In misc.consumers.house Warren X wrote:
I argued that selling a home costs a lot of money in real-estate agent
commissions, legal fees, moving fees, renovation costs, etc.

He argued that the value of the houses increases at a rate that more
than compensates for these charges.

The long answer:
I have found, like most things in life, that the answer is "it depends".

It is a good exercise to make a spreadsheet and plug a bunch of numbers
in and see what you get.

What I have generally found, assuming anything resembling historic
trends on such things as investment returns, housing value increase
rates, property tax rates around my area, US tax laws (I dont know if
Canada has similar tax breaks on home mortgage interest as the US
does..?), local tax rates, etc, is this:

Your home is an expense.

Buying can be a better choice than renting, and thus make a reasonable
"investment" choice, but, unlike other things we think of as
investments, buying more generally does not increase your wealth over
time, it decreases it. There's nothing wrong with choosing to take on
this expense, of course. It sounds from your other posts like you
understand this and will make this choice eyes wide open later on in
life.

There are, of course, exceptions, especially when unusual market or
income conditions arise. You said the toronto market is hot, so maybe
this is one of them. If, for example, housing apprecation far outstrips
the return on the opportunity cost (other investments) of the money
you're spending, I can rig up a scenario where a 400k house beats a 200k
house + investments over 10 years. But it takes some pretty
historically unusual circumstances to come out that way.

If you are at all numerically inclined, I encourage you not to take any
of our words about it, and run the numbers yourself. Make sure to
remember to include: mortgage, interest, taxes, PMI if applicable,
insurance, some estimate on insurance, homeowner/condo asscn fees if
applicable, opportunity cost of extra earlier spending (i.e. if your two
options are a $1500 payment, and a $2000 payment, if you took the lower
payment, would you invest the $500 diff? If so, that money will grow in
investments, etc), housing appreciation, capital gains tax if
appropriate, and..."transition" costs (closing on one more mortgage,
commission on selling one more home, one more set of
moving/painting/setup/prep-for-selling costs). Not all of these things
are knowable in advance of course, but if you put this all in a
spreadsheet you can play with the variables to see how the differences
play out.


Short answer:
unless things are really unusual there and they stay that way for 10+
years, you're almost certainly better off staying put until you are
ready to take on the 800k place (which will cost more later, as someone
else pointed out).