Foreign Buyers and a Market Update

So the province is running scared these days.   After trying in vain to pretend there is no problem, they are now desperate to fix it or at least act as if they are fixing it before the election.   This time they have hit with a meaty sounding tax of 15% on home purchases by foreign buyers in the greater Vancouver area.

It’s funny though.  At that thesis defense I went to they specifically said you have to apply any additional property transfer tax equally across jurisdictions or it will just push people to other areas and shift the problem elsewhere. A week later they implement a region specific tax and do exactly what was not recommended.

Look, either there’s a problem with foreign buyers or there isn’t.  Just because the rest of the country hasn’t reached the insanity of Vancouver doesn’t make it any less of an issue.  How about we try to fix the problem province-wide before it goes off the rails rather than after?   Instead they are going to remain reactionary by shifting demand outside of Vancouver, then moving the tax around, or reducing it to try to bring some balance back.   I can’t see how we won’t end up with more buyers in Victoria from this move unless it swiftly gets adopted here as well.

Also a weekly stats update courtesy of the VREB via Marko Juras.

July 2016
July
 2015
Wk 1 Wk 2 Wk 3 Wk 4
Unconditional Sales 265 512 744
796
New Listings 354 630 930
1235
Active Listings 2240 2214  2219
3942
Sales to New Listings  75% 81% 80%
64%
Sales Projection 1002 1002
Months of Inventory

4.95

Oh look we gained 5 listings last week!

A History of On Reserve Housing

This is a guest post by Dr. Sylvia Olsen.  I recently attended a talk organized by Civil Engineering students at UVIc on the topic of housing on First Nations reserves in Canada.   Before this, my only knowledge of on-reserve housing came from driving by on the highway and noticing the poor state of it, as well as the occasional news story that bubbles through the noise.  Listening to Sylvia’s passionate and insightful summary of her PhD research opened my eyes to the root causes of the current crisis and the appalling history of the system that created it.    

While outside the normal topic of discussion on this blog, I believe this is an issue we should all be more educated about and I strongly encourage you to take the time to watch the video of Sylvia’s talk below.  It really puts the housing issues we are all bombarded with every day into perspective.


Dr. Sylvia Olsen presents a paper on her PhD dissertation titled “Making Poverty: A history of government housing programs on reserves, 1930-1996.”

Sylvia currently teaches on-reserve housing management at Vancouver Island University. She has lived on Tsartlip First Nation for most of her adult life; her children and grandchildren continue to live in the community. She has worked in the field of on-reserve housing for decades in many capacities from housing and construction management, to curriculum development and policy analysis. Sylvia believes there are two fundamental principles involved in finding solutions to any problem: first, you must understand the problem and second, the intensity of the solution must match the intensity of the problem. Her work enables Canadians to understand on-reserve housing in a new way. Her hope is that it will help shift public impressions and influence policy going forward.


Making Poverty on Vimeo

July 18 Market Update

Weekly stats update courtesy of the VREB via Marko Juras.

July 2016
July
 2015
Wk 1 Wk 2 Wk 3 Wk 4
Unconditional Sales 265 512
796
New Listings 354 630
1235
Active Listings 2240 2214
3942
Sales to New Listings  75% 81%
64%
Sales Projection 1002
Months of Inventory

4.95

Looks like we might just crack 1000 sales in July.  That last happened…  never.

chart (3)

From this week it seems the last was unduly affected by the long weekend.  Now sales are back to previous levels and show no particular weakness.   Inventory also continues to melt, so likely any significant weakening of the market will not be until next spring.

It will be interesting what the next round of regulatory tightening brings.   Qualifying rates for terms under 5 years were raised a couple weeks ago and the OSFI has already indicated there are changes coming.  As I’ve said before, the regulatory environment is the wildcard that can make or break this market, and right now all levels of government are either making changes, planning changes, or gathering data (badly) on what changes to make.   What will be interesting is whether they the combination of the tweaks turns into something bigger.

July 11 Market Update

Weekly stats update courtesy of the VREB via Marko Juras.

July 2016
July
 2015
Wk 1 Wk 2 Wk 3 Wk 4
Unconditional Sales 265
796
New Listings 354
1235
Active Listings 2240
3942
Sales to New Listings  75%
64%
Sales Projection
Months of Inventory

4.95

 

Graphing months of inventory gets a little.. “squiggly” at the start of the month.  This is because there are only a couple days of data so things like weekends have a larger effect.   However it does seem that sales are starting to seriously slow down which is earlier in the year than usual.  Will be interesting to see how the rest of July shapes up.

How many skyboxes for a dirtbox?

If you listen to the conventional wisdom from the real estate industry you should get into the market as soon as possible so you can start climbing that property ladder.  Get into a condo early, then trade up in a few years to a starter house, and trade up again a few years later.

Of course you can guess the primary reason the industry gives this advice:  more transactions means more commissions.  A better idea is to minimize your transactions and minimize transaction costs when one is unavoidable.

While the market was in the downturn between 2010 and 2014, the property ladder was completely broken.  Condos were dropping in value faster than detached houses.   Most people sitting on a condo in that time would have noticed that the rung above them on the ladder was moving ever further away.

In today’s hot market it’s debatable whether it makes more sense to jump in sooner or wait until you can afford something that you can stay in for the long term.   What’s not debatable is that condos are on the whole not appreciating at the same rate as detached houses.

One way to look at this is to see how many median condos you would have to trade in for a median single family home over time in Victoria.

skyboxes

I imagine if we compared them with a repeat sale index the trend towards detached homes out-appreciating condos would be even stronger.