Rennie says boomers will sell homes and help their kids purchase…but will the kids still be in Vancouver when this happens?
Baby boomers are sitting on $88 billion in equity in Greater Vancouver and they’re looking at their retirement years. That equity will be freed over the next 15 years [and] when they sell their home, they’ll buy down and help their kids.
That’s what Vancouver real estate developer and President of Rennie Marketing Systems, Bob Rennie, told the Vancouver Sun after his keynote address to the Urban Development Institute on Thursday evening. I think he’s right that the astute developer will focus on the downsizing boomer generation over the next 8-10 years. And, sure, the equity that my parents’ generation pull from selling their family homes will be significant. Finally, it is fair to say that most parents put in this fortunate position, would want to help out their kids with purchasing a home…but, at this rate, will these homes be in Vancouver? Or will we see the money from this long term Vancouver equity vanish from the city to the suburbs and beyond? Consequentially, if the kids move out of the city, will Mom and Dad want to stay in Metro Vancouver? Or will everyone move out together?
I know for my family, proximity is very important. It is one of the reasons we purchased where we did (i.e. so we could be close to family). With all the demands put on parents today (typically both parents working full time – therefore resulting in a great need for childcare) many families are returning to the “it takes a village” approach. This doesn’t really work if Grandma and Grandpa live in Dunbar and all the kids and grand kids live in Port Coquitlam or Abbotsford. What I think we might see a slight increase in is multi-generations of families moving out of the city into more suburban settings. Another option is that the kids (and little ones) move into the family home and Mom and Dad set up house in a lane way house or basement suite. Perhaps developers should also be focusing on multi-generational housing options as well?
So, yes, there is a lot of money to be made from “boomer equity”. However, whether all of it will remain in Metro Vancouver remains to be seen.
This reminds me a little bit of how the boomers were all going to retire one day and then we would be able to get their jobs. Phhhht! I say, as the boomers in my workplace are all working well beyond retirement age, or coming back as “consultants” after they are collecting their pensions. My boomer parents are seventy and show no signs of moving into smaller digs. Methinks this is just another Rennie spin.
Ugh, this morning at coffee break I went a little apeshit on a typical clueless boomer from my work. I was lamenting the cost of housing here in Calgary and she started to get a little defensive, asking how it was, then, that we COULD live in the inner city. So I walked out on that, pissed that I have to explain to everyone how our parents helped us buy, and then feeling I have to even justify that. Anyways, your post made me hopeful that I’m not the only one, but then the comment above did just the opposite. Sigh…here’s a little negative pessimism…”well, the houses may be expensive, but at least they aren’t in good shape!”
Jackie – do you really think your boomer work peers never got help from their parents? There seems to be a myth out there these days that until our generation no one ever got help from their families to buy a house. That’s ludicrous. Think about the Greek and Italian wedding traditions involving envelopes of money….. a practice replicated in a variety of ways across cultures. It’s simply a ritualized way of giving kids a downpayment….. Lots of parents for lots of generations have helped their kids buy, but somehow the boomer parents have decided that helping the gen-xers is doing them a “favour” as opposed to giving what they got in the first place. (yes, yes, I know that some people did it on their own – but I would suggest that’s always been the minority – even in my dirt poor family, people had land to split up so their kids would have a piece).
Jackie and Megan, you will both appreciate this article. http://www.dailymail.co.uk/news/article-2055497/JEREMY-PAXMAN-Baby-Boomers-selfish-generation-history.html
and this one:
http://econperspectives.blogspot.ca/2012/02/baby-boomers-most-selfish-generation.html
We are in this situation now. My in-laws (my parents are out of the picture) live near Vancouver and their two sons who are married with kids live in the suburbs an hour outside Vancouver. In fact, until recently both families lived in townhouses in the suburbs because it’s all we could afford. This is despite the fact that we pull in 6 figures. My brother in law who is 40ish and is married with 2 kids will probably be in a townhouse forever unless he moves really, really far out (Abbotsford, maybe?) as his income, while still higher than average just cannot meet the minimum for this overpriced area we live in.
Now we’re moving out of our townhouse into a house in the valley and they are bemoaning the fact that we’re moving farther away from them. If my mother in law tells me one more time to “just look for a *bungalow* near us!” I. will. kill. her! I have a near Pavlovian response to the word bungalow at this point. She keeps telling us that there are tonnes of places near her; however, the only thing we could afford near her is an absolute piece of shit that needs $50,000 in renos. If you had the money for that you wouldn’t move there in the first place!
Em – next time you should tell her you will look at somewhere near her if they put up the cash for renovations…wonder if she will keep suggesting it then?
Ha, yeah. Anytime we inform her that we cannot buy out by her it’s like a wall of denial. They did it so why not us, right? We’re all “middle class” here, surely you should be able to, etc.
I think part of the problem with real estate in Vancouver is that the people actually in the market, who have been here for decades, do not want to acknowledge that it is impossible for people to buy in now unless they are mega rich or have a lot of assistance. Their heads are firmly stuck in the sand. Also, they probably don’t want to miss out on the opportunity to sell their place at some point at a markup of eleventy billion percent. They have no incentive to see the market drop.
I don’t get it…doesn’t anybody save money any more? I bought my first condo at the age of 26 with my own savings, zero help from parents. I am now 40 and we own a comfortable West Side house with a manageable mortgage, of about 40% of the property value. Still zero help from parents. Yes my wife and I have good incomes but more anything else we have always been savers and investors rather than spenders. When I hear that 2 people with 6-figure incomes can only afford a townhouse in the burbs, I wonder “What in God’s name are they doing with all their money???”
Amen, Richard W. While real estate prices have skyrocketed to unsustainable levels (in the last 7 years especially) I wonder how many people who complain about not being able to afford the home they want are spending the money they make on premium cable packages, the latest iDevice, eating out several times a week, and a $4 latte every morning? Yes, the cost of real estate compared to wages ratio has worsened a lot in recent years, but when my dad supported our family of 3 while paying down a mortgage in the 80′s, we had no cellphones, no cable, one 14″ TV with rabbit ears, a 12-year-old car, and we never ate out. Maybe it’s the convenient lifestyle that is unsustainable?
[...] Boomers (those born in 1946-1964) and Gen Y-ers (the under 28 demographic). Rennie has stated before that, in Vancouver, Baby Boomers are sitting on 88 billion dollars in home equity and they will [...]