Investors hear it all the time: real estate is a sure thing. Or, at least, it's as close to a sure thing as can be expected; safer than going for a white-knuckle ride on the stock market and seemingly simpler than muddling around with bonds and RRSPs.

Property values, proponents of this mantra like to say, only partly in jest, will keep going up so long as we're making new people faster than we're making new land.

This is, experts warn, an over-simplification, and one which creates risk for those who plan to use real estate to bankroll their retirement.

A recent report from the Bank of Montreal says almost one in three Canadians, upon finding they do not have enough money set aside to retire, have sold their homes in order to generate more cash — opting for a smaller house, condominium or rental unit.

(STORY CONTINUES BELOW SLIDESHOW)

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  • Calgary: 3-bedroom house

    <strong>$1.08 million:</strong> Located in the trendy Altadore neighbourhood of Calgary, this as-yet-unbuilt modernist house features views of the downtown core as well as a personal elevator. Source: Keller Williams Realty

  • Calgary: 3-bedroom house

    <strong>$1.08 million:</strong> Located in the trendy Altadore neighbourhood of Calgary, this as-yet-unbuilt modernist house features views of the downtown core as well as a personal elevator. Source: Keller Williams Realty

  • Calgary: 3-bedroom house

    <strong>$1.08 million:</strong> Located in the trendy Altadore neighbourhood of Calgary, this as-yet-unbuilt modernist house features views of the downtown core as well as a personal elevator. Source: Keller Williams Realty

  • Toronto: 1-bedroom condo

    <strong>$988,000:</strong> Located in the posh Residences of the Ritz Carlton, in the heart of Toronto, this condo features one of only a handful of private terraces in the entire building. Source: Sotheby's International

  • Toronto: 1-bedroom condo

    <strong>$988,000:</strong> Located in the posh Residences of the Ritz Carlton, in the heart of Toronto, this condo features one of only a handful of private terraces in the entire building. Source: Sotheby's International

  • Toronto: 1-bedroom condo

    <strong>$988,000:</strong> Located in the posh Residences of the Ritz Carlton, in the heart of Toronto, this condo features one of only a handful of private terraces in the entire building. Source: Sotheby's International

  • Montreal: 4-bedroom rowhouse

    <strong>$998,000:</strong> This historic townhouse in the wealthy enclave of Westmount is "of historic interest," according to the realtor, and features its original glass doors and marble panels at the entrance. Source: Sotheby's International

  • Montreal: 4-bedroom rowhouse

    <strong>$998,000:</strong> This historic townhouse in the wealthy enclave of Westmount is "of historic interest," according to the realtor, and features its original glass doors and marble panels at the entrance. Source: Sotheby's International

  • Montreal: 4-bedroom rowhouse

    <strong>$998,000:</strong> This historic townhouse in the wealthy enclave of Westmount is "of historic interest," according to the realtor, and features its original glass doors and marble panels at the entrance. Source: Sotheby's International

  • West Vancouver: 1-bedroom condo

    <strong>$985,000:</strong> The real estate agent boasts that this property offers a "spectacular 180 degree view of the city, Lions Gate Bridge, Stanley Park, Kitsilano, Point Grey and beyond to Vancouver Island." Source: Angell Hasman Realty

  • West Vancouver: 1-bedroom condo

    <strong>$985,000:</strong> The real estate agent boasts that this property offers a "spectacular 180 degree view of the city, Lions Gate Bridge, Stanley Park, Kitsilano, Point Grey and beyond to Vancouver Island." Source: Angell Hasman Realty

  • West Vancouver: 1-bedroom condo

    <strong>$985,000:</strong> The real estate agent boasts that this property offers a "spectacular 180 degree view of the city, Lions Gate Bridge, Stanley Park, Kitsilano, Point Grey and beyond to Vancouver Island." Source: Angell Hasman Realty

  • Charlottetown, P.E.I.: 8-bedroom house

    <strong>$998,700:</strong> This historic property was once the Edenhurst Inn and is now on sale as a private residence. "No expense was spared in the construction of this home using sycamore and oak for interior finishing," the realtor says. Source: Re/Max Charlottetown

  • Charlottetown, P.E.I.: 8-bedroom house

    <strong>$998,700:</strong> This historic property was once the Edenhurst Inn and is now on sale as a private residence. "No expense was spared in the construction of this home using sycamore and oak for interior finishing," the realtor says. Source: Re/Max Charlottetown

  • Charlottetown, P.E.I.: 8-bedroom house

    <strong>$998,700:</strong> This historic property was once the Edenhurst Inn and is now on sale as a private residence. "No expense was spared in the construction of this home using sycamore and oak for interior finishing," the realtor says. Source: Re/Max Charlottetown

  • Winnipeg: 4-bedroom house

    <strong>$989,900:</strong> This modernist mansion from custom home designers Artista Homes features three fireplaces, including a three-sided one, and ensuite bathrooms with heated floors. Source: Royal LePage Alliance

  • Winnipeg: 4-bedroom house

    <strong>$989,900:</strong> This modernist mansion from custom home designers Artista Homes features three fireplaces, including a three-sided one, and ensuite bathrooms with heated floors. Source: Royal LePage Alliance

  • Kamloops, B.C.: 2-bedroom ranch house

    <strong>$960,000:</strong> This ranch house inspired by the "pueblo" style of the U.S. southwest is located in one of the few places in Canada that look like the southwest U.S. — the B.C. interior. The house features foot-thick concrete walls, and is set into the hillside to look half-buried. Source: Royal LePage Kamloops

  • Kamloops, B.C.: 2-bedroom ranch house

    <strong>$960,000:</strong> This ranch house inspired by the "pueblo" style of the U.S. southwest is located in one of the few places in Canada that look like the southwest U.S. — the B.C. interior. The house features foot-thick concrete walls, and is set into the hillside to look half-buried. Source: Royal LePage Kamloops

  • Kamloops, B.C.: 2-bedroom ranch house

    <strong>$960,000:</strong> This ranch house inspired by the "pueblo" style of the U.S. southwest is located in one of the few places in Canada that look like the southwest U.S. — the B.C. interior. The house features foot-thick concrete walls, and is set into the hillside to look half-buried. Source: Royal LePage Kamloops

  • Montreal: 5-bedroom townhouse

    <strong>$985,000:</strong> The realtor humbly describes this property as a "cottage in Westmount," but with five bedrooms, four baths and parking for two, this "cottage" is pretty out-sized. Source: Profusion Realty

  • Montreal: 5-bedroom townhouse

    <strong>$985,000:</strong> The realtor humbly describes this property as a "cottage in Westmount," but with five bedrooms, four baths and parking for two, this "cottage" is pretty out-sized. Source: Profusion Realty

  • Montreal: 5-bedroom townhouse

    <strong>$985,000:</strong> The realtor humbly describes this property as a "cottage in Westmount," but with five bedrooms, four baths and parking for two, this "cottage" is pretty out-sized. Source: Profusion Realty

  • Toronto: 4-bedroom bungalow

    <strong>$989,000:</strong> Located in an area with lots of surrounding commercial properties, the seller notes that the zoning could easily be changed to allow for a business. But you can always just live in this property, if paying $1 million for a bungalow strikes you as reasonable. Source: Realty Way Corporation

  • Saskatoon: 3-bedroom house

    <strong>$970,000:</strong> Don't let your eyes deceive you: This isn't a historic property. Rather, this duplex is a recreation of the Todd House, a 19th-century home located in Toronto. It's so modern it even features an indoor garage. Source: Hallmark Realty

  • Saskatoon: 3-bedroom house

    <strong>$970,000:</strong> Don't let your eyes deceive you: This isn't a historic property. Rather, this duplex is a recreation of the Todd House, a 19th-century home located in Toronto. It's so modern it even features an indoor garage. Source: Hallmark Realty

  • Saskatoon: 3-bedroom house

    <strong>$970,000:</strong> Don't let your eyes deceive you: This isn't a historic property. Rather, this duplex is a recreation of the Todd House, a 19th-century home located in Toronto. It's so modern it even features an indoor garage. Source: Hallmark Realty

  • Port Medway, N.S.: 3-bedroom seaside estate

    <strong>$990,000:</strong> Originally meant to be occupied by the architect who designed this property, this property on Nova Scotia's South Shore is "designed to be self-sustaining," the realtor says, and was built partly using reclaimed and re-purposed materials. Source: Tradewinds Realty

  • Port Medway, N.S.: 3-bedroom seaside estate

    <strong>$990,000:</strong> Originally meant to be occupied by the architect who designed this property, this property on Nova Scotia's South Shore is "designed to be self-sustaining," the realtor says, and was built partly using reclaimed and re-purposed materials. Source: Tradewinds Realty

  • Port Medway, N.S.: 3-bedroom seaside estate

    <strong>$990,000:</strong> Originally meant to be occupied by the architect who designed this property, this property on Nova Scotia's South Shore is "designed to be self-sustaining," the realtor says, and was built partly using reclaimed and re-purposed materials. Source: Tradewinds Realty

  • An actual house in Vancouver!

    It may be a shock to some, but yes, it is possible to buy an actual house — not a condo — for under a million in Vancouver. Here's proof: A two-bedroom property in the city's desirable Kitsilano neighbourhood, for a mere <strong>$998,800!</strong> Source: Sutton Group - West Coast

  • An actual house in Vancouver!

    It may be a shock to some, but yes, it is possible to buy an actual house — not a condo — for under a million in Vancouver. Here's proof: A two-bedroom property in the city's desirable Kitsilano neighbourhood, for a mere <strong>$998,800!</strong> Source: Sutton Group - West Coast

  • An actual house in Vancouver!

    It may be a shock to some, but yes, it is possible to buy an actual house — not a condo — for under a million in Vancouver. Here's proof: A two-bedroom property in the city's desirable Kitsilano neighbourhood, for a mere <strong>$998,800!</strong> Source: Sutton Group - West Coast

Downsizing after one's children move out makes sense. But financial planners warn that selling off real estate is no replacement for more conventional retirement savings, despite Canada's healthy housing market.


"Memories are short," says Peter Drake, vice-president of retirement and economic research at Fidelity Investments in Toronto. "That's especially true [in real estate] where we've had a long, good run in most of Canada. People tend to assume just because something's been true for two or three years that it's always been true."


Falling demand could undercut house value


Drake and his wife bought their house in the 1980s when rates were in the teens and low 20s.


"Now, people complain when rates get to five and a half [per cent," he says with a laugh.


Drake and others point to signs that the market is already cooling off and that shifting demands might further undercut the value of the exact sort of homes many aging baby boomers will be looking to unload.


Empty-nesters might go into retirement planning to sell the five-bedroom house in which they raised their kids.


"We've had a marvelous housing market for people who want to do that, but I'm not sure that's going to continue," Drake said. "I'm not a doom-and-gloomer on the housing market, but we're already seeing some softening in prices."


Demand for large, single-family homes is especially weak, agrees Cherith Cayford, a financial planner and educator with CMG Financial Education in B.C.


"There's going to be less and less demand for those," says Cayford. "A lot of people are looking at them to fund their retirements, so they should move on that sooner rather than later [before the value evaporates]."


Don't rely only on real estate


Smaller and "reasonably priced" bungalows are a hotter item, at least near Ottawa where Cheryl Green operates her financial planning firm Counting Chickens, presumably because they are the sort of homes all those empty nesters want to buy.


Green understands the appeal of real estate, given that interest rates are at an all-time low and pay-outs from government plans and other investments have tended to track down over the decades. But she takes a dim view of clients who overextend on real estate — either because they plan to "grow into" an over-sized house or cash in upon retirement.


She is among those who say the value of real estate as an investment must be balanced against the need to diversify one's portfolio. People must also consider how they want to spend their golden years.


Retirement, says Drake, is about having choices — to have fun, travel, go back to school, etc. — and putting too many eggs in one basket runs the risk of limiting choices down the road.


"We always worry about cyclicality," Drake said. "Whether investing in the stock market, the bond market or the real estate market, we always worry about [clients] retiring in a down market."


An investor with a diverse portfolio has the flexibility to sell off some but not all of his or her assets. An investor who relied too much on real estate might be left with the all-or-nothing option of selling the house.


"You may be forcing yourself into a situation," Drake warns. "If you had less house and more in the way of other investments, you might be better off."