Many people climb the real estate ladder with the intent of one day selling and using the proceeds to fund their retirement.
Most of us start out renting, move around, maybe own a condo or townhouse, and then move to a family home and then again to something further up the ladder. This has been the dream of many for home ownership.
Later in life, it is often in the financial plans to sell the larger family home, put some money from the equity into savings, and move to something smaller that is easier to manage and allows for aging in place. This is called ‘the Downsize’.
The problem is that the vision of what ‘the Downsize’ will look like and the reality of real options are very different. This difference turns the ‘the Downsize’ into a myth. I have had the misfortune of dispelling this myth to many families.
The Options
As people plan for their retirement years, they often look for home features that allow them to age in place and remain in their independent home for as long as possible. These features include single level homes with limited stairs and locations close to amenities and family.
Most people I have spoken to had expected their own downsize to be a move from their current larger family home, usually a 2 storey home in Calgary, to a smaller single level family home. A single level detached home in Calgary is called a bungalow.
A second option is a villa townhouse. This is an attached townhouse style design that usually offers a single level design and is usually structured as a condo corporation with bylaws, services such as landscaping and associated monthly condo fees.
The third option is an apartment also structured as a condo corporation.
When we price out the potential costs of these options, most people are shocked at both the purchase prices and the associated condo fees. The bungalow option and even the villa option has many times priced out as more expensive than their current home resale value and it sends people into a tailspin.
Families are left with the decision of making compromises they didn’t expect. Usually, next is a call to a financial advisor, family and some time to deliberate next steps.
Stay in the Current Home
Many families have opted to just remain in their current homes. This has often resulted in some renovations, hiring of service companies to assist with maintenance/landscaping and readjusting retirement plans. It is the ‘do nothing because we don’t know what else to do’ solution. It works until it doesn’t due to a fall, illness, other family needs or financial issues.
The Bungalow Option
Bungalow numbers are declining. The supply and demand challenges here going forward are going to be even tougher than they are today.
Older existing single level homes are regularly taken down in Calgary and replaced with multi-level semi-attached duplexes and recently quadplexes especially in inner city communities. These older single level homes usually need modernizing and it is more profitable to tear down and rebuild more dense home options. New zoning will most likely see these homes torn down and replaced with denser multi family options even quicker as years progress.
Take a drive around Bowness, Marda Loop, Dalhousie or any communities in the initial suburban ring around the city and see for yourself.
There are fewer new construction bungalows being built in newer neighbourhoods. Compare the number of bungalows in a community like Scenic Acres built in the 1980’s compared to Nolan Hill, built just recently.
I wish I could provide detailed data to show you the number of single level homes available over time but neither the City of Calgary nor the Province of Alberta provides this information. The available information only focuses on single family vs multi family statistics. If you find a source of this information please do let me know. The best way to see if just to look at homes for sale on realtor.ca. It is striking.
According to the Alberta Regional Dashboard , 40.3% of homes in Calgary were single family houses in 2021. The percentage of single family homes in Calgary greatly declined -28.6% in the last five years.
This statistic is for all single family homes, not just a single level bungalow style.
The Single level Villa Townhouse Option
Just like the demise of the construction of single level homes there are few single level villas/townhomes or semi-detached properties built in Calgary these days except for the luxury market. If you have over $1Million to spend on your ‘downsized’ townhouse villa there are options, but many homeowners are not considering spending 7 figures on a downsized property that meets their needs.
There are existing villas in more mature neighbourhoods, but past clients found the pricing higher and homes older than they expected. It made the prospect of selling their current home less attractive. The layered challenge was for clients that owned pets, especially dogs. Many complexes outright ban dogs on property while others allow only those under a 20 or 30 pound weight limit.
If the decision to move was about lifestyle, then families do have numerous luxury options. However, if ‘the Downsize’ is a financially driven decision, then the options are challenging.
The Apartment Option
In my experience, people looking to downsize were either ready and looking to move into an apartment or absolutely not there yet. It is a lifestyle decision as well as a financial one.
For those ready to make the lifestyle adjustment, the move is usually slow with an eye on just the right location, complex and unit with a lot of time spent on figuring out how to adjust life, furniture, possessions, cars and hobbies.
One of the main pros for the apartment choice is the lock and leave lifestyle especially for snowbirds, those people that spent their winters in warmer climates. There are also many age 55+ condo complexes in the city. This is a great option for seniors that want the social atmosphere, amenities, and community support available.
The apartment market is often not as varied as people would hope. There are a large number of compact units with fewer options for larger sizes and flexible bylaws. Apartments also have condo fees. When considering even a modest condo fee of $0.50 per sq ft then that a 1000 sq ft condo can easily cost over $500 a month in condo fees alone. Most are higher especially in complex with more amenities.
As mentioned, some people are ready for the lifestyle change, but others are very far from accepting the adjustment easily.
One of the biggest challenges is pets. Most condos, apartments, and townhouse complexes alike in Calgary, restrict pets. There are some that allow pets but finding one that allows dogs over 20 pounds is often a big challenge. I have had a townhouse condo corporation deny an application for a buyer to keep their 12 year old 40 lb dog in order to buy the unit.
Another consideration is rules. Some people really like rules. Some people really don’t like rules.
Retirement Home Options
I should also mention the retirement home option. I’ve recently delved into understanding this market specifically built to support seniors with options ranging from independent living units, seniors lodges and medically assisted care facilities. These are group home settings of various styles that offer additional services, meal services and additional care options. This is usually not ‘the Downsize’ so I wasn’t sure if I should include this category, but then decided to include it just from a planning and pricing perspective.
There are some government subsidized options for low income seniors, but wait lists are long and there has been an increase of private facilities in recent years with private tier pricing to match. Even this week the pricing issues made the news for one complex.
City Development and Planning
Even before the current housing crunch, the City of Calgary put forth administrative policy changes around community planning and housing density. This has only been accelerated by recent housing shortages.
Reading through the documents there is a lot of focus on density, but I haven’t found much context or response regarding single level housing, aging in place or planning for the demographic shift for the general market.
Two things need to happen. There needs to be a more thoughtful consideration of the number of people entering retirement age in the coming years. As well, there needs to be a review of the standard bylaws and structures that currently govern condo corporations.
From Statscan Population Projections:
“The proportion of seniors (aged 65 and over) in the population would increase from 17.2% in 2018 to between 21.4% (slow-aging (SA) scenario) and 29.5% (fast-aging (FA) scenario) in 2068. The increase in the share of seniors would be most pronounced between 2018 and 2030, a period during which all members of the baby boom would reach age 65 and over.”
The Myth Concluded
So I dispelled the myth and you may be feeling the feeling others have felt when long held plans and current options don’t align. Maybe contact your local government representatives to voice your opinions about housing and home planning. Or maybe time to talk to your financial planner and family and look forward to a new plan that works for you.