Housing dilemma – Part 3: decision made
Should we stay or should we go?
If we go, will we get good value for our current home?
Is our timing right to move? What will the market be like when we sell?
How much stuff will we have to sell to move back into the city, into a smaller place?
Questions abound…
Over the last year and a half my wife and I have considered moving back into the city. Doing so would bring us much closer if not right next door to amenities, walking distance to work and much more.
To be honest I’ve struggled with this decision (far more than my wife has). I really don’t like to move…
You can read about Part 1 of this housing dilemma here.
Here is a continuation of our housing dilemma here – where housing decisions are not just financial ones, there are often a range of emotions and lifestyle decisions involved.
Today’s article is an update on our decision (if you don’t already know) and what lies ahead in the coming year – and more.
Last time we talked about this…
My wife and I narrowed our search for a home in Ottawa. We would like to live here:
We currently live here, about 15-km away from that area:
The outcome of some lengthy (and at times contestable!?) talks around the house, including a strong desire to make some lifestyle changes, we decided against trying to buy a single-family home in the city. Besides, most of those houses cost at least $700,000-$750,000 now. That’s an Ottawa fixer-upper price. Most detached, updated homes (in the area above we are interested in) approach $1 million. We are not paying that.
So what did we decide on and why?
We decided to re-enter the condo market. (We owned one back in the mid-2000s together, some 12 years ago before I started this blog.)
Now, no doubt some readers will groan (i.e., why would you ever want to own a condominium??) but we believe this is the best decision for us – based on our lifestyle plans in the coming years:
- We want and intend to work full-time for another 5 years, in our current jobs or at the same company at least. It would be nice to be closer to work if this is our plan. Our daily commute is at times a grind. We have 8 years experience of that.
- Over the next 5 years, we intend to save and invest by maxing out our TFSAs and RRSPs every year – owing more dividend paying stocks and U.S. listed ETFs like VYM. In doing so we hope to realize this massive financial goal.
- Over the next 5 years we intend to put a higher priority on killing mortgage debt. Our 2018 goals reflect that. We do not want to enter semi-retirement* with any debt obligations.
- *Enter semi-retirement, if we can, in about 5 years from now. We will only stop working full-time once our mortgage debt is gone. We believe with no debt, having some money in the bank at our crossover point; some small future workplace pensions to look forward – that’s enough to give us the freedom to work on our terms. Part-time work or contract work or seasonal work will give us some income AND time to enjoy the activities we love while we’re young, including more travel. With a smaller home, with a smaller footprint to take care of, the condo should be ideal to come and go largely as we please.
More benefits with the move…
While we really like our current home and have made some great friends in our community (both will be tough to leave), we believe the following are benefits to this lifestyle decision:
- While property taxes will be higher in the city; monthly operational costs for the condo (heat, hydro, water, telcos) will be lower than they are today.
- We will no longer need 2 cars in our garage. Soon after we move we intend to go down to one vehicle and use that car sparingly each week. If we do need the car to commute to work, it will be a 5-minute drive. Otherwise it’s a 15-minute walk or an 8-minute bus ride. Going down to one paid off car in the condo parking garage will save us about $300 per month or $3,600 per year. Last time I checked our travel budget, those savings would easily pay for a nice vacation for us!
- While you might believe maintenance costs will be far higher in the condo (with condo fees) we anticipate they will actually be a wash long-term. Consider most single family homes need new roofs; new windows; furnaces, A/C units, and other essential equipment replaced over time – it’s not a stretch to pay the equivalent of thousands of dollars each year to maintain a single family home. That’s what condo fees will pay for in our future building as well.
Closing thoughts
Is this the best financial decision we could make? Probably not. I mean, heck, moving is expensive and it will cost us money.
But you know what – so what.
Life isn’t about money.
As we get older we’re learning to genuinely value and appreciate our time. We also have a growing, far greater appreciation for our health (and want to take care of it). We want to have time to enjoy that health while we can – do things with our time that our important to us. We want more options and opportunities around us – the ability to walk to groceries, restaurants and employment. We want to simplify our lives with less stuff. We just don’t need some of the things we own.
We’ll have some work to do to prepare the home for the sale but that’s OK.
As we get closer to the sale I’ll keep you posted. But for now if you want to make some early, general enquiries about a well-maintained, all brick three-bedroom bungalow in the south end of Ottawa…well…you know where to find me 🙂
Mark
My name is Mark Seed - the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I'm looking to start semi-retirement soon, sooner than most. Find out how, what I did, and what you can learn to tailor your own financial independence path. Join the newsletter read by thousands each day, always FREE.
Great post Mark. And I’m glad to hear your showing went well. Our paths and goals are so similar. Thanks for sharing your for the greater public. It’s a great example and inspiration. When others see it being executed successfully they might think, ‘hey I can do that too’.
You’re right on the debt thing. I would not have moved to this ‘semi retirement thing’ had we not cleared our mortgage and vehicle debts.
Most do not consider the semi retirement thing, but it’s a great option. Free up more time, keep some meaningful work. Live a more healthy and balanced lifestyle. More time for exercising and eating well and sourcing out wonderful Craft Beers. We have more free time while we have greater health; that’s the best combo.
Keep us posted.
Thanks Dale. I figure this is the entire point for us: semi-retirement so we can work, do what we please; while freeing up more time for fun, passions, be healthy, more balanced.
Once the debt is gone, it will be a game-changer for us. Hopefully <5 years.
I will absolutely use this blog to keep you posted!
I really enjoy the freedom. But I “work” way more. Ha. Some days 15, 16, 17 hours. That said, I can work from wherever. Eventually I can settle into a grove and pick my spots.
I find that the challenge. How to walk away from ‘work’ I really enjoy.
It’s a great journey and path. Best of many worlds.
I think any sort of semi-retirement with my blog, other work (potentially CFP work) and other paid income will suit me just fine in the coming 10 years. I welcome it!
Hi Mark,
Good thread and comments. I’m currently doing something similar, selling and moving closer to downtown for the lifestyle/convenience factors you mentioned. Good luck! Selling here in Calgary was a grind.. we listed in May and are finally closing here at the end of February.
In the comments you mentioned you could be debt free, if you so chose, given your non registered balances. However you are opting to hold onto the investments and continue along with the debt. I completely get that!
Whenever these big life moments, and financial moments occur, there are sometimes obscure opportunities that make themselves available, if only for a brief moment in time. One thing you could consider is making your non deductible personal property mortgage into a tax deductible investment use mortgage.
After your house sells and you are buying your condo, sell your non reg investments, use the proceeds to pay for the condo, then have your financial institution advance the mortgage to your bank account and use that to replenish your non registered investments. Voila! Your mortgage interest is now tax deductible. Depending on your mortgage rate and tax rates this could in theory make a 4% mortgage into a 2% mortgage after tax.
Of course this triggers capital gains (which I always say are is not an IF but a WHEN decision) I’m not sure how painful that would be for you.. but crunch the numbers on the value of having deductible interest vs triggering the capital gains! At the same time, upon reinvestment of the investments, and depending on yours and your wife’s income and corresponding tax brackets, this would be a great time to look at the merits of spousal loans to balance out income between the two of you if there is a discrepancy.
Oops, just noticed after my post above that this thread is from a year ago! Sorry about that. Hope it all worked out for you!!
All good!
A condo! – groan. (someone had to say it) “And God help you if you ever buy a condo – talk about a disaster on the horizon.” https://www.linkedin.com/pulse/audi-generation-how-expectations-ruin-retirement-kurt
I too live in the south of Ottawa, and my daily tiresome commute is 1.5 hours each way. Even though we have much in common, my situation is a little different. Some parts of Ottawa are booming with new construction, others are in decay. Downtown will smell like cat piss in a few months, when pot is legalized. This should be on a condo owners radar.
I groc that it’s not all about money and the lifestyle is important. Anyway, I’m not one to talk. In pursuit of my lifestyle, I am about to make a huge financial mistake.
Cheers
I’m optimistic our condo will not smell like cat piss (due to pot)…but you never know!
What are your big (mistake?) plans?
Buy a boat. There goes all my financial credibility. Fortunately, I have had second thoughts.
LOL.
Congrats on the decision! Will you be mortgage free then? I live in a condo now and I find it pretty great- it feels very secure. It’s nice to be able to walk to things and commuting is such a drag.
I wish! No, we’ll still have some debt GYM but we hope to slay that in the coming years. We’re after it more aggressively now. In recent years, we were more focused on maxing out all TFSAs (x2) and all RRSPs (x2) – I just have my wife’s RRSP to worry about now. We could be debt free if I sold all my non-reg. account stocks but I would be hit with thousands in capital gains if I did that – and I don’t want to do that!
How are things coming along for you in 2018?
Cheers,
Mark
Yeah, same here. I have a mortgage but would rather continue with my non-reg account and invest there rather than pay the mortgage off.
Things are good, can’t complain, parental leave rocks! 🙂
Yeah, we could kill off the mortgage debt if we really, really had to with our non-reg. investments but I would prefer to keep those assets intact and growing. Keep up the good work.
I guess everyone is going over to May’s house for the MOA meet & greet?
I will bring popcorns for the movie.
We advertised and sold our previous two homes ourselves, and we’re no real estate experts. On both occasions we achieved a higher final sale price than we we were told it should be listed for. It can be a bit of a hassle, and might take a little longer to sell, but for us it was well worth the time and effort, saving us $10,000s.
Thanks Bob. We’re going to try and sell our own home as well or potentially use Com-Free.
You are correct!! Cheers 🙂
I believe that’s a good decision for your family, Mark. As you know, I paid 1.4M last year to move to a bigger house, which is $600K more than my old home. My only regret is that I did not do it earlier. My mom and kids are all extremely happy with the new home, now all with their own more spacious and better bedroom (new bedroom furniture too for the kids), and more space for live and play. I am quite happy myself. I eventually got the home theater I was dreaming of with a 120 inch screen. Life is easier for me too now the kids have their own play area and do not mess up the entire house any more.
I always think people working hard well deserve to enjoy the life using the hard earning money as long as it’s within their means and under control.
Wow, your house sounds amazing May! Well done and yes, I recall you moved. That was a huge commitment for you but at the end of the day, if these financial decisions are the best thing for you (and your family) – who is to argue? It’s only money. Life your life as well.
Mark, congrats on reaching a decision. I am sure that is a relief, versus thinking and thinking about it.
Yes, you should get on your condo board asap! I bought a new build townhouse strata property (the BC version of a condo) as a rental property. Eventually I went onto the board and had a good look at the financials, and I ended up filing 3 years of tax returns rather than pay someone to do it. None of the other board members had any clue whatsoever about the finances and lawyers had not turned over money due to the Strata after sales, stuff like that. And no way to get money from a lawyer if they don’t want to pay you.
I was lucky and sold it last summer. I would never buy a condo again, because of the inflated expenses. Maybe Ottawa is different, but here there are only a few management companies and I definitely was not happy with ours. All the trades know that they can soak the Stratas and charge ridiculous prices for everything. Like over $35 an hour to shovel 2 cm. of snow from the sidewalks. So all repairs are exhoirbitantly expensive. And then they may never get done even if you are willing to pay.
When I was selling I just did the outdoor repairs myself (even though they were not my responsibility) because it was over a year later and painting was not done and siding not washed where kids had thrown eggs or something, that kind of stuff. If you are on the board you can help mitigate against financial disasters.
Good luck with your sale, whenever it may be.
Thanks! Yeah, I might sit on the board. Not sure yet. We won’t be moving for another 1.5 years.
Trades are generally good in Ottawa. I would be happy to shovel snow for $35 per hour! I’ll keep you posted how things go.
Once you get to looking, reach out to Adam Mills for your realtor…. you won’t regret it. And no, I’m not getting paid a referral fee lol. Good luck on the decision and on the hunt!
Thanks for the input.
We lived in a condo before having kids. I love the downtown condo life. In your retirement years if you travel long term you can rent your fully furnished condo out on Airbnb, if the building will allow it. Just have the cleaner come in to check for any damages and do the cleaning. Leave the keys in a lockbox with security. That’ll pay for your retirement travels. 🙂
Yes it will… that might be part of our plan actually!
You’ve certainly given the matter a lot of thought and I’m sure it will suit you both. I’d look into the Reserve Fund as well as the maintenance history and type of repairs that have been done over the past few years. These are often overlooked by condo buyers.
Great points and reminders. It will be a new building and the developer has 40+ years of experience in transferring buildings to local boards – heck – I might even sit on the board if I get elected!
Hi, I’ve been reading for about a year as I take better control of my investments and have really been enjoying your articles.
About 3 years ago, I made the decision to sell my detached home in the GTA and move to a condo and it was a wonderful decision. Many friends and family were confused as I’m in my thirties and they thought that I should want a big detached home and saw te move to a condo as a step back. It has allowed me to pay off my mortgage, accelerate investments and is a much lower hassle lifestyle that has been well worth all of the work of selling and moving. Good luck in your journey.
Well thanks! “About 3 years ago, I made the decision to sell my detached home in the GTA and move to a condo and it was a wonderful decision. Many friends and family were confused as I’m in my thirties and they thought that I should want a big detached home and saw te move to a condo as a step back. It has allowed me to pay off my mortgage, accelerate investments and is a much lower hassle lifestyle that has been well worth all of the work of selling and moving. Good luck in your journey.”
Geez…inspiring comment 🙂
I missed it on the first read. On all these financial blogs I see terms like “financial freedom”, “financial independence”, “financial security”, “pursuing”, etc etc. There comes a time for most of us where we hit “financial maturity” in that we realize that:
“But you know what – so what.
Life isn’t about money.”
I think you’re there. Well done.
Thanks very much Lloyd. We’re getting there and a mind-shift will help as well.
If it feels right in your gut, go for it Mark! I think that with your future travel and retirement plans, a condo would be well suited for that lifestyle.
Thanks my friend. A HUGE decision for us and I hope it will be the right one 😉
I reckon that city centre condo prices should hold well as there is always a demand for downtown action and convenience. If the condo prices are still reasonable, it may be a good time to buy (i deem downtown vancouver condo prices as unreasonably high to buy) i always have a thing for smaller spaces (opting for condo or rented apartments) and taking public transportation (no car. Terrible driver) to cut down on my living costs. Formula : expenses kept low + increasing annual dividends = quicker financial independence. (this is my FI mantra)
I like the recipe rn – DRIPping many stocks and we’re trying to cut back on some expenses in 2018. Next year will be even better with one car although property taxes will be higher in the city.
Sounds like a great plan for you Mark. G/L with the house sale!!
Here’s hoping we have a buyer!!
I certainly envy your plan Mark. I think you and your better half are going to have an amazing, stress free retirement.
I hope so Gary. I feel like we’ve worked hard to get here right now.
Perhaps I should take more time to proof read…I am getting a transfer to Ottawa which will make the following sentence make sense.
All good Josh!
Good Luck with your decision Mark! I think you will catch a nice wave of boomers looking to also downsize this decade to smaller condo like accommodations as well, which should bode well for price appreciation. Perhaps a wild idea but have you looked at a rent vs buy calculator? Renting could further free you from being “owned” by your possessions, reduce stress, and unlock your housing capital to work for you. I am a bit of a property bear myself right now and think with increasing interest rates and new stress tests will but either sideways/downwards pressure on most housing markets in Canada. Anyways, I am destined for a work transfer to Alberta either this summer or next and perhaps will see you at a Red Blacks game as I am a huge CFL fan since living out in Rural Alberta for the last 10 years.
Cheers and have a great day,
Josh
We absolutely looked at rent vs. buy calculator but decided home ownership/condo ownership long-term could allow equity to be retained and we could unlock that (sell condo) and simply rent if we wanted even more freedom eventually. I suspect if we wanted to forgo home ownership all together we could be retired in another year or so but that’s not a decision we were willing to make. We actually do want to work now but as every year goes by we want to work more by choice vs. must (i.e., to pay off debt).
Sounds excellent! With your penchant for travel (I assume you intend to continue with that) it has to be easier to do with a condo versus a house no?
I think so Lloyd. Less worry about a sump pump failure, worried about the lawn burning in the summer (we have an irrigation system though); snow and ice freezing up our front step in the winter (although neighbours help out with that), other.