Housing dilemma – Part 2
Should we stay or should we go? If we go, when do we pull the trigger?
When we go, will we get good value for our home?
Could we overpay for a place in the city?
Will we miss where we currently live? (Yes)
…And more questions abound…
Over the last year, my wife and I have considered moving back into the city. Doing so would bring us much closer if not next door to amenities, walking distance to work and much more. I won’t provide all the background to this narrative – I already discussed that in this post.
Today’s article is an update on our current thinking and where things might be headed.
Are we still considering the downtown core for our next home?
We would like to live around here (near where we used to live 10+ years ago):
We currently live here:
Will it be a single-family home?
Most single-family homes that do not require at least $50,000-$100,000+ worth of updates cannot be found for under $1 million in the city core.
Older semi-detached homes are selling for $650,000+. New builds (in very desirable neighbourhoods) are selling for this much – which is absolutely out of reach for us:
To get into something we can afford (and for the space we really need), at the time of this post, we’re leaning on re-entering the condo market.
No doubt some readers will groan (i.e., why would you ever want to own a condominium??) but we believe this might be the best decision for us – based on our lifestyle plans in the coming years. (Note: we used to own a condo 10+ years ago.)
Will it cost us more money to move into the city?
How much are we willing to pay?
We’ve got a range but it’s more than this house will sell for…
If you’ve been following my site for any length of time you’ll realize we’ve been working hard to rid ourselves of mortgage debt. Well, with any move back into the city being closer to amenities brings value. Value costs money.
This means we’ll need to do some serious math in the coming weeks. A detailed budget will help us determine if this is financially feasible. In doing some quick math, here are some considerations to share as they relate to our budget and cash flow needs:
- Property taxes will be higher in the city than they are now. We estimate the annual cost will be an increase of $2,000 per year over now, starting in year 1, not including inflationary increases over time.
- Basic operational costs (heat, hydro, water, telcos) will be lower in the city (for a condo) than they are now. We estimate there will be savings of about $1,500 per year or more starting in year 1 of city living.
- Car / auto costs will be lower in the city. Once there, we intend to go down to one vehicle (instead of two today). We will sell the other vehicle given we can walk to work, get groceries, and more near the future home. In addition to that, we estimate our car / auto operational costs will decrease by more than $3,600 per year (at least $300 per month) going down to one vehicle.
- Maintenance costs will likely be “a wash” long-term (15+ years from now) but they should provide some savings in the early years of condo living. We estimate we spend about 1-3% of our home value on maintaining and improving our home each year. At the high-end, that 3% value, that would be triple of the projected condo maintenance fees.
- Home insurance would change to contents insurance (since building insurance is covered by the condo fee). Based on my research there is no way contents insurance will even come close to matching our current home insurance rate. Those costs now approach $2,000 per year based on mostly weather-related claims in our province over the last few years.
So now what?
We’ll continue running the numbers but what is very clear to us at this point is this: moving back to the city will be a lifestyle choice. This is not unlike the lifestyle choice that brought us here, to our current home, seven years ago. But things change – and that’s OK. It also means this lesson learned: even when the finances might tell us that staying put here for many years might be a better option, the desire and emotions related to moving back to the city are likely to trump math.
As our decisions are made I’ll keep you posted.
What decisions did you make when it comes to home ownership? Did emotions trump math? What was involved in your last lifestyle move?