September 18 Market Update

Weekly numbers courtesy of the VREB.

Sep 2017
Sep
 2016
Wk 1 Wk 2 Wk 3 Wk 4
Unconditional Sales 183  314  781
New Listings 321  598  1050
Active Listings 1949 2011  2061
Sales to New Listings  57%  53%  74%
Sales Projection  616
Months of Inventory  2.6

Sales continuing to weaken relative to last year as we are now 21% below the rate of this time last year (first week we were down 16%).   As fall rapidly approaches, we are seeing an increasing number of sellers either give up their unrealistic price expectations by cancelling listings or not renewing them (78 last week) or drop prices (95 of those) to dry to entice the late house hunters.

Inventory is also up and has cracked 2000.   That is very low historically speaking, but this is a time it should be dropping, not rising.   That means the market slowdown is overcoming the normal seasonal trend.

Condos may be easing off the frenzy a bit.   While 25% of detached house sales in September still sold more than 1% over ask, for condos that number drops to 20%.  Back in July that was reversed, with a full third of condos being bid up above the asking price.

We can see this in the inventory as well.   Back in June we saw an increase in single family inventory compared to this time last year, and although the condo market held on to the frenzy a bit longer, we now see there too choice is increasing compared to last year.

Keep in mind  though that these are small increases in selection.   Just two years ago we had an extra 300 single family properties on the market in September and 363 more condos.   It’s gonna take a long time of this gradual weakening to get back to some semblance of normal selection.

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251 thoughts on “September 18 Market Update

  1. The new amazon headquarters won’t be anywhere near an earthquake zone. Hq2 is partially about diversification and the hq1 in Washington, I suspect something in the north eastern US. Someone said Boston, that probably isn’t far off but maybe further south. The city needs to be attractive to tech employees as well, ruling out 90 % of place out there.

  2. ” Your goal is to get the quickest service to the largest amount of your clients at the absolute lowest cost (I presume, anyways).”

    What has that to do with the location of an HQ? Amazon’s HQ is not the place that goods are shipped from? Goods are shipped from fulfillment centers all over the place. An HQ is where you do the admin, maintain and develop the online interface, etc. (the etc. meaning I cannot imagine why Amazon would need another 50,000 HQ employees).

    For Canada, Amazon has fulfillment centers in Brampton, On, and Delta, BC.

  3. Please, enlighten me…

    I’ll give you a hint. There is a new $2500 annual fee and the potential for commercial property taxes. I think if you do the math you’ll find that the economics have changed a lot on this zoning all of a sudden. Failure to account for this is just faulty logic. Look up the info on vacancy rates and nightly rates and costs and calculate it out and see where you land before making such a comment.

  4. Yes the grandfathering applies to units. So I guess everyone list their units on AirBnB today if you want to be considered as grandfathered? Wonder what their definition of active unit will be? On what websites?

    Just came across a different interpretation.

    Hi everyone, there’s been lots of chatter about the short term rentals and the zoning bylaw amendment passed on Thursday.
    What’s important to note is that legal non conforming status now exists for those buildings, not just units but the entire buildings, in which short term rentals are being offered. So in effect nothing changes, if you had the right zoning before and there was at least one rental in the building then you still have the right zoning, it’s just legal non conforming.
    This status runs with the land. Sale to a subsequent owner does not extinguish the legal non conforming use.
    Buildings that are not yet completed also appear to have their use preserved as legal non conforming as well regardless of the fact that the building is not yet completed or operational, as per the local government act section that I’m attaching below.
    Lastly there is some question as to whether a 6 month clock really exists given the seasonal nature of some of the short term rental units. The city planner at one of the council meeting addressed this issue and felt that there in reality, if challenged, the six month clock may not apply.
    Here are the relevant sections of the local government act with respect to legal non conforming properties………..

  5. “What’s to laugh at?”

    One fender bender on the TCH and a multi billion dollar business grinds to a halt. Amazon ain’t gonna happen just like the LNG pipe dream. You think traffic is fucked up now, what would 50000 people do? A total disaster.

  6. Totoro – “Someone doesn’t know how to do math.”

    Please, enlighten me…

    Caveat Emperor — “I believe you have always been allowed to rent bedrooms within your house, so it wasn’t particularly “generous” leaving open this possibility.”

    I believe that bedrooms also require a minimum 30 day rental unless it’s in a house zoned for short term rentals. Feel free to correct me on this, but I believe that’s the case.
    http://vancouver.ca/doing-business/short-term-rentals.aspx

  7. if you are still focusing on Cook Street Village and Oak Bay (both of which are some of the best areas in Victoria) in my mind, for your price range the inventory is pretty limited and this is actually more inventory than was available six months ago.

    MLS currently shows zero SFH homes at any price range in the immediate vicinity of Cook Street Village. There is a house on Vancouver that I bike by that doesn’t show up, perhaps it just sold? Taking a broader definition of “near” Cook Street Village there are perhaps three houses under 1.5 M. More perhaps will come on the market in spring.

  8. Unless I missed something, we have no idea what the parameters are around the planned exemption for short term rental of your own home while on vacation.

    We don’t, I’m just going by Ben Isitt’s quote. I don’t think their intention is to quash this usecase. Just comes down to how to regulate it to avoid it becoming a loophole.

  9. And they can still do that as stated by Isitt. Nothing to do with grandfathering. Of course if that vacation turns into a year long stint abroad then no.

    Unless I missed something, we have no idea what the parameters are around the planned exemption for short term rental of your own home while on vacation. My guess is that it will be quite limited (perhaps less than 30 days and only once a year).

    I hope they don’t limit it too much. That is the one type of STVR I might have wanted to do in the future. I have never had much desire to run a short term rental in my basement, but funding a portion of a vacation sounds very appealing. I have seen that work really well for a number of people including my next door neighbours.

  10. John Dollar – “I agree with you Hawk, an annual fee of $2,500 is not enough to flush out cheaters. ”

    totoro – “Er, what? The fee is $2500 for a licence. There will also be fines for non-compliance. I call jibber jabber.”

    Definite jibber jabber. The higher the fee to register the greater the incentive to cheat. The incentive to comply will be aggressive enforcement and escalating fines.

    I expect the initial enforcement will be warnings so folks running illegal STVRs are probably OK to keep going until they are caught. I am not advising that – just stating it as a probability

  11. @Barrister 🙂

    Let’s see. The blue bridge is 115m long and will cost about $115 million. From approval to completion it will take hopefully about 9 years.
    The bridge to Vancouver, taking advantage of island hopping, would be about 27km…

    So, we should expect a replacement to cost about $27 Billion and be complete around the year 4130.

  12. As to Amazon, I think Victoria City counsel should build a bridge to the mainland to attract the company here. After all who has more years of experience in building a bridge.

  13. Newbie:

    It is important not to rush into buying a house. if you are still focusing on Cook Street Village and Oak Bay (both of which are some of the best areas in Victoria) in my mind, for your price range the inventory is pretty limited and this is actually more inventory than was available six months ago.In some ways it is less an issue of prices moving a bit up or a bit down as it is finding a house that you actually want.

    I found it helpful when I was new and looking in Victoria to take a city map and actually start to knock off areas that that simply where not in the consideration set. You told us of a few criteria that quickly narrows your choices. Even in Oak Bay you can knock out a good portion of the city on price alone. Generally anything within three blocks of the ocean will be over 1,2 million.

    If you avoid the debate of which directions house prices are going a number of people here can and will give you very knowledgeable and objective views about the city and its neighbourhoods.

  14. Langford has it all.

    Let’s presume this is true. And you are in charge of Amazon’s strategic operations. Your goal is to get the quickest service to the largest amount of your clients at the absolute lowest cost (I presume, anyways).

    Proportionally, the vast majority of your market activity is going to be in the USA, and HQ1 is already in the pacific northwest. And if you locate in Canada, then most of your product will need to deal with the international border, and the heightened cost and delays associated with it.

    To this island in particular – having all your goods needing to be sent to the island to be stocked, but also subsequently shipped off the island is yet another time and cost factor, and to make matters worse, the city does not have the manpower or the transportation infrastructure to support such a thing. Could it be built, ie, build it and “they will come”? I don’t think people by the tens of thousands will flock to an area with extraordinary high costs of living for jobs that are arguably worse than the conditions you’d face working at Wal-Mart.

    I think it’s no more silly to laugh at it being anywhere on this island than Langford in particular. It ain’t gonna happen, and it probably won’t even be in the general region. Carolinas, Florida perhaps, or somewhere in the American mid-west. Who knows, but it isn’t going to be here. I like the, “we’re open for business” attitude of Langford though – at least that’s something.

  15. Amazon won’t be placing their HQ2 anywhere near their existing HQ. What would be the point? I’d say either Toronto or a US city.

    I wouldn’t be overly surprised if Amazon opened an office here within 10 years though. They currently have about 1000 people at their Vancouver location.

  16. “I know—it made me laugh, too.”

    What’s to laugh at?

    Langford has it all. Close to Canada’s other software engineering school, cheap housing, mild climate AND an intelligent mayor interested in developing the economy of his town, and willing to act fast to clinch a deal with the worlds richest man.

    We could see Langford house prices overtake Gordon Head prices much sooner than most people expect.

  17. @Learner @Barrister,

    Thanks for the feedback. I wouldn’t rule out buying earlier than a year from now but I will be following the market closely. We still don’t know exactly where we want to be and are keeping an open mind until we get to know the city better.

    I will be watching the numbers pretty closely to get an idea if the market is heating up or not, with the market cooling off this year I’d like to see what the spring market looks like next year with the new OSFI rules and everything. If the market looks strong on a seasonally adjusted basis in the spring and we see something we really like we may not wait, but my bias is to see how 2018 plays out before buying.

  18. “You are mixing jurisdiction there. The city issues permits. Income tax is not municipal. How do you know they weren’t paying taxes? In my view it would be very short-sighted not to. To think that CRA won’t target Airbnb rentals soon is illogical, if they have not already.”

    I’m responding to the comment that said units that have a business license and can prove they reported and paid all their taxes would be grandfathered from the new rules, so how am I mixing things up? If you paid your taxes and have a business license, you will be grandfathered. Is that not the case?

  19. “People have the right to live in their home and rent it out when they travel a year from now if they bought with this use in mind.”

    Sure, as long as you are renting it for more than 30 days.

  20. Yes you do find legal non-conforming duplexes around the city. The legality refers to the building and not the land. If the building is torn down you can’t re-build another duplex.

    Most of these problems have been ongoing for decades. If the city had enforced its single family zoning decades ago and never turned a blind eye to basement suites, then we would have had more purpose built apartment buildings constructed today. That would mean less speculation, less hoarding, less traffic congestion and vacation rentals and high home prices would not be an issue.

    Single family homes be it condominiums or houses should be a place to live not a business plan. If you want to have rental properties then buy yourself a purpose built apartment building.

  21. Graham Greene, Simone de Beauvoir, dos Passos and Hemingway all did their writing exclusively in the morning.

    In the MORNING

  22. @Totoro
    “I expect no talk back in future. I am the authority after all.”

    Deb,
    Apparently the new spelling nazi as well.

  23. Looks like someone shouldn’t drink/medicate and post late at night. 11 posts in 40 minutes might be an HVV record. 😉

    Back to Slasherville, where the axe continues to whack away in Golden Head and many other fine locales.

    4109 Larchwood Dr slashed $76K to $799K. Guess they missed the stupid money last week on Wycliffe.

    2274 Cranmore Rd in Oak Bay slashed $71K to squeak under the millionaires club.

    Nice little villa at 530 Marsett Pl , #59 in Royal Oak on slash #2 for $70K total.

    Another villa in Broadmead at 934 Boulderwood Rise , #18 on #2 slash for $50K.

    If you’re a Highlands type there have been lots out there the last couple months. Nice digs at 677 Stewart Mountain Rd slashed $100K.

  24. @Totoro
    “I expect no talk back in future. I am the authority after all.”

    Good luck on that. I think everyone must have been enjoying Saturday night while you laboured on responding to posters comments.

  25. People have the right to live in their home and rent it out when they travel a year from now if they bought with this use in mind.

    And they can still do that as stated by Isitt. Nothing to do with grandfathering. Of course if that vacation turns into a year long stint abroad then no

  26. Yes the grandfathering applies to units. So I guess everyone list their units on AirBnB today if you want to be considered as grandfathered? Wonder what their definition of active unit will be? On what websites?

    I do agree that the way they are bringing it in is similar to the foreign buyers tax and unnecessarily harsh.

    I suspect existing licensed Airbnb’s may retain their value but units in transient zoned buildings not already AirBnB will drop quite a bit. That’s the worst of all worlds. You are living in a building that’s mostly AirBnB but you can’t short term rent out your unit

  27. It is a bit lame that they are mucking with existing residential zoning. Just chalk up the transient zoning to a mistake and don’t approve any more of those. Do you think it will make existing AirBnBs more valuable (since they have less competition) or less (since they need a business license and the status is more fragile than before?

    Complicated question and very unclear. Based on what I am reading the 20 buildings zoned transient only the UNITS being STVRs will be grandfathered, not the building.

    Which is not fair because you’ll have situations where people bought into these buildings with the intention of perhaps doing STVRs at some point, but are currently long-term renting the unit. These aren’t all bad people. You have people that perhaps their plan was to retire to Victoria, STVRs rent their unit 6 months of the year while travelling and use it the other 6 months of the year, for example.

    People bought into the transient zoning which the city came up with in the first place. Kind of sucks to follow the rules and than to get totally burned.

    No sympathy for those doing STVRs in non-zoned buildings. Those should have been shut down right off the bat via enforcement but the city did nothing about enforcement.

    I have a unit at the 834 (not zoned) and we the strata have successful shut down everyone very quickly via strata bylaw enforcement.

  28. it’s been stated here many times that people that took the “transient” zoning seriously

    Oh give me a break. People paid a premium for transient zoning whether they use it currently or plan to in the future at some time. Zoning has a big impact on pricing and if zoning changes that affects market value and personal use and enjoyment, which is why there is grandfathering. I’d expect a legal challenge to the six month limit placed on the short-term transient zoning use. People have the right to live in their home and rent it out when they travel a year from now if they bought with this use in mind. You can’t, in law, change things after the fact without paying compensation.

  29. Also, in Canada licence is spelled “licence” when used as a noun and “licensing” is the verb form.

    In British English, Canadian English, Irish English, Australian English, South African English, and New Zealand English the noun is spelled licence and the verb is license. The spelling licence is not used for either part of speech in the United States.

  30. Now hotels, motels and B&Bs all have to get business licenses and pay the appropriate taxes, so why are condo owners so special now that they thought they could magically skip that part? They are zoned the same as a hotel, want to act like a hotel, but don’t want to pay the same amount of taxes? Why would anyone feel sorry for them now?

    You are comparing apples and oranges. Individual owners are more like small BnBs than hotels. Hotels have loads of units, not just one unit and they operate on economies of scale. Taxes paid by hotels are 2% for the hotel tax. It would be easy for the city to require Airbnb to collect and remit this: done in other cities already. The federal and provincial taxes apply once you are over 30k per year so already there is a proper distinction and exception for small operators like there is for traditional BnBs.

    The real issues here are the effect of Airbnb on vacancy rates and, more likely, the effect on the Victoria hotel industry – which is a valid issue given that they are paying commercial taxes and Airbnb is encroaching on their market.

  31. any time you “own” real estate, the rules can always be changed on you

    No they can’t. That is why there is grandfathering. It is not out the goodness of the municipality’s heart, it is because you can’t change the rules that someone has relied upon when they bought their property. This is why you find non-conforming legal duplexes all over Victoria. Rules changed but existing uses were grandfathered.

    Also, expropriation laws require fair market compensation and a public purpose and this is not a change to current ownership rights. Expropriation has been around for a long long time.

    I feel for someone who bought thinking it was a short term rental but at the end of the day, you are still able to use it as a short term rental so really not much has changed.

    Someone doesn’t know how to do math.

  32. Marko, you make some good points. I agree that the city should not change the rules part-way through. They should not have allowed the transient zoning to start with, but given that they did they should not now change the rules. Just don’t grant more and then enforce the bylaws they do have that already don’t permit Airbnb elsewhere except for rooms in a primary residence.

    As for the impact on values, definitely will have an impact if you are talking $2500 licensing and commercial tax rates.

    I agree with you Hawk, an annual fee of $2,500 is not enough to flush out cheaters.

    Er, what? The fee is $2500 for a licence. There will also be fines for non-compliance. I call jibber jabber.

  33. You are the authority (and lawyer) around here

    Thanks! I take it that this means you’ll listen and follow whatever I have to say? You can’t cherry pick you know. I expect no talk back in future. I am the authority after all.

    Also, never claimed to be a lawyer but I like that you attribute me with these qualities. All the stuff I posted is available publicly on the bc courts website. Google is your friend as long as you know how to check your sources.

  34. I also know for a fact that most hire AirBB management “professionals” that take a 15-25% cut of the profits to manage the whole thing (bookings, cleaning, filling the TP etc.).

    No you don’t. Unless you are telling me that you know for a fact that over 750 of the 1500 Airbnbs are professionally managed, which you can’t know as there are no reliable stats on this, then you are just presenting opinion as fact.

  35. ot sure why this was such a big deal for people to get before running an AirBnB from their condos! If you bought a condo that was zoned transient, but then you fail to properly run it like transient housing by NOT getting a business license and NOT reporting the income and paying the appropriate taxes

    You are mixing jurisdiction there. The city issues permits. Income tax is not municipal. How do you know they weren’t paying taxes? In my view it would be very short-sighted not to. To think that CRA won’t target Airbnb rentals soon is illogical, if they have not already.

  36. did STVRs actually bother significant numbers of people

    No. Enforcement has always been complaints based so not a lot of complaints. Doesn’t take away from the issue that short term rentals may impact vacancy rates but my guess is the driver for Victoria was pressure from the hotel industry not complaints or vacancy rates. That is why we don’t see other municipalities responding the same way, they don’t have the hotel businesses impacted the same way.

  37. Any time you “own” real estate, the rules can always be changed on you — whether that’s the city expropriating a bit of your land etc.

    Now if we could just expropriate some of Barrister’s overly large lot and build some low income housing we could really get to grips with the housing issue…..

    Totally kidding Barrister – even though it isn’t an “efficient” use of land I love that there are still some big old mansions on big old lots – beautiful part of town.

  38. Possible effects on housing aside, did STVRs actually bother significant numbers of people? Did the city get many (or any) complaints? Personally when my next door neighbours rented their house as a vacation rental one summer while they were away there were no impacts on us at all. Did get to chat with some interesting visitors over the fence.

  39. As for the bedrooms versus the suites, I’m surprised they didn’t nix the whole thing, but more locals need suites than a bedroom in someone else’s home, so I imagine it was done as a middle ground. Free up suites for locals who live and work in the area, and still let people make a little extra cash renting out bedrooms short term. Considering AirBNB goes against most bylaws and zoning, I actually think leaving bedrooms to be AirBNB’d was a pretty generous move.

    I believe you have always been allowed to rent bedrooms within your house, so it wasn’t particularly “generous” leaving open this possibility.

    For clarity this is not AirBnB this is every vacation rental platform out there. AirBnB was just the highest profile.

  40. Haha. Langford mayor wants to make a bid for the new Amazon headquarters, says that he would approve the building permits for the 50,000 person campus in 48 hours.

    I know—it made me laugh, too.

  41. @curious cat et. al., I think it will actually have some affect on the number of house listings in the market, by how much and when TBD (likely when they actually start fining people with that $500,000). But, for fun I did a search of house only AirBB in Victoria and there are TONS. Many baby boomers saw this as a wonderful retirement investment, use a bit of their HELOC’s to buy a second property (most prior to Dec. 2016) and rent it out on AirBB, free money that you don’t have to claim, and doesn’t affect your pension or RRSP etc., pretty genius. I also know for a fact that most hire AirBB management “professionals” that take a 15-25% cut of the profits to manage the whole thing (bookings, cleaning, filling the TP etc.). BUT like all good things they must come to an end. I think the City has levelled the playing field, homes at the end of the day are for people to live in …no? Or am I just a fool stuck in the past.

  42. BTW, a business license is $125 a year in the city of Victoria. Not sure why this was such a big deal for people to get before running an AirBnB from their condos! If you bought a condo that was zoned transient, but then you fail to properly run it like transient housing by NOT getting a business license and NOT reporting the income and paying the appropriate taxes, are you suddenly going to start crying that your privilege gets taken away?

    It’s been stated here many times that people that took the “transient” zoning seriously and got a business license and paid their taxes are going to be grandfathered. THEY have nothing to worry about.

    Transient zoning doesn’t mean you can just do whatever the hell you want.
    ““Transient Accommodation” means:
    a) the use of land or a building for the temporary accommodation of visitors, and without
    limitation includes hotels, motels and bed and breakfast accommodation; but
    b) does not include the accommodation of visitors without receipt of payment or other
    consideration, where that accommodation is incidental to and normally associated with the
    permitted residential use of a dwelling unit. ”

    Now hotels, motels and B&Bs all have to get business licenses and pay the appropriate taxes, so why are condo owners so special now that they thought they could magically skip that part? They are zoned the same as a hotel, want to act like a hotel, but don’t want to pay the same amount of taxes? Why would anyone feel sorry for them now?

  43. It is a bit lame that they are mucking with existing residential zoning. Just chalk up the transient zoning to a mistake and don’t approve any more of those. Do you think it will make existing AirBnBs more valuable (since they have less competition) or less (since they need a business license and the status is more fragile than before?

  44. Hi Marko,

    Thanks for the clarification. Any time you “own” real estate, the rules can always be changed on you — whether that’s the city expropriating a bit of your land etc. You really don’t have that many rights as a landowner. I feel for someone who bought thinking it was a short term rental but at the end of the day, you are still able to use it as a short term rental so really not much has changed.

    As for the bedrooms versus the suites, I’m surprised they didn’t nix the whole thing, but more locals need suites than a bedroom in someone else’s home, so I imagine it was done as a middle ground. Free up suites for locals who live and work in the area, and still let people make a little extra cash renting out bedrooms short term. Considering AirBNB goes against most bylaws and zoning, I actually think leaving bedrooms to be AirBNB’d was a pretty generous move.

    Yep, HPO exam is ridiculous.

  45. Hi Marko — with all due respect, when you buy a property you go into it with your eyes wide open. You know what it’s zoned for or not. And most properties, including your house and basement suite, are not zoned for short term rentals. So really, what you can or can’t do with your property was already laid out. I’m not sure what the problem with this is. If they change the zoning, then yes that gets dicey, but generally you are left with the original conditions, grandfathered in. And at the end of the day, zoning changes depending on the needs of the city’s population.

    i/ They changed the definition of transient zoning; therefore, if you bought into one of the transient buildings downtown you thought you knew what you were buying into (the original definition of transient zone that the City of Victoria drafted).

    ii/ I have a particular issue with that you will be able to Airbnb two bedrooms but not a suite. It’s a similar fundamental issue I have with suites and the principal residence tax exemption. If you buy a $3 million Uplands home and sell it for $4 million you walk away with a million tax free in your pocket but if you have a $800,000 Oaklands home with a suite and you sell it for $1,200,000 you should be getting taxed (capital gains) because you had a suite and on top of that the city wants to dictate how you generate income from it. Basically different levels of government want to force homeowners to help with the housing shortage and they also want to tax those same people the most.

    To me this is almost as stupid as the owner-builder exam which is another piece of legislation I have major issues with. This morning I get a call from a local Greater Victoria family asking for help with the HPO exam. They went to the municipality for a renovation permit, obtained the permit. carried out the demolishing part of the renovation. Inspector shows up and says….hmmmm, this really need an HPO exam. Now they are without a livable home and unable to start construction for 2-3 months.

    Municipality response…..hire a HPO licenced builder.

  46. Marko Juras
    September 23, 2017 at 11:17 am
    Property rights is what I am concerned about. Obviously at some point in the past the City of Victoria came up with the definition of transient zoning and they issued it to approximately 20 buildings downtown for whatever reason at such time.

    What I can do and not do with my basement suite in my opinion is a slippery slope. What’s next, your city taxes will increase if your suite is sitting vacant? Then we go after two people living in a 5,000 sq/ft home on a 1/2 acre lot in the Uplands?

    Hi Marko — with all due respect, when you buy a property you go into it with your eyes wide open. You know what it’s zoned for or not. And most properties, including your house and basement suite, are not zoned for short term rentals. So really, what you can or can’t do with your property was already laid out. I’m not sure what the problem with this is. If they change the zoning, then yes that gets dicey, but generally you are left with the original conditions, grandfathered in. And at the end of the day, zoning changes depending on the needs of the city’s population.

  47. Property rights is what I am concerned about. Obviously at some point in the past the City of Victoria came up with the definition of transient zoning and they issued it to approximately 20 buildings downtown for whatever reason at such time.

    What I can do and not do with my basement suite in my opinion is a slippery slope. What’s next, your city taxes will increase if your suite is sitting vacant? Then we go after two people living in a 5,000 sq/ft home on a 1/2 acre lot in the Uplands?

    Better approach would have been just tax short-term rentals to death in my opinion and enforce the existing blyaws. Make it so the business model doesn’t make sense anymore versus taking away what you can and cannot do with your property.

    The housing situation won’t be solved with just one action. Part of it is new supply, but you also have to make sure the supply isn’t being snapped up by speculators.

    Tad more complicated than this. Often it is the speculators/investors that drive the initial pre-sales so the developer can secure financing to start construction. Owner-occupiers typical enter the game at a later stage.

  48. The hotel operators downtown must be beaming. Hotel rates are going to sky rocket.

    One thing I don’t get about the region is why saanich doesn’t encourage more businesses to setup shop there. Victoria is basically only welcoming pot shops and it seems Langford is the only muni interested in legitimate commercial activity.

  49. China is clamping down on resales from 2 to 5 years to stop the flippers.

    China Cities Tighten Home-Sale Rules to Tame Property Market

    “Shijiazhuang, capital of Beijing’s neighboring Hebei province, prohibited the resale of homes within five years of buying, the local government said Saturday, and Nanchang, capital of Jiangxi province, will cap sale prices and ban resales for two or five years after purchase, depending on the type of property, the city’s housing authority said in a statement.”

    https://www.bloomberg.com/news/articles/2017-09-23/chinese-cities-tighten-home-sale-rules-to-tame-property-market

  50. I agree with you Hawk, an annual fee of $2,500 is not enough to flush out cheaters. The economic benefit of a vacation rental over a regular tenancy is in the tens of thousand.

    As for enforcement. The public could assist the bylaw officers. Rat out your neighbor and make yourself a thousand bucks. That’s what will get cheaters to comply. The fear of being turned in by their neighbors. Otherwise it just becomes another bike helmet or anti idling bylaw.

    Remember never trust anyone under 30, especially when it comes to your stash box.

  51. “Why is everyone whining about the legal definitions and loopholes and enforcement?!?!”

    Well said LeoM. There are only two reasons to be so upset about the new rules. Because they are either running an AirBnB and secretly avoiding taxes, or have a financial interest in those who buy/sell them.

  52. … when you can get $1,400 to $1,500 with a long term tenant which works out to almost $50 per night 365 nights a year with no work involved, …

    Now, now, Marko. Leo and others don’t like to hear about how little work is usually involved in landlording; it can be upsetting.

    The housing situation won’t be solved with just one action.

    I submit the housing situation will never be “solved.” The same, sadly, goes for homelessness (doesn’t mean we shouldn’t keep trying, though).

  53. Why is everyone whining about the legal definitions and loopholes and enforcement?!?!

    It’s clear the city of Victoria does not want AirBnB short term rentals within city limits. This has been the law in Victoria for years but people flaunted the existing laws for personal gain at the expense of law abiding residents and hotels, so now the city is finally beefing up the laws. And, these new laws will likely be enforced more strictly and these Bylaws will likely be beefed up again after the loopholes are exploited.

  54. Cracking down on AirBnB is a good move as far as I’m concerned.

    My version of a crackdown would have been.

    i/ Don’t issue any short-term rental zoning going forward, ever.

    ii/ Enforce the bylaws. There are only 20 buildings with transient zoning in Victoria, which means all other units not in these 20 buildings would have been operating illegally. When they quote 1500 units they are also quoting illegal operations as well. The number of short term vacation rentals being quote should have been only those that are within correct zoning, and the remainder you just take care of by enforcing existing bylaws.

    iii/ Tax/licence/etc., Airbnb accordingly.

    This is very much like the foreign buyer tax in Vancouver. Am I in support? Yes. Am I in support of it applying it to unconditional contracts. No, doesn’t make any sense.

  55. $500K is nothing to hire 5 to 10 people to monitor and enforce by flushing out the cheaters. $2500 should be $5000. If you’re making hotel money you should be taxed accordingly. Its the only way to free up rental stock. Waiting for more new builds is dreaming and will take years with construction worker shortages.

    Barrister, I think you’re right. Marko seems a bit intense for someone who sold out. Must have some clients he just roped into buying.

  56. The housing situation won’t be solved with just one action. Part of it is new supply, but you also have to make sure the supply isn’t being snapped up by speculators. Cracking down on AirBnB is a good move as far as I’m concerned.
    Could they focus on reducing barriers to new development? Yes more could be done for sure but I wouldn’t use Langford as a model to aspire to. And given how much is actually being approved under Helps they’re not doing that badly. Definitely stepped up construction by a lot.

  57. the thousands of non-conforming suites they’ve done absolutely nothing about.

    Of course they’ve done nothing, they want those suites for housing. That should be clear.

    I don’t see this as being that difficult to enforce. Most of the info is on AirBnB. For the corner cases or where the owner is trying to hide something, pose as a renter, make inquiries, fine property owner. They don’t need to catch everyone all they time, just make it more hassle to try to avoid the enforcement and people will either fall in line or quit trying. Just like you won’t always get a ticket if you park without paying but often enough to make it a bad gamble.

    Should it cost $500k? Nah seems excessive, but I’m sure it will work.

  58. I don’t really care if they do this in Victoria too much, but I do care that they are spending $500,000 on this and there will be annual ongoing expenses to enforcement. There had to be a better way than that. And why a $2500 licensing fee? Weirdos. Makes no economic sense unless they are looking to squash everything – in which case don’t tell us you’ll get some of the 500k back in fees.

    Most sensible and lucrative way for the City to respond was to require a tax to be remitted on each transaction in Victoria to the City and also require licensing. Get a list from Airbnb based on the transactions and follow up on high volume first for licensing. A system that other places have implemented already.

    Instead they are spending all that money.

  59. 500,000 should buy them quite a bit of enforcement. But then again remember when we thought 60 million would buy us a replacement for our tiny little three lane bridge.

    I expect this will in fact add a small amount to the rental pool in Victoria, but I see this as mainly about protecting the hotel industry from competition. For that reason I would have preferred an approach that saw STVRs taxed and regulated (thus levelling the playing field) rather than largely banned.

    I think Marko correctly identifies those that are hurt the most* – the many folks in Victoria with suites that aren’t totally separate but will surely meet the definition of self contained. Many owners of those suites don’t rent them out full time (often needing/wanting them for visits of family and friends). Short term rental was for some people a way to fill the gaps. I have checked out quite a few of the air bnbs around my area of Fairfield (rented once or twice on behalf of friends that we couldn’t accommodate at our place). All but one of the roughly ten I looked at were more or less separate portions of owner occupied houses. I expect all will be banned. I don’t expect many of these will be hitting the rental market.

    *Obviously the people that are actually hurt the very most are the relative handful that bought and own properties exclusively for STVR in areas that are not zoned for it and hence can’t become legal non-conforming.

  60. Marko sounds like someone whose wallet just got gored.

    I sold my only vacation zoned condo back in May as one could see this coming from a mile away given the crop of current council, kept all my other non-vacation zoned condos so this doesn’t impact me. My personal house isn’t in the City of Victoria either so no impact there either and I wouldn’t care to Airbnb my house either.

    I also think Airbnb is a horrible business for the operator. I’ve run the numbers and running an Airbnb only makes sense if you don’t value your own time…..just made no sense on the unit I had when you can get $1,400 to $1,500 with a long term tenant which works out to almost $50 per night 365 nights a year with no work involved, no additional expenses, you don’t need to collect and remit GST, you don’t have to worry about GST being applicable when selling the unit (which would mean taking a 5% hit on the sale), etc., etc. I honestly don’t really get running an Airbnb for finances alone as it doesn’t quite make sense.

    I sound like someone who thinks the city council doesn’t have any common sense.

  61. It will take a bit of time but they usually get around to plugging the holes. Marko sounds like someone whose wallet just got gored.

    If the city can get the condo units rezoned to commercial this will more than pay for enforcement.

  62. There will be a definition of self-contained in the bylaw they draft.

    Which will be riddled with holes given the nature of the housing stock.

    You specify on Airbnb whether you are looking for a separate or shared space.

    Not sure if the city will have the ability to fine you based on data input on an online platform and there are a lot of different platforms.

    They can probably come inspect based on the ad but problem is the vast majority of houses in Victoria that have an exterior basement door also have interior basement access. Inspector shows up you leave the interior door open to main.

    Truly self-contained suites (no interior access to main portion of home) are not that common from my experience.

    They are going to be enforcing something that is fundamentally broke to start…….the thousands of non-conforming suites they’ve done absolutely nothing about. The logic is……we want to make sure you rent your non-conforming, non-permitted suite, to someone long term, versus short term.

  63. You specify on Airbnb whether you are looking for a separate or shared space. All the City has to do is search for space listed as self-contained. If you list your space as a room you be able to charge less on Airbnb is my guess. They’ll also have the power to make inquiries of you regarding whether it is separate and they will be able to inspect. The 500k is going to go somewhere.

  64. There are not really a million scenarios are there? For whole house rentals the only question will be whether it is for 30 days or more. For shorter rentals you’ll only be able to rent a room.

    In my opinion, there are. Too many issues at hand. For example, because 95%+ of suites don’t have a permit in place, and the city has let that completely slide, the city doesn’t have accurate layouts of the housing stock. You throw up “two bedrooms” up on Airbnb with no picture of a kitchen. Can the bylaw officer really force his or her way into the home with no evidence of a kitchen?

    Does a “bar” constitute a kitchen? I just think it is interesting that you will be able to Airbnb out a couple of bedrooms in your home but not a suite.

  65. Well, they are spending $500,000 more just to enforce it so my guess is that there will be some effect.

    I guess the current infractions don’t generate enough complaints to deal with the overall vacancy rate issues the city appears to be trying to address.

    There are not really a million scenarios are there? For whole house rentals the only question will be whether it is for 30 days or more. For shorter rentals you’ll only be able to rent a room.

  66. Caveat said: “But how meaningful is a drop from a peak…”

    It will likely prove very meaningful to buyers, especially when coupled with the other changes, such as rising interest rates, AirBnB restrictions, etc. But I think the biggest impact will be on buyers’ psyche (including the bank of mom and dad). The psychology of RE seems to cycle around ‘profit’ more than ‘home’, so I’m expecting the cooling effect of all the changes to go from cooling to freezing over the next 16 months.

    I’m also expecting the Speculators, especially the AirBnB operators with multiple houses to bailout first. A local realtor owns about 8 houses that are exclusively AirBnB rentals; he’ll be the first to start selling.

  67. $500,000 a year? Seems really excessive for the task of monitoring 1500 units that will shrink immediately once the regulations come into force.

    I like how everyone skips over the 1,500-unit fact 🙂 Reality is 500 will continue to operate one way or another. 500 for various reasons won’t return to long term rental pool and maybe 500 will return to the market, maybe.

    Or the city could simply speed up the ridiculously long re-zoning process and approve two larger apartment building projects which would bring 500 units to the rental market.

    If you want to build a new SFH home in the City of Victoria with a suite it will take 3 to 4 months get a building permit. Exact same house in Langford maybe 7 days.

    There is some much bureaucracy in place that prevents housing from coming to market in a timely manner but instead of solving that they spend all their time on an “Airbnb crackdown,” as if it will make any sort of difference.

    How many garden suites have been built so far? Probably less than 10….city bureaucracy plus BC Housing bureaucracy means it just isn’t realistic for the average home owner to build a garden suite.

    Ohhh well…I had a feeling this was coming so I sold my ERA unit earlier this year.

  68. So, if I have a suite I keep vacant (in my principal residence) and I want to Airbnb it out while I am on “vacation,” I will be able to do that? There are a million and one scenarios.

    They really should have started by trying to enforce current infractions and taken feedback from that before rushing this. Essentially, they have done nothing about current abuse of zoning and added more rules.

    Also, whatever happened to illegal suites? 🙂 I would estimate that over 95% of suites in the City of Victoria don’t have a permit. So complete blind eye to that, but somehow, they will be successful at enforcing this new bylaw amendment that has been poorly thought out and rushed.

  69. Not true.

    “So they will be allowed to maybe rent out one or two rooms within their home, whether that’s a house or a condo, or they’ll be able to rent it out when they go away on vacation but it has to be their principal residence,” said Loveday.

    We’ll have to wait to see the details of that. The amendment they just passed banned everything. But they have said that they will develop a regulatory framework that allows what Marko mentioned.

  70. It has always been legal to rent for 30 days or more. You don’t need a business licence.

    I guess the Airbnbs in Esquimalt and Saanich will get more rentals. Maybe other cities will follow suit.

    The regulations come at a cost of roughly $500,000 for things like third-party monitoring to ensure compliance and more bylaw staff, but some of that can be recovered through license fees.

    $500,000 a year? Seems really excessive for the task of monitoring 1500 units that will shrink immediately once the regulations come into force. The ability to recover any costs through licence fees is going to be very limited if existing legal Airbnbs, which are a limited number, are also going to be taxed at commercial rates. I think most people in Victoria just won’t bother to list on Airbnb any more.

    I wonder what kind of business case the city did for the $500,000 expenditure.

  71. Here’s a second article digging deeper into how the Liberals buried this report. Wouldn’t want bad news coming out on one of your large donors right ?

    BC Liberals suppressed report on suspected money-laundering at B.C.’s biggest casino

    “River Rock hosted a BC Liberal fundraiser starring then-Premier Christy Clark and international trade minister Teresa Wat in November 2016, where the party netted more than $124,000.”

    “Elections BC’s database shows $114,704.65 in donations to the Liberals from Great Canadian.”

    “MNP said there were 41,187 large cash transactions during the sample period, but only 1,194 suspicious cash transactions and 1,209 BCLC prohibition bans for potential money laundering.”

    “MNP found 385 of the large cash transaction reports were missing a mandatory field, such as the address or occupation. ”

    http://thebreaker.news/news/casino-money-laundering/

  72. What happens if I want to go to Europe for 6 weeks…the way I understand this crackdown is I can’t Airbnb my house while I am gone….has to sit vacant.

    Not true.

    “So they will be allowed to maybe rent out one or two rooms within their home, whether that’s a house or a condo, or they’ll be able to rent it out when they go away on vacation but it has to be their principal residence,” said Loveday.

    Unclear whether you will need a business license though for short term rentals like that.

  73. Good for Saanich AirBnB operators i guess.

    What’s the situation in Esquimalt and Oak Bay. The nicer parts of Esquimalt and all of Oak Bay would be great places for out of towners to stay especially if they have a car or bikes.

    It is such a small percentage of housing stock that no one cares. In Victoria, it became political more than anything.

    Instead of banning Airbnb zoning going forward, going after current illegal operators (don’t have zoning), applying various taxes to those running Airbnb’s in legal zones they introduce some crazy sweeping bylaw.

  74. So let me get this straight….if I have a 3,000 sq/ft home in the City of Victoria with 1,000 sq/ft in the basement consisting of two bedrooms and a living room I can Airbnb that 1,000 sq/ft, but if I have the same house with a living room/kitchen in the basement the government is going to tell me I can’t Airbnb that 1,000 sq/ft so that I can long term rent it to improve housing supply?

    Are we going to start cracking down on two people living in a 4,000 sq/ft house?

    Could talk about this all day but I’ll refrain 🙂 What happens if I want to go to Europe for 6 weeks…the way I understand this crackdown is I can’t Airbnb my house while I am gone….has to sit vacant.

  75. The lower prices in the weeks before and after the short peak window will smooth out and hide the extent of the peak prices. The same thing happened in 1981 when peak prices only lasted for several weeks before the crash. History recorded the crash of 1981 as much less severe than it actually was, due to the averaging of peak prices. Average price declines after the peak of 1981 were about 30% but actual declines from peak prices were over 40%.

    Perhaps the momentary peak was higher than any monthly average. Who knows – maybe some dweeb overpaid by 40% this spring and so now prices have fallen by 30% already 🙂

    But how meaningful is a drop from a peak that is (a) not captured in any statistics, (b) represents only a tiny number of sales, (c) passed most people by without them even noticing, (d) can really be whatever number you want it to be.

    If true a very few people (a fraction of a month’s worth of sales) bought or sold at these inflated prices that are not captured in the statistics. For the rest of the market it is kind of irrelevant whether there was a week in May (that they didn’t notice) when their house was possibly worth an extra 100K.

  76. If BC assessment starts to access these properties as commercial that might encourage some marginal operators to get out.

  77. @Leo
    I think it is clear from this council statement:
    “Condo units now being operated as short-term rentals will be grandfathered in, but will lose that status if not operated as a short-term rental for a six-month period. Short-term rentals will not be allowed in new developments in the transient zones.”

  78. Grandfathering does apply if a unit is sold but again only if the unit was operating with a business licence and can prove that all taxes where collected and remitted. One of the council members, I think it might have been Young mentioned that only about 120 of the estimated 1500 units had a business licence.

  79. So children, do you think we will see a drop in condo prices of new buildings because of the new regs?

    With this council there was never going to be another building approved with transient zoning that would have permitted STVR anyhow.

    I expect this will prop up the prices of the legal non-conforming STVRs and possibly put a bit of downward pressure on other condos where the city is now going to enforce against an illegal but currently widespread practice. Could benefit prices in surrounding munis to some very small extent

  80. So children, do you think we will see a drop in condo prices of new buildings because of the new regs?

    I bet Janion resales are going to be in serious trouble. Once we get a couple resales I’ll write an article on that building and the effect.
    I didn’t see if the grandfathering applies if a unit is sold. Does anyone know?

  81. I dont see why a condo unit being used primarily as an AirBB unit should not be taxed as commercial. They are no different than a hotel room. Note that this would not extend to people renting one or two rooms in their house.

    The city staff member had an interesting comment that seems to have slipped past the papers. Units that are presently operating as AirBB will be grandfathered if the owner can show that they were being legally operated including both having a business licence and also paying all taxes. A councilor earlier in the meeting stated that only a small fraction have a business licence. This might put the cat amongst the pigeons.

  82. Further to Leo’s posts:

    Victoria cracks down on ‘ghost hotels’; some short-term rentals not allowed

    At the suggestion of Coun. Geoff Young, the city will ask the province for suites, condo units and houses being used for short-term rentals to be classified as commercial by the B.C. Assessment Authority. The move would essentially triple property taxes on those units.

    http://www.timescolonist.com/news/local/victoria-cracks-down-on-ghost-hotels-some-short-term-rentals-not-allowed-1.22921842

  83. CS said: “…and you have, in the core, something like Leo M’s 20% decline in SFH prices”

    Just a small point of clarification. The point I was attempting to express was that I see prices for SFH have declined by almost 20% from PEAK prices. Peak prices only occurred for several weeks during this past spring’s bidding wars when the winning bid was insanely high. During these crazy weeks many bloggers on this site shared JD’s sentiment that these bidding wars were like blind auctions (sealed bid auctions), and that encouraged extra high bids. These peak prices were the hallmark of realtors posting new listings on Wednesday, open house on Saturday, and bid reviews with seller on Monday at 5pm. This sealed bid marketing strategy worked at that time for several reasons; but those reasons are now passe’.

    The lower prices in the weeks before and after the short peak window will smooth out and hide the extent of the peak prices. The same thing happened in 1981 when peak prices only lasted for several weeks before the crash. History recorded the crash of 1981 as much less severe than it actually was, due to the averaging of peak prices. Average price declines after the peak of 1981 were about 30% but actual declines from peak prices were over 40%.

  84. “except those already doing it,”

    I have to laugh at the manager that says all those many poor families who rely on the income to pay mortgages and bills ?? Like we’re supposed to feel sorry for them having to be able to afford to buy a second place which they have already made a decent profit on ? Give me a fucking break.

    This is where these gougers lose their reasoning. You’re a hotel, pay the taxes and similar fees or rent it out to someone who needs it.

    Just another sign this is going to end very very ugly when those mortgaged up families need 2 places to pay the bills. What a joke.

  85. Good for Saanich AirBnB operators i guess.

    🙂 What’s the situation in Esquimalt and Oak Bay. The nicer parts of Esquimalt and all of Oak Bay would be great places for out of towners to stay especially if they have a car or bikes.

  86. Good for Saanich AirBnB operators i guess. The rental situation is just as tight there but I haven’t heard peep from our council.

  87. @Leo

    Also note “Last week in a closed session, councillors approved an enforcement strategy that will see more staff and a third-party agency hired to monitor platforms such as Airbnb to track non-compliant units.”

    Maybe the inventory will increase a bit more, apparently that’s what happened in Nelson BC when the town brought in similar legislation.

  88. No I didn’t mean price reductions, I meant the seasonality in prices that was discussed in the paper that CS linked to. They were making the claim that prices are lower in fall/winter than spring/summer for the same houses, but I think most of that is explained by quality of the houses that they aren’t measuring.

  89. “What I see accounting for the vast majority of price changes is that the crap that didn’t sell in the spring is left over in the fall so it sells for less (if it sells at all). ”

    I beg to differ, the majority of the slashes I posted are decent homes in the core, some better than others but most weren’t crap. I never even scraped the surface of the Peninsula and Westshore where there has been piles of slashes on decent looking places. Most of the pricing is based on what the neighbor got last spring/winter and now they aren’t getting it, thus declining median/averages the past 2 months, and now the benchmark as well last month.

    With so many starving agents they can’t all be mis-priced just for greed purposes. The agents need their bucks and don’t want houses languishing if it’s obvious the market is cooling.

  90. I’m eating strawberries tonight, $2.97/lb cdn at Walmart.

    Now im normally sanguine about food, but for some reason I remembered tonight how easily Mexican strawberry pickers in California, were able to get Ninja home loans in 2005 and 2006.

    10 years later, strawberries are still pretty cheap, and homes expensive…

    [I can't tell if this is very creative spam or not - admin]

  91. There’s not much discussion of the Teranet HPI these days. This repeat-sales measure admittedly uses a 3-month median to smooth over month-to-month variations, and it’s but nonetheless, their data don’t show any declines in Victoria. Last month on record (August) was 1.8% higher than July. This is on the heels of a 2.8 increase in July and 2.2 in June.

  92. Add in the expected seasonal increase January to September (up to 12%) in a tourism destination, and you have, in the core, something like Leo M’s 20% decline in SFH prices.

    Interesting article, thanks for posting. What I didn’t see in their discussion of seasonal price variation is quality adjustment. What I see accounting for the vast majority of price changes is that the crap that didn’t sell in the spring is left over in the fall so it sells for less (if it sells at all). They adjust for house size and bedrooms/ bathrooms, and age, but they cannot adjust for quality of the house, or proximity to a busy road, etc.

  93. @Leo, Any thoughts on the rush to get in before kick-in of new interest rates apply (i.e approx. 120 days since the first increase in July) .Or do you think that is wishful thinking?

    Probably a minor effect there but not big enough to tease out of the natural volatility of the market. This idea gets tossed around a lot, but I’ve never seen any data that shows a sales bump from an interest rate increase.

    The only time I saw demand pulled forward was with the introduction of the foreign buyers tax in Vancouver where there was a mad dash to complete deals before the deadline and a dearth of sales after.

  94. Peak Golden Head has indeed passed… for the next 20 years.

    According to the shining mind that thought the smartest time to sell was… right before the market went up 40%.

    That’s another 5 minute penalty for being predictable.

    Thanks for the fun penalties, Just Jack.

    Your YouTube skills are something else! (I never click on them.)

  95. “It’s long gone only until it’s suddenly back—and that’s always way sooner than the bears can imagine.”

    You mean when the foreigners come roaring back ? They’re gone fool, with all their cash too as Vancouver slashes continue to stack up like hotcakes and like the many empty homes in Golden Head for sale with no furniture.

    Have a reality check FIntorovert.

    http://www.myrealtycheck.ca/

  96. “4334 Majestic Dr
    List: $749,000
    Sale: $820,000 ($71,000 over asking)”

    As strangertimes says, it was listed last mid August at $849K so that’s a $30K loss plus agent fees.

    Wycliffe could easily be mistaken for a crack house on Burnside. I’m sure they’re going to love to have to spend $150K plus to make it liveable.

    I guess you can ignore the 20 plus other major slashes in Golden Head the past 2 months, FakeIntorovert. Peak Golden Head has indeed passed… for the next 20 years.

  97. Half a year ago these G.H boxes were often selling for much more with a sale in a few days.

    The other one for $150k over asking didn’t impress you, eh?

    But, yes, things aren’t as hot now. I agree.

    These selling prices show that peak Gordon Head is long gone.

    It’s long gone only until it’s suddenly back—and that’s always way sooner than the bears can imagine.

  98. Could you elaborate on what kind of statistical test could be applied to determine the probability that a sequence of medians are exhibiting a trend (or some other interesting finding)? I got a C in statistics…

    I’m no statistical whiz either. I was probably a C as well and it was a long time ago.
    One likely valid approach would be to calculate the trend up to a certain point (say Jan 2017) and the confidence intervals on that trend. Then project that trend forward to current. If the additional data is off the trend line and outside the confidence intervals then you can reject the hypothesis that we are still on the same trend. The problem with this test is that it is quite “hard” to reject the hypothesis that we are still on the same trend. So this test will still be saying no downturn after many observers might be calling a downturn.

    There is a statistical test I have read about but never used – called the Chow test – that seems specifically designed for detecting these sorts of changes.https://en.wikipedia.org/wiki/Chow_test

    On a more simple level if you have a noisy data set does a conclusion hold valid over a range of start dates or is a conclusion uniquely dependent on the start date chosen? If you get to pick the start date then the chance of finding an apparently significant trend purely by chance goes up

  99. To counteract the completely “fair and balanced” news coming from FHawk’s, here are a few recent sales in my fair neighbourhood:

    After patiently waiting 61 days, this seller is pleased!

    4334 Majestic Dr
    List: $749,000
    Sale: $820,000 ($71,000 over asking)

    I’m seeing the original price of 4334 majestic at 849900. Half a year ago these G.H boxes were often selling for much more with a sale in a few days. Even the other one on Wycliffe place that sold at 728 would have been a steal a short while ago. These selling prices show that peak Gordon Head is long gone

  100. @rush4life

    how do you guys find out the average SFH selling price during the month in different parts of Victoria?

    Currently this requires a realtor or anyone else that has access to the internal data. I am licensed, hence I can use the internal board database to run these queries.
    I am working on some tools that will allow you to see this data as well, but I don’t have a date when those might be live.
    In the meantime if you are interested in something in particular, just ask, I can run the report manually.

  101. Not a valid test for autocorrelated data. Approaching statistical questions with a closed mind rarely produces the best results. Rather than choosing a statistical test that supports your predetermined idea it is better to choose a few valid statistical tests and see what the results are.

    Could you elaborate on what kind of statistical test could be applied to determine the probability that a sequence of medians are exhibiting a trend (or some other interesting finding)? I got a C in statistics…

  102. FYI:

    Short Term Rentals
    Latest News
    September 2017

    A Public Hearing is being held on September 21, 2017 to allow members of the public to speak about proposed changes to bylaws to remove short term rentals as a permitted use throughout the City. Any member of the public who wishes to speak on this matter will be given up to five minutes.

    Note: This change would not affect short term rentals occurring in up to two bedrooms in occupied single family dwellings (home-based B&Bs) permitted under Schedule D – Home Occupations
    About Short Term Rentals

    Short term rentals are defined as rentals of less than 30 days that do not fall under the Residential Tenancy Act and include rentals on AirBnB, VRBO, and other platforms. They are only permitted in two instances in Victoria:

    • up to two bedrooms within a single family dwelling under the Home Occupation Bylaw (this use means bedrooms within a dwelling unit with shared kitchen and living space and does not include self-contained suites such as secondary suites or garden suites)
    • entire residential units that are zoned for transient accommodation

    Where Short Term Rentals are permitted, a transient business license is required. (Learn more about business licenses and how to apply for one here).
    Because short term rental may be impacting the availability of long term rental housing, Council is considering further regulation to:

    • engage in proactive enforcement of zoning regulations to reduce Short Term Rentals where prohibited City-wide
    • develop new Short Tern Rental business regulations to establish specific requirements for Short Term Rental business licenses and potentially apply different business license fees to different uses, as well as fines for non-compliance. Community engagement and opportunities for public feedback would precede any changes to business regulation.
    • amend the zoning regulation bylaw to remove transient zoning downtown where transient zoning currently exists. No zoning changes would occur without a public hearing, which has not yet been scheduled.

    Your feedback on proposed regulations can be sent in writing to MayorandCouncil@victoria.ca. Alternatively, you can request to address Council at any upcoming Council meeting to have your thoughts heard in person.

  103. I don’t wish for a “crash” because I feel that would hurt more people than it helps.

    A correction which brought prices back down to 3-5 times income would be potentially devastating for this economy, RE centric as it is.

    Unfortunately, many people use that logic as a basis for either saying it can’t happen as it would be unimaginable, or that because it would be so bad, government would somehow intervene. I don’t believe either of those are strong rebuttals, where they’re employed.

    Who knows what will happen – but I am pretty confident in saying, there is little way to bring this market back into a sustainable balance without a lot of pain and economic turmoil. Indeed, many do get hurt, even those without direct or even periphery interests in RE.

  104. The probability of such a sequence is only 5%, i.e., there was a statistically significant downtrend.

    Not a valid test for autocorrelated data. Approaching statistical questions with a closed mind rarely produces the best results. Rather than choosing a statistical test that supports your predetermined idea it is better to choose a few valid statistical tests and see what the results are.

    Since I don’t have the data I have done no tests, but whenever I see a result dependent on a cherrypicked start date I am skeptical.

    Now we have the pumpers quoting one another.

    If prices actually are declining I think this would be a good thing. I am just not certain it is happening yet. How does that make me a pumper? I have often said on this blog that I would like to see a slow decline in prices. I don’t wish for a “crash” because I feel that would hurt more people than it helps. Slow decline in prices improves affordability without causing too much collateral damage

  105. @ Intro:

    “That’s not entirely what the blog is about, and you know that, Mister”

    If you wanna be formal, you can call me Doc.

    “I don’t think prices will drop anywhere near as much as they need to to erase the recent 30-40% gain we’ve seen across the last few years.”

    Well, as Leo S’s data have demonstrated, they’ve retreated by at least a quarter of that since the beginning of the year and, taking account of the seasonal variation in prices, they may have retreated on a seasonally adjusted basis by at least half of the “recent 20-40% gain”.

    “many still consider Victoria’s current prices to be a “deal””

    Well I guess some people think a house in the core, for ten times the median family income is a “deal”, just not those with a median family income or less.

  106. Now we have the pumpers quoting one another. How ridiculous is that?

    Well, the dumpers quote one another. How ridiculous is that?

    And how useful is that on a blog supposedly to aid home buyers?

    That’s not entirely what the blog is about, and you know that, Mister!

    Like, we have a 95% probability of a downtrend and you need a few more months in the same direction before conceding that for the last eight months there was a decline in price. LOL

    Yes, actually.

    I bet prices will be flat or down slightly for a little while. Not sure how long. But I don’t think prices will drop anywhere near as much as they need to to erase the recent 30-40% gain we’ve seen across the last few years.

    And I also wouldn’t be surprised if prices went sharply up again in the near future, as many still consider Victoria’s current prices to be a “deal,” hard as that may be for some folks to wrap their head around.

  107. To counteract the completely “fair and balanced” news coming from FHawk’s, here are a few recent sales in my fair neighbourhood:

    After patiently waiting 61 days, this seller is pleased!

    4334 Majestic Dr
    List: $749,000
    Sale: $820,000 ($71,000 over asking)

    A house on a busy street posed no problem for this seller (OK, to be fair, the lot is huge, and so is the house). Enjoy the basketball court, my friend!

    1885 Feltham Rd
    List: $899,900
    Sale: $1,050,000 ($150,100 over asking—Hello!)
    DOM: 6

    People looove the Majestic area:

    1602 Wycliffe Pl
    List: $699,900
    Sale: 728,000 ($28,100 over asking)
    DOM: 8

  108. @ Intro:

    Core prices may well be declining. A few more months of down would convince me that we probably have a change in trend.

    Now we have the pumpers quoting one another. How ridiculous is that? And how useful is that on a blog supposedly to aid home buyers?

    Like, we have a 95% probability of a downtrend and you need a few more months in the same direction before conceding that for the last eight months there was a decline in price. LOL

  109. Better to check your facts anyway.

    That won’t be happening. Remember, the preconceived narrative…

    Well at least hawk still has the daily slashes…

    Those are awesome. Not much else to go on, so Hawk discovers the price-slash as his reason to get out of bed every morning.

    Core prices may well be declining. A few more months of down would convince me that we probably have a change in trend.

    Excuse me, but such level-headed thinking is unwanted and unappreciated around here.

  110. And over the eight reporting intervals, from mid-January to mid-September, SFH prices in the core were down six times, flat once and up once. The probability of such a sequence is only 5%, i.e., there was a statistically significant downtrend.

    And that’s the hard math of the binomial distribution, not eyeball statistics.

  111. Or down 9% since last December.

    Up is not down. We are actually well up since December. You must have meant January. Conclusions that are rendered invalid by choosing a start date different by one month illustrate the risk of cherry-picking in time series

  112. Contending that down is up isn’t very useful either.

    Focusing on noise in time series gets you nonsense like “global cooling since 2016”.

    Core prices may well be declining. A few more months of down would convince me that we probably have a change in trend.

  113. @ CE

    “Cherry-picking a high point in a noisy time series and concluding it has been declining since then isn’t very useful.”

    Contending that down is up isn’t very useful either.

  114. “But to August 17, the data for the core (chart below) show a decline in SFH prices. ”

    The eyeball is a lousy statistical tool. It’s possible that the trend in prices has switched from increasing to flat or even declining but a couple months are not proof. Cherry-picking a high point in a noisy time series and concluding it has been declining since then isn’t very useful.

    According to that methodology I could say that prices have been “declining” for most of the last year and a half. Prices “declined” May-Aug 2016, Oct-Dec 2016, and Jan-Aug 2017 – 12 out of the last 19 months. Yet here we are at or near all time highs.

  115. @Leo, Any thoughts on the rush to get in before kick-in of new interest rates apply (i.e approx. 120 days since the first increase in July) .Or do you think that is wishful thinking?

  116. @CS: Core SFH Median is down further in September: $820,000
    So yes, core is definitely showing weakness in price still that is being counteracted by other areas.

  117. @ Leo S

    “The chart includes September to date, which is up in median price for SFH”

    The chart posted at 9.06 pm shows SFH prices for the core plus periphery as trending up. But to August 17, the data for the core (chart below) show a decline in SFH prices. So has the trend for the core now changed or is the SFH price for the core (where most Victorians live and where most newcomers to Victoria most likely wish to live) still lower now than at the beginning of the year? If the latter, it would be consistent with Leo M’s claim that prices are down substantially, given that, as a tourist destination, Victoria house prices can be expected to show a strong seasonal increase from winter to summer, which is the reverse of the trend we actually see for the core in 2017.

  118. You are the authority (and lawyer) around here totoro. If you say there are more foreclosures than was first believed I’ll take your word for it.

    “Try again later.”

    I tried several times yesterday and today and it didn’t work.

  119. Try again later. As for jumping to the conclusion you have based on one week’s data and what someone else tells you, that might be a less than rational or reasonableresponse don’t you think?

  120. “Incorrect. I randomly picked the week of June 5-9 and there were three. ”

    Great, that means things are much worse than we thought. That’s a lot of people getting foreclosed in a town so many on here say is full of people with no mortgages or debt.

    Victoria’s dirty little secret, where your friends are going under but no one wants to talk about it.

    Your search link came up with this:

    Court Services Online has experienced an error
    Error Details:
    glaze.dmz
    Thu Sep 21 07:47:24 PDT 2017
    /cso/esearch/civil/searchDateResult.do
    Error message is: java.lang.NullPointerException

  121. Your graphs make it look like housing prices are still inching up from August, when it was previously reported the market was down approx. a little more than 1%

    Few things:

    1. SFH Prices were down from July to August. This showed up in the median and in the HPI for the first time.
    2. The chart includes September to date, which is up in median price for SFH and up very strongly for condos. That is only 20 days, so could still change.
    3. Median price is pretty volatile. It was pretty flat Mar – Aug last year and then it jumped again to a new level. That’s why I’m not ready to call flat prices yet.
  122. @Leo,

    Your graphs make it look like housing prices are still inching up from August, when it was previously reported the market was down approx. a little more than 1%, minor in the scheme of things but still an indicator. Could you add some detail to your graphs.

    Thanks!

  123. Recent sale of 956 Heywood. Tiny sfh right adjacent to Beacon Hill, pending for 1.225 M. 1 BD house is worth essentially nothing, so apparently this is current value of a 6100 ft lot in this location. It is duplex zoned so will have two 1.4 M sides (or thereabouts) built I guess. Still seems kinda nuts for a modest patch of land in a very desirable location.
    Oh- took 50 days to sell and sold for $150k below original ask, if it matters.

  124. It was zero foreclosures going back a few months based on what JD said

    Incorrect. I randomly picked the week of June 5-9 and there were three. And comparing Vancouver vs. Victoria is ridiculous unless you adjust for population. The courts slow down over July and August btw. You can do your own searches as I gave you the link. Better to check your facts anyway.

  125. “when it was zero for a long time

    Which wasn’t the case actually,”

    It was zero foreclosures going back a few months based on what JD mentioned several times that Vancouver courts were packed and Victoria was nothing. Maybe you can post any ones that were missed with your search links lists.

  126. I’m still not ready to call flat prices for SFH.

    And also not for condos.

    Market is weakening, but pretty slowly.

  127. when it was zero for a long time

    Which wasn’t the case actually, and there were no masters (who hear the foreclosure and bankruptcy applications) sitting August 8, 9, 10, 16 and 17, which would proportionately decrease the numbers for August and increase the September numbers disproportionately.

  128. “Not sure how 6 foreclosure proceedings initiated at the Victoria Law Courts over the last few weeks indicates a trend.”

    Bman,
    As I said before when it was zero for a long time as JD has been noting, then some pop up several weeks in a row with a noticeable list of bankruptcies on top of hundreds of price slashes in the past two months with two months of median, average and now benchmark price declines, I’d say it smells like the beginning of something big. But it’s just my opinion.

    The brainiac and Stats Can pumpers want to see hundreds first but by then the major correction is in full force and you’re SOL.

  129. Just to recap for those that don’t know, a lower rate of late mortgage payments means one of two things

    Er.. or there is rising home equity or interest rates are declining or stable.

    If the number of foreclosures was increasing, you would expect to see the arrears rate for residential mortgages increasing first.

    Yes, and it it did in some areas of Canada. Just not here.

    If the hearing was that week I don’t recall

    Yeah, check the dates. You can do a search on the link I gave you. I would not expect consumer bankruptcies to rise in BC. I’m not sure about business bankruptcies which are subject to a personal guarantee causing bankruptcies. The internet is changing retail quite a bit and there are some casualties.

  130. According to Daniel Wong of Better Dwelling

    Mortgages In Arrears And Market Liquidity
    Just to recap for those that don’t know, a lower rate of late mortgage payments means one of two things: Incomes are rising faster than the cost of living, or you’re approaching a real estate bubble. We know incomes in BC are about the lowest in the country, heck – even Chinese state media has been discussing it for the past year. So…it’s hard to buy into the high income narrative right now.

    The second option is a real estate bubble. In a bubble, property is highly liquid. If you fall behind, you can easily sell into the market before your mortgage goes into arrears. Late mortgages fall to new lows because people are buying pretty much anything, regardless of location or condition. Some people even chose to stay in the home, and refinance the amount to further delay the number of defaults. This sends the ratio of mortgages in arrears even lower.

  131. If the number of foreclosures was increasing, you would expect to see the arrears rate for residential mortgages increasing first. Yet the arrears rate in BC is lower now than it has been since July 2008. As of June 2017 in BC 1,058 of 640,250 residential mortgages were in arrears. Compare that, for example, to November 2013, when there were 2,904 of 631,435.

    Not sure how 6 foreclosure proceedings initiated at the Victoria Law Courts over the last few weeks indicates a trend. It doesn’t even seem unusual based on some random searching in cso. Too bad the numbers aren’t published in the Court’s annual report.

  132. Barrister,

    Sounds like a great plan. When I win the lotto I’ll be your neighbor. Once you experience a 50% drop you never forget it, and all those that say they don’t see it happening are out to lunch. The personal debt loads of the masses will kill this market, and you don’t need everyone to sell, just 10% when stress tests are 6% or 7%. Most won’t be able to cough up an extra $1000 a month when they are already squeaking by.

    US putting up interest rates once more this year as per Yellen today and most likely Canada again too. The time to finance the pensions is here and rates have nowhere to go but up, by a lot.

  133. Keep them doggies slashin’.

    541 Heatherdale Lane in Broadmead slashed $40K to $859K.

    1010 Hampshire Rd in Oak Bay slashed $40K to $939K.

  134. Hawk:

    In truth I dont see a major crash occurring in Victoria but my crystal ball is not as good as yours. But I am at that age where it just is not very critical to me one way or the other. Maybe you should look at buying a house in Lugano and we can be neighbours.

    The baby boomers are just starting to retire in Canada since the baby boom only began in Canada in 1952 (the US was in 1946). If I had to guess we will see prices mostly plateau here in Victoria for the next few years. What I dont see is a fifty per cent drop in prices.

    I am told that there is a very nice small Palatzio for sale on the water for just 23 million Swiss Francs.
    It is not huge and would be perfect for you.

  135. Bankruptcies and foreclosures showing up after a long period of nothing says a lot to me. It says the person had months and months, sometimes a year to resolve their debts, and mortgage payments with the tons of leniency banks give now with “have a holiday from your mortgage” deals etc that never existed before. Not to mention piling up the HELOC and multiple credit cards forever to get to that point.

    The financial institutions would have spent many months trying to wangle something or get a sale/debt restructuring etc to not have to go through the courts.

    Like my buddy who talked to the credit counsellor friend months back that a high percentage of Victorians are up to their asshole in debt and struggling bad. It’s the dirty little secret they don’t want their friends to know.

  136. Intorovert,

    Why are so many expensive empty houses in your hood with no furniture in them up for sale and aren’t reno flippers? Looks like the Asians are all dumping. Reality is obviously a scary thing for you.

    totoro ,
    The weekly summary list I read last week had those numbers, believe it or not. If the hearing was that week I don’t recall but they were listed as new bankruptcies and foreclosures for that week. Not to mention the stack of civil forfeitures that seemed extreme for a so called economy in boom mode. Looks more like in “rolling over” mode from a debt bubble beginning to unwind.

  137. “It’s certainly not bad news that they’re leveling off,” said Robert Lawless, a law professor at the University of Illinois and a bankruptcy expert. “When filings are going down it’s an indication that things are probably doing better. But if you want to use (bankruptcy) filings as an indicator of the economy, we have to recognize they’re a weak indicator and a lagging indicator at that.

    2009 article in San Diego newspaper – link didn’t work to paste

    Looking for bankruptcies as a predictor of coming house price declines is probably futile. More likely we’ll see house price declines leading to more bankruptcies (as several here have already stated). This makes sense. Once equity stops rising it will take a little while for most people before TSHTF and they run out of options.

  138. Number of bankruptcies are an indicator for sure but would require a time series data to get a handle on whether they are increasing or decreasing. Also there are the issues of rising house prices masking bankruptcies, and I have some doubt about whether the measure is independent enough to be useful.
    For example, are the number of bankruptcies important or would the unemployment rate give you essentially the same info?

  139. It depends on the date range you are looking at Hawk. Last week Mon-Fri there were not 9 bankruptcy hearings in Victoria.

    Hawk’s preconceived narrative requires there to be MANY bankruptcies.

  140. I’m curious, how you’re getting your data going back months and years?

    Just use the link I posted last. You are looking at the daily list which is only listed that day until 6pm. You can search all public records for hearings free of charge by date range with the limit that each search can only be up to seven days so it is not that great for long period data unless you have the patience.

  141. Lots of interesting periods, just not so much on the downside so far.

    True. If you are interested in following the market there has been lots of interest. I was thinking more of the way that certain posters have used “interesting’ as a euphemism for TEOTWAWKI.

    Using interesting in the more generic sense the periods where something a bit out of the norm or surprising has happened are the 2008 micro-crash, the 2009 market recovery and the recent rapid run up in prices.

    A few months or years of stagnation or decline in prices won’t be all that surprising if it happens. Interesting in comparison to what has come before I guess.

    Surprising, and therefore interesting, outcomes at this point would be another rapid run-up in prices or a major crash.

  142. CSO court lists are provided free of charge and are displayed in PDF format:*

    Court locations that have scheduled sittings for that DAY ONLY will be displayed.
    Files with access restrictions (i.e. divorce, family law) display only the file number.
    Court lists for the CURRENT DAY ONLY are displayed.
    Court lists are displayed after 6:00am PST.
    There are NO ARCHIVES

    I’m curious, how you’re getting your data going back months and years?

  143. You don’t need special access Hawk. Not sure why the link didn’t work for you. I see no marked increase in bankruptcy or foreclosure cases looking at this year compared to last year and the data set is way too small to mean anything anyway. Maybe there will be at some point here, but we aren’t there yet.

    https://justice.gov.bc.ca/cso/index.do

    Late last week there were 9 bankruptcies and 2 foreclosures.

    It depends on the date range you are looking at Hawk. Last week Mon-Fri there were not 9 bankruptcy hearings in Victoria.

  144. Wow, a twenty percent price drop? First I’ve heard of this.

    When bitter bears see a single-digit-percent price drop, they like to add a zero to the end to make them feel better.

    I wish I had a nickel for every time someone on this blog said “things are about to get interesting” and then they didn’t.

    So true. I remember noticing and mentioning this on the blog years ago.

  145. I wish I had a nickel for every time someone on this blog said “things are about to get interesting” and then they didn’t.

    Lots of interesting periods, just not so much on the downside so far.

  146. “Until the bankruptcies start numbering in the hundreds why are we even bothering with this trivial number?”

    Barrister, because the shit is just starting to hit the fan and everything starts from zero. Why do you want to be part of this group of deniers who want to wait til after the fact and not when it’s starting ?
    Stats Can reports history, the court room lists shows now. I prefer the present.

    Housing risks ‘could even threaten financial stability’ in Canada: OECD

    Moody’s also maintained a negative outlook on Canada’s six major banks, citing mortgage debt as a “key vulnerability”

    Rising housing prices and swelling household debt levels in Canada runs the risk of leading to a market correction that would reverberate throughout the economy, the report warned.

    “A sufficiently large shock could even threaten financial stability,” it said.”

    http://business.financialpost.com/news/economy/housing-risks-could-even-threaten-financial-stability-in-canada-oecd

  147. Barrister,

    According to the city and the agents it is within the Rockland border. You might refer to them as the low end’ers. Good luck on your sale and slash away like the rest of them.

    http://www.victoria.ca/assets/Departments/Planning~Development/Maps/neighbourhoods-map.pdf

    Best be quick on the slashes though as it looks like the Malaysian money launderers are now out of the picture too. 😉

    Malaysian corruption allegedly spreads to Canadian real estate

    http://business.financialpost.com/real-estate/malaysian-corruption-allegedly-spreads-to-canadian-real-estate

  148. Hawk:

    Do not think that Beverly Place is within the Rockland boundary. I think I might list my house at 10 million and then slash it down to 3.5 million. That way you might really pronounce that the sky is falling.

  149. They were there on the lists the last few weeks if you were watching it. John Dollar commented on them as well as he was the first one to notice.

    Yeah, you don’t have to watch out for the lists each day. You can search week-long periods for foreclosures and bankruptcies in Victoria and compare more reliably through court services online. For those interested in tallying the data more accurately the link is here:

    https://justice.gov.bc.ca/cso/esearch/civil/searchDate.do

  150. I’m confused as to why you believe there are three bankruptcies listed today in Victoria?

    The supreme court list is here:
    http://www.courts.gov.bc.ca/supreme_court/hearing_list/lists/Victoria/WEDNESDAYEXT.PDF

    None of these are bankruptcy matters.

    With more details here:
    https://justice.gov.bc.ca/cso/esearch/civil/searchDateResult.do?serviceId=41197567

    The chambers list is here:

    https://justice.gov.bc.ca/cso/courtLists.do?listSelection=Victoria_Law_Courts.pdf&courtType=SCCL

    There was one bankruptcy hearing yesterday, one on the 18th, one on the 15th, and two on the 14th. I also count five foreclosure applications last week.

    Am I missing something? I’m not sure if there is another list you are looking at.

  151. It’s getting interesting and we all knew it would eventually happen.

    I wish I had a nickel for every time someone on this blog said “things are about to get interesting” and then they didn’t.

  152. When I said peak prices I definitely was not referring to averages, but specific properties. Averages are misleading in the short term.

    So what you are saying is that prices went up much more than were represented by the averages and now have given back some of those gains. That’s possible but I don’t see a lot of evidence for it. The figures John Dollar has been posting don’t show a run-up nor a fall of that magnitude. Neither obviously does the HPI. It’s hard to prove or disprove the existence of something that doesn’t show up in any stats.

  153. “Do you have a source for this assertion of fact? I did not see this reflected in the court list myself.”

    They were there on the lists the last few weeks if you were watching it. John Dollar commented on them as well as he was the first one to notice. There were 2 foreclosures, then 4, then 2 last week. One this week so far.

    There are 3 new bankruptcies listed today as well, that weren’t there on Monday, and 9 last week as previously stated.

  154. What’s odd is your link had nothing of Vancouver in it.

    Although that report is what the link you post in support of your statement references for its data source. Seems extremely unlikely that bankruptcies or consumer proposals are soaring in Vancouver at this time.

    Perhaps there were more in one month than that same month last year, not sure as no-one has released the underlying data for this and there could be an error there, but the credible data shows that bankruptcies and consumer proposals are down significantly yoy – as you would expect in our current economic conditions.

    The government collects this data and releases it annually. There has been a decline each year since 2010 in Greater Vancouver and Victoria and BC overall. And an uptick in some provinces that have experienced house price or industry declines including Alberta, Saskatchewan, Manitoba and Nova Scotia.

    https://www.ic.gc.ca/eic/site/bsf-osb.nsf/eng/br03796.html

    https://www.ic.gc.ca/eic/site/bsf-osb.nsf/eng/br01823.html

    doesn’t mean people can’t find a way to circumvent them

    I think it would be interesting to look at the debt stats in more detail. It is relevant to risk in the housing market and I do agree there is quite a bit of data on it. There is also quite a bit of skewed interpretation floating around.

    6 foreclosures in Victoria the past few weeks as well as 9 bankruptcies just last week when there was none for a long time

    Do you have a source for this assertion of fact? I did not see this reflected in the court list myself.

    When I said peak prices I definitely was not referring to averages, but specific properties

    Maybe. I don’t see that myself in the current market in OB and the HPI is meant to identify changes to the market to the same type of house on a monthly basis and it does not reflect this. Maybe it is inaccurate – not sure.

  155. The number of reno flippers that keep on slashing are a major indicator to me of lower prices to come. They were the hot money driving the $600K to 900K market the last year and many are on the losing end of their bets. I’ve lost track how many have slashed in the last 6 weeks or so and more than one slash as well.

    The ones in the Mt. Tolmie area must be in a tightest spot as they are the smallest slashes like this one at 1621 Mcrae Ave with only a $15K slash. That’s about the fourth one in the last week for a similar amount.

    Revenue property also taking a hit. 386 Davida Ave on #2 slash for a $100K slash to lucky $888,000.

    A 4 plex at 2827 Cedar Hill Rd slashed $80K.

    Even Barrister has some competition at 1064 Beverley Pl slashed $124K.

  156. “Odd when the stats show the number of insolvencies in BC declined 12.2% year over year from June 2016 to June 2017.”

    What’s odd is your link had nothing of Vancouver in it. It’s up 17% which may be considered low but is obviously a new trend developing off a lower level in a world of a historical debt bomb. Just like the sudden signs of 6 foreclosures in Victoria the past few weeks as well as 9 bankruptcies just last week when there was none for a long time.

  157. LeoS and Totoro— the peak prices I’m referring to are the insane prices sellers were getting in the spring during bidding wars. I know of three people in south Oak Bay and south Fairfield who watched their neighbours house sell in bidding wars for between $1.2 and $1.45. All three people have houses at least as nice in furnishings and size who have talked to realtors about listing their properties and all three have been told that in today’s market, to get a quick sale within 2-4 weeks they will need to list their houses for almost 20% less than their neighbours houses sold for in the spring. When I said peak prices I definitely was not referring to averages, but specific properties. Averages are misleading in the short term.

  158. Doesn’t seem to be the facts I was responding to

    My point was that just because there are regulations in place prohibiting something (such as more than 65% HELOC) doesn’t mean people can’t find a way to circumvent them. And that recent changes in rules show that quite a few people were buying with little buffer (since the stress test forced them to come up with the 20% down to avoid it).

    It’s clear now that potential sellers have missed the peak price era and must now settle for a sale price of almost 20% less than peak prices back in the early spring buying frenzy.

    Sorry, how is this clear? I don’t see any evidence of this. Prices for SFH may have flattened out, and condo increases may be slowing down, but I don’t see big decreases until we get a lot more inventory.

  159. If interest rates continue to go up and prices fall you could expect to see an increase. We don’t currently have those conditions.

    I agree with that. Rising house prices allow people that are in financial trouble the opportunity to sell their homes rather than the bank getting conduct of sale.

    If the market doesn’t appreciate significantly then applications rise and it becomes clear how many people are in financial difficulty. A rising market just hides the actual numbers and gives the appearance that things are fine. So I would expect insolvencies to decline when prices rise but that’s only hiding the number of people that did find themselves in dire circumstances and needed to consolidate their debts.

    We won’t know how bad the problems is until the tide turns and there is a housing pull back or correction. Once the tide goes out then we can count the bodies on the beach.

  160. It’s clear now that potential sellers have missed the peak price era and must now settle for a sale price of almost 20% less than peak prices back in the early spring buying frenzy.

    Wow, a twenty percent price drop? First I’ve heard of this.

    The HPI shows an increase each month since 2015 – except for August this year when there was a drop of 1.2% over July’s HPI.

  161. Another great weekly snapshot LeoS. Thanks for compiling and posting new information and insight each week.

    It’s clear now that potential sellers have missed the peak price era and must now settle for a sale price of almost 20% less than peak prices back in the early spring buying frenzy. Bidding wars are over except for realtor created illusions of bidding wars for properties priced near assessed value, although fully renovated properties will always fetch a higher average price.

    All those cancelled listings and not renewed listings (78 last week) and unsold drop prices (95 of those) mentioned by LeoS will likely be re-listed in the Spring, resulting in a Spring flood of listings by desperate sellers. There is a perfect storm forming for Spring 2018 when we might see sustained new listings of over 400 per week with total inventory reaching over 4000, maybe even higher numbers due to stagnant sales and desperate sellers. It’s getting interesting and we all knew it would eventually happen.

  162. Vancouver bankruptcies exploding. Victoria is showing they are following suit from last week’s court lists insight.

    Odd when the stats show the number of insolvencies in BC declined 12.2% year over year from June 2016 to June 2017. I also looked at the court listings for Victoria and didn’t see any unusual increase in insolvency applications. Makes sense that there would not be given that house prices have risen a lot over the past year. If interest rates continue to go up and prices fall you could expect to see an increase. We don’t currently have those conditions.

    https://www.ic.gc.ca/eic/site/bsf-osb.nsf/vwapj/Insolvency-Statistics-June-2017-EN.pdf/$file/Insolvency-Statistics-June-2017-EN.pdf

    many others also borrowed it from secondary or private lenders (as seen in the huge increase in volumes from private lenders). That I would say is the definition of “debt sorcery”.

    Doesn’t seem to be the facts I was responding to but I agree that someone who is bundling their mortgage is increasing their risk if rates rise and prices drop.

  163. Learner:

    I agree that taking your time to find the right house is important but as you pointed out there are a lot of crap boxes out there right now. My point is that if a good house comes up then it is a bit of a gamble to wait for a better one or a bit of a lower price.

  164. Leo didn’t you link a few posts back to stats of a graph on the seasonal cycle of DOM?

    Probably.. I need to build a dashboard to put all the measures in one place. So hard to find stuff on this blog.


    Note this is median, not average as JD is mentioning. However I don’t see current DOM higher than last year. Perhaps we are looking at different market segments.

  165. Some of the comments about my localness/non-localness seem pretty quaint to me in the context of what Vancouver is like.

    This is in relation to the stats on “buyer origin” that I publish here periodically. That is, when a property is sold, the buyer’s address gets distilled into one “Buyer origin” field that differentiates between Victoria buyers, up island, lower mainland, rest of bc, etc.

    There was a lot of discussion about how many of the buyers that are put down as “Victoria” are actually from Vancouver, but moved here for a week/month/year before buying. It’s important in the sense that out of town buyers represent pure demand, vs locals upgrading/downgrading have essentially no effect on the market. It’s ok though, you missed the big dump of Vancouver buyers we had in 2016 that spiked our market so we won’t hold it against you. 🙂

  166. @Barrister @Newbie,

    It’s true the market jumped around 16% YoY; however ,we are currently seeing the market adjust to new realities: interest rate hikes, new lending criteria, a clamp down of offshore investment action from China, increasing oil prices etc. These factors are all contributing to a stabilizing of the market, or rather a “balanced market”. Taking facts only, the market MAY go up 1.5-2 %, but if you are already here, I think your rent, wait and see approach is very informed. We just sold (due to issues with the neighbourhood), which had allowed us to watch for the right investment in another neighbourhood. The point being, we are aware the market might go up, but if you watch the stats and stay tuned in you will know if and when you might have missed the boat. For most it is tough if you are picky, BUT it does seem to be getting better (we could buy, but a mill for an ugly box is still hard to digest). I wish I could jump to Feb 2018…but like the rest of us – I have to sit, wait and see.

  167. Newbie:

    My advise would be to consider buying before the spring if the right house comes up and not wait too long. At the moment there is a lot of inventory with prices being stable. There is no way of predicting were prices are going but another major jump in prices is not out of the question. The other problem in Victoria is often the lack of selection in some neighbourhoods. I live in Rockland and for the last six months there has been almost nothing for sale. My point is that even finding a house that you would want in the first place can be really hard. At a 1.2 mil budget you are at the lower entry price for Oakbay and Cook Street Village.

    I know that on this blog you will find people predicting prices will be lower or higher but the truth is no one is actually sure. I do know that since I bought four years ago prices have almost doubled and in some areas like Uplands they have tripled or more.One of the stats guys on here can give you a better picture but my guess is that the two areas you are looking at have almost doubled. The question for you is whether a twenty percent increase in the next year would push you out of the areas that you want to be in.

    I know that I might be sounding like a real estate agent but as people on the blog will tell you I am not. My concern is that your budget barely gets you into the two areas that you want to be in and in my opinion the next step down is radically different than what you are looking at buying. It is just how the neighbourhoods work in this town.

    This blog has a number of people who while looking for the more perfect house or a drop prices found themselves basically priced out of the market. Obviously I dont know how deep your pocket is so perhaps this is not a concern.

  168. John Dollar – I’m not planning on buying for at least a year so obviously market conditions could change dramatically over that time.

    caveat emptor – interesting, I would have assumed Victoria would be mostly driven by Vancouver + Chinese capital flows. Our landlord is a Canadian citizen but US resident who purchased recently FWIW. I didn’t realize the board had a local/non-local box to tick when transactions occur! In Vancouver, the real estate board prefers as little data on that kind of thing as possible (for obvious reasons).

  169. Someone had blunder’d
    Theirs not to reason why,
    Theirs but to do and buy:
    Into the valley of Humbolt
    rode the six hundred.

    Americans to right of them,
    Chinese to left of them,
    Agents in front of them

  170. John Dollar:

    Condos to the right of you, condos to the left; charge for the houses to your front he said.

    I think that is what you wrote once.

  171. That by the way is just God getting back at the oil company executives for sticking a pipe down the Earth’s ass.

    This made me laugh.

    Some of the comments about my localness/non-localness seem pretty quaint to me in the context of what Vancouver is like.

    Anyone who rents here for at least three months is considered a “local buyer” in our statistics when s/he buys a property. Some of us think this makes little sense and can mask the true number of non-locals purchasing here.

    To be perfectly clear, I am in favour of non-locals buying here, in any number.

  172. An anticipated increase in the interest rates might nudge some prospective purchasers to buy. I think most buyers are worried about not having a house rather than being able to pay for it when interest rates rise.

    “Tis better to have had a house and lost it than never to have had a house at all.”

    -Alfred Lord John Dollar

  173. There is some seasonality to the average DOM. But we have been trending to higher average DOM relative to last year. Doesn’t necessarily signal a drop in prices which wasn’t my point. Just a decline in the effectiveness of blind auctions. Most people should have noticed far fewer successful blind auctions at this time of year over last year.

    Most lenders consider a balanced market to have an average DOM of between 30 to 90 days. When you’re outside of that range you get into bidding wars and at the other end a market under duress. At those extremes you get wide price swings in prices for the same type of property. Which may be illustrated with a graph of number of sales X price range. The graph is more flattened with more skewing in the extreme ends. In a normal 30-90 day market the graph is bell shaped and more symmetrical most often with a right tail.

    My guess is that most readers of this blog have never experienced a market under duress. It’s something their grand-parents talked about. But in some isolated markets such as rural acreage in the Gulf Islands it still happens today.

    Looking at the data for the last six months we are still well away from a normal market as the graph for the middle income market ($700,000 to $900,000) continues to collapse. As I said before real estate isn’t measured by a stop watch but by a calendar.

  174. Thoughts:
    According to banking best practices, given the OSFI’s notice to the big five, these lending institutions are already requiring individuals with 20% down to qualify on a 2% stress test based on the BoC’s prime. I know this to be true, and was being conducted prior to the last interest rate increase in September. Therefore, I am curious with this practice already being undertaken + the two interest rate increases is potentially already having an effect on the market (DOM etc.). It will be even more interesting with the OSFI rules become official (Fall 2017), with the highly likely prediction of at least one more interest rate hike before January 2018; added to the fact that those who locked in during the July interest rate hike 120 days will soon be up. Definitely an interesting time to “wait and see” …

  175. Finally, after stating in the Spring, that the average days on market would be increasing we are now 60 percent higher or almost 30 days for September.

    Isn’t this just the normal seasonal increase in DOM?

    Leo didn’t you link a few posts back to stats of a graph on the seasonal cycle of DOM?

  176. Some of the comments about my localness/non-localness seem pretty quaint to me in the context of what Vancouver is like.

    It has nothing to do with you specifically, it’s blog minutia.

    Indeed. The blog has gone round and round on how much market impact there is from American buyers, other foreign buyers – particularly Chinese, Alberta buyers, Vancouver buyers, and rest-of-Canada buyers.

    Not unwelcoming I hope! We’ll make sure you get issued your “local card” ASAP. 🙂

  177. Finally, after stating in the Spring, that the average days on market would be increasing we are now 60 percent higher or almost 30 days for September. That trend is rolling us back to pre oil collapse days before the housing market surged with displaced oil patch workers and executives.

    That means fewer and fewer bidding wars on houses. Once we get a few more days on market that will signal an end to blind auctions. Then I’m guessing that our average days on market will likely skyrocket into the mid 40’s.

    And that’s cool. More time to look around and make a well informed buying decision. At this point I’m not anticipating that the average DOM will go past 60 days. That most likely means there are not going to be any great deals to be had in Oak Bay. Sorry Newbie you’re going to have to pay full or near full price. That by the way is just God getting back at the oil company executives for sticking a pipe down the Earth’s ass.

    But there will be plenty of opportunities in other areas with properties that are less desirable than the mainstream.

    Newbie have you ever thought about rolling acreage with apple trees and honey bees and snow white turtle doves?

    https://youtu.be/GxtZpFl3pPM

  178. The slashes keep on rolling in. Might as well start in the Uplands where this rich dude at 2950 Lansdowne Rd is on slash #2 for $300K for a total of $500K. I wonder is he’s an oil executive from Calgary ? 😉

    2437 Camelot Rd in Arbutus/Golden Head on slash #2 for a $75K total.

    A couple of Cordova Bay slashes at 5255 Westover Pl for $50K.

    1037 Symphony Pl slashed $90K.

    Another St. Mike’s/Mt. Tolmie place at 1671 Knight Ave slashed $20K, like many of the others in the area.

  179. Some of the comments about my localness/non-localness seem pretty quaint to me in the context of what Vancouver is like. I’ve paid income tax in Canada on all of my accumulated capital, and have a job in Victoria which is a bar a huge segment of the Vancouver market fails to meet. Within my personal network I know oil and gas executives whose primary residence is in Calgary who own property in Victoria

    Newbie, I didn’t read any comments that suggested otherwise?

    Back in the spring of 2016 we had a large influx of oil and gas employees and executives from Alberta. In the time span of a less than a month prices shot up by a hundred thousand dollars as many had large severance packages. Once the lay 0ffs in the Oil fields tapered off so did our house prices.

  180. Most people will have a line of credit and a credit card with the same lending institution.

    They will use their credit cards and if they can’t pay off the card in a reasonable period of time they will transfer the balance to their home equity line of credit.

    And presto, credit card debt in the country magically remains the same at 15 percent.

    In the days of political incorrectness this was known as kiting. Now it has been legitimized by the banks as creative financing.

  181. Some of the comments about my localness/non-localness seem pretty quaint to me in the context of what Vancouver is like.

    It has nothing to do with you specifically, it’s blog minutia.

  182. Thanks for all the feedback/tips everyone.

    I’m interested to see how the OSFI B-20 rules play out, rising interest rates and whatever the GreenDP ends up doing on dark money in the housing market, years of living in Vancouver has killed any illusion I may have had that visible bearish changes will actually result in lower prices, but maybe this time is different, Victoria’s market seems to be much more influenced by domestic factors.

    One thing to consider about the HELOC market is that higher than 65% LTV is available from institutions not regulated by OSFI – take a look at Capital Direct Income Trust One’s financial statements if you have a chance, generally up to 80% LTV and average rates of 8%.

    Some of the comments about my localness/non-localness seem pretty quaint to me in the context of what Vancouver is like. I’ve paid income tax in Canada on all of my accumulated capital, and have a job in Victoria which is a bar a huge segment of the Vancouver market fails to meet. Within my personal network I know oil and gas executives whose primary residence is in Calgary who own property in Victoria.

  183. I agree with totoro that mortgage debt is probably the biggest deal, especially for recent purchasers. Most of these folks won’t even have a HELOC as they have not yet built up the equity.

    Are you suggesting that the stress tests for new home owners has no validity? If that’s what you’re implying then I disagree with you.

    To the best of my knowledge when a new home owner buys a property the lender is willing to set up a home equity line of credit with the mortgage for free. That will cost you another $800 or more it you try to set one up later. So as the home owner pays down the mortgage the amount of the line of credit increases.

    This is a good thing for the bank as it essentially means the home owner is locked into that bank. They can’t go elsewhere for a second mortgage as the global limit on their line of credit maximises their available credit. After a couple of years the home owner will build up enough equity so that they can use that equity to buy a rental condo.

    Can you see what just happened to their asset to liability ratio when they used their equity to buy more things? And we wonder how people can buy properties at 8 or 10 times the average income.

  184. Debt, as always, continued to go up

    This would happen in a growing economy even if debt stayed at a constant ratio with disposable income. The concern is not debt going up it is that debt is going up FASTER than disposable income

  185. Net worth is increasing faster than debt btw

    Net worth of Canadians went down last month. Debt, as always, continued to go up.

  186. Most financial innovation is crap, but HELOCS are actually a brilliant and useful tool for the consumer. But like all debt they are potentially dangerous.

    I agree with totoro that mortgage debt is probably the biggest deal, especially for recent purchasers. Most of these folks won’t even have a HELOC as they have not yet built up the equity.

    Credit card debt has not increased at an outsize pace. From the report cited below:

    “credit cards have consistently represented around 15 percent of non-mortgage consumer debt”

    this means credit card debt has increased only in line with the increase in other debt.

    In the comparison with the US section there is this interesting fact:

    “It is worth noting here that the United States is one of the only high-income countries with no LTV ratio restrictions or debt service coverage limitations on home equity borrowing.”

    Kind of different than here.

  187. Most of the older character style homes in Oak Bay don’t have functional garages as they have been enclosed to form more living space. So while it may be against the bylaws that Totoro speaks about, in practice it’s common.

    And if you should ever get a fine for doing so, I would suggest you take a picture of the mayor and city councillors houses and where they park their cars. Bylaws are only effective if they are enforced.

  188. Totoro you are a very fortunate person.

    Any person who has ever found themselves in debt can attest how that debt seems to explode when you start missing payments.

    All that 65% limit means is that you now have to get mortgage financing from non prime lenders that charge higher interest rates at 12 and 13% to pay off your credit card debts of 18 and 19%.

    If you’re single, as I was at the time, it was easier to cut expenses to the bone, and get the debt under control and then after several years eliminate it altogether.

    Today that debt bomb is massive and if you have a family it’s unlikely you could reduce the debt fast enough at the speed it accumulates at higher interest rates without hiring counselors to negotiate with your creditors.

    There are some people that can manage higher debt levels, but for the ordinary family if you owe more than four times your combined gross salaries then you should be hacking seriously away at that debt -right now.

    Once again it isn’t the limitation on the HELOC that is going to save people from a debt bomb going off. It’s how they control that debt. And from my experience in doing a lot of debt consolidation appraisals, it isn’t new home owners but those that have owned for 10, 15 and 20 years. They’ve borrowed too much and they no longer have the means to reduce that debt load.

    .

  189. There is no “debt sorcery” that I’m aware of and there are limits on borrowing on home equity.

    I think this is a bit naive. Look at what happened with the introduction of the stress test for insured mortgages last year. Suddenly there was a massive drop in people taking insured mortgages and they now bought with 20% down. This indicates that those people couldn’t pass the stress test, which means they were highly leveraged. Also some of those people surely got some extra money from parents and such, but many others also borrowed it from secondary or private lenders (as seen in the huge increase in volumes from private lenders). That I would say is the definition of “debt sorcery”. They cobbled together different begged borrowed or stolen sources to bypass the intent of the new regulations, which was to protect them.

    If a large number of people were not on the raggedy edge, the stress test would have hardly been felt. But it was: http://www.cbc.ca/news/business/cmhc-mortgage-housing-1.4137986

  190. How many times do you see customers pull out multiple credit cards in order to pay for something as mundane as cigarettes or groceries, because the cards are all maxed out?

    Not to say it does not happen, but not that common ime.

    The money crowd isn’t gauche enough to leave theirs parked in driveways

    You aren’t allowed in OB – against the bylaws.

    I think of a relative in Vancouver whose debt sorcery appears to match the resale value of his home (equity withdrawal and etc. roughly equivalent to mkt value $2.3M), and wonder how his situation gibes

    I don’t understand your use of the word gibe, but it would be extremely unusual for a home owner who owns a 2.3 million dollar home to have 2.3 million in debt if they don’t have other assets. There is no “debt sorcery” that I’m aware of and there are limits on borrowing on home equity. Credit cards are something else. If what you are saying is that he has zero net worth, that would also be very unusual as a homeowner in a market that continues to rise. Do you know this for a fact?

    Everybody is maxing out their credit card.

    Objectively untrue. The stats show that mortgage debt growth due to rising prices, not credit cards, is largely driving the increase in Canadian household debt and also the increase in net worth. Net worth is increasing faster than debt btw. The average Canadian has around $3000 in credit card debt and half pay the entire balance off each month.

    The biggest issue is the level of mortgage debt in Canada among those who have purchased recently. If interest rates rise then there will be people who will have difficulty paying their consumer credit and their mortgage if they have a variable rate that do not currently have a problem doing this.

  191. @ Leo: Thanks for the June 2017 .gov report (below) — well written, with good observations. This should be required reading.

    Lacking expertise, I think of a relative in Vancouver whose debt sorcery appears to match the resale value of his home (equity withdrawal and etc. roughly equivalent to mkt value $2.3M), and wonder how his situation gibes: “In 2012, the Office of the Superintendent of Financial Institutions (OSFI) issued its Residential Mortgage Underwriting Practices and Procedures Guideline (B-20 Guideline), which introduced stricter underwriting rules and capped the loan-to-value (LTV) ratio for HELOCs sold by federally regulated lenders at 65 percent. By restricting homeowners’ ability to leverage their residential property through HELOCs, the Guideline may have helped moderate market growth.” (p.4)

    Yeesh: “HELOCs offer relatively low interest rates and convenient access to large amounts of revolving credit, which may encourage some consumers to use their home equity to fund a lifestyle they cannot afford… At a time when consumers are carrying record amounts of debt, the persistence of HELOC debt may put further stress on the financial well-being of Canadian households. High levels of consumer debt can make it more difficult for families to handle unforeseen life events such as a loss of income or unanticipated expenses. The longer consumers carry debt burdens, the higher the probability that they will struggle in the event of a negative macroeconomic event (e.g., oil price shock, economic recession or interest rate hike).” (p.7)

    Yikes: “The expansion of the HELOC market has been a key driver behind the sizeable increase in household debt in Canada since the 2000s. Record levels of debt have increased the Canadian economy’s vulnerability to a lengthier and more severe downturn than would be expected if household balance sheets were stronger. Highly indebted households tend to reduce their spending disproportionately more than less indebted households in response to an economic shock (e.g., oil price collapse). When more severely indebted households cut back, it reduces demand for a range of consumer goods (e.g., automobiles, furniture), which can increase the impact of the shock by curtailing investments and increasing unemployment.” (p. 10)

    All hands, brace for impact…

  192. Canadians in general are childlike when it comes to personal finance

    Agreed. Would love to dig deep into personal finance as well on a blog, but no additional time. Also there are more resources on that front already available than there are on Victoria real estate.

    People are drowning in it. Has anybody here posted the charts for Canadian HELOCs?

    Possibly. Which ones? This report has a pretty good summary of the situation in Canada right now with HELOCs and the danger they can pose for consumers and the economy. https://www.canada.ca/content/dam/fcac-acfc/documents/programs/research-surveys-studies-reports/home-equity-lines-credit-trends-issues.pdf

    Good rant! At some point all this is going to come back to bite us in the ass. The tricky thing is predicting when.

  193. You can see it when you drive through the Western Communities. Boats, expensive trucks and cars parked in their driveways. It’s a community with a lot of wealth to spend.

    What do you see in Victoria. Older cars in need of repairs, parked bumper to bumper down the streets. I suspect it’s because if you buy in Victoria a larger percentage of your income goes to the mortgage and there just isn’t much left over for toys.

    I see an excess of Audis, beamers and Mercedes in Vic and Oak Bay. Admittedly less jacked up F250s. As for floating toys – the money crowd isn’t gauche enough to leave theirs parked in driveways. Theirs are parked down at RVYC.

  194. “There comes a time it all has to be paid”

    I suppose there are some people who don’t believe this. And they have an argument, of sorts. Despite two recent hikes, the BoC rate is still below the inflation rate, which means that, in theory, it pays to borrow money and invest it in real assets such as houses. Houses, one can expect, will appreciate with the rate of inflation, in which case, borrowing really does pay!

    Conversely, with the BoC aiming to create a 2% inflation rate, while banks and bonds pay four fifths of flip all on your money, saving certainly doesn’t pay. Or at least, saving cash hasn’t paid for a good many years now.

    But will the BoC do what Greenspan’s Fed did in 2005/6, which was to raise rates by 5% over a few months? If so, a lot of geniuses with big debts are gonna be screwed.

  195. I’m not “playing extremes.” It’s nonsensical to suggest that responsible behavior and a fulfilling life are somehow mutually exclusive. Both are possible with self-control and much tougher restriction on credit issuance, which otherwise feeds culture of instant gratification without moderation and vision.

    I don’t follow this blog consistently, but imagine that there has been discussion about the fact that we’re in a very dangerous environment economically because all levels of society are sacrificing their future on a pile of debt. Leadership seems totally absent. It’s embarrassing that we elect some of the people in office, but they merely pursue the mandate they’re given: “Nobody promised you responsible government; they only promised you representative government.” (The biggest bubble is in government; I digress.) Canadians in general are childlike when it comes to personal finance. Personal debt per capita is soaring, not including mortgage, but it doesn’t have to be. Compare:

    ~ Friend takes out biggest mortgage possible in order to build big house close to downtown with all the accoutrements, has 3 beautiful children, lives very well for a few years, and then the job starts to go sour, bills pile up, marriage falls apart, and now he’s having to sell the dream house and 2 cars, share custody, ride the bus and live in a basement suite;

    ~ Co-worker saves his beans for a few years, moves up the coast to start his own business, debt-free, pays cash up front for a well-maintained fixer-upper that cost a quarter of what you’d pay for something comparable in the bubble zones, then starts a family, has a bright, financially-secure future and sleeps at night.

    Credit is ubiquitous, which is why most people take it for granted. People are drowning in it. Has anybody here posted the charts for Canadian HELOCs? How many times do you see customers pull out multiple credit cards in order to pay for something as mundane as cigarettes or groceries, because the cards are all maxed out? Trouble is brewing. There comes a time it all has to be paid, and the numbers have grown so ridiculous that the destination seems to be some kind of collapse, all because the masses wanted It All without having to pay for it… /endofrant

  196. Thanks for the post Leo. I agree it will take a long time to get to some sort of normal but only if continued at this pace. The pace can change fast, as we saw the it accelerate rapidly in 2016. From what I understand, it can change just as fast going the other way.

    Agreed. Although the really rapid shocks tend to only happen due to government intervention or other outside factors. Left to its own devices, the market tends to move quite slowly. For example Vancouver’s foreign buyers tax, Toronto regulations and the financial crisis all led to sharp and rapid corrections in the market (some followed by equally sharp bounce backs). Meanwhile a market with no significant changes to external factors drifted lazily downwards from 2010 to 2013 and very slowly regained strength over the next 2.5 years before being sparked by Vancouver spillover and panicked locals.

  197. Or a wonderful-but-not-trophy wife, nice children, regular car, no boat, six weeks’ vacation, in an older house situated on land worth $1M and growing.

  198. As long as we are playing a game of extremes.

    Which would you rather be a father with a beautiful wife, lovely children, a vintage car, sport boat, six weeks vacations and a new house in Bear Mountain.

    or

    A lonely bitter old man than wears two sweaters to bed each night as he is can’t afford to turn the heat on in his 1915 character paid off house in Oak Bay.

  199. Leo S – It’s gonna take a long time of this gradual weakening to get back to some semblance of normal selection

    Thanks for the post Leo. I agree it will take a long time to get to some sort of normal but only if continued at this pace. The pace can change fast, as we saw the it accelerate rapidly in 2016. From what I understand, it can change just as fast going the other way.

  200. How do month to date detached sales compare vs. last year? I’m currently in the process of relocating from Vancouver to Victoria with my family.

    Welcome to Victoria. Despite a rather buyer hostile market from our point of view, it’s a step up from Vancouver.

    Also a good idea to rent for a bit to look around. With inventory building and OSFI possibly taking a bite out of the market that seems like a relatively safe bet. If you don’t already have access to this, you can sign up at the top right of the page to monitor the sales of the sub market you are interested in.

    To date we have 161 detached sales in September vs 226 the same days last year. So detached sales down 29%

  201. @ John Dollar re: “It’s new housing that drives a marketplace by creating jobs and wealth in that community.”

    Yeah, like ditch-digging, government boondoggles and war profiteering “create wealth.” Oh, for the good old days of capital formation and a real productive economy…

    Continuing: “You can see it when you drive through the Western Communities. Boats, expensive trucks and cars parked in their driveways. It’s a community with a lot of wealth to spend.”

    Oh, my god. You need to see what’s happening in bigger centers like Calgary or Edmonton or Brampton or Winnipeg or Toronto. Over the past 25 years, mile upon mile of new lego-block homes and shoebox apartments were thrown up, and everybody maxed out the credit card to build new decks and fill the house with new furniture and appliances and cabinets and granite countertops and entertainment centers and fill the driveways with big trucks and SUVs and boats and BBQs and et cetera, and now thousands upon thousands of these same people are in bankruptcy, because the whole lifestyle was built upon an unholy, irresponsible mountain of DEBT, DEBT, DEBT, DEBT.

    Everybody is maxing out their credit card. The whole modern real estate industry is geared toward it. Some of my co-workers have only been the work force for a few years, but oh boy, they’ve gotta game that mortgage as far as it will go, tacking on everything from vacations to weddings…

  202. You can see it when you drive through the Western Communities. Boats, expensive trucks and cars parked in their driveways. It’s a community with a lot of wealth to spend.

    I see people who couldn’t afford a house in the core, so are compensating by buying toys they (also) can’t afford.

    What do you see in Victoria. Older cars in need of repairs, parked bumper to bumper down the streets. I suspect it’s because if you buy in Victoria a larger percentage of your income goes to the mortgage and there just isn’t much left over for toys.

    Parking can be a problem, because the renters who pay our mortgages need to park somewhere.

    You’re right, there isn’t much left over for toys. But that’s OK. For what we lack in toys we will more than make up for in net worth.

  203. Hi Newbie;
    Keep my info handy, I have a home within your price range that I am considering selling early spring. It is on the border of East Fairfield and Oak Bay on a quiet cul-de-sac.

  204. It’s new housing that drives a marketplace by creating jobs and wealth in that community.

    In the last 12 months for all types of properties

    287 new homes sales in the Victoria Core
    455 new home sale in the Western Communities
    75 in the Saanich Peninsula.

    You can see it when you drive through the Western Communities. Boats, expensive trucks and cars parked in their driveways. It’s a community with a lot of wealth to spend.

    What do you see in Victoria. Older cars in need of repairs, parked bumper to bumper down the streets. I suspect it’s because if you buy in Victoria a larger percentage of your income goes to the mortgage and there just isn’t much left over for toys.

  205. Buyers from Colwood tend not to be looking in the $1.2M-range in Victoria. That’s how a buyer’s location can differently impact the market

    I don’t agree, there are wealthy people in Colwood. Just in Colwood in the last year there have been a dozen sales over a million. In the Westshore close to 90 properties over a million have sold in the last 12 months. That’s at least 90 households that sold and now, if they wanted to, – buy in Victoria.

    This has always been a prejudice of a small group of narrow minded Victorians. Besides someone has to be buying the houses in Victoria since buyers from out of town are well off last years numbers.

    Out of town buyers be it Vancouverites, Mainland Chinese or people from Colwood is just a stratagem to get locals to buy. If it gets prospective buyers off the fence to buy – why not play it.

  206. ICYMI, there’s some serious hurt comin’ down the tracks. 😉

    Canada flagged as hidden $14 trillion credit bubble stokes global crisis fears

    “The world’s top financial watchdog has uncovered US$14 trillion of global dollar debt hidden in derivatives and swap contracts, a startling sum that doubles the underlying levels of offshore dollar credit in the international system.

    The scale of this lending greatly increases the risk of a future funding crisis if inflation ever forces the U.S. Federal Reserve to tighten in earnest and drain worldwide liquidity, potentially triggering a dollar surge.

    A forensic study by the Bank for International Settlements (BIS) says enormous liabilities have accrued through FX swaps, currency swaps, and “forwards.” The data is tucked away in the “footnotes” of bank reports. “Contracts worth tens of trillions of dollars stand open and trillions change hands daily. Yet one cannot find these amounts on balance sheets. This debt is, in effect, missing,” said the BIS analysis, written by the team under Claudio Borio, the chief economist.

    The BIS warned that margin debt used on equity markets exceeds the dotcom extreme in 2000. ”

    http://business.financialpost.com/news/economy/credit-bubble

  207. First time buyers from Colwood with budget of 1.2 M are essentially a non-existent breed. So buyer from Colwood would be selling a house so they would be both adding to and subtracting from inventory.

    Victoria has always had sellers leaving and buyers from away, so it only really makes a difference if the numbers are trending up or down from historic norms

  208. No matter if the buyer is from Vancouver or Colwood, the impact on the market is the same.

    Buyers from Colwood tend not to be looking in the $1.2M-range in Victoria. That’s how a buyer’s location can differently impact the market.

    You can’t tell if the money came from Colwood or Vancouver as it’s the same color as ours.

    Same colour, but different quantity.

  209. Ah, another “local buyer” from Vancouver, according to the VREB

    No matter if the buyer is from Vancouver or Colwood, the impact on the market is the same. You can’t tell if the money came from Colwood or Vancouver as it’s the same color as ours.

    What’s important is if sales are increasing or decreasing relative to new listings.

  210. We’ve signed a 1-year lease to rent a house in south Oak Bay, want to get a feel for the neighborhoods and the market before buying.

    Ah, another “local buyer” from Vancouver, according to the VREB.

  211. Welcome to Victoria Newbie

    Good call IMO to rent for a year first. Lots of great sub-neighbourhoods in the swath of area you are looking at. In terms of finding the daily requirements of living within walking distance OB Avenue is better than Cook Street Village )mostly coffe shops plus the bomb-shelter grocery store. That said I prefer Fairfield to South Oak Bay for its proximity to downtown. I find the SFH options in James Bay a little limiting. When we were looking they tended to be two out of the following three – expensive, tiny, old.

    The only downsides to this southernmost fringe of Victoria and Oak Bay are

    1) It never gets that warm in summer thanks to the winds off the ocean
    2) It’s convenient to lots of things but it is one of the slowest places to get out of town from if you are heading up island on a regular basis

  212. For those of us trying to get in hopefully OSFI comes out with some info and provided they stick with their proposal for the b-20 guideline change we may see some heavier price reduction. Otherwise Duncan here I come haha.

  213. Looks like land prices continue to drop in Mt. Doug/Golden Head. A 1/4 acre lot slashed $20K at C Malton Ave.

    The once hot townhouse market seems to be cooling too. 3228 Wicklow St , #12 slashed $25K to $499K.

  214. Thanks Barrister.

    We’ve signed a 1-year lease to rent a house in south Oak Bay, want to get a feel for the neighborhoods and the market before buying.

    Our general thinking is to live somewhere between James Bay and south Oak Bay. Looking for a walkable area with coffee shops, grocery stores, parks that don’t require jumping in a car to get to. We like the Cook Street village are as well as Oak Bay village.

    We’ve rented in Vancouver but it’s nice to move to a place where we can actually afford to buy and have real options (our budget is up to ~1.2m which didn’t go very far in Vancouver)

  215. Newbie:

    Welcome to the island. Just remember that right hand turn signals, as often as not, mean a left turn. Stop signs are more just a suggestion.Chaining a tiger in your flower bed has been proven effective against deer and bylaw inspectors.

    What neighbourhood are you looking in; a lot of people on this blog can give you some great inside tips.

  216. With inventory building it seems like perhaps house hunters will be rewarded by waiting a bit longer if they can restrain their house buying urges.
    It’s clear that the years of explosive price increases are behind us for a while. So no need to “buy now before you are priced out forever”.

    House prices may or may not be falling in Victoria so far. But even if prices just level out house hunters may be rewarded with more inventory and less competition than in the last few years.

  217. Thank you for this data, very interesting. How do month to date detached sales compare vs. last year?

    I’m currently in the process of relocating from Vancouver to Victoria with my family.

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