The Rent Ratio as an Indicator for Condo Investments
If you read up on what makes a good rental investment, you’ll see a lot of rules of thumb on the Internet for evaluating the feasibility of rental property. Rent should be 1% or more of the purchase price (some say 2%!). Cap rate should be over 6%. Then you do those calculations on potential investments in Victoria and you realize that they are comically out of proportion with the market. If the 1% rule worked here, our median condo at $425,000 (that’s a 1 bed new condo or a 2 bed older unit) would have to rent for $4250/month. In reality an impeccable unit might get half that.
Does it mean that rental condos are never a good investment in Victoria? Clearly not, however because the cap rates are low, it means much of the historical return has come from appreciation rather than rental income. Because the cash returns are low, you’ll find a lot of people advocating condos even with negative cash flow because they think you’ll make it up in appreciation. To me though a rental has to stand alone and make sense entirely outside of any appreciation. If the return doesn’t make sense without speculating on future values I’d leave it. However as I’ve written before, the decision of when (and what) to buy usually comes down to a risk analysis which is highly individual, and the same holds for rental property.
But outside of calculating cap rates on property you are considering, how do you determine risk in the condo market? What you want to do is compare prices to fundamentals, but what are the fundamentals for a condo? Is $425,000 too much or too little? Affordability is a good measure of fundamentals, but another way is to compare the payment on a condo to prevailing rents. In the end, both condos and rental apartment fulfill the same need: a place to live. Rents, unlike condo prices, have the advantage that they are a reflection of true demand in the market. They are paid in cash so aren’t distorted by leverage, neither are they an investment so they aren’t distorted by speculation like the resale market is. The rent on a typical apartment reflects exactly how much people value living in Victoria. I wrote a longer piece on what’s going on in the rental market, but let’s compare it to the resale condo market. Here is the mortgage payment on the median condo vs average rents in Victoria.
Note that this isn’t an apples to apples comparison. The average condo sold is newer than the average rental, and this is the average rent of all units, not just the vacant ones so it trails market rents. However this doesn’t matter so much when we want to examine the relationship between them over time. The Rent Ratio, or the payment on a condo relative to average rent gives us a measure of risk in the condo market, whether you are looking for investment purposes or to live in.
In other words, how much more does it cost to buy an apartment instead of renting one?
There’s only three decades of data, but in that period the ratio moves in more of a defined range which is what you want in an indicator. When it’s high, there is more risk in the condo market because you are paying a large premium compared to prevailing rents. When it’s low, rents are getting close to the cost of buying a condo and your cap rate will be higher. The double whammy with a low rent ratio is that the market is also very likely poised for a jump in price.
You might be surprised to see that despite the runup in condo prices in recent years (up 50% in 5 years), the rent ratio is not that high, historically speaking. In fact it’s pretty much exactly middle of the road. Looking back at 2008 the case for a condo as an investment (or an alternative to renting) was much worse than it is now. So right now I would evaluate risk as relatively low still. Prices are up, but demand (as measured by rents) is also up, which provides a floor under prices that is unlikely to give way outside of a major downturn in the economy (always the wildcard).
Also weekly numbers, courtesy of the VREB.
| February 2020 |
Feb
2019
|
||||
|---|---|---|---|---|---|
| Wk 1 | Wk 2 | Wk 3 | Wk 4 | ||
| Sales | 154 | 421 | |||
| New Listings | 293 | 757 | |||
| Active Listings | 1970 | 2131 | |||
| Sales to New Listings | 53% | 56% | |||
| Sales Projection | — | ||||
| Months of Inventory | 5.1 | ||||
Pretty strong week to start the month, with sales ahead 22% from the same week last year, and a 5% decrease in active listings. About one in five places are going over ask, which is nearly twice the rate as this time last year. Looks like it will be quite an active spring in the market.
They are all different animals that each must be treated differently, therefore sharing is not allow.
New post: https://househuntvictoria.ca/2020/02/18/whats-really-going-on-in-the-victoria-economy/
I meant in the bathroom there is a shared trap for the floor drain and a shower. In the laundry there is a shared trap between a floor drain and the laundry stack etc. Can’t tell if that is what they were insinuating with the code points.
Lead the way, we are in line right behind you.
Personally I totally want to go back to a government that pillages ICBC and BC Hydro to “balance” the budget
It is weird how everyone in BC was singing Kumbaya till 2017 and now they are marching with pitchforks
The operative words are “all floor drains must be in the same room” to share a trap. And, shower drain is not the same as floor drain that is in a shower room.
I’m sorry I was being facticious. So there isn’t a need to talk to the inspector. A stack of floor drains are not in the same room, so it is a no go for a single trap, therefore each floor drain will need a trap with a mean of sealing (serve by trap primer).
Since we’re beating an almost dead horse…
7.4.2.1(1)(C) Where acceptable, a floor drain may be connected to a storm drainage system, provided it is located where it can receive only clear water waste or storm water.
7.4.5.2(2) A floor drain that drains to a storm drainage system shall be protected by a trap which:
(a) is located between the floor drain and a leader, storm building drain, or storm building sewer;
(b) may serve all floor drains located in the same room;
(c) need not be protected by a vent
And I think the solution for bathrooms and possibly laundry rooms may be to share a trap:
7.4.5.1(3) One trap may serve a group of floor drains or shower drains, a group of washing machines or a group of laboratory sinks if the fixtures:
(a) are in the same room;
(b) are not located where they can receive food or other organic matter.
I’ll ask my plumbing inspector next time I see him.
“ It would be a lot harder (now) than it was to get ahead in the world the way it was when I came up. My best advice, I think you would be happier if you reduced your expectations.” – Charlie Munger, Warren Buffett’s right hand man at the age of 96
The star apartment in Langford is just over 50% full – a friend checked it out last week and he asked that question specifically. They told him they expect it filled over the next few months – take that for what you will.
It is like speeding. We are not breaking the law untill we are caught or cause an accident.
Many residents run a pipe to the floor drain with an air gap from their hw tank/boiler/heat pump. However, that practice is breaking plumbing code, because code indicated that anything such as boiler/heatpump/etc… must drain into a drain that is service by a wet trap or one that is served by a trap primer. However, IMO the hw tank drain with air gap is a gray area (like jay walking), because hw tank leak can be classified as an emergency that doesn’t happen on a regular basis (but this argument will not fly with plumbing inspector).
I replaced my hot water tank 18 months ago. There is a floor drain right by it and I believe (can’t remember exactly) that there was a type of connector from the tank to the drain. The plumber said that the new tank could not have that as it was against the code. So the new one doesn’t have the connector at the bottom of the tank. The house must have been built with the drain in place though and it is only about 15 yrs old.
Crawl space/basement floor drains (emergency drain) are often connect to nothing/dirt/sand under the craw space/basement slab , or drain into a sump pit that have mechanical means to lift the water into sewer drain that is protected by check valve/s. Otherwise, it must be protected by strap primers, as per plumbing code requirement. And, it is only allowed to convey clear water. The rest of the drain/s are not consider as clear water conveyer or for emergency use.
Why wouldn’t an emergency drain of this type be considered the same as the emergency drain from the hot water tank pan? In my place, the hwt drain is positioned, with an air gap, over a floor drain in the low point of the crawl space. No primer.
That is a complete red herring. I was questioning the statement you made as a tradesperson (I presume) that floor drains were not practical for North American condos or residences in the bathrooms as people would not be able to manage the priming required for the trap. Millions seem to manage this situation fine so I would consider putting one in in our cottage bathroom that we are finishing currently unless I am missing something.
So in this particular situation my dad is a smart hard working individual, but not computer literate. He will spend 60+ hours a week on a construction site making sure everything is done right. Has never had a warranty claim on any of his houses. 15 years ago he was able to take care of the paperwork, now he isn’t so I deal with all of that. I think 15 years ago he maybe had 5-6 documents (blueprints, permit, survey, and a couple of other things). Right now in my OneDrive I have a file called “Current Version Working Documents” for one house we are building in Colwood (entry level, $749,900) and there are literally 27 PDF documents in that folder. Colwood wanted a $1,000 landscaping plan…super useful PDF….wtf.
Two of my dad’s friends that were capable smaller builders just stopped building in the last few years. Couldn’t keep up with all the non-sense. Then people complain about why construction costs have doubled…..you have more paper pushers than people swinging hammers.
There is so many people working desk jobs, myself included, I sometimes wonder how the economy actually sustains itself.
I was renting a luxury condo at Bayview for 3+ years for a ridiculous $1,350 (strata fees alone $400 for landlord) but when I started travelling I needed more security of owning….imagine if you had a 6 week trip planned and the landlord gives you legal two months’ notice just before you leave. No thanks.
Also, a lot of landlord are super deceptive. They tell the tenant they don’t plan on selling for years and then they put the home up on market six months’ later. Always a super fun situation for me as the listing agent dealing with a grumpy tenant.
i/ Only when an offer goes unconditional is it reported as pending.
ii/ There is a section for realtors called M2M (member to member) notes and realtors are split 50/50 on whether to post accepted offers in this section. I am in the 50% that is for NOT posting an accepted offer in this section. My thoughts on this are I am working for the seller trying to sell a place and I rather other realtors contact me about the showing/property versus skipping over it because there is an accepted offer. That way if the offer collapses which is does 20 to 25% of the time I have a list of realtors to contact. If they skip over the accepted offer listings and then the offer collapses I have no way of figuring out who may have been interested.
iii/ Re open house….same thing happened to be this weekend. I had an open house booked for a week Saturday at 1 pm and we accepted an offer Friday night. Do you run the open house or do you cancel it and have people showing up and being pissed? People are already pissed off as is I show up at 1:01 pm. I decided to run the open house, plus 20 to 25% chance it comes back to market.
What actually is the maintenance involved with a floor drain? Pour a bit of water in it from time to time….and if you don’t you might smell some gases and then you pour the water. My condo in Croatia the strata has the radiators, fire suppression and the heat pump services on a yearly basis but I don’t see anything about floor drains.
Nothing stopping you from building your own resident with floor drains with trap primers. But, if you have want to change the code and construction/engineering practice then you can always take it up with the International Association of Plumbing and Mechanical Officials (IAPMO), Uniform Plumbing Code (UPC) organization, National Plumbing Code of Canada (NPC) commission, and BC Plumbing Code (BCPC) organization.
The operative words are “shall be installed in basement”.
I’m not interested and I didn’t make the assertion, but I do know that the one bedrooms/with dens are occupied mostly, I think this is the only vacancy, as the Danbrook tenants took them all as they are also pet friendly. There are no other advertised units. The rental market might be easier in Langford than Victoria though.
It is just confusing for me that thousands (likely millions) of people have floor drains in condos and houses in Australia, Asia and Europe and get by just fine, and they are already required in public laundry, boiler and mechanical rooms, and residential basements where possible, but they won’t work in North American residences otherwise? Seems like this is something that could be used here somehow to reduce the potential damage from water.
BC building Code Requirements
9.31.4.3.(1):
Where gravity drainage to a sewer, drainage ditch or dry well is possible, a floor drain shall be installed in a basement forming part of a dwelling unit.
Mechanical trap seals doesn’t work, same go for waterless urinals, and waterless toilets.
Maybe you can give them a call if you are interested in the place, but as of yesterday when I drove past the place it seems as if only a small number of units were occupied (majority of the units are empty and didn’t have furniture), and the giant for rent banners are still up.
Went to a busy open house at 2316 Sooke Rd yesterday and was informed upon entry they had an accepted offer in place and were just looking for back up offers, it’s been listed for 2 days. Are they not supposed to include this in the listing? Felt like a total waste of our time as it was already slightly over our budget, and I assume an accepted offer on the first day is either at or above list price? Our realtor said there wasn’t anything in the notes section.
This happened to us last year too, at a couple of open houses. Were informed that there was an accepted offer when we arrived. Is there any penalty for the listing agent if they don’t update the listing/PCS? And how do we as buyers find out about accepted offers in place… Ask our realtor to call ahead on each and every open house we attend?
Maybe it is impossible for renters to have a dog, but it doesn’t seem to be impossible for the homeless who really need to have affordable housing to have pet/s.
Thanks for the info on landlords use of property. We’re pretty sure our situation is being done above board but will definitely watch to see if our current home goes up for sale or rent after we’re kicked out.
I’m still quite sour about this and will be for a while. The 2m notice is the law, but for us it’s just the worst amount of notice to leave because we were hoping to buy this year. There are hardly any listings in our price bracket yet as it’s Feb, and no way we’ll find something that closes before we have to move now. So we’ll have to pack and move into a rental (and find one) and move again when we buy if we buy. Now considering shelving buying until 2021 because it’ll be less bonkers to find a 12m lease rental than feel pressured to buy now, and have to bridge the gap between the two places with a short term rental or living with friends.
IMO halt the buying/selling and caused luxury price to drop is not a good tool in the tool box, because it caused sort fall in tax revenue (property transfer tax) that could be collected from people who can afford to pay them. It would make more sense to vote in a government that know how to balance a budget, one that promote unification instead of divide the populous, promote economic growth instead of looking for way to spend money and tax people to death.
Not saying that there is not an impact, but doesn’t it make more sense to focus on high impact environmental measures if you want to promote change rather than lower impact measures that people will have a really hard time adopting? Owning a smaller home, eating less meat, or driving less would offset the choice to own a cat or dog. Having fewer children has the biggest impact.
I don’t think they are having trouble. The link you provided was to an expired listing for moving in in December 2019 and signing a year lease. The Star was only available for occupancy in December 2019 as it is a new build and they were offering this as an incentive for the lease. They no longer advertise this. Currently there is one unit advertised – 564 square feet for 1368/month: https://www.usedvictoria.com/classified-ad/MOVE-IN-READY_35235498
Not my field and you likely know this already but:
I thought it was almost impossible for renters to have a dog in the first place. Maybe the people with the $2K/year dogs are the ones on the winning side of the RE market?
Nice chart, but I think residential construction except for some high-rise projects is non-union.
You are running a business. Deal with your obligations, or hire someone to do so, or get out.
Patrick said: “tell me a way that housing is better in Victoria”
We have both already agreed that runaway luxury Vancouver prices have retreated significantly. So, the NDP has already been effective, in only 3 years,.in the biggest BC market. How is it that you can pretend that is not a good result? That alone is worth voting them back in. Let’s see what they can do if they have another 4, 8, 12 years.
Meanwhile, tell me a way that Victoria would be better by going back to the BC Liberal policies that had so many years to get us to where we were in 2017. For you to expect a miracle cleanup of that mess in 3 years is beyond ridiculous.
The Star website indicated that their 1br is $1375 to $1650, and 1br + den is $1625 to $1698.
Be Bold, Be Curious, Be Essential!
Interestingly enough, wages nearly identical in major cities in BC, Alberta, Sask. Lower out east, highest in Toronto
$1,650 for a one bedroom in Langford?
Also, seems like most market rental units are condos. I haven’t anyone do a townhome rental complex that I can think of, for example.
When you do a bit of travelling you realize how ridiculous housing expectations here are.
Spent a lot of time as a teenager with my grandfather in Croatia on his farm milking cows and herding sheep, and I love animals but pets in North America (over 100 million dogs alone)…don’t get me started. Love how everyone is all of a sudden pro-environment but how do people think their pet food arrives? Ohhh yea, by truck.
As I’ve said before everyone is pro-affordable housing, pro-environment, pro-this, pro-that but as long as does not inconvenience them one bit.
I’ll bring up the example for the 100th time but love how people complain about real estate affordability but somehow, they can afford a $2k/year dog. As noted, likely more resources than families in many parts of the world.
I wonder if there’s a bit of a rental supply mismatch. Tons of rental completions in Langford but most people are wanting to rent in downtown or close to the University instead.
Perhaps money is flowing into rentals, but places such as the Star on 1085 Goldstream Avenue still having trouble looking for tenants even after offering first month free rent.
https://www.usedvictoria.com/classified-ad/The-Star-on-Goldstream-Open-House_34851778
I’m sorry but there are no such thing as self priming floor drains as it required regular water flow, because regular water flow on your floor is something that you don’t want to see.
You hit the nail on the head there. The average Canadian don’t want to live in an average UK hovel at 732 sqf, and stride to get that average SFH McMansion at 2077 sqf to house our precious pet/s . And, the pet alone consume more resource than an entire African family.
Many houses on the islands surround Vancouver island reuse gray water and cistern to conserve water, because of the lack of water such as Australia.
Water is not a concern on Vancouver Island at the moment, and the BC government offices lead the way. Many of the BC government old buildings/offices each have a 3/4″ pipe that draining treated water full bore, 24/7, year round, because they are us it for their HVAC (both for heating in the winter, and cooling in the summer).
I got briefly confused where it said I could upload forms at the end. It didn’t say what those forms were and whether they were necessary so I didn’t. Could have been clearer.
I think one of the reasons is that they have the declaration tied to the SSN and address / name. More data for future cross-check purposes, possibly tied to the money laundering end.
Also home owner grant is only a few hundred so not getting it is not the same magnitude as paying 2% of your home’s value every year.
A few ways I have noticed:
The biggest factor in slowing the market was the stress test, which is national level of course.
B.C.’s population grew by 70,000 last year — https://vancouversun.com/news/local-news/b-c-s-population-grew-by-70000-last-year
I don’t know how many new residents or rental stock were added in the fiscal year of 2018/2019, but the additional 3287+ population growth just in part of the CRD (Langford, Colwood, View Royal, and Sooke) must put a strain on vacancy rate and price.
Seems clear that your entire arguments is to blame the Libs, as you do with this “clean up the mess” analogy. That’s getting old, the election was May 2017, it’s time for the NDP to stop acting like the opposition party and start taking responsibility.
But anyway, I’ve asked you twice to tell me a way that housing is better in Victoria, and you’ve come up with nothing. So I assume you don’t think it’s better, and I’ll leave it at that. Thanks for the discussion.
Patrick said:
“I still see high prices, low inventory and low rental vacancies. Am I wrong?”
You’ve only cleaned up the corner of one room in your place in 3 mins, after I spent 20 minutes trashing it?? I can point at all the other parts of your place that you haven’t had any cleaning effect on, in your 3 minutes.
Obviously this ridiculous “cleaning up the mess’ idea of yours does not help anything, and you’re better off allowing me to continue taking a sledgehammer to everything. Right!
If you use a computer on a regular basis, yes. My parents got stuck tonight. When you have multiple properties there are tabs at the top you have to go through and if you only fill out one and click “next” the error message doesn’t tell you the exact reason you can’t go next. They didn’t see the tab for the other property and couldn’t go forward.
I don’t understand why this couldn’t be tied to the deceleration on the home owner grant.
Well if it’s better, you should be able to tell me how finding affordable housing is better for a young family with a modest income looking now for a home in Victoria. I still see high prices, low inventory and low rental vacancies. Am I wrong?
Patrick said: “So far, the only significant numbers people point to have been some reduction in high end Vancouver houses “.
Oh, so by “some reduction” you mean the 25 percent drop in sale prices for multi-million dollar homes in the last two years, in a large core BC real estate segment. “Some reduction “, indeed! (No, you’re not biased at all!)
Here’s something a very ill patient would never say to the doctor: “Hey doc, the beginning of your treatment so far has only resulted in one hugely vital part of me (Vancouver West) going into remission!! I know the full treatment involves a cocktail of solutions over a long period of time, but since after only a couple of drugs I’m only partially in remission I demand to return to previous guy, Dr. BC Liberal, who spent nearly 20 years deliberately giving me cancer in the first place!”
You have got to be kidding with your “it is no better than under the BC Liberals” stance. The BC Liberals spent 20 years encouraging things to get to this crapshow in the first place, and *now” you are so “genuininely concerned” because the NDP has only begun to clean up the mess after only 3 years. That’s just weak.
Tell you what, let’s do an experiment. I’ll be the Liberals. Give me 20 minutes to trash your place (the real estate market). Then I’ll give you (NDP) exactly 3 minutes to clean up the mess. If you can only make a start at the cleaning on 3 minutes, according to you then you’re not better off then when I was trashing your place. Ergo I shall be allowed to keep trashing your place after your 3 minutes. See, your logic makes perfect sense!
Yes, for some that would be a reason.
But now that we’ve seen the tiny numbers of declared spec tax houses (900 total in Greater Victoria, less than 1% of stock), the case that this tax will move the needle to lower prices or more quality rentals has evaporated. We now have lower vacancy and lower inventory, and need some better idea than spec tax to solve that.
All that remains from the spec tax is an even tinier revenue source for the govt (spec tax raises a negligible 1/400 of their entire budget) . It would have been forgotten except for the governments idiotic move to remind everyone about it each year by forcing 1.6m homeowners to re-declare “negative billing option”. I don’t expect them (or any other government) to repeat that idea.
May I suggest that they oppose the tax because they think they will pay – in the form of a lower selling price for their property.
“Not suggesting that your landlord is the type of person to do this, but just be aware if they evict you under the pretense of moving in (they must move in for at least 6 months) and then rent to new tenants instead, they probably owe you 12 months’ rent as compensation…so my advice would be to keep an eye on things afterwards, unless you completely trust them.”
Excellent advice Dad. Before we bought our place our landlord tried to evict us for landlord use of property. Turned out they were trying to move in their grandson which does not fall under landlord use of property (must be a child or parent – does not include siblings, grandchildren, grandparents, aunts, uncles). We disputed it and won. This destroyed our relationship with our landlord who managed to blame us (somehow) for the incident. How they squared that in their head I’ll never know. However, this let us hang onto our inexpensive rental unit and keep banking cash until we could make the jump to home ownership.
Cadborosaurus, firstly, congrats!! Secondly, you’ve probably already looked here but just in case, very clear information on the subject here:
https://www2.gov.bc.ca/gov/content/housing-tenancy/residential-tenancies/ending-a-tenancy/landlord-notice/two-month-notice
I think people expect the BC govt to actually make tangible progress in solving the housing problem. Not sufficient to say “we care and we are trying” (like the Libs said), I think people have waited a long time and want results. This is measured by actual data, such as more available rentals (measured by rising vacancy rate), or larger inventory of low cost housing. So far, the only significant numbers people point to have been some reduction in high end Vancouver houses – and I don’t see how that benefits the low end of the housing market at all.
We are told here that the low end of the market is tighter than ever, with lowered Victoria vacancy rate and price pressures and low inventory on the lower end homes. And predicted price increases on the horizon. How are voters who care about affordable housing supposed to score the govt on that?
For some young family with a modest income, looking for a home in Victoria, are things better for housing now then they were with the Libs?
Dad said: “Agreed. With numbers like that, it is the opposition party that should be taking note”
The vast majority of policy decisions that government makes every single day have much, much, tighter voter approval splits than 76/24.
What government on their right mind would say, ” Hey let’s kill a popular policy that 3+ out of 4 voters likes, AND that also generates tax revenue!”
Most taxation policies probably have at least a 26 percent disapproval rate. That the spec tax has so much approval makes it a superstar among all policies, and especially among tax policies
“At 75 percent approval across the province, it’s a popular policy, a slam dunk, a no-brainer…”
Agreed. With numbers like that, it is the opposition party that should be taking note.
Patrick said: “That’s a big number, of people opposed to a tax that they don’t even have to pay”
The number that really matters to the politicians is the percentage of voters who approve of the spec tax. At 76 percent approval across the province, it’s a popular policy, a slam dunk, a no-brainer, a (add your own expression here).
If we asked the government to change a policy because 24 percent don’t like it but 76 percent do like it, why should they do anything other than laugh at us?
I’m happy to not only explain that 76% support for the spec tax (mentioned in your article), but also explain why I consider that number to be embarrassingly low for the govt., and that my position is quite common.
Most people (myself included) are in general in favour of any tax that they don’t have to pay, since it will shift the tax burden to others. That’s normal human nature. Or as George Bernard Shaw said “if you rob Peter to pay Paul, you’ll have the support of Paul”. (In this example, “Peter” is the foreigners/satellite families/ROC that pay 90% of the spec tax, and “Paul” is the BC taxpayers who get off the hook for paying taxes to fund affordable housing )
But my position on the spec tax is a little different… I don’t have to pay spec tax, but I’m against it. You seem to think this position is rare amongst the public. I’ll now show you, using your numbers how it is actually a common position, at least 24% of people have the same position.
The BC govt has proudly pointed out that 99% BCers don’t have to pay spec tax.
Combine that with the 76% number that are in favour of it, and you see that must leave at least 99-76= 23% that are like me (Patrick) in that they don’t have to pay it but are opposed to the tax. That’s a big number of people opposed to a tax that they don’t even have to pay.
Cadboro,
Congrats on the baby. Sorry to hear that about the eviction, coming at the worst time. I hope you find something soon.
Congratulations on the baby Cadborosaurus.
Not suggesting that your landlord is the type of person to do this, but just be aware if they evict you under the pretense of moving in (they must move in for at least 6 months) and then rent to new tenants instead, they probably owe you 12 months’ rent as compensation…so my advice would be to keep an eye on things afterwards, unless you completely trust them.
“What’s the average time between making an offer and occupancy? Friends are telling me even if we bought right away, the closing date may still be after our moving date?”
We put a one month possession date in our first offer which was countered at three months which we eventually accepted.
It really depends on the circumstances though. If the place is occupied and the seller is going to be looking for a place to buy, they are probably going to want a longer window. If the place is empty and the person is just trying to unload it, or it’s a new build, then immediate possession may be possible.
“…simply envy/jealousy and a desire/expectation for the rich to pay instead of them.”
Triggered! I was just making a joke Patrick.
I am not demonizing the rich. I do think they should pay for the privilege of holding residential property in vacant possession when there is a housing shortage though…or ya know, rent their vacant properties out and not pay.
Patrick said: “the real reason some people here support the spec tax. Not related to affordable housing – but simply envy/jealousy”
Now that’s just silly. That’s like saying that people who don’t like Trump just envy him (while you ignore that it’s his policies/actions that people don’t like).
I’m a homeowner, and I approve of the speculation tax. How do you explain me? And then how do you explain that a poll last month found that “more than three quarters of B.C. residents are in favour of various housing taxes meant to address speculation” https://bc.ctvnews.ca/over-75-of-b-c-residents-in-favour-of-housing-taxes-poll-finds-1.4758979
Why would so many homeowners be okay with the spec. tax despite it possibly lowering home values? A few thoughts off the top of my head:
A. They empathize for their children, nieces, nephews, children of friends, or any local people (whether children or not!), who will otherwise not have the chances that the homeowners once had, and be forced to move elsewhere, buy a small place (which affects the kind of family they can raise), or possibly rent indeterminately, and related financial hardships.
B. They plan for the sale of their home (in the distant future) to in large part be directed towards the purchase of another home (e.g. a bigger home for themselves, or an equivalent home to pass off to one or more children). So, if eventual sale proceeds will just move horizontally to another property, not so important what that value ends up being (unless they like carrying a big line of credit on their home)
C. (Less likely considered) They realize that for every dollar that isn’t set aside to pay mortgage interest, that is money that likely will be circulated in the local economy, producing more tax revenue, helping us all.
Etc, etc
Happy new year HHV! had a baby in January so stepped away from the board for a bit to focus on him. Was just getting back into looking at my PCS this week and then…
Landlord served us papers that their family is going to use our house and we are booted end of April! Its always been in the back of my mind that our housing isn’t guaranteed but getting notice when you have a newborn is deflating. Trying to be positive, our place is too small for us anyways but the rent is affordable and I really wanted to move on our own terms. Looking at buying and or renting again, haven’t moved since having children so it’s a whole new situation now.
Questions I can think of right now…
What’s the average time between making an offer and occupancy? Friends are telling me even if we bought right away, the closing date may still be after our moving date?
For those with rentals where do you advertise these days? I haven’t had to move in 8 years.
Other than emailing my broker for an updated pre-approval, and emailing my realtor to tell them what’s up, what else needs immediacy? It’s odd having 2m notice because it feels like not enough time to buy, and too much time to look for a rental as may 1 availability would be advertised April 1 I’m thinking?
Also shameless self-plug, if you’ve got a house you’re thinking of selling to a fabulous family of 4 we are seeking a 3bed 2bath <500k, or 3bed 2bath plus suite <600k probably in Langford area. Will update these numbers after I hear from broker. No stratas.
If you have a short term rental (3 – 6m) we're probably going to be looking for one. No smoking / no pets just friendly Cadborosaurs with jobs and references.
A sad but typical statement, revealing the real reason some people here support the spec tax. Not related to affordable housing – but simply envy/jealousy and a desire/expectation for the rich to pay instead of them. Nothing wrong with that. But then these “rich” people with the spec tax homes who are paying these extra taxes should be thanked, not demonized.
Just filled out my first spec tax form! Easiest thing ever. Don’t know how anyone is possibly complaining about this process. If you can’t manage to do this I don’t know how you’re properly taking care of anything as a home owner.
Since 2017 Ontario has had a similar FBT to BC for the extended Toronto area. Quebec doesn’t and I have read some reports that foreign buying is up, although still quite small.
https://www.thestar.com/business/real_estate/2018/04/25/foreign-buyers-dwindle-after-ontario-launches-real-estate-tax.html
Patrick said: “And so the bears present us with their latest invisible bogeymen theory”
Oh,the money laundering offshore buyers do exist. Just the other day a legal expert was telling me about one they are suing in court right now. And there has been enough BC reporting on the general topic for the last few years that there should be no doubt in anybody’s mind.
I think it’s just a question of whether or not the money launderers have made a noticeable difference to the market.
Personally I thought the offshore non-resident buyers in general are a bigger factor, regardless of when their money is legit or not. The Vancouver downturn which has coincided with introduction of foreign buyer tax, etc would seem to indicate they were/are making a difference. Higher end Vancouver market has suffered a lot.
/ Wondering if much of that offshore money is going to Toronto/Montreal now, instead.
“And so the bears present us with their latest invisible bogeymen theory …. people who haven’t filed their spec tax declarations on time! Yes! – we‘ve finally found the money launderers!“
Hey, it’s no more far fetched than your “it’s just too hard to fill out” explanation. Cmon dude.
“That’s too tight a deadline for some people who are away etc.“
Surely they could just get the butler to do it.
And so the bears present us with their latest invisible bogeymen theory …. people who haven’t filed their spec tax declarations on time! Yes! – we‘ve finally found the money launderers! They’re property-tax paying name-registered homeowners, but also money-laundering criminals, who are just too terrified to file their spec tax declarations. And if we can only prosecute them, somehow the Bears buy-in price for a home will fall.
If the CRA process was to fill out your tax return online in real time on a web page, with no ability to see the whole return at once , or you could just phone a 1-800 number that was busy most of the time, I would object to it too. But it isnt. They have printable forms, and the process is transparent. You can send in taxes by mail or online in a much more secure manner. Why isn’t there a printable form anywhere for the spec tax so people can study the whole thing?
So that’s why I only object to the spec tax process, not the Municipal, BC govt provincial taxes or the CRA. The municipal, CRA/BC provincial taxes allows me to print/fill out the forms, and my accountant can prepare and review them with me offline secure and at our leisure. I can see all the questions they are asking, and don’t have to fill out my tax return online one question at a time like the spec tax form.
Keep in mind that my point was in rebuttal to you claiming that the spec tax is a simple 5 minute process. For many non computer savvy people, or people it is not so simple. And apparently I’m not the only one having problems – 32K people didn’t manage to complete this Spec tax declaration process on time last year, and I predict it will be worse this year. That is made worse by the govt only sending forms Feb 18 that must be submitted by March 31. That’s too tight a deadline for some people who are away etc.
I didn’t do this – it was what the inspector recommended. It was SFH, so no idea about condos.
…said people who know nothing about mass timber…
“And then ask yourself why the BC govt needs you to tell them all this same information year after year…”
Do you also object to providing this information to the CRA every year, or just the bc government?
5 minutes!….Well that’s impressive. But you’re happily, quickly and unconditionally sharing vital information online about yourself and your co-owner wife, (social insurance number, DOB, address, phone, email). Sharing it with the govt is fine, but this info is also a one-stop shopping list, in the wrong hands like an identity fraud scammer, that could turn your lives into a living hell. Especially the SIN, which you’re supposed to guard very carefully. So I’d hope that you were starting off from a point where you were 100% certain that you’re only going to share it with the govt:
But yes, I expect you are certain of those points above, due to prior diligence and time spent, and that’s why it took you 5 minutes. Kudos to you. But can you also understand how other people might be less confident in their abilities to separate a scam from a legit government letter/website URL, and how to make sure their PCs and networks are secure and virus free so they can be confidentially typing in their social insurance numbers and other personal information on web pages.
For example, there are thousands of Canadians that fall for the fake phone calls and text messages about taxes owing or cancelled SIN numbers and get scammed out of money or their identity data. So can you see how many people are more cautious than you and take more than 5 minutes to spill all that information to some web page a letter told them to visit?
And then ask yourself why the BC govt needs you to tell them all this same information year after year, when this is a tax that doesn’t apply to you at all?
If you think the rapid escalation of property insurance for concrete and steel high rises is alarming, then wait until you see what insurance companies will charge for the mass timber tinder boxes. Also, imagine the consequences of 12 story “leaky condos” —- not just leaky from broken pipes or rain water, but harken back a few days ago to Marko’s photo of water damage from dryer venting in ceilings.
Mass timber of today will likely be the leaky condos of tomorrow and maybe uninsurable.
My guess is that many of the non-reporters have reason not to supply information that can be used for tax enforcement (i.e. they are cheating or money laundering, etc.) and would rather pay the spec tax as the price for not supplying it.
There have been articles in the media pointing out that the spec tax info collected will be of great value in tax enforcement.
“I’m very exited about the ramp up of mass timber structures. Two projects underway in Victoria and many more to come.”
Me too. I was pretty stoked to see that a mass timber design ended up being approved for speed ave. About time that site was developed.
“The govt had problems last year with large numbers of people not even filling out the declarations, so they should have made it much simpler this year, but didn’t.“
It took me 5 minutes to fill out. You probably spent 20 minutes writing your latest anti spec tax screed. We know you’re triggered by the spec tax Patrick, but I have my doubts that non compliance is the result of people too lazy to take 5 minutes out of their day to fill in a basic form. And if it is, I certainly have no sympathy for them.
I’d never live in a skyscraper made of wood. Noise would be horrible, and I don’t like the idea of living in a giant tube of kindling. I don’t care how much they tout the efficacy of the sprinkler system.
At least it would be a more impressive sight when it becomes a raging bonfire…
I’m very exited about the ramp up of mass timber structures. Two projects underway in Victoria and many more to come. The Vancouver based Intelligent City (modular, highly automated, passive, mass timber) recently won the breakthrough energy solutions funding https://www.nrcan.gc.ca/science-data/funding-opportunities/funding-grants-incentives/energy-innovation-program/breakthrough-energy-solutions-ca/breakthrough-energy-solutions-canada-finalists/22522
Has the wooden skyscraper revolution finally arrived?
https://www.cnn.com/style/article/wooden-skyscraper-revolution-timber/index.html
I don’t understand why this would not work. All condos I’ve seen in Asia had this and it makes cleaning easy too. All bathrooms in Australia also have floor drains. Can’t be so difficult to do given that there are self-priming drains?
There are a bunch of things in North America that could be improved based on international comparisons – and vice-versa. For example, I was buying some things at the store yesterday and the clerk had a cold. She was sniffing and even used her hand to wipe her nose as she processed my transaction. In many parts of Asia any person with a cold is wearing a light face mask to prevent them from spreading the illness when out in public, and this is just part of common courtesy and a cultural norm for at least 50 years.
On the housing front, energy efficiency has only recently been a focus for Canadian homes. In many areas of the world energy costs are much higher and, as result, you don’t find central heating, instead you only heat the room(s) you are using. In addition, there are some things that just make no sense going forward in an era of increasing water shortages. Why are we flushing our toilets with treated drinking water? Why combine gray and black water? Why don’t most new houses have a grey water system and use it to water their landscaping and flush their toilets? Why does grass requiring extra watering and maintenance continue to be a standard landscaping mode?
Many of you can probably remember when recycling and composting were not a municipal option – everything went into one garbage can. If we can learn to recycle in 40 years, we should be able to do better and it will require government incentives, education and building code changes imo.
https://www.ecohome.net/guides/2272/gray-water-recycling/
The govt had problems last year with large numbers of people not even filling out the declarations, so they should have made it much simpler this year, but didn’t.
They missed out on the obvious ways to have simplified it. Instead, we have to answer all the questions again, which are needlessly spread over multiple pages. And oh yah, your co-owner spouse still has to repeat the whole thing separately.
The “obvious way to simplify it” would have been a welcome page listing a summary of your last years declaration, with a button to confirm that nothing has changed and you are resubmitting/declaring this same information. If something has changed, of course answer all the questions again. 99% of people filling it out are filling in the same info year to year, so it’s silly to ask them all the questions again. and why not allow one submission to cover both spouses if you declare that the answers are the same as they were last year?
And why isn’t there an online printable paper version of this spec tax declaration that you could print and fill out and mail to them? Like there is for most CRA and provincial tax forms? An accountant or family friend could do this to help someone who isn’t internet savvy or just prefers to do things on paper. That doesn’t waste much paper as it’s only applicable to those few that need to do that. Unlike the govt that is already again printing and mailing 1.6 million letters to remind everyone to fill out the declarations, and you need to physically possess that letter to know the “codes” to even be able to fill out the online form. Haven’t received your letter yet, (or you received it but can’t find it) and you want to declare the spec tax data…. too bad for you, wait until you get it or can find it.
I expect even worse compliance numbers this year.
Smart home is a good solution for some, but others may have issue with privacy.
It is quite simple to run a main service wire from the breaker panel to a disconnect/switch (similar to a sub panel) at the front entrance, and distribute all lighting wiring from that point instead of running all lighting wiring back to the main panel. If the resident required more than 20 lights then a sub panel could be a solution.
I would like to see what a plumbing inspector say to your solution, specialy on a stack of floor drains in a condo building.
Simple solution is to install your main breaker panel at the entrance.
Floor drains can be tied into the storm drainage so that no trap primers are required (not that they’re required). I don’t particularly like that solution and would prefer the code recognize dry-traps: http://smallplanetsupply.ca/zehnder-waterless-p-trap/. Would also be nice if they recognized whole-house AAVs.
Can do all lights off via smart home stuff (I have the Lutron Caseta switches and they work well but are pricey). I’d rather have a hard-wired solution at the front door (99% sure they don’t wire them like a typical circuit. The ones in Europe shut off the heat/AC etc. in addition to other electrical loads).
Step code will force new condos to use thermally broken balconies – there is lots of hardware out there to enable this. Better yet, we’ll see a move to mass timber in place of concrete/steel.
I was told by an appliance sales rep that condos are considering moving to heat pump dryers as they’re cheaper to install and don’t have the problem(s) Marko mentions. Plus, step code.
I don’t understand this comment. Code is changing to require buildings meet certain performance criteria. Doesn’t matter how they get there. People (and banks) need to recognize that some of the initial expenses pay back fairly quickly.
I was at a smart home pilot feedback session with BC Hydro. One guy there was super into all the smart home stuff and had over 30 devices all programmed for automation and to save power. Turns out he had couple times the power bill as anyone else there.
Most of that stuff is a gimmick. Especially smart speakers I’ll never understand why people pay for the privilege of having something designed to steal all their personal data in their house
Even “higher-end” condos are super super cheap in terms of finishing and this is coming from someone who owns a few. Rental building they might be spending $1 per square foot on flooring material and in a condo they will do $2 per square foot, if that…certainly nothing close to what a custom SFH home owner might do at $5 to $15 a foot.
No an expert but i would think the labor/drywall repairs/etc., would be a huge chunk of the cost remediation cost in relation to flooring material, for example.
Not really seeing “smart homes” gain much traction. Don’t see builders installing anything and don’t see buyers requesting anything.
@wo If you build it yourself you’ll have to pass the owner builder exam. PIA. https://househuntvictoria.ca/2017/02/23/the-owner-builder-exam/
Or you hire a GC to do all the work for you, but of course you are paying for all that.
Has anyone here built a cabin on vacant land? Wondering if it’s worth the headache, or how the process works at all. E.g. do you typically find a home builder to coordinate everything including clearing the land, drilling a well, etc? Would you have a condition to assess the land to see if you can actually drill a well, etc? Any resources would be appreciated! Thx.
Obsolete with the advent of the “smart home”, and probably not cheaper given the wiring complexity.
Filled in the spec tax forms for this year. I wonder if they will publish an update on the results. They were still missing a bunch of declarations for last year in their fall results.
I dunno about that. Yes the risk level are probably the same (as far as something happening), but condos are finished a lot nicer than rentals in general. It’s not just if something can go wrong, but how much it costs to fix when it goes wrong. A condo with nice engineered flooring, high end cabinets etc is going to cost a lot more to fix than your average rental building in Victoria (since most of the purpose built rental buildings are old AF).
That’s basically it. If this is a global insurance issue then the same hit will come for rentals, commercial, single family. That means costs go up for everyone.
The risk for a condo is if you get into a building that has problems that are not obvious at first, and you end up with a crazy increase because they reclassify the building as high risk or uninsurable.
As a multiple condo owner, the insurance thing doesn’t phase me one bit. For one, I don’t have to sell anytime soon so if there is a slowdown in sales who cares. Secondly, pretty sure the same insurance problems would be faced by apartment buildings so the increased cost will one way or another impact the rental market too. Finally, it’s not like buildings randomly, on average, started having 300% more plumbing leaks in the last few years.
It’s kind of like depreciation reports. There was all this panic about depreciation reports, but nothing physically changed, it was just a matter of paperwork in terms the reports. Buildings need new elevators after x amount of year both before and after introduction of depreciation reports but when depreciation reports came out, I had 50% of the deals on older condos collapse. Then after a while buyers clued into the fact that all older buildings have less than favourable reports and life continued.
and as I’ve been preaching for the last 10 years…if buying for an investment buy super small. Let the bigger units in your building asorb the brunt of the insurance increase.
2064 Allenby
MLS 421105
List Price: $995,000
As per the write-up:
2019 Assessed: $1,022,000
2020 Assessed: $ 963,000
I guess the industry really didn’t like what the 2020 Assessments were so they choose to ignore them.
What a farce.
I don’t think it’s anything to do with left or right. I just get annoyed with people all about the free market until it inconveniences them. Same feeling as the owners of $3M+ mansions in Vancouver now complaining about government interference reducing their equity.
“Everyone always quick to run to the government for handouts” Welcome to the club Leo. We will get you over the center one day. lol
I have to check twice that it was actually the same Leo. 🙂
Everyone always quick to run to the government for handouts. Maybe there is potential for some tweaks but insurance is a competitive market in general when the world is awash in capital. If insurance is rising you can be pretty certain the insurers have done their homework on risk
My house has 9. I think it would take care of a lot of places.
The Times Colonist has an editorial this morning about condo insurance. Lots of hand wringing and hot air about how “something must be done” by the government, but nothing specific other than the suggestion that strata lot owners be required to insure their property. If this turns out to be a serious issue, the question of who will pay for it will become the figurative turd in the political punch bowl. Or maybe it’ll blow over in a few months as some here have suggested.
https://www.timescolonist.com/opinion/editorials/editorial-condo-owners-need-help-in-dealing-with-insurance-crisis-1.24076256
It is often that things get worst before it get better.
I have witness dozens of short term workers who came to Victoria for a short contract over the last couple of winters, that ended up relocated theirs family here due to the mild climate, and many more still are coming.
I don’t know if Cross Connection has been added to the plumbing code or not as I haven’t keep up with code updates for a long time. However, cross connection is part of the 2008 CRD By Law that is now amended from annual to tri annual test/certify for residential buildings that have double check valves (apply to buildings that have lawn sprinklers.) And, I believe cross connection is now a requirement in most if not all cities/jurisdictions in BC.
https://www.crd.bc.ca/service/drinking-water/cross-connection-and-backflow
Good find. Last years population number was 395,523 (see link) so that makes our YOY increase 402,271/395523= 1.7%. That’s a rise of 6,748 people. At household size of 2.5, they’d need about 2700 additional dwellings. This large population increase helps to explain why the low rental vacancy rate didn’t improve (increase), since net completed construction was about that (and average household size for new units may be less than 2.5). For some perspective, the total number of spec-tax homes declared in the region was about 900, so freeing up some of those won’t matter much.
https://www150.statcan.gc.ca/n1/daily-quotidien/190328/t001b-eng.htm
Victoria CMA population listed at over 400,000 people for the first time: Statistics Canada
https://www150.statcan.gc.ca/n1/daily-quotidien/200213/t001a-eng.htm?utm_source=share&utm_medium=ios_app&utm_name=iossmf
I just don’t get the point of changing the code to dramatically drive up cost, but then a design issue pretty much negates any energy savings derived from the massive increase in construction costs.
Or better yet you design an efficient building without balconies and then the geniuses at City of Victoria city council reject your application because they feel units should have balconies, that happened to this project -> https://pub-victoria.escribemeetings.com/filestream.ashx?DocumentId=12213
That would take care of a lot of condos and townhomes.
I am giving you an example of something that is not required but is high maintenance from my strata council experiences…booster fans, lint traps, duct cleaning, etc. Also, a huge problem when moisture starts making its way through the ducting and damaging the ceiling. What then? Can’t exactly jackhammer through the concrete to fix the problem.
See the damaged ceiling in this newer condo downtown Victoria ->
Dryer venting issue that I’ve seen in many units in Victoria.
I just looked up my Croatia condo manual and says to pour small amount of water into floor drain once a month….am I a missing something? Seems like way less maintenance than cleaning the lint trap on my dryer here.
When I was in Australia I remember they had floor drains there too in bathrooms so it would not appear that floor drains are exclusive to Europe.
To me a floor drain is a great insurance policy.
When did this get added to code?
Correction: max 20 light fixtures on 120V @ 20A, and 38 light fixtures on a 240V @ 20A.
Dryer vents aren’t the same as drainage vents. Dryer vented moist air to the outdoor.
Soil & waste vents are there to prevent sewer gas and germs/toxic chemicals from entering the living space that exacerbate from negative pressure of bathrooms exhausts, range hood exhaust, dryer exhaust, and furnace/boiler exhaust.
I agree that there are many great ideas that could be implemented here, but IMHO floor drains isn’t one because the drain and trap primer requires regular maintenance that often neglect by home owners.
ie. How many people in this board that have DCVA (Double Check Valve Assembly) in their homes check and re certify yearly?
Excellent idea, however NEC and BC Electrical code allowed maximum 15 fixtures on a circuit with out plugin receptacle on a 120V 15 amp circuit, and 30 fixtures on 120V 20 amps circuit. Therefor it is not practical for most North America houses to have a single shut off as most will have more than 30 lights, unless we use 2 switches, but we have wifi now that solve the lights issue, or simply shut off the main breaker when we are out of town.
EU electric standard is based on 240V system that can accommodate 39 lights fixtures so having a single kill switch/shut off is doable.
There is actually massive focus on reducing thermal bridging in newer construction. It’s also not that people didn’t realize this was a problem it’s just that they were doing at the cheapest possible way. Anything built to passive house or close won’t have this issue
A few years ago, when the news was full of scaremongering about earthquakes, the insurance companies started ratcheting up the rates for earthquake coverage. Eventually they found the point at which people wouldn’t buy.
They’ve got a captive market for condo insurance, though, and I’m sure they’ll milk that for all they can then move on to something else.
One of many things that gets me with all these new code changes is on residential towers code is pushing for less window surface area and better windows ($$$$), etc., but then it allows for designs (cheap to change) with big protruding balconies. Next time you are in a condo on a cold day with a big balcony stand next to the door to the balcony and then walk 10 feet towards the core of the building, you will notice a large difference in the temp of the floor.
I am not an engineer but common sense tells me if my feet are cold adjacent the balcony that is a huge source of heat-loss through the slab that would be hard to make up with better windows….doesn’t take a genius to figure out that there is no thermal break between the balcony slab and the condo slab.
It is logic like that that I don’t understand and I am not even a professional in any of these fields.
A lot of great ideas I’ve noticed in other countries that could be implemented here….one I like is my condo/parents’ home in Croatia have a switch at the front door and it turns off all the lights in the condo/house so you don’t have to run around turning off lights when you leave. The extra wiring probably pays for itself over time.
Developers put in vented dryers which need maintenance and you get leaks occurring all time through the concrete slab due to condesantion in the ducting and this is 100% optional and done because of covinence (self-condensing dryers take longer and the load comes out more wrinkly).
So, if something optional like that can be afforded maintenance why can’t something that could prevent a leak from impacting 10-20 units?
Problem is there is so much non-sense BS in the code than other things that I think are cheap and common sense aren’t in the code. Common sense things like floor drains or a plug for an electric car (less than $150 if installed during rough-in) not part of code……when it is pretty obvious that in 10-15 years everyone will be driving electric. I just don’t think there is a lot of common sense out there.
and what about single family home construction where people have a two or three level home and they put the laundry on the top floor next to the bedrooms so when the washer line fails the entire house floods. In Croatia my parents SFH has drains in all the bathrooms/laundry room and so does my condo, it can’t be that complicated.
Adding a floor drain in flood risk areas is common practice in commercial buildings. This is going to increase costs, which people complain about here. It’s not just the floor drain (which can be very costly , especially on-grade) there will need to a trap primer which will need to be maintained(which it won’t). Wasn’t Marko also complaining about the cost of construction & unnecessary requirements in the building code. Fail to see how this doesn’t apply.
For health reasons, residential buildings lack floor drains as indicated in the linked article below. However, floor drains can be employed in residential buildings with correct measures, such as employed trap primers and perhaps makeup air vent/s.
https://www.cnn.com/2020/02/12/asia/hong-kong-coronavirus-pipes-intl-hnk/index.html
Add, Canada plumbing code only allow P-trap, and does not allow U-trap or S-trap.
Marko you’ll be happy about this “Gioventu suggested changes to the building code to address problem areas — a requirement for floor drains near water systems, for example”
https://www.timescolonist.com/news/local/condo-buildings-face-insurance-crisis-as-premium-rates-soar-1.24075271
Moved out of our 1100 sq. ft. rental at the end of 2019 and just paid the final hydro bill. For Jan 15 to 30 it was $150, or $10/day. That is heat only (baseboard) as it’s unoccupied. In the new place, 3000 sq.ft., electric everything and 4ppl: ~$2/day.
$2M+ luxury market started cooling in early 2018 like the rest of the market after the stress test, spec tax, and foreign buyers tax hit. Unlike the rest of the market it hasn’t turned around as much, but perhaps that is imminent as well.
If you had to guess, which measure hit the luxury market hardest? Stress test, spec tax, or foreign buyers tax?
When depreciation reports came out it become incredibly difficult to sell older condos….then after 1-2 years everyone just accepted them as part of life and sales continued again at normal levels.
Insurance will be a news story for a bit and then life will continue as normal.
Listed for $979,000 and sold in multiples for $990,000.
Any idea how much 918 Bank Street sold for? It seemed to have gone really fast.
Regarding the condo insurance discussion..
I’ve come to expect that representatives of certain associations related to real estate industry will go out of their way to say only glowing, positive things to the press, lest they hurt the image and business of the market which they represent. One famous example is U.S. NAR head David Lereah, who generally encouraged the rise of the U.S. housing bubble in late 2005 and scoffed at bubble believers as “Chicken Littles” (Of course, the U.S. housing market crashed catastrophically not too long afterwards).
And so I was surprised to hear that a few days ago a representative of the BC Condo Homeowners’ Association has warned that BC condo insurance issues could cause the BC condo market to collapse. For a person in what I look at as a “Baghdad Bob” public relations role to admit and broadcast something like that sounds very serious indeed.
“There are dire warnings that the condo real estate market in B.C. could collapse unless the province steps in to stop it. A representative of a condo owners’ association says recent changes to insurance rates mean that not only are buildings having to pay more for coverage – some are being denied altogether.
…
“This will collapse our real estate industry because no one will be able to get mortgages and there will be no buyers and no sellers,” Gioventu said.
Gioventu knows of a handful of buildings currently unable to get insurance, and said there could be more out there.”
…
“If you’re a condo owner reading this and are worried about how to protect your investment, there’s little you can do except to try to find insurance to cover high deductibles. But without a master condominium insurance policy, you’re out of luck.”
…
“for Khan and others in his situation without insurance it’s an emergency. “If my lender finds out they’ll pull the mortgage,” he said.
https://bc.ctvnews.ca/insurance-issues-could-cause-b-c-condo-market-collapse-homeowners-association-warns-1.4800633
Until this is figured out and settled, why the heck would anybody in their right mind be in a hurry to buy a condo right now? Is it worth even a small risk that you may be buying into something that your bank can pull the mortgage for, then force you to to sell at a time when nobody will buy it (because its uninusrable)? Even if in a worst case scenario this continues to affect only a small percentage of condos, and not yours, the publicity and panic involved is damaging, and will continue to spread. Surely it won’t help the general image of BC condo values.
Since ICBC has done so “well” for as a government-run auto insurer, I had to laugh at this idea: “…a strata president of a New Westminster condo complex facing a 40 per cent insurance premium increase, has sent a letter to Premier John Horgan asking for intervention. He says it’s reached a crisis and suggests that B.C. set up a non-profit strata insurance corporation similar to ICBC.”
If private insurers don’t want to risk insuring some BC condos, can’t make money on it, why the hell should we BC taxpayers have to foot the bill? Hell, no!
Crazy. Our average is 1190kWh/month and that is with heat pump and inefficient baseboards in the suite that is occupied all the time so in the winter they basically don’t turn off. + 2.8GJ/ month gas, so counting that we are at 1970kWh/month total energy usage and that includes the electric car.
Ha. I do wonder how that works. The place we moved into, the previous owners were burning about 3,000 kw/h per month average (annualized). Their wintertime use was nearly 5,000 kw/h per month. Their hydro bills were well over $500 per month. When we learned that I almost panicked – hydro wanted a nearly $1500 dollar deposit or a credit check to start a new account. I did the latter.
All baseboard, fibreglass batts below, beside, (2X6) and roughly R-30 above. Four skylights and lots of windows.
We’ve got it to about $80 per month now, plus the gas bill. This is what our hydro looks like now, in the lighter blue – this is after adding natural gas at the end of January, but still using electric tank hot water and dryer. You can see I do my laundry on Fridays! Before that it was burning wood and baseboard, keeping the house at 14 degrees C. Nasty.
You can also see that other homes are seeing horrendous hydro bills, but nothing like what our place was with the previous owners. What, did they take the roof off at night? Conversely, people who are at or near the minimum rate despite baseboard and lots of windows, I just don’t get how that works.
Odd….I’ve lived in glass boxes and I’ve never spent more than $300 in a year on electricity. Maybe if you are a corner, top floor, massive balcony, and facing north or do laundry 4x per day.
One of my rentals I include the rent and last 12 months the tenant spent $223.80 in electricity and that’s big windows, a balcony (probably where you lose the most heat in modern condos as the floor/balcony are all one slab of concrete), and baseboard electric heat.
And Owen Bigland basically says the same thing in his latest blog post: https://www.youtube.com/watch?v=aUFZRXTAfDY
I bought a brand new condo at Ocean Park Towers on the Songhees when towers were just built. I sold with a great profit two years later………and just a couple of years after that they had to remediate the buildings. This was a new steel and concrete building. While I was there, one of the hot water tanks in an individual unit leaked and caused much damage. I believe it was the suite upstairs from me….maybe many of the suites above me…..when they ran their water, it was like my tap in the bath/kitchen was running at full blast. When they flushed their toilet(s); same thing. Also, I could hear the TV coming from their living room. And in the winter, you could slip on the ice going to the elevator as the corridors are on the outside of the building….as are all the buildings along Kimta. But no, those are not the main reason I moved. The main reason was the electricity bill. It was enormous. Tried reasoning with B.C. Hydro about it….to no avail. There was no reason why my bill could have been so high except that the insulation must have been poor. Of course the suite was wrapped in windows as well.
When I owned a 1250 sq ft older condo in Fairfield, my hydro bill was a couple of dollars over the min. rate. I never heard my neighbors voices or their toilets flushing.
There is always going to be a downside to any property you own whether it be an apartment, townhome,semi-detached duplex or SFD.
I looked into this and they have secured insurance for 2020…..fake news.
Since I was 19, I’ve always gone with huge deductibles on everything from ICBC to home insurance. My home insurance deductibles were always 10k+ for everything. My theory there is I would save $200-$400 per year on the policy and anything under 10k I would just want to deal with myself instead of an adjuster and all that bull*** and zero claims history.
I have all my ICBC deductibles at 1k+ and no comprehensive….I’ve already save such a huge amount in the last 15 years that if a tree fell on my car tomorrow (low probability) so what. I have enough money to buy a new one thanks to 15 years of savings + investing/compounding those savings.
The average Joe and Suzy strata owner is too dumb/risk adverse to explain to but a huge deductible(s) would make sense for a strata.
i/ Would lower the insurance policy amount; use the savings to put into contingency to cover damage/repairs.
ii/ You wouldn’t have a claims history as a strata corporation.
If you have 100 units and a 100k flood that is 1k per unit, it isn’t catastrophic.
I have to say that I’ve changed my mind on this… sort of, although I’ve always made sure that anything I rented out was cash flow positive so far for a number of reasons.
Objectively, if you can afford to hold and pay the monthly loss cost, and you are in an appreciation market and comfortable with holding until a sale or refinance makes sense, then it is probable that your investment over seven- ten years will exceed the returns on the stock market. This is helped if you buy with leverage in a gentrifying area and sell in a year when you otherwise have a low income.
Does seem to be a real issue though, not just media hype. Can’t recall if this was already posted: https://www.ibabc.org/pdf_files/Strata-Premium-FAQ.pdf
Thing is if it’s a global insurance issue then it will filter down to detached home owners and rentals as well.
You obtain the insurance certificate as part of the strata documents when you make an unconditional offer, I’ve never had that not provided.
Still not seeing any major issues in any of the buildings I own in. Insurance is up in cost like everything else but nothing dramatic.
Another reason to support my theory of buying super small units as investment. If you have a 400 sq/ft studio you’ll be paying 1/3 the strata insurance as the 1,200 sq/ft unit.
If buying a strata I highly recommend having the strata documents reviewed by -> https://condoclear.ca/
Problem is 70s buildings don’t have great depreciation reports. Even if well designed and built at 50 years many things are end of lifespan. Noise transfer is typical extremely poor, and they often have horrible bylaws (no rentals, no pets, no BBQs, age restrictions, etc.)
And at what rate. It’s like buyers will need to become amateur actuaries to evaluate a claims history and predict whether a big insurance increase might be coming
Coincidentally, this morning’s column by the head of CHOA is about a buyer who’s being told that they can’t see the insurance documents until they are owners, because it’s a “privacy issue”. This is absurd, but I wonder if it’s going to become a recurring theme for strata corporations trying to hide insurance problems.
https://www.timescolonist.com/homes/condo-smarts-how-to-learn-about-condo-risks-before-you-buy-1.24073932
Might want to ask when the insurance was last renewed. Just because the building has insurance today does not mean it will be insured four months from now. No magic solution to what might be a major headache that I can see.
Good question. Of course you as a buyer should demand to see proof of insurance but I suspect if the sellers knew the strata couldn’t get insurance and didn’t disclose it that would be a material latent defect and open them up to litigation.
Sure, if you never have a vacancy, never have larger maintenance or special assessment, and don’t count buying or selling costs or your time.
Not saying you won’t make money, but I don’t see a cash flow negative rental as a good investment.
You can be cashflow negative and still make a profit. Cashflow is not the same as profit/loss. If I have $100,000 invested in a $500,000 rental. Let’s say my mortgage payments plus other rental related payments are $1000 more than the cash I am getting from the property each year. If I am paying down the mortgage down by $10k each year, I am making 9% return on my $100k investment.
There are tonnes of investments that might be cashflow negative for years before you may be able to cash out on the value built of your investment. Like lots of people starting businesses, venture capitalists, etc.
There is always a lot of listings at Shoal Point…three out of the ten right now are $6.9 million or higher.
They’re not required to disclose something like that?
From what I read they are not advocating for legislation on capping rates. I think they are proposing changes to clarify what needs to covered to make it clearer what insurance companies will be liable for. I think they admitted it wouldn’t necessarily prevent the current price hikes, but they are hoping it will allow for less chance of insurers pulling out because they cannot quantify the risk correctly.
I’m really trying hard here to not keep beating a dead horse but PCS still isn’t showing updated assessments on new listings. But it does for some.
I believe someone on here said it was automatic but if it was, all would be updated.
I can only think of one reason why you would not put the new assessed (lower) value up. Not a good look for an industry with an image problem. And I get it, assessments aren’t market value but to purposely choose to display last years is a bit ridiculous.
Examples:
1541 Pearl st
2019 assessed: $947k
2020 assessed: $892k
4014 hopesmore
2019 assessed: $879k
2020 assessed: $858k
Oh Canada!…Fun facts… (comparing US to Canada student loans)
– And oh yah, Canada leads the world (55%) in % of post-secondary education (vs 45% USA) …… “oh Canada!” https://globalnews.ca/news/2944919/how-canadian-education-compares-to-other-countries/
— =v= = =
https://finance.yahoo.com/news/u-household-debt-exceeds-14-160303784.html
https://www.debt101.ca/news/how-big-is-canadas-student-debt-today
“To go a bit tangential…I think the people asserting that this is related to “climate change” are either being opportunistic, disingenuous or liars.”
Yeah it doesn’t make sense. I’d like to know what’s so special about BC condos that makes them more susceptible than a single family dwelling to the effects of climate change, wildfire, floods and earthquakes.
Right. And the selling price is influenced by the monthly condo fees, so one would expect prices to take a hit on affected units.
To go a bit tangential…I think the people asserting that this is related to “climate change” are either being opportunistic, disingenuous or liars. I feel like it’s a red herring. What “climate events” have occurred in BC, and only in BC, that would justify such a sudden and drastic change? Why aren’t condos in Seattle, Portland, San Francisco, Los Angeles, Calgary Edmonton etc being affected?
It’s similar to the argument that says, Canada needs to pay among the highest cell phone rates in the world because it’s a big land mass and few people. The land mass isn’t that big in terms of service, as 80% of us are hugging in close proximity to the US border. Curious that Russia is almost as empty, an arguably worse climate, and yet they pay a tiny fraction for a similar plan.
I suspect the real condo insurance issue is related to investment trends due to low interest rates, as well as outrageous property values.
yeah i just asked on reddit victoria if anyone had any knew of any victoria cases as this seemed specific to Vancouver from what i’m reading online – here are the responses:
“-Yeah, I am president of my building (46 units, nearly 20yrs old) and our insurance has gone by 40% in the last two years. No claims in that time.”
“-I heard a rumour that 21 Dallas Rd can’t get insurance. There’s currently 10 units for sale in the building so maybe everyone’s trying to offload before it becomes common knowledge?”
“-I have heard that there are 3 buildings in victoria that currently can’t get insurance”
Nothing too crazy but could be the calm before the storm… or it could be nothing.
For sure one sector of apartment style condos I would advise not to purchase, would be most of the ones built in late 80s and throughout the 90s. For the most part they all have individual hot water tanks. Many of the owners are now obliged to replace them say every five years. One of the nice things about the older 70s condos is that they have common washer and dryers usually located on the main floor. Many cringe at that idea, but it truly is not that bad. Lots of these buildings have only 17-22 units. The common laundry rooms usually have 2 of each up to date washers and dryers. Sometimes an individual owner may have their own 4 hour block of laundry time once per week. This way you get the entire brightly lit laundry room to yourself and you are able to get the washing done in half the time. Not only that, it cuts back in moisture and noise in your own unit. Often the laundry is free or a small charge is levied and those funds go into new equipment when needed. People have visions of an old apartment block they used to live in when the laundry was in a dark basement and you had to keep your eyes out for thieves. This usually is not going to be the case in a well run smaller complex. People tend to be respectful of each other.
Dad beat me to it. I was gonna say:
But where will the neighbourhood’s seniors go to eat bland, lukewarm food?
Another condo insurance news story. Apparently the increases are widespread, not just in B.C.
https://vancouversun.com/news/local-news/b-c-stratas-on-edge-after-reports-of-soaring-insurance-premiums
One of the impacts from escalating insurance rates in condos may be that more landlords sell as the investment gets less profitable.
“For example, most young uber-rich celebs live in huge homes, as watched by young people on shows like Cribs”
I’m not sure that a show watched by a bunch of 12-year olds is a great barometer for the preferences of home buyers.
“Obviously some people prefer smaller homes. But for others, , you may be confusing “don’t want a big home” with “can’t afford a big home”.”
I feel like the homes-getting-bigger trend over the last 40 years was in response to Boomers’ preferences. Look at Bear Mountain. Golf, big gaudy houses, botox, three car garages. It ain’t my generation buying up there.
I definitely am in the camp that does not want a big home. I’d rather live in a 2 bed, 2 bath 1000 to 1200 sq ft home than a 3500 sq ft 5 bed 6 bath home. Who needs 6 shitters? Also, you have to heat 3500 sq ft. Seems dumb.
Re smaller houses:
Patrick: –
Washington Post –
Are the insurance brokers seriously proposing this simpleminded legislated idea?
If the government passes legislation that says the deductible can not exceed $50,000 then either the insurance premium will increase an addition 500+% ~~OR~~ the insurance companies will simply stop selling condo insurance.
Unfortunately for condo owners the new reality is they will be stuck with higher premiums and high deductibles and higher monthly strata fees.
“University Heights’ J.J. Morgan Restaurant to close its doors due to surrounding redevelopment…”
One less option for people with no taste buds.
University Heights’ J.J. Morgan Restaurant to close its doors due to surrounding redevelopment:
https://victoria.citified.ca/news/saanichs-jj-morgan-restaurant-to-close-after-decades-in-business-as-university-heights-redev-nears/
And the interesting thing about the strategy is that although it’s probably a bad investment, it can go on for a long time. It really doesn’t collapse until employment goes down and people can no longer afford to subsidize their condo investments
A higher rate of investors amplifies volatility in the market.
Chatting with one of the bigger GCs in town, the private development picture is a little slow, but they are run off their feet with rental projects, mostly funded by BC housing. Lots in the pipeline.
On the infrastructure side too, a large national player said they have 4-5 years worth of work lined up.
Trades are not going to be short of work anytime soon. LNG Canada is ramping up this year to 7000 people for peak construction in 2022. Mostly camp work, the biggest worker lodge in Canada being built in Kitimat to house 4500 at one time.
I did a google search to see how badly Seattle and Portland were being hit by the condo insurance crisis, but couldn’t find a thing.
It seems to be a selective crisis.
By implication of your quotation marks, would they be investors unquote if they bought properties that are slightly cash-flow-negative?
I would have thought that deliberately buying anything that costs you money to hang on to isn’t much of investment, regardless of the scale of your loss. Then again, people are buying negative yielding bonds, so okay…
Always shake my head when I see “investors” buying properties that are severely cash flow negative (I base my cash flow numbers on 20% down payment).
In fact, condos depreciate in the long run because of the small land value relative to the structure. People think they appreciate because they ignore the money that goes into maintaining the structure.
Thanks very much for this Leo – very germane for me as I consider whether we’ll help my daughter rent or buy.
Intro
I was waiting for the crash to post. I gave up.. Looks like we are going to have a rocking spring…
Welcome back, gwac. I missed you.
Just got a letter from Coast Capital thanking me for renewing my mortgage with them and letting me know that “we have lots of options to help you pay off your mortgage faster.”
Yeah, I know. Over the first 10 years, I’ve paid off 65% of the principal on my 35-year mortgage.
Insurance issues are only getting worse it seems for condos.
https://globalnews.ca/news/6524791/bc-strata-insurance-brokers-legislation/
actual impact on strata fees
https://globalnews.ca/news/6374159/abbotsford-strata-insurance-hike/
BC consumer bankruptcies up a small 1.5% (full year 2019 vs full year 2018), which is about the same as population growth, so flat per capita.
Canada consumer bankruptcies down 1.2% YOY.
With your 23% number ….. Looks like you’re again mixing “bankruptcies” and “proposals”. And then including only the “business” data, not any consumer data. There were a tiny number (4) of BC business bankruptcies in December, not surprising that this number would swing wildly with big % changes,
Have a look at the actual data and you’ll see all that. If you see something concerning about BC consumer bankruptcies, let me know.
https://www.ic.gc.ca/eic/site/bsf-osb.nsf/eng/br04194.html
Fascinating post, Leo. I can see myself buying an investment condo someday, after the house is paid off.
I concur. But appreciation above inflation probably will happen because Victoria. 🙂
Speaking of the economy, some more on the increasing bankruptcies: https://business.financialpost.com/personal-finance/debt/375-canadians-a-day-went-insolvent-last-year-the-most-since-the-financial-crisis
BC rate up 23% from 2018