Many will remember that the Canadian housing market went into a deep freeze in the early days of the COVID-19 pandemic in 2020.
During that time, a TD bank economist suggested that homeowners may do one thing.
That is, resist the pressure of “distressed selling”, if they absolutely don’t have to let go of their properties at a bargain price.
As TD economist Rishi Sondhi explained in an April 27, 2020 housing forecast, a drop in home listings will thwart “potentially very negative feedback effects” to the market.
“This puts a floor on prices and sustains relatively tight-supply demand balances across most markets, allowing for the resumption of positive price growth as provincial economies are re-opened,” Sondhi wrote.
As everyone knows, the market rebounded in the summer of 2020, thanks to historically low interest rates, and went to notch record highs in that year and into 2021.
Currently, the housing market is undergoing a correction following a series of interest rate hikes by the Bank of Canada that started in March 2022.
With inflation raging across the country, the central bank has signalled that more increases are coming.
In Metro Vancouver, home sales in July 2022 have fallen sharply from year-ago levels, and home listings have increased slightly.
So what are homeowners now to do if they’re thinking of selling their property?
Just like what the TD economist suggested more than two years ago, Vancouver interior home designer George Verdolaga says property owners don’t have to accept a price they don’t like.
Verdolaga is the principal of FlowForm Design Group, and his business focuses on home renovations and space planning.
“What I’ve observed during the last two years when the market was hot was that you could sell your house with $500,000 to $1 million over asking, with $300,000 over asking on the low side,” Verdolaga said in a phone interview with the Straight.
With the ongoing market correction, sellers can expect less.
“Now, usually it’s closer to assessed [property assessment value], or still, a premium $100,000 or $200,000 over assessed is doable. But you won’t be able to do it as quickly,” Verdolaga said.
Before, there were usually a long line of buyers bidding for a property.
“You’re forced to buy anything just to get a house. Now the market has shifted slighted, such that buyers can wait and see. They can choose a bit,” Verdolaga said.
This means one thing for a determined home seller.
“If in the last two years you didn’t have to renovate or renovate as nicely, now you have to pay more attention, especially if you want to get a premium over your assessed, which is still possible,” Verdolaga said.
The FlowForm Design Group principal cited some basic industry standards about how much a home makeover can bring.
Verdolaga said that most important areas to remodel are the kitchen and bathroom.
He said that kitchen renovations can boost a home’s resale value by as much as 12.5 percent.
Meanwhile, revamped bathrooms can add an average of seven percent.
After doing the inside, enhancing a home’s curb appeal will also make the property more attractive to buyers.
Verdolaga said that based on typical industry standards, good landscaping can enhance resale value by as much as 11 percent.
For the finishing touch when a home comes on the market, Verdolaga recommends staging, which means doing aesthetic touches like putting in some artwork or a nice piece of furniture or lighting.
“Never show your home unstaged,” Verdolaga said.
The Vancouver home designer noted that staged properties can sell anywhere between five percent and 25 percent of the listing price.
Real-estate boards in Metro Vancouver have released information about the level of home listings.
In the Greater Vancouver market, there were 3,960 detached, attached and apartment properties that were newly listed for sale in July 2022.
This number represents a 9.5 percent decrease from the 4,377 homes listed in July 2021, and a 24.7 percent decrease compared to 5,256 homes listed in June 2022.
In July 2022, the total number of homes listed for sale in Greater Vancouver was 10,288, a 4.4 percent increase compared to the July 2021 level of 9,850, and a 1.3 percent decrease compared to the June 2022 listings of 10,425.
The sales-to-active listings ratio for July 2022 is 18.3 per cent. A market is considered balanced when the ratio is between 12 percent and 20 percent.
In the Fraser Valley, the real-estate board in the region, whose jurisdiction includes Surrey and North Delta, 3,332 new listings came on the market in July 2022.
This marked an increase of 7.2 percent compared to July of last year, and a decrease of 8.2 percent compared to June 2022.
Going back to Verdolaga, the FlowForm Design Group principal said that some things don’t change in the face of vagaries of the market.
“A potential buyer walks into an old home that is mostly in its original condition. The person starts computing in their head that the property needs about $50,000 to $100,000 to fix. The buyer would rather have the seller do the job, and pay extra,” Verdolaga said.
In another scenario, the potential buyer would offer a lower price than the buyer’s asking.
“Let’s face it: no one wants to buy an ugly home,” Verdolaga said.