Brady Layton, BComm, CFP

by Amy Fontinelle, Investopedia

Are you making upgrades to your home with an eye toward improving your home’s resale value? If so, consider these suggestions before you get started.

Check out the Competition
When selling is your end game, the golden rule of home remodeling is to make your home comparable to others in the neighborhood. If you over improve, you have no chance of recouping your investment. If you under improve, the other homes on the market will sell before yours does.

Look at online real estate listings, attend open houses and talk to real estate agents to find out what features are considered to be the standard in your neighborhood. If everyone else has scraped their popcorn ceilings and turned that cramped shower stall into a soaker tub, you should consider making these changes to your home too. If no one has an outdoor kitchen, adding one to your backyard probably won’t pay off.

Smart buyers are looking to buy either the worst house on the best block or a turnkey home, but they aren’t looking to buy a house that’s nicer than its neighbors. For the extra money, they would usually rather move up to the next nicest neighborhood.

Pick Your Projects Wisely
Avoid expensive, difficult and time-consuming projects like adding more square footage to your house. You may not recoup the money you spend, let alone the time and frustration. You don’t want to over improve for the neighborhood. If all the surrounding homes have 1,600 square feet, there’s no reason for yours to have 2,000 square feet. Buyers looking for 2,000 square foot houses will be shopping in other neighborhoods.

There are also some big mistakes you can make in trying to make your home seem larger than it is. The biggest one is to knock down a wall that decreases the number of bedrooms or bathrooms. As a purely practical matter, two small bathrooms are better than one large one and a third bedroom is more useful than a master suite.

Another bad improvement is a swimming pool. While pools are a must have for some buyers, they also increase the ongoing costs of owning a home significantly. Homeowners insurance premiums will be higher because of the potential liability and maintenance costs are ongoing. Pools also take up a lot of the yard, and many people would rather have grass that their dogs or kids can run around on.

Appeal to a Wide Audience
With any improvement you make with an eye toward selling, think beyond your personal taste. Neutral, classic colors and textures will have broader appeal than bold or unusual ones. They are also easier to change and personalize if the buyer doesn’t like them. Also, make sure to choose colors and finishes that are currently in fashion. When buyers see outdated decor, they see dollar signs.

Don’t Overlook the Basics
If your home has a beautiful kitchen but a home inspection reveals that the roof needs to be replaced and the furnace is on its last legs, price-conscious buyers are likely to ask you to make these repairs or to drop the sale price. If you can’t afford either of these options because you’ve spent the money elsewhere, you could have trouble selling the home.

In today’s economic climate, a home that isn’t a money pit is the best selling feature for the ordinary buyer.

Also, there’s no sense in shelling out big bucks for remodeling projects if your house is so cluttered and dirty that buyers can’t see them. If you have too much stuff, a rental storage unit can be a great investment in getting your home sold. Your first instinct might be to cram everything in the garage, the basement and the closets, but buyers will look in all of these places. You want to convey the idea that your home has plenty of storage space.

The Bottom Line
It’s important to consider the housing market, economic climate and buyer’s perspective when upgrading your home in order to sell it. Before you spend your time or money on any improvements, make sure you understand what today’s buyers want.

Canada’s housing market will cool off in coming months, but a U.S.-style housing crash won’t happen, one of the country’s biggest real estate firms said.

Housing prices jumped between 5.7% and 7.8% in the third quarter of the year compared with the same period in 2010, Royal LePage said. Buyers were tempted by low interest rates and the relative stability of the Canadian economy despite global gloom, it said.

“The third quarter saw a return to a normal seasonal business cycle as price appreciation slowed in many areas – with some average values even falling slightly – after the busy spring trading season,” said Phil Soper, Royal LePage president and chief executive. “A broader slowdown is expected in the months ahead but fears of a U.S.-style correction are completely unfounded.”

Royal LePage did say prices in some markets are over blown, but the Canadian economy is structured differently from that of the U.S., making a collapse unlikely. Some commentators have predicted Canada’s housing market is set for a major correction, as record low interest rates have spurred buyers to take on more debt than they can afford.

Finance Minister Jim Flaherty also said on Wednesday that Canada is not facing a housing bubble that requires government action.

Asked at a news conference in New York what it would take for Canada to act again to cool the market, he said: “It will take clear evidence of a bubble in the housing market in Canada, which we have not seen.”

He added that measures to tighten mortgage lending that came into effect earlier this year had helped dampen demand.

In the third quarter of 2011, the national average price of a detached

bungalow rose 7.8% year-over-year to $349,974, while standard two-storey homes rose 7.7% to $388,218 and standard condominiums rose 5.7% to $239,300.

The price rises in the third quarter are skewed by the fact the third

quarter of last year was particularly weak, the company said.

The biggest gain was in Vancouver, where two-storey home prices rose 16.9%, as the city continued to benefit from strong demand from foreign investors.

The Toronto market also reported big gains, with the average price rising 9.4% to $518,433, helped by a lack of supply.

Two-storey homes in Calgary and Edmonton were relatively flat, while

Montreal saw a gain of 4.4%, according to the survey.

– With files from Reuters.

CALGARY — Calgary’s residential real estate market saw an upswing in activity in September despite continued global economic turmoil, according to the Calgary Real Estate Board.

Data released by the board Monday indicated sales and prices increased during the month compared with a year ago.

There were 1,036 single-family MLS sales in September, up 8.25 per cent from September 2010. The average sale price was $466,167, an increase of 1.27 per cent from last year.

The condominium market saw 429 sales, up 17.21 per cent from September 2010, with an average price of $299,508, which was a year-over-year hike of 5.45 per cent.

“Despite recent turmoil in the global economy, Calgarians are showing confidence in the long-term prospects for the city and are taking advantage of affordable and stable home prices,” said Bob Jablonski, president-elect of CREB.

“Undoubtedly, there are a lot of unknowns in the world’s current financial situation, but Calgary and Alberta may be relatively safe havens amidst this uncertainty. Granted, gains in the housing market have been very gradual — but we are seeing signs of improvements. Our province’s growth is expected to outperform the national average, and this will help buoy consumer confidence in Calgary and Alberta.”

Year-to-date after nine months, there have been 10,518 single-family home sales, up 9.78 per cent compared with the same period a year ago.

After the first three-quarters of this year, condominium sales totalled 4,314, a 1.72 per cent rise over the same period last year.

Tamara Pilipchuk, a realtor with Re/Max in Calgary, said the first half of 2011 saw a rise in MLS sales compared with 2010 and this caused a decline in listings, bringing down inventories to levels consistent with a balanced market.

“However, there is no doubt that the turmoil in the U.S economy will have an impact on Alberta,” she said. “Downward pressure on commodities will limit some of the expected economic and employment growth in Alberta. We expect to see the housing market remain stable at or above levels recorded last year.

“Sale numbers are expected to level off for the remainder of the year as inventories … creep up adding some downward pressure on house prices. Consumers no longer have a sense of urgency and are looking for value, spending more time looking and exploring their options.”

The positive stimulus in the overall market is being fuelled by relatively low interest rates, she added.

“We are also seeing an improved range of single-family homes on the market, combined with relatively stable pricing, giving buyers opportunities to purchase in areas not open to them before,” said Pilipchuk. “More activity in the condominium market will also have a positive impact this fall in the market place.”

In the towns outside of Calgary MLS market, there were 314 sales in September, up 15.87 per cent from last year, and the average sale price jumped by 0.58 per cent to $365,612.

The country residential market, which includes acreages, had 70 MLS sales in September, an increase of 45.83 per cent from September 2010, while the average sale price rose by 4.04 per cent to $770,822.

“It’s steady as she goes,” said Jablonski. “I think there’s a lot more building consumer confidence in Calgary . . . Calgary and Alberta are leading the way as far as the rest of the country goes and I think it’s going to be fine.

“Calgary continues to add full-time jobs to the economy, and migration is moving in the right direction. These are positive factors that will give momentum to our housing market and give winds to the sails of Calgary’s economy.”

There were also 22 rural land sales in Calgary’s MLS market in September, up 29.41 per cent from last year. The average sale price dipped by 2.75 per cent to $413,568.

mtoneguzzi@calgaryherald.com

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