Socially, we are constrained, the residential Real Estate Market, is not. Home sales for December, like the entire last half of 2020, have been better than they have been in the last 10 years. We surpassed 2019 total sales, mostly in the final 5 or 6 months in 2020. See HERE . A notable difference from our first lockdown in March where sales were driven to record lows to this December where homes sales are well above season averages. In the same breath, it is important to touch on where we are as a society trying to preserve our lives and healthcare system. Open houses are done virtuially. Viewings are limited to one agent and two people from the same family cohort. Masks are mandatory, as well as gloves and or sanitizer, there is social distancing, and limited touching.
What am I seeing? Builders continue to sell out of their Spec Homes in days over the weekend, multiple offer situations in the resale market are common. Most of us would agree, rates are driving this growth. You do not have to look far to find a high ratio (less than 20% down) five-year fixed mortgage for 1.64% or better.
Inventory is low. If I am selling, I would get staged, photographed, listed, to ride this momentum. The market is not crazy, Sellers homes still must show clean organized and improved or sell at a substantial discount. There are still small margins between what we paid 5 or 10 years ago and our sale price today. But the difference being we have a much greater chance of selling, and for closer to what we have historically paid, plus some. This is a stark contrast to 2019 when homes were sitting on the market an average of 70 days and had a 40% chance of selling mid peak season.
Having an area in mind and getting in and out of homes as they come to market will set you up for success. Being able to compare of off the next and referring to historical sales will help you get the greatest value for your purchase. Inventory is low, clean, well priced homes sell quickly and many of us are left trying to pick over hard to sell listings. A little patience should go a long way heading into the spring market when the number of listings coming on increases.
When dealing with older homes, a lot of old hat thinking focuses on shingles, the hot water tank, and furnace as major considerations to purchase. After enough property inspections and home ownership, truth be told, hot water tanks installed run around $1,250. An “old’ mid efficiency furnace can run forever and can be maintained inexpensively, even replacing them for a high efficiency unit in an older 1960’s bungalow should only cost around $3,300. If I’m looking high-cost items that are often overlooked, before I even click to see more listing pictures, I’m absolutely looking at the shingles, but I’m also looking for old windows which cost 7-20K to replace, rotten shingles that start 5K, and broken or sagging concrete and severe grading issues which is likely going to start at a bear minimum of 2K but needs to be addressed as it directly affects the state of the homes foundation.
Our Brokerage Liv Real Estate
We have won the Consumer Choice Award 2021 for Northern Alberta Again this year. This is unique, our company is locally owned and operated and consists of less than 50 people. A huge accomplishment made possible by you folks, so thank you. I have had the opportunity to touch-base with a lot of you over the new year and am better off for it. I look forward to more of the same this year. I have a lot of gratitude for you returning clients and referrals that have kept me busy throughout the past five weeks since our last market update. I feel so fortunate for the ability to still earn a living during this time, thank you!
Bonus Read: The Insurance Industry and Condominium Premiums
The insurance industry is in bad shape, and we are seeing symptoms of this in condo building premiums. This trend is a few years old now, but we are starting to see more and more concrete evidence of this monthly. Condo Buildings with multiple insurance claims from owners are causing condo fees to skyrocket, which drives condo values down and makes these units hard to sell and unaffordable to live in. So, when looking at the condo documents, look at the insurance documents and ask questions. It is getting harder and harder for buildings to maintain even base-level insurance in some cases.
This example should shed some greater light on the topic. Building A was built in the 1960’s. It is an office building for condo conversion. The heating systems consist of a radiant heat which pumps hot water through fans coils throughout the building to heat the space. This system ages and starts to fail, causing flooding throughout the building. Multiple units make insurance claims for damage done to their homes, the insurance company sends out an inspector and they find they are no longer willing to insure the building with the currently heating and cooling system, existing premiums are going from $88,000/ year to $400K a year, and in order to be insured, the buildings entire heating and cooling system must be upgraded. Condo fee’s rise from $450/month to $660 per month overnight and the condo board gives notice to the owners that the cost to replace the heating and cooling system will be approximately $43K per unit.
There is no shortage of buildings struggling to get affordable insurance right now and a lot of people now responsible to pay.
As per usual, if you’d like to be removed from this list, please let me know and it’ll happen in short order.
Thank you for your time and stay safe. I look forward to hearing from you.