Why it might not be the worst time to buy

The market is stacked against buyers out there.   Open houses are swarming, places that haven’t seen a coat of paint in 30 years are going in bidding wars, and the selection sucks.   The leisurely pace of the market we saw for a few years here seems to have been temporarily banished.  Buying now, at least in the active segments of the market like single family homes in the core means acting fast, putting in offers at or over list, and having very limited negotiating power.   Sounds like a bad time to buy.  But what if it isn’t?

Despite the absolutely miserable conditions out there for buyers, I’m going to go against the grain here and take a look at why now might not be a bad time to buy.

  1.  The market is hot.  Yes that makes it tough to buy, but those kind of markets have historically lead to price gains.
    Price MOI Scatter
  2. Affordability is not terrible.   In 2007 it was bad (the year that HHV was formed), but since then interest rates came down, prices flatlined, and incomes increased.  Recent price gains have erased some of those affordability improvements, but overall we’re still better off than many points in recent history.  Something to keep in mind is that because of our low interest rates, we are exposed to significant rate risk.  If mortgage rates bumped up a couple percent, affordability would evaporate.  However I don’t see that on the horizon with the way the national economy is going.
    yiraffordability
  3. Prices seem to be very sticky in Victoria.  For whatever reason, be it reasonably stable employers or stubborn locals that refuse to sell in a down market, prices have historically not dropped rapidly very often.  Even with the market well into buyers market territory from 2011 to 2014, prices only dropped by a couple percent a year.  So if the market did cool off rapidly, I wouldn’t expect a large price decline without an additional adverse event like significant increase in unemployment.
    chart (16)
    1981 to 1985 is the only real crash we had in our history, and even then a lot of the price declines came from inflation rather than nominal decreases.
  4. Prices are up only about 1.1%/year since 2008.  One could say we should be rejoicing that our prices aren’t up 60% since then like Toronto.
    chart (17)
  5. It was better to buy a year or two ago, but that has no relevance today.   The past is the past and there’s no point worrying about it now.  The only question is, is it better to buy now or next year?
  6. The rental market sucks.   The vacancy rate is very low and that means it’s tough to find a rental, and rents will be increasing at a steeper rate than they have been for the past few years.
    rents
  7. The market could get even worse for buyers.  Despite the level of activity, it has been even hotter in the past for extended periods, and could very well continue to tilt towards sellers.
    chart (18)
  8. There are still deals out there.  Price gains seem to be mostly limited to single family homes, and even there mostly in the core areas.   If you are looking for something else, there are still opportunities to buy at prices that haven’t budget much from a couple years ago.  For example condos are still down almost 10% from the 2010 peak.
    dfpfeb
  9. It’s springtime.   That might not mean the situation improves, but at least new listings will start to pour on, and with new listings comes the possibility of some gems.  Just don’t expect those gems to be overlooked.

What do you think?  Is it a good idea to buy in this market or have I drunk the VREB koolaid?   If someone is looking to buy into this market, are there any strategies to employ?  What segments of the market are less overheated?  Let me know in the comments.

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140 thoughts on “Why it might not be the worst time to buy

  1. It’s impossible to build a high rise on a 33′ x 120′ lot. They would need to assemble the adjoining lots. At over a thousand dollars a square foot for the land that is unlikely to happen.

    The proposed 10 storey hi-rise land at the corner of Johnson and Cook sold at $107 a square foot. Downtown Manhattan development land is $300 a square foot. You can’t pay much more because the cost to build and the gross selling prices of the units limits what you can pay.

    If I were a journalist I would investigate the buyer. This could be a crowd funding pyramid like scheme where the only reason it was bought was for the commission. But someone should look deeper to figure out why?

  2. I heard their plan on the 4.23M house might be to sell to a developer… collaborate with the neighbors and re-zone to higher density.

  3. @ Leo- yes broken Vancouver logic. Mortgage on $4mm = at least $16,000/ month.
    Property taxes on 4mm= $14,000/ year.
    Ignoring insurance& utilities, carrying costs = at least 17,000/ month.

    Not having a mortgage in no way makes the purchase any smarter because the opportunity cost of wasting that much capital on a non productive house is astronomical.

    @recoutrvan: no part of a purchase with either negative cash flows or an opportunity cost of capital so far in excess of rents saved can even be called an “investment”. This is speculation, pure and simple…probably by people with math skills that are about as good as yours and also use idiotic language like “smart move in an amazing area” without substantiating that with any actual analysis.

    Maybe they’ll make some money, maybe they won’t but rest assured whatever happens is completely out of their control. I would have to argue that anyone who hands that much over to the hands of fate is in empirical fact “dumb money”

  4. Other houses in that area sell for around 4 mil, but this one has a huge suite that would rent for around $4500 a month. Making the estimated mortgage of $8,000 a month a much more manageable $3500. The upper could be rented for $4800 a month easily.

    I am having a really hard time figuring out how to interpret this comment.

  5. Perceptions is piles of dirty money is trying to dump into Vancouver real estate before China drops the new currency law bomb. It’s nothing but total insanity and may blow the market up faster than I thought when the taps slam shut.

  6. I live in Kits. That house was under priced at 3.4. Other houses in that area sell for around 4 mil, but this one has a huge suite that would rent for around $4500 a month. Making the estimated mortgage of $8,000 a month a much more manageable $3500. The upper could be rented for $4800 a month easily.

    Smart move in an amazing area. This kind of buyer knows investments well. This is not dumb money.

  7. This is similar behaviour to the dot com bust. Personally, I’d like to buy an affordable place to live. However, house prices in Victoria have gone up much faster than the average wage and I think it’s risky to buy atm, for two reasons.

    1) It is quite reasonable to assume the US will raise it’s rates. This will bring up our fixed rates.

    2) Our general living costs are rising here.

    Either one of these, or a combination of the two may be enough to cause a downturn in the market. It is naive to assume rates will stay low forever. It just won’t be the case.

  8. Vancouver prices change perceptions. Another factor putting pressure here….

    Yea perceptions are a big thing…..on a regular basis I have clients going higher than what I am suggesting in bidding wars. Certainly didn’t get a lot of, “hmmmm, okay, let’s go another 10k on top of what you say Marko.” from 2010-mid 2015.

  9. Shoot! The that’s crazy for a simple city house! 4.23 million!!!! It makes the same thing here for 0.5 million seem cheap…. Vancouver prices change perceptions. Another factor putting pressure here….

  10. In contrast, the billion dollar upgrade of the highway and sewer lines starting in early 2000 in Greater Victoria had a multiplier effect by opening up large tracts of land for private development stimulating our economy and giving a quick start to price appreciation with new high paying construction jobs.

    JJ’s fourth (?) time posting this nonsense.

  11. Another 33′ wonder… has no view but at least has some some curb appeal.

    http://blogs.theprovince.com/2016/02/25/kitsilano-house-sells-for-735000-over-asking-in-record-breaking-4-23-million-deal/

    A Kitsilano house on a standard city lot sold this week for $4.23 million. It is the highest sale price to date for a 33-by-120-foot lot in the west-side community, listing agent Brandan Price confirmed Thursday.

    The buyer also paid $735,000 more than the asking price of $3.495 million for the West 1st Avenue home built in 1912.

  12. Infrastructure projects stimulate the local economy if they are paid federally and built locally. I doubt there will be a net benefit from the sewage plant here. It will be a massively over budget and delayed boondoggle that will put the bridge to shame.

  13. Interesting sound bite with MoneyTalk. But the answer may be a lot deeper than just dirt.

    The pool of prospective purchasers is heavily weighted to a specific location and a specific type of home. These prospective purchasers are driving prices higher and higher for this very limited number of properties. In our market it seems to be homes with suites close to the town core and the high end market.

    The high end market I don’t really care too much about. Multi-million dollar properties have no effect on the average Joe/Jane life style as they are not in competition with them.

    The irony is that prospective purchasers can’t afford a cheaper home without a suite they have to spend more in order to afford a home. They can’t afford a one-storey home at $425,000 but they can afford a house with a basement at $625,000. But as prices continue to rise, fewer buyers can afford to purchase these properties. At a certain price point everything breaks down, similar to the effect of higher interest rates.

    Meanwhile most of the remaining market is less active with prices back to 2008 and 2007 levels. .

    I suppose the idiom would be that prospective purchasers are putting all of their eggs in one basket.

  14. There is a negative multiplier effect of removing money from people’s pockets. The economic negative impact just isn’t as obvious as a big infrastructure project.

    “That which is unseen is where the money came from. In the case of government spending, it can only come from higher taxes, meaning that someone else is unable to spend himself that which the government spent, or from higher borrowing, meaning that someone else in the future is unable to spend the amount of money borrowed plus interest. The multiplier effect, therefore, can only be positive when viewed through the double entry accounting method, if the government spending today has a higher multiplier than the multiplier effect of private spending, whether today or in the future. ”

    http://www.bobkrumm.com/blog/2013/10/the-negative-multiplier-effect-defined/

    But like Jack said, some projects pay-off and some don’t. Personally, I think the current debate on Canada’s deficit should focus as much on the quality of the infrastructure investments made as the deficit itself.

  15. On the sewage plant. ““There’s enough flexibility in there that we may be able to complete the project earlier than that.” It’s nice that the CRD directors haven’t lost their sense of humour yet.

  16. Mega projects stimulate local economies. Even the $65,000,000 interchange at the airport allowed the former MP for North Saanich to sell out his real estate development along Canora. Otherwise, in my opinion, the interchange was a flop for the economy because it wasn’t really needed and didn’t open up significant new areas for private enterprise.

    In contrast, the billion dollar upgrade of the highway and sewer lines starting in early 2000 in Greater Victoria had a multiplier effect by opening up large tracts of land for private development stimulating our economy and giving a quick start to price appreciation with new high paying construction jobs.

    In a couple of years the Colwood Crawl will be greatly diminished with the new Mckenzie interchange. That will alter prices in some areas but I doubt that it will have a large sustained multiplier effect on the general economy. Land prices are generally relative to the time it takes to get to a town center, following transportation routes like contour lines on a map. Commercial nodes like Uptown, Tillicum Mall and Admirals Center will have an effect on these price contours too.

    If you are buying for price appreciation you can’t disregard the effect of the new interchange. The new interchange may mean travelling times during peak hours could be similar from downtown to Langford as they are from downtown to Gordon Head. That shifting of driving patterns might have the effect of Gordon Head becoming another Esquimalt. Being passed by as prospective purchasers choose new areas of housing with new schools, shopping and other amenities over older areas without these amenities given a similar commuting time. Gordon Head may mean something to you since your parents grew up there, it doesn’t have that same meaning for a family from Alberta.

  17. “What I’m hearing is there has been some hiring of some trades from Alberta, not in big numbers ”

    A very misleading article based on the sensational headline. Looks like most of the smart oil money workers live and work up island where it’s cheaper as they know the cyclical industry they are in. In fact some will be leaving BC to head back to Alberta.

    “But Tom Sigurdson of B.C. Building Trades said the construction association’s employment forecast isn’t as good as it appears. ”

    “Some unionized skilled trades people in B.C. will be heading to Alberta this spring for maintenance operations on energy projects, he said.”

    Mike, do you remember 2008 when there were holes in the ground all over Victoria with lots of hope and promise and hype of tens of thousands moving here then it just stopped over night ? Predicting this will go on forever especially up to your precise sell date of 2023 is a bit far fetched.

  18. “Except that the only reason we are selling is to buy again.”

    Just another bait post but what’s new. You could have stated that originally. Good luck lining up with the sheep and paying $100K over.

    What’s now is now indeed, an over priced market with greater fools paying 10 to 20% over in the core just to be an owner. Not the signs of a healthy market with financially smart buyers. With the banks losing money on bad loans and a banking crisis internationally in the works, now is the worst time to think about buying.

    The BOC is putting on a strong face but they also say out of the other side of their mouth that housing is over valued by 30%.

    “OTTAWA — The threat increasing household debt presents to Canada’s economy — and the country’s financial system, in particular — is continuing to grow, and at an ever-worrying pace.

    The rising risks to heavily-indebted borrowers, those who have taken advantage of ultra-low interest rates following the 2008-09 recession, would be an economic collapse and a jump in unemployment, accompanied by a sudden and deep shock to the housing market — leaving many Canadians unable to meet their mortgage payments.”

    http://business.financialpost.com/news/economy/bank-of-canada-warns-that-rising-household-debt-leaves-canadians-vulnerable-to-negative-shocks

  19. on here wishing the world will collapse and burn.

    You should read the blog comments going back……the tone of the blog is the most positive it has been at any point since 2007. Back in the day certain posters made suggestions of purchasing large plots of land so you could grow your own vegetables when everything collapsed.

    I listened carefully to the advice and purchased a 1/2 acre property.

  20. Marko – 1150 Dallas sold for 1.1M!! Do you know the last sale price and date for 1350 Dallas Road and 1420 Dallas?

    Email me if you would like for info….I don’t want to start a trend of getting the blog bogged down with sales prices that are 10 years old.

  21. I think it gets worse from here for buyers. I’m only a baby bull though. I don’t see large price gains like the mid 2000s but I see upward trajectory which in itself adds fuel to the fire. I don’t see mortgage rates dropping in half nor the wage increases we saw in the 2000s. The super low inventory with active buyers and the super tight rental market especially for SFHs is just too much pressure for flat prices. This is the spring of springs to tell which way it’s going.

  22. Jack was right

    Jack is almost always wrong. The stats he provides are generally helpful; his opinions not so much.

    I think it’s cute how JJ likes to throw info about specific foreclosures out there, perhaps hoping readers will mistakenly suppose that foreclosures are prevalent in Victoria.

    It’s sad.

  23. Except that the only reason we are selling is to buy again. I guess that means we’ll be having to worry the nail in the wallet this time round.

    And it seems weird that you are continuing to categorize people as bulls or bears. I don’t really care what the market does short-term. I care what the market does over ten years. I’ve repeatedly stated I don’t have a crystal ball yet it seems as though you are not comfortable unless the world is black or white: surprise, it is not.

    Now is all you have. There is only the deal of the day. Past deals are past. Future market activity is speculative. So what if it was better to buy last year. Water under the bridge. Run the numbers today and see what your best choices are. If you want to rent go for it. Buy, if you can afford it go for it.

  24. “We’ve decided to sell one place so won’t be renewing the lease for the fourth year this time round.”

    A phony bull is now cashing out. Another sign the top is in. Jack was right, the real bulls would be buying not dumping.

    “A 20% property tax increase doesn’t amount to much. $600? When places have appreciated $50k it is a pretty small price to pay for ownership even with the other costs of ownership.”

    I said if I bought now, not a year ago. Anyone who bought in the last few months of this fury of panic buyers has made squat. According to the news tonight it could be a possible $1000. For new buyers that’s another nail in the wallet but what’s another $20, $100 etc etc, every month, you’re a property king with imaginary paper profits so you can afford it !

  25. Add me to the bunch that doesn’t raise rents until a tenant leaves. I never think it is worth it. Rather have happy tenants and zero turnover.

    We’ve decided to sell one place so won’t be renewing the lease for the fourth year this time round. I’m going to give them five months’ notice and agree to break the lease if they find something they want to move to before the term is up. Vacancy rates are so low I’m concerned that they won’t find something easily.

    A 20% property tax increase doesn’t amount to much. $600? When places have appreciated $50k it is a pretty small price to pay for ownership even with the other costs of ownership.

  26. Marko – 1150 Dallas sold for 1.1M!! Do you know the last sale price and date for 1350 Dallas Road and 1420 Dallas?

  27. Too many single wierd old loser guys on here wishing the world will collapse and burn.

    There might be a few of those on the blog, but Just Jack is married with two kids, I seem to recall. He never talks about his personal situation anymore. Years ago, he mentioned that he rents in Oak Bay.

  28. I’ve never increased rent on any of my properties for an existing tenant. I just increase it when it needs to be re-rented.

    Same. The extra few bucks a month are not worth the potential trouble — and lost rent — of having to find a new excellent tenant. (Our current tenant is in his fourth year renting from us.)

  29. Our old landlord had a rule that he never raised rents. He owned a few 60s apartment buildings and said he had a tenant in Sidney that had been there for 30 years and was still paying the same rent as when she moved in in the 80s.
    Maybe not so smart business wise, but good way to lower turnover.

  30. Rental market is tough if you’re looking, but that wouldn’t affect most people that have a place. If you’re a good tenant landlords tend to not want to push you out. If you leave for greener pastures they might have someone less savoury move in.. like an Albertan.

  31. My rent doesnt’ go up more than 3%. My son’s landlord hasn’t raised his in 4 years. Maybe I should buy so my taxes can go up 20% when the city sticks a sewage plant depot in my hood.

    I’ve never increased rent on any of my properties for an existing tenant. I just increase it when it needs to be re-rented. Why risk the tenant living over 3%? The time invested in having to re-rent is not worth the 3%.

  32. My rent doesnt’ go up more than 3%. My son’s landlord hasn’t raised his in 4 years. Maybe I should buy so my taxes can go up 20% when the city sticks a sewage plant depot in my hood.

    What’s scary is that some of these psycho bulls are parents.

  33. This is the kind of post that makes little bears cry in their beer. I’m hearing all kinds of anecdotal evidence here that rents are rising and being a buyer in this market is a stressfest. The spring buyers haven’t even come out of the woodwork yet either. This is a complete bloodbath for bears. A complete bloodbath. If you’re a forenter start considering up island.

  34. Holy Jesus H Christ Just Jack, did I just read what I just read. That is the scaryest comment I’ve ever read on a forum. As a parent, that is way beyond the line.

    I’m actually upset enough that I am going to permanently leave this blog. Way way to wierd.

    Too many single wierd old loser guys on here wishing the world will collapse and burn.

  35. Why, JJ? Because location location location! Sure, places in Brentwood Bay and Langford are still unsettled, and most people aren’t aware of the potential good deals available with foreclosures (or are aware, but aren’t interested in the risk and uncertainty). But Filmer was in a great spot, and the lot value alone in that area is about what the purchase price was.

  36. With prices rising 10-12% last year, and this year looking at another similar gain, it shouldn’t be a “surprise” to see houses that “would’ve sold 2 years ago for 799” selling for over 1m.

    That’s the new reality. Those who buy in lock in their gains.

    I highly suspect we will catch up with the rest of Canada and our prices will go up another 25% again in the next couple years.

    I’m off to go for a walk in t-Shirt, rest of Canada still has 4 months of bone chilling dark winter to go.

  37. A Brentwood Bay home that was bought in 2007 at $406,000 and before that in 2003 at $268,000 went into foreclosure with an initial bid of $320,000. Court date came up on Tuesday and only the one bid. Sold at $320,000. That is an unbelievable price for home that needed only cosmetic remodeling. The same with a home in the Highlands that was bought in 2007 at $517,500 and one bid at court this week at $425,000.

    Yet the home on Filmer needed substantially more upgrading than these other homes and had 6 offers over the initial bid of $425,000. Eventually selling at $538,000 or $530,000 (It gets complicated)

    So why is there this dichotomy in the market place?

  38. Thanks for both the MMM (Mister Money Mustache) posts! (The New Yorker article did leave a bit of a weird taste & I really appreciated his clarification on the tone. )

    I liked the part about pursuing only win/win situations. “For example a bike is better for you AND cheaper. Working harder instead of being lazy makes you happier AND earns you more money. He said: “I would not stay in a cubicle just to be able to afford a Tesla or a Dryer;’. but clarified “I CAN afford both Teslas and dryers, I just don’t buy them because they would not make my family any happier!”

    I love reading these concepts & they do apply quite a bit to the housing decisions, in my opinion (ie. space for entertaining makes me happy, but a 3rd bathroom does not)

  39. Yes – good article introvert. 400k a year for the blog! Leo you need to get monetizing.

    JJ sure has a lot of hapless older male homeowners in his neighbourhood.

  40. CS – That story is a nothing burger. The US has plenty of uranium whether for bombs or for power. Likewise Russia – plenty of uranium. Buying that company made marginal difference to their strategic position. If you want to buy U assets there are still plenty of companies for sale at a fraction the stock price of several years ago.

    Anyhow if Trump is elected you need to own the infrastructure companies that are going to build the walls. All paid for by the Mexicans and Canadians of course.

  41. Jack you have the onus of proof backwards. Extraordinary claims – like the ability to consistently time markets – require proof. What studies exist that show that people are able to time markets?

    It’s easy for people to think they have market timing skills based on nothing more than good luck.

  42. Vicinvestor, absolutely, that is the truth. I never said holding cash was a tactic to use, rather I was pointing out even Blackrock (4.5 trillion money manager) is suggesting cash right now in order to preserve capital. My point was, why sell and invest now if market is unstable, but our housing market is, and the old guy can make a living renting his house out also.. Win win.

    I don’t see just jack suggesting where he would invest this poor old guys money??? Insanity!

  43. Regarding vitriolic home owners lurking here looking for the “peak” time to liquidate. Most have been on here for years, and most likely most of them are sitting on an extra 100-200+ thousand tax free in that time…. Soooo, who is the smart one?

    Bears meanwhile were in gold at 2,000 an ounce… Ouch!

  44. VictoriaVv, staying in cash suggests that people can time markets. However, study after study shows that no one can time markets. Even big name economists can’t predict what will happen next. Let me ask you: what would you do in this economic climate? Go all cash because you think TSX/housing will drop further? How would you know? Did anyone know oil was gonna drop this much? Similarly, we cannot predict when/if oil will rebound. It’s a fool’s game to try to time markets.

  45. Just jack… Even the best investors are all in cash right now, he could easily lose so much money, where would he make more then 2% return in this market today?

    Yearly I’m sure he needs more then ~ $10,000 on his investment per year. (Taxed). While his house could and will easily exceed that tax free.

  46. That’s a good question. In this case the fellow was 63 with health problems doing odd jobs in the neighborhood to pay his mortgage.

    Should he continue owning or should he rent in a new building in a down town location and conservatively invest the half million dollars so that his savings pays his bills for the rest of his life without ever touching the principle? He can still continue to do odd jobs and in 2 years he will start collecting CPP and not have to work at all.

  47. Oh my god just jack, please don’t spread your poverty to ignorant old folk.

    He should hold onto his property while to goes up tens of thousands of dollars a year, and only when he is absolutely needing to move to a rental with in home assistant should he look at his options.

    Selling is not the only option, he could rent his entire house out and that money would cover his mortgage and his rent on his new place, plus most likely a few hundred more. He could also access equity for a very low cost.

    Wow I hope he didn’t listen to you and watch his house double in value while he listened to you and put money in gold.

  48. Hawk, it’s not a scam if a buyer willingly pays the price. It was the seller that was too lazy to list the property for its current market value. 2.5 acres in prime Langley will easily sell for 2+ million.

    I just don’t understand all the upset people about prices going up… They only go up because buyers willing and happily pay for the new price, no one is holding a gun to their heads

    If these buyers in Van listened to Hawk over the last 10+ years they would be poor and not have made millions on smart Real Estate investments.

    I bet whoever buys that 2.5 acres makes a million after subdivide.

  49. Donald Trump appears set to win big in next week’s primaries.

    http://www.breitbart.com/big-government/2016/02/23/super-tuesday-trump-leads-early-polling-cruz-rubio-fight-for-second/

    Which makes me wonder how confident Introvert remains about his “guarantee” that Trump will not win the US Presidency. If Trump does win, Canada will have to go along with Trump’s protectionist trade policies (which is to say, erect its own tariff barriers against Third-World imports) to avoid denial of access to American markets. The result would be highly inflationary, leading inevitably to a return of what Info used to call “normal” interest rates and a property crash.

  50. Yes – you can have it all. You just have to cash in the house lottery ticket you won before it expires.

    Another reason why this might be the worst time to buy. Only a slight dip in the market, then a stampede for the exits, while all those frustrated wannabee first time buyers heave a sigh of relief and sit back for a couple of years, happy to pay a couple of thousand a month in rent while everyone else is losing their shirt.

  51. I was speaking with an elderly gentleman last week who does odd jobs for cash in the neighborhood. Spent his life in construction and now at 63 with a bad back and a small mortgage left on his home.

    If he sold today, he figures he’ll clear half a million dollars on the home. But he doesn’t want to sell as there isn’t anything he would want to down size and buy.

    I told him he doesn’t have to.

    He can sell and keep his money and rent a new one-bedroom in the Hudson and never worry about a condominium where a landlord could sell the unit and they would have to leave. And there would be security in the amount of rental increases too. Unlike condo ownership where your taxes, utility fees and maintenance costs have been increasing at more than 4%.

    The fellow went from being depressed about his future to ecstatic.

    Yes – you can have it all. You just have to cash in the house lottery ticket you won before it expires.

  52. “Wonder why some of the most vehement and vitriolic bulls are on this site? They’re here because they want to be the first to know when to liquidate and not to follow a market down. Because if they were really bulls they would be buying in this market.”

    Bingo !

  53. In 1986 there were fewer choices in lenders than there is today. The big 5 banks were much more conservative in their lending. Such as the mortgage could not be greater than 3.5 times your income, only 60% of the income from a suite would be included in your income and the minimum down payment was 10%.

    After Mulroney deregulated the banking industry to allow the USA banks into Canada, many of those conservative practices were eliminated in order to compete with US banks.

    And here we are today an overly indebted nation of home owners. In a city where a quarter of the owners parse out their house to strangers for extra income. A city of the house rich and income poor. Where an increase of a few percentage points in a mortgage, an empty suite or falling rents means missed mortgage payments tagged onto the amortization period. Where those buying a home with a 5% down payment are on the never, never plan to paying off the mortgage. Where the length of home ownership is measured until the next mortgage renewal. A city where people who bought their homes a decade or so ago for $250,000 now have $400,000 mortgages.

    A market that could become as illiquid as the eighties when you can own and pay taxes on a $750,000 home but not be able to find a buyer for it.

    Wonder why some of the most vehement and vitriolic bulls are on this site? They’re here because they want to be the first to know when to liquidate and not to follow a market down. Because if they were really bulls they would be buying in this market.

  54. “I don’t know if we get 160% RE gains like ’85-’94, but ~100% sure seems likely, especially when you consider our gap with Van”

    You would need a family income of $225,000 to support those “average” prices in just 7 years from now. More if rates go above 5%. Aint gonna happen with $85K annual wages getting 1% range increases on average.

    Lets use a very conservative mortgage rates increase of double to back up your massive economic boom of epic proportions which would cause massive inflation like the early 80’s, plus taxes, insurance of course of who knows how much :

    For a $1,000,000 mortgage after 10% down at 5.00%, 25 years amortization, your monthly payment will be
    $5,816.05

    For a $1,000,000 mortgage after 10% down at 7.50%, 25 years amortization, your monthly payment will be
    $7,315.55

    Sounds like a ghost city to me in only a mere 7 years from now.

  55. “Come back in a month or so when all the students start giving notice. Winter is notoriously the tight rental time of the year in Victoria for years now, nothing new. I’m sure all those panic buyers the past two months will be giving their notice soon which should free up 1000 places approx. Rental market may even tank and be deals galore soon at this rate.”

    I’ll let you know when we put our suite up for rent May 1st. I’m anticipating another few dozen enquiries, though. Sure, September might be the best month to rent for students, but there are just as many people moving here for work, moving out for the first time, getting a first place with a bf/gf, or in need of a new place after splitting up.

  56. If mortgage rates bumped up a couple percent, affordability would evaporate. However I don’t see that on the horizon with the way the national economy is going.

    The national government is going seriously into debt with a forecast deficit for 2016/17 of $30 billion.

    http://www.bloomberg.com/news/articles/2016-02-23/trudeau-drops-campaign-promises-and-goes-all-in-with-deficits

    That’s almost exactly the deficit achieved by the last Trudeau administration in 1979, when the average 5-year mortgage rate reached 21.46%.

    True the economy is slightly more than twice as large in constant dollars. But then household debt is vastly greater:

    http://www.theglobeandmail.com/report-on-business/economy/housing/remember-when-what-have-we-learned-from-80s-interest-rates/article24398735/

    Could this explain the tight rental market: folks seeking to avoid the risk of RE ownership at a time of great uncertainty?

  57. “In addition to an employment migration like ’86 (Vic has highest employment growth in Canada)”

    This out of the norm employment boost is a mirage. Where exactly are these jobs, what sectors, and wether they are full time or part time and in detail?

    You cannot find these exact stats so for all we know of the supposed 10K new jobs last year, outside of a thousand or so tech jobs (rough guess), the rest could be part time restaurant jobs for struggling college and high school students or as caveat posted: retail jobs at the mall paying $10 an hour. Where is the detail and why are they afraid to reveal it ? Because it will show a job growth of mainly low paid workers ?

    Even many of those tech jobs posted seem to be entry level with no guarantee of full time permanent to secure mortgage lending and pay in the low $20 range.

    “It’s worth noting that our currency, among other things, are paralleling the 80s perfectly.”

    In the 80’s most people I knew did not even have a credit card and any who did had a $500 limit. Now it’s common for young folk to have a $10,000 LOC maxed out before 30.

    We’re not Vancouver and never will be. As JJ says there’s a thing called the Georgia Strait.

  58. In addition to an employment migration like ’86 (Vic has highest employment growth in Canada), the snowbirds are also looking back to Vic as the US sunbelt is becoming too expensive for currency, medical, and other costs. It’s worth noting that our currency, among other things, are paralleling the 80s perfectly. Of course this time we’re receiving the added benefit of a burgeoning tech sector. Victoria is starting to be called the “Silicon Coast”. I don’t know if we get 160% RE gains like ’85-’94, but ~100% sure seems likely, especially when you consider our gap with Van.

  59. Young Albertans returning home to find that their parents have rented out their rooms to pay the bills?

    Any significant influx of Albertans/Boomerang generation returning home would be high at the beginning and dissipate quickly as most of the oil patch layoffs have already occurred.

    It would therefore not be a continuing trend and I would expect to see vacancy rates increase in the future as their employment insurance runs out.

    On the plus side, with all these bad boy trucks about to be repossessed, I’m expecting to get one heck of a good deal.

  60. Who would have thought that an a simple observation that how the population is increasing is an objective measure of the desirability of a city would cause so much controversy.

    If you can’t accept the observation that desirable cities have higher migration rates then you are left with the illogical conclusion that people don’t move to desirable cities.

  61. Curious Cat,
    Definitely sounds like the realtor is doing the buy and flip on your friend. Guess the best to hope is he gets burnt when the market inventory shoots up.

    I get your take on Winnipeg. Victoria is a different beast where most of the people I grew up with left here due to lack of quality job opportunities and limited upside as the boomers ahead of you weren’t going anywhere for 20 years.

    My buddy’s kid just got laid off up north and is coming back with limited skills that won’t pay over $15 an hour. Not mortgage worthy material by any means.

    If tech is the main driver now of Victoria where are all these oil workers supposed to work ? Timmies ? Not that many blue collar full time permanent trades jobs out there, just cyclical construction work.

  62. I think it’s fair to say that if there’s an influx of Albertans leaving to come here at the same time as large job losses there, then many/most of those people are not coming back entirely by choice

  63. “1986 was the bottom of the last oil glut and we know what happened to Victoria prices then”

    In the mid 80’s you could buy a nice bungalow, put down 10% and comfortably pay down your 15 year bi-weekly mortgage with average incomes. No way this is 1986, more Fantasy Island predictions.

    They are retiring from Fort Mac ? Not many old dudes up there. If they come from Calgary they are selling to pay higher here heading into retirement ? Hard to buy that theory unless it’s a condo.

  64. Sure there are some down on their luck stories comming out of AB but that was a good run and now there is no good reason to live there. I’m sure there are lots who managed to make money and or are retiring and heading this way…. 1986 was the bottom of the last oil glut and we know what happened to Victoria prices then…

  65. “The more desirable the city, the more people live there.”

    JJ’s theory has so many applications….

    “The more desirable the restaurant, the more people eat there”
    Canada’s most desirable restaurant – McDonald’s

    “The more desirable the job, the more people choose that line of work”
    Canada’s most desirable job – retail clerk

  66. Victoria is desirable for people with money… So prices will go up and up and up and faster and faster and faster… Just like we are witnessing.

    Or they languish for years. Victoria didn’t suddenly become desirable in 2015 so that can’t be the explanation for the recent activity

  67. Little update on my friend : She took her house off the market in December, relisted it Feb 1st for $13k less on the advice of her realtor (I told her not to drop the price because she’d been getting lots of showings at her original price and even 3 offers, just none that panned out for various reasons.) On the first day of the relist she had 5 showings. That night she got a full price, unconditional offer from a realtor who’d shown it to a client. The client wasn’t interested, but the realtor liked what she saw, came back with her husband and drew up the offer. My friend also received a second offer for ask, but this one was conditional. The listing agent suggested she accept the unconditional offer so they signed and then found out very shortly after the second guy came back with another offer at 15k over ask (or 2k over the original list price). Too late. My friend is bummed she dropped her price, of course.

    Even though I tried to give her advice and point out that I’ve been following a blog that showed strong evidence the market had heated up over those few short weeks and I felt she could get at LEAST her original list if not more, why believe me over someone whose job is to actually sell houses? Even though I pointed out his 1.5% commission only means $195 lost to him ($13k lower price is no big deal to him!) and that she was in no rush to sell. Even though I pointed out he had no other listings, nor could I even find out when his last listing even was (he doesn’t need listings to sell she replied, of course not but it sure helps, I said), my point being that he might be a little “out of touch” with current market conditions if he doesn’t do a lot of volume. I suggested she ask him how many sales he did last year. She said she felt uncomfortable asking him that. Even though I told her if you have two offers at ask, then at least TRY to get one of them to come up, and she said it doesn’t matter because the other one can’t go unconditional, I was still a nice friend and just said, “OK. congratulations on selling your house.”

    Oh and now I have a strong suspicion the realtor that bought her house is going to flip it because she offered to buy all the furniture in the house too.

    Keeping. Mouth. Shut. (She doesn’t listen to me anyways.)

  68. Dasmo- “People from AB are returning after making good coin”

    Hawk- “My son knows quite a few who went up there and have nothing but a 50K pickup with a loan and a bad attitude to show for it, after they got laid off and blew it as it came in, thinking the good times would never end.”

    Just last week, I overheard a conversation at a restaurant that supports Hawk’s version. There was a mid to late 20s guy at the table next to us who told his friends he had just moved back from Fort Mac, he had no job and had “5 figures” debt. He received some sympathetic “ohhhh” and he responded what he missed the most was his big new truck.

  69. JJ – ” Victoria is a nice place to live, but there are a lot of nice places to live in Canada and that’s illustrated by the number of people living in each city. The more desirable the city, the more people live there.”

    I also have to disagree with this one. The reason MY family has lived in Winnipeg for over a century is not because it’s a nice place to live. It’s simply because my ancestors arrived there from Europe with the promise of free land. http://www.familyhistoryalive.com/Prairie-Land-Grants-and-Homesteading–Manitoba-Saskatchewan-and-Alberta.html

    Then, once you have the family farm setup, you start pumping out the kids for the free labour, then they have a dozen kids, before you know it, in 2-3 generations you have a BIG family. There really wasn’t much in the way of communication back then to let people know “hey guess what, this area sucks, there are wayyyy nicer places to live!” You work on the family farm, you take care of your parents, you marry your highschool sweetheart, etc. Most people’s idea of moving away, was going from the farm to the closest “big city”. My dad’s generation’s motivation for going to the city was to pursue post-secondary studies. Personally, growing up, the only thing I knew about Victoria was from a Butchart Gardens placemat my grandma had that had been a gift to her by her sister. No one I knew had even been to BC! It might as well had been on the other side of the world. Family ties are hard to break, especially a big family, and if you have a stable job where you grew up, most people don’t even consider it.

    I think Winnipeg has a higher population because of its location. It’s smack in the middle of the country, the “key” to the West, as we were taught in school. Regina is 8 hrs to the west, nothing north but lakes, nothing south (North Dakota, South Dakota.. not worth the US dollars! lol) and going east, nothing for days. Manitoba’s second biggest city, is Brandon, at a pop. of 46,061. This means basically that Manitoba’s population is concentrated in one city. To compare, the population of Nanaimo is 146,574 and Duncan is 43,252. I would agree Winnipeg is more desirable than Brandon, but is it more desirable than Victoria because they have double the population? NO. Is Brandon more desirable than Duncan? NO. Winnipeg attracts many immigrants, but I think that has a lot to do with the city actively trying to attract immigrants, now and in the past. Winnipeg has large French-Canadian, German, Polish, Ukrainian and Filipino communities. Surprisingly, not many Chinese. This makes it desirable to people of those backgrounds. People like to be around people like them. And the cheap housing helps too.

  70. VictoriaVv, last time I looked this wasn’t called the House Owners Hunt Victoria blog. Note the word “hunt” as in looking for houses at fair value and discussing why they are over valued, the trends around that fact and when they are going to crash again, which they will.

    You sound like you bought in Rock Bay at the peak in 2007 and can’t figure out why your place never recovered. You could always start your own blog for owners only but that could get boring pretty quick.

    BTW Gordon Head is over rated and Uplands too snobby with ridiculous taxes.

  71. Hawk is just upset he sold his house out of fear of a worldwide economic crash the sights of which have never been seen before. Sell house and put money into physical gold right before it dropped 50%.

    If you are still so convinced of a massive collapse then why are you hanging out on a housing blog that tracks the “gains” of house prices for the last 9 years… Cause in 9 years including the big depression prices are flat-1% gain.

    Are you waiting for a 75% correction so you can buy in Gordon Head / Uplands?

  72. The more desirable cities would also have a higher population growth rate.

    No.

    Are Toyotas more desirable than Ferraris? They sell more, so they must be. But that’s not true and we all know it. Desirability can’t be reduced to sales — or to population growth. Sorry.

    Also, I can’t believe no one else has called out your crap when you’ve (twice before) reasoned that Victoria’s big run-up in prices in the 90s was because we were building roads and sewers out in the West Shore. We weren’t the only city in Canada doing that at the time, but we were one of the only cities whose prices shot up like a rocket.

    Give your head a shake, Just Jack.

  73. “up and up and up, faster and faster and faster”

    Sounds like a fairy tale story I used to read to my kids. What’s the name of that guy who flew too close to the sun ?

    Piles of houses in Langford and Bear Mountain that haven’t sold in over a year even when they drop the prices. Ahh, the Tale of Two Cities. Sooner or later the twain shall meet once the easy credit door of the last 10 years gets slammed shut which won’t be long.

  74. Tx – didn’t realize it did not sell – or that it was listed so long ago! I assumed it was sold as all the figures were taken down.

  75. I can’t believe 2390 Bowker sold for so cheap… If that house was in Surrey or Kelowna or Seattle or pretty much anywhere else it would be 30-40% more.

    Prices elsewhere are up 50-60% while Vic is at 1% since 2008… I’m just surprised people are still surprised when houses sell for 2% gain in 8 years.

    When houses near uplands stop listing for 699-799 and start reflecting how amazing an area that is and start selling at 1.1-1.4 mil then I’ll be “surprised”…

  76. Hahaha Just Jack… Wow.

    Lower priced “outlier” areas always have the “fastest growth” and are almost always seen as non-desirable but “cheap” and financially accessible to commuters.

    It’s the expensive, stable-low growth established areas like Gordon Head or Oak Bay (next to water and banana belt of sunshine) that are the most desirable.

    Just because a place is big does not mean it is the ultimate top location people with money want to live… That’s what you don’t get yet… Victoria is desirable for people with money… So prices will go up and up and up and faster and faster and faster… Just like we are witnessing.

    No matter how much you talk down the market it just won’t adjust to within reach.

    Langford on the other hand, that is so desirable (read: cheap), maybe try buying there?

  77. 3466 Plymouth Rd listed at $795k, sold for 868k unconditionally today.

    I love that area. Quiet little streets with lots of mature trees.

    But I’m quite happy in Gordon Head. Plus it’s nice being closer to the ocean.

  78. That must mean Lagos, Nigeria is the most desirable city… as long as you can overlook its homicide rate & pollution.

    It is, compared to the rest of Nigeria of course. If it wasn’t desirable, 21 million people wouldn’t have gathered there.

  79. I can’t believe 2390 Bowker sold for 930k. It is right at a 4-way stop on a busy corner. I remember when it was sold last time – used to be owned by the fellow who made figures out of pieces of wood and displayed them around the property. The new owners must have made at least $200k on that sale in a couple of years. Does anyone know the previous sale price?

  80. Jack, you’re always good for entertaining theories.

    The more desirable the city, the more people live there.

    That must mean Lagos, Nigeria is the most desirable city… as long as you can overlook its homicide rate & pollution.

  81. Of course – that’s why Winnipeg and Hamilton are bigger than Victoria, and why Fort McMurray was growing so fast recently – people discovered how desirable it was!

    As it turns out, for people who aren’t retired it is quite desirable to have a job. Cherry blossoms in February are more of what you would call a nice to have.

  82. But Langford is most likely a more desirable city for young families to live as there are more family activities than in Victoria, big block stores and new housing. Yes you’re right Michael Langford is more desirable for young families. That’s why so many chose to live there.

    Because with 5 percent down payments easily available they could have chosen Victoria as an alternative. Instead they chose Langford.

    I really think you boys are starting to learn something.

  83. JJ – ” Victoria is a nice place to live, but there are a lot of nice places to live in Canada and that’s illustrated by the number of people living in each city. The more desirable the city, the more people live there.”

    Of course – that’s why Winnipeg and Hamilton are bigger than Victoria, and why Fort McMurray was growing so fast recently – people discovered how desirable it was!

    Nice bit of pop sociology, but no, Canadian population trends are not so simply dismissed.

  84. I have been a landlord now since 2012 and I have seen the rental market tighten up winter spring and summer. Student accommodation freeing up will not make the rental market better. There will just me more crap on the market…. If you are looking to rent a SFH it is crazy. Most places forget to tell you it’s not actually a SFH for rent. You learn that if it’s under $2000 it’s not a whole house. It may not be more affordable to buy but it’s easier….

  85. The more desirable cities would also have a higher population growth rate…
    Population increase from 2006 to 2011
    Surrey: 18.6%
    “SURREY NO. 1

    Now I know why Jack thinks Langford is the most desirable city to live… it must be, its 2006 to 2011 growth rate was 30.1%!

  86. “The rental market is terrible. ”

    Come back in a month or so when all the students start giving notice. Winter is notoriously the tight rental time of the year in Victoria for years now, nothing new. I’m sure all those panic buyers the past two months will be giving their notice soon which should free up 1000 places approx. Rental market may even tank and be deals galore soon at this rate.

    “People from AB are returning after making good coin”

    I think there is an over-estimation on all those filthy rich oil workers flooding here to buy houses. Most with families already lived here and flew in and out every 3 weeks judging by the planeloads at YYJ that I witnessed. Anyone coming here doesn’t have a job with a track record to get a mortgage. Judging by all those who went back east where so many of the oil workers came from they are going bankrupt due to lack of work.

    http://www.cbc.ca/news/canada/newfoundland-labrador/casualties-collapse-bankruptcy-1.3441695

    Not everyone who went up there had a skilled trade either. My son knows quite a few who went up there and have nothing but a 50K pickup with a loan and a bad attitude to show for it, after they got laid off and blew it as it came in, thinking the good times would never end.

  87. Marko –

    To answer your question:

    Technically I didn’t pre-approve or approve the client prior to the court ordered sale. I was giving them feedback on what their financing costs would look like at different price points.

    Their specific case had no issues around debt servicing, and enough cash available for downpayment that would have alleviated any lender concerns on value compared to purchase price.

    Unconditional offers and court ordered sales offer a bit of a challenge to mortgage brokers. Given some prudence and a good understanding of the property, the borrower and lender guidelines, a broker can give a client a reasonably tight price range to work with.

    To be certain, there is definitely risk for anyone putting in an offer without a financing clause. That being said, these risks can be mitigated to a high degree given a careful assessment of the property and the borrower.

  88. There is a reason why Surrey prices are slightly higher than ours – It’s called the Strait of Georgia. Besides there are a lot more people living in the City of Surrey than in your self defined “real core”.

    A lot of factors go into making a city desirable. Many are personal choices. Victoria is a nice place to live, but there are a lot of nice places to live in Canada and that’s illustrated by the number of people living in each city. The more desirable the city, the more people live there. If it wasn’t so desirable – then they would move.

    Source: “List of the 100 largest municipalities in Canada by population”

    If you google this list, you’ll find that you can re sort the cities by growth rate too. The more desirable cities would also have a higher population growth rate.

    Here let me help you.

    Surrey Population: 468,251
    Victoria Population: 80,017

    Population increase from 2006 to 2011
    Surrey: 18.6%
    Victoria: 2.5%

    “Wondering where B.C.’s housing hot spots will be over the next few years?

    As Surrey residents, the Rajkowskis are living in what experts say is the Lower Mainland’s hottest real-estate market.

    Communities such as Clayton Heights, Cloverdale and Fleetwood are hot and expected to stay hot in the near future as buyers seek affordable housing near family-friendly services.

    Other areas expected to see brisk demand from buyers over the next few years are Burnaby’s Brentwood, the Tri-Cities and Fraser Valley communities of Langley, Maple Ridge, Pitt Meadows and Abbotsford.”

    And

    “SURREY NO. 1

    Lower Mainland communities claim five spots on the Real Estate Investment Network’s latest list of Top 10 B.C. investment towns: Surrey ranks as No. 1, followed by Maple Ridge and Pitt Meadows tied at No. 2, Abbotsford at No. 6, Chilliwack at No. 8 and Langley at No. 10.”

    Source: The Province Newspaper dated May 14, 2015

  89. If the stock market continues its reversal into to positive it’s another factor to add fuel to the fire here. I’m no longer Halibut. I’m now a baby bull. The rental market is terrible. Prices have not yet shot up. Buying is getting very competitive. Jobs and income here is stable and may start to increase with the dollar the way it is and more tech maturing. Rates aren’t going up any time soon. People from AB are returning after making good coin, people from Van are cashing out or giving up. What will pressure prices down? Every one suddenly has common sense?

  90. I had to chuckle on the Filmer sale. The bears were convinced a month ago that it was “30-45% over-priced” at 409k. It went for 539k which is still a great deal.

    After looking at the market here for a while, I’m estimating that it’s roughly 30-45% over-priced

  91. “I don’t think we are going to get much in the way of appreciation in detached house prices until core district condo sale volumes and prices pick up. ”

    … Really Just Jack?

    Prices of SFH are well within reach of the top 20% wealthy, and there are a LOT of them looking at the core. Victoria is a wealthy persons dream. Prices are lower then freeken Surrey…

    Anyone who lives here knows it’s the best place in Canada to live, it’s just a matter of time. I predicted 650 average this time last year and was laughed out. I predict 725 average by end of year and prices up 22% in the real core (oak bay, saanich west, Victoria).

  92. I’m anticipating 190 house sales in the core districts for this leap year, 90 house sales in the Western Communities and 50 house sales in the Peninsula (+/- 10%).

    To give you some apples to apples comparison in February 1992 there were 308 detached house sales in the core districts, 96 in the Western Communities and 66 in the Saanich Peninsula. The big offsetting factor is condo sales in the core that were only 109 in February 1992.

    I don’t think we are going to get much in the way of appreciation in detached house prices until core district condo sale volumes and prices pick up. And those condo sales seem to have slowed down in the core. Maybe prospective purchasers are opting for a house rather than a condo this year. That could be a prime reason why houses with suites have seen such an explosive demand this year while starter homes without suites have seen a decline in sale volumes. Today’s buyers can afford to pay $600,000 for a home with a suite, but can not afford a $425,000 home without a suite. The irony is that you can only afford a home if you buy a more expensive home.

    I was anticipating 175 condo sales for this February, but today we are only at 116 units sold. Could still make it, if there is a push this week.

    Core Condo Market
    Month Sale Price, Median (Actual)
    Mar 2015 $279,900
    Apr 2015 $287,000
    May 2015 $285,500
    Jun 2015 $275,000
    Jul 2015 $290,500
    Aug 2015 $286,000
    Sep 2015 $281,150
    Oct 2015 $292,500
    Nov 2015 $282,000
    Dec 2015 $260,000
    Jan 2016 $270,250

    Feb 2016 $290,000 (my projection)

    As for detached homes in the core

    Month Sale Price, Median (Actual)
    Mar 2015 $625,000
    Apr 2015 $631,200
    May 2015 $620,250
    Jun 2015 $629,450
    Jul 2015 $610,000
    Aug 2015 $659,500
    Sep 2015 $640,000
    Oct 2015 $677,250
    Nov 2015 $620,550
    Dec 2015 $672,500
    Jan 2016 $656,000

    Feb 2016 $675,000 (my projection for February)

    When you hear of all the bidding wars resulting in prices over asking price, you would think the median would have seen a much more dramatic jump. Perhaps some agents are not keeping up with the market and not pricing accurately? Or trying to create an auction environment? Incompetence or skulduggery? Either one would look bad on any profession.

    NOTE: under BC’s real estate act there is nothing unethical in creating an auction to get the highest bid. Although I can envision this practice being regulated in the future where the agents have to pay for an unbiased third party to proctor the auction.

  93. Impressive sales numbers. I predict 765 sales this month.

    Yikes – I see that 4905 Cordova Bay rd is for sale; Nice location, huge 0.45 acre lot, but it’s the site of the Khurana murder-suicide-fire last spring. No doubt the house will be torn down, but for $450 k it’s still a good deal for the lot. I’m not sure that this one will be as busy a court date – the heebie jeebie factor. But surely someone can make a happy home out of this sad place.

  94. So looks like we are headed for the 2nd strongest February in the history of the VREB. There is an outside chance we break the 780 sales seen in 1992 but would need to see a really strong final day to the month (Monday, February 29th).

  95. Mon Feb 22, 2016 8:40am:

    Feb Feb
    2016 2015
    Net Unconditional Sales: 523 542
    New Listings: 860 1,108
    Active Listings: 2,575 3,480

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

  96. Ex-core SFH or core condos are now the better deals at this stage of the cycle. But be aware that after these property types slingshot ahead, they may also peak earlier in the cycle than core SFH (recall 07/08). They’re always late to the party, drink too fast and then often the first to pass out.

  97. One of my client’s wanted to bid on Filmer as well. He was pre-approved up to $600,000. And the property was appraised in “as is” condition for a lot more than the initial bid of $425,000. He backed out only because of the cost to gut the interior, renovate the exterior, electrical, furnace, roof and install a suite in a 2,100 square foot home was too expensive.

    Instead he opted to buy an already renovated home with a suite and save himself 6 months of construction, permits and potential unseen problems during the build. So there wasn’t any need for him to go to the court proceeding.

    I also heard that the agents reduced their commission on the sale as the buyer used the same company. That may or may not be true, but someone thinking of buying a foreclosure should consider this. It could save you thousands and gives you an advantage over other bidders.

    The best advice I would give someone thinking of buying a foreclosure is to have the property appraised before going to court. And ask the appraiser to estimate the low, high and most likely price under normal marketing conditions for bank financing.

    The lender will use the lower of the two, either the appraised value or purchase price for bank financing.

    Then bring a certified cheque for $5,000 to court. You’ll need that with your bid.

    The day before, I was in court for a Salt Spring Island farm on 11 acres that was assessed for over $600,000. The initial bid was $445,000. Only one person showed up to court and the property was sold at $445,000 in 10 minutes.

    You never know what will happen.

  98. From a technical chart view via Teranet chart the market has peaked as it has made the identical move the past 2 years versus the move in 2009 to 2010.

    Just reading that post on the previous thread about the house on the Gorge with the two oil tanks next to a parking lot instantly sold. As Marko always says to his clients that most people don’t have any financial common sense proves it.

    MIke, did you know in the 70’s interest rates were 10% and the CPI went from 2% to 14% from 1970 to 1976 ? Also the loonie was at $1.04 and then tanked just below 80 cent range.

    Not to forget commodities exploded up double, as interest rates began their own explosion on their way up to 19%. Just incase you missed it. This aint the 70’s or the 80’s. They didn’t know what a HELOC was back then. 😉

  99. Mike, how do you approve clients for a court bidding war if there is no fixed price set until the court date and at such time the offer has to be unconditional? Do you get them approved to a cap they can bid on and is the approval firm or is there a bit of risk in terms of going unconditional in court when you need financing?

  100. I agree whole-heartedly with this post. I ran a few financing scenarios for a client that was involved in last week’s court bidding war for the house on Filmer.

    My client didn’t get the house, but I calculated for him that a $565k purchase price would have equated into a monthly obligation of $417 for principle, interest and tax payment. (He was planning on building a 3 bedroom suite in the basement for a rent of $1700.)

    The house ended up going for $539ish. If the successful buyer had a similar plan that my client did, he got an absolute steal- even though the final price was $130k over asking.

  101. My opinion is the the same as it has been since I started posting here: buy when you have a down payment, mortgage approval and are ready to take on a mortgage, A suite helped us a lot with managing risk. There is no crystal ball and life is time limited.

    We purchased is a hot market like today. We found the house on cl but the previous to that we made up flyers and delivered them in the area we were lookining in in case someone was thinking of selling. We weren’t looking for a deal – prepared to pay market – it was just that the market was so hot places were snapped up immediately. I think this could work.

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