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Will Your Remodel Pay Off? The best and worst.

 

Will Your Remodel Pay Off? The Best (and Worst)
Ways to Spend Your Budget

Most new homeowners have something about their property that they want to change. And as family needs and design trends shift over time, many will eventually choose to remodel. Some homeowners make updates to their property before listing it to maximize their potential sales revenue.

Whatever your reasons are for taking on a home improvement project, it’s wise to consider how the money you invest will impact your home’s value.

We’ve taken a look at six popular home renovations and identified those that—on average—have the best and worst returns on investment. So before you lift a hammer or hire a contractor, take a look at this list and see if your remodeling efforts will reward you when it comes time to sell.

 

RENOVATIONS THAT PAY OFF

These three common home improvement projects not only add function and style to your home, but they also offer a strong return on investment. Making strategic upgrades to your property will help you increase its value over time.

Minor Kitchen Remodel

The kitchen is often referred to as the “heart of the home,” and for good reason. Traditionally used for preparing food, it has morphed into so much more. Many of us now eat our family meals in the kitchen, it serves as a favorite spot for homework and kids’ art projects, and it’s the place guests tend to gather when we host events.

Because we spend so much time in our kitchens, it’s natural that we will eventually want to make updates and upgrades to better suit our needs and changing style preferences.

Luckily, a minor kitchen remodel is one of the best investments you can make in your home. According to Remodeling Magazine’s annual Cost vs. Value Report, it has an average 80.5% return on investment.1

The key to making a kitchen remodel pay off is to keep it modest in scale. Spend too much on custom or high-end selections, and you are less likely to recoup your investment. Instead, make an effort to keep your existing layout if it works for you and your family. Paint or reface cabinets instead of replacing them. Update countertops with low-maintenance quartz and swap out old light fixtures with modern alternatives. Replace outdated appliances with energy-efficient models. The average cost for a minor kitchen remodel is $22,500, and it’s likely to recoup more than $18,000 at resale.1

Wood Deck Addition

A deck addition is a popular way to extend and enhance the use of your outdoor space. It’s the perfect spot for grilling, dining alfresco, and entertaining. In fact, 81% of surveyed homeowners said they have a greater desire to be home since completing a deck addition.2

For a 16 x 20-foot wood deck, you can expect to spend around $13,000. Fortunately, the money you invest offers an average return of 76%.1

Decks made of composite material are a popular alternative these days, as they don’t require the regular sanding and staining that wood decks need. However, at an average cost of $19,000 for a 16 x 20-foot composite deck, they are significantly more expensive. Plus, the expected return on investment is only 69%.1 Still, if you plan to hire someone to provide regular maintenance to a wood deck, then a composite deck may offer cost savings over time.

Siding Replacement

Everyone knows good curb appeal is important when selling your home. And while it may not be the most exciting way to spend your remodeling budget, new siding can make a big impression on buyers … and your selling price.

Your home’s exterior is one of the first things buyers see when they view your home. It sets the tone for what they are going to see inside. It also gives an impression of how well the property has been maintained. Worn, peeling, or rotted siding can be a major red flag for buyers.

Replacing 1,250 square feet of siding costs around $16,000 and will net you an average of 76% at resale.1

For an even greater impact, consider replacing a portion of your siding with manufactured stone veneer. It can have a dramatic effect on the visual appeal of your home. A 300 square foot area will run you around $8,900, but you can expect to see a nearly 95% return when it comes time to sell.1

 

RENOVATIONS WITH WEAK RETURNS

These three popular remodeling projects are homeowner favorites. However, don’t expect to see a high rate of return at resale. Instead, consider them an investment in your current quality of life. Just make sure you’ll be living in the home long enough to make them worthwhile.

Major Kitchen Remodel

If there’s one room the majority of homeowners dream about making over, it’s their kitchen. From custom cabinetry to high-end appliances, the possibilities are endless. But those dreams can come at a cost.

An upscale kitchen remodel with high-end cabinetry and countertops, commercial-grade appliances, and designer features can cost upwards of $130,000. And unfortunately, you’ll only get back around 60% at resale. Even a mid-range kitchen remodel that includes new semi-custom wood cabinets, laminate countertops, and energy-efficient appliances could run you around $66,000 and net you a mere 62% at resale.1

Of course, an outdated or non-functional kitchen could turn buyers off from your home completely …  and keep you from enjoying it yourself! So if your kitchen needs a major remodel, you shouldn’t necessarily scrap your plans. Just go in with the realization that you may only get back a fraction of what you invest. Then you can decide which upgrades are worth the splurge.

In-ground Pool

Few additions deliver more entertainment or enjoyment than an in-ground pool. It brings families and friends together, provides a break from the summer heat, and offers a fun and convenient way to stay fit. Plus, you’ll be the envy of your neighbors! But before you dive into a pool addition, consider whether the benefits outweigh the (substantial) costs.

The average expense to install a standard 18 x 36-foot in-ground pool is $57,500. And the estimated return at resale is only or 43%.2 In addition to the installation cost, plan to spend money each year on maintenance, repairs, and additional insurance.

However, 92% of surveyed homeowners said they “have a greater desire to be home” since installing a pool, and 83% have “an increased sense of enjoyment when they are at home.” For you and your family, the perks of a pool may be priceless.2

Master Suite Addition

If you own a house built before the 1980s, there’s a good chance it lacks a master suite, which is a feature that has become commonplace in most newly constructed homes.3

Master bedrooms have evolved from a simple place to sleep into a homeowner’s retreat—often featuring a sitting area, his-and-hers walk-in closets, and an attached bathroom with double vanities, a soaking tub, and a walk-in shower.

And master suite additions have become increasingly popular—both in homes that lack one as well as those with aging owners who can no longer accommodate stairs to an upper-level bedroom.

But what’s the typical return at resale? Unfortunately, a master suite addition offers one of the lowest returns of any remodeling project. With a median cost of $125,000, most sellers will only recoup around 52% of their investment. Nevertheless, in a survey of homeowners, the majority were satisfied with their decision to add a master suite, giving it a “Joy Score” of 10 out of 10.4

WEIGHING COST VS. BENEFIT

It’s always wise to enter into a remodeling project with knowledge of how it will impact your home’s value. In most cases, upscale or highly-customized upgrades are less likely to offer a high rate of return. That said, home renovations that improve your quality of life and enhance your enjoyment may be worthwhile no matter the cost.

 

GET A CUSTOMIZED ANALYSIS OF YOUR PROJECT

 

We’ve been talking averages. But the truth is, the actual return you can expect on a home improvement project will vary depending on your particular home and neighborhood. If you have plans to remodel, call or send us the details. We’d be happy to conduct a free analysis to determine how the renovations will impact the value of your home!

Sources:

  1. 2019 Cost vs. Value Report –
    https://www.remodeling.hw.net/cost-vs-value/2019/
  2. NAR’ Remodeling Impact Report – https://www.nar.realtor/sites/default/files/documents/2018-05-remodeling-impact-outdoor-features-05-23-2018.pdf
  3. Zillow –
    https://www.zillow.com/blog/evolution-of-the-master-bedroom-48286/
  4. House Logic –
    https://www.houselogic.com/by-room/bedroom-closet/master-suite-addition-return-investment/

SALES ARE UP – Market Review June 2019

Sales are up. Prices are stable in the Fraser Valley but continue to fall in many areas of the Greater Vancouver.
The real estate market in the Lower Mainland started off 2019 with decreasing prices and lower than average sales. High prices and the mortgage stress test were named as the causes for keeping buyers on the side lines. Buyers were also concerned about further decreasing prices and rising interest rates.  In the past few months, many economic factors have changed and the Bank of Canada has indicated their overnight rate may remain at 1.75% for the rest of 2019. Banks have also decreased their mortgage rates in the past few months. While Spring is typically the busiest season for real estate transactions, the changes in the lending rates may have added to the increased sales in the past two months. Sales were up significantly in May compared with April, in both the Fraser Valley and Greater Vancouver markets.

Price point remains the significant factor in determining activity in a market. That price point is different in each area. In Vancouver, west side, detached homes priced under $3.5M were selling at a rate of 24% (which is a sellers market) but in Richmond, Surrey and South Surrey, you only saw a sellers market for detached homes priced under $1,250,000.  In North Delta and Abbotsford, detached homes under $900,000 experienced a sellers market in May.

Fraser Valley 

The Spring season began with March posting 26% fewer sales than March 2018, sales picked up in April and posted only 19% fewer sales than April 2018. May sales were higher again with only 13.7% fewer sales than May 2018. There were more active listings on the market because of the fewer sales and listings taking longer to sell. In May, there were 26% more active listings on the market than in May 2018.

In the past three months, prices have been stable with some small gains. Detached homes and townhouses are generally 5.9% less than May 2018 while condos have been hit a little harder and are about 8% less than May 2018.

The market for townhouses and condos were in sellers markets in May while the market for detached homes was generally balanced with Cloverdale experiencing a sellers market in May and South Surrey in a buyers market for May.

HPI® Benchmark Price Activity
  • Single Family Detached: At $964,200, the Benchmark price for a single family detached home in the Fraser Valley remained unchanged compared to April 2019 and decreased 5.9 per cent compared to May 2018.
  • Townhomes: At $522,500, the Benchmark price for a townhome in the Fraser Valley in the Fraser Valley increased 0.1 per cent compared to April 2019 and decreased 5.9 per cent compared to May 2018.
  • Apartments: At $416,800, the Benchmark price for apartments/condos in the Fraser Valley decreased 0.9 per cent compared to April 2019 and decreased 8.0 per cent compared to May 2018.

Greater Vancouver:

Sales for May increased 44.2% compared to sales in April. Overall, sales were 22.9% below the 10-year average for the month of May which is a marked improvement from what we have seen in previous months. From Burnaby to Maple Ridge, the market for attached properties was in a sellers market for May. The detached market from Burnaby to Maple Ridge was generally balanced. Moving into Metro Vancouver, North Vancouver experienced a sellers market in May in both the detached and attached market. The rest of the area remains very mixed. Ladner and East Vancouver experienced sellers markets for attached properties while West Vancouver experienced a buyers market for both detached and attached properties. Prices in some areas have continued to drop in the past three months while other areas have shown price increases.

Greater Vancouver Area Stats May 2019

HPI® Benchmark Price Activity

  • Single Family Detached: At $1,421,900, the Benchmark price for a single familydetached home decreased 11.5% compared to May 2018 and decreased 0.5% compared to April 2019.
  • Townhomes: At $779,400 the Benchmark price for a townhome decreased 7.6% compared to May 2018 and decreased 0.5% compared to April 2019.
  • Apartments: At $664,200, the Benchmark price for apartments/condos decreased 7.3% compared to May 2018 and decreased 0.6% compared to April 2019.

Staging a Vacant Home

 

Redfin, a U.S based real estate brokerage, recently published the results of their in-house study which showed that across the U.S., vacant homes sell for less money and spend six more days on the market than comparable occupied homes. The study compared the sale prices and time spent on the market for home listings that were marked vacant at the time they were sold with those that were not. Only metro areas where the listings for at least 70 percent of homes sold in 2018 were clearly marked as either vacant or not vacant were included in the study.

“Although vacant homes are easy for buyers to tour at their convenience, the fact that the sellers have already moved on is often a signal to buyers that they can take their time

making an offer,” said Redfin chief economist Daryl Fairweather.

Many buyers find it difficult to visualize the full potential of a home when it is vacant. Staging or virtually staging a vacant home will help many buyers see how layout and rooms may function for their own needs.  Staging involves hiring a company to bring and arrange furniture in the home to showcase its potential to buyers. Staging can be particularly beneficial for homes with open spaces or unusual layouts, where buyers most often need help to see how furniture could be arranged. Professional staging can cost several thousand dollars, depending on the number of rooms staged and the length of time. Virtual staging can provide a cost-effective option for vacant homes and provides a realistic view of what the vacant home can look like fully furnished. With over 90% of buyers looking online before setting foot into a house, virtual staging can increase the number of buyers who choose to view the home in person.

Staging a home also provides a certain ambiance that can not be achieved in a vacant home. Staging can be targeted to specific buyers most likely to purchase that particular home. Staging a home for sale has become standard business in the real estate market and for good reason.

Before staging:

After staging:

Spring is here, what’s happening in real estate?

The big news this month is the report on money laundering recently released by the provincial government’s new expert panel, chaired by former deputy attorney general Maureen Maloney.  The report concluded “that almost five percent of the value of real estate transactions in the province result from money laundering investment.” “Successfully reducing money laundering investment in B.C. real estate should have modest but observable impact on housing affordability,” read the report. In other words, if the government is indeed successful in reducing the amount of money laundering investment, real estate prices will go down. The report suggests that money laundering in real estate happens across the country with Ontario seeing the largest amount of money laundered through real estate. Attorney General, David Eby, now acknowledges that when a “student” purchased 15 properties in the same Vancouver condo building in 2001 for $2.9 million, that was an example of money laundering.  Today, the B.C. government announced there will be a public inquiry into money laundering in the province’s economy.

The Bank of Canada continues to hold the overnight rate to 1.75%. The bank is now projecting growth in the economy at 1.2% for 2019, which is down from its January projection of 1.7%. Analysts do not expect the bank to raise its rate again in 2019.

We are now in the middle of the spring, real estate market. Prices in the Fraser Valley have stabilized with some areas and property types showing price increases. In the Greater Vancouver area, prices are still falling in many areas.

Fraser Valley

Sales are picking up in the Fraser Valley – sales for April were only 19% lower than they were one year ago. Although that doesn’t seem like an improvement, sales were down 26% in March, 29% in February and 35% in January. So sales are picking up. The majority of the Fraser Valley experienced a sellers market in April.  Prices for condos have gone up about 3% in the past three months while townhouse prices have remained unchanged. Prices for detached homes have increased in many areas over the past three months. Even South Surrey showed a 1.8% increase in the past three months despite being in a buyers market. Note, over the past three years, the benchmark price for a detached home in South Surrey has gone up 8% where most other areas in the Fraser Valley have gone up about 25%. With prices stabilizing, now is the time to buy in South Surrey.

Cloverdale, Langley, Abbotsford and Mission all experienced strong, sellers markets in April, especially for attached properties. The average days on market for all property types in these areas was 17.

HPI® Benchmark Price Activity

  • Single Family Detached: At $964,600, the Benchmark price for a single family detached home in the Fraser Valleyincreased 0.2% compared to March 2019 and decreased 4.8%compared to April 2018.
  • Townhomes: At $521,800 the Benchmark price for a townhome in the Fraser Valley in the Fraser Valley increased 0.9% compared to March 2019 and decreased 5.1% compared to April 2018.
  • Apartments: At $420,700, the Benchmark price for apartments/condos in the Fraser Valley increased 0.6% compared to March 2019 and decreased 6% compared to April 2018.

Greater Vancouver

Below average sales continued to plague the Greater Vancouver area. Last month’s sales were 43.1% below the 10-year April sales average. Richmond had the lowest sales ratio with only 5% of listings for detached homes selling in April. Most areas continued in buyers markets for detached properties. Coquitlam and east of Coquitlam were in balanced markets. Prices for detached homes in Vancouver, west side, Richmond, North Burnaby and West Vancouver continued to fall last month while other areas remained stable.  Vancouver, west side, prices are now 8% below where they were three years ago. Richmond and North Burnaby prices are about 3% below where they were three years ago and West Vancouver prices are 14% lower than three years ago.

The attached market remained in a balanced to sellers market with the exception of West Van and Tsawwassen which were in buyers markets last month.

Greater Vancouver Stats Package – April 2019

HPI® Benchmark Price Activity

  • Single Family Detached: At $1,425,200, the Benchmark price for a single familydetached home decreased 0.8% compared to March 2019 and decreased 11.1% in the past year.
  • Townhomes: At $783,300, the Benchmark price for a townhome was unchanged compared to March 2019 and decreased 7.5% in the past year.
  • Condos: At $656,900, the Benchmark price for a condo was unchanged compared to March 2019 and decreased 6.9% in the past year.

Real Estate Market Review April 2019

Every month it’s the same comment: the B20, mortgage stress test is keeping many buyers out of the market, decreasing the number of sales and resulting in an increase in inventory. While an increased inventory is exactly what buyers needed after the madness of 2016/2017, prices have not fallen enough to counteract the B20, mortgage stress test.  While sales are down, detached properties in the Greater Vancouver area is the only property type experiencing big price decreases. Detached properties in the Fraser Valley have fallen about 5% in the past six months but are now stabilizing. The Fraser Valley may never experience the buyer’s market that Vancouver is currently experiencing because of the difference in property values.

The average contract rate for 5-year mortgages has declined about 30 basis points from its peak in 2018, reaching 3.44% in March. Unfortunately, this still means a stress test rate of 5.44%, even for the highest quality borrowers. The BCREA (BC Real Estate Association) has forecast that the average 5-year mortgage rate will fall to 3.30% by the summer.  The Canadian economy has slowed since the end of 2018 and the Bank of Canada has held the overnight rate at 1.75% since October 2018. It is no longer expected that the Bank of Canada will raise the rate again in 2019.

Fraser Valley

The Fraser Valley Real Estate Board processed 1,221 sales of all property types in March, a 24.3% increase compared to sales in February 2019 but a 26.6% decrease compared to March 2018. Of the 1,221 total sales, 462 were residential detached homes, 300 were townhouses, and 346 were apartments. This was the lowest sales total for the Board during March since 2013.

Many benchmark prices saw gains last month, particularly for condos. The benchmark price for condos in North Delta, Surrey, Cloverdale and Abbotsford rose between 3% and 4%. Prices remained mostly stable for townhouses. Detached prices remained mostly stable except for North Delta and Abbotsford which posted over 2% gains.

The market for attached properties was in a sellers market last month while the market for detached properties varied. Mission, Cloverdale and North Delta were in sellers markets while Langley, Abbotsford and Surrey were in solid, balanced markets. South Surrey just can’t get out of its buyers market with only 10% of inventory selling last month.

HPI® Benchmark Price Activity

  • Single Family Detached: At $963,100, the Benchmark price for a single family detached home in the Fraser Valley increased 0.4 per cent compared to February 2019 and decreased 4.2 per cent compared to March 2018.
  • Townhomes: At $517,300, the Benchmark price for a townhome in the Fraser Valley in the Fraser Valley increased 0.3 per cent compared to February 2019 and decreased 4.5 per cent compared to March 2018.
  • Apartments: At $418,000, the Benchmark price for apartments/condos in the Fraser Valley increased 2 per cent compared to February 2019 and decreased 5.1 per cent compared to March 2018.

Greater Vancouver

It’s a much bleaker story in the Greater Vancouver area where March sales were the lowest seen since 1986!

“Housing demand today isn’t aligning with our growing economy and low unemployment rates. The market trends we’re seeing are largely policy induced. For three years, governments at all levels have imposed new taxes and borrowing requirements on to the housing market.”
Ashley Smith, REBGV president

For detached properties, most areas continued in buyers markets. Townhomes and condos were in sellers markets in many areas with the exception of West Vancouver, Richmond and Tsawwassen which were in buyers markets.

Greater Vancouver Stats Package – March 2019

HPI® Benchmark Price Activity

  • Single Family Detached: At $1,437,100, the Benchmark price for a single familydetached home decreased 0.4 percent compared to February 2019,  decreased 10.5 percent in the past year.
  • Townhomes: At $783,600, the Benchmark price for a townhome decreased 0.7 percent compared to February 2019, decreased 6 percent in the past year.
  • Condos: At $656,900, the Benchmark price for condos decreased 0.5 percent compared to February 2019 and decreased 5.9 percent in the past year.

What’s Happening in Real Estate? Federal Government doesn’t deliver what buyers need.

The big news of March 19 could be the disappointment of the day. In an effort to help buyers, the mortgage industry had made proposals to the Federal Government to reduce the mortgage stress test from 2% down to 1% and increase the amortization period on insured mortgages from 25 years to 30 years. Neither of these proposals were implemented. The Government did increase the amount of money that can be withdrawn from an RRSP by an individual, first-time buyer. The amount is now $35,000 up from $25,000. Money withdrawn must be paid back into the RRSP within 15 years.

The Government has also introduced an incentive program where buyers who have the minimum down payment for a home can apply for an amount equal to five or ten percent of the purchase price through a shared equity program administered by Canada Mortgage and Housing Corporation (CMHC). Five percent is available for a previously lived in home and 10 percent for a newly constructed home. The money provided through this program would only have to be repaid when the home is sold. To qualify for the program, the buyers would have to make a combined income of less than $120,000 per year. The amount of the mortgage combined with the incentive funds cannot total more than $480,000. If you are a qualifying buyer, this incentive could save you over $200 per month in mortgage payments. That’s a good incentive. The program should be running by September. The plan is to run the program for five years but there is no guarantee of that.

The question that has everyone talking is how will this affect prices in September? The incentive program is aimed at a specific group of buyers.  Most of these buyers will be looking to buy a home under $500,000 so the effects of this program in the Lower Mainland will be seen mainly in the attached property market, which has been the hottest market in the past 24 months. More people would have benefited if the Government had announced a reduction in the stress test.

Fraser Valley

Sales were up over 25% in February compared with January however, sales for February 2019 were almost 30% lower than February 2018. Of the 982 total sales, 354 were residential detached homes, 236 were townhouses, and 288 were condos.

Prices for detached homes were stable in most areas. Cloverdale and South Surrey/White Rock are posted small gains in the Benchmark price. Prices for condos and townhouses still dropped in many areas over the month.

For the Fraser Valley region, the average number of days to sell a condo in February was 40 and 39 for townhomes. Single family detached homes remained on the market for an average of 43 days before selling.

HPI® Benchmark Price Activity

  • Single Family Detached: At $958,900, the Benchmark price for a single family detached home in the Fraser Valley increased 0.5 percent compared to January 2019 and decreased 3.7 per cent compared to February 2018.
  • Townhomes: At $516,000, the Benchmark price for a townhome in the Fraser Valley in the Fraser Valley decreased 1.2 percent compared to January 2019 and increased 2.8 per cent compared to February 2018.
  • Condos: At $409,700, the Benchmark price for condos in the Fraser Valley increased 0.2 percent compared to January 2019 and decreased 3 per cent compared to February 2018.

Greater Vancouver
Last month’s sales were 42.5% below the 10-year February sales average.

For detached properties, most areas continued in a buyers market. Townhomes and condos were generally in balanced markets for January. Prices for detached homes and townhouses dropped in January while condo prices in many areas, particularly Vancouver East, Port Coquitlam and Coquitlam actually increased.

Greater Vancouver Stats Package – Feb. 2019

HPI® Benchmark Price Activity

  • Single Family Detached: At $1,453,100, the Benchmark price for a single familydetached home decreased 0.7 percent compared to January 2019,  decreased 9.7 percent in the past year and decreased 7.6 percent in the past six months.
  • Townhomes: At $789,300 the Benchmark price for a townhome decreased 1.4 percent compared to January 2019, decreased 3.3 percent in the past year and decreased 6.7 percent in the past six months.
  • Condos: At $660,300, the Benchmark price for condos actually increased 0.3 percent compared to January 2019 but decreased 4 percent in the past year and decreased 5.1 percent in the past six months.

January 2019 – Off to a slow start

Fraser Valley

Sales were slightly lower in January – down 2% – compared with December 2018 but were significantly lower than January 2018 – down 35.2%. The bigger news was that there were more sales of condos last month (257) than detached homes (250).  This was the first time in the Board’s history that condo sales have outsold detached homes in a month.  Moving forward, condos will likely continue to be a very popular property type due to affordability.  So far, we are seeing a big increase in sales for the month of February over January.  While the market was barely holding on to a balanced market in January, February looks like inventory and sales will be in a more solid, balanced market.

Prices in January continued to drop for all property types across the Fraser Valley. Many market forecasters projected that we would see prices stabilize in 2019 so the question is, when will this happen. If sales start to pick up for the spring, we should see prices stabilize.

“Historically, January months start slowly, and 2019 is following that trend,” explains John Barbisan, President of the Board. “Pricing for each of our major residential property types remains either stable or decreased in most areas. This isn’t necessarily indicative of what’s to come in 2019, but it reinforces the need to be aware of what’s happening in your local market in order to be effective.”

For the Fraser Valley region, the average number of days to sell a condo in January was 45, and 44 for townhomes. Single family detached homes remained on the market for an average of 55 days before selling.

HPI® Benchmark Price Activity

  • Single Family Detached: At $954,100, the Benchmark price for a single family detached home in the Fraser Valleydecreased 1.2 percent compared to December 2018 and decreased 3.3 percent compared to January 2018.
  • Townhomes: At $522,100, the Benchmark price for a townhome in the Fraser Valleydecreased 1.8 percent compared to December 2018 and increased 0.5 percent compared to January 2018.
  • Condos: At $409,000, the Benchmark price for apartments/condos in the Fraser Valleydecreased 2.2 percent compared to December 2018 and increased 1.2 percent compared to January 2018.

 

Greater Vancouver

Last month’s sales were 36.3 percent below the 10 year sales average for January and the lowest January sales since 2009. For detached properties, most areas continued in a buyers market. Townhomes and condos were generally in balanced markets for January. Prices for most property types dropped again in January.

In the past 12 months, the benchmark price for a detached home in Vancouver, west side, has gone down over 14 percent. On the other end, Port Moody, Port Coquitlam, Pitt Meadows and Maple Ridge have all seen their benchmark price for a detached home fall less than 4 percent in the past 12 months.

Greater Vancouver Stats Package – Jan. 2019

HPI® Benchmark Price Activity

  • Single Family Detached: At $1,453,400, the Benchmark price for a single familydetached home decreased 9.1 percent compared to January 2018 and decreased8.3 percent in the past six months.
  • Townhomes: At $800,600 the Benchmark price for a townhome decreased 0.5 percent compared to January 2018 and decreased6.2 percent in the past six months.
  • Condos: At $658,600, the Benchmark price for condos decreased 1.7 percent compared to January 2018 and decreased 6.6 percent in the past six months.

 

Foreclosures and Distress Sales
Buyer Opportunities

Prices have dropped for attached properties however, these properties are still in high demand.


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Real Estate Market Review for October 2018

The Sky is Not Falling

Fraser Valley

Sales increased 11.6% compared to sales in September 2018 which is the first time we have seen an increase in sales since May.  Sales are still considerably lower than last year – down 35%. Inventory continues to increase in the Fraser Valley however, there were 5.8% fewer new listings posted to the MLS compared to September 2018.

The market for condos and townhouses remained in a sellers market for Cloverdale, Langley and Surrey while all other areas experienced balanced markets. The market for detached homes remained in a balanced market across the valley with the exception of South Surrey/White Rock which continued in a buyers market.

“We’re in a much better spot in terms of overall inventory compared to this time last year, and now closer to a more balanced market. Attached inventory in particular has seen notable gains, doubling year-over-year for townhouses and nearly tripling for apartments.”   said John Barbisan, President of the Fraser Valley Board.

For the Fraser Valley region, the average number of days to sell both a condo and townhouse in October was 31. Single family detached homes remained on the market for an average of 39 days before selling.

Sales of detached homes in the South Surrey/White Rock area were up 61% compared to September.  While most areas saw the benchmark price drop compared to September, the benchmark price for South Surrey/White Rock remained unchanged. This is a good sign for sellers but it is only one month of data.

HPI® Benchmark Price Activity

  • Single Family Detached: At $986,700, the Benchmark price for a single family detached home in the Fraser Valley decreased 0.2% compared to September 2018 and increased 1.1% compared to October 2017.
  • Townhomes: At $538,400, the Benchmark price for a townhome in the Fraser Valley in the Fraser Valley decreased 1.4% compared to September 2018 and increased 7.1% compared to October 2017.
  • Apartments: At $432,800, the Benchmark price for apartments/condos in the Fraser Valley decreased 1.3% compared to September 2018 and increased 17.2% compared to October 2017.

 

Greater Vancouver:

The Greater Vancouver area also experienced an increase in sales compared to September. Sales for the month of October were up 23% compared to September but were 34.9% lower than recorded in October 2017.

Last month’s sales were 26.8% below the 10-year October sales average.

The market for condos and townhouses remained strong throughout the Greater Vancouver area with most areas in a balanced or sellers market. The market for detached homes varied across the region with most areas being in a buyers market with Pitt Meadows in a sellers market and Maple Ridge in a balanced market.

HPI® Benchmark Price Activity

  • Single Family Detached: At $1,524,000, the Benchmark price for a single family detached home decreased 5.1% compared to October 2017 and decreased 3.9% in the past three months.
  • Townhomes: At $829,200 the Benchmark price for a townhome increased 4.4% compared to September 2017 and decreased 2.8% in the past three months.
  • Apartments: At $683,500, the Benchmark price for apartments/condos increased 5.8% compared to September 2017 and decreased 3.1% in the past three months.

Home Inspectors – Who, What, Why

Who inspects the inspectors? Published by News Real for Reators

BC and Alberta are currently the only jurisdictions in Canada that regulate home inspectors through legislation. In BC the approximately 480 home inspectors are regulated by Consumer Protection BC (CPBC) as are many other businesses including debt collectors, fitness gyms, telemarketers and travel agencies to name only a few. The CPBC is an agency of government responsible for administration of the Business Practices and Consumer Protection Act. (BPCPA). CPBC also administers the Home Inspector Licensing Regulation which together with the BPCPA governs the home inspector trade.

Licences

CPBC licenses home inspectors, (whose licences must be renewed annually) and responds to consumer inquiries, investigates alleged violations of consumer protection laws and educates consumers and businesses about their rights and responsibilities. The CPBC has an online directory where you can confirm whether the person you want to hire is licensed.

Education and Training

A licensed home inspector must meet certain education and training requirements, be insured and have a criminal record check. They spend a minimum of 150 hours to learn about topics such as roofing, flashing, chimneys, heating and cooling, plumbing, electrical and structural systems, etc. The education must be completed at one of the approved home inspector programs in BC.
Once a person passes a home inspectors exam, she/he is provided with a certificate demonstrating competency in home inspection, which is followed by 50 hours of training.
Next comes a CPBC evaluation, followed by a letter of recommendation based on the home inspector’s knowledge and demonstrated ability.

Insurance

The home inspector must obtain insurance coverage to protect against errors, omissions, personal and property damage. The policy must include:
• $1 million occurrence/limited/aggregate professional liability (E&O) coverage
• $1 million occurrence/limited/aggregate general liability coverage
• coverage for common issues to home inspection in BC including water ingress
Only then can they apply for a home inspector licence.

Contracts

A home inspection must begin with a signed contract that includes:

  • Exactly what will be covered by the home inspection including garages and carports, and whether the inspector will look for mold and asbestos and other hazardous materials. Detecting mold and asbestos is sometimes difficult and may require a secondary mold/asbestos specialist to establish whether it’s present in a home.
  • Inspectors are not limited to residential property inspections. They also provide commercial inspections, indoor air quality investigations, new construction deficiencies, building envelope surveys, WETT (wood stove) inspections and so on.
  • Most home inspections comprise a visual examination to determine if there are problems with specific aspects of the home. But for invasive inspections, the contract must state what methods will be undertaken. (A seller will not appreciate coming home to ripped out wallpaper and plaster lying on the floor unless previously agreed to)

Fees

Home inspectors can charge what they like but they must give customers a firm quote along with a detailed contract. The fees vary depending on several factors including the scope of the inspection and the experience of the home inspector but likely it will cost a few hundred dollars.
A typical home inspection takes from one to three hours depending on the size of the home, the scope of the inspection, and the number of areas they are inspecting.
The inspector must provide a detailed report of their findings which the client may retain to direct repairs or for disclosure purposes.

Home Inspectors Association of BC

On its website the Home Inspectors Association of BC (HIABC) includes this disclaimer.
“A home inspection does not guarantee future condition, efficiency, or life expectancy of systems or components. It is not [necessary for] an inspection to verify compliance with any applicable building codes, municipal bylaws or other regulations. A home inspection will not reveal every problem that exists or could ever exist and is not a technically exhaustive inspection.”

Professional standards

The home inspection industry did not come under provincial regulation until 2009 and when it did HIABC claimed some of the credit for the change, having lobbied for regulation several years. However, the association was not so happy when in September 2016 the Ministry responsible for Housing under Rich Coleman, had the CPBC remove the need for mandatory continued education for home inspectors. As a result, there are no longer any continuing education requirements, Standards of Practice or Scope of Inspection which they must adhere to, though HIABC still requires it of their members. Note that in its Code of Ethics HIABC says: ‘No member shall be actively engaged as a broker or agent in the sale, purchase or listing of Real Estate’

Consumer protection

If a person is unhappy with the conduct or performance of a home inspector, they can seek to have the issue resolved by communicating with the home inspector, or go directly to the CPBC for information and advice, or to submit a formal complaint, and in some cases receive a refund for monies paid.

Through its investigative / inspection process, the CPBC may impose a financial penalty on a home inspector for violating the laws it oversees. Every contravention has a base penalty amount, determined by the seriousness of the infraction.

If the claim is under $35,000 customers may also seek redress in Small Claims Court. Claims above that amount would usually require a lawyer to pursue.

If a home inspector is a member of an association, the association could also assist with service complaints that do not fall under provincial laws.

Referral tips

The CPBC recommends checking its website to confirm that a home inspector is licensed, or if they have had any enforcement actions against them. It also suggests a minimum of three written estimates from different home inspectors before choosing one.

 

Market Review – Summer 2018

Real Estate Market Review

Fraser Valley 

The new mortgage rules and higher interest rates continue to decrease the demand for housing. Some buyers are now waiting to purchase in hopes that prices will continue to drop. July and August sales, for all property types, were down about 35% compared to the same months last year.  Sales of townhouses and condos continued to make up over half of all residential sales.

Prices for attached properties are dropping across the Fraser Valley. Most areas have now shown two consecutive months of falling prices for both townhouses and condos. Even though prices have started to drop, most areas remained in a sellers market over July and August. The difference however was the rate of sales. Last year, 80% to 100% of inventory for attached properties would sell in a month. Today, the turnover rate is between 18% and 33%.

In the detached market, most areas have settled into a balanced market. South Surrey however has been in a buyers market since May. Prices have dropped in all areas over the past three months. Cloverdale prices for detached homes have dropped 3.5% in the past three months while South Surrey prices have dropped over 5% in the past 12 months.

The Canadian economy remains strong and has grown at an average rate of 2.6% over the past 8 quarters. The B.C. Real Estate Association is forecasting that the Bank of Canada will raise its overnight rate to 1.75% in October.

HPI® Benchmark Price Activity

  • Single Family Detached: At $1,008,700, the Benchmark price for a single family detached home in the Fraser Valley decreased 0.9% compared to July 2018 and increased 2.9% compared to August 2017.
  • Townhomes: At $548,300 the Benchmark price for a townhome in the Fraser Valley in the Fraser Valley decreased 1.7% compared to July 2018 and increased 11.5% compared to August 2017.
  • Apartments: At $443,200, the Benchmark price for apartments/condos in the Fraser Valley decreased 1.6% compared to July 2018 and increased 26.9% compared to August 2017.

 

Greater Vancouver:

Overall, sales were 25.2% below the 10-year average for the month of August.  Like the Fraser Valley, the Greater Vancouver area has seen prices drop over the past two months for all property types.

For attached properties, all areas in Greater Vancouver, except Tsawwassen, Ladner and West Vancouver, remained in sellers markets over the summer months. Despite this, prices have decreased in most areas.

For detached properties, Maple Ridge and Pitt Meadows were the only areas that continued in a sellers market however, both these areas have seen prices drop over the past three months.  Vancouver, east and west, West Vancouver, North Vancouver, Richmond, Burnaby, and Port Moody were all in buyers markets in August. West Vancouver and Vancouver, west side, are both showing price decreases over 10% in the past year. Even with a 10% price drop, the benchmark price for a detached home on the west side of Vancouver is still $3,278,500.

HPI® Benchmark Price Activity

  • Single Family Detached: At $1,561,000, the Benchmark price for a single family detached home decreased 3.1% compared to August 2017 and decreased 1.5% compared to July 2018.
  • Townhomes: At $846,100 the Benchmark price for a townhome increased 7.9% compared to August 2017 and decreased 0.8% compared to July 2018.
  • Apartments: At $695,500, the Benchmark price for apartments/condos increased 10.3% compared to August 2017 and decreased 1.4% compared to July 2018.

Foreclosures and Distress Sales

Buyer Opportunities

There will be plenty of buyer opportunities this fall. Prices may be falling now but eventually they will stabilize and start to rise again. For example, when the Provincial Government brought in the foreign buyer’s tax of 15% in August 2016, prices dropped. This decrease didn’t last for long. In the Spring of 2017, prices in the Fraser Valley rose to levels higher than they were before the tax was brought in.

There is a large group of buyers that will need to purchase homes in the next 10 years. This group is referred to as Millennials. In my opinion, townhouses and condos will continue to drive the market here in the Lower Mainland as Millennials look to buy their first home and Baby Boomers look to downsize.