Upstage or Move-Up? Should you Relocate, Rebuild or Renovate? Surviving the Numbers Game
You loved your home from the moment you saw it and you fell in love with your neighbourhood as well. But now you might be working crosstown and want to live closer to work, or your family may be growing. Regardless of the reasons, your current home may not be able to accommodate your needs. This raises a tough question: relocate, rebuild, or renovate?
With this question in mind, we turned to three Midtown industry specialists for their perspectives and advice to assist you in your decision. Our Relocation Specialist is Jennifer Greenberg, Broker at Royal LePage. Our Rebuild Advisor is Alisse Howeling, CEO and Founder of KAAV Living. Our Renovations Consultant is Custom Home Builder, Mark Wexler CEO of Wexmark Homes.
First, let us resolve that accomplishing your goals will be a “numbers game.” Your decisions will be bound by what you can afford and what level of risk you’re willing to take.
Let’s examine the three options.
To move or not to move? Considering the current real estate market with inventory at a premium, finding a new “home” can be a difficult challenge. Not to mention, Toronto’s Midtown offers such a high quality of life that it’s hard for those living there to imagine leaving and easy for those looking to buy, to imagine moving there.
Jennifer Greenberg warns that relocating or moving into a high-demand area like Midtown is challenging. Here is an example for consideration: A young couple in Toronto who wants to buy a house for $1 million, would need 20% down ($200,000) in cash, plus pay mandatory Land Transfer Taxes of $32,000. What young couple has been able to save the deposit amount, with University loans and/or other debts? Families who “want in,” may be forced to re-compile their “wish list,” settle for less space or even abandon moving to Midtown.
For homeowners who just can’t leave the area, rebuilding can be a viable option, but requires an understanding of the overall process.
Whether your house is detached or semi detached will determine your options for rebuilding. Permits will be limited by its “setback.” A semi detached house can only have setback on one side; being the distance between your house and your neighbor’s (space between lot line and the house).
Ms. Howeling has suggested an Eight Step Plan for assessing whether or not you should rebuild your house:
- Create a thorough plan and understand the process.
- Determine if this type of project is viable based on cost and timeline.
- Create a team to help with each step: architect, structural engineer, general contractor(s), designer, mortgage broker etc.
- Have a contingency budget. If you’re renovating an old house, you might discover issues that do not comply with the Building Code. You need to bring all issues “up to code.” After a structure study, you’ll know more.
- Hire a home inspector to evaluate your house for potential defects/issues? Some problems may not be initially apparent.
- “When you rebuild you don’t have these problems, because you just knock the house down.”
- Choose a competent, “all in one” contractor/builder and ensure they adhere to your proposed budget.
- Prepare to temporarily move your family out of your house for a major renovation and/or rebuild (6 months to 1 year).
If you are considering a rebuild, then KAAV Living offers design style that is both modern and functional, utilizing a Scandinavian aesthetic to maximize your lot size. Space is used to its full potential because the house is a built on an axis. A 2,300 square foot KAAV house seems large because of long sightlines that look beyond the rooms. Ceilings are high (main floor = 9 feet).
If you’re already an owner in Midtown and want to stay in the area, a renovation might make sense for you and your family. Is your lot large enough for a major renovation project? Do you have the budget to renovate? “Those who cannot move-up, renovate. They take equity out of their homes and stay put,” says Jennifer Greenberg.
If you choose to renovate your existing home, then your project will need to comply with municipal By-laws. Renovating can have limitations and Mark Wexler advises that much “depends on the Ground Floor Area and lot size. Some By-laws allow you to build a 3rd floor or an addition. Many homes in the area are bungalows so building up can be a possibility.” He recommends, that if you have less than $200K available, a renovation and redesign of your existing living space is a good way to try and find more space for your wish list.
Wexmark Homes offers renovations that help create space in your existing house. “We use creativity, such as built-ins for closet space, reconfiguring layout, taking out heavy elements of the house and finding other materials and products that will help homeowners gain more space out of an existing template … Taking out walls in the house. Redesigning room sizes. Relocating a staircase. Relocation of a space,” explains Mark Wexler.
All 3 Agree
All three of our interviewed experts were unanimous in the opinion that relocation does not make sense for homeowners in Toronto right now. This is largely due to how difficult it is to qualify for a mortgage to purchase an upgrade. However, securing renovation financing is much easier and helps homeowners build equity in their current homes.
Ms. Greenberg was adamant that homeowners who’ve purchased within the last ten to fifteen years will not have built up enough equity to qualify for a mortgage to buy a bigger and better house in the same area. This issue, coupled with the fact that salaries have not advanced to compete with the inflated housing market, spells doom for homeowners seeking to become homebuyers. Another barrier to buying is Toronto’s enormous Land Transfer Tax, paid to both the City and Province. In other municipalities, homeowners are only required to make payment to the City.
Ms. Howeling, though a rebuild specialist, seemed to only approve of rebuild scenarios that include a new foundation. Otherwise, “it would be like building a new house on an existing set of issues, such as dampness, mold, mildew and a weird musty smell.”
Mr. Wexler agreed that relocation was not a possibility due to a lack of built-up equity and mortgage financing difficulties. He explains that a move from a 1.4 million house to a 1.6 million home is not moving up, because essentially, both “houses would really be the same…” The only possible advantages would be a better school district or a slightly more central location.