WHEN TO SELL, UP-SIZE, MOVE ON.

When is it time to give up the family home?
By Garry Marr
Financial Post Nov 17, 2012

It’s a conversation certified financial planner Lise Andreana usually saves for last.

The Niagara-on-the-Lake CFP, who counts a large number of Baby Boomers among her clients, says plans for the family home are one of the more difficult subjects to address.

“It’s something that comes up all the time,” says Ms. Andreana, adding clients have to make the decision sometimes for financial reasons and other times for health considerations. “It’s a piece I leave until the last. I start with ‘sell the house never’ as a default position.”

Most people want to hold onto their home into retirement. The latest data from 2012 Census from Statistics Canada shows only about 2.6% of the population 65 and over was living in residences for senior citizens — about 72.3% of them women.

Living longer and working longer has people staying in their homes and, in some cases, even up-sizing by taking on more debt, says one real estate executive.

The evidence from StatsCan shows that in 2011, 66.5% of men aged 65 to 69 lived in a single-detached house compared with 60.4% for women. Once you get to 85, just 44.3% of men live in a single-detached house and 30.9% of women.

It’s clear the older we get the more likely we are to abandon the family home with the difficult decision being when to do it. A key trigger point is when kids move out of the house and you just don’t need the space.

“Many people move from more expensive areas to [cheaper ones] to save money too,” says Ms. Andreana, who suggests if you are still making mortgage payments into retirement you really need to think about moving because your income is gone.

The problem is adult children are moving back home like never before, forcing many Baby Boomers to keep that extra large house just in case their kids need a soft landing. StatsCan said about 42% of young adults 20-29 lived with their folks in 2011, a huge jump from 32.1% in 1991 and 26.9% in 1981.

That could be a reason to actually downsize, so your kids can’t move in. “I actually did that with my kids,” says Ms. Andreana, with a laugh. “I sold my three-bedroom house and bought a townhouse and said ‘guess what, your bedroom is gone. There is no where for you to go.”

Doug Norris, chief demographer at Environics Analytics, said Baby Boomers probably worry about their kids, but also the economic climate, which could keep them in the house longer. “It’s uncertain times,” says Mr. Norris. “But there comes a time where you do make that choice and it’s often driven by lifestyle.”

Mr. Norris says a new trend developing is downsizing to condominiums, but doing it by moving to the suburbs so Baby Boomers can be close to grandchildren. Condo growth in Toronto’s suburbs has actually been faster than downtown, even if the overall number of units pales in comparison. But in many Canadian cities high-rise development outside the urban core is negligible.

“You see a lot of care giving of grandkids being done by grandparents today and they want to be close to them,” he says.

In some cases those Boomers are actually taking on more debt so they can get into a larger home later in life.

“It is surprising to most people that instead of downsizing they are setting new standards for retirement living,” said Gurinder Sandhu, managing director of Re/Max Ontario-Atlantic Canada. “There is a significant number of them upgrading and actually assuming greater mortgages. It’s so unlike previous generations.”

It could have something to do with the housing boom. Surveys continually point to people believing their homes are a key part of their retirement package. If you believe that, leveraging a good investment can make sense.

The bottom line is Baby Boomers seem destined to stay in their homes as long as they can, says Fred Vettese, chief actuary of Morneau Shepell. “The vast majority (nine out of 10) of middle- to upper-income Canadians own their home at the point of retirement and almost all of them stay in their homes beyond retirement,” he says. “The slight percentage drop in ownership among those who are 70-plus probably reflects the portion of them who are 80-plus who move to retirement homes or move in with their children.”