Is Buying a Pre-Construction Condo a Good Investment?

I had someone ask me this question today and I thought I’d post my answer here, for those of you considering this. This is where someone buys a condo not yet built with a view to either assigning the contract at a higher price to another buyer closer to completion, or selling it after the new condo corporation is registered, again at a higher price. To be successful at this, you have to feel pretty sure that prices will continue to go up.

I work in resale so I’m not the best person to provide advice on pre-construction condos as an investment. But I can give you my thoughts, bearing in mind this is a rapidly changing market and this is not my area of expertise.

There are supply chain issues and construction delays due to the war and the pandemic so not too many developers are hitting their targets. I worry with escalating costs that smaller developers could run into issues with cost over-runs due to these delays and the higher costs of financing.

That means they either get passed on to the buyers, or the developers go under: both have happened in the past. There is a situation in Burlington currently where the builder increased the cost of the condos to the buyers  by up to $ 300K because of increased costs.

The market has slowed rapidly in the last couple of weeks due to the war in Ukraine, higher interest rates (with more rate increases coming) and the two year foreign buyer ban. The last time we saw this kind of rapid slowdown in Ottawa was in 2012. That was due to oversupply. Condo prices slumped dramatically – units lost up to 25% of their value and only started to recover in 2018.

Higher interest rates will put pressure on lower priced units as those may be the only entry points for first time buyers, and I think resale units should hold their  value. However, given construction costs (well over $ 600/sq ft), even the smaller units in brand-new developments are going to be priced right up there. Much also depends on the pandemic – condos are less appealing during a pandemic, with their shared elevators and common spaces. Because of all of this, it’s been hard to sell higher end units recently even in a red hot market.

Sometimes, problems can arise from the project itself. For example in one newer build, the condo corporation ran out of funds to pay for heating when the windows turned out to be not as energy efficient as they were supposed to be. Condo fees included heating. That meant a deficit in operating costs, not a good situation. Those units were tied up in lawsuits for years and were essentially unsellable until the legal matters were settled.

All that said, if you do go ahead, be sure to get the builder’s agreement reviewed carefully by a lawyer within the cooling off period. Make sure that the builder can’t pass along increases in construction costs to you — it’s almost a certainty that for the next few years, construction costs will go up.

And be sure to check if you can assign the sale before completion/registration without builder’s consent: if not you may be stuck if there’s a major shift in the market before the development is registered. Similarly, check to see if you can rent after completion but before registration if you have to: sometimes you can’t.

Being on the risk-adverse side, I tend to stay clear of these kinds of investments, but there are plenty of people who’ve made lots of money buying pre-construction condos and then assigning or selling them later. The trick is to buy in a situation where you can assume prices will be significantly higher after they’re built, and I don’t have that sense of confidence in making that kind of investment right now. But no-one knows for sure.

I guess it comes down to how much of a gambler you are and how you see the future unfolding. It’s a lot easier to predict the past than figure out what’s ahead – this market is crazy and not always behaving rationally. But I’m not sure I would recommend a pre-construction condo as an investment as I see too many uncertainties to be confident about the state of the market when these units are registered and ready for resale.

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Creaky Hardwood Floors? Here are some products that may (or may not) help!

I moved into a six year old house during the pandemic with lovely wire-brushed engineered hardwood flooring throughout. I was very surprised this past fall and winter when the floors developed some major creaks and squeaks, given how new the floors are. My contractor, Thomas Duncan, tried nailing them down with a brad nailer but it didn’t work and we stopped when I was getting concerned we not leave too many holes. I installed a new humidifier on the furnace hoping that would take care of the problem, but it didn’t. I went on line to see if there were any products that might help.

The first site I found was SqueakyFloor.com. I talked to Jim, the owner. He said that 90 per cent of the time, it’s an issue with the subfloor. He sells metal braces that are designed to care of that problem, so I ordered a bunch of them. Super easy to install, but you need to have access to the subfloor. You get someone to stand on the creaky spot and make it creak, while someone else in the basement looks for movement in the subfloor and marks off those areas with a sharpie or tape. The metal braces are attached with a couple of screws between the floor joist closest to the movement and the subfloor.

While I waited for my contractor to find time in his busy schedule to drop by to install these braces, I marked the creaky spots on the flooring and measured from the exterior walls. I then went down to the basement and measured those distances from the exterior walls. As soon as I did, I could see that virtually all the creaks in the kitchen were right above the gaps in the subfloor where plywood pieces met. That being the case, I wasn’t sure if the metal braces would work or not and called Jim again. (Great customer service, by the way: he responds almost instantly.)

He said we might have to use metal braces on each side of the gap between the plywood boards, but I hadn’t ordered enough to do all of them. So when my contractor called to say he could come by to do the work, I asked him to pick up some 2 x 4’s in case we needed to do solid blocking. This is where where you insert blocks between the joists to support the floor, and glue them and screw them to the joists, being careful to make them tight but not so tight that they shift the subfloor or joist because that would make the creaks worse. (You have to use a special glue for this: one designed for flooring and decks that stays flexible.)

Because the metal braces were the easiest and least expensive potential fix, we tried them first in the worst spots. They take less than a minute each to install. They helped to reduce the creaks somewhat, but the creaks weren’t gone. My contractor then tried solid blocking but there was ductwork in the way and he couldn’t get access to some of them where some of the worse creaks were, for example, in front of the kitchen sink. When he was finished, the floors felt more solid and substantial. In the transition area between kitchen and living room, the creaking was gone. But I still had creaks and squeaks in the flooring above the areas he couldn’t reach and in areas above the finished basement.

Now, another product I had purchased from Jim’s online store when I ordered the metal braces from SqueakyFloor.com is called CounterSnap. These are screws used when you don’t have access to the subfloor. Once you screw them in, the top breaks off about 1/4″ below the flooring and leaves a hole about 1/8″ wide, so that there is not much damage to repair on the surface. There are two types of screws. Type A is longer; it’s the one you use to screw into the joist. Type B is shorter, and is used when there is no joist:

Jim told me I could use Type B if I didn’t know where the joist was. However, it won’t grip if you screw it into a joist, because it isn’t long enough, so he recommends drilling a pilot hole and putting a paper clip down to see whether you are on the joist or not. A lot of my basement is finished, and that makes it a bit harder to figure out where the joists are. I decided I would prefer to use the screws as a last resort, as I worried about what might happen if the top didn’t break off, or if it poked up through the flooring. They were also much longer than I expected and I was a bit worried about them piercing the ductwork or the plumbing.

Meanwhile, I ordered another product from Stop Creak in the UK. I spoke to Paul, the owner, (again, great customer service) and he was very open in saying his product, a Teflon lubricant applied between the boards, might or might not work in my case, but I figured it was worth a try. He offered to send me a sample of another brand-new product he was working on, an adhesive that can be used between the boards to glue them.

The Stop Creak Teflon lubricant was super easy to use. It has a very narrow syringe at the top of the bottle. You apply it in the grooves between the boards, and wipe it off. And while it helped with a couple of creaks, it made some of the others a whole lot worse. Like really bad. I decided there was nothing to be lost by trying the adhesive sample Paul had sent me. Again, this was a super easy product to apply. It looks a bit like white carpenter’s glue and it too has a metal syringe that allows you to squeeze out a very narrow bead of adhesive. I squeezed it between the boards in the offending areas, wiped off the excess, and put down masking tape on top of the floor boards to let me know not to step on them as the glue has to cure for 24 hours.

The next day, once the glue cured, I was amazed to find that the creaks were gone. Sadly, within a week they were back. So I had Thomas come back, but I was still concerned the countersnap screws would be too big and that they might shift if there was no screw head to hold them down. So we looked for the smallest screws we could find. He brought finishing screws instead, and that solved the problem! The heads on the screws is only 1/8″ and they were just long enough to penetrate the engineered flooring and grab the subfloor. The dark colour of the screws made them so hard to see that I’ve missed a few of them when I’ve filled them in with wood putty and touched up the spots with acryclic paint.

We probably did around 40 of them, then Thomas came back a few days later and we did another couple of dozen, and then another ten or so. I think there is one spot left, but that was the solution! It’s been a month now and I have nice, quiet floors.

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Thinking of hosting a Ukrainian family fleeing the war? Here’s what’s involved.

As some of you who know me on Twitter are aware, I have been placing Ukrainian families in private homes for a couple of weeks now. I was an election observer in Ukraine during the Orange Revolution and I felt as shocked and powerless as everyone else when the war began. The one thing I felt I could do was offer up space in my home, and I posted a tweet on Twitter to that effect, and included my work email. My email address made its way around Warsaw and I am now contacted pretty regularly by Ukrainians needing help finding places in Canada. It’s not much, but it’s the least I can do.

I had indicated in that tweet that I didn’t know who was stickhandling things, and it turns out there is no co-ordinated body handling resettlement housing. And since the plan is that the Ukrainians will return to Ukraine when the war ends, there is a lot of uncertainty around whether they will be here for months or years, which complicates things. Let me go through what I have learned so far, bearing in mind this is a rapidly changing situation.

First of all, to clarify a huge misunderstanding, the people who are coming to Canada from Ukraine are not coming as refugees with refugee status. They are instead being issued with special visas, and while that expedites their ability to get to Canada, it also means they are not eligible for the same benefits as refugees, such as repayable loans for airfare.

Because they don’t need to be sponsored the way refugees do, they can arrange their accommodations directly. They don’t have to be sponsored by NGOs or groups. In that sense, they are like anyone else coming to Canada on a visa.  But there is a downside to all of this, as you will see.

I’ve had some potential hosts ask who is responsible for paying airfare and at the moment, it’s the Ukrainian asylum seekers or those who offer to help them. Apparently, Canada has given some thought to organizing an airlift from Poland, but the problem is that if they suddenly bring over several hundred people, they don’t know what to do with them.

If Canada does provide an airlift of some sort, I think the government will have to revisit the question of paying for airfare for others who had to pay for their own flights. With with previous groups of refugees, this has taken the form of a repayable loan, due within two or three years. But again, because of their special non-refugee status, Ukrainians fleeing to Canada will have to come up with their own airfare.

I’ve been fortunate in that the hosts I have put families with so far have been able to contribute, and I’ve had some other people contact me and offer to pay for airfare so it hasn’t been an issue.

In terms of healthcare, this is where not being refugees poses a real problem in some provinces like Ontario. Refugees are entitled to apply for health care on arrival. Those coming here on visas may or may not be be eligible, depending on the province, because health care falls within provincial jurisdiction, and the situation is different from province to province.

In Quebec, Newfoundland and Labrador and Alberta, those arriving in Canada are eligible right away for health care coverage. In Ontario, however, they have to work for six months to be eligible to apply for it. That could prove to be a longer gap, as they need to find jobs. Some are not fluent in English.

Which means having medical insurance in place. I hope the federal government encourages the provinces that don’t currently provide health care to these asylum seekers to do so, because having to pay for medical insurance will pose an additional cost to people who are coming with limited resources.

In terms of financial supports, again, they will not be receiving anything by way of government support, and will be dependent on savings or support from family, friends or strangers, until they can find work. , and they are being encouraged to apply for open work permits or student permits when they apply for visas. Host families may receive a tax credit of some type from the federal government, but details have not been announced – it’s been hinted at, and is likely being considered, but no commitments.

So if you are planning to host a Ukrainian family, be aware that until they find work, they are going to have to live off savings, and they are coming from a poor country with a much lower average monthly wage (around $ 800/month) than in Canada.

The people who have contacted me have been women, some with children. Three were lawyers. Several were in high school, fluent in English, writing on behalf of their families, who weren’t. (Remember, men between the ages of 18-70 are unable to leave Ukraine.) All of them wanted to find work or continue their studies. Most indicated that they wanted to send money home to their families to help support them as some of the families who decided to stay behind lost their jobs. Most have left husbands, brothers and fathers behind to fight in the war.

They all indicated they are looking for a place to stay until their situation stabilizes and they can find their own accommodation and all anticipate their placements with host families will be temporary. However, I suspect they have no idea how expensive housing is here in Canada. I think it’s going to take them a long time to get settled, find work, and find places of their own, longer than they expect.

If you are offering to host a Ukrainian person or family, I think you should expect them to be with you for up to a year. I’ve had host families contact me and indicate that they are willing to host for a month or two and while I appreciate the offers, that’s just not going to be long enough.

During this time, you will likely need to help them out financially or fundraise to help support them. The local Ukrainian churches are busy fundraising now, and so are many Ukrainian organizations.

There are arrangements being made in Ottawa where Ukrainian asylum seekers will have a “free” shop to go to for clothes and other items and I imagine there will be similar arrangements made elsewhere. But remember, these people have fled Ukraine with a suitcase. They are going to need help with just about everything. They are coming with limited resources to a country that is sadly, is so far providing only limited resources to help them out.

The Ukrainian Canadian Congress in Ottawa is going to provide weekly counselling in Ukrainian; I suspect other cities will too. These are going to be highly traumatized people who have had to flee with the clothes on their back and not much more. I really hope the government steps up and offers more supports.

In terms of jobs, one thing the government has done is to create a job bank database where Ukrainians coming here and those Canadian businesses who have jobs available for them can register and search availability. So if you can provide work to a Ukrainian asylum seeker, please check this website out.

I should note that Newfoundland and Labrador has sent an immigration team to Poland (where the Canadian embassy is located) and are going from shelter to shelter encouraging Ukrainian asylum seekers to come to Newfoundland and Labrador.  They are the only province to do so, bless their hearts. I do not know if they are also arranging to help with airfare, or arrange discounts, but the  province has set up an email address, UkrainianFamily@gov.nl.ca, for anyone who may be able to help support Ukrainian newcomers, and immigration@gov.nl.ca for those looking to assist families displaced by the conflict.

I have had people ask me for reputable places to donate money to help people in Ukraine and those relocating. The Ukrainian Canadian Congress is a good start.  I have donated to the Canadian Red Cross  for humanitarian efforts in Ukraine. I have also donated to the Friends of Ukraine Defence Fund, which supplies armor and helmets as well other supplies to those defending Ukraine.

Whatever you can do, however small, will help. I’m reminded of the story of the little boy who goes to the beach with his father and they find millions of starfish stranded on the sand, dying. The father picks one up and puts it in the water and the little boy says, “why are you doing that? There are too many of them. It won’t make a difference.” And the father says, “it makes a difference to this one.”

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New: 20% foreign buyers tax in Ontario & Cooling Off Period for Buyers in BC – what does it mean?

 Yesterday, the Ontario announced it would be increasing the Non-Resident Speculation Tax rate to 20 per cent, province-wide. Currently, the Non-Resident Speculation Tax rate is 15 per cent and only applies to homes purchased in Toronto and and the GTA by foreign nationals and foreign companies.

Rebates for new permanent residents of Canada and related exemptions will be available to eligible foreigners, eg. foreign nationals studying and working in Ontario who become permanent residents of Canada to apply for the rebate.

What will this do to the Ontario market? It may drive some investors to other provinces, outside Ontario, the same way that the foreign buyer tax drove some buyers from the GTA to Ottawa. But while it slowed things down in the GTA, it wasn’t for long. Prices have soared there and the average cost of a detached home in Toronto is now 1.8M, 1.3M for a townhouse.

And there will probably be loopholes: my nephew asked whether a Canadian company, with a minority stake owned by foreign nationals, would have to pay the tax (I don’t think so) and if a sale of shares by the company to a foreign owner, if the title stayed with the company, would invoke the tax (again, above my pay grade, but I don’t think so). But even without any loopholes, I suspect that for investors looking for a safe haven in these perilous times, a 20% one-time surcharge will simply be seen as the cost of doing business — it’s a business write-off.

Meanwhile, in other news, BC is introducing a cooling off period for buyers, ostensibly to give them time to get financing and home inspections done.

Anyone buying these days should be pre-approved for financing before putting in an offer, so I’m not sure I understand the reasoning. A buyer who doesn’t have financing lined up and then backs out is a seller’s nightmare. And instead of a cooling off period to let the buyer get a home inspection done, why not mandate that all sellers be required to obtain and provide a home inspection to interested buyers? The industry could create a list of approved inspectors, same way we do currently for ESA inspections.

If a buyer with cold feet drops out, as sometimes happens, the seller could be in real trouble if they have to close on another deal, and if the next purchaser is entitled to another cooling off period too — well, that could be a disaster. The government is treating a house purchase like a door to door vacuum sale, and I think that’s a mistake.

Sellers sometimes have to sell quickly and need a short close; this delays it. Buyers who get cold feet and back out could cause a domino effect, where sellers who have sold and need a firm deal for financing could end up unable to close on their new homes. And as a colleague pointed out, a cooling off period means a buyer could put bids in on a number of properties, driving prices up, and then back out of all but the one they like the best.

Will there be an opting out provision for the sophisticated buyer, who doesn’t need or want a home inspection? How about for the cash buyer, who doesn’t need financing? If not, how is this mandatory cooling off period fair to the seller? And if there is an opting out provision, will that provide a loophole that will defeat the purpose of these provisions?

Like the expansion of the foreign buyers tax, this initiative is also intended to cool down the housing market. Maybe it will work. Maybe not. But I have a feeling we’ll see unintended consequences.

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Holding off on offers – should I consider bully offers or not?

I have been getting some questions about what bully offers are and how bully offers are dealt with.

We call the time we sit down to go over offers with the seller “presentation” and that date/time is the “presentation of offers.” A bully offer is a pre-emptive offer, i.e one that is submitted before the time set for presentation. The answer to how bully offers are dealt with depends on the wording in the listing which is based on the seller’s written instructions to their listing agent.

Let me decode the language you’ll see in Ottawa listings where multiple offers are anticipated because that will tell you whether a seller will entertain a bully offer or not.

Before listing on MLS,  if the seller wants to hold off on offers to generate multiple offers, they need to set a time for when offers will be presented, considered and dealt with. The seller also needs to figure out if they want to hold off on all offers until X date/time, and not deal with any offers at all before then, or if they want to look at and consider bully offers that might come in before that date/time.

A pre-emptive offer is usually pretty strong as the buyer is asking the seller to risk not getting a higher price by waiting. (I’ve had several situations, however, where pre-emptive offers turned out not to be as high as the ultimate price we got by waiting until the presentation date we’d set initially, so this is a discussion the seller really needs to have with their realtor). Once the seller has reached a decision, the seller has to sign written instructions for the listing agent that are clear as to what they want and what they expect.

Do they want to consider pre-emptive offers? If so, you’ll see this wording in the MLS listing:

Offers are to be presented at X date/time however Seller reserves the right to review and may accept pre-emptive offers.

Now, in this situation, if a pre-emptive offer comes in, the seller doesn’t need to accept it. They can look at it, and if they decide it doesn’t meet their expectations in terms of price, closing date, etc. or they think they can do better on offer day (again, X time/date, the time set for presentation of offers) they can decline it. If that’s the case, the listing agent doesn’t have to do anything at all. The wording says the seller has the right to review it and “may” accept it, but that means they can reject it too.

However, if the seller thinks the bully offer is strong enough that that they likely won’t do any better by holding off,  and is willing to accept it, they can’t just sign off on it. Instead, the listing agent has to find out from the seller when they want to deal with it formally, and get a new set of instructions in writing to that effect.

Usually bully offers have a short irrevocable period (the time during which the buyer is bound by the offer, after which if not accepted or countered, the offer is null and void), so that usually means moving the time for presentation forward by quite a bit.

The listing agent then has to change the MLS listing to indicate that the time for offer presentation has changed, and what the new time will be. Anyone who has seen the listing or booked a showing or expressed interest in it must be notified, so that they have a chance to compete by submitting an offer. One way or another, the seller knows they have an offer that is acceptable to them, and that the property will sell whether other offers come in or not. Lucky seller!

Some sellers don’t want to deal with pre-emptive offers, however, because they know their best price will likely come with multiple offers on X date/time instead. If that’s so, then the listing agent will have them sign written instructions that say offers will be delayed until X date/time with no conveyance of pre-emptive offers.  The wording in the listing will say this:

No conveyance of offers prior to X date/time.

This means the seller has instructed their listing agent not to convey pre-emptive offers to them at all, even if a bully offer comes in. All offers will be held until X date/time and only then will they be presented to the seller to consider. If someone tries to submit a bully offer, the seller’s written instructions are clear — the listing agent is supposed to tell them they’ll have to wait and resubmit. The wording of MLS Rule 8.2 precludes the agent even notifying the seller of the pre-emptive offer: “conveyance includes, but is not limited to, presentation, communication, transmission, entertainment or notification of.”

Finally, you will sometimes see a listing that says this:

No conveyance of offers prior to X time/date subject to exceptions and conditions.

This is more rare, but it means the seller will only consider a pre-emptive offer that meets specific terms. This is usually a reserve price, eg. the seller will only consider a pre-emptive offer that is over a million. The listing agent will disclose this information, sometimes in the salesperson remarks, or by sending out notifications to those agents who book showings.

If such an offer comes in, and it meets the seller’s reserve price or other conditions, then the same rules apply: if seller is happy with the offer and wants to deal with it, the listing agent has to get new instructions in writing changing the time for presentation, notify everyone who has seen the property or expressed an interest in it or booked a showing that the time has changed, and update the MLS listing, so that everyone has a chance to compete.

In this hot seller’s market, I think you’ll find that the majority of sellers are simply holding off on offers until X date/time, but there are some who want to be able to consider pre-emptive offers. Those are sellers who are usually a bit worried that the market could shift suddenly, or who are really inconvenienced by showings and can’t wait for the process to be over.

In my experience, everyone who has submitted a pre-emptive offer has come back with a better one on the day set for offers and they’ve often lost out to a higher bidder.  But whether to allow bully offers or not is entirely up to the seller. Because it may or may not result in a lower price than might be achieved by holding off on offers, it’s important to canvas all the options with your realtor before deciding which way to go — at the end of the day, it’s your decision!

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Do you have to disclose if your basement flooded?

I’m going to say yes, and describe a nightmare scenario I learned about recently.

The basement in a newer home in my neighbourhood flooded about a year ago. Remedial work was done, which involved installing a new system to pump water out to the road, and the owners tearing out everything and renovating the damaged basement. This is a wet area: everyone has sump pumps to deal with the melt.

The owners sold the property a few months ago, with the sale set to close soon. The basement has now flooded a second time and it’s only a two year old home. It turns out that there is nowhere for the water pumped out of their home to go because of the drainage systems in the new subdivision — because of the way water drains along the main road, the water they pump out is diverted right back to their lot.

It won’t be an easy fix. It will likely involve the township, expert hydrogeological studies, and months to sort this out. While it’s a new home, still under Tarion warranty, the builder is denying any liability and says it has nothing to do with him. Needless to say, the sellers are worried the buyers won’t close the deal. Can the buyers refuse to close? Are the sellers liable?

I think the answer depends on whether the sellers disclosed there was a latent defect when they listed the home for sale. From what I understand, the buyers had a home inspection. But since the basement was newly renovated, it’s reasonable to assume nothing turned up to cause any concern. However, a latent defect is hidden and cannot be observed on a normal home inspection. If the seller knows about it, it requires disclosure to avoid liability.  (In Quebec, note that sellers can be liable even for latent defects they don’t know about).

As our Registrar states:

As a seller, you are required by law to disclose any known latent defects that could make your home dangerous or unfit for habitation. Examples of latent defects could include a basement that floods during heavy rainfalls, a structural problem with a wall or a chronic mould outbreak. If a seller knows about a latent defect that makes the home dangerous or unfit for habitation and fails to disclose it, they put themselves at risk of being sued by the buyer.

If the buyers were made aware of the previous flooding by the sellers, caveat emptor applies: buyer beware. They knew there was a previous problem and proceeded anyway.

But what if the sellers didn’t disclose the previous flooding because they thought the problem had been fixed? Is it still a latent defect requiring disclosure?  I honestly don’t know.

Generally speaking, a seller can’t be held liable for latent defects they weren’t aware of. Here, the sellers were definitely aware of a previous incidence of flooding. However, it seems pretty clear they took steps to deal with it, and had no idea the problem persisted until the home flooded again. That said, whether it was legally required or not, I think they should have disclosed it anyway.

I think that any fact that might influence a buyer’s decision to proceed should be disclosed. Can reasonable people disagree? Absolutely. But if simple disclosure can prevent a lawsuit, I’d rather take that route than wait for a court ruling to know for sure who’s right.

If you have had any serious prior issues with your home, talk to your realtor before listing about whether you need to disclose them. And if you’re still not sure, talk to your lawyer. Don’t assume that because you repaired the problem, you don’t need to disclose it to a buyer. This situation establishes pretty clearly that a recent fix may not be the long lasting one you’d expected.

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Should I buy first or sell first in this crazy market?!

I get lots of questions about whether someone should buy first or sell first in this crazy market. My advice is buy first. If you sell first, you’ll get a great price, but you could end up homeless. Here’s why.

Inventory is lower than it ever has been. You may have to look for quite a while before you find something you like. And if you do find your dream home, you may not be able to get it if you lose out in multiple offers. This can happen repeatedly. Prepare to be frustrated.

To save yourself some heartbreak, find out from a mortgage broker what you can afford and get pre-approved before you start looking. (I don’t mean going online and inputting some numbers on a bank website: I mean getting a proper pre-approval, which means gathering together tax returns and employment/investment income as well as debt load info and whatever other information the mortgage broker needs.)

You want to be able to proceed on offer day without a financing condition: just about everything now is selling without conditions. Keep in mind that in this situation, if successful, you still have a house to sell. Make sure you talk to your mortgage broker about whether you can afford to carry two properties if you need to. Sometimes closing dates don’t mesh or there is work to do on the new home before you move in.

If you’re lucky, there will be a recent home inspection available for the property you’re interested in. If not, you might be able to arrange one before offers are presented. There is a risk: if you pay for a home inspection and lose out, you’ll be out of pocket. But in this kind of market, as noted, it’s very hard to be successful with an offer that has any kind of condition in it. This is because other buyers are prepared to proceed without conditions, and a seller will almost always take a firm deal over a conditional one because it provides them with certainty.

Keep in regular touch with your agent. Prices can soften suddenly and that’s the best time to jump. I had buyers who were able to get a home without multiple offers because they bought days after the Ukrainian war started. The market slowed down for about a week due to uncertainty.  The following week, similar homes were selling with multiple offers for over $ 40K more than they paid. These dips aren’t frequent but there have been three of them in the past twelve months where sellers who were expecting multiple offers didn’t get them (see my last post).

If you are the cautious type and want to sell first, you will most likely sell very quickly, provided that kind of market shift doesn’t happen during your listing. (And yes, you still need to declutter and make the property look its best to get top dollar.) If that’s the route you decide to take, and you haven’t yet bought, be sure to ask for a long closing date, eg. 90-120 days to give you time to find something. But have a back up plan ready in case you can’t find a new home within that time frame.

Finally, be prepared to move out for five or six days to facilitate showings. You can’t possibly work from home in a market this hot – there could easily be 30-60 showings over the five or six days you hold off on offers. To avoid that, I’ve had some sellers ask me if they should sell privately or through an exclusive listing with their agent. I don’t recommend it: you will get a higher price if you put the listing on MLS and expose it to more buyers, more than enough to make up for the agency commissions.

It’s a great market for sellers; a very tough market for buyers. Don’t try to do this alone. Be sure to work with a really good agent!

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What’s up with the Ottawa Real Estate Market?

Alright, so everyone is asking me: what’s up with the Ottawa real estate market? Are prices going to continue to go up, with multiple offers everywhere, or will we hit a correction?

The best way for me to explain the market since COVID is to show you the Home Price Index for Ottawa. This is a composite that includes areas as far away from downtown as Russell and Fitzroy Harbour, but the trends are the same everywhere in the city, as I will demonstrate with a couple of other graphs. This one first:

So, right after the lockdowns in March of 2020 started, you can see how the market took a bit of a dive. We had been in a red hot market prior to this, with multiple offers on everything, but people in this area don’t like uncertainty. Prices dropped and things stalled for about a month or so, and then the market started to rebound as people adjusted to the new normal in May.

By June, you can see how prices really start to pull ahead, and then from December 2020 to April 2021, they took off. COVID restrictions started to ease in May, 2022 and we thought life would get back to normal. People who had felt desperate to move, to get more space, to be in the country with bigger yards away from other people — all those things that had propelled higher sales prices began to ease. We had a dip in June where it took longer for homes to sell. I saw a roughly 5% price adjustment in townhomes, and I had buyers who were actually able to buy properties with financing and home inspection conditions.

Then the next COVID wave hit with a more contagious variant. Once again, people who were thinking about moving began to look again urgently, but sellers were sitting tight — no-one wanted to have buyers with Omicron wandering through their homes. By the end of December, you can see the impact of this lower inventory and higher demand by serious buyers – we saw multiple offers again, and prices soared.

We don’t have the March figures yet, but I’ll bet we see another short dip for a week or so, just after the Ukrainian war started, that period of adjustment while people get over the shock of the unexpected, and another rise in prices.

Here’s a look at the Home Price Index for a specific area: I just randomly chose Hunt Club. And as you can see the Ottawa-wide trend applied here as well:

Now here is a look at Tunney’s Pasture/Ottawa West over the same time period. You can really see the ups and downs in this one in the upper blue line: if you made an offer in April or August of 2021 or February of this year (again, in the days just after the war started), you got a pretty good deal.

All of which is to say that Ottawa responds to uncertainty by shutting down, but it adjusts quickly and markets then heat up fast.

That’s where we are at now: multiple offers, seller’s market, properties selling quickly. I can’t see anything that is going to change this situation in the short term. Interest rates are going up, yes, but the most recent rate increase added $12 to every 100K of financing — that’s not going to be enough to make a difference to most people.

Add the likely demand from international buyers hoping to find a safe haven , and the need to find housing for refugees from Ukraine and elsewhere, and the bottom line is that we simply don’t have enough inventory to meet demand, and won’t in the near future.

That doesn’t mean there won’t be dips again, I just can’t predict when. I had lucky clients who managed to buy during the dips this year and last — in both instances, the listing agent was expecting multiple offers and only got ours. In those two instances, my buyers bought just before prices shot back up, and got really great prices. I’ve also had buyers who’ve been able to get properties despite multiple offers for less than they thought they would go for. But those dips, as you can see, don’t last long.

The volatile market does mean you are best off working with a realtor who is keeping a close eye on this market. Sometimes we’re having to go with our gut instincts and what we are seeing on the ground when we give advice; this market can shift in a heartbeat. If you’re a seller, you need a good realtor just as much, perhaps even more. If you’re only looking at list prices, and don’t know what properties have sold for, you’re going to be way off base — homes in Ottawa are selling for tens to hundreds of thousands over list price, depending on the property.

It’s a crazy market!

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Well, isn’t this a nice surprise!

I had no idea this award existed, so it was a very nice surprise to discover I’d won it! Couldn’t do it without my wonderful clients — I have the best job ever, one where I never feel like I’m working. Thanks to all of you!!!!

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Building a new deck!

Well, as I’m sure you all found out, due to the pandemic, getting renovations done this year was expensive, and there were often delays. I bought a house a year ago that had a balcony at the back but no egress, so we cut a hole through and put in temporary stairs.

I took the winter to work out a design plan with Julia Duncan, an interior designer (Thomas Duncan Construction) and she came up with a really interesting plan: one that had an upper tier extending out from the existing balcony, and a lower tier that would run at an angle to the tree line. I loved it! Thomas (with Julia’s help) got to work in the spring, once we had engineer’s sign off and permit approval from the Township of Beckwith. Of course, along with higher lumber prices (insane!) we had rain. I loved how Thomas and Julia set up this tent so they could continue to work during inclement weather.

We did, however, run into some other problems than the rain. We found out the well line ran right where we had planned to put posts, so the design had to be tweaked to avoid it. Then the drilling company that came to install the helical posts hit bedrock. The engineer initially told them that they could set the posts on the bedrock, which they did, after which Thomas and Julia went back to work, installing the upper deck. Then the engineer called to say he’d changed his mind and now wanted a four foot piece of styrofoam under the posts, so the company had to come back, remove the posts and start over.

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We kept the metal railings and used them on the extended upper tier as well as along the new stairs. You can see how much wider the new deck (the upper tier is) now. And that brown lumber will fade over time to match the pressure treated wood from the original balcony.

The steps on the stairs are wider and deeper than usual, by design. I had found the temporary steps felt a little steep, and I want to age into this home gracefully. Thomas said he liked the wider/higher steps so much he plans to use them in all his deck builds.

One last minute change I made was to extend those wide steps on the lower tier. Originally, there was a very long expanse of railing to the left and the steps were narrower. We decided to break that up by expanding the wrap-around steps on that side.

I think the whole thing looks beautiful! It looks as if it was part of the original design, and not an add-on, which is what we strive for, right?

The deck is not quite finished. There will also be a sliding panel at the top of the stairs that matches the railings so that I can keep the dog contained, and a sliding barn door at the side of the deck to create and close off a storage area under the upper deck. I ordered a set of custom metal screens from artist Carol Nasvytis from Soul Metal that have a dandelion pattern on them (we collaborated closely on the design and I think it’s awesome!). There are three of these metal panels and Thomas will frame them in to cover the gap between the upper and lower deck when he has time next spring.

The upper deck has really expanded my living space — it’s a lovely spot to curl up with a book and enjoy a glass of wine. And the lower deck is perfect for entertaining!

Kevin Segreto, who’s done my landscaping from years (Segreto Maintenance), created a couple of small flower beds for me, and I planted perennials there. There’s a new addition under construction now (more on that later) and the plan is to link the beds at the side of the deck to the beds around the new addition when it’s all done (also next spring).

So – almost done and looking forward to completing this project next year, but I certainly enjoyed it this summer.

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