Personal Finance

First Time HomeBuyer: Buy smaller unit then upsize vs. bigger unit then downsize

  • Last Updated:
  • Jan 5th, 2015 12:11 pm
Deal Addict
Oct 6, 2014
1313 posts
Toronto, ON

First Time HomeBuyer: Buy smaller unit then upsize vs. bigger unit then downsize

For first time homebuyer, I am wondering if it's better to buy a smaller unit than upsize in a couple of years (which I think that's an approach a lot of people do) or would it be wise to buy a bigger unit (more than I can afford right now), sell it in a couple years and then downsize + make profit (so its treating it as an investment as well)

The reason I ask is because suppose the average townhouse in North GTA is now $500,000; with the increase in housing prices, I find it very very tough to buy a detached house in future. I have been monitoring for the past 24 months. Detached houses increased almost $80,000 past 24 months and they are now worth over $750,000 for a decent one (minimum).

So that got me thinking of buying a detached house now while it's still 'more affordable' (but reality, more than I can afford), then downsize in future, so that i will have an option of keeping the bigger house, or sell it in a couple years for profit AND have a townhouse to live in.

Looking for some input. Thanks.
5 replies
User avatar
Jun 2, 2009
2738 posts
If you can afford detached then always buy detached. People typically don't have this issue because they can't afford it so they buy a townhouse out of necessity. If you're actually able to afford a detached house get it! Worry about downsizing later. Detached will always net you the most profit.
Idle hands are the devils playthings
Deal Addict
Jun 1, 2006
1007 posts
If you can afford a detached go for it. Just got out bid on a lovely detached in east side of Toronto. Stupid people paid $100k over asking (and probably $75k over actual value) just to get this house. Definitely a premium out there for lovely detached homes and as mentioned above, will probably net you the most profit (assuming you don't wayy over pay for it).
May 28, 2012
12379 posts
If you can't afford it, chances are the bank won't lend you enough money to buy it's a moot point. You buy what you can afford.
Deal Addict
Apr 19, 2014
1042 posts
Original poster asks if he should overextend himself to buy more real estate than he can afford so he can rake in a bigger profit in the future. Oh, and he needs to do so now before it’s too late.

If this isn't irrational exuberance, I don’t know what is. Absolutely no conception of risk at all here. Seems like all you need is your historical Toronto real estate value chart (past 10 years only), a ruler to extend the appreciation line upward into the future, and cheap CMHC money.
Deal Addict
User avatar
Feb 6, 2012
4943 posts
Gloucester, Canada
Personally, I would buy what I can afford and move up as I have more room to manuever. Plus easier to sell entry level houses. As arkroyal point out, it is risky to buy something you can't afford hoping that the housing market continue to rise. Imagine if you own a house that you can't afford and the housing market crashed, good luck getting out of that hole
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