Jan 16 Market Update
Weekly stats update courtesy of the VREB.
| January 2017 |
Jan
2016
|
||||
|---|---|---|---|---|---|
| Wk 1 | Wk 2 | Wk 3 | Wk 4 | ||
| Unconditional Sales | 65 | 160 |
539
|
||
| New Listings | 130 | 317 |
934
|
||
| Active Listings | 1424 | 1465 |
2471
|
||
| Sales to New Listings | 50% | 50% |
58%
|
||
| Sales Projection | — | 436 | |||
| Months of Inventory |
4.58 |
||||
Sales still almost 20% below the levels of last year. I think at these inventory levels we will likely trail last year significantly for the whole year. Nice to see that inventory has finally bottomed out though.
How can we tell whether the falling sales are because of a weakening market or because of constrained inventory? By watching the early indicators of sales/list and days on market. If the market was slowing, then days on market will rise and sales/list will fall sooner than we can see anything in the months of inventory. So far no sign of a demand driven downturn that I can see.
Continuing on the suite discussion, I am going to submit a request for a technical interpretation to the CRA. Those are free but may not give us the info we want given they will not provide specific feedback if they think the example may be in relation to an actual case.
So far the weight of evidence has all pointed towards capital gains being due on suites, however given the thousands of suites in Victoria and lack of awareness of the capital gains issue, further investigation is necessary to make this really definitive. As the CRA says, when renting out part of your house you can retain the complete principal residence exemption to capital gains if:
- the part you use for rental purposes is small in relation to the whole property;
- you do not make any structural changes to the property to make it more suitable for rental purposes; and
- you do not deduct any CCA on the part you are using for rental purposes.
The last is clear, no one deducts CCA on suites anyway. Structural changes are debatable to no end and depends whether you are asking an engineer or someone else to define structural. The first is the source of most of the remaining confusion. What is small? Is a typical Victoria suite at 30-40% of the house classified as small or not?
So I’ll be submitting a request for interpretation this week to ask them to determine if for a typical Victoria self-contained suite in a single family dwelling, the CRA would classify the rental use as ancillary (in which case the whole house still qualifies as a principal residence) or not (CG’s tax due). If that doesn’t work the next step is a ruling but at $100/hour let’s exhaust the other options first 🙂
Marko: let’s do something then. Create a petition with the best arguments outlined and point everyone that emails you to it. Write a form letter that people can use to send to their MLAs. The time to do something is now with the election coming up.
Hit me up I’m happy to help with this
Will hit you up in the next few weeks. Let me get all my thoughts on paper.
Online petition is probably a good start.
https://www.change.org/start-a-petition?step=ask&utm_source=google&utm_medium=cpc&utm_campaign=GST_USER_CANT1_SCHT1_petition_exact&gclid=CLrg776W0dECFU5cfgodlQsDEA
Thanks everyone for your helpful comments re: place on Sea View Rd.
Marko: let’s do something then. Create a petition with the best arguments outlined and point everyone that emails you to it. Write a form letter that people can use to send to their MLAs. The time to do something is now with the election coming up.
Hit me up I’m happy to help with this
Also bonus: it annoys Introvert when the blog gets political.
Yep like my friends Dad who did an owner build. ICF top to bottom, super insulated. Had help from nutmeg who specialize in ICF construction on that part. Anyway, no spec home would ever be built like that! The other thing that bugs me is it will also stifle innovation. You are now beholden to what the industry wants. Good luck building alternative structures. No builder is going to want to do something different. It’s does nothing to protect the public against poor workmanship at all. It’s only generating incomes and profits for those that are in the club.
Mishandling some of these steps can be incredibly expensive.
Pretty much every industry uses this line….financial investment services, real estate, etc.
If the market returns 7% on average every year do you think you’ll get ahead in life paying a 2% MER? Doubt it.
If you can sell your home privately for $800,000 is it a better idea to hire an agent, sell for $800,000 and pay $27,000 in commission so none of the steps are “mishandled.” Doubt it.
If you are a savvy individual and feel comfortable enough owner-building a home is it a better option to hire a GC for $100,000-$150,000? Doubt it.
These are very simplistic answers but you get the point. I always like to apply common sense. Once I had a surgeon client that approached me about owner-building and my common sense reply was….”just do a few more surgeries and hire a GC, for you it just doesn’t make sense to owner-build as it would interfere with your work.”
If someone that was an electrician, plumber, or framer approached me about owner-building I would say, yea, great idea to build some equity.
It’s not for everyone, but it is not fair for the government to take away the owner-builder option by introducing barriers.
I am a realtor and I believe people should have every right to sell privately and some people do an amazing job selling privately. Same should apply to building a home.
Anyway, time for sleep.
To let any individual who wants to build a house just go ahead and start building is a recipe for eventual disaster.
We licence those wanting to drive a car, carry a firearm, catch a fish, hell even our dogs are licenced.
Million analogies I can give you as a rebuttal. I changed out the rims on my car recently in my garage. My car weights close to 5,000 lb and it basically a projectile missile. What if I didn’t set the torque on my wrench correctly, a wheel flies off, car jumps the sidewalk and I kill someone?
At least when you build a house there a million checks and balances in place and they just keep piling them on.
For example, in addition to designer, structural engineer, etc., as you probably know most muncipalities now require a ventilation report from an expert in the field before they will issue you a building permit.
One of the exam questions is about soil conditions………like seriously? Am I going to argue or try to lecture the geotech engineer I hire about soil conditions. No, he or she will make the decision.
However I feel like something had to be done to protect those buying these homes in the future.
Jim, you would be very familiar with the 2-5-10 warranty and you would know that after 5 years there is essentially no protection on a builder built home (chances of a structural failure in Victoria are small).
Numbers clearly indicate most owner-builders are keeping their homes longer than 5 years.
What is the difference between buying a builder home out of warranty versus an owner builder home? You aren’t protected in either scenario.
Building a home is such a complicated process and to truly get it right and build a quality product you need years of hands-on apprenticeship and practice. Too many owner-builders were very novice and unintentionally building poor quality homes. These homes are sold and resold and the owner 10 years down the line doesn’t know about the problems they are inheriting.
100% agree that building has become extremely complicated; however, Elon Musk can’t possibly be an expert on rocket propulsion and battery chemistry. My point is building a quality product isn’t about knowing nailing patterns and the Mpa of concrete. It’s about the big picture.
There are developers/builders building in Happy Valley that have 30+ years experience but I would bet the average owner-builder home is much better in terms of quality. When I walk-through owner builders homes I see TJIs and plywood. When I walk through builder homes I see 2×10”s and OSB.
Highly doubt Mike is using OSB on his owner-build in Saanich…..because he is building for him and his family, not to re-sell. Mike, if you are using OSB please correct me.
Building a house is about hiring the right designer, engineer, the right tradespeople.
While complicated, it is not rocketscience and the complications can be solved with common sense. When I had my home framed in 2014 I had quotes ranging from $26,000 to close to $50,000. Obviously I eliminated the $50,000 one right away which left three other contractors. I had a great engineer from Mann Engineering and I called him up. He had good experiences with two of the contractors so I was able to eliminate one more. The two remaining ones I went to take a look at the homes they were framing at the time. Ended up going with a crew for $33,000 and they did a great job, on time, and didn’t charge extra for a bunch of complicated engineering upgrades (I had not given them the engineered plans when they quoted me).
Common sense when building is far more important than memorizing nailing patterns. I have to trust the framers, engineer, and city inspector on some things.
That may mean they have no database not that they received no complaints. So either:
1. They received no complaints and the whole exam is based on nothing at all or
2. They never kept track of any complaints and again the exam is based on nothing verifiable.
You’re really missing the opportunity here. The only study guide for the HPO Owner Builder Exam. $495. Plus! Bonus offer! A video series of opinions and tips on how to pass the exam for only an extra $295.
See this is a very valid argument. If owner builders are really building crap, then yes it would justify something being done.
But where’s the evidence? Where is the database of complaints or lawsuits that shows that on a percent basis, the number of defects in an owner-builder home is significantly more than that in homes built by the professionals?
The numbers speak the truth.
January 1st, 2010-December 31st, 2016 there were 17,402 owner builder authorization issued.
January 1st, 2010-July 1st, 2016 there were 410 owner builder sales. Yes, 410 in 6.5 years in all of B.C. Hint, HPO has been misleading the public that owner-builders sell homes in large numbers in the first 5 years. Reality is most owner-builders are living in their homes. (FYI, HPO would only track owner-builder sales for the first 10 years since date of occupancy, not after, so the 410 sales only reflects homes that are less than 10 years old).
HPO doesn’t have any complaints on file…..I should re-phrase that. In the FOI response they said “they don’t have a record of complaints,” whatever that means.
Just think of the wasted resources over the next 6-7 years of 20,000 people writing the exam, spending time studying BS legislation, taking time off to travel to cities where the exam can be written. I would bet the odds that one of these 20,000 people travelling to write the exam getting killed in a car accident are higher than someone dying in an owner-built home as a result of the owner-builder not having written this exam.
Well probably won’t be 20,000…..if the exam is not abolished and with the current failure rate many will just hire a builder.
And how on earth does the ability to pass an exam of random building code and building science multiple choice questions qualify you to then build? It solves nothing. I would be game if everyone who actually did the work needed to be licensed. That would solve a lot of problems….
Problem number one; the exam is 100% useless. I’ve put together a study guide of 120 questions and it’s a gem. First of all, 30 of the 100 questions are on HPO legislation and the questions are along the lines of….
Can you sell your owner-built home to a family member in the first year?
Can your brother help you with construction related work on the home?
If I wanted to sell my home to a family member in the first year guess what I would do? Google.
Then the construction questions are a joke and after a lot of analysis the exam is written with an agenda of failure, not learning. There are a lot of trick questions on the exam such as….
Can you pull an electric permit as an owner-builder? Using common sense and having owner-built a home where I hired a contract who pulled all the permits I would have said “no,” but the answer is actually “yes.”
All this stuff is SUPER important when it comes to building a quality home.
Today I received 7 emails asking for the study guide, I figure I am probably supplying half of all people in BC that write the exam with it.
And how on earth does the ability to pass an exam of random building code and building science multiple choice questions qualify you to then build? It solves nothing. I would be game if everyone who actually did the work needed to be licensed. That would solve a lot of problems….
See this is a very valid argument. If owner builders are really building crap, then yes it would justify something being done.
But where’s the evidence? Where is the database of complaints or lawsuits that shows that on a percent basis, the number of defects in an owner-builder home is significantly more than that in homes built by the professionals?
The buzzword for the last decade (or several) has been making “evidence based” decisions. It should be no problem and I believe there is no excuse for the HPO not to release the rationale for why they instituted the exam.
John Dollar: I believe I fixed the moderation issue.
Thanks Mike. Good points and I’m sure your house was built to a very high calibre. My opinion is that there has to be some measuring of skill before taking the the challenge and responsibility that comes along with building a home. It can’t be wild west, anyone who wants to build can go ahead. Some people are just not ready, and you have to save them from themselves. A well administered test is an appropriate accountability measurement. The only hard part is the making the testing process and governing body effective and worth while.
@Jim Dandy,
Thanks for weighing in on the other side. No hate cued on my behalf, but I seriously question your statement that “something had to be done”.
An owner builder isn’t just someone who completes all the work on their home – it’s someone who also hires licensed contractors – the same ones that licensed builders also use.
To give some perspective, I am a handy guy, started with some house renos years ago in my early twenties. A few years ago I completely rebuilt a 1910 house in Fairfield – mostly with my own 2 hands. I hired insulators, drywallers, painters and cement finishers. Everything else I did, with the assistance of a good carpenter, and a 3rd year electrical apprentice. That home was impeccable. The quality of everything was way higher than your standard build. The slower pace of not dealing with competing trades was a great way to build a house.
Skip ahead to today – I’m currently contracting out a new family home in Saanich. The trades have been ok, but certainly nowhere near the standards of the work done on my last place. It’s little things like leaving lumber piles uncovered in the pouring rain, california corners…ugh so westhills, missing things during framing, then fixing them, and not nailing the sheathing again where the framing was changed. This is the quality level that licensed builders produce – not because they don’t care, but because it’s all about “getting it done to pass inspection – minimum required”. When I suggest (very nicely) fixing up some of the items that require correction, I get looked at sideways, or asked, “do you have a buddy that’s a building envelope engineer or something?”
So for the same reasons you put forth about engineers and inspectors not being able to catch everything with an owner build, I would state that the issue is either no different or worse with a licensed builder.
I will give you some credit on the comment that building is complicated. I agree wholeheartedly. But let’s be realistic and say that you’re average pinterest pinning Sally isn’t going to suddenly pick up a hammer and start building forms.
As Marko suggested with his FOI request, there has been zero HPO complaints… so where exactly is the problem that needed a solution.
I don’t think you’re greedy. In fact, I think you most likely take a lot of pride in the results of your work. My guess is that you’re in the larger minority- especially during times like these just about any licensed builder who calls someone back within 2 weeks will likely get the job.
Local Fool, I concur
http://jlcollinsnh.com/2011/06/02/why-i-cant-pick-winning-stocks-and-you-cant-either/
A bit of information from someone who is very bright and worked in the industry.
Dasmo, I mostly agree. That’s a sensible solution but I also think the management fees by the GC consultant and the warranty fees (and markup by GC to cover the event of a warranty claim) would eat up much of the difference in overall construction savings vs. just hiring a builder to build the entire home.
I’m all for a solution to this, but the hard realities of construction are easily overlooked by the inexperienced. Every day brings new challenges and obstacles in my job. Mishandling some of these steps can be incredibly expensive and incredibly dangerous.
Many builders will let clients do the finishing. This is an area where craftsmanship is less critical. Mistakes here don’t cause there house to fail structurally. It’s a good way to save some money and still have a safe home with a warranty.
Guys, no one cares about your investments or how much you made…
Go on then Hawk. Why don’t you share with us a few of the stocks that have “made” you 500%+ in the last 10 months?
I just hope Buffett and Soros read this blog so they can pick up some tips.
Hawk, you are an odd guy….
@Jim, then why not simply allow an owner builder to hire a licenced GC as a consultant? Instead that’s been made illegal with big fines. Instead you are forced to go alone and now you are qualified because you passed a single exam? Makes no sense….
Dasmo,
If you have 37 stocks and only one big winner you need to throw in the towel bud, you’re wasting your time and taking too much risk. If you can’t do it with 7 stocks or so you don’t have the right stuff and need to buy ETF’s or index funds.
PS AG,
Investment managers don’t find out a good stock til all the easy money has been made and they don’t have the ability to enter and exit easily due to their large orders like the little guy can. I can see why you are exaggerating your previous career, it didn’t exist.
I am a Project Manager for a custom home builder, and would like to weigh in on the new requirements for owner builders by the HPO (and please feel free to point out my bias).
I certainly understand the frustration of the prospective owner-builders, especially those who have built in the past. The system for renewing credits is definately flawed, I certainly agree with some previous comments there.
However I feel like something had to be done to protect those buying these homes in the future. Building a home is such a complicated process and to truly get it right and build a quality product you need years of hands-on apprenticeship and practice. Too many owner-builders were very novice and unintentionally building poor quality homes. These homes are sold and resold and the owner 10 years down the line doesn’t know about the problems they are inheriting.
Building Inspectors only look for so much in their inspections, and there are many aspects of home building that don’t apply to their scope of work or are just simply overlooked. The argument that a building inspector or an engineer would catch any defects by the owner builder is not a reality.
As I mentioned I get some of the frustration with the HPO exam and credits, but something really did need to happen. Houses are complicated to get right, even by the pros. To let any individual who wants to build a house just go ahead and start building is a recipe for eventual disaster.
We licence those wanting to drive a car, carry a firearm, catch a fish, hell even our dogs are licenced. Why require a licence from someone who is building what will be for many years (and potentially many different owners) be their most important and valuable asset? Because to not would be incredibly dangerous.
My two cents, cue the hate towards the bias, monopolizing, greedy builder?
Sorry, I had a call and timed out. There is no problem with getting stuck in moderation on my end.
I am just learning how to load up graphs from Libre Office.
A very interesting start to the year that might shake things up.
I hope most of you are diversified.
AG , mutual funds are not stocks. We’re you really in the financial bizz ? Doesn’t appear to be you were.
What’s irresponsible as you are one of the secret agents on here, is enticing people to buy real estate here at the market top as the Vancouver decline shows it is.
Your denial that people make big money every day in the markets and comes across as juvenile envy because you made zip.
“Any investor who works hard makes good money. Passive investors make low %, those are the facts, it isn’t luck. ”
Hawk – I’m a bit confused. For example, why do active mutual fund managers consistently underperform passive managers? Given the extra time that active managers put into evaluating their investment choices, surely they should massively outperform passive managers? But they don’t. In fact, they consistently make less money.
But then, in the fantasy world where your portfolio is up 500%, I guess anything is possible 😀
I was assuming such a tax would only apply to foreign non-residents. This would be less strict than Switzerland, for example, which has no trouble at all attracting foreign talent.
There are many factors at play in Canada. What’s ridiculous is that we don’t maintain the proper data to tease apart causes, and so the imbeciles in charge can keep playing dumb.
Canada should 1) collect comprehensive data — and make as much public as is reasonable to promote oversight — and 2) legislate away undesirable potential causes (foreign buyers, excessive leverage, the CMHC moral hazard, etc.).
AG,
Hows the 2% guy doing ? Back in the red again after his cut ? Any investor who works hard makes good money. Passive investors make low %, those are the facts, it isn’t luck. The bulls can’t handle the thought that real estate isn’t the only path to wealth in the best investing year in ages and they missed out.
For someone who claims he was in the business, you sound like you are full of it AG.
That’s what makes you such a douche bag Mike, you didn’t mention my gold junior and several other winning stocks up many multiples that I posted several times that I added after the markets settled down. All the money isn’t made at the bottom as most pros will always tell you.
Just another sign of bull panic in the air when the so called rich ex-economists have to pull out a put option strangle protection post every investor with a brain used. Hows that leverage thing going? Looks fricking scary as hell. 😉
http://realinvestmentadvice.com/wp-content/uploads/2017/01/Margin-Debt-1.png
Sorry Johnny Dollar I’m not sure why you keep getting stuck in moderation. Looking into it.
Glad you’re back JJ, or should I say Johnny Dollar. We missed you 🙂
(the picture you chose automatically shows up on your old Just Jack comments)
As for Hawk, I hope he’s nearing 600% returns. However, if you look back at what he was doing a year ago…
http://i.imgur.com/DCDpBZX.png
Introvert – boring!
@Vic&Van, that property does cross into a Environmental Development Permit area. They should contact Saanich and do some due diligence so they go in fully aware. Here is a start to understand the issues.
http://www.saanich.ca/EN/main/community/sustainable-saanich/environmental-planning/environmental-development-permit-area.html
Again, the good thing is this prevents the area from going to crap….
In all likelihood, Hawk is as good at timing the stock market as he is at timing the real estate market.
That lot seems a little pricey to me. 2.75m is maybe what you’d pay for a waterfront lot in oak bay. I doubt that 10 mile point would be priced the same.
And yeah, for a modern, high-end 4000-5000sf house, I bet you’d be looking at paying at least 1.5m to build it.
Property tax HOG exemption raise – just vote buying, and runs contrary to their recent PTT increases. If granny in OB sitting on a $1.6M house needs help paying her property taxes, she can easily, as Leo has already explained, defer those taxes.
Good point regarding deferring taxes I wasn’t even thinking about when this was announced…this increase what just BS to buy votes.
Close relatives are purchasing a waterfront lot in Ten Mile Point (no house!) for $2,750,000 (o.4 acre, south exposure) without asking my opinion until now!
Are they crazy or what?
Thoughts?
Comments appreciated!
I would try to figure out what a finished product might cost total and assess versus comparables. I can’t see construction costs there being under a million. You could easily spend $1.5 million on a new build.
It is assessed at 1.6m. Nice place . The photos look amazing. Seems like a huge premium over assessed value.
I would call Saanich to see what the issues may be. They were very helpful and honest with me.
My favorite area.
@Vic&Van, no not crazy if they have the money and the knowledge of what they are getting into. Especially if the property is actually connected to the ecological reserve…. They might not be able to build what they think they can here. For us it was a non issue since we want to live in and with nature so we easily bent to the eco rules in place….
Close relatives are purchasing a waterfront lot in Ten Mile Point (no house!) for $2,750,000 (o.4 acre, south exposure) without asking my opinion until now!
Are they crazy or what?
Thoughts?
Comments appreciated!
That was my point AG 😉
Handy checklist to use when people make unverifiable internet claims of massive investing success.
In descending order of likelihood:
1) They are embellishing the truth
2) They are reporting their returns incorrectly
3) They got lucky, usually with a very undiversified portfolio, or with heavy leverage
4) They actually are skilful investors
Ask yourself. How likely is it that someone who has demonstrated no predictive skill with respect to the housing market (despite obsessing over it) is massively skilful in the stock market? Possible – yes; probable – no.
“I made 400% in the last ten month on one stock…. CGC (I own 37 different stocks). So you are right CS, it fits Hawks risk profile to put it all on Race the Moon to win….”
There’s a big difference between getting lucky on 1 stock, and getting lucky on your entire portfolio…
Hawk’s gains seems to be remarkably consistent too. Earlier in the year it was 300%, then 400%, and now 500%. His consistency almost matches Bernie Madoff.
http://www.cbc.ca/news/politics/taxes-cra-facebook-big-data-1.3941416
Only posting because of the huge decision on CG on here. Big brother is watching.
I made 400% in the last ten month on one stock…. CGC (I own 37 different stocks). So you are right CS, it fits Hawks risk profile to put it all on Race the Moon to win….
He must be getting better, last year he boasted about paltry 400% annual returns
Hawk, with the way rents are going you probably won’t be able to afford to eat after paying for shelter…
@AG:
Re: Hawk’s stock portfolio:
Either the man is a genius market-timer (a possibility which his experience in real estate would tend to eliminate) or he is full of it.
Not necessarily either.
The thing is, fund managers are risk averse, so their returns tend to follow the market as a whole.
Individual investors, however, tend to take large risks. For example, anyone who bought Encana, when oil was below $30.00 would have made 500% on that stock last year (currently $17.52, one year ago $4.75).
https://www.google.com/finance?q=TSE%3AECA&ei=7RyBWKGWA4Hj2AaT0JS4Dg
Most people picking their own stocks are probably taking far greater risks than they are aware of, and sometimes lucking out pretty spectacularly, too.
Stock picking is the fast route to riches or impoverishment, the chance of the latter being slightly higher than the former.
This not only cut out owner builders but also forces builders into this system where they need to go on that cruise every year to maintain their status.
Which benefits large companies where they can either send a “representative” to take the education credits or well off builders.
Suzy, the one woman operation builder, can’t really afford to leave a construction site for a week to go on some BS cruise where you are assured that you won’t have classes on days you are in port 🙂
Further to Hawk’s ridiculous claim that his portfolio is up 500% in the last 10 months, here’s the average return from hedge funds for 2016.
http://www.barclayhedge.com/research/indices/ghs/Hedge_Fund_Index.html
You can see that the average return is 6.2%. There’s a lot of variability included in that, but the biggest return I could find from a single hedge fund for 2016 was just over 100%. In other words, Hawk is claiming that his portfolio beat every hedge fund manager in the world. And not just by a little, but by 400%!!!
Either the man is a genius market-timer (a possibility which his experience in real estate would tend to eliminate) or he is full of it.
People making ridiculous claims like this is a problem, both online and in the real world. It encourages other investors to make irrational decisions and take inappropriate risk.
To any investors reading this – stick to safe strategies like buying the index or dividend stocks. Build a balanced portfolio. If anyone claims to be making outsized returns, just ignore them as they are almost certainly lying.
“More likely he’s trying to keep the RE market from collapsing, a real estate bubble being the last refuge of an incompetent government.”
Yeah that too but I think he is smart enough to not want to make the bubble worse than he has too.
I agree Marko. This is not incompetence. It’s cronyism at its best. Now builders can name their price. There was no problem. This not only cut out owner builders but also forces builders into this system where they need to go on that cruise every year to maintain their status. It’s created a handful of high paying jobs, created a number of private businesses that can take advantage of this program because they are connected and has handed a monopoly on home building to larger construction companies. This is class action lawsuit material….
Quote of the day from Hawk:
“My stock portfolio is up 500% the past 10 months and looking good where I am”
If you believe that, I have a bridge to sell you 😀
@ReasonFirst:
“I think Poloz is just trying to talk the dollar down to help exporters without actually changing anything.”
More likely he’s trying to keep the RE market from collapsing, a real estate bubble being the last refuge of an incompetent government.
The house at 1859 San Juan Ave reminds me of some recent builds in Vancouver that aren’t appropriate for middle-class families or millionaires. The reason is because it’s an awkward layout for a “luxury” home – it’s not really “west coast style” because most views of the outside are blocked by fireplaces or walls, and it’s got 2 suites on the lower floor – which aren’t needed if you have $3M to spend.
I just hope that design isn’t a trend – as Luke pointed out, we need better incentives for duplexes/triplexes or different types of housing suited to local needs – city councils need to stop these piece-meal approvals of strangely laid out mansions.
The Golden Head slumlords must be worrying bigtime that a similar Vancouver tanking is near. Doesn’t get how interest rates and bond markets work is frightening.
If half the sales are secret ex-Vancouverites renting here as so many posters proclaim, then I guess the average Victorian is now priced out and has stopped buying for a long while. Look out below when the mainlander stops moving here because he can’t find a seller.
Anyone who wants to follow bond interest rates they are here. There are backing off the high.
http://www.bankofcanada.ca/rates/interest-rates/canadian-bonds/
Tallguy,
Maybe buyers aren’t as hot on Cook St Village as the agents pump that it is. They are selling the “vibrant” area, and it’s not working.
An award winning builder on Gonzales Point at 2064 Quimper slashed $50K. The pain continues for the gougers.
@ James Soper:
Teachable Moment for you:
BOC Overnight Lending Rate: Affects Variable Rate Mortgage Rates
Bond Yields: Affect Fixed Mortgage Rates
Possibly. Or just good old fashioned bureaucratic incompetence and drive to create more process for the sake of process. Never attribute to malice that which can be adequately explained by incompetence. Not that it changes the outcome one iota.
“Loonie tumbles to one-week low after Poloz says rate cut ‘on the table’
I think Poloz is just trying to talk the dollar down to help exporters without actually changing anything.
Hawk:
“High end condo in the heart of Cook St Village, #209- 240 Cook slashed $20K. I thought they were lining up for these and blocking driveways ? Guess not.”
$500k for a 2 bed, 1 (1!) bath, under 1000 sq. ft. I don’t care if it’s in Cook St. Village, it’s still overpriced by $50k.
The renters are feisty this morning! I think they feel another hot spring real estate market on its way, which will push home ownership ever further from their grasp.
No worries!
“Loonie tumbles to one-week low after Poloz says rate cut ‘on the table’
http://www.bnn.ca/loonie-tumbles-to-one-week-low-after-poloz-says-rate-cut-on-the-table-1.652979
I thought interest rates had nowhere to go but up…”
You’re an idiot. This will have a negligible effect on the interest rate banks charge since people will stop investing in Canadian bonds, forcing rates to go up.
Yet another tool for the government to identify those landlords who may not be paying all their taxes!
Hutniak said while they don’t know the exact number of landlords in the province — LandlordBC estimates it could be as many as 50,000 — they do know there are more than 550,000 rental units around the province.
No. Not sure why that one got caught up in the moderation filter. As far as I know it should only catch posts that are from new Name/Email combinations, or when there are more than 5 links in a post. Sorry about that.
“I thought interest rates had nowhere to go but up…”
You should study up on how the US and Canadian bond market works Intorovert. Might learn that long rates effect Canadian mortgages and increases stress tests for borrowers. New rules you might have missed. 😉
AG,
Why ask me, you’re the pro stock investment advisor according to your statements ? You must be loading up ? My stock portfolio is up 500% the past 10 months and looking good where I am. Thanks for asking. 😉
Dasmo, cash buys food, gas, heat,etc. What does a house buy ? Nothing. Shelter is anything you rent as well. Owning doesn’t give you an advantage when the real estate markets tank and you have a large mortgage and suddenly no job. Renters are mobile and can just leave. They have options, owners don’t.
Another high end condo just perfect for the Vancouver renter with their $3 million waiting to buy but they aren’t buying a waterfront condo in prime up and coming area. Problem is it’s on it’s #3 price slash in last year and still no takers at #202, 365 Waterfront Cres. $20K slash and more to come I would imagine.
Hawk – America should brace for a final blow-off surge in stock markets akin to the last phase of the dotcom boom”
So I guess you’re buying stocks then, if you think the surge is coming?
If HPO isn’t an obvious sign of high level government corruption don’t know what is.
8 of 10 top Liberal donors are in the construction industry.
The woman responsible for the exam at HPO housing, who by the way makes $163,000 per year, can be found online in many photos with builders/at builder shows/etc.
Reason for exam; “to protect the consumer.” Reality; only 410 owner-builder home sales in 6.5 years. Zero documented complaints.
Exam is 100% BS and designed to make people fail. A question a member of the public emailed me after writing the exam a few days ago……I had a good laugh “Which of the following is a law of thermodynamics?” HOW on earth does that help to build a home?
Builders don’t have to write an exam, they get to go on a cruise (I am not joking) -> http://www.buildingitright.com/cpd-at-sea-outline.html
Etc., etc., etc.
Consequences of exam
Increased costs to build a home, people have started taking advantage of the exam by charging close to $1,000 for one day courses -> http://ownerbuildertraining.com/event/owner-builder-exam-preparation-course-vancouver-region/
Many owner-builders have been delayed by months by this exam.
Many people have traveled to write the exam (taken ferries, driven hours), etc., and a few times the computer that administer the exams did not work.
Anyway I could go on all day. I’ve collected a lot of info over the last 6 months and received over 500 emails from people.
I am going to he polls for the first time this year and won’t be giving my vote to a corrupt governmment.
Cash is worthless…. it losses half it’s value every ten years…. shelter is a primary need. It’s the first thing you need if the sh*t hits the fan.
you have 3 hours to survive without shelter. After 3 days, you need water or you’ll perish. You can make it 3 weeks without food,
Hey, Leo. I posted a comment containing an image and it says, “Your comment is awaiting moderation.” Is this a new policy?
High end condo in the heart of Cook St Village, #209- 240 Cook slashed $20K. I thought they were lining up for these and blocking driveways ? Guess not.
Correction to my last message:
LTV Range from 80%-75.01% (not 85.01%) 1.25% increased to 2.4% (thats a huge increase 1.15% – low hanging fruit)
Also, it’s important to note that for conventional mortgages (20% plus Downpayment) that are back-insured, these premium rate hikes will no doubt translate into higher interest rates. The conventional mortgage market is already at an interest rate disadvantage, and this will continue further.
Worked hard to save your 20% down and be responsible? Too bad, you’re going to pay more interest than the person that has to borrow money to meet the minimum downpayment. Makes sense right?
James Laird, a co-founder of RateHub, said he didn’t expect the changes announced to have much of an impact on the market. “Premiums will be increased for all of those Canadians with less than 20 per cent down, but these premiums are added on to the mortgage and paid off over the life of the mortgage, so the cash required on closing does not change. This change specifically will not impact the borrowing habits for the majority of high-ratio clients,” he said.
Ratehub noted that based on the recent average price of $730,472 in Toronto, with a minimum down payment of 6.6 per cent or $48,047, premiums would rise to $27,297 from $24,567 which comes to $12 per month based on an interest rate of 2.44 per cent and a 25-year amortization.
http://business.financialpost.com/personal-finance/mortgages-real-estate/mortgage-insurance-premiums-on-the-rise-at-cmhc-now-as-high-as-4-5-of-value
Loonie tumbles to one-week low after Poloz says rate cut ‘on the table’
http://www.bnn.ca/loonie-tumbles-to-one-week-low-after-poloz-says-rate-cut-on-the-table-1.652979
I thought interest rates had nowhere to go but up…
And the hits keep coming. March 17th we’ll see high ratio mortgage insurance premiums increased. This is a disturbing trend that removes even more homeowner equity in a high ratio environment. Makes it all the easier to for home owners to mail the keys to the bank if things were to go south.
95 to 90.01% LTV – 3.6% increased to 4%
90% to 85.01% LTV 2.4% increased to 3.1%
85% to 80.01% LTV 1.8% increased to 2.8% (wow a whole 1% increased here… that’s just mean hearted)
the following LTV ranges are generally charged on rental property mortgages:
80% to 85.01% LTV: 1.25% increased to 2.4% (thats a huge increase 1.15% – low hanging fruit)
75% to 70.01% LTV: 0.75% increased to 1.7%
Oh and my favourite:
Borrowed Down Payment: 95-90.01%: 3.85% increased to 4.5% (goodbye borrowed downpayment)
Yeah Marko. That whole HPO thing needs some public exposure, including some dollar figures attached to administration.
B.C.’s tech job force bigger than mining, oil and gas, forestry
http://www.timescolonist.com/business/b-c-s-tech-job-force-bigger-than-mining-oil-and-gas-forestry-1.7897755
And yet we’re repeatedly fed the line that we’re primarily a resource province.
Here’s what B.C.’s GDP breakdown actually looks like (2012 numbers, but surely still accurate):
http://i.imgur.com/FSsYDMJ.png
Source: http://credbc.ca/role-energy-sector-bcs-economy/
Marko – most of the FOIs get posted here http://www2.gov.bc.ca/gov/content/governments/about-the-bc-government/open-government/open-information a few days after the requestor gets them. I’ll be curious to see if your request is posted. Lots of people would likely be interested to see.
For all you Trumper pumpers, the end is near, just like Trump playing “My Way” as first dance song.
Donald Trump ‘could send America into the next Great Crash’ warns Nobel laureate Robert Shiller
“America should brace for a final blow-off surge in stock markets akin to the last phase of the dotcom boom or the “Gatsby” years of the Roaring Twenties, followed by a cathartic crash and day of moral judgment, according to a Nobel prize-winning economist.”
http://business.financialpost.com/investing/outlook-2017/donald-trump-could-send-america-into-the-next-great-crash-warns-nobel-laureate-robert-shiller
For 80 sales a year and no complaints from consumers (only builders I suppose?) they develop and administer this expensive program? Seems like a waste of taxpayer dollars.
I think this is great. I would do it, but I have a long-term tenant (with us 4 or 5 years now) so there’s really no point:
Landlord registry aims to improve B.C. rental industry
http://www.timescolonist.com/business/landlord-registry-aims-to-improve-b-c-rental-industry-1.7897757
Marko:
“Today I was at a townhome near Uvic that was just listed and it was complete chaos, the entire strata lane was jammed with cars blocking all the driveways, over 40 business cards on the dining room table. I saw some crazy stuff last year but this was by far the craziest especially considering it wasn’t even an open house.”
Is this the stand-alone 4 bed unit listed under the assessed value? I don’t even bother with the places listed under assessed. They are guaranteed to be a train wreck riddled with disappointment.
How about a bridge to the Westshore across Esquimalt Harbour?
How can any country that is part of the EU or the Schengen area have a restrictive immigration “climate”?
Intorovert,
You sound like a smug little worm who sits there counting his hypothetical paper profits like Scrooge McDuck playing the spelling Nazi for cheap thrills. You know nothing of my situation nor if I made much money other places.
I could care less if I ever own again, as cash is king when times get tough, not four walls and a roof that can come crashing down at anytime now and will be decimating to homeowners and the economy that’s built on sand of never ending real estate, ie: The Big Short. Maybe you should watch it but are probably too chicken.
It’s the agent hype like this that spins the BS while sales decline. The homeowners have been hoarding the past 2 years and when they unload in the near future there will be some very sad faces on this blog as the sellers will come just like they are in Vancouver and taking a beatdown.
“Today I was at a townhome near Uvic that was just listed and it was complete chaos, the entire strata lane was jammed with cars blocking all the driveways, over 40 business cards on the dining room table.
It’s like absolutely everyone is trying to pile in now and no one wants to sell.”
@ Marko
Not sure this will put your mind at ease or not, but i’ve heard a few of the mayor and council in Victoria have a regular air-bnb business in the Fernwood area…. lol.
The HPO owner builder rules is more of Christy’s pay to play in action. Developers donating to the Liberals and saying… hey, lets fix this owner builder ‘problem’. If anyone thinks our provincial government isn’t an absolute black hole of corruption they are out to lunch.
What’s really scary is when the government is throwing huge funds at major projects (road and dam building)… makes you wonder how much of it is being siphoned off by interested parties.
All of the provinces recent moves have been to buy votes – not to add anything progressive to our overall society.
-Home Equity Program – runs contrary to the federal trend of trying to force canadians to be responsible and prudent with their real estate purchases – but sounds good right??
-Foreign Buyers Tax – Don’t get me wrong, I’m no fan of the commoditization of Vancouver Real Estate by foreign buyers, but the implementation of this policy while, perhaps agreeable in terms of social license was poorly executed – and put Vancouver’s higher end market on the knife edge.
-Property tax HOG exemption raise – just vote buying, and runs contrary to their recent PTT increases. If granny in OB sitting on a $1.6M house needs help paying her property taxes, she can easily, as Leo has already explained, defer those taxes.
-PTT increases – done early enough in the term this one doesn’t count towards vote buying. This is the one policy that was perhaps progressive and executed with appropriate social intentions. However, this change was bundled with the PTT exemption for “New Homes”… which is another throwback to the developers who no doubt pay a fair portion of Christy’s stipend.
Marko:
The more I read about the exam, the more outraged I feel. Who do we write to about complaining? is there a petition going around? How can I help?
Something we all missed…
is how REITs have changed the face of home ownership in the last 20 years.
1/ 20 years ago there was no such thing a REIT
2/ today REITs in Canada control over nearly 1,000,000 units of residential + commercial properties
3/ REITs are tax efficient RE holding companies (e.g. imagine paying no/little tax on rent income + no/little CGs on asset sales)
4/ they are professionally managed companies, usually public or tax free gov’t pension funds that control vast swathes of RE across Canada.
They have reduced inventories in many major markets and have empirically shown that can increase rents substantially. Won’t write about the trickle down affect, but taking units off the market is not a good thing; + raising rents forcing people to save longer to get in the market is another. Just look @ all the properties on the Gorge or on Dallas Road close to Beaconhill Park and you’ll see the same landlord.
And who owns these REITs? Us…or most people with a retirement or mutual fund.
Point being, if you close the biggest tax loop hole ever in RE, then that would have an significant impact on price and home ownership.
@Hawk
Miss JJ’s posts and market data especially sales by district and price. His drill downs provided the most insight into the market!
IMO the RE market has more variables causing price appreciation than depreciation this year. With that said, I don’t subscribe the bogeyman theory (foreign buyers and the Chinese in particular) being a major factor in the price appreciation. Hypothetically, if you could split Victoria in half, and on one side foreigners could buy, and the other side they couldn’t, I don’t think there would be much of a difference in terms of price appreciation.
When you have an increasing demand (population) and supply (inventory) at 20% to 35% of historic averages; low interest rates(affordability), incentives (BC 0% loans), etc…guess what? people are going to buy as much as they can afford and then more…adding to price pressures.
The story above is happening all over the world. Some of the highest price appreciation in RE over the last decade has been in Nordic Countries, and they have restrictive immigration/investment climates; so just wondering what is causing that…I bet it’s those pesky foreign buyers 🙂
For anyone who is curious I finally received my FOI request back…..only 410 owner-builder home sales January 1st, 2010 – July 1st, 2016……….and the HPO did not receive any complaints. “With regard to Item 3, BC Housing has no record showing the number of consumer complaints.”
I knew this would be the answer months ago just given that I knew the type of people building owner-builder homes. People don’t owner-builder Happy Valley style homes, it’s on average very expensive luxury homes in urban centers or cottages/smaller in rural areas which no one is building to flip right after.
Love how the government created a 100% useless exam to solve a problem that never existed in the first place to benefit large builders/developers.
Today I was at a townhome near Uvic that was just listed and it was complete chaos, the entire strata lane was jammed with cars blocking all the driveways, over 40 business cards on the dining room table. I saw some crazy stuff last year but this was by far the craziest especially considering it wasn’t even an open house.
While I was there about 5 other parties came through and mostly young families.
I can’t really grasp how there can be such a shift from 2014 to now. It’s like absolutely everyone is trying to pile in now and no one wants to sell.
From what I am seeing at showings/multiple offers imbalance between supply and demand is worse than at any point last year.
Well people, apparently the hypothesis that low inventories are responsible for slow sales doesn’t necessarily ring true…..well, at least on the mainland.
“Recently, there seems to be some sort of denial around the slumping sales numbers. Look I don’t know where the market is going, neither does the next guy. However, some are choosing to downplay sales even though we all emphasized sales only a short year ago. The latest excuse is that slumping sales are due to low inventory levels.”
“As an example, the peak of the market was in March 2016. Despite (at the time) record low inventories, we set a record number of sales.”
http://vancitycondoguide.com/are-we-in-denial/
Hawk – there’s always Nanaimo
Thanks, Vicbot. You’re the first to ever provide an answer.
Sounds to me like you’re a dude who thought he could time the market — and lost big. You now find yourself priced out forever and you’re very bitter. And surely the hardest part for you is that you only have yourself to blame.
Shoot, I was a deckhand out of Sooke. Fishing and logging was why it bubbled up. I would prefer centres to grow organically. Good luck getting a bridge over from Mill Bay. The first barrier is the high end property you need to devalue not only the entire peninsula saying NO THANKS!
A Train link is possible though….
PPS Rook, how is Victoria a “fire sale” ? Where were the Asians en masse the last 20 years while they bought up Vancouver but ignored Victoria ? Because they don’t like islands and ferries and there is no large Chinese community like in Vancouver.
Last time I looked the VREB head honcho said foreign buyers are not a factor here. Only the bloggers think so from anecdotal stories which don’t equate to numerical facts. Before the aholes here turned off Jack, he posted numbers showing that as well.
PS Rook,
Victoria sales have been on the decline since last spring at 1200 odd sales and this month appears to be on track track be lower than last January. That tells me the money is not flooding in, its on the decline. The blog can pump the anecdotal stories and few overpaying deals but doesn’t say the real facts that sales are on a downward trajectory.
Eventually prices will start to fall like Vancouver did starting last spring while the media and pumpers kept spewing the “it’s going up forever” mantra. The handful of price slashes in prime core areas is just an early sign.
CS, that’s pretty funny about the ghost towns – now that’s an idea 🙂 You’re right, they’ve already mastered that phenomena.
Regarding “Golden Head” I first heard that 2 years ago. A local realtor told me about that. He said he had some Chinese clients who passed that info along to him – that Gordon Head sounded like Golden Head and they really liked that.
Same as when I hear about a house on “Lulie St” in Oak Bay, I laugh. My relatives from Europe say they’d never live there because it sounds like pee in their language.
As for Mill Bay, Barrister, I know nothing about the place. But if you want to develop new communities in order to divert population from large cities, it seems to me you need two things: one, obviously, is land with suitable zoning, the other is an economic base.
Since 91% of BC is unalienated crown land, there seems no reason why the Province should not designate any number of new town sites. A greater challenge is to create an economic base.
Villages and small towns such as Sooke or Cumberland appear to be chiefly low-cost dormitories and retirement havens accommodating population linked to larger centers.
However, with imagination it should be possible to kick-start economic development in places of that kind, although that would require substantial public investment, in for example, research, educational, or tourism-related facilities.
Whether slowing the expansion of the great population centers by creating smaller communities actually promotes prosperity, I’m not sure.
Jane Jacobs and others have argued that it is the accumulation of large masses of people with different talents and ideas in a confined urban area that promotes economic development. However, in the age of the Internet, and with the development of interurban rapid transit, maybe one can get the same kind of synergistic development in a constellation of connected smaller centers.
Why don’t you ask Mike ? He was the one first using the term. Sounds to me like it means money, but you don’t seem like an independent thinker.
@Vicbot: “the problem with high density in Vancouver is that the buzz words “high density” were used as an excuse by developers to build tiny high rise condos mostly sold to investors or foreign buyers.”
Agreed, houses or apartments for people who don’t reside in them aggravates the shortage of supply for locals. One solution might be be to double the property taxes on empty units.
Another possibility would be to create ghost towns for Chinese and other investors who want empty houses and apartments as a store of value. The Chinese have already pioneered this type of development so those with hot money to park would surely be ready buyers for this kind of property in Canada. The construction would create employment without creating housing shortages and bubbles where working people live.
Because I’ve never received a response. Is it a racist put-down?
Rook, two words: Trump and the NDP.
Introvert, why do you keep asking. Are you that slow?
Hawk, why do you call it Golden Head?
Also particularly surprising was that TOTAL WORK HOURS REQUIRED TO AFFORD AN AVERAGE HOME BY CITY ranked Victoria at 2/3 rds of Kelowna.
I particularly liked the results of the question:
If money was no object, which B.C. region would you most like to live in, would consider living in or would never consider living in? n= 1,714
Reasonfirst…
Thanks for the link… well worth the read…
Rook “I guess the city council reads this blog from all the pumpers pushing their Mandrin speaking stories”
I’m curious what you think will happen as the housing prices in Vancouver fall. Do you think money from the high USD and money from Mainland China will not look at the fire sale and the flood gates will open? Where will that leave Victoria? Unless there is a global financial shock, I can’t see housing becoming more affordable anytime soon. Yes there are signs pointing that its possible, but it’s still not the likely scenario.
I don’t understand why someone with your strong opinion on the Vancouver bubble can’t see that there is a lot of money moving Victoria very quickly. I definitely hear you on a lot of what you say on here but I feel like you have some blinders on. There are some people who try and pump, but the majority of posters on this blog are coming here to learn and discuss on a forum.
Vicbot “Agree that city councils need to get more progressive, but while we wait to fix that, we should be applying other solutions as well.”
Unfortunately ultra political correctness passes as progressive. Thanks for posting the words from Justin Fung. I think that his viewpoint as a Chinese Canadian is especially important as the racist card gets played so much. Unfortunately, as many posters have pointed out, there is a lack of political will here to push for such a tax. Add the current empathy and caution most Victorians have to even discussing such a thing, I can’t see the foreign tax being used here until much of the damage has been done. I am not only talking about money from mainland China, I also believe a buying spree from US citizens is on the rise.
A really in-depth and interesting report with cool graphics. Should definitely provide fodder for discussion:
http://resonanceco.com/reports/future-of-bc-housing/
Ento:
So assume a billion for a bridge, how does the government turn a profit and pay for it very quickly. Easier problem to solve than one might think.
Mill Bay? You start by building a bridge where the ferry currently exists (to Brentwood Bay). That would spur growth in Mill Bay in a heartbeat. Then when you have a functioning bedroom community you rezone some areas to increase density, increase commercial activity, and give tax breaks to encourage corporate investment. Proximity to the Victoria airport, ferries to Van, etc. – hey, it sounds like a pretty good place to buy an investment property!
All it takes is a few billion to build a bridge first.
CS:
You seem like a smart guy but like many people we get more firmly married to our ideas than our spouses.
But because you seem very intelligent let me poss you a challenge. Assume you have very broad powers in terms of either the federal or provincial government; the challenge is how do you develop Mill Bay into a small city of 175,000 people.(you are not allowed to move all politicians and bankers to a federal holding prison there). You need to come with a plan that creates a stable mixed economic base that offers prosperity for the community.
Think about it for a few days. i am sure that initially you will see problems; but take the challenge and see if you can find solutions.
And they can keep slashing 1859 San Juan. That’s the least interesting house for that kind of price I think I’ve ever seen
C’mon gwac, you know assessment means nothing in this crazy market where money means nothing when they pay $200K over on Oak Bay reno projects on many properties. Excuses, excuses. This is the next Vancouver ! Not. 😉
Another Golden Head price slash #3 in last few months. 1859 San Juan started at $3,398,888, down to $2,888,888 and now at $2,788,888 for a whacking of $610K haircut. I think the Asians are catching on and the lucky 8’s ain’t working. 😉
2213 Windsor Rd way over assessment of 1,189,000 so no surprise that it is not selling
2189 McNeil 766k/2015 1045k/ 2016 assessment. I would think the latest drop to 1099k should get some action.
Del Monte is 500k over assessment. Good luck with that.
Interesting some stuff just sits. When it sits I am sure it send up red flags. People would rather have and overpay for something that others want.
Hawk:
Less than 2.5% slash. Pretty insignificant.
Gross Taxes for 2017 $7,160 <- Yep, that is gross.
Even the shacks in Intorovert’s Golden Head hood are taking their punishment. 5177 DelMonte slashed $40K. I thought all the Asians wanted to live by him ? 😉
Canada and esp. Vancouver and Victoria seem to lack enough of a variety of housing. All we have here are overpriced SFH’s, or tiny strata condo’s or strata townhouses. There is nothing much in between the strata condo’s/townhouses and the overpriced SFH’s. In the past, it was in the affordability range of those who wanted to start a family, or who wanted privacy and a yard (garden) to have a SFH. Due to lack of land and changing demographics this is not possible for most anymore. Most people in SFH’s today could not afford their own houses if they had to buy in at current prices.
This is where I can use the example of the UK as a place where many different types of housing are built to contribute to many different needs. There you have flats (which are essentially the same as condo’s) but then, in between the ‘flats’ and the (also rather expensive) detached SFH’s are: freehold terraced houses (many built long ago in ‘Victorian’ times), and many post war semi-detached freehold houses (in Canada these would be called duplexes). Freehold Terraced houses do not exist in the same way in Canada and neither do semi-detached exist in large enough numbers.
It would require a dramatic change of land use/planning policies in order to contribute the different types of housing that don’t exist in Canada – but which are clearly needed/wanted. Such as, larger condos or freehold (not strata) terraced houses w/ yards (gardens) and more freehold semi-detached which would enable people starting out in Vancouver/Victoria to have more options – but these options simply don’t exist here. In the UK people can climb the housing ladder much more easily and in stages and they are able to have a freehold property w/ privacy and a garden, starting out in the terraced house and working their way up eventually to that detached SFH, where as in Canada it requires a giant leap from strata housing to that freehold detached SFH everyone seems to want, which is simply becoming impossible in the core area’s of more expensive cities like Van/Vic for many young Canadian families to even contemplate this now.
Planners need to look into more options to enable 40% of the millennials thinking of leaving Metro Van. to be able to stay, for example. Unfortunately for them, it also looks like Victoria is already heading in the same direction as Van., and I don’t think implementing a foreign tax in Victoria will change that. It’s primarily lack of land, and lack of housing options in Victoria’s core area’s that is leading us to a housing affordability crisis here.
Another $50K price slash at 2213 Windsor Rd. Yep, the market is going to da moon Alice ! 😉
I thought the pumpers said the Asians are overbidding by $200K in Oak Bay ? Guess not.
2189 McNeil in prime South Oak Bay slashed from $1.218 down to $1.099 for a nice $119,000 price slash. I’m sure there will be some lame excuse why it’s overpriced, old, etc.
CS, the problem with high density in Vancouver is that the buzz words “high density” were used as an excuse by developers to build tiny high rise condos mostly sold to investors or foreign buyers, not to serve the local population. In turn, this raised land values because you got those tiny condos selling for exorbitant amounts, so everything went up in value around them, buildings and land.
This then also caused young families to commute for longer because the tiny condos were useless for them, and they could no longer afford the SFHs or townhouses
That’s why high density itself doesn’t solve the housing issues. If there had been more types of housing built appropriate for local needs, there wouldn’t be the crisis there is today.
“Developers love high density but in actuality it causes more problems than it solves.”
Developers love pre-sales. They don’t give a shit about density.
“Decentralize jobs to smaller communities and the problem of land to develop disappears.”
And what major company wants to have their offices in Cache Creek or Estevan, Sask? They need access to major markets, which is what major cities provide.
If high density was a solution then you would expect Vancouver to be very affordable.
Yes, compared with a lower density city of comparable population, and with limits to outward development due to mountains, rivers and the Pacific ocean.
Developers love high density but in actuality it causes more problems than it solves.
Depends what problems you want to solve. If you want to grow the economy of a city with limited room to expand, raising density is the way to go. In fact its the only way to go.
Young families gravitate to where there are jobs.
Most of which are in the big cities. That’s why they keep growing.
Decentralize jobs to smaller communities and the problem of land to develop disappears.
But unemployment and low-wage employment are the problem instead.
Only 4000 sqft? That’s plenty big!
“I would support a provision where you can have the tax returned to you if you pay income tax on earned Canadian income for a period of several years.”
That’s probably the fairest, most sensible suggestion that I’ve heard. It would be relatively easy to implement too. And it would stop a few people from buying houses with numbered companies.
If the foreign buyer tax had a dampening effect on prices, it would encourage Canadian talent.
Only way they should have it paid back is if they’re becoming a permanent resident.
“There’s no legitimate reason to oppose a foreign buyer tax”
I couldn’t agree more, the only people affected are foreign investors who have no intention of living in Canada. As it is with the tax being in one area and no others, it is having a huge effect on smaller local markets and residents. I also agree with Leo, if tax is paid in Canada over a number of years, say 5, then the original 15% could be refunded. That would work all round.
It would have some negative effect on attracting foreign talent to work here. That would be the main argument against it. Hence I would support a provision where you can have the tax returned to you if you pay income tax on earned Canadian income for a period of several years. We should not be punishing immigrants that are here to work (rather than just purchase holding property)
There’s no legitimate reason to oppose a foreign buyer tax.
If foreign buying is not actually a problem, then the tax simply has no effect. Otherwise, it addresses a real issue. At the very least, the tax should be indexed to the Canadian dollar’s exchange rate to keep a somewhat level playing field.
Why people of any nation should have to compete with residents of other countries for local homes and land makes no sense to me at all. We’re talking basic human needs here, not frivolous commodities.
It’s high time Canada grew a bloody backbone and stood up for itself. There’s nothing wrong with putting Canadian citizens and residents first.
“6 bedroom waterfront house and it was listed for $2.25. This doesn’t seem that ridiculous to me…
http://www.rew.ca/properties/373042/418-beach-drive-oak-bay-bc”
It’s a very old house though with no updates. And it might be 6 bedrooms but they look small and the whole house is only 4000sf.
Do you think someone bought it to live in? Or will they knock it down and rebuild?
I guess the city council reads this blog from all the pumpers pushing their Mandrin speaking stories at every stacked open house with 400 Asians fighting to bid at the front of the line. Keep the stories coming, Christy will have no choice regardless of political locale as Horgan will ram it through on day one.
Victoria pushes for Vancouver-style real estate taxes
“The province’s capital region is looking to follow in Metro Vancouver’s footsteps taxing foreign buyers and vacant homes.
Victoria City Councillor and member of the 13 Municipalities Regional Board Ben Isitt says new regulations on the other side of the Georgia Straight have left the capital behind.
“We’re proposing that we need a level playing field between Metro Vancouver and the capital region,” he says.”
http://www.cknw.com/2017/01/18/264039/
Barrister
I disagree. The majority of Vancouver residential neighborhoods are still zoned as SFH. As soon as you get out of the muncipal centres and the Broadway corridor density drops off significantly.
And that doesn’t even take into account the potential housing that is locked up in empty condos that are owned as secondary housing or by foreign owners and speculators. Not to mention the empty houses that occupy enough land for small apartment blocks and townhouse projects.
All of these 16/18/etc+ strata properties don’t help either. For a young family, they reduce the amount of available properties by about 50%.
I’ve brought this up many times in the last 6 months when people start freaking out about Airbnb. Comes down to votes once again….why is government all over Airbnb? Big bad corporation, can’t cost them any votes.
Eliminate age restrictions in strata buildings with not be cool with a demographic that is most likely to go to the pools.
If high density was a solution then you would expect Vancouver to be very affordable. Developers love high density but in actuality it causes more problems than it solves. Young families gravitate to where there are jobs. Decentralize jobs to smaller communities and the problem of land to develop disappears.
A number of European countries have had success with this very different approach in recent years.
I appreciate that some people really do prefer to live in high density cities. Vancouver is just a short ferry ride away. I am sure that you will find it much more affordable.
“The chief reason for escalating prices in this small and not especially prosperous town is a shortage of developable land.”
Agreed.
“To keep housing costs for ordinary folk down, we need rezoning to allow subdivision of large lots and higher densities along corridors such as OB Avenue.”
Plowing a four-lane controlled access freeway through the middle of the island from Victoria to Nanaimo would likely help too. Our woefully inadequate inter-city transportation precludes the establishment of commuter towns.
None of this will happen of course – we will get a bike path from Cobble Hill to Victoria instead.
All of these 16/18/etc+ strata properties don’t help either. For a young family, they reduce the amount of available properties by about 50%.
Marko:
You really have a great point about the HPO exams. If the house ends up being properly inspected and up to code the n what possible need is there for this exam?? I just dont get it. it really is outrageous.
Frankly, I am really glad that at the moment I am not looking for a home. I seriously have been considering buying a larger acreage out of town and building but the more I read the less appealing it seems to be. The other day I had an unsolicited offer for my house from a developer at an enormous profit to me, maybe I should have taken him more seriously but I suspect that this old heritage house would end up having an accidental fire. But if city council keeps trying to convert Victoria into another Vancouver perhaps it is time to pack it in.
AG
6 bedroom waterfront house and it was listed for $2.25. This doesn’t seem that ridiculous to me…
http://www.rew.ca/properties/373042/418-beach-drive-oak-bay-bc
TallGuy, caveat, JD, Joker agree with you on the foreign buyer tax being applied to Victoria, as stated, “If foreign buyers aren’t an issue, then implementing the tax should have negligible effect on the market.”
You can already see how Toronto’s prices have jumped. This interview with Justin Fung (by Steve Saretsy) explains the housing issues well and addresses how this is about global wealth distorting the local market: https://www.youtube.com/watch?v=8JqVYT7Ii4o
We wouldn’t want to see the same problem happen here as Vancouver where engineers, teachers, nurses, doctors, or service workers cannot afford to live near where they work – to the point where they move away. That’s why 40% of millenials want to leave Vancouver – brain drain.
There’s also this “open letter to those who play the race card” in the housing debate by Justin Fung:
http://www.straight.com/news/734326/justin-fung-open-letter-those-who-play-race-card-vancouver-housing-affordability-debate
Agree that city councils need to get more progressive, but while we wait to fix that, we should be applying other solutions as well.
And the Island votes NDP, so we won’t get any foreign tax here.
“It is a great idea to apply the Foreign buyer’s tax in Victoria, the amount of foreign buyers in Victoria is about at the same level at Vancouver now. ”
Yes, but many MLAs have second homes in Victoria, which they will sell at a nice profit when they are eventually turfed out of parliament. So obviously, none of them want to see a tax that suppresses RE prices in Victoria.
418 Beach Drive … sold over asking for 2.25m.
Looks like an old house with no renos. This one really surprised me. DIdn’t think the waterfront/semi-waterfront premium was that big.
The chief reason for escalating prices in this small and not especially prosperous town is a shortage of developable land. With the core at the bottom of a funnel, the outer suburbs are inconveniently located for those who work in or around the core, which means people will pay a high premium for property in OB, Gordon Head, etc., which is close to the University, hospitals, government offices, etc. The problem is exacerbated by councils that don’t give a damn about growing the economy, only about maximizing tax revenue by encouraging the tear down of cheap older, but quite livable houses and the construction of envelope homes, that yield double the tax revenue.
To keep housing costs for ordinary folk down, we need rezoning to allow subdivision of large lots and higher densities along corridors such as OB Avenue. But with councils too dozy to deal even with deer, rats, and squirrels, no one should hold their breath waiting for intelligent action by the municipalities.
Eventually, the economic center of gravity will shift to the West shore, where they promote density and thus keep housing costs down. As people move to the West shore, they take a large part of the economy with them, i.e., the consumer economy, which is 70% of the total, thus spurring further development.
It is a great idea to apply the Foreign buyer’s tax in Victoria, the amount of foreign buyers in Victoria is about at the same level at Vancouver now. This morning I heard an ad on the radio encouraging Victoria family hosting home stay on the radio, a lot of foreigners are actually considering Victoria, there must be a huge demand to trigger an home stay ad like that .
The actual amount of foreign buyers are more than that 3.9%: a lot of the properties are bought by foreign buyers undetected, let’s say one kid is a Canadian/landed immigrant, his or her parents will buy a house and just using his/her name. It is very common in Vancouver, where one Canadian would have several properties(bought for parents, aunt and uncles who are from HongKong).
International students coming to Canada are usually upper class from other countries, a foreign student bought a Point Grey house for 7 million and sold for 8 million.
While studying in university, I have seen enough of foreign students getting a Hummer for birthday while they were already driving a BMW convertible. And I have seen enough of them owning 2-3 piece of properties while I was trying to get a summer job.
So what other choices do they have if they would like to avoid the 15% tax, not coming to Canada at all? No…eventually they will just come to Victoria.
@MJ:
“Sold for $863,000”
Ha! So the asking, at $75 K below assessment, was an invitation to an auction.
Have to love the HPO owner-builder exam policy. Don’t offer a study guide for the exam so you get people exploiting the situation ->
http://ownerbuildertraining.com/event/owner-builder-exam-preparation-course-vancouver-region/
$869+GST for a one day course and you may or may not pass the exam.
Props to BC Housing ministry making housing more affordable.
I don’t think applying the foreign buyer tax to the CRD or the core area would be a bad idea at all.
I would only be done with the tax in the CRD if I knew it was going to be used to build rental housing. Likely it would be used to come up with another idiotic program that requires administration and more government employees/managers/office space.
since the foreign tax was implemented the fulling BS has followed.
I forgot to add other things such as the home owner grant increase to $1.6 million….
I am going to cross the $1.2 threshold next year and I would have no problem paying the extra $570 but the more I thought about this it is really about buying votes.
The 50-80 year old in Oak Bay with a low income but a large asset (house worth 1.2-1.6 mill) is probably the demographic most likely to go out and vote.
It just sucks that there is no good alternative to the liberals in my opinion. I am just going to throw a vote away on Green 🙂
I don’t think applying the foreign buyer tax to the CRD or the core area would be a bad idea at all. However, it definitely should NOT be applied province-wide. Many areas of the interior have minimal price pressure, minimal population growth and no housing shortage. Applying a big city policy there makes nor sense.
Agree that Isitt is a hypocrite. Has taken many votes and positions that restrict the housing supply.
Ash, good article in the Globe and Mail, thanks for posting! Yes, it is for subscribers only, but one little trick I know that works with this website and Times Colonist at least, is to press the little “X” by the address bar when the page is loading. (You’ll see the refresh symbol spinning.) This stops the website from performing its check of whether or not you are a subscriber. If you aren’t quick enough and you get the “Please subscribe” pop-up, then simply press refresh and X it before it stops.
Ben Isitt is an idiot.
I don’t know how Ben Isitt can, in good conscience,
I’ve never voted in my life but this recent HPO exam BS has me following provincial politics for the first time in my life and I’ve been watching the City of Victoria webcasts for the last 6 months too…..and Isitt, Madoff, and Young, ohhhh my talk about lack of common sense. During one webcast for a re-development in Cook Street village Young spent 20 minutes talking about how he bought a house in James Bay 100 years ago for $10,000 which was his yearly government salary…..what on earth does that have to do with the current situation? Then he voted against the development based on how he bought a house 100 years ago for cheap. Who on earth gave him a PHD in Economics from Harvard?
Ben is a piece of work too….every single re-development he has to use his go to phrase, “sorry, I can’t vote for this, it doesn’t have a social licence.”
None of this would bother me if they didn’t preach affordable housing in every other word they sputtered.
Michael,
Great graph, looks like if you are at the beginning of a 6-10 year boom, you are still better off buying since the price correction will only get you back at the price level around 2-3 years before the correction.
9 Governors point, assessed in the $700s asking $1.2 million.
Hell, set it at something palatable such as 5%. There’s no reason why a small amount can’t be collected and put towards constructing more rental housing or other beneficial causes.
I would be 100% in support if it was used for rental housing; however, since the foreign tax was implemented the fulling BS has followed.
Owner-builder exam (100% not supported by any evidence whatsoever) which probably created 10 to 15 new government positions.
The idiotic home equity mortgage which will probably create another 20 to 30 government jobs, throw in 2 managers, and some Class A office space downtown in one of the new Jawl buildings.
Seriously, what da!!!!!!! Why just not take the foreign tax money and put it DIRECTLY into building rental units?
I don’t know how Ben Isitt can, in good conscience, take the approach that housing should be affordable, and not commoditized, when, not six months ago, he proposed to require a public hearing for the demolition of any house built prior to 1955.
On the one hand, he plays protectionist politics for Fairfield baby boomers. On the other, he claims to support affordability. He’s railing against a housing shortage that he has actively supported. I’m not surprised, really, as he seems to just stump for whatever Vancouver currently proposes; in doing so he might also want to pay attention to Gregor’s current approval rating.
Edit: In response to TallGuy, it should be a province-wide (or national) tax. Applying it in piecemeal fashion just pushes things outward and creates way more work than is necessary for municipalities and the province.
Most top-10 B.C. Liberal donors in construction industry
http://www.timescolonist.com/news/b-c/most-top-10-b-c-liberal-donors-in-construction-industry-1.7740415
Makes sense re HPO owner-builder exam.
I had my perimeter drains tested as I noticed moisture build up and I suspected the roots of a 10 year old tree may be restricting the drain tiles. The test showed the drain tiles were clear and that perhaps the moisture problem was due to hydro static pressure under the poured slab.
If I were to buy a home today, I would walk around the home to see if there are visible plastic drain clean outs that can be accessed and have the drains checked before buying. If they are not present then I would think that eventually new drainage will have to be installed. The cost of excavating, removing concrete walks around the home’s perimeter and installing new drainage is enormous and I think a rip-off of consumers.
Since so many houses in Victoria are close to being “tear-downs” I wonder if it is worth replacing the drainage if it has not completely failed? Also if I were selling one of these tear-downs and the buyer wanted 20 grand off the price I would tell them to take a hike since they are buying land value anyway.
I really hate the consensus that this must be observed and studied. Foreign buyers were “studied” in Vancouver for 25 years, and look what it got them.
If foreign buyers aren’t an issue, then implementing the tax should have negligible effect on the market. When so many politicians, developers, and real estate professionals oppose such a tax, you know that’s not the case.
Hell, set it at something palatable such as 5%. There’s no reason why a small amount can’t be collected and put towards constructing more rental housing or other beneficial causes.
Extend foreign buyer tax to capital region, 2 Victoria councillors urge
http://www.timescolonist.com/news/local/extend-foreign-buyer-tax-to-capital-region-2-victoria-councillors-urge-1.7740345
This may be a first — I agree with Stu Young:
Langford Mayor Stew Young said there’s no way he would support a foreign buyer tax, and urged caution about imposing a tax on vacant properties.
Young said he views the tax on foreign buyers “a modern-day head tax” contrary to his belief in the free market.
Most top-10 B.C. Liberal donors in construction industry
http://www.timescolonist.com/news/b-c/most-top-10-b-c-liberal-donors-in-construction-industry-1.7740415
CCA stands for capital cost allowance. I will let Curious Cat give you the technical definition or you can google it.
Surprised no one has linked to yet:
http://www.theglobeandmail.com/report-on-business/top-business-stories/victorias-secrets-a-housing-boom-stable-jobs-and-a-dicey-issue/article33627081/
May be restricted content
What does CCA stand for?
Here’s an interesting listing. A 1980’s bungalow in fairly good condition in a quiet subdivision with a nice garden backing onto a wooded park and offered at more than $75 K below assessment.
https://www.realtor.ca/Residential/Single-Family/17710869/4050-Tyne-Crt-Victoria-British-Columbia-V8N5W2
Was listed on the weekend. Is it still available?
Sold for $863,000
That might be a good business to start: a drain tile inspector that doesn’t do repairs. I think SweetHome’s analysis is right on the money. I, for one, won’t get mine inspected until I notice there’s a problem.
If 1287 Rockland gets close to 1.6m then those people did really well. I think, even in this insane market, they won’t get it. The house still shows its 1950s build and style and has a boring plain 3/2 floor plan with small beds/ baths. It’s also on a busy four way stop corner. If someone pays that for it they overpaid. Will be interesting to see what happens with it though.
Yep the site grading is more important than the drain tiles even.
But which one was correct?
Impossible to say who is correct, it is so subjective especially if there is no signs of water ingress.
I try to use common sense. If the house sits on a small rocky outcrop hill then maybe repair might be fine. If you are at the bottom of the Henderson slope on clay probably best to replace?
Problem with drain tile failures is they don’t occur in the middle of August. They occur in January in a week like this when you’ve taken off to Mexico for your vacation, it’s cold outside, and your tenant is displaced.
“Reason I say too many real life problems is for example the drain tile inspection is soooooo subjective. I’ve attended about 50-60 of these in the last 6.5 years. Then the suggestions on how to repair and costs involved are once again all over the place. It’s not unusual to do a drain tile inspection and one person suggests a $2,000 repair and another a $15,000 overhaul”
We had a drain tile inspection done before we bought, and the sense I got was that the inspection cost wasn’t that much, but the company was trying to drum up business. The companies with the inspection cameras are the same ones that do the repairs. Even though the system was in working order, it was identified as fragile (to be expected at around 40 years-old) and we were encouraged to book the work right away rather than wait until the busy rainy season. I can’t recall the exact estimate, but it was over $20,000 to replace the whole system. That seemed high to us, so we took that as an upper estimate.
So, we had some comfort that there was not an immediate problem (which is how we read the report), but we would have to get several people with several estimates and see who seemed sort-of trustworthy and knowledgable before we had a true cost. It did not change our offer, as it seemed most of the other older houses we looked at had some issues as well and it really was/is a seller’s market. Considering the recent $950K house sale on Merida, it is quite possible our house went up more than the cost of a whole new drainage system.
As an aside, has anyone replaced their drain tile proactively, or do people usually just wait until there is actually water leaking in?
@ Marko: “At the very least I have my buyers do a home inspection ($400-500), oil tank scan ($300) and sometimes I’ll have my buyers do two oil tank scans as I’ve seen each different method miss an oil tank, video camera inspection of drain tiles ($300).”
You’re a good, responsible realtor, Marko. My realtor has advised all of the same inspections, but I understand that that’s exceedingly rare. Several friends who bought houses in the last 5 years were shocked that I’d want to get an oil tank scan done on a house before I bought it because their realtors had never even mentioned the possibility of oil tanks. And they bought 1940s or 1950s houses in the core, so you know that buried tanks are a real possibility. There’s a lot of value in a realtor who is actually insisting that you do due diligence rather than just trying to get you to buy as quickly as possible.
Market conditions will dictate. Right now it’s up to the seller on how low they will go.
I’ve seem some complete shit boxes (re capital heights duplex) get bid up, despite being in unliveable condition.
But which one was correct?
I’ll make sure you’re first on the list
Imagine if Leo S somehow spurs CRA to start pursuing thousands of Victorians for CGs.
Very interesting, Marko. Really good info, thanks.
Thanks. I’m just trying to hypothesize where open auctions would work.
In theory all of these things could be implemented and factored in. They are all just agreements and contracts. The current system makes it sound like there are a bunch of barriers, but it doesn’t sound difficult.
TallGuy, you would also have to have knowledge of any verbal discussions between the home owner and the building inspector as well as any amendments made to the report. At this point, you don’t know if you are reading the final report or possibly one of several revisions.
The report is just a written summary of the building inspectors findings there is also a verbal component to the inspection when the inspector has a one on one discussion with the intended user. You are not privy to that information which could be vital to your decision to buy the home.
If you want to rely on the building inspection, then you will have to contact the building inspector and obtain a Letter of Release identifying you as the intended user. That would allow the building inspector to speak about any other information that was not presented within the body of the report.
Better yet – go get your own property inspection done.
Dasmo – most of our portfolio is in non-registered accounts so that wasn’t an issue with us. Yes you would trigger CG on any stocks that you sold at a profit.
I would definitely speak to an accountant about your specific situation before doing anything.
But there is not reason it couldn’t be extended, other than the additional cost for insurance. And at $400+ a pop for an inspection, it should already be included.
Once again too many real life problems. Homes aren’t made in a factory with a machine. Home inspection is actually not very much in term of due diliegence. At the very least I have my buyers do a home inspection ($400-500), oil tank scan ($300) and sometimes I’ll have my buyers do two oil tank scans as I’ve seen each different method miss an oil tank, video camera inspection of drain tiles ($300).
That is kind of like the minimum in my opinion. There are other inspections that may be necessary such as a WETT inspection, electrical inspection (aluminum or knob wiring), etc.
Reason I say too many real life problems is for example the drain tile inspection is soooooo subjective. I’ve attended about 50-60 of these in the last 6.5 years. Then the suggestions on how to repair and costs involved are once again all over the place. It’s not unusual to do a drain tile inspection and one person suggests a $2,000 repair and another a $15,000 overhaul. It’s an important inspection to do to know what you are buying but there is rarely a clear answer as to what and how much to do for repairs. Sometimes it’s like the system is totally blown but zero moisture problems in the home so maybe water is just naturally draining well? Buyer is asking for X amount off the price because the system has failed, seller is saying “we’ve been here for 25 years and haven’t had one problem with moisture/water.”
The way this year has started will be interesting to keep an eye on the foreign buyer numbers for January/February….29 sales today and I am seeing 4 U.S. buyers. Throw in 3 from Toronto today plus other parts of Canada the out of town buyers must be exerting some sort of impact at this point.
If the dollar could climb to at least 80 cents would probably help decrease the U.S. inflow.
AG, when you say you can’t touch it do you mean there would be a penalty to pay if you cash out said stocks you bought with said loan? This would trigger CG for myself and complications with the timing of the in and out of the TFSA plus the hit with the RRSP withdrawal. More details please on what you did to make this happen!
But there is not reason it couldn’t be extended, other than the additional cost for insurance. And at $400+ a pop for an inspection, it should already be included.
In my profession, all of the users (the general public) of my products could be considered as third party buyers, as they had no hand in the design or review. I can be sued for up to 15 years for genuine mistakes and negligence.
And I’m talking about being within reason. Destructive testing to determine the condition of a home would be excessive. And I accept that some areas of a home are unavailable for a traditional inspection. But to be able to say “I’ve inspected this and it appears okay, but if its not, I take accept no responsibility” is total bunk.
TallGuy – interest is tax deductible if you are borrowing to buy stocks or bonds, but not to buy your home.
Say you have a $1m mortgage and a $1m investment portfolio. You would sell your investment portfolio and pay off the mortgage. Then borrow the $1m back against your house and buy the same investments again. Now, instead of borrowing to buy a house you are borrowing to buy stocks.
It doesn’t make a whole lot of sense really but that’s the way that the CRA views it. You just need to make sure the paper trail is very clear. And you then can’t touch that $1m portfolio so it’s best to keep it is a different account from your regular stocks.
Luke, I bought on Rockland three years ago for 1.6 as well. The house had been completely updated, new wiring, plumbing, furnace and much more. The difference is that the house is over 7,000 sq. feet with a an additional 1,000 square foot carriage house. The lot is 26,000 square feet and there are clear unobstructed full ocean views from the second and third floors. I know that it is three years later but the price difference is seriously insane. Expecting a half million dollar profit on a quick reno job is rather outrageous.
Something for all would be buyers to consider. Third party liability does not extend to the buyer unless the buyer is identified as the intended user of the report.
Good point.
This is another area of real estate where the professionalism and accountability is seriously lacking. I could go on yet another rant about how poorly this industry, which is essential to BC’s and Canada’s GDP at this moment, is so poorly regulated.
It’s all relative. I was in Croatia this summer helping a family member with a real estate transaction and talk about the wild wild west. Penthouses, for example, go at discounted prices due to poor strata regulations. i.e. if the roof leaks no one wants to fix it until it makes it into their unit. You always want to buy 3-4 stories down from the top. I asked someone if you could AirBnb in their building and they were like “what are you talking about, it’s my unit, I can do whatever I want.”
Regulation is not too bad here….lots of different acts (strata property act, real estate act), land title system is pretty much bulletproof no B.S. of a long lost relative claiming rights to a property that is not on title after you purchase.
Crash or no crash? Clearly fundamentals are all over the place regarding this run-up in housing prices but you can’t discount the main fundamental and that is employment. You ain’t workin, you ain’t buyin.
I’m sure that Victoria has different employment opportunities but …. challenges … challenges … slow sales mean no income for a lot of these new full time jobs on the mainland.
“Altogether, employment in construction and finance represented a whopping 75% of the new full-time jobs in non-energy producing provinces. In Ontario, finance and construction made up 68% of the fulltime positions over the past year. In B.C., these industries explain over 100% of the growth. In other words, in the absence of this sector, there would be an outright decline in full-time jobs in the province.”
http://www.td.com/document/PDF/economics/special/Part_Time_Conundrum.pdf
The home owner certainly could get a building inspection and hand out the reports to would be buyers.
However the purchaser could not successfully sue the building inspector for errors, even if the report was grossly negligent, since the report was not prepared for the buyer. The buyer relies on the inspection report at their own peril.
Something for all would be buyers to consider. Third party liability does not extend to the buyer unless the buyer is identified as the intended user of the report.
Victoria’s cycle is one of the easier to estimate – notably easier if you understand one of its key drivers. The next top will have some considerable deviation.
http://i.imgur.com/G5oLsCz.png
We looked at 1287 Rockland Ave in early 2016 – it needed a complete renovation, and it looks like it got it! They’ve put at least $200k into that renovation, but that still means they’re hoping for over $500k profit. Not sure if it will go for that asking price as the pool takes up almost the entire back yard, and the view of the Olympics is ‘peek-a-boo’ at best. That said, looks like they did a good job on the renovation – a complete transformation from what it was before. It was a rental and completely run down and trashed.
@ Barrister:
Checkout 1745 rockland ave, assessment value went from $1.7 million to $3.2 million. Seriously, BC assessment, it is the same house! Just because it is one day after 2016, it ain’t worth 1.5 million dollar more.
This is not what it seems. If you look at the assessment, that is for a 1-acre plus property. What’s offered at about half that is the old house on less than half an acre. The property has been subdivided, so the assessments for this year and last are not comparable.
@Barrister: “What I would like to know is whether the seller also came back to you and asked whether you wanted to improve your offer.”
No, they didn’t, which was part of what irked me so much about the whole thing. Our offer was used only to get the other offer up. (For the record I would never have gone unconditional at that point, having done absolutely no due diligence on the property. So I wouldn’t have countered anyway.)
Here’s an interesting listing. A 1980’s bungalow in fairly good condition in a quiet subdivision with a nice garden backing onto a wooded park and offered at more than $75 K below assessment.
https://www.realtor.ca/Residential/Single-Family/17710869/4050-Tyne-Crt-Victoria-British-Columbia-V8N5W2
Was listed on the weekend. Is it still available?
Then there’s this on Upper Terrace relisted at how many hundred thousand down?
https://www.realtor.ca/Residential/Single-Family/17717149/3470-Upper-Terrace-Rd-Victoria-British-Columbia-V8R6E7
Talking about hockey-stick markets, maybe we’re heading for a hockeystick down.
@ Joker:
I did not know Victoria crashed before. Was it like this crazy hot before the crash?
Yes, we watched dozens of people milling around on the front lawn of the very ordinary, 1940’s bungalow opposite our house as the lawyer son-in-law of the diseased owner conducted an auction.
Within a month or two, the market was dead and drifted down for several years. By 1986, some properties were offered at 40% or more off what they had been purchased for at the peak.
Marko:
“Too many real-life challenges such as sellers hiring a crappy inspector.”
This is another area of real estate where the professionalism and accountability is seriously lacking. I could go on yet another rant about how poorly this industry, which is essential to BC’s and Canada’s GDP at this moment, is so poorly regulated.
“But if it’s too regulated it will crash…” and other straw man arguments pop up.
AG:
Tell me more…
It may be common sense but it’s not common knowledge.
Or the owner could take some responsibility and have the inspections completed before hand. If the place was truly auction-able, they would recoup their costs and then some. The bidders could collect the reports during their walk through, or they could be made available online before the auction.
Too many real-life challenges such as sellers hiring a crappy inspector.
People take out mortgages the whole time when they don’t need them. When we purchased our house, we got a mortgage even though we could have paid cash. We used our investment portfolio to make the mortgage interest tax deductible. That puts our effective mortgage rate well under 2%. It’s just common sense.
What i have heard is that in the core that a very large percentage of the sales are all cash and no mortgage. Merko, or anyone, do you know if that is true?
Maybe 25% are “cash?” But even this number is tough to read. Let’s say someone has a paid of $2 million dollar house in Toronto and takes out a line of credit of a million to buy a house here for $1 million. It would be counted as a “cash purchase.”
What i have heard is that in the core that a very large percentage of the sales are all cash and no mortgage. Merko, or anyone, do you know if that is true?
Joker:
Leaving aside the rest of your argument, I would point out that the Liberals virtually never have a chance of getting elected in Victoria. Why should they worry about what is happening here since the city wont vote for them anyway. It is a political reality.
Introvert,
At least the Gordon head house is asking for what it is assessed at. Look at MLS, a lot of the houses are asking 300,000 plus assessment value.
Hawk,
I did not know Victoria crashed before. Was it like this crazy hot before the crash?
I personally do not understand what is driving this frenzy.
2051 Casa Marcia Crescent: listed for $850k and sold for $1.1M. Gordon Head is warming up for spring.
According to Mike Victoria crashed 30% seven years ago so it’s due for another with rising rates and household debt that’s off the charts and people struggling to pay the mortgage and rising monthly bills.
Every peak has pumpers salivating that it’s different this time. It ain’t, it’s short term FOMO and greed. Low inventory is a temporary situation like every other time.
Barrister,
Checkout 1745 rockland ave, assessment value went from $1.7 million to $3.2 million. Seriously, BC assessment, it is the same house! Just because it is one day after 2016, it ain’t worth 1.5 million dollar more.
There is sth. really fishy here, this year is election year. BC assessment is assessing Victoria like crazy for a reason. Foreign tax is removed in Vancouver, but we can afford to lose 6 seats in Victoria, let people in Victoria suffer! It won’t happen right away, but it will happy before you know it is too late. Just like Vancouver, just like how communist party of China took back HongKong. When you realized the change, it is too late to put up a fight.
Gwac:
Of coarse people have a choice, there is still a private money market out there if you want to borrow.
It will cost you a lot more. Chmc mortgages are still a good bargain. it is earthquake insurance, it is all profit right up to the day a major quake hits.
If you ask Hawk he will tell you that the quake will hit this spring or was that last spring or the spring before that.
Joker:
I was totally shocked by the asking price on the Rockland house. I live a few blocks up the street and the asking price seems insane. But lets see if anyone steps up to the plate and actually buys it at anywhere near asking. This may end up being one of those houses that sits on the market with a endless number of price cuts.
Anyone out there think that this is priced right?
Will it? Has Victoria ever crashed? Vancouver has never since the day I was born. When a west side house went 400,000 to 700,000 I was in school, it just kept going, nothing below 1 million in west side now.
“Welcome to Victoria, the new Vancouver in its making.”
You mean the new Big Short in the making.
https://www.youtube.com/watch?v=vgqG3ITMv1Q
Coquitlam selling prices dropping below new assessment level. Won’t be long til we see the same here, we’re 6 months behind and just need a mere few hundred new listings to send the market into a freak out show. Keep cashing out while you can.
Nikolas wall
@CheleNik
@SteveSaretsky @TomDavidoff prices are falling in #Coquitlam sold price= $930k assessment= $1.24 m
https://twitter.com/CheleNik/status/821406639764836352
1287 Rockland ave, sold March,2016 for $798,000. Now asking for $1,588,000.
226 Dallas road, assessment is $1,000,000, asking $2,000,000.
Welcome to Victoria, the new Vancouver in its making.
Reason
Trudeau or Harper whatever. It is still a form of a tax to keep those profits way up there while trying to lower the portfolio balance and maintain nice high expenses and salaries over there at the crown corporation. They have one competitor that really cannot compete with a crown corporation that has the treasury`s unlimited balance sheet. It is taking advantage of those who have no choice if they want to buy.
Bit of a ramble down a slanted path, but if I had to be in the westshore for a job I’d still look for the highest potential ie. location, land, proximity to amenities and potential for growth and buy the home I felt would appreciate as much as possible.
I would not trade a long commute for appreciation but, like many, I never had to because I chose my job based on where I wanted to live. And a lot of people can live wherever they want due to internet miracles.
“Just another form of a Trudeau Tax.”
I don’t know the exact dates of the other rate hikes but I guess some would have been a Harper Tax:
http://www.theglobeandmail.com/real-estate/the-market/cmhc-to-hike-mortgage-premiums-in-march/article33643562/
Leo:
Does something look wrong in those spreads, the increase is not uniform with more increase in some middle tranches?
@Jerry, Australia isn’t the best example to model our system on if you are looking to moderate prices…
https://en.wikipedia.org/wiki/Australian_property_bubble
2013 and 2014 and 2015 cmhc profits 1.8b and 2.6b and 1.4b
http://www.mortgagebrokernews.ca/news/cmhc-shrinking-profits-growing-191157.aspx
https://www.cmhc-schl.gc.ca/en/corp/nero/nere/2016/2016-05-09-1000.cfm
Leo
Just another form of a Trudeau Tax. CMHC profits go back to Treasury
close to 25billion since 2002 /16b to 2011 and they make about 2b a year
https://www.canadianmortgagetrends.com/canadian_mortgage_trends/2012/05/highlights-from-cmhcs-2011-annual-report.html
CMHC changes. Those are big fee hikes.
Barrister:
Open auctions would work best in cases where there are no subjects.
Or the owner could take some responsibility and have the inspections completed before hand. If the place was truly auction-able, they would recoup their costs and then some. The bidders could collect the reports during their walk through, or they could be made available online before the auction.
There are so many scenarios if someone is willing to do a small amount of leg work…
In the end, you probably weren’t considering houses in the West Shore, so you had already made the decision (perhaps unwittingly) to buy a place that would appreciate more than others.
Dasmo’s not buying it either.
Make some spreadsheets on it; then you’ll see.
Jerry:
That sort of one day auction does not allow for a proper home inspection. The inner core has a fair number of heritage houses and in many cases it is vital to at least get an engineer to inspect the foundations. Otherwise, it is like buying a used car without having a mechanic inspect it.
Leo:
I agree with you that if you are working in the West Shore that one should buy there. Commuting has a lot of built in expenses that people dont include and, frankly time is the one commodity that money cant buy.
Having said that, one should give some thought as to which of the west shore areas are likely to appreciate the most.
Leo, you are no fun,I find that I usually just end up agreeing with you. On the other hand pulling Hawks tail feathers…
Jerry:
I concur. I’m sure in the really desirable locations, someone with deep pockets whom a few $100,000 doesn’t matter to just throws out a really high bid to guarantee their win.
It would still happen occasionally in an open auction, but I think the highest bid prices would drop overall.
VicRenter:
That’s what happened in my situation, except the listing agent offered me the place at the highest bid since I had fewer conditions.
Based on my research, the highest bid was already too high over the market value and assessed price, so I had to decline. Not to mention that it was $10,000 over the next highest price…
I quote from memory now so feel free to correct me, but I was told by a colleague that the system in Australia is as follows. A house is posted as being for sale on January 25th. Those interested show up that day and have a poke around. In the afternoon the potential purchasers stand around on the lawn and an auctioneer stands on the front steps and begins at the reserve bid price. Ten minutes later the house is sold and you can look your competitors in the eye.
Sounds like a perfectly sound system to me. I am going to guess that if they introduced it in Toronto prices would be $250,000 less as all the chimerical, realtor-generated “competing bids” evaporated.
The market sets the price. If one buyer gets carried away and pays way over market, that doesn’t change the market significantly. It might give the neighbouring sellers unrealistic expectations as to what they can sell for, but it’s not going to change signifcantly their actual selling prices. They are still competing against the rest of the city.
@Barrister. I do see your point, but even so I would recommend to anyone working out in the westshore to live there as well rather than stretching to the limit to buy in the core. Far more risky to be living on the raggedy edge with a massive mortgage just for a speculative play on outsized appreciation of your primary residence.
Vic Renter:
Your story is interesting to know. On the other hand, you really cant blame the owners for trying to get the maximum they can since at the same time you are trying to pay the least.
In one limited fashion this reminds me of an auction where every additional bid pushes the price up.
What I would like to know is whether the seller also came back to you and asked whether you wanted to improve your offer. If the seller was looking for a second round of bidding it would only make sense to approach all the bidders I think. On the other hand, you might not want to make the current top bidder rethink things and possibly walk away from the whole thing.
@Barrister: In my (limited) experience bidding on houses in multiple-offer situations last year, sellers do come back and ask for more.
I was personally asked for more in one situation and declined.
There was one house last year where I’m positive that I had the highest bid, but I also had conditions. I’m pretty sure that the seller/realtor then went to the highest unconditional offer and gave them the chance to top my offer. I suspect all of this because it took a very long time to hear back from the seller in what was supposed to be a quick auction and the house ended up selling unconditionally for only $2000 more than my bid. That was depressing and that sale set a new benchmark price for the neighbourhood: prices went nuts after that. So my conditional offer just helped the seller squeeze more money out of someone else.
Leo:
While I agree with you, we both come at this with a bit of a privileged view. Possible appreciation is much more important to a person of more limited means. For a lot of working people, a profit of 200k tax free, represents a lifetime of saving.
It is a lot easier for me to not even think about appreciation when my house represents less than 10% of our net worth. That is far from the case for most people where their house represents the bulk of their net worth.
Never mind that I wouldn’t count on the core continuing to appreciate at a higher rate forever.
Let’s go back to the example this started with: if you worked out in the westshore (say it is a stable job you aren’t going to leave for the foreseeable future) would you live in the core because of appreciation potential?
I certainly wouldn’t. Why the heck would I force a car commute on myself just to at some point possibly make a couple extra hundred grand? Wasting a good chunk of your life for a little bit of extra money. No thanks.
I live where I live because that fits into our lifestyle. It happens to be the core which worked out well but I’m being quite serious that even after hundreds of hours spent thinking about the market, potential appreciation of one area vs the next never factored into our decision.
Marko:
When there are multiply bids over asking, is it a common practise to go back to the top few bids and offer them a chance to increase their offer? Is there an element of an auction here? I am just wondering how one gets from an asking of 550 to a final offer of 950?
I think that the average Canadian should give thought to possible appreciation when buying a home but it should not be the most important consideration. It is a difficult balance because for most people it is their single biggest asset and also the one with the best tax treatment. On the other hand, it is also a home and makes a large difference to the enjoyment of your lifestyle.
Sounds like a lot of starving agents with declining monthly sales are pumping a thin market about to get hit with mass spring supply. January buyers late to the market overpaying by hundreds of thousands are tomorrow’s bagholders. 😉
Whenever we’ve bought a place to call home we thought, “we better stay here for at least 15 years because the market is probably going to turn and it’s the only way we’ll get our money back.”
So I get what Leo is saying – in our case, we’ve made decisions based on not wanting for the value to go down, not anticipating that it’ll automatically be valued higher at the exact time that we have to move to another city (eg., for a job). I’ve known people over the course of 30 years that had to sell for those reasons, and they had to sell in a down market.
We are not the EU (lol)…too much land and not enough people…a couple good years and look at the bottom feeders squawk. Artificial wealth…not a cent in the bank…nothing but credit..and enslaved to a house most cant afford to sell.
Real estate agent…do something useful.
In a 30 year secular bull market…the ones that bought last year are not smart…
Paying attention to every other factor in Victoria generally means you are going to experience better than average appreciation. Lucky correlation if you decide to sell one day.
The average Canadian buys and sells 5 homes in their lifetime. Silly not to consider tax-free appreciation potential if you are likely to move or retire earlier than your pension. I’m surprised your views on this haven’t changed over time Leo.
You are far from a opportunistic flipper Leo but you certainly did not want to overspend and were trying to resolve prices with where they might go using your data talents. At least that’s my analysis based on your aviator pics and what you post. It wasn’t just that you are weird. Although it’s certainly a big part of why you keep at it no doubt 😉
Yeah, sorry, I forgot about this. But it kind of speaks for itself, doesn’t it? And what have they actually done? I’m pretty sure shadow flipping is still a thing and this closed bid thing…
The government has done a lot. For example, people totally forget about the mere postings pushed through by the competition bureau in September of 2010.
What has the consumer done? Absolutely nothing.
When I was 19 years I had $1,500 I wanted to do something with. My parents were not familiar with investing so I watched BNN in my dorm between classes. After two months of watching “analyst picks,” it became very clear that these exeprt analyst were pretty much no better than a coin flip. Then I looked into mutual funds and TD Waterhouse. It was pretty obvious to me you would have to be really dumb to pay a 2% MER for a glorified coin flip. I opened up a TD Waterhouse account and bought $1,500 worth of Petro-Canada. Haven’t looked back since, still do all my own RRSPs, TSFA, etc. I’ve outperformed the market (by way of 100% luck), but even if I had just done the market I would be way ahead of anyone paying a 2% MER to Garth.
However, the 2% MER industry is doing just fine. What’s the government suppose to do if an individual can’t grasp a simple concept?
Same with real estate services….A TON of options at your finger tips? Want to do some work in terms of selling your home and save a ton of cash? No problem -> http://markojuras.com/849-flat-fee/
Want to get some cash back when buying? No problem, just Google it.
If the consumer has an option of selling a home for $1,000,000 @ $33,000 commission and the other option is to do a mere posting at half the price, yet 98% of people choose the $33,000 option what is the government to do?
The consumer obviously believe there is value in a 2% MER and $33,000 to sell a house.
Same common sense can apply to blind bids……don’t bid to outbid, bid to what you think the property is worth within context (i.e. you wouldn’t want to bid over asking if you are the only offer, other common sense).
Absolutely, and no one could say, “My realtor said I should bid this much, I wonder how much the next highest bid was…”
Totally agreed TallGuy. Also open auctions aren’t necessarily bad for the sellers. Sure there are cases where there are multiple offers and the winning one is tens of thousands over the next one. But there are also cases where if other people could one-up each other it would drive the price even more.
Likely to appreciate by a lot was never under consideration when we were house hunting. Every other factor would be 10x more important.
Barrister:
“There are a number of drawbacks to auctions and by their very nature they exclude conditions.
To be honest i would feel very uncomfortable bidding a lot over asking. the thought that i had overpaid by a 100k would keep me up at night. By in some ways that has always been the case. You never know if the owner would have taken less if you bargained harder.”
I would offer two counterarguments to this:
1. For your first point, an auctioneer could simply hold up a no conditions, or what conditions sign for the current price, or it could be determined beforehand that no conditions will be accepted. That seems to be the current practice in this market anyways.
This is kind of the crux of my argument. If the auctions were open, you would know if you bid over and by how much. A well informed decision could be made, or you may have got caught up in the moment, but either way the onus is completely on the buyer in this circumstance.
Marko
“Also if their offer is used as leverage that doesn’t affect the buyers.
I disagree, what if the top offer sets a new precedent on the street? And the top offer went higher because there were a couple of no chance offers in the mix increasing the number of total offers?
If enough buyers are throwing in no chance offers I think it can have an affect on the marketplace at least in the short term.”
Also another benefit of open auctions. Those people wasting their time are quickly weeded out, and the other bidders are increasing their bids based on actual bid values instead of perceived bid values.
“The compensation system is fundamentally flawed in my opinion. If I offered a package to buyers where I invoiced them $50 per hour for my work (and rebated 100% of the commission when they purchased) absolutely no one would go for it even thought the average buyer would save thousands. Getting a bill every two weeks would just stress people out. With my theortically model an agent would have no incentive for you to buy asap.”
I agree, you are at a disadvantage here. I do feel guilty wasting my realtor’s time, especially when I get desperate and ask for showings at places though I’m fairly certain beforehand I won’t like at all. In my mind, I can almost justify getting a buyer to raise their offer/increase my commission, if I’ve had to show them 100 houses and/or put in several bad offers.
“As an agent the over ask portion is the last thing you think about in terms of the commission. It’s not a huge amount compared to the asking price commission in the majority of cases. It is more about getting the deal done.”
In the case of the bids I’m making, I agree. In the case of the Henderson places previously mentioned, and soon to be the Yew St. case, these extra commissions are in the $1,000’s. I think that the buyer’s agents have some incentive in these situations.
Leos S:
“The province took away self regulation last year and they tightened up the regs a few times since then. More coming this year for sure on that front.”
Yeah, sorry, I forgot about this. But it kind of speaks for itself, doesn’t it? And what have they actually done? I’m pretty sure shadow flipping is still a thing and this closed bid thing…
“Personally I think the solution to that is to make generating offers easier. It should literally take 30 seconds with the standard conditions.”
My agent fills out a pdf form that appears as though it would take about 20 minutes to fill it out, then I digitally sign it and it is automatically sent back to him. Not 30 seconds, but not a huge time investment either.
Look, I’m not trying to paint all realtors with the same brush, but there is a blanket perception at this time. There is room for improvement though. I just want a fair market.
And it’s not just the agents, there are still the issues with foreign ownership, BS capital gains exemptions, home owner’s rebate, etc, etc.
Look down this thread….
28 offers… that’s nuts.
It seems that the sub-1m range is going crazy again. Will be interesting to see how it affects higher end prices.
I heard the house on Merida Place in Gordon Head (70’s box type, no substantial renos to speak of, assessed at $750k) had 28 offers and had an accepted offer at $950k. Can anyone confirm this? Seems too crazy to be true.
Money isn’t everything….But it’s a big thing….
If you say so.
So your scheme of giving X% cash back if buyers viewed less than Y homes where X decreases as Y increases didn’t pan out then?
Everyone would ask for the maximum in the end…..”well we went over Y but our showings were real quick” or similar. Just didn’t pan out in real life.
The other problem is it really brings out some interesting characters. In 2010/2011 I was doing 70% cash back and I had people trying to negotiate 75%…….it was kind of annoying. I am undercutting 1,300 other realtors by 70% and you want another 5%?
So your scheme of giving X% cash back only if buyers viewed less than Y homes didn’t pan out?
And no incentive for agents to actually try this since it would mean less money earned.
I would take less $ for a consistent income. Job would also be way more enjoyable, people wouldn’t look at homes just for the fun of it. My bet is everyone would careful look at the floorplans, drive by the house, etc., before booking a showing.
I try to do the best I can in terms of professionalism. For example, as of a few months ago my new personal policy is every single offer that is presented in a multiple offer situation on my listing I write on the front of each offer “Reviewed by sellers at X time/date,” I have the sellers initial it and I scan back the front page to every single offer back to the buyer’s realtor so people know 100% their offer was reviewed. Once I had to scan 10 offers and email to 10 different realtors, it was a pain but I’ve been getting really good feedback on it.
Also if their offer is used as leverage that doesn’t affect the buyers.
I disagree, what if the top offer sets a new precedent on the street? And the top offer went higher because there were a couple of no chance offers in the mix increasing the number of total offers?
If enough buyers are throwing in no chance offers I think it can have an affect on the marketplace at least in the short term.
And no incentive for agents to actually try this since it would mean less money earned.
Perfectly legal. The seller’s agent is acting in the interests of the seller. As long as they cleared it with the seller they can reveal the amount of the other offers. However you could probably ask for proof of the other offers.
Marko:
If I ever decide to sell my home I would be happy to pay you a hundred an hour plus all disbursements rather than a commission. Lawyers are generally paid by time, effort and complexity so I dont see why real estate agents should not be dealt with in the same fashion.
You are also right that these bidding wars are often bad for an agents economic self interest. You end up writing multiple offers for the same client with no realistic idea when one might be accepted. In the old days you could more often than not negotiate an offer that was acceptable to both buyer and seller. these days you can put in ten different offers and have none of them accepted. All that happens is that your turns his anger against his agent.
The province took away self regulation last year and they tightened up the regs a few times since then. More coming this year for sure on that front.
This is a big source of the mistrust of realtors. Being hesitant to submit offers and the pressure to go higher. I get it, it’s work to submit an offer and why bother when you know that it won’t get accepted, but that’s how it comes across to the buyer. Heard this story many times.
Also if their offer is used as leverage that doesn’t affect the buyers.
Personally I think the solution to that is to make generating offers easier. It should literally take 30 seconds with the standard conditions.
It’s anticipated that @CMHC_ca will outline increases in its mtg insurance premiums tomorrow
https://twitter.com/cdnmortgagenews/status/821116910171463681
I called the listing agent on Yew and he didn’t even bother calling me back.
Why are we subjected to this closed bid system? The conflict of interest if so obvious, and it puts buyers at such a disadvantage. And it only feeds the FOMO, inflates prices further, and pads Agent’s pocket books. This favoritism to the real estate industry needs some real exposure and Canadians as a whole need better choices.
As an agent the over ask portion is the last thing you think about in terms of the commission. It’s not a huge amount compared to the asking price commission in the majority of cases. It is more about getting the deal done.
I also do think the majority of this insane bidding is market driven, rather than agent driven. Same agents were around in 2012-2014 when bidding wars were extremely rare and unconditional offers unheard off. I literally never saw an unconditional offer until late 2015 and I had already done over 350 transactions at that point.
Regarding closed bidding I am not a big fan, but it’s not a huge problem in normal markets. Interestingly enough it is how the courts handle it as well on foreclosures (everyone submits a sealed envelope and you don’t know what other people are bidding).
There are a lot of problems right now going on in my opinion. One of the problems I face daily is a lot of buyers have the attitude, “well, let’s just submit an offer, can’t hurt.” Problem is their no chance offer is used to leverage the highest offer even higher. For example, instead of 3 offers on the table the unrealistic offer makes it 4 offers on the table and it may influence someone’s decision to go higher.
Marko your sign made it on ctvnews.
Further to that, with the public trust and negative perception of realtors being so low, why isn’t more action being taken to clean up the profession?
My realtor seems like a nice guy, but I’ve adopted the current public perception and don’t trust the guy at all. Wouldn’t it be nice if the current challenges with the market were purely market conditions?
The compensation system is fundamentally flawed in my opinion. If I offered a package to buyers where I invoiced them $50 per hour for my work (and rebated 100% of the commission when they purchased) absolutely no one would go for it even thought the average buyer would save thousands. Getting a bill every two weeks would just stress people out. With my theortically model an agent would have no incentive for you to buy asap.
The status quo model creates a huge problem in that over the course of my career I’ve had to offload the cost of my worst clients (buyers that you show 100 houses over two years to and they decide to buy in Nanaimo) on to my best clients (buy the 5th home they view). It’s not a fair system.
On the selling side, no one to blame other than the public? There are so many discount models that work, especially in this market, that sellers simply aren’t embracing.
It’s kind of like buying a mutual fund with a 2% MER….no one is forcing you to do it. If you can’t do a bit of Google searching to educate yourself and you want to pay 2% MER for the next 30 years your call. Don’t blame financial adviser Bob and XYZ Investment Group.
The question is not whether the market will turn at some point, because it will but rather will it just do a small dip and then plateau or a real crash down.
Reasonfirst @ 3:15
Touché!
There are a number of drawbacks to auctions and by their very nature they exclude conditions.
To be honest i would feel very uncomfortable bidding a lot over asking. the thought that i had overpaid by a 100k would keep me up at night. By in some ways that has always been the case. You never know if the owner would have taken less if you bargained harder.
South Jubilee – Anything in the coveted ‘Red Barn zone’ gets snapped up quickly.
Not much for sale on my hood of South Jubilee. A wonderful neighborhood. Two houses on Davie went quickly late last year.
“It seems whenever markets are hot like 2003-2007 or right now it doesn’t seem possible that they can turn, but they do.”
It will turn, obviously. But not for quite a few months, given what we’re seeing. This may well be the last leg higher, but I have a feeling it’s going to be a big one.
Yew Street, judging by the photos has the windows lined along the back and facing into the backyard. It is not a large house so this arrangement works out well. While the house was built in 1946 it does look like it has some upgrades. It has the advantage of being in the core and in a reasonable neighbourhood.
Considering the lack of starter homes in the core I suspect it will sell quickly. If it is not gone in ten days that would tell something.
I dont know the pricing in that area but 550 strikes me as bit low.I have a hard time imagining anyone offering 200k over asking when you are starting at 550. Should interesting.
I make incredibly detailed spreadsheets because I’m weird, not to save money.
Further to that, with the public trust and negative perception of realtors being so low, why isn’t more action being taken to clean up the profession?
My realtor seems like a nice guy, but I’ve adopted the current public perception and don’t trust the guy at all. Wouldn’t it be nice if the current challenges with the market were purely market conditions?
Isn’t it discouraging being referred to as “used car salesmen, etc”?
Psychology is such an important factor in our lives. No one wants to buy in a slow or down market for fear of overpaying but paying 100k more the next year is ok because you have the fear of missing out in a rising market. Interesting stuff and Data wanted human emotions. 🙂
The part that really irks me, and that is being glossed over, if that the bids over asking are what the Realtor’s are advising their clients to pay. And then the buyer doesn’t get the benefit (or demoraling knowledge) of knowing how much they overpaid because they are closed offers. The whole system is bunk.
My wife and I bid on a place a few weeks ago. We came in low with no conditions. There were two other bids, the listing agent told us, one $10,000 over ours and one $20,000. Both had more conditions and they offered it to us for the highest price if we kept our conditions. I don’t know the legality of revealing the other offers, since their supposed to be “closed”, and I don’t even know if the other Realtor was being honest. Anyways we said no.
Why are we subjected to this closed bid system? The conflict of interest if so obvious, and it puts buyers at such a disadvantage. And it only feeds the FOMO, inflates prices further, and pads Agent’s pocket books. This favoritism to the real estate industry needs some real exposure and Canadians as a whole need better choices.
Seriously, why not open auctions? Buyers can still compete and there’s a high level of transparency.
UPDATE ON BC HOME EQUITY PROGRAM:
Ok, so the BC Home Equity Program was launched today – and people can begin making applications. I’m getting a few lender updates, but so far no official releases as to how lenders will deal with this new program.
As I mentioned before, it looked like the insurers were either going to have to amend their current programs under ‘Non Traditional or Borrowed’ Downpayments to enable the full benefit of the program to be utilized. I just spoke with insurer reps at CMHC and Genworth and here is how this is happening:
If a borrower has less than 5% down (say 3%), the province will match their 3% (minus a $560 fee) to create a total downpayment of 6%. A premium of 3.85% will be applied.
If a borrower has a 5% downpayment, the province will match this with an additional 5% (minus the $560 fee) to create a total downpayment of 10%. Despite this, the premium will be based on the funds the borrower is bringing from savings, which is 5%. Therefore, the premium applicable is then 3.6%
If the borrower has a 10% downpayment, the province will match this up to an additional 5% (minus the $560 fee) to create a total downpayment of 15%. The insurers will allow the normal 1.8% premium to be applied in this case.
Long story short, the insurers are bending their own rules a little bit to enable this program to work to it’s full potential.
No word yet on how insurers and lenders will require the second mortgage to be debt serviced.
“I wonder how many people there are like us who would potentially list their house if things pick up a bit in the spring. Can we talk about pent-up demand in this market, does that make sense?”
Isn’t that pent up supply if you are thinking about selling?
If nothing changes re inventory and demand, this market is about to go hockey stick over the next few months.
It seems whenever markets are hot like 2003-2007 or right now it doesn’t seem possible that they can turn, but they do.
Oh yes it’s the same old low inventory, high demand based crash we keep hearing about. Yep this spring will be a death spiral of doom where no one lists, no one buys and prices dump because everyone wants to buy but can’t. You lose again bulls.
I cannot even imagine the horrendous feeling people must have about paying 30 to 60% more than last year and still not getting it.
@gwac
Lol. It’s actually not a bad house inside, but it sure is weird looking. $750k to $775k would be a stupid price, but not surprising. Sanity won’t prevail this time.
bman
750 to 775 if not higher is my guess. It is just plain stupid out there so it should go at a stupid price. Hope they have a few $$ left over to get ride of the checkers floor and maybe add some windows in the front or back not sure what the hell side of the house it is.
@Halibut
I went to the open house at 3174 Yew on Sunday because I live down the road from there, and I’m a nosy jerk. It was a zoo – I overheard buddy say that 150 people had been through in under 2 hours as he was busy trying to lock up the suite and shoe away all the busybodies.
My original guess was that it would go for between $625k and $650k, but having seen the hoards, all bets are off.
Re: “… the self-reinforcing nature of low inventory and slow sales, there’s nothing to buy so why sell”
And if prices are rising, why sell before you’ve bought — the market may get away from you before you find what you want.
However, if prices turn down, then the logical thing is to sell first, then buy, which means there could suddenly emerge a mass of inventory, each additional listing putting downward pressure on prices encouraging more people to list before prices fall further.
Interesting reading about the open houses and the over-ask sales so far this year. I feel really sorry for anyone involved. I can’t believe that this is already happening this early in the year.
With inventory close to zero (once you remove the dregs, as Barrister calls them), market conditions are far tighter than they were at the start of 2016.
If nothing changes re inventory and demand, this market is about to go hockey stick over the next few months.
Hold on tight, Hawk.
“I wonder how many people there are like us who would potentially list their house if things pick up a bit in the spring. Can we talk about pent-up demand in this market, does that make sense?”
You and I are pretty much in the same boat. We have talked about selling, but inventory is so bad, that we won’t do it right now. The effect is to keep starter properties like mine off the market. If the spring brings more balanced conditions (which I doubt), then we would consider selling.
http://bc.ctvnews.ca/video?clipId=1031318
The irony of the guy who makes incredibly detailed spreadsheets analyzing the economics of electric vs. gas vehicles informing me that life is about more than money.
Thank you. I am not infallible.
If it doesn’t already have an accepted offer, I’d love to see where 3174 Yew Street ends up. It’s underpriced but it’s exactly the type of property every first time buyer is looking for.
956 Heywood interests me. It will be a good gauge since it is dramatically overpriced. You would have to demo and build a duplex for pretty cheap to make money here.
https://www.realtor.ca/Residential/Single-Family/17363865/956-Heywood-Ave-Victoria-British-Columbia-V8V2V4
“1822 Merida Pl went for $950,000.”
Wow.. I popped by the Open House to get a gauge of what this year would look like, it was a zoo. Decent house, with a decent view and I figured it would go for somewhere around $850. $950 is nuts. Keeping an eye now on 4050 Tyne Crt to see where that one lands.
Interesting that someone mentioned the Asian interest at this Open House. I noticed mainly young families, or young people with a parent. Just goes to show how different peoples radars are tuned.
Marko – on the 20th, I would reach out to whoever you’ve been dealing with to give them a “friendly reminder”. If you feel that you are being given the run-around though, you could try filing a complaint with the Office of the Information and Privacy Commissioner: https://www.oipc.bc.ca/about/about-us/
Marko:
The big winners here are the developers. They seem to control both city councils and the provincial government. They got their hands into both provincial political parties.
I suspect that for a lot of young couples their only hope of moving up is an inheritance.
I love spending time in Croatia but the one super depressing thing is EVERYONE talks about inheritances. Inheritance is like part of general weekly discussion. Only hope for clear majority of people is waiting for their parents to die off so they can move into the property. Most people even give up on finding better jobs/career prospects and just bank on the inheritances……really sad.
Certainly, hope it does not get to be that way here.
https://www.bloomberg.com/news/articles/2016-10-25/croatia-leads-eu-in-young-adult-men-living-with-parents-chart
1822 Merida Pl went for $950,000.
Leo….you know this puts your home close to a mill 🙂
This along with the HPO rules will simply cut out the middle class from being in the game at all.
The HPO thing is driving me absolutely nuts as it is a step in screwing over the middle-class person trying to propel himself or herself to upper-middle class, but no one is noticing.
Everything is being put into place for the rich such as the new mortgage equity program….only benefits developers, but you want to work hard to build your own home with some sweat equity? Nope, government wants to put a stop to that.
Their privacy person assured me in December my FOI request would be dealt with by January 20th, 2017 and I still have nothing. Who do I go to if I have nothing in hands on the 20th?
1822 Merida Pl went for $950,000.
AG:
You may have left out those who have sold their kids for body parts in order to buy a house.
The rich get richer is a given. Pretty simple math that if prices go up 20% you will be better off if it’s a million dollar property than a 500k property. The insane risk of flipping at these prices blows my mind. This along with the HPO rules will simply cut out the middle class from being in the game at all. We are approaching the EU in this regard. No one owns detached houses in the Netherlands unless you are rich. The condos and town houses are at least built to a higher standard and are a better value than here….
“The spread between each level of housing has also grown. ”
In other words, the biggest beneficiaries are those at the top of the food chain (the big Oak Bay waterfront lots), those who have multiple rental properties, and those who have no plan to move-up or get houses for their kids.
Leo appreciate you doing this.
The range of rental suites I see range up to 50% floor area (100% of basement). But more typical to my mind is the range of 20 to 40% as most suites don’t occupy all of the basement and the house often has a second above ground floor.
I think Barrister asks the right question. is there any size threshold below which CRA would consider a self contained (but easily connected by opening a door) suite ancillary.
A secondary question. How does the rest of the property factor in? For example my tenant (when we had one) had exclusive use of only a small side yard that was about 5% of the total property area. The extensive back yard, 50% + of our total property was for our family’s exclusive use. Front access obviously shared use.
Infrequent Poster:
You make an excellent point. The spread between each level of housing has also grown. To move up it is now longer a gap of two years salary but more like five or even ten years salaries. Only because i am familiar with the area, by way of example, the prices in Rockland have almost doubled in the last three years. I suspect that for a lot of young couples their only hope of moving up is an inheritance. Time to be extra nice to the parents.
Infrequentposter: I think you are making a very important point. I suspect that many people find themselves stuck in their houses by the lack of inventory for moving up or by the cost of moving down both in terms of what you would have to pay for a smaller house but also the penalties for taking a smaller mortgage. I think what will move this market is a larger economic shock like Trumpenomics, recession, job losses etc or divorcees will get tired of their ex’s living in their basement.
Personal anecdote about low inventory.
Wife and I are thinking of listing our first house to do a bit of a move up, at least transplant to a location closer to work.
We took a quick look at what’s for sale in our price range last night and… there’s like, nothing. Nothing appealing anyways, prices seem absurd to us as young ‘move-up’-ers. To the point that my wife basically got scared-off of the idea. Thus our house will likely remain unlisted and go unsold for the foreseeable future.
It brought home to me the self-reinforcing nature of low inventory and slow sales, there’s nothing to buy so why sell, there’s no one selling so why buy, and repeat. I wonder how many people there are like us who would potentially list their house if things pick up a bit in the spring. Can we talk about pent-up demand in this market, does that make sense?
If my math is right, we have only seen an increase of inventory of about 3% in the first half of January.
I keep a very unscientific eye on South Victoria and only on SFH. I dont see a lot of houses coming onto the market in the last couple of weeks. In Uplands there are a couple of less than a month ago. The rest of Oak Bay has added only a few. Rockland has just added one. james Bay has added just one. Fairfield may have added two or three.
What I am noticing is that over half the listing are what I call the “dregs”. On the market for over a year; either vastly overpriced or with some serious issues or both.In one fashion these houses collectively make the theoretical inventory appear larger than the practical inventory. There is always a layer of dregs when looking at inventory numbers but I suspect that the dregs now make up a much higher percentage than in most years.
I agree with Leo that we must keep an eye on days on market but we also new to seperate new listing from the pile of dregs. the dregs can skewer the averages when so few listings are out there.
Only because it makes the most sense, I would wager that a structural change would include anything you could build to make the space more rentable. I.e. building a bathroom or a kitchen, entrance, etc. Limiting taxability to units where beams or major supports are moved seems arbitrary to me. If you either invested in or bought a house to rent a part of it, to me that is no different than owning 2 separate dwellings and renting one. One of those isn’t your principal residence and should be taxed as such.
As far as “small” is concerned, this one is trickier but 200 sq ft max and “socially awkward” use of the rest of seems reasonable to me. This is really what I would think the CRA means by ancillary use- use that is temporary and non specific like a friend staying with you for a period of time or something like that. There is nothing ancillary about allocating 40% of your house as a dedicated rental unit and investing 100k in it- you just built a rental property. Also, a % seems just as arbitrary since whether a house is large or small would affect the actual space rentable under the pre exemption . No matter how you slice it though, 30- 40% is not small, it is nearly as big as the rest of your average house. At the end of the day, there is probably millions in unreported taxes payable out there, which I hope gets collected.
Yes, thanks Leo! I really appreciate your looking into the issue further!
Leo:
Thank you for all the effort and work that you have put into providing us with the statistics.
As a completely separate question to the CRS perhaps you can also ask them the following:
1) If the suite is a wholly self contained unit, with both a bathroom and kitchen and a separate entrance to the outside would it always be considered subject to capital gains regardless of the percentage of the house it occupies? (In essence we are talking about a self contained apartment.
I think that this would be helpful since it would cover the majority of suites in Victoria.
Secondly:
I believe that if you start your letter by referring the CRS to the discussion on this blog it would convince them that you are not seeking an opinion on an individual house but that there is serious public confusion on the matter.that merits them providing more specific clarification.
Again thanks for all the work.
Ancillary not ancilliary 🙂
Thanks again Leo for all your thankless efforts…. If you set up paypal or a gofundme I would contribute to a full enquiry to get a clear answer. If it comes to that…. And I don’t even own a suite!