This past year has seen a consistent pattern of household downsizing in developed countries such as Canada, the USA, the UK and Australia. However, I expect this trend to increase and accelerate in 2019 for three important reasons.
These three external influences are listed in order of increasing strength with the strongest one listed last.
The demographic bulge of the boomer generation will lead to a natural increase in the number of downsizing households as the population is faced with the usual limitations of aging. There are still a surprising number of elderly homeowners who wish to “age in place” for a variety of reasons. However, even those who wish to do so may find that necessity eventually changes their plans. As the percentage of elderly rises in these countries, the need for downsizing also rises. Watch for a combination of demographics and the changing economy (#3 below) to be a catalyst in 2019.
Social & Tech Trends
Millennials have had a big influence on other generations, including seniors, in their attitudes and practices regarding possessions. The impact of minimalism should not be minimized. (Pardon the pun.) Seniors are now much more aware that “the kids don’t want your stuff”. Once excess stuff is reduced, excess space becomes obvious, thus encouraging downsizing. Changing tastes and a dwindling interest in items once considered antique bolster the argument for downsizing.
Technology has enabled downsizing on a scale not envisioned a generation ago. The digitization of printed media including photos, books and all written material has made a huge reduction in the amount of space allocated to storage in a typical home. Even sentimental articles of clothing can be digitized by photographing them before they are gone. For example, my wife gave away her custom wedding dress a few years ago when she came to the conclusion that it would do more good on someone else rather than hanging in a closet taking up space.
A quick survey of the economic landscape reveals a growing number of economists, pundits and investors who believe that the major markets including stocks, bonds and real estate have peaked. Others believe there is still some strength left in these markets for another year. Regardless of whether a major change occurs in 2019 or 2020, depending on ever-increasing home values to fund retirement is not a good strategy. Upturns in interest rates, the CPI and the introduction of new legislation such as a carbon tax also chip away at the ability of boomers to remain in their traditional, single-family homes. Downsizing can quickly become an urgent necessity, not a leisurely choice. An upswing in carrying costs for a home might be a tipping point for some.
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Q. What do you anticipate in 2019?
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Unless otherwise credited, all posts are happily authored with a quill pen …
Paul Ferri, Broker, ASA (Accredited Senior Agent)
RE/MAX Unique Inc. Brokerage*, Toronto, Canada
*Each office independently owned and operated