Dec 14 Market Update
December is typically the slowest month of the year for Victoria real estate. What we should be seeing is sales and new listings down to a trickle while everyone focuses on the holidays instead. Sale and new listings are decreasing, but the market is far from quiet. So far in December, sales are up 58% over last December, while new listings are only up 28% and total inventory is down 22%.
If the current rate of sales increase holds for the rest of the month, we’ll end up at an easy all time record in the 42 years of data we have.
There hardly is anything to buy on the detached side, and that means there’s a feeding frenzy for the few available listings with one in three places in December going for over ask. That’s kind of thing sometimes happens in particularly active spring markets, but it’s nearly unheard of for December. It has completely eliminated the discount from asking price, with the sales to list price hitting 100%.
The condo market is not nearly as active of course. Only one in ten places are going for over the asking price, and inventory remains up slightly over this time last year. There are more than twice as many properties on the market as in December 2017. But with sales to date up 40% over last December while new listings are unchanged, it’s a trajectory that is heading in the same direction as the detached market.
No surprise, with conditions like we’re seeing in the detached market, prices are rising quickly, and looking at the sales to new list ratio, that’s not about to stop. If there’s a reversal in the price trend coming, the sales to new list ratio usually reverses a few months earlier. No sign of that yet. It’s interesting that after the introduction of the stress test, prices weakened a lot more than market conditions would have predicted at the time. However the recent escalation in prices has closed that gap.
After the financial crisis we had a similar market frenzy which lasted about a year before burning itself out. The question now is whether this one plays out similarly (frenzy subsides mid to late 2021) or if we’re in for a longer run up. Some of the demand drivers we’ve seen are temporary like our relatively COVID-free status, or pulling demand forward from people retiring early. Interest rates – although they are likely to stay low for quite a bit longer – may drift upwards a bit when the Bank of Canada ramps back their record bond buying.
What’s much harder to pin down is consumer sentiment. Back in 2010 there was no particular reason for the market to suddenly slow down. Mortgage rates were drastically lower than they had been only 3 years ago, and affordability was substantially improved as well. But buyers simply stopped buying and the market went from a pace of 10% increases to slight price declines in the span of 12 months. Right now we are seeing exuberance in the market, and it’s hard to envision that suddenly buyers will simply not be as enthusiastic about houses this time next year but sometimes that just happens.
Here’s the weekly numbers, courtesy of the VREB:
| Dec 2020 |
Dec
2019
|
||||
|---|---|---|---|---|---|
| Wk 1 | Wk 2 | Wk 3 | Wk 4 | ||
| Sales | 142 | 315 | 402 | ||
| New Listings | 142 | 266 | 394 | ||
| Active Listings | 1775 | 1668 | 1952 | ||
| Sales to New Listings | 100% | 118% | 102% | ||
| Sales YoY Change | +71% | +58% | |||
| Months of Inventory | 4.9 | ||||
Monday numbers courtesy of the VREB
Sales: 461 (Up 52% from this time last year)
New listings: 391 (Up 32%)
Active listings: 1584 (Down 23%)
New post coming later today.
Actually working on an article for tomorrow on just this topic.
Rates have been dropping for 40 years. Not a recent phenomenon.
Hey Leo – do you have year over year price change going back before 2000? I ask simply because it would be interesting to see how the rate of range fluctuated when 5-year fixed rates weren’t continually falling (https://www.ratehub.ca/5-year-fixed-mortgage-rate-history)
Interesting points made on the idea of subdividing and holding and living in one property for only one year before selling and claiming capital gains free benefit for that one unit. It’s a tough balance and no easy answer. On one hand we need more housing and it’s good to encourage the creation of more housing. On the other hand there are people who would take advantage of the system. I hope the government at least makes the rules clear. I favor the idea of keeping the rules simple and clear wherever possible.
BC recovery benefit website working well now.
Turns out they calculate it on net income, not gross.
Subdividing the property is itself a business endeavour. That’s the difference from a situation where someone just buys a house and needs to move after a year. Given it’s a business from the start it’s reasonable to include the disposition in the business if the holding period is unusually short.
Yea, needs to be a limit. I’ve seen local builders/developers/businesspeople walk way with $1 million+ tax free via principal residence exemption multiple times in the last 10 years. Purchase lot and build for $2.5 million, move-in for a few years, sell for $3.5 million and then purchase and build again.
deryk – sure situations change but an accumulated lifetime limit on the exemption would address your scenario & eliminate the cat & mouse game of builders. I don’t think there would be much opposition to a $1M lifetime total (adjusted for inflation each year). Combine that policy with far stronger incentives to build PBR.
Edit: the exemption should also be structured to discourage flipping with full exemption after 5 years and a reduced amount the shorter the holding period.
Hi Leo…Yes I agree if it is a business it should not qualify for capital gains tax but how does the government know if the person is selling after a year because they changed their minds or their circumstances changed. (divorce, health etc.) I believe that the government does take that all into consideration and only goes after those who do it several times. A one off should be allowed. Perhaps even two.
It’s not a bad thing, It’s just a business like any other, and should not qualify for the principal residence exemption.
The CRA thinks so as well and has cracked down on this kind of thing in the past.
I get a lot of benefit from my local grocery store as well. Does that mean they should be exempt from taxes?
I certainly don’t want to see capital gains tax on principle residences. Just because someone buys a house and then subdivides, then lives in one of the houses for one year and then sells for a large profit, doesn’t mean that this is a bad thing. For example: There were two houses built where there once was one house…. the community now has one extra house for a family to live in. I see that as a benefit. The person who subdivided could easily have lost their shirt if house prices had dropped. They took that risk. And yes…ask anyone who has lived through housing crashes in the past. There is risk. No one ever knows for sure what will happen. Long term…owning your own house is a no brainer if you can afford to do it.
https://twitter.com/TMMGuerrero/status/1340172633544007680
Interprovincial Migration Statistics
July 1, 2020 to September 30, 2020
Net flow from Alberta to B.C. = 1,655 people
https://www.alberta.ca/population-statistics.aspx
The recent increase in detached homes has nothing to do with affordability. The rampant printing of money around the world has to be balanced by a tangible asset. Unfortunately, the only asset banks deem suitable to achieve this are residential properties. There are unlimited funds available for homes at ridiculously low interest rates which guarantees future increases. All this accomplishes is keeping bloated government budgets from imploding.
” In the last 8 years our home has gone up $700k.”
A common quote. Why would anyone NOT leverage everything to buy as much real estate as their budget will allow, if they believe the future will be much the same? Does that belief have anything to do with the demand?
I agree with the likelihood of a targeted increase in the capital gains tax and a PRE limit.
God forbid working with your hands instead of getting a useless job that waste time with meeting about meetings?
I completely agree, but how many of those in the stat that without degrees are lazy high school dropout and are useless drugs addict?
People who have drives that do well in an institution will do well in a working environment so it doesn’t necessary mean that university degrees provide a better return on investment. For an example, people in the rest of the OECD countries are just as employable as Canadian even those their university graduates rate is lower than Canada, or in another word 47.14% of Canadian university degrees are useless.
More than half of Canadians have college or university education — https://www150.statcan.gc.ca/n1/daily-quotidien/171129/dq171129a-eng.htm
“In 2016, more than half (54.0%) of Canadians aged 25 to 64 had either college or university qualifications, up from 48.3% in 2006. Canada continues to rank first in the proportion of college or university graduates among the OECD countries where, in 2016, the average was 36.7%.”
I also agree that in some professional field we need some education, and as rush4life put it we should do away with vampire courses that waste precious time and resources. As for a law degree, what with wasting time with a bachelor of basket weaving and then you get to apply for law school, and the same go with medicine, or do we really need 4-5 years of education do file some taxes, etc…?
“But, more to the point, leveraged house appreciation appears to be skewing societal goals and values, perhaps in a similar manner to inheritance but with greater negative consequences. I’m not sure our society should be supporting and devaluing investment in other goals and higher learning is only one of them.”
I can’t believe there’s even a discussion about young people’s career choices based on housing appreciation! We’ve lost our minds with this housing based economy. As mentioned previously, the primary objective of a job these days seems to be to fund a mortgage.
And this is why we need a capital gains tax on homes.
1647 Kenmore.
Sold Aug 2018 for $582,000
Subdivided, new houses built.
Builder’s family lives in one side for 12 months
Sold $1.795M. Presumably tax free because of the PRE.
This article is from the US. This deals with new grads who need a couple of years to get established and still have lower unemployment rate than those without degrees. Overall, in both the US and here people with degrees earn more than those without on average and have much higher lifetime earnings and some of them may be underemployed. https://www150.statcan.gc.ca/n1/pub/11-626-x/11-626-x2014040-eng.htm
Also from the US.
Sure, but you can’t be a surgeon, lawyer, engineer, accountant, research scientist, professor, dentist, nurse, pharmacist, architect, and many more jobs we need good people in without education up to a professional standard.
I think it is a fine thing to be a tradesperson, but it’s not for everyone. Might be good to consider what our society needs to progress in so that the scientific, social, emotional and artistic progress of society attracts high performing people.
But, more to the point, leveraged house appreciation appears to be skewing societal goals and values, perhaps in a similar manner to inheritance but with greater negative consequences. I’m not sure our society should be supporting and devaluing investment in other goals and higher learning is only one of them.
41% of Recent Grads Work in Jobs Not Requiring a Degree — https://www.insidehighered.com/quicktakes/2020/02/18/41-recent-grads-work-jobs-not-requiring-degree
More people with bachelor’s degrees go back to school to learn skilled trades — https://hechingerreport.org/more-people-with-bachelors-degrees-go-back-to-school-to-learn-skilled-trades/
I don’t know the stat for Canada, but for every successful story that come from people with post secondary education there are at least the same amount of successful people out in society with little or no education. Good tradesmen with a little education generally earn around 100K to 140K and many earn north of 200K per year. Self employed tradesmen with a small sole proprietorship can easily earn 500K or more per year if they put effort into it. And, then there are tradesmen that I know who had stock windfalls in the ten of millions that they got from their mining employers.
Germany prioritizes trades just as much as Uni and encourages that path earlier on. We should do the same.
Bank of Canada governor wants to avoid housing policy mistakes of the past — https://financialpost.com/news/economy/bank-of-canada-governor-wants-to-avoid-housing-policy-mistakes-of-the-past
There you have it folks, the BoC is reassuring that they will do anything to keep the housing market humming along.
+1 totoro. I have also spent alot of time in post secondary educational insititutions. (4 year undergrad, 3 years in law school) and there is no way I would be where I am today without that background. The world has changed significantly with exponential population growth and stagnant job growth. Add in the fact that industries change at lightning speeds nowadays and its difficult to have the right skillset to be comfortable. For most, you have to choose your career at 17 and when you spend 5+ years becoming skilled it is not easy to start from square 1.
When I was young, computers were considered nerdy. Adults would tell me to go outside rather than learn about computers. I would have never thought computer science and coding backgrounds would be ballers rolling in cash nowadays. But hey, maybe tomorrow farmers will be the ones rolling in cash when the bees die and 30% of our food supply disappears overnight. Climate change destroys the other 69% in the coming years and the remaining 1% of farmers/food suppliers become warlords hoarding the remaining food supply and becoming kings of the land.
That seems about as likely to me as computer science being the right career choice for me when I was 8. Hell TSLA might be undervalued at its current price. What do I really know?
The problem is the more people who go to university for more years the less a university diploma gets you in the job market. For my parents’ generation just finishing high school was enough to get you a good job. And they weren’t in debt coming out of high school.
It’s really a negative sum game. The education that opens doors for you shuts the doors for others who are just as capable of doing a job but have put in fewer years. A few years back when the census results came out I looked at a table of university grads per capita and Canada had almost twice as many as Germany. Do we really need more than they do?
Unfortunately I don’t have a solution to this, once the treadmill gets moving you have to go farther just to stay in the same place.
well said Totoro. One classmate of mine went UVic for BSC, and worked for two yrs at bc gov as a senior researcher/analyst type of job and finally got into Law@Uvic in about 2009(?). She worked on two projects while a foreign merger deal with a major china firm and If I remember correctly, one owner of the company shared a red “lucky” pocket after the acquisition for 8.88M in canadian dollar. She quited the job and started a family here- brought a large piece of waterfront land and stopped practise law as she told me something worth remember. Without the education in Law@Uvic, she would never think of living in YYJ waterfront- comparing all her other friends, some of them are still pushing papers or selling something( myself included). Now it is about 13 years after graduation, I am hitting my best five years but no incentive to move on to more responsibilities. I am going to “cruise” thru unless I have something interesting coming up- I am grateful for the 6 yr education I got at UVic and there are just so many crappy government jobs here, not comparable with the 8.88M lucky money- but VERY comfortable to date a few nice looking ones, started a family, raise kids etc.
I spent more than a decade in university. I do have a high school friends who became border guards, mail carriers, ferry workers, financial advisors, realtors, etc. and were financially better off than me for a long time, but I caught up because of my education and the doors it opened. I’d hate to see someone in my position not do what I did because the playing field has shifted and you can’t catch up. My investment in education made a bigger contribution to society and to my own development than I would have been able to do without it. That is not to say that jobs not requiring university are not valuable or satisfying, just that specialized education is too for those that are suited for this path. But I considered the time/effort and financial outcomes before I invested in education and I’m not sure what choice I’d make today if I wanted to stay in Victoria.
Yeah, I wish the government would change the degree structure – half the stuff you take in the undergrad is unrelated to the degree anyway – and we the taxpayer heavily subsidize the colleges and universities so its just a waste of money. In the UK you do your law degree in 4-5 years, my friend’s father is a Dr. from Ireland – they spent 4 years in school as well (not sure if its still the same) as oppose to 7. Meanwhile UVIC has a ton of courses just as filler – like a vampire course. Its like the next time I’m laid up in a hospital bed I’m going to feel so much better knowing the Dr. took some psych classes and a vampire course to pad their grades. Its ridiculous.
I believe that the general practitioner will go the way of the dodo bird and be a thing of the past in 20-30 years from now. They will be replaced by computerized analytical centers staffed with technicians. A detailed case history will be entered into the system by a technician specifically trained to perform that task( I find doctors negligent in the simple yet important documentation of the information provided by the patient). Then blood analysis, body scans and any other tests that can be performed by technicians are entered into a specifically programmed computer for analysis. This would produce a diagnosis and treatment program or referral to a specialist. Technicians can be trained in 1-2 years and be paid 1/3 of practitioners. Specialists such as surgeons would still be in demand but the initial examination procedure would be far more efficient and cost effective. I’m certain that this is in the works and implementation inevitable.
Other than health care, IT, and a few other things do we really need any more high level education? I don’t need someone to proofread my shitty grammar and lecture me history….need someone to change my hot water tank.
I think someone who goes straight out of high school to become a plumber, saves, and buys real estate early deserves to be rewarded. Her or his skill is in demand versus the Phd in philosophy someone spends 10-12 years obtaining.
As far as the GP shortage…government should just increase compensation 50% for those running a family practice and it might incentivize a few younger doctors to work more. Of the last 20+ young family doctors I’ve met as clients/friends/acquaintances not one is running a practice. It is either walk-in clinic pick up work when they feel like it, odd jobs like working at UVIC, doctor for private school, etc., or if they really want $ they take fly-in, fly-out rotations up north. Can’t blame them for not running family practices….pay isn’t great, you have huge responsibility, difficulty staffing, then you need to deal with accounting/taxes and all the small business BS.
There is SOOOOO much 100% waste in government (owner-builder exam, case and point) that I would take no issue with increasing GP compensation 50%. If the government can afford entire departments that serve no purpose we can afford to pay GPs more.
When you running for major!!
Thanks Totoro:)
much appreciated!
When I told Elizabeth that someone had mentioned her name on House Hunt Victoria….her first comment was…”Is someone asking how I put up with you after they have read all your posts!”.
It’s a tough life:)
I grew up in a one bedroom apartment next to a park in Croatia. My parents would just send me outside to play with my friends, it was awesome.
I’m a numbers guy. Let’s say 30 locals come out against the project vs 242 potential new residents in favour of having a home in a nice spot.
No contest.
Perimeter of parks is perfect place for density. Communal outdoor space to make up for the no yards in condos. Perimeter of all parks and waterfront should be blanket rezoned for density. Kinda odd how people want to use density only as a buffer on busy roads. I guess poorer people and renters only deserve to live by the noisiest and most polluted areas?
Close to transit, energy efficient, good spot for commuters. This project is a no brainer.
Leo’s never met a development project he couldn’t support!
Nice to see Saanich council on the right track.
Density close to a park (family amenity) and in this case a highway and transit hub is exactly where we want it. Bonus, affordable housing included. I’ll be writing in support
Saanich council votes to send this to public hearing against advice of staff report:
Royal Oak 11-storey condo project headed to public hearing, despite opposition
https://www.timescolonist.com/real-estate/royal-oak-11-storey-condo-project-headed-to-public-hearing-despite-opposition-1.24256511
I covered these guys earlier this year and they released their garden suite model. https://builtprefab.com/product/garden-build-and-price/
Very expensive though. In the absence of any local bureaucracy it’s $170k just for the build/install or $283/sqft
Over asks in the sub 1.5M space by dollar value.
Most who do not currently own are not priced out. They are just priced out of what they could have bought ten years ago. They can still buy a townhouse in Langford or a condo in Victoria. Some will be priced out permanently in our market and the number of renters vs. homeowners is slowly rising but a majority will continue to own homes for the foreseeable future.
My point was that the appreciation rate on low cost leverage in housing has created an economic disincentive to invest in education/training leading to high level expertise. Now early entry into the housing market makes more financial sense because higher wages ten years later don’t compensate for the delay. This seems like an odd state of affairs to me, but one that may start to change the perceived value of high level education once the math sinks in and this doesn’t seem ideal to me.
You appear to be including people who got into the market in the past when affordability was better, who are the majority of owners. Do I think that most households who don’t own now are priced out? Yes. That’s what the present tense “are priced out of ownership” means to me, and to most people I would think.
Yesterday the US Federal announced that it left the benchmark rate unchanged, and the there is an expect congress to push through the $748 billion stimulus deal before the end of the week. So the takeaway is that the Canadian market will be on the upswing with the US.
ks112: Actually governments tend to cater to their base (or bases). This has very little to do with the fifty percent rule. I really doubt that fifty percent of the population thought building bicycle lanes was a priority that required spending millions but a significant portion of COV councils base did.
Back to houses and back on topic. There seems to be an awful lot of houses selling for over 2 mil. Am I just imagining that?
I agree, and the medical profession in Canada no longer live up to the Hippocratic Oath that they took, because they sees it as a money generating profession.
Every medical clinic that I have been to in BC bare a sign that read “limit the discussion to one issue per visit”, and often a patient have many issues that lead to their illness that requires multiple visits. Which simply could be resolved with one single visit if the physician/s live up to their profession oath. And, we are also weight down with short prescription refills that take up resources.
PS. The doctors in Canada work load is pale compares to their peers from other parts of the world. My wife is a physician from Asia, and she as well as her colleagues each sees between 120 to 160 patients in a working day.
I believe the doctor shortage which exists across our country, not just Victoria, is the result of rationing of services by the government. I rarely go to a doctor but when I do I feel they are not delving deep enough into a patient’s problems resulting in misdiagnosis or delayed diagnosis for serious problems. This usually results in more expensive care as problems worsen requiring increased medical intervention. My dermatologist, I have a history of sunburns in my younger days, regularly suggests that I only come once a year which I immediately inform him that I prefer keeping it at 6 months. I don’t want to be taken out by a mole.
I think 20% of people not being able to find a doctor is a crisis. Life threatening in some cases. Quality of life threatening in many others.
The majority of households in BC own. Only about 1/3 rent. Not sure what your point is because less than 20% of people are “priced out” of ownership – although this really varies depending on age, market and housing type.
what grade do you get in school if you get 80% Totoro? And what grade do you get if you are get 50%. Government caters and solves problems for the majority, not the minority. Not enough resources to go around for that. Do you think there would be a foreign buyers tax for realestate if only 20% of the people are priced out?
Over 900,000 people in BC cannot find a doctor – about 20% and the 20% stat applies Victoria and all the way up the Island. Not sure why it has to hit 50% to be a crisis? Been labelled a crisis for years now and so far the province hasn’t provided a solution. Doctor’s get allowances to work in rural and remote communities, but that is definitely not something everyone wants to do, nor should they be expected to do this.
So you guys think that if say half of the population in Victoria/Vancouver cannot find a family doctor, the province won’t step in and do something about it? Doctors operate in a market dictated by public policy, if public policy no longer works then it will be adjusted or else they risk not being elected again. You do realize doctors get an extra allowance to entice them to work in certain places in Canada right?
Derek, you are very talented. I really love “Elizabeth at Point No Point” and the inside out perspective.
Well no, because doctors don’t operate in a free market. However one could adjust the argument to say Victoria is just too expensive to make it attractive to doctors who get paid on a provincial fee schedule. That’s the downside to all that perceived wealth you got from your house.
Seems like we are already there?
What wage increase could possibly compensate for ten years of lost time in our housing market? In the last 8 years our home has gone up $700k.
My adult child is on an academic track to become a research scientist in a field which can change many things that need to change. My nephew is becoming a medical doctor. Both of them will be out of the RE market for so long they will never catch up to friends who now work at BC ferries, will have a full pension, and buy in earlier if things keep going as they are.
Never mind all of the people that are already priced out.
It really is not about wages, it is about the housing market being so divorced from incomes that it removes the normal economic rewards brought by investment in education and expertise.
I am already without a family doctor as mine had retired 3 years ago. If there becomes a point where there is a critical shortage of family doctors then market forces will drive up wages. You cannot expect society as a whole to bail you out every time something doesn’t go your way.
Being able to adapt to a changing environment is something each one of us is responsible for.
We operate in a society. A society that changes over time. It used to be very glamourous and competitive to become a flight attendant. People who would compete for this job thirty years ago wouldn’t think of applying now.
This is not the same when we look at some jobs that are so specialized and important that we need to make sure that our society functions in a way that motivates those with the greatest aptitude to strive and achieve in these fields and then stay in them. Without this you might find yourself without a family doctor.
It only took from 1894 to 2020 to get it done. 🙂
Totoro, it’s the doctor’s fault for not researching the cost of going to medical school and the starting salary of a doctor. Marko was in the medical field and saw the writing on the wall and made a decision accordingly. Exactly the same thing as the history major currently working at starbucks. People make their own decisions in life and need to live with the consequences.
I made a decision to sell a stock this morning because negative new came out per-market. If I waited until noon to sell I would have been up $1200 bucks instead of breaking even on my initial investment. That is the decision I made and I live with it.
Also CMHC: one of the cheapest markets in Canada is highly overvalued.
They have lost all credibility this year
CMHC: prices will drop 9-18%
CMHC: No evidence of overvaluation in most cities
There are already higher taxes on investment properties, including residential. I do agree that the 50% deduction for capital gains exemptions will likely be reduced in the future – that was already coming imo.
Especially renters who do not have parents who are homeowners to inherit from.
I find it really really odd that you can go to school for a decade and graduate a resident doctor with a hundred thousand in student loans or more and a starting salary of 83k. In that decade your high school classmate who became a postal delivery person and bought a home ten years ago in Victoria now has six hundred thousand dollars in equity and with no student loans and a salary of $72k and off by 3pm with a very low level of responsibility.
Not everything is about money of course, and learning is worth something when you have aptitude, but unearned windfalls are hard to disregard for smart people looking towards their future.
Devils advocate:
A sure thing investment delivering tens of thousands of dollars in available capital. Pent up demand emerging after the pandemic subsides and a big portion of the population flush with cash. Lots of consumers already appear to be much more willing to accept higher prices for almost everything and are getting premiums or financial benefits at work. There’s also a social divide growing each year with massive benefits to homeowners but resulting in punishing outcomes for renters. I wouldn’t be surprised at an attempt to equal out the playing field – ie higher taxes on housing as an investment (unless PBR).
totoro – don’t worry about it and just up your offers! We all know it will be worth far more in a couple of years.
“Economics is not a morality play. It’s not a happy story in which virtue is rewarded and vice punished.”
In order to get a desirable house in this market you need to go in over ask with no conditions. That is how the last four houses we offered on went. This means doing a pre-inspection on a time timeline if you are really interested and no guarantee still you’ll get it even after paying for this. Hopefully more inventory will come onto the market in the new year and ease things up a bit.
Some more tools in their arsenal to prop up prices:
– 40 year mortgages
– Waive PTT
– Continue/accelerate mortgage bond purchases
– 0% downpayments
– Very long term rollover of deferred mortgages
– Increase borrowing limit from RRSP for first time buyers
– Expand immigration numbers
– Modify corporation tax rules back to how they were – allowing corporate loans/gifts to company owners (allows much lower tax hit to buy property)
With 20-30% of GDP dependent on housing, they will do all of these things rather than let it crash. The ultimate crash will be bigger as a result, but my guess is they have a long way to go yet.
Yes, they could do negative rates but Tiff Macklem is “deeply skeptical of negative rates” – https://financialpost.com/news/economy/bank-of-canada-says-further-drop-to-interest-rate-possible . Also at this point with 1 % mortgages it won’t matter how negatvie BoC puts the rates the banks will never do negative rate mortgages so maybe we see a bigger uptick in the banks doing less than 1% but really we are closing in on as low as they can go. Lower rates from here will just penalize any GIC/Bond/high interest savers, hurt pensions, and lower the value of our dollar and have less impact on mortgage rates.
Crazy thing is BOC still has negative rates in their toolkit. 100% agree with you is that savers have been punished the last 15 years and those that where most irresponsible and bought homes beyond their means with small down payments have benefited the most.
You should see the number of offers on some of these places which is means for every house like this that goes a crazy amount over ask there are X number of buyers left ready to go and there is no inventory.
Hi Bluesman.Thanks for your comment. I was talking the “West side” of Vancouver actually. I grew up there. We moved to Victoria because we sold our house in Kitsilano in Vancouver and my wife and I fell in love with Victoria after we came over for a weekend getaway. We found ourselves walking towards the sounds of the bells at Christ Church. When we got there, a man asked us if we would like to go up and see the bells. I’ll never forget it. We climbed right up beside the bells and touched them! Victoria offered everything we needed. Good schools, interesting culture, and opportunities. I’m an artist. I’ve exhibited in one man exhibitions in Scotland, Iraq, and the USA. I represented the city of Vancouver in a solo exhibition in the former Soviet Union. Living in Victoria never held me back or blocked me from doing my art. In fact I thrived because of my life in Victoria. Having a smaller mortgage because of the comparatively low house prices allowed me to practice my art freely. I feel blessed. I say this not to brag but to try and give inspiration to others. There are so many opportunities out there.
The painting below is of Woodwynn farms where my family created a Peace Garden filled with edible crops.
I agree with Sideliner (though hope KS and Marko are correct)- I was talking to a friend who works at one of the big 5 last night and apparently back in Oct/November all the branches were sent follow ups for people who were finishing their 6 month deferral periods – they had to call the clients and tell them to start paying. The bank wasn’t extending any of them. Many people said they still couldn’t afford to make their mtg payments. The amount of people differed from branch to branch. He noted branches in Nanaimo, for example, had a lot of people like this. The bank decided that they would allow people to re-amortize out to up to 40 years (based on a calculation – possibly if you were a good chunk into your mortgage then you might only get 32 years for example). So reducing their payment lower then it likely ever had been before – my guess is all the banks did this as they all usually follow a similar path.
So basically no matter how stupidly you planned(i know not everyone was stupid and this affected people disproportionately) , no matter what your situation is, if you were lucky enough to buy 5 years ago the government and banks have built a scenario where you can not fail – as long as your house keeps going up in value and you have equity then they will continue to pave a way to make it work.
At least when the stock market crashed this year you had a moment to buy at a 30% discount (up 50% now) – houses basically gave nothing back and are now being buoyed by 1% rates. Crazy times. While i still think there will be a correction the question is if you wait it out prices could go up even more then they correct later so its quite the risk.
patriotz-I was primarily referring to Victoria crime rate since this is the area of discussion. Your yearly murder rate is a slow month in Winnipeg or a bad weekend. As for the Atlantic Provinces, I don’t know anyone from the prairies moving to more snow.
Kenny G- What’s so hard to understand? It’s only $400,000 over assessment, a 42% premium. Total madness. Reminds me of Vancouver prices several years ago when tear downs were going for 1.4 million.
That is exactly why Victoria, or any other place in BC or pretty much any other place in Canada, is and always has been cheaper. This should be self-evident.
Good God can someone please explain this, almost 1.4MM for 1280 sq feet main and 600 sq foot unfinished basement with less then 7 feet height went multiple offers 210K over ask
https://matrixreports.vancouverislandmls.com/MatrixReportOutput/ReportOutput/7143/RenderedDisplays1477.PDF
Anecdotal from the Comox Valley, most of the people in our neighborhood (all new builds this year) moved up from from Victoria. A mix of retirees and young families.
Thanks for the breaking news introvert, this is the first time I have heard about people from the mainland wanting to move here for retirement
Sideliner, it depends on if you are buying a house for a place to live or as an investment. Buying a house right now here for investment is like like buying Tesla shares, highly overvalued by traditional metrics but can still go alot higher. But if it crashes then u are sol.
Buying a house to live in is more like buying a tesla car, it’s still expensive and as time goes by there maybe better alternatives from the other automakers but atleast it will serve a purpose for u.
I’ve heard a few different Lower Mainlanders say that Victoria is on their retirement shortlist because of the slower pace “over here.”
Not sure about other part of Vic, but on my street in Estevan OB, all buyers within two years are either from lower mainland or out of province ( include myself).
Good news, Cook st project back on the table thanks to Mayor Helps.
https://www.vicnews.com/news/cook-street-village-project-back-on-table-after-victoria-mayor-invokes-community-charter/?utm_source=dlvr.it&utm_medium=twitter#
“Helps said the developer told her including affordable units on site would require a fifth storey, something Aragon previously determined the community would not support.”
5 storeys in a central village is laughably short.
“ Coun. Ben Isitt preferred a fresh application come forward, rather than making minor amendments to the previous application, a stance supported by Coun. Sharmarke Dubow.”
Dear god.
Luckily Stephen Andrew will surely vote for it as is so hopefully this will go through
Deryk are you talking West Vancouver or Vancouver’s West side. It really matters not. I’d be shocked if either the “average” West Vancouver or West Side resident would consider moving to Victoria. Like people said here 4-5 yrs, they are not the same, they don’t even compare in most peoples views. You are in the best part of Vancouver. Amenities and outdoor activities off the graph. Sure there are outliers that would consider a move, and, certainly, it only take takes a small amount of out of towners to influence a smaller market like here. So to your and Leo’s earlier point, I agree Vancouver is wild card in terms of its impact here in the coming years.
I can’t believe that dump went unconditional. One of the owners put on Facebook (I did some digging) that it was septic flood of the whole lower level, multiple times, with no insurance. Our realtor noted that there was no record of remediation or health inspection with the city. Barf.
For those who can’t afford a house in Victoria you might wish to consider Moncton NB. This is a Duplex in Moncton. See the photo. Three bedrooms in each side. One has a gorgeous renovated attic space as well. In excellent shape. One like this can be bought for less than $260,000.00 (Yes….You get “both” units for that price!) Yes they get snow … just like Toronto and most of Canada.
The people in Moncton NB, think House prices in Moncton are “crazy out of line and unsustainable”.
Just like many people in Victoria think Victoria’s prices are “crazy out of line and unsustainable”.
People who own a house in Vancouver ‘s west side….. who are looking at Victoria’s prices…. are gob smacked in the same way when they see Victoria’s relatively low prices.
“To all the bears, crashes typically happen when people are least expecting it, so given that more people are convinced things won’t crash I am thinking the likelihood of a crash has probably increased.”
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YUP
The housing market crash will happen when the central bank and government decides to stop propping it up. That’s outside of most people’s control or powers of prediction.
Trying to time the market presumes that market forces are at work. But market forces are massively manipulated by lowering interest rates, property bond purchases and a myriad of government policies. It’s a fool’s errand, so we bought anyway and have tried to hedge a crash as much as possible through a good size deposit, a suite (which I’m currently using for work) and investments to the value of the mortgage.
What more can you do? Wait another year and risk the same house costing a lot more, like anyone who tried to time the market pretty much any year in the last 10 years did?
Why even worry about this at this point? Just enjoy the home.
I went from a SFH with a suite on a 1/2 acre lot (best cash flow and appreciation) to a condo (worst possible appreciate) and couldn’t be happier.
question: In February, I bought a duplex home in Oakland, between Bay and Hillside. There is a fair bit of info on SFH and condos here but less for attached units. In my case, my home does not ‘read’ as a duplex as there it is only symbolically attached to the other home by a small causeway. It really feels like as SFH with a largish yard and plenty of parking. So my question is, given my description, do HHV people think my house is more in the SFH category or the attached category in terms of future appreciation. Thanks in advance!
+1, 100% agree with this.
One of my clients offered on this place and yea I was like wtf, I actively tried to discourage them from even making an offer based on the amount of work the home needed….and it went to an unconditional offer too.
If you have a problematic house to sell I don’t think there have ever been a time. People will pay top dollar for anything SFH right now.
Definitely not true with respect to crime. BC is well above the Canadian average for crime yet it has the highest RE prices. Metro Victoria is about the same as the Canadian average but is far more expensive than Halifax which is about the same size and has less crime. The Atlantic Coast generally has low crime, and the lowest house prices. And the least COVID.
But as Leo said, COVID is not going to factor a year from now.
https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=3510002601
To all the bears, crashes typically happen when people are least expecting it, so given that more people are convinced things won’t crash I am thinking the likelihood of a crash has probably increased.
I’m still bearish on housing but 2 baby bears taking up most of my time so I don’t get to keep pace with the blog. I think, and hope, there will be a lot more inventory in the spring as everyone and their dog tries to cash in on this housing Bonanza.
It’s a stomache churning time to be hunting but gives us something to do otherwise it’s groundhog Day over here. Got a raise so our budget increased a bit, and prices have gone up double that increase so we’re still SOL. Looked at a foreclosure last week in Langford, the dump needed 150k+ in work and we couldn’t even look at half the house due to refused entry, already had an offer site unseen. Another dump we looked into in colwood that the basement had flooded and not been repaired plus many other issues just went for 10% over ask after 13 offers. I don’t even know how someone will make these places work, even with a bucket of cash for Reno’s.
Just renewed my earthquake insurance, it’s a dark lotto ticket.
No one will care about COVID in just a few months. Low interest rates yes and I agree with Derek that Vancouver is the big wildcard. We saw how our market went from active to off the hook with a resurgence of Vancouver buyers both in 2016 and 2020. With that big of a price difference there is always the potential for a buyer surge that will influence our market.
A bear here. Bought a SFH in the Comox Valley in August. The decision was driven by watching the government and central bank do literally everything possible to prevent a house price collapse. The whole house of cards comes down if they don’t, so asset inflation is baked in.
Absolutely sucks for anyone who misses the property train. I don’t blame them for not joining in, I blame government policies and the central bank for rigging the system.
Low covid rates+ low crime rates+low interest rates=High house prices.
You could make the argument that even though O&G is turning but I think the average and median household income are still higher in Calgary compared to here. One can also argue that Victoria doesn’t have enough high paying jobs to support the prices, but it seems to do so just fine.
As long as people view Victoria housing as fool proof investment, you won’t see demand going down.
Sentiment is turning in Alberta because the O&G sector is facing multiple headwinds, some of which are secular rather than cyclical.
Whereas, in Victoria, employment is always steady. So, IMO, the only thing that could turn sentiment on Victoria RE is a major earthquake.
Vancouver condo market going nuts. So much for the city exodus.
I am still of the opinion that house prices are driven mainly driven because the mass is convinced that it is a sure fire cannot lose investment. Maybe Marko can correct me but I doubt the average home buyer knows anything about monetary policy. They hear from the media and people around them that real estate here is an investment you can’t lose on and then they go out and get the max mortgage they can and buy the most expensive house they can.
Once the sentiment turns, if ever, then it won’t really matter what rates are people just won’t buy, look at the prices in Alberta.
I’d like to know how many people are buying with cash or are making a large down payment on the houses that are buying right now.
Do these out of town people pay full cash or are they getting a mortgage just because money is practically free anyway.
The west side of Vancouver people competing for houses here must be making a difference to Victoria’s prices. (Contrary to what I was told four or five years ago on this forum by some people. I was told then by some that…..”Victoria is not Vancouver you know”.)
So looking forward: Victoria prices should only go up because the price split between the west side of Vancouver and Victoria’s inner core is still astonishingly huge.
I have to say that I am quite surprised to hear many people say “Can this real estate surge be sustained?”.
I think so ……….. because, as I said four or five years ago….. central Victoria is still very cheap when compared to Vancouver’s west side.
My prediction is that “anything”, SFH, for sale in central Victoria, will be around 1.2 million in less than two years time. (The ones in central Victoria that you can still buy for $750,000.00 – $850,000.00 which are usually bungalows or small lots. )
The price difference between Vancouver’s west side and Victoria’s main core is still too big in my opinion.
The bears are hibernating right now and like all bears they yawn, scratch and turn over patiently waiting for the time to wake and claim the best fruit as their own.
Condo market conditions pointing to price increases for sure. The stress test and covid was a shock that kept prices flat but prices don’t defy conditions forever.
Seems to be. Hard to be bearish with those market conditions. The market is unnerving with the debt being taken on, but the firehose of money trumps all.
Are bears officially extinct on this blog now? Man would it suck if all the bears finally bought and then the crash happened.
film studio or not, the island had certainly caught the eye of the rich about 8 years ago when a few businessmen from YVR started to grab land here….
Ambitious Island film studio proposal put forward
https://vancouverisland.ctvnews.ca/video?clipId=2101013
Marko. you may have a good point. How are townhouses selling?
I was involved in a few condo offers this weekend and my impression is the condo market could heat up in the New Year if we see a light at the end of the tunnel with covid and interest rates remain this low. A couple of my condo buyers right now are previous SFH buyers but don’t feel they would live in anything 650-800k in terms of a SFH so have switched to condo/townhome searches.
SFHs can only go up so much without dragging up the condo market.