Why Downsizing Often Costs More

Many Canadians nearing retirement saw downsizing as simple equity math, but hidden selling, moving, and financing costs often shrank the expected cash windfall.
A current survey showed the choice was nearly split: 46% planned to downsize within 2 yr of retirement, while 47% said no.
Selling costs were a major drag. In Canada, closing costs typically ran ~4% to ~7%, with commissions alone often ~3% to ~7%.
Moving could add thousands more, especially across provinces. Buyers also faced much higher current mortgage rates than many pandemic-era homeowners had locked in.
Canada's tax rules helped: a principal residence sold after qualifying ownership could avoid capital gains tax entirely, though only one property counted each year.
Downsizing made more sense when savings clearly beat selling costs, but many retirees stayed put, wary of relying too heavily on home equity.