Monday, November 05, 2007

Boomers to boost condo markets through 2011

Boomers to boost condo markets through 2011

Demand from baby boomers over age 55, many downsizing from "empty nest" homes, will support steady price growth in eight urban condominium markets across Canada, says new data released by Genworth Financial Canada.
Genworth's Summer 2007 Metropolitan Condominium Outlook report finds the condo market demand easing slightly nationally, although new construction and resale activity remain high by historical standards. Victoria, Calgary, Edmonton and Ottawaall had record starts last year.

With the exception of Edmonton, condo starts will be down across the country this year, as builders look to clearinventory before expanding into new construction, says the report. The slowdown will further support price levels forexisting condos, as will demand from boomers over age 55. All markets will see price increases in 2007, ranging from 4.4 per cent in Toronto to 36.4 per cent in Edmonton, says Genworth.

"The record number of baby boomers will help maintain demand for condos in markets across the country, keeping price growth steady. That will benefit first-time home buyers, who otherwise might worry about their investment in a futurecondo downturn," says Peter Vukanovich, president, Genworth Financial Canada.

The report concludes that "the increasing population share of those 55 and over in all major urban areas provides a soliddemographic underpinning that is critical to the condo market's longer term health."

Census figures released in July by Statistics Canada show the number of people aged 55 to 64, many of whom are approaching retirement, is at a record high of 3.7 million. For example, boomers age 55 to 64 now account for 30.1 per cent of the Greater Toronto Area population, and 30 per cent of the Montreal population.

"Condos have traditionally been the entry point for first-time home buyers and we continue to see that in major urbancentres. But we're also seeing a clear trend among downsizing baby boomers who are looking for convenience, security and the ability to enjoy their retirement living in a condo where they can walk to restaurants and shopping, transit, andenjoy a new lifestyle," says Bob Finnigan, president of the Building Industry and Land Development Association (BILD).

The Genworth report reviewed resale condo markets in Quebec City, Montreal, Ottawa, Toronto, Calgary, Edmonton, Vancouverand Victoria. All eight markets registered price growth in 2006 and are forecast to continue to grow this year and through 2011.

It notes that condos are becoming a more attractive option for first-time home buyers, given the rising price of new detached homes in Canada. New homes are forecast to average $378,000 in Canada this year, a six per cent annual increase.

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