The double edged sword of increased regulation

Regulation has been the big real estate story this year, with several rounds of tightening at all levels of government.   Back in May I pondered the likelihood of the days of a self regulated real estate industry being numbered and six weeks later the province took over the Real Estate Council.

Since then we’ve seen some impact from the new oversight in the form of tweaked regulations.   The real estate council is now all government appointed rather than elected industry insiders, shadow flipping using assignments was effectively banned in June, and the bar for passing the realtor licensing exam was slightly raised a few weeks back.

Effective September 30, there were a whole host of amendments to the Real Estate Services Act (RESA) that I think may have some unintended effects.  Several things have changed but importantly some very significant changes to penalties that can be applied.

  • Maximum penalties for brokerages contravening RESA increased 25 times to $500,000 (per contravention)
  • Maximum penalties for individual agents contravening RESA increased 25 times to $250,000 (per contravention) plus the commission they received on the deal
  • The Superintendent of Real Estate (Mr. Noseworthy) may impose additional administrative penalties of up to $50,000

Meanwhile FINTRAC is cracking down on BC brokerages with a quadrupling of audits and with it the administrative penalties they can apply.  I understand what they are doing, they are trying to legislate ethics into an industry using the fear of large penalties.  In general this is a good thing, but the flipside is that it will likely increase costs for everyone as brokerages price in the increased risk of the penalties and pass the costs on to the agents who pass it on to the consumer.

I am firmly of the belief that real estate commissions are too high and far too much money is spent on transactions that are really not that difficult.   20 or even 10 years ago everything was done on paper and every signature required driving across town.  Agents received the new listings by fax and updated their own binders of listings, or received the comprehensive MLS listings book every 2 weeks.  Working with buyers meant actually working to look for properties and make recommendations.  Now buyers are doing most of the legwork themselves, contracts are completed and accepted online, and sellers are getting the vast majority of their marketing through Realtor.ca rather than agents buying ads in the paper.  Meanwhile property prices have exploded and agents are collecting increasing commissions for less and less actual work.

Now there are some low cost options for sellers like mere posting services that will allow you to list and sell your house for around $1700.    However they rely on low cost brokerages to offer this service while still making a profit, and you can bet those brokerages will be increasing their costs as they face more regulation and the threat of higher penalties.   So is the increased regulation really a good thing for the consumer?

The real estate industry is on a path to becoming more professional.  On the face of it that sounds like a positive trend, but professionals cost money and do we really need another professional involved in real estate transactions when we already have lawyers involved?   And is it actually possible to legislate professionalism into a career that anyone with a few thousand dollars and a spare couple months can get into?

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132 thoughts on “The double edged sword of increased regulation

  1. Leo S, when it comes to passive energy homes there is a lot of green washing and that doesn’t cost much except for a brochure and more attention when you’re building.

    I think that’s a problem for the industry in that there is so much confusion of what passive homes are.

    I remember Dockside Green had in its brochure that they maintained strict environmental controls when building the complex. I think that most people would not have asked what that meant. I did. And it meant that they didn’t allow the contractors to smoke when building the complex. Or that the windows were designed to allow for the owners to control their environment. That meant the windows could open. Or that the complex was specifically designed to allow for maximum energy conservation. They oriented the building on the lot so that it got most of the southerly sunshine.

    Compare that to a Platinium LEED (Leadership in Energy and Environmental Design) building such as the Tri-Eagle building on West Saanich Road that has a green roof , geothermal heating, a solar mass wall and the finishing materials and furniture used were all made from recycled materials to reduce its carbon foot print.

    I’ve even hear of a net zero house with its anticipated heating costs to be $30 a year. $30 a year. So there are a lot of variation from simply green washing a project to Platinium LEED

  2. Dear Sidekick:

    Regarding the damn, I agree with you about the lost land; Canada like Hong Kong and Singapore certainly has a major deficit of land to population ratio. We probably should give up on the idea of electric cars as well. If you are seriously concerned by the countries total environmental footprint then we should be looking at reducing the population to about half not only in Canada but globally.

    I am not trying to beat up on you but but sometimes it is good to separate marketing from reality.
    Some things like good roof and wall insulation make sense, others things not so much. But if you have deep pockets go ahead and spend it if it makes you feel virtuous.

  3. Sidekick:

    I just checked with my air conditioning engineer friend. He said to try rerunning your number on your software while adding in the fact that virtually all argon windows have leaked out all their gas within five years. There is a huge efficiency and failure loss on these windows as they age. Have fun testing the windows for argon loss each year by the way.On a positive note he said that a well insulated roof actually does make a cost efficient difference.

  4. Sidekick:

    For me it is rather academic as to the cost benefit of the windows being upgraded. My situation is a bit unique being in a heritage house since the windows would all have to be custom reproductions. That would include very elaborate custom modellings and trims. I never priced it but it would be in the hundreds of thousands. We are talking about over sixty windows and a very elaborate sunroom. Plus of coarse is there is the multiple stain glass windows.

    It might make finacial sence if you are planning to be in the house for twenty or thirty years. I suspect Marko is right and you will not recapture much if any of your investment when you resell.In my experience the majority of buyers know little about house construction and care even less.

    Certainly the government should not be giving any special tax breaks on them especially since you will already be saving all this money , according to your numbers, by building it this way.

  5. Exactly Leo…. Nice rambling sidekick. It’s it’s also about comfort in the house. Even temperature everywhere feels warmer and more comfortable…. I’m jealous you will make the mark. I like my trees too much…. I am going to look at putting some PV in front of the trees though so not on the roof. There I would get all day sun. IF I can afford it I would like to be off grid entirely since I’m building my own septic, and have a well. If not I’ll just make sure I can do it later…. Walls, Roofs, Windows and doors are my top priorities….

  6. Thanks Sidekick Spliff. I really appreciate your input here and agree most people a) don’t understand efficiency at all and think it needs to involve big fancy equipment and cost hundreds of thousands of dollars more than regular construction or b) don’t know how to analyze cost benefit when it comes to reducing operating costs.

    The biggest problem with PassiveHouse is not that it costs much more (which it shouldn’t) but that it’s not super common yet. So there are difficulties because as you say builders don’t know it and can’t price it, and inspectors don’t see it on their sheet so they will be even more obstinate than usual. Once it becomes common and the trades know it it will make even more sense.

  7. The thing is, there is so much ‘green-washing’ going on where people have hijacked and diluted the message to sell and/or promote stuff that isn’t green at all. In fact, window manufacturers are one of the worst perpetrators of this and some have been told off by the consumer protection branch to stop preaching “save 50% on your heating bills…” kind of thing (These aren’t the actually good windows).

    It kills me when people dismiss energy efficiency because it really isn’t hard, doesn’t cost much more, and is a real and tangible way to make a difference today. This is low hanging fruit, and there is so much mis-information and so little effort by the government that it just isn’t happening.

    People have put massive amounts of effort into building the tools needed to make these informed decisions, but it just isn’t sexy. We need an Elon Musk on this side of the fence!

    And just because I can’t shut up about it yet, for those of you planning on a build or reno, why not also take a gander at http://living-future.org/redlist where all the work has been done for you to make an informed decision about the environmental impact of all the stuff you use when building.

    Ok, time to study for the HPO exam….

  8. Hah sidekick…Looks like we are on the same page. Except I know nothing about buildings. I know a few people that could literally talk about building heating/efficiency for HOURS maybe days…. seems to be a passionate subject for many 🙂

    One thing that infuriates me is like you say people propagating myths. I see it on social media all the time as well. So many articles people post that are click bait and when you actually read them have no peer reviewed references. And sometimes they do add references but ones that don’t support the theory of the article. Like barely related topics. I’m not the very best at that type of thing as I haven’t had to do a ton of research in my studies/job but my husband is a scientist and is really good at picking out the garbage.

  9. And just because you stopped reading three words into my post, here is the TL;DR version:

    https://www.youtube.com/watch?v=CasrjYhZB1M

    And, for you Barrister:

    An R3 window (which is what Marko will have installed) loses 12 times as much heat as an equivalent area of R35 wall (it’s actually worse than that…but I digress). So a 9 square foot R3 window loses as much heat as 108 square feet of R35 wall! Let’s upgrade that window to R6 (only 6 times worse) and you’re down to ‘only’ 54 square feet.

    Let’s take a look at that 6 foot sliding glass door we see everywhere. One of those loses as much heat as 663 square feet of R35 wall. Add up the square footage of all your windows, doors, and skylights and there is a good chance you’re losing significantly more heat through those than the entire rest of your envelope – walls, floor, and ceiling.

    …so yes, upgrading your windows and doors does make a big difference…

  10. Marko and Barrister, I’ll have to respectfully disagree with your view on windows and doors. We have very accurate software models out there which can calculate the various loads and requirements for a building. Engineers and modelers (and, for example, the NAFS when testing windows) use these products all the time to predict performance.

    Windows and doors do make a very large difference and the math isn’t complicated. For example, using PHPP, which is one software package used for modelling, my current new build model using passivehouse certified windows from Internorm (at a quoted cost of 30K) will use 13 to 14 kWh/m2a (basically heating per square meter per year). If I swap that out for a high-end (triple pane with argon) Milgard window (using numbers from http://energetechs.com/ener_get473/wp-content/uploads/2012/12/Window-Comparison-Spreadsheet_2013_05_17.pdf) that number jumps to 32. So Marko your windows would probably bump that number up to 50. So let’s assume that 2K out of 3K is for your home (and 1K for you car), then that bill would drop by 75% to 500/year for an annual savings of $1500. In 14 years they’ll have paid themselves back at todays prices. I think it’s fair to say there’s a very good chance that in the next 14 years the price of electricity will go up, so that payback number will drop down. Now after they’ve paid back that’s money in your pocket. Sounds suspiciously like the economics for solar PV doesn’t it?

    Like I said, if you sell before payback, not worth it from a pure $ perspective, but beyond that it’s a no-brainer. If you plan to stay in your house for a while then you’re typically cash-flow positive from day 1 since the carrying cost is typically less than the monthly savings. Same thing can be calculated for other housing components like insulation (which is cheap) and an HRV. If you start to put all these components together (and have some exposure to sun), you can get your loads down to around the ’15’ area, which is the ‘gold’ zone for passivehouse in our climate. Why? Because this let’s us get rid of the heating system for the house and replace it with small, simple, and inexpensive sources (like a glorified hair dryer). If you were planning on putting in a fancy hydronic in-floor heating system, you just saved yourself 20K. Marko’s choice of a mini-split is a good one because they’re already highly efficient, but still not inexpensive or maintenance-free.

    So let’s throw those incorrect assumptions about windows and doors out and actually do some math and science and find out exactly how much swapping out crappy ones for good ones would save us. There are tons of independent resources out there for evaluating things like this, or, you could take Dasmo’s approach and actually have someone consult. Oh looky here: https://blackturtleredphoenix.wordpress.com/2016/09/15/not-going-to-make-it/ even Dasmo could cut his energy load by 15% by upping his window game a little.

    Marko – good on you for running conduit – a most excellent thing. For future-proofing your home, everyone should be doing it. But I was referring to adding more insulation and upgrading windows and doors. Those two things are hard to retrofit (especially the insulation under your house). And let’s remember that not everyone has a good solar exposure where they can attack the energy problem with solar. Another aspect which is attractive to the PH approach is that you are keeping things simple. Insulation is simple. Simple to install, it never breaks, it never wears out.

    “As far as 50+year products……can you really test something in a lab accurately enough to say it will perform perfectly for 50 years”…uh, yes. See insulation above. Also, higher quality windows do come with very long warrantees and are designed for 50-year lifespans. The pioneers of super-insulated homes (built in the 70s) still have super-insulated homes which are still far more efficient than today’s code-minimum ones. Wasn’t Hawk just talking about his expensive shoes that last forever?

    “If you spent a fortune on windows in 1985 today they are extremely inefficient” – Don’t confuse expensive with efficient. Pella windows might be expensive and look nice, but they aren’t highly efficient. A buddy of mine building a very expensive house has a window quote of over 200K. Guess what, they’re not going to win any efficient awards.

    Barrister – what if, instead of spending billions on a dam (which isn’t really all the clean if you consider all the lost land, etc.), we educated the public, builders, engineers etc. that it is possible to reduce our impact so that we don’t need to build it at all and could instead invest that capital into other areas (renewables anyone?). This is happening already in many of the progressive EU countries. Passivehouse has become the new building code in many areas of Austria and Germany (and some of the Nordics) and they’re so far ahead of us when it comes to energy infrastructure. Vancouver has already, and is continuing to make their building code more stringent. In fact, they announced their new standards at the passivehouse conference in Vancouver in 2013. The city of Victoria is now putting their building department through passivehouse training.

    I know I’m rambling on about something most of you may not care about, but people need to stop propagating the myths. Be smart about what you build and consider the environmental costs, the social costs, as well as the pure dollar costs today and in the future. This isn’t rocket science people.

  11. Marko:
    “As far as 50+year products……can you really test something in a lab accurately enough to say it will perform perfectly for 50 years.”

    I am an engineer and I worked for a company that made electronics for trains. We had to test all equipment to meet specific codes for rail and (a small) part of that was simulating various types of vibrations. There were quick bursts and also long duration type tests simulating railroad use for 25 or 30 years (can’t quite remember). In all axis. It was a sight when the design was bad and parts flew off…Anyway there are ways to test this in a lab. I’m no expert though but suspect in most industries there are similar tests. Of course rail/aviation/auto/medical/military are more regulated than Windows or whatever you are talking about. But there are actually smart people that can design tests for these things.

    As for the discussion about whether or not it is worth investing in energy efficient homes…another point I like to make is that if you have the money and it is something you believe in then put your money where your mouth is. Like any new technologies, to be developed they need funding. If there is a demand and a way for companies to make money I guarantee they will find a way to make it cheaper over time and most importantly develop better technologies. E.g. more efficient/cheaper/smaller batteries being developed because of money to be made in electric car industry. Anyway my 2 cents…

  12. @sidekick the data sheet says no for under foundation. This product does compress some. Thumbs up for under slab of 4″ or thicker though. It looks like it’s about $15 more for a 4’x8′ area. Labour is always so much more than material price though. I think this is going to be investigated further! Make up for my ICF walls. I have my hole already and it’s bone dry so no worries about moisture….

  13. I agree with you that after 250,000 KM the Tesla will be junky like every other car. The owners are deluded. On the other hand my dad had a 35 year old Mercedes with well over 300,000 miles (yes miles ) on it that ran like a dream. Its only major problem is that every spring it had an urge to invade Poland.

  14. And just a last note on spending ‘only’ 2 to 3K per year on operation. Do you think our energy prices (currently among the lowest on the planet) will be low forever? Is it possible that costs will go up to pay for site C (or maybe some high priced hydro execs)? Could that provincial/federal carbon tax nudge up prices? What if natural gas prices increase (only one way to go from current rock bottom) and now the LNG power plants become more expensive? Some European countries pay 3x what we pay. There is only one good time to install more insulation, better windows and doors etc. Retrofits are significantly harder and more expensive.

    This isn’t really an issue either. Both companies I obtained quotes for trusses noted their trusses were good for panels + snow load. After the framers finished I went to home depot, bought some pipes and ran two conduits from my attic down to my mechanical room. Once solar panels do make economical sense the roof is good to go and I have the conduits in place. It literally cost nothing.

    Re gas….I have 2 gas dryers, 1 gas range, 1 gas fireplace, gas hot water for entire home, and gas BBQ outlet. If gas prices went crazy I would just switch everything to electricity (it was super cheap to have the wiring installed to switch back to electricity). I would stop using the gas fireplace and how much can a BBQ outlet really eat up?

    I don’t think retrofits have to be super expensive if you plan ahead. I would rather spend $1,500 running gas and electricity to every single appliance than buying Argon filled windows.

  15. If you ask for a single piece of advice from many of the true experts in envelope efficiency out there (respected engineers and architects etc) they will tell you one thing: buy the best windows and doors you can afford. Will you get that money back if you sell in 5 years? Not a chance. Will your quality building that will last for 50+ years save crazy amounts of energy (and money) over its lifespan? Absolutely.

    I disagree with this; I went Milgard windows on my home for $8,200. I had quotes upwards of $40,000 for high-end windows. The payback is impossible. If money was no object or I was super interested in window technology maybe I would have spent the $40,000.

    As far as 50+year products……can you really test something in a lab accurately enough to say it will perform perfectly for 50 years.

    It’s like when Tesla owners approach me to chat about the car. I’ll get stupid comments like “you know, these cars will last us 500,000 – 750,000 km no problem as the drivedrain is so simple we will just have to swamp out the battery at 300,000 km or so,” hmmmmmmmmm no the car will be a piece of crap by 250,000 km just like any other car on the road. It will rattle to death just like any other car, the seats will be worn out and torn, seals will fail, air suspension will start leaking, the pano roof mechanism will start leaking, the screen will fail and you won’t be able to drive it. Love my Tesla but one has to apply some common sense.

    I highly doubt a “high-end” window will perform significantly better than your builder spec vinyl window 20 years from now. I certainly have not seen any great 1980s windows and that’s only a 30 year time span. If you spent a fortune on windows in 1985 today they are extremely inefficient.

    Now I understand your argument of improved efficiency and better for the environment, but once again, if one cared about the environment to that extent maybe they would consider condo life.

    If you want to be forward thinking, that’s great too and very important, but don’t try to justify it as being more cost efficient because often it is not.

  16. Sidekick:

    Those numbers for windows are about what my friend the airconditioning engineer had set out.In Toronto, walls are usually at r35 or above. But the point he was making was that the difference between R3 and R6 is virtually undetectable for practical purposes. His point was that it is basically a waste of money.The uninformed are left with the impression that the window is twice as good but in reality it makes next to no difference. His opinion is that you would have to get the windows to over R20 to make any appreciable difference. We were with two other engineers at the time. One of them said that the only thing that actually works are insulated interior shutters. Basically you close tham at night before bed. Expensive, a bit unsightly and a major pain in the ass.

    As far as Site C, since everyone is predicting that we will all be driving electric cars and that BC’s population will increase, I find it surprising that all the environmentalists seem so upset about having this clean source of reliable electricity. Wind and solar have inherent limitations and I shudder at the idea of using nuclear in a major earthquake zone. At this point someone will say that they will come up with some brilliant new discovery but I have been waiting for flying cars and a cure for the common cold since the sixties.

  17. Marko – you tell all those families of 4+ to go live in a condo. What are they thinking…really. Just buy one of the new three bedroom units coming online…oh wait.

    There are three bedroom units the marketplace right now such as the Wade development on Cook Street. They also have 2 bedrooms+solid den starting in the mid 550s.

  18. Lol. Even here, on this seemingly forward thinking blog, the standard response to efficiency is ‘not worth it’ because it doesn’t save me enough money fast enough…and energy prices are cheap. To anyone considering solar…don’t bother. Not worth it, won’t pay off fast enough (sarcasm).

    I love Tesla, SolarCity, and every day I check Elon’s twitter account but sometimes you have to apply common sense. There isn’t a huge savings to be had when you have a brand-new home with basic windows (certified to death) and a inverter heat pump versus a brand new home with solar and super expensive windows.

    It’s kind of like Prius vs Tesla. The Prius is actually cheaper to run on a per kilometer basis even if you completely ignore 30k vs 100k purchase price.

  19. @Animal Spirit – assuming you are insulating from the inside (leaving the exterior as-is), you could certainly use Roxul in the 2 x 4 cavities. You could then use an insulating fiber board (http://www.smallplanetsupply.com/agepan/ or 5thC building supplies) on the inside, seams taped with SIGA or another air barrier tape.

    What you want is air tight, but vapour open: warm inside air getting into your walls and condensing on the interior side of your exterior sheathing is bad, so minimize that (by making the interior plane as air-tight as possible). But, since air and moisture will get in there anyways, it needs a way to get out. Agepan and Roxul are very vapour permeable (the exact opposite of poly) and so moisture can easily leave and your walls dry out (no rot).

    If you can minimize the amount of air getting into your stud cavities from the outside, do so. This might be a good case for using the canned spray foam to close off any cracks and holes. Air washing through your stud cavity will significantly reduce the overall insulation value.

  20. ok, you’ve baited me on the renovation / build discussion

    So what insulation to use in the basement of an old wood character house? Typical shake exterior over structural fir board walls, with 2×4 framing and (for the moment) ugly panelboard. Currently there is no insulation, just empty space, definitely no air or vapour barriers. My thoughts are to go with the Roxul mineral wool insulation (or wood fibreboard insulation if I can get it here), without putting on either an air barrier or vapour barrier. Hopefully this would allow for insulative properties with maintenance of current moisture flow (need vapour permeability and non-condensing insulation for an old wood house). The interior refinish would be to pine or cedar wainscoting / tongue and groove.

    Your thoughts?

  21. Dasmo – I think you are referencing the lower density comfoboard IS. There are two densities available (I believe the higher density is packaged as a commercial product) but most building suppliers will be able to get both. Not HD but Sleggs, Convoy supply etc.

    Also, if memory serves, you can use this under a slab, but not under a foundation. For that you need the higher compressive strengths of EPS or XPS. Mineral Wool (Roxul) all the way for exterior insulation though (and it comes in depths up to 3″, not just what is listed at HD).

  22. Lol. Even here, on this seemingly forward thinking blog, the standard response to efficiency is ‘not worth it’ because it doesn’t save me enough money fast enough…and energy prices are cheap. To anyone considering solar…don’t bother. Not worth it, won’t pay off fast enough (sarcasm).

    Marko – you tell all those families of 4+ to go live in a condo. What are they thinking…really. Just buy one of the new three bedroom units coming online…oh wait. Although, you are entirely correct that multi-family buildings are far more efficient in almost all respects. But really we should be holding those buildings to a higher standard as well – there are many passivehouse certified MURBs, schools, hospitals etc. in Europe.

    Marko / Barrister – windows and doors make an absolutely massive difference to the overall efficiency of a building. They tend to be, by far, the weakest part of the thermal envelope. Barrister, you are correct that a standard new double-paned window is R2 to R3, and they leak air like crazy. When you buy cheap windows, you get what you pay for and there is a possibility your seals will fail within a few years. If you ask for a single piece of advice from many of the true experts in envelope efficiency out there (respected engineers and architects etc) they will tell you one thing: buy the best windows and doors you can afford. Will you get that money back if you sell in 5 years? Not a chance. Will your quality building that will last for 50+ years save crazy amounts of energy (and money) over its lifespan? Absolutely. As a side note, the window frame is the weakest piece, not the glass itself, which can get up to ~R11. A certified passivehouse window will typically have an overall R value around 7, and the only one you’re going to find made in Canada is the Euroline 4700 (out of delta). You can also import certified windows from Europe (https://bruteforcecollaborative.wordpress.com/2010/10/30/can-european-windows-actually-save-carbon/ for an interesting read).

    And just a last note on spending ‘only’ 2 to 3K per year on operation. Do you think our energy prices (currently among the lowest on the planet) will be low forever? Is it possible that costs will go up to pay for site C (or maybe some high priced hydro execs)? Could that provincial/federal carbon tax nudge up prices? What if natural gas prices increase (only one way to go from current rock bottom) and now the LNG power plants become more expensive? Some European countries pay 3x what we pay. There is only one good time to install more insulation, better windows and doors etc. Retrofits are significantly harder and more expensive.

  23. Dasmo:

    My my experience of building 25 years ago:

    1) I should have had a twenty five percentage overrun contingency fund.

    2) never let the builder pick the cabinet maker; contract that out separately. The best ( and by far the most reasonable) on the Island is Black Dog Carpentry,; Tim is the owner and a total pro.Book him now because he is usaually booked months in advance.I had him do work at the house and he was on time and not a penny over the estimate.

    3) really understand the difference between an estimate and a quote ( a quote is firm while an estimate is just a starting point for haggling later).

    4) Landscaping always costs more than you think.

    5) put in more wall plugs than you think you need; costs a fortune to add one latter. Don’t forget extra wall plugs both outside and in the garage.

    6) dont put hardwood floors in the kitchen or bathrooms.

    7) Don’t put wall to wall carpeting anywhere–ever. (if you are putting down hardwood you can get some incredible deals on area rugs on Used Victoria.

    8) Consider built in bookshelves from day one (Black dog is great for building those as well and, no, I am not related)

    9) When your builder tells you it will all be finished by September make sure you ask him which year.

    10) Go over the building plans in great detail; any changes are extra. make sure that you select things like moulding and trim ahead of time and that what you want is in the quote.

    I am sure Marko and everyone else here will add another twenty tips.

  24. @Dasmo

    What’s your build blog again? You should use it as your “website” when commenting (it was you with the build blog right?).

    Also, since we are/were partially on net zero talk.. did you know Roxul has a product rated for under slab now? I was talking to a guy a City Green and he wasn’t aware. I just happened to run across it reading up on passive and net zero builds. It costs more than EPS for the product, but it’s a lot easier to work (so maybe labour costs would offset that).

    No clue on availability our neck of the woods. It’s called Comfortboard.

  25. @Marko, so you built before the exam was required? I am certainly glad I decided to work with a builder. Otherwise I would have ran into this HPO stuff pretty late in the game. Probably not until I went to submit my BP. Huge pain! On another note, my financing is also contingent on a contract with a builder…
    Also, I know there is at least two of us here about to build. I have watched a few of your vids but are you kind enough to post your definitive list of “should have dones” and other tips?

  26. @ Marko. Wonder if there is anything to be done. Maybe petition the HPO to get rid of it? Slim chance perhaps but they did can the HST and that actually made sense!

    Doubt it, only impacts a few thousand people per year, if that. HST was Trump election type decision making by the populous…..”But my restaurant bill!”

    I’ll do my best to completely embarrass the HPO though. When I have time in December I am going to put in a Freedom of Information (FOI) request to find out the objectives of the exam.

    In talking to people across BC I am 99.9% convinced there was never a problem with owner-built homes in the first place. They are also refusing to provide any information as to WHY the exam was introduced which makes me extremely suspicious. I know when I built my home they took $400 for a piece of paper and I never heard from the HPO again. How would they know anything about the quality of my home? HPO is supposed to protect people but I remember when paid my $400 I thought, how on earth does this protect anyone? If it went into a fund for problematic owner-built home or something, sure, but not the case.

    There are SO SO many more ass backwards things about this exam. For example, you need to memorize all this legislation on owner-builder disclosure for the exam. The legislation will change over the years, any normal person will just google it when they go sell.

    BUT the thing the gets me is there is no requirement for disclosure about this exam when you buy a building lot. No one tells you that you have to write an exam you may not be able to pass which means you won’t be able to build a house. Most people calling and emailing me on a daily basis find out this detail when they sit down with their home designer or go down to municipality to deal with permits. One woman from Vancouver called me yesterday and said she called her architect to get the building code and he wasn’t familiar with the chapters she needed to study…..lol

    I was in a position where I had to write the exam I would fail it and then sue to HPO for damages of delays/financing costs/etc.

  27. @ Marko. Wonder if there is anything to be done. Maybe petition the HPO to get rid of it? Slim chance perhaps but they did can the HST and that actually made sense!

  28. I looked into windows when I was building my house in Toronto. The walls were R35. Regular windows are, if I remember correctly, about R2 but going to a very expensive argon window more than doubled that to R7. My friend who is an air conditioning engineer laughed his head off when I told him what the salesmen said. The argon windows make virtually no difference on heat loss and the seal usually goes within a few years. Total waste of money. I just went over my heating bills for the past twelve months (includes the gas stove and hot water heater). it was exactly 2,283. That is for a 8000 square foot home.
    The only hi-tech item I have is a thermostat that automatically drops the temperature to 60F at night.
    It is not like Victoria has months of sub zero weather.

    I totally agree with you that build in appliances are a pain. I do like the European dishwashers that just plug into a regular outlet and attach like a garden hose. No electrician or plumber every time you change one. Electric blinds that adjust with the sun; this is not California where you have an air conditioner running.

    When you are buying a house with a 100k of high tech heat efficiency calculate your extra mortgage interest into the cost as well. In terms of resale all that dated technology is not going to be a selling point.

    If you are really serious about saving energy, and want to feel morally superior, the simple solution is dont have kids:- there will be generations worth of energy savings.

  29. Marko:

    I suspect that you are right about one more level of bureaucracy. As long as the house ends up being built to code why do they care that you can pass some sort of “builders exam”? The whole point of building inspectors is to make sure each component is built to code. Even the final product ends up being within code why do they care whether you have a builder license.

    Sounds like a scam by the building industry and an ever expanding bureaucracy. The cost of building is already insanely high with huge profits to developers. The weak Canadian dollar does not help any either. The mayor of Victoria just announced that we are to have a second artist in residence (the extra salary is 70k plus benefits. On top of that we have a whole new poverty industry which will eventual lead to us being poverty stricken.What i dont get is why more people are not outraged and upset. The bicycle lanes are costing more per mile than the trans Canada high cost through the rookies. it is the death of a thousand little bureaucratic cuts. it is too late at night to keep going but I do wonder if the spin of political correctness is little more than a justification for an ever expanding bureaucracy.

  30. LeoS is correct – 10 to 15% premium for a house that has a number of benefits, including being healthier (proper ventilation), more comfortable (even temperatures), and efficient (~90% reduction is operating costs, not to mention the environmental benefits). There is no wizardry here, just extra insulation, better windows and doors, more care during construction (better air leakage) and an HRV. To offset some of that added cost, we can downsize the heating system (it’s common to use a 1000W heater for the whole house, ie, a hair-dryer).

    Window certification is so insane these days that spending huge money on “better windows” just doesn’t pay in my opinion. I know the sales people are trying to sell a million things like Argon gas windows and crap. Guess what, seal will fail after a while and the gas will leak.

    You get Pella windows the same reasons you get a Lexus over a Toyota and efficiency and reliability is probably not one of them.

    Re operating costs. 4,600 sq/ft home with 9′ ceilings throughout, primary heat 3 ton ductless mini-split with 4 zones, adjunct heat gas fireplace, heated tile floors kitchen/all bathrooms, and baseboards in spare bedrooms/suite. Under $3,000/year for utilities and that includes charging my Tesla and a large two bedroom suite. The only effort I made re efficiency was all LED lighting (Costco has great deals on LED bulbs). Tonight one of my LED bulbs crapped out after only 18 months, what da? Aren’t they suppose to last 20 years.

    If you went crazy out on efficiency you would maybe get it down to $1,000 to $1,500 per year, or maybe a $15,000 savings over 10 years. The numbers just aren’t great with these energy prices. Gas is almost free.

    It’s kind of like buying a Tesla. I didn’t buy one because it makes financial sense, because it certainly doesn’t.

    Environmental benefits? Live in a condo.

  31. Here’s another question – how much does a proper home automation system affect the value of a home? If you retrofit one (which is actually fairly easy now), how much of that added expense is reflected in an increased resale value?

    When I was building my personal home I talked to three different home automation contractors and there was literally nothing I thought would be that useful in my day to day life. Great, I can turn on my lights from anywhere in the world? There is a bunch of really stupid other crap like motorized blinds that adjust to the time of day/sunlight orientation…do I really need that?

    Having gone through thousands of homes I find the automation stuff quickly becomes dated and then who do you find to troubleshoot an old system?

    I ended up going with an alarm system and video surveillance so I can check the perimeter of my house from anywhere in the world but that is it.

    Another big pet peeve of mine is built-in appliances. I go into 1990s homes with high-end kitchens (for the time) and you have all these dated/broken appliances which are just a nightmare to replace as they were built in with panels, etc. On my house I didn’t want built in oven, or cooktop, etc. Slide in stove and fridge and the day both crap out I just slide them out and slide new ones back in. It is becoming tougher and tougher to find reliable people and imagine just dealing with a built in oven. You need an electrican and 3-4 strong people to life it into place. No thanks.

  32. I am a little mystified about these new owner/builder requirements. When I built my house in Toronto, we had to have building inspectors at every stage of the process to make sure it was done right and up to code. Is it different for B.C. ?

    If it was only the inspector….you also need a geotech, a professional structural engineer (this isn’t your run of the mill civil engineer coming out of UBC) needs to stamp your plans and he o she make 3 to 4 site visits for inspections, etc. This stuff is so complicated on my personal house my framer (great guy, 20 years experience) didn’t know what some of the new systemic brackets were. Had to get explainations from engineer on how to install.

    I’ve been saying this on the blog for the last 5 years but no one is listing. All the levels of government are just piling on so much bureaucratic crap that it is making it extremely expensive to build. I find issue with the fact that the bureaucratic crap doesn’t improve the end product, whatsoever.

    Having owner built my personal home the HPO exam is quite possibly the stupidest thing I’ve ever come across. I accidently became the anti-exam go to guy after I made this video, I thought it would have 30 to 50 views but it has become popular given how specific it is -> https://www.youtube.com/watch?v=VcfyZHdfS5s

    I am going to study nailing patterns and then what? Argue with my professional engineer.

    Not many people owner build in B.C. but let me give you an analogy. Government comes out and says if you want to sell your home privately to your friend you need to either pay a realtor $30,000 to handle the transaction or you have to write a real estate exam which they will not provide a study guide for. If you don’t pass the exam you can’t sell your home privately.

    To top it all off the government refuses to provide any evidence that there have been ANY problems with private real estate transactions and completely fails to recognize that lawyers are involved in most private transactions (i.e. equivalent of structural engineer in owner builder scenario).

    It is 100% clear to me that the staff at the HPO have never built a home and never visited a construction site, but then again what can we expect from government bureaucrats. They get their paid vacation irrelevant of how long it takes you to get your paperwork to build your home. Why would they care to help with the exam or if you fail, vacation still paid.

    End result is homes will be more expensive for the average Joe; however, the average Joe is convinced that foreign investment is eroding affordability. Ignores a lot of things going on closer to home.

    I could write about this all day such as have fun building a garden suite in the City of Victoria when you need to pass the HPO exam first before the municipality will issue the permit.

  33. @Marko, the kitchen cabinets in my house were over 80 years old and beautiful. My Reno incorporated them. Quality is timeless….

    Don’t know if I agree with “quality is timeless”….a 1990s kitchen whether it is melamine or dove tail boxes is going to look like crap to most people today. 80 years old is a bit different and would have some character.

  34. How’s your roof orientation and shading?

    Roof slopes toward east and west. No shade. House faces west, and receives tons of afternoon sun. But solar panels might look unsightly on the front of the house.

  35. Our roof is within about 3-5 years of needing replacement. Then I’ll look into either a metal roof with solar panels or a solar roof.

    Our roof needs replacing even sooner than yours. It would be nice to get a Tesla solar roof, but there are a lot of unknowns…

  36. @Dasmo

    Check this diy powerwall. It uses Tesla 57V modules (car modules) which is a significant savings over using the actual branded powerwall.

    They are using a schneider electric inverter and charge controller, which I thought was cool. No Go Power on this build (see that on RVs a lot) that’s Carmanah’s brand of solar gear.

  37. That’s right Sidekick Spliff, as I said originally a “high end” energy efficient house could add another $100,000 to $200,000 to the cost of construction. I guess most readers missed that in my original post.

    So I will repeat it once more from my original post…

    “Building a high end green home can add hundreds of thousands to the cost of the home.”

  38. Dear Sidekick:

    Sorry, it is a till death do you part deal or until you move and hide somewhere. Lichtenstein is nice this time of year.

  39. There is also a new build of a half duplex in Saxe Point for $750,000. But Saxe Point is the poor man’s Oak Bay. That means it’s a better hood.

    One thing that you all may have missed. This is a strata duplex but there are four units in two buildings on the lot. So it’s more like a townhouse complex with four units in one strata plan. That’s why the lot is half the size of a regular duplex. That means less lot for the BBQ and children to play on.

  40. Just Jack – active systems like solar and geothermal are expensive. It’s pretty darn easy to grab some solar, a shallow geothermal ground loop, a cistern, and so on and have a bill for 100K. It’s also easy to spend/save 20+K on a heating system.

    The 10-15% number is specifically for passivehouse, which typically doesn’t include those items (although there are some new classifications which do). Building efficient doesn’t have to be super-expensive or hard. Repeat after me, ‘building eff…..

    Yes Barrister, we definitely have building inspections, and plumbing inspections, and electrical inspections etc. Don’t forget engineers need to sign off on many items as well. Will you represent me in divorce proceedings with the province?

  41. It feels like more than 10% to me. We aren’t going to make a passive house standard so might unravel some decisions around that. If you can make the standard the extra cost can be offset by less mechanical requirements. Bernhardt did a passive house that only has the HRV system with a heating coil. That is a significant offset. There is also added cost in simply not doing something standard. added engineering. contractors quote higher. In Bernhardt’s case they are getting experience building passive house buildings so that has less effect on them. In our case we will still need to have some radiant and or mini split since we are not hitting the target. So pretty much no offset for us. We will have a more comfortable and less expensive house to run though. Who knows maybe we can be net zero with PV? Have not gone there yet though. It’s my fantasy to have a Tesla battery and enough solar to be off-grid enabled. To bad their roof isn’t here yet….

  42. There was a new half duplex that sold at 407 Edwards at $699,000 a week ago in that location. The lot was twice the size at around 4,000 square feet . That works out to be about $300,000 to $350,000 or $200 to $230 a square foot attributable to the building for traditional construction.

    If you want to be the first buyer for a net zero home you are going to pay a substantial premium. You have to decide if the payback is enough to warrant that amount. It may not be economically but then you may feel you are doing a good thing for the community by saving energy. And that could have some psychological value to you.

  43. I just read the government site on owner/builder exams.

    I just thought of the old Ronald Reagan saying that the scariest words a citizen can hear is “We are from the government and we are here to help”.

  44. I’m not sure the 790k per half duplex is that out of line: there’s a standard new-build duplex on Lyall St. in Esquimalt being marketed for $750k/side. To my eye, the Wilson St. is more high end/attractive. So maybe there’s only a 40k premium?

    (I also think in both cases that this is a case of what the developer wants to get, not what they will actually get..)

  45. Dear Sidesplit:

    Well, the house was already on the heritage register when I bought it. It was also one of the few houses that was designated by the city rather than voluntarily put on the register. You are also right that replacing the 3×16 battleship oak joists would be hard to next to impossible these days. Did a rough calculation of my heating bill last year and it averaged out to 250 a month which is actually rather good
    for a 8000 square foot house. But I keep the house rather cold at night and just really mostly heat my den with a gas fireplace if I am up late. Those heating bills include hot water and cooking as well
    Of course I grew up with some really old fashioned, but very effective technology, it is called a sweater. This house has lasted a hundred years and I suspect that it will last another hundred. I am less confident about some of the new houses they are throwing up these days.

    I am a little mystified about these new owner/builder requirements. When I built my house in Toronto, we had to have building inspectors at every stage of the process to make sure it was done right and up to code. Is it different for B.C. ?

  46. that’s a half duplex/town house of 1,698 finished square feet for $790,000 or $465 including the strata lot worth about $300,000.

    What would you figure a new build duplex of the same size built to traditional standard would sell for in that location?

    I’m saying construction costs are not hundreds of thousands more for net zero, but that is different than selling price.

  47. Michael: Not sure if you noticed, but your link is from 2013. Here’s a bond yield chart from back then. So many bears, so much missed.

    Lol, yes, I was aware of the chart date. Your chart may actually be proving my point for me better than the article I linked.

    As you recall the Fed began to pull back on its stimulus late in 2013. Bonds sold off sharply in the wake of Bernanke’s first mention of tapering and stocks began to exhibit higher volatility than they had previously.

    Clearly, just the realization that Q.E. was ending created a problem for the bond market. Now let’s pretend that the bond market thinks Trump is going to inflate away debt.

    Thank you for your assistance. You might actually make a good bear yet.

  48. Leo S, that’s a half duplex/town house of 1,698 finished square feet for $790,000 or $465 including the strata lot worth about $300,000.

    I’m saying a traditional home costs about $200 a square and a net zero about $300 a square. What are you figuring the difference at?

    ($300-$200)/sq. ft X 1,698 square feet = $170,000 (rounded) difference between the two types of construction.

  49. https://youtu.be/mK9H442sEVw

    Leo we are not talking the same thing here. When I say high end, that starts at the foundation and continues through out the home including a solar mass, appliances and a in ground heat recovery system like they have at Westhills.

    You can have a high efficiency home for another 10 to 20 percent but if you want high end net zero housing that will run close to $300 a square foot for a 3,000 square foot home that might be traditionally built at $200.

    And at times I find that the builders of high efficiency are not doing that much more than a traditional home so at 10 percent more for a regular home the builder may be “green washing” you and not the home. The extra money being spent on producing a nice brochure rather than incorporated into the home.

  50. The new HPO regulations have killed the owner builder. Not only are you in the dark to prepare for the exam there is only a few people processing things. So expect at least a year to be processed as an owner builder. Took my builder 8 months to get their number and that’s with no exam. I’m doing a cost plus arrangement with them so I am able to do what I want but his experience and connections enables me and his HPO allows me.

  51. Interesting debate on the solar panels.

    Here’s another question – how much does a proper home automation system affect the value of a home? If you retrofit one (which is actually fairly easy now), how much of that added expense is reflected in an increased resale value?

  52. LeoS is correct – 10 to 15% premium for a house that has a number of benefits, including being healthier (proper ventilation), more comfortable (even temperatures), and efficient (~90% reduction is operating costs, not to mention the environmental benefits). There is no wizardry here, just extra insulation, better windows and doors, more care during construction (better air leakage) and an HRV. To offset some of that added cost, we can downsize the heating system (it’s common to use a 1000W heater for the whole house, ie, a hair-dryer).

    We’re currently in an extremely low priced energy market, and with the current low interest rates it’s typically a wash (or better) when subtracting the extra carrying cost from the $ savings. Imagine if instead of building site C we could approach the problem from the other side? We’re going to be paying for projects like these via taxes, debt, and energy price hikes for a long time. I would hope that as energy prices rise and environmental problems continue to pile up, the general public will see the value in these types of homes (and they’ll be thinking about more than just saving $). Who knows…

    I’m very tempted to write some letters to the city to add some extra financial incentives to build better structures. For example, why not offer a reduction on permitting costs or even property taxes to those who choose this path?

    Dasmo, you are correct that the system, as is, strongly favours code-minimum bang-up houses. I will be curious to see what some of the budget developments look like in 20 or 30 years. The local municipalities (and the province) should be embarrassed really. I guess those developer dollars are hard to turn down.

    Barrister, while trims and mantles are nice, I was thinking more along the lines of the clear, old-growth timbers most likely used in your house – the 30 or 40 foot long joists that would be near impossible to find today (and would be deadly expensive). The problem with the character homes in Victoria is that they’re energy black-holes, and it’s challenging and expensive to retrofit them (don’t get yourself on the heritage list or it’ll be even harder, if not impossible). Those original windows and empty wall cavities aren’t helping, nor is the fact that these buildings tend to be big!

    Lastly, after researching the HPO exam some more, I’m totally blown away. I might need to join the Libertarian party of BC, if there is one.

  53. Building a high end green home can add hundreds of thousands to the cost of the home.

    Not really true. Passive house (80-90% reduction in energy use) construction will cost about 10% more than traditional.
    Here’s an example: https://www.realtor.ca/Residential/Single-Family/17344636/408-Wilson-St-Victoria-British-Columbia-V9A3W5
    $790,000 for a new build duplex on Wilson st. What would a traditional duplex cost at that location? Certainly not hundreds of thousands less.
    Payback on this should be essentially instant when you consider additional carrying costs vs energy savings.

  54. I’ve valued dozens of solar assisted homes here and in the lower mainland. These homes initially appeal to the environmentally concerned and the financially able buyer who is willing to pay a premium to purchase new or to build for themselves. Costs can be substantial over a traditionally built homes. The technology is outdated quickly and expensive to replace as the components age. And for many having these green homes built the owner and builder ends up cutting back on costs at the end of the construction with cheaper and lower quality interior and exterior finishing. And that effects the property’s value.

    The initial developer makes money because, like Dockside Green, they control the supply, but on re-sale the green home has to compete in price with traditional built homes. That means most of the initial buyers will net less or lose on the re-sale relative to traditionally built home.

    All new government buildings are to be built green or LEED certified. They are to be the example for private enterprise to follow and build commercial office and retail buildings. But for this to be the standard in residential will take a very long time if ever.

    Building a high end green home can add hundreds of thousands to the cost of the home. As the initial owner you have to weigh that against the energy cost savings to determine how many years it will take to payback that outlay. Since most home owners trade homes every decade, you have to wonder if it is worth the contentment of living in a highly efficient home because the payback period is beyond the typical years of home ownership.

  55. Wow, this will be quite the hit to Victoria when China kicks in their capital controls to stop the outflow of cash, and the Asian students stop coming and condo/house buying for them hits the skids. Rents could collapse.

    How can capital outflows be contained?

    Answer

    Capital controls.

    ” That’s the only other way. If they pursue capital controls, which could work, it would drastically reduce Chinese spending around the world. Politically, that would be destabilizing to some extent because studying overseas is now an aspiration of many upper-middle class Chinese households. Any restrictions on that will upset a lot of people, and pretty wealthy people. ”

    “It’s a grinding down for growth. The upper middle class will get hit very badly. That’s the whole point of still controlling the state sector so that things won’t be so bad. By pouring all this money into the state sector, you obviously have to print a lot of money to sustain that, and that weakens your currency. But then at least the lower class and even the middle class people with median incomes can put food on the table. But the upper middle class and some part of the upper class, people who own two or three apartments in Shanghai, maybe they won’t be able to send there kids overseas any more because of capital controls and rapid depreciation of the renminbi.”

    https://www.bloomberg.com/news/articles/2016-11-21/shih-says-china-faces-yuan-float-if-capital-controls-fail-q-a

  56. Receiving about 15 emails per week from pissed off people. It’s the dumbest thing I’ve ever come across.

    I bet some developer/construction lobbyists got their way on this one. Make it extremely difficult to build your own house so you have to hire someone or buy a new build.

  57. “But more generally the observation I was making is that government is back in expansion mode after lying dormant for several years. It’s not just wages and hiring. It’s all the contracts to local consultants, suppliers etc, playing catch up for years of frugal mgt.”

    Which brings us back to the fact that it’s an election coming up and of course the government is opening the coffers wide to help the numbers look better as “job creators” when most will end up being temporary/contract/part time. Lots of the usual political hype.

  58. @Marko, the kitchen cabinets in my house were over 80 years old and beautiful. My Reno incorporated them. Quality is timeless….

  59. The system propagates poor quality. I just had my build assessed and the form they were filling in during question period had nothing to do with quality. It was all about bling. Countertops and number of bathrooms. This is why you have three bedrooms particle board houses with six bathrooms and quartz countertops. So much effort and money to specify a quality house and it has nothing to do with its market value.

  60. @oops

    Perhaps we will find out sooner than later if Mr. Gibson is correct in his assertion….The U.S. bond market is so big that any signs of resurgent inflation will induce a wave of selling that would cause bond yields to spike upward and collapse the economy.

    Not sure if you noticed, but your link is from 2013. Here’s a bond yield chart from back then. So many bears, so much missed.

  61. Hi Marko:

    I agree with you that most people dont recognize quality in house. The irony is that they often pay top dollar for real junk, I have solid core doors through the house except a couple in the basement. Personally, I do notice the difference, particularly with the mahogany French doors on the ground floor.
    The burled walnut fireplace is also a delight to me as is the wood paneling on the ceiling of my den. The multilayer 10 inch baseboards and foot high ceiling molding is a real piece of craftsmanship. The staircase is a piece of workmanship from a bygone era, I actually mean that literally since the house is a hundred years old. Fortunately all the wiring and plumbing is just five years old as is the furnace and the instant heat. Solid hardwood floors through the whole house; old growth oak that will last long after the grandkids are gone. At $209 a square foot (including a 26,000 foot lot) I doubt you could begin to replace the house. People were not interested in the house because it was old and everyone was looking for a new build. While it needed a new exterior paint job and the green house had to be replaced there has little else wrong with the house.

    I think there is some real value in some of these old houses but on the other hand you are once again right about the fact that people neither recognize or appreciate real quality construction.

    Watched your video and from what i can see you seem to have done a great job on your house.

  62. I only watched the first couple of minutes of that video of the house on Saxe point, but I immediately noticed the cheapo hollow doors.

    People just don’t pay for it….https://www.youtube.com/watch?v=9xZNZLugq0Q

    In my personal home I have 9′ ceilings and I went with 8′ interior doors on all the floors, but hollow except on the bathrooms. Reason being 8′ hollow door was way cheaper than 7′ solid core. People notice the over-height doors, most people don’t even know difference between hollow and solid.

    Some other stuff I wonder if it really even makes sense to get for better quality. For example, I spent $ upgrading my kitchen with dove tails and crap…..does it really matter? in 20 years when I go sell the house the kitchen is going to be so dated that someone will want to rip it out anyway. Melamine boxes would have been just fine.

    Have you walked through any new houses lately and noticed how they have the code-mandated 4″ air vents direct to the outside sprinkled through? This is because nobody knows what an HRV is and why they should demand one.

    HRVs are now mandatory if you don’t have a forced air system.

    And just to continue my rant a little longer, I was just introduced to the new HPO owner-builder exam. Just wow. Marko, email incoming.

    I am creating a database of questions to help the citizens of BC -> https://www.youtube.com/watch?v=duGyq4TtYvg

    I’ve become the go to guy in BC for ranting about this exam. Receiving about 15 emails per week from pissed off people. It’s the dumbest thing I’ve ever come across. You can change the brake pads on your car and potentially kill somone if you screw up but you aren’t to build a home for your family. Go figure.

  63. I found this a really interesting read for several reasons: http://www.theprovince.com/business/mortgages/private+lenders+fuel+borrowers+mortgages+regular+financial/12416017/story.html

    -Langley townhome project didn’t sell for as much as these builders expected
    -Tsawwassen home is not selling so they’ve gone to a shadow lender
    -even private lenders are saying no more often
    -these people are hoping for their home to sell in the next six months

    Quite a surprising change in how things appeared in the press a few months ago.

  64. As someone gearing up to build a passive house, it’s sad seeing all the garbage being built around the city. Even some of the higher-end homes currently under construction are pretty sad from a quality / structural workmanship point of view.

    On the solar panel front, I had solar hot-water panels on a rental I sold this year (that were visible from the street). I’ll admit they’re not the nicest looking things around, but I was somewhat surprised at how most people viewing the property thought they were a gimmick and really couldn’t care less about them. I think they were a turn-off for some people who took one look in the mechanical room and ran away. In the end I pulled them off and sold them privately.

    My impression is that people (a) don’t understand efficiency from any perspective except $, and (b) would rather have a veneer of luxury / quality than know a home is significantly less polluting and/or resource intensive than the spec built home down the street. I only watched the first couple of minutes of that video of the house on Saxe point, but I immediately noticed the cheapo hollow doors. I tell you, builders and developers are savvy – they know that a splash of granite and stainless easily trumps real quality. Have you walked through any new houses lately and noticed how they have the code-mandated 4″ air vents direct to the outside sprinkled through? This is because nobody knows what an HRV is and why they should demand one. It’s utterly insane and a real shame that BC is lagging behind (except Vancouver, where they’re actually doing something). And to think that all this efficiency nonsense actually started in Canada in the 70s.

    And just to continue my rant a little longer, I was just introduced to the new HPO owner-builder exam. Just wow. Marko, email incoming.

    /rant

    And a note about the solar, most definitely take a look at improving the insulation and thermal envelope (windows / doors) of your house in conjunction with solar. Often, upgrading these ‘dumb’ technologies has the best ROI. If in doubt, contact a company like CityGreen (no affiliation) who can tell you the best way to go.

  65. I’ve had to sell some incredibly efficient homes in my career and I haven’t seen the demand. This one was super cool -> http://markojuras.com/2013/05/619000-2882-dysart-gorge/ Their utility bills were under $1,000 per year.

    Practicality trumps efficiency. The average consumer is not going to go for a whacky layout to get the efficiency. But I think normal houses that are more efficient will have demand.
    Also you advertised it as eco friendly instead of saving thousands in utility bills which would be more convincing.

  66. And is it actually possible to legislate professionalism into a career that anyone with a few thousand dollars and a spare couple months can get into?

    This is the fundamental problem where it all starts at. It’s extremely easy to become a REALTOR®; therefore, you have a huge oversupply. There are 1312 REALTORS® when 300 to 400 could comfortably handle the volume with technological advancements such as DocuSign.

    Because there is an oversupply, REALTORS® spend a massive amount of their time trying to solicite business inside of spending all the time working on transactions.

    Increase the barrier to entry dramatically, supply drops, industry becomes more efficient where you spend all your time working instead of trying to beat out the next person.

    You don’t see MDs advertising or having to do presentations to land clients. They don’t even give 2 cents about their horrible RateMD reviews. They have the upper hand on the consumer/patient, supply of MDs is restricted.

    ***Not trying to compare MDs with 10+ years of education to REALTORS®, just an example of marketplace imbalances.

  67. would a set of rooftop solar panels add to or detract from the resale value of one’s home?

    I would say add to but only if not visible from the road. I think the traditional solar panels may still be a detriment to curb appeal. The solar roof will fix this.

    Our roof is within about 3-5 years of needing replacement. Then I’ll look into either a metal roof with solar panels or a solar roof.

  68. @Hawk: “Ash, can you show us the numbers that hiring and pay raises to a small group of highest paid group of public sector employees has actually happened or are you just pumping into thin air like Mike ?”

    No, I just made it up to send you into a tizzy 🙂

    Core govt is restructuring its pay bands for non-union staff (this is about 4,000 people). Most aren’t going to see their bands expand, but the removal of the freeze means people not already at the top of their bands will now see annual rises again. There was also the announcement that the upper limit for the top group would go up (this is a minority group).

    But more generally the observation I was making is that government is back in expansion mode after lying dormant for several years. It’s not just wages and hiring. It’s all the contracts to local consultants, suppliers etc, playing catch up for years of frugal mgt.

  69. That’s funny, last week the average meant nothing to the agents and the bulls.

    Trying to help you out. The average is going to be so overinflated this month that it will likely correct 5 to 8% for December. I am also predicting that December will be the first month in 4 years that will not experience YOY increase in sales.

    Heading into the new year you’ll have a large drop in average a drop in YOY sales…doesn’t get much better than that.

  70. Which leads me to ask a question that I’ve been sitting on for a while: would a set of rooftop solar panels add to or detract from the resale value of one’s home?

    Thoughts, anyone? I’d especially appreciate Marko’s opinion on this

    Everything environmentally friendly has been a flop so far….Dockside Green, case and point.

    I’ve had to sell some incredibly efficient homes in my career and I haven’t seen the demand. This one was super cool -> http://markojuras.com/2013/05/619000-2882-dysart-gorge/ Their utility bills were under $1,000 per year.

    There are way more Panamera, Audi A7/S7/RS7 etc., BMW 6/7 series, than Teslas even though the Tesla is a better car than all of them imo. It takes a super long time for the consumer to embrace something new even if it is better and environmentally friendly.

  71. Ask your elders who bought in fall of 1980 and a year later the market caved 30 to 50% as rates rose and HELOC’s and 5 credit cards per family never existed. 11% of owners crashed the US market on far less personal debt. Man you’re clueless Mikey.

  72. Well, at least you’re trying to be creative Michael.

    Debt has only increased since this article was written. Trump may very well push in that direction but the bond markets are already reacting and that is not a direction we really want to go, but we may have to go along for the ride. Perhaps we will find out sooner than later if Mr. Gibson is correct in his assertion.

    http://www.theglobeandmail.com/globe-investor/investor-community/trading-shots/can-government-debt-be-inflated-away-not-likely/article14513780/

    Even if central banks abandon their inflation targets, it’s unlikely they can inflate the debt away. The U.S. bond market is so big that any signs of resurgent inflation will induce a wave of selling that would cause bond yields to spike upward and collapse the economy.

    “We believe that any attempt to inflate away the massive [debt] would create a panic in debt markets,” wrote Peter Gibson in a report a while ago. Mr. Gibson is the former CIBC World Markets portfolio strategist who regularly won No. 1 rankings in the annual Brendan Wood analyst survey.

  73. Hey, Leo. I like the new “JUST PLAIN GOOD IDEAS” section of the site!

    Which leads me to ask a question that I’ve been sitting on for a while: would a set of rooftop solar panels add to or detract from the resale value of one’s home?

    Thoughts, anyone? I’d especially appreciate Marko’s opinion on this.

  74. Well, there may be more teachers hired soon as per the BCTF’s legal victory at the Supreme Court of Canada.

    The BCTF has estimated that the decision could force the province to spend an additional $250 million to $300 million a year to hire more teachers.

    http://www.timescolonist.com/news/local/b-c-teachers-expect-quick-action-on-supreme-court-win-1.2741404

    What will those new hires earn, you ask? Teachers (in SD61) earn in the range of $45,331 to $85,610 a year.

    Additional general wage increases [for teachers] are scheduled for:

    July 1, 2017 (0.5%)
    May 1, 2018 (1.0%)
    July 1, 2018 (0.5%)
    May 1, 2019 (1.0%)

    http://bctf.ca/uploadedfiles/SalaryGrids/SD61.pdf

  75. Who in our economy is going to be able to afford never ending increases at rates far beyond wage growth?

    Generational wealth and the 1%ers….others will have to live somewhere between Langford and Sooke.

  76. @Local Fool

    But you can’t pile on the levels of debt that Canadians are and explain away the simple fact that at the end of the day, elementary mathematics (and your lender) demand that buyers be able to pay the debts they are accruing.

    I agree with alot of what you’re saying, however you may be overlooking the fed’s go-to play (mandate), of inflating away the debts that buyers have to pay. Again, ask your elders how much their house went up between the late 40s to ’81 while debts were inflated away and interest rates went from 2% to 20%. Your grandchildren too will look at you in disbelief, when you tell them you could buy a house here for under a million way back in 2016.

  77. @ Michael,

    I can’t pretend that I am an expert in reading charts like that. I don’t know, maybe it justifies up up and up. However, I also wonder if that’s losing the forest for the trees, obfuscating what is at core, a simple issue. Who in our economy is going to be able to afford never ending increases at rates far beyond wage growth?

    You can stretch with low interest rates, you can stretch even more by saying 50% of my gross pay goes to the mortgage as opposed to the old 1/3 – but the former, that cannot go on, rates must rise eventually. Steve can say all he wants that Canada won’t be led by US moves on their interest rates, but in the long run they don’t really have much of a choice. In the latter case, that just sucks more money out of the wider economy and diverts it into an unproductive activity. We’re already doing that, most especially in the urban regions.

    A 450% ratio mortgage is not normal, and ultimately doesn’t have the ability to become the new normal. It’s a problem which if it continues, can have serious long term implications. It’s not even a bear or bull argument, it would seem to just be common sense. No asset class in human history has ever gone up forever relative to the economy in which it resides. It absolutely never will.

    Yes, spring asking prices might well go higher, and I have no doubt sellers will try exactly that. But you can’t pile on the levels of debt that Canadians are and explain away the simple fact that at the end of the day, elementary mathematics (and your lender) demand that buyers be able to pay the debts they are accruing.

  78. Based on Professor Thompson’s analysis, long K cycles have nearly a thousand years of supporting evidence. If we accept the fact that most winters in K cycles last 20 years (as outlined in the chart above) this would indicate that we are about halfway through the Kondratieff winter that commenced in the year 2000. Thus in all probability we will be moving from a “recession” to a “depression” phase in the cycle about the year 2013 and it should last until approximately 2017-2020.

    Michael, apparently we don’t get the gain without the pain. Let’s hope the theory behind Kondratieff Waves is flawed.

  79. Ask yer pappy how big was his and neighbors HELOC’S and credit cards were Mikey.

    Looks like a monster red flag on your chart right before a crash.

  80. @Local Fool
    I’m referring to the long credit cycle (see bond yields at bottom of chart). I have a feeling ‘Spring’ has arrived earlier than ‘2020?’ this time round. The assets you want to own in ‘Spring’ are RE & stocks. If you don’t believe me, ask your grandpappy how much he paid for his house in 1949, the last time bond rates were this low 🙂 He’ll then likely tell you it went up 50-fold between ’49 and ’81, as rates went from 2% to 20%!

  81. @Totoro

    All excellent points. I’m not sure we really need income and assets if we are just looking for changes year to year. Once a change has occurred one would want to make sure it’s an actual change in affordability and not a change in the mix of income/assets.

    E.g. If we know the median income of SFH buyers in Vic is 130K, whether some of those people are relying on equity or have retained earnings in a corp does’t really matter. We know it’s not median income families stretching themselves for a SFH.

    And if median income of SFH buyers has stuck at around 1.5x the median household income of Victoria for the past decade, then affordability probably hasn’t changed much.

    It’s not foolproof, but it’s a start.

    If income is low, then the question is, “Where is the money coming from?” Equity? Rental income?Inheritance?

    So ya, then we’d need assets to try and make heads or tails of it.

    Finding out how many first time buyers in Victoria have gifted down payments would be interesting too. From this article

    “Nationwide, 28% use a gift or loan to bolster their down payment. Contrast that with 40% in Vancouver”

    I’d suspect Victoria is somewhere between the national average and Vancouver.

  82. Well said Local fool. That time is close. Mike is a clueless ex-economist who can’t see that no other new credit cycle has ever started while household debt is maxed out at historical levels and that government is intervening. It’s the end of a cycle not beginning.

    Its ludicrous to think Trump’s coal mines for old oxy addicts in West Virginia is going to save the world while Justin shuts them down on the same day. Best hit the old books Mike. The Trump Tank is so close you can taste it. He’s a psycho hellbent on saving America, and screwing Canada.

  83. Curious if you know where the buyer was from?

    There was a rumour that the Obamas were in town buying a home on Beach Drive but turns out it went to a Vancouver buyer.

  84. ““how can asset prices be soaring with rising rates?!” Part of the answer of course has something to do with my previous link on wages & earnings starting to soar.”

    No, but I am impressed that you are actually arguing real data.

    Wages writ large are not “soaring”, or starting to “soar”. Not only that, but nationwide (this is the scale to which you are referring) RE as an asset class has been outstripping wage growth for nearly 2 decades. It has been rising in part due to boomers chasing yield (especially in the beginning), Canadians’ attitude change to debt, and by far and away, unprecedented interest rates.

    By saying the prices are rising due to wage growth despite rising rates, misses the mark, IMO. You’re nearly 20 years late here – rates are now only beginning to move up, and haven’t had enough time to dent the party.

    I doubt the OB buyer thought of what’s coming next in the credit cycle. If I had enough money to buy a house for that price, I don’t think I would care what stage of the cycle we were in. See that house? I’m rich, and I’ll have it right now because I want it.

    Also, a credit cycle concludes with a large deleveraging of debt, Mike – not by piling it on at record levels. That’s what happens immediately before the conclusion of the cycle, the question is when.

  85. Nasdaq, S&P, etc all new record highs.

    The most entertaining thing these past two weeks has to be watching people scratch their heads as they question, “how can asset prices be soaring with rising rates?!” Part of the answer of course has something to do with my previous link on wages & earnings starting to soar.

    I think it was AG who mentioned central bankers are always behind the curve with reinflation and the start of a new credit cycle. I bet the buyer of the 9.75M OB this morning is smart enough to know what comes next.

  86. Mike has learned to look up real data. Gold star!

    Next lesson is on “Cherry picking – what is it and how to avoid”

  87. “provincial unionized employees received a 1.0% raise in 2015, 0.5% in 2016, and next year in 2017 they will get 1.5%.”

    Good point MrsLeoS. Along with healthcare and trades, government workers make up most of the employment in this town. High paid paper pushers/management are in the minority.

    Nurses just signed a 5.5 % over 5 years. Mike’s imaginary land of filthy rich employees is more fantasy. Like AG, it’s too much time in the ivory tower. Got to get out in the real world.

  88. “Ash, can you show us the numbers that hiring and pay raises to a small group of highest paid group of public sector employees has actually happened or are you just pumping into thin air like Mike ?”

    I can’t speak to any numbers, but the Public Service Agency is currently conducting a review of all management classifications and salary grids. This does not guarantee that management salaries will jump, but the implication is there, I suppose. You can see the info yourself by looking at some of the job listings. For example, excluded job listings right now contain the phrase “As part of a corporate initiative to update the existing Management Classification and Compensation Framework, the classification and salary range for this role is currently under review.”

    What I find interesting is Mike’s statistics that Education, law and gov’t services have gone up by 3.9%. There’s probably a variety of things mixed in there pulling that number up, but provincial unionized employees received a 1.0% raise in 2015, 0.5% in 2016, and next year in 2017 they will get 1.5%.

    http://bcgeu.ca/sites/default/files/collective-agreements/Summary%20of%20Tentative%20Settlement%20for%20the%2017th%20Master%20Agreement.pdf

  89. My drywaller said his Fairfield house is now worth $1.2 million, and he wants to buy the house next door to him, tear it down and build a fourplex for his kids to live in when they grow up.

    Case in point. 1.2 million after tax gives you a lot of capital if re-mortgaged and the proceeds reinvested in the house next door. Pretty sure there are other parents who have purchased with their children’s future in mind given the way prices have escalated.

    This doesn’t mean prices will never fall, it just means that prices have risen faster than inflation historically and over time I would expect this pattern to continue and income-based affordability to continue to erode as a result.

    This is because we are an appreciation-based market and housing has proven to be an investment – often with better returns than the market because of the leverage. Just like Hawaii or San Francisco or Vancouver for that matter. And very unlike the rust belt in the US or areas of the East Coast where housing is a shelter expense with little appreciation to be expected.

    A big crash might happen in Victoria, and has happened before, but I wouldn’t hold my breath for it. Life is too short to time the market and it is hard to keep up with leveraged appreciation if you don’t own.

  90. Let’s not forget the 10,000 plus health jobs via VIHA in Victoria that lost wages too eh Mike ? Not to mention all the private nursing operations. These are the backbone jobs of the local economy. Job losses as well as wages. Not good for an aging population.

    Health occupations 152.7 29.79 141.9 29.42 -1.2

  91. It’d be really interesting to have income data for buyers.

    In order to understand buyer behaviour and affordability you also have to know what buyer assets are as well.

    If I own a company worth 3 million dollars with retained earnings of 1 million dollars I’m still going to be taking a salary of $52,500/year to maximize CPP while minimizing taxes. Doesn’t make sense to remove capital as income. I might buy a rental in the corporation with it though.

    If I have bought and held a house for seven years I might have a $400,000 capital gain that is not reported as income.

    Receive an inheritance? Also not reported.

    I’d say the second scenario is pretty common in Victoria. People are buying houses with capital gains from a prior house as well as their income. First-time buyers are in the minority – 70% of all buyers are not first-time buyers. Probably higher than this in OB or for more expensive houses.

    You can probably get an idea of the asset base by looking at the mortgage amounts taken – over 40% of Canadian homeowners are mortgage free. That is a lot of capital to sell and rebuy with. Those who sell and buy contribute to the ability of the market to sustain increases as the retained capital is reinvested and the market separates from income-based affordability. And there is motivation to move up given the capital gains tax exemption, the historic returns and the needs and wants inherent in shelter.

    http://www12.statcan.gc.ca/nhs-enm/2011/as-sa/99-014-x/99-014-x2011002-eng.cfm

  92. FYI Mike, you conveniently left out those high paying trades guys you always yap about that are so hard to find. No wonder you can’t find any, they lost pay last year and went elsewhere.

    Trades, transport and equipment operators and related occupations Down -0.5%

  93. Mike,
    It’s well known to most that the wages are shitty compared to Vancouver. It’s historical fact the island pays lower. Most growth is in construction which is cyclical and tourism/restaurants. Lower paying in the latter and both liable to be laid off at any time. Check out the job ads some time between making up goofy charts that mean dick.

    Union jobs are getting 1% to 2% max and the Feds haven’t had a contract settled in a couple years and could strike.

    CC,
    When the construction guys start maxing out, you know the game is over. Also heard of more shitty contractors who got canned from the jobs midstream for incompetence or don’t pay their employees.

  94. Marko : The SFH average for this month will be record breaking by a significant margin. There have been some huge sales this month including a $9.75 million dollar home in Oak Bay this morning.

    Curious if you know where the buyer was from?

  95. Thanks for the numbers JJ.

    I’m curious what those would look like on a per capita or per home basis.

    Wow at the amount of condos selling in Vic proper. Didn’t realise downtown was that popular.

  96. Local Fool said:

    the average price is not supported by the average wage, or even the median price

    Excellent point. I’m curious when was the last time median family income in Victoria would buy a median home in Victoria. When was the last time median could get you a median SFH (detached) in greater Victoria?

    Median family income would definitely buy a median condo or town.

    Currently there is a lack of inventory and money is dirt cheap. I see those as the driving forces of the current market. Hence my belief it can’t keep up. At some point more people are going to list and the tide has already turned on dirt cheap money (or so it seems). Seems like it would take a lot of wage growth to balance those factors.

    It’d be really interesting to have income data for buyers. I’m curious what the median income is of the person buying a median home and how that has changed over the years (if it has changed). Barrister has brought this up before.

    I’m even curious about anecdotes. What type of person is buying a place like 1636 Longacre Dr? 700K for something that needs that much work seems nutty to me.

  97. A break down of the data into just single family homes shows how Langford has moved into second place for detached house sales.

    District Sales, Number of
    Saanich East 993
    Langford 775
    Victoria 494
    Saanich West 463
    Sooke 417
    Malahat & Area 383
    Gulf Islands 344
    Oak Bay 277
    Colwood 232
    Central Saanich 227
    North Saanich 210
    Sidney 134
    View Royal 134
    Esquimalt 129

  98. Here’s some trivia for those that are interested in seeing where the high home sale areas are in Greater Victoria

    District Sales, Number of
    Victoria 1843
    Saanich East 1530
    Langford 1328
    Saanich West 702
    Sooke 572
    Malahat & Area 418
    Sidney 391
    Gulf Islands 391
    Central Saanich 386
    Colwood 363
    View Royal 362
    Oak Bay 361
    Esquimalt 354
    Victoria West 259
    North Saanich 217

  99. I kind of feel like the statscan data makes the point that there’s a problem. To start, most people are not employed in the sectors reporting the largest wage gains.

    Regardless, the average wage increase has increased in that one year period from $24.86 to $25.43. With the rate of RE price gains, that means one of two things.

    The house price gains are far in excess of wage growth (ie underlying fundamentals) and are therefore inherently unsustainable and subject to an eventual mean reversion, or,

    The houses in Greater Victoria were so seriously undervalued before, that this increase was the new equilibrium being established.

    Low interest rates undoubtedly have an effect, but that can only take affordability so far. I would think that a notion of undervaluation is undermined by a fairly simply observation – the average price is not supported by the average wage, or even the median price. House price gains are fine, so long as the underlying economy supports it. That’s the issue I am having trouble reconciling…

  100. I agree Local Fool, very good analogy JJ! I am one of those people that has decided that improving the shoes I have is better than the overpriced crap. The new Lowes has seen many visits from me since opening, as it lined up perfectly with the addition of a new basement bathroom. Finally, after 8 years of surviving with only 1 bathroom, we have decided that putting the equivalent of real estate selling commission into our house instead, would be money much better spent. For a few years we were uncertain on whether it would be worth it to make too many improvements if we were simply going to trade up, but then I realized that I didn’t want to pay for someone else’s renovations/taste.

    It is interesting however hearing the trades talk. My drywaller said his Fairfield house is now worth $1.2million, and he wants to buy the house next door to him, tear it down and build a fourplex for his kids to live in when they grow up. He doesn’t believe they will be able to get into the housing market without his help. And he wants to take advantage of Victoria’s new bylaw allowing garden suites as well! He has a lot of confidence in this market. The plumber, electrician, carpenter, they all believe the market is going to continue to perform well. They do not believe that what is happening in Vancouver is going to affect us. The carpenter said he finally convinced his mother to put her house up for sale in North Saanich and move into his basement suite. The electrician said he wanted to go into business for himself doing home inspections. They all speak of how hard it is to find good labour and how they need to turn down jobs because they are too busy.

    It was very hard for me to find someone to even tackle such a small (relatively) job. I was very fortunate my bff, who is building a house on Bear Mountain, sweet talked her GC into lending out his foreman. When he came by, we basically had a 2 hour interview, where he sized us up, the space, our expectations, our budget, before finally agreeing to do the job. In the end, he told me that it was our flexibility that convinced him to squeeze us in. Everybody wants it done “yesterday!” I told him, I had lived 8 years with just one bathroom, I had no deadline, as long as progress was being made, I didn’t care if the job took 2-3 months. It has been one month, and we are drywalled and primed. Hoping it will be done by Xmas, but if it’s not, who cares, right?

    One last anecdote: My son has a classmate new to his school this year. His parents hosted a birthday party for him yesterday at their beautiful, oceanfront home in Saxe Point. https://stephen-foster.mykajabi.com/p/319-plaskett-place They lived in West Van, took a year to travel the world, then spent the last year living in France. While they were living in France, they received a cold call from a developer wanting to buy their house in Vancouver. They sold it, and then had a choice between living in Toronto or Victoria. They moved to Victoria in August I believe. I have no idea if they were considered “Vancouver” buyers or “Out-of-Country” buyers, but if you follow the money, it’s coming from Vancouver.

  101. Good points AG & Ash. Regarding the recent increases in gov’t hiring & wages, here are some of the wage increases since last year (Oct ’15 to Oct’16):

    Management occupations …..13.7%
    Natural & applied sciences ….7.1%
    Business, finance & admin ….6.9%
    Educ, law and gov’t services ..3.9%
    Sales & service occupations …3.8%

    http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/labr69k-eng.htm

    Yet the bears claim there are no wage increases (eyes roll).

  102. JJ,

    Nice analogy. I guess people are generally re-soling their houses as well, via renos. Home Depot has been pretty busy these days…

  103. This week end I went out to buy a pair of tan wing tips. I went through half a dozen men’s stores to find a good pair of leather shoes. 5 out of the 6 stores only had crap for sale with glued on rubber soles and the other store had good quality men’s leather sole shoes but a very small selection in the $400 to $500 range.

    So I stood there thinking. Do I really want to pay $500 for a pair of shoes that are Okay only because there just are so few good quality shoes to chose from?

    And this is the problem with housing in Victoria. There is little selection of quality so you end up paying a high price for something that you really didn’t want only because what you have in front of you is better than 99% of the crap out there.

    In the end, I decided not to buy a new pair but to have my leather shoes re-soled. Because the ones I have now are better than any of the crap that is available in stores today. And that’s the same with real estate in Victoria. Most of the housing is crap and what little that is left is over priced housing that is only slightly better than crap.

  104. In April of this year there were 1,297 sales compared to the year before at 896. That was a 30 percent increase. In October of this year sales had dropped to 718 which is in line with last year at 699.

    Month Sales, Number of
    Jan 522
    Feb 768
    Mar 1106
    Apr 1238
    May 1297
    Jun 1160
    Jul 950
    Aug 867
    Sep 757
    Oct 718

    That’s a big decline in month to month sale volumes during the course of one year. And only in October did sales decline to where we match the previous year. Three weeks into this month we are at 357 sales. In November of 2015 we had 567 sales. Our month to month sales are declining.

    So what does that mean for the future?

    Historically what has happened in Greater Victoria is that declining month to month sales lead to lower sale volumes during the next few years. As we draw future demand forward and we have a boom in sales usually followed by a bust in sales.

    Primary Year Sales, Number of
    2006 7754
    2007 8774 peak
    2008 6415
    2009 7874 peak
    2010 6389
    2011 6028
    2012 5659
    2013 5933
    2014 6657
    2015 8183
    2016 9383 peak

  105. 6% in 5 years ? So that’s like 8% range for mortgage rates ? Do the math on the average $700K mortgage in the core.

    Gundlach: Bond Yields Could Hit 6% in Five Years

    Gundlach called Trump’s victory months ago and says Trump’s growth agenda to hurt bonds and help TIPS.

    “The idea that inflation and interest rates can never go up is a very tired narrative, born of years of stability in both,” he says.

    http://www.barrons.com/articles/gundlach-bond-yields-could-hit-6-in-five-years-1478929496

  106. More Vancouver slashing. The $9.75 million guy just got hosed. Seller made off like a bandit in the night.

    :large

  107. Once again, thanks for the update,. Sales seem to be keeping pace with last year. Inventory is coming on a bit slower. I suspect that the very high prices over the last couple of years have sucked a lot of the potential inventory out of the market. What is your feeling on this Marko.

  108. A few high priced joints isn’t going to change the direction in the new year when Trump opens his yap and all hell breaks loose. High priced shacks still sell in Vancouver and they are on track for a disaster in 2017. We’re safe though, we’re an island of zillionaires. 😉

    Steve Saretsky ‏@SteveSaretsky 18 hours ago
    Richmond detached on pace for 57 sales this month. There were 191 sales last November. #VanRE

    Steve Saretsky ‏@SteveSaretsky 16 hours ago
    Steve Saretsky Retweeted Ben Chimes
    Van West on pace to be 50% below 10 year average for November.

  109. “The SFH average for this month will be record breaking by a significant margin.”

    That’s funny, last week the average meant nothing to the agents and the bulls.

  110. http://vancouversun.com/business/local-business/debt-series-payday-loans?__lsa=17eb-7d93

    “The number of Canadians using payday loans more than doubled between 2009 and 2014, a finding that Jane Rooney, financial literacy leader of the Financial Consumer Agency of Canada, or FCAC, called a worrying trend.”

    “And payday loan use has “grown especially rapidly” in B.C., according to a January report from Vancity, with British Columbians “using payday loans at an increasingly higher per capita rate than residents of other provinces.””

  111. The SFH average for this month will be record breaking by a significant margin. There have been some huge sales this month including a $9.75 million dollar home in Oak Bay this morning.

  112. Mon Nov 21, 2016:

    Nov Nov
    2016 2015
    Net Unconditional Sales: 387 573
    New Listings: 499 747
    Active Listings: 1,811 2,952

    Please Note

    Left Column: stats so far this month
    Right Column: stats for the entire month from last yea

  113. “It’s not the average worker who is buying houses in the core. It’s doctors, managers, retirees, families with 2 good incomes, etc, etc.”

    That’s why sales have tanked in the core 60% since April as per Jack. The chart eventually reverts back to the mean, any advisor worth his salt should know that unless you have a bias info being max leveraged.

  114. “The highest paid don’t reflect the average worker in Victoria”

    It’s not the average worker who is buying houses in the core. It’s doctors, managers, retirees, families with 2 good incomes, etc, etc.

  115. Ash, can you show us the numbers that hiring and pay raises to a small group of highest paid group of public sector employees has actually happened or are you just pumping into thin air like Mike ?

    The highest paid don’t reflect the average worker in Victoria. Most of the new jobs are based on the cyclical construction industry and their offshoots. We see what’s happening in Van with projects being iced and prices slashed and you can’t bank on a few non-union public workers getting a few more bucks having any effect on housing in a big way.

    One should be looking at it with eyes wide open. If prices are supposed to go up another $100K this year as AG, Mike and Marko pump out then do the math when combined with 3 US interest rate hikes.

    Can the average Victoria family afford an extra $400 a month for the extra $100K borrowed, plus another $400 approx. for a mortgage rate higher by another point ? $800 a month may be nothing to some medical doctor but to the average joe or first time buyer looking for a SFH it’s not the reality.

  116. On the topic of whether a correction is imminent or not in Victoria, and the various headwinds/tailwinds, I’m surprised no one has brought up how the public sector is back to spending/growing again, especially core govt (i.e ministries in Victoria), which ripples into the schools, uni’s and hospitals and other Crowns. The slow/flat period in real estate here almost mirrored the drop in hiring and wage freeze in core govt over the past ~7 years.

    It’s a completely different scene now. The wage freeze was lifted this past summer and one of the upper pay bands is expected to jump. Hiring is back in full swing and lots of retirements are underway, leading to more external hires. Plus all the spin off contract work for local firms now that budgets have loosened.

    Safe bet that after years of frugal mgt, the Liberals come out spending in most sectors in the spring pre-election budget. One example is the education system, which will likely see a big boost given the BCTF court ruling last week. All of this points to wage inflation and growth in employment across the public sector, a main employer in Victoria.

    Now, I don’t mean to say that a correction can’t happen – certainly it would if rates spike overnight, for example. But any correction to the local market would have to overcome what’s shaping up to be a pretty robust public sector economy.

  117. I think I would consider myself more bearish on the real estate market in Victoria and Canada, but a little less so than I was a year ago. A year ago I was contemplating buying a house but seeing the DOM of various houses in my price range, and the impending doom of Vancouvers real estate market I thought waiting would be more prudent. Boy was I wrong. The shock of what happened here in Victoria definitely was disappointing to me when a house we could afford last fall now became 100-150 g’s more expensive. I can’t bring myself to spend half a million dollars on a dump now. I do however wonder if I am making a mistake again and will be even further priced out come this spring.

    What happened here in Victoria was an aftershock of the calamity in Vancouver. It all boils down to foreign money. An insane amount of new buyers with loads of money coming in, FOMO hitting hard and locals going nuts. Some of the locals and some of the foreign buyers move to the sleepy city next door and there you have what happened in the spring. It’s not a mystery.

    If you follow Kathy Tomlinson, Ian Young, Douglas Todd, or Sean Cooper you would not be blind to the unbelievable going-ons in our Vancouver. The fraud, the government inaction, the gluttony, and the unfairness of it all has led to one of the biggest housing bubbles in history. Foreign transactions were not being tracked, and when they were it was done in the most unreliable, asinine way. Now we know that in some areas, 80% of houses were sold to someone from another country, one entire condo tower was being sold every 10 days to all Chinese buyers during the peak (pre-sales are still a hot commodity as they aren’t taxed), and now 10% of every house currently on market in Vancouver has never even been lived in. Canadian housing is a way to turn a volatile Yuan into CDN/USD. Simple. Illegal…but simple when not enforced.

    Now in Victoria, foreign purchases are not being tracked. At least not in any reliable way. I am wondering if anyone is talking about the impact it is having on the housing market in this city. Does anyone know?

    People on this blog tend not to talk about money flowing in from foreign buyers, I think for fear of being considered racist. It is not racist to talk about a problem in our country that stems from a vast amount of money flowing out of another particular country. It just isn’t. It is talking about the downsides of global economics.

    I think any deflation in home prices will be further propped up by foreign money. I know it hasn’t happened historically, but what is happening in China certainly is.

    Canadian housing crash = fire sale for foreign money, US an abroad.
    The Federal and Provincial Government will be begging for them.

    http://www.bloomberg.com/news/articles/2016-11-14/world-s-biggest-real-estate-binge-is-coming-to-a-city-near-you

    http://vancouversun.com/opinion/columnists/douglas-todd-canadas-public-guardians-have-failed-vancouverites

    http://www.theglobeandmail.com/news/british-columbia/farmland-and-real-estate-in-british-columbia/article32923810/?cmpid=rss1&click=sf_globe

    http://vancouversun.com/opinion/columnists/douglas-todd-foreign-students-make-a-big-impact-on-vancouver

    https://betterdwelling.com/city/vancouver/10-of-homes-being-resold-in-vancouver-have-never-been-lived-in/

  118. The UVic housing page (https://www.uvic.ca/opportunities/settled/housing/) says
    “The Victoria Times Colonist newspaper provides a link to househunting.ca, where you can search for rental accommodation in Victoria.”

    Except househunting.ca doesn’t actually exist and just redirects to the National Post’s housing section.
    And their link to househunting.ca actually goes to househuntvictoria.ca.
    What’s going on there?

  119. AG: And the BIS, after all, has a long history of getting things absolutely wrong at virtually every turn.

    AG, the slight improvement that you are highlighting is like highlighting the Canucks first 4 games and talking about the possibilities of a Stanley Cup win.

    The BIS hasn’t made any predictions that I’m aware of and the article link I provided was the opinion of the author on the BIS chart. The BIS developed a metric – the “credit-to-GDP gap” – that compares current credit levels to long-term trends and serves as an early warning indicator for financial crises.

    Again, it’s all information that you can throw away or add up to draw your own conclusion. If you have different data that suggests Canada or simply Victoria has upward momentum in the housing market, then let’s play with that.

    You seem to make reasonable recommendations regarding purchasing a home. Why do you insist on poking the resident bear? Oh right … it’s fun. Lol

    Bank for International Settlements

    About the BIS – overview
    Established on 17 May 1930, the Bank for International Settlements (BIS) is the world’s oldest international financial organisation. The BIS has 60 member central banks, representing countries from around the world that together make up about 95% of world GDP.

    The head office is in Basel, Switzerland and there are two representative offices: in the Hong Kong Special Administrative Region of the People’s Republic of China and in Mexico City.

    The mission of the BIS is to serve central banks in their pursuit of monetary and financial stability, to foster international cooperation in those areas and to act as a bank for central banks.

    In broad outline, the BIS pursues its mission by:

    fostering discussion and facilitating collaboration among central banks;
    supporting dialogue with other authorities that are responsible for promoting financial stability;
    carrying out research and policy analysis on issues of relevance for monetary and financial stability;
    acting as a prime counterparty for central banks in their financial transactions; and
    serving as an agent or trustee in connection with international financial operations.
    Monetary and financial stability is a precondition for sustained economic growth and prosperity. Reflecting the public good character of this goal, the BIS also makes part of its work available free of charge to the wider public, including:

    its own analyses of monetary and financial stability issues;international banking and financial statistics that underpin policymaking, academic research and public debate.
    With regard to its banking activities, the customers of the BIS are central banks and international organisations. As a bank, the BIS does not accept deposits from, or provide financial services to, private individuals or corporate entities.

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