Potential resale returns on various home improvements
Posted by on May 24, 2009
People are often curious about how certain home improvements will affect the value of their homes. The chart of percentages displayed here presents some findings compiled by the Appraisal Institute of Canada from their 2008 membership survey. It is intended to give the homeowner a very general idea of the potential that certain improvements have in adding value to your home.
| Sky lights | 0-25% |
| Swimming pool | 0-25% |
| Landscaping | 25-50% |
| Fencing | 25-50% |
| Brick walkways | 25-50% |
| Home theatre | 25-50% |
| Block paving | 25-50% |
| Concrete paving | 25-75% |
| Central air conditioning | 25-75% |
| Deck | 50-75% |
| New windows and doors | 50-75% |
| New exterior siding | 50-75% |
| Flooring | 50-75% |
| Basement renovation | 50-75% |
| Addition to dwelling | 50-75% |
| Fireplace | 50-75% |
| Garage | 50-75% |
| Roof replacement | 50-80% |
| Heating system/furnace | 50-80% |
| Interior paint | 50-100% |
| Kitchen renovation | 75-100% |
| Bathroom renovation | 75-100% |
| Energy efficient features | Avg. 61% |
Other considerations
- Improvements that are commonly found in the area the home is located in will almost always deliver the highest returns.
- Renovations in homes that have a lower market value when compared to other homes in the area generally see a higher return from home improvements.
- Poorly done renovations have a smaller upward impact on the home’s value, and can actually have a negative affect on property value.
- Renovations done on a home that is generally in poor repair overall have a minimal impact on its market value.
- It’s rare that renovations recover their full cost in added value. Home owners should understand that there is some value associated with enjoyment of the improvement.
- Not all improvements are created equal, even those that might fit in the same category. For instance, in a bathroom renovation a “spa type shower will add roughly 36% of it’s cost, while a Jacuzzi or whirlpool type tub recovers approximately 65% of its cost.
41 comments so far. We'd love to hear your thoughts.
May 24th, 2009 at 12:35 PM
“Perhaps a lot of this (solar, geothermal, etc.) is still too relatively new to appreciate the value”
And relatively expensive which is probably why there isn’t a big rush to solar and geothermal. Generally, if home owners are reluctant to make the investment so they can benefit from the feature it’s going to be a lower return improvement upon resale. I expect that the features they’re discussing here are those you’ve suggested.
My impression is that we’re just seeing greater interest in better windows, more efficient heating systems, etc in the past few years. “Granite counter tops, slate tile and hardwood floors” still seem to have a sexier ring for most people. Stuff that makes their friends say “wow!” really sells.
May 24th, 2009 at 1:19 PM
“Energy efficient features (Avg. 61%)”. With the recent “green” push and increasing energy costs, I would have expected this to rate higher. Or is it primarily things like appliances, window treatments and insulating? Perhaps a lot of this (solar, geothermal, etc.) is still too relatively new to appreciate the value (and more often than not, the higher initial costs usually take years to offset).
May 24th, 2009 at 1:23 PM
It almost sounds like we could use a “bling” category for these and other items (such as stainless steel appliances, built-in bar, garage cabinets, jacuzzi tub, etc.), that while perhaps only returning a small % on investment generate ‘sex appeal’ for your home.
You probably see a great deal many more homes than I do, so are renovations still seeing a lot of granite, slate and hardwood, or is this more limited to new construction in the past few years? What other “wow!” stuff sells? (just curious)
On the subject of energy efficiency, I was in a show home the other day that had a boiler system (in-place of a hot water tank, I believe) to provide hot water and in-floor heating. It was the first-time I’ve seen a boiler system utilized in a home in Saskatoon and I was curious if this is relatively unique or if similar “on-demand” hot water systems are starting to take off?
May 24th, 2009 at 3:03 PM
I think your supplemental list rounds out the list of more popular cosmetic upgrades.
I haven’t come across a lot of boilers. Many of the in-floor heating systems (which I think are pretty cool by the way) use a more standard water heater. It’s still a bit of a rarity to run across an on-demand water heating system as well. We’ve had one for about two years and really like it most of the time. Occasionally we have a day where it’s hard to get it to fire. Oddly, it will run fine for months. Then, one morning you have to turn the tap on and off twenty-five times to get the water going. Then you get months of trouble free service. Strange.
May 24th, 2009 at 5:46 PM
Norm,
I have seen these types of numbers before but the one thing they never address is whether the cost includes labor? For some items, hardwood flooring comes to mind, the cost of installation can add 25-50% to the cost.
Also, if it is true that home renovations do not recover their full value, what of all these ‘flip this house’ type of shows? It seems that there are professionals who go and buy houses, renovate them and sell for a profit. So that would imply that they are able to sell the place for more than the cost of all the renovations. I am not doubting the accuracy of these numbers, just trying to figure things out in my own head.
I was also curious if you find that the return on reno’s has gone up with the cost of housing. Has the spread in cost between say a standard condo with few upgrades and a similar sized condo in the similar location which has had upgrades increased?
May 24th, 2009 at 7:36 PM
Peter,
Good questions, and the one about labour hadn’t even occurred to me. I’m assuming they are meaning the full value of a contracted renovation.
Your other questions (flippers) also ran through my mind. They state, “Renovations done on a home that is generally in poor repair overall have a minimal impact on its market value.” I also think a property that needs a complete makeover is worth less than the sum of its parts, if you know what I mean.
It’s more than most people want to take on, so the market is slim for them and someone who is up for the challenge can really beat the seller up. There’s a big price to be paid for neglecting a home. Someone needs to make a return cleaning it up and restoring it.
Those small wood frame 2 bedroom-condos in Lakeview or Wildwood can bring $175K with a nice renovation and probably $155 if they’re pretty original but in good repair.
May 24th, 2009 at 11:29 PM
From the last thread… Jason said:
“In the end, as I have no vested interest in the current housing market, my perspective and comments do not serve an ulterior motive.”
See, I tend to disagree. You plan to buy a house in the near future, have been visiting open houses, so I would say you have a pretty clear interest (soon to be ‘vested’ even deeper) and bias. You want house prices to come down (you’ve stated they are overpriced)because you naturally don’t want to have to worry about them correcting after you make your purchase. Simple as that. And that’s all good. It’s a legitimate concern. But I don’t think you can say that just because you haven’t plunked the money down yet that you have no interest in what happens. Someone truly without a bias, for example, wouldn’t care if they went up another 40 percent this year, but that would affect you directly and adversly. In fact, unless a person plans to live in the house they own until they die, most of us, renters included, are somehow financially tied to what happens in housing, to varying degrees. In short, as a potential buyer with what seem to be pretty bearish outlook, it’s kind of hard to buy your claims of impartiality.
As far as my outlook on the market, I truly have no idea where prices are going and wouldn’t be that surprised if they fell 20 percent over the next 18 months in both Saskatoon and Regina. Probably more surprised if they went up by that much. But I’m also pretty optimistic about our two cities, and we’re both currently still cheaper than most other Canadian cities. Any boosting I do is usually in response to what I find to be overly-bearish sentiment.
As far as my own vested interest, most of my investment is in property purchased at prices between 40 and 80 thousand dollars in the past year or two. I’m not even sure a 20 percent correction downwards in the overall average would hurt my investment properties much. They might actually rise in value while 250,000 homes fall to 200,000. My biggest vested interest in a correction to the average is probably my primary residence. And these days, I’m just glad the world doesn’t seem to be coming to an end anymore.
Anyway, in short, I’ll admit my vested interest if you admit yours.
May 25th, 2009 at 10:15 AM
Peter,
Another reason ‘flips’ might be profitable is that since often nobody is living there and there are lots of repairs to be done, you could just tear into them and get it all done in one shot, which would bring down the labour costs on most of the individual jobs. It’s a lot easier to re-wire, re-plumb, replace windows, and re-insulate if you’re also adding all new flooring and drywall in the end. You’ll also be able to get a better deal on labour if you’re putting these upgrades throughout the house, rather just in a small area; something else maybe these numbers don’t account for. Plus, if this was something you did as a business, I bet you could get some better deals from your go-to contractors/lawyer/real estate agent than most homeowners could negotiate for a one-time job.
May 25th, 2009 at 10:44 AM
Interesting article in the Star Phoenix on the proposed “Evergreen” development (slated to start in 2010), modeled after a ‘village within a village’, and potentially providing the first LEED-certified neighborhood in Canada (second link is to the actual PDF as the SP photo is a bit small to examine the green spaces). Will be curious to see if they adopt a more “European” design for the village core with commercial/multi-unit housing coexisting, ie: small businesses and shops on street level with multi-unit dwellings residing on the upper levels.
http://www.thestarphoenix.com/Village+within+city/1627033/story.html
http://www.city.saskatoon.sk.ca/org/land/residential/land_for_sale/Proposed%20Evergreen%20Neighbourhood.pdf
May 25th, 2009 at 11:47 AM
Mark, “You plan to buy a house in the near future”. What I indicated was that late 2009-2010 would probably offer the best buying opportunities (I didn’t actually mean for myself, but I can see how you might naturally assume that). “…have been visiting open houses”. Now living in Stonebridge, I’m understandably curious to see what the future development for the area holds. I was also hoping to gleam some new design trends as well as a rough idea of where current lot prices and construction costs are (which I was surprised to learn have come down more than I thought). “You want house prices to come down.” I want a return to a balanced market without any of this insanity, where we see flat or minimal appreciation as opposed to wild swings in either direction.
“But I don’t think you can say that just because you haven’t plunked the money down yet that you have no interest in what happens. Someone truly without a bias, for example, wouldn’t care if they went up another 40 percent this year, but that would affect you directly and adversely”. Well, up until I sold at the peak until 2008 I’d say that was the case, and I was actually fairly bullish. However, it was fairly clear that an additional 40% appreciation (at least for my particular home) wasn’t that likely. And once I was no longer an owner it gave me an entirely new and different perspective or the market, once which I’ll admit is particularly bearish. But as I’m now renting with no long-term plans or economic commitment to Saskatoon, I can’t say I’m financially-tied or influenced by what happens to the market here – hard as that may be for you to believe (my rates are locked-in and I have a fairly amount of flexibility with my lease).
“And these days, I’m just glad the world doesn’t seem to be coming to an end anymore.” Well, I try to remember that things are not always what they appear to be. I’m not convinced that we haven’t made things worse with the latest attempt to expand credit and encourage even more debt with these ‘teaser’ interest rates.
May 25th, 2009 at 11:58 AM
Heather, with a lot of these ‘flip this home’ type of shows, didn’t they typically have their own team of contractors (or established ones, anyway), lawyers and (eventually) real estate agents as well, to help them maximize profits? Some were also general contractors and agents by trade, and they were probably able to do some or most of the work themselves. You also had to witness the US housing market firsthand in 2004-2005 to truly appreciate the level of “insanity”.
May 25th, 2009 at 12:45 PM
Mark, for what it’s worth, I do think you have a solid investment strategy. I must to admit I had a hard time visualizing what one buys for $40-$80k (even 1-2 years ago), but I suspect you know this market segment rather well (it sounds like you got these for well below appraised values). From what you’ve indicated this is primarily rental income, so any appreciation is probably an added bonus. With any market correction lower-priced homes tend to hold their values more, so I don’t think you’ll take much of a hit on those (if any).
You’ve been a proponent of 10-year fixed rate mortgages, though, so I have to believe that at least some part of you has not discounted the possibility of higher interest rates in the not-too-distant future.
You also indicated you wouldn’t be surprised if prices dropped another 20%. If we use the peak average price from 2008 (around $315k), that means we could see the average home price reduced to just over $200k within that 18-month timeframe. I’m not so sure my ‘bottom’ of around $175k is necessarily that far off or overly “bearish”.
May 25th, 2009 at 1:08 PM
Jason,
Jason. My best recollection says you “sold at the peak” with the intention of buying again at the bottom. Am I wrong about that? Perhaps I’m thinking of someone else.
“I’m not so sure my ‘bottom’ of around $175k is necessarily that far off or overly “bearish”.”
Lol. No, not overly bearish.
Prices would have to drop about 36% from where they are now to hit an average of 175K. I won’t say it’s not possible but I’m pretty sure the average won’t hit 175 by “late 2009.”
May 25th, 2009 at 2:19 PM
Jason, visiting open houses for design ideas, okay, i’ll give you that, with a nudge-nudge, wink-wink. but why do you spend so much time obsessively mining real estate data if you have no real interest. just a hobby? and yah, I get the assumption you are looking at buying when you say things like this from the same last thread.
“I firmly believe the best deals to be had will materialize late in the Fall, through Winter and into 2010, but I could just as easily be wrong, too. At the very worst I’ll have missed out a brief buying opportunity, and will simply have to wait until the next one presents itself.”
Just speaking in the figurative ‘I’, as a stand in for first time homebuyers you are giving advice too. No, you are clearly looking for a good buying opportunity.
Crikey, you’ll have to show me how your predictions came out better than mine. Since joining this blog last August or September, I mostly recall saying if I had to guess that prices might correct 10 to 15 percent to 260,000, but that the market would remain strong due to immigration and decent economy. In fact I said if they dropped as far as 250,000, which I acknowledged could happen, as prices in Regina were at that level, first time buyers would step in and push it back up pretty quickly. My predictions for a slight correction and reasonably stable market actually seem fairly good, now that you mention it. Even bearish today. Feel free to prove me wrong, but I don’t think I predicted house prices would keep rising in Saskatoon through the fall or winter. I just argued for a milder correction than some of the dire predictions on this blog.
Now I recall in November or December you predicted a trough of 210,000? Still see that coming? Can’t remember what your other predictions were, but if they truly were better than mine for the spring market, you must be Nostradamus.
May 25th, 2009 at 3:17 PM
Norm, your recollection is absolutely correct. But as I believe we have a long way to go before we reach the bottom (or at least a similar period of time where prices have plateaued), I don’t feel I’m an “active” buyer. More like a “passive looker”. Up until recently I didn’t have any desire to remain in Saskatoon, either, but perhaps that has more to do with not wanting to pack and move again than anything else (and I suspect that will fade over the Summer).
OK , maybe one of the more ‘grizzly’ on your forum, I’ll give you that.
I was using Mark’s example, ie: current drop + 20% over 18 months to arrive at the $200k+ and change number. If you take these 3 numbers: $175k, $200k and $225k, those would be my extreme, moderate and realistic scenarios. But that would be for an end of 2010-early 2011 timeframe.
May 25th, 2009 at 3:32 PM
Mark, sure… ‘nudge-nudge, wink-wink’… would it surprise you to learn that I really like looking at houses without necessarily having any particular desire to buy? (I also like looking at Porsches for the same reason) I haven’t been obsessively mining real estate data (yet, anyway), but I do have more idle time on my hands than I probably should and do a fair amount of reading/research. Most is economically or financially-related, it just so happens that housing is currently in a unique position being attached to much of it.
Sure, I guess offering an opinion could be construed as offering advice. *Officially* my advice is: buy based on what you can afford in 5 years at a higher interest rate, not what you can squeeze by on today. And allow for contingencies (family, career, etc.) that may see your income situation change.
And yes, if there was an absolutely incredible theft on the market, I’d probably snatch it up. I haven’t seen anything that fits that criteria for some time now, though. At least in Canada, anyway.
Unrelated, I think the $260k number that was being thrown around by a few people (including me) was end of Q2 2009. There was also some level of consensus by the various “bears” that $210k was probably the trough. I know you asked Crikey (and I’d sure like to hear her response as well), but yes, I do still see that coming. I’m less and less convinced we’ll see it this year, though, unless we’ve truly drained the future ‘buyer’s pool’ with this recent run on homes.
May 25th, 2009 at 3:37 PM
Just for the record Jason, my 20 percent I was referring was from 280 / 270 down to 230. In any case, 230 would be my extreme situation, I don’t think it will, but can’t rule it out. Quite a bit more than 200 ‘and change’.
May 25th, 2009 at 3:57 PM
Mark, thanks for the clarification.
“Deficit will be ‘substantially more’ than forecast: Flaherty”, attributed to the “…economic slowdown and lower tax revenues” (shouldn’t be any surprises about a drop in tax revenues, we’ve been seeing indicators of this all over the place). “This is a serious recession we’re in.” (kind of stating the obvious, but at least they’re finally acknowledging what many of us already know).
http://www.canada.com/business/fp/Deficit+will+substantially+more+than+forecast+Flaherty/1628886/story.html
May 25th, 2009 at 4:04 PM
My prediction for Q2 average price was $287,000 (end of Q1 prediction was $281,300). That was back in March; here’s the link, it’s a fair bit down the thread: http://tinyurl.com/pkrs4s
Your prediction on the same thread for Q2 is a bit more difficult to pin down, as you gave yourself a $60,000 leeway:
“I truly have no idea. 240,000 wouldn’t suprise me, and neither would 300,000. There are just too many variables.”
My point was about the general economy and “markets”, not our housing market specifically. Anyway, let’s not quibble about trivialities- unless you’re actually also “S’toon”, in which case I’m still interested in that bet.
“Now I recall in November or December you predicted a trough of 210,000? Still see that coming?”
As a *trough*, I don’t think that’s far off. I didn’t see the taxpayer funded free-for-all coming (see, not Nostradamus!), and it’s entirely likely there are other things I won’t see coming. I definitely don’t think we’re past the trough, although I sure hope we’re close to it. I’m afraid the government has kicked this particular debt-riddled can a little further down the road.
May 25th, 2009 at 4:57 PM
Mark,
Crikey said, “Your prediction on the same thread for Q2 is a bit more difficult to pin down, as you gave yourself a $60,000 leeway”
She’s really got you there. You were pretty vague.
Crikey,
Haven’t seen S’toon in awhile. I was a little worried there towards the end of April but I’m starting to feel confident that I won’t be having to “humbly bow” because of a $310 average.
What’s your recollection of the parameters? Was it the average for the residential category over the whole quarter, or the average for June?
May 25th, 2009 at 8:06 PM
I saw 35 listings and 35 sales following Norm on Twitter today, thats the first time I’ve seen sales equal listings.
Another choice other then bearish or bullish could be opportunistic, of course opportunities don’t always present themselves when we would like them to but over time they do
May 25th, 2009 at 8:23 PM
Crikey, I forgot about that thread, I suppose cause I had no prediction really. I thought we were talking about everyone’s predictions back in November and December, when it seemed like so many on this blog saw a rapid collapse coming. Still though, when it comes to that recent thread, as you can see, the current average sits dead in the middle of my two parameters:)
May 25th, 2009 at 8:28 PM
“You were pretty vague.
”
Yes Norm, that’s the trick. So was Nostradamus. That’s why his stuff always seems to work. Woody Allen once parodied Nostradamus in a short story, quoting him as saying: “Two countries will go to war. One will win.”
May 25th, 2009 at 8:29 PM
Just watching House Hunters, on HGTV, one of my faves, the wife comes in big as a battleship, this is nice, that is nice the kitchen has white rather then stainless though, oh Brian would love that granite around the fireplace, but the bathroom is only trimmed with 18k gold, we like platinum. Can’t imagine how so many people stateside got themselves into so much trouble financially. 5 bedrooms 4 baths 3400 sq ft, it only had a 2 car garage but I guess we can make it do. hmmmm. can you say oink oink !
May 26th, 2009 at 9:04 AM
Hey Norm,
“What’s your recollection of the parameters? Was it the average for the residential category over the whole quarter, or the average for June?”
I seem to recall it was the former. There was also a prediction way back when for medians and averages for each quarter in 2009, along with predicted numbers of sales and listings for the year. Although I may not have the predictive abilities of Nostradamus, I don’t see any humble bowing in your future, no.
Mark,
“when it comes to that recent thread, as you can see, the current average sits dead in the middle of my two parameters:)”
Nice touch. I enjoy this old saw:
“Prediction is very difficult, especially about the future.”
Niels Bohr
May 26th, 2009 at 9:25 AM
Crikey,
I know I had made a few predictions, but have come up short, but I believe most were said to the effect of ” house prices will drop to xxxxx even if the economy stays the same and interest rates stay the same.
Well, the economy is not doing what it did the last 2 years ( it is doing well compared to other places) and interest rates have dropped. House prices and sales have come down a bit, but not what I had thought.
By making predictions we can only give an educated guess and much of that depends on what school one attends. And there are some bad schools on the internet!
May 26th, 2009 at 10:28 AM
Canadian households $1.3-trillion in debt
http://www.theglobeandmail.com/globe-investor/investment-ideas/personal-finance/canadian-households-13-trillion-in-debt/article1153329/
“The report says Canadian personal indebtedness “is a highly disturbing matter” and prospects are low for improving household financial security.”
Just to see how much 1.3 trillion of debt is;
Canada GDP 2008 = 1.5 trillion
May 26th, 2009 at 10:52 AM
George, “CGA-Canada warned Tuesday that many individuals are unaware of how the economic downturn has hit their financial situation, and they continue to load up their credit cards and lines of credit while skimping on savings” and “…85 per cent of households had outstanding debt on a credit card”. This statement is particularly ominous: “One-quarter of those interviewed would not be able to handle an unforeseen expense of $5,000, and one in 10 would have trouble with an unforeseen cost of $500.” This shouldn’t be at all surprising if 80% of the mortgages being written up are close to the maximum allowed.gas
May 27th, 2009 at 8:06 AM
Is it correct to assume the suggestion that flooring will give a 50-75% return on investment is not speaking to the cheap ($1.99 stuff) laminate flooring?
We just purchased a new to us home after an exhaustive search and if it had the cheapo laminate I automatically either crossed it off the list or deducted flooring from the purchase price b/c it would need to be replaced and we knew full well that some of it was just put in.
May 27th, 2009 at 9:52 AM
Charlie,
I suppose if you were completely opposed to cheap laminate it would not have any impact on the value.
If you were one of the large group of people who is inclined to purchase cheap laminate floors you might see some value to it. Of course, 50% of cheap laminate adds a lot less value than 50% of a quality hardwood.
Wouldn’t it depend, at least to some extent, on what the cheap laminate replaced and what kind of property it was? I would think that cheap laminate would make a small home more valuable (at least marginally) than if it were sold with orange, worn, dated and dirty carpets.
May 27th, 2009 at 10:08 AM
Charlie,
Cheap laminate could give a great return on investment if it was used in an inexpensive house to cover over something that was even more hideous. It’s clean, looks okay, and would suit a house that would be appealing to someone on a tight budget. I think the key to getting your money out of a reno is to pick finishes that are in keeping with the quality of a typical house in the neighbourhood. Spend too much and the buyers in that neighbourhood won’t pay much more for upgrades they don’t need. Don’t spend enough, and buyers will mentally deduct the cost of replacing it (as you did).
I’m with you on the cheap laminate, though; about the only thing uglier is wood or leather-look sheet vinyl. Plus, it doesn’t last anywhere near as long as real wood, so over a lifetime, it really isn’t that cheap! However, what’s wrong with something that was just put in?
May 27th, 2009 at 1:02 PM
Norm, is there a way to graph the weekly cancelled/expired listings (perhaps in blue) – even if only for 2009? We always seem to see a spike (in red) of new listings at the beginning of each month (which probably comprises those cancelled/re-listed) and it might be beneficial to see when listings are typically expiring or being cancelled each month. Just a thought.
May 27th, 2009 at 1:59 PM
Hey Norm, just wondering what you think of John Himpe’s blog as far as buying a house in certain areas.
http://www.newstalk650.com/blogs/john-himpe/its-not-worth-it
May 27th, 2009 at 2:37 PM
The Saskatoon City Police has a link about halfway down their main page where you can select the crime stats for any community during any given month.
http://www.police.saskatoon.sk.ca/
In some of the newer areas they only have stats for 2009, but for most of the existing areas they go back to 2007. I couldn’t find a community map on the City of Saskatoon’s website, but this appears to be a fairly recent update.
http://en.wikipedia.org/wiki/File:Saskatoon_Neighbourhoods.png
Pleasant Hill probably has some of the worst right now.
May 27th, 2009 at 2:58 PM
EI claims in Saskatoon and Saskatchewan have spiked (SP)
http://www.thestarphoenix.com/claims+Saskatoon+Saskatchewan+have+spiked+says/1636075/story.html
“According to Statistics Canada, the number of EI claimants in March was 2,330 — a 70 per cent jump from the same period a year ago. Overall, the province saw an overall 44 per cent increase in claims, and Regina – the only other Saskatchewan city included in Statistics Canada’s list of census metropolitan areas – saw a 32 per cent increase.”
70% in Saskatoon, 32% in Regina and 44% in the province, overall (there were some indications in January that claims were on the rise and might see a sharp spike).
May 27th, 2009 at 3:05 PM
“The Greatest Fools” (May-26-2009)
http://www.greaterfool.ca/2009/05/26/the-greatest-fools/
I’m sure more than a few other people closely follow Garth Turner’s daily posts, but this one in particular deserves special attention. Whatever you pay think of Garth personally, he’s dead on the money on this one (no pun intended).
“Welcome to the parallel universe. As I have been detailing lately, the greatest fools in real estate are not those who bought at the height of the bubble in late 2007, they are the ones buying now, at the pinnacle of denial.”
“Canadian household debt has red-lined. The country’s accountants have just warned that families now owe $1.3 trillion, most personal debt on credit cards and LOCs. Sadly, 85% of us have unpaid credit card bills. Worse, a third of all families could not handle an unexpected $5,000 expense. Even worse, one in ten families could not pay a $500 bill. Meanwhile, corporate profits are non-existent, meaning any recovery will be essentially jobless.”
“The current real estate buzz will destroy the wealth of those now buying, especially in multi-offer situations. Current first-time buyers will face a double threat of rising mortgage rates and collapsing values over the next two to five years. They will truly wonder why they took such a gamble and how helicopter parents, friends and ‘experts’ could have been so wrong. In two years there will be virtually no move-up buyers. High-end houses will be nailed.”
“And as all of the above comes together in the next dozen or two months, supply will swamp demand. Those shelling out full price in the Spring of 09 will look as equity cowboys did in the Spring of 30.”
May 27th, 2009 at 4:31 PM
Jason,
Thanks. I’ll think about that. Canceled listing are easy, though I’m not sure that there’s much relevance. I really, really like the MLS the SRAR brought in for agents last year. It can do nearly anything, except reliably pull expired listings.
Todd,
“just wondering what you think of John Himpe’s blog as far as buying a house in certain areas.”
I agree completely with the idea that there are certain spots that just aren’t very safe. I wouldn’t sleep at night if my daughter was living in Megan’s neighbourhood, so naturally, I wouldn’t sell your daughter a house there either. That said, I’ll bet that Megan is someone who doesn’t feel that she has a lot of options to move up to a better neighbourhood.
I wonder how long it will be before a real estate agent isn’t free to say, “You know, this certainly isn’t a spot that I’d feel comfortable having my daughter live.” An agent can’t even suggest that an area is a bad spot in the U.S. anymore.
May 27th, 2009 at 9:07 PM
“An agent can’t even suggest that an area is a bad spot in the U.S. anymore.”
For real? What can happen?
May 27th, 2009 at 9:48 PM
Len,
To be honest I’m not sure what can happen, but it is an illegal practice known as steering, and the definition of steering is: the illegal funneling of home buyers to a particular area based on the desire to keep the makeup of that neighborhood the same or intentionally change it.
Appears to be designed to prevent discrimination.
Jay Thompson writes a bit about it here if you’re interested.
http://www.phoenixrealestateguy.com/ask-the-agents-where-are-the-good-neighborhoods/396
May 28th, 2009 at 10:51 AM
Just curious, what does it take to get access to the MLS database? Do you need to be a realtor? Pay an access fee? Both?
May 28th, 2009 at 8:28 PM
Matthew,
Both. The MLS database is created by agents, for agents. Monthly dues keep it operational.
A home search like the one behind the link below literally provides access to all of the MLS data except private information of the seller, showing instructions, realtor comments, expiry date and commissions offered.
http://homesearch.teamfisher.com