Feb 27 Market Update

Weekly stats update courtesy of the VREB.

February 2017
Feb
 2016
Wk 1 Wk 2 Wk 3 Wk 4
Unconditional Sales 119 285 439 624
772
New Listings 152 344  572 908
1160
Active Listings 1502 1498 1537 1555
2562
Sales to New Listings  78% 83% 77% 77%
67%
Sales Projection 748 718 694
Months of Inventory

3.3

Inventory is gradually building up, but still 40% below this time last year.   No surprise when we’ve only added 39 listings in February (last year we added 197).

Sales are building as expected, however they aren’t building as quickly as last year.   As you can see from the sales projections above, we started out just behind last year’s sales pace but we’ve been falling behind more as the month progresses.   Don’t be surprised to see 20% year over year sales drops as we get into March and April which were just ludicrous last year.

In other news, I’m putting together mockups for the kind of automated data tools that I want to create for this site for review by the VREB (condition of use of the data feed).   If you have ideas for what would be useful to you, let me know in the comments.

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168 thoughts on “Feb 27 Market Update

  1. Man I need to quit my job just to keep up with the comments on here, forget about working on the site itself.

  2. You’re the kind of doofus that people absolutely hate in Victoria.

    And you’re the kind of renter who’s paying my mortgage. Thank you!

  3. Introvert. You’re the person that was crowing about how Edmonton was terrible for including Jasper in their promo video and then went on about how you could ski and surf in the same day in Victoria.

    You’re the kind of doofus that people absolutely hate in Victoria. Smug, self righteous, and you’ve probably barely left the island because “why would I want to go anywhere else, this is the best place on earth.” I actually want this market to blow up in peoples faces, because of people like you. Dick.

  4. I’m going to go out on a limb and suggest these new mortgage rules are significantly affecting the real estate market in a way not anticipated.
    By making buyers qualify at the bank’s posted 5 year rate as opposed to what ever rate a client negotiates, (some as close to half the posted rate,) many buyers are realizing they wouldn’t even qualify for the mortgage they currently have on their existing home. Therefore people are staying put, deciding not to sell as they wouldn’t be able to qualify for a home anywhere better than what they own.
    So, sellers are fearful to list and so listing inventories are way down. Here in Calgary there are 30% fewer listings than this time last year in the detached housing market, now how does that make any sense? And guess what even in our dismal market SFH are going up as there is such a small inventory.
    Weird times indeed.

  5. I love it when totoro schools Just Jack. She schools him so hard that he has to leave for a while, then returns under a different name only to be outed and schooled some more.

  6. It has been “hotter” by your standards. In fact most of last year it was hotter,

    JJ. It is not “my standards”. As I pointed out, it is what is published on this blog in the market summary section in the top right-hand corner which has stated the market is ludicrously hot or hot for the past year.

    Given that there has been 2% increase per month for the last year it is unsurprising the MOI has been in this range whether lower or higher than 1.7 MOI.

    According to the Canadian Real Estate Association a balanced market is 4-6 months of inventory. A market surplus would be required to switch to a buyer’s market at over 6 months of inventory.

    It seems what you are saying is that the MOI will increase to 6 or more, or perhaps you mean 4-6, in the next couple of months.

  7. Ludicrously hot

    It has been “hotter” by your standards. In fact most of last year it was hotter,

    Month Months of Inventory Saanich East, Oak Bay and Victoria
    Apr 2016 0.97
    May 2016 0.98
    Jun 2016 1.32
    Jul 2016 1.65
    Aug 2016 1.90
    Sep 2016 2.00
    Oct 2016 2.03
    Nov 2016 2.36
    Dec 2016 3.15
    Jan 2017 3.38
    Feb 2017 2.34
    Mar 2017

    Looking back in history the market was even more ludicrously hot in 2007 and 2008 than it is now, just before the months of inventory shot up to 5 and 6 months. Those ludicrously hot years didn’t prevent a market surplus.

  8. All that is necessary is for inventory to rise and we will have a market surplus. And historically that increase in supply happens in March and April.

    You do realize that MOI is 1.7 on the top right of the blog right? Ludicrously hot. That is a really long way from a market surplus which would usually bring a decline in sales prices.

    You seem to be predicting that there will be no uptake on any increase of inventory when historically the spring market sees a corresponding surge in demand.

    I suggest we check back in in June and determine whether the market surplus theory was realized.

  9. Marko or Leo – final Feb numbers? Did we break (or approach) 700? My guess is 692.

                              Feb   Feb
                            2017    2016
    Net Unconditional Sales:675 772
    New Listings:           880 1,160
    Active Listings:        1,537   2,562
    
  10. vicbot

    Bingo, nan isn’t afraid of foreigners – let’s put that argument to rest – too many times I’ve seen this being called racism to shut down someone’s opinion and it’s not true.

    Just like saying someone is using the race card can be used to try to shut down the discussion.

    There’s a difference between, “We should be cautious, look at Vancouver.” and “OMG if we don’t do something now all will be ruined! The foreigners will make it impossible to buy! Vancouver is going to happen here if we don’t do something!”

    She’s using a false dilemma and posing foreigners as a threatening aggressor with destructive objectives. You can’t say fear isn’t part of her argument. It’s an appeal to emotion rather than arguing evidence. Be afraid. Think of the children!

    Thanks for the numbers, I remember at least another had double digits, but I didn’t remember any numbers other than Richmond. I definitely didn’t remember Burnaby being so high.

    My point isn’t it’s wrong because you shouldn’t target foreigners or that it’s racist (it definitely isn’t racist as it isn’t targeting a race). I said I’m fine with the tax if there is evidence, so I’m not arguing you can’t block foreigners because “oh no don’t you dare say bad things about foreigners”.

    Implementing a foreign tax now is not without consequences. So far we don’t even know what impact it has had on other industries in Vancouver. That could take years to sort out.

    Canada is a small country (by population). We often have to reach outside our borders for talent. If we have one expert in a speciality the US probably has 10. If that one expert is gainfully employed, then we need to go outside out country to the US or other countries.

    An anecdote (to add context as to why I’m opposed to implementing tax now):

    A local company was having a difficult time growing so they decided they needed a new leader with expertise in growing a company of that type. They interviewed a bunch of candidates, best one was from the US. He found Victoria tempting enough (along with the remuneration), so he moved his family and bought a house.

    The company’s revenue doubled and they increased staff from 30-50.

    Could a Canadian have lead them to the same? Sure, but at the time none of the candidates were compelling.

    Would he have still moved to Victoria if there were a 15% tax on housing? Maybe, but it’d definitely be an extra hurdle. It’d cost the company a lot more to entice him.

    I have other anecdotes that are similar. Theme is the same though. Foreigner comes here, more local jobs created.

    I’m willing to risk losing benefits like that if there is evidence foreigners are using our RE to speculate therefor artificially driving up prices. I’m not willing if there is no evidence.

  11. Interesting study by Demand Institute that shows that 63% of baby boomers don’t plan on moving out of their current house as they age (they want to age in place), and of the 37% that want to move, 68% want SFHs and 46% are looking for homes to upsize, ie., the same size or bigger than the ones they have now. Only 1/3 move out of “state”.
    http://demandinstitute.org/baby-boomers-and-their-homes/

  12. Bingo, nan isn’t afraid of foreigners – let’s put that argument to rest – too many times I’ve seen this being called racism to shut down someone’s opinion and it’s not true. (See Justin Fung’s articles)

    nan has some legitimate points about being proactive instead of reactive. If foreign buyers that actually have jobs here and pay taxes are buying, great – that’s the change they recently made in Vancouver.

    The BC gov’t had the right tools for years to track foreign buyers – they just didn’t start using them again until 2016 when they started seeing the election looming.

    (Also, it wasn’t just Richmond – Burnaby had 18%, Surrey 8%, City of Van 11%, etc)

  13. Marko or Leo – final Feb numbers? Did we break (or approach) 700? My guess is 692.

  14. Some people just want to keep their head buried in the sand. There is nothing magical about real estate. It follows cycles. Right now we have close to the lowest sale volumes in 15 years and the highest prices.

    If prices were rising along with sale volumes that would be different. But that’s not what is happening. Median prices have been stagnate around $875,000 +/- 5 percent for the last 5 months in Saanich East, Victoria and Oak Bay now. All that is necessary is for inventory to rise and we will have a market surplus. And historically that increase in supply happens in March and April.

    So why will there be a market surplus? Because it has always happened. It is part of the real estate cycle. That’s what is explained in the youtube link.

    In fact, I am seeing more of this happening this year than in any other year. When some one retirees they are now opting to sell the home and buy a condo or a town house and bank the surplus cash. The kids are gone – they don’t need a house anymore. What they need is money.

    Say good-bye to the lawn mower and hello to freedom and lower living costs.

  15. nan

    Let me get this straight: your preference is that foreign demand is given unfettered access to local RE markets until prices actually do go up and locals actually do become disenfranchised (so you can measure the damage and “see the data”) before a law is put in place to prevent it from happening in the first place.

    How about you do some chemo to prevent cancer? Sounds logical.

    The numbers are being watched, we’re in a normal range. The white blood cell count isn’t up, no need for chemo yet.

    Richmond was double digits for god knows how long because the gov’t dragged their feet on collecting data. I have no problem they took action in Vancouver. I mean, it was reactionary and could have been handled better (and preferably earlier), but they used the tools available to them when they finally acted.

    The problem is it’s heavy handed and there is no evidence it is needed at this time in Victoria.

    I get it, you’re afraid of foreigners and you’re desperately seeking a reason for the current run up. We love to externalise blame. It’s human nature.

    You desperately believing something is true doesn’t make it anymore likely to be true. You are free to your own opinion, but implementing a foreign buyer’s tax here is not consequence free as you’ve tried to claim. It may do nothing to housing prices here, but in that case you are making it difficult or impossible for foreigners who live and work here to buy for no reason other than to quiet those afraid of foreigners like yourself.

    Feel free to point out “how wrong I was” if and when there is a run on foreign buyers in Victoria. Until then it’s premature.

  16. your preference is that foreign demand is given unfettered access to local RE markets until prices actually do go up and locals actually do become disenfranchised

    You are presenting an either or scenario as if the only result of foreign property ownership is a catastrophically negative one that will wipe out affordability.

    Now that there is monthly monitoring of such sales which are at a pretty low % of all sales here not sure how you can conclude that it is behind rapid appreciation in Victoria or won’t be stopped until locals are “disenfranchised”. And the law for the PTT already exists, Victoria would just need to be added in which is pretty quick to do.

    So far, I don’t much mind either way looking at the stats for Victoria. I do mind if foreign nationals are getting the exemption from capital gains or other services without contributing to the tax base which is not happening in all these cases.

  17. Speaking of globalization…..I spend a decent amount of my free time on some side projects such as the owner-builder exam BS, Tesla/EV forums, some other stuff, and online immigration help/advice (from my homeland of Croatia).

    A young family with a 4 yrd old came to Victoria two weeks ago. Interesting story, app developer, living in the middle of no-where in Croatia, offered a job with a high tech company downtown Victoria. The company was impressed with his work that they contracted him to do while he was living in Croatia. Spouse is also highly educated and once they get settled in they will probably look to buy a home in 3 to 4 years…..more demand.

    I suggested they rent a condo at Dockside Green due to proximity to work and they were extremely impressed when they arrived even though it is only a one bedroom. Lots of shocks (positive) such as how dirt cheap cars are, etc. (compared to Europe). It’s all about perspective.

    Immigration has to play a huge role in real estate. As I’ve mentioned before 300k/year have to live somewhere whether it is rental or ownership.

    That is why I keep saying all those anti-density or anti-clear cutting should really complain about immigration numbers.

  18. For the boomers that are now over 65, they’ve got a 50/50 chance of getting to 85 if female and 82 if male. Those over 70 have even worse odds. So I wouldn’t say that most of the homes bought by retirees are going to stay off the market for 15 years.

    Sorry to correct but I shouldn’t let my M.H.A. from UBC go to complete waste.

    Your odds at over 70 are actually much better than 65, in terms of getting to 85.

  19. Yup, we will be moving into a market surplus

    Illogical conclusions plus youtubes. My favourite.

  20. @ Bingo: “If there’s evidence of it being an issue, sure. Hence me being staunchly against it in Victoria at this time.”

    Let me get this straight: your preference is that foreign demand is given unfettered access to local RE markets until prices actually do go up and locals actually do become disenfranchised (so you can measure the damage and “see the data”) before a law is put in place to prevent it from happening in the first place.

    Sounds logical to me.

  21. February had 95 house sales in Victoria, Oak Bay and Saanich East. That’s pretty close to the 15 year low for a February that happened in 2009 when these areas bottomed at 86 sales during the economic crisis. Sales are now down 40 percent from last February. While active listings are only down 12% for the same time period.

    Tick Tock Tick Tock

  22. With more people total living into their 80s, there will also be more people total dying in their 70s.

    Also, a high proportion of retirees have a younger spouse who is often likely to stay in the house. Finally, on average, people are staying in their houses longer than ever before; entry into nursing homes has been pushed back. It would be interesting to know the average age of retirees now buying into Victoria. My suspicion is that it is well below 65.

    No data to back that up.

  23. Maybe we’ll see you around UVic, Barrister.

    By the way, another wild flip: 2055 Lorne Terrace, sold June 2016 for $870k, now for sale $1.325M. (they removed the chimney and made it open plan)

  24. gwac:

    Initially I did a lot of travelling and competing with my horses. Some consulting work and a bit of writing which I still enjoy. Last few years a lot of work on the house. I always enjoyed wood working projects. Actually, found that I was as busy as ever but a lot happier.

    Am considering some science courses at the University this coming fall.

  25. gwac, we keep busier than we thought: renos, working on a startup idea, hobbies, charity, keeping aging parents out of trouble, and travel. Funny we used to think that we’d want to spend 1/2 the year somewhere else, but now that we have more freedom and a routine, we think 2 months is the max!

  26. @Local Fool, I agree with you in a big picture sense that all that printed money needs to find a productive home. However that is only part of it. (Anecdote time). The open house for where we are renting had a lot of families looking. So unless those global property investors send out local families to shop for them I can’t solely put the blame there….

  27. Vic

    Retiring at around 50, what did you do with your time? Asking because I keep pondering it myself soon but worried about what the hell I would do with my days. 🙂

  28. Agree Barrister, there are quite a few retirees that are younger than 65, sometimes around 50 (like me and my spouse, we’re similar in age), and you have the demographic bulge of boomers, so the overall numbers of people living into and past their 80s will increase, even if life expectancy were to remain the same. (By US definition, I’m a Gen X; by Canadian definition, I’m a boomer)

    I haven’t seen this though: “a high proportion of retirees have a younger spouse who is often likely to stay in the house”. With the tech execs or businesspeople I know, with enough $ to buy anywhere in OB, GH, Kerrisdale, West Van, US vacation spots, etc, their spouses are all similar in age, even if they’ve divorced & remarried.

    Also agree with Local Fool & Richard Haysom – the low Canadian dollar has made Canadian RE very affordable (esp Vancouver, Victoria, Toronto) – so international RE investment plays a role in this too. If it didn’t, then our local Victoria realtors wouldn’t spend money advertising in NY Times or Chinese newspapers (eg., the house on Crestview was advertised internationally)

  29. totoro:

    If you can afford the price of admission you’ll likely have more money later if you buy in the most desirable/expensive market you can afford. More risk but if things go as they have more upside too.

    Which goes with your growth market theme, which I have to agree with. I was recently in the interior so I checked out housing prices. Totally reasonable. New builds a bit cheaper than Langford and a reasonable family home (as good as anything in GH, if not better) for mid 300s. Totally affordable for your average family. The trade off is your house won’t appreciate like it will in Victoria or Vancouver.

    So pay down a house quicker and have more money to invest or shove more into your home and hope for appreciation. So far it has paid off for people who chose Victoria or Vancouver. Will that still be the case for people buying right now? Hawk would say no. But 30+ years is a lot of time to weather out dips (if you are a family starting out in this market).

    I definitely think anyone buying so much house they can’t afford to invest is crazy. I gamble a bit (craps, stocks) but the odds are too scary to put it all on a house.

  30. I’d love to hear from anyone that thinks otherwise.

    I’d have been okay with the Okanagan I think, but I grew up spending time there. We have a house there that we bought for half the price it would have cost here at the time. If I was just starting out now and given that we had no inheritance or family assistance we might have set up there instead and we would have had more disposable income.

    Buying here is probably a better long-term investment though. Vancouver even more so.

    If you can afford the price of admission you’ll likely have more money later if you buy in the most desirable/expensive market you can afford. More risk but if things go as they have more upside too.

  31. luke

    Victoria may not be the last place on earth, but it is about the only desirable city, in my opinion, to live in in all of Canada.

    I unfortunately agree. I’d love to hear from anyone that thinks otherwise.

    For various reasons I don’t like the lower mainland and definitely can’t afford the areas in Vancouver I’d even consider living in.

    Nothing beyond the rockies interests me (too cold). Interior BC is too cold, Okanagan is too cold in the winter and too hot in the summer (and I just generally don’t like it there). Duncan/Cowichan valley is tough to swallow since we are locals and it has a bit of a stigma from our youth (maybe it still does).

    I plain don’t like Nanaimo.

    Courtenay/Comox? I haven’t spent enough time there. Maybe it’s nice?

    Campbell river? Nope.

    Gulf islands: too isolated.

  32. Particularly this measure does not reflect reality well when discussing places like Oak Bay.

    Not now anyway for new buyers but Oak Bay is not, contrary to popular belief, predominantly senior home owners. There are about 18,000 people in Oak Bay and only 8000 private homes and an average of 2.7 people per private home. About 4800 people are over 65 and some rent or live in the care homes. The median age in Oak Bay is 52 – about 8 years more than the CRD overall.

    When we look at Fairfield which has similarly priced homes the median family income is part of the city of Victoria and this is almost half of the incomes of those in Oak Bay or Colwood. Median family income begins to be an almost meaningless measure on its own when separated out by sub-area and from those who will never be able to afford to buy and those who have equity, assets, family help and inheritances.

  33. @ Leo

    … Oak Bay was just another regular neighbourhood in a sleepy town with no significant industry to speak of, so it was affordable to normal people. Now it’s one of the most premium areas in a mid size city with a much more diverse economy. So naturally it is no longer affordable to a regular family. It has transitioned from regular family housing to premium housing. The regular family can still buy a detached house, but it’ll be Royal not Oak Bay.

    There’s something screwy about this. Look at the bottom end of the OB market: 1951 two bed bung of the ugliest conceivable design on a tiny lot, price: $919,000.

    That ain’t premium housing and people looking for premium housing ain’t gonna buy it.

    If it sells at anywhere near asking it will be to someone deluded into thinking this is a normal market with reasonable prices, when it’s a loony market where flippers are doubling prices, and then redoubling them for luck, although whether that Exeter Road fixed up 1950’s box will really clear $4.5 million, or anywhere near, remains to be seen.

  34. James Soper:

    You are right about the numbers, but you also have to factor in that a fair number of high value individuals retired before 65 (myself included). Also, a high proportion of retirees have a younger spouse who is often likely to stay in the house. Finally, on average, people are staying in their houses longer than ever before; entry into nursing homes has been pushed back.

    It would be interesting to know the average age of retirees now buying into Victoria. My suspicion is that it is well below 65.

  35. LeoS:

    If you work in tech, why not live in Banff or Nelson or Cumberland, or Chiang Mai instead of Vancouver if you can swing it with work?

    I was just talking to a couple contractors/consultants in Vancouver about this (along with some americans that thought they were crazy for staying in Vancouver). Rent is insane, houses unaffordable and they could work anywhere. Live in Vernon and have a season pass at Silver Star, live on one of the cheaper Gulf islands.. whatever. Somewhere cheaper than Van.

    The answer was jobs. While they primarily do work remotely their business connections are primarily in Vancouver. It’s famine and feast in consulting. So it’s all good to live somewhere small during the feast, but come famine they want to be near jobs. So by whatever their internal metric is, moving from a major city center to a smaller one is too big a risk.

    totoro:

    The median family income in Oak Bay was less than North Saanich, Colwood and the Highlands in 2010 and about the same as View Royal.

    Too bad we don’t have stats for wealth as well (or some kind of combined metric for income+wealth). The young families I know that have bought in OB in the past 5 years have huge incomes and not much wealth. The boomers I know that live there had lower incomes during their working years (even adjusting for inflation) and even lower now since they are retired. They are sitting on a lot of equity though and presumably have good investments (and pensions etc).

    We need more detailed data to see accurately judge how affordability has changed in various areas.

    It appears to me that the frustration we see here is that incomes do not support buying a house in the core of Victoria and the run up has resulted in a lack of affordable housing in the areas many want to live.

    Isn’t that somewhat always the case? The place you really want to live is just out of your reach?

    I remember when we bought our first place I was jealous of the guys a decade older than me at work that bought a detached no problem while we ended up buying a condo. Didn’t seem fair they could afford a house on a wage lower than mine. Seemed like they won the lottery.

    Then we worked a bit more, wages and savings increased and we bought a detached. Not in the exact area we wanted (we really wanted Fernwood for some reason) and in hindsight we should have spent more so we didn’t have to dump as much money into the house, but we got into a house.

    My parents started in a tiny starter house (2 bed rancher) and later moved into something bigger which basically stretched them to the max on their income at the time.

    Yes nominal prices are nuts, but entitlement and wanting more house than you can afford isn’t new.

    People who five years ago could buy in an area with no commute can no longer buy.

    Do we know this for a fact? Plenty of anectdotes, sure. I could have claimed similar back when we bought, “If we only bought 5 years ago we could have afforded OB!” Or whatever. Missing detail being 5 years prior we didn’t have the income to support OB.

    While housing prices were flat inflation was still ticking away. Obviously more than inflation is at play, but during the flat period our house definitely didn’t keep up with inflation and possibly even dropped in value. Now it has shot past.

    Seems like things usually go flat in Victoria once we shoot past inflation, but with this run up maybe a correction is in order? It’ll be interesting to see the median income come Sept. Maybe there is some income support?

    I think inter-generational wealth transfer is definitely at play (BoM etc). That is nothing new (my parents had help as did my wife’s parents), but the scale is entirely different. We have boomers sitting on 7 figures of equity that can tap into that equity at around 2% interest. Plus no need to pay down pesky principal with a HELOC. I don’t know anyone doing that, but it must be happening. How else do you get 20% down as a new buyer in this market?

  36. Family income, when it comes to affordability, does not always correspond well when you are talking about retiree’s. Their income might only be about 80k but often they have a few million in assets including the cash to buy a house.Particularly this measure does not reflect reality well when discussing places like Oak Bay.

  37. Which means median incomes have detached from prices/affordability.

    Yep.

    @barrister
    For the boomers that are now over 65, they’ve got a 50/50 chance of getting to 85 if female and 82 if male. Those over 70 have even worse odds. So I wouldn’t say that most of the homes bought by retirees are going to stay off the market for 15 years.

  38. are only able to do it with very large down payments

    Which means median incomes have detached from prices/affordability.

  39. Totoro – I think most people buying homes now in Oak Bay and other sought after parts of the core are only able to do it with very large down payments – much larger than 20% – more like above 70%. They got this from equity built wherever they were before, or inheritances, or both of those perhaps combined with income. Would be interesting to know how many are paying the purchase price in cash and aren’t even bothering or having to take out a mortgage at all?

    Given the extreme competition for the few quality homes that come up in the core – it would appear there’s quite a few people out there in that boat.

    Local Fool – Given the irrational exuberance elsewhere (i.e. capital coming to places like Vancouver and Toronto from around the world). How can you know if people aren’t ‘cashing out’ of those markets and not coming here with boatloads of cash? Once they sell their overpriced home in Toronto or Van, they now have cash – doesn’t matter if the purchaser of that home financed it with debt.

  40. why else would prices and demand start suddenly rising so fast after a long flat period (slumber)?

    Because there is a massive excess of levered capital in the market all looking to flood into any place perceived to be generating yields, currently RE. The Chinese, Canadians, and Aussies are using red ink like there’s no tomorrow, which is why the amount of debt in these countries is exploding.

    In cities like Vancouver where foreign buyers are present, locals get whipped up into a panic, and the cheap money enables them to borrow huge amounts. Speculators jump in as they always do, RE becomes a no-brainer investment. As the market rises, the banks loan out larger amounts, people borrow more, prices rise more – all in a vicious circle. Some of that has influenced the Victoria market, both via the spreading of the mentality as well as to a lesser extent people fleeing to cheaper locations.

    IMO, that is what is occurring in Victoria, and very little else. There’s a pervasive sense on this board and more broadly in Canada, of Canadian exceptionalism when it comes to our housing market.

    I couldn’t agree with Leo more, we’ve collectively let this madness get to our heads – the constant justifications for insane prices and a “sky’s the limit” mentality does not mean things are good to go, I think it’s a symptom of the problem.

    Thanks. I feel better so much now. Coffee time.

  41. Hawk – If Leo didn’t repost your blurb I would’ve missed you using the F-word. I guess I touched a chord, but why would you care what I say? It’s not as if what you or I or anyone else says makes any difference as to what happens in the real world and it’s just my observation and opinion.

    Victoria may not be the last place on earth, but it is about the only desirable city, in my opinion, to live in in all of Canada. It didn’t suddenly become desirable, it always was, but it is getting more and more discovered by the day across all the demographic spectrums – why else would prices and demand start suddenly rising so fast after a long flat period (slumber)? I challenge anyone to name a city in Canada that’s more desirable – then tell me why.

    Unlike Toronto, and other cities that can spread out – Victoria’s core is hemmed in on all sides from growth. 3 sides by ocean, and the Peninsula side by ALR. The Westshore, with it’s limited commuting options to the core, is the only place where real growth for new SFH construction can happen.

    Posting a video about empty condo projects in Florida doesn’t correspond at all to the fact that Victoria’s core has an extremely limited supply of SFH’s, and given the lack of supply and continued demand, the only way is up for those, barring a mass world economic catastrophe or earthquake. I feel the market won’t rise forever, but after it finishes the latest large price increases – it will likely go mostly flat for a while, as it did in the past. Impossible for anyone to peer into a crystal ball or know exactly what’s going to happen in the future though.

    I like what Barrister said about Victoria being a relatively small city and how only a small amount of buyers coming from elsewhere with deep pockets can have a large impact – so true. It would only take 1% of 1% of Canada’s large number of baby boomer retirees coming here from elsewhere to have an impact. He’s probably quite correct that unlike Vancouver and now Toronto, we don’t have a great deal of irrational speculation going on here, rather – it’s just what housing is supposed to be – a place for people to live. What I observe happening in Victoria now is not an abundance of overly irrational exuberance – but reality playing out, and these are indeed very exciting interesting times – if you’re already in the market that is.

  42. Re. affordability.

    Assuming the median family income in Oak Bay has increased a bit to 85k since 2010 and using the mortgage qualifying rate of 5.44% with 20% down and no other debt, a family with a median Oak Bay income can qualify for a mortgage for a home worth $528,119. Prices in Oak Bay are about double that. In my recollection (could be faulty), the last time you could buy an entry level home for this price in Oak Bay was 2007.

  43. Nan

    As long as you agree that foreign ownership should be restricted, I’ll just leave it at that.

    If there’s evidence of it being an issue, sure. Hence me being staunchly against it in Victoria at this time.

    I’m easily swayed by evidence. Specious arguments? Not so much.

  44. Barrister – 617 St. Charles has just simply disappeared off my PCS this morning. No longer listed and not showing as sold. Yesterday it was still showing as listed.

    Does anyone know why some properties do this? This happened with another I was watching recently… when it sold it simply disappeared.

    As I said before – I’m not an agent – maybe Marko or Leo or someone else know what happened with St. Charles. If we don’t get an answer, I can try asking my agent.

  45. Speaking of tropical beaches, totally off-topic, but we are headed to Puerto Vallarta for spring break and I just spent $472 for my family of three to get Hep A and Dukoral vaccines. Yikes! And I just found out it’s not covered under my husband’s Blue Cross plan. Darn it! Our first trip ever to Mexico… I’ll have to make sure we really exaggerate our Canadian accent, eh? so they don’t mistake us for Trump-lovin’ wall builders! Lucky for me, I can converse with my son en Francais. 😉

  46. You are comparing Oak Bay prices to Greater Victoria income. Doesn’t work like that.

    It certainly does given that OB is included in Greater Victoria and your premise is that Greater Victoria prices are tied to median family incomes.

    The median family income in Oak Bay was less than North Saanich, Colwood and the Highlands in 2010 and about the same as View Royal. Maybe you have more recent stats that show something different? My guess is that the reason that the City of Victoria median income is so much lower even though prices are not is that the stats include renters and there are more low income rentals. I believe the areas with high median family income probably have more home owners.
    https://www.crd.bc.ca/docs/default-source/regional-planning-pdf/capital-region-housing-data-book-and-gap-analysis-2015.pdf?sfvrsn=0

    The issue is change over time and affordability – if you are saying just make the boundaries bigger and people can now buy in Greater Victoria on median incomes that does not mean that incomes in many areas of Greater Victoria have not separated from the median family income. It appears to me that the frustration we see here is that incomes do not support buying a house in the core of Victoria and the run up has resulted in a lack of affordable housing in the areas many want to live. People who five years ago could buy in an area with no commute can no longer buy.

    I’m not sure of the point you are trying to make but it appears to be that this situation is entirely due to growth and maybe that if interest rates rise prices will fall? Not sure. My point is that prices are not going to go backwards to the point of being affordable on median incomes in many areas for many different reasons.

  47. According to my PCS, there are 379 SFH homes for currently for sale over $450k in the Westshore, North Saanich/Sidney/Central Saanich and the core.

    Broken down further:
    Westshore – 105 homes
    North Saanich/Sidney/Central Saanich – 90 homes
    Core over 750k – 135 homes
    Core 450k-750k – 49 homes

    @Barrister – that St.Charles property is not listed on my PCS at all.

  48. Any idea how many US buyers are buying into Victoria as they are getting a 30% discount (because of the $) from a few years ago?

  49. JD

    Keep that in mind when you’re next on a tropical beach, vacationing in another country in a manner that 95% of the rest of the world’s population can’t.

    How is that even a relevant argument? Me being on a tropical beach doesn’t impact the locals livelihood in a negative manner. In fact, it probably benefits locals if I’m on their beach buying drinks, clothing, and souvenirs, paying airport taxes, and generally spending my money. Just as it’s a benefit to our economy for foreigners to do the same here.

    But if a foreign country want to exclude me or tax me extra for purchasing their housing to protect the affordability for locals I’m okay with that.

  50. Luke:

    If you have a minute can you check on the selling price for 617 St, Charles St. again. I am wondering if the real estate agent who bought it made a real windfall in just a few months. There is something a bit strange about the original low purchase price here.

  51. Totoro:

    You make some good points and like most things there is not a single factor that accounts for all the price increases. Leaving aside foreign buyers for the moment, I suspect that the main driver behind the price increases in areas like Oak Bay is the wave of baby boomers retiring. Victoria has always been a desirable place for retirement if for no other reason than the weather. Victoria has not suddenly become more desirable but rather the number of boomers retiring has increased dramatically over the last five years. I think that it is easy to lose sight of how few houses come on the market every year in a place like Oak Bay. I dont have the statistics but I would guess at less than 300
    per year. The other factor to take into consideration is that most of the houses bought by the boomers in the last five years will probably not come back onto the market for at least another fifteen years.
    I suspect that we have reached a tipping point were supply has simple been exceeded by demand while at the same time the purchaser’s arriving from Vancouver and Toronto have much deeper pockets than the local demand.

    Victoria is still a relatively small city. An extra thousand people with very deep pockets has an enormous impact on prices. Some of the houses are being bought by speculators but my suspicion is that most of the houses in South Victoria are being bought as the final home for a lot of retiring baby boomers. It would be interesting to know how many houses are being bought for all cash by people over 55.

  52. Are we, or is only because you are including less desirable areas with more desirable areas that you can make this statement?

    No I am including all of Greater Victoria. If Greater Victoria had not grown, then it would be the same areas, but since it has, the areas are different. Like I said, Oak Bay did not used to be a premium housing area, so expecting it to to stay affordable to the same people is a mistake. That does not indicate the city is detaching from local affordability.

    Some areas have detached from median local incomes.

    What is the income of Oak Bay buyers and what percentage are locals? You are comparing Oak Bay prices to Greater Victoria income. Doesn’t work like that.

  53. The regular family can still buy a detached house, but it’ll be Royal not Oak Bay.

    Agreed.

    We’ve had this discussion already but I don’t believe this is the case. We are still within historical norms for Greater Victoria.

    Are we, or is only because you are including less desirable areas with more desirable areas that you can make this statement? Regular folk could buy in Oak Bay and Fairfield on a median income not 60 years ago, but ten years ago. We bought in Oak Bay for $330,000 in 2003 on a lower than average family income. A median income bought you Oaklands three years ago.

    Some areas have detached from median local incomes. You can attribute this to population growth, but it has happened at a rate exceeding what I would expect from population growth. You yourself have posted the chart to show that prices have consistently appreciated at a rate exceeding inflation here – wouldn’t you expect prices to detach from local incomes if this is true?

    All areas in the core have become less affordable. I agree monthly payment is one way of measuring affordability, but people need to qualify for the mortgage at the posted rate. If interest rates rise prices might well drop, how much I’m not sure, but there is a reason suites are everywhere and now co-ownership mortgages are available. I don’t think the “growing city” is the entire explanation, nor do I believe that Victoria is suddenly a super desirable city.

    Imo another factor is that real estate has gradually been turned from shelter to investment in the minds of Canadians. HGTV, blogs like this, what has happened in Vancouver, loss of confidence in the stock market during the last downturn, greater understanding of taxation due to accessibility of information, and appreciation rates all support this. If I was in my 20s and had had access to all this information I would have made very different investment decisions than I did.

    I do tend to agree there is a lot of irrational exuberance lately.

    Agreed. Prices won’t go up at this rate forever. It will stop. It might drop. You could well lose a lot of money if you have to sell when it drops. Interest rates could rise and this would impact some borrowers very negatively. I don’t have a crystal ball, but I can’t imagine this going on into next year given that Vancouver has stopped its trajectory upward and there will be an impact on buyer confidence if prices start to drop there.

  54. For fucks sake Luke, get off the blatant pumping like it’s the last place on earth.

    I do tend to agree there is a lot of irrational exuberance lately. I don’t think that we are at the end of the runup in prices, but the idea that Victoria has suddenly been “discovered” and is now a world class city like London or Manhattan or San Francisco is a little ludicrous. The price gains are going to people’s heads.

    My brother is an engineer. Back in the early 2000s they bought a place in White rock for $280,000. Little rancher on a dirt crawlspace with a poorly built addition and some mold issues. Sold 10 years later for about $450,000. Assessment today? Over $900,000. What the heck would my brother do if he was entering the market now? Pay almost a million dollars for a shack? Forget good incomes, it would be a life sentence.

    Thing about remote working is that many people no longer have to live in the big cities to find good work. If you work in tech, why not live in Banff or Nelson or Cumberland, or Chiang Mai instead of Vancouver if you can swing it with work? Many people are doing just that. I would never move to Vancouver for work because of housing costs, and if we weren’t already established in Victoria I probably wouldn’t stay there either. Just starting out, I’d say you’ll be a lot more successful moving somewhere where you won’t chain yourself to a massive mortgage. Even with a six figure income a million dollar house will take a long time to pay off.

  55. Okay, can someone tell me how to do quotes in the body of the text?

    You put a > at the start of the line, and then paste the quote.

  56. Areas of Victoria have already detached from local incomes and are not going back imo.

    We’ve had this discussion already but I don’t believe this is the case. We are still within historical norms for Greater Victoria. Focusing in one one sub-area is not realistic because the nature of those areas are changing. 60 years ago Oak Bay was just another regular neighbourhood in a sleepy town with no significant industry to speak of, so it was affordable to normal people. Now it’s one of the most premium areas in a mid size city with a much more diverse economy. So naturally it is no longer affordable to a regular family. It has transitioned from regular family housing to premium housing. The regular family can still buy a detached house, but it’ll be Royal not Oak Bay.

  57. Barrister – 617 St. Charles isn’t showing up as sold on my PCS yet, it says 139 days on market at the $1.25m price, maybe it will show up as sold tomorrow am?
    Sorry about that – I had another look and it did sell last Oct. for $1,050k and then was quickly re-listed. A bit confusing as it was re-listed so quickly after selling.
    Will be interesting to see if they made a quick $200k profit (which will be taxed as capital gains, but still a good profit for doing nothing). I wouldn’t be surprised if they did make that profit!

  58. “Month Sale Price, Average Sale Price, Median
    Sep 2016 $934,474 $840,000
    Oct 2016 $1,048,674 $885,000
    Nov 2016 $1,106,148 $875,000
    Dec 2016 $965,744 $871,500
    Jan 2017 $1,153,834 $950,000
    Feb 2017 $1,079,041 $920,000

    I suppose there is only so much blood you can get from a stone.”

    Indeed it does John. Looks like Vancouver did last spring while the pumpers were claiming it’s going higher when infact the peak was hit and the 20% average price decline began. Keep preaching the HPI though, it’s only 6 months behind reality. Lotsa bagholders in Vancouver these days. 😉

  59. Luke, the house was put back on the market as a flip at 1.25 million. Just saw a sold sticker on it today.
    Wonder if they got asking and a very quick 200k profit?

  60. Ummm you can’t get blood from a stone and that’s a lot of blood…. I noticed a number of properties in south Fairfield have all been snapped up. This ain’t over yet….

  61. Isn’t a 10% increase in prices in 5 months significantly higher? On track with the 24% increase overall last year.

  62. February sales are up from the previous month. That’s the first increase in house sales in the Victoria, Oak Bay and Saanich East areas since March 2016. House sales in these three areas are still hovering near the 15 year low.

    New listings are up in these areas by 24% this month which has not been enough to keep months of inventory from slipping to 2.4 from January’s 3.4. And yet, despite this pressure, median and average prices declined from the month before.

    There remains intense pressure on prices to increase substantially since April 2016. However that has not translated into significantly higher median or average prices over the last five months.

    Month Sale Price, Average Sale Price, Median
    Sep 2016 $934,474 $840,000
    Oct 2016 $1,048,674 $885,000
    Nov 2016 $1,106,148 $875,000
    Dec 2016 $965,744 $871,500
    Jan 2017 $1,153,834 $950,000
    Feb 2017 $1,079,041 $920,000

    I suppose there is only so much blood you can get from a stone.

    .

  63. Well said Nan. All these so called fake capitalists don’t have a problem with out of control speculation by outsiders until it effects their real estate values downward or their taxes upward. AKA hypocrites.

    When the China credit market blows they’ll be crying like babies.

  64. nan

    What I object to is when money is earned abroad by people who don’t live here who then proceed to outbid locals for housing they don’t need because they don’t live here while in many cases abusing our social support systems at the same time. The interests of non Canadians are being put before the interests of taxpaying Canadians, primarily the younger generations.

    But that’s not what Mukluk was referring to (where this started and why I said “would you vote against me?”). Mukluk was referring to globalization and its effects on industry and wages. Instead you took it as foreign money flights, presumably because you were once again looking for an excuse to spin into your foreign buyer narrative.

    I wholeheartedly agree we don’t want foreign money getting a free ride here and making tax free profits while stressing our RE supply. That’s no good. Where’s the evidence of this occurring in Victoria?

    nan

    What if eliminating foreign buyers doesn’t change prices?” If it doesn’t, I am OK with that.

    Yeah, but it kind of blows your whole “If foreign demand is eliminated, by definition, everything will be affordable because prices will come down until the local demand can afford it.” out of the water.

    By your “logic” if prices don’t come down when foreign buyers are eliminated then they are in fact affordable. Of course you keep insisting they aren’t affordable and foreign buyers are to blame (with no evidence).

    nan

    I do not however believe that market psychology would remain the same with foreign demand cut off and that prices would come down to their historic local price income multiple of 4x in Victoria

    Well faith isn’t fact. Seems you are suffering from false consensus effect. You think this way thus everyone does. Where’s the media hype around foreign buyers in Victoria? I’d agree you don’t even need foreign buyers if there’s enough hype that there is.. but I think our own FOMO and hype on housing prices is plenty without blaming outsiders.

    While I bought a few years ago now, everyone in my hood that bought at that time was at most 4x income (4 houses sold within months of each other when we bought). If we had to buy the same house again at current prices it’s still around 4x (4.3 by rough estimates), it’d under if we were both working full time. Point being Victoria is still affordable, at least for the families in my middlin hood. Maybe they bought well below what they could afford and make good money, maybe they’re the norm. Dunno, but definitely no fancy cars in this hood.

    nan

    Low interest rates, limited supply, parents, FOMO, CMHC, spurred on by realtors whispering about displaced Vancouverites.

    And there you have it. The major factors. Note how foreign buyers isn’t in your list.

    nan

    Just because they can pay a price doesn’t meant they would under different circumstances.

    That’s meaningless nonsense. The market is what it is and people are choosing to buy instead of waiting for different circumstances. If no one bought, prices would go down. No one is being forced into buying. People are choosing to buy.

    There’s no way I’d pay 800K+ for a 70s box with gold shag, but plenty of people are. Amazingly there’s enough demand to not only keep prices up but keep them moving higher.

  65. “We live in a global economy. To cherry-pick something right in front of your nose and mark it as unfair is, well, naive.”

    It’s not naive. It’s serving the interests of your own community, which is what democracy is about, isn’t it?

    What the globalists want is to neuter the democratic system and run things by way of global institutions subject to the hidden hand of the banking/corporate/plutocratic elite.

    Then you’ll have unrestricted movement of people and goods from low wage countries to high wage jurisdictions, while capital, technology, and manufacturing is moved to the lowest wage and least environmentally regulated jurisdictions. Profits, naturally, will be taken by the global corporations in the lowest tax jurisdictions. It’s really daft assembling cars or writing software in Canada when there are people in China, Vietnam, India, etc. who will gladly do the work half the price, a quarter of the price, maybe a tenth the price.

    The net result will be good for people in the Third World, especially people in those poverty stricken places with a fertility rate two or three times the replacement rate. They’ll be coming here in considerable numbers.

    It will be bad for most people in the West who will see wages crushed. For example, how many New Delhi pedicab drivers earning a dollar or two a day would refuse a job at $20 plus an hour driving a BC Hydro bus in Victoria? Or even at $10 an hour or $5, or wherever the rate would settle under Justin Trudeau’s program for Canada is a post-national sanctuary state.

    And, needless to say, when the rights and freedoms of very rich people are guaranteed everywhere equally, they will aquire the best real estate wherever it is to be found, from Victoria, to Come-by-Chance Newfoundland.

    Here’s an interesting flip that may skin one of those foot-loose foreign multi-millionaires. Sold within the last 18 months or so for around $1.2 million it is now offered after some refurbishment for $4.5 million.

  66. “The whole “it’s happening somewhere else so it should happen here” argument is a crock. If we’re going to say house prices in Vancouver being expensive is acceptable because house prices in Melbourne are expensive then why even have nations?”

    Keep that in mind when you’re next on a tropical beach, vacationing in another country in a manner that 95% of the rest of the world’s population can’t.

  67. The whole “it’s happening somewhere else so it should happen here” argument is a crock. If we’re going to say house prices in Vancouver being expensive is acceptable because house prices in Melbourne are expensive then why even have nations?

  68. Barrister – 617 St. Charles St. Listed at $949k, sold for $1,050k

    But this was back in mid Sept. 2016 – only on the market for five days. Closing date was Feb. 17/2017
    So, that’s a long time to wait for the closing date… looked like a nice place though. Great location.

  69. “What I object to is when money is earned abroad by people who don’t live here who then proceed to outbid locals for housing they don’t need because they don’t live here while in many cases abusing our social support systems at the same time. The interests of non Canadians are being put before the interests of taxpaying Canadians, primarily the younger generations.”

    I think it’s pretty funny to suggest that Canadians are put-upon in this regard. Take a look around you and tell me that you’re paying true-cost for everything. That the shirt you’re wearing was ethically produced. That the coffee you drink didn’t have any harmful effect on a far-away place you know jack squat about. That the factory that made the computer you’re using didn’t pollute air somewhere in some unpronounceable province in China.

    We live in a global economy. To cherry-pick something right in front of your nose and mark it as unfair is, well, naive.

  70. @Bingo “Should you vote against me?”

    Why would I vote against you? Brining income from abroad to Canada should be celebrated because you bring money into the country and pay taxes on it locally. You live here, maybe you raise your family here whatever – you are Canadian. More money in the economy is good for Canada.

    What I object to is when money is earned abroad by people who don’t live here who then proceed to outbid locals for housing they don’t need because they don’t live here while in many cases abusing our social support systems at the same time. The interests of non Canadians are being put before the interests of taxpaying Canadians, primarily the younger generations.

    “What if eliminating foreign buyers doesn’t change prices?” If it doesn’t, I am OK with that. If Canadians want to blow their brains out indebting themselves on housing in a vacuum, that is their choice. I do not however believe that market psychology would remain the same with foreign demand cut off and that prices would come down to their historic local price income multiple of 4x in Victoria and 5x in Vancouver or about half where it is today once interest rates have returned to normal levels.

    “Somehow families have the income/wealth to support buying 70s boxes in GH for 800K+. ” Low interest rates, limited supply, parents, FOMO, CMHC, spurred on by realtors whispering about displaced Vancouverites. Just because they can pay a price doesn’t meant they would under different circumstances.

    @ Gwac “We cannot just pick and chose the parts of Capitalism and free markets we like and get rid of the others”

    Sure we can. Every country does this every day, including Canada to make sure rampant capitalism doesn’t consume society. Some examples include the rule of law, the existence of wheat and dairy boards, farming subsidies, minimum wages, employment standards acts, CMHC/ fanny may/ Freddie mac, financial regulations, production quotas, trade agreements, human rights legislation, prostitution laws, environmental laws, etc. All produce constraints on the lessez faire pure capitalism to increase the cost of undesirable activity that would otherwise take place in a purely capitalist economy.

  71. Marko:

    I think we are rolling into spring…some of the offer deadlines today attractive huge amount of offers. Just fired off an offer on a home and it is number 13 they have so far.

    Do realtors communicate written text mainly with Siri? My realtor makes similar grammatical/syntax mistakes in text messages and emails, I assume mostly because he is texting (dictating to Siri) and driving.

  72. “I don’t see it as “enviros” causing the issue, nimbys seem to be much more vocal…”

    Agreed. And thanks to public hearing requirements they can oppose rezoning applications and complain about on street parking to their heart’s content.

    As for the ALR, I think it was well-intentioned, but not sure that it’s worth preserving a few close-in farms at the expense of much-needed supply.

    Combined with poor suburban transit and incomplete freeways, it’s no wonder the core is in such high demand.

    Interesting video btw – seems like a reasonable way to do density.

  73. further issue is buyers can only bid on 1 place at a time due to no conditions.

    I was explaining this the other day to someone. Offers on multiple properties seems to work for like two months in early 2016 and we had discussions as to whether it was ethical or not but that problem quickly vanished with unconditional offers becoming the norm.

  74. How discouraging is that for both agents and buyers making an offer.

    I would say approximately 80% of offers I write up I am thinking there is less than a 2% chance, but I write them up to keep my clients happy. It’s only 20% of offers that I write up that I think have a reasonable chance like 20 to 50% odds.

  75. Wealth is not just income. The wealthiest Canadians may have rather low incomes.

    Income-to-price ratio is one measure. Wealth-to-price ratio is another.

  76. I think we are rolling into spring…some of the offer deadlines today attractive huge amount of offers. Just fired off an offer on a home and it is number 13 they have so far.

  77. bman

    I think less restrictive land use policies would be a good thing, but I know it won’t happen. Too many enviros on the west coast.

    I agree on the restrictive land use policies. I don’t see it as “enviros” causing the issue, nimbys seem to be much more vocal, “Too high! Too dense! Too low income! Doesn’t perfectly match the aesthetic of our ancient housing stock!” But maybe you’re referencing ALR and agricultural?

    Tokyo has interesting zoning laws. The average family there can afford a detached home. Tiny lots and not particularly big houses, but it’s detached. Residential use is allowed in pretty much any zoning (commercial, industrial etc). This video explains better than I can:

    How an Average Family in Tokyo Can Buy a New Home

  78. I don’t really buy the assumption that Victoria will detach from local incomes like Vancouver has. If it does, what’s next? Duncan? Nanaimo? If not, why not?

    Many neighbourhoods in the core already have. Duncan and Nanaimo might be next, if our timeframe is long enough. For the foreseeable future Nanaimo will remain a relative hell-hole and Duncan is not far behind.

    Mukluk’s response to this question was also spot-on.

    I think anyone expecting to repeat past performance in a world where rates aren’t decreasing anymore or even increasing is going to be sorely disappointed.

    We can’t assume that the world of increasing rates will be with us for as long as the world of decreasing rates has been. No one, including the “experts,” predicted these—to quote info (remember that goofball?)—”extremely low, unprecedented, emergency, temporary interest rates” would last even half as long as they have.

    Hawk is our latest goofball. One day, he’ll leave us too, when he finally tires of always being wrong.

    Generation X and the millenials are much less materialistic than Boomers as well.

    I hate generalizations made about Millennials (of which I am one), especially when they’re wrong.

  79. “How the hell did a free market include dumping nuclear waste in my back yard. I and a foreigner cannot dump nuclear waste. Rightfully so.”

    My point is that there is a market for dumping nuclear waste, but it is regulated so that it is virtually non-existent. Regulation is clearly in the public interest in this case. Clearly some things shouldn’t be left up to the free market.

    With housing, I tend to agree with you that we are over-regulated; demand for housing is juiced by the CMHC, but then supply in cities like Vic and Van is constrained by restrictive land use policies.

    I think less restrictive land use policies would be a good thing, but I know it won’t happen. Too many enviros on the west coast.

  80. “Don’t confuse a possible future outcome with the analysis of certain past events ”

    That’s why I quote that point – there aren’t any stats to say that one generation is less materialistic than the other.

    “Anyway, again, have no idea why we are on this.”

    Because you keep shooting down my point with irrelevant stats.

  81. My main point is that it’s incorrect & self-destructive to find a scapegoat in the previous generations by labelling them “more materialistic”.

    Scapegoat for what? A generational tendency to one thing or the other does not make people bad or good.

    The article you linked said something different

    You missed the key bit: “it’s likely that, given their higher…”. Don’t confuse a possible future outcome with the analysis of certain past events which have already come to pass. That may occur, may not. I don’t know and neither does the author. We do know the spending amounts and patterns of each generation in their 20s because this has already occurred, stats were collected, and they have been adjusted for inflation. There might be other interpretations of the stats or reasons for them not caught in the analysis.

    Anyway, again, have no idea why we are on this.

  82. “boomers spent more on consumer goods than gen x or millennials at the same st/age.”

    The article you linked said something different: “given their higher levels of technology skills Millennials will as a group draw much longer economic straws and start spending more like their predecessors were able to do … for most goods and services Generation X did not spend less than Baby Boomers”

    Also, the original Time article I posted referred to studies showing what Millennials spend their $ on.

    My main point is that it’s incorrect & self-destructive to find a scapegoat in the previous generations by labelling them “more materialistic”.

    There’s no stat or data to support that statement.

    Every generation is at risk of Materialism/Consumerism – which causes you to “keep up with the Joneses” on everything from the latest gadgets and “experience economy” or houses or cars.

    The only difference in the generations is what they spend their money on to “keep up”

    There’s a big reason why millennials aren’t spending as much on some goods – it’s because they can’t afford it and have other priorities – but not because they made an ethical decision or are less materialistic.

  83. But can’t that be explained away by boomers having jobs in their 20s instead of pursuing education? Boomers didn’t have to go to school to make a living and buy a house. Boomers didn’t rack up 10s of thousands in student debt.

    Could be. I forget now why this is relevant except maybe it is harder for millennials to buy houses now.

  84. WordPress can support markdown and it looks like Leo has it turned on. Simply start a line with greater than.

    Hey I did it! Thanks Bingo 😀

  85. Totoro

    Boomers beat Gen X and millennials in their 20s. That is the only data I found that seemed reasonable.

    But can’t that be explained away by boomers having jobs in their 20s instead of pursuing education? Boomers didn’t have to go to school to make a living and buy a house. Boomers didn’t rack up 10s of thousands in student debt.

    I liked that saying you quoted. There are definitely people being flexible in order to live their dreams.

    We’d love to live in a new build off one income like our boomer parents did. Fact of life is we can’t have that and live in Victoria. We could elsewhere, but we want to live here (for now). We love Victoria so we made sacrifices to live here (older house, two working adults, modest vehicles). Such is life.

    Maybe at some point we’ll tire of working all the time and move to Duncan so we can have a newer house and live off one income. Probably not, but it’s an option.

    @local fool Here’s the html way of doing a HTML blockquote. Skip the citation bit. You can practice here.

    WordPress can support markdown and it looks like Leo has it turned on. Simply start a line with greater than “>”

    like this

    Here’s a markdown cheat sheet

  86. Your stats are about spending, not materialism – those are 2 different things. Materialism is more linked to consumerism with its psychological and socio-economic factors.

    Our spending patterns are the best indicator of consumer behaviour. I think the premise is that the greater the spending on material/consumer goods the greater the emphasis on materialism. Might not be but seems the best data given adjustment for same age and inflation – could be wrong.

    Not arguing that materialism does not increase happiness – don’t believe it does. Just stating that boomers spent more on consumer goods than gen x or millennials at the same st/age.

  87. “That is not supported by the stats.”

    Your stats are about spending, not materialism – those are 2 different things. Materialism is more linked to consumerism with its psychological and socio-economic factors.

    See many stats & research studies everywhere, but as examples:
    http://www.huffingtonpost.com/2013/12/15/psychology-materialism_n_4425982.html
    Americans today, compared to 55 years ago, own twice as many cars and eat out twice as much per person, but we don’t seem to be any happier because of it. Rather than rising levels of well-being, we’ve seen mounting credit card debt and increasing numbers of self-storage facilities to house the things we compulsively buy.

    http://www.apa.org/monitor/jun04/discontents.aspx
    Materialistic values may stem from early insecurities and are linked to lower life satisfaction, psychologists find. Accruing more wealth may provide only a partial fix.

    My parents & grandparents were in wars & also didn’t buy what they didn’t need, but that was about survival (and yes, they think the new generations are crazy with so much debt)

  88. I think the % of money spent at the same age and adjusted for inflation is the best measure we have for consumer spending aka focus on the acquisition of material goods. Boomers beat Gen X and millennials in their 20s. That is the only data I found that seemed reasonable.

    There are a bunch of different definitions of materialism. I think the one meant here was “being materialistic” as “excessively concerned with material possessions”. And this is directly related to the amount spent on material goods. I don’t think there was any intention to comment on spirituality.

    No generation is more materialistic than another – that all depends on the way you’re brought up, not defined the period you’re born in.

    That is not supported by the stats. Generational behaviour is a response to all sorts of things including the economic climate, home values, and cultural norms of the generation you travel through time with. Of course there are lots of exceptions, but there are statistically relevant norms. Keeping up with the Joneses is a factor.

    Who knows what will happen next but I do know that I couldn’t have convinced my depression era immigrant Oma to waste a thing or purchase something she didn’t need even though she had enough money to do both later in life. Generational experience is pretty powerful.

    As for what this has to do with housing, not sure except millennials are staying at home longer to save for a house and 30% are getting help from parents to buy.

  89. Bman

    OMG WTF. I am talking about letting foreigners invest in our country and than say sorry you cannot buy a house without paying 15% more. How the hell did a free market include dumping nuclear waste in my back yard. I and a foreigner cannot dump nuclear waste. Rightfully so.

    Canadians love their government jobs and social programs too bad they have no clue how its paid for.

  90. “We cannot just pick and chose the parts of Capitalism and free markets we like and get rid of the others.”

    Sure we can. There may be a market for me to set up an asbestos and nuclear waste dump on the back 40 of my property. Intervention, however, is required to protect everybody from my stupidity, greed, and selfishness.

    When selfishness stops serving a greater good, why should government stand pat and conform to some weird ideological purity?

  91. gwac, agree, I missed that 🙂

    Totoro, from the article you posted: “One question this raises is what will happen to these Millennials between now and 2020 when they will be 35 to 44 years old … it’s likely that given their higher levels of technology skills Millennials will as a group draw much longer economic straws and start spending more like their predecessors were able to do. ”

    Also the original comment was about “materialism”, not how much total $ each generation spent. Yes cars and houses are more expensive items, but from the dictionary definition: materialism is a tendency to consider material possessions and physical comfort as more important than spiritual values.

    No generation is more materialistic than another – that all depends on the way you’re brought up, not defined the period you’re born in.

  92. Nan:

    my point was that tech brings incomes that are comparable with what those workers would be doing otherwise. Most workers in tech aren’t average anyway so I don’t think that comparison is useful. Tech creates jobs but not jobs that justify current run ups in prices

    My point was incomes are higher. You didn’t provide any evidence otherwise, not even an anecdote. Engineers make a lot for the amount invested in education. What other career can you make as much with just an undergrad?

    So you are trying to argue tech jobs are not a net gain. The same people would just be doing something else paying close to the same. That’s absurd. If those workers weren’t in tech in Victoria they’d be in another city doing tech, not here in government/university/hospital/manufacturing as per your argument. Tech is the biggest industry in Victoria now. It’s not like every new tech job removes a government/university/hospital/manufacturing job. There has been a net gain in jobs.

    Look at Denver: state capital with plenty of gov’t, teacher, nurse jobs etc. With the tech boom housing prices popped. Same with Portland, though Portland has less gov’t jobs (some, since it’s bigger than Salem, kind of like Vancouver is to Vic).

    Also, I never claimed tech was the cause of the current run ups, I did claim it’s a factor. There are obviously lots of factors. Low interest rates, very lax borrower rules (until recently), families with multiple incomes (pretty much the norm for young families now – less common in the past), media hype on RE prices, a general obsession with RE in Canada, Bank of Mom (helps skirt lending rules).. there are lots of things pushing values up. The government isn’t helping with their first time buyer loans.

    Somehow families have the income/wealth to support buying 70s boxes in GH for 800K+. Maybe they are stretched to the limit, maybe not, but they are buying at these prices.

  93. Luke

    China needs to open their markets, if not they should only get the same access to our markets that they give. Agree with Trump on that.

  94. 2153 Sandowne Rd – listed for $950k went for $1,033k. Personally I thought it would go for more, but didn’t get a close look at it…

    Here’s a new listing that caught my eye today – beautiful! 64 San Jose Ave in James Bay – just steps to the ocean waterfront walk on Dallas Rd. 2007 build and beautifully done to look ‘old time’. Listed at $1,299,995 I think it will go for more…

  95. @gwac – we can’t buy real estate in China, and Chinese can never even really own there themselves, hence their love of foreign real estate in desirable English speaking western cities around the world. They’re not in Victoria in great numbers yet, but this is something we’ll need to keep an eye on.

    @Bingo – Agreed – adjusting expectations is completely what people will need to do moving forward if they want to live in the core. This will be harder for those coming into this market from now on. In the future, SFH in the core will only be affordable for the rich and never based on local incomes.

    This is what happens when you have limited land, more people moving here than there are people leaving, a desirable city with world class amenities and not yet with the big city problems like ridiculous traffic or violent crime, probably the best climate in Canada, and growing in popularity all the time for everyone from millennials to baby-boomer retirees. With increasing numbers of retirees leaving the public sector hiring is starting to happen here in a big way, and now there’s the growing Tech sector… the economy is booming like never before and many employers (even in the public sector) can’t find good workers very easily.

    Victoria is going through a renaissance and is awakening after a long slumber, and it’s an exciting time to be here! We’re entering the global stage and becoming more recognized across Canada as well, as an uber-desirable place to live. Get in while you still can…

  96. Vic my whole quote already said that. You cannot take just half a quote to bash the liberals. Use my whole quote than bash away. 🙂

    “Way to much government intervention all ready in this country. Let markets behave the way they should”

  97. “Let markets behave the way they should.”

    Tell that to the Liberals who accept millions of $ in donations from property developers and who instituted the HPO owner-builder exam at the urging of private interests. Or Quebec with its QIIP, where most of its “investors” reside in BC under false pretenses of investing in businesses.

    A free market for Canada is not about who ponies up the most money in gov’t bribes. It should be about creating a level playing field for all private citizens and private businesses. That’s what makes a country competitive and gives its citizens a good standard of living.

  98. “Generation X and the millennials are much less materialistic than Boomers as well.”

    It’s the Gen X’s & millennials lining up for the next $500 HD GoPro, or $400 smartphone Instagram pic of their $100 yoga pants, or $8 Hipster Starbucks latte. Or a $100 FitBit to tell them how many calories they’ve burned walking.

    Gimme a break. Gen X & millennials still spend a ton of money on things, but just not the things that boomers did. Boomers wanted cars & phones but the next gen wants gadgets & exotic stuff.

    http://time.com/money/3979425/millennials-consumers-boomers-gen-x/
    “even as they aren’t following in the footsteps of their consumer forebears in terms of embracing big-ticket items like houses and cars, millennials spend far more freely on certain other items compared to older generations.”

    I’ve worked lots of with Gen X & milliennials and seen how they spend money on things my generation would have thought were luxury items, eg., $500 pair of shoes they saw on Sex and the City, or $100k boat bought with an insurance settlement. Yikes!

  99. People need to change their expectations

    Yes. Crying that things are unfair when they don’t work to your benefit smacks of self-interest. It is not just foreign capital at play here. Lots of interrelated factors which is why there is no RE crystal ball – until Leo invents it at least.

    I like the saying, “Be prepared to do what it takes to have what you want”. So what if your parents didn’t need a suite or have to take in students to afford a house in Oaklands. If you do and you want that house do what it takes. If you don’t want it that badly do something else. Chance are you’ll be just as happy.

    Seems to me that the thing that keeps people dissatisfied is failing to adjust to reality or failing to take control of what they have control over. Spending your time worrying and complaining does nothing except decrease your own life satisfaction.

    Yeah – 70% of Canadians are homeowners. They are not going to vote for a policy they believe will cause an immediate downturn in RE. Heck, in Bermuda they decided to reduce the foreign buyer’s licence fee because the economy was stagnating and foreign capital helped. There is a reason we used to have the foreign investors program. Fine line between bringing capital in as a stimulus and permitting untaxed profits to leave the country and untaxed immigrants to take advantage of Canadian social programs while living on their retained capital earned in a foreign country.

  100. Nan

    My point is there are a lot of Canadian who are perfectly happy with a free market. Where we can buy foreign assets and they can buy ours. Canada standard of living is partly based on foreign investment and free trade.

    We cannot just pick and chose the parts of Capitalism and free markets we like and get rid of the others.

    Way to much government intervention all ready in this country. Let markets behave the way they should.

  101. @ gwac I’m not from either the Caribbean or Florida- if they want to protect their real estate, they can vote for that if they wish. Ultimately their real estate is their problem. Ours is ours.

    @ Mjay, what we are seeing right now are the unintended consequences of government policy. Saying their could be problems by changing things when there are already massive problems with the current situation seems like a distraction to me.

    @ bingo: my point was that tech brings incomes that are comparable with what those workers would be doing otherwise. Most workers in tech aren’t average anyway so I don’t think that comparison is useful. Tech creates jobs but not jobs that justify current run ups in prices

  102. Local fool:

    70% of BC folks are homeowners – it might not be quite so simple. I think there’s a reason why the NDP has been saying very little about housing, other than vague generalities.

    Yup. A bunch of boomers are sitting on huge amounts of equity. If Garth’s stats are right, a heck of a lot aren’t prepared for retirement. Proposing something that may damage their paper gains, the gains they need to live through retirement… not a good way to get votes.

    Nan said:

    If foreign demand is eliminated, by definition, everything will be affordable because prices will come down until the local demand can afford it.

    Except for markets that have traditionally cost a larger % of income to buy, like Victoria.

    What if eliminating foreign buyers doesn’t change prices? Are we going to eliminate out of province buyers next? Out of town buyers? Out of town buyers (BC residents) are the biggest buyers followed by out of province.

    What about locals that earn money from outside Victoria? It’s not fair they don’t have to compete based on local wages! Let’s put an extra tax on that!

    Popular cities with limited land will have issues with affordability. So far I haven’t seen anything convincing that foreign ownership is at issue here. Also there’s the debate of whether Victoria isn’t affordable. Nominal prices seem high, but % of income going towards mortgage payments is within historical norms (or at least was). If/when interest rates go up that’ll press affordability, but then we should see prices drop accordingly.

    People need to change their expectations. Back when Saanich West was still mainly rural your average family could afford a new build out there or something used but nice closer to town. Now that there is little vacant land in the core families have to decide between a commute or downsizing their dreams from a SFH to a town or condo. We aren’t the first growing city for this to happen to.

  103. the wealthiest Canadians should be able to afford the best Canadian real estate

    They can. Wealth is not just income. The wealthiest Canadians may have rather low incomes.

    unlike today where a nice house in a nice neighborhood in Vancouver is $4,000,000 and beyond reach of every single local taxed income stream, which is absolutely ridiculous

    No doubt this is a lot of money.

    Of course there are a lot of locals who probably earn less than you who own these homes or homes in OB – and they didn’t all buy 20 years ago or more. There are people who took equity from a prior home and moved up and people who inherited and the 30% of Canadians who had family help.

    Nice homes in highly desirable areas are not purchased on median local income streams. Entry level homes are. You need to do this first and move up the property ladder if a fancy house in a fancy area is where you want to land up.

    Taking Vancouver out as there clearly was a foreign investment factor and just looking at Victoria I don’t see that nice homes in desirable areas are all over a million. Victoria is not Vancouver.

    Generation X and the millenials are much less materialistic than Boomers as well.

    I’m Gen X. I don’t think my peers are as into stuff as our parents were but maybe that is who I know. Most of the people I know are pretty focussed on kids and parents and family experiences. Me too.

    There should be no competition for local residential real estate from offshore interests that don’t live or pay taxes in Canada.

    I agree that this should be regulated. Completely unfair to Canadians to turn RE into a foreign investment without levelling the playing field through additional taxation on purchases and profits. At the same time immigration should be supported and permanent residents should have access to the market if they are going to live and work in Canada which may mean they bring foreign capital with them to buy a home.

    By your definition, doing anything that gets in the way of people doing what they want with their money is un-capitalist.

    I’d disagree. The Canadian system has strong elements of socialism but the right to more than a basic standard of living is all you get – along with free-ish health care etc. There is no right to a fancy house or a Tesla, only the opportunity to purchase based on your own access to capital. We have taxation to support this system, but it just might not have been implemented appropriately for foreign investors in Canadian RE. Seems like the PTT has had the intended effect on Vancouver and we don’t have data showing this is a driving factor in Victoria.

  104. Nan

    You have made a lot of good points. And I think that most of the contributors on this blog would agree that some of the sales in the Victoria market is bordering on insanity. I too have been frustrated with government policy. Many countries and cities have implemented policy to try and detract foreign investment in a relatively unproductive asset like real estate. For instance, San Francisco subsidizes local buyers through taxes, Australia has a foreign buyers tax and Switzerland caps the amount of second homes purchased in the housing stock.

    However, you have to keep in mind that there is going to be negative results from government regulation. One of the things I love about capitalism is that it has a tendency to correct excesses in the long run. Does this mean that the housing market is going to collapse? Probably not, but will it eventually slow to allow incomes to catch up to housing prices? Most likely. As Warren Buffet says “Be fearful when others are greedy and be greedy when others are fearful”.

  105. @ LeoM,

    “If the NDP want to win the next election, all they need to do is what I’ve stated above and they will win a landslide victory.”

    70% of BC folks are homeowners – it might not be quite so simple. I think there’s a reason why the NDP has been saying very little about housing, other than vague generalities.

  106. Aga said:

    I appreciate that some of you think that there is a tech sector in Victoria, but let’s get serious, it’s piddling.

    Piddling but the biggest economic impact in Victoria at $4 billion (twice the size of tourism).

    Dollar-wise it’s the biggest industry in Victoria.

    Aga said:

    We should be honest about what’s driving real estate in Vancouver and Victoria: Asian money. I’m not making a value judgement, just saying that’s the driver.

    Was a driving factor in areas of Vancouver. Richmond had double digit % of foreign buyers and as many say you can see it on the streets (meaning cars). I stayed at a condo in Richmond this past month and the garage was filled with exotics and luxury cars. Aston Martin, Maserati, S-Class mercedes, G wagons, Porche GT3, Range Rovers.. So many cars worth over 100K and some people had 2 (e.g. one person had a AMG C63 and an M4 in their double spot). Considering the 2 bed condos in the building were >700K I think it’s safe to hazard it’s not local wages paying for those cars. The cars aren’t proof, but we have foreign buyer numbers to support that Richmond had a lot of foreign buyers.

    Victoria on the other hand doesn’t have numbers supporting foriegn ownership as an issue (yet? could change, hence watching the numbers). As it stands there isn’t proof of “asian money” driving Victoria real estate.

  107. Generation X and the millenials are much less materialistic than Boomers as well.

    Is that really the case or have they just had less time to accumulate?

  108. Nan

    I am sure the same thing is being said about Canadians who buy up Caribbean properties or Florida properties.

  109. Nan said:

    Sure, there are many tech workers in Victoria but their average salaries are not markedly different from the pre-existing government/university/hospital/manufacturing jobs. In most cases I believe they are in fact worse, factoring in inflation in housing prices and education requirements to get those jobs.

    So.. you think they don’t make anymore, therefor they don’t?

    The top paying jobs in Canada are medical, business/accounting and engineering.

    Look at the highest paying in demand jobs in Canada and how many of them are tech related.

    BC’s tech sector pays an average weekly slary of $1590. 75% higher than the average wage in BC.

    Anecdotes aren’t worth much, but I’ve work in both Gov and tech. Government workers (even those in tech) trade wage for a pension and job security. Of my friends in their 30s (the majority of my friends) the ones that make 6 figures do the following professions: lawyer, accountant, engineer. I don’t know any Dr my age. The nurses I know.. high 5 figures. Various gov’t workers, 5 figures. Teachers, 5 figures. Etc etc.

    4-5 years education is hardly arduous. Yes, engineers with only an undergrad can make 6 figures in Victoria. Helps that they can compete on a global scale for income while living locally.

    Nan said:

    Victoria is a nice city and Canada is a great country but most of the people that want to live here were born here and don’t have access to outside capital, but have to compete with it. As Canadians, we should vote against this competition.

    I think you were missing the point of Mukluk’s comment on outside capital. A local plumber competes for local dollars, a local store competes for local dollars, a local doctor is paid by the province which relies on the provincial economy.. etc etc. An engineer and similar careers compete on a global scale.

    Majority of my income came from foreign sources last year (>90%). Should you vote against me? I know that’s not what you were trying to say (you were trying to pivot to your foreign buyer rant), but Mukluk was talking about globalisation and how it is affecting incomes in some fields (or that was my take).

  110. @ Marko: Everything. In my view, the wealthiest Canadians should be able to afford the best Canadian real estate.

    There should be no competition for local residential real estate from offshore interests that don’t live or pay taxes in Canada. They don’t work here, they don’t raise families here, they don’t contribute to the tax base and until this year, the CRA hasn’t even had a mechanism to make sure they pay taxes on the profits on sale on their housing investments. They are parasites literally sucking the life out of our country. This isn’t just hyperbole – money is a representation of life effort, and that money is being extracted from Canada tax free by foreign interests. Who pays for it? Have you seen the GDP to debt ratio lately? Local millennials and Gen x’ers do. Canadians take out huge loans to pay locals and foreigners prices driven by foreign demand. And then commit their lives to servitude to pay that loan. Who wins? Foreign and local Sellers (mostly older) and Banks. Who loses? Buyers (mostly younger)

    If foreign demand is eliminated, by definition, everything will be affordable because prices will come down until the local demand can afford it. “Prices can’t come down we will be poor!” So I remember this concept from law class called “bearing the loss”. Who should bear the loss? Boomers for their bad planning of the younger generation due to no fault of their own? We all know the answer to that one.

    The stratification of incomes and housing would obviously still exist and there would be as many envious Canadians as there were 20 years ago – good neighborhoods would still be good neighborhoods. The difference is that locals would be able to do something about it other than lever up or borrow from parents, unlike today where a nice house in a nice neighborhood in Vancouver is $4,000,000 and beyond reach of every single local taxed income stream, which is absolutely ridiculous. 75% of that $4,000,000 value is equity created by debt over the last 6 years, not work and if you missed the initial run up, tough luck – if you buy today, you will pay for that house forever.

    @ AG: “because capitalism”

    When the free markets start destroying things due to unaccounted for externalities (environmental, social costs, etc) , regulation is needed and government needs to step in. Is it un-capitalist to build roads and bridges? Implement speed limits and other laws? Maintain parks? Pay for healthcare? Have a military? regulate financial instruments? No of course not – these are all things we more or less accept we have to pay for to make and keep Canada a great place to live. Protecting Canadian residential real estate is the same thing – do we want workers to be able to work and live their lives comfortably and productively, continuing to improve the great country we live in or do we want to allow the current generation of owners to sell it all out for their immediate gain simply because they can to people who have no enduring interest in our country at the expense of future generations of Canadians?

    Instead of regulating something meaningful, me get this BS impossible to pass test that as Marko so eloquently pointed out does nothing but shore up the profits of big builders, if you want to go for non-capitalist acts of government, I suggest you go for that one.

    By your definition, doing anything that gets in the way of people doing what they want with their money is un-capitalist. Maybe it is but pure capitalism doesn’t work anyway. You can’t blame a lion for being a lion but most people are not lions and don’t want to be eaten alive while going for a walk to get some grass or whatever. Governments build fences that allow the lions and the antelopes to coexist. We need a new fence.

    I want Canada to be great for me and my kids and my grandkids and I see that dream eroding every day as we allow huge chucks of our country to be sold to untaxed foreign interests at the expense of local interests simply because foreign interests have more money.

    Maybe stopping that is un-capitalist, but allowing it to me is very un-Canadian.

  111. I did a quick scan of the listings of SFH in south victoria.

    I dont believe that there is a single house in Oak Bay listed for under a million. Not a lot of new listings and about the same number as the beginning of the month. Cheapest in Uplands is 2.5 and that is for a knockdown.

    James Bay has added a number of houses is now up to eight(doubled from four a month ago).
    On the other hand Fairfield seems to have a couple of less listings. Rockland is about the same with the usual dregs sitting there for months (6 houses).

    I know that we have increased the number of listings but they dont seem to have really appeared in South Victoria with the exception of James Bay.

    I suspect that we have another five or six years before the number of baby boomers retiring balances out with the number either dying or going into nursing homes. Wonder what impact that will have on the market.

  112. I don’t think it is correct to say there is a 100% foreign buyer’s tax in Bermuda that doubles the cost of the purchase? It appears there is an 8% foreign purchaser licence fee for houses and 6% for condos. There are also some restrictions on the types of properties foreign buyers can purchase.
    http://www.property-group.com/doc6/acquirin.htm

    It is interesting that there is no capital gains or income tax on proceeds of the sale of house by a foreigner or resident in Bermuda whether or not it is a primary residence.
    http://www.globalpropertyguide.com/Caribbean/Bermuda/Taxes-and-Costs

  113. To Nan’s point: Real Estate in Bermuda sells to Bermudians for $X or to Non-Bermudians for $X times two. In other words, a tax of 100% for Non-Bermudians.

  114. I don’t really buy the assumption that Victoria will detach from local incomes like Vancouver has.

    Let’s hope not. Their prices are crazy.

    Areas of Victoria have already detached from local incomes and are not going back imo. Whether you attribute this solely to the natural effects of a growing city, or point to other factors such as foreign capital, low rates, two incomes, retained equity, investment decisions – we already have this situation.

    My grandparents bought a house in Oak Bay on a single lowish income in the 50s. Now double that inflation-adjusted income will not get you that house with 20% down.

    Saying people will move out to cheaper areas does not mean prices in Fairfield are not out of reach when they used to be affordable. Lumping Langford in with the core really mixes two different types of markets.

    If it does, what’s next? Duncan? Nanaimo? If not, why not?

    Not as desirable for many reasons and lower population growth with more available land.

    What is wrong with wanting to live in the best places in our own country?

    Nothing but desirable places increase at a higher pace than inflation. A SFH in a very desirable spot is not a right and at some point appreciation turns a desirable SFH into an undesirable choice. There are lots of other choices and the impact of the change in choices will create appreciation in other desirable areas. That seems to me the way income-based affordability plays out.

    Historically, RE is not a great investment.

    Historically, leveraged RE in Victoria has been a super excellent investment.
    https://househuntvictoria.ca/2016/03/17/a-brief-history-of-prices/

    Canadians are not second class citizens in canada but the realtors, banks and politicians that govern us have made us feel that way.

    Speak for yourself. I feel I have a lot of rights, privileges and freedoms in Canada and a much easier time than the vast majority of new immigrants to Canada.

    can you give me one good reason why untaxed foreign capital originating in any which way should be able to compete on equal footing for housing with local and fully taxed capital

    I am quite annoyed that a family from China can send their child to Canada for school, have him or her buy a house for cash or financed in a weird way, and then have the appreciated proceeds be tax-free upon sale. That should not occur. The foreign buyer’s tax has made it less desirable and the reporting of the sales of homes to CRA should result in greater insight into the issue.

  115. “Answer me this introvert: Why shouldn’t all canadian real estate be affordable to Canadians?”

    Why can’t everyone just get a Tesla for $10,000 and have free flights around the world?

    Because capitalism, comrade.

  116. Why shouldn’t all canadian real estate be affordable to Canadians? What is wrong with wanting to live in the best places in our own country?

    But what should be affordable? A house in Oak Bay or a townhome in Langford?

  117. @ Muckluck,

    None of what you’ve posted seems to be helping Greater Vancouver atm. Victoria may be juiced for the moment by Van RE, but that is changing as we speak.

    People not having kids, or having cheap TV’s don’t explain what is happening in our RE market at all, in fact I don’t think that would make much difference in the long run.

    Victoria will likely always be more expensive relative to many other markets, but what has happened this last while in our market is entirely different. And when interest rates rise, will that mean that house prices are rising? Perhaps, but not if they’re rising already from extreme leverage, excessive speculation, and people chasing yields. Historically, RE is not a great investment. There won’t be a fundamental left to support it.

  118. “I don’t really buy the assumption that Victoria will detach from local incomes like Vancouver has. If it does, what’s next? Duncan? Nanaimo? If not, why not?”

    Victoria has beaches, mountains, marinas, forests, a rain shadow, educational institutes, history, culture, and is a seat of political power. And now it has expensive real estate. The historic reasons people settled in New York and San Francisco aren’t the reasons they settle there now, but the inertia took those places forward into the post-modern economy. Why do wealthy Russians and Saudis buy property in London rather than Birmingham, which would be much more cost-effective? Why are there neighbourhoods in Bangkok and Mumbai where the average condo price is $900,000? Because everywhere around the world the global elite organizes in pockets that are prohibitively expensive to the common person. I’m not saying this is now happening in Victoria en masse, but I do feel that Victoria is feeling the secondary effects as people displaced from Vancouver come here because it’s a relatively cheaper alternative with many of the same world-class amenities. Remember that the effect of Vancouver house prices can’t only be measured by evaluating how many people move directly from Vancouver to here. When a young person who grew up in, say, Campbell River moves to Victoria whereas 15 years ago he or she would have moved to Vancouver, that has the same net effect.

    “So far Victoria has not detached from local incomes. That doesn’t mean that Oak Bay will remain affordable, that means Greater Victoria will. So the affordable places will move farther and farther out, which is expected in any growing city.”

    Victoria has another thing that’s in common with those hyper-expensive cities–a limited amount of real estate. We are limited by physical boundaries and the ALR. This means that the only way to increase local supply is through intensification, which in the long run only increases the value of unintensified properties. A simple rowhome in Manhattan will cost millions of dollars because it is a relative luxury there to have your own building all to yourself–imagine the value if you somehow hung on to a fully detached house for the last hundred years? I agree that affordable places will move farther away but this will mean the core properties will appreciate as quick or quicker than the periphery.

    A sidenote, but I think it’s important to note that people are also changing their spending habits as opposed to decades past. People are having fewer kids. This means that once they get into prime money-making years they can afford to spend more as a percentage on housing. It’s a chicken-and-egg thing–some might decide to have fewer children and then voila, more money for housing, while others might swear off children because their housing cost is so high–but it amounts to the same overall effect. Generation X and the millenials are much less materialistic than Boomers as well. They don’t want to buy luxury cars and boats and swimming pools. TVs and computers are almost free these days. When I think about how I’ll spend excess money I might make over the next ten years, it’ll be to fix up my house and maybe move up to a nicer (more expensive) one. That’s pretty well it. Aside from our house we don’t really have much in the way of expenses, and we have two kids. I think we’re pretty typical in this regard.

    “Our past two corrections have been mild because of decreasing rates, and the runups have been fast for the same reason. I think anyone expecting to repeat past performance in a world where rates aren’t decreasing anymore or even increasing is going to be sorely disappointed.”

    Rates don’t lead the economy, they follow it. We have low rates because of slack global demand post-2008 and price deflation that had to be cancelled out by monetary inflation. There was also regulatory fallout and changes in lending practices by big banks. Rates won’t go up until this situation changes, and for this situation to change then inflation will have to be a threat again. And if inflation is a threat again it will mean the economy is doing much, much better than it is today, which will lead to higher wages, which is the other half of the affordability calculation. It’s hard to say what the net effect of rate increases will be, but they won’t happen in a vacuum.

  119. I find Victoria wages to be higher than Vancouver in the tech sector and it has been that way for over a decade. As long as you don’t work for the government that is. If you work for the government in tech you’ll make a pittance.

    BTW Amazon does exist in Victoria. They bought AbeBooks and all their employees are now Amazon employees.

  120. Answer me this introvert: Why shouldn’t all canadian real estate be affordable to Canadians? What is wrong with wanting to live in the best places in our own country?

    Canadians are not second class citizens in canada but the realtors, banks and politicians that govern us have made us feel that way.

    Other than making sellers rich, can you give me one good reason why untaxed foreign capital originating in any which way should be able to compete on equal footing for housing with local and fully taxed capital earned by Canadians who live here, work here and raise their families here?

  121. Nan – good post.

    I appreciate that some of you think that there is a tech sector in Victoria, but let’s get serious, it’s piddling. And it’s not much bigger in Vancouver. All they have in Vancouver is Hootsuite, Microsemi and EASports. The only place in Canada with a real tech sector is Waterloo, then Toronto. I really hope that one of the next big tech companies succeeds in Vancouver (a company that employs thousands not dozens – like Amazon, Intel, Microsoft) but it hasn’t happened yet, so let’s not pretend it has.

    We should be honest about what’s driving real estate in Vancouver and Victoria: Asian money. I’m not making a value judgement, just saying that’s the driver.

  122. I don’t think one can look to the past to predict the current future of Victoria, and the examples of Vancouver and San Francisco illustrate to me why this is the case.

    I don’t really buy the assumption that Victoria will detach from local incomes like Vancouver has. If it does, what’s next? Duncan? Nanaimo? If not, why not?

    So far Victoria has not detached from local incomes. That doesn’t mean that Oak Bay will remain affordable, that means Greater Victoria will. So the affordable places will move farther and farther out, which is expected in any growing city.

    Our past two corrections have been mild because of decreasing rates, and the runups have been fast for the same reason. I think anyone expecting to repeat past performance in a world where rates aren’t decreasing anymore or even increasing is going to be sorely disappointed.

  123. “What you mean is: Canadians don’t have access to affordable housing where they want to live.”

    Yes, and where do Canadians want to live? Where they have opportunities to have good local employment and family life. Sure, those who can’t afford housing in our metro regions could all hike off to Newfoundland, and housing would be affordable. But then they wouldn’t have any work.

    They could move to the outskirts of a city, and drive 90 minutes one way to fix pipes or hang drywall.

    Neither sounds really doable to me…

  124. 3918 Lexington Ave: sold for $921,000 ($121,000 over asking).

    Pretty average house in Gordon Head. Amazing.

  125. Great ramble, Mukluk. Excellent points.

    … since the problem is that Canadians don’t have access to affordable housing…

    What you mean is: Canadians don’t have access to affordable housing where they want to live.

  126. Ash, it took me a minute to remember that we have a “Mars” street here in Victoria. For a moment I thought, what, are people purchasing land on Mars now to escape the madness?

    You think we have a supply problem here? It’s rather worse there, and I’m pretty sure you wouldn’t like the “atmosphere” of the neighborhood, either.

    Sorry, I couldn’t resist..

  127. Mars only got 716k, well below my estimate of 800.
    On the other hand, nearby 3305 Linwood fetched a wild 885k, which I would have pegged below Mars.

    Here’s to hoping our contributor vicrenter landed Mars. I didn’t view it but I’d say at 716k it is good value compared to others out there.

  128. Can anyone here recommend a reputable assessor up in the Nanaimo area? I know someone who’s selling their place and they recently did the roof, perimeter drains, kitchen, bathrooms, floors, windows etc. They just want to get an accurate idea on what the place is worth these all these recent improvements.

  129. “There’s a finite amount of top-flight real estate in the world”

    If those that live in a particular part of the world vote to keep money made elsewhere out of their real estate markets, then that is their choice, not the money’s.

    If a group of wealthy move somewhere new and revitalize it and start singing its praises, that becomes new “top flight” real estate.

    Sure, there are many tech workers in Victoria but their average salaries are not markedly different from the pre-existing government/university/hospital/manufacturing jobs. In most cases I believe they are in fact worse, factoring in inflation in housing prices and education requirements to get those jobs. Sure there are a few millionaires but for everyone of them, there are hundreds of employees that do ok and pay a monthly mortgage on an overpriced house that is only “affordable” because interest rates are low. Pensions may come here too,but folks tend not to move when they retire anyways.

    Victoria is a nice city and Canada is a great country but most of the people that want to live here were born here and don’t have access to outside capital, but have to compete with it. As Canadians, we should vote against this competition.

    To reduce the amount of this “Everyone is rich but you” BS rhetoric, I will vote for any politician that

    takes the option of selling Canadian real estate to non tax-paying foreigners away from sellers. Taxing it the way Christy Clark has done is just a cop out – the tax should be whatever number it needs to be such that the transactions stop, since the problem is that Canadians don’t have access to affordable housing, not that the government doesn’t have enough sources of tax revenue.
    Starts absorbing printed fiat money out of the system to get interest rates back to normal and get asset values under control again.

    Talk about how much wealth there is out there and how afraid of it we should be all you want but the Canadian real estate and asset value problems can be solved instantly with a few strokes of a pen. Even your extreme wealth examples of the local $500k/ year and 12MM windfall locals can’t afford Vancouver.

  130. Nothing wrong with having pride in your community but one shouldn’t mistake that for being an objective point of view.

  131. Mukluk makes a good point about global money flows. Who knows when that’ll be less prevalent.

    But having worked, been stuck in traffic, & visited friends in the far reaches of Surrey, West Van, & Victoria, I can guarantee you that it’s like comparing apples to oranges. Or a $20 veggie pizza to a $20 meat lovers – you’re paying for 2 totally different things.

    Locals live in Surrey because of jobs or family, and its lower prices compared to Burnaby or East Van.

    Locals or out-of-towners buy in West Van for the same things + proximity to skiing + ritzy bit-city vacations.

    Locals or out-of-towners (including Vancouverites) buy in Victoria because of gov’t jobs, retirement, or vacation reasons.

    I know quite a few people that moved from Metro Van over the last 10 years, and the most popular reason that everyone brings up is: multi-hour traffic jams & bridges.

    I moved from Victoria to Vancouver when I was younger for work, to move up the ladder and enjoy a bit more nightlife. But now people have more options to work remotely.

  132. Mukluk, nothing wrong with having pride in your community. But I strongly suspect that there are more millionaires in Surrey than Victoria. And those that live in West Vancouver would strongly disagree with you.

  133. Mukluk said: “The tech industry is global, and one in which wealth is being generated at an unprecedented pace..”

    All excellent points. Look at Portland or Denver. Their tech booms drove up housing prices. I remember looking at housing prices in Portland prior to its tech boom. Your dollar went a long way there. Now, not so much.

    The argument against the tech sector pushing real estate here is that Victoria doesn’t pay all that competitively. That has definitely been the case until recently (at least as far as advertised local jobs). Used to be Victoria paid at least 20% less than Vancouver.

    Now I’m seeing jobs advertised locally in the 6-figure range (e.g. Abe Books had some listed). Management, but only an undergrad required. Of course locally listed jobs aren’t the whole story as you point out. Wages are often coming from elsewhere in the world. I know a few people that telecommute and/or contract consult to US and international companies. They get paid well for Victoria and it costs the company a lot less than moving them to SF, Seattle etc and paying a competitive wage for those areas.

    I definitely don’t think tech is the only thing pushing the Victoria market, but I’m convinced it’s a factor.

  134. Too bad VREB doesn’t collect income stats. It’d be interesting to calculate median household income by building type (SFH, town, condo) and by region. Seeing how that has changed over time vs inflation would be interesting.

    Actually, to get a proper picture you’d need net worth as well as income. There definitely some areas that would be low income but high net worth (e.g. OB).

    I suspect the average family buying a SFH these days is doing a lot better than median household income (at least by the 2014 figures.. 2016 won’t be released until Sept). Pretty safe bet as I don’t think you can qualify for most of these places on 86K. IIRC Marko had some anecdotes of families making 150K or thereabouts buying houses in GH. That would makes sense. Two working adults making 75K each seems pretty achievable in Victoria.

  135. I don’t think one can look to the past to predict the current future of Victoria, and the examples of Vancouver and San Francisco illustrate to me why this is the case. Both have had staggering price appreciation, way out of line with their median salaries or the overall of the countries in which they are located. Their price growth has been driven by an influx of money from outside the city limits. This in turn is reflective of the desire of a global elite for “premiere” real estate. That includes the “local” global elite–just because a Canadian is buying the real estate doesn’t mean they aren’t buying for exactly the same reasons.

    The tech industry is global, and one in which wealth is being generated at an unprecedented pace. This industry is a major driver behind SF’s price appreciation, and has probably contributed to Vancouver’s run-up as well. It might surprise you, as it did me, to learn that Victoria’s tech industry makes up a full 23% of its total workforce. Among these numbers are some very big winners, people you see at Thrifty’s but don’t realize are earning $500k per year from their web-based business or who just scored $12 million when their startup was acquired.

    I think Victoria is showing signs that it is now behaving like one of these global prestige locales where money is earned elsewhere and spent there. Almost all of the money Victoria’s tech industry generates originates outside of Victoria, because that is the nature of tech. Retirees bringing ever more generous pensions negotiated in the 80s and 90s are spending that money in Victoria. And of course you have spill-over from Vancouver and Toronto, where people arbitrage property values in one prestige locale for another. The global elite doesn’t arbitrage in non-prestigious locales like Nanaimo or Halifax.

    There’s a finite amount of top-flight real estate in the world, and ever-more millionaires being minted who are able and willing to purchase it. It becomes a self-fulfilling cycle; these premiere locales become very exclusive, which makes them more desirable to live in. Real estate is more than just the land and the sticks, it’s the people. Prohibitively expensive enclaves in places such as San Francisco and Manhattan (and Sydney and Singapore and London and Dubai) begin to resemble large-scale urban country clubs where only the most successful and well-bred can afford to live. To many of these buyers, rising prices aren’t a bug, they’re a feature–they keep out the riff-raff. This is why the idle well-off live in a 1200 sq. ft. co-op on the Upper East Side when a 10,000 sq. ft. palace on 10 acres in Charlotte, North Carolina would cost less.

    Sorry for ramble!

  136. The HHV crystal ball! We all want one. I really like that idea but it would be hella complicated because it is hard to measure intangible things like consumer confidence and the weird snowball effect it has going up or down. And then there are the unpredictable impacts like government intervention, the collapse of oil prices, and secondary ownership issues. Not sure those all get adequately accounted for in demographics and stats.

  137. Interesting that even with large DOM we don’t see too many price drops. I think people are just hanging on until the market catches up with their asking prices. Longer DOM is definitely correlated with price drops, but not as much as I would expect.

    Maybe there is a way to use the what was, to create a data based prediction of what might be

    Yes, currently I am using MOI for a very crude version of that on the Market Summary page. However it could also be expanded into affordability measures. Probably once you get into more global factors it would be minimally predictive. However a dashboard of factors influencing the housing market and whether they are currently positive or negative would be interesting.
    For example:

    • Migration
    • Employment
    • Interest rate risk
    • Affordability
    • demographics
    • construction
  138. Since we are brain storming… I would like to see What was, what is, and what might be.
    Right now your viz is great for what is. I would like a bit more of what was. Your past year comparisons are great but seeing deeper comparisons to the past would also be awesome. This leads to what we really want. The crystal ball. Maybe there is a way to use the what was, to create a data based prediction of what might be. I think your affordability band is unique and should be delved into further. bringing in stats from other things and relating them is a real value add. More of this is probably your key. something tying interest rates, demographics, immigration, wages, CPI to house prices?
    Then I can go to the crystal ball and dial up interest rates and see what happens…. Or dial up the immigration or emigration rates. This way there is something for the bulls and bears to play with and pump out charts to put on their blogs….

  139. A breakdown of sales between SFH and condo would be useful (I guess townhouses also or you could roll them into condo).

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