Real Estate Expert: Baby Boomers Ready to Fly the Coop

By Ron Abraham Created: November 28, 2012 Last Updated: March 7, 2013
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As baby boomers shift into semi-retirement and retirement, and with growing costs of living, many may be considering downsizing to a smaller home, condominium, or townhouse. (Lisa F. Young/

As baby boomers shift into semi-retirement and retirement, and with growing costs of living, many may be considering downsizing to a smaller home, condominium, or townhouse. (Lisa F. Young/

From outstanding consumer debt and rising costs of living to successfully transitioning into semi-retirement and retirement, there’s no question that baby boomers face a number of challenges as they approach their golden years—with housing consistently arising as a hot topic.

It’s no surprise that housing is such a hot button, since so many Canadians have their life savings tied up in this single asset.

Not only are we attached to our homes financially, but emotionally; a home is life’s biggest investment, but also where we raise our families and spend time with loved ones.

As Canada’s large baby boomer demographic shifts into semi-retirement and retirement, many boomers are no longer interested in maintaining a large family home, and not to mention all that goes with it: from shovelling snow in the winter and mowing the lawn in the summer to heating and cooling rooms that are hardly ever used.

With property taxes rising all over the province, it may be time to consider downsizing to a smaller home, condominium, or townhouse to free up equity, supplement retirement income, and help reduce any debt (including outstanding mortgage debt) that you may be carrying with you into retirement.

Consider Debt and Lifestyle

In order to determine whether downsizing is the right option for you, it’s important to consider three things: your debt, your current lifestyle, and your future lifestyle.

When it comes to debt, mortgage debt in Canada has increased alongside housing prices, which may lead to financial strain in retirement.

Figure out how much of your debt you can pay off by looking at the principal owing compared to costs related to selling. Make sure to take into account other housing costs related to your new space (such as reduced property taxes and utility fees) to get a clearer picture.

If downsizing seems like a viable option, remember that condos have additional maintenance fees that can rise over time if the building doesn’t have a sufficient reserve fund in place. Ensure you discuss this with your Realtor so you get the whole picture.

Next, you need to consider your current lifestyle. How many rooms do you need? How long will the kids still be living at home? How often do you have overnight guests? How much stuff can you get rid of?

It’s important to consider what you’re willing to give up in return for a downsized space, including whether or not you still plan to host gatherings.

Looking at your future lifestyle is the final consideration in your downsizing decision. Do you have plans to travel after retirement? Are you maintaining more than one residence?

Perhaps a single-level home like a bungalow or a low-maintenance space like a condominium would suit your future needs better than your existing home.

Set Realistic Expectations

When it comes to downsizing, it never is just about the money. It is normal to be attached to your family home, especially if it’s where you raised your kids and where the kids and grandkids come to visit on the holidays.

If you do decide to move to a smaller space, you may no longer be the host for holidays and family gatherings. Remember there is a hefty emotional side to downsizing that goes along with financial considerations.

That being said, downsizing can be a great option if you are ready for it, and can enable you to live out many of your retirement dreams.

Just make sure you have a plan and set realistic expectations about the move and what your new life—and new home—will look like.

Ron Abraham is president of the Ontario Real Estate Association and a past president of the Toronto Real Estate Board. He has been active in the real estate profession for 45 years and is the broker of record with Prudential Lorimer Realty, Brokerage, in King City, Ont.

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