Saturday, November 14, 2009

Changing demographics

The workplace across Canada will be experiencing changing demographics. In the Ottawa Citizen on Saturday Nov 14 2009, there is an article on the impact of changing demographics on policing. Over the coming few years, many senior level officers will be retiring and there will not be enough incoming officers to replace them.

This is a common problem across the employment sectors. From my personal knowledge, the only government department that has been preparing for this changing demographic is the Department of Foreign Affairs (DFAIT). The department of foreign affairs has been planning for the coming changing demographics for years now, with their innovative hiring practices.

A friend of mine, retired about two years ago and was telling me that over 75% of the people in his department are retirement age eligible within 5 years. With that large number of retirements coming, it is easy to see that there will be huge turnover within the government. This will likely lead to a huge influx of people moving into the city of Ottawa to fill those high paying, secure job positions within the Federal Government.

I am certain other departments have been working through this problem and in talking with clients who work for Human Resources Canada they are making changes to the working enviroment to try and recruit more top end candidates. Many departments are looking at flex hours and working from home solutions.

How does this affect a real estate investor?

In the city of Ottawa , this changing demographic should lead to an influx of under 40 year old people. This group will replace the "baby boomers" who are at the point of retirement with a comfortable pension. I think you shall see a large increase in the city of Ottawa population over the next few years.

This new population leads to a simply supply and demand equation - more people moving into the city, means a need for more houses, which means the existing housing stock will not be enough to service the future needs. As more houses are need, the prices will go up.

This positive growth in housing prices will occur in both the core areas, fueled by downsizing baby boomer and in the suburbs as the under 40 year old demographic need large backyards, hockey rinks and schools. My thoughts are core areas will increase first and faster, then followed by the suburbs in 5 to 7 years.

The current condominium market will stay strong for about 12 to 15 more years, then the market will turn completely towards the suburbs, when the Echo Generation are starting their families. Coincidentally, the Echo Generation's first home, is likely to be a smaller condo, downtown, close to work and convenient to walk to work, bars and restaurants.

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