DOWNSIZING THE CANADIAN DREAM HOME

download Housing costs are skyrocketing in Vancouver. Low down payment schemes, limited land base and the very high immigration rate all contribute to the real estate boom. With costs increasingly becoming unaffordable to the average Canadian, some locals go the practical route of downsizing their family homes to maximize value. This move typically involves families who have had their primary home for a significant amount of time. Apparently for them, their home is ripe for the selling either because (1) its current market value is already much more than its initial value; (2) it is located in a place the owner wants to move away from; or (3) the owner would like to utilize the revenue to acquire a smaller, more functional home. download By the looks of it, downsizing indeed has its own advantages—cost efficiency being number one. Selling a primary home seems practical as owners are able to avoid payment of capital gain tax on the sale.  Not to mention that owners can add in a considerable markup on the sale price depending on the current value appreciation rate. Arguably, getting a smaller home also increases productivity with lesser household chores. As with any big move, nonetheless, downsizing should be carefully planned as it doesn’t work the same way for everyone. Families from the suburbs wanting to move to downtown Vancouver should remember that while they are selling in a very competitive market, it would also mean having to buy into a much more competitive market. In this case, downsizing would make more sense for those living in downtown Vancouver who would like to move to where housing is more affordable. For those moving to the city, high-rise condominiums are becoming the most desirable properties. This is especially true for millennials wanting to have their first official home. Of course, having a new condo in a first class neighborhood is one thing, but it might not be sustainable for the typical, budget conscious yuppie. While selling a family home may rid you of maintenance costs and reliance to public transport, owning a condo unit comes with enormous monthly association dues that may not be very practical in the long run.  
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CONSIDERATIONS

It is important for downsizers to have a realistic expectation on the worth of their primary residence and the costs associated with the sale. You can base your estimates on the Home Price Index (HPI), but if you’re not very sure, seek third-party evaluation to ensure you don’t overestimate. Consequently, you must take into account real estate services (brokers or movers, for instance) and the overall cost of building or buying a new home. Keep in mind that all of these will eat into your sale revenue. If you are the sentimental kind, chances are you would find it difficult to say goodbye to the huge dining hall that hosted dinner parties during your student years, or to the childhood bed you’ve shared with your first best friend. It can be an emotional decision, and postponing the sale might help until you’re fully decided. Better yet, try not to take it personally if you can.
screenshot2016-02-19at9-11-40pm Family is another very important concern when getting a new home. Do you plan to raise more kids? Is the land or floor area enough to support your family’s growth? Residents who jump into the bandwagon without careful thought may eventually realize they got the wrong choice of investment. They often end up redoing the whole process and getting something bigger. In worse cases, savings from the original sale has been depleted, which means bringing out money anew.
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