Elderly homeowners seldom reduce their residential spaces. Here's an explanation on why this impedes opportunities for novice property buyers.
Struggles Faced by Seniors in Downsizing Their Homes in Canada
A significant challenge in the Canadian housing market lies in the reluctance of seniors to downsize their homes. This trend, as revealed by data from the 2016 census and expert observations, shows that seniors are the demographic least likely to move[1][2].
The reasons behind this reluctance are multifaceted. Seniors often have a deep emotional attachment to their longtime family homes and are dissatisfied with the existing downsizing housing options. Condos or apartments may not cater to their lifestyle needs, making the prospect of moving less appealing[1].
This reluctance to move has a direct impact on the broader housing market. As seniors hold onto their family homes for longer periods, fewer houses become available for younger, first-time homebuyers. This tightens the supply and raises prices in the market, limiting turnover and creating challenges for younger Canadians seeking homeownership[1].
Addressing the Issue for a More Vibrant Housing Market
To improve housing market supply, several potential solutions have been proposed:
- Incentivizing Downsizing: Creating financial incentives or subsidies that make it more attractive for seniors to sell their large homes and move into smaller, purpose-built housing designed for aging lifestyles.
- Expanding Appealing Housing Options: Developing a broader range of downsizing-friendly housing that caters to seniors’ preferences, such as affordable, accessible condos, townhomes, or retirement communities with appropriate amenities.
- Reducing Barriers to New Housing Construction: Encouraging policies that make it easier and faster to build diverse housing types, benefiting all segments of the population, including seniors and first-time buyers.
- Raising Awareness and Support: Specialization in helping seniors downsize among realtors and community-level outreach can assist seniors contemplating a move to feel more confident and informed about their options.
Economists and housing experts suggest addressing seniors’ downsizing hesitancy as part of a broader approach to expand housing supply across the market, which would ultimately benefit all demographics, including first-time buyers[1].
In recent developments, Toronto city council has been considering the introduction of sixplex-unit zoning, which would create the kinds of units that would be right for many would-be downsizers. However, Toronto ultimately decided last month to broaden sixplex zoning to only some wards, leaving the others to opt in if they choose[3].
Measures to reduce the tax burden seniors face when moving, such as waiving the federal GST on new homes, can help to encourage more turnover of family homes. Such a move could spur a positive domino effect in the market by allowing move-up buyers to take on seniors' larger properties, opening up more supply at the bottom of the housing ladder for first-time buyers[1].
References: [1] "Struggles Faced by Seniors in Downsizing Their Homes in Canada." (n.d.). Retrieved March 14, 2023, from https://www.cbc.ca/news/business/seniors-housing-market-1.6413351 [2] "Why Seniors Aren't Downsizing Their Homes." (n.d.). Retrieved March 14, 2023, from https://www.theglobeandmail.com/realestate/homes/toronto/why-seniors-arent-downsizing-their-homes/article36231103/ [3] "Toronto Approves Six-Unit Buildings in Some Neighbourhoods." (2022, November 24). Retrieved March 14, 2023, from https://www.cbc.ca/news/canada/toronto/toronto-six-unit-buildings-approved-1.6685401
- In order to expand the available housing supply in the market, one solution could be to incentivize downsizing for seniors by offering financial subsidies for selling their large homes and moving into smaller housing designed for their health and lifestyle needs.
- To cater to seniors who are hesitant to downsize due to dissatisfaction with existing housing options, expanding the range of appealing downsizing-friendly housing, such as affordable, accessible condos, townhomes, or retirement communities with appropriate amenities, would be beneficial.
- As seniors often have a significant financial investment in their homes, reducing the tax burden when moving, such as waiving the federal GST on new homes, could help encourage more seniors to downsize, thereby increasing turnover in the housing market and improving opportunities for first-time buyers.
