Mar 18 Market Update
Another week another “steady as she goes” for the Victoria market with no great change in the sales pace last week. Condos had an active week with more changing hands than the same week a year ago, but single family made up for it with a bigger drop from last year. Despite the still relatively active condo segment, it’s a world away from the market last year, when we still had nearly a third of places going for over asking price. Thankfully those days are behind us.
At just under 29 sales per weekday, we are down some 14% from the pace last March which is little changed from the -13% last week. On the new listings side, we seem to have recovered from the very low levels in February to at least match last year’s pace but that isn’t saying much.
Weekly sales courtesy of the VREB:
| March 2019 |
Mar
2018
|
||||
|---|---|---|---|---|---|
| Wk 1 | Wk 2 | Wk 3 | Wk 4 | ||
| Sales | 176 | 317 | 688 | ||
| New Listings | 390 | 684 | 1188 | ||
| Active Listings | 2204 | 2272 | 1766 | ||
| Sales to New Listings | 45% | 46% | 58% | ||
| Sales Projection | 598 | 595 | |||
| Months of Inventory | 2.6 | ||||
It seems this is a market driven more by price than by value. Condos are still selling because they’re cheaper, but many single family properties are languishing despite arguably representing better value (and unlike condos, the old real estate trope that “they ain’t making more land” actually applies). But don’t be fooled by the industry position that the stress test has only cooled off the luxury market and left the entry level market red hot. Even the lower priced third of single family houses are coming in a bit too rich for buyers’ appetites and thus all segments of the market have cooled off since last year.
Drops in sales numbers also did not discriminate much by area. Whether Langford or Oak Bay, single family properties in most areas dropped post stress test by similar amounts. Esquimalt is a notable exception, but there were also not that many sales (less than 100) there to start with.
To me this indicates that although the stress test certainly had an impact on the Victoria market, it’s not the primary reason why the market has been turning over. Without the stress test we’d still be talking about declining sales, it would just be less dramatic. The real estate cycle is on a downward leg, and regulatory changes can cause that cycle to wobble in one direction or the other but they can’t derail it.
The federal budget is being announced on Tuesday, and it’s relatively widely expected that it will contain some sort of bone for first time buyers. Perhaps allowing them to take on 30 year mortgages or cutting CMHC premiums. Will they relax the stress test? I really doubt it since all their messaging has been that it is functioning as intended. However the pressure from the political side must be intense and no government wants to own a housing meltdown in Vancouver and Toronto in an election year. It’s all good until the average person starts to feel they are losing equity, and then people very quickly become less happy about improved affordability through lower prices. Might we see a boost in sales if there is a relaxation of the rules? Most likely, a bit. Again I doubt it will be enough to change the overall picture of a gradually cooling market.
However does a cooling market mean it’s necessarily a bad time to buy? Stay tuned, I’ll dig into that more later this week.
Re: Patrick’s post : RBC economist says 67% home ownership is already high.
This is very misleading for two reasons: housing type, and demographics.
First, housing type. If ‘home ownership’ includes condos, and share of condo to SFH ownership has increased dramatically in the last 10 years, and if canadians ultimately aspire to SFH ownership, not condo ownership (except as a stop along the property ladder), then this stat is misleading.
Second, demographics. Right now we’re in an anomalous situation where both the demographic bubbles of boomers and millennials want to own homes. This hasn’t happened in canadian history before, so historical home ownership rates of <67% don't accurately reflect demand.
Boomers want to hang onto their houses. In my anecdotal perspective, Sometimes several at a time. I have friends who bought first homes in their 50s last year, and other friends who bought their third and fourth houses with cash in their 60s recently.
Millennials also want in on home ownership, and they dont want condos. Demand is likely to outpace supply until the boomers start dying off.
We see the same and similar properties in disrepair overpriced and questionable for financing. Just wondering how many properties have lingered under various listing agents and the same for luxury homes completely out of price range for Canadian working folk
My thoughts on the budget: https://househuntvictoria.ca/latest
It sure would be, and I’m not sure where you read, “No T4= illegitimate money”.
A T4 would undoubtedly be the most common way to verify how the person is paying for it (especially in the lower tiers of the market), but it’s not the only one.
That’s why I said, “or other similar types of verifiable information”, with “similar types” meaning information which is domestically cross referenceable in our financial registries and does not merely rely on the honor of the claimant.
@Local Fool
People purchasing high end homes aren’t generally employees (unless your company went public). True financial wealth is seldom shown on or reflected on one’s T4. Ask any experienced accountant to describe them if you have a chance.
However to suggests people who don’t declare a lot of income on the T4s but live in mansions have somehow illegitimately made their money is disingenuous.
RBC Chief economist Craig Wright unimpressed with the budget housing measures. He also points out something I’ve been saying too, namely that there isn’t a housing ownership problem to begin with in Canada. And measures to help are a “solution looking for a problem” given that Canada 67% ownership is already high historically, and high compared to most countries https://www.cbc.ca/news/business/budget-cmhc-home-buyers-1.5063204
With now both fed and province budgets out of the way, hopefully that’s the last govt meddling for awhile.
Yes, true. Thanks. Was totally thinking about it provincially.
But it’s the provinces which process RE transactions. On good day you might get Horgan to at least consider something like this, but you can forget about the other provinces. And remember Quebec which would consider it yet another attack from the feds just for bringing it up.
If you were finance minister, what would you have done with the housing file?
Personally, I would make it a legal requirement to follow up on FINTRAC reports and actually get some real enforcement going, and identify the gaps and inefficiencies connecting the criminal justice system with the financial system.
I’d explore changing the CMHC threshold from 5% to 10% but water down the protection to the banks to at least some degree. Banks must be responsible, and be made to feel responsible, for the loans they provide to a consumer.
One other thing I would look into would be to explore the feasibility of connecting home purchases with personal financial data and for that to be verified prior to a title transfer happening.
For example, the person looking to possess title to a home through buying it (financing or not) would need to produce several years of T4’s or similar types of verifiable financial information showing their source of funds. If you do not have that information (because you are using money generated outside of the domestic and/or legitimate economy) or if you are trying to buy a 2 million dollar home while claiming you make $12,000 a year, the prospective buyer would need to account for this prior to the title being transferred.
If the money could not be accounted for, then depending on the circumstances some type of action would be taken, ranging from refusing to grant the title or an exemption. I would also see if or how that could be enforced retroactively. I guess the devil would be in the details – it could be implemented in a way that’s not too different than what would be the case if we actually enforced our existing laws, or it could be downright despotic. I wouldn’t even know if it’d be feasable or even constitutional…but that’s why I say “explore”.
The equity mortgage is a great thing that will make rich developers even richer. Honestly, considering what it costs to run a private jet, the poor developers really needed the help.
Wasn’t BC’s $37,500 home equity program a complete failure that has already been shut down?
I don’t mind the RRSP increase.
I think it’s more sad for someone who requires a 35 year mortgage, family help, basement tenants and dual income to afford a $550k home to make sarcastic remarks regarding other people’s financial situation.
Re: CMHC kicking in 10 % – I don’t like it, not at all. Who wants to co-own with the bank and the federal government? Yuck. Introducing 30 year amortization for insured mortgages would have been better.
It makes them feel better about being priced-out* of the average Victoria home.
*Just kidding, being priced-out is not a thing. Everyone can afford these prices; they’re just too smart to pay them.
This isn’t something you see every day… (3pm Tuesday …)
Victoria BC current temp 64F (18C)
Malibu CA current temp 57F (14C)
Replace “housing affordability” with “condo sale-ability” and you will see it much clearer….
Gross. This sounds just like Crusty Clarke’s plan. Save existing homeowner equity by throwing FTBs under the bus. Also the ~$480k segment (120k x 4) is already under a lot of pressure from no one being able to afford SFHs. Do not want.
Unfocused budget…Nothing to really prepare this country for a downturn. Just goodies for their base.
By, ten or more years down the road, another “mystical family buyer” paying $3.9m or more to buy the same house if the first family wants to sell.
For the shared mortgage, the requirement of max 4X income, and $120k income limit means that the program would max out a people with $480k mortgage, likely a $600k house or less. That would be starter new housing units (condos) in Victoria, which price range should see a lot more activity (given the 10% shared equity contribution). I can see the marketing materials already… for sale at $500k… as low as $460k after the shared equity credit! This should be great for selling new low end condos.
https://dailyhive.com/vancouver/first-time-home-buyer-initiative-canada-2019
“Those eligible would be first-time home buyers with household incomes under $120,000 annually. Additionally, the participants’ insured mortgage and FTHBI amount cannot be more than four times the participants’ annual household incomes.”
Go on…
How on earth is this mystical family buyer buying a 3.9 million dollar house without anyone losing money.
The 10% for new construction, 5% for resale is interesting too. Quite a clever way to encourage construction.
This shared equity business will be interesting. Say CMHC invests in a house and it doubles in value. Well now their share is worth twice as much, so if you want to buy them out you better pony up!
https://www.cbc.ca/news/business/budget-cmhc-home-buyers-1.5063204
SS is saying that “the insured mortgage amount and the incentive can not be greater than 4X the buyers annual income.”
https://twitter.com/SteveSaretsky/status/1108107212713394177
That’ll be useful in Winnipeg – Vancouver not so much. Unless I misunderstand what he means. It does feel like a “nibble but don’t do much” policy change. I honestly expected them to attempt to do more.
I agree, but it does have to be paid back. Almost like an inflation adjusted change really? Been 25k for a long time.
Raiding more of your retirement money for a house so you can diversify less. Bad idea but likely to have limited effect.
Good news on increased resources and data sharing for enforcement.
Funny. The one idea that was universally panned (shared equity mortgages) is the one they go with.
Also the CMHC president Evan Siddall must be holding his nose at this one. In many ways it is similar to the ill fated BC Home Partnership plan which he came out strongly against
I’m not advocating for them, as I obviously just said I’m advocating for family buyers that hold for at least 10 years. I’m also not hoping that they lose money, and I certainly won’t post their addresses and whatever else monetary and personal info I can find so I can gloat about how much money they may have lost. Regardless, who knows why they sold, maybe it was for unexpected personal family reasons that are none of our business.
So someone who paid 3.9 million 2 and a half years ago, and trys to flip it shortly afterwards for a bunch more money qualifies how?
Oh gawd, CMHC introduced a 10% shared equity mortgage with the budget. Very bad market-meddling idea imo!
https://www.cbc.ca/news/business/budget-cmhc-home-buyers-1.5063204
“If a would-be buyer meets the conditions described above, under the program the CMHC would kick in up to 10 per cent of the value of a newly built home, or five per cent of the value of a resale.
The CMHC would contribute that much to the home purchase in exchange for a corresponding equity stake in the home. That has the effect of bringing down the size of the homeowner’s mortgage — but comes with a bill to be paid down the line.”
Realtors® are fine by me.
Bears wish has nothing to do with the reality of loosing money. You have nothing to say to the realtors for example? Or all the propaganda behind it?
Finance Minister Bill Morneau has tabled his fourth federal budget — his final one before the next election in October. Here are the highlights for housing:
$1.25B over 3 years on shared-equity mortgage program for first-time home buyers.
RRSP withdrawal limit for first-time home buyers rises to $35,000 from $25,000.
Other commentary:
Increasing Fairness: Strengthening Rules and Compliance in Canada’s Housing Market
Buying a home is often the single largest investment Canadian families will make in their lifetime. To protect this investment and help keep the real estate market accessible and fair, Budget 2019 includes measures to tackle tax non-compliance and money laundering in the housing market. These include:
Creating four new dedicated real estate audit teams at the Canada Revenue Agency to monitor transactions in the real estate sector. These teams will focus on high-risk areas, notably in British Columbia and Ontario.
Strengthening the enforcement framework by improving monitoring of private sector partners and collaborating with government leads in order to deter financial crime in real estate, including mortgage fraud and money laundering.
Exploring opportunities to improve data sharing on real estate purchases between the federal government and British Columbia to inform enforcement efforts on tax compliance and anti-money laundering. As part of this initiative, the Government will provide up to $1 million to Statistics Canada starting in 2019-20 to conduct a comprehensive federal data needs assessment to further streamline data sharing and monitoring of purchases of Canadian real estate.
https://www.budget.gc.ca/2019/docs/themes/housing-logement-en.html
JR,
I’m hoping that someone who wants to buy a family home, and plans to stay in it for at least 10 years, is able to find and buy home they can afford. For lots of family reasons, and making money is down the list.
I don’t want anyone to lose money, take on too much risk, lose their job, default on mortgage, go bankrupt etc. – that is a wish list you see from the bears. With personalized examples reported with giddiness and glee by some bears on this blog.
It’s ok to punch upwards.
@ Patrick: You want buyers to get more debt and risk, right? You are misrepresenting help for real estate cartel as help for buyers- and that is the lowest point in this blog.
Housing budget changes:
“Morneau said many hard-working young people see buying a home as an “impossibility.” The government wants to change that with a new shared mortgage program that could offset the purchase price by up to 10 per cent.”
“The budget also boosts the amount that can be withdrawn from RRSPs for a first-time home purchase — to $35,000 from the current $25,000.”
https://www.cbc.ca/news/politics/bill-morneau-budget-2019-1.5061476
Sad to see some people here seeking pleasure in finding and speculating about individual strangers in other cities potentially losing big money on housing. Including posting their addresses and monetary details. IMO, that looks to be a new low for the blog.
@ Buck 2: Why does an offer to buy a house be called ” An offer? ” whereas in all other commodity exchanges it is called a Bid?
In law school, they call the first volley in a contract an “invitation to treat” (an invitation to the general public to make an offer to the seller). Then, that’s followed by an “offer” by the potential buyer. And then a “counter-offer” by the seller, and so on, and so forth, until a contract is made.
But I always thought this brief poem (that I once read in the law school bathroom) summed it up rather nicely:
“She offered her honour.
He honoured her offer.
And all night long it was honour and offer”.
Probably not politically correct in 2019, but times were different in the 80s and 90s.
Perhaps, but I think the data shows an overwhelming bias to multifamily construction in both cities. Don’t know what was removed over here to make them, whether it was previously vacant land, repurposed land, or just tearing down an old apartment building and making a newer, bigger one.
Ya, probably not the best time to be a builder either. Construction is a feast or famine industry, but the last decade or so appears to have changed some people’s minds.
Local Fool,
That’s a prime area for townhouse construction.
Which raises an interesting point. Vancouver run up was for a large part due to land assimilation for the purpose of townhome and condo development.
In Victoria, outside of the very immediate core, the run up one could argue is due to tear down, rebuild SFH’s. At some point the late to the party construction company is going to take a bath.
I know of a builder who has been out of it for 2 years.
Only consults. Very wise.
I hadn’t heard about that. The PTT exception is super confusing. I wish they did it like income tax – just pay the tax on the amount over the exemption. Now that I’ve had a few conversations with brokers and a RE agent, all sorts of stupid stuff is popping up. Like optimal downpayment being either 5% or 35% but nothing in between because of how banks have lowered risk on risky lends due to insurance.
Involuntary face-removal of the day…
3408 W 32nd Avenue, Vancouver
Bought at the 2016 peak for $3,902,000
Appears to have attempted to flip it for $4,580,000.
Just sold for $2,800,000, for a loss of $1,102,000 + carrying and transaction costs.
Oopsie…
As bad a news as that would be for the seller, the fact is the house still sold for a pretty ludicrous price. I wonder who bought it?
It doesn’t look like the speculation tax forms irritated people as much as we were being told it does. This is the first new poll I’ve seen in a while that was done this month and shows 68% of BC residents still support the spec tax. Surprisingly the support has actually increased from the last time this particular pollster did their last poll in May
https://biv.com/article/2019/03/majority-bc-residents-support-speculation-tax-survey-finds
Josh I was hoping for a raised PTT exemption too for first time buyers but that’s a provincial tax and the NDP had a chance to change it with their budget a while ago but didn’t budge. There are practically 0 livable SFH in the greater Victoria area that are PTT exempt. I have friends who had to borrow PTT funds from parents because you can’t even mortgage this unlike CMHC.
Another note about the Wentwich house and other similar properties on a bit of land I found out when looking into it… Being over .5 hectares (1.24 acres) means you don’t even qualify for the PPT first time buyers exemption. No acreages for newbies boooo
Penguin i tend to usually agree that a larger downpayment is better but when houses are increasing in cost by 4x my rate of savings it’s very hard to get a foot in the door and CMHC is just another penalty piled on top. I’d love some breathing room on the fees.
Funny, because as a renter, I’ve seen a ton of owners come and go in the areas that I’ve rented faster than we have. Not before doing a cheap reno for the extra $$$. Current place we definitely care more for the house than the landlords do.
Uh, wut. So the construction workers can’t find any jobs and the construction jobs can’t find any workers, simultaneously?
No idea what’s in store today but fingers crossed for a raised PTT exception and larger RRSP/HBP amount.
I think I’ve found a working title for my autobiography 😉
Talked to a bunch of large contractors with a presence in BC (think PCL, Ledcor etc..) recently on work related matters. Project pipeline in Vancouver is looking shaky after the current batch being completed. Developers getting gun shy on new projects going forward.
I’d like to see no CMHC at all, but I concede I don’t expect to see that today…
Control for age and socioeconomic status and I don’t think you will find a difference
I like this option too. Won’t change the market since CMHC fees get amortized anyway but it gives first timers a bit of a break if they can’t get 20% down. CMHC fees have ramped up significantly so it wouldn’t be a huge thing to step them back a bit.
Victoria has shortage of construction workers, delaying projects (feb 26, 2019)
https://www.timescolonist.com/news/local/affordable-homes-push-delayed-by-shortage-of-workers-1.23646842
Economist sent them to me, labour force survey data which i believe is also available through the statscan public portal
Irritating, but correct. 🙂
I’ll try to remember to resurrect the “My take” section that I created a while back for just this reason.
LeoS I might have missed it but where are you getting the full time employment numbers?
Penguin –
I don’t find it odd. In this all-digital, ephemeral age, it makes sense to encourage people to put down roots and invest in community. I guess I’m assuming that owners are more invested in their communities than renters. Is this correct? Discuss.
I came across this little piece recently, semi-profound:
“And what I would come to learn, slowly, is that community is about a series of small choices and everyday actions: how to spend a Saturday, what to do when a neighbor falls ill, how to make time when there is none. Knowing others and being known; investing in somewhere instead of trying to be everywhere. Communities are built, like Legos, one brick at a time. There’s no hack.”
https://qz.com/1570179/how-to-make-friends-build-a-community-and-create-the-life-you-want/
I find it so odd that young adults aspire to own homes. I think it is human nature to desire secure shelter but I feel that parents want to tie their kids down and for some reason think owning a house/condo will bring them eternal wealth and happiness.
I am curious about budget tomorrow too and although cheaper CMHC would be nice for some people (and me), I don’t think Canadians need incentive to take on more debt. Save up for the down payment if you don’t want to pay the CMHC!
Time for B-20 mortgage stress tests to ‘go away’: Mattamy Homes CEO
Ownership is something that young Canadians aspire to, and I hear it all the time from people that they want to buy a house, they like the price that we’re able to offer them… but qualifying for that mortgage at two per cent over the actual rate is holding them back,” Mattamy Homes founder and chief executive officer Peter Gilgan told BNN Bloomberg in an interview, referencing the B-20 mortgage stress tests that took effect at the start of 2018.
“I think that [B-20] did a job, maybe a little too good a job of cooling the market. I think it’s time for [those stress tests] to go away.”
https://www.bnnbloomberg.ca/time-for-b-20-mortgage-stress-tests-to-go-away-mattamy-homes-ceo-1.1230652
Saw the same thing in Detroit.
I hadn’t heard of that one before. I agree with you, hopefully a DOA idea on many levels.
Fwiw,in Havana, Cuba I saw occupied houses that were literally crumbling to the ground. Our guide explained that the ownership reverts to the govt at some time in the future, so the occupants don’t maintain them. If the govt wasn’t going to pay its share of your reno’s, why do them?
Re: budget, I’d like to see cheaper CMHC for first time buyers and a larger tax credit. What I’m likely to see though is 30 year amortization brought back.
What do you think of the government owning a bit of your house in exchange for an extra mortgage? Sure hope this never becomes reality… https://www.thestar.com/politics/political-opinion/2019/03/16/are-liberals-ready-to-take-on-the-risk-of-shared-equity-mortgages.html
What’s the consensus for the budget “house candy” tomorrow?
I’m going with 30 year amort and double the RSP withdrawal for FTB.
Really? But units under construction at all time high. Bigger decline in commercial space?
One theory I had is that companies are bringing in out of town trades/labour on construction projects. Perhaps when the project wraps up the out of town workers leave and thus reduce employment without increasing unemployment?
Another big drop in tech full timers, but also doesn’t jive with what companies are telling me directly (more growing than shrinking).
If we do see intervention on the downside, if countries like USA or Ireland are any indication, the level of intervention would be many times higher and quicker than any intervention on the upside . That doesn’t mean it would be effective, but I’d expect we’d see QE, govt bailouts and zero interest rates. And of course a reversal of the upside intervention. Given 67% own houses, and.almost no one wants to see banks fail, I’d expect high support for it too. (btw, I don’t expect a downturn)
If you place a sell order for $X on the stock exchange, and someone bids $X, that stock gets sold. They don’t ask you first. On the other hand a RE listing is simply an invitation for offers, there is no “ask” price that results in a sale if someone meets it. It’s always up to the seller.
Why does an offer to buy a house be called ” An offer? ” whereas in all other commodity exchanges it is called a Bid? It does not make any sense. IMHO You Offer to sell a house and you Bid to purchase a house….. It is strange and confusing. Leo can you please do something about that?
Which sort of proves the point – people have become so accustomed to intervention on the upside they don’t recognize it as such, and only see “intervention” when it’s on the downside.
You mean government intervention on the downside of course. Government intervention on the upside has been around at least as long as CMHC, and still greatly exceeds the recent measures taken to moderate prices.
I think you guys are getting way ahead of yourself here.
“Somebody” suggesting CAD might fall to 61 cents doesn’t mean that there is anything more than it being someone’s opinion. The official bets as to the direction of the CAD are available online here, in the futures markets. The aggregate bets of the market is for the CAD to rise slowly to 77 cents over the next few years. That is the sum total of the markets opinion. All that shows is that there is that market consensus is for the CAD to rise slightly, and not fall to 61 cents. Of course that doesn’t mean they are right, just that this is the best consensus guess for now. And there are other factors that affect futures prices.
https://www.cmegroup.com/trading/fx/g10/canadian-dollar.html
Someone with a reason to believe it’s going to 61 cents, who is willing to bet on it, has a potential to make a fortune on this one trade, if they’re right. They can sell CAD in 5 years, as much as they like, for delivery in Mar 2024 for $0.77.
I certainly don’t recommend it, over 90% of people playing currency futures lose money. And I haven’t seen any currency funds that consistently outperform over long term.
The main point here is that if you’re building a narrative based around a 61 cent dollar, you should acknowledge that its a contrarian position, not supported by the experts who do this for a living.
Canadian dollar could sink to record low of 62 cents as economy slides closer to recession, says David Wolf
The big problem for Canada is that a household deleveraging appears to be starting just as the global economy is slowing, said Wolf, who was an adviser at the Bank of Canada before joining Fidelity in 2014. Home values fell nationwide last year for the first time since at least 1990, while household debt burdens touched a record high.
https://business.financialpost.com/news/economy/fidelity-sees-loonie-testing-62-cent-low-amid-slowing-economy
You missed the point. I wasn’t contesting Leo’s value judgment per se; I was questioning its odd placement within neutral fact-reporting.
Isn’t it funny how one’s perspective on the topic can cloud their view of such a simple statement. For the hard bears & bulls, that statement apparently is inflammatory. For people like me who are in the middle, all I read from it was that an overheated market is unhealthy in the long run. Long live sanity.
Thank you for the data and insight, Leo. Very much appreciated.
Everything is playing out according to plan and just as expected.
We likely have 2 more years of this and a recession in between.
The budget tomorrow will attempt to provide some relief and fiscal stimulus, but Trudeau [ethically bankrupt = SNC] is toast. So is Morneau [the architect of the small business passive income theft parade] – these thieves need to go and spend their family wealth held off shore.
For those that think the lower end of the market is slowing too much, may I suggest that you take a look at the Victoria Luxury market. The Vancouver big-money exiles [can’t sell the west-Van mansion] and foreign buyers are no-shows, just as intended. The regulatory changes are working just as intended also. Funny how some now complain. Be careful what you wish for, you just might get it. Can’t see the bottom yet…………..
Got our feet wet this weekend and hit a few open houses in Langford. I haven’t been to an open house in 2 years and it’s very refreshing to feel like the deal is not being done in the driveway for over-ask and unconditional. The ones we looked at were all ok houses but most felt overpriced and that they’re still trying to catch the 2018 wave. Time will tell who’s got the guts to drop prices to a more reasonable level. The only one I felt was competatively priced from the get-go on Cornerstone Pl had an offer on it when we arrived, smart pricing will sell.
One house we didn’t even go into, creative photography had left out that there was an entire other house in the yard on what i assume was a previous sub-divided lot.
I’m glad to hear the <700k market is slowing down and that we might get a chance to buy this year.
Never gonna win the blog pulitzer with your opinion completely clouding the issue Leo.
Leo, I think it would make a lot of sense for you to save your value judgments and opinions for the comments section while striving, in the posts, to be as neutral as possible when reporting the facts.
You mostly already do this, which is why an abrupt opinion in an otherwise impartial assessment is so noticeable (to me, anyway).
Plus Leo is a human and my assessment would place him as more empathetic towards buyers than equity holders. I don’t find this commentary affects his reporting rather it is this emotional flaw motivates it…
I would argue an overactive market is bad for buyers and sellers. Every third sale going in a bidding war is overactive. Why is that bad?
So I don’t feel too bad about being thankful that the market now is back to healthier levels of over-ask sales. 10% is about right.
Leo, that paragraph sticks out like a sore thumb within an otherwise quite neutral assessment of things. You do this a lot. What are you implying? That it’s a bad thing that homeowners might lose equity? That they might react strongly, so “we better be careful”? Are you also implying that the government controls the housing market, therefore they should relax the rules to appease the “average homeowner”, since everything was “all good”? Are you rooting for home owners? More to the point, why are you rooting at all?
Interesting thought and I’d be curious to know if there was anyone able to comment further on this.
Do we have updated starts data?
Leo, that last sentence sticks out like a sore thumb within an otherwise quite neutral assessment of things. You do this a lot. Why are you thankful? Are you rooting for buyers? More to the point, why are you rooting at all?
Large scale commercial and residential construction employment has declined by about 23% in the last 12 months.
Anyone have any idea why there would be a big drop in full time employment in Victoria in the last 12 months or so? No big increase in the unemployment rate, but large drop in full time employment. Retirements? Big employer reducing head count? People leaving the city or?
Reading my mind. Also:
https://en.wikipedia.org/wiki/Betteridge%27s_law_of_headlines
“CMHC was founded in 1946. I am quite confident that the answer to 2019 minus 1946 is not “two and a half”
Lol, I was taking about the FB and Spec tax!
Barrister – why do you think there would be a broad American or other foreign movement out of Canadian real estate? Spec tax areas I can see. Rest of BC, let alone rest of Canada seems a bit unlikely?
CMHC was founded in 1946. I am quite confident that the answer to 2019 minus 1946 is not “two and a half”
Government intervention did not begin 2 years ago. Government has intervened in the mortgage market for decades. Sometimes they try to goose it by loosening credit (2000s), sometimes they try to restrain it like recently.
This is a topic that I should have waited until after my second cup of coffee but here it goes anyway. I would really like other peoples input on this since I have not done the research that this deserves.
This was sparked by an earlier post about the Canadian dollar possibly dropping to 61 cents US. I am wondering how much of that drop might be accounted for by the drop in purchases of Canadian real estate by foreign buyers. From a balance of trade point of view selling pricey real estate to foreigners is actually an “export” in spite of the fact that the product sold never leaves Canada.
I cannot find any great statistics as to the annual dollar number for real estate sold to non residents for the last few years in Canada. CHMC says that about 5% of properties are owned by non residents but that this also represents a lot of the most expensive real estate in Canada. In 2018 there were 456,000 homes sold in Canada. Assuming that 5% were sold to foreigners at an average sale prices of a million that represents about 22 Billion dollars of foreign trade. As a comparison we sold about 80 Billion of oil.
Unlike oil housing as a trade items can have a double impact on the trade balance. Obviously, if we are “exporting” less housing then this will lower demand for Canadian dollars but what can potentially have an even greater impact is if foreigners are selling out
their stock of Canadian housing and repatriating or transferring the money out of Canada.
My on the back of a napkin calculation is that if foreign purchases have dropped by three quarters and 10% of all property bought in the last ten years is sold and funds transferred out of Canada then we are talking of an amount equal to our annual oil sales. Toss in a little bit extra for maintenance, property tax, strata fees and house insurance that is not being transferred to Canada.
This thought arose out of a conversation that my wife had with some of her American friends where three out of four were putting their houses on the market (much like we will be doing soon). My initial thought was that this will make housing more affordable
but then the thought struck me that this might also impact the Canadian dollar if it happens on a large scale. Overall this might be a good thing but it will come at a price when one goes to buy cars or oranges.
I suspect that I have missed something (or more accurately I missed a number of things) but the one interesting thought is that we dont really view house sales to foreigners as a “export”.
So, am I right, in the two and half years since government intervention began, houses remain unaffordable, rents are going up, home equity is down and government revenues are down and decreasing?
Walked areas of Cordova Bay yesterday and I was surprised at the amount of reno going on. Some of these properties have been absolute dumps for years and are getting a yard and house makeover. I wonder if they will be hitting the market soon. It’s definitely slow going for sales in Cordova Bay and will be interesting to watch over the next several months.
PS: Yes this is anecdotal but this is a route I’ve walked over for the last few years. I don’t recall this much activity to clean up / spruce up in this area.
Marko, you still going for final sales tally within 5%?
Better get busy selling…
I have to admit even my own projection is putting things at about 620 sales for the month so I’ll need some luck to get to 654.
I think the stress test has had a huge impact on the lower end of the market. It has shoved a bunch of up to 500k townhome/condo buyers into the low 400s and this price range is very compettiive. I have clients looking for an older 2 bed 2 bath condos under 400k and the last 6 offers have been multiple offer situations where they have lost out every single time. They’ve been bidding $1k above asking.
Higher end of the townhome/condo market is very slow, but I don’t think it is just the stress test. On the higher end foreign buyer tax and spec tax have also had an impact.
SFHs in the core there just isn’t enough inventory. Saw a somewhat decent house this weekend in the core that required a lot of updating but reasonable price and they already had three offers as of yesterday and reviewing offers today.
Marko, you still going for final sales tally within 5%?
Better get busy selling…
House on Jackson st sold in one day……..price asked was 25% below assessment.
I love that line – that’d probably take me three paragraphs to say. Haha. Nice post Leo!