April Market Preview
April has wrapped up, so let’s take an early look at what happened in the real estate market this month. The month started extremely weak, with sales in the first week coming in a third lower than a year ago. Later weeks brought an uptick in sales, especially in single family homes where final sales came in only about 13% lower than April 2017 while condo sales dropped 22%.
Two years ago, single family sales were over 90% higher, but that says more about the insane level of sales back then when we were still burning through old inventory rather than the conditions today.
While months of inventory has been dropping since January (which normally indicates a market that is heating up), this is only due to the seasonality in this measure. To make sense of this measure, we need to remove the seasonality either by taking the average of the last 12 months (which works but lags the market) or seasonally adjust it by extracting out normal seasonal patterns to find the underlying trend.
The truth then is that the market is cooling off, but extremely slowly. We are still well into sellers market and unless the slowdown accelerates, it’s going to take a while to get back to balanced market conditions (about 4-6 months of inventory).
Price increases for single family have really slowed down, but I suspect are still drifting up slowly. At current low month of inventory levels there is still upward price pressure, although that might disappear very shortly. Condos and townhouses still stronger on price appreciation.
What’s interesting is that median prices in the Westshore have not climbed in 2018 while the higher priced core had a pretty good increase after a mostly flat 2017.
In other news, CBC has a new original podcast out called Sold! that covers the Vancouver market and delves deep into the history of the market. A highly recommended listen to understand why Vancouver got as bad as it did. The first three episodes are now available for download.
For exchanging I don’t think Interactive Brokers can be beat. Fees are roughly $2.50 USD per transaction and << 0.1% of the amount. There’s also a monthly account fee (~$10 minus any transaction fees you incur) for balances under $100k USD. It’s a ridiculously powerful platform, but it’s not for amateurs. There is notoriously little hand-holding or support.
If you just want to gamble or hedge — that is, bet on the direction of the exchange rate rather than deposit one currency and withdraw another — Oanda’s fxTrade is also very cheap and much easier to use. The caveat is that they explicitly don’t want you to use it to exchange currencies and they make it difficult and somewhat costly to deposit in one and withdraw in another.
Otherwise, there are a number of pure exchange services that are easy to use, but generally take a hefty ~0.5% cut (xe.com, OzForex, Oanda Money Transfer, etc.). They’re a bargain compared to banks, but 0.5% is still highway robbery. (When you buy something in a foreign currency on your credit card and your bank charges a couple % for the privilege, then gives you a shitty exchange rate on top, they’re making pure, exploitative profit.)
All that said, I wouldn’t advise speculating on forex. Most people lose money doing it. Interactive Brokers used to have a table on their website touting that forex traders using their platform lost less than those using their competitors’. It’s astounding that that’s brag-worthy.
New post: https://househuntvictoria.ca/2018/05/04/musings-on-future-affordability
Not sure rock.
With commodities on the rise I don’t know if I agree with you thought. Irrespective of debt.
Does anyone have a suggestion on how to exchange CDN dollar to USD without huge fees? I’m kind of seeing the CDN$ dollar taking a long dive in the not too distant future.
@ Grant
“If there were mortgage restrictions, there’s a good chance the % of the market owned by foreigners (or newly minted Canadians/PRs) would be higher.”
Yes, as I noted at 11.42 am:
[F]oreign investment in Canadian RE would have to be restricted to keep inflation-adjusted housing costs level. i.e., kept level by regulation of mortgage lending.
Mortgage rates seem to be going up to what is a historically speaking low norm of 6 or 7%. Why are people acting so surprised. What surprises me is that they were so low for so long.
The weekend is upon us and its time for a wild couple of days garage shopping.
Local Fool: “Funny though, CB manipulation is causing US debt levels to rise quickly again. Quite a time of volatility in some respects.”
<<<<<<<<<<<<<<<<<<<<<
One of the biggest challenges that the US Fed has is in the “deleveraging” of their own bond purchases. This move alone could push interest rates up significantly quicker.
https://www.cnbc.com/2018/03/28/the-fed-and-treasury-is-growing-an-800-disconnect-in-the-bond-market.html
“Wells Fargo expects the yield on the 10-year Treasury note to hit 3.20 percent by the end of the year, around 40 basis points higher than current levels. Yields have not been that high since May 2011. The 10-year has not even crossed the 3 percent threshold since January 2014.”
“Who is going to buy the bonds? We keep searching around and there haven’t been, frankly, many takers,” said Schumacher. “The U.S. Treasury right now is scrambling a little bit, and it’s that big glut you’ve got coming out of the market that really should push rates up.”
Oops,
Yes, they had their deleveraging event. We haven’t. It’s actually shocking just how far Canadians have taken things.
Funny though, CB manipulation is causing US debt levels to rise quickly again. Quite a time of volatility in some respects. Who knows how long it will take for them to unwind it. If they don’t, I would be more inclined to think housing markets will be more prone to aggressive booms and busts, as opposed to the more gentle rise and falls.
Local Fool: “One of the more notable things is when you compare the 8% of those “highly vulnerable” people today, to the housing mess that happened in the USA 10 years ago.”
<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<
………….. or let’s look at a comparison of the household debt to GDP of Canada and the USA over the last 20 years.
Household Debt To GDP…
United States vs. Canada
1997:
= 65.2%
= 59.3%
2005:
= 91.5%
= 70.6%
2010:
= 90.7%
= 92.4%
2015:
= 78.5%
= 97.5%
2017:
= 78.5%
= 100.4%
In general I agree – it’s pretty dumb to keep injecting a patient with a drug over long periods of time and then not expect some sort of hangover/addiction. But as for prices, maybe they would be lower, maybe not (or not by much). If there were mortgage restrictions, there’s a good chance the % of the market owned by foreigners (or newly minted Canadians/PRs) would be higher.
(And resentment by locals would be off the charts.) How much prices would be impacted all depends on how much of an impact foreign cash has had on the market.
CS –
If governments were to blame for high prices, then places with less intrusive governments would tend to have lower costs of living. Singapore, Hong Kong, and the good ol’ US of A suggest otherwise – local factors seem to matter much more. Russia maybe (not too far from Canada’s density)? Moscow prices are sky high, though you might find some great deals in Novosibirsk. Probably not too far from our situation in Canada, with great deals to be had in places like Prince Albert, SK and Thunder Bay, ON.
http://en.arkadia.com/for-sale/novosibirsk-g396935/
Governments often provide subsidized housing, which reduces costs significantly for those who can access it. You can definitely blame governments for enforcing building codes, making older housing much cheaper to buy relative to new construction (with small bungalows being basically ‘worthless’ compared to land value on some properties). I suspect immigration laws matter most to construction costs, with cheapest construction happening in places with high populations of easily-exploited undocumented immigrants.
@VB:
” input costs rise [labour costs and materials costs rise over time].
Inflation-adjusted manufacturing costs have generally fallen quite consistently over the last many decades.”
Insofar as the real cost of new homes has increased, that reflects mainly, if not entirely, changes in specification, especially increases in unit size, no. of bathrooms, extravagance of kitchens, etc.
Thus, even now, one could build a 1200-1400 square foot, 3-bed, one bath bungalow (such as were built in the Uplands during the 50’s, to the south of the park) for $240 to 280 thousand, which is a bit more than the current asking for a used bung, the difference due almost entirely to a rise in land value.
And, yes, foreign investment in Canadian RE housing would have to be restricted to keep inflation-adjusted housing costs level.
CS makes excellent points, but I disagree with the argument that manufacturing costs fall over time – input costs rise [labour costs and materials costs rise over time].
BNN has a great article today about the cost of RE in Montreal – prices are taking off because the Foreign buyer is now focusing there. The contrary arguments, principally by Realtors, cannot stand.
You are right about the other stop sign. A lot of rolling stops. ICBC I have done for years very safe. Someone did hit the ICBC stop sign coming out on to the lockside trail this week. They must have been going fast. Bent over.
The following article appeared in the Globe and Mail near the beginning of Canada’s national housing bust in 1990. Sales were starting to slow, and people were worried that the party may be over. And the RE industry was there, reassuring us. Immigration, Asians, demographic shifts, investor demand in “prime” areas – all were going to be supporting values. Sound familiar? Well guess what?
None of it made any difference, and values did not recover on inflation adjusted terms until well into the next decade. And here we are at the top of this cycle, at valuations that are just as high, in some cases higher, with debt loads never before seen in Canadian history. Like I keep bleating, the more things change, the more they remain the same.
it’s stupid.
Right on the other side of the road into Saanich works.
Personally I’m more concerned about the Saanich works, and the stop sign on the other side of icbc, at lochside and cedar hill. Never had a problem with people at the 3 way intersection that bikes have right of way for. But Drivers not looking at the other stop signs are definitely going to kill someone.
I’ve never cut through the ICBC parking lot. I’d think cutting through a parking lot would be more dangerous?
House prices can be fixed wherever the government wants them through financial regulation.
Currently, OSFI sets rules on how much people can borrow without regard to their ability to pay current interest rates. Having established that precedent, OSFI can vary the borrowing rules to keep house prices constant, fixed in relation to incomes, the price of lumber or whatever.
Mortgage borrowing restrictions should have been imposed by government years ago, which would have meant much greater restriction on borrowing than we have now during the ongoing period of low interest rates, and hence much lower house prices than we have now.
The idea that house prices must escalate without limit is idiotic. A house is a manufactured product. Manufacturing costs generally decline not increase over time. What has escalated massively as interest rates have fallen over the course of the last 30 years is the cost of residential land. So millions of Canadian families, who live in the least populated country on earth, can’t afford a house due to a shortage of land. Is that stupid, or what?
We need responsible financial regulation plus responsible urban land zoning, with massive increases in density in Victoria among other places. Instead, we build bizarre characterless suburbs on the West shore and then tax ourselves to build roads so that poor people who work in Victoria, but cannot afford to live in Victoria, can piss away their one and only life and their meager incomes burning gasoline while stuck in the Colwood crawl.
Instead of being excited about free money extracted by RE speculation, Canadians should be ashamed of their pathetically corrupt, stupid or incompetent governments.
James where is the counter there? Someone is going to get killed in front of Saanich works and/or that car stop sign. just past the works area. Bad design by Saanich. Safer through icbc.
As someone who bikes daily, I think that the article was a bit ridiculous in that it was taking numbers before (in the winter/early spring) and after, when it finally got nice, along w/ hefty gas prices. There’s been an explosion of traffic everywhere. For example right by the Monkey Tree pub, there’s a daily counter, and it went from just under 200 in the morning when I pass it, to over 300. No new bridge, but a 50% increase in traffic in the morning.
Could never happen in Victoria… it’s different here.
http://www.macleans.ca/economy/realestateeconomy/toronto-real-estate-losses/amp/?__twitter_impression=true
I agree. It might get better (for a time), but I highly doubt it will return to any previous utopian level.
I think so. Certainly in desirable areas.
A fall of 50% across the board would be an unmitigated disaster for almost everyone who lives in south western BC. I do think we need a degree of destruction to fix this, but those cheering for a huge mega-crash may not like the reality of it as much as they think.
Amen to that. The Fiberals are deservedly consigned to a stint in Opposition.
I don’t think I buy his prediction of 50-80% decline, but Vancouver is vulnerable once you take away the scamming, money laundering, tax dodging wave of cash. Even a fall of half that would feel pretty catastrophic for people that bought recently.
Stuff like that is interesting to read in hindsight, isn’t it? One of the reasons looking back at history can be a fascinating little trip.
Folks, check out the latest article from Better Dwelling, which provides a commentary on the BOC essay/speech I posted the other day:
https://betterdwelling.com/boc-8-of-canadian-households-owe-more-than-20-of-the-2-1-trillion-in-debt/
We now have over 2.1 trillion dollars in consumer debt, most of it being mortgages. Yet, only 8% of the population holds 20% of that debt. What’s more, is that’s a figure derived nationally – it doesn’t account for disparities among regions. It leads you to wonder how acute things are in BC and Ontario, where a very significant proportion of the national population lives.
The BoC is out-and-out warning these 8% of people that the overnight rates are on an upward path, and these are probably a similar cohort that took out 1 or 2 year mortgages because they couldn’t afford the 5 year.
One of the more notable things is when you compare the 8% of those “highly vulnerable” people today, to the housing mess that happened in the USA 10 years ago. In the USA, about 7% of mortgage holders had to foreclose and it broke the entire national market. Many of those defaulters were concentrated in certain cities (hint: the ones with the greatest amount of “investor” activity & appreciation).
Houses aren’t meant to be money making machines. Never have been or will be. You need real economic production and genuine innovation to do that. “Financial innovation”, isn’t.
Saw this posted online, thought I’d repost… Interview is from July 2016 re: Vancouver.
Marc Cohodes: This is a Money Laundering induced market, where the government has been in cahoots with the real estate brokers, developers, lawyers, and they have sought Chinese money to keep the market propped up and it won’t last. China has capital controls on, and Vancouver has become the money laundering Mecca of either the world or North America, and something is going to change and change drastically.
Randene Neil:
Well it… it could potentially last if our government doesn’t do anything about it could it not?
Marc Cohodes:
Well if your government doesn’t do anything I think they’re gonna be voted out. I think I have a pretty good handle on how upset and pissed off people are. There have been some good articles written by Sam Cooper and Kathy Thomlinson about money laundering and what’s gone on. Dead bodies in trunks, dead bodies in houses. There’s stories of a Chinese college student buying a 31 million dollar property in Vancouver and when asked what her father does for a living she couldn’t even answer it.
I mean, this is sheer insanity, and what’s going on is you’re pricing local hard working people out of the market. As I’ve said before the housing market in Vancouver resembles the Vancouver Stock Exchange in penny stocks many years ago, and that did not end well at all.
Randene Neil:
You ah… Mike DeJong our finance minister uhm basically said the other day on a local radio station CKNW that because there’s still such a demand that we still need to keep buying and prices will steep-keep-continue to go up. He says that the Chinese real estate market, they still just don’t know what the numbers are so they can’t make a MOVE yet. Uh he doesn’t believe we’re in a bubble, the provincial government doesn’t believe we’re-we’re in a bubble.
Marc Cohodes:
Well… he’s full of more crap than a Christmas turkey.! and the government is in on it. And Christie Clark has taken, I mean the market is ridiculously high and Christie Clark goes and takes real estate people over to China. They issue something called Panda Bonds which is one of the biggest scams I’ve ever seen, and they have the records, they just don’t want people to really know or they don’t what people to know the truth. I mean if there’s a problem? and I mean there’s a lot of problems in the world, but I have solutions to fix what the issues are, but the politicians in your neck of the woods do not want to take the medicine because their livelihood depends on this. And the problem is they were elected by the people to work for the people and they’re just not doing their jobs. Similar setups happened in the United States in 2008 and I was involved in it, and I vowed that if I ever saw it again I would speak out. Frankly you guys should be just sick of what’s going on and you should throw these people out. Or elect someone who’ll work for you.
Randene Neil:
In 2008 though you were talking about the U.S. housing market, that was the sub prime market, that’s not the case here in British Columbia.
Marc Cohodes:
Well, I mean sure, let’s talk reality here. The average family makes about 80,000 dollars a year, and even if we double that, there’s an affordability problem to begin with, and what’s goin on is people who buy or participate in the market are going to become debt servants for the rest of their life. Whoever loans money to anyone fully expects to be paid back, and when this market does tank, collapse, or whatever, correct, people will lose a generation of savings and/or equity and be debt slaves for a long period of time. So it is essentially sub prime in my mind and it’s fueled by a money laundering bubble that politicians don’t want to end. And I’m not a political guy, I could really care less who’s in power, but they do need to work for the people to get this thing right.
Randene Neil:
I do have one… last question for you because hehe what you’re saying is going to cause a lot of controversy and a lot of discussion here today I’m sure which is… absolutely a good thing where our real estate market is concerned because we love talking real estate in this province. But when do you think the bubble is going to burst? and by how much? You’re talking about uhm eradicating a uh generation of real estate uh for people. But how much is it gonna burst? and uh who is it gonna affect?
Marc Cohodes:
…Well I think the market is gonna go down somewhere between 50 and 80% it’s going to affect everyone, but it’s going to cripple people who are highly leveraged. When someone says when?… I mean let’s be real. China has capital controls on. China does not want what’s going on in YVR and in Canada. They want the money to stay in China. I mean what’s going on is illegal and criminals are taking their money from China illegally and putting it into Canadian housing. Specifically Vancouver. So when is it going to happen? I don’t know, all the signs are there, but people who live and work locally deserve better.! When you’re priced out of the market it’s sort of a blight on business. It’s hard to hire people. It’s hard to afford to live there, costs go up, and it’s just not good.! So when?! it could happen in a week, a month. It could happen in another year, but at some point, bubbles burst. and to say..? y’know… it’s not a supply and demand thing it’s a follow the money. It’s a money. laundering. vehicle. and it needs to stop.! And again, there are solutions out there to make this happen.
Randene Neil:
All right, Marc, we’re going to have to leave it there, but we do appreciate your time and maybe we can talk to you again, the finance minister coming out with hard specific numbers about the money coming in from Asia next week. So we can get your take on it then. Marc Cohodes, thanks you so much.!
Marc Cohodes:
Thanks for having me.
Randene Neil:
Marc Cohodes was a hedge fund manager specializing in short stocks, one of the biggest most successful hedge fund managers in the U.S. about a decades ago.
https://www.youtube.com/watch?v=TYQz1Zykz-M
If we ignore some large issues for a moment (climate change, resource depletion, overpopulation), I think the issue of the housing cycle is best looked at from a distance.
Yes, things will go down. And then they will go up. And then they will go down.
However, the disconnect between prices and local incomes may not be completely solved. I think it was the CBC podcast that mentioned that HongKong and Singapore, for all their voracious capitalism, housed a large number of people in government controlled housing.
It may well be the fact that land/SFH ownership is receding from many people’s grasp. We really need some viable alternatives. If the province could look to some other countries for public housing inspiration, maybe we could avoid this cycle of paying too much to get too little.
Ah, that makes sense. The original bubble!
“Just hired a guy to stock my beer fridge every week. That’s how well things are going for me. I actually pay a guy to stock my beer fridge. He probably rents too.”
“My god the bears sound exactly blije they did more than a decade ago. Imagine if you had bought back then bear.”
Keep going, brother! At least I can finally be correct with something in my lilliputian, tenanty existence. 😀 😀
My god the bears sound exactly blije they did more than a decade ago. Imagine if you had bought back then bear.
Victoria’s has already changed. I think what you mean is you’re just not seeing panic. For the most part, neither is Vancouver. Plenty of folks are just waiting for the next leap, where 1.6 million dollar homes go to 3.2. When that doesn’t happen, they’ll start chasing the market down.
I don’t doubt it. That’s actually very unfortunate and I suspect we’re going to find out what I mean when I say that. Forgive me, I’m being rather prophetic tonight.
Old joke? Don’t you know it’s all their fault? They started everything with their tulip-mania in 1636. 😛
The market is driven by psychology and emotion. Vancouver’s has clearly changed, Toronto’s has changed, and Victoria’s is just a matter of time. The more mortgages that are denied, the more the realization via friends etc that it’s time to wait this out.
Market corrections are like gifts and this one will be the biggest of all time. All you need is a few headlines showing the “red hot market” is history and watch the panic set in.
Garth had some interesting stats yesterday on the Vancouver meltdown: “Over 90% of the houses now selling are going for less than asking. ” 90% !!
I used to be surprised when I saw a home go over asking 4-5 yrs ago and it was like by a few thousand. I remember there was a “shocker” on Grant Street in 2010 that sold 134k over asking. Every agent was talking about it. Now 134k over ask is another day at the office.
10% of homes over asking still seems like quite a bit. What we’ve been experiencing the last few years at 25-30% of properties going over ask is kind of insane and not the norm.
He’s got my vote. Don’t know anyone in politics more sensible.
There must be an old joke here I am missing? I hate missing jokes…
For the record, I agree with you LF, regarding the tendency to blame everyone else. However, I am very curious to see what will happen to the empty house tax if the market implodes. I would be surprised if the NDP want the political heat if the market starts correcting itself.
Then again, maybe they are thinking much more long-term. We will see what kind of political will is behind it. David Eby was housing critic and I could see that he may want a more lasting change than just temporarily lower prices. That guy is future premier material, I think.
The empty house (spec) tax is a fascinating thing to me. I think it will do some things right but may have unexpected consequences. In Victoria, I wonder if it may have more effect on high-end properties that no-one expects to get into the rental pool.
What I am going to find amusing is how people will be myopically blaming the NDP for killing the housing market, others will hilariously blame the federal government for “allowing rates to rise”, others will blame the Chinese for choking the gravy off, and still others will blame Jews, the Dutch and Scientologists.
Anything, and anyone, but themselves. Happens every single time. Absolutely no one wants to admit to getting caught up in mania, and the blame game is the unfailing conclusion to a market euphoria, whatever the market, wherever the market, whenever the market. I have no pity on reckless, speculating fools getting burned. It’s just a shame so many other people get hurt too.
Garth had some interesting stats yesterday on the Vancouver meltdown: “Over 90% of the houses now selling are going for less than asking. ” 90% !!
Can’t happen here tho, right ? Wrongo. By the times the leaves fall, we will be in the same boat, a sinking one. 😉
“So the official version – plunging sales and bloating listings – is bad enough. Now some other facts.
Detached home sales are crashing hard. What everyone wanted two years ago sits idle and unloved. Transactions are down by a third to the lowest level ever for an April.
In West Van sales are off by half. Incredible. Only 30-odd deals. Another spring record. Sales in Richmond have been sliced almost 60%.
Over six thousand listings materialized across the province in a single day. The meme is spreading. This ship’s going down.
Overall, sales are reduced an astonishing 62% from 2016. The lowest number in 30 years.
The average sale price has declined 6% from last year, 8% from 2017 – and this is just the start.
Two Aprils ago $3.5 billion was spent on housing in Vancouver. This April that fell to $1.35 billion. That’s $2 billion less spent in a single month. If you think there will not be economic implications, you’re wrong.
On the Westside prices have fallen 17% from 2016 and 11% this year while sales volumes have evaporated 80%. There is three years’ worth of inventory for houses valued at $3 million or more – the ones the NDP has targeted for a special punitive tax.
Over 90% of the houses now selling are going for less than asking. Two years ago, almost all were over ask. In April there were as many price reductions on detached houses as there were sales. Yes, it’s sinking in, that Van is sinking.
Here’s how our deep, secret, industry insider source puts it:
“No one truly knows the magnitude of effects of shifts in government policy, interest rate changes, tax rule changes and enforcement efforts. However, one thing is becoming increasingly evident in Vancouver: the Fear of Missing Out is loudly muted. For as impactful as interest rate increases and tax increases are on one’s ability to borrow and pay down debt, the psychological effects of future expectations are having a very real impact on the average person’s buying and selling behaviours. FOMO is no longer the driving force it once was. The motivation to chase a detached house price beyond the asking price is largely dead. This is the new reality of a depressed, sagging and in some cases, bursting housing market.”
http://www.greaterfool.ca/2018/05/02/the-big-shed/
What I find amusing is how many people are up in arms about the speculation tax and the other housing/finance changes that the provincial government, banks, Bank of Canada are doing now.
Did they really think that the government wouldn’t eventually turn their interest toward the masses of equity people have in their houses or the masses of money that have been made in housing and think we’d like us some of that?
This is a surprise?
You wanted your cake and to eat it too?
Garden I use yates/pandora also. Bike path lights and other bikes slow it down. Love the new bridge though.
The bikes have their lane and walking path so they should stay out of the car lanes.
He could have been overtaking someone in the bike lane. Also AFAIK, bicycles are still allowed to use the roadway even if there is a bike lane.
There’s no way I’d ever use the bike lanes on Pandora because they’re too clogged with slower riders, and you only get half the green light time during each cycle. I pick Yates/Johnson when I cycle in/out of town.
Rapidly growing Seattle constrains new housing through widespread single-family zoning
https://www.seattletimes.com/business/real-estate/amid-seattles-rapid-growth-most-new-housing-restricted-to-a-few-areas/
love the guy not in the bike path.
Can’t remember whether I posted this before. Apologies if I did.
Bicycle traffic soars after new Johnson Street Bridge opens
http://www.timescolonist.com/news/local/bicycle-traffic-soars-after-new-johnson-street-bridge-opens-1.23284307
These little personal insights are always very interesting to me, Marko.
I was a teenager in 2000. Had anyone given me $250K at the time I wouldn’t have blown it on a Ferrari; I would have, in all honesty, tried to buy a house in Victoria.
But I’ve always been sensible that way 🙂
Another “lowest since” stat.
Toronto housing sales slump in weakest start since 2009 recession
Condo prices jump 10%, while detached home prices fall 10%
“Realtors in Canada’s biggest city had one of their worst months in the past 15 years in April, with sales down by almost one-third from a year earlier to 7,792 units, according to data released Thursday by the Toronto Real Estate Board. That’s the fewest number of sales for April since 2003. On a seasonally-adjusted basis, sales have fallen for four straight months, with the fewest transactions to start a year since the 2009 recession.”
http://business.financialpost.com/real-estate/toronto-housing-sales-are-off-to-weakest-start-since-2009
You never know what’s buried in those shipyards.
San Francisco is so expensive that people are spending $1 million to live next to a former nuclear-testing site — now some residents are freaking out after learning the surrounding area may still be radioactive
http://www.businessinsider.com/san-francisco-shipyard-homeowners-worry-nuclear-radiation-2018-3
LRT sorry
All the lights coming into Victoria are still going to be there. Going out the light at Tillicum is still there. Not sure the Mackenzie upgrade will make things as good as lot of people expect. It will help.
Until people take up (needs to be created) mass transit in the Western communities there will be issues. Need an above ground LTR right into Victoria.
That will help a bit, but the Westshore’s bad traffic is not limited to Mackenzie interchange. Try Sooke Road or Millstream at rush hour.
You have lots of company there. I could have comfortably afforded a house in 2000 but wasn’t interested at the time. When I purchased my first place in 2005 prices had gone up massively. You could argue that anyone that bought after 2000 missed a boat.
Relative to some earlier time, you will always have “missed the boat”. But there will always be more boats coming.
@SweetHome
Thanks for the reply. In hindsight, 2014 was a better time for buyer. But who knows, future prices may drop below 2014 or gain another double in 10 years.
50/60s home can be money pit, any “small reno” can start a snowball. 80s homes, to me, has all the mechanics I need.
IMO, the market always cycle, it is more interesting to see which neighborhoods make the biggest gain / loss in the next 5 to10 years.
Hwy #1 is going to complete soon, maybe people won’t be that allergic moving to Westshore?
Uplands peaked?? It is too expensive to maintain and keep up with the joneses?
….or Sooke will be the winner?
/Barrister, we need your wife’s crystal ball.
Good Morning Children. Another beautiful day out there.
Thank you LeoS. Has the VREB provided the agents with a summary sheet of the new taxes for the agents to pass onto buyers? It strikes me as a complicated situation particularly since the details of the new legislation is not actually out.
I support residential solar and I think this change is a bit odd and could have been implemented better (why not grandfather a couple people) but it really isn’t a big deal. 99% of residential solar installs are not big enough to create a net positive for the year. This change does not affect residential solar deployment in any meaningful way
Correct.
@ plumwine
It is mainly the paper profit. We are in a nice part of Gordon Head, and the neighbours are pretty good. Neither of us work downtown, so the drive isn’t an issue. Our house would have cost around $650K in 2014/early 2015, so it hurt to pay that $150K extra in 2016. That amount is not a paper loss, since we did buy. Now we have that much more mortgage, we are that much older, and prices look like they have now peaked (at least we didn’t buy at the very peak).
If I had to choose my area and house vintage in a price range we could have afforded prior to last run-up, it would have been the Henderson or Cadboro Bay area near UVIC. I think houses from the 50s and 60s were generally better built than the 70s and 80s.
Of interest on your list in that area is 3420 Woodburn, which got torn down or majorly renovated. It is now assessed at over $2M with a building value at $900K. That’s a 16,000 sq.ft. lot, which many houses on that street have.
I recall 3231 Woodburn was briefly on the market in 2014 for around $700K. We drove by but never looked at it inside. I thought it looked too shabby in the pictures and would need too many renos. My spouse thought the huge lot backing the golf course warranted a look. By the time I got to it, it appeared to have been taken off the market. It sold Sept. 2015 for $899K and looks like it is being rebuilt because in 2016 assessment showed just land value at $1.1M. For $700K, we could have bought it, kept it vacant, lived in a $2000+/month condo, paid the taxes and fees, and still come out $300K ahead.
I guess that’s actually $150K ahead because we could have then bought a Gordon Head house for $800K. The $150K would have given use enough money to nicely renovate it.
Anyway, who knows what will happen with prices, but we did miss the boat. Many people our age (late 40s) paid hundreds of thousands less for their houses. My in-law’s house went from $250 to $800K in the nearly 20 years they have owned it. So, even though they have less education and made less money than we did, they are still better off than we are.
I could have schadenfreude at the people younger than we are who will likely never afford a house, but I have too much sense of social justice for that. It just sucks that house prices have outpaced wages by so much.
Thanks for the names. There are a few new ones there I will look into.
Things seem pretty quiet in Rockland although I have not seen any price drops either. It is like everyone is just holding their breathe to see where the market goes.
Noticed a property for ten million up in Lands End. Lots of luck selling that to some unsuspecting American when he discouvers that the Land Transfer tax is about 2 million.
Marko or anyone knows whether real estate agents are under a legal or ethical duty to tell foreign buyers who want to use the property as a vacation home about the collection of new taxes before the poor soul puts in an offer.
Some interesting stats c/o Steve Saretsky:
Richmond, the highest concentration of foreign buyers, registered just 65 detached home sales in April. The lowest total on record and a 58% drop from last year.
West Vancouver registered a new record of it’s own, just 33 detached sales, a new low for the month of April. And a 48% decline from last year
Meanwhile, the Comox Valley SFH market was down 18% in March but up 20% in April, over last year. However, they also tend to be 6-12 months behind Vic, so will be interesting to see how things play out.
I’m not seeing a ton of sales go above asking in my price range (7-800k). Some above and some below and not flying off the shelves compared to last couple of years. Still hot but not scalding. Sellers are being optimistic with listing prices.
@Once and Future
Here are some builders that gave us favorable quotes and/or good vibes:
Pacific Homes
Mac Renovations
Philco Construction
Falcon Heights Contracting
Ultimately for us, it came down to availability. Several builders we contacted (a year or so ago) were booked up 18 months in advance, which isn’t super helpful if you’re trying to move on a project. No promises – buyer beware and do your own due diligence. Your choice of finishings – siding, railings/banisters, kitchen, flooring, roofing – will do a lot to determining if your house is $400k or $900k to build.
Thank you Harp. It is interesting to note that there are still bidding wars. Marko is that your experience as well?
Great posts Victoria Born and Ooops. I can’t recall in my lifetime ever seeing so many stats come out daily that say people are maxed out, one more hike and people will be major struggling, etc etc.
This never even happened back in 2008. It was all mortgage debt concerns, this is HELOC’s, credit card, car loans, private debt borrowing with loan shark shadow bankers that never existed the way they are now 10 years later.
My coworker winced badly today after I mentioned the TD mortgage rate hike , then saying his kids are stretched to the max with new baby, loans etc. The increasing costs on everything from gas to all other day to day costs are stacking up badly on folks. Everyone isn’t rolling in the dough because they own a house.
Thanks for that link, Leo S. I listened to the first three episodes. Some interesting history and perspectives. I lived in Vancouver in the 90s before the HongKong handover so some of that discussion (and Expo86) brought back memories. It seems like a pretty balanced overview and I look forward to hearing more.
As a skilled sales shopper, I had to break old thought patterns before I finally took the plunge on a house. It did help to actually look at a lot of houses in person.
I think it helped you psychologically. My personal experience has been people that take a look at a ton of homes usually end up in what I think is a suboptimal choice in the end.
Like they will look for two years passing up some half decent houses and then they finally settle on a house and it is on a super busy street or similar and I am thinking what da…..there where like 10 other better options previous to this one.
If I break it down to people who buy extremely quickly (view less than 10 homes) versus those that take their time (view more than 50 homes) on average the <10 home buyers always seems to have better picks. The 50 crowd is often overanalyzing or similar and then end up overanalyzing themselves into a poor choice. My 2 cents not based on anything concrete.
Some may care about the ethics.
I doubt most will care. But should be informed.
Amnesty has a number of reports in the last couple years regarding child labour and electric car supply chain.
I am sure no child labour has ever been used in the supply chain of ICE cars. ICE companies all have the highest of standards when it comes to ethics….they would never try to cheat emissions controls or anything along those line.
Barrister,
My guess is the price of condo skyrocketed so much that it is so close to the price of lower end SFH. Many of the condos are higher than lower end of SFH, and it doesn’t make sense to buy those condos. the lower end of SFH is still extremely hot and going crazy now, multiple offers and bidding wars.
It is far to nice outside to really worry about the real estate market. But does anyone have any idea why condo sales have dropped so much more than SFH?
Thank you Victoria Born.
Thank you sweethome and Gwac for the home insurance opinion. Really appreciated.
One cannot take over another’s home insurance. The insurer must assess the “risk” differently for each prospective insured’s insurable interest. Considerations such as prior claims, age, use, other occupants, etc., differ from one insured to another. Premiums are then adjusted according to the “risk”. An insurer will not indemnify for a non-assignable contract of insurance. So, don’t get fooled.
@ Harp Echo
I doubt you could take over someone’s home insurance. It is issued in the name of the homeowner(s). Also, there are specifics like your age and personal claim history that affect the rates. It would be like taking over someone’s car insurance, which doesn’t happen.
Let’s focus on the objective evidence and intentions of the government of the day.
Hawk – you are correct, I suspect. The party is indeed over and those that have not head headed for the door get to clean up the mess. The fat lady is singing. Put a fork in it. And, finally, Elvis has left the building.
Crisis level interest rates and an insatiable foreign buyer looking to launder drug money caused all of this. Throw in some demographic trends and “viola” you have a bubble bursting / tearing apart right in front of your eyes. The past price increases cannot continue from any sober economic model.
Is it time to wake up or put your hands over your ears.
The Central banker can’t sleep at night because of what a simple quarter-point [1/4%] hike in the overnight lending rate might do. Fear not Mr. Poloz, the bond market will do the “dirty” [sane] work for you – the big banks are hiking liberally. The 2% stress test rate above the BOC 5-year rate is a huge hurdle for any new buyer. Note: it does not apply for renewals with the same bank, but that bank won’t “deal” – you pay the increased rate because they know rates will keep rising – they are not stupid – they have a captive borrower who can’t go elsewhere. Then we have the NDP 30 point affordability measures. Combine all of these and you get a very sharp pin to pierce that bubble – POP !!!!
Can’t believe how some won’t accept that reversion to the mean is real and that the pumper’s day in the sun is over – it’s OK, you had a great run but your house is built on and of sand. As it is doing in London and elsewhere, it starts at the top end homes – take a look at Uplands high end homes, folks. Never have I seen so many listings and price-drops in that area. Just today, one dropped $250,000 – it is close to the inflated tax assessment value. Need a parachute to follow these ones. In 2016, homes there would sell in days. In 2017, there were so few listings. Now, peak selling season, the For Sale signs are everywhere and more every day in many areas in the core. I don’t look at or follow the western communities.
At these times, I will say it again, it is enlightening to identify the “high end” area [I think it is Uplands in OB] and see what the big money is doing. Anyone else seeing what I am seeing? We got a long way to fall.
The debt-bomb is real. Mark Carney and Jim Flattery warned the consumer – but like a heroin addict, no way, they could not stay away – the lure of “easy” money was just too much. Just had to have a home they could not afford and a leased vehicle, new appliances [hey, don’t pay until 2018], vacations – all on credit and now – a quarter point pushes them in to bankruptcy and foreclosure. Yeah, that is a stable situation on which RE prices will keep rising – hardly think so. 8% of the population owns 20% of the debt – their debt is 350% of their gross household income. BUT, debt servicing payments are made from after-tax dollars – how in God’s name can they survive any rate increase? Very sad.
Pumpers and house-shamers need to own it. And, we see the irrational hyping here [just what Allan Greenspan warned of] too.
I am expecting an outright embargo [law] on condo-pre-sales given the G&M report. Carole James is considering it.
Stay in cash…………………….
Hawk: “Still at emergency rates and Canada still can’t handle a quarter point without major pain. This party is so over.”
…. and perhaps Poloz will just watch the rates go up regardless of his intervention.
https://t.co/q6YKBjDmBH
Canada’s 5yr yield has broken 2.20% for the first time since July 2011:
Most banks and other lenders have already hiked fixed rates, however, so yields will likely have to climb another 15+ bps for the next wave of increases.
https://www.bnnbloomberg.ca/rosenberg-poloz-has-little-power-to-control-canada-s-debt-bubble-1.1070377
“Poloz has said the Bank of Canada will likely keep rates low for the foreseeable future, but there is little the bank can do to control the importation of higher interest rates from the United States, Rosenberg said.
In the last week, three of Canada’s Big Five banks have raised mortgage rates, despite the Bank of Canada standing pat on interest rates last month and some softness in once-hot housing markets like Toronto and Vancouver.
“The Bank of Canada is just the little boy with a finger in the dike basically,” he said. “Interest rates are gravitating higher in Canada because it’s happening in the United States. There is nothing the Bank of Canada can do about that.”
Relax Hawk, I am just teasing you turn every headlines into apocalyptic events!
Debt is bad, I get it. Greece was/is in trouble, EU is still here 10 years later. NK was going to flatten half of the Asia, nah didn’t happen, the fat boy has the cutest simile now. Trump won, nothing happened to the stock markets.
Buying a house doesn’t mean timing for the bottom, hoping for the milky way sucks into the blackhole. Buy one you can afford, and build it into home.
If part of neighbors garage (probably just the outside wall and the roof) is on your property, what do you do with it? Do you just let it go? Will you lose part of your land?
Due to part of neighbors garage is on the way, not able to build one’s own garage.
Harp never heard of one taking over someone else insurance. I would get what suits you.
Anna
The debt bubble is not ugly. Ugly is when bankruptcies soar and no one is lending. Right now
Is paradise compared to the possibilities. I think we
Will probably be ok but one economic or political event could change that.
DuranDuran, care to recommend a builder to me? I want to build a 2000 sq ft house for $250/sq ft (or less). Nothing fancy, but I don’t want a cost-cutter, either.
Unless you are pumping out 20 identical houses, I haven’t found anyone who thinks a one-off house will cost $200/sq ft any more.
Does anyone know that when you bought a house, is it better to take over previous oweners home insurance or start a fresh one with a different company?
If the bears have secure jobs and prepared financially it won’t hurt them. Fear of a real sell off is not the end of the world but a necessary part of the financial world merry go round.
GWac “Bank of Canada created the problem now we will see how they manage the debt bubble. If it blows. You bears may not like what happens it will be ugly. Jobs/equity and a lot of other stuff will go bye bye”
The debt bubble is ugly now. If it blows it’ll just get uglier and that will hurt both bears and bulls.
Along with London, Manhattan real estate is taking a major beatdown. All these stats saying “worst since” 10 years, 30 years etc = wake up time.
Manhattan Home Sales Tumble Most Since 2009 as Buyers Walk
People are very anxious about overpaying,’ brokerage CEO says
“Home sales in Manhattan plunged by the most since the recession as buyers at all price levels drove hard bargains and were in no rush to close deals.”
https://www.bloomberg.com/news/articles/2018-04-03/manhattan-home-sales-tumble-most-since-2009-as-buyers-push-back
Manhattan Luxury Home Sellers Slash Prices
“Apartments and townhouses that went into contract in the week ending Sunday got an average 16% price cut, according to the report—one of the steepest average discounts in the past year, at least.”
https://www.mansionglobal.com/articles/95617-manhattan-luxury-home-sellers-slash-prices
Condos in Vancouver pre-sales slowing, having to offer incentives and financing games. Now we have Vancouver detached listings at 10 year high. Victoria can’t be far behind, they are usually late to the game by 3 to 6 months.
Plumwine –
It’s not $300+ to build a new house necessarily. It might be that much for a nicely appointed custom home in the core, but you can build a spec. house for close to $200/ft^2, and View Royal isn’t quite the core – meaning there’s the possibility of subdividing larger lots. Subdivisions also allow for all sorts of economies of scale, from much cheaper land (ie one 100,000 ft^2 lot split 10 ways is much cheaper than ten 10,000 ft^2 lots) to cheaper build costs (materials delivered in bulk to the build site, etc.).
I didn’t see the property you mention, but I’m guessing it was a combination of these factors.
plumwine,
Where did I say I was hoping for a nuke ? You pumpers are one sick group of losers always making shit up as your obnoxious gloating will soon be crying.
The debt bomb will make the last one look like a cakewalk. Vancouver is cracking all over the place as Chinese leave, and sales crumble.
Enjoy your last gasp as the greed bubble implodes within itself. I don’t even think it’s going to take much more as mortgages are denied at an alarming rate. Past 2007 affordability rates will sink this bloated pig. No mortgage, no sale. Economics 101.
Coolest April for Metro Vancouver residential sales in 17 years
Metro region saw lowest number of April home sales since 2001; board says “market conditions are changing” and points to diminished purchasing power
http://www.westerninvestor.com/news/british-columbia/coolest-april-for-metro-vancouver-residential-sales-in-17-years-1.23289161
The debt bomb is better than the nuke bomb you waited for. The fat boy from NK didn’t start WW3 afterall. Party on, Hawk!
Well, the irony is that if you size it exactly for your own needs, you produce power cheaper than you buy it from Hydro. That is the opposite of uneconomic for the homeowner. For Hydro it is a more complicated equation. It is more expensive than a big dam, but has lower transmission costs if power is produced near where it is used.
Eventually, distributed electrical production is a good thing to invest in anyway. We don’t produce enough electricity on the island as it is.
While I respect that Hydro has to manage its aging fleet of dams, this change has fear written all over it. The cost of solar is falling fast enough, combined with citizens using less energy and an unneeded Site C, it looks like BC Hydro is stuck making too much energy for the next few years.
Rooftop solar is not represented by some big industry, so it is an easy target, rather than going back on the stupid Liberal IPP deals. However, the optics of it are really bad and I am glad to see Weaver stepping up to the plate.
Hydro suppressing solar is a really short-sighted decision and is only driven by poor past management. We need all the (economical) alternative energy we can get on this planet.
The debt bomb keeps ticking away and the payments will force many to sell to keep above water and avoid bankruptcy. Still at emergency rates and Canada still can’t handle a quarter point without major pain. This party is so over.
Central bank chief says borrowing costs are bound to increase
“Bank of Canada Governor Stephen Poloz said he expects the nation’s high household debt levels will persist for years, leaving the economy more sensitive than before to interest rate increases.”
https://www.bloomberg.com/news/articles/2018-05-01/canada-s-poloz-says-high-debt-rate-sensitivity-to-persist
MLS#:389861 A – 17 Jedburgh Rd View Royal
Year Built:2018
Pend->$1,210K
Single Family Detached / Bedrooms:6 / Bathrooms :6 / Kitchens:2
SqFt Finished:3,442SqFt / Lot Size Acres:0.27
I was told $300+/sqft to build a house, how is this possible?
$1.2M for a brand new 3500 sqft SFH in the core on a 11,000 lot.
@ SweetHome, just want to ask questions, not trying to rub salt into the wound.
(you can ignore me!)
Beside the paper profit on the St. Ann you missed out, any other reason you feel that your Gordon Head house is inferior than OB? I am guessing your house in GH is newer than most OB homes you passed, maybe your yards are bigger too. Both neighborhood have great schools and parks and equal distance from UVic and Downtown. Why depressed?
@ Leo S
I don’t know enough about quantum mechanics to know if this analogy works at the detailed level, but I like the idea.
It took me a long time to realize that buying a house is not the same as buying a TV or even a car. You just can’t have the same level of confidence in what the “right” price is as you can with items sold in a store. As a skilled sales shopper, I had to break old thought patterns before I finally took the plunge on a house. It did help to actually look at a lot of houses in person.
Not our finance minister. Last time I looked he ran the bank of Canada
Bank of Canada created the problem now we will see how they manage the debt bubble. If it blows. You bears may not like what happens it will be ugly. Jobs/equity and a lot of other stuff will go bye bye.
Also, keep in mind that BC Hydro pays $1.4 billion a year to IPPs (independent power producers) and, thanks to some sweetheart long-term deals signed by the BC Liberals, BC Hydro pays them far more than the electricity is actually worth.
So, yeah, let’s keep going after every mom and pop with residential solar panels and the three people who built solar farms, who all combined are costing BC Hydro literally what two of its hundreds of managers make in salary.
Exactly the IPP contracts are insane. The liberals / BC Hydro should be taken to court over this and have to show how it was in the best interest of BC residents to have these ridiculous contracts put in place then top it off with site C. Total waste of our tax dollars into some corporations.
On a side note I do not agree with Introvert often but he has a winner here!
So what do the bulls gather from reading that article written by our Finance Minister Mr Poloz?
https://www.bankofcanada.ca/2018/05/canada-economy-household-debt-how-big-the-problem/
Sounds like the debt bomb is primed when the finance minister of Canada writes an essay outlining how it is going to effect highly indebted households.
Some items in there:
“However, these regulations apply only to new mortgages. The stock of household debt, including the $1.5 trillion in existing mortgages, will persist. And this debt has increasing implications for monetary policy. As I said at the beginning, a significant issue for us now is gauging how much more sensitive consumers, and the whole economy, have become to changes in interest rates.
This is particularly important right now because the economy will require higher interest rates over time to meet our inflation goals. Given current levels of household debt, we expect that moves in our policy rate will have a stronger impact in cooling demand than they did in previous years. But this is a significant uncertainty—the sensitivity could be larger or smaller than we expect.”
“In our Monetary Policy Report (MPR) last month, we published our latest estimate of Canada’s neutral rate, saying it falls in a range between 2.50 and 3.50 per cent, assuming that all shocks affecting the economy have dissipated. At 1.25 per cent, our current policy rate is still well below our estimate of the neutral rate.
With supply and demand in our economy currently close to being balanced, you might expect our policy rate to be much closer to neutral. But several forces appear to be still acting to restrain the economy. We talked about these in the MPR. They include the new mortgage rules, ongoing uncertainty about US trade policy and the renegotiation of the North American Free Trade Agreement, and a range of competitiveness challenges affecting Canadian exporters. These forces will not last forever. As they fade, the need for continued monetary stimulus will also diminish and interest rates will naturally move higher.”
They go on to talk about the models they are going to use to plan out the paths for interest rates… (https://www.bankofcanada.ca/wp-content/uploads/2018/04/san2018-11.pdf)
“Intuitively, higher interest rates will mean slower economic growth; but they will also mean reduced financial vulnerabilities. As a result, the impact on the economy of a major financial stability event would be less.”
“It is time for me to conclude… Today’s record level of household borrowing reflects the evolution of the financial system and the comfort level of Canadians in taking on debt. But it also reflects a prolonged period of very low interest rates and rising house prices.”
Rates going up May 30th?
In fact the high end in London has been tanking recently. Not going to help the average person as it was never affordable for them. But it’s a demonstration that prices can go down even in some of the most sought after areas in the world.
https://www.economist.com/news/britain/21730914-first-time-years-capital-performing-worse-rest-country-londons
The massive escalation of house pricest can be attributed almost entirely to government feeble-mindedness, indifference or connivance. Specifically, governments have failed to adequately to regulate the financial industry, thus allowing ever increasing indebtedness to drive up house prices, and they have totally failed to insure an adequate supply of building land, through rezoning and urban densification.
I agree and also the BC Liberal government did everything they could to keep their gravy train going. Looked after themselves first. Fat cats at the trough. Now we all pay for it. And where are they?
@ VB
“What you may not realize is that there’s a small but growing segment of the population, mainly millennials, who are going to be lifelong renters, either by choice or necessity. ”
There always has been that segment, but it is evidently larger now than a generation ago when houses were much cheaper relative to incomes.
The massive escalation of house pricest can be attributed almost entirely to government feeble-mindedness, indifference or connivance. Specifically, governments have failed to adequately to regulate the financial industry, thus allowing ever increasing indebtedness to drive up house prices, and they have totally failed to insure an adequate supply of building land, through rezoning and urban densification.
Pathetic really. A civilizational failure, resulting in the continuing decline in the fertility of the population, necessitating ever more rapid replacement by people from elsewhere: a policy confirmed by Justin Trudeau’s declaration that Canada is not a nation — it’s the FIRE economy profits that matter, not the welfare of citizens.
@ Introvert:
“So, yeah, let’s keep going after every mom and pop with residential solar panels …”
What’s the point of subsidizing uneconomic investments?
The fact that BC Hydro may have wasted colossal amounts in other ways, doesn’t make throwing good money after bad at the expense of the majority of Hydro users a good idea.
Anyhow, solar cells on roof-tops look like Hell and should be prohibited by municipal by-law. If for some reason you have to generate your own power you should use those incredibly expensive Tesla solar shingles and buy some Tesla batteries as well so you can use all the power that you generate, without messing with the grid.
Also, keep in mind that BC Hydro pays $1.4 billion a year to IPPs (independent power producers) and, thanks to some sweetheart long-term deals signed by the BC Liberals, BC Hydro pays them far more than the electricity is actually worth.
So, yeah, let’s keep going after every mom and pop with residential solar panels and the three people who built solar farms, who all combined are costing BC Hydro literally what two of its hundreds of managers make in salary.
From Globe & Mail: Are you a House-shamer?
House shaming has got to stop – Plus, the best credit cards of 2018
I know you mean well, house shamers. You’ve done spectacularly well owning a house and you want others to share in the experience. So what if you’re pushy in telling people who don’t own to get into the housing market. It’s for their own good.
What you may not realize is that there’s a small but growing segment of the population, mainly millennials, who are going to be lifelong renters, either by choice or necessity. The house shamer views home ownership as a path for raising a family, indulging your inner designer with renovation projects and building enough equity to fill a Brink’s truck. The renter sees owning a home as unaffordable, as a financial sinkhole or both.
The Budgets are $exy blog recently published a useful primer on house shaming. It includes a bunch of messages from non-owners who are sick of being told they should buy. They’re quite aware of how great an investment housing has been for some people, not to mention how fulfilling it is to replace laminate kitchen countertops with granite – or maybe quartz! And yet, these renters will continue to rent.
A quick economic lesson for house shamers: Your financial gains in the housing market have made homes too expensive for many young people. It’s actually financially smart for them to rent, not buy. They can build wealth quite effectively by investing the money they’re saving by renting and not owning.
Home ownership has been a financial home run for a lot of Canadians. But inflicting the story of your good fortune on friends and family members who rent is bad form. Live and let live.
price remain the same a 500k mortgage at 3.25 vs 2.25 over 25 years
a 1% increase in rates is about 300 more a month. 2100 to 2400 and 75k in extra interest costs over 25 years. It adds up. Waiting is just getting more painful it seems. Really need a good fall in prices to get back to equal
Gulf islands.
Hawk is still waiting for the governor of the Bank of Canada to bail him out from his bad decision to sell a few years ago. This is an example of what can happen when one underestimates Victoria real estate.
Leo, do you mean Vancouver Island or the Gulf Islands?
Sorry, just my useless English degree hard at work…
Almost no one in B.C. has solar panels, so you’re clearly wrong.
@ Leo S
“They pay 9.9 cents/kWh, not 99.”
Oh, right! That’s better.
But after line losses and overheads, they’re still taking a loss on every unit they buy, and paying several times what utility wind or solar power now costs.
And taking into account the avoided $2 billion cancellation fee, Site C power will still be cheaper than roof-top solar, and most importantly, it will be available 24/7.
“80s is 30+years ago, China was a real communism country. The only globalization I knew was on HAM radio, not Hot Asian Money.”
China is still communist, and now they have so much impact on the entire western economies it’s fricking scary. They can’t print paper forever as their loans are going bad faster than Intorovert can pump out tourist brochures. ICYMI, the HAM have left BC.
Meanwhile in the real world, the slashes keep building up as expectations of lottery wins are dropping by the wayside. You can include Victoria in the headline below.
‘Financial strain’: Interest rate angst most severe for homebuyers in Ontario and B.C.
Even a modest increase in interest rates in Toronto and Vancouver is a concern for most buyers
“A new report to be released Wednesday by BMO Financial Group found that some 53 per cent of home buyers in Ontario and 51 per cent in British Columbia will conduct personal “stress tests” to determine whether they can pay their mortgages in the event of a rate hike. That compares to a maximum average of 40 per cent across all other regions.”
http://business.financialpost.com/real-estate/financial-strain-interest-rate-angst-most-severe-for-homebuyers-in-ontario-and-b-c
Does anyone have any idea why condo sales have dropped off this much?
Wasn’t there 2 high priced home sales of plus $10 million and another in the $7 million range that would have pumped the prices up ? I believe Marko mentioned it.
When prices of SFHs become less affordable prices in desirable areas don’t seem to drop because of this. What happens, barring other economic influences, seems to be what has happened in Britain already:
https://ca.yahoo.com/finance/news/hey-canadian-millennials-apos-proof-195900657.html
“Westshore is cranking out most of the SFH in Greater Victoria hence the price is more stable than stricken core.”
Last week I drove the Westshore Parkway which seems to open up another swath of property ripe for further development. Royal Bay has upwards of another 1000+ homes (with suites).
I’m fascinated by the prices in relation to the abundant supply. I also consider the row homes poor quality. The custom builds however seem good, at least in the open houses I’ve walked through. But will they retain their value in a more balanced market?
Real estate sales fall, prices climb in Victoria
It’s been a slow start to the traditionally busy spring real estate season — but the homes that are selling are going for higher prices, according to the latest data from the Victoria Real Estate Board.
There were 774 properties sold in the region during April — down about 13 per cent from 885 sold in the same month a year ago. Condominium sales hit 225, down 22 per cent from last April, while the 376 sales of single family homes were down eight per cent down from a year earlier.
We continue to see low inventory in our market, and good homes in desirable locations are still seeing multiple bids,” said Kerr. “One interesting development we are tracking is the increase of prices in a market of fewer sales. Part of the reason for this is that there is strong pressure on lower-priced properties.
“After the new mortgage-rule changes this year, many consumers have seen a reduction in their buying power, so more are competing for lower-priced properties and in multiple offer situations, pricing is pushed up.
http://www.timescolonist.com/business/real-estate-sales-fall-prices-climb-1.23288078
Batteries via slave labour isn’t really housing related…
Some may care about the ethics.
I doubt most will care. But should be informed.
Amnesty has a number of reports in the last couple years regarding child labour and electric car supply chain.
http://money.cnn.com/2018/05/01/technology/cobalt-congo-child-labor-car-smartphone-batteries/index.html
“Victoria will not be asking to opt out of the tax, as they had approached the government for assistance with the City of Victoria housing situation.”
Re: Plumwine’s 2014 Data dump…
Brought back memories of when we were still looking and Oak Bay was still in our price range. Also made me depressed. I looked up one house just to see current assessed value and picked 1866 St. Ann because I recall that being a nice street and the 2014 price of $780K is close to the price we paid for our Gordon Head house in 2016. St. Ann sold in April 2017 for $1.15M and currently assessed at $1.124M, which is approx. $250K more than the current assessment for our house.
But the Westshore is not an isolated market. More supply in the westshore affects prices in the core too.
They pay 9.9 cents/kWh, not 99.
Yes, if and only if RE follows the graph in Econ 101 textbook and as Bitterbear said in a Perfect world. The price of goods will fall if you make it harder to obtain (reduce the demand). I too think like Garden Suitor – the rich (with cash on the on the sidelines) will get richer in higher rate environment.
80s is 30+years ago, China was a real communism country. The only globalization I knew was on HAM radio, not Hot Asian Money.
@ O and F
As Hydro costs rise and solar costs fall, the economics will get even better.
Particularly if you get an electric car.
Or at least the economics will get less awful!
How it helps for BC Hydro to pay 99 cents a kwh and sell it to electric car owners for 12 cents a kwh, I don’t see.
Eight point five kwh is equivalent to the energy content of 1 liter of gas, so BC Hydro is buying solar power for $8.41 per liter of gas equivalent and selling it for a buck, or less than you’d pay for gas, which is great if you own an electric car, as I do, but hardly fair to the your average citizen, who can barely afford a home, let alone a bunch of minimally productive solar panels.
Supply and demand.
Westshore is cranking out most of the SFH in Greater Victoria hence the price is more stable than stricken core.
If BC Hydro pays those leaches, then every opportunist would jump on the gravy train.
Everyone will be on the hook if BC Hydro expand the over price energy payment to solar farmers that already milking the incentives, rebates, and PST exempts. At the moment BC Hydro is paying $0.099 per excess solar energy kwh, and the solar folks also exempt from the average of 40% line distribution lost and other associated costs, while Site C would cost less than $0.095 per kwh to deliver.
Added sector price breakdown for single family. Interesting that the Westshore hasn’t really increased in 2018. So much for the theory that the stress test would drive people down market?
@Introvert:
Yeah, very weird. I am surprised the NDP are trying to justify this on behalf of Hydro.
Hydro already has a maximum of 100 kW for residential installs. Most homes could fully power themselves with 10 or 15 kW.
@CS:
Says the guy who wants to build a floating city.
Actually, at the prices we pay in BC rooftop solar works out fine. It is an even better investment in many places with more sun and higher electricity costs.
As Hydro costs rise and solar costs fall, the economics will get even better. Particularly if you get an electric car.
@ Intro
“BC Hydro can’t afford to pay two or three customers $30,000 for the clean electricity they’re putting back into the grid, but it has enough to pay $10 billion for Site C.”
One dumb deal doesn’t justify another dumb deal.
Roof-top solar is not economic. Neither is utility-scale solar. But if, for some reason, we want solar power, then utility-scale solar is cheaper, with a capital cost barely half that of roof-top solar.
A more sensible alternative, though, is urban densification. Living at Asian-city densities, we could pack most of the population of greater Victoria into the municipality of Oak Bay. Then people could junk their trucks and SUV’s and go to work on a skate board, thereby making a real dent in our carbon emissions.
And with everyone living in a new-build, high spec., high-rise apartment, home heating energy needs would plummet too.
But instead everyone wants more SFH’s, meaning more sprawl, more roads, more cars, more debt, and more of everyone’s life spent in stuck in traffic getting from their suburban retreat to where they work.
I suspect that if North Americans do not make the transition to a more economic, not to say environmentally friendly, mode of existence, they will eventually price themselves out of world markets for anything other than the wilderness camping vacation industry.
The reason I think high rates help the FTB is this: In a perfect world, higher rates means less credit which means sellers drop their prices and FTBs can get into the market with less risk. If, hypothetically, Barrister’s wife was NOT using his crystal ball as a paperweight and you COULD know when interest rates were at their highest point, regression to the mean which is a mathematical truth dictates that your borrowing costs would fall, and with more credit available, your house would go up in value.
Anyone who survived the early 80’s gets this.
Of course, it is not a perfect world, other variables are driving the market too and Barrister’s wife is ALWAYS using his crystal ball as a paperweight.
If higher rates lead to lower prices, but the monthly carrying cost stays the same, then at least 1st time buyers’ downpayments will go further. Maybe indirectly it would cause a correction which lowers the overall monthly carrying cost too?
But I think it would disproportionately help the well-heeled with buckets of cash who have been waiting on the sidelines.
If you can’t get a mortgage, you can’t buy the shack. Poloz too chickenshit about putting up rates a mere quarter point while banks put up the 5 year .45%. Someone is out to lunch and it ain’t the banks.
Mortgage growth in Canada hasn’t been this weak since 2001
Borrowing costs are rising for the first time in almost a decade, and recent rule changes are making it tougher to get a mortgage
http://business.financialpost.com/real-estate/mortgages/mortgage-growth-in-canada-hasnt-been-this-weak-since-2001
@Infrequent Poster
$830k
On the post below, just wanted to say for those who might not know: A central banker will always be optimistic, see the silver lining, and provide reassurance. It’s part of their goal in promoting stability of the economy as they see it.
Remember Ben Bernanke during the RE bust in the States? His message never wavered from reassurance and optimism, even as things imploded around him.
Hence when a central banker writes an essay like below, it’s worthy to take note.
Canada’s Economy and Household Debt: How Big Is the Problem?
Essay from Stephen Poloz et al, Governor of the Bank of Canada
While debt is indispensable for our modern way of life, it has been a growing preoccupation for the Bank of Canada for several years now.
Among people under 35 years old, the percentage of homeowners with a mortgage has edged higher from about 85 per cent in 1999 to 90 per cent in 2016. For people in the 55 to 64 age bracket, the increase was more dramatic—from 34 per cent to 46 per cent. This casts a new light on that 170 per cent debt-to-income ratio I cited before.
Notice that the 170 per cent figure represents an average across Canadian households. It includes all those who have little or no debt, which means, to make the average level of debt so high, it also must include some very highly indebted Canadians.
In fact, about 8 per cent of indebted households owe 350 per cent or more of their gross income, representing a bit more than 20 per cent of total household debt.
https://www.bankofcanada.ca/2018/05/canada-economy-household-debt-how-big-the-problem/
The below post always makes me think. We are laughing at ~$1M piglet, like we were laughing at $0.5M bulldozer bait 4 years ago. (a dozen of SFH in OB were under $600k!)
Will we see a 50% drop in next 4 years, or another ~100% jump?
Thumbs up to you, too, buddy! Way to never give up!
Yes, BC Hydro can’t afford to pay two or three customers $30,000 for the clean electricity they’re putting back into the grid, but it has enough to pay $10 billion for Site C.
Got it.
https://thetyee.ca/News/2018/05/01/BC-Hydro-End-Incentive/
Please enlighten me. Why do you guys think the rate to go up will help local working families and 1st time buyers?? There is NO guarantee starter houses will fall, the up and down of $2M+ market won’t matter them. The banks are making a killing from tighter rules, no rate war in foreseeable future. Higher rate = more $$$ go to interest instead of building equity.
Is it because the bears have so much hate, they blinded themselves?
Leif, totally agree. We had a family pass used to do four trips per year. We stopped going two years ago because rental rates skyrocketed. Now, we maybe make one trip per season and we stay at the Cheakamus hostel, still a relatively good deal.
But, Introvert, that means being in Gordon Head. And with 2 fewer fingers? Hot off the presses:
Canada’s mortgage growth has fallen to the lowest in nearly two decades as interest rates rise and after new mortgage rules took effect at the start of the year.
Total residential mortgage credit grew just 0.3 per cent on average over the last three months, the slowest since 2001, Bank of Canada data show. That’s down from 0.47 per cent at the end of 2017, and about half the average 0.57 per cent pace over the past twenty years. Outstanding residential mortgage loans in Canada now total $1.53 trillion, the data show.
Borrowing costs are rising for the first time in almost a decade, and recent rule changes are making it tougher to get a mortgage. Just how sensitive consumers — and the economy — will be to higher rates has become a key question for policy makers, with Canadians now holding a record $1.70 in debt for every dollar of disposable income.
Dominique Lapointe, an economist at the University of Ottawa’s Institute of Fiscal Studies and Democracy sees slowing credit growth as a potential headwind for Canada’s economy, at least in the short run. “In the near term, it’s bad for growth. In the longer-run, when it leads to deleveraging, it’s good for financial stability. What matters is the speed of deceleration, or contraction, in credit,” Lapointe said in an email.
@leif
Look what Mount Washington costs now…
You don’t have to sell Introvert.
Here’s a finger for you!
Anybody know what 2750 Belmont Ave went for?
For those discussing Whistler have you been up there this year?
I go every year and have since I was a teenager. There is a DRAMATIC shift in the clientele/market that happened in the last 2 years since Vail has bought it. I was up there over spring break this year and it honestly felt like a ghost town. No waits for lines up the mountain, no major waits for the lifts. We had awesome powder and just kept hitting Peak chair run after run.
My issue is that it has changed towards the rich, I cant see how families would come up for a weekend. It used to be a place that people in Vancouver would go to for a weekend away to have a family weekend/ go party/ski and have fun. I think that is really dying out. Now it is designed for International skiiers. The late night party scene is dying and replaced with a way more expensive European style apres. Which is far from an actually Alps apre style on the mountain IMO but we don’t have to get into that.
Do you know how much tickets are?
$160 Adult/$80 Child if you buy them at the bottom of the mountain. A local family for a weekend would be 2 Adults x 160 2 days + 2 kids x 80 x 2 days = $960 lift tickets
Accommodation is something crazy like $300-500 a night now = $600-1000
Add in food, transportation and the cost continues to go up.
I used to think Whistler was a amazing gem and I have traveled to over 50 countries seeing tons of sights and amazing places. It was where I went every new years to party with friends, spring break with family and weekend trips to ski. Now it is quickly losing that appeal as you look at the financial costs involved in it. Yes it is awesome skiing but the thing that made Whistler the best ski destination to me was the village and the vibe and I feel that is dying.
We bought our place in Gordon Head in a multiple-offer situation in 2009 (we did have a subject-to-inspection).
Today, buyers would cut off two fingers to pay now what we paid then.
TORONTO — The Canadian Imperial Bank of Commerce () says it will raise its five-year fixed-rate mortgage rate Tuesday by 15 basis points.
Spokesman Tom Wallis says in an email that the rate will change from 4.99 per cent to 5.14 per cent.
Wallis says seven-year and 10-year fixed-rate mortgage rates will also rise 15 basis points, whereas one- and two-year rates will go up 10 basis points.
The Royal Bank of Canada () and Toronto Dominion Bank () announced last week that they would raise their benchmark mortgage rates.
The increases come as government bond yields rise. Fixed-rate mortgages tend to move with government bond yields of a similar term, reflecting the change in borrowing costs.