Buying a home may be cheaper, but extra costs can ,top $60,000

Tuesday, April 28th, 2009

Brian Morton

Local realtors say that there’s never been a better time to buy a house because of dropping prices and extremely low mortgage rates.

While that may be true, buying a home is much more than just a question of the purchase price.

In fact, according to a report released Monday by the Canadian Real Estate Association, a typical B.C. buyer can expect to spend an additional $60,200 over and above the price.

That includes an average of $2,075 on household purchases, $7,325 for furniture and appliances, $1,925 on moving costs, $17,800 on renovations, $24,175 for services (including financial, legal and real estate fees, and appraisals), and $6,900 in taxes.

The report, prepared for CREA by Altus Group Economic Consulting, notes the total spending cited in the study relates only to the cost of moving from one home to another and for renovations after moving in. It does not include renovation expenditures by sellers preparing homes for sale.

“The number that surprised us most was the massive increase in renovation spending,” CREA chief economist Gregory Klump said in an interview about their report, which looked at the various economic spinoffs from resale housing in the period from 2006 to 2008. “Renovation spending was a little more than double in B.C. what it was during 2004 to 2006. Everyone thinks that new home construction is a great source of economic activity and indeed it is. But it’s not just new home construction. Resale housing also generates an awful lot of employment and retail spending.”

Klump said the study shows that an average of 202,750 jobs were created in Canada each year covered by the study because of resale housing transactions.

According to the report, the $60,200 in additional consumer spending in B.C. was the highest in Canada, which recorded an average of $46,400 in economic spinoffs. By comparison, from 2004 to 2006 the average transaction yielded $32,200 in additional consumer spending. From 2002 to 2004, it was $24,697.

The CREA study revealed that the resale housing industry in Canada generated an average of $22.3 billion annually across the country in various economic spinoffs in the period from 2006 to 2008.

Klump said that higher fees related to higher real estate costs helped push the costs higher in B.C.

The report also noted that most money is spent in Canada‘s four largest provinces (Ontario, Quebec, B.C. and Alberta).

Nearly half the spinoffs were generated in Ontario, where homebuyers contributed $9.3 billion to the economy. B.C. was in second spot, with homebuyers contributing $5.4 billion to the economy.

The report concluded that B.C. experienced the highest relative job impact of any province by generating 44,735 direct and indirect jobs — nearly one in 50 jobs across the province’s economy and far higher than the national average of one in 85 jobs.

According to CREA, there were 462,734 residential properties sold through the Multiple Listing Service in Canada in 2008.

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