April 3rd - 2012

Tapping into a trillion dollar boomer market

The baby boomers are flexing their demographic muscle once again.

The baby boomers are flexing their demographic muscle once again.

More than 4.2 million households in Canada are headed by people 55 years of age and up, according to the latest census results from Statistics Canada. Among those, 3.5 million people own a home. With the average house price in Canada estimated at around $348,000, this group owns about $1.2 trillion in real estate. 

The 55-plus market is one of the fastest growing segments of the population, and  REALTORS® who recognize the special real estate needs of this demographic group and can provide the proper solutions are poised to grow their business exponentially, says Michael Wright, a consultant who specializes in helping older Canadians make their next life move.

This group ranges from people still active in the workforce all the way up to those well into their golden years as seniors. Catering to such a diverse market requires a broad skill set that may not be fully developed among all real estate professionals.

“If you specialize in resale homes, you may think you’re covered as far as the aging market is concerned,” says Wright. “But many older Canadians are looking at new homes, adult lifestyle, land or life lease accommodations, rentals and retirement residences.”

Wright works with REALTORS®, financial planners and retirement home operators to enhance their skills inSigning agreements working with older clients. He is the chair of the Peel Advisory Working Group on Older Adults Housing as well as the owner of Housing-TLC (Transitions and Lifestyle Consulting). He also delivers workshops exploring the reasons older clients are moving, the unique obstacles they face, and how to help them prepare a real estate plan for the future.

“Older clients can be similar to first-time buyers because they’ve been out of the real estate market for so long,” he notes.

Helping your clients make a real estate plan is vital, he says. For this, you need to accumulate a substantial amount of third-party research and work through it with them to help them make a decision.  

Although many Canadians develop financial plans and estate plans and have their wills in order, Wright notes that the majority of them lack a plan for the biggest investment of their lives – their homes.

“People don’t think they need a real estate plan until a crisis occurs,” he says. “Most seniors don’t want to talk about it, and then they break a hip or their spouse passes away -- something happens and they’re forced to act.”  With the right tools, real estate professionals can learn how to start the conversation and help people make this transition.

Although the 55-plus group is a colossal segment of the real estate market, many REALTORS® shy away from seeking older clients because they feel they can be indecisive, says Wright.  “In my experience, many older people need to go through a certain process,” says Wright. “They need to discover why they’re thinking of moving and what is holding them back.” 

He cites two major obstacles that inhibit many older consumers from selling their homes and moving on – lack of information and the perceived magnitude of the process.  “Our circle of influence shrinks as we get older, and sometimes we don’t have all the information we need to make a decision.”

Consumers who have lived in the same home for 20, 30 or even 50 years sometimes don’t even know where to start, he adds. REALTORS® can serve as a conduit for information and help their clients through the steps of making a plan. 

“As a REALTOR®, you don’t need to be a gerontologist,” says Wright. “You just need to know where to go for information and how to point people in the right direction.”

Although the impetus to move varies from one client to another, Wright says the decision usually boils down to one or several of three reasons:

Lifestyle - Perhaps the clients want to buy a farm in the country, a house on a lake or simply downsize and buy a house in Florida.

Financial - More and more people are using their house as part of their retirement strategy because they lack a defined company pension, says Wright. “Sixty per cent of the people we meet say they need to move either to free up equity or minimize expenses.”

Unexpected life change - A crisis such as the death of a spouse or a medical emergency such as a heart attack can trigger a big life change. In these instances, the senior is either unwilling or unable to remain in the house. “If people had a real estate plan prepared in advance, it would help them navigate when the crisis hits.”

Elderly couple with walkerOlder clients can be uncertain about whether or not they want to move, says Wright. In these cases, he asks a series of questions and goes through a workbook exercise with them. “Real estate salespeople probably ask these questions every day, but they may not write down the answers,” says Wright. “In these cases, I always commit the answers to paper so the client can then take the time to study and compare the information.”

If the client is quite elderly, Wright may ask other family members to be present for the workbook exercise so they can understand the situation better. Wright begins with the question, “What do you like about your present house?”

One key question is ‘How many rooms are you currently using?’  “I often find that ‘Mrs. Smith’ goes from bedroom to bathroom to kitchen and occasionally to the living room to watch TV. So if you’re showing her a property later on, you can remind her that she doesn’t really need four bedrooms and a big dining room.”

Another important question REALTORS® should ask is how much it costs clients to run their current home.  Wright says most consumers don’t realize how expensive it is and many who are on fixed incomes are living just to pay for their house. As a real estate professional, he advises you to work through these questions with your older clients. “If you don’t, when you try to show them a condo, they’ll say, ‘I’m never going to pay a monthly maintenance fee of several hundred dollars!’”  However, well-informed clients who have gone through this exercise will realize they are actually paying more in upkeep on their current home.

Safety is another crucial issue to discuss with older clients, Wright advises. The majority of older people are inappropriately housed, he says, citing a statistic from The Osteoporosis Society. For every four seniors who fall and break their hip, one recovers, two go to long-term care, and one dies. “The issue of whether or not a senior would be better off in a retirement home or at least a home without stairs is a discussion that should happen before a fall takes place,” says Wright.

Opportunities for socializing should also be a major focus of the planning process, he notes. “If mom or dad lives alone in a detached house, he or she may get little or no social interaction.”

Your knowledge of the options and real estate needs of older clients can provide tremendous value-added service for your business, he says. “With today’s aging population and so many people dealing with older parents, REALTORS® who distinguish themselves with an understanding of these issues will be a great asset to their clients.”

To learn more about Housing – TLC courses or to arrange custom programs, visit www.housing-tlc.com

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