Coyote concludes wolf OK to guard henhouse

Update June 29th:  Looks like the province agrees with the assessment that industry self regulation is fundamentally untenable no matter how we tweak the rules.   Great news for real estate progress in BC!

“The real estate sector has had had 10 years to get it right on self regulation and they haven’t” – CBC News

There’s a report out by the Independent Advisory Group (IAG) appointed by the Real Estate Council to look into licensee misconduct and to try to put some public faith back into the real estate industry.  The Real Estate Council is the body that regulates real estate activities in BC.  Thanks to Hawk for posting the report.

The report itself is a pretty good overview of the issues facing the industry and the reasons why enforcement is not up to snuff.  However most of the recommendations I find are of the finger wagging variety and will not lead to any change because of the existing conflict of interest.   Yes registering complaints should be easier, there should be more transparency, the code of ethics should be consolidated, and fines should be higher, but all of those will be watered down in implementation as long as the industry is the regulator.  How hard are they going to work to crack down on the members that pay their bills?

Of the 28 recommendations, the following could perhaps amount to more than handwaving:

  1. No more dual agency (Realtor representing buyer and seller).  It’s about time.  There are 22,000 realtors in BC so it shouldn’t be hard to find one to take some free money.  It’s pure self-interest that allowed an agent to represent both ends of the deal.   The IAG weaseled out of recommending to ban double ending (realtor collecting the buyer’s agent commission when the buyer is not represented) which I think is unconscionable.  If the buyer has no agent that part of the commission should obviously be returned to the seller.
  2. All offers need to be recorded with the managing broker.  No more mysterious “other offers” or offers withheld from the seller.  While this recommendation is practically unenforceable, the IAG makes a more interesting one which is to implement a real-time multiple offer registry where buyers can monitor, with appropriate privacy protections, all offers that are made on the property.  That would also put an end to the crazy overbids we are seeing by buyers desperate to secure a property against unknown competition.
  3. Increase penalties from a max of $10,000 to $250,000 for individual agents.  A big jump, but maximum penalties don’t mean anything if the regulator is unwilling to assign them.
  4. Governing body needs to be at least 50% non-industry members.   I’d say 75% would be better, but currently it’s 80% industry so no surprise we’re in the mess we’re in.

I did enjoy the last recommendation, which is that the Real Estate Council employ some professional communications people (aka spin doctors) in order to restore public confidence.

Fundamentally the issue is that you can’t expect an entire industry to maintain professional behaviour when the bar is set so low.   In 10 weeks and change you can become a real estate agent in BC and the industry then tries to hold you to a professional standard on par with doctors and lawyers that have taken near 10 years of schooling to get there.  It just doesn’t work like that.

The report says that “A self-regulatory regime works when members of the profession hold themselves and each other to an ethical standard that is higher than anyone else does”.  Does the council really think someone that has spent $1000 on an online course is going to feel compelled to do that?  It should be in the interest of all good realtors to pressure their industry towards reform before that reform is forced on them.  The rewards are high and the barriers are low, and that imbalance will have to be corrected before we see any meaningful change in the industry.

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150 thoughts on “Coyote concludes wolf OK to guard henhouse

  1. Thank Marco:

    “Sold for full asking price. $1 million+ on BM is not the barrier it use to be in past years.

    Already 9 sales over $1 million YTD. 2013, for example, was only 4 for the entire year.”

    Unfortunately a million dollars isn’t what it used to be no matter where you are…

  2. “Realtors in Toronto and Vancouver are pitching Canadian cities as relatively safe property havens now that London, for years one of the world’s leading targets of foreign capital, suddenly looks a lot riskier. Blame it on Brexit.”

    Imagine a salesman with a 3 month course behind him saying the two biggest bubble markets in history are “safe bets”. Hilarious.

  3. Active Listings: 2,289 4,003

    Still nutso out there. Seemed like there were a few more listings sitting on the market so it’s easy to get fooled into thinking something is cooling.

  4. Marko or anyone else know what 2187 Spirit Ridge Dr. sold for? Listed at 1.5 million, sold quickly.

    Sold for full asking price. $1 million+ on BM is not the barrier it use to be in past years.

    Already 9 sales over $1 million YTD. 2013, for example, was only 4 for the entire year.

  5. Victoria Real Estate Board

    Mon Jul 4, 2016:

    Jun Jun
    2016 2015
    Net Unconditional Sales: 1,174 910
    New Listings: 1,319 1,346
    Active Listings: 2,289 4,003

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

  6. Marko or anyone else know what 2187 Spirit Ridge Dr. sold for? Listed at 1.5 million, sold quickly.

  7. My portfolio has performed just fine over the last ten years. I expect the next ten to be better. And yes dividends do help. FYI Michael, I did buy back into ABX early in the year 🙂 unlike some, I can admit to my mistakes….

  8. Before you start patting yourself on the back of how great of an investment real estate has been, not all real estate has been a gold mine for their owners.

    Here are the second quarter figures for year over year condominium prices

    District Sale Price, Median 2015 Sale Price, Median 2016 Percentage Change
    Oak Bay 5.1 %
    Victoria West 0.0 %
    Sidney -0.6 %
    Victoria 9.8 %
    Colwood -0.3 %
    Saanich West 17.7 %
    Central Saanich -11.1 %
    Saanich East 13.7 %

    Some of the inner city hoods did well, but some areas had year over year declines. It’s a speculators market in some areas.

  9. Here’s the impact of dividends (from ):

    We build this Dow Jones return calculator for educational purposes since it proves a powerful point – dividends really do make a huge difference to investor returns! Say we go back and invest $1 in the beginning month on the Dow Jones – May of 1896, and we run the numbers through December of 2014:

    If you don’t count dividends, you end up with $437.43. Excellent.

    If you do count dividend reinvestment? Well – it’s a whole other ballgame; you end up with $84,638.46.

    So, yes, folks should stop assuming that investors are just throwing their dividend checks in the fireplace. It makes a lot of difference.

  10. 10 years ago:
    S&P500 Jul 2006 1330 points
    Jul 2016 2100 points, up about 58%

    Everyone always forgets about dividends.
    Annualized return from 2006 to 2016 is 7% (nominal). Total increase 98%.

    Never mind that normal people DCA so returns would be higher

  11. Just for those keeping track at home, with all the events going around the world over the last decade, keeping your portfolio in RE in Victoria is not so bad, not to mention the leverage attained indirectly by your “mortgage”.

    No wonder RE prices in major + attractive centers in the world keep on going up. The returns on the index over the last decade have been horrendous. The pension funds that pay our pensions need to park their money somewhere, why not real estate?

    If you bought the TSX index 10 years ago, you are making less than 2% a year. The S&P500 is still likely your best bet, and even better if the C$ goes up.

    10 years ago:
    S&P500 Jul 2006 1330 points
    Jul 2016 2100 points, up about 58%

    TSX Jul 2006 11632 points
    Jul 2016 14064 points, up about 20.9%

    US/C$ Jul 2006 1.15 CDN
    Jul 2016 1.30 CDN, down 16.2%

    Shanghai 1o years = up 70%
    Toyko 10 years = up 2.5%
    London 10 years = up 11.7%
    Frankfurt 10 year = up 73%

  12. Not many beaches in the suburbs of Vancouver whereas in Victoria you are pretty much near one no matter where you live. Added bonus of not being a crazy ass nuthouse shit show helps too.

  13. “If the mortgage company goes bankrupt you still owe the money. They will foreclose on your loan. Or sell the paper to another company and they will collect.”

    Incase you think the Chinese government is just going to wipe clean a trillion plus in bad loans, think again. US style debt buyers will force them to pay up. Chimerica indeed.

    Ex-Lehman Trader Loads Up on Bad Chinese Debt

    “China’s supply of discounted NPLs is “overflowing,” said Zhang, who co-managed Lehman’s first European quantitative hedge fund and served as Amundi Asset Management’s chief investment officer in China before co-founding Oriental three years ago. “There are way more bad loans than we can take.”

  14. Dasmo
    Relative to Vancouver is the key. Our beaches are fine, cause they are what we have. Gyro is my favourite. But Gyro + gonzo + willows is not even the equal of Spanish Banks which is but one of many in Vancouver. Witty’s is lovely but bears the same relationship to Victoria that Kits beach does to Burnaby or Richmond.

  15. Gyro, willows, Gonzo, seem pretty sandy to me…. Then there is island view and witty beach…. What “beach amenities” do you need. It’s a beach! Bring a snack, a shovel, and something that floats….

  16. “What’s wrong with the Beaches of Victoria?”

    Relative to Vancouver nearly everything. Don’t get me wrong – our coastline is beautiful here, but beaches are lacking. First of all our coast is mostly rock. What beaches there are, more gravel than sand with a few exceptions. Water generally intolerably cold for sustained swimming. General lack of beach amenities.

  17. JohnHK- you are wrong about Marc Cohodes. 2012? – wrong. 80%? – wrong.
    Where are you getting these numbers?

  18. It wouldn’t matter if the weather supported both. The traffic is so bad the only way to do that is spend 3 hours in your car, so no one does it. Try getting up to grouse mountain from anywhere south of downtown on a Saturday – it’s 1- 1.5 hours each way. Plus parking at the beach plus lift tix plus parking at grouse plus plus plus.

  19. I used to live at Kits Beach. Ski in the morning and swim in the afternoon can’t be done. Maybe in the 1960’s but not with today’s traffic. But I do miss the beaches of Vancouver. That’s one of the big disappointments about Victoria.

  20. If the mortgage company goes bankrupt you still owe the money. They will foreclose on your loan. Or sell the paper to another company and they will collect.

  21. “Is the “ski in morning, beach in afternoon” really worth a lower quality of life?”

    Another exaggerated myth. If the beach is warm, there is no snow.

  22. “I’ve done work for Home Trust and Home Capital. The houses were always easy to find. You looked down the street for the worst house and that was the one they wanted appraised. The financing was always to the maximum. If I had millions I would short these companies too.”

    “My bet is on the chicken farmer. Because when things begin to fry you’d better get cracking as most people have put all of their eggs in one basket and the yolk will be on them.”

    Agreed Jack. Home Capital is an accident waiting to happen. The chicken farmer has made big money shorting other scam drug stocks that are held in major portfolios and funds and is doing well.

    Home Capital will tank at some point, because if you were too blind to let 45 mortgage brokers lend out almost $2 billion of your company’s money then you have a serious lack of checks and balances problem that is most likely much deeper than that.

    Maybe Mike used them on his “transitional housing” investment. As Cohodes said, you short a Canadian company and they get all personal like you called their wife fat and ugly. 😉

  23. Is the “ski in morning, beach in afternoon” really worth a lower quality of life?

    And when can you even do that? More like “trek over barren slopes in the morning, freeze in the rain in the afternoon.”

  24. I think we will need a bridge to the mainland before that could happen. And you know how bridges have worked out before in Victoria.

    When our couple hundred feet costs $110,000,000, there is not enough money in the world for our bungling government to build a bridge to the mainland.

  25. Some of the trust companies are going to go bankrupt. Maybe even a credit union or two as well.

    What happens when your mortgage lender goes under? I’m gonna say you’re probably not off the hook but what would actually happen?

  26. btw, in case anyone is interested, here’s an article that describes the size of the real estate industry:

    Housing in Metro Vancouver is B.C.’s biggest industry
    “Buying and selling older houses in Metro Vancouver is now worth more to the provincial economy than the B.C. forestry, natural gas and mining industries combined.”

    “Bryan Yu, senior economist with Central I cautioned that industrial GDP is the measurement of new production, while resale housing sales ‘doesn’t really add any value.'”

  27. When I owned my house, I built memories in rooms.
    Now that I rent my house, I build memories on mountains.
    When I owned my house, I was content to sit quietly in my garden.
    Now that I rent my house, I sit on warm sands, mossy logs and camels.
    When I owned my house, I was proud of my new roof, my parquet floor and the bow window I had installed.
    Now that I rent my house, I am proud of my PhD, my business and my kids.
    When I owned my house, I was secure in the knowledge that my investment was a solid one.
    Now that I rent, I am solid in the knowledge that my investment is secure.

    Potatoes, Potatoes, Tomatoes, Tomatoes, wait what’s the difference?
    Set your priorities and life your life. Renting’s not that bad.

  28. Michael, yes, there are other industries – but honestly they are relatively small compared to the real estate industry. Vancouver is the world’s 49th largest port. I’ve also been involved in the high tech industry (overlapping manufacturing) all my life and it really is a small town (2 degrees of separation), and because of the number of small start-ups, the salaries aren’t as high as with the tech giants like Google. Hollywood North employs mostly low- to middle-income earners (I also know people that work as extras, stunt doubles, equipment setup, makeup artist), as does manufacturing. A handful of banks doesn’t compare to the scale of London or NY, unless Brexit changes that 🙂

  29. The only major industries are tourism and real estate

    To name a few more…
    * largest port (70000 jobs, 9 Billion economic output)
    * hollywood north
    * high-tech, biotech, software development
    * manufacturing & wholesale
    * huge international law firms
    * finance (Vancity & HSBC HQ)
    * Canada’s mining & forestry HQ (Teck Resources, Goldcorp, Eldorado, First Quantum, Pan American, Silver Wheaton………….)

    If you want to know where Van RE is headed, keep an eye on precious metals.

  30. “Yes Vancouver is overpriced for locals; but it’s certainly not overpriced for an international city.”

    I’ve lived there, enjoyed it, had a blast, still have lots of friends there – but it’s not a fair comparison to London, Paris, NY, LA, Sydney, Dubai, San Fran/Silicon Valley, etc

    Unlike those other cities, Vancouver doesn’t have a high % of high-salary jobs to justify the real estate prices. It isn’t a hub for Canada’s finance (that’s Toronto), or corporate HQ (that’s Toronto), or the tech sector (it has a good one – but most are relatively small), or manufacturing (that’s Ontario), or oil & gas (Calgary), etc. The VSE was known for its frauds & manipulations (it later merged into CDNX)

    The only major industries are tourism and real estate – but that means a high % of jobs are lower- to medium-wage to support those industries.

    Let’s be honest – Vancouver has become a vacation destination & asset depository for the world’s rich. That’s what currently drives its economy. (but I hope it changes in the future)

    That’s why politicians are so concerned that people are moving out of Greater Vancouver – because what hotel clerk, cook, retail cashier – or for that matter – nurse, teacher, doctor – wants to commute 2 hours for a low-to-average wage job?

    Is the “ski in morning, beach in afternoon” really worth a lower quality of life? People are starting to say “no”. Then who is going to be left to serve the needs of the world’s businesspeople who live there 2 months a year or park their wealth to send their kids to school? A friend rented a condo to a Toronto businessman, who later bought it, but it’s only occupied a few weeks each year.

    Schools are actually closing because there aren’t enough families left in some neighbourhoods.

    As SweetHome alluded to, the politicians are scared to deflate house prices because people are depending on them to fund their retirement somehow, but the politicians are also starting to grapple with the reality that there may not be enough low- to middle-income wage earners left to support the functioning of the city.

  31. I’ve done work for Home Trust and Home Capital. The houses were always easy to find. You looked down the street for the worst house and that was the one they wanted appraised. The financing was always to the maximum. If I had millions I would short these companies too.

    Some of the trust companies are going to go bankrupt. Maybe even a credit union or two as well. One reason why you might want to go with one of the big chartered banks even if the interest rate is a little bit more.

    When Columbia Trust collapsed in the 1980’s a lot of home owners were not able to get financing from other banks and they lost their home to foreclosure. More recently when Wells Fargo pulled out of Canada that left home owners scrambling to find a new lender.

    My bet is on the chicken farmer. Because when things begin to fry you’d better get cracking as most people have put all of their eggs in one basket and the yolk will be on them.

    As for Victoria becoming an international city. I think we will need a bridge to the mainland before that could happen. And you know how bridges have worked out before in Victoria.

  32. Hawk did the Victoria housing market crash today??? Or is another day of posting Chinese money laundering and random shorter stories.

  33. Except if you had read the article you posted he isn’t shorting the market he is shorting Home Capital Group. And if the article is correct he shorter them in the fall of 2014 when they were at $51 and shortly after they fell to $30 where they still linger.

    Who knows what his net position is but he was right about that and at least he is putting his money where his mouth is

  34. It seems like once a month someone links to Marc Cahodes.

    He has been shorting the Canadian Housing Market since 2012, and by a lot of reports has lost 80% of his fortune as the crash has not appeared so far. He is just talking up a crash in order to hopefully recover his money.

    Yes Vancouver is overpriced for locals; but it’s certainly not overpriced for an international city. Vancouver has a long way to go to catch up to the PPSF (Price Per Square Foot) that most places value property by internationally.

    Most of Canada is well below historical affordability ranges, including Victoria up till a few weeks ago, and even then, there is a lot of options in the 160-480k range within a few minute commute of anything.

  35. As for various talking heads calling the market, their opinion is worth exactly zero. There is no skin in the game for them they are only there to flap their heads on TV to fill the 24 hours. I’m much more inclined to listen if people are actually taking action and putting their money in on either the short or long side.

  36. Just the kind of moral education we need on a Sunday

    Thank the lord it’s actually only Saturday!

  37. Mike, your TA charts are a joke. That isn’t a breakout it’s called hanging on by a thread. I see you’re calling another top in natural gas just like last time. No northern pipeline, no LNG.

    Kyle Bass was one of the few fund managers who called the US housing crash. I’m sure your chart back then read “to infinity and beyond”.

    totoro, ICYMI it’s Saturday today not Sunday.

  38. Oh god…- how can 70% of Canadian adults handle all these risks and responsibilities?

    Never fall in love with things as they can be taken from you by others that want what you have.

    Yep, just like a lollipop a house can be snatched from your grasp at any moment by the mean kid down the block who likes your fridge better than theirs.

    If property values increase then relish in your good fortune but have the humility not to rub it in the nose of those who don’t have as much as you.

    Sage unsolicited advice, one can only imagine how sweethome would have become an out of control lorder without it. Just the kind of moral education we need on a Sunday.

    You are now perceived to have wealth and that means others can use that as leverage if you don’t pay your bills.

    Unlike before when there were no consequences to not paying your bills. You could get away with anything and blame others for all your problems!

    Sorry JJ – that post was hard not to respond to.

  39. Enjoy what you have Sweethome and stop regretting things that never were in the first place. With home ownership comes additional responsibility.

    If that oil tank ruptures in the next year it is your fault for not checking on its condition not the previous owner for not telling you it was old. Don’t clear the sidewalk of snow, that’s your responsibility not the city and expect to be fined for not doing it. If you don’t have enough or the right insurance on the home – it’s your fault not the insurance company, etc, etc.

    If property values increase then relish in your good fortune but have the humility not to rub it in the nose of those who don’t have as much as you. If prices decline then accept it as a fact of life that shit happens.

    A house can be a blessing and it can be an albatross around your neck. Never fall in love with things as they can be taken from you by others that want what you have. You are now perceived to have wealth and that means others can use that as leverage if you don’t pay your bills.

    The buck stops at your door.

    And if your just that bullshitting troll using another fake name then you can burn in hell.

  40. SweetHome – more power to you. Kick back and enjoy what you’ve worked for, it’s been well earned.

  41. If I was about 50 right now (I am not), and had a house paid for. I would consider buying a 2 or 3 bedroom condo or townhouse to eventually move into. By 65 it should be paid for (prior to this depending on personal finances.

    I then have my option of renting out either the home or the townhouse to fund my retirement. But wait, say I had thought of this at 45 or earlier and by the time I retired I had 2 condos plus the house I live in. I’m not concerned with house prices declining as I’m only concerned with a steady stream of income. Who cares about TSFA, RRSPs, GICs, Bonds when you’ve got direct money coming in. I’m being somewhat sarcastic here, I prefer diversity but the numbers as I see them make sense.

  42. I find it delicious that all these bears who waited it out on the sidelines doing their market timing thing got it so horribly wrong they’re priced out. Ha ha ha who are you kidding forenter, you’d never buy.

  43. It’s not looking good if you’re going to keep counting on the Asian’s

    I dunno, India & Russia markets for example are up 40% since Jan, natgas up 85% past few months, lumber & silver up 45%. I’m not saying BC’s firing on all cylinders yet, but give it a few years and the royalties will start pouring through this city.

    Even a quick look at China looks A ok.

    Looks like Kyle Bass has been on the wrong side for years now.

    July 3, 2013
    Kyle Bass: China Could See ‘Full-Scale Recession’ Next Year

  44. Nobody remembers they will need to earn all of that money eventually to pay it off. It’s all just fixated on the monthly payment just like cars. Also people betting on low mortgage rates for the duration of their 25 year term are taking a huge risk.

  45. Maybe you should do some reading gwac on what’s happening in the real world in order to anticipate the future. It’s not looking good if you’re going to keep counting on the Asian’s to sustain your paper profit piggy bank.

    ICYMI, when the bond market freezes up, you’re screwed.

    Kyle Bass Says China’s Corporate Bond Market Is ‘Freezing Up’

    Kyle Bass, the hedge-fund manager who’s wagering on a devaluation in China, said the country’s $3 trillion corporate bond market is “freezing up” amid rising defaults and canceled debt sales.

    “We’re starting to see the beginning of the Chinese machine literally break down,” Bass, the founder of Dallas-based Hayman Capital Management, said in an interview on Real Vision, a subscription video service for investors.

  46. I was just reading a June 18th Globe and Mail article about CPP reforms. There was an interesting quote: “Mr. Shillington [a statistician] calculated that a family headed by someone 55 to 64 who has no employer pension plan typically has retirement assets of just over $3000 – a thin cushion indeed on which to rest anyone’s golden years.”

    So, where are people hoping to get their retirement money from? Their houses, of course. When houses are so expensive relative to earned income, and defined benefit pension plans are becoming obsolete, it’s hard not to view one’s house as a retirement plan. People aren’t putting money into both pots, and that is even with an older demographic (55 to 64) who didn’t have to pay as much for their houses as today’s prices. This dual role that a house now plays is what makes the decision of what/when to buy so fraught (for those who do actually think about their long-term future, not just their next mortgage payment).

    There was a generation of people who could afford to buy a house before they were 30, and by the time they were 65, they would have both the house paid off and a comfortable pension from work. Now there will be many people for whom neither of those is true, so the risk they take in putting all of their eggs in the housing market (which is necessary to own a house at all) is much larger than in the past.

  47. gwac, not winding me up in the slightest. It’s you who gets all out of joint every time I post, just like clockwork posting something condescending to deflect the reality of the blow off top in process with nothing of substance to offer the board. Kinda like being introvert’s little brother.

  48. But I would expect nothing less from an adult.

    Way to insult children, JJ.

    Considering the situation, at best those digs are childish…

    Vicbot, not you too!

    Both of these are good examples of childism, which unfortunately is prevalent.

    Every market corrects.

    I guess. But Victoria hasn’t seen a sizable correction since … forever. And Victoria isn’t even halfway to where Vancouver is — and it hasn’t corrected yet.

    Typical juvenile responses at a market top.

    And that is our third example.

  49. @JJ – I’m a Gen-Xer, not a Millennial. The reason we can still afford a house is because we worked hard for many years and lived a miserly life in cheap rental accommodation. I can’t really defend my past actions without revealing more of my personal circumstances than I would like, but my main point was that the surge in the market suddenly caught many people in need of home up with a tidal wave of speculators. I think many people on this website get that fact.

    If I were younger or maybe even older and didn’t have to be out of my rental accommodation this year, I might have taken househunting’s strategy. I really don’t know which way prices are going, but I do know that I would like to own a home for at least some time in my life while I have enough health to enjoy it. Waiting until a possible downturn would have jeopardized this. So, I took the risk.

  50. I love winding you up Hawk. I can image those blood vessels popping. Don’t worry I am sure there is a house in port alice you will be able to afford in couple years time as u wait for the pop that just won’t come.

  51. Gwac and Mike are a carbon copy of the David Lereah anti-bubble media squad. Every bubble fact is attacked as we’re angry ,live in a basement, can’t afford what they live in, draw illogical charts that go on forever, etc etc.

    Meanwhile every banker in Canada who lends the money out says the party is over. Typical juvenile responses at a market top. Must be in the real estate business.

  52. Hawk the never land people seem to be doing ok. How about you?Your anger seems to increase daily as the market does not do as you expect or want. Mike has been right on the maket for awhile. You not so much. So maybe you should change dispensaries to Mikes. 🙂

  53. It’s never different. Every market corrects.

    I think we’re in agreement, but I’m betting we have differing opinions on when the next correction is.

  54. Interesting to see a Chinese economist calling for a China implosion. What would that do to BC real estate ? Disintegration.

    This economist thinks China is headed for a 1929-style depression

    Andy Xie is among the loudest voices warning of an inevitable implosion

    “In a recent interview with MarketWatch, Xie said China’s trajectory instead resembles the one that led to the Great Depression, when the expansion of credit, loose monetary policy and a widespread belief that asset prices would never fall contributed to rampant speculation that ended with a crippling market crash.”

  55. “I’d like to know what dispensary Michael is hitting up before makes his posts here, because things just don’t go up forever. It’s never different. Every market corrects.”


    Mike and a few others here live in Neverland, where prices never go down, and never lose money in any investment ever. It’s soon to be a land of pain and tears for those who think this is the New Paradigm. The sheep always get sucked in at the top, and as you say every market corrects.

  56. I agree with you Michael. When markets take off the better hoods see price rises first and then prices in adjoining hoods follow. That’s probably how the term “location, location, location” originated. But it isn’t typical to have such a huge gap between adjoining hoods. Neither is it typical to see house prices in Oaklands the same as Fairfield or that the cost of residential land being higher than multi-family zoned land.

    Looking forward you would expect to see prices in the more desirable hoods plateau with diminishing affordability while the adjoining areas continue to rise. This could still happen but I’m not seeing anything suggesting that this happening.

  57. JJ: In the past, I looked at a few places in Victoria, and I had a difficult time justifying what people were asking and what I would be getting. Think asbestos, perimeter drains etc. The situation is even worse now with these price increases. I never worry about it though.

    Why get stressed over buying something that’s overpriced and will most likely be a huge money pit for years to come? Sure, if one is inclined to think that this market will go up steady for another twenty odd years, it might be a good idea to buy, but if you think it will correct within the next five years, I wouldn’t bother, otherwise, you’ll most likely end up in a financial hole that you may never be able to get out of.

    Eventually this cycle will change. There’ll be some catalyst that triggers it.

    I’d like to know what dispensary Michael is hitting up before makes his posts here, because things just don’t go up forever. It’s never different. Every market corrects.

  58. Vicbot if you stop treating people as children they will learn to become an adult.

    Instead of rejoicing at being a new home owner she’s regretting not buying two years ago when she had a long list of reasons why it wasn’t right for them to buy back then. What did she lose? Nothing!

    Save your empathy for those that truly need it.

  59. Happy Canada Day, eh!

    The areas of Oak Bay and Victoria have had double the house inflation as other districts.

    Makes sense to me. Best hoods & amenities in city cores always outperform at this stage of the cycle.

  60. For those would have, should have and could haves. Here are how year over year prices have increased in the different core cities.

    District Sale Price, Median 2015 /Median 2016 Percentage Change
    Oak Bay 36.2 %
    Saanich East 20.9 %
    Victoria 30.2 %
    View Royal 14.8 %
    Esquimalt 15.5 %
    Saanich West 15.4 %

    Despite almost identical social, economic, geographical and political fundamentals. The areas of Oak Bay and Victoria have had double the house inflation as other districts. This isn’t what commonly happens in a market where the concern is to find a home to live in and enjoy. This is what speculation does to a market as investors gobble up more housing in select neighborhoods in the anticipation of a future windfall.

    This same is probably happening in Vancouver and Toronto and this is one of the many reason why so many economists are concerned about the housing market.

    When I first noticed this massive difference I thought the market would change and people would substitute more expensive neighborhoods for adjoining less expensive areas and price appreciation with time would even out. And that has likely happened to a small degree. But speculators will not substitute hoods because it is contrary to receiving a big payoff in the end. And so the inflationary gap between hoods has increased.

  61. “Bur I would expect nothing less from an adult.”

    An “adult” has the decency not to take continual swipes at an honest person who is obviously under severe stress about making a financial commitment. Considering the situation, at best those digs are childish, but at worst they are bullying and abusive, especially if the parttern is repeated.

  62. That’s a good story HouseHunting. You had an upset in life and you moved on and made improvements to your life. Life dealt you a lemon and you made lemonade.

    You certainly could have sued the seller but you would still be in court today with extra aggravation and attorney fees.

    Life is too short to be regretting what might have been. But I would expect nothing less from an adult.

  63. bearkilla:

    “..Looks like all those who were howling about those dumb racist hicks ruining the economy can stfu.”

    Voices again? There’s a handy container you can get at Shoppers that’s easily labelled M – S, or Monday to Sunday, so you don’t skip a day. Some even have M-A-E, or Morning, Afternoon, Evening if helps further..

    Just a friendly tip ’cause you seemed like you need it.

  64. To offer a different perspective here. We moved to Victoria last summer with a house already lined up for purchase. It was a private sale, and long story short the seller reneged just as checks were being cut to close the deal. Shit happens.

    As luck would have it we managed to find a good rental to carry through the winter and the plan was to revisit the housing market in the spring. Again, a long story short and after taking a few lumps we decided to back out of purchasing this year completely. My significant other was upset and cried a bit, and then some more.

    The main drivers for getting out of the market were:

    ** Lack of value for housing at the current prices. “compromise” is way too forgiving a word being used to purchase something that is not worth the prices being paid.

    ** The manic nature of the market this year rings alarms bells that it’s not a market to participate in.

    ** Our situation will change considerably over the next few years as the kids get older and more mobile – increasing our range of where we can look for housing.

    ** Most importantly, the financial fundamentals. We went through a pre-approval process with a friendly broker and we’re offered over $200k more than what we could comfortably afford. With the mortgage being offered we could likely find that “compromise”, but then be maxed out 100% on housing. No thanks… or aka Priced Out.

    This forum can be very binary in the points of view – you are either in, or waiting for the apocalypse. Personally I’m in neither camp and just consider and accept that we are relegated to the side lines. The plus side to our position now is that:

    ** We made a considerable amount to RRSPs this year that wouldn’t have been possible had we purchased. The tax return almost covers rent for the year. TFSA’s and RESP’s have also been maxed out.

    ** The rental we have is ideal for our current situation – close to School and Family, and after being a home owner it is nice not to worry about the maintenance.

    For the future, who’s to say. It would not surprise me either way if prices continue on the current trajectory or if prices crash and burn – there’s enough headwinds or tailwinds either way. In our situation we’re working on a four year clock where we can become re-qualified as first time home buyers to apply RRSPs for down payment. Till then we’ll offset rent year over year with RRSP contributions and just look to the future, however it plays out.

    SweetHome – Cheers to you! Committing to a course of action with a foggy view. Takes some balls, we’re in the same boat, just opposite oars.

  65. Don’t look now nutbaggers but the London stock exchange is now higher than pre-brexitagedon. Looks like all those who were howling about those dumb racist hicks ruining the economy can stfu.

  66. The way I see it, though, the real damage was done by not buying a few years ago, or even last year. If prices are 25% higher 5 years from now, it might ease some of the regret.

    I estimate prices will be somewhere between 50 to 75% higher by then than they are now, so I highly doubt there will be any regret. You’ll always go through a short period of remorse or wondering, even when buying 2013.

  67. I have empathy for you SweetHome…. Such a sudden swoop. We agreed to sell our house to our tenants in January and it seemed like I just inked the contract in Feb when reports started coming in of the escalating prices. It came in fast and hard. The property we bought had sat on the market and we had no competition buying it. I lifted conditions as fast as I could after suddenly people came sniffing around. At least I shifted the equity back into the market immediately so I don’t feel hard done by…. Looks like I will have my development permit next week by the way 🙂

  68. I don’t expect you to click on the you tube links. You can chose to or not. That you continue to do so and then complain about clicking on them- says a lot about you.

    You can also chose to buy or not. Why should some one get empathy for not doing anything.

    But here you go. Here is my empathy for Sweethome…

    “I’m so sorry that you didn’t buy two years ago and make $200,000. Now you’ll have to live with 2 bathrooms instead of three. I feel your pain.”

    I can feel empathy for those that have been priced out of the market. But how can you feel sad about someone who just bought a house? Because they didn’t get everything they wanted? It’s called life.

  69. totoro,

    that’s exactly it. You don’t post enough.
    Now, my 2c…

    If you found a home that will work for a number of years, enjoy it and stop looking over the ‘virtual fence’

    If you haven’t found one yet then it’s time to take a closer look at value and compromise. There’s a number of outlying areas that are going for good value that have been on the market for weeks. It’s not my job to tell anyone what to like, not like, or heaven forbid drive an extra 20 mins during their commute to find a home they never knew they’d find in an area they’d never considered. If you’ve lived in Victoria all your life, I’ll be honest, your notion of neighborhoods is dead. Like they say now with businesses: if it’s a model based in 20th century ideology you’re sunk in the first year, just another statistic.

    I love this blog. It opened my eyes to other areas I had not considered. Let me re-phrase: other municipalities.


    Well there goes half an hour watching acapella videos.

    Don’t you think that’s a bit harsh JJ? There’s always a continuum where people could buy from stretching to the max to get into something to finding the perfect house at a very affordable house. Choosing the moment is a big part of the focus of this site.

  71. I certainly have no empathy for those that whine of things that could have been if they had only …

    I certainly have no patience for those that expect others to click on and sit through their youtube links – I thought we were over that?

    I do feel badly for folks who waited and were taken by surprise with the jump in prices. I don’t think the degree of appreciation was predictable. Everything is relative though. Looking back the bad times to buy look like fabulous opportunities – today’s high prices are tomorrow’s bargains if you stay in long enough.

  72. Sweet home – I have empathy for you. My family was in a very similar situation, but luckily bought in the fall instead of now.

    BTW – if you’ve bought in Fernwood on a busier street and are moving Sept 1 approx, congrats!

  73. If we could have saved $50K on a house, that would have been a substantial amount of money for us.

    In the end that is the risk to take. In 2013 when we bought I expected another 5-10% decline in the market, but I was OK with eating the $50,000 loss. In the grand scheme of things not that much.

    I had expected that if prices started to rise, we would be okay up to a 10% increase. Given the relatively flat market, I expected it would take months for a 10% increase, in which case I could have acted then.

    Yes. I think a rise was predictable given that the market had been improving for 2 years. What no one predicted was the magnitude and suddenness of the rise. Even the BCREA was only calling for a ~5% increase.

  74. Thanks for sharing your story Seeethome, appreciate hearing people’s experiences with this market.

  75. Now after all that you have said Sweethome, explain how you figure you were compromised by $200,000 when you were not ready, willing or seriously looking to buy 2 years ago.

    I assume that you are an adult and are thus accountable and responsible for your own actions or in this case lack of action.

    I certainly have no empathy for those that whine of things that could have been if they had only …

  76. @sweethome, I’m sure 99% of people have empathy for your situation, it really has been a shock for so many people and that’s why I’ve been commenting that the gov’t needs to control speculation. Best to ignore the antagonistic comments here, They’re totally uncalled for. Thanks for sharing your story with us – it helps to know what’s going on out there.

  77. I should add one factor in the reason we did not buy in previous years. This probably occurs fairly often with couples.

    In our house hunt over the years, my spouse and I did not exactly agree on how much we should spend. I thought we should spend on the lower end of our range because it was more comfortable for us, while he thought we should spend on the higher end because that meant better value. Strictly speaking, he was right, since I have seen several of the houses he suggested go for over $1M this year. On the other hand, we would have seen substantial gains from one of my choices too. The disagreement caused us to pass up several houses that would have likely been fine.

    This year the selection was so much poorer and the prices so much higher that it took away the luxury of waiting for something “just right” for both of us. Neither of us hated the house we bought, and we could more-or-less afford it. This year, that was “good enough”.

  78. @JJ “You see I find it really difficult to find any kind of sympathy for you. Because every bear on this blog has repeatedly said that you buy when it is right for you.”

    I would like “empathy” not “sympathy”. Empathy because buying a house had a fair degree of risk for a working family even when prices were 3/4 of what they are now. Victoria prices have always been high relative to average local incomes.

    Also, there were some periods over the past few years when our schedules and/or circumstances didn’t allow for more than casual looking, especially if there did not seem to be a rush because prices were flat.

    I don’t think you predicted the SUDDEN increase this year, did you? A few years ago there was talk of interest rates going up and prices going down. If we could have saved $50K on a house, that would have been a substantial amount of money for us.

    I had expected that if prices started to rise, we would be okay up to a 10% increase. Given the relatively flat market, I expected it would take months for a 10% increase, in which case I could have acted then. But there was a roughly 30% increase in approximately six months, and slim pickings even before that.

    What happened to house prices in Victoria screwed younger, working people who were not yet in the housing market. A chasm opened up between the “haves” and “have nots”. Retirees ready to cash out were the biggest beneficiaries.

  79. So today you believe that you made a bad decision in waiting because you bought a house that doesn’t meet your needs and expectations.

    If prices go up will that make your bad decision a good one? The house still isn’t what you want.

    What made you decide to wait and not buy two years ago when you could have the house you wanted at the price you wanted?

    You see I find it really difficult to find any kind of sympathy for you. Because every bear on this blog has repeatedly said that you buy when it is right for you.

    Have some whine with that cheese.

  80. @Ash asked me a day or two ago about what compromises I made buying my house since I wasn’t really satisfied. The simple answer is around $200K of compromises.

    We had been looking for a house for several years, and despite the skyrocketing prices, our budget remained basically the same. In previous years, we were used to a certain type of house/location for our $650-750K price range. Suddenly, to stay in that range, we had to accept substantially less, whether it was location, condition of house, house size, flexibility of layout, lot size, etc. The houses that we looked at a few years ago are now around $1M, so this year we were looking at houses that would have previously been around $600K.

    The difference in proportion is roughly like test-driving $40K cars and then being told your $40K only gets you what was previously a $30K car. It’s still a car, but you can’t help but remember the feeling of what it was like to drive the $40K car.

    We haven’t moved into the new house yet, so time will tell if we made the right choice. The way I see it, though, the real damage was done by not buying a few years ago, or even last year. If prices are 25% higher 5 years from now, it might ease some of the regret.

  81. “I guess what I was trying to say was that Florence St wouldn’t have been listed for $750k a few months ago, probably would have been $600k at the most. ”

    Agreed. I just drove by Florence, and it was “cute” but sure not what one would picture an $800K house to be. Or at least what one used to picture an $800K house to be.

  82. Seller of 902 – 834 Johnson was doing a military move (realtor fees paid for, PTT paid for, moving expenses paid for) so likely was eager to sell so they could buy in their new town, out of province. Sound like they missed out a bit (but traded for a lovely townhouse out of province!)

    Appreciate all the examples. Cheers

  83. I guess what I was trying to say was that Florence St wouldn’t have been listed for $750k a few months ago, probably would have been $600k at the most. So the ask prices are being adjusted upward, and people are still bidding over-ask. That’s probably why you’re not seeing as many outrageous sales-over-ask figures.

  84. And just for those that are interested.

    People are paying more per square foot for a single family lot these days than developers are paying for vacant land for town houses.

  85. The agent’s commission doesn’t change much from$750,000 to $800,000. But if you can sell a property in under a week that reduces your advertising costs as well as the number of open houses and showings on the property. And that’s gotta be worth something.

  86. Except for Estevan those aren’t that dramatic of over asking prices. There have always been bids over asking price but mostly it has been contained to just 5% over asking..

    I think when people see offers that are 20 percent over ask then there is the “WOW” affect. But that’s only about 3 percent of the house sales this month in the core. And I suspect most of these were under priced to get as many offers as possible in the first week on the market. Then the agent can say “look 10 offers in 4 days – you want this house you’re going to have to pay at least a hundred grand over asking” Which is a very stupid thing to do. Basing your offer on an intentionally under priced home to entice as many offers as possible and then determining your bid on the number of those offers. Sounds like something someone from Vancouver would do.

    And believe it or not there is a stats for this too.

    Month Sale Price to Original Price Ratio for detached houses in the core districts.
    Jan 99.0%
    Feb 100.0%
    Mar 100.2%
    Apr 101.1%
    May 101.2%
    Jun 101.9%

    Relative to last June the over ask has noticeably increased when half the properties were selling at 98.1% of the asking price.

  87. Speaking of over-asks, I’m still seeing them, and they’re for properties where the ask price seemed reasonable, eg., 2260 Estevan, ask $785k, sold $950k (ensuite was very nice but kitchen was near original, main bath was done in 80s, & basement had 2 usable rooms but others were low) Also 2421 Florence St, ask $750k, sold $815k, assess $565k (with a 846 sq ft main floor). 2507 Wootton, ask $779k, sold $855k, asses $690k, needs new roof & maybe kitchen.

    It does seem like ask prices have adjusted upwards (eg., up at least $100k from last year), but there are still bidding wars.

    Then again, when we bought a few years ago, there was a bidding war too – 4 offers, and the agent delayed presenting the offers until all interested buyers were ready (all buyers indicated interest the first day, and the agent presented them the next day).

    Which makes me wonder – maybe these blind auctions became popular because the selling agents were doing it anyway – in previous years. The different this year is that it became more dramatic because the number of offers increased so much, and people were going unconditional, so agents wanted to give buyers time to do an inspection. Perhaps the intention was to give all buyers a chance, and to protect them from unnecessary risks.

  88. Condos can be a little more complex to figure out, since you are buying into a community of others. And how that community has acted in the past may have an effect on market value.

    You can have two identical condos in two identical complexes but they will not sell for the same amount because in one of the complexes some crazy old bat is intent on bringing numerous frivolous complaints and law suits to the council and other home owners. Because of this you have to investigate past sales in the complex to see if there is a pattern of under selling. That puts out of town buyers at a disadvantage as that poor sod from Vancouver who buys a condo in one day should have known that the last time the condo was for sale it took a year to find a buyer.

  89. Few more thoughts on blind auctions having sold & bought under those conditions. If I was to sell again I’d only consider doing it ‘blind’ under certain circumstances. Part of the stress is often setting your price low to attract multiple offers. If you do that:

    Make sure you negotiate with your realtor a reserve price or range (we did) so that commission is paid if the reserve price is met but not the (low) list price (assuming you choose not to sell). Some agents may pressure you to sell at the low price or demand commission if the low price is met regardless of whether you sell at that price. If you choose to give a specific number make sure you trust your realtor, otherwise it may be best to keep it vague.

    As a buyer, the idea of a reserve price pisses me off, but as it currently stands you do not have to sell your house if someone meets your price. I think changing that might chill things out a bit, or at least make the initial price more realistic. My wife and I noticed a lot of listings got cancelled and we knew the price had been met with multiple offers but the seller had a secret price they wanted to achieve which obviously was not met.

    Don’t do it if everybody is doing it. The weekend we sold only had a few delayed offers going on at once in our price range. As it turned out we lost one potential buyer to another delayed offer situation (who ended up winning) another listing that came out Friday. Things get tricky if a buyer likes 2-3 houses in one weekend that all close on a Sunday at around the same time. Marko could best describe what could happen if you submit multiple bids on multiple properties and happen to ‘win’ more than once! Keep an eye on how many other auctions are going on, and the date & time delayed offers are being reviewed – don’t jumble in with everyone else. Better yet don’t do it at all if everyone is doing it! Don’t expect your realtor to do this for you, either. As many have alluded to many realtor’s priority is their commission.

    To further this, as mentioned there were NOT many of these auctions going on in our price range when we listed our house. We talked about the possibility of this happening with our realtor prior to listing and had plans if there were too many ‘auctions’ in our price range (best to relist at a higher non auction price IMO).

    On the flip side we bought when there were a LOT of auctions going on in that price range. This can be an advantage for you, as often it could be the same group of buyers targeting the same group of houses so the horde gets thinned out. We attended several open houses and had a good feeling in what direction the horde would be going, fortunately for us it was in a different direction than the house we liked best!! We saw a lot of the same faces at open houses on comparable listings, and had a good idea where the bulk of the offers were going.

    An auction (in a hot market) can be great if you don’t want to spend a lot of time selling your house (in our case we had tenants to deal with). Getting it done in a weekend can be a real blessing, with a SMALL chance at a BIG payout, but probably a BIGGER chance of a LESSER payout. That was our feeling. In the end we had a big juggling act, between old tenants needs, renovations and new tenants if we had decided to stay, me working out of province and set to leave in less than a month. In those conditions an auction made sense. Now we have a house without a suite, and I’d likely try to bring it to market at a less hectic time, if I were to sell, and probably avoid the auction system. That being said selling your home over a long period (constant short notice requests for showings) can be very disruptive as well.

    In our humble opinion we probably got the lesser payout, and believe we probably could have sold our house for a bit more than what we actually got. That in turn may have led us to missing out on the house we bought, however – so it worked out for us in the end. We also believe that the auction on the house we bought was at a bad time (lots of auctions) plus a few mistakes (photos delayed) on the listing + a early morning open house on a Sunday (not the best time for one) enabled us to actually pick up this house for less than what it could have gone for – but that is entirely subjective and impossible to tell for sure.

    Short answer is that basically what JJ said – it can work well under limited and specific circumstances – but I suspect for the bulk of sellers a traditional listing and sales terms would be better for them in most circumstances.

    Keep in mind and do your own calculations but the bulk of an agent’s commission is made up in the first baseline part of the sale, and very little benefit for them in the last part (the most important to you). An agent’s commission doesn’t change much between a sale price of 750,000 to 800,000 but the difference to you can be absolutely huge.

  90. How is the month shaping up? Any opinion on the lower sales in the core?

    Sales slow based on seasonality this time of year. Market is still beyond insane. Just look at the sale on Empire Street yesterday.

  91. I agree with you Marko, the delayed offer doesn’t always work to the advantage of the seller depending on the current market conditions for that specific property.

    In a balanced market with lots of properties to chose from, shortening the exposure is asking for a “quick sale” price. A price that is at the lower end of the value range for similar properties. And I think as the market moves back to a more balanced position more of these delayed offers will tank.

    If the delayed offer does not meet the sellers expectations then they are left with re-listing the property at a fair asking price. Imagine what that looks like to a prospective purchaser that may or may not have made an offer on that property? Or on the seller that was told by the agent that the delayed offer would get them the best price? I certainly wouldn’t be re-listing with the same agent that failed the first time.

  92. My neighbour turned down a higher offer, sold to a family who sent a letter and photos.

    I hear this all the time, except the neighbour forgets to mention something super important. For example, the higher offer was conditional and the family who sent a letter and photos was unconditional.

    Or you get an offer for $501,000 with conditions for 8 business days and you get the family coming in at $500,000 with conditions for 3 business days and you go back to them and you say, “we have a higher offer but my seller loved your letter and photos so much that we’ve decided to go with your offer even though it is lower.”

  93. Marko,

    You said you’ve submitted 30 letters during offer presentation. Can I ask if you were there when they were presented to the sellers? If the selling agents duty is to get the highest price for their client, is it reasonable to assume that not all sellers actually get to see the letters? By default personal letters are not part of the offer so why show them and give up any commission? Honest question looking for honest opinions.

    I am confident for the most part they are presented. Honestly, this is how things play out in real life from when I’ve been the listing realtor.

    You get 8 offers, for example, three have letters, but two offers without letters are unconditional. Right away you just scrap the other 6 offers and those three with letters.

    Personal letters are a great tool when you are lowballing someone in a slow market and their home has been sitting on market for 8 months.

    Useless in multiple offers 99% of the time, of course unless your offer is the highest and has the least or no conditions. A lot of buyers think they got the house because of the letter but in reality their offer was the best.

  94. I think it is more than just who benefits. It is an activity that sheds at the least a negative perception by the public on the real estate industry. As a professional you should not be engaging in an activity that may have an adverse effect on the public’s perception of your profession. If as a real estate agent you don’t want to be labelled as “used care salesmen” then stop acting like one.

    As in all professions there are some bad apples that cause damage to the profession. It isn’t just agents. Doctors, lawyers, accountants, appraisers if you look hard enough you will find them. What is necessary is that the professional body that each belongs to have standards that are enforced. That these members have to re-certify to retain their membership and that they all must attend every couple of years a mandatory course on ethics and professional practices.

    And I think that’s a good place to start for any new real estate council to implement.

  95. In condos I am seeing the bidding war setup actually backfiring.

    For example, #902 – 834 Johnson listed for $400,000 – delayed offers, sold for $405,000.

    #702 – 834 Johnson (should be worth $10,000 less based on floor differential) listed for $418,000 and sold 10 days later for $415,000 in a non-delayed offer set up.

    Let me give you another example at Hudson

    431 – 770 Fisgard listed at $429,900 and sold for $429,900 quickly.
    416 – 770 Fisgard listed at $419,900 and sold for $430,000 in a bidding war.
    428 – 770 Fisgard listed at $429,900 and sold for $428,000 quickly.

    I personally listed 402 – 770 Fisgard for $449,900 and 83 days later, over 100 showings, and 4 offers later (seller just kept turning down offers that she felt were too low) it sold for $447,000.

    I am not super convinced even in single family homes that the delayed offer setup is superior, on average, to pricing the property higher and waiting for an offer. For every seller that gets above market value in a delayed offer setup another seller may be leaving money on the table not waiting it out at a higher price.

  96. I’d say more agents are getting burned with their blind auctions the last couple of months versus those hitting paydirt, the sales decline shows that, not to mention the Rockland open auction disaster.

    A place my friends went to a couple weeks ago and was set up for bids all in by Saturday at 5, is still for sale with an open house lined up for Saturday. Definitely a change in the winds when a place in a family hood can’t sell for an entry level price.

  97. Hawk

    The last 6 months shows the market has gone up. Last 3 not so much. Overpayment is only if prices go down after. We have not seen that so I will disregard your overpayment comment. 100k more this year not happening 760 to 770 I think is where we will end.

    My comment was only in regard to blind auctions and whether they have an impact on prices. I am not convinced. They benefit the Agent so I would say it is not good for the market.

  98. JJ

    It does not benefit the Buyer
    It may not benefit the seller, house is not long enough on the market plus people will refuse to participate
    It Benefits the agent.

    We are on the same page.

  99. Gwac would you be upset if there was deception that lead you to pay over market value for a home. That you were told there was 6 offers when there was just 2? Or that the offer was substantially over asking price when it was just $5,000 over asking price?

    Now you can sue for diminished value. That you had been intentionally mislead but that it isn’t easy to prove in court You would have to sue for fraud, And that means you will likely not see a dime and you would have a difficulty in finding a lawyer to represent you. As Error and Omission insurance does not pay out in cases of fraud and lawyers like to see a pay check.

    It’s a catch 22 when suing for fraud. If you sue for fraud and win you likely won’t see much money unless you go after the deep pockets of the insurance companies.. If you sue under a different premise of an error or omission then you can’t prove fraud and you lose the case.

    Perhaps what is needed is a fund similar to what lawyers have. If a lawyer is found to have committed fraud then the law society pays the damages out of the fund.

  100. “Why I am saying that is the Median price really is not reflecting huge over payments. ”


    The last 6 months have clearly reflected huge over payments, it’s up $100K in a short amount of time for no reason other than panic buying bidding wars.

    The last 3 months have shown the market is topped out and affordability levels reached for most buyers. Declining sales for last 3 months is another major reason. If you’re expecting another $100K this year I think you’ll be most disappointed.

    Jack’s numbers from previous thread:

    Month Sale Price, Median
    Jan $655,500
    Feb $681,500
    Mar $740,000
    Apr $758,000
    May $760,450
    Jun $745,000 projected

  101. JJ

    Your post is great and makes a lot of sense. Anything an agent loves it just makes me wonder who it benefits in the end.

  102. JJ

    Why I am saying that is the Median price really is not reflecting huge over payments. All it showing is the houses were underpriced and the selling prices are reflective of where the market has been the past few months. Median has been stable for a few months. I just would have though this would have kept the median going higher month over month if it really had an impact.

    To add would it have gone for higher if they would have been more patient and sold it normally at the price they really wanted.

    I know agents love this. Less time, less work but does it really benefit the owner. I do not know but I wonder.

  103. gwac, it depends on how widespread the practice has become. Just like an auction at Lunds it depends on how many buyers show up that night wanting that same wobbly three legged table. If an auctioneer can create an intensity among several buyers they can get a higher price. As they’re now selling the sizzle and not the steak.

    The problem is that this shortened market exposure might be used by a few less than forthright agents since there are no regulations on how this “auction” is to be conducted. And I would say that right from the start there may be an intention to deceive because it is not being called an auction but a delayed offer. There are legitimate reasons for having offers presented at the same time such as the owner is going on holidays or for the ease of the tenants. And that wouldn’t have an effect on destabilizing the market because it doesn’t happen often. But when 30 to 40% of all listings are now delayed offers then that may be an undue stimulus where buyers are not acting prudently and in their own best interest but being manipulated by the heat of the moment.

    If an agent wants to conduct an auction then the auction should be performed by a licensed auctioneer. The agent can not be both listing agent and auctioneer. Delayed offers that are veiled auctions should not be permitted.

  104. Marko,

    You said you’ve submitted 30 letters during offer presentation. Can I ask if you were there when they were presented to the sellers? If the selling agents duty is to get the highest price for their client, is it reasonable to assume that not all sellers actually get to see the letters? By default personal letters are not part of the offer so why show them and give up any commission? Honest question looking for honest opinions.

  105. For what it’s worth I would give up $5k if it meant the house was going to a family who would respect it, as long as I knew for sure they weren’t flippers making up stories – maybe reference checks are needed as well. It’s understandable that everyone is in a different situation with different debts, but if you can afford it, there are more important things in life than that amount of money.

    Marko, is there a chance the Vancouverite sent a letter too?

    BTW glad that Clark ended self-regulation. TIme will tell how it’s implemented. As Hwak said we also need Eby’s task force if we want to see change, because it’s hard to imagine one gov’t department with limited resources tackling the scale of the illegal activity that currently exists. We even saw that long ago with Vancouver condos and local drug money laundering, which probably happens in Victoria too.

  106. @Marko RE Commission – absolutely not – if that is what I had to pay I may have looked elsewhere (probably to you!).

    Fortunately I’ve done a few properties with the same realtor now (he is fantastic) and he gives us a very decent discount. He or I can’t do anything (without jeopardizing the potential for a sale) about the buyers commission but he discounts his portion pretty heavily. Looking at your chart on your website we paid less total fees on our condo, and about the same on the house. It’s still very expensive but stings much less when you’ve built up a relationship with a realtor over many years who you know and trust – and when broken down between buyers agent and sellers agent’s commission we feel we got very good value on our end for what we could control. The PTT is what we really griped about. Two doses of that in one year is more than enough, thank you very much.

    RE the letters, perhaps I just got lucky to have the personal touch work in both buying and selling back to back. I can’t imagine a situation where my wife and I would not have given at least the option for someone to match if the offered prices were so close.

  107. JJ

    My question does even lead to a higher price for the seller? If the house was priced right in the first place and waited would they not potential get the same price as these blind auctions.

  108. While the day isn’t over, I show 268 houses sold in the core districts for the month of June at a median price of $750,000. That’s down from 340 house sales in May at a median price of $760,000.

    New listings for the month of June are also down from the month before. New listings declined from 343 to 328.

    In my opinion there has been an improvement in market conditions for house buyers in the core for the month of June as new listings have replaced sales at a rate of 1.2 to every one that sold. The stand alone housing market is still a strong sellers or bear market just a little less so than the month before.

    Hopefully if this trend continues we will see an end to delayed offers or blind auctions with the days on market rising from the current 9 to a fortnight or more.

    I would like to see the delayed offer/blind auctions gone. In my opinion this widespread practice is destabilizing to the marketplace and may lead to questionable and unfair business practices. Like shadow flipping there should be regulations limiting the use of delayed offers/blind auctions.

  109. Re letters, I’ve submitted at least 30 plus this year for my buyer clients. Has not worked once (unless the offer also happened to be the highest).

    One that really stands out to me is sellers (owners for 24 years, their kids grew up in the home, etc.) went with $940,000 to a Vancouver investor over my clients $935,000 (local young family with a newborn). Letter and family photo and didn’t even get a call back with a counter of $940,000.

    YTD have also had about 50 sold listings, letter hasn’t worked once on any of my sellers.

  110. Yep. When the head of the mortgage brokers industry association can say something as dumb as “Housing bubbles do not exist in Canada” then you know they have completely jumped the shark and lost even the pretence of being there for the public good.

  111. At leasr two more regulatory oversight changes are needed:
    1. Effective oversight of mortgage brokers and firms
    2. Effective oversight of lending by credit unions

    Unfortunately, industry lobbying for results based regulation has simply led to little or no oversight, with the good players being forced down to the level of the bad players, simply to remain competitive and keep market share.

    Good stable regulation with clear and balanced compliance and enforcement is needed.

    The pendulum finally swings back.

    Where can I apply for the position of superintendent of real estate? I’d do a damn good job.

  112. I’ve met David Eby twice and had decent conversations of a wide range of issues while he was involved with Civil Liberties. He’s intelligent, well spoken and I hope the future of the NDP party.

    I’ve also met Horgan but have not spent any useful time in getting to know him. As for their leadership I had certain views on Carole James but was fortunate enough one day to bump into her and spent the better part of a half hour chatting. The projection of her that I’d seen in the news couldn’t have been more polar to the down to earth person that she is.

    I see trouble ahead for the $15/hour minimum wage that the platform is promising and I hope a sturdy case can be made. To the business community its DOA.

  113. Glad to see Horgan and Eby have the balls to take on the foreign corruption and developers in Clark’s back pocket. She’s too chickenshit to speak the truth in order to risk pissing off the Chinese and their BC bonds they got sucked into buying as well as Condo Bobby. It’s all about greasing palms for the Liberals and it’s coming home to roost.

    Next they have to go after the banks for giving out 100% mortgages and LOC’s. If that was you or I trying to borrow that kind of money with some funny looking paperwork that couldn’t be verified, we would be shown the door and the cops called.

    NDP propose task force on fraud and money-laundering in Metro Vancouver housing market

    “B.C.’s NDP leader is calling for a task force of experts to investigate fraud, money laundering and tax evasion, saying that’s part of the root cause behind skyrocketing housing prices in the Lower Mainland.

    John Horgan said Wednesday, the “integrated task force” would bring together tax experts from the Ministry of Finance, legal experts, Crown prosecutors and others to investigate the issue of speculative investment from offshore money and whether that complies with laws.

    “There’s no shortage of evidence,” said Horgan, citing audits by the Financial Transactions and Reports Analysis Centre of Canada [FINTRAC]. “FINTRAC did 82 audits, and 55 of the 82 audits of the real estate market in the Lower Mainland did not comply with anti-money laundering regulations. There’s no shortage of evidence, there’s a problem here.”

    “Horgan criticized the premier for not acting on the issue of foreign investment driving up housing prices, and instead playing “around the edges of the issue.”

  114. Whilst the Chinese buyer’s clause to remove our garbage was the only personal touch.

    How endearing!

    Great post, by the way. Fascinating.

  115. Wow. Looks like the province agrees and is on the ball for a change. I’ve said a few times they are going to lose the right to self regulate this year and sure enough here it is. Great news.

  116. JS thanks for sharing. Nice to read real stories on what is going on. 150 people that is amazing.


  117. Horgan and Eby creating a task force for foreign money laundering and tax evaders through Fintrac. Clark taking back control of the real estate industry. The first of many catalysts about to pop this bloated pig.

  118. @ gwac – good question. I suppose it was no real definitive reason, and more of a combination. The presentation of the offers was one reason, as I mentioned (IE the letter). The other was the roller coaster of the blind auction process. I can tell you that my wife and I sold a condo earlier in the year (my first place, but too small for our soon to be growing family – the market was crap on condos so we waited to sell). The condo was listed as a standard sale, we set a price we were comfortable with, and simply rejected lowball offers. The process took months, and was not particularly stressful. Got lots of feedback, made a few tweaks etc. Had several people who expressed interest, but seemed to hang back. Eventually a couple of them expressed interest at the same time and things got kind of heated, and had 3 offers come in at once (one low, one at, and one just over). Overall it was pretty chill, and never felt stressed. Although our tenant had long since given notice and planned to move on within of a month of us accepting the offer (that is why we listed it in the first place).

    The blind auction situation + the crazy hot market conditions for SFH was a very different process. We had a tenant downstairs who had signed a year lease, and wanted to move on 3 months early. We were aware of the market conditions, so negotiated a deal with them to vacate the suite for 2 and 1/2 days (only returning in the evenings) in exchange for us waiving the penalty for breaking the lease. We knew it would be busy so we booked a hotel in town, and stayed there for the 3 nights. We had somewhere around 100-150 people through the house. Clean ups in the evening, and very little feedback (everyone wanted to play things close to the vest as it was a blind auction). Neither of us could imagine keeping it one the market for longer than 3-4 days the way it was. The amount of showings alone was nuts, plus we had tenants to deal with as well, so if we’d extended it we’d start running into problems with co-operation. We had a threshold we had in mind that we wanted to sell it for, and agreed with realtor RE listing it slightly low to garner extra interest. That being said our place was on the high side of the margins – we listed at 799,000 and got around 830,000 in the end (just under 20% over assessed). In any case two of the offers were above the threshold, so we were happy about that.

    We were also just slightly out of reach of where the most activity was at that time (600-750). Plus we were in a neighborhood (near mayfair mall) that was not considered as in demand (at the time) and were the most expensive house on the street and in the area by quite a wide margin. We were still a little skeptical that the market conditions would continue as such, and were only a 1-2 weeks away from the typical spring list season, where we suspected inventory may greatly increase – which it did, but only for a week. We’d bought the house only the year prior and to have it appreciate that quickly, and profit that much so soon… why look a gift horse in the mouth, right?

    There was the thought of a fair deal + unspoken terms of the auction. Generally it is understood that you put your best foot forward in these situations, and we felt they had. We also realized we probably could have pushed a bit further, but we were happy and we (assumed) they were happy. Nevermind the fact that the one buyer showed up without a realtor, made a bit more skeptical as to whether financing would be assured or not. The Victorian’s who wrote the letter also offered an atypically large deposit – which really led to the sense of security that the deal would go through. In the end we felt that one buyer was rock solid, the other less so – we didn’t really want to be in a position where the shakier offer was the one we accepted either.

    Now, on the other hand the house we bought unfolded in a similar way. We did not write a letter, but had our realtor express our love for the house to their realtor, and mention how we wanted to raise a family in the neighborhood (and the house- which is 100% true). We also made a point of introducing ourselves to their realtor at the open house and make clear that we’d be making an offer and why we loved the house (our thought was to take away what was our biggest stress, not knowing if you’d actually get an offer!). I’m sure it was conveyed to the sellers. Plus we offered a bunch of ‘quality of life’ flexibility clauses should the sellers need them and a very clean and short windowed offer.

    We got caught in a 3 way offer situation, but we’d instructed our realtor (again) to convey our love for the property and to give us a chance to be the best offer if we were not. The clause being, our realtor was to see the ‘best’ offer in writing if we were not. In the end, I suppose, it worked. We were beat in our offer by $7,500 – but they decided to give us a chance to just match it and get the house. Our realtor verified the offer, and we matched it and got the house – didn’t have to beat it.

    Still feel pretty lucky on the deal though, the house we bought was listed late on a Thursday but for some reason didn’t show up with pictures until late Friday. They had an open house earlier in the day on a Sunday (I believe) and it was very foggy so many may have missed the ocean views. Offers were reviewed Sunday night, so the market exposure was very short.

  119. According to a well known agent in the city he would have advised his client to pay the number of offers times $11,000 over the asking price or $66,000.

    All of his clients that have accepted his advise have been successful in getting the house they were bidding on.

  120. Just to further some of the comments in the last post about overseas and/or Chinese buyers. As I’ve posted previously we sold our house in March (and bought another in April) – thoroughly happy with the price we paid and the new neighborhood we moved to, btw.

    We had 6 offers on our house total, two were from Chinese buyers, we are uncertain if they were from overseas or not. One couple was from Vancouver, the winner was from Victoria, and I’m not too sure who the other two were, but I think one was looking at strictly from a rental perspective, intending to rent out both the suite and the main portion of the house.

    The first Chinese buyer had us excited, as with all the tales of ‘crazy money from overseas/Vancouver’ seemed to line up with our limited view of how they approached their offer. First, the buyer never actually entered the house that we know of. The agent who was acting on their behalf would drive up in a convertible, enter the house and describe it to them over the phone. No idea if he took photos or video. We know this because our open house time ended at 5pm, and we had parked down the street (there was a lot of traffic in the open house) and walked up shortly after 5pm only to see their realtor pull up and sprint into the house. He was there for 20-30 minutes, as we’d walk away then come back to check. Saw him up on the balcony and through a window, always on the phone, presumably discussing features with his client(s).

    The second Chinese buyer came through the open house, and approached our realtor with a ‘deal’. She would have a large cash payment, waive her need for a realtor, and allow our realtor to double his commission (OR) if the bid price wasn’t close enough she suggested our realtor waive HER portion of the commission and send it our way. We have a good realtor, and he told us straight away about her offer, and that he would not take commission on it.

    The Vancouver couple held their offer back to the second to last possible moment, and kept trying to get hints as to how many offers had come in (total). Oddly enough, so did the Victorians – who waited last to get their offer in. Only 2 of the 6 offers came in on time, and the last came in a good hour or two after the ‘deadline’.

    The two Chinese buyers both included clauses that we remove all of our ‘garbage and chattel’ from the property – despite our house being very clean and tidy. In any case, the absent Chinese buyers offer was middle of the road, with 2-3 offers worse and 2-3 better. So much for that.

    The Vancouver couples offer was similar. The other Chinese buyer, who went unrepresented and would send the extra commission our way, was very close to the ‘best’ offer, but presentation was very different. The Victorians had included a letter about why they loved the house, their plans for it, and about themselves – Whilst the Chinese buyer’s clause to remove our garbage was the only personal touch.

    Since the two offers were close enough, we had the option to send them back and see if we could eke out a bit more, but we elected not too. The money in the bank account at the end would have been about the same, but the personal letter clinched it for us. I’d really suggest if you are in the market to buy (good luck) that you work on something like this. It may not help if you are way behind, but could allow you to win a tie breaker or a close race.

    Either way, from are limited experience in selling our house, not all the Chinese/Vancouver money is crazy money. All the offers were pretty prudent, and in the end, relatively close. We did get the obligatory lowball offer, which was dismissed immediately but the other 5 offers were are all within the ballpark. I’m fairly certain that many of the houses that sell for a big price, may have only had one , or possibly two, ‘big’ offers – the rest are probably a bit more normal. The problem is the perception they add to the marketplace – forcing people to think they need to offer big to win.

    I’ve seen plenty of decent houses go for close to the assessed (5-10% over lets say) but they don’t stay in our memories, whereas the ones that go for 20%+ certainly do. Of course my main buying experience was from March through to mid April, so things may have changed. And I’ll be the first to admit that your rarely see houses listed close to their assessed anymore (I still look at my PCS, albeit far less frequently).

    Sorry for the long post ^.^

  121. Vancouver is just like a pyramid scheme it will go until it falls apart but it will recover fairly quickly like it has in every past crash. It is like Manhattan, SF and London. Lots of Demand and they are not building anymore land there :). Toronto is the same. Other centers will take a lot longer.

  122. Yep. Bubbles can go on longer than anyone expects but I do wonder how someone can still make the argument that valuations in Vancouver are in any way grounded in local demand.

  123. Here is another biased group trying to pump the market:

    “Housing bubbles do not exist in Canada,” the group’s chief economist Will Dunning says in the report, adding that it would be “tragic” if any misguided attempts to fix a problem that doesn’t exist were to happen.
    The report cites U.S. economist Joseph Stiglitz as saying a key requirement of bubbles is that the price of something is “high today only because investors believe that the selling price will be high tomorrow.”

    What a joke. Every time I hang with friends & family in Vancouver, several people talk about flipping homes or buying ‘investment’ homes because prices go up or never drop. In my own immediate family, some own 5-20 homes!!! My generation of the family is always pressured to buy one or even more homes because prices always go up, you stupid! My parents critized us when we sold our condo to purchase our first detached. “You should have kept the condo; you can afford both.” I’ve even been pleading my parents to diversify away from RE (100% of holdings, all Vancouver), but they simply cite that I’ve been wrong too many years in a row.

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