October is Stats Month!
It’s October, and we find ourselves navigating uncertain times in the real estate market. Our intention isn’t to sow fear but rather to provide guidance for your real estate decisions. A common question that arises is whether it’s advisable to delay listing your property until the market improves. To be candid, we can’t predict when that improvement will occur or how long you might need to wait for your home to increase in value. The key advice we offer is this: if your property’s current value falls short of your expectations, consider the market conditions for the type of property you intend to move to. Is there a correlation? If you sell for less will you buy for less?
No Housing Shortage in Sight
The Okanagan area has seen a major decrease in the number of permits issued for building projects. In the first seven months of this year, there was a 32% drop in the number of permits compared to before. This suggests that there might be a 40% decrease in building new homes soon. This will lead to stronger competition for existing homes, which might lead to a continued stability in housing prices even with the rising interest rates.
RDOS Zoning, Reservoir Rd, and Sokana
Recently, there have been talks in the RDOS to change our large residential property zoning to include a mobile home as an accessory dwelling. There is a proposed development on Reservoir Rd going to a public hearing on September 12. And a new multi-family development, Sokana, nearly sold out of their first phase in days!
Best Renovations to Maximize Home Value?
We dove into some research this month to help you make informed decisions about home renovations that can maximize the value of your property. By strategically choosing the right upgrades, you can significantly enhance both the functionality and appeal of your home as well as maximize your potential return on investment in the future.
Selling or Buying a Property with Tenants: What you Need to Know
Having a tenant has many advantages: it can be a great way to create passive income, help offset mortgage payments, accelerate a mortgage paydown and help you qualify financially to purchase a property. However, when you decide to sell or buy a tenanted property, whether it’s a condo, basement suite, or a single-family house, there are some important facts about the process that you need to know.
The Importance of Accurate Pricing
How you price your home will directly impact upon how many buyers, showings and offers you attract, and ultimately how easily it sells. Overpricing and underpricing your home are two strategies that we are going to explore in this article. Both have their downfalls and could result in getting less for your property than its true market value.
The strategy of overpricing your property, knowing that you can reduce the price later, might make sense at first glance. However, it seldom works.
The strategy of underpricing your property is designed to drive interest in your home and receive multiple offers in the hopes of selling the property for potentially higher than the market value. This strategy can be successful in a high-demand, low inventory market.
Accurate Market Evaluations: Our Proven Process
Last month we told you to throw away your BC Assessments, as they are generally an inaccurate and distracting indicator of market value for properties. Below are a few examples of recent sales that demonstrate this.
Example 1: 157 McCulloch Drive, Penticton BC was assessed at $799,000. Our clients purchased this property for $766,500.
Example 2: 105 Murray Drive, Penticton BC was assessed at $686,000. This property was substantially renovated to a high standard and is a true rancher. This home sold for almost $200,000 over assessed value at $860,000.
How do we determine accurate property values? Our experienced real estate team goes to great lengths by using 3 evaluation approaches to ensure accuracy.
BC Assessments are a HUGE Distraction
Before you ask about your BC Property Assessment, keep in mind… BC Assessments are a HUGE Distraction
As a homeowner, you may have experienced a rollercoaster of emotions while receiving your annual property assessment. Though widely believed to reflect the state of the real estate market, the truth is that BC property assessments very rarely provide an accurate measure of your home’s market value.
With over 2 million properties assessed annually and only 650 assessors employed by BC Assessment, it’s no surprise that the process may lack precision. On average, each assessor is responsible for reviewing over 3,000 properties, which leaves little time to consider unique features or conditions that could impact a property’s value.
When you have to Buy to Sell
Let’s simplify one of the most challenging situations you may face when you decide to move. Below are 4 options, each with it’s own set of risks and rewards!
OPTION 1: Before listing your home, find your next property and offer to purchase it “subject to the sale of” your current home.
OPTION 2: List your home before you find your new property.
OPTION 3: Sell your home before you start seriously looking and pursuing your next property.
OPTION 4: List your home contingent to finding a home. This option is the least viable as most Buyers and Agents will not pursue a home with this type of contingency.
BC Buyer Rescission Period
This month we want to talk about the new Home Buyers Rescission Period which will come into effect on Jan 3, 2023. The BC Provincial Government enacted the Home Buyers Rescission Period to help cool off the Real Estate Market and allow a Buyer to take 3 days to determine whether they would like to go through with the purchase of property after entering into an accepted offer.
In order to take advantage of this privilege, a Buyer will be required to pay a fee of 0.25% of the purchase price, or $250 for every $100,000. Buyers are still able to write an offer with subject conditions, the rescission period will run concurrently with those subject conditions.
Passive Income in Real Estate
Buying an investment property is a huge step to financial freedom. Passive income, in our opinion, is the best type of income: No employees, no making widgets, and no punching the time card.
Here are the common questions our team fields the most:
- Is this property a good investment?
- I want to invest in another property is there anything out there that makes sense?
- I want to invest in real estate, where do I start?
All these questions deserve some conversation, but it all starts with doing a financial analysis to determine 4 key financial indicators: Capitalization Rate, Debt Service Ratio, Return on Investment, and Return on Equity. This may sound complicated and overwhelming but if you input the correct information in the following categories below in green the rest is easy.
Should I Buy or should I Wait?
The answer to the above question is “buy what you can afford”. If you are looking for a primary residence and feel that waiting for prices to come down is best, keep in mind that lower prices and climbing interest rates can work out to be the same cost. The Bank of Canada is reviewing and adjusting interest rates on Oct 26 and December 6. The top economists predict increases to reach over 4.0% in 2023.
Do rising interest rates and decreasing home prices really equal out? Here is an example. If you purchased a home for $700,000 at the beginning of the year vs purchasing the same house in today’s market for $600.000 you will see the cost is virtually the same.
Short-term Vacation Rentals in Penticton BC
Due to our thriving tourism industry in the Okanagan, home owners and investors have found great income opportunities in the short-term vacation rental market.
While short-term rentals can be profitable, the return on your investment is determined by a multitude of factors that are specific to each property. Geographic location, interior upgrades/renovations, a pool or hot tub, and available amenities will all play a role in how much your rental could earn.
While there are short-term vacation rentals in Penticton that generate huge revenues each season, not every property in town is guaranteed to generate a net positive cash flow from short-term OR long-term rental income… let’s consider an average, centrally located townhome in Penticton!