Aging Boomers Move On
March 31, 2007
When Mike and Judy Dwyer started contemplating the type of house they wanted after Mike retired from his job as a national account manager for Pepsi Cola, they envisioned a smaller, lower-maintenance home than their current 2,500-square-foot, two-storey house that sits on a 50-by-170-foot lot.
The Dwyers' search took five years, as "by process of elimination, we saw a lot of things we didn't like," says Mike. They recently found what they were looking for: a luxury townhouse in New Yorkton, a small infill development of 80 homes being built by Kylemore Communities close to two golf courses. It met all their expectations and was in Unionville, where they've lived for more than 30 years.
The Dwyers are among the nearly 10 million baby boomers in Canada - the population bulge born between 1946 and 1965 - who have been driving the housing market for more than 20 years and are redefining it again as they reach their "empty nester" and retirement years.
While the younger baby boomers still have teens at home and are buying big suburban houses, their older counterparts aren't necessarily downsizing once the kids have gone - or if they are, they aren't compromising on quality. They are also highly educated, sophisticated and discriminating and will move only if - and when - they find exactly what they're looking for.
The Dwyers' initial plan to "downsize inside and outside" fell by the wayside. While the townhouse, ready in spring 2008, will give them the freedom to pick up and travel without worrying about extensive maintenance, it's only about 100 square feet smaller than the house they are leaving.
"We were getting kind of frustrated... you think of downsizing and people think they'll see money going into the bank," says Dwyer. "But we finally said, `okay, we'll get what we want.'"
Must-haves for the Dwyers included a double-car garage, a spacious kitchen, open to the family room, with a big island where people can gather, walk-in closets and plenty of storage. Upgrades will include granite countertops, slate kitchen flooring, hardwood in the dining room and one or two fireplaces.
Margaret Wylde, is a gerontologist whose company, ProMatura Group in Oxford, Miss., does research on what mature consumers want and applies this information to real estate, the service sector, retail and consumer products. She is author of Boomers on the Horizon and Building for a Lifetime: The Design and Construction of Fully Accessible Homes. Wylde was a speaker at February's International Builder's Show in Florida, where the baby boomer/empty nester market was the subject of several seminars at the huge event.
The boomers move for the following reasons: They want less maintenance, they've retired or they want a larger home or larger lot, according to Wylde. Her research finds that about half of all buyers over age 45 want a single-storey, detached home, with bungalows slightly more popular than two storeys.
The "sweet spot" when it came to size, was 1,500 to 2,000, "even up to 2,500 square feet," says Wylde. "They are also quite adamant about wanting a two-car garage. They don't want smaller; they want high quality."
Still, Wylde cautions that "no one size fits all" and the boomer market is diverse.
However, the factors that influence their decisions most include: the floor plan and type of house; home size; price; size of the garage and storage options. The attributes of their ideal home are: single family detached, single storey or two-storey with main floor master bedroom, energy efficiency, plenty of storage space, large kitchen with good lighting and an open floor plan.
In Canada, boomers represent 33 per cent of the population, or about 9.8 million people and control 45 per cent of the country's wealth. They own $230 billion worth of residences and have a net worth of $530 billion.
"They are not necessarily behaving like their parents' demographic did," says Peter Norman, a real estate economist and forecaster with Clayton Research of Toronto. "They are much wealthier and much choosier. They've been responsible for the emergence of trends such as aging in place (features that allow them to stay in their home as they get older) and second home ownership, which is strong in the U.S. and we will see more of in Canada."
This age group may have downsized in the past, but not so much anymore, says Norman. And if they move, the houses they move to are generally not smaller, or if they are, they are higher in value than the ones they lived in before.
"Those who stay put, put a lot of extra investment in the home to adapt their environment to accommodate them as they get older. Some are doing massive renovations, like putting in main floor master suites, and keeping the second floor for the kids and grandkids," says Norman. "We're quite bullish on renovation spending in general, but one of the factors is that empty nesters are going to pile a lot of reinvestment dollars into their homes."
One of the biggest impacts baby boom buyers have had in recent years in the GTA new house market is renewing the demand for 50-foot lots, says Bryan Levman, president of Guidelines Advertising, a firm which does marketing and research for many of the GTA's largest builders.
"The last few years, anyone offering product on 50- or 60-foot lots has found a strong market," says Levman. "During the recession, no one produced 50-foot lots because developers were not willing to take a chance on large lots. The recession ended only about 10 years ago and planning always lags behind the market by maybe five years, so the supply hasn't kept up to demand."
He says boomers don't want wide shallow lots with their small backyards; they want traditional lots and since the 50-foot lot returned to the market five years ago, it's been outselling 40-foot lots. The young boomers (43 to 50) have also been a big factor in driving sales of $400,000 to $600,000 and up homes, he says.
"These baby boomers are moving up from 30-, 35- and 40-foot lots," says Levman. "The 50-foot lot has always had a magic about it. It's what their parents had, what they grew up with and it's a mark of luxury."
However, Levman says Smart Growth and the Greenbelt legislation will make 50-foot lots a rare commodity in the GTA as the province pushes towards intensification, which is contrary to what most baby boomers seem to want. And though most are attracted to bungalows, it's difficult to build those style of houses on small lots, says Levman.
He says buyers of almost any age prefer single detached homes; but they choose other alternatives, such as townhouses or luxury condos because they don't want to move out of their neighbourhood and that is what is available.
Tom McCormack of the Centre for Spatial Economics based in Milton, says baby boomers are generating the underlying housing demand in Ontario and have been for about 20 years. He says "their habits are the same as when they were 35 - they still want single detached homes."
McCormack says the recent census also reveals that 55 to 60-year-olds tend not to move, and once they are past 65, if they move, usually due to health issues, they want to stay in the same municipality they've been living in.
McCormack says the growth in demand for single detached homes in Ontario will increase by 47,393 units from 2,702,967 in 2006 to 2,750,360 in 2007. Meanwhile, the demand for townhouses is expected to grow by 4,452 units - up to 336,189 units this year from 331,737 in 2006.
The majority of that increased demand for detached homes will be created by boomers: 45 to 54-year-olds are expected to own 652,179 single detached homes in 2007, up 18,268 from 633,911 last year. The 55- to 64-year-olds are forecast to own 18,037 more single detached homes this year than they did last - up to 497,986 from 479,949.
Scarborough public school teacher Susan Montreuil is awaiting completion of a new bungalow on a 50-foot lot in Uxbridge. She is retiring this year and wanted to move out of the city but still be accessible to her children, aged 25 and 21, and to family and friends. She'll leave the 2,600-foot, two-storey home she bought with her husband in 1988 and move to the 2,400-square-foot loft bungalow in Heathwood's Country Lane in Uxbridge in May, which sits on a lot with views of woods and fields.
"I'm not a condo person. I wanted a bungalow. I have three dogs and I'm a gardener," explains Montreuil, who has been widowed since 1991. "I wanted a quiet location, but the convenience to amenities. Being 55, I wanted to be close to medical facilities and there's a hospital down the road and I'm accessible to highways and major centres."
Her Markham house was built to R2000 specifications, but didn't have many upgrades. Over the years, Montreuil finished the basement and renovated the kitchen, powder room and flooring in that house, but is having her wish list of upgrades for her new house done before she moves in.
Her list included upgraded kitchen cabinetry, granite countertops, hardwood flooring, upgraded fireplace, extra lighting, enlarged windows and wiring for sound throughout the entire house. She also customized the floor plan, such as doing away with a pantry to make room for more cupboards and removing a powder room to have more space for her office.
"I cook, I bake; I spend a lot of time in the kitchen," she says, so that's where most of her upgrade dollars went.
Montreuil also had 32-inch door openings put in the entry, bedroom and a bathroom to accommodate a close friend in a wheelchair who will visit frequently. She says the new house will cost slightly more than the house she'll sell in Markham, even though it's larger and has been renovated, "but this will likely be my last house and it's a treat to myself."
"There seems to be two types of baby boomer buyers," says Patrick O'Hanlon, president of Kylemore Communities, which has just launched New Yorkton, a luxury townhouse and bungalow development in Unionville geared primarily to empty nester buyers. "There are those who are waiting for a specific location and they will wait a long time for it to become available, then pounce on it. Then there are the ones who cannot buy off plans and even though they love a location, emotionally they aren't ready to move yet. They can't picture how the development or the house will look and they come four, five, six times through the sales office. Once the model goes up and they see the roads go in, they understand what it will be like. "
O'Hanlon says most empty-nester buyers spare no expense.
"They want it all and don't want to be told to buy now and upgrade later," he says.