May 21 Market Update: Mansions and Condos
Last week we talked about the slowdown at either end of the market, with the low end and the high end retreating the most in terms of sales, while the middle of the market is still as active as last year. Let’s take a bit of a closer look.
Even though both condo and single family sales are down about 22% year to date compared to 2017, the activity in the market has been quite different. Condos reacted most strongly to the introduction of the stress test, with signficiant demand being pulled forward into the fall of 2017, and a slouch in sales after. This is most clearly seen when looking at the percentage of condos going over ask, which went from a third of all sales around new years when people were not subject to the stress test, to only one in seven the last two weeks.
There is not enough inventory to put downward pressure on prices though. Unless we see a big impact from the spec tax in the fall or next spring, that will still take a while.
Moving now to the opposite end of the spectrum, we look at the luxury market. Although the market in 2017 was active enough to land the top spot on the flawed Christie’s luxury rankings, the market has actually been cooling down since mid last year. In 2018, sales are down by 25% while active listings are up 50%.
Also the overall weekly sales numbers courtesy of the VREB.
| May 2018 |
May
2017
|
||||
|---|---|---|---|---|---|
| Wk 1 | Wk 2 | Wk 3 | Wk 4 | ||
| Unconditional Sales | 133 | 295 | 491 | 1006 | |
| New Listings | 335 | 670 | 973 | 1451 | |
| Active Listings | 2109 | 2218 | 2255 | 1896 | |
| Sales to New Listings | 40% | 44% | 50% | 69% | |
| Sales Projection | — | 734 | 744 | ||
| Months of Inventory | 1.9 | ||||
An uptick in sales last week, but month to date down a quarter from last year. It’ll be another good month before we see sustained increases in the months of inventory as we pass peak spring market.
Even then, it would only be the employers portion that goes unfunded, it’s not like the bc government could raid the fund.
“Yea, some massive sales at Shawnigan. Anecdotal 100% but I’ve come across a few local IT company owners/execs looking for waterfront Shawnigan in the last year for a close summer get away. There is some $ floating around Victoria these days.”
Thanks for the explanation, Marko. We’ll be selling ours in three years when our last son graduates from high school, so I hope that demand continues!
a few more details/clarification about pension rules:
1) pension act now allows multiple beneficiaries. spouse and kids can both be beneficiaries
if a pension plan member dies, it can be set to cash out the “commuted value”
so for a peace of mind, someone could easily purchase a whole life insurance for 1m for about $200/m premium and later assign to the kid. so the kid will have 1M tax free.
2) a member really do not need to work 35 years (or until) they are 60 before getting medical coverage. As soon as they are vested, and do not cash out, the plan will provide medical coverage ( however, the premium is bit higher for someone who has longer services). MPP plan is better because their population ( number of employees, number of members) is larger so they get lower premium in MSP and medical /dental premiums. I have seen so many stupid young member cashes out after termination of their employment. I guess they did not pay attention in school.
3)re. liquidity might be an issue but there is a away around it. say a member is getting close to retire, he or she can quit and get the commuted value( usually for about 35 years services, it might well above 1 to 1.5m depends on the the best 5 year salary). there is always a cost or penalty to exchange the liquidity. A well designed plan helps to mitigate the risk and cost. there are only a few people in BC knows what they are doing about public sector plans due to the complexity of DB plans.
4) would the bc government pension is unfunded ever? chances are extremely slim unless the the government going to default.
When a plan is unfunded, they can do a few things to adjust. for example, they could either increase the contribution rate or decrease the benefits they are providing for the retirees. there is no other way around it. So in another word, tax payers will have to put their money and save those government employees. Hate to say, but the reality is.
Realtors in general are bound to do what is asked by the seller or back out. The busier ones will have less tolerance for nonsense and push back on stupid pricing, the less busy ones may either not know that the price is stupid, or don’t want to say no to avoid alienating the seller. And then there’s always that chance some buyer will be irrational….
So here’s what I find interesting. I’m watching prices in Vic and in the Comox Valley closing in on some Van prices which I just don’t think can last.
If the prices get too close together, then I think we’ll see a wave of people move back to the city or people refusing to pay those prices.
Check out the $1.45 M price of this house in West Van, in a very good neighborhood. A while back I saw another one in this price point, a few doors down from the beach. Sure, the house needs updating, but it’s a big house on a big lot on a culdesac.
Before Marko spouts Oaklands pricing 😉 let’s just keep in mind it’s West Van which is on par to Uplands/Rockland/Oak Bay. And I’m seeing similar houses in these Vic neighborhoods being listed for pretty close to this which I just don’t think can last.
Granted, this is a “cheaper” house in West Van, but if prices there do come down, I can’t see how prices in Vic and the rest of the island can keep going up.
Meanwhile, when I see some of the recent listing prices in the CV, I simply scratch my head. $1,350,000 was the latest head scratcher. Not sure if the owners are delusional, but one I’ll be keeping an eye on.
Another CV head scratcher was a listing put up for $1.2+ M where a near equivalent home sold on the same street, a few doors down, a year ago, for $630k. It’s now been reduced to $1+M. Again, pie in sky delusion, or simply out to lunch, no idea. Even odder that seasoned and successful realtors would entertain these listing prices. I guess you can wish though hey…
https://www.realtor.ca/Residential/Single-Family/19335653/6430-FOX-STREET-West-Vancouver-British-Columbia-V7W2C4
I’d consider this a flop… sold for 11k over 2017 selling price, bringing this to a loss once all costs factored in.
6438 Marine Drive, West Van.
Sold 10-Apr-2018 — $1,300,000
Sold 19-Jan-2017 — $1,289,000
2017 Assessed: — $1,325,000
More price changes than sales in the last couple days.
CS obviously works for a developer and keeps repeating the same old boring song. Even Hawk varies his from time to time.
@josh
This is infuriating.
https://www.cheknews.ca/tax-break-for-customs-house-condos-draws-ire-422355/
His last comment… “It costs money.” Yes it does. Why don’t you then disclose how much money your company will make and why those costs cant be past onto you and the new owners. Why should city of Victoria pay. This is not a communal building.
Agreed Leo
This is infuriating.
https://www.cheknews.ca/tax-break-for-customs-house-condos-draws-ire-422355/
Leo S’s comments on the density/price issue provides insight into the complexity of the housing market and the difficulty of predicting how a change in zoning will affect prices.
Increased density may, as Leo correctly notes, actually raise the value of some SFHs because they acquire subdivision potential. However, whether that is the case woud depend on the extent to which zoning changes result in changes in land use. If many people with a sub-dividable property sought to subdivide at the same time, it could knock the bottom out of the tear-down market. In which case, despite being sub-dividable, undivided properties might fall in value as a result of the zoning change.
And there could be all kinds of other effects. For example, anything that moderates prices will tend to suck in more people, who will counter the negative effect on price of increased density.
However, Victoria really is very low density and could accommodate many more housing units without any increase in land base. For example, the planned Forest City in Maylaysia is supposed to accommodate 700,000 people on a land base of 14 square km, or just 40% larger than Oak Bay, which has a population of only 17,000. So we don’t need to go totally overboard to increase population on our existing core land base.
For example, Oak Bay could accommodate twice its present population by allowing apartments with a 500% floor space ratio and a maximum height of, say, eight stories, along OB Avenue West of the Village ( presently one of the most boring streets in Victoria).
Probably a few billion more to go.
CRA Uncovers Nearly $600 Million In Unpaid Taxes On B.C., Ontario Real Estate
But this could just be the tip of the iceberg.
https://www.huffingtonpost.ca/2018/05/24/cra-600-million-real-estate_a_23442762/?utm_campaign=canada_newsletter
My conclusion from that fact is that the argument that we’ve heard from the development and real estate industry since forever that all we need is more supply so solve all housing affordability problems is not the whole picture. Even with the industry building flat out we just can’t catch up.
Thus, more supply and densification are necessary but not sufficient. To effectively tackle housing affordability you need to build lots of supply but also make sure that that supply is going where you need it to go. If the supply gets sucked up by speculators, left empty, or used as AirBnB hotels, then building it is not doing any good. You need to attack the issue from both sides and I believe progress is being made towards that now.
How gauche
Common way to value pensions is 180 times the monthly payout. So $60k annual pension worth about $900k.
I much prefer defined contribution. That way you know what you have and no chance the system gets underfunded.
One highway accident and a huge chunk of the island’s economy goes for a shit for 24 hours. Put that on your tourism brochure.
If you’re looking to retire and you’ve got about $1 Mil and you need some of that money to live off, what would you rather have?
East Coast:
https://www.realtor.ca/Residential/Single-Family/19375967/1868-Blake-Court-Charlottetown-Prince-Edward-Island-C1E1W8-Charlottetown
or
West Coast:
https://www.realtor.ca/Residential/Single-Family/19249831/3131-Washington-Ave-Victoria-British-Columbia-V9A1P8
I agree fully with Matthew on the pension issue. So many of my friends and family work for the government [the #1 employer in Victoria]. My 4 siblings and 4 cousins all work for either the BC government or Feds and brag to me about their pensions. I am in the private sector and work through a CCPC [one of the ones that Morneau is targeting]. I would far prefer to have $1 million invested [be it in a registered account or non-registered account] than have one of thees pensions. Using the annuity example below, the beneficiary or pensioner receives about $50,000 [taxable] per year. The person with the $1 million need only generate a 5% return to match that – surely, that is not an extraordinary feat [example: simply buying the big 6 chartered banks, with dividends and some modest capital gains, would have given you double that annually over the last 30 years – thees are blue chip, conservative investments]. Plus, the Estate actually has an asset to leave to survivors or a charity.
Plus, you have access to the capital for any reason that may arise.
We had a discussion of this a couple threads back. I use Lightspeed and am happy. There are a few other options.
This is a plague on the internet. The author and date should be the first thing on every article.
The fuel truck accident that closed the Malahat today makes property in Shawnigan/Mill Bay not look so awesome.
Yeesh. Closed for 10 hours!
Edit: Re-opening now estimated 4am. Not bad for an accident that happened before noon today. Too many bloody cars on the road…
Doesn’t it bug you that BNN Bloomberg never dates it’s news articles or videos? So when you see a story entitled “Toronto Real Estate Prices Easing” for example, you don’t know whether it’s from May 2017 or May 2018.
The problem with a Gov’t or Employment pension is: when you die, payments may go to your spouse for the remainder of his or her life, but your kids get nothing. If you have a private $1 Mil investment, you get $50K a year (or whatever) like a pension, and then your wife gets it, and then when you both die, your kids get the $1 Mil (less taxes if applicable).
We’ve got a 14 year old daughter and feel a very strong moral obligation to help her out when we die, especially when a shack costs $1 Mil.
More price creep from Telus for the Internet. Just wondering what providers people are using and at what cost? Tired of using the big ones like Telus and Shaw.
CIBC, Royal and TD have all reported Q2 earnings. All beat consensus estimates for revenues and earnings. BUT, it is to be noted that all 3 reported slowing mortgage books – no surprise given the B20 rules. 3 more big banks to report – expect the same. CIBC was said to be the most vulnerable because it really marketed to the borrower quite heavily.
This is important because this is a sign of falling demand for purchases of homes. fewer are qualifying for mortgages. Prices have to adjust, but we are seeing rising interest rates [the US 10 year is now around 3.15%] so fewer are expected to qualify. The US Fed reported that US inflation is above their 2% target and they are staying the course for 3 rate hikes between now and end of 2018.
David Rosenberg now predicts a recession over the next 12 months – it is not “if” but “when”. The yield curve is flattening. Unemployment is low [very low] and wage-push inflation is knocking on the door. Matters not what Poloz does or fails to do – this is happening right now. The policies to address the lack of housing affordability coupled with the macro picture are ringing bells for the astute. So, keep buying [?]…………..
Just saying…………..read the tea leaves, so to speak.
For sure. In addition to indexing, people with government pension do normally get health and dental insurance coverage, while the other 60 years old with $1M has to pay all on his/her own.
We paid over $6K last year between MSP and dental work ourselves. If anyone would give us government like $60K/yr indexed pension with medical/dental coverage, we would happily handover $1M cash. No more stress managing and watching the stock market, just focusing on living a good life happily ever after.
How? In the past 12 years they’ve racked up a $1.9 billion surplus.
BC public service pension plan has inflation index IF the plan returns are good enough to support it. That’s a big if. The federal pension plan has guaranteed indexing – one of the features that make it pretty gold-plated
I am not a financial expert nor sell insurance or selling mutual funds or any other type of financial product/services.
Just happen to know the following site:
https://www.cannex.com/index.php/services/canada/annuity-products/income-annuities/
it gives an idea that annuity quotes: 1M would generate regular annuity at $4490/month or $53880/year
last time I checked, BC public service pension plan does not offer inflation index feature. It is a very expensive feature or component for any defined benefit plan from actuarial perspective. Fed pension plan has it. The university sector are moving away from the index feature and some of them grandfathered the index portion after vesting. The new hires are not eligible to get to it anymore because the cost is very expensive.( MUSH, municipality, school and hospital belong to MPP plan which does not offer index at neither)
To me, the best option is, own two (or more if you could afford) income generating condos should be ok as they are generating about 1650/m each.
Well it’s not particularly relevant where we say, condos are rising at 25% per year, but without the increasing density it might be 30% or more. It would be like a huge building being on fire, and you need 150 gallons of water per minute to put the blaze out. But, you only have 15 GPM available. Would that have an effect? Of course it would. But is it achieving a meaningful result that enables the building to be habitable? No. The rate of price increase is absurd and many folks already can’t even afford condos there now. IMO it’s got little to do with density and almost everything to do with extrapolative expectations.
Where your argument will inevitably gain strength is where these ancillary forces continue to weaken and indeed, that’s exactly what happens where we move into oversupply.
I think it is working. Clearly smaller units will be less money than bigger units, hard
to dispute that. However what’s important to remember is that this is just one force of dozens acting on the market. More density pushes down on per unit prices but clearly the other forces in Vancouver (speculative mania, outside money, employment growth, loose credit, fraud, money laundering, etc etc) that push prices up have been more powerful so prices (both per unit and per sqft) have been increasing
Caveat nope that is just off their annuity calculator. 65 age is higher amount also. Static amount over time. With these low rates I would never do an annuity anyways.
Invest the money and take out yearly amounts. I was just agreeing with you. A pension is a huge asset.
Is that sunlife annuity inflation indexed? That’s a pretty big feature of certain public service pension plans.
Agreed – most are getting less, especially if you just look at the BC public service. If you look at the feds who make more money (and have a richer pension plan) then the number goes up. Add in the higher paid echelons of the MUSH sector and you have a lot of people on the public payroll that are going to be pulling $60K+ inflation indexed pensions in retirement.
So that minority is still a sizeable number.
That was probably part of my confusion. I think I see your logic, although that has clearly not been working in the Vancouver market one bit. However…I don’t think this region is typical market dynamics either. You’d need a more stable market to see what you’re talking about, in action.
Thanks!
Arizona’s highways are even worse than Victoria’s if they can only go 35mph on them.
Interesting that the city of Victoria decided to increase residential taxes by 4% in an election year http://timescolonist.com/news/local/victoria-taxes-homeowners-up-4-vs-1-1-for-businesses-1.23312159
Increasing density both increases and decreases prices. It increases prices for land, because the highest and best use of the land which is how land is valued is now higher. E.x if a plot of land is zoned to allow a duplex or row houses or low rise apartments then it is clearly more valuable than the same land that can only support one dwelling.
So increasing density will drive up the price of traditional single family houses because they become increasingly rare.
However per unit, price should go down. E.x each side of a duplex will cost less than a new house on the same land. Another example is micro condos like the Janion, more units means price per unit goes down because the cost of land is spread over more properties.
So increasing density both increases and decreases housing costs. It increases costs if you hold quality constant (same space gets more expensive) while decreasing costs per unit.
James you win big conspiracy ok. J walking across a multilane highway in the dark with a bike and a bag of crap was an avoidable accident and now there is a mass cover-up.
Sensors did detect THE PERSON, not it.
Again bullshit.
From the original interview the police chief did:
Does that sound normal to you after someone was killed?
Also, just noticed, they’ve now upgraded the speed of the car from 38 mph in a 35 to 43 mph
@GF:
If you gave some examples we could more easily debunk your argument! But in general cities that rezone for increased density do so because high housing costs are restricting economic growth. Thus, Manhattan, for example, has over the years done much to increase housing availablity, with tax breaks to developers of reasonably priced housing and by land rezoning. True home prices in Manhattan may not have gone down as a result but they are lower than they would otherwise have been, and as a result the economy of Manhattan is greater. In contrast, Oak Bay is moribund. An aging and declining population with no economy to speak of other than retail. As a result of the failure of Victoria’s core municipalities to densify sufficiently, a new city is being built on the West Shore, thus ensuring massive inefficiencies in transportation and other infrastructure.
But let’s have electric ferries, that’ll solve all our problems, social, economic and environmental.
James
Person J walking. Sensors may have detected it but a person may not have been able to stop. No one knows. Video shows driver may have been distracted, Facts have always been out there. The last fact of why the car did not stop was released today. You are looking for a conspiracy that is just not there.
No, it’s always been desirable. Lots of waterfront, tree-line avenues, large lots and close to downtown.
Furthermore, a generation ago, just about anyone could afford to live there, particularly in those 12/1400 square foot bungalows with one bathroom, many of them within the Uplands, which cost to build less than $5000.
That such houses now go for one to two millis is not because a better class of people live in Oak Bay — many of us are still the hillbillies who bought in OB a generation ago. (And frankly, we don’t give a damn how much the latecomer nouveaux riches have got. We just expect them to be sure their dog doesn’t crap on our lawn and that they don’t play their radio outdoors.) Oak Bay has become more expensive because the place has filled up. The meadow land south of Uplands park has all been developed, and Even the next best developing area, Gordon Head, is pretty well filled up. Hence crazy lot values.
4% tax increase for home owners. 1.1% for businesses. 2.6% total. Ouch to those in Victoria.
How not? The police came out and said a normal driver would not be able to avoid this collision if they were paying attention, and tried to corroborate that by releasing terrible dashcam footage to make it look like she came “out of the shadows”
The sensors detected the pedestrian 6 seconds away. Total bullshit.
This argument is popular on both sides, but I haven’t seen any convincing evidence so far that adding density promotes lower prices. The logic in why it would is simple, but in cities that have done this I just haven’t seen it help. Also, our population density here in Canada is one of the lowest in the world and in the urban centers including Vancouver, it is still comparatively low. I just don’t buy it.
I know that’s not a convincing rebuttal, but to me it seems the solution is actually lower prices which is what market corrections have always accomplished.
The average person making 27 dollars an hour does not buy in OB. That is a desirable area and attracts the top 10%.
The reason its desirable is because only the top 10% can afford to live there. The 10% want to be with their own kind and keep it that way.
@ Barrister
The average hourly wage in Canada is said to be $27.70 per hour. If taxes paid take one third of that, the average after-tax hourly rate is around $18.28 per hour. So to earn $1.3 million after tax would take the average worker 71,116 hours. or 40.46 years.
But they will need something to live on, say half their after tax earnings, so it will actually take about 81 years to earn the price of that crappy little house. However, if they have a spouse who works full-time for 40 years, they could just about gather up enough dough to purchase a house for cash on their retirement day.
Real life is, of course, much more complicated, with inflation, return on invested savings, etc. that must be taken into account. Also, it has to be recognized that when buying a crappy little house in Victoria, one is actually not buying a crappy little house so much as a fairly large chunk of land, which will often account for more than 90% of the total property value. Thus the problem of ridiculous prices for crappy little houses can easily be solved, assuming anyone with the power to solve it wished to do so. The solution is to rezone for higher density. If for example, Oak Bay zoned to allow densities such as prevail in Langford, property prices would slump. But fortunately for we lucky few early buyers, rezoning for higher density will never happen, so we will continue to enjoy champaigne for breakfast and drive Lexus SUV’s at the expense of the younger generation.
Technology is good/ turn the bloody emergency braking system on. Human driver may have been distracted.
There was no cover as was originally discussed.
Also whoever I was talking to about Uber killing the pedestrian. This is the run down on how the software failed:
Barrister those 2 types have no need to stress to find funds for retirement either.
Sarah Binab is a lot more personal (and pleasant) than Jason, but yeah, he didn’t get to where he is by dumb luck.
Vast majority of public service workers aren’t getting $60,000 a year in pension, even after 35 years service. After all that, it’d still be the person with a million in the bank right now. They’d have 22 years to make an additional 320,000 in interest.
GWAC:
You are right that it is manageable. Actually, a policeman married to a schoolteacher (both in their thirties) also fall into that income bracket.
Probable pretty close to the same 1m vs 60k. Rather the pension. Less stress.
1m annuity at 60 with sunlife for a male pays 55k. Investing with a professional may get you more.
That can be a bit misleading too. Who is richer? Person A who retires at 60 with a house and $1,000,000 in an RRSP. Or person B who retires at 60 with a 60,000/year public service pension
1.3m
20% down 3% mortgage over 25 years is 4900 a month very manageable for 2 professionals marking 100k each.
The problems starts to arise when little johnnie and Suzie have to go to Glenlyon and have to be driven in BMWs.
I still cannot believe that people seem to be paying 1.3 million for crappy little houses in Victoria. How many hours does the average person have to work to get 1.3 million after tax?
I cannot believe that I am actually going to write a positive review of a real estate agent but after going through three agents,who varied from horrible to downright incompetent, while looking to buy a house, I stumbled into Jason Binab. I have to admit that he was not only professional but extremely helpful both during and even after the closing.
I also felt that I never got all the usual real estate BS from him. Even on the house I eventually bought he was quick to point out one of its major drawbacks. In short, his success seems to be well deserved.
There were a couple of 2004 houses on Harvest Lane right by Mt. Doug that were in the same price range as the two on Lee Avenue and sold within the past month. I would have much rather had them.
The last Harvest Lane listing had 6 offers on it. Still very strong demand for clean straight forward properties.
There is so much chopped up garbage out there.
Just noticed that three homes in Shawnigan worth 1.5+ are all pending, and one where the asking was 1.649 is pending at 1.8 (1755 SL road)
Yea, some massive sales at Shawnigan. Anecdotal 100% but I’ve come across a few local IT company owners/execs looking for waterfront Shawnigan in the last year for a close summer get away. There is some $ floating around Victoria these days.
Just noticed that three homes in Shawnigan worth 1.5+ are all pending, and one where the asking was 1.649 is pending at 1.8 (1755 SL road) ! Is this demand moving from Vic because Shawnigan is exempt from the FB and spec tax?
That’s not much money really. Unless you own a property in a city where housing is more expensive than Victoria – which is just Vancouver and Toronto – it’s not going to enable you to retire in Vic. And there are plenty of other places for such people to move to.
@VicInvestor1983
IMHO you are absolutely right. The luxury market right now, especially for older builds on large lots, there is true value to be found vs assessed values.
Millionaires in Canada, it is at 1% of the population.
There are now almost 357,000 Canadians that Capgemini calls “high net worth individuals” — people with at least $1 million in wealth, not including their primary home.
That is not a small number. Much more than previously posted. There is a lot of wealthy people swirling out there.
https://www.huffingtonpost.ca/2017/09/28/number-of-millionaires-in-canada-shoots-up-11-3-in-a-year_a_23226515/
http://business.financialpost.com/personal-finance/high-net-worth/are-you-rich-heres-how-to-tell-and-why-you-should-care
Hmmm. 1748 Lee Avenue for $1.355M. Well, there are still some biting fish out there.
There were a couple of 2004 houses on Harvest Lane right by Mt. Doug that were in the same price range as the two on Lee Avenue and sold within the past month. I would have much rather had them.
Flips:
240 Superior
Listed $800,000
Last sold Dec 2016 $500,000
https://www.realtor.ca/Residential/Single-Family/19385790/240-Superior-St-Victoria-British-Columbia-V8V1T3
606 Marifield
Listed $1,299,000
Last sold June 2015 $853,000
https://www.realtor.ca/Residential/Single-Family/19422288/606-Marifield-Ave-Victoria-British-Columbia-V8V2L1
Reno Flips:
3200 Exeter
Listed $2,750,000
Bought Oct 2016 $1,950,000
*renovated
https://www.realtor.ca/Residential/Single-Family/19317495/3200-Exeter-Rd-Victoria-British-Columbia-V8R6H6
1072 Newport
Listed 2 M
Bought Sept 2016 $1,007,000
*renovated
https://www.realtor.ca/Residential/Single-Family/19411441/1072-Newport-Ave-Victoria-British-Columbia-V8S5E3
“What a difference a day makes” … He has never responded to any of my emails on realtor.ca.
He also seems to sell a few interesting types of homes from what 8 have observed this past year.
My really question is how many millions has Jason binab made these past 2 years? When he stated doing those Ferrari ride along YouTube videos to his homes I thought massive douchebag alert but I’m curious on his yearly figures. They seem to be taking the market by storm from my general looking online.
2 birds with one stone. Who was asking about the 2.4 million dollar place on midlands? Being sold by Jason and I believe it was going to be used as that other guy’s BMX track in uplands. You can find a clip about him building a private BMX track on YouTube or ctv… Maybe he gave up after bitcoin tumbled from December highs when he was bosting on TV advertising it.
http://www.binabgroup.com/property/property-391695/
Made this for a thread on VV so it’s offtopic here, but here’s another perspective on how much building is going on in Victoria right now.
And that’s before all the investments into affordable housing, so it could go on like this for a while.
Bingo. Coverage on this change was horribly clickbaity. I told the author of the Tyee article but based on his response it didn’t sink in.
Reality is there is no effect for solar.
Here’s the math:
Average house in BC uses 900kWh per month or about 11,000kWh annually (our 2200 sqft house used 14000kWh last year).
To generate 11,000kWh annually you need 10kW of solar capacity and more if your heat and hot water are all electric. That is already about double the average residential install size.
10kW of capacity is about 33 panels. Or about 36’x18′ on a roof if you have no obstructions. Most normal roofs won’t have that much space on the south side.
$1.355M, $7k over ask.
33 sales today, 31 price changes…
Looks like 1748 Lee Ave sold. Does anyone know how much it went for?
The Forces that Cause the Bubble to Burst
The bubble bursts when excessive risk-taking becomes pervasive throughout the housing system. This happens while the supply of housing is still increasing. In other words, demand decreases while supply increases, resulting in a fall in prices.
This pervasiveness of risk throughout the system is triggered by losses suffered by homeowners, mortgage lenders, mortgage investors and property investors. Those losses could be triggered by a number of things, including:
A downturn in general economic activity that leads to less disposable income, job loss and/or fewer available jobs, which decreases the demand for housing.
Demand is exhausted, bringing supply and demand into equilibrium and slowing the rapid pace of home price appreciation that some homeowners, particularly speculators, count on to make their purchases affordable or profitable. When rapid price appreciation stagnates, those who count on it to afford their homes long term might lose their homes, bringing more supply to the market.
The bottom line is that when loses mount, credit standards are tightened, easy mortgage borrowing is no longer available, demand decreases, supply increases, speculators leave the market and prices fall.
Read more: Why Housing Market Bubbles Pop
https://www.investopedia.com/articles/07/housing_bubble.asp#ixzz5GNjCWfsJ
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From the Buzzbuzz article:
I actually laughed when I read this. No matter how egregiously imbalanced the market actually is, now matter how disconnected and fictitious prices are from the economy, no matter how much the sales volumes fall, the narrative is always the same. You could detonate a 10 megaton fission device in the centre of town, and they’d find a way to promote market activity. Even Baghdad Bob would be impressed.
Anyways. The condo market is losing steam in Vancouver, and speculators are starting to flee. This market segment has, for the last year and a half, been the last vestige of affordability and speculation and the sole reason aggregate prices are eeking out YOY gains. The only thing right now between Vancouver RE and the inevitable is a dearth of listings as sellers can’t afford to move, are waiting for a “turnaround” or are afraid they won’t be able to find another place if they vacate.
That delicate finger in the dike can’t hold it forever; sooner or later at least some of those people need to sell. And, inventory has been quietly but steadily building and building. If you’re buying now, you’d better manage your expectations in this market going forward.
What happens in Vancouver will happen in Victoria about 6 months later.
Known as the “lag” effect.
http://news.buzzbuzzhome.com/2018/05/trends-vancouvers-market-summer.html
CIBC chops mortgage growth in half. No brainer that prices are going to tank with no one qualifying. Plus they lend to the most riskiest/HAM the past years so that only confirms what’s coming down the pipe and it won’t be pretty.
CIBC expects new mortgages to halve in second half as rules bite
http://business.financialpost.com/news/fp-street/cibc-reports-second-quarter-net-income-up-nearly-25-per-cent-from-year-ago
Don’t forget Jerry Bola.
Hm, I’m not familiar with that feel.
Interesting. Thanks.
Ignorance be damned – I think we have saved some years off our lives because of it. (Or perhaps that’s just what I tell myself when I miss an investment opportunity)
At the end of the day however, I am just happy with what I have, not what I could’ve had. That is a rabbit hole with no happy ending.
Andy7
Oh my deer jeebus. You’d think they could at least clean up the yard a bit before asking 1.4 for that place. Nice big lot. And it had better be as that 2 bed 1 bath house sitting on it isn’t worth much. It looks in ok shape, but I don’t think anyone buying in that area will settle for 1400sqft. Isn’t that a bit much for a tear down?
@Victoria Born:
“Many areas of south Oak Bay are very nice, like Newport. But, I believe that for “luxury” one has to come back to the Uplands area and I am seeing more listings there than I have for many, many years – many with price reductions but still hovering at the $3M price”.
I agree with you.
In Hilliard Macbeth’s book “When the Bubble Bursts” he talks about how much money one needs to buy and maintain a $3 Mil house. In short, you have to be a multi-millionaire. And (he says) there’s only about 30,000 multi-millionaires world-wide. And there are a lot of cities in the world that contain luxury neighbourhoods (Miami, Los Angeles, Hawaii, London, Paris, the French Riviera, Spain, etc., etc.). In many of these places, the sun shines brightly year round and there is a lot of action. IMHO you cannot say this about the west coast of Canada. Don’t get me wrong. Victoria is a beautiful place for sure, but it’s mostly attractive to fellow Canadians who have spent years fighting minus 30 degree winters on the prairies and want to move to a better climate for retirement. But there are precious few multi-millionaire Canadians who can afford to shell out $3 Mil or $4 Mil just for a home.
The drastic increase of home properties in the last 3 years on the west coast has made it less attractive. In 2015, a very nice property on huge lot (at 3150 Midlands Road) sold for about $1.5 Mil. Now (on a street about 2 blocks away) there is a shack on a similar big lot for sale for $2.5 Mil. They are pitching it as land value only.
https://www.realtor.ca/Residential/Single-Family/19154703/2538-Nottingham-Rd-Victoria-British-Columbia-V8R6C5
In the words of the robot from Lost in Space “that does not compute”. Very few Canadians have become more wealthy in the last few years. Foreign buyers have crawled back into the woodwork. Incomes have hardly increased. So, I don’t know where the sellers expect the buyers to come from. Or maybe they’ve started to figure that out, so this is why we are seeing some price reductions. All I can say, is it’s about time.
Maybe somebody’s gonna put my foot in my mouth for me, because I did see a listing on Midlands Road for $2.4 Mil (land value they said) a couple weeks ago, but now it’s off the MLS. Does anyone know if this property sold? I could be wrong, but I bet they could not find a buyer and just removed it.
Thanks for the electric ferry thing, Introvert.
I did a bit more sleuthing on the Hydro net metering changes. The actual proposal is here:
https://www.bchydro.com/content/dam/BCHydro/customer-portal/documents/corporate/regulatory-planning-documents/integrated-resource-plans/current-plan/amended-rate-schedule-1289-net-metering-apppendix-b.pdf
From a quick read, it looks like they will continue to pay people for any excess energy produced. The change is that they will only approve new installations that are sized to 100% of the predicted use of the home.
For an existing house, they will probably just use your past usage. How they will predict use for a new home might be interesting. Now you definitely want to get that electric car a year before installing the PV system, if you want to maximize your approved installation.
I suspect that most people’s roof area limits their installation size below 100%, unless they have a sprawling rancher with a big sunny roof that is extremely energy efficient.
2480 McNeil seems totally overpriced for a knockdown in this market. Wonder if they will even come out whole on this flip.
Methodology still 80% bs as far as I’m concerned. If someone can convince me otherwise I’m all ears. Report: https://www.cdhowe.org/sites/default/files/attachments/research_papers/mixed/Friday%20Commentary_513.pdf
Flip, flip or flop?
Curious what this will end up selling for…
2480 McNeil
Listed 1,395,000
Last sold Dec 2017 for $1,188,500
https://www.realtor.ca/Residential/Single-Family/19471162/2480-McNeill-Ave-Victoria-British-Columbia-V8S2Z4
CD Howe reprise, communicated a bit more breezily.
http://business.financialpost.com/opinion/william-watson-that-new-house-costs-a-shocking-50-per-cent-more-thanks-to-government
Leo – excellent analysis – really informative and exactly what I was hoping to see. I also read the December 2017 post about “Million Dollar” listings – great review too. But the reality is that the Vancouver / Victoria markets are a global “freak show” in terms of prices [same with Toronto and a few other places in the USA] – like a million dollars is pocket change when the median house price in the USA is about $208,000 I read on BNN recently.
We looked at 10-Mile Point and the Wedgewood sub-division [we found it to have the Gordon Head fish-bowl feel]. We then did the tour of the lower part of 10-mile – Lockehavan was nice [though sun exposure on the water side would be limited] but the roads like Seaview, Tudor, etc., were so rural IMHO and in need of a redo and widening to call this “luxury”. Many areas of south Oak Bay are very nice, like Newport. But, I believe that for “luxury” one has to come back to the Uplands area and I am seeing more listings there than I have for many, many years – many with price reductions but still hovering at the $3M price. Most with half-acre lots, too. Fairfield is nice as is Rockland, but the roads feel narrow.
Interesting to watch, but I am seeing rising listings and few sales, as are you, with price reductions galore. In 2019, we will see the full force of the speculation tax, so will be staying tuned in to the 2019 Spring season.
Keep up the quality work.
Introvert
Depending on your definition of real (genuine, authentic) it might not be far off the mark.
The old school realtors in Victoria such Darren Day, Suzy Hahn etc.. are a little different. The word caricature comes to mind.
They must be doing something right if they’ve lasted so long, but definitely not my cup of tea.
https://www.ship-technology.com/news/corvus-supply-energy-storage-systems-electric-fjord1-ferries/
Not the best list. Out of the 6 properties listed only 2 are real foreclosures as far as I can tell. Just because a property is advertised as “as is where is” doesn’t mean it’s a court ordered sale. Also one actual foreclosure on San Juan is not in the list.
Leo, could you please address some housekeeping issues?
The unread-comments-in-blue-shading feature still isn’t working (for me, at least; Win10/Chrome browser).
Also, please fix (and update!) this important graph:
Thank you!
Love the use of quotation marks—as if he might not be real.
Beancounter:
Like you I have never had the risk tolerance for real estate. That is a polite way of saying I was never smart enough to figure it out. Frankly, I honestly thought, back at the end of 2013, that Victoria real estate was overpriced then. Bought because I needed a house to live in and not because I thought it was a good investment.
Then again what do I know – my brother wanted me to go in with him to buy an investment property in North Van back in 2012. At 850k I said “Are you out of your mind?” The prices in that area have since doubled.
I suppose when it comes to making money I should just stick to my business. It’s the only thing that has made me money that I don’t lose sleep or my lunch thinking about.
Re Bank…no surprises there. My comment from last week
Bank Street is underpriced for a bidding war. It will likely sell north of 700k.
Last week we discussed the teardown at 925 Bank St which was listed at $650k in order to entice a bidding war. Sold for $720k.
If you have the $$$, the luxury market appears to have the only real value for dollar. IMHO, the mid segment SFH and condos are much more overpriced. I bought my entry-level luxury in 2016 and have made a significant profit on paper. I found the 800k-1.2 million segment very crowded with many crazy over-asks.
Man who bought that grey shack on Foul Bay just north of OB ave? Who are these people?? Another head scratcher…I guess financial sense has gone the way of the dodo.
@Marko
https://www.rew.ca/properties/387308/3320-ripon-road-oak-bay-bc?direction=desc&page=1&sort=price
Assessed: 3.190MM$
Listed: 2.988MM$
Older house, I am sure you offered 2.5 or 2.6MM with limited conditions you could have this. 20% off! What do you think Marko, sounds about right?
@Leo,
Luxury market over $2MM is definitely facing some pressure.
1/ 2017 123/45 = 2.7 listed houses/sold
2/ 2018 183/34 = 5.4 listed houses/sold
3/ houses moving slower and more inventory then other dwelling types
The upper end, if hypothetically you say 25% need to sell SOON or NOW, then offering 10-20% off list price, a deal can be had. Which would be a sizeable correction.
Other sellers, who don’t get any bites on their ask, IMHO, would just pull the listing if they don’t need to sell and just wait…that’s what I would do.
I think if you are looking at this market segment ($2MM) you could start low-balling by -20% and have a decent chance in picking it up. But with list prices being asked right now, a low ball offer you might be close the BC Assessment price. Time will tell, but it is starting to be a good time to be a luxury buyer!
I think the courthouse lists all foreclosures.
Found this link a while back through random googling and have had it bookmarked ever since. While it does seem to get updated, I have no idea whether or not it’s comprehensive.
https://www.victoriamls.ca/Matrix/Public/Portal.aspx?ID=0-163612925-10#1
In my experience people re-adjust their thinking slowly if at all. There seems to be a fair number of investment condos with a negative cash flow out there. The question is what the owners would do in a downturn.
Can probably set this up. Send me an email if you like
So nobody could identify the potential of a Vancouver spill-over before it happened or thought that double digit price increases would be possible in one year but we’re convinced that a housing price correction cannot happen quickly? Why, because it’s never happened before? If you didn’t envision these occurrences perhaps a quicker timeline for a substantial market correction is also an oversight?
With that said, in my opinion, the housing market started to show signs of slowing back in 2017 (the stress tests were discussed more than a year ago and people knew they were coming). If you didn’t notice you were probably still foaming at the mouth or proceeding with the status quo. When the full impacts of the stress test, along with the large volume of impending mortgage renewals at higher interest rates and speculation taxes, are felt later this fall without the spring buying frenzy we might be singing a different tune. A substantial ‘correction’ in early 2019 would put us a year or two into a decline in buyer mentality and an increase in government intervention, both of which generally lead to lower prices. I’m confident that in a few years when we all look back, 2017 will be the year people wish they didn’t buy a home.
Well I mentioned it several years ago. Living next to a duplex where both units are rentals, it was a constant turnover of out-of-towners looking to purchase. 4 sets from Vancouver (plus a different set bought a house I had for sale at the time), Seattle, Winterpeg etc. Anecdotal I know, but it certainly made me stink-eye the “foreign buyers” numbers (I know they’re not foreign – but not Victorians).
@RenterInParadise
Thanks for taking the time to post this, very interesting.
Meanwhile, Steve Saretsky posted this today… “Uh oh, Vancouver condo flipping is dying”. So that’s SFH’s, now condo’s, next stop is… ?
Speaking of this, I was wondering if there’s a service that just lists or emails updates for local foreclosures. Anyone know?
Yeah housing markets are dead slow. For fast price drops, the market has to consist largely of desperate sellers. That happens if carrying costs suddenly rise beyond the ability to pay or people lose their jobs.
Then again Vancouver has been nuts for ages and we didn’t see that magnitude of spillover. So I don’t think the effect is as obvious as it seems in retrospect. One possibility is that this time house values in Vancouver went up at the same time that boomers were close enough to retirement to just sell and get out whereas in previous instances they were still mid career
Speaking of realtors, has anyone called up ‘Darren Day’ and asked him about his out of town buyer program? His add says he has buyers in China, US, etc.
Probably just thinking that getting it at the top of the list will bring it up in peoples minds. Another reason is that it looks better for the realtor if a house sells closer to list price for their statistics as a selling point to get future listings.
I find it intriguing that people think that a housing market crash happens overnight.
Easy to look back; however, if anyone could look forward prices would drop overnight to the eventual bottom as who would buy if they knew a house was going to be 25% less in 3-4 years?
People talk about how Vancouver transplants contributed to price appreciation in Victoria the last few years. Very simply concept (sell for $3 million and Kits and moved to Oak Bay for $1.2 million) that none of us on this blog managed to identify while Vancouver was starting to go red hot and Victoria was still flat.
I literally thought there was no way in my career I would ever see prices go up double digits in one year. My rational was absolute figures were already massive when I started in 2010. I could see a house going from 200k to 220k in one year, but I thought 600 to 660k was too much of an absolute figure jump.
I find it intriguing that people think that a housing market crash happens overnight. I’ve owned houses through 2 major housing events in the US – 1988-1993 & 2005-2012-ish. These took years to fully develop. I’ll describe the ’88-’93 timeframe and see if any of this sounds familiar.
1987-88 in the metro-Washington, DC area – so much FOMO. Must buy. Hot market. People sleeping at doorsteps to townhouse, house & condo sales trailers to be first in line. I heard tales of price increases as people were trying to sign on their contracts. And yes, we bought our townhouse then. Looked pretty good for about 2 years after but what we didn’t notice was the cracks in the system. Lines dwindled and became non-existent. Then there was the odd-foreclosure but prices were still going up but at a much slower pace. Once inventory caught up, prices stalled and the flippers started to sweat in earnest and many left the market. Fewer houses selling meant that days on market increased significantly. And then the foreclosures picked up and banks started dumping properties at rock-bottom prices to cover the outstanding mortgage which put pressure on housing prices.
By 1992, we were looking at a paper-loss of 25% — that is if we could even sell the place. 1993 was the absolute bottom for that housing market. Spectacular deals could be had if you had the resources to buy realizing that if you had a property to sell, it likely wouldn’t. Now notice the area I’m mentioning here — it’s an area of 7+ million people with the U.S. government and all it’s myriad contractors providing solid, well-paying jobs. It wasn’t that people couldn’t afford to buy so much as there was no more FOMO. No one wanted to get caught in a property they didn’t want or that could continue to go down in value. Sure there were still sales but it was an extremely anemic market. It took over 10 years for the price of the townhouse to recover – we “broke even” at the time of sale. It was still a buyers market.
Fast forward to the next cycle. You’ll notice that I mention that 2008 market crash as starting in 2005. That’s when we saw peak housing prices for that area. June 2005 seemed to be the absolute best time to get a crazy good price for your home. Then the same trend as in 1988 happened and the market started sliding from there. It wasn’t the foreclosures that were an issue in that area so much as fear of purchasing at the top. The flippers left the market which shrunk the potential pool of buyers. Houses stayed on the market longer and longer. The area I lived in still hasn’t recovered to their 2005 pricing and it was (and still is) considered the best school district in the state in a highly desirable job market within an easy commute to recreation, work, and cultural activities.
I’ll be interested to see how this market plays out.
I just have to say, as others have expressed, how annoying it is to see listings come up as “New” when they have been on the market for weeks or months.
Today took the cake for me, as 1507 Winchester came up as “New” with approx. $10K price reduction. They thought they were being clever, I guess, in not posting any pictures of the outside of the house.
This is actually the second price reduction for this house, since it started around $928K, then dropped to $918K. The agent has been the same for all three prices (i.e. not a new agent today). Before that, in February, it was very briefly listed with One Percent Realty for $820K.
I assume the agent of a buyer would have access to the listing history. So, who do they think they are fooling? I know it doesn’t look good to have your house sitting on the market, but maybe there needs to be a lowering of expectations rather than being deceitful. A house did sell up the street for $1M a few months back, but it was in nicer shape.
Thanks for the numbers. Things seem a little slower but not the dramatic change some people where hoping for. Some might argue that while it is not a red hot market it is still a pretty strong market.
It’s really fascinating watching the market react to things. I thought economics was so boring in high school and now I seem to follow it daily almost for fun. Almost.