The Numbers tell the Story

Many people wonder which is more cost effective: building an addition or moving into a new home. Let’s look at a simplified case of an existing house and a new house located in the same Toronto west end neighbourhood.

 

The existing house required a rear or side extension to gain extra bedroom or family space : Current value: $ 400,000 + Reno cost $100,000 + HST

New house with required extra space (some renovation required): Estimated: $475,000 - $500,000

 

Scenario 1: To Renovate an Existing House (owner can live in property while it is renovated)

 

Current value: $400,000

Renovation costs (Addition): $100,000 + HST

Estimated renovation cost: $113,000

 

Total staying and renovating costs to get the extra space: $113,000

 

Scenario 2: To Move to a New House (some renovation required)

 

Estimated value: $475,000 - $500,000

Upgrade costs:

Difference to existing house : $75,000 – $100,000

Land transfer tax: $11,200 - $12,200

Difference to existing house buying costs $86,200 – $112,200

 

Moving costs:

Commission: $24,000 + HST

Moving expenses: Estimated: $2,000 + HST

Legal expenses: Estimated: $1,500 +

HST Home inspections: Average: $500 + HST

Minimum renovation: (window coverings, painting, bathroom upgrades, new carpets etc): $10,000 + HST

Total Estimated moving costs: $42,940

 

Total upgrade and moving costs to get the extra space: $131,140 - $154,940

 

Of course this is a simplified calculation and in reality the cost will vary according to the specific circumstances, but the case can be made that renovating is more cost effective than moving in the above situation.