June 20 Market Update

Weekly stats update courtesy of the VREB via Marko Juras.

June 2016
June
 2015
Wk 1 Wk 2 Wk 3 Wk 4
Unconditional Sales 187 460 725
910
New Listings 226 570 853
1346
Active Listings 2354 2362 2340
4003
Sales to New Listings  83% 81% 85%
68%
Sales Projection 1102 1127
Months of Inventory

4.4

So much for the slowdown.  Sale to new listings ratio is back up, and sales per day up a bit as well while inventory has ticked down to the lowest level since February of 2006 .   Can you believe in June of 2012 we had just shy of 5200 listings out there?   This is actually about as low as we’ve ever seen it in June, but as the fall comes expect it to drop even more.  In the hot market of the mid 2000s we had December inventory down by another 35% from similar levels in June.

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215 thoughts on “June 20 Market Update

  1. on China money…. They just went through their industrial revolution. How many newly minted millionaires are there? This in a pseudo free market with a authoritarian (almost totalitarian) government. I would want to get my money out too. The only way to do it is to say “I’m going to retire here” and buy real-estate, in multiple locations. They can’t wire transfer 40 million to a foreign account somewhere. The only way out is through real-estate. I don’t think the flight of capital is a sudden result of things tanking there. (they still have a huge growth rate). I think it is simply a result of there sudden success and new wealth. The only other option is wearing your money out in gold….

  2. Just starting to see now a few delayed offer/blind auctions that come and go with no accepted offers. Not prime houses on prime streets but it’s a start. Probably a coin toss if we will or will not have 300 house sales in the core this month which would be 10 percent less than last month.

    Seriously, how many of you thought this market was going to last forever!?

  3. I’ve seen quite a few owners lie about how their family is going to use the property and then turn around and rent it out again or put it up for sale

    You can lodge a complaint with the RTB if they don’t have family use the property for at least 6 months.

  4. Why just not keep signing a 1 year lease that reverts month to month? That is what ive done with one of my tenants that has been in my rental for 4 plus years.

    I think you have the right idea Marko. You are much more likely to end up with good tenants that respect the property if you respect them. Sure you can structure your leases to force people to move out and then renew them, but you immediately poison the relationship to some extent. Don’t be surprised when your tenants don’t care so much for the property as a result.

  5. My best landlords were professional management companies that managed properties for large institutional investors- things were clear, professional, and everyone knew what the game was.

    Same. While we never had bad landlords, they were all negligent to some extent as far as communication and maintenance of their property goes. The best way to go as a renter is with professionally managed properties. The amateur landlord is normally just that, an amateur.

  6. Anyone watching 3225 Kingsley St, MLS#366761? It is a newer house but listed at $1.18M or 170% of assessed!! Offers were being reviewed yesterday. Seems insane to me and at that price I could knock down my 50’s house, build new, and still profit.

  7. @ Marko: “Why just not keep signing a 1 year lease that reverts month to month?”

    That’s exactly what I do. I suppose my point was just that a 1 year lease that then turns month to month is no guarantee of housing. You can be kicked out with 2 months’ notice at any point. The compensation covers moving expenses and maybe, if you’re lucky, a little more, but not like it’s a windfall for the pain of having to relocate. I’ve seen quite a few owners lie about how their family is going to use the property and then turn around and rent it out again or put it up for sale. How many tenants are really going to bother taking them to small claims court or whatever the procedure would be? (This happened to my neighbours in my condo building last year. The place was on the market within a week of their moving out with no renovations completed or family moving in.)

    I understand that a big part of your problem with the fixed-term lease is that landlords can hike the rent to a degree much greater than that allowed by the BC tenancy act after the term is up. I’ve been lucky never to run into that, but I can imagine that in this market some people might really abuse the possibility. Were I the landlord, though, I’d really want to keep the tenant if he/she was good and so would avoid doing anything to sour the relationship. If the tenant was lousy, then I think it’s fair for the landlord to ask them to leave. As a tenant I do often feel that the landlord has the upper hand, but that’s also pretty much what you sign up for when you’re renting. I’ve never been under the illusion that I have some greater right to live in or make use of the property than its owner. (I agree with the comment about property management companies being the best landlords. I currently rent a condo that is managed very well and have no complaints.)

  8. This is completely wrong. As a landlord you have a duty to protect your asset as best you can. That includes signing a lease that is as advantageous as possible, i.e. fixed term with a move-out date after the 12 months. No one is forcing a tenant to sign it. This kind of contract is just a sign of a very tight rental market, and a landlord would have to be nuts to do it any other way.

    I have 5 rental properties and I also sell a ton of tenanted properties for clients during the course of the year. Honestly all I see with the fixed term leases is landlords exploiting tenants. The landlord, on average, will have a heads up in terms of tenancy legislation over the tenant.

    It would be like me, a realtor, buying a home off a 90 year old. Safe to say i have an unfair advantage.

    There is some really bad stuff going on out there that I cant stand but what do you do? Where do I even start, like people designing their suites to only have a shower; therefore, immediately shunning potentional families and or single mothers from renting.

    etc., etc.

  9. I’ve been the tenant whose 1-yr lease has rolled into a month-to-month tenancy and whose landlords then decide that they’re going to move into the property. They had to give me two months notice and a month’s rent in compensation. It was extremely frustrating, given that I’d only been in the place for 14 months and they’d acted like they wanted to rent it out for years and years when I moved in. Since that happened I’ve always insisted as a tenant that I have fixed term leases because I want to know that I have somewhere to live for more than just the next 2 months

    Why just not keep signing a 1 year lease that reverts month to month? That is what ive done with one of my tenants that has been in my rental for 4 plus years.

  10. “But if you have no morals and ethics yes fixed term with fixed date definitively the best way to go”

    This is completely wrong. As a landlord you have a duty to protect your asset as best you can. That includes signing a lease that is as advantageous as possible, i.e. fixed term with a move-out date after the 12 months. No one is forcing a tenant to sign it. This kind of contract is just a sign of a very tight rental market, and a landlord would have to be nuts to do it any other way.

  11. I concur with Marko- the current trend towards everyone signing fixed-length leases certainly goes against the spirit of the residential tenancy act. Fixed term leases certainly have their place, but using them as an excuse to impose arbitrary rent increases and evictions is certainly not renter-friendly.

    I’ve been a renter, homeowner and landlord, and it’s not fun as a renter- especially as they tend to be people living more hand-t0-mouth/month-to-month. Yes, horrible tenants exist, but so do horrible landlords, and the balance of power generally favours the landlord. I know that right now there’s lots of people who have come to depend on suite income to make the mortgage payment, but I wish we were in a market where this wasn’t the case and where rental properties were viewed as long term investments for cash flow, not ways to make a speculative investment feasible in the short term.

    My best landlords were professional management companies that managed properties for large institutional investors- things were clear, professional, and everyone knew what the game was.

  12. Thanks for the replies, all.

    I’ve been the tenant whose 1-yr lease has rolled into a month-to-month tenancy and whose landlords then decide that they’re going to move into the property. They had to give me two months notice and a month’s rent in compensation. It was extremely frustrating, given that I’d only been in the place for 14 months and they’d acted like they wanted to rent it out for years and years when I moved in. Since that happened I’ve always insisted as a tenant that I have fixed term leases because I want to know that I have somewhere to live for more than just the next 2 months. So when my current lease was up and was about to turn month-to-month I insisted that I sign another 1-yr tenancy agreement. I get what Marko is saying about some people not understanding what they’re signing, but that’s on the tenant as much as the landlord. The landlord should be sure to explain to the tenant that after the year they can both decide if they want the tenancy to continue. If someone doesn’t read a lease properly, it isn’t just the landlord’s fault.

  13. Imo the only difference between a tenant and a landlord is the ownership of a property and I’ve been both. Pretty sure the label doesn’t turn a person into something they are not already, nor does this turn on fixed term or month to month as a tenancy.

    Very well said, totoro.

  14. Pretty much all fixed term tenancies I’ve used or seen revert to month to month if a new agreement is not entered into and the term has expired.

    I don’t know how a tenant can get “screwed over” with a fixed term lease given that you cannot charge the tenant the remainder of the lease price if they move out early unless you’ve made reasonable efforts to re-rent and cannot. In Victoria this is, imo, a non-issue.

    Also the landlord cannot give two months’ notice to vacate where there is a fixed term lease unless this is a term of the lease which ties them into the remainder of the term or, in some cases might require voluntary agreement to leave, usually upon payment of compensation up to the remainder of the unexpired term.

    I have also seen a number of situations in which a landlord with a non-paying tenant or one who has caused damage who are on month to months left in a very difficult and trying situation given the length of the eviction process in BC. This can be particularly problematic when it is a suite in your home and the relationship breaks down.

    As far as morals and ethics go, I don’t see how this engages the issue particularly given that both fixed term tenancies and month to month tenancies are legal and there are ethical landlords and tenants using both for various personal reasons. My tenants asked for fixed term because they wanted to be assured of place to live for a particular period. I’d agree that everyone should be aware of what they are signing.

    Imo the only difference between a tenant and a landlord is the ownership of a property and I’ve been both. Pretty sure the label doesn’t turn a person into something they are not already, nor does this turn on fixed term or month to month as a tenancy.

  15. Is it best to use a tenancy agreement with a fixed term ( 1 year) where the landlord and the tenant both agree that the tenancy must end at the end of the term?

    Yes, 100% benefit of the Landlord.

    Excellent tenant and want them to stay? Just sign another fixed term lease. Keep doing this year after year. Just because it doesn’t revert month to month does not mean tenant can’t say forever.
    Don’t like the tenant for whatever reason, they are gone with no recourse/compensation.
    Want to sell the house, they are gone with no recourse/compensation (assuming completion date is after fixed term date).

    Etc, etc, etc. all benefit of Landlord.

    I personally don’t think the fixed term lease with a fixed end date is fair to the tenants. I think if the tenant is initialing such an arrangement there should be another addendum that explains what the tenant is signing in detail and the tenant should sign that too. Often the tenant has no idea what they are initialing and the consequences.

    In fact, I think the fixed term setup is such a low ball move that all my rental properties I do the lease that reverts month to month.

    But if you have no morals and ethics yes fixed term with fixed date definitively the best way to go. I’ve seen so many landlords screw over tenants in various ways with such a setup.

  16. Hawk,

    What you’re suggesting that if the China woukd soon be in free fall that the more wealthy of its citizens would want to remove their wealth into something more stable and secure, such as housing. Yes, this is a Victoria blog on housing but I can assure you that in speaking directly to my clients from Italy, Ukraine, Russia, Columbia, Brazil, India, Poland, Spain, UK, US, Philipines, Korea, Singapore, that this is happening everywhere: the flow of money out of China.

    When businesses began to outsource labour and manufacturing to China no one had the vision of how much wealth we were creating in China. The history is debatable but the net result is a lot of money looking for a safe haven.

    What I think we’re starting to see now is something different. My theory: average middle class are putting their money together in groups of $50k (as we know the legal outflow per individuals) and packaging them together in packaged funds. When a certain level is reached, a house is purchased, with the proceeds of 20 individuals or more. Those individuals never see the house, never leave their country, and have ‘professionals’ here and around the world purchasing for them abroad. These could be potentially even be incorporated and listed on local exchanges. There’s a local name for these on our exchanges. Just my theory and may hold no weight.

  17. Is it best to use a tenancy agreement with a fixed term ( 1 year) where the landlord and the tenant both agree that the tenancy must end at the end of the term?

    I guess so, but our current tenant is in his fourth year renting from us month-to-month.

  18. totoro, yes I meant that if the landlord needs the property, a 2 months notice can be given. But oops, stand corrected on the compensation part. I was going by some guidelines from years ago, but I see they’ve changed – the rules have gotten much more lengthy!

  19. LeoM,

    ICYMI, China is failing at the moment and are in a credit debacle from last year. Where have you been ? Why are trillions flooding out of the country if things are so shit hot ? Why are their stock markets tanked almost 50% from last summer and bankruptcies are up 50% just this past month ? Keep the faith LeoM, but you’re obviously biased and blinded from your personal connections.

    Again, I never said Armageddon as you and the perma bulls keep saying I did, just that they will eventually hit a major credit squeeze that will effect the average Chinese person. No one is immune in a credit crisis or an economic business cycle downturn, especially from the second largest economy in the world.

    If this turns global then look out below, things could get very rough, very quickly.

  20. VicRenter, the landlord would have to give 2 months notice if there’s no lease. They wouldn’t have to pay another month’s rent to the tenant.

    This is incorrect. You can only give this type of notice under very limited circumstances such as landlord’s use of property (they or a close relative are moving in) or to do major construction that requires a vacancy. Even in these cases, there must be two months’ notice and the landlord must give the tenant the equivalent of one month’s rent on or before the effective date of the landlord’s notice.

    http://www2.gov.bc.ca/gov/content/housing-tenancy/residential-tenancies/ending-a-tenancy/landlord-notice/two-month-notice

  21. Hawk said, regarding Brexit: “China is most concerned on how it could effect their stock markets like the crash last August and the devaluation of the yuan, and is planning to tighten up money outflows as well as inflows.”

    Hawk, I can tell from your posts over the years that you expect China to fail ‘soon’ and you’re always looking for a reason to support your year after year predictions. But you’re wrong year after year and I can tell you’ve never paid much attention to the intricate workings of China and probably never competed with someone from China or even played chess with someone from China. China generally and Chinese people specifically are very competitive, smart, and exceptional at making lemonade when surrounded with lemons. The simple GDP measure when compared to other countries is a good measure, but it only tells half the story, the end result. The real story is the tenacity and work ethic and intelligence and ability to make the best of a difficult situation, that are the cornerstones of Chinese society. My long winded point is simply that China will weather the Brexit better than any other country; if the average GDP drops 1% in other countries, then China’s GDP might drop a half of one percent. China is still the factory for the world and Brexit won’t change that fact.

  22. AG, the UK will have to follow those laws and policies if they want to do business with the EU. But now they won’t have preferential tax treatment. They already weren’t using the Euro so it was like our NAFTA. They’ll have to spend years renegotiating trade deals with the entire world. The only area they can now dictate is immigration but even that is murky if they want to allow free flow of businesspeople.

    VicRenter, the landlord would have to give 2 months notice if there’s no lease. They wouldn’t have to pay another month’s rent to the tenant.

  23. AG this is a different agreement than standard. Usually fixed term tenancies revert to month to month automatically unless the landlord clearly specifies that the tenant must leave at the end. I always make sure that the agreement says they must leave. I’ve always ended up renewing but it’s good to have the option.

  24. “In terms of what it means for property prices – in the short term, I think there will be downward price pressure due to the uncertainty, I think there are a lot of people who might put their buying plans “on hold” until things seem more stable. At the same time, I think there might be a good number that expedite their plans to sell which would seem to point to decreases in price.”

    Agreed Janice. Most were caught off guard with Brexit and now the reality that no one knows for sure how this will play out will effect people’s decisions on major money deals, from real estate to the stock markets.

    China is most concerned on how it could effect their stock markets like the crash last August and the devaluation of the yuan, and is planning to tighten up money outflows as well as inflows. Interesting to note since December the money outflows have decreased from $150 billion a month to $40 billion last month. That’s a major decline.

  25. @ Vicbot

    Brexit was really about sovereignty. Imagine having a collection of US and Mexican bureaucrats determining Canadian laws, border rules, trade policy etc. That would be the equivalent in North America.

  26. @ VicRenter

    Yes, make sure he does a fixed term tenancy. Also make sure that the tenant initials the box confirming that on the standard rental form.

    In the current rental market, there’s no reason for a landlord to do anything but a fixed term tenancy.

  27. A question on behalf of a friend who’s the new owner of a house with a rental suite:

    Is it best to use a tenancy agreement with a fixed term ( 1 year) where the landlord and the tenant both agree that the tenancy must end at the end of the term? And then if the tenant is good and wants to stay they can sign another one year fixed term? This would appear on the surface to be better than getting into a situation where, after the 1st year, the tenancy becomes month-to-month and the tenant could therefore only be asked to leave if the landlord is going to use the space for family or sell the house. In that scenario I think that the landlord would also have to pay the equivalent of one month’s rent as compensation to get the tenant out, even if family was moving in.

    Thoughts?

  28. Leaving the EU will make doing business in Britain more expensive because they’ll have to deal with trade barriers – extra taxes, tariffs, etc. It also leaves a lot of uncertainty with employees working in various countries, and all sorts of gov’t reps are going to be paid big bucks negotiating a way out over the next few years. A big waste of time and effort, drag on productivity, and businesses won’t invest or hire people in uncertain times (added to that, Scotland wants to leave the UK now).

    It doesn’t really gain Britain anything because the EU is their biggest trading partner and they’ll have to follow the same standards and rules – it’s just that now, it’s going to be more expensive. The EU needs to be improved, but it needed to happen with the cooperation of all involved, and not decided by voters that didn’t understand the reason for these trade agreements.

  29. The reality is Brexit will have zero impact on much of anything other than British taxpayers not financing the lavish lifestyles of a bunch of unelected bureaucrats in Brussels.

  30. My prediction: Brexit will turn out to be no big deal in terms of the global economy. Investors will buy up stocks at a discount early next week and stock prices will soon return to “normal.”

    Remember when Greece was in the news constantly and a segment of the HHV community was using it to help rationalize their negative outlooks on local and national real estate? How did that turn out?

  31. On Brexit – really difficult to determine the exact impacts as the reality of it unravels. It is an economic shock, and its likely to be substantial, as it puts the whole of the EU on some fairly uncertain territory. Personally, I think the impact will be bigger than 9/11 and bigger than 2008 – and think that this cements in low interest rates for the foreseeable future. Certain aspects of Brexit seem very foreboding – however, once again, I do think Canada will out perform in the wake of the fall out. In terms of what it means for property prices – in the short term, I think there will be downward price pressure due to the uncertainty, I think there are a lot of people who might put their buying plans “on hold” until things seem more stable. At the same time, I think there might be a good number that expedite their plans to sell which would seem to point to decreases in price.

  32. So far this month we are at 226 house sales in the core at a median price of $742,500.

    Here are the month to month count of house sales in the core for this year.

    Month Sales, Number of
    Jan 122
    Feb 228
    Mar 318
    Apr 377
    May 340
    Jun 226 projected to be 300

    The last time we reached this projected number of house sales was in June 2007

    And here are the median prices for houses in the core so far this year.

    Month Sale Price, Median
    Jan $655,500
    Feb $681,500
    Mar $740,000
    Apr $758,000
    May $760,450
    Jun $742,500

    So far this month we have had 296 new listings and the projection is for this month to reach 350. Coincidentally it was also in June 2007 when we had one of our lowest levels of new listings at 336

    And this is what happened in 2007 for house prices in the core that year.

    Month 2007
    Jan $474,250
    Feb $519,500
    Mar $522,0000
    Apr $535,000
    May $535,000
    Jun $523,500
    Jul $540,000
    Aug $551,000
    Sep $552,500
    Oct $560,096
    Nov $540,000
    Dec $584,000

  33. When I look at the median sales to assessment ratios in May for Gordon Head the majority of the sales fell within a narrow sales to assessment range from 128% to 136% with the median or typical home selling at 134% of its assessed value. And so far this June the predominate range for Gordon Head has been between 124% to 144% with the median at $134%

    The market for houses in Gordon Head doesn’t seemed to have pulled back but I don’t think anyone has suggested that it has either.

  34. This is to update an earlier post in which I compared a house sold on Del Monte in Cordova Bay to a listing near Mt. Doug on 1537 Winchester. Well, I needn’t have wondered why Winchester hadn’t sold: it just came up pending at $1.025M! This is much higher than asking of $899K, and it was only assessed at $642K. From that, it doesn’t seem like prices in Gordon Head are pulling back at all.

  35. “CNN, the ratings whore and journalistic laughing stock, is your trusted source?”

    What’s yours Introtwerp, the Gordon Head Gazette ?

  36. Forbes and CNN state China is “rife” with corruption…

    CNN, the ratings whore and journalistic laughing stock, is your trusted source?

    This, on the heels of your touting experts on webinars…

  37. “One thing to keep in mind – if the system was all “above board” in China, you wouldn’t have so many people trying to move their assets out. ”

    Exactly Vicbot. Nor would you have the China government mounting a very public, massive, local and international anti-corruption drive for just a few bad apples. It’s rampant and out of control, just like the money laundering and shadow flipping in Vancouver real estate.

  38. Thanks gwac, now I can’t get a Negroni, a panatela and a leather club chair out of my mind and it’s only the morning.

    Heck, it’s 4:00 somewhere in the world!

  39. Marko, bank financing isn’t a game where the appraiser has to guess what the offer is. The appraiser is aware of the purchase price and it is MANDATORY that he/she comment on the last three years of listing and sales of the property. In fact if he/she obtains the amount of the offer from you, they should be writing your name in the report as the source of the information and if they have or have not reviewed the contract to purchase.

    Were the comparable sales used by the appraiser recent, would the buyer have considered them as alternative properties and did they sell at fair market value? Some might be similar in most physical aspects to the subject property, some might be inferior and some might be superior but they all should be comparable sales suitable for sales analysis.

    The problem that you are having is one of definitions. A mortgage appraisal is looking back over the last 90 days of the market at past sales to establish a current market value using market transactions as evidence. And some banks have the regulation that the appraiser can not value the property any higher than the highest sale price exhibited by the comparable properties. But because of the hotness of the market those properties may have been sold in under 9 days. Your buyer may have never had a chance to bid on those alternative properties or was outbid on them and they are not going to allow that to happen to them again and they bid more aggressively than what the past sales support. You and your clients are looking forward into the market.

    But a mortgage appraiser can not do that because that is a prospective appraisal to determine an anticipated sale price for that one property. The bank’s regulations do not accept a prospective appraisal what the bank’s want is an appraisal supported by past sales.

    Now some mortgage appraisers may bend the rules a little bit if the offer is within an acceptable range. But if the offer is outside of a reasonable range based on recent sales of comparable properties then your client is going to have to come up with a larger down payment.

    Some of my work is to do with appraisers that have been over generous with that market value range and have only relied on information such as building contracts supplied by the agent without testing those sales against the market. And the banks and the insurers have lost money because they relied on a faulty appraisal. That money is recoverable by suing the appraiser. Usually those are for a difference of a hundred grand or more. For the smaller recurring infractions the lender or insurer will just strike them off their list of approved appraisers.

    I have also been brought in as a second appraiser and at times I have demonstrated a higher value is supportable by market conditions. But I get paid a lot more than the original appraiser and I am given more time to complete the assignment because I have to do a lot more research including calling the agents, driving by the comparable sales or re-viewing aerial photos. I will review hundreds of sales not just three.

  40. One thing to keep in mind – if the system was all “above board” in China, you wouldn’t have so many people trying to move their assets out. That’s partly why my parents left their home country as well. But they came with nothing and built a business.

  41. I’ve done a few off MLS® deals this year and the appraisals on those deals have been off in my opinion; I am sure Jack wasn’t behind any of them. Reason they are off is appraiser doesn’t know the asking price nor the contract price. On two deals we had to call in a second appraiser.

    Biggest issue I find is I don’t think the appraiser has physically been through the comparable properties, or even driven past the properties, because if they had they wouldn’t have used those comparables. I had one where we had a nice home on a residential street and a comparable in the appraisal was a similar house but right up against a 4-story apartment building with no privacy as a result, close to a busy road.

    On MLS® deals the appraisers obtains the accepted offer price and those appraisals this year have been +/- $20,000 of the accepted offer.

    Go figure. The appraiser knowing the accepted offer price just drives me nuts. Human nature tells me that number is sitting in the back of their head the entire time they are putting the appraisal together.

    From Dubrovnik! I’ll be back in two weeks but looks like I’ll be out of work, down to three listings and soon to be two. A few listings I thought had no hope of selling sold while I’ve been gone.

  42. You are not going to get into the Union Club just because you bought a 2.2 million dollar home.

    Besides it isn’t the same without the cigars.

  43. Appraising the Pemberton mansion would be challenging. Not because it is a big house in a prestigious area but because it is comprised of two separate Titles. Two separate strata properties that have been combined to form one large home. There could be a potential problem with the other owners in the strata development if you wanted to separate the units. You would have to read through the strata minutes and bylaws to make sure that the other strata owners will allow you to separate the home into two units?

    Many moons ago, I ran across this problem when a former Lieutenant Governor had taken two top floor condominiums and combined them as one top floor penthouse in the Songhees. A massive 4,000 square foot home was formed. Obviously when he went to sell, he wanted to recoup the cost of purchasing two separate condominiums. But prospective purchasers were only willing to pay what they saw which was one large condominium.

    In the end it would be necessary to perform several valuations to determine the highest and best use of the property. The value of the property as one large home and the value of two separate condominiums less the cost to bring the hypothetically separated units back to individual condos less developers and entrepreneurial profit assuming the construction would be completed in 6 months. I never got the gig to do the appraisal because when I submitted my bid for the job, the bank blew a gasket as they only wanted to pay $200 for an appraisal back then.

    I suppose a deep pocket buyer could just wing it with a Hail Mary offer. Risking hundreds of thousands of dollars or they could hire an appraiser for a thousand or so to do thorough valuations under different scenarios. That would likely mean the prospective buyer would have to have a clause in the contract to purchase as to a satisfactory appraisal being obtained. That’s not likely to happen in this market.

    NOTE Years later that condo was separated into two units and sold off separately as there was a stronger demand for two smaller 2000 square foot penthouses than one large 4,000 square foot. penthouse.

  44. Whatever I am sure someone will pay 2.2m to roam around a 7200 square feet house and say he lives in a mansion in Rockland to all his buddies at the Union Club.

  45. Only country who has not lost its marbles is Canada. This is why foreigners buy our property and will continue to. WTF UK. Basically voted to be poorer so they can take back their country from what???

  46. Gwac,
    I thought you said Rockland sold to the lone bidder ? Jacking the price up is another sign the greed is out of control in this town.

  47. Vicinvestor,

    I made no prediction on Brexit other than it could go either way. Let’s not put words in my mouth again. I have a few gold stocks that are doing rock solid thanks for asking, plus a couple of equity stocks that are holding up fine. I guess your stocks are down today. Might just be a one off day, but could be a catalyst for a global recession long term.

  48. LeoM,
    Great to see you’re connected to high places but what else is a commie state owned bank person going to say ?

    Anti-graft body finds irregularities at China Construction Bank

    “An inspection by the Central Commission for Discipline Inspection found 336 people responsible in cases including disciplinary violations, the commission said on its website. That phrase is a Communist Party euphemism for graft.”

    http://www.reuters.com/article/us-china-corruption-ccb-idUSKCN0XO1EC

    Doesn’t look like China bankers bad debts are getting any better either.

    Chinese Bankruptcies Surge More Than 50% In Q1; Worse To Come

    http://www.zerohedge.com/news/2016-06-23/chinese-bankruptcies-surge-more-50-q1-worse-come

  49. Canada 5 year yield is down 13% this am to 0.60%.

    Last nights news is meaningless for now until we have a handle on which businesses, insurance, and/or finance may leave. In the meantime Brexit won’t happen until 2020 as per Leave strategists.

  50. The historic Rockland mansion that went up for auction this week is still on the market — and listed for $202,000 more.

    From today’s TC: The price for 906 Pemberton Rd. rose to $2.2 million on Thursday morning, just hours after an auction for the property was cancelled after just one bidder showed up.

    The new price is what the owners had originally wanted, said real estate agent Andy Stephenson, of Sotheby’s International Realty Canada.

    http://www.timescolonist.com/news/local/rockland-mansion-s-price-goes-up-202-000-after-failed-auction-1.2286579

  51. LeoM

    China is a funny place and for the most part the dealings we have had over the last 15 years have been with people who share the same value system with the civilized world. There are a few rotten apples, but they get weeded out fast and people will avoid them unless it is a necessity to deal with them.

    In terms of corruption and kickbacks and handouts, it is much much worst in other developing areas such as Vietnam, India, SE Asia, Africa and in particular the Middle East.

    As BC has always has a connection with Asia going back to days of the railroads in the 1800s; the fundraising done by the Chinese Diaspora in BC for the founding father of modern China; Dr. Sun Yet Sen in the 1900s, and the near mythical status of Dr. Berthume, a Canadian doctor who saved countless lives during the war, Canada has always been endeared into hearts of Chinese. Google which world leader showed up on the last day of PM Chretian’s of work 🙂

    The issue which affects the way we view the Chinese is the sheer number of nouveau rich who want to shift “assets” to Canada and as a result; has contributed (depending on your opinion) to the price appreciation of real estate in certain Canadian markets. If I was one of them, I would do the same thing.

    What could be done better, is the government of Canada should better harness the potential of these new arrivals. If I was building a country, would I want a 3rd world refugee or an entrepreneur who has millions of dollars in assets and not afraid to take risks? With the sheer numbers of people who want to diversify and an equivalent capital base to match, why wouldn’t you want to use those resources to revitalize certain areas of industries?

    Here’s a thought…clean burning coal we could sell to Chinese as opposed to getting from Indonesia. Pulp and paper from sustainable resources … Finished wood products (e.g. they use very little wood in construction) for the building of homes…we have done a horrible job in exporting anything other than oil to the USA! Look at Germany, they consistently have a large trade surplus with China, why not Canada?

    My final thoughts are China and Canada are two very compatible partners. But in a relationship that is successful, one needs to understand the expectations from each other.

  52. Brexit will definitely shake the stock markets, at least for the short term. However, the effect, if any, on the housing market in Canada is hard to predict. It’s possible that rates go even lower & stay low longer, thus supporting current housing prices.

    @Hawk: so what if you have some physical gold or gold stocks? You will still take a beating on your equities. Plus, you make it sound like you predicted Brexit. It was basically a coin toss that was impossible to predict.

  53. Hawk, I just called an old friend in Zhengzhou at the CCB -China Construction Bank Corporation- one of the big 4 banks in China. She asked to tell you politely that your full of bovine fertilizer. The banks are doing fine, their profits are fine and their stock fluctuates just like western banks and their clients are paying their loans and socking away buckets of cash in their short term accounts. Building is slowing down a bit but things are still busy and everyone is working hard.

  54. LeoM, it’s true that gifts are very common, which had positive intentions in the past, but unfortunately the definition has been stretched quite widely to the point that it’s negatively affecting the way businesses can operate in a world economy, and the safety of factory workers. (Otherwise we’d have to assume that CNN & Forbes are making this up?)

    I also personally know a few people that have done business in China, and unfortunately, one guy got unwanted gifts like prostitutes being “delivered” to his hotel door. An engineer had a tough time enforcing quality control in a industrial plant because unqualified people had been hired as “favours” and this had such bad effects on safety that workers lost their lives because of it. (this just doesn’t happen in Canada nowadays)

    This corruption also negatively affects Canadian real estate markets. (David Mulroney, former Canadian ambassador to China, even said China was the world’s biggest exporter of illegal funds, probably partly due to population!)

    http://www.theglobeandmail.com/news/british-columbia/suspicious-transactions-reported-by-bc-banks-tied-mostly-to-china/article27640202/
    “Vancouver-area banks reported suspicious transactions involving Mainland Chinese clients 17 times more often than those tied to citizens of any other outside country in recent years”

    http://www.vancouversun.com/news/alleges+Metro+Vancouver+homes+were+part+scheme+launder+money+embezzled+China/10926774/story.html
    “U.S. alleges Metro Vancouver homes were part of scheme to launder money embezzled in China”

    http://www.scmp.com/comment/blogs/article/1937267/stampede-inside-story-vancouvers-wildest-property-deal-gone-7200
    An SCMP investigation reveals the obscure transactions behind a commercial real estate frenzy, including a two-hour stampede by investors desperate to pay C$60m for a site valued at C$16m. Then, a month after taking ownership, they resold it for C$68m

    http://www.vancouversun.com/business/former+agents+battle+richmond+realty+agency+over+commission+fees/11779815/story.html
    New Coast Realty shadow flipping

    That’s why the US, Canada’s FinTrac, and the Chinese government trying to enforce the rule of law to prevent it.

  55. Time for you to open your eyes and read the facts LeoM. Forbes and CNN state China is “rife” with corruption , not a “few”, more BS. Keep sticking your head in the sand.

    Brits want out, not good for the EU. The DOW futures down 594 points, gonna be ugly tomorrow. Glad gold is up like $80 and I got some.

  56. @Entomologist Whoa. Did not expect that. Will be interesting to see the shit hit the fan in the markets. Can’t see that it will affect the housing market here but who knows.

  57. Spent the last couple days in Vancouver. Market obviously out of reach for normal people and those workers will be leaving Vancouver when it comes time to start a family. This will be a problem for employers in the region (and already is) who will be able to retain people in their 20s when they are OK to rent a little apartment somewhere, but who will suffer from high turnover when those people leave to start families elsewhere. Talent is going to start evaporating because even highly paid professions cannot afford to buy into a SFH within any reasonable commuting distance.

  58. For Hawk and others who keep talking of the fragility of the global economy – looks like the Brits are voting to heave the EU overboard. The pound is dropping like a rock and the EU’s future will very soon be in question. This may be the shock you were looking for.

  59. Hawk, there are 1.4BILLION people in China and several million businesses. Just because a few corruption cases are exposed each year does not make it rampant. The percentage of corruption from your posts about China equate to about one-one hundredth of one percent. Time for you to study simple math so you can realize when you’re exaggerating by orders of magnitude.

  60. LeoM,

    You should email the CNN writer and talk to them and tell them they are wrong. Maybe you were taking bribes and didn’t realize it or don’t want to admit it. Since the major money laundering problem in Vancouver is coming from that country it the article sounds about right to me.

    “Occasionally” sounds like complete BS. Fraud is rampant in China, all you have to do is use google.

    I see Saanich East hit a high for the last few months at 9o listings. Looks like inventory in one of the hottest areas of town has formed a base and beginning to build.

  61. Hawk, not everyone in every country conducts business the way the Americans do. Read the old 1958 book ‘The Ugly American’ for a bit of ageless insight into the corrupt American ways.

    In China they have a centuries old hierarchical system of business and personalized networks of influence between acquaintances, friends, colleagues, clients, and business associates. It’s called Guanxi; 关系. Guanxi is a major reason why the thousands of Chinese businesses have thrived for the past three decades. If a person or company in China does not embrace Guanxi then they will not be successful. Guanxi is not about corruption and bribes, it is based on Confucianism. Wiki says this:
    ” Guanxi largely originates from the Chinese social philosophy of Confucianism, which stresses the importance of associating oneself with others in a hierarchical manner, in order to maintain social and economic order. Particularly, there is an emphasis on implicit mutual obligations, reciprocity, and trust, which are the foundations of guanxi and guanxi networks.

    Guanxi also has a major influence on the management of businesses based in China, and businesses owned by overseas Chinese in Southeast Asia (the latter is known as the bamboo network).”

    Of course there will occasionally be a corrupt person who uses Guanxi as bribes or pay-offs, but most business people would lose face if they were dishonest in China, and losing face is akin to public castration in China.

    I recall NumberHack mentioned he works in China; maybe he can add some current insight. In my dealing with Chinese business people years ago, I respected Guanxi and enjoyed many business meals and bags of good tea as gratitude, but never once was a bribe offered or proposed.

  62. My perception from listing-watching in the $600-800K list price range (specifically in the core and north) is that the market has definitely cooled off over the last couple of weeks. There are still few new listings, but there is an increase in the number that are not selling immediately or at least are not selling for an increase over recent prices.

    However, certain properties are still fetching a premium. For example a 1900 sq.ft. rancher on 4971 Del Monte listed $800K/sold $950K. This was recently renovated and on a 10,000 sq. ft. lot, but it was only assessed at $662K, and this has not been a premium neighbourhood in the past.

    On the other hand, 1537 Winchester Rd. near Mt. Doug is on a similar-sized lot and is a 3000 sq.ft. house listed at $899K (assessed $642K). It has been for sale since June 8th.

    The obvious difference is that Del Monte could appeal to retirees and is finished to a higher standard. Winchester is more of a family home, and maybe a family is locked out of the over $800K price range. There is also no suite potential with either home.

    Any opinions? Any other list/sold houses of note? The Rockland house is a curiosity, but it does not represent “average” sales activity, which is what I am interested in (unless I win the lottery).

  63. Interesting insight via CNN on how the foreigners operate in the business world. Can only imagine how they do things in Vancouver real estate.

    In China, ‘everyone is guilty of corruption’

    “Your business can’t survive a day if you are not corrupt,” he told me.
    He has to smooth every step of his business with gifts or outright bribes: From obtaining the business license, to entertaining potential clients, to receiving 15% of the tax deduction that a high-tech company is entitled to. He estimates that 3% to 5 % of operating costs goes to guanxi.”

    http://www.cnn.com/2013/10/23/opinion/china-corrution-lijia-zhang/index.html

  64. Totally agree with you Vic&Van. There may be only a dozen buyers for a home like the Grierson Mansion at any time, and they don’t have to go through the spectacle of a public auction to get a home.

    Compare that to a buyer looking in the range of a Gordon head home and there would be a least a hundred prospective buyers.

    If you’re buying a 2 million dollar home you probably don’t want your face pasted on every newspaper. Someone might recognize you and want their money back.

  65. I think part of the problem is that the Rockland house is a nice mansion in a good area.

    I am sure that if the item being auctioned off was a generic Gordon Head box or a moldy South Oak Bay shack or a Hillside junker, I’m sure there would have been a frenzied and highly competitive auction with the result going far ahead of any reserve bid.

  66. In fairness to Sotheby’s this was not done well. The agent should have hired Lunds or Kilshaws to conduct the auction. An independent third party that are licensed auctioneers. They would have brought much needed experience on how to conduct a successful auction.

    Otherwise it’s just a listing agent with a gavel standing in front of empty seats with as much credibility as someone selling time shares in Mexico.

  67. Rockland house best to take off the market for awhile. I doubt after this it will attract top $$$.

  68. re: the Rockland auction. Even if it’s a strata lot, it’s a well-preserved 7200-sq-ft house in a great location. (Compare it to the $1.2M tear-down on Bushby St that sold recently – the whole place needed to be redone – kitchen, baths, walls, floors, ceilings, mold, etc) Maybe it didn’t attract bidders because people don’t want to be the “first in Canada” to try buying at an auction – too risky.

    In any case, the optics on it aren’t good. It gives the impression that they can’t sell a fancy mansion in the heart of Victoria. They “got some splainin to do”

  69. In fairness to Southeby’s, we should give them credit for hyping up a rare, transparent, fair, open auction process that should be used more often in British Columbia. A proper auction is better for both the buyer and the seller. Too often, I’ve seen shady “bidding wars” where the information being communicated by the realtor wasn’t correct and the potential buyers and once even the seller were being kept in the dark. A month ago, I gave an offer (in Vancouver) at a particularly shady “bidding war” where the property was listed for only 2 hours, the realtor took one round of unconditional bids and had the property sold at a suspiciously low price. It smelled of someone getting a kick back to be frank but because it was not an open auction, I had no idea what went on.

    With a visible auction like what Sotheby’s did, the market information is there for all to see. I know what someone else is bidding so I can adjust my offer and so does the seller. This is standard practice in countries such as the UK and Australia. I had hoped this auction would have succeeded so as to encourage other realtors and sellers to go down this route.

    I am saddened the auction failed but that’s because the reserve bid was likely too high.

    I saw that house and really liked it (it is beautiful) but the five townhouses right behind it along with the stratification of the property reduced the appeal.

    In terms of Rockland itself, it seems the consensus on this site is that this neighbourhood has some really magnificant homes and is super convenient to downtown. Of course, the proximity to downtown is a double edged sword in that you get the homeless & tourists along with the conveniences/proximity to employment.

  70. Low sales. Why? No inventory – what’s on the market isn’t appealing, it feels like “left overs”. Low listings. Why? Fear. Because there’s no inventory, and a person has to live somewhere – looking out the window and seeing nothing you’d want to move to at the price you’d get, along with a healthy fear that by the time you found something you like, prices will have moved up and you’d be left further behind. Further, fear that you sell before the peak, that you fail to maximize your profit, and so you hold off. It would be interesting to see what the renovation numbers look like – after all if you can’t sell and buy what you want, the alternative is to stay and renovate to what you want.

    Also of interest – how many properties are being bought as primary residences versus revenue/investment properties? And how many sales are sales of primary residences versus investment properties? I imagine this ratio could be fairly informative as to where the market is at as the decision for an investor is somewhat different than the decision for a resident.

  71. “Lack of quality Inventory is also having an impact on sales.”

    More excuses, the market’s popped $150K in last year or less on record sales and your whining about quality ? Lots of nice places out there but the average joe is obviously priced out, that’s the bottom line.

    Sotheby’s sure laid one stinky egg after hyping up the auction, regardless wether the sale goes through or not. They’ve been pumping Victoria internationally for months now as the place to be for filthy money, guess it isn’t after all. That place would sell for triple in Vancouver.

  72. New listings for houses in the core also seem to have peaked in April at 415. They dipped in May to 343 and I project that June will be lower still near that of February when there was 300 new house listings in the core. And that is low for new listings relative to the last decade with June projections around those achieved in 2014 and 2013.

    Low sales and low listings. Only in real estate would this be considered a “hot” market. If you were selling cars you would be letting staff go.

  73. Lack of quality Inventory is also having an impact on sales. Until Inventory shows signs of going up for a few months, you cannot call anything.
    Inventory is still creeping down at 2340.

  74. The stand alone house market in the core appears to have peaked in sales activity in April of this year with sales in May lower and the projection still lower for June sales. June sales projected at less than what was achieved in March of this year.

    The peak is a month earlier than typical. The exception, in the last decade, being another “hot” market back in 2007 when house sales in the core didn’t peak until June.

    And we all know what climaxing too soon means. As it leaves you wondering if this is the new paradigm?

  75. He wants back in to the housing market after a major crash. He has explained numerous times about how he has timed the market with his buys and sells.

  76. What “personal gain” could Hawk derive from scaring people? Maybe they should be scared, or at least considering all the possibilities before embarking on the biggest financial transaction of their life. Besides, I don’t think him presenting the bear side of things, no matter how doom and gloom it might appear to you, will scare anyone that really wants to buy a house into not buying a house. I’ve tried talking my bestfriend out of very extravagant and irresponsible purchases and it doesn’t matter how illogical it is, she always does what she wants anyways, ’cause at the end of the day, she wants what she wants, no matter what!

    Personally, I think it’s good that people read about the different perspectives on the housing market. I think it’s ALL relevant, useful, and worth considering. And when it’s not, well I just skip it. (I admit to doing the TLDR whenever I see a post about the Chinese economy. Just bores me to tears lol) But if all we ever had were people agreeing with each other, there would be about 10 comments only per blog post, and none of the entertaining zingers flying back and forth. 😉

  77. This is an interesting article about a $3 million sale in Langley of a supposedly-known grow-op house: http://www.theprovince.com/business/alta+couple+sues+over+purchase+langley+home+with/12004499/story.html

    “They say that the defendants denied access to their agent to certain areas of the property and knew access had been denied to an appraiser of the property. They’re seeking to have the court declare that the contract is void and to have their $100,000 deposit returned.”

  78. Lots of other shacks have sold at over twice assesment and you all butt slap each other how it was such great “value” in a crackhead neighborhood off Hillside.

    Rockland is one of the most desirable hoods in town. You pumpers all sound scared shitless the bottom is about to fall out.

  79. The auction is overpriced. Assessment is just $895k & it’s a strata lot. Why would anyone pay $1.1 million over assessment, esp with potential need for repairs.

    @Hawk: the auction failure means nothing. The market is still scorching. Stop making predictions & conclusions. If you’re such a smart investor, let’s hear where we should park our $$$ in this uncertain world.

  80. Re: auction
    They must have been fishing for Maclure lovers with more money than brains. It was fairly obvious to me it would be a bust with a reserve bid around 2M. What most probably don’t understand is the lot had already been carved up into numerous strata with incredibly high monthly fees. There was something like 4 neighbours right on top of your back porch. Not to mention almost 100 years of deferred maintenance.

    I’m not saying it isn’t worth 2+ to some rich historian, but today it wasn’t 🙂

  81. Your bashing and postings are not economic facts that predict the housing market. They are ramblings from a guy who sold way too early.

    The auction was called off.

  82. You sure spend a lot of time trying to slag me on where I live, and denying the real economic facts for someone who doesn’t care about the coming price drops. Guess your $2.1 million is “different” from the Rockland $2 million.

    Won’t be surprised if the bidder yanks his bid when he finds out he was the only sucker. The rest of the crowd was a bunch of phonies there to mooch the free booze and cheese. What a farce !

  83. Lol. Hawk the air must be horrible in that apartment. I will explain one more time. I do not care about whether prices go up or down. The houses are going to my kids. What I care about is someone for their own personal gain trying to scare people.

    People need to look at their own personally finances and determine whether they can afford to buy. Trying to time this market is a fools game.

  84. You sound seriously concerned your $2.1 million isn’t an accurate assesment of your real wealth Gwac. It’s been promoted for over a month now and one bidder tells the tale. The bust may well be closer than first thought.

  85. Hawk

    So because a seller could not sell their over priced house the normal way and tried something even more bizarre. This is causing you to call a top????

  86. CHEK just hyped up the Rockland live auction on “live TV” then delayed showing it as it was a total bust ! One bidder only ! LOL

    CHEK gets a major FAIL trying to pump the market up at the top of news. What a fricking joke. Wake up people , the top is in, take your money and run !

  87. Cadboro how the hell do you tell if someone is living in a house. It’s big brother.
    Snoop on their Hydro
    Daily checks
    Neighbours ratting each other out.
    Sign into your home electronically

    It is stupid and ridiculous to go to this length. Cannot be implemented effectively. Not against taxing non residents but come on find a better way.

  88. Despite the “Trumpian” rhetoric in the URL, this is actually a pretty good summary of the situation in Vancouver.

    http://www.makevancouvergreatagain.org/

    Of note, Shanghai requires that one pays local income taxes for at least 5 consecutive years before being granted access to their residential real estate market. Imagine that.

    Today’s news about increased property tax on unoccupied houses that go up $1,000,000 in one year will prove to be expensive to set up and virtually impossible to monitor effectively. Good luck on keeping capital chasing 25% unleveraged returns out of the market by charging them an additional 2% in tax.

    The problem won’t stop getting bigger until it hurts to make it bigger.

    Either externally or internally catalyzed, I think we will see a breaking point on Vancouver in the next year.

  89. FYI Mike, all levels of New York real estate have been down lately but the luxury market is taking a pounding. Can’t happen here though, ever. 😉

    Desperate Sellers Resort To Dramatic Price Cuts In Manhattan’s Luxury Real Estate Market

    “The luxury market is bloated and choking with a lot of over-priced inventory, but once sellers capitulate and adjust to realistic price levels, the market moves. Not coincidentally, the May and June weeks that showed the strongest activity of the year were also those that saw prices slashed” said Donnan Olshan, president at Olshan.”

    http://www.zerohedge.com/news/2016-06-22/desperate-sellers-resort-dramatic-price-cuts-manhattans-luxury-real-estate-market

  90. Mike, what you don’t grasp is this isn’t the stock market where you can click a mouse to buy and dump instantly if things don’t work out and write the loss off as a capital loss.It’s people spending a half million to a million or more on something that could decimate their financial future.

    You ignore all the fundamentals of real costs for real families, only portraying every buyer as a rich retiree from Alberta or someone from Asia or Vancouver. With 70% still buying from here and when the banks tighten credit, and foreigners get shut out, I wonder what the result will be when half the 70% can’t qualify ?

    Why is it all the financial people in Canada and internationally are calling for danger but you and the pumper gang say “keep on loading up kids”, while you have zero credentials ?

    Perma bulls like you will be the ones crying when it finally unravels. You are part of the HGTV cult and/or connected to the industry sucking folks in that nothing ever goes down and that’s despicable.

  91. Hawk, you still haven’t quite grasped that when everyone’s bearish and calling tops as per your list below, is not the time to get bearish. The time to start getting bearish is of course when you have trouble finding anyone who is bearish.

  92. gwac why don’t you think the empty home tax is not well thought out? I think it should be implemented immediately as well as a new tax on non-resident purchases. There are homegrown ‘speculators’ allowing homes to sit empty so that they can be flipped a few months after purchase, it’s not just foreign purchases putting pressure on Vancouver’s rental market. Lots of short term renting going on too, with evictions on sale dates. At least let the city of Vancouver start to pull in some extra money from this game. They could use it to help rebate property transfer tax for first time home buyer’s further than the current rates, offer property tax discounts to landlords who offer up additional housing supply ie: convert basements or garages into suites, or build more affordable rentals. Looks like a step in the right direction to me, I’m glad at least 1 mayor in BC has the balls to start addressing this.

  93. @gwac thanks for the chuckle:
    “Big Brother in Vancouver will be looking in windows daily to make sure u r home. Not well thought out I think. Just charge double or triple the property tax for non residents and be done with it. Florida does it.”

    I agree that it is far too difficult to determine if someone is living in a place for the appropriate length of time. All that will do is create a new job opportunity for people to ‘live’ in a house the required 60 or 90 days or whatever is arbitrarily selected. Non-residence makes sense. Maybe only 1 residence claim per resident could also be considered since so many seem to be investing locally.

  94. “This is a bubble. A very big bubble. And it is going to end in tears.” – Capital Economics

    “There are reasons to believe maybe we’ve hit the peak in those two markets,” – Gregory Klump, chief economist for CREA

    “This is a very significant crisis,” Trudeau told reporters

    “We just took our foot off the gas the last couple quarters in terms of mortgage growth for the reasons I cited, in terms of Vancouver and Toronto.” – BNS CEO

    “Canadian Bank Chiefs Put Mansions On Sale After Warnings”

    Nope,nothing wrong with this picture, keep on buying fools. Never since 1981 has this become a national crisis.

    Enjoy your Timmies Gwac, best drop off a resume while you’re there, you may need that second job. 😉

  95. “The one I watched was done by a global macroeconomic expert not some tool who offers nothing on here”

    A tool who adds nothing oh what I could add to that. But Its Tim Hortons time….

  96. The one I watched was done by a global macroeconomic expert

    He was an expert? Oh, I see. Well then. Case closed, I guess.

  97. “There we have it, folks. His global macroeconomic predictions align with a webinar he watched.”

    Webinars are excellent educational tools. The one I watched was done by a global macroeconomic expert not some tool who offers nothing on here.

  98. I’m just giving you a hard time Jack. I’ve worked with many appraisers over the years, and I understand the personality traits your field tends to attract. To your credit, you have a sense of humor.

  99. “Looking at the latest RBC #s, it still wouldn’t surprise me if we see close to a double over the rest of this cycle (next 6-7yrs). One has to remember it wasn’t so long ago that Vic & Van prices were neck and neck – not that I necessarily want it to happen here as there will be many disadvantages to young families having to move away to start off.”

    So whose going to rent your “transitional housing” investment Mike, when rents have to triple and welfare rates are still near where they are ? Not to mention the near zero wage growth and mortgage payments at higher interest rates of even two points would be like $7000 for a bungalow based on your predictions.

    Your vision of Victoria is fricking scary, as there will be no one left to run the city, no families, no community like what’s happening in Vancouver. Victoria is nice but not that nice.

    The parabolic blow off top in process will take care of your neck and neck theory. The pumpers here still can’t see the elephant in the room which is even scarier.

  100. I would say that 80% of my ongoing educational requirements are done by webinars rather than being at a physical event.

  101. Michael, being a raging bull is your shtick not mine.

    I don’t find it necessary to be all one way or the other. There are some good deals and there are some bad deals in the real estate market. It doesn’t have to be all one way.

    As I have said in the past, I have worked with several clients this year on buying properties in the city. Some were condos but not all. I gave them options on what price to pay depending on the circumstances and I sat with them through the court proceedings advising them on what offer they should present to the court as their second bid.

    I do a deep background research on the properties that they are interested in and advise them on what is and what is not market value. In one case I suggested a bully bid because I knew the property would not get multiple bids and in another I suggested that an offer 5% over asking was reasonable.

    It all depends on the property.

    Just a couple of weeks ago, I gave a freebee to anyone that wanted a good deal on a house on acreage. That property just sold for $215,000 under assessed value.

  102. “We had INFO spewing stuff for years and that did not work and now we have you”.

    “Info” was the perfect indicator. Anyone that purchased in Victoria when she was most strident in her predictions of housing doom and “tanking” sales has done very well indeed.

  103. In case you missed it, the business world relies on webinars to conduct meetings now – TEDx is an example of a popular educational one, but it happens all the time in board meetings or for corporate training.

  104. I was watching a webinar on the weekend which backed up my theory.

    There we have it, folks. His global macroeconomic predictions align with a webinar he watched.

  105. VicRenter, a similar thought caught my attention. If the property on Heron had been listed at 3% more than it sold for would the owners have received the same price as it did in the delayed offer/blind auction?

    That house may have languished on the market at a list price of $1,250,000 and perhaps the listing would have been eventually cancelled. A property that is bigger in house and lot size to that of Heron has been listed for 26 days now at $1,175,000 without an accepted offer.

    I suspect if the BC government were to bring in a fair listing price requirement for real estate and restrict the use of delayed offer/ blind auctions that would bring some rationality to the marketplace.

    The government protected sellers from shadow flipping why not some protection for buyers?

  106. So how many did you buy Jack? 🙂

    Not so sure your March comments were ragingly bullish…

    I was speaking with a lady yesterday who is nearing retirement and she now has 18 investment condos in Vancouver and Victoria. This is where the big increase of inventory will come from.

  107. I don’t have a weekly posting on the market crashing. If you look back in March I was suggesting people buy condos as those prices will be increasing as buyers move to alternative properties.

    And here’s what happened to condo prices in the core

    Month Sale Price, Median
    Jan $272,700
    Feb $305,250
    Mar $289,400
    Apr $299,000
    May $325,000

    And I expect June to be higher than May at around $340,000.

  108. “The hundred grand and more over asking price gets a lot of attention in this market, but those are not typical in this market only 10 percent of the sales this month were over 20 percent of the asking price.”

    I wonder if part of the slowdown in over-asking prices that we’re seeing (if there is indeed a slowdown) is due to the fact that people seem to be listing their houses higher now than in Feb/March/April? I’m seeing far higher above assessment asking prices to begin with now than I was before and the spread between asking and selling prices is therefore reduced. I get the sense that there are fewer owners/realtors who are starting with really low asking prices in order to create a bidding war. It seems more like people now know that their houses will go for a pretty good sum and so start higher. In other words, the “reserve bid” for the auction has gone up but the highest price paid is staying about the same. At the start of the year houses were being listed for 2015 selling prices but selling far above. Now I feel like they’re being listed somewhere between 2015 and 2016 selling prices.

  109. Looking at the latest RBC #s, it still wouldn’t surprise me if we see close to a double over the rest of this cycle (next 6-7yrs). One has to remember it wasn’t so long ago that Vic & Van prices were neck and neck – not that I necessarily want it to happen here as there will be many disadvantages to young families having to move away to start off.

  110. JJ or maybe they are buying more expensive houses than locals. One can schewe data in anyway one wants. Nobody knows. Looking forward to your weekly Thursday posting where the market is crashing do to all the new listings. Bet more listings to sales happens this Thursday too. That weekly post is irrelevant. But thanks.

  111. Also, I think it’s important for young people to prepare for worst case scenarios. Don’t want them to be scared – but as the old saying goes, “hope for the best but prepare for the worst”.

    When I was in my 20s, a huge help to me was what happened to my parents’ property in the early 80s, with a 40% drop (purchase price vs assessed value 3 years later).

    It didn’t stop me from buying property, but it helped me plan for that scenario – how likely I could get another job if a recession happened, how long I’d be willing to hold onto my place and NOT move by choice for career reasons. In fact, it happened – after 1994 when the market dropped, I was prepared – I didn’t have to move. But some people did and had to sell at a lower price. (It looks like a blip on a $1M chart now, but at the time, it was significant)

    Now, sometimes people don’t think past 5 years. They may depend on the idea of selling a home for a higher price if they have to move, but you can’t depend on that. Your life changes so much over 5, 10, 20 years – and the economy changes as well.

  112. gwac, you simply don’t know if that is true. Over paying for any asset, no matter where the money comes from is foolish. A passionate statement on your part but irrelevant.

  113. Yep you got me I am worried about my personal gain. That I plan on doing zippo with except giving to my kids in many many years.

    The basement stuff is not me. Usually I tell you to go for a walk because life is not so bad out there.

    Younger people buying their first house can be influence by stuff on here. Biggest decision of their life and talk of a crash all the time can add to an already stressful purchase. Owning property is the best thing a young couple can do if they can afford it. Trying to time it can get real expensive cause nobody knows what is going to happen.

  114. “Not harassing just do not like when people try to scare others for their own personal gain. I do not care one way or another if prices go up or down.”

    Really, that’s why almost every post is replied to with a comment related that I live in a basement, etc etc.

    Whose scaring anyone ? I am relaying the current economic conditions to help folks make decisions as per BOC, banks, CREA, real estate companies, mortgage brokers, and the Prime Minister of Canada, who all say the market is a very dangerous place right now. How is that fear mongering ? I don’t make it up in my head. You think I actually influence the market place ? Hilarious.

    Sounds to me like you are more worried about your “2.1” million “personal gain” than seeing folks potentially lose their shirts or get in over their heads.

  115. Of the 203 stand alone house sales that have occurred so far this month, 67 percent indicated their residence as Victoria and the median price they paid for a house was $715,500. In contrast, the entire 203 house sales had a median price of $750,000.

    That indicates to me, that out of town buyers, in general, are paying 5% more than Victorians.

    Since I’m looking at a subset of the entire housing market, I’m seeing things differently than most posters on this blog or even what the RBC report shows. I’m noticing the volume of house sales in the core declining as buyers that are out priced move to substitutes such as condos or housing outside of the core districts. And that seems to be the same for Victorian or out of town buyers. High prices in the core are affecting both groups of buyers.

    The hundred grand and more over asking price gets a lot of attention in this market, but those are not typical in this market only 10 percent of the sales this month were over 20 percent of the asking price. And sales like the one on Heron represent less than 5% but they get 99 percent of the attention.

    Marketing plays a big role in the over asking prices. Agencies that promote delayed offers/blind auctions to create a lot of bids also instruct their clients on how much to over bid to get the property. If there are 10 offers then the prospective purchasers are told they will have to bid at least 10 x $10,000 or $100,000 over asking price to get the property. I feel that this is just market manipulation and has no relevance to market value. An agent has shortened the exposure time to 4 days and under priced the property to get the maximum offers and then a buyer is advised to pay $10,000 more per offer to get the property and the buyers have no ideas of what the other actual bids were.

    The phrase that comes to mind is that a fool and his money are soon parted.

  116. Not harassing just do not like when people try to scare others for their own personal gain. I do not care one way or another if prices go up or down. Like I said I am not selling or buying anymore property, I like my places and they will go to my kids. Others need to make their decisions based on their income and whether they can afford it and not be scared away by fear mongering. Even if someone buys now and prices go down, they will go up again. I have been on here since 2009 and learned a lot. We had INFO spewing stuff for years and that did not work and now we have you. People get priced out by listening to stuff like this.

  117. Good for you Gwac, your need to boast of your actual hypothetical assets shows you must be very nervous the market has a high chance of seriously correcting. If I had that much in equity I would be off doing better things than wasting life here harassing posters who think the market has a high chance of correcting. How do you calculate where the .1 million comes from ? 😉

    BTW, they call it a sellers market for a reason.

  118. RBC report out, Victoria affordability on the decline, 3rd worst in Canada. Surprised it isn’t much more.

    “Victoria’s housing market clearly has thrived recently with home resales
    booming and prices rising rapidly. These good times have taken a toll on
    housing affordability, however. After maintaining an improving trend between
    2010 and 2014, RBC’s aggregate measure for the area rose throughout
    2015 and continued to do so in the first quarter of 2016, climbing by 1.0 percentage
    point to 47.4%. This represented the third largest increase (after Vancouver
    and Toronto) among the local markets that we tracked during that period.
    The single-detached home segment accounted for most of this deterioration,
    thereby reflecting the hefty price gains that occurred in this segment. In
    fact, single-detached affordability in Victoria is quite stretched compared to
    most cities across Canada.”

    http://www.rbc.com/newsroom/_assets-custom/pdf/20160622-ha.pdf

  119. No its not time. I bought my first place for 170k in 1990. Never been out of the market and now have 2.1 m in equity on two places. I am a buy and just hold when it comes to real estate. . My strategy has worked and my 2 places will go to my kids. If they go down they will go back up. Not exactly making more land.

  120. Gwac, not the time to take an instant $200K of lottery money you will never see again ? You obviously skipped out of class a lot, or work in the real estate bizz. To infinity and beyond, as Buzz Lightyear would say before he crashes with a thud. 😉

  121. Hawk this has not been the time to sell yet either has it. So you do not have that business cycle down like you think. This could go on for years with a lot more people being priced out of certain areas as they wait for a crash. Victoria is not the same market as Vancouver. Victoria is only up 20 to 25% since the crash in 2008. Not exactly a bubble here. Vancouver has doubled or more. Good luck Hawk.

  122. Hawk, the facts you post are all true. What you have to consider is the HHD is separate from Corp Debt and will have little effect on the people rather than corporations wanting to shift assets from Yuan denominated to USD or CDN assets.

    Add the fact that the governments own these banks, the currency peg is set up in small range, and the last thing the world wants is a cheaper Yuan, this augments the unlikely scenario that Canada’s housing bubble will be primarily caused by an overseas implosion.

    Perhaps you might want look at the London UK housing market, when the Russian Ruble devaluated; all that happen was instead of buying super expensive properties, the Russians moved down market.

    There is about £27 billion or 60 billion CDN worth of Russian assets in London right now and it keeps on growing. So the contrary view is as more unstable oversea markets become, and NOT ONLY CHINA, as there is lots of Russian/ME/etc.. capital in Eastern Canada; the higher the urgency for foreign citizens with the “means” to diversify.

    Which means that Real Estate is likely going to get more expensive on average or stabilize before it heads down.

  123. Gwac, whose hoping ? It’s inevitable, like all the other business cycles in the past, there’s a time to buy and a time to sell, and it ain’t the time to buy. You bulls take it too personal, when it’s just macroeconomics at work.

  124. Looks like the over-asks are still happening today – 2547 Heron St in Estevan. Ask $898k, sold $1.21M. 3 bed & developed basement.

  125. It would be nice to see less posturing and ad hominem around here. Really seen a lot of it in the last two threads. You people with opposing views are not going to convince one another of anything, especially when you’re making market predictions. Let a bear or a bull be as such; it’s just what they bring to the table and it won’t change. Debate the ideas, not the person. The latter just degrades the conversation as well as the participants who indulge in it.

  126. Lol. Hawk. If living my life not wishing for an event that would cause massive unemployment and kill people investments, I guess than i have my head in the sand.

  127. Change the name of this blog to Hawk`s doom and gloom. OMG it is not that bad out there…..

  128. Bankruptcy business is on fire right now in the US, exactly the same thing you saw in 2007 and 2008 leading up to the crisis. Retail malls are imploding for $45 billion in mortgage debt, as well as all the oil and gas companies who still have to go under. New York City real estate is in decline across all sectors as well. History does indeed repeat itself.

    For One Breed of Wall Street Bankers, Business Is Booming Again

    “With company after company in oil, coal, retail and other industries in distress — the Bloomberg Bankruptcy Index is at a six-year high — business is booming. ”

    http://www.bloomberg.com/news/articles/2016-06-15/for-one-breed-of-wall-street-bankers-business-is-booming-again

  129. “Hawk, you can’t apply western banking history outcomes to the current Chinese banking system because the systems are radically different. ”

    Yes LeoM, they definitely do have a “radically different” way of running their system, but they are trying to be part of the global financial system as the #2 powerhouse and the yuan as an accepted currency. Right now no one trusts them or their numbers, and are most likely far worse than stated.

    No wonder it’s going to be a painful lesson when you beat on employees for screwing up. 😉

    Video shows staff at China bank being spanked

    http://www.telegraph.co.uk/news/2016/06/21/video-shows-staff-at-china-bank-being-spanked/?WTmcid=tmgoff_soc_spf_fb&WT.mc_id=sf29271909

  130. Hawk, you can’t apply western banking history outcomes to the current Chinese banking system because the systems are radically different. You and a few other western economist experts are making predictions about China based on what would happen to a western country under similar circumstances. My long term bet is that China will, within two decades, convert their currency to a gold standard yuan currency by creating a gold-backed Chinese currency to compete with the Western central banking monopoly which is dominated by the US Dollar.

  131. Then Michael brought up the idea that people will voluntarily downsize.. (He’s pretty much saying this for months.)

    And some will. Just not en masse.

  132. State owned banks, or corporate debt, it doesn’t matter. The money has to be paid back in order for China to function within the global system. The ability for Chinese to even borrow to buy more bloated Vancouver real estate would be severely curtailed.

    Chinese banks sitting on $1.7 trillion debt time bomb

    Chinese banks are looking down the barrel of a staggering RMB 8 trillion – or $1.7 trillion – worth of losses according to the French investment bank Societe Generale.

    Key points:

    China’s non-financial debt grew more than 15pc last year to 250pc of GDP

    More than a quarter of China’s state-owned firms are loss-making

    China’s banks could lose half their capital base prompting a financial crisis

    Put another way, 60 per cent of capital in China’s banks is at risk as authorities start the delicate and dangerous process of reining in the debt-bloated and unprofitable state-owned enterprise (SOE) sector.

    Disturbingly though, debt is not only not shrinking, it is accelerating, making the eventual reckoning far worse.

    China’s overall non-financial debt grew by 15.2 per cent in 2015 to RMB 167 trillion ($35 trillion) or almost 250 per cent of gross domestic product (GDP).

    http://www.abc.net.au/news/2016-05-24/chinese-banks-1.7-trillion-debt-time-bomb/7439844

  133. Numbers hack,

    In 2007 to 2008 crisis,the US had $15 trillion in GDP and $16 trillion in bank assets, subprime was $400 billion.

    China has $10 trillion in GDP and $34 trillion in bank assets. That’s 3 times the GDP of the US before the SHTF.

    They also have over a trillion of questionable non performing loans. Can’t go on forever, a devaluation of the yuan is inevitable.

    China drove the whole world’s economies through the last 15 years or more. To think there will no repercussions on foreign buyers when China has to pay up their trillions of bad debts like the US had to, but an even worse situation is pretty naive.

    You’re also assuming the either governments do absolutely nothing to curtail this inflow. This has gone political and front page daily. Change will come.

  134. which point people are going to be forced to start down-sizing…around 75

    Yeah, I would agree with Vicbot’s range (somewhere around 75). I think our longevity has been pushed forward ~10 years. Perhaps it’s already starting, as the fertility rate did start to surge in 1939, which would make the number of people turning 77 this year start to swell. Another way of putting it is, there’s an absolute mountain of seniors that will pass the 77 mark starting from now all the way to 2036, at which point the number will finally start to decline. Easy money to be made to get ahead of the trend.

  135. @ Hawk
    http://www.visualcapitalist.com/chinas-debt-bomb/
    – looks like G7 countries debt to GDP is between 250% t0 300%
    – Canada debt is in large part “household” debt
    – China’s is “corporate” debt
    – China’s debt is mainly by State owned companies OWING MONEY to State owned banks

    Even if the corp debt imploded, if would have minimal effects on household debt and ability to service household debt in China = stable asset prices in China = continued migration to safer assets abroad, unabated.

    So, the overseas money will continue to come in, and the chances of a Toronto or Vancouver bubble burst caused by a debt implosion from overseas is unlikely. Unaffordability will make the bubble pop along with supply, but not something happening overseas.

  136. Opinion piece in Tyee is interesting: http://thetyee.ca/Opinion/2016/06/21/China-Syndrome-Housing-Paralyzes-Politicians/?utm_source=daily&utm_medium=email&utm_campaign=210616

    But they both likely know the province won’t act as long as the real estate industry that profits enormously from selling homes to foreign buyers also contributes huge amounts to the BC Liberal Party. Gordon even refers to the influence of Bob Rennie, the real estate mogul who also heads Premier Christy Clark’s fundraising efforts.

    “The fundraising is being dominated by prosperous developers and others closely tied to the housing boom,” he writes. “This is the second lesson about housing market politics from the past decade: inside players, with large vested interests, are willing to shovel over massive amounts of money to political parties to keep the boom booming.”

  137. I was surprised in the last ten years that life expectancy has increased by 10 years.
    The whole scale has shifted, when to downsize etc

  138. CuriousCat, agree, there are many reasons why people are staying put longer (unlike what some predicted) – better health, VIHA encouraging people to stay at home as long as possible, and just the fact that they can’t think of any other place they’d rather be.

    Another huge factor is that you can’t really travel as much when you get older (very expensive insurance), and you want to stay (feel safe) in the community you’re already familiar with.

  139. Vicbot, I actually had the sentence, “and maybe in 10 years time they’ll cure cancer or heart disease”! lol I didn’t want to start a debate about that so I took it out, but you get where I’m going. Medical advancements happen every day, we know cigarettes kill us, you can reverse the effects of a stroke if you get treatment within 3 hours, etc.

    But what I was really trying to address was this idea that retirees/Boomers are going to view their house as a big piggy bank that they can sell to go “live the dream”. Apparently, many people thought this was going to happen, flooding the market with a supply of homes, and it didn’t. And it probably won’t. The majority of retirees/Boomers stay in their homes until they are forced out due to health, which I believe will be closer to 80. If the median age of Boomers is 60, then that won’t be for another 20 years.

  140. LeoS I think the debate is related to which point people are going to be forced to start down-sizing – that age seems to be increasing (with better meds for heart disease), so maybe in 10 years that chart will change and it’ll actually show some declines in SFH ownership starting around 75 or older instead of 65 (which is why people are seeing this in their families & neighbourhoods).

    Funny thing is, it could be a relative thing – depending on your own age, 65 might seem like people are decrepit, but at least in this town, people are still very mobile and hanging on to SFHs because it’s their “hobby” – no need to leave for something more relaxing or interesting.

  141. Hawk,

    I share similarly bearish views given the insane mismatch between prices and fundamentals, but I don’t think we’ll be able to predict the cause or nature of an eventual downturn. This bubble sits atop a tripod of foreign capital flows, speculation, and cheap money. If any leg snaps, Canada’s in for some major trouble.

    Which one(s) will give, or when, we really can’t say, and I suspect that claims that are too bold or predictive just feed the bulls when they don’t come to pass. I prefer Robert Shiller’s approach: give data to show how out-of-whack the market is and historical context to demonstrate how risky playing in such a market can be, but never claim to know the future.

    What makes my blood boil is the fact that both during and after this bubble, Canadians are getting screwed. The short-sightedness of our “leaders” is appalling. A handful of sane legislation would have made this insanity completely avoidable.

    I suspect this situation has many bureaucrats scared shitless (though likely not the gormless university dropout, Ms. Clark): even if we avoid an outright crash — which the longer we wait, becomes increasingly precarious –, cash-strapped, over-leveraged families could put a damper on economic growth for years to come.

    Here’s hoping my hometown doesn’t slide too far into the quagmire.

  142. I just don’t know why people keep pointing out all the old people living on their street. Is anyone arguing that old people will voluntarily downsize en masse?

    Well the topic came up because of the article I posted that said part of the housing problem was due to this: “But what really set the housing market up for such great gains wasn’t just the buying habits of family-making millennials, it was the selling habit of Baby Boomers. Over a decade ago there were predictions of falling home prices, as Boomers abandoned their single family detached homes and downsized. But that just didn’t happen. So now you have baby-making millennials trying to buy from staying-put Boomers.”

    So Just Janice agreed with the article and said:

    Until they need to access the capital to fund home care, many won’t see a need to downsize – and with reverse mortgages and policies that enable “aging in place”, again not seeing a lot of Boomers who will be willing to let go of their SFHs

    Then Michael brought up the idea that people will voluntarily downsize.. (He’s pretty much saying this for months.)

    Once you reach your 70s, maintenance, security & upkeep of a house start becoming issues. I would think it also becomes financially tempting to ‘cash-in’ and bank half the proceeds, using the other half to exit the suburbs and buy something closer to amenities and health care.

    This is why everyone started pointing out all the old people on their streets.

  143. LeoM,

    You’re on the right track. I was watching a webinar on the weekend which backed up my theory. China’s debt bomb has consumed all their banks which are the top 4 in assets in the world and almost as much as the next 6 combined on the list.

    At some point China is going to have to pay down those trillions in bad debts in one big swoop and the yuan will devalue cheaper than the loonie which is why the tsunami of money has come here in the first place since 2012.

    It won’t all cash out of course but a lot of it will or be forced to due to financial commitments back home as their economy suffers which it already is for the last year or when they see houses stop selling at insane prices and start selling at lower prices. Toss in Canadian government action and continuing China government action to stop the outflow and it’s inevitable what’s going to happen.

    You can believe it or not but it’s that scenario which is going to be the catalyst and why the BOC has China as it’s top concern. Their credit bubble is imploding the last year and may take the global economy with it into a recession.

    Yellen even said this morning she’s concerned of growth slowing in the US already. It’s closer to the end, than the beginning. I’m not saying Armageddon as some bashers here constantly interpret, I’m saying recession.

  144. In the above graph, are the houses that were sold on, say, June 20 sales that went unconditional on June 20 or sales that were completed on June 20 (ie, the full purchase price money changed hands that day)?

    This is VREB data, however I believe it is the former. Conditions came off, but the purchase was not closed yet. Some very few purchases will go unconditional and then the buyer backs out. I’m not sure how the VREB handles that in their counts, or if they do at all.

  145. I have a question about how sales per day are calculated: In the above graph, are the houses that were sold on, say, June 20 sales that went unconditional on June 20 or sales that were completed on June 20 (ie, the full purchase price money changed hands that day)? Maybe this is common knowledge type stuff and I’m just ignorant, but I think that that would make a big difference in terms of tracking how hot or cooling the market is.

  146. Rockland: Great neighbourhood that I personally think is in many ways more appealing than Fairfield or Oak Bay. The upsides are that the neighbourhood is gorgeous (the houses are, in general, much bigger/nicer than the houses in Fairfield), it’s built on rock (no liquifaction in an earth quake!), it’s up on a hill (lower tsunami/flooding danger!), and it’s awfully convenient to downtown and/or Oak Bay. It’s also very nice to have the beautiful Government House grounds close by to walk around. The downsides are not being all that close to the water and having some downtown homeless people spilling into the neighbourhood. (Fairfield suffers from some homeless problems too though, to be fair, as do most neighbourhoods in the core.)

    I rented in Rockland years ago and absolutely loved it.

  147. “Cashing out” to me means choosing to sell your house to bank the profit

    I’m fully aware of what it means. I just don’t know why people keep pointing out all the old people living on their street. Is anyone arguing that old people will voluntarily downsize en masse?

  148. Hawk, I see 1028 Finlayson had a price drop. Is that the house you were referring to that was set up for a bidding war and had no interest?

  149. Leo, I think we are talking about two different things. “Cashing out” to me means choosing to sell your house to bank the profit and then enjoy that money either by moving to a different part of the island/country/world, travelling, or if staying in the same area then downsizing to a cheaper home (ie condo). The key is that there is lots of money left over to “splurge” and enjoy life. This is what I don’t see happening by looking at people around me. Yes old people die. Yes old people get sick. Yes there will always be a supply of SFHs coming from that segment of the population. But in my opinion, there aren’t a whole slew of healthy Boomers waiting in anticipation to sell their homes the day after retirement. I’m sorry if I didn’t convey that properly.

  150. On the topic of downsizing, this one caught my eye tonight…
    401-777 Blanshard St, 40+yr old bldg, shared laundry.
    List 349k, Sold 450k! You’d want to be partially deaf to live perched right above Blanshard like that, but otherwise a great location near Royal theatre, Empress, Beacon Hill, etc.

  151. To add another proof to CuriousCat’s statement, our small street has 13 single family houses, 8 of them owned and lived in by retired people age 66 or older, four of which are single widows age 70, 75, 83, 91, who have gardeners and handymen helping them with house and garden work, children and grandchildren who come and visit. None of them want to move out until the end.

    Vic&Van, we have friends living in Rockland, they complain quite often about homeless people and associated issues in that area.

  152. Don’t dismiss Hawk’s predictions entirely just because he rants with one-sided arguments. If a perfect economic storm happens, Hawk might be more right than wrong.

    Think of it as a war being waged by the government to keep the economy strong. Unfortunately, the governments of the western world have run-out of ammunition. They used their artillery to shoot down interest rates, then they used their QE-nukes as their WMD against deflation. Now, they have no ammunition and no strategy for defeating deflation. One of the few remaining tactics is currency devaluation, but everyone, except China, is reluctant to even consider devaluation…yet. Currency devaluation by any major western country could start a chain reaction leading to currency wars and a race to the bottom. Currency devaluation in China was somewhat warranted for a rapidly emerging economy like China, but if western countries try devaluation to gain a competitive edge, the ensuing avalanche of other countries who follow along will be akin to an all out nuclear economic war leading to an economic nuclear winter. And then we will all remember Hawk’s early warning system that we all ignored.

    But something is brewing. The Americans are quietly warning/threatening countries to avoid any consideration of currency devaluation; and it’s obviously because if any country considers devaluation, we know their foreign reference currency will be the US Dollar. Remember what the USA did to Libya the week after Gadaffi was talking seriously about a new African currency based on the gold standard. The G7 meeting in Japan last month devolved into American threats to all who dared discuss devaluation. Something’s up…

  153. My family’s experience has been similar to CuriousCat’s – 80 seems to be the new 70, so maybe the chart will be updated one day? The doctors treating our parents have said that people are living healthier now than a decade ago due to new heart drugs and blood thinners (as long as you avoid diabetes). My mother-in-law was forced to move out of her home only in her 90s, and my parents are still going strong well into their 80s. In all cases their medications have allowed them to be more active.

    Vic&Van, for Rockland – great location but I’m not a huge fan of all the B&Bs and tour buses – can be more noise than other areas of town depending on the street. This is a good web site to find out what’s going on: http://www.rockland.bc.ca/

  154. ROCKLAND

    I had a look at that beautiful mansion going up for auction in Rockland. I don’t think I will put in a bid but what do you experienced real estate folks think of Rockland as a neighbourhood?

    How does Rockland compare as a long term investment/place to live compared to South Oak Bay or say the higher end parts of Saanich East?

    I look forward to your comments and thank you.

  155. Doesn’t matter to what? My anecdotes were to give my opinion that I don’t think Boomers are “cashing out”

    Doesn’t matter to the housing market much. The overwhelming effect is from people being forced out of their homes, not choosing to leave.

    Or you can think of it as the kids cashing out on the parents behalf.

  156. My father is 69, stepmother 70. There doesn’t appear to be any difference in their health/abilities now than 10 years ago.

    I’m merely saying once in their 70s, the elderly start experiencing more health & mobility issues. Let’s hope they don’t have a stroke or break a hip in the garden some day, but those arterial walls & joints are in decline. Often a trigger to cashing out & downsizing is when one partner passes, usually the husband.

  157. It really doesn’t matter what the percentage is. 90% of people are dead by then and have thus vacated their homes. What the last 10% are doing is not that important.

    Doesn’t matter to what? My anecdotes were to give my opinion that I don’t think Boomers are “cashing out” as Michael said. The stats was to point out that REALLY old people definitely don’t “cash out”. Most seniors over 80 probably have no clue what’s going on in the housing market and if they do, they don’t care. Moving is stressful. Home is home. The next step from their SFH is usually the hospital bed where caregivers finally have the leverage to force them to sell. “Sorry Mum, but the doctor says you can’t go back home. As soon as a room is available at Shady Oaks they are moving you there.”

  158. johnk, interesting how France can do all that, but Canada can’t! Just don’t understand the reluctance – is it really because we’re depending on real estate to drive the whole economy? that’s a scary thought.

  159. “My kids are all under 10 and they’re already on notice that they won’t be living here past 20.”

    Well that solidifies it, you are a total dick to tell a kid under 10 that. They’re probably planning how to off ya as we speak.

  160. I would have expected the percentage of seniors in their 90s living in nursing homes to be much higher than 43.5%.

    It really doesn’t matter what the percentage is. 90% of people are dead by then and have thus vacated their homes. What the last 10% are doing is not that important.

  161. Also the census says:
    “Among seniors in their nineties, over half (56.5%) lived in private households in 2011, including 28.7% who lived alone, 12.2% who were part of couples and 15.7% who lived with others, such as adult children. The remaining 43.5% lived in collectives such as nursing homes or residences for senior citizens.”

    I would have expected the percentage of seniors in their 90s living in nursing homes to be much higher than 43.5%. It will be interesting to see what the 2016 census shows when it comes out.

  162. I agree with curious cat here I’m seeing lots of boomers staying put. The thing that might change that is this spring. It’s one thing to be sitting on ~600k but quite another to suddenly find yourself in the million dollar range. To me that’s a psychological barrier. I know that I’d pack up my shit and head up island if I was sitting on a windfall like that.

    As for housing your children, you have to be a complete idiot to let that slide. My kids are all under 10 and they’re already on notice that they won’t be living here past 20. Call me cold but my parents sold and left town at 18 and it was the best thing that ever happened to me.

  163. Mike,
    The boomers era ends around 57,and is not the median. A recession has higher odds than ever,especially if US can’t raise rates. We’re at the end of a 7 to 8 year business cycle,not beginning.

    China may well cause a global recession as they have lost control of their credit machine. You can’t keep printing money forever to pay off bad debts with more bad debt. Parabolic blow off tops have consequences.

  164. not seeing a lot of Boomers who will be willing to let go of their SFHs, especially as many are housing millenials into their 30’s.

    This. My friend recently moved back in with her Boomer parents while they are building/searching for their next home. All my Boomer aunts and uncles, they don’t want to sell their SFHs, they still “need” their spare bedrooms for the visiting out-of-town guests, and the big kitchen, living room, dining room for family get-togethers. Oh and now that they don’t work due to retirement, they have all the spare time in the world to tend to the landscaping, that squeaky cabinet, or heck, why not rip out the whole kitchen finally when you are home all day to supervise the work? Even considering selling the family home? THAT is unusual, at least in my circle. I bet you, I can drive to my childhood bestfriend’s parents house from when we were kids, ring the doorbell and her parents are still living there! The Boomer generation just don’t up and sell without a REALLY good reason.

  165. Further to my post about seniors not doing what some here expect them to be doing at a certain age…

    http://www.cbc.ca/news/business/canada-retirement-age-rising-1.3638733

    “Almost one out of every eight people over 65 still works. A decade ago, that ratio was less than one in 13.”

    “A report this year by the Broadbent Institute found that only 15 to 20 per cent of middle-income Canadians retiring without an employer pension have saved anywhere near enough for retirement.”

    “I would say today realistically it’s Freedom 66 or 70,” acknowledges Tysowski. At 69 she is working three part-time jobs to pay the bills.

  166. Once you reach your 70s, maintenance, security & upkeep of a house start becoming issues. I would think it also becomes financially tempting to ‘cash-in’ and bank half the proceeds, using the other half to exit the suburbs and buy something closer to amenities and health care.

    My father is 69, stepmother 70. There doesn’t appear to be any difference in their health/abilities now than 10 years ago. The maintenance and upkeep on their house is part of their routine, and gives them some purpose. My Dad has been retired since the age of 56 and he keeps himself immensely busy puttering around the house and yard and still helps his family and neighbours on top of that. Age is just a number, and I think 75 is the new 65! Even then, my grandfather stayed in his house until the age of 94, and my other grandma stayed in her house until 90. And I personally know of another couple in their 90s that still live in their house on Burnside Rd East. Nothing can tempt these people to “cash-in”. They will leave their house when their children (if there are any) finally can convince them it is a danger for them to remain.

    Also, the majority of these seniors aren’t living in the suburbs, but in the core and close to the amenities already.

  167. Wouldn’t the graph plotting sales per day also be interesting as sales as % of listings per day

    That is the sales/list ratio in the first graph (dark blue line). Currently it is at 85%. That is, 85 sales for every 100 new listings

    You can see the seasonal pattern on the second chart in this page. https://househuntvictoria.ca/market-summary/
    Sales/list peaks in December, sometimes at over 100%

  168. @Vicbot,
    I bought and sold two properties in France and as a Canadian resident I paid a fat cap gains tax each time despite possessing EU citizenship. Non-residency was the killer. Tax started at 50% on any cap gain and then reduced incrementally over 10 years. Passport had to be produced and recorded in the purchase documents beginning with the initial offer. Also had to specify if it was a full time residence or seasonal. Different tax rates there, too. Higher if you aren’t full time. The French tax man is a real bloodhound, next to impossible to shake off. Maybe our guys could learn something from them on how to deal with speclators and/or offshore non-resident buyers.

  169. Michael,
    Great update. I missed that re: 5 year yield.

    Just Janice,
    Good info. I think the reason prices have climbed is we have the highest amount of buyers that we may ever see, both new and from sales

  170. Over a decade ago there were predictions of falling home prices, as Boomers abandoned their single family detached homes and downsized.

    I don’t think the predictors were mathematicians. The median boomer is still only turning 57 this year, with the leading edge turning 70. Once you reach your 70s, maintenance, security & upkeep of a house start becoming issues. I would think it also becomes financially tempting to ‘cash-in’ and bank half the proceeds, using the other half to exit the suburbs and buy something closer to amenities and health care.

  171. CuriousCat, good article, another quote from it that makes a good point about how the marginal buyer sets the price:

    “While many downplay this factor [foreign buyers] (“it’s only X% of the buyers!”), Economics 101 will tell you that the marginal buyer sets the price; and, if you introduce a wave of new buyers on an already tight market, prices will soon reach for the sky as the demand curve shifts even slightly to the right.”

    I like the idea of a combo of foreign buyer’s tax, capital gains tax, and general tax on flipped properties to reduce the effect speculation (from inside & outside Canada) has had on prices, to help people who just need homes to live in.

  172. The Boomers are still relatively young and able bodied – they enjoy their gardens and their hobbies and both demand a certain amount of space. Give up a SFH in favour of a far too small box? Not likely. Until they need to access the capital to fund home care, many won’t see a need to downsize – and with reverse mortgages and policies that enable “aging in place”, again not seeing a lot of Boomers who will be willing to let go of their SFHs, especially as many are housing millenials into their 30’s. The sharp run-up in prices adds to the problem, with many not wanting to “cash in” until they feel they’ve optimized their timing of selling what is likely their largest asset. If we were wanting them to move on – we would be building far more modest sized townhouses that meet the needs of both downsizing boomers and millenials starting their families. Think 3br with a bit of a yard and 2 bathrooms 1200-1500 sq. ft – or 2br 2ba condos. Instead we’ve got a glut of Air BnB specials – glorified hotel rooms that are far too small for either starting out or downsizing.

    That said, I still believe that Victoria offers good value, and that if you are focussed on a buy and hold strategy, being an owner offers far more financial security over the longer term at monthly payments that are price competitive with prevailing rental rates (*provided you have a down payment).

  173. @Leo S Wouldn’t the graph plotting sales per day also be interesting as sales as % of listings per day. That would fit your verbal description that sales/demand declines along with inventory/listings.

  174. Article in Macleans: Who’s to blame for high home prices?

    http://www.moneysense.ca/spend/real-estate/buying/whos-to-blame-for-high-home-prices-demographics-for-one/

    Some highlights, “There’s one demographic cohort that drives home buying and before you answer, it’s not the Baby Boomers, although they do play a role. Regardless of the year or cohort, the prime home-buying age group are the 25 to 40 year-olds…But what really set the housing market up for such great gains wasn’t just the buying habits of family-making millennials, it was the selling habit of Baby Boomers. Over a decade ago there were predictions of falling home prices, as Boomers abandoned their single family detached homes and downsized. But that just didn’t happen. So now you have baby-making millennials trying to buy from staying-put Boomers. Less supply plus increased demand means historical housing prices, particularly in Toronto and Vancouver.”

    “All of the proposed measures to tighten borrowing standards in Canada (e.g. increased minimum down payments) will simply crowd out the domestic buyer and leave the field wider open for foreign capital inflows.”

    “The composition of [the housing supply] is playing an increasing role in driving detached-home price gains. In a nutshell, while demand for single-detached homes has been rising at a brisk pace, supply of those homes has become almost irresponsive.”

    “More and more the option to impose a tax is looking good. Whether it’s a foreign buyer’s tax or a tax on capital gains above a certain threshold or a tax on flipped properties, or a combination of all three.”

  175. the graph isn’t proportional (sales vs. listings) and misses out what I think is the point of your posting

    Sorry I don’t understand. Can you elaborate?
    I was saying that as we move past the peak spring buying season, we should expect sales to trend downward. However new listings also decrease towards the fall, so in general sales/list ratios tend to increase steadily with a peak in December. This means that although demand will be decreasing, supply generally decreases even more.

  176. AskWhy,
    Just use the charts and baby step your way in with cheap put options farther out, and a little at a time when the chart starts to show key levels being broke on large volume. 50 DMA is a pretty big line in the sand right now. Brexit might effect it either in direction so wouldn’t leap in this week. Agree the big money could keep the price up longer thus the farther out time line.

  177. @Hawk – It seems like a good idea although I could only take a small position. That being said, “seems like a good idea” has often proven otherwise in my life. My biggest concern would be that there is inevitably a significant bias of influence that supports the long positions. In other words, I believe the powers to be have a vested interest in keeping things moving upward any way that they can.

  178. StepbyStep, neat story – thanks for sharing.

    TripleA, what everyone’s been saying is their disappointment in regulators and politicians for not controlling the obvious out-of-control speculation and unethical practices in real estate – which are affecting prices (various things pointed out by G&M, FinTrac, the PM, the Mayor, BoC, banks, researchers, etc)

    Nobody ever said anything about blaming millenials or boomers – everyone’s concerned about the system that’s not protecting your average homeowner.

  179. @leos – the graph isn’t proportional (sales vs. listings) and misses out what I think is the point of your posting.

    " We should expect to see sales slow from here on, but also new listings."

    @triplearated – less emotional language, especially when suggesting that another poster has indicated these ideas, such as ‘deported’ and ‘capital punishment’ would be appreciated.

  180. Triple A, you’re whacked dude. You are a new homeowner and now you’re an authority on everything on here ? I never said anything of the kind, quit making up bullshit.

  181. Fascinating. Things I learned today from Oracle Hawk.

    We should deport every Mainland Chinese immediately because the Yuan is about to imminently collapse, Flights will be full to Beijing with Suitcases stuffed with clean money.

    We should deport every Canadian Millennial because they’re financially illiterate, risk taking purchases in the housing market is a sham inflating the market with 0% down through shady lending practices.

    Note: no blame can be placed on the boomer generation which had the greatest opportunities to job wages and growth, stocks and bonds, and housing and we should reintroduce capital punishment for any person, place or thing that wants or dreams of similar success.

  182. Looks like the peak has passed as the head of CREA has stated.

    More like the spring peak. We should expect to see sales slow from here on, but also new listings.

  183. That’s a sharp drop for sure. Over SIX houses per day less. The sure sign of impending doom. Get your non-existent cash reserves ready bears.

  184. Vicbot,
    I think Moody’s is downplaying the effects. 8% of the US homeowners going under collapsed the world economy. 6% would decimate Canada.

    They also underestimate the selling style of the Chinese, when they sell they dump like madmen, just look at their stock markets when they go down like they fell off a cliff.

    When the yuan tanks as well and there isn’t any currency advantage left and their margin calls roll in. Like gamblers on steroids they will hit the panic button.

  185. You can draw a nice downtrend line on sales per day from April 18th, or a steeper one from May 16th, take your pick. Looks like the peak has passed as the head of CREA has stated.

  186. Moody’s came out with a report today
    http://business.financialpost.com/news/economy/housing-crash-in-canada-could-cost-mortgage-lenders-almost-12-billion-moodys-warns
    … the ratings agency … crunched the numbers to test how Canada’s housing market would respond to stresses such as a sharp increase in interest rates or an employment shock where people lost their jobs and were unable to make mortgage payments.

    “The latter is more likely to occur, but probably only if there’s a global slowdown as well, as Canada’s economy is so highly tied to global trade”

    “The riskier loans, in theory, would default first,” explains Mercer. “And when those houses are sold in foreclosure, prices of nearby properties fall.”

    ” … rising household debt relative to income in Canada, along with rapidly increasing house prices, has created similar conditions to those in the United States prior to the financial crisis of 2008″

    “Moody’s calculates that “riskier underwriting practices” could affect about six per cent of the overall mortgage market”

  187. Related to previous discussion, I’ve seen successful home owners & renters, and also people that have lost money doing one or the other.

    It just depends on the person’s life situation, including career (if moving cities might be a requirement), the decade they were born, divorces, family needs, etc.

    I’ve also seen homeowners wasting way too much money on unnecessary things to impress people, then they have to move to keep a job and it happens to be at the wrong month or year during a downturn in the market. Then I’ve seen people fearful of buying a home and they’ve missed out on the lottery win of home ownership, but they’ve made so much money starting their own business that they never worried about when they would buy, and they also had more freedom, because they were focused on other priorities.

    The important thing is, the numbers have to add up for your own needs, and no one else’s expectations.

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