The question of renovating a home comes up with most homeowners at one point.
Whether or not the goal is to increase its value, everyone would care to know how it is
affected. There’s no question that MOST renovations will increase your home’s value,
however the question should be, by how much? Many improvements will not increase the
value of your home by as much as the amount you’ve invested. The reason being is that
Market Value (meaning what buyers are willing to pay) and Replacement Value are never
aligned. Before you start a project, consider why you are renovating. Is it with the intention
to sell with a higher return? Or do you plan to stay in the house for years or even decades
and enjoy the upgrades you’ve made? If renovating for yourself to enjoy, that is considered
a Luxury and your return on investment won’t be as important, having no intention to sell.
Chances are that you’ll make different decisions on the materials you buy and perhaps the
labour you employ, which likely results in a “negative” investment. For example, a $50,000
renovation may only increase the value of your home by $30,000, effectively making it a
$20,000 luxury cost. The investment is not the purpose in this case and as the years pass,
inflation will help to bridge that gap. If renovating to sell, we must think in a different way.
When renovating to sell, every project must be analyzed and ensure that the work is going
to fetch, not only a positive, but a worthwhile return. The most important questions to ask
yourselves are; 1. Does the work NEED to be done? When it comes to cosmetics, what’s
more important over an updated house is “pride of ownership”. An older house that is
dated but is immaculate and well kept, will sell better than a newly renovated home with
sub-standard workmanship. Often times it’s best not to completely redo an area where all
that’s really needed is a coat of paint and a good clean up. Paint, will always give you the
highest return of any project, so long as it’s done well and using NEUTRAL colors. Never
paint to a unique individual taste. 2. Who will be doing the work? Professional labour often
doubles the cost of a project but that doesn’t mean it cuts your profits in half. If you plan to
do any work yourself, make sure the quality of work is as good as a professional’s. A job
with poor quality can result in a dramatic reduction in your sale price. Conversely, the
quality of workmanship is what results in higher returns over the price of materials. Use less
expensive materials and better quality installers. 3. What are buyers willing to pay for homes
in your area? You’ve probably heard it before; don’t turn your house into the most
expensive one in the neighbourhood. You’ll price yourself out of the market and when you
need to sell, you will likely not get the returns you hoped for.
Regardless of your goal, if the effective value of your house is important to you after your
project(s), the best way to start is to obtain quotes and get a full cost analysis, then find out
what your house is worth, before you start. Feel free to call us anytime and we’ll be happy
to help you determine you home’s value today, as well as discuss your plans and its
potential value after your project.

We’re in a unique marketplace in Edmonton, when comparing to the rest of the world. Flip through television channels and newspapers and it seems like economies everywhere are struggling to recuperate from the recent recession. In Alberta however, we sometimes forget how lucky we are to be living in one of the few places striving and growing at a very healthy rate. Perhaps we’re still used to the surreal pace from pre- 2008 where no economy seems strong unless your house is increasing in value by 5% each MONTH, rather than each year. Those increases in our house prices, along with the correction that followed, have put many of us in a situation where selling our homes is not yet feasible. So what happens 4 or five years later when life circumstances have changed and we’re ready to move to another home? Renting your current home to move or upgrade to another can be a great option.
If you’re “upside down” on your current home (meaning you owe more on your mortgage than you could sell for), renting it until its value goes up can be a great financial choice. Here’s why: We know that over long periods, markets always increase in value. If someone (the renter) is willing to continue to pay your mortgage, while in the meantime you can buy a new home in today’s market, you now have 2 homes increasing in value but you’re only paying for one. If you’re upgrading, you’re also buying a home with today’s mortgage interest rates, which in many cases are as much as 3% lower than the mortgage you would have gotten in 2007. To put that to perspective, a mortgage of $500,000 today would cost you the same as a mortgage taken 4 years ago for $350,000. That’s essentially a free $150,000 upgrade (not to mention the difference in what your money buys you for those prices between now and in 2007).
Points to consider; You must first ensure that you qualify to carry another mortgage, along with your current one. In most cases, you must also have some down payment for your new house. It’s not as hard as it may seem and there are creative ways to make it happen (that’s where a GOOD mortgage broker comes in handy). Second, you need to research what you could obtain for in monthly rent and what the rent-ability of you area is. Don’t be discouraged if it’s not a typical rent area. Those are sometimes the best places to rent as you may attract good families with more ease. People rent in all price brackets and almost anywhere. What you can obtain for rent in certain areas is the difference. You may not be able to have your entire mortgage paid for but that’s ok, so long as you budget for that extra cost. Lastly, don’t forget that you’re still on the hook for mechanical repairs. They may be needed suddenly and at unexpected times. It is wise to put away at least 3 months worth of payments on your rental property to budget for those unanticipated repairs as well as vacancies. Lastly, choose your renters very wisely. An experience with a bad renter can be overwhelming and if they don’t properly maintain the house, the excessive wear and tear will affect its value when the time comes to sell. Conversely, the right renters can make your experience pleasant and stress free. If you haven’t found the right renter, WAIT for them to come along.
If you’re considering this option now or in the not so distant future, call us to discuss! We’ll formulate a strategy and determine whether it’s the right option for you or if an alternative direction would work better!

I recently evaluated 2 homes for 2 separate clients, who happen to know each other. These 2 homes were very different in the sense that 1 was a newer, exceptionally large 2 storey home in a newer, South Edmonton community. The other house was a bungalow, about half the size, 55 years old and in need of some cosmetics and some mechanical renovations but was located in a central, established neighborhood. When the 2 compared pricing on each other’s homes, they were shocked to see that they were both worth close to the same price. This can happen quite often so naturally, I thought it would be a great idea to discuss house values in different areas.

Using those 2 homes as an example, the newer 2 Storey clearly costs more to replace when factoring size and age alone, so why similar market values? Value starts first with lot price, which is determined by its geographic location, direct location within that neighborhood and size of lot. You’ve heard it before; Location, location, location.

The first difference between the older bungalow and the new 2 Storey was that the bungalow was situated on a quiet street, only 10 minutes from downtown and walking distance to the river valley where the 2 Storey, although it was beautiful inside was on a small lot backing a higher traffic street and more on the outskirts of the city.

What we’ll generally find in and around Edmonton is the farther away from the downtown core you’re willing to move, the more “bang for your buck” you’ll get. While there are exceptions to this theory when factoring neighborhood features, sales turnover, how well the neighbors maintain their homes, etc. it’s still a good measuring tool. Typically the more established neighborhoods closer to the city’s core will see smaller fluctuations in the market, meaning, during an” up” market, they won’t seem to appreciate as much, however in a “down” market, they typically won’t see as much decrease. To elaborate, there is a lower turnover rate in central neighborhoods as there are in the newer neighborhoods. People tend to move around less often, meaning less seller competition and conversely new areas are almost always more competitive as sellers are also competing with builders in an area that needs more migration to begin with.
So if you can get into a bigger, newer home in a new area for the same price as an older, smaller home in an established area, how do you decide where to go? That’s completely a personal preference based on individual lifestyle. Edmonton is a unique city in the sense that it’s growing rapidly in size but unlike most metropolis cities, it continues to grow outward more than upward. Why? Because we have the space to do it where most cities do not. But that being said, many people would still prefer to sacrifice age and size for location. They can save time and money on their daily travels and as they’re budget grows, they are able to upgrade their home’s esthetics and still have the luxury of living central. However, if you’re ok with longer travel, you’re able to get into something that won’t need upgrading for a long time, therefore saving time and money that way and, because the city is growing outward, it’s only a matter of time before their neighborhood becomes a more “central” area itself!
Live central and travel less or live a little farther and enjoy a newer house! There will always be a market for both and decision is all up to you! I hope this has shed some light on market values if you’re ever making a comparison with your own home!

As our city develops into a bigger metropolis and our real estate prices increase (which they are both doing by the way!), condos will become a more popular option than ever and it’s good to understand the positive and negatives in condo ownership. I often meet people who entertain the idea of buying a condo rather than a house or duplex but later change their minds because they do not want to “pay for condo fees”. What’s the deal with condo fees? Do they make condo living more expensive than a house of the same price? Here are 8 vital points to understand about condominium ownership:
1. In many apartment style condos, your fees cover most or all of your utilities, which already offset most if not all of the extra costs in a single family dwelling.
2. The biggest financial advantage of a condo is that you’ll generally get more “bang for your buck” as far as finishings, location and view, regardless of the type of condo (apartment style, townhouse or bareland).
3. A portion of your condo fees are set aside in a conservative investment which generates interest and grows your pooled money as an asset that each owner of a particular project owns. The reserve fund is set aside for maintenance and unexpected repairs. If your furnace dies or your basement leaks in a house, who’s stuck with the bill? The nice thing about something similar that may happen in a condo is that either a) the reserve fund takes care of it or b) if the reserve isn’t large enough, the board will ask each owner to contribute a portion, typically making it easier on each owner as they’re given time to come up with funds.
4. Virtually everything in a condominium project is documented and available for anybody’s review so when you’re purchasing one, you are able to take the precautionary steps to review all the documents and know what you’re getting into. NOT every project is a wise investment so it is VERY important to review the documents very carefully in buildings of any age.
5. Condo projects have unique rules for things like pets, age, exterior changes or appearances. In the grand scheme these are positive because you’ll be aware of them before you choose to buy and you can expect a level of consistency as the years pass. However, if your lifestyle changes, you could be forced to move a little faster than planned. (Having children in an 18+ building would be one example)
6. Condo fees can dramatically increase should something happen to a building that is poorly managed. The negative effect that this could create is a drop in your property value. On the flipside, as inflation moves upward, fees in every building will move upward with inflation and some buildings that have lost value because of higher condo fees are now being caught up to by all the others.
7. Should anything drastic be needed that cannot be paid for by reserve fund and fee increases, the condo board can opt to create a special Levy, which each owner is obliged to pay. They can be small or substantial and will normally affect the value of your condo, unless they are strictly an improvement, like say new windows. Remember this can happen in a house as well and you’re on your own to pay for the repair.
8. In most cases, you don’t have to worry about outside maintenance making it easier to leave for long periods of time!

It all boils down to personal preference and lifestyle and if your lifestyle and budget suits it well, go for it! If you need any more info, don’t hesitate to call or write us!

We all know that Edmonton’s major economic driving force is the Oil and Gas industry but one thing I believe most of us are unaware of is that Edmonton actually has one of the most diverse economies in Canada. It’s true!
Our City is a leader in the technology sector, being anchored by major employers such as IBM, Telus, Intuit Canada, BioWare, Matrikon, General Electric, and Stantec Inc. Our strength in this sector is due to our reputation as one of Canada’s premier research and education centres. Research initiatives are anchored by large educational institutions including the University of Alberta, which in addition to its existing research centres, recently constructed the National Institute for Nanotechnology. Other city research centres include government initiatives at the Alberta Research Council and Edmonton Research Park.
During the 1970s and 1980s, Edmonton started to become a major financial centre and is now home to Canadian Western Bank, the only publicly traded Schedule I chartered bank headquarters west of Toronto. Other major financial centres include ATB Financial, Servus Credit Union (formerly Capital City Savings), TD Canada Trust and Manulife Financial.
Greater Edmonton has been the birthplace of several giant companies that have grown to international stature, including PCL Construction, Stantec, the Katz Group and Capital Power Corporation. The local retail market has also seen the creation of many successful store concepts such as The Brick, Boston Pizza, Pizza 73, Liquor Stores GP (known as Liquor Depot, Liquor Barn, OK Liquor, and Grapes & Grains). Other Edmonton native stores include Planet Organic, Empire Design, Running Room, Booster Juice, Earl’s, Joey Tomato’s, Fountain Tire and XS Cargo. Very cool hey?!!
Our geographical location has made it an ideal spot for distribution and logistics. CN Rail’s North American operational facility is located here, as well as a major intermodal facility that handles all incoming freight from the port of Prince Rupert in British Columbia.
In a Financial Times publication, Edmonton was judged to have the “best economic potential” of any North American city. Considering Edmonton’s economic potential, expanding infrastructure, human resources, cost effectiveness, and high standard of living, FDI placed it in the No. 4 spot for top-ten North American large cities and placed us immediately ahead of Mississauga, Ontario; Charlotte, North Carolina; Tijuana, Mexico and CALGARY among cities with populations between 500,000 and 2,000,000. The survey also named Edmonton in the top-five large North American cities for business development and investment promotion. Edmonton is known for its exceptional environmental stewardship, strong life-science sector, and burgeoning high-tech industry economy.
So if we’re wondering why we continue see so many new people choose to live way up north and brave the cold winters, I suspect that might be one of the reasons! What an exciting reason to call Edmonton home!

The past few years has seen a lot of changes in rules for mortgages in Canada. Most recently this past March, changes have once again tightened our lending capabilities making the amount a home buyer can qualify for slightly less as well as tightening the amount a homeowner can borrow against his current house. So why is this all happening and how is it going to affect us?
The recent market crash in the USA has undoubtedly exposed huge flaws in its lending practices and in turn, has caused Canada to look in the mirror and enhance our current lending criteria to prevent any similar circumstance to happen to us in the near or distant future. While our practices were MUCH more sophisticated already, it did raise an awareness that many of us are willing to borrow as much as the banks will offer us, which can become dangerous if the banks are too lenient.
In 2007, a young couple who showed relative financial stability could buy a house with virtually no money down and pay it off over the course of 40 years. They were approved at that day’s interest rate and should they choose a fixed rate, they were guaranteed that rate typically for 1- 5 years. Had they chosen to go with a variable rate, they were typically given a much lower rate that would fluctuate each month but could potentially rise to a level that was no longer affordable for that homeowner. They would only need to qualify at that date’s 3 year discounted rate (which is typically quite low). If that property’s value had increased a substantial amount, the couple was able to borrow against the new-found equity in the property, so long as there was still 10% of the equity left. So what would happen if interest rates had risen by 1-2% at the end of their term and prices had fallen back after the couple re-mortgaged? Now they would owe more than what they paid for the house and they could not sell the house as its worth less than they owe. Their new payments they would be forced to take with the given interest rates might be too high for them to afford and they could be stuck in a very tough situation. THAT is the type of scenario that we must protect ourselves from. Real Estate is meant as a safe and predictable INVESTMENT and not an expense or a dangerous liability. And if we take the proper steps in purchasing and maintaining real estate, it is arguably the best investment you can make, but it is NOT fool proof and the wrong steps can get a person in trouble. So in effort to promote that, new mortgage rules in Canada look like this; The longest term you can now take on a mortgage is 30 years and a 5% down payment is required when purchasing (if you don’t have the 5% available, there are still ways to get that down payment separately). If you’re taking any product aside from a 5 year fixed rate mortgage, you must still qualify for that 5 year fixed POSTED rate, which is considerably higher than the actual 5 year rate you would get through your broker. To give an example of that, if you choose a variable rate mortgage or a one year fixed product that were currently say 2.25%, the bank will only allow you to do so if your income supports what your payments would be at say 5.6%( likely more than double the actual payment). But if you chose the 5 year fixed rate that was discounted, you would only need to qualify for that rate of say 4.1%. It encourages us to choose longer, stable rates and makes things a little harder for short term savings (the less stability in the product, the lower the rate) but in the long run it protects us from economical changes like if rates spiked at the time your renewal was up. The other change is in promotion of leaving more equity in your house and now when remortgaging, you may only borrow up to 85% of your home’s value as opposed to the previous 90%.
In conclusion, it is a step in the right direction in efforts to strengthen the sustainable growth of our economy. The changes are not what I would consider drastic and in the end, the only people who will be affected by these changes are the ones who planned to step right to the edge of their borrowing capabilities. What the government did was put a railing a few feet in front of the edge so those people don’t fall off! Maybe those same people will now buy a 1200sq ft bungalow with a single garage instead of a 1400sq ft bungalow with a double garage. Or maybe those homeowners will think twice to install granite counter tops and a hot tub and air conditioning when they remortgage to renovate. The fact is that they’ll still be able to buy the buy homes they need and they’ll still have the capability to remortgage down the road should they choose to do so, they’ll just be forced to be a little more frugal!

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