2013 Cost Vs Value Report

If your clients are wondering what home improvement projects will give them the best return on the sale of their home, tell them to think “curb appeal.”

When buyers are shopping for a home, the exterior can make (or break) the first impression. According to the 2013 Cost vs. Value Report, exterior replacement projects are among the most valuable home improvements that sellers can currently invest in, starting with the front door.

A steel entry door topped this year’s survey with an estimated 85.6 percent of the costs recouped at resale. The steel door replacement is also the least expensive of the 35 midrange and upscale remodeling projects included in the survey, costing $1,137 on average.

This is the 15th year that Remodeling magazine — in cooperation with REALTOR® Magazine — has released the Cost vs. Value Report. This year’s survey included more than 3,900 appraisers, sales agents, and brokers across the country who provided their opinions and estimates.

Exterior projects dominated the list with six of the top 10 most cost-effective midrange projects and eight of the top 10 upscale projects.

 

Top 10 Midrange Projects

1. Entry Door Replacement (steel)
Job Cost: $1,137
Resale Value: $974
Cost Recouped: 85.6 percent

2. Deck Addition (wood)
Job Cost: $9,327
Resale Value: $7,213
Cost Recouped: 77.3 percent

3. Garage Door Replacement
Job Cost: $1,496
Resale Value: $1,132
Cost Recouped: 75.7 percent

4. Minor Kitchen Remodel
Job Cost: $18,527
Resale Value: $13,977
Cost Recouped: 75.4 percent

5. Window Replacement (wood)
Job Cost: $10,708
Resale Value: $7,852
Cost Recouped: 73.3 percent

(tie) 6. Attic Bedroom Addition
Job Cost: $47,919
Resale Value: $34,916
Cost Recouped: 72.9 percent

(tie) 6. Siding Replacement (vinyl)
Job Cost: $11,192
Resale Value: $8,154
Cost Recouped: 72.9 percent

7. Window Replacement (vinyl)
Job Cost: $9,770
Resale Value: $6,961
Cost Recouped: 71.2 percent

8. Basement Remodel
Job Cost: $61,303
Resale Value: $43,095
Cost Recouped: 70.3 percent

9. Major Kitchen Remodel
Job Cost: $53,931
Resale Value: $37,139
Cost Recouped: 68.9 percent

10. Deck Addition (composite)
Job Cost: $15,084
Resale Value: $10,184
Cost Recouped: 67.5 percent

Top 10 Upscale Projects

1. Siding Replacement (fiber-cement)
Job Cost: $13,083
Resale Value: $10,379
Cost Recouped: 79.3 percent

2. Garage Door Replacement
Job Cost: $2,720
Resale Value: $2,046
Cost Recouped: 75.2 percent

3. Siding Replacement (foam-backed vinyl)
Job Cost: $13,818
Resale Value: $9,926
Cost Recouped: 71.8 percent

4. Window Replacement (vinyl)
Job Cost: $13,055
Resale Value: $9,295
Cost Recouped: 71.2 percent

5. Window Replacement (wood)
Job Cost: $16,361
Resale Value: $11,194
Cost Recouped: 68.4 percent

6. Grand Entrance (fiberglass)
Job Cost: $7,088
Resale Value: $4,528
Cost Recouped: 63.9 percent

7. Deck Addition (composite)
Job Cost: $34,403
Resale Value: $20,532
Cost Recouped: 59.7 percent

8. Major Kitchen Remodel
Job Cost: $107,406
Resale Value: $64,113
Cost Recouped: 59.7 percent

9. Bathroom Remodel
Job Cost: $50,007
Resale Value: $29,162
Cost Recouped: 58.3 percent

10. Roofing Replacement
Job Cost: $33,880
Resale Value: $19,194
Cost Recouped: 56.7 percent

Ending a six-year cost-value ratio decline, this year’s Cost vs. Value Report is good news for remodeling industry with a rise in the ratio by three percentage points to 60.6 percent. According to the report, lower construction costs and stabilizing house prices were the principal factors for the upturn.

While every region improved over last year’s survey, the Pacific region — Alaska, California, Hawaii, Oregon, and Washington — had the highest average cost-to-value ratio overall at 71.2 percent, despite having the highest construction costs in the country.


14 Tips for Buyers

Outlined below is a very simple but highly successful 14-step approach to getting you the home that you desire and not ending up with a lemon.

1. Pre-approve it, Have you Toronto real estate agent help you determine how much you can afford and assist you in attaining the pre-approval for your mortgage or the transfer of existing financing.

2. Educate yourself, About the home buying process and then you will be comfortable actually doing it. Ask lots of questions. A good Toronto real estate agent will assist you throughout the entire process answering all of your concerns.

3. Design it, Based on your desires, needs and capabilities we will decide on the best neighbourhoods to target for the home that you want.

4. Shop for it, Now that we know what your goal is you can start shopping. You will have to stay informed about all the real estate activity in your areas of choice. That includes having your agent send you daily listings through email and have them arrange to show you as many as you want.

5. Do not settle, For anything but the right home, for a price you can afford, in an area you desire.

6. Buy It, When we have decided on your dream home have your agent draw up a Custom Agreement of Purchase and Sale to fit your needs. And then have them present it to the owners and negotiate it on your behalf.

7. Close It, After the successfully purchase your home stay in regular contact with your agent to ensure all of the details are being addressed. Your agent should work with you right up to and beyond the closing date.

What warning signs should you look out for?

Home buyers often pride themselves on knowing how to spot a solid home or one that needs serious work. Aside from the obvious warning signs – such as damp spots on walls or missing roof shingles – many home-buyers may remain unaware of serious yet hard to spot problems such as foundation damage.

8. Water damage. Porous grout and cracks less than one sixteenth of an inch in a ceramic tiled shower can allow enough water through to do thousands of dollars of damage over time.

9. Improper wiring. This includes such situations as amateur (often dangerous) wiring, ungrounded receptacles, lack of ground fault circuit interruptors in wet locations, overloaded breakers, etc. The homebuyer will be informed of the presence of aluminum wiring which was common in houses built in the 1960s and 1970s. These installations could be problematic and should be fully evaluated before closing the sale.

10. Attic issues. Home buyers almost never look in attics but inspectors always do, paying special attention to signs of roof leaks, missing support trusses, pest infestation, illegal venting, illegal electrical wiring, inadequate insulation, etc.

11. Chugging drains. Drains that chug like an upturned soda bottle or toilets that do not flush correctly could be signs that the plumbing system is not adequately vented. Make sure your dream home is free of costly repair problems before signing a contract.

12. Roof damage. Eighty percent of new construction litigation is said to involve the roof. If the roof is bad, the rest of the house is in danger of damage too.

13. Heating and cooling systems danger. Gas-fired furnaces have the potential to introduce deadly carbon monoxide gas into the living area. If the gas company decides your furnace is unsafe prior to your move-in, they may lock it out and require replacement before turning on the gas to your new home.

14. Foundation problems. Flower beds planted too close to exterior walls could draw too much water to the foundation of the home, causing damage. A damp basement might also be an indication that the foundation needs work which is one of the most expensive home repairs around. Before you buy, be sure that you are not going to be in the market for expensive home repairs down the road.

The best way to be safe is to get a complete home inspection from a reputable and established Home Inspection company. And include some of the mentioned items as conditions in your offer, just to be doubly sure that the seller is telling the whole truth about the condition of the property.


The First-Time Buyer is Back

Just a few weeks ago, the house on East York’s Marlow Ave. would have looked like a simple starter home — two bedrooms and two bathrooms crammed onto a 17-by-93-foot lot, listed for $469,900.

But by Monday night, after the barn-shaped detached home sold for $525,000 in a flurry of eight competing offers, it became symbolic of something much bigger.

The first-time buyer is back.

“January can be a very volatile month. I’m usually struggling for buyers. But I cannot remember having this much business coming into the new year,” says listing agent Carolyn Griffis of ReMax.

Mortgage brokers have also seen a surge since Christmas in would-be home buyers, especially first-time buyers, looking to get preapprovals or to renew approvals that lapsed last fall and winter as they headed for sidelines, waiting for the housing market to cool or crash.

“There seems to be a lot of pent-up demand in the first-time buying community,” says long-time mortgage broker Joe Sammut of Mortgage Architects.

“People seem to have let the dust settle (since the market started softening last summer) and they’re saying, ‘Maybe it’s time to buy now that we’ve had six months more to save up and see what is happening in the marketplace.’ ”

In fact, the Toronto Real Estate Board (TREB) is reporting a strong start to 2013. Home sales were down just 1.3 per cent in January over a year earlier, welcome news after six months of largely double-digit decreases. And prices were up 4.3 per cent last month across the GTA, according to figures released Tuesday by TREB.

The average sales price of a GTA home last month was $482,648, up from $462,655 in January, 2012.

Assuming the turnaround holds, “expect annual price growth in the three to five per cent range this year,” says TREB’s senior market analyst, Jason Mercer.

The strong January “suggests that some buyers, who put their decision to purchase on hold last year due to stricter mortgage lending guidelines, are once again becoming active in the market,” said Toronto Real Estate Board president Ann Hannah in a statement.

She noted that sales were especially strong in the suburban regions around Toronto, citing the dampening effect of the city’s land transfer tax. But affordability can’t be discounted: The average sales price of a detached house in the city was $765,049 in January compared to $563,675 in the 905 regions, TREB’s January sales figures show.

The resale condo sector remains soft, with TREB reporting a 5.1 per cent decline in sales in January over a year earlier. The biggest drop in sales (6.4 per cent) was in the 905 regions, compared to a 4.5 per cent decline in the city.

The average price of a resale condo in the 905 regions dropped 1.4 per cent to $269,073, while units in the 416 area were down 1.3 per cent to an average $340,295, says TREB.

Townhouses saw the biggest decline in sales in January year over year in Toronto, with sales slumping 11.2 per cent. Prices, however, were up almost 2 per cent, to $418,262. That compares to a 1 per cent increase in 905 sales and a 5.6 per cent increase in price to $359,271.

The sale of detached homes in the 416 region declined 7.6 per cent, but prices held steady, up 2.7 per cent year-over-year. Sales of detached homes in the 905 regions were up 3.7 per cent and prices up almost 7 per cent, TREB reports.

Some 4,375 homes changed hands in January compared to 4,432 a year earlier.

 


Real Estate Market is Not Crashing

Forget about a looming housing crash—it’s not going to happen. But Canada’s real estate market is changing, and both buyers and sellers will need to adapt if they want to thrive.

Let’s be clear: despite what some in the media would have you believe, Canada’s housing market is not at the edge of a cliff, ready to plunge into free fall. “There are articles saying we’re going to have the same kind of crash we had in the United States, but that’s not going to happen,” says Jane Londerville, a real estate and housing adviser at the University of Guelph.

Like many Canadians, you’re probably wondering what all this means if you’re looking to enter the housing market, sell your home, trade up to a bigger residence, or downsize to a condo. We will help you navigate all of these scenarios and show you how to profit from the changing nature of Canada’s housing market.

“Young people are having a tough enough time with getting jobs and earning money, but to see home prices going up at such a rapid clip has been really disconcerting,” says Toronto fee-for-service adviser Jason Heath. “Now, young people will feel like they’re getting less and less behind, and that it’s not an impossible dream to own a home.” But first-time buyers shouldn’t be overly optimistic, especially outside Canada’s three largest cities. Sylvia Lewis-Havard and her husband are still renting, hoping the changing market might enable them to purchase a home in Ottawa. “I don’t expect a complete crash we can take advantage of,” says Lewis-Havard, but she hopes to find something for 15% less than the current average of $354,000. Gulati says that’s not likely to happen—in fact, she doesn’t expect real estate prices outside Toronto, Vancouver and Montreal to decline much at all. Her opinion is in line with a recent report by RBC Economics predicting “both resale activity and home prices in Canada to be flat or slightly negative in 2013.”

Sonya Gulati, a senior economist with Toronto-Dominion Bank, says we could see a slow 10% decline in house prices in Toronto, Vancouver and Montreal by the end of 2014. “We think those cities are the ones most overvalued.” As of September, year-over-year housing prices were already down 3.8% in the Greater Vancouver Area, according to Gulati. Toronto is now starting the same downward trajectory, she says, despite roughly an 8% increase in sales over the same period. Montreal is following the same pattern, too.

The biggest advantage Canada’s changing housing market will offer first-time buyers is the luxury of time. “In places like Toronto you might have a bit more breathing room to look at a place and think about it for 24 hours without having to shove an offer in with six other people and hope you win,” says Jane Londerville. “So it gives you a little time to do some careful thinking.” Even in her town of Guelph, Ont., bids can be aggressive for downtown properties, so buyers in smaller centers can expect to benefit from less competition, too.

Buying newbies should also bear in mind that sellers may be more open to negotiation now, says Marc Lamontagne, a fee-for-service adviser with Ryan Lamontagne in Ottawa. Lamontagne believes there will be opportunities for savings in any region of Canada, provided you’re a patient, aggressive bidder. “A lot of homes that will be staying on the market longer were purchased by developers or flippers. These people are going to be desperate and motivated to sell.” Another option for those struggling to enter the market is to buy a property and rent out part of it to help you pay the mortgage, says Londerville. “You have to find creative ways to get into the bigger markets.”