Nov 18 Market Update
Last week was much like the one before, with strong sales continuing, up 27% from the same week last year. So what’s going on? Are we moving back to a hot market already?
After all, not only have sales been up over the previous year for a number of months now, but recently even months of inventory have been lower indicating a more active market in some segments than last year. Of course nearly anything can happen in real estate, so we can’t rule out the possibility that our little faux-slowdown is over, but looking at some of the charts, I would like to offer an alternate explanation. Take months of inventory for example.
With months of inventory lower than last year, it seems like the market is heating up right? But as usual in real estate, usually when you want to know more: zoom out.
Zooming out reveals what I think is really going on. There was a shock from the introduction of the stress test (and perhaps a little bit from the spec tax) which has now more or less settled down. But the underlying trend of gradual cooling seems to remain intact. We are definitely going to see a few more months of year over year improvements in the market statistics, but as I’ve said before, I don’t think this slowdown is played out yet.
One thing is clear though, the larger slowing trend (if I’m right about it) is extremely gradual. We’re 3 years into it and single family months of inventory has only grown very gradually, slowing the market from red hot to lukewarm. We aren’t in a buyers market yet overall with the slower high end being balanced out by a more active entry level. It says to me that the risk of a sharp change in market conditions is very low right now barring some significant deterioration of the economy. Since no one can predict with certainty where the market is going, all we can do is estimate risk. More on that in a future article.
Here are the weekly numbers courtesy of the VREB.
| November 2019 |
Nov
2018
|
||||
|---|---|---|---|---|---|
| Wk 1 | Wk 2 | Wk 3 | Wk 4 | ||
| Sales | 49 | 202 | 322 | 498 | |
| New Listings | 68 | 304 | 449 | 804 | |
| Active Listings | 2547 | 2557 | 2513 | 2343 | |
| Sales to New Listings | 72% | 66% | 72% | 62% | |
| Sales Projection | — | 642 | 632 | ||
| Months of Inventory | 4.7 | ||||
I had a moment when I read this … Yes.. yes… yes I have two boys 8 and 10. … give us a lever long enough and we can make a difference.
“I want to raise little earth warriors that will come home from school and teach me how to better recycle, reduce and re-use. I want my kids to grow up and be politically active too, and vote for representatives who put environment into the pay-attention category. Not having any children doesn’t carry the same impact as influencing a couple of your own spawn.”
New post: https://househuntvictoria.ca/2019/11/21/wait-or-buy-a-risk-assessment-approach/
Obviously you should not take any listing you think it is overpriced. I just threw out a price but you are right in this market it would be wise to price just under 3 mil. Just a passing thought that has passed on.
Yes although that statement is very imprecise. Take point A at a time of poor affordability and B at a time of good affordability. Then compare house price change in the medium term (3-5 years) and house prices have always increased more after point B.
Is that correlation entirely linear, is there no noise, and does that mean intermediate affordability values must always correspond to the appropriate level of price gains? No of course not.
You are confusing my statement about a counter-factual with a prediction about the future. By the way nothing is absolute, but in this case I am near as makes no difference certain that house prices would have increased in the last few years even if there was no increase in Vancouver buyers and no local panic buying purely due to affordability levels. Not what I would call a particularly out there statement.
Reminds me of how surveys reveal that far greater than 50% of the population consider themselves to be smarter than average.
Thanks, Leo.
Did you happen to mention to RLP that you can also predict the future with respect to house prices?
Poor bear. The market over the last 10-15 years has driven this one mad.
In terms of full service, most likely not. I would take four $899k Gordon Head boxes any day over a $3.5 million house. There have only been 5 sales this year that are $3.5+ and non-waterfront and there is a ton of inventory.
Realistically what happens in that scenario is I take a reduced fee and than after a year I get canned and seller goes with a different brokerage because my brokerage doesn’t have an “international presence” for their luxury home, but really issue is price is too high.
There is always the flat fee listing option.
Yeah many places sell without an open house so if you limit yourself to open houses you will miss a lot of them. But if you’re more interested in picking off the languishing properties then it can work.
Marko, would you consider a flat fee amount for your side of the commission on a 3.5 million house? (not a lot of showing and absolutely no open houses.) Obviously the fee would need to negotiated,
We used a realtor on our first house purchase to get in to view a house as soon as it was on MLS. The open house was the following weekend and we took it off the market before to prevent potentially getting in a bidding war.
Ya that befuddles me. What would you coming with me as my agent to view places, accomplish? Just go to an open house, and then you don’t have to bother coordinating with someone else’s time schedule.
That’s what we did. We then walked on the first counter offer and the realtor sat with us afterwards to get a sense of what we wanted. We told him we had PCS, that’s good enough – don’t put a minutes worth of work into this because it won’t be worth his time. When we see what we want, you’ll hear from us. Of course the sellers came back to us which resulted in a close, but it could have easily gone the other way.
I would find having a realtor do the search for me, attending every showing, would be cumbersome and annoying. For an able-bodied person, the agent can’t really help you find what you want because not only can you see the same listings they can, but you will always know better than the agent, what you want. But when negotiations start – a good realtor can make all the difference in the world.
Are they? Here? I expect that will happen but for right now I had thought they were kind of treading water.
It’s not just Vancouver, it’s a weekly occurrence here in Victoria too where people list or sell at a price that means they lose tens or hundreds of thousands of hard earned cash.
Remember that place on Dallas Road a few weeks ago where the seller lost a quarter million in just two years? How about that place at the corner of Cadboro Bay and Dalhousie that is re-listed yet again at a price that will cause the sellers to lose tens of thousands in just a couple years, or that place on Moss Street that’s re-listed again and advertised as “The best house on Moss” -bought just last year but listed at a price ~$30k below their purchase price which guarantees a loss of at least $70k. There are dozens more examples right here in Victoria. LeoS could probably do a quick SQL search of the MLS data to identify dozens more examples, but he would probably lose his realtor licence if he published the list.
Prices are declining rapidly now and the declines will accelerate over the next 18 months as the building industry job layoffs increase as all the major projects are finished.
That’s the funny thing, from the agent’s perspective it’s totally unpredictable. Someone like you that is highly analytical ends up spending a lot of time analyzing, but independently, then drops into someones lap and completes the deal in a couple days. Someone else that is highly analytical may hum and haw for months or years looking at dozens of places with an agent before deciding not to buy.
I don’t do sales, but through referrals I am also continually surprised at the timing of when people decide to buy. Some I think are about to purchase end up waiting or stopping the search entirely, and some that I think that are just looking out of interest end up buying the following week.
I believe it.
We knew exactly what we wanted, and that didn’t make it easier to find a place, it made it harder. You’re much more likely to disregard or walk from a home if you’re less flexible than if you hardly care at all. The reality is the perfect home is nigh impossible to find – there’s always a reason to find fault. The more analytical you are, the more faults you will find. You don’t like the color, the carpets, the heating system, the shape of the lot, the neighbors, the hue of the streetlights etc.
We knew we would suck to work with. When we contacted our agent, it was essentially to have him do the offer and walk us through the closing. Having him help us find something over time would have been far too much work for him, IMO and we told him as such.
They might be unfamiliar with the actual process or, it could be a similar phenomenon to people who constantly write on their social media (often with a lot of exclamation marks and caps lock) how they hate drama, can’t stand liars, users and abusers etc – tend to have many of those characteristics themselves and/or are drawn to it. They don’t like those characteristics about themselves and by constantly railing against them, it implies in some way they aren’t like that. A foggy “looking glass self”, I suppose.
Marko said I’m bad for the environment because I have kids so we had to part ways. And he wouldn’t let me use his Tesla to go offroading.
More seriously, the managing broker of RLP was interested in the analytics and a larger brokerage has other opportunities for data that I wanted to explore.
I stopped doing large amount of cash back about 3-4 years ago and just switched to $1,000 cash back with each purchase.
A ton of emails since that time requesting larger cash back arrangements to which I’ve replied with “no” to the vast majority.
A week ago I had a slow day where my assistant and I managed to catch up on everything and I get an email.
“We’ve found a house we would like to buy, just need an offer written up, what can you offer for cash back.”
Instead falling back on my experience, I write back “50% cash back,” as I figure might as well fill up the spare time.
Needless to say multiple excursions to house, offer, back and forth, etc., and no deal. Now the buyers want to look at other houses…. what do I say? Sorry, 50% cash back was just for the one house? It is awkward.
Based on 700 transactions worth of experience, ON AVERAGE people that drop things like “know exactly what I want” etc., end up being more work than those that seem like they will be total space cowboys to work with. Ten years in the business and I still have a really poor feel as to who will buy relatively quickly and who will spend 5 years looking.
I am not saying you personally are more difficult than the average buyer, but on AVERAGE those that drop hints that they will be easier to work with than the average are worse than the average. Not sure why.
Sellers at least I can assess based on what they want to list at and my gut feel on whether this is a chance it sells or not at that price. Not perfect as sometimes sellers go high and than do aggressive price drops but a lot easier than guaging a buyer.
We had some beef so he had to leave 🙂
Leo, I see you’re with Royal LePage now. Why the switch? Just curious.
Sent you an email..
In short, yes there are cash back agents in town, yes you can buy without a realtor, and yes I can refer you an excellent agent and give you something back (shameless plug).
Wrote an article about buying without representation here: https://househuntvictoria.ca/2019/04/11/buying-without-a-realtor/
Nice to see this site is still around, last time I was here it was run/owned by somebody else. I’m looking at probably buying in Victoria several months’ from now, and have some questions..
I’ve found a buyer’s agent that offers to give me back half of the buyer’s commission if I purchase using him. Admittedly, I’ll get less than full service from him (compared to regular buyer’s agent services), but I’m aware of and fine with the parts of buyer’s agent service I’ll be missing. All that said, he’s on the mainland, and while its fine with me if I go with him, it’d be nice to go with somebody local.
Q1: Anybody know somebody in/near Victoria that offers that, or an even a better buyer’s agent refund arrangement?
Q2: Alternatively, I could go buy on my own, without a buyer’s agent, and try to build in buyer’s commission into a purchase offer (such that the seller saves on the buyer’s commission, and puts that towards a purchase price discount instead). However, my understanding is that seller’s contracts can say that if there is no cooperating brokerage… the listing brokerage will keep both ends of the commissions. Do I understand that correctly?
Anybody have experience doing a purchase without a realtor, and working the buyer’s commission into part of a price discount in the offer?
I know exactly what I want, and while Realtors are useful and necessary for many, many people, I really don’t need one for making this purchase.
Any thoughts welcome, from realtors or non-realtors. If you’d rather not post publicly here, you can also email me at
konan01, and then at, hotmail dotte com.
I’d be curious to see the ratio of inventory that was new-build vs old throughout that downturn. Is there a supply glut because builders went overboard or because speculators turned tail and ran?
Has anyone done a meaningful residential solar panel project in Victoria , that made sense financially and they’re happy with? I’ve got no experience in this, so am asking “naively”. I got a quote a couple of years ago about a Tesla wall battery installation (35kwh ) with some panels) and that was over $20k, so I lost interest. It’s not just about money, I’m assuming spending a large amount of money for a small energy production may also may consume more fossil fuels than it saves. I’d love to hear about any success stories, as I’m willing to go ahead when anything is close to making sense financially (e.g. 20 yr payback would be fine with me)
That was me, reporting what our (or more precisely, the LL upstairs) gas bill is. I appreciate your perspective here, thanks.
In our new place we’re going to run a similar identical set-up to what you describe. Our place is slightly smaller than yours but more or less just one level. We have a fireplace in the living room (front of the house) which we’re going to put a gas insert into, and a wood stove in the family room which is more centrally located. I figured we’d just use BB to supplement further off rooms at the back of the house, like the master bedroom and such. We’re also going to add programmable thermos for those BB heated rooms, and a jacket for the water tank.
That tank is a 2012 electric though, so it’s getting a tad aged now. Will replace with it with gas fired tank, possibly programmable as well. Don’t want tankless, despite some of the advantages they offer.
I know this comment should have been posted on the last story, but I remember somebody posting they pay $60 a month for gas to only heat water and the occasional fireplace usage.
We use gas for hot water and have a 40,000 BTU Jotul standalone fireplace that we use to heat downstairs of the house in fall and spring. In the winter we use a wood fireplace insert for most of our heating needs. We have baseboards in the bedrooms to supplement.
We have 3 kids so use plenty of hot water and the house is around 2,900 sq ft. Our average gas usage is 1 GJ per month in the summer and 1.5 GJ in winter and varies between 3 to 4.5 GJ in fall and spring when we use the gas fireplace extensively for heating the house.
Only when our usage is up to 4.5 GJ do I get close to paying $60. In summer the bill is around $24 and in winter around $30.
If you are paying $60 a month for gas heating hot water and the occasional fireplace usage, then either your hot water tank is really inefficient, some of your appliances must be using a ton of hot water or you have a very thirsty fireplace.
If you happen to have an investment portfolio you should consider the option of selling it and using the proceeds to payoff your mortgage then borrowing back to deduct the interest.
Very few people happen to have both a mortgage and taxable investments. In fact few people carrying large mortgages make full use of RRSP’s or TFSA’s. But hey, maybe somebody in that tiny cohort you’re talking about may be on the forum.
@Kenny G
I wonder which bank/lender have a product that allows you do smith maneuver ? I have been using CIBC home line product but looking to break it up and now looking for a new home to host my equity/mortgage? Does MCAP fusion work?
I have brought into CHE.UN btw and it definitely, so far, outperformed any condos…. my position was 8.50. and the yield is about 12%.
More Vancouver sellers who are making (negative) money!
Also from Greater Vancouver:
Remember it’s only the really expensive places that are dropping. Also the Vancouver Real Estate Board’s stats saying that prices East Van have actually gone up since 2016 doesn’t seem to have helped either of those people…
Last time Oil was over $100 was August 2014. They’ve sure taken their sweet time building those condos if they’re just coming to market now.
Meanwhile in sleepy ol’ Victoria, a quarter the size of Calgary, we peaked at only 6,235 earlier this year.
meanwhile in Calgary, the average condo price is about 250k and average house price at 483k?
New condo prices in the Calgary area continue to drop as the region unwinds a glut of inventory that hit the market during the oil crash and that, along with ongoing economic pressures, is expected to keep a lid on price growth for the foreseeable future.
Since the first quarter of 2017, new condo prices have fallen by nearly 20 per cent, Statistics Canada said in a recent release. Over that span, new condos are not only the weakest segment of Calgary’s housing market, but also the weakest area in any of the six major markets tracked by Statscan.
In turn, Calgary is bucking a trend that’s seen the condo market stay largely resilient in distressed markets. For instance, although Toronto and Vancouver have struggled through most of the past two years, their condo prices – whether for new builds or existing units – have increased as buyers flocked to the more affordable end of the market.
“The slowdown in the overall economy, combined with all of the product coming onto the market, really caused a downturn and impacted pricing on the condo side,” said Ann-Marie Lurie, chief economist at the Calgary Real Estate Board (CREB).
“There’s just been too much supply.”
Metro Calgary saw a flurry of condo construction begin while Alberta was riding high with oil prices above US$100 a barrel. This decade, there was a peak of close to 10,000 units under construction in March, 2015, according to Canada Mortgage and Housing Corp. data.
But by then, Calgary was already several months into an oilprice collapse that sent the province into recession, and from which it hasn’t entirely recovered.
During the particularly bleak years of 2015 and 2016, more than 12,000 condo units were finished.
This led to a rapid increase in the number of completed and unsold units as demand waned.
In the summer of 2014, there were roughly 30 unsold units on the market. By the end of 2017, there were more than 1,300.
Although inventories have since dropped, the overall market is still oversupplied, Ms. Lurie said. In its most recent monthly report, CREB noted that “persistently elevated supply levels continue to place downward pressure on prices.”
Within the City of Calgary, the benchmark condo price was a touch over $250,000 in October, or down about 2 per cent from a year ago. It is still “firmly” a buyers’ market, CREB added.
Prices are subdued despite increasing demand, with citywide sales of all home types up nearly 10 per cent in October from a year earlier, and particular improvement for lower-priced homes. So far in 2019, total Calgary sales are slightly higher than at the same point last year, although still well below historical norms.
Ms. Lurie pointed to a variety of other factors weighing on condos.
For one, unlike Toronto and Vancouver, Calgary has a range of home types at comparatively affordable prices. Within the city, the benchmark price for a detached home is roughly $485,000.
(For homes under $500,000, buyers can make a down payment of as little as 5 per cent of the purchase price.) Developers have also ramped up construction of purpose-built rentals, while scaling back starts of new condo units. This should alleviate pressure on inventories, Ms. Lurie said.
On the demand-side of the equation, hiring has picked up in 2019, although the region’s unemployment rate is still high by historical standards at slightly more than 7 per cent.
“Any kind of acceleration [in hiring] would definitely help the overall housing market, and specifically the condo market,” said Robert Hogue, senior economist at Royal Bank of Canada.
Mr. Hogue said that population growth is increasing, helping to shore up demand. Indeed, the adult population grew 2.4 per cent in September from a year ago, up from a low of 1.5 per cent in early 2017, RBC said in a recent report.
“When you have fundamental demand improving, it should help absorb those excess units in the market right now,” Mr. Hogue said.
80 percent of detached homes sold in the first 9 months of 2019 in the City of Victoria went for below assessment while 73 percent of detached homes in Vancouver sold below assessment so far this year
https://vancouversun.com/business/real-estate/latest-b-c-residential-real-estate-data-five-things-to-know
Funny coming from me, but that’s too much analysis. FOMO is a very simple human behavior, that almost all people have as social animals. It’s both a symptom and a cause, or perhaps better said, a feedback loop. It’s pointless to quantify it, like trying to quantify the level of “happiness” in a society.
I think he said it’s about probabilities, not certainty. Based on this market’s history, the probability is that affordability is going to be improving, not declining. The certainty is that we’ll all be certain what happened in hindsight.
Or wait, on second thought…
Does Victoria always realize price gains with improved affordability? Or are there not other variables governing whether prices rise, stagnate, or fall that may be partly responsible?
In hindsight, anyone can say there was FOMO. But how much FOMO was there? Can we prove the existence of FOMO? Who bought as a result of FOMO and who didn’t? Does FOMO always occur when prices rise quickly? Is FOMO a symptom or a cause?
Please do.
Leo, I don’t mean to bust your balls, but I’m having trouble with what I perceive to be a new certitude with which you’re making certain statements about real estate. In the past, your statements tended to almost always be more careful, so this is a departure for you.
I would love to see you define that bar and why affordability and price changes do not meet it.
When the market increases quickly. Again, not required for price increases, it just adds fuel to the fire.
No. But I have zero doubt that even without Vancouver buyers or panic buying we would have seen prices rise 2015 onwards. Call it a backwards facing prediction. In Feb 2016 I said it was likely a good time to buy. https://househuntvictoria.ca/2016/02/22/why-it-might-not-be-the-worst-time-to-buy/ Granted you may file that under the “no duh” type of predictions and I fully acknowledge I should have written that article in 2015 to be more useful to buyers. Once I see similar conditions in this cycle I’ll write another article like it.
Indeed, these are some of our best guesses!
#1 derives from looking at past correlations (can we honestly call it causation? I don’t think so).
Per #2, what’s the price differential between Van and Vic have to be before there is a spillover effect? We can’t say for sure.
Per #3, when, exactly, does FOMO happen, or not happen?
That’s an uncharacteristically confident statement coming from you, Leo. Have you arrived at a place where you’re 100% sure you can predict where prices will go? I must have missed that.
Possibly true. Possibly untrue. We don’t know. We’ll see.
There are also other paradigms, such as the steady-state economy, that may eventually supplant what we have now.
There are also paradigms yet to be dreamed up that could do it.
Economic growth (per capita) is based on how productive individuals are. As productivity increases economic growth increases. As Leo implies most economic growth has in the past has been helped by increased resource usage. However we will find ways to produce more sustainable energy and at the same time become more efficient in resource/energy usage, which should continue to lead to productivity growth.
Economic growth does not necessarily mean resource usage growth. Those two are historically linked but don’t have to be
The second and third reasons made the jump more violent than it would have otherwise been but prices would have risen without them.
Even if humanity miraculously comes up with a way to remove all excess CO2 in the atomosphere, thereby “solving” global warming, humanity will still have to confront the ideology of endless economic growth, which is destroying almost every ecosystem on the planet to a greater or lesser degree.
Endless economic growth on a finite planet is a fairy tale.
Real price growth is what I mean – nominal is another matter. But that’s not a function of houses, that’s a function of the currency itself.
We don’t even fully know why the previous jump in prices happened. All we have are educated guesses.
In your judgment, price growth is very unlikely. But if it were so easy to predict real estate markets, then everybody would buy before a jump and sell before a crash.
Well that’s a nominal change as opposed to real prices.
The question I would have (heh, now that I’ve bought) is what difference that makes if you’re in. Inflation would devalue the existing debt, but whether your own wages increase to match is another matter – but perhaps more importantly, higher inflation means higher rates which would seem to offset the benefit of debt devaluation. Would it not?
FYI: Toronto’s New Airbnb Rules Will Return Thousands of Units to Housing Market
https://www.vice.com/en_ca/article/evj37m/toronto-airbnb-rules-will-return-thousands-of-units-to-housing-market
What you said sounds pretty good. Cana-zuela here we come! 🙂
Congrat’s on buying btw, I just clued-in that you did.
So yeah, if you believe there’s some sort of cycle in this chart I’ve posted before, the inflation drivers would be things like debt-monetization, competitive devaluation, demographics, decreasing temperatures, populism & war…
Sorry Leo, I didn’t think that chart would come in so big. I should’ve resized.
Prices for RE over the long term should increase with inflation and due to scarcity from population growth.
If people like @freedom_2008 get there way of depopulating the earth of people that have “life without quality”, then the RE market will collapse and good luck surviving in a world with not enough people to keep the economy going and moving our civilization forward. At least you could move into an abandoned house for free.
Okay – would you finally qualify this assertion with some actual analysis? Where do you think the price growth is going to come from? Wages? Interest rate drops? Devaluation of money?
If only there were some signs that last winter was the time to buy…
Hi Leo,
Just wondering how is the default avatar generated on this site (IP address based?)? And If I see two different poster names here with the same default avatar, can I assume they are from the same location/household? Thanks.
Victoria Teranet price index is up 4.2% since “the bottom” in March where it fell to -3.53% below the previous peak. That +4.2% Victoria rise is a $42k price difference on a $1m house, which if true means (on average) you’d have been better off to buy in March than today.
Interesting that Vancouver’s (mild) Teranet drop of -7% from peak has been been characterized here as a price correction (or worse), where Victoria’s price index rise of 4.2% in 7 months is described as “flat”.
Our resident bears who bought in October will at least be able to tell their grandkids “when I bought, prices were at the peak” (though I expect many more new peaks to come!)
Yea, no a lot of examples of marketing going flat and then tanking sans some sort of shock. Sales and prices have been stable +/- for 24 months so at this point I am thinking we are in for 1-5 years of a flat.
I won’t be doing any “maneuvers” that put me back in debt after I’m debt-free, even if the math says I’d be better off.
Financially, I guess I’m just a millennial who’s more of a throwback to my grandparents’ generation, a cohort that generally eschewed debt, saved diligently, and kept things fairly simple.
Teranet Victoria hits another all-time high, up 0.7% MOM for October. Vancouver down -7% from peak. https://housepriceindex.ca/2019/11/october2019/
Yup you could draw the trend line up steeper until end of 2018 and then flat after that as well. I’m not actually opposed to that interpretation either. Thing about trends is you don’t see what’s correct until after the fact and what jumps out at you from a chart is different depending on what timeframe you are looking at.
The reason I tend to favour the long slow slowdown theory (and so perhaps that trend jumps out at me) is because it matches our past patterns on affordability, where we have affordability improving for a number of years after a peak. So it would be unusual, historically speaking, for affordability to only improve for 1 or 2 years before getting worse again. Not to say it can’t happen, but it’s all a probability game.
In that case the rate may be the same with the addition of the fees required to take out a mortgage and any prepayment penalty. Many homeowners might find a HELOC an easier way to go if they don’t have a fully paid off mortgage or close to it.
https://www.ratehub.ca/cost-of-refinancing
Teranet out:
Vancouver’s index finally up in October:
In October the Teranet–National Bank National Composite House Price IndexTM began the fourth quarter with a dip of 0.1% from the month before. The final quarter of the year is typically slow for the index, and the monthly decline was in line with the average of the last 10 Octobers, in five of which the index retreated. In short, it is too soon to herald a downward trend on the national home resale market. Indeed, if seasonal pressure were removed (seasonal adjustment), October would have been the third consecutive month of an underlying uptrend.
Pulling the composite down on the month were retreats in the indexes for Edmonton (−1.0%), Winnipeg (−0.4%), Toronto (−0.2%), Hamilton (−0.2%), Calgary (−0.1%) and Montreal (−0.1%). Pulling it up were Quebec City (0.1%), Vancouver (0.2%), Ottawa-Gatineau (0.2%), Victoria (0.7%) and Halifax (1.3%). For Vancouver it was a first monthly rise in 15 months, consistent with a strong revival of home sales since August. For Ottawa-Gatineau, October was the seventh consecutive monthly rise, for a cumulative surge of 9.8%. Victoria has also had a good run, with gains in six of the last seven months. For Halifax it was the 10th advance in 12 months. For Toronto, on the other hand, October ended a run of six monthly rises. Same story for the five-month runs of Montreal and Winnipeg. According to the most recent data, however, the resale market remains balanced in Toronto and favourable to sellers in Montreal.
Despite October’s drop, the composite index has strengthened over the last six months after weakness in the previous six months, a history reflected in a cumulative gain of only 1.0% for the 12 months ending in October. That, however, amounts to a third consecutive acceleration. The 12-month change was braked by the three largest western markets – Vancouver (down 6.2% from a year earlier), Edmonton (−3.4%) and Calgary (−1.7%). The change from a year earlier was marginally upward for Winnipeg (0.3%), Victoria (0.7%) and Quebec City (1.0%), more firmly upward in Toronto (4.1%), Hamilton (4.5%), Montréal (6.0%), Ottawa-Gatineau (7.7%) and Halifax (8.3%).
Besides the Toronto and Hamilton indexes included in the composite index, indexes exist for the seven other urban areas of the Golden Horseshoe. In general the 12-month movement of these indexes has been roughly similar to those of Toronto and Hamilton, with recoveries beginning in the second quarter of the year after a period of weakness. All were up from a year earlier, some strongly: Oshawa 1.8%, Barrie 3.1%, Brantford 5.6%, Peterborough 6.8%, Guelph 6.8%, Kitchener 7.3% and St. Catharines 7.7%.
Indexes not included in the composite index also exist for seven markets outside the Golden Horseshoe. Of the two in B.C., Abbotsford-Mission has struggled over the last 12 months (−2.8%) while Kelowna (+2.2%) has been recovering for seven months. Of the five in Ontario, Windsor (9.8%) and London (9.1%) have done well over the whole 12 months, while the recovery of recent months has been spectacular in Thunder Bay (up 6.6% from a year earlier), Kingston (6.1%) and Sudbury (4.6%).
That Jan 2019 peak of SFH MOI at 8.2 that you call “Stress Test Shock” to me is just noise, because in that month, (on top of the usual winter seasonality), condo sales were flat and SFH took a big drop. You said so at the time ….January [2019] sales of “Condo sales remained relatively steady from December but sales of single family homes took a big dip, dropping to the lowest level since 2013.” https://househuntvictoria.ca/2019/01/31/january-mediocre-sales-condo-prices-stumble/
vreb.org charts sales/active listings and it doesn’t show a dramatic “stress test shock” peak like that, because it is measuring the entire market, not just SFH (see p. 20 https://www.vreb.org/media/attachments/view/doc/statsrelease2019_10/pdf/statsrelease2019_10.pdf ). sales/active listings looks very flat to me for last 12 months when seasonality is taken into account.
Anyway, time will tell if there is an ongoing slowdown or an ongoing recovery. I’m in the “recovery” camp. Thanks for the discussion.
Totoro, i’m not talking about using a HELCO, you can take out a mortgage against your house and use the funds to invest elsewhere.
With the Smith Maneuver, generally you’d be borrowing to invest in the market which gives you access to leverage you wouldn’t otherwise have and a tax deduction on the money borrowed while paying down your non-tax deductible mortgage. This makes financial sense imo.
Using an example, you may have a mortgage of 2.5% and a HELOC of 3.95%. If you sell your non-registered portfolio, pay down your mortgage, and borrow the same amount again using a HELOC you’ll be paying approx 2.765% in interest (after 30% tax deduction). This is higher than the 2.5% you are paying with your mortgage. Given that you normally borrow money to invest in property, and interest is normally tax deductible on this investment, there is not as much of an advantage when you buy a rental using this strategy as compared to buying stocks.
Agreed. To get there. not only we need less kids, we should also not prolong life that has no quality. Myself and my partner are prepared to do just that.
Not really. I do see the value in advocacy, but you do have to walk the walk.
Elon has a gargantuan carbon footprint because he flies his private jet around a lot but 99% of that travel is for his business so it’s a necessity to do what he does. Playing on a private super yacht is pure frivolity. Which he has the right to do and I don’t begrudge him that at all but you can’t expect to be taken seriously on the environment at the same time.
Wasting paper, or not, doesn’t move the needle in the grand scheme. Plus, I’m sure you buy 100% post-consumer recycled paper for the office, right?
But your point about Elon was that hypocrisy doesn’t matter if one is making a huge difference overall (that’s a very good point, and I agree with it). So our issue with DiCaprio is more that his public advocacy/donation-giving aren’t making a real difference overall.
Toronto, explain to me why you think paying off your mortgage and taking out another mortgage to invest would increase your rate?
To stop climate change?
Yup. Totally agree. If you’re going to preach about environmentalism and then play on a superyacht you can get stuffed. Those spokespeople probably do more harm than good because of the obvious hypocrisy.
I believe there was some talk about amending the strata act to specifically force stratas to allow owners to put in EV chargers if they pay the costs. Can’t find it right now though. Might be part of the CleanBC plan.
As you say, I often post the 12 month average as it’s another way to zoom out and see the bigger picture. The issue with it is that it doesn’t handle momentary spikes well like you can see in the chart above. A 12 month average during a spike will turn up (during the spike upwards) and then flatten out on the downward side. But when you have a temporary event that doesn’t really describe the market that well. 12 month averages are good at describing slowly changing markets but not so great at describing quickly changing ones. You can see the same thing during the financial crisis. The 12 month average did not properly describe what was happening during that violent time in the global markets.
The graph for the entire market (sfh+condo) looks the same as the one above I just often pull the data for single family only since that is seemingly what most are interested in.
My reference to “flat market” in the august post was to prices, not the market trend. Flat prices are to be expected (actually we should see prices rising at about the rate of inflation) at these MOI levels.
Problem is DiCrapio sets a bad example for everyone else. If Leonardo can’t give up this https://www.yachtcharterfleet.com/news/leonardo-dicaprio-throws-private-party-on-superyacht-topaz-2368.htm
Why would anyone give up anything? DiCrapio is going to tell me to do XYZ to help the environment while he burns more fossil fuel in the super yacth than I will in my lifetime.
I just had a strata corporation where I own a unit vote to ban using 120v outlets in the parkade to charge EVs. My suggestion was charge people $50 to $75 per month but nope they had to ban it.
Pretty much 98% of my sellers are like
“Please print off brochures and floorplans and drop them off.”
Me: “Everything is available online for buyers”
Seller: “No we still want print, you know people like something physical to remember the property by.”
Just saw a screening for this movie: Fantastic Fungi. https://youtu.be/bxABOiay6oA
Somewhat reassuring that if we all die off there will still be a global mycelium network around to digest us and get our ancestors high. Good movie.
You’re right they’re not exactly low impact and I hear you on the Dicaprio point. But better for the rich to spend money on low emissions stuff than high emissions stuff. Glad to see that at least Thunberg is walking the walk and not flying everywhere.
However it is more than just your personal footprint. Elon musk has an enormous carbon footprint personally but has probably done more to move the world towards a sustainable future than any other single person. So it doesn’t make sense that for someone to care about the environment or do net good they must always have a low personal footprint.
The equation is changing a little bit. Used to be that you couldn’t drive or heat a house or generate energy without burning fossil fuels so the only way to reduce emissions was to not do those things. Now you can. So there are more options even for those not living in some kind of clay eco hut within walking distance of everything.
I’m overall pretty hopeful we can pull it off. It will be solved by innovation and some well placed regulation though, not by mass deprivation.
Or just investing in RE with it. Paying off your mortgage and borrowing the money back adds points to your interest rate.
You could look into carbon offsets if you travel and don’t plan on cutting back.
Really? Doing what you can might include high impact low effort things like eating a plant-based diet.
This observation has really stuck with me:
https://www.theguardian.com/commentisfree/2019/apr/15/rebellion-prevent-ecological-apocalypse-civil-disobedience
I don’t think you will.
People driving EVs should give themselves a pat on the back. EVs are better from an emissions standpoint after just 1-5 years of driving them, depending on the size of the battery.
And if you’re heating your 3,000 square-foot house with electricity, that’s good.
I want the world’s population to decline. Earth, and life on it, doesn’t get better the more people that are on it.
That’s spot-on, patriotz. We don’t invest. One of our TFSAs is our emergency fund; it’s just a big chunk of money sitting in a “high”-interest savings account that we only touch in an emergency. We contribute to RRSPs only the amount dictated by our HBP repayment schedules.
Yes.
https://www.youtube.com/watch?v=7W33HRc1A6c&feature=youtu.be&list=RD7W33HRc1A6c&t=88
I would think the call of less kids is from global point of view, not just Canada.
Introvert probably has been deducting part of mortgage interest (and property tax, utilities, house insurance …) against his/her suite rental income for years already.
No change. Just put a > in front of the line.
Have less kids to reduce your environmental footprint?
I totally disagree.
^How do I quote with this new system?
Why not increase immigration? The world population is increasing at 82 million people per year. If we can attract 300,000-400,000 highly educated immigrants I don’t think there would be any issues by lowering requirements to well educated immigrants and attracting 800,000 immigrants/year.
No matter how you raise your enviro warrior child your child will still travel all over the world, buy a house, buy multiple vehicles, have multiple pets, etc.
Problem is everyone changes the narrative to what they want to hear. Everyone is so environmentally friendly but when it comes to things like accommodation god forbid one has to live in a condo as has been the narrative on this blog for the last 10+ years.
Everyone is the same as Leonard Di Crapio….lots of talk about the environment but let’s rent a 200′ super yacht for me and my 22 year old girlfriend.
I have nothing against people having SFHs, lots of children, travelling around the world, etc., and Leonardo with his 22 yr old girlfriends, that’s all nice in my opinion but don’t try to package all of that into some narrative of environmental footprint.
Live in a condo, adopt a kid from a third world country, drive an electric car or even better go car free, don’t have pet, and don’t travel…..then I’ll listen.
I went to a Tesla meet up at Hillside Mall in 2015, realised everyone was an idiot, and never went back to another. Just a bunch of social warriors patting themselves on the back for driving electric but the majority lived in 3,000+ sq/ft SFHs.
I do what I can (electric car, I try not to print crap for my listings until the seller complains, etc.,) but to claim I really give a rats ass about the environment when I travel internationally 2 to 3 times per year just wouldn’t make any sense.
My rant for the day.
Leo,
Great post. Though to be devils-advocate… to claim a continuing multi year “slowing trend” (upward trend -green dotted line- in MOI) for “the market”, one would expect to see a graph of MOI for “the market” (condos+SFH, not just SFH as you’ve charted ), and de-seasonalized data (via 12m average, not MOM). Fortunately, you done just that (August 2019) and if you look at it ( . https://househuntvictoria.ca/2019/08/03/flat-market-continues-to-be-flat/ ) there’s no sign of the “spike from the stress test” and MOI looks to have flattened at 4. (And it’s about 4 now too). That’s probably why you called that August topic “Flat market continues to be flat”, and I agree with that.
btw, love the new site, and fonts look fine now.
Very few people happen to have both a mortgage and taxable investments. In fact few people carrying large mortgages make full use of RRSP’s or TFSA’s. But hey, maybe somebody in that tiny cohort you’re talking about may be on the forum.
Introvert’s comments are always inspirational. I think it’s just you viewing them through your new “homeowner” lens. 🙂
See, I told you you could do it. Inspirational comment, thanks.
One of the unpleasant side effects that some people have with environmentalism is some kind of odd guilt for even existing in the first place, or worried that their children are thought of as holocaust denying, planet killing monsters that desperately need to be defended.
Don’t fall into that nonsense. Every living thing on this planet has a right to be here.
Besides, carbon footprint vs population replacement levels isn’t even the same argument. Modern humans create very large carbon footprints – being ultra green certainly helps, but the fact is the more humans there are on the planet, the more carbon footprint our species has. And whether Greta likes it or not our species’ energy needs are going to be growing, not falling – and with our current technology that means more emissions, not less. Probably a lot more.
A better use of time rather than hysteria, anger, defensiveness and guilt is to promote research into technologies that don’t rely on burning dead plants and animals for energy. It’s archaic, IMO. If you’ve ever heard of the Kardashev Scale, then you might suspect that where we are now as a Type Zero civilization is not only par for the course, but also among the most critical – do we make the transition to Type 1, or destroy ourselves? It’s a very interesting subject.
Over geologic time, the planet will ultimately do just fine with us or without us – the real threat here is us, to ourselves. But I digress, so that is all.
Introvert, mortgages are even more fun when you can deduct the interest! If you happen to have an investment portfolio you should consider the option of selling it and using the proceeds to payoff your mortgage then borrowing back to deduct the interest.
All right, folks. Here’s my mortgage renewal update.
I just signed up for my third straight 5-year fixed. This time, my rate is the lowest of all three, and 0.2% lower than my previous one. Rates have crept up slightly recently, so my rate hold from early September came in handy!
I would have gone with a variable this time, having learned a lot about variables on this blog. But the variable rate was substantially higher than the fixed, so the choice was easy.
We were fortunate enough to pay off a bitchload of principal during the previous 5-year term, which means that our payment is now half of what it was before. So we will do double-up payments at each payment, which will bring the amount we pay back up to what our regular payment was before. But, before, we were also doing double-up payments (on a higher payment), meaning that we were paying off the principal a lot faster per-payment before than we are able to now (because our payment got halved). To remedy this, we will have to take advantage of the 20% lump sum privilege every year.
In closing, I’m here to tell you that mortgages are kind of depressing at the beginning: you owe a lot, and it looks like each payment you make is doing diddly to reduce the principal (because it is). But mortgages are sure fun when you can see the end approaching, and each payment takes a real bite out of the now-not-so-big mountain.
Have less kids to reduce your environmental footprint?
I totally disagree. Canada’s birthrate isn’t even at replacement levels. If we’re to grow our economy (or even just keep it above water and exactly as is) we need population growth from somewhere. If it isn’t kids it’s immigration. Who’s going to take care of all of the boomers and the services they want into their elder years? Our kids.
I also think to the contrary, if you’re green and environmentally conscious yourself, having kids is one of the best things you can do for the planet. You can instill your green values into them, and challenge them to do better than you. I want to raise little earth warriors that will come home from school and teach me how to better recycle, reduce and re-use. I want my kids to grow up and be politically active too, and vote for representatives who put environment into the pay-attention category. Not having any children doesn’t carry the same impact as influencing a couple of your own spawn.
With a toddler I’m already changing habits like buying less packaged crap, sourcing in-season veggies, seeking out protein that’s got less of a carbon footprint. Less impulse buys of disposable items and more used shopping. We plan to bike more in the future to set a good example for fitness and commuting, and drive vs. fly for long trips etc. I honestly didn’t even consider some of this before having a kid but now it’s kind of like it matters more. Greta is telling me to fix the planet for future generations and as a parent it strikes a nerve.
Leo S, please bring back links to next and previous posts
Stop pumping the market Leo 🙂
I predict 580 based on gut feel.
Yeah estimates are always flaky based on a couple weeks of data, so I’m certainly not wedded to it.
Here’s how I get to 632. Sales right now are trending at 27% higher than Nov 19th last year on the basis of sales per business day. So 498+27% = 632
Another way might be to say that last year from Nov 19th to end of month we also had 2 full weeks of sales and gained 222 sales. Add 27% to that and we get 281 sales, ending the month at 603.
It’s all a bit of a crapshoot because of course sales do swing widely. And of course these are not actual sales, but reported sales which makes it even more susceptible to whether agents decide to upload transactions in those two weeks or delay until next month. Anything 550-630 is within the realm of possibility.
How are you projecting 632 sales? 322 + 120 + 120 = 562. I realize we had Remembrance Day but still.
Great article Leo! Would love to see an updated version of your trusty affordability graph, at some point. 🙂