Feb 11 Market Update
Happy snow day Victoria! Be safe and have fun out there, I know I am.
Weekly sales numbers likely won’t be available today because the office is closed, however the below is an estimate based on what sold and was listed throughout the week. Once the official numbers arrive I will update the table (they are usually within 1%). Update: official numbers added.
| February 2019 |
Feb
2018
|
||||
|---|---|---|---|---|---|
| Wk 1 | Wk 2 | Wk 3 | Wk 4 | ||
| Sales | 56 | 152 | 545 | ||
| New Listings | 91 | 308 | 837 | ||
| Active Listings | 2001 | 2063 | 1537 | ||
| Sales to New Listings | 62% | 49% | 65% | ||
| Sales Projection | — | ||||
| Months of Inventory | 2.8 | ||||
Sales right now are tracking nearly the same as last February. I suspect we will end up below the 545 sales of a year ago, but not by much: perhaps 520 sales. New listings are coming on at a somewhat faster pace than last year which is great news and has lead to inventory being now almost 40% higher than a year ago.
Don’t think that increased inventory is only in the high end either. Even though inventory is still low by historical standards, there is more selection in every price range this year compared to last. We may get up to 2200 by the end of the month but that is still historically low. The long term average for February is about 3200 properties, while the high in 2013 was just over 4000.
Single family homes are selling pretty much at assessed value right now, with the median house going for just 1% over the July 2018 estimated value in the last two weeks. That of course is because assessments went up in 2018 which brought the average sales/assessed value ratio down (see same scenario last year). Given that assessments seem to be in general representative of market value on the single family side (as a whole, not any given individual one), it will be interesting to watch this ratio this year.
Generally we see this ratio rising in the spring and weaker in the remainder of the year. Median prices are the same way, usually the year’s increase comes in the winter and spring. If that increase doesn’t happen then chances are prices will fall in the latter half of the year. Looking at the last decade of data for single family transactions, all of the gains in median price come in the spring while the rest of the year averages out to flat.
Why does that happen? I don’t believe that prices don’t keep increasing from July to December in hot markets, or keep falling in the spring in slow markets. I suspect that this effect is caused mostly by the change in what sells during each season. The fall often has a lot of stale listings that are left over for a good reason. Either they are in poor condition (and thus eventually sell for lower), or were overpriced and required some price drops to get to market value. Because sales volume is lower in the fall, a greater percentage of sales are also from those that need to sell (versus opportunistic sellers) and those tend to drop their price until the place moves. I suspect that a properly quality adjusted index would show much more even price changes throughout the year.
Oh and definitely only 24 hours. Our realtor just sold ahouse with that condition. Someone swooped in and got it away from the person with the home sale condition. This is why she thinks it is a good idea.
Was it you?
I am still on the fence about taking an offer with a home sale as a condition. IF we get one I know our realtors will push us hard to take it. They are fabulous and so far have given us excellent advice and have worked so hard. But it doesn’t sit right with us. Sure if the house had been on the market for months we would take it but it has been less than two weeks. There have been numerous showing cancellations due to the weather. Interesting how many Nanaimo people are interested.
Of course we can say a flat no to any offer. I like to treat people with respect. So to just ignore her offer or not write back a counter offer also doesn’t feel right.
Anyway the first offer has until midnight. They may come back asking for a chunk of money off. Or they may walk.
And it just starting sleeting here. At least our gorgeous fir and cedar trees look pretty with their snow laden branches.
Replying to Grace
“Thank you Barrister. I need to hear that.
If I can ask one more question.
Our realtor seems to feel awoman is going to put an offer in with the condition that she sell her condo in Parksville. I hate those kind of conditions. Our realtor points out that she sold a condo in one week there last month. The woman has a listing realtor picked out so there is no conflict there. But no matter what realtors say doesn’t any offer discourage others from viewing? Sure you can put in the 24 hour clause but I still think people wont come. I don’t want to miss what will soon be the prime spring market. How do we say no to an offer? Can you flat out refuse it? Or just stick to the price and not agree to the condition?
I just want to be ready to go against what the realtors are going to say.. ie..any offer is good etc.
I really like them but on this I feel differently.
Any opinions?”
I actually bought a house in Oceanside that had a subject to sell offer on it. I believe we had to wait 48 hours for the first people to drop out. So, it did not scare me off.
Normally sellers can demand full asking price when a buyer is adding a subject to sell condition.
Also, make sure its only 24 hours. I am not sure about the rules but I believe people can ask for 24, 48, 72, or even more hours. A longer wait time may scare off some buyers.
Maybe a Realtor can confirm.
Grace, you have gotten some good advice here. All I would add is to relax and don’t take things personally. You have no idea what the buyers (and their realtor) are thinking. Don’t even bother trying to second-guess. If they start playing games, just say no. Someone else will buy your house, don’t fall for the pressure.
As I have said before, patience is the greatest strength, whether you are a seller or a buyer.
Grace: After years of legal training I have devekoped a specialized technique with dealing with real estate agents. I just say no I wont agree to that condition; end of story.
You can refuse any offer with conditions on it that you dont like. But if there is an unconditional offer at full price it becomes more tricky to refuse since you might be obliged to pay comission; check with your lawyer if in any doubt.
With a softer market I would be tempted to accept an offer with a 24 hour clause myself.
Most serious buyers are willing to wait 24 hours to see if they get the house.
I walked out of two deals because of inspections. Since the offers were on heritage houses I had a structural engineer in as well as half a dozen trades to do the inspection.
But little things like sticky drawers were not the issue. On one house, which was built on the side of a cliff there was a serious foundation problem. The engineer was trying to explain it in great detail but I sort of stopped him and asked him how much to fix it. Somewhere between 800k and two million but there was a small chance that the house might not survive the work. That killed that offer pretty fast. Speaking of sticky drawers, I have put candle wax on at least twenty built in drawers in this house. Five years later, I am still getting around to little repairs. My guess is that they just had seconf thoughts; if they are angling for a price reduction I would likely turn them down. But that is a judgment call on your part.
But fiat currency does lose value forever and ever…..Consistently….
Unfortunately, I have to agree on this one.
Even I (Married to one) have great opportunity to get land and 2 housings for virtually nothing.
Price? Not warm Victoria. Language barrier and what do I know about farming… Frequent EARTHQUAKES…!
Unless you are in Japan
But Realestate does go up forever and ever…..Eventually….
Lol Josh, let me educate on one thing. No one can predict with any certainty with regards to anything that will happen in the future, especially the future in 5 -10 years. When people try to predict the future in a business sense, most of the time they use complicated models which are highly dependent on assumptions, very hard to get all those assumptions right, not to mention any unforseen situations arrising. Does Bank of Canada ever get the annual GDP growth forecast right? What about 2 or 3 years down the road?
And your comment about power producers getting demand right so they produce the right amount. Lol since we are on the topic of BC Hydro why don’t you google what their subsidiary Powerex does, and then ask yourself why does the power trading market exist?
xkcd is one of my favorite sites! I’ve read every one of his “what if” scenarios and I’m pretty sure I have the book somewhere.
He should do an entry…what if RE prices went up forever and ever? 😛
“How do we say no to an offer? Can you flat out refuse it? Or just stick to the price and not agree to the condition?”
I think you could ignore the offer, tell them to pound sound or counter back without the condition. Or you could counter back at a higher price with the condition. Your realtor can’t make you accept an offer.
Great story. These people have a terrible realtor in that she is not educating them. Our shingles are only 6 years old. But the inspector didn’t check them even though he told me he could and would .
I am surprised your first house offer didn’t budge. That was a fairly serious problem. We have nothing remotely like that. Tight drawers in the kitchen?
So they are just terrified first time buyers.
I think they will walk and later realize they will never find ahouse that is,perfect I their price range.
We have two beautiful new bathrooms, new hardi board siding, new dishwasher, fridge. All new windows and French doors. A 6 year old roof. All new landscaping. Two brand new gorgeous cedar fences. The fences were this past summer. The rest is TWO YEARS old.
And they are stuck on things that aren’t an issue at all.
IF the appraiser was sent from the financing company (like the bank or mtg broker) as a part of the purchase, then yes, he/she would know the price. This would be the normal scenario. Its a condition of financing so the bank knows its not getting screwed.
@ Grace
We had cold feet on a house we thought we wanted. We used the fact the the dryer was venting into the attic and not out of the roof and was causing mold to form in there.
As we were already low balling before inspection. There was quit a few more minor issues with the house and in the end we didn’t want the headache of dealing with them all. So we used that as our (give us $5K off the offer because that would be for remediation, as that would be how much it would cost or we walk!).
Thank goodness they declined. Because we really thought about it and we came to the conclusion that after so many viewings, we were just getting anxious and wanted a place.
We saw about 7 more homes after that and settled on a way more comparative home than that one, in the end. (Same issue B.T.W., Bathroom venting into the attic and not through the rough. But not as bad, as the problem was semi solved with crappy venting – holes poorly cut in carport ceiling). I fixed that issue myself by buying a tube and cutting through my roof and attaching a propper vent to the house and the roof.
I’ll tell you, when we had this house inspection (already with low ball offer) we were informed that the roof shingles only had about 3 more years of life left in them. We, again, tried to use this to our advantage and tried to low ball even more 5K more for a counter offer due to this inspection. They denied. We thought, what are we fighting for… 5K or a house… We in then end went back at them with our original offer and they accepted.
P.S. After the 1st house that denied our counter offer due to mold. He did get the attic remediated and in the end got his asking price.
Would he know what the price on the offer was? Oh re read your post.
in my former life as a banker our appraisers would almost ALWAYS match the price of the house as long as it wasn’t totally unreasonable. THe only time would be if it was seriously overvalued (which literally happened once a year) – otherwise they match it to the offer. The only crappy thing for your purchaser is they have to come up with another $1000 bucks as that can’t be financed through the bank based on the appraisal. Honestly its ridiculous the appraiser put it in for $1000 less – could he find no way to justify the extra 1k? Sounds like an idiot.
Ha ha. Hawk was such a goof. It’s February 2019 and still no price crash. He began running his mouth on HHV in 2015.
Thank you Barrister. I need to hear that.
If I can ask one more question.
Our realtor seems to feel awoman is going to put an offer in with the condition that she sell her condo in Parksville. I hate those kind of conditions. Our realtor points out that she sold a condo in one week there last month. The woman has a listing realtor picked out so there is no conflict there. But no matter what realtors say doesn’t any offer discourage others from viewing? Sure you can put in the 24 hour clause but I still think people wont come. I don’t want to miss what will soon be the prime spring market. How do we say no to an offer? Can you flat out refuse it? Or just stick to the price and not agree to the condition?
I just want to be ready to go against what the realtors are going to say.. ie..any offer is good etc.
I really like them but on this I feel differently.
Any opinions?
Grace: I can imagine how stressful the situation is for you. But take a deep breathe; if the house is well priced it will sell soon enough. Hopefully the next offer is a bit better than this one.
people get cold feet for a lot of reasons which often having nothing to do with either the price or the house.
two years ago .. the higher unconditional offer wins ..
The bank assessment was higher than the B.C. assessment and we priced it 1 k higher than the bank one.
If they asked for a couple of thousand off we would likely give it to them.
They sound like first timebuyers. Their realtor should be educating them. You need to look at the overall picture when buying..but everyone here knows that. I am totally convinced our house is priced right for the location etc etc. We had tons of showings and then they stopped when word got out we had an offer. The house down the street is a bit nicer than ours but not the 100,000 difference.
They can go buy it.
The snow really hurts. The market. And it is coming down like crazy here.
Unconditional offers are pretty darn rare. Even people who don’t need them usually put in some kind of condition so they can get out of the deal. Unless it abiding frenzy. Right?
Power producers predict demand every minute of every day. They have to do this in order to meet demand. If they underproduce, voltage drops and there’s a brown-out. Overproduce and they’re losing money that they don’t have to. Hopefully, even you can see how doing that constantly, every single day, means that they’re very good at predicting demand.
As for long term future demand, there’re patterns to that as well which they also need to predict in order to know when and how much capacity they need to develop. The BC Utilities Commission is the one that thoroughly reviewed the Site C dam and concluded there was no need for it based on predicted demand: https://www.bcuc.com/Documents/NewsRelease/2017/11-01-2017_NewsRelease_Site-C-Final-Report.pdf
You sure like to talk a lot of guff about things you know nothing about.
Even if an inspection was totally pristine an antsy buyer can almost always walk on the financing condition given how it is usually written.
@ Grace
I think your prospective buyers nitpicking are consistent with the softer market currently. Buyers have more time and more choices now compared to the past couple of years. Good luck with the sale.
Also, did the bank assesment come within $1000 of the BC assessment? I think u said previously that u listed the house at the BC assessment price.
Lol Josh, do u actually think power usage in the future is easy to predict? And the comment: “BC utility commission knows we won’t need any extra power going forward”. Lol not even going to bother replying to that one…..
think they are just having cold feet
Happens all the time……….this is why unconditional offers carry so much weight.
Problem in BC is conditions are written for the sole benefit of the buyer and typically deposit isn’t payable until conditions are removed so super simple for people to walk because of cold feet, not an actual hiccup with any of the conditions.
Our realtors are so amazing I am blown away. They answer emails within ten minutes. Phone to,keep,us up to date etc. They have put a notice out to lol realtors who have had interested clients that the deal,is shaky.
We have three showings for tomorrow.
Yes they definitely are. Our realtors hinted that their realtor is very difficult and not trying to,educate her buyers ( not 100% sure but think this is their first home. They are renting right now.
We are thrilled the appraisal was so bang on. Gives us confidence in our price. So at least we cleaned that bit of info from the whole thing.
And the snow just keeps on falling.
On the inspector front. Here is my take on them. They are great if they alert buyers to big problems…ie termites, a leaky roof, faulty wiring etc. But they nitpick over everything ,I believe, so they can create along list and justify their work. They also help a buyer say oh look at all the problems so they can try to get a price adjustment. Big things yes. Small things? Maybe a little bit? I mean if you get abreat deal on anouse you can’t expect the seller to go lower when those things were taken into account ( talking about in general). Our house is a fantastic deal and in excellent condition.
God house selling is stressful.
Helpful technical analysis tips – https://xkcd.com/2101/
Hawk tested these techniques on the Victoria housing market and they really work!
Looking for an out. Keep lining up those showings
think they are just having cold feet or try to use it as negotiating tactics .. different times 🙁
Does this make any sense? The people who put the offer in on our house are having second thoughts because the house appraised 1,000.00 under the price they agreed to. They wanted it to appraise for more than they were paying! Is that for financing reasons? Also home inspector, who told me he would just brush snow away from the roof and look at the shingles so it wouldn’t be a problem told them ( they say) that he couldn’t check the roof because of the snow and they are afraid it might have issues. It does not. It is 6 years old and in excellent shape. He also told them some of the drawers in the kitchen are tight. It is a kitchen with very ordinary cabinets. We priced the house according to its pluses and “minuses”.
We will know tomorrow but our realtor says it doesn’t look good.
Sick at starting all over again. We have three showings lined up for tomorrow just in case.
But 1k under what they are paying and they are disappointed? Wtf?
BC Hydro rates expected to increase 8% over 5 years
https://www.cbc.ca/news/canada/british-columbia/energy-minister-donations-bc-liberals-power-producers-1.5019705
She’s right. Home solar makes more sense with every passing year:
More f–ing snow.
Most of the IPPs are run of the river hydro. The problem with run of the river hydro is that it takes the greatest benefit of hydro – huge storage capacity – and totally does away with it.
Site C and all the Columbia dams and reservoirs are basically gigantic storage batteries. Projects like that actually let us build and use more intermittent power sources like wind and solar by smoothing out the fluctuations. Run of the River hydro doesn’t do that, it just adds its own fluctuations that are not well correlated with demand.
Probably better for the environment to mess up one or two river basins with proper hydro (with storage reservoirs) rather than mucking up a whole lot of river basins with ineffective run of the river hydro.
Some run of the river is OK as long as it is cheap enough. Also makes more sense on the coast where peak waterflow and peak demand at least occur at the same time of year.
Bottom line the Liberals paid way too much in sweetheart deals and British Columbians will be paying for it for a generation. But lets get angry about the spec tax instead!
It’s actually quite easy to predict power consumption and utilities do it every day. The only real wildcard is the weather but we’re relatively good at predicting that too (on a 24 hr basis).
The BC Utilities Commission knows, and no, we won’t.
Just to fill out the picture a bit more, the big issue in green-power is storage. Hydro is in a great position to store water for later – something that wind and solar are currently struggling with. However, in the spring all the reservoirs are full. Hydro can’t store any more at the time most of the IPPs are forcing them to buy the expensive energy.
Also, peak demand in Canada is in the winter, while peak demand in hot states is A/C in the summer. Spring is generally not a high-demand time of year.
U.S.-based platform aims to disrupt B.C.’s real estate market
Maybe they will find unicorns as well.
BCHydro already has a very successful export arm:
https://www2.powerex.com/
The point is that this power is more expensive – it is not “cheap power”. BCHydro was already able to do time-of-use arbitrage by selling our power to the USA when it was expensive, and sometimes buying power when it was cheap. Projects like these essentially mean Hydro has to sell power below the cost of making it.
The increasing amount of cheap wind power in the USA means Hydro may not have as much of a price advantage any more. We really do need electric cars to soak up all the excess power in BC – including the Site C dam.
Who knows what happens in 15 years with electricity uses/prices. Maybe everyone’s driving an electric car, and fossil fuels are verboten due to climate change. Isn’t this carbon friendly energy production the type of thing citizens demanded and are still demanding?
Maybe they’ll find a use for that seasonally supplied energy and they’ll look like geniuses. Maybe some industry somewhere in the world moves here because cheap energy at those times of year is exactly what they need to make their widgets.
I wouldn’t get in a flap about a long-term balance sheet projection.
@guest_56138
“I’m sure the “$3 million in campaign donations from the independent power industry to B.C. Liberal campaign coffers over 12 years” had nothing to do with it, and it was, as you suggest, a simple and innocent forecast miscalculation ”
Exactly. I had posted and read various articles on the disastrous changes made to BC Hydro over the past years. There was a really good in depth article going into the various costs and over payments mainly done through them buying based on increasing and crazy estimates that have never come true in any modeling. Like the need to site c.
@guest_56141
“. I love how everyone talks about the environment and then does the exact opposite….more useless print.”
How about the super thick packages and voting options from stock market portfolios. What a waste.
Here comes technology to finally break into real estate for the average Joe’s.
https://globalnews.ca/news/4959639/us-platform-aims-to-disrupt-bc-real-estate/
Got the spec tax declaration for my first property with a nice little brochure….which I will get in envelope for the other properties I have to declare as well. I love how everyone talks about the environment and then does the exact opposite….more useless print.
Also, what happens if you have no email which isn’t uncommon with the elderly.
Nothing is ever black and while. There are a couple mitigating factors for this one:
The push to be “self-sufficient” and “green-only” was certainly fine, and not knowing future rates was a factor.
However (and that is a big however), the optics of this look really really bad in hindsight. Even if the two above things were genuine, it doesn’t rise to $16B without a lot more in the background.
It annoys me that the Liberals have destroyed so much of their credibility. While I tend to lean further left, the NDP need a strong (and valid) opposition to keep from diving off their own deep end.
I’m sure the “$3 million in campaign donations from the independent power industry to B.C. Liberal campaign coffers over 12 years” had nothing to do with it, and it was, as you suggest, a simple and innocent forecast miscalculation 🙂
https://www.cbc.ca/news/canada/british-columbia/energy-minister-donations-bc-liberals-power-producers-1.5019705
CRD estimate population increase at 5848 for 2018. Core 1739, West Shore 3575.
https://www.crd.bc.ca/docs/default-source/regional-planning-pdf/population/population-pdfs/popestimate_18.pdf?sfvrsn=c5f1feca_2
@ Introvert
I don’t know the exact details of the BC Hydro transaction but hindsight is 20/20. It is possible at the time all evidence pointed to that they should lock in the power then or else they would end up paying more for it down the road. These are strategic decisions and someone has to make a call either way.
No one knows what the power consumption will be going forward, just like no one knows what house prices will be. Who knows, maybe in 5 years we will end up needing all that power.
I have a bridge for sales at a good price if you are interested. I’m surprise that you take what the politicians says at face value with out learning from historic reference. And, this could be just the beginning as they could include the rest of the province and increase the tax.
The PTT didn’t change the behavior of RE speculation, and so will the Speculation Tax.
The lead up to the Property Transfer Tax in 1987 was caused by the early 80s market crashed with extremely high unemployment and interest rate that last well into the late 80s/early 90s. There were loud resentment from the public that the immigrants are that taking jobs away from white Canadian born (sounds familiar?) Public spending was out of control, and straddle with high public debt, the government played the public by introducing the PTT as a revenue neutral tax to curb inflation and stop RE speculation. The collected money was to be use for social programs and housing to help the poor due to the cry of the public for the government to do something (again sounds familiar?)
All I know is that the government, under the BC Liberals, directed BC Hydro to buy electricity from IPPs that it didn’t need, at exorbitant rates, and we, the public, will have to pay for it.
People routinely get mad at government for wasting $3M on this, $15M on that. This is $16B that is being flushed down the toilet with absolutely nothing to show for it. This is the kind of waste people ought to be truly pissed off about, IMO.
How much affordable housing and rental housing could we build in the next 20 years with $16B? How many new ferries and terminal upgrades could we buy with $16B? We could upgrade the entire E&N line 106 times over with $16B. We could upgrade the Malahat to six lanes with a complete concrete median barrier for $16B. We could completely pay for the Site C dam, including current and future cost-overruns, for $16B.
Deryk how is the snow situation up at the farm?
Not that myrealtycheck.ca is a perfect barometer of the market, but it’s interesting to see that price reductions in Victoria have slowed a bit, yet Vancouver is still showing quite a few…
Prices so far:
Single family: 780k – Up from $750k
Condo – $380k – down from $390k. That’s a surprise given it was $420k in Dec. expect this to bounce up a bit by end of month
Sorry, perhaps I misread your post. I thought you were saying these IPPs were not a real problem and it was just the fill-in contracts that Hydro used to smooth out prices.
Does anyone have the “recent” numbers on how many new people are still moving to Victoria every month?
I dunno what your argument is…
What I am saying is:
Bad IPP contracts = operating losses = increase in deferral account so the losses aren’t shown.
While I defer to you knowledge of Hydro’s accounting practices, you said:
These are exactly the opposite. Mostly run of the river projects that produce power when Hydro doesn’t need it. They are not talking about gas peaker plants that fill in at high-demand times, like this:
https://en.wikipedia.org/wiki/Island_Generating_Station
@ once and future
One is a balance sheet item (deferral account) and another is an income statement item (potential losses from IPP contacts). One way to avoid showing losses on the income statement is to defer them to the balance sheet.
I read Introvert’s entire post, hence I posted my reply as in my opinion those two items are likely related.
Ks112, no this is on top of that, as Introvert pointed out at the bottom of her post.
Patrick, I think Vancouver already has this. They are just adding Victoria.
https://www.saanichnews.com/news/amazon-free-one-day-delivery-comes-to-victoria/
“Currently, Toronto and Vancouver also offer free same-day delivery to Prime members that make orders in the morning, typically before noon.”
@ Introvert
Those contracts are most likely related to the deferral accounts. Deferral accounts typically are used to smoothe out the rate charged to customers by a regulated utility. Without them the customer will experience constant volatile price changes. BC ferries uses deferral accounts for its fuel costs and manages the size of that account via fuel surcharges and rebates.
I am guessing having a hydro surcharge or a rebate (more specifically a surcharge) isn’t politically popular so the government never allowed hydro to do it.
Not related to RE, but good god:
https://vancouversun.com/news/politics/b-c-hydros-private-power-projects-wasting-billions-says-new-report
Keep in mind, this is on top of the $5.5 billion BC Hydro has in deferral accounts.
Barrister…
Give it time.
Sorry patrick .. i am just bad with words .. didn’t mean to be offensive .. i just want to use proper facts first
here is stats from stat can .. you can use this for your comparision
https://www12.statcan.gc.ca/census-recensement/2016/dp-pd/prof/details/page.cfm?Lang=E&Geo1=CMACA&Code1=935&Geo2=CSD&Code2=5915022&Data=Count&SearchText=Vancouver&SearchType=Begins&SearchPR=01&B1=All&GeoLevel=PR&GeoCode=5915022&TABID=1
These Are America’s Most Unaffordable Cities For Housing, based on percent of income to service mortgage. They sure make Victoria, and Vancouver look pricey.
Good points. Should make for an interesting year to see how these various factors play out
OK. I used City of Vancouver because they are the city with the vacant homes tax, similar to the Greater Victoria version that is coming.
Good advice Barrister. Thanks!
yes i understand that wasn’t the material of the argument .. i just like to point out the facts since you comparing Vancouver to Victoria and not Greater Victoria in the first statement . .. if you going to comparison .. do greater Vancouver to greater Victoria for the material of your argument
its like pointing out the ratio of vacancy in Taiwan is equivalent to Canada..both have near same population… the difference is density ..
Cynic: The sale of Thane does not actually tell us much since assessments while overall accurate are also often wildly wrong for individual properties.
Now if you can find a number of properties bought two or three years ago that have sold for less than the previous purchase price than that is at least suggestive.
Patrick: I suspect what mostly occurs is that some of the people who cannot qualify will eventually becomes buyers but they are actually just replenishing the ranks of the eight hundred who do qualify. The eight hundred are not a magically created group.
Basically the stress test has moved the bar for every buyer who is dependent upon financing.
@ Patrick
You failed to account for the first timers affected by the stress test moving down the property ladder. Also, the number of buyers at any given time are also highly sensitive to current market sentiment. People don’t just line up to buy like lemmings without any consideration for local market and general macro economic conditions.
988 Taine Pl
MLS 404 913
$911,000 assessed
$879,900 listed
$842,500 sold
$68,500 under 2018 assessment (8% below)
$54,500 under 2017 assessment
22 DOM
I disagree, because many of those turned-down buyers will qualify for a mortgage in the future, even if the stress test remains, creating a build up of buyers.
If, for example, 1000 first time buyers bought per year in Victoria, and the stress test reduced that number to 800 per year, I claim that there would be a build up of potential buyers of 200 per year, even if the stress test remains. So assume we now have 800 mortgages per year to first timers instead of 1,000. I claim this 800 number will rise, due to the backlog of turned down wanna-be buyers.
Because, say in 5 years, there are now 1,000 people that wanted to but couldn’t. They haven’t given up, and their incomes and down payments are rising. So unless they lose interest in buying, some of those shut out buyers will qualify later, and the numbers or mortgages granted will rise to fill the gap. So in 5 years, we get our expected 800 per year, but then we get some of the 1,000 from previous years, so our number of mortgages rises from 800 to more than 800. The effect of a buildup of buyers, temporarily (but not permanently) shut out by the higher standards.
The best city in B.C.? That’s a hard one, is it Vancouver or Victoria?
Well this seals the deal. Amazon one day delivery (7 days per week!, starting now!) coming to only one city in BC – Victoria!
https://vancouverisland.ctvnews.ca/free-one-day-delivery-amazon-prime-expands-service-to-victoria-1.4295583
We are the only city west of Ontario to get is so far…
Yes, it is that my belief that the government is, currently, overestimating revenue and as they are sticking to $170m estimate for total spec tax. Here’s the NDP sticking by $170m October 2018. https://www.timescolonist.com/news/b-c/b-c-greens-back-housing-speculation-tax-assuring-its-passage-1.23468864 “James said the changes could chop $30 million from the projected $200-million annual revenue from the speculation tax.”
They know lots more about it than me, so they are probably right. But if turns out that I’m right, and the spec tax revs are WAY less than $170m, then remember that you heard it here first!
And, remember that the spec tax money is to be used to develop affordable housing in Victoria, so it would be important to Victoria how much money is raised, so I disagree with your assertion that it’s not about raising money, because of course money is badly needed for affordable housing, and this is how this tax has been sold to BC by the NDP.
Anyway, thanks for the debate Dad and we can wait and see what happens.
btw, Filling out the spec tax form was easy, although LeoS’s 1m:59s record is safe. I hope next year they save the settings, and it can be a simple “same as last year” 1-button entry.
Them’s fight’n words Leo!
We’ve had so much snow here in Mill Bay it’s been crazy. At least it isn’t -30 like it has been in Alberta, but we can’t throw the snow much higher than the piles already are.
Leo S
That would be splendid! The current one did not make much sense to me tbh.
“Yes, but look at the press release posted 6 days ago on City of Vancouver website.”
I did, and then I went further and clicked the link to the annual report.
“Now you’re claiming that the number might change after the recent deadline. Fair enough, but look at last year’s number of 1,085 vacant homes (deadline March 2018) . That isn’t going to change.”
What are you on about? The press release says that as of the “declaration deadline”, 922 properties were declared vacant in 2018, compared to 1,085 last year. That is simply the number of properties declared vacant at the deadline, not the number of vacant homes in the City. The press release actually explicitly goes on to say that the statistics will change because of audits, late declarations, and appeals and complaints.
The annual report, which is linked to in the press release, states there are 2,538 vacant homes in the City of Vancouver as of November 1, 2018.
“Even if the number turns out to be double the 922, that would increase my ball-park estimate of Victoria spec tax collected from $1m to $2m.”
What’s your complaint? That it’s not a “tax grab”? That the government over-estimated revenue? The primary purpose of the tax is not to generate revenue, it is to disincentivize holding residential property in vacant possession. If the current tax rate does not create a sufficient disincentive, up the tax rate until it does.
“With 41 forced-“rentals” added, If that pans out, can’t we just call it a “flop” and get rid of it? Rather than think it is some kind of govt 3-D chess with a hidden motive?”
You were part of the vocal group who got the government to lower the spec tax rate on locals from the original 2% rate to .5% which will cause a large decrease in the number of vacant homes that will be rented out. Now you are saying that the number of vacant homes being rented out will be just too low and not worth it. You can’t have it both ways. You also don’t know how many vacant homes were rented out or sold before the tax was fully implemented and you won’t know the amount of people every year in BC who will reconsider making speculative home purchases due to the spec tax
Greater Victoria grew by more than 5,000 people between July 2017 and June 2018
https://www.sookenewsmirror.com/news/greater-victoria-grew-by-more-than-5000-people-between-july-2017-and-june-2018-2/
Yes, but look at the press release posted 6 days ago on City of Vancouver website. https://vancouver.ca/news-calendar/more-vancouver-homes-occupied.aspx
It says this…
“As of the February 4 declaration deadline, 922 properties were declared vacant in 2018, compared to 1,085 declared vacant by last year’s extended deadline of March 5, 2018, a 15% decrease.”
Now you’re claiming that the number might change after the recent deadline. Fair enough, but look at last year’s number of 1,085 vacant homes (deadline March 2018) . That isn’t going to change.
Moreover, look at the map on that page, it clearly shows the number of declared vacant homes and you can eyeball it and see that it adds up to 922. And the City makes the headline how there are 15% less homes vacant this year than last, because 922 is 15.0% less than 1,085.
I agree that the numbers reported don’t make a lot of sense comparing to previous releases, but if you go by what they are saying as of 6 days ago, on the official city PR, with a map attached, it is clear that there are 922 vacant this year, and 1085 vacant last year. It’s always possible they’re not showing the correct final number for last year and that it is hugely different than 1085. Perhaps someone can explain the earlier claims of higher numbers.
Even if the number turns out to be double the 922, that would increase my ball-park estimate of Victoria spec tax collected from $1m to $2m. And rentals freed up to 82. Still tiny!
Jamal,
Greater Victoria 367k. (Pop 2016)
city of Vancouver 631k (pop 2016)
Ratio 367/631= 58%
I said about half, because that isn’t material to the argument. Is your point that 58% isn’t close enough to “about half” for you?
Sounds like I need to develop a simpler online version of the wait vs buy calculator (or more accurately, buy now or buy later). Sure it might not convince them, but I do think there’s a lack of good tools out there for people to understand this decision.
dont get peoples mentality … people need to do some number crunching before making emotional decision
typical mortgage currently – @ 3.5% @ 400k
you are looking at $1500-ish at land tax and interest payment only.. then you have insurance, disposal, and a few other things .. you either pay a landlord .. or you pay the bank .. it make sense back in 2014.. but now ..?
I am pro real estate long term but there are situations where is makes zero sense for people to buy that cross my desk every week but people still buy.
For example, right now I have quite a few active buyers that I personally think would be way better off renting versus buying. One young couple are friends of mine….new immigrants with a solid government job and a solid commission job. Problem is because they are new the commission job needs 2 yrs of income to qualify for a mortgage. On the one government job they qualify for 300k (they have 20% saved) and are looking to buy a condo. In this price range you can only buy garbage so I’ve been strongly encouraging them to rent for two years until the other job can be used towards qualification which would push them to 700k and they can get an older home with a suite which is what their end goal is but they can’t get over the fact that they are throwing rent money away no matter what the numbers actually are.
There is HHV and than their is reality.
Marko
I think in the last blog someone asked how presales were going – I never saw an answer but I might have missed it – so how are presales going?
Even though pre-sales are my favourite niche in real estate I’ve lost complete interest in the last 6 months and haven’t been following that market much.
A lot of pre-sales are over $1,000 per sq/ft and then pretty much all pre-sales are ABOVE comparable re-sales which makes no sense. I’ve talked quite a few people out of pre-sales lately.
I’ve always looked for a 10 to 15% discount to market when I’ve personally bought….if you aren’t getting a 10% discount to a comparable re-sale what is the point?
I am guessing pre-sales right now are SUPER slow but developer expectations are through the roof.
Following the US housing bust, there was a tonne of research done by the NIH and others on the effects of popping housing bubbles on the personal, social and financial health of people affected by it.
It ain’t pretty, and yes, divorce is absolutely one of them. Excessive debt and falling house prices quite literally, can cost people their lives.
It’s why cheering a housing crash is so foolish…as well as cheering a huge run-up. Alas, it always happens that way, people being what they are.
Except it appears the rush from Vancouver is already over. Not sure of the complete reason why but part of it is almost certainly that the difference in house prices isn’t as big as it was.
We didn’t have a rush of buyers from Vancouver 2011-2014 and the market didn’t tank. I think the local market can survive without the Vancouver transplants.
Get ready for a chuckle:
LeoS Divorce is often devastating period. I dont have any reason to believe that a major drop in houses prices will lead to more divorces but being left with little or no equity does make it worse and limits options for rebuilding your life.
Now financial stress is a leading underlying cause of divorce so any major hikes in interest rates is a problem.
“Vancouvers just completed empty homes found 922 properties, also a tiny number, since they were talking about finding 10x that many (10,000) when the idea was first introduced.”
This is a preliminary number. Last year there were 2538 homes reported vacant and 5,385 exemptions. Pretty close to the 10,000 figure “they” were throwing around.
“Since Victoria is about half the population of Vancouver…”
Huh? Greater Victoria is half the size of the City of Vancouver, but that is an apples to oranges comparison.
“With 41 forced-“rentals” added, If that pans out, can’t we just call it a “flop” and get rid of it?”
If not enough properties are being freed up at the current tax rate, then why wouldn’t you just increase the rate until it has the desired effect?
Patrick, you seem to have a lot of time on your hands. Before your next screed, maybe take Jamal’s advice and check your facts first.
Your argument is based off the change of people being hit last year as opposed to this year. That is not an effective measure of the impact of the tax given that you don’t know how many properties were vacant before (and were either rented or sold in advance of the tax).
I’m not saying the vacancy tax was effective, just pointing out we would need to know the before numbers to make a determination.
Also ludicrous or out of touch to write an article that suggests this is widespread. There are lots of Victoria and Vancouver people that own a place on the Gulf Islands. OTOH very few permanent island residents own a $1M pied-a-terre in Vancouver (or Victoria). I grew up on one of the islands. There are some rich people but that is not the norm. Vast majority of the permanent residents are getting by OK but not at all wealthy.
you should double check facts first
China is intensifying its capital controls, introducing jail terms for the innumerable underground bankers over there as well as stiff fines equaling 5 times any profit made in the course of an illegal overseas transaction…
https://www.afr.com/news/world/asia/further-hit-to-australian-property-as-china-intensifies-capital-controls-20190213-h1b7ez
Well then it has to actually cause some behavioural change for it to make sense.
Seeing the “behavioral change” results posted yesterday for city of Vancouver regarding their empty home tax, one can only laugh at the idea that it is causing significant behavioural change.
https://www.cbc.ca/news/canada/british-columbia/city-of-vancouver-says-2018-empty-home-tax-cut-number-of-homes-sitting-vacant-1.5008365
The city proudly states that a whopping 82 properties that were formerly vacant are now listed as rented. (Of course we know that these are “forced 6-month-rentals” and may not be your typical year-around, long term rental to a third party. Just a spec-tax-buster rental).
Does creating only 82 rentals in a Vancouver city of 650k qualify for achieving “behavioral change”?
Since Victoria is about half the population of Vancouver, we can look forward to about 82/2= 41 “behavioural change” rentals in Victoria in year 2 of the spec tax. 41 units is a single building, and a drop in the bucket. And this isn’t 41 per year, it is a one-time gain, but we all get to fill out the form every year…yipppee!
Btw, The spec tax is very similar to the Vancouver Empty homes Tax, there are some differences but wouldn’t amount to many extra properties IMO.
Vancouvers just completed empty homes found 922 properties, also a tiny number, since they were talking about finding 10x that many (10,000) when the idea was first introduced. Based on that 922 vacant in Vancouver , Victoria spec tax would find about 500. Spec tax revenue would be tiny from that, the typical person is a BC resident paying $1,000 spec tax (0.5% on a ($600k property -$400k exemption)). That’s $500k spec tax revenue if everyone’s from BC, and maybe $500k. More from the foreigners at higher rates.
Look at the updated map of vacant properties found in Vancouver. Notice all the tiny numbers that add up to 922 – like 14 in Shaugnessy , that was supposed to be the “poster child” with hundreds of vacant homes.
https://vancouver.ca/news-calendar/more-vancouver-homes-occupied.aspx
Total spec tax revenue I estimate from Victoria is $1.5m (see calculation above)
With 41 forced-“rentals” added, If that pans out, can’t we just call it a “flop” and get rid of it? Rather than think it is some kind of govt 3-D chess with a hidden motive?
Are you saying that a drop in house prices will lead to more divorces or that divorces where the house is underwater will be more devastating?
Yup I wrote about that data here https://househuntvictoria.ca/2018/11/14/stress-test-reduces-number-of-highly-indebted-borrowers/
Stress test definitely took out a lot of what would normally be considered riskier borrowers. That’s why the industry is pushing so hard against it this year.
Wouldn’t lead to a build up of buyers though unless the stress test is dialed back again.
In terms of first time buyers people under estimate the impact of divorce on the housing market. Generally speaking about 18% of marriages fail within the first seven years with the overall divorce rate for first time marriages being a little over 40%. (common law breakup stats are even higher)
It would be interesting to have the stats for first time buyers divorce rates but I cant find any numbers. In the vast majority of cases for young people divorce involves selling the principle residence. Basically you are talking about a forced sale.
These numbers might be something that parents think about before helping your little munchkins out with their mortgage.
I am not sure that people really understand how financially devastating a divorce can be particularly if there are children involved. A lot of people here are cheering for a major drop in house prices so that they can afford to buy a house. That is all fine and well but there is going to be a lot of blood left on the street.
Depends on your definition of “tax grab” I define it as a tax whose primary purpose is to bring in revenue, not to achieve a policy goal.
PST is a tax to drive revenue first, same with land transfer tax.
Spec tax isn’t very good at bringing in revenue, cost a lot to administer, and has a very clear policy goal that if achieved will also reduce revenue from the tax. Seems clear to me that the primary goal there is not revenue generation but rather behaviour change.
That’s all well and good as long as it works out for them. Wealthy people can certainly make that decision. The issue is that regular non-wealthy people may get themselves into a lot of trouble if things don’t go quite right at such high leverage ratios.
Except it appears the rush from Vancouver is already over. Not sure of the complete reason why but part of it is almost certainly that the difference in house prices isn’t as big as it was.
Well a change in some kind of regulation to make approvals faster wouldn’t cost anything, I just don’t see how they can do it.
Marko
I think in the last blog someone asked how presales were going – I never saw an answer but I might have missed it – so how are presales going?
That data is from 2014-2016. A typical 2014 buyer in 2019 now has 10% or more equity through 5 years of their mortgage payments.
Here’s a newer data set from the same source (BOC) with data through 2018. It shows dramatic improvement, with high LTV ratio % of new mortgages falling from 20% (2014-2016) to 6% (late 2018). They also comment that the b20 stress test and insurance changes hit high price cities like Vancouver, and Victoria the worst, resulting in 18% less borrowers in Victoria. They seem to attribute these less mortgages to the tougher standards. Presumably these are people that wanted to buy in Victoria but couldn’t, so IMO that could represent a buildup in future buyers.
https://www.bankofcanada.ca/2018/11/staff-analytical-note-2018-35/
“Recent policy changes are having a clear impact on the mortgage market. The number of new highly indebted borrowers has fallen, and overall mortgage activity has slowed significantly. Tighter policies around mortgage qualification and higher interest rates are having a direct effect on the quality and quantity of credit.” “The quality of lending has improved, with fewer mortgages going to higher indebted borrowers”
If someone can’t bear living in the Gulf Islands without owning a party pad in Vancouver, and can’t ante up a few extra grand a year, they should just move to Vancouver and be done with it.
Ludicrous that someone with a second residence in Vancouver should play the victim when people who live and work in the city can’t afford a first residence.
Not so fast. The situation described was someone who lives (primary residence) on Saturna, with a secondary residence in Vancouver. They would still typically need to pay spec tax, because principal residence is Saturna, and the spec tax interprets principal residence as to where you live most of the time, so you can’t just switch it. Unless the person qualified for a medical exemption (routine medical visits don’t qualify) or some other exemption, they would still likely pay spec tax on second Vancouver home if the principle residence is Gulf Islands.
If people are logical human being we wouldn’t have problems with stock market or RE fluctuation. People don’t buy something because they need it. They buys because it is new and shiny, and because they have to keep up with the Jones.
What is it then if the Spec Tax is not a tax grab?
The original ST is the PTT that was and still is squirrel away into the coffer. PTT didn’t do anything to curb the RE speculation nor use for social housing. Now there is a short fall because they over spend so they have to come up with another scheme to siphon sweat, blood, and tears from the public.
And, don’t wish for more tax because the government medicine is often much more painful than the cure that they promised. The Spec Tax/scam and many others taxes, such as the Income Tax, PTT, GST, Carbon Tax, etc… will never going to go away and you and your children will be paying for it till eternity. (If you want I can enlighten you how the supposedly temporary GST scam came about.)
Maybe they like the house and neighbourhood for their family, and want to live there a long time, on their terms, regardless if it’s more profitable than renting. How do you “number crunch” that?
It’s normal for number crunching to favour renting in the early years. But you’re paying off a house, and the numbers look better each year, until year 25 when you own it outright,
Evidence?
admirable .. the leap of faith is solely theirs to bear…
i dont get peoples mentality … people need to do some number crunching before making emotional decision
typical mortgage currently – @ 3.5% @ 400k
you are looking at $1500-ish at land tax and interest payment only.. then you have insurance, disposal, and a few other things .. you either pay a landlord .. or you pay the bank .. it make sense back in 2014.. but now ..?
LeoM….. “Why do you feel you need a realtor to sell your property?
Im not being sarcastic, I honestly wonder why you would assume you need a realtor with 20 years experience writing descriptions about a house you know better than anyone and then willingly donate $50 grand of your equity to a stranger.“
It’s a great point often discussed over weekend dinner with friends or at the pub. During the past few hot years it’s felt like “Buyers buy.” As a seller, Agents I’ve had experience with have had to go to work in slower periods.
This is a topic all into its own. But I will say looking at Zillow.com is great. All price changes. All sales history going back 20 years. That information should be publicly available since anyone with access to the internet has e-assessments at their fingertips and has 3 years of sales history.
Do you see any (or an increase) of your clients (both buys and sellers) inquire with you regarding the current state of the Vancouver market with respect to their potential transactions here? Just trying to see if there is a potential bearish psychology developing in the general Victoria market.
No, my average buyer buys because they can afford it and the time in their life is right. Had a late 20s couple buy a high 800k home in the core a few months ago. Both professionals @ approx 100k/each. Paid off student loans, saved up 15%, kid on the way and renting a one bedroom condo…..decided they want to buy a house. Parents chipped in another 5% to avoid CMHC fees.
Your run of the mill example, could care less about what the Vancouver market is doing. I mean if the Vancouver market dropped to the point where it was only 30 to 50% more expensive sure it would impact the market in Victoria but a 1 million dollar Victoria house coming down in Vancouver from $2.5 mill to $2.0 mill doesn’t really do anything locally, imo.
I also have a couple of buyers right now I’ve strongly advised against buying given their situation and they are still buying. You can throw a book of reasons at them including Vancouver is tanking but they just want to buy reason being they feel they are throwing away $1,500 every month in rent. Purely psychologically.
——————
So in other words, for the next few years, if any new borrower in Vancouver sells a property they purchased from Spring 2017 onwards, they will likely lose their entire downpayment++ after accounting for all expenses related to purchasing, owning, depreciation, and selling. And, the loses will continue to accumulate every month during this downturn.
I do not know which devil is the lesser of two evils? The economy killing/tax happy GreeNDP or the thieving Libs.
Well I could just call it a liquidity problem, I guess. It’s much the same thing. Another way to put it is, the housing market leads the business cycle. I’m not aware of any historical support for unemployment spiking during a hot housing market. However, there are plenty of examples of the reverse: housing markets deteriorating when everything else appears to be going well.
Then, everything else gets pulled down with it. Joblessness and defaults inevitably begin to rise after credit starts to tighten up; in fact, employment is often at its strongest right before a recession. Where credit constricts, so does the housing market, industries that rely on it suffer, whole economies that rely on it suffer even more, the wealth effect reverses…etc.
Good luck at getting anything done.
The GreeNDP alliance couldn’t agree on anything let alone agree on the housing that they have to get every local jurisdictions, first nations, and majority of the populous on board. And, they will need lots of “free money” from the casinos and property transfer tax that now they are not getting any till they figure a work around.
Perhaps there is a cash flow problem because of a slower inflow of casino money. That would put a big dent in trading of high end RE in Vancouver and Toronto, and will put a temporary halt in the budget gravy train till the government figure out a work around. However, I do not think there will be much of a cash flow problem for the majority of the local home owner (except for flippers) till a large uptick in unemployment.
Which kind of kills the argument that it’s just a tax grab, don’t you think? Seems like the previous government’s attitude of “it’s all good if it brings in money” was partially what got us into this trouble.
Generally cash flow problems stem from rising joblessness which I don’t think we have yet.
The FSR from 2017 has a bit of data on mortgage debt distribution for new borrowers
51% of new (2014-2016) borrowers have 20% or less equity
23% have between 21% and 35%
24% have more than 35% equity
https://www.bankofcanada.ca/wp-content/uploads/2017/11/fsr-november2017-bilyk.pdf
Given the discussion on this forum atm, this screenshot seemed relevant.
And a cash flow problem is what we’re starting to have, folks…
I’m not so sure about that. It seems logical (more equity is better), but it really is about how that equity is distributed, and in what markets. I would withhold judgement on this one before I saw more data (data which really should exist given every bank must know exactly the equity ratio of their borrowers).
I do not believe so. For sure showings don’t happen during the snow which means offers don’t happen. But it’s the middle of the month. Those buyers are still out there willing and able to buy. They didn’t hit a couple days of snow and then decide not to buy at all. They just re-schedule the showings for a couple days later and buy then. I’ll take a look at the daily sales to see if we can see this effect (dip during or shortly after the snow days, then boost after).
Something in the throne speech today: “The government is now promising to “improve the development process by speeding up much-needed rental housing and delivering more efficient and effective project approvals” as well as enact other recommendations of a recent Rental Housing Task Force, read the speech.”
This will be interesting. I wonder what the province is thinking of doing that could impact approvals for new rental and affordable housing projects, which is mostly under municipal jurisdiction. I would love to see some action on that front.
https://vancouversun.com/news/politics/b-c-government-to-deliver-throne-speech-today
Yes, and hopefully before the next election, so the Libs get re-elected!
not to be xenophobic, but here is another video of how chinese gets PR in canada but doest not stay in canada.. new money ..
https://www.youtube.com/watch?v=ERMtBEgk9ls
Patrick unfortunately its hard to pin that all (or even majority of it) on the NDP. How many less houses were purchased due to the 30 point plan? Don’t you think the reduction is probably more weighted towards the Federal changes like the B20 changes and the interest rate increase? If anything the spec tax should bring in more PTT from people selling their houses to avoid it. Certainly some slow down can be pinned on NDP but that was the whole point – slow the market, drop prices so people can buy in – it’s a much more sustainable plan. And as prices do drop and people can afford to get back in to the market it will pay dividends in PTT down the line. THe way it was going with the libs it was bound to dry up.
Alternatively if you want to shine some blame somewhere maybe you should start with the literal billions the Libs allowed to be laundered into this province shooting up house prices unsubstainably over the past few years. Then what happens when world growth, especially in CHina, slows down and money leaves BC. Lets see average FAMILY income in places like Victoria and Vancouver is under 100k (well under in Vancouver). How does an average family making 80K a year buy a home for even a million in Vancouver. Let me spare you the math and tell you they don’t.
I’ve seen a lot of talk about buyers choosing to wait for prices to drop. News flash people! Most potential buyers aren’t waiting! Most families can’t afford/ dont’ qualify for average homes, even well below average homes in these cities in BC so its not a who’s gonna blink first – it’s more likely how much longer can the sellers hold out – i mean we are seeing it in Vancouver and starting to see it here.
Patrick you can blame the NDP all you want but IMO the larger finger should be pointed at the LIbs since they were basically using PTT as their personal piggy bank not caring about the hard working british columbians who were being priced out of the market. The party had to end some time – i’m just glad something is finally being done about it. Bring on the taxes I say.
The 20 point GreeNDP plan to meddle in the real estate market seems to be paying socialist dividends already.
https://www.vancourier.com/real-estate/province-expecting-400m-hole-in-property-transfer-tax-revenues-1.23631463
“The B.C. government has reported that it is expecting Property Transfer Tax (PTT) in the 2018/19 fiscal year to bring in $400 million less in revenue than projected in its original budget.”
This loss of course dwarfs any revenue from the spec tax.
They’re just getting started. Wait until their misguided policies create a recession, unemployment and huge deficits. Then it will be time for more tax hikes to create fairness.
Patriotz:
Yes, thanks for the reply. Those were the numbers I was referring to last year when I said “Previous articles about city of Vancouver empty homes tax talked about thousands of homes.” Do you have any idea what the 922 is referring to? They talk about 163 less than last year, and 163 properties now occupied, of which half (82) have become rented (not sure if that is legit rent or not). Seems like small numbers all around, maybe they are just partially done the count or something. Hopefully someone can explain what they are counting.
From the article earlier.
I can understand subsidizing ferries in the same way as highways (to a point), but holding down electricity costs just underfunds BCHydro. We already have cheap hydro, we should pay a fair price for energy so that all the dams don’t get run down. Distorting the real cost of things makes for poor individual behaviour. Look at the externalities of fossil fuels that the carbon tax is trying to fix.
While the NDP are better than the Liberals at not raiding the coffers, underfunding crown corporations can have a pretty bad long-term effect as well.
I can’t speak for everywhere, but in the part of the interior I am familiar with, RE grinds to a halt for most of the winter. Why would you want to look at property you can’t actually see most of?
Does snow historically reduce sales? One would think if people aren’t looking at places due to snow then they aren’t making offers on places so it does make sense. A few days out of an already short month would have an impact don’t you think? The question is, as Marko suggested, will they be made up in March.
@ Leo M
The seller has to pay half of the commission regardless if the buyer has a realtor.
To be called part of a triple whammy – snowmageddon, spec tax, stress test. Buyers have fled the market and it’s all everyone else’s fault 🙂
“This number of 922 seems too low to be believed. Because Vancouver city population of 650k is about 17% of all spec tax area. And the BC govt has told us repeatedly that 32k homes will be subject to spec tax. 17% of that 32k would imply that the BC govt expects that 5,440 homes were vacant in Vancouver city, not 922.”
The spec tax is not just a vacancy tax like the Vancouver empty homes tax. It applies to satellite families as well who pay little to no income tax here and would be part of those 32k homes that are subject to the tax. This is where most of the money being collected by the spec tax is coming from, not Canadians. People seem to concentrate on the local part of it. If there are fewer vacant homes from the original estimate it could also mean the tax is working and people are renting them out. For the tax to be successful the number of vacant homes should be decreasing. This article talks about this major component to the tax and wonders why it is being overlooked
“Addressing an almost entirely ignored goal of the speculation and vacancy tax, SFU public policy professor Josh Gordon supports that it targets wealthy “satellite families” that own dwellings in B.C. but pay little or no Canadian incomes taxes, even while the price of their unit has, until last year, been rising rapidly.
“What has been very revealing in the speculation-tax debate is the conspicuous silence of the critics about the part of the tax that applies to satellite families. These are often millionaire families that are paying next to nothing in income taxes, since the income is earned abroad,” said Gordon, referring to trans-national families that often maintain multiple dwellings around the world for their student offspring, for temporary use and to shelter their wealth.
B.C.’s speculation tax on satellite families and foreign owners happens even if they reside in the dwelling, says Gordon. It is not merely about vacancy.
“You’d assume that this is a situation that should be addressed, especially because of its impact on housing affordability. Yet there has been no mention of retaining that part of the tax by critics. Why haven’t the critics been pressed on this issue? Do they think that it doesn’t merit policy action?”
https://vancouversun.com/opinion/columnists/douglas-todd-why-the-excitement-over-the-vacant-home-form
Who wants to bet that the snow will be referred to in the press release for the month?
“The report says that out of the total of 186,043 properties, 178,120 were occupied, 5,385 were exempt and 2,538 were vacant.”
https://vancouversun.com/news/local-news/vancouver-says-38-million-to-be-collected-in-first-year-of-empty-homes-tax
Regarding previous estimates of “empty” homes, note that dwellings rented to students who report to the census at their parents’ address will show as unoccupied on the census. As well, the empty homes tax applies to properties, not dwellings. For example, if a house has an occupied main and an empty suite, it will not be subject to the empty homes tax, but the empty suite will show up as such in the census.
Why do you feel you need a realtor to sell your property?
I’m really curious why you would be willing to give $50,000 of your equity to a person who will spend a few hours writing a pithy description of your house and then post it onto MLS in much the same way as you write a blog post on HHV.
Im not being sarcastic, I honestly wonder why you would assume you need a realtor with 20 years experience writing descriptions about a house you know better than anyone and then willingly donate $50 grand of your equity to a stranger.
Before anyone gets the impression that Carney is suffering from Alzheimer’s, note that the article is from early last year, before the spec tax was trimmed back from rural areas, including the Gulf Islands.
For those who want a comic break
https://www.saanichnews.com/news/b-c-government-aims-to-stop-concert-ticket-payday-loan-gouging/
“The speech promises to carry on with rental market changes recommended late last year by an MLA task force. This could include legislation to prevent strata councils from banning rentals.”
Screwing around with the rights to set your own rules. Not everywhere wants to be a rental building.
“Let’s make the cost of housing less by making all housing shitty!”
Next up, forbidding municipalities from making any new parks and instead forcing them all to be zoned residential.
Yikes! My electric baseboards are using 56 kwh/day, but I’ve had the gas fireplace running also.
@ Renter
So last listing at $969 and now pending at $855? That’s quite the low ball offer they are considering (relative to ask).
Can anyone confirm the number of vacant properties declared in Vancouver Empty homes tax. I’ve seen a few recent articles that say it is only 922 properties. This number of 922 seems too low to be believed.
https://www.thestar.com/vancouver/2019/02/06/city-of-vancouver-says-2018-empty-home-tax-cut-number-of-homes-sitting-vacant.html
https://dailyhive.com/vancouver/vancouver-empty-homes-tax-2018-data
https://www.cbc.ca/news/canada/british-columbia/city-of-vancouver-says-2018-empty-home-tax-cut-number-of-homes-sitting-vacant-1.5008365
“2018 declarations for the second year of the EHT were due on February 4, and statistics released today show a total of 922 properties were declared vacant — down from the 1,085 properties declared vacant last year, representing a 15% decrease.}
This number of 922 seems too low to be believed. Because Vancouver city population of 650k is about 17% of all spec tax area. And the BC govt has told us repeatedly that 32k homes will be subject to spec tax. 17% of that 32k would imply that the BC govt expects that 5,440 homes were vacant in Vancouver city, not 922.
Could someone confirm if that the 922 figure is correct? Previous articles about city of Vancouver empty homes tax talked about thousands of homes.
Renterinparadise… There’s a ton of over-saturation in the just about every corner of the market that needs a good shakedown. I believe Those $779k houses that were torn down, new build and listed at $1.4-$1.6M; those days are done, unless you’re in the business of bleeding money, fast.
The next shakedown in my opinion only is the quality Reno and quick buck flips like you mentioned. The prices are similar so need to do decent DD but with market stabilizing provides more time. The good realtors that have been in business for a long time will always have success. If/When we sell I won’t be using anyone with less than 20 years experience in this market.
I’m completely fine with a major correction because I think it would bring balance, and get the local market affordable for those that actually live here. We’ve been budgeting for interest rates at 5% at renewal. If it doesn’t happen then we’ll have additional funds to pay down and lower our monthly payment at renewal.
This contract surprised me -999 Abbey Rd (MLS 402053) with a pending at $855k. Original ask at $999k then dropped to $969k and 66 DOM. Now the contract price is just a hair above assessed but Abbey Rd is one of the nicer streets in Cordova Bay. Easy access to the beach without being on a busy road. Quiet neighborhood that I walk through often. Houses don’t come up very often on this street. There is an above ground suite and peek-a-boo views of the water making this one of the more attractive options in the area.
When I saw this house first on the market, I thought the price was high but still assumed it would go for north of $900k even with the updating work that should be done. It should be a very interesting year.
I hope that is the case. I’ve been beaten out by flippers who honestly did some pretty crappy work on the houses avoiding the truly necessary repairs and just doing the cosmetic then turning the house over to some unsuspecting buyer. I’d rather the elbow grease than a refrigerator in the dining room.
LeoS,
Thanks for the graph. With HELOCS included ($200bn balance), I get 71%, using RBC numbers (link in an earlier post). Your chart maybe be using total possible HELOC including unused LOC. Only 2/3 are used.
On the issue of home equity, yes, even it was 98%, there could be some people who owe a lot and would fall into negative equity easier. Without looking at histograms, one can safely assume that the picture of 74% home equity is better than a country like Australia with 48% home equity, or USA with 60%.
FinPost/DBRS has a brief article on the same topic, and uses the 74% number (without HELOCS) . They seem to be making the same point as me…
“Massive drop in housing prices would still leave Canadian households with more equity than debt}
https://business.financialpost.com/personal-finance/mortgages-real-estate/even-a-massive-drop-in-housing-prices-would-leave-the-average-canadian-household-with-more-equity-than-debt
With HELOCS (which aren’t considered mortgages) it falls to 71%. LeoS graph shows HELICS with a bigger impact than that, because that’s the maximum drawdown on HELOCS, and I’m only including HELOCS that people have used.
I seem to recall that it is a little higher in expensive markets like Vancouver, something like 78%. But they have more HELOCS too, so evens out.
It is $ value. A simple divisor of mortgages outstanding/ RE value = (1-$1.4t/5.5trillion)=74%. Add in $200bn HELOC and you have 1.6/5.5=71%.
At that value,of 71%, on a $1m home we owe $290m. if we have a huge crash of 30%,
Our home is worth 700k so our equity ratio is (700-290)/700=59% which about what USA home equity is now (60%)
Due to some weird tax and estate planning that was done a few years back we have avoided being hit by the spec tax. Basically we are living on capital and not income.
The structure was determined by an intersection of American, Swiss and Lichtenstein tax and estate laws. So we lucked out as far as the spec tax goes.
It should be interesting to see if people who have pensions from foreign corps or have dividends paid by foreign owned corporations are hit by the spec tax.
One of the neighbours has an interesting situation in that she is divorced and living exclusively on support payments made by her American ex husband. Is this income earned abroad? I have no idea.She has early onset Parkinsons disease and is unable to work . Not sure that she was the intended target of this tax.
Yup. I am just about to help someone fill out the form, who is moving back to Canada from the USA and this may bite them. I need to see the circular way the exemptions and disqualifications will work out in their case.
@Leo
Thanks for the great graphs. The best graph in a while for me is your change in median price SFH 2010-2018. If you can afford to wait, best to purchase in Q3 and Q4 and buy an “undesirable” home that likely needs some elbow grease. Even better, if you are looking for a teardown, there could be bargains to be had @ the end of the year. For HHs this year, I’d start throwing 0.80 to 0.85 of Assessed value bids towards the end of the year.
Though I am long-term bull on RE, there will be some bargains to be had this year. It won’t be the ready to move in variety or homes that are all spruced up, but ones that need work.
For example, there was a house on a big lot on Bowker in Estevan (Vacant and Estate Sale). They wanted 1.2 Mill. Assessed at 1.2 Mill, but the house needs $400K in work or completely rebuilt. If you had the means and shopping in this price bracket and afford to wait 1-2 years for a house you can live in, I would throw in a bid of $800K no conditions with a 48 hour expiration to see how that would stick. I’ve done this a few times and most times it has worked 🙂
But the key part to this strategy is you can wait 12-24 months to live in a home, obviously not for everyone; but it is a proven way of getting a bargain, especially in a softening market.
Leo, excellent point re: percentage holders. It’s probably a fair point to mention that on a separate tangent that mortgage free homes are likely a high number of retirees. In a downturn their fixed budgets won’t change much. So it places a higher importance on the overall economic health to those with mortgages. Being underwater isn’t a problem, unless the bills can’t be paid.
Also, would you take $50 in Canadian Tire money?
on the percentage equity topic… Two things to consider:
What you want to figure out the impact of a decline in real estate values (i.e. how many people are underwater) is a histogram of mortgage holders. Percentage with 5% equity, percentage with 5-10%, etc.
Brilliant idea. To maximize revenue you might want to sell Gold and Platinum level owner badges as well.
Also a Guru Prophet badge to sell to local fool 🙂
Patrick, Interesting post.. 76% Canadian equity?
That number seems questionable. But it may well be true. If so.. what is the number for the top 5 most expensive markets? Is it much less in Vic/Van/Toronto? When owners cash out in each of top five the % gets reset to a new buyer with 20%? So is this number increasing? Good Q’s. I don’t have the Answer.
76% as a total of all property is one thing as a statistic. But I’m more interested to know what the $ value is. In other words it could be 50% in terms of value not % of all homes. Just a thought. I hate % arguments unless I do the dirty work and I control the inputs. Just my DNA.
Send me $50 I’ll give you an HHV Verified Owner badge on your icon.
Can’t she just designate the Vancouver house as a primary residence?
I’m not sure how #YYJ OR #YVR became a THING so associate it at anything other than an airport.
Pretty sure there is zero people saying #LHR #PEK #HND when it comes to talking about their City unless it directly relates to transportation to/from.
Does anyone #Translink when talking about a Canucks game. How about #Fortroddhill when talking about a Vikes game. No? How about #Sookiesam when talking about how awesome Canada Day fireworks were. More you say? How about #CRD when talking about Whisky Fest.
I believe the wording on the form is whether at least 50% of your household income is earned in Canada. But yeah lots of interesting corner cases like someone working for a US company remotely.
Topped out at 100kWh in the cold. Second stage gas isn’t working for some reason so that was all heat pump struggling and baseboards downstairs.
I think we got $20k. Didn’t influence our purchase or price point though.
Decided the bike was a safer choice today. Had a meeting go to 5PM though so it was a gnarly ride home.
Fun to see all the kids out sledding
You are the man! I don’t think I’ll brave the roads on any of my bikes tomorrow. When I lived in Edmonton I had studded tires for my bike. Sold them when I moved to Vic (maybe a foolish move – I could be king of the bike lanes for a few days :-))
Luckily I’m prepared for the snow with the right vehicle. Fewer cars on the road makes it safer than ever
“Sooke School District also telling CFAX that they’ll close Tuesday. All three Victoria area school districts, plus Cowichan Valley, are going for snow day number two #yyj #yyjsnow”
https://mobile.twitter.com/cfax1070/status/1095174349747822597?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Etweet
@ Introvert
Can you define snowday? Not quite sure what u meant in your below comment (I am asking a sincere question btw, no smart ass comments I promise :))
It’s official. It’s another snow day tomorrow!
The blizzard of 96 was a good one. It would be hard not to know of it and if you are becoming an islander and shedding your Alberta heart you would incorporate it into your knowledge of here…
Ks112,
Looking closer, I think the mortgage totals don’t include HELOCS, which if true, would bring us down to 71% equity. So those numbers in previous post apply to mortgages only. I don’t know if the USA or Oz home equity numbers also don’t include their version of HELOCS. Anyway, we are still well above USA and Oz, but not as high!
@ Patrick
I can’t dispute the number you have given, they are eye opening for sure. I wouldn’t have thought that with a 50% decline the average Canadian will still have 50% equity in their homes. But now that I think of it, most baby boomers will have had their mortgages all paid off.
This does beg the question on whether the BoC would/has taken this into consideration in their rate decisions.
Thanks for the reply.
Australia at 48% equity is way behind, nothing like just falling 10%. Canada wouldn’t fall behind Oz even if we fell 50% – see below!
https://www.aussie.com.au/home-loans/property-reports/home-equity.html
”The average Australian property has 48.4% of equity so it’s worth close to double the amount of debt held against it”
Canadian equity is 76%. (Rbc says 74% but others say 76 that I used here. Doesn’t make much difference) That 76% is dramatically more than Australia (48%) or USA (60%. https://fred.stlouisfed.org/series/HOEREPHRE).
Examples illustrate this…
Start with 1,000k house. Canadian owes 240 and has (1000-240)/1000k=76% equity
House falls 10% to 900k (like Australia did)…..
Canadian now has (900-240)/900 = 73% equity… compared to 76% that’s merely a flesh wound!
House major crash 35% to 650k (worse than USA fall of 2007-12)…..
Canadian now has (650-240)/650 = 63% equity… still better than current USA equity of 60%!
House Armageddon! Crash of 50% to 500k …
Canadian now has (500-240)/500 = 52% equity…still more than Oz has now! Oz falls 50% and they have minus 4% equity!)
Conclusion: Canada’s 76% home equity is remarkable compared to its’ peers, and significant protection for our balance sheets if there is a downturn.
Good point.
And here’s what one of those smart-as-a-whip ladies thinks of the spec tax!
“Speculation tax will hurt rural B.C. and should be withdrawn, says Pat Carney.
Carney, 82, was first elected as MLA for Vancouver Centre in 1980. She says she’s spoken with many neighbours, both young and old, who are so wary of how the tax will be implemented that they are already looking to sell their Gulf Island properties because they feel they’re going to have to make a choice.“
https://www.timescolonist.com/news/b-c/speculation-tax-will-hurt-rural-b-c-and-should-be-withdrawn-says-pat-carney-1.23207960
Where do we post our state of the title certificate to become a “verified owner”?
Seriously?? Every time there is a single snow flake spotted south of the Malahat the “Blizzard of 96” stories get rolled out. It would be extremely difficult to avoid hearing about it.
Just curious if there are any bears on this forum who thinks that prices for SFH in Victoria will drop more than 5 -7% in a year? If so, could you name any catalysts that may lead to this?
The only thing I can think of is if this money laundering inquiry causes a significant liquidation event in Vancouver and have the effects of that spill over to here. Those are highly unlikely scenarios.
I think the median of the 4th quintile ($687k) must be the same as the median of the 3,4 and 5th quintile. Because the mid point is the same. But I could be wrong!
Interesting…. I don’t know, maybe their money is tied up somewhere, or they like borrowing cheap money?
@ Patrick
The issue with the equity in home stat is that it is directly tied to home prices. So given that Australia is already a year and >10% ( I believe that’s what it is) into their real estate decline, it is a given that if they started out the same as Canada they would now fall behind in that stat.
Ks112,
Yes, you can see details of the Canadians aggregate balance sheet, with assets and debts listed in detail. See page 7 of this RBC Economics research report (source listed as statsCan and RBC research). Scroll down to the very bottom to see it, It is current to Sep 2018, and lists total assets at $13.3 trillion, net worth as $11.1 trillion
RE assets are listed at $5,526b/ net worth (11,100)= RE is 50% of net worth, and even less of total assets 5526/13000=41%.
http://www.rbc.com/economics/economic-reports/pdf/other-reports/householddebt_dec2018.pdf. (Page 7, scroll to the bottom)
But wait,,, there’s more!
Mortgages $1,428bn/ 5,526 RE = 26%, leaving Canada with an awesome 74% equity in their homes (way better than USA (60% equity) or Australia (48% equity in homes…uggh..no wonder Oz have a negative equity problem coming ).
And for Canadians, assets growing 5 times more than debts… Awesome!
Lots of interesting data to explore in that RBC chart, good and bad!
looks like business opportunity for leo
@ Patrick
My apologies , please disregard my previous quintile comment, I need a refresher on my stats…..
Ks112,
Yes, you can see details of the Canadians aggregate balance sheet, with assets and debts listed in detail. See page 7 of this RBC Economics research report (source listed as statsCan and RBC research). Scroll down to the very bottom to see it, It is current to Sep 2018, and lists total assets at $13.3 trillion, net worth as $11.1 trillion
RE assets are listed at $5,526b/ net worth (11,100)= RE is 50% of net worth, and even less of total assets 5526/13000=41%.
http://www.rbc.com/economics/economic-reports/pdf/other-reports/householddebt_dec2018.pdf. (Page 7, scroll to the bottom)
Lots of good news stats in that data table, too many to list!
@guest_56189 thanks
sorry… i might just be bad at reading charts.. but stat can said the 4th quin tile is net worth 687k.. that is only top 40%
I am not arguing good or bad .. i am just fascinated by numbers and correlations of these numbers ..
it is interesting to see that there is an increase in quantity of people in the top 20% (5th quintiles) requiring to get mortgage on principle residences.
almost 50% of those people in the 4th quintiles (687k networth range) have mortgages on principle residences
sorry again if i mis-interpreted numbers
I enjoy it. A nightmare for strata councils, though. Slip and fall liability is nuts.
The basic form is easy, you are right. I am more concerned for the people who need to request an exemption other than primary residence. I suspect there will be a few court cases before the year is out, based on wording in the form.
Unless you would like to fully explain the “untaxed worldwide earner” to me. I wonder if Barrister’s wife falls into this category, if she declares most of her income outside the country. Just a speculation, Barrister, based on previous comments…
@ Patrick
So another way to put it is that you are saying the average Victoria homeowner has $400k of net equity in assets other than Real Estate? Hmm interesting, well I don’t really try and count other people’s pockets (unless they annoy me and I want to make a point), so maybe the other posters on here can chime in if this sounds right or not?
Also, hate to nit pick but the median for the forth quintile is probably different than that of the median for quintiles 3 through 5 as the min/max and also the count for each of the two scenarios presented are different. I haven’t looked at the data you referenced btw.
As for the spec tax, maybe Leo S can start a side business of helping people fill out their spec tax forms for a modest fee… 🙂
Why is it always the “little old lady” being used as an example of a person who can not figure out simple forms? I know some smart as a whip old ladies who not only can fill out simple forms but have done the family taxes, budgets and savings for the whole of their adult lives.
I feel more sorry for those who choose to ignore the requirement to complete the form or lie on it in the hopes that they will never be found out.
At this point, I definitely prefer precipitation in it’s frozen form. I’ve had enough of the gloom. Just got back from a wander around downtown. The city is pretty much shut down from 4 inches of snow, it’s hilarious.
For you, easy….yes and congrats. How about for a “little old lady” without awareness of what the spec tax is, internet savvy or family support? She needs to track down someone to help her, and may just file that letter in the shoe box she hands to the guy that does her taxes in April…too late deadline
Is March 31!
Our govt needed to have an earlier deadline than filing income taxes or paying property taxes because ???????
Time will tell, and we will see if everyone is a “LeoS” and does it under 2 minutes, or if many people have problems. I predict problems.
The $687k for median net worth of the top 60% comes directly from the stats can 2016k number. Because the median of the 4th quintile will also be the median of quintiles 3,4,5 which is the 60% richest, and representative of the 60% of house owners. https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=1110004901&pickMembers%5B0%5D=1.1&pickMembers%5B1%5D=2.27&pickMembers%5B2%5D=4.5
The $800k number I quoted is 16% higher than that, because I quoted it as a 2019 number, and net worth has risen about 20% since 2016 (links available on request), and also Victoria is higher than Canadian average, so I could have boosted it more than 16%, but that number isn’t that relevant.
sorry for my lack of knowledge .. but i am just wondering where did you get that statistic?
I finally got the speculation tax letter. From sitting down at my computer to hitting submit was 1 minute, 59 seconds.
Add another 25 seconds or so for walking down the hall to check my SIN.
Truly a ridiculous burden.
Right, if there is a downturn, all those net worth numbers will fall, either slightly, or dramatically. I’m not predicting the future, and neither is stats can, I’m just pointing out where we are now. About half of net worth is RE, so net worth would fall about half as much as RE falls. Let’s hope the economy stays strong, that benefits everyone here.
@ Barrister
Yes, I admit that last comment to Introvert was me trying to be a smart ass. I am sorry Introvert, I apologize 🙂
I deal with quite a few lawyers in my work and I always like to try and stretch the reasonableness test to my advantage. It usually ends with the lawyer (that my firm has retained) slapping my hand and billing us the $650 an hour for me trying to be smart….
you still need new home owners to buy from the bottom … who is going to help you trade up if no one buys from the bottom ?
James Soper: Taking partial ownership of the home can create all sort of issues which need to be carefully weighed. There are capital gain issues, estate issues and possibly even spec tax issues. Really have to check with both a lawyer and an accountant.
On a totally different note, I am not sure that this is a healthy relationship tripod for a young married couple. There is value in a young couple owning their own home (albeit that it is mortgaged to the hilt),
Thanks Barrister and all for the comments
QT and Seasalt, thanks for the replies/info.
It’s good to have some comparisons of Hydro usage. Sometimes I feel like I want to dispute the meter.
Curious to know what kind of % error there is.
I always trusted the old gear meters.
KS112: Now you are really stretching a point; even I have repeatedly heard about the blizzard and I have not been here that many years. Now you are not being fair.
Median Victoria home owner net worth is about $800k, and average (mean) net worth for Victoria home owner is well over $1 million.
Details….
According to stats Can, in 2016, 97% of all net worth in Canada was held by the richest 60%. Not a stat to be proud of, but there it is. https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=1110004901 That 60% number is relevant because it is about the same percentage as own houses in Victoria (61%). Of course that’s not to say everyone who is rich owns a house or vice versa, but their is a high co-relation between net worth and owning houses.
You can see the medians for the quintiles, https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=1110004901&pickMembers%5B0%5D=1.1&pickMembers%5B1%5D=2.27&pickMembers%5B2%5D=4.5 which shows that the median for the highest 60% is about $687k. That’s for Canada, and Victoria is higher than average, Based on those numbers from stats can, the current mean average of Victoria home owner would be well over a million (skewed by ultra rich) , and median average net worth of a Victoria home owner would be about $800k in 2019. (Ie higher than the $687k median for highest 60% in Canada in 2016)
As an aside, those numbers are in constant 2016 dollars, and net worth has been rising faster than inflation, and this is both in RE and non RE assets,. Assets are rising dramatically faster than debt, about 5:1 asset:debt rise since 1999. Headlines about rising debt in Canada usually miss pointing out that assets are rising 5 times as fast as debt, resulting in rising net worth.
According to stats Can, in 2016, 97% of all net worth in Canada was held by the richest 60%. Not a stat to be proud of, but there it is. https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=1110004901 That 60% number is relevant because it is about the same percentage as own houses in Victoria (61%). Of course that’s not to say everyone who is rich owns a house or vice versa, but their is a high co-relation between net worth and owning houses. Based on those numbers from stats can, the current mean average of Victoria home owner would be well over a million (skewed by ultra rich) , and median average net worth of a Victoria home owner would be under but close to $1m.
“Those that got cash from their parents did both sets contribute????”
Just mine, but her share of the down payment was larger.
As well, if the parents own their own residence, which is a pretty good assumption in this case, their share of the second property will be a taxable investment subject to capital gains taxation.
Much much better to hold their interest as a mortgage, as previously suggested. It also protects their outlay if Junior goes bankrupt or splits up with a live in partner.
“Loving this blizzard. I wish we had this kind of winter weather every year.”
Me too. It’s so bright and quiet out there. A nice break from the gloom of a typical grey and drizzly Victoria winter.
Leo, I’m sure you’ve already got chains on your Leaf 😉
Your obsession with me is … flattering?
I’ve always known about the Blizzard of ’96. I have relatives here who experienced it, locals mention it from time to time, and so does the Times Colonist.
@LF, maybe we could swap the wood splitter and truck (bought by the BC clerk) with some little snow plow … haha
If everyone in BC with a second property sold it would cause a 1982-style collapse. But don’t worry, even for the tiny fraction of second properties subject to the spec tax I think most owners will hang on, not the least because selling would result in a large capital gains hit. Many of them IMHO are really short term rentals and the tax is small potatoes. Others will rent them long term. And some will be rich enough it really doesn’t matter.
Introvert, it is interesting how you, a self claimed Albertan that supposedly moved here in the mid/late 2000’s would reference the Victoria blizzard of 96… Not saying there is no way for you to know about it, I just find it interesting as most people who moved here since 2000 wouldn’t have known or reference it. But of course you probably heard someone at your work mention about it today so you posted it right ;)?
After all you told me that you will reinforce all my observations in your previous post, so here is another point going to the “introvert’s comments needs to be taken with an ocean of salt” bucket 🙂
If you share your house ownership with parents, you would likely lose/reduce the perks (e.g. tax rebate, land transfer tax exemption, …) of being first time home buyer, wouldn’t you?
If this persists, I can’t see how schools would be open tomorrow. When was the last time Victoria had two snow days in a row? The Blizzard of ’96?
@Barrister, what about the parent just taking partial ownership of the house?
Loving this blizzard. I wish we had this kind of winter weather every year.
@ Barrister,
Thanks for your insight. Just curious if there a particular reason that my “slick” version will not fly? I thought if both the mortgage provider and the holder agree to the terms then its all good? You see equity carve outs/payouts and such quite frequently in commercial mortgage arrangements (I have worked on one awhile ago regarding a second none bank mortgage here in Victoria involving a large public entity and a large private developer)
K112{ The really slick portion might not fly and I would recommend that you always collect a bit of interest to avoid having it be termed a gift and a gift to both parties.
The mortgage has to be disclosed to both parties and should have the spouses signature on it along with a certificate of independent legal advise.
I am not a BC lawyer so I strongly recommend that you consult a lawyer.
Alternatively keep the money for yourself and consider staging a Roman orgy for yourself and your friends. Or just travel and enjoy yourself.
gwac: a registered mortgage is the way to go when giving children a down payment. The divorce rate is high enough that you are talking about substantial risk. Even if your child is single today you never know who moves in with them later.
@ gawc
A savy move (Barrister if you could confirm with your legal expertise) if one is concerned about parental contribution to a down payment if a marriage falls a part is this:
Have your parents contribute to the down payment but do so effectively as a second mortgage with zero interest and at will payment terms (you most likely would not really get any questions on it from you partner). When the division of assets comes, the portion that your parents contributed is deducted from the equity in the home sale so your parents/you would be able to get that $ back.
If you really want to be slick, you can add in language saying that in lieu of interest on that second mortgage your parents will settle for the pro rata gain on the equity of the home associated with their second mortgage when the home is sold.
Those that got cash from their parents did both sets contribute???? That’s my real concern about contributing. It would really piss me off if the marriage ended and my money got split. I guess a loan instead would help that.
We are not going to be getting help from parents to buy our first home (I asked years ago… They were offended. Then I learned my boomer parents owe a shit ton on their mortgage and HELOC so it was never in the cards). I’m certainly jealous of those who get help, but I do have an appreciation for when they own it like Introvert. I have a set of friends who got help in much the same fashion and they’re humbled by that help and will tell you about it. I have another set who got a 150k inheiritance to help get into their 1st home but will also tell me, when I point out a lack of affordability today, to just work harder. I prefer to talk real estate with the former couple.
Ks112; no she has too much sense to read the blog but I keep her updated on the numbers.
@ Barrister
Does your wife read this blog? 😉
In reference to the net worth argument here, my most precious asset is the love of my wife, a woman who I truly adore. So put me down as rich beyond measure.
@ Introvert
Given your post below, the next time you reference to your own alleged net worth, it should be ~$250k and not ~$500K.
That is interesting though, so it took you 10 years to accumulate the alleged $250k, for simplicity sake that is $25k a year (not going to bother with real or nominal dollars or compounded risk free return on other investments etc..), That’s with help from parents and also alleged basement tenants.
Around 25% of our down payment came from parents. It also helped that my partner and I both came out of university debt-free thanks to a combination of scholarships, working, and money our parents saved for education.
While we’re certainly not “self-made,” I wouldn’t say that wise decision-making and discipline didn’t also play a role.
Yes, most of my net worth is tied up in my house. I don’t fabricate stories.
You’re welcome. I’m sure I will reinforce all your observations.
No thanks, I’m not looking for any new social circles. The fewer of them, and the smaller they are, the better.
Nah, I’ll just do what I want.
@triple A Rated
We are at 115kw for Sunday. Average is 70Kw before the cold snap. Heat Pump variable speed. 2400 sq foot home. It is a tad lower during the week as I’m off to work. Home today and I’m freezing but not putting the heat up. I go out and do some shovelling to warm up.
The median net worth of 65 plus families is 517k. Average may be a lot higher because the ultra 10% of rich may cause the average to be a lot more than median that was in the article Intro posted.
@ gwac
Yes had to jump on a conference call or else I was going to point out to Introvert that he/she should consider verifying the validity of the information before quoting them. I say this solely based on quickly scanning over the link she provided and noticing that none of the three tables presented reconcile to each other even though it appears that they should. This is a giveaway regarding to the questionable quality of the data presented. Maybe I notice these things because I am a finance person….
Introvert, just FYI for next time: Go pick source that references a lower average net worth figure, it would help strengthen your arguement how you are ahead in net worth (alleged in your case) when compared against the rest.
Interesting:
“Aside from their principal residences, about a fifth of Canadian families owned some sort of secondary property, such as a family cottage, time share or other income property. ”
Not for long in BC.
stats can net worth
https://www150.statcan.gc.ca/n1/daily-quotidien/171207/t001b-eng.htm
I did too .. the best gift to for parents are not to worry about the kids financials .. no shame on getting some help from your folks … i know i can’t repay them in there life time .. and they know that too .. but in the end … only my kids get to enjoy my inheritance
average family net worth in Canada is 295K
https://www.cbc.ca/news/business/statistics-canada-family-income-survey-1.4437137
The average net worth of a Canadian over 65 is no way 830K.. Maybe family but no way individual.
@ Introvert
Marko is a verified owner, Barrister is verified owner, there was another poster whom sold his house in the fall which he posted on the site, I also believe Leo S. is a verified owner.
As far as how your net worth stacks up, the comparison table you provided clearly states that the figures are for individuals and not couples so i think you may have to divide that $500k net worth you think you have by a factor of two ;). Or you can fabricate another wealth accumulating story, good luck on that though as I recall you pointing out multiple times in previous posts that the appreciation and principal pay down of your primary residence has contributed to most of your net worth.
However, thank you for reinforcing my earlier comment about how you need a new social circle and thus a better benchmark to compare yourself against before you start gloating though 🙂
Amidst the self-aggrandizement and bragging about net worth, how many home-owners on here got help with their down payment from mommy and daddy? I did, and I bet a lot of first time buyers in Victoria do.
But like the Donald, maybe Introvert is self-made.
We will never be able to afford ahouse in the core again. We are okay with that. We raised our children in lovely homes. If we can afford it we will travel.
Part of me feels a little sad and a little anxious but it is another stage of life. We could buy a condo but don’t want to.
With the back up offers and more saying they are waiting to see what happens I think we can say it is sold. But you never know…we will on Friday.
And we have the best realtors! After years of mediocre to bad that feels good. Not QUITE so painful handing over a large chunk of money!
It would make sense to shut off the air source heat pump and run on emergency heat/mode to reduce cycling and save energy.
Heat pump generally are slightly under sized at 80-90% of the annual load for efficiency (low cycling of heat pump), therefore it will over work during cold spells (4-8 weeks during winter) that waste energy due to defrost and cycling. Even with text book sizing of 97.5% in ideal condition the heat pump would lose efficiency for roughly a week per year (real life condition would be more like 2-3 weeks).
It’s an anonymous blog, sweetie. Nothing is verified.
Marko is a better person than I am.
Remember when Hawk offered me some BC HealthLink stuff for all my mental health issues? That memory still brings a smile to my face!
Well, I don’t brag about it in real life. Isn’t the internet a great invention?
From a net worth perspective, I’m doing all right. According to this, my net worth falls somewhere between the 55-64 and 65+ demographic, and I’m only in my mid-30s and not even close to my prime earning years:
http://casualmoneytalk.com/blog/2018/03/net-worth-compare-average-canadian/
And this is largely due to the fact that I didn’t listen to the renter-bears nine years ago, who were saying (as they always do) that prices are sure to plummet soon.
Congratulations! Exciting and a relief to have that over with.
Nice. That cash from the sale may just go further than you think, at some point here.
The problem with so many Qualicum homes is that they need major updates. They are structurally sound but many look like they are right out of the 80s inside. Ours is modern, bright, updated with an amazing yard. Basically move in ready. The house near us for sale sold at the same time for the same price we paid. They put 150,000 in! We are talking about houses that were priced then in the 440s. ( this ain’t Vic). We put maybe 5k in. Our house had all the work done! They are going to get killed and lose a ton…it just doesn’t look anything like whata house in that price range should. No idea who they are or why they are selling. But they will lucky to only lose 60-80k. Unless a crazy person comes along.
Thanks. It is going for more than the assessment. Ours was too low. The assessments here seem all over the map and not very accurate imho.
We also have a line on a good rental in Victoria.
Fingers crossed it all works out.
So many mixed feelings.
Congrats Grace, did you price your home close to the most recent assessment?
We have a great offer in our Qualicum house with two back up offers in the wings. We priced it bang on and the interest has been amazing. Conditions come off on Friday. If it goes through it will have taken one week. Tons of showings.Helps that houses around us are way overpriced! One by about 90,000.
@ Local Fool
#56123
I don’t work weekend 😛
I don’t even want to know how much hydro I am using. Wait for the surprise.
Lot better than the 3k gas bill for heating back in Ontario over a decade ago. Gas and hydro was 7k a year back than. A decade later I pay 4 k for hydro/no gas..
Our BC Hydro daily usage jumped (shocking.. I know)
We’re using 120 KWh/per day during this recent cold snap. We’ve lowered our settings to (2) cycles per hour @ 18C yet still using 5,000 Watts per hour.
Anyone care to offer a comparison for other Heat Pump/Variable speed furnace?
@ Marko,
Do you see any (or an increase) of your clients (both buys and sellers) inquire with you regarding the current state of the Vancouver market with respect to their potential transactions here? Just trying to see if there is a potential bearish psychology developing in the general Victoria market.
Introvert, do you see the other VERIFIED owners on the blog here attacking bears or using the word “renter” as a derogatory term? I remember seeing comments on here accusing Marko of a sleazeball realtor or something to that effect, I don’t recall Marko retaliating by comparing net worth or resorting to any other type of name calling that signals him being superior due to him owning real estate (the only thing he says are that the bears have been wrong for the last 8 years, which is absolutely fair game).
The unprovoked attacks you make (I noticed that every debate that has to do with why house prices may go down usually involves you calling someone a renter and an idiot for not buying) along with the constant bragging of net worth signals that you are a very insecure person. I can’t really fathom how people who’s actually owned a home for 10 years without extreme self esteem issues would actually do what you do.
I also have to break this to you, in the grand scheme of things, having I dunno maybe $500k of equity (most likely make believe) in your principal residence (while renting out your basement suite) in your 30’s isn’t really something you should be bragging about (on the internet or real life), if it is then I suggest you to get a new social circle. That’s like trying to “flex” with a used BMW 320i, because all someone needs to do is to look at the decal around the back to know that the person is a poser.
I think numbers will be below 500 sales as there won’t be a huge ton of contracts written this week secondary to the weather which means we won’t see an acceleration in sales towards the end of the month when conditions come off. I am going to predict 475 sales but March bounces back.
I was anticipating a somewhat larger drop in sales numbers than we have gotten.
LeoS: Once again thank you for a brilliant job with the numbers. They should really run this as a weekly column in the TC.
I admit what’s true. We have a 35-year, but we pay it like it’s a 20-year. Net worth comes from principal pay down and price appreciation, both of which has been substantial over the last 9+ years.
Other owners on this blog have done equally well financially, if not better.
Expert warns Australia could turn into slums in 20 years | 60 Minutes Australia
https://www.youtube.com/watch?v=vRSdiq3sOTc
Apparently 1 in 10 people in Australia with mortgages are now in negative equity on their homes.