Oh, the Canadian dream. No, I’m not referring to a maple-glazed donut and a double-double delivered to your bedside table each morning. I’m talking about homeownership. It’s true — buying a home is still a right of passage for many Canadians. And although we are more welcome to the world of renting than we used to be, the typical reason for opting out or delaying homeownership boils down to cost.
In fact, according to Statistics Canada, the country’s homeownership rate is on the decline. Young adults, in particular, are less likely to own a home in 2021 than in 2011. Nowadays, it’s more common for younger Canadians to live in apartments than detached homes.
It’s also more common for those younger adults to still live with their parents. However, we’ve heard this “millennials can’t afford homes” story many times before. It’s nothing new. But, because of this narrative, most homebuyers are encouraged to consider their first property purchase as a “starter home” or a way to break into the real estate market. This mindset has evolved over the years. Its aim encourages us to start small, build equity, and move on when our life changes or our family starts to grow.
Why Do Canadian Homeowners Move So Often?
A study by the Canadian Association of Accredited Mortgage Professionals estimates the average Canadian will own 4.5 to 5.5 homes in their lifetime. They found that around 620,000 Canadian families will move into a new home each year. Of those Canadians, 45% are first-time buyers between the ages of 25 to 34. However, first-time homebuyers are still joining the club from ages 45 to 64. Therefore, if you were to buy your first property at age 25 and stop buying it at age 65, the average Canadian who owns 4.5 to 5.5 properties over their lifespan could move every seven years.
What seems like an extreme amount of packing and unpacking belongings into multiple homes less than 10 years after moving in, there are many reasons that buyers might feel obligated to transition their life so regularly. Atrina Kouroshnia, a Vancouver-based mortgage agent, says her clients always adjust their living situation to match their current lifestyle.
“The three most common reasons my clients choose to move house is due to a relationship that is evolving, a family that is growing or a reason that is outside of their control, such as job relocation.” Kouroshnia said that although those are the prevalent reasons for clients buying a new home, “it’s not always happy cases,” citing divorce as another culprit for the move.
Does Moving Too Many Times Affect Your Financial Prosperity in the Future?
Although there are always legitimate reasons behind moving house, some Canadians may opt to keep up with their social circles or accommodate a more luxurious lifestyle. A DuProprio survey found that 14% of Canadian homeowners wish they could move every year.
As someone who has moved many times, I’ll admit that the cost is not always worth the change of scenery. Even renting means having to pay for transporting furniture, saving up the security deposit and buying new items that get lost or damaged en route. Then add to these costs the transactional costs of buying and selling a home.
To give you an idea, that same DuProprio survey discovered that homeowners will spend approximately $180,000 on real estate commissions alone. This on the typical four to five properties within a 60-year period.
Edan Puritt, a 56-year-old Ottawa resident, bought his first home at 27. Since then, he has owned two more properties and plans to move once more as soon as he enters retirement. Falling right in line with the average Canadian homeowner, Puritt says he’s happy with each decision. However, that doesn’t mean he pushes the homeownership world for everyone.
“I don’t think home buying is a legitimate financial investment,” says Puritt. “But I do think that as needs evolve, the type or location of a house will likely change as well.”
Moving Costs Money
But there is a bottom line to all this moving. Every single move actually depletes your wealth. Sure, you may have built equity once you’ve bought and lived in a property for a period of time. But as soon as you move, you’re cashing in that gain (or loss).
There are rare situations where cashing in can mean big gains. One of Kouroshnia’s clients bought a condo for $375,000 only to sell that same property just two years later for $620,000. However, someone who lives in Winnipeg, Manitoba or St. John’s, Newfoundland, may never see that type of market gain over the lifetime of property ownership.
Plus, each move will actually cost you — cash money. Consider it the equivalent of a trading cost. You must pay a trading fee when you buy and sell a stock. While this transactional cost shouldn’t dictate your decisions, it should be a factor you consider.
Buy Your “Forever Home” or a “Starter Home?”
Just like some enter the workforce and choose to stay loyal to one organization for most of their career, homebuyers can, too. You can still believe in the idea of the one-and-done “forever home.”
And now, with new tools like the Tax-Free First Home Savings Account (FHSA), it seems more possible. Opening an account like this and letting your down payment fund grow for 10 to 15 years could potentially give you a fighting chance to break into the real estate market. And at more than an entry-level property.
Depending on the city, the neighbourhood or the home you buy — there are always ways to make it work. In the 1950s, my grandparents bought one home in Calgary and stayed until they transitioned to assisted living. Sure, generationally, there are some differences between their lifestyles and ours. But the fact that they managed to find a place to build 60 years of memories leaves me with a small ounce of hope that I, too, can do the same.
Eliminating even one of those four or five moves Canadians tend to make over their lifetime could save me a dramatic amount of money over the long term. Almost $200,000, according to recent surveys. Call me a money nerd, but that sort of savings really appeals to me.
For anyone considering a purchase, whether it’s your first or third, it’s always best to consider all your options and the costs. “It’s a little bit challenging considering there are so many things that can happen, and there are so many things that can go wrong,” said Kouroshnia. But that doesn’t mean it’s impossible.
