April 18 Market Update

Weekly stats update courtesy of the VREB.

April 2017
Apr
 2016
Wk 1 Wk 2 Wk 3 Wk 4
Unconditional Sales 255 464
1286
New Listings 419 681
1590
Active Listings 1661 1652
2594
Sales to New Listings  61% 68%
81%
Sales Projection 990 875
Months of Inventory

2.0

A significant dip in the sales rate last week, that’s probably due to the long weekend, which in a government town is 4 days long so we only really had 4 business days in there.   I would expect quite a few sales to pile up today.   We are approaching a third fewer sales than this time last year, which along with the approximately third less inventory makes conditions quite similar to last year.

Inventory is down from last week again.  Inventory gains were very low last year as well, but the difference was that sales were 32% higher and we had some more properties on the market to cushion the blow.  This year we will be moving into the fall market with essentially nothing for sale.   Compared to a more normal year like 2015, we have added only about a quarter as many properties to the market in the spring season as we usually do.



The Toronto situation is coming to a head with half of the stories on the Financial Post speculating on what will happen or marvelling at the price gains.   The industry is getting antsy, so you know the government intervention should be good.

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339 thoughts on “April 18 Market Update

  1. @totoro
    “appreciating at 50k a year tax-free on your initial ex. 120k investment”

    Some people beat that on the stock market, some even in their TFSA. Your argument also assumes that house prices and stock prices both go up. Either could go down. You seem to forget that stocks are liquid and you can cash out at highs and buy at lows much more frequently, amplifying gains.

  2. My point is that your ROI with the capital gains tax exemption has made the a primary residence a better investment in Victoria than the stock market

    From a net worth generation perspective yes. But that money isn’t necessarily useful. You get utility of a residence for it. After that you get only more equity that does nothing but provide some security and brings a glint to your heirs’ eyes at the thought of you keeling over.
    So for a true apples to apples comparison of investments you need to consider the 3% interest you will pay to actually access that equity via a HELOC to make it comparable to a stock market investment you can liquidate and spend.

    Also new post: https://househuntvictoria.ca/2017/04/24/taxation-without-representation/

  3. Victoria’s debt bomb is like every other Canadian city. Those who make the most of their wealthy “appearances” are the most likely to be drowning debt while they fake all their friends and family out that they are living the good life.

    Like my friend’s credit counselor buddy who said 70% of Victoria is in hock up to their eyeballs. AKA “The dirty little secret.”

    Drowning in debt is the new normal in Canada

    An expert in consumer insolvency describes what it’s like on the front lines of Canada’s worsening household debt crisis

    “The bloated debt loads of Canadian households has become a pervasive topic in media. But for all the attention the subject has received, it’s a safe bet that most people still cling to very clichéd notions that only so-called “deadbeats” ever hit the debt wall. Nothing could be further from the truth. The reality is Canadians would be shocked if they could peer into the private financial lives of many of their closest neighbours and friends.

    As a licensed insolvency trustee firm, our practice is on the front lines of Canada’s household debt binge and the bad personal finance habits that ensnare so many people. And what we see every day is that the majority of those grappling with serious debt trouble are the most typical individuals and families you could imagine.”

    http://www.macleans.ca/news/canada/drowning-in-debt-is-the-new-normal-in-canada/

  4. “Bearkilla’s response:”

    Local Fool wins the internets and redeems himself from earlier cyclist threatening jests 🙂

  5. Totoro,

    I’m actually kind of disappointed in looking at the construct of your rebuttal. You’re inserting quotes that don’t exist, or chopping off half of them and then using the neutered quote to argue accordingly. I think the tactic is discourteous and disingenuous.

    that granting of beneficial interest still occurs at Her Majesty’s pleasure or discretion. The only issue is whether the legal test for title has been met.

    The proper quote is,

    that granting of beneficial interest still occurs at Her Majesty’s pleasure.

    And, this is correct. If the Crown requires the land, they can take it just as they can take your land. However, there are indeed checks and balances to this, which differ according to circumstance. That’s why it’s a constitutional monarchy, not an absolute one.

    Title is not at the pleasure of the crown, it can be granted by a court.

    No. A court cannot grant any kind of title any more than you or I can. A court can make a determination as to whether a test proving Aboriginal Title has been met, within the bounds of the Constitution. The Crown then responds, whether that is the issuance of title, a change in legislation, an appeal, or a S33 override.

    “The Crown ultimately remains unfettered”

    Use my entire quote, Totoro. Don’t chop off half of it, altering its context so that you may issue a rebuttal. You could have saved yourself a lot of time.

    While Aboriginal title is held communally, the rights are not just governance rights. The rights include…

    That’s all beneficial interest. Basically, you’ve managed to essentially agree with me, but arbitrarily frame it as an argument for the sake of saying “you’re wrong”.

    I love it when people poke holes in my stuff. I have a lot to learn. But I’d ask for the courtesy of having you do so legitimately. You’re more than capable of it.

  6. Well it’s a lovely day here in Calgary…ah wait a minute..is it? no, it’s freaking snowing! For the love of no it can’t be! Oh God it’s almost May and it is xxxx snowing! Oh please Lord deliver us! Is it any wonder there is no housing crisis here, no foreign investors, no flippers, no aweful investors.. starting to sound like paradise! What you need Vic and Van to get rid of all your problems is SNOW SNOW SNOW! Cone and get it! It’s yours for the taking….love you guys!

  7. My point is that your ROI with the capital gains tax exemption has made the a primary residence a better investment in Victoria than the stock market – they are not equal in the end. People forget about the leverage and the exemption when comparing.

    The tax difference is also not insignificant on its own either if you are investing in taxable accounts or tax deferred accounts like RRSPs when you do start to withdraw. And RRSPs will get converted to a RRIF at 71.

    For someone who retires early, like you may do, you can lower your tax rate but probably not eliminate it. If you are taking 25k a year each you’ll each pay about $2500 in tax assuming no other income. Someone withdrawing 50k a year would pay $8200 a year.

    I agree the TFSA withdrawals are equal tax wise – better because you don’t have to sell your house – just that the lack of leverage makes them an inferior investment to a home (at least to date) such as yours which has been appreciating at 50k a year tax-free on your initial ex. 120k investment.

    I know you don’t look at your house as an investment so maybe it is moot for you anyway if you stay there forever.

  8. Until you add in the leverage provided by a mortgage

    What does that have to do with capital gains taxes?

  9. I doubt it has a huge effect in the end.

    Until you add in the leverage provided by a mortgage. Very significant difference, especially in the first ten years. After the leverage kick-start the magic of compound interest is also exponentially greater as a result. If you are buying for cash your returns will be lower.

    that granting of beneficial interest still occurs at Her Majesty’s pleasure or discretion. The only issue is whether the legal test for title has been met.

    While you made me laugh Local Fool your analysis is not quite correct here. Title is not at the pleasure of the crown, it can be granted by a court. There is a legal test and it is not discretionary. The issue is proof of title and BC has been loathe to grant title unless sued even where there is legal proof.

    The Crown ultimately remains unfettered

    Not unless they want to be sued.

    While Aboriginal title is held communally, the rights are not just governance rights. The rights include the right to decide how the land will be used; to enjoy, occupy and possess the land; and to proactively use and manage the land, including its natural resources. Rights somewhat greater than fee simple and more like BC’s rights over Crown lands.

    The Crown can only override Aboriginal title in the public interest where:
    1.the Crown has carried out consultation and accommodation;
    2.the Crown’s actions are supported by a compelling and substantial objective; and
    3.the Crown’s action are consistent with its fiduciary obligation to the Aboriginal body in question.

    I would not call that “unfettered” in any way. I would call the process for overriding very similar to what is required to expropriate land (consultation (more than for expropriation), accommodation (permanent alienation usually requires fair market value), and public purpose objective).

  10. Ratio decidendi is correct. The “reasons” underpinning a legal decision.

    Aboriginal Title was the “very limited circumstance” I was referring to earlier. On Tsilhqot’in Lands, the community (not an individual) may be granted a beneficial interest in those lands (most notably, an element of governance – something that fee simple title cannot do). However, that granting of beneficial interest still occurs at Her Majesty’s pleasure. The Crown ultimately remains unfettered, although it introduces some new checks and balances. 😛

  11. By the way, Introvert, are you slipping? Shouldn’t it be “ratio decidendi” in LF’s post?
    (which I discovered through my Googling prowess)

  12. This is way too often ignored in rent (and invest) vs buy analysis.

    Good point.. I guess the tricky part is calculating how much difference it actually makes. You can stash 18% of salary + $5500/year into tax deferred / tax free savings accounts. For someone making $100k/year that is a savings rate of 37% of take home so many people won’t even need to hit taxable accounts.

    Then of the taxable returns, you don’t trigger capital gains unless you sell so again most people won’t see any most of the time. Most income over their investment lifetime will come from dividends until they start drawing down.

    I doubt it has a huge effect in the end.

  13. Another thing I stupidly ignored for too long is that the primary residence capital gains exemption swings the scale towards putting your spare “investment” capital into a residence as opposed to the stock market.

    This is way too often ignored in rent (and invest) vs buy analysis.

  14. I recommend you read this Supreme Court of Canada case: https://scc-csc.lexum.com/scc-csc/scc-csc/en/item/14246/index.do

    Bearkilla’s response:

    In light of the particulars of the Tsilhqot’in case and the concluding ratio decendi, I have come to understand that my comments were not only ill informed, but needlessly incendiary.

    To wit, my comments writ large have demonstrated an earnestness toward my need to learn about the world around me, and perhaps there is value in considering the scope and depth of my thoughts before speaking as a blackguard or from juvenile impulse. To date, I have not had the introspection to even realize this elementary principle.

    Learning from this experience, I will take it upon myself to explore and appreciate the complex social and economic history that forms the tapestry of our national identity, and appreciate how my own life and identity can better fit in with the community and national fabric in which we all live.

    Thank you Totoro, for enabling this important first step in my growth.

  15. We found the “cost” of rent to be much higher than what it appeared to be on paper:

    -had to live with numerous deficits to the property that we would have fixed if we owned it
    -couldn’t customize the living space long-term.
    -had to live with “neighbours” who lived in the downstairs units of the house we were renting in (we rented the top floor). You could hear them arguing, and when they were cooking the smell of spices permeated our home.
    -we had to endure a weird slave-master relationship with our landlords, which I feel is probably unavoidable unless you’re renting from a corporation or an unusually selfless and benevolent landlord. I’m an adult, I don’t want to be scrutinized, I don’t want somebody holding a deposit over my head, I don’t want someone scheduling showings of the unit on major holidays because the contract says they have that right, etc.

    The feeling of control and autonomy I have owning my own house is worth a low four-digit sum to me every month.

    We had enough money to buy our own place (actually multiple places), but we were renting because we weren’t sure what our plans were going to be the next few years. Once that solidified, we bought; actually, we bought slightly before things solidified, but that was because the market had began running away, we reasoned that we could rent the house out if we had to, and renting really really sucked.

    Another thing I stupidly ignored for too long is that the primary residence capital gains exemption swings the scale towards putting your spare “investment” capital into a residence as opposed to the stock market. And I say this as someone who had all his dough in the stock market and was renting. A second property is a different story because of the capital gains treatment. If I had to bet on it I’d bet you’d come out ahead by owning your home in Victoria for 30 years versus renting and investing your savings in the stock market for the same length of time.

  16. Thanks for sharing, Janney, interesting how many changes you experienced. Yes after Expo 86, the different areas of Metro Van started planning neighbourhoods based more on community centres (often involving Skytrain routes). Kits & Kerrisdale always had more of a mix of building types, but they started doing the same things in the North Van, North Burnaby, New West, etc.

    Funny, the only issue was that they thought everyone would both “live & work” around these community centres, but most people had to go wherever their jobs were, which meant anywhere in Metro Van, which meant more traffic jams on roads & bridges everywhere.

    So they’re still trying to solve the traffic problems & pollution (maybe with better rapid transit or self-driving electric vehicles!) Crazy RE prices have driven some people out. Hope Victoria learns from all that.

  17. @Jamiekat “Does anyone know what 34 Armine Place sold for?”

    Listed and sold for $850K (under assessed value).

  18. @Luke “wants to give Hawk a 133rd try to post that same old graph yet again (Hawk’s dream graph that will never come true for SFH in the core).”

    Personally the only time I’d use the word ‘never’ would be to say that I’d never use the word never. The same was said about housing in the U.S. in the years leading up to their crash. What’s that quote by Mark Twain in the introduction of the Big Short: “It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.”

  19. The next CMHC quarterly should be out soon. I don’t expect its sentiment will have changed much from the last one; in fact it may be louder. I’ll be curious to read it.

  20. Leo

    My screwup. Seems that popped up in my search for this site and I assumed it was new. Sorry to Hawk also.

  21. Nope the conqueror owns the land that’s how it always works. We are not on anyone else’s land other than Canada’s.

  22. @ Vicbot – your question “Where did you live for 45 years in Vancouver” really got me pondering how everything changes.

    Grew up in the 50′ & 60’s in Southeast Vancouver (Victoria & 49th.). Very quiet in those days.

    Kitsilano in the 70’s – I loved the old architecture & mature trees & of course the beach. I was young, on my own for the first time & the demographic was a real good fit.

    Did a stint renting in the outskirsts of Shaughessy – not too shabby.

    West End in the early 80’s – Bute & Davie – ugly-era skyscrapers – soul-less to me.

    Off to the Commercial Drive Neighbourhood in the late 80’s, early 90’s – it was such a strong multicultural community, truly a peak time in my life & it remains a model that inspires my current efforts in community-building here in Victoria.

    Then back to the family home in Southeast Vancouver. What was a clean, working class neighbourhood while growing up had become a dangerous & very dirty area by the 1990’s. (We would find so many needles when mowing the lawn – junkies just tossing them onto our front lawn as they went by.) Traffic everywhere had become hellish.

    It became a dream to move to Victoria & find some peace – realized in 1995 when I bought my house here in the North Jubilee neighbourhood (the little neighbourhood no one EVER mentions on HHV).

    A decade later, in 2005 I began 5 years of a commuting lifestyle – weekends here & working in Vancouver M-F. This time was perfection, I felt – living high in the sky in Yaletown. Yaletown hadn’t been developed when I had lived in Vancouver before so it was like a completely new city in so many ways. I maintain that the reason for such a positive experience in the city I had once loathed & had to escape from was because of the smart design of Yaletown. So central & Pacific Blvd. made it easy to get around a certain core from Commercial Drive & Main Street to Point Grey & everything in-between over the Bridges.

    Finally, In 2010 I had to move back to Victoria full time to care for my aging father. I was very unhappy to have to give up my big city lifestyle then but time does change everything – I call it my “Dorothy Experience”. My opinion these days is that Victoria is quite simply a paradise & I am very, very lucky to call it home !!!

    Sorry for the long personal story but it is interesting how things change & how the qualities of a neighbourhood can affect one’s whole being & whole experience really. How will Victoria change? The energy of change here is so strong these days – an intensity is building. I’m good with it (so far.) I love that Victoria is becoming more multi-cultural.

  23. “Under new immigration criteria they wouldn’t qualify to come to Canada anymore.”

    Good point Marko. Times have changed. People nowadays need more qualifications for the same opportunities that were available to previous generations (this applies to immigrants and young Canadians in my opinion). Thus, the need to keep housing affordable or opportunities will further diminish for future generations.

  24. The other elephant in the SFH is our immigration policy, highest in the world per capita I believe.

    I keep bringing up immigration to the NIMBY crowd but no one ever replies…..have a problem with the huge tower going up downtown? Write to Trudeau.

    It is not just the number of immigrants but the type of immigrants too. I spend a lot of my time on Croatian emigration forums and I’ll give you a here is an example of a family moving from Croatia to Victoria approx. two months ago.

    Early 30s, 4 year old kid, moved here from Croatia to work at an IT company as a computer programmer specializing in apps. Both wife and husband speak perfect English. Renting a condo at Dockside Green. This is the type of immigrant that within 3-4 years is already in a position to buy a condo and within 7-10 years looking at a SFH.

    Compare that with my parents who moved here in the mid 1990s and my father was working as a stone mason and my mom as a housekeeper. My dad spoke some English on arrival and my mom spoke no English. Under new immigration criteria they wouldn’t qualify to come to Canada anymore.

  25. It’s not worth being house poor, and if you are, you will come to hate your four walls faster than…

    As a universal statement, that is debatable. For you, however, it could be true. We were a bit house poor in the beginning, I’ll admit. But our incomes grew, and the 40%+ gain in our house value means it turned out to have been a great decision (to buy and be a little house poor at first, that is).

    Yep. What’s more important, freedom or a house? If the latter will impede the former, I’d choose freedom every time.

    The latter can increase the former, if, say, one makes a boatload of money on the latter, which has happened to people a time or two in this town.

    VICBOT;

    Deep breaths, Introvert. Deep breaths.

    You don’t own land in Canada either, you only own an interest in the land.

    The Indigenous people own much of the land, and we squat on it. We’re now celebrating 150 years of our boot on their throat.

  26. You don’t own land in Canada either, you only own an interest in the land.

    I see this point of confusion in my line of work absolutely all the time. Folks buying or otherwise acquiring property in Canada are granted fee simple title to land, at the pleasure of Her Majesty. This is distinct from allodial title, which except in very limited circumstances, rests entirely with the Crown.

    If you compare our property interest regime with a place like China – in some sense they’re similar in that the head of state holds allodial title, but in practical application, it’s of little significance here. You’re not going to see, as a general principle, heads of state in a western nation usurp private property unless doing so is part of a compelling national interest.

    A communist nation on the other hand…are you into Falun Gong? No property for you…

  27. Leo, that still doesn’t change the fact that under Chinese property law, you can only “lease” the land. In Canada you can “own” or “lease” it.

    That’s a distinct difference that explains why RE in places like Canada, US, Australia, NZ, UK, is so attractive.

  28. Numbers hack, remember there’s a complication with Chinese property that people cannot “own” the land – they only “lease” it for periods like 70 years.

    But the gov’t is currently drafting a law that would extend the leases (for a fee) unconditionally (people thought the fees might be 1/3 the value of the property, but new laws might make them lower)

    https://www.loc.gov/law/help/real-property-law/china.php
    “Individuals cannot privately own land in China but may obtain transferrable land-use rights for a number of years for a fee. Currently, the maximum term for urban land-use rights granted for residential purposes is seventy years. In addition, individuals can privately own residential houses and apartments on the land (“home ownership”), although not the land on which the buildings are situated.”

    https://www.forbes.com/sites/sarahsu/2017/03/21/good-news-for-chinese-homeowners-premier-li-offers-some-clarity-on-land-leases/#57909d727b4a

    Agree that there’s much more to life than property though 🙂

  29. If a person measures their success by how much money they are worth (e.g. how much there house is worth) – which they shouldn’t…

    Then LUKE, methinks your worth is what they call a “rounding error” when compared to others in the neighbourhood.

    Oh that is a little pretentious…I am starting to sound like…

  30. Must be time for a new topic?

    “Did you know that earth’s shape is not technically a sphere? It’s an oblate spheroid, due to earth’s rotation flattening the poles. But don’t call the phenomenon “oblation”, since that word means something else.”

    And that is why Mt Chimborazo measured from the centre of the Earth is actually the tallest mountain on Earth.

    VICBOT; Your description is the Canada I want to live in.

  31. Clarification
    1/ can’t assist a “know it all” who can’t simply cannot google foreigner buying home in China
    2/ amazed to hear and discover about how wonderful his “new” neighbourhood is from a family that has lived there for many generations.
    3/ even more amazed how this new crop of occupants in the hood views “others” who don’t live there.

    Now I understand why we let our hedges grow taller and taller in front of our house… 🙂

    Sorry, that was not directed at the well traveled, well educated, and definitely well informed…Luke

  32. The other elephant in the SFH is our immigration policy, highest in the world per capita I believe.

    Australia, with a similar RE problem, is tightening things.

    If the foreigner tax doesn’t achieve its objectives, does this become a target?

  33. Correction on previous post: Numbers hack didn’t provide proof we can buy property in China (but oversea’s property is so popular with Chinese because they can’t really own property in their own country).

  34. Jerry wants a new topic so we can have more of the same… wants to give Hawk a 133rd try to post that same old graph yet again (Hawk’s dream graph that will never come true for SFH in the core).
    And – I had not heard of Pokemon before 😉 If you don’t like long posts – skip ahead to the next one…

    I found the last two days had refreshing conversation about foreign buyers and opening up food for thought with some really good links, etc. Previously, I hadn’t thought that Americans were as big a factor as buyers here as people say they may be… it goes back to it doesn’t matter what the origin of buyers is, we just need to make sure most properties here are being bought for people who are staying here and living/working/contributing. Of the Americans… my guess is they’re buying condo’s for vacations instead of SFH.

    Numbers hack doesn’t provide any proof that we can’t buy property in China (but no one really ever owns property there anyway).

    I’m starting to agree w/ John Dollar – list price may be ‘meaningless’ after all… this brings any price reductions into a new light. Of course, sale price is all that matters at the end of the day. Here’s two sales I see today with divergent list/sale prices:

    1562 Despard Ave, Rockland – Listed for $1.5m sold for $1.350k Big house in need of extensive updates – straight out of the 1970’s.

    223 Government St, James Bay – Listed for $950k sold for $1,101k – Even though it was dated I bet this was about location and lot size. This was a bidding war for sure, unlike many homes in that hood it has a generous 9,240 sq ft. lot.

  35. Janni, it was in North Burnaby, but there were other neighbourhoods like that in North & West Van, West Side, etc.

    (of course in the last 5 years when prices went ballistic, some ghost towns were created. A friend was telling me that she’s having trouble retaining employees with families – there’s high turnover – because they’re moving to lower cost cities or suburbs.)

    Where did you live for 45 years?

  36. Must be time for a new topic?

    Did you know that earth’s shape is not technically a sphere? It’s an oblate spheroid, due to earth’s rotation flattening the poles. But don’t call the phenomenon “oblation”, since that word means something else.

    Did you know that if you yelled for 8 years, 7 months and 6 days, you would have produced enough sound energy to heat up one cup of coffee?

    Did you know the reason firehouses have spiral staircases is a relic from when fire trucks were pulled by horses? The horses on the ground floor figured out how to walk up straight staircases.

    Did you know donkeys kill more people annually than plane crashes?

    Did you know the plastic things on the end of shoelaces are called aglets?

    I hope this helps to spark a new topic for you, Jerry. Going to check out the Butchart Gardens today. Don’t want to miss any stages of the spring bloom. Might even get a sundae there. Their ice cream is delicious. 😛

  37. Hawk got to post his graph.

    Barrister got to remind us that he is mortgage-free in Rockland and quite well off.

    The Pokemon got to post 9 (!) tedious.prolix.point.by.point.rebuttals.

    Must be time for a new topic?

  38. @ Vicbot – curious – I lived for 45 years in Vancouver and I’m totally drawing a blank on the walkable neighbourhood you are referring to. Do tell.

    Sometimes I miss The cultural diversity of Vancouver but less and less as Victoria is changing (for the better IMO.)

  39. “Since when is being inclusive a Canadian virtue or necessarily a virtue at all.”

    I’ve noticed a difference between Canada & the US, but this is only my experience?

    I could be wrong, but in the US, I haven’t seen the same extent of mixed socio-economic communities as in Canada, eg., …

    We used to live in a walkable neighbourhood in Van with a huge range of housing – large high-end houses in one pocket, high-rise condos in another, rental buildings on one corner, subsidized housing in the middle, and middle-class townhouses on another side. (tall trees separated different areas to allow both privacy & views)

    In the middle was a mall with fresh-food grocery store, a playground, and a golf course. Several different schools were nearby.

    The rich kids would play with the poor kids, the rich golfers would have beers with everyone at the golf club, the Porsches would park beside the jalopies. The tech workers would eat lunch at the pub. Rich kids would work at the grocery store with poor kids.

    Money didn’t determine your access to services, or education, or health care, and it seemed to help, so people didn’t divide themselves into “castes” for life.

  40. I like your reasoning Local Fool. I think rent and invest, if your rent is significantly lower than the costs of ownership, has way more upside than it used to in Victoria and other high appreciation markets.

  41. If freedom is your primary motivator then maybe buying is not a good choice overall given the alternative of investing the difference between renting and owning? You would not be alone.

    Freedom is a motivator, certainly. I don’t know if I’d call it a primary motivator, though. I would say it’s a planned dynamic emergent from the choices I have made, but if I perceived more value in this market, I would happily give a portion of that up to own. Not all of it, mind you.

    As it stands, I don’t perceive that value in this market, conversely, I don’t wish to move elsewhere. So I act accordingly – perhaps to my financial benefit, perhaps to my detriment.

    Right now, people are panicking to get in, and participating in panic as a FTB as an investment strategy or any kind of strategy is just foolish IMO. Even if I was bullish, what inventory would I have to choose from in the neighbourhood I want? See, another part of my issue is the place I want has to meet certain criteria. I won’t buy a run down home on the premise of “it always goes up”. Not unreasonable, but my choosiness objectively weighs unfavourably in a market like this. So be it.

    There’s no question, at least in my mind, that home ownership can be a great way to build wealth and hedge inflation, and so people accept the purchasing/owning liability at the front end for that reason. To me, there is now too much liability at the front end – so I accept that my skittishness has the potential to affect my net wealth. I’m sure it already has. If I was born 10-15 years earlier, I would probably have chosen to own a home a long time ago, and this recent run up would mean my net worth would be much higher now. Alas, I rent, with no home equity at all, haha. But I do have a PS4 with a couple of awesome games. That’s worth something, isn’t it? 😀

  42. Well no it just means that younger people who are more likely to rent have lower net worth than older people more likely to own which isn’t surprising.

    I’ve never seen a stat of net worth of home owners vs renters controlled for age, marital status, and income.

    I’ve looked at it before and there is a lot of data collected on renter vs. home owner age, marital status and income and net worth. Here is my two minute search result that shows that there is enough data to at least CMHC make the following conclusions and I expect that we could segregate by those factors quite easily with a bit more research:

    Homeowners are, on average older than renters but age is not the only factor underlying differences in wealth.
    As you would expect lifetime income differences were the primary cause of the differential in net worth between renters and owners.
    However, since the 1990s the growth in home equity has exploded, widening the gap significantly.

    In 2005, median and average net worth differed significantly within age groups, an indication that the distribution of wealth was far from even among those of similar age. The average net worth of Canadian households increased faster than the median from 1999 to 2005 (29.5% versus 21.5%),
    which suggests that inequities in the distribution of net worth expanded during this period.

    Lifetime income differences are likely the main reason for differences in wealth, including the large gap between the net worth of a typical (median) homeowner ($327,000) and a typical renter ($14,000). In 2005, homeowners had median household incomes that were close to double (and in
    some cases more than double) those of renters of comparable age (see Table 4).

    From 1990 to 2009, the collective net worth of Canadian households doubled, which translated into a per capita gain of about two-thirds. Wealth grew faster during the 1990s than during the current decade, which was marked by stock market downturns and a recession. Home equity showed the opposite tendency, increasing more rapidly during the strong housing markets of recent years than during the 1990s. As a result, the share of net worth comprising home equity has risen substantially since hitting bottom in 2000, with growth in home equity accounting for over half of the increase in household net worth since 2000.

    https://www.cmhc-schl.gc.ca/publications/en/rh-pr/socio/socio008.pdf
    https://www.cmhc-schl.gc.ca/odpub/pdf/67122.pdf

  43. I thought this was an interesting article about real estate agents and the industry.
    http://www.macleans.ca/economy/the-crazy-world-of-realtors-in-a-red-hot-market/

    Some advice I was given early on:
    Timing – when to buy? It always surprises me how many people jump in at the top of a market when everyone else is jumping on board. Buy when you can afford to buy. Always plan for the worst case scenario. Make sure you have the ability to hang on. (Could you live in the tiny suite downstairs for example….. if one of you loses your job? )
    Don’t risk your principle residence to buy another property. Buy another property…. if you can do it without risking your principle residence.
    Rent only if you have no other choice. You can get evicted for many reasons. For example: Landlord can’t afford to live in the main house anymore because of changing financial circumstances etc. Landlord needs to sell the place. Landlord may chose to get market value for the space and can apply to the governments to jack up your rent to market value. (Don’t believe me…check the rules. Most renters and even many landlords are unaware of this clause in the rental rules.)
    Increased house taxes, increased costs of maintenance, increased financing all put pressure on landlords to increase rents.
    By the way, our real estate agent who is a super nice fellow, actually talked us out of selling our home and we are most grateful for his advice. We decided to simply fix up our own house and make improvements instead. He saved us a bundle in moving costs. Thank you Rick H. !!

  44. Yes, but it does point to the fact that very few of the 30% who rent are investing the difference and landing up as well off as homeowners

    Well no it just means that younger people who are more likely to rent have lower net worth than older people more likely to own which isn’t surprising.

    I’ve never seen a stat of net worth of home owners vs renters controlled for age, marital status, and income.

  45. “Innovation and creativity aren’t in the top 50 of what I’m looking for in a city, so I don’t feel as though we need to be changing a bunch of things in order to foster them.”

    Florida’s point, though, is that without innovation and creativity, cities will cease to be particularly nice places to live with especially happy people walking down the streets. He argues that everyone’s quality of life drops once cities become too unwelcoming to the “creative class.” Cities that can’t foster artists, the arts, etc. will, in theory, no longer be interesting places to live with varied, high-quality cultural activities. This is a very simplified version of what he’s saying, but it’s basically an argument for boutiques rather than big box stores. Without a healthy creative class to make it in some way distinct, each city becomes a cookie-cutter version of the next. Will urban densification alone ensure that the creative classes do well? No. But Florida seems to believe that that’s part of the answer because people need to be in the city rather than the suburbs in order to make that city thrive.

  46. But that statistic has almost nothing to do with the relative return of home ownership to other investments.

    Yes, but it does point to the fact that very few of the 30% who rent are investing the difference and landing up as well off as homeowners. Maybe more will be doing this now that prices have gone up like they have. In the past, home ownership was part of the mindset of a saver/investor. Now the sacrifices in time freedom might not be worth it so people are researching alternatives like global arbitrage. Some bright folks will make different choices.

  47. In the latter case, the buyer isn’t interested unless a set of circumstances occur.

    That is a good position to be in.

    It’s not worth being house poor.

    It was for us, but we were at the start of our careers and thought out incomes would rise. I think with a 900k house price we might well have chosen the Okanagan over Victoria, or bought a townhouse instead of a SFH. Most likely we would have looked for a like-minded couple and bought a house that could be divided if we couldn’t have done it otherwise. We have co-owned other property and it worked out well. Also not for everyone.

    We would always have bought though. Being a homebody who also worked from home, I would not enjoy having to move or not being able to do what I wanted with a house and garden or feeling like it was a waste to put money and effort into it. I understand not everyone is like this, but I get a lot of satisfaction from improving my living environment and knowing it is ours.

    If freedom is your primary motivator then maybe buying is not a good choice overall given the alternative of investing the difference between renting and owning? You would not be alone. I’ve posted this link before but maybe it matches up with you? Seems like a great way to go for some: http://www.millennial-revolution.com/start-here/

    That’s why nearly all millennials that have purchased in the last few years plan to sell their home in the near future.

    Where are you getting this from? All six of our millennial friends/family who bought in the last couple of years (two Gorge, one Esquimalt lagoon, one Langford, one Oaklands and one Songhees) are very happy they did and have no plans to move or become renters again.

    The move from homeowner back to renter at that age and stage would signal a significant change in home ownership mentality in this generation. None of the data supports this that I’ve seen.

  48. I’ve said it before but the thing that separates bears from bulls is income. When a bear finally manages to earn a proper income they buy. Instead of wasting all this time trying to justify your bear position you could be studying so you could find a decent job.

  49. Local Fool:

    You are absolutely right that home ownership is not for everyone and that being house poor can be a bad decision for many.

    Personally, I really enjoy working around the house and in my shop and my wife is an avid gardener so owning this house is a real joy for us. On the other hand we dont have a mortgage and the house represented only a small fraction of our net worth.

    Since when is being inclusive a Canadian virtue or necessarily a virtue at all. I love the way that people wrap their own ideas into the Canadian flag. Trust me, anyone that things that being inclusive is part of the Canadian identity has never been schooled at UCC.

    People insist on throwing out their social engineering assumption as if they are somehow scientific fact.

  50. “So drawing a straight line to gauge inflation will make every market seem overvalued.”
    Leo is absolutely right in making that observation. The almost 10 years of extremely low interest rates was predicted to eventually create inflation and it seems those days are finally here and has impacted the market in a big way.

  51. For others thinking of jumping in and are reading this – do what you want, but understand, that the mere idea of owning a house can be far sexier than actually hunkering down and owning one. It brings its own joys and benefits for sure, but there’s another side to it. It’s not worth being house poor, and if you are, you will come to hate your four walls faster than a new Fiat owner learns to hate his car and subsequently question his life choices.

    Yep. What’s more important, freedom or a house? If the latter will impede the former, I’d choose freedom every time.

  52. totoro has previously cited evidence that, in general, homeowners’ net worth is vastly higher than renters’.

    Correct. But that statistic has almost nothing to do with the relative return of home ownership to other investments.

  53. The time to buy is when your personal finances, job security and you are ready to buy. It should have nothing to do with trying to time the market.

    In the 70′ and 80’s Alberta had an excellent housing program during the boom years and housing shortages which should be revisited. The provincial program offered discounted interest rates for the construction of rental apartment buildings. The concession was that 15% of the units had to be for low income earners and their rents couldn’t be above their affordability levels. These units had to remain subsidized for 15 years before they could revert to market conditions. It was an excellent program and tens of thousands of units were built. From a social perspective there were definite benefits as different socio-economic groups were mixed which is a healthy societal objective and inclusive very much in the Canadian way.

  54. Many people have tried to time the market and failed (miserably), so it is possible that prices could flatline then spike again, leaving you kicking yourself for not having bought today.

    You are absolutely correct. As a general principle, market timing is a terrible idea. I did that with an investment actually at the start of the last year, when the market went straight to the gutter. Not a good idea. With real estate, I wouldn’t say I’m timing it. Put it this way – a market timer will say,

    “I am waiting to buy a house when the prices reach (strike price).”

    Whereas I say,

    “I will not buy a house unless the prices are within (strike price).”

    Do you see the subtlety there? In the latter case, the buyer isn’t interested unless a set of circumstances occur. It’s just not a priority otherwise – I’m not necessarily waiting for anything. So I doubt I will ever “kick myself”. Don’t get me wrong – I’d like some of the benefits, and even the trials – of owning a home. I would just love to have my own workshop and build cool stuff. 🙂

    For me though, I am too value oriented to jump in right now. If my car breaks – I suppose I could get a new one. But I go buy the part and fix it myself. My jacket pocket got a hole in the interior lining this winter – I sewed it up rather than buying a new one. My partner is the same way. $3500 a month mortgage in 2017 dollars is silly. I’d rather pay the guy upstairs less than a third of that, and pocket the rest. Granted, I don’t make 20% returns like homeowners recently (although in some ways that’s a tad meaningless), or 500% returns like my friend Hawk. But I try. And I do okay. Sometimes.

    For others thinking of jumping in and are reading this – do what you want, but understand, that the mere idea of owning a house can be far sexier than actually hunkering down and owning one. It brings its own joys and benefits for sure, but there’s another side to it. It’s not worth being house poor, and if you are, you will come to hate your four walls faster than a new Fiat owner learns to hate his car and subsequently question his life choices. That’s why nearly all millennials that have purchased in the last few years plan to sell their home in the near future. Once they’ve tasted the reality – the hype suddenly is seen for what it really is.

    Sorry, had a bit to drink tonight…

  55. Dammit. I thought avoiding getting into this market and instead diverting my monies to savings and investments – and buying a home only if it felt right for me and my partner – was a viable path.

    totoro has previously cited evidence that, in general, homeowners’ net worth is vastly higher than renters’. So you are perhaps an outlier.

    Many people have tried to time the market and failed (miserably), so it is possible that prices could flatline only to spike again, perhaps leaving you kicking yourself for not having bought today. But, as crappy newscasts like to end their stories, only time will tell.

  56. You, of all people, should know that a colon should never be used after a sentence fragment.

    I should! You see, we’re all helping one another be better writers—and people. 🙂

  57. Also, it seems like Richard Florida is arguing that all cities ought to be striving to be like “the world’s most innovative and creative places”: “San Francisco, New York, and London.”

    While I fully support mixed density neighbourhoods with many different housing types together, the argument that these kinds of neighbourhoods somehow lead to innovation is laughable.

  58. Sweet! And the corollary: renters are too small to succeed.

    Dammit. I thought avoiding getting into this market and instead diverting my monies to savings and investments – and buying a home only if it felt right for me and my partner – was a viable path.

    But now…I have seen the light. I am an abject failure, a burned out shell of a man bereft of potential with no meaningful wealth or hope of succeeding. If only I just bought a house. It would change everything. I am going to call Marko on Monday and get the ball rolling. I better buy that 900k bungalow, because 67 years of history demonstrates that next year – it’s just going to be worth more!

    Wait a sec…my common s…errr sense of failure… is kicking in. Darn it…still ain’t going to buy a house. And if that’s failure, haha, failure is awesome 🙂

  59. “And the corollary: renters are too small to succeed”.

    Introvert,

    You, of all people, should know that a colon should never be used after a sentence fragment.

  60. Also, it seems like Richard Florida is arguing that all cities ought to be striving to be like “the world’s most innovative and creative places”: “San Francisco, New York, and London.”

    Really? Why don’t we just let those three cities handle innovation and creativity? I could care less whether Saanich or Greater Victoria is innovative or creative. I care that we have a mild climate, lots of trees and parks, places to recreate, beautiful scenery, amenities and services, happy people walking the sidewalks and biking the streets, lots of libraries, etc. Innovation and creativity aren’t in the top 50 of what I’m looking for in a city, so I don’t feel as though we need to be changing a bunch of things in order to foster them.

    I guess I’m just a New Urban Luddite.

  61. Hands up if you’re a New Urban Luddite…. https://www.citylab.com/housing/2017/04/meet-the-new-urban-luddites/521040/?utm_source=atldaily041817-2&utm_source=nl-atlantic-daily-041817

    Very interesting article, Irregardless.

    I think what it actually comes down to is that upper class and upper middle class people generally want to congregate and live mostly amongst themselves. We obviously eschew density, as that might create “affordable” dwellings that would attract people of lesser means who would bring a host of problems we’d rather not have to witness or deal with.

  62. I wonder how accurate the origin breakdown you posted is then?

    It is accurate at what it proclaims to measure: buyer address.
    It is not accurate at measuring buyer citizenship, which it never proclaimed to measure.

  63. The provincial PTT stats are much more accurate and show about 5% of all sales are to non-citizens.

    I wonder how accurate the origin breakdown you posted is then? If the total sales add up to 5% of all sales or roundabout that should be fairly accurate. Have you compared? If not, there is another unknown, although maybe extrapolation is realistic. I’m not sure.

  64. I just wanted to post this little YouTube video. It features a very clear, easy to understand depiction of housing markets in general, their corrections, and how both up and downturns are a necessary component of what is ultimately an inalienable housing market cycle. https://www.youtube.com/watch?v=c-ktIPtE4E4

    Good video but he makes the same mistake I made about 5 years ago. Drawing a straight line across a graph to indicate the increase from inflation. Problem is inflation is exponential and not linear. So drawing a straight line to gauge inflation will make every market seem overvalued.

  65. @totoro The 48 is buyers where the buyer city was indicated as somewhere in Asia. So of course there were many more buyers that aren’t caught in this methodology that have a local address here first before buying. However the same would be true for American buyers so I think it’s reasonable to conclude that american buyers here are just as much of an influence as Asian buyers and no one notices them. The provincial PTT stats are much more accurate and show about 5% of all sales are to non-citizens.
    When was the last time we heard an anecdote about an open house swarming with white people driving Buicks? Just not that different from the typical Victoria resident to be noticeable. 🙂

  66. LEO;

    Never use a semicolon like this. It is wrong.

    20% of the BC economy depends on this beast. At the very least it needs to be propped up past the election.

    Old numbers, but probably still true:

    Source: http://credbc.ca/role-energy-sector-bcs-economy/

    I’ve said it before. Real estate is now too big to fail.

    Sweet! And the corollary: renters are too small to succeed.

  67. People are concerned about ALL foreign $ affecting RE

    Maybe, but they sure don’t talk about the others on this board. It is all about the shady Chinese money but, after thinking on it a bit I think the reason people here are posting against Chinese buyers and not Americans is because of all the coverage on Chinese buyers in Vancouver when they made up 70% of the foreign buyer market. People probably did not know that our market has such a high % of Americans in the foreign buyer category rather than Chinese.

    I can tell you our former tenants were one of the 48 Asian buyers last year. The daughter went to school here and her parents sold their car and house in China to move here to be with her and they bought a modest house in Oaklands. They will immigrate and settle with her after the grandparents pass – meanwhile they go back and forth. All above board. So that leaves 47, not all of which will be buyers from China. And don’t forget buying through a company means you won’t get your primary residence tax exemption so that is an odd move for Victoria real estate. My guess is that most Chinese buyers in Victoria likely have family here and are above board. Tracking down the paper trail for the remaining 47 sales would be easy for the RCMP to do if there was a reason for it imo.

    There isn’t a flood of illegal cash coming out of the US for all those reasons.

    I don’t believe the illegal cash is the impetus for the hue and cry because the real issue is price escalation and there is little or no evidence that “money laundering” is behind what is occurring in Victoria given the limited number of sales. If you are arguing foreign buyers are having a big impact focus on the weak Canadian vs. American dollar and you’ll have a better argument given the stats. My guess is that it is the Americans that are buying luxury properties as an investment for appreciation and hoping to cash in when the Canadian dollar rises in future.

    Let’s stop talking about racism in Vancouver real estate.

    I was not. I was talking about what has been posted on this board about the Victoria market over and over again. And the difference between prejudice and error is difficult to evaluate when people feel free to put down a group with zero fact checking.

  68. Can’t pull data from the buyer origin field..only the VREB can do that? Quelle suprise….

  69. Numbers hack – so the better dwelling article was wrong ? Or out of date? We can buy property in China? Yay! I’m on the next flight. But wait – just breathing the air there is worse than being a heavy smoker? Oh wait again – you never really own property in a totalitarian communist state? Now I know why they’re coming here and everywhere else in the west that’s somewhat desirable. I think I’m staying home.

  70. I wanted to post an article this week on the new Vancouver numbers and if this year has just as many buyers from Vancouver as last year.
    Unfortunately this is no longer possible. There used to be a field called Buyer City that was filled in by the listing agent with the city the buyer had as their address. That field has been replaced by a field called Buyer Origin that is no longer free form entry but gives a list of regions to enter that the buyer is from. This is good in that it improves data quality by forcing a predefined choice rather than being prone to spelling errors and the like.

    However the buyer origin field is not available as an option to search on, so there is no way to pull any data based on it. Only the VREB can do that internally now.

  71. “why there is so much hue and cry over Asian buyers and so little over American buyers when Americans buy almost triple the number of houses here? … Hard to believe that that is not prejudice at work.”

    People are concerned about ALL foreign $ affecting RE – who cares if they’re from US, Asia, Russia, Germany, etc. (but before I trust the stats, the gov’t needs to track who the beneficial owners of corporations buying RE are)

    The differences in how we discuss the buyers are directly related to the movement of $$ around the world – not racism.

    First & foremost, the US$ is the world’s main reserve currency. The US is a stable economy, with banking processes & private property laws & civil laws that are transparent & parallel to Canada’s. There isn’t a flood of illegal cash coming out of the US for all those reasons.

    It’s totally different for a country like China. There are several reasons why the Asian $$ come up a lot in the news:
    1) China’s foreign currency restrictions, its growing pains as an emerging economy, & the flood of capital that is/was leaving the country to be held in worldwide RE & other currencies, and then all the associated corruption, money laundering, shadow banking, etc. It’s been in the news because of the insanity. Of course not 100% of buyers, but these are real issues
    2) Tony Joe and his self-serving, hypocritical arguments
    3) Russian money laundering is typically done through Europe. Latin American is done through Miami & other US cities)

    So we’re talking about the insanity of how the money is flowing from places like China – it’s not racism.

    Justin Fung said it well:
    http://www.straight.com/news/734326/justin-fung-open-letter-those-who-play-race-card-vancouver-housing-affordability-debate
    “Folks who have gotten rich in China over the past couple decades see that their money isn’t going to be worth as much in the future and are getting it out as quickly as possible into assets in held in other currencies …
    This has nothing to do with Chinese people as a race and everything to do with China as a rising economic superpower with its own set of growing pains …
    It has everything to do with the corrupt and complicit politicians who serve the corrupt needs of a B.C. real estate industry whose continued success depends entirely on us turning a blind eye to the obvious problem …
    Let’s stop talking about racism in Vancouver real estate. It’s distracting us from getting to solutions to making housing affordable for those of us who call this city home. It’s time we cut through the bullshit and hold our elected political leaders accountable for the mess they refuse to clean up.”

  72. “Worst side-effect of the housing boom? All anybody talks about is housing. Canadians have actually made ourselves even more boring.”

    Believe it or not, it’s far worse in Vancouver.

  73. I’ve been too afraid to leave my house, James. I know you’re out there…waiting for me. 🙁

  74. I’ve said it before. Real estate is now too big to fail. Governments at all levels can’t afford to let the bubble pop.

    The problem is, it’s impossible. It doesn’t matter how much they can or can’t afford to let it pop, because that isn’t the question to begin with. The only thing government can really do is attempt to clean up afterwards. If a government could avoid a bubble popping, they would.

    PS not arguing with you, I get the context of your post. More or less adding to it. I don’t doubt there are people out there that think the “too big to fail” argument holds water (suspect the most common variant is “they won’t raise rates because it would crash the economy”).

    RE in BC as % of GDP is foolishly over-represented, IMO. Look at the rest of the Province – LNG is not going to be built any time soon, no matter what the current government tells you. Fishing sucks, and the tech sector is struggling to be competitive as prospective employees can’t afford to live. Lumber isn’t horrid but it isn’t great, and Mr. Trump isn’t expected to be conciliatory with respect to softwood lumber.

    Only the surface has changed on account of this RE madness – the underlying real economy isn’t very much different than it always has been, but it can be less apparent to those living in the few bubbly zones. It isn’t hard to see though, if you’re willing to look.

    Take RE back to nominal levels – and what do you have? Well, you have what BC generally always has been – a Province that teeters on “have” vs. “have not” – sometimes we contribute to transfer payments, sometimes we need them. Is an economy based on FIRE sustainable? Personally, I’d rather see money get invested into productive sectors of the economy – and that’s not houses.

  75. 20% of the BC economy depends on this beast. At the very least it needs to be propped up past the election.

  76. I’ve said it before. Real estate is now too big to fail. Governments at all levels can’t afford to let the bubble pop. I think we will see a string of toothless “interventions” to convince renters and hopeless millenials that their government really does care, followed by mystified government officials claiming they did their best but it didn’t work, so it must be that foreign buyers, speculators, Air BnB, flippers and hoarders aren’t the problem afterall therefore fundamentals must be sound, we must be able to afford these prices, it really is different this time and this is the new normal.

    Underlying all this rubbish, of course, are macroeconomic factors that keep Poloz awake at night. All he can do is spout mixed messages that bears take one way and bulls take another but either way he will be able to claim he warned us.

    I have no faith in any data coming out of the industry or the government. Ten years in the spin cycle and no one can see straight anymore.

  77. So when Vancouver introduced the 15% tax and a slight cooling occurred in the market, some would like to interpret this as proof that there are not many foreign buyers

    Doubt it.

    Stats were collected before the tax was brought in and the numbers were significant, particularly in Richmond. And post tax the numbers have dropped a lot. Given that we have data on this it is hard to argue otherwise.

    I think what this means is that the tax was effective for the purposes of discouraging foreign buyers, but there are other factors at play right now even in a market that had a greater proportion of foreign buyers than Victoria – like population growth.

  78. Nan: I agree – never mind just taxes we need full restrictions on foreign buyers (from anywhere) who won’t live, work or contribute to our society.

    Even a 15% tax is not much of a deterrent. For US buyers houses, even after a foreign buyers tax, Canadian real estate still comes at a discount because of the value of the American dollar. For money launderers it’s still cheaper than paying income tax or doing time.

    So when Vancouver introduced the 15% tax and a slight cooling occurred in the market, some would like to interpret this as proof that there are not many foreign buyers. I think it means that tax isn’t high enough to be effective. It should be raised to 50% or institute measures like the Swiss, then you’ll see how much foreign buyers really influence the market. Better still do both.

    While some measures need to occur, sadly, it is a decade too late. And now the government is between a rock and a hard place trying to grease their palms while avoiding a conflict between Homeowners versus House Hunters. Homeowners like he escalated values of their properties and will not be pleased to watch this plummet. It always comes down to who has the deepest pockets as well as the largest voting population.

  79. LEO;
    Were the following numbers for sales since Jan 1st 2017?
    “Who would a foreign buyers tax hit in Victoria?*

    USA 106
    Europe 25
    Asia 44
    Other 23
    Total Outside Canada 198”

  80. Did no-one pay attention to the post by Leo on the country of origin of foreign buyers in Victoria? I have no idea why there is so much hue and cry over Asian buyers and so little over American buyers when Americans buy almost triple the number of houses here? And why so little news coverage of American buyers?

    Hard to believe that that is not prejudice at work. And the numbers are not very large overall. I’m not saying don’t bring in the tax but this cannot be the main reason the market is the way it is.

    And China has experienced exactly the same thing as we have with foreign investors which is why they brought in those restrictions – which they are now lifting as the market is no longer so hot and they are again looking for outside investment – a position Canada may well be in again one day:
    http://www.ibtimes.com/

    And here is the Tony Joe flyer:
    ?quality=70&strip=all&w=720&h=480&crop=1

    Don’t see why his is more outrageous that the marketing strategies used by Sotheby’s, Colliers and the like to appeal to the international market – mostly Americans. Heck, Sotheby’s is called “Sotheby’s International Real Estate”. Want to run them out of town?

    With a network of over 845 offices in 63 countries, Sotheby’s International Realty provides unparalleled access to the global real estate market. We have the experience and contacts to facilitate international real estate transactions and to assist clients who wish to buy Canadian real estate from abroad.

    Tony Joe is small potatoes next to that.

  81. Luke – false
    Foreigners can easily buy properties in China.
    Most just can’t afford it or want to do it.

  82. Here’s another $100k price reduction in OB – See… I have no problem posting these… 2777 Dewdney Ave in Estevan. Down to $1,299k.

    Looks like yet another home that needs an extensive reno. in this 1939 build. Kitchen prob. from the 1980’s. Dated bathrooms. Despite it’s location close to Uplands… after 44 days, not yet selling.

  83. If there is no speculation or foreign ownership in Victoria, a tax on will have no effect…so what are you worried about? That tax should be 100%. 1000%. Whatever is necessary to keep people who don’t live here out of local real estate.

    Nan: I agree – never mind just taxes we need full restrictions on foreign buyers (from anywhere) who won’t live, work or contribute to our society. If Tony Joe doesn’t think it’s a problem, then – no problem, right? His flyers say otherwise though (had these delivered to your door yet?). On the front of the flyer it says ‘Foreign buyers want your property!’ and then the back of the flyer is all in mandarin. (I searched online for the flyer image but couldn’t find it).

    Here’s how China (the main source of foreign buyers in Van and probably TO) deals with foreign buyers… turns out if we wanted to we can’t buy more than one property there, this is AFTER spending a year living there. Yet for some reason they should be able to squash home ownership dreams for Canadians by buying multiple properties here? And, unlike what Chinese could now be doing to skirt around the new tax in Van and TO (creating companies to buy property, buying as a ‘student’), they wouldn’t allow any loopholes.

    From: https://betterdwelling.com/city/toronto/7-places-tax-foreign-property-investors/#_

    China:
    Having a population of over a billion people would put any country in a housing crisis, so it’s no surprise there’s a lot of property rules in China – including ones that target domestic owners. Foreigners are allowed to purchase only one property for their own personal use, after having spent one year in the country. After that, if you become a permanent resident, you’re allowed to purchase one additional property for personal use.

    Thinking of skirting the restriction using a shell company? Not so fast, the Chinese government conducts regular audits and foreign companies must use the property they reside in, or risk having it taken away.

    Imagine if Switzerland didn’t have any restrictions on foreign ownership… the Chinese would’ve been there in droves by now… Like Denmark, Switzerland has always restricted foreign buyers, long before it ever became a problem for their citizens…

    Switzerland:
    The Swiss have always had strict rules regarding housing, especially foreign ownership, with each canton (that’s a township if you’re not French-Canadian) assigning annual quotas and requiring approval before being sold to foreign owners. If approved, you can use it as a personal residence only, so forget your dreams of being a landlord in Switzerland.

    Fun fact, not even the Swiss are allowed to build homes over 1,000 sq. m. without a special permit – so there aren’t a lot of Bridle Path style houses to choose from. Sad, I know.

  84. Glad to see the city is moving one step closer to the foreign buyer’s tax. I’ll be interested to see if there’s eventually calls for the tax to be applied outside urban areas so that it hits the recreational property market in rural areas like the Gulf Islands and the Okanagon/ Shuswap. I had always assumed there was an element of foreign (mainly US) ownership in those areas. Obviously different situation than the urban areas but I think there’s an argument to be made that the tax should go province-wide. Heck, I’ve even heard rumours of foreign buyers moving into places like Kamloops.

  85. Interesting to see the odd bully bid happening in the condo market. Here’s one from today:

    208 – 1371 Hillside Ave
    Ask: 349k
    Sold: 402k
    Assessed: 305k
    DOM: 0

    Can’t blame the seller for not waiting to see if they could get more. Haven’t seen many units like this break through the 400 mark.

  86. I just wanted to post this little YouTube video.

    It features a very clear, easy to understand depiction of housing markets in general, their corrections, and how both up and downturns are a necessary component of what is ultimately an inalienable housing market cycle. No jargon, no stats, no selling – just a very simple lecture with some light humor here and there.

    Hope you enjoy it.

    https://www.youtube.com/watch?v=c-ktIPtE4E4

  87. Who would a foreign buyers tax hit in Victoria?*

    USA 106
    Europe 25
    Asia 44
    Other 23
    Total Outside Canada 198

    *blah blah buyer origin not a measure of citizenship, etc.

  88. Leo:

    Thanks for providing the accurate numbers and the annual comparison. It will be interesting to see where we end up by the end of the summer. But there are more sales than I believed might be occurring.

    Does make one wonder were all these people who can write a cheque for 2 mil are coming from.

  89. “stats on the number of foreign buyers are not accurate and cannot be relied upon until a more accurate form of measuring is introduced.”

    Smoke and mirrors. Not much can be proved conclusively. We can debate specifics ad nauseam but Vancouver appears to have at least some sort of foreign influence. Many Vancouverites cashed out and came to the island in 2016. Look up ‘out of towner’ not ‘foreign buyer’ stats in Victoria.

    Assuming even a 5% (very) long-term foreign buyer presence, that’s 1 in every 20 homes outside Canadian hands. That seems like a large number to me when I look around the neighborhood.

  90. Again, stats on the number of foreign buyers are not accurate and cannot be relied upon until a more accurate form of measuring is introduced.

  91. I don’t really understand how ‘foreign buyers tax’ got interchanged with ‘Chinese foreign buyers tax’. It’s a tax on all foreign buyers and it doesn’t matter where you come from. If you don’t have citizenship or a work permit, etc then you shouldn’t be able to buy property. It’s really that simple. I don’t care if you’re Chinese, American, European, Indian, etc.

    The argument that Victoria is not affected by foreign buyers seems like a short-sighted view that only focuses on direct buyers. Sure, maybe foreign buyers are only 5% in Victoria, but we all know that 2016 saw increased numbers of Vancouver buyers here (Leo posted the stats). Perhaps these buyers are cashing out of a foreign buyer (1 in 6) inflated Vancouver market, outbidding islanders and driving up prices here? There’s a ripple effect that some people appear content to be ignorant about.

  92. Vic renter – talk to Rob Reynolds at HMR in Oak Bay. He was on this board a while back and got me much better and better priced insurance than my employer was offering

  93. But, what are the sales number for SFH in the city of Victoria and Oak Bay in the last three months for homes over two million

    Feel free to request a Matrix account on the right side you can check yourself ———>

  94. Luke:

    Thank you for the OB sales over 2 mil. A few more than I thought.It will be interesting to see what the inventory in this tranche looks like at the end of the summer.

    Nice to finally have a sunny day and try to catch up on the yard work.

  95. “Does anyone have advice on the best place to buy life insurance?”

    To get the best rate for Life Insurance you need to have a complete physical. Certain providers will do this i.e. Sun Life and my premium dropped by 50%.

  96. “Why call it a foreign tax. Why don’t we just call it a Chinese tax?” he said.

    What a BS straw man argument. With the exception of “Golden Head” the majority of foreign buyers in Victoria are Americans with their 35% discount thanks to the exchange rate.

  97. The foreign buyer’s tax is not illegal discrimination.

    What is protected is Tony Joe’s freedom of speech within reasonable limits so even if you disagree with his opinion he has a right to state it.

    What is questionable in terms of legality in Canada are comments on a blog that offend, threaten, or insult groups, based on race. There is a way to report these comments should you run across them:
    http://www.stopracism.ca/content/report-hate-social-networking-sites and http://hatecrimebc.ca/internet-hate-crime/

    I’d suggest both of Mr. Newton’s comments should be removed.

  98. “The reality is that the people that were doing the speculation or land banking in Vancouver were only looking in Vancouver,” Joe said, adding that Vancouver and Toronto are global cities while Victoria is not. The vast majority of people buying properties in Victoria are not holding them vacant but are moving here, he said. He said the tax is not unlike the head tax. “Why call it a foreign tax. Why don’t we just call it a Chinese tax?” he said.

    “Reality” “The People” “Global Cities” “Vast majority” “Racial Epithet”

    Lots of subjective terms, no data and then call city council racist. I know you read this blog Tony – care to back any of your BS up with a fact or two?

    If there is no speculation or foreign ownership in Victoria, a tax on will have no effect…so what are you worried about? That tax should be 100%. 1000%. Whatever is necessary to keep people who don’t live here out of local real estate.

    Sounds like you were worried enough to go and lobby for your own self interests which based on some of your previous public communications are at least partially based on selling Victoria’s valuable and rare housing to foreigners and/or speculators.

    Our society really needs better control for these rich self interested mouthpieces. I’m really tired of hearing rich realtors spout off completely unsubstantiated bullshit for their own gain, and then getting the gain and then doing it again and again and again.

    Maybe we should work towards getting the BCSC involved in the real estate market – at the end of the day, there are more disclosure requirements for marketing a $10 share in a company than there are for a $1,000,000 house and that is at the very least, not in the public interest but in the interest of RE industry beneficiaries in my opinion.

  99. Yes I was curious about that, totoro. OB & Saanich would probably be in favour, but I’m surprised there wasn’t a mention of that. Maybe they agreed on something behind the scenes? (eg., Nils Jensen & staff had been looking at a vacant home tax so there were discussions about possible taxes)

  100. Victoria’s resolution, passed Thursday, asks the province to immediately impose the 15 per cent tax to curb speculative property purchases by non-residents in either the entire capital region or in just the city of Victoria, whichever is more expedient.

    I wonder how the Council of the other municipalities feel about Victoria making this request without their concurrence or consent. I wonder if they even consulted with the other municipalities? I’d be concerned if it did not reflect the will of the majority of the constituency in other areas, but maybe the majority are in favour everywhere.

    It might be a good move to impose the tax, but unilateral action might have some blowback – they should have stuck to their municipality.

  101. Victoria council asks B.C. for foreign speculators tax
    http://www.timescolonist.com/news/local/victoria-council-asks-b-c-for-foreign-speculators-tax-1.16307896

    “Victoria council is calling on the province to immediately impose a 15 per cent non-resident buyers tax here to cool what has become one of the three hottest real estate markets in the country …
    Victoria’s resolution, passed Thursday, asks the province to immediately impose the 15 per cent tax to curb speculative property purchases by non-residents in either the entire capital region or in just the city of Victoria, whichever is more expedient.”

    Of course Tony Joe tried to play the race card but council quashed that.

  102. In terms of the mortgages, banks in Aus & NZ like Westpac and ANZ already stopped lending to foreign buyers before their gov’ts asked them to, to reduce risk.

    Canadian banks (& gov’t) need to start taking the risks seriously, because the system is being abused to buy multiple homes and it’s contributing to low inventories.

    I’d agree that maybe Canadian banks should do the same. I’m particularly annoyed at the workaround situations where the wife and child or just child are in Canada buying fancy houses with zero income getting access to free education and child tax benefits while the non-resident spouse lives in China (usually), paying no Canadian taxes on the money the family is actually using and living on. That is an egregious misuse of the Canadian system that needs to be stopped.

    Therefore, borrowers can acquire money more easily from lenders.

    I just don’t see this myself having gone through a qualification process with RBC last November. They were very diligent in applying strict policies and review of documentation. I also had a mortgage with a smaller bank that agreed to waive the penalty to transfer to RBC (at a lower interest rate) because they were not making enough on their mortgage portfolio overall – interest rates have stayed too low too long for them.

    Go to Stats Can totoro, I’m sure it’s there to pacify your court case proof.

    So basically you are just repeating a rumour and have no evidence of this in Victoria. It is fine to have an opinion, but when you present it as fact it becomes confusing.

  103. not too many in Victoria. I heard Marko’s Dad used to build them before he realized that most people here don’t care.

    So true, if you find a quality home here – hang on to it! That’s what people do here, that’s why they don’t move much. Most times, people aren’t left with much choice but to renovate when entering the SFH market in the core.

    I guess Hawk’s penthouse must be just like his 500% stock option returns… 😉 🙂

  104. Ah so someone who missed the biggest $ real-estate move in Victoria due to speculation is someone with “open mind of how markets function” Got it… I have another name but whatever makes you sleep Hawk.

  105. Jerry,

    It’s a commonly used chart used by professionals to show how bubbles blow up no matter what the market. Calling it from Mad Magazine only goes to show how deep the kool-aid flows by those with a vested interest to see this continue forever and not with an open mind of how markets function.

  106. post a quality home

    not too many in Victoria. I heard Marko’s Dad used to build them before he realized that most people here don’t care.

  107. Some of this later commentary is getting quite strident. I think this is because Hawk has let more than 24 hours go by without posting that market graph from Mad Magazine.

    Maybe some clarity would appear if you just did that for the 35th time?

  108. BTW Luke, you bullshitters always say I live in a “crappy basement suite” when confronted with signs of a shifting market. Once again, I have a very nice large penthouse suite with beautiful ocean and downtown views you could only dream about. Your insults about where I live as many renters do, shows your pathetic ignorance and arrogance.

  109. you can do better than throw insults … while hiding in your crappy basement suite

    Easy to tell people what to do, harder to do it yourself.

  110. As I’ve said before, I’ve posted many nice places Luke but your pompous pumper attitude won’t allow those many slashes to be talked about as it blows up your fantasy story. Thems the facts.

  111. At least in South Victoria there seems to be a real glut of properties of 2 mil plus and very few sales in the last three months. At this pace of sales we must have well over a years worth of inventory in that tranche.

    Barrister – this morning’s OB news home sales over $2m: 237 King George Terrace – $5.650k. 599 Island Rd – $2.500k. 2475 Landsdowne Rd – $2.850k. 3225 Rippon Rd – $3.400k. 3185 Rippon Rd – $3.135k.

    Just a sampling perhaps Leo could tell us more – I don’t get PCS over $2m (had to bump it up from $1.5m recently though).

    Victoria council asks B.C. for foreign speculators tax

    Victoria council is calling on the province to immediately impose a 15 per cent non-resident buyers tax here to cool what has become one of the three hottest real estate markets in the country.

    I agree this needs to be brought in asap. However, nothing will happen until after the soon upcoming election. If Chrusty gets back in, she will be all relaxed and then I’d expect nothing to happen on that front.

    Luke, you are a househunt pussy. Clearly you can’t handle the signs of a market rolling over. Maybe you should go through all those similar Oak Bay houses in your hood that went $200K over, same stuff, small rooms,etc. Get over it.

    Really Hawk, you can do better than throw insults at practically everyone on this blog while hiding in your crappy basement suite. You just don’t like it when people post facts. I’ll be waiting forever for you to actually post a quality home that was price ‘slashed’. I will continue to dissect the crap boxes you post that were ‘slashed’. Quality homes sell, crap boxes over-priced often don’t.

  112. Educate yourself totoro.

    Canada’s doors are ‘wide open’ for criminals to launder money in real estate: report

    “Give us your criminal, your corrupt, your anonymous masses.

    It’s a message that Canada is sending to the world with its “doors wide open” approach to money laundering in real estate, says a new report by Transparency International (TI), a Berlin-based organization that works to stop corruption around the world.

    One of the biggest reasons why it’s easy for illicit money to enter Canadian real estate is that it’s not difficult to hide the identities of people who buy homes in the first place.

    Canadian law does not require non-financial professionals doing real estate deals to “identify beneficial owners when conducting due diligence on customers.”

    Say a real estate agent is closing a deal on a property. The agent may be working with a customer on behalf of what’s known as a “beneficial owner.”

    http://globalnews.ca/news/3350193/canada-launder-money-real-estate-report/

  113. Luke, you are a househunt pussy. Clearly you can’t handle the signs of a market rolling over. Maybe you should go through all those similar Oak Bay houses in your hood that went $200K over, same stuff, small rooms,etc. Get over it.

  114. Go to Stats Can totoro, I’m sure it’s there to pacify your court case proof. I hear they advertise in the papers too so everyone knows. Foreigners want everyone to know as they harbor no secrets….ever.

  115. 418 Heather St slashed $90K. Nice place too in James Bay by Beacon Hill Park in the $1 million range. Smells like something turning here combined with slow open houses.

    Wow – generous sized lot too at 2280 sq ft. 40ft x 57ft. Funny how you didn’t mention that. Built in 1911 and sinking. ( when house hunting last year I noted many parts of James Bay and Fairfield former marshlands are like this – it felt like I was drunk while sober walking through these old homes swaying from side to side where nothing was level). Awesome basement height of 6’1″ – I’d be bumping my head. That all said the kitchen doesn’t look too bad but the bathrooms… ugh! And, we are still talking well over $1m here.

    You still haven’t found a quality home to post that was ‘price slashed’ have you Hawk? I’m still waiting…

  116. “until the federal government imposes lending or foreign buyer restrictions or they will operate within their own risk assessment framework.”

    Yes, that’s one of the issues. I don’t want to make this only about foreign speculators, because as I’ve said, there are both domestic & international speculators.

    And I’ve been one of the main people on this blog discussing the many factors that contribute to high prices in Victoria. What I was focused on, in that one post, was speculation – one of the factors – due to the rate of escalation over a short period of time.

    Stephen Poloz himself said, “There’s no fundamental story that we could tell to justify that kind of inflation rate in housing prices … Demand is being driven more by speculative demand”

    Then there are also plenty of other reporters (G&M, Province), analysts (Teranet), & economists (Porter) that have compared Ontario’s % YOY price escalation & Victoria’s (specifically: Toronto, Hamilton, Victoria).
    Look at the charts:
    http://www.theglobeandmail.com/real-estate/house-price-data-centre-canadian-house-prices-see-record-breaking-month/article29697029/

    In terms of the mortgages, banks in Aus & NZ like Westpac and ANZ already stopped lending to foreign buyers before their gov’ts asked them to, to reduce risk.

    Canadian banks (& gov’t) need to start taking the risks seriously, because the system is being abused to buy multiple homes and it’s contributing to low inventories.

    Here are just 2 of many news articles:

    http://www.vancouversun.com/news/alleges+Metro+Vancouver+homes+were+part+scheme+launder+money+embezzled+China/10926774/story.html
    “Zhao’s numbered company bought the properties outright. However, a few months later, it took out mortgages on both, totalling $1.1 million, that represented almost their entire market value. According to the U.S. indictment, a few weeks later Zhao and Qiao took money from their Canadian RBC account to pay for a Bellevue home.”

    http://www.cbc.ca/news/canada/british-columbia/chinese-real-estate-investor-to-repay-millions-1.3998380
    “purchased three homes in Surrey worth $1 million, $2.3 million and $3.1 million, while his wife paid $2.5 million for a Vancouver house … the homes in Vancouver was bought following a withdrawal on the line of credit”

    (articles focused on Van but it can easily happen anywhere in Canada)

    In terms of Easy Money, see definition in Investopedia:
    http://www.investopedia.com/terms/e/easy-money.asp

    “What is ‘Easy Money’
    Easy money, in academic terms, denotes a condition in the money supply. Easy money occurs when the U.S. Federal Reserve allows cash flow to build up within the banking system as this lowers interest rates and makes it easier for banks and lenders to loan money. Therefore, borrowers can acquire money more easily from lenders.

    How Easy Money Works

    An easy monetary policy may lead to lowering the reserve ratio in banks. This means banks get to keep less of their assets in cash, which leads to more money going to lenders. Because more cash goes out to borrowers, the interest rates lower. Easy money has a cascade effect that starts at the Federal Reserve and goes down to consumers.”

  117. I’m paying more attention these days to “cancelled” listings. There are many reasons why a listing could be cancelled. One is to reset the days-on-market counter. This refreshing of the listing does work to sell the property to those that are not familiar with the neighborhood. Sometimes that is accompanied with a price reduction but not always. Some real estate board’s don’t allow the counter to be restated as it screws with the statistics but in BC……eh.

    What makes cancelled listings interesting is that you get to see what properties are not selling. Sometimes it is due to the overzealous asking price and other times it’s because the property is just a bit off from what today’s narrowly focused purchaser is wanting to buy.

    Those properties that are cancelled and not re-listed may also be showing sellers reluctance to take a loss on the property. It isn’t enough to have bought a condo two or three years ago at $250,000 and sell it today at the same price. When all the cost of purchasing and re-selling are taken into account that would be taking a loss. The seller who bought needs to cover their expenses, commissions and put some jingle in their pockets and if it looks like they might not get that price they cancel the listing in under 40 days rather than let the listing expire after 90 days. The difference between the previous purchase price and the cancelled price gives some insight into what a seller may consider as a reasonable return in their minds over the last 2 or 3 years. A kind of glimpse into the expectations of sellers.

  118. As I mentioned before there is large foreign money backing these local projects

    Didn’t Marko say this was not the case in response to you stating this before? I don’t understand where you are getting this information from, a comment made on the VV board? Which projects?

    I’m not saying this is not possible, but it appears to be gossip rather than fact unless you can provide a reliable source? I don’t understand how the economics of such a venture would be enticing to a foreign lender given the low rates in Canada and the costs and risks involved in developing land here.

    If there is more information on this I would be interested in reading it.

  119. Local Fool, it was evident for a short period but no one was tracking it previously to last summer. Preventive measures are a smart thing to do when you’re #3

    Agreed. While I don’t see a lot of evidence of direct influence, the data is not complete and I think as a precautionary measure it is warranted here. I believe the current implementation has enough provisions to not punish those coming here to work.

  120. Local Fool, it was evident for a short period but no one was tracking it previously to last summer. Preventive measures are a smart thing to do when you’re #3 and the Toronto scene is now going to push many foreign buyers out of there.

    As I mentioned before there is large foreign money backing these local projects, which will only eventually influence the rest of the market if you do nothing. You have agents actively marketing Victoria and that’s enough evidence to show they won’t stop anytime soon.

    I don’t want another Vancouver here, it’s already a gong show from what a great town it used to be.

  121. @ Hawk,

    “This is asking for action to be taken so that our residents can afford homes here.”

    I’m not opposed to such a tax, but I don’t think this little city is being overrun by international money. Hence, I don’t think it’ll make much difference, other than potentially in the minds of some local speculators. Remember, many here think we’re in a New Paradigm™.

    Here’s a new article from Better Dwelling, which I think makes the point a bit better than I can. This mess has Canadians to blame, IMO.

    https://betterdwelling.com/city/toronto/foreign-buyers-domestic-greed-121000-toronto-homeowners-multiple-homes-city/

  122. 418 Heather St slashed $90K. Nice place too in James Bay by Beacon Hill Park in the $1 million range. Smells like something turning here combined with slow open houses.

  123. I’m not a fan of the west shore but compare the Pembroke sale to 3232 Navy Court or 3706 Cornus Court, either of which you can get for almost half a million less.

  124. Great to see some action from city council. Now we get the whining from the agents who have no problem selling out this town. Maybe they should tax the out-of-province investors/speculators too who like to rent out their places like an AirBNB.

    Victoria council asks B.C. for foreign speculators tax

    Victoria council is calling on the province to immediately impose a 15 per cent non-resident buyers tax here to cool what has become one of the three hottest real estate markets in the country.

    The request comes after what some councillors see as the success of the same foreign buyers tax imposed last fall in Vancouver and as Ontario Premier Kathleen Wynne announced a 15 per cent foreign buyers levy in the Toronto area.

    “We all know that we have a housing crisis and that the cost of home ownership and rent is getting higher and higher and the dream of home ownership is getting further and further away for many of our residents,” said Coun. Jeremy Loveday, who sponsored the resolution with Coun. Ben Isitt.

    “This is asking for action to be taken so that our residents can afford homes here.”

    http://www.timescolonist.com/news/local/victoria-council-asks-b-c-for-foreign-speculators-tax-1.16307896

  125. Vicbot, I was not intending to be sarcastic. I was looking for answers to these points as they don’t reflect my understanding of how our mortgage system works.

    the banks don’t bother asking international investors for proof of income when they take out mortgages

    I am aware that if a foreign borrower has more than a 50% down payment, in some cases 35%, and proof of one year’s mortgage payments on hand, then proof of income may not be required. Is this what you are referring to? If so, I can understand this as, in the bank’s view, their lending risk is mitigated and they likely do this based on default stats. Banks are corporations in the business of making money, until the federal government imposes lending or foreign buyer restrictions or they will operate within their own risk assessment framework.

    I would support more restrictions on foreign investment myself. I would be worried that too much too quick would impact the housing market in a manner that would cause economic hardships to Canadians.

    Then there’s the low interest rates. Most people call that easy money.

    I don’t know what to say to this except it is a loan subject to interest rates that, while currently low, are not insignificant: for many interest makes up half or more of their mortgage payment each year. I would also not view it as “easy money” myself given the significant repayment obligations and the 25 year commitment during which time period interest rates could rise.

    You say you are referring to speculators. I’m not sure what that term means or how it differs from investors or at what level someone becomes a “speculator” and should be restricted. I’m not sure what limits need to be place don this besides lending limits and increased taxation. Right now we are in an up market that does, imo, need some intervention, but that won’t last forever. I don’t really understand where the right limit is for affordability and the economy myself.

    I also don’t know what percent of homeowners are speculating in RE, but they are still subject to credit limits and mortgage lending rules and I can tell you that it is not that easy to get a second or third mortgage in Canada and you’ll pay more for it.

    Maybe you are talking about people using HELOCs in major centers like Vancouver and Victoria to buy a second place? If so, you have to have a lot of equity and income to do this and some do.

    The stats show that the % of Canadians that own a rental is not that high. A new study pegs the number of Canadians who own a rental property at 5%.
    http://business.financialpost.com/personal-finance/mortgages-real-estate/canadians-dont-just-love-home-ownership-theyre-growing-fond-of-income-properties-too

    The causes of the current market conditions in Vancouver, Victoria and TO are not, imo, due to one or two factors. They seem to be due to a combination of factors that we’ve covered here.

  126. @ Beancounter
    Grand experiment in Cheap + tons of Credit
    – 5000 years lowest recorded rate
    – world debt @ 215 Trillion USD, up 100 Trillion in the last decade
    http://www.cnbc.com/2016/06/13/12-trillion-of-qe-and-the-lowest-rates-in-5000-years-for-this.html

    Global Real Estate @ 2.7 World GDP and rising since 2015
    North America: 5% of world population, 21% of world RE values
    http://www.valuewalk.com/2016/01/global-real-estate-value/

    Global Real Estate is 60% of the World’s net worth
    http://pdf.euro.savills.co.uk/global-research/around-the-world-in-dollars-and-cents-2016.pdf

    The Chinese are not coming for long-term settling
    – warnings about bubble
    https://betterdwelling.com/city/vancouver/chinese-media-now-warning-canadas-housing-crash-will-worse-us/
    TRANSLATED from an article this month: Bubble is only getting bigger in Canada, it will pop, from one of the most influential investing sites in China.
    http://www.microsofttranslator.com/bv.aspx?from=&to=en&a=http%3A%2F%2Fwww.xftz.cn%2Fa%2F2017%2F0413419184.html

    TRANSLATED: another RE site in China. Put your money in Thailand, forget about USA/Canada, high deposit required and estate tax. Returns are up to 10% appreciation + 10% income. haha
    http://www.microsofttranslator.com/bv.aspx?from=&to=en&a=http%3A%2F%2Fny.fccs.com%2Fnews%2F5126574.html

    5 myths about China from McKinsey
    http://www.mckinsey.com/global-themes/china/five-myths-about-the-chinese-economy

  127. Doug Porter was second fiddle to Dr. Sherry Cooper for many years at BMO. His comments likely reflect the number of indexes that track price appreciation in Canada. Sitting in the ivory office on King Street; these guys don’t drill down to the data, nor would it be worth their while, for a market such as Victoria. All they see is wow, it’s gone up and a lot of people have moved to Victoria and prices have gone up.

    If you see his quotes from the last 30 days ago, they make the National Enquirer seem tame. It’s all about grabbing the headlines and this is his “big call” to make a name from himself to separate him from everyone on Bay Street.

  128. Totoro, the banks don’t bother asking international investors for proof of income when they take out mortgages. Then there’s the low interest rates. Most people call that easy money.

    To be honest, you’re taking my quotes completely out of context & your questions sound sarcastic. If you re-read it, I’m referring to speculators. Some courtesy would be appreciated.

  129. everybody is still playing the game with easy money

    What easy money, who is everybody and what game? I don’t know anyone that matches this description.

    The big risk to them all is actually how much the banks will clamp down on the free money

    What does this refer to? What is “free money”?

    As far as I can tell it is harder to get a mortgage through a bank than it used to be but once you have a mortgage there is no “clamp down” provision and banks have an interest in seeing you pay your mortgage?

  130. “What brings you to Victoria anyway or is it just that there isn’t a househuntcalgary.ca?”
    I bought a house in Victoria in 2007. I rent it furnished for short term rental to buyers beween houses, people renovating their homes or people needing a place while looking to buy. I come out and stay between tenants. Your blog is great to keep informed on the market.

  131. Leo:

    Everyone would agree that last summer and fall had a very hot market. So saying that there were 350 mil of sales in the two million mark is not surprising.

    But, what are the sales number for SFH in the city of Victoria and Oak Bay in the last three months for homes over two million. I am not looking for dollar value but actual number of homes sold. My unscientific impression is that sales in that tranche have seriously slowed to just a handful of houses in the first quarter of this year. This might change in the next few months but I am not seeing a large number of sales so far.

  132. Leo, it seems that the article is missing some quotes from Porter that may have explained things in more detail. I agree, the August quote doesn’t explain it well.

    There’s also this: “Porter noted Victoria is the only city outside of Ontario with a double-digit average price gain in the past year with the home price index up 20 per cent year over year.”

    I think he’s comparing YOY to other cities for many other months (maybe including March 2017?)

  133. I’m thinking Porter knows how much foreign mortgages are being taken out here as well as foreign cash funding all these condo buildings going up. It’s been confirmed it’s backing many projects.

    Certainly possible he has better data… But he didn’t say foreign mortgages, he said price appreciation.

  134. AskWhy,
    I’m thinking Porter knows how much foreign mortgages are being taken out here as well as foreign cash funding all these condo buildings going up. It’s been confirmed it’s backing many projects. Long termer on VV and on here stated it.

  135. Poor Richard isn’t making any moola LeoS. Maybe he should start a Gofundme page for starving out of town agents who have to troll Victoria blogs for business.

    AG,
    They won’t take my 50% off bids….but won’t be long til they do. 😉

  136. So all the crazy development and house buying in Langford that has mushroomed over the last 24 months is QE and Foreign capital driven? Sorry but I don’t think that’s correct.

  137. At least in South Victoria there seems to be a real glut of properties of 2 mil plus and very few sales in the last three months. At this pace of sales we must have well over a years worth of inventory in that tranche.

    Hmm… In 2009-2014 we had about $100M worth of sales over $2M every year. In the last 12 months we had $350M. Don’t really see this slowdown.

  138. The TC recently posted a story claiming that there were as many realtors as there were listings. If true, that means very little money to be made selling RE atm, and what you do make you need to work very hard for.

    Don’t shed too many tears, sales volume is still way up so lots of money out there being made.

  139. Actually real estate is my second job, it is a good supplement to my architectural career.

    Aren’t you in Alberta? What brings you to Victoria anyway or is it just that there isn’t a househuntcalgary.ca?

  140. Tuesday could be a rough day when no offers come in.

    Might be a good day to put in an offer yourself, Hawk?

  141. “72 new listings today, only 25 sales.

    I am seeing 88 and 33; however, largely a function of everyone listing on Thursdays and taking offers Monday evening”

    Tuesday could be a rough day when no offers come in.

  142. “Fed rates heading up at least twice more this year, Canadian long rates will match, maybe more as the bubble starts to emit explosive pungent fumes and bond markets don’t like the risk after watching Home Capital fraud implode.”

    A relative of mine is a mortgage specialist in Ontario. He said if the rates go up, a lot of people will not be able to keep up with their mortgage payments based on the mortgages people are taking on today. I believe this to be true because I have a couple of friends who are deathly afraid of losing their jobs. They know they will likely lose their homes, so imagine if rates ever do start creeping up. Why put yourself and family at such a risk?

  143. Referencing the article on how the foreign buyers tax is clearly having an effect on Victoria: http://business.financialpost.com/personal-finance/mortgages-real-estate/little-doubt-foreign-buyers-are-pumping-up-victorias-housing-market-says-bmo-chief-economist

    Doug Porter said “If there’s really any doubt that the non-resident buyer tax in Vancouver had an impact, look no further than Victoria’s accelerating price growth since August,”

    I’m not a fancy economist like Doug Porter, but I really don’t see what he’s going on about with “price acceleration since August”.
    Here are the prices since 2015 (sorry for the bad X axis label, the major axis grid is every 6 months so January and July). Anyone see any signs of price acceleration in August 2016?
    Here is the same data with 12 month trailing average to remove seasonality.
    You can see the sharp uptick in the beginning of 2016 when the market here exploded but nothing after August 2016. Also you can see the market conditions (MOI) did not heat up significantly after August 2016.
    The data:

    Median SFH Price
    Jan 2016: $600,000
    July 2016 (before tax): $664,000 (+$64,000)
    Dec 2016 (after tax): $660,000 (-$4000).

    So no price acceleration there. However the monthly prices are highly variable so looking at 12 month trailing average:

    Jan 2016: $572,210
    July 2016: $626,586 (+$54,376)
    Dec 2016: $654,304 (+$27,718)

    No price appreciation there either, in fact a slowdown in price appreciation after the tax.
    Of course one could argue that the average and median prices are not representative due to changing sales mix. So let’s use a repeat sales index like Teranet:

    Jan 2016: 151.40
    July 2016: 174.00 (+22.6)
    Dec 2016: 180.40 (+6.4)

    No price acceleration there either. So I don’t know what Doug is looking at, but I don’t see it.

  144. 72 new listings today, only 25 sales.

    I am seeing 88 and 33; however, largely a function of everyone listing on Thursdays and taking offers Monday evening.

  145. “What are the chances that speculators will rush to another, already inflated market, to buy in only to see their expected profits cut by new taxes or laws?”

    There was definitely a surge in activity in Toronto after Van introduced the tax. It would be reasonable to assume they’ll try other cities.

    There are strong signs of both domestic & international speculation & capital flight in & to all “desirable” stable countries right now – Victoria isn’t immune to any of it. We’re just another dot on the map, a place to store $ in RE.

    FWIW, one topic discussed by some Vancouver friends – they have seen signs that it’s easy for foreign buyers to still hide the purchases via their very large family networks – so they don’t believe the “official” data about % of foreign buyers – but of course, there are domestic speculators too – everybody is still playing the game with easy money.

    The big risk to them all is actually how much the banks will clamp down on the free money, because the banks are desperate for higher profits/returns (as we’ve seen in the news with employee sales tactics).

    (Local Fool, agree on the house – a cross between Harry Potter & Italian renaissance? 🙂 )

  146. Deb:

    If I was speculating here in Victoria I would be trying to get out before the election. Things might pick up over the next couple of months but there is a definite slow down on the pace of sales.Buying today with the hope of flipping a few months down the road seems to be a bit risky.

  147. Leo:

    I noticed that a few new listings have come on in Souh Victoria; James Bay in particular now has quite a few listings compared with a month ago. A few more in Oak Bay as well. Another new listing in Uplands were almost nothing has been selling since the start of the year.

    I have a thought, which well might be wrong, that if you are listing a house in the two million and up range that you are basically waiting for an out of town buyer.At least in South Victoria there seems to be a real glut of properties of 2 mil plus and very few sales in the last three months. At this pace of sales we must have well over a years worth of inventory in that tranche.

  148. I have a question for all those experts out there.

    Could the new laws being implemented in Toronto have an impact here? The implication that if the housing market shoots up in a particular area additional cost/taxes will be put in place to control speculators in that market?

    What are the chances that speculators will rush to another, already inflated market, to buy in only to see their expected profits cut by new taxes or laws?

  149. “After each loss of a bid it becomes more and more difficult for the client to persevere.”

    Sorry, blame my ignorance if you like but why is the clients difficulty hard work for the realtor. I see no connection here. Is it stressful for the realtor to watch the client balance how much debt they can take on vs how much they want a house. If it is I suggest they are in the wrong trade. The way I see it there are just too many realtors, at the moment, in this market.

    Give it a year or so and it could be a completely different story with only one offer being made with the comment take it or leave it!

  150. It’s beyond ridiculous to hear anyone crowing about government regulations in the residential RE market as socialist or communist. Get educated in basic economics. Since when have we ever lived in a free market? What do you call the BOC’s policy of inflation targeting and QE? Pillars of the free market system? If we had a free market in this country we’d be the 51st state faster than you could sing O Canada. A house is meant to be lived in, not turned into a commodity by two industries (finance and RE) that make used car salesmen look like the second coming of St. Francis of Assisi. There is simply no fundamental economic basis for this run-up other than a dislocation imparted by both QE and foreign capital. None.

    The central issue is that governments around the world have outmoded or altogether non-existent policies/laws/regulations to deal with this unprecedented economic experiment of cheap money. And it is absolutely unprecedented in human history. The 10x-real economy-GDP global credit bubble created by QE is running around chasing yield, and not surprisingly a large chunk of it has found a home in real estate. China alone in the last 15 years has created over 28 trillion in credit – this in a country where the mean income wouldn’t pay for your average ’78 used Camaro. Just as regulations were needed to deal with the robber barons and oil monopolies of yesteryear, governments will again need to get with the times and adapt to the realities of today’s world.

  151. Hawk, I would love a government job! However like yourself I am too opinionated to be a government employee! They want people that just follow orders! Oops will probably start something there! Actually real estate is my second job, it is a good supplement to my architectural career.

  152. Maybe you should be a sellers agent versus a buyers agent Richard then you wouldn’t starve. You can then chant at the open houses “The Vancouver people are here ! Hurry up with your bids, time is counting down! “.

    I recall reading how government workers are working as agents on the side. Maybe you need one of those jobs Rich. 😉

  153. Vicbot;
    I totally get why people are livid at the “flippers” especially off shore ones and they should be taxed etc . But I sincerely believe they are being used for political expedience. I mean look, Victoria has one of the hottest markets in Canada,
    close to 30% price increases in 18 months and there is nominal evidence of them affecting the local market. Costs of construction have skyrocketed no thanks to many new Code compliances and the incessant bureaucratic hurdles, delays etc. and governments have to take ownership of these costs instead of searching for some other entity to take the blame.

  154. This market is way more difficult for a realtor to make a living than a balanced market.

    The TC recently posted a story claiming that there were as many realtors as there were listings. If true, that means very little money to be made selling RE atm, and what you do make you need to work very hard for.

    Sounds pretty stressful to me.

  155. HAWK:
    Your brilliant comment,
    “Funny how when the gravy train ends they all scream like babies cause they might have to find a real job.”
    … just goes to show how little you know about the real estate business. This market is way more difficult for a realtor to make a living than a balanced market. First you have to find a house the client wants writing umpteen offers in competitive bids before one finally is accepted. After each loss of a bid it becomes more and more difficult for the client to persevere. Just ask Ksoul how much work their realtor had to do before finally closing on a home. If you think that was in any way easy or easy money, you haven’t a clue.

  156. Fed rates heading up at least twice more this year, Canadian long rates will match, maybe more as the bubble starts to emit explosive pungent fumes and bond markets don’t like the risk after watching Home Capital fraud implode.

    Stress levels jack up, while gwac calls for another 30% so average mortgages go from $3000 a month to $5000 a month on lowest wage growth and part time/self employment doing who the fuck knows. Maybe scraping out Bearkilla’s overflowing septic tank from all the bullshit he pumps out. 😉

    The Fed’s Sticking to Its Rate-Hike Plan Despite Soft Patch

    Don’t bet on the Federal Reserve blinking again.

    U.S. central bankers appear to be on course to raise interest rates twice more this year and remain confident in their forecast for growth of around 2 percent despite a series of weak first-quarter reports.

    https://www.bloomberg.com/news/articles/2017-04-20/fed-unmoved-by-soft-patch-hardens-conviction-on-rate-hike-plan

  157. What would stop me from taking the information and using it.

    It is a crime. And it is not so easy to use this information without other id or access. There would be an extremely high probability of being caught in this situation. The biggest issue is that is a breach of privacy imo.

    The bank has to let the account holder know and notify the privacy commissioner. You don’t have to trust them, there are laws and bank policies on this.

    Shred and forget imo – mistakes happen.

  158. Thanks Totoro, I guess you caught my post before I deleted it. (Case of the heebie jeebies). The other weird thing is that the house is owned by someone other than the person using the address. I suppose it is possible that this person rents the house but it seems odd that someone with that kind of position would rent. Then again, people might think it’s odd that I rent.

    I have to say, I am somewhat surprised that a bank would ask me to shred someone else’s confidential information. What would stop me from taking the information and using it (assuming I had no qualms about things like laws). If it happened to me, I would hope that the bank would disclose the breach and change my account numbers but who’s to say the bank will even tell the account holder. I guess you just have to trust the banks to have your best interests at heart (lol).

  159. “forces such as immigration and economic growth have justified Toronto’s steady rise in house prices in prior years. But with prices jumping by more than 30 per cent recently, “there is a growing role for speculation in that.”

    “There’s no fundamental story that we could tell to justify that kind of inflation rate in housing prices … Demand is being driven more by speculative demand, or investor demand, as opposed to just folks that are buying a house”

    http://www.theglobeandmail.com/real-estate/the-market/toronto-and-hamilton-home-prices-soar-to-march-record/article34679288/

  160. With a massive run up in prices you would think a huge onslaught of new builds would quell the market but that didn’t happen. Why is that? What limits the number of units that can be constructed? Well there is of course the time to construct the units but the other factor is what? That’s right government regulations.

  161. Yes, congrats Ksoul! Glad you found a place.

    “This is beyond socialism, this is communistic control.”

    How ironic. It’s actually the opposite. It puts RE back into the hands of the actual residents trying to live there, instead of a small, corrupt group of shysters that are trading condos & houses like stocks.

    The trading is a blatant scam. How many articles have we all read that describe how people have had to pay a premium for condo because all the units were sold pre-sales to the developers’ friends & family.

    Nepotism, bribery, swindling – if anyone supports that, then they support the hallmarks of corruption. Maybe the RE industry needs to take a good long look at itself.

    Yes, citizens in a capitalist & democratic society need to be protected from that.

    Hawk, you should write a book, this made me laugh: “Funny how when the gravy train ends they all scream like babies cause they might have to find a real job.”

  162. The irony of the Ontario Government residential market clampdown is that they neglected the biggest culprit of all which is governmental bureaucracy (at all levels) attributing to the ever increasing high cost of housing.

    IMO, it’s defensible to argue that red tape increases costs and delays. It’s another thing to somehow attempt to assert that explosive bubble gains such as that seen in the GTA are attributable to red tape.

    Excessive regulation didn’t cause this housing bubble, Richard. Easy access to credit and ensuing mania did. It would be a bit like saying the US housing bubble was caused by excessive regulation.

    If you want to blame government, IMO the best you could do is blame the CMHC as well as policy maneuvers designed to allow FTBs access to RRSPs, 40 year amortizations, and lax oversight of the existing enforcement policy and legal infrastructure.

  163. Going to be entertaining to watch that pig burst in the gta. Crazy to see what politicians do in the face of an election.

    Still another 20 to 30% to go up in Victoria on this cycle. Enjoy Hawk

    Yes, it will be entertaining watching Ontario from here. Question is: Does more controls in Ontario mean the foreigners now will flock here where there are still no controls? I have to say I agree w/ Hawk (yes, it feels strange) that the foreign tax needs to be implemented BC wide. Even if we don’t have a problem with them why wait until we do? What do we owe them (nothing)? Denmark didn’t wait, and they don’t and won’t ever have a problem, and their people are much happier for it, so it begs the question: why should we wait?

    The restrictions in Ontario came way too late, there are going to be lots of people hurt there who were buying in the FOMO frenzy of recent months. I guess in one sense it’s their own fault, but in the other hand – sometimes people just buy homes because they need a place to live (what a concept). Like in BC, the Gov’t in Ontario waited far too long to do anything.

    Love the graph Hawk – but my bet is in Victoria whenever it does stop rising here, after ‘return to normal’, in the core for SFH it just goes flat for a while. No endless fields of cookie cutter homes in our tiny rocky outcrop of land here. And – not many are leaving or reliant on local incomes. Keep dreaming though. You never know, sometimes dreams really do come true (well, maybe in places like Westhills).

    My thoughts on John’s numbers is they are skewed and inaccurate. It doesn’t take much of a variable in a small market like our core to skew numbers one way or another. One has to look at the long term picture to really get a good idea on what’s going on, not just the last three months. Also, you may have noticed it was winter over the last three months – you did mention the coldest wettest ever which I thought was like shangri-la compared to the rest of Canada! It was actually nice to see a bit of snow that mostly melted after just one day 😉

    Ksoul – glad things worked out for you. It goes to show through perseverance in life that eventually, things almost always work out. I’ve found that in my own life – challenging times never last, tough people do.

  164. BTW gwac, maybe you should stick with the numbers too. As per John’s post, SFH’s in the core are up only 3% in 6 months but downtrending 5% the last 3 months from Peak Victoria.

    It’s all over dude, they’ve blown their wads and maxed out the leverages. Nowhere to go but down in a ball of flames. Did you buy your lot yet or still too chicken ? 😉

    Month Sale Price, Median
    Nov 2016 $875,000
    Dec 2016 $871,500
    Jan 2017 $950,000
    Feb 2017 $925,000
    Mar 2017 $919,999
    Apr 2017 $900,000

    source VREB

  165. @Barrister

    We are in the Colwood area. Not far from where we currently live in Langford. Anywhere closer to town would have killed us financially. Plus, I do really like it out here. Lots of beauty to be enjoyed and a house that does not needs thousands in renos and require me to go above and beyond our max price.

  166. “Still another 20 to 30% to go up in Victoria on this cycle. Enjoy Hawk.”

    Good thing there’s lot of psych meds available, many like gwac with severe loss of reality will need a lifetime prescription.

    All charts revert to the mean. Since someone pays you to know that it shows you need a check up ASAP.

    PS, don’t let your boss know. 😉

  167. Does this strike anyone as odd.

    No, it is a mistake, just shred the documents. The bank/lender has privacy laws that apply to it and a process to deal with this. Banks in particular have to report it to the OPC.

  168. By the way, dont bother trying to get old, it is not what it is cracked up to be. Staying young forever is a much better alternative.

    What you might think of doing is adding 10 or 15 years to your actual age. Then when someone asks you how old you are, you’ll get complements on how young you look. You can even go further and explain to them your secrets of staying young is by drinking distilled bat urine. You could make a small fortune from all those late night bathroom visits by bottling your own pee and selling it to the millennials. Jesus – they’ll buy anything.

  169. The irony of the Ontario Government residential market clampdown is that they neglected the biggest culprit of all which is governmental bureaucracy (at all levels) attributing to the ever increasing high cost of housing. Sure they have offered $125M over 5 years of partial rebate of development fees, whoopie! 25M/year, really? when they up the costs every year and add new ones, what a joke.
    HERE’S THE REALITY; What used to take three months to get a Development Permit now can easily take 2 years and more. A 50-150 unit apartment building needed approx 110 drawings for all consultancies (architectural, structural,mechanical,electrical) now it is 5X that much and can be as much as 10X. I would bore every one to death to ream off all the permits now required and associated costs can be as many as 30 if demolition of existing building is involved. Can you imagine that the Legislature Building in all it’s complexity and detail amounted to all of 8 drawings. But today a crappy apt. building
    can require 100X as many? Where’s the insanity, but the point is, THIS is a huge reason for the crazy soaring cost of housing. The developer/builder sits on this land for years passing along all costs to the consumer, did the government address this? Nope, rent controls and consumer paperwork is the answer. RANTED OUT!

  170. Going to be entertaining to watch that pig burst in the gta. Crazy to see what politicians do in the face of an election.

    Still another 20 to 30% to go up in Victoria on this cycle. Enjoy Hawk.

  171. Ksoul:

    Thrilled that you found your new home. Wonderful news. What part of town did you end up in:–
    Langford, Saanich, Sidney?

    By the way, dont bother trying to get old, it is not what it is cracked up to be. Staying young forever is a much better alternative.

    Again happy for the good news.

  172. Amazing to see an agent call positive changes to real estate rules communistic. Funny how when the gravy train ends they all scream like babies cause they might have to find a real job. It’s an inventory problem due to outrageous prices, not a supply problem.

  173. Agreed that shadow lending is an unknown risk. People taking second mortgages just to buy the house let alone keep it boggles the mind. How does an ordinary person short a MIC?

  174. This is beyond socialism, this is communistic control.

    Little known fact: The Bolsheviks were really just a bunch of bitter renters who wanted to crash the Russian housing market.

  175. Cohodes says the Home Capital brokers were instructed to make the mortgage applications qualify. This is going to get real ugly, can only imagine how far reaching into other subprime lenders and the big banks now that we know the employees were all pressured to renew mortgages they shouldn’t have got.

  176. we found a house! We did not have to compromise and we did not have to exceed our budget

    Very pleased for you! Could be better news and you must be feeling so much better.

  177. “Ban on presale flipping is a bit harsh perhaps”

    Harsh ? The foreigners have been raping us by evading tax for ages and BC still allows it. It’s criminal and allows insiders to flip like a penny stock and drive up prices.

    Vancouver Pre Sale Condo Ponzi Scheme

    It’s the perfect speculative system. Pay deposit increments of 5%, if the market tanks, one simply walks away from the 5, 10, or 15% worth of deposits. If the market continues to boom you flip it for an easy profit and dodge capital gains tax. Good luck tracking down an international buyer living in China, he’s long gone.

    Ever wonder why new condo developments remain empty for months after vacancy is issued? Surely it can’t be that hard to find tenants in a city gripped with a 0.5% vacancy rate.

    http://vancitycondoguide.com/vancouver-pre-sale-condo-ponzi-scheme/

  178. Hey All,
    Just putting this here as Local Fool suggested I do an update for those who are aware of my situation. After searching and getting ready to attempt to find a rental, we found a house! We did not have to compromise and we did not have to exceed our budget (although I still see these house prices as disgusting). I am content to stay far away from this market and feel bad for anyone that chooses to be a part of it. I was lucky to have a realtor that supported me and did all he could to keep me positive even when there was not much to really keep me that way. I know some that have had a totally different experience with their realtors. This has been a hell of a roller coaster ride and I am ready to grow old in our new home. Thanks to many of you who put out suggestions and kind words. They were greatly appreciated.

  179. WELCOME TO ONTARIOGRAD

    I can’t put my finger on it, but there was something vaguely satisfying about reading your post.

    Will be interesting to see how the market responds. It doesn’t quite look like a game changer to me, but who knows.

  180. One and 2 seem like practical changes to ensure proper payment of income and transfer taxes. Silly not to have this information already imo given the tax rules. I’m not sure what the objection is?

    Three seems to be a big issue affecting the marketability of pre-sales if there is a ban on assignment. I’m unclear if this just applies to RE agents and buyers need consent of the seller, like in BC now, and if it does that seems fair and practical. I suspect it will be like in BC.

    The proposed “vacancy tax” appears to be for political effect I see no practical reason to bring it in. Going to cost more to implement than they will collect and there are numerous workarounds as we have seen in Vancouver.

    We already have the annual rent increase limits and standard term rental contracts in BC. I don’t really see a big issue with bringing this in in Ontario?

    Mostly it looks like Toronto is copying Vancouver and BC.

  181. Ah yes much wailing and gnashing of teeth from the industry. A sign of effective intervention.

    Rental controls are arguable but the rest seems common sense. Ban on presale flipping is a bit harsh perhaps, not sure how that will be implemented.

  182. “Home capital going down in flames. Massive fraud under the not so watchful eye of CMHC. Wonder what else is lurking out there?”

    3 CEO’s in how many months now ? Expect to see some jail time coming up. Agree on the shadow banking, it’s like going to a loan shark. Miss one payment and they come knocking for the keys.

    Good to see Ontario kick it. Now if only all of BC could get the foreign tax and the pre-sale anti-flip laws. That’s where the foreigners are laughing all the way with zero repercussions.

  183. WELCOME TO ONTARIOGRAD
    1.)”Anyone who buys real estate in Ontario will have to reveal their citizenship and place of residence.”
    2.)”Buyers will also be required to state whether the property is to be used as a primary residence or investment, whether the buyer is acting as a representative for the eventual owner, and to reveal the names behind any numbered company purchasing real estate.”
    3.)”The government will ban speculators from “assignment flipping” in the pre-construction housing market,”
    These are just some of the new heavy handed measures brought to bare on the citizens of Ontario this morning. Wow, unbelievable! Government now to have control over every aspect of residential development. Guess what is going to happen? Residential development is going to stop dead in its tracks. This is beyond socialism, this is communistic control. Construction capital will flee this sector and head for office, warehousing, retail and hospitality. So there won’t be any “bubble bursting” in Ontario’s RE as there will quickly become a shortage crisis. Instead of the market being allowed to self correct as HAWK prophesied, government has intervened which will eventually lead to nightmarish shortages. Added to this insanity,
    “annual rent increases for all tenants who stay in their rental housing will be limited to Ontario’s inflation-based guideline (which this year is set at 1.5 per cent),” will absolutely guarantee no more apartment building construction. 1.5 per cent? Seriously? Is there anyone in this country that believes our annual rate of inflation is 1.5%? Our municipalities regularly year over year raise our municipal taxes a minimum of 3%. Has anyone’s insurance rate kept under 1.5% or utilities? These are the costs behind rentals, so landlords are expected to take ever depreciating returns? I don’t think so, construction of new apartment buildings, DEAD and worse, landlords will shirk maintenance and improvements.
    And adding insult to injury
    “Starting Monday, homebuyers in Ontario in providing information about their citizenship and place of residence when they buy a piece of real estate anywhere in the province, there will be a two-week grace period between April 24 and May 5, where there will not be any penalties if people fill out the new form incorrectly.”
    Well, Premier Wynne the only thing that’ll come close to your 1.5% inflation standard will be your eventual approval rating.
    THE REST OF CANADA SHOULD WATCH AND LEARN.

  184. He took a look at his transactions and calculated that he spent $200,000 last year, more than twice as much as he had the year before.

    How to save a million dollars by age 30:

    1. Be rich.
    2. Don’t be poor.

    Only joking. But still, saving a million isn’t that interesting if you make several hundred thousand a year.

  185. I also think the shadow banking system is a wildcard. As the lenders get more and more regulated, more people go elsewhere where there is no regulation. Our highly controlled banking system may be becoming less controlled the more we try to control it.

  186. @Local Fool
    “I don’t think the conclusion is senseless. I could say that I am “ready to buy”, yet I choose not to because of the state of this market. I am far from alone in making this choice. So if you have legions of people “ready to buy” but are not, then it makes sense. The counterargument is well then, they’re not really buyers, are they.”

    If this were true that would lead to a dead cat’s bounce when the market starts to drop. Prices decrease and those intentionally on the sideline jump in at the lower price, temporarily re-creating demand and higher prices. I think this has happened in Vancouver already. Of course eventually we run out of these people and prices continue to fall.

    @LeoS
    Home Capital isn’t just going down in flames because of the fraud in my opinion. Pretty sure they’re handing out sub-prime mortgages, and they’ve been on a downward trend since 2014 (wonder if the oil crash had an effect there). Equitable Group and Genworth have also recently been in decline or flat as well.

  187. Home capital going down in flames. Massive fraud under the not so watchful eye of CMHC. Wonder what else is lurking out there?

  188. @ AG,

    I appreciate your comment. You see, I am going out to dinner tonight and I think my resulting bill just shrank by about 80%. The reminder of the bill is taken up by the cost of buying gravol. This site really saves me money.

    Barf, shudder…

  189. Does that mean I don’t have to pay the $599 anymore? I want the secrets.

    The $599 includes a free back rub from Ross Kay (value $300) and a complimentary mustache trimmer (value $200). So the secret data is almost free, if you think of it that way.

  190. Same. I don’t see any evidence of price acceleration after the foreign buyer tax. It continued up at the same trajectory as before

    Does that mean I don’t have to pay the $599 anymore? I want the secrets.

    Intro – I was recently called “Local Food” Had a good laugh at that one.

  191. More locally, I don’t buy the foreign buyer/Victoria argument one bit, regardless of how “little doubt” Doug Porter thinks there is.

    Same. I don’t see any evidence of price acceleration after the foreign buyer tax. It continued up at the same trajectory as before

  192. Intorovert

    That’s a good blend!

    Better than Intropervert, which I was once called on this blog. Memories!

  193. I wasn’t talking about you Intorovert but whatever.

    American prices have comeback just in time for the next tanking of the credit market.

    IMF Warns of Possible Trouble Ahead for U.S. Corporate Bonds

    “The IMF issued its Global Financial Stability Report Wednesday ahead of a meeting of world and economic officials in Washington D.C. this week. Economists highlighted the risk sharply rising interest rates could pose for U.S. companies that have binged on low-cost debt in recent years.

    Already, the economists see signs of credit deterioration. While on the whole, balance sheets remained strong, IMF economists noted net leverage ratios are sitting near historical peak levels.

    More troubling though is the sharp decline in average interest coverage ratios — or companies’ ability to pay for their debt — over the last two years. Also worrying: The share of income consumed by debt servicing hit its highest level since 2010.

    The IMF says the market’s pricing of corporate bond risk has decoupled with the decline in interest coverage ratios, resulting in an increasing number of firms at risk of default.”

    http://blogs.barrons.com/incomeinvesting/2017/04/19/imf-warns-of-possible-trouble-ahead-for-u-s-corporate-bonds/

  194. Drives the highway daily looking for roadkill and empties to keep up the negative equity mortgage payments.

    Bought my place in Gordon Head for $5xx,xxx in 2009. It would probably sell today for $8xx,xxx or perhaps more. In these eight years, my tenant and I have been aggressively paying down my mortgage. So I think I’ll make it.

  195. American house prices will have recovered to bubble peaks in another year or two, so about 12 or 13 years to get back to zero nominal returns from the previous peak.

    Not only will it take nearly a decade and a half to get a net zero return, that presumes interest rates in the States aren’t poised to rise. Last I heard, Auntie Janet is feeling a bit hawkish…

  196. “Canadian real estate never corrects – and if it does, it will be minor and short lived.”

    Ask an American what they think of that logic. If only Canadians knew how silly we’re looking when viewed from the outside…

    American house prices will have recovered to bubble peaks in another year or two, so about 12 or 13 years to get back to zero nominal returns from the previous peak.

  197. The author is claiming the Toronto pig has a way to go.

    Wasn’t looking at what the author was claiming. He could be right, though. These things can go on for a lot longer than anyone thinks possible. When the last doubter becomes the converted though…

    Take Vancouver – “the market’s coming back!” I doubt it (durably, anyways), but the speculative culture there runs so deep it will take more thrashing to cause the confidence to fall. We aren’t there yet, IMO, and certainly not in Victoria. My guess is many there are just convinced this is a buying opportunity, ie:

    “Canadian real estate never corrects – and if it does, it will be minor and short lived.”

    Ask an American what they think of that logic. If only Canadians knew how silly we’re looking when viewed from the outside…

  198. Local. The author is claiming the Toronto pig has a way to go. Sorry that bloated pig is on the roast and being served up to all the idiots over the past 1 year. Congrats on those who bailed from that want to be first class hole of is town.

  199. @ Gwac,

    Thank you for posting those charts. I like the one with Van and Tor beside one another. Illuminating.

    I think it undermines the narrative regarding foreign buyers and their moving from BC to Ontario. In my view, this supports the notion that this is largely a domestically driven phenomenon and a classic asset bubble.

    More locally, I don’t buy the foreign buyer/Victoria argument one bit, regardless of how “little doubt” Doug Porter thinks there is.

  200. “Anyone want to take a stab at what bearkill is a classic example of?”

    His ahole arrogance shows when there’s been more price slashes in his own hood and max leveraged slumshacks in Gangford but too dumb to see it. Would rather traumatize his 10 year old daily that they’re on the street in precisely 8 years and don’t forget it. But he did obtain a degree in slinging beer at the Sub pub for free fries and keg dregs. Drives the highway daily looking for roadkill and empties to keep up the negative equity mortgage payments. 😉

  201. “Don’t know what to make of this – thoughts?”

    Wishful thinking. No bubble ever has a soft landing, has never happened in history. Bubbles like this blow up huge because buyers stop buying as the long awaited disaster is finally upon them.

    Toss in social media exposure and this pig will implode in the ugliest of all hard landings. FOGB = Fear Of Going Bust.

  202. I’m wondering what the % of Vancouver buyers was at the ‘Peak’ last year? Since their numbers have now dropped off apparently (or, did some move here – start renting – and suddenly become ‘local’?). I guess the stat’s on buyer origins isn’t really all that accurate when people suddenly become ‘from Victoria’ right after moving here.

    If Ontario brings in all kinds of restrictions tomorrow – what does that mean for us? Anything? If, according to that BMO economist – foreign buyers really are already a problem here – will more just come here if Ontario shuts the door on them?

    It’s true there are many older homes in Vic/OB/core in need of extensive renovations (i.e. crap boxes). So, when a good quality home in the core comes up, it often gets scooped up. As we saw with George St – sometimes even homes of questionable quality are still sold well over asking.
    Of course, sometimes with a good quality home the list price is so high it acts as a deterrent. I found this when house hunting last year – good quality homes, well priced in the core are extremely rare.

    Here’s a 1990’s home reduced today in South Oak Bay – almost $100k! 916 Deal St. now priced at $1.269k. No asbestos here, but still not selling. Maybe 1990’s decor has gone out of style? 😉

  203. They say real estate is never a bad investment and they don’t mind losing money every month because eventually it will make them rich. They buy up all the property they can just like Monopoly. It seems like the whole country has this mentality.

    That seems to be a significant problem today, speculation and hoarding. At these low interest rates you might not worry about losing $300 a month but if that were to go to $500 or $700 that could be a game changer for speculators hoarding multiple properties. But it isn’t just interest rates. The net loss on a property can increase with taxes, vacancy, bad debts (tenants skipping out on you) and maintenance costs too.

    An investor would be hesitant of buying any property operating at a loss each month unless there were other circumstances such as under market rents or possibly surplus land that could be sold. A speculator buys property for appreciation and is willing to subsidize any loss for a short time period. This is not a long term game plan for them and that property will come back onto the market which would add to future inventory. If today’s shortage of inventory is being caused by speculation and hoarding then you can expect inventory to increase when the speculators call it quits.

  204. “Bearkilla
    April 18, 2017 at 10:40 pm
    I think introvert is a classic example…”

    Anyone want to take a stab at what bearkill is a classic example of?

  205. Wow that Saskatoon article is frightening! It really scares me that so many people think this way about real estate. These are people’s retirement plans! I know people like this too. They say real estate is never a bad investment and they don’t mind losing money every month because eventually it will make them rich. They buy up all the property they can just like Monopoly. It seems like the whole country has this mentality. I just hope it works out for all those people who only have real estate to retire on or we are all in trouble. It’s hard to argue against BC real estate with such big gains recently though…I think that’s the problem.

  206. I’d say a major issue now is not lack of buyers due to pricing, but lack of desirable inventory.

    I don’t know if what you’re saying is accurate. I see a lot of desirable houses listed on the real estate board’s site. Desirability, like beauty, is in the mind of the beholder. I could give an example of any current listing and the odds are that someone on this blog would not consider that property desirable while others would.

    Desirability by itself can’t be quantified as it is likely different for as many buyers as there are houses. However, once you bring in price then you can look at the different price ranges to see if demand is outpacing supply or vice versa. For example, if you can’t find a desirable house in the Core for $900,000 means you now would have to actively look to buy in the million dollar price range. If enough people were to do that then you would add more demand for the million dollar range and the months of inventory would drop. However, if there was no decline in the months of inventory in the $1,000,000 to 1.1 million range that could mean that the buyer at the $900,000 range has been priced out of the market and is no longer an active participant (prospective purchaser) in the market place.

  207. Every day slowly putting the pieces as to why single family homes are skyrocketing even on the Westshore. Just found out Colwood is enforcing this new policy on lots than <5920 sq/ft where you have to submit a “development permit” along with the building permit. The development permit takes 8 to 16 weeks so the city staff can assess your “character and form,” including colour palate and exterior materials.

    Kind of makes sense as to why places in the Westshore are skyrocketing. In between all the stakeholders such as BC Housing, municipalities, etc., the beauracy behind building a home is become absolutely insane. It is difficult to ramp up construction to manage demand.

    Not to mention they take $2,800 + size of home calculation for this “development permit” to tell you they are happy with the colour of the home.

  208. “When you buy a condo most of your money goes into building and not land.”
    ………and the rest goes into the reserve fund!

  209. Leo:

    The possible problem with the Saskatoon situation is that he bought mostly building and not land.
    Buildings depreciate generally over time. The question becomes whether the building will depreciate faster than the land increases.

    My dad had the same view of land and after WWII bought 400 acres of farmland in Streetsville Ont.
    I asked him why farmland and he said that when it came to selling nobody is going to care about the state of the barn. He rented it to a farmer which paid the property taxes and a little extra.

    When you buy a condo most of your money goes into building and not land.

  210. I think introvert is a classic example of what I’m talking about here. Extremely low IQ by all measurements. No social skills, stays at home, never leaves the core. Primary focus is spelling and grammar mistakes on blogs. That is what I’m talking about here.

  211. Thought this was interesting…

    Sale price / Original Price ratio.

    The panic moment in 2009 is clearly visible. Also clear trend with the market.

  212. The only reason foreign buyers would get into mortgage financing would be to inherit property through foreclosure circumventing the foreign ownership tax! Oh, those sneaky foreigners!

  213. Whoops, computer glitch, I deleted my comment to re-post more succinctly. Here it is:

    Re: Leo — Ross’s claims.
    1. The foreign buyer tax had no effect as evidence by “the data”. – What data shows the tax had no effect? I haven’t seen Ross show this. The data I’ve seen is pretty clear about it having an effect.
    6. Home owners are overtaxed based on incorrect stats on housing values – Incorrect. Taxation rates are set to meet revenue requirements, your taxes don’t change if house values go up.

    Re: Leo #1 – Ross Kay doesn’t share his raw data, which is part of the frustration. However, he did predict Van’s sales drop for the correct month, months before it happened, based on his “data”. No one else did that I believe?

    I like the foreign tax and I do think it helped further slow the market, but the market was already showing signs of slowing before the tax was announced. If you look back at the SFH numbers for say North Van, you can see the sales starting to stall/wobble Jan 2016 (with that being more noticeable from March on) and peak prices were reached in Feb I believe. Then sales really dropped in July (before foreign buyer tax was announced, July 25 I think?).

    And if you look at Victoria numbers from the VREB (SFH, not including waterfront and acreage) you can see a similar pattern forming — sales starting to stall in October 2016 and then a big drop happened in Jan 2017.

    Ross has said to watch April numbers when released and that effects will be seen in July in Vancouver. He’s got an interesting perspective on low inventory levels as well and how that plays out.

    Time will tell if Ross is right or if he’s completely off his rocker.

    Re: Leo #6 — Actually, if property values go up then property taxes often go up as well, depending on the property. It’s a windfall for the city and part of the problem . Talk to anyone who’s had to go to the city to argue their property taxes year after year about this dynamic.
    http://vancouversun.com/news/local-news/metro-vancouver-property-taxes-go-through-the-roof

  214. Leo:
    Have you ever looked into the accounting of the billions that CMHC collects? For the life of me I can’t figure out where all that money goes.

  215. He did predict Van’s sales drop for the correct month, months before it happened. No one else did that I believe?

    Can you point to that prediction?

    If you look back at the SFH numbers for say North Van, you can see the sales starting to stall/wobble Jan 2016 (with that being more noticeable from March on) and peak prices were reached in Feb I believe. Then sales really dropped in July (before foreign buyer tax was announced, July 25 I think).

    Not sure where to get the earlier data, but in July sales were still strong, then it dropped a lot in August after foreign buyer tax.

    Time will tell if Ross is right or if he’s completely off his rocker. But at the end of the day, it’s a different perspective than the norm, and one, in my opinion, that’s worth keeping an eye on.

    Sure, that’s why I listen to his stuff and pick through it. I just haven’t been overly impressed thus far.

    Actually, if property values go up then property taxes often go up as well, depending on the property.

    Only if your house increased more than the average. And yes, property taxes go up every year. In the article you mentioned, SFH homes increased more than condos so they got more of the tax burden, but for every tax loser there is a winner (the condo owners).

  216. Good summation Andy. Ross called it last year in Vancouver and his methods may not jive with the norm but shouldn’t be discounted.He said he helped design the HPI and his years in the bizz and awards give cred in my books. No doubt the foreign tax gave it the extra nudge though.

  217. Measuring “Current Buyers”? never heard of such a metric, seems kind of ridiculous. There must be all kinds of “hopefull” buyers and a whole lot of “ifs”; well life just ain’t that cosy.
    A “Buyer” is someone that signs a contract, period!
    Maybe he should have used the term “Lookers” ! or “Tire Kickers” in which case there are probably YEARS of them out there!

  218. Some people will always trying to time the market. In an up market they may try to wait for a drop, but when the market turns they also try to wait in case prices drop further. Seems to me that the impetus to wait in a falling market is the stronger of the two.

    I’d say a major issue now is not lack of buyers due to pricing, but lack of desirable inventory. I would adjust my area and expectations but I wouldn’t take on a place needing major renovations if I was already at the top of my budget.

  219. @Penguin Sure, that’s why the metric is untenable. The number of current buyers is impossible to measure and may change at any time as conditions change.

  220. Leo I get your point but not sure why you think because there are “waiting” buyers now that they will always be there ready to pounce. If things start to go sour I’m sure those who were getting ready to buy may have second thoughts or will try to time the market (wait longer). If interest rates increase they may not be able to afford a house anymore. Anyway I think there are various reasons why the non-buyer buyers could decide to opt out when things settle down.

  221. I don’t think the conclusion is senseless. I could say that I am “ready to buy”, yet I choose not to because of the state of this market. I am far from alone in making this choice. So if you have legions of people “ready to buy” but are not, then it makes sense. The counterargument is well then, they’re not really buyers, are they.

    I would argue the opposite. If there are legions of buyers out there, then that is a positive sign for the market. Some will buy now, others will wait until the insanity slows down and buy then. Either way there are continued sales.

    If there are very few buyers out there i’d be more worried. That means sales can’t be sustained for much longer because the buyers aren’t there and the market will likely top out soon.

    Either way I do agree it would be a good metric if anyone could possibly determine it.

    One thing’s for sure – you’ll need to pay if you want to possibly find out.

    I signed up once and they sent me an invoice for $499 to access the full site. Sorry I just don’t love you guys that much.
    However if you send me $599 you can access the secret part of HHV with the metrics I only give to my most valued clients.

  222. Dasmo on April 18, 2017 at 2:09 pm
    Speaking of neighbourhoods…. The transition from Mt Tolmie to Fairfield is stark! I can sum it up like so…. beautiful tree lined streets with lovely character houses and crappy cars VS unwalkable streets in a crappy suburb with Teslas and BMWs everywhere.
    Birds of a feather flock together…..

    I’m completely missing your point here… it sounds interesting, I just don’t follow.

  223. So more buyers ready to buy make for a softer market? I’m gonna call this a bunch of BS.

    Well, regardless of how he’s calculating this “metric”, I don’t think the conclusion is senseless. I could say that I am “ready to buy”, yet I choose not to because of the state of this market. I am far from alone in making this choice. So if you have legions of people “ready to buy” but are not, then it makes sense. The counterargument is well then, they’re not really buyers, are they.

    Depends on his methodology I suppose, which I will admit makes me curious. Some kind of bootstrap calculation maybe. One thing’s for sure – you’ll need to pay if you want to possibly find out.

  224. did Ross Kay ever explain how he calculated days of demand?

    “At the current pace of sales, the number of home buyers out in the market today that are willing, ready, and able to buy a home, how many days will they last before the existing buyers are gone?” -RK

    How he imagines to get the number of buyers out there I have no idea. There is no way to determine that.

    “In Vancouver, Last spring you were down to about 57 days worth of buyers now, you have 199 days worth of buyers. That’s right folks, your prices are going to keep sliding because the buyers are holding back”

    This makes no sense to me. So more buyers ready to buy make for a softer market? I’m gonna call this a bunch of BS.

  225. Leo I agree. I was being a little sarcastic; should have included a winky face. The idea that MOI is a good indicator of demand relative to supply (and therefore likely price direction) seems sound to me. The demand side seems hard to quantify in any other meaningful way.

  226. Leo, nice candlesticks. So, 7 months of inventory is the buyer’s sweet spot. Interesting.

    I wouldn’t necessarily come to that conclusion. The data set 1996 onwards doesn’t include a real correction except the flash crash of 2008. I suspect the region with higher MOI will look different when the next correction arrives.
    I don’t see any reason to believe that in general higher MOI won’t lead to larger price declines.

    This version might be actually clearer. The candlesticks distort the picture at higher MOI because there is a lack of data.

  227. Ross Kay’s offering is unfortunately no different from the typical “Let me show you how to flip houses” paid seminars. They have a view, they stick to it, and they try to sell you on it.

    Ross Kay has his ‘secret data’ to sell, which apparently contradict everything that we know about the market. He says that we should trust him and his proprietary analyses, then he goes on to make elementary errors throughout that interview.

    The housing market desperately needs more oversight, but Ross Kay flogging his product is not the solution. We get much more real information from Leo S.

  228. Ross Kay is not someone who has an opinion I would put any weight on. The fellow I thought had good information for Vancouver was Steve Saretsky.

    I’d say it is very very unlikely that foreign investors have switched to lending money in any great numbers. Mortgage rates are too low and the risks are too high – plus many other reasons.

    More likely something like this to avoid PTT:
    http://vancitycondoguide.com/vancouver-pre-sale-condo-ponzi-scheme/

  229. I have come to believe that trying to predict the housing market is a recipe for insanity or at least extreme consternation. In 2008 I was convinced a residential real estate crash here was inevitable. Well it’s almost a decade later and look what’s happened. I think I’m reasonably informed (I know about things like bond markets, central banking and fractional reserve lending) but I never, ever expected a run up like we’ve seen. It is humbling.

  230. “Call up CMHC and ask them to supply you a chart proving months of inventory or sales to new sales to listings ratio has any correlation to price change at all. They don’t have it, it doesn’t exist, it’s a myth”. – Ross Kay

    No need to ask the CMHC, here it is:

  231. Higher tax bills are more likely if an assessed value is beyond the average in a municipality.

    Of course they are. The mil rate will be lowered but if your property is higher value than average you’ll pay more than average, just like before prices rose.

  232. All the new amenities, shopping, new homes and young families are what drags it down for sure.

    I saw a copy of Langford’s long-term development plan; it’s entitled “No Tree Left Behind.”

    Young families are great (even Stew Young’s family), but when every house on the (newly built) block contains one you’ve got a monoculture.

    These new homes are being constructed as fast as possible, so corners are being cut (normal during a building boom).

    Shopping and amenities? Well, I have no idea how those residents of Oak Bay and Saanich East even survive.

  233. Leo S, did Ross Kay ever explain how he calculated days of demand?

    I’ve never heard of this metric unless he is referring to days on market.

  234. Ross’s claims.

    1. The foreign buyer tax had no effect as evidence by “the data”. – What data shows the tax had no effect? I haven’t seen Ross show this. The data I’ve seen is pretty clear about it having an effect.
    2. Foreign buyers moved to lending money for real estate instead of buying it outright. Good theory, could be happening. Wonder how this could be proven/disproven?
    3. BC has already experienced the largest real estate correction in the history of canada – ????? So despite no major price corrections in Vancouver and no price corrections anywhere else in BC this is somehow a record setting decline?
    4. A decline in first time home buyers has changed the sales mix and distorted average prices – First time buyers do not only buy lowest priced homes. If the first time buyers are declining, those homes still get sold, so this is a bad conclusion to make.
    5. Repeat sales indexes are 100% parallel to average prices after adjusting for the time delay – Not correct, the methodology is different and they don’t mirror each other (only roughly).
    6. Home owners are overtaxed based on incorrect stats on housing values – Incorrect. Taxation rates are set to meet revenue requirements, your taxes don’t change if house values go up.
    7. MLS HPI is 6 months delayed. Still don’t see any evidence of this. There are no delays in the MLS HPI for Victoria.
    8. Sales numbers are down in Victoria due to market exhaustion – Possible. But I don’t see how you can ignore the lack of inventory.
    9. Current Victoria prices are the peak – We’ll see. I don’t agree.
  235. Thanks Andy. Nice to see Ross agrees with what I’ve been saying . The Victoria market is exhausting itself and starting to roll over just like Vancouver did a year ago. Peak Victoria indeed. 😉

  236. On a positive note I learned from an industry insider that the Vancourites coming here have dropped off the cliff.

    Thanks for reminding me to look into
    this. Last I checked Vancouver buyers had dropped a lot but they also changed the field to a drop down selection rather than free form text entry so I have to verify that I’m querying the data correctly.

  237. Re: VicInvestor1983
    http://vancouversun.com/news/local-news/early-signs-that-vancouver-housing-market-correction-may-be-over-royal-lepage

    That article sounds a bit like a spin piece to me. If you look at the numbers in the Van market, for SFH, in North Van as an example, March sales were down 46% from last year’s sales. Burnaby sales were down 45%. Sure inventory’s low so that’s supported prices, but what happens if inventory comes back online? I’m curious to see what end of April numbers show.

  238. I’m Hawk apparently.

    Either way, have anything useful to contribute or are you just going to be another introvert, and bitch about people using the site.

  239. I’d say that predicting a 10% increase is a lot closer than predicting a crash.

    Didn’t see any of those.

  240. AG another unsubstantiated comment like when you stated James Sopper was Just Jack too?

    James Soper is not Just Jack.

    Just Jack is John Dollar. I thought we already established this.

    Anyone want to play out the “I’m Spartacus” scene?

  241. AG another unsubstantiated comment like when you stated James Sopper was Just Jack too?

    You are a tiring and boring little man.

  242. Or is this just one more of your troll techniques along with inferring the quote is from Just Jack who has not posted on this blog this year.

    Because Just Jack = John Dollar? You can’t escape your history just by changing a username.

  243. Surprise you guys allow gas stations in Oak bay.

    They are not allowed. There aren’t any in OB that I know of.

    Most core-dwellers don’t leave the core because…. the core is awesome!

    Also the OB Border Patrol.

  244. AG- the quote is directed at a slow start to the market. Although it is true that median prices for Saanich East, Oak Bay and Victoria has declined slightly as volume has declined. Yet, I don’t see how you convinced yourself that the writer meant an immediate real estate crash was about to happen when it is clear that the quote is directed at a slow start to the spring.

    Or is this just one more of your troll techniques along with inferring the quote is from Just Jack who has not posted on this blog this year.

    Month Sale Price, Median
    Nov 2016 $875,000
    Dec 2016 $871,500
    Jan 2017 $950,000
    Feb 2017 $925,000
    Mar 2017 $919,999
    Apr 2017 $900,000

    source VREB

  245. AG

    Surprise you guys allow gas stations in Oak bay. 🙂

    Why do posts keep disappearing and reappearing. Spooky

  246. Just Jack are you still claiming that you didn’t write that paragraph? Extraordinary. I copied it from your post, then you deleted it for some reason. Very strange behaviour. It’s not even particularly incriminating, so I’m not sure why you care.

    Those numbers you posted show a 3% increase in 6 months. And I don’t really trust your interim number for April anyway, as it always seems to vary (on the low side) from the official numbers.

    EDIT: I guess Just Jack deleted his post from 2:55, that I was replying to. It’s all fun and games today.

  247. The core is amazing but you need Langford for Costco

    True. I do love Costco. And a Costco in Oak Bay would not be welcome at all. We’re already getting upset about the new Domino’s on Foul Bay Road. Where’s an artisanal pizza joint when you need one?!

  248. Rook,
    Mayor Moonbeam needs another hairdo, as she’s out to lunch on how money laundering enters real estate markets. On a positive note I learned from an industry insider that the Vancourites coming here have dropped off the cliff.

    Must have come here, seen the shitty collection of crap boxes compared to Vancouver, and decided to to hold their noses before the big town tanks for good and go down with the ship versus this rusty hulk of asbestos reno’d over priced junk.

  249. AG

    The core is amazing but you need Langford for Costco and the speedway so every place has its purpose. 🙂 I do love Bear Mountain. Only problem you have to come down once and awhile…:)

  250. AG – explain how that quote is predicting a decline in prices?

    The ninth word in your paragraph gives it away really. When you wrote “decline” you weren’t referring to sales, as that is mentioned as the causative influence for this decline. If you weren’t referring to prices, what were you referring to? The number of raccoons in the area? Deer? Tulip prices? Old people?

  251. I think most agents that have experienced a decline recognize what this pattern of falling sales means when it happens in what is suppose to be the strongest market of the year. Of course April isn’t over yet and we still have May but the spring market is taking a long time to start this year.

    AG – explain how that quote is predicting a decline in prices?

    To me, it reads that the spring market in those high priced areas is slow to start this year.

  252. I’d say the crash is coming here soon. Hawk probably bought in.

    As for the neighborhoods I stand by assertion that most core dwellers never leave their little hovels. It’s very peculiar. It’s behaviour that goes hand in hand with low iq.

  253. Speaking of neighbourhoods…. The transition from Mt Tolmie to Fairfield is stark! I can sum it up like so…. beautiful tree lined streets with lovely character houses and crappy cars VS unwalkable streets in a crappy suburb with Teslas and BMWs everywhere.
    Birds of a feather flock together…..

  254. City council is owned by the developers who are making a fortune building highrises. It is really that simple. They understand the problem of foreign buyers they just dont care. Their only interests is keeping the developers happy. The rest is just spin.

    Do you even watch (streamed live) the re-zoning meetings?

    Most of the councillors right now are anti-developers but there is huge political pressure on rental housing and really tough to spin a 5, 10, 15, 20 story rental building as not addressing a critical housing need.

    The majority of cranes right now are not building condos but either commercial or rentals.

  255. All the people complaining that Just Jack and Hawk have been wrong have been equally wrong. No one here predicted a 30% increase.

    I’d say that predicting a 10% increase is a lot closer than predicting a crash.

    Anyway, none of us here can make good predictions consistently; there are simply too many variables.

    The problem with Just Jack is that he presents his data in a misleading way to further his viewpoint. He then makes completely unsubstantiated comments like, “most agents that have experienced a decline recognize what this pattern of falling sales means.”

    Hawk has been wrong too, but at least he has a sense of humour.

  256. All the people complaining that Just Jack and Hawk have been wrong have been equally wrong. No one here predicted a 30% increase.

    It’s easy to predict a decrease simply because of the detachment between local wages and housing prices, not to mention that the only reason many can afford to buy is because of current interest rates.
    Things change, and people are going to be hurting.

  257. But Rockland is the only place in Victoria that has a Lieutenant Govenor and all of the children are below average. We get Fairfield’s rejects shipped here.

    By the way, should you decide to stay in Toronto just move to one of the old houses in Rosedale. Fast commute downtown, beautiful setting. Might be a little pricey these days though.

  258. I think most agents that have experienced a decline recognize what this pattern of falling sales means when it happens in what is suppose to be the strongest market of the year. Of course April isn’t over yet and we still have May but the spring market is taking a long time to start this year.

    Just Jack / John Dollar – how many years have you been saying that the market will decline now? Isn’t it getting a little boring?

    I’ve experienced a couple of housing crashes myself. There is no particular sign or signal that precedes them. If it was that predictable, everyone would see it coming. You yourself have been predicting declines for years now, with 100% inaccuracy.

    EDIT: I guess Just Jack removed the post that contained that quote.

  259. … and Oak Bay is differentiated by the highest number of geniuses and most beautiful smiles 🙂

  260. People who don’t live in the core are more well traveled throughout the region and have a much higher level of education and general well being.

    Total nonsense. It is well known that people in Fairfield are the smartest, happiest, and healthiest people in Greater Victoria. Plus our children also have the highest IQs.

    🙂

  261. My thoughts on Langford – the first time I saw it I thought immediately someone in their planning dept. must have been sniffing glue or gas or something. Then I heard from my friend who works in planning in another city that Langford is well known in the BC wide planning community for fast tracking and rubber stamp approving practically everything and anything. I think it also has a lot to do with their long-term mayor’s alpha personality, who is well known as a self serving businessman (‘what’s in it for me’ type, not ‘what’s best for my community’). That said, there are parts of Langford that are semi- attractive (key word: semi). That’s the Goldstream Ave. bit – the Christmas dec’s make it look great. There’s a couple nice small lakes there where you can largely escape the hodge-podge nightmare surrounding (Glen Lake and Langford Lake). My friend in Metchosin is now going to move though b/c he’s right next to the bit that Langford just took over (more happy valley coming near him).

    If I was going to have to live in the westshore (key words: have to) – I would not want to be commuting to the core during rush hour. I would try to choose Colwood or Metchosin or even Sooke over Langford. Traffic is just getting worse and worse and it can take an hour easily many days. (where outside of the rush maybe 20 min’s). They need alternative options to cars – but it looks like all they’ll get are rush bus lanes. The new overpass will only help the afternoon rush heading out of town, as coming into town you just meet more traffic lights at Burnside Rd if going McKenzie or Tillicum Rd if going downtown. The rail needs to be resurrected, but now that it doesn’t go downtown anymore that may be defunct (commuters won’t want to walk downtown from the roundhouse in Vic West on a rainy day). Great planning on that ultra-expensive new Johnson St. bridge w/ no rail going across it anymore – way to go guys.

    So, one can see, there are many reasons why the core is more expensive/desirable. That’s why we need more alternative housing options in the core (sounding like a broken record again).

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

    Victoria, like Vancouver is caught up in a real estate mania with considerable speculation on housing within an 8 kilometer radius of the downtown core. That has caused the difference in property values between Langford and the core areas of Saanich East, Victoria and Oak Bay to diverge substantially over the last few years.

    Most people on this blog concentrate on rush hour being the culprit, but if you don’t have to travel downtown regularly or not during the rush then the commute is only 20 minutes. Hardly enough to explain the substantial difference in prices. However as more prospective home owners are displaced out of the core the prices in Langford have been increasing at a higher rate.

    Year over year increase in prices (January to April) based on 3,345 house sales.

    Langford $628,650 increased 25.5% from last year

    Oak Bay $1,275,000 increased 15.9%
    Saanich East $900,000 increased 19.3%
    Victoria $850,500 increased 13.4%

    If you have no need of commuting or regularly travelling into the city core then Langford provides good value for your money. You will typically get a newer home on a large lot without the negative issues of inner city neighborhoods close to downtown like traffic congestion and on street parking problems. In my opinion, Langford is a better managed city with a newer infrastructure and well designed neighborhoods unlike the older parts (which is most) of the core.

    You’ll pay $900,000 for a 40 year old home in Gordon Head or $550,000 for a similar property in Langford. If you don’t have to commute or chose to use public transportation you are further ahead buying in Langford.

  263. Rook:

    City council is owned by the developers who are making a fortune building highrises. It is really that simple. They understand the problem of foreign buyers they just dont care. Their only interests is keeping the developers happy. The rest is just spin.

  264. I think that’s one weird thing about the south island. People who live in the core never go out and visit other areas. They live in the core and only stay in the core or they “go up island”. People who don’t live in the core are more well traveled throughout the region and have a much higher level of education and general well being.

  265. I’m shocked about George St. But, the location there is almost second to none.

    As for open houses – I went to one on the weekend – and it was quite quiet. I think a large part of that could attributed to Easter hams/turkeys/church/ and egg hunts!
    The house I went to was 1963 Fairfield Rd. listed at $948k but it just sold for $1,025k It was just under 1100sq ft! However, was in very good keep w/ heated floors, etc, so it goes back to what I was saying about a house if in the core – if it isn’t a crap box, and in a good location – it sells! It worked for somebody but I thought it was way to small, and overlooked, plus the road a bit busy.

    Here’s a price reduction for Hawk – 679 Island Rd reduced by $65k to $1,285k, and it’s in uber-desirable part of OB. Not sure what’s going on there but it prob. goes back to list price, and it also is old and looks a bit cold and cavernous.

    Very funny write up in the last post Local Fool – and the bit about me was uncanny 😉

  266. “but I’d say the commute accounts for a lot of the value difference”

    I disagree. There are many other factors. The same factors that make Vic West and Esquimalt cheaper. 🙂

    All these areas are fine to live they are just different and less desirable,

  267. Commute is just one factor. Just drive through the area and you will see what makes the difference.

    Sure Langford lacks the charm of Victoria, OB and large parts of Saanich (in fact parts of Langford are like a case study of how to screw up urban planning) but I’d say the commute accounts for a lot of the value difference. If the commute is not an issue for somebody (due to job location, working from home or whatever), Langford and Colwood become very reasonable options with good access to parks, facilities and shopping. And faster to get out of town to boot.

  268. http://www.timescolonist.com/news/local/mixed-reviews-on-proposed-15-levy-for-foreign-buyers-in-capital-region-1.15788643

    I am so frustrated by this article. Our mayor thinks foreign purchasers buying up to 10% of our inventory is not an issue but thinks supply is the issue? 10% is a lot, enough to completely alter the housing market as we are seeing all over the world currently.We all know that there are various ways of not reporting a house purchase by foreign money. How is it our elected officials seem to be so naive and ignorant surrounding this issue. It really bugs me.
    It’s great they have a completely unbiased and political sounding quote from VREB’s Ara Balabanian. I’m sure his comments are all in the best interest of local taxpayers. Pfffff.

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

    As mentioned before the commute sucks. However if you are coming from GTA you may not find the commute that awful. The distance is puny, but there are some bottle necks that make it slow. At low traffic times it is just about 20 minutes from “downtown” Langford to Victoria city centre. Peak commute is closer to an hour. Longer than that would be unusual (car crash, snow, construction).

    The commute could improve a bit with new overpass being built. However there is a lot of population growth in Langford so the improvement might be temporary. Langford is great value if you don’t have to commute downtown every day. If you are a biker you can bike from the near end of Langford to downtown in about 40 minutes at a leisurely pace, mostly on a separated track.

  270. I just can’t believe how resilient the Vancouver real estate market is!! I have family members who have benefitted tremendously by taking stupid amounts of risk and putting 100% of their $$ (tons of leverage!) into Vancouver R/E. Everyone I see them, I tell them to diversify away from R/E and they laugh at me. They’ve been right over and over again, but in an irresponsible and uneducated way.

    http://vancouversun.com/news/local-news/early-signs-that-vancouver-housing-market-correction-may-be-over-royal-lepage

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