Buyers

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Jim Flaherty may have just got what he wanted….to cool off the housing market. Most economists and real estate professionals believe the landing will be soft, but stats show that all of the moves made by the federal government have been successful in slowing the white hot housing market. Despite the fact home sales were down 17.4 per cent in December over the same month last year, the average sale price rose 1.6 per cent across Canada.

This creates a very interesting dynamic in the Canadian housing market. Sales in the market place are down, but prices continue to rise. It defies the logic of most economic thinking. The reason for this is two-fold: The market is sustaining itself due to the motivated buyers that continue to purchase and take advantage of the low interest rate options available to home buyers today.

Also, sellers don’t seem desperate enough to dramatically reduce their prices. Sellers are telling the market that they know what their house is worth and will gladly hold out until they get it….and if they don’t get it, they won’t sell it!

I have titled this article ‘Spring Market Holds the Real Estate Crystal Ball’ because the hottest market of the year will determine which way things will swing. Will a flood of buyers jump into the market and continue to pay what sellers are asking OR will buyers hold off and wait for prices to fall?

Buyers are also faced with the dilemma of purchasing now with interest rates being low versus waiting for the potential drop in market value when the rates begin to rise. Some first time buyers and buyers looking to move up the property ladder have been pushed out of the market due to the mortgage changes. Moving mortgage amortization from 30 years to 25 years has made monthly payments unaffordable for some causing buyers to hold off.

It should be noted and understood that the reported statistics showing significant drops in sales are coming from the country’s two hottest markets (Toronto and Vancouver). These markets needed to cool as the drastic price escalation was unsustainable. Toronto at 7 times the national average and Vancouver at 10 times the national average could not continue the way it was heading and the correction we are experiencing is mostly felt in those two markets. Regina, for example, actually posted an increase in sales of 15.9% from December 2011. For this reason, I recommend that you look locally for market information and not to be swayed by national averages.

There are a lot of questions and the spring market will help provide us with some of the answers.

MY THOUGHTS

• The market will continue to be healthy and you will see a rise in home sales in the spring.
• A correction or ‘Softening’ of the market should not be viewed as a negative. A stable market is a sustainable and predictable market. People should want this when it comes to the largest financial investment in their portfolio.
• Buyers will continue to purchase homes and take advantage of the record low interest rates.
• The drop in reported sales is due to buyers unwilling to make the move upward on the property ladder and assume more debt that they were willing to assume before the mortgage rule changes and threat of interest rate increases.
• The drop in sales is also a result of first time buyers not being able to afford houses RIGHT NOW due to the mortgage changes, but they will be buying once they are able to qualify.
• Toronto and Vancouver will be OK…..just ask them!
• We have the strongest banking system in the world and a government that is looking out for the people.
• The Canadian real estate market will continue to be a good investment, don’t be scared off by inflammatory articles aimed more at selling newspapers and magazines than providing sound advice to their readers, and if you have questions, seek out professional advice so you are able to make the most informed decision possible.

I recently had a consultation with a buyer and we were discussing the Pros and Cons of buying a ‘Fixer-Upper’ or homes that were selling in ‘As-Is condition’. It often seems like a great idea from a purchasing perspective because of the reduced asking prices. However, the question that needs to be asked is if the asking price is low enough.

If a home is asking $20,000 less than the neighbour that just sold last week and you negotiate an additional $10,000 off of that reduced asking price, is that a good deal? What if that house needs a new furnace and air conditioner? What if the house needs to be painted, wall paper removed or carpets replaced? What if the kitchen screams 1980? These are all considerations when buying a home that needs significant work. In our example, if you buy that home for $30,000 less than the neighbour, it may be a steal! But if the home you bought needs a new kitchen and the basement is not finished, then you may have over paid.

When you decide to buy and you have your home inspection, please keep the following costs in mind. This will help you with price negotiations or help determine if that home is the right fit for you and your budget.

As a dedicated real estate agent servicing the Burlington, Oakville, Hamilton and Toronto markets, I provide all buyers with this affordability consultation so they know exactly what they are getting into. It is not meant to scare anyone off buying a home, it is just meant to provide my clients with all the information necessary so they can make the most informed decision about their purchase.

If you would like a personal buyer consultation, I would be happy to sit down with you and examine things such as budget and housing affordability. One of the largest regrets a buyer will have when purchasing a home is underestimating the maintenance and repair costs. A skilled and qualified buyer real estate agent will be able to help you avoid such regret.

Roofing/Flashings/Chimneys

Install conventional asphalt shingles over existing shingles $2.00 – $4.00 per sq. ft.
Strip and reshingle with convention asphalt shingles $2.75 – $5.50 per sq.ft.
Strip and reshingle with premium quality asphalt shingles $5.00 – $10.00 per sq. ft.
Strip and re-roof with cedar shingles $9.00 – $18.00 per sq. ft.
Strip and replace built-up tar and gravel roof $10.00 – $20.00 per sq. ft. (min. $1,000.00)
Strip and replace single-ply membrane $10.00 – $20.00 per sq. ft. (min. $1,000.00)
Reflash typical skylight or chimney $500.00 – $1,000.000
Rebuild typical chimney above roof line $25.00 – $50.00 per row of bricks (min. $400.00)
Rebuild typical single flue chimney aove roof line $200.00 – $400.00 per lin. ft. (min. $1,000.00)

Exterior

Install galvanized or aluminum gutters and downspouts $5.00 – $10.00 per lin. ft. (min. $500.00)
Install aluminium soffits and fascia $8.00 – $16.00 per lin. ft.
Install aluminium or vinyl siding $6.00 – $12.00 per sq. ft.
Repoint exterior wall (soft mortar) $3.00 – $6.00 per sq. ft. (min. $500.00)
Repoint exterior wall (hard mortar) $5.00 – $10.00 per sq. ft. (min $500.00)
Parge foundation walls $3.00 – $6.00 per sq. ft.
Dampproof foundation walls and install weeping tile $150.00 – $300.00 per lin. ft. (min. $3,000.00)
Install a deck $25.00 – $50.00 per sq. ft. (min. $1,000.00)
Resurface existing asphalt driveway $2.00 – $4.00 per sq. ft.
Install interlocking brick driveway $8.00 – $16.00 per sq. ft.
Rebuild exterior basement stairwell $5,000.00 and up
Build detached garage $70.00 – $140.00 per sq. ft.
Build retaining wall (wood) $20.00 – $40.00 per sq. ft.
Build retaining wall (concrete) $30.00 – $60.00 per sq. ft. (min. $500.00)
Painting (trim only) $2,000.00 – $4,000.00 and up
Painting (trim and wall surfaces) $5,000.00 and up

Structure

Underpin one corner of house $5,000.00 and up
Underpin or add foundations $300.00 and up per lin. ft. (min. $3,000.00)
Lower basement floor by underpining and/or bench footings $50.00 – $300.00 per lin. ft. (min. $5,000.00)
Replace deteriorating sill beam with concrete $60.00 and up per lin. ft. (min. $2,000.00)
Install basement support post with proper foundation $800.00 – $1,600.00
Perform chemical treatment for termites $2,000.00 and up
Repair minor crack in poured concrete foundation $400.00 – $800.00

Electrical

Upgrade electrical service to 100 amps (including new pannel) $1,200.00 – $3,000.00
Upgrade electrical service to 100 amps (if suitably sized panel already exists) $800.00 – $1,600.00
Upgrade electrical service to 200 amps $1,700.00 – $3,500.00
Install new circuit break panel $700.00 – $1,400.00
Replace circuit breaker (20 amp or less) $100.00 – $200.00
Add 120 volt circuit (microwave, freezer, etc.) $150.00 – $300.00
Add 240 volt circuit (dryer, stove, etc.) $300.00 – $600.00
Add conventional receptacle $200.00 – $400.00
Replace conventional receptacle with ground fault circuit receptacle $70.00 – $140.00
Replace conventional receptacle with aluminium compatible type (CO/ALR) (assuming several are required) $60.00 – $120.00 each
Upgrade entire house with aluminium compatible receptacles, connectors, etc. $1,000.00 – $2,000.00
Rewire electrical outlet with reversed polarity (assuming electrician already out there) $5.00 – $10.00 each
Replace know & tube wiring with conventional wiring (per room) $1,000.00 – $2,000.00

Heating

Install mid-efficiency forced-air furnace $2,500.00 – $5,000.00
Install high-efficiency forced-air furnace $3,500.00 – $7,000.00
Install humidifier $300.00 – $600.00
Install electronic air filter $800.00 – $1,600.00
Install mid-efficiency boiler $3,500.00 – $7,000.00
Install high-efficiency boiler $6,000.00 – $120,000.00
Install circulating pump $400.00 – $600.00
Install chimney liner for gas appliance $500.00 – $1,000.00
Install chimney liner for oil appliance $700.00 – $1,800.00
Install programmable thermostat $200.00 – $400.00
Replace indoor oil tank $1,200.00 – $2,500.00
Remove oil tank from basement $600.00 and up
Remove abandoned underground oil tank $10,000.00 and up
Replace radiator valve $300.00 – $600.00
Add electric baseboard heater $250.00 – $500.00
Convert from hot water heating to forced-air (bungalow) $10,000.00 – $20,000.00
Convert from hot water heating to forced-air (two storey) $15,000.00 – $30,000.00
Clean ductwork $300.00 – $600.00

Cooling/Heat Pumps

Add central air conditioning on existing forced-air system $3,000.00 and up
Add heat pump to forced-air system $4,000.00 – $8,000.00
Replace heat pump or air conditioning condenser $1,200.00 – $2,500.00
Install independent air conditioning system $10,000.00 – $20,000.00
Install ductless air conditioning system $3,000.00 – $7,000.00

Insulation

Insulate open attic to modern standards $0.80 – $1.60 per sq. ft.
Blow insulation into flat roof, cathedral ceiling or wall cavity $2.00 – $4.00 per sq. ft.
Improve attic ventilation $30.00 – $60.00 per vent

Plumbing

Replace galvanized piping with copper (two storey with one bathroom) $2,500.00 – $5,000.00
Replace water line to house $2,00.00 and up
Replace toilet $500.00 and up
Replace basin, including faucets $750.00 and up
Replace bathtub, including ceramic tile and facuets $2,500.00 and up
Install whirlpool bath, including faucets $3,500.00 and up
Retile bathtub enclosure $1,000.00 – $2,000.00
Replace leaking shower stall pan $1,000.00 – $2,000.00
Rebuild tile shower stall $2,500.00 – $5,000.00
Replace laundry tubs $400.00 – $800.00
Remodel four-piece bathroom completely $6,000.00 – $50,000.00
Connect waste plumbing system to municipal sewers $5,000.00 and up
Install submersible pump $1,000.00 and up
Install suction or jet pump $700.00 and up
Install modest basement bathroom $6,000.00 and up

Interior

Add drywall over plaster $4.00 – $8.00 per sq. ft.
Sand and refinish hardwood floors $2.00 – $4.00 per sq. ft.
Install replacement windows $40.00 – $120.00 per sq. ft.
Install storm window $200.00 – $400.00
Install masonry fireplace (if flue already roughed-in) $3,000.00 and up
Install zero-clearance fireplace (including chimney) $3,500.00 and up
Install glass doors on fireplace $300.00 and up

*Costing courtesy of Carson Dunlop