The CMHC is out to lunch

Thanks to Hawk for posting the CMHC Housing Market Assessment which concluded that there is absolutely nothing abnormal about our housing market, and there is no evidence for overvaluation, overheating, overbuilding, or price acceleration.  In fact, according to the CMHC we’re the only city they looked at that had absolutely no evidence of any problematic conditions.

Rejoice oh Victoria buyers!  The market where you are being outbid on every property is perfectly ordinary and nothing at all to be even remotely concerned about.   All time sales records and $200,000 over asks are likely only figments of your imagination.

How do we reconcile the CMHC’s report with the fact that Victoria is in the same group as Vancouver and Toronto while the rest of the country languishes?

Let’s take a look at their report.   Before we get into the data itself, we have to look at the dates, which are being presented in a way that is wildly misleading.  In the summary table above (from the National Post), it says that it is based on “comparison between January 2016 and April 2016” which would indicate it is up to date.   I’d blame the media but the report itself also highlights when it was released (April 2016) rather than what it actually covers (Q4 2015).  Only if you dive into the report we see that it is actually based on “data as of the end of December 2015 and local market intelligence up to the end of March 2016”.  I understand it takes time to write reports, but it seems more than a little misleading to represent your data as current when it isn’t, especially when it doesn’t include the spring market.  Not sure what their local market intelligence consists of but given the author of the Victoria report lives in Vancouver, I’m going to say maybe not as local as you might expect.

The first category they consider is overheating, which they define as a Sales/List ratio of over 80%.   According to their chart we are approaching this threshold with a current value of 71% but we aren’t exceeding it yet.   I would say that given we are at the high end of historical values and near the threshold with a strong positive trend that should qualify as some evidence of overheating, but apparently not.


More interestingly they use a “seasonally adjusted” measure of sales/list which always makes me suspicious.  The only seasonal adjustment I trust is 12 month averaging as everything else is subject to manipulation, intentional or not.    I think it’s pretty clear from the value of our Sales/List ratio and it’s trajectory that we are clearly headed into overheated territory.   Combine that with real local intelligence like Just Jack showing that well over half of detached properties in the core are going over ask and it seals the deal.

The next category is price acceleration which they again say there is weak (aka no) evidence for.   Again the outdated data from 2015 sinks them here, combined with suspect measures like seasonally adjusted prices.   I’d say one look at the price trajectory for single family homes makes it pretty clear we are seeing significant price acceleration here.

They do acknowledge that single family house prices are accelerating quickly, but handwave this away by saying new units under construction will surely compensate for the price runup.

On to overvaluation.   While I agree that we are not yet overvalued based on affordability measures, the CMHC makes a pretty weak argument here.  They don’t have a measure of affordability, they just say that low rates, population growth, and an increase in full time employment means that fundamentals support prices.  The employment growth is interesting, but looking at their chart, I don’t see any sustained trend there.  We had a similar runup in employment in 2012.


In the area of overbuilding, the CMHC rightly concludes there is no cause for concern at the moment.  With starts at normal levels and demand for rentals high, the market can easily absorb new construction currently in the pipeline.

This report is interesting and gives me some ideas for more things to track.  The major flaw with it is that they advertise their framework as something that “may provide an early indication of potentially problematic housing market conditions” (count the weasel words).  When your report is obsolete as soon as it is released it is a bit difficult to provide an early indication of anything.  Real estate generally moves slowly so you can often get away with outdated information.  However the thing that is common in problematic market conditions is rapid change.  Looking at data that is almost 4 months old isn’t going to help identify those.

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162 thoughts on “The CMHC is out to lunch

  1. Yes we are seeing more bids n condos over asking price, but are they bidding wars?

    I suppose one could say that every property that sells over asking price is a bidding war. But that might be too simple of a statement.

    The Hillside condo that you mentioned sold 14% over the 289,000 asking price. How many condominiums in the core sold for more than 10% over asking?

    6 out of 229 condominiums that sold in the core in April sold for more than 10 percent over asking price. Only 2 sold at or more than 14% over asking price.

    If you look back a year to last April you still find condominiums that sold over asking price. But very few sold for more than 5% over asking. Maybe that should be the cut off rather than every condo that sold over asking is a bidding war.

    In April 2015 only 2 out of 187 sold for more than 5% over asking price. This April it was 16 out of 229.

    The statement that one is seeing more bidding wars than before is therefore correct. An impressive 8 times as many as last year. But at only 5 or 6 percent of the market is the statement accurate?

  2. Vicbot,

    Percentages always sound bigger versus actual numbers . 43 more Vancouverites doesn’t seem like a massive amount of people. Barely a full Greyhound.

    Funny they never track how many people left Victoria.

  3. @huevos, 2040 Allenby went for $955k, 2071 Newton for $740k

    @Hawk, there were actually 43% more out-of-town buyers in 2016 (and 69% more from Vancouver) according to the article.

    That’s also for all of Greater Victoria (maybe % is higher for Oak Bay/Fairfield/Saanich East?)

    1286 sales April 2016, 840 sales April 2015

    Out-of-towners 2015 = 29.5% x 840 = 248
    Out-of-towners 2016 = 27.5% x 1286 = 354

    YOY increase = 106 or 43%

    YOY increase from Vancouver = 62 to 105 = 69%

  4. Thanks Rover…
    I bounce back and forth between Victoria and London every 2 years…for family reasons…

  5. @db to be honest, it’s responses like that which make the comments here hilarious. “Think Victoria is expensive? Well let’s compare it to…

    1) A city established hundreds of years before Canada was even a thing, a city with a population that’s double that of our entire province, and tops the charts on the GDP-per-capita table and,

    2) Probably the world’s best-known tax shelter preferred and enjoyed by the absolute creme de la creme of world’s elite for eons.”

    Yeah. Because that’s reasonable. Or, and this is more likely, drawing such ridiculous comparisons simply makes it easier to ignore the elephant in the room that grows larger with each and every passing month.

    Oh and by the way, England is referring to their housing situation as a market in full-blown crisis, and the growth they’ve seen is literally nothing compared to what some areas of the GVRD have undergone.

  6. @JJ. I’m actually seeing more and more bidding wars on condos, even older ones. This one really surprised me:
    103-1201 Hillside
    Sold 330k
    Ask 289k
    Assess 235k

  7. The loonytoon buyers are still mainly local. Albertans slowing down, and Asians and Americans were negligible. No worries, we’re still eating our own. 😉

    Guess all those stories of “over heard on BC Ferries” of busloads of buyers, were just that, tall tales.

    “While there has been attention from buyers in Vancouver and beyond, the majority of sales are local. “Last year, 70.5 per cent of buyers were from Victoria, and this year in the first quarter we see 72.5 per cent of buyers from the area,” said Nugent.

    Through the first quarter of the year, 8.2 per cent of buyers were from the Lower Mainland, up from 7.4 per cent last year.

    “It’s also noteworthy that we’ve seen a decrease in buyers from Alberta,” said Nugent, noting last year the region saw 5.7 per cent of buyers from the neighbouring province. “This quarter we saw 3.9 per cent.”

    There was a small increase in buyers from the U.S. — one per cent, up from 0.8 per cent last year, and 0.8 per cent were from Asia, up slightly from last year.”

  8. 2071 Newton sold? Crazy… I used to rent out the upper. Interior photos on the listing I saw look very much the same as when I was there.
    If I could afford it I personally wouldn’t pay the ~$700k they were asking!
    Nice neighbours though 🙂

  9. Rover…
    It is all relative… visit London UK and you will think Victoria is cheap…
    visit Monaco and you will think London UK is cheap…

  10. Back to appraisals and a possible reason why agents are not seeing appraisals under the sale price.

    Appraisers don’t work directly for the banks anymore. In the past appraisers were contacted by the bank and the appraiser built up a report of trust with the lender.

    Today a middleman or appraisal management company is between the two. That means the appraiser and loans officer do not have a day to day working relationship where they can call each other up and say that there is a problem here or discuss the market in general. That built loyalty and the loans officer would always go to the appraiser they trusted the most. In return the appraiser had repeat business. The system worked very well. The appraiser sat with the branch manager going over reports and giving talks to the new loans officers. Heck I used to be invited to the bank parties back then.

    But today, there is no loyalty and no trust because the middleman won’t let the banker and the appraiser talk to each other. And that has caused the general level of care to decline.

  11. How about the condo market. Should I buy or should I sell?

    There are currently 353 strata titled condos for sale in the core.
    Last month we had 216 sales and 302 New listings
    Half of the condos sold in under 16 days of exposure

    That’s 1.3 Months of Inventory, listings being added at the rate of 1.4 for everyone that sells and a DOM of 16. That’s still sellers territory so while there may not be as many bidding wars on sky boxes don’t expect any discounts on competitively prices suites.

    The median price last month was $302,500

    In January it was 277,500
    February it was $311,950
    March was $289,950

    A year ago the median was $290,719. Looking back over the decade condos first broke the $300,000 mark in December 2007 and then just waffled all over the place for the last 10 years.

    Despite the low selection it seems that new listings are keeping prices stable and 16 days is enough to keep the mob from panicking . Buyers just don’t have the “crazy” about condos as they do houses.

    At this point to buy or to sell is in limbo. I’d watch the market factors and if a trend to longer days on market starts to occur you may want to think about crystallizing any profit you have made. It’s nice to have an investment but if it isn’t doing you any good maybe it’s time to cut bait and find a different fish. And with the recent German decision to ban airbnbs that could happen quickly here too. After all it is a proactive decision on housing affordability that wouldn’t cost the politicians anything. They like shit like that.

  12. As a Vancouverite that hoped Victoria held the promise of reasonably-priced homes, I must say this blog has been very illuminating, and it has been a fantastic asset.

    The comments, on the other hand, are hilarious. Of course the market is going to correct, or collapse. It has to. Will any of us be willing to pay $100 for a hamburger in one of the three local pubs that manages to stay solvent as real estate value hit two, four, six million bucks? Will our own employers be able to keep us all employed when the salaries need to rise to support property taxes that rise commensurately with the house prices since the city staff will need to be paid enough to live within a commutable distance of the street they maintain? Will we even want to live here when the vibrancy, character, and beauty of the city is rent asunder by condo and townhouse developers looking to cash in on every square foot of property they purchase? What about when 30% of the shops close down due to empty homes and reduced spending by remaining population? Because that’s the reality if the current trend continues. But is it going to?

    No. Of course not. No one in their right mind looks at prices jumping double-digit percentages and calls that a sustainable system. So if maintaining this level of growth isn’t an option, what are the remaining options? Well… if you’re an optimist, it flattens out. It softens. But the second that happens, people trying to “time” the market (every single investor) will recognize a peak and sell. And the second some people sell, everyone will, out of fear that they’ll be the last one holding onto a grossly over-inflated mortgage as prices plummet.

    And before someone says “but real estate always goes up,” you cannot point to the historical data and say “see, there’s proof; real estate never goes down here” when you’re talking about a market that is undergoing an event that has historically never happened before. That the increases we’re seeing now are breaking every record in the book should tell you that the book is no longer an indicator of what the future holds.

  13. I can definitely be convinced that houses in Oak Bay are worth more than houses in Camosun. I’ve been truly amazed to see how much money people are paying for 50s/60s bungalows just across the street from Oak Bay. I forgot to mention the one on Townley that sold for $800,000 a few weeks ago. That one looked like a very original 60s place with some interesting design features but really nothing special about it. Incredible. I think that all it takes right now is for families to be outbid by a fairly big margin a few times before they start throwing out wild bids in a panic themselves.

    @Marko: I wonder if you may eventually see some sales not go through after going unconditional because so many people are now putting in unconditional offers. It is plausible that someone would put in an unconditional bid after having received pre approval for a mortgage and would just assume that the bank will fund them in full. If the bid is WAY over asking/assessment the bank could say no based on the mortgage appraisal. Then the deal wouldn’t close unless alternate financing could be found.

  14. LeoM, another bad guess. The higher they go,the harder they fall. You watch The Big Short yet ? Apparently quite a few bulls on here are chicken to, might keep them awake at night.

  15. Hawk has two themes; ‘market timing’ and the ‘coming crash’. His daily predictions for about one year now, ‘warn’ us of the crash in real estate prices. He has advocated his “proven” techniques for “timing” the real estate market by selling high and buying low. His blog posts suggest that he sold his house in about 2011. Since then he has lost at least $250,000 in appreciation. Great timing Hawk, lucrative investment technique Hawk!!!

  16. What happens when a deal falls through at closing…The deposit paid? If you bought and do not have the cash because your buyer cannot close, this may impact multiple transactions on that day. How is this sorted out?

    When my clients are selling/buying and completing on the same day I always encourage them to have the exact same deposit on the purchase as the sale to mitigate the risk of the 1st buyer not completing and than my client not being able to complete. The two deposits should theoretically cancel each other out in such a situation.

    400+ transactions I’ve never had a deal not complete after going unconditional but I imagine the seller would lay claim to the deposit.

  17. Totoro you’re the pro here at making up their own labels and bafflegab BS. He sold an asset high then bought another asset in the same asset category at an undervalued price. Look up the definition. Hint it’s not listed under Stats Can. 😉

  18. Even more proof you market timed and don’t even know it. You sold in a hot market getting more for your condo than you would have a year ago and then bought an undervalued (in your mind ) asset. Your situation is irrelevant,it’s all about your financial timing which you accomplished. Welcome to the market timing club.

  19. Someone doesn’t understand terminology.

    Market timing is trying to buy low and sell high. Someone who is selling a condo to buy a house to fit their life circumstances is not trying primarily to “time the market”. There is also no pejorative definition of “market timer” – it is simply a person or organization that makes decisions to buy or sell investments based on economic and other factors that might affect the direction of the market. Seems like it fits the definition of “reasonable person” as well.

    An “investor” is someone who provides (or invests) money or resources for an enterprise with the expectation of financial or other gain. You don’t have to hold on to anything to be an “investor” if it does not suit your priorities. You merely have to have invested something with the expectation of gain. Stop making up your own labels. You use enough of them already. The world is more than Garth Turner makes it out to be.

  20. Hawk you make no sense. How is owning only what you can afford market timing? I couldn’t afford to own 2 homes at this stage of life. I would have been over-leveraged in a big way & under-diversified (i.e. All $$ in RE). My gross to mortgage ratio is 1:4. I paid nicely under asking price & very close to assessment (so no bidding wars or heated market).

    And, you have been wrong much longer than just one season. We’re taking years & years of crash talk…just like Garth. While I appreciate the market news you share, I don’t understand why you’re so obsessed with market-timing & prophesying.

  21. Can anyone with expertise in this area comment? This is relevant to the housing market (and particularly ones like these if I understand the implications for after 2016).

    Personally I’d like to see Primary Residence exemption eliminated and Taxable income lowered. Those who’ve had the greatest house price appreciation are likely the same whom will require those of us still working to pay for Health Care, Education, etc

  22. You did time the market or you would have held on to it and rented it out. You sold then bought in a high risk hot market. Hate to break it to you but that’s market timing, especially coming on here and boasting about it.

    Why aren’t you buying a second house if I am so wrong ? I was wrong about the spring but the year isnt over yet last time I looked.

    As Jack just stated this is pure panic buying which is historically the final sign this in the final inning. All we need is one lone catalyst.

  23. @Hawk: I didn’t “market time” in selling my condo & buying a detached house. The decision fit our life stage/circumstances. My point is that you’ve been wrong about the so called crash several times. There will always be a crash in RE & stock markets every 5-15 years. Always. So buy responsibly & hold for the long run.

  24. 3 things will kill this housing market

    BC Economy
    Interest rates
    International attractiveness

    Neither of those 3 seem to be heading Negative so enjoy the ride for awhile. To put things into perspective Victoria housing market is only up 20 to 25% or so since 2008. Hardly a bubble.

  25. I don’t think anyone can provide a date when a crash might happen. The economy is always changing. We couldn’t predict the oil crash or the staggering increase in buyers all most cities across Canada in the last six months.

    And while Michael is still going for a million by 2020 based solidly on his good looks alone, no one could have predicted that the median price in Saanich East, Victoria and Oak Bay would increase by $100,000 in one month. That’s about $140 an hour.

    And what happened in those two periods. 45 more houses sold in April than in March in those three hoods.

    That’s it – 45 more house sales.

    This is extreme panic buying. This is a serial killer gone mad near the end of his crime spree. They can’t help it – they’ve come undone. And just because I feel a little retro these days here’s Burton as a millennial.

  26. VicInvestor,

    You’re calling the kettle black buddy, you’re a market timer who just sold his condo at the top, so what’s your problem ? If you were an investor you would have kept it and rented it out so maybe change your nick to VicHomeowner.

    The bricks are all adding up but you’re too arrogant to see them, and would rather attack the messenger.

    Flipping a condo and taking on a larger debt at a market top doesn’t give you any credibility.

    Lets count the ways the market is looking very dicey as the buyers fall all over themselves:

    OSFI wanting banks to increase cash levels now dues to too high leverage mortgage lending
    Increasing insolvencies and bankruptcies
    Increase of major international banks/economists calling for a major correction or even a major crash
    Massive foreign money laundering that goes beyond anything ever seen in the world in one city/province
    Major political pressure on the BC government to do something now to stem the flow or suffer a huge loss in the next election.
    Highly illegal shadow flipping now being exposed
    realtor fraud exposed
    Mortgage brokers caught lending out $2 BILLION in fraudulent mortgages that didn’t qualify for required income
    Syndicated mortgages going bankrupt
    Household debt levels at historical highs far surpassing the US crash levels
    Canadian banks at record short selling levels
    Victoria prices are at 8 times household income which is far past the last major crash of 40% plus in 1981 where it was only 4 to 5 times.

    ICYMI you used the word “parabolic”. Should I post the definition for you and how “parabolic” markets resolve themselves ?

    BTW I have a million dollar view in a very nice apartment in the core for less than a condo, not a basement like you pumpers always have to resort to attacking me with when you can’t handle the news that dark clouds are circling.

    Sounds like you’re paranoid the market will tank.

  27. I suppose we could do what Germany has just done and ban most Airbnbs. I think the fine for operating a banned airbnb will be about 113,000 euros.

    That would be incredible to see in Vancouver.

  28. @Hawk: for how many years have you been predicting a crash? And, when is this ‘crash’ coming Hawk? Please provide date + % drop.

    You know Hawk, Vancouver prices have appreciated parabolically while you’ve been singing your crash song in a rented basement. If people had listened to you or Garth, they’d be out hundreds or even millions of $$$. Again, I agree that the markets are overpriced & out of touch with local fundamentals; however, there are still lots of buyers (esp rich Vancourites & those with foreign capital). So no one knows where we’re heading. Unfortunately for you, your predictions have been wrong. Thus, you have zero market timing credibility. Zero.

  29. Well Vicrenter the first thing I would have to do is convince you that properties in Oak Bay are worth more than houses in Camosun.

    Because the buyers could have bought homes in Oak Bay for $40,000 and $50,000 less if they had waited 10 days. And that is without considering any adjustment for the differences in the underlying land values in the two distinct locations.

    But that’s the problem with an auction. A shortened exposure time to come up with an offer. That typically means you concentrate on the last sale price of a home in that hood and make your decision on that limited information. Instead if you looked at a broader picture of the marketplace you may have chosen to pass on that property and not get worked up into a bidding war.

    This is a term for this and it’s called peak pricing. That the house you are looking to buy today is going to cost more than the last house to sell in the neighborhood. It’s all based on one sale.

    Sometimes you have to know when to fold them.

  30. The market will severely correct before you see a $1 million average by 2020. Insanity only prevails til the doctors dish out the meds. Keep on buying though, means less fools left when the downturn comes.

    Canada’s housing market ‘inching towards instability,’ U.S. bank warns

    “A big U.S. bank is warning that Canada’s housing market is “inching towards instability” amid low interest rates and a lack of listings.

    The recent report by Emanuella Enenajor, the North America economist at Bank of America Merrill Lynch, is yet more evidence of the frothy nature of some markets, though she’s not warning of a crash.

    Ms. Enenajor also said she expects further action by the federal government to cool things down.”

    “However, as the Fed gradually exits its accommodative policy, medium-term rates in Canada could also rise.”

    This, she warned, heightens the threat of a correction in Canada’s housing market.”

  31. A new trend of getting in too deep with no way out, even in BC, imagine that. Just another brick in the wall.

    Canadian Consumer Insolvencies Are Soaring, And Not Just In Alberta

    “The number of consumer insolvencies in the country jumped by 9.7 per cent over the past year, according to data from the Office of the Superintendent of Bankruptcy (OSB).

    Personal bankruptcies rose 6.3 per cent in February, compared to a year earlier, while “consumer proposals” — an increasingly popular alternative to bankruptcy — soared by 13.2 per cent.”

    “Ontario insolvencies jumped by 8.6 per cent, while in British Columbia they jumped by 8.3 per cent.

    That’s a new development: These provinces have been leading employment growth in Canada, and until recently, their insolvency rates were declining, as were the insolvency rates in most non-oil provinces.”

  32. What happens when a deal falls through at closing…The deposit paid? If you bought and do not have the cash because your buyer cannot close, this may impact multiple transactions on that day. How is this sorted out?

  33. I had a similar thing occur last week. The original lender pulled out of the deal at the last minute. In this case it wasn’t the appraisal but that the purchaser had not been forthright. Yet the broker still needed a new appraisal because the appraisal management company would not release the original report.

    Not every property should “appraise out”. There should be a small fraction that sell too high or too low. About 1 or 2 percent of appraisals should not be in support of the purchase price.

    That your Dad’s real estate agent has not ever seen this before tells me something about the Richmond appraisers. There should be a small failure rate. If all the deals go through without a problem then I’d be looking at the appraisers. No one is that perfect.

    That’s good news for some appraisers who work with law firms because there is a lot of money in suing appraisers for poorly done appraisals. $2,000,000 in insurance on every appraisal means deep pockets for lawyers to get a settlement. And it doesn’t take much to shred a mortgage appraisal to pieces in court. Tens of millions of dollars are paid out in claims against appraisers every year in Canada.

    And a lot of the complaints never get to court, they are just paid out from a fund.

  34. @ JJ – Thanks for the really interesting info about appraisers. One of the most surprising neighbourhood price jumps that I’ve noticed this spring is in the Camosun area on the Saanich side of Foul Bay. I watched one house on Kings sell in the mid-$600,000s, which I thought was high. Then another one on Kings sold for $750,000 and one on Neil for $780,000. After Neil, one on Dean went for a similar price. Oh, and a house on Service (close by but slightly out of the area I’m talking about) sold over $800,000. It seems to be that the new, crazy benchmark in that neighbourhood is now $780,000 and rising for a bungalow. If I’m not mistaken houses around there used to sell in the $500,000s just a year or two ago. JJ, if you had had clients looking at, say, 1971 Neil St. (renovated with a suite), what might you have told them was a fair price? (That’s the house that sold for $780,000.)

  35. @entomologist

    “The law of supply is a fundamental principle of economic theory which states that, all else equal, an increase in price results in an increase in quantity supplied. In other words, there is a direct relationship between price and quantity: quantities respond in the same direction as price changes.”

    Victoria, Saanich and Oak Bay listed 272 houses this April when the median price was $850,000. Last year in April, 280 houses were listed when the median price was $660,000.

    -New listings have not been increasing relative to increasing prices

  36. Oak Bay benchmark 21.5% higher than last April. Should easily reach a million median core by 2020.

  37. When most first-time real estate investors start thinking about purchasing an investment property, they start by deciding what the right location would be, what type of property they should buy and how much they could potentially rent it out for.

    One of the best advices of information I got when looking for a house was “Look at the price of the house this way… How much you could potentially rent it out for and go from there as to what you can afford in the final price. Even if you’re not planning on renting it out, you may never know what future options may arise.”

  38. Just an interesting anecdote from Richmond, BC. You may remember that my father just sold his Richmond home at 178K over asking with only 1 bidder. Anyway, about 3 days before closing buyers asked for 10 more days to “get some cheaper financing”. Said no. Turns out that what they really wanted (and not sure why they didn’t say this) was a 2nd appraisal for a 2ndary financer. Anyway, they missed the Thursday closing deadline last week and were told noon the next day or deal’s off. They somehow made it and deal finally closed. Don’t really have any more details but did the 1st bank’s appraisal come in too low?

    My dad’s realtor who has been in business for years has never seen this before…

    Anyway, thought it was an interesting story.

  39. Just bid what you think is a fair amount, and if you get it you get it, if you don’t you don’t.

  40. @ Vicinvestor1983

    The only way to avoid paying over market value is not to get involved with bidding wars. And that isn’t likely to happen if you’re trying to buy the same property as every one else.
    9 out of 10 offers may fall within a narrow range of say $485,000. But there will be that one buyer who has been outbid on the last six homes and offers $545,000. There seems to be no defense against real estate radicalism except not playing the game when you’re looking without help.

    What you probably need is to know how much crazy you can afford. If you know the market value range of the property you may be willing to pay 5% over market value to secure the property but maybe not 10%. In order to estimate the market value range for a property you’re looking to buy you have to stop concerning yourself with a small judgement sample of comparable sales. You have to look at the BIG picture to understand if what you are offering is reasonable and equitable within the marketplace.

    Unfortunately, you don’t have access to big data. You have individual sales that can become quickly misleading. You need sample sizes of 300, 400 and 500 sales not just a half dozen.

    I’ve worked with 3 prospective purchasers this year who felt they were going to be priced out of the market. I consulted with them on offers on several properties they were looking to purchase and gave them a range in value on the properties and my views on what to offer and what is crazy. All three have purchased now and none of them over paid for the property. It took time and patience but they got what they wanted without being taken to the cleaners. I am not a real estate agent, I consult only on value. You still will need a real estate agent but I work independently from them. Along the same lines as when you hire a home inspector to look at the property.

    You may want to hire an appraiser as a consultant on your behalf. The more information you have the better decision you will be able to make.

  41. 265 houses sold in April in the areas of Saanich East, Victoria and Oak Bay
    -Median price paid was $850,000
    -Median exposure was 8 days-on-the-market

    There are only 170 listed for sale today in those same hoods ranging from a low of $399,900 for a small 2-bedroom starter home along a heavily traveled residential collector road to a high of 15,000,000 for the ridiculous. Second highest priced home is at $7,250,000 for a contemporary style and very large home on 1.5 acres of waterfront in Ten Mile Point that has been listed for over one year.

    The months of inventory for all prices ranges in these hoods is shy of 3 weeks. The MOI is worse for those properties characterized as middle income houses in the $675,000 to $1,000,000 range.

    And last month 243 properties were listed or 243:265 (0.9 new listings for every one that sold)

    Generally, between 5 to 7 months of inventory, a new listings to sales ratio between 1.5:1 and 2.5:1 and a DOM between 30 to 90 days is a balanced market between buyers and sellers with stable prices.

    At under 1 MOI, an NLS of less than 1:1 and a DOM of 8 days is a market at the extreme end of the scale. A market that is very strongly in favor of sellers with irrational bidding at over market value levels for some of the more desirable properties.

    Prices should be going balistic in these hoods. And they are. The median price in March for these hoods was $100,000 lower at $751,000. Now not all properties have performed that well for example the previously mentioned starter home. There does seem to be a pattern to the type of house and location that brings out the crazy in buyers today.

    Every property has to be looked at individually to determine where it falls in the crazy scale. For example I looked at a 1-bedroom condo in View Royal last week and the market for that type of property has been flattish for the last year or two.

  42. Ok, so new listings the first 4 months of the year compared to last year:
    2016 2015
    Jan – 934 – 1027 (-93)
    Feb – 1160 – 1108 (+52)
    Mar – 1445 – 1448 (-3)
    Apr – 1590 – 1413 (+177)

    Total difference in new listings: 133 more new listings in 2016 than last year.

    Hopefully this is the final nail in the coffin of the ‘supply-driven boom’ theory. Supply this year has been the same as last year. Demand has been massively greater. Prices are rising sharply as a result.

  43. @JJ: thank you. Yes, ours was a mortgage appraisal. Now it makes sense why it came in exactly as purchase price.

    I understand that RE industry tells us the value of the home is why the buyers are willing to pay for it. However, when one is looking for a home, what metric should be used to ensure you are not over-paying? How do you determine if you got a ‘good deal’? It seems that both BC assessments & mortgage appraisals are deeply flawed.

  44. @Jonnk

    As with every business there are different levels of service. An appraisal done for mortgage purposes is the lowest level of appraisal service. The appraisal is at the end of the loan process. Essentially by this time the bank has done all of the credit checks and only require confirmation of the sale price as being at market value. The bank has in most cases decided by this time to do the deal. That’s why the majority of mortgage appraisals are ordered as rushes and the bank is looking for the cheapest appraisal fee. The bank wants to make a loan and not having an appraisal that will sink the deal.

    So it isn’t a surprise that the mortgage appraisal came in at the same value as your offer. Because if it didn’t hit the value the poo would hit the fan. The appraiser would be inundated by calls from the appraisal management company, loans officer, broker, listing agent and selling agent to raise the appraised value. All of them want to make the deal happen. And since mortgage appraisers work on volume, they don’t want call backs that take time away from billable work.

    However, if you have an appraisal done before you make an offer, then the appraisal is at the beginning of the process. That’s when you want an appraisal with good data, analysis and consultation to inform you of where to make an offer to purchase. That is different from a mortgage appraisal. Because then you want an appraisal and not a loan. That’s when you want the better appraisers to do the valuations.

    Most real estate agents only have experience with mortgage appraisals. And like I said the mortgage appraisal is the lowest level of service. This is low liability work because it is at the end of the loan process and I characterize it as cheap and dirty work. And unfortunately this work then characterizes the rest of the appraisal industry. Typically the appraiser that performed the mortgage appraisal is paid a commission and receives about $135 for four hours work and he/she has to pay all their own expenses out of that commission. That’s why most of the report is non informative boiler plate with minimal analysis and little reconciliation of values from different approaches.

    If you should ever need an appraisal for litigation, division of assets, assessment appeal or a government expropriation that you disagree with, then you would be looking for the best appraisal that you can get. Not a mortgage appraisal.

  45. Wholy crap!

    Mon May 2, 2016:

    Apr Apr
    2016 2015
    Net Unconditional Sales: 1,286 840
    New Listings: 1,590 1,413
    Active Listings: 2,594 3,945

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

  46. My experience is assessment has nothing to do with actual real world values, its for tax purposes. My neighbour’s assessment dropped by almost 100K from last year when his house would have brought about $1 mil. This year @$1.5 mil would bring a stampede of salivating buyers.

  47. @JJ: When I was buying a house, I would always check assessments as one of my metrics, but my realtor would always tell me to ignore the assessed price as it “meant nothing”. I still believe it might be unwise to pay massively over assessment, but I’m no RE expert.

    How about bank appraisals JJ? Are they any more or less accurate than BC assessments? We recently bought a semi-luxury house in the core & our purchase price was 5% over assessment & exactly at appraised value.

  48. Years ago when BC Assessment was an old boys club, I think there was some truth to that.

    However, not today. BC Assessment values every piece of real estate in the province at actual/market value.

    The difference between actual and market value is to do with legislation regarding properties like agricultural land.

    There is no truth that BC assessment under values reduce appeals. They use a complex computer system that does most of the analysis. However, this is a mass appraisal analysis and not an individual appraisal on each property. That means they are accurate in the big picture but there will be variation on individual properties.

    Your property is valued as at July 1 of the previous year according to its condition as at October 31 of that year. The current assessment is at July 1, 2015.

  49. Although it might be an urban myth, I was always of the impression that BC Assessment routinely undervalued properties to avoid having too many people appeal their assessments each year. I’d heard 10-15% was routine. So the 109% in April 2015 would be about “normal”.

    Any truth in this myth JJ?

  50. When I center in on just the areas of Victoria, Saanich East and Oak Bay. The numbers start to rock.

    109% in April 2015
    114% in January, 2016
    118% in February
    124% in March
    127% in April 2016

    A 17 percent year over year increase
    11% since January
    8% since February
    2% since March

    And just for kicks, a look at Langford and Colwood

    109% in April 2015
    106% in January
    109% in February
    109% in March
    111% in April, 2016

    Note: since there are a lot of new home sales in the Westshore some of them had not been assessed yet and that brought the sample size down. Areas with a smaller sample size with have more sample variability.

    I think it is quite clear that this market rally is mostly contained to Saanich East, Victoria and Oak Bay. And appreciation does seem to be slowing in these areas.

    The gap in prices has gotten quite large between the core and the westshore since January.

    So what do you think? Are the recent price increases in Saanich East, Victoria and Oak Bay sustainable? Or have some of the recent buyers in the core thrown away a lot of future appreciation and equity?

  51. Just looking over some preliminary stats and they are not as bad as I thought they would be for this year.

    The median Sales to Assessment ratio for April was 124%
    In March it was 121%
    In February it was 116%
    In January it was 114%

    And one year ago in April 2015 it was 109%

    Almost a 14% year over year increase in prices for houses in the core districts.
    9% increase since January
    7% since February
    3% since March

    After an initial shock in prices, it appear that the rate of appreciation is slowing for houses in the core districts.

    And intuitively that makes sense as most of the out of town buyers are from cities that have similar prices to ours. There seems to be a limit to what the market can pay and we may be nearing that point.

    I’ll need to do this analysis just for Saanich East, Victoria and Oak Bay as this seems were all of the hotness is these days. The other townships in the core might just be leveling out the stats.

  52. @bearkilla, Agree, there needs to be better balance between preserving walkable sections of a city and the realities of everyday working life. eg., downtown English Bay & Kits are beautiful & amazing for singles, retirees, or wealthy, but a city cannot survive on those people alone.

    A city still needs roads and bridges to support a working economy because not everyone can take a train to work or deliver consumables by bike. People can’t buy food, clothes, or medications unless those things are delivered by large trucks or cars. Contractors or consultants need to visit clients, engineers or lawyers need to be in the field, nurses need to visit the elderly.

    That’s why I’d like the gov’t to promote electric vehicle use and build roads and transportation systems to support it all.

    The NY Times had a good article about those urban planning theories:

    “… the problems of the 20th-century city were vast and complicated. Ms. Jacobs had few answers for suburban sprawl or the nation’s dependence on cars, which remains critical to the development of American cities …

    Perhaps her legacy has been most damaged by those who continue to treat “Death and Life” as sacred text rather than as what it was: a heroic cri de coeur. Of those, the New Urbanists are the most guilty; in many cases, they reduced her vision of corner shops and busy streets to a superficial town formula that creates the illusion of urban diversity, but masks a stifling uniformity at its core.

    For those who could not see it, the hollowness of this urban planning strategy was finally exposed in New Orleans, where planners were tarting up historic districts for tourists, even as deeper social problems were being ignored and its infrastructure was crumbling.”

    Too bad Vancouver keeps beating the same hollow drum, “tarting” itself up as a liveable city but masking the real problems. Hope it doesn’t happen to Victoria.

  53. I’ve heard that the government of Canada is weighing the idea of introducing a tax on the sale of ones principle residence in order to cool the residential markets. The first step would be to have a seven percent tax on any profits over one million dollars. If that is true, it would seem that anyone in Vancouver would want to sell their house now before this new tax is put in place. (Vancouver would be an ideal candidate because people there are in a position to sell their house and make two or three million in profit without paying any taxes if it is their principle residence. They would then move to the valley, to the interior , or Victoria where houses are one third less.)

  54. “According to 2010 Statistics Canada data, the average Vancouver car commute was only 25 minutes, compared to 29 minutes in Toronto and 30 minutes in Montreal.”

    Sure there are awful commutes in Vancouver, but on average it isn’t that bad

  55. Vicbot I know that Vancouver has the worst traffic in North America. That s my point. Progressives believe that building roads only increases vehicle traffic. Vancouver is the result.

  56. Another thing about Vancouverites moving to Victoria… I’ve heard this three times recently, I know 3x does not make a trend; but, apparently residents of Vancouver who are employed by the Provincial and Federal governments are madly bidding on government jobs in Victoria. In many cases the Vancouverites have more seniority and often more credentials than the Victoria employees. End result is the Vancouver employees are winning the Victoria job competitions, they then get a cushy job transfer/moving expense payment, they sell their Vancouver house, move to Victoria and buy a better house in the core without much concern for the house price after cashing in their Vancouver house lottery ticket.

    I’m told that in past decades it was unusual for Vancouverites to transfer to Victoria; it used to be the opposite; Victoria government employees wanted to transfer to Vancouver, but it’s changed these days.

  57. @Vicbot:
    Absolutely, if you are a family looking to buy in the Vancouver area, and you work in the city, you are doomed.

  58. @Newcomer, yes living in East Van right next door to the downtown core is easier. For people on the north shore every afternoon starting 2:30 pm the Lion’s Gate is jammed gridlock, and around 4 pm the Ironworkers is jammed. Then you also have Oak ST and Knight St and the tunnel, which has traffic backed up Nothward starting around 5 pm and Southward 7 am to 9am due to counterflow. The Patullo and Queensborough have become nightmares because no one wants to pay the toll on rhe Port Mann. So anyone that doesn’t live next to the downtown core is stuck in traffic jams. Everyone refers to all of these areas as Vancouver because it’s strange in casual conversation to say Lower Mainland.

    Also part of the problem is millenials cant find an affordable home within reasonable driving distance that is big enough for 2 kids so that’s why people are leaving.

  59. @Vicbot
    I hear that is true outside the city of Vancouver, but I live in East Van and I have to say that in ten years I’ve basically never been in a traffic jam outside of the downtown core or coming back from skiing. I never venture into the suburbs except on the weekends and in the evenings, so I haven’t experienced the bridge nightmares people talk about, but when I compare Vancouver to other cities, I’ve gotta say it is extremely drivable.

  60. @bearkilla, that’s the way the city planners like to sell and market the city. It’s a joke to people who live there. It’s not the realty. Once you get past the downtown core it’s a mess of traffic jams and pollution. Google “why I had to leave Vancouver”

  61. Vancouver is the blueprint for progressives. It’s held up as THE premier city in terms of city planning.

  62. @Hawk “The major question is why is Vancouver and other larger cities selling to move here now”

    From what I’ve seen, it’s because prices in Vancouver have reached a critical theshold where some people can sell and retire to a lower cost location, or work remotely or part time. The whole Lower Mainland has become so expensive and undriveable with every overpass and bridge clogged and bridge tolls, too many condos squeezed into every available inch, so the Island or Okanagan look better. The advantage with Victoria is access to health care amenities, university, and faster access to Vancouver.

    It’s also partly because they don’t know how long the prices are going to last.

    Too bad Rennie is now set to destroy Victoria as well. But it’s hard to stop someone that’s pumping the Liberal party with donations. With too many condos built for investors instead of residents, land values are going to go up again, which makes it harder for millenials to have the same start we did. We watched it happen in Vancouver.

  63. The reason Bob Rennie is the Condo King is because he’s perfected marketing (or at the very least following the template)

    Generating interest is the companies specialty.
    He took over the Olympic Village in Vancouver and made adjustments.

    I’m not a fan of his but that’s what he does. At some point, those 2000+ homes (and rental suites) will be filled.

  64. Overheating, I think that’s another question. The market is certainly insanely hot, but overheating implies it will lead to bad consequences.

    Fair enough but you would think the report would mention that sales are at historic highs and at this pace (20% increase YOY) the market would overheat within a couple of years.

  65. Luke M,

    For all we knew, the listing agents had it set up ahead of time to double head the deal (double their commission)

    Only about 5% of properties that hit the market and are delayed for offers are double-ended (I have access to the stats in my database). The odds are the listing realtor does not have someone in his or her back pocket willing to go 50 to 200k+ unconditionally.

    So far today I’ve shown 4 properties and it is insanity out there…..I had to park two blocks away @ 1233 Sunnyside….you couldn’t walk through the house and it wasn’t even an open house.

  66. “Exactly, how can a large bank regulator make note of it, but not the agency lending out $600 Billion of taxpayers money.”

    The job of the OSFI is to ensure safe, healthy banks. The job of the CMHC is to get risky buyers to buy. Those are almost opposite tasks, so it’s not surprising if they call the market differently. That said, everyone in the CMHC must be aware that their statements are disingenuous.

  67. “Funny. So the OSFI thinks there are signs of overvaluation. Maybe they should look over the cubicle wall and see if they can come to some agreement with their friends at the CMHC”

    Exactly, how can a large bank regulator make note of it, but not the agency lending out $600 Billion of taxpayers money.

    “Royal Bay….and Vancouver’s Biggest RE Cheerleader…Bob Rennie”

    Bobby the Condo King has finally met his match. He clearly didn’t do his research on how most people will do anything to not live on the Westshore. Guess he never heard of Bear Mountain.

  68. If this market isn’t a sign of overheating than I don’t what is….maybe 50 offers on properties instead of 10?

    The CMHC not picking up on the price acceleration is inexcusable. That is just shoddy work.
    Overheating, I think that’s another question. The market is certainly insanely hot, but overheating implies it will lead to bad consequences. If a pressure cooker overheats it explodes. The market being this hot is bad for buyers, but I’m not convinced it necessarily means it will end badly. It might just be similar to the 2000s where it gets insane for a couple years and then cools off.

  69. “A monkey could sell a house right now…..

    List on a Thursday or Friday morning, have an open house on Saturday or Sunday to make it seem like you are actually doing something for your $30,000 commission, take offers Sunday night or Monday night. Try to act professional and smart when you suggest to your client that he or she should take $150k over asking unconditionally. Yea, no S***.

    I love how dumb consumers are paying full pop commissions right now……….it is beyond comprehension in my opinion.”

    I found this comment from Marko Juras interesting. Given we have just bought a house in Oak Bay which was for sale by owner. This, after the frustrating experience of months of house hunting dealing with limited inventory on the open market and loosing multiple homes to multiple unconditional higher offers had left us worn out. For all we knew, the listing agents had it set up ahead of time to double head the deal (double their commission).

    So, we placed an ad online looking for a home for sale by owner. We had many interesting responses from others not wanting to pay such ridiculously high commissions.

    We ended up with a fabulous custom build house, with no intense competition to deal with. Dealt with the awesome owner/builder directly. Had no realtors laughing at the ease of making what for many people is a yearly salary in one day.

    As for where are these buyers coming from. There are many from Vancouver, as we had lost three homes to ‘Vancouver buyers’. But they are also coming here from all over the globe. Given the lack of land/housing in the core area in Victoria, and the high desirability of this city compared to the rest of Canada, this situation is likely to continue, or even accelerate, especially over the long term. Local incomes have minimal play on what happens in the core area. It’s about money made elsewhere.

    As for the CMHC – they are beyond clueless as to what is really happening in the core area of Victoria.

  70. “Canada’s big banks would have to calculate higher capital for mortgages in 11 cities when there are signs of overvaluation: Victoria, Vancouver, Calgary, Edmonton, Winnipeg, Hamilton, Toronto, Ottawa-Gatineau, Montreal, Quebec City, and Halifax.”

    Funny. So the OSFI thinks there are signs of overvaluation. Maybe they should look over the cubicle wall and see if they can come to some agreement with their friends at the CMHC

  71. Royal Bay….and Vancouver’s Biggest RE Cheerleader…Bob Rennie

    Vancouver’s king of RE spin is going to be marketing in a big way in Victoria.

    Get ready for Vancouver size lots (e.g. under 4000sq/ft2), at Core Prices and BTW the goods news….there is only 2200 units/lots and you can join the Colwood Crawl coming to work!

  72. I wonder if/how long it will take for Leo to start his business giving away this kind of thing without repercussion from VREB…

    The VREB is relatively open compared to many boards. However there is so much more that could be made available. We’ll see how far they are willing to go. More on this later

  73. The proposed revisions first discussed by the Office of the Superintendent of Financial Institutions in December — in tandem with federal changes to down payment levels for certain home purchases relying on government-backed mortgage insurance — are to become effective in November following a public comment period.

    From that FP article Hawk posted… Could put/add further pressure pre-November changes (much like the recent down-payment % increase recently introduced in Feb)

  74. db,

    Maybe this has something to do with the banks tightening up lending qualifying. More signs things are getting dicey behind the scenes of the Big 5.

    OSFI proposes mortgage capital changes for banks to keep up with soaring house prices and debt

    “Canada’s top bank regulator is proposing changes to the amount of capital the country’s biggest financials institutions must hold against residential mortgages to keep up with the rapid rise of house prices and highly leveraged buyers in some markets.”

  75. Can you say The Big Short 2, Canadian Style ? Urbancorp, now these shady syndicated mortgages. Same snakes, same oil. Whose next ?

    The high-risk world of syndicated mortgages

    Syndicated mortgages were once the preserve of sophisticated investors, but are now being pitched to ordinary consumers with promises of low risk and high returns.

    “Hundreds of investors sank $16.9 million into a syndicated mortgage on a high-profile Barrie development that had been marketed as secure, high-interest paying and RRSP eligible.

    For ordinary consumers looking to boost their retirement savings, the sales pitch by the mortgage brokers who raise money for Fortress Real Development projects was compelling.

    It hasn’t turned out as expected. The developer ran into financial trouble, the investors were left in limbo and Fortress has had to pick up the pieces.”

    “Rathore and Petrozza have previously run afoul of securities regulators involving high fees and poor investor disclosure. The incident involved a group of companies Rathore operated under the name Phoenix Credit Risk Management Consulting Inc.

    In 2005, Rathore was banned for life from selling mutual fund investments in Canada by the Mutual Fund Dealers Association and fined $25,000 in penalties and $7,500 in costs.”

  76. “Cohodes was right about the concerns with Home Capital – their brokers were falsifying borrower incomes:”

    As Cahodes was saying, it’s a fraud in the works as when there’s smoke there’s fire. Just look around at more early signs this is going to tank.

    The major question is why is Vancouver and other larger cities selling to move here now, and not a year ago, two years ago, when their prices were up larger versus Victoria prices back then ? Because they know the top is in and the pool of greater fools is at it’s peak. Best time to sell, worst time to buy unless you are downsizing and pocketing the difference or renting.

  77. There seems to be a common misconception about the ability to finance.

    I talked to my banker at a Big 5 bank this week as she quoted me 2.15% on a one year HELOC… AND she informed me that mortgages are only being offered if the individual qualifies based on a normal 5 year mortgage rate. (which is in the 4.5% range).

    So, either it is NOT the Class A banks financing these purchases, or the purchasers have substantial incomes, or they are putting down substantial down-payments and the loans/mortgages are not as high as everyone is projecting them to be…

    It seems everyone is calculating “expensive” based on the house sale being mortgaged to the hilt, when in fact that seems unlikely.

  78. The old adage is that the market can stay irrational longer than you can stay solvent. Victoria is on a bit of a tear, but there is nothing stopping it going up, as the real driver is not China or employment levels or intergenerational wealth transfer, but credit. As long as people can keep borrowing, prices can keep going up, and as long as people believe that prices will go up, they do. You would expect there to be some sort of natural limit, but Vancouver proves that there isn’t. People will happily buy at 800 times the monthly rent (of course, such buyers plan to spend several hundred thousand to renovate and produce an investment that is only 500 times the monthly rent). So as long as long as you have places that are only 300 or 350 times monthly rent, you have lots of room for additional madness.

  79. From that cbc article on the TREB trubunal ( at the bottom it mentioned a firm in NS that just gives the data away for free. As in the REBs of NS aren’t cracking down or enforcing the same rules that other boards are? How does that work?

    McMullin said his company and many others would love to offer a similar service in Toronto and elsewhere, but can’t under the current system.

    I wonder if/how long it will take for Leo to start his business giving away this kind of thing without repercussion from VREB…

  80. Michael Burry was early, too, with his shorts, but he still made hundreds of millions of $.

    Nothing wrong with talking about warning signs – makes this blog interesting.

    Cohodes was right about the concerns with Home Capital – their brokers were falsifying borrower incomes:

    The Economist last year called Canada’s housing market the most over-valued in the world.

    IMF has created a Global Housing Watch:

    “With this new Global Housing Watch, we can look at indicators such as the house price-to-income ratio and the house price-to-rent ratio. We will soon add other indicators, such as how fast credit is growing, which could signal a potential bust.

    IMF Survey: What’s the advice that the IMF can give a country that appears to be going into unsustainable housing price territory and unreasonable credit growth?

    Loungani: “Microprudential (Mip) policies look at an individual bank’s balance sheet, for example to determine if it is making too many real estate loans. But it could be that the individual banks are doing what seems healthy for them, but what the banking system as a whole is doing needs results in an unhealthy growth in lending.”

  81. Which is what you bears have been claiming for a decade. Anytime now. Strongest indicator is open house attendance. When people go to them it means the market is going to crash.

  82. What do you have to post troll ? Cameron Muir and the corrupt BCREA ? A crash is inevitable when extremes like this occur.

  83. Comoooon: You’re the village idiot. If you think these kinds of house price increases are sustainable, you’re out to lunch.

  84. Hawk, BNN vid shows Cohodes who lost most of his money in a short squeeze on van housing over the last 3 years. He is beating the fud drum to try to recover some losses. His mistake was not understanding income to price ratios not mattering because of Chinese money from outside country.

    Bisznitch, that author you posted to on a free blogging platform is the infamous

    Mega loser, lost it all being a reckless dinglbeery.

    Can we please post better people then Garth and the above broke losers when trying to convince home owners that there is a crash next week?

  85. Great interview on BNN today with a well known American short seller who calls out Vancouver for what it is: The North American capital for money laundering.

    Home Capital sounds like it has zero cash resources. Coupled with CMHC insisting that there’s “no problem here folks, keep on borrowing your ass off”, the lid is off the can now and the set up for a crash is in play, in my most humble opinion.

  86. 2559 Cranmore – listed at 950k, sold for 1.22m! Assessment is 656k.

    The insanity is actually accelerating.

  87. As I was saying the fact my pcs exploded and people are going to open houses strongly suggests a top which means there end of near.

  88. @JD

    1512 Fell sold for $650K. Seems like an OK price for a rental property in that area. A little bit of work and the place would sell for much higher. I wouldn’t be surprised if we see it on the market again in the near future after some updates.

  89. My guess is we will end the month with 110 over $1,000,000.

    Now, how many of these sales are a result of increased market activity and how many are as a result of those 750k-999k homes crossing over $1 mill in the last 12 months?

  90. 103 properties have sold for over a million dollars this month – so far. Compare that to last year at 36.

    14 of them sold to Vancouverites
    3 from Calgary
    3 from Edmonton
    3 from Toronto
    4 from Surrey
    3 from North Vancouver
    9 not shown
    12 other
    52 from Victoria

    Now where did those 103 Victorians that sold their houses move to …….

  91. I heard snippets of the radio interview…it was so bad I just switched over to classic rock. Can we really expect anything more from government? Report would have been done at a 1/3 of the cost with greater accuracy by a private firm.

    If this market isn’t a sign of overheating than I don’t what is….maybe 50 offers on properties instead of 10?

  92. In the radio interview she keeps quoting data “from up to end of 2015” then says “currently no overheating” . In other words the report is useless and a waste of time reading.

    The report isn’t that detailed you couldn’t use data from up to March. Take a couple of hours to do at tops.

  93. I doubt it; Marko mentioned that many realtors prefer to post their new listings on Thursday and Friday to generate buzz for their weekend open house.

    A monkey could sell a house right now…..

    List on a Thursday or Friday morning, have an open house on Saturday or Sunday to make it seem like you are actually doing something for your $30,000 commission, take offers Sunday night or Monday night. Try to act professional and smart when you suggest to your client that he or she should take $150k over asking unconditionally. Yea, no S***.

    I love how dumb consumers are paying full pop commissions right now……….it is beyond comprehension in my opinion.

  94. Instead of buy and flipping your condos, have you considered renting them out? I would think this would be the more logical approach as you would make more money in the long run than you would on the instant cash.

    I rent all of them….I have yet to sell anything but it is becoming tempting as the prices swing up.

    This is my approach to investment condos….

  95. The benchmark price of $663,000 that CMHC quoted for March 2016 is close to the median price for all house sales in the Greater Victoria area. The median for all areas for April is nearly the same being around $655,000.

    And that’s why there is no over valuation in Victoria. But if you’re not interested in living in Port Renfrew of Sidney then things look a bit different.

    Because in the core districts the median price for April is close to $765,000. And if you want to live in Saanich East, Victoria or Oak Bay where most of our population lives then the median price is $850,000.

    I wonder if CMHC took another look at our market using $850,000 instead of $663,000 would they still consider the market not to be over valued?

  96. She (CMHC) says the market is well supplied yet says demand is higher than supply, yet supply is at record lows. Talk about a pile of bullshit.

  97. Maybe the journalist has been on here. I’m just showing that it’s not just this site on it.

    That topic is how they found it flawed and this site show it how flawed the flawed system is.

    Almost a he said she said situation.

  98. Yeahright

    If you look the thread is about your link/ check the graphs.

    Marko is and has been renting out Condo`s. He is major proponent of it.

  99. @Marko Juras,

    Instead of buy and flipping your condos, have you considered renting them out? I would think this would be the more logical approach as you would make more money in the long run than you would on the instant cash.

  100. Agreed, Just Jack. I didn’t believe it for years and years. But I’m having a hard time denying that it certainly seems to at least be more true this year than in the past.

  101. It doesn’t matter if it is true or not that people from Vancouver are buying up Victoria real estate.

    What is important is that you believe it to be true.

  102. “I attend open houses for entertainment”

    Just another sign the top is in. Agents ramping up the blog posts heading into the weekend, Vancouver sellers dumping like mad men before it tanks and obsessed Victoria owners who need a real hobby. 😉

  103. If someone has access to (a) a good GIS system, and (b) addresses, sales prices, list prices, assessed prices over the past X years, one could make a really powerful series of maps that show:
    1) the changing extent of houses over a certain price point (say 800,000)
    2) differential prices, and sales price to assessed or list price between and within neighbourhoods
    3) how SFH has acted (until recently) differently than condos

    This would clearly show how the core areas are acting very differently than those in the outer areas,

  104. “The higher end sales that occured today…

    9260 Ardmore Dr NS Ardmore $3,900,000
    8140 Marcott Close CS Saanichton $3,000,000
    2378 Esplanade OB Estevan $2,565,000
    3110 Exeter Rd OB Uplands $1,895,000”

    Isn’t that really unusual? Has there ever been a day when that much high end real estate has been sold? Seems to me like the YVR buyers have started focusing on the luxury real estate here too.

  105. There were 71 new listings yesterday versus 52 sales. 1.4:1

    However, the ratio of new listings to sales is not spread evenly among all areas and types of properties.

    House sales in the core were 27:17 (1.6:1)
    Condos in the core were 20:7 (2.9:1)

    Data over the last 7 days is more relative with 73 new house listings versus 83 sales.
    80 new condo listings versus 48 sales

    But it does illustrate how fast this market can change. Especially the condo market where there will be more rental properties that may easily be brought to market.

  106. “The long awaited crash is finally here. ”
    I doubt it; Marko mentioned that many realtors prefer to post their new listings on Thursday and Friday to generate buzz for their weekend open house. It’s just a marketing technique to generate quick offers by Sunday. I attend open houses for entertainment (I’m not seriously looking) but there are mobs of people seriously looking; young families and wannabe ‘investors’ by the hundreds.

  107. “The long awaited crash is finally here. This morning my pcs exploded with an additional 10 listings and ONE sale only. The end is nigh. Also, my neighbor said he’s broke.”

    Thats quite the bold statement… There have been many days where 5-15 listings have been added with minimal sales… and other days with 10 sales and no new listings.

  108. The long awaited crash is finally here. This morning my pcs exploded with an additional 10 listings and ONE sale only. The end is nigh. Also, my neighbor said he’s broke.

  109. “640 Moss just sold for slightly under ONE MILLION$$$. What the hell is going on!?!?!?!?”

    The only thing that I can come up with to explain this kind of stuff is that people from Vancouver who have money from house sales are coming over here and buying in Oak Bay & Fairfield. It doesn’t take that many Van people to soak up most of the OB/Fairfield stock of houses. And if they have lots of money and Victoria seems cheap to them then they’ll be reckless with their bids. The price jumps in those neighbourhoods that are the results of reckless/abundant Van money are then spilling into other neighbourhoods (at a lower and slower rate, but still) where the buyers are primarily local.

    Just Jack, is there any way for you to tell us the percentage of out-of-town buyers for Fairfield & OB vs the other neighbourhoods in the core?

    Without even bringing up the topic of real estate myself I’ve talked to 4-5 friends or colleagues over the last 2 weeks who’ve mentioned that someone they know from Van just bought a place in Oak Bay. I also randomly started talking to a new home owner while I was out for a walk in South Oak Bay a few weeks ago and she couldn’t wait to brag that she’d cashed out of Vancouver and bought here.

  110. 8140 Marcott Close CS Saanichton $3,000,000

    Ok, but this property was listed at $3.5M; motivated seller? Perhaps a not-so-hot submarket outside Fairfield/OB?

  111. 640 Moss just sold for slightly under ONE MILLION$$$. What the hell is going on!?!?!?!? It’s on a small half-size lot on a semi-busy street. Maybe it’s time to sell and rent one of Marko’s condos.

    The gap between the prime core areas and the rest is growing….while Oak Bay and Fairfield have skyrocketed 25% in a relatively short time frame the same cannot be said for areas like Bear Mountain.

  112. The higher end sales that occured today…

    9260 Ardmore Dr NS Ardmore $3,900,000
    8140 Marcott Close CS Saanichton $3,000,000
    2378 Esplanade OB Estevan $2,565,000
    3110 Exeter Rd OB Uplands $1,895,000

  113. Marko

    On Condo pre sales are there any crazy closing costs tacked on that may not be know till closing like final development city charges or anything like that.

    No, you know to the dollar how much you are paying on completion.

    I bought a unit at the Encore on the 14th floor with two parking spots in September and then in December I listed a unit at the Promontory (I sold the same floor plan on different floors three times previously and it wasn’t easy) and unexpectedly it ended up in a bidding war. After it went unconditional I went over to the Encore and bought a second unit, the last one bedroom left in the development. It made a lot of sense compared to the Promontory re-sale.

    I am up as it stands about 60k on one unit and 40k on the other unit with the stroke of a pen. That is like two years’ worth of hustling mere postings and all the driving, meeting people, data input, answering calls/questions, etc., that goes along with it.

    Hard work isn’t where it is at…….some common sense and a bit of appetite for risk trumps hard work it would seem.

  114. @Moss St. I remember shaking my head when a big character home on Beechwood went way over ask for 950k a couple months ago. Now almost every sale since then in Fernwood and Fairfield make it look like a total bargain.

    Prices have gone up so fast in that segment that it’s hard to see it continuing without breaks/ breathers.

  115. Why on earth would anyone sell after a few weeks of prices just starting to catch up with Surrey. We have another 35% to go to catch up with low end dumps in crime ridden areas of Hope and Maple Ridge.

  116. 640 Moss just sold for slightly under ONE MILLION$$$. What the hell is going on!?!?!?!? It’s on a small half-size lot on a semi-busy street. Maybe it’s time to sell and rent one of Marko’s condos.

  117. CMHC seems to be wilfully ignoring data to suit whatever message the Canadian gov’t needs to support a flawed economy. Interesting how CMHC does real estate appraisals:

    It reminds me of the Iceland Financial Crisis in 2008. A disproportionate % of the Iceland economy & stock market was banking (risky loans & mortgages were rampant). Iceland also had a small population, so for the banks to grow, they needed to attract a lot of foreign investment. When the banks failed, everyone lost money – via bank accounts, stock funds, pension funds, etc.

    The crazy thing is, it doesn’t matter if you haven’t speculated in real estate, because your investment or pension funds might be exposed to real estate risk:

    Why Washington Is Making It Easier For Rich Foreigners To Buy U.S. Real Estate

    “a tax exemption that makes it easier (and cheaper) for foreign stock funds and REITs to buy American real estate. This also opens the door for institutional investors, particularly those in Europe, who are dealing with zero yield and negative interest rates and don’t have attractive options for capital preservation long term … foreign pension funds and investment firms”

    “A number of European sovereign wealth funds from Finland, Norway and Sweden, are active in Baltic real estate. They’ve made Lithuania one of the hottest real estate markets in Europe. They are fleeing negative rates and putting money next door in Moscow and St. Petersburg investment funds.”

    “developers are building hard asset savings accounts [for foreign investors] …not housing and office towers [for local residents].”

    When economies in other parts of the world improve (eg., 5 years from now), “developers will be sitting on empty buildings instead of half empty ones currently full owned – in the majority – by international buyers. An empty building won’t be returning rent and lease payments to REIT owners in that case.”

  118. Robert Shiller:
    “I define a speculative bubble as a situation in which news of price increases spurs investor enthusiasm … [yada, yada, yada]

    Robert Shiller:
    “Victoria is an awesome place to live and I would pay a lot of money to buy a house there.”

  119. Prices are just getting warmed up, we are still below 2006 prices after adjustment for inflation.

    Houses in our neighbourhood in the core sell in days with no conditions and way over asking. So someone who buys these places sees a deal, they see it as value.

    Was on ferry today from Van, and overheard multiple people talking about buying in Victoria and how cheap it is.

  120. Robert Shiller:
    “I define a speculative bubble as a situation in which news of price increases spurs investor enthusiasm, which spreads by psychological contagion from person to person, in the process amplifying stories that might justify the price increases and bringing in a larger and larger class of investors, who, despite doubts about the real value of an investment, are drawn to it partly through envy of others’ successes and partly through a gambler’s excitement.”

    I do not know if we are in a speculative bubble. They’re hard to predict, difficult to identify, and toughest to call a top to. There are some merits to the above statements however. At the end of the day, you can tell friends and family that you “paid a little more than you wanted to” or that “It’s a little more house than we can afford” or even “We couldn’t have done it without help.” But secretly no matter how much you pay for a house there is an expectation that that investment will increase over time. I believe a safe target for Victoria is 5.4% annually. That’s the numbers that my spreadsheets provide historically going back to 1978.

    My concern is that if you go back further and look at Canadian House prices from 1920 to 1978 you get a much lower number at 3.2%. Sure you can throw in the Global conflicts and other bumps along the way, but what is the larger picture here going forward? There is so much transfer of wealth right now from Boomers downsizing and gifting money for example, previously covered on this blog. But we’re will we be in 5-10 years from now as the Boomers are nearly all retired and they become savers not spenders. Does it matter today? No of course not as clearly these are good times. However I’m very sceptical regarding the long term prospects of sustainable high prices and the ratio to personal income.

    Some day, that ratio will matter.

  121. More sales going through at the higher end:
    2378 Esplanade sold for $2.58m
    3110 Exeter sold for $1.895m

    There has been a real pickup in sales in the 1.5m-3m range over the past few weeks.

  122. @ Jack

    “Few economist or organizations are going to risk their credibility on recent data that contradicts the past”

    That’s a shame because data that contradicts the past is the only data worth anything, because it means you have to do something other than what you are already doing. If all you needed to do was the same thing all the time to be in the best possible position in life, we wouldn’t need data at all.

    “It is so much easier when you know the question and the answer at the same time”

    Hence why the data is worthless.

    Sounds like a bunch of risk averse economists are caring too much about their careers and not enough about the value they purport to provide (accurate, complete & timely disclosure & analysis).

    In Finance, if you don’t disclose accurately & completely on a timely basis, you get your designation taken away and maybe even get sued out of existence. In Economics, you disclose inaccurately, you get a promotion because for some reason, it’s better to be wrong with a crowd than right all by yourself and have to face the derision of your profession? Reminds me of the Investor guy in the Big Short. He took a position that made his investors millions and got sued by all of them. But he was right and eventually, things balanced out.

    Just because everybody does it doesn’t make it right.

  123. 2348 Hamiota makes me wonder, did the buyer have remorse and re-list to get out of it? Seems to me $45K more would be mostly eaten up from the welcome tax and sale costs.

  124. 2348 Hamiota flipped for $45,000 more…..begs the question is it better to delay offers for 3 days and go for a bidding war or just list it high? Or did the market go up $45k in 6 weeks.

  125. @JustJack Maybe the CMHC should have just put 42 into the conclusion of their report and have been done with it.

  126. Few economist or organizations are going to risk their credibility on recent data that contradicts the past.

    Here’s an example, I just finished a retrospective report this week. That’s a report to estimate the value of a property at a prior date. In that report it was necessary to do a prediction of the market for the next 30 to 90 days.

    The report required a value estimate of January 15, 2016 and a prediction of future values in the next 90 days. Son of a gun, my prediction was exactly right.

    It is so much easier to predict the future when it has already past.

    In the case of Victoria, how can you say the market is over valued when in the first quarter of 2016 we had a massive increase in sale volumes and big jump in prices. One seems to contradict the other.

    It is so much easier when you know the question and the answer at the same time

    (don’t to it “T” – don’t click on the youtube video – I know you want to – don’t do it.)

  127. Sold condo at healthy asking price in 2 days. Now I wonder if I should have waited for higher offers. Anyways…I got a good detached house so all good.

    CMHC reports are a joke btw. In their last report they had Vancouver at low risk of overvaluation.

  128. Marko

    On Condo pre sales are there any crazy closing costs tacked on that may not be know till closing like final development city charges or anything like that.

  129. @ Jack – so would the data have changed in the meantime? Is order for information to be useful, it needs to be complete, timely and accurate. The CMHC data isn’t any of those.

  130. Things are really starting to become even crazier…last 3 CONDOS I’ve written offers on for buyers have gone in multiples.

    Some insane condo sales in the last week such as a 519 sq/ft north facing unit at the Promontory for $395,000 or $761/sq.ft. Purchased for $292,900 during pre-sales; 35% pop.

  131. I think anytime there has been a shift in the marketplace you’ll find economists and organizations hesitant on being the first to say the market is overvalued.

    If you report too soon and market factors reverse then you’re are going to have people always referring back to when you were “wrong” and why should the people trust you now. That’s a lot of hate mail that could end your career.

    In order to maintain credibility the advantage is to be late in reporting rather than too early. CMHC is simply playing it safe.

    -But I would have liked to see the internal report that the directors were given to read.

  132. The CMHC isn’t in cahoots with the real estate industry (at least since they changed the board, which WAS the real estate industry), but it is in cahoots with the government which is in cahoots with the real estate industry by virtue of that industry being one of the only things growing in the country at the moment.

    Unfortunately, supporting GDP numbers by supporting socially destructive and unsustainable debt and foreign capital fuelled industries instead of ones that generate value inside Canada for people that live here has it’s long term effect but since everyone looks at and values GDP and the bomb hasn’t gone of yet, that’s what they do.

    Unspun negative outlooks from the CMHC towards real estate at a time when Canada has all kinds of problems would not be kindly looked upon by those in power. So what did they do? Used 4 month old data when everyone out there and their dog has access to 1 day old data from the various real estate boards. It must just be because they’re big and slow and government which is exactly what everyone expects. By the time the CMHC catches up with the recent craziness, it’ll be fall and things will be settling down and the bad news will be of far lesser consequence.

    Maybe they’re heads are stuck in their models but don’t you think at least one of the people at the CMHC who reviewed that paper before it went out might have read a front page of a news paper or two somewhere in the country and questioned the impact such statements might have on the attitude of people participating in the market today? Of course they did. That’s why it’s incomplete, inaccurate and untimely but presented in such a way that will turn into the little snippets of information that run around the market and make people feel OK about paying $200k over ask for a 3 bed 1 bath bungalow that needs $200k in renos on a combined salary of $150k.

  133. They should hire you Leo. I wonder what they mean by “local market intelligence”. A google search would have led them to the graphs and stats on this site.

  134. Well said Nan.

    Funny part was BNN mentioned they asked CMHC why it took so long to add Vancouver to the list, they replied they use a 3 year average. Like WTF ? Do they not look at the chart for the last year let alone 6 months ? Incredible.

  135. I don’t think the CMHC is in cahoots with the real estate industry. I think their heads are just stuck too far into the models and they aren’t paying attention to what’s happening. The price acceleration detection is based on a model developed for detecting over exuberance in stock markets so who says it is even accurate for real estate markets.

  136. That report is materially misstated at best and fraudulent at worst. The inaccurate position taken by that document could affect decisions made with that information and that is probably the point.

    It benefits everyone with skin in the game. Realtors, insurers, lenders, brokers, homeowners, etc. 40% of the Canadian stock market is 10 companies :6 banks and 4 resource companies. Insurance companies aren’t far behind.

    Politicians will read it and it will only reinforce their position of doing absolutely nothing.

    Vancouver up 300% in 5 years? Victoria up 20% in 3 months? Nothing to see here peons, keep working for peanuts and paying your taxes and borrowing your brains out while we figure out new ways to hide wealth for the Chinese because it’s the only way we can think of to keep our undiversified, flagging economy from imploding.

  137. Great analysis LeoS. Using info from 4Q of 2015 while stating January to April info in the same breath made the report totally flawed. They can’t even read the local news or call up a sample of established agencies before they sign off on the report.

    They also have no grasp that new housing builds aren’t in the core, nor the jobs numbers have no real stats behind them based on income.

    Again, you can’t even find info on real job sector data in this town but you would expect CMHC to have some access to that data. Full time jobs in this city has an extremely wide range of incomes versus a larger city with more large corporations and business centers.

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