March 26 Market Update
Weekly sales numbers courtesy of the VREB.
| Mar 2018 |
Mar
2017
|
||||
|---|---|---|---|---|---|
| Wk 1 | Wk 2 | Wk 3 | Wk 4 | ||
| Unconditional Sales | 72 | 235 | 401 | 545 | 929 |
| New Listings | 104 | 424 | 723 | 983 | 1217 |
| Active Listings | 1434 | 1627 | 1684 | 1734 | 1556 |
| Sales to New Listings | 69% | 55% | 55% | 55% | 76% |
| Sales Projection | — | 761 | 743 | 696 | |
| Months of Inventory | 1.7 | ||||
New listings are still trundling along at the rather mediocre pace of last year, but single family sales had an interesting week, taking a dive after a long run of steadily increasing like we normally expect in the spring. Yes it is only one week of sales, and it could just be a larger than normal number of sales that haven’t been entered yet for last week, but it’s a drop that stood out to me. Maybe spring break, but last year we didn’t see this drop. I’ll be keeping my eyes on this week to see whether it’s just a blip.
In any case it seems the gap between last year and this is widening as we proceed further into the spring. Note the sales to list which has been stagnant at 55%. Again a measure which usually increases in the spring. It all adds up to a market that is not following the usual seasonal pattern.
At this pace we are on track for sales at 696 for the month, which is down 25% from last year. To put that into some context, the 10 year average is 713, the record is 1121 in 2016 and the lowest in recent history was 476 in 2014. So just under the 10 year average at the moment.
We haven’t seen the sales slowdown affect prices to a significant degree yet because inventory is still so low. Core single family is flat year over year and has gone nowhere in a while, while the entire detached market is still pulling off small gains. Condo prices still relatively strong. That is the market I believe will be the shakiest going forward, but again it will take some time to build up the inventory there.
Oh, I thought you were just asking for a “decent guess”? Sorry I don’t have a answer for definitions that hold up in court.
“I’d be ok with doing away with the provincial immigration program in BC entirely. If foreigners are the problem tell them to stay home.”
Please don’t give the socialist any idea. The next step for them is to demand a wall around BC and make the Albertan pay for it.
I’d be ok with doing away with the provincial immigration program in BC entirely. If foreigners are the problem tell them to stay home.
New post: https://househuntvictoria.ca/2018/03/26/spec-tax-revised
Bearkilla can go buy up the mobile home park now and be Mr. Lahey reincarnated. 😉
https://youtu.be/WdlIKy2lJ_g
Barrister, thank-you for giving me a hearty laugh.
I am not as pessimistic as some people here regarding NDP intentions, but I do think that they didn’t really plan it through all the way. It still worries me that they are making it up as they go along.
Personally, I think the changes fix a significant number of issues with the first draft. However, many questions remain.
Maybe they will figure it out by the time the law gets written? I still think it is unfair that they haven’t given enough detail for people to start planning ahead.
Since the socialist govt seems to be making up new law on the fly, why don’t they try to fix this…
How about rich foreigners who want to come here and rent a house or condo. Aren’t they taking up the same space as a foreigner who owns a house here. Taking the home away from a BC resident who could raise a family there. Surely we can do s9mething about this, by levying some huge new taxes on the basis that they are not paying their fair share.
The solution to the housing crisis is not crazy ideas like this, but instead is to construct lots of new homes and infrastructure. Not to try to scare away “foreigners” from living amongst us by taxing them if it is their second home.
No one will pay this tax. They’ll collect zero. Unless they set a minimum rent I guess.
Well there you have it folks, government now interceding in the rights of home ownership, making rules and regulations on the fly. There will be no stopping them now, the genie is out of the bottle and expect more and more intervention and more and more crazy ideas to come to the fore in the absurd idea that they have the power/means to legislate home availability. It will only get more and more administrative and complicated from here. A sad day indeed.
Instead of a government getting down to serious analysis and hard work they’ve chosen the absurd idea that they can legislate an end to the housing crisis.
Instead of giving young BC want-a-be homeowners a leg up they want to bring existing home owners down.
Instead of looking at all sorts of options for incentivising affordable housing and encouraging massive housing construction they think they can legislate accommodation space.
Yes, there will likely be some moderate short term housing gains but three years out when construction grinds to half the activity of today, critical housing shortages will really come to the fore and watch for crazy house prices and rents then.
I hereby identify as a Satellite Family (member / person). If there is any other loophole to be exploited by perceived victim status, let me know so I can embrace it.
The satellite family issue is going to take a small army of bureaucrats to administrate. Is it a satellite family or is the wife just separated and living off capital in a bank account. Since most of the satellite families are generally believed to be headed by women this may raise some serious issues affecting the second class status of women. Students generally are over eighteen and are considered independent adults under over law. If they are paying for a house from either inheritance or legal gift I am not sure that you can tax them based on their parents income.
Tonight the BC law society is cheering.
Well is there a minimum rent and can one rent multiple units? Or is that rent speculation that needs to be stamped out too?
Much like the question… When does tax avoidance become tax evasion?
“For no apparent reason”
This has been said many times since the tax was introduced but of course there is no reason. The entire notion hasn’t been reasoned, it is cant.
The changes improve what was but this is odd:
BC folks with large current incomes pay no tax while retired folks with larger past incomes pay the tax based on current income. S0 those who can afford the tax the least pay the most relative to income for no apparent reason.
Re: Satellite family
freedom_2008, that is useless I am afraid. I want some definitions that could hold up in court.
There is no sensible law in Canada that says a student cannot own a house. In fact I know a BC born Canadian university student that inherited their Canadian grandparent’s home. Would you outlaw their primary residence?
This starts to feel like “I know it if I see it”. I have high expectations from the forum members here – I would like to drop the “just trust us” stuff and get to some actual enforcement details.
So how much does the rent need to be $1 a month enough? And do the renter’s need to move in?
“James said second homes in condo developments that don’t allow rentals will be temporarily exempted as well. “ https://www.vancouverislandfreedaily.com/news/rural-cabins-cottages-exempted-from-speculation-tax/
Good move. Expect condo prices in developments that don’t allow rentals to go up, and other condo developments will soon become “no rentals allowed” too, as a spec-tax-free-for-all-zone. And is the “temporarily exempted” part of that quote that they couldn’t think of what to do about it now, and hope that the solution would be to force people in that situation to sell the no-rent-allowed condo because there’s no option to rent it out?
“That will raise a negligible amount of new money, yet introduce the idea that BC doesn’t want Albertans and other Canadians to come here, and so they should be taxed as undesirable second-class-citizens. Very stupid!”
I agree wholeheartedly that this spec tax is not thing more than a political ploy to make it look like the politicians care about the poor. IMHO, this ruse is going to do more damage in the long run instead of solving the housing crisis.
“I am also somewhat blown away at some of the sales on tiny houses I think are in bad locations around hillside and what they are selling for.”
I too have difficult time trying to understand the crazy and expensive tiny homes concept. However, my take on it is that many people who purchase them are people that do not want to live in a condo but can’t afford a SFH or townhouse.
“Did you need any proof that it is a wealth tax pure and simple?”
Not pure and simple at all, since you can own as many properties as you want and not pay the tax if you rent them out. Also, if you own an empty property you will be exempt if your taxable income is commensurate with its assessed value. Or empty properties in rural areas. Oh, and it doesn’t apply to non-RE assets either.
“1765 Oak Bay Ave Condos. Why do these have baseboard heating? I haven’t looked at condo’s in a while but I would have thought new places would have heat pumps?”
I think it may have to do with TCO, heat pumps initial cost and on going maintenance may take too long or isn’t going offset the energy saving in a condo.
Condo have much more volume to outside surface area when compare to a SFH, and my guess is that the average condo annual heating cost from baseboard is going to be less than $300. Heat pumps saving at best is 50% or roughly $150 of electricity per year, so it doesn’t make sense to have heat pumps when yearly maintenance cost ($150 or more) going eat up that saving.
Those home owners with occupation as “house wife” and “student”? Their income are normally very low and pay little income tax, and house money is from family somewhere else (who don’t claim their world-wide income to Canada) …
It is far, far past a joke now.
Did you need any proof that it is a wealth tax pure and simple? They have given it to you. Your avaricious overlords will permit you to have a second home worth 400k, but if you exceed this figure you will be penalised. Wouldn’t you love to have sat around the table with the idealogues who made that THE number?
Imagine how many new uncivil servants will be needed to keep this creaky edifice in existence. Is it even remotely possible that the revenue collected will meet the expenses? No, but it is precisely the idiotic, quixotic, beau geste the loony left excels at.
The plot thickens…
Willis Point and East Sooke are exempt.
Not in the info sheet: “James said second homes in condo developments that don’t allow rentals will be temporarily exempted as well.”
“Temporarily”
I am still curious how they will define a “satellite family.” Anyone have a decent guess?
Very bad tax, as amended!
If I was a house builder, in the face of this new tax, I would assume that prices will fall in the “spec tax” areas like Vancouver, Victoria, and Kelowna. So I wouldn’t build as many new houses there. There may be less vacant homes as a result, but there will not be a continuation of the boom in new builds that we are seeing. The vacant home total is tiny compared to annual new construction -killing those new builds will keep people out of new homes for a generation. There are 4,000 vacant homes as identified by the Vancouver spec tax, that’s a one time gain of 2,000 if half become non vacant because of the tax. Compare that to the boom in new construction – 40,000 new units per year being built in Vancouver before this tax was introduced, http://vancitycondoguide.com/the-big-boom/ so how many new units do we think will now be built, and all we have is “vacant homes”to make up the deficit?
And there’s more… A tiny spec tax difference between BC residents (0.5% tax) and non-BC Canadian residents (1% tax). That will raise a negligible amount of new money, yet introduce the idea that BC doesn’t want Albertans and other Canadians to come here, and so they should be taxed as undesirable second-class-citizens. Very stupid!
“So no-rental-allowed buildings are probably one of these “special circumstances”, which were given examples but not a completed list on government info sheet.”
I read that to be a different kind of exemption from “special circumstances”. Grandfathering exempts those who already own but not those who buy in the future.
Marko probably knows better about the difference of price and selling time between rental-allowed and rental-not-allowed condos with similar size and quality.
From TC:
“Homeowners can apply for an exemption based on “special circumstances,” James said. This could include seniors moving into a long-term care facility or relatives who inherits a property after a death in the family.
People who own condos who are barred from renting due to strata rules will be grandfathered in, James said.”
So no-rental-allowed buildings are probably one of these “special circumstances”, which were given examples but not a completed list on government info sheet.
The exact wording about the $400K:
“British Columbians who are Canadian citizens or permanent residents, and not part of asatellite family, will be eligible for a tax credit that is immediately applied against the speculation tax. This credit will offset a total of $2,000 in speculation tax payable. For
homeowners with multiple properties, the tax credit will only apply to one property.
This tax credit will ensure that British Columbians do not pay tax on a second home valued up to $400,000. For more expensive vacant properties, the credit ensures that tax only applies to the value of the property above $400,000”
To me, it sounds like all BC owners of 2nd can-be but not-rented home in the designated areas will need to pay the 0.5% spec tax, but the payment amount will be offset by up to $2000 credit. So the real payment of the spec tax = valuex0.5% – Min (valuex0.5%, 2000).
“One guy has a condo in a building where rentals are not allowed and he is exempt from tax. ”
There is nothing in the updated fact sheet that indicates this.
https://www2.gov.bc.ca/assets/gov/taxes/property-taxes/publications/is-2018-001-speculation-tax.pdf
Josh:
I got to admit that the “Eye of Sauron” quote gave me a smile.This beginning to really feel like a “Yes Minister” episode where Humprey explains that the purpose of the “Speculation Tax” is not tostop speculation but rather to make it appear that the government is doing something about speculation but without upsetting the speculators.
Perhaps not, but that rests on the presumption that market speculators will continue to be exuberant moving forward. Speculation needs a rapidly rising market, not a slowly rising or flat one.
I wonder if I am understanding this correctly. There are two Albertians that own a condos in Victoria.
One guy has a condo in a building where rentals are not allowed and he is exempt from tax. The other guy bought the identical condo in a building where rentals are allowed but he is not exempt unless he rents it out for six months of the year. Is the foreign owner who bought in a rental restricted condo also exempt?
Does this suggest that rental restrictive condo building will be more attractive since foreign buyers would prefer them? or am I getting it wrong.
@AZ
This policy change makes no sense to me as well.
@josh
No it just means there won’t be any <400k condos for much longer.
Who knows what they were thinking with that policy change.
Does this seriously mean that speculators could just move their Eye of Sauron gaze towards under $400k condos and make a killing despite them being in the heart of downtown Victoria?
Usually the first sign of a crash is when the subs stop getting paid. Where there’s smoke there’s always fire in a bloated bubble.
http://www.richmond-news.com/news/contractual-rift-lawsuit-leads-to-trade-centre-tower-cranes-falling-silent-in-richmond-1.23210567
Updated fact sheet: https://www2.gov.bc.ca/assets/gov/taxes/property-taxes/publications/is-2018-001-speculation-tax.pdf
Excellent observation. If the housing market is weakening then you will first see it happening to the odd houses and homes on busy street locations. The fugly houses of Victoria. New listings in a subdivision built by one contractor are tough to lower . Because people that just bought from the developer get pissed off with him/her/zim/them. Instead you’ll find incentives to buy like new TV’s or a trip to a warm climate included in the sale.
New details of spec tax in:
Qualicum and Parksville exempt from spec tax. West Kelowna and Kelowna not as they should be.
From CBC Justin McElroy’s twitter:
@j_mcelroy
19m19 minutes ago
More
Any homes valued less than $400,000 will also be exempted from the speculation tax.
@j_mcelroy
20m20 minutes ago
More
The speculation tax will no longer include most Gulf Islands, says James.
The speculation tax will also be only 0.5% for British Columbians, 1% for Canadians, and 2% for non-Canadians by 2019.
@j_mcelroy
21m21 minutes ago
More
#BREAKING: B.C. government announces that the speculation tax will NOT apply to people with cottages on the lake or secondary cabins.
So the spec tax mirrors the Vancouver tax and homes under 400k exempt. BC residents’ rate reduced, foreign buyers’ rate increased. Rent for six months and no extra tax. Stratas not permitting rentals exempt. In care and exempt. Gulf Islands, Parksville and Qualicum exempt. Kelowna and West Kelowna still affected.
Bearkilla’s mobile home on the Peninsula is just rocketing skyward as pad rentals double.
Agreed. I bet that in 6 months time, you will continue to post intellectually vapid nonsense that leaves bears and bulls alike, wondering why you bother to post here in the first place.
It’s pretty much a sure thing. Take it to the bank. 🙂
One of the safest bets around is to bet against a Victoria real estate bear on this blog. It’s pretty much a sure thing. Take it to the bank. Ask the original owner of the blog about that sometime. Bet there’s still snow on the ground in Airdrie.
@LF
Carole James, in her announcement to the Press, March 26, 2018.
Sigh. Or perhaps in her announcement to the Beaverton. Whatever the announcement is, I doubt it will actually deal with speculation.
Haha!
1765 Oak Bay Ave Condos. Why do these have baseboard heating? I haven’t looked at condo’s in a while but I would have thought new places would have heat pumps? I know my wifes condo in Toronto does and so did the majority of my friends. Do they only put these large buildings? I thought 1765 Oak Bay Ave was a luxury building and I looked at some photos to see baseboards sprinkled around which I usually equate to cutting costs (cheap building).
Prediction:
We have erred in the initially contemplated structure of this tax, which now appears to be more about attacking wealth than speculation. Accordingly, the tax will be restricted to include new taxes on sales of non-primary residences sold. The amount of this tax will be 100% for homes sold within two years of purchase, 75% within three years, and 60% after 4 years. Certain exemptions may be made for those looking to develop properties or other special circumstances, to be determined in an open public forum.
Further, an audit and enforcement team will be set up with powers to monitor and enforce this tax. The penalty for evading the taxes will begin at $250,000 per violation, and may include civil forfeiture of the property and/or criminal prosecution.
And finally, all property purchases must clearly indicate the benefactor of the purchase, who must also provide at least five years of T4 documents or other proof of income within Canada. This information will be sent to the Canada Revenue Agency and may be subject to audit. Failure to generate these documents will render the sale void, without recourse to the purchaser.
Carole James, in her announcement to the Press, March 26, 2018.
Sigh. Or perhaps in her announcement to the Beaverton. Whatever the announcement is, I doubt it will actually deal with speculation.
Spec tax details coming in 2 hours
http://www.cbc.ca/beta/news/canada/british-columbia/speculation-tax-government-update-exemptions-james-1.4593681
I noticed 2 homes on my watch list in Gordon Head going for $50 and 100k under asking over last week. Also a bunch of price changes.
We went to a few open houses, all of them seemed to be up 5% more than in the fall 2017 for worse houses. I’m curious to see what they will sell for.
@Neil
My friend bought into Royal Bay @ $650k Spring 2017 and those same homes now are 800k this Spring. It seems like prices really jumped up there this past year.
I am also somewhat blown away at some of the sales on tiny houses I think are in bad locations around hillside and what they are selling for. It would be great to know who bought these houses as the majority I would assume are from people out of town.
I have been looking at the listings for entry level single family homes in the Westshore for a few months now and I am noticing that attractive listing seem to still be disappearing quite quickly while the inventory that seems to be building up consists of new construction and stale terrible listings. I personally think that this could be contributing to the lower number of sales as some buyers are either choosing new construction and therefore pushing their purchases into the future or waiting on the sidelines for quality alternatives. I can’t speak to other segments of the market but that has been my experience in this segment. I am curious what are people’s thoughts on this?
Any stats to back that up? As much of a pain as it would be to charge an EV with a normal socket, it can be done and would actually meet most commuter needs. Unless a building had a bunch of super-chargers installed in the basement and a bunch of Tesla owners moved in and they all charged at the same time, I don’t see that being a problem. If a condo can handle the dinner rush of everyone’s 50A stove and/or their electric baseboard heaters, it can also charge their cars.
Predictions are… well, just predictions. Most people, from “experts” and experts like (say Garth T) to ordinary folks like us, often get them wrong. So not a big deal to admit failings as there would be too many. The important thing is to know what you don’t know, and there will be more of them when you get older. 😉
Finally a new chart that Hawk can be happy with.
Track records are important for credibility. If someone has been predicting an imminent Victoria RE crash for the last 6 years, or they say that our prices can only go up, then that drops their credibility and you can just dismiss their messages as noise.
If only those people who make predictions were of sound enough character to admit their previous failings, then we could truly focus on now 🙂
It does seem that there has been a huge increase in supply for condos and so I would think that buying any condo would be risky especially with the new rules pending on airbnb’s etc.
Most of the new condos, either in the ground or almost completed, are out of date already because they do not even have enough electricity coming “into” the building to handle all the electrical cars that people will be switching to. Why anyone would buy a condo without this vital capacity baffles me, because each owner will have to bear the massive cost of bringing the building up to the near future electrical standard.
Some of the building projects are saying that they are installing one or two electric charging stations but this is as useful as saying you are making one or two stoves available for anyone who wants to to cook supper!
Looks like the beginning of The Big Dump. Rates going up 7 more times doesn’t get more scarier with a record debt bomb that freaks most out with just a .25 point hike.
I would be severely disappointed in myself if I had to resort to looking up old posts no matter how long it took. Who cares what someone said years ago, all that matters is now. Petty.
Glad to see I wasn’t the first to post Wile E. Coyote cliff vids.
CS: I suspect “Uh uh” was not everyone’s actual first thought.
Thanks for the numbers. The week was slow because of the weather, it was a long weekend and Victoria Escorts were offering a daytime couples special.Also it was the official national Game of Thrones rerun week.
Uh uh?