"Consumers need to bear in mind that when they 'move home' the price of the home is only part of the cost," said Gregory Klump, Chief Economist for the Canadian Real Estate Association (CREA). "They will be spending more -- on furnishings, appliances and more."

This "more" consumer spending also represents a significant contribution to local economies and to job creation. According to a recent CREA study of resale homes, Economic Impacts of MLS® Home Sales and Purchases in Canada and the Provinces 2004-2006, prepared by Altus Clayton, the expenses consumers incur in transactions related to moving from one home to another -- over and above the exchange of dollars for the real estate -- are beneficial to the Canadian economy:

• The average home sale yields C$32,200 in additional consumer spending on furniture, appliances, moving costs, services, taxes and post-purchase renovations.

• The economic impact of each MLS® sale varies by province or region, from a high of C$40,450 in British Columbia to C$20,325 in Atlantic Canada.

• The national resale housing industry generated an average of C$15.3 billion annually in the period from 2004 and 2006, with C$6.5 billion added to Ontario's economy alone.

• Additional consumer spending from 2004 to 2006 showed an increased over the average transaction yield of C$24,697 in 2002 to 2004 and of C$19,760 for the period from 2000 to 2002.

In the CREA study, transaction was defined as "the sale of a home by a [seller] to a purchaser and all ancillary expenditures typically associated with the change of ownership." Expenditure estimates made by Altus Clayton were in part based on the Statistics Canada 2005 2005 Survey of Household Spending. Note: Expenses related to new home purchases may be even higher.

Job creation is also a major direct and indirect outcome from the sale of homes. Between 2004 and 2006, industry activity created more than 158,000 jobs, with just under one-third in the finance, insurance, real estate (FIRE) sector. In Alberta, 40 per cent of the new employment occurred in the FIRE sector.

Home buyers who want to avoid unpleasant surprises may want to include projected move-in costs in their calculations of affordability. Unexpected expenses can become credit card debt, which in turn may add significant interest penalties to the overall cost.

"The thing that surprised me is the acceleration in spending," said Klump, referring to the comparison of CREA's previous three studies with the 2004-2006 survey. Increases between this and the previous study are greater than increases between earlier versions. Comparing the current study to the 2002 - 2004 release reveals an overall increase in consumer expenditures per transaction of 30 per cent, a figure derived from significant increases across the board:

• Moving costs up 131 per cent

• Post-move-in renovations costs alone rose 68 per cent

• Taxes, excluding GST, rose 47 per cent

• Professional fees, including financial, legal, real estate appraisal, survey and others, went up 18 per cent

"Housing starts get a lot of attention as to their economic importance to the Canadian economy, but housing sales are also important," said Klump, explaining why ongoing research into the contribution of resale real estate is important. "The impact of housing starts is construction, but there is a lot of spending when people 'move home.' Resale has three times the real transactions of new homes."

Economies also benefit from the exchange of funds in residential sales. Last year, 483,917 residential properties sold through the MLS®system. Sales in the first quarter of 2007 have been record breaking, exceeding estimates and widening the gap between markets south of the border. MLS® home sales activity in Canada rose 11.0 per cent year-over-year to 60,735 units this May. Driven by increased sales in Ontario and Quebec, 2007 marked the first time in recorded real estate history that national sales activity surpassed 60,000 transactions in one month. Activity rose in every province compared to May 2006, and reached the highest level for any month on record in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick and Nova Scotia.

Home buying continues, which means consumers continue spending to cover the expense of 'moving home.' Buyers who budget these additional expenses into affordability calculations into possible purchases, should avoid unwieldy credit card debt. Fueling the economy is great, but most consumers are more intent on spending their hard-earned loonies to improve their personal financial lot in life.

Published: July 10, 2007

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