For almost two years now, essentially, since the COVID-19 pandemic hit in March 2020, the Newfoundland & Labrador real estate market has been hot. How hot?
In February 2022, the Newfoundland and Labrador Association of REALTORS® (NLAR) recorded 330 house sales using the MLS® System. This was a new sales record for the month of February, up 15% from February 2021. For the month of February, home sales were 38% higher than the five-year average and 50% higher than the ten-year average. Scorching hot, apparently.
With today’s average home prices approaching numbers previously seen in January of 2014 when the residential average price topped $300,000, it’s safe to say the market is booming. According to Nancy Wadden, REALTOR® with Keller Williams Platinum Realty, the ideal time to sell is in the Spring, followed by the Fall.
“Many sellers wait until Spring to list, we typically see more buyers this time of year which will be more advantageous to sellers. With the anticipated interest rate hikes the earlier a seller lists the better – it’s hard to say what the Fall and Winter will bring.”, says Wadden. Many sellers prefer spring since it is a wonderful time to highlight your home’s best characteristics, while many buyers want to close before the summer months.
Sellers & Buyers, Bankers & Brokers
If you’re one of the many people looking to get in on Newfoundland & Labrador real estate right now, without fail, home insurance is a requirement for obtaining a mortgage. Most mortgages require ongoing insurance coverage as a condition of repayment. No proof of insurance = no mortgage.
“Most buyers will have a home inspection completed as a part of their purchase. After the home inspection buyers are left with a comprehensive report – I like to call this report “your manual for homeownership.” It’s helpful for buyers to have a conversation with their insurance broker about their home inspection report. Insurance brokers can guide them into having coverage that is best for their specific home. Not all coverage is the same.”, says Wadden.
Darlene Haley, VP Personal couldn’t agree more. “Many first-time homebuyers don’t know what they don’t know. It is so important for them to have some deep conversations with their insurance advisor about claims situations that could occur for which insurance has a solution. Too often enhanced coverages are overlooked to save money but could lead to huge financial impact if they decide not to go with the coverage.”, says Haley.
But what about sellers? How does home insurance affect them during a real estate transaction? Haley goes on to say, “For sellers moving to a new home, insurance companies are being very proactive in providing new coverages, especially for overland water cover, flood cover. It’s important that they complete a review of their existing coverage with a conversation around new enhancements which could save them a lot of money in the long run.”
Sometimes when a home is sold it may be a few weeks or months before it’s inhabited. Whatever the reason, “uninhabited properties are a unique risk.” says Haley. “While there is an insurance solution, either with the existing insurer or an alternative, it is imperative that the conversation is had with their broker immediately. I can’t stress that enough. That is clearly a material change in the risk and could result in the denial of a claim if conversation and approval has not been obtained.”
What Types of Home Insurance Are Available?
The island of Newfoundland is unique in that we have many historic or heritage homes, especially in St. John’s, Brigus, and Cupids, the oldest continuously-inhabited English settlement in Canada. And while these historic homes have plenty of character, they come with their own set of challenges from an insurance perspective – wood heat systems, old oil tanks, aging roofs, and more. Not every home is a heritage home, however, and for these homes, things are a bit more straightforward.
Regardless of the age of a house, every day, dozens of threats may threaten it – from a burst pipe to a fallen tree – which makes having insurance vital. Home insurance is designed to reimburse you for the loss of (or damage to) the home and contents as a result of an accident or theft, depending on your policy.
It’s crucial to understand what kind of insurance to get and what it covers in the event of an accident. There are three types of home insurance to choose from:
- Comprehensive – The building and its contents are both covered under comprehensive coverage (excluding items named specifically in the policy).
- Broad – a broad policy covers the building as well as the contents inside against specific risks. It is frequently less expensive than a full coverage policy.
- Basic – a basic or listed hazards policy only protects your home from perils that are specifically mentioned in the policy, such as fire or earthquake.
What’s next for Newfoundland & Labrador Real Estate?
We’d all love a crystal ball to look into but for now, low mortgage rates, a glut of people moving back to the province, and an influx of people downsizing have led to a booming housing market. How long this will last is anybody’s guess, though.
From a realtor’s perspective, Wadden says this, “We’re anticipating a busy Spring and Summer season, as many buyers are still on the hunt… beyond the summer season it’s hard to say, we know banks are talking about interest rate hikes, which could cause the market to cool off a bit!”
Expert Advice from Wedgwood Insurance
Questions? We’d be happy to chat about your real estate concerns when it comes to your home insurance. There’s more to insurance than the price of the policy and Wedgwood goes above and beyond for our clients with expert advice you can trust. But don’t take our word for it – there’s a reason we’re Newfoundland & Labrador’s most trusted insurance broker.
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