Canadians who are working from home for the long haul may be thinking about trading their expensive houses in the city for more balanced lifestyles in the country. Kim Parlee speaks with Zeljka Walker, an Investment Advisor with TD Wealth, about the pros and cons of an urban exodus and what to consider before you sell.
Zeljka, great to see you. I want to start with really, we've been hearing a lot about this, but from people you're talking to, is this really happening?
- Yeah, it should be to no one's surprise that this is really happening, and it really points to the fact that in our major cities, housing may be unaffordable for many people. People are starting to think, why am living in an expensive city when I could work from home for a fraction of the price, have some green space, and no commute? And they're hearing stories of other people making the move and are considering it themselves. So it's no wonder this is a hot topic.
I mean, I've talked to Realtors in my area, and they were telling me that they're getting questions from their own clients asking them, what's my home worth? And what could I possibly buy if I moved further out? So there hasn't been an exodus yet, but would definitely been top of mind. And it's a hot topic these days, for sure.
- Well, let's talk about some comparisons. Because I think the devil's in the details. We all know housing is very expensive in some of the big cities in Canada-- in Toronto, in Vancouver. But just how expensive is it?
- The prices of these homes are quite expensive for most people, average middle class, but there's a domino effect. When housing is more expensive, you have less discretionary income, more debt, and so on. So we have to take into consideration what that impact is on not just middle class, but even young people, for instance. They can't even get into the real estate market, they're delaying families, and then we have millennials living with their parents, for instance. So all these reasons with affordability to housing impact people's decisions.
And we're talking about huge price differences. If you want to talk about what the difference are in areas, let me give you an example. In my area in Vancouver, you got the average home price around, let's say $1.3 million. And if you went two hours outside the city, in, for example, Hope, you're looking at a home about $445,000. That's a huge savings right there. And I take it that the greater Toronto area is quite similar in that regard.
- So when you look at that actually means-- yeah, yeah-- you know--
- --sorry, sorry. I was going to say, so with lower home prices, you're looking at other savings, like lower taxes, smaller mortgages, and so on. So that there is an impact that way financially for sure.
So just, I didn't mean to walk on you there, Zeljka, but in terms of savings, like you mentioned--
- So obviously, you're going to spend less on a house, and you can hopefully pocket some of that savings. You're going to spend less on property taxes and those types of things. What are some of the other savings? Because I imagine there's a lot. I would think even like commuting, and car insurance, and all that kind of--
--stuff, it can really add up.
Absolutely, absolutely. So you look at a lifestyle change as well. So you mentioned the property taxes and lower mortgages, but then other things like the commuting part, the gas, parking, transit, if you're going to be taking transit. Possibly your car insurance as well. And then other things like just regular office attire, right? You're not going to be wearing a suit every day, for instance. Other costs, there may be daycare for your children might be lower if you're in a smaller outside the city area. So you got to take all these savings into consideration, and maybe consider that you can apply those savings into paying off debt, or potentially even putting into your investments, topping up RSPs, tax-free saving accounts. All this can help you come up ahead financially for your future.
- Zeljka, that's a long list of pros. I know there's got to be some cons. And that's why we're talking about this.
- Yeah, the question of should I stay or should I go has both pros and cons. And we covered some of the positives. But you've got to consider what you may lose if you make this decision. A home for most people are their biggest asset. And also homes in urban areas and cities also increase in value much faster than potentially outside urban areas. And a home is considered for a lot of people their biggest financial asset for their future. So do you really want to give that up? So you have to take that into consideration. Also, for most people, once you leave the city real estate market, it's really difficult to get back in.
And frankly, you've got to admit that not everybody is meant to live outside a large urban area. They like that hustle and bustle. You got to think about a different lifestyle. Other services, health care, your school options for your kids, activities for your kids, activities for yourselves, missing out on maybe cultural events, mingling after work with colleagues, meeting people at the local café, networking events, and so on.
And then we have the modern conveniences like Uber Eats, or DoorDash, or some other big retail companies, they don't deliver in certain areas outside the city. So you got to consider these things when you make that decision. It will impact your life and it's a huge decision. So make sure what decision you make, you got to take the pros and cons into consideration.
- Zeljke, I've only got about 30 seconds, but I know you and I talked about this earlier. I think you had some great insight was some people you've talked to, they've kind of got the best of both worlds, they're testing it out.
- Yes, absolutely. So there's a compromise. So if you're considering moving, but you really don't want to leave your city home, possibly do both. You may want to rent out your city home and move out to a place outside the city and try it out.
Now, you've got to remember, being a landlord is not for everyone. But use some of the equity in your city home, buy a smaller place outside, test out the waters, and see which lifestyle is best for you. At least that way you have a foot in the door in both places, and you're not giving up that opportunity. So that's another consideration as well.
- Yeah. And people can figure out if that works for them. And they need to talk to people like you, to figure out all these things on both sides. Zeljka, great to talk with you. Thanks so much for joining us.
- Thank you for having me. Pleasure to be here.