Rusting in place

Regular addicts will recall a recent post on downsizing, Aussie-style.

Those crafty Australians let ancient citizens (over the age of 55) dump their family homes and keep up ot $600,000 per couple to stuff into their TFSA-like superannuation retirement scheme. where it can grow tax-free and be taken out later to live on (also taxless).

The idea is simple. Give an extra carrot to the wrinklies to depart their digs and free up residential real estate for their whiny, needy children.

We also told you about the latest stats form the US, where realtors report seniors are, in fact, selling lot of real estate. That’s the good news. The bad? They’re buying other properties of almost the same size. Damn Boomers. They never learn.

And in Canada?

Meh. Not what the demography dudes expected.

In the next four years an astonishing 25% of the country will be over 65 years of age. Yes, plastic knees and hips everywhere, Viagra vending machines in the subway, thirsty underwear ads filling the airwaves and old people driving at half the speed limit, making living speed bumps.

Logic tells us a ton of them should be cashing in on the windfall equity in their homes to finance their petering lives, and in the process turning over those four-bedroom suburban palaces to the kiddos. But this is not happening. Surveys show about half of the oldies plan to stay put until they pass their best-before date and just 16% have a plan to sell and buy a smaller place or (gasp) rent.

Why?

Mostly people are lazy and comfortable, hate selling, despise moving (and realtors) and feel zero social obligation to help younger families shunt into their space (despite rhetoric to the contrary). ‘Aging in place’ is the new mantra – even when it means keeping most of their net worth locked up an asset that pays nothing and costs a bundle to maintain.

Also keeping them in place is the cost of selling, then of buying. Real estate commissions, legals, moving, repairing and staging take a big bite out of sale proceeds. And, if buying a small place, there are more costs involved, including paying a lawyer and forking over land transfer taxes.

Meanwhile, we all know the housing market sucks so anyone listing is likely to get a crazy-eyed, low-ball offer from some juvenile vulture who wants to score, then go on Reddit and caw about goring a Boomer. Yuck.

Finally, if you sell, whaddya gonna buy?

In the big cities, apart from those teensy condos, there are precious few smaller, affordable homes. And most wrinklies want to live in an urban setting – close to the doctor, the pharmacy, grocery market, vet and beer store.

So, no wonder we’re here. Stuck. Millions of people in just as many houses that are too big, too costly, too inefficient and too scary to leave. The feds say Canada lacks about four million dwelling units. That’s probably an exaggeration, but time will tell.

So what should rational people do? Wait for the real estate market to recover in order to increase the unearned profit? Or is that taking a risk, because things might always go south? Is downsizing really an option in a country where absolutely every form of real estate in demand markets is insanely priced – even after the recent correction?

Well, we’ve staked our ground. And we’re sticking by it.

Today’s homeowning seniors are sitting on some of the largest tax-free capital gains in Canadian history. Yes, prices have dipped by a fifth or even a third from the 2022 high, but a lot of these folks have owned for far longer than the last four years. Their return on initial investment is humungous, perhaps never to be replicated by future gens.

Yes, selling and moving is a pain. Yes, you might get a better price in three years. And, yup unlocking the equity, investing it and living off the returns is unfamiliar, but also practical and wise.

Many oldies who sell, invest and rent can end up in a better home than they moved out of. Household incomes can easily double for these seniors. It’s a far better option than considering a rapacious reverse mortgage or leaving a house to a child who may hate living there and wonder why you didn’t fork over cash instead.

But all that is logical. People are emotional. And we pay dearly for that humanity.

About the picture: “Hey Garth, still reading this blog daily for the past ~15 years! Keep the excellent content and dog photos coming!” writes Peter in the Middle East. “Here’s one to replenish the supply. This 1 and a half year old pup named Crosby is our first family pet and is beloved by us all. He enjoys sniffing out the other urban dogs here in Amman, Jordan!”

To be in touch or send a picture of your beast, email to ‘garth@garth.ca’.

Source: https://www.greaterfool.ca/2026/05/04/rusting-in-place/