While this is still more of a US issue than a Canadian one (and I do try to keep an eye on both situations), there are longer-term implications that should prevent the Canadians from being too smug. The big issue is: who are the retiring Boomers going to sell to? If the generations that come in behind are (a) smaller and (b) relatively poorer (and student debt load is just one negative factor), why should the Boomers be confident of being able to realize their expectations on the value of their homes? Although the Canadian housing market has not seen the “bubble” that devastated the US, in some cities – notably Toronto and Vancouver – prices have definitely been propped up by foreign speculators and not by internal demand. We already see a softening in Vancouver and Toronto this summer. The bottom line is this: if the Boomers aren’t able to turn those paid-off mortgages into the level of cash that they were counting on, what then? Even a slight softening in the exit price, compounded by ever-increasing longevity, can create problems that go far beyond the headline “housing recovery.”
This file isn’t going to get any more comfortable any time soon, it seems to me.