Months of Inventory: all you ever wanted to know but were afraid to ask

The months of inventory or MOI is one of the key measures of the balance between supply and demand in the market.  It’s a simple measure but as usual it can get more complex depending on what subset of the data you use.

The months of inventory, as it sounds, is the number of months it would take to sell all the inventory at the current sales rate if no more houses were listed.  So if there are 2000 properties for sale, and 500 of them sold last month, then it would take 4 months to sell every property.   Months of Inventory equals 4.

You can look at months of inventory for the whole market or for a subset.   For example, you could only look at months of residential inventory (no commercial properties), or you could look at months of inventory for only certain types of housing, or certain areas.   I publish two numbers regularly:

  1. Total market MOI – This is simply all inventory divided by all sales. It is for all of Greater Victoria and includes commercial inventory and sales. This is what you will see in the weekly updates (as of March 20 the total MOI is 1.85).  The weekly numbers provided by the Victoria Real Estate Board are not broken out by residential/commercial so this is the best we can do without a bunch of manual work.
  2. Residential MOI – This is residential inventory divided by residential sales in Greater Victoria. This is the number that will be more meaningful to people as I doubt many people care about commercial.  As of February 2017 it is 1.66 (this is the number referred to in the Market Summary box at the top right).

The residential months of inventory is a good indicator of the balance of supply and demand in the market.   Generally accepted values are that if MOI is under 4 it is a sellers market, if it is 5 to 7 it is a balanced market, and above that is a buyers market.   Here is a look at the current values and that of the last several years with prices plotted on the left axis, and months of inventory on the right (colour coded to indicate how hot the market is).

Couple things are apparent from this:

  1. The market is still extremely hot with 1.66 months of residential inventory.  Well below the cutoff for a hot market which is 4, and below this time last year when it was 2.66.
  2. MOI is seasonal.  It drops in the spring until May, then rises in the summer with a small dip around October, and then peaks in December and January.   If we look at this pattern over many years it becomes very clear.

The easiest way to correct for seasonality and discover the underlying trends is to take the running average of the last 12 months of readings which removes all seasonality (at the expense of making the measure a bit slower to react to changes in the market).   For example, the latest reading is made up of the average MOI from March 2016 to February 2017.

This tells us whether the market is still heating up or cooling down overall.   What I find useful about this graph is that there was ample warning of the change in the market.   The months of inventory peaked in 2013 and slowly dropped for almost 3 years before the market really jumped.

One might argue that these overall market charts of MOI for all of Greater Victoria are too broad since they mash together condos in downtown with detached homes in the uplands, with townhomes in Langford.   While true, I’ve found that though individual submarkets can diverge a bit, they aren’t that different.  If detached in the core is going crazy, detached in the westshore will be rising too (a little less quickly perhaps).   If condos aren’t selling then the rest of the market is weak as well.   However let’s look at some subareas to see the differences in market segments.

For example, plotting months of inventory for detached houses in the core vs the westshore shows that the market in the westshore lagged the market in the core up until this spring.  In 2015, the westshore was still a balanced market while the core was already a sellers market.

We could also segment by price.  Single family homes under 1 million are definitely hotter than those over, but again the luxury market isn’t far behind recently.

What about condos vs detached homes?  Here we see that while detached homes were more active than condos until last summer, the situation has now reversed itself with detached homes cooling off a bit, and condos in a tighter market.

You can of course get arbitrarily fine grained, but eventually you start to get into data quality issues as the number of sales decrease and the month to month variability increases.   For example, comparing Oak Bay to Saanich East doesn’t tell us much at all.

One I have the data feeds up and running (mañana, mañana), the idea is you will be able to see this kind of region specific data much more easily.    However as before, I don’t really see any surprises when you break it down by region.    There’s been a small pullback in SFHs as prices roared upwards, and condos have taken up the slack.   I suspect at this point both are about as hot as they’re going to get and the overall market will start to cool down slowly.

The HHV Meetup is happening on April 7th at 6PM at the Penny Farthing. I have a reservation for 20 people which is about as many as are signed up.  If you can no longer make it, please remove your name from the list or email me so I can adjust reservations closer to the date.  Thanks!
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155 thoughts on “Months of Inventory: all you ever wanted to know but were afraid to ask

  1. The realtor who sold our house turned out to be pretty lazy..and I think it is this crazy market that is to blame. He simply listed our house on MLS. Turns out he barely knew a thing about the place….asked me ..oh yeah do you have a garage…called me by the wrong name all the time….they know the houses will sell themselves..they rake in the money for next to no work.
    I can’t name him but I wish could!

    We bought our new house privately and it was a great experience. Win win for us and the seller.

  2. I agree Introvert, the commission that a realtor takes would make me question whether it was worth it to use them. In this market the property sells its self, so realtors are having to do less work and making more money. After buying my property I was very suspicious if the agent was working in my self interest.

  3. On months of Inventory:

    I sort of keep track of SFH in south Victoria (Fairfield, Rockland, James Bay and Oak Bay) and I noticed that the number of homes listed over two million now exceeds those of between one and two million. But I have also noticed that the 2 mil plus are hardly selling at all..

    I am not a stats guy but I suspect that the months of inventory for the 2 mil houses is well above six months while for the 1 mil to 2 mil it it lower than one month.

    I know that I am crating two arbitrary categories in the most unscientific fashion possible but I still wonder if it tells us something about the market. As to the house on Exeter, and I know that tastes vary but but frankly I find it seriously unappealing. We were talking about it last night and the thought struck me that it looks like a house designed and furnished by Ikea.

  4. This is just the tip of the iceberg. Wait til the mortgage fraud stories start rolling in.

    Watchdog reports surge in bank complaints in wake of high-pressure sales tactics allegations

    The Financial Consumer Agency of Canada says it has received a surge of complaints in the wake of news reports containing allegations of high-pressure sales tactics at Canada’s big banks.

    Between March 13 and March 19, the financial services watchdog said it received 431 calls and emails, most of which appear to be complaints, marking an increase of 156 per cent from roughly the same period a year ago.

    “Since the (CBC News) story has come up, we’ve had a significant surge in calls,” said FCAC deputy commissioner Brigitte Goulard in an interview. “Some of them are complaints…. Some of them are also employees calling. We have seen a significant number of calls and emails coming in.”

    http://business.financialpost.com/news/watchdog-reports-surge-in-bank-complaints-in-wake-of-high-pressure-sales-tactics-allegations

  5. Some dude named John. Never met him. He moved to Alberta at some point for a job.

    I met him in 2010. Really nice guy…..he put me onto WordPress and buying a $49 template which I did and still use it to this day 🙂 Just too lazy to update to newer versions.

    I remember telling him how I thought by 2015 five to 10 percent of the market would be mere postings…..damn was I wrong 🙂 2017 and still below 1%

  6. Leo who started this 10 years ago. I remember he gave it up after buying a house.

    Some dude named John. Never met him. He moved to Alberta at some point for a job.

  7. Totally unrelated to the discussion below – does anybody know of a contractor that specializes in sound proofing? Would be for a ceiling/floor. Didn’t have much luck with the Google.

  8. You guys the reasons you described for staying in Vic are the same reasons we are not going to see all the vanvouverites moving to Victoria. I will agree that there are some but until someone shows me some real evidence I’ll remain skeptical. They are used to a big city and Victoria just doesn’t compare (and you are stuck on an island). You can argue all you want how amazing it is but it really isn’t for many people.

    I’ve also lived in Qualicum and love it 😉 If I had a fancy pants house to sell I’d be out of this city with the hicks up island somewhere not with the snooty victorians!

  9. I was talking about the billing by the hour part. Agree that just about every online service would need to be free as well.

  10. @Leo, I said it’s free. Venture capitalists aren’t interested in the immediate. First disrupt. Then go for another round. Maybe that Dubai million dollar flipper would invest. Ironic justic!

  11. Yes, fear! I would fear doing the paperwork incorrectly and somehow getting screwed on the largest transaction of my life. It just seems like the kind of thing to leave to the professionals.

    That’s why I had my lawyer check my offer before I submitted it. I figured his 8 years of schooling was probably good enough insurance and I didn’t need to add 10 weeks on top of that to be safe.

  12. Hey, Leo, could you please explain how you ended up as the Grand Poobah of HHV 2.0? Didn’t DavidL create the new site? Where’s he now? What’s the story?

    1. Not sure, by posting lots I guess.
    2. Yes the theme of the new site was chosen by DavidL and he ran it in 2015 after I lost interest in the old format. It was on househuntvictoria.wordpress.com. The domain househuntvictoria.ca and hosting was always mine and it transitioned there in December 2015 to allow dynamic content.
    3. Feeding the fishes. Muhahahaha. No just kidding. I’m not sure actually, haven’t seen him around the comments for ages. Probably has a real life.
  13. I realized I’d made a big mistake when a local young couple came in with their new-born and the biggest fuss was made as the baby was passed around to all the patrons!

    You’d have to have a pretty cold heart to think that’s a bad thing..

  14. I wouldn’t say I am working hard, but I am exploring it slowly.

    Interesting.

    Is there a business model there that doesn’t compromise the goals of the site? Need to be careful not to create conflicts of interest there.

    Hey, Leo, could you please explain how you ended up as the Grand Poobah of HHV 2.0? Didn’t DavidL create the new site? Where’s he now? What’s the story?

    So why don’t more people use mere postings to sell their houses? Fear. This is by far the #1 reason.

    Yes, fear! I would fear doing the paperwork incorrectly and somehow getting screwed on the largest transaction of my life. It just seems like the kind of thing to leave to the professionals.

    On the other hand, $30,000 to sell a house in GH in a hot market is absurd, which does give me pause.

  15. Charging actual money on the buying side is never going to fly. However maybe doing cash back based on time spent could work.

    Cash back = commission – transaction costs – $100*hours spent

  16. Just moved out of Victoria up to Qualicum. While,I certainly get that it isn’t for everyone ( we love the trails, ocean, cafes, low house prices, and the fact that Victoria is only two hours away) there are worse things that people enjoying a couples baby! By the way the real estate market is hot up here. Good friend is a realtor and things are selling in 1-5 days. I predict more boomers will cash out and head up here.

  17. Ya. It’s the buyer to focus on for a business. Quality tours, site does all the legal stuff, no human interaction at all. Algorithms figure out market environment (cough cough). The algorithms use this data to optimize opening offers etc. It uses your profile and your likes and dislikes at a more core / algorithmic level so it can propose properties you wouldn’t think of yourself…. etc etc. But it doesn’t cost anything. Angel investors love that detail…

  18. The buying end is much difficult to figure out compared to the selling end. For example, time involved in a mere posting never fluctuates by more than 2 or 3 hours so it is relatively easy to price the service.

    Buyers on the other hand can fluctuate from 2 hours to 200+ hours. That is a factor of 100.

    Fee for service would be ideal in my opinion; buyer pays the realtor on a time basis. Will never happen unless we get Elon Musk type brilliance that comes into the marketplace.

  19. And another reason people don’t do alternatives when buying: lack of options. Nearly 1400 realtors in Victoria, how many advertise cash back? 5 that I know of, probably a few more out there.
    If you are a highly busy realtor it doesn’t make sense (why work for less if you can work for more?). It makes more sense if you can somehow reduce the work that each buyer represents.

  20. Leo is working hard on this, I’m sure. Leo, give us a progress update.

    I wouldn’t say I am working hard, but I am exploring it slowly. Is there a business model there that doesn’t compromise the goals of the site? Need to be careful not to create conflicts of interest there.
    You can already do a mere posting and you can buy without a realtor. And yet a tiny minority do this. So the question is, why? I already posted about my theories on the selling side, so why do buyers use agents?

    1. Fear. Again, the process is scary enough as it is parting with that much money so doing it alone seems doubly so. Why not get someone to take the fear away?
    2. The impression that it’s free. Buyers agents are free right? So why bother trying to go it alone? Reality is the only person bringing the money is the buyer so you are paying for it whether you realize it or not.
    3. Difficult to determine if you are getting a deal. Even if you realize the buyers agent is not free, how can you tell if that is being taken into account? The selling agent already has a contract with the sellers for the total comission so unless they are amending to accommodate your lower offer it is quite possible that the sellers agent pockets the whole thing.
    4. Lack of knowledge and data. Generally the real estate industry controls access to the data so it you want access you need an agent. This is changing and I think in a few years there will be a lot more open access to data than we have now (which is already a lot more than we had before). I suspect the data will become less of an issue over time while knowledge from experience will continue to be important. For example if your agent has construction knowledge that can be useful to gauge quality of builds and renos.
    5. Convenience. Why not let yourself get driven around in a Jag looking at houses? It’s not for me but many people I’m sure enjoy it.

    Any others?

  21. Why do people pay $3,000 – $5,000 for a website when you could buy a WordPress template for $49 for pretty much the same thing. Why do people pay 2% mutual fund MERs when you can open up a TD Waterhouse and trade for $9.95 per transaction. Why do people pay $500 for prescription eye glasses at a brick and mortal outlet when you can get the same quality online for 1/10th the cost? Hundreds of other examples…….but Leo S nailed it with the number #1 reason of “fear.”

  22. I think one of the main reasons why realtors are here to stay is because of the difference between pictures and reality. There is nothing more putting off than a foul smelling place. Perhaps we need a “Smell” rating on listings!
    Then there is the biker gang living next door, the dog that barks at everything that moves, the six storey monster building next door that somehow never makes it into any photograph and on and on it goes!

    All things that the consumer will also find out themselves in most cases. I don’t need an agent to tell me a place stinks or the neighbourhood is sketchy.
    If the problem is not evident then I agree that an experienced agent may know things like areas that are prone to flooding, or bad neighbours, etc. This is more the exception than the rule though,

  23. On real estate, the issue is complex. Why are people paying huge fees to sell their houses? After some basic level of competence in photos and description what will sell your house is the price. Price it right and it will sell, price it wrong and it won’t.

    So why don’t more people use mere postings to sell their houses?

    1. Fear. This is by far the #1 reason. The norm is to use an agent. When you are going against the norm it always feels dangerous.
    2. They don’t know the process (and this causes fear). It’s not rocket science but if you don’t know the steps involved it can be scary. We bought without an agent and I would have really wanted to have a better idea of what the process was going to be before going into it.
    3. They believe the various marketing spiels out there. Agents always advertise having loads of buyers that can buy your home, or being connected to the Asian market, or being able to sell your house above market value, etc.
    4. They don’t care about the money. That may be because they’re rich or maybe they just feel rich. After all when your house gained $500,000 who cares about a piddling $30,000 to sell it? Basically a rounding error.
    5. They don’t know about them. Outside of real estate nerd circles I don’t know how many people are aware of options like mere postings. FSBO brings to mind a black and red FOR SALE sign from the dollar store stapled to a wooden stake on the front lawn.

    Any other reasons?

  24. I think one of the main reasons why realtors are here to stay is because of the difference between pictures and reality. There is nothing more putting off than a foul smelling place. Perhaps we need a “Smell” rating on listings!
    Then there is the biker gang living next door, the dog that barks at everything that moves, the six storey monster building next door that somehow never makes it into any photograph and on and on it goes!

  25. Just went to the open house on Fernwood Rd. Being hosted by 1% realty. I take back everything I said about it earlier. Not a breath of fresh air at all but the place stank to high hell! Amazing the difference between pictures and reality. Don’t waste your time or money on that one people- nightmare!

    As for Qualicum Beach. Definitely a pretty place but it’s for the nearly deads. And they’re always complaining about the vast distance to drive to the nearest decent hospital which is NRGH. The Catholic run one in Comox being an antiquated nightmare. Then again, the nearly dead crowd that is dominant there complains about, well, everything.

  26. There have been many an attempt to change the face of real estate with no real success. There always is the option of representing oneself. Car-to-go is a much better model than Uber. Perhaps that is the future of RE, communal ownership, although I can’t imagine it.

  27. They’re currently building a brand new hospital in Comox/Courtenay, i think that’ll put some old-fogey fears at ease.

  28. Somebody needs to do what Uber did to the taxi business to the real estate industry.

    Leo is working hard on this, I’m sure. Leo, give us a progress update.

  29. A lot of judgement towards Marko here.

    I think we need to be giving Marko props for trying to shake up the real estate industry and pass on savings to the consumer. If I would have known about Marko’s cash back programs I would have definitely used him or someone like him for my home purchase.

    I do believe the real estate industry is ripe for destruction. Somebody needs to do what Uber did to the taxi business to the real estate industry. It will just take the right business model.

  30. I’m with you Luke. My inlaws retired in Comox, yes there are some nice features there, the golf course, marina and airport. Even though they have a hospital the medical care was no where near the level in Victoria (very important to retirees).
    I actually made an offer on a place in Qualicum Beach which thankfully wasn’t accepted. As I waited for a response to my offer in a local coffee shop which at 6pm was the only place open, I realized I’d made a big mistake when a local young couple came in with their new-born and the biggest fuss was made as the baby was passed around to all the patrons!
    Thankfully I moved on to buy in Victoria. Comox, Qualicum, Campbell River are great weekend getaways or other short term visits.

  31. When I see suits and large dealerships all that goes through my mind is why am I paying for this crap in 2017? Give me direct to consumer online sales!!!

    As an introvert, when I see suits and large dealearships I see a lot of social interactions I’d rather not have. But, then again, we never buy new cars.

    I’m with Marko, though: I’d love to someday buy a new car on the Web after doing my own research.

    Once we see Saudi princes buying Gordon head boxes then that’s different

    Oh, Leo—don’t go getting me excited about the possibilities!

    Oh right, agents don’t have to work these days, they just stick up some obscene number and watch the sheep float in with the winning bid.

    First Just Jack. Now Hawk is lashing out pretty hard. These crazy prices must really be taking their toll on the poor renters.

    So why don’t you all with million dollar GH boxes sell and buy in Campbell River? Seriously you could buy a house and invest the rest and retire or work part time.

    That’s a possible plan we’re toying with, but our place is still shy of a million and we have a bit of mortgage to go.

  32. Hawk,

    if you think commissions are too high, berating the guy offering to cut them in half seems counterproductive..

  33. Penguin – I lived up island near Qualicum Beach from 2007-2015 and I can tell you, besides the outdoor activities it is really boring and sleepy up there. Courtenay has hardly anything going on and Campbell River is even worse. Nanaimo also boring. Up there the streets fold up by 6pm and everyone goes to sleep. Ok if you’re retiring but in my 30s after living in Vancouver it was not for me. Victoria is the happy medium. Not too big and hectic like Vancouver. But not too sleepy like up Island.

    And if you ask me. Victoria is actually way nicer than up Island where everyone is either retired or redneck

    Don’t forget about the constant boil water advisory in Comox Valley because they logged the watershed too much.

  34. WOW almost 50% over assesses value
    1519 Oakland ave
    Assess $602 (Assess 2016 $492)
    List $789
    Sold $890

    WOW is a good word considering this could have been purchased in 2015 for $875,000 -> http://christinastack.com/property/1542-morley-st/

    I showed the house to 3 clients who didn’t even have it on their list as I thought it was a good bang for buck especially given the legal one bedroom suite (plus media room downstairs), but location was an objection at that time. High 800s seemed expensive for Oaklands.

  35. Wonderment,
    I would go for it! That area is way nicer than Victoria especially if you like the outdoors!
    I’m surprised with prices the way they are that you don’t hear of more people moving to other parts of the island. I’ve talked about this before but it is one of the reasons I think all the realtor hype about vanvouverites driving up prices etc. is total BS. How come we hear about vanvouverites coming here but why are Victorians not selling and moving away? Lots of reasons one being their jobs! But isn’t that how vanvouverites are coming here because they can work remotely? So why don’t you all with million dollar GH boxes sell and buy in Campbell River? Seriously you could buy a house and invest the rest and retire or work part time.
    Actually my sister lives up island and the same hype is there that Victorians are driving up prices and it’s got the town in a frenzy hahaha

  36. WOW almost 50% over assesses value
    1519 Oakland ave
    Assess $602 (Assess 2016 $492)
    List $789
    Sold $890

    With this crazy market, even if I could afford to buy in, it is certainly not worthwhile when looking at ROI

    Now looking at Comox/Courtney. Bonus of being closer to skiing and better fishing as well. They even have a Costco.
    For the significant price difference, I can afford to vacation in Victoria or anywhere else for that matter.

  37. “I would say cars are more like laptops than houses. You can’t YouTube any specific house.”

    I would say houses are more like penny stocks these days. People want to feel a car, sit in it….and actually drive it. Now there’s a concept, try before you buy. Who woulda thought ?

    Isn’t that the agent’s job to Youtube the house to promote it ? Oh right, agents don’t have to work these days, they just stick up some obscene number and watch the sheep float in with the winning bid.

    “Not sure why on earth you would pay unhaggle when you can get the same thing for free here ->”

    Then why didn’t you go there then and save us the long winded rant ?

  38. I am all for a huge shake up in the industry -> http://markojuras.com/849-flat-fee/

    consumer isn’t embracing much like for some reason people like going down to a dealership to waste half their day and drink coffee versus ordering online with PayPal.

    If there was enough demand for mere postings I would just open up a mere posting company and roll from there. Certainly not set on the full service way of doing business.

    http://www.unhaggle.com

    Not sure why on earth you would pay unhaggle when you can get the same thing for free here ->

    http://forums.redflagdeals.com/request-free-dealer-cost-invoice-price-incentives-new-cars-1254621/614/

    Doesn’t solve the problem of having to visit a dealership.

    Sounds idiotic alright, just like what you do for a living Marko. You take quotes, then have a back and forth while they counter bid, debate add appliances, inspection reports etc like you would with car options. You keep exposing your hilarious hypocritical viewpoints.

    I would say cars are more like laptops than houses. You can’t YouTube any specific house.

  39. “Then you have to play this idiotic game where they need to get a “quote,” for you. Then there is the idiotic game of back and forth negotiations….just a horrible experience for someone my age….and no I don’t want coffee while I wait around for no reason.”

    Sounds idiotic alright, just like what you do for a living Marko. You take quotes, then have a back and forth while they counter bid, debate add appliances, inspection reports etc like you would with car options. You keep exposing your hilarious hypocritical viewpoints.

    “Give me direct to consumer online sales!!!”

    Yes times are changing. There’s this thing called Google.

    http://www.unhaggle.com/

  40. Recent sale on Plumber good example of what the market has done

    Sells this week for $895,000
    Sold Feb 2016 for $685,000
    Sold Nov 2015 for $615,000

  41. Foreign buyers in the uplands, that has always been the case. Once we see Saudi princes buying Gordon head boxes then that’s different

  42. Luxury houses being sold for profit…..I talked at length and provided examples about this 3-4 months ago when the whole secondary suite taxation came up.

    Tax the average Joe in Langford for having a suite (contributes accomodation to society)…..but not the massive luxury home that goes up $2 million in value (that has the massive media room for watching movies instead of a suite)?

    I don’t have issues with the whole suite taxation idea, but the system has to be fair.

  43. They’ve probably registered the property as principal residence during renovation like any of us would have to avoid capital gains on it.

  44. are not properly dressed for work

    Fair enough in terms of safety work gear but beyond that who cares? As long as the person knows what they are talking about fancy suit or jeans/shirt really makes no difference. (all with reason, stained/ripped shirt maybe not best idea).

    I was recently helping my parents purchase a car and it was the most annoying experience I’ve had in a long time. I ordered my Tesla online using PayPal; no sales person. By far the best purchasing experience of any product I’ve ever had (and also the best product I’ve ever purchased)…..the rest of industry is so messed up and so far behind. Everyone is wearing suits for some reason, but I knew more about the product than half the sales people just by watching YouTube videos/reading a few reviews/quickly scanning the specs. Then you have to play this idiotic game where they need to get a “quote,” for you. Then there is the idiotic game of back and forth negotiations….just a horrible experience for someone my age….and no I don’t want coffee while I wait around for no reason.

    When I see suits and large dealerships all that goes through my mind is why am I paying for this crap in 2017? Give me direct to consumer online sales!!!

    One of my friends just got a job a high-tech company downtown and the fact that his boss arrives on a skateboard is a positive attribute to my friend.

    Times are changing, my 2 cents.

  45. The Exeter House is a clear example of the owners renovating a house as a business. They have “renovated and flipped houses in Vancouver” (according to the article). Hopefully the owners are not abusing the tax system and attempting to amass all profits under the Principal Residence exemption. Also I’m pretty sure GST would apply here. Another case where any potential buyer and their agent better be aware of the sellers tax residency status.
    Once RCA deems you as renovating homes as a business they will not only assess the current home under that category but will reassess all previous homes as far back as the trail suggests. I have known three such “renovators” who were nailed by RCA which bankrupted two of them.

  46. “Exeter is someone with a sense of wishful thing. I have noticed that almost nothing is selling in the Uplands.”

    Barrister, when the rich/high leveraged aren’t buying in the Uplands in this so called “hot” market, what does that tell you ?

  47. Dasmo, earnings alone aren’t what determines the strength of the market long term, it’s how they were derived. As I was saying yesterday, most of the earnings per share are propped up from buybacks of $2 trillion the last 5 years and one time write offs.

    As per Lance Roberts website:

    Earnings – A Lot Less Than Meets The Eye

    Here’s a problem.

    With roughly all of the S&P 500 having reported Q4-earnings, a problem has emerged.

    Despite the exuberance from the media over the “number of companies that beat estimates” during the most recent reported period, 12-month reported earnings per share are roughly at the same level as they were at the end of 2013. This has occurred during the same period the companies that report those earnings have risen in aggregate from 1848 to 2238, or an increase of 21.13%.

    While operating earnings are the primary focus of analysts, the media, and hucksters, there are many problems with the way in which these earnings are derived due to one-time charges, inclusion/exclusion of material events, and outright manipulation to “beat earnings.” This problem has been exacerbated since the end of the financial crisis, as we will discuss more in a moment, to the point to where only 13% of total revenue growth is coming from actual revenue, the rest is from accounting gimmickry, buybacks, and outright fudging.”

  48. …forgot to add that it is currently on the market for $4.5million…only a couple of months after the build was completed. The article suggested they have created their dream family home when in reality it’s a flip…for an exceptional profit of $2million if they reach near the asking.

  49. Jope:

    Exeter is someone with a sense of wishful thing. I have noticed that almost nothing is selling in the Uplands.

  50. “Perhaps there are some evidence-based rules you can use to reduce market exposure during overvaluation, but being ‘cashed-out’ is usually a poor strategy.”

    I never said going to cash, just reducing holdings in maxed out stocks like the financial sector which has taken a hit because they know Trump’s bank deregulation changes odds of happening just went off a cliff.

    http://stockcharts.com/h-sc/ui?s=XLF

    You don’t have to do it consistently, just half the time if you are investing in sector trends and an active investor. As a passive investor in mutual funds who looks every few months that’s a different story.

    Triple A did the smart thing, but is able to adjust by buying back in should the trend change or in other sectors that go up when markets correct. Trump’s lame duck status just took on a huge change on wether he will get anything done before the Russian stuff ends in impeachment.

    The last rally was built on him getting things done and it’s clear he has ZERO power to get congress to agree with him and markets hate uncertainty.

  51. Jope – the house you mention below is 3250 Exeter Road and was purchased in August 2015 for $1.31mill. They didn’t even replace the roof in the reno….drive past it, the moss is clearly visible. The asking price of $4.5million is beyond belief.

  52. Jope

    Good read…gives the mindset and perspective of what a foreigner sees in Victoria.

    Now if they would quit advertising it 😉

    I am sure someone has lowered a drawbridge somewhere around this moat of an Island but I just haven’t found it yet. (It isn’t called WestJet and the Faeries by chance is it?)

  53. I remember meeting someone a few years back and striking up a conversation about investing. They talked about the fact that they were going to cash because they were in the industry and knew the market was going to crash. Oops… The market is on a high but it’s not crazy high. You can observe our last two crazy highs in regards to P/E here:
    http://www.macrotrends.net/2577/sp-500-pe-ratio-price-to-earnings-chart
    Many things could goose it higher. Trump’s tax reform could pass for instance.
    Stock market is going up, real-estate is going up, everything is going up. The risk with cash is it’s just losing it’s value so fast. The old saying that money loses half it’s value every ten years has played itself out to the tee over my life time.

  54. @TripleARated:

    “Hawk,
    Re: S&P I agree. I’ve cashed out my portfolios and US small Caps and will wait out the coming stock market volatility.
    I’ve done well by being patient and waiting for proper corrections to get good value. Timeline could be 12-18+ months for a bottom.
    This failed Obamacare repeal is the catalyst.”

    Market-timing is a myth. I’ve had this argument with Hawk many times before. There is ZERO evidence that anyone can time the market consistently. ZERO.

    Perhaps there are some evidence-based rules you can use to reduce market exposure during overvaluation, but being ‘cashed-out’ is usually a poor strategy.

    If you have evidence that market-timing works, please share this knowledge.

  55. I agree with you LeoS.

    I also don’t think that comparing price/rent between countries is very instructive

    Agree, but there are some countries with some similar rules and high pr ratios like areas in Australia and the US. However, I don’t even think it works to compare within a country usually because of factors like national global and local attractiveness and density that contribute to supply and demand.

    That sound you just heard was several thousand real estate agent’s jaws hitting the ground.

    Dunno – those rules already exist. All you have in that case is a negligent notary who failed to get a certificate of compliance as he was required to do under Canadian tax laws AND failed to inform his client of this fact. Definite negligence and an obvious CRA trigger issue.

    Notaries and RE lawyers have always been required to do their due diligence on this point – it is on the checklist for a conveyance. This case really means nothing except notaries and lawyers will insist on the certificate of compliance, as they are already legally compelled to do. If the seller is fraudulent in providing the certificate that is not their fault and the tax liability should not accrue.

    What might be different now is government’s willingness to try to track down fraudulent certificates which they can do if they match the data on residency for tax purposes to the certificate.

  56. Hawk,
    Re: S&P I agree. I’ve cashed out my portfolios and US small Caps and will wait out the coming stock market volatility.
    I’ve done well by being patient and waiting for proper corrections to get good value. Timeline could be 12-18+ months for a bottom.
    This failed Obamacare repeal is the catalyst.

    There has been much talk in DC regarding NAFTA renegotiations starting next week. I hope this is just market noise but there is plenty of reasons to be concerned.

  57. A great read. There is a lot of fantastic analysis.

    Interestingly, the opposite trend by these graphs show MOI and SFH increase approx 1.5 years before they inverse one another. Makes sense as human psyche usually buys into continued strength and sells into market weakness.

  58. That case has the potential to take out another leg in the house of cards. The government also has been talking about capital gains tweaks and cracking down on this kind of stuff. Maybe they’ll up the capital gains on non tax residents to 50%. Would pretty much kill any investment case for foreign speculators.

  59. How does this tie in with your views on the link to income-based affordability and price to rent ratios?

    If we see another year of gains affordability for single family houses will be as bad or worse than we’ve ever seen. In condos we have a bit further to go.
    After that we will see if affordability means anything.

    Do you believe that after this next run up there will be a return to affordability based on the norms for these measures?

    I think it depends entirely on the level of out of town buyers. If the number returns to more normal levels then yes, the market will continue to be limited by affordability constraints. If the flood of out of town buyers continues then all bets are off and a top becomes complete impossible to predict as we’ve seen in Vancouver.

    It seems to me that some markets are going to be able to sustain a higher price/rent ratio, like 20-30

    I don’t think price/rent is a very useful measure and just like price/income I don’t believe it is a good predictor of overvaluation. It is so commonly used as that though, for example the demographia reports. For many years I heard that rising price/income and price/rent were evidence of a bubble but that completely ignores the effect of interest rates.
    I also don’t think that comparing price/rent between countries is very instructive because there are almost certainly vast differences in home ownership rate, income inequality, access to credit, and the lending environment between any two countries.
    Carrying costs/rent ratio would be more useful I think but accurate rent data is difficult to come by.

  60. “Why do you need a book? Look at the S&P500.”

    There’s a reason AG isn’t in the financial industry any more and is living the maxed out leverage life in the Uplands with the large mortgage and limited equity. Those are the first to blow up.

    The S&P is peaking as well as US housing as companies revenues are built 80% on buybacks from borrowed money and one time financial gimmickry/write offs.

    Education of the markets is a good thing, not listening to a 2% profit hedge fund guy. Trump is a disaster who can’t get squat passed and the markets are finally starting to see it.

  61. AG that might be one of the silliest things i’ve heard. Have you heard of a bubble? Irrational exuberance.

    I would suggest Real Vision if you are looking for a subscription service. There is some high level presentations and interviews from economists and individuals who work in the finance industry.

  62. but we are so far away from a balanced market I don’t see flattening prices or a decline for another year at least

    Ok, thanks for the clarification.

    How does this tie in with your views on the link to income-based affordability and price to rent ratios? Do you believe that after this next run up there will be a return to affordability based on the norms for these measures?

    If so, I wonder if this is correct.

    It seems to me that some markets are going to be able to sustain a higher price/rent ratio, like 20-30, for specific reasons related to local factors ie. what would be deemed to be overvaluation may end up staying up.

    http://www.globalpropertyguide.com/most-expensive-cities

  63. Finally, can anyone, ANYONE, give me the title of a book that outlines why we are in good economic shape. I can’t find a single book in the library demonstrating why I don’t have to worry about the Canadian/global economy. Please, someone give me a title!

    Why do you need a book? Look at the S&P500.

  64. I’m not disagreeing, just wondering if the reason you believe the market will cool down is because prices are as high as they can reasonably get based on a small pullback?

    Oh no I can’t see any scenario where prices don’t increase a lot this year (other than massive recession, earthquake, etc). By cool down I meant that MOI would increase a bit as the market adjusts. In the core we saw the months of inventory drop to 1 last May which I believe was largely because many sellers hadn’t yet caught on to the conditions and were listing their houses for what they thought was realistic prices and found out market value was much higher (so the houses sold immediately).

    Now we’ve had over a year of crazy market so sellers understand it and are no longer underlisting everything (unless they are doing it on purpose to attract bids). So the MOI has moved up a bit for detached in the core.

    I believe the other market segments will adjust as well. MOI under 2 is just not sustainable. That said it might pull back a bit in market conditions but we are so far away from a balanced market I don’t see flattening prices or a decline for another year at least.

  65. The low inventory and high demand will probably crash this market I mean that’s how it works right? Hawk will then swoop in with his huge pile of twenty dollar bills and buy in for a few thousand.

  66. Wouldn’t be surprised if inventory drops again.

    And…

    If current market conditions prevail, you should expect the median single family home price to increase at a rate of about $118,000 (16%) annually.

    But…

    I suspect at this point both are about as hot as they’re going to get and the overall market will start to cool down slowly.

    I’m not disagreeing, just wondering if the reason you believe the market will cool down is because prices are as high as they can reasonably get based on a small pullback? I also believe this madness has to come to an end, but what about markets like TO and Vancouver that didn’t stop? Do you think Victoria will behave differently because of size and other factors?

  67. Bitterbear, solid post. I wish I could offer you good news, but the evidence is mounting that not only household debt is out of control, but business debt is showing warning signs of excess. You all know when businesses can’t service their debt they layoff workers.

    Blackrock did a good piece on BNN and on their blog explaining it. Servicing debt takes away from consumer spending etc and it all falls apart.

    Company debt a real concern for the Canadian economy: BlackRock

    With a lot of attention put on household debt, Kurt Reiman, chief investment strategist at BlackRock Canada, joins BNN to discuss why he is concerned about the “warning signs” that point to mounting corporate debt.

    http://www.bnn.ca/video/company-debt-a-real-concern-for-the-canadian-economy-blackrock~1085976

    Rising debt levels could spell trouble for the Canadian economy. Kurt explains why investors should take notice.

    Canada’s mounting debt load may not be a top concern of homeowners enjoying the dizzying rise in house prices or shareholders benefiting from the country’s bull run in stocks, but as the borrowing binge continues to build, so too do potential risks to the economy, including the prospect of a homemade financial crisis.

    https://www.blackrockblog.com/can/2017/03/24/debt-and-its-consequences/

  68. For what it’s worth, I think foreign buyers should have to show income generated and taxes paid in Canada. By way of example, I would have to do this in China if I wanted to buy property there. I am happy the throw open the doors to immigrants and refugees moving to this country to contribute to the economy but for those making money in other parts of the world and bringing it here to speculate and drive up prices out of the reach of people who run businesses here that are subject to more stringent taxation, labour laws etc, I feel completely cheated and sold out by my government.

    Also, for what it’s worth, I am p*ssed off at the 1% who seem to amass more to the detriment of the 99%. And for those of you who think I’m just a bitter millenial, I am not. I am mid-life and while not part of the 1%, I am probably part of the 10%, but I speak for my kids. Why not impose a proportional rule whereby the top executive in any organization can only make a proportion of the salary of the lowest paid person in the organization eg 1:5 (lowest paid = 50,000; top paid = 250,000). That would shift the accumulation of money to towards the middle of the distribution.

    Finally, can anyone, ANYONE, give me the title of a book that outlines why we are in good economic shape. I can’t find a single book in the library demonstrating why I don’t have to worry about the Canadian/global economy. Please, someone give me a title!

  69. Last 7 days: 237 new listings, 243 pending sales, 45 off market.

    Wouldn’t be surprised if inventory drops again.

  70. James Soper – you and Just Jack / John Dollar should get together for a drink. You can moan about how terrible people are and how things used to be better in the old days.

  71. How is what introvert posts any more creative, or filled with less vitriol? Why don’t you delete all of their posts as well?

  72. “If Chrusty gets back in, we can forget about much or anything on this front happening from the Province. What is the NDP proposing on this?”

    We will see the NDP’s stance as soon as the election is officially announced. I expect some major stuff via David Eby who is all over the housing scams that have been allowed to function at free will the last 15 years under the Liberals. I would expect some choice commercials pounding home how corrupt these Liberals are.

    As the article stated, Christy’s “citizenship” check box is a joke and doesn’t go after the real tax scammers and money launderers.

    Agree on the mainlanders, I have heard first hand they despise tax of any sort and will do anything to not pay. Even the local foreigners don’t trust them. Good luck that agent getting his $600K back.

  73. The article Hawk posted is a good start but… much much more needs to be done on that front.

    Clearly much more has to be done about the ‘astronaut’ families that live extraordinary lavish lifestyles here for part of the year, earn their extraordinary incomes elsewhere, and don’t pay hardly any Canadian tax but claim, for ex.- free MSP and other tax credits like GST credits due to low income. All the while cruising around town from their mansions – or GH crap boxes – from the comfort of their chrome Maseratis’.

    I think that we need to bring in tight controls, not just taxes, on anyone who is foreign buying or selling real estate who are not working or contributing to our society. In order to protect Canadians and perhaps help out that despairing person who wrote into the Times Colonist blaming the ‘grey haired elites’ for her commute to the Westshore. (maybe she needs to focus that blame elsewhere?)

    More than just having a work permit (as now any foreign ‘student’ can get a work permit and get around the tax in Van. and then not actually ever work) they should need to show they are actually working and own real estate for a minimum amount of time, say three years. We need to control the amount of real estate they are allowed to buy and only if they live and work here full time (not allowing students to buy homes, perhaps). We will then see how much of a problem it really is.

    If Chrusty gets back in, we can forget about much or anything on this front happening from the Province. What is the NDP proposing on this?

    From the Hong Kong example – I have visited several times and my brother runs a real estate company there – I can tell you that the newly minted uber-wealthy mainland Chinese are indeed a cunning crafty bunch – I guess that’s how they beat out the other 99% in their home country – and they are widely despised in Hong Kong by the local Cantonese. However and whatever way they can, they will find a way around taxes – they show this time and time again finding loopholes around the Hong Kong taxes. They hate taxes more than anything (many of us do, but we all realize taxes are there for a purpose, as long as it’s wisely used, but that’s another discussion). And, the new uber-wealthy mainland Chinese love investing in RE in English speaking western cities around the globe – Vancouver and Toronto being the Canadian favourites. But… is Victoria on their radar??

    We still don’t really know how much of an influence are these types actually having in Victoria real estate? I still suspect, not much of an influence directly, but coming across hard data on this front is challenging. I am starting to notice ethnic Chinese driving very expensive looking vehicles around town – not on the scale of Van, but they are here.

    Ironic that in TO they warn a foreign tax will risk recession, yet out of the other corner of their mouths they say – foreigners aren’t a problem… hmmmm. Same story here??

    “I find it amazing how for years, real estate experts told us that the foreign investor element was trivial in the market,” BMO’s Porter told BNN via email on Wednesday morning. “And yet now such a tax could trigger a recession, on the national economy?”
    “Which is it? Trivial or critical? And if [Lamb] is correct, how did we ever let it come to this?” Porter asked.
    The answer lies at least partially in a complete lack of data on the foreign homebuyer element. No official figures exist on how many homes in the Greater Toronto Area are being purchased by people who do not live or work in the GTA.

    https://www.bnn.ca/top-toronto-condo-developer-warns-tax-on-foreign-buyers-could-trigger-recession-1.703067

  74. Hawk said: “B.C. Supreme Court ruling will send shock waves through the arm of the Canadian real-estate market”

    Good article Hawk, thanks for the link.

    B.C./Canada need to follow the Hawaii model immediately.

    Hawaii seizes 25% of the total sale price for every real estate sale by a non-American citizen to cover the capital gains tax. The seller then needs to file a series of forms and declarations to recover any overpayment of capital gains taxes.

    It is virtually impossible to avoid capital gains taxes in Hawaii.

  75. Not looking good for the agents too as the foreign flippers take the cash and run and the leave the agent/client holding the tax bag.

    House buyer beware: Landmark B.C. court ruling will shake real-estate industry

    “A B.C. Supreme Court ruling will send shock waves through the arm of the Canadian real-estate market that is powered by foreign capital, say immigration lawyers.

    The ruling targets a weakness in Canadian laws that often leads foreign owners of real estate in cites such as Metro Vancouver and Toronto to claim they are “residents of Canada for tax purposes” when they are not.

    The landmark B.C. decision requires notary public Tony Liu to pay his client more than $600,000 because Liu failed to adequately determine whether the Vancouver house his client was buying for $5.5 million had been owned by a tax resident of Canada.

    “This truly is a game changer,” said Vancouver immigration lawyer Richard Kurland.”

    http://www.theprovince.com/news/local+news/house+buyer+beware+landmark+court+ruling+will+shake+real/13187081/story.html

  76. http://www.timescolonist.com/opinion/op-ed/comment-stopping-new-development-hurts-young-families-1.12792024

    I saw this in the Times Colonist today (oops, now that’s yesterday!) and had to feel a bit sorry for this ‘poor’ young person condemned to the Colwood Crawl, priced out of the core… since we all know the Westshore is the only place where affordable appropriate housing can be found for most families starting out who don’t already have bucket loads of cash.

    She seems to say – If only they could get rid of those pesky ‘white haired elite’ still taking up space, attending every meeting to stop any progress, and living for what seems like forever in the core. How dare those most advantaged people (basically those over 55) deny young families the ability to locate there also?

    She does have a point though, it’s a bit of what I’ve been saying all along – the core lacks diversity of housing, esp. housing suitable – and affordable – for families. In OB, we see a local example of the vehement opposition to the development proposed for the corner of Cadboro Bay Rd/ Bowker. It goes on and on – the grey haired elite will be at every meeting, after all – they have the time.

    That said – that development on Bowker could hardly be categorized as family friendly affordable housing if that developer’s other examples are anything to go by. What we actually need in the core is re-zoning to encourage family friendly developments. A bit of a pipe dream, wouldn’t you say?

    I do have to ponder though, that when one looks at other cities around the world – Vancouver our closest example – in every city there are rich areas and there are poor areas. In Vancouver, virtually everyone ‘normal’ who isn’t loaded or hasn’t been there for a long time is priced out of the Westside, for ex. Victoria is no different with those types now being ‘priced out’ of the most desirable parts of Victoria. What does need to happen, and hopefully will happen is just giving these ‘disadvantaged’ people condemned by the grey heads to live in the Westshore more options to get to/from the core, that doesn’t involve the personal car, because we all know the grey heads will continue to attend every meeting and work hard to deny any real change in the core that actually helps younger generations – until they finally drop dead, that is.

    BTW – DB – those homes on ‘Terrace’ are in the city of Victoria. the border w/ Oak Bay is generally Foul Bay Rd.

  77. Perhaps Just Jack is lashing out because he and his family have just been evicted, and he’s pissed.

  78. Big 5 not looking so good.

    How Solid are Canada’s Big Banks?

    “However this façade hides major uncertainties. Key concerns stand out, which if unaddressed, could spark solvency and liquidity issues in one or more of Canada’s Big Six banks.

    The fragilities can be seen in an IMF report, which calculated that Canada’s financial sector accounted for a stunning 500% of GDP in 2012. Today, the assets of the Big Six banks alone are more than double the size of the country’s economy. ”

    https://www.sprottmoney.com/Blog/how-solid-are-canadas-big-banks-peter-diekmeyer.html

  79. @Rook

    The comment section of this blog is getting lame fast.

    Come on, Rook. What’s so lame? Give us some examples and your reasons for finding them lame, then we can see if your views are any less lame than anyone else’s. Or did you intend to insult everyone? equally.

  80. Bearkilla’s kids already have the plot mapped out in the backyard with all his yapping how rich he “thinks he is” while they all get the boot after the grad party. I wouldn’t be the first one going down the stairs. Accidents happen.

    Yes it’s so depressing having a large bank account. 😉

  81. The comment section of this blog is getting lame fast. Keep it together guys and girls. When you run out of topics related to real estate just don’t say anything at all. Your mom told you that when you were a kid right?

  82. Making this a generational issue is just a grumpy old man type of thing.

    But it really is a generational issue, isn’t it? I mean, young people are being screwed by the Liberal government, which is allowing the real estate market to run totally out of control thereby massively raising the wealth of elderly property owners at the expense of young people. Then the liberals massively increase public debt to be paid by the younger generation in order to increase spending that exclusively benefits the elderly.

    I really hope to be mistaken for a Millennial since I suspect when they get the clout to do it this younger generation will opt to euthanize the older generation.

  83. Anyway back to real estate here. The market continues to defy Hawk’s doomsday predictions. How do you think Hawk feels about this? It must take a toll being wrong every day of your life. Imagine how depressing that would be. Glad I’m not that guy.

  84. I am possibly closer to the grave than to being a millennial. But I work with some very smart and hard working millennials. I have not seen laziness or poor ethics. If anything they put me to shame.

    Pray god I don’t turn into an old grump muttering, “Kids these days have no respect”

  85. If you treat your people like mercenaries, don’t complain when they start acting like mercenaries. If people’s attitude towards work has changed, it’s mainly because of changes in businesses’ attitudes towards workers. Making this a generational issue is just a grumpy old man type of thing. But pretending it’s an ethics issue is plain rude.

  86. Oops, I was going to edit that last comment and correct at least a few grammatical and typographical errors but the system wouldn’t let me. Oh well, I guess I’ll be taken for a millennial, whatever that is.

    But maybe Leo S will edit it for me!

  87. Since young people are being thoroughly screwed by Trudeau’s Liberals and Christie’s Liberals, I can’t see why they show up to work at all. See the Federal budget increase yearly spending to benefit those over 64 by what was it, around seven hundred bucks, which increasing spending on those under 45 by about 38 cents.

    Meantime, the Feds, without any opposition from the provinces, have made it possible for older generations to cash out of the property market with a huge capital gain to be paid by young people entering the property market — young people for most part already loaded up with debt from their crap program of brainwashing known as higher education.

    In effect, young workers are going to work pretty much their entire life to pay off debts. Their position is for all practical purposes the same as that of indentured servants, i.e., slaves. No wonder they’re difficult to manage, they’re probably saying fuck you under their breath as they greet their moaning bosses.

    And in fact one of the key ways in which this younger generation has been screwed is by exposure to an education system that fails in most cases to prepare people for the workforce, which is to say make them understand that their success in employment depends on making themselves useful and agreeable to those they work for.

  88. This new listing on Lansdowne Road is interesting: It’s offered at $5 million, or 50% over the BC assessment and the same price that Donald Trump paid for his 20-acre beach front Mar a Largo estate, although that was a few years ago (1985).

    It’s a nice house, but does it mean that a nice house on a couple of acres on the waterfront is now worth $25 million? $50 million? or what?

    Maybe it’s time for Canadians to give up on BC and move to the prairies or some other place where home prices are more in keeping with their modest incomes.

  89. @John Dollar.

    Most of the people coming out from the banks about pressure have worked there a long time. No one in their 20s/early 30s have worked at the bank for 15+ years. These are people who are hanging on for retirement, they’re boomers.

  90. My last workplace was a revolving door of professionals ranging from millennials to boomers because management had not evolved since the 80’s/early 90’s.

    People don’t like to be treated like shit.

  91. “It is a complicated issue and this video better explains the millennials in the workplace and why they are difficult to manage.”

    Difficult or different? Simon advocates that companies must change how employees are lead/managed. Yes, it might be a challenge, but I would argue that it is difficult. It is probably more difficult for organizations to change their organizational/leadership/management methodologies.

    I am excited to see that more companies are adopting and embracing this kind of change. What is the other alternative? Last I heard, not evolving/adopting didnt work too well.

  92. Our very own Douglas Coupland on Gen X and Millenials:

    “Conceptually, Gen X went from being the bash-it-with-a-stick piñata generation to being the serious generation that is heir to the greatest generation – my parents’. Boomers haven’t changed a bit. In as much as there is a Gen X, it’s paying for school bills for their kids and nursing care for their parents. There’s not much free time to be either pro or anti-establishment. They’re too busy working themselves into the grave.”

    Coupland feels “neutral” about millennials, he says. “I will say that pretty much everything they say about millennials is what they said about X except that millennials seem unable to cope when things don’t go their way.”

    http://www.bbc.com/culture/story/20170316-whatever-happened-to-generation-x

  93. It’s how I and many other business owners see some of today’s millennials. They just don’t have the work standards of the generation before. They don’t arrive on time, are not properly dressed for work when they do arrive late, and want to leave before their work is done.

    You certainly seem like someone I’d be excited to work for…

  94. So it isn’t from ignorance that I write. It’s from experience. It is a complicated issue and this video better explains the millennials in the workplace and why they are difficult to manage.

    It’s not a complicated issue. I would also argue that your stated experience, even if truthful, doesn’t really bolster your contention. It’s the age old phenomenon where a generation of people feels as though the proceeding generation is somehow worse than they are.

    The complaints are numerous – your complaint is ethics, others claim entitlement, rebelliousness, leftist, spineless, lazy, ignorant, snowflakes, can’t command the English language, eroding values etc. And indeed, many people have these attributes. I don’t however, think they’re new. Cultural shifts can and will occur over time that will make some traits more notable over time, until that again shifts and it goes back the other way.

    The “next gen is worse than mine” is essentially a mild form of moral panic – instruments of society are decaying, anarchy is rising, if we don’t do something soon we’re going to lose our grip on civilization. The red scare, crack babies, meth, bath salts – it’s all part of the latent apprehension that feeds into our deepest fears of a pending breakdown of the social order. Except, it never actually happens.

    And trust me, years from now, millennials writ large will have plenty of “it’s my experience” anecdotes to make similar claims against those who are in the new generation.

    Now that I’ve crapped all over you – I will say that I do appreciate the numbers and analyses you post, which I think I’ve said before. Just think about what you say a bit before speaking.

    Now excuse me, I’m starving. Forgot to have lunch.

  95. Great analysis of inventory, thanks! A good perspective on the sales inventory.

    Are there any sources that identify the current (and future) planned SFH and condo building permits? Would be interesting to see the developer supply response currently and projected into the future.

  96. DB that type of house is popping up in Saanich also. I like the look, I just worry about the roofs, they are not the same quality as the condo or office building flat roofs. I have just seen too many issues with the torch down stuff.

  97. That is perhaps one of the most ignorant things I have seen you post since I started visiting the site. Just awful

    It’s how I and many other business owners see some of today’s millennials. They just don’t have the work standards of the generation before. They don’t arrive on time, are not properly dressed for work when they do arrive late, and want to leave before their work is done.

    So it isn’t from ignorance that I write. It’s from experience. It is a complicated issue and this video better explains the millennials in the workplace and why they are difficult to manage.

    https://youtu.be/hER0Qp6QJNU

  98. I find the ethics of all generations pretty much the same. People will get away with what they can get away with in GENERAL regardless of the generation. I find the newer generation a lot less destructive of their environment in the pursuit of the all mighty $. As an Gen X, I really like the Millennials in their thinking and I like working with them. They work hard and play hard.

  99. Deb

    How do you jump to such conclusions? It reflects your thought process…

    I simply said those 2 structures remind me of San Francisco.

    Obviously Oak Bay council approved them and therefore set a precedent.

  100. Some Millennials on here? 🙂
    At 33 years old, I can define myself as Millennial or GenX depending on the source of the definition. I however know I am not either of those things but a unique snowflake.

  101. Personally I find today’s millennials can live with most things as they lack the ethics of previous generations.

    That is perhaps one of the most ignorant things I have seen you post since I started visiting the site. Just awful.

  102. “Personally I find today’s millennials can live with most things as they lack the ethics of previous generations.”

    Holy curmudgeon alert, Batman!

  103. Well is this surprising? – a price rise in OB ! – 479 Monterey Ave. raised from $1.575k to $1.629k. And, it’s been on the market for much longer than nine days ( a refresh). It’s in a great location and looks to be at least semi-quality at first glance. But the price rise is a bit perplexing to me b/c it was already on the market for some time (not sure how long, but I think at least a month). It has a suite as well as another recent OB listing at 2068 Milton St, but these both have full ovens which I thought were a ‘no-no’ in OB?

    2628 Fernwood at $899k. Here’s a new listing what appears to be a rare breath of fresh air… even comes w/ views and appears to be well fixed up. Open house on Sunday at 2-4 which I think I’ll attend. My prediction is this one goes over asking, probably over a million – we will see.

    2027 Byron St. in OB listed at $1.295k but sold for $1.200k. Another example of someone listing a prop. a bit higher than what this market is really willing to pay. Sold after a long 40 day stretch. Def. not in the best part of OB like Milton St (which is priced more appropriately). I call this area the OB ‘cheap seats’ (near the waste processing facility, rec centre, and public works yard, flat and near a very busy part of Foul Bay Rd.)

    The flat roof homes on Terrace assessed at around $1.8m are definitely interesting – and they don’t have driveway’s that descend to cause water damage issues like so many Vic homes! But, like gwac I don’t like flat roofs as I feel it’s ‘cheaping out’ and in a rainy winter climate like we have here – both flat roofs and driveways that go down to enable water to collect in basements are a bad idea.

  104. fizzy, it’s a combo. Some suck it up with no ethics or to keep their jobs and others just leave. Easy to move up in management if you have no ethics and like to whip the troops daily. It must have been getting extreme for many to start going public. The Wells Fargo fiasco showed it was evident even after the 2008 financial crash.

    I know I was getting harassed for a long time til I had to lay down the hammer on the excessive phone calls for easy loans. TD was doing the same til I had to the same with them too.

  105. @db
    You can’t compare Victoria with a population of 85,792 to San Francisco with a population of 805,235. Add to that facts like SF is on the mainland, is a major port facility and the principal banking and finance center of the West Coast. Anyone who thinks this is where Victoria is going will be very disappointed unless that tunnel from the mainland gets built which will never happen.

  106. “Personally I find today’s millennials can live with most things as they lack the ethics of previous generations.”

    Total bullshit. Are you going to tell us that the me generation is somehow more “ethical”? Or the previous generation of racist assholes? How about the generation that settled on stolen land?

    “And the person training them can easily manipulate them into thinking “it’s okay – everyone does it””

    It’s called youth and inexperience, big guy. Why do you think we send 18 year old kids off to fight in retarded foreign wars? Young people are easy to manipulate. It’s not a generational trait.

  107. @ Hawk:
    “Agreed John, this is a new breed of worker where they don’t stay long in that position and turnover is high. Imagine having someone standing over you saying make the deal work or you’re fired, all day long. The ones with a conscience finally caved.”
    So which is it, you blaming the new breed of worker, or the prevailing business/management culture? Are millennials lazy, or boomers greedy?

  108. You can do an aerial by toggling..

    Assessments are available at e-value BC once you get the address..

    1025 and 1029 Terrace Ave.

  109. When it comes to real estate I have never heard of an economic theory that says what goes up must come down. Utter nonsense, if you are waiting to buy Manhatten Island for a box of beads dont hold your breath, or for Malibu beachfront to be affordable for the average truck driver, won’t happen. In the short term will Victoria house prices readjust downwards? Quite possibly but I suspect that they are more likely to plateau. What we are not seeing is a frenzy of bidding wars and a return to a more normal environment of sells slightly under ask. Actual sale prices seem to be a bit higher than last year or a least not any lower.

    What I’ve noticed Barrister, in comparison to this time last year is that early last year – a lot of people were listing their properties at the ‘old Victoria prices’. That is, the prices that places were fetching in 2015. The market accelerated quite dramatically in early 2016 which caught some people off guard, and sometimes surprisingly slowly – people’s mentality eventually caught up. Hence why last year we saw so many dramatic ‘over askings’. It still appears, people in GH aren’t grasping the reality that their 1970’s crap box can now fetch close to or even over a million. Sometimes, realtors will still list prices for lower than what they know the market will pay to get more interest and bidding wars. We still see that today in certain examples like 224 Robertson which went $172k over asking, and still in most of the GH examples.

    Another thing I’ve noticed though, is that some people appear to be getting ahead of themselves, and inflating prices beyond even what this hot market is willing to pay. Examples include 2777 Dewdney Ave, where perhaps due to it’s proximity to Uplands they feel $1.349k is not too high a price to pay for a piece of complete junk (this price will have to be reduced further). And, as for some of the homes on Boulderwood Dr. – people appear to be completely out to lunch!

    The thing with Oak Bay and Fairfield are – the housing stock is so much older than other parts of Vic like GH or beyond. This probably puts lots of people off. After all, who wants to pay well over a million for something that still needs a ton of work, money and remediation? It would put me off too – hence why I’m so glad I found something that is essentially a 2014 build, because it is so rare. That’s why the rare quality homes that do come up in these areas (or even semi-quality or hardly any quality but barely bearable – like Robertson) still sell. What’s left is the ‘dregs’, homes that are so far gone people flee in horror, and so many homes in these areas are in need of so much work.

    As for what goes up must come down – that simply isn’t true. Especially in a land locked city like Victoria which cannot grow anywhere other than out in the Westshore or in the core – vertically. There may be ‘blips’ due to world events that cause things to flatten out for a while, but over time there simply isn’t anywhere to go but up – not just price wise but also height wise! And, we simply aren’t yet seeing dramatic signs of a ‘bubble’ like what may be happening in TO, where it seems apparent there is too much speculation going on.

  110. John Dollar:

    Just Oak Bay generally, are prices up or down a bit? I am in Rockland by the way and not Oak Bay.Things are not exactly selling fast here in Rockland but very little new is on the market.

  111. Agreed John, this is a new breed of worker where they don’t stay long in that position and turnover is high. Imagine having someone standing over you saying make the deal work or you’re fired, all day long. The ones with a conscience finally caved. This is just the tip of the iceberg and expect a major enquiry.

  112. With the current market conditions in Victoria, moi, average/median sale prices etc. I see the market plateauing as worst case scenario with possible minor pullbacks in some neighborhoods.
    In order for a significant price drop there would have to be a major economic crisis accompanying it. There are some good candidates for that possibility currently as there are at any time. The question is, if there is to be a major price correction which economic condition will cause it?

  113. Interesting thought there Hawk. Personally I find today’s millennials can live with most things as they lack the ethics of previous generations. Not that they are intentionally crooked, it’s just that they live in a world where ethics are not that important. And the person training them can easily manipulate them into thinking “it’s okay – everyone does it” Then when that person or persons is caught, the manager blames the employee thereby escaping any accountability.

  114. It’s been obvious for years Leo as I’ve been saying, not surprised in the least. Just wait til the next shoe drops on the Big 5 when the mortgage fraud finally leaks out in spades. Employees who can’t live with themselves is step 1.

    You don’t lend billions to foreigners/students and those who had no business qualifying, dumping it on taxpayers and it stays secret for ever. Where there’s smoke there’s fire, as in a raging inferno of fraud. Stay tuned, this is just warming up. 😉

  115. Surprised no one (aka Hawk) has posted the info from the CMHC FOI request. I’ll let Ben provide commentary:

    @BenRabidoux
    Nov 2014:
    “Hey guys we found massive fraud in our originations” – Home Capital Group
    “Okay thanks for telling us” – CMHC

    July 2015
    “Shit guys that HCG thing is now public. What’s our exposure?” – CMHC
    I kid you not, that’s how it went down. Read the FOI dump

    Seems like our friendly regulators are a bit asleep at the wheel

  116. HPI is useless…. It might as well just be three states: Down, flat, up because that’s all that arbitrary number hidden behind a cloak of mystery really tells you.

  117. John Dollar:

    Thank you, I found you last post extremely informative. I think that you make an excellent point
    that often we are comparing apples and oranges particularly in some of the old neighbourhoods.
    The limited number of sales can also skew any statistical outcome. Two waterfront sales in Oak Bay
    can totally upend the monthly averages.

    Still you have provided a useful list of tools along with a good summary of their limitations.

    By the way, how do you see things going in Oak bay at the moment?

  118. Barrister there is an interesting side note to the box of beads for Manhattan Island sale. Most people believe that the natives got screwed over on the deal but the opposite is true.

    You see Manhattan means “the place we got drunk”. The white settlers met a group of natives on the island and they all got drunk and the natives sold the island to the settlers for a box of beads and then the natives paddled off.

    But the natives were not from Manhattan. Manhattan island was not theirs to sell.

  119. If you are trying to measure how house values are performing in a specific area then your data has to reflect that market you are trying to measure. That means you have to trade off quantity against quality.

    For example, the re-sale method popularized by Case-Schiller tracks re-sales of the same property over time. The quality of data is excellent but the number of sales is very small.

    An average or a median analysis provides lots of data but the mixture of different types and sizes of properties can skew the results especially if one is looking at a short time frame such as month to month.

    The solution seems to be to use longer intervals such as quarters, 6 or 12 month intervals giving a high confidence in the result but because you now have smoothed out the data it isn’t possible to see immediate changes in the marketplace or changing trends. If you are looking backward in time to see how the market performed this does well. However, using long intervals loses the ability to project what may happen in the short term such as the next 90 days.

    Or one could develop a model like the real estate board did called the HPI which measures and borrows information from other types, styles and neighborhoods to fill in the gaps and construct a hypothetical property called a benchmark and track that benchmark property through time. But that only tracks that one type of property. If your home is not similar to the benchmark then as they saying goes “your mileage will very”

    Another technique called “smoothed averaging”, is taught by the Appraisal Institute of Canada, to reduce the influence that a small number of data may have on an overall trend. The technique does not discount or ignore any data in the set but, instead double weights the data for the subject month, while single weighting the months on either side of the subject month.

    Smooth Average Price for February = [(February Average Price x2) + January Average Price + March Average Price]/4

    You could also use medians.

    This smooth averaging provides a steady, broad view of overall value trends over a period of time.

    Or you could also track the Sales to Assessment ratios and plot how that ratio changes over time being careful that the date of the assessment is the same for all the data. This does require some excluding of data that is at the extreme ends and requires personal judgement by the person doing the analysis. There are algorithms that will do this excluding but they are complicated to understand. Human judgement is quicker

  120. Awesome graphs as usual. Be nice to also plot buying conditions somehow. I would imagine these data points would paint that picture. Days on market, over/under ask, over/under assessment and time from sale to close (indicating conditions or not). Sure would be nice to have cold hard data to prove my feeling that this is the worse time to buy in the recorded history of our market…. why do the buyers pile on the more of a sellers market it gets?

  121. Great information – thanks for putting it together.

    As someone who has been trying to buy a SFD (avec suite for a family member) within Greater Victoria since last June, this data compliments exactly what we have seen each week. In fact, for our price range (500-600K), we were pushed out to Westshore late last year due to the price acceleration. Since then, a majority of the new listings have been pretty poor quality. Anything decent is starting to escape our price range.

    For example, this listing just was posted today.
    https://www.realtor.ca/Residential/Single-Family/17936653/2949-Charlotte-Dr-Victoria-British-Columbia-V9B4L9

    Keep up the great work – love reading the comments to hear what others think and see within this market.

  122. As some of you know I tend to focus on SFH for south Victoria.

    I terms of Inventory, compared to the start of this month

    James Bay seems to be down by a couple of houses
    Rockland is about the same with mostly the same houses
    Fairfield is up two
    The surprise is Oak Bay which is up about ten, mostly in south Oak Bay. The inventory seems to be
    mostly grouped around houses at about 1.2 and then houses over two million. The ones over two million dont seem to be selling at all. The 1.2 mil group is selling but rather slowly. Also most of the sales in this group seem to be under asking.

    A word of caution, a large percentage of the inventory is what I call the dregs. Houses clearly overpriced or that have something else wrong with them.These are houses that have been on the market for over three months and in some cases for over a year. The high percentage of dregs tends to distort the realistic months of inventory here.

    When it comes to real estate I have never heard of an economic theory that says what goes up must come down. Utter nonsense, if you are waiting to buy Manhatten Island for a box of beads dont hold your breath, or for Malibu beachfront to be affordable for the average truck driver, won’t happen. In the short term will Victoria house prices readjust downwards? Quite possibly but I suspect that they are more likely to plateau. What we are not seeing is a frenzy of bidding wars and a return to a more normal environment of sells slightly under ask. Actual sale prices seem to be a bit higher than last year or a least not any lower.

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