How to prepare your property for sale in a trade shortage
Achieving your maximum sale price is still possible, even if tradies are thin on the ground
Achieving your maximum sale price is still possible, even if tradies are thin on the ground
Preparing a home for sale has never been more challenging. A construction crisis means materials and trades are pricier and harder to come by so renovation budgets and timelines are blowing out. Trade portal hipages.com.au recently reported that 85 percent of tradespeople on their site have had to raise their rates this year as timber and metal prices soar in the wake of a global supply chain crisis, coupled with a scarcity of skilled labour and trades.
CoreLogic’s Cordell Construction Cost Index revealed that building expenses increased 9 percent over the 12 months to March, the highest annual growth rate since the introduction of the GST in 2001.
Property stylist Justine Wilson of Vault Interiors says mammoth renovations should be shelved for sellers on a tight timeline right now.
“Almost across the board, everything from materials to furniture is taking longer to source,” she says. “What used to be a one-month lead time is turning into 14, 16 or sometimes 24 weeks.
It’s doubling or tripling the standard time and that has a flow on effect for anyone trying to renovate for sale, she says, but there are multiple fixes vendors can undertake to add value quickly.
“See what you can do on a cosmetic level before knocking out walls and attempting things that are going to need trades,” Wilson says. “You can give your place a facelift with styling or a fresh coat of paint rather than structural changes.”
Read more stories like this in the launch edition of Kanebridge Quarterly magazine. Order your copy or subscribe here
While the old adage says kitchens sell houses, Justine Wilson says vendors needn’t install a new one.
“Kitchens and bathrooms will always entice buyers so have them looking as fresh as possible. If you can’t order a whole new kitchen then use laminate paint to update cupboards, change out door hardware and consider peel and stick tile options to modernise really dated splashbacks. You could also swap out older benchtops and choose a laminate or Caesarstone top because they seem to be in ample supply at the moment.”
Home offices are also an asset in a post-pandemic marketplace.
“Whether it’s a nook under the stairs or a self-contained study it will appeal to buyers because people want an office or media zone separate to the rest of their family,” Wilson says. “You can get freestanding prefab pods, convert a garage, or garden shed rather than going through the expensive and long process of getting something approved and built.”
According to the recent Great Australian Backyard survey by Adbri Masonry, 80 percent of respondents said an entertaining space out back plays an important, or very important, part in decision making when buying a property.
“The outdoor dining and entertaining area is a staple for every Aussie home because it adds a new dimension to how you can entertain while enhancing the appeal of your home,” says landscaping expert and Adbri Masonry brand ambassador, Jason Hodges.
Since timber and carpenters are hard to come by, he suggests refreshing your outdoor area with pavers with a high pressure hose down.
“If you have a paved or decked area, you can give it a clean to inject new life,” he says. “If you’re starting with a blank canvas, consider creating your own aesthetic with a small format paver such as Havenbrick, which allows you to create different patterns with a variety of colour tones to choose from. Also, adding a cosy fire pit as part of your outdoor entertaining area means your space becomes usable all year round.”
A veggie patch can also add to the family-friendly nature of a home, as can embracing a wellbeing element, like a meditation space.
“The beauty of the backyard is its diversity,” Hodges says. “With a little effort and a dash of creativity it can be transformed into the space which is right for you, be it a Zen garden or sleek entertaining area. It’s yours to define. Plus, it can reap financial rewards when selling.”
Staging a home for sale is a quick, temporary fix which often means you can avoid the wait for trades. Stylists like Justine Wilson have warehouses of items ready to go so a tired listing can be revived within days rather than weeks or months.
“Styling adds value when you’re presenting your home for sale and can completely uplift a property without any renovation,” she says. “If you can’t redo your kitchen or bathroom then look at putting that money into the best presentation possible,” she says.
Window dressings like these custom made blinds from Tuiss can be ordered online and are suitable for DIY installation
Homeowners can start by making sure the house is neat and decluttered, the carpet is steam cleaned and windows are washed. Even the smell of the home has proven to help with the sale. A study by UK-based real estate agent comparison site GetAgent revealed which scents sell homes. Top aromas included freshly baked bread (with 37 percent of respondents claiming it would entice them to buy), followed by fresh linen (36 per cent), freshly brewed coffee (27 per cent), new carpet and freshly cut grass (both 25 percent).
“You could go a step further and have your home professionally staged so that it stands out online,” Wilson says. “We’ve seen anywhere from a 5 percent to 20 percent increase in the sale price after presenting a home well.”
She says to view styling not so much as an expense, but more of an investment.
“By presenting the space correctly, with the right flow, function, and scale of furniture, it can help buyers who have trouble visualising its potential.”
Americans now think they need at least $1.25 million for retirement, a 20% increase from a year ago, according to a survey by Northwestern Mutual
Equities are often seen as expensive after promising start to 2023
A new trading year kicked off just weeks ago. Already it bears little resemblance to the carnage of 2022.
After languishing throughout last year, growth stocks have zoomed higher. Tesla Inc. and Nvidia Corp., for example, have jumped more than 30%. The outlook for bonds is brightening after a historic rout. Even bitcoin has rallied, despite ongoing effects from the collapse of the crypto exchange FTX.
The rebound has been driven by renewed optimism about the global economic outlook. Investors have embraced signs that inflation has peaked in the U.S. and abroad. Many are hoping that next week the Federal Reserve will slow its pace of interest-rate increases yet again. China’s lifting of Covid-19 restrictions pleasantly surprised many traders who have welcomed the move as a sign that more growth is ahead.
Still, risks loom large. Many investors aren’t convinced that the rebound is sustainable. Some are worried about stretched stock valuations, or whether corporate earnings will face more pain down the road. Others are fretting that markets aren’t fully pricing in the possibility of a recession, or what might happen if the Fed continues to fight inflation longer than currently anticipated.
We asked five investors to share how they are positioning for that uncertainty and where they think markets could be headed next. Here is what they said:
Cliff Asness, founder of AQR Capital Management, acknowledges that he wasn’t expecting the run in speculative stocks and digital currencies that has swept markets to kick off 2023.
Bitcoin prices have jumped around 40%. Some of the stocks that are the most heavily bet against on Wall Street are sitting on double-digit gains. Carvana Co. has soared nearly 64%, while MicroStrategy Inc. has surged more than 80%. Cathie Wood‘s ARK Innovation ETF has gained about 29%.
If the past few years have taught Mr. Asness anything, it is to be prepared for such run-ups to last much longer than expected. His lesson from the euphoria regarding risky trades in 2020 and 2021? Don’t count out the chance that the frenzy will return again, he said.
“It could be that there are still these crazy animal spirits out there,” Mr. Asness said.
Still, he said that hasn’t changed his conviction that cheaper stocks in the market, known as value stocks, are bound to keep soaring past their peers. There might be short spurts of outperformance for more-expensive slices of the market, as seen in January. But over the long term, he is sticking to his bet that value stocks will beat growth stocks. He is expecting a volatile, but profitable, stretch for the trade.
“I love the value trade,” Mr. Asness said. “We sing about it to our clients.”
For Richard Benson, co-chief investment officer of Millennium Global Investments Ltd., no single trade was more important last year than the blistering rise of the U.S. dollar.
Once a relatively placid area of markets following the 2008 financial crisis, currencies have found renewed focus from Wall Street and Main Street. Last year the dollar’s unrelenting rise dented multinational companies’ profits, exacerbated inflation for countries that import American goods and repeatedly surprised some traders who believed the greenback couldn’t keep rallying so fast.
The factors that spurred the dollar’s rise are now contributing to its fall. Ebbing inflation and expectations of slower interest-rate increases from the Fed have sent the dollar down 1.7% this year, as measured by the WSJ Dollar Index.
Mr. Benson is betting more pain for the dollar is ahead and sees the greenback weakening between 3% and 5% over the next three to six months.
“When the biggest central bank in the world is on the move, look at everything through their lens and don’t get distracted,” said Mr. Benson of the London-based currency fund manager, regarding the Fed.
This year Mr. Benson expects the dollar’s fall to ripple similarly far and wide across global economies and markets.
“I don’t see many people complaining about a weaker dollar” over the next few months, he said. “If the dollar is falling, that economic setup should also mean that tech stocks should do quite well.”
Mr. Benson said he expects the dollar’s fall to brighten the outlook for some emerging- market assets, and he is betting on China’s offshore yuan as the country’s economy reopens. He sees the euro strengthening versus the dollar if the eurozone’s economy continues to fare better than expected.
Even after the S&P 500 fell 15% from its record high reached in January 2022, U.S. stocks still look expensive, said Rupal Bhansali, chief investment officer of Ariel Investments, who oversees $6.7 billion in assets.
Of course, the market doesn’t appear as frothy as it did for much of 2020 and 2021, but she said she expects a steeper correction in prices ahead.
The broad stock-market gauge recently traded at 17.9 times its projected earnings over the next 12 months, according to FactSet. That is below the high of around 24 hit in late 2020, but above the historical average over the past 20 years of 15.7, FactSet data show.
“The old habit was buy the dip,” Ms. Bhansali said. “The new habit should be sell the rip.”
One reason Ms. Bhansali said the selloff might not be over yet? The market is still underestimating the Fed.
Investors repeatedly mispriced how fast the Fed would move in 2022, wrongly expecting the central bank to ease up on its rate increases. They were caught off guard by Fed Chair Jerome Powell‘s aggressive messages on interest rates. It stoked steep selloffs in the stock market, leading to the most turbulent year since the 2008 financial crisis. Now investors are making the same mistake again, Ms. Bhansali said.
Current stock valuations don’t reflect the big shift coming in central-bank policy, which she thinks will have to be more aggressive than many expect. Though broader measures of inflation have been falling, some slices, such as services inflation, have proved stickier. Ms. Bhansali is positioning for such areas as healthcare, which she thinks would be more insulated from a recession than the rest of the market, to outperform.
“The Fed is determined to win the war since they lost the battle,” Ms. Bhansali said.
Gone are the days when tumbling bond yields left investors with few alternatives to stocks. Finally, bonds are back, according to Niall O’Sullivan of Neuberger Berman, an investment manager overseeing about $427 billion in client assets at the end of 2022.
After a turbulent year for the fixed-income market in 2022, bonds have kicked off the new year on a more promising note. The Bloomberg U.S. Aggregate Bond Index—composed largely of U.S. Treasurys, highly rated corporate bonds and mortgage-backed securities—climbed 3% so far this year on a total return basis through Thursday’s close. That is the index’s best start to a year since it began in 1989, according to Dow Jones Market Data.
Mr. O’Sullivan, the chief investment officer of multi asset strategies for Europe, the Middle East and Africa at Neuberger Berman, said the single biggest conversation he is currently having with clients is how to increase fixed-income exposure.
“Strategically, the facts have changed. When you look at fixed income as an asset class…they’re now all providing yield, and possibly even more importantly, actual cash coupons of a meaningful size,” he said. “That is a very different world to the one we’ve been in for quite a long time.”
Mr. O’Sullivan said it is important to reconsider how much of an advantage stocks now hold over bonds, given what he believes are looming risks for the stock market. He predicts that inflation will be harder to wrangle than investors currently anticipate and that the Fed will hold its peak interest rate steady for longer than is currently expected. Even more worrying, he said, it will be harder for companies to continue passing on price increases to consumers, which means earnings could see bigger hits in the future.
“That is why we are wary on the equity side,” he said.
Among the products that Mr. O’Sullivan said he favours in the fixed-income space are higher-quality and shorter-term bonds. Still, he added, it is important for investors to find portfolio diversity outside bonds this year. For that, he said he views commodities as attractive, specifically metals such as copper, which could continue to benefit from China’s reopening.
Ramona Persaud, a portfolio manager at Fidelity Investments, said she can still identify bargains in a pricey market by looking in less-sanguine places. Find the fear, and find the value, she said.
“When fear really rises, you can buy some very well-run businesses,” she said.
Take Taiwan’s semiconductor companies. Concern over global trade and tensions with China have weighed on the shares of chip makers based on the island. But those fears have led many investors to overlook the competitive advantages those companies hold over rivals, she said.
“That is a good setup,” said Ms. Persaud, who considers herself a conservative value investor and manages more than $20 billion across several U.S. and Canadian funds.
The S&P 500 is trading above fair value, she said, which means “there just isn’t widespread opportunity,” and investors might be underestimating some of the risks that lie in waiting.
“That tells me the market is optimistic,” said Ms. Persaud. “That would be OK if the risks were not exogenous.”
Those challenges, whether rising interest rates and Fed policy or Russia’s war in Ukraine and concern over energy-security concerns in Europe, are complicated, and in many cases, interrelated.
It isn’t all bad news, she said. China ended its zero-Covid restrictions. A milder winter in Europe has blunted the effects of the war in Ukraine on energy prices and helped the continent sidestep recession, and inflation is slowing.
“These are reasons the market is so happy,” she said.
The coastal area southeast of Melbourne is providing a permanent escape as the pandemic endures.