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7 Worst Home Design Mistakes These Real Estate Experts Made – GOBankingRates

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Omer Reiner, a licensed realtor and president of FL Cash Home Buyers, LLC, a real estate investment company based in Ft. Lauderdale, Florida, said his worst home design mistake was adding a pool to one of his investment properties.

“Pools almost never provide a good return on investment if you are fixing a house to sell to someone else,” he said. “Many people want a backyard or even a pool they themselves would like for their personal needs. Having a pool already will limit those possibilities.”

Reiner once added a shallow pool to a house in hopes that it would be attractive to retired people who could use it as a place to exercise. However, this made him miss out on a potential buyer who was an avid swimmer and hated the idea of a shallow pool.

“I missed out on a good buyer and needed to sell the property for less,” he said.

Reiner said that an in-ground pool only adds 5% to the home’s value, on average.

“Since most in-ground pools cost around $40,000 — over 10% of home value, even in today’s market — it is hardly worth it,” he said. “In addition, pools can be liabilities. Even if a person is injured in your pool after trespassing, the owner could be liable if proper safety measures are not taken.”

Now, Reiner only fixes up pools at houses that already have them, or even fills in existing pools. “No real estate investor should ever do any differently,” he said.

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No housing crash on the horizon – Advisor's Edge

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Amid skyrocketing investor demand and people’s fear of missing out (or FOMO) on real estate, what occurred was unprecedented: “We [had] never seen houses out-earn people, but we did. And that has set us up for where we are today,” Rabidoux said.

The medium-term picture so far isn’t entirely clear, he conceded, but Rabidoux doesn’t expect a housing crash. While home sales across Canada have declined by more than 40% in 2022 and active listings  have been weak as well, he noted that the plunge is from “peak levels.”

Further, “The declines [in real estate activity] are exaggerated,” in part due to distressed sales — where homeowners have been forced to sell in a weak market — and those transactions are “working themselves through the system.”

Rather than home prices bottoming, Rabidoux said they’re slipping “back to decade averages.” Demand is “very low” and “has to bounce,” he added, especially if inventory levels keep recovering as they began to in early 2022. Still, new home listings would have to rise almost 50% and reach pre-Covid levels for there to be true oversupply dangers, he explained.

So what we’re really seeing currently is “an interest rate story” where the fear of being burned by real estate is weighing on demand in the short term and overshadowing that FOMO that emerged, Rabidoux said.

But there are risks to watch out for, given the sizeable chunk of GDP activity that real estate has assumed.

First, Rabidoux highlighted what he deemed “a record gap” between residential investment and business investment, noting that “housing is sucking capital from productive investments” that could actually help build the economy. In particular,  real estate transfer costs are “triple the long-term average (being around that 3% level), so have become “nearly as large as core business investment.”

On top of that, there’s the massive affordability issue for clients in the face of rising interest rates and, thus, mortgage payments — weighing on their ability to consume and prop up the economy.

“Canadian households are extremely levered,” Rabidoux indicated, “and not just by our own historical standards.” The household effective interest rate is sitting at heights last seen in the 1990s, substantially affecting “even borrowers on five-year fixed mortgages.”

So how can advisors guide clients? With discretionary spending in for a pinch, cash flow analysis is of great value, as is taking a look at how, according to Rabidoux, people’s balance sheets are “more exposed to housing than ever.”

With housing weakness set “to break stuff” and there being “nowhere to hide from interest rates,” Rabidoux said to expect possible economic retraction of 1%. (An outlook session also from the IAFP symposium that was led by Pierre Cléroux, vice-president of research and chief economist at Montreal-based BDC, similarly suggested downside risk of a 1% decline for 2023, with an upside of 1% growth.)

Investors will need to brace for medium-term pain as the economy resets, will likely end of up paying more on their existing homes than expected and will need support with the psychological effect of perceived loss of value in their real estate investments.

On the upside, he added, while there could be a rise in consumer insolvencies from current levels, he suggests that “credit trends look very good for now.”

A piece of advice was it’s likely “not a good time to buy big-ticket items,” where investors will lean on savings amassed throughout the pandemic to ride the inflation, interest-rate and market volatility wave.

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Expanding access to real estate sales and listing data benefits competition and consumers alike – Financial Post

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Real estate portals generate competition, inform buyers and draw even more attention to listings

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The owners of real estate sales data in Canada have gone to great lengths to restrict unauthorized access to and use of that data, but the Competition Bureau and many within the industry have long argued for freer access to data to enhance competition.

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The matter seems far from settled despite years of litigation and rulings. As a result, some real estate boards continue to file legal notices against property technology companies that try to gain access to their data and remind them of the integrity of their digital infrastructure.

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Real estate transaction and listing data in Canada is disseminated via the Multiple Listing Service (MLS) systems, which are owned and maintained by the real estate boards. A collaborative agreement facilitates the sharing of data between and amongst boards. Realtors usually register with one or more boards and then become eligible to list properties on the MLS system, which can then be reviewed by prospective buyers and their agents online for free.

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The boards, of course, are motivated to protect the integrity of data they collect, maintain and disseminate, either by themselves or with help from others. The improper use of that data or access by unauthorized entities is a valid industry concern, but so is the commitment to promote competition and prevent monopolies.

A recent industry-sponsored paper by Paul Johnson and Anthony Niblett pointed out the success of the MLS system lies in its “network effects.” As more homes are listed on the system, more buyers are attracted to it, which motivates more sellers to list their properties. This reinforcing loop of more listings leading to more buyers leading to even more sellers creates the so-called network effect.

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The authors offer three recommendations to preserve and expand this system’s value. First, it recommends realtors be required to list all properties on MLS. Currently, the system operates as a voluntary listing service, so realtors can decide to handle the transaction alone or within their brokerage.

Before the real estate industry embraced the internet, the practice of keeping listings off the MLS system was prevalent among large brokerages that would double end the sale by having agents from the same brokerage represent the buyer and the seller. However, such practices are unlikely to be in the best interests of consumers, so requiring all properties to be listed (with some exceptions) is a worthwhile consideration.

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Their second recommendation is that MLS “must continue to leverage highly effective portals” through which real estate data is disseminated. The most recognizable real estate portal in Canada is Realtor.ca, which is operated by the Canadian Real Estate Association, the sponsor of the study.

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At the same time, proptech companies and digital–first brokerages also provide listing data with additional information about neighbourhoods and previous transaction prices through virtual office websites. Portals generate competition, inform buyers and draw even more attention to listings. The industry, therefore, benefits from such portals.

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The third recommendation is about limiting access to MLS data. The authors said unfettered access to listing data might discourage sellers from listing their property on MLS, but we believe such privacy concerns are a red herring.

Sellers willingly consent to have photographs of their bedrooms and washrooms made freely available online to anyone in the world when they list their properties on MLS. If privacy was a concern, sellers would be more cautious. Yet the millions of homes listed on MLS containing photographs, 3-D renderings of floor plans and videos suggest privacy concerns are not a deterrent.

The authors said “any entity whose access to MLS Systems is used for the transaction of real estate would presumptively create value and should (continue to) have access.” But realtors are not the only ones who create value. Most real estate transactions do not take place without home inspectors, lawyers, financial institutions and others getting involved.

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With advances in artificial intelligence and communication technologies, the real estate sector is ripe for constructive disruption that will benefit consumers while safeguarding the intellectual property rights of those who collect and store real estate data. Restricting the definition of value-adding entities to those who market real estate is not in the best interest of consumers.

Murtaza Haider is a professor of real estate management and director of the Urban Analytics Institute at Toronto Metropolitan University. Stephen Moranis is a real estate industry veteran. They can be reached at the Haider-Moranis Bulletin website, www.hmbulletin.com.

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Demand is falling, yet housing stills faces tight supply – Calgary Herald

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For Calgary buyers, selection among listings is unlikely to get better over the next several months, a local realtor says.

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A new report suggests ongoing low supply in Canada’s housing market — Calgary included among them — may be reaching a crisis point despite falling demand in recent months.

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“The bottom line is there is a real lack of supply,” says Elton Ash, executive vice-president of Re/Max Canada.

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“Although buyer demand has fallen off with softening prices, the lack of inventory — rentals included — is likely to continue because, no matter what the economy does, Canada’s growing population still needs housing.”

Ash pointed to the recent Re/Max Canada 2022 Housing Inventory Report as evidence, finding supply levels in seven of eight major markets are currently below the 10-year average.

That includes Calgary, where active listings in July were 26 per cent below average levels for the month from 2013 to 2022.

Ash says low supply, coupled with low interest rates, have driven the housing market for several years, but the pandemic exacerbated the situation, sending demand into overdrive.

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Today, even with higher borrowing costs and sales down significantly from their peak in early spring, supply levels remain historically low.

“In other words, we don’t anticipate there to be much downward pressure on housing,” Ash says.

“If anything, Canadians will become re-accustomed to more normal interest rates, and sales will likely pick up again in the spring.”

Combined with population growth, driven by more than 1.3 million newcomers forecast to migrate to Canada by 2023, the nation’s housing shortage could reach crisis levels, he says.

Calgary is unlikely to be spared, with the report finding that the 7,069 active listings in July were significantly less than the 10-year average of more than 9,500 listings.

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Compounding the supply crunch is the fact that Calgary has seen among the highest population growth of major cities over the last 15 years, an increase of about 37 per cent.

At the same time, the city has among the highest one-person households — accounting for almost four in 10 of all homes — further contributing to supply challenges, the report highlights.

For Calgary buyers, selection among listings is unlikely to get better over the next several months, a local realtor says.
If anything, supply is likely to decrease much like it has already from July, says Richard Fleming, broker/owner of Re/Max Real Estate Mountain View.

“There are now about 4,000 active listings,” he says, referring to resale inventory as of Sept. 19.

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By comparison, the city had more than 5,500 listings at the same time last year, he adds.

“If you think supply will get better this fall — a busier season than summer — it’s not likely going to happen.”

One reason is that even though more people may house-hunt in fall compared with summer, sellers are generally not as motivated to list.

“If anything, listings come down because people don’t want to move during the winter or with their kids in school.”

Still, current market conditions do offer upside for buyers. Among them is buyers now face less competition than they are likely to face in six months, Fleming says.

As well, with prices down 20 per cent from the peak in March, based on September benchmark price data from the Calgary Real Estate Board, buyers now have a window of opportunity.

“I call it ‘a sale on real estate,’ ” Fleming says. “You’re not having to compete and you can get prices down on offers.”

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