Low inventory drives single family prices to record high
Who knew that it would take a global pandemic and an 18% effective unemployment in Victoria to bring average house prices to a million dollars? I don’t think anyone saw that coming, but here we are. A combination of a rebound in luxury sales (sales over $1.5M were up 80% from last June) and a shortage of inventory in the sub million dollar market has pushed both median and average prices to all time highs in June.
After a 58% sales drop in April and a 46% drop in May, June sales came back strong and finished 9% higher than last June’s tally. Technically the sales rate was somewhat less than last June, but because of the two extra business days we went over last year’s total and likely will again in July. The shift in the market came almost entirely in the last two weeks when sales came pouring in and new listings stalled out at just above last year’s levels. That swung the market around from substantially slower to matching last year, with activity concentrated on the detached side.
14 day average values
As of June, seasonally adjusted sales for detached properties are fully back to pre-pandemic levels while condo sales remain about 20% below the levels of February.
There was a small uptick in seasonally adjusted inventory in June but we are still at pretty low levels and it’s not at all clear if the downward trend is broken yet.
Again, there’s a distinct difference between the condo and the detached market, with detached inventory down 23% year over year while there were 14% more condos for sale. That combined with the sales shift to detached means the market for single family homes has actually heated up over last year, while condos are somewhat cooler. Both are in sellers market territory (months of inventory below about 5) and we’ve still seen nearly a quarter of detached properties going for over the asking price in June.
Months of inventory of the entire market has now almost completely recovered from the pandemic. Last month I said we should be done with the wild swings in the months of inventory for now, but the big sales surge threw that out the window. Rather than learning something about predictions I’ll just double down and say from now on we should be done with the big swings in the months of inventory. However we will hit some peculiarities of seasonal adjustment in the coming months which may exaggerate the data because the sales bulge is moved from the spring to the summer months when sales are usually declining. I’ll take a closer look at this if it becomes a problem in the July and August data.
On prices, the strong showing in June turned the trend line for detached properties strongly positive, increasing at a rate of 1.30%/month (~$10,000). The trend for condos and townhouses remained relatively flat.
Sales to assessed value was relatively flat for single family as some higher end properties tended to sell for below assessed, while there was a small uptick for condos. Note that most of these sales are still relative to 2019 assessments due to the problem of 2020 assessed values not being automatically updated in the system. New listings as of end of July or so should all have the 2020 assessments, but this may be a problematic transition for this metric as 2020 assessments are overall a percent or two lower than 2019.
Beware premature conclusions
So sales are almost fully recovered while prices are not only not declining they are at or near record levels. Is it time to hang out the mission accomplished banner on the real estate market? Perhaps, but I would still urge a healthy dose of caution going forward. Despite indications from the real estate market, all is not well in the economy. So far our record unemployment has hit mostly those not in a position to buy anyway, but that isn’t likely to be the end of the story. We know that although employment is rebounding as restrictions are eased (June data will likely show an increase in the official unemployment rate but effective unemployment will drop again), many jobs will also not come back for a year or even two. Right now the economy is propped up to near normalcy through unprecedented government spending which our leaders are struggling to unwind without causing a collapse. When CERB ends it will impact consumer spending, and business wage subsidies are keeping many people employed now that may have no idea their jobs are at risk. Meanwhile BC has done an amazing job on the health front, but the US situation is looking increasingly grim which will weigh on the global recovery.
The pandemic was like a boulder that hit a pond. First the water goes down and then it jumps back up and causes big waves. Right now we’re in the bounce back as we burn through pent up demand from the interrupted spring market. But we won’t know the water level until the shock has fully passed and the pond has calmed again.
With the strength of the detached market I’m having a hard time imagining a weakening big enough to bring it back up from a strong sellers market, through a balanced market, and all the way to a buyers market where prices would decline substantially. Condos I’m less confident about as they face headwinds from consumer preference, the insurance situation, and the wildcard of more investor supply hitting the market. However the lure of extremely cheap money may be enough to counteract that. We’ll have to wait and see how the year plays out.
New post: https://househuntvictoria.ca/2020/07/05/first-time-buyers-undeterred-and-a-note-about-interest-rates/
Not much wrong with a quick sentence and a link to something a little off-topic.
Trying to drive traffic to one’s personal off-topic website is another thing entirely, IMO.
😉
Just get a couple of beaters and put them up on blocks. Always looks great on the front driveway and the neighbours will love you.
I like green tech / investments so haven’t treated that as off topic in the past.
Arbitrary and capricious is my moderation style
Maybe about the same level of relevance as UVIC’s pension fund investments…
[sigh]
Leo, might be time to nip this in the bud.
I would be curious to see if anyone who regularly posts here is in the market for a new or used vehicle currently? Not only due to pandemic related factors but to fill that empty driveway or garage. I have done this after multiple property transactions.
Just roll it into the mortgage
And who knew that “progressive thinkers” buy vehicles in the fall after acquiring property?
I seem to recall that Lost Soul introduced readers here to his fledgling website/blog a while ago.
Still not sure how someone’s auto blog is relevant to discussions here. Seems like he’s just trying to get some exposure.
Victoria house prices are at an all-time high. If you just bought a house, the very last thing you need is a new vehicle.
I object, I’m a WordPress website developer, technical SEO analyst and content curator who currently manages 15 websites.
I’ve done a technical SEO audit of this site and passed the results along to Leo, in an effort to say thanks for helping me out in the past.
LeoS, you know you’re doing well on this blog when some random guy want to ‘help you’ by capitalizing on all your hard work and franchise your website.
…Sometimes I can’t help being a total cynic…
Sorry Leo, feel free to remove it! In all honesty I just want to help Victorians who are looking to buy a vehicle as we all know they go hand and hand with a property transaction.
If it wasn’t for HHV and the progressive commenting, I don’t know if I would be in the position to write articles like the one below. I certainly would have had a lot more difficulty back in 2016 buying a property.
Always here for you, let me know if you ever want to chat franchising House Hunt!
LeoS: clearly an ad; sigh.
Looks like an advertorial to me
For all the progressive thinkers commenting on HHV, are you thinking of buying a vehicle in the fall to go with that recently acquired property? Your selection may be limited…
https://auto-blog.online/2020/07/05/vehicle-sales-to-increase-fall-2020/
Looks like condos are starting to have open houses again. All you people who can’t fathom why some of us prefer condos should go take a look at a few. There’s lots of good reasons why people live in condos… not just because they can’t afford a real house.
No guarantee, but I’ve found that being 20 feet from the nearest dwellings and the street gives me pretty good odds.
oh, my, I hope that young couple both keep their jobs. Restaurants and many other small businesses in Toronto have a very uncertain future; they don’t know if they will survive or not, having taken the govt loan/check and carrying increasing debt and hoping income will pick up before they have to declare bankruptcy.
And to top it off with no subject to financing, that lead to the scramble for house insurance and bank loan.
LeoS: Like George Carlin said:- Think about how stupid the average person actually is; now spend a few more minutes realizing that half the population is even more stupid. Loved reading about the misadventures of house buying during the plague.
Kanye is running for president. Reminds me of when Langford submitted a bid to be Amazon’s HQ2.
That’s the secret to buying a house folks. Write a nice letter.
Oh and put in bids at least $200,000 over ask during a pandemic when both your jobs are in the restaurant industry.
It was listed at $899,000, and it checked off everything on our list.
But we were anxious. The stock market was going up and down, and we worried the same would happen with the housing market. We wondered, Are we making a huge mistake? But we decided that even if the market dipped and the house lost value, we didn’t need to move anywhere anytime soon—we could just wait until things stabilized
The next day, we put in a pre-emptive offer of $1.1 million. We’d received advice from our realtor and looked at comparables in the neighbourhood, so we thought it was a fair bid. We decided to write a letter to the seller again. We mentioned how Dylan and I met, our history in the neighbourhood, and how much we love the area. The house went on the market the next day, but the owners contacted us the same day and told us our letter meant the world to them. They said they were going to take down the listing and accept our offer.
“In early March, we found a two-bed, two-bath detached in the Greenwood-Coxwell area listed for $799,000. It was across the street from an elementary school, which we thought would be great for Grace. We put in a bid of $1,051,000 and also wrote a letter to the seller to introduce ourselves. But that didn’t do the trick. The place would’ve been a nice starter home”
#nottheonion
https://torontolife.com/real-estate/a-new-baby-a-pandemic-a-personalized-letter-a-pre-emptive-bid-then-their-pre-approved-mortgage-got-pulled/
Agreed, this too will fade from people’s memories eventually. Also low rise walkups should remain fine even under pandemic conditions.
admin = me
Was camping over the weekend so was posting from the WordPress app, which for some reason sets my name to Admin. Confusing but I am the system admin. Will try to change.
I don’t know what will happen but after picking up some deals in the stock market in March I’m back to shedding risk by reducing debt, low interest rates be damned.
I think not to be underestimated is the impact on consumer spending when CERB expires. Free money to low income folks gets turned into spending very quickly. When it dries up it will filter through to the rest of the economy.
Yep. Friends work for Microsoft. They are seriously concerned about what is going on there with Coronavirus and are accelerating plans to move back to Canada. If Trump gets back in that will be the last straw. Also the clampdown on high skilled immigration means that several companies are ramping up hiring through local offices in Canada. Could have a material impact since those are highly paid jobs.
Mayfair has always confused me. Is there anything good there? Guess I’m not the target market.
Somewhat regularly but I have no stats. After it goes unconditional it very rarely collapses. If a sale does collapse after going unconditional it gets subtracted from the current month’s sales.
I think you’re taking the comment a little too seriously. 🙂
Technically, my issue with condos is that I feel at the moment, they are an absolute ripoff relative to what you get for your dollar. A condo in this city shouldn’t cost $700 too $1000 a square foot. This is not midtown Manhattan, and the “lack of land” argument is so repetitive over decades and untrue, I question the judgement of people who use that to justify the unjustifiable. At more historically consistent pricing, condos are a great way to enter and climb the property ladder. But that’s far from the case now – when we bought our SFH we bypassed condos altogether because it was a similar cost, and of course the prospect of noise was another factor.
Paul’s Motor Inn comment was tongue in cheek. I have a real bias against downtown because of all the vagrancy resulting discord frequently pervading the streets. Since the late 1980’s it’s been trendy (and most importantly, cheaper) to think that institutionalizing people is “cruel”, but the defacto alternative has always been to leave them forsaken to rot in the streets, die of disease and overdoses while stretching police capacity to the max and ruining the downtown experience for everyone else.
If I had my way I would reopen large scale mental health facilities and institutionalize those that cannot function at home and in society. The reason we never had this pervasive homelessness issue before is in part because we had these facilities and resources to help those who cannot or will not help themselves. If they cannot be treated, at least they would have routine, safety and potentially find purpose. Since the late 1980’s its been trendy (and cheaper) to think that institutionalizing people is “cruel”, but the defacto alternative has always been to leave them forsaken to rot in the streets, die of disease and overdoses while stretching police capacity to the max and ruining the downtown experience for everyone else. I don’t care how many social workers disagree, you cannot treat a person’s condition if they are sleeping on the street – this is why I think the “defund the police and hire more mental health workers” concept, in the absence of a safe and regimented care routine won’t work. Sticking them in repurposed hotels does not go far enough. Many of them will choose to stay on the street anyways, because shelters are often perceived to be even more unsafe…
Why do people like/buy/live in condos?
1) All the stuff Marko said
2) It is what they can afford
For my family of four a SFH makes sense, but if I was single i’d most likely be looking for a condo. I enjoy gardening for the most part. All the other house maintenance tasks I don’t enjoy at all. Living in a condo allows you more time for the things you actually enjoy.
Re noise: Living in a wood frame house is hardly a guarantee that you won’t be bothered by neighbour/street/construction noise.
Hi Tim,
PCS or Matrix are the two most common options. Send me an email with the area/property type/ price range you are looking in and I can set you up. Leo.spalteholz@gmail.com
@Local Fool normally your posts are insightful but your last two show a separation from the reality I’ve experienced.
I have been living in a condo for two years and haven’t had an issue with anyone beside, above or below me. And Paul’s Motor Inn was bought to temporarily support those who were homeless sleeping in tents. Have you spent time around there? I walk by there daily and can’t tell the difference since it was a hotel.
Can someone remind me of the name of the web tool that lets clients see details on available properties, including their selling price once available? You need a realtor to give you access, I believe. Thanks!
Because they’re condos.
Aside, the noise factor from having people beside, above and below you…no thanks.
“Oh, I never hear anything because it’s concrete construction.”
So what, most aren’t, and if you’re noise sensitive at night – concrete or wood – you’re going to hear and be disturbed by others.
Deb: “How about the best of both worlds, a townhouse? Small garden with some or the strata takes care of the garden in others. Your own entrance, not the same vulnerability if you go on holiday, more space etc. There are just not enough of them being developed, I guess not the big bang for the buck that developers want.”
On the other hand a town house is the worst of both worlds because you have to put up with peoples shit and don’t have a proper yard to do what you want with.
I can also understand why some people prefer condos although sometimes the advantages seem to overstated.
Well that would be a function of what buyers are willing to pay. Perhaps the developers can make money on the density for condos, and make money on the price for SFH, but buyers aren’t willing to pay enough to make townhouses that attractive.
I’ve always owned SFH but I can understand why some people like condos. I just think they’re way too expensive for what you get.
How about the best of both worlds, a townhouse? Small garden with some or the strata takes care of the garden in others. Your own entrance, not the same vulnerability if you go on holiday, more space etc. There are just not enough of them being developed, I guess not the big bang for the buck that developers want.
Couldn’t get me back in a SFH. Love locking the door and going travelling without any worries. If you work 50-70 hours a week last thing you want to do is garden/maintain. I also find privacy to be much better than my 1/2-acre lot I use to own. Up the staircase from the garage into my unit, don’t see anyone, don’t have to talk to anyone. It was much more difficult to avoid neighbours that were about in their yards when I lived in the SFH.
My only concern was charging but I have a charger in my stall. Strata fees suck but no house insurance, $250/year in hydro, no gardening, no out of pocket window washing, no gas bill (included in strata), no garbage/utility bills, etc.
I think condo will struggle in relation to houses for next 2 to 3 years but they will make a come back sooner or later.
You gotta deal with crap like this -> https://www.youtube.com/watch?v=ir5JUg5tKrY&t=37s
but in a bigger complex you don’t have to be involved.
I totally get why people like SFHs, but I find it baffling that many SFHs can’t see the appeal of why many like condos.
I always assumed “Admin” was Leo.
Leo’s got one of the those relaxing public-sector jobs, so he definitely has time to manage the blog 🙂
Actually the low rise boroughs had much higher infection rates than Manhatten. Same with Toronto, with the inner suburbs versus downtown. And Montreal.
It’s about the socioeconomic factors. Crowded housing, multiple generations in the same dwelling, low paid “front line” jobs often at multiple part time employers.
Barrister, I’m in complete agreement with you and your friends, I’ll never leave my SFH for a condo, especially now with elevators being a significant vector for COVID. When New York’s COVID infections spiked to enormous levels, my first thought was ‘It must be the crowded elevators’.
Even my wife, who was previously inclined to use gentle persuasion to convince me our future would include a condo unit, has now changed her thinking and she is no longer interested in condos; viruses and exorbitant property insurance premiums convinced her our SFH is more comfortable, less expensive to keep up, and safer.
Good question 😉 , You meant money spent, right? Let me check …
Okay, we did 3 Costco trips in past 9 months, money spent there (not counting gas) is about 10% of our total groceries spending. We go Costco because someone (a single person) in the family joined it and added us. Although we do fill gas there, but with need of only 4 tanks per year, it is not a big deal to fill it elsewhere.
For other shopping, we bought our e-bikes at a downtown bike store in May that are about 10.5 times cost of our Costco 9 months spending. But most of our non-grocery shopping these days, including goods from homedepot, are done online (e.g. We bought 6 pairs of shoes from MEC online (and returned 3 in store) in June).
We do like Oak Bay, and bike to the village and beach often too.
Freedom, do you spend more at Costco or more downtown? Personally, I spend more in Oak Bay than I do downtown.
I noticed that, too. And have always assumed that “admin” is Leo’s blog “manager/helper”. Leo does have a full time job besides this blog. It is nice to have a supportive partner to share some of the load, to help and administrate this blog, and of course the admin can post some facts and info (e.g. house sold price etc.) as well, especially when Leo is too busy with other things.
Because all the former “vibrancy” in downtown has moved into and near Paul’s Motor Inn…
Fisherman Wharf is mainly for tourists who are not here this year. You probably wouldn’t see/feel real downtown without getting off the car to walk/bike around for a hour, in a sunny Sat morning.
We rode our e-bikes from Uvic/Henderson area to downtown and back this morning from 9:15am to 12:30pm (to Government St then to Fort St then to Dallas Rd then to Moss street Market). Most stores are open and some (e.g. MEC and Crust Bakery which we went into) with people lined up outside, lots people walking and cycling, and sitting on Fort street parklet drinking coffee (we did), traffic is also reasonable, felt just like a normal Sat morning, minus tourists. We enjoyed our (multiple times per week) downtown bike trips very much, and much more than our bi/tri-monthly car Costco trips 😉
Downtown Victoria
RIP
True to that, but I’m not sure if social engineering and adding more bicycle lanes are going to improve the current affordable housing crisis that Victoria is facing, but impeding the flow of traffic will increase congestion and perhaps give homeless people easier access around downtown.
https://www.timescolonist.com/news/local/victoria-council-approves-designs-for-next-phase-of-bike-lane-network-1.24164254
A side note, I drove in from Langford to/from the Fisherman Wharf to buy crabs from Hi Gear Seafood this morning between 10:00 AM to 11:30 AM today, and downtown is absolutely dead when compare to Mayfair/Uptown/Highway/Costco traffics.
“Curious, have you investigated up the peninsula, or even Cordova Bay area in terms of wind? I’m also not a fan of the wind but it also tends to bring out the sun and less rain.”
Definitely. The peninsula has some nice areas that I like (around Brentwood, Saanichton), but there isn’t enough of a discount unless you go out to Sidney, and I don’t really like Sidney. Cordova Bay is pricey.
Other thing I like about the Cowichan Valley is that the summers are noticeably warmer and I am one of those weird people that enjoys uncomfortably hot weather.
On condos, I think the reality is that people need a place to live, and they can afford what they can afford. If all you could afford before was a $550,000 condo in the core, you aren’t magically able to buy an SFD in the core unless you can conjure up a much bigger down payment. That puts you into shit-piece SFD in the core territory, or more likely, the West Shore. If there is a shift in demand as a result of changing consumer preference because of COVID-19, I would expect it to show up there more than in the core. But as people like to point out here, the West Shore ain’t for everyone. Barrister’s examples are interesting, but those are luxury condos.
I think by far the biggest threat to condos is rising insurance cost because higher strata fees will reduce the amount you can borrow. Because investors make up a big chunk of demand, second and third would be downward pressure on rents due to rising vacancy rates, and the the collapse and uncertain recovery of the short-term rental market.
@Dad
Curious, have you investigated up the peninsula, or even Cordova Bay area in terms of wind? I’m also not a fan of the wind but it also tends to bring out the sun and less rain.
LeoS, are you posting here twice, I once as LeoS and also as Admin?
The ‘Admin’ moniker is usually reserved for a website’s system administrator, but I’m a bit confused based on the blog posts by ‘Admin’
Patrick: Interesting article, thank you. I have two friends, both of whom bought SFH in the last few days in order to get out of their luxury condos. One friends has got a room at my local B and B while his condo is being sold.
He is the only guest and is on the ground floor so he feels safe. Because he has a transplant he is immuno suppressed and Covid is likely a death sentence. His condo halls and elevators were a horror show for him.
Yes, especially when we read about thousands of people in high rises being locked down with police bringing them their food, as is happening in Melbourne Australia. That reminds me of that Diamond Princess cruise ship back in February. But at least that was just once for the cruise ship people. What’s to stop this happening to the high-rise apartments on a regular basis? Would you like to live in a high-rise in Melbourne, or anywhere else?
—- – ————
https://news.yahoo.com/australia-locks-down-high-rise-apartments-virus-cases-100139655.html
Australia locks down high-rise apartments as virus cases spike
“Thousands of residents in several high-rise apartments in Melbourne went into lockdown for at least five days Saturday, as officials struggle to control a virus outbreak in Australia’s second biggest city.
Hundreds of police were deployed to enforce the lockdown of nine public housing towers, as the country recorded its biggest daily increase of coronavirus cases in months.
The rise is driven almost entirely by 108 new cases in the southeast state of Victoria.
“There are many, many vulnerable people who live in these towers,” Victorian Premier Daniel Andrews told media on Saturday.
“Some of them will be returning home in the latter part of today, knowing that they will not be able to leave their home for a further five days.”
The immediate lockdown in Melbourne’s north would be a “massive logistical task” that includes supplying food to around 3,000 residents and deploying at least 500 police officers per shift, he added.
I have been sitting here with my cup of coffee and trying to account for what is happening with the housing market and I am left with a loss to understand the dynamics. I can guess why SFH might be keeping up their prices but I was really expecting condos to be taking more of a hit.
Show me something cheap bears. Or I’ll sell u my 70’s house in GH for 900k. Holla at me lol
I think the free government money has lulled us into a precarious situation. Even students get $1200 month CERB. Why bother looking for a job? Stay home and play video games all day/night.
Even if you consider wealthy Canadians cashing out somewhere else (Ont, Ab) and buying in Victoria right now with cash, they to will enjoy the disaster that is coming.
(Foreign) Students not returning to school, Gordon Head basement suites empty. Few jobs and many looking for work after the CERB teat is plucked from their lips.
Bottom line people are buying (borrowing or not) cause everything “looks” normal. The can has been kicked down the road……
No basis for a rebuttal, but I have a very hard time believing unemployment is that rampant. And if it is, we’re going to have a real problem come lockdown 2.0, if there is one.
Nearly 50% of employed people under 45 in BC went on CERB. https://twitter.com/mikalskuterud/status/1279145684722163712?s=21
Peter mmmKay and Erin O’ I’m A Giant Toole.
Give me a break 🙁 !
I wouldn’t worry too much about someone who cashed out in 2017, the S&P500 has returned 27% since July 2017.
Anyone have an idea on what happened at 2715 Forbes? Gold found in the back yard?
As far as I know they voted for all of the feds’ current handouts.
That’s fiscal, not monetary. Such fiscal stimulus without monetary loosening would lead to higher interest rates and lower RE prices.
Attempting to time the market, Victoria Born cashed out in 2017. Now he’s freaking out a bit 🙂
https://househuntvictoria.ca/2018/10/04/the-politics-of-housing/#comment-50101
Swing and a miss.
On a long enough time scale you’re correct. 6 to 18 months though, I doubt very much. They’ve been fighting deflation for decades which has a series of connected and intensifying causes.
We can already see what’s happened each time central banks try to tighten, but I would agree inflation due to excess printing is a bigger threat in Canada than it is in the United States.
What I suspect will happen is they are going to take this money printing regime to truly shocking levels before something gives – and we’re not there yet.
“We need a Conservative government.”
Do you mean to say that we need a conservative government? I don’t think the McKay Conservatives will be very conservative.
Wow. This market does seem to be reaching new highs.
2715 Forbes st
Assessed: $795,000
Asking: $939,900
Sold: $1,001,000
Well done. Good analysis. Thank you.
I saw Marko on BNN this morning – I think he was correct in pointing to ultra low interest rates as the genesis of this bounce. Also, Leo, I agree with you that the rise in unemployment likely hit those that could not buy regardless.
The reality, however, of all of this cheap money [liquidity from BOC and the fiscal spending] is inflation 6 to 12 to 18 months from now. We saw this in the 70’s and 80’s – interest rates will indeed rise [a certainty].
Victoria has held up well. Vancouver’s sales were also up. My shares in Shopify, Apple, MSFT………… A different market.
The CERB will end; the wage subsidy will end; I love the emergency loan [borrow $40, pay back $30K – keep $10K taxable].
All this government debt – it will have to be financed and that creates a crowding out effect. We need a Conservative government.
CBO predicts employment won’t recover for a decade in the US and rates will stay low https://www.ratespy.com/rates-to-stay-low-as-jobs-dont-recover-for-a-decade-cbo-070314658
can someone post that asset bubble graph again and point to us where we are currently?
But do you agree that the feds needed to step in with the CERB and the wage subsidy program?
In the United States, unemployment is very high, and underemployment is probably on the verge of rampant. You have large scale social division, totally lopsided wealth distribution, and a GDP that’s sharply contracting.
By absolutely every single conventional metric, this bodes very poorly for the stock market. Retail outfits and small businesses everywhere are choking. And yet, stocks are generally doing nothing but pushing higher. Calls for its imminent and catastrophic collapse just keep getting smashed. Something else is clearly at work there.
“Well Local Fool, you really deserve your screen name. You can’t live in a stock.”
To get the Canadian version of this tale, take the above paragraph and change the word “stock” to “real estate”.
Despite the physical distinction between the two, IMO it doesn’t really matter which it is. One thing I’ve learned over time is that while overpriced stocks versus overpriced housing have different social effects in the immediate sense, but they are actually all part of the same phenomenon that occurs when too much liquidity is sloshing around the planet.
Inflation of stocks and RE is a known symptom of not only too much money chasing too few returns in conventional circles, it’s also a consequence of people rushing into hard assets due to what they perceive as the imminent erosion of fiat currency – the old “cash is trash” moniker. In markets that attract global capital flows (coast cities are notorious for this, especially western ones) the effect of excess liquidity appears to directly challenge the traditional constraints imposed by local incomes.
Victoria is thankfully not one of those markets, but it’s close to one that is. And as long as liquidity is flooding those markets, I’ve come to think the analysis of traditional metrics and notion of cyclicalty is going to be of more limited use.
I don’t doubt that there’s some sort of reset coming, and the reason I think so is precisely because of what Whale Tales inadvertently implied in their post – prices are climbing despite a clear impetus for them to fall. Where I now disagree is the implication that this means, “therefore, prices are about to fall”. They could be, for sure. Economic contraction and large scale unemployment are the quintessential ingredients for RE price decline and always have been – but that’s not happening at the moment, and IMO, that’s due largely to the forces described above.
I do not believe for a moment that this is a “new era”. The whole thing wreaks of desperation, cronyism and fraud IMO. Regardless, I think we have clear evidence that central banks are absolutely hell-bent on continuing this charade until some sort of monetary and/or social reset comes. Whether that’s next month or a decade, is anyone’s guess. But one thing I am certain of, is that in some form or another, it’s coming.
https://www.cbc.ca/news/canada/british-columbia/langford-danbrook-one-1.5406134
Local Fool: Good questions, any guesses as to answers?
Traditionally, job layoffs and substantial unemployment are deflationary for home prices. Yet right now and as you’ve indicated, the opposite appears to be occurring both to this RE market as well as many major markets across North America.
Why do you think that might be? What do you think house prices are a function of?
Awesome. The framing team was raving about the hybrid Hockley Corners project and how fast it came together. This is the future for sure.
Hopefully not the land of unsafe new buildings. 😉
So layoffs at UVIC, Camosun and the downtown is dying but houses are over 1M, meanwhile rents are retracing and condo’s and city centers are becoming less and less desirable.. Seems like a perfect time to buy, I am also weary of these statistics as I can find many house on Zealty and Cross Reference them on BC Assessment and finding that many are listed at or under what was paid for them since 2017. The American dream “buy high sell low”.
Langford the land of no political fiddling around.
Question about subject- to offers: does anyone have statistics on how often these fall through? Hard to track I suppose?
Dr. Henry and Adrian Dix announce that 14 day quarantines have been extended until August 30 for USA visitors and everyone else internationally too. USA visitors are also currently prevented from visiting period for non-essential travel until July 21, even if they are willing to quarantine, and it sounds like BC govt hopes that this is extended to August 31 as well.
“I’m also keenly interested to see where our region’s large employers land in terms of ongoing WFH arrangements. If my large public sector employer allows me to continue WFH (even part time) indefinitely, I would seriously consider a move to the Cowichan valley.”
I am seriously considering whether now is the time to make that move (I’ve been wanting to for awhile). I’ve been WFH 3 to 4 days a week for several years now. I’ve been full-time WFH since March with no end in sight. Even if I go back to 1 or 2 days a week in the office, it would be ok.
Pretty tired of the classic Victorian “Wind West 20 km/h except 50 km/h near Juan de Fuca Strait” summer afternoons and evenings, so that’s helping motivate me as well.
“Downtown may be dying, but the parking lot at Mayfair Mall was about 80-85% full this afternoon (the lot at Blanshard & Finlayson). The last time I recall seeing it that full or fuller was around Christmastime.”
Could have something to do with the shitty weather.
For anybody wondering why UVic still hasn’t divested its endowment despite overwhelming support by faculty and students to do so:
UVic’s oily governing boards lay bare fossil fuel’s deep entrenchment in Canadian society
https://www.nationalobserver.com/2020/07/02/opinion/uvics-oily-governing-boards-lay-bare-fossil-fuels-deep-entrenchment-canadian
Downtown may be dying, but the parking lot at Mayfair Mall was about 80-85% full this afternoon (the lot at Blanshard & Finlayson). The last time I recall seeing it that full or fuller was around Christmastime.
ALL of my investments for the last 5 years or so have been in GIC’s. A year ago I was thinking I would purchase a nice condo in a good area…………..probably Shelbourne, Oak Bay or Fairfield. And then I would rent it out until I felt the need to sell my house and get something more manageable and on one floor. Because of the extremely low GIC rates right now i.e. 2.3% tops on a 5yr GIC, I would have definitely began looking for the condo. But now, after hearing all the problems with insurance etc. with condo’s , I am very hesitant. Maybe I’ll do a few nice reno’s to the house and just live with the low interest rates for awhile. What a confusing time.
This is beginning to feel like an ancient Chinese curse.
VREB is being nicely cautious. “ These are not normal days for local real estate, nor is this month a signal of a return to normal, regardless of the numbers.”
They could easily have trumpeted this month as all is well but they didn’t. Healthy level of caution is good.
It’s going to be interesting to see how long the down, up, down, up swings continue in the data and where things level out. So many unknowns in the economic variables right now and in to the near and medium terms, it just might be a prolonged roller coaster that tortures forecasters and prognosticators. The CERB and mortgage deferrals ending will give a good picture of the actual economic impacts and where it might hit housing.
Separately, on the anecdotal side, was is just a delayed mid-week long weekend or did a lot new listing come on at the end of this week? Are people looking at those June sale numbers and trying to sell before the uncertainty in the fall hits?
I’m also keenly interested to see where our region’s large employers land in terms of ongoing WFH arrangements. If my large public sector employer allows me to continue WFH (even part time) indefinitely, I would seriously consider a move to the Cowichan valley. This kind of thinking could have a wild effect on everything we know about core-periphery values.
Lakefront properties could also be primary residences for information workers, especially with many large tech companies indicating WFH friendliness long-term. More and more roles in my field (software engineering) can be done anywhere there’s reliable internet. Personally I don’t see that trend reversing any time soon. Video call software getting better by the day, better internet access + cellular coverage/data keeps rolling outward, etc.
Great information here Leo, thank you. Any chance you are going to do the weekly numbers graph for June?
Definitely interest rates are driving increased affordability and buying. Also if they go ahead with the previously scheduled relaxation of the stress test that will boost buying power again by allowing first time buyers to take better advantage of the rock bottom rates.
I like the image of the corona virus impacting the sales activity graph.
One thing that maybe I missed was a comment on both interest rates and lending criteria. Very low rates has brought many buyers back who were negatively affected by the stress test.
Also I wonder if a lot of buyers are taking the opportunity to purchase before the real carnage begins in the economy and banks increase lending criteria.