BuyingFinancialMarket Updates April 23, 2021

The Current Price of Lumber & Its Effect on the Real Estate Market

The coronavirus pandemic has caused problems with supply in just about every industry, not just lumber. Last summer, we saw a shortage in everything recreational, from ATVs to RV’s, batteries, and patio cushions. The computer industry is still trying to meet the demand of new home office and gaming PC needs, and doesn’t show signs of stopping. And if you’ve been considering any home renovations or woodworking project, you’re likely no stranger to the skyrocketing prices of lumber due to the higher demand. But how has this shortage of lumber affected home prices?

Home Improvements Leading to Short Supply of Lumber

When the COVID-19 pandemic hit, forced lockdowns resulted in closed lumber mills. Then those in lockdown started making improvements to their houses and backyards, as they looked forward to a summer stuck at home. Decks and fences were being built in record numbers as people renovated to accommodate their new work-from-home/stay-at-home lifestyles, swiftly leaving lumber mills in short supply and scrambling to catch up, leading to an increase in prices.

If you’re considering a backyard facelift this spring or summer, you can expect to pay as much as double pre-pandemic lumber pricing. And if you need to contract your work out, there again, you’ll likely pay even more, as contractors are straining to keep up with workloads.

The Shift to a Seller’s Market

If you’ve been paying attention to the real estate market in Saskatoon, you’ve no doubt noticed the shift to a seller’s market. The shortage of homes for sale has caused desperation in buyers who need to buy for many reasons. Perhaps they just sold their home to take advantage of rising prices. Or maybe low interest rates took them from being unable to afford a home to desperate to find one before their locked-in rates expire.

Whatever the reason, REALTORS®, like myself, are seeing more and more bidding wars and offering scenarios where the sellers have the upper hand. Buyers are offering at or above asking prices, causing prices to increase in every market across Canada, including Saskatoon.

The Cost of Lumber & Rising Home Prices

So how, you ask, does the cost of lumber indirectly affect rising home prices? Before COVID-19 hit, 1,000 board feet of 2’ x 4′ lengths cost approximately $550. As it stands now, that same amount costs more than $1,400. Now, take a typical 2,500 sq ft home, add in those rising lumber prices, and you are adding as much as $30K to the cost of building a new house!

Now, let’s consider a homebuyer weighing their options to build new or buy an existing home. With a new build home costing approximately $30,000 more now than it did before the COVID-19 pandemic, many are deciding to forgo building new and begin looking for an existing home for sale instead.

As we are in a seller’s market, there are not many available homes, especially in the most popular price ranges. But let’s say that they do manage to find one they would like to purchase. The scarcity of inventory right now has buyers right changing offer prices. There is no time to offer low and see what the counteroffer might be. In this market, the house will likely be sold to another buyer quite quickly. So they don’t take any chances and offer at or above asking, which is likely still a better deal than the new build they were considering.

From what we thought was a simple, short-term inventory issue to now a national crisi of rising real estate costs, this is how lumber prices affect the current home prices. So what can you do to best protect yourself as a buyer? Well, especially in a seller’s market, it is crucial to work with a local real estate professional who understands what is happening in today’s market—and that’s where I can help. Contact me today and let’s get your journey of buying a house off on the right foot today!

BuyingFarm & Agriculture March 19, 2020

8 Simple Tips for Looking At Equestrian Properties for Sale

If you’ve ever fallen in love with a horse, there’s a good chance you may have found yourself Googling “equestrian properties for sale” before you even realized it. And, if you have, you may even have found a few promising properties for sale! As promising as they look, though, if you’ve never bought a horse property before, you may be understandably feeling a little lost when it comes to what you should be looking for. Be assured, though, you are not alone!

Many aspiring horse property owners like yourself will feel unsure in their real estate search. But, by simply following these 8 simple tips, buying a horse property of your very own can be a breeze!

1. Find a Knowledgeable REALTOR®

Just as you wouldn’t expect a dog-lover to possess the medical knowledge of a veterinarian, no one is expecting a horse-lover to know everything there is to know about equine real estate. That’s where a real estate agent specializing in horse properties comes into play! They will be able to guide you on your search for the perfect property for you and your horses with expert advice on the market. Plus, they will also be able to help refer you to other knowledgeable industry professionals that can help you with the rest of your property needs, from mortgages to inspections to construction!

2. Know Your Needs for the Property

Not all horse farms for sale are made equally and in order to best determine what you’re looking for in a property, you’ll need to know what you want to be able to do with it! If you’d like to be able to ride on the property, you’ll be looking for quite a few more acres than someone who may just be looking to stable a few steeds. If you are looking to train or teach, you’ll want to keep an eye out for something that may have an existing corral or the potential for one to be built. And if you’re wanting to use the property for commercial purposes, you’ll want to confirm it meets all the coding requirements.

3. Know Your Long-Term Wants for the Property

It’s easy to get stuck in the shorter-term thinking of what your needs are right now, like budget and the number of horses you currently own. But, it’s important that when looking at equestrian properties for sale, you are thinking about what your long-term goals are with the property. Do you want to be able to expand to bring on more horses? Then a small horse farm for sale might not be what you should be looking for.

4. Know Your Location

Things like paint and stable location can actually be much simpler than you think; property location, however, is permanent. You can’t pick up your new pasture and move it a few towns over when you discover that you’re too far away from work. So, when looking at horse properties, be aware of where you are looking and make sure the location fits your needs first. Will you have access to the amenities you need? Will it give you a terribly long commute? Will you have access to horse-friendly trails?

5. Look for the Right Type of Land

When buying a horse property, you are typically looking for pasture land for the horses to graze on with good drainage to prevent flooding. And if you’re looking at quite a few acres, ask the current owner about the different types of plant on the property. The last thing you’ll want to be surprised by is a horse that may have eaten a toxic plant!

6. Educate Yourself on Regulations

Before diving in too deep, make sure you take some time to inform yourself of the regulations and best practices for owning a horse property. Take a read through of the Code of Practice for the Care and Handling of Equines and get a better understanding of the guidelines you’ll need to follow on your new horse farm.

7. Ask About the Water

Horses, like humans, need access to a clean and steady water supply. Ask the current owner what the water has been like in their tenure on the property and whether they’ve had any struggles with it in the past.

8. Don’t Skimp on the Inspection

Many potential property owners will often fall into the trap of thinking they can save money by skipping the property inspection. NEVER DO THIS, especially when buying farmland. Licensed inspectors are trained specifically to be able to tell you about the overall safety of the property, as well as point out any potential areas of concern that could lead to further costs in the future. They will be able to check the age and condition of any stables and fences, as well as assess the plumbing and electrical to make sure it is all up to code.

 

If buying a horse property is next on your wishlist, you can do so confidently by following these 8 tips. Ready to start your search? Let’s get started!

BuyingFarm & Agriculture February 20, 2020

7 Questions to Ask When Buying Farmland

With hundreds of acres of land spanning the province, Saskatchewan is a great place to be if farming is your passion! Whether it be crop production or livestock you’re planning for, here in the land of the living skies, there’s a plot for you if you know what it is you’re looking for. Regardless of whether you’re a new or experienced farmer, buying farmland can often be quite a confusing process. But all it takes is asking the right questions to feel more secure in your investment.

Here’s what to ask when buying farmland:

What Type of Farmland Are You Looking For?

For those less experienced in the agricultural industry, you may think that all it takes to start a farm is just a couple hundred acres of land. However, depending on the type of farming you’re hoping to do, the type of land you’re looking to buy can vary quite a bit from plot to plot.

If you are looking to farm livestock, you’ll be looking for pasture land. This land usually has lots of free space for cattle to roam and plenty of grass for them to feed on when they’re out grazing in the fields.

If you are looking for crop production land, you’ll need a plot that either has either already been farmed well to have healthy soil or one that has the potential to be improved upon, preferably without years of overhaul. Land that has already been cultivated and worked will usually be disclaimed in the listing.

You’ll also want to take into consideration whether you will need to add any buildings or structures to the land. For instance, if you are farming livestock, a barn will be a necessary addition if there isn’t already one on the property. If you are farming crops, you may need a silo.

What Are the Soil Conditions?

Depending on whether you are farming crops or livestock, the soil needs will be vastly different, and it’s important to know what you’ll be getting when purchasing farmland. Healthy soil is important for optimal crop production. With livestock, the ground just needs to be healthy enough to support grass growth.

To get a better understanding of the health of your soil, there are a couple of resources you can use here in Saskatchewan. The Saskatchewan Assessment Management Agency (SAMA) offers production land assessments that can tell you what the expected or proven production value of the farmland might be. The Saskatchewan Crop Insurance Corp (SCIC) can also provide some insight, as they provide an easy-to-understand letter grade after their assessments, where ‘P’ indicates poor productivity and ‘A’ indicates high productivity. Both will take into account various important indicators of the soil’s health, including the climate, soil profile, texture, organic matter content, salinity, and drainage, amongst other factors.

What Has the Current Owner’s Experience Been with the Land?

The easiest way to get an understanding of the land is to talk to the current farmer or owner about their history and experience with the property. Ask them about their production numbers and any issues they may have experienced when working the farmland. Most importantly, though, ask them why they are selling. If they are moving or retiring from farming, you likely don’t have anything to worry about. However, if there is low production value or exorbitant upkeep costs, you may want to be aware of that before purchasing the farmland for your very own.

Have There Been Any Previous Treatments to the Land?

It’s important to know about the treatment history of the farmland for sale to know about any ongoing maintenance that may be required. For instance, when was the last crop rotation? If it has been quite a while, you may have quite a large challenge to undertake right from the start. You’ll also want to know if it has been regularly treated with certain herbicides or pesticides. These treatments can require ongoing application and will limit you from obtaining an organic status, if that is important to you.

Can You Afford to Purchase Farmland?

While it may seem as easy as buying a home—down payment, mortgage, and good to go—purchasing farmland isn’t quite as financially simple as we might think. Firstly, when buying a house, you really only need a 5% down payment to obtain a mortgage. When it comes to buying farmland, however, lenders may ask for more upfront to secure their investment; sometimes as much as 25%.

Unlike homes, farms are expected to be a source of revenue. But, in order to be profitable, they require a lot more time, money, and resources to maintain. So, in order to ensure their loan will be returned, mortgage lenders create stricter requirements to try and selectively filter out less committed purchasers.

If you are unsure about your financial health for purchasing farmland, I highly recommend meeting with a mortgage specialist who is knowledgeable about agricultural lending before starting your search. They will be able to give you a better understanding of what you might be able to obtain and keep your continued search more realistic before you bite off more than you can chew.

Will You Need Extra Manpower to Work the Land?

Depending on the size of plot, you may not be able to realistically farm whatever land you purchase on your own. And if that is the case, can you financially support a team of farm hands underneath you? Or would you consider leasing out parcels of your land to other farmers? Be aware of the expectations you are placing on yourself, especially if you are just starting out. Farming is a lot of manual labour and there are only so many hours in a day that you can reasonably work with on your own.

Should You Get a Real Estate Agent to Purchase Farmland?

It is a common misconception that real estate agents only work for residential buying and selling. The truth is, though, no matter what type of real estate you are looking to purchase, there is an agent that can help you! However, not all REALTORS® are comfortable and experienced in buying and selling farmland. So, it’s important that you are choosing a Saskatchewan REALTOR® that is experienced with farm real estate who can better help you understand the process and find you the land you are looking for. As a buyer, they are absolutely free for you to use and they will help you to not only find your ideal farmland, but also get you the best deal possible to start your agricultural adventure off right.

 

Buying farmland doesn’t have to be a stressful experience, so long as you know what questions to ask throughout the process! They help to give you a better understanding of what it is you are looking for, so you can feel confident in your investment and start your new farm off on the right foot right from the start!