Well, my mother enjoyed Friday’s blog, and that’s all that really matters, right?
Lost in the shuffle after an impromptu 2,000 word trip down memory lane were the reasons behind this recent survey, showing more home-owners would opt to stay put and renovate their existing homes than move.
The survey was posed in this hypothetical “What if you had $50,000,” manner, whereby respondents were supposed to choose between renting and moving. But ignoring that hypothetical, and simply looking at the decision as it pertains to all of us, our lives, and our situations, I would still argue that just as many people would rather do without moving.
I see five major reasons for this, many of which have multiple reasons therein…
5) The Neighbourhood
There’s nothing wrong with loving where you live, in fact, it’s a dream for all of us.
So when faced with the prospect of leaving all that you know and love, it seems to reason that many people would look for ways to avoid it.
This means that when many people do end up moving, many of them stay within the same area. I actually sold a $970,000 condo to a buyer last week who currently lives in the building in a smaller place worth about $550,000. He loves the building, doesn’t really want to leave, but needs more space. So buying a larger place but only considering that one building became his chosen path.
For other would-be buyers, however, not being able to move within that same area is often a reason why they stay put. If you owned a 3-bed, 2-bath semi-detached house, but wanted a 4-bed, 4-bath, or at least a 4-bed, 3-bath, and were constrained by price, you might end up looking in another neighbourhood with lower prices. We’ve all been here before, and this is a very common scenario for most buyers. You can’t afford to move “up” within your area, so you look at other locations. When faced with this prospect, many buyers just can’t pull the trigger because they can’t face moving out of the neighbourhood. And thus, they renovate, expand/add-on, or simply put off the move for a little while longer.
I’ve seen this happen a lot.
When I’m working with active buyers who essentially “change their mind,” and decide to put the search on hold, one of the top reasons is because they can’t bear the idea of leaving the neighbourhood. So as I mentioned above, many decide that their plan is to stay, save more money, and then be able to purchase a larger home within that same area.
As housing prices continue to rise, however, we all know it’s difficult to “chase the market.” Saving more money for a down payment on a larger home only works if the market stays the same, or appreciates at a rate substantially lower than one’s ability to save. This is why I find so many people who don’t move, initially, because they “want to stay in the neighbourhood” end up becoming stuck in their existing home.
4) The Kids
You all heard my sob-story from Friday about how I didn’t want to move, but what I didn’t mention was that as a child, I was paralyzed with the fear of switching schools.
We grew up in Leaside, and I attended Bessborough Public School right from Junior Kindergarten. But I knew that when my mother and father were out looking at houses on the weekend, half the time they were looking in other areas.
I had no idea where “Lawrence Park” was, but I knew I didn’t want to live there.
Avenue Road? Is it an avenue or a road? That made no sense to me. I certainly didn’t want to live there.
Bayview Heights? Where the hell was that?
North Toronto? How far north are we talking?
My sister explained to me that if we lived in any of these areas, we would have to go to a different school. This scared me more than just about anything as a child, and that includes Freddy Krueger, who was just about the worst-looking, scariest thing I had ever seen, and maybe still have to this day. The makeup for that movie, considering it was 1984, is just unreal. But that’s a topic for another day…
As any child would at this age, I had developed a close circle of friends, and the thought of not only losing those friends, but also having to make new ones, was a non-starter for me. I didn’t want to be “the new kid” that shows up on September 5th, and is introduced by the teacher who basically begs the other children to befriend.
A lot has changed since the 80’s, and nowadays with technology where it is, social media, and a lot more clubs, sports, and activities, kids from all over the city blend together in a way they never did before. But I still think a lot of parents worry about pulling their kids out of existing schools, and planting them in new ones.
Many parents will actually plan their moves around their kids’ ages, and/or school cycles.
I’ve had clients who told me, “We’re going to buy a house in two years because our son will be turning 6-years-old, and we want to start him in School X for Grade 1,” as well as other variations surrounding different public/private school options, or special programs like French Immersion, or simply leaving daycare for JK, or graduating from Grade 8 to high school.
But others simply refuse to move because they fear it’ll be traumatic for the kids, whether that’s based on the school, or in some cases, emotional attachment to the home.
I suffered from both as a child, but thankfully when we moved, I stayed in the same school!
3) The “Lateral” Move
You don’t sell for $1,000,000 and buy for $1,000,000 in this market very often.
If you lived in a condo, and wanted to own a house, you might though. And I’m sure there are other exceptions to the rule.
I suppose if you live in a downtown Toronto condo, worth $600,000, and you’re moving to Hamilton to start your new job, get married, start a family, and prices for freehold homes are $600,00, then yes, the lateral move makes sense.
But here in Toronto, most of my clients are either buying up or down, and the “lateral move” is a fear of many buyers, and probably should be.
For reasons that we’ll explore in point #1, it’s expensive to move, and to buy and sell for around the same price often doesn’t make sense.
Switching neighbourhoods around the same price point can be an option, but it really just comes down to the costs involved, and I feel as though most buyers want to truly “buy bigger.”
2) The Bother
As I write this, I have not one, but two sets of clients who have moved in with their parents for two weeks. I have another couple of sellers who are also leaving while their property is being sold, but they’re sailing around the world, so we don’t feel quite as bad for them!
My other seller-clients have been displaced from their homes as it’s simply not feasible for them to sell why they’re living in the house.
In the house. In their house; it’s not feasible for them to live in their house. How crazy is that?
Well, that’s Toronto! That’s the market! You’ve heard me say this over and over, but I believe there is only one “right way” to sell real estate, and it involves doing everything properly before and during the listing, cutting no corners, and not diverting from the path that’s been set out in advance. This means, for those that choose to do it properly, that you’ve got anywhere from two weeks to two months of preparing, and it can be awful.
You start by de-cluttering, and that means throwing away stuff you probably want to keep, and/or often going through boxes you have no desire to go through. You often work around the clock, with a deadline (ie. a target listing date), and every night you go home from work knowing that you’re simply switching jobs, as the work doesn’t stop until you finish packing, and go to bed.
You have to work on the house too. Repairs, fixes, often renovations. I have clients right now who are going to replace all the flooring in their condo, renovate the bathroom, paint the entire place, and maybe even tackle the kitchen cabinets while they’re at it. They’ve told me they’re stressed, anxious, and wondering whether this is “the right move.”
But then when the property is actually cleaned, painted, repaired, and de-cluttered, the staging begins, and many people can’t live in a staged house. Especially those with kids…
Most of my clients who have children end up moving out for 10-14 days when we sell, provided the house is freehold and in at least a lukewarm location.
If we stage the house on a Thursday, take photos on Friday, to list on Monday, that family isn’t going to live in the house on the weekend. They’re already up at the in-laws! So then we have a week of showings, followed by an offer night, and it’s close to two weeks before they can move back into the house.
Add all this up – packing, de-cluttering, repairing/renovating, cleaning, moving furniture and boxes to storage, staging, and finally moving out of the house, and it’s no wonder many people couldn’t be “bothered” with the process. It’s daunting to many, although those of you who have been through it probably think it’s just the cost of doing business.
Then there’s something to be said for the “bother” of trying to essentially re-create one’s existing home, in a different location. Those of us who take pride in our homes, and who have worked over the years to make it our “own,” often see a new house as a stark blank canvas, and thus a chore. Some relish the opportunity to start from scratch, but others see it as a lengthy task that they could do without. Imagine spending five years “feathering the nest,” only to have to start over elsewhere?
To each, their own. Some might see this as complaining about nothing, but the feedback I get from people all the time is that moving is daunting, and much of it has to do with the process of selling, rather than buying.
1) The Cost
There’s absolutely, positively, no doubting that this is the #1 reason why people don’t move…
…in Toronto, that is.
Tell me if I’m wrong, and I feel as though this could be one of those blog posts where the readers’ comments really drive home the accuracy of this list, but I have to think that if it wasn’t so expensive to move, people would do it more often.
Some see real estate as an “investment” and others are irked by that mere notion; thinking somehow that houses should be exempt from being bought/sold/traded and rather simply house people. But for those who find themselves in the former camp, they’ll recognize that real estate as an investment has one major difference from your typical investment vehicles out there today: liquidity.
That’s not to say that real estate isn’t easily sold. It’s a far more liquid investment than art, rare coins, or precious metals (ie. those who actually take physical possession of gold bars; I had a client once with all his money in physical materials, it was nuts). But the time it takes to dispose of real estate is an eternity compared to the “click of a button” for selling shares of stock.
Then, there’s the cost. That’s the major issue with liquidity, from my perspective.
And the costs associated with selling real estate might be the elephant in the room for most agents, but I tell my clients this all the time!
Land transfer tax, real estate listing fees, legal fees, movers, and then the things people don’t think about – like furnishing a new house, and all that comes with it.
Those of us in Toronto pay not one, but two land transfer taxes, to the wonderful municipality of Toronto, and province of Ontario.
On a $1,500,000 purchase, that’s $52,950 that you are never going to get back.
Now let’s say you’re selling a $700,000 condo as you prepare to move into that $1.5 Million house. The fees are anywhere up to 6%, or $42,000. But add in HST, and it’s even worse – $47,460.
There are other options, of course. It costs $0.00 to put a “FOR SALE” sign on your lawn, so while the land transfer tax to Toronto and Ontario are non-negotiable, the real estate listing fees aren’t fixed.
I won’t turn this into a conversation about commission but suffice it to say, most people are paying 4-5% to sell, and that’s a big number if you’re going to buy/sell again in three years, then five years after that.
It’s why I tell a lot of my clients, “It’s expensive to move.” I do it all the time, just ask them. “You don’t want to call me in two years, tell me you’ve outgrown the space, and have to pay me again to sell your place, and then pay two governments massive fees just to file paperwork.”
You’re going to pay a lawyer to close the sale of your existing property as well as the purchase of the new one. Disbursements, title insurance, and other fees add up.
But what really surprises me is how much people underestimate the cost of new furnishings in the home. How many of you have moved into a new house or condo and been blinded by light, because you had no window treatments, and never thought to get any? How many people actually factor this in to their number-crunching when they start considering making a move?
And that couch in the living room of your condo? You are kidding yourself if you think it’s going in your new house.
The IKEA pots and pans scream “bachelor,” and now you’re a married man in a home. So get ready to spend!
In fact, the most common dollar figure that buyers attribute to these types of expenses is $0. Honestly, people never think of it until they’ve already bought, already sold, and are preparing to move into the new property. Only then do they look around at their existing furniture and realize how much they hate it. Only then do they find themselves out, every weekend, shopping up at Castlefield & Dufferin.
This certainly isn’t the largest cost associated with moving, but it’s the most underestimated!
In the end, I think the costs involved with moving are the number-one reason why more people don’t.
So there you have it, folks!
If there are other reasons, please feel free to share.
And for those of you that want, or wanted to move, but did not, I’d love to hear why!