August: Dropping prices attract some buyers back
The year over year market activity figures were very poor in August. Detached and townhouse sales were down 30% and 29% respectively from last August, while condo sales dropped a whopping 57% from last year. But the last couple weeks we’ve seen a slight increase in sales that has firmed the market up a bit from the trajectory it was on previously. As discussed last week, it’s a sales bump that isn’t typical for end of August, and along with similar reports of increased activity in other Canadian cities is worth watching closely to see if it continues into the fall market. However the uptick in sales to end the month was not enough to stop the deterioration in market conditions on most metrics.
Overall for the month, sales for detached and townhouses ticked upwards slightly on a seasonally adjusted basis, while condos dropped. Overall sales are down around the levels of the buyers market of 2010-2014, but with substantially less inventory.
For those who prefer the unadjusted figures, here is what it looks like for the last 20 Augusts. August 2022 came in third slowest, after August 2010 (425 sales), and 2012 (462 sales). New listings are up from last year but remain below the long run average, and inventory has spiked but again well below the long run average.
Inventory declined by 25 listings from July, but during the average August we lose 86 listings, so on a seasonally adjusted basis it is still creeping up. Expect the small surge of fall listings to come on after labour day.
Months of inventory also kept rising, though it’s worth pointing out here that we are still not at levels that would be traditionally seen as a buyers market. The only reason prices have been dropping is because market conditions have been worsening so quickly.
Sales to new list ratio also printed a weaker value in August. There was a slight pick up in the sales to list ratio at the end of August in the daily data, but this measure is highly seasonal so needs to be adjusted to interpret it.
Median prices were flat in August, with no movement beyond the normal noise.
Interestingly enough, there was no change in the median sale to assessed value for condos in August, despite that home type seeing the biggest drop in sales. Meanwhile townhouse and detached house prices continued to drop relative to their assessed value. That may have attracted a few of the buyers back in, as those more expensive properties are now down some 15% from the peak.
I mentioned a while back that you shouldn’t be surprised if the rapid price declines we’ve seen since spring don’t continue going forward. Drops of a couple percent a month are very quick and unusual for the real estate market compared to past downturns when we lost only a few percent a year. And unlike the 80s we haven’t seen an explosion in new listings, inventory, and months of inventory to get to buyers market levels. That makes our current market weakness extremely sensitive to buyers continuing to stay on the sidelines. Because of low inventory, even a small uptick in buyers would be enough to stabilize prices.
In the detached and townhouse markets I think we are close to that point and I don’t expect a lot more price changes there in September and October. Unless rates go much higher or existing owners are destabilized by upcoming trigger rates, I think we’ve probably shed enough risk in the detached and townhouses markets that they can achieve a relatively soft landing from here on out (that enough weasel words for ya?). Condos are more uncertain as a strong rental market could provide price support in the future, but they are also less supply constrained than ground oriented housing. In past downturns we’ve seen condos correct more than detached homes.
New post: https://househuntvictoria.ca/2022/09/12/is-victorias-market-more-stable-than-other-cities/
Does anyone, sorry to get back to housing, have any more detail how banks are dealing with triggered mortgages? I am guessing that there must have been thousands of mortgages triggered by the most recent hike and there should be some specifics on how the different banks are handling it.
Dude, the list price and sales history is on the Realtor.ca….. anyways you better go do the dishes now before your wife takes away your TV time.
I think avoiding posting individual addresses is a good call. These things seem harmless, but you know, when you actually put ‘123 Anytown Lane’ in a comment like that, search engines pick it up. Forever. So now that bit of idle banter is forever associated with someone’s home. Just like you wouldn’t want your kids’ names spelled out online (especially if it’s a rare name), you probably don’t want your address associated with some bs either.
Clearly the healthy part is not unanimous.
If this were true, there would have been no objection. But it wasn’t as you say an “unknown someone”. Their address was posted, which clearly identifies who it was. If you don’t believe me, how about you posting your home address and see if you’re still anonymous here.
Leo completely fixed it by removing the address. And so now you bears are free to continue to speculate on the possible ways this – now anonymous – person’s “life may have been ruined” or not.
I believe it was a third party shaming with a person being offended on the possible or theoretical scenario whereby an unknown someone else that might have lost some money, possibly might be having problems or none of the above, and that person might eventually possibly read a thread where the declining asking price is mentioned or having it maybe reported to them by someone else….lol… I do admit, that some threads here are just too damn hilarious.
Someone blindly speculating on how someone else might feel given an unlikely scenario is far too reactionary and controlling the conversation topics based on one persons outsized reaction to discourse that has gone on for years is outlandish to me .
At this rate why discuss any specific properties at all? Might hurt someone’s feelings if we critique things about any particular house, it’s price or how much it was purchased for since a readers friend may report back to them. I think censorship would take away a lot from the blog.
Several months ago me and some regulars were discussing prices in the sauna and someone asked us not to discuss housing since they were stressed at being priced out. Nothing here is anything a basic realtor feed wont tell you. It’s ok to discuss things. Just don’t dance.
Someone tries to set healthy boundaries. Someone else gives advice on how to be more appropriate. Internet says I don’t like that, people who ask others to respect boundaries are too soft.
Realtors actually put use these as advertisements.
I think we all agree these are creepy and cruel.
Shame on these p̶o̶s̶t̶e̶r̶s̶ realtors!
“meh, I think its fair game. This is no different than people posting how much a property was bought and then sold for and how much potential profit was made other than it is the inverse.”
People are too soft these days lol
meh, I think its fair game. This is no different than people posting how much a property was bought and then sold for and how much potential profit was made other than it is the inverse.
Wow, a bit of a listings surge today. Usually don’t see this many SFD show up on a Monday on the portal. Typically, see the listings come in like this on a Wednesday or Thursday. Well, see what the rest of the week brings, curious to see if that September bump happens or not. I was chatting with a few realtors and they mentioned that activity was up, but they wouldn’t really comment on if that has carried through to sales.
BC gov released their quarter 1 adjustment today. Original budget plan was a 5.4 billion dollar deficit. As of today’s adjust we have a 700 million surplus. Not going to help negotiations of they go back to the table with BCGEU –
https://www2.gov.bc.ca/assets/gov/british-columbians-our-governments/government-finances/quarterly-reports/2022-23-q1-report.pdf
Regarding this specific property, one way of rephrasing Patrick’s comment is to point out that a lot (though not all) of the discussion about it has been petty gossip. Presenting an instructive example of recent trends can be worthwhile; this.. has been something else. There’s no cost to being constructive.
LMAO didn’t you say that whoever bought at the peak would care less about where the market is currently and will be enjoying life? I can find the exact post if you want since you can’t edit them anymore.
And what misfortune? House prices rise in the long run so why don’t you drop a little note in their mailbox and let them know that if you feel that bad about it?
Just the property actually. I thought the purpose of MLS was precisely that – to identify the property for sale to the entire world – to get the homeowner the highest possible price.
You want to publicize a sale, people are going to form opinions. Not that the seller cares about what you or I think anyway. Just what they can sell for.
“The impact of higher interest rates will be felt in other ways too. Canadian households have accumulated a lot of debt over the past decade. And they’ll soon face significantly higher debt service payments. This is a bigger issue in British Columbia, Ontario and Alberta where household debt is highest relative to disposable income. This shift comes at a time when soaring inflation is already squeezing many households’ budgets and the drop in residential property values is shrinking their net wealth. We expect the one-two-three punch of rising rates, high inflation and eroding wealth to take a serious toll on supercharged consumer spending…”
Source RBC Provincial Outlook
You could have made that bold and title capped. Shame.
“British Columbia: Tourism rebounded this year and capital investment remains brisk. Still, we expect annual growth to slow to 3.0% in 2022 from 5.9% in 2021, as the post-pandemic spending boom plateaus and the housing market correction weighs on activity. B.C. is likely to be hit harder by the housing market correction than most other provinces as residential investment represents a larger share of its economy. The negative wealth effect from falling property values will further amplify the weakness by slowing consumption.”
Source: RBC Provincial Outlook – September 2022
Thanks Leo!
The point was not to speculate, the point was to note the risk of bidding wars and short holding periods. Spring 2022 was a super high risk period to buy even without the interest rate spike as was discussed here many times. Many will be in trouble and though everyone should be doing due diligence, the industry also didn’t do enough to warn people of that risk. Fair point though, the address isn’t required to make that point and I’ve removed it.
Regarding whether greater Victoria is “special” relative to the rest of Canada: I was wondering how inventory and new lists compare here relative to the major markets that have seen declines (e.g. Vancouver and GTA). In our parts (up the Peninsula but not Sidney), it seems like (1) there aren’t that many properties available in the 1-1.5m range (which would I think be of less interest to wealthy retirees and such), and (2) sellers have been, shall we say, optimistic as to what they can get. So I see a number of lists at well above assessed value just sitting there. Trying to figure it out. Simple guess is weak supply..
Also, took the oldest boy out on the Juan de Fuca trail to backpack for the weekend. My God, how beautiful.
————
These posts are creepy and cruel
You’ve identified a specific homeowner (by posting their address) for the purposes of speculating on how much they would have lost, and what horrible reason may have occurred for them to sell. Odds are high that a friend or neighbour of this homeowner will alert them to this thread, so they’ll become aware of these HHVers trying to gain pleasure from speculating on their possible misfortune.
Shame on these posters!
Month to date:
Sales: 131 (down 47%)
New lists: 384 (up 9%)
Inventory: 2152 (up 82%)
New post tonight.
Easy come, easy go:
https://www.theglobeandmail.com/business/article-statscan-canadians-household-net-worth/
Note that the BoC index is heavily weighted toward the GTA, which was at the top of a major bubble in 1990. Wonder what a BC or Victoria index would look like – ideally carried back to 1981.
I can see that for an investor but it’s very unusual for an owner-occupier, who as many of us have said is most likely to try to ride it out.
Longtime lurker…first time poster. My HSBC variable triggered with this past hike, I had been in talks to increase my payments 20% voluntarily, but that was not going to be enough to keep my timeline in check. So my payments are going up a whopping 46.5% – bit of a shock to say the least.
“why is the owner bailing after such a short time?”
Could be for a variety of reasons but I can see panic selling being one of them
Where do you think the money is coming from for them to buy those million+ houses?
Listing says the suite is tenanted but will be vacant soon. Main appears to be lived in but maybe just staging. But if main was tenanted listing would have said so.
In any case the question remains – why is the owner bailing after such a short time?
I believe TD is one of the only ones that will allow negative amortizations until you reach 80% LTV
I think this has come up before, but do we know what the average down payment % is on houses selling for over a million? Is it the bare minimum of 20% or are most people doing a far higher percent cash down payment?
Rising rates won’t affect people who bought expensive houses as much if most people are only financing a smaller portion of the house?
One of my TD variable mortgages is showing a 53 year amort online. Originally 30 years. Looks like it will let them do 15% a lump sump payment no penalty so I’ll probably do that and then I am guessing no trigger.
You are assuming they didn’t rent it out.
I haven’t heard anything yet. It’s odd as there are a bunch of blank fields when I look at my TD mtg online. I had a quick look at my other variable mtg (where payments change with prime):
Jan 2022, 1.55%, 2:1 payment to interest ratio
Sept 2022, 4.55%, 1:3 payment to interest ratio
What a difference 8 months makes…
They’ve likely paid about 30k in interest to the bank in that period as well.
Any word on how banks are handling triggered mortgages?
Just had some work done 2 quotes for 3000 and 1200 Took the cheaper one very happy to leave 1800 bucks in my pocket
ouch…. but according to some people the owner is likely too busy enjoying life to care about the $2M purchase price.
I’m wondering what’s going on in some peoples heads… 1335 flint avenue sold for 2 million dollars during the peak. A regular house in Langford …I think we are going to see a lot of lives ruined during this downturn
Vic- more like a 200k bath after realtors fees and transfer taxes since it won’t sell at list.
I bought during the peak as well but my payments after suite income are around 1200 which isn’t too bad I suppose . Can’t win them all .
interesting, so they are willing to take a $100k+ bath to get out now…..
No it completed. Interestingly enough BC assessment now shows the “sold” date as the date it went pending, not when the title transferred. I thought it used to be the latter.
Did the Dec 2021 sale fall through?
Yeah, I don’t tend to factor in opportunity cost on stuff because many of the alternatives aren’t ones I’m comfortable choosing (e.g. investing in the stock market).
By no means is my analysis on this comprehensive 🙂
We bought when we were able and ready, and we’re counting ourselves lucky that, possibly, we will have enjoyed historically low interest rates for the entirety of our mortgage.
You’re not likely to see houses sit vacant even if you get a population decline, since there are always renters at some price. Not to mention there are always buyers at some price. The demand for shelter is elastic, that is if rental prices fall, people renting rooms or living with parents will move into their own places and that percolates through the market.
If I can add something from personal experience I bought a foreclosed house once and the electricity was on.
It takes a real exodus like Kitimat saw a couple of decades ago to get empty houses. No empty houses now though.
Perhaps Victorian hasn’t got the economic memo, because I was at rib fest yesterday and it was packed with queues of people ( more than 2X at any other rib fest in the past) waiting half an hour or more to pay $30-55 for ribs.
Why connections and disconnections? Because the stats people rely on data that is dated. At one time I would just ask the owner of the U-haul company one simple question.
Are you moving more people out or more people in?
Patrotz, who is going to pay the electricity on a vacant house then? The banks don’t. They hire a company that turns off the water, electricity and secures the house. The home owner that left might keep the electricity on waiting for it to sell, so maybe the water connections and disconnections might be a better source. Best to turn off the water in case a pipe breaks or the hot water tanks blows if the house is going to be left empty. Few if any are going to keep paying the utility charges for water and recycling on an empty house.
Have you already forgotten about the boarded up houses in the Alberta subdivisions in the 1980’s recession? Or the excavated pits in downtown Vancouver that were left fenced for years as the new condo market collapsed.
Greater Victoria is around the 15th largest metropolitan (CMA) area in Canada.
Colwood and Langford has about 66,000 and I suspect a high portion of that population is employed in some industry related or indirectly related to construction? The months of inventory hit 4.5 in August. Way up from 1.3 in February. The average days-on-market went from 14 to 30 for the same periods. New home sales in Langford and Colwood went from 44 units in August 2021 to 8 last month.
And September is going to be worse because vacant land sales are way down while active listings have doubled since February. There was a 3 to 4 year supply of building lots available in July. Since there was zero sales in August, the MOI is meaningless.
Yes, things could turn around but higher interest rates definitely are effecting new home sales. And that will effect the employment rate. I suspect we will see a “W” style correction in the next few months as prices decline and draw in some of the fence sitters and prices bump up temporarily.
@Introvert
“Also, when you eventually reach the point of having a paid-off house, your housing costs drop substantially. The total of property tax + insurance + utilities + maintenance is lot less than what it costs to rent an equivalent place.”
You’ve dropped opportunity cost out of the equation. For even the most average Victoria home that would easily be $50,000 annually.
That would indicate dwellings are being abandoned in effect, since you need to keep the electricity on for the furnace among other things. Not going to happen.
The stats people do have indicators on population inflow and outflow based in MSP, driver’s licenses, school enrollment and the like.
Home prices don’t magically increase by themselves. There are always precipitating factors such as an increase in economic activity, increasing employment and declining vacancy rates. In my opinion, the massive public work projects such as extending the sewer lines and upgrading the highways were primary causes of home prices to increase. These projects brought a lot of workers to Victoria from the rural areas of BC and Alberta and opened up large tracts of land for development. These workers needed houses to buy and to rent and caused a modern day “Gold Rush”.
And like Gold rushes when the Gold peters out, the workers and speculators will leave, and the economy will decline. I suspect that when our unemployment and vacancy rates increase we and most of the urban areas of Canada will see the beginnings of a glut in housing. I can’t tell you when that will happen as the economics are still good in BC, although in August, BC had the biggest decline in employment and a good chunk of that was in construction. I just have to watch the drop in vacant building lot sales as builders hold off on starting new projects and have to lay off more workers.
Victoria is a very expensive city to live and unemployment cheques are not going to be able to pay the bills for most of these workers. Anecdotally, I have friends that have had no problems finding a contractor to do home repairs just with one phone call and the workers where there in a couple of days notice. That wasn’t happening six months ago.
I would really like to get information on connection and disconnections for electricity as that would be a good indicator of what is happening now and into the future. When disconnections out number connections that would indicate more people are leaving Greater Victoria than moving here.
Story of a listing.
Saanich house
Sold 2017 for $730k
Major renovations
2018: $1.1M listing, no sale. $1M listing, no sale
Dec 2021: $1,1M listing, $1.42M sale
July 2022: $1.38M listing. Now dropped to $1.3M. 51 DOM
Depends on what your rent was and whether you could save more by renting or owning during that time period. Apples to apples (if you were renting an equivalent house during 2009-2014) you’re probably right.
Also depends on if you bought and sold. I think especially in a flat period is not a good time to do the condo -> house move. Just renting is often better than buying a condo and trying to upgrade in 5 years. Without increasing prices you end up paying more to own in many situations.
Yes, it’s hard to assign a monetary value to housing security, but it’s certainly worth a lot.
Also, when you eventually reach the point of having a paid-off house, your housing costs drop substantially. The total of property tax + insurance + utilities + maintenance is lot less than what it costs to rent an equivalent place.
If I was a cash buyer I’d personally wait until next spring and buy then since I suspect prices will adjust further over the next 6 or so months. The pandemic rates were historically low and I would be surprised if rates ever go that low again in my lifetime (especially if BOCs plan backfires and we head into a nasty recession). If I was relying on financing I don’t know what I’d do.
Ive read arguments on this blog about whether it’s a good financial investment to buy housing but these overlook a perhaps even bigger benefit of owning – housing security. When you own you don’t have to worry about being kicked out because the landlord is moving back in or wants to renovate. To me that’s the biggest benefit of owning over renting. Housing security.
I have always been a lot better at predicting the past.
Someone who bought in the early 80’s got both. Think about it.
Yes looking backward it’s easy to pick an optimal time to buy, but you don’t know when the market is going to take an upturn and by how much. You just have to look at the numbers at any given time. Goes for any investment.
Predicting the future is difficult.
It would have been better for me to buy in 2014 rather than in 2009, as prices were pretty flat during that interval.
On the other hand, had I bought in 2014, my mortgage principal would be a lot higher right now and subject to these big interest rate hikes.
Buying when the market is fearful does make sense. During the leaky condominium crisis it would have been a good investment to buy condominiums that few people were willing to purchase. Condos dropped substantially in price but you could still rent them and get a positive cash flow and afford to wait for prices to rebound. The problem was getting a mortgage but if you had cash it wasn’t a problem. Cash was king.
And I suspect that would happen again if home prices dropped substantially as banks would be hesitant about those that wanted to use their lines of credit to buy houses. The banks would consider someone holding too much real estate as too risky as the marketplace would be in decline and experiencing higher loan defaults.
If we did slip into a prolonged recession I would expect the banks to claw back lines of credit and to start calling in short term loans in order to improve their stock prices. If the bank’s stakeholders lose confidence in the bank that can cause a run on the bank. The banks would have to hold a larger amount of liquid assets to prevent a run and that causes the money supply to shrink. Similar to the 2008 credit crunch that affected most of the world. But in Canada the solution was for the government to stuff money into the vaults of banks and expand the insurance of loans through the crown corporation of CMHC.
This is when it paid off to have a social democratic country that bank rolls home insurance as compared to America as their home insurance were privately owned companies that collapsed.
What would have made buying real estate a better investment in the early 1980’s would have been to hold off on buying until after 1986. Then you would not have held real estate during its flat market and would have rode the wave at the beginning of the up cycle. It’s better to have a 5% increase over one year than a 5% increase over 5 years.
There are no bad debt on investments unless you are over leverage, and buys on impulse instead of based purchase price on fundamentals.
Extra cash on hand or rental income can be use to buy stocks. As long as cash flow cover the interests or neglectable negative carrying cost then it make perfect sense to invest on undervalue stocks that have good fundamentals, because the upside is likely to be way ahead of bank interests.
Hmm, I think you missed my original comment “or hang on to cash until the stocks fundamentals meet your criteria.”
It’s really the fundamentals of the asset you’re buying that are good or bad, not the debt you’ve taken on to buy it. For example, borrowing to buy in Vancouver in the early 80’s paid off very well.
Good debt can turn into bad debt if we slip into a recession. If the bank’s stock prices drop then they will increase deposits on hand by reducing lending on long term debt, increase cash on hand, and call in short term loans such as unsecured lines of credit thereby reducing the chances of a run on the bank. This reduces the money supply.
During recessions or worse a depression cash becomes king and all debt is bad debt.
I’d watch the stock price of HSBC as my opinion is that HSBC is the weakest of the big banks and likely the first to get into trouble. Smaller Trust and Credit unions are going to have trouble too if they can not lend out enough money at a higher interest rate than they pay on deposits.
Clarence: “No, we don’t use money in Heaven.”
George Bailey: “Oh yeah, that’s right. I keep forgetting. Comes in pretty handy down here, bub!”
Paying off debt is good, but there are such things as good debt and bad debt. If you have low risk tolerance then pay off your debt, but IMHO it make much more sense to buy when the market is fear full, or hang on to cash until the stocks fundamentals meet your criteria.
Warren Buffett: How To Overcome Fear When Everyone Else Is Scared — https://acquirersmultiple.com/2022/09/warren-buffett-how-to-overcome-fear-when-everyone-else-is-scared/
Legitimate concern re. cash/credit if you are still in the accumulation phase.
We are meeting with our accountant soon to adjust our plans based on the rate increases. The math has changed and all of a sudden it makes sense to invest spare cash in short-term instruments and pay off the mortgage if variable or upon renewal of a fixed term (looking forward) instead of holding cash for renovations/purchases. We are in a similar situation to you most likely with retained earnings held in cash being devalued, while rental income is reduced by increased interest costs.
I expect a lot of people are considering paying down mortgages and moving from investing in the market to fixed term interest-bearing deposits.
Kisber sold… full list plus 1000. Kinda surprising, but not unwelcome.
That’s my understanding. Current interest rate and current balance, 3 months worth.
Marko, remember Hitchhiker’s Guide?
6 emails yesterday to send owner builder study guides to people across BC. Removing the exam would help so many people out and the exam achieves absolutely nothing. However, it employees a completely useless department at BC Housing and that must be worth it. Broken record here but government will do **** all to solve housing problems. Bureaucracy never reverses as is evident but this useless exam. Brought in without any evidence, zero analysis of its effectiveness in the last 6 years.
This seems really attractive assuming no penalty if pulling out at any time after 90 days. Unless you are making offers right now as we speak pretty safe the 90 days works no problem as most completion-possession periods are between 30 and 60 days so even if you make an offer 30 days into this cashable GIC offer you just set the completion-possession 61 days out and collect on the interest.
I am going to go this route for the time being just to hang on to cash; however, if another 0.5% increase I think I’ll max lump sum one of my variable mortgages which is currently 4.31% after the recent 0.75% increase. My worry about paying off debt which I have the means to do so is not being able to get it back again when an opportunity comes up.
Anyone know on a variable mortgage the three month interest payable if you pay it off, that would be on the current interest rate I assume?
No you get the interest as long as you cash it AFTER 90 days:
“Your Redeemable GIC can be redeemed on or after 90 days with no interest penalty”
Re:4% cashable GIC
Read the fine print as you can likely cash it but may get $0 of interest if you do
Congrats! Go do some good!
That’s a really nice place. Your dad must have done really well on the builders exam.
Sweet house! Best of luck to your folks on the sale.
No, that’s not how it works.
“The money” the bank advances for a mortgage didn’t exist before the mortgage started. It was created by the bank from a data entry when the mortgage was created. When the loan is paid off and returned to the bank, the money ceases to exist and the things return to where they were prior to the mortgage.
This is easier to explain with a line of credit. If you borrow $100k from it, the $100k is created money, and the account shows you owing the bank $100k. If you pay it back, the bank just changes the $100k owing to $0 and the money disappears. That $100k doesn’t still exist somewhere after you paid it back. It disappears from the bank’s books.
Of course the bank is constantly creating/destroying money for its customers. Right now there is an overall net large creation of money, because more is being created than destroyed. That could easily change if deleveraging continues. But when you pay them back money, they aren’t lending it out to someone else. Because it never existed prior to the mortgage in the first place.
Who wants to buy my childhood home? Built from scratch by my dad. https://www.realtor.ca/real-estate/24856287/100-lidstone-road-salmon-arm-enderby-grindrod
Does anyone know if lenders that have traditionally said they don’t require requalification for mortgage renewals have started requiring them?
Thanks for the good news. I have cash in that and had been suffering through sub 1% rates, nice to know that’s in the past.
Hubert FInancial is one of a number of Manitoba credit unions offering high deposit rates. The Manitoba government does not legally guarantee their deposits. The risk of not getting your money back is pretty small, but I would keep it in mind.
Nice try Kenny. Two months before your sale, you boasted about how you WOULDN’T sell…
You specifically said (Jan 15, 2022) “Kenny G: …if the stock market falls 20% or 30% like it did in 2020 the only thing I will do is stop looking at my account until it recovers”. https://househuntvictoria.ca/2022/01/10/where-buyers-came-from-in-2021/#comment-84490
Anyway, I never believed you in the first place about you buying and holding stocks through downturns . And so your recent revelation just confirmed that.
Thanks for the discussion.
We pulled all of our investments out of HSBC a couple of years ago. One of the few things that we could do to say that we did not agree with China’s actions re: HK
“It is with delight that I see you that you didn’t “walk the walk”, and have sold your stocks after all.”
‘
‘
I never said you buy and hold forever, I was sitting on some very large gains and took advantage of a rebound in the market to sell in mostly tax sheltered accounts. I rarely try and time the market and still hold my positions in taxable accounts but I got lucky this time to my delight 🙂 as the market and the positions I held tanked after a rebound in March.
Interesting development In Ucluelet. Only four people ran for council for the four spots available. I am from now on Councillor Ukeedude.
Marko – HSBC has a 4% cashable GIC offer right now – cashable after 90 days – https://www.hsbc.ca/investments/gic/products/redeemable/
I’m not that guy, but I don’t think there is any thing wrong with borrowing against your house to invest in the stock market?
Similarly many people leverage their property by borrowing against it to purchase more properties, or people who chose to invest in the market or real estate instead of paying more toward their mortgage when they can.
It is all about risk tolerance and familiarity. Like others that have high risk tolerance, I use my HELOC to invest in the stock market, and will be looking at increasing my position in non registered account after the US midterm election.
Here is a tip, Enbridge (ENB) is currently paying 6.39% dividend.
Set up account with TD Direct and buy their ISA fund. Currently pays 2.85% with no withdrawal penalty. Works just like a savings account that you can add or withdraw cash. Rate increases whenever BofC raises bank rate.
https://www.td.com/ca/en/asset-management/additional-solutions/
Are the rates comparable or is it more?
Still got a little ways to go before it hits that August high.
Haven’t considered Hubert, that looks to be a better product overall but very high probability I will need to funds between 3 and 6 months so losing the interest for the quarter makes it pretty much a wash against 3% and not losing interest (after 90 days). Also, I have accounts set up with the credit unit so a bit less work.
Marko Juras – Have you considered Hubert financial 1 year term deposits? 4.25% and you can withdraw but if in between quarters you lose your interest for that quarter, which is the only downside I can see.
Marko, which credit union?
Also, I’ve been looking into products to earn interest on cash while keeping liquid if an opportunity arises. Best I can find so far through a credit union is 3% you can withdraw at any time but needs to be in the account for 90 days to earn the 3% (on those 90 days) and then going forward after the 90 days you are earning 3% and can withdraw at anytime or can keep it in the account for up to 1 year.
Thanks — that was my guess, but wasn’t completely certain.
Hoping to be able to pay out the mortgage at renewal in two years or, worst case, do a one-year to finish it off.
So far so good on the start to fall season listings.
Whateveriwanttocallmyself – You hit the nail on the head with your post. Some people are in for a shock a year down the road…
They just lend the money out to someone else.
After tax to boot.
I would have to pay capital gains, real estate fees, etc. Rents are high and I am bullish on real estate in Victoria once we weather this patch over the next couple of years.
With the flavour of municipal politics the odds of a condo being vacant are close to zero.
Another alternative would be get variable, sell condo and put the proceeds in a GIC. Will depend on cap rates for the condo and the potential for a special assessment.
Right. It’s interesting, with any pay down of a bank loan, that money is “destroyed”, as a reverse of the process where it was created by the bank when they lent it to you. That’s de-leveraging that makes money more scarce and tends to raise rates further.
Mortgage under my holding company (which owns the condo) versus my personal name, but yea still had to qualify with basically everything including personal income.
Yes, hard to argue for a better no risk return elsewhere.
What’s the difference in a commercial vs residential mortgage? For example, do you still have to qualify based on your personal income, pass stress test etc.?
Yes because the loan expires at end of term and technically the whole balance becomes payable.
Yes. No letting involved. The full balance is due unless you renew. Paying out the mortgage is the default option
Is that how it works — at renewal, you can opt to pay off the principal entirely?
Pretty close. 17M deficit
One of my commercial mortgages came up for a rental condo. Currently at 2.7% with TD.
For the Oct 1st renewal they offered me
1-year fixed at 6.76%
5-year fixed at 6.40%
Variable at prime (5.45%) + 1% = 6.45%
Opted to pay it out.
Until our rankings come out, here’s a list of who’s in favour of missing middle in Victoria: https://twitter.com/bromptonymous/status/1568009270213644289?s=20&t=meHKiUs38mgaSG7uaaRY2A
Potts is not running again.
Isitt has the worst housing record on council. Not just market housing either, he voted against tons of rentals and below market affordable housing. 100% left NIMBY
Fantastic! Looking forward to that list.
The only chance is electing a pro-housing council that will immediately pass MM when it comes back to council at the end of the year (along with enacting a ton of other zoning reforms). We’re ranking the councilors on housing and raising money to spend on advertising (both paper and onine) to distribute the results as widely as possible for the core munis. If anyone is interested in donating, you can do so here: https://ko-fi.com/homesforliving Please read the donation rules first.
Adjusting one’s spending habits isn’t as easy as throwing a light switch. People will continue to spend at their previous levels into the immediate future as they hope that the current conditions are temporary. Not until they see the red ink will they begin the process. As It takes some time before one faces the reality of the new paradigm and change spending habits.
My opinion is that people use credit to augment their life styles. They don’t safe up to purchase goods and services but use their credit cards and lines of credit to receive immediate satisfaction. Changing the mindset to postponing immediate satisfaction and to become a saver isn’t easy. Add to that that it seems every time you cut one expenditure, prices for the other necessary goods, like food, increase and it is easy to get frustrated as one’s costs are not declining and instead more financed debt is carried forward.
So my opinion is that instead of paying those debts off at the end of the month more people will carry some of their debt over into the next month (s) and eventually might only be able to cover the minimum credit payment each month. Any good hypothesis / opinion should have a way to falsify the claim and that may be illustrated in an increase in the bankruptcy rates over the next year.
Precisely, that is for my amusement.
What works for me is just to follow a preset financial plan on investing. The one I use for stocks is based on the Canadian Couch Potato model. I don’t sell in downturns, I continue to buy what I can afford reasonably and ignore what the market does. It really depends on how long you have until you start to withdraw though. We have more than 15 years so are less sensitive to the downturns.
I really recommend a written financial plan that spans current to end of life. We did ours ourselves based on a template, and then went over it with our accountant to minimize tax and inheritance issues. Lots of info available online.
Says the person that went out of their way to dox people on here, sorry, who has too much time on their hands and needs to get a life?
Modern times
Exactly, people that take the back and forth on this forum seriously or gets offended needs to get a life.
So many experts live on the internet and you can turn them off by the flick of a switch.
Ha!
It is with delight that I see you that you didn’t “walk the walk”, and have sold your stocks after all.
You used to lecture us on investing, by telling us about the worst kind of investors – “amateurs” like doctors, lawyers that managed their own money. The problem being they got nervous in downturns, and sold. And then they didn’t know when to get back in because you can’t time the market. And the best kind of investors were people like you – long term buy and hold . With “strong hands” that never sold in downturns – you boasted how you didn’t even know how much the market was down in downturns because you wouldn’t even bother to look at it. And now we hear that you “exited most all of my non taxable portfolio back in March”…
Maybe you should take the same advice you gave us, which was to find a professional to manage your money. That will be someone for you to phone when you get nervous and want to sell. The 1% per year you pay him will be worth it for that alone – you told us all that too.
Next Victoria council to decide fate of ‘missing middle’ housing initiative
https://www.timescolonist.com/local-news/next-victoria-council-to-decide-fate-of-missing-middle-initiative-5798023
Who will try to refer it to the next council.
Make that 4.2% with the strong open this morning.
Long haul game just like buying a rental property. My TSFA is down 5.3% from all-time peak. The dividends have helped to mitigate the downturn. However, even with the 5.3% down from all-time peak up well over 100% from max contribution room. I am not going to do it, but I wanted to I could sell 200k right now and pay down my mortgage.
Would I be borrowing at 5% against my house right now at this exact moment to enter the stock market. No, however if you did it the last 12 years you did really well and you have an opportunity to exit right now at a relatively small pullback and pay down debt.
Kenny g Yes leveraging has worked well in the past and I will be back at it in a year or 2 looking for value
I agree that Alto is the better choice on housing. For councilors I’d appreciate hearing other’s views. We are losing most of the incumbents. Including ones that were relatively solid on approving housing (Loveday) and confirmed NIMBYs (Young)
What I think so far:
Of the incumbents running again:
1) Issitt is a grandstander and I will not vote for him. Even if you support his politics/ideology there will be more effective candidates that will actually make a decision rather than prescribing more consultation as the solution to everything.
2)Potts is part of the Together Victoria group that voted against a lot of housing. Don’t know much about her but inclined to NOT vote for her
Of other candidates
1) Marg Gardiner’s claim to fame is as queen of NIMBY with the JBNA – definite no
2) Dave Thompson comes recommended by several friends and his platform looks reasonably positive
Anyone have views on some of the other councillor candidates?
“Curiously, we’re not hearing much from the guy who advises folks to borrow against their house to invest in the stock market.”
‘
‘
Sorry to disappoint you by not posting lately, I lurk from time to time. If you review my previous comments which some people seem to have time on their hands to do you will see that I exited most all of my non taxable portfolio back in March as well a leveraged portion, I also called a housing top at that point. Yes the markets haven’t been great this year with the TSX down about 8% ytd before dividends. Nasdaq down substantially more. As I mentioned earlier borrowing to invest isn’t for everyone, but in moderation is still a sound strategy.
I think these people are BANANAs (Build Absolutely Nothing Anywhere Near Anyone), they don’t seem to care strictly about their backyard.
Yes. And I think a lot of homeowners are doing this now.
Yes, even if you can afford to pay it it is still a loss to your savings and the plans you might have had for the funds.
Doesn’t work that way. Universities receive provincial per student grants for domestic students, and the maximum number of domestic spaces is determined by provincial funding. Universities don’t get provincial funding for foreign students, so they can admit as many as they want. Eliminating foreign students would not create more domestic spaces.
Missing middle vote is postponed until after the mid- October election. Such a strange process thus far.
No rental Totoro. Although I’ve been trying to buy a house with a suite to rent for about three years, LOL. The first purchase was with my ex, then sold 15 months later to buy my current home when we moved apart. House price/payment affordability is always relative. Yes, I bought a home a shade under $500,000 with 20% down (unheard of today, I know), which was my cap at the time in 2016, but as the single-wage earner covering the mortgage, even having had some increase in salary in the almost 7 years since I bought, it’s a bit of a stretch to cover the now $400 and soon to be almost $500 a month increase to my mortgage and it’s sad it is all going to interest. I’m sure I’m not alone in feeling the pinch!
The people who lump Lisa Helps in with the rest of Together Victoria really haven’t been paying attention. Stephen Andrew has voted more like Issit and Dubow on housing. I regret voting for him once, but it definitely won’t happen again.
There are 133 building sites listed for sale in the Core, Westshore and Peninsula but there have only been three sold in the last 60 days. Seems like the contractors are just working to finish up their jobs and then take a wait and see attitude to what is happening in the market. Lay offs will be coming soon.
The only serious candidates so far are Marianne Alto and Stephen Andrew. Marianne has a better record on housing. Stephen will take whatever position he thinks will get him the win, and in this case he thinks the NIMBY vote is more powerful than the youth vote.
Who’s the Mayoral choices? I honestly don’t believe Steven Andrew will serve the younger generations well. He will talk the talk but backs Nimbys. Also Isitt for being so against any market housing, sure is doing a great job of making it worse for the student crowd.
Fixed this for you ^^^ because grammar and being accurate can both be tricky
I look forward to my DoorDash driver dropping a RE biz card in with my delivery
On the plus side of mmhi being deferred maybe this will invigorate and mobilize more prohousing people to come and vote especially being so close to election. If this motivates a few more people and those few more people are the difference between 5 prohousing seats over 4 then this will actually have worked out.
If the government’s policy is to increase interest rates to the point that national home prices reduce by 20 to 25 percent that would go a long way to improving “affordability”. Whatever that means?
Home owners would still continue to make monthly mortgage payments given that most of the increase in prices has been over the last 24 months. So you won’t see home owners walking away from their homes in significant numbers.
But it will be tough on jobs in the finance, insurance and industries associated with real estate as unemployment will be higher in these sectors as new construction is put on hold.
Just a few who wants to borrow against their house to invest in more houses.
Curiously, we’re not hearing much from the guy who advises folks to borrow against their house to invest in the stock market.
Yea, it’s a bit simplistic. I think others understand that normally, the link between changes to economic activity and the overnight rate are indirect but nevertheless there.
As you say, if RE tanks, that doesn’t cause the rates to fall. It’s the knock on effects on the economy (ie the multiplicity effect in reverse) that theoretically weigh down growth, thus inflation, thus rate hikes.
So I think you can make the argument, loosely, that a falling or collapsing RE market will ultimately be compatible with rates that hold or even fall. That connection is liable to be especially strong if the GDP is over-reliant on the RE sector, which Canada currently is.
Personally, I think they should hold and assess the effects of the hiking they’ve done to date. I don’t agree with the analysis that states, “the overnight rate needs to exceed the inflation rate to solve the inflation issue”, because that ignores the effect and degree of debt obligations currently sitting in the financial system. The economy has demonstrated several times in the last number of years its elevated sensitivity to rate increases.
The real, more unspoken risk is stagflation, especially if inflation remains where it is. I’m not sure whether they will be able to get to 2%. On the other hand, one perhaps isolated benefit would be in having it run hot (3-4%) over the next few years…as it would provide a degree of debt relief in real terms.
Referred to the next council. Ben Isitt and Stephen Andrew were against MM, the others don’t matter because they aren’t running again.
There seems to be a lot of wishful thinking by Canadians who have only known low interest rates. The hope is that as the real estate market tanks the BOC will stop raising the overnight rate. Or if the economy dips they will call a halt. The BOC prime mandate is to keep inflation under control and other factors like the economy, real estate and personal finance situation of Canadians are secondary. Below is a graph of inflation in Canada since 1966. The second graph is the BOC overnight rate (which is currently at 3.25%) over this same period. We have a serious inflation problem and it will be stubborn due to global factors. Anyone who has seen this movie before knows what is going to happen. The days of low interest rates are over. People need to adjust their spending habits and start saving again.
This current council is so ego-diseased they can’t see how damaged their reputation and how generally embarrassing they’ve become in the public’s opinion and there’s even a report they’re actively postponing coming to council that backs all of this up. They should really just bow out and let a new council readdress this one. As much as the region needs it, the buffoonery of this group will overshadow any possible good it could result in.
I am saddened that with the passing of her Majesty we have come to the end of the second Elizabethan era.
Yeah, there have been problems mostly for Universities in the States that have come with too much foreign student enrollment. The problems I’m aware of did not involve crowding out domestic students per se (although perhaps that was a secondary issue) but were rather financial. Because international student tuition is so much more expensive than domestic (28k vs. 6k at UVic, worse in the States), small fluctuations in international enrollment lead to large fluctuations in University income. Risky business.
Doesn’t look good for missing middle. Council currently deliberating
Looks like they’ve added about 4000 spots in the last decade, so I don’t think they’re crowding anyone out.
That’s about an extra 5% deficit. (Comes out to ~ 20-25m out of an operating budget of ~ 450m)
Problem is, that implies a deficit for each of the next three years too, since the “missing” students would have been here in 23/24, 24/25, and 25/26.
I’m still curious whether UBC/SFU have similar declines this year. (For example if the decline is largely due to Chinese COVID response it should lead to similar impacts for all three..)
I’m honestly surprised the drop is that small, especially with Chinese domestic Covid policy being what it is. Be curious to know what the country breakdown of that data is, although that may not be released publicly.
I don’t necessarily think that a drop in foreign enrollment is always a bad thing. I don’t know what the “ideal” ratio of foreign/domestic students is, but a university that becomes addicted to foreign cash resulting in crowding out domestic applicants, at least to me, is never a good thing.
Interesting – UVIC has 22K students (according to here https://www.uvic.ca/about-uvic/about-the-university/index.php) and 4000 of those are International (https://www.uvic.ca/about-uvic/about-the-university/international-perspectives). So 17% of that is 680 International and that means 18000 domestic at 3% is 540 students. So 1220 students total. And like you said thats big money for the University. I wonder what percent of those aren’t coming due to living costs.
Thanks Leo!
Like Jack Nicholson’s Col. Jessop in “A few Good Men”.. we need you on the wall! https://youtu.be/9FnO3igOkOk
The money I got from renting our basement suite was seriously the easiest money I ever made (not counting property price appreciation). Granted a few stressful moments along the way.
Apparently -17% international students ($$), -3% domestic.
I’ve deleted a number of comments. Please be nice, or I may need to put people on the review list which means all your comments go through moderation first
Found it. First part is here:
https://higheredstrategy.com/laurentian-blues-1/
with many more parts there after. (Just follow the “Laurentian University” tag at the bottom of the post if you wanted to keep going.)
Yes, although the main differences aren’t the ones you say but rather have to do with fiscal practices, accountability, and transparency. (A hostile governing party dropped the axe, yes, but, metaphorically speaking, Laurentian had found a chopping block, laid down on it, and called the axeman for a visit.)
There was an excellent several-part summary of what went wrong and what it all meant that got distributed in our Department last year when all of this down.. I’m trying to dig it up and if I find it I’ll post it.
Any idea how much? Could help to ease rent prices increases.
Very dissimilar in a number of respects, not the least of which is that Sudbury isn’t Victoria and the area doesn’t vote for Ontario’s current governing party.
They probably want to extra cautious after what happened to Laurentian University. However, it does help explain all those SFD rentals in Gordon Head dropping their prices now.
Intelligence is normally distributed, but I would say that tenant quality isn’t. 🙂
Hi Leo,
Do you mind dropping the link for that? Those are the kinds of things that don’t get discussed in university-wide emails. 🙂 I’d also be curious how UVic is doing this Fall relative to UBC/SFU..
I think you’re right about that. I guess landlords who didn’t have a mortgage might still have been relying on the rental receipts to live on, though I realize that’s a first-world problem (but then most of this is)
Peter’s run down is pretty accurate. And it is work to save up to buy a home as any homeowner who has done this knows. It is also risky to be a landlord and it is often cash flow negative in Victoria, sometimes even accounting for principal pay down which you pay tax on at your highest marginal tax rate.
How well you do and how much work it is largely depends on your skill in risk management and how well maintained your properties are and remain. It is a fair bit of work when tenants change.
It is more akin to self-employment than it is to a salaried job but it really is an investment strategy rather than employment.
Big enrollment drop at UVic. Hiring freeze + large deficit this year they need to make up.
Just like how studies indicate that a majority of people think they’re smarter than average 🙂
It seems like you consider yourself a clairvoyant.
Maybe I’ve been a tenant elsewhere before? Look into your crystal ball and let me know.
Even when presented with everything Peter described you still come up with the lame response that “becoming a landlord is hard, but being one isn’t”. I’ve had the same 20/60/20 mix Peter described. I’m still in touch and even friends with some of the great 20%, give references for the 60% and am still paying off damages from the awful 20%. It’s not so simple James and maybe one day you’ll spend less time complaining on a real estate blog comment section about what you deem as a fair raise in your BCGEU job and go do something about your situation if you’re clearly so unhappy. In the meantime your angry, juvenile, unhinged comments just further confirm that you have no idea what it’s like in the real world of property ownership.
It seems like you consider yourself a model tenant and you may well be one. But most tenants consider themselves to be good tenants.
Perhaps Peter‘s tenant with the messy dog also considered himself to be a good tenant. In terms of being judged a good tenant … “it’s not over ‘til it’s over”. Many of the tenant problems are undisclosed and discovered as “surprises” after the tenant leaves.
Shipping costs may have declined, but business still have to clear the old inventory that was purchased at a higher price. Most businesses will not react until the competition starts to lower prices.
@Peter, a lot of that seems like “becoming a landlord” rather than being a landlord. I honestly understand that there can be shitty tenants and they’re the hassle, but my landlord has barely come by the house I live in, certainly less than once a year, and their investment is cleaner than the day I arrived. Anyway, Up and coming assures us that they never rent to shitty tenants, so clearly has no hassles, and can spend all of their time not contributing anything of value to this message board, as well as some other facebook groups apparently.
Also correct me if I’m wrong, but weren’t you allowed defer your mortgage?
Excellent post but there are more tenants than landlords so the politicians will dump on you.
Great post Peter! That says it all. My hat’s off to the landlords out there that have to deal with all this.
James, for God’s sakes.
I can only tell you some of my own experiences as a landlord. None of this is all that bad, I get that everything is relative while people are desparate to get a roof over their heads, but now that I don’t have to, I’d never, ever do it again. This is sort of an amalgam of rental experiences:
Spend a few years saving up minimum downpayment. No holidays, drive 10 year-old car, maintain it yourself, save, save, save.
Buy older place you could then finally ‘afford’ to reach to buy. Taking into account mortgage and all other costs, meaning you will be falling short on cash-flow (or call it what it amounts to, subsidizing the tenants) to the tune of $X thousand for #Y years.
Put in sweat equity to repaint and do fix-ups sufficient to get the house in better rentable shape. No income at all during this period of course.
Big day arrives and meet with prospective tenants. Weed through all the undisclosed landmines – one was a hoarder, one had been in a cult, one had an undeclared bankruptcy (I’m not making this up, and I’m also not judging them, but this part of the process is about risk mitigation, not social justice).
Property is rented – yes!
Then you get to your day-to-day stuff, which is as you intimate, not that bad, but only IF the tenant is a decent, reasonable individual. Nobody minds dealing with normal-course repairs and maintenance with reasonable people on the other side. However, some things you do mind:
I really could go on and on. Over 15 years or so of doing this, to be honest we had probably 60% of renters being ok, 20% great to deal with, 20% terrible. Trust me, dealing with all of this is a real job, and it takes its toll. If you’re not treating it as a part-time job, you’re not doing it right, and your property will suffer, quickly, as a result.
So then ok, you finally get cash-flow-positive – yes!! And then you get:
rental restrictions that are capped the first time inflation seriously shows up
lots of musings about closing the “loophole” of going to market rent between tenants
laws changed to make it very difficult to deal with or god-forbid, evict, a problem tenant
So finally you sell – yes!!! Pay your taxes, that’s fine. Ignore all the sh#theads who just want your money because you’ve made a “windfall profit”. Sigh and invest elsewhere, move on and simplify your life and never have to deal with tenants again.
Heaven
From the Feds to the provincial government handing out inflation affordability handouts fighting every move of the BOC. Trudeau has to go back to living like a teacher rather than a billionaire with unlimited coffers. Stephen Harper days just keep on looking better and better.
And so it begins. I was wondering which central bank would blink first. Looks like it might be Australia … is BOC next?
Australia central bank (reserve bank) delighted their stock and bond market, by hinting at a pause. Their rate is at a timid 2.35% in the face of 6% inflation.
Result is AUS stocks/bonds up, and AUD down. AUD/USD is low at $.67 usd
Here’s what they said. As usual, you need to read between the lines, in this case the bolded parts pointed to a pause for the markets. For example “there are lags” is code for “we are slowing down to wait and see”.
“In a speech on the policy outlook, Reserve Bank of Australia Governor Philip Lowe said further rate increases would be needed to contain inflation but the RBA Board was not on a pre-set path and was aware rates had already risen sharply. This was followed up by a speech referring to a “flexible policy” looking at both economy and inflation as a guide to rate hikes. https://www.rba.gov.au/speeches/2022/sp-gov-2022-09-08.html?&utm_source=twitter&utm_medium=social&utm_campaign=speech-gov-2022&utm_content=anika-foundation
“We are conscious that there are lags in the operation of monetary policy and that interest rates have increased very quickly,” said Lowe adding that he recognizes that “all else equal, the case for a slower pace of increase in interest rates becomes stronger as the level of the cash rate rises.”
It doesn’t work. My neighbours invited some people over for a barbecue. The subject of interest rates came up, and four people were sent to Royal Jubilee with severe spatula lacerations.
+1. Might be time to step away from the keyboard and, as able, enjoy yet another beautiful day..
Still nothing hey? Can’t read or respond. Pretty useless.
Consumption has fallen off in part due to the higher costs leading to the lower cargo volumes and the drop in rates. Typically these movements in shipping are the leadmark to a recession. Just more of the follow on inflation fun. There will be a number of businesses stuck with over priced inventory that they can’t move and there will be opportunities to get nice discounts as they are forced to make write downs.
I agree it has been going on for a while. James has been trolling people for years here. He has been kicked off every other forum imaginable. HHV is all he has left. It’s either that or it’s Leo/Juras/Barrister/Introvert’s alter ego that they are trolling with to get more interaction from visitors here haha. I often wonder if this whole forum is just a scheme by one person wearing many hats. Ponder that!
But I bet businesses will take full advantage of the perception that shipping costs are still astronomical in order to maximize profit margins for as long as possible!
I’m not very active here and I’m not in the real estate biz. I’ve lurked for a while and posted occasionally. I’ve noticed an ongoing feud between a few regular posters and it seems to be devolving to the point of name calling and using curse words. Go ahead and hate each other but please keep the comments civil so everyone can enjoy this space. Ty
This reads like a Vancouver Island Housing Market Facebook post, such a typical ignorant renter mindset
I actually am not. Up and coming & Realist clearly are though.
They’ve also been saying for a decade that rates were going to go up.
This is hilarious. Obviously a case of “those who can, do; those who can’t, teach” as the amount free economic and housing advice coming from someone that has zero grasp on what it would involve to be a landlord let alone just a property owner all lines up. I look forward to your next post about interest rates, the CAD, inflation in the 80s, CPI, etc.
No shit – I’ve said that all along. But when a (formerly) trusted institution says to expect rates to stay low for a long time, consumers might listen. Just sayin.
Right! Time to disengage from these pointless repetitive discussions.
The embittered millennials and hard knock boomers can duke it out with the last of the permabulls.
I think you are confusing a job with an investment. Use of capital is not the same as working for a wage. You might as well say that someone who has stock market investments can’t comment on your salary because they don’t work for the gains. I thought you had investments as well?
In order to have any meaningful information you’d have to add the labour to to amass the capital to invest, subtract lost opportunity costs, and then consider the time required to operate a rental property – which is different depending on the size and condition of the property.
Go on then. List some things. What do you do on a daily basis?
As I’ve expressed before, I have zero confidence in the government to do crap all when it comes to housing. Why are rents so high and going up? Super simple econ 101, supply and demand (more people want to live here than we have housing for). The government is simply ignoring the supply portion. All the 2% does is play musical chairs and doesn’t solve any fundamental problems. You can blame investors and everyone else but reality is there are no places in mass sitting vacant. Whether it is owner occupied or rents for the most part housing is occupied in Victoria.
Let’s help the poor deserving tenant and punish the greedy landlord but in reality will end up with less rental supply and those tenants that don’t end up in long term rentals capped at low rate increases will end up having to outbid eachother at ridiculous prices on the limited rental inventory available at market.
What confidence does it give to an developer/investor to spend 2-3-5 years fighting NIMYS/local municipality such as Victoria or Saanich, plus two year build out, to have the rents capped way below inflation. Might as well just sit on the cash and not go through the stress and agony.
The 2% is just an absolutely terrible policy and this is coming from someone who has never given an existing tenant a rent increase.
Also, where is the motivation to maintain a property whatsoever. At 2% as a landlord wouldn’t you want to do as little as possible in the hopes that tenant leaves?
I think a better approach would be don’t cap rents, let the market do its thing, allow for more quicker construction, and help the tenants that cannot afford market with subsidys for rent or have the government build truly affordable rentals.
Shipping costs have absolutely plummeted
No, sounds like a you problem.
Historically, no. But house prices are just a smidge higher now…
Just look at Leo’s affordability graph to see we’re not far off the all-time worst affordability of the 80s (maybe we’re equal with the latest bump).
Pretty sure my TD variable has ‘triggered’. What started as a 25 year amortization had grown to 60 and now it just shows blank for the amortization field. Mortgage value is under half the current property value, so no where close to the 80% LTV limit. So far no changes to payment. I’m guessing my mortgage balance will be getting higher from this point on (although I do plan on increasing payment).
I remember people here giving you shit when you suggested something like 5% mortgages….
Just for the record, a five year fixed for 6% is not a high rate mortgage. If anything it is about low average historically. Considering what inflation is running at why would I lend you money at six percent?
Also anyone interested in what exactly Volcker did in the 80s i found this article on it – https://www.vox.com/future-perfect/2022/7/13/23188455/inflation-paul-volcker-shock-recession-1970s
As you may have heard in Powells last speech the US tried unsuccessfully to reduce inflation for many years prior to the spike in rates. President Carter promised to find someone to fix inflation and appointed Volcker in August of 1979:
“After a couple of modest increases in the first month of his (Volcker) tenure, he called a surprise meeting on October 6, 1979, and set the Fed on a new, dramatically tighter course of monetary policy. The Fed would allow a much wider band on interest rates, effectively allowing them to go higher than before, and announced it would recalibrate policy regularly in response to changes in the money supply. If the money supply was growing too quickly, the Fed would crack down harder.
That month, the Fed’s interest rate was set at 13.7 percent; by April, it had spiked a full 4 points to 17.6 percent. It would near 20 percent at times in 1981. Higher interest rates generally reduce inflation by reducing spending, which in turn slows the economy and can lead to mass unemployment…
The approach took two tries to get its intended effect. Volcker’s tightening slowed economic activity enough that by January 1980, the US was in recession. But Fed interest rates actually began falling sharply after April, which limited the effectiveness of the Fed’s anti-inflation efforts. The Fed tightened again after that and sparked another recession in July 1981. This one was far worse than the first; while unemployment peaked at 7.8 percent during the 1980 recession, it would peak at 10.8 percent in December 1982 in the middle of the 16-month second Volcker recession. That’s a higher level than at the peak of the Great Recession in 2009. Over the course of the 1980s, this policy regime would become known as the “Volcker shock.””
So I would guess even if inflation starts to come down, if they are taking history into account, they will keep rates high until they are sure we are in a good spot.
I would be curious to see how many mtgs during the pandemic circumvented the stress test. I’ve stated before that my Big 5 broker told me if I had 20% down that would qualify for more mtg. I asked what the difference was and he noted that for insured (less than 20%) down that CMHC (or one of the other insurers) had to approve the mtg and they followed the rules as designed. If there was 20% down and no need for oversight then the banks were commonly increasing your debt servicing ratios to lessen the impact of the stress test AKA helping you qualify for more mortgage. He said he figured nearly 50% of the uninsured mtgs he did during the pandemic had these requests attached to them. Not sure if his book is reflective of that bank in general or the larger mortgage world but I suppose we will see a fallout if that was a bigger part of the books then the banks would like to admit. Also presumably those requests would have been mostly for fixed mortgages where the impact would be more noticeable – which means we would need high rates for a few more years to come to see those impacts.
The worst for me is that I cannot take an extended vacation without having to get someone to look after the house in case something goes wrong. Dealing with issues while I am in town while annoying is tolerable. I suppose I can just get a property manager but that would eat into the cashflow.
If you bought 7 and 8 years ago then your buffer is far lower house prices, any increase in income, and if you are renting out, much higher rents.
It is impossible for anyone to predict the future and that goes for central bankers as much as anyone else. If you want a guaranteed interest rate, take out a long term mortgage. I’m pretty sure that a year or two ago you could have taken out a 10 year term at rates well below those for a historical 5 year term.
People borrowing short term are taking on the risk of rate increases and if it doesn’t work out for them I don’t want my tax dollars bailing them out, thank you. I’ve already helped them out by getting below inflation returns on my savings. That said I’m not opposed to the kind of deferral we saw in 2020.
Sure thing. I don’t anticipate it getting to that point either.
Prices have dropped to keep affordability roughly constant since April. The +75bps doesn’t move it much in September if prices stay the same. Of course this is with some assumptions on incomes
I doubt if anybody is going to get bailed out nor do I think that a lot of people will need to sell. I absolutely have no prediction of future rate hikes but another hike of .75 before the end of the year would not shock me at all.
Lets watch to see what the US Fed does. ( I am sure that the US Fed is extremely concerned about interest rate hike effects on the Canadian Housing Market.)
Nice!
I picked up nomination forms to run for council in Ucluelet. It is meagre compensation but it will be my side gig to lessen the impact of these rates and also give me an opportunity to advocate for affordable and missing middle housing here. Other than that I gave up my vehicle wrangled a couple more house design projects and sold all my music gear. Dusting off the pandemic food stuffs is next and a burning barrel and some home made fingerless gloves. Im not sure any of this was necessary but better safe than sorry.
It’s not that hard. You just have to use words like if, should, could and may. For example: “if the Bank of Canada increases the overnight rate to 6%, then most people should be ok.”
Hope this helps.
I sure hope that’s someone’s idea of a joke! I can see maybe one more increase (hopefully the smallest of possible increases) in October because it will be too soon to really judge any effects from most of the increases, particularly this last one. But I sure hope we don’t see any in December. If there are still increases in the spring, or rather the new year into spring, I might also have to put someone in my spare bedroom, ie a homestay student (have done so in the past short-term) as millenialhomeownerX2 mentioned. I already have a second part-time job on top of my full-time one, so not much room for a side hustle to keep up with my adjusting variable rate mortgage.
As for the stress test which is supposed to “protect people” from overextending themselves and the dangers of rising interest rates, I think a lot of people forget it hasn’t always been there. Our memories are so short. I bought in 2015 and again in 2016 only 15 months later. No stress test in sight as it didn’t come into effect yet for the first purchase and it was an uninsured mortgage for the second, when it was in effect but only for insured mortgages. And the idea was that the rate was higher than rates would reasonably be expected to go. I’m at 4.35% now up from 1.35% (renewal almost a year ago). Just about the bottom in terms of rates when I refinanced, although I’ve heard of some lower, but I imagine there are people already at 5.25% from increased variable rates and then some.
Also, not everyone picked a variable for the rate/payment, some people who have been trying to buy a new home and knew they would break a fixed chose it for the decreased penalty, as did I.
When you’re trying to read in the things you want to see, there’s no amount of clarity I can add to fix that.
Foreclosure is the last possible negative outcome, and there are many things that can and should occur way before that (refinancing with adding an extra 5 or 10 years to the amortization, making an additional lump sum payment increasing the monthly payment, or just selling). Remember some lending is only pegged to the BoC rate (mostly just a signal or a reference) and it’s the bond market determines what the loans will be set at and if the BoC keeps their rate artificially low, they have to undertake QE to provide the liquidity for the low lending rates because the bond market isn’t doing it, so to hold that 2023 thought on low rates would take a massive rate suppression effort that would end in just adding to the current problems. As well, offering bailouts too early just ends up in it being abused or turned into a subsidy.
February CPI would be available mid March. March CPI would be available after April 1, when the wage increase takes effect.
LoL. James you have no idea. If it’s so effortless why don’t you outbid VicRE on his Maplewood property, kick up your feet, and watch the easy money flow in.
Oh I see. Well consider taking the time to edit your comments for clarity before you post them.
If it gets bad enough, I would support some sort of bail out for first time buyers at risk of foreclosure. The Bank of Canada pretty much guaranteed low rates until 2023 and it seems unfair to hold working people accountable for the mistakes of central bankers.
What’s the extra work? You have to occasionally call a plumber? or is it difficult stuffing your money under your mattress? I sure hope it doesn’t involve actually reading, because it’s clear you can’t understand that it’s not an 11-13% YEARLY increase.
My apologies, I was looking at Canada CPI, not BC specific, which as you say is 3.7. I still have no idea why you’d use February.
https://www2.gov.bc.ca/assets/gov/data/statistics/economy/cpi/cpi_fiscal_year_2021_2022.pdf
I took the bolded part of the BOC statement as an indication of a brief pause. “We will be assessing” seems like a pause to wait and see to me. We will very likely see lower inflation by end of year (sites like businesscycle.com have future inflation gauges that predict this), so we may be looking at 5% inflation by then. At that point, I think housing prices (and the overall economy) will determine what the BOC does. If housing (or economy) is tanking , they’ll pause. If there’s some kind of rebound in house prices, they’ll keep the rates rising.
If that’s correct, I wouldn’t expect more than 25 basis points by the end of 2022.
BMO
https://www.bnnbloomberg.ca/economics/video/we-see-boc-hiking-rates-as-high-as-6-bmo-s-earl-davis~2483764
Alexandracdn, it’s never a good idea to guess people’s age!
Quite the opposite, my point is that a 6% overnight rate shouldn’t be that big of deal for most. I never said it was guaranteed either and that it could possibly go the other way and back to stimulus with rates held low with QE, but it was just more likely to continue a steady progression upwards because of the external pressures the BoC needs to deal with. That all can change and it is very unpredictable (that disruptive part I mentioned before). Overall, there are just more important things than people that willingly borrowed too much and refuse to adjust their habits and expect a government, business or a societal intervention to prevent them from even having to face a minor consequence from their gluttony.
Where did u get that from??
Debt Monster, is that you?
Yeah, reality is no one including the BoC has a clue what is going to be necessary in order to get inflation back, if it’s even possible.
I’m still unsure what happens if they simply can’t force it back down to 2%. I don’t think anyone wants to think about that possibility.
Let us know if the bank sends you a letter and what the options are.
BC got away with a soft landing in 1991. Ontario didn’t. But BC had already taken a big hit in the early 1980’s.
Yeah, only another 275 points to go the before the spring market.
This amuses me lol
Personally I think it’s a total joke that the gov is capping rent increase at 2% when it’s supposed to be tied to CPI per their own policy set a year ago. At the same time gov employees are being offered wage increases to be tied with CPI to 5.5-6.75% next year. Basically they just make up whatever they want each year, that’s the policy.
The Bank of Canada made it pretty clear today that rates will continue to rise until inflation is under control.
As an old boomer I have seen this movie before in the 70’s and 80’s. Forget the notion that they will stop when the housing market is under stress. Getting inflation under control is the focus. Folks need to cut back on unnecessary expenses and start saving in order to be ready when the recession arrives. If you look at past inflationary cycles for the last 50 years there has never been a “soft landing”.
Sorry about that then Barrister. Sometimes it is difficult to read into the true meaning behind comments.
I did think you were older than the oldest boomer though, i.e. 76, so forgive me for that as well. Gulp.
Rates will go where they go. That’s fine. My issue is with shitty, over-confident hot takes about where the overnight rate ends up.
Just taking a guess here, but I think the idea would be to use the 12-month average percent change in the CPI ending in February, which would be published mid-March, and available for the April 1 wage increase. No idea where you are getting your numbers from either. 12 month average percent change in the CPI for BC was 3.7 in March 2022. In February it was 3.4.
Oh, this amuses you? Is it because you hate your landlord too and you have found somewhere to channel it? Cheaper than counselling I guess. You’re welcome.
blah blah blah blah blah. lol can’t you tell I am just messing with you for amusement?
I am and you don’t see me on here whining that only a 2% raise in rent is allowable in 2023, so what’s your point? You’re better at complaining than me? You win.
Equity built up across a few properties, not necessarily a HELOC on one property, but if that’s what I posted previously please do cling to it as hard as you cling to the narrative that I live in Royal Bay.
> It’s just a bit rich getting told that I coast at my job coming from a landlord.
Does your landlord have a real job too James? Most of us have a full time job and then manage properties outside of that, which equals extra work, so while I’m really sorry you’re mad at your landlord I doubt they’re just coasting along expecting 11-13% rent increases each year like you
It’s just a bit rich getting told that I coast at my job coming from a landlord.
Ahh, so you must be for increasing those interest rates now…
She’s wants to access her HELOC and outbid me for a rental property in Maplewood during the winter 😉
Don’t know why you’d do February and not March? April 2021-March 2022 is 4.5%, which isn’t about equal (March to Feb is 4.2%, which also isn’t about equal).
Why would you trust that it would? Why not just do a 2 year deal.
Aren’t you a landlord? And again, you keep saying raises when it’s pay cuts.
I mean, you could go out and get a higher paying job rather than coasting through your current one expecting to continually receive raises at a level that you determine to be fair…
That hinges on where inflation goes from here. The first year increase is about equal to the 12 month average inflation rate ending in February 2022.
My take is that it’s a reasonable deal, as long as inflation returns to normal fairly quickly.
I don’t see anyone really excited about it to be honest. I don’t really sympathize with people that can afford a million dollar house though let alone two.
I do have sympathy for the renters who’ve been evicted multiple times so that landlords could get a better rate of return.
It’s over 3 years. That’s a pay cut, not a wage increase.
Leading by example. What’s good for the goose…
Five percent mortgages under the rate of inflation are still cheap actually free money. The world is not about to end and house prices are not going to drop in any significant way.
Alexandria, actually I am a Boomer so I was knocking myself off in the comments. The silent generation in my opinion can quietly carry on. Why is there no symbol for sarcasm?
I agree.
Your household income is over 250k and your mortgage is 717k . How are you uncomfortable? Psychologically? Because math-wise this seems easily affordable
Right now the people experiencing the greatest hardship are going to be those with low incomes and consumer debt. Homeowners on variable rates will notice a difference, but the stress test and reduced limits on HELOCs provide a buffer.
https://twitter.com/RobShaw_BC/status/1567610131076227072
I am not degrading anyone, I am telling the truth here. Go look for policy analyst jobs outside of government in Victoria and tell me how many you find and compare that to the policy analysts currently employed by government.
Sounds pretty good for cash buyers or those with large down payments if you can get the house for 200k cheaper compared to before.
Looking at the amortization schedule of a 700K mortgage at 5 % is a lot different than 2-3% rates. Forget the 1000/mo payment difference. What hurts the most is that you will pay 165K in interest over 5 years vs 81K in interest. And 26k less in principal on top of that.
Its going to hurt new home buyers who purchased variable the most – or people with multiple properties on variable. Anyone who bought before covid can refinance and get a lower payment.
Also for the quotes just put a “>” (without quotations) before the comment you are quoting and then put a space in between your response, like this:
“>quote here (without quotations”
And your response here.
The prices we are seeing today are not even close to where they will be when sellers and buyers finally feel the full effects of 5+% rates (not even considering what you must qualify at)
Tough to scale budget wise from 87 MLAs to almost 30,000 public servants. Two real different fiscal impacts. The solution could be voting out those MLAs that gave themselves the raise, but an expectation of the same raise for the scale of the public service just isn’t realistic.
With the COVID run up being an anomaly brought on by artificial conditions, the COVID gains being given back really isn’t drastic in that sense.
The quotes don’t work for me…but responding to:
I also sympathize with people in this rising interest rate situation where they are struggling to make payments on their primary residence. Why don’t you sell one of your properties if you’re a millenialhomeownerx2?
We actually did try to sell in March and dropped the price a few times. Financially it did not make sense to sell any lower. Made more sense to hang onto it for longer and let the mortgage pay down.
We are not ‘struggling’ but we also have paid off cars and no debt besides mortgages. So I hate to think about what other young families who might have more debt.
I show houses for a living. The cars, boats, TV,s PS5s and other crap I see on a daily basis is mind boggling.
If everyone was driving a Honda Fit or Toyota Yaris I would feel sorry for people but just look at the cars in a young family neighborhood on the Westshore.
As a society I personally like the higher interest rates. We need to get off the addiction of cheap money. Also, if it causes the real estate markets to slightly decline or go flat for a long time I think that would be a plus (I don’t think that will happen but I think a flat market for 10 yrs would be great to force people to actual do something versus get rich off real estate).
Not to mention there has been like 6 months to prepare for this. Two months ago I sold a second car I had for 11k more than I purchased it for 2 yrs ago. When I went away instead of leaving my place empty like previous years I rented it for 6k for a month. Canceled Telus TV, netflix, etc. Added another revenue stream on the side. Etc.
Personally I think the market is resilient enough to asborb today’s 0.75 but another 0.75 or 1% before end of year I think that starts to weight on the market. At that point how are we still holding on to prices higher than early last year when buyers were signing 0.99% 5 year fixed mortgages.
I also sympathize with people in this rising interest rate situation where they are struggling to make payments on their primary residence. Why don’t you sell one of your properties if you’re a millenialhomeownerx2?
Just like this comment section. On the one hand you have James complaining about an 11-13% wage increase as garbage and not good enough (overvaluing the average BCGEU member worth) and then VicREanalyst degrading policy analysts who all have an undergrad if not a maters degree (undervaluing BCGEU member worth) so this comment section is about as representative as social media, go figure…
To add to this, I expect the Victoria real estate market to continue to experience drastic price declines. Home prices do not match up at all with affordability anymore. Would love to see Leo’s graph with the latest hike and the predicted ones to come.
It is really sad to see people on here excited about others struggling with interest rate increases. We did not ‘stretch’ ourselves. We bought in 2017 and had a 707K mortgage and our household income in ~ 250K / year. We went variable and yes we benefitted during covid and the rate cuts but I was on mat leave (so just gov’t EI) then add in $1900/mo for daycare once back to work. Now our mortgage is $1000 more than it was a few months ago. Thankfully we are getting into a less expensive preschool at 990/mo. So it helps balance it out. We have definitely cut back and plan to continue to do so. The rate hikes are going to hurt young families the most. I remember when we bought this house, I was definitely gunshy about the size of the mortgage but we were reassured that we could rent out a room or 2 to UVIC homestay students if interest rates went up too high for our comfort. We are definitely getting to that point. I feel for any families that bought a townhouse or condo as there are less option to help offset increases.
James i don’t think its a good deal either. I also think they made a huge mistake giving the MLAs that much. They could have made the argument that they wanted a bit lower than inflation in hopes to help reduce inflation but since they gave the MLAs that they screwed themselves.
I wonder if members will ratify this agreement. Cursory check of social media reveals little enthusiasm. However, social media may not be representative.
Bank of Canada raises overnight rate by 75 basis points and says there will be more increases over the coming months.
RBC didn’t take long…. https://www.newswire.ca/news-releases/rbc-royal-bank-increases-prime-rate-806400650.html
“TORONTO, Sept. 7, 2022 /CNW/ – RBC Royal Bank is increasing its prime rate by 75 basis points to 5.45 per cent from 4.70 per cent, effective September 8, 2022.”
So variables are over 5% now at the major banks and about the same as a 5 year fixed. What will the punters do if they have to renew?
Same for most public sector jobs, outside of IT I doubt many will be able to do better in the private sector here in Victoria. Good luck getting 80k a year with DB pension and flex days in the private sector as a policy analyst, whatever the hell that entails.
Re: BCGEU deal:
https://twitter.com/RobShaw_BC/status/1567551864161595392
Barrister: The last of the “Boomer’s” are still in their late 50’s. “The Silent Generation” however were born between 1928 and 1945, so now between 77 and 94 years old. I think you may be one of them? They are the ones taking room up in the LTC facilities etc using up valued medical staff and many of the others still own large homes with only 2 people living in them. So maybe we should wish they die off first? You know, instead of the 58-65 year olds who still haven’t had the privilege of a few retirement years yet.
My guess is they will increase .75 or 1% by yearend and then wait to see the impact. This is based on my assumption it will be hard to eliminate excess demand in the labour market. Tough to determine if further increases will be needed next year.
Uh oh, this just got real. A lot of VR mortgages will now be at the trigger rate. I know mine will be. I’ll be paying little to no principle for the foreseeable future unless I make lump sum payments. Not sure which direction is best at this point. Invest anything extra and continue on with the bare minimum mortgage payment, or make the lump sum as required to get the loan amort back in line… Interesting times for sure.
Luckily I have the funds to do this, I assume most won’t.
That’s a pile of garbage, why would you accept anything less than what MLAs are willing to give themselves?
The problem for a lot of healthcare workers is where do you go if you dont stay. A couple of more rate hikes and we will be moving to a real recession where jobs are a bit tougher to get.
Besides bad health care mostly means that old people die a bit faster. Not my viewpoint but one at times silently on the minds of politicians. Besides if all the boomers would hurry up and die that would help with the housing crisis.
That offer is truly a slap in the face for healthcare workers. There’s zero incentive to stay.
Yea that is not much better than the initial offer. I thought for sure it would be 5 – 5 – 5.
I may have one that may trigger will post as soon as I hear from TD.
I dont know for a fact but I am guessing that some of the mortgages must be hitting their trigger rate. Does anyone know exactly what the banks are going to do with mortgages that have triggered?
Earlier in this thread we were discussing whether rates will increase 1.00 or 1.50 before the end of the year. Now that we had a bump of ,75 how confident is everyone that the next bump will be ,25 or even zero? Myself, I have no idea but would love to hear the collective wisdom.
New BCGEU deal offer – Year 1 – Effective April 1, 2022 increase all rates of pay by 25 cents per hour and then increase all rates of pay by 3.24%. Year 2 – Effective April 1, 2023 increase rates of pay by the annualized average of BC CPI over 12 months starting on March 1, 2022 to a minimum of 5.5% and a maximum of 6.75%. Year 3 – Effective April 1, 2024 increase rates of pay by the annualized average of BC CPI over 12 months starting on March 1, 2023 to a minimum of 2% and a maximum of 3%.
Thus far from people i know in the union and from what i see on Reddit its not been well received. Also HEU got the same offer.
Einstein dies and goes to heaven only to be informed that his room is not yet ready. “I hope you will not mind waiting in a dormitory. We are very sorry, but it’s the best we can do and you will have to share the room with others” he is told by the doorman.
Einstein says that this is no problem at all and that there is no need to make such a great fuss. So the doorman leads him to the dorm. They enter and Albert is introduced to all of the present inhabitants. “See, Here is your first room mate. He has an IQ of 180!”
“Why that’s wonderful!” Says Albert. “We can discuss mathematics!”
“And here is your second room mate. His IQ is 150!”
“Why that’s wonderful!” Says Albert. “We can discuss physics!”
“And here is your third room mate. His IQ is 100!”
“That Wonderful! We can discuss the latest plays at the theater!”
Just then another man moves out to capture Albert’s hand and shake it. “I’m your last room mate and I’m sorry, but my IQ is only 80.”
Albert smiles back at him and says, “So, where do you think interest rates are headed?”
Definitely. Can’t imagine the trouble we’d be in if they had not introduced that in 2018
As I previously pointed out, I lost my own job in 1982. I thought I might lose my own house but I found another job at the last minute. Also the recession made it a crappy time to be a landlord. So no, not fun for me.
On the other hand do I think it was a good thing that prices crashed? Yes, absolutely.
And good thing there was a stress test right??
And along with it the stress test
BoC increases 75 bps – https://www.bankofcanada.ca/2022/09/fad-press-release-2022-09-07/?utm_source=twitter&utm_medium=social&utm_campaign=FAD220907
of note – “Given the outlook for inflation, the Governing Council still judges that the policy interest rate will need to rise further. Quantitative tightening is complementing increases in the policy rate. As the effects of tighter monetary policy work through the economy, we will be assessing how much higher interest rates need to go to return inflation to target. The Governing Council remains resolute in its commitment to price stability and will continue to take action as required to achieve the 2% inflation target.”
Cool. Yeah, recessions are great fun if you get to keep working I’m sure.
Well in early 1980’s Vancouver there was about 12% unemployment, which means that 88% were still working. And that 88% included me.
Canada hasn’t actually devalued its currency since the early 1960’s, hence the “Diefendollar”. The dollar went down in the 90’s all right but that’s because of the oil price bust. BoC does not target exchange rates, although CPI inflation targeting may require some support of the exchange rate.
I’m referring to the home ownership rate. Which typically falls in housing downturns. Meaning investor homeownership (in the broadest sense) rises.
It’s pretty obvious to see that homeownership rate in the USA usually falls with recessions, and had an epic fall in the housing bust of 2007..2012.
Which means that investor ownership rose during those periods.
Someone buying the average Victoria house($1.4 million) in Feb at 1.99% with 20% down($280k), they had a monthly payment of $4,737.25.
Someone buying with 20% down and a monthly payment of $4,737.25 would only need a down payment of $148,902 on their $595,608 mortgage.
I guess they’ll have to settle for some of the missing middle… that or prices will have to come down since no one will be able to afford to buy a $1.4 million fixer upper.
I mean, you look at a country who is cutting interest rates in this environment (Turkey), and they’ve got an 80% inflation rate right now.
Be careful what you wish for?
Never said that. People are shit at forecasting interest rates, which is why I have zero reason to trust some random on a local realty blog.
because experts have had a great track record lately?
Yes, according to that umm really guy. I’m sure he’s an expert.
I’m pretty sure Leo has posted charts a few times showing that investors buy less during downturns, not more.
Yes. The higher rates will unfortunately accelerate gentrification, despite lower prices . Homes will get sold to affluent people (“gentry”) with higher down payments or all cash purchases. They are less affected by the higher rates, since they aren’t borrowing as much. This means more investors and ROC’ers outbidding local FTB.
Doesn’t really matter what my wishes are. We’re likely to get that regardless.
If a person can’t afford a house at 1.99%, are they magically going to qualify at 8.5%? Would take a serious housing market crash to make that work. And I don’t think the ensuing double digit unemployment would bode well for a lot of would be home buyers either.
Careful what you wish for.
You say it like the 1.99% fixed rate was helping them?
Well to six per cent it is then! I’m sure those 8.5% fixed rate mortgages will help the millennials afford a house.
Sorry to bother! Can anyone let me know what 2770 Arbutus Rd sold for? I see it’s pending but can’t see the sale price. Thanks all.
Difference is that inflation was at 1% in 98. Letting the CAD drop at this point is just a recipe for more inflation…
For the units in our building people paid circa 12K for leasehold to freehold conversion including legal fees. Seemed like a total no-brainer at the time, but not everyone went for it. I wouldn’t be shocked if they offer another conversion opportunity but I am pretty sure the hill will ask a lot more next time reflecting higher property values and shorter remaining lease time.
I think the spread between the fed rate and overnight rate was 2% at one point in the 90s when Canada devalued its currency. If it happened then, it can happen again.
Ya, Mt Washington has always been funny. That Beaufort Heights development came in 15 years ago, they put in the roads for half then planned lots and then went bankrupt. People bought up the lots (leasehold at the time), many took the option to pay out for the freehold transfer when it opened up a few times over the years (tanking the leasehold values). Most of the lots there were listed for that $75k to $100k (freehold) before the pandemic, but I know a few people that picked them up in the $35k to $50k range because people had been sitting on them so long. Then the pandemic hit and a lot have casehed in on them, but you can see the few that didn’t cash in are trying to catch the price that passed. The funny thing is, the best lots are in phase 4 and 5 of that Beaufort plan, but the roads and services will never be going for those now. I still can’t believe how many up there didn’t the opportunity to change over from leasehold to freehold, I think the fee was only 25% value of the property.
Real estate at Mount Washington. Currently 18 MLS listings (plus a few hapless FSBO signs nailed to trees here and there). Over the last few years I have seen MLS listings as low as 7, so inventory has more than doubled from the “bottom”.
On the other hand around 2013 there was a combination of back to back crappy snow years and general real estate malaise. Inventory viewable on MLS then was over 90 listings.
A few current listings will have some big reality checks if they want to sell, as their asking prices seem to be based on an extrapolation of recent trends, not any consideration of new interest rate reality.
A definite increase in the number of people living up there year round – not surprising given an explosion in prices in the Comox Valley.
In terms of new supply quite a bit of SFH construction happening along the roads just above Nordic Way. Currently this is the main area where there are titled and as yet undeveloped lots. Planned 52 lot development on the ridge between Sunrise and the main village area – web presence but not much on the ground.
Of course. No one has suggested that the investors are necessarily correct. The point is investors aren’t subject to the same biases that some economist projections have (such as attachment to a bank). Many HHVers dismiss rate projections from a bank like RBC, because “of course the bank will say that, because they’re biased”.
If the market is efficient, the Fed futures will accurately represent the expectations of future fed rates by the investors. Just as they do for sugar or oil futures.
For example, some economists (or HHVers w/insider contacts) may think that WTI oil prices are headed higher. But it is helpful to know that the sum total of investors in WTI oil futures are betting that WTI oil prices will fall (from $86 now to $81 in June 2023) https://www.marketwatch.com/investing/future/crude%20oil%20-%20electronic
What were the futures saying this time last year? Investors do have skin in the game but that don’t prevent them from getting the future wrong.
I don’t think we will see big increases in the interest rate until after the US mid-terms. Only then would the USA start significant increases in the interest rate to hammer inflation down to the 2 to 3 percent range. Canada has no choice but to follow the monetary policy of America otherwise investors will not buy our bonds.
It shouldn’t be too bad, BoC will probably taper a bit after it hits 6% going into Q1 next fiscal. It will be interesting to see how the housing market and consumers respond to a normalized interest rate environment. However, turmoil that is going to Europe this winter and the even bigger supply chain issues that are coming are tough to factor in. They could go back to stimulus with QE with dropping rates or just put the hammer down and drive the overnight rate beyond the 6%. With the way the US dollar is running and likely to continue to gain value, the odds are just too strong that the BoC will need to defend the Cdn dollar and just keep increasing rates. If the Cdn dollar can’t maintain somewhat of a pace to the US currency, then people will see what a real inflation crisis looks like. As I said before, the period coming out of COVID will likely be just as disruptive and unpredictable as the period going into and through COVID. The one thing that can be said, is that the COVID housing market boom wasn’t a new normal.
I’m not sure how 4% BOC rates squash 7.6% inflation rates, especially when core inflation is higher than 4%. But I’m sure they’ll stop anyway, before realizing they have to do more. Unless the recession hits early.
Albert Einstein said “Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.”
Avoid monster debts for a stress free life. Accept that some things are sometimes better rented than “owned”. Think for yourself. Properly assess what you can and cannot afford. Do not allow money lenders to control/own your future life. Keep life simple.
I really hope that everybody is right and that interest rate hikes stop at one point more. Anything higher will definitely start to cause a little pain.
Fed futures are predicting a 3.5% fed rate at end of 2023. That’s about 1% higher than it is now. There is no expectation among investors for fed target rate to hit 4% or higher for the next 5 years.
The futures are bought by investors, not economists.
https://www.investing.com/rates-bonds/30-day-fed-funds-futures/
Seems like a reasonable prediction. +1% from where we are. Maybe +0.5, +0.5, or +0.75 +0.25
I would say the state of the overall Canadian economy is taken into consideration as well.
BA is a core money market instrument… and the yield spread between the maturities reflects interest rate expectations.
BOC will be guided by the US Fed, which doesn’t give a crap about our house prices.
Poor taste Barrister..
In a word the banks forecasts have been… hopeless. In Nov 2021, the bank forecast for end of 2022 BOC rate was 1%. Around May it went to 2.5%. Now their end of year forecast at 3.25-3.50.
There is an inherit bias for them to low ball the rate forecasts. Banks want to project stability. That means forecasts with low/stable rates, reassuring their customers. It’s the same situation for RE economists – they always have a “glass half full” take that assumes the best outcome for house prices.
I don’t have Bay St. insiders whispering me tips like some here. So this is just my prediction, which is that we will end the year at 3.5% BOC rate. I think the BOC will be guided by house prices, despite their statements to the contrary. And so they’ll slow down or stop the rate rises in 2023. Inflation will persist, at lower levels (5%). Rates should be much higher, but everyone loves to kick the can down the road.
The CFO of Bed Bath and Beyond just did a suicide leap into the Beyond. Wonder if the store here will be closing?
Yeah would love to see a chart of all the bank forecasts and how they have swung around. Everyone is just reacting to the latest news for the most part and then most of their forecast is extrapolating the current path with some bias up or down.
I should be clear that I am not making any predictions whatsoever. I am just passing on what I am hearing from others. I would note that so far this year that the consensus of bank predictions on rate increases has not been exactly spot on.
But I certainly do not have a crystal ball and I am not making any sort of prediction. But if anyone knows what the US Fed is going to do that would certainly be a good start to foretelling the future.
No, if you’re speculating on BOC rate hikes for the future, you use bond futures, not the money market. Because you get 25X leverage, necessary to make the tiny movements in bond prices meaningful. This allows you to time the expected rate hikes. In USA there are fed funds futures.
In Canada, there are BAX futures, which are futures on 3-month (money market traded) bankers acceptance.
You can see the futures bets out to 2025 here https://www.m-x.ca/en/trading/data/quotes?symbol=BAX*#quotes
You can see the rate by subtracting the number quoted (.e.g. 96.05) from 100, which would imply 3.95% yield for a 3 month bankers acceptance. The 3 month trades with yield higher than the BOC rate, and is pricing in the Sep 7 hike. The BAX contract is leveraged 25X.
You can see by examining the quotes that there is only an expectation for 0.25% higher yield after September 21, 2022 until the end of the year. And then it stays flat for 2023.
If you agree with Barristers prediction for higher rates by December (“at least 150 basis points”) , you could profit by selling the Dec 2022 futures BAX contract, as they’re only expecting about 100 points.
Is this free advice for all the potential Pierre Poilievre voters suggesting that if they vote for him and he’s elected he’ll still be worth $9 million while they’ll just be the voter that was tricked into his “hey I’m just like you” smarmy politics?
Probably the money market rates is what Barrister is referring to, that’s where people put their money where their mouth is.
The BMO discussion on the 3.5% or 4% BoC rate as the peak or end point.
https://economics.bmo.com/en/publications/detail/a21857d3-6c48-435c-9c5f-b8cf4966b519/
The governments could reduce the size of the workforce. And it will when home owners complain about rising property taxes. At this time Development Cost Charges and renovation permits add a lot of cash to the coffers. When that source of revenue disappears then the City will have to raise taxes or lay-off employees or more likely both.
Most government departments don’t work under the profit incentive of free enterprise. Instead bureaucrats want to increase their social standing by increasing the size of their departments and social engineering. They are not primarily concerned about efficiency but want to increase the GDP of the municipality and provide jobs to those that would not be readily employable in the private sector by employing visible minorities, and those with physical and mental limitations. Which I agree with, as it is better to have them in a job than collecting social benefits.
For Canada, that would mean raises of 150 points bringing the rate to 4.0%.
None of the 6 big banks are predicting that much by year end. Not sure what “money” you’re referring to.
Current consensus among the 6 big banks is less than that, 75-100 points total rise by year-end. The September 7 rate hike may be the last one for the year (75 expected, 100 possible).
https://www.canadianmortgagetrends.com/2022/09/bank-of-canada-preview-a-100-bps-rate-hike-cant-be-ruled-out/
Bank of Montreal is calling for 3.5% by year-end, but says rates could keep rising, to above 4.0% if the housing market stabilizes. https://www.bloomberg.com/news/articles/2022-09-02/bmo-sees-canadian-rates-rising-above-4-if-housing-finds-a-floor
Money seems to be on at least two more raises of 75 before year end.
Or the government could reduce the number of people employed by itself and freeing them up for the private sector. Maybe start by cutting off funding to some of the NGOs.
Whatever I think that is the path we are taking it’s worked well in the past
Or the government could increase interest rates and thereby slow down the economy putting people out of work and ending the labor shortage. Of course this could cause a recession or worse a depression which would make asset values decline.
And here’s the rub. When people see their asset values decline they vote to get rid of the government-of-the-day be it municipal, provincial or federal. If these politicians want to be re-elected they don’t want to use strong monetary policy to effect change. And yet the next government formed will stay the same monetary course as they too will have to grapple with high inflation.
But it would solve a lot of the social problems we are facing to day. Lower rents would make it easier for pensioners to leave their tents and RV’s and move back into housing. The vacancy rate would increase as those workers that moved here from rural BC and Alberta return to their origins as they can sell their Victoria homes and own a better house with lower or no mortgage in the rural areas. Other transient workers will pick up and move to better jobs that pay well such as the Oil fields, mining, forestry.
The economic pendulum will start to swing back as migration to the cities reverses and people begin to return to the rural areas.
Here is a tough question to ask yourself. Would you accept a 25% , 35% or a 50% drop in your home prices to begin to solve the current social problems?
In a free market supply equals demand at the market price. If a business is unwilling to pay market wage they will see a “shortage”, but that’s self-inflicted. If a business cannot operate at market wage it should change its business model to require less labour, move where labour is cheaper, or close down. Remember we have record low unemployment.
You do have a point that the labour pool is not optimally skilled. Too many history grads and too few tradespeople, etc. Needs fixing with respect to education and immigration policies.
ha ha. Why do I know you were going to say that?
No need to call the plumber on such awful hour. Proceed to where the water main valve is and turn it off. Then call plumber and insurance in the morning after you wake up after your morning coffee.
So, it’s three in the morning. You discover this leak in your bathroom, water all over the place, (hence, crisis).
After rushing around, you remember your son took your new pipe wrench with him to Saskatoon. Ahh…then you remember your (old and retired) pipe wrench is in the bottom drawer of your tool case in the garage. Do you go out and get it now, or do your call a plumber and wait three hours for him to arrive?
Perhaps in economic theory or using an atypical definition of “shortage of employees”. But right now, in Canada there is definitely an overall shortage of workers, pervasive throughout the economy. More money can’t solve it all – people need proper training first.
The government has a big role to play, starting with importing workers with needed skills (immigration). Subsidies/training/tax breaks are helpful too. Removing barriers to foreign trained (e.g. medical graduates) would help.
This article lays the blame on retiring boomers.
https://www.cbc.ca/amp/1.6529325
“ Where have all the workers gone? Don’t blame COVID, economists say
Boomers are exiting the workforce in droves, leaving more job vacancies than there are people to fill them”
I’ll tell you. If we could get 10 retired general practitioners in this city to come out of retirement to work at the various clinics with a “free” cheque, no extra CPP deductions or benefits, no E.I. benefits or deductions, it could make a huge difference right now instead of 5 years from now.
If we could get some retired nurses to work in various nursing homes or LTC homes on a part time basis, it would alleviate much of the pain there as well.
If you could hire ex administrative employees say from Camosun to help run so many of their programmes, without again further contributions or benefits from their pension plan (saves on employer contributions and administration), no sick leave benefits (etc, etc., etc.), no EI benefits/contributions and CPP contributions, but they pay much less I.T. …..well?
Also, many, many seniors out there are on the GIS and other “perks” like GST credits and rental re-imbursements. If they could bring in another $500 per month by working two four hour shifts per week at Walmart and the like, and not lose any of these benefits, it would alleviate much of the current work shortages and it could give many senior women a little nicer life. Maybe enjoy a happy lunch out with a friend every few months instead of counting every penny, every day.
An no, patriotz, there would have to be some stipulation that a retired employee would have say to be retired and unemployed for perhaps a two year period before taking advantage of this programme.
Nothing is perfect. There will always be abusers to take advantage of any situation. And public servants are certainly no exception to the rule.
Just imagine, phoning your municipality up to ask a very simple question about your property, and getting a real person to talk to right away. Just like it was 20 years ago.
Would that include 55+ who are simply still working, like me?
There is no shortage of employees in a free market. We don’t need to subsidize employers or workers, which is what a tax break would do. Let employers pay market rates and the job market will adjust.
Public services like health care are another matter. If we need to pay more to people like nurses then spend the tax dollars to do it.
A good way to fill many jobs that are so short on employees: Give retired seniors (55yrs plus), a huge income tax break if they will return to work.
Nurses are arguably underpaid, and I would suggest paramedics are too. I believe paramedics have to work for 7 YEARS before entitlement to benefits, and have to move around to far flung areas rather than select their location.
“I’m looking at my options as potentially applying to the fire department because why wouldn’t I want to make 30 per cent more and work 40 per cent less? It’s a no brainer.”
https://www.timescolonist.com/local-news/push-is-on-to-hire-more-paramedics-in-bc-but-some-veterans-say-barriers-remain-5778574
@Marko it has been like this for a long time (valuing the paper mover over the doer). I know one employer here that cannot ever seem to find enough people to actually do the frontline job (that is the sole purpose for the business to exist) and meanwhile there are like 10+ managers and directors and co managers and co directors. Even though working there would be a 40% increase in my salary why would I want to go work somewhere and have a manager – worker ratio of 2+:1??? I wouldn’t. My guess is they wanted to reward and keep the people that were there longer but now it’s so top heavy working there is not appealing to the professionals they need to fill their front line. It’s so stupid. Anyway I could go on. Like for example entire departments existing to make policies that are supposed to improve things but in reality only make systems more complicated and user hostile.
Yes, we need much higher salaries for ICU nurses and all front line health care workers.
I would also extend this; All “non-remote” workers should see their wages increased relative to home based workers
“Showing up” and “doing something” outside your home should be rewarded. People sitting at home shuffling pdfs/emails should slide to the bottom of the pay scale.
I emailed a question to statCan, and got a detailed reply within 24 hours, from a home based worker. But any of the “worksite” Federal government sites are overwhelmed with huge delays (airports, passport/consulate offices etc.). Of course, because people would rather take a home job to answer random statCan questions, rather than physically work at the airport or passport office.
Government should recognize this, and give tax breaks to all “non-remote” workers.
This right here is the reason I recommend you Marko.
Right. So when I end up in ICU and they are short staffed and my medical care suffers the pain will be easier to manage as I will know the City of Victoria tree preservation coordinator delayed a permit 6 months over a waterline running to close to a useless tree. Then they delayed a sidewalk installation project 6 months over arguing with an arborist on whether to put concrete or ashfalt over a tree root.
As far as real estate vs used car salesperson why would I care about the comparison? An individual working at Walmart does more tangible work than I do.
We as a society value flipping paper more than front line health care staff. I am a perfect example, ICU respiratory therapist to real estate agent. There are also currently in Victoria ICU nurses that are also real estate agents, and have completely quit nursing.
Then we complain the health care is in crisis, go figure.
Granny needs a lawyer.
https://www.youtube.com/watch?v=Po56XymztQE
Here is a 40 second discussion between Inspector Morse and Sergeant Lewis about the folly or wisdom of being in the “property chain” rather than remaining “free”. Watch from 1:14:15 to 1:14:55 Most on this forum will side with Lewis, but there may be a few crusty old fans of Chief Inspector Morse(?) who will understand his skepticism. Enjoy on a rainy Sunday afternoon… “Starter homes…”
If there is a valid signed contract stating that something is agreed to the court will order it done – ie. sale or transfer – no signature would be required. And all the things your are stating are already included in a co-ownership agreement.
You do you. Just my view on things and something we are planning to do so I’ve looked into it.
Why not just give granny back her money if she doesn’t want to live there anymore?
Why or more likely how would a court force her to sign a legal document? Can’t come to an agreement then sell the property or buy her out.
You can do whatever you want. If a promissory note is good for you, go for it, but I personally want to be on title if I am investing $300,000 so that the permission of both parties is required to sell, transfer, or mortgage. Your co-ownership agreement can contain provisions governing all of these options and granny cannot refuse to sign, or if she does, a court can order it.
There are standard form agreements available for co-ownership at fairly low legal cost that cover:
how decisions are made about the property’s development and use;
who is responsible to pay various expenses (or how they are shared);
who is responsible for payment of the mortgage;
whether a co-owner can share/rent their unit, and keep the rent;
what happens if a co-owner wants to sell, and how proceeds are paid out;
any difference between legal (on title) and beneficial ownership; and
how any disputes that arise will be resolved quickly and cost-effectively.
Used car salesmen get a bad rap because they knowingly foist junk on people. Real estate agents tend not to know enough about the property to even know if it’s junk.
Totoro , I guess you should have been more clear when you said co-ownership. Co-ownership in real estate includes leasehold as well as Fee Simple and Life Estate. What you are suggesting is putting granny on the property’s Title as a Life Estate. That’s going to be problems when either of the parties want to end the agreement or re-finance the property when the term comes up. What if granny refuses to sign the bank documents? Lenders do NOT like Life Estates if they have to take Title to the property. The only reason to grant granny a Life Estate is that the principle property owner doesn’t have to pay back the investment to her estate when she dies and she doesn’t have to pay rent. And I’m guessing any other heirs are going to take exception to that. But if you like legal bills – then fill your boots.
What you have laid out is a pretty one-sided contract and overly complicated when a promissory note is much simpler. Why make it so complicated?
Marko comparing an ICU nurse to a forest coordinator is a false equivalency argument. Comparing helping to save lives to saving a forest. I don’t think you enjoy it when someone compares a real estate agent to a used car salesperson.
No. You are confusing co-ownership with leasing and these are different things.
If your parent pays for the carriage house build you can deem him/her a co-owner with a % of ownership of land and buildings and use only of the carriage house based on a fair valuation overall. They would not have a month-to-month leasehold, but an ownership interest which could be specified to revert to the other owner upon the death of the parent. They would pay their share of property taxes and maintenance ex. 25%.
If they are a leaseholder then you would be financing the construction of the build most likely and they would be paying you rent, or they could specify that they are prepaying rent in order to finance the build. And they cannot “evict granny” if there is a life term on the lease with a caveat that the sale can be compelled by a co-owner with a return of lease payments.
No. This would be set out in the co-ownership agreement.
That is the thing with contracts. They allow you to deal with issues ahead of time. You need to worry when you don’t have a contract.
Co-ownership agreement with a carriage house? Pretty tricky as the relative of the carriage house, who may have paid for the construction, doe not have rights to the land or the right to sell or transfer their interest. They have a month to month leasehold interest but not a fee simple interest. The principle owner retains the right to sell the property at any time and finance the property without granny’s permission that could leaving nothing to inherit. They can also evict granny.
It would make an interesting court case as the other family members sue for their portion of the deceased’s estate.
I suppose you could write up a promissory note between the two parties paying interest at the current rate and in lieu of rent. Which would be fully payable at the time of death, eviction, or if granny finds a couple of toy boys and wants to move to Jamaica.
+1, I am sorry but ICU nurse and Tree Preservation Coordinator are not in the same boat. Having worked in ICU for four years I think ICU nurse should be a 150k/year base + overtime on top of that. Right now ICU nurse and tree preservation coordinator are approx. the same which is completely non-sense. No wonder we are screwed.
Unfortunately the health authorities are admin heavy these days as well. I read somewhere that over 50% of Island Health employees are non-clinical in nature. Some of the departments that exist at Island Health like “Decision Support,” wtf. Hire more nurses and frontline staff not consultants for “Decision Support.”
Thanks. I guess I remembered that whole episode playing out differently than it actually did.
An external review found that there was “a solid process for informed consent” and that “Family members said they were given enough information before treatment and had opportunities for input before consent documents were signed.”
https://archive.news.gov.bc.ca/releases/archive/pre2001/2001/101.asp
Without informed consent?
I’m sorry I haven’t had the pleasure of reading the studies, but so far every studied of social engineering and housing in California failed miserably that lead me to think that it is unlikely that their new studies/policies will be effective.
It is sad that once again you lean on the legal system/government to make decisions for your family.
Hello chair man Xi Jinping.
I think it is a tough one to crack, but perhaps stop giving out free additive drugs, free needles, and do not hand out additive drugs so easily would be a start. And, the biggie is accountability. Place accountability upon everyone including lawyers, social justice warriors, social engineers wannabe, medical professionals, politicians, drugs manufactures, pedlars, and users.
Karise- I think the comment is more related to bloated administration jobs in municipal and provincial governments including healthcare and silly government agencies that make it impossibly difficult to get anything done . I don’t think anyone is opposed to frontline medical staff getting decent raises.
There’s a chart that explains how moving to Alberta’s model of having one provincial health authority would save 180 million dollars a year for example . There’s many legacy redundant thumb twiddling jobs that don’t need to exist . Having 13 municipalities multiple police forces etc etc
Thanks Josh! Someone with actual insight commenting is refreshing. I’ll just add in the bitterness still there from the 15% wage cut in 2004 and you have the perfect storm for a mass exodus. I worked the job of three people last nite in an ER environment and apparently I’m too lazy for the private sector.
Private sector healthcare workers are unionized and have pensions. Lifelabs took job action just last year. And what flexdays? Who’s living in a fantasy again?
It took 20 years for lab workers to recover what was being paid in 2002 and that’s not including inflation. Everywhere is hiring right now and people are taking lower pay to work less stressful jobs. They’re losing workers to parking services, call centers and basic office jobs. Meanwhile the program for MLAs went from 8 months part time to 1 year full time and costs 3x more. I’ll be surprised if 5-5-5 is enough to just stem the rate of attrition.
Re. carriage houses. I agree that they don’t have good ROI for the cost, headache and loss of amenities as a straight rental BUT they are an excellent way to house family members at a lower cost while creating separation and privacy. A pretty good solution for those with adult children or aging parents who cannot afford to buy a SFH in Victoria themselves but could afford to pay for a carriage house build. A coownership agreement could be put in place and in the case of aging parents this might include a right of inheritance.
Fully support this. One flew over the Cuckoo’s Nest did ECT no favours and has deprived a lot of people of this treatment. ECT has been proven an effective treatment option for people who do not feel better after taking medication or going through therapy. For most people, it is a low risk procedure that has a powerful antidepressant effect, which could last for years.
When people live with suicidal ideation, or suicidal thoughts and feelings, ECT can provide relief. Researchers found that 38% of people completely stopped having suicidal thoughts after 1 week of ECT. After treatment completion, 81% of people reported no longer thinking about suicide. This procedure also results in good outcomes for pregnant or older people who cannot take psychotropic medications, such as mood stabilizers.
https://www.medicalnewstoday.com/articles/electroshock-therapy#does-it-work
Except there are loads of studies on this and, ex. Victoria, went through a whole process, including a number of studies published online on their site, to assess and review options before proposing this. And there is no better way to find solutions than to look to the outcomes of jurisdictions that have already taken steps – it is a no risk way to test out the change. Have you read the studies?
The only way this is going to work is if the legal system enforces family obligations to care for addicted or mentally ill members. That, in turn, would require the state to adequately support health needs in this situation. Many families are not equipped or able to deal with addiction and mental illness and the individuals are non-complaint with family members or the family members themselves have a history of abuse or mental illness…
I am in favour of setting up institutions and allowing voluntary or court-ordered treatment for addictions and mental illness. It sounds draconian, but what is happening to these people on the streets appears catastrophic to me, with the attendant fallout on community safety as a secondary impact. I’m of the opinion that people should not be allowed to be live on the streets and there should be system that does not just move the tents along, but requires proof of residence and, if no proof, then there is a system of assessment and supportive placement.
Medicine and mental health is not my field of practice, and I do not know what is the better solution electro therapy or anti depressant drugs. However, I believe that we need to revisit our society/culture individualism and family responsibilities, and perhaps stop being selfish by taking care of our own family instead of push the needy out and wait for the state to step in.
Sorry QT while we agree that more needs to be built I am firmly in favour of environmental requirements. I don’t know about river view but I’m also against imprisoning people because they have addictions or mental health issues. I was more saying we should build way more supportive housing and other forms of housing for lower income people.
Good old Riverview, where they were still administering electroshock therapy without patient consent in the early 2000s.
My solution is much more drastic, by automatically up zone 1 to 2 levels (SFH to quadplex and perhaps 3 stories mixed use commercial/lowrise, and so on) in every municipalities by a predetermine density upon every statistic Canada census release, combine with lower tax on construction and removal of bureaucracy red tapes such as green/environments bs. I truly believe that the role of the city is not social engineering but purely on providing health/hospital, policing/fire protections, traffics, and essential services such as energy/potable water/sewage/garbage collection.
I agree, and would like to see Riverview hospital rebuilt ASAP.
@QT because even if everyone got a garden suite there still wouldn’t be enough housing for everyone. Plus not everyone can get a garden suite and not everyone will.
California is in a terrible state as a result of the state doing nothing for far too long. That is where we are headed if we continue to squabble and block sensible solutions like missing middle.
Finally, I have been a landlord for many years. Who would willingly house the people with serious drug addiction and mental health issues in their investments? I’m sorry but I think most landlords (myself included) would not. Clearly the state needs to take the lead role in this area of housing. I don’t understand people that complain about homeless on the street but don’t want the government to fix it. Makes no sens to me.
The private market cannot fix this because, as I’m sure you know, the entire idea in capitalism is to make profit. Some forms of housing will not make a profit and that’s where the state comes in.
It is depressing that we can’t come up with a solution for our region on housing. Instead we merely copying California cliche missing middle catch word of the month.
IMHO, it seems as if we are too lazy to think for ourselves instead, we blindingly rides California coattails that exacerbates inequality, drugs additions, homelessness, and now housing.
Why should we stop at missing middle, when we can cut tax and red tapes to let the market take care of itself?
Perhaps, it is a typical Canadian political solution by pretending to pay attention and talks about problem solving, then put up roadblocks to stop progress.
@300k and 2200 per month in rent would take over 11 years to pay off. That has gone up because when I checked a few years ago was just over 10 years to pay off. Thé ROI isn’t there at all – especially since managing multiple rentals takes time plus ongoing $. I guess it might make sense if you can do it cash and you bought the house a long time ago (little or no mortgage) and you’re in an area where densification won’t involve tearing down existing buildings to replace with townhouses.
Part of the reason garden suites are so insanely expensive is beuracracy. As I posted a few weeks ago local Victoria owner noted his munciaplity is requiring a tsumani risk report as part of garden suite permit on an established non-waterfront street. That must be 2k +/- you might as well torch with a flame thrower.
There is so much other non-sense it is mind boggling. Owner-builder exam being one of them for garden suites as well.
Even at $500 a foot x 600 sqft = 300k (if you are savvy owner builder you should be able to keep it close 300k even at these construction costs). I am guessing if you fence off a 10×10 patio for the garden suite that has to rent north of $2000 per month which would cover the cost of credit.
It isn’t the worst investment. If it wasn’t for the insane headaches (like waiting a year for a permit) I think more owners would opt in.
Whateveriwanttocallmyself- bingo I got quoted 400k to build a carriage house. For the same price you can buy a house in Alberta . It doesn’t make any financial sense and you’ve effectively lost your yard in the process. There’s a reason almost no one has gone through with the process in Vancouver.
There’s some people who’ve converted their garage in a cheap diy way.
Public sector workers have every opportunity to work in the private sector but risk being fired for being useless or incompetent
Nothing quite like predatory lending loosely disguised as corporate social justice action. Oh well, when marketing meets the need for increased mortgage originations to drive quarterly share price, the magic just happens.
They also have this weird PACE scam thing going on down there right now…
https://www.latimes.com/business/la-fi-pace-solar-lawsuit-20190404-story.html
When you allow a higher density on a building lot then the prices of these homes increases making them less affordable. Carriage houses are not cheap to build. They cost about $450 a square foot and don’t add all of that costs to an increase in the property’s value and then you get hit with an increase in property taxes. Those that are adding them to their property do so for relatives to live in or to add a tiny net cash flow of a couple of hundred bucks to their income after debt servicing the construction.
It isn’t economically viable to add a carriage home to your property. The net return of a couple of hundred bucks a month on a $250,000 to $300,000 investment sucks.
You can’t make this stuff up…
Given the recent history of the subprime lending crisis and subsequent GFC in 2008, we get this from “Bank of America” (aka Bankrupt America) – one of the same banks that needed to be bailed out by the govt for billions in the 2008 subprime crisis.
Since mortgage applications are way down in 2022, this bank has come up with this new “Subprime 2.0” scheme….
—
https://www.nbcnews.com/business/consumer/bank-america-zero-down-payment-mortgage-first-time-buyers-details-rcna45662
(Aug 31, 2022) Bank of America announces zero down payment, zero closing cost mortgages for first-time homebuyers in Black and Hispanic communities nationwide
Residents in selected Charlotte, Dallas, Detroit, Los Angeles and Miami neighborhoods will be offered the program first.
The loans require no mortgage insurance — the additional fee typically charged to buyers who put down less than 20% of the purchase price — and no minimum credit score.
Dee
That’s a great way of thinking and something I’ve been mulling over myself.
Id be happy with 5-5-5. My partner and I haven’t had an increase in a long time. Meanwhile the cost of living has gone up. We wouldn’t even applied for these jobs at todays equivalent salaries. We have discussed looking for new opportunities if we don’t get some kind of raises soon. The prospect is actually kind of exciting so I’m fine however it goes.
Flex days? Thank you I needed a laugh.
And as far as it being a fantasy you’re probably right. It won’t happen and health care as we know it will be over.
So you want the same wages as the private sector while keeping the flex days, union protection and the government pension? Sounds like some sort of fantasy…..
I don’t know what the current proposal entails, but the easiest missing middle housing is infills. Skinny houses or townhouses that can get squeezed into side yards is an easy upgrade for developers. Calgary, for one, has added many sfh in its core areas this way. Sometimes the original house must be torn down and sometimes not.
They lived in the same townhouse for about 15 years and bought it for around 600k, so they cleared over $1m (their claim) after realtor fees and paying off the remining mortgage and have that for a down payment on a house here.
More the better imo. I would love to see 7-7-7 but I am sticking to my guess of 5-5-5.
Missing middle will not result in a devaluation of SFHs imo. Nor will it result in a rush for redevelopment. The economics do not favour tearing down and redeveloping lots in most cases- they favour suiting or carriage houses on-site by interested and motivated owners. This is also the cheapest and easiest route to more affordable housing.
HEU does not represent Nurses.. that is BCNU we are still in negotiations..
I’m in favour of missing middle.
Separately, I think all house prices (SFH) will go up with missing middle, due to scarcity (fewer SFH) in a faster rising (more dense) population.
—-===—
‘This is why SFH numbers will decrease in COV…
– There are only 6,685 SFH in City of Victoria (as of May 2021 census)
– —That’s 14% of the total (49,225) COV dwellings.
– —COV added only a tiny 28 SFH per year (since 2016), to serve a population that rose 1,200 per year.
– —Since missing middle typically involves a tear down of 1-2 houses, it is likely that the SFH numbers will decrease.
Heu has reached a tentative agreement to be released next week. I really hope Marko is wrong about the 5-5-5 as a 20% wage increase is needed to put a lot of these workers in line with the private sector. This is a pivotal moment for healthcare in the province and especially in cities like Victoria and Vancouver. Things are so bad now I’m honestly shocked at the number of retirees moving here.
Up and coming – I’d still be curious about net. We sold a house for 700k last year but that certainly didn’t mean we had 700k to spend on a new house. Usually there’s still a mortgage to pay off and realtor fees…
No need to get upset James, I’m just sharing info with you for your ongoing house hunt so you’re aware there are buyers here with over $1m down payment also looking. I even said good luck…
I hope missing middle goes through. There are too many people and not enough space for all sfd (just math). And the alternative is much worse – including aesthetically unless you think it’s more attractive to have people sleeping on streets everywhere as opposed to being inside. The rich don’t think about it that way bc they assume the homeless will always be somewhere else, but as time goes on and there are more homeless everywhere becomes fair game. Anyone who has been to a developing country and seen homeless people living on sidewalks right outside sprawling mansions understands that. It’s in ALL our interest to have more density. And obviously it’s better for the earth too.
Caveat: You might want to really think this one out just a bit more. A race to the bottom might not be exactly the outcome that most expect.
An affordability initiative that DOESN’T result in higher home prices. The irony is killing me.
As they start to build the missing middle the remaining or adjacent houses should drop in price making them more affordable for developers. While all of the SFD are being technically upzoned this ironically will not result in higher prices for SFD in the long run. Being next door to a four story ninety percent lot courage is not going to make you SFD desirable to anyone other than a handfull of developers. If this passes and I believe that it will then if you live in Fairfield it really might be time to consider selling if your plan was to grow old there.
I’m a millennial that bought a fixer upper in Gonzo about 5 years ago (worst house on a very good street), and am disgusted by the boomer, anti-development sentiment. Please let me know if/where I can raise the voice of the pro MMI for Fairfield!
I think Leo is right. The missing middle, densification, upzoning… Whatever you call it, it’s happening. Just a matter of how soon. Just like EVs, it doesnt matter how many nay sayers there are. It’s happening.
Marko:
They know the environmental argument is bullshit. They also know that if they said what they’re really thinking they’d come across as selfish assholes. So they clutch pearls over some trees. I’m so tired of these people. They make me ashamed to be a boomer.
I feel as though this is very unfair, very very unfair, if you’re talking in Fahrenheit instead of Celsius.
Only thing that means anything is net.
https://www.timescolonist.com/local-news/debate-on-controversial-missing-middle-initiative-adjourned-until-next-week-5775953
There were 3400 sales in Vancouver area in February, how many are would you say are your friends? 15%? 20%? Did all of them sell their townhouses for $500k more than average?
Never thought I’d see the day that Introvert posted Hawk’s bubble graph.
I have friends in Vancouver that called me in January saying they wanted to eventually be back in yyj and listed their townhouse in February which sold for $1.7m and they’re absolutely laughing. They’re floating around in Air BnBs, visiting open houses whenever they want and are currently in Europe on vacation. This is the real money coming here from outside Victoria. Good luck to the FTB crowd thinking they’re going to step into a $1-2m SFH without some competition.
https://twitter.com/j_mcelroy/status/1565771054664253440
How did MMHI end? we leaving this up to David Eby? No new Doctors, nurses, trades people welcome? Unless you can afford a SFH?
I wouldn’t trust Victoria City Council to deliver a newspaper, let along housing solutions and Isitt has an IQ of about room temperature
This would work if the neighbourhood associations were representative of the neighbourhoods they claim to represent, however, they’re not
You, me, and many others at UVic too.
Did the council reach a verdict finally on MM?
I really don’t get the hold up to radically more student housing on campus. Everyone including NIMBYs can agree on that, and we reduce emissions from travel, and financially it should be break even at worst. If rental housing pencils off campus when they have to pay for the land, it should be a no brainer when the land is free
Did anyone catch how the council meeting ended on MM? I think I heard something about asking staff to conduct further legal research then the meeting seemed to come to a close
Harvard is also a private institution, they can do what they want with their money… Tuition, housing and etc….
Tuition at Harvard is family income based, low income students at Harvard pay nothing. (Low income meaning making less than $65,000, so apparently the average? median? family in Victoria)
Room & Board fees at UVic are about 2/3rds of what you quoted: $12,667 per year.
Yes, but it’s not as though UVic has to worry about land costs, which is the biggest component of development cost.
Agreed in the moral sense (yes, UVic should be able to house its own students), but to be pedantic, Harvard is in a very different financial position than UVic. Besides astronomical tuition (that btw stayed flat during 2020-2021 when courses went online) they also have a 53 billion USD endowment after a jump of over 30% during the pandemic..
UVic can always start charging Harvard tuition… Then we wouldn’t need to worry about folks attending UVic anymore either.
Not what I was hoping.
Long ways to go.
There’s no reason that Harvard should be able to house all of their undergrads on campus for all four years and UVic can’t.
This trend has been going on for a while now. There are almost daily threads on the personalfinancecanada subreddit about it.
The tradeoff for new is inventory can be months out, sometimes up to a year and a half for some models like the Toyota Rav4 Prime (PHEV) if some comments on r/pfc are to be believed.
James: Ahh, yes, you’re right. I must have misread the mail we got internally. I’ll fix what I wrote presently..
We’ve always bought used cars, but it seems like used car prices are rising rapidly due to shortages and I wonder if this tips the scale towards new in some cases.
I was under the impression that they were finishing up the first phase of the building which will house 300 students, and will finish up the second for next Sept, also housing an additional 300 for 600 total. Do you have a link to the 600 + 300?
Vic&Van: regarding UVic, indeed. FWIW they are just finishing up a large 10ish story building with housing for 300ish students, with a similar one finishing up next year. They’re patting themselves on the back a bit about this, but they still have a long way to go.
The multi-family housing building on Southgate depicted in The Times Colonist is a lovely heritage looking building and indeed fits in with the neighbourhood. However, the suites are still only 900 sq ft 2 bedroom condos.
Is this what the missing middle really needs? There are thousands of 2 bed, 2 bath condos around. The city as well as the other municipalities needs well designed 1100 sq ft 3 bedroom units. Where a small family (and most families are small now), can put down roots and make it their forever home instead of the ingrain desire of most Canadians to “move up”.
Anyway, my two cents.
Re: missing middle. It seems to me if they can’t get buy in from the entire city, why not just do it by “neighbourhood association” area? If the local area association is in favour then block zone the entire area. If not, then fine. Everyone is happy this way , nothing is forced on a particular community and things move forward more quickly. Ok Rockland doesn’t like it – well they are what – 10% of the area of the City of Victoria? No big deal I would think. If Oaklands wants missing middle housing, then great for them – their property values will shoot up as everything is upzoned. I also think if student housing is the big deal, then UVic needs to stop the lecturing to other areas and start building on their massive parking lot space (put their parking spots underground) and build 12 story housing and office towers (like at SFU and UBC).
SOP for humans is to instinctively come to a conclusion first, then back it up after the fact. Motivated reasoning. A lot of the anti-MM sentiment seems to just be a particularly egregious example of it.
Garden Suitor: +1 on that car buying strategy.
Financing, whether dealership, bank, or HELOC. Some people overextend (ie. cash flow troubles esp on dealership loans) but there’s so much available HELOC sloshing around that many people would be fine for the time being.
We go for 3-5 year old used cars paid with cash. Skip the biggest depreciation of the first couple years but still get a relatively modern car with lots of life left.
Now that we have HELOC room we might do that for our next used car if there’s a better use for our cash at the time and rates make sense.
How does missing middle affect traffic? I think that would be my main concern, I wouldn’t want my relatively quiet through road transform into a major artery…. Which I worry about anyway as the city slowly grows but I imagine adding density would speed the process up. (Disclaimer: I am pro missing middle but I haven’t been following the discussions closely and I’m hoping there’s been some mention of/plan for infrastructure that discourages driving to go along with it…)
Does anyone know about condos as investments in Victoria. I am trying to see what price ranges and locations can cash flow.
Government goes with the voters. Pretty clear the voters are swinging against housing obstructionism all over North America. No doubt it won’t happen quickly though.
I don’t and that is where I am placing my bets.
The swing vote is basically Stephen Andrew and unfortunately this is likely an effective strategy to convince him. That said, he’s running against Marianne Alto and I doubt those folks are going to vote for her. But a vote for MM by SA might cause some of those folks to vote for Hammond instead.
Dubow, Young, Isitt, and TJ are firmly against, the rest are for, but no longer running either. Though I do wonder what Isitt is thinking given his student base has come out so strongly in favour of missing middle. If he wants to run again he is going to have to explain his anti-housing positions.
The anti crowd was incredibly painful to listen to last night. Mind boggling that people with such poor logic made it through life and own property. I have no issues with opposition to missing middle but make a decent argument against it.
I like how everyone from the anti crowd made the argument that the missing middle was horrible for the environment, like wtf. Driving to Sooke is better?
I don’t know why it even bothers me. If the vote is against only benefits me. Supply remains restricted; therefore, less competition for my rental properties. Unions will probably all get 5-5-5 going forward and that has been 90% of my tenants so rents will go up with that.
One of the 70 year old Victorians last night ended their speech saying ‘for those seeking office i would remind them that those who vote tend to be older and they have expressed their views’ (verbatim). basically vote with us or be voted out.
Hopefully council sees the changing tides on those showing up at these hearings though. I suspect there are many more young people then just a few short years ago (could be wrong on that but just by other comments that is my understanding) and my guess is if many of them will come and wait hours to speak they will also to turn out for a few minutes to cast a ballot.
Maybe all those outgoing councillors/mayor will vote missing middle. Not looking to get re-elected and they can vote on the facts and not the fears…
That’s the big wildcard here I think. I can’t see massive numbers of distressed sales, but on the other hand we’ve never really been here before.
So today is the day for missing middle, hey? Thanks Leo for all of your efforts there!
Thanks to Patrick and Dad for the comments yesterday too.
Is it me or did nearly every one of last night’s speakers opposed to missing middle reside in Fairfield or Rockland neighborhoods? Not hearing anyone hailing from Vic West or Oaklands up in arms about this.
The drop in vacant land sales in the core districts is giving me concern. When contractors stop buying land then they will start to lay off workers once their current projects end. That’s fewer jobs in the finance, insurance and real estate industries. Greater Victoria is an expensive place to live and unemployment insurance doesn’t pay that well.
This article has some interesting insight into the effect of rising interest rates on the mortgage market.
https://storeys.com/750000-canadian-mortgages-at-risk-of-rising-trigger-rate-payments-this-fall/
“750,000 Canadian Mortgages at Risk of Rising Trigger Rate Payments This Fall”
The vast majority of variable-rate mortgages have fixed monthly payments, but soaring interest rates mean many of them will likely hit their “trigger rates” this fall, forcing an increase in payments.
Around 15% of the mortgages in Canada are in this group, according to an estimate from Ben Rabidoux, a prominent housing market analyst. That amounts to around 750,000 mortgages.
Canadians took out $260B-worth of variable-rate mortgages between March 2021 and February 2022, at a rock-bottom average interest rate of 1.58%, Rabidoux noted in a Twitter thread.
The “average” of these mortgages will hit their trigger rate if the Bank of Canada (BoC) raises its key lending rate by just one more percentage point, or 100 basis points in the language of the financial industry, said Rabidoux, founder of North Cove Advisors and Edge Realty Analytics.
Ron Butler, founder of Butler Mortgage, sees the greatest pressure coming from the private lender segment of the mortgage market. Private lenders offer less creditworthy borrowers mortgages at much higher rates, and Butler expects some mortgages will be “called” as rates rise even further. That is, borrowers will be asked to pay off the balance immediately.
That could lead to forced sales in the housing market, and further downward pressure on prices. But the impact should be fairly limited, as private lenders amount to a very small share of Canada’s mortgages, around 1% as of 2019.
However, this private lender market is very concentrated in Ontario and British Columbia, with about 85% of private loans in those two provinces. So they stand to see more impact from distressed sales than other places.”
I have some hope on this front. There are huge changes being passed in California and zoning reforms are being talked about everywhere. Only a matter of time now until those reforms come here.
Of course none of those affect the affordability of a single detached house which most definitely will become less and less affordable over the long run.
However for townhouses, multiplexes, condos and rentals, I think we can make substantial improvements. Whether it’s zoning, building code changes, or building innovation, I think we can bend that curve downwards over the long run and improve the housing situation here.
PS: Last night in Victoria we had a fiery 7 hour public hearing on missing middle. We got a lot of people out in support and sentiment was pretty split for or against. Council deliberations today and hopefully a vote as well. I’m not super confident it will pass, but if it doesn’t it will come back with the new council. The death of restrictive single family zoning is inevitable.