Being a boomer myself and having the privilege of being in the mortgage business (Robert Floris, Mortgage Architects), I always keep a close eye on future demographics. Needless to say, the older generation will dramatically shift the housing composition in Canada, and especially within Hamilton, Ontario. This will affect supply and demand and mortgage interest rates in a diametrically different tangent that is currently occurring. For more insight kindly visit www.hamiltonmortgageexperts.com!

Living in the moment, as work and family life require, often means that we do not have the chance to lift our heads up from immediate detail to consider the long-run, big picture. In spite of warnings of burst bubbles and meltdowns, the big picture we see for the Canadian housing and mortgage market is a healthy one: housing and mortgage markets will follow a favourable path, and, while there will be some hills and valleys along the way — accompanied by speed bumps and potholes — the direction of the path is one of growth.

Although real estate markets are primarily local, shaped by the demographics and landscape of a particular region, national factors, such as interest rates, bank regulations, lending policies, and CMHC insurance, also play a significant role. Given the attention that these national factors are currently receiving, and the fact that demographic trends fundamental to all regions and markets can be illustrated nationally, this brief analysis focuses on the national context for Canada’s housing market and, by extension, the mortgage market in the coming years.

Demographic Growth & Change

The population of Canada is projected to grow from 34.8 million residents in 2012 to 38.4 million in 2022, an increase of 360,000 people annually (equivalent to adding another Oshawa or Metro Victoria each year). This one-percent-per-year growth will add 3.6 million people to the country over the next decade, the equivalent of adding another Metro Montreal or another Alberta during this time.

That said, while population growth will provide fundamental support to residential markets (both mortgage and housing), demographic change will determine its characteristics. Appropriately, much is made of the impact of Canada’s post-World War II baby boomers on residential markets; this group, born between 1946 and 1965 and aged 46 to 65 in 2011, account for 28 percent of the Canadian population, our largest 20-year cohort.

Having acknowledged the scale of the boom generation, it is also important not to overstate it. There are two reasons for this. First, while the baby boom is the largest generation in Canada, contrary to popular perception, the one directly following it (those born between 1966 and 1985) account for almost as large a share: 27 percent. Thus, those concerned with there not being a sufficient number of people in the age groups immediately younger than the boomers to replace them as they age can rest easy in this regard. The second, and most significant with respect to housing, is that the boomers will be with us, and in private housing, for a long time to come. The largest group of boomers is currently between the ages of 50 and 54 and, at today’s life expectancies, will still be alive (and in housing) thirty-five years from now. Thus, the impact of the aging of the baby boom generation will be on the character of housing demanded, not on the general level of demand.

The aging of Canada’s current residents, combined with additions and losses through births, deaths, and migration, will change the size and age composition of the country’s population. In particular, rapid and significant growth will characterize the older age groups as few people are there currently, with relative stability driven by immigration coming to the younger ones over the coming decade.

For example, the 55 to 64 age group would be the largest older age group, accounting for 5.30 million residents in 2022 (14 percent of Canada’s population), up from 4.49 million in 2012 (when it accounted for 13 percent of the population); that said, the folks in this age group would no longer account for the dominant share that they did when they were 45 to 54 years old. A decade from now, the largest ten-year age group would be those aged 30 to 39 (5.46 million people, 14 percent of Canada’s population), achieving its dominance as a result of the aging of today’s 20 to 29 year olds, combined with net immigration to Canada within this cohort.

The fastest-growing age groups would be those aged 55 and older, which are projected to grow by 2.93 million people (a 30 percent increase). This shift is largely explained by the aging of today’s 45 to 54 age group, the peak baby boom cohort, into the 55 to 64 age group over the next ten years. In part driven by the boomers aging out of it, the under-55 age group will experience only modest net growth, adding 620,000 people (a two percent increase) over the same period. While the number of people under the age of 15 and between 30 and 44 would grow, the population aged 45 to 54 would actually decline, falling by more than half a million residents, while those aged 15 to 29 would decline by 576,000 people.