Feb 27 Market Update

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!

Has James Soper been drinking?

Richard makes an interesting point; certainly something to think about.

Here’s one that will knock you back: A little-known tech company in Victoria is being credited with winning Britain’s Brexit vote for the anti-European Union side.

http://www.timescolonist.com/news/local/jack-knox-victoria-firm-played-a-pivotal-role-in-brexit-vote-how-it-unfolded-1.10646979

And I love it when someone comes on after introvert mocks JJ and asks that she stops….

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.

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.

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.

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)

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.

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.

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.

@ 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.

Yup, we will be moving into a market surplus

https://youtu.be/zPQyInnqvrI

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

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.

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.

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!

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. 🙂

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.

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.

@ 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.

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?

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.

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.

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.

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.

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. 😉

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.

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.

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.

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.

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!

“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. 😉

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….

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.

.

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.

We are transnation….

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?

“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.

Does anyone know what 617 St Charles in Rockland sold for??

Thank you

“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.

Marko

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

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.

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.

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.

“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.

“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.

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 😀

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.

“Get in while you still can…”

For fucks sake Luke, get off the blatant pumping like it’s the last place on earth. David Lereah said that too as the bubble was about to pop. Renaissance my ass.

https://www.youtube.com/watch?v=lPnA1cnewLA

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.

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.

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.

That is the problem with anecdotal evidence. It depends on who you know.

Looking at the stats, Gen X and millennials spent less overall in their 20s in inflation adjusted dollars than Boomers. In particular, Boomers spent less on health, education and housing and more on consumer items. And it appears that in Canada millennials are even more frugal than Gen X.

http://adage.com/article/adagestat/stat-day-generations-spent-20s/233684/

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”

“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.

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.

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

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.

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”.

All of BC needs the 15% foreign buyers tax AND we need to implement an automatic tax on the sale price of foreigner owned property, just like Hawaii has.

https://www.honoluluhi5.com/blog/firpta-harpta/

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.

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?

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).

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.

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.

“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.

@ 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.

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.

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?

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.

“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…

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.

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.

Nan, I could not have said it better myself. Thank you for posting.

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.

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

I don’t see our prices much different than Surrey. Surrey might even be more costly.

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.

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!

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.

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….