AirBnB Declines, but Slowly
I’m off on vacation so only a brief update today. Hope everyone is enjoying the heat!
We know that despite the arrival of summer, there are vastly fewer tourists around Victoria. That hurts the hotel industry, and AirBnB bookings have declined sharply. Many hosts will ride out this slow period, especially if they are only renting out a room in the house. However the tourism slowdown will certainly last all year, and numbers will almost certainly still be down next year, so some hosts are evaluating what to do with their short term vacation rentals. We’ve seen some condos hit the resale market, and many try to rent out for a few months with the hope that bookings will recover. Indeed that is what is reflected in the data, with a clear reversal of the years long trend of increasing AirBnB units.
That said, as of the latest available data point on May 29th, the decline in units has been minor so far, with a total loss of 157 units, or 5% of the AirBnB rental stock. That brings us back to where we were last fall. The decline seems to be larger in other cities, with Toronto’s stock of whole-home units falling 11% since January. We’ll have to see how many more hosts transition to rental or list their units before the situation stabilizes.
Also weekly numbers courtesy of the VREB
| July 2020 |
July
2019
|
||||
|---|---|---|---|---|---|
| Wk 1 | Wk 2 | Wk 3 | Wk 4 | ||
| Sales | 111 | 329 | 545 | 778 | 706 |
| New Listings | 201 | 549 | 902 | 1199 | 1152 |
| Active Listings | 2675 | 2710 | 2757 | 2737 | 2949 |
| Sales to New Listings | 55% | 60% | 60% | 65% | 61% |
| Sales YoY Change | +36% | +38% | +31% | +37% | |
| Months of Inventory | 4.2 | ||||
At a sales increase of 37% that puts us at just under a thousand, but if we get another week like the last one we would end up just over. Either way it looks to be an all time sales record for July. This positive sales record will generate a lot of headlines, but as far as a measure of the actual market, it’s about as useful as the negative sales record we had 3 months ago. Neither reflect the steady state.
The detached market is still on fire, with sales month to date up solidly from last year (~40%) while inventory is down 26%. Meanwhile condo sales are down 5% in the same period with inventory up 20%. Townhouses are about in the middle, with inventory up 4% while sales are up ~7%.
No wonder then that over asks are still common in the detached market, a relatively consistent one in four places (slightly higher under $1M) compared to one in twelve condos. There is simply not enough inventory on the market to handle both the shifted spring market and the shift in buying preferences to single family homes.
New post: https://househuntvictoria.ca/2020/08/04/detached-on-a-tear-while-condos-disappoint/
I suspect that Covid has reduced boomers desire for a luxury condo and swung some of the demand towards either SFH or town houses. Elevators and shared hallways can be scary for boomers especially if you have any of the long list of pre-existing conditions. Lots of boomers are not concerned but I suspect a significant number are uncomfortable with condos luxury or otherwise.
caveat emptor: unfortunately, a lot of boomers are at that age that maintaining and traveling to several destinations becomes tiresome and impractical. Most would probably opt for an upscale condo. You will definitely see more people from across Canada head for B.C. in the near future.
In the case you outline it would feel a bit painful to liquidate your lovely summer cottage, your principal residence (say a 90s box in a Prairies city), and your winter escape in the southern US, all just to afford a mediocre house in Oak Bay in dire need of updating.
Snowbirds with properties in the U.S. also own $500,000+ homes in Canada. Victoria is not the only city with expensive homes, every city across Canada has neighbourhoods with $1,000,000+ properties. Plus well off snowbirds also own fairly expensive summer homes across the country that range from $250,000-500,000. Lots of professional baby boomers own over $1,000,000 in property, if they want to divest and retire to Victoria, it’s not that difficult to purchase a property if they want to.
One can’t be sure as to what every snowbird is going to do, because they’re all different. I think a reasonable assumption is that we will see more of them in Victoria during the winters when CoVid is around, for a myriad of reasons, and this will be a positive thing for housing. I think some of them will move here permanently too.
Arizona is cheap compared to Vancouver Island never mind Victoria. As a matter of fact there are people on my block who own an Arizona property and they ‘d be hard pressed to buy in Victoria if they sold both residences. Palm Springs is another story but there are only so many Jim Pattison types.
https://www.retirearizonastyle.com/SunCityArizona
Thank you for the response Bluesman. Frankly, I believed that Victoria was overpriced in 2013 but we bought anyway. People have been saying for years that prices cannot possibly go up but yet they seem to with a surprising regularity. My magical crystal ball has been converted into a paperweight.
I agree, I believe we may see many coming here and renting for the winter that is if they drive because lots of seniors won’t risk going on a plane. I won’t for sure.
I have rented condo’s in Texas & Arizona during the winter but would never consider purchasing. Better to be hands on with purchasing a condo here for rental & perhaps using it as a retirement home later on.
Pretty well every year I’ve also gone to Puerto Vallarta for a month or so during the winter. Always rented a very nice condo there in the “Romantic Zone” In the last few years, in that particular area you meet many more Canadians than Americans. A good portion of them own condos. They don’t go cheaply. So most rent out their condo when they are not there. They are going to lose a lot of money right now. And even when you are rich…..you don’t like losing money. Most, i.e. the owners in their 30’s,40’s &50’s will be having to make mortgage payments as well as association fees. So, I don’t think any of those people will be buying another condo here in Victoria.
I am waiting to see how this insurance problem with condos here play out. Hopefully soon I’ll purchase a retirement condo in a good area and rent it out til I decide to move in. Otherwise I’ll just live in place til they carry me out.
I’ve heard but not confirmed that 500,000 Quebecers own property in Florida, families invested down there for decades. They probably won’t be lured to Victoria. The Canadians with houses in Arizona and Palm Springs own pricey properties in U.S. dollars. The problem they face is health insurance, at 74 years old it becomes very high, if they will insure you at all. They are currently not covering for covid. These viruses can be very difficult to control, I’m not holding my breath for a vaccine. The political instability down there is also making them uncomfortable. Some of my friends liquidated their U.S. properties in the last few years. One of them moved to Kelowna.
As for the spec tax, the snowbirds I was referring to would be moving to Victoria permanently.
I really do not see people who own US winter properties relocating to Victoria. The winter weather here is pretty miserable compared to Florida or California. Might rent for a season but if you are in Toronto Spain might be a better alternative.
Barrister: I think it’s more a general qualitative observation and discussions with other agents. He’s not a new realtor by any means and I have known him many years. While still a realtor I don’t believe it was a cautionary better buy now because prices will be up significantly in the months ahead. For my own feelings about price on one hand I find it hard to fathom prices can continue their ascent more than by what I’d consider a modest amount if at all, especially in this pandemic environment. I mean it really is counter intuitive. However, there are those whose economic situation has not been impacted at all by this. You’ve got low inventory a significant amount of demand and most relevant is insanely cheap money. And that as we all know allows buyers to bid more. Throw in some out of towners buying with more means than a local and prices up again. And out of towners make a low inventory situation in a small market even more strained on the supply side.
They’d be smart to rent in Victoria, unless they don’t mind paying 0.5% spec tax annually on the value of their second property. Although in some cases their landlord would still be liable for spec tax.
Could be. But many condos in Florida are in the 100k range, plenty available for less than that. Just because you can afford that doesn’t mean you can afford a condo in Victoria. And although Victoria is nicer than Saskatoon in the winter, it’s nowhere near Florida.
This is also a temporary situation. Maybe they don’t go this year, but give up Florida for Victoria just because you can’t go for a year? Doesn’t make sense.
It would help the condo sector though if it does happen. I’m thinking condos may be in trouble soon given current middling sales levels.
Concerning who is buying sfhs, there are thousands of snowbirds who own property in the southern U.S., some of them very wealthy. I’m sure most won’t be going this winter since those are the hardest hit areas, Florida, California, Arizona and Texas. The ones with enough cash to burn will be looking at Victoria to relocate for the winter. What their property in the U.S. is worth is anybody’s guess. Don’t expect prices to go down anytime soon.
Bluesman: That is interesting and your realtor might be correct. Mind you it is always primarily locals who are buying. But it seems that your realtor is suggesting that the percentage of out of town buyers is lower than average.
Not to be cynical but does your realtor actually have any first hand knowledge or is he just tossing out the standard ” you must rush to buy because prices are going up” line.
Barrister – my realtor indicated to me on Friday that it’s is primarily locals presently buying sfd.
We spoke about peak price and the feeling is it may indeed go up if out of town buyers start coming in again.
What seems clear at the moment is that SFD are really selling well and for top dollar at the moment. The real question in my mind is exactly who is buying the houses at this point (equally, one might ask who is not buying especially when it comes to condos). Actually, there is no precise way of knowing but a few of the agents must be getting a general impression.
I am going to put out a couple of guesses which are related to Covid being a major factor. I dont think that it is a secret that Victoria is still a premium retirement destination for a lot of the country. I am guessing that a significant number of people in their late fifties and early sixties have decided to retire early because of Covid especially in the more infected areas of the country like Ontario and Quebec. These are added to the Alberta oil patch guys whose businesses are being shut down. We have a pretty small real estate market and, once again, my guess is that one hundred out of town buyers with deep pockets can have a major impact on the price of SFH.
The second Covid factor of which I know of three personal examples are people who felt that Condos were simple Covid traps for the elderly and vulnerable. All three bought SFH and sold their downtown high end condos. This also links into the first point that new older retirees moving to Victoria would lean towards SFH especially if they are moving from a high pandemic zone of Canada.
Obviously this is speculation on my part with no stats to back me up. So chime in with your opinions.
‘Mince_Meat_Ties
I wont be posting my personal stories here. What I am posting is purely some thoughts over my own growth. I beleive most of our life expereinces are similar, going to school, graduation, find a job, getting married and have kids etc noting unique. Some times I get critiques saying I was bragging or make them feel that I am better.
so you want to get better, and this is the first step to being better.
one day, my ED told me if I was interested in taking on an acting role for 4 weeks while she was scheduled to be off… I said yes, but then I realized how much responsibilities she had after she told me a few burning issues. BAND 3 was not bad but compare with that load of responsibilities of ED, It was just hard to swallow the following:
1)I must value all external stakeholders ( which I was not very good at)
2) my trap and challenges were losing touch with my friends at work
3) I had to get use to let go where necessary. Again, my problem was from impostor syndrome to hubris
4)Be constantly inquisitive about all
5) I had to let one director go in order to cut losses early…… the director had their own problems but I had to made the call.
It is easy to say leading was the main task-but leading came with all sorts of responsibilities….. and the pay was not even ok to be quite honest. The chief strategy officer at the private firm makes way too much I guess.
Sales/ask ratios, single family decidedly outperforming condos there too.
Do you mind sharing your story? I’m in my mid-30’s, thinking of jumping ship from regulation to entrepreneurship and would love to read about your journey….
Tech is an interesting case because it’s easy to get outsized returns per employee due to unit economics. I think “small business” needs to be split out into headcount and revenue in conversation.
Free cash flow can be misleading too. What is the “bigger” business: 10-person agency with steady $5MM book value + $1.5MM in expenses, or 10-person product burning investor money growing, on a trajectory to sell next year for $100MM?
Yeah the definition is probably a little misleading. There are ‘small businesses’ locally in the tech space generating 6 to 8 figure annual revenues with 0 to 10 employees. >20 employee businesses don’t necessarily generate higher free cash flow than companies with <20 employees.
Marko it sounds like a lot of your hassles getting mortgages for your small business are due to purchasing within a hold co. I explored this option recently with my accountant and came to the conclusion that it isn't worth it to do it in the hold co (for a primary residence, not investment properties). I've never had an issue getting a mortgage as a self-employed person using proof of dividend income.
Whatsapp had 55 employees and sold to Facebook for $19 billion. Calling that a small business seems wrong.
https://pando.com/2014/02/24/whatsapp-bought-for-19-billion-what-do-its-employees-get/
“Sorry James,.that is false information you are putting out. Plenty of ppl in their 30s making 6 figures working in the public sector.”
Maybe in the broader public sector, but I think he’s probably talking about the provincial government. Most middle managers are band 3, which tops out at a little over $100,000. You wouldn’t usually start out at the top end, so if you’re in your thirties, you’re most likely making less than $100,000. Upper-management, i.e., ED level tends to be quite a bit older.
James Soper/KS112 – I would tend to agree that there are not a lot of folks in their 30s in public service making more than 6 figs. I guess you’d need to define “plenty” Ks112. Highly depends on your professional skill set. Working as crown counsel – yes definitely and there are some others that pay highly based purely on professional/educational requirements achievable by the time you are 30. I’d say plenty doesn’t equate to common though.
To the other point of people joining late in life for a pension, certainly I saw that in my case. I worked for the province in financial audit for a short period. I was 35 and I remember turning up the first day and taking a seat waiting for the manager to meet me and there were two “older” looking gents waiting with me. One who was early fifties I later learned. As we got to know each other I asked him why he was working this job. Answer – I want a public pension. He later left and moved to the mainland after being promoted. One example but hey, if I was the type to want a DB pension and the professional requirements to pick up a job in the public sector, its a route I would consider too.
Thanks. So basically, the trying to tie up the documentation to show a finance paper trail of a client is laborious. But if you were to put it together, I wonder why the lender might be a lot more skiddish? The records are there, it’s just not quite all in one place. Anyways I believe what you’re saying, and it’s more a rhetorical question at this point.
Kind of funny how perception of numbers change over time. I think there’ll be more than a few people on here that will remember when 200k was a monster mortgage. I remember talking to a late career person a few years ago and she was telling me when in 1983 they purchased their home near Fairfield with a mortgage for 80k, they felt at the time they were reaching for the moon. And they probably were.
Now 80k is a down-payment for many. I do wonder how long it will be before people will giggle at 800k as a purchase price…
Thanks again Leo. I sent you an e-mail this morning.
FIrst of all a lot of lenders just don’t do financing on properties that are in holding companies then for the ones that do no one is really interested in processing the applications as it is so much more work NOAs, T1s, CORP NOAs, Business Financials, Supporting Documents (Invoices, Interim fianncial statements, sales receipts), Corp Summary, T1 Generals – Statement of Investment Income, T5s, confirmation of taxes paid (personal, corporate), etc. etc. I have a folder in my OneDrive with endless files. It is such a huge pain that I’ve given up for the most part on seeking financing. When you are swmaped working 70 hrs a week and then you have to produce interm financial statements (which I normally don’t do) it is too much.
For me as I buy small one beds and studios I usually need very small mortgages (like 100 to 200k) and most people are like no thnx rather do a 800k mortgage with two institutionally employed clients.
It is kind of like selling a trailer in a mobile park. From my experience it is more work (hr wise) than a $1.5 million dollar house in Oak Bay, but the commission is obviously a small fraction. When some calls me to sell a trailer I refer it out.
For the overall market it’s basically the same as last year at the moment, but of course single family is hotter and condo market is cooler.
Yeah high end sales surge is nuts. Some of them have gone for significant discounts but others have just sold at list after a short time.
Sorry James,.that is false information you are putting out. Plenty of ppl in their 30s making 6 figures working in the public sector.
I’m looking forward to the SNLR, any info on this. Further to this rent’s seem to be coming off their highs and dropping, I am really looking forward to refinancing my rent and watching this market tank out but I’m just a Bear romping around, check out that Gold price EH!
Thanks! Wow even the high end is selling like hotcakes right now.
‘https://househuntvictoria.ca/2020/07/27/airbnb-declines-but-slowly/#comment-72399
‘Totoro
smell like a mortgage broker….
HHV never fail to surprise me with how deep knowledge and diverse background we all have.
Marko is a real pro with facilitating deals/ buy/sell and assign
some brokers are also selling mortgage contracts
some lawyers are also selling private mortgage contracts
my point is we have specialized skills that others have no access or information, so their options are limited to thier own perception and experiences.
such is life….. once in entrepreneurship, never could I ever be back to renting my time to some government boss. It’s not all about the money but it is a choice that I realized later in my 30s….
Sure will do in the monthly recap. 64 properties listed over $1.5M sold in July, all time high (previous high was 47 in June 2017)
Inventory up slightly at 349 vs 333 last July
Very strange, can you send me an email? leo.spalteholz@gmail.com
Pretty dramatic declines in Toronto rents. We don’t have this kind of data because MLS doesn’t really get used for rental listings here.
https://twitter.com/BenRabidoux/status/1289585868064292870?s=20
I work in govt. Anyone making in excess of 100k in govt is in their 40+ and have owned for a while.
The majority of people in govt have worked in govt for a long time or have joined on late in life for a pension.
There was a question earlier about a house in Edmonton. I don’t have access to MLS listings, but this website is fairly quick to update the sold prices. https://www.honestdoor.com/
Any chance of a breakdown of MOI for various price segments Leo? Looks like inventory of $1.5m+ has gone from 150 to >250 units. Would be interested to know the number of sales in that segment.
Thanks Leo. Yes, I did receive the new link. I can use that one or the old one still but neither of them showing any recent sales.
We’re talking about different definitions of small business. When I refer to small business, I’m referring to any incorporated individuals or companies with 0-99 employees. Almost all of the small business owners I know own real estate and in many cases pay employees who also own real estate. You might want to widen your net if you don’t deal much in this segment.
I haven’t come across the perspective before (Introvert’s opinion, if I understand her correctly) that removing government supports is unlikely to affect small businesses significantly, and even if it does, it won’t impact Victoria real estate because business owners can’t afford houses.
Marko, I suspect many of the government workers on this blog complaining are in the provincial government union making 60k-70k a year with no upside. Can’t really compare them to the exempt management/professional public sector employees making 6 figures.
It is the government/banks/CMHC that are “bonkers” for letting this occur. People are only able to “pay” these prices because the highly regulated banks are able to lend it to them, because it is insured by government agencies. The Government controls every step of this, and is to blame for this latest “froth.” Obviously with $300+ billion deficit, Canadians are in no position to increase borrowing.
The government is handing out free drinks to drunks.
In June, the Toronto Regional Real Estate Board reported that the average price in the Greater Toronto Area sailed to a record high of $930,869. That milestone marks an 11.9-per-cent jump from June, 2019
Toronto’s frothy housing market seeing ‘bonkers’ price activity
https://www.theglobeandmail.com/real-estate/toronto/article-torontos-frothy-housing-market-seeing-bonkers-price-activity/
That seems right. Stats Can data indicates that less than 1% of people own small businesses with 20-99 employees, so yes that would represent a small % of buyers, maybe 2%.
Small business is defined as less than 100 employees.
In B.C., there is one small business for every 22 people. (See link table 2)
7/8 small businesses have less than 20 employees,
1/8 small businesses have more than 20 employees.
That means that there is one small business with more than 20 employees for every 176 people. 176 people is about 70 households, so I’d estimate about 1/70=1.4% of house purchases to be made by a small business owner with more than 20 employees. Maybe higher than 1.4% because they can afford houses- probably 2%,
See table 2 https://www.ic.gc.ca/eic/site/061.nsf/eng/h_03090.html
Hi Alexandracdn, I’m wondering if you’re using the new link? There was a transition to the new VIVA system you should have received a new link.
Not at the computer at the moment but I’ll try resending it tonight
Yesterday on my PCS, I had 441 items. Today 436 items. Yet there have been no SOLD or BOM etc showing up. Just new listings. Is anybody seeing SOLD on theirs in the last couple of days?
Sorry to be a pain.
Well…..either way there aren’t going to be many individuals in Victoria that own “small businesses” with 20 to 100 employees so they are going to be an extremely small % of buyers.
What people on the blog don’t want to hear is that it is people in similar jobs to them (government, etc.) buying property. Just look up all the muncipalities in Greater Victoria and look at their budgets and the number of people making in excess of 100k. That is who is buying real estate.
Vaughn Palmer, Vancouver Sun:
https://vancouversun.com/opinion/editorials/vaughn-palmer-site-c-dam-has-a-huge-problem-and-its-not-covid-19
Doesn’t really matter what you consider a small business or not since it actually has a definition.
https://www.ic.gc.ca/eic/site/061.nsf/vwapj/ksbs-psrpe_july-juillet2012_eng.pdf/$file/ksbs-psrpe_july-juillet2012_eng.pdf
Any
A highly volatile data series, but permits have been on an uptick since mid last year, basically in line with the resale market
Builders have signalled plans to heat up the pace of construction in the capital region by taking out more than $93 million worth of permits in June.
The figure represents a 30 per cent increase from June 2019, before COVID-19 arrived.
Capital region building permits up
https://www.timescolonist.com/news/local/capital-region-building-permits-up-1.24179892
Oh look, an update on the dam we’re building even though we don’t need the electricity:
‘Red alert’ for Site C dam project over costs, delays
https://www.timescolonist.com/opinion/les-leyne-red-alert-for-site-c-dam-project-over-costs-delays-1.24179909
Anyone with under 99 employees is a small business owner and they can have other shareholders. Incorporated professionals are small business owners even if they have a single employee. Pretty sure you’ve sold homes to both ends of that spectrum. Many managers are business owners who receive a T4 as employees. Who you probably have not sold homes to are unsuccessful small business owners who only have a small salary that they cannot use to qualify for a large enough mortgage.
Your business/personal investments could possibly be organized in a manner that better facilitates financing/taxation. For those with high net worth and lower incomes there are special mortgage financing products.
~990 sales for the month.
Sorry, dumb question:
Why is that exactly? No T4? Perceived as unstable? Suppose I were the owner of some long time shop in town?
I’ve done lots of business with tech company owners but I would say the average owner I’ve dealt with on a purchase has like 20 employees +/-…..not something I would consider a “small business owner” personally.
Must just be my bubble I guess. I’m talking about web/software developers, tech company owners, self-employed engineers, restaurant owners, publishers, accountants, store owners, marketing company owners, marketing professionals, builders, private healthcare service providers etc.
Very very small percentage. Getting a mortgage as a small business owner is insanely difficult.
I pretty much can’t get any financing for my corp. properties. Even when I am only looking for 50% loan to value.
I’ve been banking with TD for 17 yrs. Have all my business accounts with them. TD Waterhouse, etc., and they were not interested in doing a 100k mortgage for me because property is in hold.co.
And whenever I can get any financing it is often literally upwards of 50 documents I need to provide.
Walk into a bank as a nurse with 5% down….no problem.
Noticed tons of small business owners tend to use 52k not as salary but dividends from the corp for tax planning purposes.
a few lenders are happy with their corp. holding properties.
If I remember it correctly, TD is really good with approving holding co. and max allowable rental units is 9.
I believe it is a great time to buy low those air bnb eligible places in downtown victoria considering one 500 sqft unit could potentially grab $200/ night.
It really depends on the business and the industry. Some lucked out, some have been wiped out already, some are only surviving due to the supports. My point is that many small biz owners own properties and also employ people who buy properties. From the business owners I know, there are many jobs at risk once the supports end and many of those jobs belong to people that have or would qualify for a mortgage.
and
If 30% of small businesses fail in normal times, and a survey during COVID shows that 1 in 7 (14%) small businesses think they are “at risk” of failing, then it sounds like small businesses are actually doing all right, at this point.
and
Sideliner, you said small businesses “are hurting.” If the above is true, then it seems like we don’t need to worry too much about them.
Sideliner and Introvert are both correct – the only difference is they are focusing on different ends of the spectrum.
There are many small business owners earning less than 75k because their businesses are not making a lot of money or they are in the start-up phase paying off acquisition and start-up costs . Thirty percent of small businesses fail within five years. Approximately 7,000 businesses go bankrupt every year in Canada. Some of these businesses are really in trouble now.
There are other small business owners earning less than 75k because they are earning more than this net, but leave profit in their corporations. When I was running a small business I took $52,500/year as a salary. That was the optimal amount for CPP contributions and personal taxation. If you don’t have RSP room then leaving money and investing it through the corporation can produce a long-term tax advantage and grow your business. Some of these businesses are affected by covid significantly, but they likely have resources to weather it for a while if they choose to stay in business.
As for small business owners purchasing homes, all the ones I know own their own homes and sometimes more than one. Can’t think of an exception. Anecdotal and probably because I’m over 40 and most of my friends/business cohort are too, but there you are.
About 30% of lost sales and new listings during pandemic have now been recovered.
Both new listings and sales are +40% from this time last year.
That may be the case Introvert, but I think most wealthy small business owners you talk to will tell you that they aim to minimize taxable personal income at the end of the year by investing in their business (i.e. growing assets).
Accountants, lawyers, doctors, trades, software/hardware developers, private health practitioners, consultants – these can all be small businesses… all of who can easily clear $150k, while on paper it can look a lot lower.
Of the group I’m in, pretty much everyone owns at least one property and certainly own a lot more assets within their corporations.
Maybe Marko can chime in on how many small business owners he sees buying $800K houses relative to doctors, nurses, government workers, and the like.
https://www.cfib-fcei.ca/en/media/canadas-small-business-owners-are-four-times-more-likely-be-low-income-rich
Thanks Umm….really?
New listings are pretty slim as well the last few days, I believe it’s just folks shouldering the long weekend with some holidays on the transaction and listing side of things. Probably see things catch up a bit next week as a new month starts as well.
Yeah, this is just false.
Small businesses have between 5 & 99 employees.
You’re out to lunch.
Sorry, I don’t think most small business owners are in a position to buy in Victoria. You’d have to have one heck of a successful small business to make buying an $800K house feasible. Which is why people on HHV are always saying how only doctors, lawyers, government workers, nurses, and police officers can afford to buy.
Perhaps small business owners who bought a long time ago and still have a mortgage are in real trouble. That I can believe.
I’m actually with you on most of this stuff. Where I part ways with my fellow leftists is when someone says or insinuates that buying a house in Victoria should be doable by anyone. No, a quality, affordable roof over your head should be a basic right, but the ability to purchase a SFH in the most desirable city in Canada should not be a basic right.
The Bank of Canada doesn’t raise or lower interest rates to make people happy or sad. And I’m sorry to tell you that politicians don’t control or influence the BoC’s rate decisions.
My new CPS format is not showing any “SOLD” items. Just new. Unless nothing has sold in the past three days.
I’m in a local business group with lots of members (collectively employing thousands of people). I can tell you that many are hanging on by a thread and in many cases the supports are the only thing getting them through. A recent report said that 1 in 7 small businesses are at risk of closing permanently (https://financialpost.com/news/economy/one-in-seven-canadian-small-businesses-is-now-at-risk-of-closing). “Business closures could range between 55,000 at the low end and 218,000 at the high end, depending on how the recovery goes, the industry group said.”
Sure, CERB recipients may not be first in line to purchase a house, but certainly small business owners are, and they are hurting. When supports and deferrals are wound down, our overall consumption as a country will decline and that hurts the whole economy, not just the CERB recipients.
LeoS: Having spent time at Lake Tahoe I suspect that people will totally resist ever leaving there once they move.
“Lake Tahoe real estate is getting snapped up at a record pace, as San Francisco tech workers flee the city in search of more space and a healthier lifestyle. A new wave of urban flight is reshaping real estate markets from New York to Chicago and Los Angeles to San Francisco. As part of this shift, Lake Tahoe is seeing unprecedented bidding wars, buying activity and price increases. Brokers say the inventory of homes for sale has shrunk to about one-fifth to one-tenth of the usual levels.”
I wonder about the short term thinking here. Private school is online for the year and you can work at home so you buy a house somewhere else? I wonder how much of this will reverse.
https://www.cnbc.com/2020/07/29/were-running-out-of-homes-for-sale-lake-tahoe-brokers-say.html
Inflation is another card that is left on the table even if interest rates can’t move.
I think they’ve boxed themselves into a corner where they cannot raise them, yet they cannot lower them. QE has resulted in a RE and stock market which has taken on characteristics of a casino where someone else will bail you out one way or another – and we’re seeing the fruits of this behavior all over the world. The concept of market risk has been mitigated, even the notion of money itself is eroding. All this money printing (this is what is paying for these fiscal policies you are mentioning) speaks to the dilution of monetary policy effectiveness and has potentially significant implications for society moving forward.
It’s easy to make a simplistic “but, but, don’t you care if people eat and can pay rent”, but the problems of excessive monetary easing are actually bigger, longer lasting, and far more systemic than that. The real means of wealth production (making things that are physically useful) have been declining in North America for decades, and as central banks can’t generate wealth to compensate for that loss, they inflate assets as an alternative. As a matter of fact, there is no alternative. Allowing the stock market to operate without all this manipulation would likely cause an immediate and severe crash of the market with little ability of the modern consumer based economy to allow the lost wealth to recover in any reasonable time frame.
The erosion of the main street economy and the actions of central banks are IMO, what’s creating all this market distortion, birth pangs of neofeudalism, populism and what has become rampant resource inequality in society. The thing is, past a certain degree the inequality just becomes too much and that is a potent (if not the principal) ingredient for social revolution, civil war, or military invasions. These themes aren’t anything new. You can see similar points in history (inequality, QE, credit bubbles everywhere and rampant land speculation) going on as far back as Emperor Tiberius over 2000 years ago. It didn’t end well for Rome…
Introvert said:’ “So you think the BoC shouldn’t have dropped interest rates and the feds shouldn’t have created CERB, CEWS, etc., because controlling the national debt is more important than millions of citizens being able to buy food and pay rent?”
If the feds actually cared about “millions of citizens being able to buy food and pay rent” they wouldn’t have allowed the offshoring of decent paying jobs, busted unions, jacked: immigration/TFWs/foreign students, and would have done ANYTHING about fentanyl, homelessness, \money laundering and offshore tax havens.
As for their pandemic response, they would have brought in a Universal Basic Income & Postal Banking, not doled out cash in COVID programs for foreign banks/offshore tax dodgers/foreign students, ignoring millions of Canadians who are disabled/unemployed/underemployed.
They also would have raised the pathetic interest rates years ago.
Socialism for the rich is the LibCon way.
At this point, I’d vote to separate – tired of Ontarians dictating elections.
So you think the BoC shouldn’t have dropped interest rates and the feds shouldn’t have created CERB, CEWS, etc., because controlling the national debt is more important than millions of citizens being able to buy food and pay rent?
See, one example that Victoria people are (generally) kind, even to people they haven’t actually met. 😉
There will always be invisible bogeymen. In this case, it is the “undeclared spec tax” people – yes that’s where all the invisible bogeymen are to be found!
If this were remotely true, since the feb 2019 deadline is over a year ago, the govt has had plenty of time to confirm, audit etc. , and update and tell us in a simple PR, “no,, it’s not 10K spec homes, found, it’s 32k!!!!” Instead we have have you, without any evidence, announcing to us that everyone who didn’t make the deadline are the bogeymen owing tax, and the govt hasn’t bothered to issue a single press release to tell us what you know. So sorry, I doubt that the govt is sitting on great news about triple spec tax revenues without telling about it. We will have to agree to disagree on this one.
Also notice how they’ve been totally silent on the data for this year (spec tax due feb 2020), are they also burying good news there?
“The spec tax is a flop in my opinion. Expected to target 32K homes, it found less than 10K”
Last time the province updated the numbers 17,600 households did not submit their spec tax forms from last year. You would think most of the people who have not submitted their forms would have gotten multiple phone calls, emails, or letters in the mail. Sounds like some of those might have something to hide. Last year 11,783 property owners who represented 9386 properties paid the tax. The provincial estimates have 32k people paying the tax last year and also this year. Why would the province come up with that same 32k estimate of people paying the spec tax this year if that number was so far off last year. Maybe their estimate is right. If you add the number of people who did not submit their spec tax forms last year (17600) to those who did pay the tax (11783) you would be pretty close to the provincial estimate of 32k. We also don’t know how many people who did fill out their form and claimed to be exempt were lying since we haven’t heard of any results from audits. Judging from recent CRA audits BC has already shown to be the poster child of tax fraud in Canada
Introvert said. “Lowering interest rates and borrowing money to directly support citizens and stimulate the economy when there is a massive shock to the system is universally supported by the left and the right, and is the approach taken by every industrialized nation in the world.”
Covid stimulus set-in around March. Interest rates were already pathetic.
What’s the excuse for those pathetic pre-Covid rates (other than the LibCons choosing BOC governors who would do anything to protect their wealth)?
Look at the disdain the CREA gaslighters show for Canadians – they’ve built currency converters for foreign buyers right into their website.
Shameless.
Well that’s the tag line anyways, and I happen to believe it’s BS. It’s a little like asking the government why they’re doing this or that, and the answer is always something along the lines of, “to invest in people and the economy”. An evasive, smokescreeny, non-answering platitude.
What’s happening is central banks are not only promoting financialization and bifurcation of the economy, they are increasingly becoming the economy. Deflation and high debt levels are a yuge and now even yuger threat, and the only way to counteract that is to destroy the value of the currency, promoting risky maladaptive investment in assets that are often unproductive.
Heh. You think so? I guess it depends on the timeframe you’re talking about, because governments and central banks cannot substitute the means or fruits of production forever. That’s not stopping them from trying though. If the US’s money printing continues like it is and they lose their reserve currency status somehow….
Study: 3/4 of recovered coronavirus patients have heart damage.
https://www.nytimes.com/reuters/2020/07/27/world/asia/27reuters-health-coronavirus-science.html
UK’s biggest pension fund begins fossil fuels divestment
https://www.theguardian.com/environment/2020/jul/29/national-employment-savings-trust-uks-biggest-pension-fund-divests-from-fossil-fuels
Lowering interest rates and borrowing money to directly support citizens and stimulate the economy when there is a massive shock to the system is universally supported by the left and the right, and is the approach taken by every industrialized nation in the world.
While it prevents a far worse overall outcome, this approach does have unintended negative consequences, one of which being that real estate prices tend to go up.
Introvert said, “Looking at the short-term, two weeks ago the Bank of Canada was uncharacteristically forthright: “Our message to Canadians is that interest rates are very low and they are going to be there for a long time.””
Gotta love the “free market” warriors cheering for socialism for the asset owning class.
Seems the Bank of Canada, and the Government of Canada has been hijacked by neoliberal “capitalist pigs” (not to disparage actual pigs).
LeoM: I have the backyard set up for social distancing so can I invite you over for a glass of wine or beverage of your choice. Let me at least repay your kind gesture.
Deb: yesterday the site had nothing showing for anything. I assume that they have been doing some work on the site.
Alternatively Introvert has bought all the condos in Victoria.
Realtor.ca has no apartments showing for sale. Is this a new thing now, only single family available on the search?
Equitable Bank says mortgage deferrals have plummeted from their peak
https://financialpost.com/real-estate/mortgages/equitable-bank-says-mortgage-deferrals-have-plummeted-from-their-peak
Good article in the TC on the rental market. I didn’t factor in that UVic would drastically reduce student housing (by 1300 units) so impact of students being gone on rental market may be less than I anticipated
https://www.timescolonist.com/business/residential-rental-incentives-appear-with-modest-vacancy-increase-1.24177791
I suppose the COVID ‘crisis’ has a silver lining for the provincial NDP; it’s a great scapegoat to blame for failing to build the 114,000 low cost housing units the NDP promised to build. However, I’ll still vote for Horgan, he’s doing an admirable job as Premier during these uncertain times.
Introvert, can you tell us more about how you’ve been aggressively paying down your mortgage?
It’s possible. I guess we’ll wait and see.
In all probability, this economic chaos will last for a number of years, which will keep interest rates at near rock-bottom for a year or two, and then still low for several more years after. So I could see another 10-year span like the last 10, in which interest rates are historically very low.
Looking at the short-term, two weeks ago the Bank of Canada was uncharacteristically forthright: “Our message to Canadians is that interest rates are very low and they are going to be there for a long time.”
As for the support programs winding down (especially CERB), I don’t think very many of those in Victoria who accessed those programs were in the market to buy a house, or owned a house.
Let’s talk and see whether your interest rate hypothesis is correct when the support programs are wound down.
My hesitation in purchasing right now is based on trying to figure out whether it’s possible for the the myriad financial supports propping up the economy and housing market to continue indefinitely. Maybe they can/will in which case I agree it makes sense to purchase now.
Sadly many people are in favour of any new tax that doesn’t affect them, regardless of who it targets or what it accomplishes. They also oppose any tax cuts that don’t benefit them.
The spec tax is a flop in my opinion. Expected to target 32K homes, it found less than 10K, and 80% of tax comes from foreigners/satellite families , not speculators. I see no reason to be proud of a disproportionate and targeted tax on foreigners, by pretending that they are speculators.
https://globalnews.ca/news/5486187/bc-speculation-tax-revenue/
“ The completed forms showed 4,585 foreign owners and 3,241 satellite families will have to pay the tax as of July 4, making up 80 per cent of the total tax base.”
Certain economic tectonic plates are beginning to shift…
Total takes $7-billion writedown on oilsands projects, labels Fort Hills, Surmont as ‘stranded’ assets
https://o.canada.com/commodities/energy/total-takes-8-1-billion-writedown-as-pandemic-devalues-oil-gas/wcm/0a67e7fb-9f94-4ea5-8017-06287f1e290b
I would.
In fact, I think it’s quite reasonable to take the previous 10 years’ performance as a basis for the next 10 since the situations are so similar: a huge financial shock to the world causes interest rates to hit rock-bottom and then stay very low for a decade.
$826,000
Yes, but in 2010, the question ‘will property prices rise over the next 10 years?’ may as well have been the question ‘will the Bank of Canada reduce interest rates’ because the prices rise very predictably in-line with affordability.
The IMF says it in this way: “Declines in mortgage rates have been quickly priced in by housing markets, increasing price to-income and loan-to-income ratios. A household’s capacity to borrow increases when interest rates decline and its debt-service ratio is stable. Over the sample examined here,
estimated attainable house prices closely track observed house prices in most metropolitan areas. With interest rate declines quickly reflected in house prices, the price-to-income, loan-to-income, or price-to-rent ratios increase. Higher loan-to-income ratios for new home buyers increase the economy’s sensitivity to shocks to interest rates, income, and employment.”
But the BoC no longer has the ability to goose the market in this way. We’re at rock bottom (maybe an extra half point is possible?). So I’m not taking the previous 10 years performance as an indicator of future performance. I do think the government and BoC have shown that they will do absolutely everything in their power to avoid house price deflation, but whether that is enough is yet to be seen.
Magpie, the spec tax has absolutely achieved it’s goal of making NDP socialist fairness warrior voters believe that they are sticking it to the foreign capitalist pigs.
Sure, many people shoot themselves in the foot by needlessly wasting money. But play your cards right and Victoria real estate will be very good to you.
We haven’t moved since we bought, haven’t renovated except for replacing an old bathtub, and have paid down our mortgage aggressively.
Hi there, just wondering if anyone knows what 679 Vanalman Ave sold for?
So, two years later, has the speculation tax made housing more affordable in BC? Since I have to pay it, I’d like to know what it is accomplishing, other than putting the responsibility for helping keep the provincial deficit down on a small group of homeowners in selected communities. I’ve reached out to the politicians and to the provincial government, but no one can or will give me any such information. I suspect it doesn’t exist.
Annual taxes on my Sooke home doubled when the spec tax was brought in. Based on published govt figures, it is one of only 13 properties in Sooke owned by out-of-province Canadians that is subject to the tax. The tax is also being paid on 14 other properties owned by BC residents and 8 properties owned by non-Canadians. In total, there are 50 properties that are subject to the tax out of 5100 declared properties in Sooke. With numbers like these, I fail to see how this is helping anyone afford a house or condo in the Sooke community and I still don’t understand why such a small group of homeowners in a discrete community are being made to bear such unequal responsibility for affordable housing. As far as I know, there is no affordable housing being funded in Sooke by the $130,000 collected via this tax in the last fiscal year.
Other than assuaging some jealous impulses to stick it to the “rich,” (defined as, “Anyone who I perceive as having more than me”) I don’t see what this tax is accomplishing in my community. My sense is that enforcing short-term rental units to be only in principal residences, especially in places like Victoria and Vancouver, will do more to increase the affordable housing supply for both long-term buyers and renters than the speculation tax is doing. I’ve heard very little lately from the UBC academics who thought up this speculation tax and touted it as the solution to the affordable housing shortage. I have no problem paying taxes that are fair, but so far, this one doesn’t pass the smell test.
We can always point to examples where things haven’t worked out so well. And maybe B.C. real estate will implode someday. But comparing two countries and drawing reliable conclusions about the future isn’t possible, IMO.
For instance, using the U.S. to help predict what will happen to Canadian real estate hasn’t worked out too well, and our two countries are arguably much more similar than Japan is to Canada.
Again, I’ll point out that when we bought a decade ago many thought we were in a bubble at that time.
Link: https://www.imf.org/en/Publications/WP/Issues/2019/11/15/Assessing-House-Prices-in-Canada-48777
Totally agree that population demographics are different and that we will likely open the flood gates to help get us out of this. But where I disagree is that population can account for the rise in prices.
According to an 2019 IMF report on an assessment of Canadian Housing (linked below), it states:
“House prices in Hamilton, Toronto, and Vancouver decoupled from fundamentals at the beginning 2016. The pricing gap in 2018 is around 50 percent for Toronto and Vancouver, and almost 60 percent for Hamilton. House prices would have to drop by roughly 30 percent to align with the current fundamentals in these markets. ”
Perhaps the difference can be attributed to fraud, corruption or speculation, but it can’t be attributed solely to population (fundamentals) or increased affordability due to lowering interest rates.
sideliner
demographics explains the difference going on between Canada and japan. Since 1990 japans population has not increased.
After covid expect the flood gates to open up on immigration for Canada . How do you pay for this mess. You jack up the population
Well said Marko. The sooner those sucker stop whining, the faster they will get into the club.
“People on HHV thought prices were unreasonable 11 years ago. Now, 2009 prices seem reasonable”
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Sure when you use 2020 dollars. Average house prices in Victoria are up over the last 15 years by about 5% on average by the June VREB stats, it’s not as if they have been doing anything out of the ordinary or exceptional over that time, inflation plus 2-3% is the norm. Of course it goes without saying that most peoples returns are lower to much lower then that when you factor in renovations, land transfer taxes, real estate fees etc……
You might very well be right. But if you gave that advice to a Tokyo property owner around 1990 and checked back with them in 2013, you’d find that not only did they not make any gains, they would have lost more than 50% equity. Japan also tried everything to keep the bubble inflated with NIRP and ZIRP to no effect. I don’t know to what extent the Canadian system differs, but it sure seems like a bubbly time to buy.
People on HHV thought prices were unreasonable 11 years ago. Now, 2009 prices seem reasonable.
Lesson: prices always seem reasonable a decade ago, so buy today if at all possible, because in 10 years you’ll be very glad you did.
“You have to play within the system and get ahead within the system. If I can get a mortgage for 1.99% and Telus is paying a 5.1% dividend there is no way I am paying down my mortgage.”
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Stop it, you’re making too much sense, you’re going to upset some people with the suggestion of borrowing to invest
Isn’t that just life? Like for example being really good looking or having a high IQ you are already at an advatange over everyone else.
Some people are born into money and others aren’t. If you aren’t you have to hustle harder.
I kept saying on HHV when COVID started……”expect the unexpected” and sure enough who would have thought July was going to be strongest month on record in the history of the VREB.
I personally think it aboslutely sucks that savers have been punished big time in the last two decades but I picked up on this very early on in life. When I started working at VIHA at 21 yrs old students I graduated with rushed to pay off their student loans….I dragged mine out 10 years even thought I saved enough in the first six months of working to pay them off. SOOOOO many benefits. First of all the government randomly paid off around 6k through some “millenium” program I didn’t even apply for. Secondly, I was able to get bursaries, etc., when I did my masters because I had student loans, tax write off, etc., etc. Not to mention all the cash I saved up and held on to I was able to invest into the stock market when it crashed in 2008.
You have to play within the system and get ahead within the system. If I can get a mortgage for 1.99% and Telus is paying a 5.1% dividend there is no way I am paying down my mortgage.
Haha sorry for the rant this AM – was stewing after talking to my broker last night. Its the choice we have at this point if we want to stay in BC. And my wife and i are a lot more fortunate than many so i shouldn’t focus on the negative. Its all perspective. Perhaps winter will bring some better pricing and then i’ll have stressed over this for nothing. Anyway Leo i too would be interested in the Comox Valley though i suspect its all linked on the island. Cheers and Happy house hunting!
4517 rithetwood. Sign up Sundays. Sold on Tuesday. Anyone know the sale price. Thanks
Comox Valley please!
VIVA combined board is up and running though if anyone is interested in up island stuff
Unfortunately I have no special access to their MLS.
Good morning LeoS: I’m not sure if you are able to this or not but I would really like to know if an Edmonton property was sold or just taken off the market. The MLS was E4199344. I think they were asking $263,900 for it. 3bds,2baths,double garage. Thanks so much.
And its also frustrating or people like me who have no family help and couldn’t get in when the market was reasonable because it seems like now the people who can afford these prices are people who have 20% down or more and don’t have to worry about the b20. And i would guess many of these people are just getting help from family who are already rich OR who’s family are leveraging their homes (or leveraging their own home) that have increased in equity dramatically and getting around this stupid b-20 guideline. And by the time i actually get to saving up 20% in today’s market prices will be up another 30% and so it feels like home ownership is just always out of reach if you start from any disadvantage but if you start at an advantage then you just get more and more advantages. And the one time in the last decade it seems like prices could come lower the government pumps more money into the economy then what was even lost as they need their cash cow to stay propped up and so prices continue to rise across the country. Frankly its fucked IMO.
was speaking with my broker yesterday and he was talking about all the approvals they have been doing because the rates so low and i asked how that was relevant seeing as the benchmark is still 5%. He noted that when its uninsured they can send in approval for exception – so basically they are putting deals through from 45-55% TDSR (based on benchmark) and asking for exception given the rates are so low. Its ridiculous. The government brings in a rule to stop people from leveraging to the hilt and the banks just circumvent it as they see fit. ANd then guess who is going to bail them out if this goes south. We the taxpayer as the government won’t let them fail. It’s disgusting.
“ Usually, it doesn’t make sense to buy default insurance on your mortgage if you have a big down payment. But there are exceptions, like when you have 35% equity and the difference between insured and insurable mortgage rates is 15 basis points or more. In those infrequent cases, you end up saving more by paying a default insurance premium—even though you technically don’t need to. (The premium is 0.60% of the mortgage amount — plus provincial sales tax in some provinces, like Ontario.) Doing so can qualify you for cheaper insured mortgage rates if your home purchase is under $1 million. And there’s an added bonus. When you come up for renewal, you can carry that insurance over to your next mortgage—even to a new lender, assuming you haven’t refinanced after getting the mortgage. Maintaining active insurance is valuable because it lets you keep qualifying for the lowest mortgage rates in the market”
https://www.ratespy.com/when-to-buy-mortgage-insurance-despite-it-being-unrequired-072114955
Rates are generally lower on insured products and more lenders will take them so occasionally the differential can make sense if it’s big enough.
Why would anyone want to break their mortgage to get an insured mortgage? Wouldn’t you have to pay the high insurance premium again?
Breaking your mortgage in a lower rate environment can be quite costly unless you are near end of term.
a side note, hsbc is offering 1.94 fix rate for 2 yr and 1.89 for 5 yr insured.
might save your some money and tempting to break mine…
The MLS listing only had exterior photos, so the interior probably wasn’t great.
It won’t be popular, but we should scrap the homeowner tax break
Kudos to Mr. Coyne for getting it. I think the politicians actually get it, too, but unlike Mr. Coyne their jobs depend on them pretending they don’t.
My wife just told me that our most favourite restaurant announced that it was closing permanently; Bistro Swiss up in Sidney. We celebrated a number of special occasions there with some very special friends. I actually feel very sad.
“What do you think these renos cost? And judging by the numbers, is this a good investment play?”
Depends if it’s DIY or they hired someone.
Assuming everything is purely cosmetic and DIY, I would guess $8,000-10,000 for the new kitchen and appliances, $4,000-6,000 in flooring (looks like it may be vinyl plank), $1,500-2,000 for each of the bathrooms.
I notice that they’ve installed baseboard heaters against interior walls in the kitchen and hallway, which is weird. Usually you would install a fan heater on an interior wall, and baseboard heaters under windows. Also is that it for heat? If so, that would be woefully inadequate.
Hard to say whether it’s a good investment…what would an un-renovated 3 bed/2 bath upper duplex usually rent for in GH?
Also, I have a feeling now is not the easiest time to be renting out a four-bedroom apartment in an area where students are your bread and butter tenants.
LookingAtOptions: Just to be clear that was not a straw man argument, it was a joke. I think the discussion regarding Cotswald is settled at this point, no straw men required.
Introvert: Would need to see some before pics, but damn that’s definitely a bargain bin renovation. Will be interesting to see how long it takes to rent at that price.
Wow Introvert. Keen eye for quality!!……….What a mess that reno is. Dull laminate flooring. Wasn’t it great they were able to use the same marble tiles on the bath wall, bath floor, kitchen floor and even the fireplace facing! And then the matching pebble accent tiles in the bath with the ones on the fireplace hearth was truly a winning touch. The kitchen island is too long.
I can’t imagine that they had any interior design consult before doing this. I like the fridge.
Concerning the house on Osgoode (in GH) that was mentioned a few weeks ago…
The MLS listing indicated it was tenanted up and down.
Ask: $699K
Sold: $670K
After it sold, they started renovating it. Looks like the upstairs was completely redone and now they’re trying to rent the top level for $3100/month. I’m guessing the bottom suite wasn’t renovated and may still be tenanted.
Not sure about the choice to build a micro bedroom right off the living room and kitchen area…
https://www.usedvictoria.com/classified-ad/36153793
What do you think these renos cost? And judging by the numbers, is this a good investment play?
I am not talking about returns or luck. I am just agreeing with the comment that stated it is more of a sellers market now than 18 months ago, a comment where Lookingatoptions determined to prove wrong with a bunch of assumptions trying to show it wasn’t a great investment. A good investment and a strong market are different, you can make a shitty investment in a good market and lose money and you can make a good investment in a shitty market and make money.
If you really want to go down the rabbit hole then I would characterize this not as an investment but as more of hedge. The sellers thought they were going to move to Victoria so they purchased a home in the area they wanted to hedge both the price and supply risk when they were ready to move. In this case they were made whole when circumstances forced them to close out the hedge, which is a big win in the world of hedging.
Yes, selling within 18 months is pretty risky.
This house appreciated 9% in 18 months which is pretty consistent with the long-term average rate of appreciation in Victoria, but they happened to get lucky and experience this level of appreciation without having to hold for longer. The rule of thumb for breaking even or making money on a home I go by is that you need to be prepared to wait for seven years. Who knew the market would heat up instead of deflating in covid times?
I think the main lesson is that it is easy to lose a lot money if you have to sell shortly after buying. Don’t get into this situation if you can avoid it. If the market had stalled that would have resulted in a loss of more than $100,000 here. Super stressful to have it listed for six months knowing that was possible.
Dealing in real estate is expensive, as LookingAtOptions points out. Fees, taxes, expenses and the like means that you need appreciation to break even or make $. Thankfully, the market is strong enough that the owners of Cotswald probably broke even or came out slightly ahead.
Not a fantastic return, but I think you both can be correct here?
And there’s the crux of the disagreement. That’s NOT the only truth, and it is dishonest to say so.
All the expenses add up to such a great extent, that it’s a bad transaction. $33,000k property transfer fees, $58,000k realtor fees, huge mortgage interest, mortgage breaking fees. Possibly thousands for speculation tax, etc, etc.
Looking at it objectively, that transaction either lost money overall or made very very little.
Lookingatoptions, the only truth is that 2555 Cotswald house just sold for $150k more than it did 18 months ago. Oh and the part about reading comprehension, your post quoted someone else saying the seller’s market is stronger now than what it was 18 months ago. This is what you posted: https://househuntvictoria.ca/2020/07/20/the-way-we-build-houses-is-insane/#comment-72227
I suggest you take a few years of hooked phonics before attempting to provide investment analysis on realestate transactions when it isn’t warranted.
Apparently the Victoria MLS portal is getting updates this week. So if you start noticing your MLS searches not working properly, that might be why.
How bizarre, that is the saddest straw man ive ever seen.
I point out one obvious bad transaction, and when you are so traumitized that you can’t prove me wrong you have to play make-believe that you are in a completely separate new argument?
I’ve said nothing about 1745 Rockland. I don’t know enough about it, or any improvements but it’s certainly possible that seller did well.
Still does not change the result for the Cotswold transaction.
Still waiting for all your proof for those claims for the Cotswold transaction, champ. I won’t hold my breath.
And that, ladies and gentlemen, is what a sore loser does when they know they’ve been proven wrong. When they can’t use facts and logic, they resort to ad hominem.
Do you seriously have a reading comprehension problem, or are you just loving your straw men again?
I’ve never said we’re not in a seller’s market. But for heaven’s sake, if you’re going to pick something that proves that, don’t pick an example that is easily shown to be a bad result.
For the umpteenth time, I only responded to others here applauding the 2555 Cotswald transaction — which was obviously a bad transaction when you look at the numbers, period, full-stop. What in God’s name is wrong with pointing out the truth?
Go ahead, applaud any transaction. If anybody happens to notice what is obviously a bad transaction being applauded as if it was a great result, why wouldn’t anyone point it out?
Are many in a post-truth mindset on this site? Just stick to the mantra, no matter when it’s right or wrong?
What does anybody find wrong with pointing out the truth?
Caveat: I have gotten the impression that the City of Victoria does not bother to enforce most of the rules regarding a lot of things (They are pretty tough on barbershop sandwich boards being put out on the sidewalk though).
They’re all mostly based around food domesticated by the native americans.
Tomatoes, Chili peppers, potatoes, corn, beans, squash, avocado, cashew, peanut, pecan.
re decline in AirBnB:
Is Victoria even enforcing the STVR rules? You’d think that would have caused some drop in whole home AirBnBs? I get that Victoria is just one municipality in the region, but still I would have thought a virtual prohibition in City of Victoria would have had some impact.
overcooked broccoli for just one example
People live in multigenerational households out of necessity not out of choice. It provides security, company, and peace of mind to some. I grew up in a multigenerational home with my Grandparents ( blind Grandmother), single mother and two aunts. I never felt insecure in that environment, there was always someone around. Back then, people took care of their own and did not rely on government support. The more support systems you create the more people requiring support appear.
Not really? You stated “We on the other hand love our to pursue our own lives and visit with the extended family occasionally”. This would bring occasional to daily and create interdependence rather than promote the pursuit of independent lives. From my perspective, a family unit is the only place, “from each according to their ability, to each according to their needs” might be the best path for some families. Especially when you have dependents – elderly, disabled or children.
You do something different because you’ve talked about and planned for this possibility beforehand.
Co-ownership agreement with clause to trigger buy out or sale or rental. Standard terms are available now as homes are being bought this way more frequently. I think you would not enter this type of arrangement if you did not have an idea that you would be able to compromise. It sounds like your DIL has overreaching expectations that don’t match with your values already so it may be a no go.
Then don’t do it? It is an option, not a requirement. Might be right for someone else because not everyone is like you – or me. However, our culture has promoted your way as a better way and that can’t be the case for everyone.
@Totoro
So basically the same as me (with the exception of the dinners) but living in a large home.
It wouldn’t work for us we are all too independent to want input from the rest of the family all the time. Also what happens if you try multi generational living and it doesn’t work. I can only see problems in dividing up a property where there has been multiple streams of investment and one wants to sell and another doesn’t?
That is the last thing I want for my children. It is my job to plan for that.
Yes.
Then definitely don’t do that. We bought a multi-family so everyone gets their own space and I wouldn’t live in the same space or do full-time childcare myself, but would be there for sick days, extra days, make family dinners and cook for them, and more. However, I’m a kid/family person and love being around them and not everyone gets joy from that. I personally can’t wait to be a grandparent although it’ll probably be another ten years at least.
Great. You know what you’d like and this is a cultural norm here and considered the right way to go. I’m just saying there might be a more economically and socially functional way to look at it for those for whom this is a potentially attractive option. Lots of research out there showing that grandparents benefit a lot from this type of arrangement too, but it certainly is not for everyone in NA.
Or perhaps wealthier ones who have the means and motivation to make it a very pleasant situation for all – provided everyone gets along. I have seen a number of examples of this here in Victoria and abroad.
My take on other cultures is that there are some valuable lessons that are based on a long history of needed interdependence and practicality. It is like cooking, there are some good dishes from British settlers but, imo, Asian and Indian cooking are more healthful and tasty in general. Some of this is personal taste, but it is only in my generation on that this has been integrated into Canadian culture more and I like to think that with all the information we now have there is a better way to do a lot of things. IMO the nuclear family is not the best model all of the time in all circumstances.