Detached on a tear while condos disappoint
It was just three months ago when we saw the lowest April sales on record in Victoria. Now in July we’ve recorded the highest sales ever for that month. Quite an impressive seesaw.
It wasn’t quite enough for an all time high on a seasonally adjusted basis, that record still goes to the period in early 2016 when the market was even more active, despite lower inventory than now. As it has been for some time, the market recovery is anything but even between property types. The radical difference between the detached and condo markets is shown by the sales breakdown. Condos have just recovered their pre-pandemic sales level, with little sign yet of the sales we missed in the spring coming back in the summer. The detached market meanwhile has rebounded to some 35% higher than pre-pandemic as buyers make up for the lost sales and do their best to reach directly for a home without shared spaces.
It’s a similar bifurcated story on inventory. Overall, the slow uptrend in seasonally adjusted inventory continued in July, but detached inventory is down 16% from last year, while condo inventory is up 28%.
Months of inventory of the entire market continued to decline, and at just below 3 is now very close to the ultra-low levels of 2016/17 when we were in an extreme sellers market.
For the detached market though, we are already either at or close to the hottest market conditions on record, right across the price range.
It’s still a consistent nearly one in four detached properties that are going for over ask, but that doesn’t mean the over asks are that big. 80% of the over-ask sales are within 5% of the asking price so just because there’s a bidding war doesn’t mean it’s a return to the many tens or hundreds over ask that we saw commonly in 2016. Over-asks are downright rare for condos, with only 6% going over, all of them within 5% of the asking price.
Prices for detached hit another record in July with an average of $1,021,323 and a near record on the median of $850,000. The 12 month average trend line is starting to look downright parabolic.
It’s still not a normal market
I won’t belabour the point I made last month, but the fact remains that this superheated market tells us as much about the real state of the market as the super-depressed one in April: not much. We can see a clear shift in buying preferences to detached properties, with single family doing really well, while condos recover slower and townhouses are in the middle. What we don’t know is what the market looks like without the effects of pent up spring activity and economic stimulus. However as we’ve discussed a number of times, inventory levels change only slowly especially in single family, and that means if a buyers market is coming, it’s quite a ways off.
Condos could be in trouble come fall
To be clear, there is nothing to indicate condos are in trouble at the moment. Sales are up a bit from last July, and prices are stable. But the spring sales depression cost us at least 260 condo sales and unlike with detached properties there is little sign that these are being made up. So if pent up demand only gets us to normal sales, where do we end up when that dries up and the government money printer is spooled down?
At the same time we have definitely seen a surge in new condo inventory come on the market. That’s a phenomenon unique to the condo market, where supply can suddenly materialize both from new construction (not too much of that as most is going to the rental market) and from existing second property owners deciding to liquidate. In June and July we saw 35% more new listings for condos than last year compared to only 14% more detached homes. Active listings of condos in July were nearly three times higher than in July 2016, and back to the level last seen in 2014. If there’s substantial forced selling in the fall, I also expect this to hit the condo market more than detached.
The detached market currently seems invulnerable. Even though the current level of frantic activity is temporary and won’t be sustained, it would take a massive slowdown and buildup of inventory to turn the price trend negative. It’s not something I see happening in the near future. Condos are showing more cracks in the armor, and it may be worth waiting to see how that develops. However the one thing not to be underestimated as a buoying force are the incredibly low interest rates. When you can get a 5 year as low as 1.66% (~$400/month for $100k in debt), those with jobs may be tempted to keep levering up.
Couldn’t part of the increase be down to the fact that no one wants to touch cash anymore?
New post: https://househuntvictoria.ca/2020/08/10/what-not-to-pay-attention-to
Interesting article Patrick, thank you.
Depression? Don’t tell Canadians who spent 3% more on credit /debit card spending in July 2020 than they did in July 2019. Mainly increases in the “pleasure and pampering” categories according to RBC,
https://thoughtleadership.rbc.com/covid-consumer-spending-tracker/?utm_medium=email&utm_source=salesforce&utm_campaign=special+report
Well you could say that. People who live in relatively uncorrupt countries such as Canada become sensitized to smaller misconduct. People who live in places like Russia or Lebanon can only dream of having these kinds of things to complain about.
Really, if you spend some time living and working (not just being a tourist) in a 3rd world country you’ll understand where we rank. That Transparency International ranking is made using inputs from people who actually do business in the countries concerned.
I took part last year (2019) and it was one phone call and the rest online. Never met anyone, and I completed it. If they are changing the mix of in person vs phone calls because of CoVid, then yes that could explain different results based on different methodology, and also lower response rates.
The operative word being “Perceptions”.
Canada’s elite political thugs have excellent marketing. #SnowWashing #VancouverModel
False. The first month (of the total 6 months) of the survey must be done with an interviewer. Pre-Coivd time, these first month surveys are done some in-person, some via phone (called phone cases), the subsequent months can be done online/phone, or in-person when needed, and when a phone case is not-reachable via phone for the first month, or any case that has no response for subsequent months, an interviewer will be sent to the address. That would explain the lower response rate since March, as it is likely impossible for personal visits due to Covid.
Come to think of it, we have such poor data on so many things. How often do we find ourselves squinting at a bank survey as our best means of determining how much trouble (or not) people are in when it comes to this or that?
Not corrupt compared to other countries. Canada rated as 12th least corrupt of 179 countries.
https://en.wikipedia.org/wiki/Corruption_Perceptions_Index
Massive drop in response rate being the big one. Just like our LFS it will lead to poorer data quality on all sorts of statistics.
I would ignore that reported change in US home ownership. Because there was a significant change in methodology for the census data, preventing accurate comparisons. During CoVid, they stopped doing in person and switched to phone interviews. It isn’t known if this is less or more accurate. But they have a chart (See link) showing that home ownership rates reported are higher by phoning people (67%) than in person interviews (60%). This result is independent of sample size, and it would apply to any survey with changed methodology.
https://www.census.gov/housing/hvs/files/qtr220/impact_coronavirus_20q2.pdf
The Labour force survey isn’t in-person, it’s online/phone with phone/email reminders to comply, so in theory that aspect shouldn’t be affected by Covid. It’s 6 months of filling out long forms every month. Maybe they got slowed down with CoVid and aren’t chasing down as many people to complete the survey,
I was replying to a post that was talking about renters becoming buyers if interest only mortgages were available.
Regarding your examples, it depends. The home ownership rate is actually the % of total dwellings occupied by an owner. If someone moves out of a rental to live with their parents, that doesn’t affect the rate if someone else rents it. But if it’s a condo that’s sold to a new owner occupier, that does.
I would have thought the percentage of home owners vs renters would increase if there are less people living in the area or more people moving into multi generational families?
Opacity is the Canadian way, Leo, despite what all levels of government claim.
Canada is corrupt.
Condo sales are falling as folks move from the city. AirBnb hoarders are also getting hit. Plus it doesn’t account for new builds coming online.
“The homeownership rate was 67.9 per cent in the second quarter, according to a Census Bureau report Tuesday. It was the fourth straight increase, climbing from 65.3 per cent in the previous three months.”
Not sure if I’m more shocked at the stratospheric increase in ownership rate or that the US has quarterly ownership stats while ours are every 5 years.
However some people saying it’s just a data issue due to dropping sampling just like our LFS
https://www.bnnbloomberg.ca/homeownership-rate-in-the-u-s-soars-to-highest-level-since-2008-1.1471856
If there are fewer renters that means they are buying up properties that were formerly rentals, thus there are also fewer landlords. Think about it. Anyway I can’t see the ownership rate increasing at a time of high unemployment.
I’ll note as I have previously that schemes to stretch out amortizations aren’t solutions, they are just piling on more debt long term which will eventually have its impact.
Patrick said, “One half of a mortgage payment is likely cheaper than equivalent rent. That might be something the banks are willing to do for years during the crisis. This could be a good solution, though it should be means tested.”
What would happen to the speculators(landlords)? Surely there would be fewer renters if that was the case? Empty condos don’t pay for themselves.
Guess the feds would jack immigration (again).
Not sure why anyone in BC would vote Liberal or Conservative – they’e destroyed this province for the benefit of the 1%.
How are folks doing with the new portal format and access?
I am enjoying the access to the rest of the Island. However, with the old version, I was able to navigate to a details page that provided the previous sale prices of a listing, how often it was listed along with previous asking prices and some additional documentation such as the PDS. It appears, at least on the version that I have access, that I cannot get this data anymore.
Has anyone else run into this yet? Is this a new system restriction? A board restriction? A realtor restriction?
I found this an odd move since we have been moving away from some of the cartel format for controlling of data and the information. The data I use to access on the old portal version really made it easy to rule in or out potential properties without have to waste time requesting information as one offs. I can’t imagine a busy realtor would want to spend their day answering these kinds of basic questions that could be accessed online.
Any insights on this out there?
Barrister there was actually very significant support pre-covid and from what I’m hearing, the supports have been ramped up during covid. Between IRAP and SRED funding sources, the government covers at least 66% of wages (and other costs) that support new product development. Additionally there is the BC-Canada jobs grant which covers 80% of training program costs up to $10,000 per person. Also all co-op programs have been expanded which gives local companies essentially free employees for 4 months from the local universities. Support for local manufacturers is truely excellent, and actually may be on the high side because it can encourage development that would be otherwise unprofitable.
Thanks LeoS and it is too bad that we cant track buyer origins.
Entrance to Stanley Park in the 1950s:
https://twitter.com/oldcanadaseries/status/1291613940754059265
When the tide went way out, many stores got caught skinny dipping. That is, they didn’t offer (or couldn’t transition fast enough to) online shopping.
Yes, big numbers of young adults had already moved back home ore Covid. But the numbers from the article weren’t counting young millennials (25-29) that have already moved back home pre-CoVid. The article found 39% said that a CoVid economic downturn had either made them move back home or they were planning to do it.
https://www.cnbc.com/2020/08/05/39-percent-of-younger-millennials-say-covid-19-has-them-moving-back-home.html?__source=twitter%7Cmain
Either way, bad news.
Heh. You think 1.66% for a 5% year fixed is low, just you wait…
Mass Bankruptcies and Store Closures Expected in Canada by Early 2021
https://www.retail-insider.com/retail-insider/2020/8/mass-bankruptcies-and-store-closures-expected-in-canada-by-early-2021-experts
I don’t think so. On the mainland you can use zealty.ca but they still don’t have that info here it seems.
Nothing really beyond a few anecdotes. Traffic from the mainland seems pretty steady. The board stopped their quarterly reporting on buyer origin, so won’t know until end of the year.
Yes, and then how long before we can get to 0% interest mortgages so that the “interest only” payment will be nothing. Then we can buy a house for no Interest, equity or down payments at all, and just hand the keys back to the bank when we’re done.
Gotta give the gov/banks a slow hand clap for that one. More indebted consumers, propped up house prices, more leverage, kick the can down the road again. Next step interest only mortgages with no downpayment?
Heads banks win, tails you lose!
Is there anywhere I can find the date when a property was originally listed, without the aid of a realtor?
Probably has. Death rate per capita more than twice that of Canada, and higher than the US.
re: young adults moving back home with their parents.
According to the 2016 census, 34.7% of young adults between the ages of 20-34 were already living with or have moved back home with their parents. It looks like those numbers were going to continue to rise. Also, in the same census in Toronto 47.4% of the same group were living with their parents. More males than females have moved back in.
So likely even without the covid crisis, many more would have moved back in from 2016-2020.
I think around 1/2 million parents have also moved in with their children….probably many of them to look after their grandchildren while both parents work.
Heck I bet they would jump at the chance. A never-ending income stream for them!
The idea that Sweden doesn’t have Covid safety measures is a complete misunderstanding of what Sweden is doing.
“Pretty sobering update from Dr. Tam. The federal government is planning for covid safety measures to be in place for two to three years. ”
Evidently Dr Tam has never head of Sweden.
Right, and it looks like the next move from the banks/govt instead of mortgage deferrals is temporarily allowing “interest only” payments on existing mortgages. That would reduce monthly payments in the early years of a mortgage by about 50%. One half of a mortgage payment is likely cheaper than equivalent rent. That might be something the banks are willing to do for years during the crisis. This could be a good solution, though it should be means tested.
Ratehub.ca ““It may well be that the industry evolves over the next two to three months to things like making interest-only payments rather than the full [mortgage payment] deferral.”—Equitable Bank CEO, Andrew Moor, talking about mortgage deferrals during his company’s conference call.”
LeoS: Do we have any take on whether the number of out of town buyers has increased for SFH?
Overall market very close to last year, but of course detached hotter, condos cooler.
They’re not reducing the sample size. The response rate is dropping rapidly. And the people that aren’t responding aren’t likely to be randomly distributed which means it’s likely to bias the results. It’s a big data quality problem if it doesn’t recover. Strange stuff in the data already for the CMAs.
That’s why we can’t project this out to the future.
Right now we have pent up activity goosing the market, but also lowered interest rates and a shift in preferences towards detached. The first will dissipate in the next month or two, while the second will persist very likely for years (although the actual stimulative part of the drop will also dissipate) and the last, who knows if it is permanent or just for now when people are scared about COVID.
Patrick: I don’t want to argue over the fine print but I would point out that you chose to go with the headline.
But we both agree that there will be real difficulties in the economy. The tourist industry along with restaurants are both seriously hurt. At the same time the oil patch is bleeding jobs. Things are going to get grim.
What I am not hearing is any plans as to support alternative jobs by expanding areas like manufacturing. Maybe it is time to import less and make more.
“ 20% of homeowners reported impaired income due to COVID-19
Of those, 7% said they would not be able to make their full mortgage payments in coming months.”
https://www.ratespy.com/rate-expectations-falling-080715226
The article headline is “has them moving back home”. This is supported by the body of the article. It doesn’t say “have already moved back home”. The body of the article then clarified it by saying that 39% “are either planning to or have already moved back”.
Fwiw, this article says 46% have had to move back in with Parents. These are young people age 15 to 29 so gen z and young millennials https://www.foxbusiness.com/personal-finance/coronavirus-financial-independence?cmpid=prn_investors (the other article was age 25-29)
Patrick: The article does not say that 39% have moved back home but rather that number includes all those that think that maybe they might have to move back home. I dislike articles that seem to go out of their way to manufacture dramatic headlines.
Patrick- my cousin’s daughter lost her job in Calgary. She is 40 years old and when her benefits run out, I can’t see any alternative than to move back and live with them. This will be devastating to her as she has developed a great group of friends in Calgary, which she doesn’t have in Manitoba. By the way, she survived the 2008-2009 recession with the same company, only having to take a reduced work week for a while. This time it’s going to be a lot worse.
Now in July we’ve recorded the highest sales ever for that month.
I’m having a tough time with this realtor speak.
It’s like watching a river with a decreasing water level that I build a dam on and stop most of the water from flowing from April to June. All the while government trucks are unloading millions of litres of water into the reservoir biweekly (CERB).
Then I lower the dam in JUL and we have highest recorded water level ever for that month.
As sleepy Joe would say “Come on, Man!”
39% of younger millennials say the Covid-19 recession has them moving back home
https://www.cnbc.com/2020/08/05/39-percent-of-younger-millennials-say-covid-19-has-them-moving-back-home.html?__source=twitter%7Cmain
But that wasn’t your “dramatic” claim. Your were stating the “volatility” of the results would dramatically worsen. And no, that doesn’t happen when you merely reduce sample size from 100k to 87K.
The survey had a fall of 9 from 106 to 97 in 2001 to 2003. Would you label that “dramatic” as well, and btw unemployment was unchanged in that period https://www.macrotrends.net/countries/CAN/canada/unemployment-rate
There’s 23 years of data there. Normal variability is 5000. We just dropped 15,000 people in a few months. That is nothing if not dramatic.
Y axis at zero is such a red herring when you see a long time series.
They’re not wanting to survey fewer people, the response rate is dropping. We don’t really know why, but the people that aren’t responding are very likely not randomly distributed, which means the results of the LFS could be getting further and further off from the truth. Could be people not working less likely to respond. Who knows but it’s bad news for us knowing what is going on in the labour market.
Huh?
Look at the Y-axis. We were surveying 100K at the start of the year and now are surveying 87K. That’s a whopping 13% less, and still big total numbers. For example, Victoria’s 1% share of those number would be a reduction from 1,000 sampled to 870? That changes the confidence interval slightly (Maybe from +/- 3% to +/- 4%), but not dramatically.
What principle in statistics tells you that this will make the volatility of the results “dramatically worse” as opposed to “slightly worse”?
To me, the only thing “dramatic “ is someone creating a graph which such a limited Y-axis, fooling some people into thnking there has been a collapse in the data,
With the end of CERB looming, what’s next for the unemployed?
https://www.theglobeandmail.com/business/article-with-the-end-of-cerb-looming-whats-next-for-the-unemployed/
What no one is talking about: labour force survey participation is plummeting.
The estimates from the LFS are already highly volatile, and this is making them dramatically worse
Source: https://twitter.com/mikalskuterud/status/1291815320555081730?s=21
My guess is there will be a large net influx to the island regardless of area. I had heard mainland buyers accounted for about 30% of sales in Courtenay/Comox pre-pandemic. WFH will allow more people to make the jump. Anecdotally, my city slicker friends just sold in Toronto and moved to Nanoose Bay. Family reasons, but I’m sure Covid played a part.
So with increasing remote work, will Victoria benefit from influx of people leaving Vancouver for Victoria, or will we see more people leaving Victoria for lower priced markets up island?
I’ve spoken to both types, but hard to tell what the net effect is.
More!
EXXON RIPS UP $30-BILLION REBUILDING PLAN, COULD DECLARE STRANDED ASSETS AT KEARL LAKE
https://theenergymix.com/2020/08/07/exxon-rips-up-30-billion-rebuilding-plan-could-declare-stranded-assets-at-kearl-lake/
Even with that context, I also fail to see your point Frank. Lockdowns were provincial. JT was giving good blanket advice. No sense blaming him for what the premiers decided to do. Unless you think he should have somehow countermanded them to keep the provinces open?
Duran- I was merely responding to a previous comment that the lock downs were ordered by the Provinces. You’ll have to read previous posts to understand the context. Thanks
Who needs the judiciary when direct to consumer is so popular these days?
Definitely not Mount Doug, it wasn’t called that until the 1910s.
It’s Cedar Hill.
Interestingly enough, Victoria unemployment is up by 0.1% in July compared to an average drop in unemployment of 1% amongst all CMAs.
US does this as well, they just have cops do it instead of the judicial system.
Safer from corona, yes. From state-sanctioned murder, no.
https://globalnews.ca/news/7256857/china-sentences-canadian-death-drugs/
https://travel.gc.ca/destinations/china
Job gains slowing down now. The rest of the jobs recovery will be a slow grind… https://www.cbc.ca/news/business/canada-jobs-june-1.5677746
It is a beautiful sunny day out there so lets stay focused on joyous issues like real estate and not get into the political dung heap of Canadian politics.
What’s your point Frank? That was good advice at the time and JT has made dozens of statements since then as our understanding of Covid risks evolved, just like all national and provincial leaders.
I think Trudeau has made some very dumb moves, but I can’t say that was one. I mean, what do you think he should have said? Go out and have fun, maybe do some extra shopping? No thanks.
Not exactly sure of the date but in late March Trudeau came out and said to all Canadians:” Enough is enough. Go home and stay home “.
Thank you Local Fool. A little relief from the gloom and doom is appreciated.
You see to be unaware that all business lock downs were ordered by provincial governments and that Trudeau had no say over them.
Well I hope you’re unaware.
A little escape from the virus and Great Depression 2.0 porn…
Shapshot of downtown Victoria, taken in 1889 from the vantage point of the Birdcages (where the present day parliament buildings are) overlooking the inner harbor.
A few interesting points:
Note that this picture actually predates the larger Weiler Bros building, the post office, not to mention the parliament buildings themselves.
The bridge is either the second or 3rd iteration of itself, known as the James Bay bridge. Of course, Government St and the Empress just off frame is what would be there now.
Is that Mt Doug in the background?
Any guesses as to what all those flags everywhere were about?
I wonder if Justin Trudeau was aware that 98% of this country’s businesses are small businesses. They seemed to be the segment of the economy most affected by the lock down. All the big box stores were allowed to operate but the little guys had to suffer. Almost seems sinister to me, I really dislike this pathological liar we call Prime Minister.
Sales update.
Don’t Talk About Covid-19’s ‘Waves’—This Isn’t the Spanish Flu
https://www.wired.com/story/dont-talk-about-covid-19s-waves-this-isnt-the-spanish-flu/
Thank you Frank that was both informative and helpful. Those numbers still make it extremely improbable that 500,000 to a million will close. It is possible that 50% of all business will close but I suspect that is unlikely. Certainly there are difficult times ahead.
Years ago when I went to register a business name, I asked how many applications they process, I can’t remember the number per week but it was shocking. With 98% of Canada’s businesses being small businesses, I guess we’re now what England was once known as: “ A country of shopkeepers “.
Barrister: just looked it up for you. There are 1.18 employer businesses in Canada, 1.15 million are small businesses. So let’s say 1/2 close, that’s 500,000. Those are businesses that employ people, I don’t know how many sole proprietors there are, that wasn’t included. Now you know. Took less than a minute to look up.
Given that (Greater) Victoria is 1% of Canada’s population, that would mean about 880 Victoria businesses closed in April . I agree, the data points to an upcoming depression, currently prevented by the huge government borrowing and transfers. All in hopes of a good vaccine or treatment. Let’s hope those come, if not things could get bad.
With about 6 million Canadians on CERB, that translates to 60,000 on CERB in Victoria. Cutting them off would have a huge negative effect on the economy. That’s 60,000x$2,000= $120 million CERB money per month that would stop flowing through the Victoria economy.
Sideliner: I doubt Canada has a million small businesses to start with considering our population is around 36 million. The economy is definitely wounded but I suspect we will see a slow recovery over the next three or four years.
Just a flesh wound.
$850,000
The paper is reporting this morning that the average price for SFHs hit an all-time high of $1.033M (from $1.014M in June).
Leo or Marko, can you please tell us what the median is?
https://www.timescolonist.com/real-estate/prices-nudge-up-amid-strong-demand-in-victoria-real-estate-market-1.24181842
I don’t either.
I don’t think ecology has anything to do with the shift in BP investment, however their bean counters believed that going down the eco energy path (going from one destructive path down a much more destructive path covered in a thin eco veil) will let them tap into the free flowing government pig trough.
BP investors saw the writing on the wall for the last few years that their old/dying oil fields are preforming poorly against OPEC and Russia so it is time for them get their hands on that free government umm…yumm…gold bars… (Al Gore) that every eco companies are on. BP North Sea, Gulf of Mexico deepwater, Alaska, US fracking, and many more are expensive to operate and are not producing oil as they were hopping to be. And, the only exception that is making money for BP is their 19% investment in Rosneft oil (and Russia isn’t exactly known as a stable political country).
Oil fields operated by BP — https://en.wikipedia.org/wiki/Oil_fields_operated_by_BP#North_American_Gas
The End of Cheap Oil — https://www.nationalgeographic.com/environment/global-warming/end-cheap-oil/
BP net zero strategy features increased bioenergy production — http://biomassmagazine.com/articles/17257/bp-net-zero-strategy-features-increased-bioenergy-production
Most of the 20 fold increase “net renewable” will be biomass energy (carbon producing, by deforests and burn trees), and “bioenergy” barrels are will be from turning food crops (corn, sugar cane, wheat, etc…) into ethanol.
This will be interesting to watch. Single family is burning through pent up demand very rapidly. Of course just an estimate, and could be higher since this is based on last year’s sales while sales were higher going into the pandemic.
But once this is soundly into the negative, we’ll see how much of the current activity is actually new, stimulated by low interest rates vs just a holdover from the spring.
Gulf islands sales up 125% from last July.
Statscan- 88,000 businesses closed in April ( I assume permanently). Probably a lot more in May and even more in June, July, August, September and so on. I would estimate 500,000-1,000,000 businesses. Some owner operated, some maybe 10-20 employees ( small restaurant, retail store, etc…). Am I the only one seeing an upcoming Depression?
I think a lot of people don’t want to live in big cities anymore I think this will be a lasting change from COVID. Victoria I think will benefit from this over the next little while. Lot of people from Vancouver I know are looking to get out of there and move here.
Anyways this is just my view. If the Victoria market didn’t get trashed during COVID I think its going to grind higher. Interest rates are the only thing going to stop this. Rates are going nowhere anytime soon.
Also I think Canada will benefit from being one of the sane countries out there . If I was Chinese and had money I think I would want a safe place to go.
I liked Marko’s summary:
https://www.youtube.com/watch?v=L3CGRH-scH0
Because I think it is accurate.
I wonder how much of the market demand in Victoria is again from Vancouver.
Thanks – I definitely get it re the conventional view. It is ironic though. looking at the stock market as an example: For the vast majority of folks under 45 or 50 the BEST thing that could happen for their retirement savings would be a sustained swoon in the stock markets…….
They aren’t disappointing me, quite the opposite I was hoping for deals to materialize on condos that haven’t yet. The reference was to them disappointing compared to the overall sales recovery.
Not the best choice of word there perhaps. Replaced problem with phenomenon.
That said the “normal” way that asset prices are spoken about is that up is good and down is bad, so that creeps into language about real estate as well.
Leo why is it “disappointing” to you that the condo market is weaker than SFHs? Are you just writing from the realtor/salesperson perspective that rising prices and high sales volumes are good and falling prices and low sales volumes are bad?
Personally I’d be happy to see condos (or SFHs) weaken in price as it creates opportunity for first time buyers. I do agree with your analysis that significant weakening of the SFH market is unlikely in the short term.
On a related note, why is it a “problem” if there is a surge of new condo supply? I thought in the past you were an advocate for adding more housing supply? I get that new supply might hit prices, but I fail to see why that is a “problem” unless the hit was so big as to cause instability to the whole market and cascading downstream effects.
Well I hope you are right.
Listen to Uncle Leo, y’all.
I have to agree with Totoro as to our new habits. We have totally stopped going out to restaurants and dont go downtown at all. We did drive past city hall a couple of days ago and we could not believe all the druggies camping out there. I suspect that Doctor Tam is correct as to a minimum of two to three years to get Covid under control. We have set up our backyard for social distancing and are able to comfortably have one couple our at a time (winter and the rainy season will be a challenge ( am thinking about using the carriage house.)
On the other hand as time goes by more and more people will say screw this with the social distancing and life will start to return to normal to some degree. So much depends on what this virus does in the future and whether we continue to avoid it or we start to look like Texas.
Hence why I am optimistic even big issues like climate change can be solved in time. Once the economics make sense, the transition is swift.
Back in late March I said there may be opportunity now, since it was peak fear. That time has passed. No fear or extraordinary opportunity out there right now.
`Totoro
If you are looking for opportunities, maybe there may be some in condos. There probably will be more in commercial buildings.
~~~~
Capital chases opportunities. In preparation, investors must compete with professional realtors/lawyers and who have immediate access to those golden opportunities before it trickles down to average joe who may or may not ready to pull the trigger.
Toronto downtown was never alive during the 90s. Practically no one lived there. Downtown itself was mostly shutdown by 5 o’clock.
Pretty sobering update from Dr. Tam. The federal government is planning for covid safety measures to be in place for two to three years. That is a long time to feel at risk if you are elderly and live in a condo.
If this happens working/studying from and staying at home is going to become the longer-term norm. Home comfort and amenities are going to become an even bigger focus than they already are. Floor space will become more desirable I’d think – enough space for a work area, home gym, play area and socializing at home. If I had school-age kids I’d be thinking about teaming up with other parents and setting up a small home study group with a shared tutor and childcare.
I’d expect a lot of storefront retail and restaurant businesses that cannot transition to online will not make it once we hit the one-year mark. I already didn’t go downtown much, but now it is not at all. I mostly limit shopping to curbside pick-up and delivery and there is nowhere to park for that downtown. We no longer go out to eat. If there is an escalation of cases, which is likely once school starts and kids attend without masks in BC, there will be a surge in uptake up on this type of behavior. Once you get used to it, it is hard to think about moving back to in-person for many types of shopping.
If you are looking for opportunities, maybe there may be some in condos. There probably will be more in commercial buildings.
Right – no drop in condo prices yet, so no opportunity. Perhaps by later this year, though? Or maybe there will actually be no decline, just a relative separation relative to sfhs.
I did not suggest that downtown had to die for prices to go down – kind of the opposite. Like in Toronto, temporary drops in desirability (due to oversupply, or in this case, reduced demand) are good opportunities to buy – unless this happens to be the beginning of the long-term decline of downtown, an actual structural change rather than a temporary one.
According to Leo above, condo prices haven’t fallen (yet). Not really what I’d call an opportunity. And downtown doesn’t have to die for condo prices to go down. Just ask someone from Toronto who remembers the 90’s.
Boomers vs Millenials in Victoria. Still more boomers in most areas except downtown Victoria and parts of the westshore
@ James Soper –
Ok, you appear to be right about SARS in 2003. I’ve read a few stories that mentioned it may have become less virulent, but most sources credit traditional containment measures as the most effective.
My point still stands – condos are selling poorly, and a few people on this blog have suggested this is because of a sudden Covid-related aversion to dense living. Now the pandemic may last several years or it may all but disappear in 12-18 months due to several factors, one being the rollout of a vaccine. I don’t know. But for those who are bold and think things will bounce back, this could present an opportunity.
Or maybe downtown is dead forever. Office buildings and high rises will be shuttered and downtown Victoria will begin a gradual decay into squalor that make Detroit in 2013 look like Disneyland. But I don’t think so.
Dr Henry just announced results from last 4 days. Only two cases total added to VI Health Authority (pop 785K). Remarkable!
Overall about 146 cases added in BC over 4 days, (37 per day) and 90% were in Fraser valley and Vancouver.
Doesn’t seem like a lot of fear to be honest.
Hard no there.
They managed to contain it, it was only contagious after several days of symptoms. Once they recognized that and they started quarantining people properly, it died out.
There’s obviously a lot of risk and uncertainty, but this could also be one of those ‘be bold when others are fearful’ moments. I mean, SARS disappeared suddenly on its own (evolved into something non-deadly, I understand), and there are several vaccine trials showing promise. 5 years from now, are people going to wish they bought condos in late 2020/early 2021 when prices were bottoming out?
Great set of charts and observations Leo! I share your view about trouble coming for condos in the fall, but with this crazy market who knows.
Funny, as soon as I saw your acronym “MIL”, I saw, “Malfunction indicator lamp” ie, a “check engine light”. MIL and CEL are common acronyms in the automotive repair sector. You don’t want to have one, that’s for sure.
Then I got it – oh, the “in laws”. Then when you mentioned, “you have to have a good relationship” with the MIL, in a perverse way both interpretations seemed to work, and actually are kind of related if you get my drift…
This seems big.
BP will slash oil production by 40% and pour billions into green energy
https://www.cnn.com/2020/08/04/business/bp-oil-clean-energy/index.html
My MIL has been living in our suite since 2013. Best arrangement in my view if you have kids. Win win. Of course you have to have a good relationship.
Freeedom: Different strokes for different folks but in my eyes that is one ugly house that has all the charm of a shipping container.
I could be wrong, but I think toroto is a mother living with children and (one?) young adult child, but she is not a grandma yet 😉 (and she may not live with her parents or in-laws?).
Multi-generational home is a good idea for people who like/need it and can handle it correctly, be is a suite, a garden suite, a duplex, or just sharing in a big house. BTW, there is a beautiful multi-generational home built by Aryze in Victoria last year: https://aryze.ca/project/a-modern-multi-generational-home/
Are there data showing the rate of multi-generational home occupancy over time? I’m starting to come around to the idea that it’s much better to have the inlaws and family in the basement suite, than a stranger. I think this would be an interesting thing to explore on the blog. Perhaps totoro could share some of her experiences with the day to day logistics of this, and also the legal complexities of shared ownership?