RETIREES TAKING A LARGE CHUNK OF THE RENTAL MARKET
One third of Canadian households are renters. And although it’s a common belief that older people are big on property ownership, a key part of the renting pool are Gen Xers and boomers.
New census data released by Statistics Canada show renters by individual and by age, instead of household. In Vancouver and Toronto, 30 per cent of individuals over the age of 55 are renters.
“This is the first time this population has been broken down by age and made available, so we learn a little more about Canadian renters,” says data analyst Andy Yan, director of Simon Fraser University’s City Program, and associate professor of urban studies.
There’s another surprising shift under way, too, that defies the common narrative that older people are enjoying privileges the younger demographic can only dream of.
“People over the age of 55 are also the fastest growing population in homelessness,” says Prof. Yan. “Canada is a nation of renters, but what does it mean to be a nation for renters?”
One in five Canadian individuals over the age of 55 are renters, according to his analysis. In Victoria, 40 per cent of that age group are renters. Montreal leads the way with 47 per cent, and in more affordable housing markets like Calgary and Edmonton, it’s only 16 per cent and 21 per cent, respectively.
But there’s a stark contrast between those who choose to rent, and those who don’t.
Royal LePage released a report on renters this month and asked respondents whether they had tried to purchase before signing a rental lease. In B.C., one-quarter of respondents said yes, but only 12 per cent of people over 55 said yes. When asked if they planned on buying a property in the next two years, 27 per cent of British Columbians said yes and only 6 per cent of 55-plus year olds said yes. Of that group, most rent because of housing costs. Another 29 per cent didn’t want to do property maintenance.
President and CEO of Royal LePage, Toronto-based Phil Soper, studies data and market trends, and he anecdotally groups the older renters into four categories.
The ones who choose rental desire convenience and flexibility, not having to mow the lawn and being able to move if they so desire. These renters may even continue to own property, or several properties.
The second group worries about the real estate market as an investment. Moving to rental frees up their capital and they can put it into a guaranteed investment certificate, for example.
“Then there’s the group that needs the capital to live on, so they turn it into a liquid asset for vacations – or maybe even food.
“And the fourth group would be those becoming infirm and who need to be in some kind of managed care.”
Mr. Soper guesses that, based on other data, most moving into rental are getting too old to maintain a home, which is a natural progression. With boomers, it just happens later.
“I attribute that to them living longer and therefore working longer, and not needing the money as early in life, the money that surfaces from selling and becoming a renter.”
But now that the oldest boomers are 78 years old, the move toward renting will only grow. And their needs are different from millennial needs.
“[The shift] is spurring rentals in different places, not necessarily close to downtown cores … or close to great school districts, but rather in smaller towns, recreational towns,” says Mr. Soper.
He cites small, walkable communities such as Collingwood in Ontario, or Squamish, in B.C.
“I think [the shift] is going to result in some freeing up of family homes in our cities for Gen Xers who aren’t in home ownership yet.”
And the wealthiest boomers are demanding units that are on par with nice condo units, pushing up rents.
Great West Life Realty Advisors develop rental properties as long-term assets, particularly high-end premium rentals, close to transit and shops, that have a lot of amenities and include air conditioning – which is a key feature for the 55-plus renter, says Geoff Heu, GWL Realty Advisors vice-president, development.
People who’ve accumulated a lot of wealth can afford to pay rents of around $5.50 or $5.75 per square foot.
Mr. Heu knows a real estate executive who sold his house to rent instead.
“Renting does offer a certain amount of appeal to the more mature renter. And it’s not because they need to rent; they want to,” he says. “Many of them they have built up equity in their single-family home or we have heard of instances where they rent out their single-family home in the suburbs, and they rent to be closer.”
Some rent to be near their kids, or because it gives them the flexibility of moving around. And a high-end purpose-built rental building gives them long-term security, as opposed to renting a condo unit.
“Because we are building to this higher level of design, our projects tend to appeal to the mature renter who wants something a little bit more sophisticated,” Mr. Heu says.
GWL’s new, completely rented Bowline apartments in North Vancouver’s Lower Lonsdale neighbourhood has 159 modern units with views from balconies, a rooftop terrace, hotel lobby, gym, clubhouse with kitchen and lounge area with fireplace. These are not the old-school rentals with a shared laundry room in the basement. Rents are around $5.50 a foot.
“These are the types of renters that are less price sensitive and able to pay these higher rents,” he says. “We believe the level of immigration and the growth of the population and how expensive ownership real estate is, that there will be continued market for purpose-built rental. And not necessarily for people who can’t buy.”
Hani Lammam, executive vice-president, Cressey Development Group, said the company just finished a rental building called Century that was designed for the downsizer. The two concrete mid-rises with a bridge connection and quarter acre park is in North Vancouver at 250 E. 15th St. The suites have a Scandinavian look, there’s a reception desk with staff, spin classes, social nights, private dining room for gatherings, private office space, workshop to build things, suites for guests, coffee area, huge lounge with pool table. Leasing starts on Aug. 1.
“It’s a bit early right now to assess whether the tenant profile will skew older, but that was part of our plan from the start,” says Mr. Lammam. “Our instinct was to target the downsizer demographic.”
Story by: The Globe and Mail
