Goodbye sweet trend

Well it had to happen sometime.  After a completely unprecedented 45 consecutive months of year over year sales increases, we finally see our first decrease with January’s 478 sales which is down 11% over last year.

Expect all of this year to be in the red given it will next to impossible to match last year.  Be it the high prices or the lack of inventory, we won’t be seeing sales numbers like last year’s for a long time.

Market conditions, however, continue to stay at record hot levels.  As usual, I like to use the 12 month average of both prices and months of inventory numbers because not only does it smooth out the notoriously jumpy monthly price figures (average up $79,000 in November, down $103,000 in December, up $55,000 in January) but it also flattens the seasonality in the months of inventory and shows whether the market is heating up or cooling down.

For example, months of inventory has been increasing from a low of 1.5 last May to 2.3 now, but that doesn’t mean the market is cooling down.  Remember that months of inventory exhibits seasonal patterns, being lowest in March/April/May, and highest in December/January.   So our current level of 2.3 should be seen as the high water mark and should drop quickly as the spring arrives.   Looking at the 12 month trailing average shows we are still setting new records for market conditions.

That said, these are overall market conditions and we have seen that for single family homes it is actually significantly less active this year compared to last January.  Is it the high prices driving people into condos and townhouses?   Sure seems that way with only 49% of sales being single family detached, the lowest reading in several years.

That is perhaps not overly surprising given we are still seeing detached prices up 15-20% year over year depending on how you measure.

By the way it’s getting quite lonely among the cities with strong increases.   Vancouver has been moderating rapidly and there are no signs of anything turning positive there soon.   That leaves only Hamilton and Toronto at double digits going strong with the rest of the country wallowing in various states of despondence.

How much longer can we ride in that company?

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165 thoughts on “Goodbye sweet trend

  1. The house price bubble is bursting and it will happen. I have seen this over and over again over the decades back in the UK. Once the prices reach a point where first time buyers cannot even afford a small house/condo/suite etc then the markets legs have been cut off.
    Good thing too. Other factors come into effect of course from the economy etc., and I see no evidence that the Canadian or BC economies are hugely strong and moving forward enough to sustain buyer confidence at these levels.

  2. @ Barristopbipol:

    “Market will stay strong till inventory fills up”

    Or inventory will fill up when market weakens.

    In fact, in OB, market has already weakened, giving rise to increasing inventory of $2-million-plus houses.

  3. “Other factors driving up the house price to income ratio are house sizes and finishes. Average house sizes have about doubled in the last 40 years and it’s not like developers are building that extra space for free. Also seems like everyone wants the fancy finishes over anything else. In the age of self improvement, everyone needs granite and crown moulding. A couple of years ago a family member bought a townhouse in Vancouver over a house because of the newer updates (mostly kitchen), but it’s a crap build with issues like attic mold and a postage stamp lot.”

    That’d make sense if house sizes just got bigger in the last year…

  4. Maybe this is part of the reason condo prices have lagged behind houses. Would love to see the price charts comparing housing types with square footage accounted for.

  5. Other factors driving up the house price to income ratio are house sizes and finishes. Average house sizes have about doubled in the last 40 years and it’s not like developers are building that extra space for free

    Interesting how houses are growing while condos are shrinking.

  6. Other factors driving up the house price to income ratio are house sizes and finishes. Average house sizes have about doubled in the last 40 years and it’s not like developers are building that extra space for free. Also seems like everyone wants the fancy finishes over anything else. In the age of self improvement, everyone needs granite and crown moulding. A couple of years ago a family member bought a townhouse in Vancouver over a house because of the newer updates (mostly kitchen), but it’s a crap build with issues like attic mold and a postage stamp lot.

  7. Marko:

    I am one of the guilty ones that went to open houses in oak Bay and Rockland. My choice of which houses to view was solely based on the logistics involved in combining my daily walk with a viewing. Sorry, at my age if you dont do a walk every day you pretty well rust frozen.

    But i agree that there are some great places for a reasonable price outside the core. I spent my whole working life commuting at least 45 minutes each way when I was in toronto. At lot of my friends travelled further. Commutes, including the West Shore, are not bad in this city.

    The inner core may be unaffordable for young couples but the inner core is primarily retired people. Retirement homes, along with government and tourism, are one of the big employment industries here in Victoria. Those old grey hair people spend an enormous amount of money here in Victoria and create a lot of jobs not to mention the amount raised by the city in taxes. A large segment of the construction and renovation industry depends on those retirees continuing to spend money and provide jobs as does a fair segment of the real estate industry.

  8. oopswediditagain
    What this has done, in conjunction with historically low interest rates, has pressed the FOMO button hotter than any time in history

    Don’t forget the baby boomers. Here is article from 2 years ago, but we are all living together longer and those with the means, high incomes and lots of equity, the 1% percenters is now more like 5% percenters due to the increase in RE; are pouring more money into RE. Fact in point, we have MANY friends, empty nesters in Victoria, that are building new 4000 sq ft+ homes.

    Where did they get the funds? Easy,
    1/ they had 1 principle residence, and 1+ investment properties
    2/ they had stable jobs + seven figures in retirement savings
    3/ now everyone gets there CPP, OAP, and income from retirement savings, they don’t need the extra investment property
    4/ they sell the investment property, knock down their old house, build a new one and spend a year travelling the world

    This is not as far fetched as it sounds, but many people we know purchased investment properties at 1.5x to 3.0x their annual income 30 years ago and now it is worth 750K or more, so you knock down your old house, put in the gym, extra rooms for the guests, if they come…haha

    In addition we have 3-5% foreign buyers + the Vancouver crowd + the retirees from all over + dirt cheap money and you get the perfect storm.

    Say we lose the foreign buyers, and Vancouver guys get gutted, but you still have left over a healthy demand of retirees. If you drive around the core, like Rocklands, OB, Saanich, etc… who owns the new house or the estate on the corner? Don’t want to stereotype, but you’ll likely see an couple with lots of grey in their hair tending to their manicured gardens.

    We have to accept Victoria is NOT A CHEAP city, never was, and never will be. The people who have accumulated assets keep on getting richer and the barrier to entry to buying a SFH is getting steeper for younger folks. This entire QE thing around the world is the #1 culprit in driving RE prices through the roof in every desirable country to live in. This will not be an easy problem to resolve and won’t go away. A 20% discount on $1MM house is still $800K, or at least 8x’s a gross middle income salary. In the early eighties, the average house in OB was $150K or less and a dual income family, not many then could expect to pull in $50K or 3x’s a gross middle income salary.

    The problems and causes we can all likely to agree upon. How to fix this is impossible IMHO. We would need a 50% decrease in prices ballpark to have young families enjoy the same financial circumstances that we had. Paying a large % of your take home pay for the next 25 years to buying a dream shack is not a lifestyle one endeavours to have!

    My only advice to young people is buy what you can afford and have a life. Even if that means the Westshore. Good luck to HHs!

  9. Marko:

    How is $550k for a condo a measure of affordability?

    $650k for a house with a 45 minute commute is okay? I could probably by the same house in Sooke for $525k. Is that still good value?

    Everybody on this message board is full of shit, including me.

  10. I like how everyone went to open houses in Oak Bay and Rockland 🙂

    It is not all dire in terms of affordability if we take our Oak Bay glasses off……a few days ago a 2009 build sold in Happy Valley for $634,500. 2,351 sqft finished, 9,556 sqft lot and a legal two bedroom renting for $1,150 per month (carries approx. $250,000 worth of a mortgage).

    Alternatively you could buy a 1,207 sqft condo in this high-quality concrete building starting at $554k – http://www.lyraresidences.com/floorplans (Floor Plan A) in the core.

    There are options out there but if one says a bench mark for your average family should be a SFH in the core things are looking dire.

  11. Ash: “How long can the real estate obsessed city of Van keep going like this?”

    I think that you have to understand the “sentiment” behind this obsession, Ash. First of all, most people want to have their own home. That’s close to a given. Not everyone can afford a home at the best of times …. based on fundamentals, anyhow. That’s an understanding.

    What has happened in B.C., in particular, is an unprecedented media blitz on home ownership and price escalation based on the “yellow peril”. Helicopters full of chinese buyers (scam), lineups for condo sales (paid to be in line) and continuous highlights of chinese buying extravagant homes.

    What this has done, in conjunction with historically low interest rates, has pressed the FOMO button hotter than any time in history.

    Boomer parents afraid that their children were going to lose out on home ownership pushed their kids into buying and when they couldn’t afford it; they dug into their equity and financed their kid’s bidding wars. Prices rose and the cycle fed on itself.

    How did this change? The market was already starting to crumble in on itself before the introduction of the Foreign Buyers Tax, but the psychological affect of this tax was illuminating.

    Once the sentiment was that Chinese buyers were shut out, the world changed. The same driver for this market going up is going to drive this market way down.

    Fundamentals played absolutely no part in this bull market. It was strictly sentiment and that has changed. When will it bottom out. Let’s put it this way. Who wants to buy anything when they know its going to be cheaper.

    Answer: Just a few people catching falling knives.

    Unfortunately, boomers have sold their kids, unknowingly, down the river and everyone is going to pay for this mistake.

  12. Now that the pattern of increasing year over year sales #’s has finally ended it is a good time to remember the wrongest ever prediction from our former resident bear:

    “The sales boosting effect of the (soon to be underwater) rate hold crowd will taper off before the end of September, then sales will tank.”
    info – Sept 3, 2013

    Since that prediction a 40 month period of increasing sales. That bearish call also marked what in retrospect was a great time to get into the market. Use caution when listening to the doomsters as well as to the pumpers.

  13. Oops said on Vancouver: “Methinks that there were a lot of people catching knives that particular day, Michael.”

    Call me a contrarian but if I was looking to buy a detached house in Van, I’d be watching the market very closely for signs of a turnaround. I wouldn’t jump in this very moment and buy, but I’d have to ask myself, how much better will conditions get with avg prices down 20% (per Hawk) and several places languishing looking for a buyer, with time to shop around, get inspections etc.

    Strong regional employment, high rents/ tight vacancy, and not an interest rate hike in sight. How long can the real estate obsessed city of Van keep going like this? Also, something seems off with condos/townhouses doing better than houses. Thought it tends to be the other way around when there’s a real downturn?

    I’ve said before, it’d be great if Van prices came down to earth and stayed there for a while, but I’m not holding my breath. And if I was, say, in a Van condo and looking to move up the ladder to a detached place, I’d be watching that sell/list ratio closely.

  14. Went to the open house on Eastdowne – lots of people throughout the house. Good amount of space but could use some improvements. They’ll probably get close to asking because of a similar house that sold in the neighbourhood for around $50k less. Would be interested in final sale price.

    Why is there always 1 guitar in all the house pics now?

    “I did not want it to happen to Victoria” – agree, Luke – we’re on the same page.

  15. House on the corner of Brighton and Maddison listed of 700K went for 750K. Small lot, small house, odd layout…scratches head…

  16. Going to a couple open houses for a few min and projecting the entire future market… seriously?

    In certain price ranges there is always fewer viewers of homes. Try to get out of your hood and go see a verity of open houses, or even better yet, look at the numbers from a month ago to see where the market is. At your age I’m surprised by the almost daily back and forth “it’s crashing, no wait there is a sale in Oak Bay!”.

    Market will stay strong till inventory fills up, there is too much of a backlog of people wanting to move up down sideways exit etc.

  17. Just went to an open house on Pemberton; two couples one of which were just neighbours diverted from their walk. House was okay but in spite of a large lot not very much privacy in the back.

    I also noticed that the one on 617 St. Charles has not sold in spite of having a basement suite.

    Too early to tell but there seems to be hints that there is a real slowdown in the number of buyers.The next couple of months will be interesting.

  18. As for the two council members wanting to introduce the empty home tax and foreign buyer tax in Victoria…

    I get how they want to solve a problem BEFORE it happens (if it ever happens here at all), but I don’t think empty homes owned by overseas investors is a problem in Victoria like it was in Vancouver. In Victoria, it’s more likely Canadian ‘snowbirds’ who leave homes empty part of the year to flee our Mediterranean winter, rather than overseas investors letting weeds grow and hollowing out ‘hoods in Van. So I ask, should Canadian snowbirds now be penalized further? They already have the 180 day limit to leave – or else loose gov’t benefits they worked hard all their lives for – and now they have the low-ish loonie to contend with. I don’t think they need another tax.

    However, when I saw what was happening to ‘hoods in Van last year, before these policies were introduced there – I did not want it to happen to Victoria, and was glad I lived in ‘hoods that were vibrant communities with ‘lights on’ and activities in houses with friendly neighbours, etc. We also don’t want ‘ghost’ condo tower ‘hoods in Victoria, like Vancouver’s Coal Harbour ‘hood for ex.

    So, I can see the merits of what these council members propose. However, I would caution not to penalize people who use homes part time during the year (the home should be left empty all year to be subject to the new tax – which indicates oversea’s investors using it as a commodity). I am also concerned sometimes as to the increasing ‘Orwellian’ nature of our three levels of government’s and how they seem to want to poke their noses further into people’s business more and more and more. How do we strike a balance?

  19. I went to 2125 Fair St open house yesterday – on for $1.6m (add GST and PTT brings it to over $1.7m). The open house was very busy – but as people say – that doesn’t mean much?
    Boy was I shocked at many things – the house was cheaply done! Fixtures were loose, sump pumps in the already wet crawl space (really high water table in that area – ugh – I hate sump pumps!), 4 and 3 storey, really tired looking, old rental apartments staring at the backyard, bomb site for the yard of one of the neighbours (probably a nearly dead), and even the turf in the yard improperly done! None of the closets had any fittings either. This house is in a ‘four house’ cul-de-sac where two of the homes have already sold. I thought, priced really high for what it is but what the market thinks will be telling… if you didn’t mind the rental apt’s looking at you, location was good.

    As for the Henderson neighbourhood near UVic/Mt. Tolmie with the large lots – incredible how the market can change from homes sitting for months for $800k to selling in days for $1.4m in just a few years!

    Here’s an appropriately priced home for this market just on… 2586 Eastdowne Rd in Oak Bay, at $974k…open house today… but is it another ‘lipstick on a pig’ home that will probably sell?

  20. Hey Marko, have you suggested canning the HPO Exam to the liberals for their initiative to cut red tape yet?

    Will get on it in the next few weeks. People emailing me are gradually getting more agitated. One guy on Friday was on hold with the HPO for two hours and then got disconnected.

    I’ve personally tried phoning them in the last couple of weeks and I get a message “we are overloaded with call volume, please try another time.”

    I can’t believe how stupid government is….if they just put together a study guide (number #1 reason owner-builders phone, trying to get resources to study) they would probably save thousands of hours of answering phone calls, but I guess if you get paid to do it why not waste a bunch of resources. Someone needs to go in there and clean house starting the the CEO who makes $317,000 – how does someone sign off on an exam to resources to implement it for a problem that doesn’t exist in the first place?

    I haven’t really had a problem paying taxes up until this year but I’ll be seeing my accountant more frequently going forward to try to avoid as much as I can.

  21. “What’s going on with 11 – 4391 Torquay? Wasn’t there talk of crazy swarming crowds there a couple weeks ago? Now relisted for $30,000 less.”

    Agreed with those who can see the light. Crowds don’t equal a sale, just a lot of pump and hype. Guess the 40 agent cards on the table made for a whole lot of nothing at $30K off.

    Looks like Peak Victoria is in motion and will set the tone for the coming new listings that you aren’t going to get what you think you will.

  22. In the last couple of weeks my wife and I dropped into about five SFH open houses; have not seen any crowds at any of them. Might be fluke but it does not seem nearly as busy as last year.

  23. A big crowd at an open house does not mean much. It’s mainly nosey neighbours, people going for a sunday drive or just people curious from all the talk of real estate here. I keep hearing these stories of 100 people showing up at place on this board. Big deal. For the people really interested they think it means they have no chance or have to bid way over. The reality is most of these people have no intention of making an offer. Part of the problem is just hype making it seem like you have to put an offer in quickly at some silly price. Don’t be a sucker.

  24. Torquay :

    Half a million for a forty year old townhouse with near SFH taxes, $350 per month strata, and low walkability.

    From my own market watching, half a million for a townhouse is a tough sell without location.

    Speaking of, did that townhouse on Roberts Street sell? The wife and I were taking a gander but we were scared off by the crowds and the bitchy strata manager.

  25. What’s going on with 11 – 4391 Torquay? Wasn’t there talk of crazy swarming crowds there a couple weeks ago? Now relisted for $30,000 less.

  26. Leo, is there any evidence to back the hypothesis that Victoria’s real estate prices are “stickier” on the way down than those of other real estate markets in Canada, historically speaking?

    Not very convincing evidence. Yes the graph I posted doesn’t have much declines at high inventory levels, but that is only covering 1996-2015. If we had data back to 1980 we would see what happened during that decline.

  27. Michael: “Maybe the tax change is already heating things up.”

    Methinks that there were a lot of people catching knives that particular day, Michael.

    http://myrealtycheck.ca/

    Average Change: -3.50% Up:12 Down:34
    Overall $ Change: -3029188.00 Average Change Amount:-65851.91

  28. Mike, you mean you forgot about the previous 41,56 and 62% days ? Average prices are down 20% YOY and $100K just last month. Keep the fake news coming.

    Barrister, lets see if they actually close. Wessex and the other large deal have fallen through in the past month in Oak Bay. Sounds like the bankers don’t like the valuations and wouldn’t finance.

  29. Hawk:

    If you are going to post how many new listings in Oak Bay in the last few days you might also mention that there have been four SFH sold.

  30. 3 more new Oak Bay listings, that’s 6 in the last 2 days. Looks like the so called “well off” see the writing on the wall.

  31. Sounds like your friend didn’t get good real estate advice from you to slap some paint on and wait 2 years. Isn’t “Golden Head” a racist term according to Introvert ?

  32. No chit chat on OB suit?? I am surprise. Legalize mortgage helper, will OB becomes “Golden Head”?

  33. Hawk, my friend sold his 3158 Wessex 2 years ago for ~650k and the new owner is asking for 1M + after new floor and paint. No matter what you are smoking, the price of Victoria RE went up, way up, higher than 420.

  34. @SweetHome, Not unpredictable so much as more expensive. When I bought in 2003 I remember watching properties flip up for years after. That little crapy house on pine st seemed too risky @ $149 with the ants eating the sill plates And the hard core biker neighbours. Someone bought it and flipped it for $180 doing nothing. The next people painted and flipped it for $240. Ahhh the good ol days…:

  35. @Introvert Re: 2910 Phyllis Street:

    I don’t know what happened with the current owners, but I do remember when the property with the old house was for sale in 2014. It was on the market a long time and went for $700K. Two years later, in October 2016, it went for $1.075M.

    We looked at 2909 Phyllis, which is across the street, in 2014. It seemed expensive then at $865k but now BC Assessment is $1.273M. That is a nice area if you can afford it. I guess I’ll be seeing more houses that I looked at over the past seven years pop up for hundreds of thousands more that I could have bought them for. Like I said yesterday, I had no idea there could have been that much upside to buying then. I guess I never believed Trump would be president either. Is it me, or is life getting much more unpredictable?

  36. I wonder what the story is behind this.

    A while ago, when I was walking by, I noticed a Stop Work Order on this Ten Mile Point property. Now I see that it is for sale as vacant land. The ad mentions, “The seller of this beautiful property has conceptual drawings for a 3,636 sq. ft., executive, contemporary home available.”

    https://www.realtor.ca/Residential/Vacant-Land/17755274/2910-Phyllis-St-Victoria-British-Columbia-V8N1J7

    Did they try to build a house without permits? Now that is some hot Cadboro Bay intrigue! Great parcel of land, by the way.

  37. Leo, is there any evidence to back the hypothesis that Victoria’s real estate prices are “stickier” on the way down than those of other real estate markets in Canada, historically speaking?

  38. In other words, expect price increases of 15-20% annually with these market conditions.

    Sounds great, Leo!

  39. Luke: “http://www.timescolonist.com/news/local/victoria-councillors-push-for-empty-homes-tax-following-vancouver-lead-1.9712233

    Wow – do these two council members just like to copy whatever Vancouver does? They’re the same ones who wanted to extend the foreign buyer tax here…

    Does anyone see empty homes as being a problem in Victoria? Just like foreign buyers, I thought that was more of Vancouver problem…”

    Luke, I think anytime you start getting really low vacancy rates and large price increases, you have to dig into the influence of empty homes and foreign funds. I applaud these councilors for acting on this, rather than doing nothing until there was a disaster on hand like Vancouver council did.

  40. @Luke: “3528 Plymouth Rd in the Henderson ‘hood of Oak Bay – sold today for full asking price $1.39m
    Nice quality home on a large quiet lot backing onto Mt. Tolmie Pk and near UVic. Question is: what were homes like this going for about two years ago?”

    THIS SAME HOME sold in June 2015 for $800K. There have been renovations, but that is an astounding jump. Also, in 2014, I recall 3476 Plymouth Road sat on the market for a very long time before it finally sold for $830K (now BC Assessment at $1.089K).

  41. Why would you adjust for population? Cars, boats and shoes are not more expensive in bigger cities.

    It’s not the size of the population, it’s the size of the market. And that market is made up of how many people are selling and how many people are actively looking to buy.

  42. And we aren’t even population adjusting that. There is going to be a lot of pressure this spring without a doubt. We need a 15% from Vancouver tax 🙂

  43. This year has started with what most of us believe to be a low level of house listings in the core.
    Since 2002, only 7 years had lower January house inventories in the core. If you review the previous 15 years that works out to January having an average 362 house listings in the core. This January we were at 294. Back in 2004 we had 166 active listings in January.

    We are about 19 percent under the 15 year average.

    The 15 year average for sales in January is 118. Last month we had our lowest month in 16 years at 83 house sales. Down 30% from the 15 year average.

  44. Fascinating to watch if Toronto has its ’89 moment within a couple years.
    If so, it will be interesting to see how Victoria reacts.

  45. Do you honestly think everyone from Hamilton is commuting to Toronto?
    You’re in for a bit of a shock.
    Also I personally know people who live in Victoria and work in Vancouver and vice-versa.
    Although the people living here are working full time in Van, and the people living in Van are only contracting to Victoria. We also have a contractor at our work who lives in Saskatoon, who’s been contracting off and on for 10 years now.

  46. Lots of new price slashes out there today all over town from Bear Mountain to Oak Bay. The hot downtown condo market looks not so hot and is ripe for some pain. 770 Fisgard St , #301 got a 70K whacking. Yikes, maybe Suzy can get the job done with the HUGE REDUCTION!!!

  47. Vancouver investment dollars do correlate to Victoria through every other boom and bust in history and this time is no different, just a 6 to 9 month delay as per usual. Those saying it isn’t either haven’t lived here, or in Canada very long or are newbies in the market.

    The bucks that floated here last year will have a definite effect here. I lost track how many bulls preached it here daily. Can’t have it both ways.

    Beijing’s tight new currency curbs could affect Vancouver real estate

    “I think this round of (foreign-exchange) crackdown is much more strictly enforced and (will be) longer lasting,” said Victor Shih, associate professor at the University of California, San Diego, who is researching the impact of elite networks in China. “Prior to the end of last year, even low-level private bank clients for major Chinese and transnational banks can easily transfer money from mainland accounts to offshore (ones.)

    Chinese authorities have now stopped this, he said”

    http://vancouversun.com/business/local-business/beijings-tight-new-currency-curbs-could-affect-vancouver-real-estate

  48. Looking at one month in isolation to the rest of the year cay be misleading. But so is looking at each January separately for the last decade.

    You need to look at the month to month trends. And for the last 12 months the months of inventory for houses in the core has been slowly rising along with the average days on market as median and average prices have increased. And that pool of data comprises some 3,200 sales over the 12 months.

    The spring market begins around the middle of March and that brings out a lot of listings. This year however shows that rising prices are slowing sales. At this time I expect that trend to continue with the months of inventory and average days to sell a home rising even more for the next month or two.

  49. 3528 Plymouth Rd in the Henderson ‘hood of Oak Bay – sold today for full asking price $1.39m
    Nice quality home on a large quiet lot backing onto Mt. Tolmie Pk and near UVic. Question is: what were homes like this going for about two years ago?

    Interestingly, despite the frenzied open house on the weekend – 2111 Kings Rd has not yet sold. Others must have seen the ten things wrong with it and maybe I missed more than that! Plus, it’s very small. I think it compares more to Byng Rd which recently sold at $990k – which was $110k less than where they started.

    Thank you everyone who agreed with me that Vancouver is not Victoria, and never will be – there is a huge difference in prices between the two cities, and prices in Vancouver are overdue for a correction.

    As for the suggestion that Victoria is a secondary market to Vancouver, like Hamilton is to Toronto – I would say that Victoria is less related to Vancouver than Hamilton is to Toronto. Hamilton being only approx. a one hour drive to Toronto (unless it’s rush hour) and Victoria not in a daily commuting distance to Vancouver.

    I’m not on here to talk up or down prices – just talk about whatever the market is doing. As I said, doing either (talking up or down) is an exercise of redundancy.

    Crazy things are going on in the GTA market – have a look at Greater fool blog – numbered companies are bidding up house prices.

    @John Dollar – as for your friend who moved to the West End – she might find she’s left behind stoners who play video games for a ‘hood full of men who are looking at each other more than her! Makes for a nice relaxing jog for her though.

  50. Yeah, most buyers and sellers aren’t in the market over the holidays, so the Dec. and Jan. Stats are crap. By mid-Jan, serious people are in it again, but the stats are still skewed by the dead period around New Year’s. February activity and stats will be much more revealing.

  51. Last month there were 57 new listings to 23 sales in the million plus market for houses in the core. 2.5 new listings for every home that sold is high. Active listings for the month were 113 or close to 5 months of inventory. Maybe even getting close to a buyers’ market.

    The toughest market to buy into was the $900 to 1 million with a ratio of 1:1 and that’s where most of the over asking bids occurred. Months of Inventory was a low half month or 2 weeks.

    The $700 to $900K was a bit better for buyers with a 51 new listings to 38 sales or 1.3:1 which is still considered a sellers’ market. 80 active listings for about 2 Months of Inventory.

    So depending on what price range you are buying into, your experience may be different.

  52. Hawk (February 3, 2017): Agreed LocalFool, but it’s only Feb 3rd. Wait til March or April 3rd and that will tell the tale as I have seen low inventory/hot markets turn on a dime in the spring when the inventory flood gates open up over a matter of a few days.

    Hawk (February 19, 2016): It’s only February Fireecology. Wait til summer when the buyers are all gone and the inventories are up.

    Now, in his defence, at the time he was right about an eventual pullback in Vancouver so we’ll see if he was also correct that Victoria “will be caught in the down draft.”

  53. “Hawk, the euphoria amongst the general public isn’t over in the Victoria market.”

    Agreed LocalFool, but it’s only Feb 3rd. Wait til March or April 3rd and that will tell the tale as I have seen low inventory/hot markets turn on a dime in the spring when the inventory flood gates open up over a matter of a few days.

    The panic sellers step in as the FOMO buyers are told by the smart agents not to rush in and take their time to look around as bidding wars are suddenly history and sellers are left wondering WTF happened. Been there, done that.

  54. In my opinion, there is no hurry for most home owners to sell but I would keep looking at houses in the core if you want to move up the property ladder from a property in the $900,000 range to a home say in the 1.25 million range.

    There are opportunities – you just have to know where and what to look for.

    With the exception of Black Swan events like we had last February and in 2008, there should be enough notice of a significant change in prices one way or the other.

    I do see some weakness in the 1.25 million and above house market because since there is a lot for sale relative to buyers in that price range. Will that weakness increase or decrease in the next few months?

  55. Hawk, the euphoria amongst the general public isn’t over in the Victoria market. This probably still has some legs. No panic right now unless you’re a buyer. While it may be over in Van, even they haven’t hit panic mode yet. If the spring market doesn’t take off again, then look out for the crater below…

  56. “plumwine said: The owner of 3158 Wessex was a friend of mine.”

    Guess the bank didn’t think your friend’s house was a realistic price as it appears the deal fell through and is back on the market today at $66K below last asking price. Someone say prices are rising ? 😉

  57. New listings in 2012 were higher than now, but 2013, 2014, 2015, and 2016 were all more or less the same for new listings.

    Sorry I missed that. I thought listings had declined.

    Seems like it is demand that has changed and created the low inventory situation then. While the market was flat it was not so urgent to buy, nor so lucrative-seeming.

    Crap. This is not good news for people trying to get into the market. We don’t have the moderating influence of the buyers’ tax at the high end – and we probably wouldn’t have much impact if we did due to lower numbers of foreign buyers. Vancouver medians would have to decline a lot for there to be a spillover effect on consumer confidence here imo.

  58. I believe that house prices in Victoria will continue to rise this spring. It seems odd to me to hear comments that think the opposite.

    You can be extremely confident in that prediction.
    I need to update this, but we are currently off the left side of this chart (months of inventory for the year at less than 2). In other words, expect price increases of 15-20% annually with these market conditions.

  59. The other thing I notice is that the number of new listing has been steadily declining since 2012

    New listings in 2012 were higher than now, but 2013, 2014, 2015, and 2016 were all more or less the same for new listings.

  60. “Looking over the Vancouver January stats interestingly enough new listings are down in Van YOY.”

    Inventory is rising according to Steve Saretsky so that’s all that matter now, not what it was a year ago.

    Detached Sales Falling, Inventory Piling Up

    “Continuing the trend, detached sales fell again for the tenth consecutive month. January was more of the same, as the detached market continues to favour the buyers. With fewer and fewer sales, inventory continues to pile up and placed added pressure on sellers to reduce prices.”

    http://vancitycondoguide.com/january-2017-detached-market-report/

  61. “I couldn’t care less about graphs that show how little activity in sales there have been. And yet I keep hearing about how many sales there have been over and over again.”

    That’s like Leo’s post on imaging sales cause you are “hearing” things like Trump always says. Sales are down 11% from last January and down 60% from last spring high.

    Victoria is cheaper for a reason like Ladysmith is cheaper than Victoria. It’s on an island and less access to big city entertainment, industry, etc.

    ICYMI , the $3 million houses in Vancouver are going for $2 million or less. That’s called a major correction in process.

    BTW, 3 more Oak Bay listings this morning. They’re bailing. 😉

  62. Black Adder: “Baldrick, you no idea of the concept of irony.”

    Baldrick (indignant) :” yeah, I do! it’s like “gold-y” or “bronze-y” but it’s made out of iron.”

  63. I believe that house prices in Victoria will continue to rise this spring. It seems odd to me to hear comments that think the opposite.
    I couldn’t care less about graphs that show how little activity in sales there have been. And yet I keep hearing about how many sales there have been over and over again.
    As a homeowner, what I care about is how much product is on the market because I believe that if there is no product on the market then prices will remain strong and our investment will be secure.
    I believe that there are no sales in the single family home market because why would anyone put their house up for sale if it is going to go up another hundred thousand dollars in the coming year?
    Victoria is still drastically cheaper than Vancouver. $800,000 for a 60ft lot in Victoria with a modest house……versus $3 million in Vancouver for a tiny 33 ft lot and bulldoze ready house . Huge difference. There is “easily” room for another $100,000. tax free gain this year in Victoria. That’s why there are very few homes up for sale in Victoria. It’s not time to sell unless you really want to make a shift.

  64. Are you perhaps one of the foreign-moneyed people, browsing the web in the Cathay Pacific First Class lounge whilst awaiting your flight to Vancouver to find a house? Maybe you’d like to come here instead and make your 200,000-over-ask-unconditional offer, avoiding that nasty xenophobic 15% tax?

    You should know that it’s sunny and ten degrees in Victoria today, just like you’ve heard.

    Winter here is exactly like Barcelona. No difference.

    None.

  65. Marko:

    Regarding the drop in listing. Like most things it is probably not just one thing that has changed.
    One of the factors might be the way we calculate “new listings”. I have repeated seen houses taken off the market for a short period and then come out, often with a different agent as a new listing. (the days on market calculations are really skewed as well).

    December is notorious for people taking the house off the market for the Christmas holidays. When you start with a really low inventory at the end of last year then the number of houses taken off the market is lower as well. This much lower number is then reflected in the January listings.

    This is not the only factor and it does not account for all of the deficiency. We should wait until Feb, or March to see if the number of new listing starts to go back to historic norms.

    The other thing I notice is that the number of new listing has been steadily declining since 2012. Perhaps someone with a background in statistics can see if there is a correlation to the amount of inventory that was taken off the market for the holidays.

    I suspect that there are a number of other factors at play here as well. The increasing gap between each tranche of housing has probably prevented a lot of people from moving up the real estate ladder.

    Finally, maybe the city needs to consider culling out all the seniors like myself. They can model it on their deer control programs.

  66. Lack of inventory. Yes January is interesting but it is an anomaly for now. If you look at the full year, new listings in 2016 were just as high as when the market was dead in 2013. So the theory that people aren’t listing in the hot market was not correct.

    Maybe now that will be the case as there is even less choice? But it certainly hasn’t been true in the past.

  67. We could beat numbers to death and Leo does a great job of that as is illustrated above.

    I should add that to the site’s motto.

  68. Seems to me that the lack of inventory is self-reinforcing. I would not sell right now unless I was moving to a different market. Trying to move up the property ladder in a market without adequate inventory to purchase or rent would be more stress than it is worth. And the impact of out of town buyers increases as inventory declines. I think rates will need to rise or prices fall a bit to propel owners to list. The threat of loss of equity is a powerful motivator to list while the opposite is true in a rising market – the prospect of loss of gains keeps people where they are.

  69. Marko
    1/ for Jan 2017 we are at 65% of the 14 year average for SFH listings
    2/ from 2003, Victoria’s population grew 10.5% from 345368 to 381978

    So you have 10% more people looking for 35% less inventory.
    If supply kept up with demand, then there should be 255 new listings versus 173 listings

    That’s where the problem lies, we are short 80+ listings this month only and it will not get any better. Now how that turns into price increases or decreases is entirely another matter.

  70. For January (2017) in Victoria we had 753 new listings. This is the lowest number ever recorded for January since 1990 (as far back as the data goes) and over 200 of these listing were in the Westshore (wouldn’t have contributed as much going back 10, 15, 20 years ago).

    If we isolate for new SFH listings in the core areas going back to 2003 for January

    2003 – 265
    2004 – 215
    2005 – 197
    2006 – 239
    2007 – 237
    2008 – 264
    2009 – 217
    2010 – 211
    2011 – 213
    2012 – 258
    2013 – 231
    2014 – 229
    2015 – 205
    2016 – 173
    2017 – 148

    We are way below hot and cold markets. Something has changed??

  71. You’re right though it won’t drop linearly, the slope could easily increase.

    It could but my feeling is it will probably slow down to perhaps a 7-8% drop for the year for SFH. Probably 4-5% for 2018 and then a bunch of years of flat. Condos and townhomes in Vancouver aren’t giving up ground and the lack of new listings is really puzzling in both Vancouver (cold market) and Victoria (hot market).

    I think real estate hoarding due to low interest rates needs to be a topic that’s examined a bit more.

  72. James, what I was saying is in the world of investing a very basic and commonly understood principal is if a stock goes up 20% and then drops 20% you are below where you started; I get grade 8 math.

    The 20% I used in the first place was just a round number I throw out there. Depending on what stats you look at that number could also be 22%.

    What I threw out there wasn’t for the purposes of a percise math calculation, it was an overarching concept. i.e. the Vancouver market has to give up a lot more just to return to astronomical prices before the final 20% +/- 2-3% push.

    We could beat numbers to death and Leo does a great job of that as is illustrated above. At the end of the day a box in Gordon Head that was 600k two years ago is now over 825k and if the market drops 10% this year it will still be more expensive than it was two years ago.

  73. “I’ve invested in the stock market enough that I know exactly how that works.

    I am just throwing out numbers…. run up was more than the random 20% I picked out and market is not going to drop linearly 6.6% every 6 months which makes the actual calculations a mute point.”

    What I’m saying Marko is that if it goes up 20% and then down 20% you don’t arrive at the same price.
    Since a 1.2 million dollar house going up 20% is going up 240 000
    but a 1.44 million dollar house losing 20% is going down 288 000.
    So a 6.6% drop is more than a 6.6% increase.

    You’re right though it won’t drop linearly, the slope could easily increase.

  74. John Dollar:

    Hope that your friend is not one of those women whose baby clock suddenly sounded at thirty. Saw that a lot in Toronto One of the by products of the rate of divorce combined with the family law outcomes is that the percentage of successful men choosing to have children has declined. But the situation might be different in Vancouver.

    There have been some interesting social changes over the last generation.

  75. Michael:
    “Impressive acceleration in our monthly price growth.”

    Some would say scary, Michael. Not a healthy market!

  76. Marko: “The pressure to sell is low if you are holding a sub 2.75% mortgage.”

    This is somewhat true Marko, however the way this market was driven up certainly wasn’t by people looking to settle in for 10 to 20 years. Look for the same sentimental drive to push this market down.

    http://www.robchipman.net/

    “So, this January was a better month than January 2013, but it’s nothing fantastic. The market is not back. For a little fun with numbers, consider this: last February in one week we sold almost $2 billion worth of property. $2 billion, one week. As I wrote at the time:
    “The average sold price, from West Van through the Valley, was $986,468. PPT tax on that, if we exclude exemptions, is about $17,000 per sale.
    There were over 1700 sales. I’m not that good at math, but I think that’s almost $30 million, last week, going into government coffers”.
    Over the last 5 days that I’ve got stats for (I was out of town on the 30th and my staff was unable to post stats, so I’ve used last night, Tuesday, Friday, Thursday and Wednesday last week) we sold 820 properties from West Van through the Valley, with an average price of just over $850,000. Total sales, if my math is right, was about $700 million instead of 1.7 billion. Do the math in your head on PPT revenue.”

  77. Looking over the Vancouver January stats interestingly enough new listings are down in Van YOY. The lack of new listings seems to be a problem in many markets…..in my opinion interest rates are to blame. The pressure to sell is low if you are holding a sub 2.75% mortgage.

  78. Funny, just the other day you were musing about how equity is meaningless

    What’s the chances of Victoria turning into Vancouver? I’d say slim to none. So yes, it will continue to be meaningless for us.

  79. New bong Mike ? Vancouver has trillions in investment with cranes everywhere and it’s tanking like the Titanic that just hit the berg. Keep on pumping! 🙂

  80. The VREB keeps records of where the buyers are from. A year ago in January there were 28 buyers from Vancouver and this January there were 16.

    Jan 1st, 2016-Feb 2nd, 2016 351/567 buyers from Victoria
    Jan 1st, 2017-Feb 2nd, 2017 329/513 buyers from Victoria

    Looks like few percentage points up for locals.

  81. Isn’t that why we lead with “anecdote” giving ample warning the the worthlessness to follow? That said, I don’t think we jumped things up 30% overnight on our own….

  82. If the market tanks in the future, we won’t panic and sell.

    The vast majority of buyers I represent immediately unsubscribe to the PCS account once they’ve purchased and go on in life worrying about other things such as which school to place Charlie, their kid, in.

    If you buy into a house you can afford and plan to be there for 10-20 years what the market does in the interim is not really that important. The market can only chase the principal repayment downwards so far.

    I don’t pull up to my house wondering what it is worth, it’s more like damn I need to clean the gutters again.

  83. The owners are always those who bought well within their means, and in the best areas, at the right time.

    We bought in the fall of 2009, which was around the last peak. Things have turned out well. If the market tanks in the future, we won’t panic and sell. We have significant equity and will ride out any downturns. Like totoro, we subscribe to the buy and hold method of Victoria real estate investing.

    I’d say if we could clear $750k+ by moving (actual money after buying another house elsewhere with no mortgage) we would consider moving.

    Funny, just the other day you were musing about how equity is meaningless 😉

  84. Slim chance of Victoria correcting 6% when you have 9 million boomers retiring & inheriting a trillion over the next decade. Not to mention the billions of investment & jobs pouring into Vic over the next 5-10 years.

  85. Marko: “I am just throwing out numbers…. run up was more than the random 20% I picked out and market is not going to drop linearly 6.6% every 6 months which makes the actual calculations a mute point.”

    ………… and there it is. This should be captured as one of the great quotes surrounding the market correction/crash, also ironically explaining the entire real estate run-up ladies and gentlemen.

  86. I did a fast count, there are 28 SFH listed in Oak Bay at the moment; only 14 are under 2 mil.
    The 2 mil ones seem to have been there for months and are almost frozen in time. There is really is not much out there at the moment; but there may be a flood of new inventory coming on for the spring.

  87. Probably a coincidence but in the last three days Oak Bay has had at least four sales all a bit under or over asking. Four sales does not sound like a lot but there is not exactly all that much inventory in Oak Bay at the moment.

    The point is that we need a few more months of data before jumping to conclusions.

  88. Dasmo, by the looks of John’s stats, 5 core sales a month will have zero effect moving forward. Too bad the VREB doesn’t track where the sellers are going too.

    Guess we should be counting moving trucks on the ferry to Vancouver. I would imagine there’s at least 5 per sailing.

  89. These stories are the funniest, as if everyone runs around the ferry taking a poll on what the other is up to in Victoria. In reality, most would say none of you’re fricking business

    You’re right there Hawk. This is an example of the frequency illusion which states that if something comes to your attention (i.e. you are going over to buy a house in Victoria) then that thing suddenly starts to appear with improbable frequency (you happen to overhear other people talking about doing the same thing).
    https://en.wikipedia.org/wiki/List_of_cognitive_biases

    There may or may not have been a wave of vancouver buyers in the spring (likely at least a small one) but people’s anecdotes about it aren’t worth much.

  90. The are spread out in all areas and all types of properties. From starter homes to high end homes.

  91. @ John Dollar,

    Just curious if you know, where in the CRD are Vancouverites buying most, if not in the core?

  92. The VREB keeps records of where the buyers are from. A year ago in January there were 28 buyers from Vancouver and this January there were 16.

    Not all of those 16 bought houses in the core either. Only 5 bought houses this year in the core districts compared to 11 the year before. That’s a big drop.

    What we don’t know is how many Victorians left Victoria and moved to Vancouver. One of my colleagues has just done that. She took a job in Vancouver for higher pay. Being single and in her early thirties she found it difficult to find men her own age in Victoria that didn’t spend most of their time playing video games and getting stoned. In her words Victoria is too small and too full of losers. She now rents a condo overlooking English Bay and jogs along the Seawall twice a week.

    Another person that I know is leaving Victoria for a promotion in Winnipeg. While he is not looking forward to the winters he is looking forward to more money and a lower cost of living. And being able to save for the next few years so that he can retire earlier.

  93. @SweetHome: ” I only saw the potential downside before, but there was a huge upside I missed out on.”

    This was exactly me, too. Unfortunately it sometimes feels like the people who really think things like house purchases through the most lose out the most.

  94. Does anyone know what 3015 Westdowne sold for?
    I noticed 2275 Allenby sold for $956k (just an observation, no predictions one way or the other)

  95. “The market is about perception. I know of local people who refused to pay over $500k 5 years ago who recently bought a place at $900k.”

    So true, but this is because no one wants to (and likely can afford to) take a loss on something they have to save for and pay off for decades. When I evaluated our financial situation ten years ago, I felt that $500K was an upper limit for housing in order for us to have it paid off by our early fifties and then save more heavily for retirement (no defined-benefit pension).

    As the years went on and we couldn’t find anything that we both agreed on, I raised that limit to $600K, then $700K, and, last year, the house we finally ended up buying was around $800K. Raising the limit had less to do with a change in my original analysis and more with the realization that prices weren’t dropping and I was never going to own a house in my life. My spouse wanted to buy a more expensive house years ago because he actually saw it as less risky to buy better quality. Had I listened to him, we would have bought a $750K house that would now be worth well over $1M. Alternatively, I would have been satisfied with a $600K that would now be over $800K.

    The thing is, as much as people say that your house should be for your quality of life and not an investment, an error one way or the other will probably amount to a greater loss or gain than a loss or gain within your retirement portfolio. The higher prices go relative to your income, the more that is true, because the house makes up more of your net worth. I only saw the potential downside before, but there was a huge upside I missed out on. Now, who knows? The majority of our eggs are in the housing basket, which is not a position I wanted to be in, but will that be a good or bad thing fifteen years from now?

  96. @Luke

    All you need to do to get a perspective is to hang around the Royal Bank and TD Bank at Douglas and Fort St, and observe the youth.
    Also observe the comings and goings at the Mt Tolmie Apts (and the vehicles) and the Timmy’s traffic at Shelbourne and Cedar Hill X road..

    It’s been pretty obvious for years now for those with observational skills… 😉

  97. @Hawk, There must have been something to his story considering the meteoric rise in prices in the spring…. That is a cold hard statistical fact.

  98. Funny how fast things can change. Even Bloomberg is picking up on the Vancouver implosion. With Trump picking daily fights with China, Iran and even Australia, you know it’s Canada’s turn next to get some economic threat from the orange whackjob.

    Vancouver Home Sales Plunge 40%, Extending String of Declines

    “This time last year, Vancouver was one of world’s hottest housing markets as buyers turned up throughout the winter for bidding wars and sales reached an all-time high.

    Today, the Real Estate Board of Greater Vancouver reported transactions in Metro Vancouver plunged 40 percent in January over a year earlier as both buyers and sellers hover on the sidelines. That’s the seventh straight month of declines, according to data compiled by Bloomberg. ”

    https://www.bloomberg.com/news/articles/2017-02-02/vancouver-home-sales-plunge-40-extending-string-of-declines

  99. “They also said that when they were hunting it seemed like everyone on the ferry was coming over to the island to do the same.”

    These stories are the funniest, as if everyone runs around the ferry taking a poll on what the other is up to in Victoria. In reality, most would say none of you’re fricking business.

    When you have to state high income, poshiest area, and high equity but still needed this tiny mortgage cause you maxed out with nothing left over, then maybe I would feel the need to pump too.

    To think Oak Bay can’t turn into Westside Vancouver is pretty foolhardy, as I would bet many who bought in to Oak Bay the last year to two did so at a high cost. Losses will be just the same or larger on the way down.

  100. I have no idea at what rate they’re actually buying Victoria houses but I’m still seeing Vancouver folks at showings and open houses, just as I did last year. I’ll be curious to see if there’s an increase in this as the spring market gets into full swing.

  101. “According to an article in today’s Globe, the benchmark price for a SFH in Vancouver is $1.5 million, down 6.6% over the last 6 months. What are we at in Victoria now? $750,000 or so? I’d say that there are a lot of people in Vancouver who are never going to own a SFH and for whom Victoria will still look pretty appealing at 50% cheaper.”

    This. The market is about perception. I know of local people who refused to pay over $500k 5 years ago who recently bought a place at $900k. This changing perception is a big part of what’s driving the market – I’d say more so than people selling in Vancouver and buying in Victoria. It’s people across the region who are dealing with changing perceptions and reaching more for property. Part of it is absolutely FOMO, but part of it is just prioritizing housing in their lives over other things such as vacations, boats, multiple cars, and such. Some of those people may be in financial trouble, sure, but as we’ve seen from the stats here the absolute affordability based on interest rates and income levels in Victoria is not as ridiculous as some would think.

  102. That’s not how that works.

    I’ve invested in the stock market enough that I know exactly how that works.

    I am just throwing out numbers…. run up was more than the random 20% I picked out and market is not going to drop linearly 6.6% every 6 months which makes the actual calculations a mute point.

    I was making a general point of the market has a long way to drop before we get back to prices that are still insane and completely unaffordable for the average family. Vancouver was already off the rocker even before the most recent push which brought in the foreign tax.

  103. A very interesting breakdown of what is going on in the Canadian housing market:

    http://www.huffingtonpost.ca/2017/02/02/9-charts-canadian-housing-wtf_n_14441902.html

    Victoria BC is currently more expensive than New York, Miami, or Singapore.

    “When you take the suburbs into account, Toronto is more expensive than Paris, New York or Tokyo. (Here’s the proof if you don’t believe it.) And Vancouver is, additionally, more expensive than London and Los Angeles. Note also that Victoria, B.C., metro population 344,000, is more expensive than New York, Miami or Singapore.

    Can it be demand for housing alone that’s driving these markets to such dizzying heights? Or is it Canada’s very low interest rates, combined with speculators and house-flippers?

    The evidence suggests Canada’s house prices no longer have much to do with real demand for housing, or what people can afford. That’s not a situation that can last for very long.”

  104. “Sounds about right. Only issue is this 6.6% down is after a 20% run up in the previous 6 months. Vancouver would need to drop at this rate for the next 18 months to get back to January 1st, 2016 levels give or take which were already insane to start.”
    That’s not how that works.
    1.2 million dollar house increasing by 20% = 1.44 million dollar house.
    When a 1.44 million dollar house decreases by 6.6% that leaves it at a 1.35 million dollar house (only 12.5% above 1.2 million)
    if it decreases another 6.6% in the next 6 months you get a 1.26 million dollar home
    (only 5% above 1.2 million, and actually a 14% drop)
    and then the next 6.6% decrease leaves you with a 1.18 million dollar house.
    Erasing all 2016 gains in less than 12 more months.

  105. Heck as my home value rockets up, taking a chance and moving to the Comox Valley is starting to look pretty appealing….

    I’d say if we could clear $750k+ by moving (actual money after buying another house elsewhere with no mortgage) we would consider moving. Still well away from that but if Victoria does a Vancouver (doubt it) that would be an interesting thing to ponder.
    Problem is many of the places we would move to (Okanagan, up island) are not that far off Victoria prices.

  106. I agree most owners bought “at the right time” – but only in retrospect. When we bought in 2012 it was just the right time for us personally. At that time prices had been flat for seven years and many were sure there would be a crash and rise in interest rates. It didn’t feel like we were getting a bargain – at all.

    Totally agreed! We bought in Fall 2008 when it seemed like the world was falling apart. Prices were off their recent peak but didn’t feel cheap at all moving from the Prairies. After we bought prices continued to fall. Between falling prices and a few deficiencies in the house that weren’t uncovered in the inspection we had major buyers remorse for the first 9 months. Happy as clams now, especially once we realized that we had lucked into the nicest neighbours imaginable.

    Prices are what they are right now and no-one knows where they will go next

    That has been well demonstrated on this blog. Even smart and well informed posters like Leo and Marko have been significantly off in their predictions (let alone the rest of us punters!). Of course to their credit neither ever claimed to have a crystal ball.

  107. I’m not worried about buyers from Vancouver. There isn’t enough of them and most are not buying houses in the core.

  108. I seem zero point in talking prices up or down or predicting the next market move.

    Prices are what they are right now and no-one knows where they will go next and when except they probably can’t keep going up like they have recently – against the odds.

    I agree most owners bought “at the right time” – but only in retrospect. When we bought in 2012 it was just the right time for us personally. At that time prices had been flat for seven years and many were sure there would be a crash and rise in interest rates. It didn’t feel like we were getting a bargain – at all.

    But that is the story here for everyone in Victoria who bought and was able to hold through a downturn for the appreciation to happen for the last fifty years. Very similar to investing in the market. Buy and hold in index funds is the same story. Heck, people are saying the same things about the stock market crashing after a long upward trajectory too!

    The main thing is to invest in something, or have a great pension which means a long time commitment, because you can’t compete with inflation based on wages alone. I tell my kids to:

    Buy a house as young as possible as an inflation hedge. I have one kid who thinks he might be better off not buying a house – ever – and he might be right that it can be more effective to do things another way: http://www.millennial-revolution.com/
    Buy RRSP or TFSAs next depending on their income level and invest using the couch potato method.
    Hold as long as you can and repeat until you have no more TFSA or RSP room and then continue to invest in the market.

    Main thing is to be able to sae something to invest and get your start. Getting harder in housing.

  109. According to an article in today’s Globe, the benchmark price for a SFH in Vancouver is $1.5 million, down 6.6% over the last 6 months.

    Sounds about right. Only issue is this 6.6% down is after a 20% run up in the previous 6 months. Vancouver would need to drop at this rate for the next 18 months to get back to January 1st, 2016 levels give or take which were already insane to start.

  110. Whatever is going on with prices right now doesn’t have a whole lot to do with Victoria fundamentals. Victoria fundamentals don’t explain price rises in Nanaimo, Comox Valley, Campbell River, Okanagan etc.

    Cheap money has got to be at the root of it to some extent. That and some redistribution of money out of Vancouver. There are plenty of families living in Vancouver and some of the tonier suburbs with family incomes in the 100-250 K range that are sitting on mostly paid off houses worth anywhere from 1.5 to 4 million. Cashing out and moving to a secondary city like Victoria or Kelowna has got to appeal to some of those folks

    Heck as my home value rockets up, taking a chance and moving to the Comox Valley is starting to look pretty appealing….

  111. I just find it funny that some people take to a blog to try to ‘talk up’ housing prices. I totally understand though if you are in the market and have a lot of debt you would try to to talk it up – but that’s an exercise of redundancy.

  112. That’s the thing about anecdotes from both owners and renters. The owners are always those who bought well within their means, and in the best areas, at the right time. The renters are always those who invest the monthly savings wisely.

    It’s not surprising that a lot of owners say that they bought “at the right time”, because relative to today buying anytime not in the last year WAS buying at the right time. If you bought at the 2008 peak you were underwater for a while. Likewise if you bought in 2010 peak. But the market has risen such that all those purchasers are sitting pretty.

  113. According to an article in today’s Globe, the benchmark price for a SFH in Vancouver is $1.5 million, down 6.6% over the last 6 months. What are we at in Victoria now? $750,000 or so? I’d say that there are a lot of people in Vancouver who are never going to own a SFH and for whom Victoria will still look pretty appealing at 50% cheaper.

  114. I’m just fine w/ over 90% equity in my house. Also, Oak Bay is the last place to drop and the first place to rise, hence why I bought in here

    That’s the thing about anecdotes from both owners and renters. The owners are always those who bought well within their means, and in the best areas, at the right time. The renters are always those who invest the monthly savings wisely.

    Neither is an accurate picture of the groups. The owners that are on the raggedy edge and over leveraged aren’t going to come here and talk about that. The renters who can’t manage their money or save aren’t going to admit it here either.

  115. Anecdotally I have met some of the Vancouver hoard. The one family still owns their biz in Van. Anyway, they bought last spring here. A duplex with family also from Van. They found it cheap here. They also said that when they were hunting it seemed like everyone on the ferry was coming over to the island to do the same. I think the Van cash out will continue this year possibly because the downturn there. However it’s bound to be slower because inventory is so low and asking prices are much higher. We shall see….

  116. @ Luke,

    Not necessarily a matter of talking the market down. I suspect Vancouver and Victoria are always going to be expensive, relative to incomes. The current spike will, in the long term, do little or nothing to change that. It’s when the prices go beyond what incomes, employment or net migration can accommodate, that you have to look out. I believe that is what has happened in the most populous parts of BC, especially Vancouver.

    And yes, Victoria could stay true to precedent and not “crash” in the technical sense, it may just be stagnant for many years before incomes catch up. I’m not so sure that will be the case this time, most especially if this spike continues for much longer without a corresponding positive change in fundamentals. Of course, no one knows.

    For now, I’m quite content to sit back and watch the show. Having a long term horizon as you say you do never hurts, either.

  117. http://vancouver.ca/home-property-development/empty-homes-tax.aspx

    Another reason Vancouver prices are now dropping – speculators leaving homes empty – not much of a factor in Victoria.

    I already said the Chinese (and foreigners buying in general) weren’t a big factor here. It was just asking the question, and by posting the insight from someone in private schools seeing a trend, ‘is that going to change?’ My thought always was that they don’t like the island as much as it’s another plane ride out of Van, or ferries, to get here. Since they were a big factor in Vancouver – and now that the foreign buyers tax and empty home tax and Chinese capital controls are causing that factor to drop in Vancouver. Removing them from Victoria when they were never a factor here in the first place is redundant.

    And, no, I’m not an ‘agent’ and I have a long term time horizon for buying into this market – anywhere from ten to thirty years, so whatever it does (up or down or flat) I’m just fine w/ over 90% equity in my house. Also, Oak Bay is the last place to drop and the first place to rise, hence why I bought in here. And, I moved here for a well paying full time job.

    I just find it funny that some people take to a blog to try to ‘talk down’ housing prices. I totally understand though if you are not in the market and trying to get back in you would try to to talk it down – but that’s an exercise of redundancy.

    Wait and wait and wait for the crash I guess – time will tell. I think after it stops rising here – and who knows when but it will eventually end, it will just go flat which is reflective of past trends, and we didn’t have anywhere near the same level of rise or speculation that Vancouver had. We also have a very small market as compared to Vancouver, so it doesn’t take much to cause an effect on it.

  118. @ Hawk,

    Yes, for a review – “Thankfully, the wharf rats are slightly smaller here than of the View Towers variety”.

  119. We all know who pays the TC’s bills Leo, not surprised in the least. No hard DD goin on in that department.

  120. Janion price slash by a few grand and a relist. Guess they aren’t as hot as the pumpers were making them out to be at 216-456 Pandora Ave. Maybe someone needs to write a glowing review. 😉

  121. Not sure why the TC parroted the VREB on their claim that “The number of active listings on the Victoria board’s Multiple Listings Service hit the lowest point on record in January, with 1,516 properties for sale, a 38 per cent drop from the 2,471 on the market in January last year.”

    Inventory was lower in December, so it is not the lowest on record. It is the lowest January, but that’s not what they are saying.

  122. Victoria is in BC. Vancouver is in BC. BC is in Canada. Canada had a housing boom based on declining interest rates, and loose credit and foreign money piling in. Foreign money is leaving Vancouver for last 8 months but no one noticed til a few months ago.

    Victoria has no right to be any different when the housing boom is a country wide economic event. No one is left behind when markets go south no matter how you spin it.

    Why do you think Victoria went up the past year ? Because of FOMO from media spinning Vancouverites and foreigners coming here by the plane loads.

    Vancouver has great scenery too and a “breathtaking” crash in the process.

    Sounds like another agent who just bought at the top trying to justify his overpaid purchase.

  123. @ Luke,

    Victoria is indeed a different market, but I don’t think I would suppose that one doesn’t effect the other. No real estate market in balance does what ours has done, and despite your endorsements of the virtues of living here, it’s the economic fundamentals that always matter.

    Too often, people get caught up only in the fact that prices are rising, without paying attention to the former. I am not aware of any economic fundamentals that would cause a nearly 25% spike in RE values, which coincidentally started at roughly the same time Van RE exploded. The same thing is happening to other secondary markets in Ontario. For instance, I don’t think Hamilton is a retirement, employment, tech, or any other kind of hub that would make it the new prima Ontario destination.

    I would argue that more or less, the same force is occurring in Victoria as a secondary market, largely driven by local speculation. Victoria hasn’t suddenly been “discovered”, and there is very little wage and employment growth. There is no new fundamentals. Where there is employment growth, it is overwhelmingly part time service jobs, hardly the kind of thing that supports buying $850,000 + homes. Who knows, this may still have legs to run a bit more but sooner or later, we will rediscover gravity. It is a mathematical certainty.

    And this idea that some have of a limitless amount of Chinese or baby boomers with limitless amounts of money having a limitless demand for our housing…getting really old now.

  124. Re: Private schools – An anonymous person who spoke to another anonymous person posted by an anonymous person.

  125. It’s an interesting take on how Trump will likely make the US less attractive to the Chinese (and virtually all international people) – making Canada (and other western countries) the obvious more attractive alternatives. Then there’s the Americans looking to escape , and I would say this could be the case too – depending on how crazy Trump gets, there may be a significant number of Americans moving north. Pause for the thought that Trump may (not on purpose of course) even make Canada great again! This would especially benefit Victoria as we have by far the best climate in Canada.

    The other thing I find with all the talk of ‘Vancouver is crashing, therefore it could soon happen here’ is: The Chinese fueled much of the stratospheric rise in Van property prices basically since 2001 (with the blip in 08-09 obvious as to the cause), even if it was also locals ‘FOMO’ there that contributed as well (wanting to get in before the party ended). In Victoria, however, the Chinese were NOT a significant factor (perhaps this is only just starting?). Real fundamentals were much more of a factor in Victoria, until 2015.

    In Victoria, after 2008 the market was flat for many years – and really finally started to rise in 2015. While Vancouver rose Victoria was flat. Now, Victoria is finally rising, but you think it will crash because Vancouver is crashing? Vancouver went a long way up and now has a long way to come down.

    I say, think again – Victoria is not Vancouver, and it never was. It has a much smaller land base in the core, and has fundamentals driving the market not seen in Vancouver – such as continued baby boomer retirees coming here (the largest and wealthiest demographic ever seen), relocating (or returning islanders) Albertans, a booming economy attracting people (such as myself) from Gen X to come here and buy a quality SFH. Now, also the millennials are coming here for good paying jobs – ‘Techtoria’ is booming like never before. There is a severe lack of quality SFH’s, or lack of diversity of housing period. It’s arguably still much more affordable than Van., and if you ask me – it’s much much better than Van in so many aspects – better weather, easier to get around, friendlier people, much less ‘troubled’ people (i.e less homeless, druggies, crime, gangs), surrounded by ocean, breathtaking scenery, I can go on and on… The fact it’s on an island only adds to the appeal for me. I think also, it’s going to continue to be appealing for many diverse types of people. You can wait and wait for the crash if you are not yet in the market, but I don’t think it’s going to happen. The most likely thing to happen if it ever does stop rising is it will go flat again. But we will see what the spring brings as that will be telling.

  126. ” Today I learned that among the parents of Chinese students enrolled in private schools in Victoria there is an increasing preference to own real estate in Victoria as compared to Vancouver.”

    Apparently it’s not showing up in the stats, and if it does you can bet the 15% will be slapped down ASAP and we saw what happened in Vancouver.

    Wishful thinking for the bulls but they aren’t buying the average shack here, they’ll be buying the Uplands etc which isn’t reality for most Victorians. Was probably Intorovert posting on Garth’s site. 😉

  127. This came from the ‘greater fool’ blog… I thought it some interesting insight from someone in the know in the private school system about how Victoria has just come on the ‘radar’ of the wealthy Chinese…

    “As one having some familiarity with private schooling in Victoria, it has been interesting watching the number of high school students from mainland China in Canadian private schools go from nothing fifteen or so years ago to a tsunami at present. Over this period it became evident that the parents of many of these students own real estate in Vancouver. Today I learned that among the parents of Chinese students enrolled in private schools in Victoria there is an increasing preference to own real estate in Victoria as compared to Vancouver.

    The Chinese international students studying in Canadian high schools over the past decade or so have tended to head to the US for their tertiary schooling. In recent months, however, there has been a trend to rule out higher education in the US due to the perception that Trump poses unacceptable risk. Canadian universities, as the alternative option to studying in the US, will benefit from this trend.”

  128. Vancouver average price chart following the bull trap to perfection, down $100K. Doesn’t look good at all.

    Obviously the hot Chinese money has been cut off at the knees and will only accelerate the selling pressure and the rippling effect over here. Good bye sweet trend indeed.

  129. @ Leo S,

    I suspect the government will have a limited ability to “goose the market” at this point. Sentiment has clearly changed and while I don’t think panic has set in yet, I don’t think the psychology can really go back to euphoria again until this has run its course. Given the fundamentals in the Vancouver market and some recent changes to some geopolitical realities, I suspect there is more of this slide to come. Spring will be very telling, one way or another.

  130. We seem to be following the Vancouver pattern with a lag…just saying.

    Possibly. It definitely seems like we got caught in the Vancouver vortex just like Hamilton was caught in the Toronto vortex. Well Vancouver has stopped turning for 6 months now… So unless the Liberals can backpedal quickly enough and goose the market again it’s going to be tough to prevent the meltdown there. That will surely have some effect here as well, if only in sentiment.

  131. The bloodbath continues. When does Victoria wake up to the high risk of stepping into bidding wars for hundreds of thousands over assessment ? Bagholders will need group therapy.

    Via News 1130

    BREAKING: Vancouver-area home sales down nearly 40 per cent in January

    Home sales sank 39.5 per cent last month from a year earlier, according to the Real Estate Board of Greater Vancouver. It says sales of single-detached homes were down nearly 58 per cent while apartment-style condos dropped by about 25 per cent.

  132. Steve Saretsky – “As you can see condos have been taking a larger and larger share of the market since March, 2016 right around when the detached market was hitting it’s peak. This is a trend that appears to be continuing through January 2017.”

    http://vancitycondoguide.com/condos-driving-the-market/

    We seem to be following the Vancouver pattern with a lag…just saying.

  133. My house would have to double in price to tempt me to leave everything behind and start anew in a different location. The plan however is to stay put for another 7 years at least, while CuriousCat Jr. finishes school.

  134. As soon as they see sales keep continue to drop and the languishing listings start taking larger price slashes to get out while they can as they see Vancouver continue to tank.

    The Vancouverites renting here might see their hometown as a better deal after more price slashes there in next couple of months and decide to move back.

  135. Grab your popcorn and buckle your seat belts, 2017 is going to be an interesting year for real estate.

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