2023 will be the year of the downsizing boomers

2023 will be the year of the downsizing boomers

For the last two newsletters of the year, I asked people from the investment, financial planning and real estate worlds to send me a summary of a trend or theme that, according to them, will be important in 2023. Here is the first batch of answers, which have been edited for length and clarity.

Keisha Telfer, Transitions Realty – Year of the Downsizer

With the return to pre-pandemic levels, life is on the move again and baby boomers will return to those pre-pandemic plans that have been shelved in recent years. People will seek simpler housing that allows for travel, recreation and volunteering. With a more balanced housing market expected, with inflation stabilizing and interest rate hikes slowing, Transitions Realty believes 2023 will be the year of downsizing.

Tuli Parabets, Mortgage Officer – No more stress for people with mortgages

The two big themes of 2023 will be high interest rates and an economic slowdown (or recession). People with adjustable rate mortgages are already seeing the negative effects of high rates. Those with fixed rate mortgages maturing in 2023 will face an unpleasant renewal and those with maturities in 2024 and 2025 may start to worry about how to handle the potential higher mortgage payments. Tied to all of this, there will likely be a significant drop in home renovations, as borrowers will be reluctant to borrow at such high rates.

Jackie Porter, Map Wealth Management – ​​Families Talk Estate Planning

With the largest transfer of wealth to another generation underway and many clients grappling with the loss of a relative or loved one since the pandemic, I think the trend is for practical conversations about estate planning. What do these conversations look like? They indicate roughly where the will and powers of attorney are located so that executors can find them easily; whether people have thought about their digital assets and how they should be treated; and whether they have discussed advanced care issues with loved ones.

Bryan Yu, Chief Economist at Central 1 (Serving Credit Unions) – Housing Supply Problem

The new home construction market is holding up remarkably well despite the downturn in the resale market. This is not surprising given that housing starts lag existing home sales and multi-family projects are planned years in advance. That said, housing starts will fall sharply in 2023-24 due to slowing pre-sales and high borrowing costs. This will put the supply of housing at the center of the challenges as immigration increases sharply with the massive targets of the federal government. We are bracing for a severely undersupplied market by 2024-25, and another spike in prices as pent-up demand is unleashed with lower interest rates and a surge in population.

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Rob’s Personal Finance Reading List

Collapse Christmas

A look at how the soaring cost of living is causing some people to cut some or all of their vacation spending. There is an interview with a young man who cannot afford to return home to celebrate Christmas with his family.

A loyalty card lesson

Learn all about how some credit cards that offer loyalty points cap how much you can spend per year to earn points. After the cap, your spending no longer generates reward points. Now let’s look at the highs and lows of travel hacking, which means maximizing the points offered by travel rewards credit cards.

The house sold four times in three years

It’s in Brampton, just east of Toronto, and you can see the rise and fall of the housing market in how the selling price has changed each time.

Finding a Safe Withdrawal Rate for Retirement

Many retirees will need to dip into their savings to cover their income needs, but how much can you safely withdraw without putting yourself at risk of running out of money? New research suggests that 3.8% is a sustainable annual withdrawal rate.

Ask Rob

Q: Are Canadian bond ETFs a good idea to buy now? If so, which are the best?

A: I would say yes, if you can wait at least 12-24 months or more to get rewarded. Bond prices have fallen sharply this year, but are expected to rebound after peaking in interest rates. Bond prices and yields move in opposite directions. Bonds have actually done well lately due to growing confidence that a rate peak is near. Here is a link to the Canadian bond payout from The Globe and Mail’s ETF Buyer’s Guide.

Do you have a question for me? Send me. Sorry I can’t answer each one personally. Questions and answers are edited for length and clarity.

Today’s financial tool

A review of how cash and non-cash mutual fund distributions are taxed in non-registered accounts. Read if you hold funds outside of TFSAs and registered retirement funds.

The cashless zone

A century on film: 100 years of photojournalism by Globe and Mail photographers. Amazing stuff – I thought I’d take a quick look at these pics and ended up spending an hour there.

what i wrote about

– Why take a stock market risk if you can achieve your goals with low-risk GICs and bonds?

– Renting is a garbage can fire for personal finances, but it’s also the hottest trend in housing

– The last time interest rates were this high, we were just a country of amateur spenders

More Rob Carrick and Financial Hedging

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