August 15 Market Update

Weekly stats update courtesy of the VREB via Marko Juras.

August 2016
Aug
 2015
Wk 1 Wk 2 Wk 3 Wk 4
Unconditional Sales 188  396
741
New Listings 265 571
952
Active Listings 2133 2174
3688
Sales to New Listings  71% 69%
78%
Sales Projection 896
Months of Inventory

4.98

Sales still running about 21% ahead of last year’s pace, but for the first time some indicators are down year over year.  Sales/list at 69% is less than it was last year at 77%.

Daily sales trending downward as you would expect into the fall.

Oddly enough a pretty good sized jump in active listings last week.   After several months of decline we gained 41 listings.  For reference in the same week last year they dropped by 99.   Market turning around or just some noise?

deltainv

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125 thoughts on “August 15 Market Update

  1. You’re…. And I don’t mean stop coming here in a bad way. It just might not be healthy if it turns…

  2. I would not worry so much if you bought your home and you can afford it. The simple fact you have to pay to live somewhere changes things. Plus your past choice. Just enjoy the home and stop coming here!

  3. @Maqlaq – “buying is currently a much better deal in Victoria right now compared with renting (provided you can afford the down payment), and rental conditions are only getting worse.”

    This was the clincher for us. We knew that we might be buying at the height of the housing market, but we had to move before winter, and trying to find something decent in the ugly rental market didn’t make sense with the large amount of money we had for a downpayment. Also, the possibility of getting evicted due to landlord selling would have been a nightmare because we can’t move on short notice, so now we wait and see if we were one of the last people in on a pyramid scheme.

    If the rental market would have been better, I would have been happy to sit out the season of craziness and hope it cooled off in 2017. The best case scenario for us would be for prices to stay relatively flat so we could possibly have more selection and move to something we like better in 3 to 5 years. I don’t think anyone can predict where prices will be in 2020, though, since we don’t even know where they will be next month.

  4. Month New Listings, Number of stand alone homes in the core districts.
    Jan 173
    Feb 300
    Mar 398
    Apr 415
    May 343
    Jun 345
    Jul 274
    Aug projected at 10.7 per day for a total of 333

    Month Sales, Number of
    Jan 122
    Feb 228
    Mar 318
    Apr 376
    May 338
    Jun 291
    Jul 206
    Aug projected at 210

    Projected new listing to sales ratio at 333/210 or 1.6 new listing for every house that would sell in the core. Historically anywhere between 1.5 to 2.5 new listings for every home that sold would be considered a balanced market with stable prices.

    Again if you have to buy right now, you are sailing against the wind. If you are lucky to be able to wait then you will have more selection but not necessarily a better price.

    As for those that are waiting by the phone for the next “delayed offer/auction”. The only way to win is to present your best offer and never counter. Learn to walk away, there will always be another house for sale and most likely a better one.

  5. I’m assuming that what is happening in West Vancouver is also what has been happening in Oak Bay.

    Since the number of Oak Bay sales is dramatically lower this month relative to other time periods and other neighborhoods.

    What these two hoods have in common is that they are often quoted as being the premier areas in both cities. They therefore tend to sell at premium over other hoods. That premium might be described as bragging rights.

    Lately that premium has bloated. The median asking price in Oak Bay today is $1,480,000. In Victoria it is $950,000 and in Saanich East the median asking price is $980,000.

    So is it any surprise that sales are down in Oak Bay.

    The interesting part is that this is likely showing that our market does have a cap. Even with low inventory, the market has a limit to what it will pay for a home on an island in one of Canada’s most western outposts.

    This is also one way that the market begins to change as the pendulum of listing may swing back form a shortage to a glut. As Oak Bay prices begin to decline, prospective purchasers question what they are willing to pay for other adjoining hoods. With increasing selection, those home owners that were holding off from listing now can buy a better home and begin to list their house for sale and inventory grows and grows.

    I think one of the best indicators to be watching is the days on market or DOM. Yes, some agents manipulate this number to make a listing “fresh” but if you’re following the median DOM those black hearted agent practices get weeded out.

    Besides you can always retain an appraiser to investigate the properties on your short list to buy. Sometimes called a desktop report the appraiser spends an hour or so analyzing the data on the property and provides you with a low, high and their opinion or they can tell you if your offer is reasonable and how strong the competition for the property will be . If you want a more in depth analysis then you would have them perform a “full” appraisal including a site inspection. I’ve worked with several prospective buyers over the course of a month as they visit various properties and want an analysis of several property over that time. Some have narrowed their search to half a dozen properties over that month and I’ve done the analysis for them. The fee usually works out to be about $50 an hour. A cheap unbiased opinion based on past performance of the property, what similar properties have been fetching and what the last property on the street or the complex has sold for trended for changing economic conditions.

  6. Vancouver Housing Market Implodes: Average Home Price Plunges 20% In 1 Month, reports Zero

    One month is no where near enough time for list prices to be adjusted let alone a 20% price drop.

    If sales collapse by 94% in a month, it is not difficult to believe that those few who achieved a sale did so by accepting an offer 20% below asking, which seems to be what happened according to this report from global News:

    http://globalnews.ca/news/2887766/data-is-the-metro-vancouver-real-estate-market-in-free-fall/

    There were only three home sales in West Vancouver between Aug. 1 and 14 this year, compared to 52 during the same period last year. That’s a decrease of 94 per cent.

    The numbers come from long-time realtor Brent Eilers, who’s been tracking the data with the same system since he joined the business in 1983. He studied MLS listings to count how many homes were sold so far this month.

    “It’s pretty tough to go from 52 to three and pretend things are fine,” said Eilers. “That is a pattern that can’t go ignored.”

  7. You watch Victoria will take off like a rocket ship to the moon next year. You bears will be priced out forever and will be forenters.

  8. Two days of 30 degrees is enough cause the market to slow down ? What’s the pumpers next excuse? The gangster grannies of Oak Bay have cut back on the shadow lending ? 😉

    Gangster grannies’ and China’s shadow banking world

    “And in its annual review of the Chinese economy, the International Monetary Fund recently said that almost half of the shadow banking products that have fuelled China’s credit boom carry “an elevated risk of default”.”

    http://www.bbc.com/news/business-37114643

  9. 1753 Gonzales Ave bought last year in August for $1,648,000, just resold yesterday for $2,275,000.

    Lower end seems hot too, although doesn’t look to be many sales coming through with the heat wave.

    101-2605 Windsor, assess 323, list 424, sold 480
    104-1545 Pandora, assess 298, list 339, sold 375
    502-420 Linden, assess 417, list 500, sold 550

  10. Sure, it’s easy to say all these nasty things if you’re not buying. But how do the house buyers in the core feel these days?

    Well not so good, it’s still a tight market and so far this month 31% of the buyers paid more the 5% over the asking price. Compare that to this time last year when it was just 2%.

    The median sales to assessment ratio is down to 111% from 130% last month. Which means that last month the typical home sold at 130% of its assessed value. This month the typical home is selling at 111% of its assessed value.

    Now before the Bears get too excited, let me remind you of all the times I was saying how the market is heavily skewed making a fat tail. The Bulls were constantly pooh poohing this analysis. Well now that it is reversing, I suspect they will be saying that they new it all the time. There are fewer high end sales but for the normal Joe and Jane trying to buy a middle income house won’t see much relief in prices. That this is more house cleaning than a housing correction.

    And listing are up and increasing. 203 houses in the core listed so far this month compared to 132 in the same time last year. A 54% increase! While the number of sales remain about the same as last August.

    If you absolutely have to buy a house in the core right now – you’re carrion. If you can wait then you’ll have more selection. Maybe not at a better price but a better home.

  11. “If sales dropped 40-50% and inventory increased 200 to 250% we would have 2013 market conditions during which prices dropped 0.77% in the course of a year.”

    You’re predicting a certain event based on a year where market conditions would be completely different from this year. We never got a true correction last time.

    Stock markets are way over valued and household debt is at historical high from 3 years ago. Way more shit can hit the fan this time around with China’s debt bomb ticking away and Europe in a mess. A global recession has never been more of a real risk but maybe you don’t read the news.

  12. LeoS,
    That’s why I asked what legitimate reasons it wouldn’t happen here. Percentage drops based on Vancouver prices being so high are not logical nor economic reasons based on history of market psychology.

  13. Vancouver Housing Market Implodes: Average Home Price Plunges 20% In 1 Month, reports Zero

    One month is no where near enough time for list prices to be adjusted let alone a 20% price drop.

  14. If sales dropped 40-50% and inventory increased 200 to 250% we would have 2013 market conditions during which prices dropped 0.77% in the course of a year.

    There needs to be a third factor involved in Victoria for prices to drop, in my opinion, such as global economic meltdown, huge spike in interest rates or massive increase in vacancy.

    Otherwise despite low sales and huge inventory sellers just stick to their price and rent it out if they can’t sell. The mortgage isn’t killing them, easy to rent, and no fever of a worldwide meltdown.

  15. Thing is, the sudden mania in buying here is panic driven not fundamentals driven. Leo can confirm this but the low inventory is not only from increased buying but also decreased listings. Once momentum changes the behaviour will change. The only fundamental driver is the low rental inventory. Not economic expansion, Wage growth or affordability.
    combine increased listings with dropping house values in Van and listings sitting longer because they are over priced and suddenly the sentiment might change pretty quick to “wait and see”.

  16. That’s not what you said. You said that a crash of 40% won’t effect Victoria much:

    Yes what I mean is even if Vancouver drops 40% (depending on how you measure they might be halfway there already) that doesn’t mean Victoria is in for a drop. It would almost certainly slow or even stop the gains, but does it mean there will necessarily be a decline? I don’t think so.

    Like I said, 40% drop puts Vancouver back to prices as they were in early 2014. Victoria prices were stable then. Only question is how much people will panic.

  17. As per that Saanich news link, isn’t it getting a disgustingly pathetic when some tech company CFO has to pump the real estate market because he saw one busy open house with no date or address attached to it ? As if this is the first bidding war and it’s been going on for months ??

    Yeah I think I’ll take advice from another non-professional while the market may be about to keel over from buyer exhaustion.

    Pretty sad effort to keep the pump alive assuming foreigners will load up here when Helps and the government have said they will apply the tax here quickly if stats show an increase in near future,

    “Eric Erikson, CFO for Redlen Technologies attended a CPABC Victoria economic roundtable earlier this summer. He said in a media release that the impact of Vancouver’s real estate market on Victoria is “massive.”

    “We’re starting to see bidding wars that we’ve only heard of in Vancouver,” he said, citing as an example a home in Victoria listed for $800,000 that sold recently for more than $900,000 after offers were presented on a specific evening. “Cars were lined up around the cul-de-sac and not one of the potential buyers was from Victoria.”

  18. Interesting thoughts maqlaq but none of the data supports your assumptions.

    The number of buyers from Alberta actually fell while the number of buyers from Vancouver and other cities and provinces increased. The net effect on our market as a percentage of Victorians and out of town buyers was very small. Yet there is something to what you say. But these were not people retiring to BC. They were itinerant Alberta workers that were flying up every few weeks to work in the camps. They already owned a home in Victoria they were just buying another home to get some additional income with a rental.

    What makes one city more “safe” from a downturn is the diversity of its economy. And Vancouver has a more diverse economy than Victoria. When things get tough, companies shut down their operations that are located away from their main customers. If you have a cabinet manufacturing company in Vancouver and Victoria, you can easily shut down Victoria and service the island from Vancouver.

    And how about rents in Victoria and Vancouver. You haven’t been a renter for quite awhile because downtown Victoria condos are renting for more than Vancouver condos these days. a one bedroom in the Hudson is $1,800 a month. In Vancouver it would be $1,600 a month. Because we have fewer newer buildings to choose from.

    It isn’t that more people want to live here. It’s because we are not able to absorb new people than Vancouver. Obviously Vancouver is getting a lot more people moving there as it is close to ten times our size.

    Our economy is being driven by construction. When you are in your car look at the signs on the side of all of these pick up trucks. You are surrounded by people who depend on construction. When they lose their jobs in the next recession they will be returning to rural BC towns.

  19. “Victoria is a steadier market than Vancouver, and unlike the latter hasn’t been propelled by irrational investment. ”

    Prices go up by $150K in 3 months on a regular basis I assume ? Victoria has become irrational, but the pumpers and agents keep harping about “catch up” as if it’s some given right. Next phase is called “give back”. We’ll see how steady it is when the listings go back to normal levels.

    Local Fool,

    Jack’s stats have showed it’s a combo of buyers but heavier on the locals. Irrationality comes in all forms, as it’s an emotional purchase, not an intelligent one to pay $150K over ask for a house in need of $100K renos in so many examples given on this blog the past few months.

    There will always be someone paying too much but they are on the decrease if you’re going by the prices leveling off and sales declining in the most expensive area of town. Victoria will follow what Van does from here on in with the amount of media exposure.

    No one wants to be a bagholder when the front page news is saying the market is tanking.

  20. My take:

    Victoria is a steadier market than Vancouver, and unlike the latter hasn’t been propelled by irrational investment. My belief is that the upward move in Victoria has been a rational response to shifts in supply and demand. The current boom began in late 2014 when oil prices plummeted, which had the counter-intuitive effect of increasing demand for Victoria real estate. Why? The cheap Canadian dollar encouraged foreign investment, and baby boomer Albertans who had been making their money in the oil industry saw dark clouds on the horizon and decided that then was the time to hit the eject button and retire to Victoria. Victoria has also benefitted from a spillover effect from Vancouver, which is also a rational response to their runaway RE market.

    Now Vancouver appears to be going through a sudden and rapid correction. That is due to specific changes in their market (a new tax) which doesn’t apply to Victoria. Vancouver spillover into Victoria may have added fuel to our market, but if that spillover decreases then that doesn’t logically equate to a decline in values here. In fact, there is a case to be made that Victoria will receive some of the foreign investment that Vancouver is currently losing, which would be an obvious tailwind on Victoria prices. The Canadian dollar remains cheap and demand for Pacific Rim real estate from Seattle to Sydney remains high.

    Right now more people want to live here than there are affordable places to inhabit. This has driven the vacancy rate to all-time lows, and rental prices are on the move. I don’t see any indication that there is irrational exuberance in the market– in fact, the shift has been quite logical: buying is currently a much better deal in Victoria right now compared with renting (provided you can afford the down payment), and rental conditions are only getting worse. For the situation to change and prices to crash would require either a flood of housing supply or an exodus of demand, and I don’t see any clear argument that either is imminent. Also, prices in Victoria tend to be “sticky” if and when there is downward pressure.

    So in sum, I don’t see an explosion in prices but I also don’t see a large crash coming either. Full disclosure: I own a house in town but I also have substantial assets in other asset classes; I’d like to own more Victoria real estate but I won’t add unless the market dips. I’m market-neutral in the sense that I am somewhat indifferent as to what Victoria real estate does in the short-term. I’m just trying to see the situation objectively– any comments or disagreements are welcomed.

  21. Gonzales is an interesting re-sale.

    This is a market in conflict. You have some recent re-sales that would indicate higher prices and yet the median price in the core has declined from last month and the number of single family sales in Oak Bay has fallen off a cliff this month with 65% fewer house sales than this time last year.

    We are still getting some wild sale prices, but there are fewer of them. When you get up into the high home prices the market isn’t as well behaved as in the middle income market. When your valuing middle income houses there are maybe a half dozen key points to consider and analyze. In the upper income market, individual adjustments for size, age and location, parking, etc are less meaningful and you value properties on a bulk basis and rank each by inferior, superior or similar to the home you’re appraising. It’s a different method of analysis altogether.

    For example, the aforementioned property. It is a fairly new home and not difficult to cost out how much it would be to construct. And it isn’t difficult to determine a reasonable lot value for the property either. The value by the Cost Approach and the price paid are significantly different. You could buy a tear down in the hood and build the same house for less than what the property sold at. However, it would take more than a year to build. As a buyer you have chosen to pay a premium to have the house today than to build new and have the same home a year or so from now.

    That’s your choice, but it is also against economic theory when it comes to value. A rational person would not pay more for a property than the cost to reproduce the property today. Not the cost to build a year or 5 or ten years from now. The cost to reproduce today.

  22. Vancouver Housing Market Implodes: Average Home Price Plunges 20% In 1 Month, reports Zero Hedge:

    http://www.zerohedge.com/news/2016-08-18/vancouver-housing-market-implodes-average-home-price-plunges-20-1-month-market-devas

    Which makes one wonder about the Victoria market. Are prices here still reasonable. Compared with Vancouver, perhaps, but here’s a comparable that Info. would surely like:

    Carbisdale Castle:

    http://search.savills.com/property-detail/gbedrspes140078#/r/detail/GBEDRSPES140078

    Forty-one thousand square feet, 16 acres of grounds including a lake, a clock tower, and benefiting from extensive recent renovation.

    The price? A mere $1.5 million, or less than the price of any house currently offered in the Uplands.

  23. @ Hawk,

    “On the way up it has indeed effected the psyche of Victoria buyers to throw in the towel and push prices up here by $150K in a very short period of time with mass media pushing foreign buyers by the planeloads will be coming here or Van people cashing out.”

    You think it’s all locals doing that? I guess you could say that Vancouver based buyers would still want to save as much money as they can – ie just because you win the lottery, it doesn’t mean you are willing to pay $100,000 for a Honda Civic.

    Then again, how could locals afford these prices? Panicking or not, at some point they won’t be able to service the monthlies. Maybe sellers perceive the “planeloads” of people on their way and are jacking up prices on an anticipated windfall, and local buyers subsequently feel they have no choice.

    Here’s a local piece from Saanich News talking about the influx – kind of feel like they are highlighting an exceptional incident, though.

    http://www.saanichnews.com/business/390497061.html

  24. “@Hawk

    So you’re saying it’s different this time for Victoria ? Last time I looked the same banks lend to all people of BC.

    I’m saying Vancouver has appreciated so explosively they would have to have massive declines (like 60%+) before it went back to any reasonable number. 40% decline would put them back to where they were in 2014.”

    That’s not what you said. You said that a crash of 40% won’t effect Victoria much:

    “If they give up 40% in prices it would still be stupidly expensive and might not affect us much.”

    That’s a huge statement to discredit the emotional and financial effects of a major market crashing regardless of where it was or will be at. 40% is major money no matter where you’re from.

    On the way up it has indeed effected the psyche of Victoria buyers to throw in the towel and push prices up here by $150K in a very short period of time with mass media pushing foreign buyers by the planeloads will be coming here or Van people cashing out.

    That’s irrational panic buying you say won’t be effected nor have any panic selling by the hundreds (or thousands) of spec buyers here over the last couple of years. Hard to swallow it won’t effect us much.

  25. A 40% reduction in Metro Van’s average detached prices would make their prices cheaper than Victoria’s, by quite a bit

    Not even close. Greater van benchmark was $1,579,000 vs our $600,000. 40% reduction puts them at $950,000. If you look at average prices it’s already down 20% and another 20% will still put them way above us.

    @Hawk

    So you’re saying it’s different this time for Victoria ? Last time I looked the same banks lend to all people of BC.

    I’m saying Vancouver has appreciated so explosively they would have to have massive declines (like 60%+) before it went back to any reasonable number. 40% decline would put them back to where they were in 2014.

  26. “If they give up 40% in prices it would still be stupidly expensive and might not affect us much.”

    LOL. That’s astounding. Based on what ? So you’re saying it’s different this time for Victoria ? Last time I looked the same banks lend to all people of BC.

  27. Some of the <12 months re-sales I am seeing are insane.

    1753 Gonzales Ave bought last year in August for $1,648,000, just resold yesterday for $2,275,000.

    Was also purchased in 2013 for $1,539,000.

  28. If you compare like to like, YVR real estate is several times more expensive than Victoria’s. Remember that lot sizes tend to be much smaller there.

  29. I think it will affect us if Vancouver drops by 40%, which seems unlikely to me given the low rates and many buyers waiting in the wings but who knows. I’d say it will take a while to play out over here if that occurs and without higher rates seems unlikely to result in a big drop. Maybe we’ll just be flat again.

  30. @ Leo S

    A 40% reduction in Metro Van’s average detached prices would make their prices cheaper than Victoria’s, by quite a bit. If that happened, wouldn’t they be less inclined to drop everything to come over here…presuming our prices don’t follow suit? And if ours did follow, who would want to move during such an event, ie the old “catching a falling knife” meme?

  31. I think it will at least make it more civil with more selection. Expect high asking prices, more inventory and longer DOM this spring….

  32. Hard to tell at this point whether Vancouver is taking a breather or collapsing. I’d say it’s the latter and the sentiment has turned. However it might not make much difference. If they give up 40% in prices it would still be stupidly expensive and might not affect us much.

  33. Vicbot,

    That’s hilarious on the FVREB whiners. I thought foreigners had no impact on Vancouver ?

    Is the Metro Vancouver real estate market in free fall?

    “There were only three home sales in West Vancouver between Aug. 1 and 14 this year, compared to 52 during the same period last year. That’s a decrease of 94 per cent.

    What causes prices to fall is “urgency, anxiety, and fear,” according Eilers. He says a climate of financial overexposure, a treadmill of buying and selling and flipping homes, owning multiple properties, and buying before selling will test how long sellers can hold on without selling in desperation.

    He points to the 1980 housing crash that dropped prices by 40 to 60 per cent within a year and took six years to recover.”

    http://globalnews.ca/news/2887766/data-is-the-metro-vancouver-real-estate-market-in-free-fall/

  34. Now the Teachers are dumping $2 billion worth of real estate. When the pension funds start bailing you know what’s coming next.

    BTW, where all the perma- bulls and their daily anecdotal stories of 100 couples at every open house jockeying for position, whispering how many $100K’s to bid over ? Funny how those stories seem to have dried right up.

    Teachers eyeing sale of stake in Vancouver property portfolio

    http://www.theglobeandmail.com/report-on-business/teachers-eyeing-sale-of-stake-in-vancouver-property-portfolio-report/article31462693/

  35. The listings for Westside Vancouver sure seem high, though I don’t track them. Just a quick glance sees a lot of dots on the map for such a small area and most are asking over $2 million. Hard not to see prices taking a big hit when a high percentage are likely flippers/speculators. Those kind of participants make for quick and nasty corrections.

  36. LocalFool, it’s been such an insane wild west in Vancouver for so long, it’s hard to imagine what’s next. There’s already a panic by realtors & developers – and if they panic – who knows – because a lot of this “high demand” is driven by them. Developers building high-rise condos pre-sold to friends & family first, then flipped. Realtors (in their names or numbered companies) investing in real estate and shadow flipping. Houses sold multiple times a year. CRA ignoring warning signs. (All these issues documented in SCMP, The Province, G&M, etc)

    Speaking of panic, now the Fraser Valley REB “has issued a ‘call to action’ to its 3,000 members, asking them to fight the new 15-per-cent tax levied on foreign home buyers. ”
    http://vancouversun.com/news/local-news/fraser-valley-real-estate-board-calls-on-members-to-fight-tax

    (… even though similar taxes exist in most other jurisdictions around the world. Just my opinion, but I think they’re protesting now because they’ve been personally caught with their hands in the cookie jar – not because they’re worried about clients)

  37. The drop in YVR prices is starting to show up on mainstream media.

    “Real-time sales numbers show a decline in ‘average’ Vancouver home prices

    Earlier this month, as surging Vancouver luxury home prices were making international headlines and local real estate boards reported continued price spikes, another set of gauges was telling a different story. These numbers revealed that average home prices in Metro Vancouver have been falling — not just in recent weeks, but also going back several months.

    The various snapshots make for a muddle that might wash out over a longer period, but it’s a cacophony of confusion for buyers and sellers trying to figure out what to do right now, not to mention homeowners obsessed with the rise and fall in the worth of their assets.”

    http://vancouversun.com/business/real-estate/real-time-sales-numbers-show-a-decline-in-average-vancouver-home-prices

    I think it’s too early to call a blow-off top, but it’ll be quite interesting to see where this goes next. What do you guys think?

  38. You don’t think having 5 full time employees and enough property to warrant that would be full time? Plus, it’s best to mix wage and dividends anyway….

    I think if you have five ft employees you might as well buy more property and have six. I personally wouldn’t want to be working 40 hours a week if I was that well off. In fact, I’d probably be actively looking to divest myself of properties utilizing the tax exemption and invest the proceeds in dividend producing income streams or businesses for the kids instead so they can use their capital gains tax exemptions.

  39. You don’t think having 5 full time employees and enough property to warrant that would be full time? Plus, it’s best to mix wage and dividends anyway….

  40. Realtor bizz perception only gets worse by the day. If they aren’t out trying to con your grandma, they’re flipping to friends and family. F’ing disgusting.

    Richmond Realtor files $240K law suit against her former company

    Morning Yu alleges her boss at New Coast Realty wanted her to shadow flip homes

    “Yu claims she was pressured to encourage people to sell their homes at low prices to her friends, relatives or neighbours, who would act as buyers.

    Once the home was sold, it would be relisted at a higher price, allowing the company to double up on its commission.”

    http://www.cbc.ca/news/canada/british-columbia/morning-yu-lawsuit-new-coast-realty-shadow-flipping-1.3726886?cmp=rss

  41. you can count yourself as one full time employee

    Yes, if you are. CRA says only work weeks of more than 40 hours will be considered in the analysis of the number of full-time employees, even if we consider that most public service employees work full time and work fewer weekly hours. In addition if you take dividends rather than income you are out.

  42. You need 5 full time employees.

    For rental income not to be passive or many other types of passive investment income you need six full-time employees. My understanding is that the capital gains exemption applies if you use 60% or more of the floor space of the building owned by the corporation for active business even if part of it is rented out and earns passive income that way. Otherwise you pay a lot of tax on those gains made by a corporation and it seems like a bad idea although there are some limited circumstances where it might work.

  43. The corporation pays 15% but what happens when the dividend is paid out, how much more tax?

    There is a complicated gross up formula and an offsetting dividend tax credit and you end up paying about the same tax overall as you would on income. You pay a gross up to turn that dividend income back into pretax income — because the corporation has already paid taxes on it — then, you receive a tax credit for the income the corporation already paid. Both you and the corporation aren’t being double-taxed and the CRA subsidizes you for the tax the corporation already paid on your dividends.

  44. That SCMP article that Hawk posted shows just how much the Canadian tax authorities have been asleep at the wheel, back to 1996! worse that I thought. (If only they’d get serious about houses that have been flipped many times per year, eg., one in Langley)

    From the article:
    “… amid the arrival in Vancouver of thousands of rich immigrants from Hong Kong and Taiwan. It showed that recent immigrants made up more than 90% of top-end, C$600k-plus purchases … However, these buyers only declared average household incomes of about C$23,000, compared to more than C$368,000 for the handful of long-term Canadian residents who bought in the same price brackets.”

    “‘The numbers were alarming,’ the ex-auditor said.”

  45. I don’t think he would qualify for the small businesses tax bracket. You need 5 full time employees. So even if he gets the asset into the corp without paying tax there is no benefit. Sell the condo and convert the money into dividend paying equities! Put some in the RRSP at a ratio that makes sense tax wise and take this gift.

  46. If you dividended all the money out to yourself as you earned it, you would pay roughly the same tax overall as if you weren’t incorporated.

    That is my understanding as well re dividend income, and there is an advantage in being able to pay dividends to ex. a spouse who is a shareholder.

    I can’t see why a section 85 rollover would be used to transfer a residential rental property to a corporation. Maybe if it is a commercial office you own personally and use for your business there is some advantage as there is a corporate capital gains exemption for this.

    Holding residential rental property in a corporation is usually a very bad tax move as the capital gains and income are always taxed at the highest rate as rentals are consider passive income. I wouldn’t transfer unless there are some very unusual circumstances.

  47. @ gwac

    If you dividended all the money out to yourself as you earned it, you would pay roughly the same tax overall as if you weren’t incorporated. The main benefit of the corporation however, is that you can spread your dividends out over different years as needed, and income split by paying your spouse. Plus it reduces your potential liability.

  48. “He is likely not going to transfer the asset Dasmo. He is likely going to incorporate and retain earnings in the corporation at 15% tax in the year he sells and not take income. The capital gains will replace income in the year of the sale.

    Exactly….toronto has some solid common sense

    Using this approach I would get the capital gains into a much more reasonable tax bracket where I am only losing 1/7 or 1/8 of the profit versus 1/4.”

    The corporation pays 15% but what happens when the dividend is paid out, how much more tax?

  49. I believe you can transfer your assets into a corp that you control, at market price, without crystalizing any capital gains. It’s called a Section 85 rollover. The cost basis for the asset will remain at the original cost that you paid for it, not the price at which it was transferred. So you’re deferring the tax.

    I was discussing this with my accountant as a way to get cash out of a corp that we own. You would obviously need an accountant and lawyer to do this right, but it might be worth it in some cases.

  50. He is likely not going to transfer the asset Dasmo. He is likely going to incorporate and retain earnings in the corporation at 15% tax in the year he sells and not take income. The capital gains will replace income in the year of the sale.

    Exactly….toronto has some solid common sense 🙂

    Using this approach I would get the capital gains into a much more reasonable tax bracket where I am only losing 1/7 or 1/8 of the profit versus 1/4.

  51. CRA has some serious problems and will now go out of their way to bust tax cheating money launderers in Vancouver and Toronto. Just another catalyst to blow this bubble up bigtime.

    Canada tax chiefs knew foreign money’s big role in Vancouver housing market 20 years ago, leaked documents show, but auditors’ warning was ‘ignored’

    “But the “alarming” results of the auditors’ investigation were “ignored” by Canada Revenue Agency bosses who failed to commit the resources needed to tackle the issue, and instead “wanted the problem to go away”, one of the auditors, now retired, told the South China Morning Post.”

    http://www.scmp.com/news/world/united-states-canada/article/2005794/canada-tax-chiefs-knew-foreign-moneys-big-role?utm_source&utm_medium&utm_campaign=SCMPSocialNewsfeed

  52. He is likely not going to transfer the asset Dasmo. He is likely going to incorporate and retain earnings in the corporation at 15% tax in the year he sells and not take income. The capital gains will replace income in the year of the sale.

    Thing is, there is no pressing reason to sell if you are happy continuing as a landlord and okay to wait out market cycles long-term and you don’t need the money or have a better plan for it. I guess unless there is a special assessment looming that has not been identified in the depreciation report that a prospective buyer gets, which seems unlikely.

  53. Correct me if I’m wrong but you can’t simply transfer assets into a corp without getting hit with capital gains anyway. You are being taxed on the income and you are a few years away from any costs but how much further until they rezone the building to combat AirBnB or we simply get a glut of them and the added pump to the price is lost. Sell and take the 20% hit and invest the proceeds in something that will not cost you 30k when they are finally forced by the city to redo the air system because it’s violating the noise bylaws!!!!

  54. If you realized a capital gain ½ would be included in income this year. To reduce the impact of the gain you could make a contribution to an RRSP to the extent you have room. This reduces your taxes paid at the top marginal tax rate. Ex. a capital gain of $140,000 and ½ or $70,000 would be included in income this year. If you have $70,000 in unused RRSP room you can use half the gain to contribute and eliminate whatever the taxes would have been owing this year to be paid out at a lower rate (presumably) when you withdraw from the RRSP. Only works if you have unused room so limited circumstances.

  55. haven’t had a chance to incorporate my business so 1/4 of the profit would be going back to the tax person and I don’t want to inconvenience my tenant to cash out.

    You should get on that Marko. Being able to reduce your income in a year you sell may save you quite a bit. Alternatively unused RRSP room can be helpful.

    someone who doesn’t want to pay tax on his fair share of profit

    No, incorporation is legal and does result in fair tax payment imo. All Marko would be doing is retaining earnings which have been subject to corporate tax in the corporate tax account and taking them out later and paying more tax on them. It just permits him to potentially manage his marginal tax rate a bit over the long term. What is unfair is tax evasion, ie. not declaring rental income and paying tax on it.

  56. @Sweethome + Vicbot
    People do some funny things with their money, especially the rich. When there is like zero returns on traditional investments such as GICs, Bonds, etc… RE has not been an bad alternative over the last few decades.

    Nothing resembling a monster crash has occurred in Van or Vic; partly due to super easy access to credit + leverage AND the buffer of investors domestic or internationally. People are also borrowing more in absolute terms as per LEO’s post loan/value ratios are the same.

    As long as RE keeps on returning, no matter who the owner is, prices will have a hard time dropping. Also with a lack of good investments alternatives, money that is in RE, will likely stay there.

    Though we wish RE was more affordable in the core (perceived desirable areas), unless supply doubles or triples, prices will IMHO stick where they are and even go higher. MOI even @ double the current supply will be less than 4-5 months.

  57. A few friends I have with one bedroom condos turned into vacation rentals use VRBO. They have been doing it for a few years and sometimes it’s not that lucrative and yes a lot of work. they charge 200 range a night in high season and one hundred range slow season and its rarely not vacant.

    Think depends on location, water views and reviews from renters. Think it’s how you market you condo but also how much time you have to manage it.

  58. As prices have risen, loan to value ratios have remained the same.
    http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2016/08/home-values-mortgage-sizes.html

    The mortgage industry thinks this is a good sign, but shouldn’t loan to value drop after a massive runup in prices? If I buy a $250,000 house with 20% down, it will be 80% loan to value. When that house doubles LTV would be 0.4 (ignoring mortgage paydown).
    But a combination of equity extraction, new buyers, and move up buyers have seemingly negated all the benefits of that rise in prices. Will be interesting to see how it drops when a correction comes.

  59. There were only three home sales in West Vancouver between Aug. 1 and 14 this year, compared to 52 during the same period last year

    Interesting. This could be it!

  60. and I am the only one missing something with these AirBnB operation numbers?

    What you’re missing is the lack of sophistication of the investors. Even worse than amateur landlords, amateur Airbnb hosts have probably never thought about what they bring in and certainly haven’t thought about the value of their time. That’s the reason there are thousands of uber drivers making less than minimum wage. It’s the sharing economy so you get paid by being hip

  61. Interesting article on Global:

    Evidence from realtors and MLS data is showing the Vancouver real estate market is in the midst of a major slow down, with prices dropping and sales plummeting, but some experts say it’s too soon to tell.

    There were only three home sales in West Vancouver between Aug. 1 and 14 this year, compared to 52 during the same period last year. That’s a decrease of 94 per cent. According to the data, July was another slow month in West Vancouver with only 44 sales, down from 80 in 2015. June saw 74 sales, also down from 102 the year before.

    But experts are warning that two weeks of data isn’t enough to ring the alarm bells.

    Zolo’s CEO says the foreign buyer tax has certainly stopped speculative buyers. This has caused many other buyers to take on a “wait and see” approach, which has essentially frozen the market.

    “It’s part of what you’d expect out of a cycle, in terms of rapid expansion and now a small contraction. Is it an indication of a bubble bursting? Wouldn’t be able to tell you.”

    http://globalnews.ca/news/2887766/data-is-the-metro-vancouver-real-estate-market-in-free-fall/

  62. @ Marko – I agree – this seems like a lot of work for a small amount of money after tax especially when the city will almost certainly succumb to pressure from Tourism Victoria to even the playing field for the hotel industry and tax it further.

    Numbers make even less sense when you factor in the vacancy rate in Victoria. Revenue spreads may look big in the middle of the summer when everything is booked but those places won’t be booked more then 65% year round.

  63. So sorry to hear that, Dasmo. The same thing has happened to more than a few families I know this year. I wish you the very best of luck in finding a new rental.

  64. So Victoria’s building boom includes all that new retail and Mayfair is going to expand for multi-millions while retail is a dying industry. Yep, Victoria late to the game as usual.

    Macy’s Pullback Imperils $30 Billion of Debt, Morningstar Says

    Almost $30 billion of bonds backed by commercial mortgages are exposed to the retailer, which last week announced plans to shutter 100 outlets, the rating company wrote in a note on Wednesday.

    Macy’s and other department stores are “struggling to deal with a shifting retail landscape,” Jellinek wrote.

    http://www.bloomberg.com/news/articles/2016-08-17/macy-s-pullback-imperils-30-billion-of-debt-morningstar-says

  65. “I haven’t had a chance to incorporate my business so 1/4 of the profit would be going back to the tax person and I don’t want to inconvenience my tenant to cash out.”

    Imagine that, someone who doesn’t want to pay tax on his fair share of profit. It’s not a TFSA for cripes sake. Who goes into business to feel sorry for the tenant ? Something doesn’t compute here.

  66. and I am the only one missing something with these AirBnB operation numbers?

    For example, my unit at the Era I could probably re-rent right now for $1,400 per month on a 1 year lease or almost $50 per night. AirBnb operations as low as $77 per night. I don’t understand the numbers when you factor in the amount of work involved (meeting people for keys, people being late, etc. ) with AirBnB.

  67. So just got the call from the landlord. Surprise! they are selling the house…. Like I said, expect more listings to come online soon for even more inflated prices….

  68. Damn Marko, I would sell the Era condo before the crack down happens….

    I haven’t had a chance to incorporate my business so 1/4 of the profit would be going back to the tax person and I don’t want to inconvenience my tenant to cash out.

  69. “What I don’t understand is with Alberta in the crapper how come tradespeople from Calgary are not moving here?”

    It’s harder to pull up roots than you make it out to be. What good is a job when you can’t find nothing decent to rent ? Besides they probably can see the next bubble popping here which will be worse than Alberta when all is said and done.

  70. increasing wages (try hiring a contractor for instance)

    I’ve been trying to do stuff around my house and it is impossible to get people to come give a quote, let alone provide a reasonable quote and do the work.

    What I don’t understand is with Alberta in the crapper how come tradespeople from Calgary are not moving here?

  71. a brand new 1 bed room brought at pre-sale at low 200k, not fliping for 400k?

    Which condos are those?

    Anything with transient zoning (Union, Era, etc.) is just through the roof in terms of price appreciation.

    My 834 Johnson (no transient zoning) unit I bought for $198,900 and could probably sell it for around $260-270ish.

    My Era unit (transient zoning) unit I bought for $213,400 and could probably sell it for around $360,000-380,000ish.

    Only difference really is transient zoning.

    Since Monday morning I’ve received 4 emails from other realtors on my listings downtown along the lines

    “Hi Marko, can you tell me if this building allows for a vacation rental? Thanks”

    Two years ago premium for transient zoning was like 0% and now it is like 20%?

  72. Numbers hack, I agree that it’s both foreign & local speculators affecting the Vancouver market, but that Capital Economics report has some strange flaws – it doesn’t prove anything on whether or not foreign buyers are an influence:
    – Loan-to-income ratio is independent of whether buyers are foreign or domestic (can be both, foreign buyers have taken out Canadian bank mortgages)
    – They compare data on foreign buyers from BC gov’t & from Florida & California – 2 different data sets, 2 different methodologies – apples to oranges. Then they compare state-wide % with % in 2 cities, again, apples to oranges (no conclusion can be drawn)
    – Then they say if it really is foreign buyers affecting the market, it could have a “significant impact” on B.C. & Canadian economy (again, no conclusion can be drawn)

    Because they’re last point is so extreme about the economy, it sure seems like it’s more of a PR exercise in discouraging the tax, rather than a well-thought-out analysis.

  73. @Entomologist

    ‘Canadian housing froth: And then there’s Victoria’

    From Globe and Mail

    Victoria sizzles

    It doesn’t get much prettier than Victoria. At this point, housing markets don’t get much hotter, either.

    And there are warnings that the B.C. capital could get hotter still if the new provincial tax on foreign buyers of Vancouver properties sends that money to Victoria.

    According to the latest statistics, Victoria home sales surged by more than 20 per cent in July from a year earlier, outpacing every city in Canada. That came even amid the “seasonal slowdown that we expect this time of year,” said Victoria Real Estate Board president Mike Nugent.

    And listings are drying up, down 45 per cent in July from last year.

    At the same time, prices are surging. The Multiple Listing Service home price index benchmark value for a single family home now stands at $741,100, nowhere near that of Vancouver but up almost 24 per cent from a year ago.

    And that’s at least partly the point.

    “Given its proximity to Greater Vancouver and its 43-per-cent lower prices on a typical property, Victoria’s market could get another injection of fuel if foreign buyers look outside the [Greater Vancouver Area] to avoid the new 15-per-cent land transfer tax,” said BMO Nesbitt Burns senior economist Sal Guatieri.

    Others also wonder what will happen after the B.C. government moved to cool the Vancouver market.

    “Does this mean international demand will spill over into Victoria and other areas of B.C.?” said Mr. Nugent.

    “We won’t know until we see the data,” he added.

    “The Capital Regional district saw 2 per cent out-of-country buyers in the year of 2015. Although this is a small percentage of our buyers, anecdotally foreign buyers do tend to favour the same core neighbourhoods and therefore can have an impact on those areas.”

  74. Anyone a Globe and Mail subscriber? Article today: ‘Canadian housing froth: And then there’s Victoria’. It’s only available to ‘Unlimited’ subscribers. Just wondering what brilliant insights they might be providing.

  75. JustJack said: “I think it is easy to manipulate a prospective purchasers in this market.”

    Is that what the realtor Jason Binab is doing when he cancels a listing after a couple weeks then immediately re-lists it at a different price? The PCS accounts then say the listing is new to the market at just one day on the market; but the truth is this realtor has had this property listed for many days, just under a different listing.

    This same realtor also starts some listing as an “Exclusive” listing; so I wonder if this is an attempt to double-end the listing and collect the full commission as both the seller’s and the buyer’s agent. Didn’t the BC Government say that practice is unethical?

    His listings are starting to follow a pattern.

  76. @ Numbers hack – “Interesting article. Skip the race/immigrant glossing; look at the ratios for lending.”

    This may be one aspect, but there has to also be a bubble mentality and a lot of rich people in the market (or at least people with high incomes) to get the prices so high in absolute terms. The article I mentioned yesterday about Saskatchewan said people there were finding the $450K house prices too high and were buying condos instead. That is in a province with a higher median income than BC.

    So, it seems everyone has flipped their lid in Vancouver compared to the rational prairie people and there are also a lot of people (foreign or not) with a lot of money who want to own a property in Vancouver specifically.

  77. I think it is easy to manipulate a prospective purchasers in this market.

    Simply saying that you’re showing the property again later that day might add another 5% to their bid. Manipulate is probably too strong of a word to use. An agent is just doing what they are paid to do – getting the highest price for their client. The buyer has to accept their part in the negotiations.

    Another 5% over market value won’t make much difference in the mortgage payment. It only matters when it comes time to sell as the new owner will net less on the re-sale than those that paid fair market value.

    Because properties in the core are selling quickly buyers will tack on another 5 just be sure to get the home. Half the house purchases these days are at asking price or above. The “hotter” the neighborhood the more over asking prospective buyers bid.

    It’s the same for condominiums in the core except not as extreme in the over asking bid. The mania being mostly in the stand alone housing market although the condominium market has similar metrics.

    Today I saw a condominium where a buyer a month ago was willing to go another 5% over a $249,000 asking price because he was told a buyer from Vancouver was seeing the property that afternoon. The property was just reduced to $239,000.

    The other day I had a single mom explain how she felt she got a deal on a condo where she has to pay a special assessment in 2017 because her unit had a newer kitchen and she didn’t know how to fasten cabinets to a wall. So she paid another $30,000 for 5 year old cabinets. That’s more than half of her yearly salary because she didn’t look at a DIY youtube video.

    That’s what happens when the cost to borrow money is cheap and you overbid. You end up paying more over the lifetime of the loan and netting less on the re-sale.

  78. @ Local Fool

    “How would it continue to gain like that? Using what economic metric? These rises have been due to little more than speculative mania and FOMO, both locally and imported. ”

    And yet, there is Bearkilla, demonstrating speculative mania in all its glory. You don’t need economic metrics to underlie price increases when you’ve got that. In a bubble, people overpay out of greed, ignorance, and stupidity. Sure, the whole thing could crash at any time. And in the long term prices are more-or-less guaranteed to realign with general inflation. But making predictions about next year is akin to predicting that the next roll at the craps table will bust the guy on a streak. Maybe, maybe not. (Of course, the craps player is still an idiot.)

  79. @ Michael,

    jobs boom (see latest #’s, especially tech)
    …These jobs don’t pay enough to justify the rate of increase of RE.

    *commercial/infrastructure boom (billion+ in permits next 5 yrs)
    …I don’t think that’s a slam dunk case; that’s speculative.

    *rising in-migration (AB, Van, easterners, foreigners)
    …I don’t think there’s enough to justify a nearly instant 150K pop in prices, let alone your prediction of that merely being the prelude to even bigger gains.

    *zero vacancy
    ..See comment above.

    *deeply negative real interest rates
    …I agree with you. However, with the income to GDP ratio where it is, I don’t think there’s much room for more mass borrowing. Then again, there’s Australia’s insane ratios…

    *relatively inexpensive property (eg. Van & S Valley ave is near ~2M in our currency)
    …Perhaps. But this is predicated on Vancouver continuing as is, and the Victoria economy’s ability to offer these incomers jobs that can pay for the housing costs.

    *millions of boomers retiring in Canada alone eyeing up Vic
    …Right now Victoria is about the last place I would want to retire – would you rather pay $750K for something here, or roughly half that in a quieter community? I’d rather save the cash and pad my retirement pot. This is why many of the small towns in southern VI are popping.

    *only 2 yrs into our up cycle
    …You’re extrapolating here.

    *increasing wages (try hiring a contractor for instance)
    …Wages are not increasing at the rate of RE. Not even close.

    *inflation taking hold (much of world still printing like mad)
    …I agree with you.

    *scarcity of land in core
    …That…I don’t know.

    Really, my crystal ball doesn’t work any better than yours, I just feel like where this country is in the valuation/credit cycle gives more credence to a shift in the market. Time will tell who’s correct.

  80. “A few justifications that quickly come to mind…
    * jobs boom (see latest #’s, especially tech)
    * commercial/infrastructure boom (billion+ in permits next 5 yrs)”

    You mean all those contract and freelance tech jobs the head guy stated most are, that make a mortgage broker hit the reject button ? The rest are in tourism, temporary construction and retail.

    You mean the “intention” to build all those buildings but as in past booms and busts look great on paper but not when the inevitable downturn hits and so many get cancelled due to lack of funding. When the cranes are everywhere and the TC and Vibrant Victoria drooling daily over pics of holes in the ground, it’s time to worry.

  81. Then Michael none of those reasons you listed are having an effect on the marketplace as they have not been able to reverse a seasonal slow down.

  82. And yet Michael, the number of house sales declines and house prices have been flat for months now.

    That’s just the normal seasonal slowdown (ie. families on summer vacation).
    It’s never a straight line up, more of a snake-like up.

    example

  83. I just came across a CBC story from my old province of Saskatchewan and found it interesting to see their take on a surge in condo sales there.

    “Saskatchewan’s condominium market has grown in recent years in Saskatoon and Regina and experts say it’s mostly because single-family homes have become unaffordable for first-time home buyers.”

    “According to data collected between 1996 and 2011 by Statistics Canada, condominium ownership accounted for 40 per cent of home ownership in Saskatoon and 35 per cent in Regina over that period.”

    “In Saskatoon the median condominium price sits at $250,000. The median price for the single-family home in Saskatoon sits at $420,000. In Regina the gap from condo to single-family home is $300,000 to $450,000.”

    To me, this shows that in a market dependent on local fundamentals, “affordable” is much more closely tied to historical multiples of median family income (which was $85K in 2014 – higher than BC). Also interesting that the price gap between condos and houses is much larger here ($300K?) but yet that doesn’t seem to deter buyers the way it does in Saskatchewan. Anyone know Victoria’s rate of home ownership?

  84. And yet Michael, the number of house sales declines and house prices have been flat for months now.

    Month Sales, Number of for the core, peninsula and westshore
    Jan 232
    Feb 395
    Mar 537
    Apr 659
    May 612
    Jun 544
    Jul 421

    Month Sale Price, Median
    Jan $600,000
    Feb $608,000
    Mar $659,950
    Apr $659,000
    May $680,000
    Jun $662,900
    Jul $669,900

  85. These rises have been due to little more than speculative mania and FOMO, both locally and imported. There is nothing justifying what is going on…

    A few justifications that quickly come to mind…
    * jobs boom (see latest #’s, especially tech)
    * commercial/infrastructure boom (billion+ in permits next 5 yrs)
    * rising in-migration (AB, Van, easterners, foreigners)
    * zero vacancy
    * deeply negative real interest rates
    * relatively inexpensive property (eg. Van & S Valley ave is near ~2M in our currency)
    * millions of boomers retiring in Canada alone eyeing up Vic
    * only 2 yrs into our up cycle
    * increasing wages (try hiring a contractor for instance)
    * inflation taking hold (much of world still printing like mad)
    * scarcity of land in core

  86. We’ve seen a slowdown in work over the past month and a half, and would expect this to show in the data come October. Higher end work is still strong with prices being maintained, however I would expect that to ease moving into early 2017 as more data comes out and Vancouver gets exposed. 2017 will be a bit of a down year, but only because 2016 was like highway robbery.

    Want advice, hold off on those reno’s and new builds for a year, you’ll save yourself some nice change.

    Cheers,
    XT.

  87. I wanted to take a look at land sales in Greater Victoria and residual values of depreciated homes but frankly this can be challenging for new homogeneous lots in a subdivision and older built up areas where a vacant lot is created from an older home that has been demolished.

    There are 17 vacant lots marketed for sale in the westshore from $219,900 for a lot in Mill Hill to $725,500 for a view property on Bear Mountain. Of course there are a lot more lots for sale they just are not on the local real estate board’s data system.

    The median price for a lot in the Westshore is around $300,000 for a level 9,500 square foot lot in a new subdivision fully serviced with underground utilities available at the street. The median price paid for a home is $550,000 or $243 per finished square foot. The residual to the improvements would be around $250,000 or $110 a finished square foot for a non new home .

    In contrast there are 14 vacant lots available in the core districts that range from $349,900 for a water view lot in a gated community in View Royal to $895,000 for an infill lot in South Oak Bay.

    The median price for a lot in the core is around $525,000 for a lot in an area such as Maplewood. The median priced paid for a home on lot in the core is $745,000. The residual value to the improvements would be $220,000 or $103 per finished square foot for a non new home.

  88. a brand new 1 bed room brought at pre-sale at low 200k, not fliping for 400k?

    Which condos are those?

  89. More deals collapsing in Vancouver today according to Ross Kay. Hope the perma-bulls got their Depends stocked up. 😉

  90. Bearkilla knows all about moldy basements being a Langford slumlord who rents them out to welfare cases. Your kids will be living in yours for life based on your estimates unless they push you down the stairs first. 😉

  91. condominium market, to me, seems to be quite stupid. a brand new 1 bed room brought at pre-sale at low 200k, not fliping for 400k? how does that possible?

  92. Welp that’s a bloodbath. A 10 sale YOY decline in sales in Oak Bay. Holy crap I’d better sell now or be priced in forever. Enjoy your moldy basement suite there bears because the crash is not happening. Your highly speculative bet is only leading you closer to the day you will die. Enjoy life bears. Stop with the dream land.

  93. “In fact of the 6 house sales in Oak Bay in the first two weeks of August (down from 16 the year before).”

    As the rich go, so does the market. They usually are a bit more intelligent to get it first.

    I think Bearkilla is too busy these days with Dasmo’s measuring tape. 😉

  94. @ Bearkilla,

    How would it continue to gain like that? Using what economic metric? These rises have been due to little more than speculative mania and FOMO, both locally and imported. There is nothing justifying what is going on, other than people thinking it will continue ad infinitum. Continuing down this path pulls the anticipated prosperity of tomorrow and into today – what will drive the market tomorrow?

    One of the reasons there is such a lack of supply is that homeowners can see there is very little value in the RE market right now – some will move, but most probably won’t. At some point, the market will run out of the FOMO infected buyer and greater fools – speculators have a nasty habit of jumping ship on a dime. Hence, I’m not sure there will continue to be hordes of buyers lined up to get in into this type of market.

    Regardless, I don’t think we can extrapolate from Vancouver’s RE market, which has little parallel anywhere else. That just isn’t how any asset class is designed to perform over any length of time, especially real estate.

  95. Have to agree Hawk – that guy who’s bought multiple investment properties in a foreign country, then becomes a realtor and sells more to his friends, makes 40% in 1 year on paper, then sheds crocodile tears over a 15% tax. Then he says because of the 15% tax he’s going to flip the properties. Errrr, he was going to flip them anyway, gimme a break 🙂 Never mind that Hong Kong has a similar tax!

  96. I guess I’ll be the contrarian. Spring 2017 will blow spring 2016 out of the water in terms of sales and price increases. It’s already setting up that way. The supply isn’t there and the buyers are all just waiting for them to come.

  97. Condominium sales edged out house sales in the core in the first two weeks of August.

    The median price of a house remains at $750,000 and a condominium dropped a bit to $318,000.

    66% of house buyers are from Victoria and 64% of condo purchases are from Victorians.

    The number of house sales in the core for the first two weeks are almost exactly the same as last years when 71% of the sales were from Victorians.

    Condo sales are up 57% from last year when 60% of the purchases were from Victorians.

    And as for the anecdote that it is Vancouverites buying houses in the core. The number is almost identical to last year 9 versus 10.

    In fact of the 6 house sales in Oak Bay in the first two weeks of August (down from 16 the year before). None were sold to someone from Vancouver which is the same as the year before.

    Looks like the Vancouver gravy train fell off the tracks.

  98. To clarify, I think prices will remain sticky but listings will last longer and there will be more of them. I think the panic buying will be less next spring. A crash would require a crash in Vancouver first. That 15% tax is an irritant to the market but far from a stake through the heart….

  99. I’d like to see one where it says “China real estate tax laws sparks backlash from Vancouver buyers”. Tough titties I say. Australia and numerous other countries and provinces have implemented restrictions.

    This is what happens when others abuse a system that should be treated as a gift for those truly wanting a new life and productive citizenship. More government laws to come as Clark has stated or the NDP will be implementing them next spring.

  100. “I’m sorry but anyone who thinks Trump will be the Republican nominee is extremely naive.”
    -Introvert (August 11, 2015)

    Time makes fools of us all.

  101. Funny, I was just reading the posts from this time last year and found this. Coincidentally it was just what Dasmo mentioned this morning.

    “Now long-time Vic residents can follow their dream to retire to Nanaimo and sock away a hundred thousand”
    -Michael (August 15, 2015)

    Then there was this:

    “I’m sorry but anyone who thinks Trump will be the Republican nominee is extremely naive.”
    -Introvert (August 11, 2015)

    He wanted to back this up in a bet with CS but i cant find any mention of stakes.

  102. I disagree. To me the chart (and various anecdote) suggests that this is a combination of low supply and seasonal slowdown. The sales/list might be lower than last year, but the MOI is half. This is a slowdown based on extremely low supply of good properties. Prices will stay firm I think. Look for that chart to diverge again after Labour Day when everyone’s back in gear.

  103. Agreed Dasmo, now is the time. If you are planning on selling but holding off for more money, you’re an idiot. The peak was 3 months ago and a gift no one will see again. Look for the big listings spike in September and the prices to take some serious body shots.

  104. I expect there to be more listings coming online soon. Anyone who has been considering a downsize or a move is scrambling right now getting ready to list. After such a crappy sellers market and such a large bump in prices it’s a no brainer to do it now. Like a friend who is fixing everything up right now so the get top dollar and then get a place up island…. Kinda like what the Vancouverites are doing to us…. I don’t think we will repeat this market next spring. I think we will regain listings but all at ridiculous prices stalling buying further….

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