For many of you, a house is the single most significant purchase you will make in your lifetime. If you’re one of those homeowners who believe it’s necessary to purchase a new house every couple of years, you’re not alone. The average Canadian moves home every seven years. Americans move homes every 13 years or so.
For many of us, the idea of moving every 7 years seems to be ingrained in our minds as a natural part of life. But have you ever stopped to ask yourself why this is? Could it be that we’re influenced by messages from the media and realtors?
While it’s true that these industries may play a role in shaping our perceptions, there may be other reasons for our restlessness. Perhaps it’s the desire for a change of scenery, the need to accommodate a growing family, or the search for a better job. Regardless of the whys, the fact remains that moving is a big decision that requires careful consideration.
Read: Is Investing In Real Estate a Good Decision for Business Owners?
However, before you reach for the “for sale” sign, let’s take a closer look at whether this approach is sound financial planning or a waste of hard-earned cash:
1. Transactional costs are high
Purchasing a new home comes with a slew of expenses. Moving and transactional fees, such as real estate agent commissions and closing costs, can add up quickly and could easily run into tens of thousands of dollars.
The idea of moving to another house every 7 years may seem appealing, but considering the expenses involved in buying and selling, it can be challenging to hoard return on any capital gain.
2. Time and effort
Moving homes is a time-consuming and burdensome operation. Packing, cleaning, and organizing old and new houses can be exhausting, and it can take weeks or even a month to get all belongings in order. Moving at regular intervals can take away precious time and resources that could be used elsewhere. It could be particularly challenging if you have kids who have to change schools every 7 years.
3. Opportunity cost
Frequent house purchasing not only comes with upfront costs but also lost opportunity costs, particularly if prices are rising in the property market within 7 years. That’s because if you’re continuously buying and selling, you typically invest a lot of money in transaction expenses rather than accumulating wealth in your property.
You may be wise to purchase a larger home or invest money in your existing home, such as renovating your kitchen or adding an extension, instead of selling and buying a new one.
4. Emotional distress
Buying and selling homes can induce anxiety and emotional distress, particularly if the sale or purchase process is lengthy or complicated. Moreover, frequently changing schools and neighborhoods can cause emotional disturbance in children, particularly if they develop meaningful connections with peers and teachers.
5. The better alternative
Instead of chasing the latest and greatest home design trends, consider focusing more on buying a home that fits your family’s needs for the long term. You could add value to your property over time by remodelling or upgrading its features or even renting it out to earn additional income.
Homeowners would benefit from an in-depth analysis of the current market, seeking guidance from an experienced realtor, and taking the time to investigate their financial situation and possibilities. It might make more sense to wait a few years before making a big purchase, investing more in your present property, and only selling when the right opportunity emerges.
My personal story
Buying a home is a significant milestone for any couple, but my husband and I took the plunge when I was pregnant with our first child. We knew that our family was growing and we needed a place to call our own. After years of careful saving, we managed to scrape together a respectable amount for our down payment. We wanted to hit that magic number of 20% so that we could avoid any added fees like mortgage insurance. It was no easy feat, but the satisfaction we felt when we finally got the keys to our new home was immeasurable.
For my family, we thought we had found the perfect starter home. It was just the right size for us and we imagined we would be there for a few years while we saved for our forever home. But you know what they say about plans–they have a way of changing.
After a few years in our house, we were blessed with another child and suddenly our little home didn’t seem so spacious anymore. We knew we needed to make a change, but we thought we had more time.
That’s when life surprised us with an opportunity we couldn’t pass up and suddenly we found ourselves entering a new chapter.
After considering all the options, my family and I finally found our dream home – a spacious and welcoming house that ticked all the boxes of what we were looking for. It was the perfect blend of comfort, livability, and flexibility that we needed to live a fulfilling life. From the picturesque surroundings to its proximity to great schools and the amenities that we were after, everything seemed just right. We knew that this was the place where we could spend the rest of our lives happily, and we couldn’t be more excited to call it our second home.
Fast forward to 18 years later, our kids are now young adults and truthfully, I’m getting the itch to move. I find myself drawn towards newly upgraded modern homes with their sleek designs and state-of-the-art features, and I can’t help but daydream about the possibilities that await us in a new home. Everything from the spacious floor plan to the high-end finishes elicits excitement and anticipation for the future.
Our home is our sanctuary- it’s where we unwind, relax and spend quality time with those we love. However, I can’t help but feel like we’re ready for a change. It’s not that anything is inherently bad, but sometimes we need a little refresh, a new beginning, to rejuvenate our souls. Maybe it’s the allure of a little added luxury or the excitement of a fresh start, but something is calling us to explore our options. Sometimes, making a change can reinvigorate us and allow us to embrace life with renewed energy and enthusiasm.
Now I did find a new home that I quite loved, and it was time to crunch the numbers.
The land transfer tax alone to purchase a new property would be $32,000 (where I live). To sell the house we have would cost about $50,000 and lawyers’ fees and moving fees would add to about $7,000. That doesn’t include any changes that I would like to make to the new house. Just these fees listed add up to $89,000. That’s not a small chunk of change.
Moving can be quite a costly endeavour, from hiring professional movers to packing supplies, not to mention the stress and hassle of finding a new place to call home. But what if instead of spending that money on moving, you invested in improving your current home?
By upgrading your property, you not only make it more comfortable for yourself and your family, but you also add value to your home. Unlike moving expenses, which can feel like a never-ending pit of sunk costs, home improvements offer a return on investment that you can enjoy for years to come. It’s a smart move that not only saves you money in the short term but can pay off down the line.
While our family has ultimately decided to stay put instead of packing up and relocating, that doesn’t mean we don’t have some exciting changes in store. Thanks to the money we save by not moving, we’ll be able to invest in upgrading our current home.
Whether it’s a much-needed renovation or simply adding some new decor, we’re excited to give our home the love and attention it deserves. So, while we won’t be pulling up roots, we’re looking forward to making some improvements that will help us feel even more at home.
The purpose of this story is to show you how expensive moving can be, and how much money you lose on each move you make. Moving can be quite an expensive endeavour. The costs of hiring a moving company, renting a truck, and purchasing packing supplies can add up quickly. But what many don’t realize is the amount of money lost with each move.
Every time you pack up and move to a new location, you inevitably leave behind items that you no longer need or want. These items could have been sold or donated, but instead, they ended up being discarded. Furthermore, moving requires taking time off work, potentially losing out on wages. All of these expenses can really add up, making it crucial to carefully consider any move and its potential costs.
The bottom line is regardless of how frequently you move houses, the pros and cons need to be weighed to make the best personal financial decision. For the financially stable, repetitive moves may be a way of indulging in a lifestyle that they desire. However, as we’ve seen, this may not be the right path for everyone.
By knowing and understanding the hidden costs, effort, and opportunity expenses associated with selling and purchasing a home, you can make informed decisions leading to a financially secure future. Rather than opting for trendy new homes, consider the benefits of building equity by upgrading your property and waiting for the right opportunity to emerge.
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