Housing prices across Canada remain prohibitively high for many would-be homebuyers, and one expert says that’s partly due to Canadian seniors holding on to their homes longer than they did in the past, exacerbating a nationwide supply shortage.
“I think a lot of seniors today don’t have a better option,” Rishard Rameez, CEO and co-founder of real estate platform Zown, told BNN Bloomberg in an interview on Tuesday.
“There should be some sort of a need to move into a new home, but seniors don’t want to move into a condo where they have to use the elevators and all that. They still want to have a nice backyard where they can host family… but we don’t have those kinds of homes available for seniors.”
Rameez said those factors have made it increasingly difficult for seniors with detached homes to make the decision to downsize, even though it’s thought of as a popular and pragmatic option.
A 2023 Canada Mortgage and Housing Corp. report found that the proportion of Canadians older than 75 who are cashing out of the housing market fell steadily between 1991 and 2021.
“A lot of seniors actually decide to stay and age in the same place. Today, about five per cent of seniors sell their homes, compared to 13 per cent for the rest of the general population,” Rameez said.
There are also few policies in place that incentivize seniors to sell their homes in search of a better option, he explained, adding that this causes a reduction in turnover and puts pressure on real estate markets across the country.
“Who is hit the most is actually first-time homebuyers, because first-time homebuyers are the ones who are looking to buy these older, detached townhomes but we have a lack of inventory,” said Rameez.
And while inventories remain strained, younger Canadians face a “double squeeze” when the cost of renting is factored in, he argued.
“On average, young Canadians pay almost 50 per cent of their net income in rent… so it’s almost impossible for these younger Canadians to save,” Rameez said.
“Without turnover, there’s less options for people to buy from, hence these investors are able to jack up the rental prices and now Canadians are stuck paying these (high) rental prices.”
He noted that the average age of a first-time home buyer in Canada is now over 35 years of age.
“It used to be twenties, it used to be early thirties, now it’s beyond 35. Imagine someone having to pay rent for that many years before becoming a homeowner,” said Rameez.
He said Canada’s policymakers need to be looking at alternative ways to assist young Canadians in purchasing their first property, as homeownership remains a goal for many people in the country, despite the challenges it comes with.
“That’s the Canadian dream; to own your home and build a family,” Rameez said. “These aren’t just homes, these are places where people will build memories and kids will take their first steps.”
With files from The Canadian Press
