What it cost to run our house

What are the real costs to run a house?   Well there are many sites out there that will let you estimate this but often they vary widely.   Instead of an estimate, here is exactly what it cost to run our bog standard 70s Gordon Head box in 2016.  It’s about 2100 square feet with 2 adults and 2 kids upstairs, and 1 adult in the basement suite.   Primary heat is via heat pump, secondary gas furnace, 2 gas fireplaces, and a couple baseboards in the basement.  Double pane vinyl windows, 2×4 construction, and extra insulation in the attic.

On the maintenance side we actually had some expenses this year.   As luck would have it our furnace broke, the washing machine self destructed, and the hot water tank had to be replaced all at once around Christmas.  That made up the majority of the increase over two years ago when I last published one of these posts and it cost us $6743 for utilities, tax, and insurance, and another $1500 or so in maintenance.

How about last year?

MonthHydro CostGas CostWater/SewerMaintenance
January$179.25$84.11$623.00
February$136.05$71.51$270.04$79.00
March$136.04$82.47$253.00
April$105.75$50.65$68.00
May$105.75$50.89
June$62.83$46.22$309.71$36.00
July$62.84$51.08
August$55.42$44.51
September$55.43$47.91$71.00
October$102.59$51.61$315.95$39.00
November$102.60$65.61
December$235.08$72.15 $2,690.00
Totals$1,339.63$718.72$895.70 $3,859.00
Property Tax$3,248.68
Insurance$990.00
2016 Total$11,051.73

Surprisingly enough despite inflation, an extra baby in the house, and a month and a half of charging the electric car our utility costs are only up 2% since 2 years ago, thanks mostly to the cheaper gas.   Insurance was about the same for less coverage (I dialed up the deductibles) and property taxes are up 12%.

All in all to keep the house livable cost us about $920 per month.   While it seemed like quite a few things broke at once this year, there weren’t really any extraordinary maintenance expenses.   When big things like the roof or furnace need replacing those costs could go up significantly and need to be taken into account.

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187 thoughts on “What it cost to run our house

  1. As for the party of the breach being paid the overage rent on the property. You would have to take them to court and no one knows how the judge will rule.

    I would think most condo owners on hearing that their condo was rented out as an airbnb would be upset and threaten a law suit in the heat of the moment.

    Realistically though, how many condo owners are going to go to the time and expense of a law suit. I would gamble that most condo owners would chalk it up to a cost of doing business and move on.

    People that immediately go to threatening a law suit without the intention of pursing that action are kidding themselves into thinking this is scaring someone who is knowingly in breach of the contract, a person that has likely been doing this for a long time and to many other condo owners.

    It’s like pointing an empty revolver at a home intruder. All they have to do is challenge you. If the gun isn’t loaded or you are not willing to pull the trigger then don’t bring out the empty threat.

  2. I appreciate that Andy7, and I would not like my tenants subletting either without my permission.

    But that has nothing to do with morals or ethics this has to do with Contract Law.

    People have morals not businesses. Some organizations adhere to a Code of Conduct or ethics for their members with stated penalties for not adhering to specific conduct that the member has agreed on by becoming a member of that organization.

    However most businesses do not have a Code of Conduct. The free market and the courts provide the remedies for the public.

    If you have a clause in the written tenancy agreement precluding subletting then you can begin the process of eviction as the tenant breached the contract. But remember, that doesn’t mean you no longer have to follow the tenancy act regarding eviction.

    I am the LORD thy God
    No other gods before me
    No graven images or likenesses
    Not take the LORD’s name in vain
    Remember the sabbath day
    Honour thy father and thy mother
    Thou shalt not kill
    Thou shalt not commit adultery
    Thou shalt not steal
    Thou shalt not bear false witness
    Thou shalt not covet
    Thou shalt not sublet

  3. John Dollar… “Unethical? This isn’t about morals, it’s business. You may be breaking the terms of the contract by subletting the condo but that isn’t immoral or unethical. And who knows maybe the home owner doesn’t mind as long as they get the $1,700 a month and you take on the responsibilities of operating an airbnb.”

    John, I can tell you from first hand knowledge that homeowners are not happy when they find out their property is being re-rented on AirBNB without their permission, and when they find out, those tenants get the boot immediately.

    P.S. Business and morals do go together for many business owners.

  4. The amount of damages are the measure of unjust enrichment by the breach of the contract. It is a complicated set of issues set out in common law. There are a number of prerequisites that also need to be met. Simple answer, consult a very good and very experienced lawyer, Banging it around here will only make it more murky and unclear.

  5. Maybe karma is already at work through us putting the legal case out on the net…. landlords check to see what your tenants are up to! If they are Air BnB ing then you should evict them then sue them. See below for details.

  6. Dasmo, if that happened and you went after them in BC Supreme Court there’s a good chance you’d win damages because this goes beyond the tenancy agreement – AirBnB is not considered a sublet.

    “the person staying in the unit is not a sub-tenant but a short-term visitor, issues beyond the terms of the residential tenancy agreement come into play. For instance, the City of Vancouver Zoning and Development Bylaw 10.21.6, which prohibits rentals for a period of less than one month unless the unit is part of a hotel or bed and breakfast …
    the RTB has jurisdiction … up to a certain monetary amount ($25,000). The BC Supreme Court … could order that any profits wrongfully and illegally obtained in breach of a lease be returned by the breaching party to the party not in breach.”
    http://www.mackoff.ca/single-post/2015/10/20/The-era-of-%E2%80%98Airbnb%E2%80%99-Legal-Issues-around-%E2%80%98Airbnb%E2%80%99-vacation-rentals

  7. John Dollar:

    The superior courts are also courts of equity (I mean this in the legal term of the word equity). The cause of action would be breach of contract resulting in unjust enrichment. Try taking a couple of courses in contract law or better still practice for a few decades like I did. Damages with be measured by the degree of unjust enrichment along with a punitive award.

  8. Hope all your American friends don’t mind living in refugee limbo with no job chances etc. Sounds like bullshit as usual from South but maybe you can let them camp out in your backyard.

    Sorry, but there’s no quick escape to Canada for Americans

    “I am an American who has been waiting 27 months for my residency visa. Meanwhile, an immigrant applicant does not have access to Canada’s coveted health-care system, cannot legally work or study, and would find it extremely difficult just to open a bank account.

    So I’m sorry to break the news to my fellow Americans: Canada should have never been their back-up plan. Canada has its own problems and its immigration system is one of them. They should try Mexico instead.”

    https://www.google.ca/amp/montrealgazette.com/opinion/columnists/opinion-sorry-but-theres-no-quick-escape-to-canada-for-americans/amp

  9. Just out of curiosity Dasmo -what would be your damages?

    In a breach of contract, the measure of damages is the amount of money that would put the plaintiff in the position he would be in had the contract been performed.

    Since the rent was paid at the agreed amount there would be no compensatory damages to claim.

    Under the rental agreement the stipulated recourse for subletting was eviction. And that’s what you would have done.

  10. They are putting their karma portfolio at risk. If I caught my tenant doing that I would sue them for everything they made plus a large sum for putting my property at risk while potentially voiding my insurance….

  11. @ john dollar

    Funny you mention this. I’ve heard a friend of a friend is renting over 30 places in Vancouver and subletting all of them as air-bnb’s. Apparently he’s absolutely killing it, with zero risk to his personal portfolio.

  12. Out of Interest:

    I contact Bcassessment and actually found them to not only be helpful but actually very fair.

  13. Okay, Barrister I didn’t know you wanted gross sales and new listings.

    So far there has been 262 sales for the three weeks up until today. And 466 new listings for the first three weeks.

    Last January there were 522 sales for the entire month and 841 new listings.

    I’ll let you calculate the ratios. Being only 23 days into a 31 day month and looking at all types of properties and all areas there doesn’t seem to be much of a change in the sales to new listings ratio given that the error maybe (+/- 10%) since we are not at the end of the month yet.

    Today we have about 5.84 Months of Inventory (calculated using only a partial month). That will likely fall (23/31) X 5.84 to 4 Months of Inventory by the end of January which would be slightly less than January 2016 when the MOI was 4.47.

    Maybe this jibes better with some of the anecdotes you are hearing about.

  14. By the way, interesting anecdote: just talked to a tradesperson and out of the blue he mentioned how he can’t believe how fast houses are being sold right now. His friend’s place just sold in a bidding war.

    Barrister, you’re right – inventory seems to be at a crazy low point. Maybe things will ease up in the spring with more homes for sale.

  15. The fact is that both legal & illegal B&Bs/vacation rentals existed before AirBnB (I checked my vacation rentals with a business registry). A lot of people want a level playing field for all (including the hope that operators follow tax rules & healthy/safety rules. Without a license, yes, you’re not going to be visited by a health inspector, to the detriment of the travelling public.)

    Not every neighbourhood should have a B&B or vacation rental. In approving any re-zoning, matters under consideration are:
    · the impact on local parking
    · the impact on the stock of affordable housing
    · the numbers of similar business in the neighbourhood.
    http://www.victoria.ca/assets/Departments/Planning~Development/Development~Services/Documents/regulations-bed-breakfast-guidelines.pdf

    Another fact is that AirBnB isn’t running a B&B business – it’s running a virtual hotel empire. It’s very actively encouraging people to flout zoning laws and convert apartment buildings & homes from long-term rentals to short term vacation rentals – on massive scales. “One enterprising AirBnB impresario, Jon Wheatley, even posted a step-by-step guide for buying apartments for the purpose of running a remotely-managed AirBnB listing … [Example] If the new landlord converts the building into AirBnB units, Coldwell Banker estimates they could expect to bring in more than $477,000 per year, assuming a 67 percent occupancy rate. The projected rate of return under the Morrison’s residential configuration is estimated to be 5.6 percent, while the projected rate of return for configuring the Morrison as an AirBnB building is 13 percent.”
    “the challenges inherent to enforcing the zoning code on more than 11,000 AirBnB units has allowed these sorts of bootleg boutiques to proliferate unchecked throughout Los
    Angeles neighborhoods.”
    http://www.laane.org/wp-content/uploads/2015/03/AirBnB-Final.pdf

  16. You can ask permission. If the owner doesn’t mind then there is not a problem with the rental agreement/contract.

    In Quebec not only do you need permission, even with permission you cannot re-rent for a profit. http://www.cbc.ca/news/canada/montreal/airbnb-quebec-rental-board-1.3575137

    In some places a tenant might have to turn over the profits to the landlord.
    http://www.thelocal.fr/20160415/tenants-forced-to-pay-landlords-after-illegal-airbnb-rentals

  17. South:

    You are right, saying that it is too early to tell how the spring market is shaping up, is definitely extreme.
    I agree that Marko has a better handle than I do on the overall market although his viewpoint might be limited to a defined market segment.

    I actually dont have a strong opinion on where the market is headed, I leave that to people who are much smarter than me to operate their crystal ball.

    Gross number of sales seem to be shaping up to be less than last January. At the same time the gross number of new listings also seem to be less. If this might indicate anything it leans to another strong year for prices. Again, it is too early in the year to predict the spring market. How is that for an extreme view.

  18. Unethical? This isn’t about morals, it’s business.

    You may be breaking the terms of the contract by subletting the condo but that isn’t immoral or unethical. And who knows maybe the home owner doesn’t mind as long as they get the $1,700 a month and you take on the responsibilities of operating an airbnb.

  19. Johnny Dollar:

    I should have been clearer. I was referring to sales to new listing ratio and not the overall listing ratio.
    I was using Marko’s numbers.

  20. The Hotel Keepers Act and Health Act apply to any overnight accommodation.

    The Hotel Keepers Act applies to all boarding accommodation including Airbnb by the definition. You don’t need to be registered or licensed. All it does is allow hosts to put a lien on guest bags for non-payment and require hosts to stop fighting of guests if requested to do so by a peace officer. Non-payment is not really an issue for Airbnb or VRBO.
    http://www.bclaws.ca/civix/document/id/complete/statreg/96206_01

    As far as the licensing of short-term rentals go, very few places either permit this at all – limiting it to B&Bs. More rural places have no prohibitions. In Sooke if you are renting out no more than three rooms as a B&B or through Airbnb it is all legal.

    What “Health Act”? Do you mean the public health act? If so, a health inspector can inspect any business or dwelling in BC. There is nothing that particularly applies to “short-term rentals”. They don’t go around inspecting them as part of a licensing program.

    Fact is you could probably count on one hand the place where you can get a licence for short-term rentals – you need to fall within the B&B use if there is any such regulation. I know because my best friend has a licensed short term rental in another jurisdiction. There was no requirement for additional inspections other than the initial building code compliance for a legal secondary suite. All she had to do was pay a $200 tourism fee and a $175 business licence fee. End of story and end of regulation and addressing of “safety” issues.

    I would bet money that 99% of the whole house VRBOs in Canada are unlicensed and unregulated uses which may or may not be legal. The “as far as I know” argument doesn’t get you very far and when you start looking at it all short-term rentals other than commercial enterprises in hotels are likely to be the same as what is offered on Airbnb.

    Airbnb just got really successful and became a target for a number of competitive and other reasons (such as impact on vacancy rates). People offering homes on Airbnb are not at some great competitive advantage vis a vis VRBO or other short-term rentals. Their competitive advantage is that this is a home they own and they probably weren’t counting on the income to make a living – and still aren’t.

  21. Whenever I’ve used AirBnB it’s to stay in newish downtown condos that are definitely substitutes for hotel rooms. And most of the time it’s looked to me as though the owners rent the places out all the time — they’re not vacation homes. That’s pretty different from the situation that totoro describes.

  22. Do you have to own a condo to rent it out as an airbnb?

    I wonder if it is plausible that some of the condos on long term leases are being sublet as airbnb’s? If you are renting a condo for $1,700 a month but can get $2,700 a month as an airbnb what would stop you from doing so? Take out half a dozen leases on condos with absentee landlords and you are making some good money.

    The owner of the condo could find out and evict you but that’s not much of a hardship.

  23. @ John Dollar,

    Then don’t even respond to him… And, thanks for posting the stats! Much appreciated.

  24. Totoro, the point about the houses and cabins was that they were available from their own web sites and through VRBO – to show that there were choices long before AirBnB – not whether they were legal, although as far as I know they were – some places in US vacation spots are very different in terms of land use.

    They may not use the term B&B, they may call it “vacation rental” but they are still licensed as short term rentals and are taxed accordingly. The term B&B has been used too casually I agree. In that case, then AirBnB should call them vacation rentals and ensure they are licensed.

    That doesn’t change the fact that there are laws and rules for good reasons and everyone needs to have a level playing field.

    The Hotel Keepers Act and Health Act apply to any overnight accommodation. See Small Business BC.

  25. Condos are doing very well this January.

    Just looking at pre-owned condos there are only 191 active listings. 97 new listings and 64 sales in the last three weeks. Average days to sell is 32.

    Last January there were 363 active listings, 178 new listings and 88 sales. Average days to sell was 55.

    Again this makes sense as buyers that are priced out of the city’s single family market and still want to stay in the core are only left with buying a condo or other multi-family style home in a complex.

  26. Barrister: you seem to jump quickly from extreme viewpoint to viewpoint based on very small anecdotal evidence. Bored maybe? Need to see some action?

    “Johnny Dollar”: Hi Just Jack, back to your old ways are we? The old throw some numbers out then always always conclude that the market is about to crash. This is year 10 of doing this on this blog, is that why the name change, once a decade?

    From all I’ve seen, and actual people on the ground aka Marko. This market has a massive backlog of buyers and the lowest inventory in history.

    BTW. I know 2 families that are moving here from the USA: anecdotal, but they are not the only ones seeing housing as very cheap here, and a favourable social environment.

  27. We rented those full-house and cabin B&Bs through their own web sites or VRBO.

    They were all licensed B&Bs? Highly doubt it – they don’t even fit the definition of B&B in Victoria which is fairly standard in BC for a city and requires the owner to live in the property:

    To qualify, the operator must live in a detached (single family) dwelling and rent no
    more than two bedrooms.

    Further, to meet the definition you must serve breakfast and have it included in the room rate.
    http://www.bcsbestbnbs.com/bcbedbreakfasts.php

    Not to mention you don’t even need licensing in British Columbia in any event. Some cities might require a business licence.
    https://www.bbcanada.com/bb_faq.cfm?id=2061

    Other municipalities may have an alternate definition that permits more rooms.

    B&Bs here don’t even pay a hotel tax unless they rent out four or more rooms.

    B&Bs may cost less than a hotel, especially when you consider most have fewer taxes applied
    http://www.canadabbhosts.com/faqs.htm

    My guess is you were staying in the exact type of house now offered on Airbnb – an unregulated and unlicensed use of a privately owned home that may contravene local bylaws and was not remitting hotel taxes. In more remote areas re. cabins it was probably legal.

    It’s not over-regulation to expect certain health and safety standards for the travelling public

    I also see no evidence of specific health and safety standards being applied to B&Bs? Do you have some?

    as well as ensuring the safety of neighborhoods by limiting number of B&Bs (extra traffic, strangers frequenting kid-friendly streets, etc).

    There is no limitation on the number of B&Bs permitted currently, although rezoning might be required in some areas and a parking spot is required. In other areas like Sooke anyone can operated a B&B provided they have no more than three rooms or a certain square footage used for this purpose. Not sure what the real risk is anyway when people have family and friends visit all the time and paying guests are far less likely to be an issue than other folk.

    Perhaps the B&B complaints are overstated?

  28. Barrister, when you write about the sales to listings ratio being the same as last year. Are you talking about houses in your area or all types of properties in all areas?

    I’m sure Marko is talking about the latter while you might just be looking at houses in Rockland.

    There are about 212 activing house listings in just Saanich East, Victoria and Oak Bay for the first 3 weeks of January. 78 new listings since the beginning of the year and 35 sales. And the average days to sell a house in these three neighborhoods is 29.

    Last January active listings were 237 for the entire month. New listings were 124 and sales were 82 and the average days on market was 38

    For just 3 weeks into the month, I don’t think we are doing that bad. I suspect that by the end of the month we may have the highest Months of Inventory in Saanich East, Victoria and Oak Bay for houses in the last two years.

    And that makes sense as we have higher prices and fewer buyers than last year at this time. Of course there could be a surge of buyers in the next week that could change those numbers. But unless the Oil patch lays off more workers and they flock here to buy or more out of town retirees choose to buy houses in Victoria, I don’t see that happening.

  29. Whatever happened with 3174 Yew Street? Im surprised it hasn’t sold yet but maybe someone with a PCS account has more info?

  30. We rented those full-house and cabin B&Bs through their own web sites or VRBO. It’s not over-regulation to expect certain health and safety standards for the travelling public, as well as ensuring the safety of neighborhoods by limiting number of B&Bs (extra traffic, strangers frequenting kid-friendly streets, etc).

    There’s no comparison to HPO exam, which is an incredible waste of taxpayer dollars – there were already plenty of inspections and rules/regs already in place to level the playing field.

    Speaking of HPO, the gov’t could have hired 5 project consultants to assist owner builders if the gov’t really thought there was a problem or more education was required. Instead they introduced a useless exam.

  31. Is that the townhouse?

    Different home. The townhome had a lot of offers too but I don’t think it was 20.

    I showed the townhome and it was the craziest scene I’ve ever seen. The lane literally became completely plugged with cars.

  32. Marko:
    “Interestingly enough the home with 20+ offers in Gordon Head the other week has no pre-inspections so not a scientific measure.”

    Is that the townhouse?

    I saw that it sold for $660k. That makes so little financial sense to me. First you bid $150k over asking (sure, it was listed under assessed), the property taxes according to the listing were $3k (same as a SFH), and then you’re paying $400/month in strata fees and tied to strata bylaws.

    Is Gordon Head so desirable that you wouldn’t go out to the Gorge?

  33. Totoro, AirBnB is not a new technology (a fancy web site is not a new technology). Traditional B&Bs with full houses and yards had web sites long before AirBnB started. Millions of people used them.

    Really? I’d have to disagree.

    We have travelled a lot in the last 25 years and there were not lots of full house B&Bs prior to Airbnb unless you are referring to something like VRBO which does not require homes to be licensed as B&Bs and is basically the same as Airbnb without as much renting of rooms?

    Airbnb took the concept and created a very successful platform so maybe you are objecting to terminology – maybe a different platform and program is better. It is certainly far different from a webpage and created the ability for everyday folks to rent out their homes with support, confirmed payment, insurance and reviews.

    has worked with apartment building owners to sell their buildings based on the ROI of converting it to a virtual hotel, thereby taking all those apts off the rental market.

    That is something that could be regulated if it is occurring. It still doesn’t mean you have to impose hotel regulations on home-sharing or even home-swapping (which costs nothing except membership) – I don’t see the safety issues myself. And LA just collected 13 million in taxes in six months from Airbnb and is using some of the funds to address homelessness: http://la.curbed.com/2017/1/19/14330406/los-angeles-airbnb-taxes-homelessness-affordable-housing

    Other cities have banned Airbnb citing impact on housing stock. I think that is fine, we won’t rent there, but I still don’t believe existing hotel regulations are at all useful for Airbnb rentals. It would be another HPO do it because a lobby group has complained move. Pretty sure that that the “even playing field” argument was heavily used by bigger builders to propel the HPO fiasco.

  34. Totoro, AirBnB is not a new technology (a fancy web site is not a new technology). Traditional B&Bs with full houses and yards had web sites long before AirBnB started. Millions of people used them.

    I support equal taxation, fees, and laws around all types of B&Bs. The only reason why AirBnB became so popular and negatively impacted rental market is because it’s cheaper for owners (they don’t have to follow the same rules/laws) and AirBnB has worked with apartment building owners to sell their buildings based on the ROI of converting it to a virtual hotel, thereby taking all those apts off the rental market.

    Lots of studies and proof on this such as LAANE in Los Angeles. http://www.laane.org

    Search for laane los angeles airbnb study

  35. Saw a few real estate agents but not a single buyer walk through. Obviously not a scientific measure but neither are business cards.

    In this market not too many agents have time to go walk-through homes without clients. I would say from experience 90% of business cards would have been accompanied by a buyer. There are some x-factors such as a home being on a “realtor tour,” and 10 cards being dropped off all at once without buyers.

    I have three clients writing offers this week and so far the situation is one house has had two pre-inspection, one three, and one four. i.e., when buyers are doing pre-inspections they are typically going unconditional at the offer deadline.

    Interestingly enough the home with 20+ offers in Gordon Head the other week has no pre-inspections so not a scientific measure.

    January in terms of interest per half decent house is probably worse than at any point last year.

  36. You are missing the point; Bed and Breakfasts are often identical to AirB&B so why are we regulating and taxing one and not the other. Maybe neither should taxed. maybe hotels should not be taxed either.

    I’m not missing the point I don’t think? I stated I see zero point to applying hotel regulations to Airbnbs and they are not identical to B&Bs usually – many Airbnbs are not business-like with B&B-style amenities or cleaning standards but they are budget options and guests are looking to home-share a typical house, not something set up as a B&B. I’ve stayed in lots of B&Bs and there is usually a guest dining area with a bedroom and separate bathroom for each guest suite and you are “served”.

    And I do think they should be taxed, as I stated below:

    I do agree that Airbnb should be remitting municipal taxes on each reservation.

    I don’t see much of a reason to heavily regulate B&Bs except that they are not subject to comprehensive guest reviews like Airbnbs and a negative experience could impact tourism. And B&Bs are not supported by a complaints system that has the power to immediately address a guest issue like Airbnb is so maybe there needs to be third party regulation.

    That and I guess if they serve food and probably the reason they are regulated as they are is because of the influence of the hotel industry wanting an “even playing field” in most cases. Prior to internet reviews I think regulation was far more important.

  37. Marko

    Thank you for the January numbers. The only conclusion I am coming to is that we will continue to have a historically low amount of inventory this year.

  38. Totoro:

    You are missing the point; Bed and Breakfasts are often identical to AirB&B so why are we regulating and taxing one and not the other. Maybe neither should taxed. maybe hotels should not be taxed either.

  39. Marko:

    The business cards are nice but I went through a few open houses this weekend and I saw agents, who left their cards, but no clients with them. I went down to the new house on Rockland because they were asking the same that I paid for my house three years ago just to compare. Was there with a friend whose hobby is browsing open houses so I was there for a while. Saw a few real estate agents but not a single buyer walk through. Obviously not a scientific measure but neither are business cards.

    Basically, I think it is too early in the spring market to tell. But how many serious buyers do you have that can afford the prices but are waiting for the right house.

  40. Most B&B’ have the owner in them. They are not professional hotels. A number of them have simply converted into AirBnB. A lot of the AirB&b’s are full houses of rentals and no owners living there.

    There are lots of Airbnb that are home sharing with owners. People rent out rooms and it is a good way for, example, my son to meet people abroad. I personally don’t want to do this. I like a full house to myself. Hotels don’t offer this. Airbnb are not hotel rooms – they are, in our experience, vacation homes rented by the families that own them. They are taking some of the hotel market because people prefer more space for less money. They are also making conventional B&Bs much less attractive due to the price differential.

    I like staying in residential areas rather than downtown too. I don’t want to be cordoned off into a tourist zone. I also spend money in restaurants in other areas. We would not travel as much without Airbnb or spend our money in these neighbourhoods.

    My take is that Airbnb increases travel and spending on travel overall. We’ve also tried home-swapping and enjoyed it but it is a lot of cleaning and prepping before you go and there are many other details to attend to. But it is free almost.

  41. Dasmo:

    I am sure that it sucks for that family but it is also in the nature of renting. It is why people like yourself buy houses. But like you said your tenants knew it was not a ten year lease when they rented.

  42. Sales to new listing ratio seems to be much like last year but both sales and listings are down a bit. Is it just a lack of inventory or is it also less buyers?

    I am seeing 50+ business cards at some listings, doubt it is less buyers.

  43. Most B&B’ have the owner in them. They are not professional hotels. A number of them have simply converted into AirBnB. A lot of the AirB&b’s are full houses of rentals and no owners living there.

  44. Sales to new listing ratio seems to be much like last year but both sales and listings are down a bit. Is it just a lack of inventory or is it also less buyers?

  45. Those laws are in place for a reason…

    Maybe, but airbnbs are basically rental units or in house rooms and I see zero reason to regulate them as a B&B to “level the playing field”. People are not expecting a hotel, they are expecting a regular home. We don’t require grab bars in rental houses in Victoria or apply food safety regulations to places where people live and cook their own food. The “laws are there for a reason” argument is basically the justification for the HPO exam.

    I far prefer staying in Airbnb to a conventional B&B because it is a home: less expensive, greater space, and peer reviews that point out issues or flaws in advance. I feel quite confident that the risks I take on are minimal with this system and less than simply renting a home from CL – I know if there is a serious issue with a place I’ll get a refund and be placed in an alternate spot.

    I can’t take my dog and kids to a B&B and have completely separate space with a yard and kitchen like I can with Airbnb. Such a place would have cost a fortune before. I have a kid overseas right now and I was able to book him an Airbnb with peer reviews in a great area for a price he and his buddy could afford in ten minutes from my couch. Historically a B&B in this country would have required language skills and even booking online now these places are 4-8X the price.

    I agree that Airbnb has impacted the viability of conventional B&Bs in BC. That is a side-effect of technology imo and if I had a B&B I might choose to sell it or turn it into share-purchase. Values around here are so high I don’t see that there are not options.

    Same situation with uber and taxis, commercial office space declining due to worker mobility, and online books. The key with technology is adapting to the change, not protesting how unfair it is. And things are going to continue to change pretty quickly imo.

    There are going to be workers setting up in Airbnbs in Thailand, Vietnam, Malaysia or Mexico earning Canadian salaries and paying a fraction of the cost to live while they rent out their microloft in Canada. There will be multi-generational housing built as kids get priced out. There will be smaller living spaces and people will be working less if they learn how to adapt to technology.

    Right now we are considering spending a month in Chiang Mai – look at what you can get on Airbnb for $587 including pool, gym, wifi and garden. Maybe Hawk will relocate his apartment and start making more 500%s. https://www.airbnb.ca/rooms/8506716?checkin=01-11-2017&checkout=30-11-2017&guests=2&adults=2&children=0&infants=0&s=zE88wsP0

    I do agree that Airbnb should be remitting municipal taxes on each reservation. Maybe Airbnbs will be prohibited in places but, if they are, we’ll just move on to a different spot for our holidays. We would not otherwise use a B&B so we are not removing any $ from this market.

  46. AG, yes I think they should be subject to the same health/safety laws. Those laws are in place for a reason – to prevent injuries (or worse) that have actually happened in the past. We don’t need to reinvent the wheel and wait years for proof of serious problems at some AirBnBs. Those reviews don’t address safety. There’s a reason why hotels have grab bars in bathrooms (broken backs from dangerously slippery surfaces), fire escape plans, and food safety regulations – because guests have suffered the consequences of those things being absent, for which no amount of money can make up for.

  47. @ Barrister, My tenants were great. I don’t feel too bad about giving them the boot because they knew it wasn’t long term and I was giving them a deal. But it still sucks to impact someones life like this. They are a family that will probably have to move out of Victoria because of the bump in rent for them to have the same living standard. There is also a responsibility with being a landlord. We had bad tenants before and thankfully they left after about 4 months but that just seemed like a learning experience. This just sucks for this family…..

  48. Victoria Real Estate Board

    Mon Jan 23, 2016:

    Jan Jan
    2017 2016
    Net Unconditional Sales: 275 539
    New Listings: 509 934
    Active Listings: 1,502 2,471

    Please Note

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

  49. AG

    How are Air Band B’s much different than running a bed and breakfast? I think they are looking for a level playing field.

  50. Vicbot:

    Got the clear impression that they are thinking of firing the staff and closing down for a long period and taking their first real holidays in twenty years. I am not sure how they plan on doing the transition. I know that they worry about the two people working for them but they are starting to really get angry that the law seems to be selectively applied to some and not to others. I suspect that they really have a point.

  51. “AirBnBs should be subject to the same safety and health laws”

    Should they, though? I haven’t heard many reports of unsanitary or unsafe conditions at AirBnBs. The review system generally takes care of that. To me, it makes sense that they are regulated less.

    However, I do agree that AirBnBs should pay kind of general marketing fee to the city.

  52. Barrister, I don’t blame the B&B owner for wanting to switch to AirBnB because the way the city is dealing with AirBnB is a farce (AirBnBs should be subject to the same safety and health laws and taxes/fees) but wouldn’t they have to deal with a long process of inspections if they wanted to stop their traditional B&B?

  53. Dasmo:

    Being a landlord is really questionable these days. Not so bad if you have really great tenants; nightmare if you dont. But the return on investment is often not worth all the associated hassles. By the time you pay all the taxes and insurance it is often less profit than people think.

  54. I was talking with the owner of a B and B; they are thinking of just getting out of the business and shifting to Air B&B; they would get rid of all the business taxes; extra insurance costs and the endless stream of city regulations and inspectors. They feel that the city has allowed people to simply ignore the law and left them having to unfairly compete.

    I dont know what to think; any thoughts out there?

    Hope the weekly numbers come out today.

  55. More signs the Chinese real estate markets are about to tank when they suddenly stop reporting the numbers. Combined with yuan outflows being choked this doesn’t look good for the locals depending on foreign money to make them zillionaires.

    As Its Housing Bubble Pops, Chinese Real Estate Firms Halt Monthly Pricing Data

    Fast forward to Friday, when at least two major Chinese private providers of home price data stopped publishing the figures, just as the housing market is stating to cool off at a dramatic pace across all Tier cities. According to Reuters, the China Index Academy, a unit of U.S.-listed Fang Holdings, has stopped distributing monthly housing price index data for 100 cities that it usually issued at the start of the month. The academy said it had suspended distribution indefinitely, without giving a reason for the suspension.

    http://www.zerohedge.com/news/2017-01-20/its-housing-bubble-pops-chinese-real-estate-firms-halt-monthly-pricing-data

  56. I would tag the main issues in those emails and start to build a case that might gain some political traction around some key themes:

    Affordability – Increasing the costs to build as per that last email. Hot topic politically right now.
    Red tape – The liberals ran on reduction of red tape for years. They used to have a net zero policy on regs where if one was added another had to be removed.
    Corruption – Tying into the real estate industry being the Liberals’ top funders. This is just more evidence of some of the benefits they are getting for that money.

  57. Got some interesting perspectives on the HPO exam today, here is one of them.

    “Hi Marko,
    i found your youtube series and was relieved to finally hear other people talking about how messed up this exam is.I’m sure you’re getting lots of emails, here’s another couple of pespectives.

    1 I live in the Kootenays, and work as a carpenter. All of the houses I have built or worked on in the last 6 years since moving here have been owner built. that’s how it is in rural areas. Lots of people have the dream of moving tot he countryside and building their own house with. the help of local builders. That dream is being killed by this exam.

    2 I am not a licensed builder. The guy I work for as a result of the exam being introduced is getting licensed and it is going to cost a fortune and involve a huge amount of paperwork. We build one or two houses a year. That annual cost has to be divided between one or two projects a year, driving up the cost of a house by 5-10,000 per house overnight, let alone all the added expense of hiring a general contractor.

    I am interested in low-energy and low-impact healthy housing. I could still build houses that meet that criteria under these rules, but I will be unable to build straw-bale walls, something I have been heavily involved with. All the houses are already engineered and inspected, but the warranty providers are completely uninterested in taking on the assessment and risk of non-standard building techniques, in spite of the engineer’s approval, probably because they do not have enough data available to calculate risks. That is equivalent to ICBC saying they will not insure electric cars because they don’t understand them. Without something changing, whole fields of emerging building methods will be dead in the water.

    OK. Rant over, more fuel to the fire, as if it was needed. Thank you for your work.”

  58. 3/ Immediately increase the $450 fee to $2,000.” – Disagree. We’re already ‘fee’ed’ to death.

    My thoughts here are builders wouldn’t be able to complain about being at a disadvantage ($1,500 to $2,000 being the cost of a warranty) and the HPO could not make the claim that consumer isn’t protected at a $4 to $6 million slush fund for every approx. 80 owner-builder homes sold, or the $4 to $6 million a year could be used to improve knowledge base of the owner-builder which seems to be their other mission statement.

  59. He he. We do have to move Barrister. But sh*t flows downhill and we are taking over our rental house. It’s handy for it to become our principle residence for a while anyway. I’m glad we have a house to move into that is for sure. Our landlords had graciously offered us their other house that is only slightly smaller for $2700 a month… Sucks for our tenants because they were getting a good deal. Also makes me feel a lot less like being a landlord in the future….

  60. I don’t really get the point of HPO at all. An owner-builder is responsible for the exact same warranty as the licensed builder (2-5-10). The purchaser of a new home, regardless of who built it, is covered. There is no difference when it comes to the permitting or inspections (although owner-builders will see more scrutiny). The sub-trades may very well be exactly the same for both.

    HPO takes money to ensure that new homes are insured (by insurance companies). A home-owner-builder can call up an insurance company and ask for coverage too (in fact, this was one angle I investigated to bypass the exam).

    I believe that HPO is also responsible for tracking/administering professional development of new home builders, who are required to be HPO-licensed. Seems like most of the actual training material comes from CMHC and engineering bodies though. This part of HPO makes sense, because codes do change, best practices change, and new materials and products come on the market. But this really applies to people cranking out the homes, not a house every 10 years.

    @Marko:
    “1/ Immediately eliminate the exam.” – agree.

    “2/ Immediately introduce a minimum of 5 years to re-apply for 2nd home, 10 years for third home.” – sort of agree. Already you must wait 18 months after first year of occupancy of your first build (so 2.5 years), followed by 4 years for the next, followed by 6 years for all subsequent. So that’s already in place. Plus the CRA is putting these ‘build and move every year’ people in their cross-hairs.

    “3/ Immediately increase the $450 fee to $2,000.” – Disagree. We’re already ‘fee’ed’ to death. How about they keep charging $500 and use the money to expose the training material they already have to the general public. This is what the CMHC does – they put on webinars, have experts talk about different aspects of the building envelope etc. If you own the building code then you get emails about these and you can sign up (building code costs $250). This is actually useful and will result in better homes. Lots of pro builders on these webinars too.

    Instead, we have youtube videos for everything…

  61. Marko, that is outrageous. I understand why you’re P*SSED. Does this basically make it impossible for anyone other than a professional developer to build their own house? What on earth would be the motivation here? Political donations?

  62. “Irrational Exuberance in Canadian Real Estate

    …the data clearly indicates elevated real estate prices in Vancouver and Toronto. The prices are completely detached from local income levels. As people’s incomes have stagnated, they’ve had to borrow more and more which is exactly how households have become more leveraged.

    Some argue that foreign investment can sustain the gravy train. China is clamping down on capital controls again as its foreign exchange reserves continue to fall. Usually foreign money aka “hot money” is the first to leave when there is trouble at home.

    So what can happen in Canada?

    Incomes rise substantially to support elevated house prices. Canadian GDP is forecasted to grow in the 1%-2% range over the next few years, making significant real wage growth pretty much impossible; OR

    House prices eventually come down to reasonable valuations (i.e., income levels that support prices).

    The federal government and the Bank of Canada are stuck between a rock and a hard place. If households start paying off debt, it means less money will be spent in the economy which will slow down the economy and lead to job losses. A vicious cycle on the way down. Just as there was a vicious cycle on the way up.”

    https://financialfreedom45.com/2017/01/21/irrational-exuberance-in-canadian-real-estate/

  63. I have noticed that in the last two years that a lot of rental houses in the core have gone on the market. Dasmo, do you have to move?

  64. Our Landlords are selling the house. Curious what they will list for and what some greater fool will pay.

  65. I don’t remember that link exactly. Here is a detailed one from the US. It really depends on neighbourhood, market conditions and actual end cost of the reno. In our market right now none of it but paint, minor curb appeal stuff and obvious issues seems like it would have payback. Marko would be a good source.

    http://www.remodeling.hw.net/cost-vs-value/2017/pacific/

    You could probably download the Seattle stats for most similar conditions/ROI.

  66. @totoro I believe at one point you posted a link with analysis on which renovations are more likely to recover cost on resale… Do you still have that?

  67. Either you choose to spend it (or are forced to when the big things break) or you defer it and sell it at a lower price. From a TCO perspective probably not a huge difference.

    I think you first have to separate out necessary from discretionary. Necessary maintenance if not done can devalue a home due to further damage – like not fixing a roof leak. We do necessary maintenance as soon as we become aware of it.

    There does seem to be a big difference in ROI on various discretionary maintenance and upgrades though.

    Most of the time is better not to do them if you are planning to sell one day. It makes more sense to fix the furnace than replace it or repair the roof leak than replace the entire roof if your timeline is short. There are very few things that will result in a sales price equalling or exceeding the cost of the maintenance or repair item – only minor things like paint, decluttering or a new door do – kitchen and baths lose 20-50% of the cost on resale depending on neighbourhood/overall cost. Your main gain will be in appreciation on the land. And renovations can really get out of hand when you start opening up walls and moving plumbing/electrical.

    Bottom line is that you should not do more than necessary maintenance in most cases in our market if you are looking at things from a financial perspective – you are almost always going to lose money including the ROI on the money it cost if otherwise invested and any fees to borrow to renovate.

    We don’t stick to this rule ourselves always because esthetics are important enough to me to spend for quality of life reasons. I would stick to this rule if I was a new homeowner on a limited budget planning to sell within ten years, and there is no way our budget would be 10k a year ever.

    In my opinion, for most people who have to hire others to do work it is far cheaper to buy an already renovated home with a new roof and good perimeter drains if you can afford it. Discretionary renovations may help sell your home faster in a declining or static market.

    http://www.cbc.ca/news/10-ways-to-increase-a-home-s-value-1.857216

  68. Agree it sounds like the $500 per month or $6k per year is roughly the same as our budget of $7k even if we don’t spend it all each year. Included in that $7k are essential expenses amortized over 25 to 30 years – it’s a good idea to do that to avoid getting caught short, especially when you get emergency leaks. Water can do a lot of damage and previous owners had roof, weeping tile, gutter, and fence expenses even though they did absolutely nothing cosmetic.

    We considered ssentials to be roof, windows, furnace/water tank replacement, appliance replacement (they dont last 20 years anymore like the old ones did) and exterior painting (we have stone & siding, painting is $5k to $6k, and would cost $20k + to replace with stucco. We can try painting ourselves but it’s extremely difficult )

    Interesting on the window costs – we had to replace a lot of our 1949 originals due to bad fogging. We just got double pane vinyl for worst ones – replacements are around $15k to $20k for the whole house of approx 18 large windows. It depends on both the size of windows and the number of windows.

  69. Depending on the year built the annual cost is between 235 and 664 for home maintenance with houses built between 1980-89 costing the most. This survey only covers maintenance and not replacement. The last time I can find a survey for replacements was 1997 at a cost of between $2 and $180/year (back then) depending on age of house.

    As you said, this is where you would want to apply some common sense. Probably the respondents are not taking into account the big items that break occasionally. Your $500/month is probably accurate plus or minus 20%.

    Either you choose to spend it (or are forced to when the big things break) or you defer it and sell it at a lower price. From a TCO perspective probably not a huge difference.

  70. Marko, maybe you mentioned this and I missed it. Are there any study materials for this exam and if so how to I find them?

    This is the number #1 complaint by far with people writing this exam. No study guide (just suggestions of what to study such as the building code itself) and people who write the exam are not provided with results. You don’t know what you got wrong/right which seems kind of important if the HPO says this exam is to help owner-builders increase their knowledge base.

    Just to give you an idea when you go to city hall the inspectors are constantly opening the building code to look things up, but the exam is closed book.

  71. Marko, maybe you mentioned this and I missed it. Are there any study materials for this exam and if so how to I find them?

  72. Sorry meant to say $4 to $6 million is a lot spread over only 80 home sales.

    Wanted to add if you want to build <5 years you still could, you would just have to hire a builder.

    BTW the consquences of the exam are already starting to show even thought it was only introduced half way through 2016.

    Home Warranty Insurance Single Family Home registrations are at a 10 year high. Owner builder authorizations are the 2nd lowest they’ve been since 2002.

    i.e., people are avoiding the exam and hiring a licenced builder, or simply being forced to because they’ve been delayed so much by the exam.

  73. The HPO issue sure does stoke some emotions on this blog. Marco, I’m interested in hearing your suggestions if the exam was discontinued.

    1/ Immediately eliminate the exam.

    2/ Immediately introduce a minimum of 5 years to re-apply for 2nd home, 10 years for third home. Create panel for “special requests,” <5 years (kind of like a re-assessment panel). For example, special needs child and you need to rebuilt to accommodate. There is no good reason, on average, you should need to custom build an owner-builder home less than every 5 years.

    3/ Immediately increase the $450 fee to $2,000. Take $200 for administering the HPO owner-builder letter, place $1,800 in a special fund = Approximately $4,000,000 to $6,000,000 per year. Find some ideas in terms of using this money (i.e., legal help for owner-builders/buyers of problematic homes [no proof this is actually a problem], send a consultant inspector to each home twice during construction to help owner-builders make better decision in terms of materials, engergy eficiency, etc.).

    Let’s put it this way, with less than 80 owner-builder homes sales in all of BC per year $4 to $6 million per sold home/per year is a lot.

    As for $2,000 fee increase it would be WAY WAY cheaper than time lost due to the exam for owner-builders. If you gave owner-builders an option of $450+exam or $2,000 no exam, 99% of would go no exam. No one wants to study for months, make travel arrangements to go to another city to write exam, etc.

  74. The HPO issue sure does stoke some emotions on this blog. Marco, I’m interested in hearing your suggestions if the exam was discontinued. I liked some of caveat emptor’s ideas (list owner-builder on title, limit # of total builds allowed over lifetime, impose minimum length of time house must be principal residence.)

    This eliminates owner builders becoming spec builders themselves. If someone is looking to become a spec builder I believe they should be answerable to a regulatory body (HPO). A spec builder is in it to make money, and most complex professions require some form of oversight to protect the public and the profession itself. Just like realtors, their needs to be some form of policing, or the bad eggs will ruin it for the others.

    But If someone wants to build 3 dream homes over their lifetime, I believe there should be a way for them to do so without significant hurdles.

  75. Marko:

    I am waiting for them to extend the HPO requirement to the construction of bird houses. Birds, not being able to afford their own houses, are a vulnerable part of society and their housing requirements need to be protected.

  76. You might be right that the public won’t be interested in a news story about the HPO. And dare I say that’s in part because it primarily just impacts rich people?

    $300,000 – $1,000,000 is half the story. The other half is people trying to build 800 sq/ft cabins/recreational properties/rural.

    Just wait till they bring in an exam to build a fence….lots of material for the geniuses at HPO to design an exam. Design, fencing bylaws, structural rigidity, types of materials that can be used, law regarding property boundaries (do you put it right on property line, on your side, or neighbours side and all the consequences), conflict resolution with neighbours, etc.

    Make sense right? Since so many people get into dispute over property boundaries to introduce the exam. It will not only protect you by increasing your knowledge base but also your neighbour.

  77. “Houses are sold with deferred maintenance all the time.”

    In my under $850,000 price range I rarely see a house in the core that doesn’t need some serious maintenance. My non-expert guess is that a lot of the time houses aren’t updated until they’re sold. In other words, people tend not to see that their own house is dated and it’s only when someone new comes along that it gets a reno. I looked at a bungalow in Cad Bay last year that seemed exactly original to the 50s. I’d even venture to guess that they’d never changed the wallpaper. It was like walking into a very creepy, very dingy museum. The place sold for $950,000, though.

  78. US data shows people are spending about $3500 on maintenance and that’s without even getting into big ticket items.

    The Zillow report is an estimate for people paying for optional maintenance.

    And while DIY is often the preference of many homeowners when it comes to cleaning their home or doing yard work, those who choose to outsource find equally variable costs across the regions. Users on Thumbtack often request help for house cleaning, yard care, gutter cleaning, carpet cleaning, and pressure washing. These tasks add up to an average $3,435 per year on a national level.

    People may choose to pay for these things when we have greater income, but new home owners don’t have to pay for them as they are easy DIY and we certainly didn’t – do you? How many people here that are new homeowners pay for yard care? House cleaning presumably you’d pay as a renter or owner if that is important to you – but it is a common DIY task. We pay $120/month for this because we decided we could afford it and it was worth it to us – but didn’t have this expense early on when we had less money.

    In the US the National Association of Home Builders collects stats on the costs of home ownership every year. Depending on the year built the annual cost is between 235 and 664 for home maintenance with houses built between 1980-89 costing the most.
    http://www.nahbclassic.org/generic.aspx?sectionID=734&genericContentID=35389&channelID=311

    This survey only covers maintenance and not replacement. The last time I can find a survey for replacements was 1997 at a cost of between $2 and $180/year (back then) depending on age of house.
    http://www.nahbclassic.org/fileUpload_details.aspx?contentTypeID=3&contentID=35389&subContentID=9941&channelID=311

    I agree these numbers are low, too low if you are going to have to replace a roof, perimeter drain or oil furnace. We budget $500/month for home repairs and maintenance. We never spend it all.

    We have; however, spent a lot of money renovating and landscaping homes which was optional and something you do not have to do to keep your home liveable and in good repair and some of that money we won’t get back on resale. If maintained and good quality original components you never need to tear out and replace a kitchen or a bathroom even if you want to after watching HGTV. You might need to replace a toilet float valve or a sink faucet or unplug a drain and appliances will eventually go.

    Our 1993 vacation house is 24 years old with original appliances, bathroom and kitchen. Floors are tile in both and have lasted well. There are still the original oak cabinets and fixtures. We’ve painted and replaced a couple of light fixtures but I have no intention of updating it for HGTV esthetics as the cabinets are solid wood and everything is in good condition, including the counters. We probably should replace the fridge as it is not very energy efficient.

    We will never have to change the furnace as it has electric baseboard heat and a gas fireplace. The roof was new when I bought it. We spent money downstairs renovating and adding a legal suite – not necessary but the ROI worked out. We pay nothing for optional maintenance which as we do it ourselves and the kids help. We have paid someone to clear the fridge drain line, clear the dryer vent, unplug a toilet and rehang the blinds when we were away.

    You can spend $10,000 a year on maintenance and repairs, but you don’t have to on average, nor could the average new homeowner afford this. You might have to spend $10,000 in a single year if your perimeter drains need replacing and more than average if your home has deferred maintenance or needs a roof.

    Other stuff you can minimize by buying a home with lower maintenance costs. We avoid houses with carpet or remove it immediately. Decks are not high on my priority list as they are maintenance – I prefer ground level cement patios. Scope perimeter drains prior to purchase and make sure the land slopes from the house. We’ve never bought new, but newer houses do have lower maintenance costs.

  79. As totoro pointed out, estimating costs using lifespans and replacement costs is the way to go:

    “Basic vinyl windows cost $250, including installation, permits and haul-off, and need replacement every 30 years. If your home has 20 windows, they cost $166 per year.
    An asphalt-shingle roof on a 1,500-square-foot house will cost around $10,000 and needs to be replaced every 25 years. Your roof costs $400 per year.
    Carpet, padding, installation, haul-away and disposal costs $15 per square yard and needs replacement every 8 years. If your home needs 100 square yards of carpeting, this costs $187.50 per year.
    Apply this to everything: Water heater. HVAC. Gutters. Siding. Paint. Plumbing. Toilets. Shower valves. Countertops. Cabinets. Sink basins. Floor tile. Porches and decks. Appliances. Smoke alarms. Even outlet covers (yes, little things add up, especially when labor costs are involved).”

    US data shows people are spending about $3500 on maintenance and that’s without even getting into big ticket items. http://zillow.mediaroom.com/2015-06-17-U-S-Homeowners-Can-Spend-More-Than-9-000-Per-Year-in-Hidden-Homeownership-Costs-and-Maintenance-Expenses

  80. I think many people renovate and landscape for esthetic reasons rather than necessary maintenance or roi Nothing wrong with this if you can afford it and it is worth it to you to, say, have a pool or sunroom, even if you don’t get your money backbut it is misleading to call it maintenance.

    If it’s for aesthetic reasons it’s maintenance. You redo your kitchen and you have a kitchen at the end just like at the beginning. You might think you’re upgrading your kitchen but all you’re doing is restoring it to the current standard of technical and fashion in kitchens. You’re getting it back to the level of quality it was when it was new.

    If you’re finishing a basement, or adding a sunroom, or adding a pool that is not maintenance because you’re adding space that wasn’t there before.

    The average homeowner with an average condition house simply does not spend 10k a year on maintenance even accounting for roofs and furnaces. Based on US stats it is less than 1000 per year. This does not account for homeowner time spent – only out of pocket costs.

    Let’s see these stats, $1000/year is too low. The average homeowner probably spends half that on little odds and ends at home depot over the year fixing nothing in particular. You spend $10k on a roof and that would take care of your $1000 allocation for a decade. Not a chance.

  81. @Marko
    “On Vancouver Island and the mainland if owner-building realistically you need anywhere from $300,000 to $1,000,000 in cash”.

    You might be right that the public won’t be interested in a news story about the HPO. And dare I say that’s in part because it primarily just impacts rich people?

  82. The Bank of Canada ‘s job is to warn people of debt levels not panic them. These charts are frightening and clearly show Canada is in crash territory.

    After watching narcissist Trump being more concerned with bold faced lies about ratings instead of being the leader of the real world it’s more convincing he’s going to blow this thing up and a psychotic is at the wheel.

    http://www.macleans.ca/economy/economicanalysis/canadas-housing-market-looks-a-lot-like-the-u-s-did-in-2006/

  83. Houses are sold with deferred maintenance all the time. Many many homeowners do not replace kitchens, bathrooms, siding, windows or flooring or resurface driveways. Just look at some of the homes on realtor.ca being sold by people who have lived in them for 50 or 60 years. My grandparents managed without these renovations – ever – not even a dishwasher was added in the 35 years they lived there. And the basement remained unrenovated. The home was tidy and charming with coved ceilings and wood floors.

    People will pay more for renovated homes, the question is how much more and whether you are willing to lose part of the cost of the Reno for current quality of life benefits.

    Upgrading to silver appliances for the look or redoing kitchens if they still work fine is not necessary. Painting stucco to change the colour of the house brings additional future maintenance – unpainted pigmented or rock stucco lasts a really long time and keeps looking good.

    Some things will have to be replaced like appliances, furnaces and water heaters. These are relatively minor costs overall. Some replacements may pay for themselves eventually like increased insulation or high efficiency furnaces if you live there long enough.

    More expensive things like electrical and plumbing and perimeter drains or water lines might be unavoidable and won’t have much return. You can assess this prior to purchase to a certain extent.

    Roofs, decks and wooden stairs will need to be replaced and are part of maintenance costs imo although you might avoid this completely depending on your window of ownership. Same with things like wooden fences.

    I think many people renovate and landscape for esthetic reasons rather than necessary maintenance or roi Nothing wrong with this if you can afford it and it is worth it to you to, say, have a pool or sunroom, even if you don’t get your money backbut it is misleading to call it maintenance.

    The average homeowner with an average condition house simply does not spend 10k a year on maintenance even accounting for roofs and furnaces. Based on US stats it is less than 1000 per year. This does not account for homeowner time spent – only out of pocket costs.

    You may be an exception due to high ticket items and a short window of ownership or a home with expensive deferred maintenance or poor quality finishing.

  84. Still, debt loads and arrears in Canada today are not nearly as high as they were for U.S. households at the start of the financial crisis. For example, relative to Canadian households in 2012–14, more U.S. households in 2007 carried debt, more of those households were highly indebted and twice as many of those highly indebted households had debt service ratios of 40 per cent or more
    http://www.bankofcanada.ca/2016/02/connecting-dots-elevated-household-debt-risk/

    How does comparing the apex of the US housing bubble to old Canadian statistics make any sense? And averaging said old stats over 3 years during a substantially rising market only distorts results to the downside. A fair comparison would be the most recent year in Canada vs. 2007 in the states.

    I don’t necessarily think Canada’s in the same boat as the US was, but several markets definitely don’t pass the smell test (especially Van and the GTA — honestly, who would pay $3M to live in King? https://www.realtor.ca/Residential/Single-Family/17572777/82-CHUCK-ORMSBY-Crescent-King-Ontario-L7B0A9-King-City).

  85. SweetHome, it’s true that it’s hard to estimate the numbers. Unless you buy a new home every time you move, you’re going to spend some major money on upgrades once or twice in your lifetime.

    Agree that houses can depreciate to almost “just land value” – that’s why owning land is more important than the house itself – we all see that with the “teardowns” that people discuss here. A maintained house built in 1920 might go for more than a deteriorated one, but it all depends on market conditions when you sell (eg., a dilapidated one in 1981 may have sold for the same price as a maintained one in 1984)

    We budget $7k per year for home repairs, furnishings, and appliances – not because we’ll spend this every year, but because we want to have a contingency fund built up. Even this might be a little low in the long term – I’m still trying to sit down and analyze our actual expenses over the last year.

    Interesting that $7k is close to your $10k estimate below.

  86. Then there is the interior: new flooring, bathrooms, cupboards, etc. Some people call it “cosmetic”, but there is a lifespan beyond which they become unusable.

    Completely agree. I’ve argued this to death on here. When you redo the floors that is maintenance. Even if you upgrade from laminate to hardwood. When you redo the kitchen that is maintenance, even if it now has fancy stainless appliances.

    So usually people spend a grand a year and think it doesn’t cost much to maintain a house. Then every 10 years they spend $70,000 on doing a major reno and don’t consider that maintenance, but rathe improvements (when in fact most of what you are doing is catching up on deferred maintenance). Fact is all that needs to be averaged into the cost of maintaining the house. You either spend the money, you spend the time, or you defer it until you sell (and pay in a lower sales price). There are smarter ways to do it and cheaper ways to do it (we can argue endlessly about whether it costs less to maintain a house or let it deteriorate until you sell it), but you can’t avoid the bulk of the cost.

  87. What do you do when your entire drain tile needs replacing, your entire siding, your entire driveway? I believe many of these things only have a 25 to 50 year lifespan. That means if you own a 40 to 60 year-old house and these things haven’t been done, you are probably looking at some major costs.

    I assess condition prior to purchase. Your home inspection will have a report on things needing attention.

    So, on top of easily calculable costs, I would add $1000 a month for a “home maintenance/eventual replacement” fund.

    The average Canadian owns five homes. Most are not going to be in one spot for 50 years. You aren’t going to get to zero. Even if you did just minimal maintenance for twenty years your land value is going to result in a net gain and houses depreciate on paper but inflation still goes to work and market value of a home may be far different than the fully depreciated cost.

    Has anyone worked out or seen a list of the average lifespan of certain components of a house and how much it costs to replace them?

    Yes.
    https://www.thisoldhouse.com/ideas/how-long-stuff-lasts
    https://www.pillartopost.com/costguide

    Capital asset management is a field of study. Basically you assess current condition and plan and budget for repair and replacement. Here is how to do it for homeowners.

    https://www.cmhc-schl.gc.ca/en/inpr/afhoce/exsoho/exsoho_005.cfm
    https://www.nachi.org/life-expectancy.htm

    As far as adding $1000/month, I’d say that is incorrect unless your building is really old and in poor condition or super large. You won’t know your number unless you go through a tangible capital asset inventory process and actually assess useful lifespan and budget for repair and replacement. Not much use of doing this for the long-term unless you are in a forever house.

    What happens if there isn’t that kind of inflation in the future?

    You mean 4% per year adjusted for inflation? I guess you’ll have a paid off house that is worth what the market will bear. I don’t lose sleep over this myself and neither should you imo if you do not have to sell. Look at the historical chart:
    https://househuntvictoria.ca/2016/03/17/a-brief-history-of-prices/

    And people have had these worries for as long as I can remember. Look back to this site in 2012!
    http://househuntvictoria.blogspot.ca/2012/01/truth.html

    Year over year, single family home prices in the VREB reporting area fell by 8.4% between December 2010 ($647,063) and December 2011 ($595,582).

    If only we could go back and buy at that price…

  88. REALTOR® Market Survey – 2016 Annual Summary

    How did the buyer finance the purchase?

    Conventional mortgage (20% or more down payment) 2382 50.0%
    High ratio mortgage (less than 20% down payment) 777 16.3%
    All cash 1133 23.8%
    Don’t know 472 9.9%
    Total Responses 4764 100.0%

    How did your buyer first learn about this property?

    The buyer located the property on a REALTOR®’s automated listing search serv 2138 45.4%
    A REALTOR® (you or another) located the property and informed the buyer 1545 32.8%
    REALTOR.ca 462 9.8%
    Your personal website 103 2.2%
    OpenHousesVictoria.ca 62 1.3%
    Other website 44 0.9%
    Real estate sign 100 2.1%
    Relative or friend 85 1.8%
    Real estate tabloid (Real Estate Victoria, The Real Estate Book, etc.) 2 0.0%
    Classified ad 7 0.1%
    Other 111 2.4%
    Don’t know 47 1.0%
    Total Responses 4706 100.0%

    The PCS system has seen a jump every single year I’ve been in business. Will probably cross the 50% barrier this year.

  89. “When big things like the roof or furnace need replacing those costs could go up significantly and need to be taken into account.”

    How do you account for the fact that your house is eventually deteriorating into having no or almost no value? Has anyone worked out or seen a list of the average lifespan of certain components of a house and how much it costs to replace them?

    The roof and furnace are relatively minor. What do you do when your entire drain tile needs replacing, your entire siding, your entire driveway? I believe many of these things only have a 25 to 50 year lifespan. That means if you own a 40 to 60 year-old house and these things haven’t been done, you are probably looking at some major costs. Then there is the interior: new flooring, bathrooms, cupboards, etc. Some people call it “cosmetic”, but there is a lifespan beyond which they become unusable.

    If you take a new building value today of $400,000 and that house stands 50 years without needing any work (which it will), that averages out to $8,000 a year in depreciation. How is that accounted for? A house that is currently 50 years-old only cost the original owners $20,000, including the lot. So, the original build cost is insignificant in terms of today’s dollars. What happens if there isn’t that kind of inflation in the future?

    I think these issues are hard to account for because there are so many variables, but I think the real cost of home maintenance is likely between $10,000 and $20,000 a year. It gets put off, it gets done piecemeal, but eventually it has to be done or the house is torn down and then you have the rebuild cost. So, on top of easily calculable costs, I would add $1000 a month for a “home maintenance/eventual replacement” fund. I’ll be interested to see if anyone agrees with me.

  90. Household debt is at record levels far surpassing the US crash. House prices here are about 9 times average income also at record levels.. Keep pumping to save your leveraged rentals totoro but reality says 70% on the edge is more than probable.

    Statscan doesn’t measure emotion and greed but their debt numbers don’t lie. Canadians are up to their ass in alligators.

    It only took 11% to crash the US market so if it’s off by a few percent it’s highly probable the market here will implode upon itself as all bubbles do and as Vancover is beginning to with Asian cash flows being cut down to a trickle. That’s massive news that can blow this up much faster. House of cards indeed.

  91. Yes, agree that the NYT calculator is not nearly as good for Canadians. So long since I used it I don’t recall why there were some issues but I do remember were issues for Canadians although it was useful in a ballpark way. A link for those considering buying here would be really helpful – like the post on housing costs!

  92. I think there is still a link to the rent vs. buy calculator that was on here by Roger. That accounted for a scenario where you rent and invest the difference in the cost of owning and compared performance on invested capital over time.

    Still the best one out there that I know of. I got halfway to making a web version of it, should finish that. Most people face the decision of buying now or buying later, not buying now or buying never which is what most calculators assume.

    The NYT calculator is neat but I don’t really understand the results to be honest.

  93. Anyone else view it this way?

    I use ROI on the amount spent overall to compare investments, including a primary residence. The tax exempt status of capital gains on a primary residence is a significant advantage. Everything is an estimate until the sale.

    I think there is still a link to the rent vs. buy calculator that was on here by Roger. That accounted for a scenario where you rent and invest the difference in the cost of owning and compared performance on invested capital over time. There is also the NYT rent v. buy calculator.

  94. my buddy’s credit counselor friend who says 70% of the borrowing masses are on the edge of going under

    I’m not advocating taking on more debt than you can afford but this statement is objectively and provably untrue. Canadians have significant equity in their home, averaging about 73 per cent of the home’s value. If the average is 73% there are nowhere near 70% of borrowers on the edge of going under.
    http://www.cba.ca/household-borrowing-in-canada

    Those most at risk are newer borrowers and those that don’t have home equity and do have significant consumer debt. A credit counsellor will have lots of experience with dealing with those who are in trouble and it is very unlikely that s/he deals with those who are not. Perhaps 70% of the marginal borrowers seen by this particular credit counsellor would be in trouble if rates rose or prices declined.

    Nevertheless, household debt was more unequally distributed within some groups of borrowers than others. Groups with a higher Gini coefficient included those who had less than a postsecondary education, unattached individuals and people in ‘other’ family types, and those with less than $50,000 in household income. Because individuals in these groups may have fewer resources to deal with debt payments, the most indebted within these groups may be more at risk of defaulting because they hold a large portion of the group debt.
    http://www.statcan.gc.ca/pub/75-001-x/2012002/article/11636-eng.htm

    A deeper dive into the characteristics of these highly indebted households reveals that, compared with less-indebted borrowers, highly indebted borrowers tend to be younger, have lower incomes and wealth and are less likely to have pursued post-secondary studies or training. Highly indebted borrowers are also disproportionately more likely to live in British Columbia, Alberta or Ontario, provinces where house prices are the highest.

    Still, debt loads and arrears in Canada today are not nearly as high as they were for U.S. households at the start of the financial crisis. For example, relative to Canadian households in 2012–14, more U.S. households in 2007 carried debt, more of those households were highly indebted and twice as many of those highly indebted households had debt service ratios of 40 per cent or more
    http://www.bankofcanada.ca/2016/02/connecting-dots-elevated-household-debt-risk/

  95. I think it’s quite true that many have had to borrow more than they would like or should, due to these high housing costs and the banks willing to lend. That’s especially true for those just ‘starting out’. Then, there are also those that treat their house like a piggy bank and go on expensive vacations w/ no savings, buy expensive cars they can’t really afford, etc. And they expect home prices to rise forever, which they likely won’t.

    Personally, I would always rather be a home owner than a renter, esp. given my long term housing time horizon. If the market goes down for a dip, I can just wait it out, and in the meantime – no landlord is ever going to evict me for a ‘reno-viction’ or some other excuse. Plus, in my freehold home, I can have any pet and no one says ‘boo’ about the color of my blinds, weather I hang up a bird feeder, or weather or not I want a vegetable garden. If I do upgrades, it doesn’t feel like wasted money.

    Buying in Oak Bay was a further hedge against housing downturns – in Oak Bay and the more sought after core area’s like Fairfield for ex., in any downturn – these are the last places to go down (if at all, they are more likely to just go flat in any downturn) and they are the first to rise in any upturn.

    Time will tell what Trump brings for us, and it may not be good – or people may be worrying un-necessarily. In the meantime I can ride it all out knowing I will never be evicted, I can continue to enjoy my home, and if for some unlikely reason I ever have to move – guess what – I bet the west shore or other outlying areas went down even more.

  96. Curious Cat,
    Always appreciate your posts. You have a solid grasp on things. As I posted before about my buddy’s credit counselor friend who says 70% of the borrowing masses are on the edge of going under. Even your best friend won’t tell you they are in financial trouble until they have no choice. Known a few.

    With Trumponomics kicking in soon it won’t come as a surprise to see tarrifs that effect job losses in every city of Canada. It’s a whole new world.

  97. To add insult to injury, there is no way the government isn’t losing bags of money on this either.

    Oh, and as someone with experience building, I would have totally failed this exam if it weren’t for Marko’s work. Marko I owe you a beer.

    They provided two reasons this exam was brought in….

    i/ Protect consumer……obviously no evidence that consumer needed to be protected.

    ii/ Increase knowledge base of the owner-builder…..by not providing a study guide or results to the exam. I wasn’t planning on working to put together a study guide but after 100+ emails of “please help, we are depserate and the HPO office won’t help,” something had to be done. Unfortunately I work 70-85 hour weeks so I don’t have the time to work on it as much as I would like but it is better than nothing offered by HPO.

    But you are right administering 2,000 exams a year is going to burn some cash…..but they can’t even do that right. A few times the exam computers have not work. People are not being re-inbursed once they fail the exam as promsied, etc., etc. -> https://www.youtube.com/watch?v=pYbl_NGLRhg

  98. In fact, I’d put money down that the average owner-built home is better than a HPO-certified spec home.

    I would put down a lot money on this. It is just common sense from so many different angles. To buy a building lot you need approximately 50% cash and than typically you need enough cash to get to lock up stage $80,000 – $200,000. On Vancouver Island and the mainland if owner-building realistically you need anywhere from $300,000 to $1,000,000 in cash. Doesn’t make sense that you would cheap out and build a crap home. I went to see a client doing an owner-builder in the Victoria core a few weeks ago and he insulated a bunch of interior walls (around bathrooms, laundry room, etc.). I’ve never ever seen a spec home with insulated interior walls. Just one of many examples.

    Now let’s shift to Happy Valley. Builder-built homes and a huge percentage of buyers would be 1st time buyers without a lot of life experience and many buying with 5% down. Unfortunately, this type of buyer is easily fooled, “yea, all our homes are OSB because it is better for the environment.” Obviously the builders are going to build to absolute MINIMUM code and all. Baseboard heating, no provisions for electric car charging in garage, etc.

    You can’t tell me that a builder-built home using framing contractor Bob and company with 10×2” josits is better in quality than a owner-builder home using framing contractor Bob and company with TJI joists.

    The owner-builder doesn’t actually do the work. You hire the same engineers and tradespeople that builders do, but on average I am betting the owner-builder is using better materials/designs/etc., and because you are building custom and not 50 homes in a row there are less 18 year old apprentices likely to be working on your home. When you do 50 homes in a row all the same it is pretty easy to train someone inexperienced to do the same thing over and over again.

  99. So far we have seen absolutely nothing indicating there was a problem that wasn’t caught by the existing checks and balances.

    There can’t be a serious problem when only 410 owner-builder homes have sold in 6.5 years in all of B.C.. I’ve sold more real estate in the same time frame as a single realtor.

    It’s interesting how many people email me AFTER they’ve passed the exam that are extremely pissed off and ask me if there is anything they can do to help re petitions, law suits, etc. You don’t see people pissed off after they pass the driver’s licencing exam. The reason people are pissed off is they’ve been delayed by a month, two, or three and they know the law of thermodynamics will not help them build a home. Over 500 emails and I’ve yet had any email me with “I learned something from this process that will help me.”

    Plus how one is supposed to learn when the HPO refused to put out a study guide and refuses to provide exam results. At 70% to pass you simply don’t know up to 30 questions that you got wrong. It’s so backass backwards it is not even funny.

  100. @islandscott – HPO owner builder authorization can be required for renovations. I haven’t ever heard of it being enforced, but the exam is very new. The wording in the legislation appears very grey – something like “new construction or substantially renovated structure”.

    This brings up an interesting point because I think it’s much harder to do a good job of a renovation than a new build. Hard to keep the vapour barrier intact etc.

  101. Might be a dumb question, but is the HPO exam required for major renovations (like adding on 2 bedrooms and a bath)? I assume the HPO is only for new homes.

    There is a family from the mainland that emailed me two months ago about this. They’ve owned their home for 32 years and as they dropped off their plans for a large addition (to accommodate their single parent child who can’t afford housing) the municipality informed them they wanted HPO. I don’t know what ever happened but being in their 60s they didn’t want to write the exam, but having lived in the community 32 years they felt comfortable enough being their on GC.

    I’ve personally built my dream home (exam doesn’t impact me) but the reason I am raising a stink is if people don’t stand up to this non-sense the HPO will think that this program is a success. When you have a successful program you apply it to other things. Soon enough you won’t be able to build a fence on your property without writing an exam.

  102. @Hawk

    I invest in stocks as well, don’t you worry about me! 🙂 Just because I recognize that my home has some value, doesn’t mean I’m relying on that for anything. The way I see it, as long as I break even, I’ll be ok. At this point in time, we are paying 21.8% of our gross income on PIT (principal+interest+prop taxes) and 20% of our income on savings (RRSP+RESP+pension contributions). Once the RRSPs are maxed out we will switch to TFSA, and then when that is maxed, non-registered investments. I’m choosing to do this, instead of upgrading my home to something newer/bigger/fancier, just like I choose to drive older vehicles that I owe nothing on instead of running to the dealership for a trade-in.

    There are a lot of people out there, including in my social circle, that spend every dollar that comes in, take $10k vacations every year, see a $10,000 salary increase as a reason to sell their house and take on an extra $200k in mortgage (don’t forget to roll in that car loan and LOC as well!) all while patting themselves on the back for contributing $3000 to their RRSPs. They may look like high rollers, driving new vehicles every 2-3 years and living in the fancy house and going to Disneyworld for the 4th time in 4 years, but their wealth is ALL in their one asset – their house. That is NOT me, and definitely NOT what I advocate or endorse.

  103. Might be a dumb question, but is the HPO exam required for major renovations (like adding on 2 bedrooms and a bath)? I assume the HPO is only for new homes.

  104. @ AG “Do you know how enormous the fixed income market is?”

    The market in US Treasuries is around half a trillion a day, isn’t it? About the same size as the London FX market in sterling, which Soros crashed on September 16, 1992, causing the pound to exit the so-called exchange rate mechanism and UK Finance Minister Normal Lamont to exit the government.

  105. AG and caveat,

    Maybe you should look at the top percentage stock winners and sectors this past year instead of continuing to post ignorant and juvenile retorts . Many are way above 500%. Oil, mining, tech, pot stocks, you know, all the main growth sectors of our economy ? Mike has posted some of them up multiples. Did you call him out to ?

    Must be a sad existence claiming to be financial experts when it was the best year in ages to make decent coin in stocks. Bummer you missed it as this year will be much tougher. 😉

  106. In all likelihood, I would get my principal payments back when I sell, so if I’m comparing it to how much it would cost to rent instead, wouldn’t it make sense to exclude it? Let’s say Hawk and I both had $80,000 in 2008, and he decided to invest it in stocks, and I used it as a downpayment on a house. Over the next 25 years I pay an additional $350k for the house (the original loan amt) and $70k in capital improvements, and then when I have no mortgage, I’m invested for $500k. If I sell it for a million dollars, then that $500k wasn’t a shelter cost, but the cost of my investment and I have a profit of $500k.

    If Hawk makes monthly contributions to his stocks equal to my prinicipal repayments, he would also have a cost basis of $500k after 25 years. The question is whether or not his stocks would be worth more, less, or the same as my theoretical $1 million. Who will end up ahead? I’m sure he would argue his stocks would beat my house, and he may be right, but as my annual costs for 2016 show, my investment allows me, for an additional $1400/mth, to also live in 1650sq ft with plenty of storage, 3 parking spaces, private outdoor space to grow my own food and a 10 min bus ride to downtown.

    Anyone else view it this way?

  107. The old Mansion on Pemberton, the one they tried to auction on TV finally sold for 1.6 million.
    A long way from the 2 mil they have been trying to get for the last two years. I am actually surprised that they got that much for it.

    Rockland is back down to six houses for sale were it was at the start of the month. Not a lot of inventory coming on but not much selling either. Most of the properties have been for sale for over three months. I suspect that none of the sellers are going to blink until a bit further into the spring market. That seems to be the status for most of South Victoria.

    Week three numbers coming up; interesting to see how the month is shaping up.

  108. I would be interested in hearing solutions that any of you may have. Or should be no regulations at all?

    There should definitely be regulation if anyone can show there is a problem. So far we have seen absolutely nothing indicating there was a problem that wasn’t caught by the existing checks and balances. Not even a single anecdote! You being in the business, can you give some concrete examples of what the problem actually is?

  109. And on the topic of housing costs – I just got my hydro bill for Jan/Feb: $650. 800 square feet. I think you can draw your own conclusions about my mansion…

  110. I wrote the HPO exam this week (got notification I passed today). It is an utter waste of time and resources. The vast majority of questions on the exam have no relation to a real-life construction site. Marko mentioned one of my questions was about the 3rd law of thermodynamics. Really? So many questions pulled from obscure sections of the building code that you’d just go a look up (or the building desk would give you the bulletin).

    @Jim Dandy – I would agree that if owner-builders were building crap, the government should step in – but this simply isn’t the case. In fact, I’d put money down that the average owner-built home is better than a HPO-certified spec home. No shortage of junk being built these days for max profit. I don’t see the government having any issue with the explosion of ‘pad’ homes in the west shore. The money for this program would be far more effective, IMHO, at the inspection stage or for a design-stage review.

    Let’s not forget that we have engineers, city planners, building inspectors, and other building professions involved in process – so you can’t just slap some boards together and call it a day (assuming you’re in a regional district). And my experience with building inspectors is that they are very thorough if they don’t have an existing relationship with you. Doing your own electrical work? You can bank on the inspector going over it with a fine tooth comb (but they rarely show up for the pros).

    To add insult to injury, there is no way the government isn’t losing bags of money on this either.

    Oh, and as someone with experience building, I would have totally failed this exam if it weren’t for Marko’s work. Marko I owe you a beer.

  111. Caveat, very well thought. I would agree with those rules 100%. No one gets screwed though and no one gets rich so would never fly….

  112. I would be interested in hearing solutions that any of you may have. Or should be no regulations at all?

    To the extent there is a problem with owner builders at all, it is the subset of owner builders who were/are building houses with the intent to sell and abusing the principal residence exemption. The current rules solve that OK but only by practically killing owner builders. I’ll admit I am not super informed on the topic, but couldn’t the government have adopted the following:
    1) Penalties on owner builders that sell within a short timeframe (say less than 3 years)
    2) Only allowed to owner build once per every 5 years and no more than two or three times total.
    3) Owner builder houses have that status listed on title

  113. I asked Hawk to give us an example of 1 stock in his portfolio that went up 500%. He couldn’t I guess.

    Could all be a simple mistake. The keys are close together. Maybe the truth is: “My portfolio went up by 500$ in the last 10 months”?

  114. Dasmo – I asked Hawk to give us an example of 1 stock in his portfolio that went up 500%. He couldn’t I guess.

  115. @Hawk, tell me again how having ten stocks is safer than having 37. I get ETFs vs individual stocks because in essence you are exposed to more stocks. How does having your eggs in less baskets equate to less risk? So all your ten stocks went up by 500% in ten months?

  116. Marco, Leo, Dasmo, and or Mike,

    Thanks for your comments on the HPO issue, I’m just getting caught up now. I certainly understand the frustration you must feel, the system is flawed without a doubt.

    Marco I followed your owner builder blog on vibrant Victoria. It looks like you built a really nice house and did it with a lot of pride and attention to detail. I see why you feel so strongly about the issue. Try not to take my opinion the wrong way. I’m all for owner builders, I just think there needs to be more accountability.

    It looks like you are considering a petition. It also looks like you are aware of the minimal impact this is likely to have (too little interest by general public and media).

    I would be interested in hearing solutions that any of you may have. Or should be no regulations at all?

  117. Knowing if the trend is up will only tell part of the story. You might also want to know how many Canadians left Victoria for the USA. We don’t know if it is a net loss or gain.

  118. Vicbot
    You are correct but I still think the CBC graphic actually adds value – immigration and real estate are correlated.

    Do we have real evidence that the trend is up? 4/29 buyers in one day isn’t that convincing.

  119. Marko – any more FOIs re the HPO planned? If you want this issue to have legs it would be good to find a whiff of scandal. For instance you could ask for records of any meetings with home builder/developer groups or you could go broader and ask for records of any consultation they did.

    Would be good to shop the story around to media. While it isn’t super sexy it might get some traction. Petition would be a good first step of course and link to the materials you received showing zero complaints.

    Story is too complicated and literally no one would care in terms of the mainstream. The average person just looks at how much their “dream home” in Happy Valley will set them back per month with a 10% downpayment. Explaining what’s going on with the HPO would be way over the head of the average person and it doesn’t directly affect them either so the media would never run it. The reason the HST was so hot is everyone could see it on their restaurant bill. Less than 2,000 people will be writing this exam in 2017 which means the other 4.5 million are not affected.

    Even the average HHV reader would way way above in terms of understanding/common sense over the average member of the public. Most people buy on emotion when they can afford to versus coming to HHV to do some research.

    There is no chance the media picks this up, it will have to be an internet petition type thing.

  120. Reasonfirst it was 2 different data sets showing different things. One was Google searches about immigration from the general US population and the other was specifically real estate inquiries (not immigration). We’ve always had US buyers interested in Canada but the trend looks to be up. My point is that might explain the surprising sell prices recently.

    You’re right though the LePage and Google data/surveys aren’t very scientific

    Another factor is the decreasing Canadian dollar.

  121. If there is an increase in American buyers in the core it will be mostly in condominium and not house sales. Since condominium sales for this month, unlike houses, in the core will likely be higher than the ten year average but still below last January’s sales volume.

    But it doesn’t really matter if the buyer is from Colwood or Chicago. What matters is that there are more buyers than sellers. Vancouver may be an example of how the market can shift easily to one where there are more sellers now than buyers. If it can happen in Vancouver, it can happen in Victoria.

  122. Marko mentioned he’s noticing more US buyers too.

    Jan 17th
    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.

  123. Reasonfirst, that CBC news story graphic shows Google searches, which shows a 1 day spike but is different from the Royal Lepage survey which tracked interest from active buyers working with realtors over 2 months. You have to look at The Province story for more details.

    Funny that CBC graphic is kind of misplaced.

  124. Good link Reasonfirst, I expect to see further price slashes and lower new listing prices in order to get the quick sale. With the Asians shut out for the most part now, it will curtail the FOMO from getting stupid. This will shut down the Vancouverites as they languish with limited buyers. Listings down, prices down, now there’s a concept.

    “A surge of new listings are needed to put downwards pressure on prices. The detached market shows this is also incorrect. Below we see new listings for Vancouver detached are down 24% year over year, second fewest new listings on record.”

  125. Is that another trusted McLeans Magazine poll Mike ? Wanting to move here, and actually doing it are two different things. There’s no more room left here anyhow according to all the bulls with everything over priced and nothing for sale for infinity and beyond….and now the Asians are all tapped out. 😉

    I missed your post Local Fool, good to see you’re all over it too. 😉

  126. according to the survey, Victoria garnered the most attention among B.C. cities from prospective U.S. home-buyers, being cited as the preferred location by approximately one third (32.1 per cent) of respondents. In comparison, one quarter (25.0 per cent) of respondents cited Greater Vancouver as the top region of interest

    Thanks, I thought I noticed more American buyers lately.

  127. No worries about the Asians coming en masse, the capital controls have almost shut down the cash flow. If you were hoarding your house for Asian big bucks I’d be dumping ASAP.

    China’s Yuan Outflows Plummet, Showing Capital Controls Pay Off

    “The flood of domestic currency out of China became more of a trickle last month, signaling that policy makers’ efforts to keep cash at home are taking effect.”

    https://www.bloomberg.com/news/articles/2017-01-20/china-s-yuan-outflows-plummet-showing-capital-controls-pay-off

  128. CS:

    Money has been cheap for a long time now. That alone does not explain the recent surge of prices in Victoria. Further to that, with previous lending practices of 40 year mortgages and 0% down (now defunct), prices would have surged years ago.

    I will admit that the cheap money has allowed the middle class to keep up with the outside influences to a certain extent, and that ability has contributed to the steep rise in prices.

  129. “Is it my imagination or have sales in Oak Bay of SFH almost ground to a halt. Does anyone know?”

    Don’t know but based on Steve Saretsky’s reckoning, detached homes in Vancouver are at the 2nd highest inventory level in history and sales were 30% below the 10 year average. Prices are off about 20% from the highs. My bear-coloured glasses tell me that with more choice in Vancouver, lower prices and slow sales, the end of the burst of Vancouver money that came to Victoria is nigh.

    http://vancitycondoguide.com/are-we-in-denial/

  130. “planning attacks on the bond market”

    Do you know how enormous the fixed income market is? No one ‘plans attacks’ on the bond market.

  131. I agree with most if not all of what Nan has to say about house price appreciation. However, it is a mistake to assume that immigration and offshore buyers are the only, or even the main, reason for ridiculously high home prices. The chief cause is money supply expansion via the private banks, enabled by a BoC rate below the inflation rate. This increases the amount people can afford to borrow, which directly impacts the amount they can pay, and therefore, the amount that they do pay. Jack up the BoC rate to 2, 3 or 4% and house prices will collapse as the interest component of mortgage payments increases, while the capital repayment component decreases. This is desirable because it makes it easier to pay down the capital early (because there’s less of it).

    In fact, a sharp increase in interest rates seems inevitable with Trump in the White House. His economic policy will generate jobs but also high inflation, which will drive up interest rates. Moreover, Soros and other sore losers in the finance community are planning attacks on the bond market, chiefly as a means to line their pockets, but also to discredit Trump’s anti-globalist policy.

    Canada will not be immune, especially since the Trudeau government seems to have no clue about negotiating a beneficial trade arrangement with the new US Administration. With most of our exports going to the US we could be caught in a massive recession combined with rising interest rates.

  132. I’m still torn about earthquake insurance. We have it but I don’t actually believe it will pay out if the big one hits.

    It seems the insurance industry does not believe we will have a big one in the next century or two. Our office building is valued at$4.2 million and the total insurance premium, including earthquake, is $8,000. Those numbers imply that the insurer expects to payout the full value of the building once in a thousand years (assuming a 50% payout ratio). Unless they’re just living dangerously, and know they’ll be unable to pay the bill if we do have a big one.

  133. To help answer your question Barrister, if Oak Bay house sales have ground to halt.

    It depends on what times you are comparing. There have been about 8 house sales so far this month in Oak Bay. Assuming that sales will continue at the same pace as the last three weeks then house sales for January will be close to the ten year average at around 12.

    But I don’t think people do that kind of comparison in their minds. I think they compare sale volumes to what has happened over the preceding months. And that shows a big change from April when house sales in Oak Bay hit 55 and have steadily dropped since then.

    Oak Bay now has around 4 months of inventory and that’s the highest it has been for a long time. And I expect the trend for increasing months of inventory and increasing days-on-the-market to continue for the next several months as high prices impose a limitation on the number of buyers.

  134. Yep, Solar gain seems to be the biggest influence. But for the overall environment of our home I would rather have filtered sun than full. Gotta think about outside time too and this way we won’t need to invest in umbrellas everywhere for our patio space…. The modelling was well worth it though. My initial take had way too much overhang to block the summer sun….

  135. “In Christchurch there are still thousands of people waiting for their insurance claims to settle 5 years after the quake. And that was a small city of 360,000.”

    I just read an article saying that 9 in 10 have been paid out in Christchurch.

    http://www.bbc.com/news/world-asia-35612298

    I have earthquake insurance because I don’t want to be on the wrong side of that fence. I do like the idea of reducing the content insurance; equally, I think I’ll need to look at replacement costs these days. 5 years ago I thought we could build a really good quality structure for $400k. Now? No.

  136. 3 index funds. Total time spend on my investments? Maybe 5 hours/year and 3 of those could easily be dropped. Match the market, don’t try to beat it. I’m still unsure of why someone would pay 1% for Garth Turner to buy those same index funds for them. If I’m going to pay money to an advisor I would expect to beat the market, not match it. I can do that myself.

  137. Even though our site is south facing, being in the trees also cripples us. It’s a very site specific thing to achieve and in the end it really doesn’t appear cost effective to me. I’ve dialled back some things since I can’t make it anyway and will need to divert cost back into mechanical.

    Good points. It likely is very site specific and if you have very little solar heating it’s going to be too difficult. A large part of passive house is letting in sun in the winter and keeping it out in the summer.
    With all the furnace trouble we’ve had I’m sure wishing we didn’t have such a big complex machine but that’s the reality for now.

  138. ask for records of any consultation they did.

    This is a good idea.

    Would be good to shop the story around to media. While it isn’t super sexy it might get some traction.

    Also good idea. The media probably doesn’t care about the owner builders, but they do care about politics and hints of… shall we say… undue influence by the construction industry which has been in the news.

  139. Once again, the guy who preaches to me that “Life is about more than money” shares a breakdown of “exactly what it costs” to run his house. I love it.

    Yes because I believe in being honest about the true costs of things like maintenance rather than saying they are insignificant. All things someone should take into account when buying.

  140. I am also diversified in real estate plus I have a nice comic collection and about 10% of my net worth in cash held within my business.
    But I can admit I am not risk averse. I enjoy Cramer but I don’t do what he says. Sometimes we are in alignment though, like his thoughts on Apple to own it not trade it. BOOYAH!

  141. I think AG was born with the silver spoon but who really cares. Owning 37 stocks when the market tanks is suicide.

    How many stocks should you own at one time?

    “Unless you’re a professional money manager, you should own no more than ten and no fewer than five stocks in your portfolio,” said the “Mad Money” host.

    http://www.cnbc.com/id/100450613

  142. Here are my annual hydro and gas, water costs for 2016.

    Hydro – $903
    Gas – $1075
    Water and Sewer – $1332

    I live in an old (1911) two story Fairfield house with a mostly finished basement. Total house size around 2700 sq. ft. The insulation has been mostly upgraded as have the windows. However, there are still a few sizeable original single pane windows. Heat is central gas furnace with supplemental baseboards in a couple of areas not reached by ducts. Stove, dryer, barbecue and hot water are all on gas as well.

    I am always amazed my costs aren’t higher considering the age and size of the house. It means the energy savings I could realize through upgrades are not that great. Though I still want to do some more upgrades (more weather-stripping, the last of the window replacements).

    My observation is that people in modern houses are more likely to keep the whole house constantly at 21 degrees. We have a programmable thermostat and let the house cool drastically during the day when we aren’t there and overnight. We also don’t heat the upstairs bedrooms when there is nobody there. So with a modern house there is a net gain in comfort that offsets some of the potential energy savings.

    Our high water consumption results from (1) six people living in the house, (2) Large lot with a lot of food garden that needs to be watered in the summer, (3) kids leaving hoses on (Grrr!).

    I think my best $ savings could come from doing better irrigation in the garden.

  143. What is ‘Diversification’
    Diversification is a risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique contends that a portfolio constructed of different kinds of investments will, on average, yield higher returns and pose a lower risk than any individual investment found within the portfolio.

    BREAKING DOWN ‘Diversification’
    Diversification strives to smooth out unsystematic risk events in a portfolio so the positive performance of some investments neutralizes the negative performance of others. Therefore, the benefits of diversification hold only if the securities in the portfolio are not perfectly correlated.
    Studies and mathematical models have shown that maintaining a well-diversified portfolio of 25 to 30 stocks yields the most cost-effective level of risk reduction. Investing in more securities yields further diversification benefits, albeit at a drastically smaller rate.

    Further diversification benefits can be gained by investing in foreign securities because they tend to be less closely correlated with domestic investments. For example, an economic downturn in the U.S. economy may not affect Japan’s economy in the same way; therefore, having Japanese investments gives an investor a small cushion of protection against losses due to an American economic downturn.

    Read more: Diversification Definition | Investopedia http://www.investopedia.com/terms/d/diversification.asp#ixzz4WKjjCFjT
    Follow us: Investopedia on Facebook

  144. @Leo, having looked at these costs closer post our debates here it has made my inability to reach a passive house standard much easier. In the end, in our climate, an active, energy efficient house is the way I am going. The added cost and hassle to get to a place where no mechanical heating would not be required is just too great for us. Even though our site is south facing, being in the trees also cripples us. It’s a very site specific thing to achieve and in the end it really doesn’t appear cost effective to me. I’ve dialled back some things since I can’t make it anyway and will need to divert cost back into mechanical.

    Thanks again HHV and Leo for being so useful to me! As well as satisfying my urge to debate and argue.

  145. Letter to the editor sounds like something Intorovert would write, but he didn’t use the race card. Let’s have prices go to Vancouver levels then we’ll do something. Life ain’t fair, markets crash, get over it.

    “it is not fair for the many people who have worked and saved and deserve to realize whatever increase in value the market will generate.”

  146. caveat,

    So bragging about your housing profits are OK but replying about stock market profits are not when one is slagged that it’s impossible that renters can’t make great money with their savings if they work hard ? Hypocrites supreme.

    You clowns live in such a bubble where no one is allowed to make money in other markets besides the maxed out housing bubble. What a sad and narrow existence.

  147. Dasmo,
    37 stocks is diversification ? Can you show me where that is a recommended investment strategy ? Where did I say single stock ? You bulls have a bizarre way of twisting the stated facts, must be the panic factor.

  148. What am I missing?

    4) Brag about your awesomeness to strangers on a blog.
    5) Get testy when it turns out they don’t lavish praise on your amazingness.

  149. Hawk please teach me how to reduce my risk. So far I got:
    1. Sell my primary residence at a perceived top (which turned out to be a bottom) and try and buy back in later after a crash (that turned out to be a hockey stick)
    2. Invest all I got on a single penny stock.
    3. Diversification is risky.
    What am I missing?

  150. New Bloomberg article claims recent Chinese Capital Controls are beginning to have an effect:

    The flood of domestic currency out of China became more of a trickle last month, signaling that policy makers’ efforts to keep cash at home are taking effect.

    An equivalent of a net $900 million worth of yuan left China via payments in December, State Administration of Foreign Exchange data showed Thursday. That’s less than 2 percent of the record amount in September, and compares with an average of $25.8 billion a month last year.

    https://www.bloomberg.com/news/articles/2017-01-20/china-s-yuan-outflows-plummet-showing-capital-controls-pay-off

  151. I also keep meticulous records of all my expenses, and I won’t break it down by month, but here are my annual totals for 2016.

    House 1940. Also 2100 sq ft, but 450 sq ft is unheated garage/storage/furnace. Source of heat is heatpump. No natural gas, and we haven’t filled the oil tank since 2008 (and it’s empty). 2 adults and one child. Energy rating for the house is 73.

    Electricity : 1244.61
    Water: 387.28
    Insurance: 1518.00 (incl. earthquake which is $660)
    Property taxes: 2131.52
    Maintenance: April – 217.65 (mulch, plants, tree pruner), May – 1647.97 (resod back lawn, sprinkler & water timer, historical heat register and door plate), June – 150.00 (cedar garden bed), July – 65.53 (mulch), December – 340.38 (garage door opener – old one died) TOTAL = 2421.53 .

    Total cost: 7702.94 or $641.91/mth

    Mortgage interest: 9035.39 or $752.95/mth

    Does this mean my shelter costs are $1394.86/mth? If so, then I’m getting a great deal!

  152. Marko – any more FOIs re the HPO planned? If you want this issue to have legs it would be good to find a whiff of scandal. For instance you could ask for records of any meetings with home builder/developer groups or you could go broader and ask for records of any consultation they did.

    Would be good to shop the story around to media. While it isn’t super sexy it might get some traction. Petition would be a good first step of course and link to the materials you received showing zero complaints.

  153. Maybe Thomas G. Wicker has no savings? My reply to him would go something like this:

    Good job saving and paying off your mortgage – just because your home is the only asset you own doesn’t mean the government should care. Wealth diversification is your problem, not the buying generations. Maybe your one asset strategy for retirement was a mistake?
    Houses do not go up over time. On average, they generally track inflation. Your lack of understanding of Real versus Nominal is not the governments problem. The 4% per year you have received in Victoria over the last 30 years is plenty.
    The government of Canada has been tampering with the real estate markets for ever, never more than the last 17 years. In fact, this is the first thing they have done that has materially impacted any Canadian market in a negative manner.
    It doesn’t matter if the tax is working or not, I don’t want people who don’t pay taxes in Canada to be able to compete against my kids for housing who do. Owning a house in Canada is a Canadian privilege and the real estate market as you describe it should be limited to Canadians, not the entire world just so you can sell at a higher price and retire more comfortably.
    The council has every right in the world to act for the greater good. You have a house, thousands of Canadians can’t get one because they are being outbid by untaxed foreign capital. Not as much in Victoria as Vancouver, but it is starting.
    Generally, I get the impression that you thought you’d won the lottery and now the government is telling you your winnings aren’t as great as you initially thought? Tough – you should have gone back to school and generated more value for society over your life instead of what you are trying to do now which is sell out Canada for your own personal gain at the expense of the next generation.
    The tax burden to support the Medical and CPP plans for the boomer generation will be burdensome enough – you can do without another windfall from your house.

    The tax should be implemented immediately, across the country, with no further discussion.

  154. Introvert:
    “Letter to the editor: Don’t rush into foreign buyer tax for Victoria”

    Such a BS letter. Appreciation of your home through foreign demand is not “working and saving” for your retirement. These 15-20% demand induced annual increases are not due to any hard work. Homes have historically appreciated at 4%, which still beats inflation.

    The writer suggests waiting several years to see the effect in Vancouver. The effect was pretty cut and dry if you look at the percentage of foreign buyers from July to August. Maybe we should wait until prices are completely nucking futs, like in Vancouver, before we react.

    I said it before, if foreign ownership isn’t a major market driver, then imposing the tax will have a negligible effect. In the meantime, millionaires and billionaires who didn’t earn their wealth in Canada shouldn’t have an unfair advantage.

  155. “Let’s see here: $10,661 at Hawk’s 500% appreciation equals…”

    You’re finally catching on Intorovert. Now all you need to do is study the bond market and how mortgage rates will be going up. 😉

  156. We have earthquake insurance – we’re in one of the “orange” areas of this map. It gives us some peace of mind.
    http://www.empr.gov.bc.ca/Mining/Geoscience/PublicationsCatalogue/Maps/GeoscienceMaps/Documents/composite_map.pdf

    Article in The Province today (explains the early start to the rise in spring sales, and is similar to Marko’s comments about the uptick in US buyers):

    U.S. Interest in Canadian Real Estate Surges Following U.S. Presidential Election http://www.theprovince.com/business/cnw/release.html?rkey=20170120C2081&filter=4007

    “Looking at the full month of November, 2016, U.S. web traffic grew 73.7 per cent year-over-year …
    according to the survey, Victoria garnered the most attention among B.C. cities from prospective U.S. home-buyers, being cited as the preferred location by approximately one third (32.1 per cent) of respondents. In comparison, one quarter (25.0 per cent) of respondents cited Greater Vancouver as the top region of interest”

  157. Also bonus: it annoys Introvert when the blog gets political.

    It only annoys me when it goes against my political views!

    What it cost to run our house

    Once again, the guy who preaches to me that “Life is about more than money” shares a breakdown of “exactly what it costs” to run his house. I love it.

    That’s a savings of $10,661 from LeoS numbers. Invested in the markets that makes for a very nice windfall.

    Let’s see here: $10,661 at Hawk’s claimed 500% appreciation equals…

  158. If I was in Oak Bay in a 1930s special I would buy earthquake insurance; however, I am in a brand new over-engineered home built on rock. My theory is if my home sustains damage in excess of the deductible the remainder of Victoria is leveled and we have loss of life to worry about. No earthquake insurance, but I would consider it if in a different property on clay base.

  159. We debated keeping earthquake insurance as well. In the end we lowered the premium by eliminating earthquake insurance on contents. I figure most stuff will survive and it also lowered the deductible, which is crazy high. Our insurance had a fixed percentage (don’t recall the exact number) of the house rebuild value for contents, but the number was way too high. We just don’t have that much expensive stuff and could replace all the breakable things easily within the difference of the deductibles.

  160. I’m still torn about earthquake insurance. We have it but I don’t actually believe it will pay out if the big one hits. Likely will cancel it once the mortgage is a bit lower.

    In Christchurch there are still thousands of people waiting for their insurance claims to settle 5 years after the quake. And that was a small city of 360,000. If the big one hits here it will be millions and millions of destroyed homes. Better to save yourself the stress and just rebuild yourself or sell and walk away.

  161. With regards to insurance costs, what is the general feeling about the need for earthquake insurance? In my case that coverage is 40% of the entire premium.

  162. My hydro bill is $65 every 2 months for a grand total of $390 a year with free heat and hot water. That’s a savings of $10,661 from LeoS numbers. Invested in the markets that makes for a very nice windfall. Toss in all the unexpected surprises and who says renting is throwing money away ?

    Dasmo,
    I’d say you’re the odd dude here. I know many investors and traders and none own anything close to 37 stocks. Your risk level is off the charts and borders on insanity. Might as well hire a monkey with a dart board.

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