March 22 Market Update
It’s been one year since the pandemic hit the real estate market in Victoria. Few predicted that we would still be in the middle of it 12 months later, and no one predicted an unprecedented economic shock would ignite an ultra hot market across the entire country. Year over year comparisons will be meaningless for the next couple months, because we’ll be comparing to some very depressed March and April 2020 figures, and then comparing against the pent up demand from last summer. For the daily sales chart, I’ll be comparing to 2019 which was a more normal year, but less active than 2020 and so in the last two weeks sales are up 69% from two years ago.
| Mar 2021 |
Mar
2020
|
||||
|---|---|---|---|---|---|
| Wk 1 | Wk 2 | Wk 3 | Wk 4 | ||
| Sales | 254 | 508 | 769 | 608 | |
| New Listings | 323 | 621 | 939 | 1084 | |
| Active Listings | 1338 | 1329 | 1334 | 2252 | |
| Sales to New Listings | 79% | 82% | 82% | 56% | |
| Sales YoY Change | +54% | +51% | +64% | ||
| Months of Inventory | 3.7 | ||||
Despite a few more listings coming online late last week which was a hopeful sign, inventory barely budged upwards for the week as sales continue to closely hug new listings and anything priced remotely close to the market sells within the week.
Some 60% of single family properties have gone for 1% or more over the asking price in March. That’s far more than the 28% of condos that did the same, but if you look closer at the most popular (and lower) price bands for condos, it’s starting to get close to 40% there too.
For single family homes under $900,000, over 70% are going over ask, with every one of the few remaining listings under $600k (put there by deliberate underpricing) doing the same.
Price indexes are lagging the market, but outlying areas rose the most
There’s something odd going on with the MLS and Teranet repeat sales home price indexes. Both indicate about a 10% increase in single family prices from last year, when the reality is at least double that. The same is happening in Vancouver, with the indices substantially lagging actual price changes. It’s unclear why this is happening – I’ve found them normally relatively good at tracking price changes – but one potential reason may be that the algorithms reject outliers, and the market is so hot that more sales than normal are being rejected as too high to be reflective of the market. I suspect at some point the MLS HPI will have to make a sizeable jump to catch up to the market, which will be just as irrational as the current lag.
Regardless, the HPI should still be useful in comparing appreciation across our areas, and it’s indicating substantial differences in appreciation rates. In the last year the MLS HPI indicated an increase of 19% in the price of houses around the Malahat and 21% in Central Saanich, while Colwood rose 15% and core areas were up around 8-10%. The higher appreciation areas being primarily further out where there were still more affordable detached homes available to buy. With a return to mostly in-person work looming for most and the associated longer commutes, it remains to be seen whether those areas’ outsized appreciation can be maintained. I’m betting that many of the pandemic living changes will swing back rather quickly when the pandemic is behind us.
Another look at construction levels
Inspired by Ben Myers’ post about deceivingly high construction levels in Toronto, here’s the same analysis for our rate of construction in Victoria. If you just look at unit starts, it seems our current construction boom dwarfed the previous two in the early 90s and 2000s. But the mix of units has shifted, with much of the current volume made up by apartments rather than detached or semi-detached properties.
Adjusting the construction rate by the typical new home sizes, we see that the current boom, while still impressive, isn’t that much bigger than the previous ones. In the last year, the median new detached house was 2350 sqft with 4 beds, while the median townhouse was 1460 sqft with 3 beds, and the median condo was 875sqft with 2 beds. Holding unit sizes constant (in reality unit sizes have decreased so this is generous) we can estimate the rate of construction in terms of floor space instead of units.
Most of those apartments are new rentals which is great and desperately needed, but if you’re a family, some 75% of the current construction starts won’t be of use to you right off the bat. Then unless you’re relatively wealthy another 15% or so which are single family will be too expensive. That leaves only about 9% of new construction that could be suitable and attainable. Our cities will have to grapple with their failure to create family-suitable housing now and in the future. Right now the westshore is still carrying the region in building net-new detached housing, but we are likely to run out of easily developable greenfield land within the decade. Unless we can figure out how to efficiently build infill by then the housing crisis will get dramatically worse.
“Why not get rid of the elder option and just have the hardship one – that was the ppl who need it get it and the rest don’t.”
Sounds logical to me….but somehow things that land in the lap of politicians seldom are dealt logically.
New post: https://househuntvictoria.ca/2021/03/29/mortgage-insights-a-new-measure-of-affordability/
Why not get rid of the elder option and just have the hardship one – that was the ppl who need it get it and the rest don’t.
R Haysom I understand that – but if you get a reverse MTG you can use that to pay your property taxes. That’s what I’m saying. Also the interest rate is 0.45% for elderly which is what you – and everyone else is referring to – 2.45% is for hardship and families – https://www.google.ca/url?sa=t&source=web&rct=j&url=https://www2.gov.bc.ca/gov/content/taxes/property-taxes/annual-property-tax/defer-taxes/interest-fees&ved=2ahUKEwjtnPG1-dbvAhXNop4KHW17DyYQFjAAegQIBBAC&usg=AOvVaw1970IeyeK1OHn37htw3dWP
Good point R Hanson, some elderly people even stop paying insurance on their property, that’s a red flag indicating maybe they should sell their house. That would also disqualify them from a reverse mortgage. Hope I never get into that situation.
I don’t know much about reverse mortgages, other than I would never take one out. I guess other people think the same way.
Rush4life:
All Reverse Mortgage Companies require that you pay your property taxes. If a person doesn’t pay their taxes that is considered a default on the reverse mortgage. For those people that have an outstanding property tax balance it has to paid off from the reverse mortgage funds.
In some cases the mortgage company will hold an amount back to pay the future taxes and charge the owner interest on that money as it is disbursed.
So I’ve done some research on the BC Property Tax Deferral program and can see how it gets under some people’s craw.
It is a very generous program and can easily be abused. It has been around for a long time (1974) so it probably doesn’t make too much impact on the current RE market, as there are probably close to as many people signing up for it, as there are who are passing on. I can see it having had an impact in the early years of its implementation when suddenly a large no. of tax payers were suddenly removed from the tax role. The interest rate of 2.45% is very generous and likely attracts people who otherwise wouldn’t take it if it were higher. The age of 55 likewise is generous especially if those people are gainfully employed.
Otherwise it is a compassionate program especially for the infirmed, persons with disabilities, widowers etc.
Frank as I mentioned they don’t need to get a near free loan from the Province when they qualify for a reverse mortgage.
The property tax deferral system everyone is against could be saving tons of money for the government. Here’s how- instead of keeping seniors in their own home, the only alternative in some cases would be heavily subsidized personal care homes. That could cost the government $100-$200 a day. That could translate into an additional $40,000-$50,000 per year. Makes the tax deferral look really cheap.
I would imagine the majority of elderly could get a reverse mortgage and just finance it themselves rather then relying on the Province to pick up the carrying costs.
Just to be clear, PTD doesn’t reduce municipal revenue. It is a practically-interest-free loan to all old people.
IMO, it is bad policy, but I’d hate to see it eliminated. It is valuable for many old people and it’s a relatively cheap program(the Homeowner Grant costs the province significantly more). The problem is that it isn’t income tested. Slap on an 80k\household income test and we’re done.
It could reduce utilization, could probably be implemented in a few months, and would probably piss off nobody. As far as forcing old people away from home, I mean, I get it. I’m a millenial: screw all boomers. But like, my mom is also 73 and is losing her faculties. She’s already downsized, but if she hadn’t I wouldn’t her to spend her later years worried about a crippling tax bill because she likes living in the house she’s lived in for decades.
Just seems wrong.
I’m against property tax deferral when it’s based on age because it’s not based on need. It’s helping literal millionaires stay in their homes while the city is making cuts due to decreased revenue, and during a housing crisis (that the city talks about regularly) to boot. The interest on deferral is so low that financial planners publically tout doing it and investing the money for larger gains instead. Policy needs to be abolished, if you can’t afford to pay your property tax sell the place imo. Would increase inventory and would move older people into smaller places they could afford.
Patriotz, why are you so anti deferred property taxes? “property tax deferral being the most egregious.”
What is the interest COV charges on deferred property taxes?
In the case of an elderly person being able to stay in their home because of property tax referral surely is a good thing? It is emotionally dramatic for elderly people to move if they don’t have to or want to.
“It was a good week for housing in the city”
It certainly was if you happen to be someone who pays no tax, contributes nothing to society and happen to be in the market for a free new home. On the other hand, If you are a dutiful taxpayer or happen to live near these joyful free houses, not so much.
According to the TC, these free homes are also permanent (!) and have “around-the-clock supports”. Any way I can get some of that for free? I’m a little wan from scraping together my property tax….
“There really is enough housing to go around, it’s just misallocated”. Are you suggesting that investors are purchasing the majority of these homes? At a vacancy rate of sub 2%, I don’t see it.
That’s you assuming property tax deferrals lower housing supply. If you want to make your point, don’t just repeat it, provide some evidence. Such as pointing to some data showing higher housing supplies in provinces without deferrals. I don’t see it.
Also, you declared yesterday that “Of course we’re accommodating them [housing for new arrivals]” but today you say we have a “lack of supply”. Which is it?
Duplexes with suites….I would be in strong support of this!
Surprised nobody has posted this yet
https://lisahelpsvictoria.ca/2021/03/28/community-making-requires-housing-of-all-sorts-three-big-ideas/
But I was talking about stock, which is something different. Stock is the total amount of housing. Supply is the amount of housing for sale.
I do think there is a lack of supply exacerbated by government policies, property tax deferral being the most egregious. There are more SFH in metro Victoria than there are households with 3 or more people. There really is enough housing to go around, it’s just misallocated. Some of that is due to income and wealth inequality which are admittedly hard to address, some is due to wrongheaded government policies, and some is due simply to the attitude that the more house you have the bigger payoff you’ll get.
“Seawood went for 1.3”
hmmm, prob. not that great then unless it is a long term hold.
Seawood went for 1.3
That’s an analytics position. None of your forecasts would be taken into consideration.
Yes. There are still some of those out there for sure. Especially in the west shore.
Can you find a house currently for $1M that has a suite generating enough income which will pass the stress test?
not for a million dollar home anyway.
With those stats you wouldn’t need a co-signor unless you had bad credit or lots of other debt.
Cadbo, I would say to buy a SFH right now, you probably need a minimum of: $200k down payment, $150k HH income, a suite and likely a cosigner. So the real question is how many people fit those categories versus how many houses are for sale.
What kids are you guys talking to? Bootstrap mentality is rare in millenials. I find most of my peers & colleagues resonate with the generation squeeze dialogue and even the privaledged ones recognize the help they’ve had and don’t hide it. Finances and politics are anything but taboo in my social sphere and thats talking to my peers and also parents etc. I know how much my friends paid for their homes and what financing it took to get them there and it’s pretty normal discussion.
Of my friends with a SFH in Victoria area, the only ones who did not buy with parental help had sold another house elsewhere (AB and ON) to get in here. Parental help ranges from: parents built a house then sold it to kid for cost, parents contributed 20% down, inheritance from a grandparent brought savings up to 20% down, parents allowed kid to live at home while in university rent free and then kid bought with the savings, grandparent gave part of a downpayment but kid was still high ratio, parent died and kid moved into their home, parent loaned part of the downpayment (I’ve seen this with 3x friends).
4508 Seawood Terr says waiting for deposit now. Anyone know what it went for? If it was around asking price then I would say there is value there given the current market. Looks like you can build a garden suite pretty easily on that lot plus it has ample parking.
Monday
Sales: 1032 (+79% over last year but this is basically meaningless)
New lists: 1291
Inventory: 1370 (-39%)
Some murmurs of softening. New post later today
I once worked in a company where over the course of a year my boss was replaced twice. 1st guy made 120k/yr, 2nd made 220k, 3rd made 180k. All of them had performance goals that could’ve doubled that.
As far as CMHC goes, I’ve never worked in the public sector outside of the bc government. But for the BCGEU a person with 4 years tenure in a role makes 14% more then a new hire. And someone in a role that requires a professional degree will normally be under implemented one grade lower(10% pay reduction) until they finish their degree.
And in demand degrees actually get paid a premium over their union classification that the trainee wouldn’t get.
So in the bc province if a hiring manager were looking for an entry level accountant to audit taxes but would be willing to hire someone close to completion of their certification the salary range would be $60,998-$80,560.
And that’s straight union negotiated wages for a union negotiated job description.
Pulling yourself up by your own bootstraps is considered more admirable than relying on parental handouts. Ergo most people don’t advertise that the only reason they could buy a house was because they were gifted a boatload of cash.
Bluesman, this is not just government. In any job your best for a good raise is to go somewhere else (assuming it is a decent sized company). It is unfortunate but that’s just how it works.
Yeah, not a public sector, govt type in this corner. Thanks for the insight.
ANY FIRST TIME BUYERS WHO BOUGHT A HOUSE IN 2020 DON’T FORGET THIS TAX DEDUCTION:
Home buyers’ amount (Line 31270) — Value: $750
Bought your first home in 2020? Well, the $5,000 home buyers’ amount may be for you. It’s a 15 per cent non-refundable federal credit on the base amount of $5,000 if you or your spouse or partner were considered a “first time home buyer,” meaning you didn’t live in another home owned by you (or your spouse or partner) in the year or in any of the four preceding calendar years.
Bluesman, this is actually a pretty tight salary range, lots of jobs have ranges that at least double this. Typically if you are a internal promote then likely you will be placed somewhere between the min and the mid point. For an external hire you have the ability to negotiate and should be at the mid-point or little higher. For a rocks star external, you may get close to the max.
I been trying to advocate folks on this forum looking to buy to think about switching jobs and make more money for couple years now but typically just fall on deaf years. And I am not suggesting anything extreme, just going from core government to a crown corp, arms length or municipal, not do what Marko did.
Umm…..why is there a $15,000/yr spread on such a position? What difference in ability justifies +/- $15,000 annually. Wouldn’t imagine the job description being something you grow into? I’m a bit ignorant to this……please enlighten me. anyone, anyone? Anywhere in Canada, cost of living adjustments based on where employed, remote living allowances?
“Seems to me, most times one offer is all that it takes. Obviously the guy hasn’t been a realtor in tough times, when never mind not getting an offer is the problem, how about going for weeks without a showing or even a telephone call or text?”
All he said was that he thought this could be evidence that maybe the market for SFH had peaked as the other realtors he had spoken to had similar experiences. Not sure why everyone here is so negative about him detailing his recent experience and sharing his opinion.
Here you go HHV comments section prognosticators, put you and your forecasts to the test… CMHC wants you!
“In it he explains his listing last week only got one offer and he blames the market.”
Maybe his OPEN HOUSE signs blew down!!
Seems to me, most times one offer is all that it takes. Obviously the guy hasn’t been a realtor in tough times, when never mind not getting an offer is the problem, how about going for weeks without a showing or even a telephone call or text?
Traffic up about 20% from last year. You were right it does ebb and flow.
Bluesman, as Marko said no one can predict what will happen to the market in the future. One thing that doesn’t get enough mention here is how secure are people’s jobs in the aftermath of the pandemic? From the attitude on the forum here, most people seem to think their incomes streams are bullet proof, especially the ones working in IT and public sector.
Rush4life, that is almost a certainty. I think the subscribers to the Wallstreet bets subreddit increase 10x after game stop.
ks112 – I expect the market will be flat or perhaps just modestly lower after this run up cycle completes. I just don’t know what on earth or when it it could be that a catalyst will appear to take it higher for a next run up. Rates IMO can only go higher. Even at 3% the delta in payment versus now is significant on a conventional mortgage with respect to a benchmark SFD. Big question to me is wage inflation over the next 5 years. Notwithstanding that prices are detaching more from local incomes, wage inflation is still an important factor. If we’re going to rely on immigration and out of town buyers to support prices, I feel we have more to worry about.
Leo I’m seeing comments increasing pretty dramatically over the past few Months – are you seeing lots of new visitors here?
Bluesman, I think this all comes down to human psychology. Most buyers are usually too afraid to buy in a down/flat market thinking that prices will go down further and most sellers are reluctant to sell in a hot market thinking they can hold out for more $ by waiting. Then when the market shifts the other way most people are caught off guard thinking oh darn I should have done x,y,z and then proceed to try and right their wrongs. I posted on this forum in late 2018 or early 2019 that I was considering selling my GH house after the I figured the value had dropped by 100k from peak to trough and there didn’t seem to be any near term catalyst that would bring the price up. I wanted to trade up and the premise was that although my house had dropped, the houses I was interested in dropped even more. End of the day i wasn’t comfortable with the amount of additional debt i needed to take on and I didn’t do it.
This is why professional investors exist positions once their target price or exit multiple/IRR are hit.
I remember there used to be constant posts on here pointing out current money losing sales for houses that were originally purchased in 2016/2017/18. Those seem like a distant memory now even though it was just 2 years ago, i recall at that time a decent number of houses in broadmead/royal oak and cordova bay going for around $850/$900k and $1M would get you something pretty nice. Now people are forking over $1.2M for stuff in Oaklands. Where were these people 2 years ago? I doubt most people could not have saved that much more in the span of 2 years.
Marko: need to buy one of those crystal balls that double as a snow globe. To paraphrase Henry Kissinger:- 90% of real estate agents make the other 10% look bad.
Did the source have additional data such as the $ amount in the categories? For example, how big was the parents contribution as a percentage of the entire down payment?
We’re having a similar discussion in our household about buyer fatigue and the market direction right now. Having been in the market it “feels” like there is a bit less of a frenzy in the last couple weeks, but that’s likely because we are less frenzied ourselves. We have seen a few places recently and declined to place offers. The, after the offer day we find out there were not as many offers as we’d have expected. Akin to Marko’s comment, who can tell where the market is going. I’ll say that in reviewing sales prices and what appear to be comparables, its difficult to identify any type of parity some cases.
If you’re like me and are wondering about the statistical reliability of the first time buyer funding data in the table below, I asked the author about that and he shared a chart with the broken out yearly data. Though the n is low due to few of the survey participants buying in any particular year (avg 67), the years were grouped to bring the numbers up.
Will’s theory is the reduction in percentage accessing gifts from family may be because regulatory changes have made it harder to access home equity.
https://twitter.com/LooseCannonEcon/status/1376310900907474945?s=20
“CMHC can’t predict the market but someone guy in Vancouver with a 6 week course can. Makes sense ”
lol realtor is only a 6 week course? Let me guess, must be a shit ton of people wanting to be realtors in the past 2 months eh?
“It kinda just sounds like he mispriced his listing.”
maybe, but would be interesting to see if this is an outlier or a trend
CMHC can’t predict the market but someone guy in Vancouver with a 6 week course can. Makes sense 🙂
I hate it when clients ask me where I think the market is heading. If I knew I certainly wouldn’t be a regular HHV contributor.
Honestly, all I know about the guy is the first few minutes of that video.
In it he explains his listing last week only got one offer and he blames the market. He argues that everyone has changed their PCS to exclude SF and go exclusively condo?
It kinda just sounds like he mispriced his listing.
Did he say it was going to crash? He just said currently it seems like the crazy peak for SFH in Vancouver was last month for the time being.
What I gather from this is that it seems like people were all trying to get a jump on each other before the spring market (where people expect prices to go even higher) and all wanted to outbid each other now. Now it seems like buyer fatigue have set in and a lot of the ones that haven’t bought are parking it for the time being when it comes to SFH.
“Interesting development in Vancouver, if true then I expect Victoria to follow suit”
That guy seemed to be talking in circles to me.
That guy is talking about listing in metro Vancouver and getting no interest. Last week. And blaming ‘the competition?’
Did Vancouver’s real estate demand crash this week?
Interesting development in Vancouver, if true then I expect Victoria to follow suite in the coming weeks/month
https://youtu.be/1qWG-j4G2ys
You’d be surprised how many “kids” don’t tell their friends that their parents/grandparents helped them with their purchase of a house/car/debt repayments. Do you disclose all your finances to your friends and neighbours?
Sources of down payment by percentage of first time buyers accessing it from Will Dunning’s report to MPC. Don’t ask me why parents as source of down payment was much higher 2014-17. Makes no sense to me.
You can edit, press the little gear icon then edit. Used to be a 30 minute window for editing, I just bumped it to 3 hours.
Me: I don’t know many people being gifted hundreds of thousands by their parents.
Also me: all my friends doing the FTHB in the last few years are buying condos.
Has the number of hours decreased to build a new SFH home? I would think all the improvements in technology such as cranes, slingers, mini excavators, pre-fabed wall assemblies, etc., has been offset by more complicated homes with more features.
“Still need to deal with infrastructure, HVAC, electrical, plumbing, etc., etc. ”
As per the video these elements are being built into the cavity space in the wall.
Agreed, these can be dealt with more efficiently, and that will happen. I am amazed how quickly this “printing” technology has evolved and scaled up to building homes. In addition to the one in New York there was another prototype built recently in Seattle. What is really encouraging is that inspite of these both being prototypes they have already been built for less than the traditionally built competitor homes.
As an Architect I am seriously impressed with this new technology and this is what the construction industry has been dearly needing.
I’ve always been skeptical of the parental help theory. While obviously some people are being helped I don’t know that it is as common as many believe a or substantial enough to drive the market.
Of my social circles generally the millennials over 30 all own houses and the millennials under thirty don’t. Much of my social circle bought around when their household income went above 120k and they paid off their student loans. Those friends of mine who did that after 2017 all own condos.
Of those that own sfh two have received significant support from family. It allowed them to buy way younger. But I would consider both a bit anomalous as both of the gift givers(parents in one, grandparents in the other) have net worths measured in 8 figures.
I suspect family contributions also adds to and sustains the practice of unconditional offers. If family is willing to contribute $ they would also likely commit to co-signing etc so an offer made subject to financing need not be placed. Buyers without the good fortune of a backstop like that can’t compete.
I do not know; I see it a lot in my business. I would say parental help is not the norm in the general population, but it is often seen with my buyers buying SFHs. I believe part of the reason high-ratio mortgages are only approx. 1/5th of purchases in Victoria is a lot parents top up their kids to the 20% mark so they can obtain a conventional mortgage.
MJ- You’re an intelligent person, keep up the good work. I wasn’t being critical, just pointing out that parental help is not the norm, driving prices higher. I do believe that “flippers”, not investors, are driving up prices on the basis of the greater fool theory. I’ll pay 1.3 million, because someone will pay 1.5 million. Look at the example in Comox, someone doubling the price in 4 months. That doesn’t help anyone. Long term investors like myself, have little affect on the current market conditions, so long as the property is being utilized.
“You, and probably most of your friends, are highly educated and grew up on the right side of the tracks. Your circle probably represents the top 10% of the population.” Yes my friends and I come from middle class to upper middle class backgrounds. By no means was I suggesting that this is the norm for everyone. What I was suggesting is that the majority of millenials who are buying homes right now are being gifted funds from their parents. If anything, I view this negatively because it is only widening the wealth gap. I am a big advocate for increasing the housing supply and increasing density.
Leo – Are you starting to see spring inventory build as usual? Or is inventory still being absorbed by buyers? I’m curious if/when the usual push of spring inventory will begin to mitigate the demand and perhaps impact the supply/demand of the market.
” Are the gifted funds bringing the down payment to 20%?” I would say 25% of them get funds bringing their down payment to 20%, 25% of them have no savings at all and are gifted a 20% down payment, and 50% of them are gifted money and are still below 20% down payment.
“Are they in the market for SFDs, condos or towns?” All of them are purchasing SFD with suites. A couple of them have purchased homes and converted the basement to suites.
“Are your friends contributing or is it mostly family contributions?” Family contributions
MJ- Thanks for the insight. You, and probably most of your friends, are highly educated and grew up on the right side of the tracks. Your circle probably represents the top 10% of the population. My circle of friends are also highly educated but came from modest means. In the 1970’s I could pay for my entire year of university in less than 2 weeks of summer work, that is not possible now. Who paid for your education? I think your perspective comes from a privileged upbringing. Congratulations on your accomplishments, I don’t deny you did the work.
MJ – thanks for the insight. Interested in more color, if you know. Are the gifted funds bringing the down payment to 20%? Or more or less? Are they in the market for SFDs, condos or towns? Are your friends contributing or is it mostly family contributions?
Millennial here. This is very subjective, but everyone of my friends who has purchased a home has been gifted money from their parents and basically everyone of my friends has purchased a home or are in the market to purchase a home. I have managed to purchase two homes without help from my parents, but I was very lucky to have had a high paying job at a very young age and lived with my parents through university.
A lot of boomers are still waiting for their parents to pass away so they can inherit something. The boomers I know are not handing out huge sums of money so their kids can buy something beyond their reach. Most boomers anticipate living another 20+ years, and are concerned with having enough money for that length of time. Only the 1% boomers can afford to help their kids at these levels, and they are only 1% of the population.
I wonder how much of it is wealth and how much of it is debt taken out of their real estate. I tend to agree that much of the millenial generation may well be floated up by that though.
But high house prices are a drag on everything. We can overwhelm it temporarily by taking yesterday’s profits and piling them into tomorrow but that only gets you so far before the profits run out.
I would argue the forward looking prospects for real estate returns are also looking poor
Super low yield world in all areas
‘
‘
But think of all the inheritances Millennials will get from their boomer parents
“Where is the money is coming from to support this recent run up in prices? My best guess is boomer parents gifting or lending cash and/or using available HELOC to help their genx and millennial kids get into the market”
‘
‘
Good guess, I would say over 50% of clients I work with who have children plan to or are giving their kids money. I’ve had 3 clients in the past month either give their children one of their rentals, one was giving their children the proceeds of a 1MM vacation property in a few years and other just build in giving 100K to 300K to help with a house, when child hits 25 or 30. Lots of inheritances also where parents just give kids a large share of the money from their parents as its not needed so might as well help out the kids. There is soo much money out there right now looking for a place to go.
https://www.economist.com/graphic-detail/2021/03/15/young-people-stand-to-make-dismal-returns-on-their-investments
I would argue the forward looking prospects for real estate returns are also looking poor
Super low yield world in all areas
@Frank
They are moving into a house that they were planning on flipping
Still need to deal with infrastructure, HVAC, electrical, plumbing, etc., etc. I don’t think we are getting away from physical person power in housing anytime soon.
I used them in my personal home and we’ve used them in 15+ spec homes (we’ve tried three other companies within this span and circled back to Harbour) without substantial issues. As I noted, nothing special. I don’t believe in high quality kitchens mostly stemming from the fact that when I show the cheapest possible build 80s homes the original kitchens still function. Most people will want to renovate based on aesthetics way before the functional life is up. What I am trying to say is weather you spend 30k or 60k on a kitchen it will be dated in 20 years.
If you want something special with exceptional customer service there is South Shore Cabinetry, Jason Good Custom Cabinets, etc.
The reason I recommend Harbour and noted they are nothing special is the context of price which I assume is important to most people.
When I bought my Tesla 6 yrs ago everyone was freaking out about panel gaps, fit and finish, and all this other non-sense. If that’s going to keep you awake at night, for example, you buy from a German manufacturer that has been building cars for 100 years not a silicone valley startup. Context is super important imo.
Keep your eyes on the money.
It is coming from somewhere and getting into the system and I suspect it is being distributed through different means than before.
For example: Just because no one strolls through a casino with bags of money on their shoulders anymore….doesn’t mean that huge money laundering has been addressed.
The question is how are they doing it now?
Viclandlord- Where are your friends going?
Market is absolutely insane, friends house in Oakland’s just sold, 12 offers and on the market for 4 days.
Keep us posted.
QT: For countertop installations I have found flor-form to be exceptional. If you just want an estimate, try them. I don’t think you will be disappointed…..from the initial consult, to the measuring, to the installation. Let us know, I would be very interested as to how it turns out for you.
I would never recommend Harbour City Kitchens for anything. Their work for us was shoddy (adjacent cupboards that can’t be opened simultaneously because they’re spaced too tight on an angle, hinges that don’t keep door handles from banging into walls, some doors not hung straight, etc…). They pay zero attention to detail, and their after the sale support is truly horrible. Once they have your money they won’t return phone calls.
Speaking of tax avoidance, don’t miss out on some easy deductions:
https://financialpost.com/personal-finance/taxes/canadas-bounty-of-boutique-tax-credits-remind-me-of-a-popular-passover-song
Someone trying to flip for twice the price within 4 months in Comox. Doesn’t even look like any work was done.
1161 Moore Rd, Comox
Asking $1,790,000
Bought Dec 2, 2020 for $922,000
I can neither confirm nor deny.
Doesn’t make sense to me. Yes for sure low rates have caused prices to inflate. But in the end there’s very low inventory for sale and very low inventory for rent. No evidence that there are widespread empty homes as shown by Spec tax results.
So what’s left other than lack of supply? Household size may very well be dropping, we just don’t know it because we don’t get timely stats. One way for supply to suddenly materialize is if people combine households again due to an economic shock. That partially happened in the last year with rentals but not yet with owned accomodation.
3D Printing homes is here and is the way of the future, greatly speeding up construction times, way cheaper than conventional and environmentally friendly. Check it out !
https://youtu.be/EBaNBqI9dmE
No room for more SFH except out in the westshore, and even there not much longer. Bulk of new housing will need to be townhouses + condos.
Inspired by Jens’s chart. https://twitter.com/vb_jens/status/1372251931444350976?s=20
Globe and Mail:
The real estate game in big cities is broken. Young would-be buyers are better off not playing
https://docdro.id/ZAt9QL8
The approval of multi-unit dwellings in residential neighbourhoods could theoretically ease the pressure, and would make for healthier cities overall, but Toronto and Vancouver can’t triplex-their-way out of their unaffordable realities.
The real estate game in big cities is broken. Absent a truly radical policy initiative, there’s no going backward.
Of course we’re accommodating them. If we weren’t we would see average household size rising. But it’s not.
The increased price of housing is not caused by the amount of housing stock failing to keep up with population growth. In particular, the past year has seen large increases in prices in cities that are seeing little or no growth in population.
Thanks Marko, I’ll give Harbor city and Ikan a call.
That population growth should translate in Greater Victoria to about 5k people or 2k new households/year . Since 43% of homes are SFH, that should mean we need about 850 net new SFH each year to maintain that 43%. We are nowhere close to that in the core, which is where most people are looking to buy.
yea I just can’t see that happening even thought it is exactly what we need. There is such a strong emphasis on English proficiency and education. Without sounding like a total asshole poor english proficiency tradespeople would probably be ideal as it would be difficult for them to move into other careers, and there lives would be much better compared country of origin and Canadian would get lower housing prices. Instead we get highly educated people that are already living decent lives in their country of origin causing more demand on real estate.
I’ve now helped 7 young croatian families buy real estate in Victoria. All in Canada less than 5 years, out of 14 people not one works in construction. IT, government, IT 🙂
The ones that do work in construction (two that I know) haven’t been able to purchase in Victoria so it is kind of an ideal scenario for locals. You get much needed labor and they are putting demand on the housing system.
One that was a drywaller (super hard worker, would work 60-70 hr weeks) for Gordon n Gordon got sent back to Croatia cause he couldn’t deal with the paperwork. Need more of him, less of the government types.
Personally I would go harbor city and victoria granite. Harbor city is nothing special but very consistent.
You could also try Ikan.
Marko or anyone that have experienced with kitchen remodel please check in.
Who would you use for cabinet maker and counter installer?
Thanks
No need. You previously already identified the solution. Simply change the skilled immigration points system to prioritize trades we need. We could solve the trades shortage in 2 years if anyone cared to try.
Never heard any politician say a word about it though.
It’s pretty simple in my small brain. Housing gets built literally physically. There is no 3D printer for housing as far as I know. BC Housing, CMHC etc, just put out report after report.
Imo we need to provide more incentives to build housing including more trades persons versus bloating up the government with one useless department after another. If you retrained everyone in the spec tax department they could probably put out a small townhome development/year.
Which should be no problem at all to accommodate. The fact we can’t is a massive policy failure
BC Housing sent out an email news letter and one topic was on improving affordability in smaller markets in BC…..what a complete joke government is.
Over 30 emails re builder owner exam this week, vast majority from smaller places. From this morning
The poster was likely referring to natural increase which is births minus deaths.
Factoring that and emigrants in, the poster wasn’t far off, population increase expected to be about 440k per year in Canada (1.1% of population) (2021).
(Immigrants-emigrants ) + (births- deaths) = 400k-50k +375k-285k=440K= 1.1% of Canada population per year.
Sure it would be wise for the buyer, but not the developer. Among other things the pre-sales have to be unconditional for the developers to get financing.
The appropriate thing for the buyer to do is contract for under the current market price to mitigate the risk of prices going down. But people buy pre-sales because they expect prices to go up.
I am not familiar with pre-bulit/pre-sales, because I have never looked at purchasing anything like that. But wouldn’t the wise thing to have in one of these sales contract to have a condition to financing at time of completion? Or would developers never accept a contract like that? Or not be able to secure their own financing if all their sales contracts are conditional.
Just seems like a huge risk buyers are taking with these kind of purchases if they are unconditional.
375k babies born – 275k deaths = 100,000 organic population growth + immigration. As far as emigrants doubt that is a substantial number.
https://househuntvictoria.ca/2021/03/22/march-22-market-update/#comment-77945
Except owners get to extract equity appreciation funds via HELOC every once in a while…
Many in the GTA after the foreign buyer tax was introduced out of the blue on April 21, 2017.
Going back further in Vancouver there was lots of it in late 2008/early 2009. I remember there were even people picketing the Olympic Village with sandwich boards trying to get out of their condo presales – yes those are binding too.
But market shocks like that are a thing of the past, right? 🙂
You’re leaving out emigrants (yes they exist) and more obviously people who die.
Leo, I know someone that bought a house in 2019 and made it work by renting out the basement suite (parent co-signed for mortgage). When the pandamic hit that person lost their job and was forced to rent out the upstairs suite also and move in with family. Obviously now that person is in the clear and feeling very good but none the less this is also an extreme option for some.
The higher prices go, the less people seem to treat it as something ever to be paid off, it’s just a monthly payment that can be refinanced in perpetuity to keep payments manageable. Ironically the model is getting closer to paying rent rather than ever actually owning anything.
Likely meaning getting rid of capital gains tax and just having it fully taxable like income.
Basically the latter. They can sell eventually and move somewhere else, or extract equity. Just more options. I do agree with you in principle though. In the end a house is a house.
Bluesman, I think I read about this happening in Vancouver or Toronto on some pre builts where when it came time to close in 2018/19 the market turned and people couldn’t get the required financing with the updated appraisal. So they walked away and got sued by the developer.
They produced a long & good report on this in 2019 with a bunch of recommendations for munis but no teeth to actually force any of them to do anything. I bet 95% of municipal councilors have no idea this report even exists. https://www2.gov.bc.ca/assets/gov/british-columbians-our-governments/local-governments/planning-land-use/dapr_2019_report.pdf
Leo if someone is on the hook for a million dollar mortgage why does it matter if the home is worth the same or double? They are still on the hook for that million regardless. I suppose they will feel good if the value goes up but it doesn’t help day to day finances unless they do a HELOC and re-invest.
Has anyone seen an offer not complete in recent years? Did they lose their deposit as well as buck up for the difference, if any, between their offer price and the ultimate sale price? I’m still very uncomfortable bidding without conditions. Are successful offers out there still coming in unconditional in most cases?
Pretty sure the entire purpose of these HNRs are to serve as a step for the province to step in. Municipality not meeting their housing needs? Province steps in to override. Or at least I hope that’s the plan even if they can’t say it out loud yet for political reasons.
I think the writing has been on the wall for condo price increases for 4-5 months. Market tightened up around November, over asks ramping up, price/assessment ramping up. Prices going up, I don’t think it’s a shift in mix.
I still think this is a heck of a millstone to put around your neck. Say you got $500k together so that’s a $1M mortgage. Of course that’s nothing if house prices are $2M in 5 years and you can move away or whatever, but if we have a very long period of house price stagnation which I think is a real possibility then you gotta save $1M + interest. Little room for reducing those two solid dual incomes.
Everyone seems to ignore the obvious, or at least I think it is obvious.
400,000+ immigrants/year + natural birth rate 100,000 = 500,000 population increase per year.
Doesn’t matter whether people own, rent, low income housing, whatever, you need PHYSICAL space for 500,000 people and somehow supply and cutting red tape to increase supply seems to be the least common things talked about when it comes to housing.
Marko is absolutely right about failure to complete instead of failure to satisfy conditions. Once all the conditions are waived you really are on the hook. From a practical point of view one has to real take some somber thought about walking away from a deal . I suspect it is a rare occurrence. Marko is really giving sound advice here.
Yes, but we are talking about failure to complete not failure to satisfy conditions.
“Why should rents be tied to local wages”
Not sure if your being sarcastic but how else do you expect rent to be paid? I suppose some crazy bored rich person in Vancouver will pay you rent in Victoria just for the heck of it without any intention of using the place. A more realistic scenario would be parents helping out their kids on rent if they are above what local wages can support.
Marko, if an offer is accepted with inspection and financing as conditions can’t the buyer walk away by finding any little random reason?
The deposit comment is complete non-sense on many levels.
Barrister is correct in this instance, there is something called specific performance in law. If you offer 1000k with a 50k deposit and walk, but the home ends up selling for 900k you could be on the hook for another 50k, in addition to the deposit. This has been successfully tested in BC.
The average completion/possession in Victoria is only 7 to 8 weeks, real estate markets don’t swing that fast unless there is a massive sudden shock like an earthquake or similar.
Literally no one is going to take walking away from a 100k lightly, even if their bid was 200k over ask.
Indeed. Here’s an example from the GTA market slump of 2017.
https://financiallitigation.ca/2018/06/29/buyers-ordered-to-pay-470000-after-backing-out-of-real-estate-deal/
R Haysom: I am sorry to correct you (and you may not be old enough to have lived through a declining house market) but you are not just risking your 5 or 10% deposit if you dont close. You are actually on the hook for the whole difference between your offer and the actual sale price to someone else. Maybe a couple of the real estate guys can chime in on this. Also do real estate agents even bother to explain this to clients since so many clients seem to be under the impression that only the deposit is at risk?
Then again maybe BC is different than Ontario but love to hear from Marko or somebody. Come to think of it my agent never explained it either. Should real estate agents be liable if they fail to clear explain all the terms and conditions to a client and also ensured that the client had a clear understanding of a contract that was prepared by an agent. (lawyers are on the hook for explaining any contract that they prepare or advise on for a client).
A house can only sell for what someone is willing to pay for it. Building 1000 additional houses will actually bring prices down more than building 1000 additional apartment units, because the houses will have more people in them. The problem of course is where do you put them and how.
Because rents are a current expense paid by current income, not borrowing or capital inflows.
Hello? Investment properties have always been subject to capital gains taxation on the same basis as stocks or any other investment.
Ks112- House prices don’t seem to be tied to local wages, why should rents? Reducing rental inventory by eliminating capital gains on property to increase inventory of houses for sale, will put more people on the street looking for a place to live . There is such a thing as building apartment blocks but nobody wants them near their neighbourhood. That’s the solution to the shortage, not putting more houses on the market that most people cannot afford. Remember, 30-40% of people rent and do not own a home because they chose to or cannot afford a house.
Well if you think we have housing problems, check out this video of China’s problems, it’s a real eye opener !
https://youtu.be/jDIhTc6CJYY
Could it be with all these crazy bid offers, people are just saying to themselves, “well if the shit hits the fan, all I got to lose is my 5%, or 10% deposit?”
Keep it coming Totoro, your posts over the last years are one of the defining pleasures of my admittedly dull life.
The prolixity, the lack of any discernible emotion, the quote-back point.by.point.rebuttals.
It’s like a daily tennis match with a robot coached by Deep Blue.
It is a transporting delight.
Hear! hear!
But if you have enough money, it doesn’t matter anyway.
https://www.cbc.ca/news/business/cra-kmpg-settlement-taxes-1.5154610
I read that incorrectly and agree you can use tax avoidance without triggering GAAR and that would be legal. It is tax avoidance that triggers GAAR that is not legal, and that line gets decided on a case by case basis it seems. I’d restate that I don’t do anything that would trigger GAAR. I prefer peace of mind.
I see your point Totoro – you are defining tax avoidance at the extreme end of the scale. There are plenty of tax planning arrangements that avoid taxes and don’t fall under GAAR and the scrutiny you reference.
I understand your view, it is one that many people share, but CRA doesn’t. They can rely on the general anti-avoidance rule (GAAR) when tax planning becomes tax avoidance. I do agree there is a difference between applying GAAR and tax fraud/evasion but GAAR is there to stop abusive tax avoidance, even if technically correct.
https://www.canada.ca/en/revenue-agency/corporate/about-canada-revenue-agency-cra/tax-alert/tax-avoidance.html
https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/ic88-2/general-anti-avoidance-rule-section-245-income-tax-act.html
Totoro – I disagree. Tax avoidance is a perfectly legal part of tax planning. Evasion is illegal and a criminal offence.
I’m always surprised when people judge without checking out things a bit more first. Twenty years ago if someone who had overcome financial barriers and was successful was willing to share that information I’d ask questions and assess credibility. If credible, I’d ask more questions so I could see if anything they did would work for me.
Tax planning is an honest and legal approach to paying taxes. Ex. when you contribute to an RSP this is what you are doing. Tax avoidance is unacceptable and abusive tax planning that goes against the spirit of the law. The general anti-avoidance provisions in the tax act make this illegal. I don’t engage in tax avoidance or evasion.
I’ve had friends with predictable lives get cancer, or hit by a car, or have a stroke and be trapped in their own body only able to move their eyes. They’re all younger than you. I’d say you’re not going to see your grandkids because your children won’t be able to afford to live here, but you have clearly told them in no uncertain terms that they’d be ruining this world by having children right?
Then why are you opposed Frank?
tax avoidance.
ftfy.
edit: apparently strikethrough markdown doesn’t work.
Frank, you and I can try to up the rent we charge out all we want but at the end of the day rents are tied directly to incomes in the city. So with wage stagnation combined with inflation there comes a point where rents are capped.
Well, don’t get your hopes up for any meaningful changes from federal politicians. This article pretty much sums up how inept all of the major parties are on the housing file:
https://www.vice.com/en/article/pkdj9g/canadas-housing-prices-are-ridiculous-can-anything-be-done
The thing I really don’t get is the NDP– they could substantially increase their share of voters under 40 by focusing on the generational wealth divide wrt housing. Yet as far as I can tell they haven’t engaged with the issue at all, and their suggestions in that article boil down to “30 year amortizations for FTHB” (will increase prices) and “foreign buyer’s tax” (negligible impact)
I would say the struggle was just to get to an accepted offer. We sold one place and looked for seven months making many offers before one was finally accepted. We also had to provide more information to get a mortgage as we ended buying at the top end and we keep our income relatively low as part of tax planning, so that doesn’t fit neatly into lending criteria. But this was a decision we made for our children, and we can afford it.
Twenty years we were below median income and house poor – the situation I described below – and as recently as ten years ago our finances were stable, but we were not particularly well off. The thing with saving and investing is that it compounds and starts to grow faster the longer you have if you reinvest continuously. That is why I am a fan of buying a home now rather than waiting if you can afford to do so. The near-term future is uncertain, but appreciation over the longer term seems a solid bet and your life is time limited.
Removing the capital gains tax exemption on investment properties would be a huge mistake and have the exact opposite effect. Some investors will feel compelled to get out and pay less tax, in the process putting tenants out on the street, and reducing vital rental inventory. Meanwhile, assholes like me decide to hold on and charge more and more for rent, eventually doubling monthly rent from $3000 to $6000. Best to leave things the way they are and not piss me off.
What I see left out of David Eby’s comments. and in my opinion the biggest issue facing the housing crisis at the moment, is how they are going to work with municipalities to eliminate some of the bureaucracy that has led to the low supply of housing.
Lisa echos Marco and Leo’s sentiment
Sorry for that wall! Also here is Lisa Helps response – much shorter:
Thanks for writing. Apologies for my delayed reply. I share your concern! And one of the things that I find frustrating sometimes as mayor is that when new housing proposals come forward for townhouses in single family neighbourhoods, or condos that people can afford, there is a push back from that older generation who own their homes and don’t want to see change. In the City of Victoria we’re working hard to address this through inclusive neighbourhood planning, our missing middle housing work and our housing strategy more generally.
I also think it would be great for you to check out Generation Squeeze if you haven’t heard of them already. There are a whole lot of people like you across the country to address exactly this issue and to make space in cities, economies and the future for your generation…
Thanks again for writing!
Lisa / Mayor Helps
Saw a guy on Reddit who sent 100 emails to politicians across Canada about the housing crisis. Only 5 really responded. It just so happens one was David Eby and another was Lisa Helps. Here is David’s response:
David Eby, BC NDP:
Thank you for your email of February 11, 2021, regarding your observation of numerous factors that comprise our housing crisis.
Factors such as wages that fail to keep pace with inflation, dramatic increases in housing prices and rents, and employment impacts of the COVID-19 pandemic can all contribute to an untenable situation for many, and these factors can have a greater impact on younger Canadians.
The British Columbia government understands that there is an urgent need to create more options for those who are struggling to find affordable housing. As part of the 10-year, $7 billion Homes for BC: 30-Point Plan for Housing Affordability (30-Point Plan), the Province implemented a number of measures to moderate housing prices, including tackling fraud and money laundering in the real estate market.
As part of the historic investment outlined in the 30-Point Plan, the British Columbia government is funding construction and/or renewal of 39,110 units of affordable housing, including over 14,000 rental units for low-to-middle income families and individuals; and 1,750 units of social housing for Indigenous people. Since implementing the plan in February 2018, we have more than 26,000 new units already open, under construction or in the approvals process in nearly 90 communities across the province.
The Province is also providing leadership to facilitate the development of additional market housing. New affordable housing units will be leveraged through BC Housing’s new “HousingHub”, a Crown corporation that is working with partners to build housing for moderate-income households, sometimes referred to as the ‘missing middle’. Through HousingHub, BC Housing delivers two major programs – the Provincial Rental Supply Program and the Affordable Home Ownership Program, which aim to increase the supply of affordable housing for middle-income households across British Columbia.
Getting the right housing built to meet a community’s needs is something my ministry recognizes is vitally important to addressing the housing crisis. This is why we introduced a legal requirement in April 2019 for local governments (municipalities and regional districts) to collect data, analyze trends and present reports that describe current and anticipated housing needs in British Columbia communities. Housing needs reports are a way for communities to better understand their current and future housing needs, which is critical to developing a housing strategy or action plan. Government is supporting local governments with over $6 million in funding to help complete these reports by April 2022.
In response to Maureen Maloney’s expert panel report, the Province implemented the Land Owner Transparency Act (the Act) for spring 2020. The Act created a publicly accessible registry of beneficial interests of land in the province. Government also recently launched the Condo and Strata Assignment Integrity Register to crack down on tax evasion and further improve fairness and transparency in the market. We have also required beneficial ownership of corporations in our province to be disclosed to government.
As part of the 30-Point Plan, the government also introduced and/or strengthened a number of “demand-side” measures such as the Speculation and Vacancy Tax and the Foreign Buyers Tax to help moderate prices. While there are other factors involved, benchmark prices in key markets such as the Lower Mainland began to decline prior to the COVID-19 pandemic. Foreign involvement in BC residential real estate transactions is declining, from about 4 per cent when the Speculation and Vacancy Tax was announced in February 2018, to 1.4 per cent in December 2020.
The COVID-19 pandemic has significantly disrupted people’s lives and threatened their security, especially for renter households. Government has implemented a freeze on rent increases to the end of 2021 and provided a rent repayment framework to help landlords and renters make agreements about rent arrears. We also provided funding for the BC Rent Bank to help community programs expand their programs for residents who have immediate needs.
Together, in partnership with all levels of government, Indigenous Peoples, non-profit housing providers and the private sector, we are striving to make housing more secure and affordable while weathering the storm of the pandemic.
The concerns you have raised are well taken and I appreciate your writing. I hope my comments will provide some assurance that our government is demonstrating leadership to address these issues
According to this chart, the average 5 year rate was over 5% as recently as 2009.
https://www.bankofcanada.ca/wp-content/uploads/2010/09/selected_historical_v122497.pdf
Totoro, I am curious, I imagine you are fairly wealthy just based on some of your comments about previous real estate investments, but It sounds like you bought again fairly recently and struggled? What’s the story behind this?
Leo, is that because of the higher end condos being sold or are all one of them going up?
Big jump in condo prices incoming for March stats
Did I brag? I am pretty sure i said something in response that in hindsight I should have stretched myself and bought the house I really wanted in 2013 when i was making 80k as my income has doubled in the 8 years since so it would have only been rough for the first couple years. This probably applies to most professional folks and their career trajectories as i would expect most to make at least 50% more in their mid-late 30’s compared to late 20’s.
The whole thing was in response to Cadbro’s dilemma where my advice was that if she had to buy in a hot market then it is better to max our her budget and buy something she likes because if a downturn happens then she at least has a house that is enjoyable.
It’s pulled mostly as dividends, so that is not possible. The rates are approx, I would need to clarify with my accountant, but it’s roughly correct.
Do questions ever come up about your personal income? Because for some reason you’ve felt the need to brag to everyone on an internet forum that you allegedly make around $200K.
Sideliner, I am not a small business accounting expert but if you are taking the funds out from your company and also take the 40% hit on your personal tax, can’t you just apply that to salary and wage expenses to your company and lower the corporate tax by 12% so your net tax rate is 28% on that $150k?
Only reason I discuss local jobs and income is because that question keeps coming up as how can home prices be sustained by local wages. Do questions ever come up about your supposed net worth or anyone else’s? The only other thing remotely close is Barrister asking how much people think his Rockland property is worth.
I am sure the bears will return at the first sign of market softness, don’t you worry.
Yeah I think this is the part that existing homeowners sometimes don’t comprehend. We put 20% down ($150k) last year which I pulled out of my company. That was taxed at 12% for the corporate tax , and approx 40% for personal taxes. So the 20% deposit on a basic SFH in Comox took almost $300k profit from my company. That was not particularly easy to earn. I could have spent that on hiring several more people, expanding productivity, making more products – basically expanding the economy through productive work.
The attached graph shows the increase in years it takes the average household to save for the average house in Vancouver. Moving to more and more remote cities as some suggest first time buyers should do, ignores the fact that employment opportunities are obviously much worse (on average) as you move away from large urban centers. A SFH in Sayward is >$400k now with almost zero jobs available.
Unlike the myopic view of Introvert and others, I don’t cheer on the increase the value of my house. I would actually prefer it to decrease for the sake of society. I wish Canadians would strive to increase their net worth through PRODUCTIVE WORK rather than viewing a non-productive asset as a path to wealth.
If this increase in wealth inequality continues, history tells us this will probably end in large scale social unrest. You can see the beginnings of it on this forum even, where the frustration and anger of the haves vs have nots is becoming apparent.
I don’t see this ending well for Canada at all.
I also drive an old car, don’t really eat out much, and don’t take a lot of vacations other than camping trips. For the most part, that’s because I don’t give a shit about those things. Diverting money away from depreciating assets, or European vacations doesn’t seem like a big sacrifice.
What I think sucks about homeownership is that you spend a lot of free time on maintenance/yard work.
Anyway, not trying to start an argument. Power to you if those are the things you want to spend your cash on.
“the bears that were here”
🙂
Right back atcha. Does it feel weird to be so obsessed with job hierarchies and salaries that you feel the need to constantly discuss them on an internet forum?
https://www.cgframing.com/
“I don’t know exactly where everyone is getting their money from but I am at showings every day and my observation is it is mostly young families trying to outbid other young families.’
I have a friend that recently bought a 1.8M house, couple with kids. bought a crappy sub $500k house in 2012 and unloaded recently for close to 1M. house hold income around $200k (fireman/cop and nurse/teacher couple). Not sure if there were additional family help involved.
“Ours is very predictable ‘ Are you sure your health is predictable too? I just had someone I know diagnosed with cancer at 34 years old. Its interesting you love to brag about your current net worth to the bears that were here and then at the same time boast your penny pinching ways. What an odd life you live.
I wouldn’t expect any serious action on cap gains for personal residence before the next election.
About 69% of households own a home https://tradingeconomics.com/canada/home-ownership-rate
Given that homes have risen 15% in the last year, most of these homeowners are sitting on sizable paper gains. The point being, it would be political suicide for a minority government like the Liberals to introduce a cap gains tax like this before an election.
The last minority government PM that proposed a broad new tax in a minority government was the Tories led by Joe Clark in 1979- proposing a 4 cent a liter gas tax. The government fell in non confidence, and this revived Pierre Trudeau’s career as PM. The Libs won a majority, and that was it for “Joe Who” as PM. This cautionary tale would be familiar to Justin.
That person had a ton of money in chequing 🙂
James Soper – Not everbody likes to take lengthy vacations. To each their own. Hey, some enjoy reading the transaction slips left at the ATMs to see how much money other people have in their accounts LOL.
It is possible if you started really young. For example, I had a young family with two kids buy a $1.5 million home a few days ago. They bought a townhome 10ish years ago before kids, made 300k +/- on it. Saved a bit of money in the meantime, solid dual income, and they upgrade to a $1.5 mill house.
I don’t know exactly where everyone is getting their money from but I am at showings every day and my observation is it is mostly young families trying to outbid other young families.
The listings I have go in multiple offers if we get 6 offers, for example, we get 6 letters from families. I have not had a number company or a business offer on any of my residential listings this year.
As I’ve said before once a month, at least, my buyers run into friends coming to or leaving a showing.
haven’t all those people lived in the Harris Green area for over a decade? Just on the streets instead of housed.
Ours is very predictable 🙂
You sound like a Hallmark card.
We do what works for us.
The mortgage isn’t the reason we don’t take big vacations; it’s that we don’t like big vacations.
This is true, but people live life according to values important to them. At the end of the day, what’s important is making decisions independently, and being content with those decisions. If someone was deliberate about their decisions and felt content with the implications, that person is likely happier than most. There’s nothing to feel sorry about.
My truth is different than your truth. It’s really that simple.
But think of how much joy she’s had badgering people on this forum, and reading graphs incorrectly.
People seem to have short memories….if you bought a condo in 2007 you were down 10% +/- in mid-2014. If you bought a Langford condo you were doing 15% +/-.
“We’re 12 years into homeownership and we’re still deferring non-critical improvements. Rather be mortgage-free by our early forties than have a super duper updated kitchen today. Coincidentally, we also drive one old car, don’t eat out, or go on vacations except road trips to Calgary and short camping trips.”
That is great in theory, but life is short an unpredictable. The only priceless things in life are the memories you make and you life can end abruptly. Penny pinching to the extreme when you don’t need to is not how I would live my life. If you do actually have a GH house for 12 years then you should have a substantial net worth, if you haven’t gone on a vacation outside of Calgary and camping in order to pay off your remaining mortgage with the current low rates we have experienced in the past 10 years then I truly feel sorry for you.
“All the people who were able to hang on for the first few years, were laughing after that.” unless you bought in 2007/8, it took 8 years for some to break even.
True. But it’s been ~20 years since we’ve seen formerly “normal” rates. Perhaps all this new COVID-caused government debt will increase inflation, necessitating big interest rate hikes, but many economists have their doubts.
Seems like globalism and countless macroeconomic factors have changed over the past couple decades, such that inflation has a hard time rising in general and no longer spikes during geopolitical crises.
So buyers just have to wait for a historical peak in interest rates. Gotcha. 🙂
Looking back at the last 40 years, one lesson is: buy a house even if you’ll be/feel somewhat house-poor in the beginning. All the people who were able to hang on for the first few years, were laughing after that.
Households are so indebted that we would be into deflation well before that point. Note that mortgage rates only broke 10% when inflation took hold in the 1970’s. Before that the norm was 5% or so.
That’s what people buying today have to worry about – not elevated interest rates, just normal rates. And in any RE bust it’s only a small fraction of owners who get into trouble.
We’re 12 years into homeownership and we’re still deferring non-critical improvements. Rather be mortgage-free by our early forties than have a super duper updated kitchen today.
Coincidentally, we also drive one old car, don’t eat out, or go on vacations except road trips to Calgary and short camping trips.
asking for a friend- anyone has a decent framer for recommendation? small addition in the back yard. TIA
True that asking prices are basically meaningless since underpricing is a thing that happens in hot markets. But the percentage of over asks is still a good measure of market hotness. Often that goes up before we see things like months of inventory and prices move.
IMO, over-ask is meaningless. I can price my house at $500k and I bet I can probably get 500k over ask also… should be a consistent benchmark like over assessed.
Really enjoyed reading that. Shifting perspective is a great way to get happier.
For the househunters who are understandably dismayed by our market conditions a glance at the could-be-worse file might be useful.
Garth has two examples today, one at $500,000 over ask and one at $575,000……
We’re constantly hiring, and end up having to hire people who are under-qualified for what we’re looking for, and then hope to keep them as their skills get better. We also would hire more people and less contractors if that was an option. So you’re wrong.
Well, just took a look a the new supportive housing map for Victoria. Great how there will be no consultation on it. It’s bad enough now, but I am really going to have to get my family out of the Harris Green area before those units are completed. At least I have a timeline to work to now…
If we ever got to 10% plus interest rates again, boy oh boy there would he a lot of hurt out there, not just in residential real estate. Not just hurt, full on fatalities.
No, but that is why we went five-year fixed when we bought. We knew we couldn’t handle a rise in those years without taking some more action, like getting a second job. It was worth the peace of mind, but we ended up paying way more than the variable rate would have been.
When we purchased this year we also went fixed. Rates are so low that the peace of mind was once again worth it even knowing variable has almost always been better.
And, as far as interest rates go, the 80s are now 30 years ago. It doesn’t mean we couldn’t get 10% plus interest rates again, but the mortgage qualification process today controls for reasonably foreseeable risk in the first five years imo.
We had to replace all the windows. They were aluminum frame and condensation was an issue even with wiping them every day in winter. Two of us have mold allergies and it just wasn’t something we could defer. We also had to repair a leaking shower, which we did ourselves. I think most of the big things can be mostly controlled for most of the time. Perimeter drains can be a big non-visible expense and water has to be dealt with so I’d be careful with those.
“When we bought our first house we couldn’t believe our good fortune and happily deferred non-critical improvements…”
Did you have to make critical improvements in the first five years though?
Considering home inspections are superficial and conducted by generalists that seem to hone in on things that don’t really matter (e.g., asbestos tape), the risk with going all-in – at least on an older home – would be that something critical was missed on inspection, and I’ve got no money to repair it. That would likely keep me up for a few nights.
Not really Leo. You don’t know what my lived reality is, the hardships I may have faced financially, and the choices I’ve made to achieve what I have. I have a lot of empathy for people who are in difficulty financially for any reason, it is not a great place to be, but buying a house doesn’t put you there imo – unless you experience divorce or illness and have to sell at a bad time. I also don’t appreciate the disclosure of personal information that I haven’t provided to you on a public forum – whether it is correct or not. Please remove it.
I think that during the entire period you’ve owned there has not been a significant rise in interest rates. That was the case for me, and I still had a few years of squeezing nickels at the beginning.
Not the case for the previous owners of one of my purchases, which had been foreclosed.
Where is the money is coming from to support this recent run up in prices? My best guess is boomer parents gifting or lending cash and/or using available HELOC to help their genx and millennial kids get into the market. I would guess a lot of parents are struggling with watching their kids being priced out of housing and want to help if they can. Lump sum from parents + dual income + max mortgage = being able to buy right now. Due to FOMO, we could be witnessing the rolling forward of a massive transfer of wealth. Anecdotal reports from RE agent friends suggest a lot of local buying is from 30/40 something couples, families etc. (are you seeing this Marco?). Wages would suggest this isn’t possible for most without large gifts or loans from family.
I won’t get into an argument on this totoro, but can you see how holding up the example of someone with I believe a law degree that retired in their 30s/40s as representative of the kind of stresses people might face is problematic?
I was talking about the first home we bought Leo. We spent everything we had, no family help from either side, had small children, and both of us had just graduated from university during which we worked and studied and raised children. Our incomes did not make us comparatively wealthy in Victoria. We were well below median and definitely fit the category of house poor as the only reason we qualified was through an exception that allowed the bank to bet on future earnings and we were first-time buyers. We had roommates to start to make it work and felt fortunate to do so.
I think being “highly extended” is controlled for in the mortgage qualification process. I believe that if you are in a position to get the mortgage you are not house poor, but incredibly fortunate to have purchased an asset that is worth reprioritizing for the benefit it brings. I don’t even think you can call this highly extended. Different story if you have consumer debt.
And I know many don’t view things the same way but growing up in poverty has shaped many of my values. Financial edges are not a stressful place for me to be if it means I’m investing in something with a future positive upside.
If they are going to get rid of the capital gains tax on investment property and just charge full tax I think they should role it out like BC did the spec tax. Tell everyone it’s coming. Start with a lower amount and then ramp up to full amount after two years. This will give anyone who doesn’t want to pay full pop time to flog their property and likely put more housing stock up. If they just bring it in and give no time, as someone else mentioned, it likely will cause some people to dig their heels in and not sell as they don’t want to pay more tax.
Also just get rid of AirBnB until prices and rental rates are more affordable.
Person with no financial stresses has hard time relating to people with financial stress. News at 11!
Sorry totoro, but you walked into that one. Yes, if you’re comparatively wealthy and buying a house doesn’t stress your finances then it’s great. That doesn’t minimize the real stress that being highly extended causes for many people.
Agree it can be great, but a SFH may be better use of capital and leverage, especially if you have a suite, if you own only one residential property as most people do.
As we’ve discussed before, unlike other countries, condos here are generally not built with family living in mind, including noise transfer issues with kids. I think this will change, as you can already see happening in Vancouver: https://www.livabl.com/2020/03/kid-friendly-new-condos-now-selling-greater-vancouver.html
I have a hard time relating to this. I know I’m not the norm, but I view being able to buy a house as a truly fantastic opportunity. And the qualification process ensures that you are left with enough to cover non-discretionary expenses. When we bought our first house we couldn’t believe our good fortune and happily deferred non-critical improvements, drove around in our one old car, and never ate out or went on a vacation that wasn’t visiting and staying with relatives in BC for about five years. Well worth it.
That’s called a valuation date and it’s what Canada did when capital gains taxation was introduced back in 1971. Pretty easy with stocks, harder with RE – but note the valuation date did apply to investment RE at that time. Also they may not want a valuation date which turns out to be near a market peak. 🙂
I don’t see anything happening on this any time soon, certainly not before the next election. You might see some measures aimed at investors or foreign buyers though – always popular to make someone else pay more taxes.
I’m generally curious how the feds would implement any cap gains tax on principal residences if they choose to do it. There would be life time exemption to some threshold I’m sure, (similar to the US) as many have stated already. However, do you think they would determine a fair value at the date of the implementation of the policy, and any deemed gain prior to the date would be exempt? Thereby taxing gains subsequent to the policy implementation date? I wonder.
Renters’ market: Tenants renegotiate leases as prices slip in major cities
I woke up wondering about all the people who bought a house way back for $200,000.00 in Victoria and now can sell it for $1.2million.
If they were thinking of selling anyway, they might want to sell “Before” the government brings in a capital gains tax ?
I read once that you could house the entire population of the world in Texas if the whole state was developed to US big city density.
How many people could be housed if all of Vancouver Island east of the mountains was developed to current greater Victoria density?
I forgot to mention farmland. I believe most family farms have been bought by conglomerates.
Is there any evidence that institutional investors are moving into Canadian residential property? I’ve heard rumblings that this is occurring in the U.S. This is actually common in some European countries. The large institutional investors seem to like the hedge against inflation that residential real estate provides their portfolios. They already own the stock markets, most commercial real estate, and large apartment complexes. If this is true, we are all screwed.
Marko that makes sense
QT, part of my issue is that in the almost 8 years that I have bought (late 20s), my income has more than doubled. So it would have been tight for the first couple years then would have been smooth sailing. But oh well, it is what it is, more motivation to work harder.
I always own land through building lots/redevelopment properties. I might get a SFH rental property by not selling one of the new builds, but will continue to live in a condo as personal preference.
Marko, wouldn’t u want to own a SFH as an investment property though given the school of thought that land is finite and and population is growing etc.
I’m in the middle of the road on the idea of max budget, because being house poor can be very hard on your mental health.
In 2003 my ex and I stretched our budget and went for a very nice SFH in the core that maxed our budget, and it cost our relationship even those the house value increased 31% in one year. So the second time around in 2014, I purchased my present SFH at 60% of my max budget in a nice and quiet Langford neighbourhood that my present SO isn’t too keen about, but have warmed up to it over the years (she wanted a SFH at 91% of my budget that was in a busy new neighbourhood.)
I do not understand it either. Between real estate and my side hustle building/rezoning properties/investing after you pay your share of taxes, cost of life, etc., it is not a joke to save $100k-$200k and people are just plunking down these amounts OVER ASK. I am just happy that I had a chance to live in a SFH, wasn’t for me, and I don’t have to worry about being priced out as I am totally content to live in a condo. I feel bad for people that feel they really need a SFH, seems like a cultural thing here in North America. I will admit thought having had and lived in a very nice SFH with a non-sense three car garage probably helps. If I was never able to afford it in the first place I would probably still be chasing the SFH dream thinking it would somehow improve my quality of life/make me happier.
Bluesman, not sure if u already own. But my thought from experience is that when you buy there is always risk of the market going against you afterwards so just make sure if you over pay for something it is something you like.
I bought something I didn’t really like years ago because the rental cashflows made sense and even though I am up alot now, I still wished I just ponied up the max and bought what I actually liked.
Ks112 – I thought the same on an out of towner (like perhaps on 1292 Camrose $1,850M !!!???wtf?) but these are only assumptions, I have no certainty on the buyer’s domicile, in town or out. However, like many, I am wondering where all this money is coming from. The market was sideways only a couple years ago and wage inflation during that time doesn’t make up the difference. Wife is going crazy with fear. I’m not as fussed, gonna get back to Stevie Ray’s bluesy brilliance and a nice glass, for now. Cheers all.
$859k
Does anyone know what 7948 Lochside (Saanichton) sold for? Recently built half duplex listed at $819k.
Bluesman, could be out of town buyers not knowing the market and just plunking down cash. When fomo strikes then people with money will make some choices that make other people shake their heads. I heard from a realtor friend that a 70s house on Kenmore just went for $1.3M.
Since most of the IT jobs in government are filled that statement is untrue. Sufficient numbers of IT workers seem to find the government package of adequate pay, complete job security, DB pension and flex Fridays attractive.
https://www.vancouverisawesome.com/video/two-bc-real-estate-agents-fired-in-wake-of-sexual-assault-allegations-3575166
Looks like another black eye for the real estate industry.
Anyone know what the other 19th floor 2 bedroom units in the Astoria go for ? 1901 is listed now at 876k.
Evening all – Thursday night, always a favorite night of the week. I really can’t make sense of the market. I’m trying to make sense in a nonsensical market of comparables in the area we are looking at. Leo, thanks for the intel on Wicklow earlier today. Quarter acre lot, Wicklow St, ~1800 sqft recent updates and a suite sells for ~$1.2mill. Quarter acre lot, Oak Park Pl ~1800 sqft recent updates and a suite downstairs (though you may have had to put in a small wall with a door to separate) sell for $1,050,000. Delta is $150,000 and I’d argue Oak Park Place is a nicer spot, secluded and such, not near the intersection of cook and quadra. ??? I need another glass of wine. Thoughts my friends?
Waiting sounds like a good move. This type of insanity has been seen before, but it has always cooled down within a few months. Let’s hope that happens this time. Eyes on the upcoming budgets and interest rates.
Greater Victoria resales:
66% of single family houses went over the asking price in March.
29% more than $100k over.
8% more than $200k.
1% (4) more than $300k over.
Thanks Leo – that is really quite a bit more than I would have thought.
Sold $1.21M
The typical Victoria cycle: prices increase for several years, overshoot, correct by 5%, then are flat for several years.
I sense we are in the overshoot phase and expect a correction of at least 5% within a year.
These are unprecedented times, though, so my prediction may be completely wrong.
That’s what I am betting on too Introvert. Right now, I am in very good physical condition and I attribute a lot of that to going up and down over 100 stairs every day. The thing is once you fracture your hip which is very common in the elderly especially from falling on stairs etc., it is often the beginning of the end. But you know…..quality over quantity. Aging is only for the brave. 🙂
Cadboro: Sorry my zero sticks and my eyesight is not great without reading glasses. His wife’s income is around seventy not 7k. Personally I feel we have done a real disservice to young people on a number of levels when it comes to housing.
My view is that doing stairs for as long as possible is better for maintaining your mobility and health. That’s how I plan to approach it as I age.
If you are investing in housing other than a primary residence you are already paying capital gains. Most people want to own their primary residence and view it as both an investment and as shelter. Don’t think a tax is going to change this. I’d be in favour a capital gains tax on primary residences if the money went to building purpose built affordable housing – both rentals and owned.
Hey look I can play this game too! It even comes with a fraction of the traffic of SoCal and a side order of universal health care.
https://www.realtor.ca/real-estate/22709595/552-ridge-pointe-pl-colwood-olympic-view
If you’re just investing for the capital gain, but then they start taxing them, it becomes less enticing.
In the netherlands, they had up/down townhomes where the lower-level had 0 stairs and were mostly occupied by seniors, and then they had 3/4 bedroom places on top that were occupied by families.
The only objective measure of desirability is price, so your argument is essentially tautological.
After a couple of stabs at it in December, I took my 25k back from the realtor trust account and decided just to sit out an watch online (no need to look at a house that will be sold to someone else). There wasn’t any point with the bidding wars and the big payments over ask with zero conditions attached that were being placed on nearly everything. I did renew my approval in January and it will be tough to let that awesome interest rate go as June arrives. I just can’t see going after anything right now that would be right for me and my family. I just have to decide if I will bother renewing the approval at the end of May or not. It will likely depend on the interest rate and how long I can carry the approval into the fall.
Stroller you must be new here – that is the most common theme touted by the bulls on this board; that being said Victoria has always been nice and always been the warmest and hasn’t always been unaffordable – though you are right there has always been a premium; it used to be two government workers could quite easily purchase a home in this town. So clearly there are other factors at play. The same factors that are increasing home prices all across Canada – and many places across the globe – not just Victoria.
Ya, the pandemic has cut down on a lot of discretionary costs. Looking at our situation a year ago, and likely being in a small space for an unknown period of time we focused the family on being able to get outdoors. We have the full escape town camping setup that will even work outside campgrounds (almost impossible to book) so we can take advantage of crown land access when we want. Even on choosing lifestyle gain approach for housing, we keep our budget anchored and won’t enter into bidding wars on a property that would deteriorate our financial stability.
There may be another facet to Victoria’s affordability challenges.
I would suggest that Victoria is within the top three desireable urbanized locations in Canada. Look at any industrialized nation globally, find one of their top three desireable locations and select a detached home within a thirty minute commute to that town’s center.
Looking worldwide, is there any home of that description where a typical two-income family could carry the mortgage on a detached home with twenty percent down?
It seems highly unlikely to me. Maybe houses in great places are just……… really expensive.
No Patriotz, they didn’t have any problem with stairs at the time. They still don’t in their mid 70’s. Frank was saying that many seniors now opt to stay in their place and not downsize (into a retirement/personal care homes). I’m saying that many young seniors, once the kids are gone, have already downsized to a much more manageable home. Once a person/couple get to the age of say 85 and they are still living in a large multi-level home, they more often as not will get overwhelmed with the thought of selling their cherished family abode, getting rid of all their “stuff” then searching with a fast talking realtor (Marko excluded of course), to buy a smaller home. Not to mention all their kids have different ideas by then of what their mom and dad’s next move should be. At age 60, you don’t tend to let your kids tell you what to do……you usually know what you want and are capable of making those decisions between the two of you.
Umm..really? I can only speak for myself. I would say I’m quite a bit less zealous at the moment heading out on the hunt. I think what did it for me was the bump in the fixed rates even though we have locked our rate until early July. The fixed rate is still incredibly low by any standard, but the reality is the direction is up. I would also make my bet on BoC raising ahead of the guidance they have given to the public. I listened to Rosenberg recently and I feel he’s totally correct in that price to rents, price to income, show many markets are insanely inflated. I don’t feel this means there will be a correction this year or even next year though. I believe its will just level, if not already. What do the agents out there on the street feel candidly speaking? At some point the market is going to go flat and perhaps even modestly correct and I mean very modestly. I think there will always be ample demand for the supply in our local market. The question is when rates go back up, how will this slow the market and how much negotiating power will the buyer have. And further, how many buyers will there be when higher rates increase the payment to service what are big mortgages, even assuming a 20% pymt.
Came across this one today.. It’s GTA focused, but some interesting points.
https://ca.finance.yahoo.com/news/canadas-housing-market-five-things-to-know-from-a-possible-slowdown-to-bidding-wars-on-campers-153613780.html
Sounds a bit crowded 🙂 But seriously, problems with stairs at age 60? Did they all have some related medical problem?
The problem with one level properties of course is that they don’t make enough use of the lot size relative to its cost.
How?
Once they reached the age of 60, all four senior couples that are good friends of ours moved from their multi-level homes to a one level rancher. Two other female friends moved from their larger home to one level townhomes after their spouses passed. None of them are talking nursing homes yet. Unfortunately, they aren’t building many one level SFH or townhomes anymore. We’ll probably just move to the main floor once the stairs become difficult. Right now though, I honestly think I can run up and down stairs as well as the average 50 year old……..so I’m very fortunate for now.
We wouldn’t want to see existing landlord investors getting “removed” from the market. How about someone that’s renting a house owned by an investor. These Investors getting “removed” will mean their house is sold, leaving them scrambling for a harder-to-get-rental, or forced to buy a home.
You really don’t know though do you.
Every single IT job in Government pays less than market rate.
Governments are good at introducing taxes to address a problem, that when implemented:
– don’t actually help the problem, target the wrong people
– get watered down so they don’t raise much money
– just add more government micro-management to your life
Most recent example is the spec tax. Not a penny goes to the BC govt, the small amount raised gets sent to municipalities , intended for affordable housing, but too small to make a difference, so gets spread around a few feel-good-do-nothing initiatives.
A capital gains tax on sale of personal residences would be the next example. They’ll water it down (big exemption, allow expenses) so very few need to pay it, and so it won’t lower house prices. Yet they’ll introduce paperwork requirements for everyone to make sure you get the exemptions they have, such as saving all your house expenses which can be deducted from cap gains calculation. Some people will miss doing that and will get nailed with the cap gains tax when sold. In short, they should leave it alone.
If they want to lower house prices, they should increase interest rates to at least above the rate of inflation, so the house prices aren’t distorted by artificially low rates. And stop using government money and guarantees to insure house mortgages.
Also remove a lot of investors in the market.
“The biggest disincentive to building rental apartments is that developers can make more money building condos.”
Very true. There was no such thing as strata title in BC until 1966. Before then, apartment ownership was possible by setting up an apartment corporation, and selling off shares allowing a person to “own” a suite in the building. Not too many of those exist.
I used to lean toward rent control being bad for supply, but vacancy decontrol systems probably don’t have that much impact.
I want to see what the investor appetite is for Canadian MBS without mortgage insurance.
That would make the mortgage insurance from these outfits much more risky for the lenders and they would have to demand a bigger down payment, or charge higher rates, than for CMHC insurance. Not a bad thing at all, just pointing out the impact.
Prior to the introduction of the backstop, the only private mortgage insurer MICC had gone bankrupt. You might not remember but the banks and regulators do.
will result in lower prices.
The CMHC market assessments are a total joke https://assets.cmhc-schl.gc.ca/sites/cmhc/data-research/publications-reports/housing-market-assessment/2021/housing-market-assessment-68456-2021-03-en.pdf?rev=ca92f51b-3bf7-4dec-8db9-4a2f63a478bb
I get your point Patrioz. Certainly some truth to that.
At the very least any capital gains tax will hamper people’s movement to another job somewhere else.
I think a capital gains tax will only complicate everyone’s lives further and so I don’t see that as a good thing.
I’m not convinced that voluntary downsizing or moving to care homes was ever a big thing. People like to stay put until they are forced to move for health reasons. Interesting question though, how much voluntary downsizing was there, and how much less will there be now?
“A new survey found that 86 per cent of older, urban, adult homeowners said they would like to live in their current family home as long as possible.”
https://www.vancouverisawesome.com/courier-archive/real-estate/downsizing-out-vast-majority-of-older-homeowners-want-to-stay-in-their-home-3118370
I think they should remove the 90% backstop for Genworth and Canada Guaranty. Let’s see what the private sector price and risk appetite is for mortgage insurance.
Depends. The only demand side measure that’s effective is to reduce immigration. Any demand side measure that just makes it harder to buy while still having just as many people wanting to is doomed.
There’s no shortage of land in Canada, proper supply response could easily accommodate current immigration levels in perpetuity.
Discretionary sellers are almost always buying another property. If they don’t sell, they don’t buy either. That said I agree that any capital gains tax on primary residences would have to be tailored for specific situations.
The biggest disincentive to building rental apartments is that developers can make more money building condos. The input costs are the same, but the condo prices are out of proportion to rental value.
If somebody wants to bring up rent controls, note that Alberta which has no rent controls has seen Canada’s highest rate of rental to condo conversions. Same reason.
The exact same thing can be said for supply-side options.
Umm really? Thanks for your analysis it’s a lot of food for thought. We really put lifestyle on the backburner when analyzing houses at these prices points, there will be no wiggle room for more money for a while, and we will be putting all of our savings to the downpayment. (Lack of choice makes choice easy).Thrift store furniture ahead. With little kids, vacays were on the back burner anyways, plan to camp with them and trips to AB but nothing more for a while. You do bring up good points about Reno’s and maintenance, and not taking on what we can’t fund or fix. It’s also why we find it very hard to compete today because we want a home inspection. We can paint but can’t do wiring, plumbing etc unless there’s a good how-to on YouTube haha.
Barrister I appreciate your feedback, to clarify you stated in an earlier post your painters spouse made 7k so I based my comparison on that. I do not think we are undervalued and need more money, I think housing is the cost that needs to change. I’m just one example of likely tens of thousands of families here feeling the same squeeze and we can’t all just get 6 figure jobs to get into the market. But I will suggest to my spouse that painting may be quite lucrative.
Josh thanks for the tip on where to send the slumlord info which I kept.
So …former landlord…. do you think Victoria prices would go up if a house anywhere in Vancouver sold for $10million dollars?
Definition of comparison: an examination of two or more items to establish similarities and dissimilarities
They don’t need to be the same to compare them. If Victoria and Vancouver were exactly the same comparing them would be pointless.
If the government moves ahead with charging capital gains on our homes then who is going to ever sell unless they have to. This will likely reduce supply…driving prices higher.
Dumb idea.
Leo…I think we are at odds with each other when it comes to comparing Vancouver , Greater Vancouver and Victoria and greater Victoria.
Haha… I can’t make any sense of your point on that.
I want to be clear. I want you, or anyone else to know, that I don;t think Vancouver or Greater Vancouver and Victoria or Greater Victoria can be compared to each other. Vancouver is Vancouver and Victoria is Victoria. No comparison.
However, I do believe that Vancouver or Greater Vancouver has a great influence on each other when it comes to the prices for a home here in Victoria.
That’s all I’m trying to say, but probably making a complete hash of it:)
The housing solution as given by a reasoned inhabitant of the real world:
“These include lightening the regulatory burden for new housing approvals to quicken supply response; adjusting municipal zoning to allow more medium-density, family-friendly housing in large urban areas (the so-called ‘missing middle’); growing Canada’s stock of affordable housing significantly; and removing disincentives to build (market) rental apartments—or better yet, tipping the scale in their favour”
The housing solution as given by blinkered, pandering ideologue:
“Speculation tax!!!”
One factor contributing to the shortage of supply , that can be attributed to covid, is seniors choosing to remain in the safe isolation of their home longer instead of downsizing. Covid has instilled a fear of personal care homes in our population that will remain with us for years. Children used to encourage their elderly parents to go into these facilities, but now the reverse is true, and more effort is being placed on keeping them in their homes. Even apartments are viewed as more detrimental to our health. One friend of mine who is a realtor, said that he has seen this part of his business completely dry up. He offers a clean out service that gets him the majority of his listings. Anyone else noticing this?
A speculative investment is one for which you expect to get a positive total return on appreciation alone. That expectation may be ill-founded, but it’s still an investment. If you end up losing money, it’s a bad investment.
A census family is defined as two or more related people living in the same dwelling.
Thank you Leo.
Leo, I think all the government needs to do is to scale back on the amount and types of mortgages they backstop and I bet over-night mortgage rates will start looking different for alot of people. That way they can still keep the benchmark rate low for other lending at the same time.
Accepted offer waiting for deposit.
Barrister, I guess all the sellers that sold before Feburary of this year didn’t see the value of their Victoria house either. A common theme among the few sellers I know that sold in the past 2 months is “I can’t believe someone paid that much for my house”. I know some other people whom weren’t even planning on selling now changing their mind wanting to cash in.
Anybody know if 3272 Wicklow sold and for what price?
That RBC piece from their Senior Economist is quite something.
Q: Should policymakers do something about overheating markets?
A: Yes, for several reasons. 1) Overheated markets threaten to destabilize the economy down the road if or when a correction occurs, with possible heavy costs for governments. The threat is particularly potent because excessively high price expectations are widespread. Canada hasn’t had a market overheating of this scope since the late 1980s. 2) Capital used to inflate real estate values isn’t going to more productive purposes in our economy. The misallocation of capital undermines longer-term growth prospects. 3) Sky-high property values can exacerbate inequality, widening the divide between haves and have-not. Exorbitant land prices make it more expensive to build more affordable housing.
Q: What are some options to address lack of supply and strong demand?
A: First off, policymakers should re-double efforts to address supply issues that existed before the pandemic. These include lightening the regulatory burden for new housing approvals to quicken supply response; adjusting municipal zoning to allow more medium-density, family-friendly housing in large urban areas (the so-called ‘missing middle’); growing Canada’s stock of affordable housing significantly; and removing disincentives to build (market) rental apartments—or better yet, tipping the scale in their favour. The need for more affordable rental options for ordinary Canadians is greater than ever. Most of the supply-side measures we’ve outlined here fall into local authorities’ lap, although higher levels of government have a role to play. However, they aren’t quick fixes.
Policymakers should look at a range of options to discourage speculative activity as this could generate further volatility. We find New Zealand’s just-announced phasing-out of mortgage interest expense tax-deductibility for investors an interesting proposal.
More fundamentally, governments should take a broader look at the support they provide to home ownership, and the degree to which it contributes to extrapolative price expectations. Many Canadians believe the policy environment guarantees property values will rise indefinitely. Policymakers should put everything on the table, including sacred cows like the principal residence exemption from capital gains tax. These considerations will be complex, controversial and no doubt fraught with unintended side-effects. Yet this support was largely designed during times when interest rates were much higher, and in some cases to counter the effect of high rates. With the Bank of Canada committed to keeping interest rates low for an extended period of time, we believe policy support for home ownership needs to be recalibrated.
Further tightening of mortgage-lending rules could be necessary if signs of household debt stress emerge. Historic government aid and financial institutions’ debt payment deferral programs have distorted the household debt picture since the pandemic—debt ratios, and delinquency and bankruptcy trends look surprisingly benign. There could be issues brewing beneath the surface, however. Policy options include a stricter stress test, raising the minimum down payment and lowering the cap on refinancing.
One thing is certain: there are no silver bullets. All demand-side options have side-effects and work, at best, for a limited time.
https://thoughtleadership.rbc.com/hot-canadian-housing-markets-call-for-a-policy-response/
ks112: I have to agree with you that I am having trouble seeing the value in a lot of these prices but they certainly seem to be selling.
Random Poster, yes the article came out in 2016, then alot of people shit themselves in 2018 and it was and doom and gloom for Vancouver’s west side, then the 5 year yield started going down in 2019 and things started ramping up again. If people abroad with money wants to pay more for a 70s GH house than a newer house (FX adjusted) in laguna beach then that is their choice, I personally don’t see the value proposition.
https://www.redfin.com/CA/Laguna-Niguel/24545-Kings-Vw-92677/home/4925434
Dude, it’s already happening. There’s an article in the TC from 2016 even explaining this.
Random Poster, as home price gets further away from local wages I would expect immigration to Victoria to slow down also. Unless you assume most people coming here are armed with a 7 figure bank accounts.
Yes former landlord that is my point. Quality talent will always get paid, but unfortunately most people won’t qualify as “quality talent”.
The population of greater Victoria is currently around 409 thousand. Last year growth was 1.3%. The previous year was 1.7%. Let’s just say it goes up 1.5% per year over the next 5. That’s around 30 thousand people over just the next 5 years. I don’t think that is a just a drop in the bucket. Keeping up is gonna be difficult and keep the market somewhat tight. There will be the eventual dips but overall i’d say we can continue to see more of the same in the local market. I.e. Price and inventory pressure.
I don’t think they hired me because I was cheaper. If they would have found someone better suited that was more expensive in the US, they probably would have gone with the better expensive option.
I am not worried that anybody cheaper can do my job better. I still have plenty of potential to increase my earnings.
But I see your point that if you are in low skilled work that can be done remotely, WFH could be a threat to job security.
Not at all odds with reality, in fact it describes our reality. Housing is a wealth building vehicle, and it is increasingly worse for people that just want a place to live.
Newhomeowner, all good. My point is that most of these government jobs will pay more than the local private sector. I doubt
your run of the mill accountants at local construction, developement and tech companies are getting $87k a year with benefits and DB pension. Maybe the Jawls will match that.
Do they have money, or are they gluttons for punishment?
It is. That NIMBYs have to pretend to make it all about tree preservation shows how successful YIMBYs have been at shaping the discourse.
When are townhouses coming to the Uplands? ‘Cause if all neighbourhoods have to suffer the ills of density-creep, then I want all neighbourhoods to suffer. No area should get a free pass.
Seems at odds with reality unless you are looking at coops or subsidized housing.
And Greater Vancouver has 6x the population.
I don’t agree. I also don’t think the comparison would look very different comparing just downtown cores. Much higher than avg in both cities.
Leo: Actually I am not overpaying, he is very precise and extremely good as well as fast. Depends on the complexity of what you are painting. Detailed moldings and trim painting is a bit of an art. If you are doing a condo it may be a different case.
Problem is there is zero consistency from municipality to municipality situation to situation so difficult to apply someone else’s experience.
Common sense does not prevail.
Marko, I read your comment about the Saanich inspector. How ruthless are these guys? I am thinking about building a deck with permits, but I have an illegal suite. Is it risky to have the inspectors around my house? Does anyone else have experience with this?
Today I’ve learned Barrister may be overpaying his painter.
I don’t think anyone is saying they will not price to market. But more supply stops price growth, and as long as there is profit to be made builders will keep building. Problem is right now if you’re contemplating a 3 year rezoning fight, you’re not going to start that in a down market so when the market turns builders stop building. That would be less of an issue if they had a predictable path to completion.
@ks122 you’re correct. My mistake. LSB salaries are totally different. I’d correct my earlier posting but I can’t. I realized I was wrong about a minute after posting. But couldn’t get back till now.
I’ll copy my tweet on this here as well.
An epic article in the @CapitalDailyVic on 902 Foul Bay.
Here’s the problem:
Leo, The reason I keep mentioning how important it is to be careful when comparing house prices between Victoria and Vancouver is because Victoria regional district only covers 696 square kilometers. The Vancouver regional district cover 2,883 square kilometers. (A much bigger area with much bigger distances from the core.)
When I compare Victoria to Vancouver, I always look at the walking distance to downtown. There is little point in comparing regional districts.
It was 425k when we first bought in 2010. We were trying to stay under that. However, the house with suite in Sooke we ended up with was 450k so we missed out.
Still not sure how the other poster (forgot who posted it) ended up with a house with suite for 375k around the same time. It must have been one of those strata sub divisions where you could reach out your window and touch your neighbors house and you had no yard.
I’d argue housing as a wealth building vehicle and housing as shelter are fundamentally incompatible.
$975k
That’s the big if. But yeah in the past at the bad points for affordability we’ve had a long period of stagnation in prices to follow, and that was only possible due to dropping interest rates. What happens when interest rates aren’t dropping is anyone’s guess. Of course prices could pull a Vancouver, but I do think we’re reaching a breaking point here with the economy getting ever more reliant on real estate at the expense of everything else. https://twitter.com/dk_munro/status/1367444786676985861?s=20
So former landlord what is stopping someone else cheaper from taking that job away from you?
Because hiring somebody from Victoria is cheaper than the US or Toronto or Vancouver.
I started WFH before Covid, by applying for a remote position, because I could get better opportunities and pay than local companies could offer. I took away an employment opportunity from a US resident. I know I am cheaper than what they would have paid for an EE in the US, but it is way better than what most companies would pay me here.
Unfortunately unlikely to make a dent in our markets. Maybe it would shock some other markets into a pause as people wait and see what the impact is?
Good idea. The cutoffs are hopelessly out of date. 10 years ago you could still sneak in to a house under the PTT cutoff.
True that developers would want to maximize profit, but if there is profit to be made with ease of entering the market, there would be more developers and more homeowner builders that lead to more competitions and supplies, thus would lower prices.
Personally I know that there are people who collectively own several hundred acres in Sooke that want to develop their land for the last 3 decades or more, but the subdivision soft costs is so uninhibitedly high that they are leaving it empty.
Newhomeowner, you are not looking at actual lawyer salaries for legal services. Those are under legal counsel and consists of different pay bands. I know have two friends that are lawyers for government.
The talented, productive and the people you need always get their pay. There are things you need like engineers, technicians, and other actual skilled people that do things. The great thing about the pandemic is that it demonstrated how many middle management types and administrators are really not needed and actually get in the way of getting work done. Remote work has added a lot to production measurement and the be seen factor has been replaced by the work completed factor (and there is no hiding). This has connected a lot of working level to the senior level. The pros at being in the middle will be getting the squeeze because they have little offer. Who really needs that awkward conference call on teams or zoom to talk about well being because the person coordinating the call has show they are doing something (ironically wasting the time of the people that actually have work to do).
https://youtu.be/m4OvQIGDg4I
A large chunk of The NDP cabinet are here in Victoria. No way there’s a 0% wage freeze. That would be an effective paycut to large portions of their own constituencies.
My guess is the next 3 year contract continues the 2% raises to union staff and 2.25% to PEA/exempt management. Then as the next election roles around the new contract is slightly better, but nothing to write home about.
When you are in normal government 200k is limited to DMs and a small number of high level high education people(like judges).
I’m not familiar with BC Housing but my guess is that person has a mile long list of credentials and talked a good game.
Although I don’t know where everyone is hearing about these crazy public service salaries. Accountants in the public service start as FO24+6%. That’s like 69k to start and 79k after 4 years. A competent person will normally move to a FO27+6% which still caps out at 87k at the top grid. The ministry of finance has 150+ accountants in Burnaby that are paid at that as well, this isn’t just Victoria.
Official government legal services branch are mid-management or director level so their salaries range from 76k-120k.
But professionals are everywhere in government. I know finance appeals officers are all FO27 base. They only have lawyers or accountants on the team. At that classification they cap at $83k right now.
Thank you Barrister, and bonus points to you for working in a reference to the solid mahogany doors adorning your castle.
Dad: Not to worry, I am always careful with solid mahogany doors. But your kind concern for an old man is touching and may your thoughts return to you tenfold.
I dont believe that government workers will get zero increases but I do believe that their increases will be less than the actual cost of inflation. But your guess is as good as mine.
With population increases I think Marko is right and people will have to start to accept that they will be raising families in condos like they do in Europe. The alternative of creating new cities is not likely to gain acceptance.
“. In the private sector the wage inflation pressure will likely happen quickly in order to recruit and maintain talent that will be demanding increases to keep up with cost escalation”
Lol good luck with that, why would the private sector pay someone more when their biggest competition in town (public sector) is freezing wages. Unless you truly believe in the WFH, but then again if it is true WFH then why would companies hire someone from Victoria when they can just pay less for someone from say Port Hardy? I don’t understand why people all advocate WFH, true WFH just means you are now much more replaceable compared to before and your replacement can theoretically come from anywhere in the same time zone.
Marko, I would say the $200k/ year public sector folks are expected to run their respective programs/ministries which is probably a 50 hour plus a week job without taking into account emails on evenings weekends. As for job security, I know of close to 10 that got sacked in the past 6 months (all crown corp. or arms length government) making between 120k-300k+ per year.
Exempt executive employees already got the wage freeze notice back in August. The thing about Victoria is that the government workers are actually better paid compared to most of the private sector workers working in similar fields. Just compare any accounting, finance, job at the public sector to a similar job at a local private sector firm. Maybe some higher salaries in private sector tech companies but doubt it applies to the majority.
“their will likely be 0% wage increase mandates for the upcoming decade and salaries will be eaten up by inflation”
Maybe you are referring to exempt employees, but if not, it seems that this might be easier said than done, especially considering who the government is.
The government worker challenge for the next decade will be interesting in the aspect they will see inflation eat away at their standard of living. With the big deficit financing likely leading to fiscal restraint measures from all levels of government, their will likely be 0% wage increase mandates for the upcoming decade and salaries will be eaten up by inflation. In the private sector the wage inflation pressure will likely happen quickly in order to recruit and maintain talent that will be demanding increases to keep up with cost escalation (probably see a public sector brain drain because of frozen wages). Now Marko, you think there is dead weight in government now, just wait until it is a bunch of them that think they are under paid and the few that did all the work moved on the private sector for higher pay leaving behind the ones that don’t have other employment options. Some of the sharper ones will find wage increases through government by taking their pensions and coming back as private contractors for government at higher rates of pay (bypassing the 0% mandates) because the staff that is their is incapable of doing the work, but there is still work that needs to be done.
But you are not dealing with actual stress thought…Wendy Jane Ann Acheson, VP & Registrar, Licensing
and Consumer Svcs…she brought in the Owner Builder Exam, zero evidence. No other province has it. No problem in the first place. She makes 210k/year. The exam has put 1000s of people into unnecessary hardship and they probably receive a ton of hate mail, raging phone calls, etc. People driving to testing centers during covid, wtf. 5 years into it they haven’t released one piece of literature noting what this exam has changed. Such a massive success no other province has decided to follow in the last 5 yrs.
Who cares? She knows a few thousand people a year aren’t enough to lobby the government. She knows you can’t build/sell your house without playing by their rules. Who cares if BC Housing takes two weeks to give people results on a multiple-choice test?
Where is the stress when you can do whatever you want with zero risk of losing your job? A lot of these jobs are not intensive care where lives are on the line, they are complete non-sense. How do you get stressed about something that if the department disappeared overnight nothing would change? The same owner builders would build the exact same houses using the exact same methods.
Marko, I can guarantee you that a $200k a year job in any public sector (core, crown, municipal or arms length) is not stress free and you will be chained to your work phone and most likely won’t be able to use all your vacation. The stress free ones probably $90k and under. Pension is good though, ~120k a year indexed for inflation for life after 30 years (assuming you average 200k/year for your top 5 years).
Only issue is a private contractor could probably could do the work for <150k.
Don’t worry, I have offended people many times with my government comments. I have no issue with the individuals. As I said, I would personally take a 200k/year job at BC Housing to literally run a department made up of thin air with zero purpose and I would sleep well at night knowing I can relax on the weekends, massive pension, vacation in peace, etc. I am not going to lie and saying I would have a moral issue taking taxpayer dollars to do nothing, I would not. My beef isn’t with the workers as I would behave the same.
My issue is with the system, so inefficient and then we complain about housing costs. Well yea, when everyone is pushing paper, and no one is swinging hammers housing has to go through the roof at some point.
Totally agree. When people are idiots and post that kind of fraud online, it makes enforcement really easy. I’d screenshot their post and account and send that in to the Residential Tenancy branch https://www2.gov.bc.ca/gov/content/housing-tenancy/residential-tenancies/contact-the-residential-tenancy-branch
Sorry i meant that a 375K mtg costs about 1600 a month. So if you have a 900K mtg and someone paying for 375K then you are paying the other 525K portion of the mtg. Not to do with qualifying.
Someone in Toronto just sold a digital house for more than $600K
https://www.blogto.com/tech/2021/03/toronto-digital-house-nft-600k/
“So you aren’t the only one that thinks the majority of HHVers are government employees”,
No that is pretty apparent, fact is public sector employees make up a decent population of the above average income work force here so if most of them are priced out then something is out of wack. If this trend continues then the next group priced out will be your cop/fireman and nurse couples making $160k-$200k combined a year.
I am not sure if this will happen because i just don’t think there are enough jobs in Vic that will pay salaries of 120k + per year versus the # of SFH available. In Vancouver a first year Lawyer at any of the big or elite boutique law firm will hit close to $120k/ year, in Victoria, government lawyers are probably on average the best paid outside of some successful partners in town and they are probably not hitting $120k until after year 5, at 5 years call the vancouver lawyers are probably around 180k all in.
@marko juras
Yes, if that’s how governments worked. Oftentimes – in this case, definitely – government priorities change so regularly that it’s a challenging business case to put up the capital costs to make those changes. Automating those processes would cost $10m+ if it was competently managed so you’d need 3-4 years of guaranteed continued operations to justify automating it. Now this program might be around for a generation, but it might also collapse with the next government. Civil service is deeply risk averse. There’s no risk in continuing as is.
I am a fan of contracting the work out to private sector organizations that do this sort of work specifically. Presumably these businesses can do it at a fraction of the costs(they must – many companies have automatic systems in place to do what we do). But in practice the bids come in higher then it costs for government to just continue plunking along.
The city clearly requires more carpenters then it does government paper pushers. But in actuality the city needs both – as there are jobs available for both. And while barrister claims to have painters that are paid $50+\hour directly, the truth is that these jobs (painters vs entry level public servants) likely have similar monetary value to society.
So you aren’t the only one that thinks the majority of HHVers are government employees 🙂
And we’ll never get out of the hole with Canada’s immigration levels.
Here are the targets:
2021: 401,000 permanent residents
2022: 411,000
2023: 421,000
Buying a condo that can be rented simply gives you much more flexibility. For example, I had clients thought bought a RENTABLE condo in 2008. By 2014 it was down approximately 15% but they had equity, the rental market was solid, and they had enough downpayment and income to qualify for a home. The purchased a totally livable solid home in Oak Bay in 2014 in the mid-600s. Rented out the condo for four years from 2014 to 2018 and then sold the condo for 200k more than what they would have sold it for in 2014. The problem is when it is a great opportunity to buy a SFH your non-rentable condo will be near impossible to sell.
Won’t bother going through all the other scenarios (job opportunity comes up in a difference city, etc.).
“If it is any comfort we are moving to a smaller town and our house should be added to inventory for hopefully a new happy family.”
Don’t let the door hit you, etc.
“So we have 35 people basically doing nothing….wouldn’t it make sense if government was efficient and 35 people were working in construction to provide housing instead?”
careful Marko, I have offended some people by saying some government union workers don’t do much to collect their pay checks.
100% true, but if you had 10 condo towers going up downtown and 20 small townhome projects with 10 to 20 units spread out in the COV it would create for a competitive marketplace.
Also, if there was less bureaucracy the big players wouldn’t have a stronghold on development. Aryz can afford to sit on the $2.5 million Foul Bay property for years, small builders/developers can’t. If you had more developers, again more compeition.
Barrister, their lies the issue with Victoria house prices, even with above average house hold income it is not currently affordable. I believe Cadbro works for government so everyone is valued per the pay bands that are set, there are no exceptions. I have suggested folks try to make more money since I first posted on this forum because core government, you are not really making a decent income until executive director ($120k plus) where as at a crown corp or municipal (so you don’t lose the DB pension) you can hit that at manager level.
Rush: Add the Emperor has no clothing.
“Honestly I think getting a townhouse is a bad middle option. Buying a SFH with a suite seems a lot more logical.”
I think you’d have a hard time finding a house with a suite in the core that’s any good for less than $900k. There would probably be options in Langford.
Anyway, I don’t think a townhouse/house alternative is a bad middle option at all.
We bought our first place in 2015 with a combined family income of something like $75,000. We could have squeezed into the bottom end of the SFD market, or an SFD with a suite. Instead, we bought a unit in a small strata property that we felt we could live with for five to ten years. The equity from that property then became the down-payment for an SFD, and because our family income is higher now, we don’t need a suite.
Would we be better off financially if we had just bought the damned house in the first place? Almost certainly. But had we not bought anything at all, we would be priced out of the SFD market.
That’s tough, everyone’s circumstances are unique to them and no can really say what is best for another to do. I will speak to my circumstances and considerations right now and please take from it whatever you can. In a similar situation (family of 4 in 2 bdr condo) and feeling the space crunch, but making it work by reducing items and trying to keep the space comfortable. I had to separate the acquisition of a SFD into two lines of approach: a lifestyle choice or an investment. As a lifestyle choice, I am willing to pay for a gain in lifestyle to have a SFD and the commitment of funds to that coming from other things that I enjoy such as vacations, hobbies, savings and future plans (basically what is the lifestyle sacrifice vs. the gain). As an investment (for me), it becomes a non-starter because of such a large commitment to a single illiquid asset that takes up a large part (percentage wise) of my portfolio. It wrecks my diversity and puts my investment stance in to high of risk position holding one asset tying up so much net worth and cash commitment. So, I approach it from a lifestyle choice, but with the budget considerations not to impact my maxing out TFSAs, RRSPs and RESPs; however, I will be rolling back my higher tax exposed investments in order to divert cash towards a purchase. So, in looking at the lifestyle choice and finding the budget, I try to be as flexible as possible, but with some key factors: does the property allow for growth (can I add a floor up or down); is the neighborhood kid safe (needle sweeps in the park to play); are the neighbours tolerable (can I live 20 years now it to these people); the school catchment (some are way better than others and if I am paying 12k a year for private school it affects purchase price); condition of the house, the more ready to go the more I am willing to pay (if it needs 200k in work, that comes off my purchase price) and current carrying cost vs. future carrying cost (in 5 years if rates are at 3.5% vs. the around 1%, what does that do to my finances). I have never been waiting for a crash, however, I will not be forced into buying something because it is the only thing I can get. I can accept a house losing value in the lifestyle choice approach that I am taking, especially if I am financially prepared to carry it the asset in all circumstances. The thing I am looking for is some flexibility at my price point that enables some choice, ideally with some building inventory and a reduction of the bidding wars. That said, my area for looking during the last year has been Sooke to Sidney and all points in between. Cheers.
I agree with you Rush. If it is possible, and you can get the funds, it probably would be better to get a single family
dwelling with a suite. If you have parents whom you get along with (and maybe help with the down payment) that would be a big plus.
But there is the capital gains aspect of it. Also maintenance particularly comparing a new townhome with an older SF home. Maybe it’ll need a new roof, new plumbing, septic field/tank problems….or in Langford possible mandatory sewer hookup.
Oil tank?
I’m not sure if Caddy and family can reasonable afford a $800K plus home. She (he?) hasn’t said. If they can, there have been a few sales lately that weren’t too bad of a deal.
So we have 35 people basically doing nothing….wouldn’t it make sense if government was efficient and 35 people were working in construction to provide housing instead?
Encore contributes more to CRF, has full time concierge, and heating/ac is mostly included (sans air handler in each unit) vs Shutters is baseboard.
@rush4life a suite that rents for $1600 only counts for 300k of your mortgage if you are paying 20% down.
If you aren’t I believe 50% of it is counted to your income. So it would increase your income by $9600\yr. Or better stated, a suite that rents for $1600 a month would increase the amount you’re approved for with an insured mortgage by about $75k.
Cadboro: First you make less than my painter and his wife who are at 170k for the two of them. I am sure that you are a valuable part of the community, Unfortunately your employers dont think you are valuable enough to pay enough for you to be able to buy a house. ( I have no idea how they calculate average family income in Victoria; whether you include or exclude students and retirees would make a hell of a difference on the average. My neighbours probably have a net income of under 40k but a net worth in the millions).
I am sympathetic in that many decades ago I had to buy a house that was well over an hours commute from work in Toronto. Eventually I rebuilt this house since it was literally falling apart and it was where I lived until I retired. By that time the commute was even longer every day. Victoria has grown and grown a fair bit even in the last ten years. I suspect that Victoria has reached a density threshold today that has shifted the cost of SFH.
There are a number of things the government could do to reduce the cost of SFH such as removing GST on new builds, remove the agricultural land preserve designation on things like golf courses ,
But at the end of the day nobody seems to value you enough to reward you with big enough of a salary to buy a house.
If it is any comfort we are moving to a smaller town and our house should be added to inventory for hopefully a new happy family. (or for a developer to squeeze i n whatever they can.)
Speak of the devil – OSFI responded. For background I emailed them on the 15th and basically just said the new B20 guidelines weren’t very effective seeing as banks were circumventing them for people with 20%+ down (uninsured mortgages) by just changing the TDSR ratios. Here was the response:
“Good afternoon,
Thank you for your email of March 15, 2021.
As you may know, the Office of the Superintendent of Financial Institutions (OSFI) supervises federally regulated financial institutions (FRFIs) to determine whether they are in sound financial condition and meeting regulatory and supervisory requirements. While OSFI plays an important oversight role, it does not manage the operations of FRFIs, and this includes responsibilities around setting their own loan underwriting risk appetite.
OSFI sets rules for uninsured mortgages, while the Minister of Finance is responsible for measures related to government-backed insured mortgages. OSFI’s Guideline B-20 is principles-based and, while we prescribe a minimum qualifying rate for uninsured residential mortgages, it is the individual financial institutions that decide the maximum ratio they are willing to accept when making qualification decisions.
On March 13, 2020, OSFI suspended all of its consultations and policy development on new or revised guidance in response to challenges posed by COVID-19. This suspension included OSFI’s consultation on the B-20 benchmark rate for uninsured mortgages. We should note that guidance, such as B-20, is subject to ongoing review for effectiveness and remains priority for our policy agenda.
Since the consultation suspension, the environment has changed. Currently the housing market in Canada continues to evolve given the unprecedented conditions brought on by the COVID-19 pandemic. OSFI continues to monitor the environment closely, and is carefully considering the next steps on this important consultation.
We hope this helps explain OSFI’s role.”
I think i’m just going to write back that i understand the role but whats the point of inputting a rate if you can’t control the other qualifying aspects – it literally has zero impacts in that case and just seems for show – anything else you think i should add anyone?
Yes, the discussion about increasing supply always seems to overlook the fact that developers price their product to the market- not to the sum of the inputs + a % of profits. They’d be stupid not to.
Until the market slows due to external forces, increasing supply is unlikely to have any impact on prices. Yes, once supply increases sufficiently so that it’s a competitive market, then you’d expect it have an impact on prices, but we’ve under built housing for years, so it’s reasonable to think it’s going to take years/decades to get out of this hole.
(and in way should this be taken as an argument against increasing supply/making it easier to develop and build- just that we shouldn’t feed unrealistic expectations)
I know. It’s so dumb.
“If government, NIMBYs, and renters fast track/allow developers to subdivide, and break ground within let say 90 days after possession date and delete the majority of the unneeded paperwork, that would greatly reduce the over all costs that developers could pass on to buyers.”
I don’t know about that, the developer will just base their price on a comp of what has sold recently in combination with their outlook on the market to maximize their profit . No one will take less profit just to give buyers a break, you would need a competitive market of developers willing to undercut each other for market share for this to happen, only happens in the slow market.
No one is going to sell something for 900k when the market for that product is $1M regardless of how much less it costs them to build. Even If someone built it for $10K, they are still going to price it at $1M.
Honestly I think getting a townhouse is a bad middle option. Buying a SFH with a suite seems a lot more logical. For one you can boot the tenants once you are done with them – you dont’ have to keep them forever. This can also be good for having parents etc move in with you later in life. For two you have a more valuable property when its done and you have full ownership and can do with it what you like. You are sharing walls / floors in both scenarios. Also the monthly costs are less – right now you can rent a two bdrm for minimum 1600 which pays for like 375K of your mortgage. The spread between TH and SFH is too close to make it worth it in my opinion. These days richer old people buy Townhomes and poorer families buy SFH with a suite. I get that you are a landlord in one instance but to me its totally worth it given the cash flow difference.
We’ve had two distinct times when stuff like this has happened in just the past ~5 years!
Victoria. What a place.
Sorry but I can’t cry for this couple. They stand to reap a huge payday from the sale of their newly created 7,000-square-foot lot in spite of the $300K bill from the city.
And the article states that up until 2017 Oak Bay was losing money on these types of service upgrades and therefore had to adjust its fees.
Could the city perhaps have provided more cost transparency earlier on in the process? Yes.
“Doesn’t cap it as long as there are investors who are willing to run at a loss in expectation of selling at a profit.” I said most investment properties, unless you think most investors are ok going say >$1000 a month negative cash-flow for a gamble that it will sell for more in the future.
The issue with Cadbro is also the lack of a substantial downpayment. According to Marko, for a SFH Cadbro is up against couples making ~160K a year with 20% down payment ready to go.
Caddy: Some of us older folks on here truly want to see you and other younger people succeed in getting that home now or sometime in the near future. The only way we can give advice (and you did ask for it), is by reflecting on our personal experiences. You are right…..it doesn’t seem fair that a couple making over $100K a year cannot afford to purchase a decent home to live in. But it is what it is and things seem only to be getting worse in terms of affordability of home ownership here in BC and especially in the Vancouver or Victoria areas. So, all things considered, there is a very slim chance such as the housing market completely tanking, that you will be able to afford a SFD in this area. Right now you can afford a nice 3 bedroom townhome. One that almost checks all your boxes. I truly feel that it is unwise to put yourselves in a situation that you are going to be just eking by year after year. A nice townhome especially a detached one, will eventually become a decent investment. I also think there is a good chance too that come this summer things will calm down a bit thus the bidding wars won’t be so rampant. None of us know the future.
Investigative report and podcast on 902 Foul Bay rd development
https://www.capitaldaily.ca/news/902-foul-bay-road
True to a point, and no one going to do business if they can’t make a profit on their investment. And, you must put some of the blame on the government due to the sky high soft costs and policy delays that add to the over all costs.
If government, NIMBYs, and renters fast track/allow developers to subdivide, and break ground within let say 90 days after possession date and delete the majority of the unneeded paperwork, that would greatly reduce the overall costs that developers could pass on to buyers.
Not either or. Houses sell for what people are willing to pay for them. Land sells for what builders are willing to pay for it which is determined by what they think they can sell the house for and make a profit. So if prices have gone up a lot since the builder bought the land – like right now – the builder is going to make a bigger profit but that’s not because they control it but because the buyers have decided to pay more.
Doesn’t cap it as long as there are investors who are willing to run at a loss in expectation of selling at a profit.
“Median household income in Victoria is around $80k\yr and median household income when you account for university educated two incomes in their 30s is around $130-140k\yr.”
Leo it would be interesting if you can do a chart on the average rent in Victoria for a 2+ bedroom place as percentage of household income (after tax). It would be interesting to see how much stress renters are facing currently compared to historically. At the end of the day, rental income should anchor the price of most investment properties so there should be a cap (60%?) where people just can’t pay anymore rent with stagnant wages. As a result that will cap the prices for investment properties.
Barrister we make more than your painter, around 115k together, Almost 50% more than average family income here, I don’t think I’m all that entitled to think we should be able to buy a Langford cookie cutter vs. “moving to where it’s cheaper”. We work in govn’t / university. It feels pretty awful to be pushed out just to get a basic house. I think we’re a valuable part of our community and I think people who make less than us should be able to get in as well. Don’t want a dog but 2 bathrooms would be luxury.
Not sure that the cost of labour is what’s making these houses >700k, they’re built across Canada for much less than here, is it the land value or profit? Lumber is the same price at home Depot from coast to coast.
That is incorrect. Absolutely meets the definition of investment.
Cash flow is only one measure. You cannot forget appreciation and cash on cash return.
I’m so tired of people saying you have nothing until you sell. It is just so not true and has been disproven year after year after year after year… as people post the same views. It is part of your net worth and is measurable at any given point in time using investment audit criteria and not just when you sell. You can also borrow against equity.
And it has been a good investment historically here. Who knows what the future will be, but it is foolish to name a second property that you rent out in an appreciating market as anything but an investment.
Barrister – Less so in Victoria. There is a so called “beauty” tax which recruiting agencies gave me fair warning about when I decided to relocate here.
The general rule is that in expensive cities to live you pay people more.
“If I were to purchase a townhome or condo, it would have to be one that could be eventually rented out….Just keep it for an investment using the equity when needed.”
This kind of thing gets said here sufficiently often that it becomes some kind of mantra.
What you have described is NOT an investment for the simple reason that there is no such thing in Victoria as a single rental unit home that can even remotely be described as an investment – there is zero chance that the capital tied up will yield an annual profit once the landlord’s full and genuine costs are factored.
What you have described is a highly leveraged speculative play against expected rises in the value of the property.
Not knowing the difference between the two is a recipe for tears.
In my friends experience the waiting list goes faster than expected as other people on the waiting list are finding other options. Some buy, some move away, some get into a different coop, etc etc..Bottom line for one of my friends I know that the multiyear waiting list ended up only being a wait of just over a year.
I wonder how you expect people to live here who we need for our daily services – grocery store workers, restaurant workers etc. None of these people are making 70K a year – should they all leave as well? I realize you are referring to prices vs rent but they follow the same trend for obvious reasons.
Leo literally posts an affordability graph that shows that there are better times to buy and sell over the last few decades. Now is a peak bad time to buy if that trend continues. I’m not advocating waiting as past is not indicative of future, but simply saying history disagrees with your statement. And buying in a time where there are multiple offers going 50K+ over ask on the norm, no conditions, etc is likely not the best time. even if prices dont’ come down wouldn’t you rather be bidding on place where you can actually have it subject to a inspection? This FOMO won’t last forever.
@Barrister
LOL. I hear lots of stories about house painters that make 100k\yr. But even a skilled one actually makes around $25\expected hour of work(faster ones make more – but it’s not consistently THAT dramatic a difference). I have friends that own their own painting companies that make 6 figures, but I doubt 100k\yr is the average.
Median household income in Victoria is around $80k\yr and median household income when you account for university educated two incomes in their 30s is around $130-140k\yr. I would guess Cadboro has a household income of around $150k\yr. I assume his frustration is timing more then anything else. I actually have a similar financial situation to Cadboro, except I bought a townhouse in 2017. 6 months ago my realtor thought I could list at $580k. I had an appraisal for a refi done a few weeks ago and the appraiser appraised me at $750k.
When you account for taxes my house has made more in the last 6 months then I’ve taken home in two years. And it isn’t that rare for people to be poorer then your wealthy painter. My government office(85 total) has 70 (union) staff that make less then $55k\yr.
That being said, in the private sector we’d certainly be able to eliminate half of them with a bit of planning and some early 2000s web technology.
Ahem. That happens every time there’s a downturn in prices. Otherwise prices would never go down, right? The words “Bear Mountain” might ring a bell.
Marko, the cost per sqf of strata in the shutters seems pretty reasonable given the amenities at around 40 cents per/sqft compared to over 50 cents at encore. This is surprising because encore is a newer building with seemingly less features.
Cadbro: First I do not have the slightest idea of what the housing market will be like six months or a year from now. But if pressed I would guess that it will level out at best and that it may continue to climb a bit more on the lower end. Considering the increased costs of both material and labour I have a hard time seeing the cost of homes declining in the west shore. Cannot sell them for less than it costs to build them.
Frankly I doubt that you will find a SFH in greater Victoria for under 700k again or at least one that is not a total wreck. I have no idea what line of work you are in but my house painter makes more than 100k a year and his wifes income is around 7k plus. If your family income is less than that you either are in the wrong line of work or living in the wrong part of the country to support two kids and a dog.
I am also not clear whether your limit is 700k with a tenant or without one. If without then there are properties in either Sooke or Mill Bay under 700k but that has commuting costs. Otherwise, getting a condo or townhouse is your best way out of the mess or move to were your income and house costs match. Waiting for things to get better in Victoria is not likely to be a winning strategy.
1st time buyers mostly buy what makes the most sense for them to live in, but the least sense in terms of investment. What I mean by this is they will buy into a crappy wood-framed non-rentable two bedroom unit instead of buying a solid rentable one bedroom, or similar.
The first place I bought and lived in kind of sucked. 530 sq/ft poorly laid out, no window in the “bedroom,” no parking spot, etc., but it has been an amazing investment (downtown concrete building easy to rent). It has gone up more than 60% in value, I haven’t had one month of vacancy, no special assessment, cheap strata fees as it is small, and it has been cash flow positive since day one. My tenant is moving out in a few months. Will replace dishwasher/washer/paint and re-rent again.
I agree with Barrister about Shutters. Things probably have improved but when the complex was being built it became a horror story. The huge pond was leaking water into the underground garage. The townhomes main floors all had to be redone because of leakage as well. If you are facing the pool in the summer the noise from the activity could well be irritating.
I have known a couple of people whom have purchased there and they seemed to enjoy it.
Just listed for anyone that is interested: MLS 870201. Three bed, 3 bath detached single family townhome.
In August, Sept & Dec 2020 there were three 3bed/3bath townhomes at 2633 & 2720 Shelbourne that sold for $560K,$587,500 & $596K. I am pretty sure one just sold last month for below $650K can’t remember the actual amount. Maybe Marko would know as he is always on top of sales history and the condo market. If I were to purchase a townhome or condo, it would have to be one that could be eventually rented out. I would probably never sell it. Just keep it for an investment using the equity when needed.
People should move to Esquimalt if they want to renovate older houses- world’s easiest building inspector to deal with.
Speaking of which – what did 500 Joffre St. go for? That was an interesting one as there was a fixed term tenant until Sept 1st- so it’s almost like a future’s contract on the value of the house today. Asking $979k which is about double what it would have been worth in 2015.
That is already illegal. You can’t occupy a home without living in it. Boxes of stuff won’t do.
From RTB:
A landlord must act in good faith if they plan to end a tenancy to:
Move into the unit, or have a close family member live in it
Sell the property and the new owner, or a close family member of the new owner, plans to live in the rental unit
That means the landlord has honest intentions and no ulterior motive. The landlord must honestly intend to use the rental site for the purposes stated on the notice to end the tenancy.
Breach this and you can end up paying your former tenant 12 months’ rent.
https://www2.gov.bc.ca/assets/gov/housing-and-tenancy/residential-tenancies/policy-guidelines/gl2a.pdf
They’ve fixed a lot of their issues over the years. I wouldn’t say the shutters unit is cheap? You have bigger units at Encore which is only two years old at $830k.
Two phone calls from previous clients this week with nightmare stories with Saanich/COV. My client in Saanich went to fix the siding around a small, expanded entrance way put in by previous owner 16-17 years ago without a permit, inspector showed up and now it is complete mess with Saanich being totally unreasonable. COV story even more ridiculous.
Just saw this story a few days ago too -> https://www.vicnews.com/news/oak-bay-seeks-300000-from-homeowner-to-split-lot-into-two/
Every few days it is one crazy municipal story after another and then it’s like why is housing so expensive, obviously foreign buyers.
That is not a bad idea.
KS112: For what little it is worth I rented a condo in Shutters for about 9 months while I was house hunting. The building was undergoing a lot of remediation but I suspect the worst may be behind and redone properly. The obvious concern is the water features, especially the huge pond that had necessitated major repairs.
One word of caution is the location of the unit to the swimming pool. While the pool is nice to have screaming children right by your unit might be less nice. Obviously my information is years out of date but it seemed a pleasant building and convenient to downtown.
Disallow deductibility of rental operating losses against other income. If an investor is running an operating loss this means they paid too much for the property. Might actually happen since it goes after investors and brings in more tax revenue.
Rush I’m glad you wrote in I’m sending letters off to my MLA & MP thins morning too. And the MLA & MP’s of the riding I was renovicted from last year.
Budget wish lists:
I like everything New Zealand is doing to tip housing towards first time buyers and away from investors. Would be nice to see Canada copy all or some of their ideas, like higher downpayment requirements for investment property, taxing capital gains based on brackets and length of ownership. Some shifting of the goal posts is needed here if we’re to level out ownership.
I wish they’d part the interest rate on mortgages from the BoC rate, allowing mortgage to go higher.
What I think they’ll do though is bring in a national foreign buyers tax, though it’ll have basically no impact it’ll be popular because people want to point to a foreign boogeyman vs. point at ourselves for this mess. I also think tweaks to the National homebuyer plan are coming to allow first time buyers to give the Feds an even larger stake in housing.
For BC: I think the owner use of property rules should be changed, 1. Giving tenants 4months notice to move, any less really screws them from buying as happened to us. And 2. Owner should have to occupy for 12m vs. the current 6m minimum before re-rentng. Saw someone post to a housing group that they recently acquired a 7-plex on the island and wanted to jack the rent. It was suggested they just “pretend to move in” to each unit and store boxes there, only have to do so for 6m then flip it to higher rent. This shit needs to stop.
I think they should tweak property transfer tax, it’s going to be a huge chunk of our downpayment and we can’t even mortgage it. I think the exemption bar is way too low, should be under 700k, no PTT for 1st time buyers. They could make up for this by doubling the PTT on investment properties.
I agree the Feds won’t do anything – too much risk if they are going to call an early election. BC is the only hope. This week I wrote both OSFI (RE: b20 guidelines only being effectively applied to insured mtgs) and David Eby about housing issues. I expect canned responses from both (if any response) but will let you all know what they say haha.
Marko, do you know if there is anything wrong with the Shutters building? There is a 2 bedroom there going for 735k now that has been listed forever, strata seems pretty reasonable too.
Basic income, as opposed to temporary pandemic aid, is a very controversial issue and I don’t think the Liberals are going to advocate it.
With respect to housing, penalizing foreign ownership has been popular at the provincial level and the feds might want to get on board. Stuff like tightening lending requirements doesn’t have to be in the budget – it’s not a taxation or spending item – and I don’t think it will be.
“Fed budget comes out on April 17, I hope BC and Fed have some Easter eggs”
I don’t think the Feds are going to touch the housing market other than some very minor tweaking if anything at all. They don’t want any controversy going into a potential election. They are more likely to focus on goodies like childcare and the suggestion of some sort of basic income.
Cadboro I feel for you! We were in a very similar situation when we bought 1.5 years ago with kids/renting for a long time. I just can’t see how prices can keep rising. I have little experience in real estate but have followed it for many years. But my advice would be to sit down with your partner and set a date you want to move by. Say 2 years from now. Then you have hope and the pressure is off for now. IMO this pandemic real estate boom is bonkers and I wouldn’t personally partake. In 1 year you can see where the market is headed and make a rational decision for what/when you would like to purchase.
Although owning our first house has been fun it is much more work and money (3x more) than renting. I also think there could be benefits to a newer townhouse if that’s what you can afford (less maintenance but can still plant a tree etc) and you can always move in the future. Wish you all the best as I know what it feels like to have the dream slip away with each nutty 100k increase of a sfh. You will get there one day!
Re: co-ops, interesting suggestion, we had considered one a while ago and the waitlist was years long so I never looked into another.
Introvert sorry to also answer your question, yes i did think prices would come down. We did at some point have a downpayment that I’m sure would have got us into a townhouse we just hadn’t lowered our expectations to one at that point.
Thanks for the responses, it’s helpful to hear a variety of insight.
Introvert, KS112 is correct we were always a bit behind affordability as we were building our downpayment as prices have increased faster than we can keep pace. Also have changed priorities in what we were looking for last yr from house with suite, to 3 bed without suite, to almost dropping the 2nd bathroom. Prior to our recent savings years we also paid off 70k in student loans and bought a newish vehicle with cash because like you, we don’t like debt… In retrospect we should have carried these debts and funneled more into downpayment savings.
Dad / Josh I really hope by the fall the steam wears off and we can buy without this bidding insanity, wish we had just bought last fall. I was planning on seeing a house tomorrow until I saw that nauseating “offers reviewed at 4pm” that reminded me the price is not the price. The seller wants to keep the washer and dryer too, after a half million dollar gain on what they bought this for. Gross. We do look at Duplexes as well, and have townhouses in our matrix search. FYI Alexandracdn townhouses on Shelbourne start in the 700s they’re no longer affordable.
Totoro your generational housing setup helped me spark a convo with family, no one’s moving but we’re looking at all options. The stress test means we can only count half of the potential rental income from a suite and a co-sign might bridge that gap.
Fed budget comes out on April 17, I hope BC and Fed have some Easter eggs for us it’s a good marker to wait for.
Regarding Alexandracdn’s suggestion about possibly purchasing a beautiful penthouse condo with “Expansive Ocean, Mountain & City VIEWS” on the 6th floor @ 826 Esquimalt road. One might want to check out this link before rushing to go all in:
https://victoria.citified.ca/rentals/819-823-esquimalt-road/
Good luck Cadboro. My advice, being in the same relative boat as you, is to wait it out. It seems as though things have gotten too stupid, too fast for this market to not end badly.
Wicked clever.
Sure. Not sure why you keep pointing this out. Victoria also refers to Greater Victoria including many outlying cheap areas. Of course prices in the best areas in both cities were much higher than the overall average.
Leo… those comments about Vancouver prices being quite close to Vancouver prices during those specific dates…. back in 1993-2003….. surely that is refering to the “greater” Vancouver prices? (Which is a huge area out to the valley etc)
(Plus the fact that it included condo prices as you mentioned.)
By the way…for those of you who think that Vancouver prices crashed a few short years ago….don;t feel too sorry for them…..keep in mind that they were still $2.5million for a bungalow on the west side. My friend was offered $3million and didn;t take it. It went down to $2.5 million. Five hundred thousand less. Now it has gone back up. Hardly a crash is my point.
I ended up waiting ~4 years to buy my current place. I had different needs and was quite happy where I was so my experience is different, but I do think there can be real value in waiting. With the current state of market insanity it isn’t a case of stretching financially or lowering expectations – it’s just a case of waiting for the insanity to stop. I know the sense of sliding backwards is awful but overpaying for something you don’t actually want would feel quite a bit worse.
Others’ suggestions of getting in line for a coop is a good. I’ve got friends with kids that are really enjoying that. You also don’t have to go into the SFH product class in order to avoid strata fees. They’re rare, but there are non-conforming stratas. I live in a duplex that has no strata fees or strata docs. I can maintain my property how I like, the common areas are very low maintenance, and the roof lines of our units are separate. I can also grow whatever I want in my garden – some stratas have a stick up their butt about that stuff. It’s a SFH lifestyle without the SFH price.
I don’t know if this general advice will apply this year, but in the fall there will (hopefully) be leftovers that no one else wanted. Perhaps the property is a bit weird, or perhaps the sellers were just fishing, but combing over these leftovers might have something worthwhile. The sellers were fishing for my place and didn’t sell in the summer. They were waiting to relist in spring. We approached over winter and bought it unlisted. Not being on the market meant no competing offers – highly recommend not competing with other buyers if you can manage it. It’s so easy to get caught up in a bidding war and over pay.
Caddy: You are not at this time going to get what you want. The market is ridiculous out there. I understand the pressure you are feeling. You do not like where you are right now. Your wife doesn’t like where you are right now. The pressure is building. You do not want to move to another city. There are only two ways to go. Either you change your mindset on the type of accommodation you need (want), or you accept your lot at this time and hope for the market to correct. Just don’t keep chasing your tail.
Maybe take your wife and look at some alternatives. There is a beautiful 2019 built condominium at #601-826 Esquimalt Rd. Asking $625K. It is gorgeous with all the bells and whistles you could ask for. Three nice size bedrooms, two chick bathrooms, two balconies that you can barbeque on and views that I believe you would enjoy incredible sunsets from. Parking and separate storage. Strata fees $269. Absolutely the best bus service that you could ask for right at your door. A couple of blocks away is the Westbay walkway to town. Gorgeous Saxe Point Park is close as is the memorial park offering a cute playground. Two shopping centres are nearby as is the library, rec centre etc. You are allowed pets and the suites are rentable.
The thing is here, you would have a beautiful place to call home. If prices go down at least you can wait things out comfortably. If prices go up after a few years, you will have more equity, because I know you will be saving all that extra mortgage, taxes, utilities, & upkeep money that you would have sweated out paying on a house that was keeping you cash poor for much of your adult life. Then, maybe one day when you have all that extra cash burning a hole in your pocket, you will be able to purchase a SFH. Hey, you may even be able to keep your condo as a rental investment and then, when you are ready for retirement, you can move back into it.
What is that old saying? Over analysis causes paralysis. Don’t agonize any longer. What ever your dream may be, make sure it has some possibility of being attained, set out your plan, establish short time goals that can be reasonably meet and then set it in motion.
p.s. : There have been a few townhomes in the Shelbourne area that I think sold in the same price range. I know of a couple with one child that bought one a couple of years ago and they love it.
I would hold off buying until the market normalizes somewhat. The 85% sales to listings ratio is so far into the sellers’ market it’s ridiculous.
But maybe you can’t put your life on hold for a year or two and must bite the bullet.
Thank Leo. This market really is nuts. Depressing for FTB’s all round. I wouldn’t participate if I were one.
I think Cadbro didn’t have enough downpayment back then. She metioned that on cashflow basis she is actually better off buying something more expensive now compared to something cheaper before.
Curious as to why you did not buy before now? Were you waiting in the hopes of falling prices?
The difference between the average transaction price exhibits a similar pattern but the absolute difference is much less. That’s because the sales mix in Vancouver is much more condos.
Thanks, I misread that graph.
Not sure. I think part of it was definitely foreign investment. The foreign buyers tax put a hard brake on that market, but it’s not like the money went anywhere, it’s still in the market and spills over to the surrounding cities.
However also important is that single family is an ever-shrinking part of the market and Vancouver is substantially ahead of Victoria in that regard. Maybe it just hit an inflection point where the external money flows overwhelmed the limited supply. If you look at the average residential price including condos, there isn’t that much of a difference.
Original Price: $749,900
DOM: 5
Sold Price: $950,000
How is it fundamentally different? Unless you believe BoC’s goal is to support asset inflation to perpetuity.
Informal poll, WWYD if you were me today?
Fundamentally, it is different this time.
1262 Camrose list was $1.75m
What was Camrose listed at? Did someone pay crazy amount over asking or was it priced around there to begin with?
Looks like a few of us are shaking our heads at 1262 Camrose. I’m shocked for all the same reasons. I’m gonna guess an out of town buyer. I will say it looked exceptionally nicely done, but that doesn’t support the price in my view. Buy hey, all it takes in one buyer to see the value. Anyone know how many offers?
Totoro, IMO the only place that should sell for $1.8M in Maplewood are the ones on top of the hill with the view. There must be something else going on with that house that would entice someone to pay $1.85M for it.
Given there are zero bears left on this forum and almost everyone thinks prices will keep increasing, I would say the chances of a correction or crash is higher now than it has ever been in the past 5 years.
It’s certainly been an exciting year, been lots of exciting posts on this website and great analysis during a unprecedented time. Much appreciated & enjoyed.
For the graph of Vancouver/Victoria house premiums vs. number of Vancouver buyers, it would be interesting to see the percentage of Vancouver buyers of the total number of buyers.
Was wondering the same. It is about 3400 square foot though with a suite and very nicely maintained and updated on a quiet street. Still…. I mean it is assessed at about 900k….
Cadbro,
I bought a house in the fall. At that time, I would estimate the bottom end of the market was in the neighbourhood of $650k to $700k. Based on a cursory glance of current listings, it seems to have jumped significantly.
Maybe you can swing a small lot newish build sfd in the westshore on your budget, but otherwise you’re in fixer-upper territory, and I would not pick up a fixer-upper without capital set aside for renovations and repairs.
Maybe the best advice I have is to not forget about your quality of life whatever decision you make. Owning a house isn’t all it’s cracked up to be. A townhouse might not be ideal, but at least you won’t be stretched to the max, or spending your evenings and weekends dealing with deferred maintenance or upgrades. More time to go hiking, biking, or whatever floats your boat.
Does anybody know what The asking and sale price was at 931 Jasmine? Had no idea it was even for sale until I drove past it this morning . Please and thanks.
They’re not making any more older condos, you know. Just new ones.
“1262 Camrose sold for 1.85M” How did that place sell for more than places in Oak Bay?
On an older condo…….that market segment now going ballistic too. Fun times.
Sold $1.2M
James: In the world of any government project management accounting for a start.
Did 4360 Ridgewood Cres sell or get canceled?
In what world is a 169% difference the same?
Cadbro\WWYD: I’d recommend you buy in Sooke if you can, a townhouse on the westshore if you can’t. If those aren’t palatable then wait.
Maybe the market will cool and steady so you will have a chance to be choosy about the place you are likely to buy. Maybe it will shoot up like this for another 2-3 months and you will know that you are priced out of the SFH market.
But then you will know and not have to go through the up and down nightmare of blind bids and skipping inspections.
1262 Camrose sold for 1.85M
All else being equal I’d wait AT LEAST a month for the new budget to drop. Could be some items in there worth waiting for (probably nothing major but it is possible – i trust David Eby to make more changes over the last Minister). As well Leo had some examples in an older post of people who bought in 2016 in that craziness who had just recently broken even and Marko just noted its probably a much risker time to buy then it has been the last few years. Despite what people think it is possible to overpay in Victoria – its just recency bias for BCers who think its not possible. Lastly we are at the top of the affordability graph WITH interest rates off bottom.
the caveat, as always, is if you find a place you love and can afford then go for it. No one can say what will happen tomorrow. My wife and I recently had an approved offer on a home and chose to back out. That place is probably worth 30 or 40k now and I honestly haven’t thought about it begrudgingly even for a minute. Thats because it wasn’t the right one and we knew that. Now if it was the perfect home and we backed out as we got cold feet then i’m sure i’d still be kicking myself. But, thankfully, it wasn’t.
Either way you go – good luck!
It’s a lot value property on a 50 foot lot. Vancouver allows a strata duplex to be built on such a property, or a house with suite and laneway house.
And note Vancouver lot values took a beating a few years ago. If it happened then it can happen again. In any case I wouldn’t use Vancouver prices as a guide for anywhere else. The only other advice I can give is have a plan B if interest rates go up. I have a paid for house so I’m out of this racket.
Wow, that Bank of Canada report is a frightening tale to read. They say the market for Govt of Canada bonds “dried up” in March 2020, which “surprised” and “worried” them, and this was so serious it resulted in them buying 35% of all Canadian bonds in existence, expanding their balance sheet by $365 billion. They still hold all these bonds. That 35% is way higher than usa/eu/uk banks hold of their own bonds. No wonder mortgage rates fell so low., and it indicates that they are artificially low, supported only by govt bond buying. Since they are ending this QE/bond buying in April/May, it’s hard to see how bond (and mortgage) rates won’t start to rise (they need to rise to entice Investors to buy the bonds)
https://www.bankofcanada.ca/wp-content/uploads/2021/03/remarks-2021-03-23.pdf
“The dash for cash caused liquidity to dry up sharply in several core fixed-income markets—including, surprisingly, the market for Government of Canada (GoC) bonds.
The impact on the market for GoC bonds was particularly worrisome. These debt securities are considered very safe and serve as the benchmark, or reference rate, for almost every other credit market. If the GoC bond market can’t function smoothly, it’s hard for the rest of the system—and the economy—to work properly.”
“Our facilities and purchases of financial assets have grown the Bank’s balance sheet considerably. It now stands at close to $575 billion, more than four times bigger than before the pandemic, when it was $120 billion,”
“By another measure, however, our purchases stand out. Our GoC bond purchases since last March represent a little over 35 percent of the total amount of GoC bonds that are outstanding—by far the highest among this group of central banks”
Thank God “someone” likes New Brunswick!
” Good story…thanks “Underachiever” 🙂
We bought our first house in Sooke in 2012.
New House with legal suite $375,000.00
Yes…I know…. “oh but they are small lots””, cookie cutter designs”, “nightmare road”……blah blah blah 🙂
All to code though….no damp basements, no mold, no lead paint, no asbestos etc etc.
Not for everyone mind you.
We had been tracking the west side of prices and it’s why we felt confident buying real estate on the island….. because we felt that prices on the island were so cheap when compared to similar areas in Vancouver.
(Make sure that when you are doing a price comparison of “Inner Victoria” prices you are not comparing it to Greater Vancouver prices. )
Look at QT’s previous post about the bungalow in Vancouver’s south east side ………for $2.3million.
Here’s one for Deryk:
https://www.cbc.ca/news/canada/new-brunswick/maestro-fresh-wes-saint-john-hip-hop-williams-1.5958848
Cadbro, my advice is that if you are going to live in it for 5+ years then you should get a co-signer, go above $690 and and buy something you are happy with. The worst thing you can do is overpay for something you don’t really like and then have the market go against you. If you overpaid for something you are happy with and like then whatever happens to the market, you still get to enjoy the house.
If you were my child I’d be happy to cosign for you – depending on a number of factors – so you could get a home with a suite and have a living space for yourself that had a bedroom for everyone plus 1.5 baths – or room for this later with a reno.
If help from a co-signer is no-go I’d go for a townhouse.
I’ve never been a fan of waiting for better times, only for going for the best deal of the day. However, we almost gave up looking because of having too much competition in the market right now.
I think if you can muster the will to get back in the search and have made a decision to buy it is probably worth it to keep making offers.
LeoS, FYI, there’s a minor refresh/cache issue where newest HHV messages don’t appear. A workaround is to use the “sort by” control to sort to oldest and then again to newest, which refreshes the list. This occurs on iPad/Safari, some of the time, not sure why.
Informal poll, WWYD if you were me today? I’m just feeling pressure from all sides would love to hear from the anonymous bunch who talks housing daily.
Young family of 4 in a 2 bed house rental that’s do-able for now but very much want to own a 3 bed / 2 bath home that we’d live in it for 5+ years. Will have just over the min. Downpayment for a max 690k home, can go higher If there’s a suite but it means likely sacrificing a bathroom, a bedroom, and/or requiring a co-sign. Prefer SFH to strata, looking entire CRD area, ok with Colwood /Langford but the smallest SFH there are out of reach. We’re not moving to Moncton.
If I was your buddy or kid.. what would you tell me today? Don’t buy at these prices because you’ll be underwater later? Compete for a townhouse? Hold out for what we want? Wait 6m or 12? Bid what we can afford on the places we like this spring?
Thanks I appreciate the input.
You haven’t earned anything until you sell. That’s what makes it all the more dangerous.
Most places, a house costs you money 🙁
In some places, it makes you money 🙂
Bank of Canada talking about scaling back stimulus: https://www.bankofcanada.ca/wp-content/uploads/2021/03/remarks-2021-03-23.pdf
I don’t even know what to say about these prices. They are skewing the economy and social values with unearned windfalls in a manner that reinforces inequality. When you earn more from your home than you could by working it devalues work.
Fraserview home sees 21 offers in seven days, sells for $600K over asking — https://tinyurl.com/4khsbbrz
The insanity just keep on pilling up. South East Side is not exactly known as an upscale neighbourhood of Vancouver, and somehow an assessed $1,664,200 un update house went for 36% over asking.
Great graphs, Leo.
What’s the theory behind why Victoria and Vancouver prices were about the same from 1993-2003?
Yup. I don’t think I clued into that until a couple years later. Obvious in retrospect, but almost everything I’ve learned about real estate in the last decade is. 🙂
Marko, thats the same reason why most people lose money in the stock market when they try to trade, its psychology. Usually people sell when the market is in a downturn and buy when things are booming. Buy high sell low is usually what ends up happening. Still boggles my mind why people would go no conditions hundreds of thousands over asking right now when 2 years ago there were lots of price cuts. Props to local fool and Josh for buying during that slow market.
I am very interested to see how this WFH plays out, people must realize that if your employer allows WFH in the long run then that also expands the candidate pool and most likely move the salary range for those positions lower. At the end of the day, companies will seek to maximize profits so if they can get away with paying someone less to work remotely, they will.
Well now it is, but despite 1000s of posts on HHV in 2014 I don’t recall one person noting “Vancouver is completely detaching from Victoria, should we expect some Vancouver buyers?” Everyone was still calling for doom and gloom.
What I find interesting is when the market sucks 2011-2014 everyone is calling for doom and gloom and few buy hoping prices will come down. When the market is ragging and obviously not sustainable there is little doom and gloom even thought I would say buying right now is way risker than 2014 but double the buyers out there.
Greater Victoria unemployment drops to under 5% . Great to see that, in the midst of a pandemic that’s shut off tourism.
https://www.vicnews.com/news/greater-victoria-unemployment-rate-drops-below-five-per-cent/
“Figures for Victoria Census Metropolitan Area (CMA) show the February unemployment rate at 4.9 per cent, up 1.4 per cent from February 2020, but down 0.1 per cent from January 2021.“
Thanks Leo, that Lafontaine house was pretty nice. Iooks like most houses in GH will go for $1M.
When we got a mortgage our identities were verified by the lender and the notary. You’d have to have someone’s id, social insurance number, background information, and have possession of the home to try this but I suppose it is possible, particularly if it was a relative who had this information.
Craziness from coast to coast. This has never happened before.
https://www.cbc.ca/news/canada/newfoundland-labrador/nl-real-estate-mystery-boom-1.5956467
The one time I used cash in the last year is for camping last week. The pandemic has massively accelerated the obsolescence of it.
Frank, my kids will be able to code but probably not shoe a horse. What’s your point? I can’t even remember the last time I used cash to pay for something, or needed to write cursive (as a Lefty it’s actually more likely I’ll impale the paper). I used to receive handwritten letters from grandparents which were cute but difficult to read.
Times change and so do technologies, I don’t think kids today are lacking any learning by schools dropping obsolete activities. They’ve more than made up for it with new things.
No thanks. Life’s too short to be perpetually grumpy. This article says it better:
https://www.timescolonist.com/opinion/op-ed/comment-stop-complaining-even-for-just-one-day-1.24297928
Have a look at the March 23 letters in the Colonist. It appears that there are a significant number of articulate people who have the nous to be roundly contemptuous of all things relating to bike lane “planning”.
Might we live long enough to see the lanes removed?
It’s a beautful morning.
$1.175M. Listed at $989,800
What did the house on LaFontaine go for in GH? Think it was listed at 949k
Former- Totally different process involving different parts of the brain. Do a little research. Pull out some cash and see if your kids can give you change for a $17.63 purchase from a $20.00. You might take them out of school.
To no great surprise, the number of Vancouver buyers are influenced by the price difference
Vancouver premium remains high in dollars, although the percentage premium isn’t as much higher as in the 90s as you might expect.
Never heard of something like that. Not clear to me how that would work even after Richard’s comment.
What??? BC Land Title system is nearly bulletproof.
Yeah! Finally guys a place we can feel at home!
I am not sure if you realize, but videogames require a lot of hand eye coordination as well. Maybe that why our kids are smarter than us…
“Rumour has it that it was a scam to get cash by using the agreement for sale to put a mortgage on it and they may have succeeded.”
There have been a number of cases of this, two I have read about here in Calgary. This has happened where the property is free and clear which makes it easy for the scammers to do because there is nothing to discharge. A recommendation was to leave a small amount of financing on the property to act as a deterrent and to act as a warning signal to the owner. The one old lady it happened to here took well over a year to reverse and clear up.
Leo, wondering if you have any information on 2185 Bartlett? A sign went up and then disappeared when it was revealed that the owners (house is currently rented and they had no advance notice of sale) was not aware it was for sale! Rumour has it that it was a scam to get cash by using the agreement for sale to put a mortgage on it and they may have succeeded. I see Pemberton Holmes still shows it on their website. I must admit I have never heard of something like this.
Yeah seeing some of those listings cancelled where the set up bidding war didn’t work out. Some seller expectations have definitely outpaced the market, but then again we’ve seen quite a few overpriced listings sell as the market caught up to them.
Thanks, great information as always. The odd thing I saw in the last 10 days was several listings withdrawn or cancelled after only a week or so on the market. Maybe one of the realtors can provide some insight on the strategy with that particular method of sales. Is it simply because they didn’t receive the type of offers that were desired? A plan from the start to “prime the pump” so to speak for the relist? Or something else all together? Just curious…
Starting to see more and more unconditional offers on older strata complexes….kind of scary. Had clients offer 31k above ask on a condo in a 40 yr old complex one business day subject just to read through strata docs and review the form b (listing agent didn’t not have) and go beat out by a higher unconditional offer.