If you have been reading or watching the news lately, you know that housing prices have gone up considerably over the past 2 years. While they have gone sky high in Toronto and Vancouver, even more affordable markets like Calgary and Edmonton have seen large price increases. After the initial lock down in Spring 2020, people realized that their homes were too small, that they didn’t have a home office and needed one or wished they had a hot tub or some other nice amenity after being forced to stay home for so long.
As a result, all the people who lived in condos with common hallways wanted to have a small home with their own exit. They didn’t want to share an elevator. As a result, starter homes stared selling like hot cakes. As sales in this price range went on , housing prices started to rise. I knew that eventually all the starter home owners would realize this and sell their homes and move up to larger properties. In 2021 that’s exactly what happened. In Calgary, people living in basement suites started buying up condos as starter homes became too expensive.
Now in 2022, we are seeing a seller’s market like we have not seen since 2007. Sellers are getting multiple offers . I recently heard of a home being sold for $100,000 above the asking price. Why is this happening.? One reason is that real estate investors are selling their properties in Toronto for $1.5 million and buying in the Calgary market to get more bang for their buck. In Calgary you can buy a nice home for $600,000. For an investor , they can take their $1.5M and buy 2 revenue properties here, making more monthly income and pocket $300,000 as well.
What can the average Alberta home buyer do? Unless you want to compete against investors with deep pockets, there are a few things you can do.
The easiest thing to do is stay where you are. If you want a bigger house, or one with a furnished basement why not do this to your own home? As property values have gone up you may have enough equity in your home to pull money out for the improvements you want to make..
Refinance Plus Improvements – this is a regular first mortgage. You pay out the old mortgage and pull more equity out by refinancing at a higher amount. You can get up to $40,000 for home improvements. Get an estimate for the renovations and it is submitted to the lender. If the renos are less than $15,000 a cheque is issued when you finish the project. Over $15,000 , an inspector comes to check out the project and then the lender issues a cheque.
A- Lenders – Lenders who will lend on the estimated value after renovations have been done. There is no cap on these lenders but the interest rate will be higher.
Government Grants There are some programs that will pay for a portion of certain renovations that will make your house more energy efficient and increase it’s value. At this time,
there are grants for the installation of solar panels and energy efficient windows. While you will have to pay a portion of these home improvements out of pocket, the grants do pay a significant part and the energy savings will pay off the investment over time.
If you want to know more about how to make your home a nicer place to live, contact me at 403-836-1201 or at http://davidcooke.ca
David Cooke has been a mortgage broker in Calgary since 2005.