I believe that the current pandemic may be a catalyst for many seniors and babyboomers to downsize their homes in the coming months and years. The income and/or financial portfolio shock experienced by millions will force a rethink around the personal finances for millions near or in retirement.
What's become clear during this health and economic crisis is the precarious cash flow of many households. The fragility of monthly budgets has come to light and confirmed what many debt surveys had been showing with respect to many people only being a couple of hundred bucks away from insolvency each month.
It is a great time for seniors, baby boomers and others near retirement to revisit their financial plans. For many of these people, equity in their homes (often single-family detached) comprises the vast majority of their net worth. And this is often amplfied by ownership of rental property. But too often, there is a lack of adequate monthly income to cover general life expenses. In other words, the rapidly increasing housing markets, especially in the Vancouver area, have made many households house rich and cash poor.
However, in periods of economic stress, it becomes clear that liquidity and cashflow take on great importance. For example, houses can quickly become illiquid when markets freeze up and sales activity comes to an abrupt halt, much like we are witnessing right now.
For a classic ilustration of such a situation, read this case study from the Financial Post:
Real estate investing built this couple’s wealth — now selling real estate can secure their retirement
There are many great options for residents within the Fraser Valley markets to downsize from say a single family detached home, into a nice townhouse. Similarly, if you live and own a home in one of the relatively more expensive markets like Vancouver, Burnaby or Richmond, moving to the Fraser Valley can be a great advantage to unlocking home equity. In other words, downsizing or relocating to less expensive markets can unlock precious home equity that can be converted to a financial asset to help provide liquidity and cash-flow to cover your living expenses. This is especially important to those who lack an adequate pension to fund their retirement.
Contact me today to discuss your potential options to downsize in cities like Surrey, Langley or Abbotsford. Exploring options early can help secure a comfortable retirement living for you.