A survey by CIBC finds that while 41% of Canadian homeowners who plan to sell their home are simply interested in cashing out while prices are high, 62% are reluctant to sell their current home due to the high cost of buying another.
It’s another side to the housing affordability problem. Not only are prices keeping people from entering the market, they’re forcing owners to hold onto property for longer periods of time, further tightening an already low-supply market. According to the CIBC release, two thirds (67%) of baby boomers plan to sell their homes to downsize to a smaller home or condo.
Many boomers are worried about their retirement as the cost of living rises along with life expectancy. Collecting profits from selling a home is becoming a common way boomers are preparing for retirement to offset a relative lack of savings.
Meanwhile the report also highlighted that nearly two-thirds (63%) of millennial homeowners feel their mortgage and housing costs are making them cash poor. Over half (57%) are afraid that interest rates will rise and make it harder for them to cover their mortgage payments. Eight of ten millennial homeowners say they plan on selling their homes, however, despite concerns about affordability and interest rates, 43% of them responded that they plan to upsize to a larger home after selling.
There appears to be an interesting contrast between age groups as millennials are optimistic about being able to afford larger homes within the next 5 years while boomers are concerned about being able to afford smaller ones.