May 16th Market Update
This post is 8 years old. The data and my views may have since evolved.
Weekly stats update courtesy of the VREB via Marko Juras.
| May 2016 |
May
2015
|
||||
|---|---|---|---|---|---|
| Wk 1 | Wk 2 | Wk 3 | Wk 4 | ||
| Unconditional Sales | 320 | 644 |
905
|
||
| New Listings | 392 | 760 |
1485
|
||
| Active Listings | 2533 | 2499 |
4043
|
||
| Sales to New Listings | 82% | 85% |
61%
|
||
| Sales Projection | 1340 | 1199 | |||
| Months of Inventory |
4.5 |
||||
Just when you thought the market couldn’t get any hotter, it does. MOI down, sales to list ratio up.
And sorry to keep harping on it but what is still completely astounding is that inventory continues to drop. This is now the fourth week in a row with inventory dropping which is unheard of in May. Normally inventory doesn’t start decreasing until July.
Taking a look at the sales per day, we see we are still heating up and immediately devouring almost 9 out of 10 new listings that come on.
We were in open house at 3552 Henderson Rd a week ago, the asking price was $900K even. There was a young man with a middle aged lady (probably a friend). They talked in their own language, and the lady asked the sellers’ agent a few questions, then the young man said slowly: “I can pay $880,000 right now, Okay?” The sellers’ agent smiled and shook her head (she already had three offers and two more were coming). The house was sold the next day, for $1080K (or $1008K). 🙂
B
Thanks Marko. New post up. https://househuntvictoria.ca/2016/05/24/may-24-market-update/
The market is completely off the rails now.
Tues May 24, 2016:
May May
2016 2015
Net Unconditional Sales: 979 905
New Listings: 1082 1,485
Active Listings: 2,431 4,043
Please Note
Left Column: stats so far this month
Right Column: stats for the entire month from last year
Bought and sold six houses in my life. The most important thing I learned is the agent doesn’t work for you or anyone else but him/herself.
Also, AirBnb lacks a filter on specific condo complexes that VRBO has. It’s surprising how bad AirBnb is and how popular it is. It must be a millennial thing where they just want a dumbed down interface to match their intellect.
@ Rook
There have been dozens of prices in Victoria with too many 8’s in them over the last 5 years. I bet if you take a look at MLS right now you will find more than just that one.
It has been well established that Realtors don’t even work in their clients best interests, let alone those of society at large. It may be in “poor taste” but don’t blame a weasel when it weasels.
Regulation to deal with foreign capital is key here…without that, expect to see many more Vancouverisms in Victoria.
I have suggested on several occasions that there should be a steep price for foreign capital to participate in our residential real estate market (i.e. income taxes on worldwide income, just like we Canadians pay) but I get the feeling that most people (even on here) don’t want the party to stop, just slow down long enough so they can get their fill. A shame really.
Unfortunately the ones that are benefiting far outnumber those who are not. Also more of them vote.
Not sure.. According to the study linked in the article, addresses ending in 8 sold for 2.5% more than those without. So is it not natural that a realtor should try to exploit this for their sellers? Then again I doubt an asking price with 8s in it has nearly the draw of an address so it’s probably useless anyway.
“legislators must weigh the outrage of those priced out of the market against the fears of those whose livelihoods depend on a continued boom.”
Vicbot,
What they really mean is the premier and politicians whose livelihood to win the next election is dependent on listening to what the Condo King tells her to do and deny there is any problems and the non existent data doesn’t support anything.
Just like Eby said in response to Cam Muir’s BS, it’s like the doctors telling us back 20 years ago there’s no proof smoking kills. It’s a total cesspool of deceit ready to explode.
888,888.
It actually makes my blood boil. Does it anyone else or am I crazy?
What does this kind of d-baggery do to the credibility of the realtor involved?
https://www.realtor.ca/Residential/Single-Family/16972939/20-Bushby-St-Victoria-British-Columbia-V8S1B2
Lucky number $888,888 price tag targets Chinese home buyers in Victoria
http://www.cbc.ca/news/canada/british-columbia/lucky-number-888-888-price-tag-targets-chinese-home-buyers-in-victoria-1.3597410
Related to the Fintrac article, interesting that “The largest number of firms that admitted they have yet to finish implementing a compliance regime was in Quebec” (home of that investor program)
If it weren’t for Toronto & Vancouver, Canada would officially be in a recession. Our economy is no longer made up of a healthy mix of new technologies, manufacturing, and resources, but it’s dependent on a shadowy mix of 40% homeowners not always able to meet mortgage payments (due to high prices), foreign investors out-bidding each other & leaving homes empty, money launderers, and developers/realtors selling condos first to overseas buyers.
http://www.cbc.ca/news/business/crea-home-prices-foreign-buyer-economy-1.3580780
“Toronto, Vancouver are creating all Canada’s job growth …” “According to GDP figures, the two hottest cities in the fastest-growing provinces are both being powered by the property market.”
“while Canadian manufacturing and exports fall, while oil and resources crash, the property market has become the spark plug of the economy.”
“legislators must weigh the outrage of those priced out of the market against the fears of those whose livelihoods depend on a continued boom.”
How did Canada come to a place where it’s totally dependent on real estate as a driver. Talk about non-diversified. What a stupid thing to do. In the long term it’ll hurt all taxpayers that have to fund bail-outs and deal with lower standards of living.
Speaking of which: http://thetyee.ca/Opinion/2016/05/23/Vancouver-Moneyed-Interests-Real-Estate/
Dave,
Realtors think they operate within their own rules and don’t give a shit as long as the bucks roll in. The surprise is change is coming and many of them will be exposed as assisting in fraudulent deals when all is said and done. Once a bubble pops, the truth always comes out.
I expect the NDP to ride this issue to election victory on the promise of major reform and much higher fines. People are pissed off and had enough of Christy Clark’s pandering to the Asian money laundering.
Since it took only 8% of US homeowners to crash the market, the situation here looks much more dangerous.
Four out of 10 homeowners caught short without enough money to meet their expenses, new survey finds
“About four in 10 Canadian homeowners says they were “caught short” in the past year without enough money to meet their expenses, according to a survey out Tuesday.
Manulife Bank paints a dim picture of Canadians with rising debt who could be sitting on a potential land mine if interest rates start rising, a situation the financial institution says is not just confined to regions of the country with expensive housing that has forced Canadians into larger and larger mortgages.
“With the ever increasing size of people’s mortgages and their ability to service that mortgage, many people are stretched,” said Rick Lunny, president and chief executive of Manulife Bank of Canada, which polled 2,373 Canadian homeowners in all provinces between the ages of 20 and 59 with household income of $50,000 or more.”
http://business.financialpost.com/personal-finance/debt/four-out-of-10-homeowners-caught-short-without-enough-money-to-meet-their-expenses-new-survey-finds
Any thoughts on this article, will realty companies be forced to track sales more closely or will they continue skipping over rules? http://www.cbc.ca/news/business/fintrac-real-estate-1.3597226
The problem is Quebec and their Immigrant Investor program. How can one province be allowed to have their own immigration laws? It’s absurd. It’s time to either have them act like a province or become a separate country. As it is now, they collect millions from rich foreigners, who then buy houses in Vancouver and Victoria with bags of cash. The current situation is a national embarrassment and it is destroying the country.
To each his own – the weakness with the AirBnB map is that even if you try to pick something on the beach – it doesn’t mean “beachfront” – it could be across the road, or behind a park or trees.
VRBO has been more useful to me because of the number of options in remote locations and the huge range of filters, eg., air conditioning, boat, cottage, beachfront vs. beach view, golf rental, ski rental, managed by owner or property rental firm, etc. That’s why it’s been better for beach/sport/tropical vacations or away from major cities.
I like it because I know exactly where a place is located so I know if I’m near my relatives, or the beach, or the metro in major cities. I’m not sure how the map feature is difficult – you should try it and see. Padmapper is another example for rentals.
No beachfront filter and no one likes searching by map.
Pretty easy to find. Click “more filters’ and you can choose pool. Most apartment complexes with pools have hot tubs. Go to map and you can see what is on the ocean right away. For ex: https://www.airbnb.ca/rooms/270799?s=v37jIsjd
I personally avoid hot tubs. I recommend not googling why.
Airbnb has few options for searching based on both amenities like pool and hot tub as well as beach front etc. So for my travels it’s been useless. I only go to tropical destinations with my brother family and only beachfront with at least one pool and a hot tub.
Very insightful article Vicbot. Funny the banker lady had to lie and say Canadian banks never got bailed out. Should be interesting to see the banks numbers out this week and how much oil and gas losses they will take.
The banks seem to be downplaying the loss risk while sitting in a far worse position of cash reserves than US and Euro banks. No wonder TD jacked up LOC’s out of the blue a few months back. Where there’s smoke there’s fire,just like in 2008.
Glad everyone’s safe after that fire.
Interesting articles StepbyStep & Hawk. Also what’s happening with banks in Australia – they’ve stopped loans to non-resident buyers, causing some price corrections especially in “for-sale apartments” (Australian term for condos), which are now in “over-supply” because so many overseas investors bought them.
http://www.afr.com/opinion/columnists/why-the-banks-stopped-funding-chinese-investors-20160512-gothtu
“… three of the four largest banks have announced they will no longer be lending to overseas home buyers …”
“Westpac stopped lending to non-resident home buyers last month after their share of the bank’s new mortgage lending jumped from 5 per cent to 15 per cent in about three years … “at least $20 billion in lending to people whose offshore residency makes it much harder to track and pursue bad debts.”
“Since last year, the Australian Prudential Regulation Authority, backed by the Reserve Bank, has been putting pressure on banks to curb the growth in investor lending in general, fearing a housing bubble in Sydney and Melbourne, and unsustainable price increases.”
“Bigger falls are expected in particular areas of apartment oversupply in Sydney, Melbourne and Brisbane, while Perth has declined considerably as the previous resource-driven economy.”
Meanwhile, “Canadian banks are falling behind global peers”
http://business.financialpost.com/investing/market-moves/once-touted-as-worlds-soundest-canadian-are-falling-behind-global-peers-on-a-key-strength-gauge
“If OSFI decides it wants to close the gap between Canadian banks and its global peers, it would likely place downward pressure on return on equity and dividend growth,” he said.
Guilty
Yep the explosion was close to us… If we were still in Rotterdam there would be a lot less people heading towards the smoke….
Check out this crazy flip: 2518 Cavendish Ave
Listed for $1.29 million
Sold April 2015 for $660k (under assessment. To a family member maybe?)
Looks like some renos: 2 new bathrooms
If this sells at list price, we definitely got some mania on our hands!
Phase 2 of the townhouses on shelbourne at Blair just blew up. Not sure if arson or just nat gas
Sooke has been very busy lately. 16 sales just in the that one subdivision of Sunriver in the last month.
I gave up on talking about Sooke since a few of the posters on this blog are so anti Western Communities on this blog. It seemed every time I posted something the knives would come out. But for those that were first time house owners and bought last year in Sooke they would have seen a significant improvement in their home value.
Only 3 of those buyers were from Victoria and two from Sooke. The remaining 11 were all out of town buyers including Vancouver, Edmonton and the USA.
Was out in Sooke today (saw a bear!) and noticed that our poster who was having trouble selling a home on Willowpark in Sunriver seems to have found a buyer now, without changing realtors.
There are sold signs all over Sunriver — a change from years past.
Your assessment must have increased much less than the average. Taxes are up about 1.5%, so the rest is how much your assessment changed relative to everyone else. Assessment is pretty much a crapshoot though.
Interesting StepbyStep. Some signs the luxury housing in Silicon Valley is starting to take a hit as Miami and London are now witnessing. China slowdown, tighter money laundering controls, as well as the tech industry IPO business has been the worst in years is being blamed.
It’s the ultra wealthy you have to be concerned with, when they stop buying then the ponzi scheme becomes unraveled. Eventually the pool does dry up.
Is the Silicon Valley Real Estate Bubble About to Explode?
After a four-year boom, real estate prices in the country’s priciest housing market are experiencing a sudden slowdown.
“Luxury-home sales in Silicon Valley had been propped up by tech executives flush with cash after initial public offerings, and foreign buyers. But now, in the wake of tumultuous times for global financial markets, including China’s slowing economy, luxury-home sales across the country have slowed.
“The seemingly inexhaustible well of very high-end buyers has proven exhaustible after all,” an executive at real estate consultancy firm John Burns told Bloomberg. “The peak is behind us, and that’s becoming clearer and clearer to builders and buyers.”
http://www.vanityfair.com/news/2016/05/is-the-silicon-valley-real-estate-bubble-about-to-explode
Silicon Valley housing/economy from a writer I read regularly: http://www.peakprosperity.com/blog/98395/observations-heart-silicon-valley?utm_campaign=weekly_newsletter_232&utm_source=newsletter_2016-05-20&utm_medium=email_newsletter&utm_content=node_link_98395
One commenter two perspectives that fit our discussions on this blog:
“From his vantage point, he sees the capital controls as only applying to the average Chinese person — not the politically-connected, who are the folks with all the money. And of course, it’s those very insiders who are expatriating their wealth abroad in case things home in China take a nasty turn. So, Robert doesn’t see the capital flow from Asia diminishing materially in the near term.”
“It’s little surprise to learn that the average person in Silicon Valley is rooting for its come-uppance. These folks are pretty much priced out of housing, and the valuations of most of the companies are so inflated that they don’t appear to be able to grow at anything like past rates. Many of today’s professionals there are increasingly feeling that the train to Tech riches has passed them by. So the most probable way they see for them of having a chance to ever get on it is for the valley to suffer a pretty major correction — like in the 40-50% range. It’s a strange thing to see so many people living in so privileged a place wish so hard for it to falter.”
BTW Mike, when you get time to take off the rose colored glasses and look at the real world, people en masse in Canada and the US are struggling with huge debt. If the US housing goes for a dump we’ll be right there with them but worse. It’s like a golf ball sitting on a glass coffee table waiting for a gust of wind.
Two-thirds of US would struggle to cover $1,000 crisis
NEW YORK (AP) — Two-thirds of Americans would have difficulty coming up with the money to cover a $1,000 emergency, according to an exclusive poll released Thursday, a signal that despite years of recovery from the Great Recession, Americans’ financial conditions remain precarious as ever.
These financial difficulties span all income levels, according to the poll conducted by The Associated Press-NORC Center for Public Affairs Research. Seventy-five percent of people in households making less than $50,000 a year would have difficulty coming up with $1,000 to cover an unexpected bill. But when income rose to between $50,000 and $100,000, the difficulty decreased only modestly to 67 percent.
Even for the country’s wealthiest 20 percent — households making more than $100,000 a year — 38 percent say they would have at least some difficulty coming up with $1,000.
http://www.cnbc.com/2016/05/19/the-associated-press-poll-two-thirds-of-us-would-struggle-to-cover-1000-crisis.html
The CREA already said it last week Mike, Van and Toronto are “topped out”. Only those sheep like you sucked into the vortex actually believe this will continue much longer.
At your predictions of $1 million in a couple of years, $4000 a month payments will be the norm for average incomes of $85,000. Afraid the bank won’t qualify you with 10% down. You left those vital stats off your chart, as well as declining job growth since January and 1% wage growth for nurses etc in the public sector.
I figure the top will be signalled when Maclean’s does a cover story of something like a guy hugging his house, as Time magazine did in the US a decade ago.
http://i.imgur.com/hfL1Wti.jpg
Meanwhile, the millions of ‘experts’ renters & big shorts madly pushing their daily bubble proclamations, only reveals that we’re still much closer to our 2013 bottom than anywhere near a top.
My tax bill (Saanich) is down about 9% from last year.
Property tax notice came in the mail. Taxes up almost 10%
1127b Wychbury Ave, Can someone be kind enough to give me the details of this sold house?
It’s never different this time LeoM, that’s just a sign you and the other perma-bulls on here are sucked into the vortex. Your QE theory is just another catalyst that eventually blows up like all other bubbles.
The shacks on busy streets are already so over valued it’s pathetic how you’re blinded by the greed.
Someone has to be a bag holder though, might as well be you. 😉
“This panic buying can suck anyone into its vortex. During this phase, even the smartest believe that we are in a “new paradigm” and the old ways of valuing things are thrown out. ”
“There has already been a massive flight of capital out of China of over $1 trillion. Will that continue endlessly? Of course not, the Chinese government will stop that at some point, leaving the locals of Vancouver and eastern Australian cities holding the bag.”
It’s different this time Hawk…
All those $$TRILLIONS$$ in Quantative Easing have percolated through the financial system and now the 1% folks needs hard assets to stash their cash; and globally, real estate is the hard asset of choice.
It’s global this time Hawk, from Victoria to Vancouver to London to Shanghai to Dubai to San Francisco to Seattle to every place on the planet.
It’s so different this time Hawk, that if you’re right, the collapse might be like Japan for the past 25 years; year after year after year of declines and stagnation. When I see shacks on Victoria’s busy streets selling for over $600,000 in bidding wars, then I’m getting closer to converting to Hawkish thinking.
Tick, tick, tick…….. boom !
The anatomy of a housing bubble
Why do we repeatedly fall into the trap of inflating bubbles even though history shows they always end badly? Blame your brain.
“A necessary step in the euphoria stage is the occurrence of “irregular” lending practices, irregular sales practices, and financial engineering. Through magic, the impossible is made possible. People who could never otherwise afford real estate suddenly can. As the panic to buy increases, it is a self -fulfilling positive feedback loop. Prices go up, people panic to buy more and they outbid each other in an orgy of greed. Amazingly even the experts begin to extrapolate out recent trends well into the future, like in 2008 when oil was $140, and many targets had it going to $200. That didn’t happen, it’s just how powerful a euphoria becomes.
Even so-called experts get sucked in during the euphoria stage when all the news is good. That is another absolutely necessary component of any bubble: there is no bad news. This is another pre-emptive strike at all the gurus saying that Vancouver and other overvalued markets will go up forever. It ain’t gonna happen. ”
“It does tell us, though, that we are getting near the bursting. It’s a shame, because it’s not just Vancouver that will be impacted: real estate markets in many cities are red hot simply because of 240-year lows in interest rates. This type of thing ends badly.”
http://www.macleans.ca/economy/economicanalysis/the-anatomy-of-a-housing-bubble/
“For instance, 61 per cent of all new homes sold in London in 2013 were bought by investors. Of those investors, 15 per cent were offshore buyers not living in London. Fifteen per cent is a London-wide figure. In what is known as Prime Central London, 49 per cent of new homes were bought by offshore investors.”
http://www.theglobeandmail.com/news/british-columbia/in-the-housing-crisis-vancouver-is-not-alone-and-london-offers-hope/article30113530/
I get your point DevNull, but that’s not my point. My comment thread on this issue is about the tax cheaters, you know, the ones trying to hide Canadian assets from the IRS. Now that Canada and the USA are sharing tax information under FATCA and our tax treaties, the Americans living in Canada who evaded the IRS tax implications by conveniently neglecting to mention that they owned property in Canada, will now be discovered more easily by the IRS. In the past it was very difficult for the IRS to find American tax cheaters who lived in Canada, especially profits from Canadian owned property; not anymore; these days the IRS and CRA work cooperatively to find the cheaters; there is a reason why the IRS wants the SIN number of Americans residing in Canada.
Yes that’s the point – all vacation rentals need to abide by city regulations.
Sometimes the city will use “home occupation” where referring to B&B, eg., link here:
http://www.victoria.ca/assets/Departments/Planning~Development/Development~Services/Documents/regulations-bed-breakfast-guidelines.pdf
The huge concern is that AirBnB actually provides incentives for investors to buy up condos & entire houses & apartment blocks to rent on AirBnB. It’s then easier & cheaper for investors to get worldwide exposure instantly on AirBnB’s incredibly efficient web site. Investors have then been faking their host IDs, posing as individuals, when in fact, they own multiple properties.
From Laane’s LA report:
http://www.laane.org/wp-content/uploads/2015/03/AirBnB-Final.pdf
“AirBnB has created a platform that allows landlords to pit tourist dollars against renter dollars.”
“Coldwell Banker Commercial (CBC) recently listed the Morrison Apartments for sale. In an Exclusive Offering Memorandum … CBC presents the conversion of the Morrison to AirBnB units as the prudent financial choice for prospective owners. … The projected rate of return under the Morrison’s residential configuration is estimated to be 5.6 percent, while the projected rate of return for configuring the Morrison as an AirBnB building is 13 percent.”
“One enterprising AirBnB impresario, Jon Wheatley, even posted a step-by-step guide for
buying apartments for the purpose of running a remotely-managed AirBnB listing. While Coldwell Banker does encourage prospective buyers to “check with the city” before converting a building into AirBnB stock, the challenges inherent to enforcing the zoning code on more than 11,000 AirBnB units has allowed these sorts of bootleg boutiques to proliferate unchecked throughout Los Angeles neighborhoods.”
“The 7,316 whole apartments currently listed on AirBnB represents nearly seven years’ of affordable housing construction at the current rate of housing development.”
Sorry – you are right dasmo. Didn’t read down far enough – stopped at the home occupation definition.
So, it appears to me that all vacation rentals for tourists in residential zones, whether whole house, part house or room, are operating illegally unless they renting as a licensed B&B.
Just like almost all the secondary suites.
I don’t think this is true dasmo. Victoria doesn’t permit this as a home occupation: http://www.victoria.ca/assets/Departments/Planning~Development/Development~Services/Zoning/Bylaws/Schedule%20D.pdf
Neither does Oak Bay, Esquimalt or Saanich.
See section 11.
Subject to the following requirements, where any building is used as a single family dwelling, up to two bedrooms may be used for transient accommodation as a home occupation.
So foreigners are then dictating our rental prices. That is more devistating than ownership IMO since it affects both house prices and rental prices!
760 Genevieve busy today. Back on market after accepted offer collapsed due to mold. Issue since been remediated. Does North / High Quadra do bidding wars?
Most residential zoning supports BnB as a “home occupation”. Renting a room in your house is not the problem. It’s renting your house out to tourists instead of locals because you make $1000/week instead of $2000 a month…..
Transient includes short term visitors and vacation rentals. Boarders and roomers are separately defined.
BnB is not transient but you need to occupy the residence….
Also, I just checked and I don’t see that Victoria permits B&B without licensing and zoning in place? All prohibit transient accommodation that I could find. You can have four room-mates but they cannot be vacation rental guests who fall under transient accommodation restrictions.
LeoM, you seem to be missing the bigger picture. These Americans would have to pay tax on capital gains no matter where they occurred in the world, including the US. If the biggest problem that Americans who own property in Victoria/Vancouver have is that the value of their property has increased astronomically while living in one of the most beautiful places in the world, I seriously doubt a max exodus will ensue:
“Oh no, I just sold my house for a 2 million dollar profit and I only get to keep 1.5 million, I better not buy in a desirable location again!”
Meant I would not be happy as an investor…
Maybe, I’ve used VRBO for California and Florida before. Airbnb wins these days for those destinations too.
I’d agree that is not a good result. I’m not aware of any investment companies doing this in Victoria. Seems doubtful. And why invest in this manner when it is likely to be stopped at some point? I would be happy with that decision as an investor. I’d say that is only a realistic possibility if short term rentals are actually legalized as they are in some cities and buildings.
The same rentals that were on VRBO were on Airbnb in my search and I was looking for separate spaces. Airbnb gets targeted because it is a bit more popular and growing.
Most of the rentals in Victoria that are secondary suites – which is the majority it appears- are illegal to start with. Zoning doesn’t allow for secondary suites at all unless the suite is legalized and this is a tiny percent. Some areas just don’t allow them at all – but they still exist and shutting then down would be disastrous for the rental market.
As far as renting out a room goes, that seems like something to be encouraged. I don’t see a big downside except it just is not what I’d be looking for and the income should be taxed.
I’m not sure about the whole house rental market changing but it certainly has been difficult to find one for years prior to Airbnb and prior to you looking dasmo. When we rented our house out five years ago there was a line-up of applicants and this was before Airbnb. The same folks are there today.
It is simply not economic to rent out whole houses in Victoria – they don’t pay for themselves and produce a loss month after month. You’d need a suite to make it work financially overall or simply bank on appreciation which did not look good for many years. The high house prices are as much of a factor in the scarcity as anything else imo. And I don’t have much sympathy for people saying they need a whole house most of the time. We lived in apartments and townhouses with kids as renters and it was fine. Dogs make it harder.
If the city wants to deal with the issue and encourage longer-term rentals it needs to implement a program for legalization and licensing imo that makes sense for encouraging rentals and density. Of course people are going to oppose this too I expect so Council wavers on the decision. And there needs to be a budget for it. And this budget could be provided by requiring short term rental companies like Airbnb to remit a % to the municipality.
For VRBO or local web sites for vacation rental property management companies – their usefulness might also depend on which destination you’re looking at. The ones I’ve used have always had a lot of reviews and options, but maybe that’s because they were long-established full-year-round travel destinations. (it’s true that AirBnB is enticing due to lower charges for hosts than VRBO, which is maybe another reason why long-standing VRBO hosts are more successful – an established customer base)
Local tourist info centres (with good web sites) can be surprisingly helpful with finding an option for all your family needs & your budget – but again, it probably depends on the destination, and the city’s dependence on tourism/travellers for revenue.
Ultimately I just hope that AirBnB is more regulated so that the large investment companies don’t take inventory away from locals who really need it.
I’m a user of AirBnB and like the interface better than VRBO. I do see an issue though. After we sold the house I became a rental Hunter. I really saw the effect of AirBnB. It has reduced inventory greatly. The rules for most munis allow for BnB in home occupations but 100% rental is a different thing. Many full house rentals on Air. IMO it’s tipped the scales into being an issue in this city. This is the job of zoning and most 100% rentals are violating the zoning laws. Rental affordability was at least one bastion of hope here and AirBnB is eroding that fast…. The Janion will be mostly AirBnB for instance. It might be zoned for it at least….
Dev Null said, “This doesn’t make any sense. They would only pay capital gains if they sell, so why would this make them want to sell? Also, they only pay capital gains on the amount of gain over $250,000 (individual) or $500,000 (couple), so how many people is that likely to affect in Victoria?”
That’s why I would expect the Americans in Victoria and Vancouver to start selling, because they are probably nearing that threshold where they would be caught with American IRS Capital Gains. If a single individual American person bought in Victoria a few years ago they are likely nearing the $250,000 threshold and if an American couple bought in Victoria before 2009, then they might be getting close to the $500k limit. The logic is simple; sell before you cross the threshold and become a target of the IRS. Last year I met an American couple who bought a beautiful waterfront property in Ten Mile Point, and that poor guy was nearing a nervous breakdown due to the IRS harassment, he wants to sell, but his property was worth a million more than he paid, and that was last year before the recent insane gains; this year if he sells his IRS bill will be about $500,000!!! He waited too long, now he’s forced to pay a huge tax bill when he sells.
Lots of information available from a quick Google search, for example:
http://www.theguardian.com/money/us-money-blog/2016/may/12/donald-trump-president-move-to-canada
Maybe it is because we travel in a larger group or you haven’t used Airbnb a lot? We are usually 4-8 plus dog.
I just searched VRBO and for May 28-31 for four people there are three three-bedroom places available near downtown – none of them with a review. And the interface is painful to navigate and it turns out one of them is not really available but you only find that out by clicking through pages. And I have to pay a fee of 10% to book it with VRBO instead of 3% with Airbnb. And the same places are listed on Airbnb at the same price so I’d end up paying less and have reviews.
Not to say you might not be able to find something better at times on VRBO – just my two cents and a few random searches and some previous VRBO experience.
@entomogist it’s just a house build but it’s in an environmentally sensitive area so requires a development permit application first. No more mowing down all the trees and planting a lawn to the lakes edge. Those days are gone. It’s a double edged sword though since we want to live in nature so these added hoops will help protect the area in general. Short term suffering for long term gain. Once you gain knowledge of riparian areas you see lawns to lake edges in a different light….
Dasmo, my thoughts exactly!
@JD what is said on HHV stays on HHV 😉
MLS 365387 954 Mason St
“Have you ever heard that buying a property close to a McDonald’s is money in the back? Here it is!”
The guest pays the 8% hotel tax. I don’t think it is the tax that is really causing an issue, it is more likely to be the labour and capital costs.
Airbnb operates on unaccounted for labour, or self-check ins and outs. It uses space that would often otherwise be heated and services that are already available to a residence. The overhead is overall lower as we expect to pay out of pocket for residential costs of living.
My view is that income tax might be a better way to manage the issue. Airbnb should issue tax receipts that go to CRA and the income should be added to the top marginal tax rate. Long-term rentals of over 30 days should get a tax credit. Cities should require Airbnb to remit a portion of all rental income to them as Uber is required to do in Alberta.
It looks like our experiences with VRBO & AirBnB are different, Totoro – I’ve had great success with VRBO & local property management companies (with extensive web sites) and I’m also a frequent traveller.
This web site details the similarties & differences:
http://www.tripping.com/industry/rental-companies/vrbo-vs-airbnb
But aside from my own personal vacations, my concern with AirBnB still is with their business model – as shown by the data collected in those studies – proven to be fertile ground for large investment companies to take over whole properties that would otherwise be available to owner-occupiers or renters – more so than any other vacation rental business.
That’s probably why, on the surface, it looks like there are a wider variety of lower-cost rentals – due to the economies of scale of the large investment companies.
Agreed, Totoro. I’ve also used plenty of Google searches, Craigslist, VRBO, and other online sleuthing to find accommodations recently, including some very obscure ones. The outliers seem to be the big hotels who pay heavily in hotel tax and following demanding provincial regs. There should probably be some reduction of their burden – along with some minimal regulation and taxation of alternative offerings, to make a fair playing field without too quenching of the entrepreneurial spirit.
I’ll ignore the hyperbole but will say have not found this to be true at all and I am a very frequent traveller. The alternatives are not comparable in amenities or price in my experience.
I don’t want to share space with stranger but this is a service Airbnb offers with vetting;
VRBO is way more expensive, geared to the luxury market, and there is no good feedback system;
good luck finding a local homeowner website independently – seems a very poor marketing strategy to me;
hotels are a very different experience which I have grown adverse to – I generally dislike carpets and am aware of the issues surrounding cleanliness plus there are often noise issues and families don’t fit;
Airbnb doesn’t provide the same product as property management companies or long-term monthly rentals do so not sure what the point is in mentioning it for people to remember; and
I dislike B&Bs – see 1.
Now if Airbnb is targeted I expect we would see a rise of alternatives in a more organized copycat fashion.
Dasmo – what are you building or developing?
How about we tax differentially so there is less of an incentive overall but enough of an incentive to increase choice. The demand is not going to go away. We only started travelling extensively with family when this became an option. Like I said, we’d stop if it wasn’t or seek other avenues to locate the same type of accommodation.
Affordable housing/rentals should be supported by public policy and unconventional options should be offered imo in conjunction with taxation incentives and deterrents. The answer is not as simple as banning one thing.
The vacancy rate in Victoria has been extremely low since before Airbnb came onto the scene – in 2009 it was lower than now – and yet the City and municipalities haven’t felt compelled to implement a reasonable process for secondary suite legalization or increasing density.
What about a program that pairs seniors who have housing with students who want reduced rent and an online app that has a screening and review process? I would certainly be open to housing a student in exchange for a certain amount of assistance later in life. Pretty sure there are a lot of parents who would do the same in exchange for childcare if there was a safe, high tech app out there to connect people. Instead there is usedvictoria or CL which have no screening and aren’t configured correctly to create momentum and eliminate the hassle and uncertainty in the transaction.
No doubt there needs to be some regulatory response, how much I don’t know. And Victoria is not Berlin: rents in Berlin rose 56% between 2009 and 2014 – for various reasons.
Remember too that there are thousands of alternatives to AirBnB for any kind of rental – rooms, houses, etc.
VRBO, local home-owner web sites, local B&B orgs (that also offers cabins/houses), local property management rental companies, TripAdvisor. The locally-based ones are great for supporting the local economy wherever you go.
Funny enough, some of our best discoveries have been through looking at Google Maps and finding a small-scale operations that don’t do much advertising at all.
Well I think I know who Dasmo is now. It’s a small world, sir!
+1 “I think it’s worth a look at to see if Airbnbs were to be shut down if that would mean investors would now sell or rent long term. Thereby increasing the supply and lowering rents. “
Totoro I very much agree with your views on the sharing economy. However I do think the companies are having significant external impacts many of them detrimental.
As for Uber, the taxi industry is doomed one way or the other. By banning uber they get a stay of execution for a few years before they are all put out of business by self driving cars
As a frequent Airbnb user that is the only type of housing I’m interested in. I have no desire to tote my dog and kids into someone else’s shared space or to a hotel for that matter. I’ll stay in a separate home-like space with a kitchen, dishwasher and a yard – or I’ll stay at home or just go to our vacation place.
In my opinion, there is a strong consumer demand for this type of affordable accommodation which traditional B&Bs and hotels do not provide and without it there will be a segment of the population who will not travel, or travel less. We spend money in the communities and countries we travel too. The dollars are spread out too – we stay outside of downtown areas and frequent grocery stores and restaurants in residential areas. I think this should be encouraged.
As for long-term rentals, not everyone wants to do Airbnb as it is a hands-on operation with ratings etc.. If too many people are doing this and it is impacting long-term rentals provide an incentive to do long term rentals in the form of a tax exemption and increase taxation of short-term rentals so the economics are closer together if they are not already and the hassle factor will weed people out while government revenues are increased.
I expect Airbnb has had some effect on vacancy rates that should be addressed. Don’t think it is the cause of price increases, it is has been around much longer than the increases have. Part of the cycle of housing imo and may be impacted more by foreign buyers and the Vancouver effect.
As far as the sharing economy goes, I am a fan. I think there should be a good platform for sharing things like garden space and fishing boats. I’m also a fan of fractional ownership as I’ve stated before. Things will be changing and going that way I expect.
@freedom_2008
Yes. Like I said, you are the boss. You can charge or do what ever you like. Airbnb is just a connection tool from client to host/host to client. You can advertise anything you like.
“The skies the limit!” or is it…
@yeahright and @Ash
Actually more and more Airbnbers (especially in Vancouver) started to charge a cleaning fee on top of the rent. They often charge $50-$100 cleaning fee regardless how many night the guests stay. So if you only stay one night, say $99 rent, you also need to pay, say $75 cleaning fee, plus Airbnb over 10% cut, for total close to $200/night. Maybe hotel is better after all. 🙂
Development Permit Application submitted! Septic perk test, Biologist report, Arbourist report, wildland urban interface study, well test, site plan, intent letter, whew…. Thought about just hiring a lawyer and declaring myself homeless so I could just start building whatever I wanted….
Why is it necessary for the government to solve the housing issue when we have private enterprise building more condominiums. The idea promoted by the Province was that private enterprise would solve the problem of affordability by increasing supply and that would bring down prices and solve the vacancy rate.
Well it hasn’t worked. You have to ask why after all these years of building more and more the problem has gotten worse and worse? Could it be Airbnbs?
I think it’s worth a look at to see if Airbnbs were to be shut down if that would mean investors would now sell or rent long term. Thereby increasing the supply and lowering rents.
And if this solves or reduces the problem then we can also save the taxpayers some money too.
@Ash
“Ok stupid question time. If you’re airbnbing you’re basement suite, does that mean cleaning bathroom/kitchen etc on a daily/ weekly basis? Who has time or the energy to do that? Are people hiring this out to a local service?”
It’s all up to you. You are the Boss. You can rent out a whole house with all the amenities, or rent out a corner of the floor for them to sleep in their own sleeping-bag. You can clean and provide bare amenities or you may not.
Just remember it’s a two way street, you’ll be judged and reviewed and you do the same of your guest.
So it boils down to how much effort you want to put in and how that will reflect on you being a host for potential clients picking your ad.
The main issue with Airbnb is not really the standard noise …that can happen with any type of rental or even regular neighbours, the issue is one type of Airbnb called “entire apt/house” (most likely a suite if it is in a house). It takes away long-term rental units which are required by people who live and work and study in the city. That is why Berlin and some other cities only ban Airbnb on this entire apt/suite/house type, unless the owners are on short term vacation away from the unit at the time of the rental. There may be regulation, but no ban on people Airbnb out their spare bedrooms in their house/apt, as these are spaces which wouldn’t likely be rented out long term otherwise.
How many families who would like to rent out their spare bedroom and share their kitchen with changing strangers on daily or weekly bases, unless they are forced (by money) to? Maybe more in NY, but probably not that many here. It could be more in future as housing price higher up more.
“I don’t think we should care if someone can’t afford to make payments because they were banking on short term rental income.”
I think that’s what a typical sub-prime lender said to their bartender just before the 2008 global financial crisis.
Also, when studies today talk about “affordable housing” – they are often talking about the shortage of housing for middle-class families (not necessarily social assistance housing)
The provincial government is contributing $30 million to help ease the affordable housing shortage in B.C.’s Capital Regional District.
The CRD has also agreed to borrow $30 million to help with the issue.
CRD board chair Barb Desjardins says the combined $60 million is enough to get started on a housing first plan for the region’s most vulnerable people.
Agree there has always been a place for small B&Bs, and there have been B&B websites worldwide since the 1990s – nothing new technology-wise at all. (this isn’t a case of old-timers vs new generation)
The only difference with AirBnB – causing serious problems – is that it allows huge numbers of large investors to get into the unlicensed B&B game (sometimes under false host names) – distorting the housing market. (not to mention unlicensed food, safety, & zoning violations). AirBnB are also brilliant marketers, touting themselves as being “for the small guy” when that’s not what’s actually going on.
Lots of data to show this, eg., studies from Harvard & Laane …
Harvard:
http://harvardlpr.com/wp-content/uploads/2016/02/10.1_10_Lee.pdf
How Airbnb Short-Term Rentals Exacerbate Los Angeles’s Affordable Housing Crisis
“Although Airbnb claims that it mostly provides middle-class renters and homeowners with supplemental income, it generates 89% of its revenue in Los Angeles from whole-unit Short Term Rentals without on-site hosts.”
“Entrepreneurs approach landlords in popular neighborhoods expressing their intent to list rental units year-round on Airbnb”
“Employing legal, statistical, and secondary source analysis, this article explores how Short Term Rentals affect the price and aggregate supply of affordable housing rentals in Los Angeles, and how municipal policymakers can best regulate Airbnb.”
Laane:
http://www.laane.org/wp-content/uploads/2015/03/AirBnB-Final.pdf
89% of the revenue generated by AirBnB was from big leasing companies & “single lessors” (renting out their entire property).
“listing agencies have consolidated AirBnB listings under an assumed AirBnB host.
…In spite of the fact that Danielle and Lexi received a “verified ID” badge on their profile page, we have no way of knowing if they had any role in the properties other
than having their photo taken. All the listings featured on Danielle and Lexi’s AirBnB host page were actually managed by Globe Homes and Condos.”
“Sharing our homes has been commonplace for as long as there have been spare rooms and comfortable couches …
“AirBnB changes this basic formula. By incentivizing the large-scale conversion of residential units into tourist accommodations, AirBnB forces neighborhoods and cities to bear the costs of its business model. Residents must adapt to a tighter housing market. increased tourist traffic alters neighborhood character while introducing new safety risks. Cities lose out on revenue that could have been invested in improving the basic quality
of life for its residents. Jobs are lost and wages are lowered in the hospitality industry.”
Hawk says:
“How long will fools keep paying $200 K then $300K ,then $400K over ask for a moldy box ? That is the question.”
Why are you so fixated on asking price? It seems to me that paying over asking could be a terrible idea on one house, but perfectly rational on another. Doesn’t it depend on the relationship between the asking price and one’s own appraisal of the current value of the house?
LeoM says:
“That’s why I’m expecting a lot of Americans who are living in Canada, either part-time or full-time, will be selling their Canadian real estate soon.”
This doesn’t make any sense. They would only pay capital gains if they sell, so why would this make them want to sell? Also, they only pay capital gains on the amount of gain over $250,000 (individual) or $500,000 (couple), so how many people is that likely to affect in Victoria?
You also seem to be forgetting that at the moment a CAD $1,000,000 home costs about USD $750,000. Seems like a pretty good deal to me.
The NDP MP for Victoria, Murray Rankin says the federal government should also chip in when it comes to creating affordable housing in the Capital Region.
“When I heard that the $30 million was coming from the CRD regional housing trust fund and the province was going to match it, I thought what about the federal government. They should be at the table to; everyone has been talking about that.”
I don’t think we should care if someone can’t afford to make payments because they were banking on short term rental income. There is no guarantee of this being permitted in future and it is unwise to base a purchase on this imo.
On the other hand, things change. Technology is changing everything and businesses are becoming obsolete or outdated at a rapid pace and that is a risk of business – another business can come in with a better model.
Taxis are in this category re. uber where permitted if they do not shift their business model to offer some of the same apps and options uber does. I myself was looking to hire a virtual assistant. I didn’t in the end as I was lucky to find someone locally, but there are many people using these type of services. Get ready for more of it.
I like technological change myself even if it means that I become less competitive until I adapt. This is what motivates and keeps things evolving. I am also in favour of appropriate regulation that encourages competition, positive change and protects the tax base and addresses consumer safety. I’m not a big fan of protecting obsolete jobs or established ways of doing things that make no sense any more just because.
The sharing economy has lots of pluses and little regulation right now. That will change in the future imo. It will be regulated and taxed. Pretty sure CRA is already on that. I just hope uber and Airbnb are not outright prohibited by municipalities because they are good for the economy overall imo and for tourism.
Why do we have to pay “tens of millions” for social housing because of short term rentals again? Where are you getting this from other than your head? Isn’t this already an unmet need? I don’t see short term rentals displacing this segment, it is more the non-subsidized rental market that would be impacted imo and this does bear looking at.
IMO incentives for market-based long-term rental housing should be granted for landlords. More money should be put into social housing and this is not a new thing. Give people a tax break for this and enforce taxation of other uses and use this money for enforcement and housing.
Is it fair that the tax payers have to pay tens of millions for more in social housing so that airbnbs may continue to operate?
When does the needs of the many outweigh the desires of a few to make bigger profits?
And why should we care if someone bought a property but can’t afford the payments if the airbnb has to be shut down. There was always a possibility for that to happen and they knew the risk.
I’d suggest that this is extremely rare. Those folks that have the ten houses (whether they own them all or not) were doing it long before Airbnb and they have their own website. They are definitely in a business and liable to charge PST and GST which they may be doing. It is very unlikely that they are not paying income tax on the proceeds.
Very very few people can afford to buy more than one home in Victoria. Think about the credit and equity requirements required for a minute and the risk if rates rise. My take is that less than 1% of the population qualifies and among those that do very few would be motivated to do this.
What might be happening is people trying to rent places and then turn them into Airbnb as has happened in New York. Most landlords don’t want this to occur and it is usually prohibited by the lease or rental contract anyway and it is a reason to evict.
I would also say that there are already municipal rules against short-term rentals and secondary suites – they are enforced on a complaints-based basis. If the municipality cracked down on illegal suites, whether Airbnb or not, there truly would be a housing crisis in Victoria. Complaints-based enforcement and comprehensive measures for the taxation of income (including through the issuance of information to CRA directly) is probably the way to go.
Ok stupid question time. If you’re airbnbing you’re basement suite, does that mean cleaning bathroom/kitchen etc on a daily/ weekly basis? Who has time or the energy to do that? Are people hiring this out to a local service?
That would be good. Do what you want with your personal residence. If you want to rent out your cottage you pay the hotel tax, and if you have more units than that you are classified as a hotel and subject to all the same regs.
City of Victoria expecting a staff report on AirBnb June 9
Except you’re living in the place. Huge difference. You haven’t bought up 10 houses for the purpose of Airbnb
I do think a lot of people are joining Airbnb who would not otherwise be landlords. People are renting a room or a suite out knowing that it is discretionary, short-term and that the guests are going to be subject to a rating as are they. Very different from having a room-mate and a much better experience in most cases.
I haven’t found it to be a nuisance anywhere and there are some in our neighbourhoods. There are a couple of well-publicized house trashing parties in Alberta that made the news, but this has always happened. When I was a kid we used to have house parties when parents went away that sometimes got out of hand. My neighbour who was a long-term tenant had one that went on to 3am last year and it was annoying.
So a lot of people are not taking away from rental stock but adding to the options for tourists and business travellers. Hotels are more expensive and have fewer amenities. I’m grateful for an alternative and I’d hate to see it go away.
That all said there is very low vacancy in Victoria and it is hard for tenants to find places and Airbnb must be having an impact of people are converting long-term rentals of secondary suites to short-term.
Given the restrictions on rentals in existing by-laws on secondary suites and short-term rentals and the very low rate of legalization and the high rate of such suites, what we are really talking about is further regulation of illegal suites so people can illegally rent to long-term tenants rather than short-term. Seems like there is an inherent contradiction in this approach.
I know some towns have worked hard to legalize suites at a low cost to owners and they have added short term rental licensing. The licensing is limited to a suite in your primary residence and this seems to be a reasonable limit to me.
Vacation rentals have been around for a long time. Due to technology Airbnb has just increased accessibility and safety and this has brought down prices and increased options and increased family incomes. I am in favour of this and I’m in favour of Uber as well. And I think both of them should be remitting a portion of the fees to the municipality for by-law enforcement and other municipal costs and that Airbnb should be issuing income tax slips to owners that go to CRA as well. The tax slips would stop a some people from doing this.
I fully understand the resistance to Airbnb as it reduces housing stock and could drive up prices.
But we purchased recently in Victoria and we fully intend to Airbnb / VRBO out a portion of the home.
Being a landlord isn’t for everyone. It’s hit-and-miss. Sometimes it’s a disaster. We’re not up for it, at least not right away.
Airbnb allows us flexibility. We can earn more than we’d earn from traditional rents, and friends and family can visit when the space isn’t rented.
We used Airbnb all throughout Europe. It’s usually far superior to hotels over there. We had some great hosts who truly enhanced our experiences. We’re excited to do that for visitors to Victoria.
Should we apologize for that? No. What we do with our space is our prerogative. If we didn’t rent it out, it’d probably become my office space. Plus, running an Airbnb is a lot of work, so I think people overestimate how much it’ll impact housing stock.
That said, I certainly think it’d be fair for the city to licence and track Airbnb operations. Even playing field and whatnot.
(As an aside, it’s really interesting watching traditional industries and economies grappling with “new economy” disruptive technologies, like Airbnb and Uber. Are the old guys being unfairly treated? Or is it just that those old industries are being exposed for their inability to provide a modern service? Probably a little of both.)
I am on the strata council at the Era (728 Yates) and the zoning allows for AirBnB. There are approximately 10 operations in the building and we literally have not had one complaint in the last year I’ve been on council.
I am also an owner at the Promontory and recently we had a special general meeting where the strata tried to push through an amendment to the bylaws that would mimic the 30 day minimum as per city zoning. During the SGM I stood up and asked the council if there had been problems and essential the answer was not really. It barely got voted down (62% for, 38% against amending bylaws, need 75% to push it through).
A few owners now at the Promontory are selling their units even though the bylaws weren’t amended as the strata is filing complaints with the city bylaw officer.
I know of 6 illegal suites on my block (the entire block, all four sides) and three of them have been converted to AirBnB and Vacation Rentals. Two more basement suites are being built (city inspectors must be blind) but I don’t know if they will be occupied by family members, rented monthly, or AirBnB. Plus, I know someone who lives in a new condo downtown and he says several units on his floor are being rented as AirBnB now, but were rented on yearly lease previously. Seems like a substantial number of rental units have converted to short term vacation rentals. AirBnb seems like more work, but more money too. It’s a good business until the tax audit after a disgruntled tenant or neighbour reports it.
Now, where is that website … oh yea, here it is:
http://www.cra-arc.gc.ca/gncy/nvstgtns/lds/tll-s-eng.html
Let’s hope the AirBnB couple doesn’t also have 10 mortgages/HELOCs.
AirBnB might be nice to use for affordable vacations but it’s got more downside than upside. Cities around the world (Berlin, Paris, NY, LA, San Fran, Vancouver) have shown it’s taken housing stock away from local buyers and renters, and caused prices to go up.
Even if AirBnB brought more tourist $ to the area (which hasn’t been shown to the case – there wasn’t a lack of hotel/B&B space), the negative impact to the local community is larger than the reward – in terms of reductions in housing stock, lack of licensing, lack of income from licensing, etc.
It’s also become a nuisance to neighbours that want to keep out the extra car traffic & noise at all hours day/night). There are good reasons why traditional Bed & Breakfasts were regulated in the first place, and if hotels and B&Bs that have to pay business licenses, then investors operating AirBnB should as well, but it’s proven extremely difficult & costly to enforce.
http://www.vancouversun.com/business/airbnb+explosion+vancouver+neighbourhoods+edge/11809016/story.html
I think Airbnb increases tourist dollars in our area. We travel more because of Airbnb. We can bring the family and dog and it is totally comfortable and less expensive. We did a whole trip overseas with a family group of seven and the places and people we met through Airbnb were a big part of the very positive experience we had.
I also think that buying a house for this is not the best plan given that regulations can change and prices to potential income probably make it not the greatest investment overall for the risk. And you’d better be paying your taxes.
Gotcha. Missed the suite part
Seems about right to me due to the self-contained one bedroom suite.
Interesting idea for landlord licensing in Toronto https://www.thestar.com/news/city_hall/2016/05/19/landlord-licensing-passes-first-major-hurdle-at-city-hall.html
Definitely AirBNB is part of the problem. Someone buying up houses for that removes the houses from the market for buyers and doesn’t add to the rental market. All they’re doing is giving tourists an alternative to hotels so the hotels are impacted and locals lose living space.
I think anyone running an Airbnb rental that is not their own residence should be regulated like a hotel.
Why are our prices so high then freedom_2008!?
1 owner, ten houses, all airbnbs
Investor or hoarder?
I was downtown at a luxury condo complex that will be voting this week not to allow rentals in the building that are for less than one year! Yikes!
Gordon head place seems crazy expensive to rent. Are rents up that much?
One house in Gordon Head sold (probably over asking) last month, comes to market as rental right after the closing:
http://www.usedvictoria.com/classified-ad/4-BR-4196-Tyndall-Ave-V8N-3R8_27507236
Oh Boy, this couple in Victoria is semi retired but has 10 vacation rental houses for short term rental (which is a full time job really):
http://www.supersuitesvacationrentals.com/
Wait until the city says no to short term rental houses.
Define “better”. It is a different title and does has some power over people and things, but is not necessarily better, at least not to me. 😉
How do you define accurate though? The medians are a much better reflection of the market because they are the midpoint of the actual sales in that month. The HPI tries to adjust for quality Which is certainly beneficial in some cases but it also means that it’s output is the estimate of a model and in many cases based more on math than actual market sales. Case in point the HPI will quite happily spit out a benchmark home value for a segment of the market that has seen no sales whatsoever
Is the HPI more accurate than medians?
A statement that can easily be verified by looking at re-sales of the same properties.
In other news, I just got my Saanich property tax notice in the mail today and believe it or not, it actually went DOWN by $1.99! Sweeeeeeet!
“1211 Hopkins Pl for $744,000 today. Purchased in 2014 for $565,000.”
I looked up the old listing to see if any renovations had been done. It was previously listed at 579,900 and sold for 565,000 as Marko stated. But the old listing from 2014 has the same pictures as the new listing!! The description is also pretty much identical. Is this normal? Unless it was the same realtor… but that seems really lazy and kinda shady when they didn’t even take new pictures!
http://www.truehome.ca/properties/listing-details/328594
http://www.remax.ca/bc/victoria-real-estate/na-1211-hopkins-pl-na-crea_id16902710-lst/
HPI are far more accurate than medians.
It looks like Oak Bay’s HPI is up ~200k in 24mths (or 25.5%)
967700
771100
Langford for comparison is up 6.0% in last 24 mths.
449500
424100
Langford, Metchosin, etc will eventually see a double-digit yearly gain once the gap with the core has widened sufficiently… but the ability to always add more ‘Westhills’ will keep a lid on gains.
Keep in mind, the hike at the start of the year helped ignite a rocket under VicRE, gold, etc.
A Fed hike means inflation cometh.
Iggy_12, it would be great if it worked! but unfortunately there’ll be some opportunistic people that will buy at the lower price and then immediately flip to the highest bidder, wherever they may be.
800 Sea Drive in Brentwood was on the market for some time but now Sold pending probate.
Decent views in Cordova Bay have sold.
Dean Park doesn’t seem to last.
Marco posted that a house on Nitinat sold unconditionally I believe.
This is all pretty interesting where one could well question the value outside the Centre.
“we might also take a cue from Canada’s First Nations. Most of them would never willingly allow their lands to be permanently alienated through fee simple sales to those who are neither citizens, nor permanent residents of their traditional territories”
We don’t need the government to pass laws restricting foreign ownership. We just need to send an email to the 2500 or so active sellers asking them not to sell their place to someone who is not from here. Or put something in the description like “price is 30% higher if you are not Canadian”
The only difference between us or Christy Clark saying that is she has a better title.
Hopkins is a good example of a re-sale but it may not represent the real estate board’s benchmark home. A renovated home at almost 3,000 square feet and nearly a 10,000 square foot lot the property is quite a bit bigger than the average or what might be the benchmark home for that neighborhood.
The benchmark home for that hood based on the last 500 listings might be a 1953 built home with 2,100 finished square foot home on an 8,400 square foot lot.
The benchmark price for a home in that hood should therefore be lower than what this property sold at. The benchmark price doesn’t track actual sales but measures how the price of a hypothetical home with common characteristics changes over time. That’s how the HPI can track how prices are changing even when no actual sales occurred. The benchmark home is a composite of many separate items of homes that have sold.
The HPI has its limitations. For example if your home is not similar to the benchmark home then simply looking back at the HPI when you bought and factoring up by the difference using the HP Index may not give you a reliable price of say within 5% of current market value.
The HPI provides one of the several cross checks to value that should be utilized together along with a recent sampling of similar properties that sold. Another good cross check is the three month median. You could try both on the Hopkins property as it had sold before in January 2014 at $565,000 using the tool provide in the previous HHV post.
I don’t think you have to disclose death either. A couple months back I was speaking with an agent on disclosing a death in one her listings. And she told that in her years and years of being an agent she has never had a client that cared if someone died in the home and in her opinion a death has no effect on value.
And there is some truth to that statement. It depends on how gruesome the death was, how famous the case was, and if there were children involved. How much the market would discount the property would then vary from nothing to where the improvements have to be bulldozed.
Since these are the properties that tend to be centered around court cases I get asked by lawyers to determine how much of an impact they may have on value. I had one client ask me a few months ago what the impact of a child molester in the building had on values in the complex?
A new article that explores in-depth the demand-side problem of the real estate crisis and how it might be fixed:
http://www.straight.com/news/702206/martyn-brown-essay-bcs-housing-crisis-and-what-do-about-it
“Victoria is now the second least affordable housing market in Canada”
“the province now collects about 3 times more in PTT than it receives from the natural gas royalties … Arguably … the impact of the money the B.C. Liberals receive from their paymasters in the property development and real estate sectors is even greater.”
“That unwanted demand, it must be noted, is also largely driving certain new supplies of new housing that is being built primarily to attract those wealthy foreign buyers and the higher prices their investments leverage.”
“First, we might ask ourselves, for whom do we hope to add new supply?
For people from abroad who do not plan to live and work in our country, or even necessarily occupy those new dwellings?
For foreign investors who use every trick in the book to avoid paying taxes that are imposed on our citizens?
For foreign investors whose primary aim is move their money out of China and evade their own laws that restrict the outflow of capital?
For those in the real estate and development sectors who are unfairly hurting British Columbians by driving those types of new demand?”
“we might also take a cue from Canada’s First Nations. Most of them would never willingly allow their lands to be permanently alienated through fee simple sales to those who are neither citizens, nor permanent residents of their traditional territories”
“… a new initiative [whose aim would be] …to keep B.C.’s pressured residential properties, farmlands and vineyards for British Columbians and more broadly, for Canadian residents and citizens. Because those precious private assets should not be sold to foreign nationals and investors who otherwise have no vested stake in our province or our society”
JJ is correct. A seller is not required to provide the specific form in British Columbia. What is required by law is written disclosure of material latent defects whether the form is used or not.
I’d agree that where there is a death or foreclosure or the property has been used as a rental this information may not be known by a seller.
http://www.recbc.ca/psm/disclosure-of-material-latent-defects/
It would appear that your half decent benchamark home in the core is selling for give or take $200,000 more than 24 months ago.
1211 Hopkins Pl for $744,000 today. Purchased in 2014 for $565,000.
You don’t have to disclose murder or death in BC to the best of my knowledge.
Riding a bike with a helmet is mandatory. However, it isn’t mandatory that a vendor complete a property disclosure statement. There are instances when the statement can not be done such as a foreclosure or if the vendor has not lived at the property.
Also the property disclosure statement is not a complete list. Many other things are not on the PDS such as if someone died in the property or a convicted child molester lives in the complex or a new building is going to be built in front of your home blocking the view, etc.
Buried oil tanks are probably often not known. Unauthorized renovations and moisture problems are likely often known. Fraud can and has been proven in cases involving PDS documents. You’d have to have a big bill to make it worth pursuing:
http://www.aaron.ca/columns/2013-01-05.htm
The property disclosure statement is mandatory. It itemizes potential problems such as asbestos insulation, unauthorized rental suites, known buried oil tanks, enovations done without a permit and unregistered easements or encroachments.
And how many sellers are aware of the tank buried in 1952 in their front yard?
The property disclosure statement is mandatory. It itemizes potential problems such as asbestos insulation, unauthorized rental suites, known buried oil tanks, enovations done without a permit and unregistered easements or encroachments.
A conditional offer gives buyer time to cool off their heads, and opportunity/excuse to get out of the deal.</>
Exactly. I’ve seen sellers taking 50k less on a regular basis for unconditional offers. This is on over ask offers. For example, seller is asking 799k and they have 905k unconditional and 950k conditional. Seller often takes the 905k unconditional.
I would say probably 30-40% of buyers collapse offers on cold feet and provide a reason such as not happy with inspection or not happy with financing.
Normally there should be a disclosure doc supplied and signed by the seller as part of the contract or the selling paper, not sure if that is still case in today’s market?
These are kind of useless in my opinion and do not by any means replace an inspection….all the questions are worded, “are you aware of such and such.” If the seller answers that they werent aware of a problem how are you going to prove that they were?
Even a good new house can have little things off. A conditional offer gives buyer time to cool off their heads, and opportunity/excuse to get out of the deal. That is why sometimes a deal can fall through for under $1K repair expense for a $700K house: it is not because the minor issue, but the buyer just changed their mind. That is why sellers like unconditional offer or a short condition-removal time, not really because they just want to hide or don’t want to find defects of their houses.
Normally there should be a disclosure doc supplied and signed by the seller as part of the contract or the selling paper, not sure if that is still case in today’s market?
@MarkoJuras said, “When you are bidding 100-200k over asking unconditional as long the house isn’t falling down you probably aren’t too concerned about the 10-20k of potential deficiencies.”
I was wondering if it ever gets written into an offer that it is subject to inspection not revealing greater than “X” dollars of defects? Do you think that would help with the seller or do they just not want to risk having an inspector going through and finding a surprise they would then have to deal with?
Also, if a seller is that afraid of an inspection, I have to wonder what they know about the shape of their house. If I knew my house was in good shape, I would give a longer window, like listing on a Friday and taking offers the following Friday. Aren’t some of these sellers leaving money on the table with such a short date to review offers?
“This is definitely the time to unload a house with defects…”
I have been saying that I do believe there is a greater percentage of total listings that are junk compared to previous years, not just fewer listings.
What’s with the disinfectant, bleach, and air freshener trying to cover up smells? This has happened in a couple of houses I have seen in the past week. When I smell a cover-up, I think mould. Of course, I often do smell actual mould as well.
LeoVictoria said; “This is definitely the time to unload a house with defects…”
That’s the best advice I’ve seen on this blog in years… So true.
This is definitely the time to unload a house with defects…
You could be out $150K if your oil tanks hits your neighbors property like the one on Adelaide, not $10K to $20$. Not to mention years of courtrooms and stress with your new neighbor just to beat out that other fool.
Rate hike has been on the table for years… Now it’s firmly on the table. LOL!!! One more kick of the can at least….
Come on..let’s get these rates rising.:)
http://www.theglobeandmail.com/report-on-business/international-business/us-business/fed-signals-interest-rate-hike-firmly-on-the-table-for-june/article30077021/
But we can try something, something a bit different. The Vancouver Home Project will connect those willing to solve this housing crisis. If you own a home in Vancouver and are willing to sell below market to a buyer that wants to live in this city, we want to hear from you.
In other words, if you would like to donate hundreds of thousands of dollars to a stranger who will proceed to flip the place immediately at market value, please get in touch. We need morons to step forward!
If I was even considering placing an unconditional offer on a place I’d get a home inspection and an oil tank scan before putting in my bid. You’d be out $600-700 on every house you bid on that you didn’t get, but at least you’d have done your due diligence before buying once you are successful. The auction-style set up of “offers accepted on X day” usually gives buyers 3-4 days to get the inspections done. It’s all totally wacky but I’d try to minimize the risk as much as possible if I were jumping into this market.
Not all inspectors are made equal. I find the ones I trust are booked up a week in advance. I’ve also had a young couple do the inspection process prior to offers three times in a row only to be beat out by other unconditional offers. It isn’t just the $500+$300 (oil tank scan) but also the time in terms of meeting with inspector, etc.
The pre-inspections are useful in one way. I’ve started asking listing agents if the property has been pre-inspected and when they say, “yes, two pre-inspections,” I know right off the bat that there are probably going to be two unconditional offers at least and my client with their conditional offer is screwed.
Extremely rare that someone backs out from a bidding war based on a pre-inspection. When you are bidding 100-200k over asking unconditional as long the house isn’t falling down you probably aren’t too concerned about the 10-20k of potential deficiencies.
db- It’s very simple, I’m not sure which part you’re having trouble understanding; maybe this link will help clarify it for you.
http://www.cbc.ca/news/business/taxes/tax-time-2016-us-citizens-tax-shelters-1.3446226
LeoM
Believe what you will… I won’t bother educating you anymore…
It was a bad time to be a bear the last four years…. Now? I’m no so sure. Hard to dive into a market like this. We might have just hyper accelerated to the next plateau. I’m still a horned halibut right now….
db- the American tax authorities don’t care about which class of American taxpayer you are; they want their money, and the new border crossing ID rules, FATCA, and the new sharing cross-references at CRA and IRS to link Canadian SIN# and American Social Security # will ensure the cheaters are caught. The tax authorities in both countries now work together to identify cheaters. That’s why I’m expecting a lot of Americans who are living in Canada, either part-time or full-time, will be selling their Canadian real estate soon. You can’t hide from the taxman in 2016.
The new system is already catching cheaters.
http://www.financialpost.com/m/wp/blog.html?b=business.financialpost.com/news/economy/canada-revenue-agency-aims-to-recoup-2-6-billion-in-missing-taxes-in-crackdown-on-tax-cheats
http://vancouversun.com/opinion/columnists/pete-mcmartin-the-low-price-of-real-estate-please-contact This is the most f up thing I have ever heard.
Exactly Vicbot. Victoria has turned into a casino as well as Vancouver,just a different level of stakes. When it turns and you are over leveraged you’ll be buried for many years to come. Most likely worse than 1981.
How long will fools keep paying $200 K then $300K ,then $400K over ask for a moldy box ? That is the question.
Now that the Fed says today rates are going up in July and most likely in the fall you can pretty well be assured banks will be tightening up the easy credit lending.
Toss in the increase of subprime borrowers and the clock is almost midnight. This is not a market,it’s a mania which always end ugly.
Agree, You’re richer thank you think & Totoro. Especially the question of why wouldn’t the bears make money from this – of course they would. The people who consistently make the most money don’t wait for a “top”, they sell before the top.
But no one can predict when exactly this bull market will turn bear. The economy is a lot more complex than that. If I wanted to gamble on the future, I’d go to a casino or sports bar.
Your life isn’t a casino or hockey game. People who make the most money are the ones that can balance risks, and everyone’s life situation is made up of different risks and resources. If you’re not aware of those risks and resources, then you’ll be burned by people who convince you to do something that isn’t right for you.
Just like the question of whether $1M stocks or real estate is worth more – to me, that’s forcing you to think in binary 100%/0% terms, and it’s not helpful – because there are a lot more options out there. Ultimately you win the most if you’re diversified. If you had $1M in bonds in 1999 instead of tech stocks, you’d have made a lot of money. If you had $1M in real estate in 2012, you’d have made a lot of money now (if you sell).
The people that do the best selling or buying – are those people that have knowledge of BOTH local and global markets and their personal risk management.
One issue with Vancouver is that investors have turned the real estate market into a combo of casinos, stock market, and Ponzi schemes – that’s why it’s not sustainable and unfortunately affects every citizen and taxpayer in Canada.
LeoM
I don’t think you understand the severity of that article.. It wasn’t aimed at US Citizens as most people know them. It was aimed at Canadian Citizens who don’t realize they are American Citizens by birth, marriage, descent.
It is essentially a witch hunt created by FATCA.
American Citizens in Canada file US taxes and know that capital gains on houses are taxable. It is the unwitting Canadian Citizen who doesn’t realize they are pegged as American Citizens who is shocked by the dual taxation nightmare (as clearly highlighted by the poor fellow who fell off his chair).
“VREB should collect stats on where people are going to”
I don’t think there is any need to tell your realtor that information unless you feel like telling them. Don’t make a habit of disclosing more info than needed to third parties. Likely your realtor is going to figure out where you are from (at the very latest from address and ID at closing) and your approximate financial situation (based on how you are paying and what you are buying) no matter how little info you put forth. No need to be paranoid, but you don’t need to tell your realtor your life story. Your interests and the realtor’s interests are not perfectly aligned. The realtor wants the transaction, you want the best price buying and selling.
All the talk on this blog and in the news recently about foreign ownership has piqued my curiosity and got me talking to neighbours, colleagues, and acquaintances. The result of my enquires is that Americans outnumber Asians by a huge majority in Victoria’s prime core neighbourhoods, except in Gordon Head.
Apparently the American government is aware of these expats and has focused their IRS guns on Americans living in Canada. The American tax laws still apply to the real estate owned in Canada by Americans. FATCA is an arm of the American tax system and their goal is to catch wayward American tax cheats. The American government even offers a nice fat reward to anyone who turns in American tax cheats. Also, the joint American/Canadian border checks now record each person’s entry/exit across the American and Canadian border.
The crackdown has started, so this might lead to a wave of Americans selling their Canadian real estate holdings very soon, because the recent surge in prices puts most Americans in Victoria over the threshold where the IRS and FATCA get seriously involved and they also focus on Canadian income from rentals, suites, AirBnB, but it’s the American Capital Gains tax that will burst the golden egg for most Americans in Canada.
This article has a bit of information, Google has a lot more information.
http://www.theglobeandmail.com/globe-investor/personal-finance/taxes/the-longer-you-stay-in-the-us-the-more-youll-pay-to-the-irs/article22418714/?service=mobile
Totoro,
I absolutely agree that the reasoning behind buying or selling a residence is based on a number of different factors. Whether one classifies either the future of the market to be bullish or bearish or ones self or others as a bull/bear imo is irrelevant. Obviously he/she views and categorizes the market and people in that way. So lets go along with it. What i would like to hear from the good old “bearkilla” is his justification of, or at least add some context to, his statement of “sure a bad time to be a bear”.
Ask him the why? Based on what analysis? Is there a reasoning behind that statement or is it simply to troll? If it was just to troll then good on him… he got me. But if there is an intelligent, well thought out argument to back up his position then lets hear it. Let’s bring a little more to the table.
I put forward a simple counter to his position. I would like to hear his justification. Who knows… he may have something to say that I hadn’t considered.
~2013 I was thinking double within 7-8 years – now I think we could reach that within 5. Could we even approach a triple by the early 2020s? ..possibly, this cycle is definitely one of the best out of the gates I’ve seen.
Not a bad place to have been buying lately with oil doubling is parts of the prairies …even some better deals than Duncan 🙂
Interesting on Chek. The inspection guy say he does a lot after accepted purchase. Piece of mind and maybe anything hidden and major, they can walk. Not sure though the logic of that though.
Not a fun time to be a buyer. More stress in an already stressful purchase.
If I was even considering placing an unconditional offer on a place I’d get a home inspection and an oil tank scan before putting in my bid. You’d be out $600-700 on every house you bid on that you didn’t get, but at least you’d have done your due diligence before buying once you are successful. The auction-style set up of “offers accepted on X day” usually gives buyers 3-4 days to get the inspections done. It’s all totally wacky but I’d try to minimize the risk as much as possible if I were jumping into this market.
Looks like a great time to start up a home reno or buried oil tank business. The fools buying unconditional by the thousands will create a mass windfall larger than owning any house.
Why this need to categorize again? Decisions about buying and selling are sometimes correlated with a belief that the market will rise or fall but expect most know they cannot predict this in the short-term.
Black and white thinking leads to bad decison making imo and it divides people into opposing sides for no good reason.
People buy because they want a home. They buy because they are ready. They buy because they get tired of renting or are looking for a lifestyle change. They buy because their friends do and they buy because it is tangible and easier to understand than the stock market.
People sell for many different reasons too. People want to move up or downsize or free up capital for something else.
None of this makes someone a bear or bull – those terms are much better applied to market conditions than individuals imo. There are a few individuals who feel a need to crystal ball from a pre-set view, but they are the minority and most often they are wrong. Identifying buyers and sellers markets is way more helpful to decision making than using labels pejoratively can be. Why do it?
Two more of my clients beat out by ridiculous unconditional offers last night. Both winning parties buyer city Vancouver.
@bearkilla
How do you figure it’s a bad time to be a bear? The way I see it, a bear would be selling his or her real estate and solidifying tax free capital gains that are a once in a lifetime opportunity (assuming it was a primary residence and was in the right neighbourhood as it has clearly been demonstrated on here that not all of Victoria is on fire).
As you are so bullish right now I’m guessing you’re doing everything you can to leverage any and all assets you have to buy more real estate correct? If not… why not?
Anyway…. How about that hot real estate market. Sure a bad time to be a bear.
Another good article in the Wall Street Journal about why rents for middle-income rentals are so high – due to shortages in apartment buildings (not much built since the 80s), and developers’ focus on the luxury condo markets …
Rents Rise Faster for Midtier Apartments Than Luxury Ones
http://www.wsj.com/articles/rents-rise-faster-for-midtier-apartments-than-luxury-ones-1439769468
“Developers’ focus on high end contributes to shortage of affordable units; construction costs too high to build middle-income housing”
“… demand at the 1980s-era complex is so strong that the landlord has raised the rent 72% on some apartments in just two years, after renovations.”
“Modest apartment buildings like the Verona that cater to middle-class and working-class families are becoming scarcer as fewer are built nationwide and older ones are demolished.”
New article in Canadian Business magazine:
How Vancouver’s Runaway Real Estate Became a National Problem
http://www.canadianbusiness.com/economy/how-vancouvers-runaway-real-estate-became-a-national-problem/
“What is unique about Vancouver’s real-estate bubble is the unwillingness of the authorities to do anything about it. Governments in Australia, New Zealand and the United Kingdom all are trying to slow the rush of international capital into local housing markets. Since last year, the only way a non-Australian can own a home in Australia is to redevelop an existing property or build a new one; the individual must also promise the home will be for personal use. New Zealand and the U.K. have both introduced new taxes on capital gains from property.”
“In 2013, the International Monetary Fund called on Canada to create a federal entity with a clear mandate to monitor threats to the financial system. The IMF earlier this month scolded Ottawa for so far ignoring its advice.”
“It is a national issue: everyone knows who will be called on to clean up the mess if it bursts. The banks would feel it and likely would curb lending. CMHC would feel it because it has insured most of the mortgages Vancouverites have used to buy their inflated assets. The only ones who wouldn’t feel it would be the rich Chinese whose goal simply was to collect assets outside the reach of their government.”
“This is precisely why an independent macroprudential regulator is so important. Ideally, it would have the power to defuse risks without first having to seek permission from a politician”
“New research has uncovered some traits that so-called ‘grammar Nazis’ all seem to share – they are introverts who are also likely to be disagreeable by nature.
http://www.dailymail.co.uk/sciencetech/article-3515520/Are-grammar-Nazi-Language-pedants-likely-introverted-disagreeable.html
Sorry.. couldn’t resist posting this.
VREB should collect stats on where people are going to, not just where they’re from. But then again that would be a negative stat telling us how many are leaving town. Bad for business to let ALL the stats out just like the pretend jobs stats. Time for this bias organization to disappear.
Introtwerp never got enough hugs either.
This conversation somehow spurred me to remember this Just Jack classic prediction/threat from a few years ago. Everyone, enjoy:
March 11, 2013, at 3:18 PM, Just Jack wrote:
Like it or not Introvert, you are the one that is perceived as the “wealthy” Canadian.
There is a resentment of the youngest of prospective purchasers that it is your greed that is to blame for their inability to buy a home.
And I don’t think they’ll let home owners have a free ride while they themselves pay higher personal taxes and get less than the generation before them. While you gloat and count your gold coins in a darkened room of your basement.
Because if a generation is deprived of what they consider the basic of needs – then they will just take it. Maybe it will start with a little shove on the sidewalk as you pass by them, or increased road rage, or maybe they will vandalize your garden gnomes.
That is a big reason why these house prices have to come down…
Source: http://househuntvictoria.blogspot.ca/2013/03/march-11-market-update.html
Yes. Whether or not you should is a different question. Depends on how long you plan to hold, your taxable income, the rental income and other factors. Whatever you write off (usually limited to % of structure only) is recaptured upon sale and added to your gain and if you claim depreciation you’ll lose the capital gains tax exemption if you would have otherwise been eligible for it ie. home-based suite.
Markets change all the time — and your inability to predict where things are headed is constant.
First link is malware. Here is the correct location: https://www.biggerpockets.com/forums/88/topics/25519-free-property-analysis-worksheet
Can you write off depreciation in Canada?
Marko: Is the Victoria Real Estate Board still collecting statistics related to where the seller is from? Is the data considered reliable?
Maybe google REI Property Analyzer – BiggerPockets and give that one a try yeahright.
Totoro you make me feel like a rock star stalked by a groupie. My very own Margaret Mary Ray.
That quote nailed what is happening today.
What has changed from then to now is that buyers have larger down payments be it out of town buyers, help from their parents or that they are selling a home to get into the hot market areas. Sure they could have done this last year but they didn’t have the sharp appreciation in their current home then. Now that they have more equity in their current home, they figure they can make the move.
They want to use those appreciation dollars to move up the property ladder. And they are willing to overpay to get into these markets because they are spending appreciation bucks. It isn’t a big thing for them if they then loose those bucks. Perhaps In their eyes they will be in a better area for future appreciation. That may be the justification for spending $800,000 for a $650,000 property. The $150,000 difference was just found money, the same if it were a gift/loan from their parents or moving from a different city where prices are higher.
As I said they had the want to buy last year but not the means. This year it is a new ball game with bigger down payments.
But here’s one for you to mark down. This market doesn’t last forever, eventually any advantage that they have dissipates with higher prices and then prices in these hot areas levels off.
I do try to treat other bloggers with respect, but you challenge me sometimes.
“Just Jack, I’m sure you said this years ago, except back then it was $500,000 and $650,000. But maybe this time you’ll be right.
Or perhaps in a few years you’ll say it again, but you’ll have to use $800,000 and $950,000. Maybe after that time you’ll be right.
I guess we’ll see. But so far your track record has been piss poor.
But I bet you think track records don’t matter, that we should ignore the fact that you’ve been wrong for essentially ever.”
@introvert Your track for being a dick remains spotless, along with your track record of contributing nothing substantial to any discussion.
@Hawk — I agree. September is always the toughest month to find rentals so I do think some students keep their place over the summer. On the other hand I’ve never understood who would sublet a place from May-August. I guess there are always people testing out living on their own.
You know the market’s hot when a 20yr-old condo next to PatBay highway goes 24% above ask.
(111-4490 CHatterton way, assess 350k, ask 424k, sold 525k)
Yea, I’ve been pointing to this too. Places selling 200k over ask in Oak Bay, one thing. Westhills houses and condos going in bidding wars is a while another level of hotness.
I found this calculator but I don’t know the potential realistic costs to fill in, so it’s kinda hard to get the whole picture.
Income Property Strategy Calculator:
http://www.ultimatecalculators.com/income_property.html
Looks like a similar amount of listings as back then, about 150 plus 2 bedrooms under $2000 in the core. Let us know how many of the 20 make the credit check.
As Jack said, markets are changing all the time and the annual event of increased rentals from students leaving I made are proven wrong. With all the house sales with suites, many will kick out the tenant which just adds more pressure to the market.
I could see many students keeping the apartment all summer even though they leave town just to not be put in a tight spot come September.
Mind you I’ve seen many come and go in our block the last few months so there is turnover.
On February 22nd Hawk said:
“Come back in a month or so when all the students start giving notice. Winter is notoriously the tight rental time of the year in Victoria for years now, nothing new. I’m sure all those panic buyers the past two months will be giving their notice soon which should free up 1000 places approx. Rental market may even tank and be deals galore soon at this rate.”
At that time I said I’d give an update when we listed our suite and in less than 24 hours online we’ve had almost 20 emails and have set up multiple viewings. Its crazy out there!
You’ve written about a lot of things JJ.
About a year ago you wrote there was low inventory and how prices weren’t rising. Your conclusion was not that prices should be rising but:
Before you toot your own predictions might want to go back and review them – my recollection is that the stats were good but your conclusions/predictions were almost all incorrect.
That is not to say you shouldn’t keep posting or that you don’t have interesting things to say, just that I wouldn’t get too carried away with the pats on your back without verifying first.
And clearly this blog is a mix of local knowledge, stats, analysis and predictions from individuals with widely differing views.
I have no problem saying it again. Markets are changing all the time.
Last year I was writing about the shortage of listings and how prices should be rising. And guess what happened? Well you don’t have to, it happened.
Earlier this year I wrote about it being a good time to buy condos. And guess what – it happened!
I also write about how prices will be rising and where you can still finds some deals as a buyer in this market.
Now I’m writing about market excesses and the long term effects of over paying on a property.
I just wonder why you want to stifle dialogue with petty pointless remarks. Because as far as I know this blog is about ideas and a general discussion on real estate not about predictions.
You’ve chosen to be a hater rather than a positive contributor.
I’m sending you a hug – I think you need one.
No. The numbers are not good in most places in Victoria, the property taxes are quite high and there is not much inventory outside of downtown which I personally do not want to own in.
Victoria needs to get its act together on housing and effective social services for transient and homeless people before anyone in their right mind would invest downtown imo. Pandora Avenue looks like the apocalypse and I won’t even walk past the courthouse anymore – never mind open a business or own real estate anywhere near it.
Owning commercial property is a much more complex analysis than residential for many reasons, including property and income taxation, financing rates and down payment requirements.
@yeahright – I had the same thought this morning after reading the report on foreign buyers in US market.
Hmmm… now I know this is househuntvictoria but instead of residential properties, I’m thinking that a commercial rental property might be more lucrative and easier.
Just Jack, I’m sure you said this years ago, except back then it was $500,000 and $650,000. But maybe this time you’ll be right.
Or perhaps in a few years you’ll say it again, but you’ll have to use $800,000 and $950,000. Maybe after that time you’ll be right.
I guess we’ll see. But so far your track record has been piss poor.
But I bet you think track records don’t matter, that we should ignore the fact that you’ve been wrong for essentially ever.
No I don’t mean property taxes, I mean income taxes.
If you make $10,000,000 in China, you would need to settle up with the Canadian government as though the money was earned by a Canadian before you would be permitted to compete in Canada’s residential real estate market. Possibly a 1 time tax on accumulated foreign wealth as well.
That $10,000 000 in income turns into a $5,000,000 income tax bill. Not the insignificant $20,000 or whatever you need to pay on a $2,000,000 house.
Owning Canadian real estate and taking up a space in Canadian communities is a privilege built by and afforded to Canadians that should be paid for in the same way that using the medical system is paid for. Taxes.
Right now we allow anyone from anywhere to inflict irreparable damage on our families and great local neighborhoods for their own profit, for free. Foreigners have to pay for the house but admission to the market is free. The damage they cause is lost to Canadians forever and partially absorbed by them as profit.
For locals, admission to the local real estate market is very expensive – we pay our admission price to everything that makes Canada great through the income taxes we pay, including the privilege of buying a house in such a great country.
I don’t think admission prices should be any different for foreigners than they are for locals.
bearkilla, if you’re a Canadian property owner you pay an income tax on the revenue generated from that property in addition to property taxes. Foreign owners can avoid this.
To make matters worse, residential development is moderately subsidized by commercial/industrial tax bases. Residential property tax mill rates are usually about 1/10th of a commercial mill rate. When properties sit vacant, like many in Vancouver are, they don’t house people that would be working and spending money locally. What is essentially an investment in community through a municipal tax base isn’t seeing any return. All that money that goes into municipal services is not being realized with vacant property in urban environments.
Those ‘furiners do pay property taxes is that what you mean? So no one would be a furiner?
As far as I’m concerned, if you don’t pay taxes on your worldwide income in Canada, you’re a foreigner.
Housing is not a commodity – it is a limited, non-fungible national resource. If you want to profit from, consume or keep others from consuming it, you should have to contribute to what makes it valuable (i.e. society, via taxes).
When you start getting tricky with definitions & rules, loophole opportunities arise. Keep things simple:No taxes? No house.
Good question. You’ll have to consider your current tax bracket and RRSP limit and how much the RRSP saves vs. the interest on a HELOC. In addition, consider that you have to repay the HELOC and the rate could rise while the RRSP will be locked in or can only be taken out at your highest marginal tax rate. This strategy might make good sense for some.
I think the TFSA makes sense if the cost of the HELOC including interest is less than the ROI on the TFSA as the TFSA principal and interest can be used to pay the HELOC down at any time if rates rise. If you are not good with managing money re. self control over access to a TFSA I’d avoid doing this.
Some people do this: http://www.milliondollarjourney.com/the-smith-manoeuvre-a-wealth-strategy-part-1.htm
From previous thread, Totoro said, “I don’t recall an explosion of condo buyers who rented them out short-term for high rates in the 2000s.”
What I actually said was “there was an explosion of individual condo buyers in the 2000s that created new categories of rentals”
(no “explosion of rentals”)
There was an explosion of individual condo buyers, which originally started in the early 90s with the Songhees developments in Vic West (look up history of Vic West), which then led to a plethora of other condo developments around Victoria.
This also led to more individual investors buying condos, and new categories in rentals, driven by Property Management companies, and condos with concierge services, making it much easier for investors to rent out condo units as if they were hotels. Separate and in addition to VRBO. Air BnB came later.
In Victoria the majority of apartment buildings were built pre-1980s (it stopped during the 80s recession, then condos became more popular). Not including low-income housing, which is a separate issue.
See this article (if you witnessed the transformation from the 80s to 90s, you’ll be familiar with what they’re referring to):
http://www.timescolonist.com/business/three-tower-project-at-cook-and-pandora-part-of-rental-revival-1.690611
“The bulk of the rental units that have become part of rental supply over the past 30 or 40 years are spinoffs from the condo market.”
“CGS Property Group is planning to build, own and operate the apartment complex at 1075 Pandora. “
“The project consists of three residential towers linked by bridges over a lower-level podium. “It’s definitely unique and different for Victoria from anything you’ve seen over the last 10 or 20 years,” said CGS spokesman Dan Cox.
“Cox says there is a dearth of supply of two-bedroom rental units in the city. “
Regarding the petition to restrict “Foreign” purchasers in Canada, I have many questions about the definition of a foreigner:
1 Is a “foreigner” just a person or can a foreigner setup a Canadian company and have the company buy real estate? ( I know in administrative law a person usually includes a corporation, but here I’m talking in the colloquial sense)
2 Is a foreign person designation limited to people with absolutely no ties to Canadian citizenship?
3 Is a legal landed immigrant a foreigner because they are still citizens of a foreign country?
4 Is a person, who has been a landed immigrant for over 10 years, with no plans to renounce their foreign citizenship, a foreigner?
5 Is a long term landed immigrant a foreigner (say an American), when they are only in Canada for 4 months each year to maintain their landed immigrant status so they get free healthcare?
6 Is a refugee in Canada a ‘foreigner’
I’ve got a dozen more questions, but you get the gist of what I’m asking.
From my perspective, because real estate has become a global investment item and a global commodity just like base metals and wheat and oil, I’m leaning towards restricting real estate purchases to only full Canadian Citizens and defining ‘Foreigner’, for the purpose of real estate transactions, as everyone except full Canadian citizens.
@totoro
“whether your RRSP and TFSA are already utilized;”
Should I use my equity to top these out? =)
@Leo,
Thanks for the info, here is what my extrapolation found in broad strokes:
Below is MOI and the change in price. E.g. if we were sitting at 6MOI and it suddenly went to 2MOI, then prices adjusted 14%.
If u examine the data, moving from 9MOI to 6MOI causes price to increase 7%
whereas 6 MOI to 3 MOI causes 11% increase.
MOI % Change
2 3%
3 5%
4 5%
5 1%
6 4%
7 2%
8 1%
9 -3%
You know the market’s hot when a 20yr-old condo next to PatBay highway goes 24% above ask.
(111-4490 CHatterton way, assess 350k, ask 424k, sold 525k)
If anyone is interested in signing a recent petition wrt foreign house ownership, the link is:
https://petitions.parl.gc.ca/en/Petition/Details?Petition=e-281#sthash.mGy5kt8Y.dpuf
@stepbystep.
At one meeting with the Mayor it was brought up that the city should have trailers set up on barges in the harbor for the homeless. Sounds a lot worse though than a Princess Cruise line ship.
There are likely solutions to the homeless problem. But it would entail educating us and tourists and not hiding the problem on a boat or a barge out of sight.
Article on why Chinese will keep buying US real estate “China may be in the middle of a growth slowdown, but its investors will find a way to keep pumping money into the United States over the next decade, according to a new report.”
http://www.cnbc.com/2016/05/17/chinese-investors-may-be-going-on-a-big-us-shopping-spree.html
Asia Society Special Report: http://asiasociety.org/files/Asia%20Society%20Breaking%20Ground%20Complete%20Final.pdf
(start reading at p44 – Property Types & Intended Use. 39% of Chinese intend to use the property as their primary home. It goes on to talk about the global trend to leave homes vacant rather than to rent them out.)
Use your existing home as a trade-in? People do it all the time with cars. I have heard of people that have made a good bargain with their car trade ins. Why not with houses?
The other play is for agents to guarantee your house to sell or they will buy it.
It’s advertising that sets the agent apart from other agents and gets potential clients to call.
I think the model is that prices are going up quick enough and demand is high enough that the realtor can likely buy with a right of assignment and sell it right away without incurring PTT at a profit. For the seller it is likely the idea of a hassle-free transaction.
Back in 2013 the persimmon home was on the market for 177 days. This time it was only on the market for 4 days and sold in a blind auction.
The difference is that the market for housing in 2013 was in balance between buyers and sellers relative to the long term equilibrium.
Why doesn’t the concept of super-normal profits apply to housing? Does it have to be happening in Vancouver first to be the proof that it will happen here?
Some of the recent articles I’ve read does seem to indicate a plateauing market in Vancouver as people are cashing in and moving out. We have seen the number of Vancouver buyers recently increase in Victoria. Multiply that by the number of other BC second tier cities available for Vancouveries to move to.
Most of last year I was writing that if Vancouver and Victoria and other BC cities are substitutes for each other then we should be seeing prices rise here as the Vancouver market re-balances. And that’s what seems to be happening this year.
And the home owners I’ve meet these days are all talking about the big windfall in prices happening in Victoria. Surely 1 percent of them may decide now would be a good time to sell as it meets their life goals to travel the world or retire to another city? Since about 97 percent of the housing stock is not listed, a 1 percent increase would make a difference.
Life is all about choices and not everyone makes the same ones.
3420 Persimmon Dr for $998,000 last night….purchased in 2013 for $735,000. 36% increase.
I had an out-of-character response to the radio news this morning. Another story about homelessness and money from CRD to build housing. My knee-jerk reaction was – Is this all that this city is about now? And then – wow – I’ve never felt that way before. Luckily the really big cruise ship story was next which then got me wondering why we don’t put a cruise ship in the harbour and solve the homeless issue? It’s got to be less expensive than building housing. We have achieved becoming a city of two extremes – how sad for all of us.
The concept of super normal profits doesn’t really apply to housing. Besides, a rampant housing market in Vancouver has only served to decrease supply, not increase it.
These super-normal profits should be attracting more home owners to list their properties.
That doesn’t seem to be happening yet. The conventional wisdom on this blog is that home owners are not listing their homes as their is nothing to buy. And that may be true for most home owners but all we need is a small percentage of home owners to take an alternative view and choose to sell and travel, live on a boat for a year, move to a different city, etc.
95 to 97 percent of houses are not listed for sale. Super-normal profits will make more of these home owners decide to list. And that should provide increased alternatives for those looking to buy and sell in the same city leading to even more listings. Thus the market pendulum swings back to a long term equilibrium.
I have never seen a market with such critically low inventory. That leads to some buyers over paying on properties especially if they are drawn into a blind auction. That may have an effect on future markets as some of these buyers may not have the option of pulling out equity for future expenses and they get further behind in their bills. They will be caught between a rock and a hard place. A $650,000 home that they paid $800,000 for. A home that they can’t sell, can’t finance and can’t afford.
After the excesses of the late 70′ and early 80’s we spent years in a market punctuated with foreclosures. That foreclosure market was worse in Vancouver because they had more properties and a lot further to fall in price. Eventually prices had to fall to the point where a single person with an above average but not exceptional salary could once again buy a starter house in the City at 3 or 4 times their income.
“And another thing. Seeing a few signs for companies that claim they will buy your home. For example on a front lawn sign on a property “Upgrade to this house and we will buy yours”
What’s the model here?”
Renovation specialists– I presume it works like this: they are happy to sell you a marginally-overpriced fully-renovated home and will buy yours if need be to make the sale work; in that case they would then renovate and flip yours as well.
@Numbers hack
That is more or less what I did with these charts.
http://i1.wp.com/househuntvictoria.ca/wp-content/uploads/2016/04/chart.png
However that used 12 month median and annual price appreciation rates. I’ll run some variants using an index (probably the Teranet because the MLS HPI only goes to 2005). Thing is even the indexes are fairly noisy month to month but I’ll take a look.
leo/admin
is it possible to create a predictive graph showing correlation between HPI index with MOI?
It would be fun to know the delta for like 30, 60, 90, 120 days MOI.
My hypothesis is a delta of 30 days MOI would lead to a 2.5%-3.5% delta in price?
Also it would be fun to understand the correlation.
so that would be pretty useful for sellers + buyers on the thread.
at 2499 listings, we have 50 days of inventory if we are averaging 50 sales per day.
if the replenish rate is slower than 25 listings per day, hypothetically we could get to under 30 days inventory. Time to sell!
And another thing. Seeing a few signs for companies that claim they will buy your home. For example on a front lawn sign on a property “Upgrade to this house and we will buy yours”
What’s the model here?
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