Cashing in My Equity, but Where Do I Go from Here?

With the average detached home in Kitchener-Waterloo now at $900,000, many people are thinking of cashing in on this seller’s market that we have been experiencing.  

In fact, we Realtors have been hearing such rumblings from many people for the last several years.  But, on the other hand, selling high is only part of the equation.  Everyone buying right now is also buying high.  You’ve heard the wise advice “Buy Low and Sell High”.  Well, I think most people already know that the concept of buying low doesn’t much exist in our area anymore.  

The folks thinking of downsizing need to live somewhere and what they pictured when they were thinking of retirement or after their children have all left their nest was moving to a smaller home and putting lots of money in the bank for their upcoming travels.  What we have seen in the last year or two is that some of the smaller homes, like little 1950’s bungalows that a few years back would have been what many of these Empty Nesters had pictured themselves buying and moving into, are some of the same homes that their grown kids (or people at the same age and stage of their grown kids) want to buy.  So, the competition that the downsizers are experiencing is very overwhelming.

The whole Mid-Century Modern design craze that so many younger people are drawn to for their first or second home may be swallowing up a lot of great options that their parents (or people at the same age and stage of their parents) were counting on buying.  It appears that many people just want to get into a detached home.  It doesn’t even have to be that elaborate, but when we already have so many moving into our region coupled with a number of different types of buyers competing for the same types of properties, we see a spike in certain sector of the market.

When Downsizers own homes that are above the average type of detached home, (in other words, homes worth well over the average value, either because of its size, location or the type of finishes), it usually isn’t such a problem for them.  

But, when Downsizers are coming from a modest detached home that may be worth approximately what the average detached home is selling for or less, and they’re simply looking for another freehold home a bit smaller, then the difference in values between the two properties may not be enough to merit them selling.  If this happens to describe your situation, don’t lose heart.  

Here are a few options that you may not have considered:

  • Do you need to live in Waterloo region?  Perhaps heading a bit out of town would be better for you financially.  
  • Or perhaps a different region (or province) altogether would be a nice change and a great financial move for you.
  • What about a condo?  There are LOADS of options!
  • Did you know that our area offers some beautiful homes in land lease retirement communities?
  • Some people are choosing to sell and buy a very small condo to rent out.  And they plan to return to it someday, but in the meantime, they can travel the globe.  (Let’s, for just a moment, imagine a world without Covid!)

Here’s another thought.  Is your home a little dated or a little tired?  Move-in ready homes definitely sell for much more in this market because most buyers are doing everything they can just to get into a home, let alone having enough saved up for renovations.  Perhaps investing a bit into your current home prior to selling will help you to generate a much higher sale price which will go a long ways in helping you to achieve your goals with your next move.

So, no matter your situation, there are options.  You’ve probably heard that you need to buy first and then sell in this market.  Some people downsizing are selling first to know what kind of budget they have to work with, especially when they’re talking about needing to hold some money back for their retirement.  If they do a long enough closing on their house sale, it gives them a bit of time to consider what option would be best for them.  

Just make sure that you don’t try to navigate through this crazy market unrepresented.  Get a good agent on your side to ensure you don’t make a move you’ll regret.  And let’s all think positive and hope that the worst of Covid will soon be behind us, so we can start living our best life again.  The best is yet to come.

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