At the opposite end of the housing spectrum from the downsizing boomer is the upsizing millennial or Gen Z.
Boomers may downsize to a condo from their family home in retirement, while younger generations upsize to a home from a condo when they’re ready to start a family and need more space. That’s the ideal for young adults. The reality was depicted in a recent report from a real estate website called Point2 titled, Upsizing in Canada’s Largest Cities: House Prices Trip Condo Owners on Their Way Up the Property Ladder.
Overall, Point2 found that houses in Canada are close to 40 per cent more expensive than condos, or about $214,600 on average. Houses cost more than double the price of condos in 14 cities located in British Columbia and Ontario, plus Calgary. Houses are more expensive than condos by $1.2-million on average in Vancouver, and by $762,000 in Toronto. Three cities where the jump to a house from a condo is least expensive: Trois-Rivieres, Que., Halifax, St. John’s and Sherbrooke, Que.
Condos have long been thought of as a way for young adults to get started in the real estate market. Own for a few years and then apply your increased equity to the purchase of a house. But the Point2 analysis suggests a reason for caution among people buying condos as a starter home.
The real estate turnaround of early 2023 has favoured houses more than condos, which means the price gap is growing. In Toronto last month, average condo prices were down 1.1 per cent on a year over year basis, while detached homes and townhouses increased around 5 per cent.
If you’re planning to upsize from a condo, stay flexible on timing. If house prices keep rising faster than condos, you may find the equity in your condo doesn’t buy you much. A few years of additional saving may be required.
Expensive houses in big cities mean more people will live in condos for extended periods. Consider a two-bedroom condo – it might be a more comfortable fit if you need to stay a while.
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Rob’s personal finance reading list
What to do if you’re caught in a data breach
If you’re part of the Petro-Points customer loyalty program from Petro-Canada, you likely got an e-mail recently saying an unauthorized party gained access to member information like e-mail addresses, dates of birth and addresses. Here are some thoughts on what to do if you were caught up this or any other data breach.
The cost of concerts
Toronto Life’s Urban Diplomat column looks at a reader query that touches on the high cost of concert tickets. Concert inflation is a thing – fans are being priced out.
A Liberal tax promise tracker
A website for advisers updates us on where the federal Liberals are in meeting tax-related promises delivered in budgets of the past few years. I wrote recently about an as-yet unfulfilled election promise to increase the Canada Pension Plan survivor’s benefit.
Can loyalty points help pay your mortgage?
Some banks allow clients to apply loyalty points earned on credit cards to mortgage or credit card debt. A way to turn your points into a little breathing room in your household budget.
Ask Rob
Q: If I withdraw all the money in my tax-free savings account to cover a purchase, how much can I put back in when I have more money? Would it be the amount I withdrew or just the sum of yearly contribution limits?
A: Here’s an answer to this question from Jeff Dessau, a chartered professional accountant (CPA) at Yale PGC LLP. “In the year following the withdrawals or later, all the TFSA funds withdrawn can be contributed back.”
A retirement plan for life-long renters
Globe reporter Salmaan Farooqui wants to hear from people who have given up on home ownership. What does your retirement planning look like? How are you handling your investments? How much are you having to save and what does your portfolio allocation look like? Email sfarooqui@globeandmail.com to share your story. Must be open to using your real name.
Tools, Explainers, Guides and Charts
A review of 11 websites that help you compare mortgage rates.
The Money-Free Zone
Soul/R&B singer Danielle Ponder left her job in the public defender’s office in her hometown of Rochester, N.Y. to make music. Her latest single, Roll the Credits, highlights her phenomenal voice.
Watch this
TikTok introduces you to the term bougie broke, aka broque. Pronounced broké.
From the Twitterverse/LinkedIn
The very picture of bank competition, courtesy of finance professor and author Moshe Milevksy.
In case you missed these Globe and Mail personal finance-related stories
- Tim Hortons, Canadian Tire and other loyalty programs worth watching
- What are secured credit cards, and are newer ones like Neo Financial’s a better option?
- Reality deflates the NDP’s Big Grocery conspiracy theory
- How does lifestyle affect life expectancy for women? Surprisingly, diet and alcohol don’t have much impact
More Rob Carrick and money coverage
Subscribe to Stress Test on Apple podcasts or Spotify. For more money stories, follow me on Instagram and Twitter, and join the discussion on my Facebook page. Millennial readers, join our Gen Y Money Facebook group.
Even more coverage from Rob Carrick:
- 🎧 Catch up on Stress Test: Why millennials and Gen Z are Alberta-bound for a more affordable life • Rising interest rates brought pain for new homeowners - and opportunity for house hunters • Why more Canadians are choosing to be childfree or delay parenthood • Love in the time of inflation: How to manage rising costs when dating • You're not bad at money - you're suffering from money shame • Retirement might look different for Gen Z and millennials. Here's how to plan for it • Recession-beating tips for the job market, housing, investing and the cost of life • Is the middle class dead for millennials and Gen Z?
- ✔️ The housing file: A house isn’t special. Get your head straight about the reality of home ownership • The good, the sad and the unaffordable: Saving for a home downpayment in Canada’s big cities • Property taxes are popping in some cities - how worried should you be about other tax hikes? • Our other real-estate problem - people have too much wealth tied up in houses • Borrowers and savers, here’s how to time the eventual rollback of interest rates
- 📈 Investing: Canada’s top digital broker is TD Direct Investing, with an assist from the TD Easy Trade app • 2023 Globe and Mail ETF buyer’s guide part one: Canadian equity ETFs • For the ultimate in cheap investing, check out the Freedom .08 ETF Portfolio • Yes, there is risk in Canadian bank deposits for the unwary and complacent • CDIC covers bank deposits, but who protects your investments if your broker goes bust? • Answers to your questions about the low-risk ETF paying almost 5% • Happy fifth birthday to one of the all-time best investing products for everyday people • An investing strategy that wins cleanly over the long term by outperforming in bad years like 2022
- 💰 Your money: Mortgage holders, savers and GIC investors, it’s time to change your thinking on interest rates • How much debt is each generation of Canadians carrying, and how do you compare? • For the sake of their financial futures, young people should leave Toronto and Vancouver • This practical new spin on a savings account might just peel you away from your big bank • Rental fraud grows amid rise in fake, falsified tenant applications • Are Canadians worse off financially now than in the 1980s? • From groceries to auto loans, here’s how much more it costs to live right now • When saving for retirement, should you change your asset mix over the course of your career? • Do retirement income needs always rise alongside inflation? Not necessarily • When the bank suggests you lock in your variable rate mortgage, it has an angle
