August: Stress test orphans coming back?
Well it’s the last day of summer vacation, so before I start dodging the kid delivery vehicles on the roads while riding around town it’s time to take a look at how August ended up.
In total, sales are again up from the same month last year, which has been the pattern for the last 4 months after 2.5 years of nearly uninterrupted declines. It’s clear that right now the market is not continuing to decline and some segments are showing improvement. Note that these statistics are for the Greater Victoria region only (Core, Westshore, Peninsula) so they will differ somewhat from the VREB press release which includes all sorts of conflicting data (Gulf islands, new construction completing, out of area sales, old sales and adjustments from previous months, etc).
As discussed last week, the reason for the increase can be attributed mostly to the entry level single family detached market. Compared to last August:
- Condo sales are flat
- Mid market detached sales are flat ($750-$1M)
- We saw an extra 20 higher end sales ($1M+)
- There were an extra 40 low end sales (up to $750k).
August had the highest level of single family sales that we have seen since the introduction of the stress test, and is now not so far below the rate of sales that we saw before the introduction of the stress test. I wouldn’t say it’s a definitive recovery yet because last November we saw a similar series of improving data in single family sales only to have it promptly fall back again. However something to keep an eye on.
It’s clear that some of the buyers priced out by the stress test are coming back to the market, and they are coming back into the single family market for the most part. Not surprising that a rock the size of the stress test will cause some sloshing back and forth in the markets. The boost in both low end and high end sales means that market conditions in both of those segments are more active (lower on the chart) than this time last year.
The question is, is the boost in sales sign of a sustainable rebound? Is the correction in real estate over as RBC says? To that you may ask: what correction? As you can see from the price charts in Victoria, there has only been the slightest give in single family prices since the recent peak in 2018. Although market conditions have shifted dramatically in favour of buyers in the last 3 years, that has only resulted in halting the frenzied price appreciation, not giving any of it back.
The last time we had a correction in the real estate market, it took nearly 3 years of slow price slides to find the bottom whereas now we are less than a year out from peak prices. While this time the federal government may have cut the top off the market with the stress test, I don’t believe we are close to the end of the downcycle yet. Recent market data is pretty strong but I believe this is a temporary strengthening (which at the glacial pace of real estate cycles could still be several months).
At the risk of sounding like a broken record, I believe much of it comes down to consumer confidence. In 2008 everyone was piling into the market, paying no heed to the fact that carrying the mortgage on an average house would take a large chunk of their income. 5 years later incomes were up and that same house cost a quarter less on a monthly basis but almost no one was interested (more on that here). That deterioration of consumer sentiment hasn’t happened yet, with buyers frustrated by being sidelined by the stress test but not any less enthusiastic about housing. With strong income growth and low unemployment there has also been little reason for anyone to worry about taking on a large amounts of debt or the security of their jobs.
However with reliable indicators flashing warning signs for a recession, we may not be far out from when that sentiment turns sour. I find this factor of the housing market is the hardest for people to wrap their heads around. It’s easy to consider whether buyers have the money to buy, or whether there is a flood of mainland buyers turning up on the ferry. It’s tougher to imagine that buyers sometimes just lose interest in buying the same houses they were salivating over just a few years before. Nothing fundamentally changes but market sentiment and only time swings it back.
I guess that low balling a listing sometime works. 2064 Quimper St. Oak Bay. Asking 1.233 million; sold for 995k. Wonder what the story is behind this one.
Caveat: Well, I will definitely update after we get settled.
New post guys.
James Soper, Introvert won’t care until a SFH in GH sells below 650k, at which point I would also be concerned if I still haven’t sold.
Ticino, the canton you are moving to in Switzerland is about the same size as the CRD and also has about the same population as the CRD. Very different settlement patterns though I imagine. I’ll be interested in your impressions after you have lived there for a while.
So Greater Vancouver bench mark home is now $993,300 vs. Victoria’s now at $847,300 (Down nearly 5%). @Introvert, is that still significant?
James: Toronto definitely felt crowded. lived there but my heart was in Caledon.
Don’t know how you lived in Toronto for decades.
I can see how retiring in Langford, as opposed to Victoria, might well be preferable for a lot of people. The difference in housing cost may mean that one can afford to travel and take cruises or do other things that might not be otherwise affordable including spending the winter down south. For a segment of older people being downtown in Victoria is not particularly appealing.
Random number generator?
Macleans: Best communities to retire in Canada 2019
https://www.macleans.ca/economy/best-communities-retire-canada-2019/
Langford is # 5 in Canada, and first in BC. 5-year average of Crime Severity Index in area covered by local police service (lower is better, national average = 73): 61
Victoria 5-year average of Crime Severity Index in area covered by local police service (lower is better, national average = 73): 118
Hold my beer, Colwood and Langford are well above Victoria.
Macleans: Canada Best Communities
https://www.macleans.ca/best-communities-canada-2019-full-ranking-tool/
BC communities ranking out of Canada 415 municipalities.
6th place: Salmon Arm
12th: West Kelowna
15th: Oak Bay
18th: Nelson
25th: Colwood
26th: North Saanich
29th: Central Saanich
30th: Squamish
32nd: Saanich
35th: Terrace
38th: Langford
39th: Kelowna
42nd: West Vancouver
46th: Prince Rupert
49th: Summerland
50th: Sidney
52nd: Cranbrook
57th: Kamloops
59th: Delta
62nd: Vernon
63rd: Coldstream
72nd: Lake Country
75th: North Vancouver (city)
76th: Whistler
103rd: Comox
112th: Vancouver
119th: Port Moody
121st: Victoria
130th: Salt Spring Island
134th: Penticton
140th: Surrey
142nd: Coquitlam
157th: Powell River
159th: Esquimalt
160th: Pitt Meadows
162nd: New Westminster
168th: North Vancouver (district)
173rd: Richmond
175th: Burnaby
178th: Quesnel
180th: Courtenay
184th: Sooke
189th: Abbotsford
191st: Prince George
192nd: Maple Ridge
194th: Nanaimo
201st: Langley (township)
209th: Campbell River
210th: Parksville
214th: Port Coquitlam
216th: Fort St. John
229th: Greater Vancouver
236th: White Rock
245th: Chilliwack
248th: North Cowichan
263rd: Mission
273rd: Port Alberni
324th: Williams Lake
349th: Dawson Creek
366th: Langley (city)
I believe in helping people to.. but there are right ways and wrong ways.. like tent City, it is a double edge sword. You exposed the needs of homelessness but you also exposed the destruction that came along. Housing is a human rights issue. Location is a luxury.
I think there need to be a change on how social housing can be done… Singapore is a great example. Reaching 91.5% home owner ship
https://youtu.be/2cjPgNBNeLU
Hope you aren’t referring to the organisations that help and support the homeless, if so please feel free to go and live somewhere where the underprivileged and abused and abandoned to their fate.
agree .. like science world area.. it cleaned up fast .. but then you have pigeon park area – still tainted for like the last 30 years .. we have so many proverty pimp organization here that will keep downtown messed up
James: And yet Victoria still feels crowded.
a lot[ uh lot ]: Approximately 1% of the total population of the 13th least populous country by density, that doesn’t even comprise .5% of the total population of the earth.
Yes, but it is here and not in another Canadian city. That is apparently of great value to a lot of people. How much of that is intrinsic sustained demand, and how much is fueled by speculation, I’m not sure.
Hahahahaha. Where do you think they went?
They came here!
They were given fare for the ferry and told to scram.
“Home sales in every B.C. region to recover in 2020: forecast
Total home transactions across province expected to rise 11 per cent versus 2019, with average sale prices also predicted to increase in every area”
Glacier Media Real Estate
SEPTEMBER 5, 2019 10:19 AM
https://www.vancourier.com/real-estate/home-sales-in-every-b-c-region-to-recover-in-2020-forecast-1.23936955
Thanks Deb for sharing and helping out.
Welp, looks like I’m moving to St-Bruno-de-Montarville, then.
Man, do these rankings suck. Their top-10% for ‘weather’ is all in the GTA! Even St. Catherine’s, ON has better weather than Toronto, and somehow ranks lower. And somehow places like Dorval, QC and Ottawa rank higher than here. Victoria, Saanich, Oak Bay – nowhere to be seen in the weather column. Yeah, that’s a nope.
“Wow, walked around down town today where all those brand new buildings are .. so many homeless people, wonder how condo values fair where homeless shelter are located right beside them… Like the vivid on Yates , 989 Johnson”
During the Olympics I saw the direct result political will can have on the homeless on the downtown east side. Within a month 70% (I would guess) were gone. When city hall has the will to clean up an area it can be done very fast. The question should be, what is the city prepared to do about it? The police can have those people gone in under a week, I have seen it first hand. Of course they will be relocated and dispersed but the development and city planning will eventually win. Till then, those units will always be less appealing to local buyers.
In my search for a home with water views I have come across this: https://www.realtor.ca/real-estate/20847138/2-bedroom-condo-13-60-dallas-rd-victoria-james-bay
Seems like a decent deal (sans backyard) when town-houses on Shelbourn are asking for around $800k. My first choice would still be a SFH, but looks like there is some value here for around $700K. Anyone know what these were going for around 2013/14? I wonder if they were the same price as my GH home (~500-550k)
Nothing like posting an opinion piece that also points to a “news article” that’s been discredited to paint a picture of an entire region. All I said is that these best cities lists are rife with issues. You may not want to raise your children there but you might want to retire there. The point being that factors for where to live are influenced by inputs / wants / needs / desires and vary greatly from person to person. Victoria has become too expensive for many Canadian retirees and places like Ajijic offer a standard of living that in many ways is comparable.
More and more communities around the world are discovering the benefits of being a retirement location. If they can provide the services retirees are looking for at a price that fits the budget then the community can draw in money and create jobs for local citizens. My point isn’t so much for you or me but for what that means for places like Victoria. This board is full of comments about how retirees always have and always will keep Victoria housing prices afloat. But what if the retirees find something else? There’s a reason Ajijic attracts a large ex-pat community as do many other areas in Central & South America and Europe.
Agree and disagree.. living in Vancouver for the majority of my life, I don’t have to buy near Vancouver core to feel connected.. sky train rides can take 30 min or more, but still connected and find many things to do in local communities.
In Victoria, 10 min drive can be a big difference and everything/activities is heavily concentrated in small areas
Yes, Swiss cities also score well on the Economist livability rankings, the highest being Geneva (# 11) and Zurich (# 14). https://www.cnn.com/travel/article/worlds-most-livable-cities-2019-trnd/index.html
Wrong.
Affordability of housing is a factor in the Economist livability ranking. For example, here is an economist.com infographic from the 2018 livability survey, where the Economist point out that the Copenhagen livability score went up “due to increased availability of affordable housing” https://www.economist.com/graphic-detail/2018/08/14/vienna-overtakes-melbourne-as-the-worlds-most-liveable-city
But not affordability. The Economist rankings cater to high income business executives, so they don’t consider the affordability of housing or anything else to people with ordinary incomes.
Canadian Moneysense does a survey which gives priority to what lifestyle ordinary people can afford, and Vancouver and Victoria rank way, way down.
https://www.moneysense.ca/canadas-best-places-to-live-2018-full-ranking/
Switzerland might beat Canada on three of your counts (less crime, higher incomes, lower taxes). Not to slag Canada. It really is one of the best places in the world.
So is the delta between Victoria prices now and ten years ago. Victoria’s market was vastly inflated because of what happened in Vancouver, along with everywhere else around Vancouver.
🙂
And my main point is that at no time in the last 5-10 years has a household income of $150K been able to afford a SFH in the “core” of Vancouver.
Soper likes to paint Vancouver and Victoria with the same brush, but it’s not smart.
Good point.
“on 180k… you can afford a decent home in the core (~$850kish) with no tenants”
As much as it pains me to agree with Introvert, a (dual-professional) household income of approximately $150K can afford a median SFH in the core ($850K) with no tenants. It’s just that a median SFH in Victoria isn’t that great; the quality of a median SFH here is below average when compared to other Canadian cities. That’s partly why people who are looking are finding that “still nothing interests them”.
If you downloaded and read the free report on economist.com, you’d see that they do consider many of those factors, in the 30 that they include.
Livability, as they see it, is a measure of the fewest challenges to living in a place.
As to your points….
– Crime – covered in 5 factors (petty, violent, war, terror, civil unrest)
– Housing – covered in one factor (availability of good quality housing)
– Income/taxes/ unemployment not measured directly, but if course Canada would score very highly there too. People would critique it more if they did include those IMO.
As far Mexico, Lake Chapala might be a nice place to visit, but I wouldn’t want to raise my kids around this … https://mexiconewsdaily.com/opinion/is-lake-chapala-paradise-or-pair-o-dice/
If you think there is somewhere out there more livable than Canada, with less crime, better housing, higher incomes , less taxes etc., then keep doubting reports like this economist.com one that out Canada near the top. I happen to agree with the economist on this one.
The delta between Vancouver’s price peak and Victoria’s is significant.
But go ahead and lump Victoria in with Vancouver if it makes a future price crash here more likely in your head.
Funny thing about these “Top 10 Best” lists – they tend to leave out some important factors. This particular list only looks at stability, healthcare, culture and environment, education and infrastructure. What about business environment? Taxes? Housing? Income? Unemployment? Homelessness? Crime? Family supports? There are quite a few factors that make any particular city liveable and those factors are then weighted by one’s personal situation. Would I rank Vancouver & Toronto that highly? No.
I’ve been trying to find this list in it’s entirety but apparently one needs to pay $$$ in order to see it all. I wanted to see what the slant was for/against certain countries. For example, would Ajijic and the Lake Chapalla region in Mexico make the list? It is a #1 expat destination for U.S. and Canadian citizens.
which one is that .. wonder if i can find something there
Calgary (#5), Vancouver(#6 ) , and Toronto (#7 ) make the top 10 livable cities (out of 150) in the world, bested by Vienna. According to EU based Economist magazine. No North American city was higher. Not sure if Victoria was considered due to size. https://www.vicnews.com/trending-now/vancouver-6th-most-liveable-city-in-the-world-report/
Impressive that 3/10 cities are Canada. And we all know Victoria is more livable than Vancouver!
@late30
https://www.myrealtycheck.ca
Cruising the UsedVic rentals ads (yes a hobby) and I’m noticing a steady increase in the number of recently sold properties being placed for rental. Definitely more than 6 months ago and even 3 months ago so there must be some feeling of price appreciation to come as the rents don’t make sense given price of the properties.
And on the anecdotal side – one neighbor has given up after a year or so of trying to sell (at an outrageous ask) and another has relisted at a slightly lower but still stratospheric ask. As always will be interesting to watch the market over the coming months.
Vancouver’s prices were highest in the country. Victoria’s were 2nd? 3rd? You’re right, nothing of the sort.
Vancouver data very similar to Victoria. Condo sales up only a bit (and higher historically) while bigger bounce in detached sales, up 25%. Overall sales up 16%.
https://twitter.com/SteveSaretsky/status/1169020648821338113
Introvert, what is your definition of two Professional Incomes? I have said its around but 180k a year but got a bunch of backlash. So on 180k then yes, you can afford a decent home in the core (~$850kish) with no tenants.
But typically you would expect to see two professional incomes being able to afford a nice house in the core. Homes in the $1.2M range would be tough for $180k a year unless a substantial down payment.
Wow, walked around down town today where all those brand new buildings are .. so many homeless people, wonder how condo values fair where homeless shelter are located right beside them… Like the vivid on Yates , 989 Johnson
could anyone rave me the site tracks the listing price drop history ? it it called reality check.ca?
Thanks
Vancouver’s prices went to the absolute moon; Victoria’s prices did nothing of the sort. Of course Vancouver’s prices are gonna revert to a degree.
Two professionals with a decent down payment (or equity) can buy a SFH in the core, especially if it has a suite. This is true today, and it has been true at all points in the past.
Good for Poloz for holding rates…
Still not hopeful he’ll be able to hold out if the outlook globally continues to stink.
So has Vancouver, until this year.
Very well said. I could not agree more, except for your comment, “strong income growth”. Wage growth is slow and real wage growth is close to 0%. Consumer sentiment is central, but the factors that impact that are too numerous to mention – the key ones being employment and income. Much has been said about the yield curve [Google David Rosenberg’e latest comments], central banks, Foreign capital flows, bond yields, Brexit, US-China, our election and the 2020 US election = a recession in 2020, mild or severe. Negative bond yields will not prevent it – just look at Japan. I am fascinated by what is happening in Australia’s RE market. Look also at London and New Zealand.
Here VREB reports: A total of 661 properties sold in the Victoria Real Estate Board region this August, 11.3 per cent more than the 594 properties sold in August 2018 but a 6.4 per cent decrease from July 2019. Sales of condominiums were up 4.1 per cent from August 2018 with 203 units sold. Sales of single family homes increased 15.5 per cent from August 2018 with 351 sold.
Chek news reports: 7% drop in Victoria home prices YOY. That is significant, if true.
surprised none of the bears have posted this:
https://www.mansionglobal.com/articles/dubai-villa-prices-fall-to-lowest-point-in-a-decade-205042
I have that issue from time to time too. Nothing wrong right now.
Often you will see that there are new posts in the activity chart on the right of the page, but you can’t see those comments in the thread. Then as mysteriously as it stopped working, it works again.
They are both related to ROI which is what matters in an investment. Accelerated pay down usually reduces your ROI, but I do it too.
double post
Mine is stuck on older post unless refreshed too
LeoS,
Same here. Mine is stuck at your 62703 “sold the highlander” post, but a refresh solves it each time.
Hey Leo, just happened to me as well – in this case the last comment showing was 62713 from Patrick but i remember at home last night there were some new comments. So i refreshed and it worked.
LeoS: Same problem.
I think the depressed values Vic West and esquimalt border well be a value buy with future development over flowing from Vic West.. but I am pretty amateurs-ish on estimates.. something one of the realtor on this page can happily point you to the right direction
Hmm.. Will look into it. Anyone else have this problem?
Price wise or time wise? Time wise, I doubt it, price wise, I guess that depends on what you define as near. More on this in the next post.
Hi Leo. Something weird is going on with this page for me. If I don’t refresh the page in my browser, I don’t see the newest comments. It’s been happening all day for me. Not sure if the problem is on my end or yours. I tried clearing my browser cache, to no avail.
Anyone see particular areas/neighborhoods in the core that offers good relative value compared to historical pricing?
“40 year amortizations would take many people past age 65”
30 year amortizations would take many people past age 65.
Over ask. $756,000
Hey, anyone know how much 3640 BLENKINSOP RD went for? I saw a sold sign on it today…that one went fast!
Hey Gwac
Agreed. Great post. More debt at the same income levels will only lead to big problems. And 40 year amortizations would take many people past age 65 when they are (supposed to be) retired.
Hey local
Benchmark is down 5% and anther 2% inflation we are down 7%. What exactly are you looking for the Crash???? I think we are a getting near the bottom of this. Victoria is doing what Victoria does and that boat is not going to wait forever…
Well, being this is the first day after labor day, I’m in a right pissy mood. No white pants, no scantily clad folks at the beach, no Canada cones, constant rain, cold, and worst of all, now, Cheryl Woolley.
Yes, says your local REALTOR®. More debt. More leverage. Drag it out for longer. Take those amortizations out to 40 years, which is nothing since Japan once offered 100 year plans. Since you can’t afford a car after levering up so much, the dealership will help you and take the payments out to 10 years. Don’t worry – you can afford it after all! Let’s just finance everything to infinity and beyond.
Says your local REALTOR® – We’re “pleased” that the government is going to buy your house with you. Brilliant. What an exciting new role for government!
But since the prices in BC are so outrageous, it won’t help us REALTORS®. So, anything – anything – no matter the cost to people, families and the economy, to keep the party going. Pay no attention to the breakdown of monetary policy occurring around the world – buy, buy, buy today! These REALTOR® clowns would be delighted to see prices continue to escalate from here and the fact that people actually have to generate that much cash to pay it all off doesn’t seem to concern them much. What the hell are they thinking? Not about you, that’s for sure.
For goodness sake the interest rate is less than 3%, and B20 takes you to 5 and a bit. Does anyone actually appreciate how low that is? It’s a joke of a rate by almost any historical measure. If people can’t qualify to afford a home at such ridiculously low rates the problem is the prices, not the policy.
The willful blindness and unbridled self-interest in statements like the above is completely reprehensible. Miss Woolley and her clan of REALTORS® can get bent up the wazoo as far as I’m concerned.
What a crazy time we live in.
Victoria has weathered every storm since 1981 extremely well, including a global financial crisis, so I think there’s a great chance it’s going to outperform your expectations.
Inflation-adjusted cycles from 1969 to 2018 (courtesy Leo):
List of increases have been:
77%, 52%, 100%, 105%, 40%
List of corrections have been:
-5%, -13%, -42%, -12%, -10%
Patience, my pet.
Of course I’m drooling at every Tesla I see in GH. In fact, one of my neighbours recently got a Model 3.
But, no, it’s not yet time to go electric. I really wanna get this mortgage paid off before I sink money into a new or used EV. The good news is, it’s really starting to feel like I’m on the home stretch.
That makes perfect sense.
Yeah just like the big drop in July which prompted some headlines this is noise.
July SF median change: -$35,750
August median change: +$39,900
Actual change in value of SFH: ~Zero
Usually after big jumps in one direction you get a big jump back. Reversion to mean.
Not long ago, bears complaints how it is not fair that Victoria/Vancouver RE are pricing the millennials out of the SFH market. Now, the tune has changed to threaten to move out.
Why bears are waiting? When places like Regina, Winnipeg, etc…, SFH are 1/3 of Victoria price and income are high?
vreb published today – no big surprises except Median and Average prices jumped way up HPI for houses is down a bit and condos is up – https://www.vreb.org/current-statistics
“September 3, 2019 A total of 661 properties sold in the Victoria Real Estate Board region this August, 11.3 per cent more than the 594 properties sold in August 2018 but a 6.4 per cent decrease from July 2019. Sales of condominiums were up 4.1 per cent from August 2018 with 203 units sold. Sales of single family homes increased 15.5 per cent from August 2018 with 351 sold.
“August could be considered a status quo month for real estate in greater Victoria with entry-level homes selling quickly when priced appropriately, and higher-end properties moving at a slower pace,” says Victoria Real Estate Board President Cheryl Woolley. “As expected, we’ve seen relatively stable pricing, with an uptick in sales – particularly single family homes. Unfortunately, summer has been accompanied with a slowing of new inventory coming onto the market, which suggests it is a good time for prospective sellers to consult with their REALTOR® about selling in the fall market.”
There were 2,838 active listings for sale on the Victoria Real Estate Board Multiple Listing Service® at the end of August 2019, a decrease of 3.8 per cent compared to the month of July but a 12.7 per cent increase from the 2,519 active listings for sale at the end of August 2018.
The Multiple Listing Service® Home Price Index benchmark value for a single family home in the Victoria Core in August 2018 was $888,100. The benchmark value for the same home in August 2019 decreased by 4.6 per cent to $847,300, slightly less than July’s value of $858,800. The MLS® HPI benchmark value for a condominium in the Victoria Core area in August 2018 was $503,600, while the benchmark value for the same condominium in August 2019 increased by 2.9 per cent to $518,100, lower than July’s value of $523,400.
“This month the federal government opened its First Time Home Buyer Incentive program,” adds President Woolley. “We’re pleased the government is looking at creative ways to get first time buyers into homes as this program will help some buyers in Canada’s smaller markets. We look forward to hearing how the federal government plans to help first time buyers in larger markets like Victoria, perhaps by adjusting the mortgage stress test parameters and extending the length of mortgage amortizations.”
About the Victoria Real Estate Board – Founded in 1921, the Victoria Real Estate Board is a key player in the development of standards and innovative programs to enhance the professionalism of Realtors. The Victoria Real Estate Board represents 1,381 local Realtors. If you are thinking about buying or selling a home, connect with your local Realtor for detailed information on the Victoria and area housing market.”
Tammurabi: That sounds remarkably sensible.
James Soper, I think I and my family might be the anecdata you’re looking for: We’re likely moving to Nanaimo this year. Housing prices have come down in Victoria, but what we can afford here bears no resemblance to what we can afford elsewhere. So, unless something dramatic happens to the market here before October, we’ll be upping sticks and moving on.
Sold the highlander yet?? Maybe Mr. Weaver will let you take his Kona out for a spin to try it out. Time to go electric.
No you said accelerated mortgage pay down will save you thousands therefore making it a good investment.
Capital appreciation is not related to accelerated pay down.
I also pay down my mortgage faster (after the various tax advantaged accounts are full) but I am not kidding myself that it’s a good investment.
I treat mortgage pay down like the fixed income part of my investments and thus feel comfortable going more aggressive (higher equities) in the markets.
I’m not. It’s happening all over the place. Just because it hasn’t got here quite yet, doesn’t mean that I and many others won’t leave if it’s cheaper elsewhere. Some how Victoria is going to weather the storm with a huge amount of building going on, and the tourist industry + retirees, but everywhere else won’t.
Interesting global parallels unfolding in RE – here’s an article from Australia, touting better August numbers, and what some analysts there are asserting as the the beginnings of a recovery in the RE market. It really suggests that at least some of what we’re seeing here locally is due to global factors.
https://www.bloomberg.com/news/articles/2019-09-02/housing-rebound-takes-hold-as-australia-property-prices-jump
Taking a look at the global economy, or at least the little I understand of it, I find it unlikely that a global recovery in RE is truly underway…but I digress.
LeoS: Thank you once again for all the hard work on both the charts and the thoughtful analysis. It is a lot of effort and I am sure all of us appreciate it. I would say that you are fair and away the best source of information on the Victoria market.
One can argue that investing heavily in one asset class is risky. And perhaps it is. But I don’t view Victoria RE (especially properties in the core, especially properties in Saanich East, especially properties in Gordon Head) to be very risky. It may not represent a high-return investment, but I consider it to be a very low-risk one.
Also, even though most of our cash is being “invested” in the mortgage, we also have a public sector defined-benefit pension which, as far as I can tell, is being well managed by the British Columbia Investment Management Corporation (BCI), so it’s not true that we’re really going “all in” on housing.
I forgot about rental suite income. Silly me!
Doing the math is daunting (especially for an English major) and, besides, even if the math says that the stock market is the better way to go I’m personally not comfortable investing in the stock market for a few reasons, whereas I’m extremely comfortable with paying off my mortgage early.
Good gains will be there when we do sell, I’m pretty sure. Maybe they won’t, but I really doubt it.
Looking at the calendar, it’s almost 2020 and we’re still waiting for that unstoppable RE price crash to come about!
“thereby saving myself hundreds of thousands in interest—now that’s a good return!”
As tempting as it is to pay down your mortgage given low interest rates of between 2 and 3% it’s really a no brainer to max out your amortization and instead direct your money to the stock market. Balanced returns of between 8 and 10% over the last 5 and 10 years have been a real wealth builder. An even better strategy if you have an investment portfolio is to sell it payoff your mortgage and borrow back at an after tax rate of well under 2%, on a 500K investment portfolio your ahead 35K year before taxes vs paying down your mortgage, oh and your house also went up!
Money is money. You need to calculate how much you put in and how much you get back. Yes, appreciation counts, as does depreciation and rental income and mortgage rate and the leverage gained on borrowed money and the costs to operate. It is the whole tamale, not just the cheese. I once did the math some years back and posted it here. Probably could be searched out if someone feels so inclined.
Especially those employing a one-asset housing “investment portfolio”.
That has nothing to do with the returns on a mortgage paydown. But the return from a mortgage paydown is tax free and yes that matters.
Congrats for selling and getting all those gains.
Any thoughts on this new build? Looking in the core area of Victoria but wondering if this price is pretty standard for a 3-storey home.
https://www.point2homes.com/CA/Home-For-Sale/BC/Victoria/Fairfield-East-Gonzales/909-Bank-St/80511177.html
Shouldn’t we include house price appreciation in our math? And the fact that those gains are tax-free?
Sure, balances portfolio still way ahead of mortgage though in last decade.
Most Canadian investors are likely way overweight on Canada.
Sorry just months of inventory I’ll correct it.
Market Conditions graph – what is this figure showing? Is this a new index you’ve come up with?
Most Canadians who invest aren’t 100% invested in the SP500. Rather they have significant assets in Canadian equities which have had much less impressive returns lately. Of course on average equity returns are likely to exceed the 100% guaranteed returns of mortgage paydown.