Saturday, Dec 21, 2019
Volume 28 Number 51
Phone: 604-502-6100
Fax: 604-501-6111 Email: voicerealtyads@gmail.com
Baby boomers have made a fortune on real estate here are three reasons to consider cashing out now Beware the belief that real estate prices will continue to climb at anywhere near the rate we have seen over the past 20 years Long-time Canadian homeowners have benefited from declining interest rates and increasing home prices. As baby boomers, currently aged 55 to 75, continue to transition to retirement, they will be faced with decisions about whether to and when to downsize or sell their real estate. Many boomers would highlight their home as their best historic investment, better than RRSPs in some cases. This may be a failure of the retail mutual fund industry as much as it is a hat tip to home ownership. Real estate appreciation over the past 20 years in each of Canada’s largest three cities — Toronto, Montreal, and Vancouver — has outpaced that of New York, Los Angeles, and Seattle, according to data from Better Dwelling. The most recent Royal LePage Boomer Trends Survey found that only 41 per cent of boomers intend to downsize. There are plenty of reasons to sell your real estate in retirement, and I would like to highlight three that have arisen recently in my practice as case studies. Names have been changed to protect privacy. The Cottage Owners Carol and Ted are in their 60s and Carol is about to retire. She has a defined-benefit pension plan, and Ted has a RRSP he has contributed to diligently. He expects to work for a couple more years. They rent a condo in the city and own a valu-
able cottage on a lake. They enjoy their time at the cottage but acknowledge they will not use or keep the property forever. They feel like it has been a good investment and want to continue to benefit from further growth in the value. However, they still have a mortgage outstanding on it. In many cities across the country, young people are having a tough time affording homes, let alone second properties like cottages. Airbnb has also made it easier to find cottages to rent for a day, a week, or a month at a time. About 5,000 baby boomers retire each week according to Statistics Canada. As they age, many will be selling their cottages. As they die, their children will be inheriting those cottages. Will children of boomers maintain two properties, in some cases co-owning cottages with siblings, or sell those cottages to pay down their own home mortgages? My guess is much more of the latter than the former. I know there is only so much waterfront real estate to go around, but there are also only so many potential buyers to purchase the coming flood of vacation properties. My advice to Carol and Ted was to beware the belief that real estate prices will continue to climb at anywhere near the same rate we have seen over the past 20 years. Selling their cottage would allow them to pay off their mortgage, supplement their retirement savings, and simplify life as they transition to retirement.
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