A rise by any other name

How fast are house prices increasing in Victoria?   It really depends on what measure you use.

For years I’ve been saying that month to month averages are useless and month to month medians are almost useless.   They vary wildly and can jump almost 50,000 from month to month.  Looking at those numbers is a surefire way to lose the forest for the trees.

If we want to measure price changes, we are essentially looking at 3 different options:

  1. Median and average prices – The most direct measure of prices since they are the least processed, but subject to quite a bit of variability.   I prefer the median because it is less influenced by outlying high end sales.  If we want to make sense of these, we need to apply a rolling average to smooth them out.   3 months seems to be the minimum to take out the worst of the noise.  6 months is a good mid point, and 12 months is great for factoring out any seasonality at the price of flattening short term trends.
  2. Teranet House Price Index – The Teranet house price index is the oldest repeat-sale index that we have in Canada.   It uses sales pairs (the same house selling twice) to gauge how prices are changing over time (methodology).   The HPI is published about 2 weeks after the end of each month.
  3. MLS House Price Index – This index is created by the Canadian Real Estate Association and is another repeat-sale index.   Although it’s created by the real estate industry, the advantage is it is much more detailed and can be broken down by housing type and sub-region (although there are issues with that).

Note that median price data for Greater Victoria SFHs starts in January 1988.   The Teranet HPI starts in January 1996 (and is published on a 2 week delay hence no data yet for April), and the MLS HPI starts in January 2005.

Without further ado, here’s the tool to play around with.  Mouse over the chart to change the start and end dates.  It’s also been added to the Tools page.

Note:  if the chart isn’t showing up above, press refresh in your browser.

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182 thoughts on “A rise by any other name

  1. My advice to “Yeahright” would be to buy another place as an investment property with his equity if it does not place too much burden on his cash flow. My rule is always to look at the ability to hang on if things go sideways. I also recommend buying a new house instead of an older house because it costs too much to fix an old house and insurance companies are demanding everything be replaced. (roofs, wiring etc etc)
    It is also important that you buy something that you would not mind living in yourself. That way you could switch to the lesser quality home in times of difficulties.
    My other advice is that you buy something in a place like Sooke where the costs are amazingly cheap compared to Victoria. You can buy a new house in Sooke for $410,000.00 with three big bedrooms, a den, large storage basement area and a “Legal” one bedroom suite above the garage. Total income…..$2,200.00
    The interest rate being low …..most of the payments to your mortgage are applied to the principle and so the mortgage comes down fast. The wave of house price increases have not reached the outlying areas yet although there are definite signs that it is starting to reach there. I’ve saw a jump for sure.
    That’s my advice for what it is worth. The main thing is always to look at the worst case scenario and ask yourself could I hang on. Would you be willing to move into the one bedroom suite if you had to in order to make it through any difficult times?
    The benefits of owning a second place are enormous. If it works out for you and you become more secure with your finances …..it could be a way to pass on your good fortune to others who might need some help. For example….you might wish to keep your rents low and help others in that way. Or even offer them a good deal on the property if your tenants wanted to purchase it.

  2. I knew someone would say that it is just one building of many. That misses the point I was making. This isn’t about Stadacona Center. Although that one seller has cornered the market if you want to buy into that specific building.

    It’s about imperfect competition. If the seller in the complex won’t lower his price then you can bid on another property listed by a different vendor in that building. The first seller then faces the possibility of losing you as a buyer to someone else in the building or accepting a lower price.

    There are numerous examples of this in Victoria. One developer controls the sale of a condo complex and this allows the developer to get premium prices for the units. Only when some of units come up for re-sale does the developer have to compete by lowering prices on his remaining units.

  3. Should I sit on my equity or should I use it for a secondary investment residence?

    You’d need to evaluate a lot of factors to determine if this is something that would be good for you including:

    risk tolerance;
    interest and abilities in being a landlord;
    ability to carry costs if interest rates go up;
    whether your RRSP and TFSA are already utilized;
    access to funds to deal with repairs and maintenance;
    impact on your marginal tax rate of additional rental income;
    available credit; and
    your views on whether the market will continue to rise.

    I’d use a spreadsheet to work out the full costs of doing this. Generally the only way buying a secondary property makes sense in Victoria is if prices go up. Keep in mind that you are probably going to be cash flow negative on a monthly basis. Most RE investment experts don’t advocate investing in a market with these conditions.

  4. Please tell me you are building Canada’s Zillow Leo. Do it. Even Marko says Realestate Agents provide little value. Make it an app and make it neutral, transparent, easy, and full of graphs. Shoot, if Uber can break the taxi companies you can break the realtor monopoly!
    http://www.zillow.com/

  5. I wonder if the hold and rent is a result of the recent flat market with strong rental demand combined with easy money. Anecdotally, my friends went to sell a few years back but couldn’t. Got a good rental price and the money to buy the new place anyway. Now, why sell? This is probably having a big effect on inventory because the property ladder is no longer. It’s now property accumulation (or hoarding as JJ likes to say). Take out the equity, buy up, rent it out. I probably would have done exactly that if I didn’t already own another rental property….

  6. @ leo,

    The difference between 7 different sellers and 1 seller controlling the sale of 7 units is the difference between monopolistic competition and competition in an open market.

    7 different sellers compete with each other for your business and that lowers price. In the monopolistic competition super-normal profits may be obtained by one seller controlling the sales in the complex.

  7. I don’t recall an explosion of condo buyers who rented them out short-term for high rates in the 2000s.

    There were some rentals on VRBO, but not that much and not that many people used it in my recollection – traditional B&Bs were popular still. I don’t think non-commercial short term rentals occurred frequently until Airbnb and Airbnb didn’t really hit Victoria in a big way until two-three years ago or so.

    My recollection of the 2000s was that apartment buildings and condos were being built and rented out on a monthly basis the majority of the time? Same with houses.Where is your data on this?

    And I’d agree, rent is set by the market not by the price of the home in Victoria. In Victoria are prices that do not support become a landlord as the rents don’t cover the costs unless you are banking on appreciation. This might be part of the reason there are not more rentals available as well.

  8. “Rents are set by the rental market not by the owners.”

    In an ideal world, yes. But there was an explosion of individual condo buyers in the 2000s that created new categories of rentals – short term “hotel-like” stays (like Air BnB) and longer term “luxury” rentals.

    This proved so popular that traditional apartment buildings weren’t built.

    All of this added up to higher average rents overall.

  9. If you have thousands of individual investors buying $500k micro-condos to rent, or $800k homes to rent, they have to charge a lot of rent to cover expenses.

    No. Rents are set by the rental market not by the owners. Renters will not pay a higher rent just because an owner paid too much for a property and wants to recoup their costs.

  10. “Why do we want to discourage property investment?

    A healthy housing market needs a balance between buyers and sellers, and there needs to be appropriate housing built.

    There are a few major issues now:

    The right kind of properties aren’t being built to create affordable rentals.

    It also used to be that people depended on bonds, GICs, or maybe bond funds, as safe investment vehicles. With interest rates so low, some people are using real estate as an investment. This floods the market with buyers that wouldn’t normally be in the market, creating more competition.

    Results:

    If you have thousands of individual investors buying $500k micro-condos to rent, or $800k homes to rent, they have to charge a lot of rent to cover expenses.

    In the past, eg., the early 90s, investors bought entire apartment buildings, and the cost of those buildings were amortized across many individual apartments, may of which were 700 to 1000 sq ft, so they could charge a reasonable rent for a reasonable space (eg., $1M might get you a 20 or 30 unit building, or $30k per suite.

    Even with inflation, you can’t find an equivalent condo or house today for the same sq footage and the same price in 2016 dollars.

    It doesn’t benefit anybody to have too high a ratio of investors vs home owners. It just results in rents and house prices that are artificially high.

  11. Not wanting to pay capital gains on the easiest money you’ll ever make in real estate is what I would call irrational. Then I assume you own it for life.

    If one pays tax on rental income then what’s the difference ? It’s part of the game.

  12. There is a person who was selling 7 condos in the Stadacona Centre. That’s one person acting as the sole vendor. That’s different than 7 vendors competing among each other to sell their own property.

    Why? I don’t see how there is any material difference.

  13. There isn’t anything wrong with people buying homes to rent. But like anything else if it is carried to an excess it can cause problems.

    There is a person who was selling 7 condos in the Stadacona Centre. That’s one person acting as the sole vendor. That’s different than 7 vendors competing among each other to sell their own property.

  14. Totoro, basically you just disagree with everything I wrote. Which is fine.

    However, I’m going to have to stick with my original statement that we should be looking at encouraging people to list their homes for sale. That might be done by increasing or decreasing the capital gains tax on some rental properties.

  15. Better approach would be much higher property taxes for investment properties?

    I don’t get it. Why do we want to discourage property investment? We are short of supply for purchase but we are equally short of rental housing supply. I see no issue with people buying properties to rent out. It’s just a shift of supply from one market to the other.

  16. “It is like having to compete against someone that inherited a ton or their parents are gifting them 200k on a purchase, or the young power couple dentist/doctor combo making 400k/year.”

    Those competitors have always been around.

    What’s new now in 2016 (around the world) is unprecedented low levels of inventory.

    That’s caused by what’s described in those articles – the additional investment/speculation from low interest rates, global movement of money (parking cash in real estate), generational shift in attitude of home buyers hanging onto their first homes as rentals instead of “trading up”, and investors making more money in AirBnB (houses & apartments) than in stocks or bonds.

    Having been a real estate investor myself, I’m not condemning a few prudent individual investors, but I am blaming excessively low interest rate policies, banks handing out mortgages like candy, hedge funds investing in real estate, and lack of controls on AirBnB and global movement of cash.

    It’s all created an insane market that first-time home buyers have difficulty competing against.

  17. It puts the first time home owner at a disadvantage as they have to compete against investors for the same property.

    It is like having to compete against someone that inherited a ton or their parents are gifting them 200k on a purchase, or the young power couple dentist/doctor combo making 400k/year.

  18. Maybe we should think about raising the Capital Gains tax on rental properties. Even if the government started to openly discuss this as a solution this would cause some landlords to list their properties. And that would bring prices down.

    I’ve thought about selling a few of my properties while the market is irrational; however, the capital gains on renal properties is really discouraging me from doing so. If it wasn’t for the capital gains tax it would be easier to pull the trigger.

    Better approach would be much higher property taxes for investment properties?

  19. About one-third of houses in the core sold under asking price.

    Yes, the beater on Shelbourne Street usually goes below asking 🙂

    1/3 selling below asking means everything approaching average or above average in terms of desriability it going at asking or over. Kind of crazy.

  20. Also an interesting report on how millennials view their homes (if they can afford one) as a potential future “rental” instead of a sale, which impacts inventory:

    http://www.dsnews.com/news/05-16-2016/the-effect-of-millennials-on-housing-inventory

    “For millennial homeowners, cheap borrowing and bullish price expectations will lead to a mass generational rethink about when and how to trade up from a starter home,” the report stated.

    “Redfin also found that a greater share of millennials plan to become landlords. According to the survey, 28 percent of millennials plan to rent out their house instead of selling it, compared to only 4 percent of homeowners ages 55 and older.”

  21. Well, let’s go through this logically.

    It puts the first time home owner at a disadvantage as they have to compete against investors for the same property.

    Um, first time home buyers make up a very small part of the market and they have an advantage in that they only need to put 5% down. They’ll be competing against people with lots of equity no matter whether these people are buying a primary or secondary residence if they are at the price point/area that people with lots of equity are buying into. There are always going to be people with more money than others. This is not the cause of the rise in prices and drop in inventory imo.

    Adding a suite increases the value and makes it more difficult for first time home owners to buy.

    At 5% down and an additional $50,000 or so with a suite makes this is a bargain for first-time buyers who can then afford to pay the mortgage without having to finance the building of a suite themselves without being able to obtain financing to do it because they used all their money and credit to buy the house in the first place. Far better for a ft buyer to buy a home with a suite done already if they can imo. And “investors” aren’t putting suites in, everyone and their dog is putting suites in because prices are so high relative to incomes here. I’d say more than half of the posters here including Leo and Marko have suites. This is not the cause of the rise in prices and drop in inventory imo.

    I don’t think as a society it is in our best interest to subsidize investors to own multiple properties.

    I’m not sure what rules are out there that subsidize investment property ownership JJ. If you don’t live in the home you are not eligible for CMHC insurance and you’ll need to put at least 20% down – more if it is a commercial property. You are, imo, just wrong on this. This is not the cause of the rise in prices and drop in inventory imo.

    Home owners are entitled to use their equity. There is no difference between home owner and “investor” except that you are now calling home owners who use their equity to buy a second home without CMHC insurance hoarders. I’d say this is part of our free market system and it is not something most people can afford to do unless they have:

    inherited money; or
    owned for 15 plus years.

    I think those people who have owned for 15 plus years should be free to buy a rental or vacation home if they choose to do this with their equity – or use their equity to invest otherwise. They are taking on the risk of doing this. I don’t see this as a widespread trend due to the perception of the PITA factor of owning another property and being a landlord. It is easier to couch potato it.

    You seem to ignore the fact that we have a vacancy rate for rentals that is ridiculously low right now. This is a significant issue. Rising prices will not continue forever imo: they are cyclical. Low vacancy rates have been around for a long time partly because the ROI on rental homes here is extremely low unless prices appreciate a lot.

    Imo, most people are not listing their properties because it is terrifically hard to buy a nice place in this market in a desirable area and you stand to be priced out if you sell and wait too long to rebuy.

  22. Here are some articles of how excessive speculation & investment have caused housing supply problems:

    This news report gives some reasons for low inventory levels across the US, eg.,:
    “Investors, including hedge funds, also jumped in during the recession with cash and bought up many homes, turning them into more profitable rental units.”

    http://www.cbsnews.com/news/millennials-struggling-to-put-a-roof-over-their-heads/

    Also a Harvard paper on how excessive real estate speculation related to AirBnB has exacerbated LA’s problems with housing supply and affordability:

    http://harvardlpr.com/wp-content/uploads/2016/02/10.1_10_Lee.pdf

    “given the inelasticity of the housing supply, it is inappropriate for investors to permanently remove units from the residential housing stock in order to cater to tourists.”

    Berlin has now banned AirBnB:
    http://www.independent.co.uk/travel/news-and-advice/berlin-has-banned-people-from-renting-flats-on-airbnb-heres-why-a7031811.html

  23. Totoro once again you are turning the discussion from what I was talking about to one you want to talk about -as you did the last time.

    My point wasn’t addressing hoarding it was about increasing supply.

    There is a lot of difference between someone saving for a down payment and using CMHC than an investors tapping into the increased equity of their property. It puts the first time home owner at a disadvantage as they have to compete against investors for the same property.

    What we don’t have in Victoria is a lot of entire houses to rent for families. The investor chops up the floor plan to add another suite. Adding a suite increases the value and makes it more difficult for first time home owners to buy. Then the investor refinances with higher rents and outbids the next first time home owner.

    While a home owner would sell a home to buy another that doesn’t happen with the investor/hoarder as they continue to accumulate more properties. Unfortunately, this has been allowed to happen and actively encouraged by all three levels of government.

    Hoarding happens in all markets it only becomes a problem when it becomes so widespread that it puts another group such as first time buyers at a disadvantage.

    I don’t think as a society it is in our best interest to subsidize investors to own multiple properties. The financing policies of the past and today have led to high prices and high rents. It isn’t working so let’s change it.

    And now back to my original statement that another way to increase supply is to encourage people to list their homes. I would look at the investors as that would provide a greater increase in supply.

  24. @Hawk – re: the link you posted – here’s an excerpt:

    Is the Canadian Housing Bubble Already Bursting in Some Markets?

    Hilliard notes that it’s already happening in some parts of Canada. He watches the Teranet National Banking Index, which follows 11 major metropolitan areas in Canada. Seven regions have been in decline for several months with the exception of Vancouver, Victoria, Toronto, and Hamilton. Different regions of the country are already in different stages of the bubble bursting.

  25. The barrier to purchasing investment real estate is quite high for average folks JJ.

    Unlike the mortgage you took out on your principal residence, financing an investment property is more difficult and expensive.

    As of February 15th 2016 if the purchase price is over $500,000, the minimum down payment for owner-occupied properties is equal to 5% of the first $500,000 plus 10% of any amount over $500,000. If it is not owner occupied the minimum down payment is 20%.

    I’d say it is very difficult for the vast majority of Canadians to hold more than one property until they have accumulated significant equity in their primary residence – usually at least 15 years in or they inherit. You have to have both equity and credit and most people use up their available credit buying their primary residence in our market.

    If someone is holding 5, 10 or 15 residential properties that they rent out thank goodness for that. I wouldn’t call it hoarding unless you are going to call every other type of savings/investment hoarding as well. Just because you might not want to invest in real estate doesn’t make it immoral or less valuable to society than stocks or bonds.

    Given the need for rental housing it might be better to encourage people to take money out of the market and put it into rental housing but the truth is that apart from appreciation the business case for being a landlord in Victoria is, on average, negative and a lot of people don’t want the hassle of dealing with tenants. Prices are also too high and rents are too low to carry the costs. Appreciation is happening now but that is not a guarantee and the last eight years were flat.

    And we see that it is very hard for families to find rentals right now. I don’t consider that offering a rental in this market is a favour, just that it is needed as it always has been and there should be, imo, more purpose-built rental housing in Victoria that is suitable for families. Not everyone can afford to or wants to buy and they need to live somewhere. I think you yourself rent and have stated that you love that your landlord is the one paying for new appliances and repairs.

    I don’t know anyone who owns more than five separate properties personally, although I’m sure they exist. I do know some super-rich folks and groups of dentists and doctors who hold a mix of luxury residential and commercial properties – mostly commercial – through a corporation. The reason being that it is hard to accumulate the required equity to invest in high cost investments like this unless it is done with pre-tax retained earnings. Very few have access to this type of equity.

  26. Actually it would be a surprise not to find hoarding in the real estate market as the barrier to purchasing is very low as is the costs of carrying the real estate. You’ve shown us countless times how great the ROI on real estate has been over the years. Why would others not do the same as you. And our government has been encouraging investors to buy more homes providing loan guarantees for them and considering the income from the suites as personal income.

    If one individual is holding back 5, 10 or 20 properties from the market that effects supply.

    As a landlord I can understand how you see it as a positive that you are actually doing renters a favor.

    But, you would have to be really naive to believe that hoarding is not having an adverse effect on supply. Hoarding exists in all markets where there is so many excesses and the need for wealth preservation. And our real estate market is no exception.

    So get used to it.

  27. Hawk

    You should go to every open house this weekend shouting “the end is near, save yourselves”

  28. gwac,

    The price chart is even worse now then back then. Get a grip. It’s called a blow off top ICYMI and results in a hard landing. Did you see in the article where TD is calling for a soft landing ?

    Funny thing is there has never been a soft landing in history for markets at these maxed out levels of debt. Victoria houses were only 5 times income in the 81 crash, and are now 8 to 9 times depending on how many $100K’s you plunk down.

    China was never a remote thought in 1981 and HELOC’s never existed and credit cards were not tools you could access to buy cars and trips around the world. It’s the same extreme. You must be fresh out of high school on your first home.

  29. Hawk

    The similarities are incredible.

    Huge inflation 12%
    20% interest rates
    10% unemployment
    recession.

    Just like now. OMG you are unreal.

  30. Talk about similarities to 1981 pre-crash in February. They could pull this play out of the archives for another timely run and would fill the theatres like the Big Short. 😉

    “Headlines was founded by a group of artists in 1981 out of their concern about the housing crisis. There was nothing overly different about the work at this time. BUY, BUY VANCOUVER was straight agit-prop about social issues but the material was re-written every day to reflect changes in the news. BUY, BUY VANCOUVER, however, played to a community audience — reaching people who do not normally go to the theatre and was supported extensively by local community organizations with a direct interest in the subject matter. Vancouver’s (then) Mayor Harcourt took the play to Ottawa with him to the National All-Sector Conference on Housing, as he felt it articulated the voice of the homeless in the City. We ended up performing the play to a room-full of politicians, activists and developers in the Ballroom of the Chateau Laurier.”

    http://www.headlinestheatre.com/past_work/buy_buy_vancouver.htm

  31. Hawk

    I need a place to live and I like where I live so I am not selling.or using my house as a piggy bank.

  32. SweetHome

    Looks like a 100k plus to get it to other ones condition. Both are a lot for 1700 to 2000sq ft.

  33. “1748 sq ft cost a million bucks in BroadMead…. Ouch.”

    Not always. 4613 Boulderwood, 2000 sq.ft. rancher just sold for $833K. It did not have new interior and had very little useable yard. It seems someone was willing to pay premium for certain features of Faithwood.

  34. “I am sure if you looked at the hard statistics only 20-30% of properties are going unconditional, but when you look at properties that are reasonably price and attractive it just seems like you can’t buy with a conditional offer. The same buyers are all piling into the attractive stuff (if you can call it that).”

    Thanks, Marko. My perception is that not only are there fewer listings, but there are fewer “attractive” listings than previous years. Or maybe I just totally ignored the junk before but now at least glance at it because there is so little else.

  35. The recycled hoarding argument, again. Without any back-up information or supporting statistics, again.

    Someone has to be a landlord JJ or there would be little or no rental property in a market that already has little to no rental property available. There is no evidence I can find that a few people holding a lot of real estate are behind the low listings and high prices. Do you have evidence, other than what the guy in your office or on the bus said?

    What could be behind the low listings? How about being worried that you’ll be unable to re-buy in this market if your house is sold due to super high competition? I’m not a fan of unconditional over ask offers myself so I’m not going to list and try to rebuy in Oak Bay right now.

    As far as raising the capital gains tax goes, I guess that is something that could be done but I expect that most individuals who own multiple properties will choose to sell their primary residence in order to take advantage of the tax exemption and hang on to their investment property until retirement when they have low income.

    A lot of large-scale property owners and investors, which I presume is your “hoarding” cohort, own through a corporation and will transfer shares and already do not benefit from special tax treatment. And they usually don’t own SFHs. It also often makes more sense to borrow against your capital investment and re-invest than it does to sell.

    My take is that we are in an up cycle. Happens regularly. Maybe some added fuel due to low interest rates, foreign ownership and Vancouverites cashing out and moving in. And up cycles have never lasted forever.

    I’m a fan of purpose-built rentals and increasing densification through permitting secondary suites and carriage houses. I also like fractional ownership as a way of entering a high value market. It is already becoming more popular in Toronto.

  36. The real estate market constitutes the buying and selling of a very small amount of the total stock of housing at any time. The market might be 3 or 4 percent of the total stock of housing. The market is made up of prospective purchasers actively looking to buy and those that have offered their homes for sale. If you’re not actively bidding you are not part of the real estate market. And if you do not have your home for sale then you are not part of the real estate market.

    We can increase supply by building more of the types of housing people want to live in and to use as rentals. However, building stimulates the economy and increases demand for housing and you end up with higher prices. Or you can increase supply by stimulating home owners and landlords to list their homes for sale.

    This is a supply problem caused by low interest rates that allowed a few people to hoard a lot of real estate that might have been listed when carrying costs were higher. Maybe we should think about raising the Capital Gains tax on rental properties. Even if the government started to openly discuss this as a solution this would cause some landlords to list their properties. And that would bring prices down.

  37. Hawk you crack me up. Atleast those million dollar view for you are turning into 1.3 million dollars views quickly. Are you sure you are not INFO???

  38. I have been wondering how much effect this will have on housing choices – as @Hawk said: “All these new Vancouverites are trading one shit show for another”.

  39. gwac,

    Sellers don’t think too deep, just like buyers don’t think too deep paying $300 to $400K over asking. It’s a mania, not a market, people react on emotion and impulse. They see the words “topping out”, that’s all that matters. The media will run with this headline for weeks now.

    Next it will be “increased inventory” then the bottom falls out. You sound nervous gwac, your days of playing Buzz Lightyear are coming to an end.

    https://www.youtube.com/watch?v=ejwrxGs_Y_I

  40. I had to revise the dates as I meant to show March 15th to APRIL 14th

    I noticed the same thing in the data for Victoria as the article supplied by Hawk illustrated for Vancouver and Toronto.

    Half way through the month and the volume of sales and median prices are similar to last month for stand alone housing in the core districts.

    351 house sales from April 15 to May 14th at a median price of $760,000 with 63% of the sales originating from Victorians. With luxury homes (those selling for more than $1,520,000 or twice the median price) at 8.5 per cent of the sales. 40 percent of the luxury market were purchased by those that indicated Victoria as their home.

    347 house sales from March 15 to April 14th at a median price of $751,000 with 63% of the sales originating from Victorians. Of the 6.3% of home sales considered luxury in that period, 50 percent sold to Victorians.

    Are sale volumes and median prices plateauing as Victorians are priced out of the market?

  41. I noticed the same thing in the data for Victoria as the article supplied by Hawk illustrated for Vancouver and Toronto.

    Half way through the month and the volume of sales and median prices are similar to last month for stand alone housing in the core districts.

    351 house sales from April 15 to May 14th at a median price of $760,000 with 63% of the sales originating from Victorians. With luxury homes (those selling for more than $1,520,000 or twice the median price) at 8.5 per cent of the sales. 40 percent of the luxury market were purchased by those that indicated Victoria as their home.

    347 house sales from March 15 to May 14th at a median price of $751,000 with 63% of the sales originating from Victorians. Of the 6.3% of home sales considered luxury in that period, 50 percent sold to Victorians.

    Are sale volumes and median prices plateauing as Victorians are priced out of the market?

  42. Homesweet

    There are still stand alone residences that sell for less than asking price. About one-third of houses in the core sold under asking price. We just spend a lot of time talking about the over asking ones as they are more titillating. A good portion of those that sell under asking price are luxury homes (twice the median price) or small homes with only 2-bedroom or busy streets. And there are still some agents who choose to market the property under an orderly liquidation rather than a blind auction. Because sometimes a home owner won’t get the best offer in a blind auction. Some properties need to be exposed to the market for a longer period to get the best price.

    In some provinces the only ones that can auction real estate are licenced auctioneers and the courts. And none of these are blind auctions. Since the Premier has chosen to protect sellers from shadow flipping, she should also move to protect buyers from blind auctions in BC.

  43. Looks like the Canadian Real Estate Association finally sees the light. Keep on pumping bulls. Fence sitters best start listing ASAP.

    Toronto, Vancouver Housing Markets Have ‘Topped Out’: Real Estate Association

    “Activity in Greater Vancouver and the GTA appears to have topped out,” said Cliff Iverson, president of the Canadian Real Estate Association (CREA).

    http://www.huffingtonpost.ca/2016/05/16/toronto-vancouver-housing-topped-out-crea_n_9994224.html?ir=Canada

  44. “It seems Victoria has already solved this problem, Victoria`s glorious tent city is now getting some more permanent plumbing. Now they will never leave…what a clown show.”

    All these new Vancouverites are trading one shit show for another. The homeless and mental health problem is out of control in this town. I feel bad for the cops who every 20 minutes have to deal with some crack head taking a dump on someone’s lawn or boulevard, or have gone out of control and need 5 of them to take them down.

    Not to mention the psychotic torching the paint department at Home Depot by Introvert’s place or Toys’R Us stuffed toy department at Mayfair. Talk about sick.

    Can’t forget the thefts from residents and businesses that drives people away from downtown. I’m sure once the tourists get a grand tour of tent city they will want to move here in an instant.

    http://www.timescolonist.com/news/local/police-calls-surge-round-victoria-s-tent-city-1.2255171

  45. “Just watched the Big Short. Very interesting. I wonder who will get the timing right with our own made in Canada frenzy?”

    LeoS,

    Great show. Most bulls here like gwac are too chicken to watch it.

    It sure seems like a completely identical market mania when the walls came down back then. Even moreso with the headlines screaming danger, exposing money laundering extreme, foreigners flipping, Chinese gangster threats etc, on a daily basis while the bulls laugh like Bernanke did.

    Funny how he used the same BS as the bulls are using on here, demographics, jobs, low mortgage rates, etc etc. History does repeat itself from time to time, usually about every 7 or 8 years which is where we are now.

    Opportunity knocks. 😉

    https://www.youtube.com/watch?v=9QpD64GUoXw

  46. Looks like we are in for another record setting month….

    Mon May 16, 2016:

    May May
    2016 2015
    Net Unconditional Sales: 644 905
    New Listings: 760 1,485
    Active Listings: 2,499 4,043

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

  47. Just watched the Big Short. Very interesting. I wonder who will get the timing right with our own made in Canada frenzy?

  48. What a flip on 4282 Faithwood. Bought last year for $635,000. Just sold unconditionally for $1,005,000. The extra $5,000 just to beat out those who need CMHC 🙂

  49. I am going to say View Royal is the first area where you can try a conditional offer.

    Peninsula is starting to get crazy too…..my clients offered on Neptune Road (as far North as you can get) this weekend and it went well above ask unconditionally which is crazy. 1972 house with an original septic system for starters. Two years ago I use to have deals collapse on a $1,000 septic system flush (buyer would want seller to service, seller would say no, deal would collapse).

    I am sure if you looked at the hard statistics only 20-30% of properties are going unconditional, but when you look at properties that are reasonably price and attractive it just seems like you can’t buy with a conditional offer. The same buyers are all piling into the attractive stuff (if you can call it that).

    I am not a very good saleperson and I am not one for risk so I don’t push my clients into unconditionals and ridicolous amounts over asking, but I am moving my vacation from August to June. Hopefully I can take off for a month and when I come back a 50k conditional offer will actually be looked at 🙂

  50. So, what are the closest to the core areas of Greater Victoria where offers are largely still conditional and selling for less than 10% over asking? How far West or North does one have to go to get away from the bidders to whom an extra $50K here or there is pocket change? I have seen this past weekend that with a couple of houses listed Thursday or Friday offers are being accepted Tuesday (vs. Sunday), which gives at least a little time to maybe get an inspection, but the hugely over-ask bids are still a killer.

  51. Just heard back from last listing realtor and 0 for 7 on offers this weekend for buyers, damn! It has been over 20+ conditional written offers (all at ask or higher) since I had a conditional offer accepted for a client.

    Chances with an unconditional offer are spotty…..conditional on a half decent home seems to be a lost cause right now. Not sure how I tell my clients on certain properties that their 50k over ask with conditions will just be garaged as the property will have 8 offers, 4 will be unconditional and it will sell 75 to 100k over ask? If anything their unconditional offer fuels the fire. Always worried that there is a 2% chance the house actually sells 50k over ask to a conditional offer and then I look like a fool 🙂

    I am also sensing a trend that unconditional offers are now approaching 50% of offers in multiple offer situations. I felt like two months ago it was more like 33% were unconditional. This is just based on what I am hearing from listing agents and seeing on my own listings.

  52. RE:

    Marko Juras
    May 15, 2016 at 1:10 pm

    Where is this magical solution where we accommodate 3,500 additional people per year without density and without clearcutting? Just curious.

    It seems Victoria has already solved this problem, Victoria`s glorious tent city is now getting some more permanent plumbing. Now they will never leave…what a clown show.

    http://www.timescolonist.com/news/local/tent-city-taps-into-drinking-water-will-get-flush-toilets-1.2254925

    http://www.timescolonist.com/news/local/police-calls-surge-round-victoria-s-tent-city-1.2255171

  53. Yeah it’s confusing because of the different time periods and regions.
    Basically the core areas are only growing at about 0.3% annually and the GV area is growing at about 1 to 1.5% annually.

  54. admin, GVDA says Greater Victoria was 1.5% for 2008, but 2008-2013 was under 1%/yr, and projecting 4-5% per every 5 years, until 2025.

  55. In any event, it appears to me that with a growing population the more desirable areas will become more desirable for some people like the Kitsilano has.

    We are seeing it in Oak Bay/Fairfield this year. If you bought a 800k house on Bear Mountain in 2013 it is now worth 825k on a good day. If you bought a 800k house in Oak Bay it is now worth $1 to $1.075 million.

  56. We all know oak bay has always been residential. It’s like instead of trees homes grew there. A total miracle. Actually most of Victoria experienced this same miraculous phenomena.

  57. As I said, clear cut the rest of the Westshore or increase density in the core.

    Don’t worry, Marko. Langford is doing its part! I see that the nice forest along the Trans Canada Highway is being clearcut for developers. Those big Douglas firs have to go, you know; they aren’t paying taxes.

    “Leave no tree standing” is surely Langhole’s unofficial motto.

    Or maybe it’s “Pave that motherfucker!”

  58. The 1.5% is for greater victoria.

    No – it was for the core – it did not include greater Victoria – -only Esquimalt (-3.4), OB (.6), Saanich (1.4), Victoria (2.5 and a very large part of the population) and for some reason View Royal which was 7% but a small % of the overall population in the core. I think they just got it wrong as a projection.

    In any event, it appears to me that with a growing population the more desirable areas will become more desirable for some people like the Kitsilano has.

    https://www.crd.bc.ca/docs/default-source/regional-planning-pdf/Population/Population-PDFs/population-estimates-2013-.pdf?sfvrsn=4

  59. Marko, I think we both agree that it’s not 3500 units/yr – that’s people, in all of Greater Vic including Sooke, Gulf Islands, Bear Mtn, etc.

    20% are children, 20% are early adults with lowest income of all renters. 6% of current pop is >80 years old (21,000 people) – they’ll be selling or transferring their existing SFHs.

    Then in only 9 years (2025), Victoria population will be in decline.

    For now, we probably need more apartment buildings (not high-priced rental condos) for low-income renters. Then for couples/families looking to buy, and some renters, some condos, secondary suites, duplexes, & triplexes in all areas of Greater Vic.

    Exact #s are hard to come by. Based on current VREB trends, it adds up to about 50 for-sale units, but it could be between 141 condos for singles & 106 condos/THs/SFHs for couples. For renters, around 350 rental units.

    No need to clear-cut, this is in the whole of Greater Victoria including Gulf Islands.

    But with land prices increasing, developers can’t make as much money building apartment buildings or the lower density options.

    Also there’s so much easy money now, that everyone is over-leveraging and trying to be a investor/landlord, instead of those units being purchased by owner-occupiers.

  60. Irrelevant of whether people buy or rent where will people physically live? People in Victoria complain about 4 story buildings because of height and they complain about Bear Mountain having been clear cut.

    Where is this magical solution where we accommodate 3,500 additional people per year without density and without clearcutting? Just curious.

  61. Math not quite right – you can’t base # of home sales on # of people per household.

    If you’re going to start basing in purely on population stats, then it gets very complicated very fast.

    Only 35% of Greater Victoria was age 33-60, typical home buying ages. Population of official muni’s of Victoria, Saanich (incl Central/North), & Esquimalt = 202k (Wikipedia)

    35% of 202k = 70,700

    1% growth = 707

    But then what’s the % of newcomers to Victoria EACH YEAR that will buy vs rent? Probably less than average of current population of home owners, esp in non-luxury home sales where people can’t buy remotely.

    50% max of 707 = 353

    40% were single. 60% were married

    That’s 141 single & 106 couple households.

    So that’s 141 condos & 106 couple households maximum.

    After 2025, Greater Victoria’s population is projected decline, according to GVDA.

    Yes we need some density increases, but we need to be realistic on prices and sizes needed in new developments, because these numbers include North/Central Saanich.

  62. The 1.5% is for greater victoria. 90% of that growth is in the west shore. The other municipality where population declined was Sidney.

  63. I think you are right that the CRD’s estimate of 1.5 is too high for the core overall.

    Saanich is using.48% http://www.saanich.ca/living/community/trends/EXECUTIVE%20SUMMARY%201_Sept%202013.pdf

    Oak Bay is using .5
    https://www.oakbay.ca/sites/default/files/2014-06-23-OakBay-OCP-Final.pdf

    Not sure about Esquimalt or Victoria. At 1/3 of the growth rate predicted by the CRD that would be about 300 more non-condo units for the core this year. And that doesn’t count those living outside of the core who might want to move into it. Not sure how many that would be.

  64. According to VREB the core includes Victoria, Esquimalt, Saanich (not North Saanich) and Oak Bay. According to the CRD the population in these areas is about 230k with a growth rate of 1.5% per year.

    That is about 3450 new people per year in the core.

    The ownership rate is about 70% with about 20% of those being condos. The average number of people per household in this area is 2.2.

    3450 divided by 2.2 is 1590 households. Seventy percent home ownership is 1113 owned homes. Eighty percent of these equals a demand for 890 additional homes that are not condos for this year if my math is correct. This is just the core area.

    I’d say there is a very good argument for increasing density and legalizing secondary suites and carriage houses. Especially when you add the very low rental vacancy rate in these areas into the equation.

    http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/famil122g-eng.htm
    https://en.wikipedia.org/wiki/Greater_Victoria

  65. Having just moved to a SFH on a 6000 sq ft lot in Oak Bay – I can tell you it was a very hard find and priced over $1m. Unlike many other Oak Bay homes however, it was fixed up (hence the price). The only time you can get into a home in the core area that is fixed up is if someone passes away or decides to move away. We’d been looking for many months and that was always the case. In our case they were moving away. No one is really moving from one Oak Bay home to another Oak Bay home that we could see. Vicbot -You are quite right, just like in Vancouver’s west side – not everyone will be able to live in a SFH in the core part of town. As population rises, prices will only rise as they aren’t making any more land. There’s still plenty of space out in Sooke though…

  66. “1% growth is 3,500 people per year … not everyone can live in Oak Bay on a 6,000 sq/ft lot.”

    Demand is nowhere near 3500 units/year. Also Oak Bay isn’t the only core area.

    The 3,500 total population includes children, teens, students, singles, couples, and retirees. It also includes Greater Victoria – Sooke, Western Communities, Gulf Islands, Sidney, which aren’t “core” (you could even argue Central/North Saanich isn’t core either)

    Kids at 7 years old don’t need to buy a home. Single & retirees don’t necessarily buy SFHs.

    Also, only 50-70% buy in BC; the rest rent. (% depends on city & market conditions)

    So growth in homes required of 1% is more to the tune of actual VREB sales stats of around 50 homes per year in all core areas –
    Victoria, Fairfield, Oak Bay, Vic West, Esquimalt, Saanich East, Saanich West, and maybe Central/North Saanich. .

    Numbers are being artificially inflated to make city councils think they need to approve higher density – exactly the same thing happened in Vancouver, and it made problems worse.

    At least there’s still a good mix of homes in every neighbourhood in Victoria – makes for a healthier community overall.

  67. At 1% growth, we need 48 new units in the core. (maybe a mix of single- and family-friendly)

    So around 10 condo units & 20 duplexes? or 10 condos & 15 triplexes? A reasonable target.

    1% growth is 3,500 people per year. As I said, clear cut the rest of the Westshore or increase density in the core.

    I just don’t understand how people can’t grasp the concept of when you add 3,500 people per year not everyone can live in Oak Bay on a 6,000 sq/ft lot. Something has to give.

    There is no magical solution where the population grows and we bring back the middle class to single family homes in the core.

  68. Drawing sound conclusions is not Just Jack’s forte. He ought to stick to posting sales statistics.

  69. I considered those factors and they were immaterial.

    Except they are most definitely material if your conclusion from your stats is that a certain area is no longer as desirable to buyers with money from outside Victoria.

    Your stats don’t show who is buying or any change over time. All the stats show is sales of houses over two million since January with the majority of these sales being in Oak Bay, the place which, based on no valid stat presented, you are claiming is no longer the “it” neighbourhood for wealthy out of town buyers. In short, your proposition is not only unsupported by your information, it also appears contrary to your stats.

    What the stats do show is that although most of the of two million plus houses have been purchased in Oak Bay, not all of them were. This is something most people would expect given that waterfront and luxury homes/estates exist outside of Oak Bay and have for as long as I can recall.

    What would be interesting are stats on where the buyers came from and then being able to compare sales patterns over time. Appreciation rates at the high end in different areas over time would also be informative. It was interesting to see the number of sales in different areas, thank you for that.

  70. Lower prices will only draw back those who dropped out due to psychotics bidding $200K over. Few can compete with irrational behavior.

  71. More supply added to this market is just what’s needed given the insanely low inventory levels. It might just draw back in all the people who’ve taken a breather from the bidding war craziness.

  72. Totoro, I considered those factors and they were immaterial. What the data shows is simply where people with a lot of money have been choosing to live over the last five months.

    You try to make things more difficult than they are by obfuscating the issue.

  73. bearkilla,

    80 listings is higher than the usual 60 to 70. Why aren’t they sold already ? 10 more every day for next 10 days would create some very interesting inventory levels. How many sheep can be left in the SE pool ? Obviously 10 to 15 less than yesterday.

  74. Yep my PCs is exploding right now. There was at least 10 new listings this morning. The long awaited crash is imminent.

  75. “where is everyone suppose to live without clear cutting more of the Westshore?”

    A few thoughts?

    Victoria population is increasing 1% per year. Sales in the core (Victoria to North Saanich, not including Sidney, Langford, etc) were 440 in April 2016, but it was an all-time high & spring is busier than normal.

    So average 400 sales per month x 12 = 4,800 sales per year.

    At 1% growth, we need 48 new units in the core. (maybe a mix of single- and family-friendly)

    So around 10 condo units & 20 duplexes? or 10 condos & 15 triplexes? A reasonable target.

    The problem is – land is getting so pricey (due to global drivers & easy money) that developers can’t make money building just a duplex – they end up having to build a dozen $700k luxury townhouses or 40 $900k-$1.5M new houses (in the core & Langford).

    That’s why high land prices can have a negative effect on what’s built – higher density & more expensive than what’s necessary.

  76. We don’t need any more row housing and micro-condos of 400 Sq ft and call it “family living, get used it”, we need a whole flush out of the market like all the past excesses in the world.

    I just don’t understand one thing.

    There are very few vacant homes/condos. The population is increasing every single year.

    If we completely ignore real estate prices and rental prices where is everyone suppose to live without clear cutting more of the Westshore? Either we clear cut the crap out of everything from Langford to Sooke or we go for increased density in the core areas.

    It’s funny, one of my friends on Facebook last year who went into a rant over a picture of Bear Mountain from mount Finylason about clearcutting and ecosystems destroyed, etc., is now posting how her and her husband have been outbid on a bunch of houses and the government should take action.

    People can’t seem to add 2+2.

  77. Great number crunching Just Jack!

    A couple of points are interesting from your stats.

    I don’t see Rockland (City of Victoria) in there – have you included Rockland in Fairfield East? Rockland was the first “Luxury Area” to be built in the city. Historically, it was the predecessor to Uplands as the location for the elite (witness the grand homes and location of the Lieutenant Governor’s mansion).

    Uplands has a clear plurality at 23% out of every single Victoria neighbourhood in every municipality for $2,000,000+ home sales. The runner up is Ten Mile Point at 11% – half of Uplands. No other neighbourhood comes in at the double digits. Broadmead, another well known (newer but now core) luxury area comes in at 6%. South Oak Bay (older core) is at 9%.

    I think the figures tell us that there hasn’t really been any trend away from “traditional” “Core” luxury areas. Uplands has been the “signature” luxury home area probably since 1940 and remains so to this day. Before that it was Rockland but I’m guessing that the Rockland figures are around Broadmead or lower.

    An urban geographer/historian would tell you that the most significant change was the movement from Rockland to Uplands as “The Favoured Neighbourhood” for Victoria’s elite. And now in 2016 that result is still intact so it would appear from your figures.

    Your figures show the persistence of old upscale areas for long periods of time.

  78. “At this point it simply is profiteering by individuals by instilling fear and greed into the population but incremental steps later it could result in hate crimes.”

    I think everyone agrees that we don’t want this turned into racism. But local Asian Vancouverites talk about this all the time – the negative impact of unchecked foreign investment – they can’t afford houses either. This isn’t going to turn into a Japanese internment camp because all Asians are impacted by this mess, as well as people from a mixes of other backgrounds. Luckily this isn’t Trumpland.

    In Vancouver, as far back as the 90s, we simply said, “rich Asian buyer” or “rich American buyer” and it meant the same thing. Why doesn’t it mean the same thing in Victoria? Maybe because Victoria isn’t as multi-cultural and so people just aren’t used to these conversations. CBC also seems strangely over-vigilant about this – at least all other news outlets aren’t – Globe & Mail, Province, The Tyee, The Economist, NY Times, etc.

    As the Chinese businessman himself said in the article that Admin linked to: “as a Canadian citizen, he thinks the authorities should take his complaint – and the manipulation and speculation in Vancouver real estate – more seriously. “I am a residential buyer. I am not a stock buyer. I buy to live,” he said. “Even in China, the government it would control this. I am not sure why they don’t here.”

    Victoria can learn a lot from what’s happened in Vancouver and the impact of unchecked foreign investment, shadow flipping, etc. Canadian citizens from all backgrounds are affected.

  79. Saanich East SFH listings seem to be creeping up. Highest I have seen them since I started tracking them about 6 weeks ago. That would be a very indicative area to see increase that the fence sitters are making the move to cash in.

  80. We don’t need any more row housing and micro-condos of 400 Sq ft and call it “family living, get used it”, we need a whole flush out of the market like all the past excesses in the world.

    What the perma bulls don’t get is extreme bidding wars is the ultimate sign that a bubble is close to popping.

    Why are the Asians taking their money out of their homeland at extreme levels ? They know their system is crumbling.

    Hong Kong real estate is in “free fall” and they are basically a small area of land with extreme density like Victoria.

    Hong Kong Property Market in ‘Free Fall’: Hayman’s Bass

    “Kyle Bass, the hedge-fund manager who’s wagering on a slowdown in China’s economy, said Hong Kong’s property market is in “free fall” and the credit expansion in Southeast Asian emerging markets will unravel.”

    http://www.bloomberg.com/news/articles/2016-05-11/hayman-s-bass-says-hong-kong-property-market-is-in-free-fall

  81. That analysis of what is happening at the high end makes no logical sense JJ.

    If you look at the core the vast majority of over 2 million are in Oak Bay. At 45% of the sales overall this means there are a lot of expensive homes in Oak Bay.

    Your data actually doesn’t mean that Oak Bay has somehow fallen out of favour with people with money from outside of Victoria. It may actually mean there not much inventory left in OB at this price point or prices have appreciated dramatically in OB and other areas. Right now there are only 13 properties for sale in OB over 2 million. You can certainly get much more for your money in Saanich or Esquimalt.

    And we just don’t know what people from outside Victoria are buying because you haven’t broken down the stats that way. It could be people from here buying in other areas. And 2 million doesn’t get you all that much in Uplands but it might get you more land or waterfront in outlying areas. And there have always been expensive properties in other areas.

    In order to reach a solid conclusion on buying trends of wealthy people moving here you’d actually to know who is making the purchases, have and info on appreciation, inventory, and the past breakdown of home purchases over 2 million by locals and newcomers in the various areas relative to inflation over time. Maybe there are just a lot more places over 2 million now than there used to be in outlying areas due to appreciation.

  82. I find that people that have lived here most of their lives are fixated on Oak Bay as being the best hood. But, if you look at the township through the eyes of a wealthy person moving here, Oak Bay is no longer the “it” neighborhood. And that shows up where the money is being spent.

    The luxury market for homes over $2,000,000 since the beginning of the year broke down this way.

    Fairfield East -6%
    Sub Total —–6%

    Estevan – 4%
    Gonzales – 9%
    South Oak Bay -9%
    Uplands -23%
    Sub Total —45%

    Arbutus- 4%
    Broadmead -6%
    Cadboro Bay-2%
    Cordova Bay -2
    Gordon Head -4%
    Ten Mile Point – 11%
    Elk Lake – 2%
    West Saanich -4%
    SubTotal —–35%

    Ardmore -2%
    Deep Cove 2%
    McDonald Park 2%
    Sidney -2%
    SubTotal——8%

    Saanichton – 2%
    Turgoose -2%
    SubTotal ——-4%

    doesn’t add to 100% because of my errors in rounding.

    If your uber riche – you don’t have to live near the downtown core. It’s not like you have to commute to work. Besides if you’re moving here it should be for the nature not just to live in another suburb of another city.

  83. I like Marko’s example, former Yugoslavia, flats are $500,000USD and the incomes are $500USD per month.

    Horrible central bank polices of printing money has caused this. Real assets going up faster than incomes.

    At least in Croatia a SFH has never been attainable for the working class including doctors/lawyers/etc. Only way to get into a SFH in a city was generation wealth, corrupt politician, or ridiculously well to do business person.

    All the factors in Croatia point towards affordable real estate….decreasing population, shit economy, very low salaries, extremely defunct rental to purchase ratio.

    A think the biggest factor keeping prices high is SFHs are rarely sold out of families. It seems here when grandma in Oak Bay moves on the kids put the house up for sale right away (a lot of homes are subject to probate). Doesn’t happen in Croatia to same extent. A lot of siblings keep their share and rent out the house or similar.

    Ohhh, and no property taxes in Croatia probably makes keeping an inherited property feasible versus grandma’s Oak Bay tear down which is at least $500/month to keep without a mortgage.

  84. High income earners also don’t necessarily want to live in luxury mansions – there are many that like to live in an average SFH (eg., Warren Buffett) because they enjoy the community spirit of a closeknit, safe, walkable neighbourhood where lots of people look out for each other.

    Having worked at VIHA in intensive care and other departments where you have higher pay scale doctors for the most part everyone was in the more desirable core areas. At least three doctors I knew had Abstract custom builds or huge renovations.

    There is Warren Buffett but than there is Bill Gates, Elon Musk, Mark Z, and everyone else in $10+ million mansions.

    There is no denying the population is growing and the number of houses in Oak Bay is fixed. The ship has sailed for the middle class to get back into Oak Bay and most parts of the core. I think we need more row housing type projects to increase supply/density in the core.

  85. I wonder if that agent realizes what he is doing by creating fear that Victoria will be taken over by not just foreigners but another race of people?

    Our past is littered with examples of what has resulted from this fear mongering in BC.

    -Komagata Maru
    -Japanese internment camps in the interior of BC
    -restrictive land covenants not to sell to Asians.

    It can happen again unless we are vigilant. At this point it simply is profiteering by individuals by instilling fear and greed into the population but incremental steps later it could result in hate crimes.

  86. StepbyStep,

    Yes that was the article I was referring too.

    Vicinvestor,

    You seem very naive of the world and how ugly things can get. 2008 was nothing, next time around it will be a real correction and a painful one and much sooner than you think.

    Your so called “balanced ” outlook in an insane market makes zero sense and trying to say anyone who doesn’t have your view is an extremist is ignorant. You have predicted nothing and in your own market timer denial.

  87. Victoria’s RE market is nothing compared to Asia right now. The avg wage in Beijing or China now is close to 1800USD/month for white collar workers. The price of a 100m2 flat? Average is $1,000,000 USD. The nicer flats are double the price and $2,000,000 USD buys you 150m2. This is not only just in China. Russia prices, Malaysia prices, Indonesia prices, etc… have all 2xs to 3x’s in the last 5 years.

    I like Marko’s example, former Yugoslavia, flats are $500,000USD and the incomes are $500USD per month.

    Horrible central bank polices of printing money has caused this. Real assets going up faster than incomes.

    Now if I am Joe Schmoe sitting in Russia, China, India or these other countries and Canada looks like a bargain and safe place to let your kids grow up…guess what they are going to do-sniff around. Toronto and Van are the primary targets and the outskirting cities are now feeling the effects. Look at Hamilton and Victoria as prime examples!

    They can’t buy anything decent for $500,000USD at home, why not call the baffoo n like Tony Joe, who doesn’t speak a lick of Chinese anyways and buy a SFH in Victoria?

    Just saying, we are truly a borderless world, free flow of people, money, etc…
    Govt’s need to better harness this or we will turn into something that many posters on this board suggest.

  88. LeoM, you and I can hold sinkhole parties for the HouseHunt Victoria gang during the next big one 🙂 I guess I’d rather pay for an earthquake retrofit if I had to, although I do have earthquake insurance that covers a re-build if needed.

    From Marko, “How can the middle class possibly get back into the core if we keep supply fixed? As the population grows so does the absolute number of high income earners.”

    Imo, the issue is that prices are escalating faster than supply is decreasing. BC depends too much on the real estate industry to drive the economy (BC gets >$1B per year in PTT), and that has resulted in SFHs costing so much in the core – Victoria’s a nice place to live, but local population increases don’t cause that kind of price appreciation – there’s too much encouragement to “build more! sell more! find more buyers! find investors! borrow more!”

    Just today I got another letter from a realtor saying in big red letters “Time To Sell! We have out-of-town buyers that want your property!”

    High income earners also don’t necessarily want to live in luxury mansions – there are many that like to live in an average SFH (eg., Warren Buffett) because they enjoy the community spirit of a closeknit, safe, walkable neighbourhood where lots of people look out for each other.

    There have always been more expensive neighbourhoods in Victoria, but they’ve never been so out of reach (even to professionals) as they are today.

  89. Thing is, small quakes won’t do much, and when the big one hits you will be waiting a decade before any kind of payout because the entire west coast will be destroyed. Better to just walk away and start over somewhere else.

  90. I don’t have earthquake insurance on my place. My theory is if my new over-engineered house on rock suffers damage to the tune of a 10% deductible Oak Bay is completely levelled and we have bigger things to worry about.

  91. I am always caught off guard when people make comments like “new houses are built like crap and older houses are better,” etc. Maybe the cheapest spec product but custom you can’t build anymore without an engineering stamp and the guy I hired for my house just went to town. It was a little ridiculous, 34 brackets with 25+ nails each (plus bolted) securing the footings to framing structure, multiple places with three or four 24” LVLs, shear walls, multiple additional lateral foundation walls specified by engineer beyond the original design (had to do extra excavation for these walls). And this was all for a house built on rock. My framer was annoyed every time the engineer came on site.

  92. Been considering cancelling the earthquake insurance. Talked to a civil engineer the other day… He said he doesn’t have earthquake insurance on his house. Then again he also said he just finished rebuilding his house to post-disaster standards…

  93. Vicbot, sorry to be the one to tell you, but your 1949 house does not have concrete footings. Your house will just have 8 inch thick concrete walls buryed in the ground with no footing at the base of the wall. In a medium+ earthquake your old house and mine will both sink into the mud.

  94. What would help Victoria is a more diversified economy (not just tourism and luxury real estate), so incomes could be higher to pay for higher priced homes, and we get more middle class back in the core in SFHs (instead of being displaced by unnecessary condos or luxury homes)

    This just doesn’t make common sense in my opinion. How can the middle class possibly get back into the core if we keep supply fixed? As the population grows so does the absolute number of high income earners. The new surgeon at Vic General is not going to buy in the Westhills, she or he will buy in Oak Bay. The middle class is totally screwed with fixed core supply.

    Re luxury homes, other than Oak Bay a luxury home typically comes packing an income suite and typically replaces a 2bed/1bath or 3bed/1bath tear down. The new suites take pressure off the rental market.

  95. Does anyone know what’s being planned for the space where 2 or 3 houses were demolished on Shelbourne below Hillside? I see the scooper thing has been shaping the dirt but I don’t recall seeing a sign about any rezoning. Further down Shelbourne is a rezoning sign for Large to put in 3 SFH where there was one house that was relocated.

  96. @Hawk:

    I don’t know what will happen. We don’t have the data. Satellite family story is dead on. There are crap loads of them in Canada with significant resources.

    The problem with you & your predictions:
    1) your predictions on this blog have been wrong
    2) your claims of perfect market timing are laughable: 80’s housing & 2007!!! Seriously?!! You called the Internet bubble of late 90’s as well?
    3) you’re an extremist & not balanced in your views. It’s always: Markets are gonna crash & burn, Victoria is a shitty place to live, blah blah.

    Anyways, here is another one for you:

    http://www.cbc.ca/beta/news/canada/british-columbia/victoria-housing-market-central-1-credit-union-jobs-1.3545272

  97. Vicinvestor,

    You’re really going to believe a group of agents after a few bottles of wine telling Benny Tal ” it’s just a few foreigners Benny, just a few”. He’s been telling this story for months now and sounds like total bullshit.

    After reading the Globe story today Chinese gangs are flipping houses like crack dealers down on East Hastings. Not to mention the Chinese developer in Van being hunted by the Chinese corruption squad. Cats out of the bag what’s really going on here and it’s not all nice astronaut families.

  98. You’re richer than you think,

    Nice to see another voice of reason, not many of those here. My buddy in Van is cashing out bigtime. He knows the top is in and sees the relief to be debt free and the freedom to be mobile. This a generational gift that will be wasted by most. Pigs get slaughtered as the old saying goes.

  99. Good post You’re richer than you think
    Unless you sell all that appreciation is meaningless. You going to buy in Ottawa then or keep renting?

  100. LeoM, not true.

    Our house was built in 1949 and we’ve worked with a structural engineer on renos, and he has examined the house and all the original house drawings in detail.

    Nothing wrong with the foundation. In fact words were used like, “built like a tank.”

    Concrete foundation, 2×10 old growth fir joists, dry basement, solid studs, beautiful coved ceilings, no asbestos except for old kitchen floor and a bit of tape on old ductwork. 1400 sf main floor.

    The reason why builders are tearing some 1950s homes down is because they can make more money building a west-coast modern house than refurbishing an old character home.

    Our house meets all requirements for building codes. The only thing we had to add was a makeup air unit and some insulation.

  101. You all poo poo the westshore and then complain about 1950s shitboxes. I kind of like having 4000 sq ft . Added bonus it s it’s not s gid dammed death trap of crap that’s being marketed as “character”. That’s code for should have been torn down years ago.

  102. So Hawk brings the contrarian point of view and most decide to hammer him. Too funny. I have so many friends that “inform” me of how they are making so much money owning their house right now and I should have never had sold… yet they couldn’t scrounge $1000 cash if their life depended on it. As a matter of fact, buying a couple bags of topsoil to fix their lawn is now an expense that doesn’t make the cut.

    Full disclosure. I bought in 2004 and sold in 2013. Walked away with a very nice check. Have rented since with that money invested. For the last 3 years I haven’t had to worry one iota about any maintenance and have been able to scale back RRSP contributions owing to my DRIPs. The so what? I spend way more time with my family doing family things rather than renos/normal maintenance and the extra money goes towards kids RESPs and enjoying our time together. And yes… I invest the difference between my rent and what I would pay for mortgage/property taxes and the rest.

    To think what is happening is normal is redonc. I know couples that make $150k plus that worry about a $100 for a dinner out. And it’s not because they put money towards RESPS and retirement. This is owing to being over mortgaged and extended. They can’t afford it period. They pay their mortgage, all associated housing costs and basic living expenses and that about eats up their monthly income. To them the UCCB or whatever it is called now is rolled into income. It is a part of their salary. And that is a dual income salary. If that’s life… count me out.

    I now sit in Ottawa as I type this looking for a new place to live as im being transferred. $450k here in some decent places gets you 2700 sqft of 2005 brass metal fireplace living… not including the 1000 sqft finished basement. And this real estate market… the nations capital with real tech, government work (lots of it), a population and work force larger than Victorias, has been declining. But yeah, for sure a 50s bungalow on Quadra st is worth more by at least 100k… its Victoria right? The weather totally accounts for the delta.

    This isn’t sustainable. But sure Leo M and Michael… it’s all roses. If you own… good on you… your net worth can be a punch line at a dinner party…. but unless you’re borrowing against your new found gains and the delta covers your cost and your comfortable with the risk, you’re nothing more than a cheerleader for an asset appreciation that’s done nothing for you. (Run on sentence… I know… introvert get over it.)

    My appreciation (after I sold) nets me $1100 monthly (balanced, conservative portfolio)… that pays for 56% of my rent in Ottawa. Yeah… I’m renting. Could buy a beautiful house for $450k in Kanata or Barrhaven or SAndy Hill… but am renting a $530k house (bought just last year) for $1900.

    Unless you are either using the equity in your house to make you money above and beyond the financial delta and risk premium then the rise In prices is doing absolutely nothing for you. If you advocate the rising prices and have that “I told you so attitude”, yet haven’t borrowed against your new found equity to purchase additional real estate you are a poser.

    Have read this blog for years yet have never posted… appreciate all the info and insight. Just sick of the constant cheerleaders and pumpers. If I’m wrong and you’re riding and capitalizing on this wave then good on you. My feeling, however, is most of you, like me, we’re very lucky with their timing purchase. However…. most of the cheerleaders here have never sold and capitalized on the once in a lifetime gains… although they wish they had.

    ** this msg may or may not have been typed on a phone at a hotel bar. Any and all inconsistencies (be they grammatical or of the spelling variety) can be attributed to alcoholic indulgence.

  103. Vicbot said: “But there are also too many structurally sound old houses 1930s to 1960s that are torn down unnecessarily..”

    Untrue in most cases. Concrete footings were not commonly used until the late 1960’s, that’s why most of these old houses sag. Ask any Geotechnical Engineer if these old houses are structurally sound in a medium earthquake. They are not, unless the concrete foundation walls are on bedrock. The old houses might seem ok and they might even be renovated to look modern; but in a medium earthquake they will sag, sink, and without shear-walls they will twist and collapse. Why do you think building codes have been updated with new structural enhancements, concrete footings, shear-walls, and lam-beams? Because the old houses collapse so easily in earthquakes.

  104. I’m not seeing many houses being torn down these days. I can see just 2 that I’m aware of in oaklands right now. The one on scott street backing onto the park…calling it a cabin would have been kind. It actually looked like an old tool shed, tin roof flapping in the wind. That’d actually be a great strip for townhouses for families, backing onto the park, away from busy traffic etc. Instead we get a jumbo SFH built to the property line with a couple of suites.

    I hadn’t previously seen the TH complex that Marko posted. Agree it looks like good value for a young family. There’s just not enough out there. Also, like almost every other TH out there, is on a main road right at the blenkinsop intersection. This distorts the value comparison – a SFH in a similar busy spot would be priced well below typical SFH cost.

  105. LeoM,
    Your ignorance outshines your arrogance. But you would know about looking in people’s windows as you bike around every street in Oak Bay at night. Creepy ! Keep your blinds closed Oak Bay’ers.

  106. “old dilapidated houses that were not built to meet structural requirements for concrete foundation or framing,”

    Of course there are old houses like that, often built 1910s.

    But there are also too many structurally sound old houses 1930s to 1960s that are torn down unnecessarily to make way for $1.5M new homes. I’ve seen too many of those where families were out-bid by a builder.

  107. Renovating an old ‘Character’ house will typically cost double the cost of bulldozing and building new. If the socialists at city hall want to impose onerous restrictions on owners of old dilapidated houses that were not built to meet structural requirements for concrete foundation or framing, then the city taxpayers should pay for 50% of the renovation costs. Contrary to what others are saying, I think we should be encouraging the demolition of these old houses that are so structurally weak that they would collapse in an earthquake and kill anyone indoors. I suspect very few on this blog have seen a gutted old house with balloon framing and zero concrete footings; they are common in Victoria. They are accidents waiting to happen. They need to be demolished, not preserved.

  108. Start of the year I pointed out two bungalows in Gordon head as decent deals at just above $500k. Now there’s nothing under $600k in the whole area. Just crazy.

    edit: and the two listings under $700k are priced at $699k.

  109. Except townhouses aren’t cheap. Where are the ones for 400k in the core? A few old ones on shelbourne were listed for $569k. The newer ones in Gordon head go for $700k. Would much rather buy a house for that money.

  110. Show me a move-in ready bungalow in Gordon Head for ~$400k and I’ll gladly consider it.
    Until then, Marko’s TH example is mighty appealing to us as something being much more affordable.

    Actually right now on realtor.ca:
    8 listings for ‘house’ <=$450k from View Royal to Esquimalt to Royal Oak Drive. None of which are >3br 1ba. 1 is a houseboat.

    27 listings for ‘row/townhouse’ in the same area, same price range. The vast majority are 3br, 2ba.

    No contest imho.

  111. Hawk, I suspect the only million dollar view you have is looking out your basement suite window into the average neighbourhood where most houses are now worth nearly one million dollars each. If you can see two or more houses from your suite, you can truthfully say you are going to crack a beer and look at your multi-million dollar view.

  112. Gwac ,
    You can’t post anything but pump and can’t handle reading the news that half of Canada is up shit creek. Maybe go mow your lawn then instead always attacking a different view point. Meanwhile I’ll crack a beer and admire my million dollar view at a bargain price.

  113. CuriousCat, have to agree – we are fans of bungalows. Whenever we had to deal with stairs, we just got so tired of running up and down stairs every time we forgot something – jacket, wallet, shopping list, papers, keys, outdoor gear, socks, sweaters, backpacks – you name it – everything was in a bedroom on another floor. Pain in the ass.

    When our parents struggled with stairs in old age, we knew we made the right choice.

    I think people are split 50/50 on whether they want bedrooms upstairs.

    People sometimes say, “Europeans live in multi-family complexes so we can too” – and I know all about them because I’ve stayed with my relatives there.

    But personally I don’t think Europe can be compared to Canada – 740M people compared to 35M in the same land area. Europe has a much more diversified economy, and real estate prices are sometimes driven by geographic/political boundaries – some are tax havens, some vacation spots, some industrial centers, etc.

    What would help Victoria is a more diversified economy (not just tourism and luxury real estate), so incomes could be higher to pay for higher priced homes, and we get more middle class back in the core in SFHs (instead of being displaced by unnecessary condos or luxury homes)

  114. CuriousCat,

    Real estate is really subjective and every other buyer would disagree with you. I designed our laundry on the main but my reasoning was different. I didn’t want to flood three floors of our house if there was a leak in the laundry room. Pretty much all of our friends that have had new homes built have designed the laundry on the bedroom level and they swear by it…..they think my mud room location isn’t practical as you have to bring the laundry down a flight of stairs.

    Same with the bedrooms, I think the majority of buyers prefer the bedrooms up versus the same floor.

    Regarding master sounds about right. Not many people need four bedrooms upstairs. Huge master+ensuite+walk-in closet + two bedrooms would be way better for re-sale than modest master + three bedrooms.

  115. Marko, the problem with that townhouse (as with a lot of them) is that it’s only 3 bedrooms. Most families with 2 kids are looking for 4 bedrooms. Around here, that generally means house.

    What is the 4th bedroom for?

  116. Article in the TC says Victoria ranked world’s third hottest luxury homes market –

    See more at: http://www.timescolonist.com/business/victoria-ranked-world-s-third-hottest-luxury-homes-market-1.2253966#sthash.JxzLEZcM.dpuf

    “The Christie’s report ranked Auckland, New Zealand, first and Toronto second for hottest luxury market. It suggests Vancouverites have used that city’s real estate boom to relocate to Victoria. The Victoria Real Estate Board says there may be some truth to that, with 8.2 per cent of buyers coming from the Lower Mainland, up from 7.4 per cent last year. Victoria real estate agents say the buyers are either priced out of the Vancouver market or are hoping to cash out and use a windfall of home equity to buy in markets such as Victoria that remain relatively affordable. “

  117. Hawk up or down really does not impact me. I do not plan or selling and I do not use my house as piggy bank. You cannot do 1 post without sending out the doomsday prediction.

  118. Who says I’m not making a fortune somewhere else ? 😉

    Have you cashed in yet gwac or just going to brag about paper profits? … and whose bashing ? Did you not read the article ? Households are tapped out and the banks are at extreme vulnerability.

  119. Hawk Your market timing did not work this time??? Could have made a fortune oh well. I guess bashing every day fills the days

  120. “I think this illustrates to home sellers that an auction is not always the best way to market your property. And if you’re a home buyer you should get professional help before making any offer.”

    Agree Jack, the buyers paying $100K to $300K over definitely need professional help, before and after the damn bursts. 😉

  121. Nice water view property in Cordova Bay sold in an auction for $300,000 over asking price.

    The property was purchased in April 2004 at $740,000 and the 3 month median has increased by 95.4% making the projected price at $1,445,000 which is exceptionally close to what it just sold for at 1.3 million to a Victoria buyer.

    I’m wondering if this property might have sold for more if it had been exposed to the market for a longer time rather than 2 days by auction.

    Then there is a Gordon Head home that was originally purchased in April 2004 at $346,000 which would make its factored price today $676,000 which is really close to the current asking price. However the property sold a smidge over $800,000 to an out of town buyer.

    I think this illustrates to home sellers that an auction is not always the best way to market your property. And if you’re a home buyer you should get professional help before making any offer.

  122. I lived in a townhouse for 2 years and did look at a couple in Victoria, but it’s that type of floor plan that actually killed it for me. All townhouses are pretty much the same: living room, garage, kitchen, dining room on the first floor and bedrooms upstairs. Personally I hate this floor plan. The kitchen, where it feels I spend a lot of my time, preparing meals, making lunches, cleaning up, feeding pets, washing my hands, is really cut off from the rest of the house. When I had my baby, I hated that there was no good place to set him down while he was awake, I always had to carry him with me everywhere. You can’t leave him to play in his room, that’s a whole floor away! Can’t leave him in the living room either to go do some laundry or clean the dishes from breakfast. And what a pain it is to set the table and bring the dirty dishes back from the kitchen to that dining room! Basically for the first 5 years of a kid’s life, they need to be fairly close by, and not always by choice. Kids are always hanging off you, wanting to be around you all the time, and unless you want to turn your living room into what looks like a daycare centre with toys everywhere, moms want their kids to have a playroom or play IN their room, so that the mess can stay hidden and closed off when people come over.

    I love bungalows. That floor plan just WORKS. The kitchen is usually the hub, the dining room is literally right next to it, making meal time and cleanup easy. The bedrooms are on the same floor, meaning you can be in the kitchen while your child is napping or playing in their room and actually hear what they are doing. Yes the master bedroom is at the most 12×12, but I don’t need more room than that for a bed, dresser and 2 nightstands. After all, we aren’t doing cartwheels in there! (My friend who is building her own house was recently told by her realtor that she shouldn’t make her master bedroom smaller than 16×16 because that is what buyers expect. Between the huge master, ensuite and walk-in closet, she’s using up half the square footage upstairs. Wouldn’t most people rather have a 4th bedroom? Isn’t that more versatile than dead space?)

    I also don’t like having the laundry on the same floor as the bedrooms. Having it in the basement, I can do laundry at night, without worrying about keeping anyone awake. And I just love having a basement! It’s a space for the ugly, utilitarian stuff, storage, a spare bedroom or a playroom where young kids can use their ride on toys and shoot their nerf guns or have their little pretend kitchen and lay out their lego or train tracks. This eventually becomes a “rec room” where they hang out with their friends and play xbox, a home office or computer area (personally we have 3 desktops and 1 laptop-welcome to the digital age!) and probably in the future, a suite for the next person that buys the house.

    SFH are simply better than townhouses. If you don’t like your house, you have the option of ripping off the roof and adding a second story or putting an addition at the back. You can’t do that with a TH. And I won’t get into the politics of a strata and having no privacy, and having rules for everything. (In my old complex there were restrictions on renting, even having a family member stay with you longer than a month, you needed permission from the strata!)

    Lastly I agree with Ash – the townhouses we looked at were just as expensive as the SFH bungalows! No brainer.

  123. Mike’s chart looks like the Jaws of Death. Why always ignore putting in household debt in that chart Mike ? It’s at historical highs with up to 50% of households on the brink of serious trouble should rates rise which it appears they will be.

    Assuming the past as “always” for the future is an investor’s worst mistake and usually ends in disaster.

    Canadian Interest Rates To Rise As Banks Turn Riskier Than U.S. Ones

    “Riskier borrowers mean riskier banks. Canada’s big banks have been named the world’s safest repeatedly in the years since the financial crisis of 2008, but that may be coming to an end.

    Bloomberg reports that Canadian banks’ leverage ratio — a measure of how well a bank can absorb a loss — is now worse than at banks in the U.S. or Europe.”

    http://www.huffingtonpost.ca/2016/05/10/interest-rates-canada-banks-risky_n_9890600.html

  124. Marko, the problem with that townhouse (as with a lot of them) is that it’s only 3 bedrooms. Most families with 2 kids are looking for 4 bedrooms. Around here, that generally means house.

  125. For prices to rise along with interest rates then the size of the down payment must get larger to offset what would have resulted in higher mortgage payments.

    Oddly this is similar to what is happening now. This recent jump in prices would have increased monthly payments much like an interest rate hike. Instead some buyers just put down bigger down payments.

    The buyers may have been assisted by their guilt ridden parents or bubble bucks from a previous sale in amassing a larger down payment. This may be one reason why the big increases in price are localized into a small geographical area unlike in other markets such as in 2007 where the price increases where across all areas and all hoods uniformly.

    Today, some buyers are willing to gamble larger down payments in what they consider the more secure hoods. Ironically this makes these same hoods more likely to have a larger correction when the entire marketplace returns to historical norms relative to each other.

  126. Michael’s tried to make the point that rising rates doesn’t necessarily mean lower prices, in fact it can mean higher prices. Does he have a point?

    Sure. Hard assets do love inflation, I agree with that part. But mortgage rates going higher definitely drag on prices by worsening affordability, so the picture is more complex. It’s not as simple as high inflation -> prices increasing.

  127. Even in this market there are some awesome alternatives to the starter SFH in Westhills/Happy Valley.

    For example, I’ve always loved the floor plans on these townhomes -> http://kerrydavies.com/mylistings.html/details-54732888

    plus garage, plus a patio/tad of lawn and even in this market they are selling $385k-435k.

    It is just that people are so fixated on the SFH concept.

    Finances aside, I personally prefer condo living but in my situation SFH is just quite a bit cheaper on a monthly cash flow basis secondary to a hefty income from a large suite. Plus I was able to build my own home; therefore, adding value. Can’t go out and build a condo.

    Take the income suite and owner-builder approach out of the equation and I am for sure in a 2 or 3 bedroom condo at the Bayview One. Really enjoyed the 2.5+ years living there.

  128. I think in the past Michael’s tried to make the point that rising rates doesn’t necessarily mean lower prices, in fact it can mean higher prices.

    Does he have a point?

  129. Some people I know recently found themselves priced out of vic so they moved to a townhouse in central Saanich. Yup, the parallels to 16th century NA indigenous folks are endless.

    Kidding aside, re: Marko’s comments about people who’d rather live in the westhills than a townhouse downtown. When we were looking we were especially interested in townhouses if it meant we could live in choice areas like east fairfield. Unfortunately not many great options out there for young families…most of the townhouses being built (like on Shelbourne for instance) actually cost more than nearby SFHs. I think there’d be tons of young families interested in THs in the core if the right product existed.

  130. @Michael. 1990-1993 Falling rates, rising prices.
    2000-2005. Falling rates, rising prices.
    2013-2016 Falling rates, rising prices.

    Your correlation isn’t very good.

  131. Re: Inflation

    Vic prices have always soared higher with rising inflation/mtg rates…at least for as long as we have data (50+ years). It makes sense why prices take flight, as hard assets like real estate love inflation.

    Chart compliments of David_L

  132. Can we kill the alarmist and really dumb colonialism analogy, please? Quickly rising prices in Victoria may mean some people are indeed priced out of the sfh market, possibly for life, at least in hugely desirable areas. That’s a pity, but no one is about to be enslaved or ethnically cleansed, or even racially marginalized. As Marko has repeatedly pointed out, there are many European and other cities where everyone gets on just fine in multi-family housing. This could involve a cultural readjustment, yes, but so will driverless cars and genome-based medicine, among other changes we expect in the future.
    I’m not arguing for the status quo – I do think the gov should impose restrictions or taxes on foreign buyers, but I also understand why it is politically challenging to do so. Nothing in life is static. You take your chances and spend (or not) your hard-earned ducats.

  133. Whether Immigrants kill to occupy land or just buy it, the end result will be the same – your kids won’t be able to live here.

    Just wow.

    You are in fact a part of a lineage that will lose it’s rights to it’s home land …

    The sagacity with which you approach this topic matches your understanding of grammar.

  134. Re: Inflation.

    Although Introvert has given a guarantee against it, a Trump US Presidency is now something like a 50:50 probability, which means there is a risk of a sharp rise in inflation as the result of protectionist measures by the US. Canada will have no option but to follow suit, which will drive mortgage rates back to something like Intro’s “normal” range, i.e., 3 to 6%, which will quickly reverse recent gains in RE and kill bonds.

  135. Just to clarify here – Colonization & Colonialism are 2 different things. I was referring to Colonization.

    Wikipedia definitions:
    “Colonization refers strictly to migration, for example, to settler colonies in America or Australia, trading posts, and plantations …

    while Colonialism deals with this, along with ruling the existing indigenous peoples of styled “new territories”.

    Colonization is the act of creating a colony by taking over some land and resources.
    Colonization can take on many forms – doesn’t have to involve war.

    Colonialism is a paternalistic view of the world where the occupying people might destroy the original inhabitants.

    Anyway – we have different perspectives on this, depending on how severe we see the risks.

    Inflation can be incredibly devastating, destroying ways of life. Austria’s inflation in 1922 was 1400%, Greece’s was 13,800% in 1944, Zimbabwe 11,250,000% in 2008, Yugoslavia 1,000,000% in 1993 (Slovenia eventually took on the Euro)

    We ARE in a period of high inflation in real estate (some hyperinflation) in many Canadian cities.

    Here’s an article from MarketWatch that sums up the risks with unchecked foreign investment in any country:
    http://www.marketwatch.com/story/the-danger-of-foreign-buyers-gobbling-up-american-homes-2015-10-08

    “If the American government doesn’t take serious, pro-active measures to ensure that the cost of sheltering for Americans becomes an exclusively domestic affair, there is a good possibility where, in a not so distant future, foreigners may become major landlords of U.S. homes, dictating their prices and rentals. Effectively, they’ll be in position to hold Americans at ransom in their own country.”

  136. Need to test your graphs against more data but based on today’s sales, so far it looks like the 3 month median provides the better price factor over the MLS HPI and the Teranet HPI

    I’m not entirely sure but I expect the various indices are also inflation adjusted, so would expect changes to diverge from the price data over longer time periods.

  137. Inflation makes people less comfortable. War kills them or leaves them with lives not worth living. Not the same, IMO.

  138. I’m not a boomer tx – my parents are.

    The topic was comparing colonization of indigenous people to foreign ownership – not to the multi-generational effects of trauma.

    And I’m not sure how you got that I’ll be able to afford a house for my children. I did state I have every intention of helping them – they’ll need it and I’m already planning for it. And yes, I don’t see things the way many people do for various reasons.

    If you think inflation is the equivalent of war you don’t have any experience of war.

  139. “forced relocation, the residential school system, reserve system, forced cultural assimilation, death, violence, child abuse and the deeming of indigenous peoples as wards of the crown without the right to speak their language, vote or even hire a lawyer to represent themselves”

    Don’t fool yourself, we still have most of this stuff in one way or another. Life for first nations is still largely one of subsistence.

    And inflation is like war. It is a theft of value that life went into to create. Your life, my life everyone’s life – that is what money is after all. A store of value that represents the part of your life you spent to acquire that store of value. And it is being stolen, regularly and insidiously by those in Government and the banking system. What difference does it make if an entire life is stolen all at once with a bullet or over years with a pen? In principle, it is the same thing – theft.

    But we all know you’re a younger Boomer, have plenty of assets, multiple houses and a good career, 4 kids who you think you’ll be able to afford houses for, etc. If all you say is true, you’re rich and likely as far from the effects of any of the changes going on today as anyone so I wouldn’t expect you to see things the way many do.

  140. I don’t think the economic and social impacts of colonization on indigenous peoples are at all comparable to the impact of economic of foreign investment in real estate in Canada which is quite certainly something both remarkably minor in comparison and possible to legislate against.

    It is like saying inflation is just like war because you are mad you can’t afford to buy steak anymore. Only one of these things truly removes choice and puts your life and the lives of your children at risk without viable alternatives.

    The fairly localized effects of foreign ownership on housing affordability in specific areas don’t really compare with the impact of forced relocation, the residential school system, reserve system, forced cultural assimilation, death, violence, child abuse and the deeming of indigenous peoples as wards of the crown without the right to speak their language, vote or even hire a lawyer to represent themselves.

    I do agree that prices in Vancouver and Toronto are nuts and I’m in favour of legislation that would impact the ability of foreign owners to profit in BC real estate in a manner that drives up prices beyond what residents can afford if this is what is occurring.

  141. A house with a suite on busy Hillside purchased in December 2007 at $465,000 Resold at $567,000 which is close to the 3 month median factor

    A home near Portage Inlet purchased July 2006 at $385,000 resold at $550,000 which is close to the 3 month median factor.

    Need to test your graphs against more data but based on today’s sales, so far it looks like the 3 month median provides the better price factor over the MLS HPI and the Teranet HPI

    This might provide a reliable cross check to find out how much properties may be selling over market?

    How about some of those properties that sold well over asking price such as a property on Coronation purchased July 2005 at $429,000 and resold at $778,000 or 81.4% 3 month median shows a 55.2% increase.

    A property along May street purchased November 2010 at $641,000 and resold at $926,600 or a 45% increase. 3 month median shows an 18.9% increase in the market only.

  142. @ Introvert

    Maybe in violent magnitude but the economic and social impacts are similar: the next generation won’t be able to live here. Whether Immigrants kill to occupy land or just buy it, the end result will be the same – your kids won’t be able to live here.

    I’ve heard many people say “so what”? That’s globalization! And it’s making ME rich. Well, it’s time to stop thinking about your wallet and start thinking about the long game . You are in fact a part of a lineage that will lose it’s rights to it’s home land over time if things don’t start changing dramatically in the favor of those Canadians that occupy but don’t currently own land& housing in Canada.

    And it’s already happening – what do you call more recent efforts for subsidized housing for the priced out middle class in Vancouver? Land/housing set aside by government for those that can’t/ don’t want to keep up with the dominant economic conditions in the country. Sounds like a Reserve to me.

  143. Wow Introvert, that’s a red herring – you’re making the stupid comparison, not me.

    I was referring to land and resources, and how rich individuals are becoming more powerful than countries. Also the shrinking middle class. And how sad that is.

    There are actually a lot of people that make the “colonization” comparison, and maybe if you read more, you’d see it? 🙂

    Like this article talks about “China’s colonization of America’s Luxury Real Estate Market”:
    http://www.zerohedge.com/news/2014-07-08/chinas-colonization-americas-luxury-real-estate-market-one-chart

    I know quite a few people (friends, co-workers, family) of international backgrounds/cultures, many of whom have experienced colonization and oppression, including my parents, and they express similar concerns about the way the Canadian government is “naïve” and “giving away land to the highest bidder.”

    Let’s focus on the main point – control of strategic land, resources, economy, and Canadian government not being stupid.

    LeoM, I agree that must be a lot of people from the US that buy here too – especially because the Canadian $ has fallen.

    In terms of sheer numbers of “new wealthy”, though, all evidence so far points to China leading the pack – at least in Vancouver and Toronto.

  144. All this talk about foreign buyers got me talking to folks in my neighbourhood. In a one block by two blocks area, I know of only one new immigrant family from Asia but there are at at least 6 American couples who have recently purchased six houses, but they are still Americans, who live here for several months each year but spend the rest of the year in the USA. I don’t know all their backgrounds, just one group of Americans who are here as landed immigrants with no desire to become Canadians, they are here for the cheap health care system.

    The government plans to start collecting citizenship data on property buyers; we might get a few surprises when they discover the number of Americans is far more than Asians. Think about it; if your health care insurance in the USA costs $1700 per month, but a house mortgage in Canada costs $2300 per month, what would you do? I’d go to Canada to get free health care in exchange for a $2300 monthly mortgage. Then consider the Americans can rent their Victoria house on AirBnb for $2300 per month in undeclared income, when they are in the USA , and it looks like a great way for Americans to rape the Canadian taxpayers.

  145. From the previous thread:

    Strangely, this is probably what it felt like when the Europeans first colonized the Americas …

    This is a shockingly stupid comparison, Vicbot. The slaughtering of Native Americans for hundreds of years, for example, is a little bit different from a millennial being unable to afford a house in Victoria.

  146. Excellent graph!! And it reflects my own personal experiences very well :Jan 04-Jun 06′ = 47% actual , Jun 06-Aug 08=13% actual and Aug 08-present looks about right too (says 11.6%), even though I’m not selling. Maybe if the increase was 50% I would jump in. 😉

  147. If the chart isn’t showing up, hit refresh on the browser. Some kind of caching issue I’m still trying to track down why this happens.

  148. @cascadia: i have a mac & it works in Safari but it doesn’t load in google chrome. Try a different browser. The tool is pretty cool, I must say!!!

  149. I’m not seeing the chart come up – anyone else having issues with the chart loadfing oin the screen?

  150. Great work Leo! Note I sold my hose for a 147% gain over what I paid for it in 2003. So seems about right. Working on the Zillow of Canada are you? You could at least sell these auto graphs to citified…

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