Canada’s Downsizing Dilemma: Why It’s Creating a Housing Logjam

Stewart Blair

4 days ago

Canada’s Downsizing Dilemma: Why It’s Creating a Housing Logjam

A Hidden Supply Problem in Today’s Housing Market

Canada’s housing market continues to face pressure from multiple directions, yet one of the most overlooked issues is quietly building beneath the surface: a lack of downsizing options for older homeowners.

Recent data show that 65% of Canadians aged 65+ report having low or no downsizing options in their communities. At the same time, nearly half of homeowners in this age group say they plan to stay in their current homes rather than move.

On the surface, this may seem like a personal lifestyle choice. In reality, it has significant implications for housing supply across the entire market.

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The Downsizing Bottleneck Is Real

Downsizing has always played a critical role in the natural flow of real estate markets. Traditionally, as homeowners age, they transition into smaller, more manageable homes. This movement frees up larger, family-oriented properties for the next generation of buyers.

However, that cycle is now breaking down.

With nearly 49% of Canadians reporting limited downsizing inventory and 8% saying there are no options at all, many would-be downsizers simply have nowhere to go. As a result, they are choosing to stay put—often in larger detached homes that would otherwise appeal to growing families.

How This Creates a Housing Logjam

This is where the issue becomes far more significant.

When downsizers stay in place:

Fewer family homes come to market
Move-up buyers can’t find suitable properties
First-time buyers face increased competition for the limited inventory

In effect, the entire housing ladder becomes stuck.

At Elevate Real Estate Group, we are already seeing this play out locally.

“What we’re seeing is a structural slowdown in the natural movement of the housing market. When downsizers don’t have viable options, they stay put—and that prevents the next wave of family homes from entering the market. It creates a ripple effect that impacts every buyer segment,” says Elevate Real Estate Group.

This “logjam effect” means that even when demand remains strong, the supply needed to meet it simply isn’t materializing.

The Impact on Buyers in London, Ontario

In markets like London, Ontario, this dynamic is especially important.

With strong population growth, steady demand from first-time buyers, and continued interest from investors, the need for inventory is already high. When fewer larger homes become available due to stalled downsizing, it intensifies pressure across the board.

Younger buyers are particularly affected:

Limited options in desirable neighbourhoods
Increased competition for family homes
Slower progression from entry-level properties

At the same time, move-up buyers—those looking to upgrade from starter homes—find themselves stuck, unable to secure the next step in their housing journey.

Why Aren’t There More Bungalows and One-Floor Homes?

One of the key reasons downsizers are struggling to find suitable housing is simple: we are not building as many bungalows or single-floor homes as we once did. From a development perspective, these properties are significantly less efficient. A bungalow requires more land per unit compared to a two-storey home, and with land costs continuing to rise across markets like London, Ontario, builders are incentivized to maximize density. At the same time, construction costs per square foot are often higher for single-level homes due to larger foundations and roof structures. The result is fewer one-floor homes being built, and when they are available, they often come at a premium. This creates a disconnect in the market, where many downsizers want to move—but the type of home they need is both limited and expensive.

Why More Supply Alone Won’t Fix It

There is often a focus on building more homes to solve Canada’s housing challenges. While new construction is critical, it does not fully address this issue.

The missing piece is appropriate housing for downsizers, including:

Bungalows and accessible homes
Condo developments tailored to older homeowners
Low-maintenance communities close to amenities

Without these options, the existing housing stock remains locked in place.

What This Means for the Market Moving Forward

Canada’s population is aging rapidly, with projections showing that nearly 25% of the population could be over 65 by 2030. This trend will only amplify the importance of downsizing in the housing ecosystem.

If suitable housing options are not developed:

Inventory shortages will persist
Market fluidity will remain constrained
Affordability challenges may continue

In short, the housing market cannot function efficiently without movement at every level—and right now, that movement is being restricted.

Final Thoughts: A Structural Issue, Not a Short-Term Trend

The lack of downsizing options is not a temporary problem—it is a structural issue that is reshaping how the housing market operates.

For buyers and sellers alike, understanding this dynamic is critical.

At Elevate Real Estate Group, we continue to monitor these trends closely, helping clients navigate a market where supply is influenced not just by demand but also by homeowners’ ability—or inability—to make their next move.

Research completed by Remax Canada