I hope you and your loved ones are well. It appears we have turned the proverbial covid corner and our society is opening back up. I can’t wait to go for dinner and go to the gym. This isn’t my last blog, but maybe the last one written behind the societal bubble we have built to keep each other safe. My god, give me socialization! This month is starting with a story because it’s fun.
We had conditionally sold our condo listing; we were waiting for the mortgage to be approved. I got a text from the Seller. It is a picture of her bathroom ceiling partially collapsed with a caption that read, “the unit upstairs flooded, the condo board has sent someone to fix but the unit owner has covid, they have to wait a few weeks to access the condo.” I could not help but burst out laughing. What could I say, like really? The Seller and I talked it over and came clean to the buyer and their agent. It turned out they were ok with the repair that would likely be completed before the new owner took possession. Crazy, eh?
Well, no shortage of topics to touch on this month. I’ll briefly go over home prices, mortgage interest rates, buying new and newish, a note on the luxury home market. I’ll briefly go over a handful of stellar contractors and wrap up with some well-deserved thank yous.
Edmonton Home Prices
Liv Real Estate comprises their own housing market statistics. What is nice about referring to their data is they account for listings that have been terminated, expired, or withdrawn. (This incomplete data skews information such as average days on market and listings “new to market”). To read the full article, visit HERE. A straight to the point snippet:
“The average price for residential real estate hit a new high in the Greater Edmonton Area (GEA) in May – $401,390, up 23% over the last year, and the median price was up 8% to $375,000. Admittedly, averages can be very misleading, which is why the benchmark price is a much better indicator of what is going on in the market. The benchmark price for single-family homes was up 9.3% over last year in May, and the composite benchmark price was up 8.4%.”
Home prices are up again. I do not know the answer, so I’ll throw it out there. Does this level of inflation last? Will it continue to grow? Once the immediate effects of the new covid economy subside, do interest rates rise, causing a market correction, or are these inflationary prices here to stay?
They are moving! Not to the rate any condo owner would like, and at a continued discount, but on the ground, sales are rising. I am getting continued interest in my condo listings, have a handful of people actively looking to purchase them, and as of yesterday, selected three at random across the city and two were conditionally sold. I should mention it appears like investors are a part of the market as a condo in Hillside Estates sold in multiple offers after a significant discount. I would expect sales numbers that look like they are coming down to at least stabilize this month.
New Builds, Rising Prices, and Value in the Market
We went through homes west of the Henday, Secord, the Hamptons, Granville, Trumpeter, and the like. And with different clients were watching home prices escalate as we shopped. To give you an idea, a half-duplex with a front attached garage, which would have captured $320K a few months ago, went for $340K, a 2,300 Sq.Ft. Spec build with a double front attached garage that would have went for $525K last year is now going for $575K and 1,600 Sq.Ft. Spec with a double-front attached garage, which JUST sold last year in the 430s, was now going in the 460s. I called a few builder friends with different companies and asked them what they were experiencing. They had each seen about five price increases each over the last 12 months, plus the continual erosion of buyer incentives. Each admitted a few things that fueled this. The cost of building rising quickly, consumer demand, and the builders desire to recoup profit after years of discount sales until this pandemic. Why does this matter? I am motivated to buy today rather than buy a few months from today at larger prices. Suppose the value of my purchase is essential to me. In that case, I am now likely to look at the resale market as landscaping, fencing, and basement development were completed in a less inflationary time, the cost-saving will be passed on to me. For years there has been value in the new spec build market as builders needed to find ways to slash prices and be price competitive to attract buyers. For the first time in a long time, the value appears to be in resale.
Interest Rates Rising
No need to worry; there are no significant changes. There have been a few instances in the last while where real estate professionals are using “interest rates are rising” to motivate their clients into purchasing properties. (Classical sales training is to scare or joyfully excite someone into a decision subtly). Still, if you look at what changes are happening, the changes did not affect much. Here is a snippet of how the changes will affect people from one mortgage professional’s perspective.
“Quick recap on the changes happening to the Stress Test Rate for ALL MORTGAGE APPLICATIONS as of June 1, 2021:
The “Stress Test” Benchmark Rate is looking to go up from 4.79% to 5.25% for ALL mortgage applications now.
This will decrease the maximum purchase price that uninsured borrowers qualify for by about 4.5% to 5%
This is NOT the end of the world – For reference:
In January 2020, the Benchmark Rate for qualifying was 5.19%, and we were still all A-OK!
Before that, we even had a Benchmark Rate of 5.34%.”
– MINN COATES, MORTGAGE CONSULTANT, THE MORTGAGE MINDS INC. | VERICO
Mortgage brokers will have access to better interest rates and more lending solutions than representatives for the big banks. Brokers do not replace the comfort and familiarity of dealing with your bank when purchasing a home. Still, it should be noted you will likely have some more borrowing flexibility with a broker.
The Luxury Housing Market
I feel like this market can be confusing. Listings sit for a long time as the more people are willing to spend, the more specific they can be with their wants. Except for those listings that do not, they will sell right away. Price always affects sale time, but how do you judge price when luxury homes can be unique from one to the next? After spending a few weeks touring West Central Edmonton, St. Albert, and South Edmonton, a few observations; buyers will rarely pay a premium for an older improved luxury home. They would rather take a significant price reduction on a dated clean feeling home in a good location than work with someone else improvements at a cost. New homes are the most attractive, but if you have experience with modern building materials, if can be excruciating watching visually appealing MDF trim or laminate floors warp when touched by moisture. If I am looking for value and am flexible on location, I am heading out to the periphery of northeast St. Albert to the Estate Homes in and around Sturgeon County. The lots are larger, the homes are astounding, and the property taxes are a fraction of those in Edmonton and St. Albert and there is a mix of modern and classic luxury properties.
Here are some contractors who have shown excellent price and quality over the last few weeks.
Poly-level Alberta: for concrete leveling and sealing.
We received five quotes anywhere from $500 – $3,600 from mud jacking companies and foam leveling outfits. Poly-level came in the middle of the road in price, with a warranty which one other offered at a much higher price, and superior customer service. We dealt with Dan, and I enjoy him.
Window Seal West: for a large window replacement
This was an interesting experience. It seemed to be common practice to quote low, come measure, and escalate price by 20-30%. The first time this happened, we were annoyed and had even put down a deposit; the second time, we saw it coming. In the end, we were able to save $500 on a $2,800 purchase from our initial upsell bait and switch. We chose a double pane window as there is no definitive proof that there are significant energy savings with paying more for a triple pane window. We did choose 366 LOE as there are substantial energy efficiency improvements. Window Seal West won our business by being straightforward and predictable.
Kitchen Cabinets: a new kitchen
We are in our starter home. As we prepare to upsize, our kitchen needs an upgrade. We shopped everywhere, and we ended up at Blue Ribbon Millwork. For a few reasons, they produce a paintable shaker cabinet assembled for cheaper than what Ikea can provide. If you missed that last statement, fully assembled and cheaper. Unlike other places, they could commit to a delivery date where other places rely on a foreign supply chain that is unpredictable right now. So far, we are thrilled with Nesi and Blue Ribbon Millwork.
Tech Support: Laptop and Gmail issues
I have run into tech issues twice over the last few weeks, a Gmail issue and a data recovery issue. Suppose you have ever tried to correct an organizational Gmail flaw. In that case, you will know that it is almost impossible to get competent service. I heard everything from I should stop spamming people to pay to subscribe to a service to get proper advice. That is until I found Nerds on Site. Bern had me sorted out on both issues in a matter of minutes. He had a wealth of relevant experience that immediately identified my issues and subsequent solutions; they turned out to be cost-effective.
The Cost of Buying a Home
Liv Real Estate recently published a cost of purchasing a home in Canada BLOG. For those of us paying attention in the industry, we all kind of know the price of buying a home in Edmonton is affordable in contrast to much of the rest of Canada, but for those of you who might not know, take a look at this thoughtful and insightful piece HERE
I am grateful for everyone’s continued love and support. One listing appointment turned into three this week because, unbenounced to me, a past client introduced me as a ‘good man’ to their neighbor. It damn near brings me to tears to be introduced like that by such a quality human. So, thank you.
Personally, we are all relatively happy and healthy. We recently borrowed a smoker from a family member. Gratefully, they do not want it back, and we have quickly come to love smoking food! We did take advantage of the open patios over the past few weeks. Japonais Bistro tastes just as good on a cold, over-cast Saturday when you get to go at Japonais Bistro with loved ones. If you have any questions or comments, please reach out; if you would like to be removed from this list, please just ask.