The age at which you're most likely to own a home in Canada? You might think it's about 50, when your earnings are at their peak, but it's actually age 65 – more than 75 per cent of Canadians are homeowners at that age. But those seniors are not selling off their houses and moving to retirement. The rate of homeownership stays about the same and may even increase a little until age 75, when health or financial issues generally prompt seniors to sell their homes.
A new study by Feng Hou at Statistics Canada says, "The pattern of homeownership after age 65 is consistent with the hypothesis of a 'ratchet effect' in housing: households tend to adjust their house consumption upward but seldom reduce it. One implication of this pattern is that there is not likely to be a spike in the demand for rental housing and a massive increase in the number of houses for sale as the annual population reaching age 65 rises from 320,000 to 570,000 within the next 20 years and the size of this population gradually levels off."
Hou says most boomers will likely keep their houses for at least 10 more years after reaching age 65.
The study used data from eight Canadian censuses conducted between 1971 and 2006 to see when in their lives most Canadians are homeowners. It found that age continues to rise. Seventy-three per cent of those born in the early 1910s were homeowners, compared to 78 per cent for those born during the Second World War. And based on current trends, since those born in the 1950s are already ahead of earlier generations when it comes to homeownership, it looks like the number of senior homeowners will climb to about 80 per cent, says Hou.
Another international study shows that Canada isn't unique in having large senior homeownership numbers. The study, by Italian researchers Tullio Jappelli and Maria Concetta Chiuri, says homeownership in Canada falls more in the 65 to 80-year-old age group than in the U.S. and the U.K. But Hou says this finding was based on those born in the late 1910s and early 1920s, and "is not consistent with subsequent cohorts, where there is less sign of a decline – perhaps resulting from the higher lifetime earnings of these groups."
Hou says that between 1951 and 2006, the life expectancy of Canadians increased by 12 years, so a person aged 65 could, on average, expect to live for another 20 years. With that longer life expectancy has also come more financial stability. Since 1976, full government pensions have been available to those 65 and over, and private pension funds have also become common. It's easier for seniors to maintain their homes or purchase a new home than it was in the past.
"Since the 1980s, homeownership among seniors has risen gradually; this likely reflects the rise in family incomes, particularly at the bottom end of the income distribution. The low-income rate among seniors aged 65 and over declined from 30 per cent of this population in 1980 to 14 per cent in 2005 as a result of the increased direct effect of government transfer income," says Hou's study.
Homeownership generally has been rising for households where the head (whoever pays the bills) is over age 20. From 1971, the ownership rate rose from 60 per cent to 69 per cent. The study found that homeownership rates rise quickly before age 40, and then continues to climb but at a slower pace before it reaches a plateau near age 65.
People who have children are more likely to be homeowners than those who don't. Single parents are more likely to be homeowners than single people without children, but income plays a big factor – single women with children have a low ownership rate because of their low average income.
Some other interesting facts to come from the study:
- The rate of homeownership of those aged 20 to 34, in the highest income group, has grown from 12.5 per cent to 60.4 per cent in the last 35 years. Couples with children in the same age and income group have increased ownership levels from 65.4 per cent to 93.6 per cent.
- People aged 20 to 24 are living with their parents longer. "Over the last 35 years, more people in this age group lived with their parents," says the study. "The share of people in their early 20s living in owner-occupied homes rose from 31 per cent to 56 per cent for women and from 52 per cent to 66 per cent for men." This trend of adult children living with their parents is highest in high-income families.