The Bank of Mom and Dad

Assuming that the majority of buyers are still local, how are people affording to buy at these significantly inflated prices?
One theory is the bank of mom and dad chipping in (or maybe digging into their own home equity) to help with the down payment. After all why not dig into that inheritance before mom and dad have the chance to blow it all on home support?

According to Genworth, 28% of first time home buyers in Canada received some money from their parents to help buy a home, and that percentage is higher in high priced markets like Vancouver and Toronto.

dp

Sources of down payment of first time buyers

So how does it stand in Victoria?  Did you receive help when buying your first or any house?  Did it materially change what you could afford, or allow you to get into the market when you couldn’t have on your own?  And did you have to pay it back?

Did or will your parents help with your down payment?

  • Nope, I/we did it all by ourselves (44%, 83 Votes)
  • Yes, quite a bit of help (over $50,000) (16%, 30 Votes)
  • Not expecting any help when I/we buy (13%, 24 Votes)
  • Yes, we received some help (less than $20,000) (7%, 14 Votes)
  • Yes, moderate amount of help ($20,000 - $50,000) (7%, 14 Votes)
  • No gift, but we got a loan (7%, 14 Votes)
  • Expecting some help when I/we buy (4%, 8 Votes)
  • Not sure (1%, 1 Votes)

Total Voters: 188

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232 thoughts on “The Bank of Mom and Dad

  1. Mon Apr 25, 2016 8:15am:

    Apr Apr
    2016 2015
    Net Unconditional Sales: 977 840
    New Listings: 1,295 1,413
    Active Listings: 2,641 3,945

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

  2. @ Introvert

    Why don’t you try to contribute something useful, instead of just criticizing people? You’ve already had one post removed from this thread for being obnoxious..

  3. Stated more bluntly, Introvert is a pedant who happens to have access to a dictionary.

    We all have access to dictionaries. Not all of us has access to specific real estate statistics.

    But I’m sure JJ appreciates your lame attempt to defend his credibility, AG.

  4. I didn’t say Health Care… I said health insurance costs as in when you go out of Province to the US your costs get prohibitive the older a snowbird gets… (what is a bong? )

  5. Can’t let them all in db, but keep hoping we get invaded by Americans to suck up the last of our health care system. But truth is most Americans are clueless that Canada even exists in the first place so I think your inhaling too much off the bong.

  6. “Criticism of others is thus an oblique form of self-commendation. We think we make the picture hang straight on our wall by telling our neighbors that all his pictures are crooked.”
    ― Fulton J. Sheen,

  7. Lots of daily predictions on this blog. Prices will go: Up, down, sideways, higher if walking distance to:(downtown/the village/the beach…), crash when interest rate increase…

    One thing is certain; in a couple years, thousands of people in Victoria and Vancouver will be saying: “In 2016 I…should have…/should not have…/could have…/wish I had…/wish I did not…/glad I did…/wish I could do it again…/I wish I did/did-not stay a renter…

    2016 will be a year to remember; for better or worse. 2018 will be a year for remembering and reflecting on what was (or wasn’t).

  8. Oh and a further reason, Canadian Citizens are persons non grata in U.S. brokerages even if you are a permanent resident..

  9. The thing is JJ that your opinions have to stand on their own merits and your posted opinions have, historically, been very very wrong year after year after year.

    I do recognize that your willingness to post local market stats has been great. Thank you.

    Stated more bluntly [Removed pointless name calling – admin]

  10. Here is a quick list of reasons one would choose Canada vs U.S.

    Cdn$ differential (cheaper maintenance costs from cdn perspective as well as lock in gains)

    Avoiding potential dual taxation (by just not buying south of the border)

    US centric looking abroad due to US$ strength currently (US citizens seeing bargains north of border)

    FATCA (restricting US residency to less than 4 months or suffer US Income taxation as well, a snowbird problem most not aware of)

    Health Insurance costs

    (Trump? not one I understand well…but gets publicity)

    Just a few incentives…

  11. Google it.. the fact is a weak Canadian dollar makes the maintenance costs harsh as well..so if the cdn$ is stuck in the mud as you say, it makes economic sense to spend those maintenance dollars north of the border as well…

  12. Do you know any db ? I read many never sold and kept the place. It was a once in a generational opportunity that had a brief time line with a lot of risk as many hoods were abandoned with squatters taking over.

    Selling a $300K average Arizona house you made $100K on after taxes, then buying Victoria at the top for $700K and a low loonie for many years to come doesn’t make any economic sense to me.

  13. The point is given international markets, a lot of considerations are going into the melting pot which makes conclusions questionable at best…(many perspectives… one greek’s garbage is a Brit’s treasure)

  14. So how much is tons Deryk? It’s already $700K for anything to walk to town. How much is plus $700K ? Could you put out the numbers for the average mortgage for $800 or $900K versus average Vic income ? Last time I looked they don’t add up for bank approval.

  15. dB,
    Most Victorians are not buying today because of low loonie, but because they think they are going to be priced out forever, or think they are going to win the lottery. Both major myths. Who else would line up with a hundred people day after day.

  16. Only time will tell who is right on this market. I’m predicting that anything within walking distance to downtown Victoria will be $700,000.00 “plus” ….by the time “next” spring is over. My predictions are based on the core Vancouver west side market and how junk, tear down houses, on small 33 foot lots, are selling for over three million dollars. I believe Victoria has tons of room to move up. If I understand Hawk…he does not agree. with me. Time will tell who is right. Talk again after the spring of next year.

  17. So HAWK? what is wrong with BUY LOW (Cdn$ RE) SELL HIGH (US$ RE) ??? huh..huh..?
    or anything US$ vs cdn$ ???

  18. “I prefer people who look for opportunities.”

    I do to…. as in undervalued versus overvalued opportunities which the latter is what you are married to. Buy low, sell high, is the way to make money, in case you missed that basic theory.

  19. There is only one of me as far as I know. I don’t have a JPEG – WordPress assigns one. I travel a fair bit so there will be multiple up addresses.

    Who told you opinions are never wrong? Hogwash. You are confusing personal preferences with prognostication. Your opinions on matters subsequently proven wrong are wrong.

    As far as your investment knowledge – clearly not your forte. Saying something is calculated incorrectly without identifying an error is easy to do. Be happy to admit an error if there is one.

    Best to stick with stats on housing in Victoria jj. If you want to talk commercial real estate I’d appreciate stats on that.

  20. Longview was at the end of a T intersection – bad feng shui, so long time on market. Happened a lot in Vancouver. There are ways to get around that issue (eg., building a stone wall) but those buyers want to avoid it.

    There was more than that. We were there during the open house, it looked very different from those pretty sale pictures. Obviously it was used as a rental before, even with the reno done on the main parts of the house, one can see signs of house abuse everywhere, as the reno was done to sell the house, not to really restore it. Even the small retaining wall in the front is about to fall down, and they didn’t bother to fix it: bad curb appeal. They put in 2 very small bedrooms in the basement, but no suite, and probably not easy to suite either. For other houses which we saw and sold for over asking, you can feel good about at least one part of the house, but not for this one. Lucky that they got $750K.

  21. “What I am saying is that I have an opinion but my opinion is based on working in the industry and yours is not.”

    Zing ! End of story.

  22. deryk,

    Your problem is you are stuck inside bubble land and that this is the “best place on earth” theory. What you call negative, most call risk management and a major part of surviving what will be an eventual serious market correction or outright crash. The odds are in my favor.

    You called for Vancouver to correct but Victoria won’t. So why will Van correct ? Because foreign money stops flooding in or starts selling. That will be caused by a world event via China. There could be other reasons but will be the main reason and all reasons will be “world” events, not just Vancouver. It’s happening everywhere incase you missed it.

    People who put on the blinders get sucked in at market tops,that’s a fact.

  23. Totoro, opinions are never wrong.

    However, wrongly calculating a return on an investment. Or not knowing the difference between a cap rate and an income multiplier, or the difference between the return on an investment and the return on equity are wrong. Things that someone in the industry would know.

  24. Totoro, they know that it isn’t easy and that’s why they’re pooling their money.

    The buzz today is all about crowdfunding and setting up companies to find properties for investment groups. Since they all have owned a house they consider themselves experts in real estate having studied Supply & the other 4 or 5 important things in school.

  25. what is jj doing on a bus?

    Collecting stats :).

    Nothing wrong with taking the bus btw. Smart choice.

  26. What I am saying is that I have an opinion but my opinion is based on working in the industry and yours is not.

    This must be the third time in the last couple of weeks that someone has pulled the “I’m right because I’m (insert credentials)” trick.

    The thing is JJ that your opinions have to stand on their own merits and your posted opinions have, historically, been very very wrong year after year after year. You also have no way of knowing that I am not engaged in work that involves real estate in a manner which exceeds your own level of expertise.

    I do recognize that your willingness to post local market stats has been great. Thank you.

  27. What I am saying is that I have an opinion but my opinion is based on working in the industry and yours is not.

  28. Entomologist, do you really believe that 54 houses for sale in Victoria City is normal?

    Or that one person just re-listed 15 condos that they bought in Stadacona Center just a couple of years ago. ie hoarding

    Now you say that supply is just one of four or five important factors. But how can you buy a house that isn’t for sale. You see supply is very important.

    That’s why an instructor in economics spends so much time teaching that a marketplace is determined by supply and demand – and not supply and four or five other important things.

    As for your record breaking sales. That’s more of a sound bite than factual..

    Victoria City had 118 house sales in the first quarter of 2016

    The first quarter of the year before the city had 93
    then 72
    75
    82
    72
    93
    78
    2008 had 101
    110
    110
    124 in 2005
    111
    108
    123 in 2002
    89
    85
    75 in 1999

    Not exactly an earth shattering record breaking increase – is it? Especially when you factor in population.

    You could fit all of the buyers in the first quarter over last year in a bus and still have empty seats.

    This is a supply problem which any agent will tell you. They have enough buyers but not enough product.

    Now change your name again and agree with your own statement.

  29. You’re the stat

    So basically you have a theory about the market that you are presenting as fact and your theory is that in the past five years investment home ownership has exploded and this is largely based on anecdotal evidence overhead on the bus etc.

    Maybe. Maybe not. If I had to bet money I’d say not.

    My guess is that in the last 6-8 months people in Victoria have been taken by surprise by the sudden swift increase in pricing. Before that prices were slightly declining or flat for about 8 years and there was more talk about a crash than an almighty surge. And during this time and there is no way that your average SFH in Victoria made any sense as a rental – not many condos either. People were not thinking prices would appreciate as much as they have and were concerned there could be a drop.

    Now this 29 year old guy who works in your office who has only owned a house for a year and he wants more and has set up a business with friends to do so. I hope they have 40% to put down, are prepared to pay a higher interest rate and 48% on any gains if they plan to buy through a corporation. If they haven’t set up a corporation I hope they are prepared to be at each other’s mercy should one of them run into money problems or get divorced. And where is his down payment capital and credit coming from given that he just bought last year? Your stories tend to lack enough detail to make any reasonable sense of them.

    I do believe that many younger folks will believe they can get rich quick in this market. I don’t believe many of them will have access to equity and credit and I don’t believe mom and dad are going to be as keen on a second investment property as they would be to assist with a primary residence. As far as anecdotal evidence goes, I know no-one trying to buy a rental property in Victoria right now. Pretty hard to compete in bidding war conditions with low inventory. I’m not sure what will happen next but we can probably look at TO and Van housing blogs for what happens when prices keep rising. Some millenials may leave for up island or the Okanagan if this happens.

    As for those cashing out of the Vancouver market, my bet is that if they are moving here they will have enough cash for a primary residence and a nice vacation place if they want one. I don’t believe that most of these folks – who will largely be 40 plus years old – will be looking to get into the real estate rental market.

    And JJ it is nowhere near as easy to get financing for a secondary property as it is for a primary. You won’t have enough for a HELOC in most cases and unless your income has risen you likely won’t qualify for a large mortgage on a second home. You need to run some numbers first before you post. Lots of free calculators out there.

    I don’t believe what is happening now is “hoarding”. I do believe there is commodification of primary residences that is happening because they are a good investment usually and the word has spread via internet and HGTV. The cycle we are in is likely part of a normal real estate cycle – I say likely because I’m not sure what impact foreign buyers are having and I know that TO and Van have been up for longer than what might be considered probable.

  30. Hawk clearly can’t stay focused. He jumps from one subject to the other. I was only referring to the collapse of Vancouver house prices in the sense that they are a bubble. I was not talking about a possible world economic crash. If the latter happens, then all best are off, and I would agree that most floating ships will suffer. There are always people out there who think the glass is half empty all the time. Those negative people always cut themselves short and miss out on great opportunities. Positive thinking people tend to see opportunities and grasp what is in front of them. It’s easy to tear something down. I happen to prefer people who build things.

  31. “The important question is why are they cashing out ? ”

    Hawk, good point, and yes it’s partly because they see it’s a good time to do it (take the profits, as a savvy business person would do, even if those profits aren’t at the exact market top).

    It’s also because, honestly, Vancouver isn’t the same city as it used to be. It’s not enjoyable to live in ghost town neighbourhoods where nice homes are rotting. Or drive into gridlock because they’ve built so many shoebox condos for the locals & they can’t all take Skytrain to work. It’s also depressing to hear young couples arguing/agonizing over buying tiny condos, while they stand a block away from a street of empty SFHs and Maserati & Lamborghini dealerships. It’s happening the burbs too.

    It’s also impossible to cash out & find a reasonably-size home (if they have kids, especially if they grow from 1 to 2 kids) in the same neighbourhood – even with $3M or $5M, because they get out-bid by a unseen investor in seconds, so they have to move somewhere where the bidding isn’t as fierce.

  32. When the market crashed in 81 it took no prisoners. Everyone went down, just like in the US in 2008. Market crashes don’t cherry pick, it will be a credit event where everyone gets burnt severely.

    Agreed. All rational thinking goes out the window in market crashes. Look at how rapidly prices declined in Victoria in 2008/2009. Did the GFC have any particular impact on Victoria to justify these declines? Nope. By fundamentals the market was the same before and after and yet we dropped some 15% in 6 months. Pure emotion.

  33. JJ – I don’t know why you’re still beating the ‘supply- driven boom’ drum. We’re at record numbers of monthly sales. Record, as in, never seen before. If sales were average with low MOI and climbing prices your thesis would make sense. But as it is, supply is just one of 4 or 5 important factors, and less important than overall demand, non-local demand, or market confidence.

  34. “One stream seems to be Vancouver-area executives cashing out and looking for country homes after an unprecedented injection of offshore capital has boosted the city’s home prices.”

    Vicbot,
    The important question is why are they cashing out ? They must know as “executives” that this is a bubble about to pop or they would be riding this make another easy million or two, like the bulls on here.

  35. “Surrey doesn’t have a tent city, or a sewage problem and it doesn’t take over five years to build a bridge over what is really just a big creek.”

    Victoria still insisted on buying garbage Chinese steel for the bridge even when the price of steel is in the tank and they still can’t make a quality product after rejecting it twice now. It’s a total joke.

  36. “Another anecdote: friends in Maple Ridge, 3 houses came up for sale on their street in the same week, all sold within 2 days – that used to be unheard of.”

    Vicbot,
    Just another sign of mania buying and market tops. Unheard of before things happen but everyone ignores them as they don’t want the party to end.

  37. Surrey is a very well run city. Unlike Victoria, the parks and streets are well maintained. And Surrey has a lot more parks, shopping and entertainment than Victoria. But it should because it is a city of 450,000 people while Victoria has 80,000. But maybe what it doesn’t have is more important. Surrey doesn’t have a tent city, or a sewage problem and it doesn’t take over five years to build a bridge over what is really just a big creek.

  38. @Katyusha – indeed I don’t have first hand knowledge of that sector, but I have heard the same story from several well connected people.

    I’m aware they don’t bring investors into Victoria, that they are the investment arm of the BC gov. (http://www.vancouversun.com/health/Public+sector+salaries+Investment+Management+Corp+dominates/10800107/story.html).

    What I’ve been told is that they are closing their non-Victoria offices and those jobs will be moving here. No idea where those other offices are.

    Could be totally incorrect…maybe you can shed more light on the situation?

  39. “I believe that Victoria will actually benefit if Vancouver pops. I know that idea might sound odd.”

    That’s truly funny. When the market crashed in 81 it took no prisoners. Everyone went down, just like in the US in 2008. Market crashes don’t cherry pick, it will be a credit event where everyone gets burnt severely.

    You can’t have a 4 times increase in debt over last 10 years versus previous 40 years and say “won’t effect us”. Last time I looked the RBC,TD, BMO and CIBC banks all look the same as in Vancouver and will all be calling in the same loans and mortgages.

  40. Interesting article, Hawk, on the Chinese economy. Just an anecdote, but a friend that travelled to China a lot in the last few years, and met with various people including gov’t officials, used to get very expensive gifts at every meeting. Now he gets nothing. No one’s sure why! New rules or lack of money (?) But something’s changed, the only thing is, it’s hard to tell when the money’s going to stop flowing out.

    Also, here’s the article about who’s buying the Fraser Valley:
    http://business.financialpost.com/personal-finance/mortgages-real-estate/how-high-end-vancouver-real-estate-buyers-are-commuting-by-helicopter-to-their-country-mansions

    “Evans is excited … about new revenue streams coming into the Fraser Valley market.

    “One stream seems to be Vancouver-area executives cashing out and looking for country homes after an unprecedented injection of offshore capital has boosted the city’s home prices. The bigger stream is offshore investors, mostly from China, who already own properties in Vancouver and are now looking outside the city.”

    Another anecdote: friends in Maple Ridge, 3 houses came up for sale on their street in the same week, all sold within 2 days – that used to be unheard of.

  41. I happen to believe that Victoria is a much better place than Surrey or Richmond, or even Burnaby for that matter. For one thing, Victoria has fresh air and is not seeped in pollution like the Fraser Valley. Victoria has a community. You can walk to the beaches, you can walk to the core of the city, or to the theatres or to plays. Try doing that in Surrey:)
    You don;t need to leave the island. We have everything here. The money you save with lower mortgages allows a person to travel the world. Victoria is not just about tourism. It has a high tech industry to be proud of. Builders can’t keep up with the demand for the people flooding into the area. It is also the capital of BC making it a very attractive place to live. I should say that I believe that Vancouver prices are a bubble and will pop. They are at least two million dollars more than the same comparable house here in Victoria. But what will that mean for Victoria? I believe that Victoria will actually benefit if Vancouver pops. I know that idea might sound odd. But think about it. Vancouver people are also hesitant to sell their house because every year they hold onto it they make another hundred thousand dollars or more. So why would they sell? But…. as soon as it is obvious that the prices are going south then I believe that their will be a large flood of Vancouver people selling their houses before they lose even more money. Those people will then be moving out to the outlying areas and Victoria will get many of those people coming here.The price difference is still so massive.
    So at the very least, I believe that Victoria will not get dragged down and will likely be just fine. And no…I would not like to live in Nanaimo because I value clean fresh air so much. Pulp mills are terrible.

  42. You’re the stat. What makes you believe that you are the only person to buy multiple properties because the low interest rate allowed you to do this. You don’t believe that you were given some god like super investing power over others. Get on a bus and listen to people talking about their rental investments. You can’t go anywhere in this city without running into a conversation about real estate. My new neighbor bought his house last year and he and some others at his work have already set up a business to buy rentals. He is 29 with a toddler and has only owned a house for a year and he wants more! Because they want to get rich – quick, and that’s through real estate.

    This is a City mania so you can’t go by some dated stat about all of BC .

    Sometimes there are no stats available but that doesn’t mean it isn’t happening. Instead of being a contrarian voice, clean the wax out of your ears.

  43. Never before have so many hoarded real estate,and so much real estate, for so long.

    Not this again. Where are you getting this from? Is there as stat out there to back it up? The 2011 stats can stats (latest I could find?) show that about 9% of BC homeowners own a second home – usually a cottage – this percent has only increased by 1% in the past ten years.

    What has been climbing is Canada’s population and the overall rate of ownership of a primary residence:

    https://www12.statcan.gc.ca/nhs-enm/2011/as-sa/99-014-x/2011002/c-g/c-g01-eng.cfm

    http://www.statcan.gc.ca/pub/91-003-x/2007001/4129907-eng.htm

  44. Is this the catalyst to the Vancouver market finally taking a down turn ? A three month down trend is worth noting. Would explain the last three months of panic buying.

    China Stanches Flow of Money Out of the Country, Data Suggests

    “But new data suggests China has stanched, at least for now, the flow of money that had been pouring out of the country.

    Chinese officials said on Thursday that the country’s hoard of foreign exchange reserves grew in March for the first time in five months.”

    http://www.nytimes.com/2016/04/08/business/dealbook/china-foreign-exchange-reserves-rise.html

  45. @JJ do you think per capita that Victoria is showing more real estate hoarding than in other Canadian cities? I suppose Vancouver has the most jaw-dropping examples. I have lived here 4 years and my observation has been that more people here own multiple properties than I’ve previously encountered. I attributed that to it being a destination city. I have lived in cities dominated by universities and I didn’t see this same behaviour even though there was a population who would be happy to rent from the multiple-property owner.

  46. we don’t know if the return on your equity was any better than anyone else’s return. Because you can only compare your return to similar investments that used similar leveraging.

    Um, no. JJ you need to brush up on this topic before posting. It is not that complicated and you can compare the returns of leveraged or unleveraged investments.

    Let’s put it simply; you only have so much money in life. When you are looking at investing this sum what matters is the cash on cash return whether you use leverage or not.

    There is no need to confuse things by stating that someone has to calculate the IRR for a leveraged or unleveraged investment – he has sold his condo and knows the ROI. He gets to use this and he can calculate the percentage of ROI for something like an unleveraged stock’s return in the same time period as these are known stats – and are likely about 7% annually over time following the CCC for example.

    ROI of 100% cash on cash tax exempt in 18 months is an excellent return far in excess of most investments assuming he accurately deducted all costs of ownership including the sales costs that would have been in excess of what it would have cost to rent.

    If you are getting 7% in a TFSA on $35,000 in 18 months you should be able to cash out and have $38,675 in your pocket.

    If you are getting 100% on $35,000 in RE after deducting all costs in excess of renting you will end up with $70,000 in your pocket.

    Where it gets more complicated is trying to determine what your ROI is prior to final sale of your primary residence. Just like it can be difficult to accurately predict ROI on stocks in the future.

    I now use 4% gain on primary residence purchase price annually and 7% on stocks to estimate ROI. It is clear that 4% on a primary residence will return far more than 7% on stocks in an appreciating market due to the use of leverage – especially in the early years. Here is a very simplistic calculation – the rent v. buy and costs of sale are not included.

    House cost $300,000. Down payment $60,000. Prices up $12,000 the first year. 4% value appreciation becomes 20% ROI for cash invested. Reverse for losses in a down or flat market.

  47. I talk with enough Victorians to understand that most will never sell their homes and that the only way to get rich is to buy even more real estate..

    There seems to be nothing that will convince most of us to sell these days.

    But that has also happened before in every city in the world in every generation. Yet something always happens to change that among home owners.

    And those cities where the people have hoarded the most real estate will have a lot farther to fall.

    Never before have so many hoarded real estate,and so much real estate, for so long.

  48. When you start to see the bigger picture that the price increases are happening everywhere the light bulb comes on and you see that this can’t be migration alone.

    This isn’t a demand driven upturn this is supply driven.

  49. Vicinvestor1983, we don’t know if the return on your equity was any better than anyone else’s return. Because you can only compare your return to similar investments that used similar leveraging. If you want to compare your rate of return to other non leveraged investments then you will need to determine the Internal Rate of Return (IRR) of both investments.

    The thing about looking at a cash on cash return, as you are doing, is that the more you leverage the investment the greater your return on the equity. But you also have greater debt to be repaid and costs maintaining and expenses in selling that investment. It seems ironic in that if you had paid cash for the same investment your rate of return would be shown as lower.

    If you want to sell condos or Mexican time shares this is what you show to the tourists to get them to buy.

  50. Vicinvestor, there is a huge Asian presence in all the malls in Victoria for a long while now. Maybe the ones you saw on the ferry just came back from holidays. You should go ask them if they are house hunters and report back. 😉

  51. @SidekickSpliff

    BC Investment Management Corporation isn’t focused on bringing investors to Victoria. They manage investments of large public sector clients (mostly pension funds) and while their salary structure tends to be higher than those set by the Public Service Act, the salaries reflect the market demand for the skillset and experience. Not even close to 500 employees in the entire organization. Not to be nitpicky, but my hyperbole radar is finely tuned.

    Nice to see you contributing to the blog.

  52. “if our market is like white rock/Surrey/Abby, then watch out!!! Prices in those areas have skyrocketted. Tswwassen prices, for example, rose 40% in one year”

    Agree it’s happened in Burnaby and prices are also climbing as far out as Maple Ridge

  53. I think some of the new listing are being priced closer to 100k – 200k over prices so we’re going to see less and less over list. i.e. MLS #363640, 1830 Chandler – list $998,800, assessed $656,900.

  54. “Why did this one sit while others sold?”

    Longview was at the end of a T intersection – bad feng shui, so long time on market. Happened a lot in Vancouver. There are ways to get around that issue (eg., building a stone wall) but those buyers want to avoid it.

  55. Btw, I just sold my condo purchased 18 months ago @ a 16% increase. ROI with my partially borrowed down payment = 100%. The condo sold in 2 days. I moved up to a large lot detached house in the core. I am neither a bear or a bull, but, rather, a long term investor with zero belief in market timing or predictions. I see why many believe BC real estate is in a bubble (the fundamentals are insanely off), but foreign capital is still piling in.

  56. @ Just Jack: if our market is like white rock/Surrey/Abby, then watch out!!! Prices in those areas have skyrocketted. Tswwassen prices, for example, rose 40% in one year!! I have no idea where the market is heading, but sitting on the am ferry to Victoria today, there is a huge Asian presence! I know this is anectodal evidence, but I think our market is about to be hit with HAM.

  57. It was a great time to sell for us. Money went into the account and back out within a few days. Would not have had such an easy sell a few years ago. This has made my purchase possible… Holding would mean more appreciation without doubt but also more debt and more responsibility. I’m about to build a house, I want less responsibility.

  58. Victoria is not a first tier city. Surrey, Whiter Rock, Langley and the rest of the Fraser Valley are more typical of our market than Vancouver.

    For us to ever be like Vancouver would require require the Fraser Valley to be like Vancouver too. That’s a lot of territory and a lot of houses. Much, much more than we have here.

    While some Vancouverites will come to Victoria, most will be going to South Surrey – White Rock, Crescent Beach and Ocean Park where they can still be close to family, friends, and jobs and not have the biggest draw back of all of living on an island. Where it isn’t just occasionally getting on and off the island but the isolation from friends and family on the mainland that rarely visit because of the time and expense. That’s why a lot of those that are moving here today will be moving back to the mainland in a couple of years. They want that connection again. We all have the nostalgia of going home again.

    So you see there is a lot of other equal or better choices for Vancouverites. And that is going to limit our price appreciation. Once our prices are equivalent to Surrey then the surge of out of town buyers will slow.

    Then there is basic economics. If droves of Vancouverites are leaving for the Fraser Valley and the Island what is going to happen to the number of listings in Vancouver?

    Of course most Canadians think that foreign investors would snap up those lower price Vancouver homes. But they don’t. They don’t invest in falling markets. There investing strategy is quite simple – they follow the herd. And experienced Canadian investors do not invest in properties that have a negative cash flow. Eastern investors it’s appreciation for western investors it’s cash flow.

    As for money launderers. Vancouver is just a bank. Move the money from illicit sources into Vancouver real estate and then finance that real estate to buy investments in another countries. Through placing and layering you clean the money and obscure the original source. Then you close the bank by not making the mortgage payments. When it comes to money laundering, Vancouver is the whore of the Pacific Rim.

  59. According to my pcs there are already substantially fewer unconditional sales going through all this week – and quite a bit more inventory has been added. A realtor with better access would certainly know more. For all I know everything added could already be sold, albeit with subjects. I’ve seen quite a few properties go for below ask as well – and if I’d still been in the market a few I would have bought at the final price – a few weeks / month ago that was rarely the case. For a while just about everything was selling (as long as it was SFH).

    A few weeks ago when I was closing on my house I’d spoken to several realtors who felt the market was turning from craziness to just very busy. Marko was still saying it was crazy at that time though, so I’d be interested to hear his thoughts.

  60. “What is BCSEC? I know my share of public and private sector acronyms, but that one I’m unfamiliar with. 500 “executive-level” jobs? That’s greater than ICBC, BC Hydro and several other Crown Corps combined. Perhaps you mean management and/or professional jobs? I’m curious.”

    More troll potential. I read that the building will be a combo or private and government with the latter being moved from older buildings, not some massive new hire. BC Securities Commission main digs would be in Vancouver where the financial action.

  61. “If I was planning to sell I would hold on for a bit longer assuming you’re not buying back into the same market.”

    Again, with today’s click of a mouse, mobile phone updates,etc internet world, if inventory started to suddenly rise overnight, do you not think agents would be pressuring their clients to price differently, or hold off buying ?

    No one thinks longer than two seconds in this market and a sudden change in inventory could have a massive effect. Been there, done that.

    When is $100K, 200K or more, and way above this years assessment not enough cash ? You are relying heavily on the greater fool from here on in.

  62. “Now is actually “not” the time to sell. ”

    Why do you think inventory is so low ? Sellers are holding on the last year thinking it’s going higher. AKA greed.

    “No one really know for sure. But why would you sell when prices are about to go through the roof into uncharted territory???”

    Exactly, no one knows for sure, then where does your conviction that prices are “about to” going into “unchartered territory” when they already are. $200K overbids is not enough profit? Another classic market top sign.

    “While Victoria will likely never be like Vancouver, it is still incredibly cheap ”

    Not incredibly cheap to local incomes. Victoria is cheaper than Nanaimo, and Nanaimo is cheaper than Courtenay. So what ?

    You are correct that Victoria will never be Vancouver, it has a large body of water to cross to get to that is not cheap and can be a big hassle, and an economic center that is nothing like Vancouver that relies heavily on government and tourists.

  63. I know so many people in 500-700k houses that are anxious to move up into that forever home

    Since when is $500-700k not good enough to stay in?

  64. Now is actually “not” the time to sell

    Agreed. A hot market means prices are increasing. Yes it could change, but not without more inventory and fewer sales. If I was planning to sell I would hold on for a bit longer assuming you’re not buying back into the same market.

  65. Anyone know what 4121 Longview sold for? An example of a gordon head place that was on the market for a few weeks before selling.

  66. Derek, that is one perspective. The opposite view is that there are global signs of a serious downturn looming. And Vancouver is definitely a bubble. So if we are depending on a bubble not popping for continued appreciation, what does that make Vic? Son of a bubble?

    For example, changes in federal foreign ownership laws or the Quebec investor citizen program could crash Vancouver. I don’t think Victoria would crash as a result, but it would certainly pull the rug out the current exuberance.
    Note- formerly fireecology1, I’ve been inspired by all this talk of physiologists and dermatologists, and will henceforth be the entomologist.

  67. Interesting comments on this forum. It’s funny to hear people say such things as “there’s expensive and then there is stupid”. I remember a conversation I had with a friend in Vancouver a couple of years ago. I said….wow…well over a million dollars for your old broken down bungalow…you should sell and move to Victoria. They said…no…something is going on here in Vancouver that we haven’t experienced ever before. My friend didn’t sell …..and now their house is worth almost three million. So when I see people here saying $600,000.00 or $700,000.00 is insane…….I keep thinking of my conversation two years back. While Victoria will likely never be like Vancouver, it is still incredibly cheap when compared to Vancouver and Victorians don’t seem to grasp that. Now is actually “not” the time to sell. Because the prices have really just began to rise. That’s only my opinion of course. No one really know for sure. But why would you sell when prices are about to go through the roof into uncharted territory???

  68. @Sidekick Spliff

    What is BCSEC? I know my share of public and private sector acronyms, but that one I’m unfamiliar with. 500 “executive-level” jobs? That’s greater than ICBC, BC Hydro and several other Crown Corps combined. Perhaps you mean management and/or professional jobs? I’m curious.

  69. I’d say it’s already beyond nasty. People I know gave up looking a few weeks ago. There’s expensive then there’s stupid.

  70. Yeah, the more the market goes up the more houses will be listed, and then more people will be able to move upwards. I know so many people in 500-700k houses that are anxious to move up into that forever home, but are delaying till more inventory. So the market has a long, long way to go to unwind from this backlog. Maybe 2-4 years? Certainly not months.

  71. My gut feeling is that it’s going to get downright nasty out there. You have demand apparently rising from the lower mainland, with people cashing in and moving over. If you’re retired or can get enough for your house, this seems like a no-brainer. This is pushing up the price. Then you have locals watching the prices rushing up and desperately trying to get in ‘before it’s too late’.

    I’m watching a few houses in my area which are priced insanely high for what they are, and if they go anywhere near asking I’ll consider throwing my primary residence on the market.

    The rental market appears to be red-hot as well.

    So if Van is migrating to Vic, then where will Vic migrate to?

    Oh…and don’t forget the BCSEC is bringing in 500 executive-level jobs over the next couple of years (the building across from city hall currently under construction will be their new home). I would not be surprised to see 1 – 1.5M homes really heat up. Expect even more new construction demand.

  72. Hawk,

    The article is covers some things but it is missing the three biggest factors of CMHC intervention in the market, low interest rates and speculation by ordinary citizens.

  73. And the one that won the auction, in other words the one who set the new market price, was from Vancouver.

  74. 1 from Nanaimo, 3 Lower mainland, 1 Vic, 3 unknown. Of the unknown, one was US-based I think. The other two were too low and the realtor didn’t bother forwarding the offer.

  75. What we need is an interim update on the stats for foreign buyers. Would have to see how close it can get to the VREB methodology.

  76. Bought my parents place, also in SOB (private sale). The house I sold was a rental so I’m not under the gun to re-buy.

    I gotta say it appears (from my sample of 1) that the hot van money is spilling into Vic. Can’t help but think this is going to continue until the Vancouver situation changes.

  77. Lurked this blog for years. Just thought I’d chime in that I sold a house in SOB this past week. Successful buyers cashing in and moving from Vancouver. Of the other offers, more than half were non-locals.

  78. Chuckle!

    Lately, I had been feeling some privileged guilt about the large downpayment help I received from parents. I also felt I was really ‘working the system’ by paying my disabled/unemployed spouse $20/week ($1040/year) to audit my books for me. HAH!! Thanks for putting things into perspective for me RH! 🙂

  79. First the imaginary interior designer, now the imaginary “self made” trust fund baby. Do I detect a pattern? The trolling is actually kind of entertaining as long as you don’t take it very seriously.

    Some seem to be taking RH a little too seriously. First rule of financial happiness – “Thou shalt not envy imaginary self reported blog wealth”.

  80. Oak Bay has currently 44 homes for sale. That’s about normal over the last decade.

    The least costly property is along Florence street at $600,000. It has now been listed publicly for 16 days but could have been exclusively listed since the end of March. It’s a small house on a 6,000 square foot lot that most agents would call lot value.

    However, these old timers rarely get torn down and are just refurbished over and over again. And that’s what happened to this one when it was bought for $530,000 in July 2009 and for $495,000 in May 2007.

    This is a home that falls between several markets. Too small of a home for a middle income family, too costly for a first time house owner without a suite, not enough potential income for an investor.

    Prices quickly rise from there to 15,000,000 for a 15,500 square foot home on 2.5 acres of waterfront. The property has had a few price reductions since it was first listed in 2006 at $25,000,000. The second highest asking price is $6.5 million in Oak Bay.

    Half of the homes in Oak Bay are listed between $600,000 to 1.5 million. And the average asking price is 2.4 million.

    Mid month stats showed a strong demand from buyers that purchased 40 homes between mid March to Mid April from a low of $690,000 for a 2000 square foot home on a 6,000 square foot lot to 6.2 million for a 10,000 square foot home on 2.25 acres. Again a home that was first listed in April 2007 at $15,000,000.

    Second highest price was 2.6 million. The average sold price is $1,350,000. The median was 1,072,000. The median price got you a renovated 2,400 square foot character home on a 6,250 square foot lot in South Oak Bay. Median days on the market to hook a buyer was 11.

    Oddly enough I find Oak Bay to be a better buy these days than Fernwood/Oakland. But that’s what happens when you have too few listings in one area, people become irrational and get caught up in the bidding wars without objectively looking at the rest of the market.

    They simply can’t see the forest because of the trees.

  81. “Totoro you should be a physiologist”

    I noticed that too, and chuckled.

    No, totoro. I think you should be a dermatologist.

  82. Just a note on IP addresses: Telus offers Dynamic IP Address allocation (especially for mobile devices) as well as Static, so maybe I’m missing something but I don’t understand the focus on IP addresses shifting – that seems reasonable.

    On the other hand, it’s really pompous & unnecessary to discuss how you get your family to buy you a fancy house at age 21, but who knows, maybe it happened.

    The lack of values in the overall attitude are sad, though, imo. You can have both great wealth and great values, but if you just have great wealth, it means nothing. From the discussion:

    “We also use leverage and have bought 6 other properties in Oak Bay, mostly in 2013-2015 in the 680-720k range and rented out … using the one really easy tool of leverage in the housing market to gain access to wealth.”

    Leverage = Mortgage x 6 = Over-Extended. (Sorry, not wealthy, not diversified)

    “Our house has gone up about $800,000 in value, and our suite pays for our prop taxes and most other bills.”

    In my experience, people who are wealthy, and/or have corporate offices, don’t need or want suites in their homes due to lack of privacy.

    “Hard Work is usually a value statement of the working class. I was taught to be highly effective and focus on developing the mind. So while we only “work” a few days a week, our work is highly effective and productive.”

    Honestly? that really sounds like a dolt winning the lottery (or maybe Kanye West is posting here?). I’ve dealt with CEOs all my life and they all used the term “hard work”

    Malcom S. Forbes: “You can easily judge the character of a man by how he treats those who can do nothing for him.”

    Warren Buffett’s kids:
    http://www.dailyfinance.com/2011/06/17/fathers-day-what-warren-buffett-gave-to-his-kids-values-not-billions/

    Says Peter Buffett: “I watched someone who transferred values to me, and not wealth.”

    “My dad didn’t believe in misallocated capital and he didn’t believe in inherited wealth,” says Peter Buffett. “The Berkshire Hathaway stock was my big head start and it was kicked in my head that it would be all I would get. People wrongly assume we [kids] get piles of money from our dad.”

    Indeed. Warren Buffett in 2006 pledged $37 bilion to the The Gates Foundation, earmarking the vast majority of his wealth with the nonprofit and not his children”

  83. “Totoro you should be a physiologist”

    Noun 1. physiologist – a biologist specializing in physiology
    biologist, life scientist – (biology) a scientist who studies living organisms

    Yeah no more of this silly financial stuff – let’s start talking science!! lol

  84. Jack,

    I noticed that the listings for SFH in Oak Bay have jumped by 11 in past 2 days. Does that coincide with your numbers ?

    Saanich East seems to have jumped by about 20 as well.

  85. R.H. for the last week detached houses in the core have been added at the rate of 1.3 for every one that sold.

    Back in February the ratio was about 0.7 new listings to every home that sold which led to the auctions and over asking price bids.

    Or because so many enjoy the over asking prices for houses in the core.

    The percentage of over asks is declining for houses in the core.

    In the last week we are down to 57% over asking
    25% sold for more than 10% over asking
    9% sold for more than 20% over asking.

    That translates into fewer properties last week selling for a hundred thousand over asking price.

    And that’s why I said the market for housing in the core is cooling. Not because of 4 sales.

  86. First house was purchased 12 years ago, same as other gifts noted. New 2004 house in Oak Bay has gone up more then 20% since then nan.

    Totoro you should be a physiologist, loved the guesstimates/passive aggressive “analysis” you do on people here. Kind of in the ball park though, impressive.

    Just Jack, 4 houses not sold in a day doesn’t mean market is cooling. Love your data though, would love to see more of that then anecdotal musings.

    New VPN techniques do IP hopping to get around Netflix dasmo, before static IP’s were logged into Netflix databases, so a few good ones are spending more time/money moving IPS around. Reddit it.

  87. @ totoro- I’m am aware of the tax act- I have a financial designation or two;). I dont remember questioning the validity of RH’s strategies. Only that he/she is full of bs.

  88. 19 new listings for houses yesterday in the core versus 15 sales or 1.3 new listings to sales.

    For condos in the core the new listings to sales ratio was 11:16 or 0.7 new listings to sales.

    The detached house market in the core seems to have cooled a bit in the last week while the condo market is getting hotter.

  89. What will it take for the foreigners to starting selling Vancouver off ? How about a China financial crash fueled mainly from real estate and easy credit.

    George Soros Warns “China Resembles US In 2008”, Hard Landing “Practically Unavoidable”

    “Speaking at an event in new York this evening, Soros commented on “troubling developments” in China, the anti-corruption drive’s impact on capital outflows and the real-estate bubble “feeding on itself.” His conclusion, rather ominously, was that despite all the naysayers and fiction-peddlers, China “resembles US in 2007-8,” before credit markets seized up and spurred a global recession.”

    http://www.zerohedge.com/news/2016-04-20/george-soros-warns-china-resembles-us-2008-hard-landing-practically-unavoidable

  90. Leo, you spend that money living a Mustachian lifestyle…plus you are talking after tax right? It also means no personal savings. Certainly no RRSP savings since you will have no room. How does this work with new cars for everyone as well? The corp can’t buy those…. It just doesn’t add up. The strategies are there yes… but saying it’s easy, just set up multiple lucrative businesses, get your parents to pay for everything, pick up half a dozen million dollar homes in OB and rent them out, then pay yourself nothing and get your corporations to pay for everything is a little preposterous. It did remind me to talk to my accountant about setting up that family trust though… When I went over this it seemed like the optimal split was to pay a salary of around 30k to max out benefits, then the rest in dividends as needed. Too much money in the corp leaves it susceptible to the corps liabilities so there is some risk with keeping your entire nest egg tied up into it.

  91. RH has made no attempt to defend the troll allegations.

    House gone up $800k. Assuming your parents didn’t give you a house before you were at least done your undergrad ( 21 years old in 2007) the only increases since then in SOB were this year, @ 20% max. 800k is 20% of 4,000,000. What kind of parents/ grandparents ‘pool’ money to buy a 21 year old a $4,000,000 house with a suite in it? Property tax on $4,800,000 is close to 48,000/ year. There aren’t any suites that go for 4,000 in 4.8MM houses, let alone 4,800,000 houses in south oak bay to begin with

    Conclusion? Troll.

    Can we get back to real estate now?

  92. “As for the amounts of 16 to 22k, that could work. That is 32 to 42k annually for the couple which is what we spend if we factor out daycare and mortgage”

    Not really. Add in 2 kids in private school, a nanny, some holidays in Whistler and Hawaii, a couple of German cars, expensive restaurants, high end furniture, TVs, computers…. Easy to spend 200k each year without really thinking about it.

    That’s why RH’s story doesn’t add up for me. Most wealthy business owners pay enough out each year to cover their expenses.

  93. Yeah I don’t see anything wildly out of line with the strategy except odd conflicting stories about R.H’s views on money. Everything was handed to them on a silver spoon but they consider themselves self-made. They make 800 K but are concerned about repair cost of a vehicle. They brag about the lifestyle of the rich and then say how humble they are and how dirty. They say they exploit the system to get low income subsidies and then brag about how many taxes they pay.

    The basic strategy of hiding income in the corporation is just that: basic. Not exactly new information.

    As for the amounts of 16 to 22k, that could work. That is 32 to 42k annually for the couple which is what we spend if we factor out daycare and mortgage

  94. I don’t believe or disbelieve anything until there are enough facts to do so. R.H. comes across as egocentric and self-oriented and his stories are reminiscent of VV in their braggart style. However, VV appeared to have a motive to create the kind of hype talk she did – it might have benefited her a bit if she owned a home in Oak Bay she wanted to sell. As of yet I don’t see a motive for R.H. other than a possible personality disorder.

    What I do know for sure is that there are very wealthy families using these tools. Families that operate as a unit running multiple businesses and making full use of a holding company with a trust to which children are added as soon as they are born. Their earned income, and personal tax rate, remains low while they live in their paid off homes and they continue to buy assets through their corporations. The families I know that operate like this are of Asian or Indian descent. The more individualistic approach taken in many western or European countries doesn’t usually lead to this level of collaboration in my limited experience. I’ve always wondered why Canadians don’t work together this way as it allows everyone to move forward faster.

    Nan, the income tax act is long, but there are professionals who have mastered wealth management strategies and quite a few of them publish summaries that can be referred to Heck, some people find it fascinating and challenging to do tax planning. These folks advise their clients of changes in the law or proposed changes in the act on an ongoing basis. And I wouldn’t call the use of holding companies and trusts “basic tax strategy” because they are not. There are lots of rules and you need professional advice generally to have these strategies work properly.

    As far as credibility goes I do find the claim that RH is second generation Oak Bay a bit sketchy. His posts point to being ESL and his English is more consistent with having been learned as a teen. I’d also agree a “top” tax lawyer in Victoria does not charge $1000/hour.

    In response to the statement:

    this is 100% legal, why not use it

    I’d point out that there is a difference between something not being unlawful and it being unethical. The use of subsidized benefits by the very wealthy is not, imo, something to brag about but more like an unethical use of a system that has not planned for the one percent – or the very wealthy Chinese folk now investing in RE for that matter.

    And that is probably enough talk about it really. If RH’s story is true he is in the one percent and his strategies don’t work for the rest of us for the most part. His “success” depends on the accumulated capital of parents and grandparents and he doesn’t realize the work required to accumulate enough capital in Victoria to buy a home without this type of family money because he has not had to do it.

  95. RH is an inflation stoker. They are hired by the illuminati to go onto blogs and talk about everything double its price like its normal…. I have a couple businesses and can’t seem to pay myself under 80k. Then again my corporation doesn’t buy my groceries…. thats illegal by the way….

  96. I’m not sure why so much angst, just posting basic tax strategies and get tall poppy syndrome’d here.

    Your pattern of posting is similar to the last troll we had on here. So either you are that troll, or you just like to brag and come up with questionable stories in very similar ways.

  97. It’s not a financial forum, it’s a real estate forum. (Didn’t you just say you searched for housing in Victoria and this website popped up?)

    Whatever, Totoro can choose to believe your tall tales (There’s a tax accountant that charges $1000/hr in this town? Really?) but I do not and I suspect others don’t either.

    Things are never as simple as “basic tax strategy”. If you’ve seen how thick the Income Tax act is (hint it’s 3000 pages long), you wouldn’t say anything so ignorant. Oh wait, we are the “ignorantis” around here. So sorry. My bad.

  98. Hmm, not sure why the different IP addresses, I am using a paid secure VPN hard wired to my modem (Netflix ;-), maybe that is why the IP hopping.

    Not sure about you Leo, but first time posting today. Site shows up number one for anything housing in Victoria so you are bound to get a few of us newbies coming here.

    I’m not sure why so much angst, just posting basic tax strategies and get tall poppy syndrome’d here.

    You are welcome!

  99. R.H posted from 5 different IPs in one day… Must be from the 5 corporations that he/she has.
    Man some people have a lot of time on their hands…

  100. It’s shocking how on this supposed financial forum how only one person knew how our strategy worked and realized I was talking the real deal, not some made up joke. This is why the rich get richer, and I’m sure Totoro is richer then 99% of readers on this blog.

    Of course I know you are talking “the real deal”. I just hope that you understand if we all try “these strategies”, there would be no more social benefits left to take for anyone. I am not talking about the government, but the real low income families who do need help. If you are really “rich” and “smart”, you would care, or do you?

  101. Edit: if you have say 4 fam members can transfer 800k exempt to them also, for example.

    Then they can gift you the funds back afterwards thanks to lax estate tax laws.

    It’s really quite amazing what you can do, and don’t aspouse morals on me, I guarantee you I generate and pay more tax via my corps and employees then you do via income tax. I also generate income from outside of Canada into Canada, therefore making me a net provider of this great country.

  102. Yes Totoro, you are spot on in almost all regards.

    Corp within Holdco and Trusts. Can do all kinds of fancy things. The reason no one on this board knows about these strategies is they haven’t paid $1,000 per hour to be advised on them.

    I’m quite impressed how Totoro knows these details, she/he is obviously financially literate.

    To all the other haters/ignorantis on this board, please go see a tax lawyer and get setup properly.

    It’s shocking how on this supposed financial forum how only one person knew how our strategy worked and realized I was talking the real deal, not some made up joke. This is why the rich get richer, and I’m sure Totoro is richer then 99% of readers on this blog.

    Again, spend a couple years educating yourself and learn the tricks.

    Spot on re 800k cap gains tax, spot on re houses in hold co, spot on our exact ratio to collect benefits (this is 100% legal, why not use it), spot on re multiple corps in different categories to be able to write off almost everything, why have one Corp when you can have 3 or 4?

    Trusts are a beautiful thing. I’m amazed no one knows about the 800k cap gains… AG, why the heck are you paying so much in tax, go get organized instead of ignorantly getting angry at something you don’t understand.

    Rest of you, listen to Totoro. You can transfer income via holdco to kids and family members, there is also 800k per family member within a Corp also, so you could do a 3.2m tax free one time exempt once you build enough within Corp or sell. that’s a lot of tax free income.

  103. Come on Hawk, it’s in the ‘up and coming’ Quadra Village, just like the listing said 😉
    lol drug walk, good imagery.

    Anyway I’m pretty sure that spot is no more than a block from the village strip, and is in the exact location of Quadra Village days. So if it’s not in the village I’m not sure what is. And I’m still waiting to see better priced comparables in better locations.

  104. Ash,

    It is bad, Esquimalt ranks higher than that area. Wark St is not Quadra Village, which is just another dumb real estate marketing term.

    Everything is a village or a “walk” in order to hype up a dumpy area of town. Might as well call it Blanshard Welfare and Drug Walk. A coffee shop does not change the socioeconomic make up of a hood.

  105. Okay done the tax talk. I know I’m probably boring many people.

    Nope. I find tax talk interesting when it is applied to long-term planning.

    Wasn’t RH’s purpose of reporting low income is to get the social benefits based on his/her post

    Yes, agree. However, that is not hiding assets or not reporting them – the tax system permits this behaviour currently.

    No family can live off $22k befor tax

    Logically, the cash must be coming from these very successful businesses that he is bragging about.

    Nope. He stated that he was gifted with a home from family and has a paid off car. At this income level they will get CCTB of $1067 per month tax exempt with if they have 2 kids under 6. $22k income between two adults and there will be almost no tax payable. That leaves about $3000/month after tax which is doable. Properties bought through corporation and there will be no reportable income personally or impact on CCTB.

    but eventually, the money has to come out,

    No, it doesn’t. Corporations can live forever and keep buying assets and be transferred to heirs. I agree the gains within the corporation on passive income (investment) will be taxed at the top tax rate but the initial investment will be at a tax preferenced rate and there is the possibility to do both a holding corp and a family trust and transfer wealth to lower income family members.

    he really is deferring a tax bomb, as AG has said. And if he’s only working here and there, then isn’t he in a sense, in early retirement?

    Yes, he is in early retirement sort of. I don’t agree there is any tax bomb with proper planning. There is the possibility of intergenerational tax planning and wealth transfer. He could buy a shopping mall or anthing that grows the assets significantly and requires a corporate entity for liability reasons. At the very least something or multiple businesses that can be sold later for the 800k capital gains tax exemption 🙂

  106. Granted, there’s probably quicker access to hard drugs (if that’s your thing) than on Oak Bay avenue, but we find it adds character and builds community.”

    They should put that in the real estate descriptions for properties there. “Walking distance to hard drugs.” Could be a selling point.

  107. I’m looking at a tax return right now of a guy who’s making over $150k in his holding company, and having to figure out the best way to allocate $140k in dividends between him and his wife on top of the CPP, OAS, and RIF they are collecting. Why do I need to do that? Because that’s how much he withdrew from the company to support his lifestyle. So now he’s in the top tax bracket and getting all his OAS clawed back. (And he’s probably going to be pissed about that, too.)

    Okay done the tax talk. I know I’m probably boring many people.

  108. Too funny Dasmo! You left your comment while I was going on and on with mine. We are of the same mind on this for sure. 😉

  109. RH has said “Our incomes are declared at 16-22k per year so we qualify for all the great discounts at that price range. Our Corporations however make 200-400k per year each.”

    Totoro, I am pointing out some inconsistencies in his statements. He claims to only declare 16-22k a year, however he also doesn’t hide the fact that he’s living a very comfortable life. How is this funded? Logically, the cash must be coming from these very successful businesses that he is bragging about. Draws from corporations need to be taxed either as salaries or dividends, otherwise the shareholder loan is going to be in a debit situation. Leaving retained earnings in a corporation that qualifies for the Small Business Deduction is great and does get taxed at 16.5%, for now, but eventually, the money has to come out, and having a high income when you are over 65 and getting your OAS clawed back is something a lot of seniors like to avoid. Also, RH has stated he is only 30 years old. Tax laws change every year, and planning to defer taxes 20-35 years out isn’t very smart. They’ve already narrowed the gap so that dividends aren’t as advantageous as they once were. Maybe in 20 years time they will eliminate tax brackets and go with a flat tax of 30%. Anything is possible.

    Yes some people use their companies with various tax strategies, but your stmt of “use the funds to invest in other assets through a holding corporation and you can withdraw funds in early retirement when your tax rate is lower.” should then apply to RH because obviously, he’s not taking advantage of the lower tax rate. What do you consider lower? Income below $30k? Below $60k? Below $100k? If what he says is true, he really is deferring a tax bomb, as AG has said. And if he’s only working here and there, then isn’t he in a sense, in early retirement?

    Also, he stated he owns 6 homes in SOB. If these are owned through the corporations, then it’s passive income, and there goes the advantageous tax rate! The only way to avoid that, is to pay out dividends. Annnnnd we are back to the “16-22k/year”. What a load of baloney!

  110. Wasn’t RH’s purpose of reporting low income is to get the social benefits based on his/her post below

    Our incomes are declared at 16-22k per year so we qualify for all the great discounts at that price range.

    One of my volunteer activities is to help people with their income tax returns. I see lots low income people report every penny they made; and yet, people like RH who make 200-400k are trying to get “the great discounts” they don’t need.

  111. @Stewart said:

    “We are two professionals who bought recently into Esquimalt. We rented there in the past, and absolutely loved the neighbourhood. I find long time Victoria residents attitude towards Esquimalt amusing- it’s a great place, folks are very friendly, lots of kids around, not at all pretentious. Granted, there’s probably quicker access to hard drugs (if that’s your thing) than on Oak Bay avenue, but we find it adds character and builds community.”

    Stewart, it wasn’t my quote, but I said something similar so I feel I should respond. Agreed, Esquimalt’s great. I think the point was just that help from mom and dad allows FTBs to skip the (at least until recently) entry level markets like Oaklands and Esquimalt and jump into the posh areas. Personally I live in Oaklands and we love it here. Can’t imagine moving for at least 15 years. But had our folks thrown $200k our way, we’d likely be living in a different hood.

  112. How did you get hiding money/income from what I stated? Hiding income is tax evasion and is illegal. Unfortunately in Canada you can have significant assets and still qualify for low income benefits without hiding anything. Ex. dentists can borrow against their significant home equity in Vancouver and live off the proceeds and retain income in their corporations while legally qualifying for MSP and enhanced CCTB payments.

  113. Some people came from outside Canada may not understand that money from the governments are really not from the governments, but from all of us. And if we all do the same (hiding income/money), there would be no governments, never mind any social benefits.

  114. There are many reasons why someone would like to avoid paying the highest marginal tax rate on earned income and, instead, defer taxes using the small business tax rate.

    Tax avoidance is one thing and fine, but hiding money/income to get benefits which are only meant for real low-income families (e.g. MSP assistance, child benefits, or GIS supplement) is another matter.

  115. What a load…. No family can live off $22k befor tax… Not width new cars and a rich expectation. Also I smell tax fraud big time…. Company paying for your home renovations is illegal…. Definatly VibrantVV back with an ip blocker… I like it though, very entertaining….

  116. @Hawk “Similar condos in way better hoods out there without the high crime rate”

    Any examples you can share?

    Re: Crime, I’m somewhat familiar with the area through friends – it’s actually not that bad. Cafe Fantastico expansion has helped the reputation. The area has some characters though, it’s no Cook street village!

  117. Ash, I would be calling that hood Blanshard Court ,not Quadra Village. Similar condos in way better hoods out there without the high crime rate.

  118. A bidding war on a Quadra village condo, the one I posted about recently, saying I thought it was good value.

    408-2560 Wark St
    Asking: 239K
    Sold: 250K

  119. I’m sure they are taking out more than 15k a year. Most people need more than that.

    There are many reasons why someone would like to avoid paying the highest marginal tax rate on earned income and, instead, defer taxes using the small business tax rate.

  120. Our incomes are declared at 16-22k per year so we qualify for all the great discounts at that price range. Our Corporations however make 200-400k per year each.

    RH, could you tell us what are theses “all the great discounts” you are getting? Would not paying MSP fee one of them? If so, we are paying for you. The governments don’t generate free money, and all these benefits come from us tax/msp payers.

  121. @ Totoro

    Its not tax-efficient to leave all that money in the company and not exploit the lower personal tax brackets. I’m pretty sure that your friends are paying themselves much higher amount of salary/dividends than 15k. They can do this and still leave plenty of money in their company.

    As for paying the money out to yourself when you hit retirement.. Anyone earning 800k in their company is going to end up with 10s of millions in their holdco by the time they retire. Paying that out to themselves would send them way into the top tax bracket. Its more efficient to pay out smaller sums each year, at lower tax brackets, than save it all up and pay it out at a 50% marginal tax rate.

  122. 742 Oliver sold for $1,050,000. It sold for $730,000 in Nov-2013. A 44% gain in less than 2.5 years.

    On the other hand, it looks like it might have had some minor upgrades in the meantime.

  123. No one who earns 800k+ a year would follow that tax strategy.

    I am aware of people who have professional advice and do use this strategy in this income category. If you have kids in particular there are better ways to structure things using a holding company and a family trust or splitting income. You aren’t saving up a “tax bomb” if you use the funds to invest in other assets through a holding corporation and you can withdraw funds in early retirement when your tax rate is lower.

    http://www.bdo.ca/en/Library/Services/Tax/pages/Tax-Factors/2016-02/Do-investment-holding-companies-still-make-sense.aspx

  124. No one who earns 800k+ a year would follow that tax strategy. My partner and I earn more than that from our business, and we usually pay out 150-200k each. Otherwise you’re just saving up a tax bomb for later when you need/have to take the money out of the company. It makes sense to use up all the lower tax brackets each year.

    Anyway, I call BS on everything that R.H. is saying.

  125. As a priced out guy in Vancouver looking at buying in Victoria, I just want to confirm that we do exist. If I bought the place that I am living in now, my mortgage payments would be four times my rent (and I’m not getting a below market deal on rent). If I bought modestly in Victoria, it looks like my mortgage payment would be about the same as my rent.

  126. and that’s a myth saying

    It absolutely is not.
    “Indeed, 70% of wealthy families lose their wealth by the second generation, and a stunning 90% by the third, according to the Williams Group wealth consultancy.”
    http://time.com/money/3925308/rich-families-lose-wealth/

    Do you have a master degree from Uvic

    In fact I do. Although I consider it more a mark of shame than something to brag about.

  127. yet you are taxing 200k-400k in your corp(s)?

    Actually that is a tax effective strategy. The small business tax rate is much better than taking it out as income and you can retain earnings and buy RE in a holding corporation. Not a bad plan.

    Do you have a master degree from Uvic and run a successful business in town with employees and and office? Those things are earned not handed down.

    Masters degrees are earned. From your sytax and grammar it appears that English is not your first language? Seems at odds with being second generation Oak Bay but possible. Having a business and not having to work much is unusual. I would like to know more about that.

    I don’t know if that saying is a myth. When I look around at who I know it seems those with money keep getting richer. Their kids have way more opportunities and often a better start in the housing market and seem to be doing better than average and continuing to build wealth.

    I don’t know many third generation really wealthy folks in Canada probably because although we’ve been here for five generations now the ability to create wealth for the working/middle class has been pretty limited until now.

  128. new safe cars are bought for a few reasons. One is safety

    I love it when someone posts a statement that contains faulty logic.

    The fact that your parents bought you a car new and then you drove it for ten years means you weren’t driving the safest car if new is the factor used to judge this.

    You also don’t need a new car to get a warranty if that is what makes you happy. All cars need maintenance.

    The bigger the car the safer in a crash. By this logic everyone should buy their kid a hummer. Parents who don’t do this must not care about safety.

    my friends with older cars…regularly need 3-7k mechanic bills and weeks of time

    Your friends must have some lemon on their hands. My car is six years old and this has never occurred. I bought it used.

    so a few thousand of depreciation to protect kids is seriously not an issue, and Should be a large concern for anyone of any income.

    Yeah, no. The difference in safety stats is more about kind of car then new vs. used. And don’t forget the safety recalls on new cars. If you want to protect your kids don’t buy them a car at all. The risk of motor vehicle crashes is higher among 16-19-year-olds than among any other age group. In fact, per mile driven, teen drivers ages 16 to 19 are nearly three times more likely than drivers aged 20 and older to be in a fatal crash.

  129. @nan, know the term “chip on your shoulder”? That is thinking that you earned “it”. It’s an ego thing, not an actual thing. Yes you feel proud that you now are middle class, but once you get there you realize everyone there doesn’t care. They are more focused on having a good time and raising their kids, not stuck in the ego and status.

    @admin, not in our case, and that’s a myth saying. Do you have a master degree from Uvic and run a successful business in town with employees and and office? Those things are earned not handed down.

  130. JJ – No principal residence exemption available for the estate? That’s an interesting thought. The senior homeowner would need to then gift the money to their heirs pre-death, otherwise the sum of the investments would still be subject to probate, even if they aren’t subject to capital gains.

  131. RH is definitely VV. Most likely an aging stripper with 5 shacks leveraged to the hilt, like in the Big Short. 😉

    Jack said it well. There is a pile of sellers ready to hit the big red button but just need a nudge.

  132. “Our focus is on keeping all wealth away from Gov” – yet you are taxing 200k-400k in your corp(s)? I don’t see how you are keeping your wealth away from the government. Maybe your names are on the Panama papers. 😉

  133. If you are only earning 12k a year as income you aren’t paying much in CPP anyway and you are not going to get much in retirement as a result. You are not someone who needs CPP so not sure why you feel compelled to “keep wealth away from government” for this reason.

    And you aren’t going to avoid taxation anyhow. Try selling one of those rental properties. Try not paying your property taxes.

    Taxation is there for a reason – to support the amenities that we all enjoy as citizens. Aggressive tax planning while maximizing government payments to your family alone is not something I admire from someone in your asset category.

    I would agree that something about your story is a bit off. You simultaneously devalue working class efforts while taking the maximum benefits for yourself so you can build your own CPP without contributing back. If you have a paid off house, car, other rental properties and 400k-800k in your corporations each year you don’t need CPP or to worry about retirement.

  134. Just as a talking point.

    I wonder what would happen if capital gains tax was payable on inherited properties but not on other investments?

    I think estate planners would be advising their clients to sell their properties and convert to non real estate investments.

    That might be good for our economy and for the elderly who are living in million dollar homes but existing at poverty levels.

  135. Totoro, new safe cars are bought for a few reasons. One is safety. Stats show the most % chance of a life changing injury/death is from car accidents, so a few thousand of depreciation to protect kids is seriously not an issue, and Should be a large concern for anyone of any income.

    The other is time and surprise costs that come with older vehicles. We want safety and no liability/unexpected costs.

    My friends with older vehicles have no head airbags, no collision avoidance tech, and regularly need 3-7k mechanic bills and weeks of time without (transmission, etc).

  136. Our focus is on keeping all wealth away from Gov.

    One of the main reasons for that is that paper money is being devalued faster then you can imagine. So CPP and pensions? The Gov is inflating their way out of obligations. No one believes that what is paid out theoretically at retirement will be really adjusted for proper inflation.

    Let’s say 10k CPP contribution (Corp has to match personal). That 10k now used in leverage 10x will return 50k in a few years.

  137. Not sure about everything you say R.H – does remind me of VV – but maybe this statement is not quite true:

    It’s not about grinding away for 30 years, it’s about spending a few years learning the tricks of wealth, and making highly lucrative small businesses, and using the one really easy tool of leverage in the housing market to gain access to wealth.

    For most of us it is about grinding away to get a start. Not complaining just stating a fact. There are no “easy tricks to wealth” or “highly lucrative small businesses” for those without enough cash that they can take a risk or invest to start something up without putting their primary residence at risk. Not to mention many small businesses are not highly lucrative to start with. The most lucrative small businesses typically require that you have a professional designation (ie. doctor/dentist/lawyer/accountant).

    Some of what you state is true though and what people with lots of money do. You can take out remarkably little income from a corporation and build tax advantaged wealth which can then be used to purchase RE although you’ll pay the highest marginal tax rate on income from this RE and from gains.

    If I understand you correctly you are collecting the maximum in child tax and other government benefits by withdrawing little income while owning millions in assets which you can do because you have a paid off house and car and other family support. I agree the system should not permit this.

    We are not in a position to buy four houses in South Oak Bay to gift to our children. Would we if we were? I guess it would depend on our other assets but perhaps we would. I wouldn’t buy cars. Must be a leftover working class attitude but I think learning the value of owning a depreciable asset by having to pay for it with money you have earned starting out is a good life lesson.

  138. @RH There is a saying that goes “from shirtsleeves to shirtsleeves in three generations”. Your kids will understand the true meaning of that saying.

  139. db, I’m not following your logic on that one.

    House rich and income poor isn’t only about property taxes. I’ve been in million dollar homes where the owner will not turn the heat on. Where the owner can’t afford to make repairs to a leaking roof. I think most of us that live in Victoria can walk out onto our street and spot a house that is neglected within a block or two of where they live.

    Yes, you can defer your taxes BUT if you have a mortgage the bank will make you pay the back taxes when it comes time to renew.

    Forget about getting a reverse mortgage for the same reason.

    Most retirees choose to pay their property taxes so that their children get the home free of debt.

    All of their problems would be solved if they just sold their home. But they won’t because the number one reason is that they want to leave something for their children. That’s an illogical statement. My neighbor turned 55 and his kid is turning 20. He is leaving his house for his son to have when he dies.

    Okay – its logic time. He kicks it at 85 and his son is then 50. Why would his son need his house? These are not reasons, they are excuses not to sell. And I think there are a lot of people that would have sold over the last decade and down sized if the interest rate was not as low as it has been.

    That’s a lot of pent up supply waiting for a reason to sell. They just need a little push.

  140. @ RH

    None of what you said makes any sense.

    VictoriaVV trolling again?

    And no – you missed my point. Inheriting wealth is the opposite of “making it”. In the most literal way, you have not made “it” if you have had “it” given to you.

    Earning your place in society has nothing to do with wealth or financial freedom. “Making it” is like winning an Olympic Gold Medal. It can only be earned, not given, and none of the status of the accomplishment can be passed down from one generation to the next. (despite what rich kids might believe)

    If you think you have earned your place in society (“made it”) because your parents gave you a lot of money, you are wrong.

  141. @RH said: Our incomes are declared at 16-22k per year so we qualify for all the great discounts at that price range. Our Corporations however make 200-400k per year each.

    Question – why are you bringing in income below the CPP maximum income contribution amount since CPP is COLA indexed for life?

  142. @nan We have always “made it” as you say, so that feeling of wealth and financial freedom we have had since day one. The one thing that we do is we don’t take it for granted for one second, and we are focused on gratitude and health of our family and helping others above all else. If you met me you would not get an impression of wealth or status, I can blend in anywhere and treat everyone the same. In fact if you met me at Home Depot you would probably think I am a landscaper, covered in dirt.

  143. Crest Home Inspection is the best in town. We used him on all purchases. That being said, there is a limit to what even he can find. Old homes, be very careful, it is expediently easy to spend 150k on surprise fixes.

  144. My vehicle was bought new while I was 18 at Uvic. That is normal now, have you been to a parking lot there? Almost all new safe cars for students.

    It’s been 12 years since then, so we of course buy our own cars now, love the new Volvos! We traded in my car at 10 years old and it made a nice 20k down payment. We financed the rest at 0%

    Hard Work is usually a value statement of the working class. I was taught to be highly effective and focus on developing the mind. So while we only “work” a few days a week, our work is highly effective and productive.

    We also use leverage and have bought 6 other properties in Oak Bay, mostly in 2013-2015 in the 680-720k range and rented out. We use a property management company for those properties.

    It’s not about grinding away for 30 years, it’s about spending a few years learning the tricks of wealth, and making highly lucrative small businesses, and using the one really easy tool of leverage in the housing market to gain access to wealth. It sounds like a lot of people here are using that tool to wealth.

  145. However we do have a lot of retirees that are house rich and income poor and I suspect higher property taxes are going to shift their decision to take the money and down size into a condominium or an apartment at the Hudson or in Uptown.

    JJ..you are somewhat overlooking one point…
    Retirees (over 55) DON’T HAVE TO PAY PROPERTY TAX WHEN THEY CAN DEFER IT…
    At the current rate of 0.70%, why wouldn’t they? the property is increasing on land value alone at a rate of $30,000 per assessment..(last year that was probably 6% minimum)
    DO the math and you can see that it will be at least 10 years of deferments before you even worry, and then what? property is worth double today anyways?)

    You may have to starve like the vultures in NY who monitor the deceased ads for rental accommodation 😉

  146. @RH – you corporation makes 200-400k per year yet you regard purchasing a vehicle as a financial hurdle warranting parental intervention. Your story seems odd.

  147. @SweetHome, good point, there was an article about that:

    B.C. housing costs could threaten food security, study finds
    http://www.theglobeandmail.com/news/british-columbia/bc-housing-costs-could-threaten-food-security-study-finds/article29554768/

    “Double-digit leaps in home prices across the Vancouver region could force farmers off the land and threaten local food security …
    “concerns that it is being purchased on speculation for future estate homes, development or other non-agricultural use”

    I also think Canada should enforce the same rules on foreign purchases as Australia does.

  148. AG, we’ll see you around then, SOB is small and we know what seems like half the population here. I’m guessing you are older though. We are in our early 30s.

  149. Due to sheer luck, we bought our house ourselves with $9250 of RRSP. It went like this:
    Jan 2004 – buy pre-built downtown condo for $180k with 5% down, 40 year amortization. Move in Dec 2004.
    Apr 2006 – sell condo (I was pregnant) for $266k using a realtor from the building who had a buyer that had looked at the unit right next to us, but ours had a parking spot included (not enough spots for all units but we bought early). Condo sold very next day, having never even hit mls or needing photos taken, etc.
    After commission and paying off $4k in debt, we had 20% down for a brand new townhouse by Costco for $330k.
    Aug 2008 – another townhouse in the complex had just sold for $380k (owners were being posted to Quebec). My husband hated the commute and had received a promotion at work and was making more money, so we sold for $370k (this was pre-market crash, the market was JUST starting to slow). We bought a SFH for $435k with our 20% down. We could have qualified for a bigger mortgage, but we didn’t want to pay CMHC. However we still went with the 35 year amortization.

    Over the years, interest rates have gone down from when we initially bought so that we’ve done 3 blend and extends since 2008 (5.769 –> 5.114 –> 3.888 –> 3.676) each time either keeping the payments the same or increasing. This time, I’m holding out for renewal (Mar 2017) so I’m hoping the rates stay low. Currently, our projected amortization date is Feb 2031 compared to Nov 2043 it was originally. My husband is turning 40 this year, so that means we are on track to being mortgage-free just before he turns 55.

    As our incomes have also increased 30%, we’ve also been able to do some improvements to the house totalling about $50k without having to get a HELOC or increasing the principal mortgage.

    I haven’t played the “how much could I qualify for a mtg if I sell today” game in a long time. Up until February, I didn’t think I would get back what I put into the house (435+50), but now… probably? But then, what the heck would I buy?? I don’t want to enter this irrational market.

  150. Our incomes are declared at 16-22k per year so we qualify for all the great discounts at that price range. Our Corporations however make 200-400k per year each.

    So there is no dependency happening over here, just strategic advice from a prominent tax lawyer and some basic strategic planning.

    The rich rarely pass on a dependency, that is a myth. Maybe new money or “second generation” wealth does that ala the rich Chinese kids you see driving Lambos around town.

  151. @ RH

    This is going to sound harsh.

    Perhaps the generosity of your parents is the reason why you and your spouse have incomes in the 16-22k range?

    My parents are reasonably wealthy and helped out with parts of my education. But they haven’t subsidized my life in any way since. I worked my way through much of university, got a high paying job in finance, and set myself up very well. My partner’s story is very similar. We bought a house in South Oak Bay earlier this year for cash. The vast majority of our money is hard earned.

    My point is that if we were heavily subsidized (or knew that we were going to get a lot of help in the future), we would likely have been much less ambitious.

  152. @mooselessness, @yeahright – Thanks for the inspector recommendation. Now I just need the house to put an offer on and the opportunity to get an inspection done. That used to be a simple thing. Ah, the good old days…

  153. @LeoM “The global economy is alive and thriving in Victoria and Vancouver real estate, and the 1% have an edge.”

    This has to stop. There needs to be some government protection for locals. What if this were a food issue, which it may be some day. If there is a global food shortage should foreigners be able to come in and buy all B.C. farmland to export the food to wherever they get the most money? Absolutely not.

    I am a citizen of Victoria, B.C., Canada. That should mean something relative to my access to the resources of my homeland. I realize we need immigration and can’t have a completely closed system, but freely open to the highest global bidder isn’t working either. Someone’s home is more than just a “commodity”, as is food.

  154. We bought our first house using an Inter Alia mortgage against our house and my parents’ house. Because my parents owned their house outright the overall equity meant we could finance the purchase 100%. While my parents didn’t have to shell out any cash they took a risk on us. Fortunately it worked out and after the first five years we had enough equity primarily through price appreciation to have a mortgage against our house only.

  155. @mooselessness; @SweetHome:

    I second that! Crest Building Consultancy is who we used (twice) and he was super thorough. A little pricey, but huge peace of mind.

    -To the point that it was scary how many things he picked up on.

  156. The world wide phenomenon is that people are not listing their homes for sale. If you could stimulate home owners to sell than prices would moderate lower.

    When you talk to home owners they like knowing their home is worth a million but they would never sell. I get lots of reasons from home owners why they won’t sell. Like memories of their parents living there or there children growing up. That they will leave the home to their children? No place that they would want to move to?

    And that’s because they are not faced with making a choice. The low interest rate environment that we have had for so long allows them to differ making a decision. However we do have a lot of retirees that are house rich and income poor and I suspect higher property taxes are going to shift their decision to take the money and down size into a condominium or an apartment at the Hudson or in Uptown.

    The key to affordable housing isn’t building more condominiums the size of closets. Construction just stimulates the economy and increases demand. The key is to get those tens of thousands of home owners to list their homes.

    The government could take some actions by…

    -Eliminating the home owners grant and instead give a grant to those that rent out homes on a month to month basis.

    -An inheritance tax on properties but not on cash investments

    -higher property taxes

  157. All the talk about people from Vancouver and China driving up house prices in Victoria, seems wrong to me. It’s a global phenomenon that is happening worldwide. In our global economy, real estate is now a global commodity, just like gold, oil, wheat, and steel.
    If you could buy gold bars at $400 per ounce, then I’m certain you would buy as much gold as possible. Houses in Victoria are like $400 gold to people with an international perspective.

    Commodities always set their own price based on supply and demand. In the absence of restrictive government intervention with new real estate rules and regulations, I think we can expect our local desireable houses to continue to appreciate until they reach the equilibrium price as a global commodity, based on worldwide supply and demand.

    The global economy is alive and thriving in Victoria and Vancouver real estate, and the 1% have an edge.

  158. We think it’s insane that most families don’t try to help kids avoid the massive costs in “taking the long way”. The amount of time and money to try to get to middle class from nothing is much more expensive then if you have help.

    Sadly there are still a few of us plebs that can’t quite afford to gift our offspring with new houses in South Oak Bay.

  159. It isn’t really “help” when your parents buy you a house, cars and give you enough regular infusions of cash via trust to live in a paid off house in South Oak Bay on incomes of 16-22k.

    Agreed – that’s more like supporting dependents than “giving a leg up”. I don’t really know the mindset of the rich, but I’d hazard a guess that few parents would be comfortable with providing that level of support even if they could afford it. That much support could corrode any values of self-reliance and remove the satisfaction of achieving a goal through your own efforts.

  160. @SweetHome, we used Crest Building Consultancy, where Lee Ottewell does the inspections. http://www.crestbc.ca/

    Lee came recommended by both HHV and Reddit Victoria commenters. We were pleased with his thoroughness, expertise and his willingness to answer our questions.

    As for how to pick, I was advised to look for someone with both CPBC and CAHPI designations, and with a history in the region.

  161. I doubt that anyone will comment about over leveraging in this market as it has mostly worked out for the good with increased equity.

    If the market was to go south, then most people will admit that it was the worse thing they ever did. Owning half a dozen homes becomes an Albatross around your neck as one by one they go into foreclosure.

    I can see parents worried about the children not ever being able to buy a home and that could be one of the main reason for this increase in sales happening.

    But it always ends and a new market cycle begins as the pendulous swings from low listings to too many listings. Why? Because it always does.

  162. I was thinking of leveraging my home to get a new income property going. Kinda do to attending a Keyspire seminar (!! SCAM !! https://www.keyspire.com/) from that host on HGTVs income property, Scott McGillivray.

    So glad I didn’t fall victim to signing up and giving them about $1000 to be coached on stuff that I can research for free (especially since internet/Google exist), only to be poked and prodded to give more money for more coaching and seminars.

    So I was thinking of doing it on my own. But is it wise to lean the house and get into investing now or save up for another down-payment down the road?!?

    …But this insane market maybe an issue before I can even think of doing this.

  163. @ R.H.

    It isn’t really “help” when your parents buy you a house, cars and give you enough regular infusions of cash via trust to live in a paid off house in South Oak Bay on incomes of 16-22k.

    It may be crazy that some families want their kids to take the long way, many because their is no choice, but consequences can be just as bad when parents don’t require their kids to do anything. I mean what can you possibly teach your kids about hard work? It doesn’t sound like you’ve ever done any?

    Thoughtfully deciding on what I wanted to be, earning money to pay for that education, getting job after job and promotion after promotion so that I can buy a house and cars were all really hard things. And although I want to give my kids the best possible set of circumstances and will almost certainly help them (within reason), I would never go as far as your family did, even with unlimited funds.

    Through all your parents “generosity”, I am curious whether you think you have “made it” yourself?

  164. All those fiscally responsible comments. Where’s the irresponsible over leveraging? Does it not exist, do people not admit it, or are they out enjoying their monster houses instead of reading this blog?

  165. We had been diligent savers over the last 10 years and had almost enough to buy a house outright when we bought but most of it was in TFSA’s, RRSP’s & RESP’s. My parents weren’t getting any return on a large portion of their investments so they loaned us enough money interest free to get us over the CMHC threshold for the house we wanted (which we would have bought anyways).

    Since we only borrowed roughly 1/3 of what the bank would have loaned us based on our incomes this didn’t enable or affect our buying behavior in any way, it just prevented us from having to take money out of our tax deferred accounts or pay the incredibly expensive CMHC fee.

    From a family perspective it made sense for all involved, but I think our circumstances are uncommon in that our parents money didn’t affect our buying decision. The more common decision model I have seen is a couple will first figure out what the range of maximum mortgages they can support is based on various down payment scenarios, then they fill in the down payment blank with either their own savings or that from parents and buy the absolute most expensive house they can afford with their income and all available down payment cash.

    Larger down payments can have a huge impact on the amount of money you can spend on a house. A $100k increase in a down payment from $100k to $200k can double the price of the house you can buy from $500,000 to $1,000,000 assuming the couples income can support the larger loan. $800k is about $3500/ month right now which is pretty easy for a dual income professional couple making $180-$200k between them. The presence of $100,000 extra in family wealth can instantly increase the level of real estate demanded by $500,000. Pretty pervasive on prices if you ask me.

  166. You have to be really careful renting a house to kids as well…. I’ve seen all sort of crazy stuff in my career. Basically I wouldn’t let the kids do any improvements to the house.

    I’ve seen family court judgements registered against parent owned properties in the past.

    For example, kids rent the house, kids do improvements to the house, kids divorce, 1 kid (the in-law kid) places a judgement against the house for 1/2 the value of the improvements. Now as the parent you can’t clear title (aka sell) until the judgement is resolved.

    You would think you would be safe, as a parent(s), having the title only in your name but I guess not.

  167. TripleArated, the idea of Vancouver buyers increasing in Victoria isn’t just a theory with me – it’s the reality of what I’ve been seeing on the ground for the past 2 years.

    I also don’t know why anyone would want to boil these prices down to 1 factor – it’s always many factors. Vancouver is an influence, but it’s not the only influence.

    I know Vancouver people that bid-over-ask in 2014, so that $200k-over house was a lagging news story. When people repeatedly lost to competitive bids, their fear was driven from an actual fact (seeing the resulting sales price), not a story in the news. (I’ve worked with stats/data all my life, and see the “need to verify” what’s happening in the field.)

    Mortgage data doesn’t tell you the whole story, because I’ve seen Vancouver prices reach the point where people don’t need a mortgage to buy a home in Victoria, & they don’t always want to buy up-island, because they want the amenities offered here.

    Another factor that’s driving up prices is the crazy mortgages being handed out to anybody that wants one, including offshore investors that’ll probably not pay it back, & the money laundering, & pyramid schemes. Also rich baby boomers from other parts of Canada & US.

  168. The theory is that the spouse is entitled to the business.

    But how much is that business worth? Especially if it is a sole proprietorship without assets.

    I had a partner in a business who simply quit one day. 6 months later he wanted to be paid out for his partnership. I closed the company and sent him a bill for his share of the unpaid taxes.

  169. Our parents are both from Oak Bay and they and our Grandparents pooled money and bought us a new home in South Oak Bay. The money was organized in a trust etc and protected from divorce and taxes.

    When we had our kids, our grandparents, parents and ourselves opened up a RESP for the kids and deposited enough initially that they will have their education paid for. We also opened up a trust that would be for future home purchase for them.

    Our parents paid for our education and vehicles and many other large “barrier” type financial hurdleson the way to fininacial freedom. All this major help made it possible for us to put almost all our income towards retirement and towards helping our kids do the same.

    We think it’s insane that most families don’t try to help kids avoid the massive costs in “taking the long way”. The amount of time and money to try to get to middle class from nothing is much more expensive then if you have help.

    I have a huge regard for those that made it, it’s insanely difficult to get over a lot of those hurdles these days.

    Our house has gone up about $800,000 in value, and our suite pays for our prop taxes and most other bills.

    We have incomes in the 16-22k range. It’s again, insane, that benefits are dictated by income rather then net worth. But why would we pay more if we don’t have to.

    We do charity instead, much better use of money then gov would do.

  170. @Triple A rated – “If you recall, this market was seeing limited action through the Winter until the house on Joseph street sold for I think $200k over from a buyer from Vancouver”

    I agree the real frenzy didn’t start until February, likely because there were so few listings over the winter that buyers were holding off. However, as a house hunter I was seeing houses sell immediately for more than $100K over asking throughout the fall. When I went to swarming open houses in September it was very clear that we weren’t in Kansas anymore. There were clearly changes happening before the media picked up on it and hyped the story.

  171. New poster. Been watching for a while. Instead of giving $ to our daughter for downpayment we bought the Vic house (03/15 Jub area) and provide discounted rent to them for upstairs allowing them to save. We rent basement at market to cover balance of costs. Thought we would sell to them a few years out at a discount to market but still with a good return. With the way the market appears to be going that may indeed enable a pain free way to help them out with instant equity on paper and easier/more affordable financing – something we ourselves never enjoyed when starting out. Without some sort of family help many children will be shut out of SFH market.

  172. “Make sure you get a good inspector. Because you may want to renovate in the future and fined:

    The good, bad and ugly of older home renovation – Victoria News”

    I’m not sure if all the issues with the home in the article would have been detected by an inspector because some things are hidden. Nevertheless, one has to try to get the best picture of what they are getting into.

    So, on the topic of home inspections that I raised in the last post, Marko suggested getting two companies to scan for oil tanks in older homes. Is “older” any used home that had oil heat at any time?

    Also, I don’t know if anyone wants to recommend a specific inspection company, but how does one know they are picking one who will do a good job? I am sure the quality varies greatly, and I don’t just want to blindly go with the ones recommended by my realtor.

  173. Vicbot,

    Seems every 3 weeks the Province/Sun do an article on how Millenials, House rich, Retirees are moving to the Island. This is more of an advertisement for Island real estate than actual journalism.

    There has been a certain percentage of buyers in the last 10 years that have come from out of town. I don’t believe the trend is significantly higher.

    What’s really driving this market is local buyers fearing they will be priced out if they don’t buy now. The $500k to $1M price range has seen a massive jump and one segment of this market is feeding the other. Home owners selling are upgrading into the higher bracket above this.

    If you recall, this market was seeing limited action through the Winter until the house on Joseph street sold for I think $200k over from a buyer from Vancouver. It was highly covered by the TC, Sun and Province. This was on or about Feb 15th and since then Irrational Fears have taken over that Out of Town buyers are making a ‘Move.’

    Marko’s posts have been very enlightening from his perspective and I’d like to hear his thoughts on how some of his colleagues are using this Fear as a Sales Tactic from the Buyers Agent.

  174. Lots of ways to manage gifts and the possibility of divorce. FWIW businesses often are or become matrimonial assets too. You can make a loan in writing rather than a gift. Then, if your child separates, you can recall the loan, and this money will not need to be divided.

  175. The one that got the house lost everything in a divorce.

    Not just the house, a business would be impacted by a divorce, too.

    So the best is to give kids money as a loan, especially for amount over $100K.

  176. JJ Curious whether that is the New “Thing” List Thursday for the weekend open houses and Monday sale. Wondering whether Thursday is an animally day and the other days reverse that?

  177. “And these are professionals with good incomes who would otherwise have had to buy in Oaklands, Esquimalt, …”

    We are two professionals who bought recently into Esquimalt. We rented there in the past, and absolutely loved the neighbourhood. I find long time Victoria residents attitude towards Esquimalt amusing- it’s a great place, folks are very friendly, lots of kids around, not at all pretentious. Granted, there’s probably quicker access to hard drugs (if that’s your thing) than on Oak Bay avenue, but we find it adds character and builds community.

  178. No help from anyone for any of my home purchases. My wife and I both came from frugal families, who were frugal by necessity; food was almost a luxury at times. House prices were 6x household income at the time we bought, but we learned as children to be frugal, so as adults, we saved and bought and improved each house with mostly cosmetic renovations. Now our children benefit from our climb out of poverty. Yes we helped on a 50/50 basis; we matched each dollar they saved towards their downpayment. Now they have a nice house, in a prime neighbourhood, and their monthly mortgage interest is about half of what rent would cost per month.

  179. Interesting stats for yesterday. We had 120 new listings and 49 sales.

    That’s all properties in all areas.

    In the core districts it was a ratio of 71 new listings to 26 sales for all types of properties.

    For houses in the core it was 36 to 11

    I haven’t seen that in a long long time.

  180. If you plan on helping your kids with a substantial down payment would you do this by taking the cash from your savings account or would you access the equity in your home and pay a slightly larger mortgage payment each month?

    How you set it up as a gift, loan, or going on title with your kid is extremely important.

    Personally, I would never do this.

    I would buy them a business before I would buy them a home.

    I had friends from high school that had there parents buy them a Dairy Queen franchise, a Bagel franchise and one where the parents bought him a house.

    The one that got the house lost everything in a divorce.

  181. Yes, had help when buying my first house 10 years ago, and then moved here and got married. My wife had a bunch of help from her dad too. We could have afforded our current place without help (got a mortgage for $240k, but qualified for over $500k) but were happy to have lower payments. We were told – it comes out of the inheritance, and are both grateful.

  182. No help with buying ourselves, but like many others we plan to help all the kids with buying their first house, education and weddings. I too see no point in waiting until we’re gone to transfer funds if we can afford to do it before then. I agree parental help or no parental help widens the gap as prices for homes rise. It has always been like that though. Parental position in life can make a huge difference in wealth and life opportunities. Not “fair” but nothing new either.

  183. We had $30k saved ourselves. Plus parents gave me $100k (early inheritance) in order to have 20% down.

    We used it to buy a house with 3 suites in it. Could have bought the house with 5% down I saved myself, but rru grateful to save on cmhc.

    I am hoping to be able to help my son with a home purchase in 20-odd years.

  184. We had help – inheritance – for which I am very grateful. Could have entered the Vic market in 2008 without. COULD have bought the house we did without help, but realistically probably wouldn’t have as my wife and I might not have been comfortable with the amount of leverage.

    When the time comes I expect I’ll help my kids if I can. Assuming I have the extra money I’d rather give some to them early rather than have them wait to inherit a bundle that they don’t even really need anymore by that point.

  185. The Genworth survey left off “proceeds of crime” as a source of funding. Although the money laundering aspect might not apply as much to first time buyers.

  186. No help with money for the first house but help influencing the bank to lend me the money. Different standards then. Giving 200k to a new businessman was not something they did easy then…. Borrowed from my RRSP though…. I only put 10k down though so a lot easier then.

  187. You pretty much already know my story, but, Mom and her husband gave nothing. The in-laws on the other hand wouldn’t except no for an answer (it helped but we really didn’t need it to get by).

    At this rate I’ll probably inherit debt from my Mom when the time comes (But I do have power of attorney so there is yet hope!).

  188. We never had any help from our parents wrt buying houses, and we needed to send them money each month to help them then in their senior years.

    But we will help our son for full down payment if he asks when the time comes (probably in a year or so). Our thinking is that, if we can, we should help him when he needs it the most, on education and house purchasing, instead of leaving him the money when we are gone.

    But we will do it as a loan (that we don’t expect to be paid back), so the money will stay with him only, if there is a relationship breakdown in future.

  189. I have many friends who’ve received a full 20% down payment from their parents. Across the board, my friends who have nice houses and/or houses in good locations have them because of parental help. A couple who couldn’t afford to buy a house in Oak Bay bought there a few years ago because they had 20% head start. And these are professionals with good incomes who would otherwise have had to buy in Oaklands, Esquimalt, …

  190. We have a high enough combined salary & bought a house in the core. Funny story about us is that a family member of mine asked for a ‘loan’ to invest further in the Vancouver market in a speculative fashion. This family member already owns 5 homes & wanted a 6th to flip for $$. This person has no real income but has climbed to a comfortable amount of paper wealth through real estate in the past 15 years. Don’t even get me going about some other family members from Vancouver who have become multi-millionaires by leveraging & buying tons of homes/condos. We said no to the loan request, but it goes to show how crazy the market is.

  191. We knew a lot of people to get some help from mom & dad, and all of them (except one) bought a starter home, not a forever home. We all worked a long time to “move up” into another home (or do major renos).

    Then again, with the craziness of the market, I don’t know what’s happening anymore.

  192. Our parents are house “rich” and cash “poor”. They can’t prudently take a mortgage on their house to help us, let alone the sibling issue. Siblings bought years ago and don’t need help, but would feel it was unfair if they didn’t get an equivalent.

  193. Thanks for the post Leo. The Genworth study is illuminating as to the effect this is having.

    Marko said: “At these prices usually the kids are two income professionals in order to qualify for the mortgage; therefore, they have the means to come up with savings for downpayment”.

    That’s what irks me…the ones I’m familiar with have solid enough incomes to buy starter properties in say Vic West or Oaklands for 600k, but with help they can spring right into their forever home in Cordova bay or Gordon Head for 850k. The tax free growth on that upper end home and the fact they won’t need to move up down the road and incur steep transaction costs, it’s a massive leg up.

    Funny thing is I’m a total hypocrite as I could see wanting to help out my kid if/when the time comes…can’t have junior falling behind!!

  194. We asked parents for a loan a few years ago while building our downpayment and were told no… they’re broke too. I think it’s awesome when parents do lend or gift some help, it’s not how our home will be bought but without help from parents many of my peers would not be in the homes they are now.

  195. When my wife and I bought our house 14 years ago, the average house price was ~$250K. We took a bit of money out of our RRSP’s for the downpayment, and that was “good enough”. We bought our house for 2.2 times our annual combined salary. The same house would now cost 6 times more than what we were earning then – or 4 times our current combined salary.

    I expect that “help from family” is needed much more often now then 14 years ago …

  196. We got some help ($20k if I remember correctly) but it didn’t have any impact on the house we bought or when we bought.

    Actually I’m surprised there isn’t more loaning between family members for mortgages. Instead of putting the money into a bank account why not loan $50k out and collect 2% from your family instead? Everyone wins assuming you get along alright.

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