Where’s the weakness?
Sales are down 20% from last year, but that doesn’t mean properties aren’t still selling relatively promptly out there. In other markets we’ve seen the luxury market grind to a halt in the slowdown, but where’s the weakness in our market? It seems the decline so far is fairly broad based in the single family market, with sales of both properties in the core and the west shore dropping about the same amounts in recent months. Sales on the gulf islands are down even more but on an absolute level there are few there so we will need to wait to see if this trend continues in the coming months. Condos sales as well are down by about a quarter.
However in real terms we are still seeing a relatively active market because despite these big slowdowns in percentage terms, it was merely enough to bump us from an extreme sellers market to a more moderate sellers market. To get to a balanced market we will need to continue this slowdown for the whole year to give inventory a chance to build.
On price, some argue that the stress test would be heating up the lower end of the market as people reduce their expectations, while others say the lower end will cool as entry level buyers are forced out of the market. I’ve looked at this every way I can imagine for condos and single family houses but I cannot find any convincing evidence of either of those factors. If they are happening, they are roughly cancelling each other out because there doesn’t seem to be any noticeable shift towards or away from the low end of the market.
So far this slowdown seems like the dream of every regulator that wants a soft landing, with a reduction in mania but no catastrophic market disruption. We’ll see how the spring develops.
Takes seconds to check someone’s claim by simply googling past bottoms for the first comment to pop up.
Monday numbers. Last week we were down 20% from the same week last year, this week 25%.
https://househuntvictoria.ca/latest
“Lol who goes digging through 10 years worth of comments? Hahahahaha!”
Paranoid pumpers in over their heads. How do you rate saying you’re worth $2 million and have to waste life digging up ancient posts. AKA a loser in real life no matter how much cash.
Lol who goes digging through 10 years worth of comments? Hahahahaha!
As an alternative to spending your time plucking low hanging fruit of little relevance, I continue to be curious what your thoughts are with respect to inflation as it applies to a highly indebted consumer base & historically high RE prices. If you’d rather dig up 9 year old quotes of some blogger’s opinion, I’ll be happy to get off your case.
Would you agree you were a little off the mark at the ’09 and ’13 bottoms?
Thanks for posting Charlie.
The other thing to consider with these numbers, is these are the sales figures for the comparatively “scarce” SFH’s – of which it is challenging in urban areas to make much more. Whereas condos they can make more and more ’till the cows come home.
And yet, the former is cratering, and the latter is still, “different this time”. Rational actors indeed…I shudder to think of the prognosis for recent presale buyers.
Charlie Dont:
The Vancouver stats are interesting to say the least. One cannot help to wonder how these numbers might spill over to Victoria.
Lower mainland check-in.
From Zolo…..Feb 23 to Mar 23, 2018 {year-over-year change)
City/Sales SFH
West Van/ -78%
Van/ -56
North Van/ -58
Richmond/ -64
Burnaby/ -64
Surrey/ -58
Langley/ -60
Also, average selling prices for SFH in West Van for this same period is 1.9M. I do not think I have ever seen average selling price for SFH in West Van below 2.0M as long as I have been following Zolo (1.5 years?)
The best time to buy is when the largest number of people think it’s the worst time to buy.
Because people don’t make decisions that way. Just like how 5% of purchases were for investment back then and now it’s more than double that despite the investment case being way worse.
Let’s not imagine residential real estate is full of rational actors
Agreed. I would classify this time as a relatively high risk time to buy, or conversely a relatively low risk time to wait.
So why were sales volume so low in 2013 and 2014? At a time when risk was relatively low.
@RenterInParadise
Thank you!
Since I was new to the area at the time, I stuck to the bigger names – Brown Brothers, Duttons, Sutton Advantage Property (they had listings not online), Pemberton Holmes. The company that manages the house I’m in is Oakwood Property Management – not one of the big ones but they do manage some nice properties.
One interesting one I contacted was British Forest Group (britishforest.com). Small company that owns the properties that they rent out. Freddy – one of the owners is quite the personality. I think that all of their properties are pet-friendly. We would have rented one of his at the time but it just didn’t fit all the requirements (tiny garage). You never know when one of Freddy’s places will come up for rent but worth a shot and contacting.
Good idea RenterInParadise. Which companies did you call?
@Grant –
Try calling some of the bigger rental management companies. While I found my rental on usedvic, I did contact a few of the local companies and was given leads on places to look at. Not everything that is coming up is advertised. My landlord/mgmnt company does ask from time to time if we’re sticking around another year, not that the owners are selling but I’m sure because someone has inquired about a rental. My requirements were tricky like yours – wanting a standalone SFH that is pet-friendly (big dog) and has a garage in a good area. Only took a few days to track something suitable down.
Agreed Charlie. The pension plan time bomb is even worse. They desperately need higher rates or the boomer bomb will explode worse than housing.
Bearkilla and Mike are so confident they went out and bought 3 houses each this weekend. All on credit of course.
@Harp Echo
525 Transit Rd V8S 4Z4OB South Oak Bay-Oak BayMLS#:388805
$1,600,000
Pending
Last Update: Pend->$1,600K
Listing Sub-Type:Single Family DetachedBedrooms:4Bathrooms :3Kitchens:1Basement:YesSqFt Finished:2,915SqFt Unfinished:236Fireplaces:2Lot Size Acres:0.11Parking Total:4Title:FreeholdDate Listed:2018/03/15Price Sold:$1,600,000Assessed Value:$1,608,000Tax Year:2017Taxes:$7,554
It has the lowest land assessed price among its neighbors.
How much was 525 Transit listed for, how much was it sold for? Size of the lot? Bedrooms? Bathrooms? Year? Couldn’t find the original listing on Google
Was going to suggest padmapper but it seems they have garbage for listings. 95% are just pulled from airbnb.
Which is the best online resource for finding SFH rentals? I’m aware of craigslist, kijiji and usedvictoria
I could not resist poping into the open house on Bartlett. It is even worse in person than the photos would suggest. The height of the basement is really quite low. The renos are low end and look it in my opinion. It is a tiny corner lot.
But if anyone else has done a walk through I would love to hear your opinion.
Interesting that 525 Transit didn’t sell over asking.
Here’s where I don’t agree. Affordability was pretty good in 2014/15. Mortgage payments / income ratio was quite low historically speaking. The situation was primed for prices to increase at that point.
The pace of the increase was extremely rapid and the magnitude was higher than justified by affordability, but the first part of the increase at least was supported by local incomes.
“Being wrong and not just wrong wrong but DEAD WRONG for more than a decade is a pretty bad track record.”
The bears have only been wrong since 2015. The flat nominal prices previous to that meant that real prices were falling and affordability was rising. And I did think things would stay that way – I didn’t expect the recent runup.
I think that runup is based on factors that were not likely to endure even before the new government took office. Really I can’t think of a time when there were so many negatives looking forward.
Yeah maybe this is the bloodbath bears have been waiting for but probably not. Being wrong and not just wrong wrong but DEAD WRONG for more than a decade is a pretty bad track record. You gotta be a special kind of person to hang in like that. The real question in my mind here is when December rolls around and it’s clear no crash happened again will the bears just keep on keeping on?
That was more a mis-speak on my part. I wasn’t referring to the timeline for the inflation (ie it “hit in 81”, as actually didn’t know that one way or another), it was just to say that the piling into RE occurred subsequent to the inflation event – which is generally the opposite of what we’ve seen in the last several years.
I know you like to talk about inflation and the housing market, but I’m curious what you think inflation would do (and why) to a housing market and consumer base like the one we currently have. I just don’t see how we can pump it up even higher in nominal terms. Last time, money found housing to hedge inflation. Now, money found housing to seek yield. Except today and at these price levels, I don’t see how the RE market can currently offer either moving forward, at least for some time.
Incidentally, the Vancouver RE price run up in the early 20th century (which your chart text alludes to) isn’t very known either, and neither is the crash that followed that run up. Believe it or not, we have been here before. Although in the one from 1912, I don’t know what the catalyst was. I don’t think it was rates. I know around that era a fire burned most of the city to the ground, but I think that happened a ways before.
One of my favourite quotes from you was the above, where you then added, “including the people that say that.” I’ve repeated that to others a few times since.
Agreed. I would classify this time as a relatively high risk time to buy, or conversely a relatively low risk time to wait. A crash in Vancouver could derail the market. Sharply higher rates could derail the market. A recession could derail the market. Just like in 2007/08, things are starting to look quite risky to invest. And just like in 2007/08 there are also scenarios where a correction could be short lived and/or relatively mild despite indicators.
It’s just a cautionary note. In 2007/2008 the economy was also dangerously dependent on real estate investment and I read many extremely well reasoned articles by Ben Rabidoux on how this was unsustainable. And it is, but to beat a dead horse, the market usually stays irrational longer than anyone expects.
Yes, there is a “property history” button that gives this info. Unfortunately not visible on the public facing matrix but ask your realtor if you want to know for a given property.
After reading that Globe article posted by oopswediditagain, the best word to describe what’s going on is “madness”.
1981 was the peak for inflation. Inflation really started to turn the corner and hit in
the 60s, as you can tell from the chart below. I do agree with you that now is not like 1981. My guess is another inflation peak is at least 10 years away.
An interesting take on who a lot of the specuvestors really are. This article was from 2017 but I haven’t seen it before.
“In one sample of 250 houses sold and resold in Vancouver’s West Side for more than $2-million in recent years, 11 per cent involved buyers and sellers with the same names as real estate brokers. Some listed their occupation as “Realtor,” several others as “businessperson.” In Vancouver, 1 per cent of the population are brokers – meaning that figure is is potentially 10 times what might be expected.”
https://www.theglobeandmail.com/news/investigations/the-real-estate-technique-fuelling-vancouvers-housing-market/article28634868/
Hawk
March 25, 2018 at 10:46 am
“Rate hikes will only stop after US housing begins to tank and we’re way worse debt wise. Pre-foreclosures are already on the rise in places like LA and Chicago which is indicative of previous rate hikes.”
Hawk, even if US housing tanks I think the rates might still continue the ascent due to the fact that US pension funds are near insolvency. I think they would rather save the entire economy than just the housing market. In order to maintain solvency, US pension funds (which are now backed by state and federal governments) require the normalization of bond yields/interest rates to around 8%.
at the 11.5 minute mark:
https://www.howestreet.com/2018/03/23/this-week-in-money-20/
“In 1981, inflation hit – then people poured into houses.”
Inflation was high all though the 1970’s. You might (or might not) recall that wage and price controls were imposed both in Canada and the US during that decade. And nominal (if not real) house price rose rapidly. In Vancouver (and Victoria I assume) this culminated in the crazy bubble of 1980-81.
What was different in 1981 was that the US Fed got a chair (Paul Volcker) who was willing to use an effective tool to end this inflation – historically high interest rates.
There’s two ways I can think of to split this argument.
Housing prices will not go down significantly because employment is strong, or;
Employment is strong because house prices have been rising rapidly.
There’s merit to both, but I also think the two positions are linked. If housing slows and speculation drops off (or perhaps more to this market, people realize that prices can actually go down), the job market will eventually follow along with it. I’m not sure how many people realize how powerfully a housing market interacts with an entire economy and GDP in general.
High house prices due to proportionally high incomes are sustainable. 20 to 50% gains in housing prices without a corresponding shift in the underlying economy are not. In other words if the housing market experienced a run-up due to mania, we will see numerous positive economic spin offs so long as the mania continues to drive valuations up. But if the mania winds down – you don’t need an external shock to create a recession scenario, although that certainly would make it worse.
You’re missing the equation on the other side of the equals sign with that analysis. What you’ve just laid out is precisely what happened in 1981 Michael, and it precipitated a major crash in the RE market. Inflation was north of 10% then and people did indeed start piling into houses to hedge. Consumer debt levels rose and rose, and subsequently so did interest rates. At one point, rates exceeded 20%. It took decades in inflation adjusted terms for the RE market to recover.
The problem is, now is not like then. In 1981, inflation hit – then people poured into houses. And when it started, consumer debt was low as was the array of credit instruments. In short, we had room to lever up.
Now, it’s a different story. We’ve already piled into houses and have amassed enormous (historic) amounts of leverage, based on long term, toxically low rates. Worse, there are now a plethora of credit instruments that we’ve exploited to magnify the run-up. In a sense we’ve already done the same thing we did 35 years ago, only to a much greater degree and for the opposite reason.
After this huge spending binge, credit growth is already decelerating as the Canadian consumer is now among the most indebted in the world. This is 100 level economics, Michael. Leverage grows, then leverage shrinks. If it grows a great deal, then you can expect more deleveraging. Save hyperinflation, we’re not in a fiscal position to do your “900%” increase in prices. The RE market is already going in the other direction, as anyone can plainly see.
Leo S and Barrister, thanks for the responses.
Interesting regarding DOM. A follow up question if you will.
Can realtors look up through their portal if a house has been relisted, and how many times, by address or do you have to have been tracking since it was first listed?
That information would definitely change how i approach my initial offer.
I definitely believe the slowdown we are currently experiencing is much bigger than most people realize. The spring market is hiding it well but as soon as we hit around June and sales start their seasonal decline I believe it will be quite dramatic.
16.
I have noticed the large number of price corrections as well. I don’t have any stats to back this up but it does seem unusually high for this time of year. In the last 7 days there were only 149 sales and 78 price changes.
Cynic:
There was a house on ST Charles that was listed almost continuously for 2 years with off and on the market brief intervals. When it finally sold it showed as 11 days on market. The stats need to be read with a small grain of salt.
Not saying they can’t, they absolutely can and at some point will. I just don’t believe they will at this moment in time. By the way in my head a flat market is +5% to -%5 over 2-3 years, a mild decline is down 5-10%, a moderate one 10-20%, and a crash anything over 25%-30%.
Correlation not causation. The leading indicator was the economy picking up and Amazon going on a hiring spree. That caused house prices to pick up in Seattle.
I’m saying the history of plateaus has zero effect on what might happen in the future. It neither guarantees future plateaus not says anything about a crash.
So why don’t I think there’s a crash coming? Simply because of the strength of the economy in Victoria. I spend a lot of time talking to companies around town, and even if there is now a slowdown in construction starts going forward, the construction companies are booked a year or two out, the engineers are run off their feet and looking to expand, the tech companies are talking about bringing on a lot more people.
I know, all that can change with an external shock. Of course if there is a financial crisis then all that can change in an instant (like it did in 2008). However black swan events aside, I don’t see a huge decline in prices because of the support from the underlying employment picture. The market will likely slow and flatten out, and has likely overshot values in several areas, however by the time inventory increases to levels where we would start to see price declines I believe growth/incomes will have gotten to the point where the support level will be at or just under (5-10%) current levels.
It’s all just a guess, but that’s mine.
Also I am mostly talking about single family here. I am very concerned about condos and all the headwinds they are facing right now despite the momentary market being stronger.
Let’s not forget the Friday Canadian inflation numbers of 2.2%, exceeding expectations and a 3 year high. Canadian rates are going up too.
Why are Vancouver buyers balking so much? They see the overvaluation for what Victoria has to offer versus what they are used to. 75 to 80% of Van is still slashing to get the deal done.
Can anyone tell me what the VREB official DOM count for 1473 Finlayson is?
It shows as pending. Its MLS history is as follows:
16 DOM as 388069;
32 DOM as 386989; and
40 DOM as 386164.
Will it be registered as a 16 DOM sale when in fact it truly was 88?
In the area i’ve been watching there have been a number re-listed like this and some with some significant time on the market before being re-listed. I completely understand why you would relist but to gather stats this process of resetting the DOM indicator would have to skew the average.
Not sure if this has been discussed before but wondering how prevalent this is and people’s thoughts on how much this impacts the stats overall.
Thanks for the anecdotal info.. I’ve been curious if the continuing demand is concentrated in a particular demographic. I can’t imagine all these Vancoverites are switching into jobs in Victoria so perhaps most of these are either second homes / investment or they are retiring. Are the prices in Vancouver still so inflated that you can sell there and buy in an also hot Victoria market with money left to spare? Or if they are second homes / investment that sure seems bold given the headwinds facing the market.
We’ve already surpassed the 2007 to 2009 affordability levels via RBC index and rates had peaked then. Rates are just starting to head off emergency levels. Credit market won’t allow mass inflation real estate hedging unless your a zillionaire like Mike and he’s already tapped out thus his desperation.
Average Change: March 2018 -3.11% Overall $ Change: -217960.00 Average Change Amount:-24217.78
Info from My Realty Check
Just saying this. I have seldom seen a spring in Victoria that started with a decline in prices. This year is different and if this can be attributed to the NDP or the world wide market really doesn’t matter. Those with their fingers on the statistics may come up with different numbers but the corner of the market I have watched for the past 30, years which is the low/middle of the road price range, is on a roll down the hill. Perhaps it will stop but I wouldn’t gamble on that.
I really don’t understand the logic of people who say our real estate prices can’t crash here.
The prices in Victoria’s core rapidly escalated 50% in 3 short years and the escalation was NOT based on fundamentals.
I see no compelling reason why the current prices could not crash 40% over the next 3 years as a correction to the speculative increase in the previous 3 years.
One of the best leading indicators for Seattle prices has been rising interest rates.
One way to think of it is as bond investors get spooked by inflation they sell bonds thereby pushing rates up. Next, they take those proceeds and start buying hard assets like RE to hedge against inflation.
Based on 7 more rate hikes over next two years will push 5 year rates up to near 5% range and stress test near 7%. Do the calculations on how average $600K to $700K mortgage being refinanced. It’s a $1600 diff on the stress test and $800 approx. on the mortgage. Most households will not be able to handle that kind of increase.
Toss in HELOC/Credit card/car loan debt and side hustles in a recession environment will mean a paper route or three.
Rate hikes will only stop after US housing begins to tank and we’re way worse debt wise. Pre-foreclosures are already on the rise in places like LA and Chicago which is indicative of previous rate hikes.
Those who figure that out now will be dumping ASAP. The rest will go down with the ship. Heaven help them.
We went a few open houses yesterday during our sun walk along Dallas Rd.
46 King George Terr is a nice MCM house with great view and high quality reno. The agent said we were the first local couple, while the other 6 or 7 group viewers were all from Vancouver, in the first hour of the open house. Actually the owners are also from Vancouver, they bought the house over a year ago for about $1.2M, did a good reno but no major structure change, and put it back on the market for $2.2M 3 months ago and didn’t sell. The price is $2M now, but still too high, even for Vancouver buyers 😉
I’m not agreeing or disagreeing, but I am trying to apprehend your logic nonetheless. It looks almost like you’re knowingly using the same reasoning but are expecting a different result. So, I am curious what the basis is for you saying you “don’t see a crash in prices coming here.” Intuition only is fine, I just want to understand beyond a “Because they’re different” explanation.
Yeah that huge history of flat landings is definitely a factor in people’s views of the market. But it is not what is keeping the market from correcting. Seattle had the almost identical history and it was the cornerstone of many arguments there as well that real estate never crashes in Seattle it will just stagnate. Then it crashed.
I don’t see a crash in prices coming here but I don’t think our history of plateaus has any bearing on what will happen. Need to look at affordability again to see how long of a stagnation it would take to pull off a plateau this time around. Quite a lot harder with increasing rates than decreasing
I have a lot of money in the stock market – more than in my house – and every stock market investor knows (or should know) that if you can’t handle price declines you shouldn’t buy. The same should apply to house buyers. And note that government policy changes affect the stock market too.
Kind of shocking how many buyers fail to understand this simple concept. Most parents of buyers also fail to understand from my experience as a lot of them purchased post 1983 so it has been mostly up since then with periods of flat.
I need some dining room chairs reupholstered (just the seats) can anyone recommend a reasonable place in or around Victoria? Thanks.
I suspect that we are still getting a number of people moving from Vancouver. Vancouver SFH prices are down so they are either unable to afford 2 mil plus or having experienced the drop in Vancouver SFH prices are hesitant to put too much money into the real estate market.
But I am totally just guessing about this.
I did not at the cloud. My wife turned her smile at it and it stopped hailing and cheered up. She has that effect.
Did you yell at it?
Uplands is definitely slowed down. That’s the reason I am surprised by the selling price in S. OB and Estevan.
Where’s the weakness?
– $2M+ houses.
I might be imagining it, but the number of listings in Uplands seems to be really growing. I know that high end homes take longer to sell but I would guess that there is a years worth of inventory there.
We had a exciting morning of garage sales and somehow ended up with a trunk full of strange items.
It was a glorious day to be out and about although it actually hailed a bit for about ten minutes. Obviously an angry cloud.
“What will do more than any government action is a good multi year correction that beats the idea out of people that real estate only ever goes up.”
Oh it’s coming LeoS, in spades. Trump has created an inflation/interest rate time bomb and adds to it by the day with more tarriffs.
I was just reading on Pinnacle Digest how he is doing exactly what Hoover did before the Great Depression. Who says it’s different this time ? More like history repeats itself.
“…Hoover ran a campaign promising farmers that he would reignite their failing enterprises by increasing tariffs on agricultural products. Hoover won the election in a landslide with Republicans taking the House and Senate.
Ignoring a petition from over 1,000 economists warning of the dangers of such a tariff plan, and formal complaint letters from 23 of the United States’ trading partners, Hoover followed through on his campaign promise by enacting the Smoot-Hawley Tariff Act. This was the second highest tariff ever in American history and created a trade war. Within approximately one year, U.S. exports had dropped by nearly half. Within two years, the Great Depression started. Interestingly, both Trump and Hoover were very wealthy businessmen prior to getting into politics…”
I think that the “only ever goes up” meme is much easier to tear down than it is to build up. Businesses are already struggling with operating costs on the mainland and also cannot recruit low wage workers who themselves cannot afford to work there. Rapidly escalating commercial costs, especially given Vancouver is not a commerce hub to begin with, is adding insult to injury IMO. It’s just being fed by a seemingly endless tide of rampant speculation. It’ll stamp itself out eventually, it always does. Question is, what will things look like afterwards.
Interesting how difficult the speculative mania is to stamp out. First it was in residential, when that got more difficult they moved to agricultural, now commercial. The regulators are always a step behind.
What will do more than any government action is a good multi year correction that beats the idea out of people that real estate only ever goes up.
525 Transit sold for 1.6M in 8 days for asking price.
We’ll see how much 11 Oswego goes for.
Although there has been talk about it here, there has been nothing official from the government on exempting properties that can’t be rented, or any other properties except primary residences and long term rentals. It may well happen, but buying today based on that assumption is a bit of a gamble.
Barrister:
House prices in Victoria were pretty flat from 2009 to 2015 (after a dip in 2008 and a recovery) and if they’d stayed flat I don’t think many people would be talking about a problem today. Instead they’ve gone up substantially, and have even gone up since July 2017 when a government took office with an agenda of fighting price increases (Vancouver has gone up even more).
Bubble priced markets are inherently unstable and the government can’t wave a magic wand and keep nominal prices flat. I think it’s going to take a price decline, not necessarily a crash, for people to get the message. I have a lot of money in the stock market – more than in my house – and every stock market investor knows (or should know) that if you can’t handle price declines you shouldn’t buy. The same should apply to house buyers. And note that government policy changes affect the stock market too.
This can be used by AB snowbirds or AZ sunbirds who want a part time home here, but don’t want to pay the spec tax:
https://www.realtor.ca/Residential/Single-Family/19208462/8-1001-Terrace-Ave-Victoria-British-Columbia-V8S3V2
Nice place near ocean in Golden Head at 1591 Mileva Lane slashed $200K to $1.39 mill. Even the nice places are taking a whacking.
With commercial real estate skyrocketing, building materials through the roof, labour costs accelerating we won’t be able to hide true inflation much longer….
Patriotz:
Lets have a discussion on what the governments goals should be with this tax or housing in general.
But lets get a couple of the background things clear. I totally agree that the previous government completely screwed up in letting things get out of hand. I am not against lower house prices and I dont own a secondary home in Canada and I have not left the island for the last five years (I am excluding a couple of day trips to Vancouver and a handful of weekend visits to a friend on Salt Spring).
We have to acknowledge that any housing policy is a balancing act that involves the current problem, long term goals and also takes into account fairness to present owners. It is early in the morning so this is a quick list off the top of my head.
1) Stop the continuing increase of prices which is different than lowering prices which is a separate issue.
2) Stop foreign buyers from using BC housing as a place to park their money and using housing as a piggy bank.
3) Try letting the air out of the Vancouver and Victoria markets slowly without crashing the whole housing market. For better or worse a lot of the BC economy is dependent on housing for employment. I am not sure that people truly appreciate the cascading effect that a housing crash would have on BC.
4) Point three would strongly suggest that an incremental policy be adopted particularly since rising interest rates are starting to bite into the market.
5) Stop speculators and the practice of flipping homes while having some mechanism of appeal to deal with fairness situations were people are forced to sell due to unexpected circumstance such as death, divorce, or job transfers.
My wife says I have to stop since we are going out garage saling so I will have more to add later.
Ad homonym post of the day:
While wile is never welcome, this is the still the best venue for housing housing discussion. We have learned here that a lot of lot prices were raised to the degree that many people’s dreams of home ownership were razed. It is also a good place to home in on home purchase issues, even though it lays bare bear market fallacies.
“It is correct that they can always sell or rent, but how many Canadians can afford multi million dollar homes (certainly not the millennium populous)?”
The rich foreign owner can do any of these. 2-4 increase local supply.
1. Sell to another rich foreigner or non local Canadian who is willing to pay spec tax.
2. Sell to a rich local.
3. Drop the price and sell to an ordinary local.
4. Rent to a local at a price they can afford.
“Like you said, the government is myopic and only thinking short term”
That’s not what I said. I was responding to a comment that the govt cannot get someone to sell and raise tax revenue at the same time. I said they could in the short term. The long term goal of all the govt’s new housing policies is lower prices. I have no doubt at all the opposition is coming from people who don’t want lower prices.
Here’s another one… Van SFH.
oops….list in the fall season as opposed to lust in the fall season. Freudian slip?
I thought I had a pretty wide vocabulary, but I learned a new phrase from Grant: “ad hominem”
From Merriam-Webster:
1 : appealing to feelings or prejudices rather than intellect – an ad hominem argument
2 : marked by or being an attack on an opponent’s character rather than by an answer to the contentions made – made an ad hominem personal attack on his rival
@QT “30% of Canadian millenias (40% in Vancouver) expect to get money from their parents to purchase their home.”
This will lead to further class division since only those who come from wealthier families will have parents with enough money to help them purchase. We did not get any money from family to purchase our house, but they do own BC real estate, and there is inheritance potential that would take care of our housing concerns. So, just because we have relatives who purchased here decades ago, we stand to be in a much better position than people from poorer families or from other parts of the country. That’s not fair.
Let’s suppose a couple in Victoria each have parents with $800K houses and own their own $800K house. Assuming they each have one sibling, that’s $1.6M in real estate from inheritance and their own house. Whereas, a Saskatchewan couple with the same family circumstances but an average house price of only $300K would only have $600K. For wealthier families, the difference would be even greater. This is just from people buying their own primary residence, not speculating.
If this compounding effect of generational wealth transfer takes hold, it will put a serious damper on people from other regions being able to move to cities with greater real estate appreciation. Labour shortages for lower paying jobs are only going to be more acute than they are now. I prefer measures to cool the real estate market rather than inheritance taxes.
according to S Saretsky….
sales for west van march 1 to 23
2018 18
2017 45
2016 124
2015 69
No worries though man! Its just a gully! Just list in the busy fall season man…trust me!
BC Land Speculation Shifts to Commercial Real Estate
Avison Youg is reporting the value of British Columbia’s commercial real estate sales last year smashed the record set in 2016 by an astonishing $3.4B. Total investment into BC commercial real estate hit $7.5B in 2017, up from $4.1B in 2016.
The commercial real estate firm stated “the BC market has not registered a noteworthy downturn in pricing in more than a decade – boosted demand from well capitalized buyers with the mindset that such assets will continue to rise in value. Interest-rate increases, rising bond yields and changes in government at the federal and provincial levels along with new taxes did not appear to have much impact on commercial real estate investment in BC in 2017.”
However, land speculation in BC may face significant headwinds following the unsustainable price inflation, with Avison Young concluding “Developers and investors are also beginning to take a pause on acquiring land because the cost, combined with rapidly increasing construction costs and municipal fees, are driving the total price to untested levels. There is some concern in the ability of the market to support the pricing that the costs demand.”
http://vancitycondoguide.com/bc-land-speculation-shifts-to-commercial/
B.C. commercial real estate investment up 83% year-over-year
Real estate sales over $5 million hit a new dollar volume high in 2017, led by institutional buyer demand
http://www.westerninvestor.com/news/british-columbia/b-c-commercial-real-estate-investment-up-83-year-over-year-1.23210035
Victoria realtor gets tepid response to speculation-tax home-selling ad
http://vancouversun.com/news/local-news/victoria-realtor-gets-tepid-response-to-speculation-tax-home-selling-ad
Barrister, it is advertised as a 3 bedrooms house, but BC assessment shown it is a 2 beds 2 bath house. It is a little house with 10 rooms for a only 1414 sqft. And, it is a 2×4 construction (wouldn’t be much insulation left after 40 years).
“I wouldn’t call it “stupidity”, though, I would call it a scramble for self-preservation in a crazy world. The thing is that now that the Victoria market is attractive to buyers from all over the world, I don’t think you could raise local wages enough to compete. This really is something the government has to control, although it is difficult and they will mess it up to a certain extent.”
I agree that it is a tough one solve, but I do not agree with government control, because they tend to f__k everything up even with best the intention.
To me there are several factors in the equation here. The interest rates was kept at a historic low for too long, and 30% of Canadian millenias (40% in Vancouver) expect to get money from their parents to purchase their home. This free money thinking process to me is the largest factor in the ascent of housing price.
Weakness, where are you? It’s got to be around here somewhere.
“Trump is fucking up the whole world trade. Repercussions will not be pleasant. Gas up again, 9 cents yesterday.”
The US polices do affect us, but you can’t solely blaming them for it. To me the fault lay mostly with Canadians, because our policies rely largely on trading with American specially energy. The current price increased is due to refinery shutdown in Washington state where most of our fuels come from. It let the suppliers gouge us because we don’t have enough domestic refineries for the local demand.
I also find it is odd that BCers complaints every time fuel price go up, but at the same time they are pro taxes and protests against all energy developments. An example of price discrepancy between pro tax and low taxes cities from Gasbuddy; Edmonton $1.054-1079, Calgary $1.089-1.126, Vancouver $1.479-1.499, Victoria $1.489-1.499.
“For those who don’t want to pay the tax or sell, they can rent out full time, which will bring in additional revenue as well in most cases.”
It is correct that they can always sell or rent, but how many Canadians can afford multi million dollar homes (certainly not the millennium populous)?
Like you said, the government is myopic and only thinking short term, and we all will lose out in the long term from long term vacationers or snow birds that contribute to our economy.
In James bay there is a house at 118 Rendall St. Small lot and the size of a large condo but it seems reasonably priced. Anyone know anything about it?
“Not a good idea to not close on a purchase.”
Wow! what a mess!
“In 2016 Angela An-Chi Chang — who owned a home on the 3300-block West 14th Avenue”
How much more appropriate it would have been if her name had been Cha Ching! Sorry, couldn’t resist!
“Embrace the Left and there will be no money left for your children”
Sure Jan…. I mean Jerry. What’s a billion these days eh ?
“B.C. orders probe into B.C. Liberals’ $1B ICBC ‘dumpster fire’
Attorney General says taxpayers ‘not told the truth’ about the public insurer’s sky-high losses”
http://www.metronews.ca/news/vancouver/2018/01/29/attorney-general-orders-probe-into-b-c-liberals-1b-icbc-dumpster-fire.html
“Years of bad decisions and mismanagement by the former government have meant a fiscally unsustainable position at ICBC,” the briefing note says. “We never expected to find this level of mismanagement by the previous government.”
http://theprovince.com/news/bc-politics/mike-smyth-shocking-massive-losses-revealed-at-icbc-huge-rate-hikes-feared
Liberals scrubbed 2014 report into ICBC financial crisis
http://vancouversun.com/news/politics/liberals-scrubbed-2014-report-into-icbc-financial-crisis
I am not aware of any instance where I attacked an individual, but here is a blatant ad homonym attack:
Embrace the Left and there will be no money left for your children
Thanks LeoS for that graph of Properties Off Market. Interesting, if you turn the graph upside down and mirror-image it, it seems to match the price appreciation during the same time period, offset by a few months. Similar to the inverse relationship between gold and the US Dollar.
Jerry, instead of flinging feces from the peanut gallery at the actors on stage left who are trying, perhaps awkwardly, to facilitate a resolution to a problem, how about proposing some solutions sans the special sauce of intellectual and moral superiority? I suppose if the sword cut both ways and there was a commensurate amount of vigorous criticism of the previous governments, then I personally would find the comments to be a great dash of spice to our discussions. Instead by exculpating those actors stage right who while in power allowed BC’s laws and regulations to foster a destructive inflow of foreign capital into the real estate markets, one’s bias is laid bare. Perhaps I’m alone here but I personally prefer to engage in honest intellectual discourse and leave the demagoguery for other forums.
Ultimately it is unlikely anyone of import who is involved in setting policy reads the comments on this forum, rendering this as ultimately nothing much more than the mental masturbation of its participants. However, at least most here are engaged in honest and constructive discourse, open to opposing views and the possibility of having their mind changed. Some clearly have a bias one way or the other, but the blatant ad hominem attacks dressed up with colorful vocabulary just reek of a sad grasp for attention. Perhaps this comment in constructed in a way which will illuminate the issue and foster change? Admittedly, I won’t hold my breath.
My apologies Leo, I suppose I now have jumped with both feet into the fray of mud flinging, but there’s only so much eye rolling I can tolerate before my eyes get sore.
http://www.timescolonist.com/news/b-c/b-c-court-ruling-foreshadows-flood-of-litigation-forced-sales-lawyer-says-1.23210899
Not a good idea to not close on a purchase.
“Michael
Where so u see the TSX at the end of the year?”
Should have asked him at the beginning of the year when he was pumping us up that this was the bull of all bulls. Looks like a broken chart to me heading into no man’s land.
Those who borrowed with their HELOC’s can’t be happy.
http://stockcharts.com/h-sc/ui?s=%24TSX
I got the math from this post http://allthecanadianpolitics.tumblr.com/post/172084056914/soprie-crunchbuttsteak-crunchbuttsteak#notes
But here’s some of my own math. If rent is to fit into 1/3rd of your income after tax: $2,090/month * 12 months * 3 is $75,240 after tax. Let’s say they made the max contribution to their RRSP of $5,500. Before tax that’s $94,730/year. 52 weeks / year, 40 hours per week is $45.54 / hour. So that’s actually worse. And I think spending 33% of income on rent is pretty insane.
Ultimately “housing crisis” vs “income crisis” is mostly pedantic. It’s an affordability crisis. I think it’s massively easier to fix the cost of housing than it is to raise minimum wage by 375%. I say ‘mostly pedantic’ because no increase in incomes can fix a 0% rental vacancy.
“Wage inflation is already humming past 5%…”
Hands up from those who got a 5% raise this year, especially the government/union employees that are the mainstay.
Sorry, no sympathy there. So they may sell their vacation home, pocket a massive profit, and can rent a place instead next time.
Sure they have some economic impact when they are here but a full time resident has a lot more.
Spec tax working as intended, which is to bring more supply on the market and reduce empty homes. They helps affordability you cannot argue that
Re: affordability vs. income
There has been a really strong correlation between falling interest rates and rising house prices. I remember looking at a graph a few years ago and realizing that people don’t care how much more they are paying for the house: they are just looking at the monthly payment to determine “affordability”. However, I assume the gains in the past few years have weakened the correlation; maybe someone has a recent graph?
In the past few years, like Local Fool said, “I think this is more about misallocation of capital in a desperate search for safety and yield, and the locals jumping on the bandwagon enabled by group-think and cheap money. Crisis of stupidity perhaps?”
I wouldn’t call it “stupidity”, though, I would call it a scramble for self-preservation in a crazy world. The thing is that now that the Victoria market is attractive to buyers from all over the world, I don’t think you could raise local wages enough to compete. This really is something the government has to control, although it is difficult and they will mess it up to a certain extent.
Michael
Where so u see the TSX at the end of the year?
Since I told you guys where the top in stocks was at the start of the year, maybe you could return the favor and suggest a good inflation hedge for the next decade? 🙂
Someone really handsome & intelligent was saying on here that RE prices went up tenfold during the 60s/70s inflation.
No worries y’all, incomes will be jumping for years.
Wage inflation is already humming past 5%…
(…not to mention oil’s up another 5+% this week)
I have not sure that the income argument is valid but it is a different perspective. All along people have been saying that local people working here cannot to afford to buy a house. The fact of the matter is that local incomes in Victoria do not reflect housing prices. As Josh points out you need about $42 an hour (no idea if his math is right or realistic but I am accepting the number for the sake of argument) then maybe we need to raise the minimum wage to $40.00 an hour. We would naturally lose a few jobs and the price of Starbucks coffee would go up. But having less jobs in the city would also reduce the number of people trying to live here and would make it affordable for the remaining jobs.
Not saying I agree but it is a novel thought
In February, the average rent for a 1 bedroom in Vancouver hit $2,090. In order to afford rent for a 1 bedroom in Vancouver, you need to make $41.80/hour.
I have a friend that moved from Croatia to Vancouver and he gets by on $27/hour. Shares a townhome with three women in their late 20s. He is not complaining about affordability. Employment in itself is a step up from being unemployed in Croatia.
Barrister, I agree that the NDP have not been very clear in their message. However, you can plan to decrease a behaviour with a tax, while still budgeting for the income. I am just not sure they have any reasonable forecast to know how things will unfold.
I continue to be torn on the empty home tax. Like I said before, I can see what they are doing and the reasoning for it. I guess it grates on me because I think taxes should be about things you do now, not things you did in the past. In other words, if someone is not actively creating a problem now, I think they should be largely left alone.
There are clearly times when an exception might need to be made, but I hate punishing people for things that were clearly not an issue at the time when they made the decision.
“I am a little mystified as to what its actual goal is”
Really? If that isn’t a rhetorical question I would have thought the actual goal was pretty apparent.
The goal is to galvanise envy, to appear to have some policy of income redistribution when one’s party is bereft of any clear or original thinking on the matter, and to fabricate a class enemy when no such thing exists.
It might have been a savvy political move except for the maladroit selection of the name “speculator”. It will be quite easy to prove that there won’t be a single true ‘speculator’ paying this tax.
In February, the average rent for a 1 bedroom in Vancouver hit $2,090. In order to afford rent for a 1 bedroom in Vancouver, you need to make $41.80/hour.
Go ahead and try to tell me with a straight face that we have a “real income” crisis and not a housing crisis.
It can actually, because those who sell will have to pay income tax on capital gains (because it’s not a principal residence) which the provincial government gets a cut of. That’s just a one shot of course, but the short term is what politics is about.
For those who don’t want to pay the tax or sell, they can rent out full time, which will bring in additional revenue as well in most cases.
It’s just a warm up Andy. Trump is fucking up the whole world trade. Repercussions will not be pleasant. Gas up again, 9 cents yesterday.
“A recent west side of Vancouver sale (SFH/ Point Grey)
4117 w 11th ave.
Listed $3,388,000.
Assessed $3,704,600.
Sold $2,880,000.
$825,000 below assessed and $500,000 below listed”
“That gang stabbing was in gordon head. Some kid wore the wrong color shirt. What is that, three stabbings in a couple weeks in Victoria?”
For the price of that hood it has more random sexual assaults(latest one still unsolved), most arsons on record and now gang stabbings. Yep, so quiet and peaceful.
That is interesting. I wonder if he thinks Americans had an income crisis in 07-08, just before their housing market went kaput. Or if he thinks the same about Australia, now. Not being sarcastic. I guess you could say wage growth in the past few years has been comparatively low, but house prices over the long haul are irrevocably linked to incomes and the cost of money itself.
If he’s saying, “our house prices aren’t a problem – the incomes are”, in a sense he’s right. If wages were 50% higher than right now, a lot of housing would be fairly affordable. However, broadly speaking, housing prices don’t affect incomes, incomes affect housing prices.
I think this is more about misallocation of capital in a desperate search for safety and yield, and the locals jumping on the bandwagon enabled by group-think and cheap money. Crisis of stupidity perhaps?
Personally I would not rely on what the bank personal are telling you about the terms of a veritable mortgage. Ask them for a copy of their mortgage and read it, much better still have your lawyer rad it and tell you what it means. Make sure that you actually understand the actual mortgage that you are signing and not just some stand form that was given to you ahead of time. There standard form might not be the actual terms that you are receiving. Any half awake real estate lawyer will be able to explain the terms to you in just a few minutes.
While there are some excellent bank staff, my experience is that many are amusingly ignorant of what they are talking about. I suspect that it is far less amusing if you are not a lawyer who understands the legalize involved in mortgages and loan contracts.
My problem with the “cottage tax”, other than calling it a speculator tax which it clearly is not, is that I am a little mystified as to what its actual goal is. Is it to raise revenue or is it to force people to sell in order to add inventory. It cannot do both at the same time.
One of the worrisome facts is that I dont think anybody, especially the government, has any idea how many properties and specifically where they are located that might be impacted. It would have been wiser to just implement a ,5% tax in the first instance without any mention of the tax increasing to 2%.
It would then give the government a strong picture of how many properties are involved and precisely where they are located. I have no doubt that this will in the short term increase government revenue but not so much from the tax but rather from the Land transfer tax as these properties are sold. When the government states that they dont contribute to revenues for the province they are being rather disingenuous since obviously they pay a large amount of school taxes while never having children in school here. In the long run we will lose the out of province tourist revenue and particularly worrisome for some communities is the fact that Albertans and the ROC come here during our slow season. At the moment the economy is booming in BC and the amount of out of province dollars leaving BC might or might not be negligible. My problem is that we have no idea and that worries me.
Ironically the main beneficiary of this tax might end up being the speculators who snap up these properties as they come on the market. Personally this does not affect me one way or the other.
For a totally different perspective from a very clever fiend of mine is that we dont have a housing crisis but what we have is a real income crisis.
FYI site is working again for bc gov office. Thanks LF + Leo.
Also FYI, I asked my mortgage person at VanCity and someone at HSBC as well that question about ‘does my payment go up w a variable rate when rates rise, or is it just the proportion going to principle and interest that changes?’ and from both the answer was that only the proportion changes, payment stays the same.
Interesting article about complaint from “Sun bird” 😉
https://www.peninsulanewsreview.com/news/not-well-thought-out-arizona-family-slams-b-c-speculation-tax/
I’ve had shocking experiences with coast capital. At renewal the mortgage “expert” calculated my weekly mortgage payment using 4 weeks per month (48 weeks in a year). She couldn’t do the arithmetic either… Just a blank stare when I showed why her math was wrong using a piece of paper.
That’s just one of many poor experiences with their “experts”.
That said they give you $1000 every time you renew.
This was posted on fb. Could be a one off, but I like to watch what Van does, as it tends to be a preview of what’s to come.
A recent west side of Vancouver sale (SFH/ Point Grey)
4117 w 11th ave.
Listed $3,388,000.
Assessed $3,704,600.
Sold $2,880,000.
$825,000 below assessed and $500,000 below listed
“If uvic does create residence to accommodate 5000 students, those rental properties close to uvic might be out of business soon.”
Demand for rentals is elastic. That is, as rental supply increases, you don’t get empty units, rather people who have been doubling up start getting their own places. That means rents for the same unit go down, of course.
“If uvic does create residence to accommodate 5000 students, those rental properties close to uvic might be out of business soon.”
Presumably all the students are now living somewhere, so there will be vacancies unless enrolment of non-local students goes up a lot. Maybe places farther from UVIC or dingy basement suites will get hit harder than nicer places close to UVIC.
On the topic of rentals, there was an article in the TC yesterday that said:
“Greater Victoria’s low vacancy rate has prompted a building boom in rental housing. A total of 6,000 rental units are underway or planned throughout the region in response to the strong demand.”
I didn’t realize the number of units was so high. With so many rental buildings built in the 70s or earlier, that probably isn’t as much as it seems.
Hopefully it will bring a more balanced market which will fix the situation covered in today’s TC article. The acting privacy commissioner says, “I found a systemic practice of landlords asking tenants to provide an unreasonable amount of personal information during the application process.” I have seen some of these application forms, and they are ridiculous. Confirmation of employment/income and a reference or two should be enough.
Weird:
“He gave Nguyen credit of five months for time spent in pretrial custody. This means the remaining sentence is 19 months.”
I tend to think that prison is a poor solution to crime, but how is stabbing a stranger with a knife anything less than attempted murder?
http://www.timescolonist.com/news/local/gang-member-stabbed-teen-for-wearing-red-sweater-1.23207892
The old saying: How do you know who won a knife fight? They bled to death after the other guy.
LeoM, yes number of cancelled/expired listings is drifting upwards but not that much yet. Compared to the slow market a few years ago it is still quite low. Just another indicator we are past peak hotness though.
“How would those illegal activities cause issues for the new owner?”
There have been two incidents around Calgary where the SWAT team barged in on the new owners of a house that was formerly associated with drug dealers.
There was another incident where two new tenants were attacked by a recently released convict who went back to the house to get revenge on the previous tenant.
There can be serious electrical issues on previously used drug homes that have not been remediated because the wiring has been overloaded or illegally modified and becomes compromised.
That gang stabbing was in gordon head. Some kid wore the wrong color shirt. What is that, three stabbings in a couple weeks in Victoria?
Example of lender and insurance issues with grow-up (and possibly other drug) houses: https://www.ratesupermarket.ca/blog/buying-a-former-grow-op/
Police/city records? Sale disclosure? Google? Seller’s info and length in the house? Not sure it is 100% safe even with an agent (so we did all above for resale houses we bought, in addition to the agent).
No worries of that. The relentless pressure from students won’t be changed enough to make Gordon Head lose student rentals. The new residences will be a welcome addition, but it will still barely dent the demand.
The two best affordability measures for Victoria have been the stress test and more student housing. It is too bad that the student housing wasn’t built as of yesterday.
Let’s see. Grow-ops cause mould problems and I doubt a film of meth ingredients would be very healthy. Johns wandering up to your door looking for a good time, having not gotten the message that your house is no longer bawdy. Perhaps a drive-by from a rival gang…
How would those illegal activities cause issues for the new owner? How to tell if a house is involved in illegal activities before if you don’t use an agent?
An un-licenced daycare is not illegal in BC.
It’s not as though it’s a grow-op, meth lab, brothel or gang den. Now those could pose an issue for a new owner.
I watch Steve Saretzky and Owen Bigland too.
Huh, thanks for that caveat emptor. The issue seems to be that Canadian lenders call them all variable rate mortgages and yet some of them are actually ARMs. And if you have a true variable rate and rates rise I guess your payments don’t increase but your amortization is lengthened?
“given it’s location it could very well end up being stuffed with students.”
If uvic does create residence to accommodate 5000 students, those rental properties close to uvic might be out of business soon. I wonder when uvic will finish building those residence.
For that house that running daycare in there, I wonder if they have licence? I wouldn’t want to live in a house that has illegal business before. Does any one know that if a house ran illegal business before would that affect the new owner?
Steve Saretzky is great. I watch his YouTube vids when he releases them. His focus on VanRE is great, but I also value and appreciate his awareness of debt, the history of it, and countries around us that have gone through deleveraging events via their housing markets.
I also watch Owen Bigland from time to time, to get more of a bullish/investors perspective. I find it harder to agree with him on many things, but that’s sort of the point. He makes some defensible arguments that have more substance than “because Vancouver”.
Thanks for mentioning him. I remember seeing a few of his videos. I didn’t realize that he does some good analysis of the stats on his website:
http://vancitycondoguide.com/
I still think a few comparisons to Vancouver might be interesting if you are writing in the future…
Where’s the weakness?
I’m not sure if those charts/numbers tell the full story.
I don’t track the market close enough to know with certainty, but it appears to me from my small PCS account that more and more house listings are expiring unsold. Some get relisted immediately, but others don’t.
If the number of unsold listing is increasing it will be causing stress for wannabe sellers. If unsold listings are trending higher, it could be a subtle indicator (or predictor) of the market trend. A large part of the sellers market is psychological and failure to sell will create anxiety and anxiety could slowly lead to panic.
Stress, anxiety, and panic keep people awake at night, and destroy marriages, especially if they are maxed-out on HELOCs and other debt.
Whew! We can all sleep better knowing the wisdom of HHV is once again available to civil servants!
An adjustable rate mortgage (ARM) is reviewed at intervals and then adjusted based on the current prime rate, the rate at which a commercial bank’s optimal customers can borrow money. This rate adjustment affects both the monthly payment as well as the interest rate of the loan. If you have an adjustable rate mortgage and the interest rate drops, then you benefit from the lower mortgage rate instead of being locked into the higher mortgage rate as you would be with a fixed mortgage. The risk, of course, is that if interest rates rise, then you are on the hook for those increase in payments as well. Adjustments can happen without much notice, and as often as eight times per year. Adjustable rate mortgages are beneficial if you can withstand fluctuation in monthly payments but want to take advantage of lower rates.
A variable rate mortgage (VRM) is another type of mortgage where the interest rate of the loan fluctuates based on the current prime rate. With a VRM, though, your monthly payment remains the same because the fluctuating amount is the amount of the payment that’s applied to the mortgage principal. A VRM allows you to keep some stability in terms of consistent monthly payments, but also reap the benefits if interest rates fall. Rates are typically lower with a VRM than they would be with a fixed rate mortgage.
I did not know this distinction when I was first mortgage shopping and my broker certainly never explained this.
Leo – are you talking about the variable rate mortgages where the payment stays constant? If so that is for real. From my limited experience there seem to be two kinds of variable rate mortgages. One where the payment goes up or down with every rise or fall in the interest rate in just the amount that your amortization period stays the same. My current mortgage is like that. Every rate increase has meant a few dollars more per month.
My previous variable rate mortgage (with TD for two 5 year terms) was different. The payment never changed. When rates went up or down, more or less of your payment went to cover interest. The mortgage spelled out that if interest rates went so high that your payments weren’t covering interest THEN the payments would increase.
Huge thanks to Local Fool for tracking down the blockage on the BC Gov networks. Should be working again in a day or two.
Not really. Steve Saretsky does the best job of that. Seems to me SFH very slow and condos in a severe inventory crunch there.
I talked to TD and the person there said that pre approvals still had to pass the stress test with them. That said after the nonsense I heard from CIBC about variable mortgages I don’t put much stock in bank sales staff anymore.
Who knows how many pre-approvals were out there. Regardless the last of them should be gone in a month at the latest
You’re right I didn’t mean it to read like that – just Rosario is junk! Should’ve put Henderson in a diff. paragraph. That said, that stretch of Henderson is quite busy and doesn’t impress me much.
Exactly – and given it’s location it could very well end up being stuffed with students.
Sidekick Spliff, from previous thread:
You are right, I-joists are good. OSB is more a personal phobia for me, having seen a lot of it misused. Having a joist that is predictably straight with better load-bearing characteristics is definitely good. The whole OSB industry is able to use wood that would otherwise be in burn piles or just pulp for paper, so there is an efficiency gain, despite the synthetic glues.
As you say, for I-Joists fire is probably the main concern. For moisture, the OSB webbing component is probably well protected by being in your floor (instead of a wall). However, any moisture damage you do get is going to be harder to repair than a couple of OSB sheets in your wall.
QT:
I think whoever listed that Vancouver house might have been on crack. At that price Uplands is starting to look cheap. No wonder people are selling out of Vancouver and moving here.
3392 Henderson. 6 beds for a 2700 sqf house and within 10 min walk from UVic screams rental property.
“Wow is all I can say. 2.4m”
I have to agree, and I can also up the ante to $7,000,000 for a downtown Vancouver crack shack.
https://globalnews.ca/news/4095273/for-7-million-you-can-own-this-fixer-upper-home-in-vancouvers-west-end/
https://www.remax.ca/bc/vancouver-real-estate/na-1511-barclay-street-na-wp_id197033183-lst/
@ Hawk, yup love it! Interestingly you inspired me to compare that to the bitcoin chart. It bares a striking resemblance.
Looks like the city of Toronto is still crazy
https://www.theglobeandmail.com/real-estate/toronto/palmerston-home-buyer-disparaged-for-paying-600000-over-asking/article38310307/
Wow is all I can say. 2.4m
https://www.youtube.com/watch?v=5slbSsCEjNY
Luke,
3392 Henderson doesn’t look like a junk, it looks not bad. But it does look like they are running a daycare in there….
There’s something called “credit” which disappears fast in a recession/correcting market. Funny to see the usual “it’s a government town, less land, nice and sunny” etc etc. It’s all about credit, period.
It’s like looking out the window 20 minutes ago and it’s sunny as can be but the Doppler radar says the complete opposite as the storm inches closer and closer.
Dow down 700 plus, TSX takes a similar whacking. Interest rates moving up will have huge implications .
“Investors aren’t waiting around. According to Bank of America Merrill Lynch, last month investment-grade bond funds saw their first net fund outflow in 60 weeks ($2 billion) while high-yield bond outflows hit their second-highest weekly redemption on record ($10.9 billion). Since then, high-yield outflows have continued for eight straight weeks. “
You mean this one swch25?
http://2.bp.blogspot.com/-ZWsQNhB12M4/Tf161ZP8iFI/AAAAAAAAAu4/iEFXxNao1KU/s1600/800px-Stages_of_a_bubble.png
Leif
Not sure why the winky face is there. I couldn’t tell if you have a penchant for hyperbole or if you actually think downtown is literally awash in crackheads. I think it’s actually the latter, which is sad. The crime rate all over Victoria, even in the “bad neighbourhoods” is orders of magnitude better than where I lived in Saskatoon or a bunch of other places I’ve lived. I always have to giggle when someone here complains about how crime-ridden it is or talks about that one time they saw a homeless person and now “the downtown is dying”. I assure you, you don’t have to sift through a knee-high moat of needles and human feces to enter downtown. It’s actually quite nice here.
I don’t recall ever saying specifically that. What I’m hoping for is a return to early 2015 prices, which would be ~30% down for SFHs. And here’s your friendly weekly reminder that hopes do not equal expectations.
🙂
queue hawk posting ‘the graph’
I tend to agree with Richard we are not likely to see major house price decreases in the immediate future. Inventory is going to have to build up a lot before there is any price capitulation.
The first sign of real trouble might be in the condo pre-sale market. It is often the canary in the coal mine. The buyers of pre-sales are mostly speculators gambling on price increases. If the market looks flat or poised for a downturn then risk seems greater than the reward.
I dont believe that the speculator tax is going to have a major impact anytime soon and may see more impact on the condo market than the SFH market.
But Josh can keep hoping for a 59% drop in SFH prices in James Bay but I have a hard time seeing it any time soon.
I’m not that surprised our market isn’t slowing all that much – it’s exactly what I expected. Things will get a bit more subdued from frenetic craziness to just warm/hot, but the rare quality and well priced places will still get scooped up quick. I also expect prices to more or less just level out or still show small average increases. There just simply isn’t enough good stuff to go around in these parts.
ROFL! Ha ha – you have me in hysteric’s Barrister! That place is def. a piglett – oink oink!
However… it’s in South OB and we all know people go banana’s for that area too! I think that place will sit, but we’ve been surprised recently by a few sales in OB.
A couple new listings caught my eye that I think will go relatively quick… 434 Arnold in a great location in Fairfield looking good at $1,085k, and 2060 Townley at $1,249k also at first glance looks somewhat good – but it’s ‘pokey’ with a putting green as well. There’s an open house this weekend – see you there 😉
There’s also… as ever… more junk being listed or re-listed: 2368 Rosario St at $1,055k – give me a break, what a heap of junk. And… 3392 Henderson at $1,060k – looks like they’re running a daycare in the basement.
Yes, I’m curious about what’s been happening in Van recently as well – not keeping track of that much. I suspect a huge impact from all the new taxes there – but then again – do the FB’s care or more likely they will find ways around the FB tax/ spec tax/ empty homes tax. Maybe do an analysis of Van and how it relates to us % terms of buyers in a future thread head? Hard to know for certain though, when someone becomes ‘local’ just weeks after moving here to a rental and then looking to buy…
Victoria real-estate has got so many components supporting it that it has a hard time going down. (massive government jobs, retirees, land is limited) It usually just flat lines (outer areas and condos do go down) 2018 is not 1980 Victoria. That being said my flat line opinion will be tested this time in the SFH core. I have never seen so many things attaching the markets at once. Interest rates/rules/ government intervention and an economy that may weaken. This is going to be interesting to see what the housing market here can absorb negatively.
I SEE A RECESSION COMING BUT HOUSE PRICES HOLDING…..A CONTRADICTION IN TERMS.
I think the Calgary market is a good bell-weather of what is to come nation-wide. The new OSFI rules are hitting Calgary hard with sales for the year down over 30%. Bizarrely the average SFH price is holding steady while the median is up almost 5%.?
If this trend holds true which I have no reason to believe otherwise, there will be 3500 fewer SFH sales this year than last, accounting for over $2B less in RE transactions than 2017 which was the low point since Calgary’s economic collapse of 2014-15.
“Money makes the world go round” so taking that much $ transactions out of the local economy plus all the spin off effects is going to be huge. Canadians go to ground when it gets tough and desperately hang onto their most important assets…..their homes.
Here in Victoria the economy may well be the most solid in the country. So in spite of falling sales nos. there is little reason to anticipate any significant changes to overall prices.
I had suspected that legalizing pot would have some bad consequences but look at the listing at 2160 Bartlett Ave in south Oak Bay for 1.5 million on a giant 5,500 square foot lot. It is not a new build but cheap lipstick on a piglett (too small to be a pig).
Leo S, thanks for the great analysis.
Do you keep track of the Vancouver market enough to do some comparisons with what is happening there? It might put things in context a bit, since a decent amount of the pressure for housing here is driven by people moving from Vancouver.
Hey hey. I am a short time lurker on this blog, I really dig the evidenced based approached to the blog posts and lots of discourse in the comments.
My wife and I plan on selling our townhome for a decent profit towards the end of April and begin our search for a detached home. A couple of questions for the crowd.
other than HHV what real estate publications do you follow and can you recommend any books that pertain to the Victoria market. My favourite doomsday blog is the greater fool, I am afraid that if Garth Turner’s predictions come true he head might explode from screaming “I told you so!!!!”
Agree AZ, wait til the end of April when last of those pre-approvals are history and listings increase. Those with big equity and small mortgages will never influence the market, it’s when the new money stops coming in that shifts begin.
With tarriffs and other bonehead Trump moves and upcoming constitutional crisis the markets will soon get very rattled.
It’s a stretch to even call it a soft landing when rates going up 7 times over next two years have just had #1 rate hike.
Again, do the math on those refinancing going from mid 2% to 5% plus a possible additional 2% stress test for some with shaky employment history/original income statements scrutinized. No side hustle will make up that kind of difference.
Thanks for the wonderful graphic. I find it interesting that sales seem to be down across the board and that we are not seeing a difference between condos and SFH. I wonder if pre-sales of condos has slowed any?
The only issue I have is with defining Jan 1 as the start of the stress test is those with pre-approvals prior to that date qualify under the old rules.
If you think that isn’t a big deal, I recently had an acquaintance buy a house using their pre-qualification who would not have been able to buy the same house using the new rules. Don’t know how many people there are out there like that.
Thanks for the graphic Leo.
It looks pretty compelling.
I was hoping to find some more evidence of differences in activity by price range especially in condos but was surprised nothing compelling came up. Seems to be pretty broad based.
What’s unclear to me is how much of the 20% decline is due to stress test, and how much is just due to the market slowing down. It’s clear that the stress test had an effect by how many sales were pulled forward in November, but how much is unknown.
as always great analysis