Mortgage Bankers Association

Kitchen and bath updates, fresh paint, decluttering and curb appeal boost home value as buyers face steady interest rates

People considering buying or selling a home are facing a unique market. Real estate has been in flux for several years, and high interest rates have made borrowing more expensive.

The Mortgage Bankers Association projects 30-year mortgage rates will level off at 6.5 percent for the foreseeable future. That could disappoint buyers who were waiting for lower rates, but it may also push hesitant shoppers to act in 2025. Sellers, meanwhile, would be wise to make improvements that help their properties stand out and secure the best possible price.

Make kitchen and bath updates

The kitchen remains the heart of the home, and moderate upgrades such as resurfacing cabinets, changing fixtures or replacing countertops can give the space a refreshed look. Bathrooms are equally important. Katie Severance, author of The Brilliant Home Buyer, calls kitchens and baths “money rooms” because they add the most value.

Declutter living spaces

Removing unnecessary belongings can make rooms feel larger, which appeals to buyers, especially as open floor plans remain popular. A tidy, streamlined home also makes it easier for potential buyers to imagine themselves living there.

Add fresh paint

Painting is one of the most cost-effective renovations. According to HGTV, freshly painted rooms appear cleaner and more modern, making them attractive to buyers. Experts recommend neutral colors to appeal to the broadest audience.

Enhance curb appeal

A property’s exterior is the first thing buyers see in person or online. Homeowners should keep lawns maintained and consider adding colorful, low-maintenance plants to boost curb appeal.

Expand usable space

Finishing basements or attics, converting garages into living areas or adding a three-season room can increase livable square footage—another strong selling point.

With rates steady and competition expected to remain, homeowners can maximize resale value by making targeted improvements before listing their properties.

CubeSmart (NYSE:CUBE) is back in the spotlight after Evercore ISI upgraded the stock to ‘Outperform,’ pointing to what they see as an attractive valuation and optimism around the housing market. Evercore’s decision comes with the view that improving market conditions could give a welcome boost to CubeSmart’s revenue in the coming year, a sentiment many investors may find reassuring after a year that has prompted tough questions about where growth will come from. For those tracking REITs or real estate stocks, this is the sort of event that could nudge portfolios in a new direction.

In the bigger picture, CubeSmart’s stock has seen plenty of movement, with short-term gains giving way to a longer-term downswing. Over the last year, the shares have declined around 20%, despite pockets of positive momentum in recent weeks. Rising interest rates and competitive dynamics shaped the larger narrative, but annual revenue growth has held up, even if net income didn’t budge much. While CubeSmart’s three-year and five-year returns still look healthy, the past year suggests momentum has cooled for now.

So after this analyst-driven bump, is CubeSmart undervalued, set for a turnaround, or is the market already factoring in its growth story ahead of next year?

Most Popular Narrative: 10.5% Undervalued

According to the most widely followed narrative, CubeSmart is trading below its estimated fair value, with analysts pointing to a sizeable upside potential if their assumptions hold true. The current share price is seen as not fully reflecting the company’s long-term growth prospects, even as short-term headwinds persist.

Improving fundamentals in key urban markets, especially along dense corridors like New York City, where demand is driven by a growing base of urban dwellers and small businesses coupled with limited new supply, are creating a stable, resilient occupancy base and sticky customer relationships. This environment may steadily lift revenue and net rental income as positive trends flow through the portfolio.

What is the financial engine fueling this bullish rating? Analysts are betting on a delicate balance of growth factors, from urban demand trends to future profitability assumptions. However, the real surprise lies in just how ambitious this narrative is about CubeSmart’s future margin trajectory and valuation multiple. Want to uncover the forecasts and financial math powering this undervaluation call? The numbers behind this outlook may just defy expectations.

Result: Fair Value of $45.28 (UNDERVALUED)

Have a read of the narrative in full and understand what’s behind the forecasts.

However, persistent new supply in Sunbelt regions or a slower recovery in move-in rates could dampen CubeSmart’s revenue growth and delay a margin rebound.

Find out about the key risks to this CubeSmart narrative.

Another View: Discounted Cash Flow Model

Taking a different approach, the SWS DCF model suggests CubeSmart’s value story could be even more compelling. This analysis frames the stock as undervalued by a wide margin. How might this change your perspective?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out CubeSmart for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match – so you never miss a potential opportunity.

Build Your Own CubeSmart Narrative

If you see things differently or want to dive deeper into the numbers yourself, you can put together your own perspective in just a few minutes. Do it your way

A great starting point for your CubeSmart research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data
and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your
financial situation. We aim to bring you long-term focused analysis driven by fundamental data.
Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
Simply Wall St has no position in any stocks mentioned.

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Recent analysis from Moody’s Analytics, led by Chief Economist Mark Zandi and Deputy Chief Economist Cristian deRitis, points directly to outdated capital gains tax caps as the culprit that is keeping millions of homes off the market and out of reach for families who need them most.

According to the report, the problem starts with too many empty-nest seniors “locked in” to homes that no longer fit their needs. But instead of selling and downsizing to a smaller home, the prospect of steep capital gains taxes keeps them in their bigger homes.

The problem is especially acute in high-cost metro areas, where decades of property appreciation means selling even a modest home can trigger a six-figure tax bill. This “misallocation” in the housing market results in a “logjam” where nearly 6 million older Americans reside in houses far larger than necessary, while growing families are crammed into spaces that are too small and millions of young households stay stuck in rental limbo.

This lock-in effect, which is separate from the one caused by high mortgage rates, stems from the Taxpayer Relief Act of 1997, which introduced a capital gains exclusion of $250,000 for single filers and $500,000 for married couples. But these thresholds haven’t budged in almost 30 years. If indexed to home price growth, today’s exclusions would be $885,000 for individuals and $1.77 million for couples. Instead, the thresholds remain static, and more homeowners face massive taxes for moving, especially in states like California and Florida.

In an America full of what UBS calls “everyday millionaires” — a phrase that applies to lots of Americans whose inflated assets make them wealthy on paper, but quite average in lifestyle — lots of people can’t afford to pay the taxes on their real-estate nest eggs.

The case of the widow who wouldn’t sell

Zandi and deRitis argue the most direct remedy is to index the exclusion caps to reflect either inflation or actual home price growth. Raising or even eliminating these caps would immediately release pent-up inventory, helping empty nesters downsize and making more family homes available.

Take the hypothetical example of a widow with a 2,800-square-foot home, the authors write: she faces capital gains of $750,000, and after her $250,000 exclusion, she would pay taxes of more than $100,000 at combined federal and state rates. That represents over 20% of her downsizing proceeds.

“The disincentive to sell is strong,” they write, and she would naturally favor the alternative of living in the house until she dies. “Her heirs would inherit the home on a stepped-up cost basis, avoiding the capital gains tax altogether.”

The Congressional Research Service has estimated that capital gains taxes on the sales of homes exceeding the caps generate $6 billion-$10 billion a year in federal revenue. But changing the tax code doesn’t have to blow a hole in government budgets. Zandi’s analysis suggests much of this could be offset by other tax streams if turnover rises.

Moody’s found that greater housing turnover would also boost labor mobility, one of the keys to regional economic growth. When people can move for jobs, metro areas with more housing transactions see significantly higher employment and gross product growth. Increased sales generate new revenue for local governments through transfer and property taxes, while additional commissions and remodeling purchases pump billions into the economy.

Not just a fix for the wealthy

Right now, much of the tax burden falls on middle-income owners in pricey regions—often after a life crisis like divorce or the death of a spouse—and not on the wealthy, according to the report. That’s because savvy high earners have resources to sidestep taxes entirely. Indexing or eliminating caps would shift the burden from those least able to pay and smooth market frictions hurting families of all ages.

And while some worry that changing the exclusion could flood the market, Moody’s analysis finds that even a 25% spike in listings would only restore sales to normal, pre-crisis levels. Zandi and deRitis suggest a time-limited adjustment could “jump-start” the market without destabilizing prices. They also note significant compliance savings for taxpayers and the IRS, as millions would no longer need to track decades’ worth of paperwork.

America is aging in place

Meanwhile, the number of first-time home buyers has shrunk to a historic low, and they are growing older than ever, hitting a median age of 38. As of July, more senior citizens were actively buying homes than Gen Z and millennials. In April, Jessica Lautz of the National Association of Realtors told Fortune that boomers were “dominating” the housing market, “often purchasing their next homes with cash.”

Zandi isn’t alone in decrying how stuck the housing market has become. Meredith Whitney, the so-called “Oracle of Wall Street,” calculates that baby boomers now own over 54% of U.S. homes (up from 44% in 2008), and 79% are mortgage-free.

“This has made it easier for seniors to hold on to their homes by tapping into some of this built-up equity,” she warned this month. “And growth in such funding will be a major theme for the US economy in the next three to four years.”

Ted and Jamie Garber have a counterintuitive strategy for shedding cash flow from their rental properties.

“We always rent at or below market rates,” the Florida-based couple who own 28 units across 15 commercial and residential properties told Business Insider.

They’ve found that it drives a lot of tenant applications and helps prevent tenant turnover.

Plus, “our tenants value the fact that they’re renting slightly below market rate, so they’re going to want to take care of the place,” said Ted, calling it a win-win. “They’re getting a deal, and we’re still making money from it all.”

Despite renting at or below the average in their area, the Garbers earn six figures in “mostly passive” rental income, said Ted. They started buying rentals in 2020 to accelerate their progress toward financial independence and estimate that they spend about 10 hours a month on real estate-related activities.

Their philosophy on increasing rent is property and market-dependent. With insurance premiums surging in Florida due to increased costs from natural disasters, sometimes increasing rent is inevitable. But it’s capped, said Ted: “We have it built into the leases that it’s a maximum of 5% a year.”

In other areas where they own rentals, it doesn’t make sense to increase rent.

“For example, our new single-family homes are oversaturated by institutional investors that came in — like Invitation Homes by Blackstone — bought a ton of properties in that growing area, and flooded the market with rentals,” he explained. “I was able to get ours rented within days of closing because of my marketing and listing, but you still have to factor all that in. So in those areas, I’m not going to increase because the supply is way outpacing the demand.”

Washington-based investor Dion McNeeley, who retired early thanks to his portfolio of rentals, also believes in providing below-market rent.

He uses what he calls the “binder strategy” to include his tenants in the pricing conversation. He’ll set up a meeting with his tenant and bring a three-ring binder. The first page features a picture of the property they’re renting and its cost.

“Most tenants aren’t looking at home prices unless they’re looking to buy,” he said. “My last property was $400,000 for a duplex. Before that, I paid $525,000 for a triplex. Those are big numbers to a renter, so you point out the current price and say: ‘That’s what my taxes are going to be based on. That’s what my insurance is going to be based on.'”

The second page includes a map showing his property and all the rentals in the surrounding area with the same number of bedrooms and bathrooms. McNeeley walks his tenants through the binder to educate them on market prices and explain how much they’re paying below the average.

He gives the example of one of his duplexes. When he bought it, both tenants he inherited were paying about $1,100 in rent, but the market rent was closer to $1,600.

“If I just went to those tenants, and I said, ‘I’m going to raise you to $1,600,’ I would be a jerk and they’d probably move out,” he said. When he sat them both down with the binder and asked what they thought a fair price would be, “the tenants asked for more than a $300 increase because it’s still below the area average and they’re still getting a deal.”

His tenants rarely ask to pay market rent, he noted: “I’ve never had a tenant say, ‘If the average is $1,600, we should raise it to $1,600.’ I’ve also never had a tenant say, ‘I think it would be fair for it to stay the same or for it to go down.'”

In the long run, he’s saving money by maintaining good relationships with his tenants and avoiding turnover.

“Happy tenants don’t trash the place, and they don’t move, and tenant turnover is one of the most expensive things a landlord has to deal with,” he said. “I’m making tens of thousands of dollars more in the last few years than I would have if I raised the rent to the area average and then dealt with a bunch of turnover.”

Vancouver, Canada – After a major slowdown in Canada’s high-priced housing market, real estate sales in the country appear to be gradually inching up again.

That is cause for optimism across the country’s sector — hopes buoyed even more after the central bank dropped its key interest rate to its lowest in three years.

The Bank of Canada’s 0.25 percent rate cut on September 17 — mirroring its US counterpart’s move the same day — has experts hopeful it might help lift home sales and prices, which had left thousands of properties sitting unsold.

Mortgage broker Mary Sialtsis, in Toronto, where sales have been slowest, said she saw homes taking longer to sell this year, as many of her clients held off buying amid economic anxieties.

“It’s a little bit slower right now than it has been in the past”, she told Al Jazeera before the rate announcement. “During the pandemic, prices really spiked — there was almost like a buying frenzy.

“Things have tempered quite a bit since then.”

Many would-be homebuyers had been reluctant to invest amid United States President Donald Trump’s chaotic imposition of tariffs on Canadian imports, she said.

As a result, many sellers were pressured to settle for less.

“There’s just been, I think, a general hesitancy,” Sialtsis said.

But last month, national home sales rose just more than 1 percent, according to the Canadian Real Estate Association (CREA), the fifth consecutive month of small increases, as average house prices climbed nearly 2 percent from last year.

Real estate is one of Canada’s most lucrative sectors. It makes up nearly 400 billion Canadian dollars (US$287bn) of the country’s gross domestic product, representing 13 percent of Canada’s economy.

‘Rates should have come down a lot faster’

Last week, the Bank of Canada reduced its federally set key interest rate to 2.5 percent, down by a quarter-point.

The central bank’s governor, Tiff Macklem, told reporters the Crown corporation’s council had a “clear consensus” that dropping the rate would “help the economy adjust while maintaining well-controlled inflation”.

“Obviously, tariffs are weakening the Canadian economy”, he said at a news conference after the rate cut. “We are proceeding carefully … We don’t want Canadians to have to worry about big increases in the cost of living.”

Despite what the bank described in a statement as “a lot of job losses” and a weakening economy, increased housing activity was among the few “signs of resilience”.

The central bank’s key interest rate influences private banks’ own lending rates, including mortgages. Lower rates mean more people can afford to take out house loans — and also many mortgage-holders can get some relief on their costs.

The bank’s rate started climbing in early 2022, skyrocketing from just 0.25 percent in early 2022 up to 5 percent the next year, its highest since 2001.

According to Sialtsis, keeping the rate high so long “caused some people to pull back”.

She said some of her would-be clients did not buy houses, despite it having become a buyers’ market. They were “holding off because of the uncertainty due to the trade tariffs and the potential impact”.

But since April last year, the nationally set interest rate has been gradually declining as the country battled post-pandemic inflation, which drove up the cost of living for Canadians.

Shaun Cathcart, senior economist with CREA, said the historically high interest rates kept the market “mostly asleep” for three years.

“We thought that 2025 was going to be a rebound year,” he said. “And then, of course, what happened was this total tariff chaos just completely derailed that.

“People just pulled right back and said, ‘We’re not going to make any big decisions like this, I don’t know if I’m going to have a job.’”

But recent improved house sales, he said, suggest the initial “dread” from the trade war may have “sort of calmed down”.

And he believes there’s a good chance “that trend could accelerate this fall.”

For University of British Columbia economics professor Andrey Pavlov, holding the rates high as long as the central bank did “was a mistake”.

“Interest rates should have come down a lot faster and a lot further than they did,” he told Al Jazeera prior to the latest rate cut.

“Income per capita has been flat or declining in Canada for the past two years — allowing that to happen [was] a policy mistake.”

Pavlov said he would like to see more “substantial” reductions in the central bank’s rates to get the housing market moving again.

“It’s a very early trend of recovery”, he said. “High interest rates obviously present a major headwind to real estate.

“Some substantial interest rate cuts will then establish the trend of normal recovery and going back to a normal or seller’s market.”

Ottawa launches new housing agency

Before the rate cut, the country’s minister of housing and infrastructure, Gregor Robertson, acknowledged slower-than-expected real estate sales, but added some regions fared better than others.

For instance, Canada’s most populated metropolis, the Greater Toronto Area, actually saw its house sales drop last month.

“Generally, the market is challenged by the US tariffs and the threats we face across the global economy with wars and uncertainties”, Robertson told Al Jazeera.

“Housing and infrastructure are right at the core of Canada’s economy … It’s critical that we leverage that overall investment and create more jobs — create more homes.”

On September 15, Ottawa unveiled Build Canada Homes, a new agency with a 13 billion Canadian dollars (US$9.3bn) mission to ramp up construction of up to 50,000 “factory-made” housing units on federally owned land.

In a statement, Prime Minister Mark Carney said the new agency will “partner with private market developers to build affordable homes” for middle-class Canadians.

Ottawa’s plan would see the private sector offer “construction capacity, innovation, supply chains, and financing” — with the government bringing to the table “federal lands, faster approvals, and strong incentives”.

And in a nod to industries worst-hit by US tariffs, Carney said the initiative will follow a “buy Canadian” policy, to “channel demand through Canadian industries” such as lumber, aluminium and steel.

Economist Jim Stanford, with the Centre for Future Work, said federal promises to expand the housing supply were “ambitious”.

“A big expansion of housing activity would help Canada weather the Trump tariffs,” he said.

But he cautioned against relying too much on private developers, which he described as “very speculative and very financialised”.

“If it’s just left to the private housing industry … we could see one of the ramifications of a Trump recession would be a further decline in housing prices,” he warned, “and a decline in housing construction.”

Although falling home prices can stimulate demand and construction, the Canada Mortgage and Housing Corporation notes that in some cases “falling prices and tighter credit” can create “risks for buyers,” and too many unsold homes on the market can lead to projects being delayed or cancelled.

‘Strength of the real estate market’

The housing minister said the affordability crisis has created urgency around building more homes for middle-income earners, as well as non-market homes for lower-income and homeless people.

“We need to really scale up the number of homes being built below market,” Robertson said, “and make it more affordable for Canadians.”

According to mortgage broker Sialtsis, many Canadians — including renters and first-time homeowners — have been deeply challenged by a lack of affordable housing.

While close to two-thirds of Canadians own their primary home, affordability remains a major barrier, she noted.

But despite the housing sector’s slow recovery this year, Sialtsis remains a “firm believer in the strength” of Canada’s real estate market overall.

“Personally, I have seen significant improvement in my business activity over the last couple of weeks,” she told Al Jazeera after the interest rate cut, “and expect that this announcement will continue to strengthen it.”