Each move generates about $20,000 in related economic activity, a study has found
When a realtor friend told Jack Herrity that every home sale generated around $30,000 in economic activity, the Ottawa banker scoffed. So you move house — you pay your lawyer, you pay your taxes, the agents get their commissions. What’s the big deal?
Since then, Herrity and his wife Sandra bought and moved into a luxury townhouse in south Surrey to begin their retirement.
“We spent a little north of $70,000″ on renovations, appliances, taxes and professional fees, he figures. “It’s incredible how these things add up. I was running back and forth to Home Depot almost every day.”
The Herritys are not alone. Last year, the Canadian Real Estate Association commissioned a study by Toronto‘s Clayton Research Associates to gauge the economic impact of the buying and selling of existing homes. On average, each sale generated just under $20,000 in spinoffs over the period 2000-2002, the study concluded.
Nationwide, that amounts to $7.5 billion a year.
“The purchase and sale of homes generates fees to professionals such as lawyers, appraisers, real estate agents, surveyors, etc., as well as taxes and fees to government. And when Canadians move house, they typically purchase new appliances or furnishings as well as undertaking renovations that tailor the new home to specific household requirements,” the report said.
On average, buyers spent $9,485 on professional services, $3,550 on renovations, $3,385 on furniture and appliances, $1,315 on general household purchases, and $490 on moving costs.
Although they represented the largest item on the list, fees to agents, lawyers and other professionals have actually declined since 1991-92, the study found.
Not so the other categories. The greatest increase in expenditures came in furniture and appliances, where buyers of resale homes spent 85 per cent more (adjusted for inflation) than they did a decade earlier. Canadians spent 49 per cent more on household items such as bedding, towels, light fixtures and window coverings.
All those spinoffs sustain 101,600 jobs across the country, the survey estimated — about two-thirds directly (realtors, trades, furniture makers and so on) and one third indirectly (workers in the primary, wholesale trade and financial services industries, for example).
“The finance, insurance and real estate industry accounts for almost 35 per cent of the total direct and indirect employment generated by home sales,” the study said.
In the Herritys‘ case, Jack’s former employer, the Toronto-Dominion Bank, paid for the cost of moving back to Canada from his last posting in Barbados. And the couple had more than enough furniture stored away from their old house in Ottawa to furnish their new five-bedroom townhouse in the Morgan Creek neighbourhood.
But other items cost more than the couple anticipated.
“The taxes were quite significant,” Jack Herrity remembers after buying the home in the fall of 2002. And by the time they moved in the next spring, the costs of making the townhouse their home were piling up.
First they ripped out the carpets and laid down a kars (Brazilian red cherry wood) floor, then they installed granite counter tops in the kitchen. They replaced the curtains with blinds, which proved to be expensive in the exact shade approved by the community’s strata bylaws. Though the unit was just four years old, they replaced several appliances too.
“Of course my wife wanted the best in all these things,” Herrity laughs.
So you’ve bought a new home and feel you’ve got a good deal. Brace yourself and hope you’ve got some cash left over. All those extra costs add up and they’ve risen sharply over the last decade.
1990/1992 2000/2002 Change
Moving costs: $385 $490 +27%
General household purchases: $880 $1,315 +49%
Furniture/appliances: $1,830 $3,385 +85%
Renovations: $2,575 $3,550 +38%
Professional services: $9,765 $9,485 -3%
Total: $16,200 $19,760 +22%
© The Vancouver Sun 2004