The one big question about real estate that our clients are asking
Friday Mar 24th, 2023
By Alex Ocsai, Broker Owner of RLP Meadowtowne Realty
Is this the right time to upsize and upgrade my current home?
The answer to this question has many facets depending on your view of what owning real estate means to you. Do you view owning your home as an investment or do you see it as a home?
As a pure investment what you're going to decide on is the current price and what you believe about the potential future value of the real estate.
If you view real estate mainly as a home, you'll see it as one of the cornerstones of stability in your life. Decisions are made on current affordability and how this purchase and move will contribute positively to your family and future.
You've been told that your home is the most significant investment in your life. For the most part from a financial perspective this is true, especially for many people living in Southern Ontario. The question is what constitutes an "investment" ?
There's no shortage of investment opportunities that could perform as well or better than your home over the next few years. You could simply buy shares in any one of our Canadian banks and see long-term value growth as well as receive dividends anywhere from 3 to 6% a year. All that without having to cut the grass or shovel the driveway.
So why don't we all do this instead of buying a home to live in or rent out as an investment?
The first financial reason is leverage. Real estate is one of the few investments that is mostly purchased using someone else's money. We use the bank to finance our lifestyle or investment at generally manageable rates and payment schedules. When your property increases in value you get the return on the entire value not only on the cash you put as a down payment.
The second and third reasons come together nicely. You need somewhere to live and you need to put some money away as well. Having a mortgage makes you put money aside every month and with each payment you gain equity. Upsizing or adding an investment property increases the returns exponentially.
The fourth reason is that the long-term gains you make on your principal residence are tax-free when you sell.
Compelling financial reasons for sure, but owning real estate is all about the environment that you provide for yourself and your family. Owning provides stability, deeper ties to the community, more meaningful relationships with neighbours, and creates a feeling of pride and accomplishment for your entire family. When you change homes by moving to another neighbourhood or just down the street new relationships and opportunities blossom.
Extensive research from across Canada, the U.S., and Europe points to the fact that your home and where you live have the largest impact on happiness, health, education, financial well-being, and overall success.
My answer to the question is a resounding yes.
It is a very good time to upgrade and improve your and your family’s future positioning. Here are a few things to consider in making the decision to elevate where you live.
Hope this answers the question for our clients and they find THE home that will add more value to their financial and overall family success.