Oct 15 Market Update
It’s halfway through October, which means sellers have about 2 weeks left to make a sale before the end of the fall market. November, December, and January always post the lowest sales numbers of the year so expect not much to happen after the end of the month. That’s not to say you shouldn’t keep your eyes open though. The few new listings that do come online and the ones that are left over from the spring are there for a reason.
If you watch the movement of market indices like the Teranet and MLS HPI, you may have noticed that they tend to make most of their gains in the spring and then tend to flatline for the rest of the year even in pretty hot markets.
Why is that? Spring is when we see the most buying activity (along with the most listings and most inventory) so those tighter market conditions explain some of the price jumps. However I believe another factor is that the leftover listings are more likely to be flawed in some way or simply have more motivated sellers. If a property hasn’t been well maintained and finally sells at a discount in the fall, that feeds into these repeat sale indices and drags down the price gains in the fall. It also means potential interesting deals if you’re OK with some compromise. The data on sales price to original* asking price bears this out, showing that although discounts from list prices are not that large in general, you can expect the biggest ones in November as worried sellers scramble to make a final deal before winter.
*Does not account for properties being relisted multiple times.
Speaking of upcoming discounts, it’s been a sluggish week in the market and sales are now coming in well below the rate of last October. The timing of thanksgiving always throws a wrench into these comparisons but after the first week where we matched last year, now sales are down about 14% month to date. Remember last October was a strong sales month but that’s still a reversal from the improving numbers we have seen recently.
Here are the weekly numbers courtesy of the VREB.
| October 2019 |
Oct
2018
|
||||
|---|---|---|---|---|---|
| Wk 1 | Wk 2 | Wk 3 | Wk 4 | ||
| Sales | 101 | 237 | 598 | ||
| New Listings | 210 | 414 | 958 | ||
| Active Listings | 2768 | 2756 | 2510 | ||
| Sales to New Listings | 48% | 57% | 62% | ||
| Sales Projection | — | 514 | |||
| Months of Inventory | 4.2 | ||||
Some thoughts on the Royal LePage survey on immigration and housing demand in a new post:
https://househuntvictoria.ca/2019/10/17/lets-talk-immigration-and-housing/
Is it true that listings show up on PCS before realtor.ca? I never thought to look to compare.
Use to like 12 to 24 hours now it’s like 2 to 4 hours.
1935:
Is it true that listings show up on PCS before realtor.ca? I never thought to look to compare.
I certainly spent a lot of time on realtor.ca before my most recent purchase. Why do you think someone who is seriously interested in buying wouldn’t bother using a free service to see what’s on the market?
PCS has a lot more info and you can grab the floorplan off it, etc.
Marko, do you find the return profile better for a one bedroom condo as opposed to a 2 bedroom?
Return on a studio or one bedroom is so much better ->
http://victoria.citified.ca/news/stay-small-a-guide-to-buying-an-investment-condo-in-victoria/
Aside from the reasons I list in that article I own units in buildings where units that are 3x triple market value of my small units struggle to obtain 2x the rent.
In general the higher the market value the worse the return is. Right now i have clients in Victoria renting a house assessed at over $4 million for $5,000 per month, but a 900k house will rent for $2,500-$3,000 all day long.
Marko, do you find the return profile better for a one bedroom condo as opposed to a 2 bedroom? Quick glance tells me that a 2 bedroom will cost ~40%, the rent you will get will also be ~ 40% likewise for strata etc. However, I would assume a 2 bedroom will be lower vacancy and easier to rent out (attractive for roommates and couples etc.).
So with that said, if cash-flow neutral then you get a bigger notional asset once the mortgage is paid.
I certainly spent a lot of time on realtor.ca before my most recent purchase. Why do you think someone who is seriously interested in buying wouldn’t bother using a free service to see what’s on the market?
Never ask your barber if you need a haircut.
When I applied for my PR under the federal skilled worker program over 10 years ago you got maximum pts for age between 21-49. Looks like they recently changed it so applicants get maximum pts between 18-35. Looks like that could be part of the reason the numbers have changed. Would also probably limit the amount of immigrants that already have kids.
Makes sense. Can’t be over 35 to get your foot in the door via work-holiday visa and if going for PR if you are 35 the amout of points you get in that category drops off.
Hmm. Interesting. Thanks for digging that up.
Actually, it doesn’t seem to be the “same as its always been.” because the age mix in Canada immigration has changed. There is a big difference in age mix in immigration towards millennials, with now (2018) many more millennials as a % of the total mix of immigrants as previously (1990s). And less older immigrants (both in absolute numbers and %)
For example…
In 1993 , there were 94K immigrant millennials (25-39y), 94/256=37% of total. In 2018 there are 156k, (156/303=52% of total). Huge change in the age mix skewed towards the younger millennials.
In 1993 , there were 35K older immigrants (>50y), 35/256=14% of totals. In 2018 there are less- 29K older immigrants representing 29/303= 10% of total). Less numbers of older immigrants, both in absolute numbers and %.
Sources : 1993: page xiv http://epe.lac-bac.gc.ca/100/202/301/immigration_statistics-ef/mp22-1_1996.pdf
2018 : https://www.statista.com/statistics/443305/international-migrants-in-canada-2014/
Would you touch this market as an investor? Or do you anticipate better condo pricing opportunities in the next few years? I own my primary residence but fear this is a market top for buying an investment property.
A wood-framed studio in building next door sold for $307,000 earlier this year. If I can pick up concrete, for example, for $289,900 I would probably take that plunge.
i/ It wouldn’t be finished for 2 to 2.5 years and over the long term the markets trend up and at 10% down I am not losing much in terms of opportunity cost.
ii/ What’s the worse case scenario? Drops to 250k (unlikely) and I rent it out at cash flow neutral (not including principal repayment part of the equiation).
iii/ Longer term it’s a great location walking distance to downtown and concrete.
I bought my first pre-sale at 834 in 2009 when everyone on this exact same blog was predicting the project wouldn’t get off the ground and everything would collapse. You can’t predict market tops/bottoms. I just to work within the market at hand.
@guest_63842
Would you touch this market as an investor? Or do you anticipate better condo pricing opportunities in the next few years? I own my primary residence but fear this is a market top for buying an investment property.
Often they will have one unit on MLS to drive interest.
Also you can check the Citified database and filter by presales/now selling: https://victoria.citified.ca/condos/
Also, the VV forum as not everything is on citified but pretty much everything ends up on the forum that is in the core areas -> https://vibrantvictoria.ca/forum/index.php?/forum/3-construction-and-land-development/
For the Westshore drivebys are a good way to go as it may not be anywhere online but a lot of Langford construction is apartment buildings, not condos.
As someone who has bought quite a few pre-sales over the years there are just no deals out there. Pre-sales want the same $ right now as re-sales. I don’t buy pre-sale unless a clear 5 to 10% discount to re-sale market.
Right now my hopes are on the Panorama (last building at Railyards and first concrete building at Railyards) having a few studios with parking <$300,000 when they eventually launch pre-sales. You could kind of make that work in terms of being cash flow neutral, barely.
Often they will have one unit on MLS to drive interest.
Also you can check the Citified database and filter by presales/now selling: https://victoria.citified.ca/condos/
New builds that don’t hit MLS or PCS…
Where do I find them? Do I have to drive around Langford and note where the construction is to just know what’s completed next or is there some kind of database I can look at?
Yes.
Regardless of what the immigration policy is, migration flows are going to be affected by the housing market, which in turn is affected by the labor market. I would say it’s all related and even circular in some ways. I definitely wouldn’t say that immigration will, or will ever, drive the housing market in lieu of locals.
If Canada goes through a rough patch, I don’t think immigrants are going to be beating the door down to come in. We saw similar, elevated immigration inflows leading up to the last major national housing peak/downturn in the early 90s. Likewise, I don’t think foreign cash will be as willing to participate in the housing market if it isn’t doing well (the latter appears to actually be happening, but probably for other reasons as well).
Ireland, who had an even crazier housing market up until 2008, saw population growth of up to 5% in some areas, blasting past even our most aggressive projections here in Canada. There’s been a tonne of quotes posted online from Irish media at the time, and guess what one of the arguments was for continued housing robustness?
Yep.
And guess what happened to population growth after their housing market went kaput? Not only did they not need all those future homes, once the excitement disappeared it became apparent they had too many for the existing population. Whole developments were abandoned, whether they were holes in the ground, or even half built neighborhoods.
Until of course, the cycle started again – and now in some respects, they aren’t far off where they were 11 years ago…and making similar, “forever to the sky” arguments.
Makes sense. Doesn’t make a lot of sense to immigrate people that won’t be spending decades working first. Likely same as it has always been.
One point about the Canadian immigrants in the house-buying age ranges (24-74) , is that 65% are Millennials, much higher than the non-immigrant population.
For example, of 2014 immigrants, here is the age breakdown
150k millennials (age 25 to 38)
60k Gen X (age 39 to 54)
20k Boomers ( 55 to 75)
https://www.statista.com/statistics/443305/international-migrants-in-canada-2014/
For the non-immigrant population, those numbers are closer to equal among the groups.
Victoria is 1% of Canada population. If 1% of the millennial immigrants come here that is 1,500 each year, a high number of which are motivated to buy homes. In many cases, the biggest competition Millennials face in buying a home is from other Millennials.
Writing a post on this topic… Thoughts?
I have two friends from Croatia in the IT industry in Victoria in the 90-100k/year salary range. They got their PR no problems and both have bought properties approx 600k in Victoria….both their partners got 50kish government jobs. Apparently the NDP has added something ridiculous like 7,000 positions in BC? (I can’t find data to verify).
Then I have a friend that was here on two working holiday visas. Talented drywaller was working for Gordon N’ Gordon dry-walling Black & White by Abstract which is more than one year behind schedule because of labour shortages. He said a lot of the days less than half of the crew would show up on the job site.
He couldn’t get PR (just didn’t have enough points). After two years had to go back to Croatia and now he is working in construction in Munich, Germany.
My thoughts are why is the system set up to import super high level educated desk job immigrants when there is a need for construction labour, for example? Someone working in construction is going to have a tough time going to the bank and getting a 500k mortgage; therefore, you aren’t impacting the demand equation of housing. My drywaller friend was more than happy to live in an apartment unit on Gorge Rd.
Writing a post on this topic… Thoughts? https://business.financialpost.com/real-estate/immigrant-fuelled-demand-is-helping-to-power-canadas-housing-market?video_autoplay=true
“Immigrants buy 21 per cent of houses and may purchase 680,000 homes during the next five years, a Royal LePage poll shows”
If it encourages buyers to arrange for a viewing or motivate buyers that would otherwise ignore the property because of the DOM, why would that be unethical? I agree you should not mislead buyers, however in some cases the DOM might be giving off a misleading signal in the first place.
The second part is the problem there. Hard to argue that relisting with no big price change is not done just to mislead buyers.
Only space for 2 guitars? Why bother…
Anyone looking at 1346 Rockland ave? Just had a deal fall through. Have $2500 in reports from Inspection (Post and Pillar), Roofing, heating, two different pool companies (maintenance and builders), stone (floor and exterior), arborist and rotorooter. Happy to sell them to someone to expedite a sale for buyer and seller.
well nothing is impossible .. just stupid that is all
you can roll out of bed and crawl to the stairs
council members and mayers need their votes – not sure how they going to keep it as more people moving in and drown out nimby demands
Are you sure? When we were selling our last home by ourselves, a realtor representing a buyer offered us $xxK more than a private buyer without agent, if we pay $xxK (buyer’s) agent commission.
We could have gone with her to save effort and would still get the same money, but we decided to go with private buyer, as it would be unfair to the poor family she was representing: not only they would have paid more, they would have been the ones paying the commission without knowing.
There are ethical and honest realtors out there of course, but real estate business can be very shady …
The sellers are paying. They should get what they want, assuming it’s legal, ethical and disclosed.
yeah no way to even get a loft into that height. Makes sense not to have full 2 storey garden suites but 1 + loft seems reasonable. No longer. I’m sure the NIMBYs complained and killed it.
Very informative. Thank you for the data and graphs.
I missed the excellent discussion re affordability policies of the political parties. Leo – very passionate discourse. I echo it. Well done. The plans, as they stand, from the 2-bigs raise demand and encourages more debt. It solves nothing and makes the coming recession even more painful for all. Increasing supply plus tackling toxic demand are the pillars of the solution, or a road to that destination. One new report out today [Phil Soper of Royal LePage, one of the true RE bulls] says 20% of all current sales are to new arrivals in to Canada. We need immigration to continue economic growth and replace retiring baby-boomer workers; however, immigration also raises housing demand [this is highlighted by the Royal LePage report] and we need to know that and address it as part of the supply picture. Immigration policy needs to be aligned with housing supply – these folks need homes too but it is added demand which results in an economic crowding out effect. Immigration is a very important and positive factor for Canada’s growth. The NDP’s commitment to add 500,000 homes is a good start.
It looks like a minority Liberal government coming. No doubt that the NDP will support the Liberals, but what will they get for that support? The Wealth Tax is foolish [double taxation]. Or, does the Bloc take enough seats form the NDP in Quebec to allow the Conservatives to form a minority government.
The polls predict 4 seats for the greens, no likely a non-factor.
https://www.victoria.ca/assets/Departments/Planning~Development/Development~Services/Zoning/Bylaws/Schedule%20M.pdf
“Bylaw 19-086 adopted August 8, 2019, except section 5.b.i, (4.2m) which comes into force on November 1, 2019”
Garden suite height on plus sites lots being cut from 5.5m to 4.2 max. Have to love how the city quietly just piles on restrictions. Funny enough they left the “1.5 story” in the bylaw which is hilarious at the new 4.2 m max height.
$627,500
How much did 4159 dalmeney sell for? MLS 414350. CheerS!
When you’re paying tens of thousands for a service I think it’s fair to hold it to a higher standard.
How come no one is posting “bag holder” examples anymore. Hawk used to post them all the time, are there less and less bag holders now compared to last year?
But the entire system is inaccurate. One of many examples; a developer could sell 100 units and choose to report 100 sales on MLS®, or they could choose to report 0 sales.
No, but private sellers, I would offer, do not use DOM to form a narrative and do not report that metric to the public whereas Real Estate boards do knowingly report it and use it as a gauge of the market. That information reported then is used by the public and could influence their decision making as they are trusting the “professionalism” of that group. Re-listings provide inaccurate DOMs that don’t tell the full story. The amount they change the overall average may not be much but it is still inaccurate.
And on tonights family feud, the number one reason that the board still allows relisting….
– a hope to fool buyers who don’t have a realtor or have a realtor that doesn’t check or disclose the fact
– to send a red flag to the rest of buyers
The number one function is to bring it to the top of the PCS system. It also appears as a new listing on realtor.ca but so few serious buyers use realtor.ca that I don’t think that is worth much.
I agree, the board should ban it as it would save me time and I could be even lazier, but I don’t see it as some misleading travesty. It’s like me demanding that Tesla display DOM for their CPO cars. Either it’s a good deal or it isn’t….who cares about the DOM.
Bingo on that one Barrister. It would be in the board’s interest to just shut the practice down. Reduce nonsensical paperwork, improve image, and it’s an easy out for agents asked to do it by sellers.
Other than re-lists generate revenue for the board.
So (when there is no change of listing agent), this “re-listing” practice is
– a hope to fool buyers who don’t have a realtor or have a realtor that doesn’t check or disclose the fact
– to send a red flag to the rest of buyers
Interesting …
Bingo on that one Barrister. It would be in the board’s interest to just shut the practice down. Reduce nonsensical paperwork, improve image, and it’s an easy out for agents asked to do it by sellers.
On your other point ref data, just because the data is worse elsewhere isn’t a reason not to demand better here imo.
Do we also demand that private sellers disclose exaclty how many days they’ve had a for sale sign in front of the home and how many times they’ve relisted on Craigslist?
Worse RE data, better looking presidential candidates. You gotta take the bad with the good.
Cool. Wonder what the inspectors here would say if you said you wanted to plunk down one of those.
I stand corrected. Merci.
On your other point ref data, just because the data is worse elsewhere isn’t a reason not to demand better here imo.
Wouldn’t this be the reason that we have better data to begin with? Because we’re a bunch of complainers?
Isn’t this pretty much what you’re looking for Leo?
https://www.amazon.com/ECOHOUSEMART-Laminated-friendly-Building-Engineered/dp/B07PNWFJ49/
Isn’t one of the purpose for a relist so it shows up as a new listings? It would be the same concept as when u login to Autotrader and they have certain cars that show up first in your search because someone had paid extra so it shows up at the top of the page.
Yeah, pretty sure those tactics are suggested by the seller’s realtor for the most part.
Seller usually asks for it as they see other people doing it. Often the 60 to 365 day listing contract runs and and seller doesn’t want to extend but wants a new listing contract which means a new listings at 0 DOMs.
In real life practice no one is fooled by it. The vast majority of buyers use a realtor and he or she would have access to all the re-lists.
It’s funny how people here complain about the data…most countries I’ve been to it’s 10x worse as realtors don’t cooperate and don’t have a central system.
In Croatia the best data is “according to [craigslist equivalent] the average asking price for m2 in Dubrovnik is 5,432 euros up 2% from last year.”
Yeah, pretty sure those tactics are suggested by the seller’s realtor for the most part.
Realtors aren’t in a position to guarantee the DOM or CDOM figure is correct. There are always ways for a seller to game the system.
I think that one of the main impacts of resetting the days on market is that it confirms some buyers mistrust of real estate agents and the industry as a whole. The VREB lists a house as 15 days on market when I know it has been listed for over a year at virtually the same price. This is published by the body that is supposed to be a watchdog for the ethics of the profession. The industry has an image problem which they dont seem eager to fix.
I’m not buying a pair of jeans for $40. This is for many people the single most expensive transaction of their life. Why can’t I have all the information surrounding a property? I care because it’s an indicator – how I choose to interpret that indicator is up to me.
Why is this a problem? As a buyer, I want every single available tool in my arsenal to be able to make the best offer for my given situation. The buyer is at leisure to accept, decline or counter that offer. So again, what’s the problem with having this information readily available?
I come from an area where CDOM was common and attitudes adjust to whatever information is readily available. Why be misleading about a property? Why try and hide behind a cancel/relist? If a property is properly priced given it’s current condition and location, it will sell regardless of what DOM says.
Why as a buyer would you care how long it is on the market? If you are interested in a property based on the details and price, why would the DOM matter?
Some buyers might think there is something wrong with it, others might think they can use it to be more aggressive in their negotiating.
I can see why buyers might want to reset the DOM if it giving off negative signals to potential buyers, especially if it has been on the market longer because of an accepted offer falling through due to financing being a stumbling block for the buyer.
Wouldn’t be that hard to put in a cumulative days on market (CDOM) and report that. Shouldn’t be able to restart CDOM unless house is off the market at least 31 days. This is similar to many areas in the U.S. Can reset DOM as often as one wants – i.e. change realtor, change price. – as the CDOM will show the actual time that a property has been marketed for sale.
It bothers me as a potential consumer as it’s disingenuous and very much misleading. Yes one can get that information by asking their realtor but why not be upfront about how long a property has been on the market?
I like the way Zealty lists the current asking price and the drops in price since the listing was active. They also include the days at the current price and the original listing date. Far more informative than Realtor.ca
October Sales numbers for the last 6 years:
2019: 514 as projected by Leo
2018: 598
2017: 664
2016: 735
2015: 734
2014: 602
Oct Average: 641 sales over the last 6 years.
Oct 2019 = 20% drop in sales from the average over the last 6 years.
= 30% drop in sales from the hey-day of Oct 2016.
Take two identical listings at $1M. Both are wildly overpriced and sit there for 2 months with no action.
Seller A drops the price to $850k and it sells in a week. Final Days on Market: 67
Seller B cancels the listing and relists for $850k and it sells in a week. Final Days on Market: 7
Which days on market is more reflective of the market for $850k homes? The second.
REALTOR® A goes to listing presentation a few days later and quotes her or his list to sales ratio as 100%.
REALTOR® B goes to listing presentation and quotes her or her list to sale price as 100% and average days on market for sold properties as 7 days.
The re-lists don’t bother me as a consumer/someone interested in real estate. They do bother me as a REALTOR® as my clients see other people doing it and then they want me to re-list as well which is annoyng (new paperwork, more VREB fees, etc). I think to make my life easier the board should only allow re-list if you switch REALTORS®.
Relists without price drops should be banned by the board in my opinion. But I have no issue with relisting due to big price drop.
After all we want days on market to be somewhat meaningful.
Take two identical listings at $1M. Both are wildly overpriced and sit there for 2 months with no action.
Seller A drops the price to $850k and it sells in a week. Final Days on Market: 67
Seller B cancels the listing and relists for $850k and it sells in a week. Final Days on Market: 7
Which days on market is more reflective of the market for $850k homes? The second.
This is ridiculous. The province needs to step in an set a standard for the data. Relist as often as you like – but the data should not be permitted to be skewed by folks trying to game the system.
I don’t know what the big deal is. When I look at sales I look at the property and the actual sale price. Whether it sold at 102% or 92% of asking is irrelevant in my opinion. You could pay 102% and get a steal of a deal and pay 92% of asking and it is still a crappy deal.
“*Does not account for properties being relisted multiple times.”
This is ridiculous. The province needs to step in an set a standard for the data. Relist as often as you like – but the data should not be permitted to be skewed by folks trying to game the system.
Looks like we could have the lowest October sales since 2013 and the lowest new listings since 2003.