Like it or list it, trying to improve your housing situation is going to be a problem

Martin Pelletier: Personal experiences with renovations, buying a home are radically different from what governments and central bankers tell us

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After being locked in our house for so long, my wife and I decided to have fun and make our own version of Love it or List it. If you are unfamiliar with this TV show, it involves renovating your home while looking for homes for sale, with the final decision being made to love the renovation and stay put or list your home and d ‘buy another one.

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Many might find it stressful, especially in the midst of COVID-19, but I found it to be a pretty informative process, as what I experience in person is so different from what our governments and central bankers tell us.

From a “love it” point of view, besides the materially higher hardwood costs, it was really painful trying to get enough hardwood to complete our project. Luckily we had a nifty contractor and only needed a small amount of new lumber for a few carpeted rooms while the rest was just refurbished.

Our bathrooms, on the other hand, were another story, as delivery times were a minimum of six to 12 weeks for toilets, vanities, etc. was not, begging the manager to let us buy the last remaining floor model. We also had to be equally careful in aligning the project materials (availability of tiles, PVC pipes, sealants, etc.) to match the estimated installation time.

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Then there were the trades themselves. We’ve had so many people come forward to give us a quote and then we never bother to follow up. They’re stuck with existing projects, so they just don’t care. Forget about negotiating start dates or project costs; it’s a take it or leave it now.

Don’t get us started on what should be the fun part of a renovation: new furniture. There is nothing immediately available and prices have gone up, with one owner telling us his shipping costs alone were three to four times what he was paying before the pandemic.

Our experience has probably led you to think that “listing it” is the best option, but think again. Prices are still very reasonable in Calgary compared to other parts of the country, but inventory is extremely low. Thin picks, indeed.

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Homes for sale in Calgary are rare.
Homes for sale in Calgary are rare. Photo by Gavin Young / Postmedia

There is a real risk of selling and ending up with little or no replacement options. A few attractive homes hit the market, but they sold out before we even had a chance to see them in person.

Unfortunately, this situation will not be resolved anytime soon. Seasonally adjusted real investment in residential construction just experienced its fifth consecutive monthly decline and is now down 22.1% from April, according to Statistics Canada and Better Dwelling.

People are just fed up with COVID-19 and their spending habits are back to pre-pandemic levels and then to some. We are clearly not the only ones making big purchases. But global just-in-time supply channels are far from recovering, and they will not catch up for some time as the virus continues to persist.

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To complicate matters, commodity markets are exploding. Sources of supply, such as oil and gas, have been severely under-capitalized for nearly a decade, environmental, social and corporate governance (ESG) discourse has drained future investments, and governments have invoked anti-development policies.

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Anyone who thinks the government is going to get better and be able to dampen the price hike through public policies, check out this Video of Alexandria Ocasio-Cortez on Twitter, then ask yourself if politicians really know what they’re doing.

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Instead, we should expect further volatility in inflation with sharp swings in commodity prices as market participants attempt to determine when, how and if things will someday normalize beyond this so-called “extended” transitional period.

As a result, why not ask what the new normal is in this COVID-19 world, and if this is reflected in your investment portfolio. If you don’t know the answer, it might be worth making your own Love it or List it scenario to find out.

Financial post

Martin Pelletier, CFA, is a portfolio manager at Wellington-Altus Private Counsel Inc, operating as TriVest Wealth Counsel, a private and institutional investment firm specializing in discretionary risk management portfolios, auditing / monitoring investments and advanced tax, inheritance and wealth planning. .

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