Fear and loathing in Victoria

No I’m not talking about a pot fueled housing tour (although there’s an idea…), I want to discuss the impact of fear on the housing market.

If you’ve been tuned into the news, hardly a day goes by without a high profile warning about our national housing prices.   Obviously the focus is on Vancouver prices that amazingly seem to have returned to growth, and Toronto prices that increased 33% last year.  No matter how important we think we are in Victoria, on a national scale we’re about as interesting as Hamilton: just another town caught up in the maelstrom of a bigger bubble.

There is no doubt that various levels of government are hyper focused on the problem right now because the anger it is creating has the potential to unseat them from power.   So what happens if the legs get swept out from under the Toronto and Vancouver markets?  How might it affect us here in Victoria?

If a policy change is introduced it could take out foreign buyers or first timers or speculators.  But what if Vancouver and Toronto simply collapse under their own weight?  It won’t change the fundamentals in Victoria but it will radically alter market sentiment.   Suddenly the belief that housing only appreciates goes up in smoke.  Greed turns to fear.  And fear can have a powerful effect on the housing market.

We last saw this in 2008 during the financial crisis.  Despite the financial crisis not having a big effect on local employment, the market completely dried up as the double digit daily declines in the stock market hit the news.  In the end all that was left were those sellers that had no choice but to sell becoming ever more desperate to unload their houses in an environment that felt like the end of the world.   Over 8 months the median detached house lost some $70,000 (12%) of it’s value while the median condo lost $50,000 (16%).   

Of course it bounced back just as quickly as it dropped, once the market realized that nothing had actually changed in Victoria, and now mortgages could be had for half price.   This is as close as the housing market gets to a flash crash, and it played out over 18 months.  Plenty of time for a brave investor to recognize the opportunity and be greedy while others were fearful.

I believe that when Toronto and Vancouver turn downwards dramatically (I’ll avoid the word crash), it will be felt here in Victoria.   Will it be enough to change the rosy perception of housing as an investment for longer, or will it be another blip?  Will it be another opportunity for investors with foresight, or will it be a bull trap now that the world is weary of quantitative easing?   I only know it’ll be entertaining to watch.

Happy Easter everyone.

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166 thoughts on “Fear and loathing in Victoria

  1. Grace – thai Smile, Mekong River, Realm, Oh so yummy cafe are my favs thus far.

    Thanks for sharing, will stop by yummy next time @ QB.

  2. Bearkilla, it seems like that. We’re an hour north of Toronto and most people here work in Toronto. And we say “only” an hour. But there is an option of a commuter train though. Sure beats sitting in traffic. This year, prices have been driving more and more people further north. Prices have skyrocketed to the point that people are considering even buying further north of me due to bidding wars on homes that will most likely need another 100k of upgrades. Woukd these homes sell if they were listed at the price they sold for? I say no way. There is massive, never ending development of new homes that still can’t keep up the demand. Ridiculous.

  3. “Can someone here explain to me why home prices in Langford are much more affordable? Moving from Ontario.”

    Welcome to the south island. Here people think driving more than 10 minutes requires a lunch to be packed because it’s like the other side of the moon. Not kidding.

  4. “Can someone here explain to me why home prices in Langford are much more affordable? Moving from Ontario.”

    Because of the Coldwood Crawl. People sit in gas fumes for 45 minutes. After an accident on the highway, a friend told me they were trapped in Langford for 3 hours.
    http://www.cbc.ca/news/canada/british-columbia/victoria-traffic-colwood-crawl-1.3554151

    Another factor is trying to get out of Victoria. Reduced speed limits(40 km/h) on the main arteries and lots of construction have been causing bad traffic jams on Quadra, Cook, Bay, Pandora, and Blanshard.

  5. Hard to tell which is slower, sales or new listings. Leo will give us the stats soon. In south Victoria about 40% of the listings are at or above the 2 million mark and they seem to be frozen in time. (39 houses under 2 mil and 26 over 2 mil). I am keeping an eye out on the two on Dallas road over two mil because they are owned by a developer and he cant afford to keep them in inventory forever. Some of the over two mil are probably owned by people who dont have to move but would sell if you offer them a ridiculous price. Unless sales pick up in the higher end market it should be interesting to see if prices start to drop as we move into the summer.

  6. Can someone here explain to me why home prices in Langford are much more affordable? Moving from Ontario.

  7. “Ohhh…we’re all just a bit busy. We’ll be back.”
    Or they are all busy ducking and diving only 2 weeks to the tax deadline:)

  8. “This could be due to Easter weekend which may also explain the lack of attendance at open houses as well.”

    Didn’t stop anyone from stomping all over the Easter bunny last year with record sales. It’s looking like this bloated pig is seeing it’s last hurrah.

  9. Does St George Street really look like a million doller house to anybody? Something just seems not right here.

    I suspect it was flipped into the hands of a foreign buyer. Check out the website of the selling realtor https://tomdecosson.com/buying Purchased by client who likely hasn’t set foot in it… And possibly never will.

    Possibly a fine example of Speculators & Foreign Buyers working hand-in-hand driving prices up.

    Any wagers as to how long before it is relisted with the kitchen and bathroom renovated & an asking price of 1.4M?

  10. Ohhh…we’re all just a bit busy. We’ll be back.

    LF,
    You forgot to mention that HOCKEY PLAYOFFS have begun.

    No one’s been making spelling errors so Introvert has been qwiet

    Well my last post has a couple of typos

  11. Great summary Local Fool 🙂 Also Barrister probably passed out this weekend after seeing what happened to the woodwork at 1340 George.

  12. Does St George Street really look like a million doller house to anybody? Something just seems not right here.

  13. I noticed that Blog comments also seem to be cooling off, the number of entries this week has dropped significantly.

    Ohhh…we’re all just a bit busy. We’ll be back.

    Gwac-n-Hawk are ordering some mega kit from Canarmor and preparing for their latest round of hate. John Dollar had a nervous breakdown as his office just hired a bunch of ethically and professionally bankrupt millennials. Buggers, they’re all the same.

    No one’s been making spelling errors so Introvert has been qwiet, and Totoro has real people in her life that care about her, so she’s busy. Bearkilla was ordered by a judge to stand on the street corner wearing a sign that says, “I will learn to say things that have a purpose other than to be flippant and inflammatory”…it won’t help. Leo’s on vacation with a few small kids, so no free time there.

    Luke has just opened his own Tourism Victoria business (he’s discovered that we’ve now been discovered), and Vicbot and Dasmo are out making new friends. James Soper is looking to terminate me as we speak. He can’t be bargained with. He can’t be reasoned with. He doesn’t feel pity, or remorse, or fear. He absolutely will not stop – ever – until he runs me over with my car. Squish.

    db just went completely mad, ran off screaming and with reckless abandon. Who could say where. I hope she found her happy place. AG is doing whatever AG does, but it probably involves spending more money than I do. I was just doing major chores all weekend, but did have a competitive Easter egg hunt. I got the least of the bunch, and generally just failed. Typical. 🙁

  14. 1340 George St

    Literally paint and nice staging.

    Sadly they slopped white paint all over the beautiful woodwork and some floors upstaits rather than then refinishing them. Nothing updated for the archaic kitchen and I suspect the bathrooms as well (which aren’t even shown in the listing)

  15. Sounds like some cooling off is happening as per others similar experiences.

    Perhaps the state of the market is reflected in the HHV activity,
    I noticed that Blog comments also seem to be cooling off, the number of entries this week has dropped significantly. This could be due to Easter weekend which may also explain the lack of attendance at open houses as well.

  16. caveat emptor on April 12, 2017 at 11:04 pm
    1340 George St in Fairfield sold a couple months ago in February for $810,000. Relisted today for $968,000….

    Crazy if it goes for that much more. Very little upgrading done. Literally paint and nice staging. Great area though, aside from the neighbour that feeds the seagulls, crows, racoons, rats and any other wildlife that makes it onto her property.

    Sold for $1,085,000. There’s just not much out there in this price range right now…

  17. Has anyone noticed that there are no SFH listing in Fernwood? In fact, almost nothing has come on the market there this spring.

    And Oaklands has nearly nothing as well, outside of a couple houses on main roads and a couple asking >$1M. Even the ‘dregs’ in these hoods are gone.

    The sub-million market for houses still seems smoking hot, despite the apparent slowing you’re seeing in the higher end.

  18. Yes Barrister, I’ve noticed the extreme lack of SFH in Fernwood for the past many months.

    Speaking of Fernwood: Stage is great. Not afraid to use enough salt!

    Brasserie L’Ecole is another good one.

  19. Not many people know that Spinnakers is a B&B. They have 4 rooms. I make a point of eating there every time I go to Victoria. I love their Nut Brown Ale, it is to die for! Just one bottle and you start to get a buzz! I think it’s great they have the concession at the airport so one can imbide before the flight!

  20. Has anyone noticed that there are no SFH listing in Fernwood? In fact, almost nothing has come on the market there this spring.

    Grace: did you mean Spinakers out on Songhee?

  21. Well I am sure not too many here are interested in hearing about QB but…Thai Smile, Mekong River, Realm, Oh so yummy cafe are my favs thus far. Yes perhaps Sidney is a better comparison.

    I think I will return to Victoria when I am old..I am in my mid 50s. Medical,services are really lacking here.

    Naked Naturals is an awesome health food store..incredible,prices ( compared to say Whole Foods) and there are so many farmers markets around here.

    I have been to many Victoria restaurants…not many that I would call fabulous. For a consistent, well priced meal with great views we love is Soinakers. Worst service I have ever had was at Rebar.

  22. Could be there is a slow down because of the election call and people want to wait and see what results. So after May 9th and the Libs get reelected all hell will break out on the RE front and off it goes again. On the other hand if the NDP win, my guess there will be a definite cooling.

  23. I haven’t enjoyed the Pho at Phonomenal. Broth wasn’t right – ditto for Le Pho and Pho-ever since the ownership changed.

    Imo Victoria has more than enough selection to keep your average foodie type happy. Before Kuma opened up I’d have said good ramen was lacking, but that is about it. I also appreciate that I can get lots of different Asian and Indian ingredients in Chinatown and at Fairways.

    You might want to try Wah Lai Yuen in Chinatown if you like Chinese BBQ – not fancy but been pretty consistently good for 30 years.

  24. Walked by an open house in James Bay yesterday and was dead as heaven on a Saturday night. One looker and two cars, so one was the agent’s. Sounds like some cooling off is happening as per others similar experiences.

  25. There are reasonably good restaurants in Victoria, but compare to cities like Vancouver, Toronto, Edmonton, LA, SF, … I think that we are very limited, both on quality and price. We were out hiking for 3 hours yesterday, and wanted to eat burger afterwards but couldn’t get a good one (went to Big Wheel). Bin 4 reviews are not very good recently either …

    But we do like Phonomenal for pho, Lemongrass for thai

  26. anyone got any favourites here they’d recommend

    Blightys Bistro
    Green Leaf (pho)
    Il Terrazo
    OB Marina
    Bon Sushi
    Pagliaccis
    Olo
    Agrius
    Rebar
    Blue Fox (brunch)
    Baan Thai
    and Fujiya for take out

    I’ve heard Nubo is very good but have not been yet.

  27. Qualicum reminds me very much of Oak Bay… With the slow drivers and bad parking jobs included!

    Grace – To me QB is more like Sidney as a comparable down here. OB is far too close to Victoria, and therefore much more influenced by that urban proximity. However, you are probably right about the ‘grey elite’ factor (hopefully in OB not too many mistake the gas pedal for the brake! That happened lots during my time in QB). I wonder if anyone on this blog knows the stat that QB actually has the highest ‘investment’ income in Canada? I met many people from Victoria who had moved there to retire during my time there – but they came from everywhere. Actually, I know some people who moved there to retire from Victoria, but have now moved back here. Truth be told – I moved there partly to take care of my sweet old widowed mum who has now passed away, so I was able to move on to focus on my own life after that by coming to Victoria. She is still well known there as she made such an impact.

    Yes, QB is changing, for the better, as for restaurants – I’d go for Deez, one of the few places that’s slightly ‘happening’ with a more youthful crowd there. It’s right across from Fish Tales. Also, I know the owners of ‘Cockney Pride’ well – great home cooking place but not open on weekends, I wonder if they’re still there? People are very friendly there and it always strikes me the dichotomy between QB and surrounding areas. Step outside the town boundaries and it immediately changes to ‘red-neck / granola’ territory. I’ll never regret going there and it was an overall good experience. But, I’m now extraordinarily happy to be down here…

    As for restaurant scene in Victoria – holy cow, talk about being spoiled for choice! Yes, there are good restaurants in QB, but… Victoria has sooo many to choose from I don’t know if I’ll get through it all in my lifetime! And, many incredibly good ones I’ve discovered so far. I think the restaurant scene here in Vic is comparable to many much larger cities, anyone got any favourites here they’d recommend?

  28. I’m a bit fuzzy on the housing markets in 2008, but I seem to remember housing started cooling off in the spring then really started to slide in the fall. Could be a repeat?

  29. I stopped by a new open house this weekend. Only a couple of people coming through and one of them was a real estate agent. Not a scientific sampling but I was surprised that there were not more.

  30. I’m living in a crap box and it’s great. It will be bone chilling cold in the winter but it is light years above what we were in before.

  31. Best place to eat in Qualicum is “Fish Tales”
    Their battered fish is the best I’ve tasted anywhere, it is so flaky light!

  32. Grace, can you list a few good eats (and stops) @ Qualicum? Thanks

    We mostly eat at Coombs and Ladysmith bakery.

  33. I am not that old but yeah I would not have wanted to live here in my 30s although the demographics are slowly changing. The old Qualicum train station is now a cool centre for online tech businesses and many of the restaurants are being bought by young people. The restaurant scene up here is great! And now we have some money to enjoy them. Qualicum reminds me very much of Oak Bay… With the slow drivers and bad parking jobs included!

  34. (In fact I’m always amazed when some of them make millions of $ in stock options & they still don’t stop doing what they do every day)

    I know—that’s effed up.

  35. Luke, I guess it comes down to perspective.

    What you may call “worrying,” other people call “the logistics of everyday life.” We have colleagues in Vancouver & Asia that spend every day solving logistical problems created by political or business conflict. They get a lot of satisfaction/happiness out of solving those problems so we can all have computers or TVs or FitBits. They don’t have the luxury of choosing to ignore those conflicts, and they wouldn’t want to anyway.

    (In fact I’m always amazed when some of them make millions of $ in stock options & they still don’t stop doing what they do every day)

  36. Just met a young couple who are looking for another revenue property. Currently they live in a 500 sq. ft lower suite in their own triplex. Now there’s commitment!

  37. 1745 Rockland Ave. Presenting Sir Lyman Duff House. The Former residence of the Chief Justice of Canada’s Supreme Court. Offered for the 1st time in over 50 years. Designed by Victoria’s renowned architect Francis Rattenbury in 1898.

    This finally sold after 219 days for $1,763k. Just under the magic ‘$1.8m’ mark Barrister keeps mentioning. Very interesting house. They started at $2m

    Glad you like Qualicum, Grace. It is a great place to retire, has incredibly beautiful natural surroundings, you do get more for your money, and there’s lots to do with the retirement cohort. I just wasn’t ready for that yet in my 30’s.

    Obliviousness might make you ignorant & blissful for an evening. But every day, ignorance is just boring & depressing. Like drinking – it works sometimes, but if you do it all the time, it just makes you depressed.

    I disagree – being too engaged with what might go wrong in the world is what would make me depressed. I’m not completely oblivious, I do follow what’s going on (i.e. N.Korea’s missile test just failed) but I find worrying about things beyond my control depressing. Like, despite what happened in London recently, I’m still going to stand tall and proud and with a big smile on my face in front of Big Ben this fall… otherwise, they win…

  38. I just moved up Island after twenty years in Victoria. Two hour easy drive to,visit the city. It is not boring up here..it is quiet in a nice way.We have found some amazing restaurants..a Vietnamese, Thai, and vegetarian, hipster that rival anything in Victoria. Had a fabulous lunch at a lovely oceanfront restaurant in Qualicum the other day. Found my fav home interior store ever and the local bookstore is a slightly smaller Munros. The running and biking trials are amazing..a new one from Coombs to Parksville is incredible…way less busy or dangerous than the Galloping Goose. Don’t get me wrong I love Victoria but life up Island is pretty darn nice too. And we bought a gorgeous house for the cost of a tiny,old condo in the city. The Qualicum airport is a delight ( fantastic cafe) and with six flights to Vancouver a day international travel is easy.

  39. “People who live oblivious are much happier than those that worry all day long.”

    Disagree with this premise & conclusion.

    Worrying is not the same thing as being engaged in the world. When engineers/scientists develop & manufacture your Internet access, or iPhone or Android, they have to “care” & “ensure” that there’s not a war going on outside their windows or yours. They’re doing that from offices in Vancouver & Victoria, and working with real people in Korea, Taiwan, Singapore, India, etc. (making electronic components you use every day)

    Obliviousness might make you ignorant & blissful for an evening. But every day, ignorance is just boring & depressing. Like drinking – it works sometimes, but if you do it all the time, it just makes you depressed.

  40. Happy Easter all ! Hope you find inner peace like I have. Being a pompous homeowner isn’t the be all, end all in life.

    Inner peace from someone who tries to talk housing and their own town down on a blog all day long, virtually every day for ten years. Yeah, right. Reality is you have inner turmoil from selling out at the wrong time. Actually, you are quite selfish as you don’t want anyone else to come here to enjoy it. That’s self centred. Far from being like that, I actually care about meeting the challenges others face coming here and talking about ways to mitigate and resolve that. I am on here to share my joy about finding this utopia.

    This is the definition of a crap box for those who live in the bubble like Luke. Not a classic Oak Bay home by the marina.

    That is a crap box. But, that home by the marina is also nothing special. The bathrooms look awful and the kitchen is poorly laid out with cheap and old cabinets. It was built in 1925 (ok that can mean so many things), definitely nothing special but it is in a great location and while there are many apt. buildings nearby – without seeing it in person I’d have to think there are many things about it that is turning people off. And – $1.150k is not chump change. My def. of crap box is quite high, and many homes in Victoria qualify. Victoria and OB have a very old housing stock and that’s what makes it such a challenging place to find a good SFH.

  41. Luke – Hawk has good reasons for mentioning N Korea. Whether you care or not (sadly), world conflicts have effects on business and – in turn – real estate. Why don’t you read up on the history of why N Korea even exists (start with WWII & USSR). The US has funneled a lot of business & military interests into South Korea – this impacts US, China, Russia, etc – where a lot of investment & RE $ around the world are coming from.

    I care and/or worry about it on a certain level – but decided not to do that too much because there’s nothing I can do about it and it takes away from my enjoyment of day to day life. There’s much to worry about in the world, and in varying degrees, there always was. It’s not sad to put that in the background, it’s just that we have to do to get on with life. That’s why some people I know just ‘turn off the news’ and they are much happier for it. For instance, I’m taking a trip to Europe in the fall and if I worried too much I might not do that. And, we’d let ‘them’ win if we stopped living our day to day normal lives. I feel, it’s pointless to worry, as we could all die any day, for many reasons, or more likely, we’ll all be here and doing just fine for years and years to come. People who live oblivious are much happier than those that worry all day long.

    Luke, it is just a average commute for anyone from Toronto and a short commute if you are coming from L.A. The other side of the coin is that companies need to start paying their people better especially the banks. The simple fact is that the city has grown. Vancouver with all of its high rises is even less affordable but it sure does make the developers rich.

    In Toronto I’d bet the highways are better than the Malahat… but you are right about the time of commutes I guess. I’m just so happy my commute is only ten minutes 🙂 It makes for such a better quality of life. Also, you are quite correct that Vancouver has not planned well for it’s workers. Sad. I hope Victoria doesn’t head in the same direction and now that we appear poised to go through much change I hope our civic leaders/planners have more insight than those did in Vancouver. We can learn lessons from Van’s mistakes. You are also quite correct, companies need to start paying people better – many people having to scrape by on what companies pay compared to what things cost are finding it doesn’t match the way it used to.

  42. Happy Easter all ! Hope you find inner peace like I have. Being a pompous homeowner isn’t the be all, end all in life.

  43. “show me a price reduction on a home that isn’t a crap box… I bet you can’t.”

    I’ve posted too many nice ones to count but pumper Luke never wants to talk about them. Did you ever sign up for the Welcome Wagon lady job ? You’re missing your true calling.

    This is the definition of a crap box for those who live in the bubble like Luke. Not a classic Oak Bay home by the marina.

    http://www.mcleanrealestategroup.ca/property/168676814

  44. The old paradigm “they don’t make land anymore” seems to attest to SFD not just holding their value but in fact increasing in spite of the dire economic and unemployment situation here.
    Condo’s on the other hand are built anywhere, there is no shortage or location where they can be built so there is no diminishing land component and so their prices are sliding, down about 8% or $20,000 for the average condo from a year ago and I see the situation worsening.
    I imagine Victoria would respond similarly if there was a downturn or “bubble burst” in your market. SFD is king!

    If SFH are holding value in Calgary – and even increasing – what does that say about ‘land locked’ Victoria? It’s a no- brainer. Pretty safe bet. And, yes, mostly the only thing they’re building lots of right now in the core here is condo’s. Because, of course, they can’t build more SFH in the core because there isn’t any more land… I actually don’t know why anyone with half a brain wouldn’t be able to see this. But then, there’s always Westhills… (and I hear that’s even selling like hot cakes).

  45. Luke, it is just a average commute for anyone from Toronto and a short commute if you are coming from L.A. The other side of the coin is that companies need to start paying their people better especially the banks. The simple fact is that the city has grown. Vancouver with all of its high rises is even less affordable but it sure does make the developers rich.

  46. Luke – Hawk has good reasons for mentioning N Korea. Whether you care or not (sadly), world conflicts have effects on business and – in turn – real estate. Why don’t you read up on the history of why N Korea even exists (start with WWII & USSR). The US has funneled a lot of business & military interests into South Korea – this impacts US, China, Russia, etc – where a lot of investment & RE $ around the world are coming from.

    (note: we had to track things like geopolitical tensions & earthquake risk in our work because of the manufacturing our tech companies did in Asia)

    The complications are part of the great debate, humour, black comedy, and satire on this blog – all interesting to read.

    Anyway, HAPPY EASTER!

  47. Wandered through Chemainus on the way up island. Super nice town, stopped there before but never really wandered into town. Looks like SFHs starting around $350k. Had a nice wander down to the kid’s playground while the car charged and stopped by the bakery. Very pleasant, east coast feel.

    Someone where I work commutes to Victoria daily from Chemainus. Many more from Cowichan Valley. It’s quite true some people are ‘priced out’ of Victoria, but maybe some of them want to live up there for other reasons? Still it boggles my mind having to commute that far…which is why I think they need to work on more diverse types of housing near the core to enable some to stay. SFH will no longer be affordable for workers. And, I can tell you after talking to them – these people wretch at the thought of having to live in Langford (the only affordable place around here).

    Our daughter called it “grandpas world”. Thought that was quite fitting

    Your daughter must be very perceptive, because that’s extremely accurate. Having lived near Qualicum Beach for 8 years after Vancouver. I can tell you, besides outdoor activities, nothing but boredom and the oldest demographic in Canada. Most of the few young people who remained there are very insular and ‘red neck’. Victoria is the happy medium between that and Vancouver. It’s so refreshing being down here b/c most people seem ‘normal & friendly’. I learned my lesson.

    As for Hawk, some of your comments make no sense but that’s what I’d expect from someone who sold out at the bottom. N. Korea’s been creating problems for how long? Probably since you were middle aged… but who cares? Sitting around worrying about such things is futile. And, yes some crap boxes won’t sell – show me a price reduction on a home that isn’t a crap box… I bet you can’t.

  48. Is it time to sell that rental condo?

    Active listings are up this month by 8% so far.
    New Listings are also up by 11% this month
    Sales are flat so far from the month before.
    Average days to sell are up.
    The median and average prices are down so far this month from March.

    Add the uncertainty about the Federal Liberals and capital gains tax along with Christy getting the boot. It just might be prudent to cash in now. If after the next few months nothing comes out of the election or Trudeau’s need to find more cash then you can buy back in.

    A bird in the hand is worth two in the bush.

  49. Gwac, this article seems to reflect what we are seeing here in Victoria…a bit of a softening and buyers taking more of a wait and see position, especially in the higher priced homes. Much healthier overall. I have relatives selling in Langley who had to take a low-ish offer with concessions to fix some items on their property before the deal was finalized. The question is, are we in for a hard or a soft landing?

  50. Expect the Cowichan valley to get a lot younger and a lot hipper. This is where all the cool kids will be going since they are priced out of Victoria….

  51. In all seriousness, though, we visited Parksville (Rathtrevor) a few days ago, and the trip made me realize how “happening” and “white collar” Victoria is compared to everything else on the Island (which is good in my books).

    Our daughter called it “grandpas world”. Thought that was quite fitting

  52. [Edited. Boring insults are boring – admin]

    Dr Phil says, “Only boring people get bored.”

    Very pleasant, east coast feel.

    Like snow and hurricanes?

    In all seriousness, though, we visited Parksville (Rathtrevor) a few days ago, and the trip made me realize how “happening” and “white collar” Victoria is compared to everything else on the Island (which is good in my books).

    And when Vancouverites visit Victoria, they probably feel like Victorians do when Victorians visit Parksville or Chemainus.

  53. Hawk, too funny. Even the audio sounds like people’s reactions at an OH when they find out how many renos they’ll have to do for $1.5M.

  54. Wandered through Chemainus on the way up island. Super nice town, stopped there before but never really wandered into town. Looks like SFHs starting around $350k. Had a nice wander down to the kid’s playground while the car charged and stopped by the bakery. Very pleasant, east coast feel.

  55. Wow sounds pretty grim bears. Too bad your fantasy land is shit.
    [Edited. Boring insults are boring - admin]

  56. Hawk, too funny! thanks for the laugh. Too bad some bulls have nothing but vitriol where their senses of humour used to be.

  57. 2086 Marne St.
    Assessed at 2.1m.
    Sold for 3.3m.

    That’s a big number to pay for a waterfront view.

  58. I’ve noticed open houses this spring don’t come close to the mania of last spring. Most of the places I have seen so far have been pretty quiet. This market seems to be running out of steam.

  59. Open houses were empty today! I was the only one at several open houses. Most of them didn’t even have coffee tables either because they were poor people trying to get out of the market or speculator owned. People are trying desperately to get out while they can. Sell, sell, sell!

  60. It’s an absolute bloodbath out there for bears today. Open houses are so packed they had to turn people away. Offers being written on the coffee tables. Absolutely mad man. You bears are priced out forever.

  61. Calgary’s market is an interesting study for a market in duress. We essentially have three seperate markets, SFD, Condo and attached.
    The SFD is holding up well and actually is experiencing price increases. The % of monthly sales to listings is 62% with 2.2 MOI
    The condo market on the other hand has a 36% sales to listings with 6.5MOI
    The attached market is basically split in the middle between those values.
    The old paradigm “they don’t make land anymore” seems to attest to SFD not just holding their value but infact increasing inspite of the dire economic and unemployment situation here.
    Condo’s on the other hand are built anywhere, there is no shortage or location where they can be built so there is no diminishing land component and so their prices are sliding, down about 8% or $20,000 for the average condo from a year ago and I see the situation worsening.
    I imagine Victoria would respond similarly if there was a downturn or “bubble burst” in your market. SFD is king!

  62. Luke is in La La land. Everything is a crap box that would sell easily for $2 to $3 million in Vancouver. Most pathetic excuse maker on here.

    High prices scaring off workers moving here is signs of a bubble about to pop. Happened in 2008 too. Thanks for confirming.

    If you don’t think Trump is on a showdown with Kim Jong you have your head up your ass but that’s pretty obvious.

  63. Numbers,

    Pastrick called for a 47% crash in 2008 and blew that one so his track record sucks. He doesn’t break down the employment into the dominant low paying or temporary employment sectors such as building bike lanes, tourism, real estate related, part time jobs, and self employment. Any one of those can have a major impact when this market implodes.

    Actually, Hawk, many jobs in Victoria are highly paid full time work – like the shortage of trades workers, health care workers, and now government employers are now hiring. The employer where I work that is having trouble finding people is a high paying government services job with defined pension plan, benefits, full time, etc. The kind of job that traditionally supports families. But given Victoria’s tough housing market for families, I’d bet that is part of the problem for them of sourcing people. (and their vetting process is very thorough, to the point where only 12% of applicants make it). Maybe they have issues with the attitude of some millennials? Though I note they are hiring some.

    Let’s not forget the world is on the edge of WW3.

    Well this speaks volumes to a paranoid state of mind that I’m sorry you live in that. The world was almost annihilated a few times back in history but I think spending time sitting around worried about it when one can’t do anything about it is futile. Better stock up on guns, silver, and bitcoins I guess. At least there will be plenty of venison to eat in OB. Now… to get out and cut that lawn…

  64. Marco, careful with your HPO comments, we don’t want another report for conduct unbecoming of a realtor now do we 😉

    Happy Easter

  65. Prime Oak Bay slashed $50K at 2651 Currie Rd. I thought everyone wanted to live in Oak Bay down by the marina for half the price of Vancouver. Apparently not.

    Crap box! And – with apartment blocks surrounding it. Of course, not everything sells b/c not everything’s great, or sellable in any market. You’ll always find crap boxes that won’t sell and have to be reduced, even in hot markets. If anything, that’s the best time to try to sell your crap box, So you can keep finding these Hawk and I’ll keep identifying them as… CRAPBOX! It’s another dreg…

    Can’t say there are any foreign buyers making their presence here in Calgary. Maybe, because it snowed here yesterday!
    Victoria in my opinion has a very unique RE market. I absolutely believe retiring baby boomers are finally making their presence and folks this is just the beginning, so Victoria has a long and building demand which is going to make it tougher and tougher for local buyers. A unique characteristic of these BB buyers is that they are buying for the long haul, this is their dream retirement and they won’t want to move again. So all the homes they will be buying won’t be coming back onto the market till death do part so your market is just going to get tighter and tighter. Because it is the last home they will be buying if it meets all their requirements they won’t care if they pay more than they planned. Furthermore they will be paying cash so there won’t be any foreclosures or financial issues for these folks. Victoria is a destination for the BBs the most desired in the country. They are not interested in retiring to Van or Toronto so those markets are buoyed by entirely different circumstances and will react accordingly. Victoria going forward is clearly going to be the most stable and best long term market in Canada.

    Testify! 3RichardHaysom…that’s right on! It’s not just retiring baby boomers but younger working people like me. There is a ton of retirements happening where I work which is one of the largest employers in town, and so more working folks will continue to be needed to fill the void, and many are coming in from other places (such as myself, just one example – but I am constantly meeting others – some are even commuting over the Malahat). Actually, my employer is having trouble finding people (could be due to low affordability or vacancies here). So, clearly more diverse housing is needed as I’ve said before.

    Interesting Calgary has almost no foreign buyers I wonder what’s keeping the market there from diving big time then? My thoughts were if TO implements restrictions/taxes they could migrate there as well as here more, b/c what else in Canada is left? Halifax perhaps, which is almost identical in size to Victoria and has lots of uncanny similarities, but they find that far too of a backwater, and I guess the weather there is not great. Calgary is still somewhat attractive, with chinooks, good air links, and close to the Rockies. Well, guess I better get out and cut the lawn – for the third time this year!

  66. http://www.timescolonist.com/news/local/victoria-makes-it-easier-cheaper-to-build-garden-suites-1.15390609

    I love how this is being spread over the news/media/internet and not one mentioned that City of Victoria staff have decided that garden suites WILL REQUIRE the BC Housing owner-builder exam unless you want to hire a full fledge licenced builder and buy a warranty (very expensive in relation to size of project).

    Basically they removed one barrier (rezoning) and added another one no one is really aware of and no one bothers to mention it. Funny, as it will actually be more expensive to build a garden suite due to having to hire a licenced builder or be delayed by months in terms of studying for the exam.

  67. Numbers,

    Pastrick called for a 47% crash in 2008 and blew that one so his track record sucks. He doesn’t break down the employment into the dominant low paying or temporary employment sectors such as building bike lanes, tourism, real estate related, part time jobs, and self employment. Any one of those can have a major impact when this market implodes. Let’s not forget the world is on the edge of WW3.

  68. It’s troubling that the posts about the high price of housing continue to appear here. Did none of you notice that the NDP has solved the issue? Earlier in the week they announced that they have golden pixy dust which will stop ferry operating costs from rising. Would you not also expect them to sprinkle some of that over Greater Victoria at some point?

    It is also possible that they don’t actually have the pixy dust but are just using your great-grandchildren’s money to buy votes from the Great Unwashed but I don’t think that ever happened before.

  69. One of the problems is that we dont have reliable stats on the number of out of town buyers and what stats we do have dont show what they are buying houses or condos and most importantly in what price range. If the out of town buyers are mostly buying SFH in the upper price range then this has a different impact on the market than if they are buying mostly condos.

    My own feeling is that they are buying a disproportionate number of the upper price houses.

  70. Can’t say there are any foreign buyers making their presence here in Calgary. Maybe, because it snowed here yesterday!
    Victoria in my opinion has a very unique RE market. I absolutely believe retiring baby boomers are finally making their presence and folks this is just the beginning, so Victoria has a long and building demand which is going to make it tougher and tougher for local buyers. A unique characteristic of these BB buyers is that they are buying for the long haul, this is their dream retirement and they won’t want to move again. So all the homes they will be buying won’t be coming back onto the market till death do part so your market is just going to get tighter and tighter. Because it is the last home they will be buying if it meets all their requirements they won’t care if they pay more than they planned. Furthermore they will be paying cash so there won’t be any foreclosures or financial issues for these folks. Victoria is a destination for the BBs the most desired in the country. They are not interested in retiring to Van or Toronto so those markets are buoyed by entirely different circumstances and will react accordingly. Victoria going forward is clearly going to be the most stable and best long term market in Canada.

  71. Prime Oak Bay slashed $50K at 2651 Currie Rd. I thought everyone wanted to live in Oak Bay down by the marina for half the price of Vancouver. Apparently not.

  72. Luke – We are tiny, and desirable, and that’s why I think it’s by far the best place to be invested in real estate in Canada right now… but the bears can beg to differ Time will tell who’s right… In the end, the red line on my graph below tells the real story over the long term, and the fluctuating green line is the reality (markets do go up and down…but over the long term… up And, I’m pretty confident where Victoria’s SFH in the core is going from here…

    You sound exactly like everyone in Van a year ago… 🙂 Let’s just not forget that a few years ago, houses weren’t selling in Vic. Friends of mine all over the island had a really tough time selling their homes. Yes, Vic’s on a tear right now, and yes, real estate tends to go up over time (if you can wait out the downturns), but just because something’s super hot right now doesn’t mean it will continue to be super hot. Houses are being marked down all over Vancouver and the suburbs currently. Affordable stuff is selling, unaffordable stuff not so much. If Van gets more inventory coming online, it will further contract and that will pull Vancouver Island into a contraction as well. My 2 cents, feel free to disagree, and time will tell how this all turns out…

  73. Whether you think real estate armageddon is tomorrow, or we’re in a new paradigm with 2 million dollar bungalows coming right up, or you just come by to watch Hawk-n-Gwac stir it up – Happy Easter to all of you! 😀 😀 😀 😀

  74. Vicbot:

    To answer your question about old guys and houses; the answer is no. perhaps I have a genetic flaw but I have never given much of a crap about what other people think about me. Always amazed me that others seem to actually care.

    I am still mulling over Leo’s idea of bringing back crucifixions. How about a line of politicians planted in the middle of the bike lanes or on either side of the blue bridge.

  75. The HHV Easter spirit is more nailing people to crosses than forgiveness.

    That’s a good one, Leo.

  76. It’s Easter and you guys still can’t bring it upon yourselves to be kind to one another. oh man.

    The HHV Easter spirit is more nailing people to crosses than forgiveness. 🙂

  77. It is the classic, location, location, location.
    So for Victoria, areas near hospitals and the University will hold their values as will desirable communities like Oak Bay, Fairfied, James Bay. The further one gets from downtown the more susceptible there is for a price drop. Also very expensive communities i.e Uplands, Rockland may be somewhat susceptible in a major correction as there are few buyers for the very expensive homes in a recession and some of those “business types” may have over extended themselves or their businesses. Gordon Head would also likely fallback as builders would no longer be looking to buy up lots to subdivide.

    Well said 3RichardHaysom, I couldn’t agree more that the area’s closest to the core and beaches will hold their value best, and enjoy the biggest upside potential.

    Thought for the day: Has “owning a house” become the new “old man with sports car” syndrome – a mid-life crisis where you try to prove you have balls by riding around screaming “look at what I own”?

    Vicbot – I think it’s just an incredibly exciting time to be invested in this, one of the best performing (if not soon to be THE best performing) RE markets in Canada. Who wouldn’t (old or young?) be excited about that?! If the market ever starts behaving more normally, I know that I for one won’t be on this blog nearly as much, as it wouldn’t be so interesting to keep tabs on everything that’s going on… happy Easter!

  78. Thought for the day: Has “owning a house” become the new “old man with sports car” syndrome – a mid-life crisis where you try to prove you have balls by riding around screaming “look at what I own”? 🙂

    Anyway have a good Easter everybody.

  79. Well back in from the beautiful sunshine and now I have a couple comments to make… to answer Local Fool…

    Hard to me to say if Victoria is in an out-and-out bubble. I believe Vancouver is, as is Toronto. Victoria – don’t know. I would say mania-based inflation? I couldn’t really tell you what the different between that and a bubble is, and maybe it’s the same thing. I guess what I’m saying is the scale and degree of the bubble is less here, but I think it has the potential to suffer quite seriously if VanRE winds down. Personally, I think it’s just a spillover. Others think “Victoria has come of age”. On the latter, I’m sure people said that in 1981, too.

    I do not believe there are any fundamentals that justify Victoria RE prices, other than “it’s going up because it’s going up”. Powerful impact on psychology – but once you’ve climbed that wall of worry, how fast that collective greed can turn to fear…

    Personally I believe TO is in a bubble, and a large part of it driven by speculators – they will be in for a correction when the government’s there implement plans to reduce their bubble, which in the never ending fields of cookie cutter homes is obvious. Question for them is: how much will prices correct? I guess we will wait and see – but does it affect us? I don’t think much. Actually, if TO is really been driven by foreign buyers this may drive more of them to Calgary and Victoria (the two other only really desirable cities for foreigners)

    Vancouver – now this is more of a tough call. Driven largely by foreign buyers who find it ultra-desirable and are now finding ways around the new tax, the recent lull in prices could resume an upturn (as what happened in Hong Kong about a year after a 15% foreign tax was first introduced there). I don’t think much of a downturn will happen there either – as those invested won’t soon be giving up or in. I think it more likely they may just go flat for a while. What happens in Van has more of an influence on us than what happens in TO – but still not an overwhelming influence, as less than 1/5 of our buyers come from Van.

    As for Victoria – Here I go back to the mantra of how it’s such a small city, landlocked and unable to grow size wise virtually anywhere other than Langford. Virtually no one is leaving, except when they leave the planet, and it only takes a very small amount of growth and influence to make a difference here. (i.e. only 1% of 1% of people moving here from across Canada makes a difference when you only have around 1200 listings and a 0.5% vacancy rate on this small rocky outcropping of land). Why is no one listing? …Would you list when prices are rising so fast and furious? Why is no one leaving? …Is there anywhere to move to in Canada? I think the market is in somewhat of a state of paralysis here. This is quite unlike TO or even Van which are larger and have more room to grow and fluctuate. We are tiny, and desirable, and that’s why I think it’s by far the best place to be invested in real estate in Canada right now… but the bears can beg to differ 😉 Time will tell who’s right… 🙂 In the end, the red line on my graph below tells the real story over the long term, and the fluctuating green line is the reality (markets do go up and down…but over the long term… up 😉 And, I’m pretty confident where Victoria’s SFH in the core is going from here…

  80. It’s Easter and you guys still can’t bring it upon yourselves to be kind to one another. oh man.
    Happy Easter everyone.

  81. Bulls don’t think and just keep on running towards the red. You’ll get there bulls, you’ll get there.

  82. Great link, Hawk! Love the soundtrack!

    I’m happy for the bulls that they have made out like bandits but I’ll be happier that I set the priorities I did when it all falls apart.

  83. My job is to post little of value and just keep Hawk in check.

    That is an important job.

    (Hawk is right though, the next downturn…when it eventually happens..my bet is in the fall…will be significant.)

    We’ve heard that for years around here.

    Yes I do. But I have learned that there are just too many haters on this blog…

    I’m surprised Just Jack didn’t hit us with a YouTube of Taylor Swift’s Shake It Off.

  84. Good one Wolf. Just out and about and saw a lot more for sale signs than usual with no sold signs on them. The moment of truth is closer than the bulls could ever imagine in their narrow minded little world of greed. JT is coming round the bend to cool this off for good to lay one big egg on this epic bubble. 😉

  85. “Yes I do. But I have learned that there are just too many haters on this blog to present it in this type of forum. Better to present it to your peers and have it published and be paid for your work.”

    Agreed John, so much hate from what should be happy homeowners who have to spend all their days in anger as chart after chart clearly shows a “massive bubble of epic proportions” as Rosenberg calls it.

    If I did that as a homeowner I might just shoot myself, as they must suffer from depression from fear of what’s to come, or work within the real estate industry and will soon be out of work more than they are already with sales in decline. No regular joe homeowner would waste so much life on here for any other reason defending the obvious bloated debt pig.

    http://www.macleans.ca/economy/economicanalysis/canadas-housing-bubble-looks-disturbingly-familiar/

  86. @Gwac “Got to be tough and bitter to have missed the biggest $ gain real estate market in Victoria’s history because of a bad call.”

    How do you know I missed out? Maybe I lived and owned in Vancouver and recently sold to move to Victoria? Would that make my gains more or less than yours? Maybe I lived in Alberta during the oil boom in the last decade? Would those gains make me ‘bitter’? Your assertions are based on poor assumptions and lack of fact.

    It’s good however that you finally acknowledge that renting generally makes the owner rich and the renter poor. Guess we all finally know why you bought but tell everyone else to keep renting!

  87. @Gwac. I’m sure you will be fine in any downturn as we’ll be fine in any further upturn. ROI in the hot stock market on my down payment alone is by far outpacing real estate gains and rent. Gains that you’ll likely only ever see if you sell before a drop. I’ll just pour my liquid gains into real estate at that time. Win, win.

  88. Wolf and Hawk

    Any downturn I would be fine. Do not worry your pretty heads. In the meantime enjoy renting and making someone else rich.

    Got to be tough and bitter to have missed the biggest $ gain real estate market in Victoria’s history because of a bad call.

  89. @Michael. Much later in my opinion. Looks like Vancouver is in Hawk’s bull trap and Victoria lags shortly behind still on the rise and/or already at the peak. Denial and fear has already sprouted this spring.

    Gwac’s and AG’s children at a near-future Christmas:

  90. I’m waiting for Hawk to post another vicious Haiku poem as a rebuttal 🙂

    The problem is that real estate stats can be manipulated to create whatever message a person wants to give – unless you see the raw data yourself, it’s hard to believe anybody. That’s why I find Leo’s site so useful.

    eg., here’s some good info on how changes to medians & means can be interpreted in many ways:
    http://www.realestatemanitoba.com/phase1/unit3/session3_mean_median.htm

    So John’s interpretation is probably one option out of many. With the little amount of data I’ve seen, I agree it’s become harder to predict sale prices. When you look at price acceleration, assessments, ask vs sell, etc and this spring has been different from last year. Interesting times indeed.

  91. Where are we on that graph in Vic right now?

    Same place as Vancouver of course (we’re now well past our 80s-like resource & loonie collapse and thus rural to urban mass migration, similar demographics, Reagan/Trumponomics, and the list goes on……….)

    We’re nearing Hawk’s ‘first sell off’ in our 7-year upcycle. The tip-off is to watch for Toronto’s 1990 moment.

  92. The financial crisis felt like it had a significant affect on employment if like me you were “terminated” during that time (that’s the term that was actually used and not just a nod to Arnold and the new Apprentice show). I had just turned forty, married with two children 2 and 4 years old, and the primary earner of the family. Prior to the crisis I had lived and worked (in the tech sector) in Victoria always moving up along the way and expecting that would never change. Well it did and ultimately we hung onto our home by digging a bigger and bigger financial debt hole. At this point I’d say we are just back close to where we started. So all in all you could say the financial crisis cost us a decade. We made some big mistakes along the way that didn’t help with our recovery but we also learned some important lessons and gained some humility which was probably a good thing.

  93. Yes I do. But I have learned that there are just too many haters on this blog to present it in this type of forum.

    In other words, “No, I don’t.”

  94. Do you have some data on this?

    Yes I do. But I have learned that there are just too many haters on this blog to present it in this type of forum. Better to present it to your peers and have it published and be paid for your work.

  95. This market will keep going up until the day that Hawk capitulates and buys a $1.5m tear down in Fernwood. That will be the day to call a market top and sell everything you own

    HAWK, Please keep us informed when you do this, thanks!

  96. The trouble with carte blanche RE assessments/predictions is that the market can have huge variances within itself. So it really depends WHERE you buy within a specific market. Yes some parts of town may experience declines while other areas may hold their value or even appreciate, so depending where you own will determine your outcome. It is the classic, location, location, location.
    So for Victoria, areas near hospitals and the University will hold their values as will desirable communities like Oak Bay, Fairfied, James Bay. The further one gets from downtown the more susceptible there is for a price drop. Also very expensive communities i.e Uplands, Rockland may be somewhat susceptible in a major correction as there are few buyers for the very expensive homes in a recession and some of those “business types” may have over extended themselves or their businesses. Gordon Head would also likely fallback as builders would no longer be looking to buy up lots to subdivide.

  97. AG – that was hilarious! Until then…keep on carrying on. (Hawk is right though, the next downturn…when it eventually happens..my bet is in the fall…will be significant.)
    Heading outside to enjoy the sun.

  98. This market will keep going up until the day that Hawk capitulates and buys a $1.5m tear down in Fernwood. That will be the day to call a market top and sell everything you own.

  99. Hawk you kill me with the your denial. You will never be able to buy a sfh in the core again. How about a studio in a 50’s building over looking a wall. Start there and build some equity.

  100. Gwacked the chief bubble denier is paid to watch charts for a living which is a scary thought to say “we’re just getting started”. Otherwise he would have bought his lot weeks ago, not procrastinating like an old woman.

    He’ll always be able to tell his grandkids the same tale as this guy though:

    ” One day I was worth $7-million – a year later I owed $2-million.”

  101. My head just hurts looks at all this fundamental analysis. The charts say we are just getting started in Victoria. Enjoy the ride and get out there and buy Hawk.

  102. the spread between the mode, median and average in different market segments. In a well functioning market the spread is not very large between these indicators

    Do you have some data on this? I don’t understand why a well-functioning market would act in the way you indicate or even why a change in mode would be relevant, it should change in a rising market? Do you have some research that explains this? I’m not saying you are wrong, just that without more information it does not make any sense to me. I’d also be concerned about the reliability of the data if you are looking at a month instead of a longer time period.

    The market is now not only dysfunctional

    What exactly is the dysfunction you are identifying?

    fewer sales over many price ranges

    I don’t understand this statement. Do you mean in relation to inventory? Are you saying MOI is rising? Are you using your own measure or Leo’s for this? What is your time period?

    Last year the event was the Oil crisis in Alberta that drove house prices up on average in the city by $100,000 in a few weeks.

    Why would it be just the oil crises as opposed to a mix of the factors identified as fundamental to pricing? I don’t see why the Alberta oil situation would be the primary driver of prices in Victoria?

    I would have liked if he had written more about market stability and what factors one sees before a market correction.

    Looks like the main one he identified was an economic recession or other crises. He indicated that this has usually come without advance notice but is highly correlated with a housing recession and has an 80% chance of occurring.

    The next one is a policy induced change. Puts the chances at 5%. I don’t think you’d see this one by monitoring data until too late.

    The last one was an affordability squeeze, excess supply leading to a soft-landing. Put the chances at 15%. This one you would see as inventory rises without too much policy change or an economic crises of some kind. Right now inventory is still low.

    I don’t know that you can predict a correction from the data alone. I don’t think so though. Seems like the data matches in hindsight but the level of risk you can judge from reviewing the state of the fundamental factors? Likely why the crystal ball is not working for anyone here.

  103. Wolf you must be confused. I posted no charts. My job is to post little of value and just keep Hawk in check.

  104. GWAC:

    It is a nice day but my plans are to mess around in my wood working shop although my wife might drag me out to the garden for a couple of hours.

    Leo enjoy the holiday which you deserve.

    I totally agree that combining condos and SFH often provides some stats that dont reflect either very well. The two markets are related but far from identical.

  105. @Local Fool
    “Housing busts affect all sectors of the economy, and substantially…. That dynamic percolates throughout…”

    Yes, I agree that unfortunately a bust would affect some of those who aren’t involved in real estate in any way however, one could replace “busts” with “short term run-up” and your comment would hold equally true. Unfortunately it probably gets unpleasant for some no matter what happens from here on out.

    @Gwac
    The charts show exactly what I was saying: long-term trend is always up (i.e. Luke’s red line). Furthermore, the other cartoon charts are particularly damning to your view and supportive of mine. Obviously if they are in cartoon form then they must be true.

  106. You like that one too Local Fool? (he he)

    Well others seem to, or they like to hate it. Thanks for the tip!

    Hard to me to say if Victoria is in an out-and-out bubble. I believe Vancouver is, as is Toronto. Victoria – don’t know. I would say mania-based inflation? I couldn’t really tell you what the different between that and a bubble is, and maybe it’s the same thing. I guess what I’m saying is the scale and degree of the bubble is less here, but I think it has the potential to suffer quite seriously if VanRE winds down. Personally, I think it’s just a spillover. Others think “Victoria has come of age”. On the latter, I’m sure people said that in 1981, too.

    I do not believe there are any fundamentals that justify Victoria RE prices, other than “it’s going up because it’s going up”. Powerful impact on psychology – but once you’ve climbed that wall of worry, how fast that collective greed can turn to fear…

  107. Interesting presentation but it does come across that Helmut Pastrick is preaching to the choir. Hitting the points that will reinforce the audience’s preconceived opinions.

    I would have liked if he had written more about market stability and what factors one sees before a market correction. Most markets don’t correct without reason and not immediately. There will be precursors evident in the month to month data of an upcoming change in the market. The change can either be an upturn or downturn in prices.

    The most glaring change that has happened in Victoria over the last six months is the spread between the mode, median and average in different market segments. In a well functioning market the spread is not very large between these indicators. To the layman that means that they have a good idea of what most properties will sell for within a few percentage points. As the spread widens the market becomes increasingly dysfunctional and a prospective buyer now is guesstimating in a wide range. The buyer that could reasonably predict a sale price of $800,000 +/- 5 percent is now guessing that the property could sell at $700,000 or $800,000 or $900,000.

    That lower level of confidence in estimating what a property will sell for or what a prospective buyer should offer results in fewer buyers willing to take a chance and seasonally adjusted month to month sale volumes decline. The market is now not only dysfunctional but with fewer sales over many price ranges it is shallow with an increased risk of a correction. An event that would have little or no affect on the market when the market was stable now can now change prices significantly.

    Last year the event was the Oil crisis in Alberta that drove house prices up on average in the city by $100,000 in a few weeks. After a few months market prices for houses peaked as affordability became an issue and then condos began to increase in price as they are seen as an alternative to a house.

  108. You like that one too Local Fool? (he he)

    Where are we on that graph in Vic right now?

    Is Van at ‘Return to Normal’ right now? Is Toronto at ‘New Paradigm’? and Vic’s at… ??

    I’d say – Vic is at somewhere between ‘enthusiasm’ and ‘greed’. Except, unlike in TO, after ‘New Paradigm’ there might just be a mini ‘Bull trap’ before it just goes flat (if we just follow patterns of the past). Wonder what others think? (of course, we all know what Hawk thinks – yep – 1980’s all over again, the world isn’t any different now than it was then) 😉

  109. Interesting quote from Rudy Nielsen, president of the Niho Group, which puts out the Landcor report on how he learned his hard lessons of a bubble popping. Wait til the next recession with debt bombs at record levels, will be the MOAB’s. 😉

    “I think it’s the worst recession we have ever had,” says Mr. Nielsen. “I lost a lot of money in 1981. One day I was worth $7-million – a year later I owed $2-million. It was a rough recession. But with this one, people are saying it’s worse than ‘81 or ‘82.”

  110. Yes Gwhacked, you should go buy that lot today you told us you were on the hunt for. Pastrick told you there is no bubble. In 2008 he said the market was going to crash 47%, keep on buying tool.

    ‘Economist Helmut Pastrick was one of the forecasters from last fall who thought the situation would be more dire. Back in October, the outlook was a 30-per-cent decline in prices by the end of 2008, followed by another 17-per-cent decline in 2009. It was the kind of forecast that sent consumer confidence plummeting.

    “I thought it would be more severe than it appears to be,” says Mr. Pastrick, who is Chief Economist for Central 1 Credit Union, the umbrella organization for credit unions in B.C. and Ontario. Mr. Pastrick also analyzed the housing market for the Canada Mortgage and Housing Corporation for many years.

    “Certainly on the prices side, I thought it would be more severe,” he adds. “

  111. What a nice day to get out and look and buy a house.

    Hawk maybe you can get in your time machine and fix that big screwup of yours.

  112. Here’s another one… fun eh? Quite true, it doesn’t always go up but eventually it does! 🙂

  113. Luke/Hawk,

    Would either of you tell me how to post images such as you have?

    Local Fool – go to google images (or any image) find an image that you like – right click and go ‘copy image’ then paste…

    Make sure when in google images you clicked on the image first otherwise sometimes you will just get the ‘link’. You’ll be able to check it out before posting… hope that helps.

  114. Wow- Hawk – a whole two or three days of a few inches of snow this winter. Actually quite pleasant again, as it melted quick and made everything look pretty. A little reminder for prairie birds of what they left behind… 😉

    Here’s another sale today in hot South OB – only 3 days on market… listed for the first time in 50 years! Wow – wonder what they paid for it in 1967? Built in 1930 with a kitchen from… 1930. Toilet with huge tank probably from the 1980’s. And.. wallpaper!

    789 St. Patrick St. Listed and sold for bargain in that hood of $1,175,000

    This was a real fixer upper but looked like it may have had good bones. Good for those people who bought it for getting in while it was still… within reach?

    Have a great vacation Leo…

  115. Follow the green line Luke, that’s where it’s heading, way way down deep into the red valley. It’s 1981 all over again. So many catalysts about to pop this.

    Pastrick has always been a industry paid pumper with a bias. He probably wrote the same shit in his first report in 81. His chart on recessions clearly show the time pattern that it’s lining up for the next one. 😉

  116. For all the people mentioning the wetter than usual weather in March I found it fairly pleasant, and still much drier than my experience living in nearby Vancouver over 20 years, which is 4 x more expensive than Victoria… 😉 And over 2x wetter 🙂 Also, to note: Unlike Vancouver where the rain sits all day and doesn’t move – the rain in Victoria moves through rather quickly as there are no mountains to hold it up like there is in Vancouver.

    When I also compare it to my experience living in the UK for ten years, I’d also say – even during a colder and wetter winter for quite some time – much more pleasant than the UK which is often grey and overcast. 🙂 However, similarities appear here to the UK as it is often windy in both places and the weather changes rapidly here, much like it often does in the UK.

    On that graph below – Hawk sold at the bottom of the green line didn’t he (since he’s been here trying to talk down housing prices and turn people off Victoria for the last ten years – to no avail – nice try Hawk 😉

  117. That’s an instructive chart for Wolf, who claimed that real estate never goes down (yet refuses to buy himself).

  118. The graph appears again… Hawk’s dream. Will it ever happen in Victoria with our limited land base and growing population? Maybe, if the NDP get in… but even then a catastrophic crash is highly unlikely (it would likely just go flat).

    Here’s another one for you Hawk… follow the red line… Actually, since this graph was made the red line needs to be adjusted… upward 😉

  119. “Victorians have enjoyed a fairly gentle winter weather-wise”

    Actually it’s the second shittiest winter in a row. If I just moved here for the sunny warm winters I would be disappointed. Rained almost all last winter than previous years, and this winter set historical rain records and more snow than in many decades.

    Climate change may be shifting Victoria into new weather patterns.

    Dreary, rainy March weather breaks 126-year-old record in Victoria

    http://vancouverisland.ctvnews.ca/weather/dreary-rainy-march-weather-breaks-126-year-old-record-in-victoria-1.3357732

  120. you have to define the impact of the fundamentals

    Now you are talking about a crystal ball Leo. Which, btw, I wish you’d create 🙂

    He defines ALL of the following as fundamentals:

    Interest rates, financing conditions, household income, taxes, operating costs, population growth, demographics, consumer and builder confidence, new construction and development costs, regulations, land supply, density,geographic constraints, information and search costs, investment demand, expected price appreciation, opportunity cost, quality of life, non-monetary value of homeownership

    Assigning a weight to interrelated factors is something that has evaded me to date.

  121. Or this one showing the risk of max leverage like no other time in history ? Wow, this could get ugly, especially if Kim Jong or Trump pushes the button.

    Will lots of subject to’s for “deal void if any international missile attacks” be written into deals this weekend ? 😉

  122. Note I’m not saying Vancouver is in a bubble, I’m just saying his argument sucks.

    Much more interesting factors to explore would be the extent of foreign capital inflows and ownership rate. Those have had massive influences on Vancouver in the past but aren’t even looked at.

  123. He defines a bubble as:

    “[I]f the reason that the price is high today is only because investors believe that the selling price is high tomorrow – when ‘fundamental’ factors do not seem to justify such a price — then a bubble exists.”

    If you want to have some chance at a logical approach to this, you have to define the impact of the fundamentals. He talks about some of them like “Vancouver is land constrained” and “interest rates are low” but that doesn’t actually say anything about whether prices are justified or not.

    There are easily available affordability measures out there, he didn’t look at any of them. He floated the very interesting idea of a total cost measure of housing as a way to determine overvaluation, but then never looks at it. If he did he would have seen how wildly out of line Vancouver is with the past.

  124. Then we should separate out these variables when looking at other markets as well when trying to determine what is least affordable which is what he was looking at with this stat I think?

    Makes sense

  125. he didn’t address the key issue at stake which is if prices are out of line with fundamentals

    I think he does address the key issue, which to me is that this cannot continue forever, and points to an 80% chance of housing recession. He is just saying we aren’t there yet.

    I don’t know what you mean by fundamentals exactly, but maybe you are referring to carrying costs or price vs. income? Problem is that we know this is only one factor, not the only factor, although maybe the most important factor.

    I like his list of factors:

    Interest rates, financing conditions, household income, taxes, operating costs, population growth, demographics, consumer and builder confidence, new construction and development costs, regulations, land supply, density,geographic constraints, information and search costs, investment demand, expected price appreciation, opportunity cost, quality of life, non-monetary value of homeownership

    If 70% of folks have home equity that grows when the market does that can sustain some further growth than income does. Add in some foreign capital and population growth and all of a sudden supply is really limited and people believe there will be more price appreciation.

    Once the market turns though, perhaps through changes in interest rates affecting affordability or a drop in TO, price drops or stagnation will impact consumer and builder confidence, investment demand, expected price appreciation, and perceived opportunity costs.

  126. he’s identified an 80% chance of a housing recession

    Silly number, of course the chance of a housing price correction is 100% “at some point”.

    He’s identified affordability in his report

    He talked about affordability being a good measure (total cost) and then never actually looks at it. At one point he confuses affordability with price/income

  127. I thought the presentation was well done. Really like the list of housing price determinants.

    Except he didn’t address the key issue at stake which is if prices are out of line with fundamentals. He mixes up lots of different measures that don’t apply to Vancouver then concludes there is no problem.

    If the hypothesis is that prices are not out of line with fundamentals, then one would expect the presentation to actually show that this is the case, no?

    I get that there’s lots of graphs pointing upwards, but that’s not an actual argument.

  128. And median housing price in a market where half are condos is completely meaningless.

    Then we should separate out these variables when looking at other markets as well when trying to determine what is least affordable which is what he was looking at with this stat I think? The affordability rankings don’t, and they don’t look at per square foot cost either. I’d say in all of the highest priced big city markets you’ve got loads of condos and in some, like Hong Kong, almost everyone lives in a condo.

  129. Aside from the last point, this is essentially affordability.

    I don’t agree that the factors can be separated out like that Leo. He’s identified affordability in his report but if you look at housing price determinant factors they all act in concert. I don’t think he is saying prices will always go up, he’s identified an 80% chance of a housing recession, just that right now the factors support more appreciation which creates higher LOC and greater confidence in the market.

    As I read it he is saying this won’t last forever, but it is not done yet.

  130. And median housing price in a market where half are condos is completely meaningless. The median either ends up being a hugely expensive condo or a total dump of a house. Neither are representative

  131. I thought the presentation was well done. Really like the list of housing price determinants.

    I also agree with the prediction that there is an 80% chance of a housing recession, just not anytime right quick.

  132. Judging from what is happening around us, our house went up by 60% in two years. Hardly a logical jump after 5 years of stagnation. Which, I might add, was stagnation at a peak from a previous run up. It’s the equivalent of prices climbing 13%/year over those five years when rates haven’t moved nor have wages. The run up after the long flat of the 90’s was different. Rates halved, wages went up, it was cheaper to buy than to rent….

  133. From the presentation:

    Housing valuation metrics:
    Price-to-income and price-to-rent ratios are inappropriate and inadequate measures. The price-to-income ratio is an affordability measure. Housing is not an investment asset like equities and the price-to-rent ratio is not equivalent to price-earnings ratios that mean revert over time.

    Agreed. Price/income and price/rent is wildly misused

    A more appropriate housing valuation method is a well-specified and data complete user-cost method of owner-occupied housing that includes opportunity cost and expected price appreciation.

    Aside from the last point, this is essentially affordability. So why does he never look at affordability measures which are way off the charts for Vancouver? It sounds more like he has a pre-conceived conclusion and only looked at data that supports continued price appreciation.

    He talks about a bubble being when prices are only driven by expectations of future appreciation rather than fundamentals, but then doesn’t talk about fundamentals.

  134. Van and rest of Canada went up for 8 years or more while Victoria went down and flat. So if Toronto cools and van already cooled 20% or more alreasy since last year, you are saying it’s an insta drop here?

    Fear is not about logic. Market sentiment can sour despite no changes to the fundamentals

    My house is up maybe 12% in the last 9 year in value here, which is below inflation.

    Unless it’s a leasehold or an old condo with issues that is hardly possible. Have you kept up with what has happened in the market lately?

  135. RE never make much sense. In theory, the land in Richmond should be worthless, one big overdue earthquake will sink it into the ocean. Yet, they are building high rise near the airport……

    Esquimalt should be the best location, next to DT, close to Hwy1, surrounded by the water, old town charm….

    The land near Tod house @ Estevan was once worth much more than ocean front, no one wants to live near the water, too cold and stormy in the winter.

    Many of Hawk posts do make good sense too, however, observation skills is equally important. Living in the echo chamber blinded him from seeing what is going on outside his thought bubble.

  136. Victorians have enjoyed a fairly gentle winter weather-wise, but Canadians in other parts of the nation have endured several long and punishing winters in a row. This is a significant market consideration that will probably continue to support local real estate demand.

    Left-leaning politics are another consideration. Alberta politics seem comparatively unstable after a few years of economic crunch under NDP government, with loss of jobs and increase in debt. To a retiree, stable social programs have special allure. It’s ironic that entitlement culture can be seen to punish those who feel most deserving: new entrants to the market.

    +1 to the blogger for proper usage of ‘affect.’ I perceive something in common between people who use ‘impact’ as a verb and those who pluck legs off spiders.

  137. Van and rest of Canada went up for 8 years or more while Victoria went down and flat.

    So if Toronto cools and van already cooled 20% or more alreasy since last year, you are saying it’s an insta drop here?

    Toronto is a 5-6 day drive from here. Totally different world. Has anyone been to TO lately? The economy is incredibly good there and it is hopping busy! There have been front page warnings about Toronto overbuilding condos for decades, and it turns out they didn’t even build close to enough

    My house is up maybe 12% in the last 9 year in value here, which is below inflation.

    Please don’t turn this blog into a fud and hype post place. Bubbles are not “one thing”

  138. Look forward to enjoying the ride down in the communities that surround.

    A bust that serious would ultimately be a good thing, but not in the short or medium term. Housing busts affect all sectors of the economy, and substantially. Many people would be out of a job – and I don’t mean just realtors or people otherwise in the FIRE club. That dynamic percolates throughout…

  139. Vancouver’s in a dead cat bounce. Look forward to enjoying the ride down in the communities that surround.

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