Is it time to Downsize?

We are often asked by older clients if now is the right time to sell their large family home and downsize into a condo or a townhouse. Not only are there financial implications to consider but emotional ones as well.

Market Prices:

As you have probably read in the news, this is a “seller’s market”, meaning sellers are often presented with multiple offers and may even sell their home for well above asking price. The real estate market continues to be hot and may continue for awhile as interest rates stay low. Once you sell your home though, this now puts you as the buyer, the one competing for that next property with multiple offers on the table which can be extremely frustrating. Are you prepared for the real estate game?

Often, the goal of downsizing is to create a financial windfall in retirement that provides additional cash flow by which retirement lifestyle can be accommodated. It is important to manage this windfall in a tax efficient portfolio. Just remember, low interest rates are good for those who hold mortgages but provide a poor return for savers of capitals.

Condo or Townhouse?

No one can ignore the amount of construction going on in downtown Toronto right now. It seems that every other corner, has a new, fancy condo going up. The inventory seems to go quickly and the prices are getting higher and higher (supply and demand) and the spaces seem to be smaller and smaller. For example, according to – a resale condo with approximately 450 sq. ft in downtown Toronto, goes for approximately $265 000. Maintenance Fees are not included and would cost approximately an extra $263 per month.

Things to consider before purchasing a condo:

  • Is entertaining important to you and will you be able to entertain friends and family comfortably? Is there a party room available and at what cost or inconvenience?
  • Maintenance and Condo Fees – these typically increase each year as the building gets older. Will you be able to budget for these rising fees?
  • To what extent will you have to sell or give away your belongings in order to accommodate this downsize? Storage lockers typically come at a premium.
  • Will you have to accommodate change in transportation as parking spaces usually come at a premium.
  • Are you comfortable giving up your gardening, yard or outdoor space?

Some benefits to condo living could be:

  • No outside maintenance (shovelling snow, cutting grass, gardening)
  • You can leave your condo as you travel without having to worry about someone looking after the maintenance of your home.
  • Normally, there are no major expenses at once (ie. new roof) so it could be easier managing on your limited budget.

Townhouses may be a nice alternative and compromise as you will typically get larger space than in a condo and therefore not have to part with some of your belongings. There are condo type townhomes available where your lawn, roof and all common areas are taken care of, or “freehold” townhomes where you would be responsible for these things, much like a regular home. At this stage in your life, what would be your best fit?

Are you Emotionally Ready?

If you are like the majority of people, you may feel very attached to your current home. Were your children raised there? Did you share every holiday together at the family home? Do you enjoy the neighbourhood and like your neighbours? Are you ready to change your lifestyle and change the comforts of your home?

If you are thinking about moving in the near future, we’d be happy to talk about finances and perhaps give you some perspective about your choices and also to assist in calculating a meaningful cash flow projection on any financial windfall.


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