Affordable housing is a huge concern in today’s market, especially with continuing trends of low inventory numbers, fast sales and soaring house prices.
Many people jumping into the housing market for the first time or looking to upgrade to a bigger home may find themselves needing a bit of a mortgage helper.
Julie DeMelo of Sutton Group Westcoast Realty said the demand for secondary suites is increasing to a level not seen before.
“Young, first-time home buyers are having a hard time entering the market,” she said. “They have to have an extra income or revenue stream.”
She added it’s not just secondary suites that are increasing in popularity but also rooms being rented and other short term rental options. “A lot of people are doing Airbnb – anything to help with that mortgage payment.”
She noted while the market is tough right now for most buyers, it is especially hard for first-time buyers as they have to come up with a large down payment.
Those looking to upgrade or buy a newer home can usually carry some equity.
A lot of potential buyers are now looking at listings on the West Shore as the region tends to have more affordable options, DeMelo said. “There’s a lot of great stuff.”
There are also a number of new builds on the West Shore that feature secondary suites at price points that are still attractive for first-time buyers, although DeMelo added there are still a lot of new builds that do not have them. But the demand for secondary suites, not just from first-time buyers, continues to increase.
“There always has been (that demand) but even more so now because things are becoming unaffordable for young families.”
You would think with all of the new secondary suites going in that there wouldn’t be enough renters to fill them, but that’s not the case, DeMelo said.
While the listing inventory is low, the rental inventory is also low. “It’s very hard for a tenant to find a property to rent,” she said.
The low rental inventory could, in part, be due to a number of revenue properties showing up on the market.
“There’s a lot of revenue properties out there that people have bought but never lived in; those are starting to come on the market.”
She said a number of sellers are choosing to list those properties now because the market is so hot and a number of those owners are getting closer to their senior years and don’t want the hassle anymore.
There’s even an increase in demand for condos, and DeMelo said they’re selling at a rate that hasn’t been seen in recent years. “That’s a huge change from what we’ve had before,” she said.
She believes it could be due to increasingly fewer single family homes on the market. A trend, she doesn’t see changing any time soon. “I don’t see any changes happing in the next few years.”
Ron Bickford, president of Rob-Ron Construction Ltd., has spent four decades in the home construction industry and said the demand for secondary suites in brand new homes has vastly increased, as well as the number of queries to create secondary suites in newly purchased homes.
“Housing affordability is a huge concern these days,” Bickford said in a release.
“We are finding that most people just getting into the housing market today or who are upgrading to a new or bigger home need a mortgage helper.”
He said he receives a few calls a week with questions about renovating basements to include a secondary suite.
He noted new builds with secondary suites are proving to be very popular and selling quickly on the market.
Q: are secondary suites an easy add to existing homes?
Many homeowners contemplate adding a secondary suite as a mortgage helper and another source of income.
However, Ron Bickford, president of Rob-Ron Construction Ltd., said many homeowners tend to under-estimate the cost of creating a basement suite. They don’t have the expertise to avoid certain problems, such as water damage, that could lead to more expense down the line.
Bickford offers this advice for buyers looking at buying a home and renovating it to include a secondary suite.
1. Come up with a budget for the home purchase and renovation to include a suite. Creating a basement suite usually costs more than most people think. Usually a variety of trades are needed, including plumbers, electricians, carpenters and drywallers. It’s a good idea to have a trained professional oversee an extensive renovation like this to ensure it is done correctly, on time and on budget.
2. Review municipal bylaws before purchasing a home. Bylaws in Greater Victoria often vary, so before buying a home that you want to put a secondary suite in, ensure that suites are allowed, and research the requirements for correct ceiling heights, parking, and any other special requirements, including fire code regulations. This information will help you to determine whether creating a suite within your budget is viable in that particular house.
3. Review plumbing considerations. If there is no plumbing on the lower level, where you are planning to build a suite, ensure the invert height of the sewer service on the street is the right elevation. If it isn’t, you may need to install a pump, and you’ll need to allocate space for housing the pump, not to mention allocating funds for this.
4. Check perimeter pipes to avoid water ingress. Ensure the perimeter pipe is in good shape and is below the height of the slab. Since a lot of homes in Victoria are built on rock, water will flow between rock and concrete. Make sure you inspect the basement for any signs of water ingress.
5. Consider who you want to rent to and how much you need to earn from the rental suite. In general, the neighbourhood and number of bedrooms will dictate the rental income, but also consider whether you’re looking to rent to students, a family or a professional couple. For example, for students, you should be close to a college or university campus and can afford to have smaller bedrooms, but a professional couple will require a bigger main bedroom and close proximity to downtown.
“We enjoy some of the problem-solving work that often goes into creating a secondary suite, but our favourite part is helping our clients to achieve their dream home,” Bickford said.
GREATER VICTORIA MARKET UPDATE » MONTH TO DATE May 2/16 COURTESY VICTORIA REAL ESTATE BOARD
» 1,286 / 840 — NET UNCONDITIONAL SALES / TOTAL, APRIL 2015
» 1,590 / 1,413 — NEW LISTINGS / TOTAL, APRIL 2015
» 2,594 / 3,945 — ACTIVE RESIDENTIAL LISTINGS / TOTAL, APRIL 2015