Feb 10, 2026
If you bought a home in the early 1990s, the process probably felt slower and simpler. You found listings in newspapers; offers were handwritten; mortgage rates were higher than today’s — and bidding wars were rare.
More than 30 years later, many retirees are selling longtime homes and stepping into a market that looks very different. While homeowners may be sitting on significant equity, today’s market is shaped by higher borrowing costs, cautious buyers and more complexity around timing and pricing.
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Consider the hypothetical story of Mac and Sue, both 67. They bought their four-bedroom suburban home in 1994 for $145,000. The house is fully paid off and could sell for about $525,000 today. They also have about $1.3 million saved across their retirement accounts and plan to retire this year.
Their goal is to downsize, and move closer to their adult children and grandchildren. They are interested in a nearby home that is listed for $425,000. On paper, the plan seems simple. But in today’s housing market, the details matter more than ever.
So, what should retirees like Mac and Sue understand before they make their next move?
Is the timing right?
Purchasing a home today is different than it was in the 1990s. Back then, sellers faced less scrutiny and buyers had limited information. Now, buyers show up with detailed price histories, comparable sales, inspection reports and affordability calculators. The extra transparency has changed how much leverage sellers really have.
Market conditions also matter. Current housing forecasts suggest mortgage rates may ease slightly compared with last year, while home prices are expected to rise modestly. Sales activity remains relatively soft and more listings are coming onto the market, pointing to a balanced environment rather than a clear seller’s market (1).
For retirees who can buy their next home with cash, this kind of calmer market can be an opportunity. Less competition may make it easier to negotiate price, conditions or timing. But for retirees who need a mortgage, even slightly lower rates may still feel high compared with what they’re used to — especially if they’re moving from a fully paid-off home to making new monthly payments.
That’s why some retirees choose not to rush. Keeping a paid-off home can offer stability, predictable housing costs and protection from interest-rate swings. If your current home still works for your lifestyle and mobility needs, waiting to downsize can give you more time to plan your move on your own terms.
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Downsizing sounds simple, but there are costs
Downsizing is often considered an easy way to cut expenses — and sometimes it is. A smaller home can mean lower utility bills, less maintenance and fewer costly repairs.
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But many retirees are surprised by the costs that come with moving. Selling a home usually involves real estate commissions, legal fees, repairs, staging and moving expenses. On the buying side, there may be new costs such as condo or homeowner’s association fees, higher insurance premiums and ongoing maintenance charges. Property taxes can also be higher than expected, depending on the type of dwelling and its location.
Logistics can add to the bill as well. If sale and purchase dates don’t line up, retirees may need to pay for temporary housing or storage for their belongings. The more years you’ve lived in a home, the more likely you’ll have these transition costs.
And finally, there are tax considerations. In Canada, the sale of a principal residence is protected by the provincial sales exemption, which eliminates paying capital gains tax. However, the rules can be complex, especially if the home wasn’t your main residence for every year you owned it, or if part of it was used to earn income (2). It’s worth understanding how the exemption applies before you sell.
Bottom line
Downsizing in retirement isn’t only a real estate decision — it’s a financial and lifestyle choice. While today’s housing market may offer calmer conditions and solid equity for long-time homeowners, higher borrowing costs and moving expenses can quickly eat into the benefits.
For retirees with a paid-off home, rushing to downsize isn’t always the smartest move. Taking time to understand the true costs, tax rules and financing trade-offs can help ensure your next move supports your retirement, rather than complicating it.
- With files from Melanie Huddart
Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
TD Bank (1); Government of Canada (2)
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Chris Clark is freelance contributor with Money.ca, based in Kansas City, Mo. He has written for numerous publications and spent 18 years as a reporter and editor with The Associated Press.
