Buying a home is a significant financial investment. The last thing you need is for it to turn into a money pit after you’ve already taken out a mortgage and started living there.
Over the last two decades of my professional real estate career, I’ve compiled a list of red flags to avoid during your home shopping journey. Some are obvious budget drains based on the type of property, while others are problems hiding deep below the surface and might only be uncovered during a home inspection.
To save you the trouble of finding out the hard way, here are a few warning signs on the types of homes you should never buy.
You’ll save money in the long run by identifying potential issues early. Here’s what you should be looking for during a home inspection:
✔️ Structural issues: Cracks in the foundation, walls or ceilings can indicate serious structural problems.
✔️ Plumbing and electrical systems: Old or faulty systems can be hazardous and expensive to replace.
✔️ Roof condition: A worn-out roof can lead to leaks and water damage.
✔️ Water damage and mold: These can cause health issues and require costly remediation.
A next-door neighbor of one of my real estate clients recently bought a home. To be more competitive position and speed up the process, they had waived an inspection. After a few weeks of heavy rain, they discovered the previous owner had buckets in the attic to catch the rain from the leaky roof. The buckets had filled up and were overflowing into the ceiling, leading to thousands of dollars in unexpected repairs. The situation could have been easily avoided with a thorough home inspection.
7 types of houses you should never buy
In a recent YouTube video, I went over the types of properties you should avoid. Here’s a summary.
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1. Flipped houses
Many flipped houses are poorly refurbished by inexperienced investors looking to make a quick profit. They often cut corners on visible and hidden issues. If you can see obvious flaws, imagine the problems you can’t see. Always make sure that permits were pulled and work was done by licensed contractors.
2. Houses on hills or near major streets
Properties on hillsides without proper structural reinforcement can be prone to erosion and landslides. Houses near major streets, freeways or railroads suffer from noise issues, which can significantly reduce their resale value.
3. Houses with foundation issues
Structural problems, such as cracks in the foundation, can be costly to repair. Avoid homes with significant foundation issues since they can affect the entire structure.
4. Houses with old galvanized plumbing
Galvanized plumbing can rust and lead to water quality issues. Eventually, these pipes will need to be replaced, which can be expensive.
5. Houses with electrical issues
Old wiring, like knob and tube or aluminum wiring, poses fire hazards and can be costly to update. Buzzing panels or visible electrical issues should be a red flag.
6. Houses with mold
Mold can be a severe health hazard and difficult to remediate. Extensive mold problems often indicate underlying water damage that needs to be addressed.
7. Houses that need a new roof or have flat roofs
Replacing a roof can be expensive, especially if the entire roof is flat, which can lead to drainage issues. Flat roofs have a shorter lifespan and can lead to ongoing maintenance problems.
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Always check on home insurance before you buy
Before buying a home, check if you can get home insurance based on its location. Some insurance companies deny coverage for homes in certain areas due to risks like floods or fires. Verify that all necessary permits were pulled for any renovations, and make sure there are warranties for significant appliances and systems. Never close on a home without doing a final walkthrough to confirm its condition.
Location, location, location
While the quality of a property is key when buying a home, location can’t be overstated: Even if you find the perfect home without any major issues, you can’t pick it up and move it to a more desirable place. Research the quality of local schools, safety and business investments in the area, which can significantly impact your home’s value as well as your quality of life. But also remember that neighborhoods can and do change over time.
Nothing is an absolute
There are always exceptions to the rule. Sometimes older houses can be better constructed than newer ones. Balancing location, affordability and the condition of the home is a challenge, but being diligent and informed will empower you to make the best decision.
The Canada Mortgage and Housing Corp. says construction of new homes in Canada’s six largest cities rose four per cent year-over-year during the first half of 2024, but housing starts were still not enough to meet growing demand.
The agency says growth in housing starts was driven by significant gains in Calgary, Edmonton and Montreal.
A total of 68,639 units began construction, the second strongest figure since 1990, however the rate of housing starts per capita meant activity was around the historical average and not enough “to reduce the existing supply gap and improve affordability for Canadians.”
The report says new home construction trends varied significantly across the markets studied, as Toronto, Vancouver and Ottawa saw declines ranging from 10 to 20 per cent from the same period last year.
Apartment starts in the six regions increased slightly, driven by construction of new units for rent, as nearly half of the apartments started in the first half of 2024 were purpose-built rentals.
But condominium apartment starts fell in the first six months of the year in most cities, a trend which the agency predicts will continue amid soft demand as developers struggle to reach minimum pre-construction sales required.
This report by The Canadian Press was first published Sept. 26, 2024.
TORONTO – One expert predicts Ottawa‘s changes to mortgage rules will help spur demand among potential homebuyers but says policies aimed at driving new supply are needed to address the “core issues” facing the market.
The federal government’s changes, set to come into force mid-December, include a higher price cap for insured mortgages to allow more people to qualify for a mortgage with less than a 20 per cent down payment.
The government will also expand its 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.
CIBC Capital Markets deputy chief economist Benjamin Tal calls it a “significant” move likely to accelerate the recovery of the housing market, a process already underway as interest rates have begun to fall.
However, he says in a note that policymakers should aim to “prevent that from becoming too much of a good thing” through policies geared toward the supply side.
Tal says the main issue is the lack of supply available to respond to Canada’s rapidly increasing population, particularly in major cities.
This report by The Canadian Press was first published Sept. 17,2024.
OTTAWA – The Canadian Real Estate Association says the number of homes sold in August fell compared with a year ago as the market remained largely stuck in a holding pattern despite borrowing costs beginning to come down.
The association says the number of homes sold in August fell 2.1 per cent compared with the same month last year.
On a seasonally adjusted month-over-month basis, national home sales edged up 1.3 per cent from July.
CREA senior economist Shaun Cathcart says that with forecasts of lower interest rates throughout the rest of this year and into 2025, “it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country.”
The national average sale price for August amounted to $649,100, a 0.1 per cent increase compared with a year earlier.
The number of newly listed properties was up 1.1 per cent month-over-month.
This report by The Canadian Press was first published Sept. 16, 2024.
