When housing slows, is it better or worse for renovators? There are good arguments on both sides.
December 20, 2011
by Robert Koci
Predictions from a story in the Financial Post suggest home prices and home building are going to take a hit at the beginning of 2012. What does that mean for us?
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When I sold Real Estate in the 90’s my main objective was obviously to motivate homeowners to list and sell their properties. However, I did have my share of clients who decided to renovate or add an addition onto their existing home instead of selling. Their decision to do so was usually motivated by the potential loss they would have to take on the sale price coupled with the cost of selling and the subsequent cost of purchasing the new home. If those collective expenses exceeded, equaled or came close to the cost of customizing their existing home to meet their needs, they would usually see this as a practical option. Often if they had young children it made more sense to them to keep them in the same home, schools, community etc.
The calculation you mention; Adding up the cost of the transfer fees, moving costs, etc., would be a good one for renovators to have in their back pockets when they are talking to potential customers. Personally, moving to another home within Toronto would cost me about $30,000 in transfer and related costs. That buys a lot of upgrades if I stay and renovate instead.
The decision is made even easier when the neighbourhood has all the right qualifications for raising kids and having good friends around you. I don’t think renovators use the opportunity to sell renovations for those reasons as much as they should. When you add the quality of the neighbourhood to the soft cost of moving, renovating becomes a no-brainer (no offense to all the real estate agents out there!)