From NYC to Craven

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So many questions, so little time. Since my latest book has snaked its way into Chapters and Indigos across the land, my inbox has been teeming. I cannot respond to everyone personally, but I will try to address some representative questions from anxious and curious people, wherever they may reside. We are all in this together. — Garth

Hello Garth,
My wife and I are Americans from New York City planning to emigrate to Ottawa in the summer time. Our decision to move came from a desire for a slower pace of life and a more affordable housing market. After considering most places in the states, we looked into Canada and settled on Ottawa. We expect to land in July or August.

Being keenly aware of the economic developments in the US, we put our NYC apartment on the market last September and sold for a huge profit. We are now in a sublet, biding our time until our Permanent Residency arrives.

Needless to say, our desire is to buy a house, specifically a detached bungalow. We’ve already looked at several and have begun discussing what fits in our needs and budget.
We certainly don’t want to buy at the top of a market that is headed for a serious downturn. However, looking through all the information I have been able to find, it’s unclear how much the Ottawa housing market falls into this category. Ottawa is no Vancouver or even Toronto. Ottawa ranks as one of the most affordable cities anywhere according to this report. The RBC housing affordability report indicates that Ottawans spend ~30% of pre-tax income for housing expenditures. Also price increases seem to be reasonable over the past few years.

I can imagine that prices may go flat for several years as they did in the 90’s, but a severe drop in value seems unlikely. (Leaving out but not ignoring the fall in value that flat prices cause due to inflation.)

However, I always mistrust any economic opinion that implies “this” is different. So I’m questioning this argument as strongly as I can.

What is your take on the Ottawa real estate market? Is it the more rational city of the Canadian real estate or does it share just as many challenges as other cities? Could a melt down in Vancouver reach into other markets?

Any feedback is appreciated.
Trent in NYC

Well, we welcome your devalued American dollars and spirit of frontierism, and I am sure you will enjoy living in Ottawa. Too bad you just missed a winter with 6,742 centimeters of snow.

The Ottawa market is, as you have rightly concluded, a tad more stable than that of Toronto , Calgary or Vancouver, in part because of the pervasive economic influence of the federal government, and a population with more predictable growth and fewer excesses in terms of new real estate development. Price appreciation has been slower, but the average home has still increased substantially over the last five years. Ottawa does boast a wide disparity in price for homes of equal size and character – with a Rockcliffe bungalow at $700,000 and a copy five miles away at less than half the price.

My advice, however, would be to eschew the whole city and move across the river into Gatineau, Aylmer or one of the gorgeous villages within 30 minutes of Parliament Hill. You will find a quantum leap in value, and learn to parler francais at the meme temps.

As soon as I wake up tomorrow morning, I’m heading out to buy your book. In the meantime, perhaps you could give me some insight into the next real-estate move I should make thats in the best interest of my family.

My wife and I both work in the public sector. We have “secure” employment, and have an annual combined income of approximately 130K. We live in Barrie, north of Toronto and live in a very modest 1100 sq ft home that we purchased two years ago. We’ve managed to save up a nice sum of money, approx 50K, which we intend on putting down on a larger home that will better suit our young family. Our home’s current market value is around $240K and we have an outstanding mortgage of approx 140K. This gives us around $150K to use as a down-payment towards our next home.

I have several colleagues in the same income bracket who have recently undertaken massive mortgages of $350K +, with new 450K – $500K homes that will be built this summer. In some cases, these homes have increased in value by 30K before even being built. We were tempted to do the same, with promises of tax-free increases in home equity and 40 year mortgages that we could simply pay off sooner as our monthly cash flow increases in the coming years, (salary increases, short term daycare expenses etc). Some of my colleagues have even rolled their vehicle payments etc into their mortgages to “free up” cash in order to make the payments. After much thought we decided not to venture down this path purely based on instinct. Some of my friends and colleagues who have taken this risk, fear that we’ve missed the boat and are still encouraging us to try and get in.

We still need a bigger home, but would be willing to wait a while to see how the market pans out up here North of Toronto. Would you recommend selling our home now and renting for a year or two? I’m also tempted to put our 50K against our existing mortgage, but fear it may do better for us in a high-interest savings account.

Any advice or predictions for those of us living in the “bedroom communities” that serve as commuting hubs to the larger metropolitan centers? Barrie is a great example, but I’m sure the same advice would be appreciated elsewhere.

Micheal R.
Barrie, Ontario

First, you need new friends. Those guys stand a very good chance of going down, and will not be fun to be around when they’re forced to take possession of McMansions which are unsaleable, and whose illusionary gains have evaporated in the summer sun.

Good boy. Be cautious. Buy what you need, not more, and remember that the end goal is to be financially secure, not to live in a house that suggests you’re in a socio-economic bracket you are not. Do you actually need a bigger home, or just lust for one? Can you put on a second storey, or add a new room for the $50K you have saved? That would achieve the need for more space, and yet not plunge you into double your existing level of debt.

If that’s not a solution then, for sure, sell now before the real estate crap hits the fan and either rent or have a long closing (with a big deposit and a clause to keep it). Trust me, your buddies will envy your acumen, but never have the balls to tell you.

Good morning Garth. It has been with great interest that I’ve been reading your predictions on Canada‘s housing “boom”. I was wondering if you may be able to help me with a question.

I live in a small village (called Craven) just outside of Regina, Saskatchewan. I have lived in Craven for the last 2 years and have commuted to Regina daily for work. Due to rising fuel prices my commute is becoming slowly becoming unaffordable and I wish to return to the city. The problem with this is that Saskatchewan has been experiencing
a rapid increase in the cost of housing over the past few years, especially in the cities of Regina and Saskatoon.

Craven has seen some of this increase but not to the extent that Regina has. At one time
selling my home and investing an additional $20-30,000 would have bought me a nice home in Regina, now it will hardly buy me a home at all. I am concerned that Regina‘s pending oil and potash booms will mean house prices in Regina will remain high even if Canada‘s housing market crashes. Any thoughts? What do suggest I do? Should I sell, move to the city and rent? Should I stay put and deal with the fuel costs? I am confused, depressed and scared and can use any advice that you have.

Thank you for your help Garth.

If this scares and depresses you, then maybe getting out of Craven is what you need. But at what cost?

Regina and Saskatoon have seen massive price hikes, however you must remember that this was from an extremely low initial level compared to the rest of Canada. The province has also been experiencing an economic boom and even an increase in population, but remains one of the sparsest places in the country, with just over a million souls. Thus, I think the housing boom is just about done, despite the frothy hyperbole and stunned rhetoric of the local real estate community.

The choice is yours – move and suck up lots of debt to live in the same kind of house but get to look at street lights at night. Or buy a hybrid. I know my answer.


#1 carole kenna on 03.26.08 at 3:19 pm

Re: Trent in NYC. I have compared Ontario & Quebec income tax rates on a chart prepared by a prominent Canadian accounting firm. For taxable incomes below $37000, there is 1/3 more income tax to pay in Quebec than in Ontario. Of course, the equation changes as the income goes up.

Actually, the rate is 24% in Ontario and 28% in Quebec, but after one deducts the basic personal exemption, this amounts to a few hundred dollars per year. Hardly a factor if you foctor in paying $40 a day for child care in Ottawa and $7 a day in Gatineau. — Garth

#2 Freddy on 04.02.08 at 5:43 pm


I agree with Garth… buy a Prius hybrid. Or better yet, CARPOOL. I’m sure with some concerted effort you can find a car-pool partner or two in Craven or nearby. Put ads in the papers, online, etc., and you will find someone.

Save your money, save the planet, save your small town quiet stress-reduced lifestyle.