June 10 Market Update
Weekly numbers courtesy of the VREB.
| June 2019 |
June
2018
|
||||
|---|---|---|---|---|---|
| Wk 1 | Wk 2 | Wk 3 | Wk 4 | ||
| Sales | 213 | 708 | |||
| New Listings | 383 | 1322 | |||
| Active Listings | 3016 | 2595 | |||
| Sales to New Listings | 56% | 54% | |||
| Sales Projection | — | ||||
| Months of Inventory | 3.7 | ||||
A fairly strong sales week to start the month, with sales coming in 15% ahead of the same week of last year. You can tell from the chart below that after many months of the sales to list ratio being down substantially from last year, May roughly matched the year before (higher sales offset by higher listings) and the first week of June came in substantially higher than last year. This is caused by the bump in sales as well as a small drop in new listings, but as usual I wouldn’t read too much into it until we’re another week into the month. The 23% increase in inventory means that months of inventory remains higher (aka somewhat cooler market) than this time last year.
Over the last few years we’ve heard a lot about hidden ownership in Vancouver and speculation in Toronto. I did a casual survey of the 50 highest priced listings in the area, which amounts to places advertised for approximately $4M and up. Out of the 50, the majority were owned by local residents with job titles one might expect as being able to afford that value of property. Of the others:
- 4 were held by named companies (often used for new builds)
- 4 by out of town or out of country individual owners
- 3 were held by numbered companies
- 4 owners had occupations listed as “homemaker” or similar.
Based on ownership perhaps 5-10 of the listings may have been motivated by the spec tax but of course that is just a guess. High end property out in Sooke or over the Malahat is often specifically advertised as spec tax exempt so it is certainly at least a minor factor in the luxury market. What is not prevalent is private mortgages (only 2) which are much more prevalent elsewhere.
I continue to maintain that while there is of course capital inflow into our market and more so on in the high end, it is nowhere near the level that we’ve seen in Vancouver or Toronto. That’s not to say that out of town money doesn’t affect the larger Victoria market. The biggest impact on us is what we saw in 2016: spillover from Vancouver as Vancouver owners enriched by capital inflows exploited the arbitrage opportunity to cash out and buy the relative value here. The same applies to macro factors like the recent unrest in Hong Kong which could result in a flight to safety by their residents and capital. We may see small numbers of expats return to Victoria but the bigger impact would be if the there is a larger migration that props up the Vancouver market. At this point it’s too nebulous of a possibility to take into account.
New post: https://househuntvictoria.ca/2019/06/12/victoria-millennials-y-u-no-own/
No.
Could you either? No. That’s why you needed a gift for a downpayment, and tenants.
Do you mean I couldn’t theoretically re-buy my house at current prices? I could, but my down payment wouldn’t be 18% like it was when prices were lower.
Soper, could you have afforded a house in GH circa 10 years ago, when many—if not most—were selling in the 500s? Or did you hold off because you thought 500-something for a house was crazy and prices had to come down?
In the USA, the hardest hit have been low income that no longer own homes. There’s been no recovery in the home ownership rate in USA, despite the big recovery in prices pushing current prices to all time high. Home ownership fell from 70 to 63% and flatlining to present. https://dqydj.com/historical-homeownership-rate-in-the-united-states-1890-present/ No sign of “smart people” re-entering. 7% of the population have been permanently shut out of home ownership, despite the market bottoming in 2011. The reason is that the banks don’t loan money to sub prime (aka low income) people that can’t afford them. The same thing will happen in Canada if there is a crash, with the banks shutting out the low incomes from home ownership for a long time.
https://fred.stlouisfed.org/series/USSTHPI
That’s right, and the reason is people don’t want to buy because they see falling prices. I mean most people, not smart people who understand that the best time to buy is when most don’t want to.
Over 3x the current population of greater Victoria.
No one’s poor with friends like you.
Sorry which one were you talking about?
James, why oh why do you persist in giving that guy fuel. No one enjoys reading that back and forth. Just ignore it…
Top 3 neighbourhoods to buy in Victoria from that article. Sooke, Rock Heights (Esquimalt) and Gorge Vale (Esquimalt). Also easily the first choices for everyone on this blog.
hahaha. Actually looked at it further. There isn’t a neighbourhood in the “Core” Victoria until 49th in the neighbourhoods of Victoria. Port Renfrew ranks better than everything in the Core, same with Jordan River. Poor old Gordon Head is 128th, and sorry 10 mile point is 148th.
You can’t afford the house you currently live in introvert.
What’s the construction cost in Vancouver? Why are the housing prices
dropping like a rocksoaring like the hindenburg?And yet, 3 years ago the $800k SFH was affordable by the $100k HH income because it wasn’t a $800k SFH. The reality is that it’s not a $800K SFH, they just don’t realize that yet.
Local fool, my gordon head home example was trying to show that there is nothing wrong when a decent SFH home on a good sized lot in a decent area is attainable by a family who “mostly has their shit together” but not attainable to the ones that don’t.
Maybe entitlement is not the right word, but I really don’t see another word to use when folks are complaining that they can’t afford an $800k SFH because they have an HH income of $100k. The issue is that the while the $100k HH income is the average income the $800k SFH is not the average home, it is an above average home in the context of a home which includes condos and townhouses.
IMO, the average core SFH is not going to drop to the precive affordable level that some people avocating, because the construction costs is often greater than 500-600K ($300 sqf). And, when you factor in the price of a decent size lot then it is understandable why a SFH is well above a million dollars.
Fair enough. I don’t know if “entitlement” is the word, but regardless it’s a principle that works both ways. A buyer might feel it’s fair to own shelter at a bargain basement price where the seller slashes their throat; the seller feels it’s fair for them to get a winning lottery ticket and the buyer can engorge themselves in debt to pay for all of it. In either case, someone’s paying. That’s the natural friction ever-present in a RE market. Regardless, an economy overly dependent on RE is, in the long term, not good for anyone.
It’s not really a value judgement of, “do I think they should”, especially something so specific. Again, it’s an issue when large portions of the housing stock in any tier become unaffordable to a large enough segment of the population. And that’s tough to say what “large enough” is, but there’s some guesstimation you can make. Leo’s affordability chart is one example you can look to for clues.
..along with much more legitimate business moving out of BC, that doesn’t like dealing with more regulations and red tape.
My comments are solely a response to the folks who thinks they are entitled to a SFH in this town when they have a household income of $100k. It is not a bear or bull call on future prices.
Josh, I am sure I can find you examples of “livable” condos/townhouses for $500k – $600k, but I don’t have the time currently.
Local fool, do you then think a large segment of the population should be able to afford a somewhat renoed 2200 sqft 1970’s gordon head SFH on a 7000 sqft lot?
I don’t think there’s anything wrong with the scenarios you’ve laid out. On the other hand I don’t think it’s meaningful when talking about the market as a whole.
The issue is not whether there are any buyers available to support X price, it’s whether there are enough buyers available – both the buyers in that market tier as well as the ones underneath. I might agree that it’s not hard for 2 professional folks to pull in 150k, but the reality is, that’s a small segment of the population.
If 5% the housing is completely unaffordable to the average income, that’s not an issue, because there’s enough buyers in that small segment both in terms of income, and move up potential, to support it. If 10% of the housing is completely unaffordable, that’s probably still not much of an issue.
But if vast swaths of the housing stock across all tiers is, then it becomes dysfunctional. IMO, that’s where we’re at right now. If that weren’t the case, the market wouldn’t be cooling like it is. Vancouver is a more extreme and obvious illustration of this point.
This is the essence of a correction. Unaffordable prices cause the buyer pool to shrink until affordability is restored through higher incomes, lower borrowing costs, or lowering prices. Usually some combination. Affordability doesn’t just achieve escape velocity, never to be seen again.
Some people here are hoping for a crash in the (mistaken) belief that it will make home ownership more accessible to more people.
A housing crash won’t make more people own homes. Typically, in a crash the home ownership rate falls. For example, in the USA, the home owenrship rate rose to 70% at the 2006 peak, and has fallen to 63% where it is today (2019). Even though prices fall, mortgages are harder to qualify for, new construction falls, foreclosed houses become rentals.
So now in the USA, after the crash, prices have recovered, but there are fewer people owning homes (63% vs 70% at peak). If the same thing happens in Victoria, instead of 61% home ownership, we’ll have about 55% ownership rate, and even more people will be shut out of ownership. A $1m Gordon Head house might be $700K, but the bank will only lend you $400K on it, with stricter qualifying, and charge you 6% mortgage rates if you aren’t their ideal client. The banks are in the hole, and they want to stop digging (by issuing less new mortgages). If you can buy it all for $700k cash you’d be OK, but not many people can. Canada can’t print money like the USA without collapsing our currency. Look at Ireland for a model of what happens in a crash, where mortgage credit dried up.
The housing bubble isn’t just a price bubble, its a credit bubble too, and when the prices crash, the availabilty of mortgage credit crashes too.
https://dqydj.com/historical-homeownership-rate-in-the-united-states-1890-present/
Kevin Comeau, a retired lawyer and advocate for greater transparency in property ownership, is even more blunt: “While money launderers in B.C. could leave Canada altogether, they’re more likely to head to Ontario, because it has among the weakest anti-money laundering laws of all the Western liberal democracies.”
Sounds good to me. Open for Business.
https://www.macleans.ca/economy/realestateeconomy/b-c-s-money-laundering-crisis-goes-national/
ks, I’m not sure if you’re aware of this, but what moves the needle in the RE market is not your judgement of whether or not a couple “has their shit together”.
Re: Admirals Landing
“This portion of your hallway is your dinlivingkitchenroom. So livable!”
Local fool, if you look at what the average income can afford, which is what around $500K-$600K?, does that not reconcile with the type of households that should be able to afford them? For an average household income of $100k, that implies 2 $50K a year jobs ($25 an hour roughly) for simplicity sake and to minimize income tax.
From what I have seen in town, those incomes should be easily achievable by anyone with some type of post secondary education/trades and 5-7 years of experience in a particular field. I am not including the person with a sociology degree and work at starbucks.
So what i am saying is that a couple who has their shit somewhat together will be able to afford a 2 bedroom condo or a townhouse in their early 30’s to be conservative. Is there anything fundamentally wrong with that picture? If they actually have their shit mostly together then they would probably be able to afford something in the $700k-$800k range assuming $150k household income. And if they really have their shit together then they would be able to afford a $1M+ range assuming a $200K+ income.
Your roofer and plumber also charge the same rate as a realtor: seven per cent of the first $100,000 of your home value and 2.5 per cent on the rest, for the same time they spend on doing the work? Wow! 😉
We need more of this. Although I’m not so sure about reconciling some of those images with ‘starting at 258K’. Floor to ceiling ‘frameless’ glass is even more expensive than already expensive PH-caliber windows and doors. Notice the lack of baseboard? That ain’t cheap either.
Still, this project needs to succeed.
When I can’t afford to buy the house that I want it must be because there is a real estate bubble.
Believe it or not, Victoria ranks No.4 best to buy among 35 cities and 1,726 neighbourhoods across Canada, in MS “The best city to buy real estate in Canada is …” :
https://www.moneysense.ca/spend/real-estate/where-to-buy-real-estate-2019/
Eh, that’s more or less bubble talk, IMO. To call 40% of the entire housing stock in Victoria luxury just because it’s swelled to ridiculous prices is just silly. It also begs the question of why the market regularly slows down and affordability improves over all segments each time affordability deteriorates to a certain point (just like what’s happening now), and it ignores the fact that people made the same arguments decades ago where moments in a cyclical dynamic were deemed to be permanent.
Aside, just because people are buying Honda Accords at $80,000 a pop, that doesn’t make that car a luxury car as much as it means people are overpaying for that car.
The other thing is, a lot of people misunderstand “average home” and “average income”. You can’t just look at what ever “average” is due to the effect of the sales chain/property ladder (this is where equity has the market effect Totoro loves to talk about). Among other factors, when the FTB’s can’t get in, that’s when the edifice starts to retrench. That adjustment in the sales mix is also a part of what causes the cyclical top to ascend so sharply.
Is that also why you’re poor?
@guest_60684
Touchy-feely benefits aside (pride of ownership, stability of living situation), by far the largest financial benefit is the principal residence tax exemption which is a huge deal for us Canadians given our levels of taxation. Taking advantage of it does require faith that over the long run the market will continue to rise, but as Leo posted back in 2016 in Victoria real annual appreciation since 1960 is 3.74% (and it’s higher than that since the last 3 years haven’t been included.) Our entire economic model is based on growth, growth, growth. For good or ill it’s part of the fabric of our culture and politicians will continue to push this until… well, I guess until the wheels fall off. In the game of Monopoly if you don’t buy properties as quickly as possible, and put houses/hotels on them, you’ll lose. Our real life game of monopoly means asset acquisition – not just homes as you can do fine renting provided you are acquiring assets elsewhere, but with the exception of tax deferred investment accounts, you won’t get that sweet PR tax exemption which can be “had” at anytime.
@guest_60725
Most certainly it has changed. The world has shrunk too, and immigration to Canada continues at a pace that, when compared to other countries, is much higher than average. Let’s also add in how entire portions of the economy have been outsourced to China et al and it’s very easy to see how it’s getting harder and harder for the bottom rungs of income earners to become a first time home buyer. But for now at least, the market is showing there are more than enough buyers out there who are still able to do it.
Caveat: My roofer should also be buying me a bottle of wine, along with the plumber, now that I think of it.
They’re probably poor because they didn’t get hand outs from their parents like you did.
Speaking of logic, maybe you all can help me out with this one.
Are some people poor because they buy a coffee at Timmy’s every morning and smoke a pack a day, or do they buy a coffee at Timmy’s every morning and smoke a pack a day because they are poor?
Why do people assume that an average local income should net you an average local SFH? that’s the same as assuming an average local income then you should also be driving an average luxury car.
The average local income should net you an average local home (which is somewhere between a 2 bedroom condo and a older townhouse).
Sorry, what are the potential benefits of owning? Paying for repairs?
You’re right that I don’t have a crystal ball, but I don’t feel comfortable buying in this market, and there definitely is no rush to buy,
Anyone else excited about this project? https://www.corvettelanding.com/
Passive house, Mass timber construction. This is a step towards the future of housing. Hope it succeeds
because nothing says “Thank you for the big fat commission.” quite like a bottle of cheap sparkling wine.
FYI: Building design approval draws lawsuit against city of Langford
https://www.cbc.ca/news/canada/british-columbia/architect-building-design-illegal-1.5171355
Who owns secondary homes in BC:
From https://twitter.com/vb_jens
haha.
Local Fool : Worse
Some realtors buy champagne.
Person buys champagne
Person must be realtor
Sounds like the liquor store clerk is the one that needs to brush up on logic 🙂
If Vancouver is a “bit of a bubble”, what would it look like if it were a very substantial one?
Patriotz: Be fair, I clearly continued right after that sentence you quoted to point out that buying has become much more difficult. You need two good incomes and often need to rent out your basement.
Out of curiosity what was the population of greater Vancouver when you bought? Vancouver is not a great example to discuss because we can all agree that it has been in a bit of a bubble but population growth combined with no creation of new urban centers is probably the single biggest cause of increasing prices. Lots of other factors. but I am pretty sure that you will disagree since you seem to spend all your time disagreeing with almost everything.
Maybe or maybe not given the other potential benefits of owning, but the real issue is the fact that you don’t have a crystal ball.
No one can accurately and consistently predict the market as there are too many moving parts. This board has had many posters who have regretted trying to time the market, thinking there was no way prices could continue to rise. And then they did.
In my view, if you want to buy, can afford to buy, and expect to be able to stay put for at least seven years, that is an okay time to buy.
Realtors often buy clients champagne as a gift when the home sells. You might want to read up on logical reasoning principles.
At the liquor store yesterday buying a few bottles of champagne and the customer service person asked if I was a realtor. When I asked why she thought that she said “mostly only realtors buy champagne these days”. Seems to me a hallmark sign of an industry that has little competition, and too much money relative to their contribution and flagrant displays of wealth. I think we’ve hit peak realty.
Big city markets are always liquid – i.e. it’s easy to get a buyer willing to pay market price. If a property isn’t selling, it’s because the seller won’t accept market price.
This situation usually happens in a falling market. Indeed there will be properties with no equity, but it’s not really about liquidity. 🙂
My first house was no mansion, but it was in the City of Vancouver and I bought it on one income. Affordability has changed, big time, and one should not try to give the impression it hasn’t.
I suggest we award Dan Anderson from View Royal a participation award to recognize his efforts in the game of life.
Unsolicited advice and boomers go together like peanut butter and jelly. The next chapter in the Times Colonist generational warfare saga:
https://www.timescolonist.com/opinion/letters/june-11-advice-to-attain-home-ownership-1.23851489
I am a member of Black is the new red FB group. Definitely a vehicle for a few people to pump their services. It it also,full of good advice. I am amazed at what people share there. The separation/ divorce posts are sad.
I don’t participate much and Grace isn’t my real name!
If HGTV is an accurate reflection of reality, in spring, buyers dream about the dinner parties they will host in their awesome new digs on hot summer days.
Cadborosaurus,
Thanks for the info. I see your point. Hopefully there will be some flexibility coming in the stress test rules in the fall with the election etc.
Maybe some others here have ideas on qualifying for a higher mortgage.
That’s awesome. Short of inheriting boatloads of money, living below your means for a period of time is one of the best ways to get ahead financially.
Not quite as cheap as yours, but I lived five years in Edmonton in a near-downtown house. $625 for the whole house which I split with another. Creaky old house but cozy and great river valley location. I was making decent coin at the time so saving lots of money every month.
Kids blew the saving all to hell.
June July August Sept are the best weather months, and yet spring is where the market is at…
Patrick the 800k house is not attainable on 100k income without a much higher downpayment. I mentioned 100k because that’s what my family brings in… The average household income in Victoria is actually 90k and its lower in Langford.
Fyi the way suite income works right now for first time (or all?) buyers… If we buy a house with a fully established suite (as in no construction on a ‘roughed in’ suite it has to be rented already or live-in ready and rented asap) the broker can only take into account half the income from said suite, I believe due to the B20 rules which are all about countering risk. Prior to the stress test, we were approved for a 720k purchase price with a suite. Now? Approved for 575k, despite higher incomes, top credit scores and a larger downpayment. We approached Coast Capital and were met with the same mortgage caps as when we spoke to a broker so I don’t think credit unions are a work around they matched the banks.
The majority of the time I was paying either $250, or $275. One place was furnished for that price, only 2.5 years of the 8 were utils not included in that. If I hadn’t had kids, I wouldn’t have changed my lifestyle. Some of the places wouldn’t be to everyone’s taste, clean though.
No great surprise. Why do seasonal patterns exist in sales? Probably mostly weather based, although the school year may also be a factor
Cadboro: We did really trash out affordability a few topics back. First time buyers usually buy at the bottom of the real estate ladder and then with time (and growing equity as you point out) move up the ladder towards purchasing a median priced house. Put in simple terms the questions becomes what can a couple afford if they buy a starter property at 28 and then move up at 38. Incomes are still key but the rate of accumulation of capital is intregal to the equation.
You are right, 500k in the westshore buys a pretty crappy SFH or an okay townhouse. Strangely, my first house in Toronto was a small leaky old crap hole were you could almost fly a kite when the winf howled and it was over an hours commute from downtown. Some things dont change. At the same time other things change a lot. Victoria is no longer the quiet little town that it once was twenty years ago. There are a lot more government jobs than there used to be and a portion of them pay a much higher relative salary than they used to pay.
Are things worse for the average person than they were in my dads day. My guess is that they are a lot harder. Gone are the days that you could buy a house on one income and without having joyous tenants living in your basement. For the moment I am not seeing any major decline in house prices. The vast majority of buyers in the west shore are local, often first time buyers, and I am not seeing any real price drops there. I suspect that local incomes combined with the growth of basement and garden suites provide a fair bit of support for house prices.
So yes you are probably looking for that first crap house with dreams of eventually upgrading (while hoping that your spouse does not decide that it is faster to upgrade to a more affluent spouse; it happens).
If you can rent for just over $300/month and get a decent living situation at that price you would be CRAZY to buy. Most people pay a lot more than that in rent.
Yes, putting it more precisely. 🙂
“Are we humans such sensitive instruments that changes in barometric pressure cause us to make rash financial decisions?”
Personally I only like overpaying for real estate during freezing rain or tornado outbreaks.
I’d be bankrupt since I would have never been able to afford to buy when I started renting, also would have lost a ton of money moving around from realtor fees. Between 2004 and the end of 2012, I spent a rough total of $30,350 on rent, let me know where I could have bought for that much money.
It’s definitely not exponential, and it takes almost 20 years for the principal paid to equal just saving the $1951.48 (at exactly 20 years, the difference is a total of $297). Invest the money + the 10% down payment in a GIC making a piddily 1.2% , and you end up with more money in 25 years. As I said before, in a flat market it makes sense to not buy. In a decreasing market, it’s a no brainer.
It would likely increase the available $440k loan to $490k. Still $110k from the target, but maybe help from a family member (co-signer or a second mortgage)?
https://www.bnnbloomberg.ca/delinquency-rates-rise-in-canada-as-consumers-add-more-debt-equifax-1.1271422
Seniors leading the way in having trouble.
Not quite… more like: you can’t convert that equity to cash without liquidity.
I might be wrong on this 10 yr rate not requiring B20. We talked about it on HH awhile back, and the consensus was that stress test didn’t apply to 10 yr. mainly because of this article.
https://business.financialpost.com/real-estate/cmhc-head-forcefully-defends-mortgage-stress-test-as-calls-grow-to-loosen-rules?video_autoplay=true
“In Oct. 2016, Federal Finance Minister Bill Morneau extended it [stress test] to five-year mortgages. The Office of the Superintendent of Financial Institutions amended the B-20 rule starting January 2018 to include uninsured mortgages or those with a down payment of more than 20 per cent.”
But as I look at it now, it’s ambiguous as to if the ten year loophole got closed with the recent (Jan 2018) changes . Since Poloz has been calling for longer term mortgages I’d expect they are planning to remove the B20 requirement from them. Anyway, credit unions still don’t require B20 stress test for anything.
Another doozy of a loss in Vancouver…
3868 W 23rd Ave, Dunbar
94 year old home purchased for $4,475,000 in October 2017. Attempted to sell in May 2018 for 4.78M – no takers. Relisted for lower prices in May 2018, then again Jan 6 2019 and again on April 30. Put lots of 8’s in the asking price each time…no takers.
Just sold now, for 2.838M for a cursory loss of $1,637,000, excluding carrying and transaction costs. With those costs included, the final loss may be around 2M.
That’s nearly 25% below assessed, and over $82,000 in losses per month of ownership, again, not counting other costs.
“But…equity?”
Reminder: No market liquidity? You have no equity. You buy in a mania? Better be prepared to hold a while…
https://www.zolo.ca/vancouver-real-estate/3868-west-23rd-avenue
We have $90k family income at the moment. Brokers and credit unions are talking $410k to 440k. Not sure an extra $10k pa would net you a $600k loan, even if for some reason you thought it made financial sense.
You mentioned 100k income in previous post. 20% down on a $800k home is $160, so you need $640k mortgage. That’s $3k per month (2.69%, 25 yr). The interest part is $1,800 per month, the rest is forced savings. I’m assuming that is considered affordable for a $100k income.
As for the qualifying…..
BC is 75k. Ontario sunshine list is 100k
I find the whole thing intrusive and noisy. I am not a government employee,
While because we/public pay them directly via our tax money. Also isn’t the name publishing only for government employees making over $100K/yr?
Is anyone here in the “black is the new red” Facebook group? It’s a bit of a circle jerk for a financial advisor and her friends to pump themselves up, but it’s a neat concept where locals go and post their financial questions and get the village to weigh in and answer. Lots of pumper “the market will never go down” realtors too.
If it’s any foreshadowing of what’s to come, there’s some people posting about being denied portability at renewal time for their mortgages due to the stress test, and there’s often posts about people making strings of really dumb decisions about money, debt and housing. Worth a look if you find that interesting.
Patrick you missed my point. How are local incomes (average 90k) supporting local house prices (average 800k)? Rent has nothing to do with it if you can’t qualify for an 800k purchase price.
What’s the going rate on a 10 year amortization? I didn’t know that this was one way to buck the stress test.
You only ran your analysis for three years. Mine is for 25 years. The payoff from owning vs renting isn’t in the early years, it’s exponential over time.
For example, how long have you already been renting? Backup to the start of that and tell us where you’d be if you’d bought instead of rented.
No that’s a different part of the article. They link to the original article, which is nothing about days on the market. It is about auto and house sales on warm sunny days vs cold days. https://www.nber.org/papers/w18212.pdf
This is what I’ve posted previously on the subject:
You’d get more by just saving the money than you would by owning if the market isn’t going up, without even taking into account the 6650 more you’re paying in interest.
The research refers to DOM differences noted between sales in cooler climates vs warmer climates, not to any effect from day-to-day weather changes.
http://www.thehomestory.com/how-weather-affects-homebuying-and-selling/
Over the 25 years of a mortgage (at about 2,8%), 2/3 of payments go to equity (forced savings) and 1/3 to interest payments. If you’re comparing cost of owning to renting (which has no equity), you should use 1/3 of your mortgage payment as a fair comparison and run it for 25 years with rent increases. (Note that if you have a child under 18, you can defer property taxes (@4%) with no payments until you sell. ). Adding a rental suite tips it even more towards buying vs renting. Instead of using the stress rest as an excuse, get a 10yr term mortgage as that doesn’t require a stress test.
I find those government employee salary list so wrong. Really needs to be stopped. What business do I have knowing what these people make…
Post the number of employees and their pay levels. Names need to go
505 teachers between 75 and 90k and so on.
http://www.thehomestory.com/how-weather-affects-homebuying-and-selling/
“The National Bureau of Economic Research, in a paper from 2012, suggests that warm weather may have a positive impact on home sales (specifically, the signing of a sales contract).”
Sarcasm is just irony w/ intent.
So read this recently:
Any idea what the cost increases were in Vancouver? Also explains the massive amount of starts in April, and means that May should be a real bummer.
I’m still not sure how anyone’s pushing that these prices are supported by local incomes. Even in your teacher / firefighter example they’d need another factor to purchase above 1 million, a larger downpayment from a previous home sale, a gift, or savings.
Under the current stress test I’ll have to be tested at a (5.3% rate? I know it’s changed recently) so with 100k family income and 50k down, we can buy a 500k house. My family income is above average for Victoria and we have stable jobs, and we can’t buy a single house here. We can buy very few houses in Langford, and they’re dumps.
Yes some families are going to get gifted $$ from family but I don’t think it’s the main factor in buying houses above what they’d normally qualify for. I think the main thing allowing “local families with average incomes” to buy houses here is the sale of other houses and the larger downpayments on the 2nd house coming from the equity in the 1st house. It’s not incomes supporting these prices.
I love it when the weather is trotted out as an excuse for dips or spikes in RE sales numbers; it gives me an opportunity to roll my eyeballs so far back in my head that I can examine my brainstem, in minute detail. Are we humans such sensitive instruments that changes in barometric pressure cause us to make rash financial decisions? Maybe it’s the phase of the moon?
Been reading how the NDP is taking a tough stance against teachers on their collective bargaining negotiations and how teachers constantly complain about their pay. Here are last year’s list of all teachers that made over $75k a year in Sannich (starting at page 53). At first glance they look ok for 9 months of work.
https://www.sd63.bc.ca/sites/default/files/SOFI2018.pdf
Like Marko said before, combine that income with a fire fighter’s pay (page 36-38 below) then ya that couple can probably get into a $1M+ home provided they are somewhat fiscally responsible.
https://www.saanich.ca/assets/Local~Government/Documents/Corporate~and~Annual~Reports/Saanich%20Stmt%20Fin%20Info%202017%20Final.pdf
Yeah, I was surprised by this as well. Seems much higher than what I had seen before, but one would imagine they have the actual counts from the big banks.
Actually, it is irony.
And you don’t want to live in a world where we need to signpost that beautiful device. The arrival of a post-literate society appears to be inevitable without any facilitation for the bone-headed.
James is that sarcasm? Why is there no universal symbol for sarcasm?
Explains why August is always the month with the largest amount of sales for the year.
Does the chart of mortgage “amortizations greater than 25 years” say that 53% of mortgages are longer than 25 years? (Or does the Y scale represent something else). That seems way high…
For example, this page says that number is 11% https://www.canadianmortgagetrends.com/2019/01/the-state-of-the-mortgage-market/ “11%: Percentage with extended amortizations of more than 25 years (16% for recent purchases between 2015 and 2018)”
Main effect is as intended, fewer highly leveraged borrowers
Also the theory that people would just flee to higher amortizations didn’t pan out.
http://www.osfi-bsif.gc.ca/Eng/Docs/b20-nfo.pdf
OSFI stuck down the much ballyhooed concern that the stress test will lock people into higher rates if they can’t switch lenders.
I’m sure it still happens to a certain extent, but it’s also a temporary issue at worst. Once everyone has passed the stress test, the chance of them not passing at renewal is small.
Yes, time will tell if this is a just a blip up in sales or a trend. The weather has been fabulous, maybe that pulls the trigger on some sales.
So your suggesting that if the 213 homes that were sold last week all Victoria buyers then the market can not pull back? Patrick just to be clear i have no idea how many of them were Victoria buyers but i said its irrelevant because it is – one week of home sales doesn’t imply anything – you don’t even know what the sales mix was – what if the majority were well under the average/median home price – does that imply the market is unaffordable and in fact Victorians can not afford the prices in the market? Of course not – its just one week.
Well if its Victoria buyers, that’s relevant to me, as that’s sustainable, and govt clampdown on “bogeymen” (foreigners, launderers and speculator/vacation homeowners) will have little or no effect here.
1-2 years ago, we were told that govt crackdown on these groups was going to free up many homes and lower prices here. Now we’re told that mentioning that is “irrelevant.” It sounds like that “bogeymen” theory for the bears is fading fast.
Perhaps the bump in sales is capitulating bears (or their spouses), who’ve decided the family has wasted enough time waiting for a crash.
Patrick that question is a red herring. It may be that none of the sales last week were purchased by Vancouver buyers – but that isn’t the point. VB, and many others, are saying that prices got pushed to the point they are at because of the frenzy in Vancouver that spilled over into much of the Province. That isn’t to say that there aren’t people in Victoria who can afford the prices where they are – clearly there are people who can (as we have seen). The question becomes are there enough of these buyers to HOLD the prices (or even push them further) from where they are now for an extended period of time or until wages and affordability catch up. I, like many others, believe not. I agree with GWAC – we will see some decline but i personally don’t believe there will be more anything serious (more than 10%) in the SFH under a milion (which unfortunately is where I am looking).
So whether or not 213 sales last week were from Victoria buyers is irrelevant There are much more than 213 people in Victoria who can afford these prices – but that doesn’t mean anything on its own.
I can see using that excuse in 2015-2017, but how many of the 213 sales in Victoria last week do you think were foreign buyers/ launderers / Vancouverites moving here
Strongest start to a month that we have seen in a long time, Leo. Thank you.
I maintain that the foreign buyer / launderer plays a larger role directly and indirectly in Victoria RE market than is accepted here. However, I agree with the thesis that the 2015, 2016 and 2017 run up in Vancouver, caused by whatever one wishes to call it [foreign money, money laundering, whatever], resulted in many Vancouver sellers ending up here and buying which spiked prices here because they were bringing out-sized cash to compete with local incomes. Take a look at the result:
https://www.zoocasa.com/blog/income-group-to-buy-a-home/
This addresses what Barrister touched on. So, for a local income person, to be able to afford just the average bench mark home here, you have to be in the top 10% of local income earners. Victoria is unaffordable by standard measures, such as multiple of gross median income.
Just saying. We have a long way to go to get to equilibrium. 2 years min, if ever. Interest rates will stay lower longer because household debt is too high – a quarter point hike sends shivers down people’s spines, a few of those hikes would cause consumers to stop spending on other things and cause a recession. Oh, what a tangled web.
KS112 – I agree with you. A professional income in this town is likely in the $90K range [based on hourly rate pay]. Other professional earn it differently, such as profit sharing.
Gwac – I agree with you, just add another 5% points. Good to read from you.
Josh – a recession is a certainty – the question is “when?”.
I do wonder why you spent so much time handing out free “lessons”.
Our market expectations aren’t so far off from each other. I think a 30% crash off-peak isn’t going to happen without a recession or ~5% rates. I thought we’d see higher rates by now but it seems the government is too scared and banks apparently love our debt almost as much as we do.
That said I do think a recession, at least a light one, is likely in the next two years.
“A London court placed a worldwide freezing order on Sivasankaran and Siva Ltd.’s assets in July 2014. In an apparent violation of that order, within days, Sivasankaran had listed the Salt Spring property for sale and transferred it in a private transaction to Axcel, according to B.C. property records.”
Because no one does anything about these violations that even the term violation is meaningless or if someone does anything about these violations it takes so long as to be almost meaningless.
Local
To confirm my expectation is 5 to 10% off of the top of last Aug/Sept for a SFH HPI…
Luxury up to 20%. 3 to 4 years to balance itself out. We are a year in. So 2 to 3 years of nothing.
The difference between u and I is the crash rainbow you see in your dreams. 🙂
Going back to just watching before I get suckered in.. 🙂
@ Patrick
The guy in question sounds like a real peach…
“A trail of documents reveals that the property’s been linked since 2005 to a flamboyant Indian-born telecom tycoon, Chinnakannan Sivasankaran, who transferred its ownership while subject to an asset freeze as creditors chased him through courts in the U.K., India and the Seychelles.
Sivasankaran has proved slippery in the past: Bahraini telecom operator Batelco spent years chasing him through courts in the U.K., India and the Seychelles — where at some point he’d become a citizen — to pay a claim related to a failed joint venture.
A London court placed a worldwide freezing order on Sivasankaran and Siva Ltd.’s assets in July 2014. In an apparent violation of that order, within days, Sivasankaran had listed the Salt Spring property for sale and transferred it in a private transaction to Axcel, according to B.C. property records.”
https://www.bnnbloomberg.ca/one-tycoon-was-wrongly-ensnared-in-vancouver-dirty-money-probe-1.1270420
Well, it didn’t stop you before, did it? 🙂
It’s funny when you say, “the market is doing what I expected”. I believe you when you say that. It’s just that I can actually say much the same thing, despite having an apparently contradictory position. I guess it depends on what you’re watching and over what time frame.
I don’t think a debate is just about pointless arguing with strangers. It’s the third parties that watch the debate that can learn something, and sometimes, the debaters too. Feel like I’ve learned plenty watching others discuss.
Local no there is no point even if he was here
My post as well as everyone
s else's have no impact on the marketWhats the point of arguing all the time with complete strangers. Pointless.
Leo`s info is good so I read those and skim the posts.
Hawk and Info your stars burned brightly. But alas the market did not conform to your dreams.
You mean…Hawk isn’t here. If he was, oh, you’d be too. 😛
Saw a house that hasn’t sold so far this spring, re-listed for 10k higher. Never quite understand the logic on that…
I am here. Just reading and staying up to date. Market is doing what I expected so what’s the point in continuously fighting with bears, They eventually learn their lesson and do not need my help.
Where is gwac? It’s been a while.
Well, this is embarrassing…
I found it odd and inappropriate where the articles about the money laundering report mentioned specific cases, where nothing had been proven.
For example …
https://www.google.ca/amp/s/beta.ctvnews.ca/local/british-columbia/2019/5/9/1_4415689.html
“German’s report found a homemaker who had bought five luxury homes over three years for $21 million and a $3.5-million Gulf Island property acquired with funds allegedly embezzled from a $90-million loan fraud in India.”
a new article from Bloomberg : One tycoon was (wrongly) ensnared in Vancouver dirty money probe
https://www.bnnbloomberg.ca/one-tycoon-was-wrongly-ensnared-in-vancouver-dirty-money-probe-1.1270420
“Save one, according to the probe’s final report. “Most astonishingly,” Attorney General David Eby declared at a press conference when it was presented, “a $3.5 million Gulf Island property acquired with funds allegedly embezzled from a $90 million loan fraud in India. It appears the government jumped the gun on that too. There’s little evidence to show the mansion was bought with criminal proceeds – it was purchased by an Indian entrepreneur long before he faced the accusations of fraud. The tenuous link is the latest misstep by the provincial government after multi-billion dollar laundering estimates it presented that same day failed to hold up to scrutiny.”
-//-//-
This innocent person shouldn’t have been mentioned by the govt, and caught up in this.Hopefully the govt will make a statement and clear this up.
Barrister, I think this goes back to the debate about what is a “professional income” in Victoria. My comment about how a “professional income: in Victoria is around $90k a year was not well received, but fact of the matter is that it probably is.
Say the engineer is making $90k and the teacher is making $85k ($75k salary plus another $10k for teaching summer classes), plus whatever equity they have in their langford house, it is not inconceivable that they can move up to a $1.2 million dollar home with a basement suite mortgage helper.
I am not good at reading tea leaves but so far there does not seem to be the crash that some people where hoping for on here. Is it possible that house prices are more in line with local incomes than some people think? I was chating with a 36 year old engineer who just sold his West Shore house and moved up to a 1.2 mil house in Oak Bay. I think he said his wife was a teacher. It made me pause to think.
Leo thanks once more for all the hard work you do.
I’ve started to see more rentals popping up with properties I recognize. Given the sales price and the rents being asked, it’s clear that some folks believe that prices have stabilized and are counting on solely price appreciation for their investment. Will be interesting to see if these properties are back on the market in a year or two.