For Steve Klein, owner of Revolution Carpentry and Construction, the answer to the tear down-vs.-renovate debate is rooted firmly in the age old real estate mantra: Location, location, location.
“It really depends entirely on location, quality of the foundation, quality of the house [and] character of the house,” says Klein. Lately, he is seeing more of his clients opting to focus on the medium- to long-term investment game by first purchasing in a favourite location, then assessing the home’s bones and spending money on energy efficiency while sitting on the property for a while.
“Buy a house in the right area. You can improve it slowly, you can budget for it, you can build up for it,” Klein says.
Currently, Edmonton is in a buyer’s market, and the economic crystal ball watchers at the Canada Mortgage and Housing Corporation (CMHC) don’t see an end to this until 2017. The cost of an average single family detached home is estimated at between $373,600 and $409,600 in 2016. Couple these statistics with new rules that came into effect in February 2016 that require homeowners to make a 10 per cent down payment on any portion of a mortgage over $500,000 in order to qualify for Canada Mortgage and Housing Corporation insurance (along with the customary five per cent under $500,000), and it’s more difficult for entry-level buyers to buy, tear down and sell a house for more than half a million dollars.
Another key to selling homes is to ensure prospective owners aren’t going to lose money once they move in. Klein says that his clients are paying him to make renovations more energy-efficient.
“Doors and windows and proper roof ventilation system are the most important [energy efficiency] factors. My clients are doing doors and windows. I’m trying to push things that people aren’t always ready to invest in. Spray foam, for example, increases your R-value substantially. It’ll warm your house substantially,” he explains. “But people are afraid of the [upfront] costs. Energy-efficient furnaces, again, are a big investment, but everyone is doing them.”