Challenging times

This is a guest post by valued contributor CuriousCat.  Her previous work was the dissection of the new CRA rules on suites.  Huge thanks to CuriousCat for this post:

In this environment of low inventory, the average house hunter may find themselves looking at, considering and even purchasing a “less than perfect” house. What can you live with it? How do you address these challenges? Perhaps you didn’t even realize this WAS an issue until you moved in because you are a first-time homebuyer, or you are from out-of-town and homes here are just different than what you are used to, or you had to make a quick decision in order to secure the house. This is the first of a series of posts I’m hoping to write that will address different challenges that I have come across, being a first-time homeowner of a 1939 pre-wartime house in Saanich West.

CHALLENGE: BUSY STREET

In a perfect world, everyone would own a home on a quiet cul-de-sac where children play street hockey on the road with plenty of on-street parking. You may drive by a house on Bay Street, or McKenzie and think to yourself, who would ever live there? I would never! But people do and during our house hunting journey, we seriously considered 3801 Quadra Street I really liked this house. It had large rooms, a floorplan that flowed and made a lot of sense, and a flat deck in the backyard right off the dining room. I was picturing where the furniture would go as I was walking through it. The fact that it was on Quadra, a busy street, was definitely a concern, but dismissed as being a minor inconvenience without too much thought. In the end, we did not purchase this house because of the price, not because of the location.

This would be a pretty lame post if it was about a theoretical purchase I never made.  We DID end up purchasing a very similar house in the 300 block of Gorge Rd West. So here is the reality of owning a home on a busy street.

The noise factor: Possible traffic sounds are high-speed vehicles. Can vehicles actually get to a high speed in front of your house? Things that affect this are how close/far you are from an intersection where a vehicle will be forced to slow down and stop. The main culprits in my case are actually the police and the ambulances. This brings me to the next source of noise – sirens. Is your house on a fire or ambulatory route? Gorge Road is a main connecting route for ambulances heading to Victoria General Hospital.  They can be heard from anywhere in the house, but less so in the basement. The police go by fast, but rarely activate their sirens.  Fire trucks have the loudest sirens, but are more rare, so when they do go by, it’s more “I wonder what’s happening?” rather than an annoyance. I asked a friend that lives on Craigflower his experience with sirens, and he indicated that he was on the fire truck route and thus hears those more often than ambulances. Unless you are directly on the highway, you will not hear semi-trucks, however larger delivery vehicles, concrete trucks and box vans are louder than regular vehicles. Also, being on a bus route, I can identify the sound of a transit bus without looking out the window, but it is not particularly loud, just different. Luckily, Victoria does not have trains anymore so that is a non-issue. And sound carries very well over water, but there are no high speed boats on the Gorge. The kayakers are pretty quiet. 😉

One thing that helps to reduce the noise factor is the actual distance of the house to the street. My house is about 50 feet from the road. The Quadra house is 35 feet. The further, the better! Sound travels equally in all directions in which there is air, so the more obstacles between you and the source of the sound can make a big difference. Walls, fences, trees, will block sound because they absorb the sound vibrations. Having trees in the front yard provide privacy and block sound. Being in the backyard, the house itself helps to block sound, and having a fountain or other water feature can also mask the traffic noise, but you will never be able to fool yourself that you are not in a city. Having good windows also helps with sound blockage as long as you keep them closed. So when you are touring a house on a busy street, if you are concerned about the noise, don’t simply stand there and think, “Yeah it’s quiet.” Go the extra step and open the window, especially if you love fresh air. And try to view the house at the same time of day you would normally be in the house.

Traffic: The traffic on the street affects how easily you, your guests and delivery drivers, can access your property. Does the house have a wide driveway that allows you to turn around? If not, do you have a good view of the road when backing up? Is the traffic so dense at times where vehicles will be backed up, physically blocking you from getting out of your driveway? Or do you need to wait in line to turn into your driveway? Can the UPS truck pull over to deliver a package? My section of Gorge Rd used to be four lanes but was changed to two lanes with bicycle lanes. This is better than Quadra that has 4 lanes. The delivery drivers pull over in the bicycle lane with their hazard lights on and traffic is generally not disrupted. I have a great field of view backing out of my driveway in all directions and can easily do the “illegal” backing out over the center line to head east. The odd time there is too much traffic and I’m waiting too long, I can use the parking lot at the Canoe Club to turn around. One benefit of a busy street are that cars are actually not allowed to park on it! I never have a parked car obstructing my view when backing out. Meanwhile my inlaws that live on a cul-de-sac, their street is so full of parked cars on both sides, backing out of their driveway is like threading a needle. Also, delivery trucks have no room to manoeuvre and the center island of the cul-de-sac is actually a hindrance.

Safety: Being on a busy street means more foot traffic, less privacy. Random strangers walking by may get a look at the contents of your garage and you may worry about thieves having the opportunity to steal items from your front lawn/driveway/garage. However increased foot traffic seems to protect against this, rather than encourage it. I have left gardening items on the boulevard, the garage door open for hours (purposely and accidentally) and nothing has ever been stolen. I used to worry people will steal my solar lights, or a rake left on the boulevard while I went to get something from the shed, or my bike right out of the garage, or even the groceries out of my trunk, but this has never materialized. We did have one incident years ago where a thief was breaking into cars, but we had left the door unlocked and no valuables inside. (My husband actually caught the thief and recovered all the stolen items he had taken from other vehicles.)  Some tips from the police: If you do not park your car in the garage, do not leave a garage door opener inside your vehicle – use a keypad instead. And if you do not have an alarm on your car, you may be better off leaving it unlocked with no valuables inside. Thieves are looking for small things they can easily sell or exchange for drugs. The thief we caught had a screwdriver and was damaging the locks to get inside. His backpack was full of loose change, headphones, a couple cellphones, etc.  

Parking: This is a concern no matter the house you buy. Don’t think just because you have on-street parking available, life is golden! A quiet side street can be a parking nightmare if your neighbours are renting their rooms to students or every house has a suite. I do not have a long winding driveway that can fit 4 vehicles. I do not have on-street parking. What I do have is access to an actual parking lot across the street. Problem solved. (Actually, hosting a party at my house, I never have to worry about where my guests will park, as long as they are not staying overnight.)  

My final criteria was aesthetics. I do not like the way houses that are too close to the street look. The threshold for me is probably 30 feet from the road. Also, I prefer homes that are elevated above the street rather than level or lower, as you see less of the road from inside the house. How about you? Would you ever consider a home on a busy street, such as this one

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267 thoughts on “Challenging times

  1. The comment about neighbourhood is an interesting one but “keeping up with the Joneses” or maintaining an impeccable lawn is not necessarily directly proportional to the affluence or expense of the street. There is a lot of variation between neighbourhoods in terms of tolerance or having neighbours that “fit in”. In some places, it’s perfectly normal for one neighbour to drive a brand new Bentley and the neighbour driving a beat up Toyota. Or having an overgrown lawn next to an impeccably kept opulent mansion. but it varies.

    For instance, the owner of a secluded waterfront acreage in Deep Cove can get away with a lot more overgrown bushes/grass than the owner of an Uplands home with a big front lawn.

    Broadmead, while by no means the most expensive hood in Victoria, is probably the worst as maintenance, yard regulation, no secondary suites etc. are enforced by covenants that are attached to land title. Plus people I know there complain incessantly about the nosy, priggish residents association police poking their noses into everything and everyone’s business!

  2. Acreage still remains a heck of a deal relative to houses.
    A 4,000 square foot home on 20 acres near Prospect Lake Golf Course sold after 182 days on the market for $1,075,000.

    It is a great deal. Victoria land is still very very cheap. I wonder how much does it cost to maintain this property annually.

    — This particular parcel has been owned by the same family for nearly 100 years!

    The ROI is terrible for the past century.

  3. I am sure you can find way more litigation on this matter than owner-builder home sales and defects.

    Doubt that there are more cases on a % basis where the risk would have been mitigated by using a realtor rather than conducting a private sale.

    Realtors can offer helpful insight on buying conditions and markets and remove hassle, but their insurance doesn’t do much to mitigate risk in the buy-sell contract other than misconduct of a realtor and the risk that exists in the transaction would be better mitigated by the use of a standard buy-sell contract and a RE lawyer held to a much higher standard for all risks including legal risks at much lower cost imo. Not to knock your profession, it is worthwhile for many many sellers, it is just that the sales/negotiation and market insight aspect rather than risk management makes it is worth it for many people.

  4. Sooner or later we will get to the bottom of this. HPO has replied to my FOI

    BC Housing received your request for access to records under the Freedom of Information and Protection of Privacy Act (the Act)…..

    The Act allows BC Housing 30 business days to respond to a request, unless the nature of the request is such that an extension of the time limit is permitted under section 10 of the Act. BC Housing’s response to your request is due Jan 20, 2017, but we will make every effort to respond as soon as possible. We will notify you if there is a need to extend the time limit for responding.

    In some cases, fees may be charged for certain services involved in processing a request. If fees apply to your request, we will send you a written estimate showing the applicable fee for each service.

  5. Have Travelers, Pacific, and National warranty compete for owner-builder warranty policies. My guess is once they run their risk assessment analyitcs the warranties wouldn’t be much higher than for builders ($1,400 to $2,000 per single family home).

    Absolutely the way to go if it will work. If it is that easy the exam is a total waste of time because the only real risk is the uninsured risk here if there are adequate inspections and sign-offs.

  6. BTW Marko – we are allowed to take out our own electrical permit right? 200 amps and under?

    You are correct. The reason I say this is a trick HPO exam question is imagine you are sitting down to write this owner-builder exam and you get hit with this question. In real life, you would just google it, but during the exam you are thinking the answer must be “no,” as electricity is dangerous and obviously I am going to hire a licenced contractor to do the work so it doesn’t really make sense that I could pull my own permit….wrong.

    One person emailed me and his exam had 4 chimney questions on it and 2 gas meter questions….how far above the chimney can the flue protrude? How would you install flashing around a chimney? House he is building no chimney, no gas.

    Builders wouldn’t be able to answer these questions as how many homes are built with chimneys? If you have a rare home with a chimney you rely on the stone mason to know a few things, or you just look it up.

  7. If the HPO is attempting to address real risk, which we do not know because we don’t have stats but I do know construction defects are a huge area of litigation, then maybe there is merit.

    There is a real risk in individuals buying/sell property privately too. I am sure you can find way more litigation on this matter than owner-builder home sales and defects.

  8. It’ll last 5 years (until any warranty is expired) but any moisture in those walls will cause major rot and whoever owns it years 5+ may be in for a bit of a shock.

    Reality +1…..ever notice how much cedar is thrown up on high-end spec homes? Not my personal owner-builder home -> https://www.youtube.com/watch?v=VcfyZHdfS5s&t=34s

    Why? Because I didn’t want to deal with having to stain huge areas of cedar in 5 years. I picked a few spots for cedar and that’s it. Builder could care less on a spec home how much staining you’ll be doing in 5 years.

    When you walk into the building counter at any municipal hall and ask a code question, guess what happens? They pull out the building code book and flip to the required section and use it to answer your question.

    Reality +2, very true.

    The HPO should scrap the exam and simply require owner-builders to provide insurance in the same way as a registered builder.

    Hmmmm…..interesting idea, I like it. Have Travelers, Pacific, and National warranty compete for owner-builder warranty policies. My guess is once they run their risk assessment analyitcs the warranties wouldn’t be much higher than for builders ($1,400 to $2,000 per single family home).

  9. There is a seven day cruise offered where you can get all your points in a year!

    Yea, my builder friend went on one of these with his family……..owner-builder required to write an exam without a study guide, builder goes on cruise, does a few hours of courses per day (only on sea days, never on port days), no exam, approved by the HPO.

    No joke -> http://www.buildingitright.com/cpd-at-sea.html

    It is really obvious the builder associations lobbied the HPO hard to suffocate owner-builders.

  10. It’s not just that there is an exam. It’s that it’s a total mystery what is on the exam. (You can take courses provided by cronie 1) it’s that it will take 8 months to get to write it, 8 months to find out you failed, another 8 months to find out you passed after taking a four week course you had to wait 8 months to take. So around 3 years before you can submit for your BP and thousands of dollars later…

  11. In stead of a crazy exam wouldn’t enough time for a house on a market (to allow buyers to inspect) or a inspection by buyer be a given not optional in the buying a home. Or approval of material/contruction stages while building where an inspection at certain steps be signed off/approved by someone? I don’t see the merit in a exam beside gain a bit of knowledge but no enforcement required to follow it.

    You test drive a car before purchase in a hot housing market…doesn’t leave much room to inspect a building new or old.

  12. I started in the Canadian real estate industry in 1993. In the 23 years I have been involved I have watched Canadian mortgage rates fall from around 12% down to the current 2.5% There have been many times that I have thought they couldnt go any lower, and lots of times that I thought they need to start going up. Each time, I have been wrong, for 23 years…..So I have finally learned not to try to predict the rate or time the bottom.

  13. you are actually the first person I’ve actually come across that thinks there is merit to the exam

    I didn’t say there was merit to this exam. I said there might be merit to an exam and licensing process where there is abuse of the system with a 100k incentive and uninsured risk. I’d agree if the exam is dumb there is no merit except perhaps the barrier to entry stopping out the unlicensed builders trying to pass risk to the homeowner.

    It sounds to me like the exam has been poorly constructed as a barrier and not as a helpful risk management tool for consumers.

    It’s like saying that if you want to change your own brake pads you need tow rite an exam on car design and then you can’t buy insurance and you are responsible for the car for ten years if you sell it.

    Not really. It’s a house, not a car. Big difference in use, cost and lifespan that creates a very different set of risk variables. It would be possible to void an insurance policy for DIY auto work but the risk has not been deemed great enough imo.

    If the HPO is attempting to address real risk, which we do not know because we don’t have stats but I do know construction defects are a huge area of litigation, then maybe there is merit. If licensed builders are attempting to put up barriers to reasonable DIY efforts and have succeeded in lobbying government on this without a meritorious case that is a different thing.

  14. I’ve built in the past and would consider myself very competent when it comes to building and building science. I was lamenting in an earlier post that the quality of housing being built in Victoria today is quite poor (which spawned the whole window debate). Any of the spec houses going up are being built to maximize profit – and so are built to code minimum (this includes many of the ones going up in OB too). There is a high end house being built near Barrister with exterior XPS insulation (non-breathable foam) AND interior poly. Does it meet code? Yes. Is it a moisture timebomb like leaky condo? you bet. It’ll last 5 years (until any warranty is expired) but any moisture in those walls will cause major rot and whoever owns it years 5+ may be in for a bit of a shock.

    I will fail the exam first time most likely – not for lack of builders intuition or smarts, but because the questions are totally irrelevant. I own the building code and refer to it as required – I certainly don’t memorize it. When you walk into the building counter at any municipal hall and ask a code question, guess what happens? They pull out the building code book and flip to the required section and use it to answer your question.

    The HPO should scrap the exam and simply require owner-builders to provide insurance in the same way as a registered builder. I have no problem with that at all – it encourages people who are building to sell to not build crap (or at least be liable for it). For people building a home they expect to stay in for 5+ years, no issue.

    The cheapo houses built out in Langford as part of major sub-divisions are falling apart (some after only a couple of years) – these are the places built by unskilled labour for max profit. I can guarantee the builders’ numbered company has closed shop and there is little to no recourse for these owners.

    BTW Marko – we are allowed to take out our own electrical permit right? 200 amps and under?

  15. The HPO is not insurance. As an Owner Builder you are the insurance. The HPO is simply a barrier. Again, I would be all for this if it was qualifying the builder for some sort of protection…. It’s like saying that if you want to change your own brake pads you need to write an exam on car design. Then you can’t buy insurance anymore and you are responsible for other drivers of the car for ten years if you sell it.
    There is no question this is not about protecting the consumer. If that was the desire it would have been cheaper to mandate more inspections at the municipal level. You need to get permits, engineering and hire qualified trades anyway. Also at the very least have a larger staff to process things at the start of implementing a new law like this. It will take years for an owner builder to go through this process and get registered. Remember it took my builder 8 months to get their number and they are an experienced builder that didn’t even have to write the exam. It’s also a money grab for someones cronies because as a builder you need to maintain a points rating by going to courses throughout the year. But hey, no problem! There is a seven day cruise offered where you can get all your points in a year!

  16. So it sounds like the uninsured risk is that of construction defects not covered by municipal or professional insurance.

    These might include risks associated with work carried out by an unlicensed builder or owner-builder for things like:

    Poor workmanship if the poor workmanship did not result in an immediate code violation, but caused subsequent damage such as water penetration;
    Failure to build in accordance with approved permit plans where, for example, there is a change in dimensions or a substitution of materials after inspection such as in the court case I posted;
    Failure to adhere to the manufacturer’s specifications, especially if the manufacturer’s specifications are an essential part of the construction process (such as TGI or EFI systems);
    Grading and siting problems resulting in water draining towards the foundation as opposed to away from it (this is often due to landscaping work done after the final inspection or to building the foundation at a different geodetic elevation than shown on the approved plans).

    I don’t know enough about all the variables to understand the issues. What you seem to be saying is that there is no need for licensing because the building is adequately inspected already.

    I’d say that in the absence of insurance a sensible licensing process might address abuse of the system by unlicensed builders and protect the owner and subsequent purchaser from some risk. Insurance for the owner-builder would be far preferable imo but maybe the risk is one that is considered too great to insure given the lack of licensing as a builder.

  17. I may be missing something, but if you’ve heard from 50 people who passed the exam maybe it is not so difficult?

    I’ve received somewhere around 400 to 500 emails…..there have been a lot of fails too. One of my YouTube videos just went over 1,000 views (a huge number for such a unique topic).

    Today I am on email #5…..just got one a few minutes ago, same story….

    Hi Marko,
    My story in a nutshell, my wife and I have an accepted offer on a building lot in Campbell River. Deposit received, closing in Feb. I just found out about the HPO exam and am dumbfounded.

    I have done extensive renovations in seven homes, and completed an owner built home. Now I want to build our retirement home and have to write an exam created by the lobbyists in the association that want me to fail…………………….

    Thanks, XXXXX

    Toronto, you are actually the first person I’ve actually come across that thinks there is merit to the exam 🙂

  18. The conveyance needs to be carried out by someone entitled to use the LTO, banks won’t lend unless the documents are properly registered, and there is little to no risk in a private sale that a realtor mitigates. In other words, the risk of the purchaser or seller causing uninsured loss is pretty darn low and both parties can hire lawyers instead of realtors to review the contracts at far lower cost with access to the lawyer’s insurance for negligence and greater transference of risk re. legal docs.

    This is EXACTLY what I am saying….structural engineering has to be carried out by a professional structure engineer, banks won’t lend unless the municipality gives you an occupancy permit, owner-builder can hire professional tradespeople (in many cases required) and the buyer buying an owner-built home can hire a really good inspector, etc., etc.

  19. Let’s say the owner builder was out $180,000 – $100,000 savings = $80,000.

    Maybe. We don’t have their math and it does nothing to compensate for the time they and the new owners spent on this dispute or the costs the tens of thousands the new owners still had for legal. That is the thing with insurance, the adjuster deals with the claim and this rarely proceeds to court.

    I may be missing something, but if you’ve heard from 50 people who passed the exam maybe it is not so difficult?

    They should either be forced to write an exam or pay me $30,000 to sell their Oak Bay charmer.

    Realtor insurance generally protects realtors from their own negligence in a transaction.

    There is very little transference of a buyer or seller-created risk and therefor little need to insure the transaction.

    The conveyance needs to be carried out by someone entitled to use the LTO, banks won’t lend unless the documents are properly registered, and there is little to no risk in a private sale that a realtor mitigates. In other words, the risk of the purchaser or seller causing uninsured loss is pretty darn low and both parties can hire lawyers instead of realtors to review the contracts at far lower cost with access to the lawyer’s insurance for negligence and greater transference of risk re. legal docs.

    If the 2-5-10 warranty is really useless then maybe there is an issue with the policies. These types of policies are only provided through insurers approved by the Financial Institutions Commission so there appears to be oversight. Again, I’m no expert, but we’d need stats on claims to understand whether the insurance is useful and I’ve seen none. I can clearly see there is an uninsured risk for owner-builder homes though.

  20. Then why do we continue to have so many claims for construction defects? There are loads.

    Homes aren’t built in a factory and there will always be construction defects whether owner-builder or builder. This exam does nothing to address construction defects.

    No it is not. There is still insurance coverage in the example you posted. There is none for an owner-builder.

    Not if you didn’t buy enough insurance at ICBC. Okay, different analogy. Do you believe that home owners don’t deserve the right to sell their home privately because something might be missed? They should either be forced to write an exam or pay me $30,000 to sell their Oak Bay charmer.

  21. Read the court case I posted. That is an $80,000 hit right there plus all their legal fees and a portion of the plaintiff’s legal fees. I’d put that at about $180,000.

    Don’t be blinded by the court case…this was a $900,000 home more than 10 years ago. Owner-builder saved $100,000 building this place and ran into some horrible luck…should have waited just a bit longer for the 5 year envelope obligation to expire. When you factor in builder savings the owner-builder was not horribly out.

    Let’s say the owner builder was out $180,000 – $100,000 savings = $80,000.

    If this case happens 1 in 250 why the need to penalize the other 250 owner-builder to the magnitude of

    250 x $100,000 to hire a builder = $25,000,000.

  22. Is there one example of an owner-builder wiped out this way?

    Read the court case I posted. That is an $80,000 hit right there plus all their legal fees and a portion of the plaintiff’s legal fees. I’d put that at about $180,000.

    It’s like saying you shouldn’t be able to change your own brake pads because you might screw up, run over a bunch of children, and loss all your personal assets.

    No it is not. There is still insurance coverage in the example you posted. There is none for an owner-builder.

    HPO won’t provide the stats

    Hopefully your FOI request will get this information.

    not thing from the exam would have been useful

    I’ll watch your video later. If this is the case then there is a serious issue with the licensing process.

    My point is you can’t go out and just build a house as you won’t get past the municipality. The municipality has so many checks and balances in place that it makes is extremely difficult to cut corners.

    Then why do we continue to have so many claims for construction defects? There are loads.

  23. Building an owner-builder home is not about knowing nailing patterns but about common sense and putting the big picture together.

    For example, you need to hire a framer…you get a bunch of quotes from $30,000 to $60,000. You throw out everyone above $40,000 leaving you with three ranging from $30,000 to $40,000. You then ask all of them if you can come see the homes they are currently framing. Then you call you structural engineer and ask him or her if they’ve heard of Bob, Suzy, and John the framers. Engineer says yea “Bob is excellent, Suzy is a character, I’ll leave it at that, and I’ve never heard of this John guy.” Etc., etc., you use common sense due dilliegence to work through the process.

    This is one of the questions from the exam, how on earth is this going to help anyone build a house? (it is also a trick question).

    “Can an owner-builder take out his or her own electrical permit?”

    How about this gem….

    Water is backing up in a skylight what do you do to fix it?
    a) remove caulking from skylight
    b) drill drain holes
    c) clear drainage
    d) other

    lol…….I am going to go onto my three-story house, trip, fall, and kill myself? No, I will call the individual that installed it and if he or she doesn’t know what the problem is we will call in the manufacture rep to come take a look at it.

  24. Is there one example of an owner-builder wiped out this way?

    Read the court case I posted. That is an $80,000 hit right there plus all their legal fees and a portion of the plaintiff’s legal fees. I’d put that at about $180,000.

    It’s like saying you shouldn’t be able to change your own brake pads because you might screw up, run over a bunch of children, and loss all your personal assets.

  25. You cannot build a home without a structural engineering designing and site inspecting at least 4 times.

    I’d agree this should minimize risk. I also agree that insurance might not be that useful, although we’d need the stats again to see what kind of claims have been made and paid out. What we can say for sure is that owner builders have zero insurance and this creates additional risk for them and subsequent purchasers.

    I’m no expert in home construction Marko, you know loads more than I do so I’d defer to your knowledge on the adequacy of the mandatory inspections when building a house. I have some experience with the process through renovations and the inspectors have been good except sometimes they don’t show up at all – perhaps because we were using licensed contractors.

    And yet, despite all these inspections, new houses continue to have serious structural problems and people are complaining about “shoddy” new building and the construction practices of licensed builders.

    A hundred thousand dollar’s worth of savings sounds wonderful when you think of an
    owner-builder benefitting. However that is some incentive in the world of construction. It sounds less wonderful when used by unscrupulous builders or people who are unlicensed and with no intention of staying in the home long-term uninsured flipping houses.

  26. We have tests for driving licenses. Not sure why there would not be a test for building a home which will put you and others at risk of uninsured damage for negligent construction. People should be really aware of this before going into it.

    I’ve received over 50 emails over the last 4 months from people that PASSED the exam but they are still infuriated. How many people walk out of ICBC having passed the exam infuriated? Reason people are infuriated is they know the exam won’t help them build a home one bit.

    The driving test makes sense because you as the driver need to understand all the rules.

    Am I going to seriously question my geotech engineer or my structure engineer because I wrote an exam? I am going to argue with my plumber and the plumbing inspector?

    My point is you can’t go out and just build a house as you won’t get past the municipality. The municipality has so many checks and balances in place that it makes is extremely difficult to cut corners.

  27. “Here is an example….

    As a sub-contractor, if I installed the foundation, the house structure and the
    building envelope on an owner-builder home, would I be required to become a
    Licensed Residential Builder and obtain home warranty insurance for that home?

    Yes, you are required to become a Licensed Residential Builder and obtain home warranty insurance for the home even though an Owner Builder Authorization was issued. The Owner Builder Authorization would likely be cancelled in this scenario. Depending on circumstances, the home warranty insurance policy may include exclusions on components not performed or completed by you.

    The reason policies like this are BEYOND idiotic is they have ZERO to do with real life construction. First of all, 95% of the time you hire the same person to do the foundation and the structure of the home. The envelope, if hardiplank, is a very basic installation. If the framing crew hasn’t timed their jobs accordingly they might approach the owner-builder and say “our other job is three weeks out due to excavation problems, can we do the labour on your envelope for $10,000?” If you say yes both you and the subcontractor are f***ed. HPO pulls your owner-builder certificate and the sub-trader gets fined.

    WTF!!!”

    This is absolutely shocking.

  28. You don’t know if lawsuits occur at the same ratio and neither do I – unless you have stats?

    HPO won’t provide the stats…..why not? Lobbied by builder associations.

    If I understand the HPO concern correctly it was that basically the owner-builder exception was being used by potentially unscrupulous unlicensed builders leaving the homeowner on the hook for subsequent issues. The HPO’s solution is to ensure that the homeowners know enough about the process to make sure that things were done right so they and others would not be under foreseeable uninsured risk AND to require them to actually own a lot first (which I don’t agree with).

    None of this makes sense. I’ve analzyed questions from the exam and having owner-built a home not thing from the exam would have been useful. My quick analysis of the questions -> https://www.youtube.com/watch?v=gYmQNFk8EVk&t=2s

  29. Exactly. Being incorporated protects against devastating losses. Those owner-builders that were approached by unlicensed builders and offered low prices for building this way without a warranty likely did not understand that they could be wiped out by a claim which would attach to all of their assets. The incorporated builder can walk away and keep their personal assets safe.

    Is there one example of an owner-builder wiped out this way? Secondly, I was aware of this when I owner-built my home without the exam. The HPO sent a two page bulletin.

    It’s like saying you shouldn’t be able to change your own brake pads because you might screw up, run over a bunch of children, and loss all your personal assets.

  30. Yes, but the idea is that when a new home is built these problems should show within the first 10 years for the most part and there ought to be insurance for this and liability in lieu of insurance against owner-builders who are negligent and caused the problem.

    I can’t believe how badly people are mislead with the 2-5-10 warranty…it’s not a 10 year warranty!

    It should be called the 2 year limited warranty with a 5 year very LIMITED warranty.

    It’s like my Honda Civic…..who cares about the 5 year 100km powertrain warranty (very dependable engines) when the $4k navigation system burnt out at 80km. 5 year all in warranty would be useful not just powertrain.

    The 10 year warranty is 100% useless. You cannot build a home without a structural engineering designing and site inspecting at least 4 times.

    When I owner-built my home I used Mann Engineering – Victoria. Guess who all the builders use? Mann Engineering – Victoria.

    Structural problems are rare and I don’t understand how the odds would be higher with an owner-builder using Mann Engineering versus a builder using Mann Engineering. It’s not like the engineer AND city inspector will tell an owner-builder……don’t worry about those crappy footings. It’s okay, you are an owner-builder

  31. How did being incorporated work out for 10s of thousands of people that bought leaky condos?

    Exactly. Being incorporated protects against devastating losses. Those owner-builders that were approached by unlicensed builders and offered low prices for building this way without a warranty likely did not understand that they could be wiped out by a claim which would attach to all of their assets. The incorporated builder can walk away and keep their personal assets safe.

    If a $100,000 law suite happens one in 250 is the solution to force the other 250 owner-builders to spend $100,000 on a builder for lawsuits to occur in the same ratio again the warranty company?

    You don’t know if lawsuits occur at the same ratio and neither do I – unless you have stats? If I understand the HPO concern correctly it was that basically the owner-builder exception was being used by potentially unscrupulous unlicensed builders leaving the homeowner on the hook for subsequent issues. The HPO’s solution is to ensure that the homeowners know enough about the process to make sure that things were done right so they and others would not be under foreseeable uninsured risk AND to require them to actually own a lot first (which I don’t agree with).

    What I don’t agree with is the lack of study guide or ability to take the test before buying a lot.

    I think that a study guide would be the way to go. You have to take a test to drive a car and to most things where there is risk to others involved. Given the lack of insurance a licensing of some kind seems reasonable – just not accessible in the way it has been rolled out.

    There is no reason a tradesperson can’t pass an exam on this and if there is ex. a learning disability, there is a right to accommodation for this.

    We have tests for driving licenses. Not sure why there would not be a test for building a home which will put you and others at risk of uninsured damage for negligent construction. People should be really aware of this before going into it.

  32. This HPO stuff is interesting!

    I was talking to some of the crew at my friend’s house build on Bear Mountain, and one guy, let’s call him Jim, was telling me that another owner with a lot (who hasn’t started building yet) approached him to build his house. I know this because the owner called Jim, there was a phone conversation in my presence and then Jim was explaining what the call was about afterwards. The owner is from China and has been sitting on the lot since March and has been bugging Jim to come build his house and to give him a rough idea of price. Jim however just committed to helping his buddy Tom build an addition to his house, but he’s still thinking he could do both at the same time. I’m pretty certain Jim isn’t a “licensed builder”, he’s just the guy that poured the foundation and did the framing, but he feels confident that he can be the general contractor. (Actually I know he’s not as I entered his name in here: https://lims.bchousing.org/LIMSPortal/registry/Licence/)

    Are people in the trades also unaware of these changes? Or are they just ignoring the rules? Is Tom going to be hit with the HPO exam if he doesn’t hire a “licensed builder”? What are the consequences of moving forward with a house addition in Saanich, where Tom lives, without getting a building permit?

  33. The owner Builder is the one that provides insurance to a future buyer so they are on the hook anywy so it’s in their best interests to build a solid home.

    Maybe, but it appears that many were trying to save the insurance costs by using the owner-builder exemption from insurance and then hiring unlicensed builders to do the work. See below for full quote but this is taken from the HPO website:

    There was a sizeable abuse of this owner-builder exemption,

    I also don’t think it should be an unregulated right to build your own shelter given the potential impact on subsequent owners. While shelter should be a human right, the ability to erect your own shelter should be regulated for safety.

    I’m not sure how many people the owner-builder licensing even affects. I do know people who have built their own homes, but not too many. I would not do it. Even if I could pass the exam, I just don’t have the aptitude. The reduction in competition may be pretty minimal.

  34. Owner builders can be amateurs trying to cut corners and save money or flip the home and a lot of problems are not caught on inspection or can be deliberately obscured.

    Licenced builders cut corners too. You are going to tell me that licenced builder homes in Happy Valley being put together by 1st year apprentices are better than my custom owner built homes with beams composed of four 24” deep LVLs bolted together? Happy Valley homes = baseboard heating, my house = gas fireplace+4 zone inverter, etc., etc.

    Cutting corners and building exceptional homes can go both ways for builders and owner-builders. Can’t make assumptions either way.

    Fact is that owner builders are usually not incorporated. They can be sued personally and the cost can be huge. This can be financially devastating to the owner-builder and the purchaser if the owner-builder can’t pay.

    How did being incorporated work out for 10s of thousands of people that bought leaky condos? Not to mention all the current nightmare stories having to deal with warranty providers.

    See here for a case on this

    There will ALWAYS be cases like this whether it be vs licenced builder vs warranty company vs owner-builder.

    If a $100,000 law suite happens one in 250 is the solution to force the other 250 owner-builders to spend $100,000 on a builder for lawsuits to occur in the same ratio again the warranty company? This isn’t open heart surgery or transportation safety, no one dies when a deck leaks. Economics must be considered.

    I think there are some sound reasons to require an exam be taken prior to building and to be pretty strict about licensing.

    Theoretically reasons, not real world reasons. I spent 8 years in University and wrote 100s of exams…..that is where exams belong.

    I am not an expert on construction but I could easily pass this HPO exam on the basis of my multiple choice writing skills and years of experience doing it. However, the young family where the wife is a carpenter for example and the young family wants to owner build a home to save some cash would have a hard time passing this exam even though she knows more about practicular construction than I do. I am just good at writing exams.

  35. I would be for regulations like this IF the HPO then provided such an Owner Builder with insurance. As it stands they don’t. The owner Builder is the one that provides insurance to a future buyer so they are on the hook anywy so it’s in their best interests to build a solid home. If the problem is protecting consumers against owner builders doing a bad job and selling bad homes I guess this solves that because no one can owner build anymore… I would say poor work and cheap building by registered builders is a bigger problem and this does nothing to address that. It probably makes it even worse since there is now less power in the owners hands. What are they going to do? build it themselves? Sorry, not allowed unless you can jump through the hidden hoop that is 50 feet in the air without any help…. This is totally under the radar and in my opinion violates my rights as a free citizen. I should be able to build my own shelter…. But worse is this is cutting off competition entering the building world. reduced competition is a BAD THING!!!

  36. “I can see the “value” of a home on 20 acres in Prospect Lake for a million dollars”

    Only value is if you can carve it up or use if for some business purpose. Dealing with 20 acres can be a pain in the ass vs 6000 sq.

  37. Maybe years from now, people will look back and think how we all lost our minds paying so much money for so little.

    Maybe, but probably not. Like us looking back they will wonder how we got so much for so little.

  38. “@ JD my interpretation is you can if your intent is to build on the property.”

    What does ‘intent’ consist of? There’s no expression of intent required for building, other than the BP application itself. Demo permit can be lumped in with the BP. One can also renovate an existing building…

  39. Acreage still remains a heck of a deal relative to houses.

    A 4,000 square foot home on 20 acres near Prospect Lake Golf Course sold after 182 days on the market for $1,075,000. The property was listed eight years ago for 2.5 million.

    To me, that would be an incredible life style and yet 20 minutes from down town all for the price of a 75 year old box in Oak Bay.

    And this is one of the peculiarities of the market. You all want the same thing. A house in the city to get rich on. But the truly one-of-a-kind properties are cheap.

    I can see the “value” of a home on 20 acres in Prospect Lake for a million dollars. I can’t see the “value” of a shack along Old Esquimalt road for $600,000.

    Maybe years from now, people will look back and think how we all lost our minds paying so much money for so little.

  40. Plenty of houses change hands that aren’t covered by warranty and are crap. Probably most…. This does little to protect the consumer IMO

    Yes, but the idea is that when a new home is built these problems should show within the first 10 years for the most part and there ought to be insurance for this and liability in lieu of insurance against owner-builders who are negligent and caused the problem.

    Even after 10 years there is case law governing problems known to the seller and not disclosed to the buyer or reasonably discoverable upon inspection in order to try to minimize the huge impact caveat emptor can have in such transactions.

    Big developers will still hire inexperienced people to do jobs as they always have.

    Yes, and they also have to have 2-5-10 insurance which owner-builders do not:

    According to the Act and the Regulation, warranty insurance must include the following coverage:
    1.defects in materials and labour for a period of at least 2 years after the date on which the warranty begins;
    2.defects in the building envelope, including defects resulting in water penetration, for a period of at least 5 years after the date on which the warranty begins; and
    3.structural defects for a period of at least 10 years after the date on which the warranty begins.

  41. @ JD my interpretation is you can if your intent is to build on the property. So you can’t simply write the exam because you are a home owner.
    “-Be an individual (not a company, except a director of a family farm corporation) with a registered interest (fee simple, life interest or long-term lease of at least 15 years) in the land upon which the new home is to be built
    -Intend to build a single dwelling unit that is either a detached home, attached to a pre-existing building older than 10 years, or attached to a new non-residential building”

  42. A question regarding the HPO exam eligibility – if you own a home on a lot presumably you’d be eligible? All lots can be built on whether there’s currently a house on them or not. Are they not allowing owners of improved properties to take the exam? That seems exceedingly odd if that’s the case.

  43. Plenty of houses change hands that aren’t covered by warranty and are crap. Probably most…. This does little to protect the consumer IMO and I am a firm believer that the industry is problematic. Big developers will still hire inexperienced people to do jobs as they always have. This doesn’t change that one bit. During a bathroom reno I had people who hadn’t even read the instructions on a caulking tube (or couldn’t) instruction 1: clean all surfaces…

  44. Just a point when it comes to leaky condos and the HPO. The original New Home Warranty Program went broke with the leaky condos. That program was shut down and the New new program was started up with the same directors. When we most needed the program, it failed us.

    I give the HPO a 3 out of 5 pigs in the trough rating.

  45. My best friend’s husband has built several houses and they are super quality – their daughter later rebought one of these houses knowing it exceeded code. This does not mean everyone is like this.

    Owner builders can be amateurs trying to cut corners and save money or flip the home and a lot of problems are not caught on inspection or can be deliberately obscured.

    We purchased an owner builder house and have had some surprises.

    Fact is that owner builders are usually not incorporated. They can be sued personally and the cost can be huge. This can be financially devastating to the owner-builder and the purchaser if the owner-builder can’t pay.

    Buyers should be aware that the statutory warranty from an owner-builder is only as good as the ownerbuilder’s ability to pay and/or their ability to rectify the defects of the home.

    See here for a case on this:
    http://www.courts.gov.bc.ca/jdb-txt/sc/16/01/2016BCSC0118.htm

    And an article:
    http://www.bcrea.bc.ca/news-and-publications/publications/legally-speaking/legally-speaking—october-2016-(489)

    Also, another reason for a licensing and examination is that:

    There was a sizeable abuse of this owner-builder exemption, involving either an owner who was not actually building or managing the construction of the home himself or herself or an unlicensed builder who was trying to avoid meeting the requirements of licensing and the cost to provide 2-5-10-year home warranty insurance for the home buyer.

    I think there are some sound reasons to require an exam be taken prior to building and to be pretty strict about licensing. Not to provide a study guide nor permit someone to take the exam prior to buying a lot is; however, ludicrous.

  46. Adding to our tangled web of BC RE where nothing is clear-cut (excuse the pun):

    “More than half of B.C.’s most expensive homes owned by secret shell companies spurring money laundering fears”
    http://www.calgaryherald.com/business/hidden+ownership+homes+prevalent+report+says+raising/12502054/story.html

    “The report notes that Canada has for unknown reasons failed to live up to its international commitments to close loopholes that are abused by financial criminals, and a resulting “secrecy regime” has emerged … only in Kenya and a select few U.S. states is it easier to set up an untraceable company than it is in Canada. In Canada, more rigorous identity checks are done for individuals getting library cards.”

  47. Better email Horgan if you want change. Christy only does what her developer buddies who donated big tell her to do. Been telling you that for ages but the Libreal butt kissers are so afraid of the big bad NDP. You got who you voted for , live with it or open your mind whose interest is Christy always putting first. Its not yours.

  48. This is absolutely about creating a builder monopoly by cutting out the small people, the independent builders and renovators etc.

    Couldn’t have said it better myself. They are even going after trades people doing too much work for an owner builder. Don’t know how this will work in smaller communities.

  49. “Once again not an owner-builder!”

    Agree. For some reason, gov’t bought the story pushed by industry to such an extent that the focus became on owner-builders instead of regulating industry better.

    Then again, it’s those same industry groups that donate big money to the Liberals.

  50. Some of this HPO stuff was also driven by real homeowner concerns like the leaky condo crisis, and homeowners stuck with massive bills like this:
    http://globalnews.ca/news/2447337/bc-couple-says-home-warranty-insurance-offers-little-protection/
    “The builder, the insurer, and the third party all came in and said the ventilation system was working fine and installed to code,” says Tina. “When we pushed back and hired engineers and hired environmental specialists, they found that not only was it not functioning at all, but it wasn’t installed to code.”

    Once again not an owner-builder! As other people were pointed out leaky condos were not built by owner-builders.

  51. AG:
    “Michael’s chart suggests that, historically, there is consistently a dip in pricing before prices continue to go up.”

    I wasn’t talking about that chart nor was that my main point. Read Michael’s post about S&P again. He is suggesting that if we end this year as an “out” year, prices will skyrocket because that is what happened in 1985 or thereabouts. That is what I am calling out. Whatever time frame you want to pick, there were dramatic differences in house price behaviour prior to this S&P trigger than with the one in the 80s in addition to differences in rates, debt levels and (I bet) price/income ratios.

    “You seem to be suggesting that prices didn’t fall before this last move higher. But to prove that, you chose a completely arbitrary 4 year period that actually includes the recent move higher in prices!!! Why not choose the 6-7 year period where prices dropped?”

    I chose 4 years as that was the length of time the real estate prices dropped in the 80s as a comparison. Not completely arbitrary and no more than 6-7 years. Any choice of years in this case could be accused of being arbitrary if they happen to support one’s claim.

    Heck – let’s use 15 years (approximate duration of flat spots on the S&P)
    2000 – 2015 =95% gain
    1970 – 1985 = 35% gain

    60% difference in gains for the previous 15 years – focus on the difference not the random variance along the way.

    Just look at Leo’s chart from the past:
    https://househuntvictoria.ca/2016/03/17/a-brief-history-of-prices/

    It is undeniable that the drop in prices was dramatic in the 81-85 timeframe and left prices in a much deeper trough than this S&P breakout time now – which seems imminent. (e.g. in 85, prices were 20% below the trend line and the last point plotted in 2016 prices were 5% below the trend line…and that ignores the ~10-15 gain seen since this chart was produced in March).

    “As previously mentioned, I have no real interest in prices going up or down. However, I do find it very frustrating when people try to distort statistics like this.”

    Then argue with mike – he’s the champion.

  52. Barrister, it’s not government that came up with these new rules – it was business!
    From the HPO web site:
    “Recent changes to the Homeowner Protection Act Regulation were made following extensive consultation with industry partners.”

    http://www.vicnews.com/news/295243741.html Home builders applaud tougher licensing rules … Casey Edge, executive director of the Victoria Residential Builders Association, said, “Local VRBA member Gordon English, Genco Construction and I, plus additional reps from ICBA, BCCA, CHBA and independent contractors held a series of meetings with HPO/ministry reps ten years ago. We invested enormous time and effort to make this happen.”

    That’s exactly what I did working for tech companies – we worked with government officials & other businesses to re-write “master spec” requirements, so that when a project went out to multiple bidders, everyone was given a template – biased towards what my company(s) could sell to them.

    Follow the money, and we’ll always find who’s behind some of these nutty requirements.

    Some of this HPO stuff was also driven by real homeowner concerns like the leaky condo crisis, and homeowners stuck with massive bills like this:
    http://globalnews.ca/news/2447337/bc-couple-says-home-warranty-insurance-offers-little-protection/
    “The builder, the insurer, and the third party all came in and said the ventilation system was working fine and installed to code,” says Tina. “When we pushed back and hired engineers and hired environmental specialists, they found that not only was it not functioning at all, but it wasn’t installed to code.”

  53. Listing prices can be set at anything.

    I’d say that list is no longer lagging the market. I guess that could mean that the market has levelled off a bit, or that listings are being set at overly ambitious prices because the market is rising and, as always, people are trying to get top dollar. Doesn’t appear to me that prices are dropping when I look at recent sales.

    A more accurate measure of where the market is might be sold to assessed, and even that is pretty unreliable as condition of the home is not always accurately reflected in the assessed price. At least assessed was set a single period in time and is subject to appeal so it is likely a better baseline if you don’t want to refer to the benchmark index set by VRBO.

  54. Wow Marko…. so crazy. Last time I checked all the leaky condos were not built by owner builders…. This is absolutely about creating a builder monopoly by cutting out the small people, the independent builders and renovators etc.

  55. Just been looking at the house sales in the core so far this month. Especially those that sold in less than a week. Since some of these are delayed offers/blind auctions I’m interested if this marketing scheme is still working now that the median and average days on market have risen to 16 and 31 days respectively.

    Yes there are still some offers over asking price in the city. But the accepted offer is only marginally over the asking price that suggest to me that there are fewer multiple offers. And a big surprise was to find a home in Oak Bay selling under its $895,000 asking price despite only being listed for 7 days. Only 2 out of 39 house sales in the core sold for more than 5 percent of ask. And none sold for more that 15% of asking price.

    Cancelled listing are up for December which is normal.

    Happy house hunting.

  56. Marko:

    Everyone wants an activist government when it suits them but bureaucracy has a way of taking on a life of its own. This type of insanity is a natural outgrowth of ever bigger government. A whole new department has been created out of thin air. Frankly, either the house is built up to code or it is not. That is supposed to be the job of building inspectors, All you to do is track tax freedom day over the last thirty years and the magnitude of the problem becomes apparent.

  57. HPO Convictions

    In the most serious cases of non-compliance, the Registrar can recommend to Crown counsel that charges be laid against an individual or corporation. Crown counsel would then prosecute through the courts.

    Individuals who are convicted may face fines up to $25,000, imprisonment for up to one year — or both.

    Have to love this, zero obligation on the part of the HPO office to disclose to anyone buying a building lot the required exam, the BS rules, etc., but if you hire a subcontractor to do three things on your home or you forget to disclose on the sale that you owner-built the home you could face a year in jail. What kind of government is this?

  58. I am shocked by their new website (rolled out today) and further bulletins……they are either the biggest group of morons ever put together or the builder associations are sliding them cold hard cash under the table.

    Here is an example….

    As a sub-contractor, if I installed the foundation, the house structure and the
    building envelope on an owner-builder home, would I be required to become a
    Licensed Residential Builder and obtain home warranty insurance for that home?

    Yes, you are required to become a Licensed Residential Builder and obtain home warranty insurance for the home even though an Owner Builder Authorization was issued. The Owner Builder Authorization would likely be cancelled in this scenario. Depending on circumstances, the home warranty insurance policy may include exclusions on components not performed or completed by you.

    The reason policies like this are BEYOND idiotic is they have ZERO to do with real life construction. First of all, 95% of the time you hire the same person to do the foundation and the structure of the home. The envelope, if hardiplank, is a very basic installation. If the framing crew hasn’t timed their jobs accordingly they might approach the owner-builder and say “our other job is three weeks out due to excavation problems, can we do the labour on your envelope for $10,000?” If you say yes both you and the subcontractor are f***ed. HPO pulls your owner-builder certificate and the sub-trader gets fined.

    WTF!!!

  59. I think the thing that bugs me most about the HPO regulations is the fact that if you do decide to owner build that it’s illegal to hire a builder to help you. This is exactly what my original idea was…. These regulations will kill alternative buildings…. No rammed earth or hay bail houses….

  60. Yes – there are no covenants that run with title in Uplands but there certainly are such title covenants in Broadmead on every lot in that neighbourhood I believe.

    I think the covenants say no subdividing, no secondary suites and other things.

    Uplands does have minimum 1/2 acre and 1 acre lot size restrictions.

    Ten Mile Point and Queenswood also have minimum lot size zoning (except Wedgewood Estates) for 1/2 acre and 1 acre sizes.

  61. @Dasmo – you have been baptized by the church of HPO….at least you had an existing member help with your initiation.

  62. @Rook
    In 1992 CMHC dropped the minimum down payment for an insured mortgage to 5%. Previously it was 10. You might be interested in looking up mortgage securitization in Canada too. CMHC introduced mortgage-backed securities in 1986.

    Having said that, Dasmo is right.

  63. Thanks oopswediditagain. That is interesting.

    Dasmo, I see your point. I am just a desperate FTHB deciding to buy now or wait a year or two. So hard to know everything that is going on. One thing for sure, houses in my price range (500-600k) are going fast for this time of year. There is also very few that would be considered ‘nice’.
    Like everyone, I wish I had a crystal ball. Trying to do my homework and research. Seems to have made my decision harder and harder though.

  64. I think it’s hard to simply correlate data to each other like this. It’s and incomplete picture. It’s the flaw I see in Michaels methodology. We might see prices rise in tandem to rising rates not because house prices rise with rates but rates rise with rising wages (the true inflation). If rates rise dramatically now will prices increase? I doubt it. If wages do? Probably….

  65. Rook: Does anyone know adjacent to that scale that there were any government interventions in housing/mortgages? Or a large population of retirees like we are seeing now?

    Interestingly enough, the Victoria market doesn’t seem to follow any kind of rhyme or reason when it comes to government intervention.

    CMHC introduced 40 yr. mortgages, interest only mortgages and 0 down mortgages in 2006 and according to Bman’s chart, 2006 was the start of single digit price increases after 4 years of double digit price increases. Maybe you are special snowflakes. lol.

    Changes to Canada’s Mortgage Policies Since 2006

    2006:
    CMHC insures interest-only mortgages and mortgages with 30 and 35-year amortization, up
    from 25 years.
    Later bumped up to 40-year amortizations on 100-per-cent interest loans.
    CMHC insures home equity lines of credit for first time.

    2008:
    Amortization period reduced to 35 from 40 years.
    Minimum down payment of 5 per cent for new government-backed mortgages.
    Limit for total debt service ratio at 45 per cent.
    620 minimum credit score requirement.
    New loan documentation standards.

    2010:
    Must meet standards for five-year fixed-rate mortgage.
    Minimum down payment of 20 per cent.
    Maximum refinancing limited to 90 per cent of home value from 95 per cent.

    2011:
    Amortization period reduced to 30 from 35 years.
    Maximum amount Canadians can borrow in refinancing their mortgages lowered to 85 per cent
    of the value of their homes from 90 per cent.
    CMHC stops insuring home equity lines of credit.
    Financial institutions assume risk for defaults, and eligibility requirements tightened up.
    CMHC stops insuring lines of credit secured by homes, including home-equity lines of credit.

    2012:
    Amortization period cut to 25 years from 30 years.
    Maximum Canadians can borrow when refinancing their homes cut to 80 per cent from 85 per
    cent of home’s value.
    Government-backed insured mortgages no longer offered on homes worth more than $1-million.

    2013:
    Banks, credit unions and other mortgage lenders restricted to a maximum of $350-million of new
    guarantees.

    2014:
    CMHC discontinues mortgage products for second homes and the self-employed, without thirdparty
    income validation.

  66. Bman,
    Those are good numbers thank you.
    Does anyone know adjacent to that scale that there were any government interventions in housing/mortgages? Or a large population of retirees like we are seeing now?

    Rook

  67. Reasonfirst,

    Michael’s chart suggests that, historically, there is consistently a dip in pricing before prices continue to go up.

    You seem to be suggesting that prices didn’t fall before this last move higher. But to prove that, you chose a completely arbitrary 4 year period that actually includes the recent move higher in prices!!! Why not choose the 6-7 year period where prices dropped?

    I really don’t understand what you’re trying to say. Clearly prices went down for a few years, in real terms, before rising over the past year or so. I don’t know how any rational person can deny that.

    As previously mentioned, I have no real interest in prices going up or down. However, I do find it very frustrating when people try to distort statistics like this.

  68. Your 2nd and 3rd points might be true, but your first point is wrong. There was a significant drop in real prices here, from 2008 to 2015.

  69. AG – I didn’t say anything about a dip. I compared the four year period before the 170% jump that M pointed out and compared it to 4 years up to now.

  70. I am getting hung up in details. To sum up as the differences between then and now:

    Then – Prices fell a lot before rising…Now – prices were flat then jumped
    Then – Interest went way up then way down… Now – interest rates low and flat
    Then – consumers deleveraged… Now – consumers binged on debt

  71. Adding to Bman’s data, here are also the raw figures for CPI & Canada Bond rates – bond rates only till 2008 because I got distracted during the last few years 🙂

    You can tell that if you just look at RE numbers, the gains seem great, but then looking at opportunity costs, the story is different: some people made a lot more money from the bond market than RE throughout the 1980/90/00s (not just holding bonds – but trading bonds). Then when you also look at money lost to CPI in that time period, together with non-RE investments, you get a feel for why people didn’t think RE was the greatest investment back then.

    Year RE CPI Canada Bond Rate
    2015 6.60% 1.1%
    2014 1.79% 2.0%
    2013 -0.77% 0.9%
    2012 -1.72% 1.5%
    2011 -2.55% 2.9%
    2010 8.47% 1.8%
    2009 -0.51% 0.3%
    2008 3.14% 2.3% 4.04%
    2007 8.52% 2.2% 4.18%
    2006 12.53% 2.0% 4.11%
    2005 20.04% 2.2% 4.04%
    2004 17.69% 1.8% 4.86%
    2003 17.05% 2.8% 5.28%
    2002 8.13% 2.2% 5.66%
    2001 3.08% 2.5% 5.78%
    2000 0.59% 2.7% 5.86%
    1999 1.59% 1.8% 5.69%
    1998 -1.17% 1.0% 5.47%
    1997 2.90% 1.7% 6.42%
    1996 -0.04% 1.5% 7.5%
    1995 -5.47% 2.2% 8.28%
    1994 3.77% 0.1% 8.63%
    1993 10.93% 1.9% 7.85%
    1992 15.98% 1.4% 8.77%
    1991 7.05% 5.6% 9.76%
    1990 18.70% 4.8% 10.85%
    1989 18.02% 5.1% 9.92%
    1988 16.12% 3.9% 10.22%
    1987 7.92% 4.4% 9.95%
    1986 8.72% 4,1% 9.52%
    1985 -1.78% 4.0% 11.04%
    1984 -5.99% 4.3% 12.75%
    1983 -3.21% 5.8% 11.79%
    1982 -17.16% 10.9% 14.26%
    1981 37.75% 12.5% 15.22%
    1980 37.03% 10% 12.48%
    1979 5.38% 9.3% 10.21%

  72. @ Reasonfirst

    I believe you were responding to Michael’s chart and saying that there hadn’t been a dip in real prices this cycle. I explained that there had indeed been a dip in prices. The dip occurred roughly between 2008 and early 2015. That’s why I chose that time period. The rise in prices that you speak of came after that.

  73. @Reasonfirst

    Because I am using publicly available data from VREB, and didn’t feel like calculating the year to date average for 2016. $853k is the average for the month of Nov ’16. I suspect year to date is lower than that.

  74. Why stop at 2015? From Dec. 2012 (ave. SFH in GV $601K) to Nov. 2016 (853K) is 42% unadjusted. I was making a conservative estimate of 25% in real terms.

  75. Bman

    Every other double digit year has seen at least one more double digit. 2017 based on history will be another one. I have my doubts but who knows.

  76. AG,
    Unadjusted year over year change in the average SFD price in Vic:

    2015 6.60%
    2014 1.79%
    2013 -0.77%
    2012 -1.72%
    2011 -2.55%
    2010 8.47%
    2009 -0.51%
    2008 3.14%
    2007 8.52%
    2006 12.53%
    2005 20.04%
    2004 17.69%
    2003 17.05%
    2002 8.13%
    2001 3.08%
    2000 0.59%
    1999 1.59%
    1998 -1.17%
    1997 2.90%
    1996 -0.04%
    1995 -5.47%
    1994 3.77%
    1993 10.93%
    1992 15.98%
    1991 7.05%
    1990 18.70%
    1989 18.02%
    1988 16.12%
    1987 7.92%
    1986 8.72%
    1985 -1.78%
    1984 -5.99%
    1983 -3.21%
    1982 -17.16%
    1981 37.75%
    1980 37.03%
    1979 5.38%

  77. Totoro
    Great article. I think subdividing is the future in the core. I would not be surprised to see some subdividing in the uplands in the future. A developer buys up 3 or 4 houses in a row and could get 15 to 20 homes. I know a bylaw would need to be changed. I think Broadmead in certain areas could see the same. A lot of wasted land in both places. This was all fine and dandy in the past. Land use needs to be looked at better in the future. My lot you could fit 3 homes 50 x 110 but my hood would go bat shit crazy if any one tried to do it.

  78. @Reasonfirst

    What time period are you using? My understanding was that there was pretty much zero price growth here from mid 2008 to early 2015. That would of course be a decline in real terms, something like 15-20% at a guess.

    I’m sure someone has the real numbers. Please correct me if I’m wrong.

  79. OK – now I see. Sorry Michael, its different this time. The 170% price gain which was about 100% in real terms (notice I didn’t say “only” as it is pretty substantial) and it followed a real drop of about 42% from 1981 to 1985. This time as opposed to drop of 42% we have seen a real rise of ~25%. Seems like different dynamics are at play.

    Prime rate also went from over 20% down to ~10% from 81 to 85. Is that going to happen too?

  80. Uplands is RS1 and Rs2. RS1 is SFH with a minimum of one acre and Rs2 is minimum 1/2 acre SFH. No subdivision to smaller lot sizes permitted.

    Oak Bay governs and sets the rules here under a special powers act but I don’t believe there is anything registered on title – originally the rules were enforced by the equivalent of a strata corporation but it passed jurisdiction to OB in 1935 due to financial issues.

    There is a history of the development here and current rules:
    http://www.victoriaonlinesightseeing.com/the-uplands-history/

  81. North Delta detached inventory up 107% year over year.
    North Van inventory up 76% from November 2015.
    South Delta detached inventory levels up 163% year over year.
    Van East detached hit record low inventory levels last November. Now at highest levels since October 2012

  82. When did this 170% increase happen exactly?

    Here’s the graph (with my calculated %’s) that was on the VREB site a few months ago. I don’t know why they would decide to pull pre-90s data? A quick look and I couldn’t find any either.

  83. I might be mistaken but I was told that Uplands cannot be severed because of covenants that run with title. If this is true you would need to get 100% of the homeowners in Uplands to agree to having lots severed. Again, this was what I was told ; does anyone know for sure if this is the case.

    In Rockland well over half of the old manor houses have been turned into condos with about five more being converted into bed and breakfasts. Only a handful still sit on their original lots. Apparently, the ability to severe lots has lead to more than one suspicious fire that has destroyed valuable heritage homes in Victoria. But we are replacing them with brilliant 1990 American architecture houses.

  84. From 1991 to 2000 – approx. end of S&P bull:

    SFHs –
    Vic/Vic West up 27.5%
    All Vic up 29.7%

    When did this 170% increase happen exactly?

  85. Michael,

    The earliest VREB stats I see start in 1991. The first part of the S&P bull was 84 in the graph you provided?

  86. “Interesting to see if the Uplands lots start to be carved up in the future”.

    There is an early precedent for that happening: Barrister’s neighbourhood – Rockland, the original home of the elite of Vancouver Island.

    By the 1940’s and later, the large estates like Craigdarroch were carved up into much smaller properties. In fact, even some of the grand mansions themselves were carved up into separate apartments or strata condos within the homes.

    The break up of the Rockland properties occurred around the time when Uplands supplanted Rockland as the favoured home for the local rich and powerful (although holdouts remain and the upper middle class still moves to Rockland – still an upscale area).

    Could that happen again?

    It isn’t happening right now. If anything, Uplands seems to be strengthening it’s staying power as the favoured place of the elite (and increasingly, wealthy people from outside). The newer subdivisions further out such as Broadmead, Cordova Ridge or Bear Mountain while upscale do not come close to supplanting Uplands as Uplands did with Rockland.

  87. While we’re at it, we should stop the “hoarding” of equity, corn futures and stocks 🙂 Then we just need to see if Kim Jong Un from North Korea will be our leader.

    @reason – it’s from VREB.

  88. If they can unload the property, Chris. More often these people are over leveraged. When the investment goes sideways it can effect their principle dwelling too. Most banks will want a strong covenant on both properties. If the investment goes into foreclosure, the bank will come after the primary house too.

    And the bank and the lawyers really give it to you in additional fees and penalties. Another $50,000 or $100,000 added to the unpaid mortgage.

  89. And don’t worry, once those “house hoarders” as you call them start to realize supporting a cash flow negative investment that’s going down in value is not a great idea, they will unload and there will be lots of houses available. Unfortunately security of employment combined with fear of “catching a falling knife” will discourage most of the buyers. In my view there’s only a “shortage” of housing at the moment because everyone and their dog wants in on what has been ridiculously easy money for an exceptionally long period.

  90. That could spill over into Victoria in the next few months. Consumer confidence isn’t geographical it’s psychological. Hear enough problems happening in Vancouver real estate and it will begin to affect Victoria buyers.

    Got it right Jack! And there is a whole lot more uncertainty than just a few months ago and much more widespread than just in Vancouver. I believe you will see the inventory rise and demand fall early in the new year. That’s my prediction!

  91. “VicRE went up 170% during the first part of that bull”

    Where did you get that data? – genuinely curious and would like to see it plotted against the S&P.

  92. It really doesn’t make much difference whether a house is occupied by its owner or whether it’s rented out. Either way, one extra home increases the housing stock and relieves pressure on both the rental and sale market. It really is as simple as that.

    If there was some great imbalance between renters and owners, we would see it. For example, there might be a tight rental market but lots of inventory for sale. The current situation, where both rental and sale markets are tight, doesn’t really tell us anything.

    The only potential problem with investors is if they leave property unoccupied. That’s what happened in Vancouver and that’s what has distorted the market over there. It’s a non-issue in Victoria.

  93. Another reason for low listings is low consumer confidence. That can be enough to trigger a change.

    For example Vancouver. The foreign tax may have caused non foreign prospective buyers to freak out. As the number one belief in prices forever increasing was confidence in an unlimited source of rich Chinese buyers. When you put a dart in that balloon, you see what happens.

    That could spill over into Victoria in the next few months. Consumer confidence isn’t geographical it’s psychological. Hear enough problems happening in Vancouver real estate and it will begin to affect Victoria buyers. The effect on first time buyers may be less since they are looking for a home to live in rather than those risking the enormous equity in their homes.

  94. If appreciation doesn’t occur then the market will be flat for several years until mortgage pay down increases equity.

    Agreed. Mortgage pay down doesn’t create much equity over the short-term though, like maybe 12-15k a year, and prices might fall under these conditions which could temporarily wipe this out.

    Equity isn’t money, you can’t move it to some place safe like you can do with cash. It’s locked into housing. You have to ride the market out either on the way up or on the way down. You have no control over it.

    Yes. Main point is that the housing market always has this risk if you are financed and you need to be able to ride it out or the negative snowball can create significant negative equity that is realized on a sale.

  95. Nope. It has opposite effect.

    I don’t think it does. If there are more SFH rentals on the market there should be a levelling of increases for rents which have risen in the past year quite a bit and it is really hard to find a good rental now.

    My statement was not a comment on the impact of removing inventory from the market of potential purchasers and how this might affect list prices.

    The thing is there will always be people who need to rent for many diverse reasons including incomes not supporting a purchase, temporary relocation, job loss and divorce. This is about 30% of the population, including 30% of more expensive areas like Oak Bay. Not everyone is going to convert to an owner.

    If more landlords entered the market this would increase inventory for renters. However, this is unlikely imo because prices are too high for the rental return in the core.

  96. @ CS
    “What evidence is there that Canadians are now less fiscally conservative than in the past?”

    Consumer credit is at record levels.

  97. It does seem likely that people will continue to move up the property ladder using bigger down payments and that will continue into the foreseeable future. Right now median prices seem to have plateaued in the core over the last 100 days. But maybe when prospective purchasers get over the higher list price shock, prices increase will resume. But this has never been shown to last forever. Because to believe this you would also have to believe that BC will never again experience an economic recession.

    Month Sale Price, Median for detached houses in the core.
    Jan $655,500
    Feb $681,500
    Mar $740,000
    Apr $759,500
    May $760,000
    Jun $743,000
    Jul $754,500
    Aug $728,000
    Sep $781,550
    Oct $826,500
    Nov $809,500
    Dec $780,000 to date only

    I continue to believe that our market price increases are due mostly to ballooning home equity being used to purchase more homes. Be it buying an investment, home for your kids or a division of assets through divorce or an estate. It isn’t through our productivity that prices are increasing.

    The only way to create new equity is through appreciation and mortgage pay down. In order for prices to continue to rise, equity must also increase. If appreciation doesn’t occur then the market will be flat for several years until mortgage pay down increases equity. That might be happening over the last 100 days as prospective buyers pull back from purchasing with these extraordinary asking prices. At least with properties that were intentionally under priced their was a faint hope you could get a good deal.

    But, if the market started to lose equity or access to equity rapidly then we would have a problem. A problem bigger than we had in 2008 with the credit crunch because our equity balloon is much bigger now. Start letting the gas out of this bag and prices would be cycling lower just like they did on the way up.

    Equity isn’t money, you can’t move it to some place safe like you can do with cash. It’s locked into housing. You have to ride the market out either on the way up or on the way down. You have no control over it.

  98. @ Totoro

    If this is the case, SFHs in the core will continue to appreciate faster than incomes. Income will not be enough for the middle class to enter the SFH market here so floor space will decrease.

    This is the trend in every growing urban area, for which reason it would be interesting to know the historical trend in the proportion of income that families with a median income spend on housing of whatever kind, apartment, duplex, SFH, purchased or rented.

    My bet is that the trend has been continually upward over the last 45 years and that the result has been to lower the standard of living as measured by all things other than housing.

  99. “If only more people were turning their SFHs into rentals at a higher rate we’d might see a stop to the rise in rents for such properties.”

    Nope. It has opposite effect.
    If a person is buying a SFH to rent it out, it pushes a potential owner-occupier family out (who needs to buy – not rent – for family stability) – this creates more competition for SFHs, and increased competition for the same # causes a prices increases.

    That’s exactly the problem that the UK & Australia are grappling with, and US investor start-ups like Home Union are taking advantage of.

    (Of course, there are many reasons for low inventory & price increases, eg., low interest rates, loose banking policies, demographic bump in millenials needing family housing, builders focused on high-profit tiny condos instead of family-friendly housing, etc. Also as CS said, lending standards have changed so another financial crisis is possible).

    I’m not saying this because I’m averse to RE investing – quite the opposite. I just think that an RE investor needs to consider the impact on the wider community we live in.

  100. For the market buffs, if the S&P keeps chugging along and remains above its 2015 high of 2134 by year end, it will be referred to as an ‘outside year‘. The last time the S&P achieved this ‘outside year’ was back in the ’80s, followed by one of the greatest bull markets in history. (VicRE went up 170% during the first part of that bull)

  101. @ AG

    don’t blame borrowing on ‘greedy bankers’. Blame the regulatory environment and the fact that Canadians are no longer fiscally conservative. From the banks’ perspective, if CMHC will backstop most of your loan portfolio, why wouldn’t you keep on lending?

    What evidence is there that Canadians are now less fiscally conservative than in the past?

    Both now and then people probably borrowed to the max, i.e., the max that banks would lend them. If that is the case, my point remains that because lending standards have changed (not because of any conscious choice by borrowers), people can pay more, and thus do pay more.

  102. I’d agree a financial meltdown is unlikely – but possible. What is more likely is that past performance indicates future performance.

    If this is the case, SFHs in the core will continue to appreciate faster than incomes. Income will not be enough for the middle class to enter the SFH market here so floor space will decrease. Families with median income and no other assets but their down payment will be in condos and townhouses to start. First-time buyers in the middle class will move out of town if they want bigger homes.

    Those that own in the core will continue to gain net worth at rate that income-based savings cannot match and these folks will be able to move up in this market despite median incomes. And people do this at a fairly predictable rate: the average Canadian will own 4.5 to 5.5 homes in their lifetime.

    Long-term this may mean that if living in Victoria is important to you, the sooner you purchase a home in the core the better unless you are a high income earner or have equity to equalize the gap. Seems more predictable than trying to time the market.

  103. “We are, in other words, at risk of another bankster instigated financial catastrophe.

    But I do not wish to be blamed by AG for a misleading forecast, so please note, this is not a forecast, merely an observation on what appears to me to be the case.”

    You can make all the forecasts you want 🙂

    Couple of things I should note:
    One, another financial meltdown is now extremely unlikely. There is so much liquidity in the system and so many untapped sources of liquidity that can be used.
    Two, don’t blame borrowing on ‘greedy bankers’. Blame the regulatory environment and the fact that Canadians are no longer fiscally conservative. From the banks’ perspective, if CMHC will backstop most of your loan portfolio, why wouldn’t you keep on lending?

  104. Agree with Just Jack on this one.

    Uplands was never cheap relatively speaking. Even compared to Vancouver and Toronto (at least before the last 10 years), it’s never been an inexpensive place to live. Yes, from my perch in Vancouver, Uplands looks like good value (most everything in the Victoria core does) – big house, big lots etc. – but the price for a such a home (non waterfront) there is still about the same as a modest home in more modest parts of the West Side of Vancouver (not Shaughnessy) – so still a Vancouver price albeit a a lot more for the dollar.

    From the get go, Uplands was designed to be a high priced area relative to almost all places in Victoria. Barrister is correct that Uplands is like the Rockland of 100 years ago but the shift by the elite into Uplands isn’t a recent thing but started in the 1940’s and really got going in the 1950’s up to the present.

    The middle class never lived in Uplands – well maybe the upper middle class did and to a lesser and lesser degree still does.

  105. @ Totoro

    <

    blockquote> I think income-based affordability is dramatically different than it was in the 1960s.

    Your example from Toronto is consistent with my recollection of conditions in Ottawa in 1968 when a colleague bought a new, brick-built, three bedroom home in Rockcliffe for $32,000. At the time the average income of a member of the Teamsters’ Union was around $18,000, and a middle rank Federal Government employee earned $18 to 25,000.

  106. @ Leo

    Re: affordability, now and then.

    As I recall, back then, then being about 1970, the amount that a bank would lend on a house was, relative to income, much less than today, and furthermore, a wife’s income added less proportionately to what a couple could borrow than is the case today. That means that affordability measured by mortgage payment relative to income is not the same today as it was then.

    What the change in lending conditions has meant is that:

    (a) people can incur a higher mortgage burden relative to family income than in the past,

    (b) because people can borrow more, prices have been driven higher than they would otherwise have been, and therefore,

    (c) to buy a home people have to incur a higher mortgage burden relative to family income than was the case in the past, and, therefore,

    (d) banks are taking a larger share of family income in the form of interest payments than ever before.

    This at a time when interest rates are, by historical standards, exceptionally low, and therefore, more likely to rise than fall, which would mean some recent buyers being trapped with mortgages they simply cannot afford.

    We are, in other words, at risk of another bankster instigated financial catastrophe.

    But I do not wish to be blamed by AG for a misleading forecast, so please note, this is not a forecast, merely an observation on what appears to me to be the case.

  107. Last night, my outside temp -4c, inside thermostat set to 19.5c. Backup elec. Aux heater needed to be ON most of the night. How do you guys heat pump perform in this Canadian weather?

    According to BChydro site, with step 2 rate, I paid just under $10 per 24hr (no laundry yet), incl. hot water.

  108. Uplands may have been fairly inexpensive but not relative to the rest of the core.

    If you were moving to Uplands from a higher priced city then Uplands would be thought of as fairly inexpensive to you. That’s a personal call. But relative to the core, Uplands has always been costly.

    The rest of my comments would follow what Totoro has just written being that the increase in prices is tied to the increase in equity and to a far lesser extent to the increase in incomes.

  109. Barrister gets it.

    What’s to get? The whole point of this conversation was whether income based affordability is an accurate measure or whether you need to account for assets in the calculation. We are talking about whether there is an increase that is being bridged by equity and other assets that is disproportionately affecting income-based affordability over time making it a less reliable measure.

    The cause of the gap might be partly densification, but it still has to be bridged with equity from somewhere and first time buyers have to get this from income just like buyers did in 1965.

    This means it is likely harder for first time buyers and buyers from areas with lower cost housing than here to buy in Victoria now than it used to be and. And those with equity gained at a pace that increases faster than inflation are maintaining higher values, perhaps with some equity from Vancouver or abroad at the very high end.

    The fact that the city has densified is relevant to price appreciation but who cares why it has occurred, the question is whether equity is being used to maintain a system that grows faster than inflation and what effect this has. I think income-based affordability is dramatically different than it was in the 1960s.

    I did find stats from the 1960s for TO with examples. Interest rates were 4% then and houses were about 2x median incomes for detached bungalow.

    1960s

    1960sToronto looked much different in the 1960s, our signature tower wasn’t built yet, and Yorkville was apparently a hippie haven, not the upscale area it’s seen as today. BlogTO actually refers to Toronto as Buffaloesque in the 1960s. Average home prices in Toronto in 1967 were $24,000 and finished out the decade 3 years later up 20.4% at $28,900. (Note: Due to changes in market areas over time, caution should be taken when making historical comparisons)

    The Year: 1967 – Toronto’s Average Home Prices $24,078

    The Buyers: Jean, 40, and Mac, 44.

    The Buy: A 3 Story Detached Home on 40 x 100 foot lot on Hudson Dr. in Moore Park.

    The Numbers: Purchase Price – $42,000

    Household income at the time of purchase was around $20,000 and their interest rate was 4%.

    The average price for a detached home in TREBs C9 District 2014 Year To Date is $2,500,000, which would make this home worth almost 60 times its 1967 purchase price.

    http://relativerealty.com/first-time-home-buying-by-decade/

  110. My point is simply that the city has grown. Originally Uplands was a fairly inexpensive suburb. It is now what Rockland used to be 100 years ago.

    Barrister gets it.

  111. It is completely right in my view for gov’t to intervene to protect housing in this highly speculative region, not only to protect the citizens from unaffordable housing but also from allowing our city to become a bubbly speculative mess that could destabilize us economically in the future.

    Too bad the average Joe is 100% oblivious to the steps the government is taking much closer to home to make housing UNaffordable such as the HPO legislation. Some municipalities such as Victoria are even worse than the HPO but it’s more complicated to explain as it is the aggregate of all their smaller policies that make residential building insanely expensive to build within the muncipal limits.

    I am sure everyone has noticed the three small homes being built at the corner of Shelbourne and I am sure everyone has noticed the three small homes being built at the corner of Shelbourne and Haultain. The builder bought the old teardown in 2012 and they won’t be finished until 2017…..5 year turn around for rezoning/permits. City of Victoria promoting affordability at its finest.

    I was thinking tonight as to why would the decision makers care that they are delaying an owner builder months in terms of starting construction or adding $100,000 in expense for those that can’t pass the exam forced to hire a builder?

    I looked up some of the salaries and WTF…..CEO of BC Housing $317,000/year. Wendy Acheson who works at the HPO and stars in this lovely video -> https://www.youtube.com/watch?v=KJDTw6gfgGU $157,000/year……….no duh their answer is “hire a builder,” when people phone asking what they will do when they can’t pass the exam. At $317,000/year easy desk job I would hire a builder too.

  112. Maybe Leo. Maybe not. It is pretty complicated.

    Let’s take OB off the table.

    Fairfield has densified more and is closer in, yet prices have skyroccketed even in my adult lifetime. James Bay was well developed and has densified a lot but the SFH has increased faster than inflation.

    The benchmark house in the core, without specifically focusing on OB or Fairfield, is now $753,800. This is appox. 10x median income and far out of reach of an inflation-adjusted $40,000 family income that could buy a house in the core in 1960. This is also above what the median family qualifies for with a $100,000 down payment.

    From 2x in 1960 to 10x in 2016 is a gap not entirely compensated for by inflation plus low rates.

  113. Just Jack

    My point is simply that the city has grown. Originally Uplands was a fairly inexpensive suburb. It is now what Rockland used to be 100 years ago. This happens to every city as it grows. First time buyers are generally relegated further and further out. The core is no longer for first time buyers for single family homes. Nor can one expect it to be because of how the city and the population has grown.

    Try buying a single family home in Manhattan these days; they were available 150 years ago. The population of Greater Victoria has doubled since 1960. The mathematics of where starter homes are now located is undeniable.

  114. And by the 1960s Oak Bay was already fully developed and considered a desirable place to live. It has maintained its primarily single-family residential nature, growing by just 0.1% annually over the last 50 years.

    You missed my point.
    In 1960 Oak Bay was a residential neighbourhood in Greater Victoria which was probably about 100,000 people (estimate, I can’t find any data here, the exact number is not important).
    Now it is the exact same area but in a city of almost 350,000.

    Hence, it is not at all the same thing. It has become much more premium by virtue of staying the same while everything around it expanded and densified.

    Think about it in terms of the city limits. Back then their place in Oak Bay was maybe a quarter of the way from the city centre to the outskirts. Today it is only 10% of the way to the outskirts. So the value of their house has changed and thus I would expect it to be less affordable.

    Hence the average house is a better measure than your grandparents’ house. The average house back then was not Oak Bay, and it isn’t today. The average house back then was within what we would consider the core today, and today it is further out. That doesn’t mean affordability has deteriorated, it just means the city has expanded.

  115. There are probably a number of factors, but we could choose a home closer to the core and the result would be similar. The same exact home has increased faster than income in Fairfield and Fernwood and Jubilee too.

    And by the 1960s Oak Bay was already fully developed and considered a desirable place to live. It wasn’t like buying in Brentwood. My mom went to Oak Bay High which was already well established at this time and not considered rural at all. It has maintained its primarily single-family residential nature, growing by just 0.1% annually over the last 50 years.

    The bottom line is that there is an equity gap between now and 1960 that low mortgage rates don’t bridge even looking at the benchmark home in Greater Victoria. If interest rates rise I guess this will become more prominent unless prices fall.

    They bought in oak bay with equity from another house.

    I already adjusted that for inflation in my example Leo. There is a gap I think.

  116. I can’t see a tax on foreign buyers make equity in housing disappear. I think it would keep prices from skyrocketing into disastrous/unfixable territory this spring. It needs to be done. Flight capital from China is historically monumental right now and set to increase even further. It is completely right in my view for gov’t to intervene to protect housing in this highly speculative region, not only to protect the citizens from unaffordable housing but also from allowing our city to become a bubbly speculative mess that could destabilize us economically in the future.

  117. Wouldn’t you agree that for median families it is most likely coming from equity from a prior house sale if they want to move into Oak Bay, or perhaps from other assets or a family guarantor.

    Yes. But you just gave the example that your grandparents had the exact same situation. They bought in oak bay with equity from another house. All I’m saying is that this kind of thing has happened forever. Back then it was bringing $5000 in equity, now it’s bringing $100,000 (examples only, don’t take them literally).

    Also consider that Oak Bay in the 1960s was not a premium neighbourhood like it is now. It was just an ordinary neighbourhood. It would be like your grandparents buying a house out in Brentwood bay now, or Colwood. I don’t dispute that affordability in Oak Bay proper has definitely deteriorated over time, but that’s because the neighbourhood has increased in relative value by no densifying and remaining close to the core in a much bigger city.

    Do you have data on affordability 1960 that accounts for incomes/prices/mortgage rates-present in Victoria?

    No. Could probably dig it up, the problem is finding continuous data with consistent methodology over the whole span. Not really worth the effort.

    if interest rates rise it plunges for some homeowners.

    Yep. Affordability isn’t bad, but it is much more precarious than it has been in the past.

  118. Houses are affordable in the city as long as you put down a large down payment. For most buyers that larger down payment most likely originates from the sale or refinancing of another house.

    That’s how you can get a jump in prices of hundred thousand or more. You just borrow more equity from your home for a down payment. When money is so cheap you can pay a hundred grand more for a property and only have to come up with another $400 a month. That’s a lot different than if you had to save another hundred thousand dollars. In that way it makes it a lot easier for home owner to purchase more and more properties and at the same time makes it more difficult for first time home buyers to come up with a bigger down payment. The home owner most often is able to outbid the first time buyer whose funds are a lot more limited.

    And that’s how we got to where we are now. As prices rise, so does equity and that means you can use more of that equity to buy a house and prices rise again. As long as you believe prices will rise they will. Only when something happens to shake that belief, like a tax on foreigners, will that mysterious equity disappear. Then you’re hooped.

  119. Times change and now you have to go further out.

    Exactly. Price increases have exceeded wage inflation. The further out areas used to be big farms or super cheap shacks.

    Here’s the thing though, what if more people listed their home to upgrade/downgrade/sidegrade?
    We would temporarily have more listings, then they would all sell and buy the property they were after. So there might be more properties on the market but also more demand to compensate. It wouldn’t make the market any less active.

    I don’t know what would happen. There is also pent up demand and population growth and rising and falling markets and consumer confidence. It is really hard to predict. I give up.

  120. So? Price to income does not determine how much money you need to service your mortgage.

    Isn’t your argument that income does determine affordability along with financing and that asset base is not a significant factor? I’m confused by the statement.

    You asked to compare now to the 1960s and I do have first-hand experience in my family with owning in Oak Bay since the 1950s.

    Do we have an affordability graph that extends back to the 1960s? I haven’t seen one and the stats I have seen have pointed to a run up in prices since 1997 that exceeded the rate of the 1960s-1997.

    What I know for a fact is that purchase prices have increased from 2x median income to more than 10x median income for the same house my grandparents bought in the 50s. Their 1930s house is now worth about $850,000.

    If what you are saying is that monthly payments are lower because interest rates are lower and financing is easier to get you are correct, but this does not explain the equity gap entirely.

    The question is what role the increasing equity based on appreciation exceeding inflation – a gap that is even greater than I indicated if I understand your 7% comment correctly – has on affordability, if any.

    It is a fact that the median family income today is around $80,000 in Victoria.

    My grandpa worked at the bus depot post-war – he was supposed to become an engineer but came back injured. My grandma was a housewife when they bought. My grandpa’s income would be about $40,000 in today’s dollars. They had a down payment from a house they sold up island – lets call it the equivalent of $100,000 today.

    Today on an income of $40,000 with a $100,000 down today you can afford a maximum purchase price of $355,362. With the median income of $80,000 and $100,000 down you can qualify for a purchase price of $729,904. That’s with good credit and no other debt.

    That is a gap in equity of $500,000 for my grandparents and $120,00 for the median family.

    Where is this additional equity coming from? We’ve already accounted for financing differences. Wouldn’t you agree that for median families it is most likely coming from equity from a prior house sale if they want to move into Oak Bay, or perhaps from other assets or a family guarantor.

    Why do you keep saying that when the affordability stats show otherwise?

    Do you have data on affordability 1960 that accounts for incomes/prices/mortgage rates-present in Victoria? I don’t. I only know the example I have and the stats from the 1980s on. Affordability may be the same now as in 2007 on a monthly basis, but it seems to have eroded since the 1960s and if interest rates rise it plunges for some homeowners.

  121. Sorry for the many comments. Am I the only one that works during the day here or are you all employed at the HPO?

  122. The affordability argument assumes a 25% down payment. That ain’t a reality for most people buying their first home.

    I assume 20% down, but I see your point. At one point I tried to piece together some data on average down payments but couldn’t find anything consistent. So unless you have a source that shows average down payments have trended significantly down over the years then I’m not sure we can do anything to adjust it.

    Also remember I’m measuring whole market affordability, not first time buyer affordability.

    A Gordon Head box is the home of the typical middle income family. Most were built in the 1970’s and were favored by first time buyers.

    It used to be Gordon Head was the cheap neighbourhood. Times change and now you have to go further out.

  123. @AG

    The population is rising, and construction is not keeping pace. CRD estimates that population will rise 28% between 2011 and 2038. It rose about 9% from 2001 to 2011.

    So it rose 0.9%/year and the projection is 1.0%/year? Not a big jump.

    @Bingo

    Tariffs target individual countries. They protect our industries from things like unfairly cheap labour or unfair subsidies.

    The difference is that tariffs are on goods and products, this is on people. but I see your point.

    That argument implies we have an affordability problem.

    No, but with our current rate of increases we are rapidly heading towards one. Better to head it off at the pass before we get a massive one like Vancouver does.

  124. I think an interesting question is why there is currently low inventory. If it is not because of the greedy homeowners using their “unlimited access” to home equity and buying up additional properties and freezing out JJ then what is it?

    Inventory is low and vacancy rates are low. That can only be because more people moving here.

    My guess is that the lack of inventory discourages people from listing because where are they going to move to. Plus the market has been rising and some might be waiting to see if prices will rise further in the spring. Maybe other factors?

    Here’s the thing though, what if more people listed their home to upgrade/downgrade/sidegrade?
    We would temporarily have more listings, then they would all sell and buy the property they were after. So there might be more properties on the market but also more demand to compensate. It wouldn’t make the market any less active.

  125. “You shouldn’t diss the people that have made you wealthy. Telling renters to leave if they don’t like it.

    -They might just listen”

    It was only a few short years ago that they were giving away free months rent. Won’t be long til it rolls around again like all market peaks/busts. Gouging landlords/slumlords are in for a serious wake up call very soon.

  126. “What happens if I fail the exam?” HPO staff “…just hire a builder.”

    I’m more and more convinced that the HPO Exam is a bone they tossed to their developer funders..

    “Starting July 4, 2016, anyone in BC applying for an Owner Builder Authorization will need to pass a home building basics exam. This new requirement will help owner builders expand their knowledge, improve the quality of owner-built homes and protect consumers.”

    Next up: HPO Exam covering History of the Roman Empire 627 – 564 BC. Justified by the fact that it will expand the knowledge of owner builders. Also you will learn not to install lead pipes for your water supply!

  127. Or, does construction basically stop at a certain point because the confidence is out of the market and nobody is willing to stick their neck out?

    This. Exactly what happened in 2008. Construction came to a complete standstill (like zero starts) until the market recovered.

  128. They would not have been able to afford to buy in Oak Bay today based on their incomes because prices have increased faster than wages.

    And interest rates are much lower, and borrowing limits are higher, and down payment requirements are much higher. Also the city is much bigger than Oak Bay so there are a lot more options to get a nice SFH.

    on the overall asset value prices are much higher relative to incomes.

    Yes I just don’t think it matters. For years that was the argument for the bubble, that prices relative to incomes were out of whack with “historical norms”. The problem is that there was no historical norm.

    Prices in Victoria for houses have risen 4.2% per year.

    That is already inflation adjusted. The nominal rate is more like 7%

    Equity is growing faster than incomes and the ability to buy based on savings from income is eroded

    Why do you keep saying that when the affordability stats show otherwise? Clearly it is not the case. Let’s say you are correct and the driver of the market is equity and other assets. That means affordability should be extremely poor when just looking at incomes. It isn’t (SFH’s are getting there but still below what we’ve seen in the past). The only thing that I see being perhaps driven by assets in down payments. It’s possible that current buyers are getting more help there from gifted or accumulated assets as the actual number grows.
    Hence I find it far more convincing that incomes are still the predominant factor. Your argument would be more convincing in Vancouver, where houses are 100% out of reach of local incomes.

  129. You shouldn’t diss the people that have made you wealthy. Telling renters to leave if they don’t like it.

    -They might just listen

  130. Barrister, it’s not an assumption. It’s an example. I could have chosen any area in the core and the premise of the post would not have been different.

    A Gordon Head box is the home of the typical middle income family. Most were built in the 1970’s and were favored by first time buyers.

  131. No one is entitled to own a house in the core. If they want to, they can buy a condo or live further out of town. Or they can rent one of the properties that I’ve “hoarded” 🙂

  132. Barrister I know a few people who commute from Lake Cowichan where a 200 to 300k house can be had. People do what they have to do.

  133. Just Jack:

    Why do you assume that your first home should be in Gordon Head at 800,000. Whats wrong with getting a starter in West Shore for a lot less. You might as well be arguing that it is also impossible to buy a starter home in the uplands for a young couple. If not west shore than how about Sidney.

    Even when i was a young man in Toronto I had to commute for an hour each way to work, Did that for thirty years. Victoria is no longer a small town. If you want a cheap house and a short cimmute get a job in Duncan or Mill Bay or even Nanaimo.

  134. Letters from BC assessment are going out this week to those that are going to have much larger than average increased assessments. 4000 unlucky or lucky home owners will get this. All depends how you view this.

    OakBay will see the largest increase in the core 35%. West shore 10%.

  135. Another email as I wrote the post below….this guy is already planning on re-writing, ha ha 🙂

    “First, thanks very much for getting involved and helping us owner builders through this infuriating process of preparing for the exam. With the lack of study material available I fully expect to fail the exam, and reschedule for another exam, at least having a better understanding of the proper material to study.

    I’m writing today to ask if you have any more questions available that you haven’t yet posted to your video blog. If you do, I write the exam at the end of this week and any further insight would be much appreciated.

    Finally, after I have written the exam, I’ll be sending you any questions I can remember, to help others through this farce.”

  136. Marko on your side. Just telling you the spin on their website. We are in a world of over regulation.

    This is their official slogan “Starting July 4, 2016, anyone in BC applying for an Owner Builder Authorization will need to pass a home building basics exam. This new requirement will help owner builders expand their knowledge, improve the quality of owner-built homes and protect consumers.”

    1/ Exam is not basic. One individual just emailed me this afternoon and her exam had questions on gas meter clearances. See page 2 of this document -> https://www.fortisbc.com/NaturalGas/Documents/InstallingNGLines_infosheet_WEB2.pdf

    Does it make sense to have that memorized? Funniest thing is her complaint is where she is building there is no gas.

    2/ In reality will cost owner-builders months and thousands in delays. Owner-builder cannot possibly gain enough knowledge through a “basic” exam to start questioning the geotech on soil conditions and the structural engineer on shear walls.

    3/ Won’t improve quality of home at all (doesn’t force you to use plywood vs OSB, or triple pane windows vs double pane).

    4/ Consumer is not any more protected legally than they were before the exam. Abiding by the HPOs idiotic rational the consumer might be better protected in theory, based on false rational of course. Legal protection has not changed for consumer.

    Either the folks at the HPO office are complete morons (I can’t comprehend that individuals with this type of logic would actually be employable); therefore, my only conclusion is that large builders lobbied this legislation.

  137. The affordability argument assumes a 25% down payment. That ain’t a reality for most people buying their first home.

    How many of you home owners would accept that you had to save $200,000 before you could buy a house in Gordon Head for $800,000. Very few of you. But that’s the assumption about affordability.

    Most of today’s buyers opt for a condominium because it is realistically affordable. You don’t have to save for 15 years to buy a condominium. And that is possibly one more reason that condo prices have not changed much and don’t vary that much from city to city. A new condo is about the same price in Victoria as it is in Nelson or Comox. The barrier to entry, being the down payment, is low.

    It was hoped at one time that buying a condo would allow you to move up the property ladder to a home. Well for the most part those days are long gone. The spread between house prices and condos is getting wider not smaller. Of course you could buy two condos and rent one out. And that was the conversation I had the other day with a 68 year old man who just bought a condo early this year. Now he wants to buy a condo that he can rent out. And he wants me to give him alternatives where he can develop a positive income stream from one and live in another without costing him anymore each month.

  138. You may have mentioned this but from the website the average time an owner builder lives in the house is 4 years. The other 6 years and protecting the new owner is what they are trying to do. Also they state the owner builder ends up spending the savings on fixing their screw-ups.

    Year 5 to 10 of the warranty or owner-builder legislation responsibility is completely useless as it is only structural (extremely rare to have a structural problem as municipality won’t give you permits unless you’ve hired a structure engineer and he or she has to design the foundation, shear walls, etc. and has to inspect the footings, foundation walls, framing, truss installation, etc). For example, if in year six your building envelope fails you are facing a $50,000 bill for repairs as the owner you are screwed irrelevant of whether you bought from owner-builder or builder. They are not protecting anyone.

    As far as owner-builder spending savings on fixing up screw-ups? Yea right. I sent $425 to the HPO to get my “letter,” and never heard from them ever again. How would they know I screwed something up? Some of the nicest homes I’ve seen in Victoria have been owner-builds.

    When I come across a newer home that’s total crap it’s usually not an owner-builder.

  139. At one time any money you made in the stock market wasn’t taxed. That got changed and people had to crystalize their investments. It could be done with real estate too. Hypothetically, the government could declare July 1, 2017 as Valuation Day. All of your investment properties would have to be valued at that date. Any increase after that date would be fully taxable.

    I mean it isn’t like the government hasn’t done it before. But before you get scared that some minion in the basement of an Ottawa office is drafting this as policy remember that it would be leaked to the banks and politicians. When the heads of banks and politicians are selling their investment properties get worried.

    Anyone know what Mike de Jong is doing with his 7 properties in Abbotsford?

  140. AG:

    A Chinese-only tax would be the most appropriate fix. But that would immediately be condemned as racist. Even a tax aimed at countries where speculators come from would also be condemned as another head tax, because it would be 90% directed at Chinese nationals.

    Are tariffs and duties racist? We do those based on country of origin. I get your point and yes, it would most likely be condemned as a head tax (Garth Turner already called the foreign tax that).

    Leo S:

    You’re arguing that instead of an equal tax on all foreign buyers we should target one nationality (essentially race) and that will make it less racist?

    Ha. Well yes and no. There’s a bit of nuance, though I expect most would read it that way. I was noting that people were arguing against foreigners based on fear rather than evidence. Pretty much every argument presented implementing the foreign tax in Victoria immediately (rather than waiting on evidence) is just fear mongering. “Look at the hollow neighbourhoods of Vancouver!” So, be afraid because it happened there. Sure, we can be wary, but implementing something without solid evidence just to relieve people from their fear of the possible? I don’t think that’s a good way to shape policy.

    I prefer a targeted solution (if possible) to a broad reaching one, and only when there is evidence to support the need for a solution. Tariffs target individual countries. They protect our industries from things like unfairly cheap labour or unfair subsidies. If there is solid evidence there is a problem coming from one country (large flows of money being parked in our “safe” housing) I don’t see blocking that country alone as a problem. Might not be PC, but as long as it’s not based on false assumptions and stereotypes.

    A housing tax isn’t even at the right level to be attacking the problem, but the BC government doesn’t have the tools to address it at the correct level and it appears the federal government isn’t going to take action any time soon.

    Maybe next year it will be rich Americans causing a problem for local affordability.

    That argument implies we have an affordability problem.

    Do we? We’re within historical norms. Nominal prices may be high, but low interest rates mean the payments are well within normal affordability for Victoria. Arguing something might be a problem is just more banging on the fear drum. Canadians affect some US markets (the areas snowbirds frequent). They complain but they don’t go full on protectionist. I think a market being partially swayed by foreigners is ok as long as housing is being used as housing, not a place to park money. A bit of sway is ok, driving the market is not (unless you are a resort town like Whistler that is trying to attract foreign money).

    Trying to “get ahead of the curve” is just pandering to peoples’ fear. There may very well be no curve to get ahead of.

    It looks like Victoria got skipped over and Seattle is the new hot market.

    Our little blip could be explained away by fence sitting foreigners deciding they had better buy before it costs them 15% more. If they read this blog they saw the pitch forks and torches in hand and got worried.

    To lessen the impact on people who are here to work and live, I propose adding a rebate where if you declare 5 years of earned income over a certain level you can get your 15% back.

    I can agree on that in principle.

    I think 5 years is a bit much (as someone coming here still has to weigh that). As an example, I had an opportunity in Seattle. They asked how much to get me to relocate. I immediately looked up rent for a modest apartment near the office (need a place to stay temporarily) so I could make sure I’d cover that while maintaining my mortgage and other household expenses. I also looked up housing under the assumption once I decided I wanted to stay we’d move there as a family. A 15% up front penalty on buying a house would have priced me out of the job for sure, even if I could potentially get it back. 5 years is a long time.

    Anyhow, I think I’ve discussed this much more than needed. No point in me repeating the same thing over and over.

    We’ll see where the numbers go come January. I hope for everyone’s sake it’s down.

  141. Dasmo, like most everything in life it depends on when you bought the property. This year we have had multiple bids on properties with the selling price hundreds of thousands over asking.

    Where did these bigger down payments come from to buy these properties? The first response is to blame it on someone else. But not someone from Victoria but an outsider. That’s the safe thing to do. It isn’t us – it must be them.

    And all I’m saying is that it might be us.

  142. I accept the apology.

    This is a discussion. I put out the idea for others to comment on. This is not an hypothesis where I have to cite others or sources. I’ve set out my logical expression of why I believe investors are having an impact on the market.

    When you say I am attacking those who rent out space I am not attacking individuals. I’m putting it out there that it might be time for society to look at housing differently than it did 30 years ago.

    We have a possible crisis looming. At one time it was only rising prices now it is rising rents and rising prices. That has serious implications if it gets to the point that people no longer have access to shelter.

    Because we can’t build affordable housing without massive subsidies from the tax payer. We have been building “affordable housing” for decades and it has yet to solve the problem. And I doubt it ever will. We have to look at that 97 percent of the stock of housing that isn’t up for sale and ask why isn’t it up for sale? And one possible answer is that it is more beneficial to hold onto properties than to sell them.

    So why are you not selling? It isn’t because the prices are not high enough. If you bought in the last few years what your netting after taxes each month is low relative to the amount invested and the liability you have to carry. So why are some people buying a $600,000 house by using $200,000 of equity out of their principle home and then renting the investment property at $1,600 a month?

    Is it status? Because it sure ain’t investing.

  143. You could argue that capital gains should be taxed differently. Or maybe that rental property gains should be taxed as straight income. You’d need some factual analysis to create a credible theory imo.

    You would likely be in the minority as tax policy is formulated based various aims such as encouraging the use of capital and fairness. The capital gains formula seems fair to me but maybe there is a better way, but I doubt it will have the impact you are looking for simply because home equity likely drives the primary residence system and secondary ownership probably has a lower impact and may be something to encourage based on vacancy rates.

    Fairness and encouraging growth are also why income tax rates are graduated and why we have ex. the small business tax rates and exemptions.

    If all gains were taxed as straight income you would soon find that the Canadian economy would be impeded as assets would be refinanced at higher cost rather than sold or reinvested in growing the economy. It would benefit the banks and a lot of workarounds would be developed ie. selling only part of a property in one year, rolling it into a corporation. I personally don’t see this working out well for the system, and I don’t see anything in what you’ve posted so far that convinces me otherwise.

    I don’t have the energy to engage in this further than I already have, but here is some reading material for you:

    https://www.fraserinstitute.org/sites/default/files/economic-costs-of-capital-gains-taxes-in-canada-chpt.pdf

    http://business.financialpost.com/personal-finance/how-to-calculate-your-capital-gains-tax-or-not

  144. I might add that no one wanted the house when I bought it… I was the only offer at the time. So I hardly bid out a first time buyer. With the % of boomers owning second homes as recreational etc I think that an extra tax on second homes would be a very hard sell.

  145. I’d agree JJ. My comments about jibber jabber and blathering prattle were insulting. I apologize.

    The issue for me is what is the basis for your hypothesis and are you really evaluating the feedback before responding.

    You have been attacking those who rent out space for years. Only recently have you appeared to narrow the attack pattern to those who rent SFHs on the basis of causing price increases, although you also appear to attack someone using home equity to buy a condo below as well so I’m not sure.

    When prices were not rising you still targeted “hoarders” – anyone who owned more than one residence.

    Many people have pointed out that the math of house hoarding doesn’t really work and likely is not the cause of the run up in prices over the last year. Now, following my posts on equity, you have targeted equity in houses being used to buy other houses as the problem when the majority of fully exempt appreciation and equity is probably being reinvested in another primary residence which can be used to support increases in a rising market.

    If you had the stats and math and had worked out the variables into a supportable hypothesis rather than something you appear to simply believe because of some anecdotal evidence that ignores important financial information you’d likely be on to something.

    As it is, it is tempting to believe that you have some blinders on when looking at the market and are speaking from an emotional place of someone who wants to be a homeowner and waited for his predicted crash to do so and this did not happen. I have some sympathy for this if this is what it is. If it is isn’t then it is harder to engage with because it is not really a discussion based on fact but feelings.

  146. As you should be taxed Totoro. It’s income.

    It isn’t a case that since you are already being taxed you should not be taxed on the full gain. There is no double taxation here. You’re paying on the NET profit. If there is no profit there is not tax.

    So far you have shown no facts or supported opinions to the contrary. Set out your logic for others to comment upon rather than just sniping at others.

  147. I take that as an unfair comment.

    Especially from a woman who should be more understanding since men through out history have dismissed women with petty jibes and insults. Why do you feel it is appropriate to attack the person and not the post? If you don’t like what I post, then post your own thoughts or ideas for others to comment on. After all this is a discussion on real estate and that means different ideas and opinions should be proffered to the group. I have the impression that you desire to close down a lot of this open discussion.

    So I ask you what is wrong with having an open dialogue on the impact of investors on the market?

  148. I am already adding the rental income to my personal income at it’s full amount.

    So it gets taxed at your top marginal tax rate and this includes the principal pay down amount on the mortgage with no supporting cash flow and no guarantee that your house will actually be worth more when you sell it unless you are prepared and able to hold for the long-term.

    I give up explaining. He’s been on about “hoarding” for years and can’t accept facts that don’t fit with the theory and blames any differentiating opinion on self-interest. Frustrating but, no more, it has now been relegated to my blathering prattle closet.

  149. JJ, The problem I see with that is it would not improve affordability. One side affect of this is we have subsidized rents. I am providing a nice home for people who couldn’t afford it otherwise because I made a horrible investment (it was unintentional). I am already adding the rental income to my personal income at it’s full amount. Now capital appreciation would be severely punished? I think I would never sell then. So we would have even less inventory….

  150. If you made a $500,000 profit. $250,000 is not taxed, just stuff it into your bank account.

    Oh god, not again.

    The overall tax rate on the gain will likely be 16.5%. This means on a $500,000 gain you’ll likely pay $82,500 in taxes. This is the same as for other capital gains. This tax was introduced in 1972 and prior to that capital gains were tax exempt.

    Now you need to add in the inflation adjusted value of your equity contributions and compare your returns on a rental house while adjusting for the losses on cash flow vs. returns on other asset classes.

    If you really want to curb appreciation and have a trickle-down effect on pricing in expensive markets, hit the capital gains exemption on primary residences for gains over a certain value or held for under a certain period of time or a per year formula exemption. That would likely have the effect you are looking for.

    I’m not really a fan of the capital gains exemption limit because I’m hoping to benefit on my primary residence one day and have made an investment on this basis, but I agree that is probably a fair measure. Give that so many Canadians are homeowners this might be a hard sell politically anyway.

  151. And you have to have quite the imagination to consider purchasing a property today as an investment. You want to call yourself an investor, but you’re not.

    Exactly. The ROI likely doesn’t justify it. I am not considering purchasing a property for investment purposes in Victoria other than a primary residence and have said so repeatedly.

    And fwiw, here is a tip: you too can google and I suggest you do because the JJ quotient is heading into blathering prattle territory.

  152. Vancouver owners in for a wake up call. Ahhh, the joys of home ownership. Hoarders can just jack up the rent on those loser tenants. 😉

    BREAKING: Warning of sharply higher Metro Vancouver home assessments

    The BC Assessment Authority says a jump of 30 to 50 per cent will be typical for single-family homes in Vancouver, North Vancouver, Squamish, Burnaby, the Tri-Cities, Richmond and Surrey. Typical strata residential increases will be in the 15 to 30 per cent range. They’ll be based on the July 1st valuation

  153. @JJ – but how is this different from making 500K in stocks or other investments? It sounds like you’re saying that there is a special exemption for secondary properties, but best I can tell it’s treated the same as any other investment.

  154. Sidekick Spliff see Totoro’s remarks. Only 50 percent of the net profit is taxable as income.

    If you made a $500,000 profit. $250,000 is not taxed, just stuff it into your bank account.

  155. Okay so you’re a girl not a guy and know how to google. Was it really causing you so much trouble understanding when I was saying the net profit would be fully taxable?

    I have no difficulty when the government tries to encourage investing. But not when it comes to shelter. Buy stocks, buy bonds, buy apartment buildings. These are all investments. But buying existing houses as rentals doesn’t raise the vacancy rate just the prices. And you have to have quite the imagination to consider purchasing a property today as an investment. You want to call yourself an investor, but you’re not.

    Dasmo understood and she came up with a reply that wasn’t jibber jabber.

  156. Marko

    Interesting please provide info when you get it.

    You may have mentioned this but from the website the average time an owner builder lives in the house is 4 years. The other 6 years and protecting the new owner is what they are trying to do. Also they state the owner builder ends up spending the savings on fixing their screw-ups. Not agreeing just stating the spin on the website and why the changes.

    At the end of the day. Building a house just got more expensive for everyone,

  157. JJ=”That’s an exemption. Make secondary residential properties fully taxable at your personal income tax rate.”

    I thought this was treated as a capital gain just like any other profit taking? As far as I know it doesn’t matter where it comes from – real estate, stocks, FX, etc. Isn’t the capital gain the same for every asset class?

  158. Do you not need a comparison to the non owner builder?

    Non-owner builder construction defects would go through warranty company not HPO.

    I’ll see if there is a need for comparison. If there are 5000 owner-builders and 500 complaints than I will dig into it further. If 5000 and 10 complaints than you have nothing to really compare. It is a non-issue to start.

  159. Marko

    Do you not need a comparison to the non owner builder?

    Hopefully they don`t try to charge you. That should be info that takes less than 2 hours.

  160. This is the FOI I put in this morning

    A record showing a number of HPO owner-builder owner builder authorizations issued between January 1st, 2010 and June 30th, 2016.

    A record showing a number of HPO owner-builder “Permission to Sell Applications” processed between January 1st, 2010 and June 30th, 2016.

    A record showing a number of HPO consumer complaints (from individuals that have purchased owner-built homes) directly related to construction of owner-builder homes between January 1st, 2010 to June 30th, 2016.

  161. Marko

    FOI request to see what grouping of builder % (Large, small, owner live in) has had insurance claims or whatever the process is here for building issues. Just wondering whether the are chasing a real issue.

  162. AG, I don’t understand what you mean when you say that house prices are high because too many people own their own houses.

    Maybe we should be more like London or Holland where fewer people own their houses and prices are?

    ???Lower???

    I understand that those that own multiple properties don’t want to be called a hoarder. That has a bad connotation to most people. The name investor sounds more respectable. And 30 years ago who really cared that you owned a half dozen properties. You were in the minority and had little to no effect on the market place. But now there are many out there following Totoro’s own example of how to accumulate wealth in real estate. Competing against one another to see who has the bigger equity that they can tap into and get that 800 square foot Oaklands war shack with a suite for $600,000. And then justifying their purchase of this shack that they are buying as being land value. Or a home for their kids when they grow up. Or they plan to retire there. In the back of their minds there is this little bit of guilt telling them that they outbid a family that needed a home.

    Because it isn’t income that has risen in Victoria. It’s the size of the down payment. That’s not a first time house buyer that’s investors driving up the prices.

  163. They could also simply require owner builders to have engineer certified drawings. This is totally ridiculous….

    Ahhhh see that is where things get ridiculous….no municipality in Greater Victoria will issue you a building permit for a new SFH without stamped structural plans. As an owner-builder in terms of engineers, consultants, inspections, WBC, etc., you are held to the exact same standard as any builder. You even offer the 2-5-10 warranty through owner-builder legislation!

    Not sure where these policies are coming from, but it would seem that Building Associations must have some significant lobbying ability and are choking out a citizens lawful ability to build their own home.

    The more I dig into it I am also coming to the conclusion that they are not only trying to choke out the citizen owner-builder but also the small builder, we will name her Suzy.

    Everything is in favor of the huge builders/developers. For example, company owner Jack with 50 employees can nominate ANYONE within the company to take mandatory yearly education requirements including Bob the secretary who is never on the construction site.

    Versus Suzy the one-person operation that has been building a couple of houses a year in the community for 25 years is getting suffocated by all the bureaucracy including the need to sit in on a minimum 20 hours of lectures every year plus an online idiotic reporting system for her one site hours. In between municipal bureaucracts, accounting, managing the construction site, etc., the HPO just throws on another thing to choke this type of builder out.

    The thing is when you hire Suzy you just hire her to build a home. When you hire Jack and his 50 employee company you are paying for the fancy offices, the secretaries, the marketing, etc.

  164. How many of you really believe Totoro when he says that there is no property tax exemption for secondary homes?

    Seven years we’ve been here and you still insist on calling me a guy.

    All capital gains are taxed at 50% at your top marginal tax rate. The is not identified as an exemption by CRA, this is the tax rate set in order to avoid double taxation and encourage investment while gaining appropriate revenues.

    The windfall caused by a sale of a non-exempt property at the top marginal tax rate will be taxed at 33% – or an overall tax rate of 16.5% on the gain. Unlike with earned income there is no ability to incorporate and spread out the gain, nor are there offsetting RSP credits. The tax policy reasons for setting this rate seem pretty sound to me.

  165. You can still buy as many rental properties as you like. You just would have to add 100% of the net profit to your personal income and not just 50%. That takes away some of the reason why people would want to own multiple single family residential properties rather than buy apartment buildings.

    This has only become a problem because of how many more people are doing this. Your new assessment will be out shortly. Big gains coming in equity for most people. Pick up the phone and buy yourself a pre-construction condo and put the payment on your line of credit.

    We don’t need boat loads of Chinese or Vancouverites storming our shores bringing suitcases of newly printed bills. We’ve got equity!

  166. The narrative that I am pushing is that if you want to blame someone or some group look at yourself first.

    Because since you had the ability to use the instant equity in your home to buy another property did that exclude a first time buyer that had to save up over the years? It is very very difficult for a first time home owner to buy a starter home when investors are outbidding them. Then the investor turns to that unsuccessful would be home buyer and rents the home to them at a high rate. Did the vacancy rate increase, decrease or stay the same.

    So there’s the agenda I’m pushing. Take a good look in the mirror if you want to see who may be one of the causes of the housing and rental crisis. It just might be you. Because there are enough of you doing the same thing over and over again.

  167. I am living in a rental property by choice. I have lived in rental properties (by choice) longer than owning…. I have never rented from an institutional owner either….

  168. @JJ not if as an individual I would be taxed at an unfair level. This would simply limit property ownership to only those that can incorporate which requires a staff. So you are proposing to limit property ownership to only one primary residence UNLESS you are a corporation? Bad investment or not that is simply a bad idea. It would also probably increase rents because their would be less bad property investors and more monopolistic ownership….

  169. How many of you really believe Totoro when he says that there is no property tax exemption for secondary homes?

    50% of the profit on the sale is exempt from taxes.

    If we made more renters into owners that would reduce the vacancy rate. How is one person owning multiple properties helping to turn renters into home owners? Instead it is keeping people from becoming home owners.

    That 70 percent of the population as home owners hasn’t changed much over the last 30 years. Even when mortgage rates were in the double digits. In an era of ultra low interest rates, low down payments and ease of financing why isn’t that rate 90%. Do you really believe that 30% of the population wants to live in rental housing by choice. I’m sure that a lot of that 30% would chose ownership over renting if they were given a chance.

    After you buy a house to live in, you no longer have any effect on prices. The market is made up of active buyers and active sellers. But when you buy multiple properties you lower home ownership and make more renters. Saying that we at 70 percent home ownership doesn’t mean much in a country of 3 percent mortgages when we were close to that same percentage when interest rates were 12 and 13 percent. Hording just drives the prices up with little benefit to society. Sure it makes the property owner wealthier but that isn’t solving the housing crisis or the vacancy rate.

  170. Honestly, I think you’re just making stuff up to suit whatever narrative it is you’re pushing.

    Something I fondly refer to as jibber jabber. A coincidental acronym?

    Marko, I think it is ridiculous that you have to own a lot prior to writing the exam. This goes against all ability to create economic certainty in an investment. If the office wants to introduce an exam you should be able to have a study guide and take the test in anticipation of building. This is just a bunch of JJ.

  171. JJ, I’ll ask you again. If only 30% of households are renting (historically a very low number), where is the evidence of “property hoarding”? Honestly, I think you’re just making stuff up to suit whatever narrative it is you’re pushing.

    Do you know what is really to blame for the rising prices in Canada? The high (and rising) homeownership rate. No one wants to rent, therefore more and more people buy a house, therefore the price for first time buyers goes up. Prices aren’t high because of some imaginary “property hoarding”; they’re high because too many people own their own houses!!

  172. JJ I am totally against what you propose. It would be yet another thing stopping opportunity for people to get ahead. I am all for limiting foreign ownership but not making it impossible for a regular joe to own a rental property. Then a regular joe can’t build a house on their own or own a rental house…. More of the rich get richer then…..

  173. The rise in population doesn’t mean that there is no hoarding. We have been building homes at a high rate with no impact on lowering prices. Something else is happening to cause high prices and low vacancy rates.

    No evidence of property hoarding? Is there no evidence of property investing either?

    Surely you are not suggesting that people are not buying rental properties?

  174. And then in the end the warranty isn’t even a warranty… The HPO is only making you, the owner responsible for the house for ten years. Also if you go this route you can’t even get help from a GC ” If an owner builder engages a builder, construction manager, project manager, or any third party to perform these functions, both the owner builder and the hired construction manager/builder are committing offence(s) under the Homeowner Protection Act and could face monetary penalties of up to $25,000 and/or prosecution.”
    Ridiculous. My original plan was to do just that. Owner build with the help of a GC as a consultant. Now I am forced to pay 5% markup and a 10% management fee. I already made this commitment but I don’t like the fact that I don’t have any other option. Thank goodness I didn’t decide to go with an super alternative building like rammed earth or cob or post and beam with hay. Good luck finding a builder for that…. This adds up. This really is a removal of a basic freedom. I am all for stopping unscrupulous builders and helping to prevent unsafe houses being built but this isn’t doing that. They could simply add inspectors and actually inspect buildings as they go up. They could also simply require owner builders to have engineer certified drawings. This is totally ridiculous….

  175. If you want to be a land baron then buy apartment blocks or commercial buildings. Residential housing is shelter and as a society we should not let some abuse that basic human right to have a place to live.

    You want to call them an investor then why would they buy a property that loses money every year? That’s not an investor that’s a speculator who is hoarding properties and driving up the price and the rents which allows them to buy more properties.

    It’s is the extended cycle of rising prices and increasing equity that has caused most of the problem. If we had had a significant market correction then that equity used to purchase more properties would have been lessened and first time home owners would not have been priced out of the market. And a sizable amount of today’s renters would now be home owners.

    Instead the taxpayer will spend tens of millions of dollars trying to build affordable housing. When we already have it. 97% of all housing is not listed for sale. Free up that some of that 97% and the housing and rental crisis goes away.

    Hoarding of any kind is not good for society. And hoarding is only temporary like Oil cartels. Eventually these multiple properties owned by one household will come back onto the market. In the past it has been an economic recession and rising vacancy rates that made landlords sell off their assets. But since this market has been going for so long it would not be unreasonable to assume that never before in history has the number of homes used as rentals been so large. When it comes time to sell that is a lot of homes coming back onto the market in multiples not singles. One person decides to sell and that could be two, three or more homes being listed. Lower prices would then lower the vacancy rate.

    Last month there was 118 new listings in Saanich East, Victoria and Oak Bay. These areas have tens of thousand of houses. Then imagine if just a dozen or two property hoarders decided to sell their multiple properties? It would change the dynamics of the market immediately.

  176. “I think an interesting question is why there is currently low inventory. If it is not because of the greedy homeowners using their “unlimited access” to home equity and buying up additional properties and freezing out JJ then what is it?”

    The population is rising, and construction is not keeping pace. CRD estimates that population will rise 28% between 2011 and 2038. It rose about 9% from 2001 to 2011.
    https://www.crd.bc.ca/docs/default-source/regional-planning-pdf/Population/Population-PDFs/2014-population-employment-amp-dwelling-projections-to-2038.pdf?sfvrsn=2

    Again, there is no evidence of “property hoarding.”

  177. Regarding the new HPO requirements:

    I’m currently doing an owner build and just snuck in under the old rules. I can’t imagine anyone preparing for an owner build is also going to have the time and resources to prepare for this exam.

    Not sure where these policies are coming from, but it would seem that Building Associations must have some significant lobbying ability and are choking out a citizens lawful ability to build their own home.

    Not everyone can afford to pay $225/sqft to build – never mind have your building site filled with lowest common denominator builder-hired trades that treat your property like one big garbage dump.

  178. The net effect you had on the vacancy rate is zero. The same two people are in the same house. This time however one has become a home owner and not turned into a renter.

    Oh god. Total Jibber Jabber again.

    There is no capital gains tax exemption for non-primary residences and it is not, in my opinion, the “buying up of rental properties” with home equity that would otherwise be owner occupied that causes prices to rise. We had seven flat years or did you forget? The historical rate of appreciation in Victoria is 4.2%. Seven years of flat has a lot of making up to do once you adjust for the prior run-up.

    And neither the net worth stats nor the ROI on the investment (CAP rates are terrible here) support this theory at current prices so I’m not sure why you keep stating this. Property “hoarding” is a pretty ridiculous theory if you actually do the math and realize how few will a) have the cash flow to support this and b) want the hassle.

    In addition, we need rental housing – there is not enough. If only more people were turning their SFHs into rentals at a higher rate we’d might see a stop to the rise in rents for such properties.

    I would agree that first-time buyers are, over time, finding it more difficult to enter the market, and this has been a trend for decades. The property transfer tax exemption, 5% down and withdrawal from RSPs provide some assistance. The intergenerational transfer of home equity and other wealth also helps.

    I think an interesting question is why there is currently low inventory. If it is not because of the greedy homeowners using their “unlimited access” to home equity and buying up additional properties and freezing out JJ then what is it?

    My guess is that the lack of inventory discourages people from listing because where are they going to move to. Plus the market has been rising and some might be waiting to see if prices will rise further in the spring. Maybe other factors?

    I found that article on the drop in prices in Vancouver interesting. We haven’t followed Vancouver in tandem with their meteoric rise but maybe the drop will eventually have an impact here too. Hasn’t worked out so far for those trying to time the market for years on end, but maybe spring will be it.

  179. There’s one thing that people like JJ and others are forgetting. The home ownership rate in Canada is already astronomically high at 69%. And the home ownership rate in BC is even higher at 70%. These numbers are from 2011 but I don’t imagine they have changed much.
    https://www12.statcan.gc.ca/nhs-enm/2011/as-sa/99-014-x/2011002/c-g/c-g02-eng.cfm

    If this “property hoarding” that you speak of is such a massive problem, why isn’t it reflected in these numbers? Or are you saying that it’s purely a local phenomenon (which doesn’t make much sense because cap rates are lower here).

    If JJ was right, the percentage of owning households would be lower than 70%. In actual fact, that percentage seems to be rising. For example in Canada overall it rose from 64% in 2000 to 69% in 2011.

    So I ask again, where is the evidence of this “property hoarding”?

  180. “Hogwash. All but one of the houses I’ve bought have been converted into 2 or more suites.”

    Says Mike the admitted slumlord who buys “transitional” houses for profiting off the less fortunate.

  181. Hogwash Micheal. Those homes could have been owner occupied and then the home owner would be using the suite to augment their income.

    The net effect you had on the vacancy rate is zero. The same two people are in the same house. This time however one has become a home owner and not turned into a renter.

  182. “Good thing Victoria doesn’t have the same issue”

    Agreed Chris, note the word “plunging” no one here wants to talk about. Ah, it’s different here right? They were just asking too much in the first place.

    Yep, multiples of agents are wrongly pricing by half a million or more because they’re just too greedy, not because the identical place down the street sold for the same a month or two ago. Just like in Oak Bay,Gordon Head etc. 😉

    “That home, located in Renfrew Heights, was initially listed at $1.36 million in August, but sold for $800,000 in mid-November. “

  183. JJ said:

    As it is now, those that are using their equity to buy up properties and then use the properties as rentals are not helping with vacancy rates

    Hogwash. All but one of the houses I’ve bought have been converted into 2 or more suites.

  184. Dasmo – one more anti-HPO point – I had to get it for the last house I built (through a certified builder). You get a sticker and a binder with a bunch of boiler-plate pages in it (at the time it cost about 2.5K). I actually had a deck leak and cause 5K (at cost) of damage due to defective application of torch-down. You think HPO was any help? Nope – came out of my pocket – on a basically new house.

    I didn’t want to throw this thread off-topic but I’ve been receiving a flurry of emails in the last few days from some very desperate individuals. It’s insane the people that are emailing me from across B.C. begging for help with the exam…..one individual has been teaching trades for 30+ years and built homes previously. One individual is a director in a building department with a city in B.C.

    and then people are sending me their interaction with the HPO staff and this sums it up perectly.

    “What happens if I fail the exam?”

    HPO staff “…just hire a builder.”

    Yea, $100,000 for a builder, you know, no problem. Too bad you didn’t know about the exam before you bought the lot and even if you did you can’t write until you buy the lot.

    I put in a formal FOI request today. If no response I will be buying a new domain name StopTheHPO.com or similar (any suggestions? thought about FtheHPO.com but maybe too aggresive).

    I am also actively looking right now at ways to write the exam just to document how idiotic the process is…..one of my friends offered to put my name on his building lot title but don’t want to mess with various problems resulting from that just to write the exam.

  185. That’s an exemption. Make secondary residential properties fully taxable at your personal income tax rate.

  186. JJ-“Instead it would be better to make it less profitable for people to use their home equity to buy more properties by eliminating all tax exemptions on the sale of non primary homes”.

    I wasn’t aware there were any exemptions for non-primary residence? Isn’t it net proceeds / 2 to income tax?

  187. Dasmo – one more anti-HPO point – I had to get it for the last house I built (through a certified builder). You get a sticker and a binder with a bunch of boiler-plate pages in it (at the time it cost about 2.5K). I actually had a deck leak and cause 5K (at cost) of damage due to defective application of torch-down. You think HPO was any help? Nope – came out of my pocket – on a basically new house.

  188. I don’t know if it is fair to make it more difficult for first time home buyers when they already face a challenge of saving a down payment over years and years to obtain a property. Unlike property owners that may just use the increase in their equity to buy more and more properties. With almost unlimited access to a large amount of equity in their homes they can put down larger and larger down payments forcing the first time buyer out of the market. Higher prices just means more equity that they can tap into to buy another property.

    Instead it would be better to make it less profitable for people to use their home equity to buy more properties by eliminating all tax exemptions on the sale of non primary homes or extend the 15% tax to secondary residential properties.

    As it is now, those that are using their equity to buy up properties and then use the properties as rentals are not helping with vacancy rates they are just turning what would be new home owners into renters.

  189. Dasmo -“Sheesh. This HPO sure is irritating. You need a “Home Owner Protection Office Form” for the building permit application. As a muggle without the password I can’t even find out what that is…. What is with all the secrecy?”

    I applied for the HPO homeowner exam a couple of weeks ago and am still waiting on them to let me know if they’ll allow me to write the exam or not. Have a demo permit in hand, plans into the city this week. In the ‘confirmation of application’ email I received, they said ‘there is nothing else which you can do at this point, we’ll contact you when we’re good and ready’.

    I think another interesting discussion topic (for me) would be looking at the cost of construction correlated to housing prices. Seems like they’re tightly correlated – but if prices were to decline, is there a floor set by the cost of construction? If we were to assume that trade labour rates were cut in half and lot values dropped 30%, what does that look like for new builds and major renovations? Or, does construction basically stop at a certain point because the confidence is out of the market and nobody is willing to stick their neck out?

  190. Dasmo:

    Just remember that you are paying these guys to make your life harder. The builders must love being virtually given a monopoly.

  191. Sheesh. This HPO sure is irritating. You need a “Home Owner Protection Office Form” for the building permit application. As a muggle without the password I can’t even find out what that is…. What is with all the secrecy?

  192. No.

    No what? I’m not sure I understand what the point is of the no or how it relates to high income earners or whatever the point is?

    What do you think the people buying those $60,000 oak bay houses were doing in the 1960s?

    I wasn’t around yet, but my grandparents lived here then. They bought a house in Oak Bay in the 50s on very limited incomes and never moved again. They had lower incomes and I think the house was about 2x median income back then. They would not have been able to afford to buy in Oak Bay today based on their incomes because prices have increased faster than wages.

    Affordability on a monthly basis may be okay today due to low interest rates and two income earners, but on the overall asset value prices are much higher relative to incomes. The equity is much higher and the income-price gap keeps growing. You yourself have graphed it:

    https://househuntvictoria.ca/2016/03/17/a-brief-history-of-prices/

    Inflation since 1960 has averaged 3.83% per year. Family incomes have risen, I don’t have a good stat on the rate, but so have income taxes – by about 25%.

    Prices in Victoria for houses have risen 4.2% per year. That differential compounds. My understanding is that the multiplier for median family incomes vs. housing costs is much higher now. What was 2.5 x median income for my grandparents is now 9 or 10 times median income – maybe higher in OB.

    People using equity to upgrade is nothing new. The percentage annual appreciation is also nothing new.

    Yes, your point? Equity is growing faster than incomes and the ability to buy based on savings from income is eroded. This means more of the market gains have to be based on accumulated equity, or other assets to bridge the income-based affordability gap. It seems very different than it was in the 1960s, but perhaps I am missing something.

  193. So, yes, the income-based stats are interesting but lacking in meaning when we try to gauge affordability when it comes to buying a house for all except perhaps some of the minority buying in as first-time buyers.

    No. What do you think the people buying those $60,000 oak bay houses were doing in the 1960s? A small minority were first time buyers, the rest of them were upgrading from something else and using their equity to do so.

    People using equity to upgrade is nothing new. The percentage annual appreciation is also nothing new. You’re talking about stuff that has happened here since houses existed as if it was a new phenomenon.

  194. Either the percentage of wealthy people withdrawing small incomes from their businesses is insignificant, which means that reported income is an accurate measure of buying power, or it’s not insignificant, at which point the stats lose some meaning.

    Leo, your logic is off. This is not an either or scenario. That was an example of reported incomes not reflecting buying power and it only affects the 1-2% of high income earners.

    Incomes really are only one factor, asset base is the other. Your dad could sell his farm tomorrow and buy a fancy house in Kelowna with the proceeds even if his reported income is $50,000 a year.

    So, yes, the income-based stats are interesting but lacking in meaning when we try to gauge affordability when it comes to buying a house for all except perhaps some of the minority buying in as first-time buyers.

    Also, I wouldn’t consider a high income earner “wealthy”. It is the asset base that matters. Earned income can disappear or be spent fairly easily and it require effort to maintain. Passive income from assets is much more reliable and net worth is a better measure of wealth.

    I’ve also never posted that amounts withdrawn from businesses by most high earners were “small” or “minimal”, just that the reported incomes of these individuals do not reflect actual buying power nor does your reported income reflect your buying power without including your other assets.

    Income-based buying power is simply not an accurate measure of asset buying power given the asset base of your average Canadian family is over $500,000 and the top 20% have more than 1.3 million in net worth. Sell your paid-off home in Victoria you bought back in 2000 for 300k for 800k and suddenly you qualify for at least a 1.3 million on a median family income. Look at Sidekick Spliff’s example.

    And back to the small minority of top earners who are often incorporated – they may not need 250k or 500k in a year or want to pay 46% income tax to get it, but they are probably withdrawing 100k at least or whatever they need to meet the bills and leaving the rest in the corporation.

    The 1% of high earning self-employed or small business owners are not, imo, driving prices up in Vancouver or Victoria. They’ve been around for a long time: my entire lifetime and yours.

    Dentists are simply not causing prices to rise in Comox. In my opinion, it is people moving to these areas or moving up in these areas who have home equity or other assets that are most likely to be driving this market. Homeowners like you Leo who could cash out and downscale to a more affordable house in Courtenay, or use their equity to qualify for a more expensive place in Oak Bay.

    My point below and again is that retained earnings are like home equity in a primary residence, or an inheritance, or a gift from parents as they are not reflected as “income”. It is flawed logic to tie incomes to affordability without accounting for such assets as your average Victoria homeowner has significant net worth.

  195. totoro – fyi there was some sarcasm in my post, making light of the implausable explanations I’ve read here about the hot Victoria market.

  196. The bottom line imo is that income is not an accurate measure of buying power

    You can’t have it both ways. Either the percentage of wealthy people withdrawing small incomes from their businesses is insignificant, which means that reported income is an accurate measure of buying power, or it’s not insignificant, at which point the stats lose some meaning.

    My bet is on the former. There have always been the 1%, but the vast majority buy houses with earned and reported income.

    affordability has not remained tethered to incomes

    Affordability is within historical ranges for Victoria.

  197. Leo, do the bright lights illuminating the soccer field at night bother you? They shine right on your house.

    Nope. They are always off by 10. Also in the summer when you are actually outside there is the least activity on the soccer field.

  198. My understanding was that most high earning doctors are incorporated. Is that not correct?

    It is correct and it is also correct that high earning doctors would fall within the top 1% of incomes in Canada – that is incomes of at least $222,000/year.

    In terms of assets, the net worth of the top 1% of Canadians appears to be more than $2,000,000. Most of the net worth of Canadians is in home equity. High appreciation markets build on this.

  199. Today’s buyers are tomorrows bagholders. More price slashes to come. Look out below.

    Prices plunging: Houses selling well below asking, some under $1M

    Listing prices for detached homes appear to be falling as Vancouver’s real estate market faces what an expert calls “significant headwinds.”

    Data released Friday showed that those looking to buy a single family detached home in the city last month forked over about $1.5 million in Metro Vancouver, but recent listings suggest that the benchmark is falling.

    CTV News found a number of East Vancouver homes priced under then $1 million mark during a search of MLS listings on Monday, including one that sold for $560,000 below the initial asking price.”

    http://bc.ctvnews.ca/prices-plunging-houses-selling-well-below-asking-some-under-1m-1.3190864

  200. In the past you have talked about how the income stats aren’t reflective of who’s buying real estate because all those high earners that are retaining earnings. Now it’s insignificant (which is likely correct).

    That seems to be an unfair characterization Leo which ignores the other part of what I stated and a way of evaluating information that is … polarized. What I actually stated was:

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

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

    The bottom line imo is that income is not an accurate measure of buying power and affordability has not remained tethered to incomes due in part to the effect of higher than inflation appreciation in our market.

    Retained earnings are a factor at the top, which is consistent with what I have stated below, in this and something I would recommend to those willing to live below their means, but so are inheritances, gifts and other investment appreciation such as through the stock market. Money makes money and this is not always reflected in income stats until a capital gain is realized, or a business is sold etc.

    When the capital gain is in the primary residence this dramatically increases buying power, but has not been reflected in income tax returns – perhaps until 2017.

    Income is really a poor measure of affordability when it is divorced from assets.

  201. Leo, do the bright lights illuminating the soccer field at night bother you? They shine right on your house.

  202. Sheesh with such low inventory it’s hard to imagine a price decline this spring. Will depend on what wild cards are played. Asking price cuts are somewhat useless since most are now pricing way high. Over asks by huge amounts are probably not going to happen as much simply because asking prices are now going to be way higher. Last spring was before the jump so asking prices were at 2015 levels. Now asking prices are at 2017 levels….
    As far as imperfect houses go. I did alright buying one. I would have done better if I sold it in May vs January….

  203. My guess would be we are talking about 1% of the adult population who are using a minimum withdrawal strategy from an incorporated business.

    In the past you have talked about how the income stats aren’t reflective of who’s buying real estate because all those high earners that are retaining earnings. Now it’s insignificant (which is likely correct).

  204. Not to forget Jack that Marko mentioned above average $5 million range sales last month, as well as a $9.5 million in Oak Bay.

  205. I suppose it could be happening that asking prices are being lowered. Here are the median asking prices for houses in Victoria, Saanich East and Oak Bay for the various months this year to date.

    Month List Price, Median
    Jan $769,350
    Feb $799,888
    Mar $788,000
    Apr $782,400
    May $767,000
    Jun $834,450
    Jul $799,900
    Aug $879,000
    Sep $898,500
    Oct $899,000
    Nov $912,500
    Dec $899,900

  206. Mike should be working for Tourism BC but they just laid off a ton of workers the past month or so while the media spun it that the tourists never stopped coming.

    I lost track of how many listings have been reduced by only $10K or as low as $1K and relisted versus pulled off the market til the new year. All nice places in the core in nice hoods too. I’m seeing a tired market as buyers were scooping these places up well over asking a couple of months back.

    The new year should start off with a bang for all those Trumper pumpers like Mike who think he’s the savior. Once the psycho really gets China pissed off and they start dumping some of that $1.2 Trillion in US debt and they can’t borrow anymore off of them for his massive infrastructure program, I’m sure most people aren’t going to want to make any large purchases until the shit storm has completely blown itself up…..in about 4 years. 😉

    ‘Everybody loses’: What an economic war between US and China would look like

    “I think everybody loses. And the global economy is even worse when you have the two biggest economies going after one another,” said Manning, a senior fellow at the Atlantic Council’s Brent Scowcroft Center on International Security.

    http://www.cnbc.com/2016/12/05/trump-news-how-china-and-the-us-could-hurt-each-other-economically.html

  207. I’m going to offer an addition to CuriousCat’s post (thanks btw). When my wife and I were first-time house hunters in 2004, we were pretty overwhelmed at the high price of “junk”. That was another “heating up” market and in Fairfield prices were 400K+, which at the time seemed steep. One of the first houses we looked at was in a good location, but was on a 30-foot wide lot and had an absolutely gross ‘cabin’ on it. We immediately crossed it off our list and kept on looking. 30 or 40 houses later we decided to sit down and actually think about how we could make this cheap-ish narrow house work for us. With the savings over buying the next cheapest house in the area, we figured we could almost afford to build a new house. We ended up buying the place, putting a little sweat equity into it, and ended up with a cute little place. We ended up building a new house there a few years later, and while it ended up being about 100K more than buying a similarly junky place on a larger lot, it was nice and new and at 2k square feet, big enough for a small family.

    We ended up selling the place this year for 1M to some very happy Vancouverites, to whom a 30-foot wide lot wasn’t out of the ordinary.

    While I agree with most of the things CuriousCat is saying with respect to busy streets, don’t be too quick to dismiss a house/property – especially if it’s relatively inexpensive and been on the market for a while. Someone mentioned a lot on Richmond which was 30 feet wide and dismissed it right away – but almost everyone who came to our house thought it was great. Certainly the width was never an issue. I don’t know anything about that lot, but if you could get it for 550K and end up with a new house all in for 900K, that doesn’t seem like bad value to me (busy street aside).

    Compare that to new panhandled houses selling on Madison street (also small lots) selling for 1M each before the recent run-up.

  208. Since the middle of last month the median sales to assessment ratio has slipped marginally to 132%. Compare that to the scorching hot month of April when we had 367 house sales in the core when the sales to assessment ratio was 127%. That’s not much of a change in prices but a heck of a drop in sale volumes when we only made 150 house sales last month in the core. And it is very doubtful that sale volumes are going to improve this month as we will likely fall to 100 house sales in the core.

    At the same time the median and average days on market is increasing along with the months of inventory doubling since April.

    And how about those marginal houses along busy streets. Just as AG pointed out a property along Bay street sold several months back at $460,000. However the last sale along Bay street was in October at $390,000.

    I’m not implying that prices are falling just that there are weaknesses in the market that shouldn’t be there if everything was going swimmingly well. If you’re a prospective purchaser stay vigilant but not over excite yourself burning the rubber off your Ford 350’s wheels to get to the next open house. Give yourself time to make an informed decision.

  209. Oh I don’t think so Michael. AG would have to up his/her game a lot more.

    Perhaps some of your graphs would help him/her.

  210. due to all the rich business owners who only declare a minimum income.

    How many “rich business owners” do you know earning a lot and withdrawing only a small income? It is, in my experience, quite uncommon. First, rich business owners are uncommon in general, and second, with additional income often comes lifestyle creep.

    There are about 170,000 small businesses in all of British Columbia. Only 51 percent of small businesses survive five years so we are talking about 85,000 small businesses. Of these, many will not be earning enough income to incorporate to retain earnings – you need over $100,000 plus operating cash flow a year to make this worthwhile. The median small business owner-operator in Canada makes $49,000/year.

    Of those that incorporate and retain earnings, they will need to draw enough to live on. A minority may declare a smaller than average income: ie. those with a second earner, those who have not divorced, older owners with paid off houses and children who are grown, and those that have sold a capital asset and are living on the proceeds.

    My guess would be we are talking about 1% of the adult population who are using a minimum withdrawal strategy from an incorporated business.

    Courtenay, Comox and Cumberland have all experienced a higher than average rate of population growth in the last seven years. Cumberland itself has grown by 25%. Prices are still affordable compared to other areas like Victoria which, with the climate, appears to be attracting retirees. The population of over 65s has risen 25%. Retirees tend to have lower incomes because they need less to live on with paid-off homes. Mystery solved?

  211. From that Globe article that you can’t access, Hawk:

    In the Toronto area, where prices for detached houses have jumped more than 27 per cent from a year earlier, real estate professionals appeared more resistant to the government’s efforts to collect data than their Vancouver counterparts did, the documents show.

    “Many were curious as to what share of foreign buyers CMHC considered a problem,” CMHC wrote. “Many hoped that any data collected by CMHC will not be used to say that there is a problem.”

    Toronto realtors told CMHC they keep records on the identities of buyers and supply that information to the Financial Transactions and Reports Analysis Centre of Canada, which investigates money laundering, but they don’t want to be seen to be policing the real estate market. “Realtors are concerned about privacy and are mindful of what they pass along to FINTRAC,” some industry players told CMHC. Others “expressed doubt about the accuracy of FINTRAC data.”

  212. AG’s got you pegged JJ 🙂
    No need to be juvenile and pull out the M word on people who understand our market.

  213. JJ – this is what happens when you make bad valuation judgements. People call you out on it. There’s no need to regress to name calling.

  214. Headline in the Globe, can’t access the whole article.

    REALTORS LOATH TO SHARE FOREIGN BUYER DATA, CMHC TALKS SHOW

    Tamsin McMahon – REAL ESTATE REPORTER

    Ottawa’s attempts to track foreign investment in the housing market are likely to be hampered by realtors’ reluctance to share information on overseas clients, industry players told closed-door meetings with the country’s housing regulator.

  215. $599,000 isn’t falling! AG, you read everything I wrote and no where did I say the market is falling.

    If you would try to understand rather than immediately get your knickers in a knot. My post clearly states not implies that the builder/owner would rather sell the lot than build on it. The implication is that the builder may make a bigger profit selling the lot than building and selling a house.

    Here, I’ll show you the part you didn’t understand…

    ” In fact it’s owned by a builder that would rather sell the property than build on it.

    Things that make you go hmmmmmm?”

    And in this post I stated that you lack understanding. However, at this point you might think that I am implying that you’re a moron. That’s not true because I don’t need to imply that as your responses do that themselves.

  216. I guess the Comox Valley must also have a shortage of housing, a tight labour market and people with lots of extra cash that realized the real estate here is way undervalued, because houses here have also been selling fast and way over assessed. It couldn’t be anyone from Vancouver or Victoria driving up the prices, I’m sure they are a tiny, insignificant part of the market! I also assume the extremely low income levels are just like Victoria, due to all the rich business owners who only declare a minimum income.

  217. A Chinese-only tax would be the most appropriate fix.

    Er, no. A citizenship-based tax lumps all individuals in the same box and would be discriminatory. Not all Chinese buyers are “speculators”, acting illegally, or taking advantage of the system. Our former tenant was a Chinese student who immigrated with her parents and bought a house here. Not sure why she should be taxed while someone in the same situation from the US would not be.

    The $599,000 house is priced at more than 60% over assessed – maybe the $649, 000 was a bit of an overreach for the house age and lot size?

    The building at Oak Bay Ave and Richmond is, unfortunately, just outside the Red Barn/Jusu gentrification zone. If it was 2 blocks further East it would be totally different.

    One block I’d say. The nerve of pricing it the same as the OB and Foul Bay building now that I think about it.

  218. By way of comparison, 1551 Bay St sold back in May for 460k. It’s a larger lot than the one that JJ posted, with a larger house that has since been renoed.

    It’s just around the corner from that 599k house on the small lot that supposedly represents the market crashing.

  219. JJ,

    The purpose of your post was to imply that the market was falling. I have no problem with that, but you have to include the relevant information. If you say that a Jubilee lot is on sale for ‘only’ $599k, you have to include the fact that it’s a 4000sf lot.

    Otherwise it just looks like you’re lying by omission.

    If the market really is falling, surely you can find some real examples?

  220. AG, how big do you want the lot to be? The lot would allow for a 3,500 square foot home.

    Not big enough for you?

  221. “In fact it’s owned by a builder that would rather sell the property than build on it.

    Things that make you go hmmmmmm?”

    Sounds like the builder doesn’t want to risk building something trendy like an ugly stacked box on even a 4000 sq ft lot. Peak Lot by the looks of it. 😉

  222. My main issue is the proposed solution is taxing ALL foreigners. The issue isn’t because they are foreign (i.e. “taxing them is racist/xenophobic!”), my issue is it targets ALL foreigners with no evidence of there being an issue let alone it being caused by ALL foreigners. If it’s capital flows from China, then block that.

    You’re arguing that instead of an equal tax on all foreign buyers we should target one nationality (essentially race) and that will make it less racist? Singling out one country would definitely be racist, and the government isn’t nearly nimble enough to keep pace with changing market conditions. Maybe next year it will be rich Americans causing a problem for local affordability. By the time the law can be amended we will be on to the next country.

    To lessen the impact on people who are here to work and live, I propose adding a rebate where if you declare 5 years of earned income over a certain level you can get your 15% back.

  223. Strange that a house near Jubilee hospital hasn’t sold. Listed now for 25 days starting at $649,900 and price dropped to $599,000.

    Used as “short term” rentals yielding $3,000 a month (that should make you popular with the neighbors). But because it is only 650 square feet you would think the builders would be climbing all over themselves to buy it. In fact it’s owned by a builder that would rather sell the property than build on it.

    Things that make you go hmmmmmm?

  224. Peak Cranes = Peak House there Mikey. Just like all the other classic “peaks” of business cycles of the past when the big money leaves the province. Look for some great sales coming up in the New Year like there is in Vancouver. 😉

    @SteveSaretsky
    Van West condo sales down 35% year over year for November. Hmmm #VanRE

  225. Challenging times indeed! Victoria seeing big job gains (20-35% YoY) in high-pay sectors. Bodes well for Spring as many newcomers buy after being at a new job for a year.

    Numbers in the professional, scientific and tech sectors climbed to 19,100 in November, up from 14,900 the same month a year ago. The region’s tech sector is busy.
    Cranes at building sites in the capital region have translated into more construction jobs. There were 16,300 last month, up from 13,300 the year before.
    Building, business and support services jobs climbed to 10,400 in November from 7,600. Jobs in public administration rose to 22,400 from 17,800.

  226. The building at Oak Bay Ave and Richmond is, unfortunately, just outside the Red Barn/Jusu gentrification zone. If it was 2 blocks further East it would be totally different.

  227. Panic in the bond market. Lock in now before the rates spike.

    Canadian Provinces Open Bond Floodgates to Beat Rising Yields

    Canadian provinces have rolled out a flurry of bond sales as they scramble to lock in borrowing costs before a global-market rout intensifies.

    “For issuers viewing the recent back-up in rates as a precursor to even higher yields ahead, there’s financial incentive to raise money in the here and now,” said Warren Lovely, the Toronto-based head of public-sector research and strategy at National Bank Financial Inc. National Bank leads a Bloomberg ranking of Canadian government bond sales for the third year running. “In a world of heightened geopolitical risks, provincial issuers have learned to jump through issuance windows when they’re open.”

    https://www.bloomberg.com/news/articles/2016-12-05/canadian-provinces-open-bond-floodgates-to-beat-rising-yields

  228. “That said, the same builders sold out of the same type of units at the same prices in the building at OB and Foul Bay and downtown Vancouver is full of such places. That unit is under construction so it is no wonder it is “still for sale”.

    Which is why the top floors and a few others have been put up for sale within a year of full occupancy. Only 2 left for sale, but I’m sure they will be flipped once built. This isn’t bustling downtown Vancouver with the big city benefits to offset the noise factor, it’s supposedly laid back Victoria/close to Oak Bay with nothing substantial of interest near it.

  229. A Chinese-only tax would be the most appropriate fix. But that would immediately be condemned as racist. Even a tax aimed at countries where speculators come from would also be condemned as another head tax, because it would be 90% directed at Chinese nationals.

    The best way to get the legislation enacted is to make it a general foreign buyers tax, and deal with the fact there might be a little collateral damage along the way.

  230. Excellent article Curious Cat! Lots of aspects I had never considered.

    I know someone on McKenzie proper. I was amazed at how quiet their home was. They were up off the road a bit, set back and had a nice big fence in the front yard. I would have assumed it would be loud. Nope. I was there rush hour. It was fine. Plus it was a totally cool house I would have passed by due to it’s location. Definitely some deals to be had on busy streets.

    I’d like to address Andy7 accusing me of using the “race card”. Please learn to use that term properly if you are going to use it. Race card is when you interject race into a conversation where it doesn’t belong.

    E.g. (correct usage)
    “Hey, slow down this is a school zone!”
    “You’re just mad at me because I’m a purple alien!”
    “No. Don’t use the race card. You were speeding, race has nothing to do with it.”

    Trying to shut down a conversation using the term “race card” is simply a straw man argument.

    I’m fine with implementing measures to prevent foreign speculation, given evidence of it being an issue. It happened elsewhere and 2 months data is not evidence as far as I’m concerned.

    My main issue is the proposed solution is taxing ALL foreigners. The issue isn’t because they are foreign (i.e. “taxing them is racist/xenophobic!”), my issue is it targets ALL foreigners with no evidence of there being an issue let alone it being caused by ALL foreigners. If it’s capital flows from China, then block that. If we can’t do that at the banking level, then tax Chinese foreigners purchasing homes along with, “Sorry, we can’t have our housing stock treated as a stock market. Once something is done about capital outflows from your country we will consider removing the tax.” It has to be applied evenly to all offenders though. If there are capital flows from UAE or Iceland or Uruguay, block them. We don’t need to unfairly affect countries that are not part of the problem. Countries where we are allowed to buy freely.

    If it’s foreign speculation, then fine, target that. If it’s speculation in general then target speculation in general (foreign and domestic).

    Taxing all foreigners is a poor solution. It’s much too broad/coarse. You don’t get chemo for skin cancer when a simple excision will do. You don’t roundup your lawn when you can pull a few weeds.

    But hey, I don’t do foreign policy. In my line of work I get to chose solutions that narrowly address the issue with as little collateral damage as possible (usually none). It’s rare I have to compromise on what I’d consider a gross hack of a solution.

    I think anyone who lives here, works here and pays taxes here should be able to buy here without targeted taxes making it an undue burden. Buying a home is a big decision. If someone foreign wants to commit to setting down roots here, that’s a big deal and huge vote of confidence in our community. Yes, the tax isn’t applied to people with permanent residency but getting permanent residency isn’t a trivial procedure. I have friends that should have been shoe ins under the skilled worker class and it was anything but simple. In the amount of time it takes to get residency the market could have moved significantly or you’ve passed up on your dream house.

    If we can show the majority of foreign buyers in Victoria are speculators, then I’ll reluctantly agree to tax all foreign buyers. Non-speculating foreigners will have to wait out the permanent residency process to buy. I have a hard time believing that’s the best solution, but if there is a problem and that’s the best solution available to us.. so be it.

  231. We’ve never lived on a main road, but we have lived next to an elementary school which was great as our kids went there. The only noise issue was the basketball court after hours. I’d recommend not buying within earshot of a public basketball court as teenagers tend to show up for a game of pick-up at all hours.

    While being next to a park or other public space has its advantages, it can create issues – I have friends with waterfront in Oak Bay who have teen gatherings at all hours on the beach below them on nice summer weekends.

    When we first bought our compromise was style and condition. The house didn’t have the 50s charm we were looking for and it was in real need of updates. After going through multiple renovations on multiple homes I can see why people who can pay more are willing to pay a premium for a fully updated home.

    That’s why I’m confused why people pay an insane premium for places on Dallas Rd. Folks, it’s not oceanfront, it’s busy streetfront.

    Location and view. I wouldn’t be as bothered by the Dallas Road scenario myself. Traffic moves slowly, dies down to almost nothing after dark, and it is not a siren or truck route. I think traffic noises easily become background noise when it is just slow moving passenger vehicles.

    Which is what blows me away with that new development at Oak Bay and Richmond with what looks like a 10 foot distance from an extremely busy intersection and $1.1 million to live on the 4th floor for a mere 1360 sq Ft still for sale.

    I would not buy this type of property myself. Being right at a busy intersection with other apartments all around is not very charming and the noise is more prominent. That said, the same builders sold out of the same type of units at the same prices in the building at OB and Foul Bay and downtown Vancouver is full of such places. That unit is under construction so it is no wonder it is “still for sale”.

    I have noticed that homes on busy roads are harder to sell in all but the hottest markets and there is definitely a discount factor. For me, this would only be worth it for overall walkable and charming location at the beginning of home ownership if I planned to move up and this was the only way I could afford it. I’d rather live in a smaller less updated home off a busy road otherwise.

  232. Looks like there may be a lot less sales than last December although a bit early to tell. One almost expects inventory to go down a bit over Christmas since some people take their houses off the market for the holidays.

  233. Where you live does have an impact on value. In a balanced market, a house on a busy street will appreciate at a similar rate with the neighborhood. However, if the market is strongly in favor of sellers you’ll find yourself paying more as the discount between a busy street and a less heavily traveled street narrows due to lack of supply.

    Then,if you find yourself having to re-sell in a balanced or god help us, a buyers market then you’ll find that the house on a busy street will take longer to sell and will have slipped in value relative to other properties in the hood even if prices remained flat in most of the neighborhood.

    In general houses prices on busy streets are the last to go up in value but the first to go down in value. NOTE: that’s why I like watch those less desirable or marginal properties that are on busy streets such as the recent sale of a home on Bay Street that sold at $390,000 and took 37 days to find a buyer. The last time a house on that busy street sold in that price range was over a year ago. A harbinger of the future?

    Busy street locations do provide one solution for those that want to live in the core but want to pay prices similar to the communities outside of the core.

    Personally, I’d rather commute than live on a busy street like Bay or Quadra but as the saying goes your mileage may vary.

  234. In terms of living on a corner the problem is acceleration and Ford F350 type vehicles pulling away from the stop. One thought I had earlier this year as my clients purchased a home in Fairfield on a corner with a 4-way stop is it will get better in 10 to 20 years with electric cars. You won’t get the engine noise from acceleration.

    As for busier streets I don’t think electric cars will help as most of the noise is created from the tires.

  235. “That’s why I’m confused why people pay an insane premium for places on Dallas Rd. Folks, it’s not oceanfront, it’s busy streetfront.”

    Which is what blows me away with that new development at Oak Bay and Richmond with what looks like a 10 foot distance from an extremely busy intersection and $1.1 million to live on the 4th floor for a mere 1360 sq Ft still for sale. There’s either some very stupid money still out there, or some very stupid developers about to go under.

  236. I am on the corner of Rockland and St. Charles, both fairly busy during the day. The house is set back about fifty feet from the street which helps as does the line of evergreens. The sound is louder on the second floor than the main floor. What helps the most is that I put the master bedroom at the back of the house and as far away as possible from the two main streets. At night it is quiet except for the occasional sirens going down St Charles. The noise is the single biggest drawback to the house but that is life in the big city.

    The added traffic from the extra basement suits probably does not help and parked cars on St Charles seem to have created a new type of traffic maze.

  237. Mon Dec 05, 2016:

    Dec Dec
    2016 2015
    Net Unconditional Sales: 78 465
    New Listings: 85 451
    Active Listings: 1,757 2,517

    Please Note

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

  238. The side of the house ran along the length of the street and couldn’t have been much more than 15 ft back from the road. Even with all the windows closed it was incredibly noisy. (And the windows were all newish.) Cool house with a rooftop patio with an ocean view, but the incessant noise would have ruined it for us.

    That’s why I’m confused why people pay an insane premium for places on Dallas Rd. Folks, it’s not oceanfront, it’s busy streetfront.

  239. We live on a street across from an elementary school that is referred to as a commuter collector (i.e. busier than a side steeet but little to no commercial traffic). Speed limit is 40km outside of school hours. There is only ocassional emergency vehicle traffic and in the evening the street is very quiet. There is a bus stop nearby on the opposite side of the street which does make it loud when the busses accelerate from the stop. Fortunately they do not run through the night. I’m glad that caveat emptor experienced an improvement with the front window replacements. That is high up on our list of upgrades although as much to stop condensation as reduce noise. Ultimately the street was the compromise that enabled us to afford a large house and a large lot in what we feel is an ideal neighbourhood.

  240. That was extremely thorough. Let me add that you need to also make sure that you are not within three blocks of any firehouse since they have a policy of having to turn on their sirens while entering the public street (or so I was told by the fire hall in Oak Bay.)

  241. I’m looking for a house actively and run into this dilemma all the time. There have been a few nice places on Quadra, Richmond, and Foul Bay that we’ve ultimately decided against because of the busy streets. For me it’s mostly the noise and low privacy that are bothersome. I also worry about resale value / appreciation not being as great. The place that took the cake for me this year was a house on Cordova Bay Rd right on a curve in the road on a pie-shaped lot. The side of the house ran along the length of the street and couldn’t have been much more than 15 ft back from the road. Even with all the windows closed it was incredibly noisy. (And the windows were all newish.) Cool house with a rooftop patio with an ocean view, but the incessant noise would have ruined it for us.

    House hunting is a balancing act, for sure. We’ve seen two houses that tick all of our boxes and lost them to others in auctions. (Dont worry, JJ — we only put in our best bid, never countered, and walked away.) Many more have been varying degrees of imperfect, some worth putting in offers on others not. The thing I’m most unwilling to compromise on is location. I’ve expanded my horizons within the core, but I’m not willing to give up on the core for all kinds of lifestyle reasons (we walk or cycle as much as possible and value low commuting times). I’d rather be a core VicRenter forever than a LangfordOwner. But obviously not everyone feels that way.

  242. Lived on a medium busy street in Edmonton. Not too bad as we had a boulevard and a service road separating us from the travel lanes. Replaced the living room and master bedroom windows that faced the street which helped a lot. Flat straight stretch of road which helped as there was minimal acceleration going on. Overall not too bad.

    However in Victoria ended up on a cul de sac. Love the quiet (when the wind isn’t howling). Neighbourhood kids come to learn or practice biking. We chat with our neighbours in the middle of the street. Basket ball and street hockey happen outside. Overall worth the price upgrade compared to some medium busy streets we looked along (Fairfield, Richmond, Richardson)

  243. We lived on a few busy streets while we were renting. Shelbourne and Quadra St in apartments, and then Cedar Hill Rd in a rented house. It didn’t bother me much when we didn’t have kids, but we did decline one rental on Landsdowne right here https://goo.gl/maps/Eom9b9Jv93r because it was impossible to get out of (would have to back out onto Landsdowne with zero visibility to get out). Back then the landlord was so desperate to have us he offered us free rent to take it anyway, those were the days.

    However when we bought we had a quiet street on our “must have” list. Ended up at the end of a dead end street and I’m happy with it. Interestingly enough it is busy in other ways because we are across from a soccer field and a pedestrian path however kids playing soccer doesn’t really qualify as noise. Also our house has been egged at least three times, which I suspect was either Introvert, or some local teenagers out at night on the path (or both).

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