Dec 19 Market Update

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).

http://www.macleans.ca/wp-content/uploads/2014/03/Rabidoux_house_chart.png

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.

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.

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.

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.

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?

“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.

Rimouski who needs Victoria.

http://www.moneysense.ca/save/retirement/canadas-best-places-to-retire-2016/

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.

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.

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.

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.

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%.

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”.

Did you miss the US housing crash AG ? That’s what did them in. Banks can call them in whenever they want, it’s what you signed up for. To say it won’t happen is more bull-shit.

A decade after the bubble, home-equity line delinquencies jump

http://www.marketwatch.com/story/a-decade-after-the-bubble-home-equity-lines-show-signs-of-strain-2016-06-06

“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.

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.

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/

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.

“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.

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

I know which one I would rather have.

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.

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.

“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 !

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 !!!

@ 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.

“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.

“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.

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.

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.

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/

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.

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.

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.*

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.

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.

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.

“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..

“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. 🙂

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.

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.

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.

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.

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]

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?

Toronto’s average price now $1.35M, or up 32.3% y-o-y.

http://globalnews.ca/news/3102085/average-price-for-detached-home-in-toronto-hits-1-35m-as-prices-soar-real-estate-board/

Agreed Barrister, and recall that it was once Toronto burst in ’89 that things got interesting for Victoria.

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.

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.

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.

Might be of interest… Tom Davidoff and Steve Saretsky having a chat.
https://www.youtube.com/watch?v=CZV9QJMzDj8&feature=youtu.be

Be careful for what you wish for. In April it was 89 Vancouver buyers.

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?

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.

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.

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.”

Nice to see our conservative banks are doing a great job of keeping the criminals in business with a weak ass fine.

http://m.metronews.ca/#/article/news/news/2016/12/22/canadian-bank-failed-to-report-1200-suspicious-transactions.html

The core consists of the Oak Bay, Victoria, Esquimalt, Saanich East, Saaanich West and View Royal.

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

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

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.

“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.

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.

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

It’s all in the details Michael to be able to see how the market pendulum swings and cuts both ways.

https://youtu.be/uPG92YqKx5A

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.

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.

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

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!

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.

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!

“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.

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.

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.

we still would be lower than the ten year high for house sales in the core for December.

Read AG’s explanation, plus the coldest 1st half of December on record definitely affected sales – will resolve itself in January with pent-up demand. Many newcomers to our city waiting for new inventory in the new year.

http://globalnews.ca/news/3124915/vancouver-could-be-on-course-for-coldest-december-on-record/

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.

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?

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.

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

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.

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.

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!

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.

That oak bay condo is definitely outside the red barn/Jusu gentrification zone.

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.

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.

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.

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.

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.

“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.

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?

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.

“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.

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.

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.

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.

“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.

“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.

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

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.

Welp there you have it bears. 33% decline in sales month over month. It’s starting!!!!!

“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.

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?

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.

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.

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”

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.

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

Keep on buying fools.

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 🙂

“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 🙂

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.

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

“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?

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.

“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.