Market Update Nov 30

Monthly data will be out tomorrow, but here’s a sneak peak with only one day missing thanks to Marko.

November 2015
Nov
 2014
Wk 1 Wk 2 Wk 3 Wk 4
Unconditional Sales 145
270
415 547
465
New Listings 238 426 556 716
682
Active Listings 3060 3029 2986 2948
3631
Sales to New Listings
61%
63%  74%  76%
68%
Sales Projection 609 567  581  574
Months of Inventory

7.8

Also a quick question regarding commenting.  On the old blog, comments were simple and linear.  Pre-historic you might say given there was no ability to reply to a comment.   What people did instead was quote people they were replying to or target comments at them using the @USERNAME (e.g. @LeoVictoria) in their reply.

Currently we can reply to comments, but only 2 levels deep.  It’s nice to be able to reply, but can lead to chaotic conversations where some people hit reply to a comment, and others just post a new comment on the article.   Also it’s much harder to get caught up on new comments, since comments can end up anywhere in the page, rather than all at the end.

So without running a formal poll, please let us know in the comments what you would prefer.   Some options are:

  1.  Leave the commenting system as is.
  2. Leave the threaded comments, but increase how many levels deep you can reply from 2 to some higher number (there is a limit at which point there is no more horizontal space to indent).
  3. Go back to linear commenting, so all new comments are at the end.
  4. Some other suggestion (WordPress experts, please suggest plugins to improve the commenting experience).

Personally I prefer option 3, unless there’s a way to highlight new comments in a threaded system.

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75 thoughts on “Market Update Nov 30

  1. No-one gave us “free money”

    Low down payments are enabled by the government guaranteeing your mortgage. If CMHC didn’t exist, you would be paying a heck of a lot higher rate for small down payments to compensate for the risk. It is definitely free money. As for paying to insure yourself, you’ll notice that there is no private competition in this space (Genworth is 90% backed by the government as well). That means you are in fact not paying to insure yourself, because private industry has deemed the rates are not sufficient to make it worth their while to compete.

    You might as well say that no-one should be allowed to borrow any money at all if that is your logic because all people bear the cost of bad debtors in the form of higher prices.

    That doesn’t make any sense at all. Fact is, when you allow 20% down, you get prices at a certain point. When you change that to 5% down, prices shoot up to the new level where buyers can afford it. It doesn’t help first timers at all.

    My point is that borrowers who have “less skin in the game” when we are talking the difference between 5% and 10% down are not, imo, at significantly greater risk of default

    Being underwater on a mortgage is one of the main risk factors in foreclosure. By definition someone with 5% down can only weather a 5% reduction before being underwater, while someone with 10% down can weather 10% and so on. Being underwater doesn’t mean you go into foreclosure, but if you lose your job or get divorced you can’t sell your house anymore without coming up with the mortgage differential. We know this from the US situation.

    I’m in favour of keeping the 5% down option and of the incentives for first-time home buyers. Given the way the market has appreciated I think they need all the help they can get so they can get a foot in the door so they can get ahead as you have with home ownership.

    That’s what I’m trying to explain. The main reason the market DID appreciate as much as it did was because of those lower down payments and first time buyer incentives. So yes, now they are necessary because they distort the market to such an extent that it is no longer stable without them.

  2. Hawk, that’s because they are all leaving Australia and moving to Vancouver and Victoria. Our boom has just begun!!!

  3. How is a home a non-productive asset when we have a historic rate of appreciation of at least 4% and leverage is available and commonly used? I think you’d better run the rent v. buy calculator again Leo. And include what your mother in law contributes, if anything, including the market cost of any childcare, due to the suite accommodation.

    As far as requiring 20% down, you are going to shut a whole segment out of the market for years even if that $600,000 home drops 30%.

    The average first-time homebuyer has $67,000 to put down. That doesn’t get you much in Victoria if you have to pay 20% plus closing costs. A condo. Which I would have preferred not to live in with kids simply because they are not really set up for them in most areas we wanted to live in as they’ve traditionally been owned by those without kids – so many prohibit both kids and pets.

    I agree with reducing the barriers to home ownership for those with a minimum down payment, income and credit history to support low risk of default. Once they have a foot-hold in the market this will help them reduce their overall cost of living, increase their net worth, and will allow them to move up the property ladder if they wish and pay 20% the next time round like we did. That CMHC premium is a costly thing.

    Savers are not punished by this system. You aren’t forced to save more than 5% plus closing costs – and this is not easy on a median family income of about $80,000 unless you have family help. Savers who do come up with 20% save the premium.

    Who the system really rewards are the 20% of people who get family help in the form of down payment “gifts”.

  4. No-one gave us “free money”. Kind of insulting given that we took the risk of a market downturn while making all debt payments. There is no “free money” where returns are not guaranteed and you have to pay to insure against your own default.

    You might as well say that no-one should be allowed to borrow any money at all if that is your logic because all people bear the cost of bad debtors in the form of higher prices. You yourself are a beneficiary of this system if you did not pay all cash for your home. If you paid 20% down great, if not you also paid most of it back already in the form of a pre-paid insurance premium to CMHC.

    My point is that borrowers who have “less skin in the game” when we are talking the difference between 5% and 10% down are not, imo, at significantly greater risk of default in Canada due to the fact that they have to qualify for a mortgage based on credit rating and debt ratio and income.

    And these borrowers pay a premium to cover the risk of default which likely results in a net positive to CMHC imo. This is not a choice you make when you have enough for 20% down in most cases. This is a choice you make when you don’t have this choice but are a good credit risk and have the right credit scores and income.

    I’m in favour of keeping the 5% down option and of the incentives for first-time home buyers. Given the way the market has appreciated I think they need all the help they can get so they can get a foot in the door so they can get ahead as you have with home ownership.

  5. My comments were directed at requiring 20%. Coming up with $120,000 on a $600,000 home is not easy for a first-time homebuyer

    I guarantee you the home would cost nowhere near $600,000 if werequired 20% down. Which means allowing lower down payments does nothing for the first time home buyer because prices very quickly rise to erase any temporary gains in affordability. At the same time it punishes savers by forcing them to lock a massive amount into a non productive asset.

  6. All in all, having to wait an additional two years would have cost us about $50,000 in additional payments and lost equity.

    I don’t think anyone is arguing that the government giving you free money is not a net positive for people who can pay that money back. The point is that borrowers having less skin in the game destabilizes the credit system.

  7. There are more options for people selling their homes in Vancouver other than moving to the island. They could simply down size or retire in the Fraser Valley.

    The substitution effect means that you would see a correlation with high prices in one area with an increase in sales in another. Vancouver prices went up but home sales in the Victoria Core went down from 204 to 149. That’s not a ripple effect. And not a correlation.

    Our market is dominated by local buyers. Those that do move to Victoria buy houses in all prices ranges and are not having a significant impact, as prices have remained around $625,000 +/- 5% for almost the entire year.

    However, we have had more million dollar plus home sales this year. And the reason may simply be because we have had more homes listed in the million dollar plus market this year.

    The most recent sale at 7.5 million had been listed for several years starting at 11.5 million and when it sold, it sold below the assessed value. When you look at the inventory, new listings to sales ratio and days on market there is more selection and more bargaining in the million plus market than in the middle income neighborhoods.

    Most of the increase in the median and averages are related to more sales in the middle income range. That trend is waning and we might see median and average prices drift lower over the next few months. As for the HPI who knows only the real estate board can calculate it. Or the better answer might be – who cares what the HPI is.

  8. “so where are they”

    We were buying the US at %50 off between ’11-13 with our above par loonies. Now we’re selling at double the prices once you consider the exchange and starting to buy Vic. Same thing happened late 80s on a smaller scale (far less retiring).
    This will only add fuel to our retirement wave as the US no longer makes sense (esp with tax issues & health care costs). I won’t even bring up how appetizing we’re starting to look to Americans.

  9. Looks like I was low on my Van sales… they’re actually up 40%!

    Van is certainly pointing to one heck of a ripple effect headed our way this Spring.
    (…now we just need rates to jump 😉 )

    They must be in disbelief when they start looking here at what they can buy for less than half what they sold their shack there… especially once they figure out it rains half the amount.

    http://www.moneysense.ca/property/november-home-sales-in-vancouver-up-40-from-year-ago/

  10. “so where are they” – they are waiting for interest rates to rise so they can sell before losing too much in their current market and ride the rising tide in Victoria where house prices always go up when rates go up.

  11. Yet there numbers are not showing up in increasing house sales. As the number of sales has actually declined since 2010 when the first of them turned 65.

    Primary Year Sales, Number of in the Core Districts
    2005 5070
    2006 4579
    2007 5196
    2008 3809
    2009 4594
    2010 3744
    2011 3550
    2012 3302
    2013 3453
    2014 3780

    Maybe they’ve decided to move to some less expensive part of the Island like the Western Communities.

    Primary Year Sales, Number of
    2005 1553
    2006 1694
    2007 1904
    2008 1474
    2009 1873
    2010 1454
    2011 1227
    2012 1195
    2013 1204
    2014 1363

    Nope, they’re not there either. How about the Saanich Peninsula

    Primary Year Sales, Number of
    2005 861
    2006 781
    2007 899
    2008 624
    2009 797
    2010 688
    2011 715
    2012 679
    2013 681
    2014 829

    Nope, none to be seen there either.

    You did say we would be getting a sizable chunk of those 10,000,000 retires? So where are they?

  12. My comments were directed at requiring 20%. Coming up with $120,000 on a $600,000 home is not easy for a first-time homebuyer and seems an unreasonable bar given prices. It was hard for us to get 5% when we first started and prices were half what they are now.

    I’m not sure that the extra $30,000 between 5% and 10% down on a $600,000 really does all that much to “protect the taxpayer” in from mortgage default. The bankruptcy rate is already extremely low the vast majority of people declaring bankruptcy are not homeowners. And mortgage debt is secured debt. It is usually other creditors that wear the loss, not the mortgagor.

    If, all of sudden, prices declined 10% and an owner only paid 5% down I do not believe we would be looking at a situation of mass foreclosure – even if interest rates rise at the same time.

    People starting out with housing are usually at the start of their careers and headed up in income. Divorce is a significant risk but, imo, most homeowners, even divorcing ones, would not go the foreclosure route due to additional fees and hit on credit rating and overall solvency.

    Don’t forget the additional CMHC insurance fees these folks paid in the amount of $20,520.00 on that $570,000 mortgage. Overall it is, imo, an acceptable low risk for taxpayers to provide a leg up to new homeowners who need the help the most and end up paying for it. Multiplying that $20,520.00 premium by all the less than 20% down folks x the default rate and CMHC is not losing money so stop with the fear mongering already.

  13. Interesting development down in Australia, the HAM/foreigner money is leaving. Is it “Peak HAM” hitting Vancouver now and the tide is about to turn ? Guess the coming months will tell the tale.

    Price Cuts Herald Sydney Home-Boom End as Foreigners Retreat

    “Chris Carr, a real estate agent in Sydney’s northwestern suburbs, has had to convince sellers to drop prices on at least six homes in the past two months to complete transactions.
    Such price cuts sent Sydney dwelling values 1.4 percent lower in November, the most in five years, as Chinese demand slows, banks raise mortgage rates and buyers balk at record home values. The first open inspection of a home now attracts on average about six groups of prospective buyers, compared with as many as 30 three months earlier, Carr, an agent with Gilmour & Orley, said in an interview.

    “Sellers have had to accept up to 10 percent price reductions,” said Carr, who sells homes in Sydney’s Hills district about 30 kilometers (18.6 miles) from the central business district. “There is a lack of international buyers, particularly those with a Chinese background now, who were behind the price rise. Local demand is still there, but they are price-conscious.”

    http://www.bloomberg.com/news/articles/2015-12-01/price-cuts-herald-end-of-sydney-home-boom-as-foreigners-retreat

  14. I agree with Hawk on the boomer migration part of his post. Some folks choose Vic for retirement but I would suspect most of them are from Vancouver or semi local surrounding areas. Very few people will choose to uproot their entire lives (and abandon regular visits to kids & grandkids) for better relatively pricey real estate and mild weather, especially if they are wealthy enough to afford a place down south that is closer to their families (e.g. Florida, Phoenix, etc).

  15. Wanting to move here and actually pulling up all family roots to move to an island with a ton of rain, and limited selection of houses you have to get into bidding wars (and over paying for the good ones) are two different things. Not to mention the risk of the big one.

    We have no family doctors for aging boomers, and a health system that takes 9 months to get an MRI and longer for basic surgeries. The Boomer Mirage is just that, a mirage.

    BTW did you see the comment on Garth’s blog from a broker ? Even the best credit risks are paying up and the cheapest money in history is gonzo.

    “I’m a mortgage broker and just got the email today. Scotia raised the variable to prime minus 20 basis points as of tomorrow. That was P-65 about a month ago. Banks are chopping the discount fast. Will soon be at prime. Cheap money days are ending fast.”

    http://www.greaterfool.ca/2015/12/02/balls-of-steel/

  16. “when are those baby boomers set to arrive?”

    It‘s already starting. There are about 10 million in Canada alone to retire over the next ~15 years and the retirement surveys always show Victoria their top destination. We’ll certainly get a sizeable chunk of the wealthiest subgroups.
    As far as US, Euro, Asia, etc… it’s hard to say how many we’ll receive, but you can be sure we’ll get some of them too (at least for parts of the year).

  17. Fixed rate mortgages are determined by longer term bond markets, which will rise ‘slightly’ in the next year or so. The Fed is stressing a very slow and theoretically data driven rise in rates.

    Variable rates are determined by BOC rates.

    Two things will happen.

    1. Most Canadian mortgages will not come up for renewal in the next 2-3 years.
    2. Like Australia, Canadians are becoming more financially literate, so I expect most people coming up for renewal will look at the 5 year fixed and look at the variable rate and make a smarter choice and pick the variable rate.

    I honestly expect for a lot of Canadians coming up for renewal (and in my circle of friends this is happening), variable will be the choice as the BOC is going to be in stalling or falling rate zone for the next 1.5-2 years minimum.

    This means a lot of Canadians will have lower mortgage payments coming up. Also, HELOC interest rates will stay low as they are determined by the BOC (I believe, couldn’t find any info on that other then variable rates are determined by BOC).

    So for the foreseeable future Canada will have very low rates with a large portion of the population switching to variable rates and saving literally hundreds of dollars per month compared to fixed rates from 4-5 years ago (upwards of 3.8+% on average).

    That combined with low inflation, upwards wage growth in most industries other then oil and gas, a hot immigration influx of hyper wealthy immigrants to our area, 23% year over year growth in Vancouver and many other areas while Victoria sat stagnant for 8+ years really should mean upwards pressure on prices.

    The lack of inventory and a ‘pileup’ of buyers waiting in the wings (sometimes new houses on PCS go out to literally thousands of buyers that are pre-approved and waiting and ready to pounce).

    I would expect more houses to come on the market starting very early Feb of 2016 with our very warm winter, we will see a very warm and early spring.

    If Vancouver shows a little bit of a slowdown I expect a lot of boomers to jump into the market to sell so they can cash out and move to somewhere warmer and sunnier where prices are 1/3 Vancouver. I personally know 3 boomers that were holding out on selling because their houses were going up 30-50k per month in ‘value’.

    With Victoria also having a large employment % doing business online in USD, I expect there will be a lot of pressure on starter homes in the 650-720 range easily accessible by millennial couples (easily 120-140k per year income combined for a married 28 year old couple in the tech industry).

    Anyways will be interesting to watch average prices hit 825 by June of 2016 at a minimum with a ‘perfect storm’ of low interest rates, a fully lagged market compared to most of the USA and Canada in the last 3-4 years (Victoria was flat while rest of NA went up 30% + ). Boomers cashing out to retire, tech millennia’s hitting middle class income easily, and upwards pressure on the core with zero new SFH (supply) created since 1972 in the core.

  18. It’s looked like downtown eastside for a long time now. Who would want to live downtown is beyond me. I’m sure the new flea market will be set up soon on Quadra and Courtenay to help out the entrepreneurs.

  19. Big sister is a major drunk Mike, and about come out of it with a wicked hangover. Victoria doesn’t have that kind of money power. Hate to break it to you but only 21 shacks sold in Oak Bay last month and prices were flat. The HAM are not buying. Imagine when they leave ?

  20. Canada has no choice with the 3 and 5 year mortgage rates, the bond market controls that and it’s already moved up in tandem. Some variables have inched up too but we’ll see how they react to Yellen next week or maybe after the jobs report Friday.

    How about that TSX drop today eh Mike ? Guess they don’t like the idea of a lower loonie and higher mortgage rates. Those Canadian REIT’s look like serious trouble.

    http://stockcharts.com/h-sc/ui?s=ZRE.TO

  21. You forgot the 30 and 40 year mortgages in the last box again from 04-07. How convenient. The first three boxes had historical inflation records and 5% annual wage increases which won’t happen any time soon. The little tiny boxes are negligible as the over all trend was down.

    It’s not 1986 all over again Mike, the commodities market is in shambles and not about to pop 40% as it did back in late 80’s til 91 nor the loonie rise 20 points to create inflation.

    You really need to quit using that comparison unless you are going use all the economic indicators of that time or you are just misleading people with fairy tales.

  22. Why should we let more lambs to the slaughter at the expense of mine and yours tax dollars supporting the 5% downpayer ? Obviously the Libs have seen the books and see something dangerous and want to head it off at the pass which I commend.

    Why should their risk taking level come at my expense should they lose their job, get divorced, or go under ? CMHC already bailed out the banks a mere 6 years ago to the tune of multiple of billions from the last pump.

    If you can’t come up with $70,000 for a $700K house you shouldn’t be in the market.

  23. I don’t think raising the minimum DP to 10% would be a bad move. The risk to avoid is having people underwater on a mortgage in case of a significant price correction; those are the cases that make people remain in debt even if they sell, and can lead to foreclosure in a declining market.

    Mind you, I don’t think such a move would have much effect on the Victoria SFH market. I recall Marko’s survey results suggesting that less than 20% of all buyers here put 5% down (and about 20% paid all cash), mostly on condos. Yes, I suppose that would result in some fewer sales in starter homes; might hit condos a bit? But I can’t see that presenting major downward pressure on prices for most homes in greater Vic.

  24. We have had some minor increase in the interest rate last month. Could that be yet another reason for the falling median and averages too? If half of the purchasers in Victoria are stretched to afford a home it wouldn’t take much to stop them buying. Sales did decrease by 27% from the month before. That doesn’t seem like a normal seasonal slow down.

  25. Most of their residential lots are north-south. Most of ours are east-west which is bad Feng Shui. Being on an island doesn’t help much either.

    But otherwise I suppose Stanley Park and Beacon Hill. The Seawall and Dallas Road. Willows Beach and Kits Beach are so much alike that you couldn’t tell what city your in. And that they just seem to have 8 times our population. Or that their Chinese minority numbers 182,000 to our 11,000.

    But I say never let the facts get in the way of a good discussion.

    Oh by the way when are those baby boomers set to arrive? The first of them turn 70 next month.

    But downtown Victoria is starting to look more like Vancouver these days. That is the Downtown Eastside of Vancouver.

  26. Accurate for what purpose?

    The benchmark for condos show an increase of 6.8%. Yet today a condo on Richardson that sold for $247,900 in September 2007 resold today at $235,000. Or a townhouse along Marset that sold in 2008 for $565,000 resells today for $569,000. Or a waterfront property in Saanich East that was bought 9 years ago has only increased 16 percent in all those years. Yet the HPI core shows 9 percent just in the last year.

    The HPI is a general market indicator and was not developed to predict what your specific property will sell for today. That’s not its purpose. That’s a purpose you assumed. The HPI is more like a barometer of the marketplace showing if it is sunny or raining today. And today the market is sunny and it will likely be sunny again tomorrow and the next day until it is not sunny anymore. Then it will be rainy.

    If you want to predict the current price of your property based on its previous sale. Then you would bracket the physical aspects of your property in terms of size, age, condition etc and determine the median price at the time of purchase using hundreds of sales. And compare that median to the median price of similar homes today. That gives an economic conditions factor that can be applied to the original purchase price to estimate a current price. Assuming that the home has not substantially changed through renovations between those two time period. Also the further apart those two dates the less reliable the current price estimate may be. If you purchased the home after 2000 then the calculated current price will be reasonable. If you bought the home in 1980 not so much. The HPI can’t do this.

  27. Rising mortgage rates actually coincide with surging prices in Victoria…at least for a year or two or three 😉

    I’ll give you a hint as to why… each time mtg rates are rising in the following boxes, real rates are actually doing the opposite for Victoria. The same set up is already well underway as the Vic/Van economies are leading the country. The time period is very similar ‘86/87.
    Since there is speculation the Fed will raise 0.25% this month, for fun you may want to also recall what happened to Vic prices as the Fed started raising the overnight rate from 1% to 5.25% between ‘04-07.

    Note: The chart was from DavidL…I merely added the boxes.

  28. It’s turning into an interesting race across the water.

    Van West… $2,864,600… +23.2% YoY
    West Van… $2,519,200… +26.1% YoY

    Van’s definitely accelerating…sales up 31.9% since last Nov.
    High time for us to play some catch up with big Sister… the full force of Van’s ripple effect should hit in 2016.

  29. I’m not sure I agree.

    When I started out we only had 5% down to put on our first home. I’m very grateful for this as it allowed our family to get a start and gave our kids a place to call home near the elementary school they would attend.

    Saving an additional $30,000 after tax straight out of school while renting a home in the neighbourhood would have been tough – in fact it would have delayed home ownership by at least two years, if not more, and renting would have cost us more than home ownership did because of suite income. Plus the market appreciated like crazy over those two years.

    All in all, having to wait an additional two years would have cost us about $50,000 in additional payments and lost equity.

    In a depreciating market new homeowners can wait it out. Even if interest rates rise there are things you can do to keep your home and make payments given that the debt servicing ratios create a reasonable bar to meet imo that goes far enough to set a limit on affordability.

    As far as this nebulous threat of foreclosure due to only 5% down on a home, I don’t agree. Foreclosure doesn’t happen because someone didn’t put an extra $50,000 down on a home. Foreclosure happens because people can’t meet current expenses, usually due to other factors like divorce, disability, addiction, poor money management and job loss.

    Given that you can’t just walk away from a bad debt on a house in Canada the motivation to keep a place to live and ride out a difficult market is strong and this is the most logical choice. Plus the ability to rent out rooms or the entire place and move somewhere cheaper or where you can get a job remains an option.

    The ability to pay off a mortgage is not, in my opinion, as strongly correlated with having more than a 5% down payment in an expensive market like Victoria. First time buyers that have more than this down either have very high incomes that could support a mortgage at 5% or have a “gift” from other family members for their down payment which says little about their own financial saving ability. Incomes and credit scores and debt ratios seem like a more accurate measure of ability to pay and likelihood of payment to me.

    All raising the down payment requirement does, imo, is further prejudice those just starting out in life who have the ability to pay and meet all the other criteria for qualification, but have no parental help with the down payment, from entering the market.

    The ability to pay 20% down and avoid the CMHC fee only something I was able to achieve in a reasonable timeframe as a result of home ownership. I’d hate to see young people entering the market from a background like mine further penalized. Let them make the choice as to the level of risk they wish to take on.

  30. That’s something we seem to agree on Hawk. In my opinion the minimum down payment should be 20%. I think the biggest risk to the overall RE market (that includes CMHC and the Federal Gov) is the absurdly low down payments allowed on house purchases. This is a time bomb if we get that correction you keep predicting. Just look at the small ripples of foreclosures around Sooke and Shawnigan Lake. That ripple could turn into a tsunami if your crystal ball was right and us Bulls were wrong.

  31. The data is on the MLS stats and I posted it below. Highest gains were for SFHs in the core. Other areas and types of housing gained less than 9%.

    SFH
    Victoria – up 8.6% yoy
    Core – up 9% yoy
    Westshore – up 5% yoy
    Peninsula – up 6.6% yoy

    Condo
    Greater Victoria – up 6.8% yoy

    Townhouse
    Greater Victoria – up 3.6% yoy

  32. Wow, your last thoughts before bedtime are about me ? I’m touched. Hope I didn’t give you bad dreams. 😉

    No interest rate cut in Canada but looks like the Libs are pulling out the swords to kill the bull.

    Mortgage industry insider says Finance is pondering hike to minimum down payment

    “The new federal Liberal government could face its first major question on the housing market as early as January, according to a mortgage industry website which says the department of finance may call for an increase in the minimum down payment.

    Consumers with government-backed loans must have at least 5 per cent of the value of their house before they can get a loan but that would rise to as much as 10 per cent under a proposal that will be presented to the minister of finance, says Rob McLister, of Canadian Mortgage Trends.

    It’s a move, if implemented, that would heavily impact first-time buyers who are considered crucial to the housing market. It would make it tougher for them to borrow because they would have to come up with a larger down payment. (For example, on a $700,000 home, homeowners would need up to produce $70,000 instead of the current $35,000.”

    http://business.financialpost.com/personal-finance/mortgages-real-estate/mortgage-industry-insider-says-finance-is-pondering-hike-to-minimum-down-payment

  33. 2014 median
    Jan $576,250
    Feb $579,000
    Mar $568,950
    Apr $599,450
    May $609,450
    Jun $583,000
    Jul $576,000
    Aug $595,000
    Sep $585,000
    Oct $570,000
    Nov $569,000

    2015 Median
    Jan $542,500
    Feb $597,500
    Mar $625,000
    Apr $631,200
    May $620,250
    Jun $629,900
    Jul $610,000
    Aug $659,500
    Sep $640,000
    Oct $677,250
    Nov $611,000

    uhhhhh…me not so smart… me see ten 5’s and one 6 in 2014 and see nine 6’s and two 5’s in 2015. Not good at math but see more 6’s in 2015. must mean more? Dis advanced addimications makes brain hurt….

  34. I don’t think that 9% would be for all properties in all areas in all price ranges. It probably represents the best case scenario for the most popular type of property in the core districts.

  35. As 2015 nears a close, it’s like the third period in hockey with the Chicken Little Bears doing poorly against the Canuck Bulls. The Canuck Bulls are doing well and are ahead 20% over the premature sold of the Chicken Little Bears. A few Canuck Bulls with multiple goals are ahead $200k in 2015 while the Chicken Little Bears are eating dust watching their residual dwindle as the game surges higher. There’s no overtime in this game, but Hawk is certain 2016 will be different, a new game, a time for the Chicken Little Bears to regain some lost ground when the Bulls flounder and panic. Yellen is rumoured to announce new game rules on December 16th, or will she freeze and hold-off on any game-changers until 2016? Watch for a Hawk filled blog on December 16th if Yellen raises the stakes with a 1/8th point increase… will a hockey-wave of panic fill the RE stadium after December 16th?

    Time for a new 2016 poll prediction: Will the Hawk suffer the fate of Info and go extinct in 2016? Or will the Hawk soar high with “I told you so” as the market dives, the economy crashes, and the debt bubble pops with rampant bankruptcy and foreclosures.

  36. Just read the data JJ. Go to the section on townhouses. Look up OB. You’ll see the benchmark this month is $542,700 while last month was $519,400. Gain of $23,300 month over month.

    I agree it is interesting that the HPI is calculated for townhouses mom even without any sales in a month and that it shows such a significant gain. I wonder what the base factors are. Perhaps scarcity is one.

  37. I didn’t realize we were in the US. We have record monthly sales happening for many months now.. No excuses in a hot market. Buyers price ceiling is clearly being hit.

  38. There were no Oak Bay townhome sales in November. When I say no – I mean there were zero townhome sales. In October there was 1. So where does a $21,000 month over month increase come from?

    Here’s the median price for Saanich East for the last few months

    Month Sale Price, Median
    Jul $646,000
    Aug $697,750
    Sep $667,500
    Oct $675,000
    Nov $640,000

    Here’s Langford and Colwood

    Month Sale Price, Median
    Jul $457,750
    Aug $527,500
    Sep $468,000
    Oct $495,000
    Nov $477,700

    And the Malahat
    Month Sale Price, Median
    Jul $492,500
    Aug $461,000
    Sep $447,500
    Oct $478,500
    Nov $455,000

    For Oak Bay the prices ranged from a low of $515,000 to a high of $3,800,000 over 23 house sales. You’re not going to get any meaningful data out of that kind of spread in prices over so few sales. And just because a property sold at a high price doesn’t mean it symbolizes rising prices.

    The sale in October at $7.5 million was a home in Oak Bay that was originally listed at 11.5 million. When it sold at 7.5 million it sold under assessed value.

    Many of the homes in Oak Bay that recently sold at high prices had undergone expensive renovations or were newer construction. Comparing two different time periods but with substantially different homes in age and condition is going to skew those numbers to the high side.

    Then there are the auctions. I haven’t crunched the numbers in depth but at first glance the properties that sold substantially over asking price didn’t sell much differently than those marketed normally relative to their sales to assessment ratios. But I have to spend more time crunching these numbers.

    This inning definitely goes to the bears but the game isn’t over yet.

  39. I see the data you are now referencing for Greater Victoria, which is different then your prior data, and reflects the median and average mom.

    I guess it depends on whether or not you agree that the HPI and Benchmark prices are more accurate than the median/average as both the Benchmark and HPI show month over month gains – as do many of the areas within Greater Victoria and other areas. .

    Averages or medians can be skewed by the inclusion of high-end or low-end properties – especially within a monthly data. The HPI is calculated using a sophisticated statistical model that estimates home prices based on their “basket” of features. MLS says that these measures provide a more accurate indication of price trends regionally, or by municipality or neighbourhood, than average of median.

    Up to you what you believe this or not I guess. My view is that fewer high end/high value sales are currently taking place in some areas given the gains in the HPI in everything except condos in greater Victoria which lost $1600 mom on the HPI index which appears to be a real loss in value.

    Here is the HPI data month over month with November 2015 on the left and October 2015 on the right:

    SingleFamilyBenchmarkHome:GreaterVictoria $517,900 $516,600 (up 8.6% yoy)
    SingleFamilyBenchmarkHome:Core $608,600 $608,200 (up 9% yoy)
    SingleFamilyBenchmarkHome:Westshore $426,800 $420,000 (up 5% yoy)
    SingleFamilyBenchmarkHome:Peninsula $562,500 $561,400 (up 6.6% yoy)

    CondoBenchmarkHome:GreaterVictoria $304,200 $305,800 (up 6.8% yoy)
    TownhouseBenchmarkHome:GreaterVictoria $415,400 $408,700 (up 3.6% yoy)

    http://www.rebgv.org/mls%C2%AE-home-price-index-gauges-trends

  40. It’s common for prices to slow month-over-month in winter as shown below. As sales go thru their typical winter slowdown, it becomes that much more important to use the benchmark index formula. Our benchmark is still M-o-M positive, but it is finally going thru the typical winter deceleration. If you’re an owner, you’re still up 9.0% (~$50,000 per house) since last Nov.

    You can’t blame the bears for jumping on the median/average swings this time of year due to lower sales to try to portray a weakening market. Don’t worry, they’ll be put in the their place again come January 😉

  41. Look down the column for month to month comparison. Look across the row for year to year comparison.

    I’ll make it easier for you to look at the month to month

    Mnth Sale Price, Median
    Jan $542,500
    Feb $597,500
    Mar $625,000
    Apr $631,200
    May $620,250
    Jun $629,900
    Jul $610,000
    Aug $659,500
    Sep $640,000
    Oct $677,250
    Nov $611,000 down 9.8%

    Mnth Sale Price, Average
    Jan $619,555
    Feb $665,536
    Mar $705,337
    Apr $698,202
    May $703,989
    Jun $719,006
    Jul $781,363
    Aug $812,136
    Sep $706,817
    Oct $794,051

    Nov $704,269 down 11.3%

    Now year to year
    Nov $569,000 to $611,000 up 7.4%
    and the Average
    Nov $643,875 to $704,269 up 9.4%

    The year to year is an absolute difference and can only be understood if you remember that in 2014 prices were declining from a high in May at $609,450.

    2014 median
    Jan $576,250
    Feb $579,000
    Mar $568,950
    Apr $599,450
    May $609,450
    Jun $583,000
    Jul $576,000
    Aug $595,000
    Sep $585,000
    Oct $570,000
    Nov $569,000

    Since February of this year the median prices has closely been centered around $625,000 give or take 5% Except for January and October

    Mnth Sale Price, Median
    Jan $542,500
    Feb $597,500 ******
    Mar $625,000 *****
    Apr $631,200 ******
    May $620,250 ******
    Jun $629,900 ******
    Jul $610,000 ******
    Aug $659,500 ******
    Sep $640,000 ******
    Oct $677,250
    Nov $611,000 *****

    Certainly looks baffling how prices can do this strange dance of being both up and down by such large amounts. Especially looking at each month. The reason is our marketplace is becoming more shallow with fewer sales and is dysfunctional with crazy bids on some properties and others selling for less than they did just a few years ago.

    I think that anyone who watches the stock market and saw this kind of volatility would sell their stocks. You gotta rock the coke machine a couple of times before it falls over.

    https://youtu.be/bTi9eJqkxng

  42. Just read the data.

    The median and average from October 2015 to November 2015 went down. From $677,250 to $611,000 and from $791,051 to $704,269 respectively. The same with the volume of sales, that are down from 204 in October to 149 in November.

  43. No, houses in the core rose from October 2015 to November 2015, as you yourself have noted, so that is not a possibility. You’ll see he is comparing the same months from 2014 and 2015 on his charts so there should be a yoy increase not decline based on the data.

  44. I believe he meant month over month declines from October 2015 median and average prices to November 2015 going by the numbers he posted.

  45. I was wondering this as well. Do we have another 5.5% employed in the oil industry? Also bottom of the barrel oil prices will drive down the dollar and help other exports, as we just saw in this quarter’s economic numbers.

  46. “Nov $569,000 (2014) $611,000 (2015). Month over month decline of 9.8%”

    “Nov $643,875 (2014) $704,269 (2015). Month over month decline of 11.3%”

    How is that a mom decrease of 9.8% or 11.3%? Did you mean increase?

  47. For those that didn’t read what the medians and average prices were for houses in the core here they are:

    Sale Price, Median
    Mnth 2014 2015
    Jan $576,250 $542,500
    Feb $579,000 $597,500
    Mar $568,950 $625,000
    Apr $599,450 $631,200
    May $609,450 $620,250
    Jun $583,000 $629,450
    Jul $576,000 $610,000
    Aug $595,000 $659,500
    Sep $585,000 $640,000
    Oct $570,000 $677,250
    Nov $569,000 $611,000

    Month over month decline of 9.8%
    The median for the entire year was $582,000. So far this year the median is $629,000. That’s an 8% year over year increase

    Sale Price, Average
    Mnth 2014 2015
    Jan $638,272 $619,555
    Feb $631,135 $665,536
    Mar $697,516 $705,337
    Apr $701,092 $698,202
    May $681,651 $703,989
    Jun $645,682 $719,006
    Jul $656,549 $781,363
    Aug $689,180 $812,136
    Sep $673,535 $706,817
    Oct $630,884 $794,051
    Nov $643,875 $704,269

    Month over month decline of 11.3%.

    The Average price for 2014 was $664,500. So far this year the average is $724,000 or up 9%

    The median sales to assessment ratio also fell 113.5% in October to 109.5% in November. Month over month decline of 3.5% The number of house sales in the core also fell from 204 in October to 149 in November for a decline in volume of 27 percent from the month before.

    Year over year prices are up just as the press release showed. Most of which was because house prices in the core in the last half of 2014 were in decline.

    If our current prices remained flat, which I expect to happen, we will start posting year over year price declines starting in the spring of 2016. It wouldn’t be because prices are actually declining it would be because we caught up to the higher market prices of the year before.

  48. Considering all the bidding wars Marko has been posting prices should be up in Oak Bay not down, especially with only 20 houses sold and all the hot money supposedly going thru this town. I thought everyone was paying 100k over? Apparently not.

    The core benchmark is the main guide here that VREB quotes religuosly to all the media and it’s only up a whole $400. Imagine if a few less high end sales and the core price would be negative for the month. Saying its up 9% year over year makes one feel better I guess.

  49. Pretty ridiculous sweeping generalization based on a one-month one house type one area stat. You managed to ignore the rest of the data that doesn’t agree with your hypothesis.

    OB townhouses are up $21,000 month over month. Saanich East with the highest volume of sales (60 SFHs) is up each of the last three months, as are Sooke, Langford, Malahat, Sidney, Victoria core, Victoria city, and North Saanich

    At least attempt to make a fair comment.

    Maybe what we can say is one month one area benchmarks are not a good indicator of an overall trend.

    Year over year prices are up 9% in the core which is a real stat.

    Where they go from here, not sure, but 21 houses sold in Oak Bay with a few thousand dollar change in benchmark is not indicative of anything except low level of sales and some lower priced houses being sold.

    The spring market will be interesting.

  50. Don’t forget what Michael said though, interest rates need to go up before “prices will really start to lift off”…lol

  51. It is far from obvious to me why a further $10 decline in oil price would drive unemployment from 7 to 12.5% whereas the past year a $60 decline saw the unemployment rate barely budge, while house prices, except in Alberta, trended up.

    A further decline in oil price may further impact house prices in Alberta, but otherwise, shouldn’t the effect be positive, with cheaper energy meaning more to spend on other things?

  52. I’d say Jack called it with his projected numbers, the prices appear to be topping out. Even Oak Bay benchmark price went down from last month as well as last three months in the hottest market in years. This should send a message to the buyers to quit the panic mode thing, the prices are plateauing.

    November $838,400, October $842,300, September $846,700

  53. After all that record sales volume the benchmark in the core up a whopping $400 !!! What will you do with all that payola ?? Party time !! 😉 Sales to listing on the decline as well.

  54. Tue Dec 1, 2015 7:30am:

    Nov Nov
    2015 2014
    Net Unconditional Sales: 573 465
    New Listings: 747 682
    Active Listings: 2,952 3,631

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

  55. The November #s are out…

    ——–YOY%
    SFH… 9.0%
    Condo 6.8%
    TH… 3.6%

    Yawn… let me know when we pass the million mark.
    Third quarter GDP sure was bright 😉 …sure is driving the TSX higher today.

  56. According to O’Leary then, those that bought after 2009 made a poor choice.

    Primary Year Sale Price, Median
    2005 $429,000
    2006 $479,000
    2007 $535,000
    2008 $560,000
    2009 $555,000 X 1.12 = $621,600
    2010 $601,000
    2011 $595,000
    2012 $578,000
    2013 $572,500
    2014 $582,000
    2015 $628,750 projected

    If you had sold in 2009 and invested in the stock market then you would be better off financially today. And it isn’t going to get better looking forward. For most people, the longer they hold real estate the lower will be their personal rate of return.

    In economics there is always a trade-off. Buying real estate today fulfills an emotional need at the cost of your future financial wealth. You’re giving up superior financial security at retirement for brick and mortar today. 40 years from now you’ll be hovering a wood stove in the basement because you won’t be able to afford the gas bill.

  57. Stop derailing the conversation here. The market has resoundingly completely rejected bear theory once again. Let’s resume talking about how depressing that must be for for-renters.

  58. Good idea Leo. I do find the new comments difficult to find since it is mostly Hawk and Michael and they look very similar. JK Seriously, I vote for option 3.

  59. Yes this is possible as well. I find this works best in combination with a threaded comment system. Otherwise you’re reading responses to posts before the original when going top to bottom.
    Another option might be to have a link that jumps to the bottom of the comments. I found that on blogspot clicking comments jumped to the bottom, while here it doesn’t.

  60. Is is possible to have new comments added to the top rather than the bottom? Seems to me that would eliminate a lot of scrolling currently required to stay up to date as the comments grow. Anyways, just a thought.

  61. I like the look and feel of the WordPress site but the way the comments have been working wasn’t ideal. Thanks for seeking feedback. I also prefer the old linear format … Option 3.

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