Canada’s Boomers went all in on real estate investment, looking to double down on their windfall. That was the takeaway from a new Canadian Housing Statistics Program (CSHP) study looking at investor demographics in 2020. The Statistics Canada (Stat Can) study found that most resident real estate investors are at least 55 years old. Younger investors are underrepresented as a share of the population, bringing a unique problem to the market as older households concentrate into a single-asset, forming a crisis for young adults looking for shelter.
Most of Canada’s Real Estate Investors Are Boomers
Most of the country’s resident investors are 55 or older. Looking at property registry data for five provinces, the largest share of investors were in Nova Scotia (66.9%), and New Brunswick (66.1%). Though the other provinces weren’t too far behind—BC (58.5%), Manitoba (58.1%), and Ontario (57.1%). Boomers held nearly 1 in 3 resident owned investment properties in these provinces.
The share shouldn’t be too surprising if you’ve been paying attention. Prominent mortgage broker Ron Butler previously observed a sharp increase in older homeowners hanging onto their existing property as they upgrade. Rather than selling the old unit, it would turn into a rental unit, leveraging its value to pay for the new home.
The strategy increases household exposure to a single asset class, increasing vulnerability. However, it’s been lucrative for decades, so any calls for risk management would fall on deaf ears. If an investor is over leveraged, they have a problem. If an economy is made up of over leveraged investors, the economy has a problem.
Canada’s Younger Investors Are Underrepresented
On the flip side of that stat, the agency found that younger investors are underrepresented. Those between 35 and 54 years old, owned about 1 in 3 resident investor owned properties in Ontario (37.8%), BC (36.5%), and Manitoba (35.8%). It drops off to less than half the share of Boomers in Nova Scotia (29.1%), and New Brunswick (29.5%).
Time and capital are the reasons, according to Stat Can. Saving a downpayment isn’t a quick process, and saving two is even harder. Especially in pricey markets like BC and Ontario, where you would expect the share of younger investors to be even smaller than more affordable markets. That isn’t the case though.
Young investors made up a smaller share in provinces with smaller barriers to saving a down payment. Buying a home in Nova Scotia or New Brunswick is easier than Ontario or BC, especially back in 2020. However, younger investors are even more underrepresented in the more affordable provinces. The trend isn’t as straightforward as just a longer timeline means more exposure. There has to be a cultural or opportunity-based factor also present.
Canada’s Investor Demographic Has A Big Impact On Price
Demographic makeup can have a significant impact on home prices. Greater leverage translates into higher home prices. More leverage results in higher home prices, as well as greater competition for homes. Canada’s largest bank, RBC, notably warned that investors are replacing first-time buyers.
Normalization of leveraging existing property when upgrading is also problematic. It holds back more affordable units from the market, making affordable inventory more scarce. It’s like pulling up the steps as you climb the property ladder, so no one else can follow. Less inventory, while competing with more investors for the same number of units.
There’s also the single point of failure, and non-productive capital diversion.
All of these problems aren’t new, but they are getting worse. Canada is painting itself into a corner, where it’s dependent on future generations moving here to pay higher and higher rents, with little focus on how they’ll be able to earn those rents.
I wonder how those 4% Under 35’s in Ontario can afford a home?
It is an other reason to do:
– Not to move here
– Take your kinds and move somewhere closer to your origins
Are you a bot?
I am not. Are you?
Bot talking to a bot it seams
Well said, you should also leave the land to the First Nation
Boomers are born before 1965. Therefore boomers are 58+. Gen X 1965-1980. (43-58). Millenials 1980-1995 (28-43). GenZ 1995-2010 (13-28).
What does “your kinds” mean? Is this a racist comment?
This is not a surprise. I am 60 and never owned property. For most of the time I could buy (ie last 30 years), prices have been escalating wildly. What hasn’t risen are interest rates. It is as if all forms of government. all stripes of government, have been holding a gun to your head to buy real estate. Since 2008, the savers of Canada have been punished. I have paid for other people’s mortgages. Why would anyone sell a property into an environment of zero interest rates???
PS I’m fine financially. I have a degree in engineering. As I chose not to have children, I watch the world burn, not with glee, but sadness. Anyone with half a brain could see this coming 30 years ago. Humans will not give anything up.
Kate- you sound vaguely racist. It doesn’t matter which particular country or “origin” a person comes from.
What matters here is that we’re selling the country’s future on the altar of equity gains for current owners, and based on other recent stories, screwing over a lot of young immigrant students to do it.
Of course politicians won’t do anything… 60% of Canadians are homeowners who now have imaginary wealth as a result of this scam-like trend. The politicians thus can’t rock the boat or they’ll risk their own careers.
This pusillanimous attitude by them and homeowners will completely wreck our economy in the long run like crabs in a bucket pulling each other down, each hoping to be the sole one to get out.