The online survey of 1,000 Canadians found 20% of repeat buyers have owned more than five homes. Another 23% plan to move in six years.
Garry Marr, Financial Post
Imagine being so bored you would be willing to spend about $20,000 for a respite from your life.
At least 16% of Canadian repeat homebuyers are willing to pay that price. They are so “bored” with their current home they plan to move, says a new report from Toronto-Dominion Bank.
The online survey of 1,000 Canadians found 20% of repeat buyers have owned more than five homes. Another 23% plan to move in six years.
The survey looked at people who had purchased a home in the past 24 months that was not their first home, or intended to purchase another home.
The amount of wealth destruction from so much moving is staggering. The average sale price of a home sold last month in Canada was $324,928. Even at a modest 6% of the sale price, transaction costs can easily add up to $20,000.
Comment: COMMISSIONS ARE NOT 6% AND HAVE NOT BEEN FOR YEARS!!! WHY DOES EVERYONE PERPETUATE THAT LIE? THE HIGHEST IS 5% AND MOST ARE AROUND 3.5%-5%.
But in a rising housing market as Canada has enjoyed for most of the past 15 years, those transaction costs have apparently been ignored by home buyers.
Previous studies by the Canadian Association of Accredited Mortgage Professionals have also suggested we move 4.5 to 5.5 times in our lifetime.
Could a booming housing market be encouraging Canadians to move more than they really need to?
“If you look at the last five or six years, [moving] was a winning combination because prices were rising,” says Benjamin Tal, a senior economist with CIBC World Markets. “If you look at the situation now, prices are flat and you have to question the wisdom of moving. You can get a better return elsewhere.”
Mr. Tal says with the exception of the boom years of the last decade, moving up or moving on has not made much sense as an investment once you factor in transaction costs. “You need a place to live, but it’s not going to be a good investment. Once you add in the cost of moving, it’s a worse investment.”
Certified financial planner Kurt Rosentretor said one of the last things he would ever advise clients to do would be to frequently move.
“You’ve got real estate commissions to pay, moving costs, land transfer taxes, legal fees. It can be in the tens of thousands of dollars. I can’t see how it’s beneficial unless you really time it right.”
He says he has noticed clients moving more often over the last five years because of the attraction of rising home prices combined with poor returns from stock market investments.
Farhaneh Haque, regional sales manager of mobile mortgage specialists with TD Canada Trust, says the mindset of consumers has changed.
“Gone are the days where people would say, ‘we’ll buy this home and live here forever,’” says Mr, Haque, who adds that rising real estate prices and low interest rates have driven Canadians to move.
The trend does not appear to be slowing any time soon. Only 31% of those surveyed say their next move will be their last.
People gave other reasons for moving. Retirement, cited by 29% of people, was the No. 1 reason. But boredom still came in as the No. 2 reason, beating out market conditions and investment opportunities.
The survey found about 51% of respondents will move to a smaller home while 49% will go to a larger home. Only 8% said they considered moving because they were making more money, so wanted more house. And only 6% of respondents said making less money is a reason behind moving.
“With all the new homes that have hit in the market in last 10 years, you can imagine that as you walk into a new home you want that feature. Your home can’t give you that feature, so you’re looking to move,” says Ms. Haque.
Anybody ever hear of renovating?
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