Columnists
Quantifying your bonus
So it’s official. House prices in the County have been escalating at a rate even faster than in Metro Toronto, Ottawa, Peterborough, Niagara-on- the-Lake and the Muskokas,
According to PEC Affordable Housing Corporation president Chuck Dowdall, the average sale price in March was $821,000—an increase year over year of nearly $250,000— not a bad return for just sitting on your duff during the pandemic watching prices go through the roof. And that’s not counting in the gains pre-2020. There’s a bonus for County homeowners in there somewhere.
So, if you own a house, you are no doubt considering how to spend your bonus, That first requires you to access it, which in turn means that you must either mortgage it, rent it or sell it. Mortgaging allows you to stay put, but requires paying interest to the mortgage lender. Renting out your place involves leaving your residence as a tough-to-manage capital investment, in which your only access to spending money would be the difference in rents between your new place and your existing house, So the simplest thing to do, if you want to access your bonus, is to sell.
Selling, however is a two-stage process. Unless you like sleeping under the stars in a Canadian Tire parking lot, you’ve got to find yourself somewhere else to live. If you’re planning to rent, you can live comfortably for more than 20 years paying $3,000 a month from your $821,000 cash pile. But many people want to buy again, whether for tax reasons (the principal residence capital gains exemption) or family reasons (the pride of home ownership).
And therein lies the bugaboo. House price have also risen elsewhere in Ontario—not as much as in the County, granted, but still enough to eat up much of the bonus. The only way you can quantify your bonus is to take into the equation the magnitude of the savings you will realize by buying into a much cheaper market.
Where do we find these much cheaper markets? Fortunately, a real estate company by the name of Zolo has conducted a survey of the cheapest places to live in Ontario, using April 2021 data. It has factored in home prices as well as unemployment rates and local family incomes, and come up with winners in three categories: large cities of more than 100,000 population; medium-size cities with a population of between 30,000 and 100,000; and small cities with populations under 30,000.
The winning big city is Windsor; average house price $534,000—leaving you with a bonus of $287,000 on the sale of you average County house. Zolo says “Windsor is home to The University of Windsor, ranked as one of the best universities in the nation. Windsor [population 287,000] is a family-friendly and affordable place that offers plenty of festivals, museums, and gardens, and don’t forget about the gorgeous waterfront view.” They even have some wineries there in case you feel homesick— and they aren’t overrun with tourists and STA rentals.
At the top of the medium-size cities stands Sarnia [population 96,000] with an average sale price of $358,000—leaving you with a net bonus of $463,000. You could in fact buy two houses in Sarnia and still have some money left over in your bonus. And Sarnia is a very refined place to live.
Rounding out the all-star list is Deep River [population 3,658] where all the nuclear scientists who work at the nearby Chalk River nuclear facility live. The average house price is $217,000—so you could buy three houses with your bonus and still have some money left over.. Zolo agrees: “you’d certainly have lots of extra cash to participate in all of the cross-country skiing and snowmobiling the region is known for.”
So there are three attractive options—and that’s just picking the top from three lists of ten. Which is it to be? I plump for Deep River. It’s the closest to the County, a pleasant three-and-a-half-hour drive away on Highways 41 and 17. It would take at least an hour longer to get to Windsor and Sarnia, and you’d have to cross through Toronto traffic to get there. And Deep River has a symphony orchestra, a municipal swimming pool and a nearby forest research centre. It’s just a tad bigger than Wellington, and sits on the Ottawa River facing the Laurentian mountains.
So how about it? Is anyone up for a mass exodus from the County to Deep River?
There is one small problem with my proposal, A mass exodus would see us all selling at the same time, thereby flooding the market and driving prices down, while we would all be purchasing in Deep River at the same time, thereby driving prices up. Our bonus would be squeezed at both ends. So I insist that you go first, while I bravely try to hang on here, not quantifying my bonus.
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