Advantages of a Well Maintained Home

What are advantages of a well maintained home when selling?

  • Your home is more emotionally appealing in and out
  • You create a level playing field or advantage over competition
  • The home’s value is preserved, as inattention lead to costly repairs
  • Speaks of a safe and environmentally healthy home
  • Eliminates or lessens renegotiations due to deficiencies found
  • Results in a profitable net gain over time

What do maintenance, repairs and replacements cost?

Caulking windows, replacing a furnace filter, cleaning gutters and sealing an asphalt drive may only add up to a few hundred dollars a year and your time. At some point, replacing a new furnace, roof and central air can add up to thousands of dollars. Windows, kitchens and baths, flooring, and decorating eventually become worn and outdated, necessitating periodic and potentially costly remodeling.

Industry estimates on average annual cost over time

Industry estimates suggest that a homeowner should expect an average annual cost of 1% to 3% of the price paid for the home as a measure of anticipated cost for maintenance, repairs and replacements. A home’s age and condition at time of purchase can affect these averages.

How does overall maintenance and replacement affect value?

We certainly didn’t do an in depth study. For fun and as a small test, we looked at 8 mid-range homes, their initial price, the cost of maintenance over time, the homes age when purchased, length of ownership and selling price or appraised value. Here’s what we arrived at:

  • Homes new to 4 years old when purchased averaged an annual maintenance cost of $2,003 and 1.25% of initial purchase price. Their average length of ownership was 15 years and their average net gain in value after cost of maintenance was 3%.
  • A home 27 years old when purchased required updating and repairs. It had a length of ownership of 32 years and was 59 years old when sold. This home averaged maintenance and replacement costs of $2,891 per year or 8% of initial price and a net gain of 3.86% when sold.
  • Another home, 22 years old when purchased resulted in the following: Length of ownership was only 3 years, average annual maintenance/updating was $5,000 or 2.2% of initial price and net gain on sale was 3.2%.

The industry average of 1% to 3% annually for maintenance represents a good rule of thumb. As well, our little study produced a net gain of around 3% for average, mid-range homes.  

Eugen Pilato is with CENTURY 21 Today Realty Ltd. in Fort Erie, ON

Bank of Canada, Overnight Rate Target Announcement

Date: January 18, 2011

Bank of Canada, Overnight Rate Target Announcement

Source: Bank of Canada

Link to Release:

Summary: At its January 2011 meeting, the Bank of Canada announced that it is maintaining its target for the overnight rate at one per cent, citing “elevated risks” to an economy that is growing slightly faster than predicted last October. The Bank gave no indication of when rate hikes might resume, instead noting that “any further reduction in monetary policy stimulus [i.e. interest rate hikes] would need to be carefully considered.”

Analysis: In its Monetary Policy Report (MPR) that followed the Bank’s January interest rate announcement, the Bank unveiled a slightly modified economic outlook, with the Canadian economy growing slightly faster 2011 than was previously forecast. While growth is expected to be more brisk in the coming year, the Bank also acknowledged that the gap between current economic output and potential output in Canada is wider than estimated in their October (MPR). This prompted the Bank to make a slight downward revision in their outlook for inflation. Against this backdrop, the consensus view of credit market participants is that we will see a resumption of interest rate hikes in the spring or summer to ensure that consumer spending does not grow so quickly as to push the growth rate of consumer prices beyond the Bank of Canada’s long-term target of two per cent. It is important to note that there are diverging views as to the timing of future interest rate hikes. Some commentators have suggested that hikes will not resume until the winter of 2011, whereas others were calling for a hike in January.

Source: Toronto Real Estate Board

New Motor Vehicle Sales, November 2010 Release

Release Date: January 14, 2010

New Motor Vehicle Sales, November 2010 Release

Source: Statistics Canada

Link to Release:

Summary: In November, Canadian new motor vehicle sales rose 0.3 per cent to 135,823 sales, reversing October’s 0.3 per cent decline. Truck sales increased 1.2 per cent to 75,916 units in November, overcoming a 0.8 per cent decline in car sales. Sales of North American made vehicles fell by two per cent while foreign made vehicle sales rose 0.8 per cent. Sales in Ontario were up 0.4 per cent to 51,037 units.

Analysis: The trend for Canadian new motor vehicle sales flattened in 2010 as the number of monthly transactions moved into the range experienced in the three years leading up to the recession. Motor vehicle sales are often used as an indicator of consumer confidence. With this in mind, the fact that Ontario vehicle sales reached and remained at pre-recession levels in 2010, suggests that consumers remain confident in their future employment and income situations. Robust consumer confidence bodes well for the housing market, because people want to be relatively certain about their ability to pay for their home over the long-term through the use of a mortgage.

Source: Toronto Real Estate Board

Canadian Housing Starts, December 2010 Results

Release Date: January 11, 2010

Canadian Housing Starts, December 2010 Results

Source: Canada Mortgage and Housing Corporation (CMHC)

Link to Releases:

For CMHC’s GTA release:

For CMHC’s national release:

Summary: In December, Canadian housing starts fell 13 per cent to a seasonally adjusted annual rate of 171,500 units from an upwardly revised November figure of 198,200 units. The drop was driven by a decline in the volatile multiple-family component, especially within Ontario, where the overall decline was 45 per cent. In Toronto, the annual rate of starts fell by 65 per cent to 17,800.

Analysis: We experienced a volatile end to 2010 home construction in the GTA. In the Toronto area, condominium apartments accounted for almost 40 per cent of total construction activity. The timing of condominium apartment starts is more erratic compared to low rise starts, which means that in some months GTA starts will spike well above trend and in other months the level of starts will move below trend. With this said, it is important to note that overall home construction was up in 2010 as a whole, making a positive contribution to the local, provincial and national economies. Looking forward through 2011, it appears that housing starts in the GTA will include an even larger share of condominium apartments, as new high-rise sales (as reported by RealNet Canada Inc.)

Source: Toronto Real Estate Board