Thursday, October 25, 2007

The Boomers are coming - watch as affordability crunch fuel highrise sales

Boomers, affordability crunch fuel highrise sales

Industry insiders never thought they would see the day when sales of highrise condo suites outstripped low-rise new home sales; but that day may be just around the corner.

According to RealNet Canada Inc., 49 per cent of total new home sales in the GTA through the first eight months of this year were highrise condo suites.

If the sales trends hold for the remainder of the year, with highrise sales running 25 per cent ahead of last year, compared to 5 per cent growth in low-rise sales, this will be the first – but probably not the last time – that builders will sell (and ultimately produce) more high- than low-rise homes.

It has been fascinating to watch the growth in highrise market share from 25 per cent of the market in the early 2000s, to one-third of the market by 2004, to more than 40 per cent in 2005. Last year, highrise sales spiked to 45 per cent of total sales and this year they appear to be heading north of 50 per cent.

What's happening, and can it continue?

I don't believe this dramatic market shift signals an equivalent shift in consumer preference. I maintain that consumer preference is gradually shifting as more and more retiring baby boomers enter the condo market. But the shift has been exaggerated as the affordability crunch drives more and more first-time buyers into condos, just to get a toehold in the market.

My view is confirmed by a recent report prepared by the Conference Board of Canada for Genworth Financial.

The report looked at condo markets in Canada's eight largest urban areas and asserts that rising prices for single-detached homes has bolstered demand for apartment condominiums, which are a relatively affordable ownership alternative.

"In most markets, condominium starts have risen in tandem with increases in average overall prices," the report states.

As for the longer term, the report states that "an aging population, particularly a growing number and population share of those 55 and over in all major urban areas, provides a solid demographic underpinning that is critical to the market's longer term health."

That's the gradual shift I mention above.

The Genworth view is corroborated by Jane Renwick, editor of Urbanation, which has been analyzing the GTA condo market for more than 25 years. Speaking to a recent meeting of our association's highrise forum, Renwick stressed that affordability attracts first-time buyers to the new condo market but that diverse buyer groups such as upsizing second-time buyers and downsizing baby boomers are beginning to add to the mix.

With respect to the boomers, Renwick notes that the "first wave" of them turned 60 in 2006 and that "there's more downsizing to come" for the next 17 years as the rest of the boomers reach their 60th birthday.

As an aside, Renwick revealed the key market trends in the highrise market, including a shift to tall buildings, master-planned communities, mixed-use communities and green condos incorporating features such as all-off switches, dual-flush toilets and water-saving faucets, EnergyStar appliances, motion-activated common area lighting, green roofs, car-share programs – all good stuff.

Getting back to the market trends, it's clear that the highrise lifestyle is becoming an active and positive lifestyle choice for the boomers, while first-time homebuyers are more or less backing into that market due to the high cost of low-rise homes.

As those first-time buyers begin to start families, I hope the market and our industry will be able to provide more affordable low-rise or mid-rise homes to serve them.

In the meantime, it's make way for the boomers! From Bob Finnigan Toronto Star

Search the MLS or read more about Interest Rates, Power of Sale Properties, Price Trends and more at my website. Homes for Sale

Thank you for reading my blog and if there is anything else I can help you with please don't hesitate to contact me,


A. Mark Argentino
P. Eng. Broker
Specializing in Residential & Investment Real Estate

Thinking of Selling? Best Mortgage Rates Current Home Prices Search MLS
RE/MAX Realty Specialists Inc.

Providing Full-Time Professional Real Estate Services since 1987

( BUS 905-828-3434
FAX 905-828-2829 ÈCELL 416-520-1577
8 Website :

No comments:

Post a Comment