Market Update Dec 7, comment changes, and a stats update

First of the month monday market update courtesy of Marko Juras.

December 2015
Wk 1 Wk 2 Wk 3 Wk 4
Unconditional Sales 124
New Listings 125
Active Listings 2797
Sales to New Listings
Sales Projection
Months of Inventory


No point in projecting sales yet given the severe slowdown around Christmas but I suspect we’ll see about 470 come the new year.    A 99% sales/list ratio is pretty impressive though, could we break 100%?


Two posts ago I asked about what comment styles people prefer, and of the 8 people that expressed an opinion about it it seems at least 7 prefer the old linear system, so its now back with new comments on top.   I still like the ability to reply to comments directly but without a significantly more advanced comment system it seems the simple comments will be easiest.   We can make a few more improvements once we migrate to the new server.

I’ve also enabled Markdown for comments, which makes quoting people and comment styles in general easier.

To quote someone, put a > in front of what they said.

Automated Stats

The automated stats page has received some updates.  It now supports going back in time, so play around to see what it has to say about past dates.    I’ll be writing an article about how this thing works at some point.

Another area is why it says the market is balanced, when we know that it is quite hot right now?   Well I’ve been looking into that and there are several reasons:

  1. Using generally accepted definitions of how many months of inventory translates into a buyers, balanced, or sellers market does not take into account the season.   5.2 months of inventory in November does not mean the same thing as 5.2 in May.    I’m unsure as of yet how to compensate for the seasonality of the data.
  2. I calculate Months of inventory by dividing the total sales into the active listings.   While accurate for the entire market, this includes commercial sales and inventory, which is a totally different market and the resulting number doesn’t reflect the conditions in the residential market (this also explains the graph in the previous post).   Problem is, the VREB doesn’t publish the residential inventory, so I have no easy way to get this data.   I’ve asked them to add it to their publications so hopefully they do that in the future.   In the meantime I’d be grateful if someone posted the residential inventory from July 2013 to present (I have the data before that).

For those who missed it in the comments, here’s a good article on cash back mortgages by a local broker.


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102 thoughts on “Market Update Dec 7, comment changes, and a stats update

  1. The month over month appreciation rate is under one percent for the most active market namely single family housing in the core. Not 1.7 percent for all of greater Victoria and all types of properties

    They’re not saying that appreciation was 1.7% every month this year, just last month. The YoY increase they are pegging at 8.65%. Not wildly out of line if you’re saying the core increased by about 10% in the same period.

    In other words, how many homes sold in October then re-sold the next month in November that Teranet could have used to determine that 1.7% month over month increase for all properties in all areas?

    That’s not how the Teranet works. It’s based on resales but the places don’t have to sell every month. The index is based on the properties that sold in November and sold previously at any time. The difference in price between the two sales and a bunch of statistical magic makes up the index. Teranet publishes the number of sales that it is based on every month. In november the index was based on 519 sales.

  2. That’s right, it isn’t a year because I’m not comparing the year over year numbers.
    The month over month appreciation rate is under one percent for the most active market namely single family housing in the core. Not 1.7 percent for all of greater Victoria and all types of properties. We’ve been averaging half that rate consistently for the last 6 months.

    That’s based on 2,250 sales detached sales in the core districts. How many sales is the Teranet number based on? My guess is close to zero.

    In other words, how many homes sold in October then re-sold the next month in November that Teranet could have used to determine that 1.7% month over month increase for all properties in all areas?

  3. JJ – Not sure I understand why you are calling BS on Teranet. Unless I am misunderstanding, the data you posted shows 9.7% increase – broadly consistent with Teranet.

  4. Hmm, Teranet index or hhv bear who’s been trying to talk the market down in vain for years…tough choice.

  5. It might be more illuminating to look at how detached house prices in our strongest market have increased since the beginning of the year by increments of 500 sales rather than month to month which has a lot more variation.

    Median price for detached houses in the core in blocks of 500 sales for 2015

    $600,000 for the period January 1 to April 2, 2015
    $624,500 for April 3 to May 29
    $625,000 for May 30 to August 6
    $650,000 for Aug 7 t Oct. 22, 2015
    $658,250 for Oct 23 to Dec 14, 2015 (254 sales)

    That comprises about 2250 house sales in the core districts of View Royal, Esquimalt, Vic West, Victoria, Saanich and Oak Bay. Which is our strongest market. This is pretty consistent data. So much so that I’m going to call BS on Terranet.

  6. “Victoria now has the hottest monthly gains in Canada for Teranet (Vic 1.76%, Van 1.35%)”

    Looks like Vancouver is leading the way down and all the sheep are left overpaying here. Atta boy VanCity !

    Hope the new owner of the Willis Pt doesn’t mind the wind that is usually constant when perched up on a cliff. Makes for cold times by the pool and foggy landings in his helicopter.

  7. “Those 3 units would be their profit for the project, but what do I know.”

    What’s your point?”

    What needs to be explained ? …you’re the numbers pro after all.

  8. I’m not talking about choice of pillows. A good design will gift a place with “good bones” paint it this way or that it’s still a good design. Look at the fire pit zone for example, Who is going to feel cozy there? it has no good flow to that zone at all. But that is minor compared to the simple positioning of this giant house on the precipice of a cliff. The outward flow of the outside living space is on this side. Totally uncomfortable! I’m not inviting anyone over with kids. Or that has vertigo! Totally unnecessary and uncomfortable. IT has no relationship to it’s beautiful surrounding at all. It belongs in a mega mansion suburb in Alberta!

    I do like the wood shop though 😉

  9. Victoria now has the hottest monthly gains in Canada for Teranet (Vic 1.76%, Van 1.35%)

    As such we’re starting to close the gap for yearly numbers with the hottest 3 markets.

    Vancouver (up 11.3%)
    Toronto (up 9.7%)
    Hamilton (up 9.6%)
    Victoria (up 8.7%)

    There’s a good chance we could become the lead horse for 2016 or 2017.

  10. “Bad taste has nothing to do with being custom… It’s also not about the style of the place or its decorations. It’s that they did a crap design.”

    I was in a brand new penthouse condo earlier this year that my clients purchased and had the developer carry out a number of upgrades they think are awesome. We walked across the hallway into the other penthouse and my clients couldn’t stand the paint colours, upgrades, etc, which their soon to be new neighbours had chosen. Their neighbours are going to feel the same about my clients’ place/upgrades.

    What is custom to you is not custom to another person. What is bad taste to you is not bad taste to another person. Case and point contemporary homes in Oak Bay.

    My favorite is when I go into large buildings built by massive developers such as Bosa and my client says “I could have designed this better.” Like yea, I am sure you would be able to pull off a better job than all the architects, designers, experience and feedback the developer has from selling thousands of units. All within the constraints of finances and complicated building codes and structural factors.

    Not many people are willing to accept that their custom upgrades are simply not going to be appreciated by the average person. I did a lot of custom stuff on my house but at least I know some are incredibly dumb for re-sale. Not in denial.

  11. “The Belcher condo developer has other projects on the go right now I don’t think they are hurting.”

    Those 3 units would be their profit for the project, but what do I know. I guess every builder in town is rolling in bedfulls of devalued loonies and howling at the moon as the sheep are herded in.

  12. Surprise, surprise. Canadians borrowing their ass off to infinity and beyond. No worries, it’s all good debt. 😉

    Canadians keep piling on the household debt as it hits 163.7% of disposable income: StatsCan

    OTTAWA — Canadian household debt hit a new record in the third quarter, as borrowing rose faster than income.

    Statistics Canada said Monday the amount of household debt compared with disposable income rose to 163.7 per cent, up from 162.7 per cent in the second quarter.

    That means the average household has roughly $1.64 in debt for every dollar of disposable income.

    “The deterioration in the headline was expected, driven by a combination of sluggish income growth and still-hearty borrowing,” Bank of Montreal chief economist Doug Porter said.

  13. Money is just so cheap for builders right now that you just don’t see anyone blowing out inventory. The Belcher condo developer has other projects on the go right now I don’t think they are hurting.

  14. Noticing a couple of pre-builds for sale in same Fairfield neighborhood plus another in Oak Bay for a million and up. Builders must be nervous trying to build in this market. Who would be a fool to buy something for that type of cash before they get to see it. Not many so far. Risky business building a box style place in a neighborhood of older established homes. The head of VREB is involved in one of them.

    I see those Belcher condos are still for sale with only 1 sold over last 2 months out of the 4 left. With a building of 9 total it’s pretty funny seeing the agent still use “65% Sold” as if it’s some large building. I thought they were supposed to be all sold shortly ?

  15. Safe to say the market hasn’t slowed after seeing an old junker on a corner go for $65,000 over ask after 3 days on the market.

    I think the George one sold for 980k if I remember correctly. My bet is they get the full 1.28M.
    300k profit minus some appliances and bathroom fixtures in a year would be ok.

  16. Considering what other properties along Edgelow have brought in the past, this auction result was a bit of a disappointment.

    Auctions don’t always get the best price. Especially when the home is a generic Gordon Head box in need of remodeling. This home may have received a higher price if it had been marketed over a longer period.

    A successful auction (in terms of price paid) requires a special type of property. An agent should provide you with the best marketing plan for your home to get the best price net of commission. Unless you want to sell the home quickly.

  17. Wow, did they get fleeced, place needs $100K easy. Who was the buyer ? HAM with some dirty cash or a slumlord for students, or both.

  18. Victoria Real Estate Board

    Mon, Dec 14, 2015 8:30am:

    Dec Dec
    2015 2014
    Net Unconditional Sales: 244 389
    New Listings: 261 419
    Active Listings: 2,734 3,210

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

  19. That Willis point house is a monstrosity. It’s disgusting, tacky, and pays no respect to its location, or the era it was built in. That’s what it says about its builders and its buyers. I have a thousand times more respect for a wealthy someone keeping a collector car alive…

  20. The property is an example of the difference between price and value.

    Would it matter to the purchaser that they are paying in excess of market value for the property? Or is obtaining this home the only importance to them and to hell with the price.

    If this had been a private sale then I would be suspicious that the home sale was tied to the sale of a business. Pay a lot more for the home that is capital gains exempt and less for the business that is subject to tax.

    Being a public sale this is probably an ego purchase. The price paid is an important as the property itself. You buy Janis Joplin’s Porsche for 1.7 million not because it is worth 1.7 million, it’s so that people now know you as the person who paid 1.7 million for what in reality is a repainted piece of junk.

    This neighborhood is isolated, wet, cold and a boring place to live. My guess is the property will be back on the market in three years.

  21. Interesting how many more “new” and “reduced” prices are showing up without even looking hard. One was in Oak Bay and another was a condo penthouse with a “Huge Price Reduction” in the MLS ad. You would think they would just pull them til the new year instead of panic sell.

    Pretty pathetic all the local media hype over the sale of that Willis Pt Rd. mansion selling $250K over asking after being on the market forever and dropping it’s price $1.5 million and then pumping out a massive pumper party for the rich and their agents in order to dump it.

    Seems like a ton of high end mansions up for sale right now. I guess they see the top of the market or have hit hard times in the financial markets and need out. Watching the media spin it as some new boom after the past few years of watching Madrona and other big estates take severe beatings of mega million dollar hits to get a sale, shows how two faced they can be when advertiser dollars are waved in their faces in order to stay alive.

  22. :large

    Good example of how the average person buys high and sells low. Peak ownership rate at the top of their bubble, then continued decreasing ownership rates as their market makes huge gains in the last several years.

    Also a symptom of the decline of the US in my opinion. The middle class is being decimated there.

  23. Interesting that US home ownership is trending down and renting is in vogue. Someone gets it that it isn’t the end all be all to financial wealth.

  24. Great stats Jack. As usual a salesman distorts reality pumping someone else’s story that can’t be proven. Typical pumper pattern. I’m watching a number of properties in nice areas and they haven’t sold for almost 3 months. No rush to buy anything when a storm is a brewing in the financial world.

    Dividend stock profits are hardly bragging worthy if the stocks have fallen 10 – 20% in value like so many have this year. $2500 pre-tax profit (5% div) on a $50,000 worth of dividend stock that’s lost $5000 to $10,000 in value ?

    I like how the HAM come in here expecting to cheat the system with gaurantees of citizenship then clog up our courts when they get scammed, or are scamming us to begin with. This should scare a few of them off.

    Chinese investors claim they were guaranteed immigration to Canada

  25. I was looking at some of examples near UBC lately (thinking of a property I have near UVic), and I’m convinced there’s one heck of a ripple on its way across the Salish Sea.

    New listing for $4,380,000.
    Sold for $2,200,000 on Sep 8, 2013.
    …and for that low price you get a lovely view of about 10 power lines.

    I’m only talking the core Jack. It’s quite obvious we’re up more than 100k (after sale costs)… some of the latest data I’ve seen show prices up 13% in the past year alone.

    “There were significant year-over-year price increases in Victoria (13%), Fraser Valley (10%), Hamilton-Burlington (12%) and Barrie (8%).”

  26. Michael, the majority of house owners in Greater Victoria have not made a $100,000 tax free on their homes in the last two years. Some have actually lost equity.

    Sale Price, Median detached homes in the core districts
    Month 2013 2014 2015
    Jan $540,000 $576,250 $542,500
    Feb $590,000 $579,000 $597,500
    Mar $574,750 $568,950 $625,000
    Apr $610,000 $599,450 $631,200
    May $551,250 $609,450 $620,250
    Jun $585,000 $583,000 $629,450
    Jul $570,000 $576,000 $610,000
    Aug $556,100 $595,000 $659,500
    Sep $575,000 $585,000 $640,000
    Oct $579,500 $570,000 $677,250
    Nov $555,500 $569,000 $611,000

    Sale Price, Median condominiums in the core districts
    Month 2013 2014 2015
    Jan $232,500 $300,500 $264,950
    Feb $269,000 $270,000 $310,000
    Mar $284,950 $290,900 $279,900
    Apr $275,000 $281,000 $287,000
    May $295,000 $272,900 $285,500
    Jun $272,000 $295,450 $275,000
    Jul $275,200 $268,500 $290,500
    Aug $277,500 $264,900 $286,000
    Sep $275,000 $289,900 $281,150
    Oct $300,000 $276,500 $292,500
    Nov $255,250 $275,000 $282,000

    Sale Price, Median detached homes in the Western Communities
    Month 2013 2014 2015
    Jan $425,000 $432,500 $418,000
    Feb $433,890 $433,500 $476,000
    Mar $420,000 $452,000 $480,000
    Apr $440,000 $460,000 $477,500
    May $442,860 $430,000 $469,000
    Jun $435,000 $460,000 $459,950
    Jul $448,000 $460,000 $439,900
    Aug $450,000 $418,000 $490,000
    Sep $441,750 $465,000 $468,000
    Oct $443,000 $449,500 $489,900
    Nov $417,100 $416,000 $457,112

    Sale Price, Median condominiums in the Western Communities
    Month 2013 2014 2015
    Jan $249,900 $242,000 $234,000
    Feb $279,900 $310,450 $238,000
    Mar $247,000 $282,000 $265,000
    Apr $169,000 $245,000 $263,500
    May $267,450 $271,250 $225,000
    Jun $278,950 $240,000 $251,500
    Jul $245,900 $251,500 $245,750
    Aug $280,000 $275,000 $256,000
    Sep $225,000 $249,000 $312,500
    Oct $265,000 $272,000 $255,000
    Nov $235,000 $253,000 $225,000

    It isn’t about semantics. It’s a matter of deception to state that home owners have made $100,000 tax free in two years. Alt that has changed is the equity in the property. And equity is not the same as money. Equity has to be converted into cash by incurring selling costs, additional debt or for some owners capital gains tax.

    Equity is not an asset or a liability. It is the home owners’ claim against the property. A claim that for many may be partially mortgaged if the owner can meet lending regulations. Some people may have considerable equity in their home but they can not obtain a conventional mortgage for financial reasons. Then they have to sell their entire asset at considerable costs in exchange for cash. Only then will they know how what they really did make on real estate. For the vast majority of those in Greater Victoria that will be much less than $100,000 in the last two years.

  27. I somehow doubt Leo is losing much sleep over making ~100k tax free in the last two years while his taxes went up a few hundred bucks. You come up with some entertaining points Hawk. I hope you haven’t declined a raise at work for fear your income tax will go up a hundred bucks.

    Flat? I guess if you stand a few miles back from its cliffs you’d have a hard time seeing the Grand Canyon. Cleavage is one of the best things in life…don’t try to take away from it 😉 I know of numerous properties that went for a third off in our down cycle.

  28. Agreed dasmo, banks should be taking on more risk. Thus any lowering of rates by BOC will have a fractional lowering by the banks like last time. Long term mortgages will be going up with US rates.

    Expect tighter qualifying rules and scrutinizing by both banks and CMHC with your employment. There must be a hell of a lot of fraud they are uncovering to make it worthy of a major report like that.

    How about those new big tax hikes coming ? The downside to being a property king. Where will I spend my property tax savings ? Hawaii ? California ? Hmmm.

    1,855 capital residents get warning: expect bigger property tax hike

  29. These are all measures being put into place because the BOC is going to lower rates again. The are counter measures against price increases because of that. More flat prices on the Horizon….

    They are good measures though. Bank should have more skin in the game. Bigger downs are also good IMO.

  30. Gee Mike, your a registered stock broker as well as a registered house flogger ? Who woulda knew ? Thanks but I don’t take tips off strangers on the internet, especially ones who worship their house like a demented cult.

    Did you see the high yield bond fallout today ? Chart looks just like back in 2001 and 2008 but what do I know ? I’m just a renter. 😉

    Why the junk bond selloff is getting very scary

    BTW, did you see the OSFI is sounding extremely nervous moving forward about HELOC’s and fraudulent income statements and wants some number adjusting ? Mortgage fraud usually comes to light with a fresh set of eyes. Harper would never have had the balls to deal with it. Glad JT is all over it.

    “A more significant issue for the mortgage industry is the letter issued Friday by the Office of the Superintendent of Finance, which regulates banks and other lenders, saying the regulator was proposing changes to rules governing how much capital lenders must hold against insured mortgages over concerns about mortgage fraud.

    Current rules allow lenders to hold very little capital against insured mortgages, essentially considering them to be risk-free because they are fully backed by a government guarantee. But OSFI warned that problems with faked income verification documents used to qualify some borrowers for insured-mortgage had prompted it to consider tightening the rules.”

  31. Let me know Hawk when you want to see a bunch more places you can own for less. I bet I can save you at least a couple hundred or more per month for the same thing you’re renting… and I would bet I’ve held some Exxon since…probably before you were born.
    Pssst, before I forget buy some GE while you’re at it too…don’t tell anyone but it’s going to $50 and also has a great div.

  32. You held XOM all the way down from $86 to $73 ? Wow, you’re a genius Mike. Should be back to square next week. Oil bets of $5 trillion are imploding ICYMI. Remember that dead cat I told you about ?

    Things are golden indeed. Especially when O’Leary says you have to be an idiot to buy a house right now. But what do I know, I’m just a lowly renter building up cash day by day. 😉

  33. The impact is minor because it was intended to be minor. It’s not in the government’s interest to pull the rug out from under the housing market, which is what would happen if they’d done a 10% across the board change immediately. They will implement this minor change, then if it doesn’t work, another, and another. They have been on this dampening trajectory for 7 years now.

  34. Kevin O’Leary says will have absolutely no effect on housing market… so it must be true…lol. And Hawk could you let me know if my oil plays Exxon or GE drop to where I bought them Aug 24th… highly doubt they will, but a reminder to buy some more would be nice. Btw, are you still a goldbug after I showed you the gold vs. Van chart?
    Terrorists, rates, and bears…oh my! Things are looking worse than the flying monkey scene from Wizard of Oz 😉

  35. Dasmo – but I have to hand it to you. Brooksfield’s numbers today show Victoria prices same as late 2009. Flat as a halibut for 6 years.

  36. Do I think it will have a noticeable effect? For me perhaps, in a heavily leveraged, topped out market in the low 600K price range considering a little downward and increasing pressure all the way up to a $million. It’s good news.

  37. It will have an effect that people will rush to buy now. Great marketing! After there will just be cash back schemes to make up the extra 2.5% down payment. Or the bank of mom and dad just need to pony up more dough. By then the rush now will have already pushed prices up and rates will have dropped as well adding more fuel. Halibut growing small horns…

  38. This could bring out a lot of fence sitting sellers who think a big surge in buying pressure before February will reap them a windfall. Might be one of the catalysts that turns the market south in the new year.

    High yield bonds are taking a beating along with all the markets this week and will have an effect on credit markets. Oil, and oil stocks are in the crapper for a long time now. Hope you all didn’t load up via the gurus on here.

    Could combo with possibly higher mortgage rates next week as well if Yellen pulls the pin. Toss in terrorist warnings in Vancouver and back east, and it’s not a feel good situation to load up on bloated real estate.

  39. To answer your question, I think Marko has way more knowledge on Victoria than Ben Tal. However, look at what CIBC’s Ben Tal is actually saying… ~8% of new mortgages in Vic will be impacted, or 1 out of every 12 new mortgages will have to pony up an extra $7000 down on an average 640k house. Do you think that will have any noticeable effect?

  40. I don’t have the market survey YTD aggregate numbers but I can tell looking at the months that we are going to be below 20% of transactions requiring a high ratio mortgage for 2015 (high ratio; less than 20% downpayment).

    Let’s assume everyone in this less than 20% downpayment category is putting down less than 10%.

    Let’s assume that the median property (condos, SFHs, townhomes combined) trades hands at $500,000.

    Let’s assume that the average less than 20% downpayment buyer is buying the median property in terms of purchase price and it is equally distributed above and below the median.

    When you multiply the number you still only get 10% of the market affected.

    In reality a decent junk of the less than 20% down payment crowd is putting down between 10 to 20% and a majority of that crowd is buying under $500,000.

    How CIBC comes up with 8.3% I don’t know but it seems high to me.

    Also should be noted the extent of the impact on a bell curve. For example, impact greater than $5,000 (home over $600,000) is most likely under 1% in my opinion.

    Impact greater than $15,000 (over $800,000) probably drops to under 0.5%.

  41. They should have done 10% across the board in my opinion. Not sure if this will do anything in Victoria, I really can’t recall the last time I had a buyer buy something over $500k with 5% down?

    The biggest issue with 5% down is people have no sense of money and how long and difficult it will take to pay off.

  42. I’m with fireecology, if anything it will act to raise condo prices for millenials & downsizers (soon to be Vic’s fastest growing markets), and may slow houses for a bit after Feb 15th, but I doubt it. Mostly a yawner… most Vic newcomers I know don’t require financing, although some get mortgages for investment purposes.

  43. I was expecting a full 10% on the 700K which is about the average in Victoria. Keeps the credit card down payment types in line though,as an extra $15K doesn’t grow on trees if you’re going in with nothing. With this new government I would expect them to increase it in 6 months if it doesn’t have the effect they wanted. This isn’t Harper’s pumper party anymore.

  44. Agreed – a responsible move, but one that probably won’t change much in Victoria. I would think it might actually change things in Vancouver, but not in the way they intend (ie raise prices slightly in condos, and not affect the soaring SFH market at all).

  45. Bill Morneau moves to tighten mortgage market, boost down payments

    Liberal election platform expressed concern over ‘escalating home prices in high-priced markets’

    “The federal government is boosting the minimum down payment for high-end homes.

    Right now, home buyers are required to put a minimum of five per cent down to qualify for Canada Mortgage and Housing Corporation insurance — protection lenders usually insist on when providing a mortgage worth more than 80 per cent of the home’s value.

    Starting in February, CMHC will require a 10 per cent down payment on the portion of any mortgage over $500,000. The five per cent rule remains the same for the portion under $500,000.

    Once implemented, that would mean someone looking to buy a $750,000 home would need to have a minimum down payment of $50,000: which is five per cent of $500,000, plus 10 per cent of the remaining $250,000.”

  46. While we do a monthly update, the Australians do a weekly update of their market.

    I thought I’d give it a try to see how it works here in the Garden City.

    For the first week of December the core had 26 detached homes sell. That’s down 16% from the first week in December of 2014 and down 19% from the year before. Days on market at 17 which is much lower than last year when it was 40 or the year before at 63.

    New listings are at 25 for the first week in December. That’s up 8 percent from last year and 9 percent from the year before.

  47. This year has experienced a substantial increase in the number of new units purchased. A 63 percent increase over the same time period as last year.

    That translates into higher retail sales for appliances and door knobs. Along with more people working in the local economy.

    Number of new units purchased in the core, westshore and peninsula by date of construction for the same time periods.

    2012 -234 units
    2013- 240 units
    2014- 314 units
    2015 -514 units

    The construction industry is very important to our local economy. For those that have ever had to provide a budget for a company what happens this year is heavily weighted in your budget estimates to occur in the following year. But as you can see looking back over the last three years past performance has not always provided a reliable indication of the future. Only once in three years did the past reasonably indicate future consumption.

    I doubt anyone making a projection of demand for new housing units would go out on a limb and say that demand will decline next year to be in line with the average. Or that 2015 was a one-trick-pony brought on by an election year. Especially if you are reporting to an industry that is pro construction. Unless that person wants to be unemployed.

    As this blogg has demonstrated many times. If you are the first contrarian to come out, there are people waiting with knives to cut you to ribbons. That the most successful economists are those that say nothing until a correction is definitely happening and then they purport that a correction has always been their contention.

    There are few Mozarts in the world but no shortage of Salieris

    “There is another positive economic outlook for British Columbia, this one from the Conference Board of Canada.
    It predicts BC will be the only province to grow more than three per cent this year and next: 3.1 per cent this year and 3.6 per cent in 2016.
    …The forecast calls for BC’s retail sales to rise 6.6 per cent this year and remain above the 20-year average until at least 2019, partly supported by an “improving job market,” adding “job creation should be strong again in 2016 and 2017.”
    It adds that BC’s wood-products industry will continue to benefit from an increase in US home construction.”

  49. Hawk – It’s wilfully missing anything about new supply. It looks like one of those charts you see at some pyramid scheming “seminar” (not that I have ever been to one). Seriously tacky.

  50. Low rentals will scare people off from moving here if there is no where to live, correct ? The smart techies are only here for a coffee break til they can move on up to the big leagues in Vancouver or Silicon Valley or anywhere else worldwide. It’s a mobile bizz. Putting a mortgage anchor around their necks when they have higher expectations than what Victoria can offer will stifle a promising career in a hurry.

    Reasonfirst… higher wage growth ? Maybe inflation ? Neither around.

  51. You guys clearly don’t understand what a blend and extend deal is but that’s ok you’re a forenter so keep being arrogant, ignorant and poor.

  52. Depsite oil tanking Calgary buyers have spent $134,476,842 on real estate in Victoria YTD.

    Also ““…we’ve seen no pickup in arrears rates in…Alberta at this stage, and I would think we would expect to see some upticks in 2016 as there are more layoffs…but…all of our assets that we have in Alberta are insured so that we don’t have material…exposure there,” said Stephen Smith, Chairman and President of First National.”

  53. In my opinion, the MOI is only one indicator. How fast new inventory is being added to the market expressed as New Listing to Sales Ratio and how fast homes are being bought shown by the Days on Market (DOM) also have to be considered in determining if the market is balanced between buyers and sellers with stable prices.

    What we need is to combine them all into an HHV Market Activity Index. The only one I have no data on is DOM, so would not be able to integrate that unless someone provided a source. Also I wonder to what extent the S/L is independent from the DOM and MOI. Anyone want to brush up on their principal component analysis skills???

  54. Oh well, with country-leading permits in Calgary, at least the oil workers can go straight from erecting rigs to erecting buildings.

    Tectorians don’t seem to understand that falling energy prices act like an enormous tax break. The places that benefit the most (besides cities like Vic/Van) are China, US, Eurozone, Japan… People begin traveling more, flying more, spending more… it will become a boon to the world economy, just as it did in the late 80s.

    So – why is it different this time?

    It’s not. Prices always lag.

    We now have country-leading job growth @ 6.3%, extremely low vacancies, FTB millenials and lots of recent in-migration that will soon go from renting to owning.

  55. So 134 or less Calgary millionaires sold out…or 260 half a millionaires,not that big a number in a city of 300,000. Where did they all buy ? Bear Mountain, Deep Cove, Oak Bay or Sooke? That would be more telling that just a value. Did they buy acreages, condos or mansions ? How many left now that oil has tanked and house prices there are beginning to crater with sales.

    I’m sure the building permits have been submitted many months ago with planning a couple of years back if it’s anything substantial in size. We know how city hall works at record slug speed. Will be interesting to see if they actually continue to build or Calgary winds up with a pile of holes in the ground like Victoria did a few short years ago.

  56. Speaking of Calgary, here’s a headscratcher… latest building permits show Calgary led the whole country at +154.2% in the most recent report… wtf?

  57. Depsite oil tanking Calgary buyers have spent $134,476,842 on real estate in Victoria YTD.

    2014 = $132,501,317

    Edmonton is $53,308,141 YTD/ 2014 = $39,284,343

    and Vancouver is through the roof.

    There is really poor correlation between our market in Victoria and factors such as oil prices.

  58. Well Hawk, the spring market doesn’t start until March. Timing the market near the end of the winter in January and February would mean selling in a low inventory market with demand starting to increase. The best chance to sell a run down house or a poorly located one at the best price.

    If the Feds announced a change to the down payment requirements there would be a grandfather clause along with rate guarantees for those looking to purchase. That means a rush of buyers sitting on the fence.

    In my opinion, today’s first time buyers while having access to more data have far less understanding of the market than the generation before them. They suffer from data overload and are up against sophisticated techniques and better trained marketers than any generation before them. Give them easy access to credit and they’re just cannon fodder.

    The other difference between this generation of buyers from the previous ones is that the generations that came before could get themselves out of a bad decisions. This generation of new buyers may have their entire financial life crash and burn.

  59. The 1st week of the detached house market shows a New Listings to Sales Ratio of 1:1 in the Core. Generally to allow for over priced properties and those that are likely to change their minds in selling and cancel their listing a rate of 1.5 new listings to 1 sale is necessary. Less than 1.5:1 is a sellers market with little selection for buyers to choose from.

    The Months of Inventory still remains low at 151 sales last month compared to current active listings at 280 or 1.85 MOI. Generally between 5 to 7 MOI is necessary for a balanced market between buyers and sellers with stable prices.

    The median days on market in November was 24. Again, a balanced market would have the DOM between 30 to 90 days. Less than 30 days is another indicator of a sellers market.

    These are really low numbers indicating a market strongly in favor of buyers and should reflect substantial price increases.

    But that’s not what is happening in the market. The median price for houses in the core has remained around $629,000 +/- 5% over the year to date. Which is only $47,000 more than the annual median price for houses in the core for 2014. Less than you would expect in a market so heavily weighted in favor of sellers. During the years 2005, 2006 and 2007 we experienced similar low indicators and the market was appreciating in the double digit range of 12 percent annually rather than the current 8 percent.

    Month Sale Price, Median
    Jan $542,500
    Feb $597,500
    Mar $625,000
    Apr $631,200
    May $620,250
    Jun $629,450
    Jul $610,000
    Aug $659,500
    Sep $640,000
    Oct $677,250
    Nov $611,000

    So – why is it different this time?

  60. “Crap boxes that were not selling in the summer now sell at close to full asking price.”

    On the other hand Jack, friends of mine that had been on the hunt were very close to buying in a hot neighborhood a month back but balked at the last minute. The place which was reno’d very nicely just sold for a full 10% lower. “Flip This House” turned into “We Lost Our Shirt”. Buying in this market is clearly a high risk game. That would have been a $50,000 mistake getting caught up in the granite and steel.

    Waiting til spring is the best bet to see how the new rules and higher mortgage rates effect these bloated areas that a dozen years ago you wouldn’t want to walk down at night….and maybe still don’t.

  61. The message is getting louder by the day. This ain’t 1986 when people weren’t maxed to the hilt in easy credit…no one knew what a HELOC was, and a credit card had very low limits for the average person. No one could buy a condo online with a credit card with a click or call up their banker to say “blend me for another few thousand”….again and again.

    Even the Federal Finance minister’s old outfit sees the problems continuing to pile up. I would expect to see new rules in the new year.

    CD Howe touts tougher mortgage rules as households vulnerable to debt rises to 11%

    “Canada may need tougher lending rules to guard against the risks from a higher proportion of borrowers facing deep debts, economists at the C.D. Howe Institute said.”

    “New Finance Minister Bill Morneau, who was chairman of C.D. Howe before entering politics, has said housing is one of the first briefings he took from his officials. Canada has long faced international warnings about the need to head off a housing crash like those seen in the U.S., the U.K. and Spain, and former Finance Minister Jim Flaherty acted several times to tighten lending rules.”

  62. The Months of Inventory will also be different for new construction. The new construction MOI will be greater than re-sale homes as most of these properties will be marketed before completion.

    I’ll have to think about why the MOI showing a balanced market will be different in the winter than say the spring. My guess is that in the winter new listings are being added at a lower pace while in the spring more people are putting their homes up for sale.

    In my opinion, the MOI is only one indicator. How fast new inventory is being added to the market expressed as New Listing to Sales Ratio and how fast homes are being bought shown by the Days on Market (DOM) also have to be considered in determining if the market is balanced between buyers and sellers with stable prices. Or in favor of sellers with stable to increasing prices. Or if the market is in favor of buyers with stable to decreasing prices.

    And then if you want to forecast for the next 90 days, you would have to consider what historically has happened in the upcoming winter or spring markets. That historically has moved the market from a balanced position to one in favor of buyers or sellers.

    As an example.

    If you own a real dog of a property. Say a shack on a busy street like Bay or Hillside. You’ll get your best price in January or February when inventory is low and buyers are increasing. Crap boxes that were not selling in the summer now sell at close to full asking price. The strategy is to take the home off the market in December and re-list in the new year. If you wait too long then you’ll be competing against new listings coming to market every day.

    It’s all about timing your home sale to when the market is most in your favor.

  63. For the loonie, if we continue following the mid-80s path, we should drop to almost 70 cents before we turn… so we‘re getting close. The loonie, interest rates & Vic houses all soared higher together between ’86-91. Everyone thought the economy sucked in 1986 too (and that we were heading into a severe recession) but then things slowly turned around.

  64. Boom times Leo ? Oil crashing, commodities breaking 40 year lows, GDP heading down and a tanking loonie with record low exports. Yep, she’s booming alright.

    Gotta agree there. The market here might be taking off but the overall economy isn’t exactly rosy. I’m not yet convinced the US will be raising rates, but if they do it’s going to be interesting up here. Also the increased down payment chatter is heating up.
    Victoria might be sideswiped by an attempt to calm the insanity in Vancouver and Toronto. Then again the market is in a better position to handle it now than two years ago.

  65. Boom times Leo ? Oil crashing, commodities breaking 40 year lows, GDP heading down and a tanking loonie with record low exports. Yep, she’s booming alright.

    If you think the HAM and wannabe Victorian boomers are going to save you then you are smoking some good shit. Toss in higher down payment rules coming in the new year and expected changes to foreign home ownership and you will be lucky to keep the gains made this year. Not to mention layoffs showing up in various high paid industries like banking and tech and you got some serious issues moving forward.

    The HAM leaving Australia and signs of them leaving the US , suggests the HAM party may be nearing its end , especially with increased financial and immigration scrutiny in light of the terror attacks.

    Victoria may be an island but not immune to global problems, eventually we will feel it. ICYMI the world just changed the last few weeks.

  66. Hawk, your blowing in the wind again; it’s only microscopic changes this winter as we near Christmas, compared to past years when the market hibernated during December and January.

    Our boom has just begun! First time buyers can afford their first ‘box’, boomers can trade up or down at will, executive luxury places finally have buyers, some from China, and rates won’t go up for years. Wealthy Chinese are selling their basic 2 bedroom condos in Beijing and Shanghai and Guangzhou for $1million plus (Canadian dollars), then moving to Canada to be close to their recently graduated UBC/UVIC child and buying a couple nice houses in BC. Our low Canadian dollar and low interest rates make for perfect conditions for Canadians and new immigrants who bring cash from their liquidated high priced Asian real estate.

    These are boom times Hawk… if you own a house or two or three… but it’s also sad times for people who sold early and have their cash in the bank collecting one percent…

  67. Negative rates are only in a crisis and wouldn’t effect mortgage rates. Poloz must see an economy in trouble otherwise why bring it up. Saying things will be humming along in 2 years from now doesn’t make sense after going in depth on negative rates. Not the time to blow 3/4 of a million on a box.

    I hear there’s a whiff of change in the local market. More reduced and new prices and agents balking at letting clients near over priced crap.

  68. Leo –

    Yes- at renewal you are able to renew with a cash-back mortgage. The cash-back will be based on your balance either at the renewal date.

    BearKilla –

    At renewal, a borrower should not have to incur any penalty charges. Penalties are only charged when the mortgage is broken before the term is up. Depending on the nature of the charge the lender has put on title, (standard charge or collateral charge), a borrower may have to pay legal fees to move to another lender.

    Marko –

    While the prepayment privileges aren’t a big deal to some, the bigger deal is the ‘clawback’ of cash-back funds. For example, if you need to break your mortgage in year 4 of 5, the entire amount of cash-back will be ‘clawed back’ by CIBC. For example, in the scenario in the article, this would mean that the borrower would have been charged $3412.62 in additional interest over 48 months, and now also has to pay back the entire $9000. This means $3412.62 in extra interest costs for no real benefit.

    That being said, there are definitely some that could put that $9000 into a self-directed TFSA and with minimal effort earn more than the $3412.62 interest expense over 4 years. Break-even would be an 8.06% annualized return for 4 years.

  69. “Does that include blend and extends? If it does it doesn’t really matter now does it? I mean I’ve done that many times to chase a lower rate. Save thousands with a single phone call to your banker. Try doing that renter.”

    Sounds like more of a “HouseKilla”. Multiple blend and extends like yourself is why the banks are laughing as they continue to make record profits. Borrowing more cash to avoid penalty only proves it. Banks always win, you always lose on any deal breaking.

    BTW, my rent went up $40 last year,others I know haven’t had one in several years. How about your taxes and heating bill ? My heat and hot water is free and can turn up without a thought. Renting saves thousands alright. 😉

  70. Not to mention most mortgages allow lump sum payments (10%-20%) in addition to increasing your monthly payments, often up to double the minimum monthly.

  71. I’ve never embraced the 10% – 15% – 20% pre-payment arguments personally.

    First of all, who has that kind of cash sitting around to pay down a mortgage? If you do have that kind of cash dump it into TSFAs and RRSPs. If you still have cash left over just pay off the mortgage at the 5 year mark?

    You won’t get slaughtered at these interest rates waiting a few years to pay out your mortgage because you have more than 10% to pre-pay each year.

  72. 65% of most borrowers will break their mortgage term prior to their renewal date

    Does that include blend and extends? If it does it doesn’t really matter now does it? I mean I’ve done that many times to chase a lower rate. Save thousands with a single phone call to your banker. Try doing that renter.

    As for getting a cash back on a renewal it’s not only possible, it’s encouraged as a way to break a mortgage and cover your penalty.

  73. Stats page is very cool. I also am confused by what the VREB means by sales/active listings ratio, because it’s clear their numbers are constantly higher than the obvious value.

    I am no longer confused. I asked them and here is what they said: “This is a Residential-only analysis, so:

    Active Residential listings: 2136 (see the Historical Active Listing Count By Month report)
    Total Residential Sales: 537 (see the Monthly Sales Summary report)
    537 / 2136 * 100 = 25.14”

    Only problem is, they don’t publish the residential inventory (I believe the report she mentions is for realtors only, or otherwise I can’t find it on their site).

  74. Stats page is very cool. I also am confused by what the VREB means by sales/active listings ratio, because it’s clear their numbers are constantly higher than the obvious value.

    On the stats page, the VREB suggests “The use of sale price statistics can be useful in establishing trends when applied over a period of time, i.e. six months or longer”. I am one who believes that month to month stats are too volatile in our small market. We’ve seen annual stats, and those are interesting in retrospect, but pretty slow to shift. Any interest in showing 6-month running means/medians?

  75. The caution is necessary however, given that something like 65% of most borrowers will break their mortgage term prior to their renewal date.

    Good point. That’s the bigger issue here. I guess there’s no way to get any of this free money on renewal?

  76. Hi Leo,

    Thanks for reading the article! No, not a huge downside considering the free money.

    The caution is necessary however, given that something like 65% of most borrowers will break their mortgage term prior to their renewal date. Savvy homeowners that want to ‘time the market’ may also find this somewhat restrictive – especially if 3+ years into their term, the market gets hot and they want to sell.

    That being said, CIBC does allow a borrower a 90 day window to ‘port’ their cashback mortgage, and does not clawback the cashback amount – even if you ‘port and reduce’.

  77. From the mortgage article.

    The one caution here is that, CIBC cash-back mortgages have very limited pre-payment privileges (10%per year)

    Really doesn’t seem like a large downside. 10% of the typical Victoria mortgage is probably close to $40,000 in extra payments a year. Not many people will have anywhere close to that much extra cash to put into the mortgage.

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