August 29 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  396 599 784
741
New Listings 265 571 811 1039
952
Active Listings 2133 2174 2139 2127
3688
Sales to New Listings  71% 69% 74%  75%
78%
Sales Projection 896 889 866
Months of Inventory

4.98

A bit late because I’ve been on vacation.   Steady decrease in sales rate but we will be hitting several records this month including lowest August inventory ever (second is August 2003 with 2184 properties for sale), and almost certainly the highest sales (August 2007 was 846).   New listings will be up about 12% over last year but just not enough to keep pace with the sales rate.

On another note, we’ve been visiting my folks in the interior for the past week and it was quite clear that the massive inflation in real estate values is not limited to Victoria or the lower mainland.

IMG_0613

A small part of the quarter section

In 1990 these fully fenced 7 million square feet of land in the north Okanagan valley cost $70,000 and that included a house, a barn, and several outbuildings. That’s about 1 cent a square foot.  Now 26 years later, it would sell for about a million or a 14 fold increase in a generation.   Sure my parents built a new house, but most of the value is still in the land.

Meanwhile a Victoria detached house has increased by only 4.3 times in that time period.  Hence I don’t buy the endless arguments about why Victoria is special.   It’s not the climate or the old people or the lack of land.   Real estate inflation is happening all over the place and the factors extend well beyond any local attributes.  However fundamentally not much has changed in Canada.  There aren’t that many more people.  We certainly have no shortage of land.   So could it go back to being cheap some time in the future?   I don’t see why not.

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81 thoughts on “August 29 Market Update

  1. @Totoro

    I did explicitly say that was not my point. I’m not planning on buying in the states. My point, once again, is that, for locals in the places you defined as desirable, properties are much, much more cash flow positive than they are in BC. But I see there is no way your mind will allow you to see that Victoria is overpriced. I’m guessing that you have a lot riding on Victoria being reasonably priced. That’s fine. I wish you well.

  2. That neighbourhood and house are well below the median in Seattle but we can use those numbers.

    You will be out of pocket about 300/month on that place if you properly account for your costs and correctly identify the interest rate you will get buying an investment property by my calculations and this doesn’t account for the extra expenses a Canadian buying in the US has.

    You will also have to pay withholding/income taxes on equity pay down portion less your losses which will be at your top marginal tax bracket.

    The only way you win on that investment vs. stocks is through appreciation, which is a risk.

    I recommend watching this:

    http://www.lcaoa.org/management/how-i-quickly-analyze-a-rental-property-for-cash-flow-biggerpockets/

    Then use this calculator:
    https://www.biggerpockets.com/buy-and-hold-calculator

    And we’ve already pointed out that there are other HCOL appreciation markets in the states so I’m not sure why you are insisting that Victoria prices are “unprecedented madness”: they are not. Prices are way more affordable then they were in the early 80s when interest rates spiked.

    In any event, you get to make your own purchase decisions and the future will tell whether it was a good decision or not.

  3. @Totoro

    How about 6921 24th Ave SW, Seattle, WA 98106

    It’s 360K. You want 10% down (not actually possible for an investment, but let’s use it) so you are looking at under 1300/month. Zillow says you can rent it for 2200/month. 6321 21st Ave SW, Seattle, WA 98106, which is a pretty good comp is going for 2275, so Zillow’s not crazy wrong. That leaves 900/month for repairs, taxes, opportunity cost on your 36K and contingency. You might argue that I’m leaving stuff out (I know I am) or that there are better places to buy (there are). But that’s not my point. My point is that I found this house in under five minutes. You can take as long as you like but you will not be able to find anything approaching this level of return in Victoria.

    Victoria prices are not explained by lack of land. Victoria prices are not explained by desirability. And it is not the case that people in other places are equally willing to overpay. What is going on in BC is nearly unprecedented madness.

  4. Anyone know what 1423 Bay just went for? Old house, decent interior, excellent garden. Listed 549, assessed 427.

    Thanks

  5. “I was actually thinking about affordable oceanfront the other day… It seems like just a couple of years ago you could find the odd tear-down on the ocean for $400-$500k. ”

    When we purchased in 2008 we looked at a few waterfront places. Lovely waterfront duplex on the Gorge (just off Selkirk) asking 800K and disgusting house (probably tear down) in West Saanich on a nice large lot for 700K. Don’t think you’d find those values today.

  6. Newcomer, I’ve been looking in the US since 2007. My conclusion is that I’ll stay in Canada for mostly tax and hassle related reasons. I don’t need to make the most money ever, just enough to retire early while we still have our health.

    As far as cash flow positive neighbourhoods in San Francisco, Seattle and New York city – I really really doubt it. Go to biggerpockets and ask around and you’ll see what I mean.

    Investors living in these cities are not investing at home for cash flow – they are heading to Oklahoma and Texas and the Carolinas and other areas where the numbers work.

    I would be interested in a concrete example of a cash flow property in these areas.

  7. @Totoro

    I can show you cash flow positive in those cities, but you might not think the neighborhoods I pick match your definition of “desirable.” (I’m guessing you know that, so don’t make me do it if you already know.) I can’t, on the other hand, show you cash flow positive anywhere in Victoria. I know, because I tried to find one to buy this summer. My point here is that Victoria is more overpriced than any US city, including Seattle, New York, and San Francisco.

  8. Nice work, Dasmo. I remember that lot coming up for sale and thinking it was a cool spot. It is always rare for affordable waterfront to come up, especially so close to the city.

    I was actually thinking about affordable oceanfront the other day… It seems like just a couple of years ago you could find the odd tear-down on the ocean for $400-$500k. Not in fancy places like South Oak Bay or Cadboro, but places like Esquimalt and View Royal. Now – forget it, nothing for less than $800k or more; usually a million.

    Anyway, looks like a very nice investment and piece of paradise.

  9. @ Caveat, that’s the neighbours helicopter landing pad. There was a lot of encroachment on the lot from the neighbours since it used to be one large lot way back and since subdivision in 2000 it has been empty. The neighbours stuff spilling onto the property also affected it’s curb appeal… That neighbour is actually pretty awesome and removed all their stuff as soon as he caught wind we might purchase. I guess he wanted us there….

    @omykiss,
    Our proximity to the goose was also a big selling feature. Although my ebike is down right now 🙁

  10. It’s pretty neat up there and is a part of the city that not many people have ever been to or even know exists.

    Ah now i see it. Yeah cool area I used to ride my motorbike up there. It does kinda look like it was used as a dedicated trampoline property before.

  11. Dasmo – lovely spot. I’m a little bit jealous. I go back and forth between loving city living (Fairfield currently) and missing the big acreage I grew up on. Looks like this spot is the best of both worlds and won’t face a lot of development pressure.

    I’m curious – Google Earth makes it look like you have a trampoline in your front yard or perhaps a crop circle

  12. I bought my house about 4 years ago and looking back I am really glad I did. Paid one mil six for it
    which sounds like a lot but it is over half an acre, almost 8,000 square feet with a carriage house. The house was built in 1922; but all new wiring and plumbing; newer roof and all the chimneys were repointed. In Rockland, with ocean views from all five balconies. Did a bit of interior painting to brighten up the entry hall colour and replaced one bathroom countertop with granite.

    I have no idea if the house is a good investment but I love living in it and plan on being buried in the back yard under the rosebushes.

    I still look at the real estate listings regularly but have not found anything like it for under 3 million; so I guess it was a good deal. It took a year to find it in the first place so patience is the key.

  13. Yes. And they are not cash flow positive. You need to do the math.

    Yeah a lot of people in Victoria like to think cash flow positive means you are net positive if you consider principal paydown.

  14. Have you checked out the rents in these places?

    Yes. And they are not cash flow positive. You need to do the math.

    My definition of cash flow positive, which is the standard one is that you have money in your pocket at the end of the year with a 10% down payment after accounting for all costs (taxes, insurance, repairs & maintenance, water, sewer, income taxes…). Show me a place in a desirable area of these cities you can do that with buying today.

  15. @Totoro

    ” These areas are also terrible for rental property based on cash flow.”

    What makes you say that? The numbers say that rentals are cash flow positive in San Franciso, Seattle, and New York. Have you checked out the rents in these places?

  16. Dasmo, I recall you being into bike commuting (and bikes in general) and am wondering if you’re planning on riding the road that links you to the rest of the city. It’s pretty neat up there and is a part of the city that not many people have ever been to or even know exists. Good for you and your family.

  17. I was under the impression that you were arguing that BC land price appreciation is justified by population density (shortage of land).

    Not really. I was arguing that there is not endless land – not a shortage of land – and our population is increasing and the more desirable places become more desirable as the population increases in these areas and within larger areas the subareas that have more desirable characteristics become more desirable.

    I’d say comparing anywhere based on density alone doesn’t work.

    I’d also say the US and Canada is not apples to apples, however, appreciation markets in the US work in a similar fashion to those here.

    Appreciation markets get expensive quick and tend to hold their value and recover after drops quicker. These areas are also terrible for rental property based on cash flow.

    Appreciation markets are generally desirable places to live for climate, geography, other appealing features, and access to jobs and services.

    Within Victoria the overall desirability factor outweighs looking at density alone – OB is more expensive but less dense than James Bay.

    I guess it does come down to location-specific features more than anything.

  18. @totoro

    “My opinion remains the same: areas that are desirable will experience a greater rate of appreciation over time.”

    That’s not exactly a controversial opinion. We are in agreement there.

    I was under the impression that you were arguing that BC land price appreciation is justified by population density (shortage of land). Perhaps you agree that, looking to the US for comparison, that is not the case and that much lower prices are the norm with much higher population densities (not to mention, much higher gross regional products).

  19. But we all know that Langford isn’t more desirable than Oak Bay, because if the folks moving to Langford had the means to buy in Oak Bay (or many other places in the core), most of them probably would.”

    Langford owners made $6200 more last month that Saanich East so whose the loser ? SE looks like it’s topping out only up $5800 in a record breaking month.

    If you believe Ross Kay those numbers are not the real deal anyhow. Pretty funny how they are all just up a little bit to the positive, but total sales dollars are down over $200 million compared to March peak.

  20. At great risk of revealing my secret identity I will share my blog I started for my house build.

    Cool. Looking forward to following it as I’m very interested in low energy houses.

    My guess is somewhere near Sooke. Lots of little lakes around there.

  21. @Triple A rate – “I estimate that I looked at more than 1000 listings before we bought”

    Well, I thought I was picky! As I mentioned before, we had been casually looking for over 10 years, and more seriously for five (with life getting in the way at times), but we certainly didn’t view that many in person. My spouse and I only had one day a week that we were both consistently off work, so that cut our opportunities. I don’t think most people have enough time and energy to put that much effort into home selection, even if they don’t mind the actual activity.

    There were indeed very few houses that warranted further consideration, but I do wish I wouldn’t have held out hope that a better one would come along for so long. That back-fired this year because prices shot up. I have ended up with a worse house for more money. At some point you have to decide something is “good enough” and the price is fair for the current market. Maybe I should have held out longer this year, but we had a deadline to move by winter and could not count on a surge of listings in September. I was waiting for that last year, and it was very brief and prices were already rising. We’ll see what happens this year, but at least I know I will be spending Christmas in my own home for the first time in my life.

  22. My opinion remains the same: areas that are desirable will experience a greater rate of appreciation over time.

    And Just Jack would argue (and frequently has in the past) that Langford is the most desirable spot in Greater Victoria because its population is growing faster than that of any other local municipality.

    But we all know that Langford isn’t more desirable than Oak Bay, because if the folks moving to Langford had the means to buy in Oak Bay (or many other places in the core), most of them probably would.

    More people buy Honda Civics than buy BMWs, but that doesn’t necessarily mean Civics are more desirable.

  23. Dasmo

    You are going into with right attitude just make sure you stand your ground when you have to. Getting into arguments about what a tall plant is versus small and there is not enough of the large and them trying to have access to my property at will putting stupid shit on the title. Had to sick my lawyer on them. All fine and dandy to protect the environment but logic has disappeared. Not sure you read about the Saanich stupidity with houses on the Ocean. It was all worth it. I have my paradise that is not replaceable and would never sell because of that.

  24. Is it your belief that land prices in the Seattle area and in Oregon are comparable to land prices in the Vancouver area

    Comparing Vancouver to Seattle or San Francisco is likely valid keeping in mind the 2008 crash recovery effects in the US. Oregon is pretty big with lots of rural areas and prices are locally influenced. I meant to identify Portland as they’ve experienced 20% yoy appreciation and are well on the recovery route – it is a desirable city.

    The benchmark price for a home in Vancouver is $1,400,000.

    The median price of homes currently listed in San Francisco is $1,100,000 ($1,441,385.00 Canadian).

    The median home value in Seattle is $588,000 ($770,485.80 Canadian). Seattle home values have gone up 15.7% over the past year and Zillow predicts they will rise 6.9% within the next year.

    So San Francisco is more expensive, Seattle is much less expensive. San Francisco is more desirable than Seattle in the US. Vancouver is more desirable in Canada than many other cities even though it shares much of the Seattle climate – Canadians don’t have a San Francisco option.

    You need to compare cities of similar sizes and areas with similar amenities. I can show you cities of similar densities in the Eastern provinces that are less than half the price of a similar home in Kelowna.

    My opinion remains the same: areas that are desirable will experience a greater rate of appreciation over time.

  25. @GWac, I already have 100’s of pages of reports and will cover that in a post. It’s a double edge sword. We find that this lake is still living with trout, turtles, frogs and surrounded still by mostly nature is what makes it precious. Speaking of Value, it’s invaluable because of this. Coming from the EU you can’t have enough money to live in a spot like this because it doesn’t exist. I’m ok with suffering through the added administration (and it is suffering) because of this. It will also protect the area and keep it natural and protect the lake. Once you learn about the riparian zone you understand why it’s needed. IMO it’s too bad these regs weren’t in place before…

  26. Dasmo

    Are you a liberty to say where this lot is. What city?

    I built 5 years ago next to a lake up Island. Nothing but a complete nightmare. Dealing with 100 an hour Riparian reports and monitoring and post reports. Paying people to watch concrete being poured near the lake with a spill kit. Counting plants. Finally I told them all to fuck off and let me just enjoy my property. I had my building occupancy at that time so I felt they had nothing they could do which I was right. They all just fuckoff.

    I wish you much luck and success. Hope it is not Saanich. BTW very excited about following the blog.

  27. So we’ve had a 30% growth in property values in less than a year and a vacancy rate of less than 1% and the argument that this is not logical is that ‘growth rates are low’.

    LOL. I’ve read some stupid stuff on here but this is close to the tops. How many units can you fit onto the average courthouse lawn? Hey, there’s hardly been any new lots added in South Oak Bay. Clearly nobody wants to live there. How come nobody is eating at McDonalds in this empty parking lot? Clearly nobody here wants a tasty burger.

  28. At great risk of revealing my secret identity I will share my blog I started for my house build.
    https://blackturtleredphoenix.wordpress.com/
    This way I might get nagged to update it… get critiqued and ridiculed… and share knowledge gained with other realestate nerds (which is what in the end binds us) I should have started it sooner so it will probably alternate between the present and flashbacks…

  29. @Totoro

    Is it your belief that land prices in the Seattle area and in Oregon are comparable to land prices in the Vancouver area and areas like the island and the valley? If that is your belief, you may want to have a look at Zillow. Once you have done that, and checked the population densities in these areas, it is my guess that you may revise your opinion.

  30. Growth rate is relative. When you have 50 people and next year there are 100 then it is 100% increase. When you have 4.8 million people and a growth rate of 1% that is still 48,000 new bodies in the province. And new bodies are only one factor, the other is where they settle or where people here already go:

    As for land values, the situation is the same south of the border in desirable areas like Seattle, Oregon, and coastal California. Less desirable areas normally don’t experience the same appreciation or population growth – rust belt.

  31. Spending more than $20-25k annually on a rental – depends on the value
    Constantly facing threat of eviction – or constant threat of insolvency
    Lack of pride in something that yours to freely make mostly and number of changes to – or ease of life since you don’t have to worry about stuff
    Finding yourself cold and in the street after the fire alarm goes off every month from another unit – if you live in a condo you have the same problem
    You’re young, have a family perhaps, and are sick of renting a slum of a townhouse from a jerk of an owner – if your young you shouldn’t tie your life down with a million dollar noose. You should remain movable.
    You’ve set yourself a budget for the last 5 years, stuck to it, invested it in a diversified portfolio outperforming the market – so keep doing that
    Have more than 30% down – No excuse to do something stupid with that money.
    Set yourself another budget as a homeowner tracking every cost, over estimating for home repairs – which would equate to DON’T DO IT in most cases right now.
    Have a 3 month emergency fund (6 preferably) – There goes the 30% down payment
    Lock into a fixed rate of less than 2.5% – duh
    Can afford a 20 year amortization but instead go with a 25 and invest the rest in GIC’s and again a very balanced portfolio of Grade A Blue Chips (waiting for any correction to invest more) with no more than 10% in Growth or High Yield dividends – right…And at these prices who is doing that?
    You’re 50, have your house paid for and look to diversify your retirement stream with rental income (many posts on this hot topic. More cons than pros) – If you are buying it now it will be cash flow negative for 20 years so you will need to get another job in your 60’s to hold on to the investment….

  32. @Triple A Rated

    It isn’t one set of #’s. The ISM was below close to 48 at the beginning of the year, showed signs of bouncing back this summer and looks like it’s rolling over again. Non-farm payrolls is actually a pretty bad indication of economic performance in an economy and is why most central banks don’t target it (it is popular because people like to have jobs). Non-farm payrolls can change depending on structural changes in the economy etc. You mentioned China. China may be the biggest risk to the global economy with the amount of credit expansion and government stimulus in the last decade. To me they look like the US pre 2007. This is why I am concerned about Canada right now because if China go, so goes our trade and our foreign buyer. Well the foreign buyer may have already left.

    I do agree that there may be good buys to be had. You have to be diligent at looking at your carrying costs etc. But, I think for the general population there are more risks to rewards to buying right now.

  33. In the long term, there is lots and lots of land that the crown would be willing to sell, if there was a genuine demand for it, even if that involved making payments to settle FN claims. But long term is not the issue here. BC land prices are loops that have formed as a result of pushing on the end of the string. Those who think that BC land prices are the result of increases in population density need only look south of the border to see that much greater densities can be reached with much lower prices. Or they can look at past BC population growth rates to confirm that recent growth rates are the lowest in over 100 years. In fact, the only time they were lower was a period of negative growth in the 1800s when the gold rush ended. Hmmm.

  34. #23…..
    UK reported PMI at 53.3 vs 49.0 forecast.
    I don’t put much faith in one set of numbers, especially these. Germany and China all reporting over 50.0

    Now if you had mentioned non-farm payroll was well under forecast than I would be more interested. But it came in better than expected which further increase odds of an interest rate hike (which should dampen borrowing to some extent in the US). However up here, until Gov’t spending runs rampant, inflation nudges, they’re not going anywhere.

    Why would you buy a house? Because you fell in love with the value in the home, not the price you paid. Value can also mean a lot of money paid but it’s a function of $/ft of lot and/or finished, unfinished. Perhaps you’re tired of:
    1. Spending more than $20-25k annually on a rental
    2. Constantly facing threat of eviction
    3. Lack of pride in something that yours to freely make mostly and number of changes to
    4. Finding yourself cold and in the street after the fire alarm goes off every month from another unit
    5. You’re young, have a family perhaps, and are sick of renting a slum of a townhouse from a jerk of an owner
    6. You’ve set yourself a budget for the last 5 years, stuck to it, invested it in a diversified portfolio outperforming the market
    7. Have more than 30% down
    8. Set yourself another budget as a homeowner tracking every cost, over estimating for home repairs
    9. Have a 3 month emergency fund (6 preferably)
    10. Lock into a fixed rate of less than 2.5%
    11. Can afford a 20 year amortization but instead go with a 25 and invest the rest in GIC’s and again a very balanced portfolio of Grade A Blue Chips (waiting for any correction to invest more) with no more than 10% in Growth or High Yield dividends
    12. You’re 50, have your house paid for and look to diversify your retirement stream with rental income (many posts on this hot topic. More cons than pros)

    These don’t all apply to my or your situation but there’s some thoughts on why you may choose to buy now. I estimate that I looked at more than 1000 listings before we bought, Went to god knows how many open houses but at least 12 per weekend for more than a year. 5 prior to that. Of all of these, there were only 12 houses I would have seriously considered viewing privately, and 4 I would have put an offer on. I encourage patience regardless of market conditions and disregard the FOMO. A better house always comes along.

  35. For the last month I have been reading the comments on this blog and it has been interesting to look at all sides to the debate. In every bubble there is a euphoria stage and I believe we got that last Spring. I don’t think the fundamentals support real estate prices. We are in the very late stages in this business cycle and the Canadian consumer has a record high debt burden. Every housing affordability metric is screaming bubble in Van. We are seeing the first signs of a correction in Van with volumes dropping significantly and once these numbers hit the media panic may ensue. This may not impact Vic real estate instantly, but Vic should lag Van.

    The ISM numbers were just released out of the US and it came out at 49.4. Anything below 50 and there is a 65% chance of a recession. I don’t know why you would want to buy a house when the largest economy in the world is showing significant weakness.

  36. Wed Sep 1, 2016:

    Aug Aug
    2016 2015
    Net Unconditional Sales: 883 741
    New Listings: 1,120 952
    Active Listings: 2,094 3,688

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

  37. where will the $ come from if you can’t get it from property taxes?

    Why wouldn’t they be able to get it from property taxes? If property values go down they would just increase the mil rate

  38. Just to follow up on the BC land area discussion-
    14% of BC is protected in parks or reserves
    4% is in long- term timber lease (tree farm license, etc.), managed for 25 year terms.
    About 5% is private; federal land (military, FN reserves) is another 1% or so.
    Of the remaining 75%, as others have mentioned, it is essentially all covered by FN land claims.
    Now, some of it does get developed, as we do get new mines, ski resorts, etc. popping up. But access is a major problem, as much if our area is totally remote. Think coast mountains and inlets, where we don’t even have a road route to the Sunshine Coast, which has been developed for over a century.
    The gov would have to invest tens of billions in highway and other infrastructure to make substantial areas accessible, even if the political will was there, which it isn’t at this point.
    Bottom line is that there is tons of public land here, but there’s very little potential for any significant conversions to private land happening that would affect housing in Victoria.

  39. China’s Thirst for Energy (not including Coal, LNG)

    1/ 11M bbls/day @ $55/bbl = USD$221 billion/year – over 60%+ is foreign oil
    now if they use only half of what the average Canadian uses

    2/ 22M bbls/day @ $55/bbl = USD$422 billion/year- over 90% will need to be imported.
    they get 50% from the Middle East.

    3/ Canada consumes 1.8M bbls/day and we can easily ramp up to 5.oM bbls/day

    If we really want to cash in on Asia (China/Japan/SE Asia), the pipelines to the coast need to be built. At $55/bbl, that would give our country $60 Billion USD/year. No matter how you slice this, that would be some serious resources to fund our social agenda. That is a lot of social housing not to mention the good jobs that would be created.

    FYI: Now it takes by boat only 7-9 days from BC to China’s coastal Refineries; versus 16-18 days from the ME. Average Super Tanker is renting out for $275K/day.

  40. @Jimmy Nantucket
    Investment choices are few these days. Equities @ all time high, RE @ all time high, and the world governments keep on printing money @ an alarming rate. Too much money and not enough choices; when is the last time you hear there will be XXX millions of dollars going into a new factory? You don’t. Much easier to buy AAPL or MSFT or Vic RE.

    You bring up a great point. For Municipal governments whose budgets (spending) has swelled 50% on average over the last 5 years, 10% annually, where will the $ come from if you can’t get it from property taxes? Ouch, can’t answer that one. Figuring that one out will be harder than finding an cure for Cancer. Cynic.

  41. @Ash
    Well… we had a flat down market for ~7 years with record low rates, tight vacancy and decent job/migration figures in BC. What made it go nuts all of a sudden? I would say it’s up almost 50% in some hoods, seemingly overnight. But it’s hard to be too bearish since prices are sticky here…. but, I think the opportunities will be back and I think some people will be punished for being crazy with money.

  42. And doesn’t your private lands map support the idea that there is not an endless supply of land for sale in BC – particularly in the desirable areas?

    I’ll concede that one. Although it’s easy to forget how big those private land parcels are. I find it very difficult to believe that in the last 20 years land in BC went from so cheap to unbelievably expensive because of a shortage of land. Not that much actually changed.

    So let’s settle those damn claims pronto so the FNs can start transferring some of that land to fee simple.

  43. Not forever but a long long time. And the end result will be a redistribution of large tracts of Crown land to First Nations. The province has already implemented shared decision making with First Nations on Crown lands within their territory.

    Take a look at the territorial/unsettled land claims:
    http://www.albertaoilmagazine.com/2014/03/long-way-to-go-for-northern-gateway/

    or with pretty colours:

    And you might want to remove the parks from the map as a start – they won’t be privatized or become First Nations lands: https://en.wikipedia.org/wiki/List_of_protected_areas_of_British_Columbia

    And doesn’t your private lands map support the idea that there is not an endless supply of land for sale in BC – particularly in the desirable areas?

  44. If the province or federal government attempts to privatize that would be a direct route to litigation.

    It very well might be. But do you think that this situation will continue forever? Not a chance in hell

  45. Not right now, but crown land has been privatized since Canada existed and more will go that way in the future, especially if there’s the impression that land prices are out of control.

    That will not happen. The outstanding land claims by first nations cover almost the entire province. If the province or federal government attempts to privatize that would be a direct route to litigation.

  46. Dasmo said: “this is the only time in my life when I have thought things are insane (excluding Van. It’s been insane for years”

    Man you’ve sure turned bearish this last little while! Do you really think things are that out of hand in Victoria? I’m not super bullish either, but hey, we had a flat/down market for ~7 years and then saw a rise of ~25%(?) with record low rates, tight vacancy and decent job/migration figures in BC. Is it that insane?

    Yes there’s been some ridiculous sales this year, but as JJ and others point out, those have been the anomolies.

  47. That’s interesting Leo. I bought in 2003 and I remember a Realtor saying “we are signing deals on the hoods of cars”. Of course I thought sure… But I guess he wasn’t exaggerating! Of course houses were almost free then so it makes sense….

  48. I attended dozens of open houses this spring and the dominant demographic I noticed at almost every open house was NOT Chinese folks or young Alberta dudes

    The perfectly ordinary home depot reno house that gained $400k in 8 months around the corner from us was bought by an asian couple. They drive a Corolla. I doubt real offshore investment is a significant factor in Victoria. If it starts after the Vancouver tax they will extend it to here in very short order.

  49. Thanks Bizznitch. Those are terrifying numbers. No worries bulls, it’s only one month. But what happens if it turns into two months ? September will be a gut wrencher for the bulls.

  50. Crown land is not in the picture

    Not right now, but crown land has been privatized since Canada existed and more will go that way in the future, especially if there’s the impression that land prices are out of control.

  51. If you are counting up a mountain outside of Salmon Arm desirable then there is no shortage of desirable land out there. Most of it probably crown land.

    Crown land is not in the picture. Desirable is also relative. $60,000 per acre of land seems damn cheap when you compare it to Victoria prices but you can buy rural land for $10,000 per acre near Terrace or $870 an acre near Vanderhoof. The further south you go the higher the value generally – add in variations for servicing and waterfront.

  52. It will be interesting to see who buys into the market with such negative press coming out the past few weeks. I’m surprised I know so many people who actively look at real estate and yet had no idea about the mid august sales numbers in Vancouver. You think if you were going to finance a cool mil you would do the same amount of research you put into buying your organic grass fed butter.

    Still waiting for buying opportunities, but I think 2-3 years from now will be prime in terms of value. Too much risk in this market, why take on such a huge liability and then leverage it to the moon (maybe even further?). Don’t get me wrong, housing had an epic run, and kudos to you if you took advantage of it, but there is no fundamental support for further price increases unless lending costs go down, and I just can’t see sub 2% big bank 5 year fixed mortgages.

    It’s not panic mode yet, but I’d suggest slowly reducing exposure. Whether that’s through your employment or your real estate holdings, get things rolling to unload next spring. Lots of people I know hold real estate as their only investment, which is dangerous. At least put a meth lab in one of those homes… This will be a gradual slowdown, with prices slowly eroding over a few years and causing havoc for 5-7. Have a look at the municipal budgets of Saanich or Victoria, I think that will take a huge toll on the communities as they try to reign that in. 50% of their operating budget is made up from property taxes, which I found quite alarming.

    Interested in hearing other peoples thoughts, in a respectable manner, of course.

    Cheers,

  53. But will it be the highest sales to list in August ever?

    No. 2002 (78%) and 2003 (95%) were both higher.

  54. The difference has become more pronounced over the years between un/desirable areas.

    If you are counting up a mountain outside of Salmon Arm desirable then there is no shortage of desirable land out there. Most of it probably crown land.

  55. Yeah, those acres are not the same price across the province. The difference has become more pronounced over the years between un/desirable areas. Not too many of the millions moving to BC headed to the north to buy a family home either. Can’t see that changing.

  56. I understand things change. I’m a recent buyer and couldn’t be if I couldn’t accept that. However this is the only time in my life when I have thought things are insane (excluding Van. It’s been insane for years).

  57. I don’t know Leo. The Okanagon is a super popular place and has experienced tremendous change over the last 20-30 years. People who were there (especially Kelowna) in 1990 will tell you the place is almost unrecognizable to today.

  58. As for population growth in BC, try 3292111 in 1990 and 4693139 in 2015 – most growth in the desirable areas.

    There is essentially endless land in BC. There is no way the population is putting a significant pressure on province wide prices. Yes there is only one point grey, but there are hundreds of thousands of acres very similar to what my parents have.

  59. If you disagree with Ross Kay on this one I would love to hear your reason with evidence. Start listening at 8:15 http://www.howestreet.com/2016/08/21/this-week-in-money-61/

    Don’t know anything about Ross Kay but at first listen he sounds like a total blowhard who spent more time pretending he called this market than actually explaining what is going on. His website (which you have to pay for) promises that members: “They know when to buy.
    They know when not to sell.
    They know what the markets doing and why months in advance.
    They can survive a house price correction.
    They grow their home’s equity at an unmatched pace.
    And much much more.”

    Which is of course 98% nonsense.

  60. My folks also live on a quarter section – North VI – mixed forest and farmland. They bought in 1976. I estimate the price has gone up 23x in 40 years – based on a very guesstimated sale price. Some value due to newer houses on the property and a better access road, but mostly increase in land value. Keeping pace with inflation would have been only a 4X increase so this went up WAY above the rate of inflation. Same is true of rural land all over the province – especially in halfway desirable areas. In the interior it seems like there is always a steady supply of rich Americans and Europeans to buy up big chunks of ranch or farm land

  61. “Look at that absolutely massive decline in daily sales over the last week. The time has come bears!!!!”

    Wait til you see the Vancouver numbers which will ripple over here in due time.

    Steve Saretsky ‏@SteveSaretsky 5h 5 hours ago
    Preliminary findings for August detached. It’s bad, like real bad.

  62. Some comments from the last post

    @SweetHome

    I do know that compared to the number of rich people in the world, there are a paltry number of total properties in the core of Victoria (and even fewer if you stick to the traditionally “desirable” areas).

    If only 1% of the millionaires in China come here! A spot in tent city will cost you your first born! Or maybe not.

    @Dasmo

    That said…. I can’t see anyone saying, “thank god I only payed 950k for this fixer upper next to hillside mall” in the next few years….

    Agreed, except prices have this way of normalizing over time. 15 years ago my parents thought $100k for a condo was insane. 5 years ago I thought half a million for a house was insane. Things change. But like every time, right now it seems insane.

    @totoro

    Funny how Leo is able to take the same data, chart it with reasonable comparisons and make reasonable conclusions and formulate defensible hypotheses as a result – losing no-one in the process.

    Well I don’t get the regional breakdown, so easier to graph. However that is coming later this year most likely.

    @Michael

    Sure displays the inadequacy of the monthly median, especially when trying to figure out how much prices have risen in a year (undoubtedly worse in months like Aug, Dec)… hence why boards moved to HPIs.

    Monthly medians are useless, but a running average is pretty good. HPI is also useful but a little too processed for my taste. In the end the price is the price.

  63. Well, there is more and less desirable land and the desirable land is getting more desirable. North Okanagan has become pretty desirable. Try Prince George or Hope or Williams Lake.

    As for population growth in BC, try 3292111 in 1990 and 4693139 in 2015 – most growth in the desirable areas.

    RE markets are not national or even provincial and if you look at Canada overall inflation adjusted prices show in 1981 the average home was $198,094 in today’s dollars, while in 2016 it is $450,866. – so just over double.

    For your north OK property which was $70,000 in 1990 that is $113,392 in 2016 dollars so it has way way outperformed the average increase evening accounting for the higher buy-in price in 1990 than 1981.

    http://www.theglobeandmail.com/real-estate/mortgages-and-rates/comparing-canadas-housing-market-with-the-high-rates-of-1981/article25169755/

  64. Look at that absolutely massive decline in daily sales over the last week. The time has come bears!!!!

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