We all know the drill. You save up to buy a house. You maintain it over the years, watching as its value grows steadily. Then one day, when the time is the right, you cash in. You sell your home for a pretty penny (tax-free if it was your primary residence), move into a beautiful condo, and retire in style!
If you’re a homeowner approaching retirement, there’s a good chance you’re counting on this outcome. At one point, I was too! But the rules are changing. While there was a time when waiting for the value of your house to appreciate was your best move, that’s no longer the case.
If you’re planning to retire and buy a condo in the not-too-distant future, here’s what you need to know!
What’s happening with your biggest investment?
Remember how detached house prices skyrocketed in 2017? Of course you do. With all the news coverage at the time, how could any of us forget? Well, I’m going to level with you. We won’t be seeing the kind of price growth for houses anytime soon.
Let’s look at what’s been happening with the market recently. In July of this year (2019), the average price for a detached house here in York Region was $1,114,449.00, Compare it to the average price for a detached home in August of 2018 – which was $1,148,503.00. That’s a drop of $34,054.00!
I know what you’re probably thinking. Prices move and up and down sometimes. What’s the harm in holding onto my house a little while longer? I can tell you that waiting too long may be a risky strategy—one that could mean a lot less money than you’re expecting after you downsize. To understand why, you just need to know a little bit about what’s happening in the condo market.
Vaughan’s booming condo market
Downsizing is about maximizing your returns. That means selling your house for as much as possible—and buying that dream condo for the lowest price you can get. But how much are you likely to spend when you purchase your ideal unit?
When you get down to it, prices are about demand. And right now, there’s no shortage of people looking for decent-sized condos. For the most part, our parents’ generation waited to downsize—so a lot of seniors are just getting around to it now. Many professionals in my age bracket (on the verge of retirement) are also opting for that condo-living lifestyle. Even young families are looking increasingly at large units as a more affordable alternative to detached homes.
Here’s my point. Two-bedroom condos are in huge demand today, the way bungalows were 15-20 years ago. And we all know how that turned out. The value of bungalows increased—fast. A lot of homeowners were living in beautiful old two-storey houses at the time, and many of them were counting on downsizing into a bungalow one day. Unfortunately, that quickly became impossible. Bungalows rose in value quicker than those bigger homes—so downsizers moved on to condos. It happened to my parents!
Buying a 2 bedroom unit right now
So, how much would downsizing cost you if you did it today? Let’s take a look at what units in Vaughan are going for. Based on demand, I’m going to look at two-bedrooms that are around 1000 square feet.
First up, Villa Giardino. Before we get into prices, here’s what I love about this adult lifestyle community. To start with, it’s in Maple—my own backyard! Here you’ll find well-maintained common areas (great for socializing), landscaped gardens, and no shortage of fun activities planned. Residents also enjoy convenient bus trips to major grocery stores and medical service providers, which make it easy to get around and perform daily chores—without having to drive or be picked up.
In October, 2018, a 960-square-foot unit without a parking spot sold for $545,000. In August, 2018, a unit over 1000 square feet sold for $585,000 (again, without parking). The highest sale for the year sat at $610,000, with 2 parking spots.
Fast forward to 2019. Here’s what’s happening now:
The highest sale price for the building (in September, 2019) was $730,000. Five other recent solds (ranging from May to September 2019) fetched the following sums: $646,500, $655,000, $675,000, $695,000, $698,000 and $700,000. Two units even received multiple offers!
Villa Giardino is a wonderful place to live (due in large part to its social programs and access to transportation), the numbers above may be higher than you were expecting. And they’re only going to continue climbing.
Next up, another Maple gem. The four gorgeous buildings that make up Bellaria Residences sit at Jane and Rutherford Street. To give you an idea of what you’ll get here: we’re talking luxury—and one of the most beautiful lobbies I’ve ever seen! Looking at recent sold prices, two-bedroom units have been in the $600,000 to $700,000 range. The average for this square footage is 1000-1100 square feet) is $670,000—and one recently went for $749,999! Another great development, but the price tags are higher than a lot of buyers think they’ll be.
Now for one of Woodbridge’s finest. Right downtown, in the heart of Market Lane, you’ll find Woodbridge Avenue Condos. If I had to describe this development in two words, they would be “charming” and “convenient.” Within walking distance of this idyllic community, you’ll find local shops, eateries, cafes, banks—all the amenities you could ask for! Recently, sold prices for two-bedroom units here have sat at or above the $700,000 mark. One of these units actually went for $1,148,000!
In the years ahead, we’re going to see a lot more units selling for over a million dollars. While you might already be experiencing some sticker shock, you’re going to be paying somewhere in the neighbourhood of $650,000+ for a typical 1000-square-foot condo today.
The bottom line
I’m in the process of helping a client downsize. Although we started looking at units a year ago, they weren’t quite ready to take the plunge then. We recently circled back to condos in the same buildings, and guess what? We’re seeing increases of $100,000! Unfortunately, detached house prices aren’t appreciating in nearly the same way.
Here’s the cold, hard truth. Condo prices are appreciating a lot faster than detached houses—but that doesn’t mean you can’t get that nest egg you need. Just remember that timeliness is key. If you are wondering about downsizing or right-sizing and are curious about the market, I welcome that conversation. By taking this crucial step, you may be able to maximize the equity you’ve built in your home—and start your retirement off right!
If you or a loved have been considering rightsizing, I’d love to take a few minutes and talk. Whether you have questions or are ready to take the first step, I’m here. Give me a call at 416-550-7555 or reach out at Lisa@LisaSinopoli.com.