A recent TD Bank study found that only 50 per cent of Canadians remain at the same address for more than five years; some 20 per cent of homeowners have owned more than five homes; and 23 per cent plan to move again within six years. We surely are a nomadic population.
Even more interesting were the reasons respondents gave for their planned moves. At 29 per cent, retirement was the top reason; boredom with their current home was the rationale of 16 per cent. Planned moves were evenly split between downsizing and upsizing.
Given, as this survey illustrates, the high mobility of Canadians, it’s easy to understand its effect on the Canadian economy. We keep almost 100,000 realtors employed nationwide. Moving companies, furniture stores, appraisers, inspectors, decorators and lenders all benefit from this constant churning of what is usually our most important asset — our personal home. And let’s not forget the governments which benefit from property purchase and sales taxes charged at every stage of the relocation process.
All this mobility is great for the economy. However, it is the relocating homeowner who pays the entire bill. Using Greater Victoria’s current average single-family home price of approximately $600,000, the total cost of selling this home and moving up to, for example, a $700,000 home, can easily top $50,000 by the time the family is fully relocated and settled-in. In effect, the real cost of a $100,000 upgrade is closer to $150,000. These high transaction and settling-in costs also explain why downsizing retirees usually end up with much less in their pocket than the simple difference in the selling prices of the two residences.
This is not to suggest we should not move. However, it is important to not only understand the real cost of a move, but also to not act impulsively without first considering all options. If a move is going to cost $50,000, might those funds be better spent on improving the suitability of the current home to meet the changing needs of its owner?
Generally, our housing needs inevitably evolve as family size grows and then declines. Many of us start out with a condo, progress to a townhouse, then a first house, followed by a larger one, then again move to a small house or strata property upon retirement. Despite these natural pressures however, we can rationally consider and plan relocations which are truly beneficial and cost-effective as we move through the various life-stages. An impulse move, simply out of boredom, may be better solved with a nice $5,000 vacation in Hawaii, rather than an unnecessary $50,000 relocation cost.
Average Victorians moving into their first home can expect to own at least five more homes in their lifetime. That’s 10 more buying and selling transactions — an aggregate of over $6 million in property values. If prudently avoided, just one less buy-and-sell during our lifetime can make a significant difference to our ultimate net worth — and more trips to Hawaii.
A retired corporate executive, enjoying post-retirement as a financial consultant, Peter Dolezal is the author of three books. His most recent, The Smart Canadian Wealth-Builder, is now available at Tanner’s Books, and in other bookstores.
