Market seems to ease ahead of rates and government action

You honestly think that renters wouldn’t be willing to trade some trees for lower prices? Don’t blame the victim.

Tenants are too preoccupied calling landlords and developers greedy and are easily swayed into thinking airbnb, foreign investors, and speculators are the root cause of the housing problem and hence they elect the same government officials.

I put up a 10×10 bedroom in a suite for my mom on FB marketplace for $800 (previously rented for $650) and had over 100 inquiries had to shut down the ad. Rented it to a UVIC Phd student my mom felt so bad for him told him if he stayed for 12 months the last month would be free. Shitty housing situation out there.

Let’s continue to save the trees and block development. #savethetree(s).

I also don’t think the hand deconstruction bylaws are enough, we need toothpick deconstruction.

Barriers to housing driven by the middle class who complain about the cost of housing.

Marko, you claim you can deal with a Mazda 3 just fine but isn’t it rather entitled to expect to own a car at all? Many people use the bus or walk and do just fine! Can’t you make due with less?

I love walking so if I had a downtown desk job, I would strongly consider not having a car and just buying a Modo membership. That would not be the end of the world for me or impact my happiness.

Does anyone know how much 2860 Graham st sold for?

Hey guys longtime reader, first time writer/questioner.

I’m wondering does anybody know how much either 8 Seagirt Rd or 540 Treanor Ave sold for?

Am I correct in assuming this isn’t public information that can be looked up, that I would need to be a realtor to get this information directly?

Thanks in advance!

If it makes a difference to you, Squamish gets more than double the rain than Victoria, a lot more snow, and is about 3 degrees colder on average in winter. Victoria gets 2200 hours of sunshine a year vs. 1940 in Squamish.

Yes, good points.

On balance, I think Victoria is my ideal place to live. But I do sometimes like to daydream what it would be like to live in other nice spots and, because of the nature of daydreams, I tend to under-weigh the negatives and over-weigh the positives.

The only sensible thing in that article is calling for the spec tax to be expanded to Squamish. The rest is a mess. They mix up approvals vs actual built homes, mix up building something VS building enough.
“Yesterday 6 people came over for dinner and I made 6 hot dogs. Today 10 people came over and I made 8 hot dogs. I made more food so I don’t understand why people are hungry”

Good example of Gell-Mann Amnesia:

“Briefly stated, the Gell-Mann Amnesia effect is as follows. You open the newspaper to an article on some subject you know well. In Murray’s case, physics. In mine, show business. You read the article and see the journalist has absolutely no understanding of either the facts or the issues. Often, the article is so wrong it actually presents the story backward—reversing cause and effect. I call these the “wet streets cause rain” stories. Paper’s full of them.
In any case, you read with exasperation or amusement the multiple errors in a story, and then turn the page to national or international affairs, and read as if the rest of the newspaper was somehow more accurate about Palestine than the baloney you just read. You turn the page, and forget what you know.”

The only sensible thing in that article is calling for the spec tax to be expanded to Squamish. The rest is a mess. They mix up approvals vs actual built homes, mix up building something VS building enough.

Fair.

I bet it would be pretty sweet living in Squamish. I’ve only visited once or twice, but whenever I see photos I’m always impressed.

The quality of being in or near the mountains but still within an hour’s drive of a big city is appealing to me. In this respect, Squamish is similar to Canmore, Alberta, which I also love.

False equivalence is a common result when an anecdotal similarity is pointed out as equal, but the claim of equivalence does not bear scrutiny because the similarity is based on oversimplification or ignorance of additional factors. The pattern of the fallacy is often as such: “If A is the set of c and d, and B is the set of d and e, then since they both contain d, A and B are equal”. d is not required to exist in both sets; only a passing similarity is required to cause this fallacy to be used.

I’ve been “accused” (correctly) of saying that Victoria homes are affordable. So let me back that up with examples that show how an average home in Victoria is affordable to an average family

As I see it, the “Victoria homes are unaffordable” crowd are missing a major point.
They are never looking at average homes for average incomes. They expect average incomes to afford above average homes.
—-An average home is a condo (especially near downtown).
—-Average household income is $100K (that’s what is used on the HHV affordability charts). This is a 2 income household. This excludes unlikely homebuyers like pensioners, students etc.
——-Average home size is 3 people (requiring 2bdr).
—— Average homebuyer could afford $450-550k. This would result in a mortgage equivalent to rent. (note: the average BC first time homebuyer paid (afforded) $560K in 2019)

Here’s an “affordable” sample of what this average family could buy, as there are MANY options to choose from now, all over core Victoria and beyond. (Note: these are listed prices, and HHV reports that average selling price for condo is currently 5% above ask.

—-$550K James.Bay. 2bdr with garden patio “ Pets Allowed, Family Oriented “ https://www.realtor.ca/real-estate/24210208/103-305-michigan-st-victoria-james-bay

——$499K Cook st village 2bdr, corner unit, 2 balconies “bright and extremely spacious, amazing location” 302 1101 Hilda St https://www.realtor.ca/real-estate/24220237/302-1101-hilda-st-victoria-fairfield-west

—-$450K Fernwood 206 1500 Elford St “ modern, completely updated, steps from downtown” https://www.realtor.ca/real-estate/24208060/206-1500-elford-st-victoria-fernwood

To me, these homes pass the test of being affordable and suitable for an average family (3 people+pets). They are modern, nice looking, walking distance to parks and downtown Victoria. If we define affordable as average family income affording an average home, then Victoria passes the test as affordable

Above average homes (SFH, 3+ bedrooms) aren’t affordable to average incomes.
But as shown above, average homes are affordable to average incomes.

If I’m wrong, please tell me how low the price would need to get for nice 2 bdr condos in core Victoria to be considered “affordable”, if $450K is too much

In terms of moving to the island for job opportunities when I came here 4 yrs ago I was told be the recruiting agencies that there was a so called “beauty tax” or island tax here. Effectively, and it proved to be true, at least before the WFH phenomenon due to the pandemic, jobs here paid quite a lot less than equivalent to other markets in Canada. Wife and I are finance professionals and on top of the cut in salary were far less interesting job opportunities. For every 1 job opp here there were 10 on the mainland. However, the competition here was far less. Still a good move for us, but not so much for interesting work on big opportunities for advancement. Really a govt town.

Patrick, you too! Again, all the best..

Hey Patrick:

I think I’m understanding better what you’re saying, and agree, actually. Although I’d push back a bit and say that there’s not a conflict between rising affordability indices and FTBs slanting upwardly mobile and less picky (in particular buying below the mean). People have finite resources after all. So it isn’t clear to me that the affordability measures are misleading per se. But that may be a semantic distinction.

I think part of the tricky thing with the thread is that there are a few competing questions being discussed in parallel. One is, to exaggerate for effect a bit, whether the current market is normal and young people are just whining. Another is what to do in the face of it all. But those separate questions are being conflated a bit.. I’d argue it’s 100% clear that the market is bad in historical terms. “Nothing is new under the sun,” yes, but the current state of affairs is objectively bad, and not only here. When Marko chimes in about identical listings in Royal Bay selling at ~ 2x price from 2019 to 2022, that’s bad no matter how you slice it. Bad for FTBs, bad for young people, bad for the economy actually, since that is money that goes from investing in new things to not new things. “What is to be done?” is a separate question. We’ve introduced our kids to the lovely Eastern European Yiddish folk take “It could always be worse” (https://www.amazon.com/Could-Always-Be-Worse-Yiddish/dp/0374436363) and certainly take try to take that attitude..

Patrick – do you think if interest rates go up and we see a pull back in prices in Canada that Victoria will be immune to this?

Rates could rise, and prices could definitely fall back. We would not be immune.
I don’t think that this will approve affordability much if at all though – because of the higher mortgage payments. Because historically, affordability has always worsened during a period of rate rises, and then only improved as rates fell . But if a higher mortgage interest payment doesn’t scare you, then yes you would likely see more inventory and lower prices with higher rates.

Nope, haven’t the checked the MLS in months. likely over a year now.

Great! In terms of bears – you’re the real deal!

Maybe it is a good thing that more people do not think this way as of yet, but there are some of us out there

The reason that more don’t come, at least until they’re older (hence the retiring boomers with cash-only sales who are driving this boom) is because the career opportunities for these young professionals are much more in toronto, vancouver, calgary, etc.

Choosing to buy a ‘bargain’ home within walking distance comes with less career advancement, less income, less of the rock-star 9-5 lifestyle that these people also value.

Victoria up 22% yoy meanwhile Kelowna is up 28% (even with the fires), Abbotsford up 35%, then we move over to Ontario (we all know how desirable it is there) and we see 16 cities and 13 of them have gained MORE than Victoria in the last year. And these aren’t cheap east coast cities. Are Barrie and Guelph and Brantford and Windsor special cities like Victoria?

You seem firmly set on your Plan B which is to wait for lower prices. And so you seem a long way from pulling the trigger on buying, which is unfortunate since that’s obviously the goal.
HHV has seen a few people posting in similar circumstances as you over the years. They were dubbed “perma-bears”. One of them proudly accepted the title “King of the bears”. Making detailed, rational reasonable posts about how houses were overvalued, and various economic indicators and YouTube influencers had convinced them to wait for falling prices.

Now the funny thing is most of them ending up “surprising” the HHVer board by suddenly and unexpectedly announcing “We bought a house!”. So I’m curious, as you type these long bearish posts, do you also have another browser tab open to mls.ca which you refresh a few times as you make your HHV post?

btw) if it helps… the justification that the perma-bears typically make to explain their sudden purchase was that they found a house that seemed underpriced and perfect for them. So they threw caution (and their charts of inverted bond yields) to the wind, and bought a house. And never looked back!

I’m not from here and found this whole city is sale. I know 10 people from Vancouver and five people who moved from Toronto in the past couple of years who sold their homes between 2.5 and 6.4 million and were blown away that they could get a house walking distance to work. For educated professionals all of them thought it was a deal. Maybe it is a good thing that more people do not think this way as of yet, but there are some of us out there.

Not sure what is less believable: Patrick arguing affordability is actually fine, or the UBCM arguing there is no housing shortage.

My affordability position might be more believable to some than “affordability is a cycle” charts implying that “affordability for average incomes affording a Victoria SFH” is cyclical, and the “affordability fairy” may make Victoria SFH affordable again to average incomes if we wait long enough.

Rather than joining the “pity party”, it seems to me to be more helpful to show (2019 StatCan data) how BCers are in fact affording homes, and how they’re doing it prudently by buying below average cost homes as their first home. Where they start building up equity. In the hopes that a HHVer will read that and say, “I could do that too”, instead of sitting around on the sidelines asking “who can possibly afford these homes’? In practical terms, that means buying what you can afford now, and may mean settling for a Westshore townhouse instead of a SFH.

And by shiny new place I didn’t mean new build. I meant updated

That’s what I meant too.

But everyone goes for these types of properties.

Nope.

And by shiny new place I didn’t mean new build. I meant updated (a 50s house can be very nice completely renovated). But everyone goes for these types of properties. I am saying go for the dregs and see what you can drum up. It takes risk and imagination no doubt.

Hubby believed we would never get our money back for all the renovations we did.

You mean you sold it? Even if you did it’s hard to figure out whether you actually got the money back from the renos themselves.

Everyone wants a shiny new place.

Nope, not by a long shot. Never bought a house less than 30 years old myself.

Hey Millenialx2:

Yes, that is basically the plan for us too once summer comes. The problem of late has been that the floor for those properties has jumped substantially since you bought, and especially the past two years (remember: listing and selling prices are not the same right now, especially for anything that has potential income generation meaning suites, so you may be misled somewhat as to where the market currently stands), and inventory is at historical lows.

Hey Patrick:

This is a funny case where I think that the conclusion you’re drawing is correct, but the lesson is wrong. Let me explain. Basically, I claim that you’re falling victim to a sampling error.

Here’s an extreme example, from the Bay Area. If you look at the demographic distribution of first time buyers there, it has a large bump in the 25-35 range, larger than average nationwide. Similar to what you describe in your comment actually, where those buyers have larger than average income, and are buying below the median.

Problem is, when conditioning on first time buyers there, you’re isolated a highly non-representative demographic. Largely young techies, or double-income professional couples without kids, making in excess of 250k/year US.

Here’s another way of phrasing a punchline from the data you quote: first time buyers were (emphasis on the “were;” remember the data you quote is from 2019, before home prices nearly doubled) skewing from the upper end of the distribution, and are getting by with less.

Certainly the conclusion — that first time buyers are doing better than the affordability chart suggests — is correct. But how is that actually happening? By buyers a standard deviation above the mean buying properties that, under normal conditions, would be bought by people at the mean. Which in the absence of supply prices the latter into worse outcomes.

So yes, conclusion is correct. But I don’t think you can reliably extrapolate to a wider picture for prospective FTBs, because you’re conditioning on a narrow subset of the distribution.

Incidentally, for all the talk about how young people need to learn to stop being entitled and live with less, well, one thing your data shows is that exactly this is happening.

As for the question about retirees shifting the median income downward, that’s a great question.

“Data data data! I cannot make bricks without clay!”

Looking around, median household retiree income in Canada appears to be ~ 65k, higher than the median income in the region. Given that Victoria is a good retirement destination, I’d actually expect retiree income to be higher here than the national average.

It’d be great to have fine-grained statistical information about all this. Like, the distribution of incomes according to age, # of adults, # of kids. That would allow for a better estimate for the distribution of prospective buyers.

But all that being said, as to whether one should be interested in the ability of people at the median to afford ownership. Well, look. Suppose you want to keep historical norms of ownership across all sectors of the market, i.e. about 65% of the population. If so, then yes!, you’d better want people at the median to be able to get into the lower third of the distribution of housing options, in particular townhomes for families.

As the city densifies and more densely packed but high quality options become available for families, sure, that will change. But those options largely don’t exist yet.

Patrick is absolutely right about first time buyers but what amazes me is that this might be a surprise for anyone.

Is the median household income a valid representation of what house hunters are earning?

Good points.

Data shows that First time buyers in BC have higher than median income, and buy below median price homes. So measuring affordability using both median income and median home price grossly overestimates unaffordability of homes for first time buyers.

StatCan data (2019) shows us that homes in BC purchased by first time buyers are twice as affordable to them as the typical values we see on affordability charts (that use average incomes buying average homes). Because what actually happens is first time buyers have 50% above-average incomes and are buying 30% below average price homes (as described below). Combine those two factors and the homes are twice (150/70=2.1) as affordable>

For example, buying a $800k average home with an $80k average income would be equal to 10 years income. But buying a $560k home (30% below average) with $120K household income (50% above average) is 4.5 years income – more than double the affordability.StatCan data tells us that this is what is actually happening in the BC housing market, and it explains why FTB are affording to buy homes and pay for them.

Details:
StatCan came out with an interesting study on first time buyers (FTB) in BC in 2019

https://www150.statcan.gc.ca/n1/pub/46-28-0001/2019001/article/00002-eng.htm

They captured FTB data by identifying a FTB as a household where the filer or spouse claimed the homeBuyerAmount (HBA) on tax return (which is available to any FTB). (That might miss a few FTB that didn’t bother claiming the $5k amount, but should get >90% of them).

Some interesting StatCan stats for BC FTB in 2018

First Time Buyers (FTB ) in BC:
– have incomes 150% of median. (63k per person vs $40k)
– buy cheaper homes (70% of median home price).
– Only 25% buy SFH. The rest condos or townhouses .
– Only a small % of housing stock is sold to FTB per year (<2%).

So when we think of FTB, we shouldn’t imagine an average income buying an average price home. What is occurring is a 50% above average income buying a 30% below average price home. Both of those factors (50% above average incomes buying 30% below average price home) make homes much more affordable to FTB

When we do this, and combine those two factors, we see that homes in BC purchased by FTB are much more affordable. Homes are twice as affordable (150/70=2.1) compared to measuring affordability of an average income buying an average home.

This is the first time in a long time that it has been an employees market, wages are significantly up, especially in the construction sector where increases are outpacing inflation. From project mangers to on-site employees, the latest carpenters union agreement had a material increase in the hourly rate and overall compensation package. This is not going to make housing costs any cheaper, but it is a great time to be an employee in high demand industries.

It is also a great time to move somewhere else, I know many people earning Toronto wages in Victoria and working remotely. While others are working north island or on the gulf island for companies all across Canada. Victoria wages have lagged behind other cities, but if you are an individual with several skills in the top 25% you will always be in high demand.

Victoria is still on sale for a lot of people not from this town and most people still do not realize it.

Growing wealth inequality:

https://www.youtube.com/watch?v=PVNdvkXTe1E&t=2495s

Not strictly a BC problem either.

https://twitter.com/clairlemon/status/1509616243631788034?cxt=HHwWhMCozbX-nfMpAAAA

People can always move somewhere else

This is not strictly a Victoria problem and the ‘move somewhere else’ worked once upon a time but now the majority of the Province is like this, as is Ontario and quickly fracturing out to many areas of the country.

council isn’t going to remove any red tape…

But David Eby Might.

Be good if prices stopped escalating for a start.

This shouldn’t be a battle between existing and future owners here and that dialogue goes nowhere. The people who bought before I could made way more money on housing and had it way easier than me to buy in, but then they will likely die earlier too (or already have) – so there is that.

After that I would like to see co-ops make a comeback. Rent to income units built on municipal or provincial lands with no fee for the land or a fee paid from capital gains taxes on the sales of primary residences and not co-op purchasers.

At this point I’m looking for densification and new affordable housing options and not seeing too much happening.

A friend was hoping to put a suite in in their home in Oak Bay but read the new policy – three off street parking spots – one covered – required for a legal suite or to have a boarder. For most older homes in Oak Bay that is impossible without tearing down and building new – maybe not even then because driveways are a limited width under the bylaw.

I’m not sure which way some people go to get to Sooke. I always stay on the highway and take the west shore parkway.
If you follow the highway signs it is more zig zaggy and I find it takes longer.
I’m not a crazy fast driver. Never had a ticket for years. I do fly a bit on the straight stretches but nothing crazy.
Hampton court to the welcome to Sooke sign is 35 minutes. (Edge of town to edge of town.
My main point is that a commute from Sooke is much easier than a commute in Vancouver. (Oak street bridge, lions gate bridge, dease Island tunnel etc etc.)
I have been very lucky to travel and see the world and I love Sooke.
I certainly wouldn’t want to commute to work…… anywhere.
For myself …I feel it would be lot of time wasted out of ones life.
But “millions” do commute for a number of reasons and I wouldn’t want to judge them. ( For example: I’ve heard some say that they like the time alone to unwind after work.)
Many people would think Sooke is too rural with not enough things to do. (Vancouver people often say that about Victoria. New York people say that about Vancouver. And so on. And so on:)
I’m never bored. I never have enough time to do all the things I love to do.

I don’t get it. A young couple in their mid 30’s 8 years ago (2015), scrimped and saved, didn’t get any family financial support and finally had enough to put down on a modest SFD. So they bought one. They didn’t know at the time their house was going to go from $500K to well over twice that come 2022. Quite the opposite because loads of people were telling them houses were priced too high….and they were biting their fingernails hoping they didn’t make the biggest mistake in their lives. So now they should feel guilty? What would some have them do? Sell their home at a greatly reduced price so that a similar aged couple can buy it? Where are they going to live? Life happens. We do not know what the future holds. None of us. Hopefully, the entire economy won’t go to r.. sh.t, and instead will cool down moderately and then level off.

May I suggest that the people who should properly be called entitled are those who were able to buy at much lower prices and don’t see the need to correct the policies that have led to the current housing crisis. It didn’t just happen.

Well if you bought a house, that actually does make you entitled to owning it. You get that in writing. And I don’t think you’ll offend a homeowner by calling them “entitled” to own something they bought.

There is no way on earth you are not spending 2 hrs in your car if such is the case. Have better things to do with 2 hrs of my time every day. You are defintively not averaging 45 minutes each way in commuting times, to downtown.

It’s possible if you drive to Thetis and bike the rest of the way.

Markos worldly perspective is one that is missing in Victoria and a lot of cities in Canada. There is a sense of entitlement with most people in Victoria around having a house with a yard, two bathrooms and a single room for each kid.

Good for you Deryk. Why does everyone here think that everything is measured by the distance to downtown Victoria. Unless you happen to work in downtown Victoria which is less and less people as a percentage there are not a lot of reasons to venture downtown for most people. For many things you have a better selection of stores in the Westshore.

An OpEd by two unnamed Oak Bay councilors…..

Comment: Why Oak Bay council rejected the Quest condo project

From: https://www.timescolonist.com/opinion/comment-oak-bay-aiming-for-best-answers-to-housing-crisis-5212815

One of the funniest things I have read all year. Basically says stop criticizing and making fun of us…lol.. Accept it Oak Bay city council, you’re a joke; just a different kind of joke than the Victoria city council, but a joke all the same.

The condo I mentioned is a luxurious property (by my standards, I know everyone else will including Barrister will disagree).

I don’t see mention of a wine fridge in the amenities. It is not luxury if there is no wine fridge.

Central bankers and economists are practically screaming a warning of much higher rates on mortgages and HELOCs

The interest rate outlook is like a weather app that starts flashing red because of nasty conditions ahead.
.
In the past month, Bank of Canada officials have warned that the expected cycle of rate increases ahead could be bigger and come sooner than expected, while the chairman of the U.S. Federal Reserve has said “inflation is much too high” and talked of moving “expeditiously” to tame it. Unambiguous comments such as these from central bankers are unusual.
.
How much might rates go up? CIBC Economics said in a report published this week that the Bank of Canada’s benchmark overnight rate could rise as high as 2.25 per cent to 2.5 per cent from just 0.5 per cent today. The next rate hike could happen April 13 – don’t be surprised if the increase comes in at 0.5 of a percentage point, double the move made in March.
.
All those reasons people have on why interest rates won’t or can’t rise much? It’s time to park them. What we need to focus on now is how much extra weight borrowers will have to carry on mortgages, lines of credit and other floating rate debt.

Similar applies to real estate, to me anyway.

I don’t live in my car though. 🙂

Re townhouse statistics, well I can do a little number crunching from the MLS data.

This is a histogram of recent selling prices for >= 3 bed 2 bath townhouses and half-duplexes originally listed below 1m in the greater area excluding Sooke. The two below 750k were both sold for 745k, and are ~1200 square feet. Strata fees averaged 300/month for townhouses.

So, small statistics, but the floor in that market is ~750k.

For reference, a family with say 100k in savings, no help from parents, above median household income at 100k/year, at current interest rates (ignoring stress test) falls short of that by 200k.

I saw a comment in a thread once that said this number includes people living with their parents. IE if you can’t afford a home so are living with your parents at age 30 then you would be included as a ‘homeowner’ in that stat.

The census indicates whether a household is the owner of their dwelling or not. Your case is a single household. So yes, if you have adult children living with their parents the homeownership rate will include adults who aren’t owners. But note the rate is for households not individuals, i.e. it’s owning households out of total households, not owning adults out of total adults. This is also the case for shared houses where one or more residents is the owner.

Hey Patrick: Regarding the stress test, ha! No kidding.

Thanks for the discussion too. All the best..

Hey Patrick: I think you misread what I wrote or perhaps I didn’t write clearly.

For us, we’re on two MLS email lists. One for townhouses 3 bed 2bath plus, and one for SFDs, both spanning from Sooke to up the Peninsula. I haven’t run a statistical analysis on either set, so I won’t claim high resolution here, but what I’ve noticed is that the set of townhouses has been north of 800k plus Strata in Westshore/Peninsula, with Victoria of course running higher. By the back of the envelope calculation I suggested earlier, that rules out ~60%+ of families under 40, barring significant family help or prior investment in housing.

We’re actually not interested in a SFD in the core. That would be nice, but if wishes were horses, we’d all have a lot of horses. Our case is a little unusual, in that we moved here from elsewhere and already have young kids. A townhouse would be a hard sell for the wife, after we’ve lived very cheaply for the last 13 years in the hope of someday buying a house. We have to wait until summer anyway for permanent residency goes through, so for now we wait and save and take our kids to parks and hikes and count our blessings.

is the fact that I don’t have 2,000 sq/ft to have a dedicated room for setting up my PS5 dream gaming setup?“
‘
‘
Marco, I think your quote is really what it’s all about. Most people growing up in Canada probably lived in a nice sized house with a large yard so that is a they also strive for, if you grew up in a small house or condo then that seems normal to a lot of people in other parts of the world. We had a athlete stay with is from Vienna last year and he was blown away by the size of our fridge and house, he was used to an apartment in the city. Once you get used to a large house with a yard or an expensive car it’s hard to accept a 800 so foot condo or drove a Corolla. We moved to nearly new house over a year ago and it’s quite nice but I can already see downsizing from almost 4K square feet once kids leave as it’s far too much house.

Hey Patrick: Well, for us, we’ll see what happens. But I threw out the 3 bed townhome as an attempt to put down a reasonable benchmark. The professionals could better address the actual number, but from the MLS emails I get I’d estimate those prices have climbed to north of 800k plus Strata fees (selecting for >= 3 bed 2 bath).

Back in July 2021, those could be had for $700k (with $110k family income). How bad is it now?

More than 200k of that 700k is non-sense bureaucracy and taxes.

With reduction in bidding wars and over asks then its fair to say the market is turning and we will see prices either rise less or stop rising (or eventually drop) – cant’ say that it wont’ stop here and go back up but with all the other factors it just seems unlikely to me.

100% agree, another run up seems insane. At the same time market metrics not even close to a drop in prices.

That’s the same social division, just with a generous helping of debt. I’ve said before that if the majority can’t aspire to more than that, those with SFH had better watch out.

I live in a condo assessed in the mid 800s so nothing super crazy. Let me see, I have heat, hot water, fully stocked grocery store short walk away, three well maintained city parks within 5 minutes walk. One of the parks the city is dumping a few million into to make it nicer, even thought it was already nice. One of my favorite past times is playing tennis which entails walking along the Songhees Walkway to free tennis courts overlooking the ocean, that the city nicely resurfaces so I can serve up my aces.

What exactly is the social division? I don’t commute an hour each day so I can have 10 feet of backyard to my spec build on the Westshore or I don’t have to worry about the crappy old basement in South Oak Bay flooding? Or is the fact that I don’t have 2,000 sq/ft to have a dedicated room for setting up my PS5 dream gaming setup?

They aren’t in sync – thats the point. As per Leos post

Looks like will be about 270 sales down YOY and 200 new listings down YOY….it isn’t a massive divergence imo. People forget what a balance market actually looks like 2012-2014.

the rate of over-ask sales has also has been on a downward trend, at 55% of properties going over the asking price in the last two weeks compared to a high of over 70% a couple weeks back

I mentioned a week ago expect a huge drop in over ask % reason being more and more sellers are pricing at market and even with a slight cool-off will lead even more sellers to price at market. I wouldn’t be surprised if this number dropped to 20-30% and we were still hitting peak prices.

A house I listed in Royal Bay two years ago that sold for $855k just re-sold for $1.575 million with an asking price of $1.575 million. The final sales price is what matters not whether it sold for 100k, 200k, or 300k over ask.

The comment I saw was on reddit and did reference statscan definition: “Yes, the figure includes adult children living with their parents. The reason for this is because the census uses the term “economic family’, which is defined as “two or more people living in the same dwelling who are related by blood, marriage or adoption, or who are living common law, as well as single people who are living either alone or with others to whom they are unrelated.”
https://www150.statcan.gc.ca/n1/pub/75-006-x/2019001/article/00012-eng.htm#a9

My point is that an increase of young adults living at home (due to affordability or culture) will skew that homeownership stat upwards and make it seem like things are more affordable when in fact the opposite may be true.

Patrick I tried to find some info on this once but could not. I saw a comment in a thread once that said this number includes people living with their parents. IE if you can’t afford a home so are living with your parents at age 30 then you would be included as a ‘homeowner’ in that stat. Can you confirm or deny that? I assumed their would be an age where that was true (25 years as a cutoff for example) but I could see anything on the stats can page I was looking at. Any ideas?

Yes, that 68.55% homeownership was measured by statcan as part of their Canada Housing Survey (2018). You’ll find all the details for the Canada housing survey here (including statcan links and detailed methodology) https://househuntvictoria.ca/2021/07/02/june-market-eases-slightly-but-remains-hot/#comment-80966
I hadn’t heard about the “living at home” thing. Statcan designed the study, so one would hope that they would use similar methodology to the census. Then again, they sometimes change methodologies between censuses too.
The 2021 census data was collected in may 2021, at the peak of the third wave of Covid. This will make it harder for apples to apples comparisons between census 2021 and 2016, because there will always be people saying things like “yes, but this was during Covid and there were more people living at home so blah blah blah and we cannot compare the values” with prior census.
As an illustration of how Covid might skew home ownership measurements, look at the gyrations in USA homeownership that have occurred during Covid, (homeownership rate went way up, then down, probably noise). This seems to point to problems with measurements during Covid instead of actual changes in homeownership. I don’t know how this would affect the Canada census in may 2021, but we know that many stats have been skewed during Covid.

but preliminary estimates from statcan (2018) showed overall homeownership levels rising (to 68.55%),

Patrick I tried to find some info on this once but could not. I saw a comment in a thread once that said this number includes people living with their parents. IE if you can’t afford a home so are living with your parents at age 30 then you would be included as a ‘homeowner’ in that stat. Can you confirm or deny that? I assumed their would be an age where that was true (25 years as a cutoff for example) but I could see anything on the stats can page I was looking at. Any ideas?

I find it odd that both new listings and sales down substantially in sync.

They aren’t in sync – thats the point. As per Leos post “sales are dropping somewhat faster, widening the gap between new lists and sales” and to top it off “the rate of over-ask sales has also has been on a downward trend, at 55% of properties going over the asking price in the last two weeks compared to a high of over 70% a couple weeks back”. The chart shows clearly listings are basically flat the last two weeks and sales are trending down.

This all wouldn’t be explained away by spring break (especially the over asks). Now you could say a lot of garbage properties have come to market recently that are sitting or just not getting asking price which could explain it but without that, and just looking at the data (along with realtors like Steve Saretsky in Vancouver saying homes that were getting 150K over ask are getting picked up for 50-100K over ask now, or Toronto increasing supply at record levels) it seems like we may be in for a slow down. Still a sellers market no question – but could be turning. Its only been two weeks so could just be a blip but as you say April will be telling.

FWIW, you’d better hope things correct. There will be long-term social instabilities that come with locking a supermajority of young people out of the housing market.

We can still solve a few problems and get young people into the housing market via condos, just not SFHs. This should also align with the social responsibility we have for the “environmental crisis” that is at hand.

Seems prices might be tied to the wealth and incomes of the cohort, and not necessarily the size of the cohort.

Absolutely, however there also a possibility of a larger portion of affluent families when the cohort is larger, and free money from the bank of mom and dad make appreciation and value of money meaningless.

2016 Census indicated that Victoria single detached house are 39.5% (44.1% in BC, and 53.6% in Canada) of total housing stock. So it is likely that SFH buyers would be competing with affluent families offspring presently or in the immediate near future.

Seventy-two per cent of those surveyed were willing to help their children purchase a first home, giving an average of $145,000 per child, at a time of rapidly increasing housing prices in Canada…. Over the next decade, the report says it is estimated that assets in motion between generations of Canadian families will be approximately $1.2 trillion

There are roughly 10 million people between the age of 25-44 in Canada that will see a share of $1200 billion, and if half of that cohort are from affluent families then their share of the wealth transfer translate to an average of $240K each or $480K free money per couple.

‘Bank of Mom and Dad’: https://tinyurl.com/bczvkrd8

Don’t know what I’m missing there Patrick

Here’s a population projection pyramid for 2030, and we can see the largest demographic groups are the age 35-44 which is exactly what I have posted. For example, the male 35-39 population will be the largest in Canada (3.7%) representing 1.51 million people, compared to 1.2m shown on your chart. That’s a 26% increase expected by 2030. Same for the other cohorts in the 35-44 homebuying group. That’s likely 26% more people looking to buy from the same (or fewer) stock of SFH in Core Victoria.
https://www.populationpyramid.net/canada/2030/

The largest age group of home buyers are 30-39 year old in Canada. And, as Patrick point out we are at the beginning of this buying trend, and it is highly likely that we will see ascending of house price for the next decade or more that exacerbates by restrictive construction policies.

https://www.statista.com/statistics/444868/canada-resident-population-by-age-group/

Don’t know what I’m missing there Patrick, but every thing I’ve seen w/r to demographics in Canada, numbers drop off before 35.

Just look at heard mentality in real estate. Great time to buy, no one buys. Crap time to buy everyone piles in.

Be fearful when others are greedy, and greedy when others are fearful. — Warren Buffett

Spring break didn’t start until last week (unless you’re counting private school kids — i don’t know how much of the market they make up).

You are less likely to put your home up on the market or purchase heading into spring break if you have plans and people weren’t travelling much last few years. I find it odd that both new listings and sales down substantially in sync.

Year over year sales will be down huge this year but won’t change market much if new listings are down too. We need to see lower sales and higher new listings.

I am a huge fan of home inspections, drain tile inspection, etc., but in my career I haven’t had many inspections uncover >$50k in problems BEYOND what the average person could see themselves. For the most part it would be 10-20k and then post inspection you would try to split it with the seller.

Fair enough and that’s been my experience in purchasing over the years too, so maybe I’m just being too cynical. Interesting about the average seller not being that sophisticated or able to think that far ahead though.

This could result in a number of questionable properties hitting the market over the next couple months as the cooling off period will only scare people with properties that have known problems an inspection could uncover.

Average seller is not this sophisticated or able to think that far ahead, re implications cool off period. Also, based on my experience very few sellers are hiding major issues IN THE CONTEXT of prices. Let’s say you have vermiculite in the attic ~ 15k issue you may to try squeak by someone. Does that even change a buyers 100k over ask offer to 85k over ask?

I am a huge fan of home inspections, drain tile inspection, etc., but in my career I haven’t had many inspections uncover >$50k in problems BEYOND what the average person could see themselves. For the most part it would be 10-20k and then post inspection you would try to split it with the seller.

the cooling off period is coming but that’s nothing we didn’t already know. That will officially kill the no condition bidding wars as it guarantees that buyers have time to do their due diligence or back out, similar to the recision period when buying new construction.

This could result in a number of questionable properties hitting the market over the next couple months as the cooling off period will only scare people with properties that have known problems an inspection could uncover. I imagine this could create an even bigger lull in the market until buyers feel as though they have more certainty, but with no more bidding wars buyers may experience sticker shock as sellers start pricing their homes for what they want, not pricing them for blind bidding wars. RIP $999,999 priced SFHs.

We’re not talking about letting buyers back out all the way to closing day. Just within the period they would have had if a conditional offer had been made. The existing condo cooling off period is seven days.

but I think it will pick right back up in April given the low new lists and low inventory.

I wouldn’t bet on it otherwise it would be happening right now – and its not. During the past two years we have pulled untold demand forward, and nearly doubled the 5 year fixed which was as low as 1.8% for a moment and now is closer to 3.5%. The latter rate impacts the stress test as well. I’ve seen lots of anecdotes about the Vancouver market topping and pulling back in many areas and we know historically when prices spike we see Mainlanders moving to Vic increase and when prices stop rising it goes back down. Add some possible regulatory changes coming on multiple fronts i think its very possible we have seen a price top here (or spitting distance from here) (especially if OSFI changes the down payment requirements). I saw BMO calling for a 50 bps increase in two weeks and even if that doesn’t happen 25 bps is all but guaranteed.

The only thing i can see causing another spike is a crazy variant which shuts things down and causes negative interest rates but even that wouldn’t be a guarantee. I’m calling pricing top here with the general craze in the market reducing along with it.

Of course no crystal ball but that’s my thoughts.

Posted rates going up again tomorrow at some FI’s. I am seeing posted going to be 3.94%! It seems like last 3 weeks big jump in mortgage rates on the 5 year fixed.

Caveat, but in reality very few people backed out and they only had a week or less to back out. Backup offers where not unusual. The fact of the matter is that most people just want to buy a home. This stampeding of buyers is bad public policy and it says something about the real estate industry in their lack of concern for buyers in this market.

Most of my life offers being conditional on home inspection and on financing where the absolute norm. Things moved smoothly with no real problems overall. Now suddenly a bunch of people in the industry are predicting the end of the world. I think it is humbug.

Regulations will be introduced later this year to actually define the specific time homebuyers will have to exercise this right, as well as the financial costs of retracting an offer.

Looks like losing part of the deposit is part of the package.

A bad idea: regarding the Homebuyer Protection Period (change the the Property Law Act), seems to me this measure is only going to increase the number of quick offers to purchase with no condition, as people will be able to pull the trigger quickly, and then back out of the deal if they feel like it. There needs to be strong disincentive for people to do that, like losing part of one’s deposit. Also, the legislation will allow for “regional variations within the province”, which is another bad idea that will create inequities in the market.

Thanks Leo, enjoyed your analysis.

We’re a young family in YVR and have been looking at buying a 3-bedroom townhouse in a suburb here. Prices are approaching $1.5 million dollars for the type of space we would like, and although we have a healthy down payment and good incomes, I can’t stomach a $5K monthly mortgage payment, and that doesn’t include strata fees . I’d like to wait but we’re starting to feel squeezed by circumstances.

Anecdotally, we’re in talks with an owner who lives on the Island and would like to sell their rental unit here. They are worried the feds will change the principle residence exemption (yes, sounds like they claim it as their primary residence). The unit is tenanted by a young family, and we would displace them.

It really makes you wonder how families can establish themselves in Vancouver without consenting to a life of debt.