The baby boomer exodus is finally under way — and it’s driving luxury condo prices higher
As baby boomers finally move out of their large family homes for the convenience of low-maintenance lifestyle of condos, luxury condo prices are outpacing appreciation in luxury detached homes in most markets across the country, a Royal LePage report finds.
According to the report, luxury condo prices outpaced luxury detached homes over the first four months of 2018 in Greater Vancouver and the Greater Toronto Area, with median prices rising by seven and 10.4 per cent, respectively.
“Somewhat unusual in historical terms, and reflecting an important demographic shift happening across North America, appreciation in the luxury condominium market is outpacing the traditional target for large value residential property investment, the detached house,” said Phil Soper, President and CEO of Royal LePage in the report. “Baby boomers are finally exiting their large family homes, and luxury condos, with their low maintenance lifestyles, are the favoured destination.”
Luxury condos outpaced luxury detached homes over the first four months of 2018 in Greater Vancouver and the Greater Toronto Area.
While prices have surged, the number of luxury detached homes sold fell nearly 70 per cent year-over-year in the first four months of 2018, while luxury condo sales dropped about 28.1 per cent compared to the first four months of 2017.
Royal LePage also noted “resilience” within home prices in the wake of government intervention with the Ontario Fair Housing Plan, new federal mortgage stress tests, and policies within B.C.’s provincial budget targeting foreign and domestic buyers.
“The resilience of home values reflects the strong aspirations of luxury buyers to reside and work in cities that are consistently ranked among the most desirable on the planet,” Soper said in the report.
According to Soper, this move towards luxury condos represents a change from past generation’s attitudes.
“People looked at condominiums as an entry-level form of housing, and a step down,” he said. “It was something for people less well-off or earlier in their lives to purchase.”
Now, Soper said buyers are choosing luxury condos based on their own lifestyle decisions, such as baby boomers downsizing homes after their children move out of the house.
“They’ll move somewhere with less maintenance, more amenities,” he said. “Maybe more walking, less driving, that sort of thing.”
Soper noted over the past decade, baby boomers were not leaving their suburban homes when they expected to. Part of it came from the amount of storage space needed for larger possessions, but a larger factor was millennials staying at home longer than past generations.
He attributed this to factors such as millennials pursuing more education and delaying marriage for longer periods of time. Now, as millennials have grown up and started leaving in larger numbers, older homeowners have been able to leave their homes and look into options such as luxury condos, Soper said.
The increased demand has led to more condominium developments outside of major metropolitan areas, Soper said.
“(Baby boomers) should have been free five or 10 years ago, but they’re finally free now,” he said.