Page 20 - International Architecture & Design Sotheby's Summer 2016

designphile STRAIGHT TALK ON
DOWNSIZING
The pluses and pitfalls of letting go of the family home.
BY DOUGLAS GOOLD
Generations differ in their life experiences,
interests, lifestyles, buying power and expec- tations. Those at the front end of the long-dominant baby boomers, who turn 70 this year, are starting to worry about their mortality, and are downsizing in their quest for a simpler lifestyle.
Boomers famously have a sense of entitlement and they are rich, poised to inherit $1 trillion over the next two decades. They took pride of place in an insightful study released late last year by Sotheby’s International Realty Canada.
The study, entitled Top-Tier Generational Trends, compared how three generations—baby boomers, generation X and generation Y— approach luxury real estate in Canada’s four largest cities.
The report divided boomers into “upsizers” and “rightsizers.” (Instead of “downsizers,” Sotheby’s calls this segment “rightsizers” because “the reduc- tion of unfinished living space is less pronounced than the term would suggest.”) The upsizers were generally in their 50s with children living at home, while the downsizers were affluent boomers over 60, “at the stage in which lifestyle simplification becomes a priority,” and who had moved into “large, luxury condominiums with prestigious brands and addresses in order to access high-end amenities and elevated levels of service, privacy and security.” While this was the pattern for down- sizers in Toronto, Vancouver and Montreal, Calgary’s downsizers preferred to move into detached bungalows or townhouses, a reflection of their city’s real estate assets.
How closely do the study’s findings corre- spond with what brokers are saying now? To find out, I consulted the following three real estate professionals:
Penny Brown, senior vice-president–sales, Sotheby’s, Toronto. Brown is in accord with the report’s broad brush strokes, noting that her clients “are really tired of the maintenance that goes with a house. They are tired of carpenters, painters, and of
the ongoing gardening. Maintaining a large house requires somebody not only to pay for it, but to be around to organize it.”
She goes on to say that “while the condo market is booming, they are not building big enough suites.” Many clients want 1,700-to-2,000-square-foot units, but these units are not easy to find and will cost $850 to $1,000 per square foot. People think they can sell their house for $2 million and
find adequate accommodation for $1 million, she says, but they can’t.
In most cases, the kids moved out a few years earlier. “It is often a big emotional decision— a realization that times are changing, and the kids really aren’t coming back and you don’t need the space for grandchildren,” she says.
Brown estimates that only half of downsizers are happy with the decision they’ve made. “That is because those who bought off plans didn’t compre- hend what they were getting,” she says. She advises her clients to ask questions that might not seem obvious, such as whether or not a building is going up that could block their view.
Daniel Lynch, sales representative, Johnston & Daniel, Toronto. Like Brown, Lynch has trouble making the math work. It’s tough to downsize from a $3 million house in Rosedale to what was once a $1 million house elsewhere in Toronto, he
says, because real estate’s lower range has gained far more proportionately during the boom and has narrowed the advantage.
Workable options for some, he says, might include renting out that home in Rosedale and moving into one of the less expensive suites in a luxury hotel, while keeping a place in Florida, or buying an elegant triplex and renting out two of the units.
The bottom line? “The person with the $3 million house can’t cash out,” he says, “but the guy with the million-dollar house can. And our nieces and nephews can’t get into the market.”
Monique Badun, associate broker, Sotheby’s, Vancouver. Badun specializes in downsizing but has a different perspective from Brown and Lynch because of her experience in the hot Vancouver market. “Ninety per cent take money off the table, especially if they are retired,” she says.
But regardless of their good fortune, her clients are aware of the emotional side to selling the family home. “I tell them they are just selling the house, not their memories. They can’t stay there forever,” she says. “If they are in their late 70s or early 80s, I tell them to move while they still have a choice. Otherwise, they are one fall away from having the kids decide.”
Badun advises her clients to downsize for the right reasons and to stay within their comfort zone when choosing a location. She also tells them to be realistic about price, especially when selling, and about the amount of space they’ll actually need.
Asked if her clients who have downsized have any regrets, Badun replies: “Ninety-eight per cent wish they had done it earlier.”
Douglas Goold is a Toronto-based writer and commentator, and a former columnist and editor with The Globe and Mail’s Report on Business. He is the author of three books, including (with Andrew Willis) The Bre-X Fraud. Contact him at mail@iadmagazine.com.
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