In the Greater Toronto Area, will a bigger house be worth more when I sell it later?
Yifei has been a realtor in the GTA and Niagara for 11 years, and he doesn't buy it. His view is that when it's time to sell, the bigger house can actually be harder to move, because fewer people are shopping for it:
- The bigger the house, the more you pay in property tax, hydro, gas and winter heating.
- A lot of today's buyers are downsizers who want lower costs. They'll pay up for the smaller home, and once a few of them compete, the price climbs.
- Fewer people come to see the bigger house. With no one competing, you wait.
Which situation are you in
- You have a big household, say three kids, and you need the space: the extra money buys room for the family to live in. That's money well spent, so don't judge it by resale.
- Your kids need their own rooms, or parents are moving in: also a living decision. Just be clear on how much more it costs you each year.
- You're moving up mainly because you expect to sell for more later: in Yifei's words, that math doesn't work.
What to do
Yifei says it comes down to two things, and you can get a rough answer online yourself:
- Pull the homes that sold in the area you want over the last month or two. Pick two or three larger ones and two or three smaller ones, divide each sale price by the square footage, and see how much cheaper per foot the bigger ones went.
- Write down how much more a bigger house costs you each year in property tax, hydro and gas.
Put those two side by side and you'll know whether it's worth it. That's also the first thing he does when a move-up client comes to him: pull every sale in that area over the past month or two from MLS, which is more complete than what you can find online, and lay out the price per square foot for larger and smaller homes on one page.
What Yifei has seen
Yifei listed two homes in Oakville with roughly the same level of finish.
- The smaller one, under 2,500 square feet, was listed at $1.49 million. Several buyers competed, and it sold for $1.55 million.
- The larger one, 2,780 square feet, was listed at $1.65 million. The buyer went up to $1.6 million and wouldn't go higher.
Nearly 500 square feet apart, and only $50,000 apart in price. As Yifei puts it: bigger is worth more when you're living in it, not necessarily when you're selling it.
Ask about your own situation
How big your current home is, how big you want to go, and which area you're looking at: those decide how to spend the extra money well. To ask about your own situation, reach out to Yifei (RE/MAX, efay.ai).