While the title of this article may sound a bit dramatic, it is intended to catch your attention to discuss why building a large house may not be the best financial move you can make.
Weighing Today’s Large Home Needs in Prime Toronto Neighbourhoods against Tomorrow’s Finances
Chances are, you’re planning to have that four or five-bedroom home built because your family is growing. This is perfectly logical. HOWEVER, as anyone who has children knows, they grow up and move out quicker than you ever imagine. Then, what you’re left with is a house that is too big for just the two of you.
Why Large Homes in Prime Toronto Neighbourhoods May Be Harder to Sell Than You Think
“So,” you may be thinking, “I’ll just downsize. I’ll sell my house and move to a smaller home or perhaps a condominium.” But, this may not work out the way you think. There are several factors at play that will conspire to drag down the value of large homes in the future, making them harder to sell. Specifically:
Retiring Baby Boomers: Since the late seventies, baby boomers have been the driving force in the housing market. And, with millions of them in the U.S. and Canada set to retire, the housing market is set to change dramatically. This group will be downsizing to smaller dwellings – not larger ones.
The New Homebuyers: Young adults will make up the bulk of new demand for housing. And with the shift towards a greener economy and environment, efficiency, lower maintenance and lower taxes are their priorities – not massive amounts of space.
Immigration: Immigration to Canada has slowed considerably, especially to cities like Vancouver. This is important to know because the first wave of immigrants tends not to be homebuyers. They struggle and sacrifice in order to give their children a better life. And many of them succeed, producing a second generation who has the buying power to afford larger, more expensive homes in prime Toronto neighbourhoods.
If the predictions for lower housing demand by population experts such as Boom, Bust and Echo author David Foot unfold, you may find yourself owning the home equivalent of a gas-guzzling SUV.
On the other hand, if your financial situation is such that money is no object, then by all means go ahead and build your large home in a prime Toronto neighbourhood – and live happily ever after in your Casa Loma!
Rosalin Smith-Carr is a Sales Representative with Royal LePage R.E.S. Ltd., Johnston & Daniel Division. Rosalin can be reached at rsmithcarr@sympatico.ca or visit www.primetorontoneighbourhoods.com
Sir Henry Mill Pellatt almost went bankrupt trying to finance his Casa Loma. See the following passage from Wikipedia. A lesson to be learned here:
“The strain of maintaining his large castle led him to ill-advised real estate investments which were unsuccessful. The Province took over his electricity business and his airplane business was taken over as part of the war effort during World War I. Combined, these difficulties led to his near bankruptcy and forced him and Lady Pellatt to leave Casa Loma. Sir Henry Pellatt, virtually penniless, spent his final days at his Chauffeur’s home in the Toronto suburb of Mimico where he died.