March Market Update
The market has been cooling for quite a while now. Peak activity in terms of sales was 2016, however one could argue that that was an anomaly fueled by a temporary influx of out of town buyers igniting local panic buying. If we look at the longer term trend, both 2016 and 2017 were really market peaks in terms of demand.
Last year we had steep sales declines, but mostly because we were coming down from the insane 2016 and just didn’t have the inventory to maintain those kinds of sales levels. So while we saw large year over year declines every month, this didn’t actually reflect any substantial cooling of the market, just inventory constraints. This year is different. Inventory is roughly the same or a bit higher than last year, but sales continue to be slowing. March sales are down 27% from last year.
What we see in the single family market in particular is that the spring market is coming in much weaker than normal. The market always heats up in the spring and months of inventory declines, but this year it is barely drifting downwards.
Inventory is a tale of two markets. Condo inventory is still extremely constrained, and once you take out the pre-sales there is no improvement in selection at all over last year. Single family is starting to look better, with an uptick in inventory in March and a sign that we are breaking the low inventory pattern we have been in for 18 months. 
Prices meanwhile, are still on the upward trend, even if only marginally for single family. It makes sense given that although the market has cooled it is still firmly in sellers market territory.
My Take
Looking at the usual metrics (sales, inventory, months of inventory, sales/list, etc) the market continues to cool but these are all leading indicators that will take a while to really show up in what we care about, which is prices. For single family, I believe we are a month or two from the top, while condos are likely to follow late this year. What we have seen is that the market in previous declines has been very sticky as measured by a median or average price basis. However that doesn’t mean there aren’t deals to be had. In a hot market, there is way too much scrutiny on every listing for any really good deals, and even desperate sellers can always unload a property. That’s different when things are slow, buyers are convinced it’s a bad time to buy, and sellers need to be patient. That’s when you can find opportunities and that time is coming up.
I continue to be convinced that the spring market is hiding a larger slowdown than most people are aware of. People see that every month we have more places selling and the market is getting more active so they conclude that it’s all fine. However that is merely the normal seasonal heating taking place which is stronger than the market trend. I think a lot of people will be surprised when the downslope in the market arrives (July – Dec) and they see just how weak it is.
Two months ago I projected that as long as this pullback was orderly, it was going to take until early 2020 to bring inventory back to normal levels. I still still think it will take this long, however the new wildcard here is the impact of the spec tax. It has the potential to bring substantial inventory on to the market that we wouldn’t have normally seen. Although the government has dialed it back, it has also re-committed to the tax and now the question is how many owners of second homes that are affected will pay it or find a loophole versus putting the property on the market. It will be interesting to see how this plays out.
New post https://househuntvictoria.ca/latest
Let’s leave this topic for another forum, thx - adminLet’s leave this topic for another forum, thx - adminI had a voucher for a free 16amp charger from Bosch when I purchased the vehicle. So I only need to pay for installation. They tried to upsell me to the 30amp unit, but I only have a 100amp panel so the 16amp only requires a 20amp circuit, while still cutting my charging time in half. I saw this idea on a forum about running a 40amp conduit so if we DO upgrade to 200amp in the future, it will be a very simple switch to a 40amp breaker and swap in a bigger charger without having to rewire. Electrician thought I was brilliant!
Also, he mentioned that their calls for EV chargers have spiked. He had 3 more quotes for EV chargers after me for that same day.
https://www.boschevsolutions.com/charging-stations/bosch-level-2-ev-charger?sku=EL-51245-A
Having never been in Ottawa, how exactly is Ottawa style different than regular Lebanese?
I remember that place on Palmer. I considered putting an offer on it when it was for sale in 2012 for $680k or so (IIRC), but also had trouble imagining dealing with all those tenants. As did my wife.
Anyone know if this is legal? (4 suites on that property) Or is it just a matter of time before a neighbour complains, and then the gig is up.
I like to visit Saskatchewan but would have difficulty living there for an extended period of time. Apparently the best physicists in the world feel the same. Canada built the synchrotron in saskatoon trying to create a scientific research hub like in Boston or San Fran. Nope. Nobody wants to move there. So world class facility in the middle.of the frozen tundra. Great planning Canada.
Nice! I am about to order one as well. Have been driving electric for 1.5 years but just on the L1 charger. But for 75% off I’ll put the faster charger in. What did you buy? I’m looking at the chargepoint which is currently on sale for $800
Also driving out to the interior in the Leaf next week. Purely for entertainment purposes and as an adventure with one of the girls. Should be fun.
I also want to thank whoever posted about the EV charger rebate a few weeks ago. I bought an electric car last November and was on the fence about installing a charger at home until I saw the rebate mentioned here. Getting my charger installed in just under 2 weeks! 🙂
I’ve heard good things about Superbaba downtown. They serve shawarma and are located in the Atrium (where Pig used to be). https://eatsuperbaba.com/
If anyone wants to open a Lebanese/Ottawa style shawarma place locally, especially downtown, I will invest in it. I’m not kidding, please someone do this.
Meanwhile, in a different shithole:
A redditor to boot eh Leo? 🙂
The lack of good shawarma is a true travesty. Perhaps when I move to Victoria I should consider exiting IT. My homemade falafel, white (garlic) sauce and chicken marinade have quite the following among my family and friends. Nothing tops excellent shawarma!
https://www.reddit.com/r/VictoriaBC/comments/8aa37l/chart_top_10_least_favorite_things_in_vic/
Josh: “Good/alarming article here”
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Well, that’s got to be an understatement. Most of the bulls on various blogs tout the low foreclosure rates in Canada as signs of a stable market.
This article highlights the trouble that is coming our way.
“Dollar volumes of impaired residential mortgages spiked in the first quarter of 2018, at the Big Six Canadian banks. National Bank of Canada (NBC), the smallest of the Six, has seen impaired dollar volume jump 111.84% compared to the same quarter last year. CIBC came in second, with an increase of 29.89% to the same quarter last year.”
“In Canada, loans securitized by a private insurance company, aren’t considered impaired until 180 days of non-payment. Loans securitized by the government backed Canada Housing and Mortgage Corporation (CMHC), aren’t considered impaired until 365 days of non-payment.”
A few reasons people stay in shitholes like Saskatchewan:
• Friends/family (which are highly overrated, IMO)
• Never been anywhere nicer, so don’t realize the shittiness
• Inertia/laziness/lack of imagination
@AZ
Thanks for the info.
I am surprised that 165 Palmer Rd is sold for $1.1m. The bonuses of this house are: has 3 rental units; the main unit of the house looks very nice; the backyard has direct access to the beautiful park. But I can’t imagine myself living in the same house with three other families or terants! Crazy…
Zolo trends for Vancouver(& area) should have potential buyers in Victoria worried. When was the last time we had decreasing sales going forward into the spring season?
Here is an “interesting” sale:
165 Palmer Rd
Listed: 949k
Sold: 1.1M!
Dom:8
Assessed: 851k
I’m guessing it’s because it’s been turned into 4 suites but why oh why would you want to live like that. Can’t imagine it being cashflow positive even if you rent every suite.
Good/alarming article here:
https://betterdwelling.com/impaired-mortgages-soar-at-canadian-banks-as-standardized-reporting-hits/
That would be no.
I honestly can’t see how anyone would be a prairie fan after experiencing life in another province. Even if you have friends and family there, I feel like anyone that bothers to put thought into their quality of life, leaves.
Richard, I suspect that’s at least a small part of what’s driving HELOC growth. Josh, you’re not much of a prairie fan, are you?
It’s funny cause it’s true.
“Watching the Vancouver condo market with some interest. It’s a fascinating view into human psychology. Just a completely unhinged, caution-to-the-wind craze.”
I guess some parents will pay “whatever” to get their 30 somethings out of the house!
Investing in a condo in Toronto.
https://www.bnn.ca/many-toronto-condo-investors-struggling-to-cover-costs-and-it-s-going-to-get-worse-study-1.1049120
Just read his last 3. Surprising change of events. So the correction is back to early 2017 prices and that is it. No idea myself just really shocked at his change of view.
Millennials are to blame. Seems they are like their parents and want to own. Just got to get them voting conservative and the world will be great again. 🙂
The advice to not get fixated on a certain percentage drop is good in my opinion and what I’ve been saying many times that deals emerge in soft markets that you should keep your eyes out for. It’s just ironic coming from Garth when valuations are still well above levels when he said not to buy.
@oops
It comes down to the principle of “nothing in life is ever truly free”. Garth says what he says about the housing market to convey a message.
“Housing is dangerous, especially if it’s your only asset. It’s all about to come down. Better invest with us and avoid the scaryness”.
Meanwhile, he flips houses. The self serving theme does get obfuscated because much of what he says about the acquisition of excess debt, one-asset-only, and “different this time” is so true. But I don’t think public service is, or ever has been his motive as much as drumming up business for his firm. Ross “no one but me understands how a housing market functions” Kay does the same thing.
Garth may be altering his message as he can see a change in the market, or that it’s becoming common knowledge he might not practice what he preaches. One thing he isn’t, is stupid. I’m sure there’s a reason and even a strategy for his about-face.
@LF, certainly a hairy halibut. I’m not sure we will see major price drops in the stats anytime soon but the market is dysfunctional. Inventory is so low that the cream is still getting snapped up so that will keep the prices high meanwhile sales are down big time. But as Just Jack used to say, the properties that don’t sell don’t define the market. Tell that to those sellers!
@Trekker
1234 Crown Cres
Listed: 898,400
Sold: 899,555
DOM: 3
LocalFool: ” I don’t like his recent backpedalling on some things and implausible justifications for it though. Often feels vaguely like a bait and switch. Then again, I don’t pay him very much for his time.”
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You’re absolutely right, LF. In the last few posts he has actually been advocating buying if you’ve been waiting for prices to drop … as prices have dropped in some places around Toronto by up to 30%.
His “blog dawgs” have been crucifying him for the advice and questioning his bullish turnaround.
He wouldn’t post my comment regarding this possible flip. Lol.
https://themash.ca/realestategossip/2017/6/real-estate-doomsdayer-garth-turner-lists-caledon-property
“And considering this house sold around $1.5 and closed in December 2016 only to undergo a large gut and rebuild in 2016 that took 7 months to complete, this is a flip and one more property to add to the 50 properties mentioned in 2012.
For the most part, I like it. I like that they kept a lot of the original features like the floors but I am not loving the columns between the kitchen and the dining room. And maybe if the bathroom vanities were painted white and there was different furniture, I would be into it more.
This place is now listed at $2,499,000.”
Dasmo, welcome to the bear club where our motto is, “Getting it terribly wrong until we’re terribly correct”!
🙂 🙂
Watching the Vancouver condo market with some interest. It’s a fascinating view into human psychology. Just a completely unhinged, caution-to-the-wind craze. I really do think that’s going to be a significant source of strife as this cycle matures. At least SFH’s come with land.
The market is sputtering from lack of oxygen after shooting too high too fast. The heat is residual but the rockets are out of fuel…
Does anyone know the sold price for the property on Crown Crescent in Maplewood? The property was on the market for only a couple of days?! The asking price was closed to 890k. I don’t have mls#.
Thanks Leo for the excellent analysis. The market is still hot. Nice properties near the core are selling well!
Looks like a condo flood is coming. Once they hear of the garbage trucks waking them up at 5:30 am daily the millineals will want back in mom’s basement pronto.
At a $500 monthly loss the property ladder is missing some rungs.
Condo owners make big gains, but nearly half in negative cash flow: report
http://business.financialpost.com/personal-finance/mortgages-real-estate/condo-owners-make-big-gains-but-nearly-half-in-negative-cash-flow-report
Vancouver condos are still going nuts. However, the market there could finally be reaching a tipping point. Even Own Bigland, who is usually bullish, has turned bearish on Vancouver condos. But man, investors in Van have made off like bandits:
https://youtu.be/lj81Y_OGB3U
China re-zoned vast tracts of land in the last 15 years by overruling the local governments. They overruled local politicians, they overruled the residents of old low density neighbourhoods, they overruled farmers, they overruled protestors, they overruled environmentalists. The Chinese government then enacted a high densification edict to build hundreds of new high rise condo buildings. They promised all the displaced people they would be happier in new modernized cities, living in a new modern condo, with modern appliances, with clean running water, with new shops nearby, with new subways, new parks and green spaces.
China has proven its possible to overrule everyone and force a change to very high density, but could it happen here, even with an NDP Government? I doubt the NDP want to adopt the Communist China methodology of forced densification by overruling all stakeholders.
Free market is devising cockamamie schemes like the HOME partnership plan?
And nothing would ever happen. Do you think that Oak Bay would give a toss about the province pushing them to increase density?
Not sure how to reduce NIMBYism except by just reducing consultation. Victoria got rid of mandatory consultation for garden suites. They should do the same for most developments.
@Marko
Marko, I think we’re going to agree to disagree on this point.
Sorry if I wasn’t clear — My point was Uplands would be like West Vancouver & the West side near Point Grey; these communities both have similar lots sizes and demographics. I didn’t say you’d find a 40′ lot in the Uplands.
You can’t compare Van to Vic as they are, as they are two very different sized cities. You’d have to stretch Vic out to match Van to properly compare it, and that’s what I was doing.
By your reasoning, I could also say, you can buy maybe 10 houses in Port Alberni or a couple homes in Nanaimo with a 20 minute walk to the water and downtown for the same price. Just like I could buy a bunch of Camry’s for the price of a Ferrari. But they’re not really a comparable product. It’s again apples to bananas.
I totally get what your point was and from a financial/investment standpoint it makes complete sense what you’re saying – it’s insane to pay 2 million dollars for an average older house when you can get a bunch of houses for less. But they’re paying that price-tag for that particular neighborhood/location/safety etc.
The original reason I posted that sale was to see if it starts to become a pattern. When a 2.7M assessed house sells for 2.1M that is significant, because if that starts to be a sales pattern, that trend will likely trickle down to the rest of the market and I think that’s something to keep our eyes on.
A 17% drop in prices in one short year could never happen here in sunny Victoria!! It’s impossible!! Victoria is different.
That’s what they said last year in Toronto too!!
”Sales of detached homes in and around Canada’s biggest city fell 46 per cent in March from the same month a year ago, while the average price fell 17 per cent”
http://business.financialpost.com/real-estate/toronto-luxury-home-sales-tank-from-last-years-record-pace
@Richard, that is not rezoning. That is the OCP. So really nothing but make work project since it’s meaningless. Still need to apply for rezoning for each project…..
The mayor thinks this will cause housing prices to fall:
“I want jobs in Langford. I don’t want to begin on a speculation tax that kills jobs. Because when house prices go down, they don’t build as many homes,” Young said.”
Meanwhile the staff report says it will hurt affordability:
“The implementation of this tax will negatively impact the City of Langford’s economy, revenue and tax income and work against continued efforts to develop more affordable housing market,” the staff report says.”
I call BS
If you want to rely on the HP Index as supporting data that is reasonable. However, it fails to be predictive of house prices if you compare historically how the index has changed from one time period to the next when looking at actual re-sales. Especially as the length of time between sale and re-sale increases.
A median analysis has always been superior to the HPI when the data has been grouped by physical and location aspects that are similar to a property. And what’s really good about this kind of median analysis is that everyone can do it and get the same answer. You can’t do that with the HPI. The HPI uses a proprietary equation that weighs different forms of analysis and requires blind faith in the person doing the calculations.
But the HPI is still valid as supportive evidence as it is an independent verification by a third party. The HPI tells you how the value of a hypothetical home with certain physical aspects over time has changed that’s not the same as saying market prices are the highest they have ever been.
If you want to answer that question then it would be necessary to do tens of thousands of residual land calculations, expressing the remaining land as a price per square foot and then estimate a land value of a “standard” lot in size topography and shape while adjusting for marginal utility. Not f%$ing gonna happen.
I leave that to the UVIC professors who get paid well for their time and don’t pay their undergraduate researchers.
“Another real solution would have been to mandate cities to review all their zoning and make a new, more dense zoning.”
Well infact City of Victoria is currently quietly undertaking a mandate to upgrade densities in inner city communities.
Currently they are working on The Gonzales Neighbourhood Plan, a fairly large area boarded by St.Charles, Richardson, Richmond, Oak Bay Ave, Foul Bay, Crescent Rd. The plan almost got approval about 2 weeks ago at 3rd reading at Council but somehow got sidelined by vocal NIMBY’S and Council has deferred it for revision. Essentially the plan called for effectively doubling the density within that area by encouraging sidexsides suites and Garden suites. A similar plan is being worked on for Fairfield. My guess is the success of the Gonzales plan will help spearhead future Neighbourhood Plans. A point to consider is for those people hoping for prices to fall in these areas will be quickly disappointed once these plans are approved. There is no question as some have pointed out that with the increased densities the property values will increase.
In my opinion these are responsible efforts by the City to increase density where all public facilities already exist in terms of schools, infrastructure etc. and further encourage cycling, walking to work to the Downtown Core.
“Too bad those folks don’t have an NDP government out there. They could have counted on a new tax to be levied against sound developers who unknowingly enter into contracts with financial imbeciles. ”
In fact they bought those pre-sales shortly before Ontario’s Liberal government introduced a foreign buyer’s tax for the GTA, which many are blaming for the subsequent softness in the market.
@ Intro:
“60 per cent of people who work in Langford are homeowners “because they have actual jobs now in the trades industry”
They used to talk of people getting a living by taking in each other’s laundry. Then it was taking in each other’s washing machines. Now, apparently, people thrive by building each other houses. Trouble now is we have to sell those houses to the Chinese to pay for all that cheap Chinese stuff we want to stuff those houses with. Is this the only way forward?
‘Job killer’: Langford joins chorus against property speculation tax
“I want jobs in Langford. I don’t want to begin on a speculation tax that kills jobs.”
“Because when house prices go down, they don’t build as many homes,” Young said, noting 60 per cent of people who work in Langford are homeowners “because they have actual jobs now in the trades industry — good jobs.”
http://www.timescolonist.com/news/local/job-killer-langford-joins-chorus-against-property-speculation-tax-1.23256235
FYI, the Canadian housing market has never been a “free market.” It’s always been regulated and also subsidized.
@ Patriotz
“Actually houses would become more expensive, since they would be torn down to build higher density properties. The latter would likely become cheaper.”
Depends how the rezoning is done, obviously. Oak Bay Avenue, should be rezoned for 5, 10, 15 story buildings, but in most of Oak Bay what’s need is a reduction in minimum lot size for a single family home, thereby creating the potential for more single family home lots. Preventing subdivision of acre and half acre lots is totally nuts.
“But the real rub is this would essentially be a takeover of municipal government responsibility by the province. Massively more intrusive than the spec tax which seems to be regarded by its detractors as Stalinist.”
The prospect of a spell in the gulag might sharpen the thinking of some councilors. Instead of futzing about putting collars on deer, they might just shoot the pestiferous beasts for dog food and get on with something more serious than putting up fancy signs and holding tea parties.
Re
https://www.thespec.com/news-story/8373823-they-bought-prebuilt-oakville-homes-at-the-market-s-peak-now-they-face-financial-ruin/#.WsWKNlS1u6c.facebook
Too bad those folks don’t have an NDP government out there. They could have counted on a new tax to be levied against sound developers who unknowingly enter into contracts with financial imbeciles. Contracts. Who knew they could be like, “binding”, eh?
Makes you doubt the whole capitalist system.
No , it would be a push. The cities would have to hold their own consultations and develop the rezoning themselves. No different than the sewage push. OCPs with Spot zoning is unfair, expensive and unclear. Look at every development that comes to the CSV. It gets fought and redone and fought and redone and in the end the developer gets to make it anyway after years of delay. Meanwhile in the SFH district you get monster houses built that fill the lot to the max and have a suite (plus a secret suite) built into them. So one person gets a house that is supported by their Air BnB revenue…. Instead a real duplex could have been built supporting two families. OR if two lots get bought side by side 5 row houses get put in. OR, if in the right spot, four houses get bought and a low rise apartment gets built. These sales get triggered because the zoning is already in place and it’s not a maybe.
What the BC liberals were doing.
I would call it free market. Capatilism something
we are going further away from.
Good question.
If the spec tax is Stalinist, what would we call what the BC Liberals were doing (or not doing)?
Intro,
That’s a benchmark price. I tend to ignore that value whether it depicts up, or down. I don’t know if it’s a surprise given the recorded jump in pre B-20 activity.
Barrister,
Curious as to why you unloaded on Josh, without mentioning LeoS, who started the ball rolling..
Also, posted without further comment:
Vehicle thefts in Alberta are way above the national average, accounting for 29 per cent of all such crimes across the country, according to Statistics Canada.
Jeff Kasbrick, the vice-president of government and stakeholder relations with the AMA, says too often thefts are crimes of convenience, perpetrated when someone finds a car unlocked or idling with the keys inside.
“That’s another solution that won’t be adopted, since it would obviously work and drive house prices down”
Actually houses would become more expensive, since they would be torn down to build higher density properties. The latter would likely become cheaper.
But the real rub is this would essentially be a takeover of municipal government responsibility by the province. Massively more intrusive than the spec tax which seems to be regarded by its detractors as Stalinist.
Guys, I’m lovin’ how this crash is playing out so far…
Single-family home prices hit new high in capital region’s core
http://www.timescolonist.com/business/single-family-home-prices-hit-new-high-in-capital-region-s-core-1.23253340
@ Dasmo:
“Another real solution would have been to mandate cities to review all their zoning and make a new, more dense zoning.”
For goodness sakes! That’s another solution that won’t be adopted, since it would obviously work and drive house prices down, a development for which there would be Hell to pay.
I lived my first 24 years of life in Alberta. I agree with the above.
Saskatchewan is unquestionably one of Canada’s shittiest shitholes. Its desolation, frigid temperatures, lack of any natural beauty whatsoever, and above-average levels of racism make it one of my favourite provinces to avoid visiting.
How was that lob?
Ontario issues
Not a lot of sympathy. You buy before you sell. Bad things can happen.
https://www.thespec.com/news-story/8373823-they-bought-prebuilt-oakville-homes-at-the-market-s-peak-now-they-face-financial-ruin/#.WsWKNlS1u6c.facebook
tends to be much higher value, increasing municipal tax revenue
I wrote that and immediately realized it’s wrong, as per many discussions of property taxes here. The owner pays more tax, but everyone else pays (very slightly) less tax, so the muni doesn’t get more revenue.
I am 100% ok with this and stand by my obvious joke.
@CS
“One thing they might tax is tear-downs, where the new-construction provides no additional unit of housing. It is amazing how much construction there has been in Oak Bay resulting in zero increase in housing accommodation.”
Well, no – new construction meets building code, which old tear downs don’t; and tends to be much higher value, increasing municipal tax revenue. Plus they get new home builders to upgrade things like sidewalks and water mains and not have to pay for them. So Munis love new construction, for better or for worse.
@patriotz
So did Saskatchewan, but strangely we don’t see much hate lobbed their way.
https://globalnews.ca/news/2567494/reports-2-homeless-men-from-saskatchewan-given-one-way-bus-tickets-to-b-c/
And by your logic, we should heap scorn and ridicule on every American for the fact the world now has to deal with Trump. It might be useful to remember that a politician’s actions and beliefs should not be applied to every constituent they represent.
Well they did elect a premier who gave welfare recipients bus tickets to BC and bragged about it. I think that ranks higher than making jokes about taste and lifestyle, from either side of the Rockies.
Rest easy. I lived 15 years in Alberta. I can assure you that Albertans mock British Columbians just as much as we mock them.
As far as the redneck Albertan stereotype – like many stereotypes there is a bit of truth to it. But there is a whole lot more to Alberta and Albertans than rednecks.
I like to point out to Albertans that they live in Eastern Canada, east of the continental divide and draining to the Atlantic. Central Canada is roughly Kamloops and of course Victoria is the true west (setting aside the pesky detail that the entire Yukon is further west than us).
I know this is likely meant in jest, but the sheer amount of passive aggressive (and often plainly aggressive) hate from BCers to Albertans is something I simply don’t get. Yes, there are a lot of douchebags in Alberta, but you’ll find idiots in any given populace. I see this hate manifest most typically in relation to the O&G industry in Alberta. Clearly the O&G industry are no darlings when it comes to environmental issues, but I can point to many examples where BC government and industry have not exactly been angelic stewards of the environment either.
That’s how it works. If debt levels were relatively normal, this would just be another unwinding like any other. With debt levels this extreme though, it will be more challenging to somehow engineer this ethereal “soft landing” that everyone hopes for.
Maybe China will save us all. 😛
Perception and fear of the uncertainty on exactly what they will be taxing.
Insane prices are…. insane.
Speculation in RE is bad for the community.
No arguments there from me.
I just don’t think a new tax rolled out in this ambiguous and vengeful way is the solution to those things. How about pushing ahead aggressively to build a tram link into the West Hills and providing seed capital to build high density there if it incorporates affordable housing geared towards the local community. No presales needed or allowed. Mix of condos and row houses, rentals and owned. Even a percent of STRs into a commercial area. Make revenue off the loans and the increased activity. Create an affordable community in the best and fastest way possible. More positive less punitive….
How? Spec tax doesn’t affect presales buyers and on completion they can either sell or rent it out and they’re still not affected. A halt to the insane price appreciation will definitely reduce speculators but are we now pretending this is a bad thing?
Just a few more headwinds coming our way. The increase in debt loads over the last several years and the reliance on helocs to finance their way out of debt is going to bite back!
https://askross.ca/2018/03/more-bad-news-for-mortgage-renewals-in-canada/
“It used to be as long as your mortgage repayment history was impeccable, you did not worry too much about your mortgage renewal.”
“More Bad News for Mortgage Renewals in Canada
Last month we received an email from a distraught client in Ottawa who had just received a letter from his mortgage lender letting him know his mortgage maturing five months from now will NOT BE RENEWED.
Same time a Hamilton family called us to complain their mortgage lender had just sent them a renewal notice — they are welcome to stay but the new rate will be 7.99%!!
And only yesterday, another family from Richmond Hill sent me their mortgage renewal letter. The letter states the clients must first pay for an appraisal on their home, and the value of their home must be such that the new mortgage will be less than 65% of the appraised value.
Unfortunately, I believe we are going to hear many more such stories in the months ahead.”
Josh:
Your comment about Albertans was not just unkind and unfair but extremely small minded with a real elitist arrogance about it. I may often disagree with your comments but now I have to say that your comment has disappointed and lowered my respect for you.
Of course it’s going to get opposition from the industry. Ironically it might slow down new construction of condos which are funded by speculators. So some waterfront vacation homes hit the market and sit not selling at 4 million dollars and less condos get built….
But you are right Leo, outrage from the industry probably was the other goal since that gets more cheers from their voters. So success so far. I’m looking forward to the quotes they get to build their affordable er…. subsidized housing.
@CS they probably would tax tear downs that don’t increase density. Because that would further consolidate the ability to build into the hands of the big players. Good luck rezoning. And thanks for the opening for me to rant about the spot zoning BS. Another real solution would have been to mandate cities to review all their zoning and make a new, more dense zoning.
“If property taxes are comparatively low, as they are in B.C., this allows such individuals (i.e. those whose income is from outside BC) to pay much less than their fair share of taxes. They can, in short, free ride on the contributions of others.
What will be the effect of that dynamic? If the jurisdiction is an attractive place to live, it will mean that wealthy people from around the world will want to place their families there. They will buy expensive housing, pay minimal income taxes, and enjoy public amenities and services — all for the modest cost of their property taxes.”
http://vancouversun.com/opinion/op-ed/josh-gordon-speculation-tax-is-essential-for-housing-affordability
Thanks for the correction. I think it should be noted that the FBT expansion has not been cut back from the rural areas as has the spec tax. Thus it applies to the whole CRD (including Gulf Islands), Nanaimo RD, Fraser Valley RD (which is more significant than Victoria IMHO), as well as Kelowna and West K.
https://www2.gov.bc.ca/gov/content/taxes/property-taxes/property-transfer-tax/understand/additional-property-transfer-tax
Collectible truck nuts, porno mags, lifetime supplies of dip, gold-plated bust statues that are just boobs, hard drugs and gas-powered codpieces. If I know Albertans.
“Do you want the government to cut spending? ”
We want the government to spend what the public, if properly informed, would approve. Having, in the dim and distant past worked, briefly, for three governments, I can say with confidence that much of what the government spends would not be approved by a properly informed public.
However, whatever revenue government requires to fulfill its legitimate and competently administered purposes can be provided by direct taxation. No need to base housing policy on the need for revenue generation.
@ Dasmo:
“They wanted a new tax that would get cheers from their voter base.”
One thing they might tax is tear-downs, where the new-construction provides no additional unit of housing. It is amazing how much construction there has been in Oak Bay resulting in zero increase in housing accommodation.
$200M
Victoria might bring in an extra $25M
“You mean a ban on foreign ownership won’t raise extra revenue.”
No, I mean it will give up existing revenue. I recall Marco saying the old FBT (15% metro Van only) brought in about $800 million/year. Ban foreign ownership and that revenue disappears.
“But we don’t care about government revenue.”
Only 2 ways to pay for government spending – revenue or borrowing. Do you want the government to cut spending? Well everyone’s OK with that as long as the cuts affect someone else.
“Faulty household appliances – primarily washing machines and tumble dryers – account for 60 house fires a week in the UK, consumer group Which? has said.”
It concluded that malfunctioning kitchen appliances have accounted for nearly 16,000 fires across the UK since 2012.
A VERY GOOD REASON TO NEVER LEAVE THE HOUSE WHEN WAHER & DRYER ARE STILL OPERATING.
Leo do you have the condo/housing starts for Greater Victoria for the years 2014 thru 2017?
Nothing wrong with Oaklands. And it’s just not a realistic comparison to the West End/ West Vancouver. It’s like comparing apples to bananas. Uplands would likely be the closest comparison to West Van/ West End (Point Grey area). Oak Bay/James Bay/Rockland would be a better comparison to the West End. Oaklands is like East Van.
Haven’t seen any 40′ lots in the Uplands. I rented in Burnaby for a year and the distances are more than double to downtown. If you take the middle of East Van maybe like Kingsway and Victoria Dr it would take you well over an hour to walk downtown Vancouver. I’ve walked from Koffi on Haultain to downtown in less than 30 minutes many times.
My point is, sure it sold below assessment but you could buy three bigger properties plus have cash left over in a solid area in Victoria that is even closer to downtown. The price tag is huge.
It is kind of like buying a property priced at $5 million for $3 million and thinking you got a good deal but the actual market value is $2.5 million.
You could compare Burnaby and Saanich too other than it takes 1/3 of the time to get to downtown from Saanich.
Reverse engineering the numbers…
So, if your house would rent for 3000/mo, that gives you 36,000/yr.
You would have to take off 9,000 for PropTax, repairs, etc to get to 27,000 net.
At a 4% return you would need 675k to net the same amount. Sound something like what you calculated?
I am not sure if there is an argument to flip it and say, if you weren’t living in your house, how much rent would you be willing to pay for something equivalent? In that case if you want an similar house that will rent for 3000/mo, you would need an investment of 900k at 4% to pay for your rental habit.
Can’t recall what my exact assumptions were in that calculator. There was a percentage of ownership only costs that have to be taken into account (maintenance, taxes, etc) so those get backed out.
Not sure about that. If the taxes did not have the potential to be quite effective we wouldn’t see the opposition we are currently seeing. Industry is very worried
One reason for more AB debt – younger median age. 36.7 vs. 43 for BC.
That is it exactly CS. They don’t want to actually do something. They wanted a new tax that would get cheers from their voter base. Almost well played politics, almost.
@ Patriotz
“A foreign buyer ban would cost a lot of money. First from the lost revenue, and second from the enforcement costs which would likely be higher than with the present tax ”
You mean a ban on foreign ownership won’t raise extra revenue.
But we don’t care about government revenue.
Governments spend too much as it is.
We just don’t want to the richest of the world’s eight billion people competing for our tiny (relatively speaking) housing stock, thereby denying home ownership to many young adults upon whose children the future of the Canadian nation depends (or would do, if today’s young adults could afford to raise a family).
Wait Leo am I missing something? 675K @ 4% is 27K. Divide by 12 is $2,250/month. And that doesn’t include any tax that you’d have to pay on the gains. How did you come up with $3000 net per month?
“The third couple, Darren and Claudia Evans, are second-time Mattamy buyers, who have been living in the area for four years. They wanted a different floor plan for their 2-year-old son, so they bought another house for about $1.6 million, expecting their current place to sell for about the same amount.”
The couple, Darren and Claudia, also bought a third $1.6M house because there was a pea in the beds of the previous two.
Yeah the market is slow. It doesn’t seem slow because every month it’s either accelerating or decelerating, but if you zoom out enough, the cycles are dead slow. 10-12 years to complete one.
The supposedly highest debt loads in Alberta never made sense to me either. Much higher incomes, lower house prices that have been flat for a decade. Where’s the money going? Collectible truck nuts?
As for a home being an investment. Given I neither intend to sell nor extract equity out of our house, it is worth exactly as much as the amount of money it would take to generate enough money to rent an equivalent house.
So if our house would rent for $3000, then it is worth $675,000. Why is that? Because I could take $675,000, invest it, and extract a safe 4% every year to pay a $3000/month rent in perpetuity.
Yes you can get more complicated and consider rising rents and such but fundamentally that is my view of the issue.
More here:
https://househuntvictoria.ca/2016/01/04/your-house-increased-in-value-heres-why-it-doesnt-matter/
Yes. Out of town buyers down in 2017 compared to 2016 but still up from previous years.
@Harp Echo
Apologies, that wasn’t very clear. Asking is the current asking price (2018) and sold is what the current owner purchased it for in 2017 (per evalueBC).
Point being the current owner will likely lose money after factoring in property transfer tax, realtor fees etc.
That article is just full of people screaming “I made an incredibly stupid financial decision and now it is time for everyone else to fix it for me.”
You buy a pre-sale and then “hope” that your existing house will go up in price before the new building completes. I hate to be heartless, but doubling down by going to the media to complain makes me think that these people deserve their self-inflicted misery.
Rover
The listings you posted, is the asking price the price right now (2018) or the price before they sold(2017)?
In other word, are you presenting they are sold over asking or sold under asking?
LF it would still have to drop down and test it’s 2016 low for Vancouver prices. Interesting according to your graph it hit both its high and then most recent low in the same year. Though that graph is somewhat hard to read the dates accurately.
The stock market is currently testing its low from February and is into it’s 3rd bounce, I hope this one has more momentum going into a strong earnings season.
“the stress test has cut his borrowing power by about 20 per cent.”
He signed up for a new home, many lenders hold their approvals for up to two years on new construction so I’m not sure how the stress tests have anything to do with his borrowing power. There’s something missing in this story.
” They listed their house twice last year but received no formal offers, just a phone call with “a lowball” proposal.
“We haven’t put our house on the market again and we need to close in seven weeks. There is no point. We are watching the market so closely with our realtor and we can’t afford to take the amount of money that we will get offered right now. If we got a delay in closing then it would be fine. I’m sure the market will recover in time,” he said.”
I’m sure it will…
https://www.thestar.com/amp/business/2018/04/04/they-bought-their-prebuilt-homes-at-the-markets-peak-now-they-face-financial-ruin.html?__twitter_impression=true
@Marko
What’s wrong with Oaklands? 20 minute walk to downtown. Just putting things into perspective. Yes it sold below assessment but the price tag is still massive.
Nothing wrong with Oaklands. And it’s just not a realistic comparison to the West End/ West Vancouver. It’s like comparing apples to bananas. Uplands would likely be the closest comparison to West Van/ West End (Point Grey area). Oak Bay/James Bay/Rockland would be a better comparison to the West End. Oaklands is like East Van.
Sales drop off before prices decline. Everyone knows it. Which is a reason why they want to stimulate new construction at the same time. Which is contradictory to higher interest rates and tougher qualification guidelines. They want to engineer a soft landing but not create a recession.
Good luck, but I wouldn’t trust the NDP to park my car let alone manipulate the real estate market.
I was addressing “house as an investment” not personal titles. I would never describe myself as an investor without qualifying that it’s only in broad-market index equity and bond funds.
Andy7,
Yes, they are a pattern, and have been for quite some time now. Currently…
West Van average sale price:
Monthly change: -5.5%
Quarterly change: -22.5%
Yearly change: -23.4%
Sales flat, inventory rising.
Source is zolo.ca.
You know there’s a SFH house on that lot right?
A SFH house where the sellers have lived in for the last 46 years….you have those in the Oaklands area starting in the mid 600s but 50′ lots.
I think that house price is nuts, but that house is also in the West End, and the West End and West Vancouver are the top/ most expensive communities in Canada; Oaklands area is not.
What’s wrong with Oaklands? 20 minute walk to downtown. Just putting things into perspective. Yes it sold below assessment but the price tag is still massive.
The bankers were tightening up on credit. Projects were being put on hold through out the city as developers could not get credit.
It took the Canadian government to step in so that our economy did not freeze up like what happened in the rest of the world. If we didn’t have a tax payer backed CMHC we would have followed the rest of the world. But it came at a high price which we still have not dealt with as Canadians have racked up huge personal and public debt. We won’t be capable to spend ourselves out of the next recession which Scotiabank predicts will be very soon with the rising interest rates and removal of the federal government’s stimulus spending.
And the bankers are not going to be giving access to credit without tougher lending qualifications. For example if your a real estate agent with a home and a couple real estate investment properties you would be seen as over exposed in the market and a really bad risk. You’d be lucky if they validated your parking.
@Marko
You know there’s a SFH house on that lot right?
I think that house price is nuts, but that house is also in the West End, and the West End and West Vancouver are the top/ most expensive communities in Canada; Oaklands area is not. I think homes in the Oakland area are listed around the $850k mark?
What I’d like to see is the current sales data for West Van & the West End to see if these SFH sales price drops are starting to become a pattern or just an outlier here and there.
Both of these examples speak to my previous point about most buyers/sellers taking months or more to make purchase decisions, making home-buying very different from any other so-called investment.
We previously discussed how the most impact on the market is from pure buyers (new arrivals, first time buyers, ‘pure demand’) and pure sellers (ex-pats, ‘pure supply’, also from death & divorce). Anyone arriving in Victoria (and buying) or leaving for greener pastures (and selling) will not make the decision in a week. Job impacts, family, the logistics of moving, estate management and legal delays (in case of death or divorce), etc. all make this a much slower process than just about any other investment.
This makes for a market failure, in economic terms, or at least a highly irrational and lagging market. Why were people still buying in November 2008, after the financial crisis had turned the world upside down? Because of momentum – they’d gotten the job, moved here, were getting settled, got pre-approved, finally found the property, etc. Same reason people were selling in early 2014, when prices had finally started climbing again, and it was obvious they could have held on for much greater gains.
Don’t throw around your economic predictions expecting things to turn on a dime. Bitcoin can collapse in a week, but not the housing market. It takes years for base conditions to change and affect people’s decisions on ‘the greatest purchase of their lives’. By then, conditions may well be heading in a different direction, which can either reinforce or further delay any changes.
Sale of existing houses contributes somewhat to economic activity (commissions, moving, redecorating, bank and insurance activity). It is construction of new houses that is the big economic driver.
The monthly sales are down a whopping 27.3% and this is from March 2017 which was close to the low in Calgary’s current economic recession. New listings have only increased 6.39% compared to a year earlier represented by 207 units. Surprisingly the median sale price has increased by $3500 and the average sale price has climbed from $490980 to $494600
Let me get this straight…the market has been flat for 6-7 years….it sees a 27.3% drop in sales and prices still go up? How does that work?
In Victoria at least we are dropping from record highs versus from flat so I can somewhat understand the upward price pressure.
40″ x 130″ lot
Just sold $2,110,000
Tax Assessed July 2017 $2,667,700
Tax Assessed July 2016 $2,554,900
SOLD $557,700 (or 21%) under Assessed.
What a deal, 40′ lot for only $2.11 million. You could buy three 50′ foot lots in the Oaklands area and still have cash left over.
THE CALGARY STATS ARE OUT FOR MARCH
The monthly sales are down a whopping 27.3% and this is from March 2017 which was close to the low in Calgary’s current economic recession. New listings have only increased 6.39% compared to a year earlier represented by 207 units. Surprisingly the median sale price has increased by $3500 and the average sale price has climbed from $490980 to $494600
Inspite of the tough new OSFI rules a floor seems to have definitely established itself. Spring sales don’t arrive in Calgary till May and could be later this year due to the brutal length of winter.
But it is interesting to note how, even in a bad economy sale prices have not been affected by the new rules but it is the no. of sales that have been affected instead. Somehow I don’t think this was the expected outcome of the new rules. Instead of lowering prices the economic “activity” is being greatly affected and that surely was not the objective. Bottom line is this is not good for the economy and who knows but the Federals may just have to rework those rules and fairly soon. I also don’t expect Victoria’s market to behave much differently.
The last recession in Canada started in November 2008 and lasted seven months until May 2009. During that period hundreds of buyers purchased in just sleepy little Victoria with money from the bank. Canada-wide tens of thousands of people got new mortgages from the bank during the last recession.
And it goes without saying that the last recession was a pretty good time (in hindsight) to buy in Victoria. Didn’t feel like it at the time. We bought in October 2008 and at the time it felt like we might be making a big financial boo-boo.
Another SFH sale in Van posted:
Present owners lived there 46 years so they have done well.
40″ x 130″ lot
Just sold $2,110,000
Tax Assessed July 2017 $2,667,700
Tax Assessed July 2016 $2,554,900
SOLD $557,700 (or 21%) under Assessed.
Whether this is another one off or not, I don’t know, but something’s definitely shifting because this type of price drop wasn’t happening before.
” Ask any real estate agent or contractor that has tried to pry money out of a bank in a recession. You’re not going to get the money.”
So true…….and that goes for many first time buyers as well.
The abiltiy to paste graphs into the comments section is several IT-illuminati levels above mine, but there is one on Garth today which sets a nice Manichean book-end to THE graph from Hawk.
My opinion is that investing is not semantics. Either you are an investor or you are not. If you have to argue the point then my guess is you’re not.
The dead cat bounce can only be isolated after the market has collapsed. You simply go back in time to find one in the graphs and low and behold we always find one. You can’t predict when a dead cat bounce will occur or even with certainty when you are in one. But it makes interesting reading when your lining the bird cage with the Economist and MacCleans magazines.
Having said that, I do think there is some plausibility to bulls rushing in to buy. Not that any of the bulls on this blog will, since they never bought during the run up in prices either. Some bulls might think it’s a good time to buy but they have to convince a banker to lend them money. And bankers are tight with money during downturns. Ask any real estate agent or contractor that has tried to pry money out of a bank in a recession. You’re not going to get the money.
This comes down to semantics, like so much else in life. A lot of people read “it’s an investment” as “it will always keep appreciating” and not the factual “an asset whose equity value will change over time and might generate yields, etc”.
So when I say we didn’t buy our home as an investment, it’s the first meaning of the word. We leave it out of all future wealth considerations for retirement planning, beyond the fact that it reduces our monthly expenses once paid off since it would be a place to live for relatively little cost.
So what is so important about calling your home an investment and then be extension calling yourself an investor?
Is it more appealing calling yourself an investor over that of being a homeowner? It’s rather silly to to think of yourself as stock investor if you only own one stock. But owning one house makes you a a real estate investor?
If you call yourself a real estate investor than you are willing to take on risks. Should buying a home be considered a risky investment? I don’t think buying a home for your family should be a risky investment but today people have to think of home ownership as a risk. Otherwise they would not buy. You have to be talked into paying the price because it isn’t just a home -it’s an investment. And that somehow translates into paying a lot more for a home today over that of shelter.
You are willing to overpay today because you assume tomorrow’s prices will be higher. So when you call a home an investment it allows you to make investment mistakes- like over buying. Since you can justify over paying by saying everything will be higher in the future.
The lack of a /s tag on the education comment notwithstanding, the arguments about debt servicing, (possibly) rising interest rates, affordability, etc., these are all very valid “Average Joe” concerns for the overall Canadian real estate market. But how big or small an impact it will have specifically in Victoria completely depends on the total demand and what buyers are part of that demand. It’s certainly not a cut & dry situation: if all the demand was foreign buyers and retirees willing to pay cash I think it’d be pretty obvious that the average joe concerns wouldn’t matter one bit.
So who are the buyers – who is making up the demand? A quick Google search on who’s buying in Victoria pointed me to Leo’s post from March 2017. (Great SEO Leo!) In it he states “From a demand perspective, the first timers, the out of towners, and the second home buyers are the most important players in the market. ” In another post he also stated “So what really makes the market is the balance between first time buyers and out of town buyers on the demand side, and people selling to rent, move out of town, or die on the other side.” & “…out of town buyers represent pure demand. And that pure demand has been growing.”
Leo, is there any new data from VREB for 2017 on buyer origins? If out of towners are continuing to come in larger numbers, and if supply is being legislated to remain constrained, the market may remain very resilient to other downward price pressures.
Chatted on the street with a banker friend. He said there are many many people in Oak Bay and Uplands who will be in very big financial trouble if rates are up just a fraction when they renew in four years. He said it is scary how thin the line between serving a debt and not being able to is in the city.
Just sharing.
Latest graph for VanRE.
Buyer exhaustion in SFH’s is becoming clearly evident in the graph now. Often times when you see a market peak, you can see either a dead cat bounce (where it falls, bulls jump in reversing the trend, but the bull pool is too small to sustain a new boom and the reversal resumes), or another phenomenon called a three or triple top reversal. We’ll have to see a updated graph in a few months, but this current one is beginning to appear consistent with the latter.
If that’s the case, this is generally a bearish indicator, as it signals to bulls that a ceiling of resistance is being not merely established, but is now being reinforced. I would still hesitate to call it definitive at this point, but if I were a speculator, I don’t think I’d be sleeping well.
All your criteria (except the rental restriction, which is a limitation on returns) relate to the owner not the property. Is an owner-occupier less likely to be objective about a property? Of course. But the sale or rental market doesn’t care what your motivations are. If an owner doesn’t manage a property with due regard to returns that doesn’t mean it’s not an investment, it just means the owner isn’t a good investment manager.
There are some flaws with the above logic. For example condominiums that have rent restrictions. They have no marketable yield. But that doesn’t make them worth nothing.
You could make a hypothetical assumption that the condo could be rented for X amount. But that’s a hypothetical condition used for comparison purposes not reality.
You can call most anything an investment. Even your children.
Let’s say your house is an investment like other investments you may have. Do you treat your home differently than say a rental condominium? I think you do. I think you paint, update and remodel your home more often than you do your rental condominium. When you bought your home you wanted the best location, big yard for the kids, a water view, etc. Things that would enhance your life while living there. But how about your rental condo? Did it just come down to maximizing your return.? Paying the lowest price for the property relative to the rent it could achieve?
Your criteria when buying a home is therefore different from a rental property.
Both are investments but they are not equal investments. You’re a willing to net a lot less on your home maybe even lose money for the benefit of living there. But that benefit is only to you. Not to anyone else.
Say you got fired today from your job. Would you consider selling your rental condominium? I think most of you would consider this option. But how about your house? I would think all of you would try to do everything you could including raiding your RRSPs, TFSAs, Savings, and loading up on credit debt before you would sell the home.
If you’re treating your home differently than your other investments, then why do still call your home an investment ? In my opinion, having a home makes you a home owner not an investor.
Don’t educate yourself, just keep buying fools. The more that buy now, the less there will be to prop up the disaster when the debris field is littered with broken dreams.
China is at risk of a banking crisis, the Bank of International Settlements has found
“In addition to China, the BIS report also found Canada and Hong Kong to be at risk of a banking crisis. The vulnerabilities of those two economies were partly caused by climbing property prices.”
https://www.cnbc.com/2018/03/12/bank-of-international-settlements-countries-at-risk-of-banking-crisis.html
“Can you afford to fork out an extra $1,200?
The average Alberta household would see debt-servicing costs shoot up by more than $1,200 a year — the highest jump in the country — if interest rates rise by one percentage point, according to a new report by RBC Economics.”
$1200 a year ? Try $1200 a month on an average $600K mortgage renewing after 7 more coming rate increases and a 2% stress test. 90% of Victorians would be beyond broke trying to cover that kind of monthly increase.
Funny how the pumpers completely avoid the basic math of the disaster of what’s to come to the average family already in hock at 2% rates and doubling plus over the next year or two. The imaginary floor buyers won’t even qualify in a credit crisis. Fantasy Island is well intact. Look up boss, da rates ! da rates !
https://www.youtube.com/watch?v=zTs3uzChx8k
@patriotz, true, my concept wouldn’t be practical but you kinda illustrate my point. This is a tax grab, not a housing solution.
Oh it can change if you apply and pay for new CMHC insurance, required if current equity is <20%. But you also have to meet all the current requirements for a new mortgage, e.g. stress test.
That’s one way in which houses are less liquid than stocks. But on the other hand there are no taxable capital gains when you sell your personal residence.
A foreign buyer ban would cost a lot of money. First from the lost revenue, and second from the enforcement costs which would likely be higher than with the present tax (because now someone who doesn’t want to take the risk of evading the tax can just pay up).
Capital gains are part of federal income tax. The provincial government could forgive the provincial amount, but that’s small enough that it would likely lose revenue with little effect. Also note – and few do – that if an out-of-province owner sells their 2nd house they don’t pay capital gains to BC because they file as residents of another Canadian province or as non-residents.
Where would that lost money come from?
I think the spec tax may be even more effective than the govt expected? Why – because of all the opposition to it. If it were of little or no effect few would case.
patriotz those similarities are true, but the biggest difference is that a person needs somewhere to live. One can sell all of their financial instruments without replacement. One cannot sell their house/condo without replacement (either buying or renting).
@ Intro:
“You can take it to the bank.”
But if it’s a mortgage application, the bank may decline it.
Vancouver home sales down, prices up
The same, Leo reports, for Victoria.
One could explain falling sales with rising prices as a failure of buyers to realize that, while asking prices are coming down, they were previously rising so fast that they are still crazy prices.
But if sales continue to fall, which seems certain at current prices, prices deceleration will turn to price reduction.
You can take it to the bank.
Exactly CS. They should have had a two year foreign buyer ban and a two year capital gains holiday on secondary properties. That probably would have done more to increase inventory for “locals”.
I can confirm this. In Calgary I sold (SFH) and bought again (SFH) in late 2007 and I will be fortunate to get the same price (plus the amount I spent in renos) now. Other houses in my area are in the same position – no price appreciation over the last 10 years. Whee! (Granted, with the economic collapse that happened in Calgary I’m surprised the RE market didn’t completely tank.)
I believe the amortization cannot change – at least that was what I was told for my existing property which is up for renewal.
“Definitely time to sell if Garth is saying buy.
Given he has been 100% wrong so far this is a half decent theory in all seriousness.”
How can anyone be that reliably wrong? The man’s either a genius, or he’s had a lucky streak.
http://business.financialpost.com/real-estate/toronto-luxury-home-sales-tank-from-last-years-record-pace
Is Toronto traditionally a leading indicator for housing for Vancouver?
@ Barrister
Yeah, nice places are too expensive for the native population to enjoy when you let international brokers market your local property to the plutocrats of the world.
The NDP just achieved their first big skrew-up.
The should have restricted ownership of residential property to Canadian citizens and landed immigrants.
Yes I agree I apologize I cannot compare Victoria to large centres like Berlin I was being to blunt, but if you do your research on smaller European cities more comparable to victoria you will see want I’m talking about. I’ll try and post some better facts about that later. Another thing to note is Canada does have a unique things when it comes to housing many Canadians grew up on a .25 acres lot with lots of room to play in the back yard, we are spoiled when it comes to that, compared to many other places over time that is going to change.
However I do agree we most likely will see some prices declines in the next 1 to 5 years because of the steep run up in 2016, but my advice and opinion for anyone young is don’t except the sky to fall. Many people rely on the housing market at the moment in Canada, banks and government especially so it’s in there best interest to keep a strong market.
Sorry for the bad written message I m just busy today haha
I’m also really interest on any other info anyone has on population increase projections for Victoria, thanks for Posting that info Grant. I believe those are key factors to look at going forward over the next few years.
Cheers
Cheers
Cheers
On a household basis, it’s in Alberta where the debt load is the highest and the debt-service costs are highest,” said RBC senior economist Robert Hogue.
Not sure I buy this argument….prices have been flat for 6 or 7 years in AB? Probably similar to peak in 2007/2008. Oil prices have been lower and unemployment has been higher without a significant correction up until now and mortgage rates haven’t really gone up that much.
Couldn’t someone who bought in 2013 with a 25 year mortgage just go for another 25 year mortgage now and with the lower principal the monthly payment would be the same despite the higher interest rate?
I would think the risk in markets like Victoria/Vancouver/Toronto would be much higher due to the massive run-ups for a variety of reasons. You have people tapping into the equity to buy 2nd properties, etc. If the market is flat you don’t have access to equity to do stupid crap.
Market activity is down in that segment too.
Sure demand for cheaper housing is high, but that’s always the case. I’m sure demand for a $600,000 house in the core is also extremely high. But it doesn’t exist so isn’t really relevant when looking at demand in the current market
Well partly because the market segment no longer exists for the most part.
I get your point….when a decent SFH was 600k in 2013 there was demand for a $350,000 home in the core.
I do think the demand at certain price points that largely don’t exist anymore does set a floor on the market price as people still need a place to live which is probably the biggest factor why people buy. Boo, the dog, needs a backyard to play in and if they can afford it on a monthly basis they will go for it.
Unless we see a massive spoke like the recession in 2008/2009 those floor buyers will be there if the market does start trending downwards or the market will go flat enough where wages catch up over a 5 to 8 period.
Interest rates are rising. Can you afford an extra $1,200?
If the trend continues, Albertans — not consumers in the ultra-pricey housing markets in British Columbia or Ontario — could face the most pressure from higher costs tied to rising interest rates, said the report released Tuesday.
“On a household basis, it’s in Alberta where the debt load is the highest and the debt-service costs are highest,” said RBC senior economist Robert Hogue.
http://calgaryherald.com/business/local-business/varcoe-albertans-most-vulnerable-to-rising-interest-rates-says-rbc
Definitely time to sell if Garth is saying buy.
Given he has been 100% wrong so far this is a half decent theory in all seriousness.
What I don’t like (other than a questionable track record) is him not being upfront about how he uses his blog to advertise his business.
How is it questionable? A monkey flipping a coin January 1st of ever year would have beat Garth by a long shot on the real estate market.
Definitely time to sell if Garth is saying buy. That said he does have good advice in that article. Waiting for the stats to drop 50% won’t work. You need to find the cracks. There will be people who need to sell. I know, I have only bought in those situations and recently was that seller. I also think he is right about demand from millennials. That is as large a blob as the boomers just a different shape. You need to be ahead of the curve….
Those who have followed Garth’s advice for any decent length of time are now so far behind those who did the opposite that they have no choice but to double-down on Garth’s crap and hope it eventually turns into gold.
That’s the thing….by doing exactly the opposite of what Garth preached (don’t buy real estate, invest in market) not only do I have a ton of equity in real estate but also maxed out RRSPs/TSFAs. If I had followed Garth I would have maxed out RRSPs/TSFAs and maybe a bit in non-registered accounts which would pale in comparison to the real estate equity.
Patrick, you are right, but Victoria is much smaller. A more apt comparison would be to similarly sized centres, not major cities. It is nice here, and values will always reflect that, but let’s not get ahead of ourselves comparing ourselves to Berlin.
A comparable condo or SFH will be more expensive in Dubrovnik (population <50,000) than Victoria and that’s a place located in a country with a crap economy and the times I’ve been to Dubrovnik in the winter time you can find three cats and two tourists.
As I said I was surprised how expensive Dubai was……I was expecting it to be a lot cheaper than Victoria but it wasn’t cheaper at all.
When I go traveling if the place is half decent whether it be big or small it is expensive.
Location is also massive. In Zagreb, Croatia a decent house will set you back more than $500,000 CND but a one hour drive from Zagreb you can find a livable house for <$50,000. In Croatia the minute you move away from the populations centers prices fall off the cliff.
It is kind of like Victoria and Crofton here on the island.
This comment from Patrick about Victoria in relation to other major cities is really interesting and worth discussion as it impacts RE values so much. On the one hand, clearly Victoria has a small population, ~400K in the CRD. Also, while it also has a very pleasant climate and is most certainly an “attractive” area with a good quality of life, Victoria cannot be considered a world class city in the strict definition of the term. (“A global city, also called world city or sometimes alpha city or world center, is a city generally considered to be an important node in the global economic system.” https://en.wikipedia.org/wiki/Global_city)
So attractive as it is, the lack of economic drivers means the pull of Victoria will clearly not be as great as London, Paris, Hong Kong or even Vancouver for that matter. Now the question becomes, of the people who are still determined to come to Victoria, (or invest in property in Victoria), will there be enough housing to accommodate that demand? On that I decided to educate myself on what Victoria’s growth plans are. I’m new to the blog so I don’t know if this has been discussed much, but I was very surprised to learn what the growth plans are for the CRD. Just this last March, the Board of the CRD passed “Adoption of Regional Growth Strategy Bylaw No. 4017″. Briefly summarizing, by 2038:
they project the population of CRD will only be 440K. That represents a 27% increase in population from 2011 and importantly, only a 1% average annual increase.
urban areas will be purposefully kept compact and within boundaries. rural communities and other ecologically sensitive areas will be protected.
Through all of this they then state in their plan ‘Growth management measures could have the effect of limiting the supply of new lands for the urban housing market, thereby putting upward pressure on housing prices, particularly for single detached homes.” GEE, you don’t say? When you consider that Langford in particular grew 21% in the last 5 years (http://www.timescolonist.com/business/langford-s-population-grows-by-20-9-in-five-years-highest-in-region-1.9748691) I can’t help but look at this report and scoff. For me, their population projections seem way, way off, and if they are going to constrict supply like they plan to, watch out. (Or at least this certainly applies to SFH, assuming they can build condos fast enough.)
There continues to be considerable headwinds in the RE market in CRD. Affordability, possibly rising interest rates, credit worthiness etc. But reports like this make me think that the planners refuse to consider the possibility that their projections are very conservative. There could very well be a continuing demand surge in Victoria and insufficient supply to accommodate it.
PS
For those who want to read the growth strategy, it is here:
https://www.crd.bc.ca/docs/default-source/crd-document-library/bylaws/regionalgrowthstrategy/4017–capital-regional-district-regional-growth-strategy-bylaw-no-1-2016.pdf?sfvrsn=ecb611ca_2
A house/condo is an investment because it has a marketable yield which is the net rental value, and a marketable sale price. It’s just as much an investment as any stock. And you can get a positive or negative total return just like a stock. If you are living in it yourself you are spending the yield, i.e. part of the investment return.
It doesn’t matter whether you care if it’s profitable or how you define profitability. Those are attributes of you, not the property.
With respect to the ‘home is/isn’t an investment’ debate, I am reminded of a discussion I read a few years ago on about musical instruments as investments (yes, there is such a thing – collectible guitars, violins, mandolins, and such, worth many tens of $k in some cases. )
“Overall, I’ve had better investments and worse investments, but my mandolins have been my most fun investments by far.”
A house (in particular; maybe applies to multifamily as well) is a nice blend of things, including an investment, a place to live, and a unique asset to enjoy. Properties are also not very liquid, taking months to years to buy and sell for most individuals (ie non-flipper professionals), between the decision to buy/sell and the actual legal transfer of sale. That’s why they don’t fit neatly in the same category as purely financial investments.
As for guitars and such, my only dispute with musical instruments as investments is that the better they are as investments, the less fun they actually are (because you can’t play them for fear of decreasing value, need insurance, low peace of mind, etc.).
Zolo sales data for Greater Vancouver
March 4 – April 1, year-over-year difference
Van -56%
W. Van -65%
N. Van -54%
Richmond -60%
Delta -50%
Burnaby -67%
White Rock -46%
Langley -40%
Surrey -53%
I keep expecting these numbers to improve like they have in the past due to normal market cycling. It does not seem to be happening. Maybe the spring market will suddenly come to life? Or maybe it is different this time.
Does this blowhard remind you of anyone?
Those who have followed Garth’s advice for any decent length of time are now so far behind those who did the opposite that they have no choice but to double-down on Garth’s crap and hope it eventually turns into gold.
I actually had to look twice at these numbers as they are somewhat startling.
Single Family dwellings – Sales and Total Volume for March
Victoria, Oak Bay, Saanich East combined
Year/Sales/Volume
2018/107/114.0
2017/150/153.4
2016/233/199.1
2015/169/125.1
At the peak for March in 2016 there were 233 sales for 199.1M in volume compared to March this year with 107 sales and 114.0M in volume.
Anyone know what 4395 Robinwood Drive sell for?
Lost all my old mls listings.
LeoS:
Some might argue that Victoria is the cherry on top of a mound of Canadian snow. But I tend to agree that the market is not on the point of a major collapse.But I am smart enough to know that I really dont have a clue where it is going to be six months from now.
Assuming that we are going to see a decline in SFH prices I really dont see that happening until this fall at the earliest.
Hang in Josh for about another two years or until the baby boomers finish retiring whichever is longer.
You are right, and I’m not arguing nice places are expensive, but that is cherry picking. I’m not actually very bearish on this market so I’m not going to argue too far on that basis.
In other news, the VREB is lobbying Langford to push the province to exempt them from the spec tax. I wonder how much real estate industry pressure is behind other cities wanting out?
Well, I just glanced through the VREB press release and their stats package. For a moment I thought that I was looking at my washing machine during the spin cycle.
Frankly, I really am starting to take their HPI benchmark price index with a grain of Salt. I know that times are tough at the Times Colonist but I really wish they would stop pretending that the Vreb press release is a news articles actually vetted by the paper. One does not want to erode British Columbia’s reputation for honesty and integrity.
From http://www.greaterfool.ca/2018/04/03/gen-h/
Ya just look at that median SFH price. A mere fraction of what it used to- oh wait, no it’s at an all-time high. Huh.
What does this guy huff to get his information?
Leo S
Well lets compare prices with a much smaller place like Portofino or Lugano or Cannes. Nice places are expensive.
I admire Garth, he’s a good writer and excellent businessman. What I don’t like (other than a questionable track record) is him not being upfront about how he uses his blog to advertise his business. Much of the advice is there to drive business for himself, and I believe he should be more transparent about that.
Patrick, you are right, but Victoria is much smaller. A more apt comparison would be to similarly sized centres, not major cities. It is nice here, and values will always reflect that, but let’s not get ahead of ourselves comparing ourselves to Berlin.
If your talking about Garth still, you’re on your own. If you’re talking about what might have been had I made X choice 10 years ago, hindsight always provides the best investment perspective. You’re literally correct, but I’m not sure what the analysis is worth.
Using the same logic, I should have dumped everything into Bitcoin. That would annihilate my current returns over god knows how many years. P100D’s would be a peasant’s car. You also presume that either the asset inflation in question has a sustainable value (400k—> 1200k), or, that you can successfully time markets. If you can do that, you rock.
No, and he actively discourages people from investing themselves. That part I find very self serving.
Market activity is down in that segment too.
Sure demand for cheaper housing is high, but that’s always the case. I’m sure demand for a $600,000 house in the core is also extremely high. But it doesn’t exist so isn’t really relevant when looking at demand in the current market
Good thing investing in the market is a multi year – multi decade endeavour. I’ll take market returns between now and my retirement over house returns over the same time span, any day.
Sure starting from today I don’t mind your argument….who knows what happens. Personally I would still go long term on RE because of the principal residency exemption but I could be wrong there.
However, looking back if you had 200k in 2009 your options were invest with Garth or buy a 800k home in Vancouver, for example. Have a hard time believing Garth’s well balance portfolio went from 200k to 1.2 million let alone tax free.
Good thing investing in the market is a multi year – multi decade endeavour. I’ll take market returns between now and my retirement, over house returns over the same time span, any day. 🙂
Gnite.
I ve have done much travelling around the world, Europe, US, Asia. I feel many people here are very sort sighted. Prices all over the world are high in the “nice”places. For example, Berlin, Paris, Lyon, Nice, Copenhagen, London, Barcelona, Valencia, Madrid, Lucerne, Zurich,,, I could build a very long list and Victoria is just another nice beautiful place to live, Canada does not have a housing crisises, the world is a big place, Yes there are people out there with money, and they will be the ones who live in the “Nicest” cities. Prices have gone up mostly in Vancouver Toronto and Victoria and what do you know! those are desirable places to live.I feel Canadians are very sheltered, remember it’s a big world and it’s changing with technology and the internet people can now see what we have here in Canada, coming from over populated and polluted areas, I.e China and India. You can’t really put a price on living in a place that is as safe, secure, clean and beautiful as Victoria. Demand for immigration is very high and it’s going to stay that way unless something tragic happens in Canada. we are all very lucky to live in Victoria, unfortunately it is a competitive world and chances are we will have to start paying for it eventually, just my opinions cheers and good luck everyone!
People need to watch Garth’s Youtube videos from 9 years ago where he is mocking people for buying pre-sales in Vancouver and making bold claims on interest rates going up when it comes time to renew 5 years mortgages (which would have been 2014).
It’s the mocking that’s funny…he is so confident he mocks but ends up being 100% wrong.
On the whole Garth’s advice has been horrible for anyone that bought into it. I don’t think the intent was bad but it has been plain horrible for your average Joe in Van or Toronto. There is no way the average Joe could have been better off in the market versus taking out a mortgage and buying a home.
Either my communication skills suck, or you’re being difficult.
“overall investment advice”.
Like, principles Marko. Don’t over leverage. Have a mixture of exposure to different assets and funds, and different levels of volatility. Don’t go out, buy a house and expect you’ve got your retirement in the bag. That’s as far as I go with my endorsement. And it’s reasonable.
Not, “invest in this, and invest in that, buy this many shares in this but not in that”. I have no idea what his track record is and couldn’t care less. Neither do you.
That’s precisely what I’m talking about.
Just when I think the SFH market has started to cool, a run of the mill Oaklands/Fernwood bungalow (2510 Garden st) sells for 853k. One door from Bay Street.
A one off or another leg up?
We have to be hitting the peak and if not today will be in the next two or three months as Leo notes. With sales dropping I can’t see another leg up.
There is still a lot of demand for a certain type of product and Oaklands bungalow is one of those products.
His basic asset allocation advice is sound if a bit generic. He has been quite wrong on some specifics. For instance I recall him mocking a commenter who thought the bond part of a balanced portfolio should actually be bonds. Nope you should load it up with preferred shares. This was just before preferreds tanked by 30%.
Garth is obviously smart, however he is arrogant, over-confident in his abilities, and never admits his mistakes. The latter three would not be qualities I would look for in an investment adviser
So if the stress test is pushing people towards 2BR condos shouldn’t they be a strong point in the market? But they are down along with everything else.
The two bedroom condo market is multiple markets within itself from million+ penthouses to no rentals no insuite laundry stuff your averager younger buyer is not interested in, etc.
Demand for something 2 bed 2 bath rentable under the PTT treshold with insuite laundry is very strong only problem being there isn’t much under the PTT threshold available.
Has Garth published his full service brokerage investment track record showing he is outperforming the market after his MER is paid?
Marko,
Canadians in general may now think “investing” means buying houses but to me investment advice is distinct from whether VanRE or wherever is going to ascent or decline. Nothing wrong with a diversified, balanced portfolio that doesn’t involve RE. In as far as RE (or really anything else) does tie in, anyone having a one-asset strategy with a view to investing isn’t.
He’s a bit of a blowhard, but he gives decent overall investment advice.
Canada’s two biggest citiies must be up well over 100% since he started the blog. Even better the 100%+ for most people if tax free (principal residence) and for those that bought with small downpayments the returns are equivalent to hitting a jackpot on a penny stock, but without tax.
Some of his message have been okay such as don’t put all your marbles in RE but the predictions/advice couldn’t possibly have been worse.
Well, I’m slumming it in Dubai for a few days and I spotted some condos for sale in the city for $384k. No clue how big they are etc, but it generally gives you an idea of how inflated prices are in BC. Victoria is no Dubai, no matter how much one twists the facts.
Speaking of living costs, I’m finding Dubai to be similar to BC,at least when it comes to eating out etc.
I was in Dubai for a week in late November and real estate was a lot more expensive than I thought it would be given the desert and cheap Pakistani labour. 300k CND was basically a started studio in a non-prime area.
Dubai is an awesome place to visit but Victoria is way more attractive for day to day life in my opinion. We spent a half day on a boat checking out the attractions from the water and man if you take away the man made crap it’s fugly as can be with murky water….can’t compare it with the natural beauty of Dalmatia, for example, or even the West Coast we have here. The city itself is a bunch of massive buildings with massive highways with piss poor walkability unless you want to walk around Dubai Mall hitting up unique stores like H&M and eating at Tim Hortons in the food court. Having dinner at the Burj Khalifa on the 123rd floor is cool but I can’t drop $500 on dinner every night.
It’s kind of like Vegas….I’ve been once and enjoyed seeing it but would never ever return.
And a few cutting it close with big $$$:
3585 Beach Dr
Sold Jul 2017 – $4,400,000
Asking $4,800,000
3355 Uplands
Sold Sep 2017 – $2,500,000
Asking $2,899,000
2830 Lansdowne
Sold Jul 2017 – $2,500,000
Asking $2,790,000
Should you need evidence that morons in high places have been with us for some time you need only look back to the previous incarnation of this blog. It had on it’s banner a quote from the head of the VREB which said “because we never know when interest rates will be increased to stimulate the economy”.
He’s a bit of a blowhard, but he gives decent overall investment advice. When he talks about the housing market, he’s often not bad as long as he sticks with the data. I don’t like his recent backpedalling on some things and implausible justifications for it though. Often feels vaguely like a bait and switch. Then again, I don’t pay him very much for his time.
Not making much on these flips after property transfer tax and real estate fees etc:
1843 Penshurst
Sold Aug 2017 – $775k
Asking $828k
3456 Hopwood
Sold Jun 2017 – $920k
Asking $1.099k and reduced to $999k
2368 Rosario
Sold Aug 2017 – $990k
Asking $998k
Garth hyping a fake news poll put out by a bank. Too funny. Wait til the China/Asia debt bomb sets off the global credit markets. Going to be a lot of Bank of Ma and Pa’s retirement plans blowing up after lending junior too much HELOC cash.
I don’t understand the theories in this piece. https://victoria.citified.ca/news/ultra-tight-re-sale-inventory-plagues-victorias-real-estate-market-as-median-prices-soar/
The assertion is that the primary factor behind low sales is low inventory. But last year we had even less inventory and almost a third more sales, so clearly current inventory levels can support a lot more sales than are happening today
The second theory is that the stress test is pushing people out of SFH and into 2 BR condos. Well let’s take a look:
2BR Condos:
March 2017: 197 sales taking an average of 16 days to sell out of 275 active listings. 7 expired listings. 44% sold over ask.
March 2018: 144 sales taking an average of 22 days to sell out of 316 active listings. 15 expired listings. 27% sold over ask.
So if the stress test is pushing people towards 2BR condos shouldn’t they be a strong point in the market? But they are down along with everything else.
At first I wondered, was this posted April 1st? Or is he doing a fashionably late April Fools joke?
From his post: “A whopping 84% think a house is a good investment”
My first thought on reading that sentence: It’s similar to when the taxi cab driver is telling you to buy XYZ stock. That’s when you know XYZ has hit its peak and is all downhill from there.
Just when I think the SFH market has started to cool, a run of the mill Oaklands/Fernwood bungalow (2510 Garden st) sells for 853k. One door from Bay Street.
A one off or another leg up?
Garth’s devotees are the greatest fools.
Funny that after a decade of advising people not to buy because prices are too high Garth is now saying you should buy because millenials will add demand going forward.
http://www.greaterfool.ca/2018/04/03/gen-h/
I like the relative centrality of Gordon Head: it’s not too far from anywhere, and it’s on the ocean!
Well, I’m slumming it in Dubai for a few days and I spotted some condos for sale in the city for $384k. No clue how big they are etc, but it generally gives you an idea of how inflated prices are in BC. Victoria is no Dubai, no matter how much one twists the facts.
Speaking of living costs, I’m finding Dubai to be similar to BC,at least when it comes to eating out etc.
Surprisingly little attention paid to the municipalities that want in to the tax (or at least are concerned about the impact of being left out) like Squamish.
The tax is Trumpian in that it makes the little guy happy even though it does nothing to benefit them. I expect more municipalities to protest this tax. I hope they do on the principle that a poorly thought out tax is not the solution.
He says that for the same reason Donald Trump says he loves the Mexican people…
Sloppy reporting has always annoyed me but, in the age of Wikipedia and Google, it just makes me sad. When it would take 10 minutes with a search engine to find the basic facts, reporters still seem to get things very badly wrong.
The “fake news” hysteria from the far right hasn’t seemed to do much to smarten up a lot of news outlets. You would think this would be a chance to prove the naysayers wrong and demonstrate the vitality of the mainstream news.
Isaac Asimov, Column in Newsweek (21 January 1980)
Now Stu Young wants Westshore exempted. What a pathetic joke. The level of greed is so disgusting I can’t wait to see this crash and burn.
This isn’t a new phenomenon. You can expect to see more and more of this kind of thing coupled with constant soothsaying as the cycle progresses. This run, such as it was, provided their industry a boost almost beyond their imagination. Who’d want it to stop?
Now that things appear to be changing, they will go into it kicking and screaming. If dishonesty is what it takes to keep market perception favorable they will do it, so long as they have a plausible explanation for their words later. If they want to try to rally the citizenry to effect a protest toward policies that are harmful to realtors, they will.
I wouldn’t worry. I don’t think trust of realtors is at an all time high right now. Reminds me of the tripartite letter that cell phone companies wrote to the public in 2015 when they were forced by the CRTC to adjust their contract rules to be a tad less usurious. Trust me – the sky was falling, but consumers laughed at them.
Snore. Best to just ignore the noise.
Of course he should, he was probably just trying to mislead/fool others who don’t understand, with his CEO hat on.
Totally agree.
Once:
I think that is true!
I was just reading this article I think someone posted:
https://www.cheknews.ca/nanaimos-mayor-to-ask-for-exemption-from-bc-housing-speculation-tax-434789/
And I think it is a poorly written/researched article that shows that no one has any idea what’s going on, especially the author of the article. They interview a guy (random?) who has had rent increases/can’t find a place and he says the tax is only going to increase rent because home owners have to make up addidional expenses (tax). Who is this person and why do we care about his opinion? Then the Nanaimo mayor says the tax won’t do anything but the author gives no stats on FB/vacation/empty homes. And then at the end of the article it says ” Hundreds of rental units are poised to come onto the market in Nanaimo”. Coming from where? Isnt this the purpose of the tax… You can tell people are freaked out about this tax and no one knows what it will do but I would bet money that it’s not going to push rents higher.
Anyway Leo I think you should make money freelancing writing RE articles because you would do a much better job!
But he’s part of the 1% 🙂 Not a joke really.
These days, I am inclined to believe that 99% of people don’t understand how anything works.
Are you pushing your car or driving it Hawk? Seriously, time yourself on that stretch. You are saying that it takes you an additional 15 to 20 minutes to drive that 1.3 km from Cook to the bridge. So if it used to take you 5 minutes back then, it is now total driving time of 20-25 minutes or average driving speed of 3 to 3.5 km/h – basically a slow walking speed.
I’ll readily admit Pandora is a bit slower than a few years back, partly to do with bike lanes and partly to do with increased traffic. But it has NEVER taken me close to that long and I have driven it a number of times at peak morning and afternoon rush. I also bike it pretty frequently. Mostly cars are still faster than me and I am averaging 15km/h including sitting at lights
The Province gets the PTT, not municipalities, so I would assume that he is talking about property taxes…but good question – this sort of error shouldn’t be in the media because probably 95% of folks out there think they work this way too and this “comment from an expert” only reinforces that error, keeping people dumb.
Was he talking about the property transfer tax?
Fixed that for you.
More FUD from the industry on the spec tax.
“There are further unintended consequences from these kinds of policy changes,” Soper says. “If property values decline, property tax revenues decline. Local municipalities will have to deal with this added burden.”
http://www.remonline.com/dont-take-new-b-c-taxes-lightly-says-royal-lepage-ceo-phil-soper/
Are we to believe the CEO of Royal LePage doesn’t understand how property taxes work?
Caveat,
It’s another 15 to 20 mins to get that distance in rush hour versus half that a decade ago and pre bikelane. The streets in this town aren’t designed for heavy flows which is why they only put one lane inbound on the new bridge. Douglas St/downtown is a gong show even on a holiday.
Let us know when the $8 million closes. Last $10 million sale awhile back fell thru a few weeks later as I recall with little acknowledgement from the pumpers.
Irrational markets always correct and someone has to be the bagholder. Might as well be the rich guys who go down first.
$8M and $3M sale today. That’ll pull the average up for April too
Not that odd. MOI still very low. Need more inventory to get to balanced market.
What an odd odd market…..sales down substantially but median for both SFHs and Condos hit a record high in March.
One of the conditions of the rational (aka efficient) market hypothesis is that a market must be fully liquid in both long and short directions to price in all available information. If this is not the case – and obviously it is not in the case for the RE market – it is possible for irrational players to determine prices.
In all open markets, rational or not, prices are determined by supply and demand.
For the bike lane opponents it is “grid lock” if it takes an extra 120 seconds to drive from Cook and Pandora to the bridge.
The terrible Colwood Crawl isn’t even that bad in comparison to lots of other places, but it would still suck to have to do it every day.
The good old, rational market hypothesis. In Vancouver condos, you have falling sales volumes, rising inventory, and rising prices. Extrapolative expectations, IMO, aren’t terribly rational though we seem to excel at it o’er these parts.
Number 6, I generally agree with most of your post, esp that you can’t divorce price from demand. I think the implication is “demand for housing at a lower price is strong”, but that’s breaking the useful definition of demand.
I don’t have a solid method of determining local RE demand, or else I would consider getting into the RE investment market at some point instead of my boring broad-market index funds. Note that we do own a modest house, but as a long-term home and not as an investment.
Garden Suitor, if you have a method of determining demand, I would like to hear it. The only way that I’ve been able to determine if demand is meeting supply is when the equilibrium/market price remains stable. And that’s a problem I have with those that say demand for housing is strong but prices are not rising. You can’t define demand without referring to price.
Demand is meeting supply at today’s market prices. The market is in balance otherwise prices would either be rising or falling. This is different from saleability. Increasing the desirability of your home relative to others will lower the market exposure (days-on-market) but will not change its market price.
Increasing the supply of housing will change market price as long as you are not stimulating the economy by creating new jobs and thereby increasing demand for homes. However, increasing re-sales will have a different effect on prices and lead to lower prices.
If you keep building people will keep coming to Victoria for work or those with property will buy more real estate with the extra income they earn.
I doubt that we will see a significant decline in prices until the unemployment rate and vacancy rates increase. When the U-Haul trailers are loaded up and leaving the island, as they were in the 1990’s, then we will see price declines.
But until then – go and buy another condo.
” I’ve had coworkers that moved from Vancouver and ridiculed the local idea of bad traffic.”
It’s not the traffic that’s bad. It’s the way people drive.
Yep. Same goes for what’s considered a ‘bad neighbourhood’. I’ve had coworkers that moved from Vancouver and ridiculed the local idea of bad traffic. “I hear if things get really bad I might get stuck for 10 minutes. I can’t wait to get stuck in traffic for 10 minutes!”
Victoria traffic IS worse than it was even five years ago. But yeah…not that bad.
People also bitch about how expensive downtown parking is..it is so cheap it is laughable.
We parked in your city Calgary a few times..now that was ridiculously expensive.
Victoria is a dream city…love love it. People who live there and have never lived anywhere else have no idea….and I love them for it.
But the rise in housing costs is a big issue…but I leave that to the experts here.
@Grace
In our last week in Victoria I’ve really noticed there seems to be a huge variance in what people in Victoria consider bad traffic. When we were driving around the neighborhoods, I decided to head out from Victoria to Langford at 3:30PM on a Wednesday. Traffic through the construction at McKenzie was definitely slowed, but as someone who lived in the San Francisco Bay Area, my gosh, it was a piece of cake by comparison to even regular traffic. Perhaps those who have lived in Victoria for a long time, or those who moved to escape any and all forms of traffic are the ones who consider it intolerable? Just a matter of perspective really. With regards to the Malahat, the Victoria PD officer I know lives in Shawnigan Lake and she regularly commutes into Victoria – for her the Malahat simply isn’t a big deal.
I don’t know a lot about Mill Bay specifically but I’d echo Grace’s comment about it being an in between place. If you are not tied to commuting to Victoria consider a place a bit further with more community feel like Ladysmith, Lake Cowichan or even Saltspring.
The Malahat would be a big pain if you had to drive it daily or frequently on a schedule. Not a big deal if you can take it at your leisure if and when you want to.
I can’t believe people make such a big deal about the Malahat! I have driven it hundreds of time in all types of,weather. I to not a big deal. Drive to the conditions and you will be fine. It is so short a distance.
But then I lived in the Kootenays for ten years. Now the mountain passes there ( Salmo- Creston, Allison Pass etc) are no joke. I drove them many times in winter.
Yes the Malahat has more traffic…I think that makes it easier. Go with the flow.
Being alone driving a mountain pass with only big rigs around you is way scarier.
I would think very carefully about living in Mill Bay. It is what I call an in between place….it really doesn’t have much to do and it would mean a lot of driving.
I have had amazing luck putting up ads on Craigslist etc. We found our current house that way. Write an ad detailing exactly what you want, what you can pay and see what happens.
There are also some good Facebook groups. Search Rental Victoria and join the groups.Again post what you are looking for. Victorians are very friendly and helpful.
Also do contact the agencies.
I have seen recent ads for Oak Bay homes…can’t remember which sites as I look at so much online. Google is your friend!You can find a good place…just put it out there and someone will come through.
But you have to decide where you want to be!
Thanks everyone for your feedback on Mill Bay, all important points for me (and my wife) to chew over, especially since my wife in particular seems to be in love with Mill Bay. Renting is preferable, however so far we’re not finding much of anything in the entire metro area that suits us (3+ bedrooms, not a dump, not 4 doors down from a fire station and accepting of a dog.) However I’ve yet to contact the management agencies that were recommended to me, perhaps I’ll have more luck with them.
@Leo
The consensus prediction from economists is pretty much a resounding NO, tax revenues will not increase from their tax cuts. (Profits to shareholders of course WILL increase)
http://www.igmchicago.org/surveys/tax-reform-2
(This was from November 2017)
Question A: If the US enacts a tax bill similar to those currently moving through the House and Senate — and assuming no other changes in tax or spending policy — US GDP will be substantially higher a decade from now than under the status quo.
Strongly Agree: 0%
Agree: 2%
Uncertain: 36%
Disagree: 33%
Strongly Disagree: 19%
Did they let Intorovert out of his straight jacket or did the meds wear off? 5 posts in half an hour.
Dropping stock markets mean tightening credit for real estate lending. With one in 5 not qualifying it’s only going to get worse as rates go up 7 more times.
@Grant
It is surprising how hugely different weather conditions are from one community to another in and around Victoria. Oak Bay has way more sunshine and less precipitation than immediate close neighborhoods. Sooke often gets covered in fog banks. It is way windier close to the water and substantially cooler than just a few blocks inland. All this is another good reason to become familiar with before making a final decision on where you finally buy.
Grant
We met a couple in a gathering some years back, they were in their mid/late 40s, no children and used to live in a smallish old SFH in Esquimalt, but bought and moved to Mill Bay for about a year when we met. For similar amount of money, they got a bigger near-new SFH on a big lot with sweeping ocean view in Mill Bay. But the (mostly stay-home) wife told us she was not happy about the location: they felt very isolated living there, and missing Victoria very much. It seemed, atmosphere wise, that living there was like living in an island off Vancouver island (note there is a ferry between Mill Bay and Brentwood Bay).
It sounded to me that you are not really sure yet about the location (from near UVic to North Saanich, and to Mill Bay), and there are lots beautiful neighborhoods in and around Victoria. So I would definitely agree with others’ suggestion that to rent first, say half year near UVc and half year farther out, before buying.
I think the far bigger risk is simply losing money. Marginal areas are usually the first to see price declines. Even with flat prices you’re losing the PTT on the buy and commission on the sell.
Here’s another one… Van SFH:
(March 28)
Just sold $2,700,000
Tax Assessed July 2016 $3,673,100
Tax Assessed July 2017 $3,484,300
“49.5′ x 125.8′ lot in prime Kerrisdale”
fyi – decent looking, 3 level heritage home.
SOLD $784,300 (or 22%) under assessed.
@Grant – echoing what others are saying here. I lived in Alberta until 3 years ago. Drove main roads & back roads Medicine Hat, Lethbridge, Calgary, Edmonton & many others all year round. The Malahat is a totally different beast and not one to be taken lightly. Consider renting in the area(s) you are most interested. Also consider making at least one more trip to see areas you may have missed like Sooke, Ladysmith, Parksville, etc. – lots of great areas on this big island.
From my perspective – seeing the water is great but being close to the water is even better. I can’t see it from where I am at but I can walk to a public beach in less than 10 minutes. That’s priceless especially when you hit it at low tide on a sunny day.
Grant you will be making a big mistake if you buy in Mill Bay or Brentwood Bay without renting there first. Remember there are a lot of “soft” costs when buying here so you don’t want to make a mistake. The transfer tax at 2% is a big hit if you decide after a year you want to change community and who knows you could be hit with a “Speculation Tax” if it is decided any persons selling within 2 years has to pay up a big % of any profit.
@Grant – don’t underestimate the Malahat, especially in winter. It’s one thing to say you don’t have to drive into Victoria that often, but if you have to for a meeting, flight, or appointment, and the roads are treacherous, an accident could change (or end) your life.
Because of the elevation, it often snows on the Malahat when it is not snowing in Victoria. FYI, downtown Victoria usually gets the least snow, with increasing amounts into Saanich. Brentwood Bay probably gets even more snow than Saanich. Also, snow here is almost always in conjunction with ice because it is usually right around the freezing mark. I grew up in Saskatchewan, so I am not just being a local wimp when I say that driving in snow here is nasty. Check this out from March 2nd
https://www.cheknews.ca/winter-wallop-causes-traffic-delays-on-malahat-424806/
Thanks for this article, too. Both were very interesting.
Ulm seems amazingly well planned. I would be startled if our local municipalities could plan that far ahead.
Thanks for the link, Introvert. At the end of the article, I wasn’t quite sure what to think.
Maybe that is a good thing? Thought-provoking, though.
One elephant in the room is immigration, which the article did not touch. I am generally of the opinion that immigration is a net benefit, but until our housing catches up, we are just punishing ourselves regarding house prices.
Maybe Hawk’s crash will even things out for a while. I am worried that the same pattern will repeat again, though. Too many people.
Sounds like most of the folks on this blog are in working and saving mode. For these folks lower stock markets are a long term positive (buy cheap now).
For folks living off a portfolio – yes a bear market will hurt (when it happens)
It does not seem like voluntarily reducing your market exposure is a good idea to me.
Mill Bay just isn’t very big. It’s over the Malahat so definitely has been cheaper, but if you don’t need to commute it’s fine. A 40 minute drive into town outside of peak hours. Question is if you don’t need to be in Victoria, why not go further up still? Chemainus is nice. Ladysmith? At least there is something going on there.
As for prices, it’s not really cheap anymore in Mill Bay either. After hovering around $500,000 for about a decade, the median SFH price in Mill Bay is $785,000 in 2018. Mind you that got you a new 3000sqft house on 21,000sqft of land.
Grant:
I’m not sure mill Bay would have much to offer if you have kids or like “city” amenities. But maybe that’s what you’re after? Quite a difference between mill Bay and Brentwood Bay. Seems overpriced to me for a more rural area and it’s probably priced how it is because of its proximity to Victoria. From what I have seen of mill Bay it is lovely (as are most island communities IMO) but what are you looking for in a community? Do you want to have a farm and beach and hike every day without much else? Do you care to be close to a theater/restaurant/pool/hospital/school etc? If I were you I’d rent first if you really don’t know why Mill Bay is “cheap”. From what limited knowledge I have, Mill Bay has traditionally been a cheaper area until normal people stopped being able to afford Victoria and prices have risen a bit more than some other similar towns on the island. If you come from a city it might be a bit of a culture shock to live somewhere like Mill Bay and maybe it’s better to rent for a few months to see if it is really where you want to live. Because I think if RE crashes, mill Bay will be very susceptible. If it were me I would chose Mill Bay over anywhere in greater Victoria but I’m from a smaller island town. Even still it would be an adjustment and I would be driving into Duncan a lot I suspect.
From the previous post:
I was in Vancouver watching cartoons with the kids in the hotel for a bit and was surprised to see that commercials had switched over to 15 seconds from 30. It seems that is the limit of our attention span. And over 5 minutes of commercials for 9 minutes of show! old man yells at cloud
To a point. There is a sweet spot and I haven’t seen much convincing evidence either way to indicate that we know where this sweet spot is. We will very soon find out with Trump’s experiment down south. Will their tax revenues increase from their tax cuts?
Good article introvert about German real estate speculators . Speculators are deemed vile in most western countries now.
This quote from that article is important:
”the German Federal Bank calculates that the richest 10 percent of households own almost half of the country’s real estate.”
History repeats itself frequently with revolutions, civil wars, and insurrection. The main reason for historical revolutions, civil wars, and insurrection have been when the richest 10% to 20% of the population own or control the majority of the real estate.
I doubt if we will see the en masse killing of landlords as happened in China by Mao ZeDong, but an uprising by tenants and homeless wouldn’t surprise me if the concentration of real estate continues to concentrate ownership in a small percentage of the population.
https://en.m.wikipedia.org/wiki/Mass_killings_of_landlords_under_Mao_Zedong
https://local.theonion.com/longtime-residents-worry-roommate-with-well-paid-job-sl-1819578403
Probably better bang for your buck in Mill Bay (but you would know better than I). My sense is that Mill Bay has a lot of seniors. It also seems pretty sleepy and rural (relative to Victoria). It certainly is beautiful. How often would you drive into Victoria is something to ask yourself—as well as how annoyed you are (or would become) by the drive.
Landless Americans Are the New Serf Class
https://www.thedailybeast.com/landless-americans-are-the-new-serf-class-10?ref=home
That comment perplexed me for a moment because Cochrane and especially Airdrie are not particularly beautiful towns and conversely Mill Bay is. I assume you’re referring to having to commute for work (not currently an issue for me) and/or Mill Bay is away from the “action” in Victoria?
This is a fascinating, short read—especially the “Ownership entrenches inequality” section:
German real estate: Renters’ woes are speculators’ profits
http://www.dw.com/en/german-real-estate-renters-woes-are-speculators-profits/a-43202615
This made me laugh pretty darn hard.
I imagine living in Mill Bay would, for a Calgarian, be sort of like living in Cochrane or Airdrie.
Just when I think I’m bearish on the market: “Canadian Housing To Be Listed On Chinese Amazon-Style Site”
https://www.msn.com/en-ca/money/topstories/canadian-housing-to-be-listed-on-chinese-amazon-style-site/ar-AAvjsl0
And does anyone have market data on Mill Bay? Or other opinions about it? (other than it’s a long drive on the Malahat to get to Victoria). It seems much more reasonably priced out there.
I haven’t heard any cogent arguments against supply+demand fundamentals in Victoria. Where most people seem to differ is on measuring demand relative to current prices.
Nice job, Leo.
The laws of supply and demand are still relevant, it would seem. However, I suspect that your foretelling from 2 months ago will be hastened by all of the NDP measures to bring sanity back to the RE market – Victoria included.
My running angst with our City is how residents seem to think this is nirvana – it is not. Victoria is a beautiful place, as is Nanaimo, Qualicum Beach, Kelowna, etc. Victoria is simply not immune to supply and demand fundamentals. I suspect that once Peter German’s 2 reports are released, one will see that the “pump” in price has less to do with the beauty of the City than with parking ill-gotten gains in hard assets of a home – vacant or not.
The RE market is also a “market”, not a homogeneous storefront. We have high-end/luxury and low-end areas, along with everything in between. The prices of homes in thees segments behave differently [but as a matter of degree and timing] in the short-run but they do eventually follow the same curve. So, we see a big inventory spike in Uplands [surely the most expensive real estate on Vancouver Island] accompanied by some price declines by those there listed more than 30 plus days – a welcome sight. We do not see that yet in Gordon Head [the fish bowl] or south Oak Bay – but expect to after a lag.
Common sense tells us that foreign buyers played a bigger role in this run-up that most thought. The speculation tax is a fascinating current feature and our Mayor welcomed it. Lots of taxes, layers on layers – the so called “gig” is up and we will see capital flight. Montreal is the new hot-spot for RE. In any event, and the point I am trying to convey, these new measures will likely result in price declines sooner than Leo originally predicted – July to December will be the first round of softness; but all bets are off for 2019. I for one believe that 2020 is too far off now for sellers to feel they are safe until then – inventory pressures are building.
A new home was listed today at 3355 Uplands Road.
https://www.realtor.ca/Residential/Single-Family/19243064/3355-Uplands-Rd-Victoria-British-Columbia-V8R6B8
Sales History (last 3 years):
05-Sep-2017 sold for $2,500,000
02-Oct-2015 sold for $1,175,000
It was just listed today, again, now asking $2.9M [almost 3 times what it sold for 2 1/2 years ago]. Tax Assessed at $2.15M. Asking price is staying below the $3M warning light. 16,000 square foot lot [most lots there are 22,000 plus]. I am curiously watching this one to see how many price drops it goes through – the current owner is a 6 month resident !!! time to flee, I suppose.
LeoM,
Yes the inevitable Trump Tank is well underway. He’s in full blown out of control narcissist mode. This will only discourage speculators in all global markets as they look to safer choices and inflation hedges. Easy credit is going bye bye.
Enjoy it while it lasts. A week of rain rolling in. Will probably scare off more prairie people who many have told me they would rather have the sun and cold.
More agents hanging out at the beach these days with sales down bigtime. Maybe start a self help group for bored out of town salesmen. 😉
https://weather.gc.ca/city/pages/bc-85_metric_e.html
For Canadian cities, Victoria has by far the best climate in my books. Sure is showing today 🙂
Heading down to take in low tide at Gonzales beach and revel at the amazing views in this glorious weather…… but don’t mind me I’m just a pumper !
Here’s one for you Hawk, more news to support your dire predictions.
”The S&P 500 Index finally tumbled below its 200-day moving average, dragged down by tech troubles and tariffs. To chart watchers, the failure portends even bigger declines to come.”
http://business.financialpost.com/investing/market-moves/stocks-tumble-on-tech-rout-as-support-levels-fail-markets-wrap
Irregardless, from previous thread:
That was my understanding, as well. However, this CRA page seems to have a work-around for countries with tax treaties. I am not an expert, though.
https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/individuals-leaving-entering-canada-non-residents/factual-residents-temporarily-outside-canada.html
“If you have established ties in a country that Canada has a tax treaty with and you are considered to be a resident of that country, but you are otherwise a factual resident of Canada, meaning you maintain significant residential ties with Canada, you may be considered a deemed non-resident of Canada for tax purposes.”
“You become a deemed non-resident of Canada when your ties with the other country become such that, under the tax treaty that Canada has with the other country, you would be considered a resident of that other country. As a deemed non-resident, the same rules apply to you as a non-resident of Canada.”
I have a question for the blog. There is a house that just listed down the street and the agent sign says it is “exclusive” and it is not on MLS.
My question is why would the owner decide to give an agent an exclusive listing? What is the owners advantage to doing this as opposed to MLS? I am guessing that it has something to do with commissions?
Barrister, from previous thread:
That is an interesting scenario, thanks for relaying your lawyer friend’s comments.
As much as I respect David Eby, I think he is going to have a tough time cracking down on some of this “satellite family” stuff. It seems to lie firmly in the realm of Immigration Canada and the CRA. I am not sure how much the province can do without those two slow-moving beasts joining the effort.
Well, RBC is certainly squawking today regarding investment dollars leaving Canada and pouring into the USA. Real estate, continues its inevitable march forward in its cycle, as does the consumer debt we’ve gorged ourselves on. Turns out, houses don’t rise in price forever and that all that excitement has to be paid back.
What’s funny is how many new outlets reporting Q1 economic data are calling the declines in various sectors “unexpected”. What were we thinking was going to happen?
And the numbers for Vancouver and Toronto RE are starting (and in some cases continuing) to get uglier and uglier. Condos are generally still going strong, but that’s already slowing as well. These people IMO, are going to get hurt the worst. They don’t even own land; they own a depreciating box in the air. If you paid 750k for it today, you think you’re going to sell it at this point for the same value or better 5 years from now?
Can our incomes support home prices at 10-30 times income? Are rich folks going to abrogate the cycle and for the first time in history, make it “different this time”? Is Steven Poloz going to decide to hold out against interest rate hikes, causing inflation to spike on an already tapped out consumer? We’re going to find out. 🙂
Anyways, never mind all that. Going to see if the flowers are up yet at the Butchart Gardens. What a gorgeous day!