We have long been saying one of the uncalculated social and economic costs of the Ontario government’s rush to impose wind power generation on this province will be the wide-ranging effect of property value loss. Ontario studies show property value loss for areas near wind power developments can be in the 20-50% range (if not higher). What will be the effect of that, rolling out across the province, along with the wind “farm” approvals? If the Ontario government had ever done a cost-benefit analysis, as the Auditor General says they should have, this would have been revealed.
A study done by Sun Life shows just how much Canadians are counting on the value in their homes.
Canadians think their homes will fund their retirement
Any retirement strategy involving accessing the equity of the home could mean selling it or at the very least getting a new mortgage on the property or a reverse mortgage.
Almost a quarter of Canadians say they are planning on using their home as their primary source of income once they are out of the workforce, according to a survey from Sun Life Financial.
“It’s not something we would recommend per se, it is a bit of a surprise,” says Sadiq Adatia, chief investment officer of Sun Life Global Investments, about the retirement strategy being considered by 24% of Canadians. “People should be counting on their retirement savings and not really looking at their home. A home is something you can have and carry forward with you.”
Any retirement strategy involving accessing the equity of the home could mean selling it or at the very least getting a new mortgage on the property or a reverse mortgage.
Mr. Adatia thinks the downturn in the stock market in 2008 may have affected people’s retirement plans and has them turning to the homes to pick up the slack.
Rising home values have helped many Canadians approaching retirement feel like they have created a pretty big nest egg. The Canadian Real Estate Association said last month the average home in the country sold for $388,553 in January, a new high and a 9.5% increase from a year earlier.
On average, Canadians expect 10% of their retirement income to come from their home. Government pension plans on average are expected to supply 30% of retirement income, 27% is to come from personal savings, 23% from employer plans, 5% from inheritance and 6% from what is called other sources.
Mr. Adatia thinks a retirement plan involving selling your home might work for people who bought a few years ago, it might not work for people buying today.
“I know my own parents bought their home 30 years ago and at an extremely dirt cheap price,” he said, adding the older people can afford to absorb a downtown in the market if it happens. “If you’re 40 and bought your home five years ago, you can’t afford that hit.”
Sun Life’s view on real estate is the market is overinflated and there might be a significant decline in prices, making renting a viable option. The company says homes are selling for on average six times personal income, compared to a historical average of four times.
“Do you want to overextend yourself at the peak of the market?” said Mr. Adatia.
The survey was conducted by Ipsos Reid between Nov. 12 to Nov. 20 and is considered accurate to within two percentage points.
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