Andre Smit's Real Estate Round-up
Friday Jul 09th, 2021Share
Another busy month, in the exciting world of real estate! Just when we could see the real estate market starting to move closer to a more balanced market, the provincial government went and prolonged the lock down, which had an understandable negative effect on the number of new listings, especially for the first three and a half weeks of June. The number of new listings actually fell by 13% from May.
So, after the ratio of total physical sales to new listings had been showing a downward trend, it bounced back up to the April figure of 68%. This means that we are likely to remain in a sellers' market for at least another 3 to 4 months! This is good news for sellers, but bad news for buyers. Last week, I made an offer for a 3 bedroom, 1.5 bathroom side split, fully upgraded home with in ground pool and hot tub in Cambridge, at 25% over asking. With 23 total offers, it ended up selling for $795,000 or 33% over asking price!
With most offers these days, having to be made without the usual financing and home inspection conditions, in order to be successful, a new danger is starting to manifest itself, in terms of mortgage financing. Most buyers now get pre-qualified for a certain amount of mortgage from a financial institution, before they go out looking at homes. However, in the small print of this qualification letter, it states that the home still has to be appraised at a high enough value in order to qualify for the requested mortgage amount. That is where the danger lies! Because of the rapid price increases in the market, banks are not adjusting their valuations fast enough to keep up with this dynamic market, and are now starting to turn down mortgage applications for lack of perceived home value! This means that where buyers have made offers in good faith, they now need to scramble in order to find an additional down payment, or move to a “B” type lender who does not have the same lending criteria of the more formal financial institutions. For this perceived extra “risk”, these lenders often charge substantial administration fees, as well as interest rates at least 50-75% more than the current market norms! Buyers ending up in this unfortunate position, stand the chance of losing their deposit if they do not close the deal, so the official financial institutions' loss becomes the “B” lenders' gain, as well as an added financial burden on the buyer!
According to the Toronto Real Estate Board, (the largest in Canada), compared to June last year, total new listings were practically the same as this time last year, while total actual physical sales were up by 28%. This resulted in the average price for all homes, increasing by 17% from the same month, the year before! The average days that listings spent on the market, before selling, decreased by 28% to 13 days, from the same month, a year ago. Average detached house prices have increased by 25%, compared to June, 2020, while physical sales increased by 17%, year on year. The number of total new listings, reduced by 7%, compared to the same period, last year, while the average days that listings spent on the market before selling, decreased by 40% to 12 days, from the same month, a year ago.
However, average condominium apartment prices have only increased by 8% for the same period, while new listings increased by 3% over the same month last year. The average days that these listings spent on the market, before selling, has decreased from 18 days to 15 days, or by 17%, for the same period. Actual physical sales, in this category were up by 57%.
My advice to all home owners looking to downsize, is to take advantage of these market conditions. Sell now, with a fairly long closing, so that you can reap the benefits of a sellers' market, and hopefully, look to purchase in a more balanced market, as more listings start appearing, in the fall.
This all points to a busy and vibrant fall market! If you are contemplating putting your home on the market, now is the time to contact me for a free, no obligation, market valuation, in order to take advantage of the current increased buyer activity.
As I mentioned last month, there are two areas of a home that trigger the most buy decisions – kitchens and bathrooms. This month I will be looking at bathroom renovations, in order to increase the value of your home.
The moisture generated by the steam in a bathroom, can cause the growth of mould on the joints between wall and floor tiles over time. This is accelerated, when the extraction fan is not switched on, prior to running a bath or taking a hot shower. Often, the grouting and sealant between the tiles wears away, and moisture gets in behind the tiles, and starts to turn the dry wall into a wet wall, resulting in more mould growth. One can often see a resultant bubbly effect on the dry wall surface below a shower door or curtain, on the outside. At this time, it is a good idea to consider removing all the floor and wall tiles in the shower cubicle and replacing the dry wall, ($0.70 - $0.90 / square foot), where necessary, and updating the tiles, ($4 - $6 / square foot), as well. At the same time, the shower head can also be updated into a more modern rain shower type, ($50 - $150).
Building in a glass shower door, ($500 - $750), in a shower cubicle to replace a curtain, or replacing a curtain over the bath with sliding glass doors, ($250 - $600), add practical moisture containment, as well as improving the aesthetics of the bathroom.
Replacing a single basin with a double basin arrangement, ($1000 - $2000), if space allows, especially in the main bathroom, creates an illusion of space. If this is coupled with two modern independent mirrors, ($150 - $250), two sets of lights, ($150 - $300), and two modern faucets, ($100 - $500), your bathroom renovation is almost complete. When doing this change, one can either replace the counter top, ($200 - $800 depending on whether one chooses Formica or quartz / granite), and the cupboards below, if necessary, or one can purchase a complete vanity, (single $250 - $500, or double $1000 - $2000), and install this as a unit. Most vanities now come complete with granite, quartz, or marble counter tops. The towel racks and toilet tissue holder should also be replaced at this time, ($60 - $175).
It may also be prudent to replace the toilet cistern with a bench height, more efficient dual or single flush model, ($150 - $400). At the very least, the toilet seat and cover should be replaced, ($20 - $50).
To add further storage space, a storage unit above the toilet could be installed, ($150 - $300).
Remember, that if you use any paint in the bathroom, it should be specific moisture and mould resisting paint, ($40 - $60 / gallon).
So for an investment of approximately $5-$8,000 per bathroom, you could add at least $20 - $30,000 to the current market value of your home.
The prices that I have quoted are for the raw materials only. Labour is extra, and needs to be negotiated with a competent installer. I work with a small team of excellent handymen, who handle these projects professionally, on a daily basis. If you are contemplating such a project, I can always give you their contact details.
SMIT'S TIP OF THE MONTH
Check your property for bird or wasp nests, and have them removed. Any such blockage of any outside vents, will cause damage to your attic and insulation.
Clean any lint from your clothes dryer venting hose, in order to prevent any risk of fire, due to lint buildup.
If you, your friends or family have any questions regarding real estate, or indeed, require the services of a good realtor, please do not hesitate to call me at 416-898-2852, anytime! Please remember that I operate a cash referral reward system, for any referrals to me, that result in a completed buy or sell transaction.
Enjoy the sizzling hot summer months! Don't forget the sunscreen and hydration!
Until next month.