Finally, some insight into how to navigate today's challenging housing market
Real estate agent Meray Mansour breaks down everything you need to know when buying or selling a home.
Canada's housing market is a hot button topic. But even if the market wasn't so unpredictable it's still not easy to buy or sell something so important and expensive. Whether or not you're a first-time buyer or seller, the current market is bound to raise a bunch of questions – so REALTOR® Meray Mansour stopped by The Goods to shed some light on the situation.
Is the Canadian real estate market going to crash?
Meray Mansour: I answer this question about 3 times a day on average! I don't have a crystal ball, but I have been doing this for over 18 years, and what I can say is I have pretty good intuition about the real estate cycle. People have been saying over the last 10 years that the proverbial bubble is going to burst. Finally, right now the market has softened in some areas and in some cases. Again, this is dependent on the demographics of the neighbourhoods and the price point of the homes.
The governments of some provinces, such as the Ontario, have implemented the 'fair housing initiative' with the most extreme action of introducing a foreign investor tax similar to in Vancouver. This has affected areas with high home prices that foreign investors are drawn to. Urban neighbourhoods are still seeing multiple offers and bidding wars almost to the same point of what it was when the market was crazy. But what I'm noticing is that the bidding war is in and around the 1 million dollar price point and lower. Anything over 1.2 million dollars is taking longer to sell and buyers are being more picky because inventory is higher. Whereas in a market where inventory is low, people were buying anything and everything.
In summary, there's still about 300,000 people moving to Canada each year, and land in urban neighbourhoods is scarce. What's happening is that people are cashing out and moving to the suburbs and, in effect, we're seeing some suburban neighbourhood prices go up more than ever before. This is due to the fact that some people can't afford to live in the city any longer.
The condo market in urban neighbourhoods is seeing more growth than ever before. I believe this is due to a few variables. One being that some people can't afford housing because of prices going up. The other reason is the stress test that the government has introduced in February for people who are putting down less than 20%. This means that they're having to be approved at a higher interest rate. This essentially allows the banks to approve at a lower mortgage price. So all in all, I would call this more of an adjustment and a leveling which I think was necessary, more so than a market crash or a bubble bursting.
I'm looking for a new house. How do you suggest that I make sure I buy something that will increase in value?
MM: I suggest that you buy something that is close to an area that has really high values. Look for neighbourhoods that are becoming gentrified but not quite there. A good agent can help you look at historical stats and growth percentages of neighbourhoods you are looking at. Also look into the house's placement on the street and the demographics of the area to give you an even clearer picture of what to expect from the home you're interested in.
Should I sell my current home before buying a new one?
MM: In the previous seller's market, I think you would have purchased a home prior to selling yours because it was much harder to purchase than to sell. You would have had a slightly longer closing date in order to give yourself time to sell, but everything was selling at one point, so this was not much of a risk. But I hesitate to do that in a market that we're still figuring out. This is because it's a bigger risk.
What has happened in the adjustment is that people who did buy when the market was intense and went to sell, had to walk away from the purchase and lose their deposits. I personally do not like to put my clients in this type of risky situation. What I've been doing more recently is selling first with a really long closing date and adjusting the closing date if we find something sooner. It's really about measuring the risk in each individual situation.
How is square footage calculated? And what parts of the home count towards overall square footage?
MM: Size does matter! What's measured is the livable space, but calculating square footage isn't easy. Square footage is usually transferred from sale to sale without being recalculated. Liveable space means space that's above grade, so no basements or sheds. You may think of laneway homes which are garages that have been retrofitted to become a liveable space. Those homes will remain separate structures and will not be combined with the square footage of your home.
When trying to sell a home, is staging really that important?
MM: In a word, yes! I personally will not list a home without staging it. It is worth every penny in return. Most buyers cannot see potential. Instead, they look for a feeling when they enter a home and that is what dictates whether they purchase property or not. The client may not be aware of this, but my job is to create this feeling so that the purchaser is able to view the features of the home and picture themselves living there without distraction and clutter. And that's what staging does. Staged homes are especially crucial in this new online market. 94% of buyers are aged 25-44 yrs old, and the Internet is how they view and find potential homes. Places that aren't staged are eliminated from their potential list right away.
There are different types and levels of staging. You don't want your home to feel like a catalogue – so it's also important to have the right stager. Your stager has to take the demographics of the neighbourhood into consideration and what styles most people would be drawn to. There's a lot more to staging than what meets the eye. We can turn to stats for proof – staged homes sell 90% faster than those sold 'as is'.