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Prices to Rise Despite Demographic Change

Created: 07 May 2007
Hits: 2515

A report by CIBC World Markets looks into the future of the Canadian housing market and sees a rosy picture. One of the longstanding concerns about housing has been what will happen to prices as the baby boomers retire and downsize, but a detailed analysis of demographic buying patterns has revealed this to be unfounded.

While baby boomers are a significant demographic, they only account for 11.8% of housing activity. They will also be moving into a demographic that, despite having a lower population, accounts for 14.9% of activity through aquisition of rental , vacation and recreational properties .

Meanwhile the age 25 to 44 group, which contributes the most to housing demand with 67.9% of activity, will remain static. Over the next twenty years an extra supply of 12,500 units a year is expected but this can easily be compensated for by reducing the number of starts from current record levels of 180,000 a year nationwide to a more reasonable 170,000 starts a year.

Overall, CIBC expects that after subtracting inflation prices will double in twenty years. Higher increases are expected in urban centers and retirement and recreational properties.