Market Update Jan 25
This post is 8 years old. The data and my views may have since evolved.
Monday market VREB numbers courtesy of Marko Juras.
| January 2015 |
Jan
2015
|
||||
| Wk 1 | Wk 2 | Wk 3 | Wk 4 | ||
| Unconditional Sales | 103 | 225 | 361 |
351
|
|
| New Listings | 254 | 468 | 703 |
1027
|
|
| Active Listings | 2379 | 2399 | 2435 |
3283
|
|
| Sales to New Listings |
41%
|
48% | 51% |
34%
|
|
| Sales Projection | 435 | 429 | 478 | ||
| Months of Inventory |
9.4 |
||||
We are pacing 35% above last January in sales which is insane. Sales to list is usually very low in January, but not this year. I walked through 1606 Kenmore on Sunday. 60s Californian bungalow listed for $550,000. There was not a single thing in there that was not in need of complete gutting (which was half complete) and reno. Overall it might be an OK investment, but seemed crazy given the condition. Well the open house was swarming, I asked if they had offers and they said they were reviewing them all that night. Now it’s gone, so I imagine full price or higher unconditional.
I know people here don’t like the idea of driving in cars for more than 5 minute stretches but the reality is that families in Vancouver and Victoria are moving into the suburbs. So yeah a 2 million house in West Van is probably not something most families in Vancouver can afford but they could do say a 500k shit box in Langley and you know drive or something. Same deal applies here.
You guys know that in Toronto and other shit holes in Canada people commute for HOURS each way right?
I agree with you Marko, but it’s clear that condos are a poor investment compared to SFHs. Condos are always depreciating – witness the current offerings of 60s through 80s built units, selling for $200k or less, even some 2 bedroom ones. The Victoria core clearly has a long way to go before being overly built up, so for the foreseeable future, supply will match market demand. SFHs, well, people are subdividing here and there, but supply is heavily constrained.
But yeah, the money and time people spend on dogs here is ridiculous.
Good question. The first step is recognizing the irrational behavior, The second and more important step is not engaging in it.
Existing wells are said to deplete at the rate of about 7 million bpd each year, or about 7.5% of global production. So unless OPEC can raise output by that much and more (to account from sluggish but growing demand, then supply will surely become tight in the foreseeable future. So, a deal between Russia and SA is not the only possible route to a price recovery.
Meantime, US tight oil production has begun to fall:
A suggestion dasmo, it’s time to start shifting from overweight US assets back to Canuckistan… we shall reign supreme over the next 5-6 years.
You mean oil is up because Russia says it wants to talk with OPEC about turning off the taps. It’s the only way oil will go back up. I’ll believe it when I see it. Don’t see those two high fiving each other anytime soon. I hope it does go up tho, picked up an unloved solar play the other day, up already. Nice to see gold up again too, up a double now. 😉
The not so smart ones just got stuck with Madrona. Would like to see who the buyer and seller were. Lots of shady shell companies flipping mansions in California and Vancouver.
http://www.nytimes.com/2015/12/15/us/shell-company-bel-air-mansion.html?_r=0
When it comes to multi-million dollar properties, very few of them are straight deals. Cars, boats, furniture, businesses can all be wrapped into these purchases.
It actually makes sense to sell your tech company and your multi-million dollar home as one. You have to pay taxes on the sale of your business over XX amount but your home is capital gains free.
The sale of your multi-million dollar company is conditional on the purchase of your home under a separate contract price of 50 million. Saves you a whack of taxes.
Because when you come down to it, can you tell the difference between a 20 million home and a 50 million dollar home when the last sale in the city was at $5,000,000. The same with CRA, they can suspect but they can’t prove. You win.
Good Christ…At least FaceBook is going up… The made a billion in profits for the first time. I guess it’s not bad for everyone….
I’m still wondering what happened to our permabeartroll “shocking” oil call for today?
Let’s see here… benchmark crude closed up 4% today 🙂
The point to Madrona was that the smart investors have already made millions by knowing where bottom was (2013). The not-so-smart ones will be buying again ~7 years from now (like the original Madrona buyer).
Make sure you let us know when you buy.
“Vic’s really high end seems to be up up & away now as even Villa Madrona just resold for ~20% more than the buyer paid in 2013. There are some smart flippers out there.”
The guy built it for $20 million and spent 7 years trying to sell it all the way down from $16 million to $6 million.
Marko, you sound like you need a wife and dog. Without either why own a huge house in the first place. Status ?
Well said nan, first world luxury is OUR norm. Someone can come from an igloo in the Arctic but doesn’t mean we should all live in an igloo. When prices get so out of whack with incomes to the point no one will sell, then communities and families become jaded and people begin to leave. It’s happened before and will happen again.
Just chiming in that I agree with Marko on condo having some perks over SFH.
We live in a 1000sq ft condo & love it! Superior closets, bathroom storage, coat storage, and much more windows compared to any SFH we’ve looked at that is not >$625k. Have a wall bed, so spare room doubles as an office & a spare room. It’s also a craft room as we have a desk that wheels out & flips open to double the counter space. When we have a party, we turn the couch around & our entertaining area is far larger than most houses as well.
Admittedly we are not planning on having kids, which is the only reason we could stay here.
People in general are having less kids.
Smaller places do make life simpler, which is in demand for boomers, as well as busy professionals. Hydro prices are only going up (ours is $54/mo). We could live here our entire lives. May give us nothing in appreciation, but it does allow us to save over $12,000 more per year than if we lived in a house (and if that all goes to a special assessment some day, we can cover that without issue as well.)
I agree with Marco though my reasons are slightly different.
Perspective is what creates the quality of life differential between living in SFH versus a condo. People all around the world have been raised in condos and urban attached housing. North American SFH is an anomaly to how most of the world has grown up.
I grew up living in large houses in Calgary, White Rock and Kelowna but that does not mean I am entitled to the same for my family. I was raised to appreciate life experiences and simple living which allowed me to see that raising kids in a compact environment isn’t a failure. It is a realistic way to maintaining the life style of urban environments and experiences that I grew up with.
I would love to have a yard and a garage and bedrooms for visiting family, but I appreciate the ability to live in an urban center for the same costs as commuting an hour or more each day. This allows me to spend more quality time with my family and keep our material expenditures lower.
Also, we have a large dog that has been fine with living in townhouses and condos for the last 6 years. Having a yard would be nice but it is not necessary.
Nan, this is my preference and my opinion but I don’t see how that makes me a failure?
iphone sales are not dropping. They are just not increasing as fast… So momentum is slowing yes but their stock is not priced as a hyper growth company. Their P/E is very low. 10.28. Amazon’s is 847.52… With a billion active users they don’t need constant hardware upgrades….
Re: top end
I’m not seeing it as an Uplands listed at 1.7M just sold for over 2M.
The really high end stuff always lists for outrageous prices to begin with. Nothing new there.
Vic’s really high end seems to be up up & away now as even Villa Madrona just resold for ~20% more than the buyer paid in 2013. There are some smart flippers out there.
This thing is this Marco: maybe relative to the rest of the world it’s excessive, but to me it’s the way I grew up. I (and my entire generation) wants to have at least as luxurious a life as our parents had. Not only that, but raising a family in a condo maybe palatable for you, but most kids raised in SFH’s view raising a family in a condo as a failure that needs justification (you’re either divorced, a first gen immigrant, etc.) If you were born here and raised in SFH there are no excuses. Raising a family in a Condo is a step down. Even if you say it’s a choice, it doesn’t look like a choice.
Not only that, but I think you like and appreciate living in a house more than you care to admit. I mean why else would you have built a heated tiled garage for your cars? That has nothing to do with investing.
That “unnecessary” yard and dog and stuff will become you and your kid’s lifestyle. The way things are going though, your kids won’t be able to afford the lifestyle to which they’ll become accustomed to in your big new house and the result will be that they will either give up and never leave your basement or choose to achieve “luxury parity” somewhere else. No one wants to live where they grew up feeling like a failure living in an overpriced condo cramming 5 people into a Honda FIT with one tv and no dog while they drive past the house they grew up in that they won’t ever be able to afford while constantly justifying to their parents why they need to raise their family in a condo.
Like I said – unless RE is your only investment and you have no kids, housing price increases that are so big that they decouple housing prices from local wages are not positive things.
“Oh right, just shoot the dog, and save a kid in Africa. Seriously ?”
I wish all all dog owners would take this approach!
Both in the US and the UK there is an ongoing bust at the top end of the housing market.
http://www.zerohedge.com/news/2016-01-26/luxury-housing-bubble-pops
Is that what’s happening here:
See 3550 Beech sold the other day. Originally listed at $10 million, then reduced in stages to $5,800,000. Wonder what it actually sold for.
And while I’m standing in for Info, here’s a comparable she would surely love:
Groovy baby! Austin Powers-style Chicago condo untouched since the 1970s hits the market for just $158,000
http://www.dailymail.co.uk/news/article-3418264/Chicago-condo-untouched-1970s-hits-market-just-158-000.html#ixzz3yT8DNxg7
Wow, three bedrooms, over 1800 square feet, for less than a new-build Victoria, studio apartment.
Once you make that decision to buy and start actively looking, you have become a prospective purchaser. Because of the ease of entry into buying property most of these prospective purchasers looking today will become buyers. These are the hard core believers in real estate and will pay premium prices to get what they want.
But what about the sellers? Is it any coincidence that our vacancy rate has fallen so precipituously? Are sellers turning to renting because they have lost confidence in the sustainability of housing prices? That may be one reason why some downtown projects are getting astronomical rents for one and two bedrooms apartments. Sellers flush with cash are turning to renting rather than buying.
Declining consumer confidence is a prequel to falling prices.
fyi, I have nothing against pets I just think it is funny people complain about single family homes prices but many of the reasons they need a single family home are 100% optional reasons (such as a pet dog, guide dogs/etc., obviously excluded).
People like houses because they want the space to do things, like build stuff, create stuff, garden etc, not just accumulate stuff. It’s called life. Oh right, just shoot the dog, and save a kid in Africa. Seriously ?
Every single thing you listed in my opinion is a first world luxury including the dog.
How can someone possibly live without space to have a studio to create beautiful art….seriously?
Apple is down 5% this morning. Iphone sales dropping means the market is getting saturated. I’ve believed for awhile now that Apple has seen it’s best days. The tech level of phones has caught up to where you don’t need a new one every year or even two. Mine should do me for three at least.
I don’t think you can grasp the reality of kids in a condo Marko. What you experienced as a kid is not the world of today. Maybe you should move back into one of your digs and have a couple then come back in 10 years and tell us what it’s like. Being a kid and having them are two different realities.
“Having lived in a condo for years and current living in a SFH I am not sure what the big obsession is?”
Preaching we should all live in condos when you live in a big house is kinda pathetic as well. People like houses because they want the space to do things, like build stuff, create stuff, garden etc, not just accumulate stuff. It’s called life. Oh right, just shoot the dog, and save a kid in Africa. Seriously ?
The results were pretty much as expected so they should be “baked in” to the price. My point is that we are experiencing a global slowing of growth. That’s different than a collapse. It makes the media talk of collapse because they can’t talk about booming. It’s either fear or greed….
The stock is down 2% in after hours trading…I think they’ll survive 🙂
Hawk, you are really choosing to only look at the bad. Apple did amazing. They just didn’t do insanely amazing. One of the reasons was because of the dollar. This is what he was referring to with his comment. Currencies are brutally dropping compared to the USD. the EU is almost on par! This has affected their bottom line. China’s growth rate has slowed and their dollar has also dropped. This is Apples biggest market so also a “headwind”. Here are the facts:
Apple posted revenue of $51.5 billion and net quarterly profit of $11.1 billion, or $1.96 per diluted share, compared to revenue of $42.1 billion and net quarterly profit of $8.5 billion, or $1.42 per diluted share in the year-ago quarter.
For the quarter, Apple sold 48 million iPhones, up from 39.2 million in the year-ago quarter. iPad sales were down to 9.9 million from 12.3 million in the fourth quarter of 2014, and Mac sales rose to 5.7 million from 5.5 million.
They sold 48 million phones!!!!! Hardly as sign of the end….
http://cdn.macrumors.com/article-new/2015/10/linechart.png
Not really, gained equity doing the owner-builder gig and cheaper per month than a solid condo. Reason I say level of happiness is equal is while the extra work around the house sucks there are perks to having a SFH such as tinkering around with my cars in a large heated garage versus not being able to do that in a condo.
At the end of the day from a society standpoint I do think SFHs are excessive.
Sounds like you wasted a lot of money Marko 😉
However, decoupled RE prices will tear the western sfh culture you grew up in apart for all but the wealthiest western families, and that sounds like the beginning of the end of our way of life to me.
What’s wrong with living in a condo? Let’s say we have a shift from young families living in SFHs to row homes/townhomes/condos/etc due to decoupled RE prices.
i/ Way way more environmentally friendly. People complain all the time about how Bear Mountain was clear cut……yea, it was, to make way for western sfhs.
ii/ People would have to cut back from two cars to one…..once again better for the environment.
iii/ People would have to say goodbye to their pet dogs. $2,000/year that can be spent on sponsoring a child in Africa.
iv/ Children would have to go play in a public park versus have free rein over a fully fenced yard….doesn’t seem like the end of the world.
Having lived in a condo for years and current living in a SFH I am not sure what the big obsession is? More work around the house/outside and I have more useless junk now than I did before. I use to have one 42” TV in the condo now I have a 55” and 60” – wtf do I need two TVs for? Why on earth do I have a spare bedroom that is used twice a year?
Level of happiness’s is equal. If large condos (1,000 to 1,300 sq/ft) made any sort of financial sense I would move back into one (and so would my singificant other). Just the way things work right now with interest rates and all it’s cheaper on a monthly basis for us to be in a large house, renting out a suite, than it is to be in a condo, without a suite, paying strata fees.
I think many bulls can’t see the forest from the trees with their rose colored glasses. The headlines are telling us a story and it’s not just some flunky journalist at the TC having to pump the advertiser’s sunny ways. These are world leading company CEO’s as well as seasoned investors giving out the warnings.
How can you ignore this today after Apple’s earnings came in weak ?
“Tim Cook: We’re Seeing ‘Extreme Conditions Unlike Anything We’ve Experienced Before’ in the Global Economy”
How about a 26% drop in London’s luxury home sales and now in the US where the Chinese are even backing off.
The Surge in U.S. Mansion Prices Is Now Over
“There’s a limit even to what a wealthy person will spend,”
http://www.bloomberg.com/news/articles/2016-01-26/at-3-68-million-this-california-home-has-everything-but-buyers
Silicon Valley braces itself for a fall: ‘There’ll be a lot of blood’
http://www.theguardian.com/technology/2016/jan/22/silicon-valley-500-startups-tech-companies
Connect the dots and you can see the big money around the world is cashing out, not loading up. Bulls have it ass backwards, but again, Victoria is always late to the game.
“Nice to see Van’s ripple effect finally hitting our shores”
This actually isn’t that nice unless RE is your only investment and you have no kids. I have family in Vancouver who bought 20 years ago, on decent incomes in that city. Today, their kids have absolutely no hope of living where they grew up. They will either live in the basement until their parents die or leave town forever.
Cheering the conversion of cities from working cities to investor havens (evidenced by the decoupling of incomes from house prices as continues to happen in Vic) seems a bit generationally selfish to me.
Decoupled RE prices are very compatible with Asian and other multigenerational family cultures where grandparents look after the kids and both parents work and the grandparents wealth is combined with the kids earning power to support the house price.
However, decoupled RE prices will tear the western sfh culture you grew up in apart for all but the wealthiest western families, and that sounds like the beginning of the end of our way of life to me.
Frankly, I’d prefer to live somewhere where re gets cheaper over time so that my kids aren’t eventually disenfranchised by their hometown.
You don’t need another 2008 Mike. The bulls don’t seem to grasp that Victoria is not some private millionaires club. All the other market corrections had nowhere near 174% personal debt levels. 10% of the market can crash it, but keep your head in the sand.
Once Tectoria feels the pinch that Silicon Valley is beginning to feel then look out below.
It‘s good to see the bears haven‘t given up.
…today Case-Shiller 20-city reported the biggest jump in prices since July 2014.
…the API today showed inventories at Cushing actually fell by 664K barrels. It’s rather obvious why they reported an 11 million build.
The entertaining part is why the bears keep thinking it matters for Vic house prices. They’ve literally watched our house prices soar as oil has plummeted for over a year and a half now. Several of us have tried to explain, but they still can’t figure out that this is nothing like late ’08. They’d be lucky to see another credit crisis of that magnitude in their lifetime.
The market in 2002 to 2006 was fuelled with 30, 35, then 40 year mortgages. Won’t happen this time. Sooner than later the credit markets will tighten and the banks and CMHC will once again tighten their lending rules,it’s inevitable.
As CS’s article laid it out, there won’t be a choice with world real estate markets in decline. BC is just late to the game.
Overall it does seem like the market is drifting from sellers market to irrational exuberance. But then again the market spent several years in that area from 2002 to 2006, so it’s not necessarily a sign of imminent change.
Yes. I think the single family housing affordability in the core is toast. Prices could correct, but it still won’t make the core SFH affordable to the average family. Affordable SFHs are available further out (Colwood, Sooke, Shawnigan, Mill Bay).
Global House Price Crash Led by Major Cities And Rapid Exit Of Investors
http://truepublica.org.uk/global/3411/
Should be interesting to see what the effect oil has on the markets tomorrow. The API number after the bell showed a shocking 11 million barrel build up, over three times the expected number and largest since 1996.
With savings accounts at record highs as well it’s hard to imagine Ma and Pa forking out ten’s of thousands for junior’s new digs when their pension accounts are screaming for mercy.
If the over asking prices weren’t happening so frequently, I would agree with you Marko. However a spike in prices has most often been followed by a fall in prices. It seems to be too much too fast.
We seem to be having a bit of honeymoon while most of Canada is hurting economically. In my opinion we just haven’t been hit by the fallout yet.
As the saying goes “The bigger they are the harder they fall”.
This is great. We’ve got ourselves a real live bear here. My bet on capitulation is this fall. By this fall they’ll have either bought or moved on. Hopefully the next one will be more interesting though I gotta say.
When we have agents touting “2br – Buy a Condo with NO MONEY DOWN!” then the top is in. I thought those days were gone but the subprime must be rampant behind the scenes.
I would like to see ALL the sale prices, not just those that have been cherry picked due to over exuberant out of town and/or panic buyers in select areas.
http://victoria.craigslist.ca/reb/5419952583.html
Only thing is the market appears to have enough legs at the moment for another 5 to 10% gain and in the last 30 years we’ve only see one 5% drop off a peak (1995 – 5.47%).
It seems the Victoria market is extremely resilient, especially the core, after run ups. We had 4 years (late 2010 to late 2013) of absolutely brutal sales volume/very high inventory and the core didn’t really flex more than 5%.
Basically, market will cool down sooner or later but for it to give up the gains would have to be a pretty significant collapse.
Prices like those might bring people to list their homes for sale. Or if sellers expectations become too high then this could kill the market. This could be the straw that breaks the camel’s back.
As I’ve said this market is shallow and for some segments have become dysfunctional. We could be heading to an 80’s style crash if the phones in the agents’ offices stop ringing.
Nice to see Van’s ripple effect finally hitting our shores. I still somehow doubt we could match the gains of the 85-95 period, however the next few years are definitely going to get interesting.
This isn’t a market built on solid foundation, it’s a market of panic buyers. The Vancouver buyers don’t give a shit over paying, they just won the lottery. The lack of inventory is because everyone thinks they have a pot of gold until they don’t. Agree with Marko, the so called pent up demand will run out by summer, there can’t be that many sheep left in the flock to fleece.
A few of the sales posted in the last hour…..market is going insane.
3150 Midland – Listed for $1,795,000 – sold for $2,005,000 – Vancouver buyer
1627 Barksdale – Listed for $749,900 – sold for $770,000 – Vancouver buyer
1117 Clayton (Deep Cove) listed for $899,900 – sold for $1,000,000 – Surrey buyer
Increasing density usually takes the form of hi-rise condominium towers. That isn’t going to help the single family housing market in the city.
What we need is more listings of homes which will bring the price down.
At this time we have very few listings but that will change and one day we will have too many listings. Of course that isn’t going to help those that want a house in the core today. If you want to buy today, you’ll have to pay the market price.
There is some positive indicators that listings will increase. For example Langford use to have a shortage of listings but now there has been an increase in listings, the market is heading into a balanced position between buyer and seller.
The same will happen to Victoria.
Keep in mind the spread between same-size house lots in Vancouver and Surrey can be well over 2 million. I don’t see why Fairfield lots couldn’t reach a million over Langford.
Helps has it right. Problems are low incomes, land scarcity, and too much bureaucratic process. Part of the solution is increasing density.
2010 was a bit of a bounce from the overreaction in 2009. Once people realized the world was not ending they slammed back into the market. Also the crashed interest rates and drop in prices made the market suddenly massively more affordable in a few short months.
I think the current recovery has a more solid foundation, although clearly this pace of YoY improvements cannot be sustained much longer.
I would think it’s the panic buyers along with the sheep from the Flip This Shack seminar crowd, that’s been pumping their scam as of late. With oil back under $30 tonite, I don’t see this ending well at all.
Victoria rated second-least affordable housing market in Canada
http://www.timescolonist.com/news/local/victoria-rated-second-least-affordable-housing-market-in-canada-1.1736646
Down to 34 houses for sale in the City of Victoria.
Meanwhile in Langford, that has one-fifth the population as Victoria, there are 127 houses for sale. With only 29 sales in the last 30 days.
Victoria City now has 2 months of inventory and Langford has almost 4.5 months of inventory.
The price difference between a vacant lot in a new subdivision in Langford and an infill lot in Fairfield is now $315,000. The spread between Langford and Fernwood lots is now $215,000.
Does this make Victoria the better place to buy a property?
If you believe that the spread between these two areas can continue to get wider – then you should buy in Victoria City today. If you think that supply will increase and that will lead to prices falling into balance with the general market then you should wait.
What I am witnessing out there has me a little worried that we might be in for another year like 2010 where the market was nuts to start the year and by summer the pool of buyers was completely exhausted….2010 August and September ended up being the slowest ever on record.
This YOY increase pace would crush the highest total sales year (1991 with 9,241 sales).