June 13 Market Update

Weekly stats update courtesy of the VREB.  Thanks to Just Jack and Marko Juras for sending stats.

June 2016
Wk 1 Wk 2 Wk 3 Wk 4
Unconditional Sales 187 460
New Listings 226 570
Active Listings 2354 2362
Sales to New Listings  83% 81%
Sales Projection 1102
Months of Inventory


A few signs are starting to appear that our hot market is slowing down.   Inventory is up for the first time after 6 straight weeks of drops.   Sales/list is weakening again this week, and we are running only about 21% ahead of last year’s sales pace, rather than the 40+% we’ve been seeing.  The market is still incredibly hot but there might be a bit of buyer fatigue setting in.

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121 thoughts on “June 13 Market Update

  1. Yeah, everyone in Vic lists on Thursdays now, with multiple offers to be presented on Sunday.

  2. Amazingly low Vancouver inventory. For perspective, total inventory (TI) was 28000 in mid-June four years ago. Here’s today’s snapshot for Van:


    Meanwhile, you can hear the crickets chirping in most markets across our country. Extreme hot vs cold regional divide.

  3. The best post post I’ve read thus far was from 2012.

    “Anyway, I read this blog because I’m hunting for a house in Victoria. The title suggests I’m in the right place. For the writers and commenters who have no interest in home ownership in Victoria and have nothing but bitterness and self-righteousness to contribute, I just wonder why you’re here.”

  4. Justin just said today housing is at a crisis, not the beginning of a boom. US interest rate hikes exposed the same ponzi scheme with less household debt than here. To think rich people will be buying up Bay St mortgage free to live in is pure insanity.

  5. So if house prices also rise when interest rates go up, then when would house prices ever go down?

    Short answer, when real interest rates jump. Note that I’m not saying prices won’t correct after a ~few years of rising nominal rates. If you look at the ‘Vic prices vs mtg rates’ chart I posted, eventually inflation/growth takes an unforeseen nosedive where CBs can’t react quick enough to lower borrowing rates.

    be able to make their mortgage payments if interest rates rise?

    Rising wages are usually the biggest contributor to rising inflation/interest rates, but for Victoria we shouldn’t overlook a steady flow of buyers that require little to no financing.

  6. Vicbot,

    In Mike’s warped world, paychecks are for chumps , everyone in Vic is a millionaire where prices never go down and a phony BC economy built on foreign money laundering never ends. Maybe someone knows of a good bankruptcy trustee for Mike.

  7. Michael, from 1970-72, 1976-78, 1990-93, 2000-06, 2009-10, 2012-16 house prices rose while interest rates fell.

    So if house prices also rise when interest rates go up, then when would house prices ever go down?

    Also, how would people living paycheque to paycheque be able to make their mortgage payments if interest rates rise? (38% of Canadians). How would that affect prices?

  8. Are you really trying to make the point that if rates rise after this, housing will rise further?

    Absolutely. You shouldn’t have to wait long to see it. If I’m right, the next few years will see rates rise alongside Vic house prices, same as always (see chart I posted below). I’m always puzzled why people think it would be different this time. The Fed already embarked on a tightening cycle at the start of this year signalling they see some inflation in the pipeline. Central banks only tap the brakes when they have to slow wage inflation or overheating national housing markets (nationally we’re not even warm). Afterall, they have an inflation mandate, not a jam-on-the-brakes and crash the whole market mandate.

    To better understand Vic’s rate/price relationship, you have to wrap your head around real interest rates and that our bond markets revolve mostly around central Canada’s much larger economy (not Vic/Van). I’ll give you a quick implausible scenario where our prices wouldn’t rise again – if somehow Ontario’s economy & inflation rates were to leave us in the dust this time. However, the exact opposite looks like it will happen again. BC will lead all provinces for growth going forward, not just central Canada. And yes, I know everyone disagrees with me, but by ~2020 you’ll be saying “damn, that Mike guy knew what he was talking about!” 🙂

  9. Funny how Mike now uses 1941 as a new starting point for his fuzzy pumper theory, when that was when real estate had just tanked the previous 3 years after the US raised interest rates after coming out of the 1929 crash. How convenient to leave that out, not when the market was peaking like an out of control rocket.

    Morgan Stanley thinks we are in similar times to the mid- late 30’s and the eventual coming rate hikes will not be good. Ground control to Major Mike, your circuit’s dead.

    World Economy Flashes Hint of 1937-38 Redux, Says Morgan Stanley

    “In 1936-37, the premature and sharp pace of tightening of policies led to a double-dip in the U.S. economy, resulting in a relapse into recession and deflation in 1938,”


  10. Let me rephrase that for you Mikey. Household debt has gone up more in the last 10 years than in the previous 40 years total combined. Put that on your useless fuzzy fantasy chart where historical debt bombs mean nothing.

    Meanwhile China is dumping US stocks as well as treasuries. Oil heading back down well under $50 is not a good sign either.

    China Dumping More Than Treasuries as U.S. Stocks Join Fire Sale


  11. Mike, if you draw lines of best fit for rates and housing prices over time there’s a very clear inverse relationship between rates and house prices between 1982 and now.

    Rates are super low right now and house prices are super high. There’s a global glut of cash being soaked up by housing because nobody is making money anywhere by lending it or sitting on it. Are you really trying to make the point that if rates rise after this, housing will rise further? That’s not what your own graph is telling you. That’s not what any economist would tell you right now. That’s not what central bankers would tell you right now.

    The central banks are freaking out about how cheap money is inflating assets like housing. Rates are a very broad, blunt instrument and when they’re used to stimulate economies you get all kinds of collateral damage. Housing is one of them. You could easily kill the housing market by raising rates right now. You’d also kill economic stimulus.

    If you really think that raising rates right now would add fuel to this fire…well…I don’t know what to say. You’d be alone.

  12. Total household debt has QUADRUPLED in the past 10 years

    Lol, why didn’t you make up a bigger number for dramatic effect? ..couldn’t figure out how to spell quintupled?

    10 years ago debt to disposable income was 132%, now it’s 165% (and falling by the way), so enlighten us where you pulled the quadrupled from. Maybe you’re getting confused with many Canadians net worth quadrupling in the last 10 years.

  13. CuriousCat, I’m shocked by how bad it’s gotten out there. People are being convinced by their realtor and broker to build a house & buy another by hiding facts from the banks?

    No wonder people don’t trust the real estate industry anymore, and I’m surprised that people are waiving $100k around like it’s a casino chip. If they’re not experienced with home building, yikes. If you don’t know what you’re doing, an expected profit can turn into a debt, especially because of inevitable delays. Are they going to be on site checking how everything’s going?

    Michael, “every time rates rise, prices rise.”

    Interesting theory, but it sure seems to be cherry-picking the data to prove a pattern that doesn’t really exist. Here’s why …

    1) House prices move in “reaction” to interest rates – not in “tandem”.
    There’s a time lag. It takes a few months or few years for an interest rate rise or fall to affect the market. So a box around the same years doesn’t prove that there’s a correlation.

    2) Recessions are a major factor – if not biggest factor – in house price drops. Major recessions were 1981 to early 90s, 1999 to 2005 –that’s also when house prices dropped

    3) Why are boxes only drawn around periods where both interest rates & house prices are rising? Answer: because the data is being cherry-picked to prove a weak assumption.

    If I drew boxes around 1990-1992, or 2000-2004, or 2008-2016, it shows interest rates falling & prices rising – the opposite of the claim.

  14. “Each and every one, with no problem at all, was able to find a broker to “work through” that problem. There are loopholes you can drive a bus through, and few people question any numbers because likewise, they want their commission.”

    Curious Cat,

    Great link. Another sign this will end extra ugly when the employees are laid off and can’t even handle their first mortgage.

    BMO plans more job cuts as profit slips on restructuring charge


  15. “The relationship is between rates & prices, and I don’t think it’s too difficult a concept that as inflation rises (ie. interest rates), prices rise.”

    Once again Mike’s fuzzy thinking gets in the way of his concept of reality. In those past bubbles, the debt loads were not at 165% with people buried in HELOC’s , credit cards and LOC’s. Total household debt has QUADRUPLED in the past 10 years . Your fantasy chart always leaves out the debt bomb.

  16. “I think a lot of people consider what they are doing as soft fraud.”

    Just another form of fraud like shadow flipping. You’re misleading a financial institution of your true intentions for that money, that’s fraud. When the walls comes down we’ll end up looking worse than the US in 2008 and possibly reaching the highest levels of our BC government.

    The politics of Metro Vancouver real estate — money and votes rule

    “To unravel the politics of Metro Vancouver’s red-hot, real estate market, just follow the money. And the votes.

    Premier Christy Clark has resisted aggressive intervention in a hyper-inflated market that’s soured the dream of home ownership for non-millionaires.

    Why has Clark fiddled while the market burns? Maybe it’s the $12 million donated by real estate tycoons and property-development companies to Clark’s governing Liberal party over the last decade.”


  17. @Jack

    The relationship is between rates & prices, and I don’t think it’s too difficult a concept that as inflation rises (ie. interest rates), prices rise.

    For those that still have difficulty, we can simply look back as far as we have data on Victoria to see that every time rates rise, prices rise.

    Chart compliments of DavidL

    “In economics, the majority is always wrong.”
    John Kenneth Galbraith

  18. How mortgage fraud is thriving in Canada’s hot housing market


    Looks like the one sticking his nose out, is the bank employee. Kinda dumb, to risk your job that way. The comments section brings out some interesting stories as well:
    “Only an anecdotal story from me, but another to add to the pile. I work in a professional capacity, and I know many, many colleagues who have purchased second (income/rental) properties. None of these people are able to meet the requirements for a second home purchase, particularly the 20% downpayment. Each and every one, with no problem at all, was able to find a broker to “work through” that problem. There are loopholes you can drive a bus through, and few people question any numbers because likewise, they want their commission. This is not an isolated problem by any means – every single broker/bank operates this way. If you don’t have the minimums, they’ll find a way to work around that, no questions asked.”

  19. I like buying my stuff when no one else likes to. I would never buy right now. That said I do not see the catalyst to stop this train. Not sure how long the track is though. Could be 2 or 3 years longer. The end of the track is a mountain and it is going to hurt.

  20. Exactly GWAC, when prices correct then all the crap comes out of the wood work and we get to see how really bad it has been.

  21. Michael, not according to Will Dunning*

    ” it is clear that most of the time, sales move in the opposite direction to interest rates: when rates rise, sales tend to fall; conversely, when rates fall, sales tend to rise. That relationship has been especially strong during the last three years.”

    Will Dunning is an economists that operates a consulting firm in BC that specializes in
    analysis of housing markets.

  22. JJ

    Its all good until prices fall. Than it gets bad real quickly.
    Like a pyramid scheme. 🙁

  23. I think a lot of people consider what they are doing as soft fraud.

    In my opinion, if the broker association and government bodies enforced their regulations then we would not be where we are today. Soft fraud when it is allowed to continue unchecked leads to escalating prices….

    ….and hoarding

  24. USA won’t be raising interest rates.

    You may as well of said “Inflation won’t be rising again.”
    (Note: RE loves inflation)

    As inflation & bond yields rise, central banks and their mandates will as always follow.

    I love it when everyone thinks low for long (even Yellen), that’s when you know the boat’s about to tip 🙂

  25. I don’t watch HGTV – makes me feel like my house is inadequate and needs to be totally gutted.

    However I do watch Million Dollar Listing NY on slice. 😉

  26. Anyone watch HGTV Island life last night. 1.7m USD for the 1000 foot cottage across from San Diego.
    US seems to have recovered nicely.

  27. The credit check will only report on what is registered against them. There are items that may not appear on a credit check.

  28. Question for Michael: While house prices increased and interest rates rose between 1940 and 1981, what did wage growth look like? What about between 1981 and 2016?

    I would bet on much higher wage growth between 1940 to 1981 mainly because of the rapid growth in unionization and public sector employment, and the conventional wisdom of the day that high inflation was a trade off for full employment.

    Contrast that with the decline in “good” jobs since 1981 in manufacturing and other value-added sectors where unionization was traditionally strong. I don’t think it’s any secret that wages have stagnated since the Reagan era.

    So my question for you would be, if interest rates have bottomed out, and wages are flat, what are the fundamentals that support your view that house prices are going to double or whatever it is over the next 5 years? Millions and millions of millionaire baby boomers that just can’t wait to get over to Victoria? Is it just civic boosterism?

  29. If it is fraud, (I assume because not all the information is being disclosed to the lender?) then I’d like to know so I can forward that information on to her and get her to reconsider. Sometimes I feel like I’m the only person in her circle who is the voice of reason!

    Looking back over our conversation she said “go to one bank and get a mortgage.. walk over to a different bank and get another one. the first one won’t be registered and visible to other lendors for 3 months. it takes a couple of days to get approved for a mortgage as long as i have all my documents. so need to do it all within 3 months after I do the advancement. so get mortgage on first one, get advancement, get other mortgage. was told by a few mortgage brokers that’s how people do it”. One of the mortgage brokers is a good friend of hers, and in my opinion, is totally sketchy but happens to work for a big bank, so if he’s saying it’s ok, then maybe it is?? (She might be exaggerating when she says she was told by a few people, I think she was only told by her realtor and it was confirmed by her mtg broker friend.)

  30. They are lying on their mortgage application. If they told the bank what they were doing would they get their mortgage?

    Most likely not as the bank wound consider them a greater risk. And that’s why they have to falsify their application.

    Fraud: wrongful or criminal deception intended to result in financial or personal gain.

  31. JJ

    The credit check should show that. I guess they are hoping for the filing gap.

    This is how people get into cashflow issues. House builds always cost more. Rent never comes in as expected and up keep costs.

  32. They are lying on their loan application that they don’t have a mortgage with another lending institution.

  33. Interest rates are almost definitely low to stay for a long time. The more we leverage up the more impossible it becomes to raise rates. Any small increase will immediately swat down economic activity. And the Americans haven’t been idle accumulating debt again. Lots of their housing markets have surpassed their pre-crash peak again.

  34. I am lost. How is any fraud being committed. Two separate properties, two separate loans. Both with Equity in it after the loans. Risk is if the market goes down or she cannot make payments.

  35. Another point, their mortgage broker should have never informed them on how to commit fraud. If this had been a financial planner or a bankruptcy attorney the financial planner and attorney would be seriously reprimanded even facing expulsion from their professional associations.

    It is unprofessional conduct to give advice on how to commit fraud. You’re looking at a broker with a short term career. The brokers E & O insurance for damages is void as well.

  36. Her first property is a construction mortgage. The home will receive progress inspections as it is built to advance funds. Only after the construction is complete will both the bank and your friend now the actual costs and register the mortgage. That could be 6 or 9 months from now.

    Banks don’t talk to each other. One bank doesn’t know what the other is doing.

  37. Curious cat – what are the chances that your friend will even make a profit on the new build? I suppose if the market keeps going crazy perhaps. But I don’t think that for the average person (who isn’t a builder or well connected with builders) it’s very easy to make money building new and selling.

    The mortgage ploy sounds dodgy, but I have no idea whether it will work or not.

  38. USA won’t be raising interest rates. Then Canada won’t have to. The party will continue for some time yet. Christy Crunch breathes a quiet sigh of relief.

  39. I am not a risky person. I like safe, boring, repetitive and routine. I don’t know if this aspect of my personality is what is making me think worse-case scenarios in this particular scenario, or if alarm bells are going off for a valid reason. Help me out guys!

    My good friend is caught up in this real estate frenzy. As I’ve mentioned in the past, they sold their house in Feb. They want to build but are having a hard time finding a lot. Their realtor brought them in on an opportunity to build a SFH in Bear mtn. This is not where my friend wants to live, but was convinced they can flip it for a profit. The realtor is arranging for the builder, etc, as he also has a lot in the same development. My friend paid cash for the lot and still has about $100k left. Building should start in about a month and be complete before Xmas. Fast forward to yesterday, my friend tells me about this other property for sale that is in a location they want. It could sell for $700-800k. I say, hold on a minute, how can you buy another property when you are already committed to bear mtn? She says, there are ways… I ask her to explain. She says she’ll rent out the new one while she completes the first and then sell bear mtn. I pointed out that rental prop needs 20% down and she doesn’t have that. (also I seriously doubt the teardown shack on the lot will rent out for anywhere near carrying costs). She said, she was told by a mortgage broker, that if she times it right, she can get a mtg on the new property with less than 20%, and then get a construction loan on bear mtn at a different bank, without them seeing the mtg she just received. I asked are you sure?? That doesn’t sound right! And she said, yeah, her mtg broker said, that’s how people do it!

    I don’t want to be Debbie Downer to my friend, but can she get away with this?

  40. The stark reality is that housing appreciated solely based on easy credit…rates on a downward trajectory ever since.

    You may be overlooking how house prices went up a far higher percent between 1946-1981 as rates went from 2% to 20%, than did prices from 1981-2016 as rates went from 20% to 2%.

    Low rates are here to stay.

    When everyone’s moving to the port side of the boat, it’s time to start thinking starboard 🙂

  41. Lol. LeoM and I are not the same poster.

    One could easily argue that historical interest rates are in the 3-5% range. There was as we know a brief time during the 80’s that interest rates were increased rapidly, a time which many became “upside down” and lost faith in housing.

    The stark reality is that housing appreciated solely based on easy credit (which since the Tech boom 1.0 ended in March 2001) has had rates on a downward trajectory ever since. We’re talking 15 years now. Low rates are here to stay. That being said I think it’s prudent to budget accordingly, and conservatively so that there’s plenty of margin for uncertain circumstances.

    I’ve said it before, unemployment is the concern and catalyst of any downturn and macros related to such.

  42. The Tod house has a lot of wood in it, which actually looked pretty appealing to me in the photos. Do you wonder if they had a bad winter there because the place seemed to be poorly insulated? I never saw it in person.

    We visited the Tod house in recent open house weekend. It was a house built by an artist per the realtor. Has solid structure but with cheap finishing, and mostly with reused old wood and building materials. The unique/odd layout is not good for a family with children. It is also in a run down state, with no furniture, missing baseboards everywhere, felt damp, lots molds in lots places, so not really livable in its current state. Needs lots love and money to bring it back, or to tear down and rebuild as the realtor suggested (“$150K repair or $600K to rebuild a new house, city allowable size is 3500 sqft”, he said) .

    Note that there were children playing in the school basketball yard next to the house when we were there, very noisy.

  43. I’ve been in the Tod house a number of times. It is not set up for family living with young kids – loft bedroom and stairs that are a bit dangerous and not much privacy – although it is right next to an elementary – and that can be noisy. Huge tree lifting the foundation/tile a bit. It is cottagy feeling which is nice but i’m not surprised it didn’t sell for more. I remember the last time it sold it was on the market for ages.

  44. @SweetHome: It’s interesting to hear that the Tod house was like a cottage – I actually had just that thought when I saw the listing photos. I don’t doubt that it sold for a nutty price, but the standard bungalow at Graham/Bay for $50,000 less is more shocking to me because it isn’t in Oak Bay. The Graham sale illustrates just how close to OB prices people are now willing to pay in neighbourhoods that were recently considered to be much less desirable than OB. $890,000 in OB isn’t very notable these days.

    The Tod house has a lot of wood in it, which actually looked pretty appealing to me in the photos. Do you wonder if they had a bad winter there because the place seemed to be poorly insulated? I never saw it in person.

    On a related side note, I wonder what starts the mania in a particular neighbourhood? I think it may just take one “it” house that has a bidding war to get a bunch of other people ready to start dropping a fair bit of money in that neighbourhood. My guess is that with, say, 5+ bids coming in on the most popular houses, the people who lose out start making more and more outrageous bids on practically anything in that once-not-so-coveted neighbourhood. And then prices only go up from there.

  45. On Tod, I heard through the grapevine that it was resold because the owners couldn’t get permit approval to make the changes they wanted to make to it.

    This is really tough for most people buying an older house these days as it could take months before you know that the city will actually let you make the house the way you want it. If you want the neighborhood, you have to hold your nose to some extent and hope that things will work out.

    Probably not a big deal for more standard types of bungalows and such but for a unique house like that unless you like it the way it is when you buy it, the probability of Oak Bay getting in the way of your changes is pretty high.

  46. “Crackhood? It’s called densification + gentrification. Good luck affording a SFH in the core ever again!”

    You’re hilarious Vicinvestor, I get the dense part. 😉

    Listening to BNN today with a mortgage broker on there and was interesting how the subject came up about the Chinese real estate buyers in Vancouver being margined bigtime and how if things get rocky back home they will be forced to sell ASAP and how it could very ugly fast. Mainstream TV is finally getting the reality of a Chinese exodus. Too bad the homies don’t.

    What worries the Bank of Canada even more than housing? China


  47. @VicRenter: “The sale of 2397 Tod Rd. in OB for $890,000 puts the $850,000 Graham sale in perspective.”

    I just want to comment on that Tod Rd. sale because it’s a nutty price. I haven’t looked at Graham, but I looked at Tod Rd. when it was for sale last September and thought the $745K it went for then was over-priced. It is not really a house; it is more like a cottage. That is what several of the people looking at the open house remarked.

    Also, the lot is next to a school yard, which may be okay for some people, but there could be noise associated with that. I wondered why it was being re-sold. Maybe for the profit, but maybe because the winter was uncomfortable there. Perhaps the new owners will tear it down and that price was just for the lot.

  48. JJ, I recall in the past you were able to post figures about average selling price above BC assessment. Do you have an update on that? I have a friend that is looking at a place in Cordova Bay for the land only (the house is a teardown) but it’s currently asking 175% of assessment and I think that is a little nutty!

  49. Crackhood? It’s called densification + gentrification. Good luck affording a SFH in the core ever again!

  50. The Fed is too chicken to raise rates a meager quarter point or the whole world will collapse. Hey, lets go out and buy a house for 400K over assessed price in a crackhead hood and be a property king. Now there’s some “fuzzzy thinking”.

  51. VicInvestor;

    “…Foreign Money: Proposals to increase minimum down payments on homes will only curb domestic buyers, not foreign investors with excess savings.”

    Probably the most relevant part.
    Buyers coming from Vancouver to the Island have already locked out their price increase which is excess savings in kind. The last rule change no CMHC over $1M does what exactly for doctors and other professionals that are starting here? Answer: nothing but penalized them for not being a foreign buyer.

  52. For anyone that likes charts & data, here’s a good paper:
    Investor Contagion in the Housing Bubble
    “we document substantial entry by amateur speculators at the height of the boom, entry that was strongly associated with sharp short-term increases and intermediate-term declines in local housing prices. Their collective inexperience and complete inability to anticipate the market peak by either curtailing their purchases or selling their inventory suggests that these speculators were not acting with superior information, but were instead simply betting that the boom would continue for a while longer. The lack of any special informational advantage provides indirect evidence that their substantial purchases and holdings actually caused local housing bubbles…”

  53. ” I did a private deal recently 78k under assessed that should easily carry itself.”

    “should” Mike , not “will” ? Another flophouse in a bad part of town I suppose. Rock Bay must be on sale again.

    That’s shocking JJ on that Graham place. All these boomers and 30’s groups with easiest credit in history loading up at the top. Either they forget when credit wasn’t easy or never experienced the dark side of the banking system.

    Not sure why Garth gets trashed so bad, he’s called a lot of stuff right. No one on here knew Harper was going to bail out the banks in 2009 for $114 Billion and save a banking and housing collapse. We know Justin isn’t doing that next time. What’s obvious is this can’t go on much longer but naivety and FOMO still rules this town.

    “Canadians are taking on more mortgage debt, and this is keeping debt-to-income levels near an all-time high, according to Statistics Canada.”

    “Benjamin Reitzes, senior economist and director of economic research at BMO Capital Markets, warned against reading too much into the fact there was a decline.

    “Don’t let the improvement fool you though, as the ratio usually falls in the first quarter, and the 13 basis-point decline is the smallest Q1 drop in seven years,” Reitzes said in a note to investors. “

    “In a note to investors, TD Economics’ Diana Petramala said there is increasing risk that soaring home prices will promote a deeper accumulation of debt.

    “The fear of missing out, referred to as ‘FOMO,’ is a developing trend amongst first-time homebuyers who may choose to jump into the market despite the high prices rather than risking being priced out in the future,” she said.

    Petramala said TD expects the debt-to-income ratio to continue to grow throughout 2016.”


  54. Yeah – last year parksville was doing nothing going nowhere then it took off. We are not buying for rental income primarily but for a family purpose so location/amenities are super important. Cowichan might have great deals still but not for us. Still prices up island are way lower than here so we will keep looking and see if anything works out.

  55. “Why do you call renting out a property ” hoarding”. Selling to an owner occupier would not increase the housing supply”

    Caveat, I see Jack’s point in this, although I have a different reason.

    Yes selling to an owner occupier wouldn’t increase supply – but it DOES reduce demand.

    Lots of authorities now say it’s a problem with demand, NOT supply – Bank of Canada, Scotiabank, National Bank, and various researchers like Profs Josh Gordon & David Ley, eg.,, http://www.theglobeandmail.com/report-on-business/rob-commentary/housing-costs-are-rising-but-its-not-a-supply-issue/article30380106/

    Here’s why the demand problem happens – millennials are becoming big buyers of SFHs now as they start families, and throughout history, families have wanted to buy homes because it’s better family security (no limited leases or unexpected landlord termination notices to deal with, and reverse mortgages can help in old age, etc)

    These millenials can be landlords with secondary suites – Great! Problem is that they’re competing with investors from too many different sources because of easy money and low interest rates – locals who buy 2nd/3rd/4th houses & hack them up into suites (or vacation rentals), and foreign buyers who either come flush with cash or get easy mortgages from banks.

    If you have too many people competing for SFHs, then the people that really need to become homeowners for family security cannot access them – prices soar, and urban sprawl becomes worse.

    Most families don’t want to rent, but they’re forced to rent because of high prices. Look at 30 years ago – families could afford to buy – even on one income. But that’s not because of population increases – it’s because of globalization and this crazy QE/ easy money lending/ HELOCs going on – encouraging everyone to become an “investor”.

    This exact problem happened to a family I know – they couldn’t afford to buy, their landlord sold their house without telling them and skipped town, then they were forced to pay the same month’s rent again to the new owners (never mind legal wrangling) – then they were kicked out!

    As the article said, “supply” isn’t the problem, it’s demand (similar situation as Victoria), “the ratio of population to housing units in Greater Vancouver has been falling for the past 20 years or so. Even the UDI said in a late 2015 report that housing starts were in the “healthy range” given population growth, and had been for several years.”

  56. Already missed the boat on Parksville, still some deals in Cowichan. I did a private deal recently 78k under assessed that should easily carry itself.

  57. Jack
    Why do you call renting out a property ” hoarding”. Selling to an owner occupier would not increase the housing supply

    Agreed. Also puzzling is this assertion:

    I think most of what is happening is due to a lot of baby boomers sitting on a load of equity in their personal homes. Individually they consider themselves investors (bad ones in my opinion) but collectively they are hoarding real estate.

    So now people owning a home with any accumulated equity in the property are “hoarding” real estate and “bad investors” and people renting out a home are also “hoarding”. So pretty much if you are not a renter you are a greedy hoarder of real estate and a bad investor.

  58. @JJ: “The Graham property was bought by a baby boomer, from Victoria, to be used as a rental property.”

    Do you know that for certain or are you speculating?

    That seems like a very high price to pay for a rental property. I’d expect someone buying to rent a place out to be a little more savvy in terms of not over-paying by a huge sum. But then like JJ said, maybe they aren’t good investors…

  59. The Graham property was bought by a baby boomer, from Victoria, to be used as a rental property.

    I think most of what is happening is due to a lot of baby boomers sitting on a load of equity in their personal homes. Individually they consider themselves investors (bad ones in my opinion) but collectively they are hoarding real estate.

    Hoarding only becomes a problem to society when it becomes excessive and in places like Vancouver that has led to a shortage of rentals, excessive prices, and long commutes into the city. Just in the cost to society of lost time, fuel and wages, etc.

    When you point a finger at someone else, like out of town buyers, remember there are three fingers pointing back at you!

  60. Vicbot, to give you an idea of what 10,000 vacant homes means.

    In all of Oak Bay there are 8,200 homes.

    That’s the size of the problem in Vancouver.

  61. I’ve been saying that Hillside/Quadra seems to be ridiculously hot right now. The Graham sale only confirms that. (And the Graham house, like the last few crazy sales in that area, isn’t even in the nice part of that neighbourhood on Smith’s hill.) Suddenly people are paying huge amounts to live in a neighbourhood that to most is a step down from Fairfield, OB, Ferwood, etc. The sale of 2397 Tod Rd. in OB for $890,000 puts the $850,000 Graham sale in perspective.

  62. Attempted to buy up island. Six offers and a bidding war later and it went ‘significantly’ over ask to the successful buyer. Our full price offer didn’t stand a chance. There iseems to be no escape from the madness right now.

  63. Vancouver plans to impose tax on owners of vacant homes

    “Vancouver’s mayor says the city will impose a tax on property owners who don’t live in their residences as part of an effort to make housing more affordable …

    After months of demanding action from the provincial and federal governments on the affordability crisis, Mr. Robertson said Tuesday he has no faith that the province in particular will intervene …

    The mayor said the city wants access to an estimated 10,000 empty houses in Vancouver, a figure based on data that city staff released in March. ”

    (by the way, AH, sounds like you’ve had a lot of success. Does zoning affect how you’re dividing up the houses? As you mention, just make sure that those rentals cover all costs, eg., since the Fernwood property may not cover maintenance, you’ll want to factor in those things before leveraging again, eg., roofing, new furnace/electrical, new appliances, water main or pipes or water tank leaking/bursting, exterior/interior house painting, fencing, yardwork, window or flooring repairs, as well as income/property taxes & extra rental insurance.)

  64. I think the Graham sale takes the cake as the nuttiest sale yet this year (with Alder a close second). Assessed at $450, sold for almost double that. Someone asked whether a family could fit onto the main floor. Can’t see why not? Throw some bunk beds in the second bedroom. Also, could possibly put a kid in the suite when they’re a tad older I suspect (but i havn’t seen the place).

  65. Thought I’d share mine and my partner’s experience with the Victoria RE market. I guess we would be considered some of the young ‘over-leveraged’ out there but we’re happy with our choices.

    We bought a modest house in Esquimalt in late 2005 for 295k. We were 24 and 27 then. My partner is a contractor and we were able to save up and transform the house from a run-down 3 bed 1 bath to a nicely finished 4 bed 2 bath. We love the house – it’s steps to the water, in a great family neighbourhood and miles from any snobs:) We’ll probably stay indefinitely.

    In 2014 we re-financed our mortgage (got an appraisal for 480k) and took out 120k as a deposit on a rental house also in Esquimalt. We bought a beautiful character house for 510k and created 2 suites – one 4-bed 2-bath and one 3-bed 2-bath which now rent for $3100 / month combined.

    Due to saving, we were able to put 50k down on another 4-bedroom property in Fernwood last month (private sale – too good to pass up 560k / large lot / beautiful street.) We plan to rent that property for $3000 a month which will cover all mortgage / insurance / taxes (though possibly not all maintenance.) In 3 years we will consider re-financing our Esquimalt rental property to build a large garden suite on the Fernwood property to generate more income.

    I know Hawk will say we are bound for financial ruin, but we’ll have to see. We’ve enjoyed every moment of our real estate investing journey so far.

  66. Is it possibly 1314 Dallas Road sold already? It appears the listing has disappeared…if so does anyone know what it went for? Seems like record time to me.

  67. @ Hawk – garths website which you keep referencing seems to have the same dire set of predictions and talk of the housing bubble going back to 2009 (I checked for may of each year). A lot of the things he says are (and were) not wrong but his prediction of a crash has been steady for 7 plus years.

    Who knows, I guess, I tend to be more in your camp anyhow. My wife and I sold our house and condo even though we have not owned them long (the house less than a year, the condo since 2008). We cashed out and traded sideways on the house (bought a house for roughly the same price as we bought the first one for and pocketed the rest – the condo proceeds will be kept well away from the RE market). Part of me does wonder if we should try to sell the new house as well and just rent but we do love it. We are in the 35 year age bracket, and went from a 5% down on a 300k condo in 08 to a 30% down on 750k house in April. We are keeping another 10% back as cash reserves just in case things get really hairy. We are also one of those crazy people Garth referenced with 35 yr amortization (did the same with the condo purchase) but we bank the savings as cash or investments that are ready to go towards the mortgage as the latest 5 yr term expires (2021!).

    I posted on this blog when we sold our house in March Regarding our experience – turns out if we’d waited we probably could have eked out a bit more, but I know for sure we wouldn’t have got the new house we got for anything near what we paid now. I’m still shocked we got it for what we did, but there was a brief slowdown that early part of April. Some of crazier valuations I see on my pcs now – like the one mentioned on graham – just can’t get my head around it.

  68. Interesting Garth post from a Whistler Remax agent telling folks to sell now, and buyers to wait a couple years. Wonder how long til Victoria Remax agents say the same. Another red flag the peak is history and the denial stage begins.

  69. Mike, again you use old stats. 9 times average household income is not 46% nor affordable in the real world. Have the phones stopped ringing at the office?

  70. Aggregate affordability measure for Victoria (Feb’16) is 46.4% of income, exactly the same as our national average and still near our historical norms.

    Van is closer to 100% and unfortunately is the direction I think Vic is headed.

  71. There were also rumours for a while that Demographia had a hidden agenda of supporting urban sprawl, which isn’t true. They correctly pointed out that inefficient zoning of city land can result in unnecessary densification that doesn’t benefit the local population – Vancouver is a prime example, where pint-sized condos have become king (due to high ROI for builders & attractive prices to investors) but they can’t support growing local families, so those condos have actually produced more urban sprawl.

    They’re comparing housing costs to people’s incomes in the countries around the Pacific Rim, eg., Canada, US, Aus, NZ, HK, Japan. And also UK & Ireland. They say it’s because housing costs used to be similar (2-3 times median income) but now they’ve diverged. Other countries didn’t have similar housing costs historically, so they weren’t included.

    Anyway, I find it useful because they’re just comparing apples to apples and are pretty open about how they do the research.

  72. “The capital region is behind Vancouver, which was named the second most unaffordable housing market in the world next to Hong Kong.”

    Rumour has it that there are some other countries out there that don’t speak God’s language and were not included in the half-baked Demografia study.

    Also “overpriced” is a separate issue from current rate of increase. The current rate of increase can clearly not be sustained for long. That says exactly nothing about the current level of prices.

  73. “But I’m still seeing some surprisingly large over-asks, eg., 2525 Graham St in Hillside area, ask $699k, sold $850k.”

    Guess they will wake up to their new neighbors, the Crackhead family along with their pit bull. Lots of surprises in store for the panic buyers who don’t know this town. 😉

  74. “When Vancouver falls it’s hard to imagine Victoria (or really anywhere in BC) escaping unscathed although the impact should be less here because we are not that overpriced.”

    Not overpriced ? Victoria has increased twice the average family income in a year. That’s massive and unsustainable.

    Victoria rated second-least affordable housing market in Canada

    “Greater Victoria has the second least affordable housing market in Canada, according to an international study of urban housing markets.

    The capital region is behind Vancouver, which was named the second most unaffordable housing market in the world next to Hong Kong.

    “I knew it was bad, but I didn’t realize it was that bad,” said Victoria Mayor Lisa Helps, who cited low-paying jobs, scarcity of land and government fees as part of the city’s affordability problem.”


  75. “But I’m still seeing some surprisingly large over-asks, eg., 2525 Graham St in Hillside area, ask $699k, sold $850k.”

    Whoa, and that’s not an area I would consider all that desirable. Granted it presents very nicely, but at the end of the day, you have a 2 bed/1 bath main house which would do well only for a couple + 1 bed suite. Makes me wonder about who will ultimately end up living in this house? A couple with one child, a single person, a retired couple, or will someone squeeze 2 adults and two kids in that upper suite?

  76. “I’ve heard that argument before that because our market was flat for so long our prices won’t fall.

    But if the financial hubs of Vancouver and Toronto get their asses kicked, so will we. Think of the effect of falling prices will have on the construction and related industries.”

    Exactly JJ. When this market tanks it will be based on a credit squeeze that hits everyone’s ability to borrow from Victoria to St. John’s. No one will be immune when the banks stop lending to only the cream of the crop.

    As per Tony, not sure how it can be called unintentional when he went on TV a second time to reassert himself by saying that he’s never heard of homeowners wanting less for their house than what an offshore guy would pay over that of the local buyer. He’s reaffirming that it isn’t your neighbor buying your house and you shouldn’t be concerned who is buying it or where they come from. Just shut up, take the money, and run.

    To me that’s someone bent on selling us out when locals are extremely concerned with the insanity and direction of Victoria not being a Vancouver with all the shady shit and he’s now a major part of it. That’s disturbing.

  77. Vic

    1011 Carolwood. Busy corner 1.2m. Saanich east is going stupid. A lot of stuff at prices I cannot believe.

  78. Entomologist, great to see the analysis!

    The only thing to note is that 52% of the Vancouver buyer properties were actually in the $600k-$1M range. But as you say, different distributions.

    Added to that, even properties around $800k in Fairfield/Oak Bay wouldn’t be considered high end anymore. Most, if not all, of the houses in that range needed some serious kitchen & bath renos. Also $800k gets you an updated house in Saanich East, but not really deluxe or new.

  79. I think it’s interesting that you folks think those two datasets show the same patterns. If you break it down by percentages, something quite different emerges:

    Vancouver buyers:
    Sold Price Sales, Percentage of total
    $0 – 200 —
    $200 – 300 —
    $300 – 400 —
    $400 – 500 6.8%
    $500 – 600 11.1
    $600 – 700 6.2
    $700 – 800 18.5
    $800 – 900 17.3
    $900 – 1,000 13.0
    $1,000 – 1,250 11.7
    $1,250 – 1,500 8.0
    $1,500+ 7.4
    Total: 100%

    Victoria buyers:
    Sold Price Sales, Percentage of total
    $0 – 200 <0.1
    $200 – 300 <0.1
    $300 – 400 2.8
    $400 – 500 10.0
    $500 – 600 18.2
    $600 – 700 19.4
    $700 – 800 14.4
    $800 – 900 11.5
    $900 – 1,000 6.8
    $1,000 – 1,250 7.6
    $1,250 – 1,500 4.1
    $1,500+ 5.1
    Total: 100%

    The Victoria buyer percentage is higher than Vancouver for all of the lower 6 categories, and the Vancouver buyer percentage is higher than Victoria for all of the top 6 categories.

    Looks like the stats show that Vancouver buyers are interested in higher end properties. The modes of the distributions are also notably different. Half (48.8%) of the Vancouverites’ purchases were in the $700k-$1000k range, while half (52.0%) of the local buyers purchases were in the $500-$800k range. Those are different distributions.

  80. I think Vancouver HAS to fall at some point. What is going on there is not sustainable. Once it stops going up the motivation for speculators becomes less and things could fall pretty quickly. I make no prediction for when it will fall. Vancouver could still surprise people by levitating for longer than expected. (For the record I thought Vancouver was going to crash in 2008 – instead it just paused and briefly dipped).

    When Vancouver falls it’s hard to imagine Victoria (or really anywhere in BC) escaping unscathed although the impact should be less here because we are not that overpriced.

  81. I think the price consolidation is a result of people losing their appreciation of different neighbourhoods. What is a distinct difference to people in Victoria (Fairfield, Oak Bay, James Bay, Fernwood) – is indistinct to people coming from elsewhere, where the distinction is core versus West Shore. I also think the $1M mark (the difference between 5% down and 25% down) is a bit of a driver of this – with properties being bid up to there. A graduated down payment would have mitigated that effect where the amount down between $1M and $1.5M was a function of price (ie. every additional $10,000 in price attracting a 0.4 percent increase in downpayment – so a $1.1M house requires a 9% downpayment and a $1.5M house requires 25% down).

  82. We’re currently in the 2nd longest bull run in NA markets so a considerably correction has been forecasted

    Or, something else could be up 🙂

  83. “You might want to re-think what you wrote there Vicbot.”
    Not sure what you found? I think I said Vancouverites are pushing up prices in the $500k-$1M range. Probably in every range, depending on how much money they made on their previous house.

    I also find it interesting that houses in every “traditional” neighbourhood are going up the same way – maybe another sign of newcomers finding gems everywhere, whereas oldtimers might not have even looked at them. Just like when I came back, I “discovered” places that I didn’t know existed just because I was willing to drive another 10 minutes.

  84. What I find interesting about this market is that the sale prices are all gravitating to the same price range. It doesn’t seem to matter where the property is located.

    A house in South Oak Bay is $850,000 and so is a similar house in Glandford. It’s a bunch of silly people buying houses.

  85. Interesting thought Janice.

    We also have a substitute from high inner city prices and that’s Langford. The difference in the price of similar starter homes between the two areas of Langford and Fernwood is close to $350,000 now. Housing in Langford is getting to be half the price as a home in the City.

    That isn’t a fair comparison because these are two distinct market from each other now. Langford is owner occupier while Victoria is speculator/investor. UVIC profs buying another investment property.

  86. Just Jack – I don’t think it’s as 1:1 as it once was. I think there’s been an economic shift in how people work, where they work – and how and where they consume goods and services. I think for many Vancouver businesses, if given a choice between the “Vancouver Office” – where its impossible to recruit into positions because of the housing market, and the “Victoria Office” – well, I think many businesses might start to substitute away from Vancouver. This is particularly true when a “bricks and mortar” presence matters less with respect to the goods and services being delivered. This might be particularly true if the resident population of Vancouver is already in decline – empty houses are not known to have many consumers in them. It might also be true, if in order to attract talent, you must pay premium wages. All of a sudden, businesses then switch to a model where the “head office” and the highest paid brass might be in Vancouver, but the guts of the business are elsewhere. I think small to medium markets – Kelowna, Victoria, Nanaimo – tend to be beneficiaries in these scenarios. Less construction in Vancouver, but more elsewhere – with wage pressures in those other areas. In short, I think a Vancouver RE downturn might be a fairly localized event, with most of the pain being felt by those who aren’t really economically active in the local economies anywhere (if its driven by foreign investment demand).

  87. You might want to re-think what you wrote there Vicbot. But I understand where you’re coming from.

  88. I’ve heard that argument before that because our market was flat for so long our prices won’t fall.

    But if the financial hubs of Vancouver and Toronto get their asses kicked, so will we. Think of the effect of falling prices will have on the construction and related industries.

    If construction falls off in Greater Vancouver then the price of building material will drop and so will wages. For Victoria that would also mean lower building costs. So a completed house that took 6 months to build at a higher cost will have to compete with proposed construction at a lower cost.

    In some ways it depends how close you are to the blast radius and how many megatons the bomb would be. But I think a lot of companies would choose to close down their Victoria offices and service Vancouver Island from the mainland during an extended economic slowdown.

  89. Yes Vancouverites – from Greater Van – buying in similar price ranges. This creates higher demand for houses Victoria (especially $500k-$1M) – more demand for the same number of listings then leads to higher prices (in those price ranges)

  90. I keep going back on this one. When you say Vancouverites that includes people from Burnaby and Surrey and Langley. They may not be millionaires buying up all the expensive properties. In fact their buying habits are similar to Victorians that are buying.

    Here are the price ranges that people who identified themselves as from Vancouver are buying in the core stand alone housing market

    Sold Price Sales, Number of
    $0 – 200
    $200 – 300
    $300 – 400
    $400 – 500 11
    $500 – 600 18
    $600 – 700 10
    $700 – 800 30
    $800 – 900 28
    $900 – 1,000 21
    $1,000 – 1,250 19
    $1,250 – 1,500 13
    $1,500+ 12

    And this is the price range that people from Victoria are buying houses

    Sold Price Sales, Number of
    $0 – 200 1
    $200 – 300 1
    $300 – 400 29
    $400 – 500 104
    $500 – 600 190
    $600 – 700 202
    $700 – 800 150
    $800 – 900 120
    $900 – 1,000 71
    $1,000 – 1,250 79
    $1,250 – 1,500 43
    $1,500+ 53

  91. I don’t see interest rates going anywhere, anytime soon. As such when we refinanced, I actually went with the variable rate instead of the fixed – as I couldn’t justify dropping our payments as low as possible, and paying as much as we can (topping off, with the top offs coming off of the principle).

    Not sure if the “bubble” is about to pop – perhaps Vancouver or Toronto might, but even with a 50% fall back, they’d still be “lofty”. Victoria was flat for quite some time between 2012 and 2014 – so again, not sure how much of a fall back should be anticipated. To the extent that our “out of town” phenomenon are economic refugees from overpriced Vancouver – these are families not “investors” – these are the people who have been priced out of Vancouver. They don’t like empty hoods anymore than Victorians do. Those that have sold there and are looking to buy here, might also be looking for a better lifestyle – with much of their RE “winnings” being used to become much less indebted. Shorter commute, less debt, better life. Many might even be willing to take a cut in pay as the bottom line is just that much better. Economically, Victoria might boom while Vancouver goes bust – a hollowed out metropolis. As long as the houses being bought are being used as houses (versus investments) – I do not think we have much to fear, and would think that when intended use shifts, is about the time we really should worry.

    So if anything, I think we’ve seen most of the “lift” – and that once again things will slow and go flat for a time, but it would be only wishful thinking to see any real retreat in prices. I also note that it appears that the rental market has become significantly more pricey in the last five years – if nothing else, being a mortgage slave does entail a certain degree of price stability with respect to housing.

  92. JJ, understood it was unintentional. I guess it’s important for Victoria realtors to understand that the changes in Vancouver started exactly like this, with promotions to foreign buyers, especially in the 2000s. If government and the real estate industry isn’t going to do anything to prevent it happening throughout BC, then the only option is people’s feedback.

    If anyone thinks “it can’t happen here” – well, that’s what Vancouverites thought for a long time, and it’s already happening here, with Vancouverites pushing up prices to get away from the insanity. That’s on top of the already “general desirability” of Victoria as a retirement & vacation destination. It really cannot be taken lightly – the shock that it is to see entire neighbourhoods and ways of life change over 10-15 years.

  93. @ Hawk re:

    “HSBC would be the last place I’d put my money when things go south. They are the biggest money laundering chutes of all, not to mention all the Asian money that will be pulling out fast in a financial crisis.”

    Since HSBC got busted & fined a billion dollars, they are one of the most careful banks in the world. We deal with them regularly, it took almost 9 months, dozens of signatures, passports, other id’s and incredible amounts of documentation to get an account opened in the US for perfectly legitimate business reasons.

    HSBC Bank Canada is a standalone Canadian bank that is part of the HSBC group. Sure – there are capital requirements for Canadian banks that may be put under pressure in the event of a collapse, and maybe even more so in the event of an Asian crisis because of a Canadian clientele bias but HSBC doesn’t expect to get bailed out. And they weren’t in any material way in 2008 either. $114BB total was taken by the 6 Canadian banks. Less than 4BB was taken by HSBC, ING and National Bank combined and given the disclosures, it isn’t even clear that HSBC took any of that.

    Given that HSBC is run without the expectation of a bailout and as a consequence, is operated in a manner more aligned with it’s actual risk (some of the highest mortgage rates in Canada!) and that it is exempt from any Canadian bail in legislation because it isn’t “systematically important”, I see it as one of the safest banks you can use for depositing and investing activity from a risk management perspective.

    On top of that, they have some of the best customer service in Canada and there are a whole host of things you can do with HSBC that you can’t do with other Canadian banks. Hold investment & cash accounts in currencies other than CAD/ USD for example.

  94. German interest rates have gone negative for the first time in history.
    With Brexit the theme of the week, I suggest that growth the latter part of this year will be anemic. We’re currently in the 2nd longest bull run in NA markets so a considerably correction has been forecasted about as long as housing concerns have been published.

    I don’t see interest rates rising in an environment such as this where the global engine can’t get into first gear.

    A recap of countries with key rates of 0.0% or less:
    Euro Area 0.0
    Japan -0.1
    France 0.0
    Italy 0.0
    Spain 0.0
    Greece 0.0
    Netherlands 0.0

    Argentina 36.88%
    Venezuela 21.07%
    Brazil 14.25%
    Russia 10.50%
    China 4.35%

  95. Well Vicbot, as Tony told all of us at the meeting he didn’t expect the negative response he received from the advertisement.

    Unintentionally the advertisement tapped into a fear that our neighborhoods are going the way as Vancouver’s neighborhoods. The end of young families living in the city and being forced out to the suburbs while houses in the city sit empty and abandoned.

  96. @Localfool – I didn’t get a chance to respond on the previous posting, so I’ll just do it here …
    Tony leaves the foreign buyer brochures in all the neighbourhood mailboxes simply because he wants to become our realtor and sell our homes, and make the commission, like all the realtors always do that leave them in our mailboxes several times per week. He’s just a businessman trying to form a business relationship, and telling us over & over again that we can make more money if we sell to “investors and foreign buyers.” It’s the “extra money” sell, plain & simple.

    The Chinese language part of the brochure is probably for the folders he prepares for the Chinese buyers. If he represents some Victoria-based buyers too, and they happen to find these flyers, there might be a secondary benefit to him if it instills some kind of buyer fear, but that’s not the main reason why he left these brochures in our mailboxes in the first place. It’s the same reason all the other realtors have always done – they want to make some very fast money off the seller, because they have to do less driving & running around with a seller than a buyer (in this seller’s market).

    @Beatriz, spring is always a good time to sell. Victoria seems to be slowing down a bit early right now, before the usual fall slowdown. But I’m still seeing some surprisingly large over-asks, eg., 2525 Graham St in Hillside area, ask $699k, sold $850k. In general, the asking prices for houses I’ve seen have been $150k or $200k or more over last year. Who knows what is next though.

  97. I have had some people ask why is there such a difference between the appraised value and the purchase price these days. So I’ll give you one example.

    Two near identical homes. One on a busy street in Fernwood and one along a quiet residential road in South Oak Bay. Both sell for nearly the same price. However, there is easily a $200,000 difference in location between the two properties.

    The South Oak Bay property took 24 days to sell and sold $20,000 below asking price.
    The Fernwood property was sold in a “delayed offer” after a limited exposure of 3 days for $117,000 over asking price.

    Under the current definition of Market Value in Canada, Market Value assumes a reasonable time is allowed for exposure on the market. And the buyer and seller are acting prudently and knowledgeably and assuming the price is not affected by undue stimulus.

    What that could mean is that a delayed offer may not meet the definition of market value. And that would make the sale unsuitable for sales analysis.

    The function of a mortgage appraisal performed on a property is to determine its fair market value. And that is accomplished by looking back over the last three months of properties that have sold at fair market value.

    That is not the same as what an agent is doing when they come to list your home. They are looking at the anticipated sale price in the upcoming 90 days and their analysis would include non market value sales and current listings.

    Most of the time the fair market value and the anticipated sale price are the same. But not in this market where some prospective purchasers are acting in an irrational manner because of the temporary limited supply.

  98. How exactly are the Victoria housing market?
    I’m thinking to sell my house . Would be a good time or should I wait for next summer?

  99. “Yale professor Robert Shiller tracked media activity and found that prior to a major correction, in housing prices, newspaper articles about the marketplace rose substantially.”

    Cracks are starting to show. I don’t ever recall so much negative media attention or serious public concern from homeowners in any other market peak. Never have I seen our own banks pleading for change, especially at a point where those “fuzzy thinkers” believe this is just the beginning. Those greater fools are in for a world of hurt.

    From Garth’s blog yesterday the evidence mounts:

    “By the way, a Vancouver realtor (who does most of her work in Richmond) called me yesterday for some money advice. She just sold her four of her five properties, and plans on bailing out entirely. “This cannot last,” she said. “In fact, I see it already slowing fast.”


  100. Nothing typical about this year. Fall slowdown usually means decreasing inventory not increasing.
    But I agree the fall slowdown is likely starting.

  101. ^Looks like the normal summer ‘slowup’ has arrived on shedule. Time again for the bears, hawks & jacks to convince us armageddon has arrived 🙂
    I hope they don’t waste away their whole summer again.

  102. Thanks for the update. This is what I’ve been seeing in the marketplace too. The hotness is cooling.

    Yes there still are some off the HMS Burnaby and Vancouver spending their money like drunken sailors in a Thai whore house. But their ships may be sailing soon.

  103. Not reckless lending to the same degree as they had in the states but I suspect there is a lot more mortgage fraud that will be uncovered once a correction starts.

  104. Yale professor Robert Shiller tracked media activity and found that prior to a major correction, in housing prices, newspaper articles about the marketplace rose substantially.

    coincidence or correlation?

  105. In May, the Teranet–National Bank National Composite House Price Index™ was up 1.8% from the previous month, the largest May increase since 2008. For the first time since June 2013, prices were up on the month in all of the 11 metropolitan markets surveyed. Gains exceeded that of the countrywide index in four of those markets: Vancouver (2.9%), Hamilton (2.6%), Victoria (2.0%) and Montreal (1.9%).

  106. Watched the big short on the plane. Good movie. Fascinating. We don’t have synthetic CDO’s happening here to the tune of billions but we certainly have the reckless borrowing and lending part going on though….

  107. It’s remarkable just how much media coverage the housing market is generating. The Globe seems to have have 2-3 articles a day. Virtually everyone of all stripes agrees that price growth in those cities makes little sense. In other words, everyone’s talking about the bubble.

    If Toronto and Van finally do take a serious drop, it should be put in the books as a rare occurance where everyone successfully called the bubble (which by definition isn’t supposed to happen).

  108. Doesn’t really surprise me that the frantic pace hasn’t continued to escalate. Hard to imagine how it could. However, I’m still seeing some insane pricing: 867k for a 2 bed (main floor) bungalow on Fernwood is the latest.

    Anybody have an update on the Van market?

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