Deciding to Renovate or Move.
Love It, Don’t List It
As I followed my GPS through the maze of streets to a customer’s house, I found myself admiring the neighbourhood. The homes were beautiful! Judging by the manicured lawns and landscaping, it was clear that the homeowners were proud of their properties.
I visited this neighbourhood often over the years when my son played rep hockey at the local hockey rink. It has many alluring features: schools, parks, restaurants, convenience stores, major shopping malls, close proximity to the highway and much more. In real estate parlance, it possesses the three must-have features: location, location, location! I rang the doorbell and was greeted by an attractive woman, who introduced herself as Eleanor, followed by a boy of about 10 who was trying desperately to hold back a giant, barking Great Dane (thank you, kid!). The woman, dressed in a black Lululemon outfit, was probably in her mid-40s and looked like she worked out regularly. After shushing the mammoth dog (whom she called “Oscar”) we squeezed past him into the kitchen where I met her husband, Tom. We shook hands and settled in at the kitchen table.
“So,” I said, turning to Eleanor after exchanging pleasantries. “How can I help you?”
She looked quickly at Tom and smiled, then turned to me. “We’re really busy people,” she began. “Tom practices law downtown, and I work at home as an accountant. We’ve got three kids, twin eleven-year- old boys who are just full of energy and a teenage girl who does competitive dancing. The boys play hockey in the winter and soccer in the summer, and we’re always rushing around from one thing to the next.” Eleanor took a breath before continuing. “We are constantly going from hockey arenas, soccer fields and dance studios, then over to my parents’, who are getting on in age and need us to help them around their home.”
Pausing, she looked around and sighed. “Managing this place isn’t at the top of our priority list, and I don’t think it’s ever been. The whole house is disorganized and cluttered, and we barely have any storage space. Honestly, I’m fed up.”
I nodded, just letting Eleanor vent, showing her obvious frustration. “So, when I called you, I mentioned the flood that we’d had in the basement, right?”
“That’s right,” I replied. “I’m sorry to hear about it.”
Eleanor’s hands clenched as she continued. “I was so embarrassed when the insurance adjuster came over to inspect the damage and he commented how old and outdated our finishes were. I realized that it was time for a complete update. The house feels completely dysfunctional.”
She clasped her hands together and looked intently at me. “We need help, Gene.”
I nodded my head. She wasn’t the first person to seek my expertise out of desperation. It was time, however, for the home tour so that I could see for myself how serious this situation really was.
Having toured this style of house on many occasions, I knew exactly what to expect. A typical subdivision home, it had a center hall plan and circular staircase with dated wood pickets facing the front door. A powder room was adjacent to the staircase. The living room, dining room and cramped kitchen were situated on one side of the house and a family room, laundry room and mud room adjacent to the garage were on the other side.
My first impulse was to lift my arms in the air and announce, “You need a complete overhaul!” but I bit my tongue and tried not to wince as I took in the outdated parquet floors, the small baseboard, and casing around the doors and windows, the lack of lighting, the dated stipple ceiling, and the tired laminate kitchen countertops. As we walked upstairs, I cringed at the wear marks on the railing and the treads. The upper landing was awash with natural light, but the stipple ceiling was faded with water stains: the telltale sign of a past roof leak.
Once inside the master bedroom, Eleanor leaned in close. “Tom and I are having some problems in here,” she says, glancing sadly around the room.
“Sorry to hear that, but I don’t do that kind of work,” I deadpan, then let out a laugh so she knew I was just having fun.
She looked at me quizzingly and then let out a chuckle. “Oh, Gene, not those kinds of problems! It’s just that the room is draughty and cold at night and there’s only so much cuddling we can do to stay warm in the dead of winter!”
“That’s easy to fix,” I said. “What else bothers you about the room?”
“Well, there’s the closet …,” she replied, her face turning a slight crimson. “I’m too embarrassed to show you the closet. It’s a mess.”
“Hey, I’m a professional!” I replied. “Do you know how many closets I’ve seen? Some people come out of the closet. I go into them!”
Sure enough, the closet was a disaster. It was so small that things were shoved wherever there was room, with no rhyme or reason why things were where they were. Shoes piled upon boots, evening dresses squeezed up against hoodies and hat boxes. Tom had his own closet, but it didn’t look much better. I could only imagine what the kids had done with theirs but, thankfully, she spared me the misery.
Then we moved to the ensuite bathroom. It was tidy, I’ll give it that, but the layout was not ideal with its one lonely sink and a large built-in tub that dominates the room.
“Feeling any vibes?” Eleanor asked sheepishly.
Was I? I was feeling claustrophobic! There wasn’t much I could do with this cramped floor plan, so I looked her in the eye and told her the truth.
“The bottom line is that you need more useable space, “I said. “To achieve that, I’d suggest an addition out over the roof of the three-car garage to create a new master bedroom with a spa-like ensuite and two large his-and-hers walk-in closets. We could design a whole new roof, offering up ten-foot ceilings in the bedroom. Believe me, it would be a fantastic space.”
As I spoke, Eleanor’s eyes lit up.
We maneuvered back to the kitchen. Eleanor saw my eyes fall on a huge pile of paperwork on one end of the counter. She blushed. “I have to admit,” she said, “the kitchen is my home office, and my files are slowly taking over the room.” (As if I couldn’t tell?)
“I hadn’t noticed,” I deadpanned, and she chuckled. “Yeah, it’s pretty bad. I even have magnetic file folders on the side of the fridge!”
“Hmmm,” I said, trying not to look as frustrated as I felt. “Wouldn’t it be more efficient if you set up your business in another room, like your own private office, and left the kitchen for cooking and socializing? We could knock down the walls between the family room, the dining room and the kitchen to open up the space and let the natural light flow throughout. With all the extra space you’ll get in the kitchen, we could put in an island made of natural stone and then have a matching backsplash. Nice, eh?”
She smiled as her gaze drifted into a vision of her perfect home for a few seconds before she blinked out of it and turned back to me. “Lately, I’ve been dropping into open houses at new custom homes. I love those modern features. Tom and I had considered selling and buying new, but I can’t convince the accountant in me to reconcile spending money on the same square footage that I already have.”
Tom walked back into the kitchen just in time to hear Eleanor say, “I’d really rather invest the same amount in this house than move and disrupt everyone’s lives.” Tom let out a huff.
“Really, Eleanor?” he said. “Are we going through this again? What’s wrong with a new home? The new ones are better insulated and energy-efficient, they’re open-concept, they have high-end finishes. And what’s not to love about ten-foot ceilings instead of our eight-and- a-half-foot ones, especially for a tall guy like me?”
Tom looked at me, and went into his own breathless rant (who says opposites attract? Hook these two up to a generator when they’re really talking and they could power all of North York for a week!).
“Gene,” said Tom, “the other weekend we were driving by this great new subdivision in King City and we decided to take a look at the model home, just for fun. Man, was it ever spacious and nice. Even I could tell Eleanor was dazzled. But she doesn’t want to let go of this place for some reason, and she doesn’t want to be so far away from our family and friends and her clients. She’s always going on about the larger mortgage we’d need as well as all the extra cash we’d have to put out for new drapery, TVs, landscaping and everything else that goes with buying new. I get it, but I’m so sick of living in this tired old place.”
He took a breath then continued. “Last year, we had a ‘Burn the Mortgage’ party.” I looked over at Eleanor, who nodded with a smile as Tom continued. “It’s been a tremendous relief to be debt-free, so you can imagine when we started talking about buying a new house and starting the whole racket all over again that I was not really happy. We did some math and found that it would cost us more than $8,000 a month to get into one of those houses! I can’t imagine that anyone would be eager to get back into huge debt like that. I sure don’t!”
They both went quiet, and I saw a chance to get a word in edge-wise.
“How did you get that number?”
“It was what we worked out based on some of those listings,” replied Eleanor.
“Okay…and did you work out how much it would cost to renovate the home you already have?”
Both of them blinked. “We…. weren’t sure of the total costs,” replied Eleanor, who then chuckled. “I guess it’s a good thing you’re here, then!”
I laughed. “Indeed.”
We got to work and after crunching the numbers, Tony and Eleanor were surprised to learn that borrowing $400,000 to invest in a renovation would cost them only $2,000 a month. Tom nodded his= head slowly. “Now that is way more reasonable than buying a new house.” He paused, then smiled. “Tell you want, I’ll keep an open mind about the renovating, and I’ll let you know.” That was where matters stood as I left the house that day.
It took another month before Eleanor invited me back to their home. Tom opened the door and led the way to Eleanor seated at the kitchen table.
“Let’s do it,” she said, then turned her gaze to Tom. He was smiling and nodding.
I put the Agreement in front of them and they both signed without any hesitation on the dotted line. As Eleanor handed me the deposit cheque, she leaned in, and whispered, “Thank you so much, Gene. You can’t imagine how long I’ve been waiting for this.”
Oh yes, I can.
The Benefits of Staying Put
Eleanor’s story is not unique. There’s something to be said for loving where you live. Familiarity with the people, the parks, the local market, the excellent school, and even the secret traffic shortcuts: all go into the decision on whether to move or to stay put.
Unfortunately for most of us, the place we first settle into doesn’t always serve us well over the long run once we buy a dog, start a family, or simply acquire more stuff. After all, needs change as the years go by. The space may feel tight, the furniture grows shabby, and the look runs stale. While some people are held back by sentimental feelings toward the house or the neighbourhood, others simply feel overwhelmed just by the thought of moving.
The result is that many homeowners, and particularly couples, will stay put longer than they should, turning a blind eye to the inadequacies of their surroundings until they just can’t take it any longer. At some exasperating juncture, frustration wins over and the question “should we stay or should we go?” is given serious thought.
But let’s face it: finding a house in Toronto and its surrounding areas that is less than $1 million these days is no easy feat. With such high prices, most people considering a move couldn’t afford to buy back their own house at the current market price. So, if they’re looking to upgrade, they’re forced to head to the most far reaching suburban areas such as Orangeville, Barrie, or Kingston. An increasing number of buyers are choosing to commute two hours or more to and from Toronto just to get more housing bang for their buck.
The Hidden Costs of Moving
People often forget to consider the transaction costs of buying or selling a house. Let’s break it down into dollars and cents (and sense). There are numerous fees and soft costs that come with buying a
typical $2 million resale home in the Greater Toronto Area (yes, that’s typical these days). The knowledgeable mortgage broker Gary Fooks provided me with approximate values for the soft costs buyers incur when they purchase a resale or a new built home (in the Toronto area in the year 2018). Here is a partial list of what goes into the purchase of a home:
A RESALE HOME
City of Toronto’s Municipal Land Transfer Tax $50,000
Ontario’s Provincial Land Transfer Tax $50,000
Realtor’s commission payable on the home
sold and home purchased $150,000
Lawyer/appraisal fee $10,000
Home inspection $700
Moving expenses $10,000
Drapery, landscaping, etc. (approx.) $25,000
Catching up on deferred maintenance in the resale $50,000
home both inside and outside including painting
and roof shingles (approx.)
The total soft costs are approximately $350,000, or about 20% of the selling price.
A NEW- BUILD HOME
In addition to all of the above costs, a typical new-build custom home of $2 million in the GTA also has the following soft costs:
13% HST $260,000
Development and education levies about $50,000
plus building permits fee as per the
City of Toronto Building Department.
Total soft costs are approximately, $650,000, or about 33% of the selling price.
Even after spending all that money, it’s not likely that you’ll just paint the walls and clean the carpets before moving in. In the case of a resale, it’s more likely you’ll want some upgrades, such as a new major appliance, updating the kitchen, or a new backyard deck. Suddenly, you have a laundry list of soft costs that aren’t adding value in bricks and mortar. It’s dead money that could be better spent on an existing home through a partial or complete renovation. For many, this is the tipping point.
No less important is the emotional aspect of relocating. It’s not for the faint of heart. In fact, some psychologists claim that only the death of a family member, divorce, and the loss of a job are more stressful than a home move.
Like Eleanor, many people prefer to renovate rather than move because they like their neighbours, their community, and schools. They also don’t want to go through the disruption of moving or running the risk of suffering the dreaded “buyer’s remorse.” There is no guarantee they’ll like the new place or the people. Staying put allows the family to maintain stability and familiarity.
Naturally, there are a ton of variables when it comes to deciding whether to stay put and renovate or relocate to something with many of the bells and whistles already in place. We’ve all heard the horror stories: costs, months of dust and disruption in your home and life, unexpected problems and delays, budget overruns, poor-quality workmanship and unreliable contractors.
Canadians, however, have definitely caught the renovation bug. According to Statistics Canada data compiled by the real estate consultancy Altus Group Ltd., residential renovation spending (including alterations, improvements, conversions and repairs) across the country broke the $70-billion barrier in 2015.
Why renovate instead of move? Here’s my assessment, based on years of experience in business:
Adds to the value when it comes time to sell and will increase your personal enjoyment for years to come.
Improves the comfort and functionality of the home as well as your lifestyle.
Additional space will accommodate the needs of your expanding family.
Updating and remodeling will transform your home into the trendy and glamorous appearance that you have been envisioning for years.
Mastering your makeover style will create a dream home that you can be proud of.
A functional and inviting living space brings the family together and creates a strong family unit.
Removing clutter and achieving a beautiful, functional and harmonious home reduces stress and, ultimately, makes the home a healthy, nurturing place.
Moving is one of the most stressful life experiences and contributes to hair loss, short-term memory problems and incredible anxiety.
There is a scarcity of new homes and resale in the GTA.
After 2018, the “move up” dreams of families have been squashed because they can’t afford to buy as much now. More people are making their current home their forever home by renovating and making additions to it.
But that’s just my opinion. Before you decide your next steps, do some honest soul searching by pondering all the reasons why you should honestly stay or go.
Making the Choice That’s Right for You
Let’s begin with the neighbourhood. Do you love it? And, I mean do you really love it? Consider all aspects: the people, the schools, the shops, the community centre and library, the trees (or lack thereof), the parks, the walkability score, the religious institutions, the traffic, and any other conveniences that have their place in your daily life. If you moved, how much would you miss those things? Remember, you can fix a house, but you can’t replace an entire neighbourhood.
Next, think about your ultimate goals. Do you want more room or more rooms? People often decide to move because they crave extra space, but it’s not always about adding square footage. A renovation that incorporates a creative layout can make the space more efficient; sometimes, all it takes is an addition of just one more room!
Even if the house doesn’t become physically bigger, a little ingenuity can go a long way toward making a house feel more spacious. For example, a spacious three-bedroom home can be reconfigured to four bedrooms and allow a family to have a more efficient layout. An attached garage can be made into a bedroom, den or office with its own ensuite bathroom. Knock down the walls in a hall linen closet for a bigger washroom. Improve the flow and family vibe by removing walls between the kitchen and the family room for an open-concept design. Finishing the basement provides bonus space for the family without having to build an addition.
The attic, too, is a square-footage gold mine, especially in older homes with pitched roofs. Build stairs through the closet, add insulation and heating ducts … et voilà! You’ll be shocked by the amount of usable space you never knew you had.
Consider what I call “the patience factor”. This virtue is a necessity during renovations. It’s a long-term commitment of time and energy, so only serious homeowners need apply. There will be countless decisions to make throughout the process, from cabinet door handles and paint colours to window coverings and landscaping. Patience (and interest) is required to set everything in place. Kitchens can take several months, new ductwork and wiring even longer. And since most timelines are based on estimates, how will you manage when the work isn’t finished by the promised date? Are you even-keeled enough to handle it, or will you ride an emotional rollercoaster as plans unravel, tradesmen don’t show up on schedule, and the dining room set doesn’t arrive in time for your in-law’s 50th anniversary party?
Be realistic about cost. Renovating is more than paying the contractor. Be sure to consider costs associated with architect plans, appliances, furniture, moving to temporary digs while under construction, an interior designer, and much more. It all adds up … and usually ends up costing more than estimated, so be sure to build extra cash into the budget. There’s also the long-range picture to consider: will the renovation yield a higher selling price if you decide to sell at some point in the future? What’s the eventual return on investment?
As for Eleanor and Tom, they had a terrific space to work with and they loved their neighbourhood, so why pack it in and start again?
They simply needed the confidence to turn their existing home into their Forever Home. And now, guests are regularly wowed by the transformation… and guess whose business card they keep asking for?
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