As homeowners start families or change their living situation, they often decide to trade up from their starter home. With rising real estate prices in major cities across Canada, this can be challenging—but not impossible. An individual buyer who purchases a condo in her twenties may find that with the second income of a partner, higher income in her thirties and hopefully some appreciation on her starter condo, moving up to a larger home is feasible. Or if that couple wants to start a family, they might choose a detached home in a more affordable suburb rather than staying in the city.

RateSupermarket.ca recently published a blog post called “Stuck in the Starter Home: A Canadian Conundrum” and according to their numbers, buyers in Toronto and Vancouver should expect to pay at least an extra $3,000 per month to move to a larger property in those markets.

That sounds like a lot, but according to my own calculations, the difference between a condo and a detached home isn’t quite as dramatic. Based on a 5-year fixed mortgage at 2.74 per cent  (assuming a 5 per cent down payment & necessary mortgage insurance, which I’ve included in my calculation), the monthly payment on a condo would be $1,796 in Vancouver and $1,914 in Toronto (not $1,826 and $1,946, respectively, as they’d calculated).

The other thing to remember is that the average detached house in those markets is over a million dollars, you would need a down payment of at least 20 per cent. Two hundred thousand dollars is of course, a lot for most buyers to come up with, but it does mean smaller monthly payments. Using the same term and interest rate, the monthly payment would be $3,684 in Vancouver and $4,154 in Toronto, so that equates to a difference of less than $2,500 in both cities. Since the million dollar homes would have to be conventional, you can also chose a longer amortization which would reduce your payments.

In my experience, most people decide to upgrade if their funds allow for it and they more likely to upgrade to a bigger apartment or a townhouse before they go for a single detached home. And if they do want a detached home, they tend to move to the suburbs.

Bottom line: yes, upgrading from a starter home is more expensive but there are ways to make this transition possible and the financial challenges may be overstated.