The more baby boomers retire, the more speculation increases that 2022 will be the year housing prices drop.
Not likely, anxious home buyer. No matter how many baby boomers are retiring each year, Ontario’s housing market can barely keep up with pent up demand from Gen X and Gen Y buyers.
The reason has to do with demographics.
Who Are the Boomers?
Is a 66-year-old a boomer? They are, and so are Ontarians between 58 and 76. The first boomers turned 65 in 2011. But as boomers retire earlier and earlier, those enviable pensions will let them age in place at home.
The longer Canadians live, the better they are aging. RBC Wealth Management points out Canada will soon join the “super-aged societies”, where 21% or more of residents are over 65. Close to one in four Canadians will be seniors this decade.
That presents some unique problems, like the number of workers available to pay taxes and fund services, and the ratio of young people (16%) to seniors (23%) by 2031. How many baby boomers are retiring each year will definitely impact the quality of life all Canadians have in future.
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What Year Will the Most Baby Boomers Retire?
Boomers retire at different rates, depending on their health and finances. One thing for sure: those without generous employer pensions may have to rely on part-time work to make ends meet. Employers in turn may ask baby boomers to stay longer to fill the gap in labour force growth.
By age 80, one in 10 Canadian boomers will be in a seniors’ residence or nursing home, and by 85, one in four will make a move. RBC Wealth Management forecasts.half a million homes could come onto the real estate market, with downsizing increasing that supply.
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Boomer properties won’t be cheap for first time home buyers. But the influx could lead to new opportunities, like paving the way for duplexes or stacked townhomes to replace single family houses.
How Long Do Boomers Live for, Anyway?
Psychology Today says many baby boomers believe North Americans’ life spans have sharply increased compared to their ancestors. The actual difference is about four years.
Obesity, smoking, sedentary lifestyles, substance use, and environmental carcinogens have
made boomers less healthy than expected. Female boomers are among the heaviest smokers, leading to higher rates of lung cancer. All things considered, average life spans for Canadians in 2022 were 81.1 for males, and 84.7 for females.
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That’s not all. Harvard University’s Joint Center for Housing Research predicts North America’s adult population will drop by 40 per cent by 2050. The decline will start this decade, and steadily increase, from 2.5 million deaths annually to over 4 million in the U.S.
Regardless of whether Canada follows suit, the number of retirees could rise from one per five working age adults to one per two. That will place a greater financial burden on young people to fund retirees’ health and social services.
What Happens When the Baby Boomers Retire?
Right, but won’t more housing flood Ontario’s real estate market when baby boomers retire?
Not so. How many baby boomers are retiring each year will have limited initial impact. Harvard found most deaths after boomers retire will be among married couples. That leaves surviving spouses to run the household.
A fact worth knowing: Ontario’s Succession Reform Law Act allows matrimonial homes shared by legally married couples to be transferred to a surviving spouse. Even a family home not automatically inherited by a common law spouse can be bequeathed to a partner through a Will.
If a spouse dies without a Will and the couple had no children, their surviving spouse receives all their property. The spouse gets a preferential share of up to $350,000 If the couple had a child (the spouse and child split the remainder 50/50). If they had two or more children, the spouse receives the preferential share, plus one-third of the remaining estate. The other two-thirds is shared equally between their children.
Conclusion: since matrimonial and family homes hold so many cherished memories, how many baby boomers are retiring each year won’t truly influence housing inventory or prices in 2022.
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Signing an offer to purchase is just the first step in buying a home or land in Ontario. Axess Law’s real estate lawyers can review your agreement of purchase and sale to ensure you haven’t missed essential clauses that could make the difference between completing the deal on time, or being liable for the seller’s expenses.
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We liaise with the seller’s lawyer on your behalf. When mortgage financing doesn’t come through as planned, Axess Law negotiates to amend your offer to purchase to buy more time. We withdraw your offer if it becomes impossible to proceed, and advise you if walking away would incur penalties.
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Common questions to ask when hiring a real estate lawyer in Ontario.
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