Seniors aren’t selling their homes

The Financial Post had an article on this topic and I’ve shared a few points with my “anecdotal” thoughts below.

Is it true that seniors aren’t selling their homes?

The article had this quote: Statistics Canada found “seniors are less likely to move than the general population. In 2016, only 5.5 per cent of seniors 65 to 74 years old, and 4.7 per cent of those 75 years and older had moved compared to 13 per cent of the general population in the previous year.”
In my financial planning meetings, I have found this to be true more often than not – people want to stay in their homes for as long as possible.

Will this continue?

I expect it will – we see younger demographics move far more often and for different reasons (work, life event, to fit a budget or even to climb the property ladder). That’s not to say these things don’t happen to seniors but they tend to happen to a lower percent of the population.
Given today's higher cost of housing, we have found most millennials / Gen-X clients have moved more times than previous generations at the same age.

“I’m going to sell my property and pocket some money!”

During the planning process, we hear the “I’m going to bank some money” argument a lot. In practice, I find it challenging for seniors to downsize and come out with money on a move (especially if they want to stay in the same neighbourhood). In my experience, people tend to end up with a smaller, nicer version of what they were in before. Even with a lower sticker price, there isn’t usually much left as move-related transaction costs can add up, ranging from 5% to up to 10% when when you factor in the costs of selling a home, land transfer costs, moving, renos, etc.

I’m going to live in a condo!

Transitioning from a detached home to a condo can be tough. You’re taking a lifetime's worth of possessions and narrowing them down to fit in a smaller space. For some people this can be easy, for others it's very hard.
On top of property taxes (and in some cases a mortgage), condos also have maintenance fees. These costs can add up, especially if you’re on a fixed budget. A lot of clients run the math and say “it is cheaper for me to stay in my home, pay someone to cut my lawn/shovel my snow vs. paying the monthly condo costs”.

What if you need health care?

This is where planning needs to come in. With every passing year there are more options for home health care. I find a lot of retirees believe they may need to move into a retirement home when their health starts failing, but that isn’t always the case. I remind people in these situations that although your health care expenses may be going up, they are normally offset by decreases in other discretionary spending (like travel, cars, etc.).

What if you need the money?

There are different options for those who need money but want to stay in their home:
- You could look at a reverse mortgage
- We’ve seen people sell their house and then rent it back (my neighbour actually did this)
- You may have other borrowing options
- Every situation is a little bit different - it is important to review your options with a financial professional.

What should you do?

There is no perfect answer to this, communication is key. Make sure you talk to your family, friends and financial planner to find out/discuss your options. From there you can make the right decision for you.

Here is the original article: