Selling the family home is a standard step for many boomers planning to downsize – but what happens when it is profitable to sell but not economical to buy?
In today’s market the power is with the sellers and many are reluctant to take advantage because they do not want to be on the other (buying) end of things. The solution? Sell your home for top-dollar and rent short-term to enjoy flexibility while you wait for the market to cool.
Rental Prices Remain Steady
According to TREB, the average rental agreements facilitated by REALTORs® for two-bedroom units in Toronto went up by 4.1% last year while the average sale price for all home types went up 17.7%.
Renting is generally more affordable than owning a home. Even if rental prices may match or exceed your current mortgage, take into account the absence of property taxes, insurance, and repair and maintenance costs. Find a place to rent that is affordable for you and when the time comes – re-evaluate the market and decide if buying again is the right step for you.
Your Home Could be Worth More Than You Think
You may be shocked to find out how much your home’s value has increased over the years. If you live in a desirable neighbourhood, you can almost guarantee a tidy profit that will help with your retirement goals while allowing you to make other investments. Websites like REALTOR.ca allow you to view listings for the homes available for sale in your neighbourhood and see what the asking prices are. If you find a home comparable to yours, you can get a good idea of what to expect. If you are intrigued and want more information, click here for a free home evaluation.
Invest the Money from the Sale of Your Home
Interestingly enough, in a study conducted involving 1,500 homeowners aged 50 plus – half of the participants said they had never considered selling their homes to generate retirement income. Selling your home will allow you to cash in with an amazing ROI and put the money towards other investments. The main benefit of remaining in your home would be the potential to capitalize on future price gains but with the inflated prices we are seeing today, it is hard to say how much longer prices will climb. Speak with a financial advisor to figure out what types of investments will work for you.
Selling your home and renting will not only free up money, it will offer you the flexibility you could not have while owning a home. Renting allows you to make short term decisions and enjoy spontaneity and mobility. Maybe you will decide to rent a condo in the city for a year? Or maybe you will place your belongings in a storage locker and go on a trip of a lifetime. No matter what you decide – renting will give you the luxury of freedom and movement.
Renting is a flexible, low-risk short-term strategy while property values are at an all-time high. Take advantage of the current market and get top dollar for your home – then buy when the time is right.
Downsizing and retirement planning can get complicated and confusing at times – if you would like help sorting out the real estate side of things – give me a call at 416-921-1112 and I would be more than happy to help.