Tidbits
Well the democrats have won back the house down south. That should restore some measure of stability (stable like a lame duck) and take out some trade risks to our economy going forward. Even though it will be feather in Trump’s cap, I suspect NAFTA V2 will get ratified regardless and our central bank will be able to finally stop fretting and keep on their interest rate raising path. It is interesting to see the divergent interpretations of how strong our economy really is though, with some more convincing data coming out that cracks are starting to appear due to the credit tightening that has already happened, as mild as it was.
On a more local level, here are a few updates on construction and debt in the Victoria market since they’ve been making the news recently.
Construction
There’s been a lot of chatter about construction slowing down in Canada, and that is true for the nation as a whole. The problem is that in a center as small as Victoria, construction starts are extremely volatile month to month. One big project starting or not starting will swing monthly numbers wildly. Comparing one month year over year is completely useless. You want to look at at least 6 months of data to get some kind of usable data on starts, and that shows construction starts continue to creep up even as the number of units under construction rises to record heights and the billboards scream for carpenters, heavy equipment operators, and anyone capable of lifting a 2×4.
So the level of construction is not down yet, but when I talk to the GCs in town there is some rumbling about a weak looking pipeline. The projects they have ongoing will keep them busy for quite a while out but this is likely peak construction. Of course a global slowdown could threaten even existing projects (like in 2008) but a flattening of prices seems to be putting a bit of a damper on enthusiasm for new developments. However I suspect that once the private sector projects start taking a breather we will see some of the affordable and university housing projects get moving. That should sustain the industry for a few more years although not likely at the same record levels as today.
To see how extraordinarily high this level of construction is, just take a look at the stats going back to the late 70s. There are three times as many units under construction as 3 years ago, and some 40% more than in previous peaks. As you can see from the chart above, we haven’t actually seen the impact of most of those units becoming available yet as they work their way through the pipeline.
No wonder that unemployment took a nosedive starting in 2016. Guess where those people are working?
Debt
A few articles ago I posted this chart from the CBC about average debt levels by city in Canada. Turns out that chart is somewhat misleading, since it shows average debt levels for people that have that kind of debt. That’s fair enough, after all it doesn’t make sense to spread mortgage debt over renter households or owners without a mortgage (40%). However it does mean that the different types of debt (mortgage, heloc, consumer, auto loans, etc) cannot be added up to get one total average debt number, since the populations that hold those debts are different. For new and existing borrowers, the picture looks like this:
I’ve dug a bit deeper into those debt statistics and found some other interesting tidbits.
- Renewals with a new lender were down by 20% in 2017. Impact of the first version of the stress test keeping people with the same lender? Will be interesting to see 2018 data.
- Multiple mortgage applications up 20% in 2017. Refinances up 9% as well. Likely some equity extraction going on there from the price runup.
- Average mortgage payment is $1530/month which implies an average interest rate of 4.5% on a 25 year amortization. Seems high, but that could be due to second and private lenders charging higher rates.
- Percentage of marginal borrowers (credit score under 660) is lower than most cities, at just over 8%.
- Average auto loan payment is $468/month. Almost a third of the average mortgage payment! Y’all be crazy.
A rising rate environment will really expose those borrowers that are living on the edge like we haven’t seen for a decade. Nothing in the data overall is particularly concerning on its own, but when the tide goes out we might be surprised about who’s stuck on the beach.
New post
https://househuntvictoria.ca/2018/11/13/nov-13-market-update/
Caveat – I agree. I was back in my Ontario hometown recently and realized I grew up in a neighbourhood of ~3000 ft2 lots. Dense sfh’s and duplexes; these desirable old brick homes now sell for over 1M usually, and make for fantastic communities. Kids walking to school, etc.
Victoria would be very pastoral still if large lots were never carved up into smaller lots.
My subdivision is called Fairfield Farms, because it replaced a lovely farm. Why was carving that farm up into 5000-20000 sq ft lots OK, but subdividing a 20000 lot now not OK?
Very alarmist. Personally I find Cook Street Village quite pleasant, not at all like a tumour that needs to be cut out and removed from Victoria lest it metastasize
At the rate things happen in Victoria it will be more like 2500 years.
Very few of them. Although the data feed on collapsed sales is not available outside of the internal board office, I sometimes watch how the pending sales change in past months. Out of two to three hundred sales, I’ll occasionally notice one drop out. So fractions of a percent.
The issue is that backing out of sale is such a bad idea for the purchaser that unless they really cannot complete (don’t have the money) then it is almost always better to complete. There have been a number of high profile cases where someone bought a property (unconditional contract), then the market dropped and they failed to complete. They were then taken to court and forced to pay the difference in the eventual sales price, sometimes tens or hundreds of thousands of dollars and they have nothing to show for it.
Really I can’t imagine a scenario where it would be better to back out than buy and make the best of it.
It depends on the zoning. In my zone (R1-G), you’re only allowed:
7.6m in height and 2 storeys if the single family dwelling does not have a basement; and
7.6m in height and 1½ storeys if the single family dwelling has a basement.
I have shallow rock so decided not to go the basement route and instead put in an attic. The city was not amenable to allowing an additional half story and so my max attic ceiling height is 5′ (which classifies it as a crawl-space).
I just got my final survey certificate through the city and managed to hit 7.58m height.
A sale is recorded as a sale when the conditions are removed. How many of these don’t complete? In Vancouver and Toronto there has been an increase in the amount of sales that haven’t completed after removal of conditions. Wondering if there’s a similar affect in Victoria
If you start encouraging people to tear down their older homes by allowing even more homes to be built on a piece of property this inflates land prices and encourages speculation
We clear cut from Langford to Sooke so everyone can be on a 6,000 sq/ft lot?
I think we can all agree that the population is increasing and there isn’t a massive number of vacant homes/condos/apartments in Victoria that can be tapped into; therefore, whether it be apartments, condos, or SFHs we will need physical shelter for people going forward. People don’t want high-rises, ok. People don’t want more density in SFH neighbourhoods, ok. People don’t want clearcutting Bear Mountain style, ok. Where and what do we build?
It is pretty evident that duplexes, for example, are cheaper than SFHs, for example -> https://www.realtor.ca/real-estate/20056375/3-bedroom-condo-1-1757-newton-st-victoria-jubilee
If you rezone something from one unit to two units the value of the property goes up; however, the two end-product units for sale will be substantially cheaper to buy than one end-product unit.
A lot on Roseberry recently sold for $565,000. Brand new house approx $1,300,000.
If it allowed small lots, for example, and the value of the lot went up to $700,000 two skinny homes wouldn’t be $1,300,000 each. They would be like $899,900 at most.
Long story short.
Three stories = 300 m2 and to meet height requirements (if building a half decent house your top two floors will be 9′ ceilings) your basement will be buried underground and most likely depending on the street you’ll need storm and sewage ejection pumps. This is a complex build (excavating, water management, sewage pump for basement, etc.). I would go this route if doing a forever custom home. Personally, I would also throw in a 600 sq/ft garden suite and then after occupancy I would turn the basement into another two bedroom suite. You would be all in for around $1.3 million in an area like Oaklands but with $3,500 in rental income. So on a monthly cash flow basis $700,000 and you are living in a brand new 2,200 sq/ft upper two floors walking distance to downtown.
Two stories = 280 m2 and you get away from substantial excavations and the mechanical systems. You have a slightly smaller yard as the footprint is bigger. I would go this route if doing a spec build. Specifically suite above the garage.
Sidekick, in my last post I used the word ‘floor’ when I should have used the word ‘story’ I should have said: “In Victoria, basements do not count as a ’story’ if they are less than 1.2m from average grade to finished basement ceiling (look at the diagram in the definitions). The takeaway is you can build a house with a basement and two stories for a maximum of about 3200 sq ft. In the COV the very first level can be either a crawl space, a basement, or the first story… it all depends on how the space fits in relation to the average ground level, the overall height, and the distance between the average ground level and the finished ceiling. Every municipality has a variation of this methodology.
There are lots of rules to follow when calculating floors, stories, basement, etc but they are mostly understandable after initial confusion, and they do confuse most people at first. Double check everything with the COV officials. The COV has some good staff who will answer your specific questions, just walk into city hall, no appointment is needed. It’s the same in all municipal offices, just walk in.
In COV you’re allowed a Basement plus two Stories, and the total floor Area for basement and both stories is about 3200sqft.
COV Zoning Regulation R1-B
Here is a link to the COV R1-B zoning regulation which covers the majority of houses in COV.
https://www.victoria.ca/assets/Departments/Planning~Development/Development~Services/Zoning/Bylaws/1.2.pdf
Any word underlined in the zoning regulation will have a legal definition defined in the following Schedule A Definitions.
COV Definitions
Here is the link again to the legal definitions
https://www.victoria.ca/assets/Departments/Planning~Development/Development~Services/Zoning/Bylaws/Schedule%20A.pdf
The key definitions to read are: basement, story, crawl space, Area (in relation to floors) and ‘Half Story’
It’s worth noting that in addition to the maximum floor space of about 3200 sq ft, you get extra ‘free’ space of about 400 sq ft for an indoor vehicle parking space; crawl spaces are also ‘free space’ although technically you’re not allowed to use crawl space for storage, but everyone does.
If your lot is not amenable to building a basement then apply to COV for a variance to build two and a half stories. The ’Half Story’ is the area under to roof. See definition for ’Half Story’. The COV rarely deny variances for an additional Half Story, but again, you can’t exceed the total floor area of about 3200 sq ft.
If you need clarification of any of these points ask the COV officials, I’m not an expert, I just got this information from COV when I was contemplating building.
Something I noticed when moving here from Alberta is that primary care seems to be through walk-in. I’d never experienced the sheer number of walk-in clinics with long hours day in and day out in Alberta. Walk-in clinics, where I lived, tended to run after doctors regular hours so you knew to head over at 5pm if you needed to see a doctor that same day. When I talked to my friend who moved here about the same time I did, she said that the remuneration here in BC favors walk-in over office visits. I know of doctors here who ONLY do walk-in hours and on a casual (couple days a week) basis. Something that differentiates BC from AB is that BC has a patient billing cap:
Ever wonder why walk-in clinics close early?
https://www.cbc.ca/news/canada/british-columbia/get-rid-of-daily-patient-cap-says-b-c-walk-in-clinic-founder-1.3945412
Is it just me or are there more houses for sale for under $1m in OB/Fairfield than I have seen for well over a year.
Not exactly correct. In Victoria, basements do not count as a ’floor’ if they are less than 1.2m from average grade to finished basement ceiling. If the average is greater than 1.2m then the ‘basement’ is considered the first floor. Victoria has a limit of two ‘floors’ plus basement. In other words, in Victoria, ensure there is less than 1.2m distance between grade and ‘basement’ ceiling, however you still can’t exceed the maximum sq ft area of about 3200 sq ft.
You sure about that LeoM? When I look at the zoning bylaws I see most have the following type of statement:
c. Floor area, of all floor levels combined (maximum): 300m2
https://www.cbc.ca/news/canada/british-columbia/bc-doctor-shortage-medical-fees-1.4100251
Did you look at the link from RenterInParadise?
Yes, I did factor that in and it’s too small to make a difference. There are estimated to be 300 hospitalists in all of Ontario. http://rorrhs-ohhrrn.ca/index.php?option=com_content&view=article&id=350%3Aassessing-the-prevalence-penetration-and-performance-of-hospitalist-physicians-in-ontario&catid=10%3Alatest-news&Itemid=8&lang=en That would translate to about 10 here in Victoria – representing 1.3% of our family doctors. . And no reason to believe that we have more hospitalists than anywhere else. Keep in mind that hospitalist is a fancy name for “house” doctor, which is traditionally a junior position for a young Doctor.
Moreover, we have 40% more Docs here in Victoria than Alberta has Maybe partly because we need more Docotrs to take care of Alberta seniors that have retired here. (At great benefit to our Victoria economy – see my other post on that !
Did you make sure to factor out those GPs who are “hospitalists” or don’t maintain a regular office & staff? There are quite a few here in the region.
https://www.cbc.ca/news/canada/british-columbia/bc-doctor-shortage-medical-fees-1.4100251
A friend of mine here is a GP and her gripe with the system is remuneration. It is out of whack and does not encourage GPs to open up offices here. It’s not seniors who are the problem but an out-dated remuneration system.
No, the net cost of Victoria seniors healthcare is a big positive for Victoria.
Health care is an industry, and a good one for a city like Victoria to have. A huge influx of seniors to Victoria with high health costs would be a great thing for the Victoria economy, not for the rest of BC though. This is because health care dollars get spent locally, and are paid for by the province (and the ROC via the Canadian health transfer). Since greater Victoria population is only 7% of BC, when a BC provincial dollar is spent, Victorians only pay 7 cents of it, and only 1 cent on a federal dollar. The value of $1 spent by province on healthcare in Victoria is worth much more than 7 cents to Victoria.
It’s no different from other provincial govt spending, which benefits Victoria if spent here.
You should expect a growing Victoria health care industry to be a big positive for RE too. More doctors and other health care professionals buying expensive RE here, all paid for by provincial dollars that only cost Victorians 7 cents in provincial tax. If you’re renting, it’s likely not good news though, as it would mean more competition for renting or buying houses.
It is abhorrent to suggest that South Fairfield residents would every accept being lumped into one giant “Fairfield” megalopolis.
I think it is a bad idea to allow even more single family homes to be built on larger lots. This creates the bulldozer mentality like in Vancouver where all the older homes are torn down to make way for multiple multi million dollar mansions. I was driving by San Juan Ave the other day and saw a home for sale on what was formerly one lot with an old home that was subdivided in to three lots with new homes. Look at 4168 Sierra Park Lane. 2 million dollars. The other two will probably be the same price. We’re not talking about beach front or even ocean view property. These extra homes being built on this lot I think create more damage than good. This will increase land value around the area so that those older homes that may have been affordable now become unaffordable. I wasn’t surprised to see an application for a subdivision on the property right beside this one. If you start encouraging people to tear down their older homes by allowing even more homes to be built on a piece of property this inflates land prices and encourages speculation
Another side effect of BC’s property tax regime, which encourages people with income elsewhere to buy BC RE. Wealthy immigrants get the most attention, but retirees probably account for a higher net cost.
Rent a room. Freedom of movement (which is guaranteed in the Canadian Constitution by the way) does not mean that anyone has an obligation to provide you with accommodation at a price you dictate.
The reason it is so hard to get a doctor here is due to our high senior population. They typically are larger users of a doctors time and therefor the doctor can’t take on as many patients. In Alberta there is a younger population and don’t typically have as many visits or as complex.
Here is something to think about. When your working you pay the most in income taxes and less when you retire. Alberta gets the tax dollars from there younger population for there health care when people are working. Because BC is a reitirement destination we miss out on those tax dollars but also have the burden of supporting those seniors with there higher healthcare costs arise later in life.
I wouldn’t be surprised if Fairfield split off from Victoria to become it’s own city…
Too bad I wasn’t at the party as I could have challenged your premise. Because Victoria has many more family doctors per capita (186) than Alberta as a whole (123) , or red Deer specifically (124) *
This doesn’t answer the question of why it’s hard to find a family doc here, but it’s not because there aren’t a lot of them because they stay in Alberta for 20% higher fees
Moreover, Greater Victoria has 673 Family docs for 360k people, which is 186 per 100k people, and is well above Alberta (123) and Red Deer (124 fam docs for 100k population)
https://www.cma.ca/Assets/assets-library/document/en/advocacy/13cma_ca.pdf
IMO, the reason it’s jard to find a family doc is that the average number of visits per patient has risen, and is at a huge level of 6 per patient per year. Doctors fee schedules should be altered to encourage seeing new patients rather than seeing the same patient repeatedly for routine issues
Caveat said: “Here is an example of a large urban village that has people outraged.”
The salient point that advocates of Large Urban Villages always neglect to mention is that Large Urban Villages are a cancer that spreads to immediately adjacent areas first, then spreads further into the SFH neighbourhood. And this is exactly the point that city officials hide, they never mention the ’Large’ designation means the Large Urban Village will spread rapidly. When city officials are confronted with this consequence they admit it, but downplay the effects. That’s the very definition of deceitful.
Using your example of the development at Moss and Fairfield; the consequences of designating that location a Large Urban Village is that the other small village at Moss and May will be then be designated a Large Urban Village, then those two Large Urban villages will grow and merge, then they will merge with the Cook Street Village. The end result for this part of Fairfield will be one Huge Urban Village of 4, 5, and 6 story luxury condos replacing all the SFH in this neighbourhood over the next 25 years.
This is Helps et al deceitful plan, she is even on record stating that residents of Fairfield are all in favour of densification and large villages, which is untrue; in fact at every opportunity the local residents object en masse.
Yep, $116K BELOW assessment in Golden Head is a new record. Watch the rest follow.
Rates are going up 4 more times at least plus general inflation costs are going to cramp many a lifestyle in a hurry.
Yes.
You should lobby Oak Bay to help the new mayor elect enact his proposed housing policies designed to help out people like you (see the proposals below)
You’d also have good reason to lobby Oak Bay, because they had no net new housing built from 2011-2016 , in fact 20 fewer housing units total.
Here is the Oak Bay mayor elect Murdoch’s web page outlining a new, comprehensive, ambitious, “holistic” housing policy for Oak Bay.
. https://www.murdoch4mayor.com/policies
(scroll to densification section )
“The goal needs to be housing options that meet our (Oak Bay) community needs. This includes changing from depopulation to community growth, creating ownership and rental options for all life stages, and supporting commercial centers… all with a plan and regulations to allow those housing options to be built“
“Planned development will avoid the uncertainty, unevenness, high costs, and conflict that has developed under our current spot-zoning process, and will provide alternatives to the current trend of small single family houses being replaced by large single family house”
“This approach to planning: holistic, thorough, fair, and transparent, is the best possible way to incorporate new housing options while maintaining the unique soul of Oak Bay that has drawn us all here.”
Talking to a psychiatrist at a party last night.. he is practicing out in Red Deer. I asked him why he figures there’s such a shortage of GPs here and his perspective was that they can make 25% more over in Alberta and living costs are significantly less so unless you’re big into surfing or have family here he didn’t think it made sense.
I wonder if we might see more established physicians come here eventually. Make more money elsewhere and pay off debt aggressively when young and then come.
I think these new clinics will be the answer https://www.timescolonist.com/opinion/editorials/editorial-langford-clinic-just-a-start-on-the-crisis-1.23484468
Yup, they are full of shit… It is fire sale time.
LOL
edit
LOL x2
Living where you want is a freedom we all should have?
I want to live in the Uplands, but my bank account doesn’t allow me that freedom. Should I lobby Oak Bay to upzone the Uplands?
A new trend starting ? Looks like it.
4017 Magdelin St slashed $85K down to $695K which is $116K below assessment. In decent livable shape for Golden Head.
Nice place in Cedar Hill at 1530 Stockton Pl with a 1 bed suite a $1K below assessment.
I don’t buy the BS that buyers who are desperate can’t find a deal out there. I can list off several more.
Here is an example of a large urban village that has people outraged.
https://vibrantvictoria.ca/forum/index.php?/topic/5862-fairfield-unity-commons-fairfield-united-church-rentals-commercial-proposed/page-5?hl=fairfield#entry439094
Bear in mind that none of the other four corners (there are five corners total here) have SFH.
“Let’s go back and consider why more people in a city is a good thing. ”
Because it’s a good thing that people can live where they want. That’s called “freedom”.
Large urban village might sound scary to those that don’t follow this stuff, but it is just a COV zoning. For example they want to upzone the old church on the southeast corner of Moss and Fairfield to large urban village and then build a very modest sized apartment block there. Zero impact except to the immediate 25 metre radius neighbours. Structure no higher than the church.
Big deal! But apparently enough to get some folks outraged
Let’s go back and consider why more people in a city is a good thing. Other than to prop up for a few more years the unsustainable economic system we’ve got, more people in a city is not a good thing.
VicInvestor1983; that’s a great idea to build 4 SFH, each on a 5000 sq ft lot. It would also be good to add a suite to each new house, and an AirBnB room, and a small garden suite on each lot too. But it would not be ok to build an apartment building on your big lot in the middle of a SFH neighbourhood unless your lot is on Shelbourne or Cook or Hillside….
If your big lot is on a corner you could probably fit 5 lots of 4000+ sq ft each. Nothing wrong with that.
@guest_51661
What about allowing more SFH lots by allowing subdivision of large lots into small lots for single or duplex housing? I live on 1/2 acre and see no need for my large lot in the long run. If the city allowed subdivision into 4 lots (5000 sqft each let’s say), I would make a good profit and 3 extra families can live on the same land. Why is this bad?
VicInvestor1983: As I said, near downtown is ok for densification. The reason is simple, that land was already zoned for density or commercial or parking lots or was adjacent to those properties. On the other hand, invading a SFH zoned neighbourhood to change zoning from single family to high density impacts every homeowner who bought into a SFH neighbourhood. Density has its place, but that place is not in the middle of traditional SFH neighbourhoods and the COV nefarious attempt to invade SFH neighbourhoods by upzoning small neighbourhood villages to large urban villages with rapid densification is nothing short of deceitful.
Sidekick said: “In Victoria, basements do count..”
Not exactly correct. In Victoria, basements do not count as a ’floor’ if they are less than 1.2m from average grade to finished basement ceiling. If the average is greater than 1.2m then the ‘basement’ is considered the first floor. Victoria has a limit of two ‘floors’ plus basement. In other words, in Victoria, ensure there is less than 1.2m distance between grade and ‘basement’ ceiling, however you still can’t exceed the maximum sq ft area of about 3200 sq ft.
All these rules are online for every municipality.
https://www.victoria.ca/assets/Departments/Planning~Development/Development~Services/Zoning/Bylaws/Schedule%20A.pdf
@guest_51661
Can you logically explain to me why densification is bad?
In Victoria city basements do count. There is a hard cap on square footage in some of the zones. In OB it used to be that floor area 1M below grade did not count towards the floor area ratio (not lot coverage).
As a former Banker, I agree with Leo and think it won’t impact that many people. Currently if someone was purchasing another home and was taking equity from a LOC we already factored that in to the mortgage calculation. So basically people will just have to reduce limits or close them entirely if the application calls for it. Probably not a deal breaker for most people who are focused on buying another home/rental property.
Where this could be potentially more impactful is if it applies to unsecured locs as well. If you have a 30,000 unsecured LOC do they factor that in as well? I know a lot of brokers who would get a client who didn’t have either enough down payment or ANY down payment (but otherwise qualified for a mortgage) and still get them approved. The work around for it was to get that person to get a gift letter signed from a family member. Basically the letter just says the family member is gifting them the down payment and it didn’t need to be repaid. No further proof required from the lender – end of story – that was all they needed for a down payment. In reality the buyer would get the letter signed then pull the 30K off their LOC and use it as the down payment knowing the lender wouldn’t do post credit analysis after approval is given. A lot of brokers direct their clients to do this.
So i’m curious to see if they say anything about that type of lending.
New video from Steve Saretsky on the new HELOC policies about to be implemented. He believes it may be an “underappreciated” change. One things for sure, it certainly changes the dynamic for those who use it to fund their lifestyles or buy additional homes…
https://www.youtube.com/watch?v=s0Kbz2XbH5o
@ SweetHome
If you are only building a two level home you are better off building both levels above ground.
Basements cost a lot more due to the excavation & trucking up the malahat to dump the fill, concrete & steel to pour the foundation
Not to mention if you hit rock and have to blast !
Why do basements ? Because it will not go against your lot coverage ratio if its 5’ below grade, so that means free sq footage
Dasmo
Thanks for the insight on your project ! It really is hard to get a solid budget down when the price of materials fluctuates so much, as for the management of it we are acting as GC, so we will have no one to blame but ourselves !
Awesome job on the blog and a great looking house you have built 🙂
I’m a complex guy LeoS, I try to see all sides without too much bias, although bias is difficult to ignore. I am against densification in residential SFH neighbourhoods, but close to downtown is ok with me. I really object to Lisa Helps and others on counsel trying to enlarge small community villages into large urban villages were high densification will encroach into residential neighborhoods. If the city wants densification downtown there is not much wrong with that concept, however the developers should not be saddled with paying for affordable housing to satisfy a politician’s election promises, especially when those same developers have already been extorted huge sums under the guise of amenity payments.
Also, I disagree with you that Helps understands. I recently had a personal one-on-one conversation with her on this very topic and her comments left me bewildered and I left the conversation believing that she only has a surficial understanding of real world construction economics and practices. Also, she is known around city hall to leave every meeting about the next big luxury condo project with the comment, “Well that project sounds good to me!”
Helps has a pretty good idea, but yeah I would agree that the newly elected ones don’t. Hope they learn quickly. It is interesting that before you were advocating against aggressive plans for densification, and now you’re faulting them for policies that might inadvertently discourage new developments.
Someone mentioned that at the next election vacancy rates will be up, prices might be flat or down, and council will declare victory on affordable housing 🙂
About 27 condo sales last week
Same week previous years:
2017: 46
2016: 35
2015: 34
2014: 19
2013: 20
So halfway between 2015 and 2014 level of sales.
Haha. Exactly the same thing was happening in the early 80’s when the City was debating mandating X percent of housing to be “affordable”, or as it was referred to at that time, “below market value”. These types of conversations are usually symptoms, not solutions. In the end at that time, that’s not what solved the problem, and neither did all their acrobatic conversations among Cabinet members about meddling in the rental market to ensure rent prices stayed “affordable”. Once prices corrected, interest in those polices nosedived and the conservation was moot for a long time.
The resolution to unaffordable housing has always been just that – unaffordable housing. We’ll get there one way or another.
Ok Barrister, back to the housing market.
Looks like the socialists at Victoria City Hall got a taste of reality from the local developers when the socialists tried to offload the cost of affordable housing onto the developers. This one example shows that Victoria’s elected officials have no comprehension of the basic economics of construction process or construction costs. The socialists proposal to immediately impose a requirement that 15% of units in new Condo buildings be ‘affordable’ is absurd because at this stage the developer has finished the feasibility study, secured financing, determined profit margins, and decided to proceed. A last minute requirement from the city to sell 15% of their units below building cost would totally ruin their feasibility study and jeopardize their financing. Socialists like the crew at Victoria City Hall will ruin the economics of the current building boom. Their tactics are just another tax on the building industry and another reason that $1,100 per sq ft will be the new normal for new condos.
https://www.timescolonist.com/real-estate/victoria-council-eases-affordable-housing-stance-amid-backlash-1.23492596
Interesting tangent.
I figured consciousness in machines, whatever that means, is a long way off. Human thought is more than the sum of its parts in part because it is a slow, but massively paralleled, analogue processor. 100 billion neurons each with a tonne of dendritic connections all working with billions of other cells, all at the same time. The emergent property, is consciousness.
In computers, this is almost inverted. The information is processed linearly and digitally – 1011010001010101001. So while a supercomputer might run 200,000 trillion calculations per second, at each given instance in time though, it is only processing 1 binary calculation*. The human brain might run at a lousy 20-25 MhZ, but it’s billions of impulses of data all being processed at once.
Imagine if you had 100 billion neurons – or 100 quadrillion – but only one neuron could process information at a given instance. That wouldn’t sustain basic life processes, let alone consciousness. Your couldn’t process your environment, make music, have an intuitive conversation or see Barrister get angry when the topic strays from real estate. Even with multiple cores, or neural networks, our machines still don’t come close to the breadth of what a human can process. This is why they don’t have intuition, aspiration or feelings.
Keep humanity in perspective. Hell, most of the energy we make as a species is made by digging up and burning dead plants and animals – we’re not sophisticated enough yet to build conscious machines.
*not correct in a supercomputer, NN, or multi cored system, but the end point is the same.
The housing market is so sleepy that we are now talking about AI.
The connected collective AI mind won’t need consciousness. It only needs to “decide” that self preservation is paramount and we will be in trouble. If there is consciousness then that might mean compassion or reason. Deepak could sway it then. Pure self preservation without a soul…. I think LF has the idea….
Seems every era has some great technological leap in the making that promises to disrupt or upend the way we live and make a living.
I remember the utopian visions of the dot com era. Before that (I wasn’t alive but whatever) was the promise of the atomic age – free energy for all! And here we are in 2018 still driving to brick and mortar grocery stores in cars powered by internal combustion engines, heating our houses with fossil fuels and grinding it out 9 to 5 Monday to Friday.
Change happens, but it’s rarely complete. I doubt it will be different this time.
So true. I was involved in AI in the 80s and it was true then, and sadly is still true today. Many of these “AI” systems are one-trick-ponies. Many are more like expert systems that AI purists wouldn’t even consider to be AI.
Lets just say it was an average size build.
As for basements, I’m not sure how they’re priced (ours is a crawl space). With the highly restricted building heights here, you do often give up some ceiling height to have a full basement. I was recently in Ottawa and was reminded of how much taller inner city sfh zoning is in Ontario – just about every house is a 3storey.
Follow up by Josh Gordon.
“What you’ll notice when you see people try to minimize the role of foreign money is that they fixate on “foreign buyers”. (We’ll call these people “minimizers”.) When they do this, they want you to focus on the nationality of the buyer, or sometimes their residency. In other words, they emphasize stats about foreign citizens purchasing housing, which the B.C. government now collects, or “nonresident” owners, which Statistics Canada has collected for Toronto and Vancouver.
The problem is that these stats only capture a small part of the foreign ownership that’s happening in Vancouver. This means that those stats are misleading.
What matters is where the money comes from. Foreign ownership, properly defined, is “ownership primarily based on foreign income or wealth.”
Full article here:
https://www.straight.com/news/1162801/josh-gordon-vancouverites-dont-need-re-education-about-foreign-ownership-and-housing?fbclid=IwAR0pOw_deRE7xCoJwCmV7mzuDLg3DLzo4aQ8cqqEcZl1vByQ9-bCuOmXj6Y
@LeoM
Rather scary.
Artificial intelligence will change rapidly, in the near future with new neural network integration based on Professor Chua’s memristor. Memristors are the electronic equivalent of neurons and synapses. Nanoscale neural networks already exhibit learning and memory effects with high integration density and scalability.
These AI brains will be able to evolve themselves, independently and rapidly, without any human intervention. They will also have the ability to create massive links between many memristor ‘brains’. A bit spooky to me, sounds like the Borg, but now that scientists have working microscopic memristors in production, it’s just a matter of time.
Current AI is nothing more than powerful computer code with no real learning ability, current AI just mimics learning and reasoning. Memristor based neural networks will likely have much more advanced natural abilities to reason and learn. The next big question is will they have consciousness.
After review, I see now that Hawk didn’t bring up “the topic.” I was wrong, and I want to apologize.
@guest_51781
Thanks for the building cost info and for clarifying how the garage/deck fit in. Depending on your design, maybe you can answer how basements are handled? I have wondered if, for example, you build two levels with 1400 sq. ft. on each level, but the lower level is mainly unfinished (maybe just concrete floor, laundry, and roughed-in plumbing), does that save a significant amount? I’m just never sure when someone says “X” amount of finished square feet, what that actually looks like on each level.
Too early to tell. Will check back later in the month.
But that’s coming off the presumed stress test rush. Any sense on how it compares to the 10 year average?
They are basically nowhere in this though, and you don’t make a generalized AI from combining a bunch of specialized AIs.
Gonna be a very big YoY drop in condo sales in November.
For what size house?
I agree for all specialized AIs. Once they figure out a generalized AI all bets are off as it will likely self-improve beyond our capability very quickly once it has the ability to learn.
Buyer origin data is based on the buyer’s agent’s response to the following question:
“Where is the buyer currently residing?”
Different agents will likely interpret that slightly differently but that is the question.
As for your deleted comments, I appreciate your contributions to the blog and don’t like to delete things, however I believe I was clear that I needed that particular line of discussion to be dropped. It wasn’t and I don’t have time to watch comments all day so I had to put you in the moderation queue. That has now been reverted. Sorry about that.
We completed our build in Saanich this past summer. It took a year. Original estimate: $215 per sq ft. Final price: $292 per. That included about $40k of demo and remediation costs. To our builder’s credit, once we got the itemized budget, they stayed within 5% of that, and actually most cost overruns were our choice. The problem was that we had to make a $50k deposit before getting the itemized estimate…there was a slight heart attack moment when we got it. They did a good job gauging the ballooning costs after that.
The other problem is that decks and garages aren’t usually considered in the square footage of a house, but they’re not free. So we were assured that we could have gotten close to the original amount if we somehow excised those from our plans.
In government, Straw Man is politically incorrect so they call them Straw Dogs.
Damn! I could have chosen StrawMan as my user name … is it too late to change???
Skynet and T-800’s?
AI is going to creat defence jobs since the connected car that is linked to the net and to other AI’s and that has the notion of self preservation in it will eventually become self aware and then…well…we know what happens then….
I’m kind of split on this. Remember in the mid-90s when the conversation about computers is that they’re going to be so ubiquitous and streamline so many processes that they’ll take all our jobs? Didn’t happen. It created more work since people were capable of getting more done, while several new industries were created. I feel like the same will happen with AI.
Totally agree. The writing is on the wall for those who don’t have their heads in the sand. My spouse’s niece is in grade 12 this year. My spouse, who is highly-educated in a STEM field, has tried to casually suggest those are good areas for her to look at. Her mom, a life-long clerk without a university education, interrupts and says, “Oh, she doesn’t like math, she’ll do something in the arts.” Of note, she has not shown any particular talent in any arts-related area.
Things have worked out alright for my in-laws, but their house has appreciated $550K since they bought it, and the husband was lucky to get a job for the government. Things are going to look a lot different for their kids. At least the niece is working in retail now at her first job, so maybe she will clue in that she doesn’t want to be doing that when she is 50, assuming that job has not been replaced by AI.
I get that. I’m a developer, I’ve been offered work in SV for over $150k and would not take it. I know lots of people who work in SV as developers. I wasn’t comparing Victoria to Silicon Valley. I was comparing it to some mythical place in a hypothetical.
Victoria is the smallest place I’ve lived. I consider it just barely city-like enough to be enjoyable. I don’t see that changing.
Listen dude. I’m trying to get the bare minimum property that I can raise a family in, for a price that I can manage. I posted once about why I like James Bay / Cook St village – my consideration is everywhere south of Mckenzie Ave. Ever notice that the only places with affordable 2+ beds south of McKenzie are in James Bay and Cook St village? Mind-blowing, I know, what an astounding coincidence! Ottawa is where my wife and I are from, we both would have a lot of friends and family there, and my current employer is there. It makes sense. Good god.
Yes that’s true, but won’t it hand cuff anyone with an existing HELOC who needs to increase the amount due to increasing costs on say a potential condo pre-sale and gets a surprise at the end like so many do ? I could think of lots of other reasons why one would need a HELOC raise which would mean reapplying under the new rules even if they haven’t used it yet.
Leo, I object to comment #51800. Please censor it.
Speaking of tech industry, VIATECs report came out a couple weeks back.
https://silkstart.s3.amazonaws.com/ad2e2c08-5458-4c6f-8c3f-0d54e98dfb06.pdf
The HELOC change is interesting. I see it as more of a precautionary change that will prevent runaway HELOC draws in the future. The effect is that HELOC limits will be reduced, but won’t change anything for someone with a given balance. Good thing, prevents people from kicking the can down the road too far if they are living beyond their means.
VC money is god in Silicon Valley. It flows like a fire hydrant there and every developer worth a damn can move there and start making $120k working on something completely unprofitable, for 2 years. Then it’s either time to get acquired or file for chapter 11. When the VC money dries up, the RE and rental markets are hit. I don’t know of any other place that has a market force of nature like that. Maybe Fort McMurray and oilsands investments. Point is, Victoria is not Silicon Valley and comparing them is a bit silly.
Meanwhile new HELOC rules will crush the heavily borrowed and wannabe property kings on the hook for their second homes. Don’t think many borrowers can afford $1300 a month extra credit without a major and painful life change.
Got a HELOC ? Your Mortgage Options Are About to Shrink
“Banks are tightening rules significantly for those with a HELOC who are applying for a new mortgage (and not closing their existing HELOC).
Here’s what’s changing
Take the exact same scenario as above, but now assume the lender makes you prove you can afford a payment based on your HELOC credit limit.
Even though you might have a zero balance, the bank assumes you might use all of your available credit. It therefore adds a hypothetical $1,334 a month payment to the debts on your mortgage application.
As this chart depicts, the impact is momentous:
https://www.ratespy.com/got-a-heloc-your-mortgage-options-are-about-to-shrink-11067208
Wait, what? At Hawk’s request, you’re censoring my inoffensive factual statement that said Hawk brought up the objectionable topic first?
Come on, Leo.
Thanks LeoS, but it shouldn’t have said “to keep the peace”, it was an outright lie.
NIGHT AND DAY
Garth’s ego brooks no criticism.
Leo S apparently has healthier self esteem 🙂
Friend of mine just bought a townhouse in Gordon head for around $550k..
On the one hand, that is what a house cost there 5 years ago, on the other hand that same townhouse sold for $210,000 in 1992. An increase of 3.8%/year over 26 years or 1.9%/year after inflation.
Agreed. Going to be very interesting how long this rate of construction is sustained. Market slowing but interest in more supply from government is growing.
Just from a social interaction standpoint, as an introvert, I don’t think I would ever take on an owner-build.
It’s a sad day when censorship has to happen.
But I’m sure it not as bad on here as it is on GreaterFools.
https://www.greaterfool.ca/2018/10/18/careful-9/
Wow! That’s a lot in upfront fees Vic! View Royal (pronounced like: RoyAl with cheese) has it’s advantages. No surprises on that front. There were no other surprises like running into a burial ground or a buried oil tank. I didn’t change major things on the fly. Really it was the GC underestimating costs but that underestimate was pre boom. During the course of that boom prices for materials and trades spiraled up and fast. Then there was inefficiency both with material use/waste and labour. Engineering caused added expense too since the builder didn’t budget that much steel in the concrete (twice as much as he had ever done) plus other added beefyness throughout. For some reason once you overbuild engineers want to over engineer your overbuilt building. Better that than under building the design so I at least appreciated that they took my project seriously and irritated the builder in not letting them take shortcuts. So they get my thumbs up.
Bottom line is it was part unavoidable with construction costs going up 10% a month while I’m building. The other part was underestimating at the start. Then it’s the management throughout. In the end I was there every day for at least two hours. Sometimes working there like when I had to paint the siding that we were shorted. So I believe I actually kept it from being worse. It just meant that the workers hated me… I know I kept it from being worse since I caught them charging me PST on top of the PST they already included in materials (not actually removing it as they said). They did refund that amount in the end. Then again that’s a criminal offence so not much choice there.
Sounds reasonable. With our current 3%* build rate, we won’t have to wait long to find out the answer!
LeoS, if you are going to delete my posts, would mind deleting #51746 ? It was what fueled my latest replies and only defends that poster’s ignorant comments.
I completely agree. The problem is that it won’t happen because builders only build at the rate they can make a profit on as proven by 50 years of historical building data. Sometimes that is a very high rate, sometimes that is a very low rate.
If prices start to stagnate or decline, builders scale back and build at a low rate until inventory is absorbed and prices start to climb again.
Sorry folks, we’re not continuing the discussion on that topic. Have edited the last couple comments but don’t like to do that.
Dasmo, nice place. When I last looked at your blog you were doing the foundation and it looked like a 40% over budget project. At least it’s a nice place and you’ll be there for a long time.
Well don’t stop your answer with “prices would fall”.
Here was my question to the forum….
Don’t make us infer what you’re thinking by having to complete the thought.
Are you thinking one of these or something else…..
For the record, my answer is A.
I should add that with our current building boom rate of 5,200 units (leos graph) that equates to a build rate to house 2.6% of the population, so this example isn’t hypothetical!
Of course, that was never the argument. Population growth in Oak Bay is very clearly limited by zoning restrictions. The only reason we are even having this discussion is because we have so many municipalities. If it was all one region pointing out that one neighbourhood is supply constrained would be silly.
Patrick’s assertion is that Victoria’s growth rate is artificially low because there aren’t enough houses being built. This is just not true. At every point in our history there have been a variety of houses available for anyone wanting to move here that can afford the prices. It is not a problem of no supply, it is a problem of high prices (these two factors are linked of course).
It doesn’t mean that every type of house is available in every neighbourhood. Condos are mostly downtown, Oak Bay is mostly single family. You will find these different kind of areas in every single city on the planet.
So what would happen if builders built at a 3% growth rate when Victoria is only growing at just over 1%? Prices would fall until an equilibrium is reached.
The lower price is what would attract more people. It’s not that there is now supply when previously there was none, it is that the places are cheaper. Unfortunately builders don’t do this because the laws of economics do apply to them, and they will only build as much as they can profitably sell.
Sometimes I think it would be a good idea to build a house. Then I read Dasmo’s blog and it dashes that crazy idea out of my head.
Mad respect to Dasmo for this accomplishment. You are a far braver man than I.
Dasmo has a blog: https://blackturtleredphoenix.wordpress.com/
Dasmo,
I would love to hear about your experience, we are in the process of starting two new builds in the core. The city of vic is not helping the budget
Permit fee = $9,300
Water, sewer,storm = $18,300
Sidewalk deposit = $6000
That is per lot and paid up front, not to mention the demo permit that was another 5k
Damo: Not to rub salt in the wound, but a think a lot of people here might like to hear what went so dramatically wrong with your build in terms of costs. A lot of people think of building or a major renovation and your insights would really be appreciated.
That is the same cause as I cited of course. I was a bit puzzled that you say Patrick is “entirely correct” when he claimed to disagree with me on this, but looking more closely it seems he resorted to a straw man argument, to put it in most polite terms.
Leo –
I’m not sure what’s getting missed with the debate with Patrick. Of course supply matters, and is one of the major price determiners, especially in a constrained area like Oak Bay. The fact that Oak Bay homes are expensive is precisely because the supply-demand function is so skewed towards demand. Prices can only be set to what the market will support, they’re not some fixed object. If OB housing wasn’t quickly snapped up at high prices when it became available, sellers would quickly have to drop their asks; if a lot of similar supply were available and DOM went up, prices would drop as motivated sellers started to capitulate.
I guess the real question is how substitutible condos, townhouses, infills, or even illegal suite rentals are compared to the current dominance by sfh’s (since there’s no new land and little prospect of the golf course or cemeteries being dug up). My hunch is that Patrick is entirely correct, and if a mix of 2000 of these alternatives were made available, they might budge prices a bit but would be quickly snapped up. If I’m correct then the OB lack of growth could indeed be considered caused by local government policy and not economics.
And no I don’t live there.
@ Sweethome:
The Bowker Collection, 43 units on the corner of Cadboro Bay Rd. and Bowker, is sold out, with completion in 2020. I haven’t been following closely, but it seems that sold out quite quickly. How much were the units (it was marketed as high-end)?
The emails we received was pricing from $1000 sq ft and up. The top price was close to $1350 sq ft. Expensive when you consider 2 out of 3 sides of buildings are busy roads. It is a triangle lot.
The thing is, throughout history, when inequity becomes too great, the peasants revolt. You’re going to need more than a “tweed curtain” to separate yourself from the have-nots just outside your “borders”. Like it or not, you are part of a larger community.
I have travelled the world extensively this year. The inequality in the world today compared to 10 years ago or 20 years ago is astounding. Before everyone was poor in LDCs. Now you got lots of rich people and the majority of people poor; though general standards of living are improving. Read a report in either The Economist or a large NGO report, that to be in the top 1% of the world’s richest … you needed $800,000 USD net worth including RE. To be in the top 20%, you needed $40,000. What a gap!
Though wealth can be an absolute metric like USD net worth, PPP is more indicative of a human’s well being. The good news is that many smart people are trying to solve this problem…it won’t be overnight…it might take a generation…but their are people who share the same views as yourself, but other than socialism and wealth re-distribution; there are no simple solutions.
The wealth divide will keep on widening IMHO. The only advice I have for our kids and kids in general is get a STEM, business, or trades education + learn some Chinese. The biggest shock to the world order is going to be AI and automation in the next decade. It would not surprise me in the next decade many of the manual/factory jobs to be replaced by robots. The payback time for a robot vs human is less than 24 months now. Scary…but just make sure your family and yourself is on the right side when it does happen.
The thing is, throughout history, when inequity becomes too great, the peasants revolt. You’re going to need more than a “tweed curtain” to separate yourself from the have-nots just outside your “borders”. Like it or not, you are part of a larger community.
I do not live in Oak Bay, but I am now a property owner, and I am concerned about increasing inequity leading to civil unrest. I think maybe some preemptive sharing might actually be a good idea for long-term self-preservation.
Speaking of multifamily construction in Oak Bay, The Bowker Collection, 43 units on the corner of Cadboro Bay Rd. and Bowker, is sold out, with completion in 2020. I haven’t been following closely, but it seems that sold out quite quickly. How much were the units (it was marketed as high-end)? Assuming there was land and approval, could there really be demand for dozens more like this?
A big negative for me is the wood-frame construction. In my experience, wood-frame buildings always have more noise issues than concrete (even a newer one like Union). Frankly, I’m surprised that people are buying all these new wood-frame units at such high prices (e.g. B&W on Fort). I would sooner take my noise from outside than above my head.
i really dont understand the mentality of people who think that everything is good as long as their tiny municipality is good … does people in Oak bay uses the infrastructure in other locations? … Is the municipality self sufficient for job creation.
Oak bay only prospers when greater Victoria prospers
Don’t be sorry. I knew I was swimming with the sharks. I had a cage. I was maybe hopeful at the beginning and terrified near the end but look where I am now? On the wrong side of the interchange that’s where!
I was thinking about pulling a PCL and filing a lawsuit just to protect my right to….
With apologies to the Rolling Stones…. and credit to LeoS for insipration for the tag line 🙂
You can’t always get what you want…
You can’t always get what you want…
You can’t always get what you want…
But if you drive real far ….
Langford has what you need!
You can’t always get what you want…
Josh is stupid. He cannot find his ideal place in a 3 km sq area, so he is considering to move 3000km away. It makes no sense.
OB has new builds, they are $1.5M+. A new rezoned duplex is listing for $1.6m mls:401364
I am sure more people will move into OB if the price of new builds (ie. bigger house) are lower, just as construction industry will build more new homes in OB if the sell prices are higher. Market equilibrium at work.
www150.statcan.gc.ca/n1/daily-quotidien/170208/t003a-eng.htm
It did go up in the next 5 years.
It shows rising growth rate :
2006-2011 4.4% Metro Victoria growth rate
2011-2016 6.7% Metro Victoria growth rate
In fact, looking at the other cities, the rise in growth rate for Greater Victoria is the absolute highest rise of any listed city in Canada. And all this before our huge rise in new building (see LeoS graph above) starting in 2016.
Maybe the Boomers are coming!
It’s capricious.
Isn’t it weird that it’s still perfectly acceptable to casually disparage children?
Like Hawk’s prediction posts?
And there is inventory in every region available. The idea that people aren’t coming here because there aren’t any condos in Oak bay is absurd.
There are 100 houses available to buy for them. The reason they aren’t buying is they don’t like the price.
You’ve really lost track of the point though. The construction industry is failing because it can’t magically create unlimited single family houses in the core?
Not true at all. There are many listings in the core for Josh. Just none at a price he’s willing to pay.
For LeoS “the graph maker” maybe the region is “Greater Victoria”.
But for the Leo “the person” (and other potential buyers) – you may well have not instructed your RE agent to find you a place “anywhere in greater Victoria”. Most people have narrower searches than that (for a myriad of reasons) and if those needs aren’t met, then the people just rent, wait, or don’t come at all.
If someone is looking to buy in Oak Bay/Fairfield, the alternative isn’t just what you say it is – “Greater Victoria”. The alternative for many is “wait and rent” or “somewhere else, like “Vancouver”, up Island, “staying in Calgary” or moving back to Ottawa”
So for those people , the construction industry has indeed failed them, and not built (as you say )“exactly as many as are in demand”.
Ask 100 people who want to buy a house in Core Victoria if an acceptable alternative is anywhere outside Core Victoria (e.g.Langford). If 100 say yes, then your statement that the construction industry builds “exactly as many as are in demand” is 100% correct. If the answer is only 70/100 would accept something outside the core, like Langford, and 30/100 wouldn’t, then your statement is 30% wrong, as the construction industry has failed 30% of those “househuntCOREvictoria.ca” people by not building where they want to live.
Just look at members like Josh, that are considering moving back to Ottawa because they can’t find anything here in the core. Tell him that the construction industry builds “exactly as many as are in demand“
Dasmo, that’s shocking that your build went 40% over budget. Could you elaborate a bit on what went wrong? I’ll understand if you prefer to not elaborate, but I’m really curious because I’ve done many big reno’s and never gone over budget, although a new build is quite different. Maybe I won’t pursue the new build I was contemplating.
Good point. 2008 financial crisis stopped/paused the hiring on the public and private sectors which could explain the lower growth rate.
Victoria growth rate since 2001. Still looking for some data that goes further back
You’ve been good, thank you 🙂
My strategy to comment moderation varies over time. Sometimes I delete comments, sometimes I hope people will be adults and move on.
Edit: Ok I removed a couple comments just to put the issue to bed. I often don’t have time to monitor comments during the day so don’t take my lack of action as approval. May institute a “Flag” feature for comments so that readers can report the bad ones. Thoughts?
The industry is capable of building at 5000 units as we can see now. If building limited population growth, then they would always be building at that rate. They haven’t, so clearly population isn’t limited by building rate. Basic economics.
The reference to Oak bay is nonsensical since there is no such thing as dwelling “need” for Oak Bay. No one needs to live there. However not a single person in history has not moved to Victoria because there was no housing available. There is always an inventory of houses to buy or rent and the number goes up and down over time but there are always some available if you have the money.
The price of that housing certainly has a large effect. If the average house cost $200,000 you can be sure that population growth would be much higher. But that is not about building capacity.
Well, just beat the landlord at the RTB on a renoviction notice. Too much of this cr@p going on. Now to go for damages after three months of headache.
Figure it’s worth fighting this kind of thing. $1100/month for a four bedroom house in town is much cheaper than buying.
Population growth is correlated to government employment growth.and budget increase/decrease. Rock and roll with the ndp. May be a slight lag.
The region is Greater Victoria. Dividing it up into little bits is not useful because zoning changes influence where condos can be built. No you won’t see many condos in the uplands. However if you want a condo to buy, there is no shortage, and the construction industry will build exactly as many as are in demand at market prices. They are slow to react to the market so the trend is very lumpy, but if they overbuild they will decrease prices.
Why do you think the CMHC housing market assessment uses “overbuilding” as one of their risk factors? Because that’s what leads to price crashes. Simple economics.
Bingo.
Desmo
Sorry to hear. Frustrating and expensive.
On a side note. I am trying to be good. Hard sometimes:)
Really not sure what part you don’t understand about you referincing a 5 year period while someone else referenced a 10 year period.
Also would you like to explain why population growth went down in the period from 2006-2011 compared to 2001-2006? Victoria growth rate only goes up right?
Hahaha. Leo, you are funny. I thought you were a straight-shooting stats guy.
Clearly, Victoria is reverting to slower growth, isn’t it? That HUGE CONSTRUCTION SPIKE in your graph above is certain sign of that.
Proportional representation debate live now
https://www.cbc.ca/news/canada/british-columbia/proportional-representation-referendum-debate-1.4896484
Haha actually LF if i’m busy and dont’ have time to read all the comments your posts are one of the posts i’ll stop for because they are usually of worth – i just look for your snowflake symbol.
My posts are perfectly short and succinct as long as you don’t read them. I wouldn’t. Most of them say the same thing anyways. 😀
Not done. Finishing myself. 40% ish over budget….
I know Introvert’s comment over the holidays was said with tongue-in-cheek. Poor taste? Probably, but it’s words over a forum – i think we need to remember that and not get so worked up. personally i love having a difference of opinions on this board – its nice to hear educated comments back and forth and not be stuck reading some echo chamber. I haven’t seen anything worth banning on this board since i started following about 18 months ago and when it gets too far off topic Leo is good about getting things back on track. And honestly i enjoy the bickering that goes back and forth between some of posters here, Quite frankly i find it amusing and i’m sure a lot of the other readers do too.
One of my favorite comments this year after one of Victoria Born’s lengthy posts:
Introvert: “I see that Victoria Born has attended the Local Fool School of Verbosity.
I’ll save reading this entry for right before bed…”
I have a distinct recollection of Hawk telling some while back that he sold and that it had been a smart financial move. But:
1) I could remember wrong
2) It could have been one of the other bears.
3) I don’t care enough to look back through years of comments
4) Even if it was true I don’t care to mock someone for their financial decisions
5) And for real – people sell for different reasons.
The Christmas murder comment was so far beyond the Pale that it was out in the mid-Atlantic and I sincerely hope Introvert apologized.
OTOH mocking some of the over the top bear comments, and their gleeful crash cheerleading is totally on point.
@Grant 2 weeks later and…
Really he didn’t.
This is only the first revision. The original estimate was put out in June. They’re currently in the middle of their spring market.
There’s some housing stinkers coming out of London and Hong Kong, too. Global money currently on retreat.
You know what’s funny. Recently I was watching a documentary on the great depression, and while I already knew most of the justifications for extreme values were repetitive through history, one bit surprised me.
Did you know that in the 1920’s, the argument of a globalized economy and global capital flows through markets was already well established – and was yet another argument at the time for “up-up forever”? I didn’t know that. I figured that only became a thing in the 80s.
Those forecasts have a nasty habit of being “revised” as time goes on.
That doesn’t seem like that much of a drop relative to all the doomsday headlines we’ve seen.
Since this is a housing blog here’s an article about housing:
https://www.smh.com.au/business/the-economy/housing-slump-set-to-be-the-largest-in-nearly-40-years-macquarie-says-20181107-p50ejz.html
in Australia!
Just for you gwac.
tldr: was gonna be a soft landing, now they think it’ll be merely a 15-20% drop.
Hawk, [edited to keep the peace – admin]
Let’s get real: you like to stir the pot as much as anyone on here.
https://en.wiktionary.org/wiki/don%27t_feed_the_troll
If Leo banned the troll a year ago there wouldn’t be this bullshit. Next time you are accused of such a reprehensible and disgusting crime and keep getting trolled almost daily, then we’ll see how you respond.
Okay. Stop with the name calling and accusations. It gets really annoying in here at times.
Now shake hands and go to your neutral corners.
So it’s not “very helpful” for you ? Wow, that’s truly whacked.
There is no “difference”. Your demented word games show how sick you are to actually keep up defending making such a disgusting accusation, then try to justify it multiple times without a single bit of remorse or regret.
You clearly have serious mental issues with hard core narcissist behavior. Seek help ASAP.
https://www2.gov.bc.ca/gov/content/health/managing-your-health/mental-health-substance-use
It probably does. In this respect, I’m precocious.
As far as I know, you’ve never corrected the record except to say that sometimes “people sell for different reasons,” which isn’t very helpful.
The city of Beverly Hills has extremely low population growth but the prices reflect the desirability of low density in a built up city. The propensity to prefer lower density, i suspect, tends to increase with age.
Josh describes high density as vibrant but it is possible that by the time he is fifty he might just find it mostly annoying. Obviously not everyone has that transition.
I am beginning to feel that people are now arguing the self evident as we all wait to see if the market turns in the spring.
perhaps we should focus on which are the three best pubs in greater Victoria.
Thank you Patrick, at least as a bull you post logical and debatable info.
Two fun facts about Oak Bay housing units and population from our friends at Stats Can.
Fun fact 1:
Oak Bay Population growth rate is meagre 0.1% growth per year (lower than I thought). Given their 18k population, that represents 18 people they allow in per year ( perhaps live-in help?). And we need to read LeoM telling us that Oak Bay don’t want to do any more development and are happy with status quo.
Statscan: https://www12.statcan.gc.ca/census-recensement/2016/as-sa/fogs-spg/Facts-csd-eng.cfm?LANG=Eng&GK=CSD&GC=5917030
“In 2016, the enumerated population of Oak Bay (District municipality) was 18,094, which represents a change of 0.4% from 2011. This compares to the provincial average of 5.6% and the national average of 5.0%.”
//::mm/:::
Fun-fact 2
They managed to reduce the total number of SFH in Oak Bay by -0.3%. Less houses over a five year period! At the same time as they had ZERO multi-family new builds in 2015.
Statscan: https://www12.statcan.gc.ca/census-recensement/2016/as-sa/fogs-spg/Facts-csd-eng.cfm?LANG=Eng&GK=CSD&GC=5917030
“In 2016, there were 7,737 private dwellings occupied in Oak Bay (District municipality), which represent a change of -0.3% from 2011.”
Hawk,
I’m totally in agreement with you on this!
Intorotwerp,
You got very little flack for that revolting comment which only fuels your demented crap.
You should have been banned for accusing a poster of being a child murderer just because they stopped posting over the Christmas holidays for a couple weeks. Not sure why Leo’s standards have gone so low to not ban you.
I have “corrected the record” many times but your f’ed up brain can’t compute and you choose to keep spewing utter bullshit to keep your sick game going.
Like Cynic posted, you must have been beaten and bullied as a kid to have such low self esteem and hatred inside you to post such garbage. Maybe ask your shrink about your “strange” and ” prolonged” problem.
gwac
I didn’t literally mean “no” new oak Bay housing. I should have said “little new housing and almost no new multi-family housing”. ( you’re right , tear downs are common, but I wouldn’t count tear down rebuilds as (net) new housing unless it multi unit )
No. Your NDP govt doesn’t agree, and have declared a crisis, including in Oak Bay (and elaewhere) As you know they will be sending the spec tax collected in Oak Bay specifically to be used to help create multi-family affordable housing in Oak Bay. There’s plenty of building potential in Oak Bay it’s just the residents don’t want it, and reject many apps. If/when these multi family units get built, oak bays total housing units (and hence pop growth) will rise, rendering your “low growth forever” statement above false.
Moreover the building boom in Victoria speaks against your “we will always have a low growth rate because there’s nowhere to build” assertion .
The only other person that uses that line is Trump. Not a good look for you 🙂
I draw the conclusion that areas that are already built up and aren’t upzoned are going to have a low growth rate, and so does everyone else I think.
Patrick agree except the below is not accurate 100%. You can always find a new house in Oakbay a teardown it just cost 100% more, Price/Landuse and land availibity are why the population does not grow,
“So, people move to Langford not because they don’t like the new housing in Oak Bay, it’s because there is no new housing in Oak Bay”
I agree with your statement, and it aligns with what I’m saying. I’m not saying Oak Bay has to do anything it doesn’t want to do.
My point is that population growth in Victoria is “artifically low” because we aren’t building enough. And you confirm that, by saying that’s how you like it in Oak Bay – not much new housing. So it’s the “artificially constrained” building that’s limiting your population growth (not demand and means to live in Oak Bay) , and that’s how you like it too.
I have no problem with that if it’s what Oak Bay wants. Where I object is where people see Oak Bays population growth of 0.4% and draw conclusions that it isn’t such a such a desirable place , because it has a low population growth (“lower growth than Moncton”).
An example of this is LeoS graph below where he invents a metric called “dwelling need” that seems to just mirror population growth. Whereas Oak Bay has a huge “dwelling need”, but “low housing starts”, but too bad, the existing residents want the status quo.
So, people move to Langford not because they don’t like the new housing in Oak Bay, it’s because there is no new housing in Oak Bay, even though they could afford and want a small condo in Oak Bay.
If you want to read about the absurd level of citizen objection to new multi-family units in Oak Bay, check this article out. 7 hour public meetings arguing against a single 4 storey building. And many more examples
https://www.timescolonist.com/elections/oct-20-civic-election-oak-bay-mayoral-candidates-at-odds-on-housing-1.23456575
And it’s not just Oak Bay. Many areas of greater Victoria are similarity resistant to new density in their neighbourhoods. This is the “artificial constraint” I’m referring to when we see the Victoria population as rising only 1% per year.
LeoM
Exactly and well said…
Isn’t anyone who moves to Victoria, rents for three months or longer, then buys a property considered a “local buyer” in the system?
Layers of millionaires in Gordon Head!
gwac, don’t ban yourself. That’s silly. Wait till Leo throws you out, like Uncle Phil used to toss Jazz out the front door.
And Hawk did sell before the run-up, trying to time the market. I’m not the only one here who is under that impression. Hawk could always correct the record, but he never does.
I really do not understand the mentality of people who say the Municipality of Oak Bay should be somehow forced to increased density. Why? The Municipality, as is, is self-sufficient and well-managed and the people who live there are happy with the way it is. A few people in Oak Bay want basement suites, but the majority of residents seem content with the status quo. Oak Bay has no duty to fix problems created by others outside their borders.
Dasmo your build done? Curious how bad was the budget hit as a %.
This is silly. Langford’s growth is Victoria’s growth. half the population doesn’t even distinguish these things. Shoot the latest condo in ESQ completely ignores the fact they are in ESQ. People want to live in Victoria. Victoria only offers micro lofts with pullout couches for half a million bucks. Of course Langford is going to grow faster!
Affordable housing musical chairs has begun. Who will be forced to pay for the lame ideas of Lisa Helps and Ben Isitt? Will Lisa give more property tax holidays to developers or will they force ‘affordable’ units on the backs of developers? Regardless of what they do, the end result will be subsidies for ‘affordable’ units, subsidies that will be paid for by property owners through higher taxes.
https://www.timescolonist.com/real-estate/victoria-councillors-push-for-affordable-housing-will-halt-building-city-told-1.23491001
To add if this was not a government town with the jobs that come with it, we would have a lot less people and a lot more cheaper houses. Being the capital/Navy brings stability and slow growth as the government grows.
“Population isn’t rising quickly because we aren’t building” Things are not that easy to frame. Quality employment/housing affordability/family/ being an island and a thousand other variable come into play when it comes to population growth. Victoria is a sub market it will not see the demand as Montreal/GTA and Vancouver. Victoria will see a slow continued growth. The core will always be in demand and Langford to Sooke will see the biggest population increases because of price. (land availability).
Agreed! And that difficulty-of-building (“political hassles” “trying to get rezoning”, “securing multiple homes”) is why Oak Bay population isn’t rising, not because “demand to live and buy in Oak Bay” (called “dwelling units needed” on LeoS graph) isn’t there.
That almost looks like those things they put on building ledges to keep birds away. Is that what you think of me? A squawking sea gull? Bird poop? I’d agree to either. 😛
Okay. Population isn’t rising quickly because we aren’t building. I should have known; I now see the light, thus. You win, I lose, rather like when I’m at home. Dammit (Runs away screaming) 😛 😛
People build what they can sell for the most profit and with the less hassle politically… Building a multiple family units requires securing multiple homes for the land in the same area and than trying to get rezoning and than hoping people will pay a million plus when they can get for the same price a SFH a stones throw away. Just not worth it.. Not having raw land available makes things a lot harder in developing and a lot more expensive.
-vv-v-vv-v-v
Yes, that is my point.
Do you actually believe that the reason there were zero multi-family units built in 2015 in Oak Bay, is that noone would buy them, because they would have to be sold at such a high price. These aren’t new “RollsRoyce” Uplands mansions I’m referring to, it is multi-family condo units, comparable to what is built (and sold) in Victoria.
When a number is ZERO for a year (zero multi-family units constructed in Oak Bay) …. how can you get more artificially constrained than that? If they would have built them, they would have sold them, and Oak Bay’s population would have risen more than the 0.4% than it did.
Cheaper to build in Langford when the lot is valued at 200 to 300k vs a million in Oakbay. Langford will see more demand because of Price. Oak bay’s price will remain high because of limited supply and the Value that people put on living in the core. Every year a developer or two will buy up a house with a larger lot and build a couple houses. That’s how supply grows in Oakbay. Langford grows by building 10 to 50 on empty lots.
That’s exactly correct. (IMO)
If the supply of cheap homes came on the market than demand would be there. That would not happen so the reason more supply is not coming on is price is high in Oakbay. There is a limited amount of people who can afford and like it there at that price. If the demand was there we would be more guts and rebuilds in Oakbay.
Not joking, I’m more an idiot with dementia (see last thread).
Our friend below is essentially arguing that demand on a premium market segment is being artificially constrained by a lack of supply. That can be true at certain stages of the RE cycle and is most definitely true if a bubble is present in that market.
West Vancouver is a glorious example – it is arguably the most “desirable” residential RE market in the country. Sales data absolutely bore that out a few years ago. In fact, the case for that could hardly have been stronger. You could build however much you wanted and it would just be gasoline to a seemingly endless demand fire. NIMBY everywhere, a passive city council and an enabling provincial policy platform probably magnified things even more.
Now it’s dead last in the global lux RE market. Demand is essentially disappeared, they have inventory piling up everywhere and prices drops are already nearing crash territory in some parts. These are cyclical dynamics, and in that case, just intensified due to global factors that continue to shift.
Same with housing in oak bay.
Leo, Please don’t waste your time on this garbage. At the end of the day, you’re not changing Patrick’s mind, he’ll disagree regardless.
Fyi as someone who has lived in South & North Oak Bay, there are parts about it that truly suck. I wouldn’t buy there even if it were affordable.
Local you are joking right?
Production has nothing to do with people not buying rolls?
Price is the reason…
hahaha, it doesn’t fit your MO so it’s weasel words? In what world is going with the 5 year period more accurate than the 10 year period?
How about this, Introvert’s “shithole” Regina, is nearly twice as popular as Victoria in the last 10 years.
Edit: Looked it up: 2001-2006 growth: 5.8%
1996-2001 growth: 2.5%
“The reason why far more people buy Toyota Corollas as opposed to Phantom Drophead Coupés is because Rolls Royce doesn’t build enough. If they did, Corolla buyers would almost always buy the Rolls Royce instead.”
It’s amazing to me that we’re having the retiree population growth discussion AGAIN with the same players. What people intend to do != what actually happens. Lots of factors in life circumstances that can and do happen over a 10+ year period. Also, how much of the recent growth has been due to construction? What happens if construction jobs wane either through less projects or improved technology? People do move for jobs so some of that recent inflow could easily become an outflow.
It doesn’t have to be an economic downturn as in 2008. Look to what happened in the U.S. during the run-up & subsequent sharp downturn around 1985-1997. Inventory was low, prices up, lines out the door to buy. Lots of speculators in the mix too looking to make a quick buck. I remember new developments going up fast and builders had a huge pipeline of projects coming and then it dried up when demand dropped. Prices started to tumble which forced decisions – stop the project or sell for no profit (or worse at a loss). I bought in 1988 when there were still lines out the door – FOMO was strong. I bought in 1993 when prices hit rock bottom. I remember negotiating for a new house in a large development around 1992 and the builder was desperate. They threw in lots of freebies to try and entice buyers but most like me weren’t biting. That particular builder went out of business as did many other very large and well-known builders. My 1988 place? Couldn’t sell so we rented it out until the market turned but many didn’t have that option so they stayed put.
If you look to this article which chronicles the RE headlines of the time during & after the boom, some of the factors included investors leaving the market, rising interest rates, risky mortgages:
http://www.rntl.net/history_of_a_housing_bubble.htm
The US census website has lots of good tidbits of information. You can see historical housing starts, permits, completions, etc. The breakout by region is fascinating as well:
https://www.census.gov/construction/nrc/historical_data/index.html
Same place she got Hawk selling before the run up in prices, and that Hawk is the dude who murdered his children in Oak Bay. By the way, bullshit that she brings that up and doesn’t get reprimanded.
How does VC money matter at all? Who cares why it’s incredibly popular, in the hypothetical it just is. Silicon Valley fits the hypothetical perfectly.
I disagree. . You ask “How many new units do we actually need to build to accomodate people actually arriving.”. Well in Oak Bay, they build almost zero, so that miraculously meets the number of people arriving to Oak Bay. IMO, obviously Oak Bay “needs” way more housing built than the number of people actually arriving to Oak Bay.
So I’d like to see you prepare a “Dwelling Need vs Construction” graph for Oak Bay, and then one for Langford. And then attempt to explain why Langford (4% pop growth) grows its population at 10x the rate of Oak Bay (0.4% pop growth). When I’d estimate desirability numbers are the opposite – 10x more people want to live in Oak Bay than Langford.
Answer: Oak Bay builds a tiny amount of new housing, and Langford builds a huge amount of housing. In fact Zero multi-family units were built in Oak Bay in 2015. How can a city like Oak Bay grow its population if they don’t build more than a tiny amount of housing?
https://www.timescolonist.com/business/langford-s-population-grows-by-20-9-in-five-years-highest-in-region-1.9748691
“Some municipalities, such as Metchosin, Highlands, and Oak Bay, did not have any multi-family projects started in 2015 or 2016, Edge said. North Saanich had none in 2015 and 12 multi-family units were started in 2016. In Oak Bay, it moved up by just 0.4 per cent and the Highlands rose by five per cent.“
The only thing stopping Oak Bays population from growing like Langford is not “dwelling need” as you say in the title of your graph, but “shovels in the ground” – actual multi-family units being built.
Local I know…Enough is enough. If Leo gets mad I will ban myself for a week again..
Kind of had to chuckle. It’s almost becoming a game now. How many ways can posters find a way to state this?
Gwac, you were doing so well there for a while… 🙁
Once
Lol welcome to land of bears. They grasp at anything and then run with it regardless of whether it is relevant or not.
Soon we will see some more slashes, a friend who heard from his doctor that one of his patients heard a developer was giving free toasters to sell their homes. Or best of yet the Australian market is declining so Victoria BC is next.
All that matters that they cannot get around in their head is there is no land in the core and as the population continues to grow, house prices are not crashing.
Lastly they love interest rate increases for some reason even though the last 5 did nothing except raise the benchmark price over the past year.
Twilight zone…
I’ve posted this before but it is relevant to the current topic. How many new units do we actually need to build to accomodate people actually arriving.
Sometimes the market underbuilds, sometimes it overbuilds. In the long run it meets the needs of incoming population.
Except this has clearly not been true anytime in the past. If builders could build at a 3% level without compromising on price they obviously would. They can’t so they haven’t.
Stating a period is not a weasel word. In fact it is the exact opposite as it makes the statement more specific not less.
Population growth in Victoria was higher 2011-2016 than in the previous 5 year period. It doesn’t make the statement about a 10 year period wrong it just means you’re making the argument that recent increased growth rate will continue while the original poster was assuming growth would be closer to the longer term trend
From previous thread:
What? For the 2011-2016 column:
Victoria 6.7%
Canada 5.0%
Sherbrooke 4.9%
St. John’s 4.6%
Moncton 4.0%
Why use the weasel-words “in the last 10 years” when the recent period is right there? Why was this voted up by 11 people? Does no-one follow the links and actually look at the data?
LeoS: Let’s say you have some kind of irrational builder that builds at that 3% rate and sells them no matter if they make a profit or not. What would happen?
Since the population is only growing at 1%, 2/3rds of the places would not sell at current prices. That means they sell at less than current prices. So prices drop.
=================
Langford is growing at 5% population per year. Victoria is growing population at 1%.
That’s because people move to Langford, buy the (cheaper) houses and live in them,.
If Victoria builds 3X as many houses as it used to, and people buy the (expensive) houses and live in them, our population will rise faster than 1%, and close to 3%.
Here’s some more of this kind of logic for you:
Or we can look at the data we have, which is that of the ~25% of buyers that come from out of town:
BC (outside Victoria) buyers outnumber Alberta buyers by 2 to 4 times depending on the year.
BC buyers outnumber Ontario/QC buyers by 5 to 7 times depending on the year.
The biggest source of out of town buyers is our neighbouring municipalities, primarily Vancouver. Even outside of the data, this is perfectly logical both because people are more likely to move if they are already close, and because Vancouver owners have the most expensive houses and thus can afford to buy here.
Of course not, and I said in several places that only a tiny percent of the people that intend to retire in Victoria will actually do it, but a tiny fraction of 45k per year is still a big number.
You intend to buy a house here, (I hope you do!) but maybe you won’t ever do it either. But I would still count an estimate of people like you that are interested in buying here as a positive for real estate here.
I’ve seen posts by you sounding incredulous when some average home goes for $1.5million. You’re trying to tie it to average incomes and can’t believe that anyone makes that much here, with everyone in a Victoria getting lame salaries.
So next time you see one of those $1.5m purchases, maybe you’ll think – maybe it was some lawyer from Toronto who sold his Toronto home for $1.5m and is retiring here and buying one of ours for cash.
Then again, you could assume that no significant number of rich people move to retire to the #1 rated retirement destination in Canada. And the $1.1 million average Victoria family net worth is another mirage. And everyone here’s just got a huge mortgage that they can barely afford. Feel better?
I really can’t recall where you got the idea that that is the definition.
Yeah same. Very exciting stuff. Right now many of the prefab startups are this kind of boutique phenomenon with small players keeping prices high. What is necessary is someone to invest big in an automated factory at scale and then work with different jurisdictions to streamline the other parts of it (customization, inspections, foundations, etc).
It’s not so rigid though. You may think sharing houses is absurd, but this is absolutely what people do. If you want to move somewhere and there is a housing shortage / low vacancy rate then you might move there anywhere and get a roommate.
Then vacancy rate goes down, rents go up, prices go up, and builders build more. Housing supply is elastic, not some sort of hard limit.
Because it’s true. Just look at construction rates 2010 to 2015. Less than half of today’s rate. Nothing was stopping the industry from building way more units if those units were in demand during that time.
Neither. Let’s say you have some kind of irrational builder that builds at that 3% rate and sells them no matter if they make a profit or not. What would happen?
Since the population is only growing at 1%, 2/3rds of the places would not sell at current prices. That means they sell at less than current prices. So prices drop.
Dropping prices attracts more people and Victoria grows faster.
Eventually the market find an equilibrium where prices are low enough that Victoria grows at a steady 3%.
Unless they need the payment flexibility I don’t see why they would do this. Interest rates on HELOCs are higher than mortgages.
Yeah I had the same thought and mulled it over for a long time. My issue is that I just can’t figure out the mechanism for it to drop so rapidly. I know what happened in 2008. The financial crisis dried up credit and starts went to zero while existing projects were cancelled. I don’t see another financial crisis coming, so what could cause a sharp peak and rapid reversal this time? Builders still have a pretty long pipeline, and there is nothing but talk of starting more affordable housing projects. What would kill those projects quickly?
Your napkin math needs work. As others mentioned in yesterdays thread, “intentions” in a survey are moot. Population growth for the CRD from 2011-2016 was 23,190. As in an average of 3,865 per year. You’re predicting a 10x population growth increase all in one demographic because of a BMO survey about “intentions”?
I know. So let’s try to fix this particular methodological shortcoming. If only we knew a sensible, statistics-loving realtor who could potentially effect change from within…
The problem is, he hasn’t drawn any real dots to connect. They’re suppositions. It’s not that it’s “wrong”, it just isn’t meaningful. It’s like those tourism/investor rags that Luke used to link to.
Yes it is, because the alternative to doing so is to engage in unrestrained conjecture. I haven’t seen anyone here argue or conclude that out of town buyers have no impact, but neither you or anyone else has ever been able to quantify or even meaningfully describe its influence – other than to assert it exists and it makes prices higher. It’s fine to point out methodological shortcomings in data, but what you appear to offer in its place certainly isn’t an improvement.
Those dots are too tough to connect, Patrick. It’s easier to point to the flawed out-of-town buyer statistics and conclude that it’s essentially all locals taking out $800K mortgages who have been driving this market.
And then most of these same people will be surprised that more homeowners aren’t underwater on their mortgage when prices eventually drop because, in fact, a significant number of wealthy people move here and their mortgages, if they have one, can’t go underwater unless prices drop 50%.
Well you’d need to connect these dots….
Out of 100 cities in Canada, Victoria is ranked #1 as retirement destination https://www.moneysense.ca/save/retirement/canadas-best-places-to-retire-2017/
Alberta has the lowest % of seniors because they have the highest rate of moving elsewhere to retire (61%) https://boomerandecho.com/retiring-to-another-province/
“Albertans are most likely to set their sites on Victoria”
“26 per cent of Albertans would opt for Victoria retirement”
“15 per cent of all Canadian baby boomers intend to retire in Victoria “
http://www.carp.ca/2011/10/06/boomers-eye-retirement-in-victoria/
You mean relatively few from Toronto or Alberta who rent here for three months or less before buying property or who do not rent here at all before buying property.
Anyone who plays it safe and rents here for longer than three months prior to buying property is considered a local buyer, whether they just arrived from Calgary, Toronto, or Jakarta.
Is the three-month local buyer definition the same across all real estate boards in B.C. and in Canada? I sure as hell hope not, because it’s a poor definition that doesn’t serve us well.
Where did I get that? Basic demographics knowledge and a BMO survey.
Boomer generation peaked (highest number in any age group) in 1961, they are now 57 and will be peak retiring in 10 years from now – age 67 (ie not octogenarian) Only 20% of them have retired so far, https://www.theglobeandmail.com/globe-investor/retirement/the-boomer-shift-how-canadas-economy-is-headed-for-majorchange/article27159892/
BMO did a survey of boomers and asked their intentions of where they plan to retire.
http://www.carp.ca/2011/10/06/boomers-eye-retirement-in-victoria/
An incredible 15% of all canadian boomers said they intend to retire in Victoria. There are 300k retirees per year so 275 x15%=40k to Victoria (if they come). This was discussed yesterday, you can read about it here. https://househuntvictoria.ca/2018/10/31/halloween-update/#comment-51610
Relatively few coming over here from Toronto or Alberta. The vast majority are from Vancouver. Makes sense, you can retire here from Vancouver and still see family
Where on earth did you get that stat from? 10 years from now boomers will be in their mid-eighties. I don’t know a lot of octogenarians that are intent on uprooting their life.
Silicon Valley isn’t a “case in point”, comparable kind of place. Nowhere else experiences the distortions that VC money causes as they do.
We’re still waiting for “plain old” Uber.
Delayed by the NDP until at least fall 2019 🙁
Case in point is Silicon Valley. Population rose by more than they built, and prices rose too.
Agreed, but that doesn’t imply when the building boom will end. We are 3 years into the current building boom. The last boom lasted 10 years (from 1999-2009). (See leoS graph above)
So it may end tomorrow, or have 7 years left to run like the last boom. It seems to me that the bears here are betting on it ending tomorrow. Vacancy rates are still at very low levels, so that’s a good sign to me that it’s not ending tomorrow.
This building boom is fueled in part by the huge number of well-heeled retiring Canadian boomers who intend to retire in Victoria (40k per year who intend to retire in Victoria, with those numbers rising yearly until they peak 10 years from now) . Time will tell if they show up, but at least they’ll have a place to buy when they do come, because we weren’t building many houses from 2006-2016.
Anywyay, you should be happy that they’re building lots of housing. Don’t you bears want affordable housing for all?
It isn’t sustainable. The point you keep ignoring is that the building rate is highly volatile, responding to price movements, and averages out around population growth long term. Builders are building at a high rate now because prices are high – upward sloping demand. It’s that simple.
There are many prefab startups. We just need the Uber of them to come along and nuke the industry as we know it. I can’t wait!
Cool. Thanks.
That’s lower than I would have thought. I’m wondering if that’s because:
I think that last one is the most unlikely. The story I’ve been seeing is that many people borrow as much as they can and think they’re a genius for doing so.
8%+ marginal mortgage holders are enough to move the needle but the effect would be very slow since most are on 5-year fixed.
At least it appears that condos and rents will be getting some breathing room in the next few years.
A glacial schedule. 2020 construction, 2022 occupancy for first buildings.
https://www.uvic.ca/campusplanning/current-projects/new-student-housing/
The upside is the labour market might be more favourable by then.
This post is all based on LeoS units under construction” graph above
in the census period 2016-2016 we averaged about 2,000 units built per year. And our population grew about 1% per year during that period.
The last building boom lasted 10 years (1999-2009). The one before it lasted 6 years (1985-1991).
The current building boom started in 2016, so that puts us in year 3 of a building boom. It followed a low “plateau” period of building (2009-2016) so there may be pent-up demand. This boom will bust sometime, but if it’s sustainable at the current rate 5,200 units per year, that implies a Victoria population growth of 5,200/2000 x 1% = 2.6% per year. Because, if vacancy rates stay stable, 5,200 new units implies about 8,000 new people to Victoria per year, which is 2.6% population growth.
CLTs and engineered lumber coupled with pre-fab will replace stick-frame construction for all but the smallest of builds. The increased material costs will be more than offset in labour savings and better end-product. Plus as the seismic requirements continually increase, CLTs will better be able to meet those. Also, hitting step 5 of the new step code will be pretty easy with CLTs.
For all the people talking about how a decent chunk of our economy is based on construction, you can kiss a chunk of those jobs goodbye regardless of what the RE market is doing.
MLS 400223
Sidney seems to be tanking. I have said this before but if I was looking to sell a craptastic house on a busy road, run down, Peninsula/Westshore etc. I would do it now. Houses like this one would have been snatched up less than a year ago. Would love to see some data on this but from my observations Sidney 6-800k SFH does not seem to be hot anymore and starting to reach other parts of peninsula.
Checked out the project at Hockley corners today. Foundation to roof in 9 weeks, an almost 2x improvement due to use of pre-fab CLT panels. The builders were raving about it. Material costs are higher but you earn that back and much more in labour savings. http://www.dbsvictoria.com/projects/
One more reason I don’t buy the “building costs only go up” argument for prices. There is huge potential to drive building costs down using prefab. We have hardly scratched the surface on that front and there is massive change coming to the industry in the next decade.
There is big money being poured into this space. Within a decade we will marvel at how inefficiently we used to build with custom everything. That applies to single family residential as well. https://www.cnbc.com/2018/09/25/amazon-makes-its-first-investment-into-a-homebuilder.html
It’s possible you’re right, but history suggests this will not be the case. As someone pointed out, building in this city does not rise linearly over time. It comes in fits and starts and then almost always drops off precipitously. We go through phases where we don’t build enough, then we build too much, or we build the wrong types of things. Those things are dictated by current market demand – depending on where the cycle is, that demand will be on an upward trend, or a downward trend. The latter doesn’t imply the population is going down, or everyone suddenly hates living here; it can also imply less people are wanting to participate in the market (1981, 1990, 2009 for instance).
So you have these fluctuating periods of more or less market demand driven by market perception (confidence or pessimism) against the larger, more durable backdrop of population growth. In the end, the difference between construction responding to market demand vs meeting organic demand is probably a wash.
Don’t get sucked into a recency bias where because construction is hot right now, this is some new dynamic, we’ve been discovered, this is not like before etc. That is unlikely to be the case (ie it’s different this time). What is more likely, IMO, to be the case is the pervasive culture around housing as a one-way cash cow, something that is both a product of RE’s cyclical nature as well as the lingering effects of QE.
Well, hypothetically imagine an incredibly popular destination. The govt limits new housing construction to accommodate no more than an extra 1% of the population. Seems obvious that population growth would be at most 1%, and not 5%. And prices would likely rise.
I think that Victoria’s 1% growth rate is also limited by the low growth of new housing, Time will tell if I’m right, since more units are finally under construction (more than to accommodate 1% growth per year). But many people look at the numbers of new Victoria construction and (falsely) conclude “oh that’s way too many, because Victoria only grows at 1% per year.”
Maybe we will build housing to accommodate 2% more population per year, and then “2% population growth will be the “new normal”
No for a couple of reasons. As Leo’s chart shows, units under construction is poorly correlated to population growth. It’s well correlated with prices. You don’t get vacant housing – unless deliberately held vacant – because of elasticity of demand. That is, the number of households adjusts to the housing stock as you get more or fewer people living on their own in adjustment to available supply.
It is the inverse of what you are assuming, if you are looking at a long enough time scale (decades). Over the course of a RE cycle however, it would be more accurate to say that housing starts respond to demand, whether that is from organic growth or other stimulative but potentially transitory dynamics.
Canadians keep showing how stupid they are taking out 8 year car loans while subprime loans are being cut back as well. Banks/lenders see the writing on the wall with rising interest rates on other household debt. Next bubble to pop. Big shiny trucks will be ball and chains.
Canadians are 5 times more likely than Americans are to take out a long-term car loan
“More than half of all new car loans are currently financed for 84 months — seven years — or longer. Industry standard used to be to amortize car loans over 60 months — five years — but as low interest rates settled in, payment periods began to stretch longer and longer to make monthly payments as low as possible.
Experts say that one of the biggest risks of such loans is that as the loan terms stretch into seven eight or even nine years, it’s not uncommon for the borrower to still owe more against the car than it’s worth, when they come to need another car in a few years time.”
https://www.cbc.ca/news/business/debt-car-loans-long-term-1.4863737
There has been discussion about population growth in Victoria. It is about 1%. Typically it is used to (incorrectly) infer how many people “want” to move to Victoria and can afford to.
I’ve always assumed that the population growth is, for practical purposes, limited by the new housing supply. So if we add housing for 3,000 people next year, we will get 3,000 people (or have vacant housing). But we couldn’t add 10,000 people next year if we only have new housing for 3,000 (absent some absurd solution like living in tents or sharing houses). I’m including “new basement suites” in the new housing supply numbers.
So I’m curious if others accept that the above as generally correct. And if they do, why do they mistakenly say things like “Victoria isn’t that desirable, because the population growth only 1% per year, similar to many cities”.
Here is an example of someone here using the argument that “Victoria’s 1% pop rise means that Victoria is not so popular a destination.”
In response to someone saying “everyone knows how popular a destination Victoria is” the poster says this …
.>JS: ”And then you look at data:https://www150.statcan.gc.ca/n1/daily-quotidien/170208/t003a-eng.htm Growth rate of Victoria is less than Moncton’s, St. John’s, and Sherbrooke’s in the last 10 years. It’s barely above the Canadian average.”
So the question is, if Victoria added new housing equal to 3% of our population each year, and sold them above the building costs , would our population grow 3% per year, or would most of them be unsold?
rush4life,
My slash list for last 24 hours is double the norm today, sellers are beginning to get the message. Start whacking or forget it.
With fewer low credit score buyers out there the banks are shuttering out the weak. Seeing several in nice hoods getting the $100K slash job under $1 million that need a reno but last year would have gone in a bidding war.
As a matter of fact this is how I financed my first house. It’s a HELOC because it’s a line of credit secured against the house. The institution may call it something different however to distinguish it from the everyday HELOC.
Thanks, patriotz.
I’m still trying to figure out what a couple that I know are using. They recently bought with 45% down and explained that they were financing the rest on a line of credit, where interest was charged daily and they would be automatically depositing their pay cheques directly into the line of credit.
As I understand it, they would be sort of using their LOC the way most people use their chequing account, i.e., paying all bills from it and depositing all their income into it.
Is this a LOC or a HELOC? Has anyone heard of people doing something like this?
LeoS, that’s another great post today. The graph ‘Units Under Construction’ is an eye-opener, I had no understanding of the intensity of construction over the past couple years, I haven’t been very attentive obviously. This graph is interesting in its repetition pattern, there is never a plateau after a significant multi-year run-up in construction, rather there is always a precipitus cliff where construction falls rapidly for 2+ years. a quick trip to StatsCan website shows a rapid rise in unemployment when construction falls; however, I know that hundreds of construction workers sold their homes and moved during previous falls in ‘Units under Construction’ thereby masking the true extent of the unemployment downturn. For example, unemployment in the construction related industries is likely less than 1% today, but during the last decline on the graph in 2009/10 the construction related unemployment rate went to over 10% and overall unemployment went to 8%
The take-away from that graph for me is that we are approaching a cliff soon, not a plateau.
The logic is simple. I want to make $30,888 off my old shack more than what you think its worth.
Just be lucky you do not have to pay my “Total value Assessed as of July 1st, 2017”
$1,076,900
I love this part of Oak Bay, everything between Kendal and Frederick Norris Rd. Just a quiet, beautiful little area.
Why do these sellers persist? This guy has not lowered his price by one dime in months and months.
https://www.realtor.ca/real-estate/20063378/single-family-2849-burdick-ave-victoria-british-columbia-v8r3m1-estevan
How much torture can this seller/realtor take? How much rejection? Talk about “waiting for Mr. Right” to come along. The realtor and his entire family have probably all starved to death by now waiting for this ship to come in. I don’t even think Rodney Dangerfield stood for this much rejection. Love the beautiful spring/summer pictures thou (which provides clear evidence about how looooong the property has been on the market). C’mon Mr. Seller, get with the program, man. Nobody wants to buy your house for the silly price your asking for. Lower it or take it off the market. Geez.
The latter could have something other than RE for security, e.g. stocks. Also a TFSA but not RRSP.
Could someone please explain the logic here? This home is “on sale” for $1,028,888.
https://www.realtor.ca/real-estate/19906569/single-family-3487-cardiff-pl-victoria-british-columbia-v8p4y9-henderson
Why not list it for $998,000? Do realtors/sellers not understand the huge psychological impact in listing a property for more than $1 Mil? All you have to do is go to Walmart. Things are never on sale for $10.28. It’s always $9.98. A small difference in price, but a huge psychological difference to the purchaser.
Btw, what is going on with Uvic Housing? Plans to start construction anytime soon?
(From the previous thread:)
Understood.
Is there a difference between a HELOC and a secured line of credit?
Great post – the reference above is more commonly known as “swimming naked”!