The basement walls are crying

Thanks to CuriousCat for this guest post :

“If I were to buy a home today, I would walk around the home to see if there are visible plastic drain clean outs that can be accessed and have the drains checked before buying. If they are not present then I would think that eventually new drainage will have to be installed. The cost of excavating, removing concrete walks around the home’s perimeter and installing new drainage is enormous and I think a rip-off of consumers.” – John Dollar

When we bought our 1940 house, there were white PVC clean-outs around the perimeter of the home and the inspector told us that the drainage system was updated within the last 5 years. The owners stated that they had never had any moisture in the home during the 3 years they’d owned it. The house is on a slope atop of clay. They indicated on the disclosure statement that there were no moisture issues.

Two years later during a major rainfall in December it was as if someone turned on a tap behind the foundation wall. The basement was unfinished but we still had carpets, furniture, TV, and computers in the southern half, and the water was coming in through the northern wall so there was a bit of a buffer and a chance to “save” our possessions.  A lot of water was running along these channels on the perimeter of the foundation (like a concrete moat) but it was overflowing. It was about 10pm when we saw the water and using a shopvac we battled the deluge all night, getting up every 20 mins to empty the vacuum.   The water didn’t stop coming until it stopped raining, at about 8am the next morning.   That same night a neighbour had her entire basement flooded and had to go through insurance to have her furnace replaced.  We hoped it was a one-time thing, but then it happened again two years later.

Things that should have tipped us off:

  1. The concrete foundation walls and floor were painted, likely in an effort to hide water damage.
  2. The rubber interlocking tiles that the previous homeowner had left behind and we had just put our stuff over top, had this white chalky mineral under them, covering signs of efflorescence.
  3. The old carpet that had been put over a carpet pad, directly over the concrete, was moldy. We hadn’t checked under these when we had moved in.

When we had Drainscope scope our drains, they informed us that the system had all the right size pipes and that they were clear, but were in fact 6 feet away from the foundation of the house! He told us this was likely due to the homeowner not wanting to rip up the concrete sidewalk that wrapped around the house. He said, “Yeah nice system you got there, but it’s not going to stop the water coming into your house. It’s acting like a curtain drain, so it’s probably helping somewhat?”

I spent a lot of time researching all the options from curtain drains to perimeter drains to sump pumps and got multiple quotes with everyone telling me something different and providing me a different “solution”.  Finally, after all this research, I settled on an interior French drain with a sump pump. It was not the cheapest option, but it wasn’t the most expensive either.  At this point, we didn’t want to have to pay to break up the brand new concrete patio, the concrete sidewalk, or move the oil tank and heat pump from the side of the house.  I decided I would try the cheaper/easier option first and that the external option would still be available if that failed.

Island Basement Systems came and dug a trench in the basement along the north wall. It took two people one day to break up 35 feet of concrete, dig a deep sump pit, and haul away the rubble. The next day they installed a vapor barrier over the foundation wall that directs water into the drain towards the sump pump.  The water is allowed to come through the walls, flows down into the drains and into the pit.  The sump then pumps the water up through a pipe, through the wall, and ties into my drainage system. The only outside work required was to cut a small section out of the sidewalk and dig a bit of dirt for them to run the PVC pipe from the basement to the clean-out.  Two days and $3800 later I was left wondering why I hadn’t done it years earlier! (Honestly, I thought it would be a much more expensive fix!)

The benefit of this solution is that I have physical evidence that it is working. I can hear the pump when it kicks in, which is just 5-10 seconds of whooshing. It goes off so rarely, sometimes I pour water in the pit just to reassure myself it’s still operational! It is covered by a 25 year warranty with the company that installed it. And finally, because it is mechanical, if it fails, my home insurance will cover the damage, much like it would if your indoor plumbing burst. I did not get a battery backup because there usually isn’t a worry of power outages during heavy rains, so I didn’t think it was worth the extra cost. Even if the pump was not working, the system works by gravity, so the water would fill up the sump pit, which is quite deep and large, before harmlessly overflowing into the garage where it’s already sloped to flow out the garage door and down the driveway.

Just for our own peace of mind, we waited two more years before finishing the basement so we could monitor that the system worked. We removed all the rubber mats,  allowed the concrete floor to dry out and laid recycled PVC garage floor tiles as a subfloor. This allows the concrete floor to breathe and has no wood to rot. We then laid a water-resistant vinyl floor tile on top. All the walls we built we used gaskets between the pressure-treated lumber and the concrete. In some sections, we even used plywood instead of drywall, because plywood will dry out as long as it has access to air around it.

In the end, this was another challenge of buying an old house in Victoria that I hope we met successfully, but only time will tell. As long as I own this house, the memories of those two long nights vacuuming water will make me forever vigilant. Though 3 years later, a heavy rainfall warning no longer gives me anxiety, so looks like I did buy myself some peace of mind after all.

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196 thoughts on “The basement walls are crying

  1. @ Vicbot

    “I think the main cause of sweatshops is our consumer-throw-away society”

    Undoubtedly, if folks didn’t keep upgrading their cell phones there would be less work for those young people at FoxConn factories in China, you know, the ones with anti-suicide nets.

    But the reason that Apple assembles the phones in China rather than California is that the labor is cheaper than in the US and therefore the profit margin as larger.

    That’s all globalization’s is about. And that’s probably all the Lesser Trudeau is about too, collecting payoffs gifts from friends by way of the family foundation.

    When Trudeau says there is no Canadian nation he’s either being disingenuous, or he doesn’t know the meaning of the words he’s using.

  2. Barrister: It’s one thing to put up condo’s and triple the density but lets not make the same mistakes Vancouver has made. We don’t need dark ghost cities of condos unsuitable for families, like Vancouver’s Coal Harbour which is bought up by overseas (mostly Chinese) buyers.

    Rezoning large areas of James Bay/Fernwood/Fairfield and Vic West (yes sadly, good luck rezoning Oak Bay)… is a great idea. They call it ‘gentrification’ and large parts of formerly sad old grimy industrial British cities like Liverpool, Newcastle and Manchester, for ex. have now been ‘regenerated’ in this way (but now, they’re a target of the Chinese global buyers, who ever thought that would happen, the UK hasn’t done enough to stem the tide of Chinese buyers either). Let’s hope the new Chinese capital outflow controls at least help somewhat with that.

    Victoria is getting older and much of it’s housing stock is getting very old and tired, esp. by Canadian standards. There is ample opportunity for rezoning and regenerating, especially in areas near downtown or along transportation corridors.

    Unlike Vancouver, we need to make condo’s/townhouses that are more ‘family friendly’. i.e. there needs to be a lot more 3 bed or even 4 bed condo’s/and townhouses or terraced homes or duplex/triplex with gardens and like I said before – why are there no ‘freehold’ terraced houses in Canada? (like there has been in large numbers of these in the UK since the 19th century). We can especially look at the ‘freehold’ terraced (or duplex/triplex/fourplex) house as a model here because it gives families an option besides ‘strata’. Many families and people, myself included, balk at the idea of buying into a strata.

    It will require our zoning and planning people, mostly in Victoria city proper but also Esquimalt, which is ripe for regeneration – to ‘think outside the box’ and look at other options besides ‘North American norms’, and when have they ever done that? So, for now, if it doesn’t change, we are stuck with a future like Vancouver with either small or tiny condo’s (the tiny lofts in the Janion for ex. may work for some housing needs, but there are many many people who need larger condo’s than that) or overpriced SFH in the core. This condemns families to commute to the numerous quickly thrown up cookie cutter homes in the Westshore, b/c they have no other option. Let’s give them an option.

    As for the parking issue downtown, and I didn’t want to get started on this but… yes many parking lots are being replaced by residential/commercial buildings, but Lisa Helps is also hugely purporting the bike lanes – apparently, we should all go to work and have ‘helmet hair’ like her! Then, waging war on the car and even the buses with narrower lanes and ridiculously wide concrete pads (along Johnson to the boondoggle of a bridge built w/ Chinese steel), while not giving people realistic alternative options like LRT and then eliminating the train on the boondoggle bridge, for ex., which could have let people in the Westshore, at least, have another option if they ever do get a commuter train (but I don’t think they’re going to want to walk from the Roundhouse in Vic West to downtown). Yes, Lisa will say, the bridge was a ‘done deal’ before her – but the bike lanes are her legacy. Along with ‘where are the people going to go’, I say – ‘where are the cars going downtown going to go?’

  3. Barrister

    I hope you are joking. No city should model themselves from Toronto.

    That would destroy the uniqueness of Victoria.

  4. I really think we should add another 30 or 40 highrise apartment building downtown; they should be modelled after Toronto and be at least 25 stories high. That way we can catch up to all the American cities. We should start by rezoning James Bay and all of Fernwood. We have a pretty good start in Vic West but we should continue there by tripling the density of the remaining land.

  5. “(instead, Lisa Helps is just eliminating parking left right and centre, but lets not get started on that).”

    Oh let’s. Did you notice the lane sizes on the main drags like Johnson/Pandora/Fort have been narrowed to the point of no room for error in order to make a whole bike lane with cement barrier on Pandora below Douglas. Don’t even know if their legal lane sizes anymore.

    It’s getting to be a joke considering over half the bikers appear to not wear helmets anymore as it effects the image of the hipster bikers.

  6. What is going on with new listings? Last year was a 10 year low for new listings and this year we will be below that.

    Mon Jan 30, 2016:

    Jan Jan
    2017 2016
    Net Unconditional Sales: 409 539
    New Listings: 699 934
    Active Listings: 1,525 2,471

    Please Note

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

  7. (instead, Lisa Helps is just eliminating parking left right and centre, but lets not get started on that).

    Luke – all the surface parking lots being developed into buildings is a big net positive for downtown Victoria, despite the modest inconvenience of having to walk a bit further from a parking spot.

  8. “in fact there are a number of core identities in Canada”

    I think that’s what he was trying to say – there’s no 1 core identity to Canada – there are many. eg., my family are immigrants and they had to learn the history of Canada – English/French/First Nations. But an identity is more than just history – it’s a way of life that evolves over time, including support for universal health care (health as a basic human right), minority rights, women’s reproductive rights, respect for the diversity of our neighbours, etc

    In other words, we’re bigger in our way of thinking that just inside “national borders” – we look at ourselves as citizens of the globe, who want to preserve our environment and health for future generations, no matter what country they’re living in or from. We recognize that what we do impacts the rest of the world, and things that are good for us may not work in areas of extreme poverty. It’s not a “me-first” attitude.

    I think the main cause of sweatshops is our consumer-throw-away society that western gov’ts have encouraged, to keep economies going – it’s bad for third-world workers. We need to pay a higher price for those goods so that third-world workers get a fair wage, but that doesn’t mean making everything in Canada. I agree we need to do something more – but halting trade isn’t a solution.

    “I find him to be outrageously dangerous to human rights and I’m actively looking for a way to put my skill set to work against normalizing that – and plan to be at any local protests.” – Agree Totoro, same for me.

    Luke, funny Christy graphic LOL, ain’t it the truth 🙂

  9. It’s very easy to circumvent the foreign buyers tax. A numbered company with one’s BC resident lawyer the named representative (and you with the hidden beneficial interest) will do the trick and this is only one of many dodges available.
    With this in mind, is the government tracking home purchases made by business entities?

  10. Could Victoria’s flat spot in prices a few years ago have increased the rate at which non-first-time buyers were doing this, eating up inventory?

    Could be. But the rental vacancy is also incredibly low. So it’s not like suddenly the rental market was flooded with units. The current insanity in both markets has to be due to more in-migration and possibly more first time buyers driven by fear of missing out.

  11. And yes, I think we can safely say this means now the foreign tax won’t be extended to Victoria, at least not before election time in May…

    Foreign buyer data is so far delayed we will only have seen February by then.

  12. Rook – yes of course it’s too late for Vancouver. The devil is in the details – how hard is it to get a work permit in Canada? (I wouldn’t know as I was born a Canadian -UK dual national – having a parent from each country). Personally, like Leo S – I would like to see a work permit AND income above a certain level (say min amount per year). If there is no income requirement any joe blow can go out and get a work permit. (or is that any… Tony Joe?). Next question is: what is the income requirement going to be? This could get messy.

    When you say negative impact on Victoria I’m not sure what you mean?

    I’m not a fan of Christy – so you may have misinterpreted my post, and I was only really saying it was more vote grabbing by her and it seems she’s going after the large ethnic Chinese-Canadian vote (by doing this on Chinese New Year).

    And yes, I think we can safely say this means now the foreign tax won’t be extended to Victoria, at least not before election time in May…

  13. What about side- or up-sizers who kept their previous homes as rentals? I have no data (anybody?), but this is what we did 3 years ago when we were expecting our second kid, needed a bigger house and had a hunch that prices were going up after years of what seemed like relative stagnation. Could Victoria’s flat spot in prices a few years ago have increased the rate at which non-first-time buyers were doing this, eating up inventory? If so, perhaps a bunch of it will come back into play soon as flukie, amateur landlords like us try to cash in before getting sunk by rising interest rates and falling prices.

  14. Isn’t this announcement what many on this blog have been saying all along? That people who are going to work here and pay taxes shouldn’t be subject to the foreign buyer tax?

    sounds good to me. keep out the speculators, welcome the immigrants who are actually here to work and live. However I would want to see a work permit and income. Not sure if the satellite families have work permits or not.

  15. Did you notice a mad dictator just took over Mike ? It isn’t different this time, it’s the end of the line for credit debt like all previous bubbles.

  16. Hows that leverage going Mike ? Looks like the credit markets are maxed out like you. Only one to go now and it ain’t up.

  17. “Except I’m not basing my observations on what you, I or my neighbour says. It is based on national stats. ”

    You said it was “In my opinion”, not stats. Spin it like Kellyanne.

    ““In my opinion, if rates rise and house prices drop in Victoria most homeowners will be fine. ”

  18. Luke, sorry but I think you are out to lunch on old Christy Clark. It is a good move for her, definitely, but not for Vancouver or the rest of BC. I think she is too late for Vancouver. Victoria though will see the negative impact from this.
    I think we can safely say now she is going to stay away from implementing a foreign buyers tax for Victoria and the rest of BC after this move.

  19. What about downsizers

    They buy one property and make one property available. Net effect on the balance of supply and demand in the market is zero.

    side-sizers

    minus 1 unit supply when they buy
    plus 1 unit supply when they sell
    = 0

    Of course if they keep both units and rent out one then that removes supply from the market and adds it to the rental market.

    people who are counted as local but have rented after selling elsewhere?

    Those are out of town buyers and represent pure demand. They remove one unit from supply but don’t add anything. Whether they show up in the stats or not isn’t relevant to how they impact the market.

    Seems to me that population growth bringing buyers in the mid to upper range of the market is as big of a factor as first time buyers, if not more so?

    We’re saying the same thing. How does population growth impact the market? Well, either it’s people buying their first homes or it’s people moving here from other markets.
    Which factor is bigger? Well the VREB says of the buyers last year, 20% were first time home buyers. Meanwhile about 30% of buyers are from out of town (unknown how many were both). So you’re likely correct that out of town is a bigger factor than first timers, but they are broadly similar.

    On the supply side we have people selling to leave town, be that to go to another physical or ethereal destination.

  20. How does a family of median income with 5%, or even 2o%, down buy a house at the current Victoria median price, or anywhere close, if the mortgage rate is 10%? They don’t.

    We can agree on that CS. However, I think it’s unlikely that many of us see 10% rates again in our lifetime. Interest rates and inflationary cycles tend to take decades to go from cycle lows to cycle highs, regardless of who holds the oval office. And as seen below, rates may again only rise a few percent over the next ~30 years after carving out a long saucer-shaped bottom.
    Even if we were to get another 1946-’81 anomaly, that would be a bear’s inflationary nightmare. Houses that were bought here for around a $1000 at the 1940’s rate lows, went for over $100,000 at 1981’s rate highs.

  21. Thank you Mr. Barrister for your comment that the ‘Colwood Crawl’ is not that bad, when compared to Ontario or L.A. I’m sure you’re quite correct – but those are both far larger cities/Metro areas, and my thought is that is not the direction we want to head in.

    I lived in London, UK, previously, as well as Vancouver, and of course, both those cities had vehicle traffic jams far far worse than this small city. The thing about London (and a lesser extent Vancouver) that’s different from Victoria, is that people have alternative options to the car and can take trains in all directions that whisk them there in minutes. To discourage cars in Central London, they even brought in a ‘congestion charge’ if you drive into the core there. (instead, Lisa Helps is just eliminating parking left right and centre, but lets not get started on that). People in the Westshore don’t have any choices beside using the car (and the buses don’t yet have priority lanes either). So, they are condemned to sit in ever increasing traffic jams.

    While things may improve in the future… (perhaps there’ll be a train, perhaps bus lanes), the Mckenzie interchange will just encourage more vehicle use, so with unending unimpeded growth in the Westshore, and not much growth in affordable housing in the core, it just leads Victoria on a pathway to a more unsustainable future, one with increasing traffic jams to the Westshore, and one that forces families out to the Westshore and away from the Core due to increasing unaffordability and lack of quality SFH in the Core, and a lack of diverse housing choices suitable for families in the Core.

    Personally, I totally understand the premium in the cost of housing in neighbourhoods near the Core. Being much more well established, close to desirable beaches, markets, etc, and not a ‘hodgepodge’ of quickly thrown up developments like many of the cookie cutter homes in Langford, there is also more appeal than just ‘location location’.

    I attached the link you can find below… ‘Getting Growth Right’ before, but in case anyone missed it, it talks about what more could be done about moving forward in the future development of our increasingly popular city…lets try to make this paradise more accessible for more diverse groups of people.

    The Capital Region’s population is expected to grow to 442,000 in the next 20 years. Where are we going to put everyone?

    http://www.focusonvictoria.ca/janfeb-2017/getting-victorias-growth-right-by-leslie-campbell-r5/

  22. http://www.cbc.ca/news/canada/british-columbia/foreign-buyers-tax-exempt-1.3957470

    http://vancouversun.com/news/local-news/b-c-premier-christy-clark-lifts-foreign-buyers-tax-for-those-with-work-permits

    Isn’t this announcement what many on this blog have been saying all along? That people who are going to work here and pay taxes shouldn’t be subject to the foreign buyer tax? If it ever is implemented in Victoria, this should also be the case here. Good move by Christy – but of course, there is an election coming up…
    Interesting timing also, doing it at Chinese New Year.

  23. Actually the first time buyer drives most of the market. It’s the first time buyer and the out of town buyer that presents all the demand in the market. People upgrading in the same market have almost no effect.

    How so? Is it because of the requirement of new buyers to replace those that pass away?

    What about downsizers, side-sizers and people who are counted as local but have rented after selling elsewhere? I’d agree that out of town buyers can have a big impact.

    Seems to me that population growth bringing buyers in the mid to upper range of the market is as big of a factor as first time buyers, if not more so?

  24. @ Mike

    “I think what you’re overlooking is that interest rates tend to rise ‘slower’ than inflation, not faster.”

    Even if rates rise more slowly than inflation it is irrelevant to the argument.

    How does a family of median income with 5%, or even 2o%, down buy a house at the current Victoria median price, or anywhere close, if the mortgage rate is 10%? They don’t.

    And remember, first time buyers earn less than older couples, because they’re less experienced, and because job opportunities are poorer now than 10 to 20 years ago. Hence prices will have to fall if rates rise substantially.

  25. @Vicbot

    ‘‘There is no core identity, no mainstream in Canada,’’ he claimed. ‘‘

    Which reveals his allegiance: it is to the New World Order of George H. W. Bush, of George Soros, and if you want to go into the history of it, Cecil Rhodes, and above all, of the global corporations that would without hesitation offshore your job to a sweatshop in Asia, while flooding the North American continent with cheap labor from the rest of the world.

    Do most Canadians share this anti-democratic allegiance? I very much doubt it.

    And of course there is a core Canadian identity, in fact there are a number of core identities in Canada: the French nation in Canada, four hundred years of it, with its own language and legal tradition; six hundred Indian first nations, going back thousands of years; the Innuit people; and then there’s English Canada, a group of diverse in origins, but bound by a language, a culture and shared history. In addition, there is the Canadian identity shared by all, the imprint of a land, a history, a constitution, and a democratic parliament.

    To declare that there is no Canadian identity, is to assert that anyone anywhere in the world has the same rights in Canada as a Canadian. It is to assert that Canadians have no right to decide democratically, among themselves, such matters as who and how many may immigrate to Canada.

  26. Most of the RE market does not depend on first-time buyers. Seventy percent are not first time buyers.

    Actually the first time buyer drives most of the market. It’s the first time buyer and the out of town buyer that presents all the demand in the market. People upgrading in the same market have almost no effect.

  27. You seem clueless to the real world how most people hide bad debt and mostly from those with high incomes and educated as they have access to borrow more and take on more risk like Mike.

    Except I’m not basing my observations on what you, I or my neighbour says. It is based on national stats. I grew up poor and have close relatives who are bad with money so I’m not unaware.

    It seems to me that you are implying that the stats point to Canadians having done something exceptionally responsible with the current housing markets making them less vulnerable than would ordinarily be expected but I do not believe this to be the case.

    Where do I imply this? I’m merely reporting the facts backed up by stats. Of course some of this is due to rising home equity – just like always but most recently at a faster rate than might be supported long-term. Don’t forget equity is only 30% of average net worth though so pensions and retirement savings have also risen in value as the next biggest asset and then unregistered investments.

    As far as financial literacy goes, I strongly agree with teaching this in school. Math alone doesn’t cut it. There is planning 11 which includes a requirement to budget based on your first job, but this doesn’t go far enough. I’m in favour of mandatory investment and home ownership classes with modeling, including rent v. buy, the power of compound interest on assets and debt, and identifying different types of borrowing. I do this with my kids, although levels of interest vary greatly. My oldest is very interested now that he actually has some money of his own to put on the line.

    The US crash was caused by people on the edge. The average home owner in the US was perfectly fine throughout the downturn. That has zero relevance to the extent of risk of a housing price correction.

    Yes, and none of that was the point I was making. The only point I was making was that the average homeowner will be fine if prices crash in Victoria and they hold through it – just like the US in similar appreciation markets. Will they crash? I don’t know. Maybe. Maybe we’ll have another long slow period of price stagnation. Our borrowing rules are different than the US rules were and our mortgage products are different too. I don’t believe prices will go up forever in the short term.

    At the top end of the market, people with capital may pay what they like for a house, but most of the RE market depends on first-time home buyers, who enable those moving up market to realize the capital gain upon which their new purchase depends.

    Most of the RE market does not depend on first-time buyers. Seventy percent are not first time buyers. I’d say a segment of the market depends on this and they are linked to the ability to move up in that first time buyers can move up if they gain equity, but it is overstating it to say the entire market depends on them. I’ve read the opposite trickle down argument about the high end properties and foreign buyers and agree there is a correlation, but not primary. The whole system works together and each sub-market seems to have different variables. Really hard to evaluate what measure will have what effect imo.

    CuriousCat, agree with you on the travel ban (nonsense, pure chaos just to appease his paranoid voters)

    I tend to advocate for change anonymously, by donating or by volunteering quietly. The Trump administration has changed this for me. I find him to be outrageously dangerous to human rights and I’m actively looking for a way to put my skill set to work against normalizing that – and plan to be at any local protests.

  28. “Currently, our not-so-charismatic leader is doing everything to distance Canada from Trump-like policies … to inform the New York Times that Canada is not a nation, that it has no core, and that it is the first post-national state. ”

    All sane world leaders & US mayors are distancing themselves from Trump policies.

    Also, postnationalism is the idea of how everything gone more global now (human rights, migration, EU, UN, Internet communications, etc). That’s affected real estate too. This is Trudeau’s full quote from NY Times:
    ‘‘There is no core identity, no mainstream in Canada,’’ he claimed. ‘‘There are shared values — openness, respect, compassion, willingness to work hard, to be there for each other, to search for equality and justice. Those qualities are what make us the first postnational state.’’

    No need for conspiracy theories.

    CuriousCat, agree with you on the travel ban (nonsense, pure chaos just to appease his paranoid voters)

  29. Mikey, I already posted that in 1980 debt levels were 60%, now they are 167%. There is no room left to borrow. The crash is closer than the bong in your hand with Trump and his band of white supremists about to send the world markets into the tank.

  30. in an inflationary environment wages will rise, perhaps by as much as 10 to 15% per year, interest rates will rise much faster, perhaps as much as 100 to 400% over several years, i.e., from the present 2.5% to 5.0, 7.5 or even 10% and more. In that event, the housing market will come to ground as it did in the early 70’s.

    Which of the 70’s periods are you referring? I only ask because every time interest rates spiked higher, prices also spiked higher.

    I think what you’re overlooking is that interest rates tend to rise ‘slower’ than inflation, not faster. Hence, why prices roughly doubled in each of the 70’s boxes above at the same time as rates spiked.

  31. “Clearly you meant to say “levitate” the housing market.

    No Michael, you deliberately misquoted me. I said rising wages would mean inflation which will mean rising interest rates.

    At the top end of the market, people with capital may pay what they like for a house, but most of the RE market depends on first-time home buyers, who enable those moving up market to realize the capital gain upon which their new purchase depends.

    But the ability of first-time buyers to buy depends mainly on their ability to borrow. And while in an inflationary environment wages will rise, perhaps by as much as 10 to 15% per year, interest rates will rise much faster, perhaps as much as 100 to 400% over several years, i.e., from the present 2.5% to 5.0, 7.5 or even 10% and more. In that event, the housing market will come to ground as it did in the early 70’s.

  32. @CS

    drives up wages… will mean inflation… devastate the housing market.

    Clearly you meant to say “levitate” the housing market.

  33. Luke:

    I will drive this week although I have driven through there a number of times. You are aware that I am from Toronto and that prior to moving to Victoria I lived in L.A.

    I have driven the “Callwood crawl during rush hour before. Actually not very bad; long way away from being gridlock and traffic sure moves a lot better than either Toronto or LA. People in Victoria really have no idea what even heavy traffic looks like.

  34. @CC

    “Isn’t it ridiculous that his travel ban doesn’t include any of the countries whose citizens were responsible for 9/11? ”

    Wow, there’s a red herring: who did 9/11?

    But the Trump effect could be important. Forbes is already worrying that Brexit will cause a labor shortage in Britain.

    LOL. That’s the whole point. Stop the immigrant flood (greater to Britain’s tiny island than to the whole of Canada) and so create a labor shortage that drives up wages, which is what most folks want. Of course it will mean inflation, which in turn will mean rising interest rates. So yeah, the Trump effect, if it were to impact Canada as Brexit is expected to affect Britain, could devastate the housing market.

    Currently, our not-so-charismatic leader is doing everything to distance Canada from Trump-like policies, going so far, even, as to inform the New York Times that Canada is not a nation, that it has no core, and that it is the first post-national state. It will be interesting to see where this attitude takes us when NAFTA renegotiation begins.

  35. Mr. Barrister: I look forward to hearing how your drive up through the Colwood Crawl goes this week… ask yourself… would you like to do that every day? Make sure you leave downtown Vic at 4-5pm… 5pm is probably peak time. Then, you can turn around at the ‘Rabbit’ (Helmcken) interchange before having to venture too deep into the fringes… Langford is a bit scary 😉

  36. Curious Cat:

    For better or worse money is a major factor in divorce on a number of different levels. This is a much more complicated set of issues than one might imagine and operates on a number of different levels
    across many strata.

    You are absolutely correct that if one person is a spender while the other is a saver that this causes major stress in a marriage. Resentment often develops in both parties. The spender feels like the other person is trying to control them and is often sucking all the joy out of life; the saver feels that they are sacrificing their needs and that they are being taken advantage of in a major way.

    I am sure that your sister the nurse has days where she feels resentment and perhaps even that she has somehow ended up with a parasite. Ones expectations when one got married also come into play.
    What often gets eroded first is respect for the other person and this can accelerate to the point where you see your partner as an adversary.

    As a point of interest, unexpected or sudden financial success can also lead to a divorce. This is much less common but more so than one suspects. Divorce becomes much easier to contemplate when it does not mean any basic change in your lifestyle. I can have a nice house but I can get rid of the annoying snoring.

    Most importantly I completely agree that our education system is a complete failure in teaching even the most basic financial realities to young people. I have had a few cases where I tried to explain compound interest and its effects on finances to clients and was completely meet with blank expressions.Ontario family courts use a standardized detailed form for creating a projected household budget, which while a great tool, often totally overwhelms some clients. Originally as a young lawyer I found myself amazed at the number of people that had no handle on their spending.
    But, as the years went by, I was even more confounded by the anger and resentment that occurred when you tried to even suggest that some financial disciple was required. I am not talking about putting aside savings but rather that you cant spend more than you make endlessly.

    Perhaps my perspective is a bit flawed since I am naturally frugal. I have yet to buy a brand new car in my whole life (the closet I have come is buying last years model at 25% off) and I usually kept my vehicles for well over ten years.

    Basically, I am totally agreeing with you Cat.

  37. I went to the open house at 2111 Kings Rd yesterday – small, around 1400 sq. ft rancher listed for $1,065k after selling just seven months ago for $802k! They’ve fixed it up, but I still spotted at least ten things wrong w/ it. At first I thought it looked like a quality house, but there’s hidden things everywhere that shout borderline… ‘crap box’. It does have a nice private garden and is on a very quiet street (one of those rare streets where kids still play hockey and basketball in the street). If you want to catch it, there’s another open house today at 2-4pm before they ‘look at offers’ tomorrow (and can you spot the hidden things?). The open yesterday was a frenzy of BC/Alberta/Washington plates. Then of course, all the nosy neighbours 🙂 I guess we’ll see if it sells.

    This new listing today – at first glance it looks like a rare quality house in the core: 2312 Howard St in Fernwood for $1,150k. Bargain, wouldn’t you say? It’s only 1 block off both Bay and Shelbourne Street’s (these aren’t busy or anything), and it’s a corner lot. The ‘legal’ suite should get the CRA’s attention though… Tax tax tax – that’s the Canadian way!

    Yes, I guess Trump will affect us and our real estate. Perhaps not all negative though? It’s clear, we will see an increase in Mexican tourists (Did you know their numbers were up 36% last year?). And then, there’s the American ‘refugees’ that may be coming soon, if they can find a way to do that. (hence the American plates at yesterday’s open house). After all, no where else in Canada, other than Victoria or coastal BC, has a climate that is remotely close to theirs.

  38. In my opinion, if rates rise and house prices drop in Victoria most homeowners will be fine

    The overall stats are not important. The average home owner is not important. The only thing that is important is the fringe. How many homeowners are on the edge with respect to payments?
    The US crash was caused by people on the edge. The average home owner in the US was perfectly fine throughout the downturn. That has zero relevance to the extent of risk of a housing price correction.

  39. we have one HOT market left and that is Toronto.

    As Toronto finally corrects in a couple years, Victoria will benefit again à la ’90-’94 with a wave of Ontarian retirees headed this way. Not so different from the past couple years with Albertans.

  40. And just to add to the Trump discussion, because I also believe it will affect our market, perhaps as soon as this spring/summer…

    Isn’t it ridiculous that his travel ban doesn’t include any of the countries whose citizens were responsible for 9/11? http://www.smh.com.au/world/donald-trumps-muslim-ban-excludes-countries-in-which-he-has-business-ties-20170128-gu0ptl.html

    -“Trump claims to be motivated by the horrific September 11 attacks on New York and Washington, but the countries of which the 19 aircraft hijackers were citizens are not on the list – most came from Saudi Arabia and the rest from the United Arab Emirates, Egypt and Lebanon.”

    -“In the 40 years to 2015, not a single American was killed on US soil by citizens from any of the seven countries targeted – Iran, Iraq, Libya, Somalia, Sudan, Syria and Yemen – according to research by the conservative-leaning Cato Institute.

    But the same research shows that in the same period nearly 3000 Americans were killed by citizens of Saudi Arabia, the UAE, Egypt and Turkey — most victims of the September 11 attacks.”

    -“Also absurdly absent are Pakistan, Turkey and Afghanistan – all of them hotbeds of terror.”

  41. Anyone here have kids in high school? I’m curious if the education system has incorporated a course on Personal Finance yet. All this talk of debt and managing money… these are very important life skills that many people don’t understand and recognize how important it is to their life!

    I remember taking courses on cooking (still a terrible cook, but useful at least) and sewing (who sews their own clothes??) and shop and woodworking. These last three can all be considered as hobbies, not necessary life skills. But money? NO ONE talked about money. My parents never did. We weren’t even supposed to ask! I had no idea how much money my parents made, or whether they had debt, etc. It wasn’t until I was much older that I got a peek into my Dad’s finances when I started helping him with Quicktax back in the late 90s. Happy to say, he is very savvy with his money and he was able to retire at 56, lucky guy! But he failed to impart any of his wisdom to his children. We were left to figure it out, or not.

    I have one sister who is a life-long renter, who recently went thru either a bankruptcy or a consumer proposal. Not many details were shared because of the SHAME, but I’ve been tapped from time to time for money from her because she no longer has any credit cards.
    My other sister is a homeowner, a nurse, but her husband for some reason seems to find it challenging to keep a job for more than a year. Rather than affect their lifestyle, they have repeatedly used the equity in their home to consolidate vehicle loans, credit cards, line of credit, etc. She always tells me it’s because the “interest on the mortgage is lower! I’m saving money!” and doesn’t want to hear it when I tell her she’s simply extending the time it takes to pay her truck from the 3 years she had remaining, to 15 years, so NO, she probably isn’t saying on interest. LALALA – doesn’t want to hear it! The nice lady at the bank showed her how her monthly payments will be lower overall, and that’s all that matters.

    Barrister may be able to confirm this, but I think money is one of the main reasons for divorce. Is it any surprise? The worse is probably when one is a saver and the other is a spender. When they are both spenders, they are just blissfully ignorant, and when they are both savers, at least they are on the same page!

  42. Remember the reason why places like the Netherlands and Norway have such high consumer debt levels is because of mortgage debt. In the Netherlands, 30% have negative equity in their homes:
    https://ftalphaville.ft.com/2016/06/16/2166258/why-is-the-netherlands-doing-so-badly/

    “Residential mortgage debt outstanding was worth twice the total disposable income earned by households at the end of 2015” because of falling house prices.

    In Norway, they have it because of unusually high house prices.

    I agree that everyone needs a place to live, and owning has a lot of advantages.

    But we also have to be realistic about how much people (especially younger folks) are encouraged to rack up too much of all kinds of debt (credit cards, HELOCs, etc) by the banks. I don’t know how many times I’ve been offered a LOC by the bank.

    I don’t think it’s just because a person is young and inexperienced, or uneducated – I place a lot of the blame on banks and other businesses that are taking advantage of people’s inexperience to take out far too many loans or types of credit that they shouldn’t have. These businesses are trying to drum up more profits, but when things go sour, taxpayers are going to foot the bill.

  43. @ Totoro- this has been mentioned before but, of course equity has gone up more than debt. People borrow to buy houses and for each house that gets bought in a rising market, 100 experience an increase in equity. I don’t think Canadian stats show anything different that what you would expect the stats to say when this is the case? It seems to me that you are implying that the stats point to Canadians having done something exceptionally responsible with the current housing markets making them less vulnerable than would ordinarily be expected but I do not believe this to be the case.

  44. Totoro: “In my opinion, if rates rise and house prices drop in Victoria most homeowners will be fine.”

    Perhaps we are looking at the problem from different perspectives, totoro. It seems that you are looking at it from a regional perspective and you might be partially correct in your assumptions.

    Nationally I am more concerned about the economy’s reliance on the FIRE industries. The impending correction/crash will create a very, very big recession.

    “And Hawk, you can see this for yourself if you believe the past is the predictor of the future.”

    The biggest problem with this statement is in the validity of it. Lol. Yes, each of the previous crashes worked out fine for a number of people and we all survived, one way or the other. However, it was decreasing rates that ultimately saved the day for the real estate market. The crash in the early 80’s resolved by a big drop in interest rates, the correction in the 90’s resolved by a big drop in interest rates.
    http://www.tradingeconomics.com/canada/bank-lending-rate

    Now, the experts … real estate/economists/banks etc. tell us that we have one HOT market left and that is Toronto. Why the other MAJOR markets are declining is immaterial. They are declining and with that decline comes the potential for big job loss. Interest rates will not be saving the day this time.

    “Some newer owners will have a hard time paying but the new qualification rules should create some breathing room given you have to qualify at the posted rate.”

    You are dead on albeit the majority of this market has already been baked in at lower rates. There is no guarantee on rising rates just a probability. What we are seeing is sentiment changing and perhaps the weight of this bubble collapsing on itself.

    In my opinion you might be very optimistic whereas I may be slightly pessimistic. Hopefully everything falls right between our viewpoints.

  45. “If we were to climb to 300% like Denmark & Norway, I’d start to get concerned”

    I guess if you have almost 14% wage hikes like in Norway I wouldn’t be concerned either, but we have barely 2%. Forgot about that important part eh Mike ? Keep pumping dude. 😉

    “Wages in Norway increased 11.60 percent in September of 2016 over the same month in the previous year. Wage Growth in Norway averaged 13.46 percent from 2003 until 2016, reaching an all time high of 18.56 percent in the third quarter of 2009 and a record low of 6.13 percent in the first quarter of 2016.”

  46. “In my opinion, if rates rise and house prices drop in Victoria most homeowners will be fine. ”

    Right, and if one family member loses their job then what ? Only took 11% of bad debt homeowners to crash the US market. I go by facts not opinion.

    You seem clueless to the real world how most people hide bad debt and mostly from those with high incomes and educated as they have access to borrow more and take on more risk like Mike.

    Household debt has exploded since 2008 and will be very different next crash/correction but keep your head in the sand.

  47. that ratio recently passed the 150% figure (Statistics Canada 2011)

    If we were to climb to 300% like Denmark & Norway, I’d start to get concerned.

    ?7

  48. Doesn’t take a mensa student to figure out that all debt will soon be bad debt when the bank shuts down your HELOC as extreme measures get implemented.

    That is a blanket statement. I’ve never found them much good for understanding where your risk is or for making good decisions.

    A lot of people don’t have a HELOC or don’t use it if they do. Although debt has risen so has equity – at a greater pace than debt. Debt to income has risen, but not debt to net worth.

    I’m not advocating consumer debt – but 77% of Canadian debt is in mortgages and that seems to be what you are referencing.

    In my opinion, if rates rise and house prices drop in Victoria most homeowners will be fine. Some newer owners will have a hard time paying but the new qualification rules should create some breathing room given you have to qualify at the posted rate. I agree with this change, although we certainly benefited from the old rules when we started out.

    House debt will still be good debt if the market changes, you’ll just have to be able to wait out the downturn. And Hawk, you can see this for yourself if you believe the past is the predictor of the future.

  49. “In 1980, the ratio of household debt to personal disposable income was 66%; that ratio recently passed the 150% figure (Statistics Canada 2011). This means that, in aggregate, households owed more than $1.50 for every dollar of disposable income. Household debt is therefore an increasingly important component of the finances of many Canadian families.”

    Gee, I wonder what will happen this time around ? From 66% household debt one year before the 81 crash, to 166.9% presently. Doesn’t take a mensa student to figure out that all debt will soon be bad debt when the bank shuts down your HELOC as extreme measures get implemented.

    Banks can do what they want when a crisis hits. The “it’s never going to happen” crowd will be in for a major wake up call when it does.

  50. It would appear that your assumptions might be a little off base totoro.

    What assumptions? This statement?

    Also it is generally non-homeowners who have the most difficulty with consumer debt.

    I’d agree new homeowners who then rack up consumer debt might have difficulty paying their bills.

    Those with home equity have an advantage over those without including renters without other investments to access to consolidate a loan. Banks don’t just give out consolidation loans or personal lines of credit without credit and income to pay and if you are having trouble paying a lower interest unsecured line of credit becomes more difficult to obtain.

    Given that 70% of Canadians are homeowners and about 50% have no mortgages there is a lot of equity to backstop debt. Most renters are not in this position as they don’t have the “meaningless” home equity to help them out if they get into difficulty.

    When we look at insolvency stats we see that 72 per cent of the overall insolvency debt is unsecured without collateral – ie. not mortgage debt and not a HELOC or car loan secured by an asset. The fact is that most of those who file for restructuring or bankruptcies are renters who get into trouble with unsecured debt – they make up 79 percent of those who reach this stage of difficulty with credit.

    The average owed by an individual filing for bankruptcy was just over $92,000, while the average owed by an individual filing for restructuring was approximately $115,000. Given that the average debt per household in Canada was approximately $56,700 ($79,368 for homeowners and $10,420 for renters)4 during the same period, it is evident that the amount of debt held by those filing for insolvency is substantial. This high level is surprising, since a large percentage of individuals who file for bankruptcy are renters and, therefore, do not have a mortgage.
    http://www.bankofcanada.ca/wp-content/uploads/2012/02/boc-review-winter11-12-allen.pdf

    In my view there is good debt and bad debt. Good debt is borrowing the has ROI and grows your net worth. Bad debt is borrowing for things like vacations and consumer items that result in a decrease in net worth.

    Housing is usually good debt IF you can hold your home for at least seven years and through a market downturn or rate increase. There is risk in everything, but the risk in mortgage debt is early in with divorce, addictions, health issues and job loss and the risk diminishes as equity rises. The risk with consumer and unsecured debt compounds over time at a higher interest rate with no asset growth.

  51. totoro: “A disproportionate amount of the debt in Canada is held by groups who have less than a postsecondary education, unattached individuals and people in ‘other’ family types, and those with less than $50,000 in household income” – not homeowners in general.

    It would appear that your assumptions might be a little off base totoro. That disproportionate amount of debt unfortunately appear to be highly leveraged homeowners in the obvious contender provinces. Note hightly indebted =most vulnerable=homeowners

    “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 ”

    http://www.bankofcanada.ca/2016/02/connecting-dots-elevated-household-debt-risk/

    What would be the impact on the financial system and economy?
    What would be the possible implications for the financial system if the vulnerability arising from highly indebted households were triggered?

    The rise in household arrears could force some vulnerable homeowners to sell their homes or eventually default on their mortgages and other consumer debt.18 If defaults rose quickly or if many households were forced to sell their homes, house prices could drop sharply across Canada, particularly in Vancouver and Toronto, which have recently experienced exceptionally strong price growth.

  52. Totoro, you can also get an unsecured line of credit for less than 18%

    I have an unsecured business line of credit at 6.7% from BMO

  53. That’s probably true as home owners can consolidate their credit card and other debts into their home mortgage while non home owners can not.

    If they have enough equity and a high enough credit score.

    Again, a reason why equity is not meaningless if it is saving you 18% interest on credit card debt.

    We all just know what we know based on what we do and the people around us do. The stats are more reliable I think?

    If you were bad with money matters before you bought a home chances are you still will be bad with money after you bought.

    Maybe, but financial literacy is negatively correlated with factors like lower income and lower education levels and younger ages. These things change over time and houses require budgeting. If you have problem spending or addictions that might not change.

  54. @ Janney Claire Alexi

    CS – Is this OK with you?

    “Privacy safeguards relied upon by Canadians have just been stripped away. Trump just signed an executive order eliminating Privacy Act protections for foreigners. This means as of right now, all your personal, sensitive information has no legal protections in the U.S.”

    I have never believed that my unencrypted online communications were private, and I don’t place much faith in encryption. I once used PGP, but it was a tiresome complication that I abandoned.

    I do use online banking, on the assumption that the banks know how to keep my communications with them private, although the possibility that they may fail to do so is, I suspect, quite real.

  55. Totoro you also mentioned that non home owners have higher consumer debt than home owners.

    That’s probably true as home owners can consolidate their credit card and other debts into their home mortgage while non home owners can not.

    Financial literacy does not occur when you buy a home. If you were bad with money matters before you bought a home chances are you still will be bad with money after you bought. Except you might be a little older and a little wiser.

  56. “A couple of years ago it was common for the banker to talk the new home owner into a line of credit with their mortgage application at no charge. That still might be the case with new mortgages although I have heard that some lenders will want an $800 fee to set up a home equity line of credit later.”

    Used to be $300 back in the early 90’s. There’s inflation for you. I constantly get pop ups on my screen from on my bank website to increase my pre-approved line of credit the more my stock portfolio increases. Banks are looking desperate for business with the declining house sales I guess, after all they are in the debt business to make money while pretending to be your friend.

  57. Vicbot you are quoting the 2011 statscan report to counter the newer 2012 statscan report from which I pulled the statement quoted?

    Leo, I’ll give you credit for sticking to a position when you don’t want to be moved from it.

    You are ignoring the many people that downsize. Even if they stay in their home a long time the surviving spouse might go into care – quite often – like both my grandparents and probably yours or those you know of. Cash is helpful for this.

    Or those that do sell and downsize and rent – or become a snowbird – and someone has to be filling all the retirement condos and complexes – and then there are those who cash out and full scale move to ex. Mexico to retire where they can live well for 2k a month:
    http://www.theglobeandmail.com/real-estate/mortgages-and-rates/time-to-sell-my-house-and-rent/article10465869/

    A recent study shows 56% of Canadians are considering downsizing their home in retirement.
    http://business.financialpost.com/personal-finance/mortgages-real-estate/canadians-close-to-retirement-getting-tempted-to-sell-new-data-suggests

  58. A couple of years ago it was common for the banker to talk the new home owner into a line of credit with their mortgage application at no charge. That still might be the case with new mortgages although I have heard that some lenders will want an $800 fee to set up a home equity line of credit later.

    Since the bank’s are not giving up the information of how many new buyers are also signing up for a line of credit – you are not going to find that information. That doesn’t mean it doesn’t exist.

    Not everyone will use that line of credit but others will dip into that well because it is so easy to do so. Entire marketing strategies by the banks have been developed around the line of credit to convince home owners that equity is the same as cash. I hear it when a home owner says they bought a new car for cash. But the spouse says that they really used their line of credit and were using their money early rather than when they eventually sold the house. Besides the house will be worth a lot more by then – right?

    But that’s not cash – that’s a loan.

    And now we have home owners that bought a home for $200,000 several years ago and today have a $400,000 mortgage. That’s more of today’s reality than say someone paying off their mortgage in 25 years.

  59. The StatsCan report linked to this study which said:

    ” family type was no longer associated with having a high debt-to-asset ratio or a total debt service ratio of 40% or more …
    Factors associated with having a high debt load or a debt-to-asset ratio of 80% or more included being born outside of Canada, having lower levels of household income, and living in a CMA [Census Metro Area] with high housing prices. Not surprisingly, people aged 50 to 64 had lower odds of having high debt ratios in all three metrics than younger Canadians.”
    http://www.statcan.gc.ca/pub/11-008-x/2011001/article/11430-eng.htm

  60. Yep,the US housing crash victims were all uneducated losers. Give me an effing break. The so called smartest people in the world go bankrupt out of greed and FOMO.

    A college degree guarantees nothing but bragging rights. Many a college graduate ends up making subpar wages or can’t cut it in the real world. I’ve lost track of how many I’ve known in that category.

  61. Yes, Leo’s equity is meaningless as long as he stays within Greater Victoria’s 696 km² and doesn’t relocate to anywhere else on Earth’s 510,000,000 km².

    Which of the 510,000,000 km are you planning to relocate to?

    You are atypical given that the average homeowner buys at least five homes in their lifetime.

    And unless they are moving to cheaper markets every time (which they aren’t), then it makes no difference. Well that’s not entirely true. They will pay much higher transaction costs if they are buying and selling 5 expensive homes.

  62. I personally know 2 friends that tapped into their equity to purchase “retirement” homes in Arizona. I’m sure that this is quite prevalent as Canadians were the largest foreign purchasers of real estate in Florida and Arizona for several years.

    I wish I did that. Thought about it and didn’t… Huge windfall now given appreciation and the Canadian dollar drop. Many Canadians cashing out now. Your buddy just needs to change his plans up a bit and he will likely be able to recover more than his capital investment – maybe 60% more and he’ll be back to a paid-off house and extra in the bank. Without the HELOC investment he’d just have lost his equity.
    http://www.cbc.ca/news/business/snowbirds-loonie-real-estate-1.3425322

    Making the HELOC the gateway drug to alternative financing.

    Except their is no evidence of this I can find. The debt service ratio peaked during the 20098/09 recession at about 15%, but it has kept steady at about 14% since 2010. This level is higher than during the 1990s (about 12%), but does not ring alarm bells.

    A disproportionate amount of the debt in Canada is held by groups who have less than a postsecondary education, unattached individuals and people in ‘other’ family types, and those with less than $50,000 in household income – not homeowners in general.
    http://www.statcan.gc.ca/pub/75-001-x/2012002/article/11636-eng.htm#ftn6

    Also it is generally non-homeowners who have the most difficulty with consumer debt.

  63. We should be gearing up for “week four”stats. Went to both open houses on Dallas road. Hope they can sell them to that nice Edmonton couple before the cruise ships all get here.

    In fairness they did a pretty nice reno on that house that they barged in but the 2 million price tag might be a tad high.

  64. Trump might put upward pressure on real estate here. It’s not like the US is creating a welcome environment for immigration. Tech firms are going to hire outside the states to hedge even more. My friend at MSFT was telling me that their presence in Van facilitates difficult to immigrate people.

  65. I suppose the rational about HELOCs and higher prices is that it make it less likely people will lose their homes to foreclosure as they will sell the home themselves and I guess become renters once again.

    However that isn’t what happens. The home owner will find anyway they can to find additional financing and not sell the house. And that usually means they will seek out non prime lenders.

    The HELOC is the easiest, least costly and initial way most home owners access money. It’s so easy to make a call to the bank and get $50,000 that you can easily adapt to living above your means. Making the HELOC the gateway drug to alternative financing.

  66. Totoro, I guess that is some comfort however, the rules also state that you still have access to 80% of your equity, but the remaining 15% must be in the form of an amortized mortgage where the monthly payments are principal + interest.

    This should have slowed usage down but the bigger concern is consumer spending. I personally know 2 friends that tapped into their equity to purchase “retirement” homes in Arizona. I’m sure that this is quite prevalent as Canadians were the largest foreign purchasers of real estate in Florida and Arizona for several years.

    As you noted on home equity value, both of my friends were mortgage free on homes that are probably worth $800,000 and $750,000. today (my estimate). The problem is they were worth around $900,000 (their estimate) when they pulled that equity out.

    One of my buddy’s big plan was to sell his home for $1.5 million, payoff the “retirement” home and then retire comfortably on the remaining $1.3 million.

    He’s 63 now and holding on to a market “that will turn around in the spring”. He doesn’t have a pension. Savings are limited to less than $100,000 in RRSPs. His house is his retirement so I am actually pulling (against logic) for this market to turn around for him.

    My other buddy is very well off so I don’t think he has any real concerns. Full federal pension and plenty of investments … other than real estate.

    The only consolation to my first friend’s dilemma is that he probably made money on his Phoenix place.

  67. The study is prior to the change in the rules on HELOCs I think? And maybe part of the reason to tighten the rules. And even in 2012 34% of the funds were used for investments, which is not insignificant and the study allocated the repayment of student loans as “consumer spending” rather than debt repayment – which is odd.

    A bit more difficult to argue there is heightened risk now when you can only borrow 65% of value and for prior borrowers prices have appreciated since 2012 mitigating risk.

    Not saying there are not a cohort of highly leveraged individuals, but I don’t think home equity borrowing is super high risk for most. Canadian homeowners have an average home equity of 73 per cent of their home’s value. Consumer credit use is far higher risk than a HELOC is.

  68. Totoro:
    I gave others including this very common occurrence at which equity is realized and usually redeployed. Equity is not meaningless for the average Canadian: it is their biggest safety net and retirement cushion.

    Unfortunately Totoro, it doesn’t seem like the majority of Canadians follow your example of intelligent equity deployment…and this is 5 yrs. old. Ouch. I don’t really want to know what it looks like today.

    http://www.bankofcanada.ca/wp-content/uploads/2012/02/boc-review-winter11-12-bailliu.pdf

    “In this article, we have examined the relationship between the accumulation
    of household debt and spending on consumption and home renovation. We
    find that increases in home-secured debt, particularly home-equity extraction
    (increases in mortgage debt and draws on HELOCs on existing houses),
    contributed the largest share to the rise in total household debt in Canada
    between 1999 and 2010. Moreover, we show that a significant share of the
    funds borrowed against home equity was used for consumption and home
    renovation. These findings suggest that household indebtedness constitutes
    an important source of risk to household spending, since it makes households
    more vulnerable to substantial negative economic consequences in
    the event of a correction in house prices.”

  69. “As for all this talk about Trump – isn’t this a blog about housing in Victoria? Aren’t there other blogs (i.e. Reddit) where Lefty liberals worried about Trump can banter. That said, I did enjoy the Bill Maher video.”

    Glad you liked the video. Get used to the Trump talk, he will effect our economy and real estate like no other president ever.

    As per Victoria and the tech industry having major contracts in the US and travel back and forth and with not everyone living here is a pure Canadian national I’m sure this will create some chaos.

    You can expect to see some major angst and worry about how this travel ban will effect the #1 industry in this town the past 5 to 10 years. This is just the beginning according to Trump’s right hand Chief of Liar staff boot licker.

    As per Janney’s post below I would be very nervous having to travel south in the next 4 years.”

    “This news seems to be slipping in under the radar:

    “Privacy safeguards relied upon by Canadians have just been stripped away. Trump just signed an executive order eliminating Privacy Act protections for foreigners. This means as of right now, all your personal, sensitive information has no legal protections in the U.S.

    Every day, the data of millions of Canadians enters the U.S. by Internet traffic being routed through the U.S., or by our own government routinely sharing personal information. You don’t need to have done anything wrong for your most personal information to be revealed, and you will likely never know what has been shared.” — via Open Media

    And this is still only Week One.”

  70. No, house equity is meaningless because I will never access it (unless we leave Victoria).

    Yes, Leo’s equity is meaningless as long as he stays within Greater Victoria’s 696 km² and doesn’t relocate to anywhere else on Earth’s 510,000,000 km².

  71. I get you Leo. It is still a reminder of what you saved by not waiting any longer. Plus you never know…. it might come in handy when you look to renovate or buy that condo on Mount Washington….

  72. Leo you’ve owned one house and if I understand you correctly plan to stay put. You are atypical given that the average homeowner buys at least five homes in their lifetime. My example is just one given, I gave others including this very common occurrence at which equity is realized and usually redeployed. Equity is not meaningless for the average Canadian: it is their biggest safety net and retirement cushion.

  73. So the correct statement should be “my house equity means nothing to me because I’m never going to access it”. I’d say that is fine for you but not as a generalization for others

    Our situation is pretty typical. Most people buy a house and slowly pay it off, or upgrade a few times in the same market. Certainly way more common than your example of owning multiple properties and accessing equity for ER purposes.

  74. Wow – lots happens on this blog in 24 hours.

    Thank you Marko for the stat’s on listings/sales and what the average over asking price is.

    Unfortunately, oopswediditagain, on realtycheck.ca it doesn’t show what places sell for, just weather or not they were reduced or increased. As I said before, a quality home will have much more interest than a crap box. And, while you may have bought and sold 2x the homes as me (and maybe are 2x the age?) and lived in the Lower Mainland more than 2x as long (sorry you had to endure that), it doesn’t really change the fact that Victoria is not Vancouver.

    Barrister: I encourage you to dust off the Range Rover at 4pm on a weekday, and take a drive up Douglas St, and then on to Hwy 1 out towards Langford. Yes, ‘the Colwood Crawl’ may not compare to nightmare commutes in Ontario, or Metro Van for that matter, it’s still an awful lot of sitting there and stopping and starting and crawling along at a snails pace. If anyone thinks its going to get better with all that growth in the Westshore (and not as much in the core where it should be), then I think – think again. The McKenzie interchange may help the afternoon rush, but not so much in the am.

    As for all this talk about Trump – isn’t this a blog about housing in Victoria? Aren’t there other blogs (i.e. Reddit) where Lefty liberals worried about Trump can banter. That said, I did enjoy the Bill Maher video.

    Thanks for keeping it interesting everyone!

  75. That could support my “home owners being responsible for home inspections” argument. It’s such a snowball effect of people who are cashing in on this, it is ridiculous.

    I don’t think owner inspections would work, but I agree with you that it is idiotic have 4-5 inspectors inspecting same house when only one party can secure it.

    I am spending a huge percentage of my week at inspections and my clients aren’t securing the homes because they are getting outbid by other unconditionals.

  76. “Because this isn’t about left vs right. Nobody gives a shite about the parties. It’s about the survival of the human race ”

    Exactly Vicbot, this is about the world as we know it, not about political parties. A proven psychotic liar the equivalent of Baghdad Bob is at the wheeel and is already out of control in one week.

    CS clearly reads too much Breitbart and all the other nutbar conspiracy theories sites out there.

    You need to watch more Bill Maher and less Fox news CS, your brain is melted.

    WTF Is Going On?

    https://www.youtube.com/watch?v=eQwkVgl6eHw

  77. Looks like some much needed inventory is trickling into the marketplace in the last few days. Quite a few homes like 870 Roy Road which is what the demand is highest for.

    There is also finally a listing in the Oaklands area at 1524 Pearl.

  78. house equity is meaningless because I will never access it

    So the correct statement should be “my house equity means nothing to me because I’m never going to access it”. I’d say that is fine for you but not as a generalization for others. Our equity is deployed in ER to assist us with cost of living and we will eventually use some of it for other things – like helping kids buy houses so the statement cannot be true for everyone.

    And you are ignoring the fact that your mortgage pay-down increases your equity re. your payment to principal – which will eventually decrease your housing costs vs. a renter once your mortgage is discharged or you refinance. The equity is what discharges this and frees up more of your income to invest.

    I can’t believe you are worried about earthquakes to the point it causes you to discount your equity but you don’t assign any value to equity that would be of great help if you needed to downsize due to other circumstances such as death of a spouse, job loss, health issues or a desire to retire early and live, in part, on your reinvested equity.

  79. Actually house equity and other RE equity only make up 40% of the median net worth of Canadians. The next biggest part of the net worth is in private pensions at 30% (includes employer and RRSPs). That leaves 30% other. Most of the rest is in vehicles and mutual funds.

    However the total median net worth of Canadian family units including over 65 is only about 500k – and less for those under this age. Barrister is definitely in the top 1% if his multi-million dollar paid-off home is 15% of net worth. It is not the norm to have over 10 million in net worth in Victoria.

  80. House equity is meaningless because insurance might take a long time to pay out if there is an earthquake?

    No, house equity is meaningless because I will never access it (unless we leave Victoria).

    Never mind the amount a paid-off home reduces your monthly cost

    That has nothing to do with your equity and all to do with the size of your mortgage. Last I checked my mortgage payment didn’t go down despite my house gaining $200k.

    It does and the vast majority of Canadians do not stay put even if you think you personally will – they access the equity to move up or down or sideways or even to invest.

    Doesn’t matter. I could sell my house for $550k in 2013 and upgrade to one costing $750k. Or I could sell my house now for $800k and upgrade to the same house which now costs $1M. Increase in equity worth exactly zero.

    The only time it matters is if you’re borrowing against it (something I’m not going to do) or if you cash out to a cheaper market (possible, but again unlikely).

  81. Why is there an assumption on this blog that peoples net worth is tied up in housing.

    Because it is on an overall basis. You are in the top couple percent, that can’t be generalized to the 70% of the population that owns property

  82. Just another point to support my argument that house equity is meaningless.

    No! Still? After all these years? House equity is meaningless because insurance might take a long time to pay out if there is an earthquake?

    Never mind the amount a paid-off home reduces your monthly cost – all because of home equity. Or the HELOC and invest route. Or the sell and invest and downsize. Or the amount of net rental income that increases due to decreased debt.

    I think you are deliberately discounting a reasonable inclusion in net worth based on a somewhat skewed view of risk and volatility. It is easier for you to discount equity entirely because you tell yourself you’ll stay where you are forever so it doesn’t matter. It does and the vast majority of Canadians do not stay put even if you think you personally will – they access the equity to move up or down or sideways or even to invest.

    As a more concrete example, I have family moving down to Victoria from up North. Their home did not appreciate like houses here do so they are having a heck of a time finding anything they can afford because their accumulated equity is only 150k. Here their house in the North would be 700k and in their window of ownership they would have accumulated approximately 350k of equity. They could have done the move in reverse and had a paid-off house. Appreciation and equity matter a lot.

    PS. Ross Kay is a nut. Steve Saretsky seems a more reliable sort for Vancouver stats.

    PPS. I agree with Hawk. Mr. Trump is not a fine fellow.

  83. Has anyone heard of Ross Kay? I am not sure of his credibility but his confidence in his reports do intrigue me. Have a listen :

    Let’s dissect his claims here though
    “Mere postings have increased reported sales by bringing in FSBO sales to the MLS system”

    True, at least partially. Yes some FSBO sellers have gone mere postings but the number is very small. In Victoria it’s about 1% of sales, and some of those mere postings would have previously been full service or 1% realty sales so they’re not additional.
    There is a small effect on sales but hardly significant, maybe a bump of a couple percent.

    “The bump in sales from the mere postings has fooled the public into thinking the market is hotter than it is”.

    Not a chance. The public is not paying close enough attention to notice a couple percent increase in sales. At best the public pays attention to price movement, definitely not sales. The media coverage has been focused on sales prices and bidding wars, not number of sales.

    He just keeps hammering on the theory that the entire housing bubble is caused by a few additional mere postings in the numbers after that with zero evidence. Complete nonsense.

    “Real estate board stats in September reflect the market in January”

    No evidence for this shown. Why a current sale would not reflect current conditions is beyond me. Conveniently enough, he said his company is the only company that can correctly interpret the data. Fat chance.

    “Average price hasn’t shown much of a drop but accounting for quality you see a much bigger drop”

    This may or may not be true. But let’s think about how it could be possible. If the average price stays constant but the quality you are getting for that price is increasing, that must mean that the lowest quality places are not selling at all (because that would drag the price down). So the entire market has shifted upwards in terms of what is selling. Definitely possible and we have seen large shifts in sales mix before, but this is not something that would be sustainable. Also a repeat sales index should catch this scenario, so we should see the true picture in Teranet if the average price is being affected by a systemic change in sales mix.
    This factor is worth additional investigation though. Would be nice to have more quality data.

  84. Leo S:

    I think you make a brilliant point about anyone that predicts the specifics of the future housing market.
    There are simply too many uncertain variables; interest rates being just one.

    Why is there an assumption on this blog that peoples net worth is tied up in housing. My house is less than 15% of our net worth and i know a lot of people that are far from invested in just real estate.

  85. Has anyone heard of Ross Kay? I am not sure of his credibility but his confidence in his reports do intrigue me

    That should be clue number one. Anyone that pretends to be confident about the future of the housing market is a shyster.

    His arguments are based on data that he claims only he has access to and won’t reveal. Sure he may or may not be right at the moment but I don’t see any basis for credibility

  86. There seems to be a lot more listing in the core than there was a few weeks back. But that may or may not be typical. I am not the statistics king here. Prices are starting to look a little bit on the insane side though. Certainly there is not the value that was around a mere three years ago.

    Oak Bay is cute and quaint but asking well over a million dollars for what is basically a crappy little house
    that was originally built for a blue collar worker seems to have reached a point of insanity. I know, something is worth what someone is willing to pay for it. My wife pointed out that if we were buying today we would be looking at Santa Barbara instead of Victoria. Even with the exchange rate, a lot better house for a lot less money. (I know the other factors involved so dont write a long list of problems about living in California).

    The sales this spring should be interesting but I suspect that prices may have plateaued at this point.

    On a separate point, what is this view that somehow the west shore is this far away development with a impossible commute. I lived in Etobicoke in Toronto for most of my life. But in terms of distance and time it was a much longer commute downtown than the West Shore. Victoria has grown and is no longer a very small city. But honestly there is no grid lock and traffic to the West Shore moves pretty smoothly in rush hour. When is the last time anyone took two hours to go from downtown to Langford??

  87. What changed in a few short years?

    The media & bears rang the bell of course – Macleans, GT, Rabidoux, Macbeth, Kay, Saretsky, Madani……………

    You’ll know it’s time to sell in the 2020s when they’ve all finally bought and magazine covers show someone hugging their house with a rainbow shooting out their arse 🙂

  88. All this talk of basements reminds me of the assertion that most of them in Victoria are going to collapse when the big one hits.

    Good podcast. Just another point to support my argument that house equity is meaningless. Good luck refinancing when your house is a pile of rubble. And insurance money will be a 10 year wait / legal battle away.

  89. CS – Is this OK with you?

    Hawk, Vicbot – Thank-you !!!

    This news seems to be slipping in under the radar:

    “Privacy safeguards relied upon by Canadians have just been stripped away. Trump just signed an executive order eliminating Privacy Act protections for foreigners. This means as of right now, all your personal, sensitive information has no legal protections in the U.S.

    Every day, the data of millions of Canadians enters the U.S. by Internet traffic being routed through the U.S., or by our own government routinely sharing personal information. You don’t need to have done anything wrong for your most personal information to be revealed, and you will likely never know what has been shared.” — via Open Media

    And this is still only Week One.

  90. That Fault Lines podcast is eye opening and quite terrifying. It is so unsettling to know that we are just clacking away in Victoria arguing about real estate while sitting on a time bomb. At the same time, we can’t live every day in fear and expectation. We need just to be prepared for the inevitable as best we can.

    On another note. Has anyone heard of Ross Kay? I am not sure of his credibility but his confidence in his reports do intrigue me. Have a listen : http://www.howestreet.com/2017/01/23/trump-numbers-vs-real-estate-numbers/

    I listened to him back in August on howestreet when he was stating a correction in Vancouver had started at the beginning of the summer, even before the foreign buyers tax. He was the first and only to report this. Looking back at the numbers he seems to be correct.

    Also, on twitter, a twitterer stated that ‘no one seems to know when Victoria will turn (start correcting)’ and he replied ‘it turned months ago’.
    I’m curious how he has come to this conclusion. Does anyone have a ‘membership’ to his website?

  91. All this talk of basements reminds me of the assertion that most of them in Victoria are going to collapse when the big one hits.

    The point is made by a structural engineering expert based on the construction quality/era and the predominant soil composition of the capital area.

    This came from the podcast series that walked through 2 earthquake scenarios for our area:

    http://www.cbc.ca/radio/podcasts/fault-lines/

    I found it a worthwhile listen.

  92. “Why is it that anyone who doesn’t believe the myths of the Clintonite liberal-left is almost always designated a hater”

    Because this isn’t about left vs right. Nobody gives a shite about the parties. It’s about the survival of the human race (it’s plain ignorance and insanity to talk about “nukes” or OK torture on Twitter, or force scientists to go underground to communicate the results of their work).

    “Hawk doesn’t actually know anything very much about Trump, he only knows what Hillary supporters, Vicbot and Women’s March supporters in “pussy hats” have said about Trump.”

    So you’re sayin’ that I have control over Hawk’s mind now. Wow that’s power 🙂 I guess they’re in good company with most US intelligence offices & most US companies (eg., Buffett, Gates, Zuckerberg), or union boss Chris Jones who called him a liar, or even Canadian universities, Target, Kellogg, & 750 other companies that are pulling ads out of Breitbart (the pride of Trump’s chief of staff).

  93. Why is it that anyone who doesn’t believe the myths of the Clintonite liberal-left is almost always designated a hater?

    Isn’t it really the left that is consumed with hate, hate for Donald Trump especially, for example, talking about blowing up the White House (Madonne Ciccone), or hoping for murder in the White House (Standford professor Joseph Joffe).

    Trump may, I suppose, like Bush and Blair, Hillary, Obama and Cameron, start some new wars killing hundreds of thousand of people and creating millions of refugees. But so far, he’s expressed a rejection of regime change policies. Moreover, Theresa May, now visiting the US, is said to have brought president Trump the gift of a no more regime change British foreign policy.

    http://www.telegraph.co.uk/news/2017/01/27/theresa-may-changing-foreign-policy-secure-us-trade-deal-had/

    But it’s true Trump has done one mean racist thing:

    https://www.lewrockwell.com/political-theatre/trump-forces-black-family-home/

  94. CS ,

    Sad to see a Canadian blinded by hate to not see what Trump’s whole life has been about. Greed ,jealousy,envy and hate. This is just getting started, wait til the til the taxes get hacked and the videos leak out. They’re coming.

    So pussy grabbing is an approved practice too ? Wow, that’s sick.

  95. No bias there,move along folks. Via Wikipedia:

    “Rasmussen Reports is a conservative leaning American polling company, founded in 2003.”

  96. @ Intro:

    “Hawk is wrong about everything except Trump.”

    Hawk doesn’t actually know anything very much about Trump, he only knows what Hillary supporters, Vicbot and Women’s March supporters in “pussy hats” have said about Trump.

    Not that I know much about Trump either, but if we are going to be irrelevant, let us at least be factually correct in our irrelevance.

  97. LeoS, agreed. They always suddenly have so much to bitch about me having an opposite opinion when they offered up nothing previously or nothing of substance. Usually a sign of worry of a coming crash from US economic fallout.

    AG can always go back to his old job as a bank teller if the agent gig doesn’t work out. 😉

  98. If there are a large number of people here who are saving up for a downpayment I have an idea for a little extra revenue. We hire Barrister to begin a class action suit against Hawk for repetitive strain injury, inflicted by hours of scrolling past his incessant and vapid posts.

    Solid idea.

    BTW, Hawk is wrong about everything except Trump.

  99. Marko:

    Your sales numbers are not very uniform. Not all areas are selling equally. You forgot to point out that not a single home in the Uplands, in the under a million, sold in the Uplands.( I am practising to take over for Hawk for when he goes on Vacation.)

  100. “one week of silencing the scientists, killing women’s rights, promoting racism, corruption and narcissistic pathological lying is enough for anyone I hang with.”

    Agree, well said. I think most of the planet agrees with you (eg., the large US city mayors rejecting Trump’s illegal policies, bizarre “alternative facts” claims, his repeated dismissals then about-face on the CIA, and the Netherlands setting up a fund to counter Trump’s actions that affect the poorest women in the world). It’s the end of America’s strong standing in the world – which unfortunately will negatively affect our economy.

    Here’s the Netherlands point of view 🙂 http://www.youtube.com/watch?v=ELD2AwFN9Nc

  101. Why is it always those that contribute the least that complain about other people loudest? Jerry, south, etc.

  102. Jerry – Hawk can afford a class action lawsuit. His portfolio was up 500% last year. He still can’t afford a house though, strangely.

  103. If there are a large number of people here who are saving up for a downpayment I have an idea for a little extra revenue. We hire Barrister to begin a class action suit against Hawk for repetitive strain injury, inflicted by hours of scrolling past his incessant and vapid posts.

  104. @ Hawk:

    Impeachment won’t come soon enough as the Russian connections get uncovered.

    LOL. Confirming that there is no evidence known to Hawk concerning the alleged Trump “Russian connections.”

    But we do know that Hillary and Bill and their associated foundations have “Russia connections.”

    https://www.nytimes.com/2015/04/24/us/cash-flowed-to-clinton-foundation-as-russians-pressed-for-control-of-uranium-company.html?_r=1

    So, if corruption is the criterion, Americans picked the right candidate.

    @ Introvert:

    Does anybody use UsedVictoria.com anymore?

    Yes …the other day bought a rocking chair advertised there — very comfortable. Now I can while away my last days here in OB in the utmost contentment, without any further thought of selling my old shack to a philistine developer intent on building a 6000 square foot monster home for some nouveaux riche foreigner with hot money to hide and absolutely no taste.

  105. It’s only January Marko in a thin inventory market and too many FOMO’s panicking still to over pay. Wait til March to May when the real market starts up. No need to pump numbers like JJ but then you must have a lot of time on your hands.

  106. Toronto up next, Victoria will feel the heat soon enough when the tide eventually goes out. No fad lasts forever.

    Canada’s biggest bank warns of possible cooling measures coming to Toronto housing market

    “Royal Bank of Canada warned on Thursday that policymakers are more likely to introduce measures to cool the Toronto housing market after home sales hit a record high in 2016.

    “The likelihood of policy intervention to address housing risks in Toronto is increasing,” economists at Canada’s biggest bank said in its January Canadian Housing Health Check.”

    http://business.financialpost.com/news/property-post/canadas-biggest-bank-warns-of-possible-cooling-measures-coming-to-toronto-housing-market

  107. With the multiple and healthy price slashes around town in prime areas and still no takers

    72 SFH sales in the core this month.

    Average price original: $1,043,543
    Average list price: $1,041,510
    Average sale price: $1,063,180

    Becomes worse if you go SFH in the core sold under $1,000,000. Sample size drops to 48

    Average price original: $733,875
    Average list price: $730,408
    Average sale price: $766,884

    Your average house in the core under $1 million has been selling 36k above ask.

  108. “As for Trump… give him a chance people. ”

    We did, one week of silencing the scientists, killing women’s rights, promoting racism, corruption and narcissistic pathological lying is enough for anyone I hang with. Impeachment won’t come soon enough as the Russian connections get uncovered. Hard to believe anyone can side with that psychotic bullshit whose trying to destroy democracy.

  109. Marko says:

    “The situation, in my opinion, is worse than at any point last year. Sales are obviously down but the interest on any semi-attractive property is insane.”

    oops says:

    “The biggest difference today is the ability of unscrupulous marketers and real estate agents to manipulate public opinion through social media. ”

    With the multiple and healthy price slashes around town in prime areas and still no takers, we can see whose spreading the bullshit on thick here. Starving agents in declining sales markets on declining price volumes go to great lengths to keep the pump alive. Pumpadoodledoo indeed ! 😉

  110. That could support my “home owners being responsible for home inspections” argument. It’s such a snowball effect of people who are cashing in on this, it is ridiculous.

    I just bought a condo. A house and a duplex in my price range popped up today and I got a little discouraged. But then I remembered that if they aren’t complete shit they will be bid up $50,000 or more. So they aren’t really in my price range…

  111. I was involved in one last night where four parties had the home pre-inspected/scanned for oil tanks, so that was four unconditionals at least.

    The inspectors and tank scanners must be laughing all the way to the bank. Used to be they did one scan and inspection per property sale. Now they do 5. Or rather they do one and charge 5 times for it

  112. 1521 Arrow Rd for almost a million. Yes, WOW!

    Even the outskirts are taking off. 3738 Ridge Pond out on Happy Valley Rd. Sold new for $600k. 5 years later (2014) it sold for $585k. Now sold for $705k.

    The situation, in my opinion, is worse than at any point last year. Sales are obviously down but the interest on any semi-attractive property is insane. Quantity of offers seems to be similar to last year but the percentage that are unconditional seems to have increased significantly.

    I was involved in one last night where four parties had the home pre-inspected/scanned for oil tanks, so that was four unconditionals at least.

    The unconditional offers are saving me a bit of time. I’ve adapated the practice of emailing the listing realtor, “how many pre-inspections have you had,” and when I receive the answer I forward to my clients and most just don’t end up writing. No point really, either you are competiting against an unconditional offer or the house was total crap and the party that did the inspection is pulling out.

  113. In Victoria, you can build ~2550 square feet at grade or above max (depends on the zone, but this is for RG-1). If you want more than that, you must build it at least 4′ below grade – and then you can add an addition 600 sq ft. In Oak Bay, area at or below 1 meter below grade is exempt.

    One of the reasons I like Oaklands, the lots are R1-B so you can do 3,000 sq/ft above grade.

    The below grade stuff gets to be very expensive in older neighbourhoods as sewer and storm are usually not buried deep enough to gravity feed the basement. I’ve seen storm water management/pump systems cost $20k+ with engineering, etc.

  114. That’s why I hope that we can build more duplex/triplex style housing – barriers to this might include city councils or developers

    In my opinion we could increase density in the core by just rezoning all the 50×110 lots into R2 and change the offset from 15′ combined to 10′ combined. Each side could then be 20′ wide, single car garage, you would have a bit of a yard for your dog to run around and you could do 1,800 sq/ft finished or so on three levels, what more do you need?

    No strata fees, no bylaws, no bs, other than a bad neighbour.

  115. While there may well be dips in house prices , even in the core, the long term trend for SFH, ESP quality SFH as these are so rare, will always be up so long as population continues to grow and the number of SFH in the core will not increase.

    This is key. The market will go up and down, but your places on the bell-curve in terms of wealth/income to obtain a quality home in the core will require more standard deviations in decades to come as a result of population growth.

  116. Facebook

    Go to Facebook search Victoria Buy and Sell. Lots of pages become members in the ones with huge membership.

  117. Does anybody use UsedVictoria.com anymore? For years, I used to sell stuff quickly using the site, but within the last year or so the traffic seems way down. Did everybody move to Craigslist or VarageSale? What do people here use?

  118. Luke: “As I said before, the mainland is not Victoria (I would know I lived there for twenty years and its 10x better over here – but lets not let the secret out!”

    Well, I’ve lived in the lower mainland for over 50 yrs so I guess I know a little bit more. lol. It sounds like you just missed the market correction in the early 90’s and definitely in the early 80’s.

    The market on the mainland for this real estate run-up is absolutely no different than the previous markets and crashes. They were all characterized by stupid price increases. My first house went from $48,000. when I bought it in 1980 to $108,000. in 1981.

    I’ve bought and sold over 6 homes in my lifetime and guess what? The real estate agent’s patter has never changed. We have another offer on the house!!! If you truly want it then you had better increase your bid. The most interesting thing is …. who knows if there is another bid. In a hot market there’s always another bid … right?

    The biggest difference today is the ability of unscrupulous marketers and real estate agents to manipulate public opinion through social media. Foreign buyers was a huge meme that drove even more fomo with the buying public.

    Yes they were a factor, but what middle class person would give two hoots about a mansion selling for $1,000,000 over asking. There is no trickle down effect. People selling those multi-million dollar mansions weren’t heading to the suburbs and overbidding houses.

    Sentiment is the only factor that drives these kind of bull markets…period. If you believe or you are made to believe that you had better buy now or be priced out forever, then you buy. Helicopters flying over White Rock (proven scam), lineups for condos (paid to stand in line) were all factors in scaring people into buying now. All of this abetted by the media.

    How about the mortgage broker’s contribution to this market. “A group of 45 brokers suspended by Home Capital Group Inc. for alleged mortgage fraud generated nearly $2-billion worth of outstanding mortgages for the lender, twice as much as executives originally estimated, the company revealed Wednesday.” http://www.theglobeandmail.com/report-on-business/home-capital-brokers-alleged-fraud-bigger-than-estimated/article27110594/

    Those are just the ones that were caught.

    How about homes/townhomes/condos being sold based on monthly payment. You couldn’t pass a development without seeing the monthly payment advertised. Not the price.

    Every city’s market took off after emergency rates were enacted, in conjunction with extremely loose qualification standards.

    How about if you tighten up all of those qualification standards that were enacted …. oops, less buyers.

    Conversely, if the public believes that the “chinese buyer” is no longer a factor so prices might actually go down, well, now all of a sudden, sentiment changes. Voila. Dropping prices.

    The most interesting part of that interesting site is that every city is seeing dropping prices. The crap that you see there in Vancouver is crap that was going for over asking last year and the year before. There is change in the wind and you had better be able to withstand the change in the tide.

  119. Andy7, here’s my theory for what it’s worth, from things I heard “on the street”:

    I think there was a lag after Vancouver’s prices started shooting up – during which people were seriously considering all their options about a big move out of the city – and finally a “tipping point” where people could realistically pull the plug and retire or move.

    That tipping point in Vancouver was influenced by many things: 1) prices 2) demographics/population spikes in boomers retiring and millennials starting families, 3) foreign buying, 4) spikes in tiny-condo developments that were useless for the prevailing local population needs, 5) gov’ts depending on RE to drive the economy, 6) more work flexibility in high tech jobs (working remotely)

    What I don’t want to see is the ghost-town neighbourhoods that happened in Vancouver – with only the most wealthy buying close to the city – living there just a few months of the year, if at all. Victoria has advantages over other small towns – long-term gov’t work (capital of BC), hospital/cancer/aging care, university & college, ocean access, tourism, etc – so it’ll remain popular.

    That’s why I hope that we can build more duplex/triplex style housing – barriers to this might include city councils or developers, who approve new $3M mansions built on a former $700k teardowns, or a 15-storey building with 500 sq ft units – we need more diversity. Those luxury homes don’t serve local needs any more than the tiny condos did.

  120. Below grade basements are common because the zoning encourages them. In Victoria, you can build ~2550 square feet at grade or above max (depends on the zone, but this is for RG-1). If you want more than that, you must build it at least 4′ below grade – and then you can add an addition 600 sq ft. In Oak Bay, area at or below 1 meter below grade is exempt.

    It’s a little silly because if you look at the outer shell of the structure (using setbacks and height regulations) you could easily fit all the required area at grade or above – but zoning won’t allow it. This is why so much area is put underground.

    Also, per a comment below about using rigid insulation as a water barrier, you should use ‘dimple board’ or ‘drainage mat’, not rigid insulation. This provides a full drainage plane against your foundation walls.

    As for municipalities pushing for higher density housing in place of large SFH – they do slightly. They offer incentives (5k) to put in a suite. To put that in perspective, it wouldn’t even cover the cost of the additional water line/meter required, which is now >6K. Want to add a storm water connection? That’ll be 9K please. I currently do not see it being financially worth it to put in a suite, since you need to excavate to get the extra floor area, extra concrete, extra water and service requirements, extra fire-proofing and sound proofing, second kitchen etc. It would take a long time to break even.

  121. Dasmo and Luke, I agree… and Alberta buyers have always been coming to the island, did it really change that drastically in a few years? (due to the oil slump) Anyone have population stats? Again just a few years ago friends in Comox couldn’t sell their place, now that market is booming too. Yes the economy is doing better in Vic, but again has it changed that drastically in a few years?

    I heard the same argument a few years back in Squamish about it getting “discovered” and it took off and now it’s in a slump (for SFH). It was Van and Whistler buyers getting pushed out, and moving to Squamish because at the time it was still affordable.

    Not trying to argue here, I just find the variables contributing to the markets fascinating.

    I really think it comes down to FOMO and affordability – the island was very affordable to buy for those that couldn’t afford the mainland or who sold on the mainland. The amount of people I know that have moved from Van to the island is astounding, for this very reason. What happens as the island affordability erodes?

  122. @Andy7, also changed was the green rush, exodus from Alberta. Then it’s simply that buying begets buying….

  123. 2111 Kings Road in Oak Bay just listed today for $1,065k and was sold just seven months ago for $802k. Yes they fixed it up but they didn’t live in it and I don’t think spent that much on it?
    Open house this Sat. and Sun!

    As for Arrow Rd. That sold in June 2014 for just $512k. Within earshot of the section of McKenzie that sounds like a freeway.

    What changed in Victoria? The market here was flat and undiscovered for so many years. Now, it would appear, tourists and buyers alike are ‘discovering’ it. While Van is coming off the highs now, remember that Van went up for years and years stratospherically to levels 3-4x higher than Vic, before the market in Victoria finally started to rise. One could argue, even with Van now dropping, we still have a long way to go… and the economy is now booming here so that’s another factor, but time will tell.

  124. The thing I find interesting about the Vic market is just a few years ago a builder friend of mine couldn’t sell his properties, and ended up having to move into one of them as a result. Now, they’d be gone in a flash. What changed in a few short years?

    The only thing that I see that really changed was the Van market went nuts and that impacted other markets and people left Van in search of more affordable properties elsewhere (Fraser Valley, Sunshine Coast, Squamish, Vancouver Island). Possibly a foreign buying element as well. If I’m missing something here, by all means let me know…

  125. oopwediditagain: As I said before, the mainland is not Victoria (I would know I lived there for twenty years and its 10x better over here – but lets not let the secret out!

    Foreign (mostly Chinese) buyers were a huge factor there and not here. Sure, we had the ripple effect from that in 2016, and this year that will likely diminish somewhat, but I don’t see the market for the rare quality homes in the core decreasing anytime soon, when the numbers of these homes does not nearly match the amount of people wanting them.

    The price decreases flagged on the interesting website you put out are often – crap boxes which could be near busy roads and/or over-priced to begin with. Remember, in a hot market people w/ crap boxes will take the opportunity to try to sell (better then than in a downhill market). And, many people have a falsely inflated idea of what their house is worth – the market will tell them what it’s actually worth. Also, I noticed many condo’s in the Victoria area w/ price decreases, so that was interesting (there are many more condo’s currently coming on the supply side in the core).

    As far as our sales/list ratio being down for January. Remember folks: It’s January, the dead of winter. Let’s wait and see what happens in the spring.

    Interesting comment ‘caveat emptor’ on Pandora being like the Downtown Eastside. I worked near the downtown Eastside for years and I can tell you it’s about 20x worse than Pandora. But, quite true that would be our ‘mini’ version of that, perhaps along with the ‘hood near Rock Bay (and lets hope it stays ‘mini’)

  126. 965 Byng probably is full of drainage issues as it has so many untouchable oak trees in front. It’s also a very small older home. Also, the grade slopes towards the house. In short- it’s a crapbox and even in hot markets crap boxes don’t sell. Binab has his work cut out selling that one.

    To answer Barrister… I meant the future in the core is not sustainable if the majority of people can’t afford to live there and raise a family. If we are forcing these people to be condemned to long commutes to the Westshore instead of changing zoning and planning mindsets to offer more diverse housing stocks in the core, then the future is only sustainable for those who already have a lot of money.

    While there may well be dips in house prices , even in the core, the long term trend for SFH, ESP quality SFH as these are so rare, will always be up so long as population continues to grow and the number of SFH in the core will not increase.

    While families may not want to live directly downtown. You can bet Fairfield, Fernwood, Oak Bay and other areas near the core are very desirable for many families. It’s totally true though, similarly to Vancouver but unlike European cities, we do not offer families many welcoming options in the core. There needs to be more diverse types of housing in the core that would appeal to families. But this will take a mass transformation of the mindset of our 13 fiefdoms, zoning bylaws, and planners. Can you see it happening?

  127. Even the outskirts are taking off. 3738 Ridge Pond out on Happy Valley Rd. Sold new for $600k. 5 years later (2014) it sold for $585k. Now sold for $705k.

  128. Another Oak Bay slasher for $50K off. Get’em while their not hot at 965 Byng.

    These Vancouverites and their $3 million cash outs are cheap bastards, it’s the same as what they sold over there for $2 million off. 😉

  129. people talk about multi-family dwellings but really most of the units in condo buildings are for singles and couples and possibly one child families. If you have more than one kid, it is hard to find three-bedroom units and they are as expensive as SFH outside of the core. I don’t know of many families who want to raise their kids in downtown Victoria. At least, I wouldn’t. What I would like to see is more three bedroom or four bedroom units/townhouses outside the core.

  130. Luke:
    The fundamentals are simple to see, and these are, the ongoing lack of SFH detached homes compared to people wanting them.

    Those fundamentals don’t seem to be helping the mainland, Luke.

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

    “Recently, there seems to be some sort of denial around the slumping sales numbers. Look I don’t know where the market is going, neither does the next guy. However, some are choosing to downplay sales even though we all emphasized sales only a short year ago. The latest excuse is that slumping sales are due to low inventory levels. This seems logical since little inventory means fewer homes for buyers to choose their “dream home.” But how quickly forget we set record sales last year despite record low inventory.

    As an example, the peak of the market was in March 2016. Despite (at the time) record low inventories, we set a record number of sales.”

    Follow the trend in every city. Sorry, but when there are more price decreases than price increases it must say something about the direction of the markets.

    http://www.myrealtycheck.ca/

  131. As a basement is not required as by some other colder provinces, there are probably two facts that cause the slope-back house style; 1 the house height and the footprint limitation 2. the ground grade, of course. But if we all build one level houses only, there would be much less houses with slope-back driveways.

    One thing we noticed is that the building code here doesn’t require an extra vinyl barrier over the under-grade exterior walls, as required by, say Ontario. I understand that we don’t need it for cold, but we probably do need it for moisture. One house inspector (in Ont) told us that if we want to build flower bed against the house foundation wall, we should install the rigid form between the flower bed and the wall, to prevent water and moisture getting into house.

    So when we bought our near new house here (no basement, but on ground level concrete slab, no crawl space, but the back and the north side grade seems slope back bit towards the house foundation walls), we dug out a couple feet deep, installed the pink rigid form along the entire wall, put back the soil with proper slope and added a layer of gravel rock on the top, about 3 feet wide along the house with a nice curve and some nice evergreen plants. No problem so far, and the rock garden looks good, too.

  132. When hunting for our house we were determined NOT to buy a home with a driveway that led DOWN slope towards the basement, and there were so many homes like this it defied imagination, so in early 2016 it made our search that much harder.

    We have this. The grading of the site is ok but the driveway slopes steeply down to the garage (old carport). A california drain is what keeps the garage from flooding. The place flooded for the previous owners when a creek overflowed. Then they did all the perimeter drains new with the insurance money (and some money from Saanich apparently). Seems to be good now, but all this talk makes me thing I should get drainscope to take a look to make sure. Finished basement would be a disaster if it flooded.

  133. @ tallguy. Agree especially since those bigger houses all have suites in them anyway. Just make them real duplexes or row houses etc.

  134. Luke:

    I have to agree. Even the prices of townhomes, due to their lack of supply, got to a point that after factoring strata, taxes, and whatever else, my partner and I settled on a condo. And the nice ones are getting bid up as well.

    There is a real antiquated zoning strategy in Victoria. And I believe that it should be mandated that any tear downs in central portions of the city are replaced with multi-family housing instead of bigger houses.

    And as I mentioned in another post, the number of 16/18/55 plus condos out there is really astounding. This issue needs to be tackled, especially in a housing crunch.

  135. Luke:

    Can you be more specific as to what you mean when you say a more sustainable future to be possible.
    I would like to be clear as to exactly what you are saying. Approximately how much population increase for the core are you suggesting, an extra 10,000 or an extra million? I am trying to get a clearer picture of what you are saying?

  136. Longer time reader, first time poster (poser?).

    We bought an older house last year on a slope that amazingly (knock on wood) hasn’t shown any signs of leaking. The neighbouring house was also sold. New owner tore it down and found bedrock that he didn’t know about. Blasted it out, but then the hole kept filling up with mystery water. Kept pumping it out, water kept returning. Could it have anything to do with the natural stream that runs through another neighbour’s property and straight to the blasted hole? They built a big house that they want to sell; they should include a pump as a housewarming gift.

    On a different note, thanks to you all for the education on real estate and the Victoria market – so invaluable when we were houseshopping; this page is a wealth of information (and occasionally amusing drama).

  137. Earlier today, on CBC Radio’s All Points West, a guy from CMHC was on the show, talking about Victoria’s situation. I didn’t catch all of it. The segment doesn’t seem to be available online.

  138. The CMHC report is overdue, for sure, and it talks about factors at play for the entire CRD, but it misses the mark that encompasses the geographic/demographic fundamentals at play in the core areas of Victoria.

    The fundamentals are simple to see, and these are, the ongoing lack of SFH detached homes compared to people wanting them. This is likely to continue to play out, and will eventually lead to a continued increase in SFH detached home prices in the core, no matter what Trump, or interest rates, or what happens in Van or elsewhere, or what Canada’s or the US/world economy does… The lack of land and continuing increase in population here will not, in the long term, change the fundamentals.

    We are on the way to SFH detached prices becoming more and more unattainable for most… in the core. And more diverse types of housing need to be made available for a more sustainable future to be possible.

  139. One of the things that really struck me the most coming to Victoria was many of the homes have driveway’s that slope DOWN towards basements. I could not understand why Victoria had such rampant development of this type which seems to stem from the 1950’s mostly. It defies logic.

    This obviously will lead to more drainage problems in the future and with climate change apparently ramping up… I know Victoria only get’s 1/3 the rain of Vancouver but still… it boggles the imagination…

    When hunting for our house we were determined NOT to buy a home with a driveway that led DOWN slope towards the basement, and there were so many homes like this it defied imagination, so in early 2016 it made our search that much harder. Thankfully, we were able to find a home that did not need a sump pump and actually had drainage that sloped DOWNHILL… away from the house!

    As for Trump… give him a chance people. I had some thoughts that he might actually be a good thing for US/UK/Canada?? The Mexico wall thing is ridiculous, but revisiting China on trade…? Can you or I find things that aren’t ‘made in China’ anymore? Does that need to change?? Sit back and have a think about some of the things he says because while not everything makes sense some things actually do…

  140. “Rising prices in those markets “indicates that home price growth may be driven by speculation as it is outpacing what economic fundamentals like migration, employment and income can support,” CMHC’s chief economist Bob Dugan said in a statement Thursday. ”

    In other words it’s a gambler’s crap shoot market = high risk to lose. Speculators in any overvalued market always get burnt no matter what the product or investment.

  141. You would think that the overall CMHC score would be a weighted average of the other scores. But that’s clearly not the case. It suggests that there is some other element, perhaps a more subjective evaluation, that is thrown into the mix. It does look a bit strange, and it undermines their credibility a little. They should publish the scores and the thresholds.

  142. Excellent info CuriousCat and posters, thanks. Inspector thanks also for posting the roof information. That’s exactly what we’ve been investigating at our place. A torrential December rain caused some moisture in one part of a wall in our basement, and during the rain, we noticed floods of water pouring from our new roof’s “valley” and into our downspout, so we’re looking into a separate pipe system for that now. Great to know what other people are doing.

    Leo, funny you mention the CMHC red/yellow/green colours – I was wondering about that. I might be missing something, but there doesn’t seem to be a standard formula for the “Overall Assessment” colour – is this because there are different analysts preparing the reports – if so, it would be useful for all the analysts to standardize on some thresholds for colour changes.

  143. I think you’re right, Leo

    I’m surprised you didn’t mention the other possibility which is that they are out to lunch with their current report. What immediately stands out is that the individual components are either rated green or yellow but the overall assessment is red. Seems weird. Will dig into this more when I have time.

  144. I’m surprised the CMHC had it in them. Given the last report we seemed similar to Moncton NB, I was wondering if any of them were even talking about Victoria or if they were, how they could arrive at such an assessment.

    The author of this report subscribed to the site shortly after he took over from the last author. So looks like he got educated 🙂

  145. This solid pipe system doesn’t have to be buried down at the base of the foundation and doesn’t have to be right up against the house. So you can avoid some of the expensive digging.

    I’ve seen this done on a we homes and it doesn’t look great aesthetically.

  146. I have a question:

    One of our rental properties is about 20 years old. No signs of water in the basement, or any water issues at all. Should we get the perimeter drains checked out? We have no record of them being checked before our purchase.

  147. I have zero concern for people in the real estate industry.

    I have dealt with many realtors over the years. Most were pushy sales people with little interest in the well being of their clients. Some are okay and one or two were lovely people. But sympathy if the market slows down? Nope!

  148. gwac:

    Your clay solution working is as much a grading issue as it is placing an impermeable layer (clay) to prevent water penetration through the surface.

    Grading alone won’t work if you have gravel fill next to your walls.

  149. Thanks, Dasmo, TallGuy, Marko, CuriousCat.. I know it’s hard to know exactly what you’ll be in for with an older house water-wise until you live there, but it’s good to go into house hunting armed with all of this information.

  150. Just a short comment on the drain issue (great synopsis by the way). Up until the 1980’s roof drains were directed into the perimeter drains (known as a one pipe system). It wasn’t until later in the 80’s that a two pipe system became common. This involved a second system to take the roof water to a point beyond the house where it could be connected into the storm drain system. I mention this because the roof water is often the culprit when it comes to flooding. Consequently it can often be a lot less expensive to put in a second solid pipe system that diverts the roof water away from the house and downstream of the perimeter system. This solid pipe system doesn’t have to be buried down at the base of the foundation and doesn’t have to be right up against the house. So you can avoid some of the expensive digging. I often suggest people do this first before digging up all of the perimeter drains. Sometimes (often actually) it can be the cure.

  151. John Dollar:

    Totally agree that a decline in volume of sales will effect people in the real estate industry but to a lessor degree will also effect a number of other industries such as home renovations. New owners have a history of doing upgrades in the first couple of years.

    What factors are at the top of your list in accounting for the slow down?

  152. I thought of James Bay being like the West End; Fairfield a bit like Kitsilano, Rockland like Shaughnessy, Oak Bay a bit like the West side, Fernwood like Mount Pleasant, and so on….

    Pandora of course corresponding to the Downtown East Side. I live in Fairfield and I occasionally tell people it is the Kitsilano of Victoria. Bit of a stretch though. Cook Street Village isn’t quite as trendy as 4th ave.

  153. Has anyone been in the house for sale on Balfour? A casual acquaintance mentioned she and her husband were looking at it. Looks like a hell of a lot of work. Maybe a tear down?

  154. Never had an issue in Victoria. Everything slopes away. In another province. 1940`s house, foundation block. I was told there maybe a moisture problem. Unfinished basement. First week 3 inches of water. I called the inspector. He ask me if I wanted the expensive solution or cheap. I said cheap. Get 2 yards of clay and a yard of white stone. I put clay around the perimeter of the house foundation so nothing sloped into the house foundation and put the white rocks as decoration on top. 50% of the House. $125, never had water issues after that and looked good after a bit more landscaping.

    Moral of the story try to find away to not have the ground sloping into your house.

  155. I had my basement totally flood in the first and second years. Drainscope was the fourth company that came out to try to fix the problem. They did a great job and I was very pleased with them. I wont mention the other three since it is not fair to complain about what rips they were when my name is not on this letter.

    I also spent a number of nights pumping my basement out as the water flooded in using first a shop vac and then when it died using a heavy duty pond pump with a hose attached.

    I would strongly suggest that you get someone like Drainscope to do an inspection while you are doing the regular inspection. One more reason never to buy a house without full and very professional inspections. This flood of unconditional offers is like betting in Los Vegas if you are buying an older house. It may be time to legislate that all residental real estate offers must contain a five day inspection clause in them.

  156. Very interesting and useful post, CuriousCat. Glad things are under control now — and you didn’t break the bank!

    CMHC does a complete flip flop on Victoria moving the rating from Green (no problem) to Red (high alert) in one quarter. Clearly conditions didn’t change that drastically in 3 months so this is finally an admission that their previous reports were a joke

    I think you’re right, Leo.

    We live in a city with heavy rainstorms and some areas have a high water table. Buying a home that has proper drainage, above the street grade and not down hill from your neighbors will help but there are no guarantees.

    Also, make sure your home insurance covers sewer back-ups. Some policies automatically include it; others require you to add it as an endorsement.

  157. @VicRenter our house in VicWest was built on a rock with a slope. Perimter drains were long gone. Some down spout diversions and some proper sloping and there were no general moisture issues. When we did get flooding from the driveway sloping down before diverting the one downspout. Much better now but that one side could need doing (not my problem anymore) Water would at least just go out the back door of the basement if it started coming in unchecked. Benefits of being on some high ground…. Anyway, after first buying it I had my own all night battle with the floods armed with the shop vac. Fun stuff. I felt better the next day hearing stories of basements filling up with water! At least my water was just passing by!

  158. Downspouts and perimeter drains address separate issues and shouldn’t be connected. Downspouts should be connected to your storm sewer service downstream of the perimeter drains. You shouldn’t rely on perimeter drains to drain your roof and your foundation. The are generally a 3-4″ pipe with little slope.

    People extend the downspouts when the perimeter drains are broken/don’t exist or the perimeter drains are overwhelmed by the roof drainage because the slope/drainage directs water towards the house.

    Also, in combined (storm and sanitary) municipal sewer systems, the municipality will request that homeowners disconnect their rainwater leaders and run them overland to prevent sewage backups during high rainfall events.

    If you have overland downspouts/rainwater leaders, you should extend them as far as needed to ensure positive drainage away from your house.

  159. Thanks for the opinions re: sloped bedrock. How effective is diverting the downspouts 6ft from the house vs having perimeter drains? I’ve noticed a few places I’ve looked at that have done this.

  160. Lisa H has seen the CMHC report – I just sent it to her and got a “Thank you” (after the canned response) 🙂

  161. Thanks for your post. We, knock on wood, haven’t had a flood. One thing to keep in mind with water damage though is to check your deductible. Often it is quite high for this type of damage as it is a frequent claim. My parents had a big one and it took ages to process the claim and do the work and their deductible was $2000.

    I know it shows a problem has been addressed, but I’ve always avoided homes that have sump pumps. We travel a lot and the last thing I’d like is to be away when something goes wrong with it – they don’t last forever – and then have to deal with the damage. A solution that includes a sump pump is good if you are comfortable with it, but it may impact your home on resale as it is not as worry-free for a new homeowner as perimeter drains. Maybe the impact on resale is less than the cost to install perimeter drains when you have to rip up new patios and walkways though…

    I remember looking at a partially below-ground unit in a converted triplex in Fairfield – it had an in-house sump pump! Like a covered hole in the living room floor. Lifted up the lid and there was water in the bottom. Not to mention the fireplace clean-out for the upper unit was in the bedroom… Or the kids running around overhead on the poorly insulated floors… Or the fact that there was no off-street parking as required by the City and in the plans, as the upstairs owners had converted it to a deck with raised beds and play area for their use. And street parking for a triplex was not permitted – only duplexes and SFHs.

  162. I’m sure CMHC, and as any business owner would understand, the seasonally uncharacteristic decline in month over month sales and yet prices are rising rapidly is concerning. That means less money flowing through our local economy as it isn’t the price of the house but the number of sales that sustain jobs and create new ones.

    If this were to continue it could lead to lay offs in the industries related to real estate that now comprise a substantial portion of our economy.

  163. I’m surprised the CMHC had it in them. Given the last report we seemed similar to Moncton NB, I was wondering if any of them were even talking about Victoria or if they were, how they could arrive at such an assessment.

  164. Just out of curiosity, anyone have an opinion on how likely it seems that a house built on a slope on bedrock might have or avoid water issues?

    If the footings sit on bedrock on a slope you almost always get a leak between the footing and the rock. It’s so hard to seal. If you are the very top than you are fine.

  165. “CMHC does a complete flip flop on Victoria moving the rating from Green (no problem) to Red (high alert) in one quarter. Clearly conditions didn’t change that drastically in 3 months so this is finally an admission that their previous reports were a joke”

    Agreed LeoS, it was a total joke 6 to 9 months ago or more but the pumpers like Mike and those in the bizz who troll on here kept pumping out (and still do), that we’re the greatest place on earth and oh so cheap.

    Wake up time, it’s ripe for a crash as Adolf Trumpmeister keeps spewing out the strange voices in his head on an hourly basis.

  166. Reason,

    Looks like CMHC is seeing more bad news/defaults than they are letting on to keep putting out these type of messages like the BOC has been. They don’t keep repeating these warning just for kicks.

  167. Two years ago during a heaving rainstorm the city drains backed up and water was rising above the curbs, up the driveway and into the garage of my neighbor’s new home. Instead of waiting for the city to fix the problem, I waded through in my combat boots and cleaned the debris from the drain and the water was sucked down the drain emptying the pond on the street. If I had not been home that day, the neighbors house may have been flooded.

    We live in a city with heavy rainstorms and some areas have a high water table. Buying a home that has proper drainage, above the street grade and not down hill from your neighbors will help but there are no guarantees.

    Paying attention to these matters before buying will help.

    So go and clean out those gutters and have your perimeter drains and catch basins inspected.

  168. VicRenter – it depends on the slope. For my scenario, imagine you have a length of 2 by 4 flat on the ground and you nail a small box in the middle of it. Now grab one end of the 2 by 4, lift it at a 45 degree angle and pour a glass of water at the top end of the raised 2 by 4. The water will saturate that one side of the box and find any way it can to get inside. Clay or bedrock, I don’t think it matters. You can notch the 2 by 4 just before the box and the water might go down the “moat” and never touch the box. I think that’s the basic idea with perimetre drains. Unfortunately the notch in the 2 by 4 in my scenario was too high up the plank, and some water was just hopping over it. So on the inside of the box I’ve put a plastic wall that collects and funnels the water into a cup. If that cup overflows, it would continue down the box, out the bottom of the box (garage door) and down to the bottom of the 2 by 4. I haven’t stopped the water from entering the box, simply redirected it to a section that can handle it and thus protecting the rest of the box.

  169. Hawk, I’ve thought about that, and the reason I feel it’s unnecessary in our case is because the sump pump is located in the garage which has nothing in there that would be damaged by flooding. I can turn the hose on in there and wash my concrete floor and it all flows down towards the garage door and down the driveway. Unlike some other homes, my driveway slopes down towards the street, instead of down towards the house.

    Basically I’ve only addressed the water coming in from that one wall. If there was overland flooding coming in through the windows in the other parts of the basement, then I would be screwed, but the windows are fairly high up, they aren’t in window wells, so the chance of that happening are like zero.

  170. One more thought about neighbourhoods. As a transplant from Winnipeg, my thoughts regarding Victoria are that there aren’t any bad neighbourhoods. In Winnipeg there are entire sections of the city that people would avoid and be scared to drive down, let alone walk! When I moved here I asked people which areas I should avoid, you know, the ones that are “dangerous”. The only response I got was that Esquimalt was kinda “scuzy”, so I had this idea originally that there were gang members in Esquimalt and I better avoid it! Well, after reading the TC for a few months and not seeing anything about murders, home invasions, stabbings, gang wars, I realized people here had a very skewed idea of what a “bad area” means. I started to explore more of the city and was shocked that pretty much every area I felt safe. Fast forward 15 years and sure, the downtown has deteriorated a bit, but it still isn’t scary for a city of this size.

    A couple years ago my cousin from Wpg was here for a visit and the night before she left she wanted to have a “girls night”. It was a Thursday in August, we went downtown for dinner and then walked pretty much from the Inner Harbour to Chinatown and back afterwards, snapping photos of everything, being silly… and we never felt “unsafe”. We actually marvelled that the streets were actually kinda deserted after 10pm and nothing much was open. The clubs are pretty much on the outskirts of downtown and only a couple pubs were busy enough to have people spilling out of them. All in all, very tame. (In many other cities, walking to your car after dark after dinner can suddenly make you go, omg what was I thinking?? while you clutch your purse by the straps ready to swing it, giving yourself a mental pep talk that yes you CAN stab someone with your keys if you have to.)

    This to me, is what makes Victoria stand out. The scenery, the climate, that’s just cherry on the icing.

  171. I’ve seen that type of system installed in a high end Uplands home and the sump couldn’t keep up during a heavy rain year. It was ugly. You might want to put a back up pump in there/and wet floor alarm system.

  172. Just out of curiosity, anyone have an opinion on how likely it seems that a house built on a slope on bedrock might have or avoid water issues?

  173. Thanks so much for this, CuriousCat! I hadn’t realized that an interior drainage system is an option so this is great to know for my own (old) house hunt.

  174. In response to Barrister’s question in the last post, I think the Gorge/Tillicum area will continue to be an area that is accessible to the middle-class, simply because of the age and size of the homes. Most of the housing stock here are built between 1920-1960 and are 2 beds/1 bath up over a < 7′ basement or crawlspace. One thing I noticed driving thru the neighbourhood is that there are “nice” streets and then “not-so-nice” streets (cars parked on front lawns being a pet peeve of mine). However as more families start to move in (being that this is the only place they can afford in the core), the homes are being fixed up, the yards are being cleaned up, and the rif-raff are moving on.

    The example of the house sold on Donald St I think demonstrates that the “floor” to enter the SFH market in the core has been raised. I think 2 years ago, this home would not have sold for more than $460,000.

    Another home that just came to market, 569 Hurst in Glanford is a 2 bed/1 bath, 1035 sq ft home on a crawlspace with a detached garage, listed at $535,000. In terms of housing stock, this is probably the bare minimum for a family to squeeze into if they want to be in a SFH in the core. This is why I keep an eye on these properties, vs. the crazy $1.5 million homes in Oak Bay. I think the bottom rung tells more of a story regarding the market here.

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