New single-family houses under construction in Delta, B.C. in August, 2024. Many young families are stuffed into condos and townhouses with cramped space, but a 'silver tsunami' will not solve the problem, writes Mike Moffatt.DARRYL DYCK/The Canadian Press
Suburbs across Canada are filled with family-sized homes, owned by aging baby boomers whose children have long since moved out. Many young families, meanwhile, are stuffed into condos and townhouses with cramped space.
It wasn’t supposed to play out like this. A prediction first made in the 1990s was that Canada would experience a glut of family-sized homes as part of the so-called “silver tsunami,” which would eventually cause home prices to crash. This crash would allow young middle-class parents to buy these homes at affordable prices and eliminate the need to build more homes.
Unfortunately, those who believe the middle-class housing crisis will solve itself are failing to consider the number of young people currently looking for family-sized homes, how long generational turnover really takes and, most importantly, the impact of immigration on housing demand.
The silver tsunami theory of housing gets a lot right. As of the 2021 census, 54 per cent of all single- and semi-detached homes were owned by those aged 55 and up. Those 4.2 million homes will eventually be turned over, as their owners either downsize, move to long-term care facilities or die.
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The theory also correctly acknowledges the impact of Canada’s falling fertility rates. Statistics Canada projects that, by around 2029, for the first time in Canadian history, deaths will outpace births, with roughly 355,000 deaths and 351,700 births. The gap between the two will grow over time: By 2050, there will be 80,000 more deaths each year than births.
However, these trends will not leave Canada with a sudden glut of family-sized suburban homes for three reasons. First, baby boomers will not be leaving these homes all at once to downsize or move into long-term care homes. Rather, it will be a gradual process, as the baby-boom generation covers almost two full decades. The house doesn’t tend to go onto the market until both members of a couple move on – and those couples could be 10 years apart in age or more.
The silver tsunami thesis also overlooks the large number of families who do not own a suburban home, but would like to. If Canadians who were between the ages of 15 to 44 in 2021 eventually own single- and semi-detached homes at the same rate as the baby boomers, they will occupy 4.9 million homes, well above the 4.2 million that will one day be freed up by those aged 55 and up.
The pent-up demand to buy a home among those born in the 1980s, 90s and 2000s will exceed the number put on the market by the baby boomers. In fact, the Missing Middle Initiative predicts many of those homes may never be sold at all and instead will be inherited by the boomers’ grandchildren. Suburban homes could increasingly become something that young families inherit rather than purchase.
Finally, the silver tsunami theory overlooks the impact of immigration. Having 80,000 more deaths each year than births is noteworthy, but it is relatively small compared to the population growth driven by immigration.
The federal government’s recent immigration plan would add an additional 370,000 permanent residents annually in 2027 and 2028. The target beyond 2028 has not been set, but it will almost certainly be above 80,000 a year. Statistics Canada’s projections have the target increasing to 455,000 persons by 2050.
Newcomers to Canada don’t often buy suburban homes upon arrival, but many eventually do – whether they were new arrivals from Italy in the 1950s or India in the 1990s. A large part of what makes Canada attractive to newcomers is the opportunity to own a home with a garden, a yard and space to raise children.
The Missing Middle Initiative has a tool that translates population projections into housing demand forecasts, called the Rest of Canada Average Benchmark (RoCA Benchmark). The tool takes into account sources of new housing demand such as immigration and young people reaching home-buying age, as well as the number of homes that will be freed up, owing to population aging, to indicate how many homes need to be built each year to keep pace, called the “net demand.”
Using Statistics Canada population projections, we find that the net demand for ground-based ownership housing, including single- and semi-detached homes and townhomes, will fall from roughly 100,000 homes a year later this decade to 85,000 by 2046 owing to the silver tsunami, after which net demand begins to rise again.
The silver tsunami will happen, and the increased turnover of suburban homes will reduce the number of family-sized homes we need to build. But for net demand to turn negative, immigration levels would need to be reduced to levels unseen since the 1930s, which no mainstream political party is proposing to do.
We still need to build more homes.
Mike Moffatt is the founding director of the Missing Middle Initiative and co-host of the Missing Middle podcast.
