Where there is smoke …

In addition to our surreal forest fire induced sepia-toned smoked-filled skies, it looks like the early July market is also on fire.

2015-07-06 16_13_24-July 2015 Sales ProjectionWith 97 sales in the first 6 days and 181 new listings, the sales to new listings ration is 54% and my monthly sales projection is 878 – a 29% increase over the 681 properties sold in July 2014.

Smoke-filled skies at Otter Bay(Photo taken Sunday morning at Otter Bay on Pender Island.)

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45 thoughts on “Where there is smoke …

  1. Isn’t the concern about the Chinese stock market more about the effects on manufacturing and importation of raw materials from other countries – like Canada?

  2. China’s stock markets are a little bigger than Canada’s and about 10% the size of the U.S. Anybody worth anything in China has most of their net worth in the U.S. Stock exchanges already- losing half of what might be 10% of their portfolio means nothing. China stock market is small potatoes for the types that buy houses overseas.

  3. Weren’t you the one who that showed us above the drop we just witnessed? …and if you calculate it to the actual bottom, instead of to 2015, wouldn’t it be closer to a 20% drop? I’m sure prices went from nearly 600 to under 500 at one point in 2013. 20% is a big drop.

    DavidL said “According to the BOC, inflation has been 9.11% inflation over the past five years. That $578,300 in 2010 should be $631,008 in 2015, so that “increase” to $581,600 is actually a loss of $52,708 (more than 8%).”

  4. Weren’t you the one who that showed us above the drop we just witnessed? …and if you calculate it to the actual bottom, instead of to 2015, wouldn’t it be closer to a 20% drop? I’m sure prices went from nearly 600 to under 500 at one point in 2013. 20% is a big drop.

    DavidL said “According to the BOC, inflation has been 9.11% inflation over the past five years. That $578,300 in 2010 should be $631,008 in 2015, so that “increase” to $581,600 is actually a loss of $52,708 (more than 8%).”

  5. That big rise in housing prices in Victoria in the late 1980’s was preceded by a big drop in prices in during 1981 to 1984. When factoring in the high inflation at that time, house prices didn’t return to previous levels until the early 1990’s.

    If you are planning to see a big increase in prices, you’re going to witness a big drop first …

  6. What does CD Howe see that real estate bulls can’t ? If this China stock market crash carries over into their real estate market things could get ugly. Haven’t heard the words “panic in the markets” in a long while.

    “Canada needs $9-billion fund to shield it from severe housing crash, C.D. Howe warns”

    “More than half of outstanding mortgage debt is now covered by federally backstopped insurance, the C.D. Howe report said.

    The Bank of Canada has said prices are overvalued by 30 per cent and a dip remains the single biggest risk to the economy. ”

    Half of all outstanding mortgage debt on the taxpayers shoulders ? That’s atrocious.

    http://business.financialpost.com/personal-finance/mortgages-real-estate/ottawa-needs-9-billion-fund-to-shield-it-from-full-blown-housing-crash-c-d-howe-warns

  7. Holy macaroni! It’s starting to look like we might be getting our Oct’87 China crash…50% off within 2 months!

    I wonder if that means Vic/Van is about to go up 50% like it did from ‘88 to ‘89? Remember when Li Ka-Shing bought the Expo land in 1988… Or is his name Ka-Ching 😉

  8. Dammit, they should be playing on the highway.

    You live in a community and abide by the agreed upon rules. The strata rules are established by the strata council at their meetings.

    Don’t like the rules – then change them

  9. $25 a month is cheap. You won’t be building up much of a reserve for replacement when the road needs to be re-surfaced. Of course roads, unlike elevators, don’t fail in a day. If you leave the common property road to steadily deteriorate then property values would be effected over time. There is no set monthly amount or requirement for a depreciation report to determine the size of the reserve for bare land stratas. But at $25 a month, the owner of your property in 30 or 40 years from now might have to pay a special assessment.

    Municipalities like bare land strata lots because they are off the hook for maintenance. Which probably means there will be more bare land stratas than freehold subdivisions in the future.

    So how much less are you going to pay for a bare land strata lot over a freehold lot that you have to pay $300 a year?

    A thousand? 10,000? a $100,000? Zero?

    What’s the sinking fund factor for re-surfacing a road over 40 years? Divided between the property owners. Probably 25 or 30 bucks. But you have to do the math.

  10. I’ve also come across a number of bylaw issues over the years with bare land strata’s too. Sometimes developers are lazy and just apply the standard strata act bylaw schedule that is moreso written for condos (limits # of pets, for example)….or you get a crazy strata corporation amending the bylaws after the fact. I saw one when they introduced a bylaw that children could not play on the common lane.

  11. Bare land strata is best to avoid for various reasons….that being said I bought my personal 1/2 acre property in a bare land strata. I wouldn’t rule out the perfect property because it is bare land strata; however, I would definitely lean towards freehold if possible.

    Mine is only $25 per month but it is really annoying having to deal with the insurance paperwork ($400/year to insure our common road), meetings, strata bank account, etc.

    I guess the only positive is my neighbours are great so the common road is nicely landscaped and sprinkled, with have solar lighting fixtures coming down the road, etc.

    Also, we don’t have a lot of the problems of a typical bare land strata such as parking issues since we have 1/2 acres lots/big houses/big driveways.

  12. The newer residential subdivisions that share common property maintenance such as a road , typically have small lot sizes.. There are some subdivisions with larger lots but they were created before sewers were available and originally had a common septic field as well as a road.

    It’s very difficult to quantify if there is any difference in price between freehold and bare land strata lots. I suspect that it isn’t the price but how sale-able are bare land stratas relative to freehold. That you can determine by looking at the median days on market for each.

    Freehold properties have a median days on market of 40 in Langford.
    Bare Land Stratas have a median days on market of 50 in Langford.

    What that seems to show, to me, is that there isn’t a significant difference in price between the two, but freehold properties will sell faster than bare land strata properties.

    Included in the bare land strata fee should be insurance to cover injuries. Roads don’t normally require a lot of maintenance in Victoria. Overtime the strata fees could build to a sizable reserve that would allow for a complete re-paving.

    .

  13. A topic for a new thread perhaps but can I have some opinions on strata developments which feature detached homes? I do not have apartment-style or row-house style strata properties on my shopping list but there are a good number of small strata developments which feature a half-dozen or so homes on a cul-de-sac. Are there any downsides to those in terms of resale or being exposed to future costs in infrastructure upkeep (roads/curbs/sewers/landscaping)? I am trying to defeat a strong preference for freehold….

  14. > depreciation and maintenance is way too low

    I’m counting what I spent, not what I would budget to spend for all maintenance. As for way too low… Well the car cost $14,300 when it was one year old. 4 years later, based on usedvic I’d say it’s worth about $11,000 so $100/month depreciation is on the high end so far.

    As for maintenance, if I spend $1200/year on maintenance I’ve got a lemon.
    I think your views of car ownership were distorted by the Westy 🙂

    > So it costs you $419/month to store it most of the time.

    Yes. My cost per kilometre is astronomical. But my total cost of ownership is still low.

    > A membership with Modo is $500 once

    I was a member of the co-op for years but cancelled recently. We don’t drive much, but the co-op is not convenient enough to get rid of the car entirely. Although we could easily share a car with my mother in law if we wanted to. Not sure if that proposal would fly though.

  15. I think So. Your gas is cheaper sure and insurance but your depreciation and maintenance is way too low. I have the handy recent hindsight of two vehicle sales in calculating total costs ish. First a Mercedes bought used. Same with the Westy. The Mercedes depreciated 9k over 5 years. (if i include tax paid on the purchase). It maybe about 5k in maintenance over that period. The Westy depreciated $2500 over 3 years (including tax paid) But was 8k in maintenance. So I’m going to say $250 is the base cost of depreciation + maintenance based on my two car sample ;-). I would expect a new car would depreciate fast but have low maintenance and thus have the same number apply to it. You are at $419 but you aren’t driving it much judging by your gas cost…So it costs you $419/month to store it most of the time. A membership with Modo is $500 once and then $4/hour or $46ish every 24 hours including gas up to 200km.

  16. > 100 insurance, 150 gas, 100 maintenance, 150 depreciation = 500/month min.

    Well…
    Insurance: $88/month
    Gas: $60/month
    Speeding ticket: $11/month
    Parking: $10/month

    So $169/month + your $100 depreciation is $269.

    Of course it costs more than that, there is some maintenance there not accounted for (oil and filter) and I’m not counting larger maintenance allocation down the road, or opportunity cost of the money. Once you add that it’s probably closer to $500/month.

  17. 100 insurance, 150 gas, 100 maintenance, 150 depreciation = 500/month min.
    Depreciation depends on Vehicle as does maintenance but the two interact. I don’t see how you can get under 158/month even without depreciation.

  18. @nan I think counting real out of pocket costs is a better way to compare. Yes your time has value but I wouldn’t say your commute is wasted time. You can use it to decompress, you can listen to an audiobook on the way home, etc. I still think all things considered it is cheaper to live downtown if you can ride/walk to work than drive from Langford

  19. One of these does not **yet** belong to the other four’s club, but is **bound** to soon.
    lol…Sometimes I wonder if I have too much time on my hands.

    The most expensive USA from Dasmo’s article is bottom middle.

  20. It’s not obvious that it is cheaper at all to live in Langford. I calculate that it costs roughly $14,000 per year driving an average car with a salary of $40/ hour to commute from Langford to Victoria per person (basic google distances, ignoring any nuance of each individual commute). This also assumes that you value your free time at the same rate as you value your paid time – your kids may value it higher… For 2 people, it is double that @ $28,000/ year or $2,300/ month.

    Compared that to riding my bike from where I live into town (takes 10 minutes each way) and costs about 3,333/ year or $6,666 for two people in time, but I get a workout for free, so I get to skip the gym. If I plan on going to the gym anyway, the net cost is zero (and I do actually try to keep fit – the 2 rides a day help a lot!)

    The difference for me here is $2300/ month, which is the equivalent of a payment on a $500,000 mortgage at todays rates. Houses are not generally $500,000 cheaper in Langford. In fact, they are maybe only $100-$200k cheaper for similar properties.

    If you plan to commute to Victoria, housing prices in Langford are WAY too high (or city prices are way too low) to justify the amount of time and money you need to spend driving in and out of town everyday.

    But this is the truth almost everywhere. The cost of commuting is virtually ignored across Canada.

  21. I’ve sold all my vehicles and can totally function with my bikes and a car share membership. I might never go back. I loved my Westy but it was like owning an Elephant that eats bails of cash. You love it but it does suck to feed it cash all the time to keep it alive. Owning a car cost’s 500/month at least (with Gas). Having sold two vehicles recently I have done the math. One ate less cash but devalued a ton. The other held it’s value but ate more. They ended up working out to about the same. 500/month and I have a 5 minute commute if I drive… Certainly wouldn’t own two vehicles again. In Rotterdam we won’t own at all. We will join a car share, Bike as daily vehicle, and rent recreational vehicles. Renting a Westy when I get there for two weeks and it’s only going to cost one bail of cash which it would eat in a couple months of owning anyway….

  22. Also 25% more cars per person in Langford than in Victoria implying that some of your housing savings go into extra transportation expenses. Obviously still overall cheaper to live in Langford.

  23. Here’s the contrast:
    – in City of Victoria 33% of people walked or biked to work and 78% had commutes under 5 km (10% over 10 km commute)
    – in City of Langford 7% of people walked or biked to work and only 29% had commutes under 5 km (43% over 10 km commute)

  24. It has its compensations. Most people commute to work into cities these days. The few that don’t have to commute probably imagine it be worse than it really is.

  25. Sales activity in the core is up quite a bit over the last 4 or 5 months. I don’t think people’s attention has ever left real estate. Victorians seem to be obsessed with it.

    Since real estate is the number one game that the whole family can play. You’re just a phone call away from owning your next investment condo or to get junior on his way to a life of riches and dreams.

    And speaking of the 80’s

    https://youtu.be/2AS8E9eoNQw

  26. Living in Bear Mountain seems crazy to me because of the drive – maybe there are more jobs out there these days?

  27. There are 53 houses for sale on Bear Mountain in Langford. Which is about 40 less than the City of Victoria. Prices ranged from a low of $439,000 for a 1,500 square foot 10 year old home that was just bought in 2008 for $469,000 to a high of 1.9 million for a home that just recently had a price drop from 2.35 million.

    For the entire month of June – 4 houses sold in Bear Mountain and 9 new listings were added. The median price for the last 6 months of this year was $595,000 which got you a 10 year old, 2,800 square foot home on a 6,000 square foot lot. The typical home selling at about 6 percent more than its 2014 assessed value

    Last year the neighborhood median was $689,500 for a 3,400 square foot home on a 6,500 square foot lot. With the typical home selling near its 2014 assessed value.

    Clearly the market for houses in Bear Mountain favors sellers. With 13 months of inventory and new listings being added at the rate of 2 to 1. It also appears there was a market shift to smaller homes but even after adjusting for differences in house size – market prices actually increased.

    How can this happen?

    Marketing can do this. Tell someone that they’ll be more attractive with this skin cream because it comes from T cells of an Avocado plant and people will pay more for the product. They’re buying the sizzle and not the steak.

    Do you really want to be in a bidding war against someone like that?

  28. Now the stock markets could use a good smoking. It’s still freaky how identical things are to ‘87… oil, currency, interest rates, resource prices… all got slaughtered ‘81 to ‘86, just like ‘10 to now. If we could get an ’87-like stock crash to get people’s attention back to real estate, I think we’d be on our way to an ‘87-’94 double double.

  29. 5 yr Mortgage Rates? under 2% fixed?
    That’s giving money away
    Fidelity just announced they think the stock markets are not over valued haha

  30. According to the BOC, inflation has been 9.11% inflation over the past five years. That $578,300 in 2010 should be $631,008 in 2015, so that “increase” to $581,600 is actually a loss of $52,708 (more than 8%).

  31. Interesting looking at the benchmark for the core. June’s is $581,600, and 60 months ago it was $578,300. Only $3,300 profit in five years kind of sucks as an investment versus the risk factor.

    Did you notice oil crashed over $4 a barrel today ? Not good for the Alberta oil recovery, the worst is clearly not over.

  32. Great pic indeed !

    From the previous thread, Jack said:

    “However, the government has been vamping and re-vamping the normal cycle of real estate and not letting it correct. That’s really screwing with people’s financial futures.”

    That’s my number one issue. When you don’t let a market naturally correct and politicians alter key lending criteria for more than a decade, then one day they won’t be able to move the goal posts any longer which is now that day in my humble opinion.

    Will another interest rate cut truly juice the market in any big way to save us from the recession TD Bank says today we have been in the first six months of this year ? I highly doubt it. Another quarter point won’t allow any significant amount of new players into the market. No more raises til 2017 now makes Canada’s economy look like it’s going in the tank much faster than previous thought.

    “Canada slumped into first-half recession as oil prices crashed, TD Bank economist says”

    http://business.financialpost.com/news/economy/canada-slumped-into-first-half-recession-as-oil-prices-crashed-td-bank-economist-says

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