As the children have grown and moved out, many homeowners find themselves with extra space that is often more burdensome than beneficial. This situation creates an opportunity for retirees to consider downsizing to smaller, more manageable living spaces like condos or bungalows, allowing them to save financial resources. However, recent trends indicate that the idea of downsizing has become increasingly challenging due to various economic factors affecting the real estate market.
Real estate experts have noted that many older Canadians are putting their downsizing plans on hold amid concerns such as falling home prices and limited options in the market. Tim Syrianos, a broker and owner of Re/Max Ultimate Realty Inc. in Toronto, highlights that although the conversation around downsizing is growing as the population ages, many retirees are hesitant to move because suitable smaller housing is hard to find.
A survey conducted by Re/Max Canada, which included over 1,500 adults from March 30 to April 1, found that only 10 percent of Canadians plan to move to smaller homes in the next decade. Among those aged 65 and older, this figure drops to just 16 percent, with the majority (57 percent) intending to stay in their current homes. Furthermore, many potential downsizers express frustration about the lack of available housing tailored to their needs, with nearly half the respondents citing low availability in their communities and eight percent reporting no available options at all.
Syrianos attributes this sentiment to long-standing issues in the housing market, where there hasn’t been a sufficient number of smaller, appropriately designed homes to meet the demands of retirees. He points out that many recent developments—often in the form of 450 to 550 square-foot condos—have not adequately addressed the needs for downsized living space.
The broader economic landscape plays a significant role in this scenario. The Canadian housing market has witnessed a decline over the past year, partially due to global trade tensions that have raised concerns regarding affordability and job security. As a result, home prices have decreased from their post-pandemic peaks, although they remain significantly higher than in previous decades when many retirees first entered the property market.
Ben McCabe, founder and CEO of Bloom Finance, emphasizes that the decrease in home prices compared to 2022 highs represents a major obstacle for potential sellers who now need to be cautious about the timing of their move. Marco Pedri, a broker with Shoreline Realty, corroborates this observation, noting that many seniors are uncertain whether it is the right time to downsize and are evaluating their financials carefully.
The financial implications of moving, referred to as "friction costs," are further dissuading seniors from taking the leap. McCabe estimates these expenses—including Realtor fees, land transfer taxes, and moving or renovation costs—can take up to 15 percent of home sale proceeds. In addition to lingering concerns about home prices and moving costs, some older adults are choosing to postpone their relocation plans to provide financial assistance to family members, which exacerbates the strain on their retirement resources.
Research from Bloom indicates that supporting family members has impacted retirement savings for three-quarters of seniors surveyed. McCabe notes that this financial strain can make their initial downsizing plans less appealing, particularly as many older Canadians live on fixed retirement savings.
Despite the current pause in downsizing intentions, McCabe expects this trend may alter as condominium prices in cities like Toronto and Vancouver decline due to an increase in available supply. A longer-term trend towards downsizing might emerge as Canada's population continues to age. According to a 2024 report by Statistics Canada, nearly 25 percent of the Canadian population will be over 65 by 2030, highlighting the growing demand for suitable housing accommodations.
Both Syrianos and Pedri anticipate an eventual increase in seniors seeking to "rightsize" their living arrangements. Pedri suggests that some individuals may prioritize their lifestyle needs over market conditions, indicating that while the market may not currently favor selling, personal health and maintenance responsibilities could compel them to move sooner rather than later.
As the conversation about downsizing continues, it remains evident that while financial and market conditions pose challenges, the aging population's need for adequate housing solutions will only grow more pronounced in the coming years.
