Skip to main content
personal finance

Seniors across the country should be asking the question that David Renegar tossed my way recently.

Mr. Renegar and his wife, Helena, are in their 70s and they wonder if it's time to sell the Toronto home they've owned for 32 years and rent. They like their home a lot – it's a Victorian-style house with great transportation links, a lively urban scene and a backyard and nearby park for their dog, a 70-pound Berger Picard named Harley, to run around.

But talk of a possible pullback in housing prices has the Renegars thinking. Is it time to sell, invest the proceeds and rent their next home? "What would you do in our shoes?" Mr. Renegar asked me in an e-mail.

My answer, based on a chat with Mr. Renegar and David Fleming, a Toronto real estate agent and housing blogger: Stay in the house. Don't be in a rush to sell and rent. Your thoughts, readers? When you get to the end of this column, you'll have a chance to vote on whether the Renegars should stay or go.

Friday's Personal Finance column presented a case for seniors like the Renegars to make an orderly exit from the housing market sooner rather than later to protect themselves against a decline in home values. This option has to be considered if you're sitting on huge gains in housing, you plan to use home equity as part of your retirement plan and you accept the high probability you'll end up in a condo, owning or renting.

The Renegars don't really fit that profile, although they've certainly done well in the housing market. "We've had four or five houses on our street that have sold in the last six months for over $1-million," Mr. Renegar said. "We bought this property for something around $100,000."

Mr. Renegar, 74, is a retired marketing executive who currently has a sideline as an actor and writer. His wife, 71, is a retired longtime employee of Bell Canada. They have no kids, but they're on what Mr. Renegar says is their fifth or six dog. Financially, Mr. Renegar describes their situation as "fine." His wife has a pension and they don't need to dip into their home equity.

It's lifestyle issues, not finances, that make the case for them staying put.

Most importantly, Mr. Renegar is the one who thinks renting is the right thing. "That's where I'm coming from," he said. "Now, my wife goes a little in that direction and a little in the direction of buying another property or buying a condo. I have no interest whatsoever in a condo."

Stay in the house until you agree on where to move next, Mr. and Mrs. Renegar. I say this based on a conversation with Mr. Fleming, who struggled to find decent opportunities to rent a house in downtown Toronto. While talking on the phone with me, he found a listing for a new three-bedroom freehold townhouse (read the listing here). "It's super new, super modern and it's $4,700 per month," he said as he punched up another listing, this one for a $3,000-per-month triplex unit with five bedrooms and one bath. Mr. Fleming figures this one's a former rooming house.

He figures that if the Renegars rent a house for a decade, they could end up spending roughly half the money they get from the sale of their house. Meanwhile, their house might appreciate further over that period.

His shorter-term analysis argues for staying as well. If the housing market falls 20 per cent and their home declines in value to $800,000 from a hypothetical $1-million, the equity they lose would be roughly equivalent to four years of renting a house for $4,000 per month. "My sense is that they'd probably be better off to stay in their house," Mr. Fleming said.

If Mr. Renegar was more open to a condo, there would lots of choices for both buying and renting. Mr. Fleming said premium downtown two-bedroom condos can be rented for $3,000 to $5,500 per month, while non-premium addresses can be found for a bit more than $2,000 monthly.

The Renegars have maintained their home, so there are no particular maintenance issues for them to worry about. Also, they're both in good health. A final reason for staying is Mr. Renegar's own summary of how he and his wife feel about their home. "We're very happy here, frankly."