Historical Housing Values in Victoria

Is the owning and holding of real estate a good investment?

A quick glance at residential values over a thirty five year history shows an increase on the average home price in Victoria from $63,000 to $630,000. Not a bad return I would say. Looking at that same graph, however, reminds us of the crucial importance of timing in your investment strategy. The market values fluctuated dramatically in cycles as follows:

• 1978 – 1981 – Doubled
• 1982 – 1987 – Dropped by 20%
• 1988 – 1992 – Values almost doubled again
• 1993 – 2000 – Values remained flat
• 2001 – 2009 – Values almost doubled again
• 2010 – today – Values corrected downward approximately 7-8% and are now holding stable.

Is it still a good sound investment?

Yes, definitely! Not only does home ownership provide a place to live for your family, but the historical increase in house values has been incredible. Having said that, currently, and over the next few years you must research very well and use the experience of a good real estate agent.

From the desk of Larry Jeffs
Team Jeffs
RE/MAX Camosun

What is a Property Worth?

Assessed Value vs Real Market Value

In the past few weeks most property owners would have received their yearly assessment notice from BC Assessment. This government agency endeavours to determine a fair and realistic value of all properties in BC in order for the municipalities to have a basis for generating property taxes to fund their annual operating budget. There is an arbitration process available to those who feel their assessed value is too high or low. This negotiation process is kept fairly simple and is well worth pursuing if the owner chooses to do so, however, surprisingly only 1.6% of home owners actually appeal.

Why is there, in the majority of cases, a difference in assessed value to the appraised value or realtor generated opinion of value? The following notes point out some of the reasons for the differences that occur regardless on how diligent the assessors have been:

1.  The assessed value is based on what a property might have sold for on July 1st of the previous year and doesn’t reflect our fluctuations that may have happened since then.
2. The assessors base their opinions on data they have available from the Land Registry System and Real Estate Boards in the province. In most cases they are using exterior views of similar houses whereas appraisers and realtors would complete a thorough inspection and compare features and nuances to establish their opinion.

A few more interesting points are:

1. In the fall of last year the MLS Data showed in a study of 286 sales that 61% sold for under assessed value.
2. In areas of traditionally high popularity (ie. Fairfield, Oak Bay etc.) many of the sales were at higher prices than assessed.

In summary the BC Assessment does a very good job and a very necessary one for the local governments and although there may be a few discrepancies between actual and assessed values, it is a pretty fair system. In Real Estate sales, however, it still comes down to what a particular buyer will pay for a property after they have completed their research and negotiation. Proper and fair pricing is the key to a successful sale.

From the Desk of Larry Jeffs

 

Preparing Your Home For Sale (Part 2)

Giving potential home buyers the right first impression to your home is very important. You want those viewing your home to be able to picture themselves living there. There is an art to doing it right. Anne Gedye, a Victoria based professional home stager has provided us with a great article on benefits of staging a home for sale.

 THE ART OF STAGING

Home staging is the deliberate art of showcasing a home in such a way that a buyer can imagine themselves living in the house. A stager has the ability to be disconnected from the emotional attachment that a seller likely has. There are key principles to follow which are worth the time and effort and this process will give you a giant step toward selling your home for the best possible price.

The Staging Process:

My tasks are to rearrange and edit furniture pieces, move artwork to new locations, and suggest paint colours and window treatments when helpful to a sale. Home stagers will try to use as much of the current furniture and artwork as possible and will only suggest additions as necessary to increase interest and create a WOW factor.

Tried and True Staging Rules:

1. Remember curb appeal as it’s the first important impression.
2. Bright plants – especially red – at entryways are welcoming.
3. Stay on neutral ground regarding colours if possible.
4. Use fresh towels in all bathrooms – white goes with everything.
5. Don’t forget bedding – fresh and neutral.
6. Depersonalize your spaces (ie. collections, family pictures, etc.)
7. Keep all rooms super clean especially in bathrooms & kitchens.
8. Cut down all clutter.
9. Set the stage before showings.

 

Anne Gedye, AHSC
Anne Gedye Home Staging
agedye@shaw.ca
250-744-7723

 

 

Preparing Your Home for Sale (Part 1)

With buyers, first impressions count. A small investment in time and money will give your home an edge over other listings in the area when the time comes to show it to prospective buyers. Below is a list of things we feel are very important when preparing your home for sale. We have been sharing this list with prospective sellers for quite some time, and we know from experience that it works. If your home is on the market and you are not getting the results you had hoped for, or if you are considering putting your house on the market in the near future, consider these tips to improve your home for the market.

Curb Appeal

• Cut the lawn regularly
• Trim shrubs and hedges
• Weed and edge gardens
• Remove all debris, discarded wood scraps and other materials from the yard and around the house
• Touch up exterior paint

The First Impression

• Clean and tidy entrance
• Make sure doorbell is functioning
• Polish door hardware

The Spacious Look

• Clean stairs and halls
• Store excess furniture
• Clear counters and stove
• Keep closets neat and tidy

General Maintenance

• Repair squeaky doors and loose door handles
• Replace burned out or missing light bulbs
• Clean and repair windows
• Touch up chipped paint
• Repair cracked plaster
• Clean furnace
• Repair leaking taps and toilets
• Repair seals on tub and basin

Spic and Span

• Clean all carpets and floors, especially if you have pets
• Keep storage areas tidy and uncluttered
• Clean fridge and stove

The Buying Atmosphere

• Arrange to be absent during showings
• Turn on all lights
• Light fireplace
• Open the drapes during the daytime
• Play quiet background music
• Keep pets outdoors

Check back with us for part 2 of our series on preparing your home for sale, when we discuss the benefits of home staging.

Fixed Term vs. Variable Rate Mortgage

The Best Rate May Not Be So

 

We at Team Jeffs are sharing some words of financial wisdom from TD Canada Trust Senior Mortgage Manager, Gerry Smith. We have found over the years that his financial advice has always been very astute and timely. It is always true as well that in the professional service industry, like Real Estate, Mortgage Brokerage and legal services, the lowest fees aren’t necessarily a bargain if the quality of the service is lacking.

The following is an article from Gerry Smith.

———

Speaking of Rates – May 30, 2013

Gerry Smith

Hello all:

I have attached a copy of the latest bond yields showing the increase over the past few weeks for 5 – 10 year bonds which is quite significant.

Just word of caution,  if you or any of your clients have a variable rate mortgage with about a year left to go on the term,   I’d certainly be giving serious thought to moving out of the variable rate mortgage into a fixed rate and term.

Don’t know if the bond rate will stay up or not, but if it holds at this level,  I think we will see margins on the five year fixed rate and term start to collapse and the five year fixed will likely in my opinion be increasing.

If there is an announcement in the press or papers of a rate increase, by the time you see that,  it’s over,  you won’t be able to get today’s rates.

The U.S.  Federal reserve has already indicated a pull back in their quantitative easing which means bonds will decrease in price causing yields to go up.

No one has the crystal ball, but when I see that type of increase in the bond yields,  there is cause to consider your options and quickly.

If you want to convert from variable to fixed term, call your local branch to make an appointment to do an early renewal as they handle that end.

If you are looking at refinancing or securing a rate for a five year fixed for a new purchase,  call me directly.

Regards,

Gerry Smith  AACI, P.APP.
Senior Manager, Residential Mortgages
TD Canada Trust
Tel: 250-361-7068
Fax 250-592-1801

 

More Buying Opportunities

At Team Jeffs we have learned through years of experience that many good home purchasing opportunities have been overlooked by buyers due to the age and condition of the house. The concerns that buyers have over and above remediation required and the work it entails is how to finance both the original purchase of the home as well as the costs of renovations. This same concern faces both first time buyers and investors alike.

Gerry Smith, Senior Manager of Residential Mortgages at TD Canada Trust covers a number of possible solutions in his recent article below:

 

PURCHASE WITH IMPROVEMENTS PROGRAM

Gerry Smith – Senior Manager, Residential Mortgages TD Canada Trust

How can you assist your purchaser in maximizing their buying opportunity? How often do you hear the following from purchasers?  Is your listing in need of a facelift but buyers don’t have the money to fix it?

1. Great home, great location, but I don’t like the kitchen cabinets;  bathroom is too old and it needs new flooring, but I don’t have the extra cash to renovate.
2. I like the house, but it needs a new roof and a new furnace otherwise I’d buy it.
3. I like the location, but its needs too much work and I don’t have the extra money to fix it up the way I want it?

I have a solution!!

Overview

The Purchase with Improvements and Refinance with Improvements product provides home buyers/owners with the opportunity to make improvements to their home and allows the homeowner to borrow against the increased value of the property.

The cost of improvements (increase in market value) can be added to the purchase price and we can provide progressive advances on amounts over $10,000.00 to assist the purchaser.   On improvements of <$10,000.00 monies are advanced upon completion with receipts supplied to the solicitor and a declaration.

Important: Purchase/Refinance With Improvements requests are processed in 2 advances.  Confirm that the customer is aware that they will not have access to all funds on the date of closing and that they will be required to make full principal and interest payments once the first advance is completed.

Property types:

Max 4 units, where at least one unit is Owner Occupied Principal Residence.

LTV is based on the improved value of the property.

Maximum LTV:  Purchase 95% (1 & 2 unit properties) ;   Purchase 90% (3 & 4 unit properties) ; Maximum amortization of 25 years

Restrictions:

Not available for rental/investment properties, vacation/second homes or cottage properties.

Documentation Required for Improvement:

Obtain a list of improvements along with contractor cost estimates, quotes, invoices to support improvements.

Clients will be required to complete a Customer Declaration with their solicitor when the improvements are complete and before the final draw will be processed. This Declaration with paid invoices/receipts will need to be forwarded to the CAS by the solicitor before the second (final) draw will be released.

If Sweat Equity (owner labour) is requested, a reasonable estimate based on applicant’s skills must be submitted to the credit centre.  Amount must not exceed 50% of minimum equity requirement of the Improvement, to a maximum of $25,000 for conventional requests. Must be supported by 2 competitive quotations.

Advances

First advance will be up to 95% (based on approved LTV request) of the improved value of the property minus the cost of improvement.  Progressive advances (inspection required) may be available on larger renovations  ie. $10,000 and over.

Second advance will be the cost of improvement, released once solicitor has forwarded a completed Confirmation Letter and paid invoices/receipts confirming that improvements have been completed as per the contractor estimates/invoices/quotes provided to TD at the time of application.

Example:

Improved Value: $400,000

Current Value/Purchase Price: $360,000

Improvements: $40,000

Mortgage Approved at 95% LTV; mortgage amount $380,000 plus CMHC insurance premium (95% of $400,000)

First draw:  95% of purchase price $400,000.00 =  $380,000.00  plus CMHC insurance premium LESS $40,000.00 improvement holdback.

Improvement holdback of $40,000.00 to be advanced based on progressive inspections, can be up to three draws on the improvements.

If you have questions or want more information on this product, please don’t hesitate to call me for more details.   This is just one scenario and there are many variations,  have client contact me for further information.

Attached are a couple of links to  some programs benefitting purchasers as well.  CMHC will provide a partial cash rebate of their insurance premium for building or renovating a home to qualify that ‘energy efficiency” upgrades.

http://www.cmhc.ca/en/co/moloin/moloin_008.cfm

http://www.builtgreencanada.ca/

Gerry Smith AACI, P.App
Senior Manager, Residential Mortgages
Tel. (250) 361-7068
Email: gerry.smith@td.com

—-

From the Desk of Team Jeffs
www.teamjeffs.com

Pricing It Right

A Guide To Pricing Your Home For A Quick Sale

A recent survey suggested that over three quarters of home owners believe their home is worth more than the list price that is recommended to them by their real estate agent. It is only natural for this to happen as home owners have an emotional connection to their own home. The many memories and life experiences enjoyed within its walls in addition to all of the reasons they purchased the property in the first place tend to inflate its value in their eyes. Unfortunately these perceived values often mean very little to a buyer viewing your home for the first time.

Home buyers usually have a better grasp on the current market value than do home sellers. Home buyers have been out there pounding the pavement, looking at other homes in your area before they have walked into yours. Home owners planning on selling rarely have this same opportunity, so they look to the advice from a real estate professional to give them a knowledgeable market evaluation of their home.

The real estate market has a history of cycles from inflated values to cycles of correction with declining house prices. We have been affected by a softer market over the past year but this seems to be stabilizing and pricing is anticipated to remain at the present sales level for some time to come. The good news to home sellers is that when they switch hats and become educated buyers, they will recognize today’s true value and likely purchase for similar values as they achieved from their own home sale.

The hard truth is that your home is only worth what a buyer is willing to pay for it given current market conditions. Home buyers make their decisions based more on logic than emotion. As difficult as it might at times, someone hoping to sell their home in a timely fashion will have to price their home in the same logical and emotionally disconnected way.

The best opportunity to sell your home is when it is new to the market – that is when it generates the most interest. During the first few weeks a house is listed is when it will have the most showings and have the busiest open houses. Testing the waters with a higher price can seriously affect the initial marketability of your home. First impressions do count.

Buyers won’t pay top dollar if they feel home prices are declining. Even where the market has rebounded buyers may avoid multiple-offer situations if they don’t feel assured of the stability of the recovery. It takes time to build buyer confidence.

Be Proactive

When it comes time to agree on a list price of your home, it is helpful to understand the criteria used by real estate agents and appraisers to arrive at their conclusions. What they are using as an indicator of price is sales data from the most recent transactions of similar properties in your area rather than placing too much emphasis on those currently for sale with possibly optimistic pricing.

Agents will analyze comparable sales and add value for saleable features your home has while reducing value for saleable features it is lacking. For example, your home may have a remodelled bathroom which might add value, whereas the lack of a level back yard might be a deduction.

It might be difficult for sellers to take an unemotional view of features they value in their own home if those features do not suit others tastes. For example a seller may have gone to the expense of installing a swimming pool where a bigger lawn and the less need for maintenance might be preferred by a buyer. When determining a price you have to be able to see your home through the potential buyer’s eyes.

Its important to price competitively. If the comparable sale information suggests that the value of homes similar to yours is declining, select a price to under-cut your competitors to stir up interest. You can take a more aggressive stance on price if it appears prices are on an upward trend.

If there is a high demand for homes similar to yours, you may receive more than one offer, but be sure not to list your home too high. Its better to stay within the range of comparable properties and let the market drive up the price if warranted.

In Conclusion:

Its important to base your price on hard facts rather than rumour. Prices tend to get inflated when passed from one person to another. Don’t rely on opinions of your neighbours as they will often have the same overly optimistic impression of your home’s worth as you do.

From the desk of Larry Jeffs – RE/MAX Camosun

www.teamjeffs.com

Condo Conundrum 2 – More On Depreciation Reports

First and foremost, I salute those owner/volunteers who sit on the councils of their strata corporations. This sometimes thankless job is so important to the successful day to day operation of the approximately 27,000 stratas in the province. The responsibilities these volunteers face became even greater with the passing of the legislation in BC on December 13, 2011 requiring all stratas of five for more units to file a Depreciation Report by December 14, 2013.

If you or your strata corporation has not yet complied with, or does not fully understand the requirements of this legislation, then a good source of information can be found at: CHOA – What a Strata Corporation Needs to Know About Depreciation Reports. 

Last week I attended a Depreciation Report workshop along with more than 100 fellow realtors. We had the honour of having Tony Gioventu as a lecturer and teacher. He is the most respected leader in “all things strata” and currently sits as director of CHOA (Condominium Home Owners Association) and writes a weekly editorial in The Province, Times Colonist and The Kelowna News called “Condo Smarts”.

The over all consensus was that we all felt the need of a Depreciation Report or similar legislation that allows strata corporations to develop a clear and concise method of planning long term budgeting for required repairs, replacements and maintenance. This kind of legislation also gives buyers comfort as to their future obligations as well as protection for lenders and insurers.

The cost of having a qualified company or individuals prepare an accurate Depreciation Report is not insignificant, but by planning ahead stratas can reduce some of the cost. It was recommended that stratas assemble all documentation, records, past engineering studies, bylaws and regulations and current financial information and upload it to a website that is easy to access. The cost of preparing the report comes down to the number of hours that are required, and with all the information readily available, a substantial amount of time would be saved.

There is a great deal of information available on the Condominium Home Owners Association website and in my future blogs I will be adding further views and thoughts.

From the desk of Larry Jeffs – RE/MAX Camosun

http://www.teamjeffs.com

Related Link:

CHOA – www.choa.bc.ca

 

Condominium Conundrum – Depreciation Reports

Does the absence of a Depreciation Report have an adverse effect on sales?

On December 13^th 2011 legislation was passed in BC requiring all strata corporations of five or more units to file a Depreciation Report or to have passed a 75% vote to exempt the strata from the legislation. The deadline for the report to be filed or for the vote to be passed is December 13, 2013.

The purpose of completing a Depreciation Report is so that a strata corporation can inventory the common property assets and portions of limited common property in the strata to determine what is going to have to be repaired, maintained and replaced. The cost to the strata for having a professional report prepared is not insignificant and may require an increase in strata fees to ensure the contingency fund will be sufficient to take care of the future deficiencies as they occur. For these reasons some strata corporations are choosing to vote for an exemption. A vote to exempt must be voted for and passed each year thereafter. If a strata corporation decides to vote against having a Depreciation Report prepared, how does this effect the owners who want to sell their unit?

Buyers, buyer’s agents, lenders and insurers are requiring more confidence in the decision to purchase strata properties, and as a result are seeking copies of all documents indicating the health of the strata and future potential repairs. The large current supply of condominiums and strata properties for sale will undoubtably make buyers more selective. Given the choice, most buyers will likely choose one that doesn’t have any potential maintenance surprises in the future.

One of the best sources for information on this and all questions relating to strata properties is Tony Gioventu, executive director of the Condominium Home Owners Association and the author of the weekly editorial “Condo Smarts” in the Times Colonist. Two specific editorials used in this blog entry can be found at:

What if we just say no to Depreciation Reports? – January 29, 2012

What is the cost of an exemption from the depreciation reports? – March 25, 2012

Note: Bare Land Strata developments are certainly not exempt from the requirement of filing Depreciation Reports when there are five strata lots or more in the development. Many of these developments treat the fact that they are bound by the rules of the Strata Property Act quite casually. Typically, the strata fees are relatively nominal and all that owner maintains is their own strata lot and house. This leads many owners to believe that the ownership of their bare land strata home is no different than a basic fee simple subdivision. The strata corporations running a bare land strata must file a report that contains provisions for future repairs to the common area infrastructure such as water lines, sewer and storm drainage, road surfaces, street lighting and more.

Personally, we have witnessed two bare land strata sales in the last year having the price negotiated downwards due to a lack of a Depreciation Report which caused concern for the buyers.

From the desk of Larry Jeffs – RE/MAX Camosun, Victoria BC, Canada

www.teamjeffs.com 

 

Time to Buy?

 “Record Low Interest Rates To Continue”

Have you been watching the Real Estate trends and waiting for the right opportunity to jump into the world of home ownership? Many reliable indicators suggest that now is a good time for that decision. The number one reason for this is that over the last two years we have seen price corrections in the range of 10 to 15% in most housing segments and it appears that the market is stabilizing.There are some excellent home purchase options available!

A second reason for proceeding at this time is today’s prediction from the Bank of Canada that the incredibly low interest rates we are experiencing are not expected to to rise from now through most of 2014. This further confirms predictions made in the past two weeks by senior manager of residential mortgages at TD Bank, Gerry Smith, who stated:

“According to most of the forecasts, expectation is the Bank of Canada will not make a rate move until the end of this year.  The general consensus indicates the pace of any rate increases will be slow, measured and impacted by world economic factors.  There does not seem to be any indication of any rapid or accelerated increases in rates as inflation remains low,  employment figures are still relatively high and economies are still growing slowly.”

Gerry went on to explain that low interest rates means greater principal being paid down with each mortgage payment. He illustrates this with the following example.

“Mortgage interest rates are at historical lows, at these rates (2.99% 5 year fixed rate) on an average mortgage of $300,000.00 amortized over 25 years, the monthly payment is $1418.17, of that payment in the first month the principal portion is $675.28.  Almost 48% of the payment is principal, at the  end of the five year term with bi-weekly payments, the borrower would have paid off $51,666.00 of the principal.  A great way to build equity.”

A final indicator that this is might be an opportune time to invest in the home ownership market is that it has also been predicted that later this year and into the start of next year Canada will be following the lead of the housing market in the United States. After four bad years the US housing market has, for the past six months, had a healthy recovery and its expected to continue. House prices here will likely follow this trend, creeping upwards in 2014.

From the desk of Team Jeffs with thanks to Gerry Smith of TD.

gerry.smith@td.com

http://mms.tdcanadatrust.com/gerry.smith/