Dec 19 Market Update

Weekly stats update courtesy of the VREB.

December 2016
Dec
 2015
Wk 1 Wk 2 Wk 3 Wk 4
Unconditional Sales 222 351
465
New Listings 218 315
451
Active Listings 1702 1618
2517
Sales to New Listings  102% 111%
103%
Sales Projection 502 511
Months of Inventory

5.41

Wow, I don’t think I’ve ever seen a 111% sales to list ratio.   Big drop in inventory as well which is the usual occurrence in December but still we are getting to some scary low numbers here.   Will we break 1500 listings at the end of the month?  Last year we dropped 114 listings in the last two weeks of December so it is definitely possible!   Keep in mind at 1500 total listings that is only about 1000 residential properties for sale.

In the last post on the first time home buyers program, first time buyer Auzz wondered about whether to take advantage of it.   I said it is a no brainer to take the free money, but since then local broker Mike Grace has provided some more info that makes the program questionable for even the first timers it is meant to help.

The problem is that the government’s funds are treated as coming from “non-traditional sources” by insurers like CMHC and Genworth.   Programs involving non-traditional down payments are limited to 5 to 10% down, and require a higher premium.

According to Mike, if you as a first time buyer have 10% down, it is better to just ignore Christy’s 5% loan and put your own money down.   Any advantages to interest free money would be outweighed by the higher cost of the higher insurance premium rate – 3.85% using the government’s cash, to 2.4% making your own 10% downpayment (and it’s actually even more complicated/worse than that).

So who’s left that will benefit from this?  Maybe those that can only scrape together 2.5% of the purchase price?  Seems pretty clear we don’t want people with less than $20,000 buying three quarters of a million dollar properties.

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295 thoughts on “Dec 19 Market Update

  1. If 1991 prices had simply kept up with inflation the price today should be 418,000, not a million.

    Not sure what your point is. Mortgage rates in 1991 were 10%. So prices increased from $271,000 to a million while mortgage rates dropped by three quarters. Clearly they won’t drop by three quarters again in the next 20 years so why would you expect continued appreciation at the same rate?

  2. Just a reminder, the previous secular rise in interest rates from ~2% to 20% (between 1946-’81) saw real house prices rise a similar percent to what they have in the secular fall from 20% to ~2% (1981-now).

    I’ll try to find one that goes back a further 10 years to 1946, to fully show how much prices increased as rates were rising.

  3. To all the bears constantly talking about wages being separated from house prices:

    You are forgetting the west shore and condos. That is where the average wage earner lives. The core is not for average wage earners, it’s for the wealthy.

  4. I think it likely that we will see 1 in our lifetime Leo in the core areas of Victoria, particularly OB, Fairfield, Fernwood and James Bay.

    This has already happened in other countries and in the desirable locations on the East and West Coast of the US in what are the appreciation-fueled housing markets. Those who end up being able to buy in these areas are those who have really high incomes, move-up equity, inheritances or family help. We are seeing this effect already imo.

    If you look at the history of house prices going back to the 50s prices have been rising faster than inflation in many places.

    I agree monthly payments remain affordable because of low mortgage rates. Maybe rates will rise a lot and we’ll have a crash in prices, but long-term prices have risen in this direction even after a crash. And I do believe that prices will go down or stall here at some point. The appreciation rate is unsustainable right now. Government could also implement more policies to control this trend.

    In 1991 the average home in oak bay was $271,000. http://www.vreb.org/media/attachments/view/doc/1991/pdf/1991%20Sales%20of%20Single%20Family%20Dwellings%20By%20District

    Today the benchmark home in oak bay is over one million dollars. The benchmark is likely lower than the average.
    http://www.vreb.org/media/attachments/view/doc/statsrelease2016_11/pdf/November

    If 1991 prices had simply kept up with inflation the price today should be 418,000, not a million. My parents who bought in 1986 in the Okanagan for 140,000 should have a house that is worth 285,000 today if it kept pace with inflation. Instead it is worth close to 500,000.

    I don’t believe all areas of Canada will experience this effect, nor have they, but some will and have. These are the appreciation markets with a combination of desirable characteristics that include weather, environment, density and jobs.

    I don’t have a crystal ball so maybe this won’t happen, but it is one of the possibilities and it is what has happened over my lifetime so far.

    If affordability is impacted by rising mortgage rates people will likely list properties they cannot afford and there will be fewer buyers – but this will not be the case for the majority of owners who have significant equity.

    Maybe we will have a repeat of the 1980s when everything crashed, but look where we are now, and look back on the market trajectory over the long-term and over many years of varying mortgage rates.

  5. I think it is fairly reasonable even based on recent history given ex. that 2007-2014 had little appreciation. Overall long-term this is the average.

    It’s the average because falling interest rates kept affordability within historical norms. If you expect 4% real appreciation to continue, that means you either think:

    1. Victoria prices will completely detach from local incomes (which has never happened before)
    2. Local incomes will increase massively
    3. Interest rates will drop further

    Which is it?

  6. AG
    In practice, a lender would never reduce the size of the HELOC below the current utilization if you are making your payments.

    That is so cute, presuming the banks have the discretion to determine OSFI regulated legislation on Helocs.

    If only they could, I know that the big banks are fairly philanthropic and understanding. I remember in 1982 the banks were just as gracious with people with large mortgages. A lot of people avoided losing their homes because the banks didn’t want to deal with foreclosures.

  7. Totoro, home owners do get behind in their payments and they do go into foreclosure. Even in a rising market.

    Sure they do. My point is that the house and HELOC are not the primary cause of this. Just like very few Canadians declare bankruptcy, whether renter or owners, those that do generally have divorce, disability or addiction as the underlying cause. Sometimes business failure.

  8. Totoro, home owners do get behind in their payments and they do go into foreclosure. Even in a rising market.

    Sure they do. My point is that the house and HELOC are not the primary cause of this. Just like verry few Canadians declare bankruptcy, whether renter or owners, those that do generally have divorce, disability or addiction as the underlying cause. Sometimes business failure.

  9. Banking on 4% real annual appreciation forever would be foolish.

    I think it is fairly reasonable even based on recent history given ex. that 2007-2014 had little appreciation. Overall long-term this is the average. I’m comfortable using it as a rough estimate for projection purposes provided you can hold through a downturn.

  10. JJ

    Owned 10 years. Worth more than a million. Now there is uncertainty if it’s worth the mortgage. Wow I guess these people were using their house as piggy bank. Wow stories like that always shock me.

    How many foreclosure in the core would you say each year over the past 5 years?

  11. Totoro, home owners do get behind in their payments and they do go into foreclosure. Even in a rising market. I already have my first foreclosure request to be completed in the new year.

    The person has owned the property for ten years, it’s in a nice area of Saanich and likely worth in excess of a million. In this case the assignment is a risk assessment to see if their is enough value in the home to allow the owners to sell the property with their own agent. If not, then they will have a redemption period to come up with the money. If they don’t come up with the money, their evicted, property locks changed and the property is sold by the law firm’s agent.

    From what I was told two weeks ago, foreclosures in Calgary are way up due to the slump in prices with about 225 properties in pre-foreclosure at any time.

    If you want to know what is happening in the Supreme Courts in BC you can get the court lists of people under foreclosure the day before they are presented in court. Anyone can watch the proceedings in Victoria’s court room which can seat about 20 people. The last one I was at took about 5 minutes. With only one bidder and his agent present. The property had a $160,000 mortgage and the only bid was at $150,000. The vendor did not even try to sell it himself and let it go straight into foreclosure. The process took about 3 months from start to finish.

    Other properties that I’ve worked on have taken over a year. If you have a lawyer then the lawyers can delay the inevitable. The biggest difference that I was involved in was an oceanfront home with a $10,000,000 dollar construction mortgage and eventually sold for a little over $5,000,000. CMHC insured.

    And I would expect that if our market took a hit like Calgary or Vancouver we too would see a big increase in court ordered sales.

    Now would anyone like to know – how you go about bidding on a foreclosure? Or the special service I provide to those wanting to buy one where I will sit with you in the court room and advise you on your bids.

  12. “If your HELOC Credit Limit is decreased, all amounts owing to us in excess of the new HELOC Credit Limit will become immediately payable and must be repaid to us without delay”

    In practice, a lender would never reduce the size of the HELOC below the current utilization if you are making your payments. In other words, if you’ve borrowed 200k on a 300k HELOC, your lender might reduce the HELOC to 200k so you can’t borrow any more. It would be quite unprecedented for them to reduce it below 200k and demand immediate payment, thus potentially forcing you into a default.

  13. Since 2000, the average price of a Victoria single family home has increased from $250 K to $850 K (November 2016), or 340%.

    During that period median household income has increased from $51,900 to $86,430 (in 2015), an increase of 66%.

    Simultaneously, mortgage rates have fallen from around 7.5% to around 3.75%, a decrease of 50%.

    If we assume that prices increase in a direct relationship with household income and an inverse relationship with mortgage rates, it would follow that since 2000, prices would have risen since 2000 to:

    $250 K * 1.66 * 7.5/3.75 = $830 K

    Which is exactly where we are.

    Bond yields are now rising fast, mortgage rates should follow, meaning ….

  14. Leo S.

    We used a small portion to build a suite and do some simple uodates to the house. We don’t plan to rent the suite unless we need to. In the meantime our family and guests love to stay there and we love having people around.

    We refinanced recently and the new awesome rate is $400 a month lower then before so we just kept payments the same and the heloc should be paid off in a short while.

    We also are looking to move to somewhere where we can be warm and see sun year round and renting out a house with a suite in it will bring in more monthly.

  15. AG:
    Even in the depths of the US crash, lenders only cut LOCs down to current utilization. Nobody got a call from the bank saying “pay back your HELOC now.” Lots of people got a call saying, “we’ve reduced your HELOC down to your current utilization.” Which, if you knew anything about the banking industry, would make perfect sense to you.

    Ag, I believe current utilization would be double speak for current ltv on your assessed home value. In other words if you have a heloc on a $500,000 home and the home value dropped to $400,000, then the current ltv would obviously be less.

    Now if you haven’t been fiscally responsible and you spent all that money, perhaps on a second property, then just pay the difference of approximately $65,000 and the bank is good with you.

    Now, we all know that Canadians are much more financially responsible than our U.S. counterparts so this shouldn’t be an issue. Right????

    Canadians The Largest Foreign Investors In Florida Real Estate: Report
    http://www.huffingtonpost.ca/2014/09/17/canadians-property-florida_n_5837416.html

    Ahhh, the wealth effect that Just Jack spoke of. Hopefully a majority of homeowners are responsible.

    Here is typical language from a Heloc agreement in Canada.

    You agree that we may, at our discretion, reduce or terminate your HELOC Credit Limit without prior notice to you. Any reduction or termination of your HELOC Credit Limit does not necessarily mean the termination of the HELOC Account or any Mortgage Loan. If your HELOC Credit Limit is decreased, all amounts owing to us in excess of the new HELOC Credit Limit will become immediately payable and must be repaid to us without delay. We will not increase your HELOC Credit Limit without your consent.

  16. I don’t know of any other reliable way to gain higher ROI than a primary residence does over the longer term.

    You mean did. Banking on 4% real annual appreciation forever would be foolish. Most of that appreciation came during times of falling interest rates.

  17. My house rose in appraised value by $600,000 in the last 3-4 years. We went to the bank and they gave us a $350,000 Heloc at prime plus .05%

    Truly amazing. What have you done with your HELOC besides marvel at the possibilities?

  18. Barrister, for builders, I have heard good things about Domingo & Co. – he did some neighbours’ projects as well.
    Marko’s family also has a construction company I think!

  19. From what I’m seeing around town I’d say the crash is imminent. Last night I was out shopping and it was dead. I’ve heard at least one person complain about financial issues. The end is near my friends. In fact I’ve heard Oak Bay is in serious trouble. A realtor I talked to said that it’s really slowed down there over the last couple of weeks and they won’t even be having any open houses over the holidays.

  20. Marko Juras
    December 23, 2016 at 3:27 pm
    Single detached home sales numbered 4,074 units in the third quarter of 2016, falling 4.4 per cent on a year-over-year basis.

    Given the situation in Calgary I would have expected a 10-12% drop, not 4.4%.

    Perhaps, if you delved into the year after oil crashed, it would give you a better perspective on Calgary’s housing market. Detached home sales dropped over 23% from 2014 to 2015. Double digit declines this year would have been a disaster.

    2014 2015 2016

    Total Sales 15,104 11,519 -23.74% 11,432 11,133 -2.62%

    http://www.creb.com/Seller_Resources/Housing_Statistics/

  21. Barrister, multi millions if Americans couldn’t make the payments just like millions of Canadians won’t be able too when they lose their industry related job which is at peak numbers.

  22. Help from the group. Can you recommend one or more really good builders in Victoria? A friend of mine is planning on building and I am trying to get some names for him to contact.

  23. Hawk:

    No bank in the US asked for the keys back when the monthly payments were being made. Totally miss your point or are you just going over a cliff.

  24. You’re special AG. RBC just showed affordability “deteriorated” to the highest level in 6 years just shy of the the 2008 and 2010 peaks. When the rich become anal, is another sign of a coming correction.

    BTW, multi-millions of folks in the US went bankrupt when the HELOC was maxed out on their “free money” to spend on more over priced houses and crap like most do. They didn’t get the call to lower the amount, they were told to get out and leave the keys on the counter.

  25. Single detached home sales numbered 4,074 units in the third quarter of 2016, falling 4.4 per cent on a year-over-year basis.

    Given the situation in Calgary I would have expected a 10-12% drop, not 4.4%.

  26. AG, it doesn’t matter what evidence I post from the BCREA calling for house prices to decline in BC, to CMHC and the banks/brokerages/lenders/economists warning on record debt and high chance of serious housing correction you say won’t happen.

    Maybe change your nick to Dr. No, or something. It’s getting lame, watching a so called financial pro dispute every industry pro calling for a correction while you sit in your Uplands castle whining “it will never happen”. I think it’s called “clueless”.

  27. Hawk you have no idea what you’re talking about. The link you included does not support your argument, in fact it does the opposite.

    Even in the depths of the US crash, lenders only cut LOCs down to current utilization. Nobody got a call from the bank saying “pay back your HELOC now.” Lots of people got a call saying, “we’ve reduced your HELOC down to your current utilization.” Which, if you knew anything about the banking industry, would make perfect sense to you.

  28. Hawk – banks will very rarely (if ever) call utilized lines of credit. It’s just your twisted fantasy that one day all the banks will call their HELOCs. Banks do not want to foreclose on people; it’s a needlessly expensive strategy for them. They would much rather let you keep making payments on your HELOC and other obligations.

    There’s plenty for you to be gloomy about – you don’t need to make stuff up!

  29. “Just that alone came out of nowhere. We now have a massive massive buffer against so many things can can go wrong. That heloc will cover us for 10+ years of living carefully if need be.”

    “There is some risk of a massive correction, but then again, just don’t sell, if in a correction the heloc is still accessible! That’s real money!!!”

    And when the market tanks, the bank calls it in and force you to pay up or sell. You do realize you have to make payments on any borrowed money ? It’s not free.

  30. I have to agree with oops, there’s a cowboy in our midst that’s shovelling something kind of smelly 🙂

    The benchmark price on single-family homes in the city last month was $498,300, slipping from $515,600 in November 2015, says the Calgary Real Estate Board.

    http://calgaryherald.com/life/homes/new-homes/single-family-benchmark-average-resale-price-slips-17000-over-last-year

    I’m betting prices have now finally bottomed as I’ve been buying mostly non-residential Alberta-based REITs this year, but SFH prices certainly aren’t up over the past 12 months.

  31. In a perfect world all the HELOC’s aren’t used for new cars, trips and useless crap, or debt problems due to death, divorce, or taxes. But it isn’t perfect.

    It doesn’t take all of them to go down to bring the house of cards down, it only took 11% in the US crash. You’ll go bankrupt far sooner than waiting for the inheritance to come through.

  32. Personally, I don’t think many of them will even try to pay off the debt. It’s too massive. And they’ll just let the bank foreclose. Which depending on your circumstances may not be a bad idea. But that will be a discussion we can have in the future.

    Not this again. Haven’t you reviewed the stats on foreclosure JJ – and bankruptcy? We’ve had this conversation before.

    Coles notes: foreclosure can occur but is much less likely in a rising market. Even when markets change foreclosure is most strongly correlated with divorce, addictions like gambling, and disability/job loss – not with having a HELOC.

    The average percentage of home equity for homeowners who have a mortgage but no HELOC is 50%. 75% of homeowners have an equity ratio of 25% or more. Three percent of homeowners have less than 10% equity. Ten percent of homeowners have fully utilized their available HELOC. Nine percent of homeowners took some equity out of their home in the past year – average is 70k.

    As discussed and backed up with stats previously, much of the HELOC use is not for consumer spending but for other investments, or to pay for a child’s education. Debt consolidation is actually a good thing if there is high rate consumer debt and a HELOC requires a significant equity buffer so this will result in savings with a margin of debt safety. Not to mention the stats posted on inheritance and Benjamin Tahl’s opinion that much of the debt of Canadians will be more than taken care of by inheritance.

    I’m not saying there is no risk in owning a house, but the risk is relatively low if you can afford to buy and hold through a downturn. A house or part of it can also be rented out if necessary. The real risk in buying a big asset are the same as with the foreclosure: divorce, disability and addictions impacting ability to pay and hold in a downturn.

  33. Richard Haysom
    December 23, 2016 at 12:36 pm
    Prices did drop in 2015 but they have gained back the losses in 2016.

    I don’t know Richard, not that I trust CREB stats anymore than you, but it would appear that Calgary really isn’t faring that well. Perhaps all those helocs are drying up and making it difficult to make payments. I’m as surprised as you that they were able to draw upon that equity for so long.

    Single Detached
    Single detached home sales numbered 4,074 units in the third quarter of 2016, falling 4.4 per cent on a year-over-year basis. This was the lowest third quarter sales volume since 2011.
    http://creastats.crea.ca/calg/mls/mls02_category.htm#anchor01

    Detached home prices totaled $498,300 in November, making it the first time since early 2014 that the monthly benchmark price dipped below $500,000. Despite this price change, the detached resale sector has still fared better than most of the high density sectors, as it has not faced the same city-wide inventory pressure coming from the new home market.

    http://creastats.crea.ca/calg/

  34. @AG “Why have Calgary house prices been so strong? Seems counterintuitive given the job losses etc. Maybe there are some people unwilling to sell, but job losses usually force their hand and that’s what leads to a drop in prices.”

    Isn’t that one of the big things mentioned in the movie ‘The Big Short’. Why didn’t housing prices crash in Silicon Valley during the dot-com burst? Why isn’t Alberta’s housing market crashing when the economy there is in the tank. Things can’t stay irrational forever.

  35. Relying on home equity for your retirement versus relying on investments for your retirement.

    I know which one I would rather have.

    If you can only have one and you live in Victoria then a primary residence wins that financial analysis easily:

    principal residence exemption
    low cost financing
    use of leverage
    historic 4% appreciation rate on principal and leveraged amount
    place to live which would be a cost anyway

    That is unless you are able to create a successful small business instead with the difference in savings between buying and renting and leverage the $800,000 tax exemption upon sale. Then you may come out ahead not buying a home.

    I don’t know of any other reliable way to gain higher ROI than a primary residence does over the longer term.

  36. Leo S.

    You seem like a fairly smart guy, but sometimes it’s like you just don’t get it.

    My house rose in appraised value by $600,000 in the last 3-4 years. We went to the bank and they gave us a $350,000 Heloc at prime plus .05%

    Just that alone came out of nowhere. We now have a massive massive buffer against so many things can can go wrong. That heloc will cover us for 10+ years of living carefully if need be.

    You should wrap your head around the reality that if a house goes up drastically in value that there is actual “real” value there.

    Just because it is not in cash, doesn’t mean it isn’t real.

    There is some risk of a massive correction, but then again, just don’t sell, if in a correction the heloc is still accessible! That’s real money!!!

    We (and many others in Victoria with a bonus 200-400k heloc in 2016) are looking at stocks, rental investments, starting small business locally to tap into the new and vibrant and rapidly growing population.

    This whole concept that you can’t actually use equity is inanity. I’m able to look at a pile of $350,000 in CASH if I want to out of thin air right now. That’s Real!

  37. “Equity is not liquidity or diversity.”

    It depends. Equity can certainly give you liquidity. And it can give you diversification if, for example, all your other assets are financial (e.g. a pension).

    When you sit down to examine your portfolio, the equity in your primary residence should absolutely be included in any analysis that you do.

  38. A good friend of mine lives paycheque to paycheque, but he’s paid off his mortgage so that helps, and, every year or so, we (all his friends) help him out with sudden emergencies (the old-fashioned version of GoFundMe). These friends come from all walks of life – rich/wealthy to struggling single moms. I’ve never heard any of them say that other people “flaunt their wealth” – they value generosity more than anything.

    This may sound corny but it’s what’s in your heart & mind that matters, not your bank account or your RE. So if you do find someone that’s flaunting, they’re probably not as wealthy as they make themselves out to be – they are simply braggarts with not much to back up their claims 🙂

  39. Relying on home equity for your retirement versus relying on investments for your retirement.

    I know which one I would rather have.

  40. Equity is not liquidity or diversity.

    You’re at the mercy of what happens to the housing market which is outside of your control.

    A lot of home owners have the wealth affect. Lots of equity that is easily accessible at low rates. And the banks have done a great job in making you think equity is the same as cash. Can’t pay the taxes then put it on the line of credit and amortize that debt over the remaining years of the mortgage. Want that 1967 Camero with wheel spinners put it on the line of credit. It’s instant gratification of your wants. Not your needs but your wants.

    We live in a city where some bought home years ago for say $200,000 and now have a $500,000 mortgage. Of course none of those people are on this blog. But if you are, then if there is a correction and you no longer have access to credit it will be a very painful experience to de-leverage.

    Personally, I don’t think many of them will even try to pay off the debt. It’s too massive. And they’ll just let the bank foreclose. Which depending on your circumstances may not be a bad idea. But that will be a discussion we can have in the future.

  41. Yes, Janney Claire Alexi, it will appear as a charge against your Title of ownership.

    If you don’t have a mortgage or a HELOC then you’re fine.

    However if you have a mortgage or HELOC then the bank will require you to pay all the back taxes at renewal time. Otherwise you’re putting the security of the loan at risk. If you have a mortgage or HELOC you should speak with your lender before doing anything. They may have a better solution for you than deferring property taxes.

    Besides, you should be talking with your lender at least once a year about your investments. I did that the other day, I booked an appointments and spent a hour with him talking about RRSPs, Mutal funds, bonds, savings accounts. Then re-mixing those investments where I’m more comfortable. It was a good idea as I got the bank’s perspective of the Trump bump and what the bank thinks the president elect will do for Canada. And it’s good to always be building a relationship with your personal banker.

  42. Home equity is certainly not meaningless to the hundreds of thousands of Canadians who are relying on it for their retirement 🙂

  43. said it’s meaningless unless you sell or borrow against it.

    Just like any asset. A stock is a piece of paper. A house is a place to live in. A car is something you drive around in. Money is something that sits in account until you use it. It is not “meaningless” in the interim.

    My view is that net worth is a significant measure of security. It can rise and fall with the underlying asset. Even cash gets eroded by inflation unless you invest it.

    However, you can trade any asset in for the necessities of life even when you can’t work and I find that to be a significant issue as we all get old and eventually will not be able to work. Some of us also have others to support who can’t work due to disability or illness.

    If I need it, I can trade my house in for many years of living expenses, including shelter, whether due to personal choice, disability or old age. Just like I can with stocks or cash in the bank.

    Maybe we are saying the same thing but I would never assign the term “meaningless” to home equity or any other asset so there has to be a difference in our views on this matter.

  44. Prices did drop in 2015 but they have gained back the losses in 2016. Now this is only in the single family detached market not to mistake the rest of the market which has fallen and continues to do so. There are a number of probable explanations but one fairly strong one is that investors were taken out of the market at the end of 2014. Investors did account for a fairly significant % of sales and they all dumped in 2015. Now with new lending rules border line investors or novice flippers can’t do their fix up flips removing them from the market, reducing volatility. As Duddy Kravitz’s grandfather said “A man without land is nobody” so the old adage of “location, location, location” bears out for close in/inner city single family homes.

  45. Seriously thinking of deferring my taxes this year. They won’t be way out of line but still deferring sounds like it could be a real smart move for me.

    I am going to try it and post it here as an experiment… Stay tuned.

    Will it be a lien on my home?

    Correct.

  46. Didn’t make the edit button in time. This most important re deferring my taxes next year –

    Will it be a lien on my home?

    Thanks.

  47. “But they love to flaunt their own wealth. They have no problem boasting how wealthy they are to those that have less than them.”

    Amen !

  48. Great reflection of the year reading Steve Saretsky’s article about Canada’s (and Victoria’s) sick obsession with real estate and how we are so far passed the US crash point it’s scary how far it could fall.

    In light of the Vancouver bubble popping, it’s worth looking at the over priced charts and their extremes. As the buyers step back, the industry related job reliance is frightening. But it’s different here. 😉

    The Canadian Economy’s Unhealthy Addiction to Real Estate

    “Even a slight slowdown in the real estate industry could have a huge impact on the Canadian economy. Perhaps the most mind blowing stat out there; housing ownership transaction costs represented nearly 21% of total GDP growth post-2014.”

    http://vancitycondoguide.com/canadian-economy-unhealthy-addiction-to-real-estate/

  49. Total change of topic.

    Seriously thinking of deferring my taxes this year. They won’t be way out of line but still deferring sounds like it could be a real smart move for me.

    Would love any & all advice on timing the application? Anything else I should take into account?

    Happy Holidays , All !!!

  50. It’s the difference between being rich and being wealthy.

    Does owning one home make you rich? A home owner can still be living pay check to pay check and racking up the credit cards and getting deeper and deeper into debt. And yet their net worth may be increasing. It’s ironic that you can be broke and wealthy at the same time.

    Personally, I would say that a lot of families that own houses in Victoria are not rich. I meet retired persons that still have mortgages of a hundred thousand dollars and more. They struggle to pay bills on time.

    Owning a house may make you wealthy but you still may live poor. And Victorian’s are very nasty about that as they don’t like others who flaunt their richness when buying a high end dishwasher or a $500 pair of shoes. But they love to flaunt their own wealth. They have no problem boasting how wealthy they are to those that have less than them.

  51. @ Richard Haysom

    Why have Calgary house prices been so strong? Seems counterintuitive given the job losses etc. Maybe there are some people unwilling to sell, but job losses usually force their hand and that’s what leads to a drop in prices.

  52. “Virtually all of the folks here who have posted on good timing have attributed luck rather than skill”

    Not what I’m reading from the hardened bulls and bear bashers.

  53. It was a lifetime event never to be repeated so revel in it while you can but it had nothing to do with your investment prowess, it was a fluke.

    Virtually all of the folks here who have posted on good timing have attributed luck rather than skill

  54. “Of course when you have an entire neighborhood voicing this over one sale it sounds like an invasion. And most of the time, the neighbors tend to embellish the sale when talking to others …”

    Well real-life stories are actually different. Usually when my neighbours are talking, it’s about how to do some gardening or a home repair without spending a ton of money, and “hey whadyyaknow, my contractor just bought a house up the street and he can help you with that.” Or “by the way, I just moved in, nice to meet you.”

    and why would anyone care to embellish any sale? It’s damn easy to find sale prices on PCS through this Internet thing.

  55. Really enjoy reading your posts Leo S. I am a Realtor in Calgary and believe it or not in Calgary, even in these very difficult times we are experiencing a sales to list ratio in detached single homes of over 100%. Where condo, townhouse etc are less than 50% and prices having fallen on average 15%, the single family detached have actually gained approx 8% from this time last year and are matching the highs of 2014. Never anticipated this and of course depending where the property is the gains can be substantially higher as opposed to new suburbia detached where there has been price devaluation. My take is that people are afraid to sell because of their financial circumstances and the new federal rules that if they sold they could only buy down. I experienced this in 1982 under similar circumstances where there was a huge demand to renovate homes as opposed to selling. Interesting times indeed.

  56. Not really.

    Yes really. I said it’s meaningless unless you sell or borrow against it.
    Your counter argument was that you can borrow against it plus you can sell it. ???

    If you live in your house forever you always own exactly one house whether it is worth one dollar or one million. Your benefit is limited to a warm fuzzy feeling and when you’re dead your kids will like you more if it happens to be closer to the million.

  57. The hot Westshore market must be cooling too when a nice looking new build at 3554 Pritchard had to slash their price to try and attract a buyer. I guess with rates going up the builders are very sensitive to costs rising and profits declining.

  58. In other words, exactly what I wrote.

    Not really. I think we have a fundamental divide on how we look at a primary residence. I see that it is the biggest single investment families make and include it in current net worth.

    You can always cash out of any investment so the tying up of equity is just temporary. Housing is less liquid than other assets, but it is still an investment imo with ROI that should be factored in to the buying decision.

    If I understand you correctly you look at it as a shelter cost, one that would be incurred in any event, and the equity is not realized until a sale so should not be counted until then. I’d disagree.

  59. we’ll see the average days on market to continue to rise into the 40’s and 50’s day range.

    Well, that will be easy to fact check on March 31. Three months of data should do it.

    Predictions about the housing market are tough as the odds of being wrong are high, as you know based on your past predictions. Why do you keep doing this for years on end after being wrong for so long? I don’t get the appeal.

  60. If anyone bought a house in early 2007 when this blog started they would be WAY ahead over waiting for the crash.

    Perhaps, if they were staying in that house the whole time. People that waited out 2007 and bought in early 2009 were the real winners. The trick was recognizing that as a buying opportunity which some did (the owner of the Victoriastruth blog for example)
    But if we would have bought in 2007/8 it would have been a condo. Upgrading 5 years later when we needed/wanted a house would have been a guaranteed substantial loss. Glad we didn’t fall for the “property ladder” that gets pushed by the industry.

    @totoro

    I’d strongly disagree. (snip) You could ex. choose to use a HELOC to withdraw and invest some of the equity into stocks as some do to increase ROI – along with risk.

    In other words, exactly what I wrote.

  61. The average days on market is a barometer of what happened during 2016

    Month Days to Sell, Average
    Jan 39
    Feb 26
    Mar 20
    Apr 18
    May 19
    Jun 18
    Jul 16
    Aug 19
    Sep 26
    Oct 21
    Nov 29
    Dec 30

    When the average days fell under 30 that’s when the bidding wars started to escalate in the core for houses and some agents began under listed properties and conducted delayed offers to entice multiple bids. And that continued for most of the year. But for the last four months the median house price has stopped increasing and modulated back and forth by a bit. And that is reflected in the days on market.

    Generally a balanced market between buyer and seller with stable prices has a market exposure of 30 to 90 days. Generally, less than 30 days is indicative of a sellers’ market and more that 90 days as a buyers’ market. This is how fast the market is selling out and it’s what most people use as their frame of reference. Basically it’s how long it takes before the sold sticker is put on the For Sale sign. People don’t need a computer for this, they just have to walk or live in the neighborhood. And this is the source of most anecdotes.

    “It sold in a week for over list price…. to someone from Vancouver!”

    Of course when you have an entire neighborhood voicing this over one sale it sounds like an invasion. And most of the time, the neighbors tend to embellish the sale when talking to others. They add a little to the sale price, instead of Vancouver the buyers are now Chinese. They spice it up at the water fountain at work because they want others to like and admire them for living in such an expensive neighborhood.

    I know this because I have to come an appraise their property most often for debt consolidation purposes. And they always tell me about the house that sold around the corner that is not as nice as theirs for a huge amount. When an applicant volunteers data, I research it because I know they have told the loans officer the same story and I want to be able to answer the question why I may not have used that sale.

    Another thing that I’ve noticed is home owners do not see the market as it is today. They see the market as it was six months ago. And that makes sense with all the animosity shown when I call this a balanced market between buyer and sellers with stable prices. Six months ago it still was a sellers’ market with rising prices. Now the market has moved as there are fewer buyers at current prices and I believe we have transitioned from a sellers market into a balanced market. That’s most likely going to continue and we’ll see the average days on market to continue to rise into the 40’s and 50’s day range.

  62. This blog has not really influenced my buying/selling decisions. I’m firmly in the camp of you buy when you are ready and can afford it: don’t try to time the market.

    This blog has made me think about many things, like whether we should own a SFH vs. multi-family for the 100% income tax exemption from capital gains.

    Based on our accountant’s advice, we had thought that if we owned and occupied 51% we would be eligible for 100% exemption.

    However, I ran the numbers and it seems like the after tax rental income is still well worth it even after the inclusion of 50% of the 50% of the capital gain which will then be divided between my husband and I if I understand the rules correctly. We can reduce our income in the year of sale to further reduce the taxation rate.

    Do I have my numbers right?

    Ex.

    300,000 capital gain 51% exempt is approx. 150,000 exempt

    150,000 remaining divided by 2

    75,000 each capital gain and $5294 in taxes payable each if no other income and can also be reduced by available RSP room.

    This is more than offset by the rental income. I imagine it would be for others with a suite as well who are able to plan for low to no income in the year of the sale. Ie. wait for retirement, take a sabbatical year… the offset to taxes will subsidize part of the living expenses which can also be supported by the gain.

    Even if you have to pay the tax on top of your income, multiple years of rental income would likely still make this worthwhile and increase the overall affordability of your home. If you are buying more home because of this which creates greater appreciation, or able to get in earlier which also creates greater appreciation, there is also value to this.

    Also, I’ve been thinking about the first-time buyer program. Back when we bought our first home it would have been helpful if we could have used it to get to 20% down which we did not have. It would have been helpful in any event to get into the market earlier as we were at the start of our careers and the appreciation in the market was greater than we could keep up with based on income alone, getting in earlier was actually much more affordable.

    I know that is anecdotal and the market might fall so there is great risk for FT buyers, but we were in a situation with no family help where this program would have helped us compete in the market and we could afford the repayment in five years. Maybe it is encouraging overleveraging, but not for all. For some it will be levelling out the inequality of buying power for FT buyers without equity.

    I do agree the market does not need more stimuli though.

    You are worth the same as you were when you bought.

    I’d strongly disagree. Net worth includes the current value of your assets less your liabilities. The fact that you don’t have cash in hand does not mean your net worth has not increased a lot. It might fall if prices drop, but currently it has increased. And you are doing something with the increase, it is compounding as values rise, albeit at a lower rate as your equity to debt increases. You could ex. choose to use a HELOC to withdraw and invest some of the equity into stocks as some do to increase ROI – along with risk.

  63. This is hilarious reading all the bull…shitters patting themselves on the back because they were so smart. No one on here(even king pumper Mike) predicted a massive amount of hot Asian money flooding Vancouver (then deflecting here) starting last January til mid summer when they began to dump en masse and still dumping.

    It was a lifetime event never to be repeated so revel in it while you can but it had nothing to do with your investment prowess, it was a fluke.

    If you want to buy at the top like in 81, and 94, and 2016 and plan to be in your house for the next 10 to 20 years and can afford a 2 to 3 point interest rate hike after Trump has screwed the global economy, then go for it and be happy. If you’re on the fence then wait til spring and see what happens. It won’t be pretty. 😉

    http://www.myrealtycheck.ca/

  64. Been lurking on the site for a few years now – first time posting.

    We purchased in 2013. No market timing at all, this was just when we were able to scrape together the 5% down payment. By some peoples measures we had no business buying with a single middle class income (though secure government job). At the time my wife was a stay-at-home mom for our 3 kids and it was really hard to save the down payment while renting a townhouse.

    As soon as we moved into the house my wife started a home daycare (we were not allowed to run daycare from the rental). Now after saving for 3 years and a couple of promotions for me, she went back to school in September.

    Moral of our story is to sometimes take that calculated risk. I figured if catastrophe struck (job loss, health issue, etc) we would be no worse off than before we bought the house. But now we have equity and healthier savings because we bought the house. We also have a WAY happier life. The kids have more space, yard to play in, great neighbors, pride of ownership and so on.

  65. Barrister

    Yep very sound advice. I struggle with that but I feel I at least owe them a free education. Life is way to hard to enter the work force in major debt. I made sure that I made yearly full payments to their resp for 18 years as a priority and put it in stupid high risk stuff since it was for a long time. So their education is covered. I just need to provide them a roof. They work for their spending money.

  66. Caveat Emptor:

    I generally agree with you. I have stopped trying to predict the housing market ever since my wife started using my magic crystal ball for a paper weight.

  67. GWAC:

    I have seen a lot of parents make enormous sacrifices for their kids and then wonder why their 30 year old son is still living at home strumming a guitar. Kids are a very personal choice but sometimes it is wise to step back and really reflect on things; which I am sure you have already done.

  68. If anyone bought a house in early 2007 when this blog started they would be WAY ahead over waiting for the crash. House prices way up and now 10 years of paying down your house with some of the lowest interest rates imaginable.

    In 2008 when we moved here I was pretty convinced of the crash and wanted to rent and wait. Fortunately my wife convinced me to buy and we bought in fall 2008. By luck rather than skill it proved to be a pretty OK time to buy. Prices dipped further and then flatlined before they rose again, but we were never far underwater on the purchase.

    Critically we love the neighbourhood, love not having to worry about moving. Thankfully we have not had the psychological toll of having to follow the market for multiple years waiting for the crash that has still not come.

    This blog has been good education, but hopefully it hasn’t thwarted to many people from buying that took the “infos” and “hawks” of the world too seriously and missed out on opportunities to purchase.

    Looking back my thought of market timing in 2008 was stupid. Life is short. If you WANT a house and CAN afford it without it being a financial millstone then by all means BUY.

  69. Barrister

    Yep that is why I will stay here 6.5 months and 5.5 months out of the province. You need to be in the country 183 days I think for BC and the Fedsto consider you a resident..

    .

    http://www2.gov.bc.ca/gov/content/health/health-drug-coverage/msp/bc-residents/managing-your-msp-account/leaving-bc-temporarily

    Residents

    An individual must be a resident of B.C. in order to qualify for medical coverage under MSP. A resident is a person who meets all of the following conditions:
    must be a citizen of Canada or be lawfully admitted to Canada for permanent residence;
    must make his or her home in B.C.; and
    must be physically present in B.C. at least six months in a calendar year, or a shorter prescribed period.*

  70. GWAC:

    I could be wrong but someone was saying that you lose BC health care if you are out of the province for more than six months. Apparently this is new but I am not sure if this is accurate? Does anyone know for a fact?

  71. Barrister

    Probably another 4 to 6 years as they finish up school. Could be a lot longer, I guess if they stay on longer for the cheap housing. I want them out of school without owning anything.

    The whole plan is to live here at my place on the lake 6.5 months. Sell my place here and buy a place in a small Mexican town not near the ocean (cheaper). This way I keep my free healthcare….Just in case.

    Need to simplify my life… too much stress.

  72. GWAC:

    A good financial strategy would be to sell the kids for body parts; it is the only way you will get a return on investment.

    But it sounds like you have a good plan for the future to look forward to; how old are the kids?

  73. Barrister

    When you can help me get my kids out of my house. 🙂

    I dream for one of those 300k homes that look like run down shack from the front and you walk inside to a Mexican dream home with a pool in the back. Simple simple simple. Run some small tourist place renting something. Yep that is the dream.

    Here is some advice for the younger generation. Do a job you like not one you hate but pays well. Do not get stuck in that trap.

  74. Barrister, the 80% also seems high, but it’s true that he might be dealing with a lot of retirees and builders. In the blocks surrounding my place, there are near-retirees moving in – after selling their other home in Victoria or other cities like Vancouver, including at least 1 from upisland (to be closer to specialist doctors in their old age). There are also people with kids. The families with kids either bought just before the frenzy (one of the neighbours commented that there was suddenly a huge surge in kids at Halloween) or the more recent families with kids are builders or otherwise involved in RE, which seems to be the big industry at the moment.

    Bitterbear, I understand your frustration – it seems crazy that the government has propped up RE for so long with low interest rates, and turning a blind eye to corruption & money laundering in places like Vancouver.

    But having lived through the 80s, I cringe when I see people loading up on debt & HELOCs. Younger people now think the 80s was a “short blip” but it was hugely devastating to the economy & some people lost everything & didn’t recover for 20 years. All I know is that we need homes to live in, & with all the medical advances today, it’s very possible to live a productive life into your 90s – so don’t give up yet – there’s gotta be some options.

  75. I wasn’t here last year, but was there a post where everyone made predictions for the market in 2016? It would be interesting to see what everyone’s predictions were, vs how it all turned out.

    Yes I’ll put a yearly review up addressing these.

    I’m now worth near a million just on this one transaction alone and in a short 5-10 years will be probably 1.5m

    You are worth the same as you were when you bought. You own one house, and whatever financial assets you have. The fact that the house is worth more on paper has zero effect on your life unless you intend to sell and move to a cheaper city or borrow against the house. However it has allowed you to brag anonymously on a blog, so there’s that.

  76. “The other effective strategy is to marry rich; you might not end up with a great marriage but you a pretty well guaranteed a wonderful divorce.”

    Haha, now that’s some good financial planning..

  77. AG:

    The other effective strategy is to marry rich; you might not end up with a great marriage but you are pretty well guaranteed a wonderful divorce.

  78. “For what it’s worth, all the materialistic crap doesn’t make anybody happier”.

    Yep copy that. Just more shit and stress to deal with. Probably happier in my Condo 25 years ago.

    A 800 sq ft condo in Mexico and a 20 year old jeep and some simple job sounds about right at this stage. Just need to get the kids out of the house. 🙂

  79. We bought in May of 2012. And would have bought earlier but was reading this blog and all magazine and blog posts about losing everything in the housing crash.

    This blog definitively influenced my decision on the first pre-sale condo I bought in 2009. I went with a super cheap unit at the 834 ($198,900) as in the back-up of my head I thought the market might crash any day.

    My first solid sense of maybe the market won’t tank was when one of my buyer clients purchased a bungalow with a suite in the Oaklands area for $495,000 in 2011. She rented out the one bedroom suite for $950 and put a homestay student in the other bedroom downstairs that wasn’t part of the suite. I ran the numbers and was like “hmmmmm, this is cheaper for her on a monthly cash flow basis than renting her condo, not even factoring in principal repayment and potential appreciation (walking distance to downtown appreciation was only a matter of time in my opinion).”

    Situation has obviously changed big time. That bungalow now is pushing $700,000 and the suite is up to probably $1,200 but not much more. I thought 2011-2014 was a good buying opportunity and 2012-2014 I think I represented the most buyers in the VREB, or at least in the top 3. This year total disaster with buyers, my worst year since 2011 when I was still starting out 🙂 Unfortunately my buyer clients are for the most part rational individuals and there was no hope this year being rational with offers.

    Obviously offset with sold listings….monkey could have sold a house this year.

  80. If you want to buy a house but don’t have enough money, what should you do? Rent, and invest your money. Work harder and hustle – the best way to improve affordability is to increase your income. Buy a small, old house and invest some sweat equity in it.

    Most of the home owners on this blog have been struggling first time buyers at some point. We’ve all made sacrifices of varying kinds.

    Some of the non home owners have made bad financial decisions (such as Hawk and Bitterbear trying to time the market). Others simply haven’t built up the income streams to afford a house where they want, or are unwilling to ‘settle’ for an area that isn’t ideal.

  81. Michael:

    I am assuming that you are speaking from your personnel experience and that you own a mansion in the uplands, drive a Mercedes sports and have a Gulfstream up at the airport. Told you we need a symbol for sarcasm.

  82. Bitterbear:

    What we really need is a new keyboard symbol for sarcasm. I agree that people need to be financially prudent. In particular, one has to recognize that there is a strong possibility that mortgage rates will go up.

    Having said that, I also do get a lot of enjoyment from my home. Different strokes for different folks.

  83. I get the sarcasm, but I’m with you Bitterbear. It’s become a shallow world at times. It will all crash down upon our granite & bosch DWs soon enough (well maybe not mine, as I have neither 🙂 For what it’s worth, all the materialistic crap doesn’t make anybody happier.

  84. South that is insane crazy talk. You wrongly assume the issue with bears is just one of not being able to pull the plug when it’s an income issue. Pretty tough to buy at any price when you work in a cafe.

  85. I can’t resist reposting some of Hawk’s real estate predictions from Jan 1st –

    On real estate:
    “This coming year reminds me of beginning of 2008. Signs were there that debt and asset bubbles were popping up all over the place but everyone stuck their head in the sand proclaiming “it will never happen”.

    Canada is at the extreme debt levels of all time and this year will be the year it all comes home to roost and the air begins to be let out of real estate bubble in my humble opinion. How fast is the big question.”

  86. Bitterbear: lets go back a couple years. I took this advice (bought well within our affordabitlity range), and you mocked it like you are now doing. I’m now worth near a million just on this one transaction alone and in a short 5-10 years will be probably 1.5m

    In the meantime I’ve been living in one spot, while our income have risen, as well as our house value. We don’t think about moving, we love our neighbours, we are a part of the community and don’t have to move, can make deep connections without fear of landlord loarding over us and randomly deciding when we have to move. What a nightmare.

    We have seen friends with similar “it’s rediculously overpriced, must crash to my level, just this spring it will crash” attitude. And they have to move with kids 4-5 times and it’s super stressful and they hate it.

    Aren’t you renting now, and near retirement, and thinking to move up island? I would GET GOING right away before prices there go up!

    It’s the cost of building raising prices also.

  87. AG
    It sounded high to me as well but on the other hand the median age in Oak Bay is 54; maybe it is mostly retirees who are buying at these prices. Does anybody else have any info on this?

  88. South, you are right. I waited and I am priced out. My advice: buy Buy BUY. Don’t wait. If you can’t afford a house, buy a townhouse. If you can’t afford a townhouse, buy a condo and once you buy one, buy another and renovate it, add granite, stainless and at least one $1400 dishwasher. Owning a home is THE most important thing people can do with their lives. Real Estate only goes up. Throngs of people from all over the world are lining up to to live here. Borrow your downpayment. Get it from the government. Take a cash advance off your VISA. Interest rates will never go up. Don’t Delay, BUY NOW.

    [sarcasm]

  89. “He said that when it comes to SFH about 80% of the transactions he was involved in were all cash”

    That sounds way too high to me. Perhaps he deals mostly with the retiree market?

  90. I chatted yesterday with one of the realtors that does a lot of sales in Oak Bay and Fairfield. He said that when it comes to SFH about 80% of the transactions he was involved in were all cash. Does this number sound right to anybody else?

  91. Ag, everyone was so OTL 🙂 We did the predictions right into that January market plunge where TSX hit as low as 11k.

  92. I wasn’t here last year, but was there a post where everyone made predictions for the market in 2016? It would be interesting to see what everyone’s predictions were, vs how it all turned out.

  93. why won’t they go away with the Vancouver market the way it is?

    So some vancouver buyers may have sold for $200,000 less now than in the spring. Won’t stop them from affording a place here. But will be interesting to see the full year stats from the VREB, and how it continues into the spring.

  94. Also, house prices are directly correlated with land use policies, which the core has well documented issues with. I do not see any free land in the core, and I do not see any new houses being built other then a few on the old cow poo lot by mount Doug that took years and years and huge fights just to get off ALR.

  95. We bought in May of 2012. And would have bought earlier but was reading this blog and all magazine and blog posts about losing everything in the housing crash.

    In the end it came down to reality. We could afford a nice house in a great area of the core with ocean views and over half an acre of land for around 700k.

    At the time people like hawk and just jack were posting on this blog 20+ times a day trying their hardest to scare people into renting for life.

    Thank god we actually looked at our finances and said “wait a minute, this is actually totally affordable”. Even if rates go up a bunch we won’t have to renew for 5 more years (around 2021), and by then we will have paid off over 75% of the house and have well over $1.100,000 of extra equity.

    Thank god we looked at our specific situation and ran the numbers. There is so many financial benifits to owning, one of them is to hedge inflation (which is here now). It protects against wealth depletion.

    Always own real estate, it’s a hedge.

  96. South:

    When I bought three years ago I could not believe how cheap prices were in Victoria. They have gone up since but they are still really reasonable for what you get. Right now the big drawback is not price so much as selection. I also agree that the vast majority of people in Toronto who retire in the next few years will never move to Victoria. But there are over 150,000 people between 60 and 65 years of age in Toronto alone; if just one per cent pick Victoria to retire to that is still a lot of house sales for a city our size. And there is 300,000 in that age group in the GTA.

  97. Oh and per Barristers comment about friends moving. We have 2 friends and their families all moving to Victoria from Toronto. They did very well in the market there and Victoria is very affordable for them. All cash, no financing needed.

  98. Yes, as inventory rises so do prices. Just like how inflation causes interest rates to rise, so will any asset like housing or computers, etc.

    With rising prices comes the urgent “must buy now before prices rise even more”

    We had a 10 year period of deflating prices, so most unknowlegable people held off “waiting for prices to drop on the perfect place”.

    There are quite a few on this blog in that boat, now almost priced out of the market… and I bet they are still “waiting”.

    Get in now before you can’t get in. Prices are still very good for this amazing amazing place we call home.

  99. Vancouver prices do seem to be dropping. But even if your 6 Million dollar house has dropped to four; moving to Victoria and replacing your house for 1.5 lets you retire early if you are around 55. The numbers moving here are not large but they dont have to be

    I have three friends who have already decided to move to Victoria and will be hunting this spring.
    Two of them are looking in the 2.5 to 3 mil. range. The third guy is rather well off and wants something expensive in the way of waterfront. By Toronto standards only the one guy would be considered well off. Three does not mean a flood of people Two of my friends from the same circle have already moved to Victoria. People are more open to retiring to where their friends are and I imagine that might be even more true of people in Vancouver.

    Does such a small number of people affect the market in Victoria; probably not but it might effect a segment of the market such as Fairfield or Oak Bay.

  100. Housing doesn’t become unaffordable for everyone at the same time. And that’s what is likely happening. There are still buyers that can afford a house in the core just fewer of them. Instead of the demand curve shifting we are just sliding up the curve as the buyers that are left are not willing to substitute a condo for a house or the core for the western communities. Consequently we don’t need as much inventory as before to maintain stable prices.

  101. Marko, can you clarify what you meant in the “buyer city” post. I did not understand what you were trying to say. Do you mean that we had 18 Vancouver buyers in Victoria?

  102. I keep running across Vancouver “buyer city,” on a daily basis. Just ran the numbers and Dec 1st-22nd 2016 = 18 versus Dec 1st-22nd 2015 = 17……………why won’t they go away with the Vancouver market the way it is?

  103. I stand by the assertion that prices have a pretty hard link to market conditions. There is no such thing as flat prices with the conditions we have. If people are maxed out due to affordability problems then sales will decline and inventory will rise. Until that happens prices will continue to increase.

    I think in the SFH core market we could see a fundamental shift though if owners start holding on to properties longer reducing inventory. New listings this year are similar to 1990 when Sooke and the Westshore didn’t exist.

  104. I think if the market tops out in the spring it could be on the basis of maxed out affordability versus huge inventory and low sales.

    I stand by the assertion that prices have a pretty hard link to market conditions. There is no such thing as flat prices with the conditions we have. If people are maxed out due to affordability problems then sales will decline and inventory will rise. Until that happens prices will continue to increase.

  105. “Don’t worry: we regularly make extra payments to principal (notice the spelling).” Funny, all I noticed was a jackass. No one gives a shit. Go find a spelling blog.

  106. I think if the market tops out in the spring it could be on the basis of maxed out affordability versus huge inventory and low sales.

    As per my 2012 example to see downward pressure on prices sales would have top drop 50% and inventory would have to increase over 250%…..doesn’t happen overnight.

  107. Well then I’m not agreeing with Marko as I believe prices for houses in the core will remain stable.

    If the market was favoring sellers that would lead to price increases like what happened in the spring. Conversely if the market was in favor of buyers then prices would be declining.

    The market has been in balance at its current price level for the last few months. I don’t foresee any reason why that would change in the next 90 days.

    Houses in the core are expensive and a lot of potential buyers are no longer in the market for houses in the core and that has reduced demand. 2 out of every 3 buyers are not going to be buying a house in the core. Some will buy condos and others will buy in other areas.

  108. Barrister, it isn’t my definition. It’s the real estate board’s definition.

    Personally, I don’t follow those areas when I’m appraising a property. However that is how the stats are presented so you gotta use what you got.

    In you’re area, I wouldn’t go much further that a half kilometer in any one direction. Otherwise you are moving into adjoining middle income areas. And over the last six months there have only been 15 sales within a half kilometer radius that ranged from a low of $792,500 to a high of $2,675,000. In age from 2 years old to a hundred, in floor area from 1,245 square feet to 8,439 square feet and in lot size from 7,344 square feet to 31,088 square feet.

    That is a lot of variation in such a small area which is part of Rockland’s charm. But it also makes it a nightmare to appraise anything in your area.

  109. JJ – “I’m agreeing with Marko. The market for houses in the core is currently in balance. ”

    JJ, I’m not sure that Marko ever said that. What he actually said was:

    “I personally have a list of buyers that are in a position to buy of 33. Three years ago it floated around 5 to 8 at any one time and 3 to 5 around this time of year. The reason being my buyers were actually able to secure properties. Right now finding a property in the non-existent inventory is one thing; however, securing it amidst unconditional offers is a whole different story.”

  110. JustJack:

    Thank you for providing your definition of the core. Personally I think there are two very seperate markets in the core itself.

    There is what I consider “South Victoria” namely James Bay, Fairfield, Rockland and Oak Bay and then the rest of the core. They seem to be different although inter related markets. I am not about to predict the spring market although I am wondering if the drop in house prices in Vancouver might have some impact here.

  111. Other appliances we’ve so far elected to cheap out on are our washer and dryer, which are not HE or new.

    Barbarian.

  112. One more note: this blog was very helpful with data and anecdotes when we purchased too. I also gathered a lot of “word on the street” from a variety of buyers & realtors in person.

  113. “If you want stories Vicbot, I’ve got some.”

    JJ must be the life of any party – if anyone tries to tell their story, he’ll jump in with “Never mind – mine are the only ones that matter” 🙂

    “I mentioned nothing about price. ” Well good – because that’s exactly what I was referring to, so there’s no need to put down other people’s experiences with pricing.

    ICYMI, we got a good deal in the winter – when # of buyers had decreased – but there was still a lot of competition for the well-positioned property we bought – as there was in the years before.

    Frankly, my own data & analysis of seasonality & competition led us to an awesome purchase – nothing to do with rumours from “realtors or friends”. Try to consider that posters on this blog are pretty experienced in this game as well.

  114. I’m agreeing with Marko. The market for houses in the core is currently in balance. Next year we will see a return to higher months of inventory and longer days on market.

    You might not get a steal of a deal on a house but you will have more to choose from and more time to make your decision. The delayed auction will be a thing of the past.

  115. JustJack:

    For the sake of clarity, when you say “the core” exactly what area are you talking about? Do you mean just city of Victoria or are you also including Oak Bay and parts of Saanich??

    I am trying to follow your argument but I might have missed your definition of the core?

    Thanks

  116. Really – $1400 for a dishwasher? We got a used Kenmore for $50; washes dishes just fine. Put the other $1350 towards your principle…

    Don’t worry: we regularly make extra payments to principal (notice the spelling).

    Personally, I’d rather cheap out on a fridge than on a dishwasher. We don’t like washing dishes by hand (hate it!), so we put everything in the dishwasher including pots and pans (if they’re dishwashable). I’d say we run 1-2 loads a day. Also, we have an open-concept floor plan, so having an ultra quiet dishwasher means less noise pollution in our main living space.

    Other appliances we’ve so far elected to cheap out on are our washer and dryer, which are not HE or new.

  117. Anyone who thinks the market for core SFHs is ‘balanced’ needs their head examined. It is the exact opposite of balanced.

  118. Just so that you are not going in the wrong direction. I mentioned nothing about price. That’s something you brought up – not me.

    The Months of Inventory, Sales to New Listing ratio and the average days on market are equally necessary to understand if the market favors buyers, sellers or is in balance.

    A market that is in balance will have stable prices. Markets that favor buyers will have declining prices and markets that favor sellers will have increasing prices.

    By those measures, the house market in the core is in balance with a Sales to New listings ratio of close to 1:1, an average days on market of 30 and a little over 2 months of inventory.

    Back in April it was a sellers market with a lower sales to new listing ratio, lower days on market and only one month of inventory and most importantly both the median and average prices had been rising.

    That is not our current market. This is the new balanced market where many households find themselves priced out of. They no longer make up part of the demand for housing. We are left with a much smaller pool of prospective buyers. That’s why the drop from peak volumes has been so enormous this year. And why that decline was so out of line with the normal seasonal variation.

    Unless you want to say what happened in the spring was an aberration of the market that should not have occurred. If that’s true then all the gains of this year will be wiped out. I’m not suggesting that at all. But if you want to – I wouldn’t have any problem with you voicing that as your opinion.

    When you say that last month was a record low, you’re speaking about all properties in all areas from the Malahat to Salt Spring Island. If we are talking just about housing in the core then it wasn’t a record low.

    Month Months of Inventory
    Jan 2.84
    Feb 1.66
    Mar 1.31
    Apr 1.06
    May 1.09
    Jun 1.26
    Jul 1.86
    Aug 1.81
    Sep 2.05
    Oct 2.38
    Nov 2.21
    Dec 3.24

    Even for the month of November the MOI was lower in 2006 and 2007 at 1.81 and 1.61 for those two Novembers.

    What happened this year is that a lot of income groups got axed out of the market place.

    A couple of months back I said the same thing and guess what it happened. House buyers in the core that are left have either a big income, access to a big down payment or a combination of the two. That’s a much smaller pool of sharks to swim with. And that’s why my thoughts for next year is that we will see more of the same. . So expect more of the same.

    And note once again – I did not mention prices.

  119. We will end December 2016 with approx. 1500 listings and 500 sales.

    We ended December 2012 with approx. 3,900 listings and 283 sales.

    Single family home prices dropped 0.77% in 2013.

    We might tap out on upward price pressure due to affordability, but given the demand/supply picture I can’t see downward pressure for the time being.

  120. There are 281 houses for sale in the core today. If you spent an hour driving to and looking at each house it would take you almost 40 work days to see them all if no more houses were listed.

    It is not just price – it is location, orientation, condition, age and style. The normal reasons every house will not be suitable for every person looking to purchase.

    The standard way to judge the number of houses available is based on months of inventory. Months of inventory is currently very low, which points to a sellers market. Last month was actually a record low. Not sure what December will end at but you can count on it not being “a lot of houses” based on any reliable measure.

  121. “There are 281 houses for sale in the core today. If you spent an hour driving to and looking at each house it would take you almost 40 work days to see them all if no more houses were listed. Compare that to the average number of sales so far this month at less than 4 a day.”

    Really, Jack?? Are you denying that inventory is extremely low? I suggest that you scroll up the page and look at the table kindly posted by Leo. That shows, quite conclusively, that inventory is very low indeed. It’s so low, in fact, that Marko has 33 buyers waiting in the wings who have been unable to find a suitable property.

    Sometimes I read your posts and I wonder if we’re even talking about the same city. You’re just so desperate to paint a negative picture, even when the data say otherwise.

  122. Why do you assume that just because you own a home you can’t be bearish on real estate? And I’m not saying that I am bearish at all. I scour the market for good deals for buyers. I am very bullish on acreage and waterfront. But I consider micro condos will be a future disaster.

  123. The seasonality and low (not lack) of inventory can not explain all that is happening. Houses are being listed, bought and sold on a regular basis this month.

    There are 281 houses for sale in the core today. If you spent an hour driving to and looking at each house it would take you almost 40 work days to see them all if no more houses were listed. Compare that to the average number of sales so far this month at less than 4 a day. You would be finished looking at today’s sales before noon. And while 85 houses have sold this month they were replaced by 78 new house listing and that makes 281 houses for sale, just in the core, a lot of houses.

    So when AG is saying their is a lack of listings what he/she is actually saying is that there is a lack of listing in his/her price range. That’s not the market that’s one persons circumstance which won’t be the same for you or for me. If AG were a prospective purchaser then he/she would be just one point on the demand curve.

    Actually AG isn’t on the demand curve at all. Since AG is a home owner and not a prospective purchaser. You can be very fussy if you aren’t buying.

  124. Really – $1400 for a dishwasher? We got a used Kenmore for $50; washes dishes just fine. Put the other $1350 towards your principle…

  125. JJ, I assume you sold your house and are renting. It would be foolish to own and be so bearish????

    If memory serves, a long time ago he used to rent in Oak Bay. I’ve inferred that nowadays he’s renting elsewhere. I doubt he owns, or has ever owned, a house in Victoria.

    I am with Introvert on this one; the Bosch was amazing – no rinsing, everything perfectly clean, and so, so quiet. Every dishwasher since has had its Achilles heel – egg, avocado, pb – that won’t come off and instead bakes on. I miss the Bosch!

    Thank you, Cadboro Bay. Once you go Bosch, it’s hard to go back.

    Not that expensive -> http://www.bestbuy.ca/en-ca/product/bosch-bosch-24-50-db-tall-tub-built-in-dishwasher-with-stainless-steel-tub-she3ar75uc-stainless-steel-she3ar75uc/10201399.aspx?path=54dbe46a8248f5430634174c01af3495en02

    That’s the low-end of the high-end, and I don’t have any experience with those dishwashers. They might be amazing — I don’t know. We bought our Bosch dishwasher in 2009 for $1400, I believe. It was the second-best Bosch dishwasher available at Sears at the time. Check out this one for $3849, which one could probably find cheaper at a department store or elsewhere:

    http://www.bosch-home.ca/products/dishwashers/built-in-dishwashers/all-dishwashers/SHX9PT75UC.html

  126. It would take something really extraordinary for prices not to pop higher again early next year. Any drop in sales can easily by explained away by seasonality and the lack of inventory. The bears don’t want to talk about those incredibly low inventory levels and the buyers waiting on the sidelines.

  127. If you want stories Vicbot, I’ve got some.

    An older couple that lived in Fernwood sold their house after he retired and bought a town house outside of the City. Their reason was that the yards were to much to keep up and that they wanted to be mortgage free.

  128. Well Caveat are you looking to buy a farm on Salt Spring Island or acreage in Shawnigan Lake or a Condo in Sooke?

    Most people on this blog are not and want a house in the core. Then why are relying on stats that include these properties?

    Would you not be more interested in knowing what is happening in your area for houses?

    The general numbers are not showing what is happening to houses in the core. It’s condos and house sales in the Western Communities that are breaking the ten year highs not houses in the core.

  129. The GST isn’t shown as a separate line item. The value is shown as…

    $385,000 (including Net GST with the rebate assigned to the vendor)

    and recorded as $371,384 not including GST for BC Assessment sales analysis purposes. And the reason for this is consistency between owner occupied and investment properties. As investment properties do not get a GST rebate. The investor pays $18,569 in tax with no rebate while an owner occupier is rebated $4,953

  130. Not sure what the sales discussion is all about?
    I personally have a list of buyers that are in a position to buy of 33. Three years ago it floated around 5 to 8 at any one time and 3 to 5 around this time of year.

    It’s just Jack with his feeble late-month attempts again. He was hoping were already away on holidays.

  131. The appraised value states if the estimate includes GST, does not include GST or is Net of any GST rebate and if that rebate is assigned to the vendor or purchaser.

    So what. The owner doesn’t get the appraisal. They get the assessed value. The assessed value assigns the price between land and buildings and does not include GST as a separate line item as far as I can tell from the BC Assessment notice.

    Now that we got that cleared up for you. Let’s talk about government assessors that are governed by BC legislation and not the Appraisal Institute of Canada or bank regulations.

    I was never confused, but thanks. BC Appraisers are governed by legislation, policy and court cases. The court cases state that including GST on new construction is a reasonable thing and specifically reference the Appraisal Institute of Canada policies in this respect. The one that was adopted by the institute and set out in this article: https://professional.sauder.ubc.ca/re_creditprogram/course_resources/courses/content/330/11_Barber%20-%20GST%20and%20Residential%20Property.pdf

    I understand the difference between sale price and assessed price JJ. I stated this in my response directly:

    It is conceivable/probable that the sales prices in July were higher and the assessment is not skewed even though the sale price reported is incorrect.

    The bottom line is that it is the assessed value that creates the tax liability and my understanding is that the poster is concerned that an incorrect sales price might have some bearing on this but maybe I am wrong and he is only concerned with a correct recording of the sales price for the sake of correctness.

    but the sale in the written contract is recorded by BC Assessment not including the GST

    There seems to be a lot of room for error in the report of sale process.

  132. All this talk of the market slowing isn’t making sense to me.

    Q: Is the inventory higher or lower than typical for this time of year?
    A: Much lower.

    Q: Is the pace of home sales lower or higher than normal?
    A: Higher than normal.

    So – low inventory and high sales? That does not sound like a slowing market. Not yet at least.

    I’m not trying to be a “pumper”. In fact I’d be perfectly happy to see the market slow down and prices soften. I’m not hoping for an all out crash as I think the economic benefit from affordability would be wiped out by the likely economic downturn that would ensue

  133. “As volume returns to the market, these buyers step back in.”

    As volume returns to any overpriced market with ( Vancouver tanking especially) the prices drop as there is more selection.

    These buyers-waiting in the-wings stories are getting lame. They have been around here since September. I see many houses listed that are unsold, go make an offer if you’re a serious buyer, how many have I shown that have slashed prices ? More than 20 and many I never bothered with because they were minor slashed but relisted because they weren’t selling in all the popular core and Westshore areas. Those on the sidelines are waiting for the perfect house or they want it cheaper. Perfect is a rarity, but they will be cheaper in the New Year.

  134. Jerry, as a new resident in Victoria, would you mind sharing where you moved from, and what it was like trying to find a home here. Would be an interesting read!

  135. “That’s funny AG. When I go to the store and the coffee is almost sold out at $10 a bag and decide not to buy, then a new shipment comes in and the price drops to $7. I think it’s called Economics 101 that I mentioned. For as stock guy who made his millions shorting stocks he should know better.”

    Hawk – you betray a sad lack of knowledge about how markets work in reality.

    Focusing on the important stuff here. Where are people finding decent coffee at $7/lb?

  136. To be more clear about that Totoro.

    The appraised value states if the estimate includes GST, does not include GST or is Net of any GST rebate and if that rebate is assigned to the vendor or purchaser.

    For example, when valuing vacant land the estimate is usually not including GST. For a new home sold by a developer the value estimate is typically Net of any GST with the rebate (if any) assigned to the Vendor. If you’re building your own home the estimate is Net GST with the rebate assigned to the owner. Wherever the final estimate of value is stated in the appraisal report it is followed by how the GST is being included or not.

    So why do banks lend on GST and not PTT? Hypothetically if the market remained stable and the home was never to be lived in and then re-sold in six months the owner would not recover the PTT in the sale price. They may or may not recover the GST either. However, most lenders have agreed to finance including the Net GST. That’s a lenders’ regulation.

    Now that we got that cleared up for you. Let’s talk about government assessors that are governed by BC legislation and not the Appraisal Institute of Canada or bank regulations.

    BC Assessment reports sale not including GST or PTT.

    Now to be absolutely clear there are two things that Totoro may be confusing. The reported sale is NOT the same as the assessed value. BC Assessment assesses properties allowing for any GST rebates, but the sale in the written contract is recorded by BC Assessment not including the GST. Most often those reported sales are shown as the last three historical sales of the property. Don’t get the two mixed up.

  137. Not sure what the sales discussion is all about?

    Leo is projecting 511 sales and we’ve only had two other months break that mark going back to 1990 and that would be December of 91 and 2004. Sales have not collapsed.

    There have been many anecdotes recently about buyers waiting on the sidelines and unable to find the properties they want.

    I personally have a list of buyers that are in a position to buy of 33. Three years ago it floated around 5 to 8 at any one time and 3 to 5 around this time of year. The reason being my buyers were actually able to secure properties. Right now finding a property in the non-existent inventory is one thing; however, securing it amidst unconditional offers is a whole different story.

    I went through the active SFH core inventory last night it is extremely depressing.

  138. Hawk, we’re talking about a small increase in inventory that is going to bring more frustrated buyers back into the market. No one (except you) is predicting a big increase in inventory. There have been many anecdotes recently about buyers waiting on the sidelines and unable to find the properties they want. A small increase in supply, which is what we will see next month, will have the effect of increasing demand too.

    A similar thing happens in some of the less liquid financial markets. If volumes get too low, some buyers start to pull back. This is because they are concerned that they won’t be able to buy the amount they need without adversely moving the price. As volume returns to the market, these buyers step back in.

    If you’d spent any time around other markets you would begin to understand these nuances. Not everything is black and white, and ‘Econ 101’ is surprisingly fallible in the real world!

  139. AG,
    If a stock price zooms upward then volumes and bids and asks get thin, and big volume suddenly pops up what happens ? The stock goes down, not up as buyers back off and the sellers keep hitting the bid to sell and get out. The market has over valued itself, the declining sales and increase in price slashes show it. You must have made your money on inside info.

  140. “That’s funny AG. When I go to the store and the coffee is almost sold out at $10 a bag and decide not to buy, then a new shipment comes in and the price drops to $7. I think it’s called Economics 101 that I mentioned. For as stock guy who made his millions shorting stocks he should know better.”

    Hawk – you betray a sad lack of knowledge about how markets work in reality. When volumes get extremely low it often causes a kind of paralysis in the market. A small increase in supply, as we will see next month, acts to bring in more buyers, increase liquidity, and push prices higher. Anyway, I guess we’ll see soon enough.

  141. Now, now AG. Before you go hog wild on me, I have been very careful not to say that prices will go lower. That’s your interpretation.

    All I’m expecting for the next several months is for more of the same with the months of inventory to increase along with the days on market.

    As for not enough decent houses to buy. If you wanted decent houses to buy then you wouldn’t be looking in the core. In Victoria people pay astronomical prices for properties that most reasonable people would consider to be tear downs. And then the buyer never tears them down but remodels them.

  142. GST is often included in the valuation per the Assessment Appraisal Institute of Canada and this has been unsuccessfully challenged in BC. http://bcassessment.ca/about/Stated%20Cases/SC390.pdf

    PTT is not included in the valuation and this seems to be an error to me.

    Here is the decision tree for assessing non-realty factors: https://www.bcassessment.ca/services-and-products/APPs/Non-realty%20Value%20%E2%80%93%20Information%20and%20Treatment.pdf

    I’m not sure if you need to file an appeal where there is an error like including PTT and I’d call BC Assessment to find out. If you are raising this I’d raise the GST as well. Check you neighbouring property valuations and ask your neighbours if GST was included on their valuation as well. If it wasn’t you have a good argument that it should not be. If it was your argument appears weak to me.

    Also, you bought in February. It is conceivable/probable that the sales prices in July were higher and the assessment is not skewed even though the sale price reported is incorrect.

  143. Actually GWAC, the inventory is not at the worst that it has ever been. It was worse in 2006 and 2007.

    Not true unless you’re talking about some subset.
    Dec 2006: 2650
    Dec 2007: 2799
    Dec 2016: ~1500 end of month

    Read AG’s explanation, plus the coldest 1st half of December on record definitely affected sales

    Total nonsense.

  144. Mike, did you miss the memo, these new people here are hardened prairie folk and easterners you keep raving about. Even the Vancouverites get way more than us. An inch of snow and minus 5 ? Weak ass excuses from the king pumper.

    As a previous poster said, the market is starting to correct, and the cracks are showing in Victoria. More inventory will mean lower prices and the over priced shacks of today will have to drop their prices again in January to get a sale.

    Those on the sideline are waiting for a deal, not a 10 person bidding war or they would have bought already.

  145. In 2006 and 2007 there were fewer active listing than today. We’re only 14% below November and we are not through the month yet. In contrast house sales, as at today, are 43% below November. Both those numbers will change as we reach the end of the month. The number of active listings will increase a little bit more and so will the number of sales.

    A better judge is to look at the ratio of active listings to sales or the months of inventory and that has not been falling for the last few months. Today the MOI for houses in the core is the highest for the year at 3.29 but as we near the end of the month that ratio will drop a bit but I expect it will remain in the low 2’s. That’s twice what it was in April when the MOI was 1.06

    Month Months of Inventory
    Jan 2.84
    Feb 1.66
    Mar 1.31
    Apr 1.06
    May 1.09
    Jun 1.26
    Jul 1.86
    Aug 1.81
    Sep 2.05
    Oct 2.38
    Nov 2.21
    Dec 3.29

  146. “When demand is higher than supply in a thin market like this, an increase in volume tends to push prices higher, not lower.”

    That’s funny AG. When I go to the store and the coffee is almost sold out at $10 a bag and decide not to buy, then a new shipment comes in and the price drops to $7. I think it’s called Economics 101 that I mentioned. For as stock guy who made his millions shorting stocks he should know better.

    When the largest real estate pumper is predicting Vancouver to correct double digits, then how do you figger Victoria is going to take off higher ? Bulls getting super desperate.

    Vancouver house prices face double-digit correction: Royal LePage

    Vancouver’s long-awaited housing correction may be around the corner: Prices are headed for a double-digit decline in 2017 as buyers drop out of the market, says the head of Canada’s largest real estate services company.

    “Home prices had gotten so out of whack with the growth in underlying wages and salaries that there had to be a correction,” said Phil Soper, chief executive officer of Royal LePage, a unit of Brookfield Real Estate Services Inc. “And it’ll happen in 2017.”

    http://www.theglobeandmail.com/real-estate/vancouver/vancouver-house-prices-face-double-digit-correction-lepage/article33406124/

  147. Jerry you should contact BC Assessment. The reported sales are excluding GST and property purchase taxes.

    It won’t make any difference in the assessed value of your home as that was established as at July 1, 2016 assuming the condition as at October 31, 2016. What that means is that if your home had been finished in September then the assessment would be for a fully completed home not a partially built home in July.

    As an appraiser, sometimes I am sent the purchase agreement. And these agreements can be difficult to understand with the rebates, discounts. is it a home owner purchase or an investor purchase. Furthermore, some developers are very creative in how the purchase agreements are written. Each government assessor is responsible for about 20,000 properties so you can see how errors can easily happen.

  148. Michael if only another 10 out of that 10 million bought a house in the core this month we still would be lower than the ten year high for house sales in the core for December. All we need is ten more than our highest year in 2006 that had 106 house sales. And that is really unlikely to happen this late in December.

    At 85 house sales in the core so far this month, there aren’t many shopping days left till Christmas.

  149. If the mod would permit a tack in the thread direction, I would like to ask a question as a new resident in Victoria. We bought a newly-built home in February. I was looking at the BC Assessment today for our home and I noticed that the “Sale Reported” value shows the full amount which was fronted for the transaction, inclusive of sales tax and land transfer tax. These two together are not insubstantial and of course skew the sales “price”. Is this normal or should I have it corrected?

  150. Well Vicbot, markets change and rarely are the many factors that make up a market constant for more than six months. What your agent or friends said to you when you purchased your home has little to do with today’s market.

  151. The biggest reason why sales are only at the ten year average is that inventory is so unbelievably low. There are very few well priced properties right now. Hence the sales-to-list ratio being at possibly an all time high.

    As more properties come on the market in Jan and Feb, it will be just the fuel that the market needs to head higher. When demand is higher than supply in a thin market like this, an increase in volume tends to push prices higher, not lower.

  152. ~10 million retiring boomers in Canada alone couldn’t possibly have an effect on a retirement city like Victoria 🙂

  153. I would like it better if local incomes were determining factors in prices

    Local incomes have probably never determined prices on their own – or not for a long time.

    My grandparents had help from their parents with the down payment for their home. They then used the equity in that home to buy another home.

    Many parents act as guarantors on mortgages for their children. And once you get in you build equity which then becomes part of the affordability equation for the next up-size or downsize. Equity is likely why a blue collar worker in Fairfield who bought in 15 years ago can think about buying the lot next door now to build a house for his kids.

    Houses seem like a safe investment to many Canadians. It is likely easier for people to reinvest in a larger home when they see the amount of home equity they have to reinvest. Over time equity has grown faster than inflation, and so have prices.

    About 70% of home buyers are not first-time buyers. About 40% of first-time buyers have family help in BC. Assuming those who are not first-time buyers have some equity, this leaves about 12% of buyers who are buying based on income and savings alone without family help or equity. It is the buyers in this category who earn middle incomes in Canadian dollars that are disproportionately impacted on their first purchase in a rising market. We were in this category ourselves a decade ago and it was not easy then, now we would have to buy less house and accumulate equity to move into what was our first house back then.

    Oh, and the inheritance impact. About 2/3 of Canadians inherit and the amount is significant and increasing a lot in BC due to RE values. Some of this will land back in the RE market. As Benjamin Tal has said, “A lot of the debt problem we think will not be debt because it will be paid by inheritance, even the debt problem taken on by baby boomers”. Tal also said there is no doubt that some older Canadians are passing on their wealth within their lifetime, and some of it is already responsible for elevated housing prices and will continue to keep prices high. “It will pay for down payments, for renovations”.
    http://business.financialpost.com/personal-finance/parents-will-pass-on-750-billion-to-kids-over-next-decade

  154. “you can’t or don’t want to hear it.”

    JJ, not sure why you’re saying I “can’t or don’t want” to do anything. Like I said, from my own purchasing experiences, out-of-town buyers were an important influence on prices (other influences are low interest rates, over-leveraging, etc). The % of buyers from Victoria doesn’t prove anything about final sale prices – unfortunately.

    I would like it better if local incomes were determining factors in prices, but they seem to be less so than years before – that’s NOT great news for local neighbourhoods. I think that local working families should still be able to afford something in the core where they have jobs – it’s an important part of community building that I hope won’t disappear in the core areas. That’s a major concern in Vancouver as well.

  155. We will most likely be around the ten year average for house sales in the core this year. At least half of that decade was a flat market, making that 10 year average a low bar to meet or beat. At the same time the median price in the core has come down and the days on market has increased with the higher priced homes taking longer to sell. And the percentage of buyers describing themselves as being from Victoria has shot up to 79% or roughly what is was before the market took off in February of this year.

    Compare that to April of this year when sale volume for houses in the core peaked at 376 while the ten year average was 210. That meant April sales were 79 percent higher than the ten year average.

    So Vicbot the only way to answer your question is by asking why did out of town buyers not follow the cycle in April when sales increased by 79% but now are expected to follow the cycle in December? I think most readers of the blog are screaming the answer out to you but you can’t or don’t want to hear it.

    Our market is dominated by factors such as local wages and local employment and the current high prices for real estate are lowering demand for housing in the core. The mammoth run up in prices in the Spring has been followed by a larger than historical decline in the volume of sales. In this years case a decline larger than the ten year average and at or close to what was experienced in the credit crunch in 2008.

    I should hope that most of us can agree that this year has been anything but typical. If we are just now returning to the ten year mean then we have a lot of changes ahead of us. Such as rising months of inventory and lengthening marketing times and possibly lower prices some time in the future. But for prices to steadily trend lower we need to have a significant increase in the months of inventory and days on market. That could take a year to happen. Or not.

  156. JJ, my point was that out-of-town buyers follow the same annual cycle as local buyers – the spring market is busier for all (you had said “I would think that if it had been out of town buyers then we would still be seeing high sale volumes”).

    If you don’t agree the spring market is busier due to weather/daylight hours/school seasons, etc – which affects how sellers can show off their homes & how buyers & inspectors can find daylight hours to look at them – then we can probably find another reason. (or we better call BC Ferries and tell them to re-instate their summer schedule right now because winter has no effect 🙂 )

    Here’s a Forbes article on it: “Folks feel fairly flush in the spring. Christmas bills are in the rearview mirror, school expenses are dwindling, and there just might be a fat tax return burning a hole in their pockets … spring! The birds are chirping, the flowers are starting to bloom, and sunshine streams through the windows of your potential new home, showcasing it in its best light — literally.”
    http://www.forbes.com/sites/trulia/2016/04/25/pros-and-cons-of-buying-during-real-estates-hottest-season/#5bc49cdc2487

    Also, I lived through it – talked to realtors and other buyers about where buyers were coming from – it’s all part of getting to know your competition so you can put in the right bid. We won one of the bidding wars so it worked. From our experience the bidding wars started in 2014, before it became an obvious pattern.

    I also think that anything can happen in the future – RE might go up or down this spring – who knows.

  157. Barrister
    December 21, 2016 at 6:33 pm
    Just Jack:

    I dont remember anyone writing about hundreds of thousands of retirees coming to Victoria.

    C’mon Barrister,

    Whenever a comment is seemingly made ad nauseam, hyperbole is the perfect foil for the silliness of the proposition.

    I would suggest that you have probably indulged yourself in this harmless but pointed exercise. I know that millions of people probably have. Oops!

    Just maybe Phil Soper’s message might have some bearing on the Victoria market, as well.

    “Home prices had gotten so out of whack with the growth in underlying wages and salaries that there had to be a correction,” said Phil Soper, chief executive officer of Royal LePage, a unit of Brookfield Real Estate Services Inc. “And it’ll happen in 2017.”

    http://www.msn.com/en-ca/money/homeandproperty/vancouver-real-estate-prices-face-double-digit-drop-in-2017-lepage/ar-BBxqbCX

    You know when the Realtors are predicting small double digit declines then the world is a changing.

    Or perhaps Canadian Business offers some perspective.

    Canada resembles the pre-crisis America that Rajan describes. The homeownership rate is 69%, about where the U.S. rate was when the market crashed in 2007. Total household credit topped $2 trillion for the first time in the third quarter, pushing the ratio of debt to disposable income to a record 167%, according to Statistics Canada. Personal debt is rising faster than household income.

    http://www.msn.com/en-ca/money/topstories/bc-is-desperate-to-keep-its-housing-bubble-aloft-it-won%E2%80%99t-work/ar-AAlKgB7

  158. Forget the december market, let’s keep talking dishwashers! Long time reader, never poster – I got hooked on this site while house hunting in 2012-13. We bought our forever home in 2013 but I still keep coming back to read all your thoughts.
    What I really wanted to say is we had a Bosch a long time ago and have lived in many houses with varying levels of finishes and varied dishwashers in the time since. I am with Introvert on this one; the Bosch was amazing – no rinsing, everything perfectly clean, and so, so quiet. Every dishwasher since has had its Achilles heel – egg, avocado, pb – that won’t come off and instead bakes on. I miss the Bosch!

  159. I have two new neighbours (both rentals) within the last year. One family is from Seattle and one family from Vancouver. Both families are actively looking to buy. The current consensus is there is very little of any interest currently for sale. What is for sale is quite expensive given the upgrades that will be required (and the current price of renovations).

    When the rentals went on the (rental) market last year they seemed surprisingly expensive to me – but not to my neighbours. I think it’s similar with the current set of RE listings – neither neighbour is particularly interested in doing renovations but there isn’t anything on the market that is ticking their boxes. So there may be a small pool of buyers waiting in the wings…

    Also, when I had a place up for rent last August, most of the interested parties were out-of-towners. I’ll being putting it up again in the spring so we’ll see if the demographic has shifted at all.

    On a side note – I would agree with some posters that the core really is becoming unaffordable. I don’t know where the money is coming from but even the junkers are mega-bucks. Once/if the flow of wealthier buyers dries up, I just don’t see prices continuing to increase. If not the out-of-towners, then who is able to afford these places?

  160. Think about it. With the tiny inventory level we have homes are selling at overvalued prices but still relatively affordable. Common sense would say homes should be selling for alot more with the tiny supply but the reverse is happening.

    How fast do you think prices should be increasing?

  161. Just Jack:

    I dont remember anyone writing about hundreds of thousands of retirees coming to Victoria.
    It is not very helpful when you just make things up. The stats compiled by the selling agents indicate that about 20% or one in five buyers are from out of town.What implication that has for the Victoria market is open to discussion. Hyperbole adds little to anyone’s understanding of the market.There are arguments to make that the market is cooling; but you are not making them. If anything you are undercutting those arguments.

  162. It’s pretty easy to see the market has already starting a correction. Think about it. With the tiny inventory level we have homes are selling at overvalued prices but still relatively affordable. Common sense would say homes should be selling for alot more with the tiny supply but the reverse is happening. The only thing holding this market up on its last string is low inventory and that can’t last forever.

  163. Mike, why is 930 Yates right across from the Market on Yates had to slash their price $10K after months on the market of a hot downtown condo market with a great city view ?

    Oak Bay Ave looks like some serious buyer regret coming down. Wouldnt be surprised to see the deal fall through like the Gonzales mansion.

  164. Vicbot, we don’t live in Calgary! You can buy a home at anytime of the year with little to no inconvenience due to weather.

    And we are not talking big numbers. How much BS have we heard about hundreds of thousands of retirees ready to come to Victoria. Yet we have over 150 houses currently for sale in the core and 685 through out the CMA buy only 83 sold so far this month in the core. Surely a dozen or two Calgarians could have pried themselves out of their ice caves and followed the dog sled trail to Victoria by now.

  165. GWAC, my personal circumstances are none of your business.

    I don’t think there is anything wrong with buying or owning a home today. It depends on personal circumstances.

    One of the things someone contemplating purchasing a home to consider is timing. Not timing the market but timing when it is best for them to buy.

  166. And what’s with OB condos lately, have people started downsizing their two-storeys for apts?

    402-1807 OB Ave, assess 307, ask 399, sell 460.

    For a 30yr-old/1100ft box and it’s over 5 blocks to red barn!

  167. Both increasing home equity and out of towners affect prices. If they didn’t then the foreign buyer tax wouldn’t have affected prices (as we know it did). Out of towners wouldnt have increased fall or winter numbers simply because all buyer numbers increase in spring – it’s easier to travel and look around in better weather and longer days.

  168. The decline from peak sales volume this year is the highest since the economic recession market of 2008.

    I think what Jack is trying to say is that prices are about to soar again like they did in 2009 🙂

  169. We have sold our Victoria home and bought in lovely Qualicum. Charming homes, beautiful neighborhoods. I reckon I / we will come back to Vic some day but look forward to at least ten years of relaxed living. If you can do it there are many lovely communities that are still relatively affordable.

  170. The market isn’t all doom and gloom like some of the bulls are making it out to be. We’ve seen it worse and come out okay. Markets change. And so will this one.

  171. Actually GWAC, the inventory is not at the worst that it has ever been. It was worse in 2006 and 2007.

    In fact our MOI for December is one of the highest this year.

  172. Nothing Earth shattering about that economic study. Land use regulations are part the concept of Highest and Best Use which determines the highest price paid for a property.

    But so are:
    Geographical
    Political
    Economic

    You need all four of the above. You could still have housing in a town without zoning regulations of any kind- but none of you would want to live there. Unless you don’t mind that your neighbor starts up a pig slaughter house next door.

  173. Here a thought. You cannot sell what is not for sale. Inventory available of decent places has got to be at its worse level in maybe forever…..

  174. “I know what shorting is, having done plenty of it in my previous career. However I probably should have said underweight instead.” How am I supposed to know that when you get it that wrong?

    Real Estate isn’t required to live, currently there are thousands here in Victoria doing just that.

    Also you only need to diversify if you don’t know what you’re doing.

  175. “FYI, markets don’t follow a 12 month cycle”

    Is that a straw man I see? Clearly financial markets don’t follow a 12 month cycle, but that wasn’t what we were taking about, was it?

    In fact, what I said was “There is a seasonal cycle in real estate that lasts exactly 12 months.” Do you disagree with that Jack? Really? Because I’m sure I’ve heard terms like Spring Market thrown around fairly regularly.

  176. I am shocked, who ever heard of a slowdown in sales in December before? The economy was be tanking because house sales in every city in Canada seemed to have slowed this December. Why even in toronto there were declining sales compared to the spring market. Remind me again why they call it a spring market?

  177. And I did AG, you just won’t acknowledge the fact.

    The decline from peak sales volume this year is the highest since the economic recession market of 2008.

    FYI, markets don’t follow a 12 month cycle. They generally follow the business cycle not a calendar or even Michael’s seven year cycle. No offense to all you Cabalist, Numerologists and Mayan Calendar enthusiasts out there. Happy 666 to all of you too.

  178. Interesting Article Supply and Demand Studies for RE:
    https://www.fraserinstitute.org/blogs/the-price-of-housing-is-driven-by-demand-and-supply

    In a series of papers, Harvard economist Edward Glaeser and his co-authors have demonstrated that land use regulations (i.e. zoning laws) are a quantitatively important determinant of house prices. By affecting how intensively land can be used, strict zoning regulations create a differential between construction costs (which tend to be similar across markets) and housing prices. Glaeser, Gyourko and Saks estimate that approximately 50 per cent of the price of a house can be attributed to restrictive land use regulation. In another paper, Glaeser and Gyourko find that direct measures of stricter zoning regulation are closely correlated with higher house prices. Similarly, economists Quigley and Raphael find that house prices and rents are higher in Californian cities with stricter land use regulation and that new house construction is lower in cities that regulate land use more stringently. Finally, two recent Fraser Institute studies (one on Alberta, the other on British Columbia) provide evidence that land use regulations contribute to higher Canadian housing prices.

  179. Okay Caveat, call it a cycle then. It still doesn’t change what is occurring in the market. Not since 2008 during the economic crisis have we experienced such a steep decline in sales.

  180. “Obviously you can’t compare just Decembers over the last 10 years. Since a lot of changes have occurred during those ten years including house prices”

    Yes you can compare just Decembers. And in fact that’s exactly what you should do. There is a seasonal cycle in real estate that lasts exactly 12 months. To correct for that, you should be doing year-on-year comparisons, not month-on-month. Without adjusting for the obvious cyclicality of the market, your analyses really don’t tell us anything.

  181. AG, a lot of time has been spent on this blog saying how we are being out bought or out priced by out of town buyers. However, the data just doesn’t support this notion.

    I suppose most think that out of town buyers bring “new money” into the economy and that inflates prices. But as I have shown, the effect of increased equity in our homes is more likely the root of our higher prices. We had a price and volume boom in the spring but that boom didn’t last long. It lasted only a few months as compared to the previous boom that lasted a couple of years. I would think that if it had been out of town buyers then we would still be seeing high sale volumes as our active listings to sales so far this month is 283:83 or 3.4:1 That ratio will decline as we get closer to the end of the month. But so far it is higher than last months MOI at 2.2:1

    And Michael, this is 2016 not 2015. Do us all a favor and buy yourself a calendar.

  182. AG, the trend is over the last 12 consecutive months not just one month.

    That’s called a cycle.

    In other TREND news the hours of daylight have been getting shorter for SIX straight months. I’m getting worried that soon there will be nothing but inky blackness.

  183. AG, the trend is over the last 12 consecutive months not just one month. Obviously you can’t compare just Decembers over the last 10 years. Since a lot of changes have occurred during those ten years including house prices. I doubt that you would say that house prices are similar to those of ten years ago or even one year ago.

    Here is the information that I posted previously to show the trend for houses in the core.

    Month Sales, Number of
    Jan 122
    Feb 228
    Mar 318
    Apr 376
    May 337
    Jun 291
    Jul 206
    Aug 207
    Sep 185
    Oct 152
    Nov 149
    Dec 83

    As you can see we had a steep decline in house sales from April to July. Then the rate of decline slowed a bit and plateaued briefly and now it seems that this month the rate of decline in sales has increased again.

    If you look at the average days on market for houses in the core you see the average days to sell increasing from July to September, dropping briefly from September to October and then rising from there.

    Month Days to Sell, Average
    Jan 39
    Feb 26
    Mar 20
    Apr 18
    May 19
    Jun 18
    Jul 16
    Aug 19
    Sep 26
    Oct 21
    Nov 29
    Dec 31

    Now before you go on a tirade of how I’m such a “bear”. No where in all that did I write prices are falling or correcting lower. These are just trends that some may choose to extrapolate in support of lower house sales and higher days-on-market for next year relative to 2016. And I think that would be a reasonable conclusion given the noted trends.

  184. I cook a lot and for a lot of people. We have a Kitchen aid dishwasher that is a year old. Probably not as good as Bosch but I’m happy with it. Vast improvement over washing dishes on the patio with a garden hose and in the tub while we renovated. It cleans about as good as the one we have in our other house that appears to be 90s vintage, but the Kitchen aid cycle is way longer.

    I’m even happier about the Ikea kitchen we had installed. That makes a big difference to how organized and tidy things are. Much more affordable than some of the other options here in Victoria and the reviews are good.

    spice pull outs and crap…….who cares

    I do mildly. I love the spice drawer. Pull it out and you can see everything immediately. No rummaging around and losing bags behind bottles because everything is in the same size glass jar with the top labelled. Sometimes I just open it to have a look at it :).

    My car, on the other hand, is just a way to get from point a to b. My goal is to save energy by not driving it. Different strokes.

    Games up for me. I have to go elsewhere.

    Up Island is lovely. We just had friends buy near Courtenay after renting in Vancouver for years. I am enjoying their FB posts about the charm, nature and affordability of the area. We would be happy with the Okanagan or anywhere between the Parksville to Comox stretch if we decided to cash out of Victoria one day. For us it really depends on where family will be in the future. Moving may turn out to be a good thing for all sorts of reasons.

  185. “I really believe that that this out of town money has more of an impact on Victoria house prices than some people realize.”

    This is my humble opinion as well – there was a MoneySense article that talked about this too – describing how the marginal buyer sets the price. They were referring to how out-of-town buyers increase competition for a small number of listings – which I think has 2 effects: (a) the higher the number of buyers, the more each bidder ups their price, and (b) the higher salaries & higher RE prices in bigger cities affects the price they’re willing to pay. It doesn’t necessarily mean the out-of-town buyer wins each bidding war, but it impacts final sale price.

    Victoria is my home town, but having moved back from Vancouver myself, I’ve seen this in action – both here in Victoria and Vancouver.

  186. JJ, Great post as usual.
    Interesting double hump on the Day on the Market.
    It seems the $1MM to $1.2MM takes double the time of the prices BELOW and ABOVE this tier.
    My thinking is that these are borderline properties and people asking much more than what has historically sold. E.g. OB older homes that can’t command the higher price of a premium/newer home, but at the same time, a few cosmetic touches and the owners believe it is worth more than the house that has never been renovated.
    Interesting times.

    In regards to the Wade, cracked the numbers…and they are okay.

  187. I think JJ’s favorite month to try and scare people is December 🙂 especially one with record-breaking cold to skew sales.

    He’ll be out with his annual pre-Xmas ‘peak call’ soon:

    December 24, 2015 at 1:46 pm

    Looking back over the last decade at how single family home prices have changed it looks like prices may have peaked once more in 2015.

  188. “the more costly properties are taking twice as long to find a buyer”

    I would guess that is always the case. Mainly because they are harder to price for both buyer and seller.

    It would be interesting to see a comparison vs the same time last year.

  189. It may be interesting to see how the days-on-market differ by price over the last 200 house sales in the core.

    Price Range (Average days on market)
    0 to 600,000 (26)
    600,00 to 800,000 (22)
    800,00 to 1,000,000 (29)
    1,000,000 to 1,200,000 (54)
    1,200,000 to 1,400,000 (34)
    1,400,000 plus (63)

    The trend seems to be apparent. The more costly the property the longer it will take to find a buyer. That certainly is contrarian to the idea that rich out of town buyers are snapping up properties in Victoria as the more costly properties are taking twice as long to find a buyer.

  190. “And that can be seen in the median asking price, as agents react to the new dynamics by lowering asking prices.”

    JJ – Again, it’s a bit disingenuous to try to create a trend from a single month. Am I right in thinking that last month had the highest median price ever? To take 20 days of data, and claim that the market is changing based on that, is deceptive at best. Especially in December when the number of transactions is lowest and the median is most likely to be noisy. And because you never post last December’s numbers, we are unable to make a proper evaluation ourselves.

  191. I do have a high-end dishwasher but I don’t say “wow,” this is way better than what I had at my condo.

    Are you sure your dishwasher is high-end? Decibels, and ability to clean heavily soiled dishes without pre-rinsing or pre-scrubbing. I bet you don’t cook much.

    There you go, folks — a debate on dishwashers on the House Hunt Victoria blog! Value added.

  192. Real Estate markets are always changing with economics. This years market has less in common with the real estate market of a decade ago, five years ago or even one year. The multitude of factors that influence values has changed so much by then.

    That’s why most lenders have guidelines in-place that state if an appraisal is more than 3 or 6 months old, the property has to be appraised again. The changing economic conditions are a problem when you compare last December when the core had a flat market for many years to this years robust market. They are not similar comparisons.

    So while house sales in the core for December may likely be similar to last years what you are comparing are two distinct markets one which was a very robust with low months of inventory, low new listings to sales and low days on market to a market that had been flat for years.

    The slow down in house sales in this year’s market is similar in percentage to what happened in the 2008 market. Most would consider what happened in 2008 to have been severe. Fewer sales means lower dollar volumes with fewer commission checks not only for agents but other that depend on sales for their livelihood. Whatever bump we had from out of town buyers is gone now and our local economy is dominating the market place. And that can be seen in the median asking price, as agents react to the new dynamics by lowering asking prices.

    Month List Price, Median asking price for detached houses in the core
    Jan $695,000
    Feb $719,500
    Mar $724,950
    Apr $709,900
    May $700,000
    Jun $750,000
    Jul $759,450
    Aug $799,998
    Sep $800,000
    Oct $799,950
    Nov $833,900
    Dec $749,894

  193. “I could rent my place for the rest of my life and I’d never have to leave town.”

    But the point is that you do want to buy at some point. You would rather be a home owner than a renter. So you are underweight real estate. Works out great in a falling market, not so much in the last few years.

  194. It’s a little disingenuous to talk about seasonal drops without a wider perspective. For example, if core sales come in at 100 for December, how would that compare to previous December? What’s the range? Comparing it to March or April is of little benefit.

  195. I could rent my place for the rest of my life and I’d never have to leave town. More bullshit from someone whose real estate experience is questionable.

    More people leave who put homeownership above everything else in life or just see Victoria as not the end- all-be all as the congestion increases. Call some place paradise, kiss it good bye.

    Mike,
    How come the cold isn’t slowing down Toronto as you say half of new Victorians are from there ?

  196. “AG. It’s not shorting the market unless he’s selling something he doesn’t actually have. He’s not going bankrupt not owning a house.”

    I know what shorting is, having done plenty of it in my previous career. However I probably should have said underweight instead. You could argue that the following are the possible positions:

    Overweight real estate –
    Owning your own home plus investment properties, or owning a primary residence that is larger than you need or can really afford.

    Neutral real estate –
    Owning a primary residence that is appropriate to your wealth and requirements.

    Underweight real estate –
    Renting

    As you say, it’s true that you are unlikely to go bankrupt by renting. But you might be forced to leave the city, or make other adjustments to your lifestyle that you might not otherwise want. Real estate is unique investment asset in that we require it, in one form or another, to live our lives.

  197. So what has caused this enormous decline in month to month house purchases in the core?

    I’ll go with the obvious record Arctic cold spell.

  198. Just Jack:

    I think one factor is that inventory gets this low what I think of as the “dregs” factor has a lot more impact. it is those house that are so overpriced with so many problems that no one in his right mind would ever consider them. An example would be that house in Rockland that is in foreclosure and the bank is still trying to get 1,8 million for it. Lots of luck. When inventory is high the dregs are at about 5%.
    With inventory this low the dregs seem to be about 25% of the available housing. So a 17% drop in inventory actually is a much higher percentage of the non dregs.

    But I agree that there seems to be a bit of a slow down in the core. Inventory in the Uplands seems to have doubled in the last four months. I wonder if the choas in the Vancouver market is finally having an impact here?

  199. AG. It’s not shorting the market unless he’s selling something he doesn’t actually have. He’s not going bankrupt not owning a house.

  200. Jack ! Man, I thought Bearkilla said you were dead. 😉

    Looks more like the median price and sales is what’s dying. The buying pool must just about be drained of fools and the owners can’t afford to move. Flippers/investors will load the market next month as the fear of losing big will set in.

  201. Tough to say if we will even make 100 house sales in the core this month. That would be a 33% drop in sales from November and a 73% decline since peak sales occurred in April.

    To put things in perspective the worst December that we ever had was during the financial crisis of 2008 when house sales fell to 70 when we had a 71 percent decline from peak sales in that year.

    So what has caused this enormous decline in month to month house purchases in the core? While there are fewer active listings in December they are only down 14 percent from the month before and 32% from peak listings back in March.

    A look at median and average month to month prices illustrates what is most likely the cause in this unusually high month to month decline in sales.

    Month Sale Price, Median
    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 $782,100
    Oct $826,500
    Nov $809,000
    Dec $755,000 so far this month

  202. Good Morning:

    Hawk is right that affordability has gone down if you are employed in Victoria. But considering the amount that house prices have gone up in the past year and that wages really have not, this is sort of a no brainer. But does this mean that house prices will go down anytime soon. Probably not.

    One of the interesting stats that I saw on this blog is that at least 20% of buyers are out of town. (yes, the percentage is probably higher because of the reporting method, but certainly not lower). House prices, in spite of this years increases, still look cheap when compared to Toronto or Vancouver (even with the rapid prices declines in Vancouver, there is a substancial gap in prices).

    I am aware and I respect the opinion that since 80% of sales are local that house prices are set locally.
    But I really believe that that this out of town money has more of an impact on Victoria house prices than some people realize. I will be the first to agree that we dont have the stats to get a clear picture of what is going on. For example, it would be helpful to know what percentage of buyers over 2 mil are out of town. My suspicion is that it is closer to 40 or even 50%. What about the next tranch down at around 1.5 million.

    Perhaps of equal importance, is to try to analysis how much of chain effect on prices that one out of town buyer creates. The house on St Charles that sold recently for 2 million was bought by a person from Vancouver, but the people selling bought a house in Oak Bay for 1.4 cash and in turn those sellors bought a condo. I am speculating but my guess is that the people buying in Oak Bay found 1.4 million quite affordable not because of their income but because they got 2 million from an out of town buyer. I honestly dont know how common this chain effect is in Victoria nor do I have any idea idea on how to measure the impact on house prices. My suspicion is that it is one of the major drivers behind the increase in house prices. (Note, I am not saying it is the only driver, certainly low interest rates are playing a large role).

    I have recently had two friends from Toronto buy in Victoria. One of the reasons, according to both of them, as to why they picked Victoria is that house prices are “cheap”. I am just passing on their view on it.

    Maybe the raw numbers of out of towners buying SFH in Victoria might not seem that large but when you also factor in the extremely low inventory my strong suspicion is that there is more impact than we think. I dont see house prices coming down any time soon. Before I suffer the attacks of people saying that i am just hyping real estate in Victoria let me say that I dont have any investment properties here in Victoria or elsewhere in BC. Nor do I have any intention to sell this house and in point of fact I am in the process of setting up a trust fund to make sure that this house is maintained as a heritage house and never sold to developers even if the grandkids never want to live here. After the last three years here in Victoria I find it impossible to tell if I listening to a city council politician or to a spin doctor for the developers; dont trust either to preserve Victoria’s heritage.

  203. AG, how about higher interest rates which are already happening and tightened lending rules? As an ex-finance guy you should know Economics 101 like every other professional is saying will blow this market up. But you must be so maxed on leverage to not see buyers have been shut out not increasing.

    Why so angry bud ? Lame old sayings like that are so over used. Here’s one: Those who stick their head in the sand when red flags are flapping all around wind up broke. Happens at every market bubble popping point. Ask the millions of bankrupted Americans who still haven’t recovered 10 years later.

  204. Hawk – you arguably shorted the market when you sold your primary residence. Here’s a quote from Keynes for you:
    “Markets can remain irrational for longer than you can remain solvent”

  205. “Debt levels have also gone up huge from 2008 level. Totally different environment which is why bankers are tightening the credit noose.”

    Agreed. Doesn’t mean prices won’t go higher though. With inventory this low (both in rentals and houses for sale), it will take something extraordinary for prices not to pop again.

  206. AG, it’s a mere few percentage points below the old highs and we’ll above the early 90’s peak. Debt levels have also gone up huge from 2008 level. Totally different enviroment which is why bankers are tightening the credit noose.

  207. Re the RBC report

    It’s interesting that condo affordability remains in the middle of the range and has hardly moved.

    The measure for single family homes is high but still well below the levels seen in 2008 and 2010. There’s still room for another leg higher.

  208. RBC affordability report out for Victoria: “most significant deterioration in more than six years”.

    Keep on buying fools.

  209. I still remember Marko reporting on an insane open house on Walnut street with 100 people inside and an inspector trying to do his measurements.

    It was actually a place on Denman listed in February 2015 that went 75k over ask….it was the first time I had seen anything like it as I started in June of 2010 as the market rolled into the worst July and August in the history of the VREB….the next 5 years were very slow….it wasn’t until 2015 that I saw my first unconditional offer 🙂

  210. In terms of dishwashers, they clean better and do it very quietly. There is nothing like a high-end Bosch dishwasher. I personally can never go back.

    Marko, please don’t tell me you have a Frigidaire dishwasher in your owner-built mansion.

    I do have a high-end dishwasher but I don’t say “wow,” this is way better than what I had at my condo. The big difference is having dishwasher versus not having one. Frigidaire to Bosch is a very small jump in comparison.

  211. “Same. As much as I’d like to say several hundred (thousand?) hours of watching the market allowed me to time the market it was mostly fluke.”

    I’m forever greatful to this blog for helping to inform the timing of my purchase. I didn’t hit the bottom like Leo but I did buy in early 2015 just before the big price run up. It was a fluke that we needed the extra space at that time. However we had actually planned to save for one more year before buying but it was actually this blog that convinced me to dive head first into the market. The stats/charts as well as the anecdotes from open houses were all suddenly pointing to a market that was taking off – even if none of us understood why.

    I still remember Marko reporting on an insane open house on Walnut street with 100 people inside and an inspector trying to do his measurements. That was the image that did it for me. We then aggressively started looking and luckily got something without having to compete. No one around us, including our realtor, seemed to understand why we were so hell bent on buying – guess they weren’t reading this blog 🙂

  212. Saskatoon is known as the Paris of the Prairies (yup, if it got down to minus 35C in Paris).

    On the other hand ISIS doesn’t know where Saskatoon is. Upsides to everything.

  213. Problem these days is the base stuff is very functional….what is so much better about your German appliances?

    In terms of dishwashers, they clean better and do it very quietly. There is nothing like a high-end Bosch dishwasher. I personally can never go back.

    Marko, please don’t tell me you have a Frigidaire dishwasher in your owner-built mansion.

    (And Miele makes the best vacuum cleaners.)

    They certainly won’t last as long as the bare bones stuff as they have more complicated eletronics and more functions to go wrong.

    I have heard this when it comes to HE washers and driers.

  214. Sweethome, we moved here 10 years ago from Saskatoon. Sold just as their market was starting to take off. We will be relocating up island or over to the Sunshine Coast. It was a big decision because I have a successful practice here and will need to build the same somewhere else, but the thought of renting through retirement clinched it.

  215. I’m being serious AG, anyone who can do that in several different countries during 3 crashes and make all that cash from scratch at your young age should be writing an E-book , sharing your knowledge and making even bigger money. I’m still waiting for some of it on here unless it all came from insider knowledge or your still max leveraged

  216. @bitterbear – I am sorry about your plight. This is a very hostile city for housing, both purchasing and renting. I know it is not as bad as Vancouver or Toronto, but still has bad affordability for basic working folks.

    I too was waiting for a “correction” once the dust settled after 2008 and interest rates went up, and it did seem logical at the time. I guess I didn’t recognize “good enough” when it came along. What happened to us with housing has made me re-evaluate my approach to other decisions in life. Too bad I am learning my lessons late in life and didn’t have better luck to protect me from my earlier ignorance. Some, like Leo and Barrister, hit the timing right with more luck than skill.

    Does “go elsewhere” in your comment mean you are moving cities? If my employment and family situation were different, I might be tempted to go back to my home province of Saskatchewan. Saskatoon is known as the Paris of the Prairies (yup, if it got down to minus 35C in Paris).

  217. “There is no such thing as a house that does not need ongoing maintenance. There are days when I understand why some people prefer to rent.” Barrister

    See the man has got his house—or has the house got its man?

  218. “More debt and inflation is the only way to continue growing our debt-based economies.

    But GDP growth per dollar of additional debt is heading down from 70 cents in 1966 (for the US) to less than 20 cents today, which suggests that additional debt is now, or will soon be, counterproductive as a stimulus to growth.

    https://www.creditwritedowns.com/2008/07/chart-of-day-debts-diminishing-marginal.html

    A different notion altogether is provided by Nobel Prize winner Edmund Phelps, who argues that economic growth is driven by cultural factors that create a “grassroots dynamism” necessary for widespread, innovation. Most innovation, he says, was driven not by a few isolated visionaries like Henry Ford and Steve Jobs; but rather by millions of people empowered to think of, develop, and market innumerable new products and processes, and improvements to existing ones.

    https://www.amazon.com/Mass-Flourishing-Grassroots-Innovation-Challenge/dp/0691158983/ref=sr_1_1?ie=UTF8&qid=1482278785&sr=8-1&keywords=edmund+phelps

  219. I’m too old now to buy into this market as I won’t be able to pay off enough of the house to avoid a serious penalty when I have to downsize. Games up for me. I have to go elsewhere.

  220. Bitterbear – There’s absolutely nothing wrong with renting. The costs of real estate ownership are far higher than anyone realizes, although the tax shelter and leverage usually make it worthwhile in the long run. But as long as you are saving your money and investing it elsewhere, I wouldn’t be too concerned about getting into the real estate market. Don’t try to time it – just buy a house when it’s fiscally comfortable to do so.

  221. “I think who you really want to blame is our governments for depegging currencies from anything of real value. For decades now, it’s been inflate or die. More debt and inflation is the only way to continue growing our debt-based economies. ”

    Michael, I can’t believe I’m saying this but I totally agree with you. You and Mauldin are right on this one. The government has no choice but to keep the party rolling or face economic disaster, social instability and political catastrophe.

    If the prudent, reasonable and sensible can’t beat ’em, might as well join ’em. I think I’m going to stop fighting the good fight, shut down my business and go get a real estate license.

  222. Hawk – thanks for the ad hominem attack. If that’s what you’ve descended to, you truly have lost the argument. For your information, I made most of my money from my career, not from real estate investment. I’m sure you’ll find some other reason to attack me though 🙂

  223. “Hope that’s not too long a comment for Sore-Thumb South to scroll by.”

    LOL – yes I enjoy it when the ribbing from both sides when it’s friendly, but the demands for editing people’s comments go too far! Agree with you about the total cost-of-ownership being high – I made those same calculations to determine my actual ROI, and frankly, as others have said, even if your property goes up 50%, if you don’t include renos/repairs/maintenance/operating costs/interest/insurance/inflation, your paper gains can be very deceiving.

    @Hawk, “All the homeowners I know aren’t offended when you bring up the huge price moves and how the market might correct.” Agree – same for me & homeowners around me. Don’t know why there’s such extreme reactions to you posting warnings from all the different institutions – every homeowner should be concerned about how easy it is to over-leverage nowadays, and when that’s part of what’s holding up the market, it’s not good news.

    Bitterbear, I agree with Michael when he said, “More debt and inflation is the only way to continue growing our debt-based economies.” Since RE is driven by market fundamentals as well as gov’t subsidies/incentives/corruption & international money flows, it’s impossible to predict.

    (The 10/4 thing is interesting – but it’s Apophenia 🙂 the tendency to perceive patterns within random data – because I can identify 30 year cycles as well – it doesn’t make it a perpetual law of RE in Victoria)

    I can’t forget that Victoria really does have one of the nicest Canadian climates (look at the last 2 weeks compared to Metro Van), and that’s a driver for investors.

    But as Robert Shiller said, “since homes are relatively infrequent purchases, people tend to remember the purchase price of a home from long ago and are surprised at the difference between then and now. However, most of the difference in the prices can be explained by inflation. “

  224. AG the superman real estate investor who survived 3 crashes in 15 years but still owns in Uplands without a silver spoon. Shouldn’t you be writing a book and do the tour on how you made it huge instead of wasting time on here attacking bears with facts of price slashes in the core ? At least Mike admits he came here with the spoon firmly attached to his orifice.;)

    BC Desperate to Keep Its Housing Bubble Aloft. Why it won’t work.

    http://www.canadianbusiness.com/economy/b-c-is-desperate-to-keep-its-housing-bubble-aloft-heres-why-it-wont-work/

  225. How about the Chelsea on Burdett? I think that that’s a really nice and very well-finished building. The suites are relatively big and were (and still are) pretty pricey because they’re high end.

    Solid building, great location, and high-end for Victoria but not compared to Bayview One. Chelsea is baseboard heating, 1/2” quartz, uninspiring bathrooms, etc.

  226. At Bitterbear:

    ” I have been in this city for 10 years waiting for the elusive correction that never comes… I give up.”

    Don’t give up.

    Do these calculations:

    (1) If you’d bought in January 2007, how much would you have gained net of all costs, including interest, taxes, utilities, repairs, renovation, commuting, etc.?

    (2) If you’d put all your savings since January 2007 into market index funds how much would you have gained less rent, property tax if not included in rent, utilities , repairs, renovation, commuting, etc.?

    (3) How much would Victoria’s property market have had to appreciate or decline for you to come out even?

    I have no idea what the result will be, but it would be an instructive exercise.

    Hope that’s not too long a comment for Sore-Thumb South to scroll by.

  227. “It is interesting the all the 1970s Gordon Head boxes (no offense Leo) still hold up half decent. No rain screen, 2×4”, etc., etc. Not the best builds at all.”

    I think rain-screening is only necessary when a wall is designed to be airtight. I would guess the Gordon Head boxes have tar paper over the exterior sheathing, and no vapour barrier inside.

    And what’s wrong with 2x4s? I could see using 2x6s if you want to pack more insulation in the wall, but why overbuild if you don’t have to?

  228. “I rented at the Bayview One for a few years and in my opinion it is the best building in Victoria in terms of quality”

    How about the Chelsea on Burdett? I think that that’s a really nice and very well-finished building. The suites are relatively big and were (and still are) pretty pricey because they’re high end.

  229. I agree, 2013 would have been good market timing. I did nottime the market it just happened to be when I moved. Pure fluke, no genius.

    Same. As much as I’d like to say several hundred (thousand?) hours of watching the market allowed me to time the market it was mostly fluke. Here’s what I said 3.5 years ago:

    “Then this place came up and we tossed in an exploratory offer. Didn’t think we were going to get it, so did it without a realtor. Everything came back clean so we went ahead with it.
    Doesn’t change the market of course. It is still sliding and will almost certainly continue to do so for some time.” – me, May 2013

    Turns out that was the bottom.

    http://househuntvictoria.blogspot.ca/2013/05/may-27-market-update.html?showComment=1369881893899#c7004033465615122555

  230. Regardless, and on a totally different issue, I still think that condos are vastly overpriced and that the finishing work does not even come close to justifying the prices. We can agree to disagree.

    Finishing in a condo is a relatively small expenditure. It’s the massive excavation, underground parkade, concrete structure, elevators, etc., that cost a lot of cash. The reason developers don’t do the finishing upgrades is there is simply zero market for it.

    I rented at the Bayview One for a few years and in my opinion it is the best building in Victoria in terms of quality…..potential buyers could care less about the solid core doors. The entire development was a flop for the developer.

    Bosa, different developer with my experience, came in to do the Bayview Promontory. Quality cut, one bedroom layouts reduced 200 to 300 sq/ft. Two bedroom layouts reduced 300 to 600 sq/ft. Very successful project despite a slow market.

  231. The stats for post 2010 didn’t paint the entire picture. I argued endlessly with Leo about that. The fact is there were deals to be had. But it’s not like a stock market where the last sale sets the price. The best example was our missed opportunity in Saratoga Beach. (Thankfully missed) We almost bought a beach front property there. The owner had the property listed since 2008 for 1.2 million. The were finally capitulating and had it offered at 695k. At that price our yurt village on the beach could actually work! I lowballed on Friday but the agent said no way and there was someone else. Monday I offered 620k but it had sold for that over the weekend to the someone else. After that we tried to get in by other properties there. Three to be exact. But none would drop their prices to anything as reasonable as that one place. So the stats would not represent a 50% drop in prices yet those deals were there for those making the effort.

    The guy that bought the property turned it into 12 RV strata lots for 120k each….

  232. I live in a 70 year old house that was cobbled together at record speed to accommodate returning veterans. Make no mistake, it was cheaply built and cheaply finished. It will last another 70 with proper maintenance.

    I’m sure the Langford new-builds will be just fine. And if you buy one, you don’t have to worry about weird shit, like cloth-bound Romex, asbestos backed tile, etc.

    It is interesting the all the 1970s Gordon Head boxes (no offense Leo) still hold up half decent. No rain screen, 2×4”, etc., etc. Not the best builds at all.

    Some trades I was talking to the other day about how houses aren’t built the way they used to… I was saying that houses used to be built to last a century, and I’ve heard that now, they are built to last 50. The tradesman went “Ha! Try 30! Those houses going up in Westhills, you’d be surprised how cheap they are slapping them together.”

    Not sure how a WestHills home is so much worse than a 1970 Gordon Head Box?

  233. my finishes in the house are vastly superior to any condo that I have seen on the market. The baseboards are ten inches tall and molded sold woods. The fireplaces surrounds are burled walnut and there is mahogany paneling throughout. Solid oak flooring and cedar lined closets. Solid core mahogany doors as well. The appliances were all only a year old and German top of the line

    I have a massive kitchen in my places with dovetail drawers, Blum kitchen hardware, spice pull outs and crap…….who cares. At the end of the day drawers go in and out just like they went in and out at my condo.

    Problem these days is the base stuff is very functional….what is so much better about your German appliances? They certainly won’t last as long as the bare bones stuff as they have more complicated eletronics and more functions to go wrong.

    It’s kind of like comparing a 2016 Civic vs 2016 Benz C-Class…..they both have power windows, mirrors, locks, A/C, etc., etc. In the Benz you pay for the stupid crap you never actually use like 20 way power seats. Sure it has 300hp versus 170hp but you can’t use more than 100hp in daily city driving so another mute point.

    I have an opportunity to drive a Yugo this summer when I was in Europe and the difference between the Yugo and my 2012 Civic is night and day. The gap between my Civic and my Tesla is much smaller in terms of driveability.

    The basic Westhills home is very functional and actually in many ways better built for longevity. What do you think will last longer? A fiberglass tub/surround all one piece or your extensively tiled shower with a tile floor. Tiled shower will crap out and leak sooner 99 out of a 100 times.

  234. 1711 Haultain went for 34% off what it sold for in 2010.
    BC Assessments never accepted the sale as suitable for market analysis which means something funky was going on. Oaklands area was never really dropped substantially.

    The biggest drop I came across in this area was my clients bought a place on Belmont at the top of the market in 2010 for $535,000 and sold it at end of 2012/beginning of 2013 for $509,500 but we are basically talking peak to bottom.

    I had a client buy a bungalow on Shakespeare in 2012 for $495,000 and in 2013 we had higher offers on it. It would be close to 700k now.

  235. AG:

    I agree, 2013 would have been good market timing. I did nottime the market it just happened to be when I moved. Pure fluke, no genius.

    Possibly a gentle decline in prices but a major crash in Victoria is much less likely.

  236. IT NEVER HAPPENS. Whenever it gets close, the rhetoric ramps up and on it goes. We are so far down the rabbit hole now that the only option is to maintain the market at all costs.

    I think who you really want to blame is our governments for depegging currencies from anything of real value. For decades now, it’s been inflate or die. More debt and inflation is the only way to continue growing our debt-based economies. If you told someone 50 years ago that houses would go for over a million, or a coffee over $5, they would have you committed.

  237. Bitterbear,

    Did BOC ,CMHC, every bank as well as BCREA call for a crash potential risk in 2008 ? I don’t recall any of them saying boo because Harper saved the day. Justin won’t be doing that anytime soon.

  238. Guys like Barrister likely got his house for 25-30% off, but we can’t tell for sure as it didn’t sell at the top. You had to be out low-balling in 2013 like Leo, which is a tough thing to do when everyone is telling you you’re nuts and magazines have burning houses on their covers.

  239. Mike grasps at two sales out of thousands as the norm. Pretty desperate pumper.

    To say the Victoria spike is something that’s owed to you because it didn’t do a Vancouver is ridiculous. FOMO chasing hot flipper money and a few Vancouver cash outs was an aberation you will never see again. It will leave just as fast as bankers keep tightening the credit noose.

    I believe The Wade is getting funded by that mortgage syndicate that’s getting sued. Last place I would put my cash for next two years with the high risk of a market crash.

  240. Bitterbear – I’ve actually been through 3 housing crashes, all outside of Canada. Without exception, it’s the overbuilt areas that get hit the hardest. That’s why Victoria will see a slow melt lower, if anything. Valuations aren’t that stretched yet, and I think they have further to go. Sorry but if you’re trying to time the market, I think your chance was 3 or 4 years ago.

  241. Wasn’t the “correction” after 2008 driven mainly by condos?

    Condos were hit hardest, but there were houses off by a third too. 1711 Haultain went for 34% off what it sold for in 2010. Then there were ones ex-core like Swanwick Rd that went for about 50% off.

  242. AG, spoken like a 30 something. Most 50 somethings who were in real estate in the 80’s have a different perspective.

    Wasn’t the “correction” after 2008 driven mainly by condos?

  243. AG:

    You are right that an old house is not for everyone and frankly a lot of old houses were not well built to start with. To anyone thinking of buying an old house, I would seriously urge that at the very least you have a professional engineer check the foundations.

    There is no such thing as a house that does not need ongoing maintenance. There are days when I understand why some people prefer to rent.

  244. Just for those that want to know. Here are the month to month sales for single family houses in the core.

    Month Sales, Number of
    Jan 122
    Feb 228
    Mar 318
    Apr 376
    May 337
    Jun 291
    Jul 206
    Aug 207
    Sep 185
    Oct 152
    Nov 149
    Dec 80 so far this month 78 percent of the purchasers identified themselves as from Victoria which is identical to this time last year.

    And here are the median and average prices.

    Month Sale Price, Median
    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 $782,100
    Oct $826,500
    Nov $809,000
    Dec $755,500

    Month Sale Price, Average
    Jan $736,731
    Feb $776,810
    Mar $857,915
    Apr $883,958
    May $892,661
    Jun $843,050
    Jul $823,652
    Aug $859,981
    Sep $866,768
    Oct $968,924
    Nov $969,048
    Dec $866,247

    For houses in the core the month to month volume of sales is down as is both the median and average prices as well as fewer rich out of town buyers.

    And so is the dollar volume.

    Month Sales, $ Volume
    Jan $89,881,193
    Feb $177,112,657
    Mar $272,816,923
    Apr $332,368,217
    May $300,826,912
    Jun $245,327,602
    Jul $169,672,300
    Aug $178,016,073
    Sep $160,352,165
    Oct $147,276,429
    Nov $144,388,126
    Dec $69,299,736

    Fewer high end sales this month has contributed to both a lower median and lower average. The sales to listing ratio is a bit distorted due to the increase in cancelled listings during the holidays. 17 cancelled so far this month. Even more telling is that the median list price has dropped too.

    Month List Price, Median
    Jan $695,000
    Feb $719,500
    Mar $724,950
    Apr $709,900
    May $700,000
    Jun $750,000
    Jul $759,450
    Aug $799,998
    Sep $800,000
    Oct $799,950
    Nov $833,900
    Dec $749,900

  245. AG: All the electrical was totally, and I mean totally redone four years ago. All new wiring, switches, boxes and outlets and all new breaker boxes. It is all up to or above code right now. I even had an electrician double check that the work was done properly during the house inspection. Same thing for the plumbing where all the lines had been replaced and instant was also added. New furnace and all the chimneys had new liners put in and the brick work was repointed. The work had all been done the year before I bought it. The roof though is now ten years old and probably needs to be redone in the next ten to fifteen years.

    I agree that this type of house does not appeal for someone that wants an “Abstract” type of house.
    it is a separate market. The items of deferred maintenance when I bought the house was the outside needed to be sanded down and repainted and two of the backyard fences needed replacing. The only modern convenience that is missing is air conditioning but with the ten foot ceilings I have yet to have a day that was uncomfortably warm.

    But, this is not the sort of house that anyone that wants an open concept would ever think of buying.
    Different strokes for different folks. The obvious advantage of an open concept house is that it makes the home feel more spacious. The old school of architecture made the house feel more spacious by actually making it more spacious. Each appeals to different people.

    Regardless, and on a totally different issue, I still think that condos are vastly overpriced and that the finishing work does not even come close to justifying the prices. We can agree to disagree.

  246. I live in a 70 year old house that was cobbled together at record speed to accommodate returning veterans. Make no mistake, it was cheaply built and cheaply finished. It will last another 70 with proper maintenance.

    I’m sure the Langford new-builds will be just fine. And if you buy one, you don’t have to worry about weird shit, like cloth-bound Romex, asbestos backed tile, etc.

  247. “Over and over again, I’ve seen predictions of a crash, a correction, a drop in prices, increased inventory etc and IT NEVER HAPPENS”

    Prices dropped from 2008 to 2013. I think someone said the inflation-adjusted drop was 23%. If you’re waiting for a massive market implosion like the Americans saw in Vegas, that’s not going to happen. That typically only happens in places where there is significant overbuilding. The most that is likely to happen here is a slow melt lower, as was already seen from 2008-2013.

  248. I have been following this blog for many years now, but I rarely post. I have been in this city for 10 years waiting for the elusive correction that never comes. I have resisted buying because there’s nothing worth living in for the price I would have to pay, I wouldn’t sleep at night with the kind of mortgage the bank would give me to buy a livable house and I don’t want to get dinged for paying out a large mortgage when I downsize as I get older. Over and over again, I’ve seen predictions of a crash, a correction, a drop in prices, increased inventory etc and IT NEVER HAPPENS. Whenever it gets close, the rhetoric ramps up and on it goes. We are so far down the rabbit hole now that the only option is to maintain the market at all costs. I give up.

  249. I lived in a house with mahogany panelling for a while, and it’s nothing but a pain. It was dotted with scratches and dents from 100 years of kids running around and drawing on it. And you can’t get it fixed. Give me drywall any day – at least then you can do what you want and you’re not stuck with it.

  250. For me, the question of whether a house will last 100 years comes down more to maintenance than original build quality.

    You can have the best quality house in the world, but if you don’t regularly paint it, fix the roof, watch for leaks, etc, it will look like a teardown after 30 years.

    And when it comes to selling a house, prospective buyers are more likely to care about your shiny new kitchen than whether you framed with 2x4s or 2x6s.

  251. Some trades I was talking to the other day about how houses aren’t built the way they used to… I was saying that houses used to be built to last a century, and I’ve heard that now, they are built to last 50. The tradesman went “Ha! Try 30! Those houses going up in Westhills, you’d be surprised how cheap they are slapping them together.”

    I’m not so sure. I live in a Gordon head box. That neighbourhood was all slapped together at record speed as well and I’m sure many people complained about how the quality wasn’t there. Yet the place is 45 years old and I don’t see why it won’t last another 50 years with minimal issues.

    As for finishings, it’s mostly preference. Why is mahogany paneling intrinsically better than drywall? It isn’t, just subjective.

  252. Curious Cat:

    I have also heard a number of trades people say that a lot of the new construction is simply not built to last. But that is true of a lot of things. Take fridges, my grandmothers fridge ran for forty years mostly because the heat exchanger and compression unit was on top. The new ones are virtually designed to fail.

    I have not looked at the houses at West Hill. Maybe I will take a trip out to them one day to take a look.
    What amazes me is how few people do any research on house construction before buying one. Usually the biggest purchase of their life and they dont even bother investing forty hours to read a bit about houses. There are some great books out there. On the other hand I dont recall ever having a real estate agent recommend that I should one of them before buying. If you want to assume yourself ask some basic construction questions of a real estate agent during an open house. There are a couple of knowledgeable one out there but they are pretty rare.

    On a related note, before you rely on a home inspector read the fine print as to what is excluded in his opinion. With some of these guys they dont do much more than check to see if the doorbell is working.

  253. Barrister,
    What do you think it would cost to build your mansion today? Based on the finishings you describe, a lot more the $600 per square foot I’m guessing. Not really fair to compare the per sq. ft cost of something built 100 years ago, with a new build.

  254. Barrister – I would still say that, even with all the improvements you’ve made, an old house is going to fetch significantly less per square foot than a new house. I know it’s difficult to avoid bias when it’s the house that you live in! However, the design probably doesn’t cater to modern tastes, and there are all kinds of risks regarding deferred maintenance, electrical, plumbing etc. Plus, if a new homeowner wants to change the layout it might be a nightmare to bring it up to code.

  255. Some trades I was talking to the other day about how houses aren’t built the way they used to… I was saying that houses used to be built to last a century, and I’ve heard that now, they are built to last 50. The tradesman went “Ha! Try 30! Those houses going up in Westhills, you’d be surprised how cheap they are slapping them together.”

  256. AG:

    What you wrote about paying mostly for the land seems logical except for the fact that my finishes in the house are vastly superior to any condo that I have seen on the market. The baseboards are ten inches tall and molded sold woods. The fireplaces surrounds are burled walnut and there is mahogany paneling throughout. Solid oak flooring and cedar lined closets. Solid core mahogany doors as well. The appliances were all only a year old and German top of the line, The plumbing, electrical, and heating were all virtually new and top end work. I am not boasting but I am pointing out that most of the condos I have seen have pretty cheap finishing work. I rented a very high end condo in the Songhees for a year (these are also selling for about 650 a sq. ft.) and I immediately noticed all the flaws in the finishing. The kitchen cupboards were slowly disassembling themselves and they were not that old. Grout was falling out in the bathroom in a number of places and the baseboards were warping out away from the wall and must have had a few gallons of cocking put in to cover half of the joints.

    I helped a friend look for a condo for about six months and this was typical of a lot of “high end condos” He finally decided to buy a very small house in Oak Bay.

    I am sure that this will stir up some controversy but, in general, I dont find the condos to have particularly great finishes. Certainly they dont justify the very high prices. Next time you are in one of the luxury condos with the fancy granite countertop, measure the thickness of the granite and then talk to a couple of the granite guys in town and they will explain the problems with using cheap Chinese granite slabs. My friend who lives next door is a retired stone mason and he will also tell you that you are being ripped off. Looks pretty when new; good chance it wont last long.

    I think the developers are raking in an enormous amount of profit these days. I really dont feel that people are getting value for their money. But I dont see this changing any time soon.

  257. Every viewpoint is valuable to my understanding of the market here in Victoria. Please don’t change a thing.

    Don’t worry. I’ve only edited/deleted a small handful of comments out of the 12,854 that were posted this year and I aim to keep it that way.

  258. AG, why are you always the first to be offended when I mention industry related posters in disguise ? You seem obsessed with lot and house values like someone who is.

    All the homeowners I know aren’t offended when you bring up the huge price moves and how the market might correct. Most expect it will as they realize these types of market moves are not justified and they have lived thru previous crashes and corrections.

  259. With a 70% ownership rate those that don’t own are more likely to be screwed than those that do. It’s about votes obviously. How can we keep owners getting rich while first time buyers get pushed out? Give them free money? I certainly get Hawks perspective. It’s seems like it just can’t inflate forever. But forever is a long time and we just don’t live that long so timing the market is a fools game. Look at your own finances and what you are willing to pay and or lose….

  260. Re comments yesterday as well –

    I don’t comment often, but I read this thread daily.

    It offends me deeply to read requests to limit or edit people’s posts or cull posters from participation..

    My position is uncertain re trends although I hope for an outcome that will not screw anyone over.

    Every viewpoint is valuable to my understanding of the market here in Victoria.

    Please don’t change a thing.

  261. Hawk – why does everyone who disagrees with you have to be “in the real estate biz”?

    Are you incapable of holding a normal conversation without throwing out insults and aspersions?

    Nice trolling, though.

  262. Barrister you can’t really compare your property to a condo. The price you paid, given that it’s an old house, would probably have been mostly for the land. With a condo you’re paying very little for the land but more for the finishes etc.

  263. I was expecting the new mortgage rules to have more impact but I dont see any evidence of it yet.

    Yeah me too. However it seems that the few people that were sidelined have been replaced by someone else.

  264. Also Leo, I would like to participate in these discussions but my comments require moderating

    If you have an account choose login instead of filling in the comment field.
    Now that you’re approved you should no longer get stuck in the moderation filter (it’s based on email and username so even if you don’t log in it should work). Thanks for contributing.

  265. Barrister,
    With folks like South flaunting the Wade as a “lovely corner” it’s evident they are in the real estate bizz.

    Maybe we could flush out the industry players here so we know which angry bulls are greasing their palms by slagging any bear posts as tin foil hats. They are clearly not into open discussion.

  266. Also Leo, I would like to participate in these discussions but my comments require moderating and get left behind by the delay, I registered with the site but my comments still need moderating.

  267. “Seems pretty clear we don’t want people with less than $20,000 buying three quarters of a million dollar properties.”

    Couldn’t agree more Leo. Why do the BC Liberals consider it a good idea to encourage high risk homebuyers to get further in debt? And the fact that the CMHC mortgage insurance fees outweigh the benefit of the loan itself make this completely useless. Are we missing something here or is this really that poorly thought out of a plan? This isn’t coming from a die hard conservative either, I voted liberal last election but will be seriously considering otherwise this time around. I just don’t see the benefits here other than to people who aren’t ready to buy a home in the first place.

  268. Thank you for the numbers. Any way you cut it the sales numbers so far are very strong. Equally, as December goes, the inventory remains low. We will see how the rest of the month goes but appears that December will at least match last year.

    I was expecting the new mortgage rules to have more impact but I dont see any evidence of it yet.

    The per square feet price of the Wade seems really out of line for me. I paid $208 per square foot three years ago in Rockland and I am not even counting the 900 square feet in the carriage house. Are there luxury health facilities or a swimming pool to balance out the price?

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