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Buying up – why?

Traditionally, some couples once their kids have finally left home, decide to sell the old homestead and possibly downsize to a smaller home – even a condominium and perhaps even buying a small get away condo in a warmer climate to smooth out the edges.

Today, there are those who are buying up. Buying the most expensive home that they can afford and then when the time comes, sell it, take out the equity and live off the income.

Why? Perhaps during their working life they were self-employed and their RSPs do not look as if they’re going to provide much, if any income to allow even a modest lifestyle in their so-called golden years. Or they had a pension and want to supplement it so when they finally do retire everything will be taken care of – and then some.

There are many people who are just not confident that whatever provisions they have made for their retirement will not be enough.

Generally, real estate, long term is a safer form of investment saving. Traditionally, you make monthly mortgage payments to reduce the principal of the loan to the point that when the home is sold, the mortgage has either been eliminated or is so small and the equity is sufficient to cope with future life decisions.

This buying up process while sound on paper, may only benefit some. But ultimately, it may create an unexpected void in the market in years to come. Imagine a glut of expensive homes available but at prices most homeowners looking to buy may not afford. Then what? Prices fall and the new buyer benefits and the individual(s) with plans of retirement may have shot themselves in the foot!

Some plan.

If you are risk averse, let your home’s equity work for you. Downsize. Purchase that waterfront downtown condo and rent or buy a condo in a warmer climate. Slow and steady will always prevail.

Talk with a professional and experienced realtor such as Mary Bateman. Mary can help you navigate unchartered waters. Call 705-722-7100 or look up www.marybateman.com.

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