May 22 Market Update

Weekly stats update courtesy of the VREB.

May 2017
May
 2016
Wk 1 Wk 2 Wk 3 Wk 4
Unconditional Sales 193 436 698
1289
New Listings 361 692 1013
1423
Active Listings 1797 1854 1855
2406
Sales to New Listings  53% 63% 69%
91%
Sales Projection 889 940 966
Months of Inventory

1.9

About a week left in the month and at this pace of new listings we will fall short of last May’s total new listings which doesn’t help the supply crunch.    After some decent inventory gains in the last weeks (+72, +73, +57), we were back to flat in the last week at 1855 properties on the market.   Last year this time there were 2431.

I’m keeping an eye on detached houses in the core where there is more selection this year than last.  413 properties are on the market compared to 368 a year ago, while sales will likely end up down 40% from last year (estimated 202 sales vs 337 last year).     Oddly enough the median days on market is currently below that of last year, maybe there are more overpriced listings that just aren’t selling at all?

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129 thoughts on “May 22 Market Update

  1. Isn’t it obvious. If you have a property as an investment you may as well cash in your winnings now as the longer term prospects don’t look good. There has to come a time when the market cools down and this looks like it.

  2. John Dollar ~ “This month is turning into a bit of surprise for houses in the core. So far 295 new listings and 164 sales. That’s 1.8 new listings for every house sale. We haven’t seen that high of rate in years.”

    Thanks for posting this info.

  3. Kalvin

    The house on 776 Revilo Pl cancelled the listing. Someone popped in here a couple of days ago looking for opinion of the property.

    Hmm.. maybe to relist? Wonder if it’ll be the same agent or not (if they are relisting). Or maybe they are butthurt that no one viewed the property at that price and are pulling out long term.

    Personally I’d rather live on Quadra proper than out there. Speaking of which, 3835 Quadra St is pending at 710K. A bit above asking. No slashes there. 143K above assessed (however assessed value lists it as a 3 bed and it’s advertised as a 4 bed – 2 up 2 down).

    In this market that almost seems like a good deal, but my god. Before prices started going up in 2015 that place would have been in the 400s.

    3930 Quadra sold Oct 2016 for 490K and it’s a 5 bed 3 bath. No clue what it looks like since I don’t have mls access, but I’m not sure that matters. Stuff on Quadra was going ‘cheap’ not too long ago.

  4. Luke, should we not be thinking of ways to reduce the population since there is such a housing shortage. I sort of like your idea of razing all the old houses in James Bay and replacing the whole area with 30 story high-rises. We might have to put up a sign telling the Cruise ship passengers that they are indeed in Victoria

  5. It’s actually a fair bit bigger (47000km^2 – about 1.5 times the size of Vancouver Island bigger)
    Why would NZ want to open themselves up to the people that Britain won’t integrate and want to get away from?

    size of NZ is 268021 square km
    Size of UK is 242495 square km
    Size of Vancouver island is 31285 square km

    Difference between NZ and U.K. is 25526 square km, so smaller than Vancouver Island in difference.

    New Zealanders had the highest approval rating of the concept out of the four countries at 90% approval of those surveyed, so it perplexed me why but probably economic reasons for them. It is beautiful there but their economic opportunities are limited.

    But now I’m deviating away from talking about Victoria housing. Other than to say this concept if implemented would cause huge changes here.

  6. This month is turning into a bit of surprise for houses in the core. So far 295 new listings and 164 sales. That’s 1.8 new listings for every house sale. We haven’t seen that high of rate in years.

    The market for houses in the core is still in favor of sellers but it got a little bit easier this month for buyers with over 2 months of inventory to choose from. The median and average may be slightly higher this month but that’s most likely due to some skewing at the high end of sales in the 1.5 million plus range. Sale volumes may be be down in every price range from last year’s May except for the 1.5 million plus range.

    First go the sales then go the prices.

  7. Has one of the houses on Dallas road in James Bay been sold. It was the one they were asking just under 2 mil?It was one of the two that was moved and while it was nicely done in terms of a reno I cant imagine anyone wanting that location.

  8. The house on 776 Revilo Pl cancelled the listing. Someone popped in here a couple of days ago looking for opinion of the property.

  9. So what happens when Home Capital uses up the last of their 2 billion line of credit and no one has bought them yet? Probably be next week at this rate no?

  10. NZ is about the same size as UK though much much less crowded (except for the sheep!)

    It’s actually a fair bit bigger (47000km^2 – about 1.5 times the size of Vancouver Island bigger)
    Why would NZ want to open themselves up to the people that Britain won’t integrate and want to get away from?

  11. No, thanks, did not know about this. It seems the last time the arrears rate (behind three months) was this low was 1995.

    2008?

  12. Where is your evidence Vancouver is having an uptick JD? Have you tracked this over time? Just seems unlikely given valuations.

  13. Even during the height of the leaky condominium crisis when people were walking away from their condos and declaring bankruptcy the rate never went over 0.7 percent. During that time condominium prices fell substantially and dragged down house prices slightly.

    So our present low rate is good, although Vancouver seems to be having an uptick in foreclosure applications as the court is fully booked each Monday and Thursday. A rate of 0.7 would likely mean declining prices and lots of headlines in the news saying how bad the real estate market has become.

  14. On the topic of foreclosures, does anyone here check the mortgage in arrears data from the cba?

    No, thanks, did not know about this. It seems the last time the arrears rate (behind three months) was this low was 1995.

  15. W/ NZ or Aus citizenship you can already work & live in Australia/NZ/Cook Islands. It’s already pretty easy as an Australian/NZ to live in & work in Canada and the UK, and vice-versa.

    Easy to move between these countries when you are young, but only for temporary reasons. Not easy at all to move to Aust/NZ permanently from Canada or UK, esp if older. Not easy to move to Canada permanently from any of these currently.

    I have British relatives that have immigrated to Aust. and NZ. More that are trying to or thinking of it but they are older so it looks virtually impossible. One cousin who went to NZ had to marry a Kiwi as NZ is not an easy country to get into at all if you are not from Aust/NZ. My other UK cousin who just got his PR in Aust. had a really hard time doing that and wasn’t sure he was going to get it and had to wait years, so he was very happy when he did – he is young at 25. The concept is interesting b/c UK is leaving the EU and so they will no longer have freedom of movement there but they have much closer ties and more commonalities with Canada/Aust/NZ anyway, so it makes sense to me. I think though, that NZ and Aust. could be flooded w/ UK citizens if it happened. NZ is about the same size as UK though much much less crowded (except for the sheep!) and without the problems the UK and Europe are now facing being too close to the troubled parts of the world like Libya and Syria, and the UK has many immigrants who are not integrated or welcomed very well into mainstream society which is the root of problems like the Manchester bombing. If it ever happened, there would also be those that go the other way as well, as there always was. I’d like to see it implemented, would be nice for Canadians to also have more options, we don’t even have a tropical island to go to!

    I actually don’t think it will happen, who knows if it will though? If it did you can bet we’d see huge changes in Victoria.

  16. I find this mortgage market very dubious, “Borrow up to 45% of your home equity and never make a payment as long as you remain living in your home”. What happens if prices drop, rates go up, you live for 15 or more years? The compounding interest would be massive.

    They are pretty straightforward. If prices drop the lender is on the hook. You can never owe more than the house is worth so that’s the risk they’re taking, and that’s why they don’t lend more than 45%. Rates go up, depends on the terms of the mortgage just like any other. If you live longer it just keeps eating your equity, but again you can’t owe more than the house is worth.

    I like reverse mortgages if people need the money. If an elderly person lives in a $1M oak bay shack and wants to enjoy some money in their retirement then great. Tough titties for the heirs but that’s their problem for relying on an inheritance rather than making their own way.

    https://www.theglobeandmail.com/real-estate/mortgages-and-rates/the-reverse-mortgage-quandary/article1391748/

  17. It’s already pretty easy as an Australian/NZ to live in & work in Canada and the UK

    Yes, if you want to teach skiing at Whistler for a year. But for other jobs, and especially if you’re bringing your family, no it’s not easy at all.

  18. full day of foreclosure applications today at the Vancouver court house. Nothing in New Westminster or Victoria court house.

    Yeah, again, that is because foreclosure applications are heard only on Mondays and Thursdays in Vancouver. The Victoria and NW courthouses are not sitting today at all – there is a 3-day closure for judicial conference reasons.

  19. Does anyone have experience/knowledge on the reverse home mortgages being advertised? What lending institutions are behind these mortgages? Is this part of the shadow mortgaging market or are some of the big banks involved?
    I find this mortgage market very dubious, “Borrow up to 45% of your home equity and never make a payment as long as you remain living in your home”. What happens if prices drop, rates go up, you live for 15 or more years? The compounding interest would be massive.

  20. full day of foreclosure applications today at the Vancouver court house. Nothing in New Westminster or Victoria court house.

  21. “Interestingly the only time in the last 40+ years where we’ve had price declines greater then 5% YOY was in 1981.”

    Inflation in 1981 was in the 12% range – not sure if the 5% decline was real or not but if not, looking more like a 20% decline in real terms.

  22. http://www.canzukinternational.com/

    W/ NZ or Aus citizenship you can already work & live in Australia/NZ/Cook Islands. It’s already pretty easy as an Australian/NZ to live in & work in Canada and the UK, and vice-versa. I don’t think it would change much since it’s really just a $20 visa application that gets approved overnight today.

  23. Oaklands duplex at 2717 /2715 Grosvenor Rd slashed 88K. Guess the ROI on duplexes has reached it’s limits.

  24. That’s a big sale on Foul Bay Road. Small lot, small house, busy road.

    Looks like the new house premium is alive and well.

  25. I don’t have enough information to assess the risk to the housing market. “Shadow banking” numbers include unregulated lending not just for mortgages, but all types of loans, ie. auto loans, so using the overall value of these loans in reference to housing alone is misleading.

    I’ve read the BoC report and other analyses of the situation. Without more of an understanding of the variables and practices I don’t think you can make an accurate projection.

    My understanding is that not many primary mortgages are granted this way – these types of loans are likely to be smaller secondary mortgages through a mortgage investment corporation and currently comprise 12.5% of the mortgage market vs. 6.5% ten years ago.

    Someone might try to obtain a second mortgage where they have equity but don’t qualify for a HELOC and they don’t want to sell their house, or where they don’t qualify for the mortgage they need to buy the house they want. Rates for borrowers with fairly good credit are about 3%, for those with lower credit they are 7-10%.

    Not knowing does point to a possible high risk, but maybe not. The average homeowner in Canada has 74% equity and less than 3% of homeowners have less than 10% equity. Things could go really wrong if prices drop and rates rise I guess, but that is not the most probable outcome imo based on the information I have seen. What seems most probable is that insolvency rates among renters who have non-mortgage debt will rise if rates rise and some homeowners with low amounts of equity will have to sell their house to pay other debt.

    The question as to whether this could lead to a US-style crash remains open. I suspect it won’t, but there are a lot of wild cards, including consumer confidence and how the economy will react. Job loss combined with high rates would cause hardship and the downward snowball could gain momentum.

  26. 375 Foul Bay Road – sold in days for $1.5m

    This sold in Jan. 2016 for $1,047k plus GST. Still, they made a profit of almost $400k in one year.

    It was a nice-ish but boxy new build (I did view it last year). but still, I didn’t expect it to sell when I recently saw it listed at this price. Guess I was wrong on that one.

  27. http://www.canzukinternational.com/

    This is an interesting concept I came across yesterday – after Brexit, a union of free movement between Canada, NZ, Aust., and UK. What would this do to house prices in Victoria? suddenly, over 60 million brits could move here? Plus, Aussies and Kiwi’s. And, we’d also be able to move to those places. With what just went on in Manchester and if things get worse in that regard, and Europe loosing it’s appeal for so many reasons, it could enhance the appeal for them to head back to the former colonial pastures. Still, for now it is just a concept.

  28. A large portion of the demand is driven by retirees and when the baby boomers start dying faster than they are retiring this will affect large segments of the market here in Victoria.

    Barrister – the youngest boomers are currently in their early 50’s and so many not retire for another 15 years. The biggest glut of boomers is yet to come, as they are currently in their 50’s and 60’s.

    Victoria may be loosing ‘charm’ due to high rises in your’s and some others opinion, but I think as long as the high rises don’t get too high (lets say no higher than 30 storey’s) and not spread out all over the place but concentric to downtown, Vic West, and perhaps James Bay then we won’t see the rest of the city ‘spoilt’ so to speak. If anything it would encourage less cars and more walking/cycling. I have to say – I always did admire that 1970’s built high rise perched high on that Rock all alone in Rockland. I don’t think it spoils anything, and has incredible views, though I do get why you might not want a high rise right next door. Let’s put some effort into the design of these high rises so we don’t end up with what they did in Britain in the 1960’s (awful ugly boxy council flat high rises everywhere). I noticed some of the new ones going up on Caledonia Ave are not really all that attractive.

    Even if Victoria looses some of the ‘charm’, which I agree would be unfortunate but if they’re careful it can be avoided. it still has the best weather in all of Canada so that won’t change it’s attractiveness to many across much of this cold and unforgiving land, which is often way too hot in the summers and way too cold in the winters.

  29. I would tend to agree with Hawk on this one. The fact that no one seems to know anything much about the scale and risk profile of the shadow lenders means that it’s a problem just on that basis. And it’s certainly big enough to derail the market while the rest of the banks stay steady. All you need is the margins to fail.

  30. If shadow lending is half the size of the banks and the BOC doesn’t know the whole story, then that’s fricking scary.

    Canada’s $1.1 Trillion Shadow Banking Sector Is Now Half As Large As Banks

    “While BoC researchers caution there are “significant gaps” in data and knowledge, what they could find was massive. They estimated that the industry has liabilities of $1.1 trillion dollars, just a little more than half of the $2.1 trillion in liabilities Canadian banks have.”

    “China gets a lot of heat for its shadow banking sector, but Canada’s number is almost 5x larger per capita. With ‘cooling measures’ on the horizon for Canada, that number is about to get a hell of a lot larger.”

    https://betterdwelling.com/canadas-1-1-trillion-shadow-banking-sector-now-half-large-banks/

  31. You left out these two important parts. They don’t know how big shadow lending really is and it will play a major part of the coming correction.

    Everyone believed the US government, Bernanke etc in 2005 to 2008 too when they said there was no bubble. Believing the Bank of Canada is a bizarre loyalty road I would never go down when they can’t raise rates a quarter point with inflation signs all around. The low interest rate game is a failure.

    “However, significant gaps remain in data and knowledge and are likely to
    persist because of the dynamic nature of the shadow banking sector. ”

    “The experience of the 2007–09 global financial crisis showed, however,
    that financial stability can be threatened by vulnerabilities originating in the
    shadow banking sector, especially if they are allowed to grow unchecked.”

  32. My main concern with the Canadian banking system is the shadow lenders.

    I’m not sure how much of a problem this is. It seems like we are missing the data needed to understand the risks associated with non-bank lending. I also find it difficult to understand the interconnectedness and riskiness of the different types of lending, much of which seems to serve a positive function in the system. The BoC doesn’t seem to think the risk is high:

    Based on available information, we judge that the shadow banking sector
    does not pose large vulnerabilities for the Canadian financial system at
    this time, mainly because of the limited degree of liquidity and maturity
    mismatch as well as low leverage in most parts of the sector. The relatively
    small size of individual subsectors currently also limits the potential for
    systemic stress.

    http://www.bankofcanada.ca/wp-content/uploads/2016/12/fsr-december-2016-chang.pdf

  33. Leo:

    Victoria is vulnerable to price drops in the future if perhaps not immediately.A large portion of the demand is driven by retirees and when the baby boomers start dying faster than they are retiring this will affect large segments of the market here in Victoria. Also a city can change both its character and its appeal to the market place and it is not necessarily for the better. In the last few months I had two separate friends come and stay with me while investigating places to retire. Both independently came to the same conclusion that Victoria has lost much of its charm and was turning into just one more high rise city. On quiet reflection, I had to admit that if I was looking today as opposed to five years ago I would have the same concern. I do not want to spark the debate
    of which direction the city should move in terms of density or the benefit of mixed income neighbourhoods. But perhaps it might be wise to consider that the main reason that the Uplands commands high prices is precisely that it is not high density and is definitely not a mixed income neighborhood.

    There is a lot of interesting debate on this blog but I would venture to say that most people would agree that Victoria’s housing prices are not supported by wages earned in Victoria.Would Victoria be a better city if the affluent retirees stopped coming? Perhaps.

  34. And the two situations are not analogous

    No two situations will be. My main concern with the Canadian banking system is the shadow lenders. Strict regulation on the lending side has worked to keep mortgage quality decent for the big banks, but many people have been driven to private funds because of that regulation and the oversight there is nil. That could be a huge problem in the future in markets with big speculation and potential for a correction that will put those same people underwater like Toronto.

    As for price declines in previous corrections, yes they have been mild but why? Because interest rates decreased and restored affordability to the market over a period of flat prices. That won’t be an option next time unless rates go up first. Seattle thought they were immune from declines too and cited their long history of increases followed by plateaus. It was a pattern until it wasn’t.

    I’m not predicting a near term price drop in Victoria, but I do think that the idea that Victoria is somehow immune to price drops is dangerous.

  35. I love reading opinions of everyone on this blog. Generally speaking the bears are much more prevalent here then out there in the real world. That said I think that a lot of our ‘predictions’ are being made by over-interpreting some relatively minute data points.

    Even more interesting is that, in general, most would likely agree (outside of a few extremophiles) that the market over the last 18 months has been abnormal and is likely unsustainable.

    I’m just not truly sure I really understand the whole doom and gloom group though. I was on the front lines of the american financial collapse in 2008 and am now working in finance in Canada. And the two situations are not analogous. And if we’re comparing Victoria now to Victoria in 2008 then you’re probably looking at what many expect. A flat market for the next few years.

    Interestingly the only time in the last 40+ years where we’ve had price declines greater then 5% YOY was in 1981.

  36. Hawk – ‘The Fraser Valley Real Estate board (FVREB) has warned managing brokers that offshore investors have apparently been asking realtors to complete illegal transactions that would break money-laundering and tax-evasion laws.’

    Something that many realtors (r with circle) have been doing in Vancouver for many years. Victoria?

  37. ICYMI, all hell is breaking loose in Toronto, buyer remorse setting in. Can’t happen here though, cause we’re prettier and everyone is debt free.

    Toronto Homeowners Are Suddenly in a Rush to Sell

    “After a double whammy of government intervention and the near-collapse of Home Capital Group Inc., sellers are rushing to list their homes to avoid missing out on the recent price gains. The new dynamic has buyers rethinking purchases and sellers asking why they aren’t attracting the bidding wars their neighbors saw just a few weeks ago in Canada’s largest city.

    “We are seeing people who paid those crazy prices over the last few months walking away from their deposits,” said Carissa Turnbull, a Royal LePage broker in the Toronto suburb of Oakville, who didn’t get a single visitor to an open house on the weekend. “They don’t want to close anymore.”

    “The frenzy is over — it’s over,” said Evans, who focuses on Toronto suburbs such as Brampton. “Sanity is returning to the marketplace.”

    https://www.bloomberg.com/news/articles/2017-05-24/toronto-bidding-wars-turn-to-homebuyers-remorse-as-market-slows

  38. I’ll just call it CC.
    We just need a coalition to last long enough to ban corporate and union donations. Anything past that I’ll take as a bonus.

  39. So many unique attempts at spelling Courtenay on this blog!

    I wonder if Guichon will even accept an alliance between the NDP and Greens and simply force another election.

    I’m so pessimistic. Hope I’m wrong.

  40. The question is if the government can hang together long enough to make any meaningful changes to housing policy. I somehow doubt it. Electoral reform and elections financing reform will come first. Then initial housing policy will likely be limited to things like funding for new rental stock. I doubt we will see significant change on that front.

  41. “Any drop in prices can lead to an increase in people defaulting (on their mortgages) because people who are stretched tightly don’t have an exit strategy,” said Andrew Bury, a Vancouver-based partner at Gowling WLG, who specializes in handling foreclosures for banks, mortgage investment companies and other lenders.

    At the moment, mortgage default rates in B.C. are very low, Bury said. But looking back, he said, “in 2008, it didn’t take a huge decline in prices. In short order, there was double and then triple the number of defaults because of price declines.”

    It’s not that falling prices lead directly to foreclosures. Ideally, it’s better to hang on to an asset that is declining in value and sell it later when prices rebound. However, if “something goes wrong, and in life, stuff goes wrong — you lose your job or you get a divorce,” said Bury, there isn’t the option to tap into a home’s equity for a lifeline when prices are declining. And for speculators who have taken equity out of one house to buy another, there is less to tap when it comes time for refinancing.

    Vancouver Sun, November 2016

  42. Insolvencies include both bankruptcies and consumer proposals. Bankruptcies are down and consumer proposals are up. Overall the insolvency rate has declined yoy in BC.

  43. totoro, while insolvencies are down, is it not the case that consumer proposals are up? Without looking at consumer proposals, the insolvency data is misleading.

  44. NDP takes Courney-Comox, and we have a minority government! I’m happy to have been proven wrong on that call.

    It’s anyone’s call what happens now – Clark will try to form government, Horgan and Weaver may try to join forces (or Weaver may support Clark), or there could be another election shortly.

    Oh moan oh groan. Business (and the housing market, I suspect) dislikes uncertainty.

  45. ICYMI via an insolvency trustee the trends are changing fast. Be an ostrich in denial but I’ll believe what’s happening now not a year ago:

    “As stated earlier, the most troubling trend we see now is the flood of regular Canadians facing financial crisis. Households and individuals who are employed, have decent incomes, own homes and have done everything they feel they ‘should’ be doing now find themselves facing serious, if not insurmountable, debt problems. They are having to file insolvencies now, or will in the next few years.”

  46. Hawk, would you take the role of BoC Governor if it were offered to you?

    I have a feeling you’d work wonders for my savings accounts.

  47. “Stats Can and the Trustee of Bankruptcy are far better measures of what is going on than your circle of friends or mine.”

    Spinning the bullshit once again. It’s written by an insolvency trustee ICYMI. Trends are changing as a result of a decade of loose lending.

    Who do you think borrows from the explosion of subprime mortgage brokers who openly admit everyone jacks with the paperwork to get the sale from people with solid incomes to get the biggest house they can ?

    There’s naive and then there’s downright stupid. Someone praying the market doesn’t tank or their retirement will soon be over is not credible.

  48. Totoro: “In BC, the insolvency rate decreased 8.7% yoy (10,759 for the year), but for Canada it is up 2.2% (129,000 total for the year). The most recent insolvency rate is .29 % in BC.”

    You are absolutely correct regarding the insolvency rates but I think you need to dig a little deeper. Renters and students don’t have the same opportunities as home owners. Perhaps, this helps to explain the lower insolvency rates in B.C. and Ontario. High home prices seem to mask a lot of problems. On the way down, not so much though.

    https://bankruptcy-canada.com/bankruptcy-blog/personal-bankruptcies-in-canada/

    “What’s interesting is the dramatic difference across the various provinces. Canadian provinces who are dependent on oil as a significant economic driver saw a rise in unemployment. This rise in their 2016 unemployment led to a corresponding rise in consumer bankruptcies and consumer proposals. Consumer insolvencies increased 34% in Alberta, 35% in Saskatchewan, 24% in Manitoba and 32% in Newfoundland and Labrador.

    Conversely, provinces with stronger economies and strong housing markets saw a drop in overall insolvencies in 2016. This is all despite a continued increase in overall consumer debt. Filings dropped nearly 7% in British Columbia while Ontario insolvencies declined just under 1%.

    Housing prices have had a big impact on consumer insolvencies in provinces like BC and Ontario. If they remained working, many Canadians could keep up with their debt repayment in part to low interest rates. Canadians with higher debt loads who own a home could qualify to refinance their existing credit card debt at very low interest by using the equity in their home.”

  49. 58% of young adults between 20-29 live on their own and do not report as part of their parents’ household. 40% between 20-23 live on their own and 75% of the 25-29% live on their own. Average age of a university graduate is 25 and post-grad is 30 plus.

    Average student loan debt is 28k for undergrad. Students that work during school earned an average of 6k a year in 2010. About 65%-70% of Canadians go on to post-secondary.

    Guess it would have some impact on the stats. Not sure how much.

    http://www12.statcan.gc.ca/census-recensement/2011/as-sa/98-312-x/98-312-x2011003_3-eng.cfm
    http://www.statcan.gc.ca/pub/75-001-x/2010109/article/11341-eng.htm

  50. Unless that includes recent grads with student loans? In that case the whole stat becomes a bit meaningless.

    I believe it includes renters and owners and all debt, including student loan debt. There are a lot of students with more than 3.5x the debt to income. There are far fewer older Canadians in this boat who are not also homeowners. I’d say the stat is not meaningless as it the impact of bigger mortgages is likely behind the increase, but it doesn’t help to understand risk in a measurable, accurate way.

  51. Stats Can and the Trustee of Bankruptcy are far better measures of what is going on than your circle of friends or mine.

    You are living in a world where disaster looms large and leaks out to colour everything with doom. There is no doubt that household debt to income has risen, largely due to mortgage debt, and this could create more risk if houses drop and rates rise and jobs are lost, but the stats show most homeowners are not living on the razor’s edge.

    It should be noted that while the number of households that seem to walk the insolvency line is under 10%

    They are using a measure of debt to income with no regard to underlying assets or other savings. That is not insolvency.

    Canada keeps good stats on insolvencies, including consumer proposals and bankruptcies. In BC, the insolvency rate decreased 8.7% yoy (10,759 for the year), but for Canada it is up 2.2% (129,000 total for the year). The most recent insolvency rate is .29 % in BC.

  52. He said that 720k Canadian households, including those that rent, have debts equal to more than 3 1/2 times what they earn every year. He did not separate out mortgage debt from consumer debt, student loans or other types of borrowing.

    The absolute vast majority of those will be owners. No lender in their right mind would lend someone 3.5 times their gross income in consumer debt.

    Unless that includes recent grads with student loans? In that case the whole stat becomes a bit meaningless.

  53. Totoro still can’t accept the real world where your closest friends are in hock and you’d never know it. As McLeans and many recent articles by those in the trenches who see it every day it’s those with well paying jobs that are in it worse. Statscan is not the be all, end all to reality.

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

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

  54. “It should be noted that while the number of households that seem to walk the insolvency line is under 10%, it’s still twice as many when compared to 2008, at the start of the global economic crisis.”

    Vicbot, exactly my point. When the tide turns the level of folks in trouble faster is way higher than previous bubbles. This is why Poloz is chicken shit to raise rates otherwise we would have a few already the past year.

    Changing your lifestyle is not easy when crimped in debt. Most families taking second jobs don’t last long due to burnout and cave in and sell or go under. Seen it too many times.

  55. Dasmo, wage growth may be high in some sectors but overall it’s the lowest since 97. What your buddy is experiencing is a maxed out labor market for his type of employee. His low wage employees aren’t buying $800K houses.

    The average 1.5 % wage increase isn’t going to pay annual 10% housing increases. We’re Peak Victoria now.

    Banks are just downgraded, BMO crappy earnings, China debt is downgraded. TSX down big today. Thats not inflationary signs.

  56. aggregate data is hiding an important disparity between those with houses paid off and those who have over-extended themselves in such a way that the deviation around that 14% is probably huge

    Interesting question. I do question whether those who have “overextended themselves” are generally homeowners other than some recent first-time younger buyers who are buying with a cosigner. I’d agree with JD that most will be fine but have less equity, which will have some additional impact on the economy and spending patterns.

    In order to qualify for a mortgage you need to demonstrate a satisfactory debt service ratio to start with and only those who borrowed in the last year, after the qualification rules changed, will not have significant equity in the expensive markets.

    It seems like those at highest risk if rates rise will generally be those who have the highest consumer debt to income ratios and who fall into the following categories: those without a post secondary education, unattached individuals and people in ‘other’ family types, and those with less than $50,000 in household income.
    http://www.statcan.gc.ca/pub/75-001-x/2012002/tables-tableaux/11636/tbl03-eng.htm

    We know from the bankruptcy/insolvency stats that people experience financial trouble because of divorce, addiction, illness and job loss, so homeowners who experience these conditions and don’t have much equity could also be at risk if rates rise.

    or 8% of mortgage-holders

    I don’t believe that is what Poloz – article misquotes him: http://www.bankofcanada.ca/2016/02/connecting-dots-elevated-household-debt-risk/

    He said that 720k Canadian households, including those that rent, have debts equal to more than 3 1/2 times what they earn every year. He did not separate out mortgage debt from consumer debt, student loans or other types of borrowing.

    Many people owe mortgages that are more than 3.5x their annual incomes. Consumer debt, which is about 20% of all debt, is far higher in its risk profile in general, including in the rate hike scenario, but homeowners who have recently taken on high ratio financing (about 15% of all loans) will also be higher risk, particularly in the case of job loss.

    http://www.bankofcanada.ca/wp-content/uploads/2016/06/fsr-june2016.pdf

  57. @ Hawk, They will raise rates when wages rise. The one lesson from down south is when the house of cards starts coming down you don’t open all the windows…. This is a delicate operation that just got a whole lot more precarious. Wage inflation is already happening for business owners involved in the building trades. With it being so busy they will need to pay more to compete. My buddies restaurant in Van in struggling to find people to work. Need to pay more. Tough because they then need to charge more. This is the beginning of an inflationary cycle that will see rates rise along with wages because then people can still afford to just put those pay raises towards their obscene debt. The art of banking is to give just enough rope so the noose is around the neck but not to pull so suddenly as to hang the client. This will also then reinforce Michael’s theory that rising rates cause rising house prices once again….

  58. Yes it’s the small % of higher risk borrowers (and the lenders that encouraged them, and the resulting shorts, etc) that triggered the US financial crisis.

    “Stephen Poloz stated that most of the debt exposure is concentrated among 720,000 households, or 8% of mortgage-holders, who currently hold more than 350% of debt when compared to their annual gross income. These are the households that would struggle to make debt payments either in the face of a significant economic downturn or when interest rates rise. It should be noted that while the number of households that seem to walk the insolvency line is under 10%, it’s still twice as many when compared to 2008, at the start of the global economic crisis.”

    http://www.moneysense.ca/spend/real-estate/mortgages/the-canadian-housing-market-puts-us-all-at-risk/

  59. With 74% of the data for May compiled it appears that May may be the third consecutive month that the months of inventory for houses in the core has risen.

    There is almost double the MOI than May of 2016 (1.09), but still under that of May 2015 when the MOI was 2.5

    Besides 2016, we have to look back to 2007 and 2008 when the MOI was this low. But the market did recover back then and by 2010 we were once again experiencing 5 and 6 months of inventory.

  60. Why is Poloz so chicken shit to hike the rates a mere quarter point ? Because he knows disaster looms large if he does. Most brain dead BOC chief ever.

    You do see the irony in this statement, right?

  61. Even in a market crash, most Canadian home owners will be fine. They just have to continue to pay the mortgage. And most of these people just would not list their homes for sale.

    But they won’t be the market. The market would be made up of people that have to sell in a declining market. Divorce, job loss, foreclosure, bankruptcy, etc. That small 3 to 4 percent of all the home owners in Canada will determine price not those that choose to wait out a housing recession.

    The average Canadian should be fine, they will just have less equity. You have to look at those at the margin that would have difficulty with a rise in interest rates or a loss of a job and have to sell. And if that is even 1% of all the mortgage holders in the country that is enough to change the market.

  62. Why is Poloz so chicken shit to hike the rates a mere quarter point ? Because he knows disaster looms large if he does. Most brain dead BOC chief ever.

  63. totoro, thanks for the links.

    I suspect aggregate data is hiding an important disparity between those with houses paid off and those who have over-extended themselves in such a way that the deviation around that 14% is probably huge. How else could you account for people in Vancouver and Toronto spending 60-80% of their income on housing?

    the issue with the Manulife data is in the interpretation of being able to financially withstand a rate hike vs being willing to adjust to a rate hike. In the end, it’s what people are will to give up to keep a house. It might be that many people are simply not willing to give up a second car, a tropical vacation or a daily latte. those people will bail out of housing.

    The people who decide they will give up the perks will also slow the economy because they won’t be spending. So, I totally agree that either way, there’s a negative impact.

  64. You don’t need mortgage increases to blow up the bubble, you just need a massive shift in sentiment which is what is happening now in Toronto.

    Walking away from deposits and open houses with no one coming is major. Those who have been waiting to sell will kill it as well, not just the debt burdened. No sector is spared.

  65. Right now, the average Canadian household spends about 14% of its disposable income to pay down debt, including mortgage principal and interest. The ratio has been at this level for about a decade, but the amount of interest paid has declined overall due to low rates – it is 6.4%.

    This stat, along with others, such as the household savings rate of 5.8%, does not support the finding that a 10% increases in mortgage payments will create a situation for most homeowners they “can’t withstand”, unless can’t withstand means not having as much money to spend on things they want but do not need or that they would be able to save less.

    http://www.statcan.gc.ca/pub/13-605-x/2015006/article/14219-eng.htm#a3
    http://www.tradingeconomics.com/canada/personal-savings

    You can find the disposable income and other data for oecd countries here:
    https://data.oecd.org/hha/household-disposable-income.htm

    RBC has a summary as to what might happen if rates increase. Basically, as you would expect, this will disproportionately impact the minority of households with high debt obligations and lower incomes, an increased exposure to variable borrowing rates and elevated interest payments on non-mortgage outstanding balances.

    If rates increase there will be an immediate impact on discretionary income and consumer spending which would likely, imo, impact the economy negatively. There could be a snowball of negative effects that could increase debt service ratios more.

  66. You would think that after her first project went over budget that she would have stopped to reconsider the whole process. But she seems to have a talent for talking other people into getting on board with her easy money schemes.

  67. “A few weeks ago I found out she bought ANOTHER house! Come on, wth right? How is this possible I ask?”

    It’s always easier to buy than to sell.

  68. My impression for South Victoria is that there is a lot more houses listed at or above 1.8 mil than last year and they dont seem to be selling at nearly the same pace. There are 15 listings in Uplands alone.
    A lot of these properties have sat on the market for months.

    My guess is that a 2 million and up price point caters mostly to out of town buyers My suspicion is that there are less buyers from Vancouver that are showing up with the big bucks. Asking prices for many of these houses have simply reduced the gap between Vancouver and Victoria to the point were they are simply not that appealing. A person might be getting 4 million for their Vancouver house but replacing it with one in the Uplands for 3.5 does not exactly leave a lot in the bank to retire on. Obviously this is pure speculation on my part and I am sure it will be pointed out that my opinion is not backed up by figures and facts.

    Will prices drop? hard to tell since it is impossible to know how motivated many of the sellers actually are and how many simply put up their houses thinking that I will sell if I can get the big bucks but i dont have sell if there is not a really big payout.

    This might not be a good scenario for a couple of builders who simply cannot afford to have the houses sit for a year or more. We could have a very interesting fall. By the way, I would not be making any buying decisions based on my speculations. On the other hand, if anyone is thinking about buying a house in order to flip it I would give that idea some somber second thought.

    LEO: I found the story of your friend absolutely fascinating. Strangely I have known a few people like her. More often than not the story does not end well. Try to avoid giving her advise since you will not endear yourself to her.This sort of magical thinking is more common than you might imagine and it is not pretty when it comes apart.

  69. Amazing how fast things can turn. Bidding wars ended, buyers walking away from deposits. The Asian contagion that drove this bubble is over.

    Dispute the Manualife survey all you want but many other surveys said the same. You think the bankers want to really tell you how dicey it’s looking ? Look out below.

    Bidding Wars Turn to Homebuyers’ Remorse in Toronto

    https://bloom.bg/2qfyC2M

  70. “Any experience with tobacco smoke remediation?”

    There are a number of ways of remediating tobacco smoke. Different surfaces require different treatment. A good bet would be to contact your home insurance who will put you in contact with companies that specialize in the type of work that you need done and they will tell you what you need to do and what products to use.
    I had an electrical fire in my home which left a very pungent smell on all sorts of surfaces. The only thing I had to throw out were oil based (nylon) drapes but everything else was cleanable and my wife and I followed all the instructions of the remedial company contacted by the insurance company avoiding a claim. Had we not been able to eliminate the smell to our satisfaction they would have come in and done an ionization procedure which would neutralize all smells a procedure which takes a couple of days and you have to leave the premises, cost of about $3-5,000.

  71. Other quotes from Warren Buffett on speculation:

    “Like most trends, at the beginning it’s driven by fundamentals, at some point speculation takes over. What the wise man does in the beginning, the fool does in the end.”

    “The line separating investment and speculation, which is never bright and clear, becomes blurred still further when most market participants have recently enjoyed triumphs. Nothing sedates rationality like large doses of effortless money. After a heady experience of that kind, normally sensible people drift into behavior akin to that of Cinderella at the ball.”

    “The day traders of the Internet moved into trading condos, and that kind a speculation can produce a market that can move in a big way. You can get real discontinuities.”

  72. Actual number of mortgages held by banks: 4.7 million. Actual number that are past due: 13,000.

    As usual the truth is somewhere in between. Defaults are not a judge of how many people are living on the raggedy edge because in a rising market most everyone can sell instead of default. And a manulife survey that says 70% of people can’t afford a 10% increase in payments also doesn’t compute.

    How many are living on the edge and would be in trouble with a sustained decline? No one knows except the banks, and given how loudly they protested when the CMHC wanted to shift some risk to them, I think it might be a bit higher than they would like you to believe.

  73. The Manulife report is obviously not a particularly accurate sampling of the general populace.

    Also from the survey:

    “Overall, nearly one quarter (24 per cent) of Canadian homeowners polled said they haven’t been able to come up with enough money to pay a bill in the past year.”

    http://www.cbc.ca/news/business/manulife-housing-debt-1.4127243

    Actual number of mortgages held by banks: 4.7 million. Actual number that are past due: 13,000.

    If you look at other reporting you’ll see that the numbers are further uneven. As:

    “The Manulife survey found that Canadian homeowners are carrying an average of $190,000 in mortgage debt, with Albertans carrying the heaviest debt load — an average of $242,300.
    That’s followed by $217,300 in British Columbia, $196,900 in Manitoba and Saskatchewan and $193,000 in Ontario.”

    Considering the average home sale price in BC is around 80% higher then it in Alberta(and Ontario is 65%+ vs Alberta) and you are left with even more questions.

  74. The market collapsed because of a myriad of things. The default rate was but one. The subprime lending here is scary as is the level of speculation. See curious cat’s post. It’s amazing how fast and steep it turned. I think it’s possible that wage inflation might follow this leg up and that might make for a soft landing….

  75. Many people don’t want to adjust their lifestyle or aren’t capable of it due to outside forces and will go down with the ship.

    Again the US market collapsed on a mere 11% defaulting and Canadians are far worse borrowing their brains out as every debt chart clearly shows.

    Subprime and shadow lending is rampant which will only accelerate the coming downfall. Ignorance will only ramp it up that much further.

  76. The Manulife report was not an analyze of peoples finances but just a survey of whether people thought they would have trouble.It is very different. It may reflect that people are spending it as fast as they are making it rather than anything to do with defaulting on a mortgage.

  77. Looks like a strong possibility of an NDP win in Courtney. I fully expect the NDP to live up to their promise of stopping the pipeline (bet that they dont since pipelines are exclusive Federal jurisdiction).

    As to whether a ten per cent increase in mortgages might put people over the line. It is possible since incomes have not really kept up with true inflation. I guess one would have to break apart Manulifes numbers a lot more.

  78. Funny how no one wants to talk about the news today from Manualife that 70% of mortgage holders over all age brackets won’t be able to cope with a 10% mortgage payment increase. That’s going to to tank this market worse than I thought.

    I can’t believe this is true. A 10% increase in payments would happen after a less than 1% increase in rates. Mortgage rates were 1% higher about 6 years ago. Of all mortgage holders in Canada, the vast majority bought before 6 years ago. So somehow all those people could afford higher rates (on a larger mortgage) back then but can’t now? Even if true, those people can’t adjust their lifestyle if their mortgage went up 10%? Doesn’t compute.

  79. Wolf,
    Funny how no one wants to talk about the news today from Manualife that 70% of mortgage holders over all age brackets won’t be able to cope with a 10% mortgage payment increase. That’s going to to tank this market worse than I thought.

    What happens if someone loses their job which is just as likely ? No wonder the US tanked with only 11% going under. Going to be bigly ugly, Canadian style. . 😉

  80. Curious Cat,

    I posted this from Warren Buffet in the last thread for AG to grasp but he failed in spades as usual. Your friend has the same problem. 1929 mentality is here now and will all end badly like it did back then.

    “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 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, which it was in 1929.”

  81. “regular housing demand, investment and speculation all benefit the housing market”

    A ‘hot’ real estate market negatively impacts other aspects of the economy. Fine view to have (I don’t agree), just don’t cry foul when your children / grandchildren are affected. That would make you a hypocrite.

    @CuriousCat: sounds like your friend is chasing gains. I’ve never seen that end well, sometimes you just don’t get the breaks.

  82. As soon as her realtor says she can sell for a million, the for sale sign is going up.

    What is the current market value?

    A couple weeks before she moved in this Feb, she bought a duplex, extremely close to where she had just sold her old place! How is that possible? Well she found a friend that was willing to go half with her on it! The plan is to tear down the house and build a new duplex there

    That is not a bad plan. If the market doesn’t warrant tear down and rebuild at least she’ll have an affordable place to live.

    A few weeks ago I found out she bought ANOTHER house! … She only needs to come up with $60k before possession (her half)

    Well, the uncle will likely be on the hook for it if she can’t.

    This all reminds me of my friends who attended Keyspire and bought a house for “investment” recently.

  83. Would you even know what a market driven by speculation looks like?

    I guess it depends on your definition of speculation. I don’t view the normal demand for housing to live in or to rent out long-term as speculation.

    And, fwiw, regular housing demand, investment and speculation all benefit the housing market despite your tendency to demonize investment and speculation. See, “Uncertainty, Dangerous Optimism, and Speculation: An Inquiry into Some Limits of Democratic Governance”.

    Outright speculation is neither immoral, nor (for most people) fattening to the pocketbook. More than that, some speculation is necessary and unavoidable.
    The Intelligent Investor

    Warren Buffet

    An investor is one who seeks return from the underlying asset itself, whether be earnings/dividends from the underlying company for a stock or rent from a property if it is real estate. A speculator on the other hand seek returns from pure price appreciation.

    I think in Victoria we are at the point where there is no reasonable return from rent, only appreciation. This would mean most second property acquisitions would be speculative in nature, while most primary residences would not.

    I’d say people buying a second property in Victoria right now are taking a big risk, but this is not what is primarily driving demand.

  84. Any experience with tobacco smoke remediation?

    Not personally.

    2936 Mount Wells Dr is another one with smoke damage. Either a smoker resided in the property after the renovations were complete or the damage was beyond repair. There were new floors and fresh paint. Not sure what’s left to hold the smell. Maybe the insulation?

  85. I haven’t commented in a while as I’ve been busy with life and things, but here’s an update on my friend. If some of you may recall, she sold her sfh on Christmas Hill Feb 2016 about two months too early. The townhouses there started selling for $200k more than she sold her house for last summer. Her plan to buy acreage and build, fizzled. She couldn’t find a lot or a teardown for less than $500k in areas she desired. So her realtor convinced her to buy a lot in BM for half that. Costs, of course, spiralled a bit out of control. Originally projected to be “all in” for $700k, ended up over 850. (imagine that they would find rock that needed to be dealt with, and retaining walls, and drywall tariffs and labour costs have gone up across the board etc). As soon as her realtor says she can sell for a million, the for sale sign is going up.
    A couple weeks before she moved in this Feb, she bought a duplex, extremely close to where she had just sold her old place! How is that possible? Well she found a friend that was willing to go half with her on it! The plan is to tear down the house and build a new duplex there, move into her half and then build more houses because this is going to be her retirement plan! So you would think that’s the end of it, but no. A few weeks ago I found out she bought ANOTHER house! Come on, wth right? How is this possible I ask? She says, her uncle in Vancouver who she had approached about the duplex, had said if she found another “deal” he would get onboard so she said this new development in 6 mile is a no-brainer. She only needs to come up with $60k before possession (her half) and then they will sell it right away for a profit (she believes). What if the market goes down I ask? Well then I can rent it she says. Where is the $60k going to come from? I haven’t figured that part out yet she says.

    True story guys.

  86. Lots of opportunity with the size of the lot and house but you’d never realise a gain after repairing the (tobacco) smoke damage in the suite above the garage.

    We almost bought a place years back where the owner had been smoking in the addition/porch out back. Were wondering how easy it would be to get that smell out. Any experience with tobacco smoke remediation?

  87. U R such a moron.

    Writing like a twelve year old girl, while calling someone else a moron… I guess you have this irony thing all figured out, Just Jack 🙂

  88. Bad grammar aside, that sounds like spectacularly bad investing

    Irony:
    the expression of one’s meaning by using language that normally signifies the opposite, typically for humorous or emphatic effect

    U R such a moron.

  89. We viewed 776 Revilo twice and were tempted to make an offer. It’s a pretty nice house but we weren’t willing to compromise on a few things for the price.

    Another overpriced one (to a lesser extent) is 3696 Happy Valley. Lots of opportunity with the size of the lot and house but you’d never realise a gain after repairing the (tobacco) smoke damage in the suite above the garage.

  90. Their are companies that are raising millions of dollars to buy hundreds of thousands of dollars of real estate.

    Bad grammar aside, that sounds like spectacularly bad investing 🙂

  91. Without the bank of Mom & Dad and their home line of credit, how can first time home buyers afford to buy in Victoria/Vancouver?

    Maybe Vancouver and Victoria should be for second- and third-time home buyers. Alternatively, first-time home buyers can elect to wait and build up their down payment to meet these prices.

  92. Explains how prices get to what they are. Without the bank of Mom & Dad and their home line of credit, how can first time home buyers afford to buy in Victoria/Vancouver?

    There doesn’t seem to be a shortage of people that want to pool their money into buying property either. Their are companies that are raising millions of dollars to buy hundreds of thousands of dollars of real estate.

  93. Parents have always helped out their children. It isn’t something new, it’s just more prevalent in markets that have become unaffordable for first time house buyers.

  94. If kids came to me in Victoria and said they wanted to drop a million on their first home I would them to have fun; A fixer upper for a half million I might help them out a bit.

  95. @Dasmo, James. Some do. But they’re more often becoming outbid by other first time buyers who are less awesome / make less but have assistance from mom and dad.

  96. Would you even know what a market driven by speculation looks like?

    According to Just Jack, a speculative market is any market in which he can’t afford to buy.

  97. @ James, they can’t. The world hasn’t changed that much…. Dropping a million on your first home? on your own dime? On your own two feet? No way.

  98. It would be interesting to know how baby boomers funded the millennials purchase. Did they take money out or their savings, investments, RRSP or home equity? Did the boomers also co-sign the loan?

    If the millennials start defaulting on their mortgage, they may drag their parents down with them. It could cause a domino effect through out the market with one default initiating another default.

  99. British Columbia had the highest instance of homeowners getting help from family members when they purchased their first home, with almost half (45 per cent) saying they either borrowed or were given money.

    Source: http://www.newswire.ca/news-releases/the-debt-truth-unexpected-expenses-could-spell-big-trouble-for-millennial-homeowners-623825354.html

    Explains how prices get to what they are. Without the bank of Mom & Dad and their home line of credit, how can first time home buyers afford to buy in Victoria/Vancouver?

  100. Just Jack / John Dollar – I guess it would be characterized by affordability that is outside of the long term range? Oh, wait…

    That doesn’t make sense. As many news articles have mentioned many speculators buy with cash or private money. Affordability is therefore not an issue. And WTF do you mean by “outside of the long term range”

  101. Thanks AG:

    I should have had more coffee this morning or perhaps I need to do a remedial reading coarse.
    By the way, hope you had a great weekend. Today, I am enjoying mowing the lawn. Tomorrow, I will be enjoying mowing the rest of the lawn.

    I see the house at 916 Deal is back on the market with a fairly substantial price reduction while
    1712 Montheith sold for 125 k over asking. Interesting times.

  102. 776 Revilo pl looks interesting. Having the suite separate from the rest of the house (sort of a mini house even w/ a separate fenced area almost just like a separate property is much better than having someone in your basement, you’d hardly even notice them). I had this set up in my previous home in Coquitlam and it works really well to separate the tenants from you. Everything really nicely fixed up is what will sell it, but my guess is for Langford it’s overpriced? Tucked away on a dead end street but close to all amenities is another plus? I haven’t been following Langford too closely though, so I wouldn’t know what homes have been selling for there recently.

    I wish OB would get on the ball about permitting secondary suites like this. Of course, as ever, council is taking forever to do anything, but at least the recent approval of the Bowker development was a plus for this area and signals a bit of progress. There’s a great video of the ‘hood in this link, and also an open house coming up on June 3rd from 12-4pm at their sales office on Oak Bay Ave/Foul Bay Rd.

    http://abstractdevelopments.com/project/bowkercollection/

    Following, in this OB News link you can see council has been dragging their feet on this for a decade! Now, pushing it off another year… there’s so many separate garages in OB that could be used to help the wider housing crisis, I wish they’d get on with it!

    http://www.oakbaynews.com/news/oak-bay-budgets-for-secondary-suite-regulation/

  103. Would you even know what a market driven by speculation looks like?

    Just Jack / John Dollar – I guess it would be characterized by affordability that is outside of the long term range? Oh, wait…

  104. VicRealEstateLurker: 776 Revilo Pl. yeah, I think it’s been in the market for well over 60 days. It is a nice home but I, too, think it’s overpriced. I may be wrong, but it seems it would be difficult to get onto the main road from that street as I’m sure it can get busy there. Maybe they can wait and sell in another year or two? Then again, we don’t know what’s going to happen in the future; prices may go down for all we know.

  105. I disagree with this statement

    Would I expect anything different.

    For one, I don’t believe there is evidence that we are in a market driven primarily by speculation

    Would you even know what a market driven by speculation looks like?

    In a hot market well-located properties in good condition will actually appreciate faster than others and lose value more slowly when the market cools.

    That’s true of all markets hot or not. But do you think that would still hold true in a market driven by speculation? Where the marginal properties appreciate faster than average properties on quiet streets? The property on Bay street last sold in 2003 at $175,000.

    Back then the median price for the core was $311,750 and today it’s $873,000 (using a sample size of 400 sales each time) which is an increase of 2.8 times. That would put the current price of this marginal home at $490,000. Now let’s just see what the property sells for because from your statement the property should not have appreciated as fast as the average home. That would be a price of less than $490,000.

    Everyone loves a contrarian, but really if you have been listening and understanding the comments on this blog you would realized by now that these are not normal market conditions.

  106. Is that the final count or are they still counting?

    The bit where it says ‘In Progress’ is a giveaway

  107. 776 Revilo seems really pricey to me as well. But I have not been following the prices in the West Shore.

  108. VicRealEstateLurker

    I’m looking at you, 776 Revilo Pl.

    859K for that area seems.. erm.. pricey. Decent reno though and 2 heat pumps. They’ve definitely put some money into that house and I don’t doubt they think it’s worth it ;).

  109. Houses are still moving in the West Shore, with the exception of a few overpriced properties. I’m looking at you, 776 Revilo Pl.

  110. because a speculative market is not founded on the physical or locational aspects of a property

    I disagree with this statement. For one, I don’t believe there is evidence that we are in a market driven primarily by speculation and, secondly, condition and location are always important and related to market value of a home. In a hot market well-located properties in good condition will actually appreciate faster than others and lose value more slowly when the market cools.

    I’d say location becomes a lot more important when your hold window is expected to be shorter and you are hoping to profit from an up market. There are a lot of transaction costs in buying and selling a home and putting your eggs into a poorly located house on a busy street is not something a lot of people would do if they need to sell soon. A low cost house on a busy street seems a more rational choice if you are a first-time buyer who wants to stay in the core and is set on a SFH and can’t afford a higher cost of entry imo.

    Poorly located homes and the ultra-high end tend to lose value more quickly in a downturn, so maybe they can provide early warning of a changing market.

  111. There certainly seems to be a lot more properties priced near or over two million that dont seem to be moving. One might want to calculate how many properties presently on the market, that are unsold, have been on the market for more than 60 days.

    I am guessing that condo sales are pretty brisk.

  112. Thanks for the update, Leo.

    Barrister, because a speculative market is not founded on the physical or locational aspects of a property there is no limit to how high prices can go as long as the prices keep rising.

    I agree with the principle of the statement, and I do suspect that it’s happening here as the underlying economy hasn’t appreciatively changed. But, I am curious if there is any selling data that is collected to indicate whether speculation is a significant force in this market? More specifically, if there is evidence that people are buying multiple properties, or buying and then reselling in a short time?

    I’m sure that if there is, the data itself could be questioned (Well, how long do they have to hold it before it’s not considered speculative, and why that long, and not some other time interval etc), but I’d be curious to know what there is.

    Anyone?

  113. Barrister, because a speculative market is not founded on the physical or locational aspects of a property there is no limit to how high prices can go as long as the prices keep rising. Speculators are paying for the sizzle and not the quality or the size of the steak. Real Estate has become a commodity like wheat, corn or steel.

    There is no reliable formulae to determine how close we are to a price decline. All that can be done is to monitor those types of properties that, in the past, were the first to show a drop in demand followed by price.

    Another thing to watch is the velocity of price increases. When the market starts to runs out of sizzle then the rate of appreciation slows, goes to zero and then starts to decline.
    Luckily this isn’t the stock market, real estate usually moves by a calendar and not a stop watch.

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