April 30 Market Update
Only one day before the end of month numbers are out, but here’s a brief update on weekly sales numbers courtesy of the VREB.
| Apr 2018 |
Apr
2017
|
||||
|---|---|---|---|---|---|
| Wk 1 | Wk 2 | Wk 3 | Wk 4 | ||
| Unconditional Sales | 158 | 340 | 543 | 745 | 885 |
| New Listings | 331 | 643 | 967 | 1263 | 1270 |
| Active Listings | 1842 | 1921 | 1966 | 1998 | 1690 |
| Sales to New Listings | 48% | 53% | 56% | 59% | 70% |
| Sales Projection | — | 734 | 769 | 775 | |
| Months of Inventory | 1.9 | ||||
After the 30 or so that will come on board today, new listings will be just barely over last year’s 1270. It’s still low historically speaking, with the 10 year April average at just under 1500. I imagine the low inventory is still scaring people out of selling for fear of not finding a new place to move to. Just like with prices, I don’t think the majority have really noticed that the market is not nearly as frantic as it was last year or the year before.
Sales relaxed a bit last week, settling in around 15% lower than last year’s total with an 18% increase in active listings. The switch to increases in active listings has come quite quickly, going from matching last year for months up until mid March to climbing since then.
Both sales to list ratio and months of inventory running slower than last year, but still indicating overall sellers markets.
A week isn’t a long time to be re-examining the market, so sometimes the natural variability in sales leads to more active and less active weeks. The overall message though is that so far this is an orderly slowdown. Fewer over-asks, fewer irrational sales, more selection, more.. civilized. Let’s hope that trend continues because a house is not something you should be buying in 3 days with no conditions.
Month preview: https://househuntvictoria.ca/2018/05/01/april-market-preview/
What I meant by a “lot of people” is an absolute number rather than a percentage. Percentage wise I don’t believe most people paid over market; however, if 20% paid over market in a bidding war you’ll have a decent amount of people selling for a loss even if the market has appreciated 10-15% since they purchased the home.
In any hot market there are extremely irrational purchases….Falls, Aquattro, Bear Mountain being perfect examples during the last hot market where people lost 20-50% on re-sale.
Whooo we’re back over 2000 active listings!
Barrister have you been to whistler lately I go a lot biking it is a community and people who live there deserve the same protection that Horgan is giving other communities..
SweetHome, I didn’t mean to suggest that all bidding wars ended up overpaying. Some sold at market and some sold over. It is simply a higher risk way to buy. For some that will go sideways (if they need to sell now and overpaid) and for others it won’t make a difference. Good to hear that it has worked out for you.
Market value is kind of like Schroedingers cat anyway. You don’t really know until you try to sell again whether you paid it.
@Barrister
With all due respect, I know many people that call Whistler home and many others that have had to leave and when you speak with them, most still miss it. To them, it is definitely a community. To those that simply visit, they may not see that side, but it’s definitely there. Take the time to get out of the hussle and bussle of the village, go to the cafes that the locals frequent, and you’ll see the sense of community as well.
Sweet Home:
As long as you are planning on being in the house for ten years you should be fine. Getting over obsessed about the market takes the joy out of life. Hopefully you bought a home and not a house. Just remember to fill it with friends, laughter and love. The best thing about my house is my wife.
If all decent houses are going in bidding wars, then that is the “market” at the time. It makes it really hard to tell if you overpaid in a market where houses are going up thousands of dollars every month, as they were when we bought in 2016.
The market was crazy then, but we probably weren’t crazy to buy (given that we couldn’t turn back time to buy in 2013). Ours was one of several offers on the house, and we paid over asking and way over BC assessed value. That was the thing at the time. We weren’t the highest offer but met other criteria the seller liked. We had decided that if our offer wasn’t accepted, we weren’t going higher.
Did we overpay? Well, the house still went up after we bought it, and I didn’t see anything for a long time after that I would have considered a better buy. I guess time will tell if it drops below what we paid for it plus expenses. We plan to stay in Victoria, though, so the bright side is that if the price drops on our house, it will drop on anything else we might want to buy too. That’s a different situation than a speculator who bought within the last year, though. Someone has to be the person who bought at the peak of the market, I guess.
I remember Whistler going back to the early days of Nancy Green. Whistler has always been first and foremost a ski resort and a tourist business. Calling it a community is really romanticizing it more than a little.
If you have not noticed there are lots of container ships going past Victoria every day bringing in goods from China and the USA. Check any store and the majority of goods are imports. Guess what, these people what to get something in return. One of the things we sell is tourism including grossly overpriced homes in Whistler. Not only does that provide all sorts of jobs but all sorts of tax revenue that pays for things like your health care. Strangely people dont want to pay a lot of money for a house in Whistler and then be told what they have to do with it. Getting rid of the rich tourists might sound appealing but you will find that the housing crisis will be solved by a job crisis.
This whole thing about a labour shortage is fanciful because businesses will pay more to attract people and will at the same time complain that they would rather be paying minimum wage. Horgan is at least smart enough to recognize that Whistler is a money machine that frankly puts food on all of our tables.
Leo I think this is the first time we agreed on anything. You are bringing me over to the dark side. 🙂
Agreed. If the resort excuse is going to be accepted, it just opens the door to an excuse for every city. Victoria is a tourist town, we certainly can’t apply any spec tax here.
The place either has a housing crisis or it doesn’t.
Local that sound like a fair plan. Everyone should access.
British Columbia considers halt to exclusive access for condo presales
Forcing developers to make preconstruction condo units available to all potential buyers at the same time and the same price is something B.C.’s Finance Minister says she is open to trying in order to help make real estate more affordable in and around Vancouver.
“We are open to looking at options that are necessary to make our housing market more affordable. We are not closing any door,” Carole James said in an interview. “If there are further steps we need to take we will be moving on them because this is a critical situation for people who live and work in our province.”
Ms. James’s reaction comes after a Globe and Mail investigation found select realtors and speculators who buy multiple condos have preferential first access to the most sought-after units in Vancouver, through private deals with developers.
John Pasalis, president of Realosophy real estate brokerage, said developers in Toronto are also selling a large percentage of their condos to realtors and other insiders – who then flip them before they are built – but only because the existing tax rules allow it.
“If you’re running a business and you have a client who keeps coming back to you and buys a lot of product you’re going to incent them,” he said. “To me, the bigger thing is why provincially and federally is our tax system set up to incent speculators to just flip on these properties?”
https://www.theglobeandmail.com/canada/british-columbia/article-british-columbia-considers-halt-to-exclusive-access-for-condo-presales/
Andy well said. A community needs locals. Not part time residents.
Our beautiful one of kind areas in this province deserve to be local ownership not just for the rich. The resort excuse is very weak.
Andy
I agree with most everything you say about Whistler. Not sure it is ever going to come back to being a “normal” community. Maybe if they built like crazy.
The worker thing is a bit self limiting. In the end businesses will have to pay more to entice people to commute from Squamish or Pemberton, provide their own worker accommodation, or do without the employees.
I don’t buy the shortage of workers story. When businesses claim there is a shortage of workers, generally it means they aren’t paying enough. “Shortage of workers” translates to “I can’t find employees at the wage I am willing to pay” which translates to “I am not willing to pay the market clearing price for labour”.
@caveat emperor
That article on Whistler’s pretty bang on.
I know a lot of people think of Whistler as just a resort, but to a lot of people it’s home. And a lot of people have had to leave that community, a community they love and wanted to stay in, because they needed to go elsewhere to afford to live and to raise a family. I’ve met countless people on the Island in this very situation. What you see as a result of the crazy prices are businesses not being able to keep workers and long term workers especially. And not all businesses there can afford to buy multi-million dollar properties for their employees to live in.
They do have short term zoning areas which is great. However, the housing stock in the areas zoned for long term rentals, has been bought up by people (often foreigners) that aren’t there very often, if at all.
So you’ll go through neighborhoods that used to have quite a bit of local community to them, with people walking, kids and dogs playing, and now it’s quiet and the lights are out or on timers. It’s unfortunate. It’s like a replica of the West Side of Van.
Meanwhile, workers can’t find a place to live, stores have to close because they can’t find workers and more and more people are commuting in from Squamish and Pemberton on a road that’s pretty dangerous. Not to mention, Whistler got bought up by Vail and that’s causing a whole other wack of problems.
It’s not a great situation. They should probably put some form of tax into play, I’m just not sure what it would look like; maybe something like the spec tax applies to the area zoned for long term rentals, and is exempt in the short term zone. It’s the locals that run that community, and without them, operations shut down. Ie. Welcome to Whistler, whooops, no one here to serve your coffee. Whoops, no one here to turn on the lifts.
Very few times when buying in a bidding war is a good idea. Perhaps early 2016 when prices were just taking off. But in most cases it is just a bad idea to get involved in. Too much risk. There aren’t that many (any?) properties I can recall where I thought the price it sold for after a bidding war was a deal for the buyer.
Cancelled
Thankfully “Comrade Horgan” understands that a tool designed to increase affordability in major metropolitan areas is perhaps not the best tool to apply to a resort town. That’s not to say nothing should be done about affordability in resort towns like Whistler, just that the spec tax is not the tool to do it.
I tend to agree with Local Fool’s comments on Whistler. Will Whistler ever be affordable for average families? Are Vail, Aspen, St Moritz or Zermatt affordable for average families there?
I’d add the following:
In a resort community like Whistler you want LOTS of investors/speculators holding units for short term rentals to provide visitors a place to stay. That’s not what most people want in Vancouver Victoria.
A backdrop to all of this is the demand side – the household cost of servicing debt is rising significantly. Below is what is reported today on BNN [worth a close read]:
The indefatigable ability of Canadians to shoulder an ever increasing mountain of debt is being tested.
The country’s biggest banks began raising key borrowing rates last week, just as the busy season for residential real estate gets underway. In addition, the mortgage market looks set for a particularly heavy year of renewals in an environment where debt-servicing costs are already rising at the fastest pace in a decade.
How well Canadian households can weather the squeeze has become one of the biggest questions for policy makers and will determine whether the economy is headed for a mild, or sharp, slowdown. Bank of Canada Governor Stephen Poloz will address the topic in a speech on Tuesday.
“The economy has never been as levered as it currently is, and the economy is far more interest sensitive than it has been in the past, to a degree that we don’t have certainty over how each interest rate hike is going to affect Canadian consumers,” Frances Donald, senior economist at Manulife Asset Management, said by phone from Toronto. “All we know is it’s going to be painful, but how painful isn’t quite clear.”
The heavy debt burden is one of the reasons the central bank has been reluctant to raise reluctant to raise borrowing costs further, after hiking interest rates three times between July and January. Given the nation’s debt load — as of February, households had a record $2.1 trillion of mortgage and non-mortgage debt — Poloz estimates the economy is 50 per cent more sensitive to rate hikes than in the past.
Here’s what households are up against:
Mortgage Season
Canada is entering its busy season for real estate, with purchases concentrated in the April to July window. Some 47 per cent of existing mortgages need to be refinanced this year versus 25 per cent to 35 per cent typically, according to Ian Pollick, head of North American rates strategy at Canadian Imperial Bank of Commerce in Toronto.
At the same time, the country’s biggest banks are raising key mortgage rates. Toronto-Dominion kicked it off Thursday, hoisting its five-year fixed mortgage rate 45 basis points to 5.59 per cent. Royal Bank followed with its own hikes Friday.
New mortgage stress tests are pushing some borrowers from the big banks to alternative lenders charging higher rates.
“That’s an unfortunate outcome of the stress test,” Will Dunning, an economic consultant who specializes in the housing market, said by phone from Toronto. “In that sense, the stress test is not reducing risk. It’s increasing risk.”
Cost of Debt
The vise is tightening. According to Statistics Canada, total payments on debt made by Canadian households rose 6.7 per cent in the fourth quarter from a year earlier, and the interest-paid component climbed 9.2 per cent. Those were the biggest gains since the financial crisis. A moving average of quarter-over-quarter changes shows a similar pattern, with the 1.62 per cent increase in the latest period the fastest since 2008.
Debt payments now represent about 14 per cent of household disposable income, the highest share in three years. Donald expects the debt-service ratio to continue moving higher over the coming quarters.
“The world spends a lot of time talking about the level of Canadian debt being extremely elevated, but what matters most is not the level of debt that Canadians hold, but the cost of carrying that debt,” the Manulife economist said. “Canadians are going to start to feel the pinch.”
Cracks Appearing
There are already signs of strain. The roll rate — the percentage of credit card users who “roll” from early stage delinquencies to 60-89 day delinquencies — reached the highest since 2008 for one credit card program, while delinquencies for another were above the 10-year average, according to Royal Bank of Canada credit analyst Vivek Selot.
While the level of mortgage arrears is still low by historical standards, a rising debt service ratio could signal that’s about to change.
Retail Sales
Canada’s economy led the Group of Seven in growth last year, mostly because of the willingness of the country’s consumers to spend money. But growth is expected to slow this year. Gross domestic product unexpectedly shrank in January. Data for February is due Tuesday.
The nation’s retailers have already had a tough few months. Retail sales in February were still 1.8 per cent below 2017 peak levels. In volume terms, the input used to calculate gross domestic product data, first-quarter retail sales probably posted the biggest quarterly drop since the 2008-09 recession.
The low unemployment rate and decent economic growth will help the economy withstand higher rates, though risks are increasing.
“You have some capacity in the economy to absorb this, but the fact that rates are going up isn’t positive for consumers, because it’s making credit more expensive,” Bloomberg Intelligence analyst Paul Gulberg said Friday by phone. “That’s the but.”
2368 Rosario St was talked about here a while ago.
Sold: 2018/04/24: $980k
Last sold: 15-Aug-2017 : $990k
That particular realtor has sold another place for a $100k loss that I was interested and looking back probably should have bought. (We had just started looking though and didn’t want to jump in on our 3rd house we saw)
$900k in early 2017 then resold winter 2017 for $800k. He mentioned it was a friend who bought multiple places in Oak Bay to determine where he wanted to live and sold the rest. (Not speculation) It seemed somewhat odd to me as it seemed $150k in losses is not a normal thing to aim and sounded more like speculation to me.
As the market flattens out there will be a lot of homes selling below the previous purchase price….reason being a lot of people paid in excess of market value in bidding wars in the last two years.
A house in North Saanich just dropped to $1.69 mill and purchased exactly a year ago for $1.75 million.
1484 Lang St
Already a quick 50k price drop. How many more till it sells?
$898,000
Interesting that the sale price is also under the BC assessed of $1,008,000. However, the fact is that this is a tiny house with the upstairs looking like you can’t even stand up in some of it and possibly some weird extensions in the back.
That this is still $1M house doesn’t say to me that prices are tanking. I am not sure, but I would guess this house would have been under $700K in 2015. Whoever bought it last year at that high price was dreaming, though. Maybe they thought prices here would match Vancouver?
Those numbers seem really low for SF.
The Rosario scenario makes me happy.
Time for greedy flippers to lose out.
https://www.piquenewsmagazine.com/whistler/council-gets-crash-course-on-speculation-tax/Content?oid=8063258
“Mayor Nancy Wilhelm-Morden pointed out that plan would likely end in the turfing of mayor and council, as second homeowners are eligible to vote if they are Canadian.
Councillor Cathy Jewett noted that Whistler has a lot of empty homes and scores of jobs to fill, and wondered how the tax could be adjusted to address that problem”
CE
Glad you are ok with the situation for renters in Whistler and the fact that normal residents have really no chance of ownership. Its a rich persons town. Rich owners first… Its always been a problem so no issue. Difference is the comrade Horgan has introduced new rules to stop this kind of thing in BC. For some reason foreign owners and non locals are ok to continue to drive up prices in the worst impacted area. Sorry I call BS. If your going to introduce stupid rules on housing make sure they impact the worst areas.
Gwac,
Whistler is kind of a thing unto itself. It’s a very small place where tourism probably makes up a large part of their activity. Few people go to Whistler for any reason other than to go visit.
Buying places for worker staff to live in communally isn’t that uncommon in tiny resort towns. It certainly affects some residents negatively, but I don’t think the macro scale of the disruption it causes is significant. With such a small population and an existence that’s predicated on outside money, housing prices that are out of line with local incomes could actually be sustainable, but to what point I have no idea.
“Amazon creating 3k jobs in Vancouver.”
Mass exodus of Victoria techies tired of being stuck in low paying nowhere jobs. Ouch.
Not really. It has always been hard for employees to live there. Same issue at high end US resorts. Similar in other major tourist spots (Tofino, Banff, Jasper).
The issue is different than in Van or Vic. In a big city discouraging short term rental made some sense. At a resort short term rental should be encourage and regulated.
CE
If you read the article it is a disaster there. It should be a prime target for the spec tax.
I am sure there is a lot of empty homes that are not in no rental pool.
Presumably because in a resort town you WANT lots of “empty” housing available for short term rental to visitors. IIRC if you own a place in Whistler you HAVE to put it in the rental pool when you are not there
New office building on Pandora and Douglas opinion on the outside of the buiding? Reminds me of lego.
Can anyone tell if what 101-1190 View St sold for (if it sold)?
2368 Rosario St was talked about here a while ago.
Sold: 2018/04/24: $980k
Last sold: 15-Aug-2017 : $990k
Decent loss after fees.
Amazon creating 3k jobs in Vancouver.
https://www.bnnbloomberg.ca/whistler-now-tops-vancouver-as-canada-s-craziest-housing-market-1.1068737
Why is this area not part of the NDP spec tax. It is by far the biggest impacted place in BC. Makes you think something more at play.
Workers living in Vans. No rental/ no way regular person could afford a house. Either the Tax is meant to do what it says or its just more politics.