When Should Retirees Sell their Home?

When Should Retirees Sell their Home?

Photo: Alan Cleaver

As a retiree, when is the right time for you to sell or downsize your house? In many cases, new retirees have owned their homes for decades and seen it increase significantly in value. Many are depending on it to help fund their retirement choices as well. With all this talk about housing bubbles in Canada, how do you know when the right time to sell your house is?

The answer depends on the kind of retirement strategy you already have in place:

1.      Do you have other retirement income to cover your needs?

If you do not need the equity of your home to fund your retirement, you should not worry too much about timing the sale of your house. Emotional factors about the memories created in your family home, the stress of moving to a new neighbourhood and other “readiness” concepts should be explored instead.

2.      Are you planning to sell your home or downsize to help fund your retirement?

In this case, consider putting your house in the market within the next year if you plan to take the proceeds. Despite the fact that there is much controversy about a potential “housing bubble” and the future of the housing market, all that is guaranteed is the value of your house today. Selling now brings certainty (within a few percentage points) of the financial value of your home – and what you can count on for retirement planning and expenses. As with all financial questions and decisions, there is some value in certainty and guarantees. If you are going to sell anyway, sell now.

3.      Do you require the home equity to help fund retirement, but are not ready to sell?

If you do not feel forced to sell your house now, but you still need help funding your retirement, you should ensure that you have a sizable home equity line of credit available to you if you need it. This will allow you to draw money out of the equity in your home if needed and to wait until you are ready to sell.

For a different perspective, read and watch the video on the High Cost of Owning a Home.