A deeper dive into construction

This post is 5 years old. The data and my views may have since evolved.

I’ve been talking a lot about the level of construction in Victoria recently and the fact that we are building at a rate that is completely unprecedented since the start of data collection in 1970.

As usual, there is more to the story than the total numbers of units under construction.   Last week I examined the rate of construction of rental apartments specifically and discovered that we are building nearly 10 times the long term average right now.  That will likely disrupt our long term pattern of a vacancy rate that calmly oscillates between 0.5% and 4% every few years with a bit of a supply shock in rentals both this year and next.  I would not be surprised if we had a jump in vacancy rate from the current 1.2% to 3% this year and beyond 4% in 2020.  We will likely move into higher vacancy rates than we have seen for the last few decades in Victoria which is something I think is not receiving much attention out there.  The appetite for building new rental buildings doesn’t seem to be waning either, with new housing projects at the university also pulling demand from the general market once they complete in a few years.  There seems to be currently fairly strong in-migration so I think we will absorb the units without vacancy getting out of control, but this is new territory for sure.

Of course this site is not called ApartmentRentVictoria.ca so who cares about rental starts?   It is true that construction of rentals will affect the home buying market less than the completion of units for sale, but there are some indirect effects including:

  1. More rental inventory, especially dedicated professionally managed units eases uncertainty (no renovictions or units being sold out from under you) and thus reduces pressure to purchase.
  2. A higher rental vacancy rate keeps a lid on rent increases which again reduces pressure to purchase.
  3. Lower rent appreciation due to adequate dedicated supply weakens the case for private condo investors to purchase condos.

However the much more direct effect on the housing market comes from the construction of units that are meant for the resale market. That means to get a picture of what kind of supply is coming down the pipe we must remove rental units from the picture.

Some takeaways from this data:

  1. Much of the extraordinary construction boom is fueled by rentals, not condo or freehold units.
  2. Although we are currently at a relatively high point for condo starts, it is still lower than during the last condo boom (2007/08).
  3. Freehold (mostly single family) construction moves in a fairly narrow range, with between 500 to 1000 units started per year.
  4. Condo construction is much more boom and bust, with anywhere from 2000 units started per year to a near total halt to construction depending on market conditions.
  5. Construction in this space may be slowing down, with freehold units trending down since 2017 and condo starts potentially weaking as well.

A lot of people point out that many of the condos currently under construction are already pre-sold and will not hit the market when construction is completed.   While it is true that the majority of condo units are pre-sold during the planning or construction phases, I don’t think this actually make a big difference to the impact they have when they are actually built.  After all, who is buying those condo units and what will happen when the condo is completed?

  1. Flippers – People intending to either assign the unit or flip it on completion, at which point it gets added to condo inventory.
  2. First time buyers – Those buying their first property and intending to live in it will move in and vacate a rental.
  3. Other owner occupiers – Those upgrading from an existing home will move in and add their previous home to resale inventory.
  4. Investors – People intending to rent out the unit will add the unit to rental supply on completion.
  5. Out of town buyers – Buyers waiting on a new unit to be built before they move here will occupy the unit as soon as it is created, and have a net zero impact on the market.

So whether the units are pre-sold or not doesn’t really affect their impact on the market, as their completion will still result in one unit being added to either the resale or rental inventories unless they are sold to out of town buyers that wouldn’t have otherwise come here.

However, with current condo construction levels and existing low condo inventories, there is little risk of oversupply from new construction alone.   Inventory is a tricky thing though.  There’s always a shortage of it in hot markets, and then it has a habit of magically coming out of the woodwork once market sentiment turns sour.

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Barrister
Barrister
January 28, 2019 9:13 am

Sidekick: There is no tax break on historical houses. You can apply for a small grant for outside painting, repairs and roofing but at best it couvers a third of the cost and often less like ten per cent. But then you have to deal with people from the historical association telling the contractor how to do the job and what paint colours you have to use. At times their requirements end up costing more than the grant money. But you pay the full property tax.

Sidekick
Sidekick
January 28, 2019 9:08 am

Barrister – I agree. It’s a tricky problem, and I don’t have any solution. I know folks get a tax break on their heritage places, but that doesn’t mean they can afford or want to keep them in tip/top shape.

‘Blair Gowie’ in Oak Bay seems to be a similarly controversial heritage project.

Funny thing is that this is one of the few areas where density can be fairly easily increased.

Barrister
Barrister
January 28, 2019 8:58 am

Sidekick:

The problem facing the city is that a number of the historic houses, mine for example, would be “taken out of the equation: if the developer can then get the property severed into five lots.

I am guessing that in this market my house is worth about 2.5 mil. (The house is in perfect shape and fully updated). If the house is taken out of the equation and the property divided into five 5000 sq. ft. lots or 6 four thousand foot lots then the land value is a lot more. The property has city streets on three side so you dont even have to strata the houses. You would also have clear ocean views from the second floor of the new houses.

Sidekick
Sidekick
January 28, 2019 7:32 am

“mysterious fire”

From what I hear, that house was condemned both on a structural basis and from a hazmat basis (many cats left to their own devices lived there). I’m not even sure prospective buyers could even enter the place to view it due to the potential health hazards.

The city wanted it fully restored, which would have cost an absolute fortune, and may not have actually been possible (too far gone). Don’t think anyone would have purchased it on that basis, and it most likely would have been left to fall apart.

I suspect the developer got tired of the city’s BS and ‘took it out of the equation’. It’s a nice lot, but on a pretty busy street.

Dad
Dad
January 28, 2019 1:24 am

Lurker,
You’re right, my bad. Thanks for catching that.

Barrister
Barrister
January 28, 2019 12:20 am

Josh: 902 Foul Bay was a designated heritage house which had a mysterious fire that destroyed it. I believe that they are selling the lot on the basis that they can sever it into four or even more lots. Assuming four lots of about 6000 sq. feet than each lot is probably worth about 700.

Severance is not a sure thing since there is a strong feeling that the destruction of heritage should not be rewarded.The fear is that the city might only allow it to be severed into two lots and then the present price would be way too high.

Josh
Josh
January 27, 2019 10:57 pm

What’s up with 902 Foul Bay Rd? It’s just a half acre lot and it originally listed for $2.88m in July last year. It’s since dropped 24% to $2.2m. It’s an empty lot with a pile of rubble, who are they kidding?

Jamal McRae
Jamal McRae
January 27, 2019 10:55 pm

ya .. reasonable price sells .. assessed 738,000, sold 654,000… floor plan looks reasonable for reno or touch up … land is good size location is going to get better once the highway construction finish in a couple of years … assuming no major repair is required… it is a good purchase for the value

Lurker
Lurker
January 27, 2019 7:50 pm

@Dad

My PCS shows 2854 Adelaide sold $5k under ask.

Josh
Josh
January 27, 2019 5:06 pm

Went to 2 open houses. One was crap with no one there. Another was decent with quite a few people rolling through it. There was a max of something like 12 people in there at once, including a few families with kids. The condition of the exterior wasn’t what you’d want for a place with a condo fee over $300. Still, lots to like about it and I’d be surprised to see it not sell for asking pretty soon.

Dad
Dad
January 27, 2019 4:38 pm

Barrister,
I went to an open house at 2854 Adelaide last weekend…at least I think it was last weekend. Pretty busy, lots of younger people. Not surprising, because it was priced reasonably well.

I see it has sold in a bidding war. A bit surprised at how much it went over asking, given how tired it looked in person. It needed a lot of TLC.

Barrister
Barrister
January 27, 2019 3:49 pm

Did anybody do open houses this weekend and what was the turn out.

Barrister
Barrister
January 27, 2019 3:48 pm

Josh, it never hurts to low ball an offer. Worst is that they say no. But in a slow market the owner might get back to you in six wees with a counteroffer close to your offer. Too early to tell but it looks like it might be a slow spring.

Josh
Josh
January 27, 2019 3:20 pm

Well I was keeping an eye on 2505 Cotswold Road.

I have a small fear that I’m going to let a desirable property slip through my fingers because I assumed the seller wouldn’t be open to offers so low. Though I doubt I’ll see drops like that in my price range.

Local Fool
Local Fool
January 27, 2019 11:47 am

1) Debt/Money Flow/House Prices going up = we are doomed. 2) Debt/Money Flow/House Prices going down = we are crashing.

I don’t think they’re that black and white. At any rate, that’s not so much the issue as long as they can make a numbers-based case for whatever the argument is. Better Dwelling is actually pretty good at that compared to many other sources.

I dunno. I don’t see a reason to boycott them unless that’s somehow your sole source of market intelligence. A better way is to have several sources that you trust and distil from there.

Viola P
Viola P
January 27, 2019 11:15 am
once and future
once and future
January 27, 2019 10:09 am

Has BetterDwelling just descended into clickbait now? Punwasi used to publish a pretty good article once in a while, but now it always seems to be their other writers going:

1) Debt/Money Flow/House Prices going up = we are doomed.
2) Debt/Money Flow/House Prices going down = we are crashing.

Perhaps someone can kindly post a link here if there is something actually worth reading, I am kicking them off my RSS feed list.

once and future
once and future
January 27, 2019 10:05 am

Those creatures in your back yard are deer not unicorns.

What? You have unicorns in your back yard? Don’t you know they are a protected species? We will now require a $45,000 mytho-biologist report and some 15′ tall silt-fencing.

Triple A Rated
Triple A Rated
January 27, 2019 9:59 am

“Barrister:Introvert:- Those creatures in your back yard are deer not unicorns. The City of Victoria has just had published a two volume set of books, with colour plates, on the identification, care and feeding of unicorns which is available free at the information desk.”

And while you’re there, ask the fine folk whether or not a Variance is required to build this City on Rock n Roll.

Tomato
Tomato
January 27, 2019 7:19 am

I love watching some of these price drops on myrealtycheck.ca

I wonder what the seller’s rationale is – “hmm my house didn’t sell at x price… better drop it by 1% and see how it goes!” hahaha

Local Fool
Local Fool
January 26, 2019 8:18 pm

You gotta listen to this. Allan Mark Angell, a realtor in West Van for 30 years or more, on Howestreet – This Week in Money.

His reviews on Google are certainly colorful. Don’t know how legit they are, but they make him sound a tad machiavellian. Perhaps he works with Layla Yang. A…killer team.

CharlieDontSurf
CharlieDontSurf
January 26, 2019 7:50 pm

Last week Greater Van numbers.

New listings: 1073
Sales: 285

Last 2 weeks combined.

Total new listings: 2269
Total sales: 506

Jerry
Jerry
January 26, 2019 7:47 pm

“Twenty former BC legislature employees…..”

That was a nicely played article. The herd will now forget that the curtain surrounding the trough was drawn back momentarily to reveal a person with no visible qualifications doing a non-job for a salary of $387,000.

A tip of the hat from Alastair Campbell.

CharlieDontSurf
CharlieDontSurf
January 26, 2019 7:29 pm

You gotta listen to this. Allan Mark Angell, a realtor in West Van for 30 years or more, on Howestreet – This Week in Money. Some quotes on the 2018 Vancouver market sales.

“worst sales year of all time”
“never seen anything like it in my life”
“in West Van, if not 50% down, you are not buying a house”
“anyone that bought in the last 2 or 2 1/2 years with a 25% down, it is gone, no
equity left in your home at all”
“prices have no hope in hell of increasing”

Data records of his go back to about 1984.

West Van annual sales
Average: 755
year 2018: 321

Van West annual sales:
Average: 1749
year 2018: 697

https://www.howestreet.com/2019/01/26/this-week-in-money-167/

Grace
Grace
January 26, 2019 7:14 pm

I really wonder about people who have put new suites into their house to help cover their mortgage payments will do when new apartments come on the market. I am following the rental prices quite carefully and I see nice BASEMENT suites going for 1800-2000.00.
I don’t care how nice a basement suite is it is still in someone’s basement!
Sure they are great for students but they can’t pay those prices.

That said I am still terrified about finding a nice place for my husband and myself. At a price we can afford and still eat.
So many people in Victoria and other parts of the island are really struggling. Read afacebook story about BC ers being the physically healthiest in the country but that mental health is amongst the worst. Comments went on and on about people working their butts off with barely enough to pay the bills. There is a lot of stress and anxiety out there.Makes me sad.
Not everyone can up and move to Halifax.

Barrister
Barrister
January 26, 2019 6:10 pm

Introvert:- Those creatures in your back yard are deer not unicorns. The City of Victoria has just had published a two volume set of books, with colour plates, on the identification, care and feeding of unicorns which is available free at the information desk.

Deb
Deb
January 26, 2019 5:43 pm

I can’t tell any trend from these sites. Seems about the same to me.

I am currently looking for a place to rent for six months. I spoke to a property manager who looks after two multi story buildings one on Rupert Terrace and another close by. He has two 1 bedroom places available that have been advertised since the beginning of January and neither is rented yet. He said it was really changing now.

Also talked to a landlord on Rocklands with a place for rent also been on the market for a couple of weeks. Things are changing, just slowly, as expected.

Introvert
Introvert
January 26, 2019 5:32 pm

If your mortgage were nearly double what they are now (since you said your place has gone up 65%, say it’s a $500,000 house, at 20% down, your $400,000 dollar mortgage would be a $725,000 mortgage if you bought now) would you actually be able to pay it?

The numbers are way tougher today, that’s for sure. Glad we bought nine years ago instead of waiting for unicorns.

Steve
Steve
January 26, 2019 5:16 pm

Well I was keeping an eye on 2505 Cotswold Road. Originally listed at $2,150,000. Price reduction to $1,895,000. Sold for $1,675,000. That is pretty much 500k or 25% under original ask. I would love to get into an Uplands lot to build new on for under 1.2 but not sure how long I will have to wait. Might have to wait till a recession/fear.

Introvert
Introvert
January 26, 2019 5:16 pm

We always knew there was rot. Now we’re discovering there was a lot.

—Dr. Seuss (just kidding)

Twenty former B.C. legislature employees say they were fired for raising concerns about wasteful spending
comment image

https://vancouversun.com/news/local-news/twenty-former-legislature-employees-said-they-were-fired-for-raising-concerns-about-wasteful-spending

James Soper
James Soper
January 26, 2019 2:41 pm

If this person overpaid but holds for 10 years, there are good odds that s/he will probably look pretty smart in retrospect.

That’s surmising that they could actually financially do it. If your mortgage were nearly double what they are now (since you said your place has gone up 65%, say it’s a $500,000 house, at 20% down, your $400,000 dollar mortgage would be a $725,000 mortgage if you bought now) would you actually be able to pay it?

Bitterbear
Bitterbear
January 26, 2019 2:00 pm

Just had my first avocado toast and millenials ain’t wrong. It’s DELICIOUS!

Introvert
Introvert
January 26, 2019 11:22 am

They effectively bought a house $175K over assessed and $89K over ask and they will barely get out two years later even if they sell for ask.

If this person overpaid but holds for 10 years, there are good odds that s/he will probably look pretty smart in retrospect.

I’m also on a site for tenants and there are so many people looking, particularly those with pets.

We never really consider this, but pets surely motivate renters to buy.

Around the corner from us there were two lots for sale for quite a while and several price drops. Never sold so now they took them off the market and building on them instead. Seeing if the market for a complete house is better.

Are you talking about the ones on Kenmore, by the school?

Some analysis by the National Bank. Victoria shown as always cheaper to rent.

Cheaper to rent, but how does the net worth comparison between renters and owners look? That could change going forward, but I doubt it.

Jamal McRae
Jamal McRae
January 26, 2019 11:02 am

…I don’t understand. Are we supposed to feel sorry for the landlord who refused to rent to the father of two children because he was on “welfare”?

it is the same reason that the banks wont lend money to that father on welfare …. there is a big chance that he might default on his payment … what is wrong with protecting their own interest?

it is a numbers game..

inreallove
inreallove
January 26, 2019 11:00 am

Some analysis by the National Bank. Victoria shown as always cheaper to rent.

https://www.nbc.ca/content/dam/bnc/en/rates-and-analysis/economic-analysis/housing-affordability.pdf

Dad
Dad
January 26, 2019 10:32 am

“The BC Human Rights Tribunal is a tenant’s best friend when dealing with a ‘bad’ landlord.”

…I don’t understand. Are we supposed to feel sorry for the landlord who refused to rent to the father of two children because he was on “welfare”?

James Soper
James Soper
January 26, 2019 10:10 am

I can’t tell any trend from these sites. Seems about the same to me.
I’m on a group for landlords and there is no issue being raised with this currently. I’m also on a site for tenants and there are so many people looking, particularly those with pets.

I just look every once and a while to see what’s out there. Can’t say I’ve seen anything with a “first month free” option in quite some time.

LeoM
LeoM
January 26, 2019 9:14 am
totoro
totoro
January 26, 2019 8:47 am

I went to UsedVic, Kijiji, PadMapper, etc and it seems the trend is common

I can’t tell any trend from these sites. Seems about the same to me.

I’m on a group for landlords and there is no issue being raised with this currently. I’m also on a site for tenants and there are so many people looking, particularly those with pets.

yvr-yyc-yyj
yvr-yyc-yyj
January 26, 2019 8:25 am

Replying to Bitterbear #55296

“Anyone know exactly what bylaw seven young unrelated women in a house are violating? I can’t find anything.
When I went to university, campus would allow boys in a frat house but would not permit girls to live in a sorority because it violated brothel bylaws.
I personally know of multiple houses full of young unrelated men. Are they at risk of losing housing as well?”

I am not sure of what Bylaw, but I do know my Insurance Company told me if I have more then 4 different last names of tenants(unrelated). Instead of regular rental insurance I would have to be classified as a boarding house and the insurance would price would be more then triple the amount. That was a few years ago, so maybe even more now.

So, I have a rental house with students and I always say 4 people maximum.

Deryk Houston
Deryk Houston
January 26, 2019 8:10 am

I have always liked this forum and I appreciate all the work that Leo has done.
I like it because it gives me a bit of a pulse of what is happening around Victoria’s real estate.
One problem with it however is that I don’t see a lot of new people on the site. It is often the same core of people commenting and this leads me to worry about the picture I see overall.
( I believe that Open line radio talk shows have the same problem. It tends to attract people who are somewhat angry and it often sounds like the whole world is going to hell in a basket. )
One thing is clear to me. When you are looking for real estate (SFH) in the Victoria area, there is very little to choose from. When you see something good, and I don’t mean just the price …it get’s picked up fast. That’s been our experience.

Bitterbear
Bitterbear
January 26, 2019 7:43 am

Anyone know exactly what bylaw seven young unrelated women in a house are violating? I can’t find anything.

When I went to university, campus would allow boys in a frat house but would not permit girls to live in a sorority because it violated brothel bylaws.

I personally know of multiple houses full of young unrelated men. Are they at risk of losing housing as well?

patriotz
patriotz
January 26, 2019 2:27 am

I think what matters is the classification at BCAssessment

Thanks for the correction. Note that “hotels and motels” are expressly in Class 6.

https://info.bcassessment.ca/Services-products/property-classes-and-exemptions/understanding-property-classes-and-exemptions

Barrister
Barrister
January 26, 2019 1:11 am

LeoM Interesting read. Cannot say I ever had the urge to be a small time landlord and, in a moment of insanity,if I decided to invest in a rental property it would a commercial property.

LeoM
LeoM
January 25, 2019 11:12 pm

So you wanna be a landlord…
The BC Human Rights Tribunal is a tenant’s best friend when dealing with a ‘bad’ landlord.

“I was discriminated against in my housing”
http://www.bchrt.gov.bc.ca/human-rights-duties/remedies/compensation/housing.htm#bchrt201249

Introvert
Introvert
January 25, 2019 8:04 pm

comment image

once and future
once and future
January 25, 2019 7:05 pm

The tax applies to residentially zoned properties only.

I don’t think the zoning matters at all. I think what matters is the classification at BCAssessment (see Class 1 and Class 9 in the legislation).

patriotz
patriotz
January 25, 2019 6:28 pm

For that matter does it apply to hotels that have an efficiency kitchen in the suite?

The tax applies to residentially zoned properties only. What the status is of those old B&B’s I don’t know.

once and future
once and future
January 25, 2019 4:25 pm

Hey, I’m not saying this is the best approach for everyone.

YeahRight, you have the right attitude. Well done.

As someone smart once said, we are often very bad at predicting which monetary purchases will actually bring us happiness. It sounds like you have it figured out.

Michael
Michael
January 25, 2019 4:21 pm

Just FYI….
However this would be much more telling of reality if it wasn’t adjusted.

Here’s one of Vic that’s unadjusted (with rates incl).
comment image

It’s certainly different this time. The equation is unique. An unprecedented surge of rentals, no recession, low rates…

Lots of similarities to the 60s – surge started in rentals, no recession ’til 70s, low but climbing rates… demographics, leaders (Nixon/P Trudeau)……

Cynic
Cynic
January 25, 2019 2:59 pm

Interesting snapshot of two things…

1) if you overpaid in a bidding war in 2016, two years haven’t really been too kind; and
2) once again, realtors are playing the system when it comes to DOM and providing that accurate picture of the market.

795 Martin Rd

2016
MLS# 370273
Assessed $614,000
Ask $700,000
Sold $789,000

2018 (Nov 05)
MLS# 401367
Assessed $785,000
Ask: $859,900
DOM: 81
No Sale

2019 (Jan 25)
MLS# 405047
Assessed $853,000
Ask: $849,900
DOM: 0

So once again, if a sale goes through within the next couple weeks, the 80 days it sat on the market will not be counted. If they sell for ask, they will make a $61K gross before any expenses. Will be interesting to watch. They effectively bought a house $175K over assessed and $89K over ask and they will barely get out two years later even if they sell for ask. Definitely not a great short term investment as has already been mentioned here before. But also definitely illustrates the FOMO / chaos / rampant speculation that the market experienced during that time period.

James Soper
James Soper
January 25, 2019 2:58 pm

We are up Island and thinking of coming to Victoria, renting initially, could anyone recommend a good property management company to use in Victoria?

I was happy with the guy I had at proline. (Adam Taylor – adam@prolinemanagement.com)

Patrick
Patrick
January 25, 2019 2:58 pm

LeoS,

Nice post and charts. Thanks.

The rental starts chart seems to go to end of 2017, where there is the start of a steep fall. Do you have any 2018 data for rental starts (the non rental data in your next chart goes to end of 2018). I’m guessing it takes about average1.5 years from rental start to completion, have you seen data on that?

tdm2121
tdm2121
January 25, 2019 2:35 pm

We are up Island and thinking of coming to Victoria, renting initially, could anyone recommend a good property management company to use in Victoria?
(rather than Kijji/Craigslist/Used)

Thanks in advance.

Jamal McRae
Jamal McRae
January 25, 2019 2:21 pm

Cost and money .. and lack of inventory to demolish .. labour cost too much in Canada to make it efficienct

caveat emptor
caveat emptor
January 25, 2019 2:00 pm

So why are apartments so much more volatile than SFH construction? I get that builders want to build apartments when times are good but why doesn’t that hold as much for SFH? Is it easier to make money in SFH no matter the market conditions? Is it because fewer SFHs are built on spec? Or are SFHs inherently more desirable so that there is always a latent demand?

dasmo
January 25, 2019 1:57 pm

Water is always serious as it’s the slow killer. What this particular mysterious problem will do is destroy my front door as that is the weak spot it finds. It sucks because it’s not obvious as to the source exactly. Its above the front door which is under 10 feet of cover. We can rule out simple wind driven rain at least. Condensation from warm air coming up from the door frame seem behind the siding? a small roof Leak? a condensation issue in the roof itself? Who knows. At this point we take it bit by bit. So I’m not even done and I’m taking it apart. At least it’s not going to cost me anything more than heart ache. This is a warranty issue after all.

The handy thing is it can’t go into the walls since they are foam and concrete and sealed off. So it reared it’s ugly head now and not ten years from now with a huge rotten wood and mold problem. So I at least congratulate myself for building ICF walls…..

ks112
ks112
January 25, 2019 1:36 pm

@Dasmo,

I also know a builder, basically the biggest risk is not overpaying for the land (whether its a new lot or a tear down). Right now he has admitted adjusting to the new reality that his previous average margin of ~20% is no longer possible with the houses he has listed currently for sale. If the sales slowdown continues then sooner or later it will push down the price of land and trade prices and will be enable builders to still make an acceptable profit building houses at lower prices.

Marko Juras
January 25, 2019 1:33 pm

I’m talking to my builder again because my money pit has a water issue.

Yikes, hope nothing serious.

Dasmo
Dasmo
January 25, 2019 1:23 pm

It’s certainly different this time. The equation is unique. An unprecedented surge of rentals, no recession, low rates, restricted lending, no freehold inventory, slumping sales. I’m still slightly bearish for this year but there are some contradictory influences here so hardly a perfect storm but some sort of storm.

The private lending thing is interesting. If they make that tighter there might be even less inventory. I’m talking to my builder again because my money pit has a water issue. Anyway he has had to turn to the loan sharks for money to build. This will of course make building more expensive. Cut his type off entirely and it’s simply less SFH builders.

yvr-yyc-yyj
yvr-yyc-yyj
January 25, 2019 1:17 pm

I received my Speculation Tax and Vacancy Letter today. I have 3 properties that fall in the Vancouver & Victoria areas. All three properties are listed on the letter, so they already compiled the information from land titles. So, they are being somewhat efficient.

But my spouse is still waiting for their letter.

Local Fool
Local Fool
January 25, 2019 12:44 pm

comment image

James Soper
James Soper
January 25, 2019 12:09 pm

Umm didn’t Viclandlord say he just rented out his 500 sqf suite for $1650 a month and there was lots of interest? Where are you guys seeing rents coming down?

Apparently? I don’t understand why anyone would pay that, I’ve never paid anything close to that.
Saw it on craigslist, for a 3 bedroom around $2000.

Tomato
Tomato
January 25, 2019 11:27 am

@guest_55255 @guest_55268

You can sleep well or eat well. The choice is yours. There’s no wrong answer.

caveat emptor
caveat emptor
January 25, 2019 11:21 am

We are:
Debt free.
Money saved.
Roof over our heads.
Land with veg. garden and a fruit tree. Nice Hood with friendly Neighbours.
Clothed.
Not cold, ever.
Active and Healthy.
And Happy with what we have accomplished (In Greater Victoria no less).

And have your priorities straight – congrats

ks112
ks112
January 25, 2019 10:35 am

Umm didn’t Viclandlord say he just rented out his 500 sqf suite for $1650 a month and there was lots of interest? Where are you guys seeing rents coming down?

Patrick
Patrick
January 25, 2019 10:07 am

LeoS: I would not be surprised if we had a jump in vacancy rate from the current 1.2% to 3% this year and beyond 4% in 2020

It’s hard to imagine how the spec tax could continue if the rental vacancy rate rises to 4% – what would be the purpose? (since there would already 4% of rentals vacant and available for rent). Continuing the spec tax would just be punishing landlords for building too many rental units.

If the vacancy rate rises to 4%, ….. landlords who create rental properties but fail to rent them all out for 6 months per year because of the oversupply (4 % vacancy rate), will get rewarded by no rental income AND a spec tax.

The higher the rental vacancy rate, the more “6 months vacant” rental properties there will be, all subject to spec tax.

James Soper
James Soper
January 25, 2019 10:07 am

Rents seem to be coming down and prospective tenants are different.

yep, first time in a while I’ve seen the first month free offer.

Yeah Right
Yeah Right
January 25, 2019 10:03 am

@Kenny G
#55256

@ Yeah Right, good for you but your lifestyle is not for most people, Whenever I hear stories of people in their 20’s and 30’s who live very frugally, I find it sad, these people become obsessed with not spending money. I was able to retire in my mid 40’s and can relate to watching my money but got bored with “living simply”, I though I was living fairly simple at 6-7K month without a mortgage but i have 2 kids and we like to travel and kids play multiple sports, golf memberships etc, life is meant to be lived not sitting in a dark house with the power turned off.

The thing is, we still spend money and travel and eat well (just not as frivolously as the average North American). Bought a “medium expensive” Kamado Premium Ceramic Grill and cook better meals than going out, so we splurge on better cuts of meats and quality upscale vegetables and ingredients. And still enjoy activities (hiking, biking, kayaking, rock climbing, Aikido, etc.). My wife just this fall went on a 16 hour flight to visit her parents over seas for 3 week $$$$.

This summer we are going Halibut fishing with the neighbours. It’s gonna cost a lot $$$$. But really we can afford it. More so because of our life style.

We may deprive our selves of a big fancy house, and a big fancy car, and big fancy accessories (watches, clothing, gadgets, etc). But we find those thing silly anyways. We just find the frugal lifestyle suits us better, and we still get to do a lot of things others can not, go figure.

We are:

Debt free.
Money saved.
Roof over our heads.
Land with veg. garden and a fruit tree. Nice Hood with friendly Neighbours.
Clothed.
Not cold, ever.
Active and Healthy.
And Happy with what we have accomplished (In Greater Victoria no less).

Hey, I’m not saying this is the best approach for everyone. Even we look back and say “Shoulda Woulda Coulda” (Knowing now what we didn’t then). But jugging what a lot of media headlines have been saying about Canadians being in financial trouble, I think we are doing a heck of a job and will be all right in our golden years.

So No. We are not in the dark, not living!

https://www.greaterfool.ca/2019/01/24/not-fake/

LeoM
LeoM
January 25, 2019 9:48 am

One question for the landlords on this site:
What’s up with rentals in SFH?

Rents seem to be coming down and prospective tenants are different.

I’ve noticed rental units in houses (main floor and basement suites or the entire house) are having trouble renting their units. I’m just talking about units within SFH, not condos.

The trouble is three-fold; prospective tenants answering the advertisements are fewer and they tend to expect lower rent and their qualifications are dubious (work history/tenant history).

People I know with SFH rental units are lowering their rent when advertising, trying to get quality tenants. Just one year ago these same landlords were raising rents and they were overwhelmed with highly qualified tenant applications. This year it’s the opposite trend. In one case their basement suite tenants, a professional couple, moved and their new tenant drives an old beater and collects bottles and cans to supplement his income, and their SFH is in a nice part of Fairfield.

I only know a few landlords so my observation is limited to relatively few SFH, but I went to UsedVic, Kijiji, PadMapper, etc and it seems the trend is common. If this is a trend, then I wonder if basement suites will become unrentable when 5000 new apartments become available later this year.

Anyone here with more insight?

Local Fool
Local Fool
January 25, 2019 8:55 am

Canada mulls measures to curb private lenders’ growth – sources

Canada is considering subjecting private lenders to the same mortgage stress test rules faced by banks to prevent housing markets from being destabilized by the lenders’ rapid growth, three sources with direct knowledge of the matter said.

Officials from the Department of Finance, Bank of Canada, Office of the Superintendent of Financial Institutions and the Canada Mortgage and Housing Corp have discussed whether expansion by private lenders over the past year poses a threat to economic stability, said the sources, who declined to be named because the talks are confidential.

Each of the agencies declined to comment.

https://ca.reuters.com/article/topNews/idCAKCN1PJ1QR-OCATP

Barrister
Barrister
January 25, 2019 8:15 am

I have a question, will the new spec tax apply to the old established bed and breakfasts that are in the city. I am curious because there are about half a dozen here in Rockland.
For that matter does it apply to hotels that have an efficiency kitchen in the suite?

Sidekick
Sidekick
January 25, 2019 7:38 am

Any newer building (last 10 years) will be engineered for a decent earthquake. No idea about older places.

transformer
transformer
January 24, 2019 11:49 pm

What do people think of tall condo buildings in relation to the Big One? Would they stand or crumble?

(posting here for visibility. Thanks once and future!)

once and future
once and future
January 24, 2019 11:29 pm

Great work Leo. I am really surprised that the non-rental starts are so much lower than they appeared at first.

Barrister
Barrister
January 24, 2019 11:23 pm

Great work; have you ever offered to have your stuff published weekly in the TC. While I doubt that they will pay you they are desperate for free copy since the staff has been reduced.

Local Fool
Local Fool
January 24, 2019 11:16 pm

Inventory is a tricky thing though. There’s always a shortage of it in hot markets, and then it has a habit of magically coming out of the woodwork once market sentiment turns sour.

😛