The Repairs That Will Help Sell Your House in a Cooling Market
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The Repairs That Will Help Sell Your House in a Cooling Market

More sellers are remodelling properties to avoid cutting prices, though some projects pay off more than others

By VERONICA DAGHER
Tue, Oct 11, 2022 8:52amGrey Clock 3 min

The playbook for selling a home needs a makeover, and often so do the houses.

Selling a house takes much more elbow grease than it did a year ago. Homeowners earlier could expect a bidding war the moment they staked the for-sale sign in the front yard, even if the property was in dire need of updating.

With mortgage rates now pushing 7%, buyers are harder to come by and easier to turn off, real-estate agents say. Making repairs or even small cosmetic improvements that buyers care about could make the difference between getting your asking price or giving a discount.

Between mid-July and mid-August, about 95% of home sellers made updates or repairs before listing their properties, up from 71% of sellers six to 12 months ago, according to Realtor.com. They spent an average of $14,163.

Not all renovations are worth the cost for sellers, data suggest. The top three interior remodelling projects with the highest return on investment are a hardwood-flooring refinish, new wood flooring and an insulation upgrade, according to a recent National Association of Realtors report.

Some sellers might find that smaller fixes such as a fresh paint job can make a bigger impression on buyers than pricier changes such as a renovated third bathroom, real-estate agents said.

“Sometimes, the upgrades that aren’t the sexiest pay off the most,” said Judy Dutton, executive editor at Realtor.com.

A big remodelling project, such as a new kitchen or deck, might not be worth the investment and delay a seller’s timeline, given supply and labor shortages, said Jessica Lautz, a vice president at NAR. Focus on more affordable projects that appeal to buyers and look beautiful in photos, such as refinishing hardwood floors, she said.

A hardwood-flooring refinish has a 147% cost recovery, meaning homeowners are likely to recoup well more than the cost, said Ms. Lautz. For comparison, a kitchen upgrade has a 67% cost recovery.

Consider the smaller things that are likely to turn buyers off and fix them fast. Mitigating strong odours is a relatively low-cost fix that helps sell a home, said Mark Barnes, a Realtor in Charleston, S.C.

Mr. Barnes got one client’s home a deep cleaning before showing it to potential buyers, because the scent of the owner’s dog overpowered the house.

The owner paid about $400 for the service, which included two carpet cleanings. The house sold for $475,000, about 5% over the list price, Mr. Barnes said. A deep cleaning could add $3,731 to the sale of a home, according to a recent report by HomeLight, a marketplace that connects home sellers with real-estate agents.

Enhancing curb appeal helps a home stand out to buyers and reduces seller concessions, said Darin Eppich, a Realtor in Los Angeles.

Mr. Eppich recommended his client David Garonzik resod the front lawn of a three-bedroom Woodland Hills, Calif., home as an improvement from the lawn that was dying from the drought. Mr. Garonzik considered putting in a desert landscape with rocks, but Mr. Eppich didn’t think the roughly $10,000 cost would be worth it or would seem as appealing to buyers.

Mr. Garonzik is hoping the $4,000 improvement will help him land more than the home’s $1 million asking price, though it is too soon to know whether the gambit worked.

For apartment sellers, focus on cosmetic upgrades—unless there is an apparent flaw such as a leaky faucet or nonworking appliances, said Renée Lee, a real-estate agent in New York City.

Anything that isn’t broken, is costly to replace and isn’t overtly visible, such as a new central air-conditioning system, won’t impress buyers as much as improvements they can see, such as new doors for the kitchen cabinets or customisable closet shelves, she said. Aim to fix anything that an inspection would turn up, real-estate agents said.

Rising material costs are one reason to be judicious with the projects you choose. Utility is another.

Cindy Scholz said one of her clients wasted more than $1,000 repainting his home’s garage floor and re-wallpapering the inside of closets.

“Don’t fixate on items that don’t matter,” said Ms. Scholz, a Realtor in East Hampton, N.Y.



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Stronger demand in some areas is pushing unit rents up faster than houses

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Tue, Mar 5, 2024 3 min

Renters are returning to the apartment market, leading to higher growth in weekly rents for units than houses over the past year, according to REA data. As workers return to their corporate offices, tenants are coming back to the inner city and choosing apartment living for its affordability.

This is a reversal of the pandemic trend which saw many renters leave their inner city units to rent affordable houses on the outskirts. Working from home meant they did not have to commute to the CBD, so they moved into large houses in outer areas where they could enjoy more space and privacy.

REA Group economic analyst Megan Lieu said the return to apartment living among tenants began in late 2021, when most lockdown restrictions were lifted, and accelerated in 2022 after Australia’s international border reopened.

Following the reopening of offices and in-person work, living within close proximity to CBDs has regained importance,” Ms Lieu said.Units not only tend to be located closer to public transport and in inner city areas, but are also cheaper to rent compared to houses in similar areas. For these reasons, it is unsurprising that units, particularly those in inner city areas, are growing in popularity among renters.

But the return to work in the CBD is not the only factor driving demand for apartment rentals. Rapidly rising weekly rents for all types of property, coupled with a cost-of-living crisis created by high inflation, has forced tenants to look for cheaper accommodation. This typically means compromising on space, with many families embracing apartment living again. At the same time, a huge wave of migration led by international students has turbocharged demand for unit rentals in inner city areas, in particular, because this is where many universities are located.

But it’s not simply a demand-side equation. Lockdowns put a pause on building activity, which reduced the supply of new rental homes to the market. People had to wait longer for their new houses to be built, which meant many of them were forced to remain in rental homes longer than expected. On top of that, a chronic shortage of social housing continued to push more people into the private rental market. After the world reopened, disrupted supply chains meant the cost of building increased, the supply of materials was strained, and a shortage of labour delayed projects.

All of this has driven up rents for all types of property, and the strength of demand has allowed landlords to raise rents more than usual to help them recover the increased costs of servicing their mortgages following 13 interest rate rises since May 2022. Many applicants for rentals are also offering more rent than advertised just to secure a home, which is pushing rental values even higher.

Tenants’ reversion to preferring apartments over houses is a nationwide trend that has led to stronger rental growth for units than houses, especially in the capital cities, says Ms Lieu. “Year-on-year, national weekly house rents have increased by 10.5 percent, an increase of $55 per week,” she said.However, unit rents have increased by 17 percent, which equates to an $80 weekly increase.

The variance is greatest in the capital cities where unit rents have risen twice as fast as house rents. Sydney is the most expensive city to rent in today, according to REA data. The house rent median is $720 per week, up 10.8 percent over the past year. The apartment rental median is $650 per week, up 18.2 percent. In Brisbane, the median house rent is $600 per week, up 9.1 percent over the past year, while the median rent for units is $535 per week, up 18.9 percent. In Melbourne, the median house rent is $540 per week, up 13.7 percent, while the apartment median is $500 per week, up 16.3 percent.

In regional markets, Queensland is the most expensive place to rent either a house or an apartment. The house median rent in regional Queensland is $600 per week, up 9.1 percent year-onyear, while the apartment median rent is $525, up 16.7 percent.

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