Election monday update

Well my tables aren’t as nice as David’s, but it’s time for a Monday update.  Thanks to Marko as usual for providing the numbers.

October 2015
Wk 1 Wk 2 Wk 3 Wk 4
Unconditional Sales 268
New Listings 371 570
Active Listings 3338 3282
Sales to New Listings
Sales Projection 755
Months of Inventory


October should handily outpace last year once again.

Given the date, what effect do you think each potential government will have on the national housing market?   Will it matter to the market who is elected?  We haven’t seen a lot of talk about real estate during the campaign but we’ve seen how much the market is at the mercy of government direction, so there might be some change coming.

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109 thoughts on “Election monday update

  1. This has retirement buying at 65, but maybe the age has been pushed ahead a few years like for first-timer buyers.

    VANCOUVER (NEWS1130) – Thirty-six is the new 30 when it comes to first-time homebuyers in Canada according to the poll from BMO.

  2. If you’re buying a retirement home that also means you’re selling a home too. Unless you’re purchasing a secondary home for vacation or rental purposes.

    I question that someone turning 60 would be looking to buy a secondary home. Move the box back by 10 years where the secondary home is bought around 50 years old and the graph takes on an entirely different meaning.

    The sharp decline of the back side of the baby boom generation is due to the wider use of the birth control pill in 1963. That’s the boomers in their early 50’s and late 40’s today. If you’re a boomer with secondary homes the graph signals that you should be selling and not buying properties that are not your principle dwelling.

    Another interesting thing about the graph are those under 18 years of age. That’s a steeper and deeper decline than back side of the boomer generation. Those are the potential buyers 15 years from now. And there is a lot fewer of them.

    Thanks for posting the graph.

  3. You can make most investments carry themselves by increasing the amount of the down payment. But you are not going to know if it is a good, average or poor investment until you calculate the property’s IRR and NPV.

  4. For condos, you want to buy anything that carries itself. Things look good for Vic condos for 10+ years, and of course this StatsCan graph doesn’t include all the immigration and foreign buying.

    The goal is to be in a position to sell techie millenials and zoomer boomers what they are going to want. Walkability is key. I would think Marko is nailing it with his purchases.

  5. If you’re contemplating investing in a rental condominium then you should make decisions on how long you want to hold the property and if the additional return (if any) is sufficient for the additional risk you’re taking relative to say a safe investment such as a savings account. Things you should know before buying the investment.

    A simple ROI or even a cash on cash ROE calculation isn’t going to tell you this. You need to calculate the property’s internal rate of return.


  6. … the Carey area market and Glanford is not as desirable as some other areas.

    You are absolutely correct… which is why houses in these neighbourhoods sell for $100K less than in Gordon Head.

  7. 15 billion dollars in infrastructure spending in Quebec won’t stimulate anything. This is a 2 trillion dollar economy. Garth Turner is always wrong about everything.

  8. So the emergency fund is how to mitigate risk.

    Life is a poo sandwich, the more bread you have the less poo you eat.

  9. Job loss is exactly the same life risk everyone who is not financially independent has JJ whether they own a home or not. It doesn’t stop people from living/buying/investing and this risk is why you need an emergency fund.

    Why would I use the rent checks to live on if I lose my job? Mortgage default has a big impact on your credit rating that lasts far longer than job loss should.

    Job loss is something you can mitigate. You can reduce all non-necessary spending, get a room-mate, rent out your home and move somewhere cheaper or with more jobs, get EI for a short time and find another job.

    Almost all risk can be mitigated except, in some cases, the really significant risk of divorce.

    If you separate your home or rental property might be ordered sold at a loss, although it is extremely unlikely. If you are underwater, a court is going to want to see agreement of both parties to sell at a loss and an agreement or order will be made as to how the debt is accounted for.

    With a cash flow positive property you could agree to rent the property out and wait the market out for a sale given the impact on finances of a sale at a loss.

    Right now very few, Victorians are going to sell at a loss unless they have just purchased a home and have to sell it right away. Although if you are in Oak Bay apparently you may come out ahead anyway.

  10. When you stop making payments on the debt. When you lose your job and use the rent checks to live on. That’s one example of many why people stop paying their loan. So what if the rent payments cover the mortgage on the property. You still have to make the payment to the bank.

    Stop making payments on one of your positive cash flow rental properties. See what happens.

  11. In what situation is your mortgage going to be “called” JJ if you stick with the same lender upon renewal and have been making your payments?

    Point me to such a situation that has occurred here in Canada where a homeowner has 20% or more equity and we’ll talk likelihood and mitigation of this risk. Otherwise you are just fear-mongering again.

    In what situation is it that “the property has positive cash flow and the loan is on another property”? I’m not following the logic or the real life scenario you might be referring to.

  12. What is the risk the positive cash flow is mitigating?

    If you have used this property as collateral against a debt, then the property may have to be liquidated if the loan is called. Even if the property has positive cash flow and the loan is on another property.

    You own the debt. The property is just the collateral.

  13. People also lost a lot here in the latest down cycle (-30%) if they had to sell.
    Jan, 2014
    “Alexandrahere said…
    I just received my condo property assessment. The total assessec value has gone down by $80K!!
    Quite the shock….
    Biggest investment mistake I made in my life was buying this one.”

  14. Leveraging at the “max” is correlated with your income and overall asset position which impacts your credit rating and therefore available credit. In residential real estate lenders set it at a certain level for primary residences and another higher level for rentals.

    The use of leverage is limited by your available credit. You may be confused about the relationship between leverage and risk and how being cash flow positive mitigates risk.

    You also do not seem to understand why someone would not put more than 20% down on a rental. Let me explain.

    Net rental income is taxable. This means the ROI declines as you put more hard money down because you can only deduct the interest portion of your mortgage, along with other expenses, from your rental income.

    If you are in a higher tax bracket you don’t want a lot of taxable rental income. You want to benefit from appreciation and eventual pay down when you are in a lower tax bracket. Even better, you want to sell your primary residence rather than a rental prior to retiring and benefit from the 100% capital gains tax exemption.

    It is often better to put the minimum down on a rental and even to take out equity through a HELOC to reinvest. I would argue the same logic applies to a primary residence with a rental suite, or perhaps even without depending on the ROI of the investments made with the HELOC vs. the HELOC interest.

    And if you are cash flow positive it doesn’t matter what house prices do. You don’t have to sell.

    I personally find it odd that the single biggest purchase most people make in life, and the single biggest contributor to wealth in Canadian families on average, is being based on “market timing” rather than a risk analysis.

    Also, my user name is totoro not tototoro.

  15. “And the Australians don’t know why so many home owners have decided to sell at once. ”

    Exactly. Emotional owners fretting about making every last buck become emotional sellers and the ball flips into the buyers court. Once the honest agents catch wind they advise their clients to take their time and look around which helps drop prices. It’s a common market theme in past booms and busts.

    You have mentioned in the past tototoro how you pay for your rental houses with 20% down or thereabouts. To me that is high leverage if you own 3 houses using similar numbers, regardless if it is cash positive.

  16. Why in the world would you assume I am maxed out to the limit on leverage? Or that I’ve never experience a correction?

    I bought my very first very cheap condo at the age of 19. Had no idea what I was doing. This taught me that a place should be rentable and cash flow positive from the get go, and if a market declines waiting it out can be a good strategy. That was a purchase that I was lucky to break even on btw.

    I agree past performance is not necessarily an indicator of future performance. It is possible the market could decline 10% in the spring, but at this point this is not the most probable scenario and not one I’d make house purchase plans on. I’d make it on affordability and ability to commit to owning for 7-10 years in order to be able to ride out a market if need be.

    I would take your charts as better than national data Leo for Victoria. Markets are influence by some Canada-wide factors such as interest rates, but they are also localized as we’ve seen with the run up in Toronto and Vancouver.

  17. Maybe CMHC is getting its forecasts by reading the Australian newspapers?

    We are not alone in the world when it comes to high prices. This is a global event. An Interesting side bar is that Australia has had a tight market that resembles ours for many years and is now having a substantial increase in listings. And the Australians don’t know why so many home owners have decided to sell at once. They have had some minor drops in prices but there is a lot more to choose from these days.

    So it can happen.

    It may be better to time your purchase for when there is more selection available and you are less likely to be caught up in an auction. You still may have to pay a high price but the house may be something you and your family can live in for the next decade.

  18. Thanks Leo, your charts are great but taking them as God’s word is foolhardy at best as any chart can change over time with increased inventory. Since I have experience twice seeing markets reversing ten percent in short order during hot markets I think I can say with some honesty that it is very possible and only once was because of interest rates being high and were actually coming down at the time. The second time was pure inventory change in a very short timeline in the spring.

    Since you are maxed to the limit with leverage tototoro and never experienced a true market correction I guess that would qualify as someone who needs to poo poo the possibility with cliches like “don’t hold your breath”. That was what I was doing actually when the prices declined 10% while I was trying to sell but I guess that only happens in someone else’s life. Denial ain’t just a river in Egypt… ooops bad cliche. 😉

  19. Don’t get too excited about the crystal ball. It’s based on past performance, and there is a clear relationship between MOI and prices in the past 20 years, but it’s still pretty variable. I’ll write a post about this and show what the data actually looks like.

  20. Given that prices are forecast to rise approx. 7% next year in Victoria proper via Leo’s crystal ball, which seems more reliable than CMHC for our local market given CMHC’s track record vs. Leo’s, I wouldn’t hold my breath for a 10% savings

    If you can’t find something to buy right now because of inventory then I would wait for spring. I think there will be more inventory on the market but no drop in prices – probably the opposite. Paying slightly more for a better home that you’ll want to stay in is a better bargain than buying something now at a slightly lower price that is not as suitable.

    As for “overpaying” there is, as always, only the deal of the day and your crystal ball stating that prices will decline significantly is an unlikely possibility in the near future. It is also a prediction/belief/mantra that has been repeated here over and over again now by posters who eventually bought, moved, or stopped posting because their forecasting was flat out wrong year after year.

    Once day prices may drop, but not likely this spring. And if they drop because rates rise unless you have very large down payment you’ll be no better off on affordability.

    If you are concerned about buying more than you can afford if rates rise, get a longer term on your mortgage, or buy something with a suite or suite-able.

  21. Interesting video and article on BNN on real estate investing pros and cons. Some sobering reminders of past market tops who weren’t around then and their repercussions for those who are in the “they’ve been saying it for years” camp.

    “For the young folks out there speculating on condos consider this: The first home (condo) that I bought with my wife in 1990 traded at $225k to the previous owner in 1989 at the peak of the last bubble and interest rates were 9.75% for my first mortgage. We paid $168k in 1990 (one year later) and sold it in 1994 when I went to work in the US for $135k and after all legal fees and commissions were paid my wife and I got $107 back wiping out all our equity and principle payments of almost 5 years. But we needed a place to live and while we were not happy, we were fine with it. But if we had other properties we were renting out, we could have been wiped out and deep in the hole.”


  22. So over paying for a house now in a hot market and stretching yourself is better than waiting a few months to see if inventory finally rises ? Worshiping home ownership and saying “oh just buy it and get it over with” mentality has sunk more than a few in past peak price points. If you’ve waited a few years than what’s another few months to possibly save upwards of ten percent ?

  23. Patience hasn’t been rewarded as far as I can tell despite all the admonitions to “wait for the crash” on this board over the past seven years. Buy or don’t buy, but trying to time the market while waiting for years when you’d rather be living in your own house seems foolish to me.

  24. The poor saps are those who over pay for a house in a low inventory market. Once the market inventory normalizes those who have been patient will get a better price. The trend has already started in Vancouver with lower sales coming off lower inventory. As usual Victoria is always a step behind the mainland.

    CMHC was most likely caught off guard by the BOC and banks continuing to lower the interest rates over the last two years like many experts have. Sooner or later low oil prices will have an effect on BC, since they have to balance the books by selling real estate.

  25. Agreed, but it’s only 14% off from a year ago (loonie was high 80s)… I’m not sure how much tourism was up the previous year. I think it’s healthy to see the big increases in Asian and US tourists again this year.

  26. This should be very positive for inventory levels to finally increase once those who have been holding on expecting a $500K shack in Oaklands turn into a million in a few years realize the fantasy has gone poof.

  27. Mon, Oct 26, 2015 8:15am:

    Oct Oct
    2015 2014
    Net Unconditional Sales: 567 602
    New Listings: 766 945
    Active Listings: 3,247 3,927

    Please Note
    Left Column: stats so far this month
    Right Column: stats for the entire month from last year

  28. Sorry JJ – I rely on primary sources like academic articles. Takes more time than I’m willing to spend to watch someone talk on something unless it is a Tedtalk. Have no comment.

  29. Hard to know where to start.

    I think what you are trying to say is that the volume of sales is not as high as it was 2005-2007.

    It is; however, likely to end up over 2000 if sales keep at this pace which is the highest number of sales in five years despite extremely low numbers of listings. For those places that are listed the demand is likely the highest it has been in five years. Hence, the crystal ball projecting warm market conditions.

    I think you may be confusing overall volume of sales with demand and ignoring the impact of scarcity and choice on the market.

    The role of choice arises from scarcity, when an item is limited or unavailable consumers maybe be forced to make a difficult choice. Consumers will decide if they can go without the item, or are willing to pay a higher price for the item due scarcity.

    Scarcity will increase the demand which results in a higher price.

    Read more: http://www.ukessays.com/essays/economics/how-scarcity-and-choice-impact-supply-and-demand-economics-essay.php#ixzz3pbxlvLzf

  30. Demand is the number of prospective purchasers actively looking to buy a home. Demand is affected by price and affordability. The more affordable the housing then the more houses that are sold. But despite housing being so affordable this year the volume of sales still remains average by historical numbers. Affordable housing with high sale volumes would indicate strong demand. Instead we have affordable houses with near average sale volumes.

    Primary Year Sales, Number of
    2005 2344
    2006 2209
    2007 2461
    2008 1888
    2009 2224
    2010 1796
    2011 1710
    2012 1633
    2013 1743
    2014 1917
    2015 1830 to date

    The years 2005, 2006, 2007 and 2009 had stronger demand than this year. This year’s low interest rate has made houses affordable but demand has not been strong enough to increase the number of sales past historical norms.

    Although we have low inventory, the new listings are keeping up. The MOI and the DOM have been much lower in the past than they are today too.

    As price increases the number of prospective purchasers decreases as fewer people qualify for mortgages. Demand may be increased by lowering interest rates and loan qualifications which is what has been happening this year making homes more “affordable”. Yet sale volumes are only up to average. Without this election year stimulus package our sale volumes might have hit the lowest in the last decade.

    Just because prices are high doesn’t mean demand is strong. It just means houses are expensive.

  31. When MOI decreases demand on those homes in the market increases in a warm market like this. When demand increases DOM decreases. Not sure what your point is. Both measures are linked to demand.

  32. Looks like WordPress.com can export blog settings and such fairly easily to move to dedicated hosting. Drop me an email or make me admin on this site and I can give it a try.


  33. Higher demand may be there now but it’s not infinite. Canada’s economy is in the tank and moving deeper and Victoria won’t be insulated forever. Panic buying is evident due to bidding wars which is not the norm, which means this is a temporary situation brought on by a small group of buyers as Jack’s stats show. The inventory chart shows it bottoming in an extreme manner.

    Once that changes prices reverse regardless of sales, it’s a natural progression of a market. Just needs a catalyst to change that and it may well take til spring but it will happen, the chart shows the trends eventually change.

  34. Go look into Leo’s crystal ball first JJ. Demand is strong. And comparing sales volume between Victoria and Vancouver without references to MOI or DOM is a true straw man argument.

  35. What I said was the demand is not strong. 179 sales out of 447 houses listed in the core for the month of September is not strong demand.

    What you changed it to was that demand in town is stronger than Langford which I did not say. That’s known as a straw man argument.

  36. I’ve followed assessed and market for about 15 years now JJ. BC Assessment has been predominantly under market for this time period except for 2010-2014 period.

    What are the assessed to sales stats for Fairfield and Oak Bay for the last 30 days? Seems like these areas are going at over asking right now.

  37. No. The demand is much stronger in town because of densification creating fewer listings and the areas having a higher demand.

    Listings are selling quickly in Oak Bay and Fairfield, apparently over-list and sometimes sight unseen because there are not “hundreds of new homes”.

    Some listings are not desirable in all areas and they don’t sell as quickly.

    Compare days on market in OB to days on market in Langford and you’ll see the location effect. You’ve already posted about this several times JJ so I’m not sure why you are contradicting yourself to be contrary now.

    As for not wanting to live in Langford, I don’t. My kids are connected to friends in the neighbourhood they’ve lived in their whole lives.

    The fact is that once you start in a school district it is disruptive to switch. Those that start in Langford at, say, Eagle View which has a good rep, will probably happily stay there because their kids will be connected in to all sorts of community. They probably won’t be in the market for an OB home ever.

    If you have little kids imo it is way better to stay put in a specific neighbourhood once you buy as long as your neighbourhood meets your minimum standards. Moving up where you are is far more likely as far as I can tell.

  38. You might be right. I don’t know the Carey area market and Glanford is not as desirable as some other areas.

    The areas I’m somewhat aware of market trends for include Fairfield-Gonzales, Fernwood, James Bay, Downtown, OB, Camosun, Gordon Head, Saanich, Rockland, Oaklands, Cedar Hill and Mt. Tolmie.

    Very hard to get a four bed 2 bath nice-ish family home not on a main busy road in these areas for $500-600k right now looking at realtor.ca Nothing in OB Camosun Fairfield Gordon Head or near UVic that I can see showing up.

  39. No, what you’re saying is that YOU don’t want to live in Langford. The hundreds of new homes in the Westshore show that people do want to live there.

    Last month there was 179 house sales in the core. Vancouver likely gets that in a few days.
    Victoria had 31 sales last month
    Oak Bay had 25
    Saanich had 103

    Certainly not eye popping sale volumes.

    We don’t have strong demand what we have is low listings. If the demand was strong then ALL of the listings would be sold in a few weeks and prices would be skyrocketing.

  40. You have an odd understanding on how properties are assessed. There is no attempt by BC Assessment to undervalue properties or err on the low side to reduce the number of appeals. They are legislated to appraise market value as at July 1 each year.

    It’s a myth that BC Assessment intentionally under values properties to reduce the number of appeals.

    It would be a really stupid thing for the Chief Assessor to instruct the assessors to under value properties and then have the media find out. The Chief Assessor would lose their job.

    When you say the assessments have been a lot closer over the last few years, that’s because the market has been flat. More data – better accuracy. But they still can vary substantially on a property by property basis. But over thousands and thousands of properties they are fair and equitable.

    For example over the last 30 days the Sales to Assessment Ratio in Saanich East ranged from a low of 78% to a high of 150% Most homes sold around 112% of their assessed value. But only 3 actually sold at 112% of their assessed value. Half of the sales fell between 100 to 120 percent.

    The other myth is that properties always sell for more than their assessed value. Clearly, as in the example above, they don’t.

    Followed by the next myth that there is some magical percentage that properties are always worth X percentage more than the assessed value.

    Perhaps in the past there may have been some truth to these myths when we didn’t have the use of computers. But those days are gone.

  41. Actually, I would disagree. In the mid-$500K to $600K range you can get decent 30-40 year old houses in Glanford area. MLS’s 356300 and 356569 are both examples.

  42. Unfortunate but $500-$600,000 is now too low to get something fairly fixed up in a nice area in the core. Works for the outlying areas. People don’t want to live in Langford instead though so how are Nanaimo, Ladysmith or Comox even relevant or have any impact on the strong demand in the core?

  43. “* our Vancouver invasion will continue for years ( same home for half price, twice the sunshine)”

    Nanaimo,Comox, even Ladysmith has same homes for half the price, same sun, same moon, same ocean. You must work for the Victoria tourism industry, if not you should be.

    BTW, shipbuilding is two years late and counting. All those promises of Clark’s trades jobs are falling off the cliff like all her other lies and deceit. See the price of natural gas lately? LNG ain’t gonna happen.

    I know people looking in the core in the $500 – $600K range and there’s nothing but junk with deceiving photos.

    I know people looking to buy too in the $500-$600K range in the core and there’s nothing but junk with deceiving photos in their ads.

  44. > People may over pay on real estate but banks don’t over lend.

    I really don’t buy the idea that banks are a bastion of prudence anymore. They are there to lend you money and they will lend you way more than is good for you if given the chance. It seems like American banks are way more conservative in their lending now than our banks

  45. I understood that Marko gets this data once the conditions have been removed. That would mean financing is confirmed.

  46. * demographic tailwind for Vic for a ~decade (boomers finally retiring, millenials buying)

    I know quite a few people who have bought or are looking to buy, all between the ages of 25-30. The issue for most of them is that there are just no SFHs out there in the 400-450k range worth considering.

    In terms of what kind of effect the new government will have on them, I don’t think any — they were going to buy no matter who was elected.

  47. No-one said anything about suing anyone – ridiculous idea really given that the purpose is for assessing taxes and there is an appeal mechanism.

    BC Assessment doesn’t match market for many reasons, renos sometimes, but mostly it is because the market changes faster than they do and they err on the low side when they do assess in my experience so they don’t get a bunch of property tax appeals.

    However, when the market is declining or stable they are usually much closer than $200,000. That house hasn’t had $200,000 worth of visual renos. Over the past few years assessments have been closer to sales JJ in general, you yourself have been posting the stats on this. Now they seem to be significantly off as the market is moving up quickly. When I bought in 2003 assessed and market were at least $100,000 apart.

  48. If you’re looking for more of a ‘reassurance‘, I could ramble off some of that for you…

    * Vic economy starting a full-fledged boom…billions in multi-year projects beginning + infrastructure, tech, film, tourism, shipbuilding …
    * demographic tailwind for Vic for a ~decade (boomers finally retiring, millenials buying)
    * soaring US prices and currency redirecting snowbirds to Vic
    * Liberal policies to further fuel our market, immigration will be highest in G8
    * incoming AB, SK, ON… as their economies are sluggish compared to ours
    * our Vancouver invasion will continue for years ( same home for half price, twice the sunshine)

    Just take a 10min drive around the core and your head will spin at the number of capital projects underway.

  49. Most likely it has been decades since a government assessor has been through this home. In consideration of the renovations that have been completed why would the assessment be close to fair market value?

    BC Assessments are for taxation purposes only. Unlike a written appraisal report, you can’t sue the government for damages due to your reliance on their figures. You’re using the assessment for a purpose that they were never intended for and you are not the intended user.

  50. The difference between price and market value.

    People may over pay on real estate but banks don’t over lend.

    The buyers will likely have to come up with a bigger down payment of say 30% or more to buy this property. If the buyers can’t make the bigger down payment then the property will have to be re-listed once more.

  51. @Michael – What would you charge to insure a pending home purchase against a future decrease in value? You can use the median for the area as an index. You can also set the term (i.e. only a decrease at the end of the term would be applicable).

  52. That is what a million dollar home is these days hey. It went for $177,000 over assessed value. Reminds me of 2003.

    I don’t think anything was changed in the last three months except the home is now vacant. Maybe the new owners never even moved in.

    They would have paid $17,000 in PTT and if they are paying full commission that adds on another $28,000 or so. Conveyance $1000. $600 for sale. Heck, they might have come out with a few thousand to the good.

  53. it was that colour in the original. from the 850k & 950k posting photos i don’t see a single thing that has been changed.

  54. From the pics on the MLS site it looked like there was some interior redecoration prior to the second sale, or was the living room always oxblood red?

  55. So the place was under priced in July to create a bidding war and a panic buyer pays $50K over. Shouldn’t the new buyer be paying $1 million to prove it a hot market still ? $5K over seems like he paid market price as no one else stepped up to bid it higher. The seller/flipper loses most of the profit in real estate fees.

  56. I would suspect renters would be more likely to use the RRSP to save for a down payment.

    That exactly describes mu situation … Back in 2002, my wife and I withdrew the down-payment for our house from both our RRSP’s. I had been renting for 15 years and had recently started a new (much better paying) job. Other than the RRSP’s we didn’t have savings as we were still paying back student loans.

  57. 70% of households own their homes. 60% of people are contributing to RRSPs. I highly doubt that the 30% of rental households are all contributing to RRSPs. More likely that some of the renters are and many of those who can afford a home also are in a higher tax bracket and benefit more from the tax deduction.

  58. Hmmm. 2741 Burdick listed in july for $850,000 – goes in bidding war for $900,000. Re-listed last week $950,000 and goes for 955,000. Haven’t seen this sort of pressure on prices since 2004-2006.

  59. I doubt that the GST will be totally removed from new rental housing. Most likely it will be made the same as if the home were bought for home ownership. Depending on the purchase price the amount of GST applicable will be determined after any rebate.

    This will not stimulate more housing to be built for rentals. It will just make the land more expensive as builders will have a little more wiggle room to pay for vacant land.

    You can not build “affordable” housing or rentals. The very act of building stimulates the economy and causes prices to rise.

    My opinion is that the government should keep the hell out of the free market system. Let the market take care of itself because government policies are slow to be enacted and slow to be repealed thereby accelerating and decelerating the economy at the wrong times. Besides any benefit will not trickle down to the home buyer or renter it will be swallowed up by the developers.

  60. I would challenge your assumption that it is mostly home owners that contribute to RRSPs. I would suspect renters would be more likely to use the RRSP to save for a down payment.

    There isn’t much disposable income left after paying a mega mortgage to contribute to an RRSP. Quite possibly the reason why so many don’t repay the HBP.

    Increasing the amount that a person or couple may take from their RRSP’s means a larger annual payback that may possibly lead to more home owners defaulting on their payback to the HBP.

    Home owners are not born with a silver door knob in their mouths, they come from the pool of renters. It’s much easier to come up with the 5 per cent down payment for a home these days. All of us are literally sitting on that amount right now – in the limits of our credit cards.

    A 5 per cent down payment is not a barrier to entry into the housing market. And until recently it was the reason why so many people could own multiple properties.

  61. Well the current limit is $25,000 ($50,000 for a couple) and you have to pay it back within 15 years.

    At $25,000 this is about $1600 a year that gets added back as taxable income if you don’t repay. However, the money to buy a home has to come from somewhere and if you don’t have other sources you’ll be saving for a while from income that is taxable, often at your highest marginal tax rate, if you don’t utilize the RRSP HBP.

    As far as not paying back the HBP, the ROI on the $25,000 over 15 years is likely going to be much higher than the cost of not repaying the HBP and LOC on the gains less any tax on the RRSPs when withdrawn due to the effects of leverage and the capital gains tax exemption on primary residences.

    Given that 57% of Canadians made RRSP contributions and this is likely higher for home owners, the numbers don’t show that people aren’t saving in RRSPs if 60% are not repaying the HBP. I expect many people are making new RRSP contributions and just not repaying the HBP. It has to be designated a HBP repayment on the income tax return and lots of people probably don’t do this.

    I’m in favour of opening the HBP upon death of a spouse/elderly relative/marital split. Not so sure about relocation. I do think this new category will bring new buyers into the market.


  62. Aren’t they just added to income then?

    Yes, that is correct. If you do not repay the HBP loan then the CRA will treat the amount you withdrew from your RRSP as income and tax you on it at your current marginal tax rate. However, if you don’t have extra cash, paying a bit more tax costs less than repaying your RRSP.

    Interesting related article:
    The Home Buyers’ Plan dilemma
    Many first time homebuyers borrow their down payment from their RRSPs, but does it make sense to pay it back?

  63. Here is a big change! Liberals plan to relax the rules under which people can pull money out of a registered retirement savings plan for a house down payment. The Home Buyers’ Plan currently focuses on first-time buyers; people would additionally be able to use it multiple times when moving for work, after the death of a spouse, after a marital split or to take in an elderly relative.

  64. Although the BoC kept the kept the key interest rate unchanged, they also issued a lowered economic outlook. They expect that the economy will now expand by just one per cent in 2015, by two per cent next year and up to 2.5 per cent growth in 2017. Not too surprisingly, the market reacted …

    Canadian dollar plunges as Bank of Canada stands pat at 0.5%
    The Canadian dollar plunged as soon as the report came out, losing 0.8 of a cent to 76.25 cents US as investors digested the reduced growth picture, and the likelihood that another rate cut is possible. By the end of the day it was down .94 of a cent at 76.11 cents US.

  65. My guess is that the market for properties outside of the city centers is soft even in BC.

    The term “soft” is an interesting one. It’s an old term that pre-dates home computers and the abacus, used to describe a market that was based more on a feeling than “hard” data.

    Today, I would describe a “soft” market as one that favors buyers. A buyers or bearish market with lots of inventory to choose from and lots of time to make a decision. With new inventory coming to the market sufficient to offset over priced properties and those that cancel their listings because the home owners changed their minds on selling.

    We have the opposite happening in the city today. The market in the core districts strongly favors sellers. Which has led some estate agents to prey on buyers by intentionally under pricing properties to create an auction whereby the prospective purchasers are buying under stressful circumstances designed to exceed that of a typical real estate transaction.

    This most often quickly leads to a rise in market values. As prices are quick to go up, but slow to come down.

    But this isn’t happening prices have been stagnate with month on month median prices remaining stable. The year on year median has increased only because the median price in 2014 was in decline.

    To me, this strongly suggests a price ceiling. We’ve been bumping along this price ceiling for most of the year despite low inventory, low new listings and a 20 per cent increase in buyers.

    I suspect sales to fall off as there isn’t enough listings to keep prospective purchasers and sellers interested in buying or making a move.

  66. Interest rates staying put. The party must be coming to a close soon with only two drunks left on the dance floor.

    “The Bank of Canada has left its key interest rate unchanged at 0.5 per cent. It says “vulnerabilities in the household sector are edging higher” but the housing market outside of BC and Ontario is “soft.”

  67. Thus a reason for the panic buyers of late. Mortgage rates moving up much sooner than expected would really spook the market. Trudeau may even have a tough time borrowing the money for his infrastructure plan as well. The US bond guys aren’t interested.

    Pimco to Oppenheimer avoiding Canadian debt as Trudeau vows more

    “Just as Justin Trudeau looks like he’ll get the chance to implement his plan to prime Canada’s economy with debt, some of the world’s biggest investors say they’re not interested in picking up the tab.”


  68. I’ll send you an email. I’m already paying for the hosting for another site so could work, and I doubt that the minimal traffic from HHV will have an impact. Also I can add you to the Google sheets doc with edit privileges.

  69. Given the date, what effect do you think each potential government will have on the national housing market?

    The The Globe and Mail is suggesting that “with the Liberal election victory, Stephen Poloz’s job just got easier. … Justin Trudeau Liberals may make another Bank of Canada interest-rate cut unnecessary.”

    Garth Turner is suggesting that “a tax-and-spend Liberal government (if the leader does what he has vowed) will be quite stimulative, especially if billions are plowed into infrastructure programs. So, the central banker won’t be forced to do something he’d rather not, hastening the day rates normalize.”

    So … if no rate drop tomorrow and a sooner-than-expected rate rise – prices could be affected sooner rather than later. I expect that the US Federal Reserve will inch up rates soon enough.

  70. @leovictoria

    Fantastic job with the post last week! It was perfect timing as I was away over Thanksgiving and on vacation last week. 🙂 Sales volumes are still very high … I guess that we will have a clear idea where prices are heading when VREB posts the sales number after the end of the month.

    I think that using Google Sheets for dynamic chart generation and data collection is simply brilliant. As a fellow software developer (and parent!), I have to say that I’m so impressed with the effort that you have put into this!

    If the HHV “community” were willing to pitch in a few $$$ (PayPal donation?), I think that it would be possible to migrate this WordPress site onto the same site that is hosting your Google sheets. Something that we should talk about?

  71. It seems like Langford and Colwood are slowing down as the market for houses has increased to 3.7 months of inventory with only 2 houses a day selling. With new listings being added at the rate of 1.6 for everyone that sells. Half the homes in the last 30 days have sold for less than $466,500

    Worsening for Salt Spring Island as house listings are at 155. Months of inventory are back up to 9. Mercifully new listings are not being added at a significant rate and are only just keeping pace with sales.

    The Malahat has 116 house listings and a shade over 6 months of inventory but new listings are being added at the rate of 2.1 for everyone that sells.

    The market seems to be contracting from the outer areas as it did in 2014.

    Now half of all of the house sales occurring in the Greater Victoria Area are situated within a 5 mile radius of downtown Victoria.

  72. The irony here is that the conservatives were the ones who overhauled immigration. The liberals will turn the tide back to letting in welfare cases while ignoring people with marketable skills.

  73. Who says they all have $700K to drop on a house ? How about a job with some work experience first before they qualify for a mortgage ? If they are a professional their credentials may get questioned as well. The government doesn’t control those, the individual professional groups do. Many hoops to jump through before they have one iota of effect on Victoria house prices. Grasping at straws as usual to keep the pump alive.

  74. One big change I think we’ll notice is how open and pro-immigration the Liberals are… may add more price pressure to our neck of the woods. More so for Van, with Vic getting the spill over.

    From the Liberal party’s platform…
    International Students:
    We will give international students and temporary residents credit for time already spent in Canada.
    We will make it easier for international students and other temporary residents to become Canadian citizens by restoring the residency time credit. We will also make changes to the Canadian Experience Class, to reduce the barriers to immigration imposed on international students.
    Reuniting Families:
    We will make it easier for immigrants to build successful lives in Canada, and contribute to the economic success of all Canadians.
    Immigration has always been an important part of Canada’s economic growth, but over the past decade, Stephen Harper has turned his back on welcoming those who want to contribute to our country’s success.
    We will take immediate steps to reopen Canada’s doors, and will make reuniting families a top priority.
    We will immediately double the number of applications allowed for parents and grandparents, to 10,000 each year.
    We will also nearly double the budget for processing family class sponsorship. Wait times will come down – which currently average almost four years for parent and grandparent applications.
    We will provide more opportunities for applicants who have Canadian siblings by giving additional points under the Express Entry system, and we will restore the maximum age for dependents to 22 from 19, to allow more Canadians to bring their children to Canada.
    We will also grant immediate permanent residency to new spouses entering Canada, eliminating the two-year waiting period.

  75. I don’t know how the conservatives can win after proposing a “Barbaric Cultural Practices” act and hotline.

    My European friends sent me some Nazi comparisons… first time I’ve ever felt a bit ashamed of Canada. And we already have criminal laws covering everything in that proposal – it was just a grab for the bigot vote – sad. We’ll see what happens in Alberta and Ontario, hopefully they will prove that the majority of Canadians aren’t on board with that approach.

    As far as housing goes, I suppose some new policy could impact prices. I doubt anything would be implemented in time to affect the spring market. Pretty scary to start playing god with the RE market given how heavily Canadians are invested.

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