When is a Good Time to Downsize?
Wednesday Jul 28th, 2021
For years and years, you’ve been possibly raising a family, working to support them and pay off your mortgage. Now that “the kids” have all moved out (and for some of you, that includes former spouses!) and you’re embarking on your retirement, you may be looking around and wondering if you need all this space. Is it a good time now to downsize? Or should you wait?
There is certainly no guide or “standard” plan for Canadian “boomers” aging into retirement. According to a recent Royal LePage study, here are some interesting statistics:
- 75% of boomers own their own homes; 64% of boomer homeowners are mortgage-free
- 40% of boomer homeowners have at least half of their net wealth in real estate
- 52% of boomer homeowners would prefer to renovate their current home than move
- Of the 35% of boomers who are considering a primary residence purchase over the next 5 years, 56% say that they would consider moving to a rural or recreational region
- 71% of boomers say that “less maintenance” would be their primary motivation for downsizing
- 25% of boomer homeowners say that they have or would consider gifting or loaning money to their children to help with their home purchase (percentage goes up to 29% in Toronto and 34% in Vancouver)
If 75% of boomers own their primary residence but only 64% of boomer homeowners are mortgage-free, how are the remaining owners planning on paying their mortgages into retirement? Or is retirement not even possible? Could selling now allow you to retire earlier?
If 40% of boomers have at least half of their net wealth in real estate, are the 52% of those who would prefer to renovate cashing in their other assets in order to pay for renovations, putting even more equity into their principal residence?
We’ve worked with many families in this life transition – there are many factors to consider and the decision is not always easy. If there was a common theme amongst these boomers, is that they wished they had done it sooner – moved closer to family, downsized to reduce maintenance and avoid costly unexpected repairs, freed up equity to travel and pursue other endeavours, or entered into a snowbird lifestyle for part of the year……whatever the goal was, it gets more challenging to do, the longer you wait.
So what is your plan? 16% of Ontario boomer homeowners own more than 1 property. Some own a property that they intend to eventually downsize to, but in the meantime, have a tenant paying off the mortgage – this might be a great option for some.
59% of Ontario boomers would seek out a detached home if they were to buy, however location, lifestyle and health considerations may come into play….those who are not ready or interested in condo living may be looking for an alternative like a detached bungalow, but even those are becoming harder and harder to find in Ontario as a typical bungalow lot is attractive to builders looking to either build a 2nd storey or to split the lot and build 2 properties.
Lastly, and not covered by the survey, we’ve seen a surge of younger buyers who are factoring in the eventuality of having aging parents move in with them, when making their own purchasing decisions. Whether that is a basement apartment, bedroom/bathroom on main level without needing to negotiate stairs, condo options nearby a house purchase when deciding on neighbourhoods, or even a separate auxiliary unit on the property – we’ve had conversations about all of these options in order to accommodate those considering the future needs of boomers in their families.
Whatever the reason for wanting to downsize, making a plan will help with figuring out timing, location, and trying to reach your goals, whether it be travel, financial, lifestyle or health. We are happy to discuss your options and arm you with all of the real estate information needed to set things up for you or your loved ones in their retirement years! What an exciting transition!