Not (just) a Victoria problem and other tidbits
You’ll often hear that real estate is local, and especially in a country as large as Canada, the conditions in one market don’t necessarily reflect those in any other. That’s usually true, but the pandemic has been an exception, with unprecedented synchronization of price trends across the country (and in fact across the continent). The year over year price increase for the country hit 23% in January, which has only been exceeded a couple times in the last 4 decades (and at much lower baseline prices). Even markets that have been in the dumps for years like Calgary saw a spike in the average sale price after the pandemic hit.
Of course some of the jump can be explained by a shift in the sales mix away from condos and towards larger and more expensive detached or semi-detached properties. However this is looking in the rear view mirror. That shift is real, but just like the supposed flight to the suburbs it’s been overblown. Yes the detached market took off first, but we’ve been seeing for months now that condo markets are heating up and prices are starting to rise rapidly in that segment as well. That’s happening in our biggest cities as well, with downtown Toronto condos being extremely weak until last fall, but now are very active again. The flight from cities as well seems to have been temporary, with sales in Vancouver up 73% from last year.
Another way to look at the data is to compare Victoria’s average price with the Canadian average. Victoria has been an above average market since 1990, and the current level at around 35% higher is in the middle of the historical range. In 2008 after a decade of price increases, we hit 60% higher than the Canadian average, briefly moving ahead of even Toronto. As spectacular as the price runup has been post-pandemic in Victoria, the rest of the country has been essentially keeping pace.
Risk of government intervention rises
If it was just Victoria prices going up no government would care. However because it’s a nationwide phenomenon it raises the risk of regulatory intervention to tamp down the frothy prices. So far the Bank of Canada has steadfastly refused to see the frenzy in the real estate market no matter that it’s been obvious for some time. Recently though it’s gotten so out of hand that they’ve been forced to acknowledge “early signs of excess exuberance” although they believed that conditions were still less active than 2016/17. That’s categorically false, as inventory is lower and the market is hotter nationwide now than it was four years ago, but perhaps that will be clear at the next meeting.
Talk of government intervention is increasing. In a recent note, ScotiaBank predicted that national measures to contain the housing market would be coming in the spring budget either March or April.
What could those measures be? No one knows at this point. The Bank of Canada is not raising rates and the stress test can hardly get stricter, which doesn’t leave much room for effective action. Unlike in 2008 we don’t have 40 year mortgages or the ability to put zero down on a house. Those were all permissive policies that were gradually unwound over the following decade, and now there’s little left to pull back on. Sure they could raise the minimum down payment requirements, but it would be spectacularly unpopular and I very much doubt that’s the direction they’re going. They could address the root of the problem by announcing a massive housing construction plan and wrest local planning control from obstructive municipal governments, but that’s no quick fix and also unlikely to happen.
If I had to guess, I’d put my money on a national vacancy tax as promised in their platform. The problem with that is that it will be entirely ineffective in BC, where we’ve already got one. Our speculation tax – while a good shot across the bow messaging that houses are for homes first – hasn’t been all that effective at curbing price appreciation. There was no discernible impact on the market when it was introduced, and results show that there simply aren’t many empty homes left in the region. Layering on another vacancy tax (comically the Vancouver region would then have 3) may convince the last few holdouts to sell, but it wouldn’t even be a drop in the bucket of the broader market.
However increasing regulatory risk joins the party with increasing rate risk. With bonds remaining stubbornly high after their recent spike, it seems the recent bank rate increases are here to stay, and surprises in the bond market are likely not over. For the housing market, all of the positive impacts of the pandemic have been frontloaded, but that doesn’t mean the negative ones don’t exist. The surprises in this market are far from over.
Stress test stops biting, but only for the wealthy
The introduction of the mortgage stress test back in 2018 was a huge hit to the Victoria market. Overnight it took out 20-25% of the buyers from both the single family and condo markets, shifting them from hot conditions with rising prices into ones where prices were flat for nearly 2 years. In fact it was such a major shift that it fooled me into thinking we had hit the top of the cycle early and were starting down again. That was obviously not the case, and around the end of 2019 the effect of the stress test started to wear off for buyers of detached homes. And now, even though the spread on the stress test is higher than ever it seems to have lost all of its impact for those higher priced properties.
The difference between the rate you can get on a mortgage (~1.5%) and the stress testing rate (4.79%) is at a record high. Source: RateSpy
Why exactly the stress test has stopped working is unclear. Some lenders have relaxed requirements, and allowed those with substantial wealth to avoid it entirely. Some buyers are accumulating higher down payments either through savings, borrowing, or gifts from parents. What seems to have happened is that the stress test continues to bite for those ordinary borrowers without a lot of wealth buying in the condo market, while it has less and less relevance for buyers of detached properties where affordability has become very strained even at today’s super low rates.
It’s another way that the pandemic has transferred wealth and gains to those with the most means going into it. Not only were the highest income earners least likely to lose their jobs and benefited from no strings attached government transfers, those who could afford to borrow were gifted with nearly free money while the barrier to entry remained high for those not yet in the market. We don’t have any solid data on this, but anecdotally it seems more existing owners are hanging on to properties as investments when they’re upgrading instead of selling those entry level homes for first time buyers to get into. Ultra low carrying costs make this possible.
Also the weekly numbers, courtesy of the VREB:
| Mar 2021 |
Mar
2020
|
||||
|---|---|---|---|---|---|
| Wk 1 | Wk 2 | Wk 3 | Wk 4 | ||
| Sales | 254 | 608 | |||
| New Listings | 323 | 1084 | |||
| Active Listings | 1338 | 2252 | |||
| Sales to New Listings | 79% | 56% | |||
| Sales YoY Change | +54% | ||||
| Months of Inventory | 3.7 | ||||
Sales took a step up last week to match the usual March increase in new listings and the market remains extremely supply constrained across the board, with 38% fewer properties available for sale than this time last year. The condo market continues to heat up, with a quarter of properties going over the asking price so far in March. 6 months ago it was only 8%. For detached properties sold in March, 62% went over the asking price.
Remember that in a usual year, new listings peak in May so house hunters can still look forward to an increasing rate of new listings for some time, but of course that usually brings more buyers as well. Inventory normally would be climbing steeply at this time of year, but elevated sales has kept it almost flat so far. Average inventory for March is well over double what we currently have.
It continues to boggle the mind how little the rate of new listings is affected by market conditions. This year we have a pandemic and a huge price jump behind us but it hasn’t made any difference at all to listing behaviour. New listings have been tracking 2020 narrowly all year, but of course those year over year comparisons are about to become meaningless. We are about a week away from hitting the pandemic drop, so I will likely switch to a 2019 comparison soon to get a more normal baseline. Expect some wacky real estate headlines and infographics this spring (April sales up 348%!).
Interesting anecdote: Wife’s colleague listed her house in Maple Ridge and the agent hosted three open houses. Offers were due last week. In total she received one offer at approx $80K over asking….
Apparently there were a number of parties interested, but most did not want to get into a bidding war. The lucky buyer had a financing agreement that expired at the end of the month, so the buyer was keen to complete the purchase!
Take it for what it’s worth.
Has anyone else noticed that on the “Realtor.ca” website the search for House/detached is no longer working, it just comes up with nothing for sale? There is no way to filter out other properties in the Victoria/Saanich/Langford area but the filter is still available for other places. Could it be that there are so few SF homes for sale here realtors hope the folks looking in the Victoria area will be tempted to buy a condo if they don’t see anything else when the filter is applied?
New post: https://househuntvictoria.ca/2021/03/15/are-investors-driving-the-market/
I think it is obvious mortgage debt would be going up along with higher prices and younger people getting into the market. Also the deferrals would have added to the increase in mortgage debt.
I think the article was trying to explain why young couples/families were willing to buy at these high prices.
Increased mortgage debt is caused by the current market. Debt increase does not in and of itself drive up prices. Easy access to cheap credit is a driver and was discussed in the article.
Thanks for the standard deflections from the RE industry, but I find this simple explanation more compelling:
Canadian households added record mortgage debt in Q4: StatCan
I don’t know who to speak to Peter but there are definitely options for air to water heat pumps that can handle both your radiant heating and your hot water. Also big incentives right now for heat pumps and heat pump water heaters.
Makes no sense to bring fossil fuels into a house in 2021 in my opinion.
I once looked at appreciation rates by municipality. Would be interesting to see the difference in dollar terms for sure
https://househuntvictoria.ca/2019/12/19/which-municipalities-appreciate-the-most/
As always, your story doesn’t add up.
You were straight out of University when you moved here with no jobs or job prospects, and somehow had a 14% down payment on an house that was at least $450k. So you managed to save $63,000 while going through university? I’d say that’s atypical.
Doubt it if you’re dropping $600/month. I’d get an energy advisor out there before doing anything.
I think they’re fine for ‘standard’ stuff. Wouldn’t use them for bleeding edge.
Given a super high hydro bill my thought is there is a reasonable probability the home is older and Peter does not have PEX tubing.
For those who might be interested in where the money is coming from to buy houses, who is buying, and why is there such a crunch for available homes, this article is interesting. (This is an across the country view)
https://www.canadianrealestatemagazine.ca/news/is-talk-of-an-overheated-housing-market-full-of-hot-air-334541.aspx
Peter, we were in a similar situation as we were on a large acre lot with a 500 ft long driveway and wanted to replace our oil with natural gas. The quotes from Fortis to install the gas line were prohibitive, and after getting quotes from private contractors we found a solution. We had Fortis install the meter near the entrance to the driveway for no cost and had a private contractor dig the trench from the meter to the house. The plumbing company then laid the gas line and replace our old oil burner. Since the gas line was low pressure from the meter, the trench did not have to meet the exact standards of the one from the road to the meter. If you have a lot of rock this would be a problem, but we were able to find a path in that by-passed any rock. This was a huge saving and we are very happy we made the switch.
LOL, it is like asking a car mechanic to repair a printed circuit board on a computer monitor.
It is highly unlikely that the leaks are caused by faulty tubing, because the tubing have to be pressure test before the slab is pour, and hydroponic PEX (Oxygen barrier Pex, or Pex Al Pex) are rated at least as high as standard PEX tubing. Therefore, the fault is likely due to poor installer or was damage during slab pour (and installer didn’t check the pressure test after the pour).
The only time that hydroponic PEX tubing might fail have to be in combination of a long chain of events (practically impossible):
city water main pressure spike beyong 110 Psi,
house water main supply pressure regulator valve (PRV) failed,
boiler feed PRV failed,
pressure tank failed,
pressure relieve valve failed,
supply temperature sensor failed,
threeway mixing valve failed,
zone valve/s failed, slab temperature sensor and/or thermostat failed,
lead to runaway boiler.
thanks folks, appreciate the advice.
I’ll phone Hydro, but the reason I think bringing gas in will be prohibitive is their website says they charge you $125 per meter to bring it in after the first 25 meters or something like that. A rough guesstimate given the length of my drive made it prohibitive (property is an acre or so).
The house is well-insulated and I’ve already had an electrician check the system & he says that’s just the way it is. But yeah, before hooking up to radiant, it makes perfect sense to ask about the generation of the piping, thank you.
The house inspector recommended Island Energy; of course I don’t know if he has some relationship there. Has anyone used them?
Peter – also research the type of radiant plumbing you have. I’ve had two clients in my career that have ended up with leaks that required jackhammering the slab; therefore, if you have a generation of pipe that is leak prone another consideration to factor in.
If Fortis can’t bring the gas for free or reasonable cost I would personally go mini split + baseboards in bedrooms. I know everyone ****s on baseboards but maintenance free and essentially last forever.
Yea that is a tricky one. The few times we’ve done radiant heating the plumber has done the construction component but not sure who does this type of servicing/diagnostics but I imagine it is expensive. Which brings me back to baseboards, maintenance free and no need to search for elusive specialists 🙂
Peter – I agree with QT. I’d try and minimize your losses before replacing the system. There are a number of air-to-water heat pumps out there you can hook to hydronic heating, but I have no idea who to recommend.
Bought for $19,000, sold for more than $2 million, this Don Mills home is a reminder of when Canada helped Canadians house themselves
https://www.thestar.com/opinion/contributors/2021/03/13/bought-for-19000-sold-for-more-than-2-million-this-don-mills-home-is-a-reminder-of-when-canada-helped-canadians-house-themselves.html
Comparison is meaningless, since almost everywhere else in Canada cities have been amalgamated with suburbs. Ottawa has the lowest density of any major Canadian city but that’s meaningless too, which you will see by looking at a satellite view.
Just wait until the west shore runs out of greenfield land if you want to see a housing shortage
Peter,
Have an experienced tech check the heating system to make sure that it is running within spec. Make sure the boiler feed is working properly, as well as expansion tank, heat exchanger if applicable, threeway valve/s, circ. pump, zone valves, and the most important is remove absolutely all air from the system (eliminate air lock).
Make sure the house envelope and insulation is adequate. Seal air leak/s specially around doors and windows, and check the ventilation to make sure that it is not over worked. Upgrade single pane windows to double if applicable, and install double layers heavy curtains will greatly reduce heat lost.
In the heat pump category you have four options as follow, geothermal (expensive), air source to water (pool heat pump), air to air (require duct work in the attic, add inexpensive air conditioning option), mini ductless split (come with AC, but unattractive).
IMHO, the best option if you are looking for an upgrade of equipment is condensing gas boiler. And, give Fortis a call for a quote as most of the time there are no cost to the homeowner for running the piping or meter (standard $13/ mo rental fee) from the street to your house. The key to get Fortis to do the work is to tell them that you are looking to have many things service by gas (boiler, hot water heater, fireplace, stove, outdoor bbq, outdoor fireplace, etc…)
I’m hoping Ned Taylor will decide to run in Victoria instead of Saanich.
I greatly prefer gentle densification to increased homelessness and housing insecurity even if I am secure with my housing.
When you have a growing population I don’t think you can stop it by just saying, “no more development” in my backyard. In Canada we have freedom of movement and we rely on immigration for economic development.
The logical way to address this may be to take the debate from the neighborhood level and do what Oregon has done and pass a law that eliminates exclusive single-family zoning in much of the state. Local politicians face too much local push back to be effective until we are past crisis levels and this is really a provincial issue imo.
The people that currently own SFHs and don’t like this change and want less densification can move to more rural areas: they will have the means to do so later in life with the accumulated equity they have. The people who need the jobs Victoria offers, or want to stay in the City and are okay with greater density, can stay.
Along with this I would support the strongest legal measures possible to end homelessness.
Gentle density will happen whether I like it or not. A lot of what I’m arguing here can be summed up as “Old Man Yells at Cloud.”
I just hope it is gentle, and gradual.
Yeah, if I recall correctly, gift from the parents boosted us from 14% down payment to 18%.
I do forget that sometimes. Good point.
Wasn’t planning on upgrading anytime soon, so the increasing delta won’t keep me up at night.
Would be interesting if Leo could put together some data on the changing deltas, over the years, among a few neighbourhoods like GH, Oak Bay, Fairfield, Oaklands, etc.
Here is someone who didn’t make a killing:
1331 Salsbury Drive, Vancouver BC. Listed 22 Feb 21 @ $1,699,000 & Sold 01 March 2021 for $1,910,000. They purchased it in September, 2016 (4 1/2 yrs ago), for $$1,811,000. I keep an eye on this area because my daughter’s house is just three blocks away. It is also an arts & craft built in 1912. Theirs is about 350 sq. ft. bigger than the Salsbury one and has an extra bath. Also dining room and living room are nicer with built in sideboards, bay window etc. I’m wishing they would sell and move to Victoria to be closer to me. Oh well.
Hey Barrister….don’t become a stranger here. As much as some things you opine on I don’t agree with, you are a gentleman with a great sense of humor and I enjoy your posts. Just to be clear about Leo, I don’t believe he sells real estate.
Peter, that hydro bill is incredible. Stroller gives some good advice. Also, especially if you have vaulted ceilings, it might help to install ceiling fans.
Same size house here, also on a slab. The solitary source of heat is a heat pump. The hydro bill for the two months ending on Feb 25 was $362, along with a note saying that this was 7% more than for the same period last year. Sounds about right – I think this winter had lower lows. There’s also a handy graph that shows my consumption relative to “similar homes near by”. Our consumption is about half of the others.
You should be aware that the effectiveness of the heating drops off once you are below four degrees or so. This is not really a big deal, it’s just if you are in the habit of turning the house temperature down at night as a savings measure it doesn’t really work – it takes the system to long to regain your daytime target temperature next morning.
Hi, heat pump question here as I saw in the past that there seem to be knowledgeable folks here on this topic. Sorry if this is derailing the other discussion, fascinating as it is!
We just recently bought a house that is something like 2300 sq. feet one level on slab. The current main source of heat is in-floor radiant heat with an electric boiler. Our first Hydro bill (for February) came in at over $600. This at a time when we were keeping the house very cold, as we haven’t really moved in yet. It was kind of shocking compared to what we were used to. Then talked to the prior owner, who keeps meticulous records. Last year same month, her heating bill was over $1,000 (for one month). So, pretty intolerable…
I am just starting to educate myself, but it seems a heat pump is a serious contender. We don’t mind spending on an up-front investment like that if it pays off, as we plan to live in this house indefinitely (big bad Vancouver retiree coming to the Island to drive up your house prices, sorry!).
The house does not have natural gas, and bringing gas to the house would be very expensive (hugely long driveway), plus not as efficient as heat pump anyways. I think roughly speaking we could get a heat pump, installed, for about the same price it would cost just to bring the gas line to the house, so I’m not seriously considering NG.
I’ve been reading about ducted vs. ductless heat pumps, but the option I’m most intrigued about is hooking the heat pump right to our radiant in-floor heating, as I really like the warm floors, plus would just as soon not have heat being blown down from my ceiling or be looking at the split units.
Has anyone done this? Was it a big job to do the conversion? Did you get significant electricity savings? Would you use an air-to-air heat pump? Any recommendations on type/make of heat pump in our climate (North Saanich)?
And most importantly maybe – who would you recommend if I want to have someone out to the house to assess the situation?
Much appreciated!
“Attractiveness was determined by the number of big cities in a 500-kilometre radius, accessibility by road, train and plane”
Ah yes much of my day to day satisfaction is based on whether I can take a train here, or how many big cities are within a 500km radius. These lists are all ridiculous. Rank the Canadian cities by price or rents. The most accurate measure of attractiveness.
https://www.vicnews.com/news/victoria-ranks-woefully-low-on-best-canadian-cities-to-study-in-list/
I don’t think you can stop growth. London is an example of where expansion is restricted and people end up renting out backyard sheds. I think planning for growth is the best way. People will find a way to live where they want or need, but there is no reason they should be forced to live in suboptimal conditions. A lot of people are now living in Greater Victoria in conditions that are a strain on their longterm wellbeing.
Providing more options for housing solutions is the right thing to do. Even if it means my house might drop in value or there might be more cars parked on my street.
Well introvert, my delta to upgrade to arbutus or oak Bay is now atleast 200k more than 2 years ago. I like to think I did ok in my investments etc. But I am definitely worse off if I am to upgrade right now. MY waterfront dreams are all but gone now given the current market.
I hope you realize that a 20% gain on 800k is less than a 20% gain on 1M, so unless u can make up for that delta elsewhere you will be further away.
“But we scratched and clawed our way in, and never advocated for more density and more development along the way. Why would we?”
Did you mention the help you got from mommy and daddy with the downpayment? Or does that not fit with the scratch and claw narrative?
God I hope you’re right :). But at the moment the market sure leaves the impression that it can just run away on us. Leo and Totoro have debated this ad nauseam but I’m of the view that rising prices like we’ve seen make it much harder to move up for existing homeowners. Just think what you could buy for a measly million $ if houses were still at 2009 prices.
My theory on why housing markets are so strong virtually everywhere right now: a combination of all time low interest rates and the COVID effect.
Covid has provided a lot of free time to people who used to be busy driving kids to minor hockey, commuting to work, hosting dinners, going to concerts etc. That has led people to accelerate plans to finally upgrade to the new house, move cities, etc. What better way to spend excess time and money? And, a higher than normal % of that group will hold on to their other property to rent out because of low interest rates.
I’m seeing several examples of this, including people returning to BC from colder parts of Canada after a long winter and no sunny/warm vacation. Covid is accelerating these kinds of moves.
Have to think demand will taper off for awhile post Covid.
Neighbourhoods can change without being effed up. Allowing gentle density like auto rezoning for duplexes for all munis in the core seems like a reasonable way forward. Would be gradual change, as not everyone would sell or develop all at once. I mean, even now we’re heavily constrained on construction resources. I’d support that zoning change for the Oaklands (my neighbourhood).
Big difference is that Beverly Hills has a wealthy tax base and massive urban sprawl surrounding it, so I think the need to grow population directly in the city is reduced.
I love the introverts of the past, but I would never talk to them 🙂
By way of response:
A) I’ve acknowledged that some growth is inevitable (because NIMBYs don’t bat a thousand), and as long as it’s a trickle, and not a torrent, I’m OK with it.
B) When we arrived, the signal was for us to scram, and we knew that. We went in eyes wide open. Vacancy was near zero. House prices were high (so high that, I shit you not, 90% of folks on this blog thought we were in a bubble that was about to pop — hah!). But we scratched and clawed our way in, and never advocated for more density and more development along the way. Why would we? We loved that Victoria wasn’t very dense, wasn’t bustling, that it still had suburban wastelands in walking distance of the ocean! For the people who want to move here today, I would say scratch and claw your way in like we did, without advocating for effing up existing neighbourhoods to make it happen; and if that’s too hard, or you simply can’t, then head up to Nanaimo or Port Alberni or the dozens of the other places where it’s easier to make a go of it. And if you do make it into Victoria the hard way (or the easy way because you’re rich AF), welcome!
Like someone on Reddit said, Beverly Hills doesn’t worry about accommodating newcomers. You can either buy a house in Beverly Hills, or you can’t. It’s that simple. Victoria should be like that.
My thinking is that as long as GH price gains are roughly proportional to the price gains of other neighbourhoods that I’m interested in, it shouldn’t become more difficult to move as time goes on. Yes, I still have to save up to cover the difference. But when our mortgage payments (and extra payments) are gone, our income will be freed up, turbocharging our savings (for decades, really, since we’re nowhere near retirement age).
Well, the plan is to stay put for the next 20-ish years. But plans can change.
Introvert, I assume you feel justified in your position. How do you feel about the Introverts of the past? If someone in 1990 had the same stance as you do now, would you agree with them? 1990 Victoria is perfect the way it is, no need to grow, should be a signal to people to live somewhere else.
Will be interesting to see what Saanich council looks like after the next municipal election. Current council is easily the most pro-density, pro-development council I’ve ever seen in my time in Victoria. Will the pendulum swing back a bit? I don’t see it happening, but you never know.
Introvert, the faster prices rise and the more desirable Victoria becomes the less chance you have in upgrading to a better house. I am experiencing this first hand so unless you are happy living where you are forever I don’t see how this benefits you. You could leverage your home equity into other investments but you said you are debt-averse so that is out of the question.
Yes. Wouldn’t be surprised if they’re some of the biggest ones in Victoria history but there may be some higher priced places at some point that were underpriced
Leo are those over asks all this calendar year?
I still don’t know where all these buyers were in 2018/19 when the market was soft. Pretty clear that most people buying right now are finding ways around the stress test because I dont think most people can save an extra 200k worth of down-payment in 2 years.
Biggest over asks in Victoria so far are
4349 Kingscote for $1.75M, $451k over ask
620 Normanton for 1.8M, $377k over
4906 Alamida for $1.8M, $329k over
2706 Forbes for $1.3M, $310k over
Using past development as the justification for any and all future development is bonkers.
The gift that keeps on giving.
Toronto house sold for $620,000 over asking — https://tinyurl.com/wdrumtfw
Victoria is full. And by people wanting to move here while there are insufficient housing options available, prices go up, which I like.
Yes, we do fundamentally disagree on this.
I think growing generally makes things worse, so it’s best to try to limit growth by pressuring councils to reject developments that are inconsistent with LAPs and OCPs. NIMBYs aren’t always successful, so some growth will happen no matter what. But I’m against opening the floodgates on development and population growth. A trickle is good. That’s what we have now.
One person’s suburban wasteland is another person’s peaceful and quiet oasis. Density will destroy that.
Fair point. But a bit of development here and there, I fear, is the camel’s nose under the tent. Advocates like you want more and more and more, and will never be satisfied. For you, there is no threshold beyond which a neighbourhood or community is too dense. That is crazy and worrisome to me.
“I never complain about people coming/wanting to live here.“
Dude, your entire shtick is that Victoria is full. Try a little harder now.
Everyone has the right to express their views to their elected representatives. I am not demanding anything, I am just using the advantages of my small platform and reasonable understanding of housing market dynamics to amplify my voice.
I’ve changed my views on supply over the years. I used to be a lot more skeptical of the supply narrative from the industry and I’m still under no illusion that most developers aren’t pushing it mostly out of self interest. However I’ve read more research on the impacts of construction both on the rental and resale markets, and now that the government has taken several steps to control toxic demand it’s the only sensible angle I can find to lean on that may have the chance to make a difference. Many of the other policies that have a big influence on real estate prices (rates, credit policy, consumer sentiment) are completely outside of our locus of control but supply response isn’t.
Swing and a miss. I never complain about people coming/wanting to live here. I complain about the notion that cities are obliged to try to house everybody who wants to come, as if there aren’t other places for people to live in Canada.
Population density of the city of Victoria( 4,400/sq.km) is already high, by Canadian standards. Victoria density is 7th highest in Canada. The highest in Canada is the city of Vancouver (5,500/sq.km), by a lot (20% higher than next city – Montreal)
https://www150.statcan.gc.ca/n1/daily-quotidien/170208/t001a-eng.htm
.
Of course other cities are 10-25X more dense, like Manila (100k/sq.km,), Paris (54k) https://en.wikipedia.org/wiki/List_of_world_cities_by_population_density
No they weren’t….back in the day homes were magically built without having to cut trees or inconvenience anyone.
I think people are simply too dumb to figure out in advance that they will enjoy the amenities. My reference to Boom + Batten is a great example. Insane opposition and after the fact it is so popular you can’t even grab lunch without a reservation.
As far as never noticing it again….what has been built since the View Towers 50+ years ago that someone drives by and says “damn I wish that wasn’t there?”
I just posted my suite for rent on Tuesday and got over 100 inquiries. That being said I generally rent my place for a bit under market value to give people a break. If you have had to rent out a suite it’s quite sad listening to people stories trying to find a place to rent. But hey, let’s not try to meet market demand and build more, It’s all good, let them eat cake.
“We didn’t write to municipal councils demanding that the city densify to accommodate our arrival.”
I bet you also didn’t write to complain about the densification that was happening when you arrived in the midst of a building boom, and the new housing units being added to help facilitate your arrival.
Back then, you were the problem that you complain about now. Pointing out the hypocrisy and myopia of your position hardly seems weak.
That’s our fundamental disagreement. I think growing makes things better, infill makes things better because it supports a wider variety of businesses, and walkable/cycleable neighbourhoods are better than suburban wastelands where you have to drive everywhere. Density gives us that.
As Marko pointed out people also overestimate how much any given development will affect them. Once it’s built they like the amenities it brings, or will never notice it again.
You’ve said the same thing. Existing townhouse developments don’t bother you at all and yet you believe somehow new ones will completely ruin the neighbourhood. Doesn’t make sense. I bet you wouldn’t even notice a difference if Gordon Head slowly put in more townhomes as properties came up for development.
It’s also about moral consistency for me. I care about sustainability and equity, and denser and more affordable forms of housing support both of those. Therefore I’m increasingly convinced that there’s an imperative to actively work towards enabling those opportunities. Maybe that will turn out to be a Sisyphean task. Certainly municipal councilors will have a hard time supporting change when most of their voting base are single family detached home owners but the political winds are changing in some cities.
And to pre-empt all the weak “You got yours so everyone else can suck it”/”You wanna pull up the ladder” criticisms that I invariably get, when we arrived in Victoria circa 2007 the vacancy rate was near zero and it took some time to secure a place to rent. But guess what? We didn’t write to municipal councils demanding that the city densify to accommodate our arrival.
I believe most bubbles also came with substantial overbuilding (US & Spain for example). As far as I know we have no evidence of overbuilding here and pretty good data now from the spec tax that there aren’t many empty homes.
There we have it. When you start with “we need investment into downtown” and work backwards from there, then all development proposals look great to you, which is basically your stance.
If there’s not enough housing in Victoria that’s a fantastic signal to prospective newcomers to maybe consider other places to live. Not sure why we should screw up Victoria for the folks who live here for no better reason other than “we need to grow.”
We’ll grow slowly no matter what, but we don’t need to actively encourage it and open the floodgates.
If that many people moved to Vancouver during those 5 days, then what’s the problem? They moved to the city and found a place to live. All is well.
AAA biking network is a key sustainable and healthy commuting option. Fewer cars on the road, and frees up parking spaces downtown for those unable/unwilling to bike. Better for the environment. Retains charm for Victoria (huge wide roads and ample parking are not charming). You know what’s charming/cute? Smaller versions of things. And separated bike lanes are just smaller cute roads. It’s a win all around, not virtue signalling.
And we do need to ramp up non-vehicular infrastructure. Roadways and parking take up a stupid amount of space.
Zoo time is she and you time
The mammals are your favourite type, and you want her tonight
Heartbeat, increasing heartbeat
You hear the thunder of stampeding rhinos, elephants and tacky tigers
This town ain’t big enough for the both of us
And it ain’t me who’s gonna leave
Anyone familiar with RE bubbles knows that rapidly rising prices are not a sign that not enough housing is being built. In fact in just about every market there is a strong correlation between the amount of housing being built and rising prices. Then when prices start falling, construction drops off. Rinse and repeat.
Marko: Leo is unbiased because you agree with him. I am sure you live happily in your condo and that is just great. I am sure my memory is failing but did you not have a wife and kids in that SFH when you owned it? If so, are they happy with you in your condo? I am about to again hear about how happy people are in your native Croatia to raise families in small condos.
Sorry but I have to take the opinion of real estate agents, especially ones that sell a lot of condos, with a grain of salt, But you have made an awful lot of money selling condos so where your stand on an issue has a lot to do with where you sit to eat.
I take it you mean this place. I know someone who lives nearby. As the article notes, this is pilot program. Six stories is way above the norm for that neighbourhood, but that’s the tradeoff for the rental guarantees. That’s the sort of thing the council is supposed to debate. A development that falls under the existing zoning wouldn’t have to go to council.
https://www.vancouverisawesome.com/vancouver-news/city-adds-35-rental-homes-to-vancouvers-west-side-some-at-below-market-prices-3519036
I tried to grab lunch a few days ago at Boom + Batten. We were told it was 1+ hour wait and left. On our way-out patio is packed and I noticed a couple eating lunch that live in my building. They were opposed and furious when the marina/restaurant was approved. There was insane opposition to it and now whenever I walk by there patio is filled with the elderly of the Songhees, the original opposition to the project. Now we move on to opposing the roundhouse 🙂
Barrister, have you ever thought that maybe it is just your problem and a few other 1%ers that Victoria is getting too big? Last time I checked thousands of people including myself live happily in tiny houses.
Leo has to be the most unbias person on HHV.
You know what my nightmare is…trying to sell a dated 6,000 sq/ft mansion in Rockland.
“Others may feel like the system is doing its job”
I suppose if you are the type of person that likes going to public hearings to shout down low-density development because some trees might be cut down, or some extra people might park on the street, then maybe the system is working. But in a growing region with a housing shortage, it seems problematic to me.
Leo: If you stop building tiny little housing people would stop moving here. While it is every real estate agents nightmare maybe there is a little to how large cities should get.
“I would be keen to come and see how virtue-signalling with bike lanes and turning a blind eye to the ulceration of public spaces can etiolate one of North America’s loveliest small cities in less than five years.”
Complaining about bike lanes and virtue signalling in a single sentence. What a lame old trope. Not sure what the embittered conservatives have against bike lanes. Can’t go ripping up Fort St at 60 km/h anymore?
Vancouver council just spent 5 days debating the approval of 35 units of rental housing. In that time 4 times that many people moved to the city. The system is broken.
Leo I love your posts but I have to agree that you support any and all developments. Really you should move to Vancouver or Toronto and then you can be surrounded by what you like instead of trying to turn Victoria into Vancouver.
Well it would be a crying shame to replace the quintessentially old Victorian charm of the existing rental car parking lot.
Lots of comments about sending the Telus building back for fine tuning but not specific comments about what needs to be fine tuned.
Disagree there. AAA bike lanes and mode shift are key to keeping Victoria lovely as it grows. We need to ramp up investment into pedestrian and cycling infrastructure in the whole region.
Moncton NB doing quite well:)
https://globalnews.ca/news/7680006/n-b-housing-boom-sees-house-prices-climb-30-in-2021/
It’s broken by definition. I don’t care much either way about Telus ocean other than we need investment into downtown. What I do care about is housing. And we’ve had dozens of rezoning applications for very moderate townhouse developments stuck in endless zoning fights. It doesn’t matter if 100% of them get approved, there are simply not enough hours in the day of staff and council to spend on approving a measly few units here or there. It’s like trying to walk up an escalator going the wrong way, you won’t keep up with growth. There is literally no way to create the housing we need if we stick with that process.
How do we know when we’ve built enough?
When we have a healthy vacancy rate of over 3-4%.
When resale prices for homes (not necessarily detached single family) stop spiraling upwards.
When people in BC aren’t being forced to move at the highest rate in the country.
Let’s get real, Leo. You’ve never met a development you didn’t think was good.
Second, development and change aren’t happening at the speed you would like, so you feel the system is broken.
Others may feel like the system is doing its job.
We already have that. We’ve made transparent rules and guidelines — they’re in the Local Area Plans and Official Community Plans.
The Telus building proposal, for example, is inconsistent with some the rules and guidelines laid out in said plans, which is partly why it’s receiving pushback.
The corollary to “Anything that meets those [rules] should just go ahead” is anything that doesn’t, should not.
But I don’t think you would like that. When it suits you, you’d really prefer that council ignore those silly rigid community and local area plans and approve projects that require variances.
And so we see that you’re essentially supportive of all development inside the Urban Containment Area. You have no standards.
If I was a city-council member from another location, I would be keen to come and see how virtue-signalling with bike lanes and turning a blind eye to the ulceration of public spaces can etiolate one of North America’s loveliest small cities in less than five years.
I thought they came for our feces, urine, needle free streets absent of being harassed on corners and at ATMs for cash.
The vast majority of tourists come to Victoria to see our condo towers. Nothing like them anywhere else in the world.
Not everything is good, but the system is broken. Let’s decide what we are shooting for as a region that is equitable and then have simple, transparent rules in place for new development. Anything that meets those should just go ahead.
Yes, such a shame that every development proposal that comes down the pike doesn’t get an immediate rubber stamp of approval because all building is good and it’s really that simple.
Well we wouldn’t want a towering checks notes 12 floor building in the middle of our downtown core would we?
Don’t worry though I’m sure the opposition at the public hearing will still kill it.
I too am not enamoured with the public sector, however, I chose a long time ago to pursue self- employment and invest my hard earned money in real estate. As I gracefully turned 65 (gasp!) and began receiving a modest $1160 a month pension, I am thankful that my investments worked out. If they hadn’t, I would be screwed. That’s the risk one takes in life. The end benefit of this decision is when I’m gone my “pension “ won’t disappear, but my investments will live on if handled properly.
Maybe they are distinct skill sets to a large degree. A concrete guy isn’t going to be good at fixing toilets. Construction down but renos up.
Ks112 i have a few colleagues at Brookfield who definitely sit in lots of meetings however they contribute and get compensated quite differently than the peeps in the public sector. The city of Victoria is in absolute disaster right now, running the city into the ground one day at a time. How did we have a 5-4 vote on the new Telus building? Someone needs to vote these tit lickers out.
The huge disconnect in construction job data and how unavailable every handyman is makes me think there’s some kind of mass covid money fraud happening.
MLS: 869421 $1.29 mil
I wonder if we are going to start to see few more of these in this market after the insane bidding wars driving nutty high offers without conditions.
Wonder what happened:
– Buyers get cold feet after winning?
– Appraisal not hit the mark for the offer?
– Financing collapse?
– Something wrong with it?
– None of the above or another reason?
Just curious to see if these start popping up more. I thought in this type of situation the seller would just call up the next highest offer? Unless the next highest was a couple hundred grand lower, you might decide just to relist….
GC, the head of realestate at Brookfield also gets paid to sit in meetings all day. That Pandora purchase probably came from above him for all we know. End of the day, government is meant to provide public service, their goal is not to get the best deal on every transaction. Looking at that guy’s LinkedIn timeline he probably replaced whoever was involved with the Johnson Street bridge.
Ks112 that guy gets paid to sit in meetings, typical government work. There is nothing strategic about the city of Victoria
You’d think that would give us a big vacancy rate, but doesn’t seem to have been that dramatic
I think you may have some misconceptions about what leads to life satisfaction. 🙂
Here is your guy Marko, looks like he started off as a corporate lawyer at a McMillan which is a decent corporate law firm.
https://www.linkedin.com/in/peter-rantucci-ll-b-75981b28
I have no issues with individuals working government jobs. If someone offered me 200k/year to work at BC Housing overseeing the owner-builder exam department I would definitively retire from my current gig right away. Who wouldn’t want a job managing something that is completely non-relevant that was made up out of thin air with no evidence? I would even strongly consider switching current career if the COV offered me the Head – Strategic Real Estate at 150k/year. Developers would certainly love with the COV paying $10 million for a property a developer bought 4 years earlier for $3 million and change.
I have a problem with the bloated inefficient system that often does not nothing but add bureaucracy.
One of my closets friends works for the government and all his does is make fun of all the ridiculous waste in his department. In one instance he was working on roof replacement projects on structures they slated for demolishment in two years.
This US article has some interesting ideas on another model to achieve home ownership. It gets to that idea about half way through the article…. so skip to there if you don’t have a lot of time.
https://www.theatlantic.com/ideas/archive/2021/03/why-its-better-to-rent-than-to-own/618254/
I shouldn’t generalize all union workers, just like everything else in the world it is a mixed bag.
I’ve worked in both union and excluded environments and cannot relate to this. The union staff I know can end up working OT off the books (no additional pay). There can be pockets of government with very different work cultures, regardless of union/non-union.
That is not how it reads James:
This policy applies to executives at public sector organizations with approved compensation plans for excluded management employees. This includes the public service, Crown agencies, research universities, post-secondary institutions, health and K12 education sectors. It also applies to employers’ associations.
The policy specifically applies to the CEOs, Vice Presidents, and equivalent senior executive roles within the organization with an annualized salary of $125K or greater.
In the BC Public Service, the policy will apply to all members of corporate executive. Additionally, the Deputy Ministers’ Council has voluntarily declined to receive compensation adjustments for the 2019/20 year. The policy does not apply to positions below the Deputy Minister, Assistant Deputy Minister, or Executive Lead Level. The policy applies to all forms of increases or adjustments, including salary, benefit improvements, pension adjustments and any other form of compensation.
No.
Those middle managers @ BC Hydro would be excluded management employees. This would absolutely apply to them.
This new executive salary freeze is confusing, it says all executives making 125k or over… so you can have an executive at a small branch making $125k and that person would get a freeze but middle management at BC hydro making $170k won’t be frozen.
Yah – the current management structure only dates from 2015. But for several years before that – and after that till 2018 – all management had a salary freeze. The only way to get a raise once you left the union was to find a new job and bargain for it.
I once worked in a branch where there was a team where the line staff(all accountants or lawyers) were paid about 83k, reported to a TL making 93k, who reported to a manager making 75k, reported to an ED making 100k.
Lol.
I work in Government. I work with Union employees every day.
I can’t relate. The people who have been in government the longest seem to care the most, and definitely don’t just leave it at the office.
Sorry.
People who get flex days still work the exact same amount of time (actually slightly more), they just do it in 9 days instead of 10. They work 70.38 hours in 9 days instead of 70 in 10.
Looks like this is related to COVID, they put a cap in place for crown CEO’s back in 2012 i think. This one looks like it is more wide spread.
Isn’t that exec freeze from 2012?
I just googled the salary freeze, looks like it has been in place for awhile now.
https://bcpsea.bc.ca/wp-content/uploads/2020/09/2020-04-Attachment-PSEC-FAQ-2020-Executive-Compensation-Freeze-Policy.pdf
James, I meant the ones are paid for 35 hours a week but actually “work” for 20 or less. You can try to argue this point but I am sure the other people on this forum who work in government can relate to this.
I can’t speak for the fed, but the BC province actually had fiscal restrictions put into place back when Carole James was finance – maybe last january?
IMO right now isn’t as massive a blitz as it looks for the province. With the new fiscal people are prepping to fill stuff that has gone unfilled this past year. As well, there are a select number of ministries and business areas(Advd ED for ex) that have a pipeline of money from the feds for federal liberal pet projects.
Other then that this is normal cyclical government hiring. Atleast in the jumbo ministries I have a network in(social sector, finance, and health). There is a general sense that this is the only hiring people will be allowed to do for the next year. But that was the same when Christy Clark was in charge. Basically there was a general bonanza for the first two years with Horgan, then belt tightening unless your programs were getting press coverage.
newhomeowner, not sure how many ADMs there are but freezes usually start at the top, so I guess depending on how the budgets look, the next step is to freeze other exempt employees also.
I think we just discovered where all the power that Site C promises to deliver will be directed: Bitcoin mining.
https://twitter.com/adam_tooze/status/1370384081771433989
ah – well, ADM and above makes up a fraction of a fraction of the public service. There are what? 100-150 of them? And ADMs start at around 170k as well.
The biggest protection that the public service has is that most of them are constituents of the BC NDP leadership. A BC Liberal win would definitely shake things up for the public service.
Dad, no I never had any direct work experience with union employees. I do have some friends working in union jobs at the government and that is what they all brag about. Oh ya, forgot about the flex days too.
The other end of the token is that the pay at the union is capped, but if someone is ok with topping out at 90k a year with job security an no stress then all the power to them. I don’t really have any problems with it either way, Marko is the one that constantly rags on the public sector workers so I am just speculating on his reasoning.
The thing with private sector and certain crown corp/government related entities is that your job security is much lower in exchange for higher pay, so there is that natural fear and people atleast try to make it look like they are adding value. Exempt positions in core government you also have job security, maybe not as much as in the union but I don’t think they regularly can people unless they do something really really bad.
It’s a bit of the job posting competition blitz on the Federal and Provincial side right now to get the screened in pools established right now so that employees can be deployed quickly once staffing a position is approved. The first wave of reductions in the public service won’t be coming as direct cuts, it will initially by not staffing vacant positions and gapping positions that people leave. It starts with the freeze on creating new positions followed by a hiring freeze and the spending cut comes from attrition without declaring a cut. So managers are sensing the fiscal restrictions coming down as things move into next year, so they want to get staff locked in before they can’t staff positions and suffer from being understaffed for several years during deficit reduction.
They’re lazy for working what they’re paid for?
Doesn’t apply to union, might be only executives for now (ADM and above). Can anyone on here can confirm?
Pay freeze for the BC government? Where’d you hear it?
That would be a surprise as BCGEU get a contractual 2% pay raise on April 12th. And by agreement all excluded staff and government contractors get a 2.25% raise next month as well.
The current contracts were signed to cover from 2019-2022. I think announcements for the next contract probably aren’t till October or so.
He said we’re at the tail end of rates dropping.
Pushing back against that would be saying that they’ll go negative, not that they might stay low.
5 year bond rates have tripled since January 1, so they better get cracking if they’re going to keep it low.
“The ones that like to work their 35 hours a week on the dot and never have to think about work once they leave, guaranteed collectively bargaining raises and very little risk of getting fired. I am sure the ones in senior management have stress just like any other private sector job.”
Could it be, ks112, that people who are able to complete their work within the allotted 35 hour work week are not lazy, just good at what they do? There is also a tendency to over hire in government, which has nothing to do with laziness.
I somehow doubt that the majority of people working traditional 9 to 5 type jobs in the private sector are working pure 8 hour days and fretting about work on the weekends. And if they are, is that supposed to be a good thing?
I guess you had a bad experience in the public sector with unionized employees.
Absolutely they could. In fact I expect it.
But here’s the change in the average mortgage rate:
1980 to 1990: -8% (rates spiked in 81/82 but were lower in 1980)
1990 to 2000: -38%
2000 to 2010: -42%
2010 to 2020: -35%
Going from a drop of a third every decade to 0% is a massive change in trajectory.
pay freeze now at BC government apparently, not sure if it applies to everyone though.
I mentioned that I know a number of people who lost their jobs…
For specificity I used to work for Flight Centre as a travel agent and store manager. February 2020: Flight Centre Ltd was raking in the cash handover fist and had 86 employees on the island. Today they have 2 employees on the island. 11 of their 12 stores are permanently abandoned.
I know a large number went into the health care field – old folks homes mostly – those places hire with no training, no experience, and at a livable wage. If you are willing to work it is extremely easy to get a job taking care of old people paid $30+\hr with no education or experience.
I know a large number went into government. Most of my most recent team did. These were all sales people with fairly long client lists. ‘My former client was on the panel’ is a common refrain.
Others just found work doing other sales type things. I have a half dozen friends that all work remotely for Shopify for example. Others in insurance. Stuff like that. These are hustlers who are used to working 50-60hrs per week. It is very easy for someone with a bit of hustle to get a job in Victoria right now. really easy.
Yes patriotz, thats what I meant BoC, I view them essentially the same as federal government despite them being an independent crown. Government sells debt with the left hand and BoC buys it up with the right hand along with other investors. There may come a point in time where no other investors wants to buy a 5 year CAD bond that yields 1%. In that hypothetical scenario either the BoC has to buy all of them or let the yield go up to whatever the market price is.
I think Marko’s comments about lazy government workers are pointed mostly at the unionized ones. The ones that like to work their 35 hours a week on the dot and never have to think about work once they leave, guaranteed collectively bargaining raises and very little risk of getting fired. I am sure the ones in senior management have stress just like any other private sector job.
They don’t. I think you mean the Bank of Canada. In any case Canada cannot diverge significantly from interest rate trends in the US, so what happens down there will dictate trends here also.
Canada 5 year bond yield is over 1% now. I be interested to see how much government can continue to buy their own bonds and push the yield down. In an extreme scenario they could be the only buying what they are selling if they are targeting a certain yield
The surprise from the BoC announcement this week wasn’t the rate, it was the continuation of the big bond buys. The BoC benchmark is only a small part of how lending rates to the public occur. Primarily, banks need to sell debt in a debt market in the form of a bond and someone has to be willing to buy those bonds so the banks can lend money. There isn’t much demand for those low rate bonds right now, so government is buying it up to subsidize borrowing. Once those big government bond buys disappear (eventually some sort spending discipline will come back) the bank rates will depart the BoC rate. There’s just so much debt out there to buy as an investment, they will eventually need to find a competitive way to get people to buy that debt and the way that is done when the government debt buys go away is through higher rates of return on the investment through increased interest rates. The last minority with Harper saw their way to a majority through spiking the housing market (people buying housing feel secure and wealthy) and it appears that the Trudeau minority government will likely do the same through the spring until after the federal election to assist in getting a majority win (keep the the taps wide open and hope voters are happy buying houses). We will probably see the big government bond buys disappear soon after the election and there will be a quick escalation in the rates offered by the banks no matter what the BoC rate is at.
I’m not arguing the merits of high or low interest rates; I’m simply pushing back against Leo’s tacit assumption that, because rates have fallen for 40 years, a) rates can’t stay very low for much longer and b) rates are about to enter a prolonged period in which they rise.
Look at what that has done to the Japanese market.
FIRE doesn’t mean fireman.
Finance, Insurance & Real Estate.
Did you find it easy to get your job as an RN? Because honestly seems fairly difficult to get a government job if you don’t already have one.
Wouldn’t that be a market failure? Are you wanting the government to step in here?
It’s the part of the market that the government is pumping. Makes sense that it would be where the jobs are.
How do you know we’re at the tail end of it? Rates could stay extremely low for another 10 years, or more.
Remember, the Bank of Canada couldn’t even lift rates above 1.75% during the entire 12-year period between the ’08 financial crisis and the pandemic.
It is the worst I’ve ever seen it….I got this email back three weeks after requesting surveying. We have plenty of people to complain about the cost of housing and write reports; however, don’t actually have the people to build housing which leads to more reports and complaining. How on earth cannot we train more surveyors? It isn’t a trench job. Ohhh wait, why survey when you can get a government job and have zero responsibility.
“Thank you for contacting JE Anderson & Associates.
We apologize for the delay in contacting you.
Unfortunately, due to an extreme workload, we have not been able to respond to all of the project requests arriving in our office and are unable to take on any further projects at this time.”
Yeah I don’t really trust these figures either. Big drop in construction goes against everything I hear from the industry every day. Hard as ever to find trades and labour, people booked way back. Sure there are some big projects that completed (wastewater and interchange) but not 5000 people worth.
Sure, fastest growing part of the economy, everyone jump in.
Great story ->
https://financialpost.com/real-estate/real-estate-could-be-a-viable-career-alternative-for-women-hit-by-pandemic-job-losses
As the job losess pile up we need more agents, make sense 🙂
how do you go from travel to healthcare and fire right away? Don’t you need education or training for that? I thought there was a long line of people wanting to be a fireman.
the jobless thing seems a little counterintuitive to me. I mean, culture\food\accom job losses makes perfect sense. But construction and health care? My only thoughts are that those job losses are at the margins. Low skill and\or parttime and were convinced to step out of the market because of the generous government supports.
I work in government and all of my new staff in the last 6 months have come from the accom\food\travel industry.
I also have tons of friends that lost their work(used to work in travel) and haven’t heard of any that didn’t land on their feet. They all went into either government, health care, or FIRE.
Note 3 month average
We’re down about 5000 jobs from this time last year
You’re absolutely right it’s a bit of both. In hot markets sellers switch strategy to an auction system and deliberately underprice to set up bidding wars. I don’t think there’s great evidence that that leads to higher selling prices overall, but it allows them to sell quickly, avoids negotiation because generally offers are unconditional, and gives them a chance to win the lottery by accepting an irrational above market bid.
So I completely agree with you about fair market value. A bidding war makes it impossible to tell whether the selling price is market value or not. I think it’s a big risk for buyers in this market is paying over market. If prices keep rising then it’s fine and you’ve just set a few tens of thousands on fire, but if they don’t you could be really stuck.
never mind you already answered!
Accepted offer, but it’s an estate sale so subject to probate.
Leo, any thoughts about demand being pulled forward?
I think if I lived downtown I would prefer to live in a condo. Downtown has always been like that. 20 years ago my sister lived on Pandora and anything that wasn’t nailed down was stolen, including their door mat. Certainly the escalating costs of housing has made the problem worse.
I actually love wollaston rd. The problem is the house and property which leave a lot to be desired. That said I think a 649k list will bag a 740k unconditional by next week.
It has huge hipster appeal. Great for two working adults with no kids.
Quite a bit. I think this is part of the reason real estate moves in cycles. On the way up FOMO strikes and causes people to accelerate their plans, then when people are priced out price increases stop there’s a hangover. Big recency bias and right now we have a double whammy of it. In this case people see prices boom over the past year so they jump in expecting to get a piece of the price appreciation. At the same time we are at the tail end of 40 years of dropping rates and people’s entire view of real estate is based on the outsized appreciation that has driven in properties. I think this is still wildly underappreciated in the market.
Increase in the home ownership rate – or multiple home ownership rate? Maybe a combination of people moving out of cities and buying for the first time, or cashing out of high value markets and buying more than one place.
Could be people buying second properties. Remember the homeownership rate is defined as the % of households which own their primary dwelling.
Conference Board only seems to be measuring gross economic performance. Do you think that PEI, for example, has a low quality of life? Didn’t see many homeless last time I was there. They had 6 opioid deaths in 2020. BC, which has about 30 times the population, had 1,716.
So with sales up massively in small towns and sales up in big cities as well, and with immigration remaining low, the only explanation is a massive increase in the homeownership rate in the last year right?
https://www.cbc.ca/news/canada/nova-scotia/nova-scotia-homes-buying-sight-unseen-housing-boom-1.5946827
re: 1038 Wollaston. People tend to overlook that this portion of Equimalt is one of the best neighbourhoods – strong sense of community, easy access to downtown and services. Wollaston is slightly less attractive than one street over, but Dunsmuir between Head and Lampson is very much sought after.
Cadboro, glad to hear you are coming to peace with this crazy market. While we’re talking alternatives to cookie cutter Langford houses, have you looked at townhouses along Shelbourne? I think the 90s era ones are in the 500-700 range. Not ideal but have 3 beds/2 bath, you’re in the Core close to daycares/work and not driving the Hat.
The “percentage of sales over ask chart” shows just how crazy things have got in SFHs. This is definitely a bubble, but who knows when it will burst. Renewed my mortgage yesterday, 1.89% on 3 years, was paying 3.07%. They told me that rates are going up today at RBC, and are going to continue to increase. That might cool things in the market.
Cadboro, we were where you are till 2019 when we couldn’t take it any more. Found new jobs and moved to Nanaimo. Daycare’s simple, we landed French Immersion with no fuss, houses are affordable, parks are everywhere, and I only notice the mill once in a while. C’mon up, the water’s fine.
Leo – from your perspective is the over ask ratio increase due more to the fact that list prices are purposely far below what sales prices are expected to be versus last year (orchestrated bidding wars). Or is it due to the fact that bidders are just throwing as much as they can at a property regardless? Probably very difficult to make that determination in this market. IMO there is no fair market value being assessed here when offers are being placed. Comparable sales references are infected with the insanity. Fair market value is what two parties can determine together with full information on both sides of the asset being sold, with no compulsion to act. Buyers are so incredibly frantic right now and the compulsion to act and sense of urgency is off the charts. My wife and I have taken a breather in viewing lately, trying to collect ourselves, but this is mainly due to really poor quality stuff we are seeing in our price range. But seriously I’ll take the rest any way it comes right now.
Re: 1038 Wollaston St. 2 bed 1 bath
Besides needing an extra bedroom and bathroom, I bet it will sell for 812k. Anyone else want to play the price is right and put their guess up?
Kenny you call that an outlier. If you travel around Victoria and you travel around Oak Bay its pretty clear where the presence of crime is likely centered. I’ve worked in both areas, and while I would never want to live in Oak Bay, it definitely has less ‘sketchy’ people walking around. It’s not hard to understand why people would feel safer their. I’m sure the crime stats would back that up despite the Oak Bay murders.
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It not only sketchy people that commit violent crimes, there was another murder of someone in their late teens I think at an uplands house about 15 years ago. I think there is a common theme here that these murders all had in common some degree of marital and or financial stress so I wouldn’t call them outliers, as Barrister would say I’m not sure what to make of this
Rob Carrick (Globe and Mail):
Shut out: A well-qualified millennial home seeker throws up his hands after losing multiple bidding wars
https://docdro.id/7xrCE1c
Re Wollaston. Unfortunately that’s the going rate. The only 2 houses in my area for sale were 3 bed 1 bath and both asking 749,000. I’ve just looked and they’re both gone. I don’t even think that was 2 weeks on the market for both.
And those high tax low house cost provinces also have the worst quality of life. At least as measured by the conference board of Canada. They put BC highest of any province and also highest if were a country, tied with Ireland and ahead of Australia.
https://www.conferenceboard.ca/hcp/provincial/economy.aspx
“The Conference Board’s overarching goal is to measure quality of life for Canada, its provinces, and its peers. We ask two questions: Do Canadians have a high quality of life? Is it sustainable?”
“British Columbia puts in a remarkable performance, ranking first in the country and second overall, behind only Ireland. Ireland and B.C. are the only comparator jurisdictions with A grades overall on the latest economy report card. While Ireland’s swift economic growth puts it out of reach of any other peer jurisdiction on any measure based on GDP, B.C. outperformed it on inflation, unemployment, and employment growth for a well-earned position atop the rest of the peer countries. B.C. ranks well ahead of the third-placed jurisdiction, B-ranked Australia.”
Cadbro: Might consider a townhouse. I was speaking with my house painter the other day and we got to talking about house prices. He did point out that he makes $60 an hour and a good bit is cash while his girlfriend makes well over 80$ in her trade. Between them that is 200k plus.
1038 Wollaston: Ouch. 900 sq ft and 1 bathroom for 650k.
Lots of upside to it though. It’s just not very functional for a family with two small kids. Also, if he’s approved for 660k then it might take years to come up with the cash to finish the basement.
Still, to get in the market is worth it. The actual problem is that my guess is there’s just about 0% chance that it sells for under $660k though.
Does anyone know where are all the people are moving to, that are selling now??
Barrister, if Cadbro wants to live in Victoria then I think they should just do it when they can and not bother with Mill Bay. Take me for instance, when I bought the GH house in 2013, I could have shelled out another ~200k and be in Oak Bay/Arbutus part of GH. Now my delta is atleast $500K if i were to upgrade.
Obviously 2013-now is the all time bull market for house prices, if it was 2007-2014 then it would be a different story.
If I were a young couple/family I’d be taking a hard look at 1038 Wollaston. Close to town, shopping, schools. Cute, older house. Only 900 sq. Ft finished but another 800 unfinished. 649,000. No, I don’t know the owners.
Barrister funny you should mention that as we went to check out 2 places in Shawnigan recently. The 599k one on Fitzgerald that I think was discussed on this blog is at our max budget if you factor in the strata fee and $3700 annual property tax (why is this so high?) So the numbers didn’t make sense for 900 sq feet of living space and the commute. The other was too good to be true, 2 suites large house so could have been approved for more but it turned out to be a prev. grow op. (I have fallen for 4 of these, why isn’t it disclosed in the listing?).
We are looking further out but for our jobs and the need for daycare for the next 4 years it feels pretty desperate to go over the hat unless it’s worth it.
I feel that being priced out of the smallest Langford houses is a turning point in this market. What does that say about the city? And I’m talking about the city of LANGFORD, Victoria hasn’t been wishful thinking for us for years. The median family income in Langford is 80k and we pull well above that. And houses are almost 10x the median income there.
If it’s true that the provinces that have the highest taxes also have the least expensive house prices, I wonder if that is because there is better support for the people (Thus higher taxes needed)…… and as a result less crime and less wicked dog eat dog mentality that attracts brutal competition we see in our big cities.)
I know I am stretching things a lot here, but I feel that there are so many red flags that indicate that our society’s model is not at all healthy and we need a fundamental change on so many levels. (Look at the homeless and the drug use for example)
Cadboro: I have no doubt that you have thought about it but there are a couple of listings still in the six hundreds up in Mill Bay. A few challenges there but also a nice small community that is still in striking distance of Victoria. Just a thought since even Sidney seems to be hovering around 800K.
If you can squeeze some from family or your employer it is time to really think about it.
I’d probably agree with “Dad” to certain extent because I’m sure it is never one thing that creates a problem like we see in the housing market. However, it doesn’t take a lot of digging to find information on the massive scale of the money laundering that went on in Vancouver.
Here is one example: https://complyadvantage.com/knowledgebase/vancouver-money-laundering-model/
Also, where do you think the money from drugs ends up? There is a ton of money being laundered. Crime is one way to avoid taxation. It’s one of the reasons why our streets are flooded with drugs. (Among others.)
The government has been working hard to stop all this since around 2015, but when you squeeze the balloon, it just pops out somwhere else.
“I’m sure the crime stats would back that up despite the Oak Bay murders.”
Probably, but but being homeless or sketchy isn’t a crime, and I would bet the recent spike in the crime rate is mostly because of non-violent crime. Sucks to have your property stolen, and it makes you feel violated/less secure, but Victoria still seems pretty safe to me.
Leo, how much demand do you think have been pulled forward due to this covid panic buying? If it is mostly locals that are buying then I would assume this must be the case given the sales increase?
It bears repeating that the provinces with the highest taxes have the least expensive housing.
First time buyer update. Still glancing at PCS but we’re done going to viewings right now, this is beyond stupid. All 3 bed cookie cutter Langford specials on small lots. If realtors would stop writing “affordable entry level” in these listings that’d be great.
3296 Merlin, list 699k, sold for 695k
3392 Turnstone list 679k, sold for 705k
851 Arncote Pl. (I drove out to see this one, you cannot even park a normal size vehicle in the driveway or in front of this place due to stop sign, garage for bikes only? so small) listed 650k, sold for 736k!
I’m glad we’re over the sadness and anger part of grief and into the laughing. We’re priced out, and I’m banking $1300/m in savings so have no way of catching up now unless something changes. Bring on the government intervention or whatever it’s going to take, this is gross.
“When the government thinks it can squeeze people more, this has always happened. People find a way around the rules.”
Monetary policy has allowed asset prices to inflate. Excess demand is created through programs that encourage home ownership. Banks circumvent regulations intended to tamp down demand by pushing up lending ratios for “qualified” borrowers. Building costs are rising because of requirements imposed at the provincial and local government level. Voters elect local governments that oppose development, except for six-storey condos on arterial roads.
That is where the squeeze is in my opinion.
On the whole, I don’t feel squeezed by federal and provincial tax policy (if that’s what you were getting at). What is happening in Victoria and Vancouver is happening across North America. I don’t think we can blame this one on the underground economy.
Let what go?
That Introvert is a terrible person?
Would be easier if she didn’t confirm it regularly.
Panko, not too concerned one way or the other. Delays with the roofing on the new place. But excellent advise
for a lot of people who are thinking of moving. This market could easily turn.
Kenny you call that an outlier. If you travel around Victoria and you travel around Oak Bay its pretty clear where the presence of crime is likely centered. I’ve worked in both areas, and while I would never want to live in Oak Bay, it definitely has less ‘sketchy’ people walking around. It’s not hard to understand why people would feel safer their. I’m sure the crime stats would back that up despite the Oak Bay murders.
PS James lets let this one go 😉
Leo…absolutely a “yes” to the idea of being concerned about high house prices. I don;t think it is a good thing at all.
I’m simply observing that as long as Vancouver’s best neighbourhoods are so outrageously high priced that it shouldn’t seem abnormal or “crazy” that Victoria’s best neighourhoods are going to be priced at least half of comparable Vancouver’s best neighbourhoods.
That’s been my yard stick for years and as I said years ago….Victoria is a good deal and it is no surprise to me that they have indeed come up. It doesn;t make it a good thing for society though.
I am convinced that what has really “decoupled” is the underground economy…everything from the guy building the back decks for people to drug money etc. When the government thinks it can squeeze people more, this has always happened. People find a way around the rules.
One of the owners is moving to Oak Bay since they decided that Victoria is turning nasty. The wife experienced a most unpleasant incident and just decided that they had it.
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I’m sure all the “bad people” dont cross Foul Bay, lol.
Funny thing in the 20 years I have lived in Victoria there has been 3 young children murdered by their parents, all of them lived in Oak Bay, I’m not sure what to make of that
“Not sure what to think of this market.”, Barrister? You should be thinking about accelerating your selling plans and get out of Dodge while the getting is good.
Patrick” The question is take the money and run where? One of the owners is moving to Oak Bay since they decided that Victoria is turning nasty. The wife experienced a most unpleasant incident and just decided that they had it.
So Deryk, as an artist you’re not concerned about the effect of high housing prices on that scene?
The only purpose to these arbitrary lists is to generate clicks and publicity for the sponsor. And it worked beautifully
Umm, hate to break it to you but the all knowing Governor of the Bank of Canada, Tiff Macklem, has stated that the housing market is only starting to show signs of ‘excess exuberance’ so this is all just figments of our stupid imaginations. This is totally normal with just a ‘pinch’ of liveliness starting to show up in the market. duh.
The people buying Edgemont…I tip my hat at them. They don’t give a shit because they are not buying the house, they are buying location.
I’ve watched people for years turn their noses up at houses because the “clown” inspector informs them…. with a dark look on his face ….that the hot water tank is over seven years old.
People are buying Victoria, a house close to their sons or daughters, etc., their work, or for any other personal reasons.
They recognize that Victoria is still cheaper by a long shot when compared to other locations nearby. Ha ha….. You don’t need charts and graphs under your arm to understand that. Not for the big picture.
Right, high prices and quick sales! Incredible to see this in the >$2.5m range. Many older/heritage houses like that in Rockland and elsewhere have previously taken years to sell, with little buyer interest shown along the way.
I also don’t know what to think, but the seller sure is in a great position, and “take the money and run” comes to mind.
Laughably singling out Langford while the entire greater Victoria area (pop 408,883) is ranked farther down. It also ranks Greater Vancouver higher than North Vancouver, which is part of the former of course. No indication whether they mean North Van City or North Van District, but who cares.
Thanks Leo! That is nuts… there wasn’t a single interior photo on the listing, but from what I saw driving past the place everyday it was a complete gut job…
$905,000 unconditional (is there any other kind of offer these days?). “This is the handyman or woman’s dream. The renovation of all renovations”. Unclear if it comes with the bin out front or not.
Anyone know what 1483 Edgemont sold for? Curious as it looked pretty rough but it is just down the street.
Actually, the 3,5 listing sold for 3.3 while the 2.6 listing sold over for 2.725. I believe there are no other SFH for sale in Rockland at this point. This is rather unusual to say the least. Not sure what to think of this market.
1 Langford
7 Cowichan Bay
11 Courtenay
13 Duncan
30 Victoria
37 Campbell River
54 Nanaimo
66 Parksville
82 Port Alberni
97 Ucluelet
155 Tofino
Langford ranked ‘most livable’ community in Canada — https://tinyurl.com/9d72zak7
Most Livable Places 2021: Canada’s Livability Report– https://tinyurl.com/tdv8pwch
Two houses in Rockland, one for $2.6 & one for $3.5, both sold within days! I’ve never seen a crazier market!
I didn’t forget. Obviously a ballpark but you can calculate it out fully, including what you would have paid in rent and whether you have suite income. I didn’t do that here, stating instead “minus expenses” but it is still many times more than the market.
Here is a link to a calculator from this site that takes into account the lost opportunity costs at the bottom:
https://househuntvictoria.ca/resources-2/
Stroller – if you sold for only $1.3 after buying for a mil, I’d also argue that the 30% might not be exactly accurate or that one pays a premium for brand new.
I own a detached townhouse that I bought in 2017 for 505. After ptt and CMHC the cost was approximately 525k. This is with a $26k down payment.
Last week i was appraised for 750k(15% above assess).
if I sold today my transaction costs would be 3k for the mortgage company and 25k for the realtor.
So I’d be up around $170k in 3.5 years from a 27k investment. Soooo, 70% return?
I believe the mortgage payment shouldn’t be counted, but if it was I pay around $1150/mo (interest and fees) for a 4br/4ba house in colwood. You would not be able to rent this house for double that.
Another item I’d note is that basically all of that gain is in the last 6 months. I had a realtor suggest I list for $580 in September.
But you would still need to live somewhere if you hadn’t bought the house. If you were to rent something equivalent, I assume you are spending around 3k a month, so spending 180k on rent in those 5 years.
Still a big windfall though. I don’t think you’ll be able to whittle it down.
Agree with you there. There is research that high ownership rates impede economic mobility. If you own and the market hasn’t appreciated it’s hard to get out and move to a better job opportunity. If you co-own it’s like hanging a millstone around your neck. If you’re lucky it works out, but the downside risk is way too high. With a relationship there is some expectation that your life will be somewhat comingled in the future. Not so with a random acquaintance.
No real way to dissolve it short of selling the whole place. Not like you will get anything close to market value selling half a house. So then whoever needs out torpedoes the other partner. Just so much less risk to buy something yourself.
The hypothetical you sketched out perhaps reveals some of the reason for the frenzy – missing information.
The hypothetical owner made 350 you say?
You forgot opportunity cost on the 200 downpayment for five years (at least 40k), interest on the 800 for five years (at least 80k in after tax (!) dollars, property tax of 25K also in after tax dollars, insurance 7k, etc, etc. It no longer looks like such a windfall
You bought with cash? If so that may be correct.
If not, your numbers may be off.
If you bought for 1 million, currently worth 1.350 and you put 20% down that means you made 350k plus principal paydown less expenses in five years on 200k or so – tax free. That is about 23% a year?
We are down to one house for sale in Rockland and I just saw a home inspection truck in front of it. Most unusual year.
Not trying to be a buzzkill or stir the pot but…
Bought a new house here exactily five years ago. It was low 900s and a new-build so once I had tugged my forelock and paid the government for the privelege of buying I was out just under a million.
If sales-to-assessed ratios are as Leo has suggested, I could sell now and be up about 35% on my initial outlay. That’s a little more than 6% a year which anyone with the dumbest ETF index portfolio could have easily exceeded if given the same capital to invest back in 2016.
Why are we all tearing around with our hair on fire?
Genuinely curious.
That particular unit is strata. In BC if you can’t resolve it among yourselves in a manner set out in the agreement you can go through the civil resolution tribunal for about $225.
https://civilresolutionbc.ca/resources/crt-fees/
“Likely less sales.”
Also the rich part of Gordon Head. Rich people are able (and perhaps willing) to substantially overpay in a hot market.
Likely less sales.
“How do stratas work in 2 unit town houses? How can you vote on anything?”
It would likely be a non-conforming strata where the owners do not vote on anything and strata fees are not collected. Maintenance of common property is worked out informally between owners. This is pretty standard practice for strata duplex owners. Seems to work pretty well, but not without risk of course. Could end up with a nightmare owner that doesn’t keep up their unit.
How do stratas work in 2 unit town houses? How can you vote on anything? i am talking about this place in particular:
https://www.realtor.ca/real-estate/22796838/a-3960-cedar-hill-rd-saanich-mt-doug
Leo, that’s great. Thanks!
Interesting how “spiky” Arbutus is compared to the other three.
I don’t think I can combine them into one. But here they are.
Leo, my man. In future, I’m going to have to check that you’re including all 4 subareas in your stats on GH! I kind of thought you were already doing that, because this discussion has come up in the past.
Not everyone lives in VREB’s quarter-slice of GH, you know 😉
Case in point, when Ks112 talks about his rental property, he says it’s in Gordon Head. And it is.
But according to the VREB’s subarea boundaries, his property is in “Lambrick.”
I know. And Leo neglected to include SE Mt Doug, SE Lambrick, and SE Arbutus in his graph for Gordon Head.
VREB breaks Gordon Head down into 4 subareas and confusingly calls one of them “Gordon Head.”
But when most people talk about GH (myself included), they are usually referring to the entire neighbourhood of GH as recognized by the municipality of Saanich:
Contrast that to the VREB map, which has GH broken down into 4 subareas (probably because GH is so large):
The issue of discrimination raised in the article is access to the very limited number of clinical placements required to be completed as part of the Canadian qualifying standards. I am unsure what you are referring to now as you referenced something different initially, but being required to qualify vs. equitable access to the training required to qualify here are different things.
No system is perfect. This is why we have disciplinary committees and complaints processes. I would suggest again that your statement appears biased and prone to black and white thinking and really has nothing to do with the issue of foreign-trained doctors and licensing.
Not all are halfwits but the system let enough through that is a disserving service to the public.
You haven’t presented facts, but links that don’t actually support your proposition in a factual manner. Your comments are always very well informed and factual when it comes to technical information on energy matters, which I appreciate, but you may wish to consider whether you are acting under confirmation or other bias here.
Calling those who get admitted into medical school and pass the licensing exams “bottom of the barrel halfwits” seems unusual and a disservice to the level of knowledge and effort required. I’m satisfied that our medical education is acceptable, but unsatisfied with our shortage of available physicians which cannot be safely solved, imo, by licensing foreign doctors without ensuring they have comparable education and knowledge and an understanding of the system. There may be more we can do to create openings for foreign doctors willing to jump through the hoops here.
You have the right to disagree even when face with facts.
As a tax paying citizen, I strongly believe that I should be able to seek the best medical service and personnel available in Canada and not some bottom of the barrel halfwit.
Some how it is hard to believe that there are discrimination for foreign born physicians, but no discrimination on foreign graduates that are pre qualify here in Canada.
Disagree. Strongly.
I’m not sure if I remember correctly but isn’t your wife is doctor from a country (Vietnam?) that is not deemed an approved jurisdiction? I understand this must be frustrating if this is the case, but the consideration of comparable training and requirement to jump hoops seems like a really good thing with this profession and you do not seem unbiased.
Whatever some world-famous surgeon you are related to said does not make it true and the article goes on to state that the reason for the lower drop out rate is Canada’s more difficult admission process and greater mental health supports in medical school.
And the human rights case you referenced is NOT about requiring extra training and licensing for foreign graduates, but it is about discrimination in accepting these graduates into the clinical assessment and in making them work in underserved areas for a period after this. In this they may well have a case, but it has nothing to do with the actual requirements to be assessed, examined and carry out supervised clinical work in Canada on the path to licensure which, imo, are reasonable.
A lot more imo. You’ll need a written agreement and divided legal tenancy. It is not common to see this when buying with a spouse. And you are assuming that you’ll live in the same space together. That is not my idea of the best solution based on my own personality. My view is buy something with two separate suites in one SFH.
This was the word of the famous Canadian surgeon (my sister late father inlaw); it has more to do with nepotism and making sure that the bottom of the barrel Canadian born graduate.
<– wife is a foreign born internal medicine specialist.
RADIN, Dr. Steve, M.D., F.R.C.S.(C) — https://tinyurl.com/jhzrzecv
Doctor Nepotism — http://www.medaholic.com/doctor-nepotism/
Why do students quit medical school far less often in Canada than in other countries? — https://tinyurl.com/ubmzupvs
Rights tribunal asked to finally end discrimination against foreign-trained doctors — https://tinyurl.com/tpjm4f6r
Our definitions of desperate measures differ. Mine involves life and death, not buying and living in one of two suites in a jointly owned house. That I view as an opportunity.
Reality is what it is and co-ownership is a pretty logical move in this market for those who might be looking at a condo otherwise but really want a SFH for ex. kids and a dog. It is an expectation adjustment to a reality that still involves a lot of options. I personally view co-ownership with agreements and joint tenancy ownership as a desirable interim measure and did back in 2013 when we first bought. Just wasn’t the norm and didn’t have any close friends with the means.
I would suggest what people are reacting negatively is change. Heck, internet dating used to be looked down upon not too long ago until it was clear that the benefits outweighed the reasons for the stigma and norms changed and now people doing this are no longer “desperate”. It is not going to be normal to buy a SFH here as a first step based on a two-income family median income going forward. If you want a SFH more than the alternatives open to you then your attitude is going to have to shift because the market doesn’t seem like it will.
Langford is Canada’s top livable place in 2021 based on a report titled “Urban flight: Canada’s top places to move to if you’re trying to escape the city”, compiled by rates.ca
As I said, you’re also entering into a relationship with the co-owners, with a lot less preparation. Living with someone else isn’t just a business proposition. Ask anyone who’s shared a rental – the difference is that’s easy to get out of and you haven’t put anything into it beyond a month’s rent.
And as someone else said, if the partners are a couple, you’re taking on their relationship risk as well.
As far as financial return goes, it seems to me that people resorting to increasingly desperate measures to buy indicates increasing unsustainability. But we shall see.
Sure, but with tenants in common and a coownership agreement in place I’d say your biggest risk is having to sell when you don’t want to.
Given the inability to get into the market alone, and the potential benefits that go with this if you do your due diligence vs. the risks, I’d say buying with a romantic partner without an agreement as tenants in common objectively poses a far greater risk overall given the 50% or greater rate of relationship breakdown. And yet this is accepted as normal in our society and people still come out ahead financially in most cases if they owned a home together for more than a few years.
I’d say that bailing a boat together is not an apt metaphor for joint tenants with an agreement. A house is not a sinking ship but an appreciating asset over time. It is just like any investment decision. Vetting a business partner is the biggest first step and you need to be motivated to go into it with a partner. If not, don’t do it.
Market activity.
Seems reasonable that ex. foreign doctors need to pass Canadian medical qualifying exams and a language proficiency test. Not all countries have similar medical training and equivalency of knowledge and understanding of our system. There are already fast-track routes for doctors from countries with similar training and requirements (approved jurisdictions).
Wow 20% down and 40% down for investors in NZ. I doubt we’ll see raises to down payment requirements but I think a bump for investors is a real possibility.
I think a brake on investing in detached homes as rentals may make sense. Let investors buy condos which we have a functionally unlimited supply of. That would have to come with a increase in purpose built rental construction of family suitable rental housing, and a relaxation of zoning rules so that kind of housing can be built anywhere
Even CBC paying some attention now: https://www.cbc.ca/news/business/canada-and-new-zealand-both-have-hot-housing-markets-but-only-1-has-plan-to-cool-things-down-1.5942438
It’s getting more likely that regulatory intervention is coming, I guess the only question is when and how much of one?
SE Gordon Head refers to Saanich East, not southeast
Feels like there’s merit to inflation adjusted cap gains. $100k in 1970 was around $580k in today’s dollars. If you sold the $100k place you bought in 1970 for $580k today, you didn’t really “gain” anything.
One unfortunate aspect of our immigration system is the inability of highly educated professionals from other countries to pursue their careers here because their credentials are not recognized. I have spoken to several people who had to take jobs that are far below their qualifications. They simply cannot afford to take the years of added education required as they have families to feed. I realize there are a lot of unaccredited Universities around the world hand out fake degrees, anyone can get one on the internet. Surely there is a way to qualify someone’s credentials and work experience. I guess there are just too many scam artists out there.
This market must be having a bit of a depressing effect on a lot of younger buyers.
The housing market is like the tech stock market right now. Value investors like myself are on the sidelines fighting fomo lol.
Thanks, Leo. But note that your graph appears to be only looking at the “SE Gordon Head” subarea. You need to include the three other subareas — Mt Doug, Lambrick, and Arbutus — if we want to get the full picture of Gordon Head.
Yea, the most irrational day I’ve seen in my career. The market is all over the place. Despite the insane stuff on the SFH end I saw some decent condo buys today, imo.
LeoS: Your CPA is not totally correct. Chocolate bar used to be a quarter; now 1.40. Sell it and you pay tax on the capital gain. Your after tax will not buy you another chocolate bar. Depending on the circumstances it is quite possible that you are being taxed on the very inflation that the government has created. Almost always, at the very least, your profit is diminishes to some degree by inflation.
The $1m is what my neighbor quoted. But ya 100k is what if I estimated it to be, which I thought was dramatic in 1 year and a little concerning to say the least.
Holy moly 4906 Alamida Cres.
Listed October 26, 2020 for $1,487,500
No action for 77 days.
Listing cancelled.
Listed March 3, 2021 for $1,499,000
Sold unconditional offer for $1,828,300
Discussion around capital gains, I’m reminded of what the CPA said when we were talking about suites
“It’s important to remember that you’re not going to pay tax unless you make money, so unless something good happens to you there’s no tax.”
https://househuntvictoria.ca/2020/10/15/does-a-suite-risk-capital-gains-tax-a-professional-perspective/
I don’t think it was that much although there was some pullback in prices for sure. What I did see was at least 2 properties in GH selling for what I considered to be $100k over market value back then in crazy bidding wars.
Here’s what the MLS HPI has to say about Gordon Head prices. Peak to trough is almost exactly $100k, but I wouldn’t put too much stock in that, pretty noisy.
You transferred your primary residence to your wife when you moved and bought another primary residence and turned the first into a rental? That seems like it was a smart plan if they have much less income or unused RSP room.
It is lower than if you have more leverage but, on the other hand, it is also more cash flow for those who cannot financially manage negative cash flow and some people just like not having a bigger mortgage payment.
Yes, however we will pass our assets to our children. As an aside, there is no PTT when you pass a primary residence to an adult child who lives with you and no income/gift tax either.
That’s wrong. At no point in history have there been no houses for sale under a million in GH. Not even close.
What’s Interesting to me is the amount people can afford for rent. I rent out my top suite for 2200 and the bottom for 1200 due to long term tenants. I am seeing comparables as high as 2700 and 1600. It’s crazy people can afford this as there hasn’t been much wage growth and we r in the middle of a pandemic where lower wage earners are hit.
Introvert just look at Leo’s comment about ppl overpaying in 2016/17 and now finally bailed out. There was one point in summer 2017 I think where my neighbor was boasting there were no homes under $1m for sale in GH. Then flash forward to late 2018 and houses comparable to mine were going for 750-800.
I was intrigued by the math on having no incentive to sell a rental property due to capital gains. We sold our rental a few years ago. We had transfered it all to my wife when we moved out completely converted it to rental and sold it during a year she had minimal income so we’re able to mostly exclude the capital gains from the highest brackets.
If you had originally bought the property for $500k and could now sell it for $1m. Let’s assume your original mortgage was $400k and now is paid down to $350k. Assuming sales/real estate fees of around $60, selling would give you a $440k capital gains. Worst case you pay around $105k in taxes.
So you would come out with $485k of cash to reinvest.
Refinancing at 80% bumps your mortgage up to 800k and frees up $450k to reinvest. So only a difference of 35k. So looking at it that way you could see it as only having 35k of your own money still invested in the house. There is $105k of unrealized tax liabilities and 60k of unrealized realtor liabilities. Your ROI on that 35k is potentially very large. If the value of the house remains flat you could be paying off $25k of the mortgage in year 1. I am not sure if you could be cashflow neutral renting this out and carrying a 800k mortgage. However if even your cashflow is negative by something like 10k a year, you are still making 15k on that 35k, so an ROI of 43% in year 1. Also your 450k in stocks (or bonds) only need to generate just over 2% in cash flow to compensate for the 10k cash out flow from your rental.
However keeping the status quo of having 485k of your money tied up in a rental would probably not give you a great ROI especially if the market stays flat for a while. Unless you are waiting to sell when you retire and have less income to reduce the tax hit.
Over the past 40 years, big price jumps have never been followed by big price declines. But this time could be different, I guess.
Was it that much? Maybe Leo can comment on this.
Bluesman….You are likely correct. They might very well be simply listed low to get a bidding war going as you say. (I should have thought of that:)
~5% less buying power for every 0.5% increase in mortgage rates.
I’ve seen a few sales of people that way overpaid in 16/17 now being bailed out by the market. Lucky this time, but yeah those people overpaying now might be trapped or facing losses if they need to sell in the short/medium term.
Introvert, because volitality means I am automatically exposed to an outsized move to the downside as well. You should know given u you have a gh home. I estimated there was about 100k delta between the highs of 2016/17 and the lows of 2018/19. I would rather consistent increases on an annual basis compared to volitality going either way. Now as we get to the upper band of leo’s affordability graph, a correction is much more likely now compared to a year ago. I don’t want my realestate investment to be volatile, I have my TFSA and margin account for that.
Lol, curlew just sold for 987k. 18 months after selling new for $691.
I assume the next batch of royal bay releases will be $1m+.
In the short term, unfortunately, I think the insanely awesome low fixed rate I have locked in until 31 May will go unused. In another couple of months, I will get a hold of my broker and see what I can lock into going through the summer and fall. I just have to see what appears with the increased inventory down the road is worth paying the higher rate. However, right now, I can’t get into the battle for properties going 200k to 300k over ask at any rate that’s offered. Especially with properties that have significant flaws (at least from my perspective).
Why is one so much better than the other for you? We’ve established that your properties taxes won’t increase simply because the value of your house does.
Makes sense. If there’s one thing I know about this market it’s that you really gotta flog listings to get rid of them. Only the properties with the best marketing have a chance of selling.
UVic preparing for in-person learning this fall
https://vancouverisland.ctvnews.ca/uvic-preparing-for-in-person-learning-this-fall-1.5340246
As a home owner although I am not complaining about the price jump, I would definitely appreciate a consistent 3% growth in price every year than prices being this volatile. Now there is a real risk of a 10% correction once the craziness settles.
Less demand.
Sorry Deryck, meant to say Vic SFD Benchmarks are 45-50% lower than Van. Even more of a difference.
Some of the pending sales coming through are off the charts irrational imo…there is going to be a lot of pain when the market goes flat which it eventually will.
Irrational logic all over the place. Career wise I would say I get 90% of the listing presentations I physical go to just by pitching the lower fees. This year it is 50/50%….getting so many emails back “sorry, other agent offered more marketing avenues.” Who cares about 10k in fee savings when the house has gone up 300k in 3-4 months. You can pay the agent the equivalent of a Tesla and buy three yourself just based on a few months of appreciation 🙂 I don’t think this will end well long term.
“Stricter Government rent controls, Increased tenant’s rights , Increased difficulties in getting rid of bad tenants, The increased restrictions on renovating suites and asking for rent increases to match the improvements, buildings become more worn and harder to rent, etc etc”
There is no rent control between tenancies, which means that unit turnover is your bread and butter as a landlord. You can set the rent at market rate when constructing new units so the temporary rent increase freeze doesn’t factor in. The provisions for evicting bad tenants have not been changed. Not sure that changes around renovictions would have any bearing on deciding whether to invest in new construction since building renewal shouldn’t be required until when…maybe 50 years down the road?
One thing on my radar is all the “Rental” buildings being built. I have a friend/developer who puts together the financing for some of these fairly major projects. What I wonder is: the people who put money into these kinds of projects and expect a monthly return on their investment….. what happens when they begin to realize that the rental market has a number of downsides. For example: Stricter Government rent controls, Increased tenant’s rights , Increased difficulties in getting rid of bad tenants, The increased restrictions on renovating suites and asking for rent increases to match the improvements, buildings become more worn and harder to rent, etc etc.
I’m left wondering, if, over time, it will be become more difficult for the developer to give the investors the return that was guaranteed . Will there be pressure to switch these projects be back to regular condos? Can that even be done? I’m not sure anyone really knows for sure what will happen. More regulation could at least put a damper on new such buildings being added I would think.
Deryck – so you don’t feel the “ask” price at 14th and MacDonald is simply bidding war bait and irrelevant to the sale price, as in Victoria? 30% over ask gets you closer to your $3 million mark. I don’t know how one could expect a Vancouver bubble bursting, or lets just call it a correction, not to translate to Victoria correcting too. Over the past 10 yrs Vancouver benchmarks SFDs are about 45-50% higher than Victoria. In recent years it is closer to 45%. I still maintain there will always be a healthy premium in Van vs Vic. I really enjoy Vancouver and can’t wait to get over there sometime this year and see all the friends I’ve missed.
“You’re setting sail in a boat that both of you have to keep bailing to keep afloat” ha ha ….isn’t that the truth.
At the same time, if there is no other way it might be worth it as long as you go into these things with your eyes wide open.
Personally, I’d avoid going into a shared purchase at all costs.
Could be numerous other causes short of bankruptcy. Inability of co-owner to meet the mortgage payments due to job loss, divorce, illness, interest rate jump. Or a court judgment against one of the co-owners – divorce again, lawsuits. Or death.
You’re setting sail in a boat that both of you have to keep bailing to keep afloat.
Asquith went for 200K over listing (31% more than assessed) – a pretty good bidding war was setup there.
I agree. Should be interesting to follow teranet over the next few months to see if they catch up with the recent jump in prices.
A cool $1.1M.
Anyone know how much Asquith went for – it isn’t showing up in my matrix feed anymore.
Re: CoVid 19 outbreak in Kelowna Nursing Home where residents had been vaccinated.
The vaccine prevents serious illness, hospitalization and death but does not prevent transmission of the virus. That is why we will be wearing masks etc .for some time to come.
Tenants in common works with co-ownership agreement. Doesn’t protect against being required to sell if one party declares bankruptcy but does protect your share of the proceeds and you can own unequal shares – ie. less for the smaller suite.
Easiest and most affordable way is to get a large house with an above ground no-stairs suite, or legally suite it rather than a rancher – you won’t find a 3000 square foot rancher outside of Uplands most likely. There are more up island in Parksville/Qualicum. We bought multi-family – two units have no stairs – but it is no longer affordable and they are rare. If you are buying a duplex you won’t save all that much and each unit is usually sold separately, there are some non-strata duplexes out there but they are also rare.
The greater the capital gains on non-primary residences the greater the tendency to hold and withdraw capital via refinancing. I’m also not convinced that landlords selling makes the market “better” as it likely reduces more affordable SFH rentals that would be uneconomic to replace at current costs and with current barriers to development and land restrictions.
The odds of winning the lottery with six numbers are 1 in 13,983,816.
The odds of experiencing appreciation as a homeowner in Victoria if you hold for seven years or more appear to be close to 100%.
Cash flow return is not the way to invest imo unless you no longer work and need the money for living expenses or can’t manage a negative cash flow and cover your living expenses. You need to consider the overall ROI if you are investing now for later gain.
Does not make sense to us as we refinanced 80% LTV appraised for 800k
640 mortgage
160k Loc can spend on whatever we want or invest and then the interest is tax deductible.
If we were to sell, after paying realtor fees, capital gains etc, we would be left with a similar amount and not have mortg pay down, cashflow and appreciation if any.
Possibly. But look at the Case Shiller CAPE Ratio. Forward returns looking not great
I was looking at Kitsilano, Vancouver houses, and I’m a bit surprised by their prices. Not quite as high as I would have thought. I Know for a fact that one simple bungalow, at 14th and McDonald, was offered just under $3 million at Vancouver’s peak a few short years ago. Now I see similar ones being offered at $2.3 million. That surprised me because I keep hearing how prices in Vancouver are on the rise again.
Still….for anyone selling that Vancouver Kitsilano bungalow….they could still buy a house in Victoria and put lot’s of excess money in the bank.
I also believe that when the Vancouver Bubble bursts, there would likely be a lot of people fleeing the sinking ship before they lost more money and would be looking at areas like Victoria etc.
There is lots of room for upward movement in Victoria, but I’d say the peak is getting closer. (Maybe this spring will establish the peak is my guess.)
“decided to refi and keep, house still cash flows”
If you sold the house, settled your tax bill, and put the money into a balanced and diversified account the annual proceeds would almost certainly exceed your current return on the equity lodged in your home. Rents in Victoria (and everywhere in Canada) do not reflect the costs of purchase and transfer, opportunity cost, insurance, and maintenance.
Of course, many landlords have made large gains on their original purchase price but this is purely a speculative play and/or good fortune. If after selling your rental property you miss that little frisson just put aside $200 a month to buy scratch cards and lottery tickets. You will still be ahead in cash in cash flow.
Another great article Leo!
I’m in the same position as R haysom, single family house with a suite, bought in 2004, it was my principal residence for about 7 years, rented out the suite and the extra bedroom the whole time I lived there, this house no longer fits our investment model and we considered selling it last year, until looking at what we would pay in taxes, decided to refi and keep, house still cash flows
Yeah I can’t explain this discrepancy either. Even the MLS HPI which shouldn’t lag says Victoria single family is up only 10% year over year.
Seems obvious to me that prices are up more than 10% just looking at sales and sales/assessment indicates more like 25%.
I wonder if the market is going so crazy that the repeat sales indices are rejecting more sales as outliers.
When the head of the mortgage broker lobby is calling for cooling measures you know the market is scary.
“A 40% equity downpayment for a rental purchase is a whole lot more of a stringent requirement than we have here. Those types of things are smart for our domestic regulators to be considering,” said Paul Taylor, chief executive of Mortgage Professionals Canada.
https://www.cp24.com/news/canada-s-housing-market-is-clearly-overheating-but-policymakers-aren-t-intervening-1.5337249
Frank….. good on ya.
When I hear some people mention that we should all own stocks instead of rental property, I always think of the benefits of owning places to rent to people. The return is not always about money as Frank points out.
Good to witness.
The multi-generational use case I’m considering is: aged parents looking for a home to spend their final days and the child (plus child’s family) who are caretakers of the parents. If it weren’t for mobility concerns precluding stairs, side by side duplexes would likely be one of the ways to go. I say that because it allows for both parties to live completely independently (ie. not share a kitchen like in the article Totoro posted) and also allows for separate legal ownership of the “joint” property lessening concerns regarding risk of exposure to creditors through events like bankruptcy or marital breakdown. I’m not sure if this kind of legal insulation can be achieved with joint or tenants in common ownership on a single title with something like a joint venture agreement. If so, then the suite arrangement Leo describes could work. Another consideration is if one of the parties needs financing for their part of the property but the other does not – how does that change things?
Ideally the property would allow for single level living for the parents such that they do not feel like they are living in a basement. At the same time, they want to be within walking distance of basic amenities. Assuming 1500 sq/ft per household, that would mean 3000 sq/ft total and if half of that is in the form of a rancher for the parent, you’re looking at a fairly unique building, a larger than average foot print thus requiring more land which drives up cost, perhaps well beyond 2M. In the core, I think this is likely a unicorn in the price bracket but I think further out on the peninsula, like around the Saanichton town center, it might be a possibility.
Using a benchmark price can be a useful indication of house prices. That measures the cost of buying the same type of home, not skewed by the cost of shifting from a condo to SFH. Using a benchmark, SFH are up a more modest 10% YOY (Jan-Jan) in Canada, and 9% YOY in Victoria (source teranet, using a 3 month rolling average). Since BC assessment values for Victoria measure the same property, I’d expect them to be up (July 20 to July 21) closer to the Teranet value (9%) than overall averages (23%-25%)
Thank you Leo for your graph on SFH for sale. Basically there are less for sale than at any other time in the last ten years. And ten years ago the total inventory of SFH was less. Of the limited number of houses on the market 60% are over a million.
Now would be an opportune time to sell my property in LadySmith. It appears that there are fewer than 30 SFH for sale and LadySmith had the largest population percentage gain( higher than Langford) of communities over 5000 people. However, according to my property manager, there is no place for my tenants to move to. I simply cannot do this to someone, especially when they are caring for an elderly parent. I also won’t make any income from the property this year as I’ll be investing approximately $15,000 on improvements. It’s a dilemma that I’m fortunate to have.
Just not true, even in Victoria. Just about every US city (including Seattle) fell more than that a decade or so ago. You have to go farther back in Canada but Victoria fell more than that in nominal terms (and a lot more in real terms) in the early 1980’s. Vancouver was down 35% nominal and 50% real.
Stress test seems to have completely stopped working as a way to curb highly indebted borrowers (red line percentage of borrowers with 450%+ debt to income)
I’m not paying any taxes until the feds release a budget. https://ampvideo.bnnbloomberg.ca/two-years-and-counting-feds-not-planning-for-march-budget-1.1574048
Probably won’t be back to pre-pandemic though just because of the higher number of rental completions. But yeah very likely down from the 2020 figures.
Mother in law has been living in our suite since 2013. Works out great for everyone. No/low housing costs for her, we get help with many things, kids have their grandma around and everyone gets along well.
At some point we are considering upgrading to a house on a bigger lot with room to drop a garden suite in the backyard to give the kids a separate space and hopefully keep them around longer while they go to university.
Highly recommended if the relationships are good.
Went for a drive and walk out Metchosin way over the weekend. The amount of building around Latoria and Royal bay is mind bending. Blasting rock to push a road through/ subdivisions on both sides of the road. The hobby farm home owners around there must feel she’ll shocked literally and figuratively. I came home to look up the prices and they’re almost worse than the core. That’s for the very few actually available. Traffic also sucked but part of that had to do with the highway out to Sooke being closed. I foresee major traffic headaches with the lack of arterial roads.
I have experience with this. What do you want to know.
Garth turner, today:
“Will prices plunge as the pathogen fades?
Nope. Not without government intervention. There’ll be no retracing back to 2019 levels. History shows that after a bubble occurs prices can retreat 15% or so, but four-fifths of the inflation remains.”
Ummm, isn’t this guy the bear of bears? We’ve gone from being a hot market to a ‘whose line’ market: where everything is made up and the points don’t matter.
Although I swear, everyone is in on it. I’m looking at a refinance of my townhouse. Appraisal came back today $160k higher then the highest any house in my complex has ever sold for (including 10ish sales last year).
My best friend’s mom is there. They are not releasing information yet on the severity of symptoms which is hopefully lower. The second dose was delivered February 22 so there should have been some time those vaccinated to develop some immune response.
Coming to a neighborhood near you….
https://calgary.ctvnews.ca/a-comedy-of-errors-more-dream-home-nightmares-in-southern-alberta-1.5338960
Remembering the leaky condo crisis and other boom times in BC construction that resulted in poor workmanship (or is it workpersonship now?) when trades get to name their price and everyone is too busy to follow up on credentials. I imagine that we will have similar stories here in the not to distant future. The best part of the story is that it was the structural insulated panel supplier was one that said they couldn’t put their product in because the build was unsafe (at least someone was honest).
Co-ownership.
https://torontolife.com/real-estate/these-families-just-co-purchased-a-900000-semi-in-mount-dennis-now-theyre-learning-how-to-live-together/
https://www150.statcan.gc.ca/n1/pub/11-626-x/11-626-x2019006-eng.htm
What do we make of this?
New outbreak of COVID-19 in B.C. care home where residents and staff were already vaccinated
https://www.cbc.ca/news/canada/british-columbia/new-outbreak-covid-bc-care-home-1.5941508
Two staff members and 10 residents have tested positive at the Cottonwoods long-term care facility in Kelowna … Henry said that all staff and residents at the home were offered immunizations and that there was very high uptake of the vaccine. She said some of the cases were among people who had received two doses of the vaccine.
If the feds really wanted to increase the number of properties for sale, they could just increase the inclusion rate for capital gains on RE to 100%.
Effective January 1, 2022.
But you wouldn’t. You’d sell the house for as much as you can get, just like anyone else. Also if there were no capital gains tax on investment properties that would be an incentive for buyers to pay even more.
Ministry of Advanced Skills & Training just announced that all BC colleges and universities would be back to full time on-campus this fall.
https://news.gov.bc.ca/releases/2021AEST0015-000406
Expect a tight rental market again this summer?
$925,000
Does anyone know what 4327 Ridgewood cres went for?
Yes. Active as of this moment are 289 single family homes (not new construction). 39% are under $1M. 20% are over $2M
And as a principled libertarian stand I am going to do more shoplifting until the government abolishes the GST. Live Free!
No incentive to sell. Banks give you nothing for your deposits and properties are going to keep going upwards for some distance yet. Why would anyone sell when their investment will still make more than a full time job?
More supply needed. Less bureaucracy.
Has anyone here given any thought to, or better yet, had any experience with multi-generational homes in Victoria? The median end of the market is on fire which might make median priced household consolidation attractive. An example scenario would be two 900k homes, one owned by a child and the other owned by the child’s aged parents. Given recent market activity, each house could fetch a 15% to 25% premium. The two households could then amalgamate and use their combined capital to move into the 2M+ segment. Activity in this high priced segment is less feverish giving more time for evaluation and commanding less of a premium yielding better value. You see this fairly often with South Asian and some East Asian households at varying scales in parts of the lower mainland but I don’t see it happening very much here, South Asian population or otherwise.
Great, you’re in the fortunate position to own multiple properties (I assume), keeping a SFH as an asset after you moved out and improving its value over the years. None of that would have been possible without taxes for infrastructure, support, etc for a broad number of people (your tenants, their downstream customers, etc).
Let me know if my assumption is wrong and you don’t own your current primary residence, or if my numbers are off. Because AFAIK at most you’ll end up paying 25% of the gain in taxes. You’re upset about $200k gone on $800k gain. Let me know what part of this all I don’t have a clue about. Because all I see is someone complaining about having to contribute back to a society that they’ve been able to gain so much from.
I am in support of capital gains especially on principal residences in some form (max amount you can be exempt for, etc.), the question is does it reduce inventory as sellers are less likely to sell? At the same time would not it reduce demand as there is less speculation and less sellers means less buyers (those sellers aren’t turning around to become buyers).
Garden Suiter, get your tiny violin and bow away. I have owned that property over 15 years lived there myself for four years, did all kinds of work to it have worked with tenants for eleven…you just haven’t a clue.
Getting away from taxes for a moment, am I imagining it or is the inventory for SFH almost nothing?
R Haysom:
Cap gains tax is 50% of the gain added on to your income, which is capped at 48%. So you’re upset that you have to pay $200k on your good fortune of making $800k+ of gain in a bull RE market? You’re still up $600k just on this one property alone, let alone any others and your primary residence. Let me get the world’s smallest violin for you.
It’s a low yield world out there. Expected return in equities is also low right now due to high prices. Part of the reason there are so many bubbles popping up everywhere. If you’re getting 10% returns it’s easier to be patient and get rich slowly than when you’re getting half that. Tempting to jump into the ponzi scheme of the day but of course the expected return from those is negative.
Sold $1,010,000
Same dilemma here. Given the current prices return on my condos is poor; however, it isn’t like I can simply sell and re-invest in something else like the stock market. Problem is I have less money to re-invest even if the return is better elsewhere due to taxes so might as well just keep the units long term.
Wow Leo, I am very surprised, that has the potential that over 20% of SFH could be rental.
R Haysom – It’s actually amazing that you managed to call out the gov’t for only wanting to line their coffers while simultaneously dreaming of a world where you don’t pay any tax on your windfall capital appreciation. This is an absolute all-timer HHV first world problem post.
You can’t really believe that making non-PR speculative real estate investing tax-free would make housing more affordable.
I’m genuinely curious what your end game is here. Wait for a market correction so you can sell lower and really stick it to the gov’t? Hold forever to avoid paying tax? You can’t take it with you.
Personally I think 50% inclusion rate on cap gains is a pretty sweet deal considering 100% of employment income is taxable.
4045 Saanich Road asking $900000 sold about a week ago.
Could someone please provide what the sale price was thanks in advance
I give them a little slack, the majority pays little attention to details and the government communications planning and execution around the entire Covid-19 event has been terrible. Just because they have people talking to public from all levels government almost daily, it doesn’t mean they are saying anything substantive (mostly bureaucrat speak to be seen saying something without actually doing anything; just to be seen that they are), so the public unfortunately acts on half knowledge. Then you get problems with 1.7 million calls (I say calls because it’s likely not individual representative, but a lot of same trying 10 times trying to get through) instead of the 82k it’s intended.
I wouldn't call them stupid. I would call them selfish.
The majority knew it wasn't their time to call and book.
Not precisely. However in the CMA:
128,790 people own one property
16,345 people own two properties
3,230 people own three properties
1,455 people own four or more properties.
I believe these are all residential properties.
2018 data, Tabel 46-10-0038-01
You just said that you think taxes are going to increase considerably soon. The incentive would be to avoid those no? They’re not going to magically go down to 0. So pay less now, or more later.
Rush4life
“Personally i hope they totally abolish the
tax and then prices drop and you won’t have to worry about paying any taxes. Would that be better?”
That’s exactly what I was saying, and you’re damn right that would be better.
Remember “James Soper”, I’m not just paying taxes on my rental capital gain income, but selling increases the % of taxes on all my other non rental income…..yeah so there is very little incentive to sell.
LEO
Any idea what the % of SFH in Victoria are rental?
Yup Josh, you are probably right, but at least I would sell my property along with many other rental owners and that would greatly increase the inventory for sale and that could well bring the price down.
Call centres opened today for people aged 90+ and Indigenous people 65+ to book their COVID vaccination.
There are only 82,000 people in B.C. who meet the above criteria.
So of course 1.7 million British Columbians called in this morning.
Simple question: why are people so stupid?
https://vancouverisland.ctvnews.ca/b-c-health-minister-urges-patience-after-enormous-volume-of-calls-for-covid-19-vaccines-1.5338474
I still think they should separate lending rates for mortgages from others. Other parts of the economy need low rates but having the same low rate for real estate is getting quite dangerous.
If the gov reduced taxes around selling properties, the savings would absolutely not be passed on to the buyer.
You’re late to the party, rush4life. There are 1,720,000 Canadians doing exactly that already.
How many months of SFH inventory. Just by way of impression I am getting the feeling that there are not that many SFH listings.
tax avoidance/minimization is a lot easier when just receiving rental income. it becomes pretty black and white when selling so i can see why home owners don’t want to sell. I really wonder the % of home owners not reporting rental income.
You guys i’m so mad. I worked this year and the government wants to tax my income. Who do they think they are!? I’m not going to work again until they stop taxing me just to show them.
R Haysom what a greedy statement. Did you not know about capital gains tax when you bought the place? You should do some research before spending hundreds of thousands of dollars on a SFH. Personally i hope they totally abolish the tax and then prices drop and you won’t have to worry about paying any taxes. Would that be better?
So if you sell now you’ll end up paying $100k less in taxes, but you won’t because you have to pay any taxes?
Sounds smart.
I would be interested in selling my SFH in Victoria if I wasn’t facing a $200,000 capital gains tax hit. What’s most likely with the next Federal budget is the capital gains tax exemption will be reduced to just 25% thereby increasing my tax hit to $300,000.
Imagine if there was no capital gains tax on rental properties, I could sell my property for $100,000 less in favor of the buyer and I would still be $100,000 ahead. But guess what, the Feds are only interested in padding up their coffers.