Real Estate Value and Retirement

Don’t Count Your Chickens (or Square Footage) Before They Hatch

Don’t Count Your Chickens (or Square Footage) Before They Hatch

For Baby Boomers nearing or already in their retirement years, they may be planning to ‘cash in’ or downsize their real estate to fund their retirement. However, as the Canadian Real Estate Association reported, Canada is seeing a nationwide slow down in the property market. This means for many Baby Boomers, the ‘high point’ of the market may have passed, and this could impact retirement savings.

When calculating your retirement investments, the phrase “it’s wise not to count your chickens before they hatch,” comes to mind. If your retirement fund is dependent on the sale of a property, be wary of basing your predictions on current market prices – as the housing market can change quickly.


When valuing real estate growth, the rule of thumb for financial advisors is to utilize the inflation rate to calculate the future value of your property. However, Canada’s housing market has been booming for the last decade, with Vancouver and Toronto jostling for the top spot as the most expensive city in Canada. In these market conditions, real estate can be a lucrative investment option.

However, the property market is cyclical. In Vancouver, nearly $90b in equity was wiped off home values in the Lower Mainland in the past year. During this same period, stock markets have been positive: the S&P/TSX CDN$ composite benchmark from April 31, 2018 – April 31, 2019 was up 9.60 per cent and the MSCI World CDN$ composite was up 12.36 per cent.

The stress test introduced by CMHC on new mortgages has impacted property prices Canada-wide, along with provincial regulations, such as the foreign buyer property transfer tax.

It’s also interesting to consider, that over the long run, from 1975 to 2013, the stock market outperformed real estate, when comparing the House Price Index from the Federal Housing Finance Agency compared to the investment returns on the S&P 500.

Retirement investment:

Property is unique because it’s not just an investment, it’s a home. Consider when would be the best time for you to move – and that time could be before you retire. In Vancouver, we’re seeing more people move from the Mainland to the Islands before retirement. I am one of those people, and now enjoy the beauty of living on an island with a more affordable housing market.

In this scenario, people are able to invest the proceeds from their Mainland property in other investment vehicles and diversify their portfolio beyond real estate. Putting all your eggs in one basket can be a risky approach to investment. Diversifying your portfolio widely with lessen the risk and increase your chances of meeting your retirement investment goals.

Generational differences

Baby Boomers already in retirement who had planned the sale of a property as a source of income may need to re-evaluate their strategy. This could be by either holding onto the property for longer than planned or renting out the property as a source of income.

Baby Boomers nearing retirement that plan to release capital from their home should watch the property market closely. You may be wise to move before you retire, to release capital in your property at a time when the real estate market is on a high.

If you’d like to talk further about how real estate can work with your retirement saving plans, get in touch at

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