Mid-August: Sales up, Listings down

Back in mid-June, I asked:

Are the current sales “pulling forward” future sales that may have occurred in the summer?

With strong sales during the past week – the answer would be “No”. With a mid-month sales projection of 750 (up 23% from last year), we’ll likely end off with about 5 months of inventory at the end of August. This keeps us firmly on the edge of a sellers’ market.

2015-08-17 16_14_00-August 2015 Sales Projection

Active listings are projected to be about 15% less than the same month last year, meaning that with ongoing strong sales – there is not a wide selection to choose from. Where have all the good houses gone?!

[BTW: Thanks for keeping the blog comments going while I was away in Alaska. If anyone is interested in writing a future blog post, please let me know via the contact page.]

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82 thoughts on “Mid-August: Sales up, Listings down

  1. That’s why you try to engineer your life…. Don’t want to sit in that traffic? Change something yourself….

  2. Exactly…. In front of Thetis was where I was in a multi car pile up… Because traffic had come to a complete and instant stop screwing my neck…. That was 1986. I remember the colwood crawl well…

  3. One accident on any main route and the town is a disaster. Just look at yesterday, a couple of fender benders by Helmecken and the traffic is mess all the way back down Burnside, Blanchard and effecting Pat Bay as well.

    Try coming into town by Uptown on Blanchard and it takes 10 to 15 mins to get just past Mayfair. Unless you are at off peak hours the traffic has major back ups and a fine line between movement and complete chaos with a single accident. Toss in all the new drivers with N’s that are showing up everywhere it seems and it makes Vancouver’s system look attractive.

  4. Then how come it’s been called the “Colwood Crawl” for as long as I can remember…

    I first heard “Colwood Crawl” in the mid-80’s – but at that time Hwy #1 was just two lanes snaking it’s way past Thetis Lake.

    Until McKenzie Ave. was “punched through” from Glanford Ave., over Interurban Rd., and on to Hwy #1 (in 1981?), the traffic in the 1970’s always backed up along Tillicum Rd. The McKenzie Ave. extension eased congestion for a while, but then the traffic started backing up at both intersections – thus the beginning of the crawl!

  5. Then how come it’s been called the “Colwood Crawl” for as long as I can remember…. It was bad, got a little better but not much because they didn’t really do the highway right. Now it’s just back to bad and a little worse… But it’s still not that bad. I remember it taking me 45 minutes just to get on the san francisco bay bridge… about 200 meters. When there are vendors selling newspapers and snacks along the highway here then you know it’s “extremely” congested….

  6. The commute into Langford from town at rush hour has been 45 minutes for a lot longer than a decade…

    Highway expansion work between McKenzie Ave. (Saanich) and Spencer Rd. (Langford) started in 1995. After that, the traffic congestion was not too bad until about 2005 near the peak of new SFH’s being built in Langford. As a Victoria resident all my life, I would say that the Colwood Crawl has only been really bad for the past 10 years.

  7. My aim wasn’t to give you supporting examples, just to point out that there are many cities that are crowded and that many more people want to move to those crowded cities than out of them. The crowdedness of a big city is actually a reason to move there, on average.

    So all the videos above actually support moving to a bigger city, not out of them, on average.

  8. Actually, Blanchard is my preferred route getting in and out of town. Even during rush hour, the traffic moves consistently. Yes, Victoria is getting more congested – but with a radial plan overlaid with a grid, traffic moves in and out of the downtown core fairly well.

  9. The commute into Langford from town at rush hour has been 45 minutes for a lot longer than a decade…

  10. Looks like Blanchard St most days. If you haven’t noticed Victoria is getting extremely congested the last 10 years here making what used to be easy commutes into very stressful ones on mainly single lane roads. Pick any main route at rush hour and it’s a gong show, just a different proportion. If it wasn’t for family I would be out of here.

  11. It’s not a credit crisis that’a going down. It’s a China crisis, global economy, US fed taper worry, crisis that have people worried about “risky assets”. I think our RE will hold up just fine….

  12. Agreed. However, I’m surprised that many people who work downtown would prefer to commute to Langford to live in a house < 10 years old rather than reducing their driving time and living in a similarly priced 1970's home (with a bigger yard) in Saanich West.

  13. “The report concluded nitrogen oxide emissions…volatile organic compounds,
    carbon monoxide and sulphur dioxide.”

    So in other words a tiny fraction of the exact same emissions coming from all the automobiles passing by the plant each day on the Malahat highway. There isn’t a chance of anywhere on Saanich Peninsula registering one part per million uptick coming from a Mill Bay LNG plant.

  14. Does anyone happen to know what 2760 Lincoln Rd just sold for. Also does Teranet consider this sale and the sale of the same property (address) last year a paired sale, notwithstanding that the house was torn down and rebuilt during the interim.

  15. Prices have hit a ceiling here and will continue to bounce on a flat plateau until there is significant wage and or rent inflation…

    Wage inflation will probably come with price inflation which will bring interest rate inflation, which will probably mean RE price deflatioin.

  16. Yep, not a single stat to back up their claims. Just like Asians flooding into Gordon Head, never happened. The industry needs to quit with the BS stories trying to keep the pump alive like a penny stock hype job.

  17. Sure Michael, massive tankers in a narrow inlet where people live to enjoy the fishing, prawning and tranquility will be instantly destroyed and Victoria’s reputation for clean air will be gone forever. You obviously have your priorities ass backwards on what Victoria is all about and why people want to live here. I’ll buy after the coming crash thanks.

    Ignore the realities all you want, this is from the Kitimat environmental report.

    “The report concluded nitrogen oxide emissions from the LNG plants would increase 500 per cent above existing levels. Nitrogen oxide emissions create acid rain, which harms waterways and fish and creates smog, which causes respiratory problems for children and the elderly, the report states.

    The report also concluded natural gas driven LNG plants will increase emissions in the Kitimat area of volatile organic compounds, carbon monoxide and sulphur dioxide.”

  18. Yes, a $30 billion project in Saanich Inlet where high-paid workers load LNG onto boats would certainly devastate Victoria property values.

    Hawk, do yourself a favour, if there was ever a time to buy a home…

  19. Another canary in the coal mine, as in a potential US credit crisis. What starts there in a so called strong economy, always washes up on our shores. But keep up the Conde Naste pretty sunset stories, another catalyst is showing up on the list.

    “With 70% of the US economy driven by consumer spending, particularly via credit spending, both of these data points indicate that a sharp economic contraction has begun. The official GDP numbers do not reflect this because they are too politically important to do so. But the hard data shows something nasty is coming down the pike.”


  20. Is that the sound of real estate beginning to crash in V-town ? An LNG plant smack dab in one of the most prestigious inlets of the island within breathing distance of the core ? Guess we know greed has no boundaries, especially when the ex-chief is caught with his hands in the cookie jar taking pay offs from the Shawnigan dirt dumpers.

    If I was one of the canoe full of Vancouverites who left to move near an LNG polluting plant I would be second guessing my decision.

    Speaking of “shovelling doodoo”, CHEK TV should be ashamed of themselves for pumping out that piece of agent biased garbage last night making up stories of Vancouver millionaires flooding here without saying the numbers that Jack posted. Huge credibility lost IMO.


  21. I do wonder if these chaps have been on too many brewery tours.


    “I really think the Pacific Northwest of North America is becoming the next super region. Think of the great cities and destinations that are clustered right there, and how deeply we’re connected with our transportation links,” said Nursey, noting Victoria is ranked the 17th best destination in the world by Condé Nast Traveller magazine.
    “I think we stand on our own two feet, but we’re part of a burgeoning region. It really is exciting.”

  22. With building material costs falling so much over the past two years 😉 I might wait a couple more years to buy my new house in Oak Bay to see if I can get it for next to nothing. I figure I’ve already saved over a hundred grand since 2013 by waiting out this commodity rout. What do you guys think of my plan? ….ok, maybe that wasn’t as entertaining as it first seemed.

  23. > Prices have started to rise again this year. We are no longer in a flat market.

    We never were. After the peak in 2010 we were in a declining market for 3 years and since then it’s been rising with an uptick in the rate this year

  24. I’m curious if you think new car prices are falling too…

    Whether is due to cheaper fuel (less cost to transport) or cheaper raw materials, many 2016 car models are less expensive than their 2015 counterparts. A quick search shows that the MRSP for cars such as the Volkwagon Tiguan, Mazda 3, Chevy Volt, Kia Soul EV are all lower.

  25. When it comes to luxury condos in the core what constitutes a luxury price?

    In other words what price separates the unwashed masses from the Donald Trump wannabees. Half of the last 500 sales in the core ranged between a low of $122,000 to a high of $290,000. Toss these away as human refuge- the shoe shine boys of our times. The top quarter of condo dwellers paid more than $390,000. But that still is too low – there might be a real estate agent or two perhaps even an appraiser in there and that alone would disqualify the entire group.

    The top 10 per cent paid more than $525,000 for a skybox. The top 5 per cent more than $650,000. And if you want to have any chance of being invited to Trump’s inaugural ball. then to be in the top 1 per cent you need to spend a million plus.

    The good news is that there are more buyers in the 5 per center club over the last six months compared to the same time last year. Not since 2007 have we seen more buyers in the top 5 per cent. They don’t seem too special anymore. Kinda like BMW’s

    And the millionaires club where you will pay between $500 to $1,000 a square foot for a condo. The one per centers. Again one of the top years for sales. Those lucky enough to have a picture taken of themselves with the Donald and Steve in a compromising position.

    Of the top 11 condos to sell in the last 6 months. The buyers were from…
    1 was from Edmonton (witness protection program)
    1 was from Calgary (looking for someone in the witness protection program)
    1 was from Up Island (WTF??)
    1 was from Switzerland (thought Vancouver was on Vancouver Island)
    7 were from Victoria (should have known better)

  26. I’ll give you a hint Jack on the price of building materials lately. Everything that goes into a new build in Canada that’s not manufactured here, just went up a lot of loonies this past year.

  27. Prove it.
    I’m curious if you think new car prices are falling too… you know, since they’re getting their spools of wire so cheap 😉

  28. And what about London – England not Ontario

    Seems like Chinese investment for high end luxury is slowing down. Harder hit still are Russian investors since the rouble has fallen 55 per cent against the pound since the economic sanctions following the annexation of Crimea.

    No news from Canada on how the luxury market is doing. But would you expect any?

    A slowing demand for high end condos in Toronto or Vancouver would change CMHC’s assessment of risk for these two cities. Making the level of risk go from low to high in a very short time period. That’s the problem when the local market is driven by foreign investors. What happens in their country has an impact on your local market. That’s something the Canadian government has no control over with its fiscal or monetary policies.

    Asian investors do not invest in falling markets. A reason why they stopped investing in the USA after 2007 and increased their investments in Canada. Now the USA is back and Canada is slipping. Imagine having invested in Canada over the last decade only to lose wealth from a falling Canadian dollar. You parked your money in Canada because it was suppose to be safe.

    If you gave Canada a $500,000 interest free for several years and now get back $400,000.

  29. I see, so you’re thinking builders can just mosey on down to the nearest copper mine and fill up their half ton.

  30. While Canada had been ramping down its investor immigrant program our American cousins have increased there visa plan. As a foreign investor where would you rather be…. Vancouver or San Francisco?

    It’s called an EB-5 visa, the heart of a little-known but quickly growing U.S. program that grants foreign investors green cards — and sets them on the path to U.S. citizenship — in exchange for a significant business investment on U.S. soil.

    Although complex, the 25-year-old program boils down to this: A foreign investor sinks $500,000 or $1 million into a project in America. If that project saves or creates at least 10 jobs, the investor gets a green card, as does that person’s spouse and unmarried children under 21 years old.

    EB-5 visas have skyrocketed in popularity since about 2008, when the U.S. economic downturn made bank loans virtually impossible for many entrepreneurs, businesses and construction projects. They turned to foreign investors.

    EB-5 visas are especially popular among China’s increasingly wealthy citizens, who like the idea of living in America or see residency as a way to help their children attend U.S. colleges .

    In 2014, about 85 percent of the 10,000 EB-5 visas went to people from mainland China.

  31. Copper at a six year low
    Steel down from $104 a tonne to $56 a tonne.

    Madison’s Lumber Reporter, a Vancouver-based publication that tracks the forest products industry, says the cash price for benchmark-grade western spruce-pine-fir was $302 per thousand board feet as of Monday, down from $354 a year ago.

    And despite lower crude oil costs you are not getting a break at the pumps. However the cost to fuel a ship, with bunker oil, to bring the goods from China to Victoria is down.

  32. “Today we have the cost of materials coming down.”

    Not a chance. Total material costs to build are going up each year. For instance even though lumber is only up 20% in the past 5 years, builders are paying more than 20% for their lumber packages than 5 years ago. Heck, builders aren’t even getting a break on gas. Sometimes you shovel more doodoo than a climate change scientist 😉

  33. That’s plausible that our market has hit a price ceiling.

    But if we are bouncing along the top we should also be transitioning back and forth between an affordable market and an unaffordable market. Or a least see an increasingly less affordable market.

    Perhaps we just have to goad buyers into paying more. Or try to get Victorians to list their property hoping for a big windfall from a rich buyer. Because in my opinion the lack of selection is one of several factors holding the market back. If there was something worthy of buying then you would list your home to get it.

    The irony is the low listings are keeping price increases low. People have less confidence that this is the time to make a change by selling their home.

  34. The inflation was in materials, labor and municipal charges. The cost to build a standard one-storey on slab went from $65 to $125 a square foot (excluding garages, site improvements and landscaping). All of the builders were equally caught with rising costs of things like concrete and copper and were able to pass those costs along at the same time to all buyers.

    Today we have the cost of materials coming down. Those declining costs are not affecting builders at the same time. A condo that is finished today will cost more than a condo to be finished a year from now. That makes a more competitive market among builders. Builder’s may have to cut their profit margin or grind down their subcontractors on costs or both.

  35. One primary residence that should be. Although even without it 4.6% on leveraged capital on a rental property here is significantly more than the after tax return of the average investor.

  36. That’s a good of guess as any. We’ve gone from one bus load of Vancouver buyers to two bus loads of buyers in five years.

  37. Maybe it’s just me, but I think 39 to 101 is a big increase (up 160%). With what’s now an average $800,000 distance between Vic & Van prices, my guess is the trend accelerates.

  38. Deny all you want Michael, it cost each tennant $75,000 to $100,000 each for repairs. That’s the bottom line. Making weak excuses does not deny the depth of the damage. Show me pics from the Stadacona, not Google images from some other place. I saw bare studs right inside the suites, not the exterior only.

  39. I’m not sure it is that simple. Prices went up much faster than inflation 2001-2008, but haven’t kept up since then – or done much at all.

    Prices have started to rise again this year. We are no longer in a flat market. It is a rising seller’s market in the core.

    I’m not sure how long the trend will continue, but if low interest rates stay in place chances are the balancing effect of having had a flat market for an extended period of time has left room for prices to continue to rise over the next few years, at least keeping pace with inflation.

  40. It makes me chuckle when the bears hang on so tight that they now argue that the price increases should be higher… The Irony! It’s simple. It’s the Halibut effect. Prices have hit a ceiling here and will continue to bounce on a flat plateau until there is significant wage and or rent inflation…

  41. Of the 201 homes that sold in the core last month. 12 were buyers from Vancouver that purchased homes ranging from $525,000 to $7,300,000. 5 out of the 12 sales were for homes over a million dollars (2.5%)

    3 buyers were from Edmonton
    5 buyers were from Calgary
    0 buyers were from Toronto

    For the last 12 months out of the 2,204 house sales in the core
    101 were bought by Vancouver people (24 sales out of the 230 total sales over a million)
    23 from Edmonton
    49 from Calgary
    14 from Toronto

    Compared to five years ago out of 2,061 sales
    39 were from Vancouver
    16 were from Edmonton
    33 were from Calgary
    4 were from Toronto.

    So it does seem that more than twice as many Vancouverites are buying in Victoria this year. But 75% of all house sales in the core are still from Victorian buyers.

    The increase is more like a fart in a wading pool than a tsunami of baby boomers beaching themselves on the Dallas road rocks.

  42. Yes Hawk, water from a balcony can leak into a buildings envelope.

    Have you ever heard of something called caulking? Many landlords and renters have not. $3 a tube.

  43. Only balcony leaks ? Sorry Michael, you’re totally wrong on that. I walked past that building many times and they were stripped down deep into the studs right inside some of the apartments. It was much more than just balcony problems. Prices dropped 100K just before the work started. Most condos have infighting, nothing new there.

  44. David, your miscalculation is you’re including the principle pay down.

    Hawk, no leaker here. It’s very rare to have a 70s build leak. Even Stadacona only had balcony leaks due to infighting and no maintenance over the years.

  45. The global market is looking pretty grim (again). Contrary to what the politicians says, we never recovered from the 2007-09 great recession. IMHO, the stimulus packages and low-interest band-aids just prolonged the economic problems.

  46. You can rent a comparable one bedroom with larger space for $800 and pocket the extra $250 in your TSFA or RRSP. What happens to that “cheap” investment when the first leaker report comes in and you have to shell out $75,000 ? New selling price would be $39,000. Stadacona Centre apartments dropped 100K once the word got out on their leaker.

  47. “I’m surprised too! The year over year increase should be higher – much higher!”

    As Jack said, I totally agree. With blowout sale numbers, prices should be shooting sky high, not a paltry 4.6% YOY. What happens to Victoria when the global recession hits and the tech industry shudders as projects get cancelled and unemployment rears it’s ugly head ?

    Hard to imagine where “thousands of office workers” are going to come from as I don’t see Victoria becoming a mecca for every corporate entity in North America. Someone is grasping at straws again.

    Underestimating the China syndrome effect is going to be an epic financial disaster for many in the coming year.


  48. Many ways to structure a lease. If the government are vacating existing space for new space there will be concessions. Especially for a long term anchor tenant.

    I worked in a new office tower in Mississauga years ago. The builder needed to fill some of the space to make it more attractive to potential tenants. We back loaded the lease and filled half a floor with the rent at half price for the first two years.

    It’s all about appearance.

  49. Something like this for 139k is much cheaper than renting.

    Not sure about your math there … The property at 120-1680 Poplar Ave (MLS: 354201) just sold for $139,900. With 10% down and closing costs of about $5000, the mortgage of $130,910 at Tangerine’s posted 5-year rate of 3.79% and a 25-year amortization – the monthly mortgage would be $673.79. Sounds great until you add in the property management fee: $239.00/month, mandatory insurance: $700/year, property taxes: $859/year – bringing the actual monthly cost to $1042.70/month. For a 45-year old apartment with just 669 square feet (single bedroom) – that’s a hefty fee. You also have to ask yourself why six other condominiums are currently (or recently) for sale at 1680 Poplar Ave.

  50. Those won’t be new office workers filling new buildings. Likely it will be filled with existing provincial employees. Our current provincial government is getting out of the property ownership/management business and would prefer to lease.

  51. Initially their plan was for phases on the one near city hall, however the demand for office space (the number of signed lease agreements) was so great they’re now doing it all at once… must be why they’re going ahead with the one in James Bay too. Not only will these two projects stimulate the local economy for 3-4 years, imagine what thousands of office workers will do for the core housing market.

  52. Several months back I was speaking with one of the many developers in Bear Mountain who went broke. I asked him about his feasibility study. And he said he never had one done.

    We assume that builders and lenders would want to know if there is economic demand for these projects before going ahead. But you don’t need to have a feasibility study done if you have investors willing to put up the cash for the construction. They don’t ask for interest to be paid to them or any payments at all until the project is sold.

    Now you’re just building for the sake of building without any economic consequences for your construction company. It’s the investors that take the hit. You get paid no matter what happens. Investors are giving you truck loads of cash to build – are you going to say let’s think about it?

    What happens is you build faster and more than necessary. That creates a glut. But you are still being paid to build more.

  53. I’m watching it. I’ll tell you when it does. The year over year July increase for houses in the core, western communities and Peninsula stands at 4.6%

    For all other types of housing in those areas the year over year gain for the month of July is 5%

    I’m surprised too! The year over year increase should be higher – much higher!

    Maybe it’s because we don’t have enough first time home owners buying or investment capital coming into the city. Without that steady injection of new money all we’re doing is playing a game of musical chairs. Exchanging one house for another.

    You need to bring new players into the game to increase the size of the pot.

  54. Interest rates are so low, making the Two Towers and Capital Park easy to finance. Jawl Properties has a good record of methodically building quality developments in Victoria, so I’m sure that they will be successful. Mind you, the completion of Capital Park is 2019 …

  55. If you are correct and there is a mass influx of people purchasing properties in Victoria, further reducing availability and driving up prices … wouldn’t this “shut out” many of the local first time buyers? Local buyers reportedly make 75% of the current real estate purchases in Victoria.

  56. Speaking of billions, I just noticed they’re digging on the commercial project behind legislature. When you add up the money pouring into Vic right now (Two Towers, McKenzie interchange, Capital Park…+++) it’s into the 10 figures.

  57. I can’t see the demand to live here taking much of a dive. We who comment here take our lifestyles for granted, but billions of outsiders are recognizing that we have the best of the best. Not only that, we are currently having a currency sale 😉

    With our sales to listings situation, I wouldn’t be surprised if Victoria accelerates into the double digit gains by next year.

  58. I have:

    New listings for houses in the core projected at 250
    projected house sales at 186
    Today’s actual current listings at 486

    Projections for August (a bit early and these projections can change significantly)

    MOI at 2.6 – which is low (5 to 7 MOI has historically been considered balanced between buyer and seller)
    NLS at 1.3 new listings being added for each projected house sale which is slightly below what has been considered to be balanced as between 1.5 and 2.5 New Listings for each home to sell

    Median Days on Market (DOM) at 24 which is slightly low with 30 to 90 days historically being considered as balanced.

    Projected Median Price at $609,000 for a 2,170 sft home on a 7,400 sft lot
    Projected Average Price at $763,000 for a 2,330 sft home on a 13,000 sft lot

    The market for houses in the core is plagued by low inventory and a low level of new homes being listed. This has been continuous since January in the core. Prices have historically been very quick to rise and slow to decline. With this continued short supply the month over month price should be rising quickly. However for the last several months the median price has remained stable.

    For vendors: They may want to buy first – then list their home. And that makes low inventory

    For purchasers: They are mostly made up of local buyers for properties in the $600K to $800K who seem to be more cautious in their bids. Or possibly they could be maxed out on what they can reasonably afford for monthly payments.

    NOTE: the New Listings to Sales Ratio is the inverse of the Sales to New Listings Ratio. I’ve reversed it because of the ease of understanding what the ratio means and to be consistent with other organizations. The SNL% stands at 74% which is outside of the balanced range between 40 and 60 percent.

    It’s an interesting year of markets behaving like children. Refusing to follow the rules and running around the pool. It’s all fun and games until someone gets hurt.

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