Demographia: We’re number 2!
You may have heard of the Demographia Housing Affordability Survey. This comes out once a year and they compare various cities around the world based on the median multiple: the median house price divided by the median household income. A ratio of 3 or less is deemed “affordable” (only 9 out of the 91 compared major markets fell into this category: all in the United States). Cities with ratios above 5.1 were classified as “severely unaffordable”, and about a third of cities landed in that category.
If you look at Canada as a whole, it doesn’t appear there is anything to be concerned about. Compared to Australia and New Zealand our housing affordability is tame.
Of course as you may have heard, Canada is a big place, and there is no such thing as a Canadian housing market. In fact in the Demographia survey, Canadian markets are heavily represented both on the most affordable end of the scale (Cape Breton and Fort Mac are the most affordable two markets out of the 309 cities they compared) and the least affordable end (we have 6 of the 20 least affordable markets). In Victoria, we tend to end up more on the latter end of that scale (surprise!). After spending some time languishing in 3rd or 4th place in Canada (sometimes behind Abbotsford and Kelowna), in the last two years we have been a solid second behind only Vancouver. In other words outside of Vancouver, Victoria has the least affordable housing market in all of Canada.
I pulled the affordability ratios out of all of their surveys for Victoria as well as the two biggest markets in the country.
My Take:
I like the Demographia Surveys. Their methodology is more or less transparent, they consistently publish their annual reports to the public, and they are up front with their biases and positions. That position is that affordable housing requires permissive zoning policies. In fact they go a step further and assert that it is impossible for a city to create affordable housing by increasing density: affordable housing requires geographic expansion.
Although the evidence so far does seem to support their stance, I’m not quite ready to give up on the hope that intelligently making a city denser and keeping it relatively compact can be done without horribly unaffordable housing. I hope the only solution is not endless sprawl. They point to Vancouver as a prime example of a city where 4 decades of urban containment policy has lead to price escalation, but if you look at the data it’s only in the last 15 years or so that Vancouver has gone from a fairly unaffordable median multiple of 5.3 to crazy town (12.6). It seems unlikely that this recent escalation is all due to the long standing policy of urban containment.
I also have a bit of a problem with the median sales price as an accurate price gauge for the entire market. The median is great if you restrict yourself to one property type because the distribution tends to be more or less a normal one, which makes the median quite stable. However for the entire market including condos and single family, the median falls right around the price range of a teardown single family or a high end condo and the relatively fewer sales in that range make the median not reflective of the price of either type of housing. However this limitation is not catastrophic and just leads to the median dwelling price being a little less stable than it would be for just one property type.
Their insistence that affordable housing requires a median multiple under 3 may also be a bit of a fantasy at this point. They state they leave out interest rates because those can change over the mortgage – and they are right about that – but in the end low interest rates are a primary factor in affordability. Expecting markets to return to such a low median multiple under today’s rates is a losing proposition and only happens when economic conditions are poor (as can be seen in their list of the most affordable markets). However this doesn’t affect the comparison within a country, where interest rates and credit conditions are equal across markets.
We are now tracking very closely to Toronto’s level of affordability which is interesting given how different the cities are. Cities generally become less affordable as they grow according to Demographia’s data, and it’s not good news for our future competitiveness if we are already matching Canada’s largest city with a tiny fraction of their population. I think if we are to make the transition from sleepy retiree town to real working city, we will need to find a way to make housing more affordable so that businesses can expand and continue to attract talent.
Also weekly sales numbers courtesy of the VREB.
| January 2019 |
Jan
2018
|
||||
|---|---|---|---|---|---|
| Wk 1 | Wk 2 | Wk 3 | Wk 4 | ||
| Sales | 42 | 93 | 171 | 261 | 431 |
| New Listings | 92 | 274 | 501 | 711 | 772 |
| Active Listings | 1828 | 1884 | 1914 | 1980 | 1491 |
| Sales to New Listings | 46% | 34% | 34% | 37% | 56% |
| Sales Projection | — | 392 | 316 | 330 | |
| Months of Inventory | 3.5 | ||||
Sales took a slight bump last week but still down about a quarter from this time last year. Listings meanwhile continue to come on board, currently at a rate about 10% faster than last year. We’ve got four solid business days left so I suspect we will end the month with sales down just over 20% from last year. That would put us back to around 2014 levels of market activity.
You can see on this post just how Vancouver real estate prices are coming down due to the government intervention on all 3 levels of government.
https://www.strawhomes.com/blog/2019/06/19/vancouver-housing-market-correction-2019-should-i-buy/
Lol Dasmo, u decided to use $900k in cash because at the time the interest on the mortgage is higher than the rate you would have got on any suitable fixed income investment and the equity markets crashed. And your also not an entrepreneur. Have I covered all my basis yet?
January numbers: https://househuntvictoria.ca/2019/01/31/january-mediocre-sales-condo-prices-stumble/
The answer is…. If I bought the house with $900k in cash I’m an idiot…
@ local fool
I kind of enjoy pointing out the obvious fundamental flaws in the comments certain uneducated bulls make. I even think that some the educated bulls on the forum think they are clowns.
Hey Patrick, pop quiz:
If I bought a house for $1M and I financed it with $900k cash and a $100k mortgage, then one month later the market crashes and my house is worth $800k. Am I a bag holder? I still have positive equity of pretty much $700k (plus whatever tiny principal paydown I made in that month) so I am still sitting pretty right?
Ponder on that for awhile and if you can answer that correctly then you will do better in life, I promise you 😉
Noone who has ever had a mortgage would post math that bad in describing a typical mortgage. A mortgage starts out about 70:30 interest:principal , not the other way around like you think it works.
So based on that , I’m assuming you rent.
And that’s the worst of it…
@ Dasmo,
So I was assuming 70/30 as an average over 10 years to be conservative, so @ 55/45 then the owner would have need to shell out close to 300k in the first 10 years in cash to pay off 150k in mortgage debt.
Hey Patrick, hope ur taking notes 😉
One more observation I have made is that some of the bulls automatically assume that just because someone is bearish on Victoria realestate it automatically makes them poor. Like seriously how sheltered and narrow minded are you? I know tons of people with 7+ figure net worths that are bearish on BC realestate.
@ Marko, this is slightly off topic but have you ever looked at an investment condo in Edmonton or Calgary? Cap rates there are much attractive than Victoria, you can probably low ball on top right now and oil/gas is cyclical so there is appreciation opportunity in the future. I wonder if you can be cashflow positive even when u hire property management company?
In fact if the first five years were at 2.7% and the next five were at 3.7% then the pay off would be more like 55 principle 45 interest. So ya, Your math is a bit wrong.
Ks112. Just don’t bother. You’re encouraging exactly the same pointless exchange you were complaining about earlier.
@ Patrick
Are you not going to thank me for the personal finance lesson I just gave you?
Also how do u know I am not both a home owner and a renter? Maybe I rent out the entire house I own in Gordon head but also rent a condo downtown to live because I work downtown and have grandfathered cheap rent;). Maybe I am on the forum trying to gauge if I should sell the house I currently own (worth around 800k ish which is why I am so interested in that market), keep the cash in hand and then buy something nicer once the higher end prices come down.
Lol I am not even that much of a bear (I am thinking lower end may drop 15% max and hopefully the $1.5M range will come down closer to $1M) but man you and introvert sure like to talk a bunch of uneducated childish smack over and over again.
Or maybe I am 40 like introvert and live for free in my parent’s basement.
@K112 Mortgages work on a sliding scale with interest being front end loaded. So it depends on the rate over time. Over ten years at an average of 3.5% you will actually end up at a 50/50 ratio of principle to interest.
.. not every one is afraid of having neighbours close to your fences … why are people in Victoria scare of density … seriously .. travel around the world and see what real density in a good size city is about …
Also, please don’t bother replying with “oh but my tenant in my basement pays for part of the mortgage etc.” Because that just means the home owner also only gets to use a portion of the home that he/she bought.
My parents have lived in 2 beds 1 bath (upper of a bungalow in Oaklands) for 20+ yrs. Also, for 20+ yrs they have rented the basement suite. They don’t need to rent it anymore but they don’t need the space so they continue to do so. I am guessing that even after income taxes they’ve pulled more out of the suite than the purchase price of the home.
Alternatively they could have bought a 2 bed 1 bath one level for $40,000 less back in 1995, with no suite/income that would now be worth $200,000 less. The extra $200,000 capital value would offset any theoretical capital gains taxes secondary to suite but it doesn’t matter anyway as they plan to live it out in the home.
I am just a big fan of suites. You don’t need to rent it but it is always there and I have yet to make any easier money in my life. Nothing comes remotely close in terms of return/lack of effort. I have to do 3 mere postings to net what my tenant pays me per month. 3 mere postings is work involved. Meeting sellers including challenging characters like any people business, paperwork, data input, installing signs, answering phone calls/emails, etc., etc…….tenant I type in the e-transfer password.
Introvert,
I don’t actually live in Langford. I live in the City of Victoria and to be honest, density isn’t really my cup of tea either. But in a growing region, you have to put people somewhere. My opinion is that Langford is doing a good job of accommodating that growth by building a range of housing from low to high density.
Not everyone wants to or is able to live in an sfd, and not everyone wants to live in a condo. A mix of houses, duplexes, row houses, townhouses, and condos is a positive imo.
While you, the clever renter, have used your $210k rental payments over ten years to reduce your landlord’s mortgage debt.
Hi dad,
I’ve hiked in every park you mentioned many times. They’re gems.
I’m just not a fan of dense residential communities. I think density is great downtown (City of Victoria), but that’s about it. I’m not a fan of Uptown, BTW.
The older parts of Langford aren’t that dense, but most of the new subdivisions are horrible—fairly large houses on very small lots, such that your house is literally six feet from your neighbour’s house on each side and everyone’s back yard is a tiny patch of grass. With every household owning 2+ vehicles and every fifth household owning a boat that sits on the driveway, street parking is a nightmare. Being all squished in there like that isn’t my cup of tea, and I think Langford could do better. But the residents seem to like how their municipality is developing, so by that measure Langford is doing a good job.
Lol @ Patrick. First, I love how you got your panties in a knot because I simply mentioned that bears should post more actual bag holders.
Second, please let me educate you on how principal pay down of a mortgage works. How does principal paydown of a mortgage happen? Well it’s kinda simple actually, the home owner takes money from his/her bank account and gives it to the mortgage provider. What does that mean? It means you are using an asset (cash) that you have to pay down a liability (mortgage debt) that you also have. And the result is that your net worth stays the same because those are offsetting transactions.
Now i am not sure if your familiar with what an amortizing mortgage is, but in an amortizing mortgage the first years of your payment term you are paying quite abit of interest. So in your example where a home owner has payed down 150k in principal in 10 years, if we assume during that 10 years the average principal to interest ratio in the mortgage payment is 70/30 (math is prob lil off). So that means the home owner actually has spent a little over 210k in cash to reduce his or her mortgage debt by 150k.
Also, please don’t bother replying with “oh but my tenant in my basement pays for part of the mortgage etc.” Because that just means the home owner also only gets to use a portion of the home that he/she bought.
As far as parks are concerned Langford is definitely freeloading off of the regional and provincial taxpayer
100% agree with more mix housing development in core Victoria .. unfortunately … there seems to be a lot of anti development residing in James bay/fairfield area – Any one who goes down on that moss street event can see that anti development banner held up by the local properties owner… so many Nimby’s… dont see core Victoria area being redeveloped into any thing nice within the next decades .. too many property owners who bought in 2 decades ago are still alive … need to wait for another generation of people to change the atmosphere of the place
“More likely a townhome development in Langford….there aren’t a ton of examples of giant buildings on quiet streets in the middle of residential neighbourhoods.”
I am probably in the minority here, but I see a lot of positives in the way Langford is developing and the mix of housing being built.
It also has some things that Saanich does not like a core area with lots of services and medium density residential. It’s very walkable. What’s Saanich’s core? A mall designed to look like a city? Mt. Doug Market?
As for parks, maybe the city-owned ones aren’t that great, who knows. I’ve never noticed because there are so many great parks nearby (Goldstream, Gowlland Tod, Mt. Wells, Mill Hill, Thetis Lake, etc.)
Introvert seems like she doesn’t get out much.
With regard to real estate, that only happens when property taxes approach the rental value of the property. Because property owners only have two choices, pay the taxes or walk. It’s entirely different from income taxes which may affect incentive to earn, or sales taxes which may encourage underground sales. This is something that Adam Smith himself recognized.
Needless to say Victoria is not remotely near that point.
Happy to see small tax increase to buy land for parks. Can never have enough.
Marko, I absolutely agree that I dont see the costs of building a new house dropping any time soon.
I don’t believe I have the patience or knowhow at this point but I like hearing about various options. I just dump it all into WealthSimple. I got into their trade app beta, so I might have some fun with that.
Kudos to Saanich. Imagine the same scenario occurring in Langford … two giant condo buildings would be standing there in no time.
More likely a townhome development in Langford….there aren’t a ton of examples of giant buildings on quiet streets in the middle of residential neighbourhoods.
That area in Saanich doesn’t have a ton of parks so not a bad move in my opinion but as soon as the park opens, you’ll have people hanging out in the parking chatting about how unaffordable Victoria is.
Kudos to Saanich. Imagine the same scenario occurring in Langford … two giant condo buildings would be standing there in no time.
Saanich OKs $5.5M-deal for park edging Royal Jubilee Hospital
https://www.timescolonist.com/news/local/saanich-oks-5-5m-deal-for-park-edging-royal-jubilee-hospital-1.23618126
@ Josh
#55609
Yes, I do it through Questrade.
But I did a lot of comparing to settle on those versions of ETFs. If I got the equivalent from Vanguard it would have been more. But probably still lower than your 0.4 -which is really good as well.
You might want to consider TD Mutual Funds ‑ e‑Series, with MERs as low as 0.33%*
https://www.td.com/ca/en/personal-banking/products/saving-investing/mutual-funds/td-eseries-funds/
But with Questrade for me, it’s all about controlling my own funds and keeping the fees very low.
Buying ETFs are virtually free as well at Questrade.
Selling does still cost (Sell 1¢/share; min. $4.95 to max. $9.95). So I just buy to balance the portfolio and decide at year end if I want to sell bloated assets to balance it back to those numbers.
It takes me moments to contribute every payday. And around 15min at the end of the year if I need to rebalance the whole allocation (I built an excel calculator).
https://www.questrade.com/pricing/self-directed-commissions-plans-fees?refid=sjvzuniv
Marko Gov thinks the tax trough will continue indefinitely. At a point increased taxes actually bring in less revenue.
Here’s the info on that:
I don’t get Saanich’s business model. Someone buys a 500k teardown in the Swan Lake area. They replace is with a $1.2 million house. You keep the mill rate the same (owners of existing homes don’t see their taxes go up) and you just increased your tax revenue forever (minus the new home depreciating on the assessment) for infrastructure improvements.
The $1.2 million home has a modern safe suite above the garage so affordability also improves.
Discouraging building with higher fees not sure if that makes sense for maintaining infrastructure.
I thought my 0.4 was good. Is that a self-managed account?
My favorite compounding demonstration is A Penny Doubled Everyday:
If you were given a choice to receive one million dollars in one month or a penny doubled every day for 30 days which one would you choose?
Day 1: $.01
Day 2: $.02
Day 3: $.04
Day 4: $.08
Day 5: $.16
Day 6: $.32
Day 7: $.64
Day 8: $1.28
Day 9: $2.56
Day 10: $5.12
Day 11: $10.24
Day 12: $20.48
Day 13: $40.96
Day 14: $81.92
Day 15: $163.84
Day 16: $327.68
Day 17: $655.36
Day 18: $1,310.72
Day 19: $2,621.44
Day 20: $5,242.88
Day 21: $10,485.76
Day 22: $20,971.52
Day 23: $41,943.04
Day 24: $83,886.08
Day 25: $167,772.16
Day 26: $335,544.32
Day 27: $671,088.64
Day 28: $1,342,177.28
Day 29: $2,684,354.56
Day 30: $5,368,709.12
Day 31: $10737418.24
Ontario considering allowing realtors to tell prospective home buyers the prices of other offers
The government launched a consultation Thursday looking at the Real Estate and Business Brokers Act, and that’s one rule they’re looking at changing.
Currently, if there are multiple bids on a home, the seller’s broker can only disclose the number of competing offers, but not the details of them.
https://business.financialpost.com/real-estate/ontario-may-allow-disclosure-of-prices-in-real-estate-bidding-wars
Here’s the info on that:
https://www.timescolonist.com/real-estate/housing-affordability-eroding-saanich-to-boost-building-costs-1.23615217
The example given was someone with $0 in 2009, (no down payment, for simplicity) who now has $450k equity. It is more remarkable (a bigger “yay!”) to turn nothing (*) into $450k, than to turn $500k into $919k. If you want more details on how to do that, ask some of the many bulls here who have done it.
( * ) Factor in a small down payment if you like
The average Joe doesn’t really comprehend how many stakeholders are involved that have caused construction costs to balloon. You need to run like a two-page spreadsheet to add up a all the costs that have nothing to do with physical construction.
Saanich doing their best to help affordability by piling on more fees -> https://www.saanichnews.com/news/head-of-greater-victoria-builders-warns-of-changing-construction-climate/
Then add WCB, Building Code, BC Housing, etc., every year with more and more bureaucracy.
Quality is a house built now better? (laughing again)
Of course. (sarcasm) Honestly, we’ve just cut more and more things out of our houses over the years. Can’t really get the buyer to pay for TJIs/plywood and stupid crap like we use to insulate interior walls around laundry rooms. Even as a huge Tesla fan after doing 4 houses in a row with a Nema 14-50 (charging plug for electric car) decided to cut ($150) from last house as no one cared when I pointed things like that out to them. Stopped doing all the extras, houses still sell no problem.
And of course, the building code instead of making a $150 electric plug in garages mandatory, something that could be super useful in 5-10 years, is focused on all sorts of other non-sense.
The parameter was 10 years, not the “last few”. Someone buying 10 years ago has almost no chance of being a “bag holder” unless they’ve been raiding that equity all this time. Even then, that’d be tough given there are limits to how much you can raid.
People overleveraging themselves over the last 2 years on the other hand…scary.
No lets say you had $500k in 2009. Place that in the market and get a return 7% compounded. You’ll roughly get $919K by now!
Yay, compound interest.
As I’ve said over the years, I don’t think there is a strong case for a scenario where new build constructions drops substantially.
meant to say
As I’ve said over the years, I don’t think there is a strong case for a scenario where new build costs drop substantially.
Makes sense, since there weren’t a lot of purchases in the last few years.
I understand the rules and regulation changes are there to protect and makes things better (laughing right now). Markos post demonstrates some of the issues that are making homes too expensive to build. Sad really what governments say but actually do..
Quality is a house built now better? (laughing again)
Patrick
Let’s take a theoretical house that was purchased in 2009 for $600,000; $600,000 + 128 % = $1,368,000… now $1,368,000 – 50% = $684,000. Careful what you wish for!
Marko,
Yes, great SFH post.
correction on my previous post (1990 not 1981)
Drywall that was installed before 1990 has the potential to contain asbestos in the mudding compound. Drywall containing asbestos can be brought to the landfill for disposal as ACM.
In addition to the restrictions above, documentation confirming that the drywall has been tested and confirmed to contain asbestos fibres must be provided. There are a number of labs in the region that can complete this testing at a nominal fee. HAZMAT Survey, Testing and Removal Service Providers
Note: Drywall is not accepted for recycling at the Hartland facility. Clean drywall can be recycled at local private facilities; please visit MyRecyclopedia.ca for a list of drywall recyclers.
https://www.crd.bc.ca/service/waste-recycling/hartland-landfill-facility/asbestos
Marko really good post…
And it’s stuff like that that continues to kill the SFH.
My father sold his last spec home in October and it is the first time in 10+ years he is doing nothing. There is just not enough margin in anything right now once you add up all the costs (and he has no financing costs to deal with at this point in his career) nothing really makes sense. I remember in 2008 we bought a lot in Langford, it automatically met criteria to subdivided into two lots. Excavator showed up Monday morning, old house was demolished by Monday afternoon. Excavation done by Wednesday and we were working on the footings by Friday.
Now to do the same thing is like 6 months later and $50,000 extra in BS paperwork/delays you are working on the footings. Instead of the house being dumped at Hartland now it is dumped at Hartland, but the asbestos is in yellow bags. It is an improvement but it costs a fortune.
Also, looking at the subdivisions in Colwood/Langford I don’t think developers can drop lot prices much as the infrastructure costs are staggering. You are typically blasting apart a side of a hill to squeeze out a few lots, this is after you spend 2-3 years getting screwed around by local politics. Even Langford is becoming tough on re-zoning.
Then even when you finally have a registered vacant lot in Colwood in a huge cookie-cutter subdivision is still a bureaucratic nightmare to build.
In Colwood, for example, you have to pay $2,800 for a character and development permit which takes 6 to 8 weeks before they take a look at your building permit. Funny part is the houses that go through this character and development bullshit still look as cookie-cutter as the homes pre 2017 (before some genius at Colwood thought this policy would be a good idea).
As I’ve said over the years, I don’t think there is a strong case for a scenario where new build constructions drops substantially. I think the much more likely scenario is if the market prices drop constructions just crawls to a halt.
I also think small time builders like my father (1-2 houses/year) are done going forward other than the high-end of the market. It is going to be all massive developers like Royal Bay in the future. Small builders won’t be able to keep up with the bureaucracy. If you have a company of 100 people you just send some random to take all the courses as a “representative.” For the one woman or man show it is tough.
Even with a huge Victoria crash, you’ll be hard pressed to find many Victoria “bag holders.” A typical Victoria home owner who bought 10 years ago (2009), isn’t up 60%, they are up 128%. Even a 50% drop wouldn’t make them a “bag holder”.
Many bears here have never yet had a mortgage, so they may not realize the basics. One point that they miss is the equity buildup that is occurring.
For example, consider someone who has bought for $500k in 2009. Assume, for simplicity, this was no down payment at all via a $500k mortgage (3.5%, 25 year).
Typical Victoria house prices have risen 60 % since 2009, so some bears here are saying the gain is 60%, since the House is worth $800k. But after 10 years, the outstanding mortgage has fallen to $350k, because of principal repayments that occur as part of normal mortgage payments.
So we have a house worth $800k, and we owe $350k. That’s not a 60% gain, it’s a 128% gain. ((800/350)-1)=1.28.
Expressed another way, for them to become a “bag holder” , with the value of their house falling below the outstanding mortgage, this would require a fall of 450/800= 56%. So for people who’ve bought >10 years ago, let’s hold off on the “bag holder” calls until Vic prices have fallen >56%. Last I checked, teranet Victoria was 0.5% from all-time high Sep 2018. https://www.nbc.ca/content/dam/bnc/en/rates-and-analysis/economic-analysis/economic-news-teranet.pdf
I assume why no buyer would agree is if the deal fell through. They would have to divulge to any buyer that the house has asbestos
Saanich just jacked up development fees also. So Dasmo what you refer to is exactly true. Governments talk about affordable housing is BS.
And it’s stuff like that that continues to kill the SFH. At least in the core. Anything that needs redoing will have to become multi family to make economic sense. Be it fees, demolition/enviro costs or crazy code requirements. Building new SFHs will not make economic sense. So what I am saying is there are other factors that will affect that particular market. Perhaps it’s this administrative inflation that is the factor which slants the affordability chart ever upwards despite the cycle within….
Saanich has started asking for an asbestos report before they dole out a building permit it anything to be remodelled could have asbestos. So buyer beware, It is not cheap to have the men in white come in to takeout a floor or drywall. Hartland has even more Stricker rules this year…Bylaw and workplace are making a lot more surprise visits.
B.C. nurses just signed their new deal a few days ago: they got an annual 2% increase for 3 years, plus some extras.
Flat market, while not exciting, would be good outcome going forward. Over 5-10 yrs affordability would improve with inflation. Pretty much everyone wins with the exception of those who have come to use their homes as ATM machines.
Real estate market must be slow out there, lots of posts from Marko today.
On the verge of bankruptcy.
A word of advice to buyers. You buy a house pre 1981 pay the money to check for asbestos. It is a real expensive process to get rid of it.
Unless the house has been sitting on market for many months and the seller is super motivated you will be super hard pressed to get a residential seller to agree to an environmental assessment. Even back in 2011-2013 it was tough.
I remember my clients were buying a house in Fairfield in 2013 that in 10-15 yrs they wanted to add a floor to so I thought it would be a good idea to test the stucco/drywall….and nope, completely rejected by seller. Seller was willing to lose the deal over it.
It is wise to be aware of what could contain asbestos and how much it would cost to deal with but getting approval from seller in real life is a no go for the most part.
75 Regina went for $461K
Marko thank you for your insight. I thought I could find some savings as a buyer but it’s clearly not as simple as I thought considering the new rules about representation.
Bears ridicule owners who overextend on real estate and lose their shirt. But when an owner doesn’t overextend (e.g. by buying only one house at a time), they ridicule him/her for not overextending: “if you were truly smart, you would have bought two.”
Comic time:
Introvert is most definitely a woman….
Any one know what 75 Regina was sold for?
B.C. teachers are breathing a sigh of relief after last night’s byelection. The teachers’ contract expires in June, and they would much prefer to negotiate with the GreeNDP than with the BC Liberals (the governing party that illegally ripped up their contract and underfunded the education system for a generation).
B.C. nurses just signed their new deal a few days ago: they got an annual 2% increase for 3 years, plus some extras.
https://vancouversun.com/health/local-health/b-c-nurses-approve-new-collective-agreement-with-pay-increase-workload-changes
My portfolio
USA 50% XUU
CAD 20% XIC
Dev Int. 17.5% XEF
Emg Int. 7.5% XEC
Bond 5% ZDB
100%
Average MER: 0.11%
http://www.squawkfox.com/tools/portfolio_mer_calculator/
@ Bowler
Just FYI, Introvert does not actually own or have equity in a house, Introvert is also a he and not a she.
Usually its men who get a kick out of boasting fictitious facts in front other men (d*ck measuring contest). Do you actually think a woman would bother to go on an internet forum day in and day out and brag about the equity they have in their house to a group of predominately male strangers?
Lol, but keep it going Introvert. Like i said before, it is pretty entertaining. Too bad Hawk isn’t here any more 🙁
Oh you should see how low my MERs are..
I don’t think you know what “arbitrary” means.
True, I won’t sell because I need a place to live. And because I don’t jump into and out of owning a house like it’s a stock.
As for your assertion that I “will neither gain nor lose anything,” that’s just nonsense. Occasionally we hear this type of stuff from renters—that equity means nothing because you haven’t cashed it out yet. The only value of conclusions like that is they make you feel better.
Well, you get what you pay for.
I didn’t buy two properties because having two mortgages sounds scary to me. If taking out only one mortgage at a time means I’m not truly smart, then call me dumb!
Yes, I did buy when I could afford to. Not everyone buys when they can afford to, however. We all make our own decisions in life.
I’m not too concerned about my anonymous online reputation.
Net worth is probably declining a bit on the market value side, but it’s growing on the principal pay down side.
The principal only goes one direction: down. Until it’s gone. Market value will fluctuate but trends up over time.
Michael
Still holding RNX. Watching the news. Everything seems positive. Only issue too many shares.
I have no idea of course how many more houses will come on the market! 529 was about the tops we thought we could get. Not sure we are patient enough to wait.
We see the realtors again on Monday so will see what they say.
https://www.sookenewsmirror.com/news/greater-victoria-grew-by-more-than-5000-people-between-july-2017-and-june-2018/
here is an article regarding population growth recently … but i dont think the growth is from retirees — its more from the construction boom with increase labour demand …
numbers didnt add up in 2011 to 215 — market was flat and decreasing .. the market only picked up when vancouver and alberta have a crisis… the 15% intended retirees never followed though .. atleast not 15%
.. this is not facts .. only opinions…
If memory serves from 3 yrs ago, I sold at +49.3% 🙂
Joking aside, congrat’s on your RNX gwac (~500%)
Grace: I would wait for the 529 to sell and then price below the other competition. That is assuming that you are not expecting a lot more houses to come on the market. If the 529 does not sell quickly then you might consider this to be a bad year to be in the market.
House pricing! A house that is nicer than ours is listed for 529,000( 60,000 below assessment)and a house 3 houses away from us and almost identical just came on the market for 599,000 ( way way overpriced) and 70,000 over assessment). So what do we do? Still mulling it over!
Best way is for you to ignore posts that reference it. Close your eyes tight and scroll down to next post.
Prices are up 50% since that article was published in 2011. Many factors there, but if you just bought in 2011 because of the boomers coming, you’d be up 50%.
Moreover, well-heeled boomer retirees are in-fact coming…,
There are some new high-priced condos being built in Victoria. There has been speculation from some here that we have “run out of buyers”. And then we hear recently from the one of the most prominent projects (Customs House) that they are selling fast, including several record-breaking prices for any condo, and that the “typical buyer” is in fact a well-heeled boomer, and many are from outside Victoria. This is an important source of buyers that shouldn’t be ignored.
https://www.timescolonist.com/real-estate/10-79m-downtown-victoria-condo-sale-doubles-the-previous-record-1.23510734
“Project real estate agent Craig Anderson, of Vancouver’s Magnum Projects, said buyers are typically 55 to 64 years old, planning to live here full-time during retirement. At least half the buyers are from Victoria. Some Canadian buyers have been living far afield, in places such as Japan and Europe.”
I agree that the Greens have a problem but they should have seen this coming.
Me thinks the spring market is going to be one big yawn. Sellers have no reason to be in a rush (economy still ok)/Jobs ok) buyers also have no reason to be in a rush /government intervention and affordability. There will be some bargains in the high end and the few dumps people need to unload.
A word of advice to buyers. You buy a house pre 1981 pay the money to check for asbestos. It is a real expensive process to get rid of it.
So you say, head meet sand, which is then buttressed by the above. Non sequitur, IMO.
What isn’t going to ever change is that migration and their associated demographic patterns are data questions. It cannot be resolved by anecdotes and stated desires, intentions, assurances – ever. No amount of,
“I was outbid twice (or 20 times), by retirees”,
“5 of my friends had this experience”
“I saw a 15 tour buses full of Asian looking RE investors”,
“My friend works at a RE firm and all the callers are Chinese buyers looking to buy”,
“I’ve seen 12,368 surveys of people across the solar system re Victoria and they all say…”
…will ever unseat this simple reality no matter how numerous or authoritative the source.
All this stuff says is, Victoria’s popular with retirees. This is objectively supportable given the city’s demographics. Everyone has known that for the last 75 years. If the retirees are coming in greater than average numbers today, okay. That’s fine – let’s see the data and examine the effects. It’d be interesting to analyze, for sure.
No data? Then it’s conjecture and nothing more. If conjecture is being rejected as proof in lieu of data, that’s not sticking your head in the sand.
Well actually pleased with last nights election results. I new NDP was going to win. Seeing the Green results was beautiful. Mr Professor is being manipulated for NDP gain. Hopefully we will see some changes and not just keep kissing John`s ass and voting yes on everything…
The conspiracy theorist in me thinks the NDP may have helped Pro rep disappear.
Green really needs to do something to be relevant or they have seen the high in seats and aligning themselves 100% with the NDP is not it.
But if Leo “boasts” that his index funds have nearly matched the market, then I’ll believe him.
Leif – need to add two more zeroes to that. Lots of companies have wiped out 5 Billion in shareholder value, but wiping out 500 Billion makes you a special breed.
Case study in why you should ignore nearly all on line claims of stock picking prowess
Last time he posted he said he never owned it, then he did own it but forgot, then despite remembering, still couldn’t remember what he bought “last week”, and now definitely did own it but sold it (presumably near or at the peak of course). Good to see his memory has finally returned with such detail. 🙂
Yes let’s all ignore what’s actually happening and what is predicted to increase. Head, meet sand.
Source
https://www.theglobeandmail.com/globe-investor/retirement/the-boomer-shift-how-canadas-economy-is-headed-for-majorchange/article27159892/
Of course not all of these boomers are going to move to the island. If they did, we’d have a massive problem because the population would literally skyrocket. But even if they don’t ALL move, the % that do with their deep pockets have a large impact on the RE market because they are net-new buyers.
When we were looking this last spring, two houses we were interested in were snapped up within a week of listing by retired couples moving to the island. Both went $50K over list. A third house that didn’t fit us (but we have a friend who knew the owners) was sold for $35K over list the night before it was about to go on the market.
When we look at trends to see where the market is headed, you don’t get cherry pick which factors you will include and which you won’t. Just as affordability can’t be ignored, neither can retirees moving here.
But did you sell GE at +50%? Probably not….
Have have socialist health care, fire dept, police, sewage, power, and I wouldn’t want it any other way.
Board is producing new map-based reports for year over year single family price changes based on the HPI: https://www.vreb.org/pdf/HPIMap1812.pdf
Kinda interesting with Oak Bay and Saanich east roughly flat while other core areas are +~6%
Yeah that was really good timing. Good from my perspective, I think the NDP need some more time to really develop their platform and see if it will be effective.
Quick reminder if you lowballed Victoria right after any of the financial market bottoms this millenium (green arrows), you were soon smiling.
Haven’t owned GE for years Leif, but after I suggested it over 3yrs ago it quickly shot up 50%.
We really need to stop referring to that study on upcoming retirees “intending” to move to Victoria…as the saying goes, “the road to hell is paved with good intentions”. Not to mention, I intend to have six pack abs in 2019, but the beer fridge in the basement keeps calling out my name.
Not sure if anyone posted on the Chinese Bank bailout
https://www.forbes.com/sites/francescoppola/2019/01/29/the-great-chinese-bank-bailout/amp/?__twitter_impression=true
“We are here?”
For the person calling to buy GE
Since it peaked in 2000, GE has wiped out about $5,000,000,000 in shareholder value.
https://www.bloomberg.com/graphics/2019-general-electric-rise-and-downfall/?utm_source=facebook&utm_campaign=socialflow-organic&utm_content=business&utm_medium=social&cmpid=socialflow-facebook-business
I like KeePassXC. Written in C++ instead of C# and runs natively in Linux.
https://keepassxc.org/
No system is perfect, but using any password manager is a massive upgrade in general security, even the cloud-based ones. Password re-use is the biggest threat at the moment.
https://haveibeenpwned.com/
https://www.cheknews.ca/saanich-council-asks-for-community-support-to-purchase-kings-road-land-for-5-5m-529997/
Here’s your chance in Saanich. 5 acres of development land in the core:
a/ 63 SFH homes @3500 ft2 lots or
b/ 126 Duplexes or
c/ 186 townhomes or
d/ 500 apartments.
Catch is Saanich is already raising property taxes this year, and they are looking for donations to finance a big chunk of this land. Quoting George Bernard Shaw “Socialism is the same as Communism, only better English”.
I expected Nanaimo to be closer. My theory (not original) – Plecas report reminded a few people that Liberals deserved a few more years in penalty box
73 of 111 reporting; 49NDP to LIb 41. This over and my last post.
Back to housing.
Yes, that does seem plausible.
Introvert,
“Oh I’m a bag holder all right. I’m holding bags of equity from both appreciation and mortgage pay down.”
A fool and her illusionary money are… ?
Dudette… you really have nothing. Your equity is worth nothing more than an arbitrary figure that you believe you can turn into real money if you sell.
But you won’t sell because you need a place to live. And due to that fact, you will neither gain nor lose anything. So it truly means absolutely nothing.
Your opinion, for all intents and purposes, is worthless. You bought in 2009…. great. You didnt buy two. You would have if you were truly smart and knew what was coming but you didnt. So, that to me means you bought when you could afford to and did nothing more.
Cool it. Seriously. Just try to be you for the conversation rather than trying to impress. You water down your position and reputation by telling us how awesome your net worth is when its declining on a daily basis.
[Edit: Removed some insults, keep it clean folks – admin]
Local Fool: Real Coke factor.
58 of 111 still 50 to 40.
I am guessing this is over.
If you oppose the Libs strategic vote for NDP
50 of 111 boxes NDP 50% to Lib 40%.
Conjecture on why?
The question here is the fact that the Green support seems to have been cut in half.
Not enough gwacs in Nanaimo?
Local Fool: Not a surprise, it has been a safe seat for decades.
Almost half count NDP 50% to 39%
NDP are going to get the seat…
Early still, but the Greens look like the big loser at 7.2% of the vote compared to the last election.
31 of 111 ballot boxes counted NDP 48% to Lib 41%
With 15 of 111 ballot boxes counted the NDP has a commanding lead of 50% to 37%.
With less than 5% of the vote counted the NDP is in a commanding lead at 51%
Other than a fairly high net worth for my age, I don’t have that much in terms of possessions—you’re right.
I agree, it would be nice if the other homeowners here did some boasting once in a while.
Will do!
Any results yet on the by election?
@ local fool
I agree with the loss aversion post u made earlier! I think this is amplified because of the big run up we just had in the market.
Gotcha. Ya, I thought that was an uncharacteristic kind of comment for you to make. Always found you worth debating FWIW… 🙂
Maybe, I don’t know. I just wish I knew carpentry. Somehow, I can fix almost anything mechanical or technological, but I wouldn’t know how to lay floor or build a staircase to save my life. Kind of pathetic and incongruent…and jealous of your build too.
@ introvert
The more I read your posts the more I believe that the only bags your carrying are groceries bags when you’re walking down to the basement suite where you live, in a house thats owned by your parents.
Usually people who brag constantly don’t actually have much. You brag about your alleged equity and mortgage paydown in one week more than all the other homeowners on here combined since the existence of the forum. I’ve never seen Barrister brag about how he’s up probably almost 7 figures in his Rockland house (I figured he’s up close to 7 figures because he said in the current market his house is worth $2.5M and I believe he bought before the run up). I don’t see Marko brag about how much equity he has in his house and investment properties. Leo S. has a gordon head house, don’t ever see him rambling on either. You, however…. Lol but carry on its kind of entertaining 😉
I might add that I admit to being a financial idiot for building my house….
Ummmm when I said all you Bears are financial idiots. Prove me wrong. It was a parallel to the spec tax calling property owners all greedy speculators. Prove them wrong.
I think you bears are all too smart for your own good!
Real estate market must be slow out there, lots of posts from Marko today.
“…15% “intend” to retire in Victoria if/when they can afford it.”
Here we go again with “the survey.” That thing belongs in the same pile as Hawk’s graph or Michael’s crazy “we are here?” chart.
It is not hard or time consuming to find renters at a fair market price, by definition.
You’d save on the BC spec tax all right, but PEI would hit you with their non-resident property tax surcharge.
Oh I’m a bag holder all right. I’m holding bags of equity from both appreciation and mortgage pay down.
Great Twitter thread on the psychological fallacies that drive loss aversion when investment property is sinking in value – speaking in context of the Toronto and Vancouver RE markets.
“Investors hold on to their cashflow negative properties for longer than they should. A good example of the sunk cost fallacy. When the investor’s property drops in value from $1.4M to $1.1M most prefer to hold on even if they’re cashflow neg $1,500 p/m to avoid the $300K loss. Interesting, I think a lot of people mistakenly assume that once a property’s value goes negative investors will all rush to sell their cashflow neg properties asap – when history and psychology show the opposite is true. They’ll hold on as long as they can!”
https://twitter.com/JohnPasalis/status/1090620666594902017
@ Patrick
Pretty sure Victoria’s home price to income one of the highest in the world? You can’t cherry pick Canada as a whole because then you include the prices in godforsaken PEI! Nice try to sneak one in though.
Your other points about rich people in Victoria is of little relevance as there are some very wealthy people (the richest woman in Canada lives in 10 mile point) here that skews the average and they won’t drive local real estate prices. This is probably why you see all those homes over $1.5M just sitting on the market while the ones priced around $700k (which by the way probably would have sold for close to $800k last year) are sold relatively quickly.
@ Local Fool
I don’t have the time or energy to research all the “bag holders”, this is why I suggested someone else do it when they want to make a point to the bulls. Otherwise it’s just the same debate over and over again.
@Yeah Right
I was speaking to cloud based password management options, but to hack Keepass someone doesn’t need your master password. A DLL injection attack using something like KeeFarce will extract your entire Keepass database from memory into clear text. Are you 100% confident that your USB key has never been plugged into a compromised computer? No system is 100% secure. In reality you are likely fine with Keepass, I’m just very paranoid.
i would like to see that 15% intended retirees in 2011 to come here and retire now… i would love to see population growth of that 15% in Victoria ..
Not bad for a bear, but you forgot ( or have blocked out) …
No, I don’t get it. Worldwide, this isn’t necessarily a repeating cycle, with an upper bound. Canada’s affordability as measured by mortgage-as-a-%-of-income is among the lowest in the world.
Click here https://www.numbeo.com/property-investment/rankings_by_country.jsp and then click on the column “mortgage-as-a-%-of-income” to see for yourself.
Canadas is 53%. You assume that this is high as it gets – but look at other countries (Sweden 67%, UK 62%, Israel 95%, Croatia 89%, South Korea 122%, Hungary 105%, Honk Kong 320%)
Correct me if I’m wrong, it’s the bulls that are losing hundreds of thousands of dollars these days, just as the bears predicted would happen. And this is just the beginning of the decline, I seriously doubt if SFH prices will experience the Spring Rush with a bump in prices.
So if the bulls are losing hundreds of thousands in Vancouver and $50,000+++ in Victoria, then who are the financial idiots? The bears were the ones warning of unsustainable increases as I recall.
Some of the losses are hidden, for example, the young couple who listened to the bulls on this site two years ago, then bought during the 2017 spring frenzie, spent $125,000 on a beautiful kitchen and bathroom renovation, then sold recently for $50,000 over the price they paid in 2017. Total loss for this young couple was well over $100,000 because they bought the hype the bulls were pushing; but their loss doesn’t show up when comparing bought vs sold prices.
Recently the bulls have added a caveat to their bullish rants, to wit, “you can’t go wrong with Victoria real estate…PROVIDED YOU HOLD LONG TERM, for at least ten years”
Long term I’m a bull too, but for the past few years I’ve been bearish, it’s a repeating cycle and it had to happen, it was always just a matter of time. I’ll be bearish for another 24 months, during the interim my paid-off house is comfortable and my cash is earning at least 4% per year in interest while I patiently wait for the dip in LeoS’s affordability graph on post #55348. It’s a repeating cycle!! Get it?
@ islandscott
#55499
I like KeePass https://keepass.info/download.html
https://en.wikipedia.org/wiki/KeePass
It’s totally trusted and what the experts use.
A 2017 Consumer Reports article described KeePass as one of the four most widely used password managers (alongside 1Password, Dashlane and LastPass), being “popular among tech enthusiasts” and offering the same level of security as non-free competitors but being more difficult to install.[11]
They offer a portable one that I use on a thumb/USB drive and store a copy of it inside google drive (cloud). Good luck getting my master password!
ks112,
If you’d like to see another kind of content, why don’t you just post it? There’s plenty of sources to get bag holder info. The only thing is, much of it focuses on Vancouver at the moment.
@ Josh
Exactly, so its a stupid and pointless exchange. Unless evidence is presented where Gordon Head homes are selling at late 2015 early 2016 prices, Introvert will keep saying those points you mentioned over and over again.
I bet He will shut his mouth if and when prices decrease to that level because the price he supposedly bought in 2009 isn’t far off from 2014 prices, and getting back to 2014 prices is very likely if the market has already dropped to 2015 prices.
I also wouldn’t worry about Introvert bragging about net worth, usually it’s only the wannabe’s that brag, especially the ones that brag on an anonymous internet forum. I think there are only a hand full of verified posters on this site? So for all you know Introvert could be some 40 year old living in his parent’s basement in Gordon Head.
Mortgage growth rates slowing? That’s not being debated here, because its obvious to everyone but you that mortgage growth rates slow when less houses are being sold. Total Mortgage balances up 3% YOY.
Bingo…
Bulls should keep this in their clipboard and just paste it in whenever they’re getting itchy fingers. This is exactly all of their arguments.
thank you L.F for making a logical point … self proclaimed bears or bulls here are like Democrats vs Republicans.. it is no longer about current facts .. its about being right and proofing that their choices are right … it is true that bulls have a phenomenal run in the last 3 years .. but can you claim it is the same thing for the next 3 years .. the current facts – people no longer offer 100k above asking .. the current facts – sales are slowing … the current facts credit is tightening .. why hold on to a simple branding such as bull or bear… just look at current situations
Ya that’s fair and see your point. Consider this exchange:
“Credit growth in Canada is decelerating by X percent per quarter. With mortgage originations, and the amount of mortgage being booked, falling to levels not seen since 198X, this is having X impact on the housing market, and the prospects for an immediate turnaround in sentiment is unlikely. This is in conjunction with global macro trends, which are also showing similar patterns, with China and USA following suit….(or whatever is happening).”
Here’s a typical rebuttal seen on this site of late:
“And yet here you are, missing out on the market. You’ll never buy anyways; you’ll just sit here like you always have. Want to compare net worth? And look at this chart of price growth in Victoria for the last XX years. You’ve all said the same thing all this time, and have always been wrong. You’re a socialist, a lefty, envious and poor. You think you can outsmart the market. Here’s a picture of flowers in January. Here’s current weather conditions in Manitoba. We have no land, we’re desirable, construction costs are never going to fall, and regulations ensure this is the case. We’ve turned a corner.”
Break that down, and you’ll see there’s actually no debate happening. They’re not even discussing the same thing. It’s worthless “conversation”, as you point out.
So look at it like this. Whether I am in the market or not, the first comment might be more useful if I want to learn about the market and help educate myself in making a decision, regardless of whether that means buying or not buying. It’s something to consider among other things, and if that information makes at least one person fly less blindly, that’s awesome. Conversely, as some people have said, it also cannot and should not always be about logic and data alone – because markets aren’t either.
So, I do see value in talking about data, current and former even if it isn’t connected to a meaningful debate. If the “bearish” cohort focuses mainly on bag holders hereon in, that’s more for “entertainment” or shock value than anything. Sure maybe someone with an opposing viewpoint can’t say much or they twist it into something else to try to mitigate it, but that doesn’t change the fact that no one’s learning anything.
Readers need to judge for themselves which posts represent value and skip those that they think don’t. Having said that, if I search for bag holders and find something interesting, I’ll post them from time to time as I did below. Thanks for your thoughts btw!
One group that the spec tax is going to hit hard is the operators of illegal AirBnBs in the spec tax areas. They are either going to have to pay up, sell or do some real contortions to avoid paying.
And yes the spec tax is going to make it hard to justify keeping a $5 million dollar Oak Bay waterfront home largely vacant as a vacation home. That is going to cost you $100,000 per year as an American or other foreigner and $25,000 as a Canadian.
Is this a good or a bad thing? Those vacationers do pump some money into our economy. On the other hand each home kept empty for vacationers is one less home for locals to live in.
Suppose I buy a home in lovely Summerside PEI and live there a lot of the time, but my aging parents stay in Victoria. If I decide it is absolutely necessary for me to own a condo in Victoria and maintain it vacant year round so that I can visit anytime how much would this cost me?
Assume $400,000 condo. It would cost me $2000 per year. Big deal.
There are a number of ways I could make this zero dollars per year. Simplest strategy – maintain BC residency which would also save income tax. Another strategy – buy your vacant property on First Nations land (May not be a good option in Victoria but in Vancouver there is centrally located and luxurious property located on reserve land in several spots.) Rent your condo to family or friends but maintain a vacant room for yourself. Buy just outside the spec tax area. In Victoria that would mean East Sooke, Willis Point, or areas along the Malahat. Depending on where your aging parents lived those might be convenient or inconvenient
For a given level of government spending I’d rather money be raised by things like spec tax, PT tax, carbon tax rather than income tax. Better to tax luxuries (vacant second homes) or negatives (carbon emissions) rather than taxing positive things (working).
Overall I support the spec tax. The problem I do have with it is that adding the spec tax without removing or reducing anything else increased our overall level of taxation (albeit fairly slightly)
There are so many exemptions in the spec tax that actual tales of hardship are going to be few and far between.
Off topic, but as an information security professional I disagree with the use of cloud based password managers. Using one is putting way too much trust and eggs in one basket. There is no way to verify their back end security and ALL your passwords are at risk if your PC or their service is compromised.
Use 4 word passphrases (which are easier to remember than random characters) and multi-factor authentication where possible. I keep cryptic personal password hints in an email draft for easy access. Email account is protected with 2FA. IMO if you need to record your full passwords it’s better to write them down at home in a hidden location. If you’re really paranoid you can salt the written down passwords. Bad actors are not breaking into your house. This also has the advantage of a significant other having easy access should something happen to you.
On prem enterprise level password management solutions are available for business uses that have nice features like auditing, alerting, change management, AD integration, etc.
@ Local Fool
I wasn’t pointing to you directly but I have noticed that every couple days someone posts the same theory or graph related to house prices, income or debt or the asset bubble chart and point to the impending housing crash in Victoria. And then like clock work, the bulls will post actual evidence of whats happened to the market in the past 4 years and how great of a place Victoria is compared to the rest of Canada and blah blah. This is pointless as the bears are posting theory while the bulls are posting actual historical evidence.
So if the bears are trying to make an argument about the housing crash in Victoria then they need to demonstrate verifiable concrete evidence. This is why I am suggesting the bears to post more content on actual “bag holders”. I noticed that when actual “bag holders” are posted, the bulls have much of a less rebuttal to go on, it’s usually Introvert saying how he bought in 2009 so he’s not a bag holder, yet.
Not a heroic position, since you are also fundamentally exempt from paying any spec tax.
It’s easy to be in favour of taxes that apply to others.
Expensive, luxury properties typically take up to two years to sell and this is expected and not because the price needed to be lowered repeatedly so they could be sold within six months.
Charging people who are BC residents and bona fide sellers spec tax merely because it took them more than six months to sell their property seems pointless, punitive and ridiculous to me. I find it surprising that you are defending it in this hypothetical circumstance.
We already make those in the top income bracket pay 51% tax in BC so what’s the difference between that and someone paying the spec tax because their $5 million vacant property doesn’t move in 6 months?
I am all pro business, low taxes, small government but not a huge fan of properties sitting vacant. Fundamentally I don’t mind the tax.
Plus, even years before the notion of the spec tax I was always pro renting recreational properties versus buying so the cottage spec tax sob story isn’t really something that grasps me either.
There’s a type of mob mentality going on with bears, too.
I disagree. If support drops for the Greens in the byelection it could very well be because a chunk of would-be Green supporters strategically voted for the NDP so that the GreeNDP government stays in power. In fact, the Greens don’t have a hope of winning that particular seat, so I question their decision to even run a candidate given what’s at stake.
Theory and graphs is generally all the bears have to go on. The real world has provided nothing but butt-kickings to them since 1981, basically. Sure, there have been downturns over the years but prices never dropped dramatically, whereas the run-ups have been dramatic.
Obligatory disclaimer: this downturn could be different. (But I doubt it.)
Marko, you’re a beauty. Your frankness is always a breath of fresh air.
How long did it take you, Marko? 🙂
Expensive, luxury properties typically take up to two years to sell and this is expected and not because the price needed to be lowered repeatedly so they could be sold within six months.
Charging people who are BC residents and bona fide sellers spec tax merely because it took them more than six months to sell their property seems pointless, punitive and ridiculous to me. I find it surprising that you are defending it in this hypothetical circumstance.
But you didn’t answer my question which was “did you ever have a real estate listing that took more than six months to sell?”
I think the spec tax might be working…
A few months back I was over in Van (in an area not included in Van’s Empty Home Tax) and walking through a very small neighborhood I know well – there were 3 houses with for rent signs – I can’t remember ever seeing this.
Last weekend I was back over in Van and took a walk through the same neighborhood – all the places were occupied and rented. Coincidence? Perhaps. But due to the timing, I think it was likely due to the spec tax.
Marko: I read your article on buying investment condos and I was impressed both by the content and the clarity of thought. I am not an expert or anywhere close when it comes to condo investments but you seem to be giving very clear and sensible advise and I commend you on that.
My question for you, considering the run up of condo prices in the last couple of years, do any condos in the core still fall into your categories of sensible investments?
Marko, have you ever had a RE listing that took more than 6 months to sell? If that isn’t a primary residence for your seller, and it’s empty, they may pay spec tax on it. Are you OK with that too, as anyone should be able to sell a house within 6 months.
Yes, I am, if you are taking longer than 6 months to sell a vacant home under normal circumstances your price is too high.
Any if the circumstance aren’t normal, like death, plenty of expentions for that etc. ->
https://www2.gov.bc.ca/gov/content/taxes/property-taxes/speculation-and-vacancy-tax/exemptions-speculation-and-vacancy-tax/individuals
How many renters in Victoria have seen what their net worth could have been—and what location they could have afforded to buy into—get obliterated, go up in smoke, by the previous couple of run-ups? It’s probably because they thought gravity always applied here, or that they could time it just right. What a horrible, possibly life-changing, financial disaster.
some one is mad … why so emotional? .. that statement alone proves something in your personality
Marko, have you ever had a RE listing that took more than 6 months to sell? If that isn’t a primary residence for your seller, and it’s empty, they may pay spec tax on it. Are you OK with that too, as anyone should be able to sell a house within 6 months.
Since I’m basically the one doing it, I’ll presume you’re talking to me. 🙂 I don’t really agree. Personal experience and anecdotes have their place and carry high emotional weight, but actual market data is far more powerful than anecdotes of tour buses filled with Chinese RE investors, or people asserting their home values doing this or that. This is why I’ve been able to tell you over the last year that the decline is not merely a “bump”, because the meta financial data in RE and other durable goods clearly shows it isn’t – despite your home’s value potentially going up in that time. And it’s not hard to look at this data, either. Anyone who has, knows exactly what I mean.
The theory is just about education, and the demonstration that time honored principles of markets and human behavior don’t merely disappear simply because people can’t imagine they apply anymore. And I know, it sure felt like that here for some time. For those that don’t like that kind of info or think it shouldn’t be on HHV – don’t read it, and/or throw it out like yesterday’s garbage.
That information is intended as a demonstration of a principle, i.e. what happens when a market turns. It’s not meant to show what the general market is doing per se, which is why I don’t post that stuff often. I’ve called it “chewing gum” in the past, and at least some people are interested in it. But sure, some will take it as a good market gauge on its own (it’s not), others will use it to feel a sense of hope in seeing those examples, still others will feel a sense of schadenfreude watching “those greedy bastards” get their faces ripped off in the market. To each his own, but identifying Hawk’s “bag holders” shouldn’t be the primary focus if your goal is analytics. But…I will post more as time goes on.
I really think Marko is giving great advise, find a hungry young realtor who will spend hours with you.
Just curious. If vacancy rates rise, and it is harder and takes longer to find renters at a fair market price… if one of your units is empty for 6 months in a year, despite your best efforts, you’ll need to pay spec tax on it (on top of you getting no rent). Would you be OK with that happening to you and other landlords?
lol…..how would you not have a unit rented in 6 months despite best efforts? If I can’t rent for $1,500 a week later I am at $1,400, a week after that at $1,300…..etc,, I can’t picture a scenario where I haven’t rented one of my units in 4 to 6 weeks. It isn’t rocket science, lower the price until it is rented.
This is my personal strategy -> http://victoria.citified.ca/news/stay-small-a-guide-to-buying-an-investment-condo-in-victoria/
The mortgages are small so it is hard to run into trouble. Even a 50% drop in rents would easily be managed.
As for landlords who bought into places where the numbers don’t make sense, they are cash flow negative and they need crazy rents to sustain…….not my problem. Should have thought about that when they purchased. With the market going flat a lot of stupid purchases from the last few years will be exposed.
Here, a New Cartoon that I though was Victoria appropriate.
Use a password manager.
It isn’t just the passwords, all the interfaces are different so you have to navigate around this crap once a year. Just creates inefficiency.
Rather than another BS department why not hire more nurses/train more GPs. The way they’ve set up administering the spec tax just seems like a massive waste of money. It literally has zero common sense, kind of like when the foreign buyer tax was applied in Vancouver to unconditional contracts.
Just curious. If vacancy rates rise, and it is harder and takes longer to find renters at a fair market price… if one of your units is empty for 6 months in a year, despite your best efforts, you’ll need to pay spec tax on it (on top of you getting no rent). Would you be OK with that happening to you and other landlords?
Has anyone on here sought out a realtor licence just to buy and sell their own home?
You could get up an running for about $6ish so numbers wise it would work. Just a matter of how much your time is worth. If you are smart you can blow through the course in about 3-4 weeks. If you are average it will take you about 3 months.
If there’s 0 incentive to buy without a realtor then why do I hear of some people doing it? Sorry to sound naieve but if I can find the house on the internet myself, view it at an open house and compare other sales and my own finances to base on and make an offer, then why would a listing agent keep 100% of the commission when a portion of that would have otherwise been paid to my realtor if I had one? If you’re listing a house and a buyer walks up without a realtor wouldn’t there be some positive gain from offering them a % of that commission to make the sale? Deal for them / deal for me. Or does this just not happen? When I Google it there’s a lot more scare tactic articles making it seem like I’m going to buy a secret grow-op if I don’t have a buyer’s realtor.
With the new rules there is just so much paperwork to go over with unrepresented parties that it is a huge pain. The listing agent could just email it for review but the Real Estate Council is just waiting to roast agents getting involved in double-ending (different from dual agency) that if you don’t sit down with people to explain everything and dot every i you will get roasted sooner or later.
Essentially the Real Estate Council wants to eliminate double-ending, their goal is that everyone have their own representation.
So as a listing agent you spend all this time with an unrepresented party for them to write a lowball.
Now you have to go to your client, the seller, and before your present the offer to them you have to present the commission disclosure. So you are showing up to your clients’ house with a massive commission disclosure (double what you would normally make) and a lowball offer, I am sure that will go over super well.
Your alternative as an agent is to decrease the gross commission to 50% but then you are taking on a much large amount of risk and you are making the same amount as if someone was to come with their own agent (a lot less work for the listing agent) so why just not encourage everyone to get their own agent?
With the new rules you are just going to run into one roadblock after another trying to make lowballs directly through the listing agent.
My suggestion would be get a newbie agent who is broke and willing to write up one lowball after another until your are successful.
Marko: My typo, where is that second cup of coffee, it is 2060 Beach Drive and the Realtor .com has the original listing price as 1595. Did they drop it some point in between?
I think bears needs to post less theory and graphs on bubble busts etc in general. This is because the bulls will just come with the rebuttal of “my home prices increased 50% in the last 4 years” and “Victoria is different from the rest of the world”. And right now those two latter points carry more weight than all those theory and graphs.
Bears needs to identify more local “bag holders” which are increasing in number and also bag holders in Vancouver in the lower end of the market (someone selling their house for $3 million what they paid for instead of $4 million is more or less irrelevant to Victoria compared to someone selling their house in Richmond for $750k when they bought for $1M 2 years ago.)
Use a password manager. In fact, everyone should use a secure password manager to help reduce the possibility of an account being taken over. Password managers are also very good at helping to spot phishing attempts by not providing login information to a bogus website. LastPass and DashLane are some of the popular ones.
https://www.pcmag.com/article2/0,2817,2407168,00.asp
In terms of the spec tax I don’t have a fundamental problem with it. I live in my house and I rent out my condos long-term, but the paperwork is going to be super annoying. Between all the crap I already must do; corporate taxes, personal taxes, WCB, payroll for my employee, etc., etc. it makes just logging into all the different municipality websites to pay municipal taxes annoying. Victoria has “MyCity Online,” others have some other crap. I always forget the passwords.
Now add more paperwork, another useless bloated inefficient government department to oversee.
In my opinion in terms of unnecessary bureaucracy this is stupider than the Liberal $37,500 interest-free loan program. Who knows how many people are sitting around downtown Victoria doing nothing still maintaining the program even though it has been cancelled? At least that program was optional.
This seemed timely:
https://www.smbc-comics.com/comic/the-real-villain
Not usually housing-related, but SMBC has lots of clever humour…
Speaking of low ball offers, 260 Beach drive sold. Asking 1,595; sold for 1,175.
I guess they were not that offended. Assessment 1,455
Unless I am missing something the asking price was $1,195,000 so $ 1,175,000 is not really a low ball.
In terms of the Nanaimo election, I will be surprised if the NDP dont win. But equally important will be how the Greens fare. If there is a marked drop for the Greens support then they will have to rethink whether supporting the NDP is hurting more than helping.
On the contrary, that statement doesn’t go far enough. Stupidity, especially in financial matters, is a beautifully universal trait of our species. Welcome to the club.
Of course, your friendly cohort of “bears” are therefore in good company with the rapidly growing population of “financial idiots” who overleveraged on housing and are now losing hundreds of thousands of dollars, and in some cases millions of dollars.
I’ll also add that someone’s perspective on the short to medium term future of the housing market vis-à-vis their perspective on various tax policies, aren’t necessarily synonymous.
West coast cities in general, fared the worst in terms of declines, and recovered the strongest. Many cities in that region have since exceeded the heights of HB1.
Speaking of low ball offers, 260 Beach drive sold. Asking 1,595; sold for 1,175.
I guess they were not that offended. Assessment 1,455
I found it interesting that the number of millennials exceed the number of boomers (actually there was a note of sadness there.as I thought of lost friends). But that lead me to a second thought regarding housing in Victoria.
There has been a lot of speculation here that one of the reasons for the increase of house prices is that there has been a wave of asset rich boomers who are retiring here in Victoria. Personally I think there is a lot of truth in that position.
Still on my first cup of coffee but what struck me is that (assuming boomers were born between 46 and 55)is that the vast majority of boomers have already reached retirement age. That flood of retiring boomers should be turning into a trickle over the next couple of years. Put another way, within two years every boomer will be at least 65. The significance of the fact that there is more millennials is simply put that the boomers are dying out.
I think we are going to see a noticeable impact in the next five years on the SFH market.
Obviously death frees up the house but equally significant and what moves the time chart forward a lot of years is downsizing or entering nursing homes. The fact of the matter is that only a small portion of people remain in their SFH after age 75 and that number really decreases by age 80. To paraphrase Will Rogers famous comment about land, the thing about boomers is that they dont make them anymore.
I understand the frustration of millennials but the fact of the matter is that your day has finally come. Over the next five years you will be the ones buying SFH because we have simply run out of retired boomers. The houses will have to be affordable for you because because you are the market. Having waited and worked hard you will also enjoy having the next generation snapping at your heels and complaining how you are hogging all the housing and how unfair that is because you inherited all your wealth from the boomers. Have fun with that.
If they were going for the opt-out method they shouldn’t have branded it the spec tax and made it for greedy people. They just called us all evil and greedy. Prove you are not. If you’re not and your f*cked anyway? Too bad. They have zero chance of getting back in. All you Bears are financial idiots. Prove me wrong….
The speculation tax is poorly conceived; and worst of all it will likely go into general revenues for the government. Reminds me of Vander Zalm when he introduced the PTT 20 or 30 years ago, and now the provincial government is addicted to this source of revenue due to rising property values.
Call it whatever, a “envy tax” “spec tax” “generational tax” etc… it is just another tax grab. If they said it was going to be used 100% for education or preparing our youth for the future, I think many people would support it. But it isn’t, it is going into the bureaucracy. Tax revenues have doubled in the last 12-15 years, but I don’t believe the services the population receives is better than it was then. Just food for thought.
Barrister- If you consider the full blown attack that developers and the Liberal Party have mounted on the spec tax that the media has pushed on a daily basis since it was announced with little to no time and space spent on the support side it is a miracle that the poll numbers have stayed steady. Some people say look to the Nanaimo election to see how people feel about the spec tax forms but I don’t think that is what most people have in their minds voting tomorrow just like I don’t think the scandal in the legislature will have much of an impact on the other side tomorrow as well. The dates these polls were taken were somewhere around March 2018 to August 2018
http://angusreid.org/metro-vancouver-housing-prices-policy/
https://globalnews.ca/news/4196524/bc-ndp-housing-bc-liberals-poll/
https://globalnews.ca/news/4254710/bc-ndp-housing-taxes-poll/
https://biv.com/article/2018/03/most-bc-residents-support-foreign-buyer-tax-increase-and-new-speculation-tax-poll
approx 10 years for house prices to fully recover in nominal terms in the US after the financial crisis and housing bust. That’s the national average – some cities recovered faster, some still not recovered
Local Fool: Interesting article.
Strangertimes: Please cite the polls and when they were taken. Just for the record I own a single property which is my principle residence and I dont have any commercial interest otherwise in BC so this tax has zero impact on me personally. But I still think it was badly crafted and poor public policy. At the least they should have had grandfather provisions inserted to couver people who are clearly not in the speculator class,
In terms of public support I find it interesting that Andrew Weaver has publicly stated that this is a badly crafted tax that he does not support which means that there not even a majority of members in the legislature that actually think this is a well crafted measure.
Now if they brought forward measures to properly tax people who flip houses as a business or to properly tax Airbb units I would support that. And certainly collect the proper LTT on all pre-sale condos and all capital gains on flipped pre-sales.
And while I dont think it is good policy, I would even not have a major problem if they applied a second home tax to any property bought after the implementation of the tax. At least people would know what they were in for before buying.
Reposting for newer readers. Written by Vancouver investment portfolio manager Bob Thompson at the 2016 height of the Vancouver housing market.
The Anatomy of a Housing Bubble
Every 20 years or so, investor dementia sets in. Memories are wiped clean, allowing individuals to make the same mistakes over and over again. It doesn’t matter if it is real estate markets, stock markets, commodity markets, or tulip markets (I’ll get to this later). They are all the same.
Why? Because markets are a reflection of people, and people are hard-wired to have emotional instincts that don’t change. They never have and they never will.
Let’s talk very little about real estate, and a lot about people’s behaviour and the anatomy of bubbles throughout history. The anatomy is shockingly the same no matter what asset we are talking about. It starts with something actually changing, a new development—in the technology bubble it was the rise of the Internet, and the “new economy.”
In the early part of last century, it was the building out of railroads, resulting in skyrocketing real estate prices and ending in yet another crash of both Florida real estate and railroad stocks. For sure, there is a valid game changer that starts the boom, and lots of people question whether the valuations of whatever asset we happen to be discussing are overvalued. That’s called climbing “the wall of worry.” The underlying asset continues to go up however, seemingly proving the disbelievers wrong.
This has been real estate in Vancouver and for many parts of Canada for the last few years. Market bubbles don’t pop during this phase, when there are rational buyers and disbelievers. Bubbles burst, and people’s financial lives are destroyed at the end of the next phase: euphoria. During this phase, caution is thrown to the wind, people’s hard-wired desire to “not want to miss out” comes into full play: “I have to get in now, my next-door neighbour is making money and I am not.”
This panic buying can suck anyone into its vortex. During this phase, even the smartest believe that we are in a “new paradigm” and the old ways of valuing things are thrown out. Whatever the asset is, it becomes too expensive for the average investor, which is especially true of real estate.
Continued at…
https://www.macleans.ca/economy/economicanalysis/the-anatomy-of-a-housing-bubble/
I had co-workers in Vancouver that thought they had it made because they managed to buy a condo. Like actually thought they could retire early because they managed to max out their leverage for a 750sqft place with a $400+ condo fee. I didn’t have the heart to argue it. There’s going to be a lot of sob stories but I pity a very small percentage of them. Mob mentality makes idiots of every member.
James,
It’s on REW, under the insights section. I never use BCA anymore, this other one is far better IMO.
As a curiosity, the person who sold it in 2016 made out like a bandit – they paid 155k for it in 1982. Murderously high price at the time, considering the rates then.
It was never a valid argument to say that equity or net worth in RE will buttress the decline, mathematically, economically, and historically. Equity is a concept dependent on the willingness of a buyer to give you that money back you paid in, as hundreds of people in Vancouver are suddenly and rudely, discovering.
Equity is evaporating fast and the bulls don’t want to hear about price declines. Yet in 2017/18 the bulls commented daily saying “you can’t lose in Victoria real estate”, “my house appreciated $80,000 in the past year”, “my house earned more than me last year”, “the recent price escalation is just the beginning”, “listed on Thursday sold on Monday in a bidding war”…
Victoria won’t increase until a year after Vancouver starts to increase. Victoria always follows Vancouver but lags behind by a year, so now this is not the end of the decline. It is not even the beginning of the end. But it is, perhaps, the end of the beginning. Thanks Winston.
That’s just an example of that crazy criminal money using Van RE as a form of Bitcoin….
Where do you find this? There’s nothing on BC Assessment?
I don’t know if you guys remember my posts where I was showcasing some of the flip flops going on in Vancouver. People losing 100k, 250k, sometimes even 750k+.
Well folks, times have changed, and decidedly for the worse. The losses above are as common as dog mess now and I’m seeing more and more presumed speculators trying to unload homes and losing more than 1 million dollars in the process.
3191 35th Avenue W, MLS R2336065
http://www.realestatevalley.ca/listing/r2336065-3191-w-35th-avenue-vancouver-bc-v6n-2m7/
Purchased for $3,600,000 on January 11th 2016.
Now trying to offload it for $2,080,000 for a potential loss of a whopping $1,520,000, not including carrying, transaction, and major opportunity costs. And that level of losses presumes the seller can even get that much for it.
Think about that amount of money for a moment. Over million, five hundred and twenty thousand dollars. Obliterated, up in smoke, probably because they thought gravity no longer applied here, or, that they could time it just right. What a horrible, possibly life changing, financial disaster.
This shit’s getting real, folks. And there’s more to come…
Meanwhile, up island, the Comox Valley ranked as the 5th most unaffordable housing market in BC.
https://www.comoxvalleyrecord.com/news/comox-valley-ranked-fifth-most-unaffordable-housing-market-in-b-c/?fbclid=IwAR3SC5UfH5ttRAYCZCjjEqvbzsBl63m-fozmeb8q9JYtk8uyOSSXW4wz0Ew
You bears sure need some happiness in your life. Lot of anger out there. FYI owning a house is not some magical thing. Usually a huge money pit and work. Enjoy renting not that bad a thing.
If anyone is spinning my point it is you. I am not assuming how people feel. There are numerous polls showing massive support for the spec tax regardless of political affiliation and the media for the most part only promotes the other side. They have an interest in this as do developers who want Victoria and Vancouver to turn in to resort towns so they can sell condos like stocks. I think your issue with this is you hate the spec tax and simply don’t like hearing the other side as well. You made it clear last time I posted something how pissed you are over the spec tax. Instead of going on some ridiculous rant about integrity learn to deal with public opinion if it differs from yours
Gordon Head holds many secrets.
I going to miss the Chinese investment. Come again soon! We’ll leave the lights on!
Did I? The market is not exactly at the bottom of a trough right now. If the point is that bears will never be satisfied, then the hyperbole of the comic makes me think it’s the comic author that missed the point. Also, aren’t comics supposed to be funny?
Chinese investment in Canada falls dramatically
Chinese investment in Canada nearly halved in 2018, as Beijing’s restrictions on capital outflows combined with rising Western scrutiny of its state-owned firms and heightened diplomatic tensions to put a damper on its global dealmaking ambitions.
At 47 per cent, the drop in investment in Canadian firms was slightly deeper than the global decline, which came in at 40 per cent, according to new data from the Canada-China Investment Tracker, maintained by the University of Alberta’s China Institute. Total investment fell to $4.43 billion from $8.45 billion in 2017.
“What struck us was the sharpness of the decline, which was quite significant albeit somewhat in line with global figures,” said Gordon Houlden, a former Canadian diplomat and head of the institute. “It suggests the heady days of Chinese investment are certainly over for now.”
https://business.financialpost.com/news/economy/chinese-investment-in-canada-off-47-per-cent-as-diplomatic-spats-currency-controls-take-toll
Grace: I suspect rents may go down on average in the city but not so much in the areas were you are looking. Finding the right unit is hard to begin with but finding a bargain in those areas is a real challenge. You might consider expanding your search to included the quieter parts of Rockland as well.
Strangertimes: I always question the integrity of people that make grand announcement of knowing how people feel of about any issue. It is simply manipulative spin. I dont care which side of any issue this tactic is used on it is still disingenuous at best and dishonest at worst.
Cadboro: In theory you are correct but in practice it really rarely occurs. The ban against dual agency and the extra paperwork and potential legal hassles if things go bad mean most realtors just find it a bother not worth doing. Possibly if the market slows to a crawl.
Honestly you are much better off finding a good real estate agent who knows how to draw up an offer that protects you and focus on finding a great house that someone is willing to take a low ball offer on.
I am retired matrimonial lawyer without any connections to the real estate industry so I dont have a horse in this race, Finding the right real estate agent when you are looking to purchase can actually save you more money than his commission especially if you are prepared to do a series of low balls. Honestly just finding the right house is hard enough.
Love the cartoons, great way to change it up from time to time.
Introvert, do you mean there is junk in the yard, or is there some secret junkyard on Feltham I don’t know about?
since we are on the spirit of posting pictures
Excellent response Marko.
+1
So as the property transfer tax (the original spec tax) that will never going to go away as well as the new spec tax, because something have to pay for those liquor, wood splitter, etc…
https://bc.ctvnews.ca/the-dreaded-property-transfer-tax-turns-25-1.794001
Josh I think you missed the point 🙂
Just add 6 zeros to the price, make it 20% down and have 3.3% financing and it’s accurate.
The attitude I see on this sites blog comments:
We won’t be buying in Victoria. We will be renters. I hope rents come down a bit. They don’t seem to be at the moment and we are pretty particular as to where we want to be. Oak Bay, Fairfield, Cook Street village.
Prices are down here for sure. Inventory looks to be up at least in our category.
Waterfront property is a unique and special category.
@ Grace
On the positive side, if you decide to buy in Vic, the same logic applies and you’ll pay less than you did last summer. Apparently rents might be slightly softening as well..
@ Cam
That’s actually not true – if you take a quick peak at the sales stats on the PBQ area, you’ll see they flux as well. Nov 2018 sales were down 36% from Nov 2017. And the average sale price was down 2%. As for waterfront inventory, she may have more luck once spring/summer rolls around.
Page 17:
http://www.vireb.com/assets/uploads/11nov_18_vireb_stats_package_64515.pdf
If there’s 0 incentive to buy without a realtor then why do I hear of some people doing it? Sorry to sound naieve but if I can find the house on the internet myself, view it at an open house and compare other sales and my own finances to base on and make an offer, then why would a listing agent keep 100% of the commission when a portion of that would have otherwise been paid to my realtor if I had one? If you’re listing a house and a buyer walks up without a realtor wouldn’t there be some positive gain from offering them a % of that commission to make the sale? Deal for them / deal for me. Or does this just not happen? When I Google it there’s a lot more scare tactic articles making it seem like I’m going to buy a secret grow-op if I don’t have a buyer’s realtor.
Has anyone on here sought out a realtor licence just to buy and sell their own home?
@ Leo S
Housing in Van has gotten so ridiculous that people are buying in Chilliwack and Hope and commuting into Vancouver, so I’m not surprised Chilliwack is included in the spec tax.
It may seem like people do not support the spec tax because of the large amount of time the media gives to small group of angry residents but these letters are how the majority here feel about the tax
https://www.timescolonist.com/opinion/letters/stop-complaining-about-speculation-tax-1.23615072
https://www.timescolonist.com/opinion/letters/communities-need-houses-to-be-lived-in-1.23604443
A bunch of bears just got a tingle from reading this.
Barrister makes a good point.
Leo, didn’t you buy without a realtor? Did you get some cash back from the seller’s realtor or something? Maybe you could chime in here.
If realtors don’t care about how they are perceived at doing their job then I guess the rest of us shouldn’t care about the cancel-relist-pretend-its-new bingo game either.
I have a very competent colleague and we’ve talked for 5+ years about opening a brokerage that is completely different from the current status quo.
Current status quo is you open a brokerage. You charge a monthly fee of between $150 and $1,000/month and you try to pile on as many REALTORS® as possible. If you just received your real estate licence yesterday and have zero real estate related experience pretty much every brokerage will take you in to collect your monthly fee.
Our idea is to start a brokerage where only competent full time REALTORS® reside; however, we always come up against the same conclusion every time. The consumer doesn’t really care or do any research when it comes to picking a REALTOR®. People pick REALTORS® because their kids play hockey together with the REALTORS® kids or the REALTOR® dresses sharp or the REALTOR® told them they will fly in people from Calgary that will pay more than market value of their home, etc.
There is very very little correlation between competency and success in the real estate business and I think it comes down to the consumer.
For things to change in the industry the consumer has to demand more and that is not the case right now. Currently consumer demands little and pays a fortune. How cancel-list-pretend-its-new bingo game is perceived is who cares.
I am all for market efficiency and I think it should be 100% banned. If 6,750 sales will occur this year in the VREB they will occur with or without re-lists so might as well have no re-lists to save time.
Thank you Leo & Barrister for your replies to my questions. As a first timer I wish the process was easier. Maybe an ap… see the house, swipe right, pm the seller some numbers. Would a realtor do an a la carte offer write up for me or can the listing agent do it?
Most listing agents will just tell you to go find your own representation. With the new rules too much paperwork to cover with an unrepresented party to make it worthwhile writing up lowballs.
If I were to write a book on HHV bears there would undoubtedly be a chapter exploring the thrill bears seem to experience in pointing out sellers’ losses on short-term holds.
This has been a common discussion point since day one on the blog. Even if someone buys for 600k and sells for 605k the uplift of 5k is not relevant, only the fact that the seller took a loss after PTT/commissions/legal fees/etc.
@ Leo S
It might be time to do an updated article about the 1st time home buyer and the benefits they can get (Tax Exemptions, Tax Rebates, Dipping into RRSP/TFSA – not the best option, but can be a good tool, Grants, ETC…).
The Canadian government’s Home Buyers’ Plan (HBP) allows first time home buyers to borrow up to $25,000 from your RRSP for a down payment, tax-free. If you’re purchasing with someone who is also a first time homebuyer, you can both access $25,000 from your RRSP for a combined total of $50,000.
I have a feeling not many 1st timers even know they have options to help them out.
The Loan Program might be gone, but other opportunities still exist.
B.C. tears down 1st time homebuyer loan program, after just 3,000 people signed up
https://globalnews.ca/news/4066987/bc-homebuyer-loan-program-shut-down/
…
https://www2.gov.bc.ca/gov/content/taxes/property-taxes/property-transfer-tax/exemptions/first-time-home-buyers
https://mortgagepal.ca/first-time-home-buyer-government-grants/
…Good Luck Future Home Owners!
Some cures are worse than the disease.
—ancient NIMBY proverb 😉
If I were to write a book on HHV bears there would undoubtedly be a chapter exploring the thrill bears seem to experience in pointing out sellers’ losses on short-term holds. It thrills them almost as much as when multimillion-dollar properties take a beating. They love that shit too. Take that, stupid rich people!
Those initial low-ball offers are around what I paid for my GH place nine years ago 🙂
I’d also have to be pretty desperate to accept $625K.
The current lowest asking price in all of GH is $767K and it’s basically a 90-year-old house situated on a junkyard on a busy road. The interior evidently is so bad that the realtor decided not to post any pics:
1842 Feltham Rd
MLS#: 405021
KS112: The other possibility is that there is a divorce. Buying a house is not only stressful but it is sometimes the final catalyst in deciding the relationship just does not work. This is particularly true if the house purchase ramps up the financial pressure. Often in a divorce people just want to get out and get a clean start.
Sometimes you can tell by what furnishing are left in a house or that one side of the master bedroom closet has been cleaned out.
Cadborsarus: I am not sure what you are trying to accomplish? You do not save a penny by not using an agent when you are buying. The listing agent gets his #% from the buyer and he splits it if there is a buyers agent. If no buyer agent then the listing agent gets to keep all of the commission. They will not give you any of the commission. If it is a multi-million dollar house then maybe you can haggle some of the agents commission but good luck with that.
Thank you Leo & Barrister for your replies to my questions. As a first timer I wish the process was easier. Maybe an ap… see the house, swipe right, pm the seller some numbers. Would a realtor do an a la carte offer write up for me or can the listing agent do it?
@ RenterinParadise
I don’t really think the relist is a big issue, in a slow market buyers can play games too. Just get your friends/family to throw in couple super low ball offers and then you can come in with a normal low ball offer. I have done this with cars in the past, albeit not a house yet.
You can get Hawk and some others to throw in couple $550k ish offers on Introvert’s house and you can come in with $625K 😉
Leo…
Appreciate the work. Nothing sexy about dumpster diving for hard numbers.
Thought: Overlay Medium House price/Income over House price. I think you’ve used one before, but it might be helpful to update and possibly show corrective/rebound phases of the market.
So do we think 1150 Timber Lane is bought by a speculator who is trying to get out before he/she loses more money? Or is it for sale by someone who just lost their job or got a new job and needs to move?
I don’t see your typical home owner selling at a loss after just one year of ownership.
The perception is that the realtor is play a lying game (regardless of who initiated the request to cancel.) If realtors don’t care about how they are perceived at doing their job then I guess the rest of us shouldn’t care about the cancel-relist-pretend-its-new bingo game either.
It’s a loss even before selling expenses – 1150 Timber Lane has again dropped it’s price and this time by $20k to $869k which is $15k below what was paid in January 2018. Ask is still above assessment which is $852k.
@ Leo S
Maybe you can break those data by price or neighborhood also? I suspect the current bag holders are mainly the ones that bought in the desirable areas within the last 2 years? If you bought a condo or in Langford then your prob still doing ok so far.
I would have to say the spec tax is one of the stupidest taxes that any government in Canada has ever implemented. Congrats John. Well done.
You should write for the tourism board Marko.
Victoria: It’s not too bad, and the country is alright too.
Victoria is over-priced for what it is.
Thanks to Trudeau I’ve started travelling again the last few years. Came back from travels in Asia last week of which I spent 5 days in Taichung (Taiwan) at my friends. Super clean city, high standard of living, super friendly people, great health care, BUT you got the air pollution from China. Every day is smoggy.
The more I travel the more I recognize what a spectacular package Victoria is. Is it as scenic as Dalmatia where I grew up? Nope, but it’s not too bad. Is the average salary the same as Zurich? Nope, but it’s not too bad. Is the weather perfect? Nope, but it’s not too bad. Etc., etc.
And to boot it is located in one of the best countries in the world.
Yes I like that as a metric as well. I likely would get some grief if I published individual addresses, but overall is fine (like 10% sold under last purchase price, or whatever).
Not a relist. Was listed for first time in October at $1.6M, now dropped to $1.2M.
There’s a motivated seller. Dropping $400,000 in the dead of winter rather than waiting for the spring market. Another hint is the line “this property is easy to show”.
So who’s making an offer? Maybe you can get a Beach drive address for a mere million….
I hosted four open house this past weekend and all were a lot busier than I thought they would be, but you can sense that buyers are timid about making offers right now. Everyone is trying to gauge the market. It isn’t quite like 2011-2014 where I would have two parties show up to an open house. Right now there is plenty of traffic and receiving quite a few offers on my listings but tough putting the offers together; some buyers looking for unrealistic deals and sellers still have high expectations.
I have buyers that offered a totally realistic $7,500 below ask on a mid 700s property and sellers came back at full ask and wouldn’t budget.
It will take a bit of work this year to get some deals done.
Seems to be Greater Victoria since they don’t have entries for Saanich or Oak Bay. They also talk about metropolitan areas.
Greater Victoria includes Sooke.
You can always write the seller’s agent and try to get some sense of where they are price-wise, but realize that unless it’s a written offer they aren’t obligated to pass it on to the seller.
You can get a standard offer form and write it yourself. There is no requirement to pay a lawyer to review it or prepare it. Obviously that depends on your level of comfort with the process and if you haven’t researched it that may not be a good idea. It’s not rocket science, but it is a contract that you will be on the hook for if they accept. If you’re unsure I would get a lawyer to review or use a realtor.
What does that have to do with the mortgage terms? Sounds like more a symptom of the mortgage amount.
If Demographia has its way we would turn the CRD into one giant Langford without the condos. By ruining the place it would make it more affordable granted. I think Wendell Cox’s favourite song is Big Yellow Taxi….
Also, I have a daughter. I hope if she wants to continue living in the place she grew up, that she can do so without resorting to extreme measures like shacking up with a douche-bag realtor.
lol
Excuse my stupidly but who cares about cancels and realists. Your broker has that info if you ask.
I think the cancel and re-list should be banned as that would save me a ton of time every year (believe it or not, it is primarily seller instruction driven or seller is like “what else can we do” and you throw out the re-list to make it seem like you are doing something) but other than saving myself some time by banning it who cares. Pretty much everyone knows when properties have been re-listed multiple times and even if hypothetically you didn’t would you be willing to pay more for a property that is 30 days on market versus one that is 90 days on market?
Hmm.. On the one hand, Chilliwack seems far enough out that it shouldn’t be included. That aside, if the point is to encourage freeing up housing, then one might argue why shouldn’t it apply to them? They do in fact own two properties, and one is kept mostly empty.
I think many people were expecting this to a be tax on foreigners keeping homes empty, and that was something they could get behind. As it turns out it’s a tax on anyone keeping empty property and that shouldn’t be a surprise.
Yes, but fewer zoning restrictions would decrease costs and enable housing to be built somewhere other than the Langfords of this world. More housing closer to core is better for efficiency/emissions too.
That is their claim yes. I would guess it would definitely help. Open up the whole peninsula to development and you’re definitely going to get more supply on board faster. Is it worth it? Not sure.. On the one hand I wouldn’t want to see Gordon head style residential wastelands spread out over the peninsula. On the other hand I don’t see ALR as something sacred that must not be touched. Sensible medium density gradual expansion into the mostly unproductive fields is fine with me. Some people really fetishize supposed “farmland” even if it is spectacularly unproductive.
Yep, it’s the revenge tax. Sorry Boomers. No more cottage by the lake for you. The millennials outvote you now so expect more punishment to come.
UBC professor frustrated after being told he must pay speculation tax for second home
https://globalnews.ca/news/4899941/ubc-professor-frustrated-after-being-told-he-must-pay-speculation-tax-for-second-home/
I feel like this guy isn’t the intended target, but he and others like him are gonna be among the collateral damage.
That’s a good question. Only a realtor can access that restricted information, as a list, from the MLS computer system, and even though LeoS is a realtor he might get reprimanded by the Board if he published that information as a list, by address. Hopefully he can let’s us know the answer without violating the rules. The answer would make a great monthly metric to establish Bull or Bear territory based on the number of years a property was owned and it would also likely prove Totoro and others right when they say “you can’t lose on Victoria real estate when you hold it for at least x years.”
@Times Colonist link
Sounds like a child throwing a tantrum when they don’t get their way. Nobody cares what you think Alan Adelstein.
For every house that is currently listed for a loss or sold for a loss compared to their purchase price from 2016, how many have sold for a profit recently (past 2 months) in like for like condition (no renos)? Can the bulls give some examples? I am curious as to where the current market is.
Fair to say this guy isn’t a fan of the spec tax:
https://www.timescolonist.com/opinion/letters/remove-tax-law-immediately-1.23613005
Let’s check in on Summerside, PEI, a.k.a. “Cheap Victoria”:
“Now I’m getting nervous…”
You can take some comfort in knowing that Mainstreet was at the centre of the great Calgary polling disaster of 2017:
https://globalnews.ca/news/4375306/report-flawed-calgary-election-polling-mainstreet/
Now I’m getting nervous…
Liberals lead in latest Nanaimo byelection poll, Mainstreet Research
https://www.cheknews.ca/liberals-lead-in-latest-nanaimo-byelection-poll-mainstreet-research-529029/
Dad,
Ok, 5.94% to be exact (Calgary SFH) , and yes, you are right, prices are ridiculously sticky there…. usually. But now, sales are down 20% both YOY and MOM, with 26% more listings as well. Bankruptcies are also increasing. One home just sold there with a tax assessed value of 2.27MM, for 1,095MM. More terminated listings than sold. They are going to need a pipeline, a reduction in interest rates, and a change in both the provincial and federal governments to curb this. Gonna be a while….
Grace, PQB always holds its pricing and sales in VIREB stats, even when others are dropping. Exactly the same number of homes sold in Dec 2018 as in Dec 2017, and prices increased 21% YOY. My sister is looking for waterfront with some privacy there- very little inventory, she says.
You’re excused.
Kenny g/cam
It’s Monday afternoon and my attention span is shot, but I’m not seeing 6%…
Anyway, the point wasn’t that prices can’t/won’t fall in those two cities. Just that house prices are sticky.
Right now the global economy is slowing, when it retracts and goes into a recession then the wheels come off and we can find some heavily discounted pricing. Even now it seems the 1.5+ mln are all sitting and being heavily discounted if they sell. That seems more to do with government changes, rate increases, taxes etc.
Kenny G, quite right- Calgary prices are down almost 6% already this year, from last year’s – and there is nothing to indicate that trend will slow any time soon….
https://www.creb.com/Housing_Statistics/Daily_Housing_Summary/?tab=2
The Executive Summary begins: “The 15th Annual Demographia International Housing Affordability Survey covers 309 metropolitan housing markets (metropolitan areas) in eight countries”.
You can find further explanation on page 43. Whether the metropolitan stats include Sooke would make no discernible difference to the numbers.
It’s the deception that I find bothersome. All this pretending like it’s a brand-spanking new listing which is a lie really doesn’t engender much trust of realtors in general.
Yeah I’ve re-edited this response multiple times to remove snark. And sorry it’s not some rosy post about the joys of Victoria. Just thought I’d mention something real estate related that is a pet peeve. Carry on.
As soon as house prices decline to 1981 levels.
“Unlike Edmonton and Calgary, with their notoriously un-sticky prices. Oh wait, they’ve barely budged since the oil crash in 2015. Edmonton looks flat. Calgary is down 2% maybe”
Actually Calgary house prices are flat 1% rise from 2007, mean while inflation has reduced the real prices of Calgary homes by over 20%.
At the same time Victoria house prices have been up almost 80% before inflation
https://housepriceindex.ca/#chart_change=ab_calgary
https://housepriceindex.ca/#chart_change=bc_victoria
Excuse my stupidly but who cares about cancels and realists. Your broker has that info if you ask.
I went to two open houses in Qualicum yesterday. At least 12 people at each. I was surprised. Lots of prairie people and two refugees from Victoria. Got talking to one woman from Vic who asked me if I liked it here. Told her it was quiet. She said too quiet right? I tried to be positive but honest.
Anyway prices are down here and if we sell we won’t get what we could have for last summer.
Damn.
More cancel/relist to reset that DOM. I really wish the realty board would get with the times and run a cumulative DOM so that these silly games would go away. Not quite sure who is being fooled here with the trick.
Speaking of Hawk – anyone know when he’s back?
Talking about 30 somethings.
https://www.ctvnews.ca/business/6-in-10-millennials-using-third-party-food-delivery-apps-study-1.4270496
Gwac,
Yep, those are all factors.
Personally, I don’t really give a shit if prices rise, fall or stay flat. I’m in the market, and not over extended. Once you’re in, house prices are relative. That said, I’m not one of those Victoria home owners that feels schadenfreude because a bunch of 30-somethings can’t afford to buy a house right now. I think it sucks, and I won’t be surprised when there is a correction.
Also, I have a daughter. I hope if she wants to continue living in the place she grew up, that she can do so without resorting to extreme measures like shacking up with a douche-bag realtor.
Replying to LeoM
“I’ve noticed quite a few “bag holders” as Hawk calls them. Another example will be 1616 Hampshire in beautiful downtown OakBay; it was purchased in July 2016 for $1,086,000 and is now listed for sale at $1,099,000. They will lose at least $100,000 after paying all expenses since purchasing, legal, PPT, realtor fees, etc I’ve noticed lots of listings in the past few months that were purchased since 2016 where the seller lost >$100k.
**You can’t make money on real estate these days by either appreciation or by becoming landlord; both endeavours are money pits with significant capital losses. **”
Was the house sitting vacant for the past 2 1/2 years? If not to rent and live in a house in Oak Bay would be around $4,000 per month. So, if they rented instead of buying it still would of cost them about $120,000 in rent.
I know they could of put their down payment in the stock market, But the market has been wild lately, so who knows what they would of made doing that.
I know Local. Just not the same… 🙂
You bears are in overdrive. Keep up the good work, Hawk would be proud.
if by some miracle the liberals win boy it will be fun on here…Massive sadness..
This listing is actually one of the more comparatively down-to-earth listings I’ve seen in a while. Right next to police and fire hall though.
https://www.realtor.ca/real-estate/20195266/3-bedroom-single-family-house-1924-mt-newton-cross-rd-central-saanich-saanichton
Gwac, you’re really missing Hawk aren’t you. I don’t think Dad is going to give you the amusement you’re used to. 🙁
But, I do have a consolation gift for you.
The talk of Victoria being a highly desirable city to live in is only partially true. I don’t think it’s as much of a factor as some people think. While working in Northern BC towns this past summer it became pretty obvious that people generally enjoy where they live. For example, everyone I meet living in Smithers truly loves Smithers and northern BC and speaks highly of it. They laugh at the crazy high Victoria real estate prices and think young people are insane to live there. Clearly there are less work options in a small town like Smithers but my point is that everyone doesn’t love Victoria as much as claimed. Sure, Victoria has the Ocean, but the interior of BC also has proper mountains and amazing hiking as well.
The fact that Victoria is the second most unaffordable city in Canada is downright sad as I’ve been looking to buy a place and just can’t justify buying a complete dump for $600,000 plus dollars. Thankfully the market has slowed over the past few months but prices are still very high and sellers are pricing as close as possible to the latest assessment prices as best they can.
Don’t know if any of you ever look, or looked, at the #VanRE twitter thread. I used to, but haven’t been there in about a year. If you were there then, you might remember it was the standard “Bull vs Bear” nonsense, and it was that way for years.
Looked again today – I had to do a double take and verify it was the same thread.
Wow. It’s truly an unbelievable difference to see. No “Victor Wong”, no “Real Estate Egg” or any of the other “bulls” and trolls. All gone, as with all their arguments of endless appreciation, cheaper than Hong Kong, no land or making fun of those who said it was unsustainable.
Now all you see is endless articles about political corruption, legions of anecdotes featuring people losing huge sums of money, pending litigation, damning articles on Chinese shenanigans and mass money laundering.
Even developers announcing projects have really toned it down. There is not one optimistic post on there as far back as I looked. I know, it’s a lousy anecdote but if anyone here knew that thread then, you’ll see exactly what I mean. It’s literally a completely different place now. Jeebus…
https://twitter.com/hashtag/VanRE
Dad
The real lesson. If you bash enough on HHV and wish hard enough prices will come down….to 2016 levels and than you can say you won….lol
Prices are high here because it is desirable and there is limited land and it is expensive to build here. Not complicated.
Drove by 3 open houses yesterday. 1 car at one, 3 cars at another and total deadzone at the 3rd. Didn’t have time to drop in and I know that this is just a spot check but definitely different vibe than when I was doing the open house rounds and places were mobbed. There are a few houses that are starting to tic boxes so I’ll try to attend a few open houses see what the activity is like.
Today’s other lesson: Victoria house prices are high because it’s so magical here.
Barrister- I think 2060 Beach Drive is re-listing and if I recall correctly, they played this game once before on this property…list very high then do a huge drop.
——-
I’ve noticed quite a few “bag holders” as Hawk calls them. Another example will be 1616 Hampshire in beautiful downtown OakBay; it was purchased in July 2016 for $1,086,000 and is now listed for sale at $1,099,000. They will lose at least $100,000 after paying all expenses since purchasing, legal, PPT, realtor fees, etc I’ve noticed lots of listings in the past few months that were purchased since 2016 where the seller lost >$100k.
**You can’t make money on real estate these days by either appreciation or by becoming a landlord; both endeavours are money pits with significant capital losses. **
Among today’s lessons: Victoria is about the same as everywhere else.
… as some here scratch their head and wonder why our prices are higher than almost anywhere else in the country.
Morneau Clarifies: Not Considering New Rules for Canadian Private Lenders
“I’m not currently considering any stress tests on private mortgage lenders,” Morneau told reporters in Ottawa. Asked if he was concerned about the rise in private lending in Canada’s mortgage market, Morneau said there are no specific measures he’s looking at.
https://www.bloomberg.com/news/articles/2019-01-28/morneau-not-considering-new-rules-for-canadian-private-lenders
Dad
Sure thing…:)
Oh I’m not afraid I’ll offend them, I’m just worried I won’t think to low ball as hard as I could.
Gwac,
I meant I didn’t think there was anything interesting or unusual about price stickiness here.
I’ve lived most of my life in Victoria, and continue to live here by choice. I recognize it is a nice place. I like it and I bought a place to live here.
Growing up, there was this contingent of local people that would say things like “why would ya wanna live anywhere else? Gotta pay for the privilege to live in paradise!” etc. Super annoying, and showed a lack of perspective IMO. It seems to have now morphed into “I live here and think it’s awesome, therefore everyone wants to live here!”
Anyway, locally, I think there are lots of nice places on Vancouver Island and in BC. Victoria is but one of them, and not for everybody. In my opinion, Victoria is over-priced for what it is.
There isn’t. If we go to RE purgatory in Atlantic Canada, the market in St. John’s Newfoundland started lagging around 2009 with the rest of the country, with sales tanking below already anemic levels. Month after month there was no improvement, and the pressure was on sellers. What happened? You might be surprised.
That perpetually miserable RE market didn’t start seeing seller capitulation until over 3 years of almost non existent sales – and that was just to move downwards by 5 digits. And contrast that to here – we’ve already seen absolute losses to that degree even after a few months. Vancouver has seen considerably more. Does that mean St. John’s is…a “better market”? Does it mean St. John’s has even more sellers than here thinking,
“I’ve lived here for x years and there is no way I’m going to accept only y amount of profit. This is St. Johns, goddammit, and people want to live here!”
No. It’s simple loss aversion and a very basic human behavior. People who think sellers here are different are deluding themselves; they’re not. If there’s no buyer at their price, they can wax poetic on their market to their heart’s content – in the end they will have to meet the market or forgo selling. Some will do the latter, but others are forced to do the former. The ones that are forced to do the former, drive it down. It’s not that complicated.
Jamal,
I’d be interested in seeing some restaurant patronage stats for the region. I know it’s not RE, but as you’re kind of pointing out, it’s all connected.
Other than houses, the most glaring manifestation of the wealth effect is car purchasing patterns, which do appear to be changing for the worse. But dining out is in there too as is renovations, jewelry etc.
https://vancouversun.com/news/local-news/maserati-and-mercedes-sales-fall-in-b-c
The whole story
#55344
but what are the mortgage terms? i remember my dad was able to pay off the debt in 15 year terms . he was only single income and wasn’t working on a high paying job in Vancouver .. now we are barely able to do it with duo income on 30 years
Dad
Thanks for making me laugh. Funny how people who want prices to fall to buy here find nothing special about the place. Take the drive around the Ocean and than tell me again how other places are just like that…. Victoria is special and amazing….I feel incredible lucky to be able to work/play and live here.
That would be an actual loss. That house has been flipped repeatedly, too. He may one of Hawk’s “bagholders”, if he gets his asking price.
$884,500 Sold 03/05/18
$712,000 Sold 03/30/17
$565,800 Sold 07/07/15
Haha, nothing to see here…
“Many Victorians have a romantic view of Victoria; you hear it in a passerby’s reply (“This is why everyone wants to live here!”) when you greet them with a simple, “Beautiful morning, isn’t it?””
Romantic = delusional and provincial.
“…but I think this tremendous positive perception of Victoria has something to do with our historically sticky prices during downturns.”
Unlike Edmonton and Calgary, with their notoriously un-sticky prices. Oh wait, they’ve barely budged since the oil crash in 2015. Edmonton looks flat. Calgary is down 2% maybe?
House prices are sticky. I don’t see anything interesting or unusual about Victoria. At least nothing that needs to be explained away by some putative “romantic” vision that Victorians have about the place.
I see that 1150 Timber Lane in Cordova Bay has dropped $10k off asking. That is a mere $5k above what the house was bought for in January 2018.
I just noticed that 2060 Beach Drive dropped from 1.6 to 1.2.Miss priced or a sign of the times. Since Hawk is away I figured I would throw this in. (Sorry no graph)
Toronto and Vancouver are fairly self-explanatory, I think.
As for Victoria, IMO, it’s just a potent brew of mildest climate in the country; not too big, but not too small; slower pace than major cities, but not dead asleep; on the ocean; beautiful scenery; and decent access to a wide variety of outdoor recreation.
Also, from what I can gather, people around the country (or at least in Western Canada) tend to have a romantic view of Victoria. For example, when I’m in Calgary and I meet someone and the conversation inevitably turns to where I’m from, they often wistfully sigh when I answer the question. I honestly don’t think a response of Vancouver would elicit the same reaction.
And you know what? Many Victorians have a romantic view of Victoria; you hear it in a passerby’s reply (“This is why everyone wants to live here!”) when you greet them with a simple, “Beautiful morning, isn’t it?”
I could be wrong, of course, but I think this tremendous positive perception of Victoria has something to do with our historically sticky prices during downturns. It’s as if, en masse, sellers and those only considering selling say to themselves, “I’ve lived here for x years and there is no way I’m going to accept only y amount of profit. This is Victoria, goddammit, and people want to live here!”
Leo: Generally speaking, mortgage rates dont usually vary in the US since most mortgages have a thirty year term (and yes I mean term and not amortization period).
Cadboro: You might as well get a real estate agent to write up the offer. You are not saving anything by doing it yourself. Almost always the same amount of real estate commission is paid by the owner (it just is not split by two agents and the vendors agent keeps it all). This is assuming that you are making offers on a house already listed by a real estate agent. Leo will be happy to explain how real estate commissions work in real life.
The owner being offended is more myth rather than reality particularly in a slow market.
I know one lawyer in Toronto that picked up a bunch of properties cheap by having both of his married sisters put in really low offers in on a property and then he would do his low ball at a 100k over their offers. A couple of times the second sisters low low ball was actually accepted. As the old saying goes, lawyers can safely swim in shark infested waters because of professional courtesy.
Deryk : You asked my question while I was still typing it but in a much more intelligent fashion.
I hate to ask this but is the Demographia survey for the City of Victoria or for greater Victoria? If for greater Victoria does it include the west shore and Sooke?
Municipal boundaries and reality are often different. One of the weirdest division is the City of Beverly Hills which is totally surrounded the city of LA.
The numbers really vary depending on where you draw the boundaries for any study.
One pet peeve with media reporting of the Demographia reports. It almost always says . “So and so city is the most expensive city in the world”. Quite a tall claim to make from a survey that covers 7 countries (plus a city) representing 6% of global population.
Their position is:
“More elaborate indicators, which often mix housing affordability and mortgage affordability can mask the structural elements of house pricing and are often not well understood outside the financial sector. The mixed indicators provide only a “snapshot,” because interest rates can vary over the term of a mortgage; however the price paid for the house does not.”
However personally I agree that considering interest rates gives a much more useful picture of house prices relative to local incomes. That’s what I have done in the past:
https://househuntvictoria.ca/2018/04/25/affordability-update-single-family/
However it is not true that we are not paying much more than 20 years ago. 20 years ago (1999) was a very affordable time in the Victoria market. Now is a very unaffordable time and we are definitely paying a lot more relative to incomes currently.
Could someone clarify if they are comparing “Greater Victoria” to “Greater Vancouver” and “Greater Toronto”.
Or are they comparing the municipality of Victoria to Greater Vancouver and greater Victoria.
Or are they comparing “Greater Victoria which is 13 municiplalities.
Or are they comparing the CRD which covers the lower southern islands and gulf islands.
I just want to make sure they are comparing apples to apples.
Can we talk low-ish offers / how to? I’ve never bought a home or made an offer on one. Starting to house hunt this spring. I’ve heard a few people suggest to buyers to just put their offers out there and see what happens. I share Josh’s sentiment that I worry I’ll miss a desirable house because I was concerned about offending a seller with my lower than ask offer, but there are a few houses out there right now that I like that are not selling.
If I’m doing this without a realtor, how do I make an offer on a house? Do I go see it and then email the listing realtor or the owner what I would actually pay for the house? Do I have to pay a lawyer to write up the offer or can I test the waters to see if the seller would take me seriously first and then write up the official offer later? I watched a friend write up several ‘official offers’ on houses last year and lose $500 each time. We don’t have money to burn on that. We do have a mortgage pre-approval. Thank you!
In Victoria we can already build SFH like crazy in Langford, Colwood and Sooke. Would it do much for SFH affordability if we were able to build SFH like crazy in the off-limit parts of Saanich and Central Saanich?
Why don’t they compare the monthly home ownership cost to income ratio? With mortgage rates decreased significantly since the late 1990’s, that ratio of monthly payment to income is probably much closer. I have seen other articles show the difference, and it was clear that looking at the payments showed we are not paying much more than 20 years ago.
Nice write up!
Or a Maserati dealer. YOY sales in BC are down over 50%…
Cant be fun to be a real-estate agent in BC right now.