High frequency (un)affordability
I’ve talked about affordability a lot on this blog, most recently a few weeks ago when I looked at the relationship between unaffordability and price changes in Victoria. The measure I used is useful because it shows cycles in affordability going back about 45 years, however it also has some issues. The primary problem is that the measure was based on annual data, which means that it was pretty slow to react when prices or rates are changing quickly (like now). For example the most recent data point for the average posted 5 year rate is 4.93%, but for the 2022 data point I would use the year to date average, which is 3.92%.
The second issue is the rate I use in the affordability calculation itself. I’ve been using the StatsCan series 027-0015, which is the “conventional mortgage lending rate, 5 year term” from the CMHC. The advantage is that the data goes back to 1953, but because it’s an average of the posted rates of about 3 dozen lenders, it doesn’t reflect market share or practices around discounting. That keeps it about 1% above the actual contract rates that people are getting. A constant offset would not be a problem (we are interested in changes in this measure, not the absolute value), but the big banks’ habit of keeping their posted rates artificially high since 2008 has widened the gap between average posted rates and contract rates. Equally important is the recent trend of over half of consumers opting for variable rates which should be accounted for. To correct this I constructed a new rate series which is the average of the overnight rate + spread and the 5 year bond yields + spread. Spread was calibrated against actual contract rates and set at 1.5%. In general the old and new rate series are close, but the new method is lower in more recent periods.
More important than their relative standing is the relation to the rates that people are actually getting. Of course if we had that data we could use it directly, but it only goes back to 2013. Actual mortgage rates are influenced by changes in spreads over time and rate holds on the fixed side, but overall we can see that our new estimate is pretty close to the actuals. I’ll use this series going forward.
Does it make a difference to our assessment of affordability levels? In general it will slightly improve affordability levels in more recent periods without changing the bigger picture much. I’ll take a closer look at that in the future, but more importantly we can now monitor affordability on a monthly basis. That is shown below for single family and condos.
It’s fundamentally similar to the yearly charts using the previous method, with condo affordability being at a point where prices have flatlined and drifted downward in the past, and single family affordability being somewhat higher than where we’ve seen soft landings in the past depending on your assumptions of how quickly single family affordability is expected to deteriorate. Again it shows how incredibly insane the 80s bubble really was and why prices declined quite dramatically back then.
What’s the point of the new method when it yields essentially the same picture as the old one but in a messier chart? Well we’ve just had a 1.00% rate hike which will immediately worsen affordability. At the same point we have dropping prices and rising incomes which are improving affordability. The question for many buyers will be when enough risk has drained out of the market in order to feel comfortable jumping in. The monthly series will be much more responsive and useful to make that kind of call.
Incidentially on the income side, that’s a point still to be improved. Currently the last reading is from 2020 with increases after that extrapolated from the previous trend and inflation. I’ll see if I can improve on that method using other measures of wage growth to get closer to current income levels. At that point I’ll publish the live chart and data somewhere so we can keep an eye on it at as it changes.
Also the weekly numbers courtesy of the VREB.
| July2022 |
July
2021
|
||||
|---|---|---|---|---|---|
| Wk 1 | Wk 2 | Wk 3 | Wk 4 | ||
| Sales | 147 | 835 | |||
| New Listings | 346 | 971 | |||
| Active Listings | 2090 | 1270 | |||
| Sales to New Listings | 42% | 86% | |||
| Sales YoY Change | -36% | ||||
| Months of Inventory | 1.5 | ||||
My big question going into July was what would happen to new listings. This time last year they dropped precipitously as people chose to go on vacation instead of sell. Luckily the same hasn’t happened so far this year, and we seem to be on track for a more normal pace of new properties hitting the market. Sales continue to drift downwards and we should expect July sales to come in at the very low end of the historical range if not the bottom.
Bidding wars continue to decrease. This should stabilize soon at less than 10% at which point we can stop tracking it.
Inventory continues to increase in a time it usually starts to stabilize before dropping in the late fall. That’s a good sign, but we’ve got some way to go to hit normal levels for July. Hopefully selection for buyers will continue to increase during the summer. Very low sales levels are putting pressure on prices right now, but low inventory makes that balance precarious as it hinges on sales remaining depressed. For a sustained buyers market we will still need to see substantially higher inventory levels persisting.
Ironically Turner was right at the time, April 2008 was a market top in Vancouver and Toronto and prices began to fall rapidly in the following months. What he didn’t see coming was the response to the GFC in the fall, namely the slashing of interest rates by the BoC and the efforts by the Harper government to stop the price decline and use RE to juice the economy.
And it worked until – you know when.
New post: https://househuntvictoria.ca/2022/07/18/triggered/
That’s just cruel
He’s like that on the blog too. No respectful back and forth possible unless you drink the Koolaid first
If Leo were Bonnie Henry then Garth would be the foaming at the mouth anti-vaxxer marching back and forth in front of the Legislature.
Regarding the possibility of migration from the States, here’s an amusing (well, to this expat) comic on the matter:
I think Garths analysis focuses so heavily on fundamentals and completely ignores the unpredictable psychology and emotion that has equal influence on the real estate market. He always seems surprised by peoples actions. After 14 years you would think he would at least try to factor that in rather than simply shame people into buying his books and investing with him (Turner Investments) rather than housing. There are stories out there of people regretting following his advice.
Garth Turner is terrible in terms of analysis. I am not sure that he understands the subtle interplay of economic forces.
I recommend starting from the beginning: https://www.greaterfool.ca/2008/04/28/the-canadian-subprimes/
That Greater Fool blog is terrible. Garth Turner sells books and has been flogging the crash since before I started following his posts in 2009.Even went to see him speak in Calgary and while he is pretty entertaining he is a bit of a dick to people that even ask a question that challenges his views. But he has garnered a large cult like following amongst the bear crowd and he has ramped it up to the point of being the Alex Jones of Real estate. Search his post history and see he has been wrong for over 95% of time. Listening to him which I almost did in 2010 would have cost me well over a million in equity and I would be still renting. Even a broken clock is right twice a day.
I’m sure you are learning lots.
I have recently begun visiting another blog which seems vastly larger than HHV given the number of posts per day and this is a daily blog. It’s called greaterfool. Victoria seems to be getting a few honorable mentions. Today the author referred to Victoria as the nation’s most “stuck-up” market. Interesting description of us.
@Frank of course you’re right that eventually the market will roar back. But in order for the concentration of wealth to move ever upwards (which it must in a capitalist system) the tide must go out so that some people lose everything and the cash buyer can come in and seize the opportunity. Also, if money is too easy to come by people stop working, and of course cheap labour is also required in a capitalist system. So the writing is on the wall, this down cycle will go further down before it goes up. My guess is the going up won’t happen for 4-6 years. The next couple years will be rough. But we are lucky here in Victoria – I suspect our housing market won’t plummet like it will elsewhere (even though it will correct).
I watch several news channels and gather information from each. 16 mass shootings in the U.S. this weekend alone. Several reports on news channels, radio, newspapers, that more Americans fear for their children’s safety and are considering moving to Canada. Who knows? Maybe some doctors and nurses will move back and take a 75% pay cut. I doubt that. Most will be educated and highly skilled, just what Canada lacks. Not to mention the extreme climate, fires and water shortages making regions uninhabitable . Their dollar also gives them an advantage. The micro-analysis everyone is focused on misses the bigger picture, massive immigration and severe shortage of housing. This temporary slowdown will turn around just as fast as it slowed, just not sure when.
I am just returning the favour 😉
Given the timing delay of the stats, I am thinking now that August will be the month where the full rate hike impact will show up in the data instead of the second half of July. Curious to see where sales versus assessed end up.
Once again, thanks for making me your priority today.
It wouldn’t surprise me. The levels of sophistication line up.
Re July numbers
We are at 285 currently. Quick eyeball test tells me we gained 138 since last week.
Let’s say this week we do 130 and the following week 115 that is still 530 (285+130+115).
Based on the number of accepted offers out there I don’t believe 130 + 115 is a stretch by any means.
I would really be surprised if we hit a 22 year low, I think we will hit a 10 year low instead.
Here are a couple from you from May and June Up and Coming,
https://househuntvictoria.ca/2022/05/16/new-and-active-listings-what-happened-during-the-crash-of-81/#comment-88758
https://househuntvictoria.ca/2022/06/13/poor-affordability-continues-to-drag-on-the-market/#comment-89818
Another beauty of this anonymous forum is the linking of prior posts made 🙂 Speaking of prior posts, where is that debt monster poster? lol he should be the one calling you out, not me! Or maybe I am him 😉
That’s the beauty of an anonymous internet forum.
No one does, but he can’t let reality get in the way of his narrative.
I don’t remember seeing that. I think most folks probably recognized that once the Bank started its tightening cycle, the writing was on the wall. The only thing I’m surprised by is how quickly rates have risen, and by how much. But Tiff Macklem is also very surprised by it, so I don’t feel that bad.
Frank from Winnipeg seems to be the only permabull on here.
Not many people have the foresight to go all variable until all time low rates and then flip to think that they would rise sharply and lock in as a result. So congrats to you if you actually pulled it off.
As for people in Vic being typically slow to changes in the RE markets comments, I absolutely stick by that one. Look at how many people thought we were immune on this forum when Toronto and Vancouver first slowed down. Some even thought that suburbs in the Westshore were more desirable compared to Oak Bay, how’s that for a laugh.
Hey, if being skeptical helps you feel better you go right ahead, but just because you missed out doesn’t mean that everyone did. Someone keeps posting on here that people in Victoria are slower than people from Vancouver and Toronto when it comes to RE, so maybe that’s the case here?
Also
https://www.crd.bc.ca/about/news/article/2022/03/09/crd-regional-parks-strategic-plan-online-engagement
https://www.victoria.ca/EN/main/residents/parks/parksandopenspacesmasterplan.html
I am disappointed that in all the talks about development very little is said about developments that have greenspaces on/around them. I would like to see a committee come up with a green master plan – like what they have in Singapore. I don’t care if buildings are 4, 6 or 8 stories high. Is there a green master plan for Victoria/surrounding areas? Perhaps I’m wrong about this.
Wow such impeccable timing that you managed to get a minimum of 3 properties locked in to all time low rates. I am a little skeptical of that claim but unfortunately have no way of verifying. Let me guess, you had variable rates on all of those prior to locking in right?
My comment was about past Julys. Leo already answered my question. Thanks Leo!
Such a weak attempt at trolling, but no I locked in my primary and all rentals at rates under 2%. Imagine that, someone figuring it out before you arrived here and started dispensing your free advice.
Right, so every July there’s a 1% rate hike following two straight 50bp hikes?
Believe it or not, this isn’t the first July we’ve ever had.
Sales are pretty flat usually in July and August.
Only thing that will make housing more “affordable” in the short term is the process of deleveraging. Keep in mind that wealth is not created, it is merely transferred (whether its from one group to another or from a bunch of groups to one group) and the process of deleveraging transfers wealth from those with home equity to those with cash. The process of deleveraging will not make homes affordable for those without cash.
How would you know that if today is July 18th? I anticipate this to be the case but the data is not available yet.
Actually, it is not a matter of just building James Bay but the plans for the railroad lands should also be moved forward. People keep arguing that we have a housing crisis and that we need to rapidly increase the housing supply to make it more affordable. If that is the goal then major high density needs to be built in large parts of Victoria (in addition to missing middle). My understanding from the city planners is that the missing middle will not make housing any more affordable nor will it make any significant increase in units any time soon.
It is fine by me since a developers has made me a generous offer for my property subject to the missing middle being passed.
On the good news front permission has been granted for my renovations to at least partially restart. But we are still having problems sourcing roofing slate.
Neither, but there’s no reason it all has to end up in James Bay.
If you don’t have to go through 2 years of garbage to build a 3 story walk up in Oaklands that would be better, since you could build what you need in James Bay and Oaklands.
I thought that the back half of July slowed considerably for sales?
Logical fallacy – Appeal to extremes:
I don’t like density. Therefore I will argue against a mild form of density that many support by proposing a ridiculous form of density that few support. Let’s expropriate James Bay and build a Burj Khalifa of low income housing instead.
James: I never said that at all. I actually said that we need both if we are to meet the CHMC figures within any reasonable timeline. I never suggested that it was a choice between one and the other. Nothing particularly sacrosanct about James Bay in my book.
The real advantage to the highrises, in addition to building more of the missing middle, is that a lot of housing can be achieved in a comparatively fast time line. Incidentially, I dont have a personal dog in this fight. It simply does not affect me. I am not arguing against the missing middle here and I dont think it is a totally bad proposal except that it is not well tailored in my opinion by doing a blanket rezoning. My point is that if you are looking to have any meaningful density increase over a reasonable timeline then you need to go high density. I am not going to be around to see any of it in any event.
Thanks for that. Looks like BC and Ontario leads the way with the google search, If you drill down by city, Abbotsford is #1 and Victoria is #9. Up and Coming and Frank, are you two contributing to this? 😉
https://bmoficc.bluematrix.com/sellside/EmailDocViewer?encrypt=38f234ab-42df-43c8-b6ef-cea7bc455bce&mime=pdf&co=bmoficc&id=ROB_Research@globeandmail.com&source=mail
No one is asking for Hong Kong or NY though. Only you are arguing for it because you don’t want it.
People are asking for the missing middle, and you’re saying Kowloon Walled City is the ideal for the masses while everyone else can live in Single family housing.
Don’t need to ‘feel’ it, when we can check Google Trends:
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The most recent peak is dotted as they are waiting for more data to come in but it will likely solidify next week. We are at peak interest for people searching “Bank of Canada Rate Hike” on Google Trends. Not a surprise i guess.
Let’s see if my call on market lock up post July hike and rate holds expiring stands. I have a feeling that everyone interested in RE is finally frantically googling “Bank of Canada rate hike” now. That probably led them to a bunch of Steve Saretsky videos, lol the same guy that called for a debt jubilee and BoC can’t raise much past 1.75%.
For those who have a vested interest, please watch and read the actual BoC meeting press releases and interviews (there is a reason these releases move capital markets). They clearly said that they will sacrifice the equity of those who bought recently to bring down inflation and a slow housing market is a mechanism for that, also their concerns about the weakness in the CAD given the current high oil prices.
The whole country is available. A population growth of 1% or a bit more annually is no big deal, we’ve had more than that in the past. 3% in the early 1950’s for example. The real issue in recent times hasn’t been population growth per se but falling household size and resulting increase in households. But that trend is just about spent.
https://www.macrotrends.net/countries/CAN/canada/population-growth-rate
In Europe you have masssive chains like LIDL that have Costco sized stores but they also have excellent grocery stores the size of a Red Barn with great prices. Here for some reason we don’t have smaller Safe On Foods/Thrifys/etc. Every that is small is not exactly value driven.
+1 love this too.
When I lived there, regular grocery was pretty impossible to do walking. Looks like things have changed a little bit if you’re in the right area.
When you legalize suites then the owners do pay additional fees. In terms of extra parking, you have no right to road parking as a homeowner. You are supposed to be parking on your property and the road is then additional parking for the general public unless redistricted to residential only. There are already a whole load of suites in all areas, including Oak Bay.
There is a move by Oak Bay Council right now to amend the work from home rules to allow much more of this activity. Still would be residential zoning but would increase the ability of individuals to earn a living in the neighbourhood and provide local services like massage, lessons, and professional services.
I personally love small commercial with one or two floors of residential above and bought deliberately based on access to this walkable amenity. I’d be in favour of allowing this in more areas through gradual changes to expand existing areas that are already zoned this way.
There would be a lot of uptake imo. Just not for businesses that compete with Costco. You’ll see niche grocery stores like Red Barn, Peppers or Old Farm Market along with bakeries, coffee shops, and restaurants. Estevan Village, Cadboro Bay at Estevan, Cadboro Bay Village, Cook Street, Oak Bay Village, Oak Bay Avenue, Quadra Village… people love them.
Will end the month between 525 and 550 which isn’t that bad on 2200-2400 inventory. Market hasn’t locked up as hard as I thought it would over the summer.
Monday month to date numbers
Sales: 285 (down 31% from same week last year)
New lists: 631 (up 13%)
Inventory: 2141 (up 51%)
New post tonight
No for sure, I could live in Yorkville, TO if I didn’t have to commute anywhere in TO but I’ll still take puttering along the water in Vic West over Yorkville. Way better weather here, condo is like 1/2 the price in Vic West, strata fees 30% less, taxes less. Vic West will be perfect by the time they add 15-20 towers/commercial @ Roundhouse but I’ll be 80 yrs old by then (realistically).
Was really disappointed in Montreal waterfront too, great they copied London and got a ferris wheel but yea no where as nice as I thought it would be. I guess I am holding up everything to Europe standards.
As I said I really enjoyed Ottawa but I was there last summer. Winters are just brutal.
To be clear I am not advocating this as a good plan but I am suggesting that this is a likely coarse that may need to be taken or may be chosen within the political parameters of today. It is a straight numbers game.
1) You dont want Urban sprawl
2) There is no interest in creating multiply new cities and infrastructure
3) People want to have net immigration of and population increase of 400k to 600k a year.
4) It comes down to where do you house about a half million each year in the few cities available.
5) I am sure that I will get the usual word salad of a response from people but let me reply that ultimately it is time for some real thoughts on this problem.
From the CHMC numbers I am guessing that just upzoning density, by way of the missing middle, is not going to even scratch the surface of meeting the CRD numbers over the next few years. In addition to any low rise buildings a lot of high rising buildings are going to be required especially in the downtown core. Some might argue that to meet CHMC projections we should plan on a good part of the City of Victoria being turned into highrises.
Caeveat: A number of cities have gone the expropriation route. You piss off a handful of homeowners but you can afford to be very generous with the compensation since you are massively up zoning the property. Done properly there is serious financial and political support not only from the developers but also all the union workers and contractors. Throw in BC Housing and supportive housing facilities into the mix along with bicycle projects and the Woke will pile on. If we enter into a recession, as appears possible, this sort of social megaproject can be a real political winner for the right party.
If there is a recession, private construction might come to a screeching halt. I know that projects in both Vancouver and Toronto are being put on hold in major numbers. Not sure about Victoria so if anyone actually knows for a actual fact speak up. But jobs for the boys is usually a big political winner.
By the time you get to California you are likely to be one of those people who are too old to be vibrant.
“GTA on the whole super disappointing after having travelled to 30+ countries“
I feel like if you live and work in one of the hip areas of Toronto or any other major city and can bypass commuting it could work. You’re often on the move for business or travel so you never quite get to relax and you’re forced to experience the downsides someone doesn’t necessarily need to see. Even Calgary has cozy walkable neighborhoods like inglewood that have everything someone needs.
The downside of Victoria is none of the areas are really that vibrant and the median age needs to go down 15 years to fix that.
Northern California can’t be beat for a working person imo. That’s my long term goal.
Low income households also spend a lot of their income on cigarettes, alcohol, junk food, etc…,
items that are heavily taxed.
They don’t, because lower income households spend a disproportionate % of their incomes on shelter, food, and second hand goods which are not subject to these taxes. On top of that, they get GST and carbon tax rebates funded by taxes which higher income groups have paid. And, they are less likely to own a car or live in an independently heated unit in the first place.
The % of income paid for these taxes actually rises going up from low to middle income, and then starts to fall going to higher income.
I’ve been to Toronto 6 times in the last 8 months and it sucks. Give me Amsterdam/Vienna density not Toronto and 10 lanes of traffic to drive to some crap suburb.
GTA on the whole super disappointing after having travelled to 30+ countries. They even managed to screw up Niagra Falls. I never realized when you looked away from the falls you would be looking at what looks like Vegas or Reno from the 1970s. Seeing different parts of Canada in the last year has made me really appreciate BC, but density would not change what makes BC desriable imo.
As for Vancouver if I was in a different profession I would consider it but 98% of my profession is my name and 2% tangible skills so not the easiest to move.
I think it is an attitude thing. For 20% of the population “parking problem” = someone parking in front of their house.
Example. I live a few blocks off Dallas Road. 6 or 10 times a year some big fun event happens along the waterfront and all the street parking disappears for a few hours or half a day. For me this is a tiny inconvenience that is a consequence of living in a nice place. For some in the neighbourhood this is a “problem” that needs to get fixed by “resident-only” parking zones. Sigh!
I’m still curious about this part of your solution Barrister. You were a lawyer and presumably understand something about expropriation. Do you truly think this would be an efficient way to add density vs market processes? Do you think this exercise of government authority would have popular support? Do you think any government would actually do it?
You’re describing the grand bargain. Go big density in the downtown then preserve the single family sprawl outside of that. Vancouver and Toronto are good examples of this type of thinking. I would argue a much better approach mostly taken in Europe is mid and low rise more broadly. So then you don’t need the 40 story tower, but you have 3-6 stories allowed everywhere. The city stays human scale and green, the height supports mixed use, and it’s basically optimal from a climate standpoint.
City of Victoria estimates an immediate deficit of 4500-6300 homes in this report: https://www.victoria.ca/assets/Departments/Planning~Development/Community~Planning/Housing~Strategy/Victoria%27s%20Housing%20Future.pdf
CMHC came to a similar conclusion but at a province and country level.
Marko, I truly appreciate that density and street life is extremely important to you. I am surprised that you have not moved to Vancouver or Toronto where you could have this immediately instead of waiting for decades to see if develops in Victoria.
Downtown Amsterdam is still not high density compared to Hong Kong or NY. I believe the argument is that to make things more affordable then we need to seriously increase density. High rises in James Bay would go a long way towards the goal of more housing units. Not saying other measures are not needed.
Actually, I have never been able to have a city planner tell me how many units we need to have built to make things affordable. Does anybody here actually have a number range of how many more units need to be built both in C of V and/or the CRD for it to become affordable?
I’ve been to the Netherlands 3x, love it.
Outside of poorly planned new subdivisions on the Westshore where exactly are these parking problems in Victoria? I would like to drive by to assess.
Personally, I would find more secondary suites, duplexes, townhomes, and six plexes way way more desirable. I really like density and activity on the street and in the neighbourhood in general. Can’t stand the car centric community planning/neighbourhoods, like Gordon Head is just complete trash planning imo. In Croatia I even like the soviet style condo blocks as they have nice parks everyone goes out in the evening with their kids, and it just feels really vibrant. My cousin lives in this lower end soviet style neighbourhood and there are always people outside socializing from kids to 80-year-olds as you can tell by this google street view -> https://goo.gl/maps/WU7J3Snai6EhTLn4A I don’t think density is all bad as long as we aren’t removing parks, tennis courts, basketball courts, etc.
My parents have been renting their secondary suite for over 25 years in the Oaklands area. Vast majority of tenants have been UVIC students. For example, they had two Phd students from Tanzania for two years. My mom would invite the students for dinner with us upstairs a couple of times a month and we became friends. Next thing you know I am in Tanzania on Mount Kilimanjaro visiting them. Each to his own, but this is desirable to me not living in Happy Valley cheering for the Oilers in my media room driving a Dodge Ram 🙂
Also, if anyone actually gives a rats ass about the environment we need density and a lot more of it; however, the cold hard truth is no one gives a **** re environment so I ‘ve accepted with are completed screwed on that front.
When something isn’t convenient for people like a few extra cars on their block everything else from housing affordability to environment is tossed out the window.
It’s not the goal, unless you’re talking about the actual cIty of Victoria instead the city of Langford.
Missing middle is actual high density. The downtown doesn’t have to look like NYC to have high density. Look at downtown Amsterdam.
Yes, lower incomes being dependant their vehicles is an easily verifiable fact and additional costs have a disportionate economic impact on them. It may not be to others that don’t view that cost as significant or recognize that impact on others may find themselves in an elite category.
I did not advocate against more rental housing or freeing up space for density. Simply, folks already facing the hardship of high costs brought about by the lack of affordable housing options can be impacted by the further application of additional costs. Sometimes a focus too much on the macro blinds the micro.
What does that have to do with street parking in Oak Bay for suites?
By the way it is not rhetorical because no one has actually provided me with an intelligent answer. The standard answer was that we have to preserve the character of the neighborhood. The missing middle initiative pretty well gives the green light to removing most of the SFH along with most of the character.
If you want to increase the density of the city and afford walkability to the downtown than James Bay strikes me as the logical choice.
A easily verifiable fact = elitism. OK buddy.
City of Victoria did a study on various apartment buildings and parking usage. Average was 0.6 cars per unit. When we lived in a rental apartment we paid extra for a parking spot, and why not? It’s an extra service we wanted, and the people without a car should not be subsidizing my car. Building a parking spot in an underground parkade costs many tens of thousands of dollars.
We have the lowest rental vacancy rate of any major centre in Canada. That drives up rents very quickly and costs people 50x more than a parking permit. Space is limited. You can use it to house people or house cars. Pretty simple.
Caveat: I sincerely dont understand why if the goal is to increase the population of Victoria why James Bay should not have the same density as the Songhees at the very least. It is the most easily walkable area to the downtown core. So instead of replacing the SFH with the missing middle it strikes me as a better alternative to have actual high density that is easily walkable.
Marg Gardiner – superhero NIMBY powers
Do you sincerely not understand or is this question (which you have posed numerous times before) purely rhetorical?
I worked on Queen Street, building after building after building that were max 3 stories high, right in the core of the city. Kensington Market, right there in the core of the city as well, either 1 or 2 story stores or single family and duplex. Easily could have been 3 or 4 story, residential overtop of commercial in the whole city block.
That’s the blind spot of elitism in this case though, assuming because someone is low income and needing to rent a basement suite will not own a car or require as a necessity based on a belief that lower incomes on percentage down own vehicles. It’s almost exclusionary in a sense that adding the cost will make vehicle ownership prohibitive. Conversely, that vehicle may be critical to the sustainment of that person’s income if they work multiple jobs, split shift, or nights where other mobility options are not practical. Placing such barriers, impacts the ability of that person to earn an income and sustain a lifestyle (a home) not to mention telling them by their economic station in life, society is going to act against them and limit their freedom of mobility and their possible future upward economic/social mobility. This is how consumption taxes, value added taxes and carbon taxes (because they need to drive older vehicles or rent a place without a heat pump) disproportionately impact lower incomes, because those in that bracket typically are more dependant on those types of goods (as well as not affording a home with their own driveways).
It’s mostly the inhibitive nature of the thought process and the outlook to possibly obstruct a potentially beneficial outcome by placing barriers before it happens. It seems to parallel a lot of the thinking that comes from those looking obstruct densification.
You’d start with gas cars. Gas tax doesn’t even begin to cover road maintenance let alone the actual construction. We paid more for one overpass (Mackenzie), than has ever been spent on bike lanes in the history of the city. Pedestrians everywhere subsidize car drivers, and that’s not even taking into account pollution (from tailpipe to actual production).
Re Parking in Europe
I have seen the parking situation in Europe. I am having a little trouble understanding why you want to bring that level of conflict to Victoria. If the choice of how to make Victoria un-affordable to lower income people is high housing costs or a myriad of incidental charges I would prefer that those who are profiting from the increased density (ie suite owners) should pay the costs of extra parking, garbage collection etc.
If the solution is pay parking, why don’t we bring it in first before we have a problem. If it seems to be working, we can raise the density at that point. Even better, why don’t we have zones of the city where we try that approach and see where people would rather live.
So far I have seen a lot of arguments for increased density. I am not hearing any body arguing for increased commercial zoning in residential neighborhoods which is what it would take to achieve the walkable neighborhood you envision. That seems well down the list for our enlightened municipal councilors. FWIW, our society has clearly demonstrated a desire to shop at Costco, Home Depot, Walmart, McDonalds etc. to the point where the corner store / family restaurant from 40 or 50 years ago is pretty much extinct. My guess is that even if you do manage to get commercial zoning in residential areas there won’t be very much uptake.
While I appreciate different people have different visions of what is desirable, it certainly feels like the hidden goal is to gradually reduce everything people see as desirable here until until nobody wants to live here and thus solving the problem.
For the doctors simply pay them more and then the housing will not be unaffordable.
James Bay is actually easily walkable to the core and I dont see why Vic West gets towers and James Bay does not. The missing middle proposes most SFH would be rezoned anyway so if we are making zoning changes anyway lets be logical and put highrises in the most walkable area to downtown.
What’s driving them out is the cost of housing due to the housing shortage. Preventing the freeloading problem of street parking is a non-factor, especially since lower income folks are less likely to own a car than higher income (doubly so if we allow them to live close to where they work).
Pricing negative externalities is good actually. Most of what you mention does not have a negative externality so the analogies are invalid (except for charging road tax for EVs which would be fine).
Should all be 6 stories minimum that close to the biggest city in Canada. Have you been in Vancouver’s west end? That height is perfect. Streets are leafy, not that busy, tons of services to walk to.
James bay already has a pretty cool mix of buildings, let’s start with the lower density hoods first.
Don’t threaten me with a good time.
Alternatively just ban all overnight parking between 2 and 6. it will encourage more people to get a bicycle.
Leo: I know that part of Toronto in the photo and virtually none of it is single family homes. The density is a lot higher than the missing middle. I guess they could have done more forty story towers.
Actually, I dont understand why if the goal is more density we dont zone all of James Bay for forty to fifty floor towers. Expropriate the land and we can make that whole area walkable to downtown. Get BC Housing involved to make sure all the building have both subsidized and shelter housing. The condos should have a good mix of three and even four bedroom apartments for families. Done properly we should be able to increase Vic’s population by about 15 to 20%
A nice house – 3 beds upstairs, 1 bed suite downstairs, a good neighborhood, a maintained garden, deck, heat pump, below $1M……..Things are definitely improving! It will be interesting to see what it goes for.
https://www.rew.ca/properties/4252762/3246-doncaster-drive-saanich-bc?search_params%5Bonly_open_house%5D=true&search_params%5Bquery%5D=Saanich%2C+BC&searchable_id=1016&searchable_type=Geography
Lol @ overvalued. lesson #1 in RE – land value is much more important than house value.
Don’t homes with legal suites pay more in property tax because of their higher value? Also, aren’t people complaining about a lack workers? Nothing like driving up the living cost on that person working at your grocery store, restaurant, construction site, and (might as well include doctors now as a low income service sector since they are bailing on this city) with hitting them with an additional parking fee. However, if we are getting into anything that has been publicly installed and maintained at sometime as a public subsidy: let’s make sure those bikes on roads and bike lanes have their paid permits, electric vehicles metered to road use since they don’t pay gas tax, walking on the sidewalk pay permit, a Beacon Hill park entry fee and etc… Where would people like that logic loop to end? At items they personally believe should not have a fee? It’s kind of like people’s view on most tax policy; I’m special, I should not have to pay, but make sure to charge that other person.
The whole street parking is actually public parking thing is lost on so many people all throughout Greater Victoria. They think they own the street in front of their home so they park there while their driveway is empty. No one should have sympathy for any Oak Bay anti development/density whiners that call bylaw when someone parks in front of their 1950s, not updated, over valued house.
Really looking forward to getting a good laugh from the letters to the editor section of the Times Colonist that declare the world is ending because of secondary suites that are signed by Walter and Mable in Oak Bay.
Exactly. You should need to pay for a permit to park on the road and they should be limited in number.
One thing I find odd between here and my places in Croatia is in Croatia if you live in town pretty much any location is within 5 minutes walk of a quality supermarket along with a bunch of other amenities. Here even in town areas like Gordon Head you can’t walk to shit so tenants often need a car. If we had more density there would be more commercial and less need for cars imo.
Also if you haven’t spent time abroad you have no idea what parking problems look like. Until someone starts parking on your property like my parent’s neighbor you have nothing to complain about 🙂 Here is a video I made about the situation -> https://m.youtube.com/watch?v=_R7UylUVPNo&t
End free (aka taxpayer subsidized) street parking.
Yes. Ridiculous planning failures in Toronto that’s for sure
Maybe the only way that Victoria/Vancouver becomes affordable is if they take back all of their land?
Toronto is a massive sea of suburbs. Would have ended better if they had just allowed actual infill.
I am not sure why the majority here appear to dismiss parking as an issue with suites. While I can see it being an obstacle to those wanting to develop a suite, allowing them to push the problem out on the broader public is not a very good answer. Around here there are several side streets that are chock a block full and pitting neighbor against neighbor making a pleasant area much less pleasant. A couple of times fire trucks have been unable to navigate corners due to parked cars. In the cases I am aware of it was a practice evening and not an emergency but it easily could have been. Shortly afterwards, cars were ticketed and things improved for a couple of months but it did not last. The only way I can see accepting bicycle parking as a replacement is if part of the lease specifies the tenant is not allowed to own a car. I am not sure but I suspect this would not be legal or enforceable so I am back to holding out for adequate off street parking for every suite.
Still not posted… Probably in the next few business days.
Does anyone know what the recent sale on St Charles went for?
Note the distinction between on-reserve development (e.g. the Burrard Bridge property) and off-reserve development in which the bands have an interest (e.g. the Jericho Lands). The latter are subject the the normal municipal approval process, the former are not.
Although it doesn’t seem to be making a difference time wise.
That would make more sense. Weird way to list though with both properties at $5M instead of 2x$2.5M
I think that that was 2.5 million x2 = $5 million? No
Saanich
I’m so pleased with the OB response to community concerns about how difficult they were making secondary suites in the draft policy. I spent quite a bit of time on this and I’m sure others did too. Thankfully they have loosened up on the parking requirements, recognizing that secure bike parking is an option, and I feel hopeful people will be able to legalize existing and new units without a whole bunch of illogical and expensive or impossible regulatory requirements.
Not everyone slammed you. A few thought it was a reasonable forecast. At least for be those that have the understanding that the more debt that is issued and out there, the more interest rates need to rise to make it marketable and sellable. For some reason folks make a false assumption that because people have a lot of debt, that rates need to stay low because of it and don’t realize that high debt can sometimes create the need for high interest.
Saw the same pattern in Toronto. Did not end well.
They are also working on an infill strategy which we’ve met with them a couple times on. Nowhere is safe!
Most victoria folks are slow to what is happening and believe the past will be an excellent predictor of the future without understanding of the current shift in the broader macro paradigm. No real capital markets or large corporate presence here outside of bci so people aren’t really in tune with what is happening in the broader economy. Lol need a real corporate lawyer, you will need to get one from Vancouver.
Oak Bay set to legalize secondary suites
https://www.timescolonist.com/local-news/oak-bay-set-to-legalize-secondary-suites-5591294
Dev property:
3861A Cadboro Bay
List Price: $4,999,000
Assessed: $1,631,000
Sold: $2,500,000 after 55 days
Pretty cool what First Nations in the lower mainland are doing on housing https://vancouversun.com/business/real-estate/indigenous-developers-to-create-25000-new-homes-in-metro-vancouver
I just had a delightful Sunday phone call with a couple of Bay Street lawyers this morning. Nice to catch up with who is on their fourth wife, what the kids are doing
and their opinions on the economy and the housing market. Last time I passed on their opinion that five year mortgages will hit five or six by the new year I got absolutely slammed for spreading nonsense. I have learned my lesson but I am happy to share how one should manage with a fourth wife.
I have to agree that Parksville is more of a retirement community than an actual working town. Sidney is definitely more of a town but is turning into a suburb of Victoria. Not sure about Lady Smith. These days it does not seem to matter where you go there is a real Doctor issue on the island and medical care.
I would be more inclined to call Parksville a retirement community than a small town.
Thanks for your efforts on this Leo, the GV region obviously needs more housing and while I tend to side with Marko that the hope for increased inventory remains low, it will be great to see where candidates stand on the issue. Hope you get some quotes or promises to accompany the rankings because as the COV clearly demonstrates, a person or group like Ben Isitt or Together Victoria can promise all the housing in the world and then vote against all the housing they don’t agree with
Stay tuned, Homes for Living is ranking all the candidates in Victoria, Saanich, Esquimalt, and Oak Bay on housing policy and we’ll be publicizing those
Just keep in mind they’re both going to tell you what you want to hear, but I’m interested in what they shared with you. I imagine they’re very similar in their approach to housing having seen Murdock as a councilor a term or two ago and Haynes for the past four years.
Most importantly, always remember the mayor can steer the conversation or the agenda, but they’re still just one vote.
Yeah, I doubt there will be a ton of daylight between the mayoral candidates when it comes to density.
Vacationing with some of our Alberta family at a beachfront property in Parksville this week. Saw a few houses for sale in the area. One is $1M. The other $1.2M.
Pretty crazy that going from my old GH box to something like this would be basically a lateral move.
On the other hand, there are no nearby schools, and I’m not sure small-town living is what I want at the moment.
I have had a number of conversations with Dean but meeting with Haynes coming up I will let you know. I’d say both realize Saanich has to build a lot more housing. For example Haynes voted in favour of bringing the elk lake drive project to public hearing despite staff recommending against, citing the housing crisis
Beauty candidate right there.
Now tell me, who is less pro-density, Haynes or Murdock?
Weird I knew this guy’s family when I was a kid. Always odd to encounter the adult version of someone you knew as a kid, especially when they are…. A bit different in opinions/values than you might have expected.
Sasha seen sitting in his backyard which he will not allow anything near.
Leo, what would you put the odds at of the Missing Middle passing?
Introvert I found your guy for this fall
If you have been a good customer and are making regular payments most often the bank does not want to know if the house value has dropped too much. They are likely to be happy if you increase payments to couver the trigger rate breach.
Yes, what is unclear is whether the lender will do another assessment on LTV. Because all else the same you could be at say 75% LTV based on the assesement at time of lending but if the lender determines the value of the house has dropped by 20% then you are instantly in breach and have to come up with cash to cover.
Okay, I have read up on it. I understand the loan to value (LTV) limit now.
Thanks for the lesson!
Yes, okay. So, the trigger rate is when you have reached the point that your set payment is no longer paying any principal but does cover all the interest and the Trigger Point is when your payments no longer are enough to cover the interest? Is that right?
No Alex, just because your payments no longer pays doen principal or cover the interest portion (trigger rate) doesn’t mean you automatically breached the LTV limit of the loan (trigger point). Trigger point is where you have to pay up immediately.
Maybe we are saying the same thing. On a variable rate mortgage, I think of the Trigger point as when your set payments of P&I no longer cover the interest portion of the loan. So then you have some options ( I think) such as making a lump sum payment so your are no longer in that predicament i.e. your normal payment is covering at least the interest payable, or maybe the bank will let you lock into a longer amortization period providing you would qualify. Otherwise the mortgage is called.
I never have had a variable rate mortgage. When my daughter bought her home in Vancouver, I encouraged her to get an “open” mortgage vs a closed. The interest was a tad higher but she was able to pay down the principal anytime she wanted to. Which they did on a regular basis. Sometimes though you can attain a closed mortgage with the option without penalty to pay down the principal every six months or annually on the anniversary date.
Seems too aggressive.
That’s probably the trigger point where the bank knocks on your door and ask you to pay up. The trigger rate is lower (I think around 2% higher), the trigger rate is the point where you stop paying down any principal. Trigger point is when you breach the LTV on the loan (80% for uninsured and more for insured) and have to pay up or else the banks forces a sale.
Right now I think most trigger rates have been breached for buyers from the last 2 years before the hikes so they are essentially paying off zero principal going forward. What’s unclear to me is whether the lender will do a new assessment to determine the LTV because they could have ramifications in a declining market and the rate hike may not need to hit 3.5% for the trigger point to happen.
But yes curious to see Leo’s article to officially summarize.
Unconfirmed but I have read in two seperate articles that the Bof C rate would have to increase 350 basis points before most variable mortgages would trigger. I am looking forward to Leo;s articles which will give us actual facts to look at rather than some of the speculation.
Note that it’s the markets which have gone up the most in % terms – the fringe and rural areas – which have shown the largest % declines to date.
https://www.theglobeandmail.com/business/article-canadian-home-prices-spiral-down-in-june/
You don’t have to wonder, Leo has posted newspaper clippings of the usual suspects saying just that, sounding much like the usual suspects today. I remember them myself, and I personally did not expect prices to go down.
You said deficit before which is not the same thing. But it was pretty clear you meant debt though.
There’s a nuanced difference between pre-qualified and pre-approved. Typically, variables are pre-qualified and fixed mortgages are pre-approved. A buyer using a variable will still need to be approved once their offer is accepted where the fixed pre-approved buyer doesn’t require anything other than an appraisal to support the loan value.
From: https://www.investopedia.com/articles/basics/07/prequalified-approved.asp#:~:text=A%20pre%2Dqualification%20means%20that,the%20money%20for%20a%20mortgage.
If the buyer has a finance condition in place, they will fine of the their financing doesn’t come through. However, if they don’t have a condition, they would be in repudiation of the deal and they would likely need to face the seller’s litigators.
I wasn’t in the market for a house in 1981 so I honestly can’t remember property dropping 40%. I do remember hearing stories of Vancouver houses dropping considerably. I don’t think that applied across the country. I remember my cousin buying a house in the 70’s for $30,000 and selling it a couple years later for $67,000. He then purchased a place for $90,000, raised a family in it and sold it decades later for $144,000. At 75, they now live in a fairly new house worth around $700,000, in Winnipeg. Both his children, now in their 40’s don’t own anything. My cousin also owns a cottage worth around $300,000. He would have no problem selling either one of them today.
Our debt is over one trillion dollars, see below.
It sounds like there may be a possibility of a preapproved variable triggering before closing. Is that correct? What happens then? What if a buyer cannot qualify for enough mortgage to close. Waiting for the article on preapprovals but this might get a bit troubling.
Seems like you’re just making stuff up here frank.
Na, just a rollback of those artificial pandemic gains, that’s only 37% in Victoria.
I wasn’t. I was just wondering if people also found it inconceivable that house prices could fall by 40% from peak. I assume many probably did.
In 1981 I had a net worth of maybe $10,000, and finishing the last year of my education. It’s slightly higher now. The amount of wealth that has been created in the last 40 years was inconceivable back then. The internet has created trillions of dollars of wealth. Yes it isn’t evenly distributed but that holds true through the history of humanity. Please stop comparing the dark ages with today.
10% interest rates for 10 years will bankrupt our country. We have a trillion dollar deficit and an ill conceived government agreement that wants to hand out money like candy to stay in power. I’m losing faith in the viability of our country in the hands of incompetent idealists. The government wants the public to curb spending, why don’t they set a good example.
I wonder if people said the same thing in 1981.
Hard working, saving families have been able to buy a house all along, just not in one of the hottest markets in a country millions of people want to move to. High interest rates haven’t slowed immigration or made houses less expensive to build. Anyone waiting for prices to drop 40% is dreaming.
Ya let’s see what 10%+ mortgage rates for a decade will do to home prices with the exact same municipal policies….
People talk about “fundamentals”, such as income and mortgage rates, but in the long term those are swamped by municipal policy.
That is, the market can be unhinged for the long term.
~ First lesson from statistics: don’t draw any conclusions from small samples.
Ya fair enough, I guess for a small sample size it’s better to goto a neighborhood full of new houses like royal bay to get a more accurate picture as it reduces the chance of inaccuricies due to renos, etc.
He said the July hike will be the wake up call for the average folks here? I’ll stick by end of summer will be when the data clearly points to a correction which no one can argue against.
Still couple folks on here a little slow to what is happening and think immigrants, foreign buyers and vancouver/toronto transplants will bail the market out.
Of the listings that changed their asking price, what was the average change?
Technically yes, but practically no.
Any given sales/assessment on one property is basically useless. Assessments on individual properties can be badly wrong. But when you get enough sales the median sales to assessed value ratio is quite good and I’ve found matches the actual movement of prices quite well. But we need enough sales to make the median reliable. How many? I haven’t thought about it, but for the monthly figures we have like 100-300 sales which seems sufficient. The month to date figures I posted below are about 60-120 sales which is probably OK but I would get nervous if it was less than that.
Meanwhile Oak Bay single detached, 3 sales this month. Sales to assessed value ratios: 0.99, 1.02, 1.29. No information there.
Total nonsense. Also we have don’t cold winters here.
VicREanalyst, I think it was the Debt Monster that said that first and you told him to come back at the end of summer. Local Fool, DM said that you knew what was happening. Do you agree with him that prices are going to drop a lot more than 30% in Victoria?
I’ve been following the CREA stats and prices have been dropping nationally every month.
Personally, I think home prices here need to drop 40 to 50%. Even then, they’d still be expensive. People are so used to the numbers of today that they’ve lost all sense of how truly unhinged this all is.
Hopefully hard working, saving families can get homes once again soon.
Alex, you sure that wasn’t me saying that awhile back ;), told you all that the July hike was going to be the wake up call for the average person.
https://househuntvictoria.ca/2022/05/30/cooling-off-period-whats-the-impact/#comment-89105
“Late-1980s market”means the peak before the Toronto bust of the following years.
https://twitter.com/SBarlow_ROB/status/1547908882034372610?s=20&t=PNxIgPXpKugEWxN-7RTXvQ
I think this kind of panic is what Totoro was saying awhile back. Its the psychology. People actually have to hear the bells or the sirens, they have to see the accident before they can believe an event can actually happen. Now they see the people running and they follow. There is no thought before or after, only desperate action.
Seems odd, everyone was already pricing in 0.75% so I can’t imagine an extra 0.25% would cause this type of last minute panic. Its not so much pre approvals that’s the issue, its more potentially pulling financing at the last minute on deals I believe.
Yes, but I’m still not convinced a stitch in time will save nine. Maybe seven, or eight on a good day.
“Had a heat pump took it out and put in natural gas very pleased a different kind of warm I wasn’t getting with a heat pump“
I don’t doubt some people have very positive experiences but I think there’s a lot of drawbacks as well. If you have very high ceilings or many smaller rooms or hallways mini splits just don’t distribute heat efficiently and the payback period probably isn’t worth it . I’m betting the larger the building the less efficient with bc hydros stepped billing costs.
If we have a long cold winter on the opposite end of a heat wave than the suffering from that cancels any cost savings for me. If I were to build a house again I’d do heated floors with heat pump.
I know what you mean Maggie. Many credit unions have been amalgamating recently. For instance Hubert is going with Access Credit Union (on-line Accelerate Financial).
I have been a client with several of them in the past. Never had a problem. Wouldn’t go with Outlook though
just because of their client services reps.
People swear by them though. Lots of prairie residents only deal with Credit Unions. They feel more comfortable with them.
But with every acquisition there comes either responsibility or risk, sometimes both. All one can do is do their homework and then make an intelligent & informed decision and go with it……and always have a plan B. So many tend to overanalyze absolutely everything and then they don’t do anything because they freeze up.
“Over analysis causes paralysis ” “You can’t see the forest for the trees” , “Don’t put your eggs all in one basket” “A bird in the hand is worth two in the bush” All these old sayings are so true.
There’s no rate hold on a variable like with a fixed pre-approval. So, it’s better to re-qualify those variable folks before they make an offer and find out they actually don’t have the financing they believed they had. The variable is qualified by the amount of the payment, it’s almost like they hit the trigger value before they even bought because the interest payment just ate up their payment or exceeded it.
I guess they are expecting more rate hikes as well…
Interesting – could be prudent but sucks for people with preapprovals if true:
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I’ve always wondered how secure the Deposit Guarantee Corporation of Manitoba is, and whether the Manitoba government would back them up if something went wrong. Hopefully I’ll never find out, because I have a couple of GICs with MaxaFinancial.
Given the current yield on GIC’s and the uncertainties in the equity and RE markets, it is a pretty attractive place to park some $ and wait to see how things shake out. I am still of the opinion that early next year there will be some deals to be had in the RE market here where you can get cap rates of potentially 6%.
Actually now that 3 mo is @ 3.95%. It is with Hubert Financial. You purchase a one year GIC with them first.
After 3 months you can cash in and get 3.95%, the 2nd three month period you get 4.05%, the third 3 month period you receive 4.15% & fourth 3 month period 4.25%. If you keep the GIC for the full year you would get 4.1%;
i.e. the average of each increment.
Also, some banks do promo rates for target customers on HISA. I’m getting 2.8% til the end of Aug and some others are getting 3% and so on. This particular one is from Tangerine Bank.
Because of my age, I now always opt for interest paid annually GIC’s. Some older people purchase GIC’s with interest paid monthly. This is an alternative to say purchasing an immediate annuity. If you have no government pension, you need to play it safe, and you want monthly income you could go to CWB downtown and purchase 3 $100K (CDIC insured) GIC’s ,one with CWB, one with CWT and one with Valliant. So say next week the 5 yr is at 5.2%. That would bring in $15,600 annually. Or you can opt for monthly, every six months or monthly payment. You can have them put the funds directly into your main/on-line bank such as CIBC. Of course there are other ways like purchasing 6 $50K ones or 12 $25K.
This is just me talking. I have never been employed in the financial services sector. I think I am done with real estate investing now but then again, because of the game, I just may buy another investment condo. Who knows.
I’d be interested in that too. According to ratehub, the best right now is 2.00% from Oaken.
Right. A typical condo near sea level in sunnier areas of Maui has no heater – just an AC.
You didn’t see the part about Tiff agreeing that the CAD weakness with high oil prices is a concern?
missed that line, Who is giving 3.65% for 3 months?
Why wouldn’t you just go with the 3 month @3.65%.
I still wonder if they hike again in September. Everything points to them trying to front load the rate hikes for a pause in Sept, but maybe the data is bad enough that they have to keep going.
I’m not a fan of burning wood either, out at my cottage the air is incredibly fresh, you literally can smell the difference from city air. When anyone nearby starts burning in the summer I get irritated. I’m just interested for emergency backup if the power goes out at -30c. I’m sure wood and pellet stoves are sold out in Germany now, they might run out of nat gas this winter, something they never expected. Climate change isn’t as important when your survival is in jeopardy.
Code typically calls for a make-up duct interlocked with the exhaust fan. But cracking a window also works…
Alex, given the probable upcoming rate hikes one could be better off with a cashable until after the Sep hike and then locking in. 2.6% for an HISA is pretty good given the current environment.
Where are the bears with that investor psychology graph on asset prices? If there was ever a time to post that graph it is now!
VicRE:
I never bother with the cashables. However, some banks, C.U.s offer pretty good HISAs.
For instance Hubert Financial HISA is at 2.6%, Achieva Financial @2.4%, Motive (CWB) @ 2.2% & Peoples Trust/Peoples Bank & Wealth One all at 1.8%.
Not sure if sarcastic, but unless you have a source for free/cheap firewood, this would be a truly bad idea.
Frank – to heat our 3 level 2700 square foot home it will cost us 15K minus rebates of 7k. That is for a top of the line Daikun one. Our hydro bill is $400/month (equal payments) and we expect that to go down by half. Even better is that we will have AC in summer – which I’m certain will become a necessity as the climate changes and heat domes become a more regular occurrence. We did the energy audit and a ductless heatpump was recommended to us. We have an old wood burning fireplace that used to be for heating the house but I’m not comfortable with wood burning. My friend who relies on wood burning living on a small island said it’s a lot of work and also that some people apparently don’t burn wood correctly and it creates air pollution. I don’t know how that works so best to stay away – in my case anyway.
Entirely depends on where you are in Hawaii. Even on the same island, Kihei vs. Hana for instance, are massively different.
got any on cashable ones?
Had a heat pump took it out and put in natural gas very pleased a different kind of warm I wasn’t getting with a heat pump
Best GIC rates:
3 Month@3.65%
15Month@4.4%
19Month@4.5%
1yr@4.32%
2yr@4.72%
3yr@4.9%
4yr@5.0%
5yr@5.1%
Regarding wood burning stoves: The ashes make great fertilizer for your garden. Pellet stoves are also interesting that I may look into one day. I wonder what the houses in Hawaii have, I personally wouldn’t need any heating/ac system. A couple small electric furnaces and portable room ac unit would probably be sufficient.
More so, the article mentions that a year of gains on the national average have already been given back.
Does this imply that just maybe the Victoria locals are indeed behind the curve or aka “Slow” to market shifts??
From: https://www.cbc.ca/news/business/real-estate-numbers-june-crea-1.6521568
The Ontario unravelling driving that average price down with BC in hot pursuit.
You can always go for something local and sustainable, they have done great things with wood burning furnaces in the last few years. There’s ample fuel available locally, it will work during an emergency or disaster and you get to improve your personal fitness through the exercise of splitting and stacking firewood (take strain of the healthcare system by being shape). On top of the fuel source being organic, it saves you from needing to spend on new insulation and windows.
Friendly reminder that it’s usually more cost-effective to improve air-tightness and levels of insulation before a new heating/cooling plant. I would recommend signing up for the Canada Greener Homes grant/loan, getting an energy audit done, and then following the recommendations given. I believe the government is covering the cost of the audit (assuming you follow through with one upgrade) and you’ll get info tailored to your specific situation.
This is also why the oft-derided step code is important. Once a structure is built, it’s challenging/expensive to retrofit. The only “good” time to do these updates is when it’s being built.
We looked at that product, actually. For a few reasons we decided not to do it.
One of those reasons was, while it seems like a great idea in theory, if it breaks it kills your heat and hot water. The limited market penetration these things have could mean much more expensive and time consuming repairs. They are also helpless in a power outage, although that matters only to the degree of your grid’s reliability. Ours is not very reliable.
We also considered a Navien NPE240A (ie forget the home heating part), but we rejected that for other reasons. The utility cost savings to go to tankless water heating is negligible unless you have 5 people each wanting marathon showers every day. The ROI for our energy usage was over 17 years for the tankless. Plus, despite the marketing material, those units still give cold water sandwiches.
We went with a 50G direct-vent non-condensing gas, and it’s awesome. Heats fast, inexpensive to operate, completely silent and requires no electricity to run. Last winter we had a 12 hour power outage when a line went down, and we had full heat and hot water the entire time.
Here is the price of 3 different systems I have recently installed.
1) House with suite. 2 heads in the main house. One in the master and one on the main floor. Another head in the suite with its own outdoor unit. So 2 outdoor units in total. Approx 20k. However I recently bought a 18000 btu one head zone Mr.Cool for a suite on Amazon for $2400. Roughed it in myself and then got a refrig tech to do the final hook up for $600. Huge savings.
2) 4400 hundred square foot house. Fully ducted with heat pump and natural gas furnace as back up. Furnace kicks in at any temp below 5c. 27k. A year ago this would have been 18 to 20k. Huge increase in equipment prices
3) A combi NTI/Navien Hydrondic boiler. Older home already had duct work. Added a hydronic boiler. Essentially it creates hot water for home and has hot water coils that connect to the ductwork to heat the home. $4500. 1k for sheetmetal crew to make small changes to the ductwork. $5500 total minus a 3k grant from Fortis. There are a few brands producing these. Space saver as you dont need a hot water tank or on demand heater. It is all in one. Which also means maintenance just on one unit to.
On really cold days I use an extremely effective Scottish technology to minimize the cost of heating. Try a wool sweater.
Could someone provide the cost of some of these heat pump systems? Thanks. Like a lot of the new technology out there, like solar power and high efficiency systems, a lot depends on getting the right system to match the efficiency of the house. I don’t know how many times I’ve heard of a company installing the incorrect size of furnace. In my 6500 sq. ft. commercial building (2 storey) I have 2 mid-efficiency furnaces and it keeps the 1960’s brick building toasty in -30c Winnipeg winters for under $2000 a year. It does face south and on sunny winter days, it does not kick in even with people walking in and out all day long.
Re Heat pumps
I suspect the reason we are getting conflicting reports is that there are several generations of heat pumps. I am sure the HVAC people here can give more details but the gist of it is early heat pumps which would be most of the ones from 15 plus years ago that were added to an existing furnace rapidly lose efficiency when it is cold outside so call for the furnace to kick in which runs up the bills. Mini split and new whole house heat pumps from companies like Fujitsu and Mitsubishi use a technique called vapor injection to dramatically improve cold air performance. They will often work down to -15F with no backup heat. They also cost more. My bigger concern about heat pumps is that the refrigerant they use is a serious green house gas that is about 2000 times worse than CO2. I am sure they are careful but there will still be lots of losses over time. Something else to keep in mind is that the output air temperature is a bit lower than gas or oil so you need larger ducts or put up with higher velocity air which can be noisy. Some people don’t mind and others do.
“Useless in cold weather which barely ever happens here”
There’s been several years where it’s dipped below -5 for several days in the winter and my electricity bill was atrociously high with much worse performance than a natural gas furnace. I’ve had both- heat pumps from central to mini split and I have experienced several times where the heat pump didn’t cut it. I’m guessing you have a small house with lower ceilings. My neighbours and I were spending 500-1000 bucks a month in the winters from 2017-2019 on electricity- they even installed a brand new heat pump and had a <15 year old house. Finally swapped to natural gas . Mini splits seem to have better performance but the issue is getting the heat to all the smaller rooms.
No, insider contacts obviously! Come on girl you should know that by now
Tiff macklem exclusive on financial post. Lol looks like he’s been reading my past posts on here about the issue of weak CAD/USD with high oil prices, inflation and the need to hike rates.
https://financialpost.com/news/economy/exclusive-tiff-macklem-bank-of-canada-rate-hike-inflation-forecast-miss
Useless in cold weather which barely ever happens here. The money saved over the other 362 days of the year more than covers the 3 days a year the backup furnace kicked in on my unit last year. I have not found it to be useless or expensive in fact it is the opposite. Maybe my unit is better than average but it has saved me thousands over the last two years and never once felt a chill. A house is a system though so mileage will vary depending on the level of insulation and performance of windows.
“don’t understand why people would want a fossil fuel heating system that doesn’t even provide AC when you can get a heat pump (ducted or not).”
Heat pumps are useless/ expensive during cold winters. Heat pump /gas combo is best imo
Is it your Ouija board or your magic 8-ball?
I don’t understand why people would want a fossil fuel heating system that doesn’t even provide AC when you can get a heat pump (ducted or not). I had a heat pump in our second last home (built in 70s) and it was amazing – hydro bills went way down and we had AC in summer. Our current house is over a hundred years old and we are waiting for a ductless mini split heat pump to be installed. Two of our neighbours that have homes the same age have ductless heat pumps and they both love them. Can’t wait to get ours!
The rental project on Richardson is dead. After 2.5 years of work the city managed to kill it. Congratulations all around https://twitter.com/archimommac/status/1547762287385014274?s=21&t=QU9ID0-QEBc66dpXT7S2cQ
A heat pump would probably be the best option on a new build. How they work in a 60 year old house with inefficient windows, etc… I have no idea. Either way, the ducts are going to cost.
Excellent income growth in Victoria
Having lived in houses with every kind of heat from oil to natural gas, wood stove/baseboard, boiler/radiator and now finally heat pump I wouldnt ever consider anything else currently available. I had my house built in 2020 with a heat pump installed by Temprite out of Nanaimo. Ducting and Daikin Fit unit all in at 13k. Its a small home just over 1300 sq.ft. but I keep the thermostat at 23C in winter and have the AC set to 18 in the summer. Before we had a hot tub installed the power bill was on average $60/month. We do have propane for the kitchen stove and hot water on demand which runs us less than $600/year. Compared to our last home which was freezing cold all the time and hydro bill was $600/month in the winter. Heat pumps keep the temperature locked in so it never fluctuates hot/cold like baseboard or furnace heat does.
I know absolutely nothing about heat pumps, I think my place in Henderson came with an oil furnace and some sort of heat pump/exchanger. I think it was used for providing air conditioning. When it died I didn’t bother replacing it . When my insurance company wanted me to get rid of the oil tank in my garage, I contacted Fortis and had a gas line installed, the cost: $25. Then had a high efficiency furnace installed. For the temperate climate of Victoria, it’s all you need. I recommend a Trane, very reliable, easy to repair. If I hadn’t put in a restrictive filter, which caused the igniter to burn out 3 times, I would have had zero problems with it . Changing to the cheapest filter you can buy finally solved the problem. I would invest money in a back up generator, if the power goes out, your furnace will still work.
Heat..
Wait for it….
Pump!
Karise- A natural gas high efficiency furnace should be around $5000, you might also need to change the hot water tank. I converted from oil to nat.. gas several years ago, it was $4000. Again, if it is a single storey house and basement, you might get it all done for $15,000. The materials alone are expensive. At least you have a starting point. If you can get it done for around $10,000, grab it.
Floating rate preferreds:
https://www.theglobeandmail.com/investing/markets/stocks/BBD-PR-B-T/
I think summer 2020 buyers are still pretty safe, I don’t expect prices do go lower than that. Maybe temporarily, but not sustained given current interest rate expectations and market rents.
Interesting to see if construction actually does slow as some predict.
Patriotz I guess everything is a loser right now with inflation If u bought a rental property in the last 2 years I guess u will get handed your head
Nahh, I like testing out various scenarios.
Seems to me you should focus on saving up a down payment for one house, find an agent and bid on it like everyone else. And don’t spend any more HHV time talking about your “multiple simultaneous unconditional offers” idea.
Theoretically that could work, I don’t think my success would be very high right now and would still want an inspection before hand so I will be out of pocket on the unsuccessful ones or potentially all of them.
Maybe it was a poor example, but my point is that there are potential deals to be found in any market.
Why would you make the unconditional offers at the same time? That seems ridiculous if you aren’t able to close on all of them.
Just make one per day, open for 24 hours.
Because I don’t want more than one to be accepted.
What’s stopping you from doing that now?
Well it depends on what price you enter at. If I am able to I can go out and submit 900k unconditional offers with 50% deposit on a bunch of houses listed for 1.2M and see who bites. I might get one so then it would be a good time to buy.
interesting, looks like some are just cracking the 6 figure mark, but I guess it doesn’t say if that is with OT or not. Pretty good deal with flex fridays and pension plus union protection. I can’t imagine these people will want to strike for too long.
https://www.victoria.ca/assets/City~Hall/Documents/2021%20Statement%20of%20Financial%20Information.pdf
Doesn’t mean anything IMHO. In the long term everything goes up. A bull is someone who thinks now is a good time to buy, and if prices are lower at some point in the future now is not a good time to buy.
The basic question of investing is where do you put your money now.
Seems like it’s time to update the Vancouver rollercoaster video, looks like 2010 is where it ends…
https://www.youtube.com/watch?v=TCa1pfsvftI
Hey Leo, you should partner with someone that knows how to make rollercoaster videos – we’ve never had a Victoria HHV house price ‘coaster. There’s programs that make it easy to design them if you know what you’re doing https://youtu.be/HUUInM1N4t4
That is flat out wrong. The “Vancouver Special” was designed to maximize floor space – and minimize construction cost – under outright use in single family zoning.
Union workers make 6 figures now? I am assuming that is with OT.
Since that June 30 chart…
Detached down 3.5%… 115->111%
Condos down 7%… 122..114%
… in the last two weeks!
From the March peak…
Detached down 13%… 127->111%
Condos down …11%. 128->114%
I consider everything added since July 2021 assessments to be “froth”, so I’d expect this blow off to continue and we will hit 100%.
Is it possible to get this by neighborhood (Sannich East/West, Oakbay etc.)? Be interesting to see which ones are holding up better.
Problem is government is a reflection of the people that elect the government. I am extremely in favour on the Missing Middle but chatting up my parents’ neighbours on a non-descript run of the mill street in the Oaklands area has been eye opening as they are all opposed.
Someone posted by the name of “Inspector” here on HHV a few months ago about how 20 yrs ago Langford invited Saanich to come take a look at how they turn around permits in a week and Saanich staff left after one day or something, didn’t want to adopt whatsoever.
Makes sense. If you are making 6 figures, flex Fridays, vacation, pension, as a staffer why would you want to be reasonable when it comes to development intake? The more unreasonable you are the more secure your job is. If the permit for a garden suite takes 3, 6, or 9 months who cares.
All it really ends up doing is middle class screwing over middle class. 1%ers aren’t waiting months on end for their garden suite permit or to rent in an apartment tower that has been delayed for years.
July month to date:
Detached: 111%
Condo: 114%
Hey Patrick:
Regarding the price of sold listings relative to assessment, Leo had a plot through the end of June in
https://househuntvictoria.ca/2022/07/03/june-the-froth-is-gone/
which I am reproducing here.
Oh if you haven’t noticed I already get that quite a bit on here, it ain’t no thang to me my friend 😉
Thanks Frank. That is quite expensive. We’re able to get a deal on the furnace from a family member in the business. Would half that quote be for the furnace?
Karise – I’ve recently looked into changing from a boiler to forced air natural gas and duct installation is expensive. A ballpark figure for a two storey house (not too large) was $20,000- 25,000 including the furnace. If you are ducting one floor and the basement, the costs could be significantly less. The second storey is a real pain.
Yup, I reassessed and changed my opinion afterwards and concluded that it was worth more than $1.5M, am I not allowed to do that? I am not going to get it right all the time and I underestimated the price the first go around. Relax, we don’t know what the actual sale price is yet, maybe it is halfway between 1.5M and 2M.
Or maybe I know someone who bid on this house and changed my opinion because of that, or maybe I actually bid on this house.
It was in the news late-June that the Horgan government was considering capping the rate to avoid “shock” to renters.
https://dailyhive.com/vancouver/bc-rent-cap-inflation
My favourite part of the article: The Horgan government is now stuck between the rental formula it chose, and intense public worry over how inflation has raised the price of most household goods and housing.
This topic was raised earlier and consensus was that they will break their own policy of tying rent increases to inflation. woops, only lasted 1 year!
https://househuntvictoria.ca/2022/06/07/busted-benchmark/#comment-89502
No you didn’t. https://househuntvictoria.ca/2022/07/03/june-the-froth-is-gone/#comment-90701
You used that exact listing to hold up in comparison to homes in Royal Bay for $1.5m saying it would be better value, you never mentioned it was waaay under market. So did you disingenuously try to compare a Rockland $2m home up against a RB $1.5m home to try and prove your point, or is what you’re saying today just a lie and more of your typical know-it-all attitude? Either way, you should try and keep your comments consistent or someone might accuse you of not knowing what you’re talking about.
Also, I’m posting this to show your hypocrisy, not my personal love for Royal Bay, but please don’t let that stop you from making the only comeback you seem to be able to think up regarding the Colwood crawl.
“Voted down and referred back to staff by:
Andrew
Isitt
Young
Alto
Thornton-Joe“
—
Such an idiotic decision. But par for the course from Isitt & co, I guess.
Feels like all levels of Cdn government need a massive reset. Way too much rot & incompetence.
But the main thing is how out of touch they are, it’s staggering.
Can anyone give me a ballpark on the cost of installing ducting? Our new place has baseboard heaters and natural gas fireplaces on each level. The downstairs has a drop ceiling so easily accessible. I hate baseboard heaters and was thinking installing a gas furnace might be the way to go. Any advice appreciated. Thanks
Kahlon, Dix, Ma, all names floated for NDP leadership have already said they aren’t running and would support Eby instead. The premiership is his for the taking if he wants it
I agree. And with that in mind, Leo what is the current reading on % sales price over assessment?
Long term is >10 years for me
When people talk about long term I sometimes wonder if they mean longer than their lifetime?
I am also long term bullish, in addition I have a leading indicator to know when it is time to go all in on Victoria Real Estate.
Voted down and referred back to staff by:
Andrew
Isitt
Young
Alto
Thornton-Joe
Most disapointed by Alto, the rest are just left or right NIMBYs
Say goodbye to those affordable rental units, they will certainly not survive the changes and increased interest rates.
Not sure how much weight I would place on “price drops”, looking at the trend of sale price versus assessed value is probably the most reliable method to see the direction of the market.
This missed timed reno and flip of day? Listing ready a day after a 100 point jump..
Short term prices are all about demand. Long term they’re all about supply.
Short term demand is pulling back due to rates so bearish for prices. Medium term it’s unclear if or how affordability will return, but wouldn’t understimate negative consumer sentiment keeping prices declining or flat for a few more years after the initial pullback.
I’m long term bullish on Victoria and the island for growth.
I’m hopeful but not confident that there can be significant shift in zoning to end the housing shortage. I think we can bend the curve enough to not keep spiralling worse, but unlikely to bend it enough to get to housing abundance.
None of that really changes the limits on price growth though. No matter the supply shortage people still need to pay for their homes. With a chronic supply shortage price is mostly governed by affordability and the cycles thereof. With a shortage housing prices will over the long run rise to what people can pay. Without a shortage prices are more governed by replacement cost + profit margin. Chronic supply shortgage will just push more people into other island communities that have greater supply elasticity (Nanaimo, Parkville, Courtney, CR, etc), it doesn’t mean prices go up forever or with no regard for affordability.
On another topic for what it is worth: Video: Vancouver Realtor cites “Massive” price drops not getting reported in the housing market.
The other is 1023 St. Charles originally listed at $3.25 and dropped to 3 and is still active. Marko confirmed an accepted offer on 1021 St. Charles, but no sale price posted yet on the system.
There was a time in construction that u just got things done. It’s no longer like that and will never be. A lot has changed since the 80s and 90s when I swung a hammer. Going forward it can only take longer and cost more to get projects finished so I guess we will never overbuild again
This is the one Barrister, obviously the $1.5M list price would have been waaay under market. Interesting strategy of listing at $2.5M and then dropping all the way down to $1.5M in this market though. I took a guess at around $2M as to what current fair value to be. I am sure the sellers were hoping for like $2.3M or something like that.
For $2M I think there is more long term value in this one if the sellers would accept: https://www.realtor.ca/real-estate/24635959/1980-fairfield-rd-victoria-fairfield-east
I stand to be corrected but I believe that there were two houses, side by side . for sale on ST Charles. The sign for one is removed but there was never a sold sticker on the sign. So it would be nice to know what is actually happening. Sold, or off market.
I don’t know that either way, but let’s say that’s the case.
As James Bay is one of the more mature neighborhoods in the region, it would have been built at a time when the community was too new, small and dispersed for that sort of thing to have mattered to the same degree. There would be a lot less competing, established interests to conflict with each other.
A young community is just interested in growing for the sake of doing so, to establish access to wanted goods and services. Once all that is there and the community gets “full” so to speak, these conflicts about the best way to grow further, including the aesthetic components, start to arise.
I think that’s been the case here for a long time now. That doesn’t say your point of “but we weren’t like this before and it was fine so why not now” isn’t worth contemplating, but the reality is the developmental maturity of the city has progressed to the point where enabled interests and resulting conflicts are now well established. For better or worse, that will continue to exert substantial impact on projects that move forward.
Kind of par for the course in the broadest sense. Canada is notable for its excessive regulation and bureaucracy, high costs, difficulty in getting national/large scale projects completed (or even started), and general administrative inefficiency. It’s almost a cultural thing in Canada. Your observation is perhaps the same phenomenon on a micro scale, and it ain’t going anywhere.
It is ridiculous for planning staff and council to regulate taste. That’s how we ended up with the “Vancouver Special”. Living in Calgary for a regrettable 2 years it was soul crushing living in a sea of identical boxes as far as you could see and drive. Innovation and design will always be way out in front of these knuckle dragging dinosaurs. If you don’t like to see change maybe living in a city is not for you. Buyers will decide what is attractive and developers aren’t going to purposefully build ugly places that don’t sell. Iron works is a cool building that stands out. if a unit had come up when I was looking I would have bought there instead at Black & White. I like weird buildings that’s what makes a city interesting. . It seems like Victoria Planning is pretty stodgy
Exactly. And architects/developers at least have a financial incentive to make the building attractive “enough” to potential buyers. I don’t know how much of a premium people pay for a nice looking/interesting building but there does seem to be a bit of a penalty for standout ugly.
Also so what if we get a handful of boring ugly buildings? I can drive through even the nicest neighbourhoods of the city and find buildings I find ugly and/or boring. IMO the established neighbourhoods of the core “work” aesthetically because of an eclectic mix of buildings in different styles and from different eras. It’s not because each building is beautiful on its own.
Medium and long term yes. Canada can at times be a nation of complainers which obscures the fact that this is one of the best countries in the world to live in. Not too corrupt. Not too polarized. Most things work. We generally muddle through crises…
BC in general and Vancouver Island in particular are arguably one of the best places to live within this pretty good country. We will continue to be a magnet for people from the ROC and around the world.
Leo and Marko have laid out pretty clearly why we won’t be drowning in housing supply any time soon.
And even if the world goes to hell in a handbasket, there’s every likelihood that this will be a slightly cooler and more comfortable corner of hell.
Short term I see speed bumps.
Two of our councillors live in Saanich. Come on down I say!
Why? Walk around James bay. There’s a huge diversity of housing from small detached to heritage mansions to duplexes, converted multiplexes, small apartments, and larger towers, with some small corner stores with zero setbacks sprinkled in. Much of that diversity came when there was a lack of restrictive zoning and municipal nitpicking. People built what made sense. I think most people agree James bay is a nice, diverse, interesting neighbourhood.
I am more bullish long term now more than ever.
i/ I was surprised to see the initial offer to BC Government Employees be 11%/3 years. This will most likely settle out at 5/5/5 before or after the strike and will spread to every single other union/large institution. How will this sooner or later whether it takes 3, 5, or 10 years not spread to higher rents and real estate prices? Interest rates will stabilize at some point.
ii/ Depsite Leo trying his best we are really screwed long term on housing supply. Upcoming slowdown/potential recession might mask the issue for a year or two but not long term.
iii/ I’ve never been a huge fan of the argument “Victoria is special,” as I come from Croatia, which is an extremely beautiful country, but due to some ventures I’ve had to do some travelling around Canada in the last 12 months and didn’t realize how shitty rest of Canada is. Ottawa is really the only place I thought was kind of decent, but the weather is brutal.
Like this is how much a place costs in a shitty town in a cookie cutter subdivision that makes Duncan look like paradise, 1 hr+ drive from Toronto and the drive sucks as you are in 10 lanes of traffic at some points -> https://www.realtor.ca/real-estate/24458804/26-glenora-pl-georgina-keswick-north
I don’t understand who would want to live there when you can buy a decent house in Victoria for 1.1. I guess people are tied down to jobs/family/etc.
The owner of the property.
That is because the muncipalities/government have created such a massive barrier to entry so there are only a few players. Aryze & Abstract are doing like 50% of the projects outside of the downtown core. Take a look at how many rezoning applications both have in Victoria/Saanich.
A small developer starting out can’t buy 10 properties and hope 1 to 2 get rezoned every year. The big players can play that game.
This why missing middle would be benefical amongst other things, it would increase competition which is a benefit for the end-user.
And yet the ones I know seem to be doing just fine…
But that is your assessment of the council’s performance, and is distinct from the concept of whether it’s worthwhile to consider the aesthetics of proposed projects.
What is creative and attractive then? Someone must decide that. If a building is not creative and attractive, should the project be cancelled or ordered to be modified until it is creative and attractive?
Even if you don’t mean “creative and attractive” in the aesthetic sense, someone else in the community or on council surely will. Practical or not, no council is going to ignore the aesthetic angle of a major building project.
Clearly, there is not an easy answer, but the answer, “it’s not helping so let’s not do it” is just too easy and for the reasons above, just isn’t a practical consideration IMO. If council isn’t working, then it hardly matters what the “best” way to approve a project is, because there is a more fundamental problem. That’s what elections are for.
It’s a practical approach to organizing space in an urban environment.
Who decides “if”? You either have an outright use or you don’t. IMHO municipalities need to be required to zone for a given number of new units as an outright use with targets specified by the provincial government. If they want to quibble about more beyond that let them quibble.
Aryze having to block people on Twitter -> https://vibrantvictoria.ca/forum/index.php?/topic/7137-cov-zoning-density-plan-for-missing-middle/page-24#entry657058
Have to love being a developer. You have to deal with landowners asking an insane amount for their properties. Then everyone shits on you for proposing a re-zoning. Then every consultant tries to suck as much as possible out of you. Then you pray tradespeople show up when they say they will. Then you have end-product users complaining about your prices and crawling around on the floor looking for minor deficiencies. Then people call you greedy in the end. All while risking bankruptcy on every project. Sounds like a fun career 🙂
St Charles has an accepted offer, no need for hearsay until price is posted.
Ironworks is a perfect example of how screwed up the staff/council are. I apparently don’t know how to post photos, Leo maybe you can help.
Developer comes in with a super cool rezoning concept -> https://vibrantvictoria.ca/forum/index.php?/topic/6059-downtown-victoria-the-ironworks-condos-retail-5-5-storeys-under-construction/page-10
Staff don’t like it and we end up with this building that looks like it belongs on Peatt Road in Langford -> https://vibrantvictoria.ca/forum/index.php?/topic/6059-downtown-victoria-the-ironworks-condos-retail-5-5-storeys-under-construction/page-14
This shitty version goes to council passes with zero opposed.
Luckily this developer isn’t focused purely on profits and kept playing the game with amendments/variances including halfway through construction going back and changing the exterior and we ended up with what is my favorite building exterior in all of Victoria. Mind you this game probably cost close to a million dollars. Architects/other consultants don’t produce these drawings for free. Ironworks is a love it or hate it building, but my favorite, showing how subjective aesthetics are.
Other developers would have just built the approved Peatt Road condo and called it a day and we would have ended up with a lame ass bland building thanks to staff/council.
Still for sale and active on the portal orginally $2.5 mil cut to $1.5. Might be waiting on a deposit and then it will post as pending with the price when the deposit comes in.
Because they’re not making it better. They’re just making it fit their personal tastes.
You’re arguing for state-planned communist housing blocks. I’m arguing for the exact opposite. If an architect has an creative attractive idea for a building let them do it.
But yes also cookie cutters are good. For example both you and I live in basically cookie cutter houses. That’s how you get a lot of cookies.
The problem with aesthetics is that it’s extremely subjective. Whose taste prevails? And why? I’ve seen no evidence that city planners have any better taste than architects. To be honest, I think they both tend toward boring, beige and grey redundancy. But given our current housing situation, why should I care? How do we decide how heavily to weigh the taste of city bureaucrats and architects vs. the desire for ordinary working people to have a place to live near where they work? How do we know the “aesthetic” concerns being raised aren’t merely another smoke screen for NIMBYism, much like the ostensible environmental concerns over a few trees on Foul Bay Road from people who drive their SUV eight blocks to the Thrifty to pick up a plastic bottle of organic mango flavoured kefir?
$2M I think, so 500k over ask!! Omg the market is hot again
When did we decide that councils should have little or no regard to the aesthetics of the communities we’re building?
If I run with your implied argument, the easiest way to physically design a community would probably involve some sort of Brutalist architecture that is simple to design, easy to construct and ruthlessly efficient in serving its core housing purpose. But, many people wouldn’t want to live in or near it.
Communities that offer aesthetics that are considered, cohesive, and harmonious tend to have a more pleasant, livable atmosphere – and that is one of the more significant aspects of community and personal well being. IMO, it’s definitely worth council debate, even though it does make it more difficult to facilitate development.
It’s too easy to say, “debating how our community will look is tough and expensive so let’s not bother”. Whether that debate is conducted functionally or not, is of course a different issue.
Are their any bulls left on this blog
What did 1021 ST Charles sell for?
From the architect on ironworks “ memories of the Ironworks. Staff recommended against what was ultimately built. We spent months with planning staff changing materials, colour, panel layups and fasteners because they didn’t like the corten steel throughout.”
Like when did we decide it was a good plan to spend tons of taxpayer dollars to argue aesthetics?
I guess bidding wars still exist – see 1021 St. Charles.
I was at the meeting as I own some corner lots that are 18 meters in depth which under most area plans works for townhomes. Asked the planner why would you make the depth 24 and not 18 as there can’t be many corner lots in the city that are that depth. He did say that you can do a land assembly on corner lots for townhomes and that is there preference. But he did say any land assembly not including a corner lot. So mid block would require rezoning.
On another note there is no minimum lot size for a house plex. and only one parking spot required after you hire the proper consultants to prove you only need one car.
So as Marko said economics barely work for anything to get built out. Aryze did make a point recently that this could work for the older parents to have a home built where multi-generation’s could live on one property. Maybe some merit there. 3 to 6 apartments with a house plex.
Marko: I believe on the cornor lots it is 24 meters of frontage calculated by adding both sides of frontage which means it would include a 10 meter by 14 meter lot for example. (basically almost every lot in the city).
There’s a borrower on the other side of that GIC. They will pay lower prices for assets, e.g. stocks, RE because of the higher rates though.
TFSA frank?
Now I’m playing with a compound interest calculator, let’s see if I can get this right: An initial investment at 7% interest compounded monthly will double in 10 years. But the taxes are a killer. At that level, money will pour into guaranteed investments and all other investments will suffer. At least that’s what happened in the 80’s, when the Dow hit a low of 776 in August 1982. Interest rates were much higher than 7% though. I’m sure the rate setters are aware of this potential scenario and will be reluctant to raise rates too high. Money hoarding accomplishes nothing.
They sacrificed themselves, by failing to take out a 10 year or at least 5 year term at historically low rates.
Nah, I do for profit deals. Gotta generate returns to get my bonus unfortunately. But you are correct about the cubical though 🙁
Hard to say. Councilors are most likely to weight City of Victoria resident responses though anyone can speak.
Am I even welcome at the meeting, considering I live in Saanich?
I have 2 variable mortgages, one the payment tracks prime and the other they’ve (so far) extended the amortization. The first is now up 1k/month (as of today) and the others amortization has extended by 8 years. Can’t see how the rate increases don’t start to bite (the general economy) soon.
Yeah I have my doubts too. We are working to get a lot of people out at public hearing for it.
August 4th. Put it in your calendar folks if you want to see change. https://www.victoria.ca/EN/main/news-events/public-notices/public-hearings.html
We have already massively shifted the conversation at public hearings. Used to just be NIMBYs going out to these things and then it’s very difficult for council to approve housing even if they want to.
The system is nuts but that’s what we have until we change it.
Come over one day for a glass of wine anyway. I can practice my Croatian which would probably be more amusing than a half hour of George Carlin.
Slight problem is your house is worth too much as is to an end-user. 1/2 acre = 12 townhomes (optimistically, my guess is probably 8 not to require variances depending on how they write the Missing Middle bylaws) and at $4 million for example that is over 350k/door @ 12 townhomes by the time the home is deconstructed. Really it needs to be 24 meters of frontage AND a shitty house.
That is why I keep stressing that very little will be built even if approved. When you multiply bylaws X economics there will be few viable properties for the Missing Middle. Economically a developer will not be able to outbid an end-user on a nice house and make the numbers work.
Let’s loop back around should Missing Middle actually passes. Based on the turn out at the open house yesterday and polling my parents’ neighbours I wouldn’t be surprised if the motion wasn’t passed. Everyone on my parents’ street so far against it.
Marko: My house has 24 meters of frontage and that is on each side of frontage. Come over for a glass of wine and we can chat.
While we often differ I have to agree that I cannot foresee a whole lot of failures to close arising at this point.
Ohhh mid 9 figure deal…aka you listened in on a zoom meeting from your cubical on the museum project being cancelled.
Leo has a life.
Ohhhh managing brokers
I guess interest rates will peak sometimes next year Inflation isn’t going away anytime soon Surprised by the 1 point rise could we see it again yikes
I’ve seen way worse. You would not believe what goes on at the staff level with planning, engineering, traffic, parks before this even goes to council. We are royally screwed on the housing front long term.
Also, open house yesterday for Missing Middle. Average age attendance must have been 65 yrs old. Get this, if you want to do a townhome development on a corner lot under Missing Middle you need a frontage of 24 meters. lol, in my 12 years of real estate I can’t recall coming across a corner lot in Victoria with 24 meters of frontage.
Not sure why people are freaking out. Even if passed barely anything will be built. Last night I was talking to people on my parents’ street and everyone coming back with the same non-sense “Imagine the parking situation if we had 5 or 6 six plexes in a row” while most of the homes on the street have been heavily renovated/lifted/2 brand new homes (i.e., won’t make any economic sense to tear down for decades). Pretty much everyone who is opposed will definitively be 6 feet under by the time there is anywhere close to 5 or 6 six plexes in a row.
The more you stay on this topic the more it goes to show just how clueless you are. I have a lot of different avenues to verify failures to complete including I can pick up the phone and call managing brokers and simply ask what they’ve seen in their office as they would be exposed to 100s or 1000s of transactions crossing their desk. If you’ve done your research you’ll know which managing brokers I am personal friends with. We are running what we have historically run approximately 1/500 +/-.
Also, BC Land Title info is public information. Just like the woman posted last week on HHV about the property in Broadmead she was confident didn’t complete and I verified in 10 seconds that is did complete at the reported amount, anyone else can post these numerous failures to complete here and we can quickly check if true or not. Yes, there will be failures to completes at a pace of 1 to 2 per month.
Just use common sense. Why would failures to complete increase when everyone is making conditional offers, no one is dumb enough to go unconditional without selling their place first anymore, everyone knows rates are increasing, agents are advising high deposit amounts. Failures to complete should have spiked 60 days after Feb/March due to massive bidding wars, people having to sell their house (and not being able to) after going unconditional, interest rate pressure, etc. Failures to complete did not spike in the crap market we saw 2011-2014. The two are not tied together as in a crap market buyers have way more time for due diligence. Odds are you aren’t going to have an 8 business day conditional period, sign off removing conditions, and then walk away from your deposit plus be sued.
Yes, Tesla’s will catch fire like this one in Vancouver where the owner barely escaped death (I hope you like this Frank) -> https://www.youtube.com/watch?v=dQxm6n7SdvE
Yes, you can also find lots of videos of plane crashes.
Can’t ignore the probabilities thought.
Anyway, let me know the the TC article hits the press and includes more than a couple of collapsed sale examples.
Inflation is here to stay, because the basic food and fuel price metric isn’t going to come down even with higher interest rates or crater house price.
I am personally looking forward to a nice TC article on failed Re transactions so I can stick it to Marko on this anonymous forum about how my “insiders” are better than his referral lawyers.
Yup, those recent royal bay buyers will be sacrificed!
I was more interested in their comments about how the recent buyers had to pass the stress test. Basically saying to both buyers and lenders that if you got around that somehow then you will suffer the consequences.
Someone wants to build 20 rentals (5 affordable for low incomes) in Victoria in a sea of apartment buildings and city staff wants to kill the project because it’s 6 floors instead of 4.
A councillor when asked about the project said it’s a tough one and it needs more work. After 2 years of process they want to spend another few person-years of effort to get fewer and more expensive homes in the name of essentially aesthetics.
The mind boggles.
Just got off the phone with a Toronto lawyer and rather usual for him it was a rather pessimistic picture. Still, it does not seem a total surprise.
Looking forward to Leo’s article on mortgage triggers.
Thanks. Basically “we’re willing to sacrifice those buyers who bought recently”.
Not like had a choice but still pretty crazy
The BoC pretty much gave a big too bad soo sad attitude with regards to hiking rates and the impact it has on the housing market. Minutes 18 to 23 for anyone interested.
https://www.youtube.com/watch?v=xpdeTuaTsk8&t=1397s
Yep, mis-wrote… there would need to be equity beyond the mortgage for the the other creditors to claim.
Bought one. In this case the title had reverted to the lender and it was just a regular sale. Presumably that had happened because nobody was willing to pay the outstanding mortgage balance.
Mortgage debt is senior to the claims any other creditors may make on the property.
Chances are that many facing foreclosure are facing solvency issue eslewhere. The lender moving to foreclosure may do it to stay ahead of a borrowers bankruptcy. The lender probably doesn’t want to risk sharing the liquidation of the house with other creditors (which would happen in a bankruptcy). As well, it’s always best not to drag out the write down of a loss too long.
There are more factors to the strata fee story other than just the concept of larger unit pays bigger share of elevator repairs, maintenance, etc.
Another angle.
400 sq/ft condo with parking strata fees $250 and rent is let’s say $1,700
so $250/$1700 or 14.7% of gross rent goes towards strata fee expense.
1,200 sq/ft condo strata fees $750 and reality is you aren’t renting it for $5,100. On a very very good day you are renting it for $4,000
750/4000 or 18.75% of gross rent goes towards strata fee expenses.
Let’s say in both scenarios max rent increase every year is 2% and strata fees goes up 5%/year in 5 years you are left with
$319/$1,877 = 17%
$957/$4,416 = 22%
I see it all the time, amateur landlords buy large 2 bedrooms to rent. Tenant sticks around for 5-6 years and all of a sudden the rent is $2k/month but the the strata fees have skyrocketed to $650/month and landlord is moaning about how 1/3 of the gross rent is strata fees. Sorry, you simply made a poor purchase to start.
1% hike and the CAD didn’t even budge. Ouch, not looking good!!
“With variable interest rate, the interest rate can fluctuate… When interest rates increase, the principal and interest amount may no longer cover the interest charged on the mortgage. The interest rate this occurs at is called the Trigger Rate.
Variable interest rate mortgages can exceed their trigger rate until they reach what is known as a balance called the Trigger Point. When this happens, you will be required to adjust your payments, make a prepayment, or pay off the balance of the mortgage.”
https://stories.td.com/ca/en/article/mortgage-process-101
Anyone have any experience with foreclosures? My understanding has always been that foreclosing is a costly and lengthy Court process and generally lenders prefer to avoid it if possible…which I think is what Patrick’s comment alluded to.
No but the overall aggregate strata fee includes common areas and building maintenance/repairs and that total gets divide up based on the unit size. So someone with a unit 3x the size is paying 3x more to use the same common area and 3x more to make sure the roof is maintained.
I do stand corrected as I haven’t looked at condos in a long long time since I believe SFH is the way to go when it comes to residential RE investment.
The regulations are in place to ensure the banks are capitalised and solvent. So, the lending standard isn’t at the whim of the bank. If it was just decided based on the bird in hand approach, where does it begin and stop? Who should get help? How much and how long? The system can’t be stable if the practices are inconsistent and made up as they go. If they were, you would really see investment on mortgage debt dry up and the lending market freeze. It still comes down to debt being a commodity that is sold and the return is interest. So, it’s not the bank missing profit or return, it’s the bond that it was sold in and the funds and investors that bought it. If the rules aren’t followed, the capital markets that support lending freeze because investors will not buy it. If those markets are uanble to raise lending capital, then it’s a huge problem, not just for housing, but the economy.
VicRE That makes sense, but not sure it is a huge difference then if it was a building just with small units. Strata fees are based on your relative sq ft and excludes common areas does it not?
I think Marko is saying that for common areas, amenities and building components (roof, load bearing beams, elevators, exterior walls etc), the smaller unit utilizes it just as much as the bigger unit owners. However if the strata is based on the size then the bigger units are subsidizing the smaller unit owners for those items
Great idea. And I’d wonder, once you do reset, is it a new variable with fixed payment and a higher trigger point? Also, is there a precedent as to what the banks do when they have lots of customers in trouble. In theory they could foreclose on them, but they usually prefer to stick with someone that’s living there and paying. A bird in the hand….
Yah my friend was messaging me about rates today. A year back she got a large mortgage and her broker basically Saresky’d her into thinking that any meaningful rate hike was near impossible. I’m sure they convinced a lot of people into doing the same thing. And based on history they had good reason to think that (and may still if rates drop as fast as they rose in the next year or two). Ultimately my friend’s responsibility though. Luckily she recently got a better paying job so can handle quite a bit more of this.
Stay tuned, article on this next week
Umm: It might get a bit rough on variable mortgages if we have another one or two big rate increases. For a lot of young first time buyers they are getting slammed on the price of gas and groceries as well as their mortgages.
I am not totally sure why a units strata payments are any different regardless of the size of the other units if you are paying based on a square foot formula. Your percentage of the square footage remains the same regardless of the size of the other units. Am I missing something? Are there costs calculated on a different basis? I am a bit brain dead because it is sunny out.
Different ways to find the money. If it’s a 25 year amortization, might be able to cover the difference by moving to a 30 year… If it’s an uninsured mortgage, can see if you can make it insured and up the borrowing percentage (of course you need to pay for that insurance as well). However, if they no longer qualify under regulations from OFSI or CMHC, the only option might be a foreclosure. Ideally, folks have just saved some contingency funds and can put in the additional down payment.
It is sounding like if a variable rate mortgage is triggered then your mortgage term is at an end and you need to refinance from square one. If that is the case, or something remotely similar then the question would be how many first time buyers are really on the ropes?
Interesting. What does the bank do if they don’t requalify (based on income and extra down payment), but they’ve been making all their payments. It’s hard to see the bank foreclosing.
That is a savvy “insider” move.
The fixed rate variable needs to change because the interest due monthly is greater than the fixed rate payment. So, the borrower needs to negotiate a new fixed rate that encompasses the interest or the excess interest is added to the principal (but adding to the principal is usually not allowed on the loan terms). So, the borrower needs to requalify at a current rate and borrowing level, so if the asset has depreciated they may need to to up with an additional down payment.
Your payments increase in a way so that the lender is not in the position of having an LTV greater than 80% or whatever the original underwriting LTV was. Each mortgage is different so the actual calculation is different (both lump sum and monthly top up options are available). It is entirely possible that once triggered the new payments will be more than that of a true variable rate mortgage.
Long term game, I don’t pay attention month to month or year to year when it comes to rentals. This is an example of one of my rental condos
Pre-sale purchase from Bosa in 2011 in Vic West at $193k (very small 430 sq/ft with parking spot).
2012 – Condo average dropped 4%
2013 – Condo average dropped 3%
2014 – Unit is finished and the market has dropped 7-8% since I purchased. I secure a 140k mortgage and rent the unit out for $1,100/month. Strata fees $150 per month. Taxes $1,447/year. Every month starting in 2014 has been cash flow positive.
2022 – Unit is worth $475k. Mortgage is down to 80k. Unit is rented below market but $1,500/month (market value $1,700/month). Strata fees $253 per month. Taxes $1,669/year.
Why are the strata fees low? Because by DESIGN I bought into a building where the average unit size is large so the 1,200 sq/ft units are paying $750/month and funding the majority of the budget. Why are the taxes so low? (I have units downtown where I am paying less tax than 5 years ago and the same as 10 years ago) Explained in my recent video here -> https://www.youtube.com/watch?v=RFTdI2KTyL4&t
Once all the public service employees negotiate 6/6/6 where do you think rents will trend long term with our lack of long term supply? 5 to 20 years out.
Landlords complaining about inflation and what not have no idea what they are doing. I like to call them amateur landlords. I don’t remember landlords giving out rent decreases when they were all re-financing last year at 1.5%? Now rates go up and suddenly the tenants should pony up. Give me a break.
I am still a bit (actually totally ) confused as to what happens when a variable rate mortgage is triggered. Is it like you are just getting a new variable rate mortgage at the going rate or is it different? If you were paying 2000 a month and then when your mortgage triggers and a variable rate for the remaining principle is 3000k at the present rate is that what your payments become or is it a different formula.
Put another way, are you stuck with paying the rate of a variable today?
Still not as good as mine! The “maybe” in your post kills it.
Barrister,
Good points.
Patrick: Somehow I dont see the NDP government allowing a 10% rent increase regardless of your calculations. Ironically, the inflation “crisis” will be used as the reason not to allow a full rent increase.
https://househuntvictoria.ca/2022/06/13/poor-affordability-continues-to-drag-on-the-market/#comment-89909
https://househuntvictoria.ca/2022/06/13/poor-affordability-continues-to-drag-on-the-market/#comment-89907
Better?
Ever heard of the term “banter”? Maybe that’s something you should consider trying during those long treks on the Colwood crawl!
I think anyone that’s been a landlord for longer than a couple of years will understand this is all part of being a landlord. Those speculative landlords who bought over the past couple years that have done nothing but try to get renters to cover their insanely high mortgages may not be as well prepared.
Just an observation that for someone that has said multiple times that it doesn’t matter what anonymous people say in the comments section of a blog, you sure do seem to think this really matters.
You’re right. It sounds like Eby is looking at ways to make the increase smaller https://vancouversun.com/news/local-news/as-record-inflation-hits-b-c-renters-critics-urge-ndp-to-curb-expected-rate-increases
Man, who wants to be a landlord? Rent freeze during the pandemic. Then 1.5% max increase this year. Then they want to to do less than inflation in 2023, as many landlords face higher costs?
anyways on to the next call (which I actually already made in posts prior to this 1% hike):
Sales continues to slow while inventory increases rapidly as the slow Victorians rush to list and lock in whatever profits they have prior to the Sept rate hike.
My call had way more conviction, you were just hedging your bets. Nice try though 😉
Close….
https://househuntvictoria.ca/2022/06/01/may-prices-pull-back-somewhat-as-cooldown-continues/#comment-89190
My bet is David Eby doesn’t allow the full inflation increase. He’s already made comments saying renters are vulnerable. I wouldn’t be surprised if he caps it like Ontario did at 2.5% – or somewhere close to that.
Canada 2 and 5 year yields currently inverted.
Allowable rent increases in BC for next year (2023) are tracking to be 5% (based on BC CPI growth YOY July 2022). BOC expects inflation to be 8% going ahead (for next several months) so likely to see 5%+ rent increase for 2024 too.
Based on that, I’d expect to see 10%+ allowable higher rents over the next two years for people in rent controlled units. That will figure in to rent-or-buy decisions.
.
By overshoot I mean causing a recession. I don’t think they will overshoot their target inflation range of 1-3% (i.e. fall below 1%)
I’ve been saying for some time that housing’s % of GDP is not sustainable. That’s the real problem, not what the BoC has been doing for the last couple of years. There’s always been a bust in any country where the sector has gotten that big. So I think it’s time to get inflation back under control and not worry about propping up a house of cards that was bound to come down one way or another.
Here is the historical posted 5 year mortgage rate. The rate will probably not go more than 6%. My rationale is that as the stock market goes down (or at least stays flat) this will keep the 5 year Canadian gov’t bond rate down as investors flock to bond safety. This bond rate is a primary driver for 5 year fixed mortgage rates.
It has been a long time since I posted something… The only great thing about old age is hindsight. The Bank of Canada is just starting with their rate increases. Inflation is much worse this time around. How high will it go? Will another crisis come along to stop the increases? We will be heading to recession. It has happened every time they have had major increases in the BOC rate. One indicator will be when we get a rate inversion (short term rates higher than long term rates.)
No. What I mean is that every rate hike takes a considerable period of time to work its way through the economy. The first hikes in March have not had their full effects yet, and we’re already seeing seismic changes in the housing market. Yet they have hiked aggressively since.
Of course, their mandate has nothing to do with the housing market, but that market’s share of GDP in Canada means any significant change in that market is going to have an outsized effect on the economy and consumer spending. Also, the economy is now far more sensitive to rate hikes given large levels of debt across just about every major public and private economic sector. That’s also why the 1% hike is actually proportionally much more significant than it was in 1998.
In other words, what I expect is going to happen is, regardless of whatever they get inflation to, that they are going to fail in their “soft landing” goal, and cause a very significant economic recession. And perhaps that’s what’s needed, at least for Canada’s ridiculous, overpriced housing market. If that happens, it will be many years to recover…as it was after ~1990.
https://www.bnnbloomberg.ca/food-suppliers-signal-more-price-hikes-coming-to-grocery-stores-1.1791250
Ouch, they gotta get inflation under control for all those people on fixed incomes! The most influential voter group is the none voters, and that group come out to vote when they are angry!
Lol, before it was bears coping and now it’s the bulls coping. God I love the internet!
You mean CPI inflation going below 2%? Doubt it. Remember that’s their target.
Vic and Van ( I think that was you), better get your cash ready, we might be bidding against each other for a Maplewood house this winter. Maybe we can do a reverse bidding war strategy or something like that 😉
Agreed
https://twitter.com/SBarlow_ROB/status/1547189615987236867?s=20&t=LEEnpvL7SZLShjh-AC0LsA
Yes that is correct, trigger rate is typically 2% above what you contracted with the recent rates (hence alot of them originated last year and earlier this year has been breached with this latest 1.00% hike). It is a risk mitigation lever for the lender.
I didn’t know that’s what they were predicting. I’m not sure how they could model that one out unless we are subject to large scale nuclear hellfire and/or long gestation airborne Ebola in the next few weeks.
Many of the shipping companies that boat over our Chinese trinkets to us have raised their prices from $5,000 a container to $18,000 – and that’s just one example, but a potent one as it effects so many of the things we buy.
Personally, I don’t care if the prices of things go up so long as wages keep pace. However in many cases they aren’t, and it provides a fertile ground for disruption and chaos in the labor market. Nothing we haven’t seen before, but a pain nonetheless.
friends of mine own two houses, and both were up for renewal a few months ago. Unbeknownst to me, they picked variable on both renewals…but then, ironically, they inadvertently ended up with 5-year fixed on the bigger mortgage of the two because their mortgage broker had mixed up their instructions. And because they failed to read what they signed, even though one of them is a lawyer! Some higher power was smiling on them that day!
I got that wrong. The trigger rate is when the principal and interest payment no longer covers the interest portion of the payment. The interest is deferred and added to the principal. The trigger point is when deferred interest plus the principal exceeds 80% LTV. At that point, you have the option of making a lump sum payment for the amount exceeding 80% LTV, or increasing your payment to pay off the principal within the original amortization period.
At least that’s how my lender does it. Not sure if that’s standard practice….also not sure about high ratio mortgages.
Because it is. We’re 8 months removed from “inflation is transitory”. Inflation predictions from the bank of Canada has us down to 2% by the end of this year. They only started raising rates in March. They absolutely butchered this call, and I don’t understand how they can even pretend there will be a soft landing coming.
Dad: Exactly how is the increased payment calculated? Do they recalculate it as if was new mortgage at the new rates or is there some formula?
The trigger rate is the rate at which you have to increase your regular payment, or make a lump sum payment. At least that’s how it works in my mortgage. I’m not sure why you think payments would double? Rates would have to go up a lot more for that to happen.
I am a little bit concerned about the possibility of a lot of variable rate mortgages possibly triggering by these rate increases. If this is actually the case it could be rather a disaster for some first time buyers. If they have to renegotiate their mortgages at these higher rates would they have to requalify and how many could actually afford to have their payments possibly close to double.?
How many vulnerable buyers are we talking about? Just a handful or actually a lot? Is there someone out there that has some hard knowledge about the triggering provisions.
At +2.25% we’re already getting into territory we haven’t seen very often. Of course this chart is the average overnight rate over 5 years so not apples to apples here. I should redo with peak increase.
Come on, you know better to debate against someone with “insider” contacts 😉
How will buyers act is the question! I think if one was to write an unconditional now with a jumbo 20%+ deposit you maybe able to get just under $1M for a suited livable house in the core. That is something unimaginable a month and half ago.
I am now extra happy I paid that 2k penalty to re-negotiate and lock in a 7 year fixed term a couple months ago. Sometimes you guess right, sometimes you guess wrong. My guess is this will end when BoC gets up to 3.5-4%. I think we will get to the 6+% mortgages. There will be a recession next year. Then, it will bounce back and these prices will look like sweet deals in 5-7 years. I will add that I have no formal education in economics (except a first year undergrad course that I got a D in) and no education in real estate and very little knowledge in this area in general.
When I bought my first house it was a variable rate which was all that VanCity was offering at the time. Good for me as that was past the interest rate peak.
Of course assumable mortgages aren’t worth anything in a declining interest rate environment, I don’t know if you’re talking about before the peak or if people just didn’t get it.
Should help to push-up listings to lock in profits
Ummm Really, if you thought yesterday was “price drop day” wait till you see the price drops coming up from these sharp owners trying to front run the Sep hike now lol.
Imagine signing up for a 5 year fixed term of 21% in 1981. You’d pay close to 100% of cost of the house in interest in the first 5 years.
Stress test means more people will be able to afford less house. There is still enough demand in the market and parents who are willing to cosign that this doesn’t set a hard limit on prices imo.
Stress test matters for sure. It means that people who don’t have family help are further disadvantaged. Contract rates matter a lot because carrying costs are bumped up and this affects the monthly budget and is an immediate barrier. Plus no-one likes to pay more interest.
What also matters is consumer confidence. Parents are more likely to back a home purchase for an adult child if they believe the market is rising. Facing a recession and potential for flat prices or drops I’m not sure that stays the same.
100bps might be interpreted by some as panicking, especially when you consider the move against every other move they’ve made in the last decade.
I continue to suspect they are going to overshoot. We haven’t even absorbed the first hike yet…
From the sources and “insiders” I spoke to previously, the stress test parameters are a joke and there are many ways around it.
And no I will not be listing the ways to get around the stress test, people will have to pay me for that
Really? I thought they were higher. Need to look into this more closely
Quite possibly unprecedented to have this many people on variable rates and disproportionately those who bought at the highest prices.
I don’t know a lot about the mortgages in the 80s but given the number of sellers ads with reference to assumable mortgages I think it was mostly fixed terms
I believe most of the trigger rates on variable mortgages have been breached now.
This I am curious about. Back when the stress test hit and prices flatlined I was making affordability charts showing the affordability at +2% and given prices had also flatlined I thought that was the end of the runup. Clearly that was incorrect since by mid 2019 or so the stress test seemed to basically stop working entirely and then of course COVID dropped rates and prices took off again. For whatever reason buyers behaved as if the stress test didn’t exist, whether they were bypassing it with substantial help from parents and equity extraction, going to provincial lenders, or stretching the truth on income to pass it.
Now the stress test is way up again, so does it mean anything? Or is it still that what matters is the contract rates people are paying, not the stress test rate?
I am pretty sure after my 9 figure deal sentence I wrote: “or I could just be doing what I can to make myself feel better on an anonymous internet forum”
Anyways no big deal, I do appreciate all the effort you put in running this blog and the data you collect/present. Out of respect for that I will put on the kid gloves and watch my tone, unless of course it’s a response to a smart ass comment.
Yes, that changes the current variable rate (3.2%) to 4.2%. About 60% of people who bought in the last 2 years went variable – ouch!
Full point was on the table because the actual economic impact of 25bps isn’t that significant. BoC wants to restore credibility and signal to the market and the people their commitment to fight inflation and that’s the more important part.
Plus they probably also realized that the CAD is also in danger and that makes inflation worse. Lol yes that is another one of my previous “insider” calls.
? I didn’t edit any posts
They said they’re serious about hitting Inflation and they are. So far this is just catching the variable rates up with fixed
Another point of note (stealing from Ben Rabidoux twitter):
Stress test WAS the higher of 5.25% (the Mortgage Qualifying Rate) OR the contract rate +200bps. Variable rates were ~3.2% = 5.25% stress test rate. Fixed were ~5% = 7% stress test rate. But with BoC hike, the new MQR will be closer to 6% which means nowhere to hide.:
The one point increase is not what I would have guessed but it does not really surprise me. From the people I know opinion was split on which way it would go with most guessing they would follow the Fed.
If I recall right a few months back I was suggesting that people I know were predicting the five year mortgage would up to 5% or 6% by the beginning of next year. I was beat back then but I am beginning to suspect that it might go above six possibility by this time next year. I am not making a prediction but the possibility is well within the realm of a likely scenario.
On a separate note, does anyone here know of a family doctor who is taking on patients for my elderly neighbour?
Credit where credit is due. I almost made a post to say i doubted they would do that… but here we are. US inflation coming in hot at 9.1% as well. Not good – https://globalnews.ca/news/8986310/us-inflation-june-2022/
Who here called the full point hike????
Oh right, yours truly 🙂
https://househuntvictoria.ca/2022/07/03/june-the-froth-is-gone/#comment-90827
BOC raised by 100 basis points. (good call VicRE!)
BOC Says “inflation is higher than expected.. should remain around 8%… more skewed to domestic sources”
Overnight rate is now 2.5%. Says economy is in a period of “excess demand”. Unemployment is at record low 4.9%. CADUSD rose a little (0.3%) to 0.70
https://twitter.com/CBCAlerts/status/1547220178609504256?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Etweet
Awww Leo edited my 9 figure post, and the context is lost….
I have no idea how the mortgage calculator generated an incorrect 4% rate monthly payment. I must have been distracted by the 10 figure deal I was working on in Hawaii (haha).
How is the rental market? Is the vacancy rate up? Are rents decreasing? I heard on BNN that rental rates in the U.S. are up considerably. Thanks.
More than just that. There was a rapid runup in prices starting around 1979 as buyers turned to housing as a perceived safe haven from inflation. Not long thereafter, the central banks got serious about beating inflation by imposing historically high interest rates. Not surprisingly this mixture blew up and resulted in a massive bust.
Sound a bit familiar? History doesn’t repeat, but it rhymes.
From: https://www.timescolonist.com/local-news/saanich-homeowners-wont-need-council-approval-to-put-a-garden-suite-in-front-side-yards-5576880
Thank you! I been slipping up today….Should prob stop posting until the Aug stats come out! Unless the hike tomorrow is higher than 75bps.
allude
I had some down time between turns with legal on a mid 9 figure deal today believe it or not
So now you’re mentioning me in other people’s posts and trolling so hard they’re getting deleted? Imagine what you could accomplish if you didn’t have so much downtime.
Thanks for making me your priority today though.
“VicREanalyst”, are you incarnation of “DebtMonster” which quite a few people seem to be missing here ?
Although very much correlated, a decline in Canada bond yields and over night rate would not necessarily directly translate into cheaper mortgage rates due to credit spreads. The government would need to start buying up MBS again along with other things to really bring down mortgage rates, the question is would they do that again given what they had just witnessed happen with the housing market?
ok fair enough. Umm Really, I wasn’t confusing between you and Up and Coming. I was just using your post of Sooke price drops to elude to what I think will be coming to Royal Bay.
No trolling, comment deleted
I’m not sure if we can say it’s primarily due to any one factor in an equation that stays constant. However I think it’s fair to say that in the 80s the jump from about 15 to 20% was a huge factor in bringing unaffordability from poor to off the charts poor and just decimating sales. Back then we had a ton of room on the downside of rates and affordability could come back quite quickly. This time we don’t have as much, though I wouldn’t rule out drastic rate drops if we hit a bad recession. Not sure if there is a good way to illustrate the impact of the range of possible rate moves on the chart but that would be Useful.
I’m not sure how one would describe where the unaffordability comes from. Obviously affordability is a confounded product of house prices and interest rates but it seems like the source of unaffordability in the 80’s is from very high interest rates – something that changes quite quickly and if it declines, doesn’t affect balance sheets. On the other hand now, it seems like unaffordability is primarily from house prices. ..
Is that correct? If so, it would likely affect the comparison between the two time periods, no?
You still seem to be confusing what posters saying and what they have said.
I think you are forgetting to consider the rooms. Not a lot of one bedroom or no bedroom houses out there. I would imagine the vast majority of condos are studio and one bedroom. I believe I had seen on this site once that 3 bedroom condos made up something like 5% of stock. So if you need a 3 bedroom place I’d argue that could be seen as unaffordable rather then just house vs condo.
Closer look at condo affordability cropping out the 80s and adding a 3 month average on the price data to smooth it out. Perhaps more useful this way?
Don’t know what you or your “insiders” saw but I been warning Up and Coming that the reaper will be coming for Royal Bay.
Oops forgot the “LMAO”
Right now we have SFH as unaffordable (63%) to the average income, and condos quite affordable (30% of income). So we have a situation where some homes are unaffordable (SFH) and some are affordable (condos). Anyone saying “homes are unaffordable” seems to be not considering condos, and seems to be only referring to detached houses.
The correct way to describe this would be “detached houses are unaffordable to average incomes”. But I’ve never heard anyone describe it like that, because that isn’t a headline describing a crisis, it’s just stating the obvious. . Instead they say “homes are unaffordable” which does imply a crisis.
This is still the golden age of affordability for homes in Victoria. Because It will only get worse with time, and in 10 years for affordability this current time will be considered “the good old days”.
Wow, looks like today was price drop day in Sooke…lol
In the early stages for sure. Developers are looking at much higher carrying costs (projects often takes 3-5 years start to finish), construction costs are at record highs, etc., and then you don’t know what the final product will sell for in two years.
Also sorts of pre-sale buyers/investors but my thing has always been buying below tangible market. If a developer can offer me a great product with a 2 to 3 year completion period at 10% below current tangible market I am in irrelevant of inflation/interest rates. Who knows what three years out holds and long term the market trends up.
Does anyone bother reading? The article says the minister sees vacancy control as an impediment to more rental development, and he wants less regulation that impedes supply.
Stand corrected by Dad 🙂
Agreed, vacancy control is beind idiotic.
Rent control is IMO, generally a terrible idea. Tends to reduce incentive for new rental supply and eventually encourages blight and the presence of “slumlords”. The fact is, rents cannot sustain themselves beyond the market’s ability to pay, so I say leave it alone. We see this debate historically in almost every market top.
The exception for this is public housing, which I think we need a lot more of. There was quite a bit more emphasis on this in decades past, something that’s been sorely lacking in recent times. On this point, I’ve always thought of it as a public choice:
Pay lots of money to house the poor and disadvantaged, or,
Pay even more money still on policing, emergency and chronic medical care and general social dysfunction in an urban area.
Yes he does. From January 2022:
https://www.theglobeandmail.com/real-estate/vancouver/article-bc-housing-minister-eager-to-spur-supply/
Hey Leo,
Nice post!
What do you make of the fact that, with your updated affordability plots up to the pandemic, the band of high/low affordability is increasing at a much smaller slope than what you’ve shown us before? (In fact the slope looks to be indistinguishable from zero at the 2 sigma level.)
I do this on purpose to troll a selected few posters here, they should be able to take it if they want to dish it back. But I will leave Frank alone now as it looks like he is being the bigger person and “frankly” it is getting old for me too lol. I have expressed my own personal view on the Vic RE market in my prior posts, and I will sum them up in the below bullet points:
One last important point:
Typical slow/unsophisticated Real estate analysts.
$100,000 X 2% = $2,000 & $100,000 X 4% = $4,000.
You know VicREanalyst everyone is not as knowledgeable and as logical as you are on many subjects. I think some on here truly appreciate your posts. It gets them thinking. I would ask you though if you would consider not using a certain expression over, and over and over again. And it is: LMAO. This “chatspeak” was so overly used 10-15 years ago on the net and it is honestly quite a rude and not too classy of an expression. When you use it, it negatively affects your entire comment. Could you maybe use something more appropriate?
There are a few newer buildings hitting 50% or higher like the Jukebox but for the most part it is less than 30% and I see the numbers on a daily basis (on the Form B I see how many units are rented in a particular building).
For example, in my building 29 out 132 units are rented or approx 20%.
You are right! I stand corrected. My curiosity about the supposed highly paid remote IT workers still stand. Although I doubt it has any significant impact on the RE market, it will just be another bogeyman myth busted.
Looks like you read the headline wrong. Less than 1%.
Another insider tip!! MSFT announced cutting 1% of its workforce today, following the other FAANG firms. Very curious to see any future impact on all these supposed highly paid remote IT workers residing in Victoria working for US firms.
https://www.theglobeandmail.com/real-estate/vancouver/article-bc-housing-minister-eager-to-spur-supply/
The minister’s views on vacancy control seem pretty clear in the second paragraph
No, I just enjoy trolling delusional people once in awhile during downtime. How’s the Colwood crawl today?
@dad can you link to the public comment? As a landlord if this happened (or was coming down the pipe) I would certainly er-take one of our two units. There is pressure to enact vacancy control but some time ago Marko listed the main downsides – delisting of properties (wait it out because the move is not sustainable with different political parties) and massive increases in rents. Anyway if dad could kindly post the link to the public comment that would be great.
I would say the odds of that happening are close to zero, and Eby has already publicly indicated he has no interest in imposing vacancy control.
Not sure why this keeps getting brought up.
I’m guessing my comments have the best tenancy agreement in Victoria as they seem to live in your head rent free
Darn, I guess he supposedly just owns investment properties here… Guess I will just concentrate on Up and Coming going forward.
Frank isn’t from Victoria, and doesn’t live here.
Hey Frank i think you may have entered the 4% incorrectly. The payment is actually closer to $5300. The rate increase should be equal impact on mortgage payment. IN this case for every 2% increase on a million dollar mortgage the payment goes up by about $1100. Hope that helps.
Cheers.
I think the ones bought recently via alternative lenders will come to market first. Those were tight cashflow wise already at inception and are probably all cashflow negative now.
I was wondering if a lot of SFH or condo units would be sold and taken off the rental market since allowable increases dont reflect real inflation costs. Would enough units possibly hit the market to actually increase inventory substantially?
Marko wrote about this where he thinks most landlords will automatically raise rents as much as they are able to every year and no discounts will be provided to good tenants. Makes sense to me, flip side is that it will take some investor demand out as your return will be tied to your initial tenant as everything after will be capped.
I was told that Ebby has some pretty strong feelings about rent control being tied to the unit instead of being limited to a tenant. Hypnotically if rent control is tied to a unit what impact might this have on the housing market?
I wonder if any of the condo projects that are still in their first stages are being put on hold? I can see a lot of presale investors becoming more than a little nervous with a scenario of raising inflation and interest rates. Does anyone have any actual feedback?
Lmao, the typical slow/unsophisticated local Victorian, finally waking up to the impact of higher interest rates but can’t even an online mortgage calculator properly……. seriously, how did those numbers you put down even pass a quick gut check ?? Interest rate doubles from 2% to 4% yet the payments only increase by ~5%…
P.s. I didn’t get this from an “industry insider” either 😉
Lol now I know the real reason people are paying 1.5M for royal bay, they don’t even know what their actual monthly payments are!
Playing with a mortgage calculator- $1,000,000 (5 year, 25 year amor.) at 2%, monthly payment-$4200. 4%-$4600. 6%-$6400. Apparently, if interest rates get to 6%, the real estate market will surely suffer. At 4%, I don’t see much change.