Summary of a Study on The Residential Path of Households Aged 45 - 64 Years in The CMA of Montréal and Québec

Highlights

• One in five households moved in the last five years. Condominium owners and renters had a greater tendency to move.
• The reasons for this residential mobility are not related to societal phenomena, such as returning downtown. The moves were prompted by other motives: search for greater comfort, desired improvement in living conditions, changing needs, etc.
• Among the homeowners who moved, many opted for condominium housing.
• One in four households strongly intends to move in the next five to ten years. Renters are planning to be more mobile than homeowners. As well, among the homeowners, those with a high income will be more mobile.
• Reasons related to their retirement will motivate households to move, and respondents consider nature and tranquillity as factors that will influence their next move.
• Around 10 per cent of the households surveyed own a secondary residence and an equally significant proportion intend to buy one within the next five years. Buying intentions are stronger among households with a high income.
• One in four homeowners is planning major renovations within the next five years.

Households Aged From 45 to 64 Years Facing New Choices

The 45 to 64 years’ age group is a very significant cohort within society. It set the tone for many social trends and strongly influenced the real estate market over the years. As the members of this age group will be retiring, their housing intentions will have a major impact on the real estate market. In order to better identify the trends on the housing market, it is important to better understand what the households in this age group have done in the past and what they intend to do over the next five to ten years.

To better define this phenomenon, Canada Mortgage and Housing Corporation (CMHC) conducted a survey among households aged from 45 to 64 years. While several documents have been published on this topic, there have so far been few quantitative studies aimed at measuring the different dimensions of the residential path of these households. During the summer of 2001, a telephone survey was therefore conducted among 649 households in this age group in the Montréal census metropolitan area (CMA) and 623 such households in the Québec CMA. The margin of error for the results in each location is around 4 per cent.

The 45 to 64 years’ age group: a numerous and spoiled cohort

CMHC’s demographic forecasts show that the population is getting increasingly older and that this trend will intensify over the next ten years. The pool of households aged from 45 to 64 years will get larger, while other groups will get smaller. According to the demographic forecasts, close to 40 per cent of the households living in the Montréal and Québec CMAs will be aged from 45 to 64 years in 2011. This means that, in 2011, nearly 650,000 households in the Montréal area and 136,000 in the Québec area will be part of this age cohort.

In addition, the 1996 census data indicates that members of this age cohort are more spoiled financially. They have higher incomes than the rest of the population and, consequently, more of them accessed homeownership. In fact, CMHC’s study revealed that these households enjoy financial flexibility, as nearly half of the households who participated in the survey no longer have mortgages to repay (42 per cent in Montréal and 45 per cent Québec).

While this cohort may be more spoiled, there are still some significant distinctions to be made depending on whether the respondents are homeowners or renters. In general, homeowner households are more highly educated than renter households. They have higher incomes, more of them live as couples, and they have twice as many children living with them. Strictly in terms of their family situation, it is clear that the housing needs of homeowners are different from those of renters. However, an interesting fact emerged from this study: most renter households are tenants by choice (55 per cent in Montréal and 67 per cent in Québec). Quite a few households who participated in the survey benefit from their rental tenure as, for many, this means less maintenance and fewer responsibilities. They also consider that this formula is more economical than homeownership.

Residential path in the last five years

Condominium owners and renters have been more mobile than exclusive owners

CMHC’s study revealed that, in the last five years, one in five households moved and that condominium owners and renters (30 per cent in Montréal and 47 per cent in Québec) were more mobile than exclusive owners (12 per cent in Montréal and 11 per cent in Québec). It is highly likely that condominium owners and renters are more dissatisfied with their dwelling than homeowners, which explains why they have been more mobile in the last five years. It is therefore no surprise that one of the main reasons why they moved was that they sought greater comfort and improved living conditions.

Exclusive owners therefore moved less frequently, particularly those aged from 55 to 64 years living in the Montréal area. In fact, 14 per cent of households aged from 45 to 54 years moved in the last five years compared to 7 per cent of those aged from 55 to 64 years. Slightly older homeowner households probably have more stable housing needs, or else a greater proportion of them moved when they were slightly younger.

In the Québec area, a similar phenomenon was observed. Among condominium owners and renters, 53 per cent of households aged from 45 to 54 moved, compared to 35 per cent aged from 55 to 64 years.

The reasons for the last move are not related to societal phenomena

Overall, residential mobility is not attributable to societal phenomena, such as returning to the city or getting closer to the workplace. In fact, moves are prompted by a search for greater comfort, a desired improvement in living conditions, changing housing needs, the wish to become a renter, a divorce, a separation, financial reasons, etc. It should be pointed out that the wish to become a renter is perhaps not completely dissociated from financial reasons often linked to a divorce or a separation.

In order to better define residential mobility, respondents evaluated the importance that they attached to five factors in the choice of their home. The most important factors correspond to the main reasons cited by respondents as having prompted their last move, as presented in the previous paragraph.

As such, in the Montréal area, nearly one third of respondents considered that getting closer to nature and/or seeking tranquillity (improvement in living conditions) and the size of the dwelling (needs) were very important factors in the choice of their home. Getting closer to their workplace was very important to only 16 per cent of respondents, while getting closer to downtown or a more urban environment was a marginal reason. Just 7 per cent of respondents considered this factor to be very important in the choice of their home when they moved.

For respondents in the Québec area, getting closer to nature and/or seeking tranquillity stood out from the other factors, as close to 30 per cent of respondents considered this factor very important at the time of their last move. The size of the dwelling (needs), closeness to the workplace and proximity to downtown or a more urban environment obtained practically equivalent results. Around 20 per cent of respondents considered these factors to be very important at the time of their last move.

 

Condominiums seem highly rated among the 45 to 64 years’ age group

At the time of their last move, households aged from 45 to 64 years did not significantly change their tenure choices. In other words, the proportions of homeowner and renter households before and after the last move remained essentially the same.

However, condominiums seem highly rated among households aged from 45 to 64 years, as the percentage of condominium owner households is now greater than it was before the last move. Five years ago, 16 per cent of households were condominium owners in the Montréal and Québec areas, whereas condominium owners now account for 26 per cent of households in Montréal and 30 per cent of households in Québec.

Did they move into smaller or larger homes?

Just under half of homeowner households, both in Montréal (48 per cent) and Québec (45per cent), moved to a larger home, but the opposite phenomenon was observed for renters. In fact, around 45 per cent of current renter households in the Montréal area and 40 per cent in the Québec area moved to a smaller dwelling.

The reasons that prompted households to move to a larger dwelling essentially had to do with a need for more space (different needs, arrival of children, accommodation of one or more relatives), while the factors that motivated the choice of a smaller dwelling were mainly related to financial concerns (divorce, separation, wish to save money) and a need for less space (departure of children, divorce, separation).

Residential path: what people aged from 45 to 64 years intend to do in the next five to ten years

What will be the intentions of households with regard to housing over the next five to ten years? Will they be moving in large numbers? Will the reasons for moving be similar to those cited by households who moved in the last five years? Will the concerns of households change? Will households settle elsewhere? To answer these questions, it is therefore important to better define the intentions of households aged from 45 to 64 years in order to better prepare for the future.

One in four households intends to move in the next five to ten years

CMHC’s survey revealed that, both in Montréal and Québec, one in four households strongly intends to move over a horizon of five to ten years. This proportion may be underestimated, though, since events that have not yet happened, such as a separation, a death or a job loss, could prompt future moves. As was the case in the last five years, renter households will again be more mobile than homeowner households. The study also revealed that households with a high income ($80,000 or more) plan to be more mobile than those who earn less. However, moving intentions are less significant within the next five years than within the next ten years.

Reasons related to retirement will now prompt households to move

Within about ten years, the main reasons for moving will be retirement, age and illness. New needs in terms of space will remain an equally important reason as for households who moved in the last five years but, contrary to the last move, the notion of comfort and improved living conditions will be less important, although it will remain relevant. Financial concerns will still be a factor. Even when looking forward in time, quite a few households think that financial reasons will prompt their move. In Montréal, many households consider that it is important to access homeownership while, in Québec, many households are thinking of moving to change regions or districts.

As part of the survey, in the same manner as for their last move, we asked respondents to evaluate the importance that they will attach to certain factors (the same ones as in the previous section) when they will choose their next home.

The survey results revealed that the reasons retained exactly the same ranking as at the time of the last move. More households consider getting closer to nature and/or seeking tranquillity to be a very important factor in the choice of their next dwelling. In Montréal, 41 per cent of households who intend to move consider this factor to be very important while, at the time of the last move, this proportion was 33 per cent. Similar results were noted in Québec. In all, 34 per cent of households find this factor very important, compared to 28 per cent at the time of the last move dating back five years.

Another result is worthy of mention: getting closer to the workplace is no longer considered as important as it was at the time of the last move. In fact, in Montréal, only 10 per cent of households consider this criterion to be very important in the choice of their next dwelling, compared to 16 per cent at the time of the last move. The same phenomenon was observed in Québec, as well. Only 11 per cent of respondents deem it very important to get closer to their workplace, down significantly from the proportion of 21 per cent obtained at the time of the last move.

This survey therefore shows that households are thinking differently as they near retirement and that their concerns are no longer exactly the same.

Among the households who intend to move, one in four wishes to change tenures

The results of the study revealed that, among the households who intend to move, one in four wishes to change tenures. In Montréal, there will be more renters who will want to change tenures (renters: 39 per cent; homeowners: 19 per cent) while, in Québec, the opposite should occur (renters: 21 per cent; homeowners: 30 per cent). Renters intend to access homeownership by becoming exclusive homeowners (87 per cent in Montréal and 81 per cent in Québec). As for homeowners, their intentions are divided between renting a dwelling (38 per cent in Montréal and 48 per cent in Québec) and owning a condominium (58 per cent in Montréal and 43 per cent in Québec).

Consequently, renters should be moving to equivalent or larger dwellings, while homeowners will be opting for smaller dwellings. The search for comfort will be the primary factor (45 per cent in Montréal and 56 per cent in Québec) prompting households to opt for a larger home. Conversely, the departure of the children will be the main reason (50 per cent in Montréal and 35 per cent in Québec) inciting households to move to a smaller home. Compared to the results for the move dating back five years, it can be seen that the departure of the children will now be a much more important factor. In Montréal, the proportion of respondents who cited this reason doubled (from 25 per cent to 50 per cent) while, in Québec, it rose from 25 per cent to 35 per cent.

Where will they want to go?

In the Montréal area, the central sector of the Island of Montréal should post a negative net migration level. Around 12 per cent of households who currently live in the central part of the Island and who intend to move are thinking of going to settle in resort areas. The Montérégie, Laurentians, Eastern Townships and Lanaudière sectors (+6 per cent) and other areas across Quebec (+5 per cent) should therefore register positive net migration levels. As for the other sectors, including Laval, the North-Shore, the South-Shore, and the western and eastern parts of Montréal, the study revealed no significant migration movements. It should be pointed out that the study does not rule out the possibility of any movements from the suburbs to the city, and vice versa, but these movements are not sufficiently significant to show any net migration (positive or negative). In addition, this path only applies to households currently living in the Montréal metropolitan area. The intentions of households living outside the metropolitan area were not measured and could have an impact on the residential path in the area.

As for the Québec area, the survey results indicate that the northern suburbs of Québec should lose a portion of its households (-27 per cent) to the benefit of the central part of this metropolitan area (+13 per cent) and other areas across Quebec (+12 per cent).

Given that the search for tranquillity and the desire to get closer to nature will be a very important factor in the choice of a home over the next few years, it is not surprising to see an interest in resort areas.

 

Secondary residences: a market that is bound to grow . . .

The secondary residence market is a sector that will grow over the next few years. According to the survey, just over 10 per cent of households aged from 45 to 64 years (13 per cent in Montréal and 11 per cent in Québec) currently own a secondary residence and equally significant proportions (12 per cent in Montréal and 10 per cent in Québec) intend to acquire one within the next five years.

In Montréal, over the next five years, more households earning over $80,000 will be buying a secondary residence (21 per cent). This proportion falls to 10 per cent for households whose income ranges from $40,000 to $80,000 and to 8 per cent for those with an income under $40,000. In the Québec area, households earning $100,000 or more will be major players on the secondary residence market (31 per cent), while those whose income is below $20,000 are not planning to buy this type of housing. Also, very few households aged from 54 to 64 years whose income is between $20,000 and $100,000 are thinking of buying a cottage (3 per cent).

The chances that households will move to their secondary residence on a permanent basis are relatively good. Just over one third of respondents (38 per cent in Montréal and 34 per cent in Québec) are considering this option.

. . . and provide opportunities for the renovation market

The secondary residence market is therefore providing some interesting opportunities for the renovation market. In fact, some work will have to be undertaken on these homes in order to make them habitable yearlong.

Also, as mentioned earlier, the study revealed that one in four households intends to move. In other words, most households (three in four) will prefer to stay in their current living environment. Consequently, this means that renovations will have to be done to maintain the quality of the housing stock or else to adapt dwellings to the needs of an aging population.

The study also measured the renovation intentions of homeowners. One in four homeowners, both in Montréal and Québec, is thinking of undertaking renovations within the next five years. In Montréal, more homeowners aged from 45 to 54 years (39 per cent) than those aged from 55 to 64 years (25 per cent) will be performing renovations. In Québec, a greater proportion of employed households (41 per cent) than those with another status (19 per cent) will undertake projects.

The top major renovations that will be performed include the replacement of doors and windows (42 per cent in Montréal and 48 per cent in Québec), roofing work (10 per cent in Montréal and 31 per cent in Québec), kitchen renovations (25 per cent in Montréal and 16 per cent in Québec) and bathroom projects (19 per cent in Montréal and 17 per cent in Québec). Necessary maintenance, search for comfort and decorating were the main reasons cited by respondents to justify their renovations.

Other opportunities in sight

In light of the results of this study, it would seem that many opportunities exist for welladvised developers. Given the current rage for resort areas, there will be renewed activity on the secondary residence market in such areas and even the possibility of proposing specific and customized housing concepts in quiet sectors, situated close to nature.

In addition, with many homeowners changing tenures, developers will be able to market housing projects (condominium or rental) adapted to the specific tastes of the 45 to 64 years’ client group.

For more information about this publication or any other question concerning the Quebec market analysis center please contact our Customer Service Department at: 1-866-855-5711.