Upsizing: Why Couples Are Picking Real Estate Over Weddings

Overview: a look at how COVID has inspired couples to invest their wedding budgets in real estate, whether it’s buying their first home or upsizing to something bigger in the city.

Backyard and exterior of large house showing couple upsizing.

More and more couples are downsizing their weddings and upsizing their homes.

Work, travel, school, recreation—COVID has turned every aspect of our lives upside down.

Weddings are no exception.

Many couples have had to cancel or postpone their big day because of the pandemic, without certainty of when they’ll get married.

But some couples are making the most of a bad situation.

How?

By taking the money set aside for their weddings and using it as a down payment on their first home, or upsizing to something bigger in the city.

So let’s take a look at this trend, why couples are doing it, the risks and rewards, and how you can make the most of it.

Dream Weddings or Dream Homes

Married couple sitting on bench looking at house.

Why are couples buying real estate instead of splurging on their dream wedding? (Pixabay)

The first and most obvious reason is the pandemic.

Besides the ban on large social gatherings, COVID has also made air travel harder.

With new quarantine rules and burdensome time requirements, wedding-related travel is no longer practical.

As a result, couples with family outside of Canada may not have all their loved ones present at their nuptials.

Another reason is the sheer cost of weddings, which can range from $40,000 to $50,000.

That figure, combined with the uncertainty and stress of a pandemic wedding, is pushing couples towards real estate.

According to the National Post:

Couples…are seeing the financial silver lining of cancelled or postponed weddings due to COVID-19. The pandemic has made large events next to impossible to plan, and putting the money from would-be wedding costs into a down payment offers people a chance to enter the market.

On one hand, COVID has forced many couples to give up their dream of a big wedding.

But on the other hand, it offers them the opportunity of fulfilling another: owning a home (or upsizing to something bigger).

New Homes Vs Upsizing

Living room with bookshelf showing upsizing to a house.

What types of homes are couples buying with their wedding money?

Most Millennial couples are using their wedding fund for a down payment on condos.

Why condos? Simple: because houses are too expensive.

The average price of a detached house in Toronto is currently $1,684,073 ($1,324,244 for a semi-detached).

At $676,837, condos seem like a bargain.

A 5% down payment on such a condo works out to $33,841.

So couples can take the $40,000 to $50,000 they would have spent on a wedding, use it towards a condo down payment, and still have money left over!

Despite their high cost, some couples are putting their wedding funds in freehold properties.

As I state in my interview with the National Post:

What’s more, the couples who are able to use wedding money to buy a house — a semi or detached — are often the same ones who have a stake in the market already.

These couples tend to have pandemic-proof white collar jobs that can be done from home.

And since they already own property (usually a condo) they’re focused on upsizing to something bigger.

The interview goes on to say:

One engaged couple in their early 30s that Lai worked with in 2020 already had equity built up in their condo, so by selling their property and using the $50,000 or $60,000 they had earmarked for their wedding, they were able to buy a detached home.

So it is possible for couples (even Millennials in their 30s) to buy a detached home with their wedding funds.

The Pros & Cons Of Investing Your Wedding Money In Real Estate

Silver scales with question marks.

Do the benefits outweigh the risks? (Pixabay)

Pros

You Don’t Have To Choose

Couples can still have a wedding (albeit smaller) and invest the savings into a down payment for their first home.

These micro weddings are both cheaper and safer because they conform to COVID restrictions.

Upsizing Your Property

Higher-income couples can pool their savings together to buy more expensive homes.

Plus couples who already own real estate and have equity built up can sell their properties.

That money, combined with their wedding fund, can be used to buy a detached house or a bigger condo in the city.

Preparing For The Future Of Work

Couples forced to telecommute because of COVID can buy condos with a den and turn them into home offices.

Remote work is the future, and buying a home that allows you to telecommute is not only an investment in real estate, but your career.

Cons

Legal and Financial Complications

According to Business Insider:

…not all unmarried homebuyers get a happily ever after — and their bank accounts may suffer as a result. And with financial pitfalls come legal risks.

So be sure you understand the risks and obligations before buying a home together.

Economic Uncertainty

One of the biggest concerns of COVID is economic uncertainty.

With every new lockdown or restriction, businesses are shuttered and jobs are lost.

That’s why it’s important for couples buying a home to have stable white-collar jobs that can be done remotely.

Agreement Is Hard

Finding that perfect home isn’t easy because the individuals in a relationship may want different things.

For example: house or condo? City or suburbs? Variable or fixed-rate mortgage?

So before buying a home, sit down and iron out the details.

Tips For Upsizing or Buying A Home

Young couple holding picture frame with house.

How can couples avoid the headaches of home-buying? (Pixabay)

Hire A Lawyer

If you plan on buying a home or upsizing before getting married, be sure to hire a lawyer.

One legal expert explains:

I recommend involving a lawyer and drawing up a contract that spells out what will happen in the event of a breakup… It’s not exactly romantic, but it can save serious headaches down the road for both parties.

While every couple plans on staying together, it doesn’t always work out.

Hiring a lawyer can help prevent needless stress and pain in case of a breakup.

Sign A Cohabitation Agreement

According to Global News:

A cohabitation agreement is essentially a contract that outlines how a couple will deal with assets like property and spousal support should they break-up or one person dies… It helps prevent future legal issues, and clearly outlines who owns what.

Cohabitation Agreements are especially important if the property is paid by both parties but only has one person’s name on it.

Leverage Your Condo

For couples who already own a condo and plan on upsizing, consider building equity in your condo before selling it.

You can then use this money (along with your wedding fund) as a down payment on a more expensive property.

Or if you want to keep your condo but still upsize, rent it out and use the income to finance your new home!

Dream Weddings VS Dream Homes: Conclusion

Young couple sitting on floor embracing with moving boxes in background.

Just because you had to postpone your wedding doesn’t mean you have to put off buying a home (Pixabay).

In fact, many couples are using this pandemic as an opportunity to buy their first property.

While there are some downsides to investing your wedding funds in real estate, there are also clear advantages.

Plus, if you follow the tips above you can find your dream home and avoid any future complications.

For questions about upsizing or buying a new home, contact me below for details.

 

Wins Lai
Real Estate Broker
Living Realty Inc., Brokerage

m: 416.903.7032 p: 416.975.9889
f: 416.975.0220
a: 7 Hayden Street Toronto, M4Y 2P2
w: www.winslai.com e: [email protected]
*Top Producer (Yonge and Bloor Branch) – 2017, 2018, 2019, 2020

(Visited 122 times, 122 visits today)

Leave a Reply

Your email address will not be published. Required fields are marked *

Share via
Copy link
Powered by Social Snap