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

Alberta’s Pascale Paradis earns bronze in 7.5 km Female Biathlon

Canada Games action carries through to March 2nd

Alberta earns three medals in Long Track Speed Skating

Alberta now has 16 medals (6-5-5) and currently sits in second place of the medal standings

Calgary singer Shaye Zadravec gearing up for City appearance

Talented songstress to open for Latin guitarist Oscar Lopez Feb. 22nd

Team Alberta takes exciting victory in wheelchair basketball, remains undefeated

After three games in the tournament, Alberta is sitting in first place of its pool

Team Alberta adds nine medals on day two of competition at Canada Winter Games

Team Alberta had a solid day at the 2019 Canada Winter Games in Red Deer

‘Our entire municipality is heartbroken’: Seven children die in Halifax house fire

A man and woman remained in hospital Tuesday afternoon, the man with life-threatening injuries

Alberta investing $3.7B to move oil by rail, leasing cars

4,400 leased railway cars will move up to 120,000 barrels of oil per day by 2020

Make sure measles shots up to date, Public Health Agency says

Measles causes high fever, coughing, sneezing and a widespread painful rash

Payless to close 248 Canadian stores, saying it’s ‘ill-equipped’ for market

The company will begin closing stores at the end of March

UPDATED: ‘Violent’ B.C. man back in custody after Alberta arrest

Prince George man with ties to Vernon was being sought by police

After a week away, SNC-Lavalin questions await MPs returning to Parliament

Two have resigned already: Jody Wilson-Raybould was veterans affairs minister and Gerald Butts was Trudeau’s principal secretary

Chanel: Iconic couturier Karl Lagerfeld has died

He spent virtually his entire career at luxury labels catering to the very wealthy

NDP Leader Jagmeet Singh calls for public inquiry over SNC-Lavalin questions

Vancouver member of Parliament Jody Wilson-Raybould resigned from cabinet last week

Body found after apparent house explosion in Calgary, police investigating

Sgt. Dwayne Lepchuk declined to say whose remains were found

Most Read