Wednesday, October 21, 2015 8:00 am ·  0 Comments
When it comes time to start thinking about downsizing your home in Oakville, there are several important things to consider. Where should you go? How much can you expect to gain from the sale of your family home? What should you do with the money from the sale of your family home? In this article I will explore these questions and provide additional information to help with your home downsizing decision-making process.
Reasons to Downsize
There are many reasons why you may consider downsizing your home:
In all of these cases, downsizing means moving to a smaller (and usually less expensive) home. The most common question that I get from my Oakville clients is: “where can I go if I want to downsize?” Fortunately there are several options for downsizing in Oakville, but we also need to consider how to manage the revenue gained from the sale of your family home.
The Benefits of Downsizing
While some people say that they want to stay in their family home and never move, experts tend to recommend that seniors should consider downsizing proactively. Waiting for a significant event or health issue to occur that forces a move is not an attractive alternative. When that happens you will be compounding an already stressful situation and then have to make a move under even more stress or duress. All of this can be avoided with some proactive thought and advance planning.
There are other benefits to downsizing beyond the money you will get from the sale of your house. Moving to a smaller house means less maintenance and lower costs to run the home itself. Moving to a townhouse or condominium will have an even more dramatic effect; outdoor maintenance can be greatly reduced or completely eliminated, freeing up time to enjoy life. If one of your objectives is to get away from the strains of clearing snow or raking leaves, then moving to a townhome or condominium is worth considering. Easing your daily chores and seasonal tasks can greatly increase your quality of life and enjoyment of all seasons.
If stairs are becoming an issue, then bungalows and condominiums are excellent options. There are even some townhomes worth exploring where stairs are less of a barrier versus what exists in a typical detached home.
Where Can You Go in Oakville When Downsizing?
“Where can I go in Oakville?” is one of the most common questions that I am asked by Oakville residents who want to downsize.
While most dwellings in Oakville are larger detached houses, there are pockets within town where suitable properties exist for downsizing. For example, if you still want to live in a detached house, we can search for a bungalow in West Oakville, Bronte and other areas where bungalows do exist (see my map of Oakville communities). Many of these homes have been renovated and are smaller than the average detached home built in Oakville in the 1980s. With the average price of a detached house in Oakville hovering around $1-million, it is possible to find a smaller home in some communities in a price range between $600,000 and $750,000 in the current market. A move like that would result in a nice bump to your retirement savings nest egg, along with the added benefits of lower taxes and overall costs.
Townhomes in Oakville are another great option for those who want to downsize and lessen their workload around the house. Townhomes offer outdoor space for those who are not fully ready to leave their yards behind. You can generally find a nice townhome in Oakville for somewhere between $400,000 and $600,000. An end-unit townhome is one of my recommended options for homeowners who want to downsize, but who still want to maintain much of the feel and options of their larger detached home.
If you are looking for the least amount of work with the potential for the highest influx of cash to your retirement nest egg, then moving to a condominium is worth considering. Within a range of approximately $235,000 up to $600,000 in Oakville there are several choices and options when it comes to condominium living. Condominiums are worth exploring if you think you may enjoy the low maintenance lifestyle that they offer. Many of these buildings also have excellent amenities as a bonus.
Opportunities for Savings Beyond Oakville
Many people who consider downsizing would prefer to stay in Oakville so that they can remain close to family, friends, doctors and so on. However, if you are willing to move a little further away, considerable savings can be found by looking within Burlington for similar properties.
If proximity to Oakville is not a primary concern, then even more savings can be found by looking further down the QEW towards Stoney Creek, Grimsby, St. Catharines and the Niagara area. If a move like that is something you would consider, then you could potentially see a big increase in your retirement investment portfolio once you sell your paid-off detached house in Oakville.
Managing the Income from the Sale of Your Property
Beyond deciding where your next home may be, there are important financial considerations to think about when downsizing.
Angela Galer-Grist is an Oakville resident and Investment Advisor with BMO Nesbitt Burns. She is experienced in managing income from the sale of family homes. I spoke with Angela to get her input on this issue. “On a regular basis, I have clients or their adult children coming to me with requests to manage the proceeds of the sale of their principle residence,” said Angela. “In some situations, the parents are working closely with their adult children to organize their finances. While some parents have downsized to a condominium, others are moving directly from their home into a retirement residence.”
Angela raises a good point about retirement residences. She noted that today’s retirement homes vary greatly in amenities and monthly cost. Many are like boutique hotels with a monthly fee that can range from $4,000 to $12,000. My own parents recently downsized into a residence much like this.
“We are putting these funds to work,” says Angela, “using the proceeds of the principle residence to design a custom, dividend/income generating and tax efficient portfolio. With interest rates very low–and expected to be lower for longer–most of my clients are moving beyond traditional guaranteed investment certificates into high quality dividend paying companies for tax efficiency. We are using low-cost exchange traded funds that provide attractive yields on a monthly basis. This will minimize us encroaching on the capital and will benefit future generations,” she added.
Angela raised an important point about considering the revenue from a sale as part of your overall wealth management and tax planning strategy. “Some clients wish to gift a portion of the proceeds of their principal home to their adult children or grandchildren to help fund education,” said Angela. “This can be an important part of my clients’ financial plan to lower future estate taxes and the generations of the family can benefit from the efficient transfer of wealth,” she added.
Where Do You Start?
If you are considering downsizing your home in Oakville, start with an assessment of your desired wants and needs in a new, smaller home. Next would be to have a valuation done on your current property to determine how much equity you will have for both your next residence and your retirement savings. If you are not sure how to begin and would like assistance managing the overall downsizing process or would like to learn more the options for your or someone you know contact a local realtor.