Myths and Realities about Vancouver and BC Real Estate
Myths and Realities about Real Estate in BC.
Real estate myth #1: Albertans are buying up B.C's recreational property.
60 percent of the 9,400 vacation homes were purchases by Albertans valuing over $2.2 billion in value. Albertans were the biggest out-of-province consumers of ski chalets, resort condos and lakeside cabins.
Real estate myth #2: My home's assessment tells me what the property is worth.
BC assessment sent you an assessment of your property in January 2008- this land and improvement value was estimated 6 months prior (July 1st 2007). This was a reasonably good estimate for July 1st 2007 but the property values have changed since. If you were to put your home on the market now, you would most likely sell it for a higher value on your BC Assessment
(this is especially true in Vancouver’s Hot Real Estate Market)
Real estate myth #3: Real estate prices in Greater Vancouver can't keep going up; they're too high already.
With the average detached-home price in some parts of Vancouver topping $918,000 in March, it is hard for many to envision real estate values climbing even higher.
For the previous 2 to 3 years bloggers and other experts have been saying the real estate market can’t go up any higher -well I got news for you- the prices went up and up and up. We have seen an increase of over 100% in over the past 5 years in some Metro municipalities.
High prices have been the enemy for first-time-home-buyers. They have been pushed out of the market- a solution to this is people are coming together. What I have noticed is couples are purchasing homes and apartments together- this opens up opportunities for the first time home buyers.
The rules have also changed with Property Transfer Tax- the maximum you can purchase now as a first time home buyer is $425,000.
The Vancouver market has had its ups and downs over the decades, and while no one is promising that prices will keep going up in a straight line forever. CMHC (Canadian Mortgage and House Corporation) does predict further growth this year and next.
The way I see it is we are not the US- we do not have the same issues they have with the Sub prime interest. Vancouver is a hugely desirable place to live, safe, beautiful, tones of opportunities and the list goes on. We are restricted from growing outwards- with the ocean, mountains and the US boarder we are running out of options to grow. It is basic supply and demand- demand increases and supply can only go up so much and then it has to stop.
Real estate myth #4: Spring is a good time to buy or sell a residential property.
There is truth to the notion that spring brings out the daffodils, the cherry blossoms and the house hunters with renewed visions of new homes in their minds. Records show that spring is the best time to sell. An analysis of land title records since 1993 shows that the busiest months for sales to close (closing usually takes place 60 days from the accepted offer), are March through June.
Real estate myth #5: A bathroom or kitchen renovation is the best way to add lasting resale value to your home.
Renovation is the way to turn a tired old home into the fresh, modern palace of your heart's content, which might make it more valuable on the open market. Not all renovations are created equal, however.
You spend most of the time entertaining and such in the kitchen- Renovating won't return all of the money you put in, but any improvements you make to a kitchen will repay you 75 to 100 per cent of what you put in to the reno if you ever choose to sell.
You spend less time there, but renovating bathrooms with new counters, tiles and fittings will repay the investment by a similar amount. Potential buyers will love the fact they don't have to touch a bathroom renovation themselves because with all the fittings, it can be a difficult project to take on.
Real estate myth #6: Swimming pools are a negative when it comes time to resell.
When we were all younger is was cool to have a friend with a swimming pool in the back yard. Well as you grow older it is not all that “cool”.
A pool constricts the potential buyer- it is attractive to the middle aged families with teenaged kids. But for younger families with toddlers the pool is seen as a death trap. For older families the pool is seen as a money pit, sucking up their pension money.
Real estate myth #7: More than half of all Lower Mainland houses will soon be worth more than $1 million.
Rising markets over the past three years have certainly made a lot of Vancouver residents "paper millionaires" with the property that they hold, but not so many to push anywhere near a majority of them into that category. That day may come, but not soon.
Across Vancouver in 2000, just under one per cent of properties were valued at over one million. The number has skyrocketed since, but was still only about 11 per cent as of 2008.
In the UBC Endowment Lands, virtually all homes were worth more than $1 million on their 2008 assessments. In West Vancouver, 86.5 per cent of homes are worth $1 million or more.
If you live in Vancouver now, the chances are rising that your home is worth more than a million dollars. But we are far away from having the average over a million- so when will the average home be worth over a mill? This stat is amazing- assuming no market corrections and the average inflation from 2000- you will see the average over a million by 2014. BUT IF INFLATION CONTINUES POST 2006 LEVEL IT WILL HAPPEN IN 2011!!!
Real estate myth #8: A house with a south-facing backyard is likelier to appreciate more than the equivalent house facing the other way.
The South Facing backyard is a great feature to have on the description of your feature sheet on MLS- but does it actually earn you more money relative to the house across the street? NOPE.
It may sell fast in Vancouver as Vancouverites are starved of sunlight and will do anything to get that bright entertaining space, but what about the house with Mountain and water views (as you get on a north facing home in Vancouver). The south facing home in my opinion may sell a little faster but not for more bucks.
Real estate myth #9: You can save money by buying a 'fixer-upper' and renovating.
If you have the skill, time and patience to put in the SWEAT EQUITY into a home, you can make some great value.
You do have to be careful though. If you stray into projects that are above your skill level in carpentry and plumbing you can get into trouble and lose a lot of money.
Real estate myth #10: Buying a home outside the city and commuting to work is a good way to save money.
This is crazy- if you take the median property values starting West and going East- the numbers look something like this:
Maple Ridge $386,000
So buyers can buy way more for way less as they head out to the suburbs. You can save a chunk of money if you commute to work downtown. There are clearly some negatives with this though- you spend lots of money on gas (I filled up yesterday for $1.37/l), terrible on the environment, you spend less time with the family, stress of driving to and from work is cannot be good for you…
People do say location location location for a reason!!!
Real estate myth #11: Buying an additional property to rent out is a solid investment.
The dream is to buy a rental property or two, or three and hold on to them while renters pay down the mortgage you took out to buy them. As soon as you have burned through the mortgages you are earning an easy income.
The idea situation is finding a property with neutral or positive cash flow- that means you don’t have to pay anything into the investment on a monthly basis- the rent covers your expenses on the property. Today’s market in Vancouver is making that a little tough.
There are some outlying communities where you can find rental properties for less than $100,000 where the potential rent will cover your payments- but the problem is the vacancy rate is in the three-to-four-per-cent range (making it tough to rent out sometimes).
Real estate myth #12: professionally staging a home appeals to more buyers and sells faster on today’s market.
As Suze McCart our stager- it works and we also believe it. There is so much competition in today’s market only the good units are selling (obviously a realistic price helps).
Clean and well maintained is the look that buyers are after. A neatly trimmed yard and bit of fresh paint gets across the message that you look after your property and that it is worth a look.
And staging can help too. A professional design helps the potential purchaser see how well a home's rooms work, or could work if they owned it and were putting their own stamp on things. That is a vision that is more difficult to conjure up with your kids' toys piled up along the wall in the living room, or your impressive collection of National Geographics stacked in the hall.
Source: from the Vancouver Sun April 25th 2008