Just like building a home, one passion of mine is working with owners, builders, and developers to help take a project or people's plans and take it from the conception and idea stage and help to the finish line. I love seeing plans come to life much like the building of a house, I challenge you to share your ideas and plans with me, the road isn't a straight line to the top but let's navigate it together.
How much Value does a Suite Add?
We will get into how much does a suite adds to the value in today's market, before we do that, however, let's look at the indicators and compare them to the history and the last 10 years, the old saying that history repeats itself is often true, real estate markets is no exception. With home prices increasing so fast, if you are like me you would make an assumption that there would be an increase in the sale price of homes with suites, as home buyers are needing a suite to be able to make/ qualify for mortgage payments and investors are looking for ways to shield cash from inflation.
Looking at the number of sales in the last 5 years for homes with a suite the number of sales has increased rapidly in the last year. With the ten-year average for homes classified as having a suite selling on average around 60 homes a month, 2021 averaged 98 sales per month hitting peaks at 151 and 147 sales in March and April respectively.
With the housing market, the way it is this probably doesn't come as much of a surprise. In 2021 there were 1186 sales of homes with a suite in, comparing it to the entire year of 2016 where there were 927 sales, not huge increases as the population in the Okanagan has increased 14% in the last 5 years.
Sales currently seem to be following the same trend lines as in 2016 when we saw the last surge of buyers in the Okanagan, with one exception, the one that is fueling the price increases in the real estate market and that is the low supply as we look at the number of active listings.
Currently at the lowest amount of inventory in the last 10 years, with the next comparable being January of 2017 which is the dip in the middle of the chart.
When looking at the average home prices and comparing homes with a suite and homes without a suite, the values are tightening, last year I looked at these values and the difference was $48,000, looking at the same metrics for all of 2021 the difference is negligible, a whopping $5k difference with the average home sales with a suite at $1,054,210 and homes without a suite at $1,049,000. The gap is now closing for suites having an additional value. We don't know the individual situations, the homes could be classified wrong, more lower-end homes with suites could have sold, maybe there is a suite potential to be added but all things considered equal we can't account for the number one thing in my eyes of what is driving the real estate market- Emotions. Emotions are high right now, with the risk of finding a home dwindling as prices are increasing buyers can't wait, as prices are increasing and chances of finding something in the budget is dwindling. Also to note that home prices have increased but if a home is tenanted and has been there a long time the rent is below market and the homes won't cash flow, vacant properties are easier to sell to investors but there is a cap on the overall sale price as it is really based on what amount of the rent they can get. Have a great week and feel free to reach out if there is ever anything I can do for you!