For over two decades, George Verdolaga has been helping property owners give their homes a visual boost.
With his long experience as an interior designer in Vancouver, Verdolaga has closely observed how the real estate market has developed.
Therefore, the leader of the FlowForm Design Group speaks with a level of expertise on many issues.
When asked about house flipping, he says it is now pretty much dead, except for people with really deep pockets or those who are professional builders.
“15 to 20 years ago, it was a hopeful thing for the middle class,” Verdolaga said. Just in a telephone interview.
House flipping used to attract what he described as the “hobbyist”, ordinary people who just wanted to climb the property ladder.
“The idea for the part-time flipper was: ‘I buy a house, use it, make changes, put it back on the market, then I buy a new house after three to five years,'” Verdolaga explained.
Typically, the climb starts with a one-bedroom apartment. The owner then upgrades to successively larger properties, culminating in a detached house.
“This process usually takes place between 10 and 20 years and has been the sacred path for any potential property owner who wants to get their foot in the real estate market,” Verdolaga said.
Even then, house flipping did not have a bad name. It’s different these days.
“You get scolded because people think, ‘Oh, you’re lowering prices,'” Verdolaga said.
More importantly, the economy has changed.
Verdolaga said the hot housing market has killed house flipping as an option for many.
“House flipping used to be something that many ordinary people could strive for,” he recalled.
To illustrate, Verdolaga noted that if a detached house in East Vancouver cost $ 400,000 in 2003, a five percent payout of $ 20,000 would put someone in the “game.”
“You could actually find some great deals back then, and competitive bidding was not as big an issue as it is now,” he said.
These days, Verdolaga said one has to contend with more expensive properties to begin with, situations with more bids, a higher payout that banks demand, and a “really tough mortgage stress test that never used to exist”.
“Keep in mind that insurmountability is not solely a Vancouver problem,” he said.
Verdolaga noted that it is a global problem and real estate is rising by six percent or more per year, “especially in highly desirable coastal towns where people most want to live and work”.
He added that in Vancouver, real estate appreciation can sometimes be as high as 9.5 percent annually.
“Keep in mind that wages only increase by two percent or more per year on average,” explained the FlowForm Design Group principal.
Note the difference of four percent between annual wage increases and annual property value increases. Because of this, Verdolaga said that even a household that brings in $ 120,000 in total income will find it challenging to buy a condominium for $ 735,000, which he said is the price of a newly built 598-square-foot apartment that he recently saw near Vancouver’s Olympic Village. .
“Especially if you’re required to pay a 20 percent down payment that the bank asks for, which would be $ 147,000 in this case, as opposed to buying a $ 240,000 condominium and only depositing five percent or $ 12,000 at the time, which is the same new build. condominium would have cost new 20 years ago compounded by six percent a year, ”he said.
Since the middle class is already mostly shut out of that turnaround game, Verdolaga said only the rich and established builders are left.
“Today, people are just making home improvements that increase the resale value of their home, so if they decide to sell their house in one, five or 10 years from now, they can do so without any problems and without their home being looked after. dated out, “he said.
This is where Verdolaga’s expertise comes in.
“What makes me unique is that I myself project manage renovations of the home, ranging from decorating customers’ spaces with new furniture to hiring the necessary craftsmen,” he said.
Verdolaga added that he also advises customers “not to over-adapt their homes as they usually renovate to three parties”.
They would be themselves, a potential tenant or a future buyer.
Verdolaga noted that Canadians, especially people in Vancouver and Toronto, “seem to be a little more obsessed with real estate than most other places, and they usually renovate within one to five years”.
“They call an interior designer like me to help them make changes to their kitchen or bathroom, typically, or their entire space to increase their net worth,” he said.
After hearing all that, can the middle class return to the game of house flipping?
“If you want to, then you might want to target the advanced market, where buyers are less sensitive to price and there is less competition with other house flippers,” Verdolaga said.
He explained that buyers in this spectrum of the market tend to go for a certain type of neighborhood, a certain square footage, a certain architectural style and higher quality of renovation.
“These people are willing to spend a little more. But this is a smaller market to go after, so your house may not be selling as fast as you had planned, which could make it a nerve-wracking and riskier endeavor,” Verdolaga said. .
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