Oct 17 Market Update

No they’re not Michael.

This year has been anything but normal. There was an increase in the number of Vancouver buyers temporarily in the spring. Now we have returned to historical norms where 70 to 75 percent of all purchases are made by locals. And I suspect that is normal for most cities as people move from one city to another. I’m sure people in Duncan are blaming their higher house prices on rich Victorians moving there too.

Vancouver buyers driving up prices is a red herring. Our detached housing market is primarily driven by locals purchasing property. Once you say Vancouver, people assume that all Vancouverites are rich and therefore pushing up prices. Vancouver buyers are no richer than Victorians. They are buying in all price levels and all types of properties just like Victorians are doing.

“We had nearly no international buyers here on the way up (same as usual). Sure some vicarious money via Vancouver locals cashing out and moving here. Was that the sole driver of Victoria price gains? I don’t know. ”

Jack settled that number question Bingo. Was it the sole reason ? It fueled the whole media/industry push, as was evident on here daily by stories by posters and Marko of open houses lined up around the block, large groups of high end cars circling the blocks, mailbox stuffings and door bangings begging you to sell your home. Where are they now ?

Not to mention agents gloatingly promoting filthy rich Chinese pouring in on planes daily on the news (and being evident at every open house). You tell me with these facts pumped all over the news nightly from February til about a month ago if it would not have an effect ?

Don’t have to wait to see what’s happening in Vancouver, look at the chart. Show me when it’s dropped more. The money is leaving Vancouver by the same planes it came in on.

http://www.canadianmortgagetrends.com/wp-content/uploads/2016/09/Vancouver-Average-Price.png

Maybe. The program is growing in popularity with 38,000 current users – most over 55:

A spokesperson for the Ministry of Finance says there are currently 38,000 homeowners using the property tax deferral program and the average amount of deferred taxes per household is $3,000 a year.

In one scenario, a 60-year-old homeowner in North Vancouver might pay $8,000 a year in property tax on a standard $1.6 million house. If that house continues to rise in price by $200,000 a year for the next 15 years, by the time the homeowner wants to move at age 75, their house would be worth $4.6 million. Assuming their tax rate hasn’t changed, they would have deferred $248,000 in property tax over the years – money which they may have chosen to invest for profit. They would have only paid just over $1,900 in interest.

At a rate of 1% simple interest this is a much better deal than a mortgage or HELOC.

http://www.vancitybuzz.com/2016/01/rich-bc-homeowners-property-tax-deferral-program/

If you can’t afford to live in your place with property tax deferral you may be better off selling and downsizing. Seniors with mortgages that could pose an issue for renewal with a deferment might be in this category.

Yes Totoro, some will elect to defer the taxes as long as the property is clear of all mortgages that is a possibility. But by doing so that means the person can not have a home equity line of credit or a mortgage. The bank will not renew the mortgage if you have a charge against the property. And that can become a problem if they need a new roof or windows.

It has also been my experience that most pensioners will not defer their taxes. They want to pay their taxes and not encumber the children with a debt that has to be paid off when they die.

And I agree with them. It isn’t that they are bankrupt and need assistance, they have lots of wealth, just no money. Not everyone is out to get something for nothing.

So while your guess is logical it isn’t reality.

AG: No there is no way to bet $50.00 on the average house price. The people on this site, with all respect, would spend the next year arguing what is average and what is included in the definition of a house and, possibly, in which currency should those calculation shouldbe made.

Lets pick something easy instead like figuring out what colour the center of a black hole is?

But it was a fun thought.

Let’s make this interesting.

Is there a way for us all to put in say $50, and make a prediction for the average Victoria house price in 12 months? Winner takes all.

MIchael

Fuzzylogic is paper profit vs real money paying increase taxes.

Those who sell or will sell no issue. Those that are on fixed income and or retired and like where they live have a potential cashflow issue if they cannot defer under the government program. Anyways lets see how it plays out in June when the actually bills arrive and lets see how happy people are that are impacted.

Introvert/tot

So yes will some will have seen their house assessment go up by 30% their taxes may only go up 10 to15%. Boy somehow that is not a win for those who do not plan on moving and may be a tad upset and may not be able to afford it with their 2% government raise. All I saying next years tax bills in July may be shocking for some.

JJ

The justification is Brand. Same reason people buy a 80k BMW vs a 30k accord. Both do the same thing and are the same size and will last the same amount of time. The BMW represents something to the buyer and what he or she is trying to tell everyone. That is why less sales in the “in” hoods still do not mean lower prices.

Totoro

Those people with more expensive houses in nicer hoods will pay a lot more and those areas that see less increases. A house going from 750 to 1m vs a condo going from 250 to 300k. Victoria will experience this. Those with lower price housing will see a nice cut in taxes. Victoria/ Sannich and even oak bay will see some very surprised owners with their tax bills. While the overall money collected will only go up 3%. A larger burden will be paid by those that have seen huge increases on their street or areas. IE GordonHead vs the area near Mann street.

The tax notices will be fun. As an appraiser you are suppose to comment on the tax assessment and property taxes for the property you’re appraising. And I do find myself commenting that some of the current assessments are neither reliable or reasonable relative to other similar properties currently selling in the marketplace and that may effect future property taxes (up or down) if the property is re-assessed. Or sometimes I will advise the client to appeal the assessments to have them reduced. Not so much in the core housing market but some high end condos or properties further out from the core.

“Yet Animal Spirit sales are down from the month before for houses in the core and have been trending lower since May.”

Jack,
Thus the noticeable decline in the local nightly news leading off with the “red hot” real estate market. I haven’t seen a “we can’t find a house in Fairfield” sob story for a while now. Haven’t seen any live auctions in Rockland for like 5 months now either. 😉

Yet Animal Spirit sales are down from the month before for houses in the core and have been trending lower since May.

Some say this is seasonal but if more out of town buyers were purchasing then we would not be seeing declining house sales in the core. And that is what is happening in condo sales. They are increasing as out of town buyers buy mostly condominiums in the core and not houses.

And that seems reasonable. If you are retiring to another city, why buy a house with all the associated expenses. Buy a newer condo and you can lock the door and go off to Mexico for four months with few worries. Better yet, if you’re from Ontario then downsize to a condo in Ontario and go to Europe or Florida during the bad weather months and not have to leave your friends. At least then your children will have access to the best post secondary education and best paying jobs in Canada.

@ Animal Spirit: On hot money, I heard from one of the neighbors that the Dunlevy house that sold last week for 1.2MM or so was bought by Chinese folks who didn’t even want to look inside the house. This is very Vancouver like so maybe you are right.

One question, while we’ll obviously declare income, which expenses to claim? We have mortgage interest, utilities, property tax, maintenance, yard upkeep, some expenses to make the room livable, etc. Your thoughts? Haven’t talked to an accountant yet…

I think those are the main ones. If you do hire an accountant to do your taxes, you can also claim a portion of that expense.

JJ – my suspicion is that the hot money from overseas that is no longer going to Vancouver is getting distributed to other locations such as Victoria. I have no data to back that up though.

With the CCA / PRE questions going around, it looks like my family is on the safe side – we rent out a room in the house (with use of the house and property) to a great boarder. One question, while we’ll obviously declare income, which expenses to claim? We have mortgage interest, utilities, property tax, maintenance, yard upkeep, some expenses to make the room livable, etc.

Your thoughts? Haven’t talked to an accountant yet…

It’s a good month so far for Oak Bay house sales. 15 have sold ranging from a low of $828,000 for a house suitable for a Great Dane to a high of $3,298,000 for a gaudy Trump like mansion that was listed off and on since the day it was completed in 2015.

With only 79 house sales so far this month in the core, that is having an effect on both the median and the average. In the case of Victoria it has pushed both the median and the average substantially higher than the previous month.

A similar skewing phenomenon to either the high or low end may be happening in Vancouver and that may be a reason why their board is reluctant to release September data.

From my experience we need to have at least 250 house sales in the core during the month to make the data meaningful. And that doesn’t happen as we enter into and during the winter market. There is historically some seasonal variation in prices but when the market was stable for five years that variation was minor of under 5%. Our strongest market with rising sale volumes has been the Spring-Summer and the weakest is the one we are now entering into as the volume of sales decline.

But that doesn’t mean prices follow that same path. Many factors can influence prices and raise prices in markets with low sale volumes such as a drop in interest rates or easing of lending policies.

As we are enter our weakest market for housing the government is tightening up on lending. That should bring prices down. However, preliminary medians and averages for the first half of the month seem to show projected sale volumes are down from the month before but prices have risen substantially for houses in the core.

Is our core housing market over valued then?

Is it the rush by prospective purchasers to buy before the lending rule changes?

I thought Canada was going to boom next quarter, now it won’t be til mid 2018. Stick a fork in the housing market.

The Bank of Canada slashes its growth forecast

“The bank said the government’s recent move to tighten mortgage and tax rules around housing was likely to restrain residential investment, dampen household vulnerabilities and leave the level of real GDP 0.3 percent lower at the end of 2018.

Canada’s long housing boom has helped offset the oil price decline and a commodity slump, but economists believe slowing in most major markets – with the notable exception of Toronto – will hamper growth next year.”

http://www.businessinsider.com/bank-of-canada-interest-rate-decision-october-2016-10

Income is not really an accurate gauge of wealth and buying power.

Those at the top are often incorporated and retain earnings in corporations at a 15% tax rate. And assets and inheritances are not counted. The wealthiest people I know in Oak Bay don’t have the highest incomes – that would also mean paying the highest amount of income tax which is not part of a smart wealth management strategy.

Two million invested and a paid off house will get you a comfortable lifestyle with a family income of $80,000 a year at a relatively low tax rate for a couple.

After tax income is a good measure of affordability when there are no other savings or assets.

“What’s with your obsession with Vancouver? Victoria didn’t go hand in hand on the ride up, but they’re tied at the hip on the way down? Different markets not directly tied. There has been some influence for sure, but Victoria isn’t going to mimic Vancouver.”

Ummm, maybe because it’s part of BC ? Victoria has generally followed Vancouver through out history but on a lower price scale because we are an island etc.

Victoria didn’t have billions of foreign money pouring in the last 5 years but the parabolic blow off top this year of Vancouver’s chart and Victoria’s rise was tied together with Vancouverites selling and moving here back in the spring and the FOMO being sucked in by the media and industry pump. What else could explain at $100K rise in a few months ? The pump was on and now it’s take cover with new mortgage rules etc.

Average price in an overbought market will show the early money direction indicators and the median benchmark trails by 6 months or more. Since most of the bulls on this board say over and over how Vancouver houses average $2 to 3 million a pop and they get slashed 700K and now it’s not a big deal ? As Steve Sartetsky says he listens to the large investors and they are selling Vancouver.

If you want to think you’re isolated in a cocoon Bingo, keep on dreaming, Victoria is not immune from international money flow when it influenced the price spike on the way up and it won’t on the way down either, history has shown that.

@Franc, don’t know if it is avg or median/quintile. I agree entirely with your observations of how the outliers could easily affect the income numbers.

My only conclusion after seeing the info and researching articles regarding net worth, is that the wealth gap between the poor and the rich is widening. The rich tend to be older, more educated, and have tripled their net worth over the last 15-20 year mostly via real estate and investments; and to a certain extent – income.

Victoria as a retiree hub, older people represents a large demographic. And if they follow the trends in terms of wealth, then there is a lot of it in Victoria. Hence, a partial explanation/understanding of the potential “wealth” driving the market.

Here is income stats for BC by Family in 2015 before the RE increases this year.

http://www.moneysense.ca/save/financial-planning/the-all-canadian-wealth-test-2015-charts/
BC income Poorest 20% $16,679/year income
BC income Richest 20% $212,944/year income
Toronto Income Richest 20% $298,000/year income
Calgary Income Richest 20% $363,000/year income
Vancouver Income Richest 20% $239,000/year income

BC Net Worth Poorest 20% $158K Assets
BC Net Worth Richest 20% $1.4MM Assets

It doesn’t break into Victoria BC separately. Also another anecdote, I have a few broker friends in the City who provide wealth management services. An account with $500,000 in investible assets elsewhere in Canada is considered large, and in Victoria, anything less than $1MM a year, you get the secretary/assistant. That tells me there is a lot of 1%ers in the city and not to mention someone previously poseted 1/4 of RE sales in Victoria are ALL CASH.

Introvert:

Not so that you can sue him. but rather that should an issue arise then you can convince the tax department that you were acting in all good faith and with no intent to avoid. Honest mistake goes a long way to smoothing a settlement. I am not saying your accountant is wrong but I am suggesting that it does not hurt to be a little prudent when it seems to be a gray area. But please yourself.

Hawk:

So Vancouver sales down 47% and average prices 20% (300K), in last two months is doubtful too ? Interesting.

Average, not median. That can easily be explained away by the high end market dropping.

I do think Vancouver prices can and will drop a lot. But Vancouver has a lot farther to fall than Victoria.

What’s with your obsession with Vancouver? Victoria didn’t go hand in hand on the ride up, but they’re tied at the hip on the way down? Different markets not directly tied. There has been some influence for sure, but Victoria isn’t going to mimic Vancouver.

How about this for a theory: as people start to bail from Vancouver as prices drop some of that money will come here. People are going to bail for sure. Whether they come to the island after cashing out.. who knows. But it could bolster prices here for a while.

Regardless we need more inventory for prices to drop here. We’re scraping the bottom of the barrel (Neil for 1 mil?!).

barrister

Let me ask a different question, what percentage of couples under fifty have enough income in Victoria to afford to carry a million dollar mortgage? Does anyone know?

I’m curious about this too. Too bad people don’t have to report income when buying so we’d have stats on that. I’m assuming people buying SFH are making over median, but I could be wrong. Median family income in Victoria was 88K circa 2014. So let’s assume 90K currently.

According to Ratehub that means you can afford 840K if you have 20% down (30 year amort). That drops to 760K on 25 year.. at their rock bottom 2.14% fixed mind you.

Both scenarios are $2500/month. That seems like a lot on 90K (especially if it’s single income). That’s around 70K take-home. Add in property tax, insurance etc and it’s easily 35K/year to keep your home without counting any maintenance. Half your take-home just to “own”. No thanks.

Assuming you have 200K down you need an income of 109K for a 1mil mortgage. For 25 year amort you’ll need around 125K income. $3550/month on 109K income seems absolutely nuts. You have 10K/year more take-home than a family making 90K but 12.6K more in mortgage fees per year. How does that math work?

Anyhow.. it looks like you don’t need to make much more than the median family to get a million dollar mortgage (assuming you have 200K). You just have to be willing to stretch yourself to the limit. So maybe lots of families can stretch to 1 million.

Please do not limit postings here. I am learning so very much from the discussions.

Besides, Jerry, I just bristle at the mere hint of anyone trying to limit anyone else’s speech. Read the posts, skim them or move along but continue to let people speak.

AG:

I noticed the date on the heading of the article but when you actually read the article it clearly refers to the recent changes as near as I can tell. But perhaps I am wrong. I think we can safely assume the author did not have a crystal ball.

@ Barrister, Do you really think that suddenly they will let you subdivide your ALR land in ten years? It’s only going to get harder to do that…. It would be a good investment if you had a good farming business plan. Maybe an underground organic cannabis farm?

Marko:

I am thinking that the best investment property for me at this age might be ten orfifteen acres of vacant farmland in the Peninsula within the agricultural land reserve. No tenants just a professional farmer. What are your thoughts? I am thinking of a ten year investment window by the way.

Looks like lots of alligators to dodge when renewing now. If you’re deep into your leverage/HELOC and other debt, things could get very expensive.

New mortgage rules could make switching or refinancing tougher

http://www.theglobeandmail.com/real-estate/mortgages-and-rates/new-mortgage-rules-could-make-switching-or-refinancing-tougher/article4389044/

I agree with Barrister about the idea of stuffing young people into shoebox sized apartments and how there is no sustainability in that. People need space to raise children and have a family and a future. I believe that cities will start to shrink. I know this goes against what the current thinking is. Cities have been growing. But I believe a big change is on the near horizon and city governments haven’t a clue what is about to happen. My prediction is that the young people will move to the outlying areas of the city and telecommute. (Those who have to be physically at the office will commute by autonomous cars…. and not so far off ….drones. ) The commute will no longer be an issue because time will not be simply wasted. Who would live in an expensive, tiny box stacked one on top of another if another alternative is possible? The taxes in the city are also outrageously high compared to outlying areas where the cost of housing is hundreds of thousands of dollars less and taxes are low. Look at Sooke and the surrounding areas. It’s filled with young people and baby strollers everywhere.

So we lived in a one bedroom 530 sq/ft condo for a year and then we lived in a one-bedroom condo 780 sq/ft condo for almost three years. Last 18 months on a 1/2 acre, huge house, three car garage. Our master+ensuite+walk-in is bigger than our first condo.

I am not any healthier (physically or mentally).
I am not any happier.
I don’t feel like I wouldn’t be able to go back to the 530 sq/ft condo for any particular reason.

The only thing that would make my life a tad more inconvenient is charging my car but that will be resolved in strata complexes in the next 10 years.

I grew up in a communist style block in Croatia and I don’t think my upbringing was affected by lack of space. The condo was small but I would meet the other kids outside and we would go play in the park?

My ideally situation would be a 1 bedroom + den condo (for home office) plus a bedroom for each potential kid. So if two hypothetical kids a 3 bed condo plus den in Vic West/Songhees would be my 100% ideal living arrangement, finances aside. Problem is when you factor in finances the house in Saanichton is cheaper on a monthly cash flow basis and a much better investment over 20-25 years than a three bedroom condo at Bayview, for example. One of the few buildings that has a good selection of three bedroom units.

Having a yard is very over-rated. Absolutely love pulling weeds in my 2 spare hours per week. We don’t have much stuff so huge amounts of storage are a little useless too. Massive kitchen with huge island great for two times a year we host family/party, otherwise useless as well, etc., etc.

Let’s not get this topic started again.”

Hah – that didn’t last long:

“If I understand it correctly this issue first came up because one will now have to file a new form for all sales of a principal residence in the coming tax year.”

…including deemed dispositions:

http://www.cra-arc.gc.ca/gncy/bdgt/2016/qa11-eng.html

“Does the new rule apply for deemed dispositions of property?

Yes. The new rules apply for deemed dispositions. A deemed disposition occurs when you are considered to have disposed of property, even though you did not actually sell it. For example, a deemed disposition will occur if there is a change in use of the property:
•You change all or part of your principal residence to a rental or business operation.
•You change your rental or business operation to a principal residence.”

Bman/numbers hack,

News like this seems to get missed but has far reaching implications moving forward.

Canada’s $440-billion mortgage-backed securities market may cool on new rules

“Efforts to cool Canadian home prices could trickle down to the $440 billion market for debt backed by insured residential mortgages.

Stricter rules for banks lending to home buyers and higher requirements for mortgage insurance could reduce mortgage origination in Canada and in turn lower sales of mortgage-backed securities, according to investors and analysts.

“If it slows down the housing market, it’s going to slow down the quantity of mortgages that will end up being on banks’ books, which means there’s a smaller pool that’s available to be securitized,” Jean-Francois Pepin, co-chief investment officer at Addenda Capital Inc., which manages $28 billion, said by phone. His Montreal-based firm invests in mortgage-backed securities.

http://business.financialpost.com/personal-finance/mortgages-real-estate/canadas-440-billion-mortgage-backed-securities-market-may-cool-on-new-rules

Numbers Hack:

I am reading the report for a second time and it is causing me some real concern. What are your thoughts?

Did some reading and as I understand it, about 35% of mortgage debt is sold off via CMHC mortgage backed securities or covered bonds. Does anybody know the percentage of low-ratio loans that are bundled up and sold off? Seems like not too many laymen (including me) were aware of bulk insurance.

Marko:

The experience of most cities is that while high density reduces some infra structure costs that other municipal costs are substantially increased after a certain point of growth. There are also so real issues as to quality of life that are associated with high density cities.

I am saddened at the thought that we want to condemn the younger generation to being squeezed into little high rise boxes. I really think that we can plan a better future for our country.

Introvert:

Well. I hope that my posts have not offended you in some way, if so I apologize. Mind you since you skip over my posts this might be an exercise in futility. I am somewhat surprised in that I am neither a bear nor a bull in terms of the market.

“Siddall said the new mortgage rules will both reduce the ability of home buyers to borrow and will increase lenders’ funding costs. He added that mortgage rates are expected to rise “modestly in response.”

Higher mortgage rates, stress tests, CRA snooping in everyone’s basement, everyone needing an accountant to be a landlord, costs passed on to borrowers, doesn’t look good for bulls. I see sellers stepping up here soon once the reality kicks in.

“Oddly enough only 19 new listings today. Lowest Monday new listings I’ve seen in a long time.”

Deer in the headlights. Kinda like Bearkilla when CRA comes knocking.

“1524 Davie St listed in 2013 for $569,000 with no sale. Listed last week for $699,900 and sold for $850,000 today. That is a 49.3% increase, wow.”

Two words: Red Barn. 😉

Also, introvert, I was waiting for you to comment on the advise/advice great grammar issue of the past few days.

Since you asked, the debt (orange) in the last rate trough (WWII) was much higher than today.

http://i.imgur.com/QVwzbzY.png

Oddly enough only 19 new listings today. Lowest Monday new listings I’ve seen in a long time.

CMHC to issue 1st ‘red’ warning on Canadian housing market

http://www.cbc.ca/news/business/cmhc-red-warning-housing-1.3808364

One of the comments….

The #1 reason for ridiculous housing prices in Vancouver and Toronto, is lack of real estate. Even in other cities, detached homes are inflating because of rules set by municipalities on housing density. They’re purposely under supplying the market with detached homes. Do to the lack of supply. The increased cost of these homes has meant that people who don’t have exceptional jobs, or money from family, will not own detached homes in major Canadian cities.

The reality is that baby boomers never had to deal with urban sprawl. The cost of roads and public transportation is massive when you have sprawling suburbs with low density. People should accept that living in an apartment will eventually be a reality for a large portion of the country.

Good point. Didn’t really think about the infrastructure required per household in the Westhills/Royal Bay type development versus a condo tower downtown.

1524 Davie St listed in 2013 for $569,000 with no sale. Listed last week for $699,900 and sold for $850,000 today. That is a 49.3% increase, wow.

@Marko: It’s possible that the $1.2 million friends had 20% down or could have gotten it from parents. I was under the impression that they didn’t, though.

Possible, but they wouldn’t fall into the 1 in 5 buyers affects that I was referencing.

Rate cycle bottoms can easily span 20 to 30 years. We’re likely in the bottom of the ‘bowl’ for at least another decade.

http://ochousingnews.com/blog/wp-content/uploads/2015/12/ust-via-cs-600×284.png

Many people have never known interest rates to be all that high, especially if they’re first-time buyers. It’s unfathomable to most that their payments could increase by a huge amount.

@Marko: It’s possible that the $1.2 million friends had 20% down or could have gotten it from parents. I was under the impression that they didn’t, though.

Smart people, yes. But what fool would not consider that mortgage rates could easily double in five years. I am not saying that they would but one has to recognize that interest rates are uncommonly low. Still many people are less than prudent when it comes to their finances.

And another pair of friends was approved for $1,200,000 but set their own budget at $900,000.

I don’t think you can buy over $1 million with less than 20% down…Mike clarification?

“Approx. 20% of individuals are buying with less than 20% down; affected by the new mortgage rules.

Out of the 1/5 you have probably 20 to 40% that were not shopping at the top end of their budget.”

This has certainly been true of my friends who’ve been looking recently and have had less than 20% down. One couple was approved for $1,000,000 but refused to spend over $800,000 out of concern for what would happen if rates went up, etc. And another pair of friends was approved for $1,200,000 but set their own budget at $900,000. There will be some people whose budgets are affected by the new regulations but many weren’t already planning to take every dime that the bank would give them.

“Repeating an unanswered question is hardly whining. ”

I already gave a timeline in my guesstimate on the last thread but you were too busy slagging as I said before. Best go reread it.

If you got lots of equity and say I’m wrong then why do you care so much about my opinion ? Sounds like you’re scared of losing all that paper profit and not treating your place as a home long term.

“That seems like a big change. Does this effectively kill off the 30 year mortgage? Did it just get more expensive to buy an investment property?”

I believe it does Bman unless you want to go to an alternative lender which some are dropping out of the bizz so you will pay a higher interest rate to get a 30 year as it won’t be insured. Could be some real gouging going on there.

“In fact, lenders have already begun announcing surcharges on new mortgage applications for refinances and for rental-property loans that will close after November 30. Several have suspended lending on rental properties altogether, and these announcements are expected to continue over the coming weeks.”

http://www.movesmartly.com/2016/10/what-canadas-latest-mortgage-rule-changes-mean-for-you-part-two-october-11-2016.html

Bingo, can you quit whining about a number and exact date ? Only a dolt would keep bringing this up. If you got in over your head that’s not my fault.

Maybe it will be 50% like the early 80’s when all the house obsessers got their ass handed to them for being too greedy. Guess you’ll find out in due time.

Meanwhile the foreigners are whining too about paying tax to buy here and they will now go elsewhere, but it’s OK when it’s us trying to buy there. Hypocrites.

Chinese real estate billionaire says customers troubled by Vancouver tax

http://www.theprovince.com/business/chinese+real+estate+billionaire+says+customers+troubled+vancouver/12290193/story.html

..but then the parents and grandma’s houses tank 30%..

So is that you’re number your going with? 30% drop? I won’t debate 30% being “big”.

Over what period will this 30% drop occur?

You said the big correction is coming soon, but your soon might be different than mine. Less than a year?

I figure an identical place might sell for 100-200k less on the other side of Richmond. Maybe even less than that.

Agreed. Those houses look exactly the same as Taylor st between Shelbourne and Richmond. To me Neil isn’t any more desirable. Good area, but no way I’d pay an OB premium.

Also wondering if everyone realizes that a “deemed disposition” resulting from a change of use (e.g. rental to non-rental etc. and vice versa) needs to be reported now (on your tax return) as with a sale of the principal res.

How much of a premium does everyone think those Neil Street buyers paid for the place simply because it’s in Oak Bay?

I figure an identical place might sell for 100-200k less on the other side of Richmond. Maybe even less than that.

“So Oak bay is now 1mil fixer-uppers? Seems too pricey to be a tear down.”

Paid exactly list at more than $300k over assessed. That thing is coming down.

Do you believe that whatever the impact will be that it will be felt more in the West Shore than the core?

Yes, West Shore will probably feel a bigger impact for sure in my opinion.

I do think the market needs to be cooled off but I just don’t think these regulations will be enough. Makes it tougher in terms of paperwork to get a mortgage but once you get it everything is still the same as it was yesterday.

The most obvious factor dictating the market continues to remain unchanged; interest rates.

This probably applies to Victoria -> https://ca.finance.yahoo.com/news/cmhc-issue-1st-red-warning-171031802.html

LOL yeah…bought into that ‘hood last year. Identical floor plan and paid >$300K less. Unbelievable.

Thank you for putting the figures together once again. I was expecting a bit of a bump up in the numbers as people tried to get in under the wire before the new mortgage rules.

Approx. 20% of individuals are buying with less than 20% down; affected by the new mortgage rules.

Out of the 1/5 you have probably 20 to 40% that were not shopping at the top end of their budget. I often will have clients that are looking in the 600-650k range when they’ve been pre-approved for 800k+ simply as they don’t want a massive mortgage and prefer to keep their Mountain Co-op lifestyle going. Let’s say their borrowing power dropped from 800k to 650k they are still buying in the 600-650k range because the actual mortgage rate/mortgage payments didn’t change.

Out of the 1/5 you have another percentage that will look at creative ways to get around this. For example, I have one set of clients right now that will collect on their grandma’s house early to get up to 20%. The parents will front the dough and sell grandma’s home at a later date.

Whatever is left over will move down the product chain in a very low inventory environment. It’s not like there is a glut of supply at 500k that is now in big trouble as all those individuals now only qualify for 400k. There is low inventory across the board.

The market isn’t going to turn overnight. I can’t see inventory approaching a 10-year average until March setting up the an interesting spring.

Anyone catch the sale price on 2117 Neil?

$981,000