It's no secret. Many Canadians who are in or entering their retirement years are, quite literally, on the move. In a 2017 CIBC poll, 67 percent67 percent. Opens a new window in your browser. of Baby Boomers said they had their sights set on selling their home. And many—63 percent—said they wanted to downsize to something smaller.

If reducing your expenses in retirement is part of your financial plan, downsizing may be one effective way to get there. It can also be an optimal move if you plan to spend less time at home and more time exploring new hobbies or traveling the world.

At the same time, Canadians are showing there's no rush to make a move. According to that same poll, 62 percent of Canadian homeowners planning to sell, said the high price of switching to another (presumably smaller) home has made them reluctant to follow through.

If you're planning to downsize in the next five to ten years, now's the time to consider how rising home prices could come into play.


Look at the Bigger Housing Picture

According to the Canadian Real Estate Association (CREA)Canadian Real Estate Association (CREA). Opens a new window in your browser., the national average home price is expected to drop by 1.4 percent in 2018. Lower prices may mean better bargains for home-buyers. The CREA also suggests that buying activity may be hampered by new mortgage rules that took effect beginning this year, which could help keep a lid on prices.

So what does this mean for your downsizing plans? In a nutshell, home prices should still see some growth in the short and long-term, but it could be at a slower pace than years past. One potential downside is that updated mortgage rules could shrink the pool of buyers, making selling more of a challenge.


Focus on the Positives

Downsizing early on in your retirement can give your bottom line a serious boost if it allows you to put money back into your monthly cash flow.

The idea is that your new home comes with a lower mortgage payment, or you are able to supplement your retirement savings with equity in the home.

Sure, rising housing prices mean that you might pay a little more for a new home than you planned. However, higher home prices don't automatically cancel out any financial benefits you could gain from downsizing.

For example, downsizing may mean paying less for things like utilities, property taxes, homeowners' insurance or homeowners' association fees. Maintenance and upkeep may also be less expensive. Downsizing to an area with a lower cost of living can also yield benefits if you're saving money on things like food, transportation, and health care—an area that often ranks as one of retirees biggest expenses.

Remember, selling your larger home when the market is high could yield a higher return. That could help offset paying a higher price for a smaller home. Rising home prices shouldn't necessarily be a barrier to downsizing in retirement if it helps you achieve the lifestyle you desire.