First time buyers undeterred, and a note about interest rates
There’s lots of surprising data coming to light during this market shock, and the latest I noticed was a surge in the proportion of first time buyers in the pool. We’ve always had a very low percentage of first time buyers in Victoria, only an average of 22% of all buyers compared to nationwide statistics where 45% of all buyers were first-timers. That proportion is generally quite consistent until May’s survey results where first time buyers suddenly surged to 33% of all buyers.
It may be that first time buyers were simply more motivated than repeat buyers and jumped back into the market faster than repeat buyers (or the younger first time buyers were less concerned about COVID exposure). It will be interesting to see if this persists in the June data or is just a one time blip.
Investor interest in May though was relatively low. The peak was in the mad years of 2016 and 2017 where investors were drawn by outsized price appreciation in the market, and has retreated since prices flatlined. I got quite a lot of interest from investors looking for deals starting in March, but with no significant dip in prices I expect most are still sitting on the sidelines.
Interest rates are low, but it’s not like 2008
Low rates are being cited as the reason behind the recent sales surge, and it’s true that money is almost free, but it’s not been that big of a drop since before the pandemic. After recovering slightly in 2018, rates had been dropping for over a year already. The pandemic brought fixed and variable rates down by about 0.5% and 0.75% respectively.
Source: ratehub.ca
That’s nothing to sneeze at and brings rates to record lows, but as a comparison after 2008 both variable and fixed rates immediately dropped about 1.6%, and then went on to drop a total of about 3.25% over several years.
Put that into real terms and you get quite a difference in the impact on mortgage servicing ability.
| Mortgage for fixed $2500/month | |
|---|---|
| Pre-Financial Crisis (2008, 5.25%) | $420,000 |
| Post-Financial Crisis (2009, 3.6%) | $500,000 (+19%) |
| Post-Financial Crisis Low (2016, 2.1%) | $585,000 (+39%) |
| Pre-COVID (2.50%) | $560,000 |
| Post-COVID (1.75%) | $607,000 (+8%) |
Putting aside qualifying, after 2008 someone able to pay $2500/month could immediately add another $80,000 to their mortgage with no increase in payments and eventually could borrow an extra $165,000 on the same monthly payment. That’s nearly 40% more mortgage for the same payment just via interest rate declines.
The COVID emergency rate drop only gave that same borrower a boost of about $47,000, or 8.3% increase in buying power. Perhaps rates will drop a bit more, but they’re unlikely to deliver the same kind of stimulative effect we saw after the financial crisis. The Bank of Canada is sticking to their guns that rates are at their effective lower range and won’t be going to zero or negative anytime soon, and bond yields are likely there as well.
Rates will likely stay low for a long time, but I think we’re just about at the end of the multi-decade trend of dropping rates acting as a tailwind for the housing market.
Hi all. I need to have a house appraised. Can anyone recommend someone?? Thanks,
New post: https://househuntvictoria.ca/2020/07/13/employment-recovers-strongly-in-victoria-but-its-about-to-lose-meaning/
“Introvert, what did Deb ever do to you?”
She’s a bully who targets specific people: JustJack, Hawk and now Deb.
I liked all these people’s posts. Provides a nice balance to reading the comment section.
I personally want RE prices to come down not just for personal reasons but for our society. Tax free capital gains on houses needs to end. Why should a minimum wage worker pay tax on their earnings but wealthy home owners with often huge gains don’t have to. Real estate agents shouldn’t make more than surgeons either.
Introvert, what did Deb ever do to you?
Agree with you Former Landlord.
This morning I’m far more concerned about a second wave of Covid than what house prices are going to do next. There are now enough reports and medical studies out there about serious long-lasting effects among all age groups and possible aerosol transmission to make me get back on my letter writing campaign for mandatory masking in most indoor spaces. Probably won’t happen in BC unless our numbers rise, but people seem to be a lot less careful now than they were a couple months ago.
https://news.sky.com/story/coronavirus-warning-from-italy-effects-of-covid-19-could-be-worse-than-first-thought-12027348
In bad times (i.e., when RE prices seem to be going up), highlighting asking-price reductions is always the last refuge for the bears. Like Deb and Myrealitycheck.ca.
I looked and Myrealitycheck.ca is currently down, so maybe prices are going up in Vancouver too and the bears crashed the site.
The tax on suite income is minimal, especially if you are carrying a large mortgage, since the interest portion attributable to the suite is deductible. While we had a suite the extra tax we had to pay was minimal. Even negative one year when we had a change of tenants and missed some rental income and had to do repairs to the suite.
The only real missed tax revenue to be found here by the CRA would be from the capital gains of the suite portion at sale. They seem to be gathering data that can be used for this by now having to report the sale of a principal residence on your tax return.
This seems ever so slightly judgmental.
I retired early with a mortgage, but it made no sense to pay it off as legal rental income covers the debt. Having the rental income pay down the mortgage means it does not create a lot of extra taxable income due to the interest deduction, and the mortgage is at a lower rate than the returns we receive for investments of the amount of the mortgage in tax advantaged accounts.
As always, it is a question of math, not applying black and white rules.
I can’t afford a Ferrari. Why isn’t Ferrari doing something to solve its affordability mess?
Chicken or egg situation…
Are high Victoria RE prices caused by people doing naughty things, or are people doing naughty things because of high Victoria RE prices?
I think it’s more the latter, and I would argue the main reason we’re in this “affordability mess” is that Victoria is one of the most desirable cities (if not the most desirable) in Canada and the supply of detached houses available in the “core” is basically static while the region’s population continues to grow.
I think anyone who retires with a six figure debt is a fool. Everyone used to think that actually, but times change.
Why “instead”? In what way are trying to get a lower price and trying to pay off the mortgage early mutually exclusive? In fact, the first facilitates the second, doesn’t it?
Can’t wait to see the response to whale tales pointing all the houses that sold quickly over ask.
Does pulling $97,000 off asking with 7 days on the market seem a little fearful to anyone else. Very nice house on “Davies Street” in Vic has done just that, does anyone know if there are special assessments on this? Or is this people starting to understand the changing climate and future outlook on deteriorating “asset” valuations?
As we all eagerly wait for this weeks numbers.
Yes, and the average Canadian will buy/sell 4.5-5 homes in their lifetime. Best to try to make most of these moves as they can have a huge impact on your net worth. Stay put if you can if the next move is not going to be net positive.
It can make a lot of sense not to have a mortgage in retirement depending on your cash flow as it is a recurring monthly expense and incomes typically drop in retirement and people generally become more debt averse for many practical reasons. Carrying mortgage debt into retirement also creates a potential financial burden for a survivor if one spouse passes and qualifying for a HELOC may be impossible. You also cannot have a reverse mortgage and a mortgage at the same time, although you may be able to get a reverse mortgage to pay off the mortgage. A reverse mortgage is a higher interest rate but no monthly payment required. I agree that if you want to downsize, carrying a mortgage up to retirement might make financial sense.
“ CRA is investigating foreign real estate holdings by Canadians
Next they need to investigate unreported BC suite incomes.
The elephant in the room.
And don’t go telling me people report it!
Buying an overpriced house because it has a ‘tax free’ mortgage helper is one of the reasons we are this affordability mess…
Sure, but nowhere near one upgrade. You could keep ramping up the home buying every 5 years, and do that perhaps 5 times before you retire. If you’re not opposed to extracting equity in retirement it makes no sense to be opposed to carrying a mortgage.
The whole exercise does expose the absurdity of unlimited tax free gains though. High time for a cap on principal residence tax exemption.
Lots of talk about how affordable house prices were prior to the run up etc etc. Lets take a trip down memory lane, If you wanted a decent house in oak bay/henderson and wanted to pay 2010 prices, you still would need to pony up $800k like below. keep in mind, its nothing fancy.
https://www.brendarussell.ca/Properties.php/Details/104/3562-redwood-avenue-henderson-oak-bay-victoria-bc#viewdetail
Also saw this flip below, wonder how much they made after a 3 year holding period.
from this
https://www.brendarussell.ca/Properties.php/Details/151/331-robertson-street-fairfield-victoria-bc#viewdetail
to this
https://www.brendarussell.ca/Properties.php/Details/193/331-robertson-street-fairfield-victoria-bc#viewdetail
Finally, i found the house i am interested in back when it was purchased in 2016 pre-reno.
Back in 2016
https://www.brendarussell.ca/Properties.php/Details/173/46-king-george-terrace-oak-bay-victoria-oak-bay-bc#viewdetail
And now
https://www.realtor.ca/real-estate/21961233/46-king-george-terr-oak-bay-gonzales
Because you will hit an affordability wall as there is an equity gap between lower and higher priced homes due to compounding appreciation and your income will only qualify you for so much of that differential. And then your life is time limited. At some point you’ll retire and won’t qualify for a mortgage or want one.
My response was specifically to this point:
In an appreciating market is probably financially better to sell after five years and pay transaction costs if you are leveraging up and can afford to do so. Lateral moves not so much.
Sure, but then it makes no sense to stop after buying the 1.3M home. Why not keep going? $750k, $1.3M, $2M, $2.8M, $3.4M… Just keep levering up every 5 years to maximize that tax free gain. School tax aside, with your assumptions it will just keep getting better and better.
True, illiquid I should have said, not inaccessible. But most people just don’t downsize in retirement after having lived in a house for so long, and while you can borrow against it, that’s just not what most people want to do after paying down the mortgage all their lives. So I’m not arguing against your strategy per se, but it does come back to your second point: At a certain point, why bother? Upgrade to the $1.3M house if you will enjoy living in it more, but the marginal value of the extra money I would personally weight very low.
I don’t know what the appreciation rate is going to be going forward. It might well end up being the long-term average, especially if you are holding for 30 years. Even if a lower appreciation rate occurs, it applies to the lower value and higher value home and the compound interest effect means the higher value home will still have a higher net return.
I took LOC into account in the analysis and it still appears better to buy higher, but money is not everything and many might rather just just pay a small mortgage off sooner, and those with pensions might not be as interested in maximum return.
As you point out, later you can sell and downsize or borrow against the equity. I don’t see how home equity is inaccessible.
Yes if we have 6% annual appreciation that is tax free, then you are better off buying as much principal residence as you can. Basically pour all money into your principal residence.
But:
@freedon_2008 – I appreciate there are far worse places on the planet, but the chart is flawed, IMHO.
So long as fewer than 40% of voters can give any party a false majority, Canada is not a full democracy.
Justin Trudeau screwed voters by reneging on his promise to make 2015 the last election under FPTP. He’d rather let the 905 decide elections and volley power with the other corporate party, than move Canada forward by cooperating with actual progressive parties.
For those worried/complained about Canadian democracy earlier on this blog, hopefully this chart of democracy index by The Economist will make you feel lucky:
So it snowed in Innisfail, Alberta, this afternoon. Innisfail is just south of Red Deer, and north of Calgary.
Often the case, but if you are a move-up buyer, long-term you may end up better off in some situations if you sell and rebuy in five years, particularly if you sell without a realtor.
Scenario A
Buy a home for 700k in 2015 with 20% down. 6% annual appreciation. Mortgage would be 560k.
Stay in the home for 30 years – 3.2 million in appreciation over the 30 years plus paid off home equals 3.9 million net asset worth. Pay $847,934.91 in interest. Tax free gain of 3.05 million (ignoring other costs along the way for simplicity)
Scenario B
Sell in 2020 for 936k and buy a better home for 1.3 million in 2020. 6% annual appreciation. Mortgage would be 950. PTT would be 24k.
Keep for an additional 25 years. Total appreciation – 4.279 million for the 25 years plus a paid off home for a total value of 5.579 million. Pay 1.3 million in interest over 25 years plus $136,275.26 in interest from first five years in first home. Tax free gain of 4.119 million (ignoring other costs along the way for simplicity)
Given the tax free status of primary home equity, the net approx $1,000,000 gain on the more expensive home may be worth it for both monetary and non-monetary reasons even accounting for transaction costs- if you can afford it along the way and interest rates don’t skyrocket.
There would also be a monthly principal payment differential between the two homes, but you would likely be ahead financially even if you invested the differential each month as not all of it would be tax sheltered and principal payments are lower at the beginning and higher at the end of the mortgage term – plus some people who might be tempted to spend discretionary income may benefit from the forced investment a mortgage requires.
And moving up after five years may have a higher return than moving up after fifteen years given the nature of appreciation.
The numbers change depending on a lot of factors but it might be worth it for some.
And yet houses are still selling.
Would it make you feel better if the answer was no?
“The deal in real estate is basically minimizing the number of transactions. One person that paid market value on a place they can live with for 15 years is way better off than someone else that got a deal of a few percent off but has to move again in 5 years.”
If the difference between the place you can live with for 5 years vs the place you can live with for 15 years is $20,000 in default insurance, I’m not sure this holds true.
The deals in real estate are few and far between anyway. In a normal functioning market everyone is paying market value plus or minus a couple percent.
The only deals arise if the market is dysfunctional with very low volumes where the must-sellers don’t have any bidders. Or you have unique skills like development or substantial renovation.
The deal in real estate is basically minimizing the number of transactions. One person that paid market value on a place they can live with for 15 years is way better off than someone else that got a deal of a few percent off but has to move again in 5 years.
Because it’s not affordable.
Could you even afford to buy the house you live in currently if you were in the same situation you were in in 2008?
Sunday thought.
In an effort to save money, so many people seem to spend so much effort trying to find a “deal.”
Why not just pay a “normal” price for a house and instead concentrate all your effort on trying to pay off your mortgage in 15 years rather than 25 or 30? In most cases, you’ll probably save far more money in interest than you ever could by getting a “deal.”
And I would argue that the speed at which you pay off your house is far more in your control than is finding a great “deal” on the right house.
Yikes………….the wine I had last night turned me into such a blabbermouth!! I’m in my senior years and can’t handle it as much as I once could. I can’t believe I even made that wonderful dinner of prawns, peppers and rice while I was into it. Wonders never cease.
To Frank: Know what you mean about the auctions. I miss them too. We attended them for years.
110k special assessment? Jesus Christ, are they practically rebuilding the entire structure??
Speaking of boats (and insanity), we lived in a basement suite whose bathroom was so small that it had a boat sink in one corner, and you could touch the sink with your head if you leaned over on the toilet. The “kitchen” had a hot plate instead of a stove.
This was in Saanichton circa 2007. The vacancy rate in Victoria was like 0.01% (at least it felt that way). This place was “Plan B”; much nicer “Plan A” fell through when the owner’s mother fractured her hip.
Despite the cramped bathroom, and much to the landlord’s surprise (he later told us), we ended up renting that suite for two years. The rent was only $500 a month, so we were able to aggressively pile up cash for our down payment. Short-term pain for long-term gain, we had to remind ourselves sometimes.
In retrospect, it was a great time to have a lot of money in the bank. Our high-interest savings account at Coast Capital was paying 4.25% at one point! After we bought, interest rates dropped to nothing but we were house-poor with no cash, so we didn’t care. Good times…
1.9 single family detached properties are selling for every condo
Last year it was 1.5.
Note when I chart price/ask it is relative to original asking price on that listing, so if that condo sells at $450k, it will be $450k/$675k = 67%.
This condo is an estate sale, so it will sell at some point. May not be a bad price but few people have $110k just lying around. If you do you will likely get it at a discount relative to equivalent non-impacted place.
Being beside Beacon Hill Park may not be the selling point that it used to be.
That property comes with a $110,000 special assessment the buyer has to pay which brings the purchase price slightly above assessed value. The property also requires a renovation inside. Not an amazing deal in my opinion.
https://www.realtor.ca/real-estate/21899433/203-1000-park-blvd-victoria-fairfield-west
Probably was the owners kid living for free or close to it.
For the price doesn’t make sense. But good option if you can save serious coin. I knew someone who lived aboard a semi derelict boat near Brentwood while attending Uvic. Also a friend who lived for a year in a plywood box in the forest of Burnaby Mountain while studying at SFU.
For both it was seen as a sacrifice to get ahead and not take on too much debt
CRA is investigating foreign real estate holdings by Canadians https://www.remonline.com/cras-tax-audit-of-u-s-real-estate-transactions/
Debt cliff slowing encroaching… And I have been counting 30 to 50 rental properties a day for the past couple of day on Used Vic… Does anyone use Zealty to watch houses? If not check it out and look at the massive reductions on asking’s, I saw a 2 bedroom condo beside Beacon Hill Park go from 599,999 to 450,000 after being on the market for 46 days (which will be touted as selling near or over asking when and if sold) … Also Victoria’s unemployment is at the highest level since 2001, but of course we are bound for a V shaped recovery.. Does anyone have any idea what happened in 2001… Oh yea and the clipper is on hold until April 2021, V shape is just around the corner and all time new housing prices.. “To infinity and beyond”!
Yes, if rates remain near historic lows and the job and rental markets recover long term you should be able to move out of that basement eventually.
IF.
FWIW a balanced portfolio up about 3 percent ytd, or off about 2percent from all time highs earlier in the year
Good point haven’t actually looked that closely since I only own ETFs
Has anything actually recovered except tech stocks? Most of everything that I’ve seen is still down, some of it substantially. Tech is propping up the indexes.
Thanks Duran and Leo
I wasnt trying to brag here. I was trying to say houses in some areas havent increased as much as you may think.
The asking and selling prices of the houses in Lambrick Park area in Gordon Head that I sited in an earlier post are only about $150K more now than they were in mid to late 2007.
I was actively looking at those homes at that time because I was thinking of selling my 1962 Esquimalt bungalow and similar 1974ish homes in G.H. were selling for about what I thought I could get for mine. Not many Rockheights homes come on the market often. The man who bought my home didnèt want to flip it. All of a sudden the market was staring to fall and he was unable to sell his existing home. He was sure he was able to so he did not put any conditions on his offer with me. So, after a few months he tried to sell the Esquimalt home and ended up only getting, I believe $585K. That is what was happening in the summer and fall of 2008.
I am very familiar with the 70s homes in G.H. I bought a brand new one, I think in 1974. I paid $42K for it. Three months earlier it would have sold for $36K and a few months later it would have sold for approx $48K. I sold that home in I believe Jan 1980. It went for $128K. Most of those homes then were going for between $126-$132K. It wasnt many months later, that those same homes had dropped back in price to about $85K.
The address of the house was 4389 Columbia Drive. It sold on 22 May 2019 for $770K. In say September of 2007 it probably would have sold for around $685K.
Alexandracdn-
It’s never a great idea to compare a single sale to the market as a whole. It gets repeated so often it’s a cliche but it’s true – anecdotes aren’t the same as data. In any market there are good and bad deals. And when things are changing quickly (as they were in n 2008), it’s easy to get caught on the wrong side of things. As I recall, it was fall 2008 (late Sept or October) when Lehmann Bros went bust in the US and the stock market was decimated.
It’s quite possible that you got a great deal for your house and the buyer got a bad one; there can be a $100k difference right there. And if that person was trying to flip the house in 1 year or less then I don’t have much sympathy…
I’d pay $1200/month for that tuna can if I could take it out.
It does make me curious though. Which UVic student just lived on a boat in Esquimalt for 3 years? I guess it was probably the owners kid for free.
lmao, I thought I seen it all but nope:
https://victoria.craigslist.org/apa/d/esquimalt-1-bed-live-board-yacht/7157612253.html
I remember when you bought that house Leo. I was so happy for you. Yes, I was fortunate to get what I did for my home. It was in Jan 2008. Gordon Head area homes similar to the ones sited in my earlier post, were selling in Mid to late 2007 for between$650-$725K. The person who bought my home tried to sell it later……………as prices started to increasingly drop in March of 2008. He thought it would be no problem selling his home (so no subject to on his offer with me)…..but he was wrong and unfortunately got caught. He later took a huge loss……….maybe in Aug 2008? He ended up getting only, I believe $585K for the house he bought off of me for $700K, and he was forced to remain in the house he was attempting to sell. Remember in around July 2008 the stock market fell drastically. Housing prices also. My goodness, the TSX now is almost at the same level as it was in July of 2008. It was not until 2015 that housing prices in the core really started to see huge increases once more.
No, he is not retired, but moved from Victoria to Mill Bay and keeps working as a family GP, so he could buy a nice house there for his family that he couldn’t afford in Victoria.
New data out
The number of work permit holders in Canada appears to have been affected by coronavirus closures
March 2020 20% drop YOY
April 2020 22% drop YOY
May 2020 45% drop YOY
https://www.cicnews.com/2020/07/canada-work-permit-levels-remain-steady-since-march-0715008.html#gs.a0mob
Immigration numbers for May up but still way below normal
“Canada’s immigration levels increased significantly in May 2020. Canada welcomed 11,000 immigrants compared with just 4,000 in April. In a given month, some 25,000-35,000 individuals officially become permanent residents of Canada.”
https://www.cicnews.com/2020/07/canadas-immigration-levels-nearly-tripled-in-may-0715003.html#gs.a0qnvs
I also bought my rental house in GH in 2013 in the $500k range, at that time I remember there was a waterfront home on Vantreight drive asking for around $770K, it was not updated but livable. In 2007/8 I know someone who bought a 70s house in the campus view area for over 600k. 2009 would have been the time absolute low I think. I remember there was a decent rancher house in the uplands and also new build waterfront homes in mount doug going for just under 1 million at that time.
Td downgrades its housing market outlook for Canada based on weaker population growth
“While some of this setback is likely temporary in nature, we see the mix of ongoing travel fears, a pandemic-related slowdown in processing times for immigration applications, government travel restriction measures, and an only gradually healing global economy holding population growth well below its pre-virus rate of around 1.5% annually over the next few years.
This more moderate pace of population growth will weigh on housing market activity across the country. In fact, weaker population growth is a major factor underpinning our downgraded forecasts for home sales, prices and starts across the country through 2021.”
https://economics.td.com/ca-housing-population
For what it’s worth, here’s what the CREA’s new pricing tool spits out:
Based on HPI trends for Single Family-1 Storey homes in Es Old Esquimalt
and a previous selling price of $700,000 in February 2008,
the estimated price in June 2020 would be $1,095,200
I think you are mistaken about that. I bought a typical Gordon Head house for $550k in 2013 (one of the basically 2 standard layouts in Gordon Head, 2100sqft).
Early 2008 the median price was high 500s in Gordon head. A $700k house in Gordon Head in 2008 would have been pretty nice. Unfortunately I can’t pull any specific sales that far back without a bunch of effort.
Have prices of SFH really gone up as much as many think here? Some food for thought.
I had a SFH in Rockheights area of Esquimalt. Built early 1960’s. Very nice home. Total of 1900 SQ Ft with most of it on the main floor. 3 beds, 3 full baths. Large single garage with extra parking on the side. A nice view. NO SUITE. Sold in early 2008 for $700K.
Now, take a look of some of these 70’s homes in Gordon Head/Lambrick Park area:
1708 Sprucewood. built 1965. Assessed at $882, Now: $864. 2180 Sq Ft. 2 kitchens; 2 baths
3990 Gordon Head Road. 2459 SQ FT. Blt 1975. 5 bds; 3 baths. 2 Kitchens Ass’d $738 Asking: $838
1825 Fairhurst. Lambrick Park/ Gordon Head Blt: 1973. 2214 SQ FT 5 beds, 3 baths, 2 kitchens. Assessed: $777; Asking $839
1700 Teakwood Lambrick Park/Gordon Head; 2285 Sq Ft, Ass’t: $807; Asking $850K, 5 beds, 3 baths
1805 Hartwood Place, Lambrick Park/Gordon Head. 1932 Sq Ft. 4 beds, 3 baths, 2 kitchens, Ass’t $880K Sold: $859K…Very nice home and been very nicely updated.
This is 12.5 years after I sold the house in Esquimalt. Esquimalt at that time, even in Rockheights sold for approximately the same as would a typical house in Gordon Head.
Just sayin………12.5 years later………..$150K more. Also, in 2008 you could get a 5 year GIC with CIBC for 4.25%. AND, there were a lot better places and formats to invest in at the time than a CIBC GIC.
Interesting to see that Genworth is still down nearly 50% from pre-pandemic. Didn’t recover with the rest of the market and didn’t benefit despite CMHC handing them part of their business.
Market clearly thinks there are losses on the way for Genworth. Either they’ll be right or this is a good investment opportunity.
MIC.TO
Just biked back from Moss St Market. Pretty busy, with lineups at most veg/farm booths . Note the market has been spread out to a much wider area, over the grass filed and a park nearby, in addition of the school yard (which has entrance number control at the gate).
‘
‘
You must be one of the few people who biked there as there were well over 100 cars parked over 3 or 4 blocks, i’ve never seen it this bad, it’s really amazing that more people don’t use other forms of transportation to get to the market.
Interesting scenario..
Listed home is 50 years old
Listing Realtor is asked by a viewing buyer’s representative if renovations which happened during the life of the home had permits.
Listing Realtor also mentions one showing was a result of their “recommendation”
Listing Realtor goes to City Hall to look up records and does not find permits for modifications but also takes note there is no final occupancy permit on file
Listing Realtor tells selling client the lack of permits is a Material Latent Defect that must now be disclosed using the Material Latent Defect form.
Totoro – absolutely correct
Seems like it is to me? Even without further declines in rates you still pay off the mortgage over time, rents increase, and presumably many people will have increases in income from when they first purchased.
The owners who bought in 1990 saw steadily declining interest rates which enabled them at some point to pay the mortgage without the rental income.
Another example of how “this is how you could buy X years ago” isn’t relevant today.
To Ks112’s point, that has always been the case. 30 years ago I know folks who did the same, living as the basement dwellers whilst renting the upper floors. Not a new strategy by any means.
All kidding aside, there are still ways for hard working ppl to buy a house currently. It just takes hard work and sacrifices which could involve living in the basement suite while renting out the upstairs for the first 5 years.
Ok so 200k usd a year then. I am interested to see what this does to the commerical realestate market
Some Silicon Valley companies have said that employees can work from elsewhere but will get pay cuts to compensate for the reduced cost of living outside of Silicon Valley
Well if you go by Leo’s latest post then it could be the 300k usd a year silicon valley work from home software engineer.
Indeed. The govt worker was able to get in because they bought when the million dollar house was only half that.
Question is, who will move into the neighbourhoods when all the houses are a million dollars minimum? Certainly not the ordinary families that lived there before. And the wealthier families that do will not be satisfied with an ordinary little rancher from 80 years ago. Those will be increasingly torn down and the replacement homes will be maxed out for the lot.
It’s starting. Friends in Seattle are considering the same (back to BC, not Victoria) if the work from home persists
“ I’m a Canadian living in silicon valley. It looks like my job is going to be 100% remote going forward, and the company I work for already has remote employees working from Toronto. My wife and I are considering relocating to the Great White North”
https://www.reddit.com/r/VictoriaBC/comments/hpgxkv/looking_for_recommendations_of_where_to_move/?utm_source=share&utm_medium=ios_app&utm_name=iossmf
Almost any able bodied person with a median income can be a millionaire, just have to save, invest, and live long enough.
Invest 30k at 30 and $500/month every year thereafter and you’ll be a millionaire at 63.
If you have a grandchild, invest 50k for them at age 20 and make no further investment or withdrawal and they’ll be a millionaire at age 64. Start when they are born and they’ll have a million at 45.
https://www.bankrate.com/calculators/savings/save-million-calculator.aspx
For every doctor who can’t afford a house there is some 70k a year government union worker living in a million dollar house in oak bay, it’s a zero sum game at the end of the day. The realestate market has priced some ppl out while providing others with the opportunity to be millionaires.
A thoughtful critique. Thanks.
Too bad, they just come here to retire, not to work
Just biked back from Moss St Market. Pretty busy, with lineups at most veg/farm booths . Note the market has been spread out to a much wider area, over the grass filed and a park nearby, in addition of the school yard (which has entrance number control at the gate).
Downtown Victoria is convalescing, let’s say.
Good luck of that with our high housing prices here. Our ex-family doctor moved from Victoria to Mill bay 3 years ago so he could buy a house there for his family.
Not dead but seemed a shadow of its former self when I visited Victoria over the last 2.5 days. Obviously a big improvement from April when I was last in town though.
How do I poach one of those doctors? Maybe we need to run some targeted Facebook ads to get them to move here
Good summary and criticism of modern monetary theory, at least superficially. Also available in podcast form
https://youtu.be/TMGDaTGx3V4
In reality, very few will actually leave. But this survey shows how upset Alberta doctors are right now.
42% of Alberta physicians considering leaving the province for work: AMA survey
https://globalnews.ca/news/7162354/alberta-medical-association-doctors-survey/
According to CHEK NEWS there are two new cases of COVID in the Island Health District. I believe someone asked about that and it was hard to find an answer.
I feel the worst outcome of this pandemic will be the social isolation and lack of human contact due to WFH and most businesses going exclusively online. I don’t know about you, but I hate sitting are home. One example is auctions, not everyone’s cup of tea but a great meeting place for people with a common interest. I’ve made lots of friends and networking going to regular auctions. They have now vanished and are doing business strictly online and do not intend to go back to live auctions. Their overhead has been greatly reduced and are realizing higher prices. But my usual Thursday night outing is gone for good. Always something I looked forward to, knowing I would be hooking up with some of my cronies.
The economy lost $45B in employment income and the government injected $65B in direct supports to skate over the problem. Seems like a reasonable concern to wonder what might happen when those supports scale back.
I think we’ll be OK. Was at costco the other day and they now have a mask recommendation and were handing out masks to those who had none. Perhaps 60% of people had them on.
People are more concerned about COVID than ever, likely because of the huge surge in the US. That will work to our advantage. If cases rise again here I suspect people will quickly be more careful again or ramp up the mask adherence.
Asw things open up, I cannot see how we dont start getting more cases of Covid on the island. The bed and breakfasts near me already have people from both Toronto and Montreal staying here as well as a number of couples from Alberta.
While lots of people are social distancing what I see is an increasing number of people that dont. If the infection rates hit a spike like they have in a number of US States I suspect that the economic damage could be significant.
2 new cases on the island today.
Anyone have any insight?
I’m not a bear. I’m just not rich enough to buy here.
We had a landlord on the blog talk about how she reduced her rent in April. You said it was anecdotal evidence.
Therefore when you said that Earls was full…
Did you upload that video yet?
You forgot the “Vancouver ripple effect.” Remember when Soper, Josh (before he bought), and the other bears were constantly reminding us that Vancouver RE was in trouble and VANCOUVER IS ONLY 100 KM FROM VICTORIA!!!
“Where are all those people saying downtown is dead, soo much parking, just because Earls had a waitlist doesn’t mean anything blah, blah blah. Have they changed their tune now?”
A little bit. I was downtown last week and while it wasn’t particularly busy for a summer afternoon, there was decent foot traffic and businesses were open as usual. Clearly not all doom and gloom out there. But I bet a lot of restaurants and employees are being buoyed by the wage subsidy program.
The other wildcard is how many white collar types permanently shift to WFH. Nobody I know has any interest in going back into the office (including me), and I had a short commute by bike and was only doing it a couple days a week. Can only imagine how much better quality of life is for people who were commuting in from the Westshore everyday and who are now full time WFH.
I think there will be some casualties (lunch spots/clothing stores/tacky tourist shops) but downtown will be fine.
Speaking of rents dropping in July, looks like the hudson mews has once again dropped rents:
https://victoria.craigslist.org/apa/d/victoria-pet-friendly-one-bedrooms/7155898712.html
$1340 now for a one bedroom, really wonder what the catch is. I guess with parking it is still 1490.
James by “we” you mean “we bears” right? I really do hope you can all get out of that bear trap soon. If my recollection is correct the potential catalysts for the way out of the bear trap progressed as below in chronological order (nothing sticking so far):
Looks like CERB ending and a second wave of COVID hitting in the winter is the only hope left now, good luck!
I also said rents won’t really start dropping until July at the earliest when someone said they are dropping in May/June already. I’ll let you be the judge on who’s right on that.
66,645 new cases in the US today.
When do they hit 100k/day?
End of July? Sooner?
No one said that. We were just asking for proof to rib you about your posts w/r to rents falling. 😀
Where are all those people saying downtown is dead, soo much parking, just because Earls had a waitlist doesn’t mean anything blah, blah blah. Have they changed their tune now?
I saw a good one where a farmer in australia was putting charcoal in his cattle feed. The dung beetles he got for the farm would then bury the carbon. Interesting side effect was the charcoal as a feed additive has so promoted more efficient digestion and reduce methane emissions.
https://www.abc.net.au/news/rural/2019-10-18/wa-farmer-uses-beetles-and-charcoal-to-combat-climate-change/11613846
This is interesting:
https://www.washingtonpost.com/climate-solutions/2020/07/08/spreading-rock-dust-ground-could-pull-carbon-air-researchers-say/
I looked at that annotation. Looks like BC’s hydrodams would fall closer to the max level than the median, since they did flood a lot of forest (In the process of creating Williston Lake, 350,000 acres of former forest land was flooded). Funny that Quebec & BC might have the dirtiest energy mix of the lot.
Wouldn’t Real estate be substantially lower then?
February is part of the low season, and May/June are the biggest months of the year.
*With 75% wage subsidy in effect.
I’m in a business group where some of the members are actually doing substantially better than they were before Covid due to the subsidies.
Okay, but at one point didn’t you have it at 30%?
What’s the effective employment in Victoria now? is it above 11%? Even with the recovery, June was still obviously worse than March since the rolling # went down.
Effective Victoria unemployment down strongly in June but official unemployment is up from 10.1% to 11%.
Let’s see if the local media figures out this time that the unemployment rate is a 3 month moving average. We’re only 4 months into this so far….
Lido patio was pretty busy the last few days, and couldn’t get a table at the penny farthing yesterday evening (without a wait).
BC Employment is looking good. Most industries substantially recovered.
Percentage below is June employment relative to February. Not seasonally adjusted so not quite apples to apples, but looking pretty good except accomodation/food of course.
Employment 40% recovered from lows
https://twitter.com/mikalskuterud/status/1281570931211751424?s=21
Life-cycle greenhouse-gas emissions of energy sources — https://en.wikipedia.org/wiki/Life-cycle_greenhouse-gas_emissions_of_energy_sources
After 5 years, Medicine Hat powers down $12M solar thermal power plant: Low price of natural gas made solar power a too-pricey proposition — https://www.cbc.ca/news/canada/calgary/solar-thermal-power-plant-mothballed-medicine-hat-1.5137428
America’s Concentrated Solar Power Companies Have All but Disappeared
SolarReserve, one of America’s last remaining CSP developers, appears to have ceased operations — https://www.greentechmedia.com/articles/read/americas-concentrated-solar-power-companies-have-all-but-disappeared
Our housing development process is broken.
This is pure bullshit. There is absolutely no way that it’s an apple to apples comparison.
So not only are we not making any money from LNG royalties (see my earlier post) but “LNG exports will make global warming worse over the next three decades.”
What a great lose-lose!
https://www.cbc.ca/news/canada/british-columbia/promised-greenhouse-gas-reductions-from-lng-projects-are-vastly-overstated-says-new-report-1.5640429
I didn’t. I said that he was being politically expedient, and that the fires had more to do with forestry policy than climate change.
Climate change doesn’t necessarily mean a drier climate.
It’s always been normal to have forest fires in BC in the summer, this isn’t a new phenomenon, the first nations used to light them purposefully. So what would make it the “new normal” if it wasn’t every year with big ones?
I think he said the massive amount of forest fires could be the new normal. Just because it would be normal to have forest fires in the summer, does not mean he is saying it is guaranteed to happen every year.
It has been very wet so far this year in the interior as well as last year, which has mostly been good for keeping first fires at bay, although there is more flooding.
I think Siberia has been getting the forest fires this year and last instead.
I’m sure it’s just hemp for making clothing. 😐
1714 Hampshire Rd
MLS: 427012
Not sure I would want that picture used for the listing! (Left corner)
Then we’re not going to bother to believe you.
I’m not going to bother googling it for you, but yes, there was an expert saying massive fires were a certainty.
Are you familiar with Modern Monetary Theory? I had no idea it existed until very recently.
Super interesting:
https://www.cbc.ca/radio/thesundayedition/the-sunday-edition-for-june-7-2020-1.5594627/no-need-to-worry-about-a-deficit-when-the-government-can-print-money-say-some-economists-1.5594636
Yeah it’s interesting. I’ve seen some pushback from people saying that focusing on debt servicing costs is moving the goalposts to distract from large absolute debt value, but I think it’s pretty clear that just like when you’re looking at house prices, interest rates are key. Just means that rates will be lower for longer.
Doubt it. experts don’t tend to talk that way. Drier climate would mean higher probability of wildfires, not certain anything any given year.
Not sure what Horgan said, but the experts were saying massive forest fires were certain to happen last summer.
Perhaps the experts will be right someday.
Oh but we need LNG to help fund critical public services…
Royalties to B.C. government per thousand cubic feet of gas sold:
2005: $2.05
2018: $0.16
https://thetyee.ca/Analysis/2020/07/09/LNG-Fail-For-BC/
So it is going for well under BC assessment which is at $793,100 and the lot is valued at $697,000. Not bad area so not such surprise it is going for this.
And sales activity.
Not too much difference.
Last 2 weeks
Single family: 25.7% over ask (identical if we just look sub $1M)
Condo: 8.7%
I’m sorry you thought John Horgan was psychic.
Leo any change in the over asks? Are we seeing more listings pop up? Am i getting ahead of myself as you will cover that Monday? haha – Cheers.
Now that the US is pushing records again (ie: 3 times the number of daily cases as just 3 weeks ago), it’s time to revisit that log graph you were all so fond of. Looks pretty much flat still. Australia on the other hand you can see is going wild, except it’s only at 131 cases a day.
Didn’t he also say that the massive forest fires would be happening every year because it was the new normal?
I agree with Transformer. I am definitely not a first time home buyer but inflation is eating up peoples savings. As I have a very small pension, much of my savings has been used for retirement income. I fully intended, as I said before in buying a condo to rent out until I eventually felt the need to move into it. I am extremely hesitant to do that now. What are the alternatives when you get older? Age in place in ones big home I guess and utilize the extra space for a housekeeper/gardener/ part time cook etc. & provide it for free or just enough rent to pay for their portion of the utilities. Also, I think with all the government debt that is building as a result of Covid, the Feds will cancel the TFSA. Or maybe they will let you contribute up to say $100K and that will be it.
Horgan said insurance costs are going up nationally, not just a B.C. condo problem, although I haven’t seen data on that.
Certainly insurance companies claims are going higher due to climate change and other factors so insurance will cost more and more going forward
I think the wage subsidy expiring might be the bigger issue. Lots of businesses that have kept all their employees because of the wage subsidy where people may have no idea their jobs are precarious. When CEBA goes away I suspect there will be a second smaller wave of layoffs, likely more broad based (not just low income)
This is a positive in terms of our situation:
Debt-service charges are now about one per cent of GDP, compared with about 14 per cent in the early 1980s and around 12 per cent in the mid-1990s, two earlier periods of economic weakness.
https://business.financialpost.com/news/economy/canada-needs-a-new-fiscal-anchor-if-its-borrowing-spree-is-to-continue
is whale tales the new hawk?
CERB is done come September: https://m.huffingtonpost.ca/amp/entry/cerb-end-canada-coronavirus_ca_5f066fd9c5b63a72c33ce308/?__twitter_impression=true
The final tally on Calgary’s recent hail storm is in: $1.2B in damage. It’s the 4th costliest natural disaster in Canadian history.
3 out of the top 4 have happened in Alberta:
Patriotz: You make a good point about the number of actual first time buyers. LeoS, what are the raw numbers for first time buyers for May 2020 and 2019. It may be a question of who is no longer buying.
Is the number of FTB actually increasing, or are they just an increasing % of total buyers (as per the chart above). I thought total sales were still pretty low by historical standards.
What may actually be happening is that those who already own are deciding that this is not the time to move.
Let’s see what happens here when no students return to Campuses and all the rentals come on the market for long term instead of targeting students. This I am sure will push rents lower, although some have indicated that this will not happen I am of the view that rents will crash here pushing many cash negative rentals to force sell.. Wait for it! If you are a renter watch the market it’s time for all of you guys to get a better deal.. As the year pushes on the rates will get better as owners become more and more desperate for cash, this sounds cynical however renters have been taken advantage of for the past 5 years in this area.. It’s time to Capitalize!
why dont people look at the hole in march .. more in may because there werent sales in march .. average the recent months and you see a different may
@Mayfair Man
Yep, if you’ve got a crapper of house to sell, apparently now’s your chance.
People are probably afraid that inflation will eat up their savings, so they are looking to invest in real estate. Hence the increase in first time buyers.
Yes, and note that Japan has the world’s worst debt-to-GDP ratio (236%) and it’s not a third-world country.
Canada = 87%
USA = 108%
(2017 figures)
And all OECD nations are currently racking up debt, so it’s not as if Canada is in unique trouble.
https://en.wikipedia.org/wiki/List_of_countries_by_public_debt
can you find anything better for 705k mayfair man?
1405 Hamilton -> Pending @ $705k
This one really surprised me. All rock lot and for sure a tear down(house is literally falling down and a zoo of animals are living inside) + the added problem of big oak trees around it. Can someone help me out and explain it?
I often wonder if anyone made claims like this ever lived in (not just traveled or read from paper) a 3rd world country themselves? Try to live in one for a few years (I did) , then you will appreciate the political system and the freedom (to read, to think, to speak) we have in Canada that many take for granted.
Total Wealth Canada (population 38m): $8 trillion
Total Wealth all of Africa (pop 1.3 billion): $4 trillion
Even with Canada takes on extra debt of up to 500 billion or so for Covid, we are in no danger of becoming the equivalent of a third world country.
Ref: https://www.visualcapitalist.com/all-of-the-worlds-wealth-in-one-visualization/
Yeah, dumb post of my part. I equated classless society w/ communism. You are right, there are no pure classless societies.
I was trying to fire back (failing miserably) at the reduce the government workers’ salaries by 25% comment. I find the “government worker” is the quick, easy target because of course, they all do nothing (except the “front line workers”). So, when times are bad, everyone shouts that they are overpaid and have great pensions that they do not deserve. So, take it all away so they can suffer like the rest! But when times are good, I do not see the private sector re-distributing profits to government workers to bring them back up to their level. Easier to drag down, I guess.
This situation sucks for everyone (except realtors… they are killing it right now). But dropping the salaries of the government workers might appease a few but would have far worse ramifications on the economy which would then further exacerbate the situation for those already impacted. Vicious cycle.
I know a couple people that chose the government route. Good people. Work hard. I know a couple people that chose the private sector. Good people. Work hard. Go figure eh.
Concern about our fiscal situation is certainly warranted, but I think this kind of comparison trivializes the problems of third world countries which were bad enough before this pandemic hit.
Totoro- Thanks for the empathy, however I was not greatly affected by it personally. It was the devastation caused to other businesses and sectors of our economy. I’m afraid there is a lot of pain ahead of all of us and public sector workers will also feel the effects for years to come. I really feel for young people, there will be few entry level jobs for them to pay for education and get a decent start in life. If this situation persists, our government will not be able to come to our rescue, we are already overdrawn to the point of becoming a third world country.
Well EI has never been based on need and CERB is essentially an extension of EI. I think the feds wanted to stay away from means testing as it’s a minefield in a number of ways and would take much longer to get running. Like EI, CERB is taxable so those who have other income in the same year will be paying back a chunk of it.
No more weekly comparison chart? That’s sad I always found it very informative.
Frank, I’m sorry you are experiencing a shut-down, I presume due to covid. I never saw this coming and I empathize with you. Having to pay overhead with no revenue is scary. Not everyone has significant cash reserves and small businesses are important.
I don’t think we need to pit business owners against public servants or those with otherwise stable employment. I’m in favour of everyone getting through this as best they can.
I don’t think I’m out of touch, I think your math is off. Way off.
The median family income is about 80k in Victoria. Lets say those folks work from home and earn the same but can live in Cowichan or Parksville instead. If you have decent credit and even 5% down you’ll qualify for a mortgage of 520k and you’ll be able to buy a nice 3 bed 2 bath on an average city lot in Parksville and something with more square footage and amenities than this depending on where in the Cowichan Valley .
And how cheap do you want a house to be? You are talking about building brand new subdivisions across Crown Lands. That land needs to be serviced. There are significant development cost charges and developer costs to curb and gutter and services to each lot. And houses cost about $250/square foot to build now. If you want people to have an 1800 square foot house it is going to be $450k just to construct, plus the servicing charges, and don’t forget about higher property tax rates for all the new development costs.
This is why you get a $750k 1750 square foot home on a 3600 square foot lot in Royal Bay. Any SFH new build of any quality is going to get you to around 500k now. It is far cheaper to buy in an older home in a community where land costs and the house has depreciated. We don’t need government incentives for new Crown Land communities for remote workers because affordable communities with excellent internet and services already exist within two hours of Victoria and you are not going to do better by building new.
And, as a taxpayer, I want my money to go to assisting those who are truly homeless, not giving away Crown assets to those who can afford to buy a home. I’d much rather incentivize employers to create work from home positions if this is a social goal.
https://www.rew.ca/properties/2730252/3388-curlew-street-colwood-bc?search_params%5Bquery%5D=Royal+Bay%2C+Colwood%2C+BC&searchable_id=757&searchable_type=Geography
Yes. I’ve heard anecdotally of some young people using their CERB money to play the stock market. Others on CERB are saying they’ve “never been this flush” with cash. I think it’s a big mistake for the government to have decided that one size fits all, and everyone affected gets $2,000 per month, regardless of need. And remember, in April Canada borrowed net $26 billion from foreigners (a record!) to pay for this unsustainable nonsense.
Dad- Why don’t you try to making more money being self employed. Obviously you’ve never tried. You make it sound so easy. Go for it. As for seasonality of business, most businesses pick up in the spring and it makes up for the winter doldrums you must work through in January and February. Again, you wouldn’t be aware of this.
“It’s difficult for self employed people to make more money when your business is forced to close its doors. I have been self employed since 1982…”
Would it be fair to say that you probably have, over the last 456 months or so, made more money being self-employed than you would have doing the same job working for someone else? That was my point about self-employment and making more money, and the trade-off of less security.
“Shutting down a business for two months, especially two important months, could represent the business owner’s profits for the year. This is something you probably can’t understand.”
I can see how this would be the case if your business is seasonal.
Dad- It’s difficult for self employed people to make more money when your business is forced to close its doors. I have been self employed since 1982, and never did I fathom that the government would shut down my ability to earn a living. It is my strong belief that they violated my right to sustain myself while they continued to draw a full salary with benefits. Shutting down a business for two months, especially two important months, could represent the business owner’s profits for the year. This is something you probably can’t understand.
Cynic- I have no idea how you interpreted my statement to mean that I was in favour of a classless society. The society I was describing is known as Venezuela, which is what Canada is turning into, impoverished working class controlled by greedy bureaucrats. By the there are no classless societies. Name two for me.
I thought it would be fun to take a look at some numbers, so I took three friends/family (all millennials, like me) who live in Calgary and compared their SFH purchase price to their current Calgary property assessment (which is publicly available).
Couple #1
Bought in 2014
Sale price: $1.1M
Vs. today’s assessment: -6.5%
Couple #2
Bought in 2018
Sale price: $650K
Vs. today’s assessment: -7%
Couple #3
Bought in 2014
Sale price: $1.78M
Vs. today’s assessment: -14%
And readers here know what Victoria prices have done over the same time period…
I saw that article this morning, and it made me smile.
True.
And, strangely, we keep hearing about the economic “recovery.” Isn’t that a little premature, given that a second wave is nearly guaranteed (and some countries haven’t even wrestled down the first)?
In fact, it could very well be that no substantial recovery is even possible in the absence of an effective treatment or vaccine.
https://www.timescolonist.com/news/local/langford-residents-join-to-oppose-apartment-building-on-single-family-residential-street-1.24166605
I guess Langford is not immune to NIMBYism.
Government estimates CERB has more than offset loss in labour income. So economy is rosy because there is more money floating around than before.
We haven’t even come close to seeing the full economic impact of this.
Another thing. Most public-sector employees can’t set up little “personal businesses” to reduce/avoid taxes.
So you would like a classless system eh. I believe there are a couple countries that offer that. You might want to look them up.
“then we are living in a dual class society, people with guaranteed income no matter what and under the same circumstances, people who are devastated.”
Isn’t the main purpose of self-employment to reap the full rewards of your labour and in doing so, make more money than you would working for the man, with the trade-off being that you have less security?
Punishing public sector workers because of the foregoing would be arbitrary.
Although this chart is interesting
https://twitter.com/kevinmilligan/status/1280933038394875905?s=21
Respectfully, this comes across as slightly out of touch…. sure, $500-$600k is ‘affordable’ relative to Victoria prices. But look at the macro factors and it’s still nonsensical… home prices are artificially inflated by supply restriction.
Canada has: a shitload of land, fairly low median incomes, and an overwhelming desire for home ownership. Put those pieces together and it’s clear we are not serving our people will with current land use policies.
The only reason it’s difficult to attain home ownership for most people is because of structural factors we’ve created as a society – it doesn’t have to be this way. I’d like to see some progressive policy around this topic.
Don’t worry with a deficit of $343B, there will be no one exempt from paying for the coronavirus response.
Those that did not lose their jobs should expect to pay for the support of those who did. The impact was disproportionately on the young and less wealthy, but I’m sure we’ll hear a lot of whinging from those who skated through this unscathed when it comes time to pay the bill.
First, I don’t think democracy means what you think it does.
Second, people in the private sector are free to apply for and obtain jobs in the public sector. Their decision to work in the private sector wasn’t made at gunpoint.
Wait, wasn’t a lot of people here saying how much more they can make in the private sector especially in IT? So now Frank wants the lowly paid public servants to take the hit? People are free to choose where they work, it is on the individual to decide if they want to chase higher pay and less job security and vice versa.
Dad- then we are living in a dual class society, people with guaranteed income no matter what and under the same circumstances, people who are devastated. Doesn’t seem like a democracy to me.
Countries are not at all like households when it comes to finances. It’s a terrible comparison.
“Everyone should share the pain, including government workers who have a good pension to look forward to and a multitude of benefits self employed people never have. It’s a matter of the inequality private sector workers suffer while public sector workers are immune”
Slashing wages would make things worse by reducing the disposable income of a huge swath of the population. There would be less money to spend in the local economy causing greater suffering for self-employed people. Not to mention, there are collective bargaining agreements in place for most public sector workers. So government would end up being sued.
It’s just bad policy. If there is a need to reduce operating expenses over the medium term, then a couple less painful options are,
– downsize through attrition. Still lots of baby-boomers in the public service who will retire soon.
– get rid of leased office space by requiring everyone who is able to do their job remotely to work from home.
Yes I think that is still the case.
Patriots- The government expected commercial landlords take a 25% reduction in revenue, my point was they should lead by example. Let alone the financial pain business owners have suffered. Everyone should share the pain, including government workers who have a good pension to look forward to and a multitude of benefits self employed people never have. It’s a matter of the inequality private sector workers suffer while public sector workers are immune ( pardon the pun).
Calgary’s condo market faces low prices and glut of inventory as it lurches from crisis to crisis
Yes it’s Calgary, but I’m pretty sure that Alberta is #1 for other province origin RE purchases in Victoria and elsewhere in BC.
Excluding the Canadian Forces and RCMP, the federal government has fewer than 300,000 employees (all status – full/part time, permanent/temporary). Cutting their salaries would make little difference to the deficit and would face legal challenges.
If you raise livestock you have to subtract purchase costs but if you sell meat the purchase AND processing costs are deducted from sales. Makes it hard to meet the target on anything but larger scale production. https://info.bcassessment.ca/Services-products/property-classes-and-exemptions/farm-land-assessment/farm-classification-in-british-columbia/Apply-for-farm-classification
Here are my comments on the following:
It should be noted that farm status for BC property tax assessment and farm status for CRA income taxation are two different things.
I noticed on realtor.ca that listing addresses now reflect the municipality it is in (e.g., Saanich, Highlands, etc.) instead of “Victoria, British Columbia” for everything between Cordova Bay and Metchosin.
Barrister. The country is definitely living beyond its means. When the pandemic started, the first thing Trudeau should have done is reduce the salaries of government employees, with the exception of frontline workers, by 25%. I wonder how long the lock down would have lasted
Frank: Not only are people living beyond their means some might argue that the country is living beyond its means.
The “Classification of land as a farm regulation” doesn’t refer to income but rather “farm gate amounts”. If the target you need to meet is $5000 for example you do not have to actually MAKE $5000 with your farm. In fact you can lose as much money as you want. All you have to do is sell $5000 of qualifying products whatever it cost you to produce them. (The one and only input cost that is considered and must be subtracted is purchase price of livestock you sell)
Why do people want to run small farms at a loss to maintain farm status?
1) Tax savings – Reduced property taxes every year
2) Tax savings – Possibility of inter generational transfer of the property with no capital gains (this could be a huge savings)
3) Tax savings – exemption from PTT if/when you transfer the property
4) Tax savings – write off those losses against other income
5) Get to feel smart when you fill up your truck with purple gas that the peons can only buy in jerry cans
6) Get to operate ancient trucks that would NEVER pass commercial inspection under your farm fleet insurance policy
7) Get to ignore some local bylaws that don’t apply to farms
8) Occasionally take advantage of some handouts that are mainly aimed at keeping prairie grain farmers happy.
9) Quite a few people love the lifestyle
10) I am sure I missed a few
Despite the targets seeming really low it takes either some real work or the willingness to spend a lot of money to meet the targets.
One thing this pandemic has shown is how precarious the financial situation most people have gotten themselves into. Banks should require a 3 month emergency fund be in place in order to qualify for a mortgage. The reliance on government aid and loan deferrals to survive a 2-3 month lock down tells me that people are living beyond their means.
If I was starting out again now I’d co-own a house Victoria that could be divided. I’ve co-owned before and it worked very well. We spent 17 years working our way through the property ladder from low initial incomes. Still can be done today, but harder to get a start and that is one way you can do it. Alternatively, I’d start out up island or in the interior, which was something I considered, but now I’m glad we did not do that because our children find Victoria big enough and they have lots of educational opportunities.
We don’t need to subsidize remote workers. Pretty much everywhere on the Island has lower land prices than Victoria and there is no issue with internet connectivity in existing smaller communities that I’m aware of on the island and I’ve spent time in most. If someone wants to move to Parksville or Qualicum to work remotely they’ll be able to find a 3 bed 2 bath SFH with great internet for $500k or less – many more choices between 500-600k.
This is not really true.
The income you need to generate for farm status depends on the size of the land. For under two acres it is 10k. For 2-10 it is $2500. For over 10 acres it is $2500 plus 5% of the value of the land over 10 acres. It is not all that easy to meet these targets for many, particularly those with under two acres or over ten, and those who raise animals as the purchase price and processing fees get deducted from the total. A farm requires a lot of infrastructure and none of this gets deducted from the amount needed to meet the income targets.
As far as ALR only being for the rich, it depends where you are. I’d say this is now true for someone starting out and not inheriting in many areas of the lower mainland and the Saanich Peninsula. Not true up island or many other more rural locations. A lot of farmers have a main job and farm seasonally. They could not afford to pay the mortgage without a second job as it is not easy to have a profitable operation for many years.
I had an article planned for a while that I haven’t gotten around to writing.
“ALR is estates for the rich: change my mind”
The amount of revenue you need to produce from agricultural goods is pretty minimal to qualify for farm status. This does not always result in efficient use of the land.
There are a lot of benefits to farm status, but there are people who live on ALR land who don’t farm. They pay regular tax rates though. I suppose there could be a surtax that creates more of an incentive.
My understanding is that land in the ALR has to be used for agricultural purposes to be assessed at agricultural value. A good incentive to do so.
“I’d strongly disagree. Throwing open land in the ALR for development will not, imo, lower prices. It will; however, reduce our ability to farm in Canada and create a huge windfall for ALR land owners (and I am one). This is not a political issue imo, but a food security issue.”
Yeah, maybe. I’m not really opposed to the ALR. I don’t think it’s a bad policy to set aside agricultural land, although I am not how much of it is actually being put to productive use.
Don’t get hung up on the land being necessarily Crown owned. It could just as well be provincial– oops, I mean Timberwest land right here on the Island… All that TW land was once a taxpayer asset, until Canadians subsidized forestry companies’ ownership of it. (And TW is now selling them off for a windfall… huh).
The point is: Canadians subsidize things all the time, not subsidize our own next generation’s ability to own a home, subsidize the shift to remote work and ending commutes, and subsidize Canada’s role as a leader in the information economy?
I’m not advocating for remote homesteads and farm parcels in the most remote regions of the country. I’m thinking closer to China’s planned cities (though much less density, because humans love SFHs).
I know the idea of sprawl gets a bad rap (and I have a Regional Planning background, so I really get it), but maybe Frank Lloyd Wright was right. Suburbs are a good compromise in terms of land use- it gives humans the privacy and space they want, and today’s construction technology is good enough to plan and build things with a high sensitivity to the environment and existing habitats. Targeting WFH workers eliminates the commute, thus saving substantially on GHGs.
Here’s how the space requirements break down: You can fit 100,000 suburban lots (1/4 acre each) in an area of 100 km^2. That’s not a massive area, and could easily hold 150,000-500,000 people depending on household size.
For comparison, Edmonton’s corporate boundary encompasses 750 km^2.
The City of Victoria proper is just under 20 km^2 (population 86,000).
Metchosin is 75 km^2 (population less than 5,000!!)
It’s not difficult to find 100 km^2 between any two existing major cities. I’m not saying move people to Burns Lake – you’re right, they wouldn’t want to. I’m saying let them have houses out by Cowichan Lake. Or in the valley behind Nanaimo. Or inland from Parksville, etc. There are limitless opportunities to make good locations available for sensitive development, to attract the right type of people to live there.
But would you say the same if you had to buy your Oak Bay houses again at today’s prices? How quickly we forget what it’s like not owning a home. You are a landlord with multiple properties (as am I). Your decision to stay in Victoria as a remote worker is a privilege many of our young folks can’t afford.
We may well be seeing a decline in core land values, similar to what occurred in the early 1900s as the automobile disrupted urban planning. Maybe it’s time to be proactive and lean into the disruption, rather than reacting and recoiling, and playing catch up later. I don’t know, I’m just having fun thinking about it. https://www.curbed.com/2017/1/4/14154644/frank-lloyd-wright-broadacre-city-history
I’ve been putting in some sweat equity hours in the beach drive area and have been entertained by the cars driving by. A few Ferraris, Astons, Lambos…the Porsche club (at least a bunch of them in a row) etc. There is clearly money here at the top end.
That is a lot of $ for not even waterfront.
I’d strongly disagree. Throwing open land in the ALR for development will not, imo, lower prices. It will; however, reduce our ability to farm in Canada and create a huge windfall for ALR land owners (and I am one). This is not a political issue imo, but a food security issue.
I love that Canada has vast tracts of relatively uninhabited land. I hope it stays that way. More people isn’t better.
“selectively open parcels of Crown land to development, and incentivize the development/purchase of this land for those with remote work jobs. in the 2nd largest country by land mass, it’s absurd that an empty lot costs what it does.”
I think the better policy option would be to end the ALR and throw it open for development if the goal is to lower the price of land. Politically this is not possible of course, but there’s a lot of land tied up in it.
Why would Canadians subsidize home ownership for this group? Crown Land is a taxpayer asset. Land in more rural and remote locations is already much cheaper and a lot of it has great internet connectivity already. If you did this in areas closer to, say, Victoria then Crown land would be bought, developed, and resold for a huge windfall profit. I think this will happen naturally to areas up island as more people work from home, and they will pay less for their fee simple homes than they would in Victoria, no need for incentives.
I think you have a bit of a flawed premise. The problem with developing more remote areas is a lot of people don’t want to live even if it is cheaper and has good internet. Me, for example. The last 10 years of my career I worked from home and could have been anywhere. I prefer the friends, climate and amenities that Victoria has to offer. I don’t want to live in rural Chase, Williams Lake or even Sooke. Even more so for schooling and job opportunities for children. Just because you work from home doesn’t mean locations are interchangeable.
We’re in a weird time, that’s for sure… my mind naturally wanders to strange policy thoughts in these times. Here’s one (admittedly out-there) idea that could: curb rising house prices; stimulate the economy; position Canada as a world leader in the skilled tech labour; and dramatically reduce GHG emissions.
The old economic land use theory / land value models is ready for disruption- the remote worker revolution is pointing at this forthcoming truth. The old models said that rent prices always decrease the farther you get from the core. This is widely acknowledged as a an economic law of nature…
Canada should get ahead of the curve on remote work opportunities and adapt a national strategy to:
1) incentivize remote work opportunities for employers. make it aggressive – target both domestic and foreign employers, and target the employees themselves. Make those Google employees who are being paid USD want to live and work here, as well as the government employee who’s already been doing it for the last 4 months.
2) selectively open parcels of Crown land to development, and incentivize the development/purchase of this land for those with remote work jobs. in the 2nd largest country by land mass, it’s absurd that an empty lot costs what it does. Even if we only ever live in Southernmost 1% of the country, there’s a relative shitload of space that can be developed for human habitation.
3) develop and require the best eco/sustainability standards in the world for these new developments.
4) make the new developments single family homes, with secondary dwellings, so that multi-generations can live together if required.
5) roll out a nationwide fast internet access strategy. internet is a utility, not a luxury.
Just a small escalation in value.
2666 Dalhousie (hope you like white)
Sold 2003 for $467k
Resold 2017 for $1.3M
New house built (5600sqft)
Listed February for $3.575M, Cancelled
Re-listed in May for the same price
Sold $3.625M
“Uh, no – this is some naive and ignorant BS”
Paying a person to stage your house is fine but that isn’t his point. A realtor is motivated only to complete a transaction, which has very little to do with the buyer or seller understanding anything other than what is in the realtor’s best interest – signing that deal. Even if a realtor knew any of the particulars about a house (not many of them do) I wouldn’t rely on any of it anyways because they are so biased favoring their best interests.
In a usually hot market like Victoria where most decent properties sell in a few days, paying a realtor $30k for what essentially amounts to listing a house on Canada’s “house eBay” and waiting for offers so he can populate a contract template can only happen out of pure financial ignorance, which I might add is upon which far too much of Canada’s economy is built these days anyways.
Unfortunately, it will just become another market subsidy if it does happen. It will limit a true reflection of the cost of owning that property contributing to an artificial valuation of the property because of the insurance subsidy. However, the government might be a little gun-shy on jumping into the strata insurance business. The new home warranty program was such a huge money suck during the leaking condo crisis and went to near default ( or did it default? I can’t remember) not that long ago. To have the tax payer take on the risk for people poor purchase decision-making may not be a winner for any government in the long term. Unfortunately, politics rarely looks at the long term and just might chase those strata votes in urban areas with your tax dollars being the victim.
“Housing costs will simply go up for those in badly affected buildings (and resale values likely suffer)” …and indeed resale values should increase in buildings not-so-badly affected.
Uh, no – this is some naive and ignorant BS. Houses are complex and trying to perfectly assess pros and cons is very hard to do objectively.
When you think about the decisions made by first time buyers in particular, it makes perfect sense why 1- there’s money to be made from marketing in real estate, just like selling anything else: staging a home, a fresh coat of paint, changing light bulbs, cleaning and decluttering before showings, and taking good photos for your listing; these impact the emotional appeal for all but the most obsessively practical individuals, and will impact willingness to pay for many; and 2- figuring out all the pros and cons of a particular property is a huge pain in the ass if you’re starting from scratch; info on neighborhoods, schools, prior sales, bylaws, construction materials, etc., and it makes sense to pay someone to help. If you’re moving from out of town (overseas is the extreme case), that’s pretty useful expertise. (It’s probably not worth $30-50k, commissions are indeed ridiculous, but it may be worth a few $k).
All this to say that you’d be hard pressed to find a sales transaction made by millions of ordinary people that was more complex than real estate, and there are plenty of places where irrational (non- rational market) forces come into play all the time.
There are lots of people that don’t have the time or the interest to do a workshop. Also a lot of people would have even more chance of getting fleeced by an unscrupulous seller if the buyer (and/or seller) didn’t have anyone representing them. Just because you might be a n informed buyer, doesn’t mean everybody is. Also you are not forced to use an agent. You can buy directly from owners.
Yes, why even have sales people at all. Close down stores that have sales people pushing things you don’t need and just let people buy everything on amazon. But let’s verify they actually need what they are buying first. Do you really need that fancy new TV or should we block you from buying it, because you already have a serviceable one?
We should ban all ads while we are at it too. Wouldn’t want somebody to have the ad “whispering” about some sweet thing a person might not need.
I owned my property outright in the post financial crisis era and secured the coveted prime + 0% HELOC offered by TD. It take many years of stability for TD to offer this again, if ever. I’m still not convinced TD will make it through this as they are overleveraged in the US and have hordes of people who loathe them for all the fee scams, communications errors and awful customer service.
With Toronto and the greater golden horseshoe housing markets rapidly regaining lost ground, It’s only a matter of time before the BoC must step in to curb the rampant buying and continued speculation. Economic recovery will be illusionary at this point though and the damage will cripple sales nationwide. The illusion of economic recovery will set the stage for the next election.
It really is a perfect storm brewing. If you have not diversified your portfolio it is not too late. I’m still advocating physical gold and gold producing equities as a safe hedge, with the occasional sell off causing devaluation for the next 2-4 years. I also had minimal losses and rapid recovery from Tangerine’s balanced income portfolio through the March pandemic crash. They have evidently restructured this fund to offer even more safety and and stability though it may be a better buy after the US presidential election.
re: condo insurance. I can’t see the provincial government letting this situation go on forever with condo insurance. Once a couple 100,000 people are affected, it wouldn’t surprise me if the government doesn’t establish HICBC i.e. “House Insurance Corporation of BC” Just think of all the great overpaid government jobs it would create.
“Take a walk downtown this is your “bustling local economy” do you see any differences? It is operation at 15% of the normal volume.. What do people think this means?”
I think it means there is a global pandemic. I don’t think foot traffic is that great a way to gauge economic activity – e.g., lots of people are getting take out/using Skip the Dishes.
FWIW, I took a walk downtown this weekend. Quiet, but not nearly as dire as some on here make it out to be. No marauding zombies. Some businesses won’t survive, but downtown will be just fine I think. Maybe even better if the road closures/additional patios stick around.
More on the condo insurance situation. This isn’t nearly played out yet and there is nothing for the government to do really. Housing costs will simply go up for those in badly affected buildings (and resale values likely suffer).
https://www.timescolonist.com/opinion/columnists/les-leyne-empathy-for-condo-owners-woes-but-not-much-else-1.24166022
I love a good bear rant.
Sarah:you will love Sidney, great choice especially if you can mostly work from home.
Congrats Sarah
Rent declines are always disguised via incentives, so on the downward side you get immense rent stickiness because landlords would much rather give out a month or two of free rent than reduce the rent and be locked into that lower level + inflation forever.
@Barrister: I love that Sidney has this reputation and I can’t wait to move in! 😀
As far as the article goes, we’re first time buyers during the pandemic. I can’t say we were motivated to act by any external means since we’d been planning on buying this Spring anyway. However, my office job became WFH which allowed us to consider Sidney a little more seriously. We’re slowly transitioning back to the office but the most I’ll have to commute going forward is twice per week. Prices (while still expensive!) in Sidney are better than the core so we were able to afford a place with a yard. The dogs will be so excited.
We had to sign documents stating that we acknowledged the risk of Covid-19 while viewing the property and that the realtors and owners weren’t responsible if we caught it. I was a bit taken aback by that paragraph in the document but it’s to be expected, I suppose. Interesting times.
Sidney is where old people go to visit their parents.
LeoS: From the photos Beaufort seems like a nice property which with a bit of updating would be a great home.
RE targeting the young uneducated and unknowing buyers… Has anyone seen how many reductions in rent / how many new rentals are coming to market? I say this because this was the case when I was a “first time buyer” sometime ago, RE Agents / Car salesmen all in the same category, it’s a sales based system it doesn’t work unless the narrative is to the moon and maybe even a new galaxy with prices…Control narrative and control all… Why we need organized RE is beyond me anyways… The banks / RE Boards should just offer a homeowners workshop “what to look for checklist” get home inspection, do land and title survey, check for leans on property so on and so forth… Check check check… It’s a house do you research run the numbers and buy it or not, why we have people whispering sweet nothings into our ears and paying foolish sums of money to sell houses.. Come on here let’s get serious.. Revamp the industry and launch a formal investigation into the practices of CREA and local boards.. At least Evan Siddall has the Cahhonas to come out and set a realistic expectation on the long term outlook in an attempt to save people from looters and the likes.. Take a walk downtown this is your “bustling local economy” do you see any differences? It is operation at 15% of the normal volume.. What do people think this means? Read a book on economics anything at all educate yourselves! One last thing check out the VOLATILITY INDEX “VIX” and look historically what this signals / indicates…
2538 Beaufort
Original list: $2,249,900
Last list: $2,199,000
Assessed: $2,379,900
Sold: $1,850,000
Definitely some high end properties being picked off these days.
https://montreal.ctvnews.ca/montreal-man-in-his-70s-after-pausing-work-for-covid-is-told-his-mortgage-relief-is-over-1.5010595
He believes that by fall, things will likely stabilize somewhat. “I think in two to three months it could be okay,” he said.
But when he applied for a second deferral, he was refused, leaving him panicking.
Banks extend deadline to apply for loan deferrals
https://www.theglobeandmail.com/business/article-banks-extend-deadline-to-apply-for-loan-deferrals/
Introvert: That is interesting for Toronto but I am just going to stick where I am although Mill Bay or Sidney sometimes looks interesting.
Toronto real estate buyers turn to the suburbs as more people work from home
https://www.theglobeandmail.com/business/article-toronto-real-estate-buyers-turn-to-the-suburbs-as-more-people-work/
LeoS: a portion of the increase is students moving back home after Universities shut down classes. But I am sure that some of that is also job loss.
Current sales and new listings
People moving back in with their parents
US data, but likely very similar here https://twitter.com/LizAnnSonders/status/1280089849970806784?s=20
Interesting article as always. I dont see a lot of bargains out there at the moment. Might have to wait for the CERB and the mortgage deferrals to end before much comes on the market.