Imagine if you will that you have an opportunity to purchase a home for the first time but had to sell it in 2 years. Would you become a home buyer if your exit time-frame was that short?
My vote would be no. First and foremost is the fact there are several hidden costs to home ownership. The average sale price of a Canadian home is approximately $326,000. In Ontario, this means the land transfer tax is $3,365.00 less the $2,000 first time home buyer rebate, giving you a $1,65.00 bill. Add moving costs, cost of installing new phones/internet/cable, lawyers fees etc. and you most likely have another $500-$1,000 bill.
This is a relatively insignificant dollar amount compared to the fact that very rarely has anyone moved into house that is just perfect. Most people I know engage in some touch-ups: painting, gardening or replacing some facets. Some people I know undertake some medium to major renovations: install new flooring, buy new kitchen cabinetry, build a new bedroom. EVERYONE I know who ends up being a first-time home buyer becomes an accumulator of stuff. We can’t help it. See that empty space in the corner there? Fill it up with something. Anything. Basement is empty? Buy used exercise equipment to create a gym.
Economists obsesses over housing stats for a reason. They know it is a harbinger of consumption; it is a rare story of someone who buys a home and leaves it unfurnished for many months afterwards. This is especially so in a first time home since first time home buyers have relatively little possessions. When I bought my condo I owned an Ikea love-seat from my university days that fit my cozy student apartment and looked so tiny in my new place that I “had” to get a new couch (not to mention it had survived 4 moves and looked and felt like it had survived 4 moves). Then I needed side-tables to go with the couch and then I got lamps for the side-tables and then and then…
Add all this “stuff” to the price of the home and suddenly you have sunk more than $326,000 in your home. This does not include on-going maintenance costs in any home, which can be steep for anyone who lives in the snow belt with raising energy costs. Some estimate property tax, condo fees, maintenance costs of up to 5% of your acquisition costs a year depending on the state of your home and how heavily you are taxed.
…now, you have to exit 24 months later so would you get your money back on exit? According to the National Association of Realtors, the average gain in real estate in the U.S. has been 6.4% per annum over the last 40 years, or 1-2% over real inflation. Add commissions from the sale to costs and, given this really rough calculation, you may not be getting much back in return ASSUMING the housing market does not go sideways in the short-term (any prediction about the future is fanciful these days).
This also ignores the more practical consideration of actually why you buy a home. To enjoy it as your castle. Two years flies by quickly. You don’t get to enjoy something you worked hard to acquire.
At the end of the day, I tend to agree with a host of a HGTV show I once watched. Everyone should look to own their home for at least 5 years, short of life-changing circumstances, to both enjoy their place and for enough time to elapse to earn back what you invested in the home.
Other opinions are certainly appreciated. 
