Figures published by StatCan shed new light on Canada's aging workforce
New national census figures released by Statistics Canada last week contained some intriguing revelations about the country’s current demographics – not least where its housing and mortgage markets are concerned.
The headline news from the census was the fact that the working population in Canada is older than it’s ever been, with more than 20% of the country’s working-age adults now approaching retirement.
The rapidly aging nature of that workforce will undoubtedly put the onus on increased immigration to support the country’s labour market as the federal government plans to welcome over 1.3 million new Canadians by 2024.
That’s a development whose impact on the housing market should be profound, with immigrants having traditionally contributed strongly to new purchases across the country and particularly in or around its largest urban centres.
Another takeaway from the census data is that an increasing number of Canadians are now moving into the demographic typically catered to by reverse mortgages – a sign that that product’s growing popularity could be set to accelerate.
It’s no secret that home values have risen precipitously over the past decade, and particularly over the last two years – another fact that could lead more Canadians to consider taking out a reverse mortgage, according to HomeEquity Bank vice-president of referred sales Nick Chant (pictured top).
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“The number of people aged 65 and older is up 18.3%. It’s almost at that seven million mark, and home prices in that same period are up 62%,” he told Canadian Mortgage Professional.
“I think the trend we’re seeing [is] that older Canadians that are in retirement are being provided with more options to finance their lifestyle and their retirement that they probably haven’t had… and they probably haven’t thought about in the past. It’s a favourable trend for our solution – no question.”
Those skyrocketing home prices across the country have contributed to another phenomenon whose prominence has been growing: the so-called “Bank of Mom and Dad,” the trend of older Canadians gifting down payments for their children or relatives to be able to afford their own home in an otherwise challenging housing market.
Last October, CIBC said Canadian parents had gifted in excess of $10 billion to assist their children or relatives in the homebuying process over the previous 12 months.
Chant said that trend was being driven by the rise in home prices – and also by the increased equity that older Canadians, many of whom are homeowners, now have access to because of that price growth.
“They’re eager and willing to help their kids and even their grandkids in a lot of cases, whether that’s for first-time homebuyers or for education,” he explained. “That’s opened up a new option for how they help their kids and grandkids.
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“The other side is that there’s been a trend over the last decade which has been Canadians have wanted to enjoy watching their families – call it an early inheritance versus passing it on to their estate and not being able to see them enjoy that. I think that both those trends have actually played a part in the so-called Bank of Mom and Dad.”
A high number of older Canadians – more than 90%, according to HomeEquity research – want to live out their retirement in their existing home and community, another fact that Chant said had contributed to greater adoption of the reverse mortgage solution.
A curious anomaly of Canada’s reverse mortgage space is that while the product’s uptake has risen substantially in recent times, its penetration of the overall mortgage market continues to lag behind those elsewhere – for instance, the United Kingdom and Australia.
Still, Chant pointed out that HomeEquity had been serving Canada’s reverse mortgage clients for 35 years, and said the solution was increasingly becoming a viable option in the eyes of many Canadians.
“The adoption is certainly behind other parts of the world,” he said. “I think that’s something both from a social acceptance standpoint and an awareness standpoint, and clearly the equity that’s been growing in people’s homes and the conversations that are happening around that are all driving that trend and certainly would lead you to believe that the adoption rates would only increase and pick up from where we are today.”
