A question I have been getting a lot lately is, do I fix up my home and get a higher value out of it or should I sell it as is.
My answer is usually along the lines of it depends and that it depends on 3 questions
Timing-How long will it take you to complete the renovation?
How experienced are you to make this happen? and will you be hiring professionals to assist to either keep costs down or keep it on time?
Will you like the renovation you completed if you were forced to live there another few years?
This time is no different, however, the timing portion could have a much larger impact than before.
Canadian Mortgage and Housing Corporation (CMHC) reported this week that the national level of house prices could decrease anywhere from 9-18% over the next 12 months. That figure is throughout Canada and certain areas could see higher losses than others. Publically there have been a number of Canadian Real Estate firms and economists that have mentioned that those claims are reckless.
The truth of the matter is we don’t know what the future has in store and that prediction is speculation on the national side, there are a lot of smart people with CMHC and the figures they have there is no reason to deny what they are saying. However, we just know where we are at today and we cannot worry about the future as it's not here yet.
Currently inventory is relatively low, I touched on it last week. Which will help keep prices from declining in the short-term. https://www.markcoonsrealty.com/post/taking-a-pulse-before-the-reopening-of-bc-economy
Instead we have to focus on what we do know and assess the situation locally. Here are some stats from the past couple of months to give a sense of where we are at.
What we do know is that in an area from Peachland to Lake Country lost 7,300 jobs since March and unemployment increased from 5.9% in March to 8.1% in April.
Looking at the adoption of people utilizing the mortgage deferral available Canada wide there were over 700,000 people that utilized it on their mortgages whether they needed it or not which equates to roughly 15% of the mortgage portfolios.
CERB benefit ends after 16 weeks.
What that means is financial issues may be on the horizon as cashflow issues tighten up with CERB payments dwindling and mortgage payments coming due. As we get into summer and early fall the benefits out there may start to wear off and people may feel tight cashflow. The increase of motivated sellers likely will hit the market and inventory could start to increase.
If CMHC is correct and prices do decline even 5%, it may pay more to sell your house as-is, rather than spend money on a renovation that takes time. The amount you save in the time period alone could pay off not to mention the savings for not paying for renovation bills which could be put towards your next place.
If you plan to sell regardless and your renovation might take 2 months to complete, we don’t know what the market will be like in 2 months as these are volatile times. There is an additional risk than during normal market conditions that putting money in today any decline in the market could eat the money that you had put in.
If you are on the fence of selling and you are okay living in your home for the next 2-5 years potentially then do the renovation, it might be a risk but risks can pay off, just make sure it is one you like so you don’t regret it.
Have a great week, reach out if you have any questions.
Coldwell Banker Horizon Realty