First hints of a deceleration

This post is 7 years old. The data and my views may have since evolved.

Roses are red,
cherry blossoms are pink.
Sales are down,
because real estate is like a squash.

Or so you may believe if you looked at the VREB’s press release which says “Local agricultural production has been delayed due to the late spring, and so has the local real estate market”.  

I’d say the lowest inventory on record may have more to do with the market than soil temperatures but this is not a science.   So where are we at?  

Prices still trending upwards strongly.   Medians are down from last month for detached and condos, but benchmarks are up across the board.   However looking at months of inventory we can at least see that while we are still lower than last April, we are starting to carve out a bottom.

Let’s see if we can figure out a balanced way to report on these kinds of months.   I don’t want to be a cheerleader but despite the 31% drop in sales there still is little weakness that can be found here.  However we’re starting to see some cracks in the market.   What used to be endless months of acceleration in every metric is now showing some areas of slowing.   What’s the good bad and ugly of this market?

The case for more upside:

  • Record low inventory and above average sales for any April since 1996
  • Sales price to original price is at 100% indicating properties are being snapped up without price cuts (I’m honestly not sure if the VREB data system is broken but the last 4 months have been exactly 100%)

The case for a slowdown:

  • There may be a decline in out of town buyers.  Hard to tell at this point since markets are highly seasonal, but there is a drop in out of town buyers as a percentage of the total.  And since sales are down substantially from last year, that means the absolute numbers of out of towners are down quite a bit.  Absolute numbers being down have a large effect since out of towners are pure demand.
  • Sales are down 31% from last year.   Now that is easily explained away by saying inventory is also down 35%.  But how do you explain that April sales are down 5% from March despite an increase in inventory?
    Sales usually significantly increase from March to April as you can see in the chart below.  The last time they decreased was 2010 and 2011 when the market was slowing down.

The Wildcards

  • The Home Capital meltdown may spread to other high risk lenders.   The big banks are fine, but the history of regulatory tightening has driven more consumers to B lenders and shadow lenders.  It’s the wild west out there and once confidence evaporates, these things collapse quickly as we’ve just seen.   How much fraud is lurking out there?  So far it’s very unclear how much of the panic is due to actual substance and how much is just people caught up in the stampede.
  • Housing in Toronto may be bowled over by the new regulations.  When that happens (due to regulations or just under its own weight) fear can take hold of the market and overpower any fundamentals.

Looking at what is selling, single family homes are not making up as much of the sales mix as they were previously.   The high prices are likely sidelining a lot of potential SFH buyers, and those that have moved to condos have seen that there isn’t much choice there either.

So, are we cutting this runup short after just 2 years?   Or are we just pulling back a lit from insane mode to just normal sellers market?     Last time we had a hot market it persisted for about 5 years, but of course prices seemed a lot more reasonable back then.

267 Comments
Newest
Oldest Most Voted
Inline Feedbacks
View all comments
Vicbot
Vicbot
May 4, 2017 10:06 pm

Marko, agree that there are some things that make our standard of living better, and other things that make it worse & more stressful, eg., I did with fewer things back in the 80s and it probably made me happier, and now people are having problems fulfilling basic stuff, eg., an affordable rental or a family home near where they work (so they have more family time) – those intangibles have gotten a bit worse.

But it’s all relative, eg., when I was in my 20s I left the island, lived below my means, worked long hours, and worked with people from China, Lebanon, South Africa, etc. So yes, Wolf, you start to recognize First World Problems when you talk to fellow engineers who’ve survived wars.

Wolf
Wolf
May 4, 2017 9:46 pm

“2 incomes needed to buy more shit tha[n] our parents did not have or need.”

Some people of all ages buy way too much shit. A lot of younger folks I know live quite modesty below their incomes, while others live well beyond them. Same applies to the Baby Boomers.

“I guess there are a lot of trade-offs and we’re still very lucky compared to most of the world.”

Queue the comments about the atrocities in Syria…

Wolf
Wolf
May 4, 2017 9:27 pm

“I have no problem with using a more Canadian definition of rich but certainly you are not suggesting that everyone in Vancouver who has a net worth of 2 million is rich. What does a middle class house in Vancouver sell for these days or in Toronto for that matter?”

Just because you ‘own’ a 2 million dollar house doesn’t mean you have 2 million dollars. Most people ‘lease’ their homes from the bank.

“Having a partner stay at home is virtually [un]affordable for most people these days while buying a house and also having children. My point was that it now seems to take two incomes to barely afford what one income used to provide.”

Yet all you old folks accuse millennials of being entitled and not working hard.

Marko Juras
May 4, 2017 8:21 pm

True, Barrister – it’s sad that things have changed so much that you need 2 incomes to do what 1 income used to support. Instead of people’s standard of living getting better as we develop better health care & technology, in some ways it’s gotten worse. I guess there are a lot of trade-offs and we’re still very lucky compared to most of the word

It’s not exactly apples to apples. I remember an old electrician telling me that back in the day he use to wire a home in a couple of days….yea no duh. One plug per room and one light fixture and done. A half decent house these days has over 40 pot lights alone.

Everyone is packing smartphones with $50+ per month cellphone plans. I only got a smartphone 7 years ago when I started real estate. Prior to that when I worked for VIHA i use to make a $25 pre-pay voucher last 2 month.

Standard of living is a lot higher…..even the cheapest cars these days have 6-8 airbags, power windows, power locks, etc., etc.

Hawk
Hawk
May 4, 2017 8:07 pm

Here’s a good one via Garth for all you millennials. Patience grasshoppers. 😉

https://www.youtube.com/watch?v=T-nKA1GCEnc

Gwac
Gwac
May 4, 2017 7:52 pm

2 incomes needed to buy more shit that our parents did not have or need. 🙂 Houses are more expensive due to 2 incomes also.

Vicbot
Vicbot
May 4, 2017 7:44 pm

True, Barrister – it’s sad that things have changed so much that you need 2 incomes to do what 1 income used to support. Instead of people’s standard of living getting better as we develop better health care & technology, in some ways it’s gotten worse. I guess there are a lot of trade-offs and we’re still very lucky compared to most of the world.

CS
CS
May 4, 2017 7:15 pm

@ James Soper

“The Farquhar Auditorium at UVic.

That’s definitely on the saanich side of Uvic.
You’ll have to be content w/ whatever they have at Camosun.”

I spoke of “Oak Bay and adjoining urban areas.” The university is only a stroll away from where I live in Oak Bay.

But the Gibson Auditorium at Camosun is certain an attractive venue, much more so than the Royal Theatre, although smaller.

Barrister
Barrister
May 4, 2017 5:46 pm

Having a partner stay at home is virtually affordable for most people these days while buying a house and also having children. My point was that it now seems to take two incomes to barely afford what one income used to provide.

Marko Juras
May 4, 2017 5:35 pm

Having a partner stay at home isn’t a symbol of wealth these days – it’s just one of many choices.

https://www.theatlantic.com/business/archive/2017/03/busyness-status-symbol/518178/

James Soper
James Soper
May 4, 2017 4:57 pm

The Farquhar Auditorium at UVic.

That’s definitely on the saanich side of Uvic.
You’ll have to be content w/ whatever they have at Camosun.

Vicbot
Vicbot
May 4, 2017 3:47 pm

Barrister, I understand you were just curious as to what people like to do downtown – fair question. I was surprised how many events actually happen in both Victoria & Oak Bay before I moved back.

For a lot of people now, though, the “better lifestyle” is for both people to pursue their “dream jobs” – not for one to stay at home and cook up a dinner party. Great for some, not for others.
Having a partner stay at home isn’t a symbol of wealth these days – it’s just one of many choices.

caveat emptor
caveat emptor
May 4, 2017 3:29 pm

A lot of the money laundering is totally legal under our current rules. One of the reasons Canadian RE is so popular.

While the critiques are accurate in theory; in the real life case studied Richmond isn’t terribly full of house poor seniors that purchased long ago.

I thought the property tax bit was about saying the property tax “should” be more progressive (higher % rates for higher values) but I admit I didn’t read that part super closely.

Entomologist
Entomologist
May 4, 2017 3:09 pm

Caveat –
I saw that article too, but don’t miss the bits critiquing the methodology and data. Not necessarily a sign of fraud and tax evasion.

“For instance, if we had one city that was full of people who bought these houses a long time ago and are now retired, they’re going to have very low income and very high house prices because they bought houses a long time ago and they’ve increased in price,” he said.

“If, in comparison, I have a city that’s full of young people who are buying condos and paying one third of their income on their mortgage payments, then their ratio of house prices to income is going to be very, very different.”

Also, the foreign income buyer (but home owned by a local Can. citizen student or homemaker) phenomenon would be another obvious source of this effect. Not that it’s a good thing for Vancouver, IMO.

I also thought the bits discussing property tax were off. Property tax has nothing to do with income in BC – just home value, residency (ie do you live there), and age. I don’t know how Wozny, one of the authors of the study, missed this obvious point.

Local Fool
Local Fool
May 4, 2017 2:59 pm

Warren Buffett explains how bubbles are formed

Back in 2010, Buffett answered several questions about what he thought caused the housing and credit bubble in an interview with the Financial Crisis Inquiry Commission (FCIC).

Mid-way through the interview, he also gave a clear explanation of how bubbles are formed, which we pulled and shared below. It’s a stunning read for anyone interested in investing or behavioral economics — or, more broadly, in human behavior.

“… My former boss, Ben Graham, made an observation 50 or so years ago to me that it really stuck in my mind and now I’ve seen evidence of it. You can get in a whole lot more trouble in investing with a sound premise than with a false premise.

If you have some premise that the moon is made of green cheese or something, it’s ridiculous on its face. If you come out with a premise that common stocks have done better than bonds [… that] became the underlying bulwark for the [1929] bubble. People thought stocks were starting to be wonderful and they forgot the limitations of the original premise. So after a while, the original premise, which becomes sort of the impetus for what later turns out to be a bubble is forgotten and the price action takes over.

Now, we saw the same thing in housing. It’s a totally sound premise that houses will become worth more over time because the dollar becomes worth less.

It’s related, of course, though, to houses selling at something like replacement price and not far outstripping inflation.

So this sound premise that it’s a good idea to buy a house this year because it’s probably going to cost more next year and you’re going to want a home, and the fact that you can finance it gets distorted over time if housing prices are going up 10 percent a year and inflation is a couple percent a year. Soon the price action – or at some point the price action takes over, and you want to buy three houses and five houses and you want to buy it with nothing down and you want to agree to payments that you can’t make and all of that sort of thing, because it doesn’t make any difference: It’s going to be worth more next year.

And the lender feels the same way. It really doesn’t make a difference if it’s a liar’s loan or you know what I mean? Because even if they have to take it over, it’s going to be worth more next year. And once that gathers momentum and it gets reinforced by price action and the original premise is forgotten…

The Internet was the same thing. The Internet was going to change our lives. But it didn’t mean that every company was worth $50 billion that could dream up a prospectus.

So understandable to the public – they might not understand stocks, they might not understand tulip bulbs, but they understood houses and they wanted to buy one anyway and the financing, and you could leverage up to the sky, it created a bubble like we’ve never seen.”

http://www.businessinsider.com/warren-buffett-explains-how-market-bubbles-form-2017-5

Barrister
Barrister
May 4, 2017 2:07 pm

I noticed that both houses on Dallas road have dropped their price by a couple of hundred thousand. Lots of luck selling them once the cruise boats and the tourists are in.

caveat emptor
caveat emptor
May 4, 2017 2:05 pm

I have no problem with using a more Canadian definition of rich but certainly you are not suggesting that everyone in Vancouver who has a net worth of 2 million is rich. What does a middle class house in Vancouver sell for these days or in Toronto for that matter

The definition of high net worth that I quoted consider assets exclusive of the primary residence only. So all those home-owning Vancouverites and Torontonians are not automatically high net worth.

caveat emptor
caveat emptor
May 4, 2017 2:02 pm

And I have no problem with you being in the top whatever, just a problem with your definition.

Likewise. As long as the well off (which includes me) pay a fair share of taxes I have close to zero envy for people who have accumulated more wealth than me by hard work or luck. What I do envy occasionally is people who arrange their affairs so they can take a chunk of time off to do really cool things that are unavailable to me because of limited holiday.

I actually understand how wealthy people can feel like they aren’t really that wealthy. A lot depends on the circles you move in. For instance I have friends with a respectable family income of $200K. They send their kids to SMUS and inevitably spend much time in that social circle. Relative to that group of families they are lower middle in income and very modest in their lifestyle.

Barrister
Barrister
May 4, 2017 1:51 pm

I have no problem with using a more Canadian definition of rich but certainly you are not suggesting that everyone in Vancouver who has a net worth of 2 million is rich. What does a middle class house in Vancouver sell for these days or in Toronto for that matter?

I am not sure that we fundamentally disagree on some underlying points. What distresses me is what percentage of the national wealth is now owned by the top 1% and also by the top .05%.

I am also distressed by the number of high worth Canadians that have dropped off the income radar since their official residence is in a tax haven such as Monaco or in the Caribbean.

totoro
totoro
May 4, 2017 1:23 pm

Rich is a relative term of measure.

Yes, and your frame of reference is out of line with all existing measures used in Canada and excludes those in the top 1%. How can the top 1% not be “rich” when they have more than 99% of the population if it is a relative measure? We live in Canada and are talking about Canadians are we not?

You are now excluding all but the top .01% – normally defined as an ultra-high net worth person and, even at that, all that takes is 30 million US, plus a paid off house. There are only about 5300 of these folks in Canada. As for billionaires, last count there were 92.

I’d suggest the usual measure of “rich” would at least include everyone in the top 1% by net worth.

You seem to have moved the goal post because your friends and family and acquaintances are past this measure? I guess that you can do that for yourself as your own relational definition for your own subgroup, but I would not apply it to all Canadians or put it out as a useful measure on this blog. Only someone who is unaware of how the vast majority of people live would dismiss the majority opinion that a net worth of 2 million plus puts you into the rich category.

And I have no problem with you being in the top whatever, just a problem with your definition.

caveat emptor
caveat emptor
May 4, 2017 1:22 pm

Rich is a relative term of measure. Internationally, a billion puts you into that category. Two million
in Toronto just means that you own a nice house that is paid for. Certainly it does not buy you a mansion on Post Rd.

Seriously? A teacher or city worker in Victoria are part of the global 1% by income.

But seriously looking at net worth:

•High net worth: Those with US$1 million to US$5 million of investable assets – not including the primary residence and other hard assets like cars or jewelry. Canada has roughly 298,000 individuals in this category – a little less than one per cent of the population.
•Mid-tier millionaires: Those with US$5 million to US$30 million of investable assets. Canada has roughly 30,000 in this category – a little less than 0.1 per cent of the population.
•Ultra-high net worth: Those with over US$30 million of investable assets. Canada has roughly 3,300 in this category – about .01 per cent of the population.

A mere US 30 million portfolio puts you in the top o.01 % in Canada. For most of us plebs that would count as rich though I quite realize that even at that wealth level some trophy properties remain tantalizingly out of reach and there will always be other folks with bigger yachts.

Barrister
Barrister
May 4, 2017 1:21 pm

Hawk:

had fun reading the front page of the TC?

Barrister
Barrister
May 4, 2017 1:11 pm

John Dollar:

I tend to agree that there seems to be a number of trolls but equally worrisome is the number of people who seem to look for offence where none exists or is even intended.

Since I seem to be offending everyone, let me continue by pointing out that Oak Bay in my opinion is downtown these days. I would certainly agree that Victoria for restaurants and cultural events compares very favorably with any city its size but that does not mean it is New York, London or even Toronto in those categories. But it has has other qualities that more than compensate for that.

totoro
totoro
May 4, 2017 1:02 pm

Not commonplace and totally skewed by the people the author meets in his work, which is dealing with insolvent folks.

Two or three decades ago, it would have been unthinkable for people to hold the equivalent of $30,000 or $40,000 (or more) in credit card debt. Yet now that has crept into the Canadian psyche as just something one does.

Complete exaggeration. The average Canadian holds $3,954 in credit card debt and median net worth has been rising quite a bit. The median net worth of a family in Canada in 2012 was 381,300 in 2012.

http://canada.creditcards.com/credit-card-news/canada-credit-card-debit-card-stats-international-1276/
http://www.statcan.gc.ca/daily-quotidien/140225/t140225b001-eng.htm

What is true is that debt to income ratio has risen but this is because of an increase in mortgage debt due to rising house prices. Insolvency rates are really low and, in BC and Ontario, they have been on the decline. 3.6/1000 in Ontario and 2.9/1000 in BC. In Alberta the rate rose from 3.1 to 4.0/1000 due to the oil issues I believe.

https://www.ic.gc.ca/eic/site/bsf-osb.nsf/eng/br01820.html

Barrister
Barrister
May 4, 2017 12:50 pm

Totoro:

Not helping myself?

Rich is a relative term of measure. Internationally, a billion puts you into that category. Two million
in Toronto just means that you own a nice house that is paid for. Certainly it does not buy you a mansion on Post Rd.

I have no idea why you would extrapolate that I am out of touch with the average Canadian. If anything I have been seriously concerned with the fact that the Canadian middle class has been dropping further and further behind in the last few decades. It is not a healthy state for the economy. Someone mentioned that no one has time to have dinner parties with both spouses working. There is something wrong when in my fathers day a single middle class income was able to provide a better lifestyle than today where both spouses seem to be working their derriere off and barely managing to make ends meet.

As to restaurants, I most certainly never gave an opinion. I am the last person to ask about restaurants since I am not a foodie in an shape or fashion. I have actually gone to a fair number
of restaurants in Victoria since some of my friends are foodies. Personally, I am fairly indifferent to what I eat but I am aware that a lot of people find food central to their pleasure. I am just as happy with soup and sandwich at home while reading a book.

What I do find disconcerting is the vast leaps of assumption that people make on this blog that seems to be fueled by some sort of underlying anger.

CS
CS
May 4, 2017 12:48 pm

@ JS

“Longest Waterfront? that’s inaccessible to anyone but the owners”

Well that’s nice for the owners! But I have long advocated rezoning the waterfront for higher density with the condition that developers provide a public walkway along the waterfront.

“best auditorium? don’t even know what you’re referring to here.”

The Farquhar Auditorium at UVic.

“beuatiful park? or here. Which is better than Beacon Hill?”

Er, never mind. We don’t need crowds visiting

“Victoria’s newest five-star hotel – built in 1927”

Completed last year on the site of a hotel built in 1927, which was not a a 5-star hotel, though to be honest, I preferred the old hotel, it was comfortably seedy and never too crowded.

CS
CS
May 4, 2017 12:41 pm

@Vicbot:

“And it’s too bad you only see beautiful people twice a year..”

Oh, there are beautiful girls in Oak Bay too, they’re just not so thick on the ground as on Government Street on a spring morning.

Local Fool
Local Fool
May 4, 2017 12:28 pm

Is this really common place or just extreme media coverage?

I would say somewhere in the middle. My sense is that debt when viewed in population aggregate is getting excessive, which of course has its implications. It’s also a principle sign that the credit cycle is reaching maturation. I think this particular cycle is pronounced due to what I perceive as excessive demand for credit spurred by the low cost of it.

But on a more individual level, I suspect it’s more polarized. There are people who are generally anti-debt and owe diddly. There’s still tonnes of those folks out there, but probably some are falling off into the “debt doesn’t matter anymore” mantra. Of those who were always more open to debt though, might be becoming more and more open still.

I have no idea if any of that’s actually true, just an intuitive answer.

James Soper
James Soper
May 4, 2017 12:25 pm

Here in Oak Bay and adjoining suburban areas we have the best beach, the longest waterfront, the finest homes, the quietest residential streets, the best auditorium, and the most beuatiful park, five eating places on Estevan alone, Victoria’s newest five-star hotel, and a bunch of restaurants on the Avenue, plus no panhandlers — though it’s true we have the deer.

Best beach is Arbutus Cove.
Residential in Oak Bay isn’t that quiet unless you live on a dead end cul de sac, but there aren’t too many of those.
Longest Waterfront? that’s inaccessible to anyone but the owners
best auditorium? don’t even know what you’re referring to here.
beuatiful park? or here. Which is better than Beacon Hill?
Victoria’s newest five-star hotel – built in 1927
no panhandlers – the govt liquor store is in oak bay fyi. Also have seen guys on the avenue at the benches across from cobs.

3Richard Haysom
3Richard Haysom
May 4, 2017 12:20 pm

Barrister was suggesting a follow up meeting since he enjoyed it so much! I’m in town till Sat May 13 so I’m up for it, who else might be interested? Even if it’s just me and Barrister that’s cool!

John Dollar
John Dollar
May 4, 2017 11:57 am

Barrister welcome to the world of internet trolls. These people may not even live in the city. Their purpose is to be as nasty, contradictory and disruptive as possible. They may even be paid by the real estate industry to do this all day.

If someone is blogging on all the great stuff to do in Victoria and they are sitting at home behind a computer screen on a beautiful day like today and not out and about then there is something wrong.
Here are some internet trolls for your consideration…

https://youtu.be/EIMqF7b9FHQ

Vicbot
Vicbot
May 4, 2017 11:39 am

“Never realized how much those down-towners hated we suburbanites”

What are you talking about? Some of the people commenting about how they like downtown (including me) live in OB. And it’s too bad you only see beautiful people twice a year ☺

CS
CS
May 4, 2017 11:33 am

Wow, Barrister, never realized how much those down-towners hated we suburbanites!

But its understandable, I suppose. Here in Oak Bay and adjoining suburban areas we have the best beach, the longest waterfront, the finest homes, the quietest residential streets, the best auditorium, and the most beuatiful park, five eating places on Estevan alone, Victoria’s newest five-star hotel, and a bunch of restaurants on the Avenue, plus no panhandlers — though it’s true we have the deer. Come to think of it, I’d prefer the panhandlers — give them a toonie and they thank you and leave you alone, whereas the damn deer never let up crapping on your lawn and trying to destroy your garden. Then there’s the raccoons, the rats, the squirrels, the rabbits, and the crazy old ladies who feed them so that they can go forth and multiply ….

But having lived both down-town and in Oak Bay, that mausoleum of wealth (or not so such great wealth, in the case of those of us who bought in days of yore), I would say there’s a lot to be said both for downtown and the suburbs. Once or twice a year, I go downtown for the pleasure of walking along Dallas Road, and any sunny day in spring it’s a pleasure to walk down Government Street around noon and see all the pretty women from all over the world. But when one wants only to sit in the sun on a rock, a log, or a park bench and doze a while, the quiet of the suburbs has much appeal.

Luke
Luke
May 4, 2017 10:31 am

2175 Bartlett looks kind of tacky imo. Luke, you refer to “quality” homes often. What exactly does that mean? I’m assuming you are referring to finishings?

Really? Tacky for $2m? Ok, if that’s where we’re at. After over 9 hours sleep I feel refreshed enough to answer… 🙂

When I say ‘quality’ it’s clearly a subjective term (much like saying Victoria is highly desirable). Here’s what I mean: no knob and tube, no ugly oil tank – and probably a more modern heating system than that (above or hidden below ground), no asbestos, probably no rodent infestation, repaired drainage issues, a level floor that doesn’t creek with every step, custom features, newer fixtures (and not from the 90’s please – newer than that), well maintained (so not rotting away or falling apart), the house is not sinking or sunk (some homes in James Bay/Fairfield in former marshlands are), nicely landscaped, well laid out and not closed off rooms, it goes on and on but clearly many homes in the core of Victoria are lacking some of these features. For me, the standards of quality are really high and probably higher than they are for many people. About 9/10 homes I looked at last year did not meet these standards – thank goodness I finally found one, by a custom builder, that did. Of course, reno’s can always happen to fix some of these issues, but I was on my third house and not wanting to do any more reno’s.

I had to laugh yesterday I heard Bear Mtn. described on the radio as ‘Canada’s finest resort community’. Really? I thought that was Whistler. I’ve always thought of Bear Mtn. as too far away, inaccessible, ugly, dry, and contrived. At least they are now getting an alternative road access (to Leigh Rd interchange). I would never want to live there. But, hey, that’s just my opinion.

Vicbot
Vicbot
May 4, 2017 10:17 am

Downtown is a draw for us similar to how we felt about walking around English Bay and Second Beach in Vancouver – an enjoyable place to walk at sunset, take a Harbour Ferry ride, stop in at restaurants, pick up an ice cream, take in a festival. It may be a change in lifestyle over the last 30 years but no matter the size of one’s home, people gathered at restaurants in Van similar to why they do here – because it’s a social place to go, especially when no one has time to cook or do dishes (easier for the stay-at-home spouse to entertain in their house in the 50s). This walkable kind of socializing is what makes Van and Vic interesting. Victoria also has smaller villages to gather like Cadboro Bay or Oak Bsy Ave.

AG
AG
May 4, 2017 10:02 am

buy out Oak Bay once and for all and put up a wall

We would make the City of Victoria pay for the wall, of course 🙂

The only question would be, which side of Foul Bay Road would it go? And where would our ‘Checkpoint Charlie’ be?

AG
AG
May 4, 2017 9:57 am

Barrister,

You imply that the cultural and dining scene in Victoria is sub-par, and you reference your time in New York, London and LA.

Firstly, for someone who only eats out at the Penny Farthing, this is just a silly thing to say.

Secondly, I’ve lived in several of the major cultural ‘hubs’ around the world, and I’ve spent significant time in all the ones you mention. I can tell you that Victoria punches well above its weight when it comes to both food and culture. If you can’t be bothered to go out there and find it, that’s decidedly your problem.

totoro
totoro
May 4, 2017 9:52 am

Rich is counted in the billions these days.

You are not helping yourself by stating people need billions to be classified as rich – by objective measures they don’t. In order to be in the top 1% in Canada and qualify as “rich” you need a net worth of 2 million or more. If you count by income you need to earn above 230k a year.

Stating that those who meet this measure are not rich means you are out of touch with how 99.8% of people live, which can come across as offensive.

As for downtown, definitely more to do. The rest is personal choice and opinion which is not really up for debate is it?

I don’t go downtown much. I like to walk everywhere and it is a bit far for that and I have almost everything I need near where I live. I feel the same way about shopping at Costco or Uptown – no interest.

I’d be more inclined to go downtown by bike if the new corridor didn’t pass through the section of Pandora filled with homeless/mentally ill folks who are clearly still not getting the assistance they need.

Hawk
Hawk
May 4, 2017 9:43 am

Barrister,
I’m sure your daily concerns for the $2 million plus lack of sales will soon be history as all your mega rich TO friends buy out Oak Bay once and for all and put up a wall. 😉

Barrister
Barrister
May 4, 2017 9:38 am

Caveat Emptor:

Being fair to me, my point has always been that I dont have an economic interest in real estate so I am not gaming the market one way or the other. My other point is that in Toronto alone there are over 100,00 people with a net worth of more than 10 million not including their principle residence. Many of them are boomers and are staring to retire. Only a very small percentage will likely retire in Victoria but I am suggesting that their impact on the real estate market will be significant.

Hawk
Hawk
May 4, 2017 9:34 am

Never been more relaxed Barrister, it’s those who can’t handle the mere thought of a corecction that have their guts in a knot.

I did read the latest TC on Bear Mountain and by reading between the lines it appears they can’t get funding and desperately need a partner to carry on or will have to sellout. No guarantee you can walk with a profit if they are possibly carrying major development debt on the books. I thought I was reading a sales pitch.

LeoM
LeoM
May 4, 2017 9:34 am

The deceleration/cooling in the RE market is global, and spreading fast, even to New Zealand’s robust market. London and Hong Kong are traditional early indicators of global RE trends, and London is down too, but Hong Kong is still awash with mainland China buyers, but it’s slowing there too.
Looks like the today’s cooling will become the big freeze when winter arrives.

http://m.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11849098

Barrister
Barrister
May 4, 2017 9:29 am

I dont think it is a big factor but my neighbor who runs a premium bed and breakfast was saying just the other day that she is concerned with the amount of negative word of mouth that is spreading about Victoria as a tourist destination. What she has been hearing is that the city is losing its charming uniqueness and is simply much more Americanized. She has been in the business for almost thirty years and has close relations with many of her clients. It may not be a major problem but it should give some pause to consider.

caveat emptor
caveat emptor
May 4, 2017 9:25 am

In the future, how can you know when you are speaking to the nouveau riche? Easy – they will tell you.

In Catbus’s defense it may have been several weeks since Barrister last reminded us that his fully paid off, large-lot Rockland house is a small portion of his net worth.

Barrister
Barrister
May 4, 2017 9:20 am

Local Fool:

I am afraid my sleep pattern was set while I was working so I seem to function best on about four hours a night. It seems to be a family trait. All of my siblings are the same except most them are more accomplished and driven than I am.

caveat emptor
caveat emptor
May 4, 2017 9:17 am

Everybody keeps commenting on all the things to do downtown. So I am curious, what are all these things that are downtown that are not in somewhere like Oak Bay or Cook Street village or for that matter Sidney.

Barrister – there is absolutely nothing fun or interesting downtown. All the best things in life can be found in Fairfield Plaza or on occasional weekend outings to Oak Bay Avenue. Don’t waste your time venturing into the crime ridden wasteland that lies to the west of Cook Street.

oceantrader
oceantrader
May 4, 2017 9:17 am

JD, actually we could get by with a small profit at a 50% vacancy rate with a small drop in rates. If we had to truly discount the rates then it would be marginal. Lucky to have bought at a good time, makes a big difference. My worry is the big crush of condos coming on to the market the next while alongside a significant drop in demand..might not have been such a great idea then.

Barrister
Barrister
May 4, 2017 9:14 am

Jerry:

After more than nine generations I am not sure that novena really applies; certainly rich does not apply. Warren Buffet is rich along with a host of other families. Rich is counted in the billions these days.

Hawk, the sun is out try to enjoy, go read the TC and relax.

Local Fool
Local Fool
May 4, 2017 9:10 am

Barrister, when exactly do you sleep?

Barrister
Barrister
May 4, 2017 9:08 am

Catbus:

Let me be clear that I was never suggesting that there is nothing to do downtown or that it is not the best choice for many people. I am sincerely interested in discovering what people actually value and equally what they are willing to pay a re premium for in terms of real estate. it is no different then trying to figure out why some people will pay 1.5 million for a condo downtown rather than buying a house elsewhere.

You make a number of interesting and valid points foremost amongst them is that downtown is where other members of your generation gather. When I was thirty having a drink at the Penny Farthing in Oak bay would not have thrilled either myself or my friends. Staring at a collection of really old persons would have been enough to drive one to drink.

Some of your other points while valid really only apply to a very small segment of the population.
Which means that it may or may not apply to you. My guess is that most people rarely if ever even step into the museums or at least not more than once. To a large degree this also applies to live theater and I have noted the times i have gone in Victoria that most of the audience consists of the nearly dead.

Restaurants is an interesting answer because there seems to be a major change in how people entertain in that many younger people seem to meet friends at a restaurant as opposed to hosting dinner parties. Of coarse if you are living in a 1000 square foot condo then hosting dinner for ten becomes problematic. I am not saying that it is a bad shift but rather an interesting one.

What I noticed was absent from your list is that downtown is a great place to raise a family.

As to shopping, the concentration of stores for young people seems to be as much at Uptown rather than just downtown. That though might turn on your definition of downtown.

gwac
gwac
May 4, 2017 8:56 am

Hawk have a nice day and try to enjoy the weather. Life is short….

John Dollar
John Dollar
May 4, 2017 8:53 am

Hawk – we have had a business airbnb rental downtown for 2 full years and are -for the first time- finding gaps in our bookings for this spring. Tourists from the States are mia.

The last few years have been great for tourism and were atypical which has supported the growth of airbnbs. In the past, before airbnbs took a chunk out of the hotel market, vacancy rates for hotel rooms in the city were running 50%.

Could you make a profit running an airbnb with a 50% vacancy rate?

Hawk
Hawk
May 4, 2017 8:52 am

Gwac , you’re desperation along with AG to keep the bubble from popping is quite hilarious. Seething homeowners/ industry pumpers will only ramp up from here. Guess you never lived down there , our friend did and sold for those very reasons.

Pathetic how you slag the homeless but defend a hoods outrageous values that is infiltrated with homeless addicts biking/ walking by your front door 24/7.

Oceantrader, interesting to know. Jives with the drop in tourism.

Barrister
Barrister
May 4, 2017 8:16 am

Marko:

That cannot possibly be a serious reply. Reread what I wrote after your second cup of coffee. I never said that there was nothing to do downtown since that is obviously absurd. Nor am I even remotely suggesting that people should not have that preference. The issue of high rises is completely separate and, in an effort to help you out, you would be better off arguing that at my age I should not care how the city develops since I will be dead before a lot of these building will be finished. Under your logic you should not have an opinion since you are busy mowing your suburban lawn most weekends on your large custom built house. Obviously, though, your opinion should and does count.

Bearkilla
Bearkilla
May 4, 2017 8:05 am

No it’s because the market’s about to crash.

oceantrader
oceantrader
May 4, 2017 7:50 am

Leo – that could be for sure.

oceantrader
oceantrader
May 4, 2017 7:40 am

Hawk – we have had a business airbnb rental downtown for 2 full years and are -for the first time- finding gaps in our bookings for this spring. Tourists from the States are mia. Still a good sold summer but not like the past 2 years, even with the low cdn dollar.

Jerry
Jerry
May 4, 2017 7:35 am

Catbus, you must be new here, taking on Barrister so boldly. He has developed a strong position here as he is mortgage free and living in Rockland and once lived in a differenct city which was larger.

In the future, how can you know when you are speaking to the nouveau riche? Easy – they will tell you.

AG
AG
May 4, 2017 7:34 am

I am surprised that you are content with staying in Victoria considering your list. But I will thank you for your insight but since I have lived in Toronto, New York, London and LA my perspective is a bit different than yours. But there is no accounting for either taste or lack of politeness.

Nice work on the passive-aggressive reply Barrister. See, you’re catching on with this whole internet thing!!

gwac
gwac
May 4, 2017 7:30 am

Rail yards never smelled anything or heard much noise around there when I am there but I am sure the mold from your basement room is worse if there is a smell.

Have a great day feeling angry and negative at everything…..

Marko Juras
May 4, 2017 7:18 am

Everybody keeps commenting on all the things to do downtown. So I am curious, what are all these things that are downtown that are not in somewhere like Oak Bay or Cook Street village or for that matter Sidney and how often do you actually do them? Give me a list. This is actually a serious question.

This can’t possibly be a serious question. If there is nothing to do downtown you never need to go downtown; therefore, why the opposition to towers downtown when it has zero impact on you?

Hawk
Hawk
May 4, 2017 6:55 am

Tourism numbers down. Blaming the weather but was wet last March too. The thrill is gone.

Catbus
Catbus
May 4, 2017 6:53 am

Sorry if I was rude, Barrister. Nothing I said has anything to do with my income or entertainment budget. You asked for a list of things to do downtown (in a way that implied that you didn’t think there were any!), and I provided one. Why are you surprised I’m content in Victoria… did you see the list? And I won’t be baited into a pissing contest regarding income or net worth, why some people are always trying to do this I’ll never understand. And I can’t make any sense of your perspective: you’ve lived in great cities but don’t like downtowns? Also: you don’t bloody well know that I haven’t also lived in those same places!

Hawk
Hawk
May 4, 2017 6:49 am

Gwac obviously thinks all the toxic water,smells and noises of the Railyard makes for healthy living. Amazing how the pumpers in the bizz reach to low levels to justify $700K townhouse boxes.

Why sell Bear Mountain ? Cause the top is in and nowhere else to go but down or there are money problems. Where were all the big changes they promised ?

Barrister
Barrister
May 4, 2017 3:17 am

Catbus:

I will thank you for taking the time to provide me with an answer and it was a genuine question and not an argument as to values. Obviously you must have a very highly paid job since it sounds like your entertainment budget is many times more than mine ever was during most of my working life. A touch of envy perhaps.

I am surprised that you are content with staying in Victoria considering your list. But I will thank you for your insight but since I have lived in Toronto, New York, London and LA my perspective is a bit different than yours. But there is no accounting for either taste or lack of politeness.

Catbus
Catbus
May 4, 2017 12:11 am

I can’t believe I’m wasting my time answering such a blatantly ignorant, fogeyish question, but how about:
Live music, from opera to death metal?
Theatre?
Live sports?
More and/or better bars and restaurants?
Museums?
A way of getting to Vancouver in 20 minutes?
Movie theatres?
Nightclubs?
More and/or better shops?
Jobs, a crapload of them, many very good?
People to whom the value of the above doesn’t need to be explained?

We’re lucky enough to be within a quick walk or bike of downtown are are drawn there by the above ALL THE TIME, thank goodness.

Lurkess
Lurkess
May 3, 2017 11:32 pm

barrister, mid 30s/millennial – we like downtown, foodies like downtown, the restaurants are hip and trendy, and there’s a younger vibe. we eat downtown a fair bit, and usually gravitate towards if it we just feel like going out to eat somewhere. easy parking (thanks city of vic), summers are beautiful, walk along the wharf. things to do in the habour, just more happening than the other places around. downtown closes later too compared to everywhere else, that helps. most of the specialty stores we goto are there as well in the same area (MEC, lulu, chapters just to name a few). it’s just kind of all in one place for us. easy place to meet for brunch or meals with friends, etc. this is not to say we don’t go elsewhere; we are generally all over the city except westshore.

Barrister
Barrister
May 3, 2017 11:14 pm

Everybody keeps commenting on all the things to do downtown. So I am curious, what are all these things that are downtown that are not in somewhere like Oak Bay or Cook Street village or for that matter Sidney and how often do you actually do them? Give me a list. This is actually a serious question.

Bingo
Bingo
May 3, 2017 10:30 pm

gwac

The rail yards not sure why the hate but they sell quickly. They are right near downtown. Seems like a nice place.

I used to walk or bike through there quite often. Seems ideal for someone young that works downtown. We have some friends that own there and they love it (they even have kids).

It wouldn’t suit our current lifestyle, but we could make it work. I can definitely see the draw. Quick walk or bike to town, easy to launch a kayak, groceries and liquor nearby.

I’d choose the railyard over bare hill any day of the week. There’s stuff to do near railyard, no driving required.

Bearkilla
Bearkilla
May 3, 2017 9:49 pm

Yep the crash is finally here!!!! Bear mountain for sale for well over 3 times purchase price, anecdotes about some rentals opening up in Hawks place, it all adds up bears. I heard some lady at the store complaining about lettuce prices. This is it!!!! Look out below.

Gwac
Gwac
May 3, 2017 9:42 pm

AG

Not a suite but room.

Gwac
Gwac
May 3, 2017 9:33 pm

http://vancouverisland.ctvnews.ca/mobile/video?clipId=1115113

Sorry hawk this is not a negative story but a story of a company who bought real cheap out of bankruptcy and is looking to take the $ off the table.

The rail yards not sure why the hate but they sell quickly. They are right near downtown. Seems like a nice place. It’s not oakbay but not everyone can afford 1 to 2 million to be in gods land.

John Dollar
John Dollar
May 3, 2017 9:14 pm

If there are more higher end sales and fewer lower end and midpoint sales a curve might change, but it doesn’t mean you can’t assess market value.

Yes you can assess a value but not within 2 or 3 percent of its fair market value. Since the data is spread out over a wide range over fewer sales the error in the final estimate of value can be very large. In some of the MBS in the financial meltdown, the error was so large that the thousands of mortgages in an MBS couldn’t be determined reliably and investors would not buy them.

While it seems simple to most people on how to determine value in practice it can be very difficult. How much is a 3,000 square foot penthouse worth when there hasn’t been any similar sales in a decade? A million, two million, three million?

It’s similar to what is going to happen to Home Capital. The mortgages in their portfolio have to be re-evaluated before an investor can reasonably make an offer on their portfolio. Because I bet you most of those properties were over assessed to begin with.

AG
AG
May 3, 2017 9:08 pm

several suites come up for rent in my place for the first time in ages, even last spring was nothing. They wouldn’t take you though, as they screen heavily for arrogant assholes.

Ha. Good to know, thanks. If I ever need to rent a basement suite, I’ll make sure I’m suitably humble 🙂

Bitterbear
Bitterbear
May 3, 2017 9:01 pm

It’s been a long time, but I think the reason it becomes difficult to estimate value in a platykurtic distribution is the standard deviation gets larger. In practical terms this means that if a banker wants to value a house, they want to make sure they place the value of that house in the smallest range possible, say within plus or minus .1 of a standard deviation. In a normal distribution, that might mean a range of say 700-725. In a platykurtic distribution, placing the value of a house within plus or minus .1 will mean a range of say 600-800. That means the banker could be overestimating the value of a house by as much as 200, so when they go to foreclose, their asset isn’t worth nearly what they thought it was and they lose. Too bad, so sad, who cares.

different story if it’s you that bought the house, mortgaged it at 800 when it’s only worth 600.

so basically, when the distribution shifts, no one really knows what anything is really worth relative to other properties in the distribution. In other words, it actually is different.

Hawk
Hawk
May 3, 2017 8:11 pm

AG, why are you looking ? Didn’t make the mortgage this month ?

I have several suites come up for rent in my place for the first time in ages, even last spring was nothing. They wouldn’t take you though ,as they screen heavily for arrogant assholes.

Hawk
Hawk
May 3, 2017 8:00 pm

Interesting lead in on CTV news : Is there trouble on Bear Mountain ?

What do they know? Maybe they got some Home Capital probs ? Hmmm.

Barrister
Barrister
May 3, 2017 6:39 pm

The “Rail Yards” looks like a container depot in New Jersey.

Barrister
Barrister
May 3, 2017 5:51 pm

I am not surprised by the number of listings in Bear Mountain. A lot of people paid more than they were able to resell the houses for and were waiting to get out. The lack of both schools and a good plaza with a grocery store and shops made Bear Mountain feel isolated and inconvenient.

strangertimes
strangertimes
May 3, 2017 5:48 pm

“Rail yard is a nice place”

My co-workers were commenting today that even if the units were 100k they wouldn’t want to live in one of them. If you like views of a car crushing plant or the sound of constant gravel trucks and conveyer belts or the constant smell of chemicals or close access to a toxic waterway you’ll love the railyard.

AG
AG
May 3, 2017 5:37 pm

Lots of rentals in the core showing up today.

Are you looking through the rental listings Hawk? Did your landlord kick you out?

Here – I found one for you:
http://www.usedvictoria.com/classified-ad/Room-available-immediately-long-termshort-term_29306681

totoro
totoro
May 3, 2017 4:51 pm

No one would know what a property is worth in order to lend against it.

If there are more higher end sales and fewer lower end and midpoint sales a curve might change, but it doesn’t mean you can’t assess market value.

I always find that if someone can explain something in plain language they really understand it. I don’t see any benefit in the use of kurtic chat.

So I don’t know if it says anything other than we have higher prices & lower inventory than 2008.

Yeah – and maybe more buyers at the high end and fewer at the mid-point due to affordability and inventory. I don’t know from the chart.

Hawk
Hawk
May 3, 2017 4:47 pm

Lots of rentals in the core showing up today. Students must be leaving for good instead of paying for their place all summer. The landlord gouge days could be coming to an end like a few years back.

Ash
Ash
May 3, 2017 4:39 pm

Doesn’t the graph just illustrate that there’s nothing affordable for sale?

Vicbot
Vicbot
May 3, 2017 4:24 pm

As caveat & AG pointed out, one issue with the graph is that the x access changes from $100k increments (up to $1M) to $250k increments (past $1M).

On top of that, just a wild guess – but it’s hard to compare 2008 to 2017 because prices have gone up, so the % range in prices within a particular segment actually represents greater dollar figures. Simple example: today houses in the $900k-$1M segment might range +/-5% or $95k , whereas in 2008 a +/-5% range in the $500k to $600k houses would have been +/- $55k. (right or wrong, people think $50k over ask is nothing now)

In other words, a flatter distribution, partly due to low inventories in houses <$1M, and partly because of wider selling ranges within a segment pushing the houses into the next segment up.

So I don’t know if it says anything other than we have higher prices & lower inventory than 2008.

John Dollar
John Dollar
May 3, 2017 4:17 pm

You’re right active listings are up by 50% in Bear Mountain in just one month. New listings are up by 100%. But sales only increased by 2.

Hawk
Hawk
May 3, 2017 4:08 pm

Bear Mountain owners getting out while they can. They know this about to cave. Maybe some hockey players will buy it . 😉

John Dollar
John Dollar
May 3, 2017 4:07 pm

The platykurtic wouldn’t make bankers very happy.

You would have a home that could be worth a million or $800,000 or 1.2 million depending on what day of the week it was. Market values would be all over the place. No one would know what a property is worth in order to lend against it.

It would be like what happened in the USA with mortgage backed securities (MBS’s). They became toxic.

John Dollar
John Dollar
May 3, 2017 3:49 pm

I’ll let someone else decipher that one.

Bitterbear
Bitterbear
May 3, 2017 3:12 pm

The reason I’m think platykurtotic is I think we’ll see the ratio between the lower/mid range buyers and higher end buyers approach closer to 1. ie fewer people at the lower and middle end qualifying and more people at the higher end moving up or bringing money from away. Hence a flatter distribution.

John Dollar
John Dollar
May 3, 2017 3:11 pm

They don’t have to. The lower end could rise 100% from 100k to 200k, and the higher end could rise only 60% from 200k to 320k. The range still widens from 100k to 120k.

So what you are saying is that there has been a paradigm change in the make up of buyers accompanying the decrease in sales. I can agree with that. Speculators now make up a larger percentage of the market as those looking for a house to live in, are forced out of the core.

John Dollar
John Dollar
May 3, 2017 2:54 pm

Wow! JD isn’t just a smart guy. He’s a scholar

Not my words, note the quotation marks.

AG
AG
May 3, 2017 2:54 pm

Assuming that all segments of the market increase at a fixed percentage rate. Not so sure about that, but I see what you are saying.

They don’t have to. The lower end could rise 100% from 100k to 200k, and the higher end could rise only 60% from 200k to 320k. The range still widens from 100k to 120k.

John Dollar
John Dollar
May 3, 2017 2:51 pm

Compare the detached housing market in the core to the core’s condominium market and the difference in the distribution is like night and day.

So why such a difference when both markets have similar shortages of inventory?

It’s all about risk as short term speculative buyers are gambling that the market for houses will keep rising. The bad news for the speculators is that both the median and average prices for houses in the core have not increased in the last four months. And this is during the spring market of which only May and part of June is left. Then we will be in what has typically been the summer slow down months. As people’s attention is shifted from buying houses to taking vacations.

AG
AG
May 3, 2017 2:44 pm

Why?

Say 90% of sales are between 100k and 200k. Then all prices double. Now, 90% of sales will likely be between 200k and 400k. So the range has doubled in width from 100k to 200k.

In our case, there has been a large jump in prices in Vic. So the distribution will not only move to the right, but also naturally elongate.

CS
CS
May 3, 2017 2:37 pm

@ JD:

Kurtosis isn’t just a theory …

Wow! JD isn’t just a smart guy. He’s a scholar.

gwac
gwac
May 3, 2017 2:28 pm

Looks like the Bear Mountain assets are up for sale. The owners will do well. They bought that out of bankruptcy.

http://ca.reuters.com/article/businessNews/idCAKBN17Z1CK-OCABS

The 2013 purchase

http://www.timescolonist.com/news/local/bear-mountain-resort-in-langford-sold-to-developer-ecoasis-1.653331

John Dollar
John Dollar
May 3, 2017 2:05 pm

The quickest way to return to a normal distribution is by a market correction.

I don’t think any of us are going to shed a tear over a property speculator going bankrupt.

As for those that bought a home to live in, they still will have a home. They will just owe more than the home is worth. Make your payments and you’ll be fine.

John Dollar
John Dollar
May 3, 2017 1:55 pm

My guess is that we are going to see a platykurtotic shift

“Kurtosis isn’t just a theory confined to mathematical textbooks; it has real life applications, especially in the world of economics. Fund managers usually focus on risks and returns, kurtosis (in particular if an investment is lepto- or platy-kurtic). According to stock trader and analyst Michael Harris, a leptokurtic return means that risks are coming from outlier events. This would be a stock for investors willing to take extreme risks.”

nan
nan
May 3, 2017 1:52 pm

That graph is great.

One hypothesis might be that we had a normalish market from 2008 until 2015, in 2016 prices blew up and now all the folks who want to buy can’t afford anything on the market and those who would normally sell don’t want to because they are waiting for higher prices.

Who knows.

Vicbot
Vicbot
May 3, 2017 1:50 pm

Actually Wolf is right – Vancouver Coastal Health is having trouble keeping nurses in City of Van because of housing costs. That’s the problem with having no middle class housing in a city – all the service workers move out & don’t want to commute for an hour to do a job they could do somewhere where there’s a lower cost of living.

gwac
gwac
May 3, 2017 1:14 pm

Wolf good come back 🙂 lol

Wolf
Wolf
May 3, 2017 1:10 pm

“Congrats on stupid comment of the day”

If that’s even the case (which I don’t think it is), someone else had to get one. You’ve been running away with it for some time now.

Ash
Ash
May 3, 2017 1:07 pm

Can that neighbour hood support a 1.5m house?

Probably not. However around the corner on Belmont and Kings (corner lot) a builder paid ~$558k last year and is tearing down and apparently building a passive house. So 680k to tear down looks unlikely but not that far off either.

gwac
gwac
May 3, 2017 1:05 pm

Wolf

“Who will help Gwac get out of his assisted care facility bed to post here when there’s no middle class left”

Congrats on stupid comment of the day….You should be proud you beat out Hawk.

Wolf
Wolf
May 3, 2017 1:01 pm

“not entirely clear on the exact reason outside of increased out of town buyers”

Out of town buyers from Vancouver also cashed out of a high priced, speculative, and foreign influenced market. Ripple effect. Same thing is probably happening in Ontario.

Who will help Gwac get out of his assisted care facility bed to post here when there’s no middle class left?

gwac
gwac
May 3, 2017 12:57 pm

Hawk however your mind is justifying your mistake great….enjoy.

John Dollar
John Dollar
May 3, 2017 12:53 pm

But you have to show if there has been a significant increase in the number of out of town purchases. From what I have seen out of town buyers are more prone to buying condominiums than houses and since their income is spread out like ours they will buy in all areas not just the core.

To think that all out of town buyers are rich and buying in the core is not correct.

Hawk
Hawk
May 3, 2017 12:52 pm

“Biggest investing mistake is “Being married to a position and not realizing you are wrong””

You spoke it so eloquently gwac, exactly what the greater fools like you trotting out your crap valuations trying to justify the most obvious bubble in Canadian history. Sales at the office must be tanking.

As Wolf says:

“I find it amusing how defensive the real estate moguls get when things are looking down.”

Desperation is rearing it’s ugly head.

gwac
gwac
May 3, 2017 12:49 pm

Ash

700k to build and 700k for the lot. Can that neighbour hood support a 1.5m house?

Ash
Ash
May 3, 2017 12:43 pm

@Gwac
Yup, the whole house will need updating inside and out (or tearing down), just like the neighbor’s. I’ve yet to see these bungalows be torn down, only the 2 bed ranchers seem feasible to do so. But with just ~800 sq ft on the main floor and everything needing work, there’s a case to tear down and build new here

Bitterbear
Bitterbear
May 3, 2017 12:40 pm

Leo, thanks for posting the chart. Can you post this periodically so we can track what happens to this distribution? My guess is that we are going to see a platykurtotic shift as more people buy at the high end and fewer at the new low end. This would suggest a new distribution and maybe it really is different this time.

Wolf
Wolf
May 3, 2017 12:24 pm

I find it amusing how defensive the real estate moguls get when things are looking down.

Luke, we all have access to the data and know you’re mostly cherry picking price gains. I’ve noticed a ton of price drops and cancellations in the last couple months, as I’m sure others have.

John Dollar
John Dollar
May 3, 2017 12:11 pm

Luke, you’re trotting out the one trick ponies. Very few people are buying 2 million dollar homes. That’s just a distraction. Two thirds of purchases are made by people making a normal wage.

How that market is affected is what’s important. If the middle class goes tits up so does the rest of the market.

Bman
Bman
May 3, 2017 12:10 pm

2175 Bartlett looks kind of tacky imo. Luke, you refer to “quality” homes often. What exactly does that mean? I’m assuming you are referring to finishings?

gwac
gwac
May 3, 2017 12:09 pm

Ash no photos inside…Hmm

Sue
Sue
May 3, 2017 12:07 pm

Brampton is west of Toronto in the Peel Region. It is also known as Bramladesh because of the high south Asian, East Indian population. Home prices in this region tend to be less expensive, even for massive homes. Perhaps in the range of 100k to $250k less. The chaos you see in this video is a reflection of what happens at most new home sales offices in the GTA today. On another note, we are noticing homes sitting on the market much longer in Ontario. Prime locations like waterfront are still being scooped up real quick.

Ash
Ash
May 3, 2017 12:01 pm

A rare for sale by owner in Oaklands:

http://www.usedvictoria.com/classified-ad/2657-Forbes-Street_29324684.lite?

Listed for (I believe) exactly what the next door property sold for a couple months ago (680k). Interesting strategy to list without a realtor. Offers not looked at until May 14, so quite a bit of time to gain market exposure. Will be interesting to see if the seller gets what the neighbor got without the realtor fees.

gwac
gwac
May 3, 2017 11:48 am

Luke that would be good construction. It was a developer`s original home. I think it was around 1.2m in 2010/11ish. Somewhere around there.

Luke
Luke
May 3, 2017 11:43 am

2175 Bartlett Ave in South OB – sold $30k under listing at $1,950k. 2005 build. over 3500 sq ft. Only a 5000 sq ft lot. On a nice quiet street. This is almost $2m people. What would this have sold for one, two, or three years ago?

This is an example of why quality homes are commanding even higher prices in this market than the junk houses that are still often commanding high prices. Quality does matter, and now even more so.

John Dollar – hopefully the ‘fundamental change’ you’re talking about is a more balanced market. I for one would welcome a market where there’s actually something to buy for all price points.

gwac
gwac
May 3, 2017 11:41 am

Hawk

So I am suppose to take advice from the guy who missed the biggest $ gain in the Victoria Housing market. I will pass.

Biggest investing mistake is “Being married to a position and not realizing you are wrong”

John Dollar
John Dollar
May 3, 2017 11:37 am

You have to Luke otherwise the world around you collapses. There is data that shows a fundamental change is happening in the marketplace. It isn’t just opinion anymore.

Luke
Luke
May 3, 2017 11:34 am

226 Dallas Rd – a price reduction by $202k down from $2m to $1,798k. Why isn’t this selling? This is a 2017 build, so add GST to the price. On a tiny lot across from the busiest section of Ogden Pt. Tons of tourists and cruise ship smoke in your direction! Guess people can still be a bit picky when it’s $2m.

Here’s a price rise while I’m at it… 2166 Central Ave in South OB. Up by $30k to $1,425k. I guess they don’t think the market is crashing…

Hawk
Hawk
May 3, 2017 11:18 am

gwac, if you can’t take the truth then go away like you’ve told us several times already but never do. The rest of the world can see a bubble about to blow but you’re like the captain on the Titanic saying the ship just hit a log.

http://ochousingnews.g.corvida.com/wp-content/uploads/2013/08/2005_kool_aid.png

Luke
Luke
May 3, 2017 11:11 am

Looks like things are crashing in Fairfield!… not…

89 Moss St. Sold $130k over asking for $1,405k. Again, in the ultra desirable part of that ‘hood. Not the greatest house, but not bad. It would’ve been around $1.1m early last year I think.

Those poor saps in Brampton in that video… interesting observation I noticed most if not all were of South Asian or Asian descent. This is another difference btwn. Victoria and big cities (we have much less ethnic diversity – I think TO is more than 50% non-caucasian). Also, not everybody lives here because not everybody can… the opportunities that exist in much larger cities simply don’t exist here. We’re lucky indeed! 🙂

Totoro’s post from 8:46am this morning – in my opinion 😉 … I totally think everything she said was… well said!

I’ll add.. Many people are probably ‘paralysed’ in this market and people can’t move up or down when there’s not much for sale. So therefore, for now, they aren’t bothering to move at all. I know I for one would be petrified to sell right now as there’s no where to go.
Incomes are no longer as big a factor as equity probably is. Just having a job and no equity just doesn’t cut it any more – even if it’s a really well paying job. Physical factor’s of a property still matter, and now perhaps even more so, a property with good physical factors will command even more of a premium than previous years b/c junk houses are even selling for ridiculous prices.

Hawk
Hawk
May 3, 2017 11:11 am

Christy’s house of cards for hidden tax grabs by foreigners. Amazing how anyone thinks that bag has any concerns for BC’ers when it’s only for her insider friends and palm greasers. Now the New York Times has to tell the tale.

British Columbia’s Business Temptation: An Opaque Array of Tax Breaks

“The incentives operate under a cloak of secrecy that is unusual for similar efforts in Canada and the United States, critics say. The province will not name the companies that get the breaks. The only information available about them is on the website of a nonprofit that promotes the program.

“This is essentially a temporary foreign-worker program for the rich, with secret government subsidies for multinational corporations,” said Dermod Travis, the executive director of IntegrityBC, a nonpartisan political watchdog group based in Victoria, the provincial capital. “The government is selling B.C. as a tax haven for the global elite to park investment here, but not have to contribute.”

At one point, the tax breaks were projected to create more than 13,000 jobs in British Columbia. According to ministry figures, though, fewer than 300 have been created as a result of the program, and possibly as few as 122.”

https://www.nytimes.com/2017/05/02/world/canada/british-columbias-business-temptation-an-opaque-array-of-tax-breaks.html?_r=1

Hawk
Hawk
May 3, 2017 11:06 am

“If that’s the case this could be the new normal actually.”

Yes it’s The New Paradigm, but it’s actually the bull trap. Look out below.

http://2.bp.blogspot.com/-ZWsQNhB12M4/Tf161ZP8iFI/AAAAAAAAAu4/iEFXxNao1KU/s1600/800px-Stages_of_a_bubble.png

CS
CS
May 3, 2017 11:00 am

@ JD

there are plenty of home owners in the city with a lot of equity in their homes that can be used to buy property. 76% of the buyers are still local.

Correct, and as we old home owners die off, the next generation, many of them well-to-do middle-agers, will inherit a bundle, if only in the form of a very high-priced home, which they can use to move up to that waterfront or Uplands home they always wanted.

AG
AG
May 3, 2017 10:59 am

That would be an absolute bloodbath for market timing bears. Not that the last decade hasn’t been already.

Stop picking on Hawk 🙂

bearkilla
bearkilla
May 3, 2017 10:55 am

One explanation for the low inventory could be that all those that were going to downsize did and all the move up buyers did so we’re left with new builds, death and divorce with the occasional job transfer and trickle of downsizers. If that’s the case this could be the new normal actually.

That would be an absolute bloodbath for market timing bears. Not that the last decade hasn’t been already.

John Dollar
John Dollar
May 3, 2017 10:53 am

I don’t think we have to limit it to rich Vancouverites and foreigners there are plenty of home owners in the city with a lot of equity in their homes that can be used to buy property. 76% of the buyers are still local.

CS
CS
May 3, 2017 10:39 am

Thanks to JD and Leo S for noting and illustrating the transformation of the price/sales distribution.

The flattening of the mid portion of the curve with the thickening of the high end tail indicates that those with limited resources, mainly first-time buyers, are disappearing from the market, while the number of high-end buyers, including presumably many Vancouverites and other foreigners, has increased.

When first-time buyers and others with limited financial resources realize they’re members of a dying breed, will they continue to be guided by the siren songs of the RE promoters, or will they too leave the market? I would guess the latter, in which case the median could rise while total sales continue to fall, although one would expect the ongoing decline in sales will eventually chill the high-end market, leading to price declines across the board.

Local Fool
Local Fool
May 3, 2017 10:37 am

April numbers show Victoria housing prices continue to soar

The number of houses on the market in the Victoria-area has levelled off from this time last year, but the prices and competition for limited supply have not.

According to the Greater Victoria Real Estate Board, since April of 2016 the benchmark home price has increased nearly 17 per cent, from $685,000 to $805,000.

Ara Balabanian with the Victoria Real Estate Board says numbers are easing from record highs in inventory and sales last year, but they’re still up there.

“Even though we’re down in the number of transactions by about 30 per cent we’re still above the ten-year average by quite a bit.”

Condo prices have increased even more, with the benchmark up 25 per cent from last year, jacking the price up by $80,000 to $409,000.

But Balbanian says early indications suggest that trend may not continue.

“I expect that this situation will gradually sort of get back to what we are more accustomed to in the way of a balanced market. It’s taking a while to get there, there’s some evidence that it’s moving in that direction albeit slowly.”

Since January 2016 the market on the island has increasingly had more buyers than sellers, with the sales to listing ratio going from around 25 per cent to between 70 and 80 per cent.

http://www.cknw.com/2017/05/02/victoria-real-estate/

gwac
gwac
May 3, 2017 10:10 am

Hawk you can see the ugly in everything….Ever thought of becoming a motivational speaker.

Hawk
Hawk
May 3, 2017 9:50 am

“Vancouver up 5% in 3 months.”

But up only 2.4% in 6 months. Just like Victoria median core, it’s stalling before the next leg down.

Local Fool
Local Fool
May 3, 2017 9:47 am

Maybe. Doesn’t really match with the increasing prices in the detached market though. And maybe we need to wait and see with Vancouver too.

I don’t think it’s entirely incompatible. You’ll have some equity buyers there, and likely some speccers thinking it’s a buying opportunity.

Come on Hawk…let’s see that chart. No thread would be complete without it. 😀

Hawk
Hawk
May 3, 2017 9:45 am

“Having exhausted the detached market, speccers are concentrating on the last remaining vestiges of affordability. IMO…”

Local, I won’t post the chart (for now 😉 ) but the bull trap is firmly intact, last of the sheep being sucked in that’s it’s all fine, there’s no alligators. Wrong.

totoro
totoro
May 3, 2017 9:44 am

Having exhausted the detached market

Maybe. Doesn’t really match with the increasing prices in the detached market though. And maybe we need to wait and see with Vancouver too.

The benchmark price for detached properties was $1,516,500, an 8.1 per cent increase from a year ago and a 1.8 per cent from March 2017

It is also likely that a lot of people are trying to buy a townhouse or condo because they are now unable to afford a SFH and they are worried prices are not slowing down? Seems like the condo market in Victoria might be rising for this reason?

Local Fool
Local Fool
May 3, 2017 9:37 am

Vancouver up 5% in 3 months.

Having exhausted the detached market, speccers are concentrating on the last remaining vestiges of affordability. IMO…

totoro
totoro
May 3, 2017 9:04 am

The graphs are illustrating that this market is fundamentally different from all previous ones.

Maybe. Or maybe this is what an up market with low inventory looks like. The data is only since 2008 and 2008-2015 was pretty flat. I guess you’d need to graph the curve in a preceding rising market with low inventory to determine if there is a correlation ie. it moves the prices to the right and causes an uptick in high end sales.

AG
AG
May 3, 2017 9:03 am

As plotted the histogram is a bit misleading. At 1,000,00 the bin size suddenly increases by 2.5x. This did not matter when 1M+ properties were a negligible part of the sales mix, but it now affects the shape of the right side of the graph substantially for the 2016 and 2017 plots.

Another good point, caveat. I didn’t spot that at first. That chart is not particularly useful for evaluating changes in distribution. It needs constant labels on the x axis, and the x axis needs to go up to at least $2m.

AG
AG
May 3, 2017 9:01 am

AG, why does the data cut off at 1.5 million make it difficult for you?

Just Jack / John Dollar –

As the market shifts upwards in value and the chart moves to the right, the distribution naturally elongates. That’s just simple maths. Having a single data point for $1.5m+ might have made sense in previous years, but it certainly doesn’t now.

Perhaps you don’t get it, or maybe you’re being willfully obtuse.

caveat emptor
caveat emptor
May 3, 2017 9:00 am

That’s an amazing chart, Leo. Holy smokes. Talk about skewed…

As plotted the histogram is a bit misleading. At 1,000,00 the bin size suddenly increases by 2.5x. This did not matter when 1M+ properties were a negligible part of the sales mix, but it now affects the shape of the right side of the graph substantially for the 2016 and 2017 plots. The bin size should stay constant through the bulk of the data to give an accurate perception of the shape of the distribution and the extent to which it deviates from normal distribution.

If replotted with constant bin size up to a higher threshold the graph will still show a move to the right and MAY still show an increase in skew.

gwac
gwac
May 3, 2017 9:00 am

That is crazy for a place in Brampton. Its Brampton!!!! Interesting to see may numbers in Toronto after all the changes.

Hawk
Hawk
May 3, 2017 8:53 am

Agree with the Tulip Bulb market JD. It’s like a hot stock with low share float with a wide spread. No one hits the bid, and what few sales happen are taken out at the ask….until a catalyst comes which floods the ask side (as in inventory).

We appear to be at the point where the Home Capital catalyst will be the first hammer to fall. Just look at those clowns in Brampton, you tell me that’s normal ? FOMO, panic, and insanity makes for one ugly crash.

https://www.youtube.com/watch?v=YfmHI2lvuHY

John Dollar
John Dollar
May 3, 2017 8:49 am

AG, why does the data cut off at 1.5 million make it difficult for you?

What is obvious is that you don’t want to acknowledge what these graphs potentially mean to the marketplace. The graphs are illustrating that this market is fundamentally different from all previous ones. Instead of just opinion, this is quantitative data. You can disagree with opinions but the data is a known.

totoro
totoro
May 3, 2017 8:46 am

And just to keep Totoro happy, I’ll add…

In my opinion.

Tx!

In my opinion, that is one way to look at things but perhaps we have an interplay of many other factors:

Agree it is harder to qualify on income alone now than in the recent past. Given the rate of property ownership and appreciation I disagree that people cannot move up the property ladder using equity. One bar right now seems to be low inventory creating too much competition to risk selling and trying to rebuy for many. This is probably one of the reasons for low inventory.

Agree that first time buyers are going to have a harder time getting into a SFH in the core than in the recent past if they are qualifying on their incomes. We know; however, that more are getting parental help and many will have to shift to condos if they want to own.

Disagree that the housing market and how well if functions is related to income alone. It is, imo, related to many other factors such as buyer confidence in the market and appreciation and the use of this home equity. A middle income family who bought ten years ago in Oak Bay for 400k now likely have 900k in equity tax exempt to move with. With 900k they can buy a 1.5 million dollar house if they want.

“This is not a normal distribution”… Is there a normal distribution? I don’t think the housing market has standardized measures for this. Unlike tulip bulbs, which can be propagated from seed in seven years, or divided by bulbs in a shorter time frame, there is a limit to desirable land and zoning creates additional restrictions on the creation of new housing in these areas. Tulip bulb speculation was always going to come to an end due to exponential supply, the bulbs were not a necessity of life, and it is not like what is going on now except perhaps for similarities in the hype factor.

“the physical aspects of a property that have historically always given value to a property are of little concern”.

I don’t see this myself. More desirable houses are still selling for higher prices than less desirable houses as far as I can tell?

I do agree the rate of appreciation is currently too high to be sustained. Income is a factor and something will happen to change buyer confidence at some point.

Currently it looks like 2017 will look like 2016 but shifted more to the right which would make sense

Yes – in addition to the effects of appreciation 2016 and 2017 also seem to have a higher proportion of high end buyers than previous years and inventory issues in the mid-range (as compared to past inventory levels), which would also explain the change in the curve.

Hawk
Hawk
May 3, 2017 8:46 am

“Rail yard is a nice place.”

Right. Junkies biking by your front door 24/7, heavy metal water at your front door for swimming, and the shipyard machine noises 24/7 while toxic boat painting fumes waff through your windows. Not to forget the car crusher plant across the way. Sounds like paradise to me.

I know someone who barely lasted a year down there for those very reasons but gwac would know cause he’s lived there too.

AG
AG
May 3, 2017 8:35 am

AG, if you changed the scale then all of the graphs would change too, not just 2016.

Thanks, Captain Obvious.

2016 probably has a similar shape/distribution to the other years. But it’s very difficult to tell with the data cut off at $1.5m.

Dasmo
May 3, 2017 8:27 am

There is no denying we are in a crazy market that made a sudden shift. The graph simply confirms it….

John Dollar
John Dollar
May 3, 2017 8:08 am

AG, if you changed the scale then all of the graphs would change too, not just 2016.

John Dollar
John Dollar
May 3, 2017 8:04 am

In order to answer what this graph means, you have to understand how important a normal distribution of prices is to a well functioning marketplace. In a well functioning market you have entry level, middle income and upper income buyers. There will be more middle income than entry and upper income and that’s why the graph is always bell shaped. As the market improves the bell curve moves to the right but still keeps its shape and prices in all categories of housing increase relative to each other. That’s a healthy market where first time house buyers can move up to middle income homes and middle income families can move up to upper income homes. The so called property ladder.

This is not a normal distribution. It is an illustration of how the marketplace is no longer functioning well. There is little left of the first time home buyer market, middle income market or move up market in housing. There is still a bit of the upper income market around the 1,250,000 range but it is very small.

I called this earlier the Tulip Bulb market because this is a market of speculators where the physical aspects of a property that have historically always given value to a property are of little concern. In other words the things that made real estate – real. Now real estate has become a commodity without intrinsic value like a Tulip bulb caught up in a mania frenzy where people are buying just for anticipated short term appreciation. When that appreciation ceases to occur there is little to no reason for these speculators to hold real estate.

And just to keep Totoro happy, I’ll add…

In my opinion.

AG
AG
May 3, 2017 7:45 am

If you changed the scale on that chart then 2016 would probably have a similar shape to the other years.

totoro
totoro
May 3, 2017 6:51 am

Leo, I don’t understand how you adjusted for the year only being 1/3 over? The chart is hard to use at a glance if this has not been done but it looks to me as though people paid a lot more for entry level homes and there were far fewer sales under 500k and far more over 800k as a % of all sales.

Barrister
Barrister
May 3, 2017 5:10 am

I see that the house on Bartlett sold in a week for 1950000 (45 under ask). Nice house but a really high price.

Barrister
Barrister
May 3, 2017 4:17 am

Fascinating chart that confirms what I have been noticing in south Victoria.

By the way, I found our last dinner (and also first) get together a real success. Any chance of organizing another? Perhaps mid week and a little bit later would work better for some people. Or perhaps on a Sunday evening.

Entomologist
Entomologist
May 2, 2017 10:37 pm

The chart shows a big jump in the sales of properties 700k+ starting in 2016. But otherwise it isn’t too wild or crazy. Don’t forget that 2017 is only 1/3 over, so some distortion in the distribution is expected.

Gwac
Gwac
May 2, 2017 10:33 pm

Fun chart for colorblind people. :).

Local Fool
Local Fool
May 2, 2017 10:27 pm

That’s an amazing chart, Leo. Holy smokes. Talk about skewed…

Part of that appears to be a function of low listings.

Gwac, it’s going to crash, it’s going to crash! Blow off top now! 🙂 I’d post the bubble chart but I don’t want to distract from Leo’s new one. I really do find it interesting. Any commentary on your chart, Leo? Be curious to know what you think.

Gwac
Gwac
May 2, 2017 10:18 pm

No info was not like you. He would post the same stuff day after day calling for a crash. Nothing original.
Seemed to have no real personality. I doubt you are info.

Local Fool
Local Fool
May 2, 2017 10:15 pm

Info seems to have just disappeared.

What if I am Info? It’s possible. Just drop off, and quietly re-emerge at a later time.

Gwac
Gwac
May 2, 2017 10:10 pm

Resident bears have been info and hawk. Info seems to have just disappeared. Hawk is still with us.

Entomologist
Entomologist
May 2, 2017 10:06 pm

Thanks, Bingo.

Local Fool
Local Fool
May 2, 2017 10:01 pm

If I’m not mistaken…

You are, and are confusing me for someone else. Cheers.

Gwac
Gwac
May 2, 2017 9:36 pm

Leo’s interview. I thought it was good. I am sure those new TH will be gone quickly. Rail yard is a nice place.

http://vancouverisland.ctvnews.ca/mobile/video?clipId=1114294

Biopri
Biopri
May 2, 2017 9:31 pm

@Local Fool;

If I’m not mistaken, haven’t you been negative/worried about a crash for close to 10 years on this blog? The low point in affordability was 2012-2013 and you still were posting almost exactly the exact wording as you do daily here.

At what point would a house in Oak Bay or Fairfield be acceptably priced for you? 100k, 200k?

Local Fool
Local Fool
May 2, 2017 8:58 pm

…the market for houses in the core has become shallow and dysfunctional. We are in a market where the physical composition of a house has negligible meaning to its value.

We aren’t buying real estate anymore we’re buying Tulip bulbs.

I think this is precisely correct, and is why I continue to caution those who are looking to jump in to think very carefully about what their priorities are, in conjunction with the medium to long term expectations of the market. It’s the latter that has many people confused, IMO dangerously so.

It’s not armageddon, but it’s certain to return to normal. But it will probably be painful. And the longer Hawk and others like him are “wrong”, the greater chance that this reversion will cause long term damage to the economy and people’s lives.

A house has intrinsic value. They always will. But it’s not worth throwing everything else away over.

Bitterbear
Bitterbear
May 2, 2017 8:58 pm

Leo and John, did you post the distribution? did I miss it?

John Dollar
John Dollar
May 2, 2017 8:19 pm

Leo_S, you can see the distribution of sales in each price range as a graph in the stats mode. Every year except for the last two years has had a normal distribution of house sales in the core.

And the last 12 months for house prices in the core has been a gong show.

So what does that mean? The middle income market is or has collapsed and the market for houses in the core has become shallow and dysfunctional. We are in a market where the physical composition of a house has negligible meaning to its value.

We aren’t buying real estate anymore we’re buying Tulip bulbs.

https://youtu.be/fDN796om8JY

Gwac
Gwac
May 2, 2017 7:40 pm
John Dollar
John Dollar
May 2, 2017 7:16 pm

Got it. Another approach would be to look at trend and then see it current prices are outside of standard deviation of variability.

That’s exactly what I’ve been saying – jeeshh!

Wolf
Wolf
May 2, 2017 7:03 pm

Now you’re just trolling us Leo. Demand for townhomes surges, as declared by a developer in the space? Looks like the usual unsubstantiated opinions of the media. Sales are down because less people are coming over from Vancouver and those already here are standing pat. Open homes I’ve been to lately are pretty quiet. This article looks like more of an advertising piece.

Gwac
Gwac
May 2, 2017 7:03 pm

Leo closer to 20 times the population . I have live there. Barrister has lived there. I think anyone who has experience living in both would say the quality of life is better here. Career choices better there.

Toronto has been Canada’s largetest city for many moons. It has been only since the crash in 2009 that Victoria stopped going up like Toronto. We got hammered and took much longer to recover.

We can argue till the cows come home. Only time will tell about housing and how we fair against Toronto and Vancouver.

Hawk
Hawk
May 2, 2017 6:58 pm

That segment you were on CTV came off looking like an agent pump for overpriced towhouses. $700K in The Railyards looks like a total gouge. The media here is still in the industry’s back pocket.

Local Fool
Local Fool
May 2, 2017 5:10 pm

Hawk, I knew I could count on you to spice up what was my rather mundane little pushback. You’re simply relentless. My guess is you’re a lot older than I, but you have twice my pizzazz. Way to show me up.

Anyways, time for my nap. Just have to find my John Deere PJ’s and a clean Waterford for my beverage of choice. Oh, and, houses in Victoria won’t be 1.3 by 2022. Because…I say they won’t?

Hawk
Hawk
May 2, 2017 4:56 pm

Concerns on how they underwrote and internal controls ? Smells like the Canadian ponzi scheme is about to unravel. 😉

Home Capital Fails to Draw Buyout Interest From Canada Banks

Canadian banks and financial firms are so far showing little interest in buying Home Capital Group Inc., vindicating short-sellers who say the embattled mortgage lender could be sold off piecemeal, driving the stock down further.

“People in the industry would rather see these guys go out of business because the loans aren’t worth the risk, and they’re so leveraged,” said Marc Cohodes, a private investor and part-time chicken farmer in California who has been shorting the stock, or betting on declines, for more than two years.

“The bottom line is no,” Equitable Chief Executive Officer Andrew Moor said in an interview at Bloomberg’s Toronto office on Monday. “We have some concerns based on what we’ve read about how they underwrote their loans and their internal controls.”

https://www.bloomberg.com/news/articles/2017-05-02/home-capital-fails-to-draw-buyout-interest-from-canada-banks

Hawk
Hawk
May 2, 2017 4:43 pm

“I think we hit 1.3 m from the 805k we are at in the core by 2022. 10%”

As Intorovert said, you’re fucking scary. Greed is a dangerous thing as we can all plainly see. Gwac must work in the lending bizz.

Check out these incestuous relationships with all these alt mortgage lenders. No doubt this ponzi scheme is going to blow up once Home Capital’s disease is exposed. One guy is in top positions/shareholder with 3 subprime lenders ? Disgusting, that’s what penny stock companies look like.
comment image:large

Luke
Luke
May 2, 2017 4:34 pm

My thoughts on comparing TO vs Victoria. I suggest anyone who wonders why our prices are almost up there w the armpit as gwac calls it. Try go live there for a while then come back here w tail between legs. You’ll get it.

As for myself. I’m starting to get tired of people complaining about the rain this spring. We had two glorious days of sunshine recently on Friday and Sunday and I’m not complaining. But it all comes back to personal perspective. After all, I lived in Vancouver and England before this and both places are much wetter than here…

Bingo
Bingo
May 2, 2017 3:20 pm

@ Entomologist

3923 Orchard Lane
$1,362,500

gwac
gwac
May 2, 2017 3:18 pm

Leo

Yep sure does. Paradise vs an armpit. Income is income. Supply is supply. Not just a government town.

The government town did quite well the last 2 years on those 1.5% government worker increases,

Local Fool
Local Fool
May 2, 2017 3:17 pm

I think we hit 1.3 m from the 805k we are at in the core by 2022. 10%

My inexperienced, cut-rate intuition says no way, and without a shred of data to back me up. I will say this however:

It’s not worth arguing that “it can’t because fundamentals won’t support that.” It’s not about that. I think it’s a speculative mania gripping significant parts of the country. Can a speculative mania (if you presume that is correct) keep going for another 5 years?

Wouldn’t count on it, regardless of what government is in power. I just don’t believe gov can prop something like that up over the long haul.

Local Fool
Local Fool
May 2, 2017 3:11 pm

Home buyer madness in Brampton…

https://www.youtube.com/watch?v=YfmHI2lvuHY

Scary. Bath with Mr. Housing Bubble?

gwac
gwac
May 2, 2017 3:10 pm

I think we hit 1.3 m from the 805k we are at in the core by 2022. 10%

Family income is close for all 3 areas.

If the NDP get in we will be close to 700k in 2022.

Local Fool
Local Fool
May 2, 2017 3:05 pm

Okay, I understand. Thanks.

So you believe that prices will continue to grow for the next few years, at roughly 10%/y?

Introvert
Introvert
May 2, 2017 3:04 pm

How is real estate like a squash? Green outside, orange inside? Pretty good if cooked just right? Turns to mush if overdone? Sorry – but I didn’t get it.

The expected result of an engineer attempting art.

Rental house that we were living in before it sold is sitting empty….

Happened near me last spring. Sat vacant for months, before being fully rented. The new owners weren’t in a real hurry (or hard up for cash), I guess.

Well bears I think this is your chance. The crash is here!

That graphic may be the funniest thing I’ve ever seen on this blog. Almost peed myself! Nice job, bearkilla.

The Home Capital meltdown may spread to other high risk lenders.

What’s Home Capital? Oh, fuck it. I don’t even care.

gwac
gwac
May 2, 2017 2:55 pm

Ento you said it better than I could have. Victoria Average prices had been similar to Toronto up until 2010/11 ish.

Janney Claire Alexi
Janney Claire Alexi
May 2, 2017 2:54 pm

I agree that it is best to go elsewhere for this climate change discussion but will briefly add that I have learnt a lot about the commenters via their posts on the issue & most particularly by the links folks are referencing. Heartening to hear from the green inclined and, frankly, if not getting it about climate change then I have trouble accepting a person’s take on real estate or any issue requiring broad & deep investigation.

Entomologist
Entomologist
May 2, 2017 2:50 pm

LF – I think gwac means that Victoria’s strong gains are all within the past 2 years, whereas the previous 5 years or so were flat or negative. So yeah – basically we remain on track for moderate growth over the medium term (~10 years), less than 10% per year, in any case.

Vancouver and Toronto are still much higher over the same time period, so revertion to the mean for all means our prices increase further, or theirs drop to match our long-term pace, or some combination thereof.

Entomologist
Entomologist
May 2, 2017 2:46 pm

Anyone know what 3923 Orchard lane sold for? It was listed above my PCX account limit, but curious nonetheless. I think it sold in the last month.
Thanks in advance!

Local Fool
Local Fool
May 2, 2017 2:33 pm

I don’t get what you mean.

“Victoria average prices with revert to those of Toronto and Vancouver. So either Victoria goes up or the other 2 go down or a combination.”

gwac
gwac
May 2, 2017 2:27 pm

I agree with mean reversion. Victoria average prices with revert to those of Toronto and Vancouver. So either Victoria goes up or the other 2 go down or a combination. One way or another they will revert over the coming years.

CS
CS
May 2, 2017 2:19 pm

@ Leo

“Back to topic. Lots of other forums to argue about climate change”

Oh darn! I was just about to hit Caveat Emptor’s climate contention out of the park!

Local Fool
Local Fool
May 2, 2017 2:18 pm

Gwac,

I’ll see if I can help to facilitate the topic refocus.

How may I convince you that the RE market gains in Victoria are unsustainable and will eventually have a mean reversion?

😀

gwac
gwac
May 2, 2017 2:04 pm

Leo

🙂 sorry for starting that. I will stay more focused on what you programmed me to do….

Michael
Michael
May 2, 2017 1:35 pm

I’ve heard some of the farmers in central saanich are freaking out. This is the latest start in a long time“
We could be in for a long cooling trend:

The so-called climate scientists already flip flopped from ‘ice age’ (70s) to ‘catastrophic warming’ over a couple decades. I’m convinced they’ll try ‘Another Ice Age?’ again to keep fleecing the gullible. But I do agree there’s a good chance we’re entering another cooling trend. Just hope we don’t allow them to bilk us out trillions this time 🙂

http://i.imgur.com/STrpj90.png

Bingo
Bingo
May 2, 2017 12:21 pm

James Soper

So it shouldn’t impact the local economy at all since most of these people are temporary foreign workers?

Most? There are a few farms notorious for bringing in foreign workers seasonally for manual labour. Definitely not ‘most’. In any case I don’t think the farmers would be worried if it was seasonal workers (as they tend to change every year, foreign or not).

One of the bigger farms in question employs a lot of their extended family. Those family members rely on that income to feed their families, pay the mortgage, pay their car payments etc. It’s bad enough laying off a long term employee, laying off a family member is even harder.

caveat emptor
caveat emptor
May 2, 2017 12:18 pm

Bicentennial Decrease of the Total Solar Irradiance Leads to Unbalanced Thermal Budget of the Earth and the Little Ice Age
Habibullo I. Abdussamatov
APPLIED PHYSICS RESEARCH: Volume 4 (1), 2012

That is laughable as a scientific paper. However even a layperson can evaluate the main prediction.

“The Earth as a planet will henceforward have negative balance in the energy budget which will result in the temperature drop in approximately 2014.”

Let’s see… Since 2014 we’ve had 2015 and 2016, the warmest and second warmest years globally averaged..

Luke
Luke
May 2, 2017 11:53 am

This listing popped up recent: 241 Beechwood in uber-desirable Fairfield. One of the crappiest ‘Tri-plexes’ I’d ever seen when house hunting last year – at that time listed for $1.1m if memory serves and then it went in days for $1,195k. I remember being shocked at the time. This was in March 2016.

Well, the New owners must have discovered the rot and infestation or something because now it’s just been re-listed for… drumroll… $1,499k! And they even go as far as to say ‘wow this is rare’ in the selling descrip. Really? That’s funny… because that home was flipped so many times recently it’s like a live fish on a boats deck.

The home was sold in Sept 2014 for $763k. So, those flippers on selling it in March 2016 made over $400 each and every day, or almost $13,000 per month, even without having to be slumlords – but they were slumlords b/c 2 out of the 3 units were rented to tenants when I viewed it in Mar. 2016 (I wonder if they told the CRA the house was chopped up into three horrendous pieces? Since they sold before the Personal Residence Exemption disclosure on income tax forms was announced later in 2016)

Well, guess what, now the new ‘flippers’ after just 13 months want to make over $20,000 PER month, or about… $675 per each and every day! That’s right, this is after a regular realtors commission is factored in… (if they get the asking price). And, I wonder if on top of that they bothered being slumlords in a triplex all that time? Oh, and I’m sure they’re now aware – the CRA is watching…they are, aren’t they?

James Soper
James Soper
May 2, 2017 11:47 am

keeping employees gainfully employed

So it shouldn’t impact the local economy at all since most of these people are temporary foreign workers?

Hawk
Hawk
May 2, 2017 11:37 am

Those US companies will scrutinize the books, don’t be surprised to see them walk away or offer pennies on the dollar. Why wouldn’t Equitable touch them ? Oh right, they have 13 ex-Home Capital brokers on staff who know a lot about the 45 brokers they fired. 😉

James Soper
James Soper
May 2, 2017 11:36 am

The surge in prices over the last two years has brought on more inventory than usual.

I’m pretty sure Leo has posted graphs explaining it hasn’t. The same amount of houses went up last year as a normal year, just more were bought.

CS
CS
May 2, 2017 11:34 am

@ Bingo:

I’ve heard some of the farmers in central saanich are freaking out. This is the latest start in a long time“

We could be in for a long cooling trend:

Bicentennial Decrease of the Total Solar Irradiance Leads to Unbalanced Thermal Budget of the Earth and the Little Ice Age
Habibullo I. Abdussamatov
APPLIED PHYSICS RESEARCH: Volume 4 (1), 2012

The Earth as a planet will henceforward have negative balance in the energy budget which will result in the temperature drop in approximately 2014. Due to increase of albedo and decrease of the greenhouse gases atmospheric concentration the absorbed portion of solar energy and the influence of the greenhouse effect will additionally decline. The influence of the consecutive chain of feedback effects which can lead to additional drop of temperature will surpass the influence of the TSI decrease. The onset of the deep bicentennial minimum of TSI is expected in 2042±11, that of the 19th Little Ice Age in the past 7500 years – in 2055±11.

http://www.ccsenet.org/journal/index.php/apr/article/view/14754

gwac
gwac
May 2, 2017 11:25 am
CS
CS
May 2, 2017 11:24 am

@ Leo S

“Can you explain to a dummy like me how you did this calculation? Take into account I got a C in statistics..”

With a C in statistics, you did better than me. All I know is what I figured out for myself, or at least what I think I figured out for myself.

In the case of the decline in median, I assume that this month it will either rise or fall, since in advance, we have no idea which, I assume the probability of one or the other is 50:50 (That, incidentally, is the main conclusion of Maynard Keynes PhD thesis, which was on the subject of probability). The next month, the same, so the probability of a fall two months running is 0.5 x 0.5, or 0.25. Thus the probability of it falling four months in a row is 0.5 x 0.5 x 0.5 x 0.5 = 0.0625, or 6.25%.

Vicbot
Vicbot
May 2, 2017 11:24 am

Bare-killa I didn’t know you could now share pics of your colonoscopy exam 🙂

Hawk
Hawk
May 2, 2017 11:23 am

The bigger the pictures Bearkilla posts the more he looks like Ben Bernanke. For a guy who claims he makes $120K a year he sure looks like he’s still in high school computer class.

Ben Bernanke didn’t see a housing bubble in 2006

https://www.youtube.com/watch?v=u5A4Gw20dcw

Bearkilla
Bearkilla
May 2, 2017 11:14 am

Well bears I think this is your chance. The crash is here!
comment image

Vicbot
Vicbot
May 2, 2017 11:02 am

Interesting fizzy, I see that now – it seems the trial judge looked at all the writers’ articles together and they’re recommending looking at them individually.

In any case, it doesn’t change the fact that Corcoran has a history of libertarian anti-gov’t views, eg.,
http://www.straight.com/article-207377/terence-corcoran-and-tax-and-regulatory-breaks-canwest

fizzy
fizzy
May 2, 2017 10:52 am
Bingo
Bingo
May 2, 2017 10:49 am

@Entomologist

I’ve heard some of the farmers in central saanich are freaking out. This is the latest start in a long time and there are concerns about keeping employees gainfully employed. I think the in-laws planted at least a month late. They have and are planting now (was just out there and the FiL was loading the seeder), but it’s still pretty nasty in some areas.

Vicbot
Vicbot
May 2, 2017 10:48 am

caveat, true, Corcoran is a known libertarian. I don’t know but it seems to be another attempt at him trying to defend Home Capital for breaking securities laws, and he’s ignoring parts of the OSC report.

Corcoran has made weird statements before, which resulted in court action, eg., National Post lost a defamation suit when Corcoran accused MLA & climate scientist Andrew Weaver as “cherry picking data” and “Canada’s warmest spinner-in-chief.” BC Supreme Court Justice Burke concluded the writers were “careless or indifferent to the accuracy of the facts,” adding, “they were more interested in espousing a particular view than assessing the accuracy of the facts.”
http://www.theglobeandmail.com/news/british-columbia/bc-mla-andrew-weaver-wins-defamation-suit-against-national-post/article22850470/

Entomologist
Entomologist
May 2, 2017 9:43 am

Well they are right about at least one part of that. It IS a late start to the season. It was way too wet to plant, too wet to even work the soil in prep for planting.

Yes, most years the camas in our yard has been up and blooming for almost two weeks by May Day. This year, not one flower so far…

caveat emptor
caveat emptor
May 2, 2017 9:40 am

Interesting story on Homecapital and osc.

Terrence Corcoran is predictable as day turns to night. It’s always government’s fault.

fizzy
fizzy
May 2, 2017 9:27 am

Have you guys watched this: Millennial Home Buyer, by CBC Comedy
https://www.youtube.com/watch?v=9eTRiU6-D5c

Bingo
Bingo
May 2, 2017 8:59 am

Leo S

I don’t get it either. But the VREB says the late spring has led to reduced agricultural production and also also reduced sales.

Well they are right about at least one part of that. It IS a late start to the season. It was way too wet to plant, too wet to even work the soil in prep for planting.

I didn’t think spring RE seasonality was related to weather. Places with shit weather still have an uptick in spring. Maybe that’s how Victoria is “different”…. anyhow, yeah I agree VREB is reaching with that explanation.

Dasmo

Rental house that we were living in before it sold is sitting empty…

Meh. Last 3 sales in my hood (well, my end of the street) the houses sat empty for months after closing. Different reasons in each case. None were rentals or flips. Just slow to move in.

Seems strange to me. The two times we bought we moved in the day we closed. I could see not moving in immediately if you were from out of town, but that wasn’t the case in any of these scenarios (all locals, moving within the city). To each their own.

CS
CS
May 2, 2017 8:41 am

@ Barrister

Finally a sale in the Uplands. A 1950’s knockdown on 2538 Nothingham Rd. Asking 1, 998,000 and sold for 2.2 million.

That does not seem an unreasonable price. Well relatively speaking. There have been tear-downs on 50 foot lots without a view and beyond the Uplands pale going for close on a million, whereas that lot is more than half an acre with a view and in the Uplands. You could build a 6000 square footer and sell it (if the market does not die first) for about $7, 8 million (cf., the absurdly named Oakstone, just up the road, which has no view and was offered at around $6 mills now reduced to $5.6).

CS
CS
May 2, 2017 8:36 am

@ Leo S

A few months of median prices going counter to the trend is not that unusual. You can see it regularly. If it continues for another 1 or 2 months I’ll start paying attention.

The probability of the median falling four months in succession is 6.25%. One more month down and it will be a statistically significant trend (P = 0.05)!

Barrister
Barrister
May 2, 2017 8:17 am

Dasmo:

Could be that they are trying to get building permits if it is a knockdown or waiting for a contractor to free up to renovate. Or simply waiting to flip and pretending it is a principle residence for a year. Who knows.

Dasmo
May 2, 2017 7:44 am

Rental house that we were living in before it sold is sitting empty….

Hawk
Hawk
May 2, 2017 7:18 am

Barrister,

Did you know Equitable doesn’t even want to touch Home Captial’s junk with a ten foot pole? That’s pretty bad.

Since you lived in the US it’s amazing you can be so ignorant to how contagions happen when fraud money gets uncovered. International investors flee like rats, and no one wants to touch real estate, stock market or whatever entity.

Did you miss Concordia and Valeant be uncovered as frauds ? Good ole conservative companies denied financial improprieties til the bitter end. Just check their charts as they imploded. Where there’s fear, big investors sell and ask questions later.

Canada’s ‘boring-but-stable’ reputation shaken as industry fears Home Capital will trigger crisis

“Canada’s reputation as a boring-but-stable financial system took a bit of a hit this week,” Alex Bellefleur, head of global macro research and strategy at Pavilion Global Markets Ltd. in Montreal, wrote in a note Friday. He predicts lending will slow across the industry, hurting cash flow into housing, and weakening inflation and the Canadian dollar.

http://business.financialpost.com/personal-finance/mortgages-real-estate/canadas-boring-but-stable-reputation-shaken-as-industry-fears-home-capital-will-trigger-crisis

Entomologist
Entomologist
May 2, 2017 6:32 am

Weather is indeed looking promising the next few days.

I confess I didn’t understand the little poem st the start of the post.

How is real estate like a squash? Green outside, orange inside? Pretty good if cooked just right? Turns to mush if overdone? Sorry – but I didn’t get it.

Barrister
Barrister
May 2, 2017 3:23 am

Finally a sale in the Uplands. A 1950’s knockdown on 2538 Nothingham Rd. Asking 1, 998,000 and sold for 2.2 million.

In terms of inventory, I suspect that it might be a few years before we see a spike in inventory. The surge in prices over the last two years has brought on more inventory than usual. Some of the extra inventory came from rental houses being put on the market and some extra inventory came from people downsizing a few years earlier than normal. The last two years of high sales basically drew down the available inventory for the next few years.

What we are left with, at least in the core, is the usual inventory from death and divorce. Even here there will be a bit less inventory since a fair number of the houses were bought by people retiring early from the mainland. Many of these early retirees see his as their final house and because they are on average younger than the normal retirement age it will be a few extra years before these properties will come on the market.

On a positive note, if prices start to plateau or even decline a bit, then we can expect a number of house bought by speculators being put on the market. But I suspect that there are far fewer of these than people think.

Don’t give up hope Hawk; we must be due for a major plague soon which will decimate the population and add inventory while dropping prices. I am expecting Hawk to flood us on articles on both the great influenza and the Black Death. In the meantime lets hope for some sunshine today.

2 bits
2 bits
May 2, 2017 12:07 am

Oversupply of multidwelling units
From local and foreign speculative
Investors and new mark to market
banking regulations coupled with
All construction related companies
Slowing down and job losses will out weight
All the land transfer tax and associated revenues that has been propping
Up federal and provincial coffers
For the last few years will set the table
For interest rate hikes to keep investment
Money from leaving canada and inevitably
into the usa as they raise thier interest rates even more to attract investors. Of course the effects of Nafta changes and inflation over 2% and all the government regulations that have been implemented to slow the realestate market Will greatly reduce buyer eligibility if there is a correction and a run for the door by sellers who cant afford to keep second properties because rental prices/revenues always drop with real estate prices that will happen at the same time as increased monthly spending from higher interest rates. Banks will be competing with each other to unload negative assets to maintain banking regulation lending ratios (mark to market accounting) and offer fire sales on surplus condos right when mortgage helper renters who were left out of the market have been saving for a decade will leave there overpriced suites to own a condo of there own that will put further pressure on single family home prices. The whisper of foreclosures will trigger all foreign money to pull out of canadian realestate to the next lucrative investment or safety like gold or high yield government bonds, most likely US treasuries.
You will know when we finally hit bottom
When CAD/USD finaly stabalizes at $1.65 and black rock investment starts buying billions in canadian commercial real estate after CHMC looks for ways to save its a$$. Of course this will take some time like it took some time to get where we are now.

anonagent
anonagent
May 2, 2017 12:02 am

VREB chart data is broken re: sale price to original. I dumped the listings into excel charted and see >100%. Mode is ~60-80,000 over ask.

CS
CS
May 1, 2017 9:35 pm

Leo, thanks.

Will be interesting to see about the “noise”!

CS
CS
May 1, 2017 9:05 pm

Leo S, I’m puzzled by the fact that last week you indicated that the median price had declined for four months, whereas in the last chart of the current post, the median price remains on a rising trend. Am I misreading something or what? Would please clarify.

Lore
Lore
May 1, 2017 8:51 pm
Gwac
Gwac
May 1, 2017 8:38 pm

Hawk you missed my point. Just looking what you are up to so I can do the opposite. 🙂

Hawk
Hawk
May 1, 2017 7:59 pm

Gwac , where there is a stench there’s garbage. Haven’t you learned that as a pro chart analyst? The US crash started the same way. Bundled subprime mortgages going bad should not be a surprise.

Sorry if it screws up your retirement plans and 30% call last week but Garth posted the large Toronto listings piling up overnight and cancelled deals. Shit happens when you lend out free money. Get over it.

Wolf
Wolf
May 1, 2017 7:51 pm

Thanks Leo, appreciate the stats.

Local Fool
Local Fool
May 1, 2017 7:32 pm

Hats off to Leo for another fantastic analysis.

Thanks.

Gwac
Gwac
May 1, 2017 7:15 pm

Hawk can you give me your insight on what will be hot and cold over the next 12months. Sectors or stocks, commodities anything that is tradeable. TIA.
Long and short would help and just your strongest views.

Gwac
Gwac
May 1, 2017 7:04 pm

I think it was bought in 2009 timeframe give or take for 900’s. Heritage status caused if from not going higher . Someone else may have the actual original purchase. I may be a tad off.

Hawk
Hawk
May 1, 2017 7:03 pm

When the banks don’t want to pick off the carcass of mortgages they wouldn’t lend to begin with why should we be surprised this is done like dinner. With the OSC investigation in fulll gear it won’t be long til it’s halted for good.

$12.8 billion of GIC’s cashable soon is the death knell. Pennies on the dollar coming up.

Barrister
Barrister
May 1, 2017 6:56 pm

Thank you AG for the price on St Charles.

Biopri
Biopri
May 1, 2017 6:30 pm

https://www.bloomberg.com/news/articles/2017-05-01/u-s-money-manager-sees-buying-opportunity-with-home-capital

Smart money has been buying at major discount. I have bought significant amount this last few trading days.

This is a huge opportunity to make an amazing return. It’s clearly FUD crashing the stock.

Will be bought within the next 2 weeks guaranteed.