Many factors play roles in property market values

There are many things that can affect the market value of a property, ranging from interest rates to home improvements to the mood of the seller. Below are some of the key dynamics that tend to have the largest influence on home values that every homeowner or aspiring homeowner should be aware of.

1. Increase in disposable incomes

This is one of the most important indicators. If a town’s average disposable income is increasing faster than the national average, real estate prices are poised to follow suit. Key indicators: a) increased average income; b) decreasing income tax rates; c) increasing retail sales. Be wary of towns where demand is driving values upward while the average income is remaining flat.

2. Job growth and migration

It pays to read the news regularly in the town you would like to invest in or have invested in. Be on the lookout for announcements of new jobs, major expansions, or new employers. Ideally you can purchase in areas where the population is growing faster than the provincial average and where the reputation of the town, city or region is strong.

3. Political climate

Business-friendly politicians generally equal real estate friendly investment areas. Look for regions where development is wanted, not shunned. Look for areas with forward-looking economic development offices where they sell the area to potential employers. Progressive towns attract business while other towns lose it.

4. Infrastructure expansion

Here’s another reason why reading local news in areas that you plan to invest in can pay off for you big time. Look for planes, trains, highways, sewers, land annexation or expansion plans. Don’t buy until the construction begins or until plans have been completely firmed up, it can be dangerous to buy based on rumors alone. Trains and rapid transport are huge opportunities (towers that spring up at subway stops as an example). To enjoy a nice price increase relative to other areas of the town, city or region not affected by the infrastructure enhancement, try to buy within 800 meters of the station, or exit/entrance etc.

5. Areas of renewal

If chosen correctly this consistently provides the biggest bang for investment dollars. This is best defined as areas that are moving up from one economic class to the next, often described as ‘tough, yet funky’. In these areas, you’ll witness a mix of run down to well-kept, recently fixed up properties. Often you’ll see these areas mentioned in the news, every city and most towns have areas like this. The local perception is the hardest to change, so often locals miss the opportunity.

6. Mortgage interest rates

Low interest rates allow a greater proportion of renters to become homeowners, which in turn can lead to an increase in home sales and therefore push prices higher. That said they don’t significantly increase mortgage costs (on a $100K mortgage a quarter per cent increase in rates only increases the payments by about $14). With interest rates historically low for the past several years, this is less of a factor now than it would be when rates first dropped.

7. Maximizing value and zoning opportunities

Sophisticated real estate investors look first at a properties physical attributes, and then they examine how they may be able to change the property to optimize profit way beyond just renovations. As an example, an old hotel that is converted into loft apartments (advanced), or taking a single family home and converting it to a duplex (less advanced but still can be tricky). You need to know zoning bylaws and tenant regulations to make the transition successful. A small percentage of properties will have this potential, but make sure you have the required finances and expertise before taking this on, or find a partner.

8. Buy wholesale; sell retail

You can buy properties at wholesale any day of the week in any town across the country, there are many investors across Canada who make their entire livings this way. This can include buying rundown properties and fixing them up, developing raw land or buying properties that are going to foreclosure. In Canada, accessing foreclosure properties is tougher than in other countries such as the U.S. The best opportunity for this in Canada is the pre-foreclosure market, some investors will advertise targeting distressed homeowners and then provide them with a much needed opportunity to sell.

9. Stand out

Quality marketing is a real estate investor’s best kept secret. You must be proficient to get above market rents and values for your properties. An example of this would be how two incredibly similar houses in the same neighbourhood can easily sell or rent for a 5-10% variance from each other. Matching your message to your prospective target in a compelling way is critical.

10. Renovations and sweat equity

Areas in transition are great sources for homes that need improvements. Look for well-built but neglected homes. Keep the work simple and in line with what a renter or owner is looking for. Remember, smaller aesthetic investments such as in paint, flooring or carpeting can provide the biggest bang for your buck. Landscaping and exterior work also typically provide a solid return.

Jean-Guy Turcotte is an Accredited Mortgage Professional with Dominion Lending Centres Regional Mortgage Group.

Just Posted

Central Alberta Theatre is gearing up to present Neil LaBute’s Some Girl(s)

Opening night is April 20th with shows running through to May 5th.

Burman U prof publishes international development book

The Development Trap: How Thinking Big Fails the Poor looks to challenge perceptions

WATCH: Check out this week’s What’s Up Wednesday

A weekly recap of the week in news

WATCH: Red Deerian receives award for aiding RCMP officer in arrest

Lonnie Amundson, rugby player, tackled a fleeing suspect to help ailing officer

Man threatens to kill partner, kids, dog

This is a very serious offence: Judge

WATCH: Red Deer’s latest ‘Ghost’ statue unveiled at Servus Arena

‘The Face-off’ is the 11th ‘Ghost’ in the notable bronze series

Black Press Media acquires two new Alaska newspapers

New Media Investment Group to acquire the Akron (OH) Beacon Journal while Black Press Media takes on daily newspapers in Juneau and Kenai Alaska

Men arrested at Starbucks say they feared for their lives

Rashon Nelson and Donte Robinson were arrested in a Philadelphia Starbucks, becoming viral video

Did a Canadian shoot down the Red Baron? A century later, debate hasn’t quit

Om April 21, 1918 two Canadians in their canvas-covered Sopwith Camel biplanes engaged the enemy

VIDEO: Canadian teen lands invite to Royal wedding

Prince Harry and Meghan Markle have invited Faith Dickinson, founder of Cuddles for Cancer

Ponoka County worries about Prussian carp in Gull Lake

Alberta Environment delays pumping due to at least 1,000 carp found near the pump channel inlet

Health committee cheers idea of national pharmacare program, but cost an issue

Conservative health critic Marilyn Gladu says she fears costs could be far higher than $19 billion

Canada’s oldest blood donor says it’s all gain, no pain after decades of giving

Great-grandmother and Coquitlam, B.C., resident has been donating blood since the late 1940s

Most Read