Tracking the coming market slowdown
The murmurs of a slowdown in Toronto and Vancouver have gotten stronger recently, with more reports of offer nights without offers, and a substantial pullback in showings activity, while Toronto inventory grew substantially in February.
We don’t live in either of those cities, but given we’ve just come from all time record tight market conditions, affordability is very poor, and rates are rising, it’s inevitable we’ll see some pullback here as well. So how do we know when the slowdown reaches Victoria?
- Showings & Offers – The first thing to slow down will be the number of showings and associated offers. We don’t have a transparent booking system like Toronto and blind bidding still exists so we can’t conclusively measure this when it happens. I’ve heard from a couple agents there are fewer offers than before, but that could be due to increasing numbers of new listings (normal for the spring market) diluting the pool of buyers, rather than a true slowdown.
- Over-asks – As fewer buyers compete for each listing, we will see fewer properties selling in bidding wars. Here we do have data, but there is no sign of a sustained decrease in bidding wars, with the level around 70% like it has been for 6 weeks.
Buyers bidding on a property are often informed how many other bids there are, which can influence the bids themselves. If there’s one other offer you’re going to offer less over ask than if there are 20. No indication that is happening yet either though, with the average sale to list price remaining very high in March.
- Sales – Sales and over-asks should start to pull back at roughly the same time in the market. However it’s key to recognize seasonality in this data. Sales generally peak in May, so unless there was a sudden and drastic slowdown we can expect rising sales for another couple months. However by comparing to previous years and seasonally adjusting, we can extract out the underlying changes in trend in the monthly figures. Looking at daily sales, it’s too early to call it a slowing trend, but the gap between new lists and sales does seem to be slowly widening. That could be due to the pool of buyers becoming somewhat shallower, or it could be overly optimistic pricing by sellers.
- Price changes – Note that I didn’t say price reductions here, and paradoxically as the market slows you may see some more price increases first. That’s because right now most sales are going for over the asking price not because the sellers are being surprised by too much demand, but because listing prices are deliberately set lower than market value to attract bidding wars. So far that’s working, but when the offers don’t arrive at the anticipated price, some sellers will re-list and increase the price to market in the hopes of selling that way.
More traditionally, as sellers shift to selling without a bidding war, you will likely see more price reductions. Price reductions don’t necessarily mean that prices are declining, they are simply indicative of seller mispricing, which happens when the market decelerates.
- Months of inventory – Inventory will take a long time to build up, but months of inventory depends on both sales and active listings, so it will generally react faster to market changes. Again, here it is important to seasonally adjust as months of inventory are usually lower in the spring and higher in the winter. Of course, we really only have one way to go by this measure as well as we’ve been at the effective lower bound this year.
- Prices – Prices don’t generally drop until months of inventory exceeds 6 (we’re at below 1). Normally that takes a long time to move up to that point, but not always. Shocks like the mortgage stress test can put an end to price gains very quickly (market went from rapidly appreciating to flat almost overnight in 2018). And in a true bubble, prices can drop quickly as well, going right from rising quickly to dropping quickly. The higher prices go, the higher the risk of rapid reversals if there’s a souring of sentiment.
Long story short then, no signs of a slowdown in our data yet, but murmurs indicate it might be imminent. I’ll be regularly updating the daily data for the early indicators to keep an eye on when it turns. For now, it remains an excellent time to sell if you’re selling.
So why mention a slowdown in the big cities if it’s not showing up here? Well it’s worth keeping an eye on other markets because when the market does shift, I suspect it will be in the form of a nationwide change. Right now Victoria prices don’t really stand out when compared against the rest of the country. Our prices jumped just like prices everywhere did (even the Calgary market is now on fire). People were willing to pay the Victoria premium just like they always have. Victoria has been the second or third most expensive market in the country for decades. However, relative prices connect different markets like rubber bands. When other centres rise they pull us up, but if the country corrects we will certainly feel it here too.
New post: https://househuntvictoria.ca/2022/03/21/exploring-scenarios-for-future-affordability/
He was talking about late next year but personally I dont have a crystal ball about any of this. I take most things with a very large grain of salt.
Dunno how you are going to get the 5 yr canada bond to around 4.5% by next year Barrister.
I was talking with a senior banker in Toronto today and they are anticipating 5yr rates at or above 6 by next year. Is that really a surprise. Inflation is at a rip and the fed increase in the money supply is just starting to be felt. Nobody has a crystal ball but there is real concern both on Bay Street and in NY.
Interesting times. What percentage of SFH have a mortgage?
Hold on to your hats
Thank you for the numbers Leo. I sure do miss your box diagram showing each weeks sales, new listings, inventory etc. for the month in comparison with the same month the year before. Looked forward to it each Monday.
Some of y’all need to step away from the glowing rectangle and touch some grass.
Checked out the numbers. All provincial motor fuel taxes together (including carbon tax and transit levies) bring in about a billion $ a year. Total government revenue is about 70 billion $ a year. In the long run that’s just noise.
In the spirit of the topic at hand, here is another article on upcoming house prices. Hopefully Leo might address this again soon.
https://www.msn.com/en-ca/money/topstories/posthaste-canada-s-housing-boom-has-been-unprecedented-the-fallout-will-be-too-say-these-economists/ar-AAVjsFK?ocid=msedgntp
The comments on this site are moving too far from the points of discussion. I used to enjoy reading the posts but lately its too much of what seems like really bitter and annoyed people bickering back and forth. I know this market is probably frustrating some of you, but take it easy and regain composure back to the main agenda.
“The only thing that could be more exhausting than listening to numerous rants about cycling infrastructure being inadequate, would be to have your entire identity consumed by being a self-righteous cyclist”
Pretty sure it’s more exhausting working as a doctor or nurse in the emergency room dealing with an endless stream of car related injuries and deaths.
“Rarely do I see cyclists obeying any traffic signs, myself included. They rarely stop at stop signs”
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Agreed, we need to adopt what many states have done or are doing in the US, that is to allow bicycles to treat stop signs as yield signs, and red lights as stop signs, its called the “Idaho Stop” law, most bikes already do this, at least with the stop signs and I would add many cars also roll through stop signs.
https://en.wikipedia.org/wiki/Idaho_stop
Monday numbers
Sales: 527 (down 27%)
New lists: 763 (down 15%)
Inventory: 985 (down 26%)
Bit of an odd for March lull in both new lists and sales recently when both should still be increasing. New post coming.
When everyone in Shangrila are driving EV’s and riding bicycles, I wonder what the government’s plan is to replace the loss of billions of gas tax money. Probably tax the sale of primary residences.
No personal attacks please. Active transportation infrastructure will be improved in every city going forward. No sense being angry about it.
lol good one.
I said the roads were shit in Oak Bay, and you took it personally.
Clearly you just have to take a look in the mirror.
No, calling someone a fucking idiot like James did is a personal attack. I’m simply commenting on his behavior and what I’m observing from him.
I have to say that someone’s attitude toward cycling and cyclists tends to be a good proxy for their attitudes on many other issues.
I say that as someone who’s done the full length of the Goose, then past Sooke Lake over the hump down into the Cowichan Valley, and then back to Victoria via the Mill Bay Ferry and Lochside Trail (before the latter was officially opened). Not sure if you can do that any more since they raised Sooke Lake. But I’m not a Spandex guy.
My only contribution to this discussion is it is not okay to “draft” behind me in your spandex warrior outfit when I am going for a leisurely Sunday cruise.
That’s way too personal. If you have to get into personal attacks, it’s a clear sign your working something out emotionally plus the argument has been show to have serious cracks.
Not at all actually and based on your comments you seem to be the one that’s triggered. I’ve met many small men with anger problems like you James. Try to relax a bit, maybe go for a bike ride.
The general coffer.
Will prices keep climbing until the middle of the year like the Real Estate Association predicts? Or just Vancouver?
https://www.vancouverisawesome.com/highlights/bc-home-prices-expected-to-climb-85-in-2022-amid-supply-shortage-5021289
Motorists are now paying $8-9 for an Imperial gallon of gas. A good portion of that is tax. Where do you think the money comes from for our roads, bridges, and transportation infrastructure?
Odd, thing is that I’m not white nor I take the entire lane, and I obey all traffic rules. I also said that we should learn to share the road if you care to read my post, and I’m sensible enough to take side roads when I can because right or wrong I can’t beat 2 ton of steel.
Perhaps madatory defensive riding training and licensing should be a requirement.
This is hilarious. The word bike really triggers you eh?
I thought you were wrong at first but… I have to say this.
You’re a fucking idiot.
Also fairly evident that you don’t bike anywhere.
I know you’re attempting to be clever, but be careful what you wish for as this could be coming to a Joke Bay near you
https://www.macleans.ca/economy/realestateeconomy/the-next-trend-in-luxury-canadian-real-estate-multi-level-iceberg-basements/
At least traffic is measurable and real, whereas the perceived inadequacy of a physically existing bike lane is just not good enough in some cyclist goofs opinion
Oh good, I see we’re having a reasonable discussion
Thank you again for the hypermacho take. Old white guy has no problem taking a lane in traffic and if you don’t feel the same way you should never ride a bike. You’re like the alt-right of cyclists. Just goes to show there’s even a political spectrum when it comes to cyclists that ranges from the know it all cycologists that whine about inadequate infrastructure to the spandex warriors that think only aggressive MAMILs should be allowed on the roads.
The only thing you all have in common is you’re exhausting to interact with
“I’m in favour of cycling as a form of recreation in safe designated areas. As a form of daily transportation, it’s your life. I would much prefer seeing electric scooters that can maintain the speed limit, traveling with the traffic instead of blocking it”
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Frank I think you’d really like it in Phoenix just endless miles of sprawl and cars.
How many owners in each category. It’s a histogram.
It appears that “costs” include the entire mortgage payment, although only the interest is an expense properly speaking. Note the census question is: “What are the total regular monthly mortgage or loan payments for this dwelling?”
What does the Y-axis represent?
Will be interesting to see how this breakdown shifts in the 2021 data.
Bike lanes also eliminate vital street parking spaces in downtown retail areas, ultimately destroying local small businesses. In my experience, cyclists rarely purchase anything when they stopped at my store. I’m in favour of cycling as a form of recreation in safe designated areas. As a form of daily transportation, it’s your life. I would much prefer seeing electric scooters that can maintain the speed limit, traveling with the traffic instead of blocking it. If you want an automobile free society, move to Catalina Island, everyone drives golf carts.
It totally defeats the purpose if you ride a bike everywhere, then order all your crap on Amazon.
You are welcome.
So when are we going to advocate special roadways for equestrians, dog sledders, or pogo family outing?
Or, perhaps waterways/canals to accommodate boaters & swimmers?
IMO, it is high time that we know our skill/limits and learn to share the road, instead of demanding costly infrastructures to satisfy a small entitled group.
“it’s that whiny entitled group that keeps saying this isn’t good enough“
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If anyone entitled it’s car drivers, a majority of drivers still think they should be able to drive their cars through the middle of a growing city with little no traffic or share the road and be able to park in front of where ever they want to go, if anything drivers should be encouraging more bikes and pedestrians so we don’t end up in grid lock. Cars have had a monopoly of the roads for far too long but thankfully that’s changing, slowly.
Safe bike infrastructure is not built for avid cyclists, it’s built for people who currently aren’t riding because it isn’t safe.
Completely agree and you’d be hard pressed to find these regular people out complaining about cycling infrastructure, it’s that whiny entitled group that keeps saying this isn’t good enough. They (and the hardcore cyclists) make everyone think twice about riding a bike and being lumped in with them, at least I know I feel that way when I go for a ride.
Thanks for proving my point above about the hardcore men in Lycra thinking they are special and that families should stick to the parks. Exhausting.
Hence we have parks and trails.
Literally exactly why we need protected bike infrastructure so kids and regular people that don’t want to risk their lives on a bike can still ride.
Safe bike infrastructure is not built for avid cyclists, it’s built for people who currently aren’t riding because it isn’t safe.
The ones that fear for their lives shouldn’t be on the road, because one they are newbies that do not know how to ride a bike, or two they are assholes that weave in and out of traffics, tailgate cars and blow through red lights/stop signs.
As an avid rider/ex roadie I commuted to and from work/school though out the 80s till the early 2K in Victoria and Vancouver with 4 incidents from bad drivers, and one was from a bus cutting me off. And, I trained/ride at least once a week from Oak Bay to Sooke & back or to Mt. Newton X road and back, long before there were bike lanes infrastructure.
freedom- Rarely do I see cyclists obeying any traffic signs, myself included. They rarely stop at stop signs, usually ride on sidewalks( I don’t blame them), and generally believe they are invisible. Riding a bike in a city is taking your life into your hands. Don’t get me started on motorcycle riders, they are the ultimate assholes.
I’m pro-cycling infrastructure and hope people can cycle safely on our roads, I simply am exhausted of hearing about what is provided isn’t good enough. Also, I believe for the most part that the average cyclist is a reasonable person, I was simply commenting on the cyclists that have made riding a bike part of their identity and lash out about shitty roads and inadequate cycling infrastructure. There’s a strange, almost militant approach to the way they go about things. Kind of like those bedwetters in the big trucks.
You are centainly one of a kind. Actully when a cyclist drives, he/she wouldn’t complain about fellow cyclists, as he/she understands how vulnerable they can be on the road.
“Rather than whining about road quality get yourself a modern all road bike that fits 40 mm tires. Then you’ll fly through the rough sections faster than most cars.”
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Yes, agreed, riding a gravel bike on city streets is becoming more of a necessity, their a bit slower but easier on the back for most commuters. The roads in the core right now seem to be in awful shape and I’m sure many cars have suffered damage in the past few months because of it.
When I ride my bike, all motorists are assholes. When I drive my vehicle, all cyclists are assholes.
Maybe one should take a moment to view it from the perspective of the folks on bikes. They just want to feel safe getting around their city, but without good infrastructure they are in fear for their lives when they have to share the roads with drivers in their overpowered 2-ton metal cages. So maybe some of that “drama and hyperbole” is justified.
Listening to drivers (=traffic) complain about traffic is at least as tiresome.
Barrister is so right. In fact even allowing one story starts us on a slippery slope. All future buildings in Oak Bay should be underground with restored Garry Oak forests on the surface.
Really!? I bike all over the CRD and I love cycling through Oak Bay. Low traffic, scenic streets. As for road surface quality you can find potholed streets in every muni. Rather than whining about road quality get yourself a modern all road bike that fits 40 mm tires. Then you’ll fly through the rough sections faster than most cars.
Doesn’t get a whole lot better than oak bay and nothing like the penny on a Friday
Really, 1/3? Sounds like a community thriving with families and culture. Nothing like replacing a 1800 sqft home with a 3000 sqft home.
Joke Bay, the home of the recycled Bear Mountain floor plans!
It’s hard to take comments like this seriously. The typical cyclist comment is always filled with drama and hyperbole, so forgive us if we already know that you’d also criticize the Westshore, Sooke, the Highlands and Metchosen for some bumps in “your road”. Nothing is ever good enough for cyclists and even when the cycling infrastructure is installed (Victoria, Saanich, etc.) the whining continues because “it isn’t good enough” as it doesn’t reach some European standard.
The only thing that could be more exhausting than listening to numerous rants about cycling infrastructure being inadequate, would be to have your entire identity consumed by being a self-righteous cyclist
1.455 and 1.465
Marko, please see my comment below. I think we are in fundamental agreement that pro-active upzoning by councils based on some sort of coherent plan for retaining trees, street presence etc. is the solution, along with disposing of meetings/approval for development that meets existing guidelines.
I think I have been fairly clear, I think both NIBYs and developers shoulder some blame and municipalities/the province need to show some leadership to put an end to these petty disputes and dubious tactics by both sides.
Looking for a little sale price action on 1825 penthurst and 4434 chartwell if someone has the desire. Chartwell was listed 1.6 and then dropped to 1.4. Thanks
What other options does the developer have? He or she is not dealing with logical individuals. The 902 Foul Bay neighbours save the trees campaign consists of printing off 100s of signs to place in the ground. If that isn’t stupid I don’t know what is.
If Aryze proposed a massive mansion on the lot where the building envelope required the same amount of trees to be cut there would be no problem, but because they are proposing townhomes all of a sudden we need to save the trees. Like common, just be a reasonable neighbour and tell the truth. You don’t want density next to you, plain and simple.
Keep in mind people have also gone to court pertaining to Aryze -> https://victoria.citified.ca/news/judge-nixes-b-c-supreme-court-lawsuit-against-fairfield-townhome-project/
So people can use the court system against developers but developers can’t use the same court system?
With regard to “aesthetics”, if I had my way, every project would be Art Deco. But ultimately, why should I or anyone else be regulating aesthetics? We have a housing shortage. Just build the goddamn housing. Someone will think it’s magnificent, and somebody else will think it’s ugly as sin. Take a trip to Paris if you want to see architecture. It ain’t happening here, and it never will be. We need places for people to live, and I’m a lot more concerned about whether I can walk or take transit on my errands than whether I tremble with spiritual ecstasy at the sight of my home.
Marko,
As I recall Aryze sent a pretty aggressive letter to the neighbours threatening costs if they objected to removal of the restrictive covenant, and don’t forget the without-notice court action
Leo, and Sidekick
I entirely agree that zoning for density needs to be pro-active an council-led, following the city of Ottawa’s lead where upzoning is now even ‘compulsory’ in some locations. This would avoid individual battles over re-zoning specific lots, and developers resulting to… unusually aggressive… tactics.
I agree, I think street level greenery is key to aesthetics.
My point is that by-laws, even fairly restrictive ones with regard to setbacks, street trees etc. can provide certainty to both developers (project can be approved w/o council meeting/approval or public input if requirements are met) and also the public who are no longer in a pitched battle with the ‘evil’ developer, and have some assurance over minimum standards for aesthetics.
That being said I’m SURE there would be insane public uproar if OB did something like Ottawa, but I hope Eby etc. will put enough pressure on municipalities that they will being their own pro-active upzoning following a thought-out (and democratic) density plan.
Why do you think most developers are like this? I bet most start out with good intentions, but after being put through the wringer over and over (for questionable reasons) they end up with a F-U attitude.
I’ve been through the process a few times and it boggles my mind what people object to (and the justifications they use). Instead of pandering to neighbours, council should be taking a more objective outlook. Even with their own staff recommending a project, they’ll still vote against it.
So the Vancouver Council has the ability to amend/rezone whatever they need to do to build their “affordable” building, but they can’t do the same to sell off the lot (zone it for same size footprint/building) for $80 million and re-purpose the funds to build affordable housing where they can get 3x units?
Our housing situation is being called a “crisis,” and we are going to have affordable units with a market value of $3 to $5 million. You would think in a “crisis” you try to put as many roofs over as many people as possible.
I absolutely love Pearl Block, maybe it reminds of of growing up in soviet style neighborhood in Croatia, but a modern interpretation :). Love it or hate looks wise it if you take a close look at the detail of the envelope/units/rooftops I honestly don’t know how Arzye made money on this project. They barely sold these units for any more $ than the hardieplank complexes lining Shelbourne. It is way overbuilt for townhomes on Shelbourne.
One of my favorite condo exteriors ever is Ironworks and a lot of people absolutely hate it. Aesthetics are debatable, I’ll agree on that.
I disagree. I’ve watched 100s of hours of council meetings in the last couple of years in various municipalities and it does not seem to matter who the developer is or how nice of a person she or he is or what their social behaviour is, the end result is always opposition.
How do you explain 902 Foul Bay now that Aryze owns it? Did they burn down the house? No. Have they done a ton of great things in the community? Yes, one of many examples -> https://www.vicnews.com/news/feds-approve-floating-swim-platform-quietly-installed-in-victoria-waterway/
Do they do amazing aesthetic exteriors? Yes.
Where is 902 Foul Bay at currently?
This might be a factor but I see fierce opposition to almost anything regardless of whether there is controversy about unethical behaviour, which there usually isn’t.
If we made a clear and predictable path for infill much of these problems would go away because developers would choose the sites and projects they can build on predictably and quickly rather than the one-offs that involve heritage or something else.
As for aesthetics… that’s debatable and views change over time. Personally I think the Pearl Block townhouses are pretty hideous but they won some kind of major design award. Most buildings in the region are entirely unremarkable builds. It’s fine. Level of maintenance and street level greenery has a bigger impact on the feel of a neighborhood than house design IMO
The footprint is part of a park currently in use as its parking lot. It can’t just be sold off, not to mention the complications with regard to the school. If it were just an ordinary property the parameters would be much different.
Marko, I also do not know Mr. Large nor am I suggesting anything about his personality or business practices, merely commenting on how public perceptions and reputation could be a factor.
It can also certainly be true that development and density helps nice people and families even if the developer is shady. While I also look down on NIBYs I think its important to acknowledge the public’s legitimate concerns over incidents like the fire at 902 Foul Bay.
A different developer also comes to mind who was involved in the unfortunate rock wall incident, the eviction of tenants and threat of demolition of an historic beach drive mansion, and now he’s also suing his own strata at the black and white building…
I think this kind of anti-social behaviour by developers is also partly responsible for public opposition to higher density development, along with the lack of aesthetic merit to many proposed new builds. It’s easier for people to get behind something that is A) attractive B) built by someone who hasn’t alienated the neighbourhood through questionable conduct
I did check the facts. Covenant x amount of space for 99 year lease for child care and x amount of space for elementary school for 99 year lease to Vancouver School Board. It would still sell for a small fortune as everything on top of the child care and elementary school would be in excess of $3,000 per foot and build affordable housing elsewhere.
This developer in Victoria is proposing a similar concept in James Bay -> https://www.vicnews.com/news/17-storey-housing-tower-childcare-centre-proposed-for-james-bay-site/
There will be a lucky few families renting $3-$5 million dollar apartments in Coal Harbour. Why not have 3x the families living in $1 million apartments in Burnaby?
100% guaranteed once all the government stakeholders have had their input this project is going to be a small fortune to build way in excess of what a professional developer would spend on construction.
I don’t know Mr. Large personally and can’t comment on 902 Foul Bay and his personality or business style but I am familiar with 15 or more of his projects and I’ve seen nothing but positive outcomes. For example, he took an old house on the corner of Shelbourne and Haultain and moved it down the street and placed it next to another old house on the corner of Shelbourne and Ryan Street. These two old house he raised, redeveloped and made into a 5 unit strata. Five families live there including a couple with children (Oaklands school three minute walk). My parents house in a few houses away on Scott Street. This lot going from one old home to a 5 unit strata has not impacted their life in any shape way or form.
As for the lot on the corner of Haultain and Shelbourne Mr. Large built three small homes which now three families occupy.
Lili: Your mentioning of Mr. Large brings back memories for sure. The whole family really. I don’t know if you remember when Hawkes Realty, a mortgage lending firm, went down around 1995? He got on the committee for all the devastated investors. Heaven knows what little goodies he got there.
Lots of facilities, start with the Oak Bay Recreational center, everything from skating to swimming and go to all the parks and facilities such as Willows beach. The sailing classes out of the marina. There is a really long list.
In speculating as to reason why OB council rejected this project, don’t forget Mr. Large spent a night in jail after being arrested for arson at what is now the doomed 902 Foul Bay Road project. He was ultimately released and crown stated not enough evidence to lay charges.
I think a lot of the opposition by the “save the trees” folks at 902 foul bay begins with what some may see as bad faith/illegal conduct in razing the existing heritage building after Mr. Large’s initial development permit was denied by Victoria. If the development at 902 hadn’t started this way, it may have faced less opposition from neighbours… also, perhaps if the design looked less like it was designed by Darth Vader.
The history with Mr. Large likely has some bearing on why OB council not very ‘friendly’ towards this project…
have younger friends who live in Oak Bay and they think the facilities for their kids are super. With the exception of Fairfield a lot of Victoria is crappy for families .
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What facilities would those be? Oh wait maybe the small skateboard ramp behind the tennis bubble or the run down Carnarvon water park. Victoria has way more kid friendly resources from the protected bike lanes to large skateboard park Vic west, dirt bike park off the goose and the new planned kids park at topaz to name a view
Agree. OB has plan to remove the time restrictions on Henderson Rd bike lane since 2011, but still hasn’t done it. Giving the fact that they held off the one day job for 11 years and counting, they may need more than 100 years to replace the aging infrastructure.
Why not tear down all the houses and let it return back to nature?
As someone who bikes, Oak Bay has unquestionably the shittiest roads in Greater Victoria.
If you check out the facts you will find the development is being built on existing park property and includes an elementary school and child care, and is part of a complicated arrangement involving BC Hydro and the Vancouver School Board. It’s not a matter of the City just taking a chunk of land and building affordable housing on it.
Any and all development is going to turn Oak Bay into a mess apparently
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At least 1/3rd the homes in oak bay are tear downs and change will be coming whether they want it or not, btw I live in oak bay
You use the same arguments Marko, 14 apartments, then what is an extra 30 apartments and then why not eight stories and now that we have eight why not 12, besides lots of twenty five in Victoria. Same process as what exactly happened in Victoria.
So why would extra apartments make life better for the people who already live in Oak Bay?
Any and all development is going to turn Oak Bay into a mess apparently. The idea that this would have not faced intense opposition if it was townhouses is complete fantasy. There was a hearing for turning a duplex into a triplex in Oak Bay and neighbours were crying that it would turn their street into a mess with garbage and noise and make it unsafe for their kids. They’re unhinged
Re subsidized housing in Vancouver
Reminds one of Howard Roark in the Fountainhead. No idea if there is any truth to it but legend had it that when WAC Bennet saw the plans for the new civil service Finance building on Government (617?) he had a fit at the architecture costs. His response was that they had just built a building in Kamloops. “Use those plans.” Apparently it is a clone of a hospital in Kamloops. In the same vein, there were cost overruns on the Pat Bay highway. Gillardi (sp?) was the highways minister at the time so he and Bennet drove out to see what was going on. They got to where construction was proceeding (just out of town from Royal Oak) and talked to the man in charge. It was explained that overpasses cost a lot of money so the way legend went Bennet picked up the plans and crossed off all the unbuilt overpasses from there to the ferry. No idea if either of the above are true but it made a good example of the tone of the early Social Credit government.
14 apartments being rented at $3,000/month is going to turn Oak Bay into a mess?
Marko, townhomes are more family friendly. Overall, the people in Oak Bay dont want to turn it into the mess that has become Victoria. High density is great for developers and real estate agents but crappy for the people who already live there.
it is why people pay a large premium to live in Oak Bay. Rezone all of James Bay and all of Fernwood for thirty five story apartments and then everyone would be happy.
Affordable housing is always a failure, especially when it is targeted by governments. It just ends up increasing costs everywhere else in the developments. They don’t want to admit that achieving affordable housing is actually simple. Just let it rip and go as hard as it can on the development side and allow the scale of supply to make things affordable (making older housing options less desirable and thus more affordable). Industry will overbuild if you let it and allow private money to assume risk of over building. New build affordable is just such a contradiction that could only be thought up by government types… I guess it’s the same fools that believe you can tax something into being cheaper.
To the right is an apartment building, to the left is an apartment building. How on earth would townhomes make any sense?
“I do think we’re going to have to ultimately prescribe some minimum standards for municipalities,” – Minister Eby
With the recent rejection of the Quest in Oak Bay after 9 years of back and forth by the city this is a certainty.
BCREA predictions for rates
Bond markets showing fixed rates on a continued steep upward path
Interesting comment on Reddit. Reminds of the City of Vancouver deciding to building affordable housing on possibly the most expensive piece of land in Canada (waterfront Coal Harbour), instead of selling it and building 3-4 times the units in Burnaby or similar.
“Being in the construction industry, we see a very big issue…
There is far too much obsession with appearance and not enough time spent on function. All the affordable housing buildings, schools, anything that touches government money are so ridiculously bloated and inefficient it’s no wonder we are in the mess we are.
Boxes, whether mobile or modular you literally would be able to build 3-4 times the units for the same cost, if not less once the ball started rolling due to the repetitive nature. Again though, “no one wants to look at it”. Shakes head.
The new rcmp station and high school in Duncan are two perfect examples. You could build three each of them easily for the budgets they have allowed. You don’t need exposed Timbers and glulam beams, vaults, wall to wall glass to learn, solve crime and protect the public.
Western society is a victim of its own making in most regards.”
The streets in Victoria seem to be in a lot worse shape than any of the ones I have run into in Oak Bay. I have younger friends who live in Oak Bay and they think the facilities for their kids are super. With the exception of Fairfield a lot of Victoria is crappy for families .
“Anyone know why they axed this (how was it being abused)?
It was being used to avoid rent control.
Municipal debt is normally needed for big infrastructure replacement projects. Municipalities get 30-year loans at low rates through the MFA for this. The loans are guaranteed by pooled assets for all municipalities and repaid through tax revenues. Having debt is not a bad thing, not planning and budgeting for long-term capital repairs and maintenance (100 years) is. OB is planning for this and has been proactive since 2018 and released the plan in 2021.
https://www.oakbay.ca/municipal-hall/plans-and-reports/sustainable-infrastructure-replacement-plan#:~:text=The%20District%20of%20Oak%20Bay%20is%20pleased%20to,recommended%20infrastructure%20spending%20for%20the%20next%2050-100%20years%2C
It was a loophole. See:
https://www.cbc.ca/news/canada/british-columbia/b-c-announces-legislation-to-close-fixed-term-rental-loophole-1.4374057
FYI: “Debt a near certainty as Oak Bay faces infrastructure shortfall”:
https://www.vicnews.com/news/debt-a-near-certainty-as-oak-bay-faces-infrastructure-shortfall/
The 82 pages OB plan says: “Modelling has indicated that a more rapid pace for replacing overdue infrastructure would not be feasible because of forecasted debt levels. Replacing assets over a longer period may result in unacceptable infrastructure condition risk levels.”
In my case 13.1 applies (and this is called out on the newer RTB forms). Anyone know why they axed this (how was it being abused)?
Oak Bay has aging infrastructure – particularly storm water. But it doesn’t really have a problem with funding, it has the money earmarked with a plan for the next 100 years for capital asset management which includes repairs, replacement and maintenance.
Where OB is currently short is internal capacity – they need to hire more trained people to manage the increased number of capital projects.
I note that a municipality can raise taxes if need be and municipal infrastructure is financed through the municipal finance authority at low rates over long terms and provincial grants.
Not aware of a single “run down” area in Oak Bay, but maybe I’ve missed something.
As for the Quest, their development didn’t fit the OCP and in many ways and they needed a variance and bylaw amendments, but they probably were victims of neighbourhood lobby groups of seniors with a lot of time on their hands and a desire for no change.
“Downtown Victoria looks a lot more run down than Oak Bay or is Pandora just an interesting vibrant streetscape for the developers.”
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Oak Bay has some of the worst roads in the region with many of the side streets full of pot holes and very poor conditions. They spent a pile of money on designing a master plan for long over due makeover of Carnarvon Park which has now been shelved indefinitely, but they managed to find some money to refurbish run down lacrosse box and hand it over to the seniors to play pickleball, seniors are priority over children in Oak Bay.
What I heard is that Oak Bay repeatedly told him that they would approve townhouses but the developer figured he would bully it out. That is why it was not sent back, Oak Bays finances are in better shape than Victoria.s in the long run. Downtown Victoria looks a lot more run down than Oak Bay or is Pandora just an interesting vibrant streetscape for the developers.
That is classic Oak Bay for ya. It is a vicious circle: The anti-develop OB people/seniors -> anti-develop concil -> minimum development -> minimum new people
The only hope is that the provincial government will step in or the anti-develop people/seniors aged out. Heard that OB may have financail difficults to meet city infrastructure needs due to (at least partially) lacking of income from new development. Guess the anti-develop people/seniors would rather let their city to run down than to welcome new people, even on the main street between two existing four-storey buildings.
Most would be investor properties, but there is a good replacement rate of investors too. I sold a non-rented condo yesterday to a Vancouver investor looking to rent it out. Also sorts of other scenario thought. I had clients buy a nice pre-sale condo for retirement. When it was finished they were still working back east so they rented it out for a couple of years and then ultimately decided to actually retire in Europe and we just sold it in February. So tenant property, but not investors, just life plans changed.
“This year every other call I get is for listing a tenanted property”
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Would this be an indication that people are tired of having tenants in their basement and with the increased equity are moving up to a more expensive home with no tenant? Or are these investors cashing out?
In my opinion, the problem is lack of housing and simply put we need to build more. Spec tax did nothing, adjustments in the RTA did nothing, further adjustments in the RTA will do nothing.
Instead this is what we get -> https://victoria.citified.ca/news/the-quest-after-nine-years-of-municipal-planning-oak-bay-council-rejects-14-unit-residential-proposal/
This year every other call I get is for listing a tenanted property, it is absolutely brutal how many tenants are getting displaced. It also sucks for me being the middle person as the two parties (tenants) and (landlords) are coming for two completely different worlds. A lot of my landlord clients are shocked and surprised when I tell them they will have to compensate the tenants for one months’ rent if buyer wants vacant possession (for personal use). Then you have tenants that make life very difficult for everyone which on average doesn’t help the tenants cause either.
If people were normal there are many things that both parties can do to better the process but everyone only thinks about themselves (and I think this has become worse in the last 10 years).
This is one of many examples, if you want to be nice to your tenant list your property right at the end of the month with offers reviewed right at the start of the next month. With this approach, the tenants two months’ notice effectively turns into three months notice as the notice doesn’t start until the next pay period. In essence, you give the tenant an extra month to figure things out.
Do any of my landlord clients listen to suggestions like this? Absolutely not. In fact, they do the opposite. When the above scenario happens because of random timing, not planning, the landlords wait till the end of the month to give notice as they are worried about the tenant giving 10 days’ notice back and the later in the month they give it the lower the odds that unit will be vacant for x amount of days if tenants turn around and gives notice back.
Also, landlords and buyers both don’t seem to realize that the rental where the tenants lives is actually their home. The lack of respect is mind boggling. I’ll let people know, “tenant has requested masks and gloves,” and people will reply with “are you serious.” Or people want to get in one 2 hrs notice or other random crap.
I talked about this years ago on HHV. In 2012-2014 I was renting a luxury condo at the Bayview for $1,350/month. It was an insane deal, the strata fees for the owner alone at the time were $400/month, property taxes another $300/month. I still decided to get my own place (amongst a few other factors) as I started spending 2 months abroad and couldn’t take the risk of taking off to Europe and then receiving notice 2 months’ notice shortly after leaving. Maybe it would have never happened, but the risk wasn’t worth it even for the cheap rent.
You can’t execute this in real life. I’ve seen sellers give preference to an “investor” and the game that is subsequently played. “Investor” offers to keep the tenants with a super quick completion/possession and then the new owner “investor” gives two months’ notice the day after the property completes.
If you want to be baller just sign a multi-year lease with your tenants and then put the home up on the market and take a massive hit on re-sale.
It is if the owner or a close relative is moving in as set out in 13.1.
Dad is right about the fixed term lease no longer being allowed. it is why my neighbour up the street has sold four of her five rentalhouses which are now occupied by full time owners.
Looking for stability and rent-controlled rates? Go for a long-term lease. You’re protected for the term of the lease with almost no downside.
The problem is the tenant can break the fixed term lease anytime. It up to the Landlord to re-advertise the rental and try and find a new tenant, and if they cant(slower times) they must prove to the Tenancy Board why they couldn’t, to then just keep a 1/2 months damage deposit. Or if you are really lucky 1 months rent, and good luck on collective that if your old tenants move back to Ontario etc.
“I only do fixed-term leases with the ‘must vacate the property at the end of the lease’ option. If the relationship is good then a new lease is negotiated well in advance of the term. If either side wants out, then there is a defined end date and no surprises.”
I guess you and your tenants are unaware that this is no longer permitted and wouldn’t be enforceable.
The BC government has voided this in most cases. Sec 13.1 is owner or family occupancy.
https://www2.gov.bc.ca/assets/gov/housing-and-tenancy/residential-tenancies/policy-guidelines/gl30.pdf
The country is thawing out of a long, cold winter, pandemic restrictions have been mostly lifted and global turmoil has broken out. Not a good recipe for lower prices. Unless supply magically appears, demand could increase even further. I thought the top was 2017, that was a mistake.
I only do fixed-term leases with the ‘must vacate the property at the end of the lease’ option. If the relationship is good then a new lease is negotiated well in advance of the term. If either side wants out, then there is a defined end date and no surprises.
Looking for stability and rent-controlled rates? Go for a long-term lease. You’re protected for the term of the lease with almost no downside.
Patriotz : Where are most of the buyers for SFH in Victoria coming from right now and that is from outside of Victoria. How many SFH are rentals right now? (not including houses that have been turned into multiple units.)
Silky / Freedom you make a good point about renegotiating rent. Though it’d be cold to do, I’m sure a lot of families would prefer to pay a bit more vs. have to move in a tight market. Leo’s posted the stats in BC, the most forced moves of any province due to renovictions like ours or sales and the properties changing hands- I’m sure these stats are even worse now if updated.
Community groups I’m in have a DAILY post about another family losing their rental home to a sale or “landlord use”. It’s gross out there.
Re: the unfair super low amounts you’re allowed to increase rent by each year… Not sure who has had a wage increase at the same rate as rents are allowed to increase. Not us.
RTB policy is tenant friendly, but there is no rule that would block rent increase mutually agreed by both sides, regardless the amount. Have a friend who just increased rent by 6% after discussing and agreed by the long term tenants.
In Cadborosaurus example, she could have offered $500 or $1000 more to negotiate and possibly stay longer (that could be win-win for both sides).
But I would agree with her that the owners occupied time should be increased from 6 to 12 months, to match up with the 12 month penalty. Also a good landlord should give more than 2months notice when possible, but 2 months rent compensation might be too high, considering the tenants could move out anytime after the notice and the landlord would loose rental income on the unit before they are ready to move in.
In any case, one can’t expect rental stability beyond a fixed term lease with private owners, be it a SFH or a condo or a suite.
Where are all the new owner-occupiers for those SFH going to come from? Think real hard.
I agree. I’d sell my house today if I didn’t plan to live in it for the next few decades.
Cadboro: Did you ask for a lease each year and was that refused? If the landlord wont give you a lease then it was time to look for one that would give you a lease.
Perhaps the solution is to make all month to months a two year term binding on the landlord but after the two years then market rents apply and a new two year lease is entered into.. To be fair to tenants they can move out with two months notice.
The problem is with the “I want to live there as long as I want paying increasingly under market rents because the increases dont even keep up with inflation. But maybe you have a point that we need a new set of rules to make surethat almost all SFH are owner occupied. Renters can live in high rise condos like they do in most of Europe.
Barrister it wasn’t stability, it was literally ripped out from under us. To answer your question when did we pay “below market” from 2018-2020 when rents took off, we were paying less than comparables. But signed on at market rent when we started, paid annual increases and were never offered a new lease so there was nothing stable about it.
Calling a situation like mine “subsidizing us” because we just existed there for a while is so narrow minded. The relationship isn’t just one way, my landlords got a stable family in their property who did our own repairs, watered their trees, got along with them and paid rent on time. 0 conflict through the whole tenancy.
So no I don’t look at it as having had it so good for so long, because others had an even shittier experience than mine paying more. I think the rules need to change to de-incentivise the commodification of family suitable housing. Or at a bare minimum safeguard it more from instability.
Doesn’t have to be. If governments took real action against policies which result in inflated RE prices I think the rental market would take care of itself to a large extent. More efficient than having dueling subsidies for ownership and renting.
Well the renters have watched owners make huge gains for doing nothing. What goes round comes round.
On the issue if fam-victons or reno-victons, I would prefer if the RTA allowed for renegotiation of the terms of the tenancy agreement including the monthly payment allowing for higher annual rent increases in certain cases.
Tenants would not be happy with negotiating a lease that is currently favorable, but if the alternative is possible eviction many would agree to increase their payments above the annual increase.
I think the RTA has gone so far in favour of tenants that landlords are circumventing the rules and causing greater harm to tenants than if the RTA gave landlords more options for resolving their tenancy issues.
I agree with Barrister. Cadboro, we followed your situation and were very happy you found your place, but per your post you had 7 years, and it seems your landlord was effectively subsidizing you for 1,000 a month compared to market, I think 7 years then is plenty long enough, sorry if that sounds harsh. But I agree with you on the situation you describe where landlords are just flouting the 6 month rule hoping not to get caught, yes that is indeed crap.
And Patrick, sorry, but if your answer is that the ‘amateur landlords’ that represent the biggest landlord group are supposed to provide “permanent” rentals as you say, then somehow the rents, as high as they are, would have to go up a crazy amount so that landlords aren’t “permanently” expected to subsidize tenants compared to the actual costs of owning and maintaining a house properly & without being “allowed” to god forbid think of using it yourself at some point or selling it or paying the tenant tens of thousands…wow.
What this ongoing debate seems to show again and again is how crazy the market has become, and I get that many tenants actually deserve to be subsidized, but what I don’t get is why people think a societal problem should fall on the mom& pop landlord instead of on society as a whole. I suspect the answer has to be means-tested, taxpayer-subsidized co-ops and the like as someone else here said (totoro?).
In the meanwhile, I will certainly never re-enter the fray as a landlord. Did it for about 15 years (permanent enough?), was proactive about maintenance and upfront in my dealings, met some good people, some bad, but the “surprises” somehow always seemed to be on the tenant side. And now my sense is the expectations have risen exponentially.
We have to figure out how to deal with this as a society, vs. some stupid tenant vs. landlord war.
I am sure that rising interest rates will have impact on the condo market and for lower priced SFD. I am less confidant that it will on an impact on SFD running over two million.
Cadboro: Seven years stability on a rental is a very long run. And of those years how many were you paying well below market? Some of the problem is built into the cake when landlords are forced by law to take less than market rents often for many years.
There are lessons to be learned and not all of them favourable to tenants.
What’s different this time is that interest rates have finally bottomed and are now going up. There may or may not be another factor to counteract this, but it’s a new ball game.
I am trying to recall how many times in the last ten years there has been a prediction that house prices were going to fall or the bubble was about to burst. Perhaps this time it is different but perhaps not.
My wife is using my crystal ball for a paperweight so I have no way of being sure.
I was that family. Rented a very small sfh in Oakland’s for 7 years, over which time our landlords TOLD US that they had no plans to sell when the market was picking up to calm our fears. We were great tenants and thought they were great landlords. We had our kids there and when our youngest was 1 month old, they gave us 2 month’s notice that their own kid was moving in. It was a really dark time for us as we were also dealing with a newborn, a toddler and house hunting to buy, and had to put that on a backburner because nothing would close in time for our eviction and we were looking at either a hotel in between and huge pressure to buy or find another rental.
Found another rental the same size and in rougher shape than our first home, for $1000 more, that flooded right after we moved in. What a time.
Our previous landlords did move their kid in all within the rules and 6m later re-rented for what I’ll assume was way higher rent than what we were paying, we kept tabs with our previous neighbours. This crap has been happening everywhere.
I am in landlord groups now where it is point blank encouraged to just evict for “personal use” then re-rent immediately for market rent, and if caught just pay the penalty. 12 month’s rent (at the previous tenants low rent rate) is chump change when you can increase it by $1000+ after, this move can pay for itself in a year.
Solutions?
1. Obviously more purpose built rentals so we don’t even have this problem
2. Tenants should get 4 month’s notice for personal use evictions vs. 2
3. If you evict for personal use, compensation to the tenant should be 2 month’s rent
4. It should have to be used as “personal use” and not re-rented for 12 months instead of the current 6 months. If you re-rent prior to this, the previous tenant is owed some compensation for their eviction.
I’ve noticed a lot of under stocked shelves at the grocery store lately. Now there’s a possible railway strike at CP. That won’t help matters.
Ouch!
Kenny G’s call yesterday of a ‘top’ in house prices in the market is looking good!
Wonder if it is actually a fake rental scam?
2921 actually. Exact same text in ad. Price/monthly rent 533(!). Gross rental yield 2.25%.
I recall from the blogs that sale and rental listings at the same time were becoming common in the US circa 2005.
This is strange: 2961 Shakespeare Rd, MLS 896229, 6 beds, 4 baths, 2 kitchens, asking $1,599,000. Posted today on Used Victoria. Same house Ad# 39442972, for rent 6 beds, 4 baths, $3000K per month? What is going on? $3K per month for a $1.6M property.
Patrick, are you a landlord? Have you researched the RTB rules? They are quite favourable to a tenant.
If tenants would like to remain in a home longer term, then they tend to request a longer-term lease. A term lease cannot be terminated early by a landlord who wishes to occupy the home – they have to wait until the end of the lease to give notice. This is at little risk to a tenant because if they need to vacate early, the landlord has an obligation to try to re-rent and in this market that is a near certainty.
I don’t have a better answer. Looking at Finland and the Netherlands, it seems like people are generally adequately housed at lower cost and the programs are run by the municipalities or non-profits. Higher cost to all is probably better for security of tenure unless you have a better solution. I’m ok to pay more taxes for this. I recognized that an increase in quality of life where there is currently insecurity for those who cannot purchase is of benefit to society as a whole.
Totoro: Be careful for what you wish, government becoming the major player for the whole housing market usually does not end well. Not surprising “affordable housing” comes at a huge per square foot price along with a small army of politicians and bureaucrats alongside. Someone, usually the middle class pays through the nose. My friends the developers make out like bandits.
It does let companies like Amazon and McDonalds continue to pay outrageously low wages since you kindly subsidize these companies with cheap housing .
Patrick- I’m curious- were you born and raised in Victoria? If not, when did you relocate?
So don’t put that six month clause in your contract, and just pay them one month. I assume that you’re upfront with your renters and before they start renting, you tell them that if one of your kids want to move in, you’ll be evicting them (when their lease is up). If they move in with that knowledge, I have no problem with how you’re doing it
The evictions I’ve heard about here on HHV have been unexpected to the renters, where the landlord hadn’t told him he was going to move in or sell and evict them. There was a landlord-owner here that just decided to sell last week, and was afraid to tell his renters the bad news. That’s the situation that seems unacceptable to me, as the least landlord can do is tell them UPFRONT, BEFORE THEY START THE RENTAL that the landlord will be probably moving in or selling within a few years, which could result in them getting evicted. That way, a family wanting a longer term rental can rent a different place instead.
So you want to make a homeowner renting out their home at $4000/month to pay $24,000 to a tenant instead of $4,000 because it will help tenants feel secure and it is fair for a tenant to get a $24,000 (tax-free?) windfall at the individual cost of a homeowner?
I don’t know about you, but I’m never ever going to be renting out a home I plan to live in or have my children live in to those nice tenants if I’m at risk of paying a penalty of $24,000. Just not worth it. I’ll rent out rooms. Even at $4000, the penalty is enough to make landlords think twice about renting to the nice family. What the family needs if they can’t buy is a coop or subsidized permanent housing at a society’s expense, not at the individual’s expense.
And thinking that somehow a homeowner can afford that cost is misguided. We have experienced astronomical appreciation in the past couple years, but it is not usually like this, you can’t always access your equity, and likely won’t be like this going forward – plus the costs of home ownership and mortgages need to be factored in. $24,000 to live in your own home is punitive and unaffordable. It costs way less than this to move. Increase notice if two months is not deemed enough but don’t play havoc with someone’s ability to get back into their own home.
Nowhere in the world I’m aware of has this ridiculous system – for a reason – it has foreseeable negative consequences for the rental market. The only way to manage the rental market effectively is to put the responsibility for permanent rental solutions where it belongs – on government.
The increases in interest where expected by everyone and these where on the conservative side. Dont be surprised if we see a half point increase or two asw well.
Here comes the increasing rate environment for 2022… Wonder if the BoC will make a similar announcement at their next meeting.
From: https://www.theglobeandmail.com/business/international-business/article-us-federal-reserve-hikes-rates-signals-aggressive-turn-against/
Most of the time my renters inform me when they want to move out. I inherited one tenant in a small house in Langford when I took possession. I let her stay at $600 a month. After about a year I gently suggested that the house needed major renovations to bring up to code and that she might consider looking for another place to live . She ended up buying her own townhouse for around $180,000. That was almost 20 years ago. She probably has $500,000 in equity now, it was the best thing for her.
Frank, I’m not suggesting a 10 year lease. Neither the landlord or tenant could be expected to make a commitment like that.
About 40% of families can’t afford a home, and lots of them want a secure rental where they won’t get evicted unexpectedly.
This is the problem that could be helped by the landlord, as outlined below.
What I am suggesting, is that if you have no intention of selling the place or moving in yourself, that you:
That would appeal to people that are looking for secure rentals. Maybe a family with young kids, where they want the kids to be able to grow up in the same house.
Because they’d be happy to know that you have no plans to evict them down the road, and if your plans change, and you do evict them, they would get 6 months rent compensation from you. Note: you’re still able to sell/move-in as you would without this clause, you just need to pay them compensation.
The only change from you is that you might have to pay 6 months rent to them if you evict them to sell/ move-in.
The change for them is that they feel more secure with the rental.
Patrick: Forget renting the house for a few years and just move the family member in to start. Why would anyone assume that a rental is any longer than the lease that one has. If you want permanent then buy a house or rent a apartment in a commercial building.
But listening to voices like Patricks is making a lot of people simple sell off their rental SFH now rather than wait for even more disadvantageous situations.
Patrick. That is just a bunch of jibber jabber in my view that makes no real world sense.
If we had stable long-term rentals that would be great, but we don’t. Our free market system needs to have limits and taxation, and it does.
If we are going to change taxation laws in view of fairness then I would say tax all primary residence sales subject to a maximum reasonable exempt gain amount and use these funds to build affordable, stable long-term rental housing. This would curb house “investment” immediately and put the funds into fair housing options for all.
Rental homes owned by private individuals are already taxed heavily on gains and are taxed on rental income. Until we have a better supply of rental housing my view is that we don’t want to discourage market rentals, we want to encourage them.
Patrick- There is no such thing as permanent renters. By nature they are transitory, that’s one reason they don’t buy a home of their own. You’re not considering all the possible scenarios that every individual may have in their lives. If I stipulated that I wanted a 10 year lease, no renter would sign it. Be realistic.
Let’s say I go out today and buy a second home I don’t need, but I think a family member might want it someday.
So I buy the home and rent it out to a nice family who thinks they have a long term rental. And a few years later… surprise! My family member wants it, so I evict the nice family and my family member gets the home.
Are you suggesting that I have helped the housing crisis, by offering this lousy, short term rental for a few years before evicting my tenant?
Seems to me that unless I’m prepared to rent the home long term (without “moving in”), I’m just a speculator and should stay out of the housing market, or at least be taxed heavily for my speculation. And a good time to penalize the landlord is when they do “move in”, because that identifies them as a speculator vs long term landlord.
Anyway. I have nothing against landlords, I just wish they would provide what is needed, which is permanent rentals, so we don’t see evictions when landlords move-in.
That’s all I have to say in the topic, thanks for the discussion.
The “housing crises” is comprised of people who can afford to buy but are having difficulty because of current market conditions, and those who cannot and will remain renters. And if you suddenly convert rental homes to owned homes this is going to lower the vacancy rate even further and, at the same time, flood the market with tenants evicted by new homeowners.
My view is that renters are impacted by low vacancy rates disproportionately and this is at crisis levels. We need a major influx of long-term stable, affordable rental housing. This type of housing is not free market housing, but purpose built housing with affordability controls ie. rent geared to income. This means co-ops and subsidized housing built with public or public-private funds.
If we create more rental housing the vacancy rates will increase and any free market landlord will need to provide and/or charge less to to attract tenants.
As far as penalizing a person with a home that is rented out and who wants to move in or sell by making them pay a tenant tens of thousands of dollars, that is poor policy in my opinion and reduces rental housing options in a rental housing crisis.
This is incorrect. The Germany Civil Code allows a landlord to give notice to their tenant when they are moving in. The notice period is extended for longer tenancies, but there is no punitive tens of thousands of dollars penalty or windfall for a tenant.
inflation at 5.7% – wait til next month when the massive gas spike we have seen is included… assuming it doesn’t tank later this month.
https://www.cbc.ca/news/business/canada-inflation-february-1.6386536
Once upon a time in a place far, far away, there was no housing crisis. Owners listed their homes and waited for viewings, offers did not pile in, their property sat for months on the market and a sale wasn’t guaranteed. They even had to take a loss at times. This applied to owners and landlords. The ratio of owners to landlords was probably consistent with today’s ratio. Sellers did not care who bought their property, they were glad to get rid of it. To blame today’s housing crisis on landlords is ludicrous. I’m sure my tenants are grateful to have a roof over their head.
You’re right about the amateur landlords being a significant portion, but I think they worsen the housing crisis.
—-My definition of amateur landlords is people who buy homes, and rent them out on a non-permanent basis. Typically this means holding them for future occupancy by themselves or a family member. Or they expect to sell the home in the future, so are using it as a temporary speculation. This would be a full dwelling, so it doesn’t include someone renting out a suite in a home. It also wouldn’t include rentals to singles like university students, since they wouldn’t be here permanently anyway.
—- I don’t see these amateur landlords helping with the housing crisis. They didn’t build the homes, they are just blocking other people owning them.
But they worsen the housing crisis, both by buying, selling or simply renting the homes as outlined below. Because
——they are a major source of evictions when they sell their tenanted property. We’ve all heard sad stories from HHVers evicted, and it seems always to be from an amateur landlord selling.
——- When they buy, they outbid someone planning a permanent homeownership or rental.
——— When they simply hold the home and rent it out, this provides an non-permanent rental, causing the tenant to seek a permanent solution buying a home, worsening the crisis. We commonly see messages here from HHV members with a rental that they fear losing, so they are compelled to stretch to buy a home.
That is sneaky as it will only happen when the tenants don’t know the rule. Moving is stressful. The one month rent is a compensation for the tenants’ stress otherwise wouldn’t happen if not for the landlord moving in. So a decent landlord should give the notice and the money, even if the tenants are not aware of the rule.
It would be even worse, if the tenants move out due to the “informal heads up” and then the landlord “changes” mind and go on to rent to new tenant (for higher rent). In this case the landlord could “dodge” the one month rent plus the 12 month penalty, that is more than sneaky.
Both cases are under false argument that the tenants move out “by their own choice”.
We subscribe updates from TaxTips.ca, this one with a link below came today wrt “Principal Residence Exemption (PRE) Education Letters”: https://members.videotax.com/shared_links/2982506768
The amateurs are providing a significant portion of the housing. We would be beyond crisis and into disaster without them.
https://www2.gov.bc.ca/gov/content/housing-tenancy/residential-tenancies/ending-a-tenancy/landlord-notice/two-month-notice
If you end up giving an informal heads up that you plan on serving the eviction notice in 4 months, just before the 2 month deadline and they relocate in those 4 months you would not need to give them a free month of rent.
However, once you have formally given them a notice of ending tenancy for landlord use, you have to give them 1 month of free rent.
I was unaware of any compensation given to tenants if you terminate their tenancy with proper notice.
That is allowed and good for you and them, but they would be still entitled to one month rent from you as compensation.
Good luck with that. Most places that have successful rental housing programs have the programs administered by the municipalities, co-ops or non-profits. I’d like to see public lands used for this in Canada.
Only if you both agree at the start of the tenancy that the tenant will vacate at the end of the term so the owner can move in. Many fixed term tenancies do not have this clause as the rules changed in 2017. https://landlordbc.ca/rtb-update-regulations-vacate-clause-fixed-terms/
Yes. And that is the only case now the landlord is legally allowed to do so without gving compensation to the tenant.
Long term/stable rentals don’t need to only be “purpose built”, they can be legislated into existence by housing policies that provide incentives for ownership of current homes by long-term professional landlord management , and disincentives for “I’ll rent it to you until my family member wants it” amateur landlord/speculators. People (and corporations) could convert their existing rentals to long term rentals, losing the right to “evict and move in”, and get tax benefits. Whereas the amateur landlords would get treated as speculators, and face punitive taxes, since they aren’t providing long term rentals.
Countries like Germany have these laws, and people can rent a house there for life, without risk of getting evicted. And they have a much lower homeownership rate (50%), because people are happy to stay in long term rentals.
Isn’t this a case where you can still do a fixed term rental? And therefore don’t need to pay the one month penalty?
“A tenancy ends only if one or more of the following applies: ……..(b) the tenancy agreement is a fixed term tenancy agreement that, in circumstances prescribed under section 97 (2) (a.1), requires the tenant to vacate the rental unit at the end of the term;
AND
Fixed term tenancy — circumstances when tenant must vacate at end of term
13.1 (1) In this section, “close family member” has the same meaning as in section 49 (1) of the Act.
(2) For the purposes of section 97 (2) (a.1) of the Act [prescribing circumstances when landlord may include term requiring tenant to vacate], the circumstances in which a landlord may include in a fixed term tenancy agreement a requirement that the tenant vacate a rental unit at the end of the term are that:
(a) the landlord is an individual, and
(b) that landlord or a close family member of that landlord intends in good faith at the time of entering into the tenancy agreement to occupy the rental unit at the end of the term.
Adding this penalty is punitive. Extend the notice if you want to provide something more, but even more important, build more purpose built rentals. Until you do that you are going to worsen vacancy rates by saying a landlord has to pay six months rent to a tenant to live in their own house again.
If or when I want to move into my property, I would give my tenants 6 months notice and ask my property manager to help them relocate. I don’t think any more should be expected. They would also be free to move at any time prior to 6 months.
The landlord would still be able to move back in. They would need to pay a 6 month penalty to the renter. Amateur landlords that you feel “should be able to move back in” should realize that this has economic consequences for their tenants, and should pay for this, by a 6 month penalty.
Adding this penalty would discourage amateur landlords from providing these lousy, temporary rentals, which lead to sudden evictions. Instead, the homes could be bought be professional landlords, owning them for the long term and providing stability in rentals.
If we had stable long term rentals of various dwelling types, at reasonable rents, there wouldn’t be a housing crisis. Many renters are happy where they are, but afraid of eviction by their amateur landlord, so they feel compelled to buy a home at any price. There are some of these renters here on HHV. They describe themselves as happy with their rental, but worry about eviction so they need to buy a home.
I think that someone may have mentioned this below, but if you re-sign your tenants to a fixed term lease, they’re locked in until that lease completes. You don’t need any clauses, or even to mention it. It may come out in the due diligence, but many realtors are just lazy.
That would be very difficult to do in practice. Nor would we be willing to end up with less offers/lower offers due to a clause like this. Not sure how one would even do that. You have no control over what the new buyer actually does once the house is sold.
Totally disagree. Someone who owns a house should be able to move back in. Lots of people rent out homes temporarily while they travel or go somewhere for work, for example, or buy before they retire and can move. They already have to pay a one-month penalty and if they don’t actually move in and occupy the house for six months they pay a 12-month penalty.
It looks like if the new owner is a landlord/investor, not planning to occupy, the tenant is in luck and the landlord couldn’t evict them to get a different tenant or higher rent. It’s only if the new owner plans to occupy the house that an eviction can occur. https://www2.gov.bc.ca/gov/content/housing-tenancy/residential-tenancies/during-a-tenancy/selling-a-tenanted-property
You could put in the listing that preference would be given to landlord/owners who plan to continue the rental. And then evaluate offers based on the information provided by the buyers about their intention to keep it as a rental. There’s no guarantee, but at least you’re increasing the chances that they won’t get evicted.
A landlord/owner evicting a tenant for “owner occupation” should pay a penalty to the tenant, maybe 6 months rent. This would discourage these lousy rentals that are really just house speculation and never were intended to be long term rentals at all
Yes, but they still have to give several months notice.
Not unless they have a good reason.
Easier said than done.
You get to choose who buys the house. How about selling to an investor/landlord that will keep them as tenants at the same rent. Then you would be “amazing” just like your tenants.
If a house is rented to a tenant. ( month to month), and sold to a new investor/landlord, my understanding is that the new landlord can’t evict the tenant (after possession) unless the landlord or his family plans to live in the property. Is that correct?
I think the previous owner could evict the tenant prior to sale – is that also correct?
It wouldn’t seem fair to me to allow the tenant to be evicted in either case. This is different than vacancy controls because the tenant hasn’t vacated.
That’s true, but what matters is what people think, whether justified or not.
“I have no idea if this is a real concern or not.”
The minister has publicly stated that vacancy control is a non-starter.
Sadly most investors buying rental properties would like to have new tenants who pay market rent price. But If you have a fixed term lease with the tenants, they are at least protected in the lease time regardless who the new owner would be.
I spoke with a neighbour who is putting both his rental houses on the market this month. When I spoke to him his major concern is that he is worried that rental rates will be locked in for the unit meaning that you can not bump the rent up even with a new tenant. His view is that this would lock the property into an ever diminishing stream of income compared to costs.. (the fact the last tenant did not pay rent for nine months and jerked him around the Landlord and tenant Board did not help his outlook.
I have no idea if this is a real concern or not. Guessing he is tired of the hassles.
Another factor we considered re: cap gains tax is we wont have to pay it until May 2023. We have a bunch of unused RRSP deductions that will reduce our tax load for that year.
For the record, we have decided to sell our investment property and it’s being listed towards the end of the month, but only because we cannot buy our forever home without selling one of our 2 properties first. If we weren’t looking to upgrade our principal residence we would definitely not sell as the rent keeps us in the green after all expenses and even pays for our principal property taxes. We were very nervous to tell our tenants but they have been amazing – mind you we have a great relationships and consider ourselves good landlords as well. It is possible they may not have to move out depending who buys the house.
And we won’t be selling our owner occupied home until we have an accepted offer on our forever house.
We’re in a similar position with our basement tenant. We’d love the extra space with 2 young kids and don’t strictly need the cash flow. But it’s a brutal rental market here and we’re still in a pandemic. On balance it feels like letting them stay is the right thing to do.
Add “> “ (without quotes) before the text you want to quote
My biggest impediment to selling at the top of this market is-1) tossing my tenants out onto the street would be cruel. 2) Capital gains taxes 3) I honestly think 5-10% gains will be realized for a few more years. I’m sure investors have other assets they could cash in (stocks) rather than selling a property that would be difficult to replace. Even if you pay capital gains on the sale on an equity, you can easily repurchase it after you pay the taxes. Once you pay capital gains on a property, you’re instantly priced out of the market.
How do you get the comment you want to reply to in quotes :)??
“Indeed not, but the issue is what the investors who piled in over the last couple of years are going to do.”
I would argue those are speculators, not investors. I don’t know how many speculators there are currently in the greater Victoria market so not sure how much of an impact that would have.
I’m talking about list/sales ratio which has been below normal during Covid, leading to low inventory. I expect listings to rise to normalize this ratio and improve inventory.
Indeed not, but the issue is what the investors who piled in over the last couple of years are going to do.
That would only apply if you had no other income sources. If you already make $100K, and then add in $50K of dividend income, you pay about 23% tax. At high incomes (>$250k) , you’d pay about 35% tax on those dividends.
https://househuntvictoria.ca/2022/03/15/tracking-the-coming-market-slowdown/#comment-86205
hmmm…given rental prices it is comparable really what you can get from dividends vs how much principal is paid off each year depending on your mortgage. It is a big decision to sell an income producing asset like a sfh in greater victoria. There is no right or wrong really. You’ll likely do well holding the asset, withdrawing equity to invest in dividend etfs or selling and doing something else (investing, buying an investment condo) with the profits. It’s a great position to be in. Holding onto a rental property that has served you well over the years is not going to ruin someone if the market goes down 10%.
Dividend tax credit. Dividends are paid out after a corporation pays its own income tax, so the recipient gets a credit for that. OP is correct. It’s a result of the marginal tax rates for someone with income ~50K (low in BC) and personal credits, versus the corporate tax rate.
A head scratcher… Why would a private investor pour money into actually building homes, when you can buy Housebuilder stocks with 25% earnings yield?
There is an interesting contradiction in pricing in the investment side of the housing market. On one side, we have the bullish case where demand & prices for new homes is at all-time high. Waiting lists of 2-4 years to get a home built.
On the other hand, the prices of US house builder stocks are behaving as if the housing crash is happening. They are selling at P/E of 4-5, implying an earnings yield of 20-25%. For example, Lennar , trading at $71, with 2022 earnings estimate $16, and $17 for 2023 (Len.b, https://finance.yahoo.com/quote/LEN-B?p=LEN-B&.tsrc=fin-srch). All of the major housing stocks are the same (tol, dhi).
Fixed rates are now up so high (~3.4%) that the stress test (lower of 5.25% or contract rate + 2%) is now going up for people choosing fixed rates. First time in a couple years.
How does that work?
I’m calling a top to this market, I have had a couple of clients recently looking to sell at least one of their rental properties to lock in gains and fund their retirement for several reasons, among them: interest rates going up, capital gains taxes and other taxes possible on rental properties may be going up over the next couple of years, they can invest funds in dividend paying stocks and get almost double the yield considering that a couple can earn over 100K in dividend income and pay no tax. I say this party is over and forecast a 10% decline (or more) by this time next year.
More on how affordability might get back to normal next week.
A shortage of homes isn’t the main reason house prices keep rising
As for weekly sales.
Sales: 356 (down 22% from last year)
New lists: 509 (up 7%)
Inventory: 935 (down 30%)
We’ve gained 283 listings since the start of the year.