Just when we thought the skies were brightening over our economy, the demographic doomsayers have returned, again predicting that markets will collapse under the weight of Canada's shifting demographics.
On the surface it seems so logical: a total fertility rate that peaked in the late-1950s at 3.94 kids and produced the single largest generation in Canada's history (those born between 1946 and 1965) was followed by a baby bust that saw the fertility rate fall to only 1.63 kids by the mid-1980s. This resulted in those popular images of pigs in pythons, booms and busts, and perceptions of how the aging of the boomer generation will impact everything Canadian, from consumer spending and housing to health care and the Canadian Pension Plan.
One area where this notion of booms and busts has garnered attention of late is the Canadian housing market. We have all heard it: the aging of the boomers will drive our real-estate market to collapse due to the perception that there are fewer "busters" available to move into the "boomers" homes as they shuffle off to the seniors' home.
So let's consider the data rather than the perceptions. The most recent run from our Canadian population model shows that, by 2012, the "bust" generation in Canada (the 20-year cohort born between 1966 and 1985) represented 28% of the Canadian population: 10.2 million people aged 27 to 46 Canada-wide.
But the data also show that, by 2012, the boomer generation, now between the ages of 47 and 66, accounted for a smaller share of Canada's population than the busters: 27%, or 9.7 million people.
This means that image of the pig in the python has changed, no longer characterized by a single bulge, but rather by a snake that has eaten both Wilbur and Babe. In a demographic context, this has been the result of immigration filling in the younger age groups as the boom generation has aged. So even before considering a projection of how the Canadian population will grow and change in the coming years, it appears that there are now enough busters to fill in for the boomers if they were to all pick up and leave. The question is: Will they?
Housing data from the Census provides some insight. The 2006 Census showed that the propensity to be a primary household maintainer increases right up to the age of 80 (watch for new 2011 data on August 14). While only 2% of those aged 15 to 19 and 50% of those aged 30 to 34 are primary household maintainers, 65% of 75- to 79-year-olds maintain a private household. Rates dip to 64% of those aged 80 to 84, and further to 53% of those aged 85-plus.
Further to this, mobility data from the 2006 census shows that after the age of 29 the propensity to live in the same dwelling for at least five years increases right up to the age of 75: 79% of Canadians aged 70 to 74 reported that they were resident in the same dwelling five years earlier.
With the boomers aged 47 to 66 today and our most typical resident being 49 years old, it will be many years until the boomers begin the transition out of private accommodation. The strong lifecycle pattern of being a household maintainer and a projection of Canada's population growing by 20% over the next two decades (seven million more residents) would see total housing occupancy demand in Canada grow by 24% by 2031. That's right: housing occupancy demand will grow faster than total population (as it has historically), due in part to household maintainer rates continuing to increase right up to the 75 to 79 age group. It will also be due to immigration continuing to add to Canada's younger generations.
Canada's housing marketwill certainly have to deal with a great degree of change in the coming years: by 2031 almost a quarter (23%) of Canadians will be 65 or older (up from 15% today). But it's time to stop focusing on boomer bulge as there are a whole host of other factors that will shape Canada in the coming years, many of which will be more important in helping businesses strategically position themselves for growth. •
