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Balancing the Emotional and Practical Sides of Buying a Home

Balancing the Emotional and Practical Sides of Buying a Home

Imagine this scenario...

You're shopping for a new home. You drive to visit a recent listing. As you walk through the front doors, you're impressed. Every room looks fantastic. You see yourself relaxing on the spacious patio, cooking in the modern kitchen, and enjoying evenings with the family in the cozy living room.

Your emotions are on overdrive. This is your dream home!

Should you make an offer? Probably. In fact, you should make that decision quickly in case there are other interested buyers.

However, your decision shouldn't be guided purely by emotion. You want to make sure you take practical matters into consideration too.

For example, you'll want to consider:

  • Is the property within your price range?
  • Does it have everything you need?
  • Does the neighbourhood work for you?
  • How old is the property? Are there items, such as the furnace, that may need to be replaced soon?
  • Will it need any major repairs or upgrades?
  • What are the average monthly costs of carrying the home? (Property taxes, utilities, etc.)

Once you've considered the purchase of the home from a practical standpoint, you'll have a lot more confidence in your decision when you make an offer.

Want to talk to an expert who can make sure you're informed with a 360-degree view on any property? Get in touch today.

Setting Your List Price Requires Calculation AND Savvy

When you're having a garage sale, one of the toughest tasks is pricing your items. If you put a price tag on your old golf clubs that’s too high, no one will buy them. If you make the price too low, they might sell quickly, but you’ll spend the rest of the day wondering if you could have gotten more!

It's similar to selling your home — except with your home, the stakes are much higher. You want to price your property to sell, but you don’t want to leave any money on the table.

How do you accomplish that?

Setting the right list price for your home requires a combination of skilled calculation AND industry savvy.

Let's start with the "calculation" part...

When you work with me, I'll review recently sold properties that are similar to yours in type, size, features and location. Then, using that data, we’ll calculate a range that represents your property's "current market value."

For example, consider a spacious 15-year-old bungalow in a nice neighbourhood. If similar homes in the area have sold for $675,000- $750,000 in the last six months, then it's obvious that your home should sell in that range too. A list price above or below that range would be in the danger zone.

But skilled calculation is only half the task.

Setting your list price also requires expertise in the local market, combined with good old-fashioned gut instinct. That instinct comes from being on the front lines of many property transactions.

That's why working with a good real estate salesperson is so important, when you’re deciding on the list price for your home.

Want to discuss selling your home? Call me.

Boosting Your Curb Appeal

Ideally, you would like buyers to wait until they’ve viewed your whole property before they judge it. However, the reality is, buyers start forming an impression of your home as soon as they see it from the curb. So, it pays to do everything you can to improve your property's "curb appeal".

Here are some ideas:

  • You can improve the impact of your landscaping by trimming hedges, removing any unsightly weeds, and cutting the grass. Planting just a few fresh flowers can make a big impact.
  • If your main entrance door is old, a fresh coat of paint will make it look like new. In some cases, the effect is significant.
  • Remove any items that might distract the buyer from forming a good first impression. For example, garbage cans, stored items along the side of the property, etc.
  • Make sure the curtains and blinds on your front windows are open during viewings. That will make your home look more friendly and appealing.
  • If your driveway has grease stains and other blemishes, consider renting a power washer and giving the driveway a thorough cleaning.
  • Clean your front windows. If possible, also clean the exterior panes.

Finally, if possible, park your vehicles on the street and away from your home. Doing this will not only make your home look more inviting to buyers, it will give them a convenient place to park.

Most of these tips can be done in less than a day. Yet, they can make a big difference in your home's curb appeal. They are worth the effort!

Looking for any other tips on a successful, top-price sale of your home? Get in touch with me any time!

What’s happening in the Victoria Real Estate Market? Fall 2018 Trends to Watch

While the regularly released Real Estate Board statistics provide an immensely useful overview of the market on a monthly basis, many of my clients often stop me to ask, “Dirk, what’s really going on out there?" I’ll share the inside track here that I’d usually walk them through, hopefully in comprehensive enough detail to help you make some sense of where things are headed from where I sit. Of course, if you have any questions, you can always shoot me a text or an email.

Overall, the economy’s position in the credit cycle, with rates rising and borrowing becoming more difficult for consumers, coupled with government interventions designed to cool the market has lead to a somewhat balanced (or even stagnant) market in Victoria, with increased inventory compared to recent numbers, but still well below the 10 year average. The market for Single Family Homes in particular market has softened, especially listings over $1 million, as a result of the factors above. As a result, there is still some stale inventory that has failed to sell as the market has slowed. This is inventory is gradually being reduced as we see a number of these homes coming off the market, Attractive, reasonably priced properties are absolutely still selling well, sometimes even bringing in multiple offers. As of this fall, Victoria’s real estate market has far less inventory in the more affordable $750K-800K-and-under bracket than we have seen in recent years, which contributes to this pressure. Given their more accessible price point, condos continue to perform well.

In addition, More advanced softening in the Vancouver market has led to a drop-off in the number of ‘Vancouver Refugees’ selling off and purchasing properties on the Island. In fact, this declining real estate trend is happening elsewhere, not just here - price declines are showing up in the news from areas in Europe, Oceania, and the U.S.

In Canada and the U.S., interest rates are expected to continue to rise, further increasing the cost of borrowing and putting downward pressure on demand, however, broader economic fundamentals appear to be keeping steady, with inflation reaching its 2% target.

What does this all mean? Expect a slightly slower, cooler market in the next six months, particularly as active buyers and sellers who haven’t succeeded in their aims this year begin to back off toward winter and wait until spring. I expect that higher interest rates leading into 2019 will continue to impact demand and the shift away from a strong sellers’ market will continue. Prices should flatten out, although I don’t see a significant decline on the way. This should contribute to a little more inventory available in the upcoming spring market, so for buyers - particularly those who are less dependent on financing to purchase properties - there will be more opportunities.




2018 Expanded Foreign Buyer Tax and New Speculation Tax. A Rant.

By now, I’m sure you’ve read the headlines about #BCBudget2018, so I won’t go to pains to explain what the newly announced taxes are, but I will say that the more time I have to absorb the news and consider the implication of these clumsy, poorly thought out measures, the more I feel the need to rant. Here we go.

First, the “speculation tax,” actually a new, extra, annual, provincial property tax on property owners who don’t reside in the property they own. What? It’s good optics for the NDP to appear to be doing something to curb real estate speculation since most people believe speculation is causing prices to rise, however, a true speculation tax would be better designed to hit actual speculators. Case in point: anyone flipping a property within a short period of time won’t face a heavy tax burden from the new “speculation tax,” right? Conversely, someone who holds a property for years will pay tens of thousands, year after year - but that person doesn’t strike me as a speculator. What about those who speculate on pre-construction condo assignments? They’re selling agreements, not property, so …? The budget announcement suggested the government intends to put measures in place to track pre-construction projects, but it’s a hard market to track, with vast amounts of time between initial deals, contract flips, and property titles being registered. The bottom line? I’m not against the idea of implementing taxation to curb property speculation, however, this tax misses the mark big time, and many Canadians and British Columbians with second homes here will be unfairly affected.

Further on that point: it’s no surprise to be told that left-of-centre governments tend to favour progressive taxation, where higher earners are taxed at a higher rate. But what surprises me is seeing this government make the leap from taxing citizens’ incomes to taxing their equity and property assets. British Columbians didn’t sign on to having their provincial government expropriate funds from their privately held assets. Or to having the provincial government force them to rent out their private assets through measures like this as if those private assets were public housing stock. The finance minister suggests that there will be a tax credit in place to lessen the burden on BC residents - details are scant at this point - and she hasn’t indicated that anyone would be exempt on a second home used part-time, like a cottage, or small pied-à-terre in another city. Residents who have worked hard enough and made the sacrifices to enjoy the use of a second personal property have surely already been taxed through the income they earned - and are we forgetting that they’re already paying annual taxes on both of those properties?

Secondly, the expanded Foreign Buyer Tax. Expanding the FBT outside of Vancouver simply isn’t supported by the numbers we have at hand. We haven’t seen vast sums of foreign capital driving up the market in Victoria; in fact, VREB’s figures suggest that about three quarters of the market activity here is just amongst locals, with only around three percent selling to buyers who reside outside of Canada. In Vancouver, the reported numbers are higher, but still, the initial introduction of the tax had little effect aside from a brief stall in the market while everyone took their foot off the gas for a moment to see what was going to happen, followed by a rapid return to rising prices.

Questionable foreign money does seem to be a serious issue in the lower mainland, which is a large enough market to consistently skew province-wide figures. There is no shortage of anecdotal chatter amongst Vancouver real estate industry folk, and a number of more prominent voices stating publicly that it’s a bigger problem than the statistics produced by the real estate industry or various levels of government suggest. The excellent report recently released by Transparency International Canada (read it here) about the various anonymous models of property ownership available to speculators and foreign purchasers is, frankly, eye opening. I’d bet most people have no idea. To that end, a much more meaningful move would be for the government to start pursuing enhanced disclosure around property ownership. The problem with this, of course, is that it costs money up front, rather than generating new tax revenues. Ugh, sounds like work. The real light about all of this goes on when one considers that all this new taxation announced in the budget is expected to raise $5.5B more for government coffers - which should neatly cover the $5.2B in new spending that was announced in the budget.

And the cherry on top? The finance minister’s own admission that the government specifically designed these measures to push down the real estate market, a statement that in itself suggests that the government is willing to risk putting thousands of homeowners underwater on their properties, owing more money than they’re even worth. Even more appalling, that the government openly admits that it didn’t thoroughly consider or predict at the impacts these manipulations would have on the housing market before putting them in to place. That is beyond irresponsible.

I’m already turning a few of the points from this rant into a strongly worded letter to the finance minister expressing just how galled I am at their short-sighted, tax-and-spend approach, opportunistically targeted at real estate as it’s an eye-catching source of news headlines. I encourage you to do the same. Not to be forgotten: real estate and construction are among the largest contributors to BC’s economy as a whole. I hope for my clients’ sake and yours that all the worst case scenarios I imagine don’t unfold as we deal with the as-yet unforeseen consequences of Budget 2018. Stay tuned.

Dirk


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Dirk VanderWal
  dirk (@) yyjhome.ca
  250.888.7049 mobile
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  250.385.3763 fax
  Newport Realty
Christie's International Real Estate
1144 Fort St.
Victoria, BC V8V 3K8


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