Domestic Speculators – Good or bad?
The role of speculators in the local market has been discussed here a lot over the years, and it has risen to provincial attention in the last year with the NDP mentioning “speculators” 11 times in their 2017 platform. Thing is they were mostly talking about foreign speculators, which are much easier for people to get outraged about. In the recent throne speech the Lt. Governor said that
Safe, decent housing is a right that is under threat by speculators, domestic and foreign, who seek windfall profits at the expense of people who work, live and pay taxes in B.C.
Clearly there is something coming in the budget 5 days from now to do with speculators, but what and targeting whom? The reality is there is a lot more real estate purchased for investment purposes by locals than by foreign owners, with one out of five buyers in Victoria indicating they are purchasing a second (or third or fourth) home. How should we feel about these buyers? Are they house hoarders that are distorting the owner market for everyone else? Or are they saints providing much needed rental housing?
Some believe that all real estate purchases outside of a primary investment are speculative, but I think this is a hard argument to make. To me the line is whether the investment makes sense without any appreciation of value. Anyone investing in rental real estate without a reasonable return (negative cash flow is the big red flag here) is in my mind a speculator since they are speculating on house prices always increasing in value. Given how hard it is to find a rental in Victoria that makes sense from a yield perspective, this likely describes a large percentage of the landlords in this city.
This is unlikely to be the type of speculators that the government is targeting though. It tends to be bad politics to go after a large segment of the voting public, hence in the platform they only said they wanted to target “people who buy property in BC but don’t live or work here and leave their property empty”. If that’s what they’re still thinking, it’s a very small number of properties, will be difficult to enforce, and likely have no significant effect on the market.
Thus it begs the question: which speculators are actually harmful to the market? All of them? Only the flippers? Only the ones that leave their properties empty?
Personally I have no problem with people buying properties to rent out provided they are good landlords. While it increases demand in the ownership market, it provides rental stock which we desperately need. Whether those people are making money or subsidizing the renters makes no difference to me. Also from a personal liberty standpoint, it feels wrong to crack down on an investment option that is open to people uncomfortable with the stock market.
However this kind of investment can also be a problem, specifically when:
- Holding periods are short. During times of rapid price appreciation, investors tend to see dollar signs and sell their places, kicking out renters in the process. In that case they are not providing useful rental accommodation which needs to be stable.
- Vacation and short term rentals proliferate. I think residential real estate should not be re-purposed as distributed hotels. I hope more municipalities follow Victoria’s lead and crack down on this no matter how convenient it might be for a traveler.
- Properties are left empty. I believe this is pretty rare just because few investors can carry properties without some income, but in some cases in Vancouver we have evidence of empty homes being more common.
In addition to the above, there is evidence that speculation amplifies housing price swings, with higher levels leading to higher highs and deeper lows in house prices. In that case increased speculation could hurt normal homeowners just by driving up prices and then leading to larger declines that people may be forced to sell into.
However I suspect that we won’t see anything significant targeting local speculation in the budget. Vacation rentals won’t be banned after BC just inked a deal to skim some money off that industry. An empty homes tax is a nightmare to administrate, and will be easy to game. The easiest to enforce is a flipper tax, with short holding periods being taxed, but it seems like a minor issue at best as far as house prices are concerned.
What do you think? Is domestic speculation a big cause of our elevated house prices? If so what if anything should be done about it?
@ Josh, those with kids and pets want to rent houses not condos and there aren’t many professional outfits renting houses. Next up would be townhouse same there. So then you go vintage condos because they are larger. But those are more prone to needing renovations. Anyway, the point being is this market is not easy to find stable rentals either.
Monday #s: https://househuntvictoria.ca/latest
So now hawk you may buy at just a 10% correction. So 2017 prices. Lol. Good job.
I meant professionally managed ones that don’t have one family owning the whole thing. Like Starlight managed buildings.
I realize you have to take what you can get in a rental market like this, but it’s not as if the only solution to renoviction is buying.
These wise old rules of thumb don’t really apply to the current market IMO. Things like “if you’re staying in one place for 7 years, buy” and “don’t time your buy, just get in early and sit on it” make sense in markets that are remotely close to balanced. For high earners, they might still make sense, but let’s not pretend that buying is even an option for people below the 80th percentile, or virtually anyone with debt (which is most).
I’m hoping once I buy that I’ll stop coming here. I’d like ownership to not be so nerve-racking, but I can’t imagine that being the case.
“Dave
Hawk is not house hunting he is market bashing. He has not interested in buying until he sees a 30 to 50% haircut like 1981.”
Again Gwac, you’re clueless and not a house hunter, just a house pumper with zero substance to your posts. AKA bear basher.
I’m predicting the obvious based on a debt bomb of epic proportions. Wether it’s 30, 50, or 10% I will be buying eventually and the market will dictate that decision, I have an open timeline.
You call it market bashing because you know damn well it has the high odds of being 30 to 50% and it scares the crap out of you. End of story.
LeoS, thanks for removing the post.
“Not a lot to argue with this article. Unfortunately no easy answer without sending this Province into a deep recession.”
And whose fault is that ? Many recessions have happened in the past, no one died, there were no soup kitchens, the productive found a way to work, and in the end is the only way the youth, like my kids, will get a decent shot at owning in their lifetime.
It happened for me, it happened for you Gwac, why are you being so selfish to keep painting this doomsday scenario that it would be so terrible ? Flushing out the excess debt is part of a capitalistic society. Everyone gets through it.
“Hawk you know it is strange that this blogs’ name is “house hunt” yet most of the bloggers here are homeowners (or they think). Please, just ignore them!”
Thanks Dave, I noticed that, haven’t seen one of the regulars buy a single property on here since I’ve been here the past few years neither. (Except for Dasmo building.)
99.9% of the comments are like water off a ducks back. But when wishes of death and suspected of being a child killer for not posting enough are thrown at you, and you still see the same demented narcissist thinking it’s still OK with zero apology, you do have to take a step back. I wonder where this blog will be going once prices really start going down, just like Toronto is now down 10%, buyers walking away from deals and people are seriously freaking.
This blog is better than Netflix. It is local, informative and entertaining. Lol… I don’t have Netflix or TV at home.
If you can afford and want stability, then buy. Bear or bull doesn’t matter. Money deppriates faster than we think – “Money falls 90% every thirty years”. But don’t be slaughtered by mortgage debt. 🙂 I will wait though because there are too many uncertainties: interest rate, the impact of stress test and new government policies on RE etc…
“The tension is building by the hour before Horgan’s anticipated announcements ………. Tuesday’s going to be a busy day on this blog. In the meantime, take a Valium and relax.”
How about a get together to discuss the aftermath Leo S ?
Hawk and Gwac are great! It’s like reading the funnies ! I get a good laugh at them going back and forth at each other. They remind me of that great o’l cartoon strip “Spy vs. Spy”. Sometimes the one wins, other times the other, always trying to outdo each other ! They are great, I would love to meet both of them!
The tension is building by the hour before Horgan’s anticipated announcements to cool real estate speculation. The tension is causing obvious mental stress for some frequent posters on this blog. Don’t wear out your typing fingers before Horgan’s announcement, you’ll need good typing fingers after the budget details and housing strategies are released. Tuesday’s going to be a busy day on this blog. In the meantime, take a Valium and relax.
Agreed. It’s a needed viewpoint and Hawk does post links worth reading fairly often.
Sometime in the near future reality is going to temporarily align with Hawk’s predictions. I predict Hawk will be insufferable for a while, but that will be his due for all the ribbing he has endured here.
See, the solution is simple! Why are so many renters so dumb? [sarcasm]
Until your landlord dies, his kids sell the building and the new owners more than triple the rent after renovicting everyone.
I knew it! Well, no, I wouldn’t have expected that.
Please don’t use Disqus. I know managing a forum is thankless and prone to breakage, but I hate Disqus. As much as I would like to reverse post order and have proper quote attribution, the quirks here are quickly learned. Think of it as a filter for people who have to learn the secret handshake to participate.
Wait until you have a better idea of what you really want. At the end of the day, a more sophisticated discussion board may just cause this discussion to morph into a side-forum of VibrantVictoria.
Property is hardly a job creator. Renovations create jobs but that’s hardly consistent. Investing locally can be done well, but snatching up condos and SFHs isn’t it. Quite the opposite – it prices people out of the market and causes people to hoard cash. If I wasn’t saving for a home, I would be a far better economic citizen.
Christ, that’s more than I pay in James Bay currently, and I have 960 sqft. I’ve heard some horror stories, yours included, but I’ve also heard some not-horror stories. I know someone renting a 3 bed whole SFH near Vic West for $1600.
Or just not shitty landlords… Rent in a rent only building and you won’t be renovicted. Ownership really isn’t for everyone, especially now. Scoffing at that concept is like stamping “out of touch” on your forehead.
Leo, the current setup is great. I especially love the unread-posts-in-subtle-blue feature.
I don’t think you should blow up the whole thing based on the occasional complaint. Jerry’s main problem is that he isn’t in Arizona right now.
I could move the whole commenting system to something like Disqus (example here: https://electrek.co/2018/02/18/tesla-powerpack-powerwall-intelligent-grid-nova-scotia/#disqus_thread ) which has that feature and many more,
but I’m not a big fan of making people sign up to comment. So far always went back to the simple system that has a few nice to haves and doesn’t force you to keep all the comments on their servers. Who knows maybe worth it? We’ve tried a few things with comment replies and such and always went back.
Might it be time for a one-post-per-day limit? I’m getting repetitive strain injury from scrolling past the towering column of dross.
I would happily pay a subscription fee if the site would include a feature that would enable one to ignore specific contributors.
Dasmo has it right, I only catch up with comments periodically. Usually Tyler Durden manages not to punch himself in the face in the meantime, but not always.
In this case Hawk is right that was overboard. Removed.
Yup. Some people are so far down the rabbit hole they lost all perspective.
The problems you describe are because of speculation in real estate and amateur landlords carrying money losing rentals they want to unload when there’s a gain to be made. If we had a proper rental industry renting would be just as stable as homeownership. It is in other countries.
https://www.theglobeandmail.com/opinion/youth-pay-the-price-for-british-columbias-real-estate-crisis/article38018591/
Not a lot to argue with this article. Unfortunately no easy answer without sending this Province into a deep recession. That may solve the issue but create a equally bigger one. Our economy is too focused on real estate and that is the real problem that needs to be fixed.
Dave
Hawk is not house hunting he is market bashing. He has not interested in buying until he sees a 30 to 50% haircut like 1981.
Holy moly this wind is getting people riled up this weekend. 🙂
That was suggested to me last week. I don’t think it would work. Anyway gwac and Hawk are both the same person. And both russian bots.
I think the listing at $1M really woke people up to how ridiculous prices were getting here. After that it really slowed down.
Wasn’t this group started by a bear?
Who bought a house a few years after.
Intro
Lol. Thanks for the laugh.
Hawk you know it is strange that this blogs’ name is “house hunt” yet most of the bloggers here are homeowners (or they think). Please, just ignore them!
Hawk can take a hike if he wants to. I wouldn’t cry. Some other chump will replace him, just as he replaced info.
The Victoria market eventually destroys uber-bears.
I would also like to add that we need Hawk. Without him the spectrum would be incomplete. Considering our loss of info, I’m glad Hawk has the stubbornness (or madness) to stick around and stay on target. Nothing is worse than everyone agreeing with each other and all getting along. Leave the unreal to the real world. I’d rather hear with hat people really think. Areas of free speech are getting rare so I personally appreciate where Leo’s line is.
That’s the spirit LF!
It’s hard to say. Antiseptic is boring. Fight club is lame. Middle somewhere? But my middle isn’t your middle, isn’t someone else’s middle. Ahh, eff it then. I do find Hawk-n-Gwac hilarious, though.
I can’t stand the Empress. And the food at Bengal was second rate, but the odd mouse scurrying across the floor made for a memorable experience.
Time for a drink. I hate Mondays.
I’m kinda with Introvert on that one. She is right, this is fight club. Don’t complain if you get punched in the face!
https://youtu.be/_sEqRyRI8Yg
For me, the answer is quite possibly.
Also, since we’re all anonymous here we are freer to be provocative and blunt at times. I regard that as a feature, not a bug. It makes for more lively and entertaining discussion.
If Cynic and Local Fool wish to discuss real estate in a more sanitized environment I recommend doing so on a lunch date at the Empress.
Or scroll past it.
Local Fool, one person’s “content” is another person’s drivel.
True I also think a lot of good is going on in Vic. It can be bigger and better. With what I do more direct flights are better. Success is good but it comes with a price. The successful super livable cities are expensive to buy in. It’s supply and demand. Most of Canada’s land base is hell, then there is purgatory like Alberta, and livable like Calgary and then there is paradise (with zombies mind you) like Victoria! On a global stage it’s special. So it ain’t ever going to be cheap. Those days are over officially….
this blog is better than netflix this weekend. Be careful for Leo is gonna start charging 12.99/month.
Hawk –
Removed- not productive - adminI didn’t accuse Hawk of being a child killer; I merely wondered aloud. The start of Hawk’s Christmas hiatus matched up pretty well.
Also, we’re all anonymous here, so Hawk sustained no harm.
Yeah, we have friends that rent out part of their home. They got new tenants roughly a year ago and reported the same thing. It was a small 1-bedroom basement suite (although pretty nice) and they had professional couples desperate for a place after getting sale-evicted.
Not sure what the current situation is, though, and whether the cooling in the housing market has trickled down to the rental market. It is too bad the new UVic housing will take 2 years to build. I think we could use the pressure relief right now.
IT,
Mod response in this site is not a good measure of the worthiness of the comment. Leo creates amazing content and is a great analyzer, but I’ve seen numerous comments that border on shocking make it through, even after people complain. I actually think that comments like that or ones that are prima facie tasteless should be addressed at times more than they are.
And I agree with Cynic – saying you’re “tired of the rhetoric” while trying to one-up them is just senseless. Would you actually say that to the man using the “Hawk” pseudonym in real life, to his face, from across the table? If you don’t like what people are saying, say something worthwhile that steers it in a different direction.
Hawk, neither you or anyone else needs to “reevaluate” anything. I don’t know if you’ve noticed, but the people complaining the most about the content tend to be the ones that provide little to none of it themselves.
Where is the child killer post?
I think Leo will check in after the kids are to bed and clean this mess up….
I’ve been on many stock chat boards that have gotten very nasty wether bull or bear,but never ever have they ever wished someone dead or accused a poster of being a child killer. That’s just fucking sick and demented as well as those who actually approve of it and regulars who sit back and say nothing.
Most blogs remove those posts but LeoS must have moved the bar much lower to scum level. I’ll have to reevaluate my posting on here as there are some very sick puppies out there.
PS Luke, your shortest post ever. You should adopt that style.
Also, if the moderator felt it was too much or inappropriate, it could have been flagged as such. It seems there must have been something worth sharing if it was allowed.
Cynic, just taking Hawk and Number6’s trolling to the next obvious level. If neither of them can deliver their thoughts or ideas without calling someone stupid, lowest common denominator, boasting about their own intellect, etc, etc, etc I see no harm in wishful pining. Seems as though I’m not the only one growing tired of the rhetoric. Thanks for the suggestion though.
Islandtransplant,
Might I suggest next time you think about posting something you back away from the keyboard and keep your thoughts to yourself.
Asinine, disturbing comments like yours add nothing of value to the discussion.
I do worry about first time buyers if there is a major drop in real estate prices.Sitting in a house that is underwater while having to loss years of savings if for some reason you have to sell can be devastating.
Any major correction would wipe out the equity of most first time buyers over the last two or three years. For young buyers divorce or job loss are the major causes of being forced to sell.
Average Commenter
That was disturbing.
Hope is a powerful thing.
When that happens, most of us will just yawn and carry on. Because most homeowners don’t treat their primary residence like a stock.
Hawk’s situation is a great example of what can happen if you do.
““If the goal is freedom from worry and work at an age you can enjoy it, real estate my not be the right path. Especially now when costs are extreme and historic. Nobody needs to own, nor be in debt, to have a home. That’s where you live with the ones you care about. It’s where the dog sleeps.”
I don’t know who said that, but they’re obviously significantly detached from the rental market in Victoria or are a complete imbecile.
I rented from 2010-2016, a 2br in a wood frame construction condo in Colwood. $1200/mo and my rent never changed. I decided to buy last year because of reasons, but I had a good relationship with my landlady so I offered to help her rent it out(I hosted the open house, she knew nothing about the place, I hadn’t even seen her since the day we moved in – I just mailed her checks every year). She put the rental on the market at $1500/mo and had an open house. We had over 50 people come through in two hours. Person after person was complaining that they were being evicted out due to the sale of their home or the move in of their landlord’s family. Despite the 20% increase in rent there were a half dozen people that had their checkbooks out asking to make a deposit, one even offered $1700/mo if the landlady signed right there.
If you want any certainty you do need to own. Otherwise you’re on the edge of homelessness at the whim of a landlord.
I know someone posted an article about hudson one earlier. The last building they finished was rented out, entirely, in a single day. They had line ups around the block. I have a friend that lives in one of their new buildings and pays $1700/mo for 600sq ft. It is way cheaper then buying a comparable condo. But just cause you have income doesn’t mean you have leverage in victoria right now. Especially when your backup plan is literally homelessness.
bonus: as I moved in to my new house I had a chat with my new next door neighbour. he was a navy guy that had just been served eviction because the house he was renting was sold.
Wowzers… who’s really the babbling one this weekend? Take a chill pill Hawk – or go smoke a fatty. We think your prescription ran out!
Hawk
Someone needs to make sure your crazy posts/claims/crashes do not go unchecked.
One last post til Tuesday’s NDP news, for all you Hawk haters but love all the long winded babbling nonsensical Luke posts (and others).
Real estate is not the end all be all to life as so many on here make it out to be. As Garth posts today it’s about freedom and happiness.
“If the goal is freedom from worry and work at an age you can enjoy it, real estate my not be the right path. Especially now when costs are extreme and historic. Nobody needs to own, nor be in debt, to have a home. That’s where you live with the ones you care about. It’s where the dog sleeps.
Emotional and financial goals are often opposed. People make decisions by rote and instinct, not always with intellect and forethought. What worked for the parents may not for the child. What others covet may be your downfall. Pick the destination, then go your own way. Proudly.”
http://www.greaterfool.ca/2018/02/18/gyow/
Don’t click on the video via Garth, it might make you tap your toe and smile. Not allowed on here. 😉
https://www.youtube.com/watch?v=pB39OJ9dX4U
“I’m starting to pine for a month ago when we thought Hawk was 6 feet in the ground. Maybe we can get a two-for and Number6 will go the same way?”
That’s a very sick post but a sign the bulls can’t handle the news that the party looks like it’s over.
Maybe there will come a time where the bulls won’t get so angry and hostile and learn to have a level headed debate. But I doubt it. Wait til the first 10% loss hits like in Toronto right now.
Gwac, you’re one twisted dude. So if you think the market is going down then why do choose to harass me like a psychotic and claim I am spreading bull when I am saying the same thing ? Get a hold of a doctor ASAP and stop posting BS against me.
You may want to recall I have said dozens of times, if you can afford to buy, then buy. If you can afford to stomach it through a 10 year down turn, then buy. If you can’t, then don’t. I couldn’t take a 10 year loss in my situation but have done just as well investing and staying liquid and mobile, so what’s your f’n problem ? Pyschosis ?
Did I say buy now. I just stated what I felt was going to happen. People can do what is good for their financial situation.No one has any clue what is really going to happen.
You are a perfect example of not being right since 1981.
Now you’re protecting the young family ? LOL My bull ? They are links to national media sources with stats. You have zero credibility to call out anyone for posting the facts.
So now you say a young couple should buy now, lose 10% which may be their down payment and go negative equity and maybe go under ? Yep, that’s a ton of bullshit alright. 😉
Thanks for saying I can influence markets. I better start a new bizz.
LF,
Angry homeowners who can’t let it go is the problem on here. They seem to be having a hard time accepting that things are changing and the massive debt bomb could blow it all up. Don’t shoot the messenger.
Canadians can’t stop using their homes as piggy banks
“It’s a rising risk factor because it’s something that reprices more rapidly than a typical mortgage pool,”
https://www.bnn.ca/canadians-can-t-stop-using-their-homes-as-piggy-banks-1.1001518
Hawk I stated that because I did not want some young family come here over the past 4 or 5years and miss buying a place because of the crap you post. Some unsuspecting person may believe your bull.
Now I believe we will see a 10% decline over the next 2 years followed by 2 to 3 years of stable market.
I wouldn’t do that to an old friend like you would Gwac, I have ethics and morals unlike yourself.
Sure Gwac, that’s why you stated your mission on here is to debunk/harrass all the posts I make of latest stats, etc. It’s in the history dude. Normal homeowners don’t do that, they just live life. You need to let it go, you might have a stroke reading things backwards all the time. Sad,
Another happy tale from hawk. Maybe you can swoop down and pick apart your friends assets as they hit bankruptcy court.
Was just going to post this earlier but Gwac got in the way. An old acquaintance is going through a very nasty foreclosure for a year now. Made big bucks,lived the good life as his business appeared to be nothing but blue sky, wife with high paying profession, kids in great colleges etc. In reality he borrowed against his large property for the last 25 years all the way up and now he’s fucked for well over $1 million plus. I assume bankruptcy and divorce are next with the tax man coming.
I can only imagine with the coming rising rates, there will be many a businessman/joe average whose done exactly the same as I know another. You would never have imagined him being in this situation but as others have wrongly disputed, you never know your friends true financial situation til the SHTF.
JD’s foreclosure friend info paints the picture of whats to come.
♫ Hawk and Gwac, sitting in the tree. ♫
A-R-G-U-I-N-G. ♫
♫ First comes the slight, then the disparage,
Jumpin’ gee-willikers, it’s just like marriage. ♫
Oh and, apologies for interrupting. Do carry on. 😀 😀
Omg Hawk.
How exactly will I be in for a rude awakening. The market goes down and so? I told you many times my housing assets are going to me kids.
My life will not change one little bit. A downturn would be a good time to add some more. 15 years from now things will be way up from here.
Housing you need to look longterm.
Keep up the good front Gwac but that’s not what your posting history has shown. Defensive of any downturn evidence I post, expert on everything. You care deeply with your multiple properties that would take a major hit in a 50% correction. Only fooling yourself.
There’s a thing called “life” Gwac, that makes one be in the market then out of it. Since you live the perfect life in your little bubble, you’ll be in for a rude awakening one day.
Looks like the scavengers see what’s coming.
Attn: Distressed properties owners (Victoria)
https://victoria.craigslist.ca/reo/d/attn-distressed-properties/6500851565.html
I personally don’t care what happens to the market. Goes up or down who cares. No impact on me.
I just enjoying our back and forth.
Relax hawk breath you seem very very upset. It’s good how you have justified not being in the market during the huge move up.
Who cares about the last decade, I wasn’t looking to buy then, didn’t give two shits and wasn’t on here for 10 years like you have been. All that matters is now and it’s not looking good for the bulls in the least.
Why does that make you so upset when I post the latest charts, stats etc ? Can’t handle the thought of someone else getting in at 50% off like you did ? Sure seems like it.
You seem to have low self esteem like Intorovert who have to play the “you missed out” BS when I wasn’t even interested in being “in” the market, bozo. Your perception of reality is truly so bizarre.
Hawk
How does it feel to miss the largest $ movement in the Victoria market ever. Not exactly 1981 for you eh. Good job speculating on home ownership.
It is funny how I’m the “agitated” one while Gwac has been saying he’s a buyer the last 3 years and still can’t get the balls to pull the trigger while prices rose.
Now that sales are tanking, and prices to follow with the multiples of major events working against higher prices, he’s an angry bull. Very strange behavior. Fake bull or secret bear but won’t admit it ? Hmmm.
The changing market is different from the changing market over the past decade. This time u r right. What happened to the last decade of wrong predictions????how is it different with your predictions this time?
Delusional is defined when you look in the mirror.
Because you’re delusional and can’t handle the truth of a changing market? That’s the pumper troll job to paint the new reality as false, unstable etc. Pretty sad.
doesn’t seem like you are having a hoot. Seems like totally the opposite.
I’m having a hoot at you pumpers that are out of control. Like Trump deplorables defending the obvious. Did you miss the news ? Things aren’t looking good.
Canadian Existing Home Sales Crash In January
?itok=Mxhoec1O
Hawk you seem a really agitated this weekend
Take a break from bashing. 10 years being wrong is really stressful I would think.
Did you get a new job at Citified Intorovert ? Would make sense at your narcissistic non stop posting.
A hole in the ground sometimes stays a hole in the ground. It’s been that way for 10 years now. Party on Garth.
12 Charts About Canadian Housing That Will Make You Go WTF
http://www.huffingtonpost.ca/2017/02/02/9-charts-canadian-housing-wtf_n_14441902.html
You’re so funny Luke. Reality has a way of making fools out of NeverEverLand pumpers. Not going too well for your bros back in the Big Smoke. Just like the coming Canadian Big Short. Imagine a 9.1% drop in one month here, the shrinks would be working overtime.
“The same experience is playing out in the GTA, where overall sales (and prices) tanked in January. The price of the average detached house crashed by $90,000, or 9.1%”
“There’s some shady stuff goin on.”
https://www.youtube.com/watch?v=vgqG3ITMv1Q
Construction start on Vancouver Island’s tallest building just weeks away
The 25-storey, 85 metre tall mixed-use condominium and ground floor commercial tower, dubbed Hudson Place One and situated at 777 Herald Street, is the second-to-last phase of developer Townline’s Hudson District community in downtown Victoria.
Hudson Place One’s 176 luxury residences will feature studio homes, one and two-bedroom suites plus a collection of sub-penthouse and penthouse residences. Square footage will range from just below 500 square feet to nearly 1,900 square feet.
https://victoria.citified.ca/news/hudson-place-one-townline-construction-start-on-vancouver-islands-tallest-building-just-weeks-away/
27-month terminal expansion project underway at Victoria International Airport
The 27-month undertaking will more than double the square footage of the lower departures area’s existing footprint while providing more seating capacity, dedicated departure gates and improved restroom facilities.
Travellers can also expect additional food and beverage services available to departing passengers, while the terminal’s added capacity, according to Dickson, is expected to generate more flights and grow the airport’s roster of destinations.
https://victoria.citified.ca/news/27-month-terminal-expansion-project-underway-at-victoria-international-airport/
https://m.youtube.com/watch?v=NO04VXBIS0M
We can see in this clip Hawk as a young chicken in proclamation the sky is indeed falling! But wait… it’s just an acorn?!
Better run for your lives on Tuesday everyone!
You’re always arguing that intorovert. The sky is just starting to fall and its still only February with new rules kicking in with more to come. Idiots like you will be in denial til the bitter end. Only the obsessed track every sale in their ghost hood.
Whose cherry picking? They just got reduced in last 3 days.
The real estate market seems to be cooling off, especially for SFHs. Nobody is arguing with that, Hawk.
On the other hand, the sky isn’t falling as your cherry-picks may suggest.
Some recent sales in Gordon Head:
4366 Fieldmont Pl—$89K below assessment
1487 Mt. Douglas Cross Rd—$135K below assessment
4408 Greentree Terr—$125K above assessment
4404 Houlihan Crt—$236K above assessment
1788 Triest Cres—$67K above assessment
1715 Llandaff Pl—$56K above assessment
1951 Ferndale Rd—$453K above assessment
Plumwine into the sauce pretty heavy last night by the looks of it.
Yep just “park your money in RE”, like it’s some totally safe place to be. Ask the syndicated mortgage holders in Ontario. I bet this will be the next bomb to blow up in BC with the massive out of control condo building.
How’s the Wade coming along ? The sidewalk is still closed and Johnson still one lane.
Toronto lawyer says $1B of Ontario investors’ money lost in syndicated mortgages
http://www.cbc.ca/news/canada/toronto/syndicated-mortgages-losses-1.4083261
A Golden Head flipper can’t even make a decent buck. 1607 San Juan Ave had to slash $40K to $849K. I guess the Escalade didn’t like what he saw and kept on rolling.
Another Golden Head’er at 1946 Grandview Dr slashed #30K to $938K, only $6K above assessment. A year ago the limos would be lined up around the block with screams of “The Vancouver people are here ! Get your bids in fast or you’ll lose out !” Nothing but crickets now.
We advocate Buy-Local. But when we Invest-Local, torches are out, name calling, witch hunting….
The easiest way for average joe to park their money locally is through RE. The investment creates jobs locally, multiplier effect, etc.
Of course there are ppl take advantage of the loopholes, but should we punish the society because of them.
“We don’t want better roads, riceboys and HA will road race in our town!”
“We don’t want better health care, junkies and frequent flyers will take up the hospital beds!”
“We don’t want fast internet, billy will watch porn in 1080p 24/7!”
// Won’t somebody think of the children??
Yes Richard. A recession will hit like they always do every 8 to 10 years. Not brain surgery.
It won’t be small LeoS, the debt bomb is like nothing ever seen. It will be ugly.
Gwhack needs his pill and early to bed. All those facts hurt his little feelings. Bummer.
Not easily. The VREB has that data feed because their published sales are equal to sales reported – sales collapsed.
So I can kind of get an estimate by looking at the difference between what they publish and what was actually reported sold, but this gets inaccurate the further back I go, due to how the system is built.
And that’s a good thing. Better small recession now than big bust later if people can’t afford +2% then they’re going to be in trouble with rising rates anyway.
Foreign buyers data out until end of Dec. More or less same as before. Lower than the average for GV, but Saanich still elevated.
Ah, THE graph.
Who knew a squiggly line with random meaningless terms super-imposed upon it could reliably yield a Damascus moment time and time again.
These new OSFI rules are clearly going to have an effect on the RE market. However I predict even more importantly, these new rules are going to be so detrimental to the economy, that by late Fall they will cause a recession. Taking 20 to 25% of RE activity out of the market will bring on a recession. This is a huge blow to the economy. Not only are the OFSI rules hurting the RE market they are also affecting many small business owners who can no longer obtain credit aka the equity route. On top of this interest rates will be rising until the goverment realizes we are in recession (late this Fall) at which point I predict they will fall taking us out of sync with the U.S. and thereby the collapse of our $ under the 70cent range.
Yes you read it here first ! Buy now $U.S.!
1981 the best year of my life.
The bashers really seem aggressive today. Espically the ice cream hawk. Sleep tight little ice cream man and dream of happy crashes.
LF,
The expert clueless pumpers won’t know what hit them when rates keep climbing and listings suddenly explode.
When I sold my first place in 81 it was not just to take the money and run, it was also because my mortgage was up for renewal in a year and 18 to 20% from 13 % would not have been possible to maintain. Equivalent to rates going up another point or two now with another 2 points stress test on top.
Many recent lottery winners best consider their new payments in a year or so and beat the rush and dump now while the market is thin. But that would mean common sense and the fairy tale would be over for the pumpers from Nevereverland. TO down 10% already. The Big Smoke will lead the way down.
I wonder if we will start to see more than normal cancelled sales due to financing conditions not being met. Any way to analyze the number of cancelled sales compared to previous months/years Leo?
Nice repartee. Quick, simple and quite funny. Reminds me of that “argument clinic” skit from Monty Python. If you haven’t seen it, watch it.
An argument isn’t just saying “no it isn’t”.
Yes it is.
No it isn’t!
Thanks #6, very well articulated post.
Except here… 🙂
Luke, you can employ hyperbole and sarcasm to give Hawk or the article the giggle factor, but the reality is the article is simply describing what happens at the turn of every single market run up everywhere.
It’s called deleveraging, and the ride down is generally proportional to the ride up. I know you think Victoria is now “different”, as do countless others today for one reason or another. That belief however, won’t be enough to reverse the pullback’s momentum, which is already in the early stages of developing. It’s not doomsday, it’s not an “explosion”. There’s no reason to “run for cover”. Deleveraging is an inherent, indelible part of any market anywhere. It can be stretched any number of ways, but sooner or later the inevitable happens.
When we begin an up cycle again (and make no mistake – we will), there will once again be people who re-regurgitate the same, “the time for affordability has now passed” that people regurgitate now. And they’ll have great reasons why they assert as such. They will also be just as wrong as they were before, and are now.
Financial memories are almost suicidally short, it seems.
Yep. Disaster will strike any moment. She’s gonna blow! Duck/ run for cover!!! Head for the hills! Anywhere but here! This pigs gonna explode!!!
Refinancings could bring down this house of cards.
How new mortgage rules hammer indebted households
“The Toronto housing market’s rotten January has thrown a scare into veteran mortgage broker John Cocomile.
A lot of Mr. Cocomile’s business in recent years has been mortgage refinancings, which are like a financial-stress reducer. When your household debt gets too high, refinancing takes the pressure off by folding all your borrowings in with your mortgage. What worries Mr. Cocomile is that the latest developments in housing make it much harder to refinance.
We’ve seen household-debt levels push ever higher in recent years, with no evident repercussions in terms of more people being unable to repay what they owe. Now that refinancings are no longer an easy fallback, Mr. Cocomile thinks we’ve hit an inflection point where more people will find their debt unmanageable. This could be the year debt gets messy.”
https://www.theglobeandmail.com/globe-investor/personal-finance/household-finances/is-this-the-year-household-debt-gets-messy/article37972424/
The so called “hoarder” will sell when he sees the most he can get out of the market. Until then he can hold long term for years and maybe even decades. However, if there is a market trigger such as a significant drop in prices my believe is that the hoarders will want to sell ALL at the same time.
Knowing the difference between speculation and a hoarding will determine how a government may effectively moderate prices. You want speculation in the marketplace but not hoarding.
When people say raise the interest rates to fix the housing problem that will effect hoarding but it will also effect speculating. I don’t think that is desirable. There isn’t much sense in throwing the economy into a recession just to get lower house prices.
Next week should be rocking. I’ll wager that those who cut a deal to flog their shack this weekend will be the winners and the rest the losers with 1 out of 5 getting rejected by the bank and alternative lenders tightening up too.
The market is grid locked after panic buyers have now been sucked in and the rest can’t afford to move up the ladder due to fear of banker rejection or maxed out HELOC’s and credit cards.
Credit makes the world go around, take it away in a bubble market and a major correction/crash is inevitable.
:large
Alright Number 6, I think we are getting closer to a point I can agree with. However, building new stock is a different type of speculation than the run-up in existing stock. However, in the general market numbers it is very hard to disentangle them.
I agree that there needs to be someone who will risk their money to build a new tower. Someone somewhere is speculating on that. Those people may win big but they often lose big as well.
However, the people who run up prices of existing housing stock by gobbling up inventory only push others to do the same and overvalue the market. Those people are not doing a service at all.
Moving goods through space is done on a rational basis – avocados from California will fetch good prices in BC in the winter. Price speculation in general housing has no rational basis to know that they are bringing goods into the future in any way that makes sense.
Hence the study (yes, by university researchers) that Leo S linked to in the story. This kind of speculation is like the bitcoin bubble – it is not rational in any way.
I think this is why New Zealand banned existing stock from foreign buyers but left new construction alone. I did some reading and saw there is a controversial clause that foreign owners of new construction are forced to sell pretty quickly, I think one year. I am not sure whether that is a good idea since it may distort the market in other ways.
For that you want to look at the old blog: househuntvictoria.blogspot.ca
How is it sensible to put it in a place that requires destruction of perfectly good buildings? Bizarre. There is no shortage of land on campus.
That was the case for us as well in 2013. Did the rent vs buy analysis and it was a wash and that was because we were renting a smaller house than we were buying. Apples to apples it was cheaper to buy. So we did.
Maintenance is merely money spent to halt the gradual deterioration in value that happens over time to all buildings. Misclassifying it as an investment is how people justify extracting equity and going into debt for it. “Sure it’s expensive but it’s an investment!”
The so called “hoarder” is simply speculating that house prices will go up. Since the “hoarder” wants to make money, they too will eventually sell. Most likely the “hoarder” will rent the house in the meantime and thus provide a stable rental situation for someone.
I think we can all agree that vacant homes are a waste. I don’t think they are widespread in Victoria except there are a fair number of seasonally vacant holiday properties.
I’m not saying rent isn’t worth spending – I obviously recognize the value of not being homeless. I’m using “loss” in the sense that money is being spent.
I’m also not saying that people buy because mortgages cost less than rent.
There is a loss associated with renting and a loss associated with buying. The unrecoverable costs of rent is the sum of what was paid in rent and utilities. You don’t have anything to show for your payments at the end of the year, other than not being homeless. The unrecoverable costs of owning are your interest, taxes, utilities, condo fees if applicable and the cost of transactions (buying and selling). The principal can be considered an investment. Maintenance could also be considered an investment although it’s return can be dubious.
Over the next 25 years, I would lose $369,600 to rent, assuming there’s no increases. A big portion of that could instead be used as an investment by buying. Thus buying a principle residence is a rent avoidance scheme (loss avoidance) in addition to being an investment. Surely this isn’t a foreign concept to folks here…
Let’s get back to the massive debt bubble. It’s out of control and coming home to roost with higher rates coming or else a recession. The market has been on a 10 year run and overdue like every other business cycle.
Canadians can’t stop using their homes as piggy banks with line of credit debt jumping to record $230 billion
Canadians are borrowing against their houses at the fastest pace in more than five years, raising red flags with policy makers
“Canadians are borrowing against their houses at the fastest pace in more than five years, as home equity lines of credit emerge as a preferred means of accessing funds.
It’s “either greed based or need based.”
“It’s a rising risk factor because it’s something that reprices more rapidly than a typical mortgage pool,” said Gulberg, adding the risk is rising “in conjunction with the fact that it’s fuelling overall consumer credit, which is considered to be an issue.”
Canadians have about 3 million heloc accounts and the average outstanding balance is $70,000, the FCAC said, which also warned heloc borrowers are increasingly vulnerable to rising interest rates and a housing market correction.”
http://business.financialpost.com/real-estate/mortgages/canadians-cant-stop-using-their-homes-as-piggy-banks
How speculation is good for an economy is simple economics without speculation contractors would not build houses on spec or developers create subdivisions. These are high risk ventures over short time periods. The same with someone buying a couple of condominiums in a proposed condominium.
This is being done by dozens of people with different time horizons on when they will sell. As each reaches their personal point to sell they add inventory to the market and moderate prices from going higher. That’s how speculation stabilizes the market.
That’s not the same as hoarding. Hoarding is when there are incentives to hold the property long term. Those incentives could be historically low interest rates or ease of access to financing. And that’s the problem we are having. Money is so cheap that in some cases it makes sense to keep properties vacant because the rent isn’t worth the problems with being a landlord. When hoarding is wide spread then you have historically low inventory, vacant properties/land banking.
In summary, speculation is good and necessary for a market. Hoarding bad.
“Benefits typically cost approximately 20% of your actual salary, more in union environments. I dont think its a stretch to see a specialized labourer in Vic making $30-35/hr.”
swch25,
No one quotes benefits when they quote a wage. That’s more corporation bullshit to make it sound better. The base rate is $42 an hour top rate for a ship fitter. That’s $87K for a trade , not a laborer.
Overtime is not something you count automatically either and might not even happen or the worker doesn’t have time to take it with other life commitments.
As well not all of those 200 jobs are full time as ship work ebbs and flows and you might wind up working only 6 months a year. Welders are only needed during certain times just like pipefitters and electricians. It’s like building or renovating a house. A lot of fluff if you ask me, that is still 4 or 5 years away.
“Wow this is truly scary. Needs to be stopped.”
Old news Gwac, I posted it last night but you were too busy trying to get me to stop posting the reality of graving docks damage to the environment.
This was from Reddit. I bet the so called questionnaires didn’t mention the reality of what’s to come.
“I lived at Dockside Green and couldn’t handle it because of the shipyard. They would be constantly demolishing old barges and the whole building would shake.
Dockside green is built without air conditioning to get the LEED rating. You are supposed to open your windows to cool your suite down. But with the noise from the shipyard we basically couldn’t open our windows during business hours, often on weekends. That whole area is a land use planning failure.
Peopl argue that they were there first but the area isn’t zoned for the type of demolition work they were doing. The shipyard is probably good for Victoria but I wouldn’t want to live in Dockside Green.”
What happens when a real shipyard moves into your hood you just blew your brains out buying for $500K plus. Worth a read for those who will be listening to the jackhammer needle guns all night and dust levels of sand grit that scratches tables etc. But as long as the mighty buck is being made who really cares right ?
http://www.southcoasttoday.com/article/20130922/NEWS/309220346
If you believe this corporate BS, I have a $100 million bridge to sell you.
@josh, if most people were so technical about buying we wouldn’t have this market. I personally have only seen one time where buying saved money on rent. 2002. That only lasted a few years tops.
I can tell you don’t have kids, maybe no pets either….
No offence meant by that, just a short sarcastic way to say my point.
Try explaining your points using your big boy words instead. I promise I won’t criticize your grammar.
I don’t live in James Bay.
Definitely getting out of the city is faster if you live in the West Shore. But then I’d be driving that commute five times a week. I’d rather complain about the Colwood crawl a few times a month when I head north on the island rather than every weekday.
Add to that I just don’t like Langford very much. It’s built for the car. I don’t find the neighbourhoods very attractive and the traffic can be terrible just within Langford (see Millstream Road). I am not trying to diss Langford. That’s just my personal opinion. Lots of people love it out there and that’s great. I also think it likely that Langford will develop over time into a nicer community.
I don’t understand the UVic obsession for growth. It is now the size of Oxford or Cambridge and those places are over 800 years old.
https://en.wikipedia.org/wiki/University_of_Victoria
https://en.wikipedia.org/wiki/University_of_Cambridge
https://en.wikipedia.org/wiki/University_of_Oxford
Send some students to the other great BC universities. Making VIU world-class would be awesome for the whole island.
Anyway, the new housing is a good thing and, looking at the map, they have put it in a sensible place.
https://www.uvic.ca/campusplanning/current-projects/new-student-residence/index.php
One of the attractions of UVic is that it has incredible green space so it is more difficult to cram new buildings in without destroying a big reason that everyone is there in the first place.
It should ease rental pressure in the city and some car traffic as well.
Oh Jesus Caveat. I’ll find a video that’s done as a cartoon for you.
Ok Jack – I made an exception and watched the video you linked. Not the whole thing of course. Just enough to see that it was a largely irrelevant example. A speculator who believes that houses are over priced has no investment tool to put that belief in action. There is no Victoria housing futures market. There is effectively no way to sell housing short. There is no “Triple Bear Victoria Housing ETF” that Hawk can invest in.
So we have a market where speculators can effectively push the price up, but not down. Add to that the herd following nature of many speculators and you have a means to amplify price movements.
I am not making the argument that speculation is always bad. Or that it never acts to stabilize prices. That would not be true either. But your statement was categorical and therefore needs only one counterexample to prove it wrong.
In one way speculation is good. By bidding up the price of a commodity it can send a signal to increase production.
There is a whole literature on speculative manias, cases where speculation did not stabilize markets but rather caused extreme price movements that led to economic crises. Look at Kindleberger – Manias, Panics and Crashes for instance. Also consider Hyman Minsky.
When the current comments or discussion seems stale to me, I always enjoy going back a few years to remind myself where we’ve come from.
We’re (you’re) all still here – Jack, Marko, Leo, Hawk, Michael – good times!
How does that song go? ‘If I knew then what I know now…’
https://househuntvictoria.ca/2015/10/10/the-direction-of-the-market-and-a-new-resource/#comments
But it took 35 minutes to get to Mckenzie. Your problem isn’t living in the Westshore. Your problem is living in James Bay.
I really hope that isn’t the reasoning to buy for most people. Rent isn’t losing money. It is paying for a service. If you buy a home you still pay for that service in the form of taxes, maintenance (pay money and/or spend time), mortgage interest, and opportunity cost on the equity in your home. Sometimes buying makes more sense, sometimes renting.
Why not buy a farm to stop “losing money” on food purchases?
Reason? I understand a rental property is often quite different from an owned property, but if buying didn’t avoid the loss of renting, I would never buy. There would be no reason.
Left James Bay yesterday at 320 PM. 50 minutes to Goldstream. 1.5 hours to Duncan. And that was before the peak of rush hour (though rush hour starts early on Friday). Glad I don’t have to face that everyday. Hopefully it does improve after they finish the work at Mackenzie and the work on the Malahat.
For a change, and because people on here have been talking bout condos, I took a quick look at condo listings this morning. The prices seem absolutely insane from my point of view. The developers must be making a fortune on these buildings.
Construction costs are through the roof and a lot of developments downtown sold out just before the huge run up in prices. I think Encore left around $20 million on the table. Legato $10 million+ etc. Encore is also behind schedule due to lack of skilled labour so the developer has some massive carrying costs secondary to delay. A delay towards the end of a project is much worse than the beggining due to outlay of capital.
Very few have launched at new prices (Vivid, 989 Johnson, Jukebox) but their construction costs are going to be high as well. You also have a lot of parties bidding on the land. There were quite a few bidders on the Dockside Green property.
Where you make a huge margin is where you start construction in a slow market (low construction costs), you don’t pre-sell, and you finish in a hot market.
If no one bought investment properties would there even be a SFH rental market?
Take the same $1,000,000 (+?) in assets, place it in four ETFs and reap $3500 month which can be sheltered in any number of ways to reduce tax.
Most people don’t have a $1,000,000 in assets and it is difficult to get to that number investing in ETFs. I’ve been maxing out my RRSPs plus above market returns and it still pales in comparison to just one pre-sale condo transaction. For example, bought pre-sale at Promontory for $193k and completed on it in 2014 with 50k down. Mortgage is less than $600 per month, rents for $1,300 per month (below market at this point), and based on a Promontory sale two days ago is worth around $350k. That is an insane return on $50k.
Now you could argue why not sell it and re-invest 350k outside of real estate. Problem is transaction costs + capital gains + pay off 125k mortgage and you have no where close to 350k to re-invest so you just keep it long term.
I would also say the odds of the condo tanking 50% or losing all rental income are lower than an investment tanking 50% and the dividend being completely cut. If a company goes belly up and the divdend is cut you can’t really do much about it. If the rental market goes belly up you just cut your rent to $995 and you still have something.
Obviously the numbers have to make sense in all of this. Paying 450k for a condo to rent out for $1,300 per month does not make any sense.
It’s half way through February and time to see if the stats match the anecdotes when it comes to condominiums in the core.
I’m not going to make a comparison to last year or five years ago, I’ve come to believe that is more entertainment value than for determining trends. My view is only on the last 6 months to see if the market indicators are trending towards buyers or sellers.
Condominiums in the core districts of Victoria
Active Listings.
After falling from 316 in September to their lowest level in December, active listing are on the rise.
New Listings
New listings have declined since September and have been on the rise since the beginning of the year but have not reached the level of September.
Sales
Sales have been on a decline since September but have stabilized at a little over 100 a month for the last three months.
Months of Inventory
MOI is a key economic indicator and has been trending higher over the last six months but there has not been a significant increase in the MOI over the last three months.
New listings to sales
This is a key indicator illustrating how quickly the market is replenishing itself relative to sales. This indicator has had a lot of volatility falling to a low of under 1 new listing for every sale in December and in the last two months eclipsing the rates set in September and October. Currently we are replenishing properties that sold at a rate of 1.6 to 1. And that is enough to account for over priced properties that are not competitively listed.
The average days-on-market.
Another key indicator. Unfortunately this indicator is the easiest one to manipulate. Which is amplified when there are so many new condominiums and different reporting methods. Over the last six months the DOM has remained stable at just under a month. For those of you looking to buy a condominium this is where your frustration level kicks in. As it seems that everything that is priced reasonably is sold before you get into your car to go see it. And that trend does not appear to be changing.
And the last one….
Median Price.
That has remained stable over the last 6 months at around $400,000 give or take 3% to 4%.
So all you happy home owners with lots of equity in your homes maybe its time for you to buy another condo for your retirement? Or is it? Bear, bull or steer, feel free to interpret the numbers with your own personal bias.
It sure got Eby’s attention, and I think he means it. Regardless of whatever RE prices do or don’t do, I think this type of thing needs to be identified, punished and stomped out of existence. Asset seizures might be one manifestation of this.
I’m not generally that partisan, but I cannot believe that any western government could just ignore something like this – it’s not like one day it was just happening. It took years to establish and metastasise, all the while we were being told how we should be thankful “everyone wants to come here and invest”.
Just, ugh. Skin crawl.
I’m sure your Gorge-ous “million dollar view” is of a Schnitzer Steel barge passing by every few days.
From the TC article:
@ GWAC – I couldn’t figure that out either. How does the drug money get turned into houses or whatever. Will a bank even allow a deposit? I doubt it.
The question I have about the article. The drug money cash given to home buyers in bills. That not raise suspicion when the buyer pays for the house?
Stringer moved to Vancouver?
Good article for sure. Anyone watch The Wire?
I think very few buy a home to avoid money loss.
Crazy. Thank god for investigative journalism. Time to subscribe to the G&M.
https://www.theglobeandmail.com/news/investigations/real-estate-money-laundering-and-drugs/article38004840/
Wow this is truly scary. Needs to be stopped.
Good news about uvic. Always worried the uvic dog park will get developed. :(. That is an amazing community space.
People buy their primary property as a means to avoid losing money to rent. Avoiding a loss is a non-speculative reason. I would say that investments to simply outpace inflation are the same thing – avoiding a loss, and are non-speculative. But when someone buys several properties as a means for ongoing income, as a pension or as a retirement solution, they’re not out to merely avoid a loss.
Speculative specifically means an investment involving a high risk of loss. Property historically hasn’t been particularly risky, but I guess weather the landlord-as-a-pension method is speculative depends on a bit of hindsight. Either way, I see that behaviour as pretty harmful to society. If all the old people bought back when things were affordable, and depend on property as a means for pensions, of course it’s going to price out following generations.
I used to commute on the galloping goose past there. They wrap ships in plastic covered scaffold while sandblasting, welding and painting. Never noticed too much noise or stink. I don’t think they do anything with bilge or sewage. Inner harbor on the other hand… 816 Government St is hilarious. All those multi-millionaires are going to basting in ass with every heavy rain.
I assure you, they rake it in.
This is true. By the time this housing is done, UVic will have added 600 seats so the net effect is zero
Leo:
I think he was talking about net after all expenses and income taxes.
LeoS:
That is good news about the student housing but they could use at least double that number. Certainly UVIC has the land to build adequate accommodation for the number of students that it has enrolled..
For a change, and because people on here have been talking bout condos, I took a quick look at condo listings this morning. The prices seem absolutely insane from my point of view. The developers must be making a fortune on these buildings.
I can understand people who actually work downtown wanting a condo within walking distance but I dont get why so many people want to be right downtown particularly if you are a bit older. Living in amongst a small forest of high rises just does not seem particularly pleasant to me. But different strokes for different folks. But with the number of units coming on market in the next few years I would be worried about prices crashing at some point.
Housing for 600 students will be built at UVic https://www.uvic.ca/news/topics/2018+new-student-residence-15022018+ring
I must have missed something, where did $2800/month come from?
2 rental houses will gross a lot more than that unless they are two condos. Probably nearly double depending on the house. And we’re talking in 20 years.
It is absolutely fascinating that someone is sufficiently gormless to think that owning two rental homes grossing $2800 a month is a retirement plan. After taxes, insurance, and a modest kitty for repairs that is probably $2000 a month before being taxed at your marginal rate as income.
Take the same $1,000,000 (+?) in assets, place it in four ETFs and reap $3500 month which can be sheltered in any number of ways to reduce tax.
It’s this level of financial sophistication that begins to explain some of the shocking personal finance statistics you can read on Garth and other (less-shrill) sites.
Interesting that Esquimalt and Public Works Canada has been doing sound testing and monitoring the past few years due to neighbors complaints from excessive noises all night long from the Esquimalt graving dock. Same with Dockside Green. They should have saved the money and just asked Gwacked.
The clueless don’t seem to get a graving dock will be a major operation versus the small existing yard. New cranes with loud motion alarms every time it moves will be most fun in middle of the night along with ear piercing sand blasting. Janion AirbnB will be a fun stay too.
How many are buying next door for $500K to $700K ? Hands up please. 😉
Since your 10 feet away from it and combined with all the carbon monoxide from exhaust pipes you suck in riding your bike thru town your life span is definitely in the extreme danger zone.
I’m miles away thanks. Nothin but fresh sea breeze and a million dollar view for $1300 a month with best neighbors and a stack of cashola in the bank. Life has never been better as I await the coming tanking of the Canadian bubble.
BTW over 18 x 2 bed 2 bath condos listed last 3 days city wide plus a handful of price slashes. Looks like condo bubble could be popping sooner than I thought. 😉
Yep hawk the toxic fumes are escaping and obviously heading right for that so called penthouse apartment of yours.
Local trying not to get turfed by Leo. So I limit my Hawk discussions. 🙂
Local congrats
Thanks Gwac. I’m not worried about that per se, or in a rush. We’re just taking it easy and enjoying life. My partner just got a great promotion about a month ago, still doing lots of saving and other investing. Things are fine and our rental situation is very fortunate. We never forget how lucky we are, even if this place isn’t ours in title.
Like I always say, these things move in cycles. “Priced out forever” is a vernacular for the ignorant. I do worry about the levels of debt we’re putting on and where that will take all of us, me included. I guess though, what can you do? For us, it would be madness to jump in now, but I’ll admit from time to time I see a listing and I think…wouldn’t do any harm to go take a look? But I don’t, for the same reason I don’t read the Canadian Tire flyer.
Glad to see you and Hawk are making acquaintance again – I had thought you’d gone your separate ways. 😛
It’s tarped because its raining idiot. Of course they tarp it to paint in the rain. Doesn’t mean toxic fumes don’t escape. Man you are slow.
When you sit in an enclosed office with 80% recycled air it’s obviously done some real damage to you.
Laughing so hard right now…
Wow, this blog has never been busier on a Friday night!
Hawk there is two boats there now. 1 is tarped because it is being painted. You can not see the boat it is 100% tarped the other just arrived it is not tarped. OMG those paint fumes did one hell of a number on you.
There will be bigger boats being fixed. That is the plan.
Victoria was good value in 2013 but not great value these days. Personally, and others will disagree, I found the city much more livable and charming five years ago than today. Turning it into a small forest of high rises and then actually being surprised that the traffic has become worse makes me wonder about what people are smoking here. yes, the weather is better than Calgary but not nearly as nice as Santa Barbara or Orange County.
I can’t tell who’s supposed to be the cranky one 🙂
Yes, these are Victoria stats.
A 2015 report said only 5% of Canadians own rental property.
You’re talking dinky boats. They want ships 3 times the size that barely make it through the bridge.
Toxic fumes do not stay under a tarp fool. Same with dust. That’s to keep the workers dry.
2 boats with a tarp? So clueless to what a full size graving dock can produce. Figgered. All talk no walk.
Hawk I guess I understand your issues now. Sorry I guess in your time they did not tarp them like now.
Gwac you said you were leaving 2 hours ago. Have you ever breathed in toxic algae resistant ship paint ? How about sand blasting paint dust? How about diesel fumes like James Bay cruise ships til your nausous ? Nope. Your very naive for an expert on everything.
2 boats at the shipyard this past week. A navy ship under white tarp and a tug that just got there. Also a new apartment in being build across from it. Steel beams went in the past 2 weeks.
“We put a god damn lifting bridge for a reasons. That reason is to have a working waterfront.”
Clueless again. The old bridge is a rust bucket and not earthquake proof. Good to see your 10 feet from shipyard. I assume you sleep there as well? Sounds like bullshit or you would have said many posts back.
Swch please stop with the truth and facts. Those things are bad. 1981 is good.
stupid investment, stupid cranes, stupid jobs. I want a crash like 1981 and I want it now. Now I say. I can’t sleep anymore. Being so wrong for so long is hard. So hard. I am so tired. I need some ice cream. Is that rocky road. I wish house prices where like Ice cream and melted away.
@Hawk they quote the following:
” A labourer in our shipyard is earning, including his benefits, just under $90,000 and skilled trades they take home between $110,000 and $130,000 a year,”
Benefits typically cost approximately 20% of your actual salary, more in union environments. I dont think its a stretch to see a specialized labourer in Vic making $30-35/hr.
35/hr * 2080 h per year = 72,800 per year x 20% = 87,360 per year or ‘just under 90k per year’ per the article.
That’s funny Gwac. You dont read anything just spout off opposition to facts that say the opposite and then try to say you’re a good guy?.But wish me ill well because I show the truth? Hypocrite much?
The Reddit Victoria tells the tale of someone in Dockside Green who had to move because of noise and shaking the building and couldn’t open windows. Reality sucks when you have to distort facts.
Mayor Moonbeam and council passed something they are clueless about while touting green everything. PCB”s and other toxic waste is not green last time I looked.
Even the wages quoted are bullshit. No one makes $90K as laborer. Same with trades at $120K. That would be $60 an hour. Trade wages don’t jive.
Lol
Got to be Chinese money laundering also.
followed by statscan charts of avocado prices and amount of guacamole financed by HELOCs
Local part of me wants a correction so you can get a home to call your own. Always been a good respectly poster. Hope your time comes soon.
Hawk on the other hand. The longer he waits the better. No one deserves him as a neighbor. There will be ice cream everywhere as it flies out of his mouth as he yells at the neighbors.
LMAO
Attorney General responds to media reports of money laundering in real estate
“Recent media reports of money laundering through real estate in British Columbia, including today’s Globe and Mail story, are very serious and deeply troubling. The nature of these allegations, that this money-laundering activity is actively influencing our real estate market and is connected to the sale of life-destroying fentanyl, underlines the critical importance of addressing money laundering urgently and not ignoring it.
https://news.gov.bc.ca/releases/2018AG0005-000231
https://www.theglobeandmail.com/news/investigations/real-estate-money-laundering-and-drugs/article38004840/
Omg hawk the city sent questionnaires. No one complained. Turn up the hearing aid.
500 times a year I am 10 feet from the shipyard. Not a lot of noise. Amazing place to watch the activity.
We put a god damn lifting bridge for a reasons. That reason is to have a working waterfront.
“Seems everyone including neighbors are happy at expansion.”
I see one comment and not a neighbor. Fake news Gwac. Go have some ice cream.
When’s the last time you’ve been in a shipyard Gwac? Like never. Bummer about those facts.
Hawk I can’t argue with stupid so goodnite.
Great post. I will say though, it’s almost inevitable that people writ large will do exactly that – no one wants to admit getting swept up in a mania. And we see it over and over again, in popping RE markets or any other market subject to the same psychological dynamics.
“It would have been fine if it wasn’t for….”
IMO, the people that think our homes represent good value either have a vested interest in saying so, or they haven’t spent much time away from this region.
Sure Gwac, who cares about health, clean air and water in a highly polluted inner harbor that just was exposed as one of the worst in Canada. Its all about money to you to keep the bubble afloat.
Of course they are Gwac cause they don’t have to live there. Man you’re pretty stupid for a so called educated guy. Try doing some homework before shooting your yap that shipyards are healthy places to live by.
Wait til they start digging up the old site. Lots of toxic surprises from 100 years ago. Education and facts helps when trying to pump jobs that are 4 years away.
http://wavy.com/investigative-story/investigating-complaints-of-lead-contamination-at-norfolk-naval-shipyard/
http://www.southcoasttoday.com/article/20130922/NEWS/309220346
@gwac whoa whoa whoa…. lets not dis ice cream!
Hawk
I like success. I like jobs. I like increased tax base to pay for improvements. People and communities doing well is a good thing Hawk.
In Victoria? Investment purposes was 11.3% which seems not as startling, but still pretty high.
No one on this blog has ever said that that I’m aware of. People know a SFH is a money loser as a rental these days, that is why most of the people with rentals have condos they purchased before the big run up. Some with homes they purchased more than 10 years ago might be cash flow positive. Some with paid off houses they purchased twenty years ago don’t have to care and are able to live on the income.
Seems everyone including neighbors are happy at expansion. Reports have it only one people is angry. Hawk from Oakbay. An ice cream eating house price crasher poster on househuntvictoria
https://www.facebook.com/CTVVI/posts/1561891540530637
Gwac you missed the point.as usual. For a guy who hates downtown you sure defend it to the max. Ever been to a shipyard during a retrofit?. Didn’t think so. Stick to your bike lanes.
Good points LeoM. The clueless think this island is rhe only place on earth. With 4 out the 5 top bubble cities are beginning to tank with Vancouver a nudge away from the cliff as money launderers are exposed en masse it’s just a matter of time til the inevitable.
Probably explains the 17% of Golden Head ghost houses. Victoria is not immune.
#VanRE #bcpoli “B.C.’s attorney general says the province will look into how fentanyl, real estate and money laundering fit together in British Columbia. The statement referenced an investigation published Friday by The Globe and Mail.” @KathyTGlobe https://t.co/wXv48Jxvvg
How shady lenders with drug-crime connections are using B.C. real estate to clean dirty money
Through millions of dollars in private lending and mortgages, people connected to the fentanyl trade are parking their illicit gains in the Vancouver-area property market – and using alleged threats, extortion and deception against homeowners to make sure they get their money back.
https://www.theglobeandmail.com/news/investigations/real-estate-money-laundering-and-drugs/article38004840/
Hawk get your facts straight. It is right in front of their working property.that usually has 2 to 5 large vessels being worked on. No parks lost. No more noise. No lost condo. Maybe time to take a nap and dream of 1981. Bitch and hope for disaster. Nice way to think.
Good paying jobs for hard working people is a good thing. Great for the workers/town and all the other business that will benefit.
oh wow. I thought they were talking about esquimalt graving dock! (which in fairness has been there since 1842). Maybe this is what Lisa meant by public art?
Well, I’m sorry, Leo—I must have been washing my hair when you made that astute comment.
And we all know how killer your real estate instincts are.
You must have missed the big news earlier swch25. This is a new one right downtown in the middle condo developments. So much for waterfront green spaces for condo dwellers. 24/7 noise and fumes. I’d be dumping ASAP.
Ouch ??? Intorovert are you mentally challenged ? You posted the link idiot. Hope you booked the shrink appointment. Homeowners with OCD never end well.
http://www.timescolonist.com/news/local/new-graving-dock-gets-city-ok-jobs-to-follow-1.23176165
Ouch.
Nothing yet, but if they bring in what they planned at the stated prices it could remove most airbnb listings by making them either contrary to bylaws or uneconomical. It does seem like they are backing off the high license fees though.
Indeed. I commented on it when the stats came out as being crazy high but no one seemed to bat an eye. Based on what I’ve read the national average is half that.
The figure is based on the 2017 REALTOR survey for buyers that bought in 2017. n=4321
The question is:
What was the primary motive of the buyer(s)?
Answers:
To enter the housing market (First time buyer) 950 22.0%
Wanted a larger home 493 11.4%
Wanted a smaller home 347 8.0%
Wanted to move to a different neighbourhood 398 9.2%
Wanted to be closer to family 129 3.0%
Due to a family reconfiguration 189 4.4%
It was a work-related move 177 4.1%
Buying a second home for use by family member(s) 229 5.3%
Buying a second home for future retirement 148 3.4%
Buying a second home for vacation use 84 1.9%
Buying a revenue property as an investment 487 11.3%
Relocation 488 11.3%
Other 197 4.6%
Total Responses 4316 100.0%
Cancelled.
The majority of posters on this blog seem to believe that real estate prices in Victoria are good value for the price. People believe that a single family house purchased for $850,000 is a good rental property when it rents out for $2700 per month, even though it’s a money loser, losing over $1,500 per month. Or an old beat up house in south Oak Bay or south Fairfield for $1,200,000 that requires extensive renovations before its livable.
A reality check is in order for those people with delusions of real estate’s infallibility as an investment.
For these people I suggest a trip to the American real estate website Zillow.com.
Search for great American cities, near the coast, or near major large cities, or idyllic countryside. For example try Portland or Vermont.
Hundreds of beautiful houses or small 10 acre farms for $500,000, or about 5 times average family income.
When our crash happens, don’t blame the government for not propping up the prices, don’t blame the NDP’s new rules/laws. The blame belongs to those who fed the market frenzy.
@Hawk are you speaking to the graving dock? because its been there since 1842
I love the “working harbor” thing on the news tonite. Facts are you just devalued those thousands of condos who will now have non stop noise pollution as well as burning steel, highly toxic algae paint fumes, sand blasting clouds of lead paint and lovely aroma of bilge and sewage pumps.
So much for a modern waterfront with green spaces everywhere. Don’t forget your ear plugs and gas masks, you’ll need them 24/7.
There are better ones that are just related to real estate. But the concept is the same, widgets or wadjets the theory doesn’t change. Just like the math for finance is the same for real estate except for adding mortgage paydown into the calculations.
Not sure what’s wrong with videos, it was an interesting one. I don’t think the price stabilizing properties translate to real estate though. At least not based on what I’ve read. However I am not smart enough to cogently argue why that might be.
I don’t click on your YouTubes. And your reliance upon them is quite sad.
So you really believe that a university graduate would not know how to use spell check and they would write in a way to mimic a stereotypical broken English? Something that would be considered racially offensive if done in public.
https://youtu.be/Lapak02ct3E
Did 2470 Cadboro Bay Road sell?
Wow. Just wow.
You might want to consider changing your name again (that will make the fourth time), because you’re dragging this one through some awfully nasty mud.
Yup, I am. Unless he has turned off spell check, the author has intentionally miss spelled words to play into a western stereotype of an Asian’s broken English. Shame on the troll and shame on you for being so gullible.
Really, Just Jack? You’re going to mock an ESL person’s English? That is vile.
But let me guess. You too have the brain the size of a planet.
https://youtu.be/k-lqVn2vk_Y
And I did. You just have not shown yours. This is basic economic theory taught in every class room in the world.
Again show me one.
Did you even look at the study linked by Leo S in the article?
I think you have to prove your point first. Extraordinary claims…
You must have graduated the highest in your grade 6 class.
-6 foot two
https://youtu.be/NnVaSBoBt5s
Did I miss something Caveat? When did you show that I was wrong?
All you need to do is provide one link to one university economics professor that states speculation does not provide stability in the marketplace.
Good luck. You ain’t gonna find it.
Dude, let’s just say that I have enough education credentials to not be impressed by anything you can throw around by name-dropping. Your level of argument is usually a lot higher than this, Number 6.
Yes, I watched the video you linked and it is a joke. There: He said, she said.
Oh, and calling other people trolls without further evidence is pretty low.
Excellent debating style. Next time you are wrong I’ll just post an ISBN for a book that proves you wrong. QED
Plays to your strengths for sure.
The London School of Economics has 2,416 videos on you tube.
https://www.youtube.com/user/lsewebsite
You’re old fashioned.
Call me old fashioned. I would like something in print. Youtube doesn’t count as citation worthy in any serious field I know, especially coming from “Marginal Revolution University”. Economists have major issues with credibility at the best of times.
To the Asian Chinese Male that wrote.
It isn’t necessary to write in broken English in order to mimic a western stereotype.
We need a better class of trolls on this blog.
“I did already. See the youtube video”
Isn’t caveat the one of many on here afraid to click on a youtube link because it might actually explain the facts ?
Gwac, you’re sounding like the crotchety old man with the ice cream screaming at the kids to get off the lawn. Your true ranting self is coming out again. 😉
I guess those 200 jobs will be just in time after the crash as they are 3 full years or more away from reality. Government approvals will take 2 years alone.
Much can change as per last financial crisis where projects shut down or delay out of the blue like in 2008, and 2000, and 1990 and 1981, and in the early 70’s, and in…… Oh to live in a bubble that never pops.
But lets not let facts get in the way of a good pumper story as it will cancel out the hundreds of Shaw jobs that just got whacked. Sad, real sad.
“Prior to start of construction, Ralmax will need approval from a number of agencies, including Transport Canada, Fisheries and Oceans Canada and the provincial Ministry of Environment. Once approvals are granted, construction will take 18 to 24 months.”
Sounds like a solid pension plan to me.
Distract ’em, and hope for the best.
I bought in Gordon Head in ’09, too! A great time to buy, it turns out. Well, when I was 20 would have been a better time, but…
Luckily, we have a public-sector defined-benefit pension, but we’ll still probably look into buying an investment/rental property once our house is paid off in a few years. Entering our top salary-earning years with no mortgage = lots of disposable income, not to mention we’ll be sitting on an unencumbered $1M+ asset.
Caveat there are many youtube videos done by university professors and economists describing what I’ve said. It’s just easier to link people like you to video. After all, one has to write to the lowest common denominator.
I did already. See the youtube video
Number 6, could you provide an article or two to support this? It runs counter to everything I have read (and observed).
“Vacation and short term rentals proliferate. I think residential real estate should not be re-purposed as distributed hotels. I hope more municipalities follow Victoria’s lead and crack down on this no matter how convenient it might be for a traveler.”
What has Victoria really done with airbnb?
Made a licensing tax? (small peanuts imo)
A city tax which is passed onto the renter.
I really don’t see them as doing much.
“3) Last week – another friend bought a property that had been languishing on the market for 4+ yearl. $100k Lips stick reno, 3 month hold – sold for $100k profit.”
So the above example is not a capital gain. It is a business gain and will be deemed so by RCA. So depending whether or not the individuals are incorporated (probably unlikely), they will be either taxed as a corporation or the $100k will be added to their personal income tax pushing them likely above 40% tax bracket. In other words, by right they would be paying approx $40k income tax on that $100k.
Now they may submit their taxes and declare it as a capital gain thereby reducing their taxes to 20k payable and they may get away with it simply because CRA doesn’t catch it. However if they do it a second time their chances of getting caught go up dramatically and if they do it a third time it is almost guaranteed CRA will catch it. When CRA does catch up to them they will be reassessed and back taxed on any previous “flips” possibly with penalties attached. I have known a number of people caught out by this forcing a couple of them into bankruptcy.
Bottom line, buying a house to “flip” for $60000 is an extremely risky proposition when you consider all the implications.
I started working right after university, started out around 50k, did tons of overtime and save first down payment. Now 34, still working within government, pay sucks, maxed out around 71k…. I own one home in Gorden Head(brough in 2009) and three more rental units, One of them is on vrbo on salt spring island, and other two rented @1400 in Downtown.
partner currently does not work, looking after kids.
When kids are bit older , like 10, I will quit my job and retire. living on rental incomes
Number 6 –
When the facts are on your side argue the facts.
When the facts aren’t on your side spray them with video links.
You’re still getting the annual income from the properties. Just not the windfall profit upon the sale. Since you or your husband are never likely to sell, it doesn’t impact you. Because you are not speculating you invested in a rental property for its income producing potential.
Now those that bought properties and are loosing income and were just hoping for appreciation have to make the decision to shit or get off the pot.
They could sell the home to their tenants and save themselves the agents commission. That turns a renter into a home owner and reduces the overall demand by renters for housing. As that renter would have been looking for another rental sometime in the future, the overall demand for rentals declines.
And if you’re a person that thinks real estate and bitcoins speculators are the same then you need some man splaining. See below
https://youtu.be/mjN3QfXU_y8
Totally incorrect imo. We have no pension. Only reason we’d sell and pay capital gains is becoming fed up with being landlords or disability and even then we’d probably sell to one of the kids and hold the mortgage.
People who engage in tax evasion are already breaking the law and liable for penalties and interest if investigated. Someone who fixes up houses and sells them within two years is liable to pay capital gains tax already.
Those numbers seem really unlikely – unless you are talking pre-tax possibly.
They made 400k in 8 months on Bear Mountain? Also seems unlikely unless they bought the lot quite some time ago.
Seems possible last year on a very high end property, although I don’t know of many that were on the market for four years in our area. Not sure that the current market makes this likely?
The tax rules about flipping are already in place folks. You are liable to pay capital gains taxes but if you do it too often it will be treated as business income and become 100% taxable.
https://www.theglobeandmail.com/globe-investor/personal-finance/taxes/house-flippers-beware-you-cant-always-sell-your-residence-tax-free/article4804446/
Except that means all investments that could rise in value are speculative. And that makes the definition meaningless. It has to be based on intent and whether there is a non-speculative return. My house rose in value but it wasn’t a speculative investment. Also dividend paying stocks may rise in value but that is very much incidental to those buying them for their income generating properties.
I think domestic speculation is a cause of the elevated prices. As someone who is a want to be homeowner I should be outraged but I’m not. I do wish I was born 3 years earlier though and I would be knocking down my walls. I guess because I can afford a SFH in Victoria and I’m in a great rental I’m not as upset about it as some people I know. What I am upset about is when people should be paying taxes and don’t. Like not declaring rental income, Airbnb without taxes, flippers not getting taxed etc. I think the government should be taxing everyone they can in this market on non-principal residences especially foreign buyers. Maybe down the road if things get really bad for sellers they can scale back the tax. I really know nothing about this though and really don’t know what the details would look like.
It really sucks for anyone buying a house or renting in Victoria but also in most of BC. Things are similar in the other cities on the island but to a lesser degree maybe. I guess if people don’t like it they need to adjust their expectations or move.
I think it’s fair that people make a RE investment and see gains from it (as long as taxpayers aren’t on the hook for the loss i.e CMHC). It’s their risk. It’s fair that the rental market is self regulated. But don’t cry “unfair” when the tides are turned. When one day you can’t find a renter and can’t pay the mortgage on your 2nd property, your fave restaurants close because they can’t find workers who can afford to live here or you lose your job and can’t sell your house for what you paid.
But for the love of God government, attempt to tax these people so we can afford to build affordable low income housing, housing co-ops, homeless shelters.
They’re my husband’s pension (who is self-employed).
I don’t have time to run around rental SFHs but yea same plan here with my condos; it is my pension. That is why I refuse to buy wood-framed. When you are in it for the long haul I am more confident in concrete.
“No one holding a second property is going to continue holding it after several years of 15%+ gains. I’m pretty comfortable with my “all non-primary residences are speculative” statement. There are exceptions but they’re few and far between”
All the people I know who own recreational property are more concerned about the yearly tax bill increase rather than selling it for a profit. Lake stuff is way up and very few are selling.
My husband and I (both mid-30s) own 2 rental houses in Vic (bought in 2014 and 2015) and have no plans to sell either for at least 20 years. They’re my husband’s pension (who is self-employed).
I’d disagree. If that was true we should be seeing a flood of properties coming to market as supposedly everyone that bought an investment property more than a few years ago would now be cashing in.
agreed. Like we saw from 11-14
This is the situation for most people i know too. I don’t have data to back it up.
Queue the household debt/heloc graphs.
So true – the bitcoin market just needs more speculators to stabilize it.
A tax that costs taxpayers nothing. Why didn’t anyone think of that before!!!???
Seriously though. Not many of these “hoarded” houses are empty. So most of them contribute to the rental market. Your additional capital gains tax would probably cause a little bump in supply in the first exempt year but then suppress supply thereafter. As the capital gains tax rate increases it becomes more and more desirable to hold an investment property for long term income and less and less desirable to sell for short term gain
This is very interesting ‘ruit’… anecdotal, but telling about how a large segment of locals could be what drives a large part the market here. This coming Tuesday the Gov’t is going to have to do an awful lot to crush/slaughter this beast.
All the news about new construction won’t help the bears either – Times Colonist refresh of ‘midtown’ the latest piece of news. Right next to the upcoming Scott Building reconstruction. New Graving dock creates more high paying jobs for decades to come… Yet another part of Vic gets a major facelift. It’s happening everywhere you turn – left, right, centre – the city is transforming before our eyes and to me it’s a very exciting time to be here. Talking to people who have been here a long time they all tell me they’ve never seen a time like this – just over 3% unemployment, construction everywhere you turn. Yes, there are those old timer Victorians that reminisce for days gone by, but many people are also happy to see things getting so vibrant here – and, change is inevitable. Better to embrace it rather than fight it! I’m looking forward to the changes that keep coming in Canada’s best city over the coming years!
Some recent sales in OB: The tired cape cod at 2361 Zela St. sold. To me, it looked like one of those Gordon Homes manufactured cape cod places. But, someone thought it was worth $1.155k…
And, 3561 Plymouth went for $1,238,800… lots of lucky ‘8’s’ in that price, wonder who bought that?
This looked like fairly nice digs. I was actually a bit surprised it took this long to sell, but no one bothered waiting for the Gov’t announcement coming on Tuesday did they?
No one holding a second property is going to continue holding it after several years of 15%+ gains. I’m pretty comfortable with my “all non-primary residences are speculative” statement. There are exceptions but they’re few and far between.
Whatever it takes for me to get a sparkly unicorn.
🙂
Me too. A small decline at some point soon seems very plausible.
If it happens, will I be panicking?
Well, I didn’t panic when prices dropped a bit from 2011-2014 and my mortgage was a lot bigger.
Hey Leo,
You are dead on in your assessment of speculators. Everyone, especially in Vancouver, tries desperately to sell the “Chinese” investor meme and, of course, there are some foreign influences in the real estate market but local specuvestors are by far the worst.
Take a look at the U.S.A where there is a lot of foreign investment, as well. I’m currently in Arizona and Canadians have been the largest foreign buyers of real estate for years here but prices are a dream compared to B.C. even after an uptick in prices.
This isn’t a comparison of lifestyles (Victoria vs Scottsdale) so much as a sobering wake up call to locals. You can scream foreign investor all you want but it isn’t driving the USA market parabolic. Their market went nuts when their locals became specuvestors prior to the huge crash.
http://phoenixpropertymanagementcompany.com/foreign-buyers-increasingly-attracted-arizona-real-estate/
“Out of the 68 foreign countries that purchased homes in the USA, there are five the make the majority of purchased real estate. They are Canada, China, Mexico, India, and the United Kingdom. These countries make over half of all purchased real estate, with Canada and China leading the way.
Not all people from different countries like to make purchases in Arizona. Chinese buyers do not rank very high in the purchase of Arizona homes. Chinese buyers make the bulk of their purchases in California. They also like to make purchases in Washington State, New York, Massachusetts, Illinois, and New Jersey.
In the state of Arizona, Canadians make up 46 percent of the foreign home buying market. They are likely to purchase a home for a vacation use or as a rental property. ”
https://www.nar.realtor/sites/default/files/documents/2017-Profile-of-International-Activity-in-US-Residential-Real-Estate.pdf
“The average price of properties purchased by foreign buyers was $536,852, more than the
average price of $277,733 of all U.S. existing home sales.3 The median price of properties
purchased by foreign buyers was $302,290, also more than the median price of $235,792 of all
U.S. existing home sales.4
China remained as the top origin of foreign buyers ($31.7B), followed by Canada ($19.0B), the
United Kingdom ($9.5B), Mexico ($9.3B), and India ($7.8B). The bulk of buyers from China,
India, and Mexico were resident buyers, while most buyers from Canada and the United
Kingdom were non-resident buyers.”
In my circle:
1) one friend quit his bc gov’t job to focus on being a general contractor ( No certification in any trade, or any type of post secondary education). In 2016, between a spec build and project management for reno’s and new build – cleared $400k. 2017 – Cleared $750k on 2x spec builds and project managing builds for family and friends.
2) Another friend and his wife on Bear Mountain – bought a lot on their street to build a spec home. 8 month build – $400k profit
3) Last week – another friend bought a property that had been languishing on the market for 4+ yearl. $100k Lips stick reno, 3 month hold – sold for $100k profit.
In my circle of friends – anyone that has been ‘getting ahead’ have been speculators by popping in and out of the market. Not one has bought a property for a long term hold ( other than their primary residence)
It is in Leo’s article above highlighted in orange in the article with a link to a graph.
I disagree with this point. In my opinion, supported by economists, speculation dampens those wide spreads in housing. Speculation stabilizes markets not amplifies them.
The problem is when wide spread speculation becomes hoarding. If one in five home owners now owns two, three or more single family residences as investment properties the marketplace is distorted by hoarding real estate. That’s the problem the BC government has to address.
The BC government is capable of putting limitations on hoarding. If you own a primary residence and either an investment or recreational property that’s reasonable. However owning several condominiums in addition to your primary residence should be discouraged. Access to housing is a right and should not become a commodity for profit by a few to the detriment of the many. Since all of us, renters and home owners, pay for the city workers and maintenance of the cities, we shouldn’t be socializing the costs and privatizing the profits for a few.
The best way and at no cost to the taxpayers is to levy a capital gains tax on those that own multiple residential properties. A BC Capital gains tax on those third and more residential properties. A BC Capital gains tax that would take effect in a year from now, allowing those with multiple properties to divest themselves of surplus properties without additional costs – if they sell within the next year.
That would bring more inventory of pre-owned homes onto the market that would be available to renters to purchase, increase the inventory for those looking to move up the property ladder and moderate prices. All at no cost to the government to build affordable homes and with an increase in future government revenues.
If you want to be a real estate tycoon, then buy apartment blocks or commercial properties not residential.
Redeveloped Times Colonist building start of ‘Midtown’
The new owners of the Times Colonist building are developing a concept that they’re branding “Midtown” in an overhaul and expansion that includes residential, office and entertainment components.
The renovation will include a glass atrium that will bisect the existing structure. There will be street-level retail and 120,000 square feet of office space.
Merchant intends to establish a rooftop space with a restaurant or café, while the existing print building — an extension that was added to the main building a quarter-century ago — could in the long term become commercial or entertainment space.
http://www.timescolonist.com/business/redeveloped-times-colonist-building-start-of-midtown-1.23176103
Well you know what I think. Between a decade of cheap money and everyone and their dog becoming a RE tycoon, I think domestic speculation has inflated the market to the tune of about 40%. Super low rates: punch to the gut, speculators: being kicked when you’re down.
I’ll be sacrificing several house plants at my altar hoping for a short term no renovation flipper tax. Just going after empty homes won’t do diddly.
Hmmmmmm
Ditto and it’s refreshing to hear this, although I’d be happier with 4 times annual median household income.
How Montreal is dealing with winter’s massive snowfall
How lovely:
Snow-clearing operations in Montreal begin with trucks blasting obnoxious horns up and down residential streets early in the morning, alerting formerly sleeping citizens to move their vehicles.
https://www.theglobeandmail.com/news/national/how-montreal-is-dealing-with-winters-massive-snowfall/article37997780/
Great Jack Knox column this morning. So glad I had the good sense to not buy in the West Shore.
For now, the Colwood Crawl lives on
http://www.timescolonist.com/news/local/jack-knox-for-now-the-colwood-crawl-lives-on-1.23176146
Victoria’s economy keeps on booming…
New graving dock gets city OK, jobs to follow
A new $50-million-plus graving dock to be built at Point Hope Marine shipyard near the new Johnson Street Bridge was given the green light by Victoria councillors Thursday.
Once completed, the graving dock will mean another 200 high-paying jobs at the shipyard in addition to the 200 already there.
“Those are well-paid jobs that can pay the mortgage. A labourer in our shipyard is earning, including his benefits, just under $90,000 and skilled trades they take home between $110,000 and $130,000 a year,” said Point Hope Marine general manager Riccardo Regosa.
http://www.timescolonist.com/news/local/new-graving-dock-gets-city-ok-jobs-to-follow-1.23176165
Totoro:
Where did the 20% number come from?
Twenty percent of buyers in Victoria are purchasing a second home? I’d like to see the survey methodology/period/sample because that seems somewhat unlikely based on the stats can data? The rate of vacation/secondary home ownership in Canada is about 9% and of the 9% most is recreational property – 1/4 of the homes being located outside Canada. If Victoria is at 20% purchasing a second home then it would be interesting to figure out why.
I can see the possibility of a 10% to 15% drop as well but I am not predicting one. The constraint to this is that I suspect that inventory will remain low for many years. We had a flood of lower mainland retirees move here in the last few years. These are people that are likely to stay in these homes for the next twenty years. The number of buyers from the mainland has really dropped but the amount of inventory, particularly in premium areas remains low. Unless we see something from the government that stampedes all the speculators into putting their houses on the market (and I am not even sure that there are all that many spec houses floating out there in any event).
You would never have declined below purchase price – that is true. You would still have experienced year over year declines in house value on the few occasions I mentioned. For most people that would have been fairly meaningless. “Honey our house is now only worth 2.9x what we paid for it, not 3.1x like last year”
Caveat
It looks like if you bought in 1980 or before you did not experience any decline.
I think there is a good chance of a small decline 10% over the next couple years. These are the typical normal retracements we see in Victoria after a few years of double digit increases.
If you use a really broad definition of a correction then there are four corrections in the VREB data since 78:
1981-85
1994-2000
2008-2009
2011-2014
That’s just counting the periods when housing fell by any amount. In fact only the 81 occurrence would be anyone’s idea of major.
http://i41.tinypic.com/ev5g0k.png
Here is a graph from this site. Seems those 8 year corrections didn’t happen.
Hawk may also be thinking back to the big slump in the 1910s
50m graving dock approves. 200 more 100k jobs in the city. Great news for city.
Hawk
Please show me the 8 year major corrections in Victoria. You made a statement. Back it up. Maybe you are reliving 1981 in your head over and over but that does not count.
Very happy to see CIBC ending this program:
https://betterdwelling.com/cibc-kills-foreign-income-program-makes-buying-canadian-real-estate-harder/
Personally, I have been going back and forth on this question.
For a city that wants to cultivate an “international” image, you want to attract people from all over the world. Russian aristocrats used to spend winters in Paris before the revolution and tended to bring western European tastes back to Moscow.
However, in the current world, it is way too easy to dump money into property anywhere in the world. Would somewhere like Vancouver (or Toronto) risk losing its international image if it outright banned foreign ownership? I don’t know.
From the little I have read, New Zealand only banned foreign purchasing of existing housing stock. That doesn’t help with speculation on new construction, but it probably will take the edge off the market.
There may other be good arguments against a ban, but I haven’t really heard them. While I am cautiously hopeful toward the upcoming budget, Horgan’s comment the other day about a ban was laughable.
At the moment, I am leaning toward a ban, if it is only on existing stock and only on residential zoning. I could probably be convinced to change my mind, though.
Someone in an earlier thread asked why developers didn’t construct rental buildings to hold as investments.
The primary reason is that they are businessmen and know a non-sensical proposition when they see one.
EVERY tenant of a SFH rental home in Victoria has his rent subsidised by his landlord.
Financial illiteracy has given us rental property “speculators”. Irony this rich should be covered in gravy and curd.
Yes, domestic speculation a big cause of our elevated house prices.
Every country around the developed world is currently imposing their domestic ‘solution’, so our NDP has many options to consider. We need several of these options imposed on all speculators, not just domestic. I like the China model; impose big restrictions on people buying second or third ‘investment’ properties by forcing huge downpayments and short mortgage durations.
I also like New Zealand’s ban on foreign purchasers. Our 15% tax is a minor inconvenience to many wealthy foreign buyers; an outright ban is needed.
Whatever it takes to drive house prices down to below six times annual family income is ok with me, provided it encourages principal residence purchases, but also restricts investment/speculation purchases of additional properties.
Whatever the NDP does will require creative legislation due to unforeseen circumstances creating unintended consequences.
I think negative cash flow is a good test. There is a less “testable” factor regarding trendiness. Some local (or at least Canadian) people jumped into second properties because it was the cool new investment while probably not being really financially educated about it.
I worry about those people because they aren’t experienced landlords and will be the first to bail out when a downturn starts. Lets call them naive trend-chasing investors.
If you aren’t in it for the long haul, it is probably speculation.
Great Article. Sums up the situation very well.
Excellent article Leo S. I think your points are all very well made.
I’d like somebody to explain to me why we allow any foreigner to buy non-commercial land/property in BC (or Canada for that matter)? What would be the effects of just banning foreign owners outright? Or raise tax to 50%? Doesn’t seem to me we need their (often questionably fraudulent) money raising our real estate prices.
As for house flippers, I have no issue, so long as properties are actually being significantly improved and with permits. If no improvements are done above X dollars of upgrades (say min $50K+?) then tax ’em as they are just speculating, driving up prices and improving nothing.
As for locals, people who can afford to own 2, 3 or 4 houses. All power to them. There should be some limit though, otherwise some local multi-millionaire/billionaire could drastically game the entire system buying up entire neighbourhoods.
On another note, can’t wait for the housing crash, it’s been way too long. That said, if the stocks crash first, people are going to get scared and dump their money back into real estate.
Overall, I think we’re all F’ed… We’ve got bubbles in real estate, bubbles in stocks, bubbles in bonds (the biggest of all), bubbles in crypto currencies, it’s bubbles in everything. I don’t know if this is all going to implode later this year or 5 years from now, but obviously you can’t have bubbles everywhere without some of them popping.
Continuing on with the global real estate cooling picture, #5 Sydney is in the tank as well after cutting off the foreign mortgage lending like CIBC. With 4 out of 5 top bubble cities showing some serious cooling off things are about to get very dicey. Better pick up some Pepto pumpers.
Sydney’s property market cools
After five years of growth, property prices are falling
Sydney’s property market is cooling off after five hot years creating an opening for some bargain prices
Prices are expected to drop between 5 and 10 percent in 2018 and many are attributing the changing market to tighter lending rules introduced by the Australian Prudential Regulation Authority, according to Mansion Global.
Mortgage-lending is stricter under the new rules as is borrowing for foreign investors and Australians who live abroad using foreign sources of income to pay.
“The agents haven’t rung us for three or four years because they’ve had 101 buyers, whereas now they are ringing, but usually with properties that have got fleas in the way or zero buyers on, or have got something wrong with them,” said Gray to Mansion Global.
https://therealdeal.com/2018/02/11/sydneys-property-market-cools/