What would it take to get affordability back?

Well after that brief and exciting diversion to local politics, its back to housing analytics.   However stay tuned for a future article analyzing the provincial housing promises that presumptive NDP leader David Eby announced recently.

We know that (un)affordability broke out of long term ranges at the peak of the market in February, and has stayed poor while prices dropped in concert with rising rates.   In past cycles, when poor affordability has dragged on market activity, we’ve seen affordability improve in subsequent years through a combination of increasing incomes, dropping rates, or substantial price drops (though you have to go back 40 years to find those).

There doesn’t seem to be a lot of consistency in how long it takes for affordability to return, taking 6 years after the peak in 2007, 8-12 years depending on what you consider the peak in the 90s, and 5 years after the early 80s crash.  If we are to see a return to better affordability this time around, that would put the bottom of the cycle between 2028 and 2034.  Dashed lines on the chart below are an estimate of where affordability could return to if past trends repeat.  That would bring condo payments back to around 20% of average household incomes and detached payments around 45%.

What would it take to return affordability to those levels?  One way to look at it is by isolating the levers of income, interest rates, and prices; determining how much change in each would be required to bring affordability back to those levels.

If we relied only on rising incomes, it would take a 50% jump in incomes to make housing affordable again.

If we relied on only dropping rates they would have to go way down: all the way to zero percent (yup, just the principal payment on an average house takes up 45% of current average incomes).

If it was only dropping prices, it would require a drop of about a third.

This is a mental exercise only, since of course affordability cannot return instantly or by changing only one factor.  Instead, rates, incomes, and prices will be moving together and the reality will consist of some combination of all three.  We don’t know the future for prices and rents, but we do know that if we are to see improving affordability it will take some time to arrive.     In the last 3 cycles we had affordability bottom anywhere from 5 year to 12 years after the peak, so we should look about that far into the future in terms of income gains.

How much will incomes increase?  Well from 2000 to 2020, household income growth was strong in BC, outpacing inflation by 30% (or 1.3% annualized) while inflation averaged 1.8%.  It’s unclear whether that can be sustained while the central bank battles high inflation.  However the previous 20 year period saw wages slightly trail inflation while inflation averaged 4% annually which is actually slightly higher nominal wage growth.   So we might expect 3-4% annual wage gains going forward as well.   If it took 6 years to restore affordability, that would yield 19-27% wage increases, or 43-60% over 12 years.

Therefore, if we had a decade of strong nominal wage growth, we could restore affordability with a long price plateau similar to what we saw in the 90s.   If affordability was to return more quickly, then we would need either further price declines or rate decreases to get us there.  For example if we saw a 25% increase in wages 6 years from now, we would need to also have rates drop back to about 2% or have prices decline some 15% to bring back affordability (or some combination of the two).  If I had to bet on future prices I would bet they would fall somewhere into that range of outcomes.

That all hinges on two things:  rates won’t increase much further than where they are now, and affordability will indeed return in line with previous cycles.  There’s no point in speculating on future rate paths, but will affordability really return, or is it different this time?

Personally, I’m relatively confident that affordability for condos will return at some point.   There is no fundamental limit to the supply of those, and I believe no matter the pressures from population growth, in the end people still need to afford a place to live.   Reforms at the municipal and provincial levels seem to also be coming to make it easier to build housing which will help improve supply elasticity for attached housing and allow the market to meet demand.

At the same time I’m less confident that affordability for detached homes will improve as much as it did in past cycles.  The same reforms that make it easier to build townhouses and condos will accelerate the trend towards those housing forms and make detached housing an ever shrinking part of the housing stock which means the fraction of the population that can afford one will shrink.  That will overall improve housing availability and affordability (by providing a greater number of more affordable townhouses & condos), but if you’ve got your eyes on a detached house I would pay very close attention to those longer term reforms.  The reality is when missing middle is legalized, many attached lots will gain an additional use (building denser housing) and that will support values.  How much we won’t know for several years.


Also here are the weekly numbers courtesy of the VREB.

October 2022
Oct
2021
Wk 1 Wk 2 Wk 3 Wk 4
Sales 115 225 745
New Listings 318 544 866
Active Listings 2270 2256 1036
Sales to New Listings 36% 41% 86%
Sales YoY Change -43% -39%
Months of Inventory 1.4

About the same number of sales last week (with the holiday) as the week before with new listings staying solidly above the year ago level.  At this sales rate we would get to the mid to high 400s in sales, which is in line with the activity we saw in 2010 and 2011.  Quite slow, but not catastrophically so (October 2008 there were 316 sales, and October 2012 there were 373).   More and more sellers will be giving up in the coming weeks, so we’re likely past peak inventory for the year as more listings are cancelled and expire.

Back in July I looked at each market segment to see how far it had dropped from peak pricing and found that overall prices had dropped between ~5 and ~15% with condos at that point holding up better than detached properties (condos have dropped since then).

The only property type that had not declined at all by that measure was high end detached properties, which were selling for more relative to their assessed value than in February.   While less interest rate sensitivity may be expected in that segment, it’s worth checking in again to see if anything has changed.   This is what it looks like today, with sales quartiles based on their current assessed value.

Though there aren’t huge differences in the quartiles (the cheapest 50% of homes saw the most prevalent bidding wars in the spring), the luxury market still seems to be holding up the best of the bunch.  Not only is the difference between current and spring sales the lowest, but properties are still going for more relative to their assessed values than lower priced homes.  It will be interesting to watch the flow of out of town buyers in the second half of the year to see if it remains strong and supports that market segment.  However different price bands usually can’t go in opposite directions for very long before demand filters between them and equalizes market forces again.

Meanwhile on the supply front, big council changes in Victoria and the westshore.   In Victoria the new council is solidly pro-housing, and they have the ideas to really accelerate action on housing in the city which should help alleviate the shortage.  Saanich too has moved a little more in that direction with the election of Dean Murdock, though council remains split.  Even Oak Bay and Esquimalt got a few more pro-housing voices in.  However in Langford there was a sweep from rubberstamp Stew to an entirely new council that ran partially on slowing down development.  In the best case that will mean continued growth with more emphasis on high quality infill projects, pedestrian infrastructure, and public amenities, while in the worst case that will mean a rapid brake on homebuilding there which will exacerbate regional shortages.

What’s clear to me is that the highly unequal growth patterns where everyone is pushed out to the edge of the city are not sustainable.  Not only does it increase traffic, consume greenfield land, and increase emissions, but eventually the concentrated growth provokes a backlash with no other growth relief valve.  Ideally the core municipalities will absorb more housing demand to even out growth in the region, but it’s too early to tell what the impact will be from this election on regional supply.

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Case
Case
October 24, 2022 11:08 pm

I don’t think the bond market is going to help you understand the interest rate risk past a few months just like the long term weather forecast shouldn’t be trusted for big decisions past a few days.

Umm..really
Umm..really
October 24, 2022 11:07 pm

Would hate to leave a decent variable only for the BOC start to taper a bit a year from now.

That’s really the rub, it’s an “it depends” kind of thing. If you are looking at borrowing over a 10 or 20 year plus time frame you can really balance things over term, but if it’s looking at 5 years or under it becomes much more guess work. A person can really only know their circumstances and figure out what to do. All the best, hope it works out as well as possible.

Rune
Rune
October 24, 2022 10:33 pm

Does anyone understand the bond market very well? I’m trying to understand the risk to interest rates at this time. I have to come to a decision if we are to keep our variable (prime-1.3) or lock in for 3 years. Market seems to be pricing in a couple more hikes than plateau but I feel there are a lot of unknowns. Would hate to leave a decent variable only for the BOC start to taper a bit a year from now.

Introvert
Introvert
October 24, 2022 9:36 pm

patriotz, who’d you vote for in Ottawa’s mayoralty race?

Whateveriwanttocallmyself
Whateveriwanttocallmyself
October 24, 2022 7:47 pm

A similar thing happened on the way up too, except prices were rising and affordability was increasing.

Frank
Frank
October 24, 2022 6:59 pm

Prices may have decreased in some regions, not all, but affordability is even worse. Go figure.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
October 24, 2022 6:52 pm

Alright Patritots, I don’t get the math then. Because as long as the assessments are fair and equitable for everyone then all the municipalities have to do is adjust the tax rates to meet their budget.

So yes you could provide assessments on a bi-annual basis and not at current market value. You would just set a base year and adjust the sales during the next year to that base year. Trend and bend baby.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
October 24, 2022 6:42 pm

Patriotz, I am impressed with your ability to google. With actual value the property’s market value is determined as at July 1 but in the condition as at October 31. That’s an important detail that differs in most ways than people think of as Market Value. Not many people buy a house based on what it will look like 3 or 4 months from then. So you could buy a house on July 1st but the assessed/actual value for the next year will be different than your purchase price. Even though you bought it at fair market value on July 1st.

Of course you don’t believe me
So here are four properties that sold on July 1, 2021 and their July 1, 2021 assessed value

1540 Eric bought for $1,275,000 Assessed Value $1,101,000
1997 Scottswood bought for $1,039,000 assessed for $1,059,000
649 Cornwall bought for $1,305,000 but assessed for $1,175,000
4988 Georgia Park bought for $1,829,000 assessed for $1,791,000

Most are pretty close but some are quite different. It all depends on how the BC assessment application crunches the numbers when doing mass valuations. Some are high and some are low but few if any are right on the button. These actual values are computer generated which is then reviewed by an assessor. Almost like Zillow does but with a review.

What happens when someone calls up to complain about their assessment not being the same as their purchase price the immediate answer is ” Yes that’s true, but it’s based on the condition of your property as at October 31″ That’s enough to confuse them and they go away.

So if you believe that your property would have sold at the assessed value on July 1 – you’re fooling yourself. It should be close which is close enough for tax purposes. A little high or a little low won’t make a significance in what you pay in taxes. But there will be a difference. Market Value and Actual Value are equivalent but they are not equal to each other.

patriotz
patriotz
October 24, 2022 5:36 pm

Many cities have assessments that are way off sales prices (25% off on average), and they don’t update them.

Don’t confuse a bug with a feature. Ontario does not do annual market value assessments like BC. It only does them every few years and uses an interpolation formula. For my 2022 taxes my house is assessed at all of $9000 more than I paid for it almost a decade ago.

But this was already discussed a month or two back.

patriotz
patriotz
October 24, 2022 5:31 pm

The assessments could be off by $200,000 but as long as everyone’s assessment is off by $200,000 then it is still fair and equitable to everyone in order to determine property taxes.

Well no, actually. Signed, Your Math Teacher.

James Soper
James Soper
October 24, 2022 3:59 pm

Almost half of recent immigrants are “considering moving out of Canada “. Where? Mexico, many millions leave Central America every year. People from developed European countries want to come to Canada. The U.S., good luck paying for health care. Most immigrants might not be buoying the real estate market with suitcases full of cash, but they are putting ever increasing strain on the system and that causes prices to escalate. As long as demand increases, prices will increase. There is no way we will ever meet demand.

You should really just leave the immigrants alone at this point Frank. Also, somehow in spite of all the immigrants that have come to Canada since February, prices have decreased.

Frank
Frank
October 24, 2022 2:29 pm

Almost half of recent immigrants are “considering moving out of Canada “. Where? Mexico, many millions leave Central America every year. People from developed European countries want to come to Canada. The U.S., good luck paying for health care. Most immigrants might not be buoying the real estate market with suitcases full of cash, but they are putting ever increasing strain on the system and that causes prices to escalate. As long as demand increases, prices will increase. There is no way we will ever meet demand.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
October 24, 2022 2:05 pm

To have access to their system for a couple of days would be something. But they don’t talk much about it.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
October 24, 2022 1:57 pm

Not only do they do them once every few years, but they use a different methodology than BC Assessment. You might think how many ways can someone assess value. Well there a lots of different ways especially when it comes to the productivity of farmland.

In the end it is all about fairness. The assessments could be off by $200,000 but as long as everyone’s assessment is off by $200,000 then it is still fair and equitable to everyone in order to determine property taxes.

BC could and has in the past gone to a bi-annual assessment. It’s questionable if it would save the province any significant money. They would only have to produce a roll once every two years to the municipalities but other than that the amount of work that has to be done by the assessors is the same. The assessments are used for a lot of different purposes besides taxes. The fire chiefs used them to assess damages and when the news tells you that the flood has caused $200,000,000 in damages. They are getting that data from the assessment roll.

Patrick
Patrick
October 24, 2022 1:05 pm

Anyone interested in the exact method they use to calculate the coefficient of dispersion for property assessments, here you go (an example from NY) . It looks like in this case, they are incorporating things like appraisals and other data. BC might use a simpler method. https://www.tax.ny.gov/pdf/publications/orpts/cod/2013mvs/appendixb.pdf
Warning, it’s not for the faint of heart, and let’s hope it’s not going to be on the HHV exam.

In absence of specific details from BC how they calculate it, I think we’re safe to assume the COD it is close to the standard deviation. In which case as Kristan pointed out this means “ that 68% of properties have actual values (at the time of assessment) within 6.2% of the assessed value”

patriotz
patriotz
October 24, 2022 12:59 pm

There is a difference between market value for sale purposes and actual value for tax purposes

BC Assessment Act, 19 (1):

“actual value” means the market value of the fee simple interest in land and improvements;

Whateveriwanttocallmyself
Whateveriwanttocallmyself
October 24, 2022 12:55 pm

Definitely the assessments are more accurate in a flat market. Then there is a ton of data that can be utilized. Big data rules.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
October 24, 2022 12:54 pm

Patrick notice from your chart it does not say market value. It states “actual” value. Actual value is defined differently from market value. The two should be close to each other especially if you live in a neighborhood of homogenous housing such as Royal Bay. Sometimes they are not because of the diversity of properties in a neighborhood such as in Oak Bay. The more uniform the neighborhood or type of property the higher the accuracy. But they all averaged out in the bigger market place.

It’s not that you can’t use the assessments as a gauge of a property’s worth. It gives an estimate that you can built on when you incorporate all the changes that have been done to the property over the years. If your home has fallen into disrepair or you have not done normal maintenance then the likelihood is that it will sell well below the actual value. If the interior has been gutted and updated it is likely going to sell well above the actual value.

In the big picture of the market place the assessments are very accurate for tax purposes, just not necessarily on an individual property basis when buying or selling.

Patrick
Patrick
October 24, 2022 12:52 pm

Unclear to me how they are measuring that. Assessment is valuation on July 1. So are they comparing sales around that time vs the assessed value? But those sales should be the basis of that assessed value, so getting those close is no feat.

Agreed. They must measure it based on sales around that time. And they would have the opportunity to make it 100% (instead of 98%), just by increasing their assessments for all by 2%. I think the “feat” is that they bother to do these calculations at all. Many cities have assessments that are way off sales prices (25% off on average), and they don’t update them. So our BC assessment gets to boast that they aren’t as bad as those guys.

Patrick
Patrick
October 24, 2022 12:49 pm

Is COD basically the same thing as standard deviation?

I looked it up, and there are different types of COD calculations.
One is the one I used,
Another is the one you said… “ Karl Pearson Coefficient of dispersion is simply the ratio of the standard deviation to the mean.”
More details… https://www.statisticshowto.com/coefficient-of-dispersion/

Umm..really
Umm..really
October 24, 2022 12:49 pm

Consider a recent survey of 500 newcomers to Canada by Angus Reid Institute and Publicis Media that showed almost half intend to leave Canada or are considering leaving. For too many, Canada’s cost of living and the housing market are challenges.

From: https://financialpost.com/news/economy/victor-dodig-canada-immigration-housing-affordability

For those that believe immigration will always bouy real estate.

Kristan
Kristan
October 24, 2022 12:42 pm

Great, if so then yes, COD * average = sigma in the distribution of value vs. assessed.

Again, good job by them. And thanks!

Patrick
Patrick
October 24, 2022 12:38 pm

Is COD basically the same thing as standard deviation?

I think COD = (mean deviation)/ (average from the data)

From my example:

6.19% = (mean deviation)/ $1million
So mean deviation on a $1 million average house would be = $61,900

Kristan
Kristan
October 24, 2022 12:32 pm

Hey Patrick,

Thanks! Is COD basically the same thing as standard deviation? Meaning, that ~68% of properties have actual values (at the time of assessment) within 6.2% of the assessed value?

If so, doubly impressive.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
October 24, 2022 12:26 pm

You nailed it Rodger. The 98% refers to where the majority of property values lay. And 98% is pretty awesome.

Patrick
Patrick
October 24, 2022 12:24 pm

One thing that would be nice to know is the variance in the ratio of assessed/sold. Getting the mean right is impressive, getting small variance even more so.

Kristan,
They do measure the coefficient of dispersion (COD). It is 6.19%

My understanding is, if an average house is $1 million, that means their assessment would be off, on average by 6.19%, about $62,000

This is from https://info.bcassessment.ca/services-and-products/Pages/Assessment-Roll-Quality.aspx

53714C55-6D26-48A4-BCA6-136DEE0123B5.jpeg
Whateveriwanttocallmyself
Whateveriwanttocallmyself
October 24, 2022 12:20 pm

And that would be a wrong assumption. As an assessor would have logged any upgrades to the property if there had been a site visit in 2020. Now that the property sold at 30 percent over assessed value that would red flag this property for a least a site visit to update the information they have on file.

It is impossible for every property to be physically inspected each year. BC Assessment doesn’t have the staff to do this. Depending on the area, each assessor has between 10,000 to 20,000 properties that they are responsible to assess. How many times have you ever had an assessor come to your property? My guess is that most of us have never had an assessor come to our door and ask to come inside.

Rodger
Rodger
October 24, 2022 12:16 pm

All BC assessment’s 98% accuracy claim is saying is that they got the mean value correct. It doesn’t say anything about the variability of their estimate relative to the actual variability. To get this, we need the standard deviation of their assessment values. I am sure they have this info and I understand why they wouldn’t want to disclose it. Ever heard of the six-foot tall man who drowned crossing a river that was three feet deep on average?

VicREanalyst
VicREanalyst
October 24, 2022 11:58 am

Not necessarily Vicanalyst. They would have to set up an appointment with the new home owner to come through the property. My guess is that very few people have had such a call after buying their home.

I am not following? I am just saying that the assessed value of $964k is what I think the property was approximately worth in April 2020.

Umm..really
Umm..really
October 24, 2022 11:56 am

Geez, what happened to all the folks that thought there was no way another 100 points could be added to the BoC rate by Xmas?

Whateveriwanttocallmyself
Whateveriwanttocallmyself
October 24, 2022 11:53 am

Not necessarily Vicanalyst. They would have to set up an appointment with the new home owner to come through the property. My guess is that very few people have had such a call after buying their home.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
October 24, 2022 11:50 am

Patrick 98% is excellent. But if you read further into it, BC Assessment discloses that individual properties may vary considerably. I love big data, it sets a benchmark for the bigger market-place, but on a one to one basis it’s not so good.

What you find is that home owners misread that 98% and assume that that was what their home was worth on July 1 of the previous year within a couple of percent of its assessed value. That’s not what that statistic is meant to imply. But on the whole, BC Assessment is excellent and they have been able to sell their assessment system around the world. It’s such a good system that they can calculate the value of a view, by floor, in a condominium complex. That’s frigging amazing to be able to calculate a value on something that is so subjective to so many different people. That doesn’t mean that is what the condo will sell for, it means that they are providing a fair and equitable actual value relative to other properties that have sold for tax purposes.

When you read your tax notice. They don’t use the term “market value” they use the term “actual value”. There is a difference between market value for sale purposes and actual value for tax purposes. One is determining the most probable sale price of a property the other is determining what is fair and equitable to home owners. Definitions are important.

VicREanalyst
VicREanalyst
October 24, 2022 11:49 am

Long time since a government assessor has been through the property at Ascot as it sold for 30 percent over assessed value. the purchaser could see a good size property tax hike next year or the following year.

$964K would have been an April 2020 purchase price.

patriotz
patriotz
October 24, 2022 11:17 am

“An Assessment to Sales Ratio (ASR) is a measurement of how close the assessment of a sold property is to market value. In other words, how accurate is the assessment.”

I’m surprised they would say that, given that the assessment is simply an estimate of market value on July 1 of any given year, and consequently can be greatly out of date at time of sale. That doesn’t mean that the assessment was inaccurate.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
October 24, 2022 11:05 am

Absolutely and couldn’t agree with you more Kristan. On a one on one basis the Sales to Assessment Ratio can be garbage. You need a minimum sample of 30 to 50 sales after tossing out the outliers before the SAR is meaningful. You want to see where 90 to 95 percent of properties lay around the median. One of the reasons why I think that the size of the sample as well as the range from low to high should be quoted along with the median ratio being used. Smaller samples have more variability.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
October 24, 2022 10:56 am

Just doing some Monday morning quarter backing on what is happening to the condominium and town house market in Langford and Colwood. There has been a substantial increase in the number of active listings for strata homes in this area since January. There are now some 165 strata homes for sale in Langford and Colwood but the absorption rate is only about 30 a month. A lot of these active listings are pre-construction so they may never be built or completed or may even be scaled back. If you exclude pre-construction then there is about a four month supply which is reasonable and allows prospective purchasers some (not a lot) negotiation room on the asking price.

Re-sale prices for these Stratas has pulled back a bit but someone that bought say 12 months ago would not necessarily take a loss (excluding sale’s commission and closing costs) if they sold today. In the last 12 months there were about 500 sales, so the number of households that have been adversely effected by the interest rate increase is quite small. It’s going to take a couple of more interest rate hikes before we see any significant change in the real estate market.

However, if you bought a strata as an investment solely for appreciation in the last two or three years, you might want to revisit your game plan.

Kristan
Kristan
October 24, 2022 10:42 am

Yeah, there will be fluctuations in one property to the next when it comes to assessed values. But, averaging over the distribution, it’s been an effective measure. I mean, it’s sort of amazing that the ratio selling price/2021 assessed value has been one of the best metrics for tracking the market through ups and downs this year.

One thing that would be nice to know is the variance in the ratio of assessed/sold. Getting the mean right is impressive, getting small variance even more so.

Patrick
Patrick
October 24, 2022 10:33 am

Long time since a government assessor has been through the property at Ascot as it sold for 30 percent over assessed value. the purchaser could see a good size property tax hike next year or the following year.

The BC assessment office measures the accuracy of their assessments. Their current measure is 98%, which is incredible accurate. This would be the selling price of properties sold close to July 1, compared to the assessed value on July 1. Seems incredible that they measure 98% accuracy given all the renos etc. that they are unaware of. Maybe they exclude outliers? Or maybe they “guess” at average renos and apply it to everyone, so their averages work out, even though they’re way off on the homes that actually have renos done. So the 98% doesn’t mean every assessment is within 2% of selling price, it means the average assessment is within 2% of the selling price.
So for every $ of “under-assessed home” there must be a $ of “over-assessed home”.
But here’s their site.,.
https://info.bcassessment.ca/services-and-products/Pages/Assessment-Roll-Quality.aspx

“An Assessment to Sales Ratio (ASR) is a measurement of how close the assessment of a sold property is to market value. In other words, how accurate is the assessment.
An ASR is calculated by dividing the property’s assessed value by the property’s selling price.”

Whateveriwanttocallmyself
Whateveriwanttocallmyself
October 24, 2022 10:26 am

Long time since a government assessor has been through the property at Ascot as it sold for 30 percent over assessed value. the purchaser could see a good size property tax hike next year or the following year.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
October 24, 2022 10:07 am

What no one has yet considered is that with the banks projecting a decline of say 15% how is this going to impact the business model for high ratio lenders? How would high ratio lenders explain to their stakeholders that they will finance a property with 5% down but with the expectation that in a year or so from now that property will have a value of 15% less? That sounds like a really bad business model to me.

There once was a high ratio lender known as MICC in the 1980’s. I believe during the correction in the 1980’s it went bust.

So how strong is the business model for high ratio lenders in today’s market correction environment? Or will they have to lobby the government to increase the percentage of equity required so that no other high ratio lender has an advantage over another?

We are about to leave the days of sales persons running the head of these corporations where nothing they did was wrong as the market increases covered the mistakes. Now I suspect the bean counters are going to form the boards of directors and we may see changes.

Any worthy hypothesis should be testable with a projection of things to come. Will we see a change in the Board of Directors at CMHC signifying a change in direction?

Things that make you go hmmmmm.

Maggie
Maggie
October 24, 2022 9:46 am

I wouldn’t worry about that, like i been saying all along, most Victoria folks don’t have much exposure to how capital markets work so they end up too slow to act. That’s not their fault, its just the way things are in a small town.

Us folks in Victoria are too busy whittlin’ on the porch or huntin’ squirrels to worry about them fancy capital markets in the big city.

Patrick
Patrick
October 24, 2022 9:35 am

Interesting. My mistake I wonder if they changed that. Could have sworn it was detached at some point

Right. Not sure when/how it changed. Or how they weight dwelling types to match the changing mix in different markets. Seems like a non-trivial task.

Marko Juras
October 24, 2022 9:03 am

3760 Ascot Drive

Sold 5k over asking at $1,255,000

Stroller
Stroller
October 24, 2022 8:58 am

May I prevail on one of the illuminati for the sales price of 3760 Ascot Drive, please…..

Patrick
Patrick
October 24, 2022 8:45 am

Note that Teranet only tracks detached prices,

Are you sure?

This is current Teranet published methodology

https://housepriceindex.ca/wp-content/uploads/2017/08/Teranet-National-Bank-House-Price-Index-Methodology-Overview.pdf

https://housepriceindex.ca/about/our-methodology/

“The indices are estimated on a monthly basis by tracking the sale prices of condominiums, row/town houses and single family homes within these six metropolitan areas”

Marko Juras
October 24, 2022 8:31 am

Sales: 350 (down 35% from same time last year)

Looks like most likely we end at 475 +/- with a reasonable chance we hit 500 sales.

Marko Juras
October 24, 2022 7:02 am

https://realestatemagazine.ca/canada-posts-another-record-home-price-drop-in-september/

Home prices in Canada fell 3.1 per cent from August to September, according to Teranet-National Bank House Price Index, posting the largest monthly decline since the index began in 1999.

The most significant price declines were in:

Victoria (-5.9 per cent),
Vancouver (-3.5 per cent)
Hamilton (-2.1 per cent)
Home prices increased in:

Calgary (+1.2 per cent)
Halifax (+1.1 per cent)
Edmonton (+0.2 per cent)

Since its peak in May, the composite index has already declined by seven per cent. In contrast, during the 2008 financial crisis, prices fell by only 6.2 per cent over the same period and by 9.2 per cent in total over eight months, according to the Home Price Index.

Year-over-year, home prices are still in the green. The country’s largest CMAs recorded an annual gain of six per cent in September.

The economist behind the report, Darren King, expects house prices will continue their contraction and exceed that experienced during the financial crisis of 2008. King anticipates a record cumulative decline of about 15 per cent nationally by the end of 2023, assuming a policy rate peaks around four per cent and the Bank of Canada lowers rates in the second half of 2023.

Although corrections are happening in most markets covered by the index, those that have experienced the most significant price growth over the past two years have also experienced the most significant declines to date. Teranet expects price corrections to be more significant in Ontario, B.C. and the Maritimes.

The Home Price Index is estimated by tracking home prices using data collected from public land registries. All dwellings that have been sold at least twice are considered in the calculation of the index.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
October 23, 2022 7:12 pm

I agree with you Barrister, the effects of the higher interest rates have yet to be seen in the marketplace. Developers and home owners are still clinging to high prices. That’s why sales are lower. But as inventory increases and days-on-market increases then there will be cracks in the marketplace.

My opinion is that it will be in new construction. I’m seeing an increase in the number of listings for properties that were built and purchased a year or two ago. As more of these come onto the market, the developers and builders will have to lower prices to compete against them. A buyer will pay a little bit less for a home that is one or two years old but if the gap widens then the contractors and developers will have to follow.

It’s a bad time to be a land developer, sales activity is extremely low. Unlike a home owner, these developers can not sit and wait it out. Lots of bills to pay and nothing coming in.

Rodger
Rodger
October 23, 2022 6:40 pm

0.75% this week and 0.25% in December. October: some ambiguity about future rises. December: 2023 guidance for “data dependent”.

VicREanalyst
VicREanalyst
October 23, 2022 5:31 pm

Last time I passed on their thoughts I was seriously attacked here.

I wouldn’t worry about that, like i been saying all along, most Victoria folks don’t have much exposure to how capital markets work so they end up too slow to act. That’s not their fault, its just the way things are in a small town.

Barrister
Barrister
October 23, 2022 4:34 pm

I was talking with my friends from my days on Bay street yesterday. While there is a lot of disagreement on many of the specifics their general take is rather bleak. Last time I passed on their thoughts I was seriously attacked here.

My own gut feeling is that we might be in for some serious difficulties, a lot more serious than many suspect. But I dont make predictions so have a great week one and all.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
October 23, 2022 4:27 pm

It does seem that the person buying the property on St. Stephen was considering the cost of demolition as well as soft costs to finance and their time before they can obtain approval to build. If the lot were vacant and ready to build on, I would say Marko’s estimate is pretty good. Say $675,000 as if vacant less $175,000 for demolition, soft costs and the builder’s time.

But why wasn’t a first time house buyer interested? Or an investor looking for a rental property? They don’t have all those costs as they are looking at a home that could be fixed up. These properties with marginal homes (is it a fixer upper or is it a tear down) have always been quirky properties and can be telling of where the market is going.

One sale doesn’t make a market but this may be one indicator that those thinking of doing quick cosmetic upgrades and investors looking for rental properties have pulled back from the market. That means less competition and less bids.

The only time you get a smoking hot deal on real estate is when you are the only bidder.

Rush4life
Rush4life
October 23, 2022 4:01 pm

Welcome back debt monster – stick around a while – definitely we have come a long way since the beginning of the year. I remember at the beginning of the year Scotiabank was predicting BoC rate to hit 3% this year and everyone laughed. ‘if rates get that high the economy would collapse’ ‘canada relies on real estate and would never let that happen’. Admittedly I never thought it would get close to this high this quickly. Haven’t had a rate increase over 25 bps since the 90s – I think the majority of us underestimated how serious banks would take inflation. Curious to see how 2023 pans out – what’s ur best guess?

Thurston
Thurston
October 23, 2022 3:27 pm

Debt monster good to c your back u bring great wisdom

The Debt Monster
The Debt Monster
October 23, 2022 3:14 pm

Hi guys, just checking in after a few months. I’m not going to be posting but I wanted to see how “my guys”, that I left in my place, were doing. They were all very accurate in their predictions from May of this year.

Pay attention to them. Well, Patrick seems a little less effective in his warnings but….

<

blockquote>
>”Local Fool
I have my first renewal in 2024, and I can’t tell you how unconcerned I am with what the overnight or 5 year bond rate will be then. It may be higher than my current 2.69%, but it ain’t going to 8%. If by some miracle it did, we’ll have far bigger problems like wide scale and sovereign defaults, accelerating social and political tensions, and even war. No one will be buying houses at that point…”

“”patriotz
May 13, 2022 12:26 pm
would you be able to afford a house if they were now $800k instead of $1.6M but mortgage rates are at 8%?”
What were house prices the last time rates were 8%? Not $800K I think. I’m pretty sure 8% would crater the RE market – and consumer spending – coast to coast. Which is why I don’t think we’ll see rates that high – I think inflation can be brought under control before that. We could well see 6% though.”

“Patrick
May 15, 2022 5:07 pm

Well, considering Scotiabank’s mortgages are already over 4.5%, I would have to suggest that the market won’t crash at that rate but they are certainly starting to turn over.

Thanks for the reply DM.
We have actually found “common ground”. If your prediction of 8% mortgages comes to pass, I share your view of a crash coming to house prices. And if we get 4.5% mortgages, there’ll be no housing crash.”

Roger Need
Roger Need
October 23, 2022 2:35 pm

This Wednesday the BOC will increase the bank rate by at least .5%. That will bring the variable rate at most Canadian banks to 5.7% with a 50 basis point increase and very close to 6% if we get a 75 basis point increase. Anyone with a variable they took out at 3% or less will hit their “trigger rate”. If they choose to switch to a fixed at 5.5% (typical 5 year posted fixed rate) their monthly payment will go way up. For example a 500k variable taken out at 3% has a monthly payment of $2366. If they have 3 years left and switch to a 3 year fixed the new payment will be $2900 or a monthly increase of $534. I suspect this will be a shock to many who have making the same payment since they took out their mortgage and not thinking much about all the bank rate discussion in the news.

Roger Need
Roger Need
October 23, 2022 1:54 pm

Bloomberg reports… https://ca.news.yahoo.com/surprisingly-hot-canada-inflation-6-124051324.html

The consumer price index was up 6.9% from a year ago, higher than economist predictions for a 6.7% gain, Statistics Canada reported Wednesday in Ottawa. During the month of September, prices rose 0.1% versus expectations for a 0.1% decline.

The data caused traders to shift bets toward a larger rate hike next week, with markets now pricing in a 60% chance of a 75-basis-point increase from the Bank of Canada. That would take the benchmark overnight lending rate to 4%, where it hasn’t been since early 2008.

Thurston
Thurston
October 23, 2022 1:25 pm

Thinking 75 points myself but don’t see them rising too much further I think we are getting to a point where the crap economy will be kicking in soon enough to kill inflation

Patrick
Patrick
October 23, 2022 1:12 pm

What’s the call next week?

Put me down for 75.

Patrick
Patrick
October 23, 2022 1:07 pm

I see your point but you said rates had to rise from 7% to 14% to control inflation last time. On a $100k debt, that is monthly payments going from $707 to $1204, a 70% increase

Yes, all valid points, and I agree. The starting point matters in rate hikes. To be clear, I wasn’t talking about mortgage payments, just BOC rates to control inflation. Fwiw) I don’t think that house prices don’t seem to co-relate one way or another with rate rises (or falls). For example, during the 86-90 rate rise, house prices doubled. Same thing in the 1970s. Do I think that means that rising rates means higher house prices – no! There’s always other factors at play.

But the main point I’m making is that if we have persistent inflation (for example 6% or higher), history tells us that BOC rates can rise to 14% like they did in 1990. There’s much more to inflation than house prices (such as food, oil/energy, salaries etc.) so I don’t think that house prices matter that much (or at least shouldn’t matter much. to the the central banks.

The key is what level of rates causes a recession – that seems to be what’s needed to control inflation, but in the 1980 period, we needed TWO recessions and extreme rates (20%) to kill inflation. For example, we might get a recession/unemployment, but inflation stays high (ie-stagflation). So we need even higher rates. We may see that.

VicREanalyst
VicREanalyst
October 23, 2022 12:45 pm

Marko, what would you estimate the cost would be to demolish a house like that? Google says $40k, but I suspect that’s way too low given the new regulations and the potential for asbestos.

Given the math probably somewhere around 75k to 125k if a bare lot would see for 675k.

Maggie
Maggie
October 23, 2022 12:41 pm

40′ lot + house needs to be demolished (likely environmental work) + hand stick deconstruction + market all suppressed the price.
I think a cleared 50′ relatively flat lot in the Oaklands area fetches 675ish right now.

Marko, what would you estimate the cost would be to demolish a house like that? Google says $40k, but I suspect that’s way too low given the new regulations and the potential for asbestos.

VicREanalyst
VicREanalyst
October 23, 2022 10:49 am

What the hell is the world coming to, me and Patrick actually agree on interest rates.

What’s the call next week? 75bps is what I am going with. Imo, this one will hurt as the last hike mearly hit the trigger rate for most who went variable since covid, this one will cause an increasing balance.

Marko Juras
October 23, 2022 9:59 am

Speaking of forced sales, my feed just showed 2651 Mt Stephen ave in Oaklands just sold for $500k on a $650k listing (originally 699, assessed value $936k!). It’s clearly lot value only, but I can’t recall the last time a sfh lot in a desirable central location went for that little.

40′ lot + house needs to be demolished (likely environmental work) + hand stick deconstruction + market all suppressed the price.

I think a cleared 50′ relatively flat lot in the Oaklands area fetches 675ish right now.

Patrick
Patrick
October 23, 2022 9:11 am

What the hell is the world coming to, me and Patrick actually agree on interest rates.

🙂 +1

Barrister
Barrister
October 23, 2022 9:09 am

What the hell is the world coming to, me and Patrick actually agree on interest rates.

Patrick
Patrick
October 23, 2022 8:26 am

Here’s a historical chart of BOC overnight rates (currently 3.25% with inflation of 6-8%).
You can see that BOC rates rose from 7 to 14% during the period 1986-90 where inflation rose from 4 to 6%.

11A712A5-1490-4CE7-932B-048C26107E19.jpeg
Patrick
Patrick
October 23, 2022 8:19 am

If I was betting (and I am), it would be that interest rates are going to rise up a lot further. The last time inflation was in the 4-6% range in Canada was 1986-89. And during that time the BOC rate rose from 7 to 14% to combat it.

We are just in inning one with the BOC rate at 3.25%. We have recently become accustomed to this bizarro world where you can fight 8% inflation with 3.25% rates. Historically, to state the obvious, you need BOC rates HIGHER than inflation to fight it. Rates will keep rising for years. Lock in whatever rates you can now

Chart of Canada inflation …. 1950 to 2012 (I posted a chart of BOC rates a few posts back)…

D4F908FD-3283-4583-8388-97B2D9225239.jpeg
Barrister
Barrister
October 23, 2022 7:57 am

Josh, I would not be betting on interest rates dropping anytime soon myself (and by soon I mean the next five years) but on the other hand my wife is using my crystal ball as a paper weight. Ask five experts and you will get eight totally contradictory opinions. I would get the longest mortgage available that I can comfortably afford simply to avoid the black cloud of worry. But I have always been risk adverse.

DuranDuran
DuranDuran
October 23, 2022 7:20 am

Speaking of forced sales, my feed just showed 2651 Mt Stephen ave in Oaklands just sold for $500k on a $650k listing (originally 699, assessed value $936k!). It’s clearly lot value only, but I can’t recall the last time a sfh lot in a desirable central location went for that little.

Josh
Josh
October 23, 2022 2:21 am

The brokers I’ve talked to are recommending short term fixed with the expectation of renewing at a lesser rate.

Are they just crystal balling that? I’ve been wondering if I should put down lump sums before my renewal to soften the blow.

Patrick
Patrick
October 22, 2022 1:53 pm

First point is that Canada wide data is going to show a bias toward Toronto simply because it’s so big

No. You are using the term “bias” incorrectly. Canada wide statistics will include about 15% of Toronto data because it is 15% of the population. That’s not a “bias”. A “bias” would be if the stats included MORE than 15%.

Because a bias is a “prejudice in favor of or against one thing, person, or group compared with another, usually in a way considered to be unfair.”

patriotz
patriotz
October 22, 2022 1:44 pm

where are these people going to find a place to rent in Victoria or Vancouver after they are forced to sell?

How about the same places they have sold (I mean collectively, not individually). Think about it.

I can also tell you that the rental market in Vancouver after the 80’s bust was very weak.

deryk houston
deryk houston
October 22, 2022 1:07 pm

If everything does go into the toilet here in Victoria because of high personal debt, high interest rate, collapsing economies around the world and the inability to hang on till times get better, I am left wondering if there might be a mass movement of people to less expensive provinces in Canada. Otherwise…. where are these people going to find a place to rent in Victoria or Vancouver after they are forced to sell?
For example: One can still buy a fairly decent duplex (Both units included) for $275,000.00 – $300,000.00 total in the Maritimes.
It seems like that might be one of the few choices left for people if things get as bad as many are saying.
And what would that do for Victoria and surrounding area?
Hope people have allowed for the ability to hang on in their long term budgets.

fertilesaanichfields.jpeg.jpg
patriotz
patriotz
October 22, 2022 1:01 pm

No, Leo’s posted chart is Canada wide data and it It is showing affordability, not prices.

First point is that Canada wide data is going to show a bias toward Toronto simply because it’s so big, is always one of the most expensive markets (skews average), and the rest of Ontario tends to track it. Second point is that the blue line on that chart is average price.

Patrick
Patrick
October 22, 2022 10:45 am

No surprise about the improvement in affordability that occurred 1990-95.
There was a bad two year long recession, 1990-92 (Canada and USA) , where unemployment rose from 7 to 11%.
Mortgage Rates fell improving affordability. From 14% to 7% 5-year mortgage 1990-95. Incomes up (for those employed) went up with inflation . Canada prices were flat (down in Ontario).

1A5F39C5-67DF-45A0-85B6-DC88E2AE67FA.jpeg
Patrick
Patrick
October 22, 2022 10:31 am

It shows a lot of bias toward Toronto. Look at that runup in the second half of the 80’s. Also note how the BC/Alberta bust of the early 80’s had little effect on the graph.

No, Leo’s posted chart is Canada wide data and it It is showing affordability, not prices.
The un-affordability run up in 85-89 was a Canada wide “double whammy” – Canada prices doubled and mortgage rates rose from 10% to 14%. As you can see in the charts of Canada wide data for prices and mortgage rates.

8D85688D-6238-46C3-8E41-4E6C106B828F.jpeg
patriotz
patriotz
October 22, 2022 9:18 am

It shows a lot of bias toward Toronto. Look at that runup in the second half of the 80’s. Also note how the BC/Alberta bust of the early 80’s had little effect on the graph.

Patrick
Patrick
October 22, 2022 3:44 am

I don’t want to hope anyone going bankrupt. I am just stating what I think is an rational explanation on why bankruptcy filings will lag rate hikes.

Fair enough. With homeowner insolvencies at almost zero, I guess they have nowhere to go but up. How much is the question.

As mentioned, I’d expect a big rise in unemployment and insolvencies if we get a recession. Bloomberg economist modeling puts the chance of recession by October 2023 at 100%. Despite their dismal track record, you gotta love the economist’s bravado of a “100%” prediction.
https://www.bloomberg.com/news/articles/2022-10-17/forecast-for-us-recession-within-year-hits-100-in-blow-to-biden?sref=DVLxwQGZ

VicREanalyst
VicREanalyst
October 21, 2022 11:30 pm

Are you only hoping to see more homeowner bankruptcies or are you wanting to see a rise in bankruptcies in general?

I don’t want to hope anyone going bankrupt. I am just stating what I think is an rational explanation on why bankruptcy filings will lag rate hikes.

Rush4life
Rush4life
October 21, 2022 6:18 pm

A recent homebuyer might be feeling pain with the variable rates. But homeowners overall pay way less per month on mortgage payments than rent

Fair enough and agreed.

Patrick
Patrick
October 21, 2022 6:09 pm

Strange take. As discussed many homeowners are variable rate holders (especially as of late) which means they do have to make higher payments.

Rush,
My post included the higher payments from rate rises that would have affected variable rate payments. So not following your point.

Here’s what I said.
“ But it’s not only rising prices and low mortgage rates that helped homeowners.”

A recent homebuyer with little equity might be feeling pain with the variable rates. But homeowners overall pay way less per month on mortgage payments than rent. Whereas all renters pay full rent, that expense never goes away. Of course most homeowners have equity and could sell the house before declaring bankruptcy.

Summary: I don’t see a big rise coming in bankruptcies unless unemployment rises and we have a recession.

rush4life
rush4life
October 21, 2022 6:01 pm

They don’t have to pay rent, so their finances aren’t hurt by the big rent rises. Leaving them more money to pay their bills, and not go bankrupt.

Strange take. As discussed many homeowners are variable rate holders (especially as of late) which means they do have to make higher payments. Much higher than many of them likely expected. Renters have had a 2% increase in the last few years provided they stayed put. Only renters who have been forced to move are feeling the pinch. Also when you go into a rental situation you know what you are paying. There are no surprise 50% increases YoY like what has happened on variable rate mtg payments as of late. They also dont’ have to worry about a leaky roof expense etc – all of that is paid by the owner.

As for the bankruptcy index i suspect it will increase soon. Here is a prominent manager of a consumer insolvency firm out east on twitter:

[imgcomment image[/img]

Patrick
Patrick
October 21, 2022 5:24 pm

Patience, I don’t think most people really felt the rate hikes till that 1% increase in the middle of July, so its only been 3 months which most people should be able to scrape by. Lets revisit again come January.

Are you only hoping to see more homeowner bankruptcies or are you wanting to see a rise in bankruptcies in general?

Mt. Tolmie Foothills
Mt. Tolmie Foothills
October 21, 2022 5:21 pm

Marko, recently you made a youtube video where you interviewed a family living in a small apartment in Croatia. Thanks for doing that, it is interesting to learn about daily life in other parts of the world.

Perhaps you could make a follow-up video the next time you are in Croatia. I have two questions for them:

  1. If they lived further from the city centre, they could afford a larger home with bedrooms for the parents and each of the kids. What is their reasoning in choosing the smaller apartment?

  2. Show them pictures and video of the tent city next to the courthouse. Explain how it went on for months, and the top 50 cm of soil had to be removed and sent to a hazardous waste dump afterwards due to contamination with needles and what not. Explain that this sort of disorder is an all-to-common occurrence in Canadian city centres. Ask if they would still prefer to live centrally if they had to face that.

Patrick
Patrick
October 21, 2022 4:55 pm

This owner bankruptcy filing index still at all time lows,

It’s worth mentioning that the hoyes homeowner bankruptcy index measures the % of insolvencies (bankruptcies or proposals) that are filed by homeowners. That’s why the scale is 0 to 100%. I posted about it here a few years ago when it was at 5% which was an all time low. Now at near 0% it’s insanely low. Theoretically it could fall when non-homeowner insolvencies rise. Though I don’t think that’s the main cause now because insolvencies in general are low.

But it is remarkable that something close to 0% of insolvencies are being filed by homeowners. Of course rising prices had a lot to do with that. But it’s not only rising prices and low mortgage rates that helped homeowners. They don’t have to pay rent, so their finances aren’t hurt by the big rent rises. Leaving them more money to pay their bills, and not go bankrupt.

patriotz
patriotz
October 21, 2022 4:24 pm

Rather, the drop in our HBI reflects a rise in home prices since insolvent homeowners purchased their homes and the resulting increase in their home equity. Homeowners with significant unsecured debt have been able to refinance this debt through a second mortgage or home equity line of credit.

In other words, insolvencies are still at all time lows because very few owners have bought at higher than current prices. Note that the graph only runs to January 2022.

VicREanalyst
VicREanalyst
October 21, 2022 3:59 pm

This owner bankruptcy filing index still at all time lows, though one of the credit counsellors at that firm reports an uptick recently.

Patience, I don’t think most people really felt the rate hikes till that 1% increase in the middle of July, so its only been 3 months which most people should be able to scrape by. Lets revisit again come January.

Marko Juras
October 21, 2022 2:55 pm

I was informed it was ‘a flip’. You are right though, they might just be calling something that needs to re-sell fast as ‘a flip’ when it is actually just life circumstance.

The friction costs are likely over 50k depending on the mortgage penalty (aka the purchase price would need to go up 50k just to break even). So someone is going to buy when the market is clearly trending down, interest rates heading up, with an anticipation of the market going up at least 50k just to break even? The flip story doesn’t add up.

Do you know why there is a different price on realtor.ca compared to the RE agent website? Is that common?

No idea, I don’t visit other agent’s RE websites. You can always ask your agent to clarify with the listing agent as to why there is a discrepancy.

None
None
October 21, 2022 2:47 pm

Marko –

I was informed it was ‘a flip’. You are right though, they might just be calling something that needs to re-sell fast as ‘a flip’ when it is actually just life circumstance.

Do you know why there is a different price on realtor.ca compared to the RE agent website? Is that common?

Marko Juras
October 21, 2022 2:44 pm

I know it sold a couple months ago for something close to this listed price. Looks like a flip that could very well go very very wrong.

First of all the property did complete successful. Failure to complete is ridiculously rare. I would estimate around 1 in 500. The failure to complete risk at this point in the market cycle is extremely low for a number of reasons including the majority of offers are conditional with plenty of time for subject to financing, sellers are asking for large deposits, etc. The risk for failure to complete was highest for contracts signed Feb to April, but we are now well past all of those deals completing.

No one is going to try and flip a near new condo in this market.

I’ve been involved in quite a few re-sells right after purchase and there is typically a reasonable circumstance behind it. For example, two out of town Microsoft employees purchased SFHs and then literally within weeks Microsoft shut down their office and due to the nature of their unique skillsets they had to move. The one house in Gordon Head I listed only six weeks after the purchase completed.

Friction costs in BC are absolutely insane. You have PTT, you have massive real estate fees, you have lawyers x2 (and conveyancing fees have skyrocket in last 18 moths), etc.

I know Eby wants to crack down on flippers but it is another non-sense political scapegoat. There simply aren’t that many flippers out there.

Marko Juras
October 21, 2022 2:30 pm

Did they necessarily sell? Lots of people start to take their listings off around now.

For the most part, yes. We will hit close to 450ish sales this month. People are still buying.

James Soper
James Soper
October 21, 2022 1:56 pm

Out of the 12 that sold, how many were less than assessment?

Did they necessarily sell? Lots of people start to take their listings off around now.

VicREanalyst
VicREanalyst
October 21, 2022 1:38 pm

SFHs under 1 million seem to be selling ok last 10 days. We hit 60 freehold active SFHs 1 mill or less in the core 10 days ago down to 48 active today.

Out of the 12 that sold, how many were less than assessment?

VicREanalyst
VicREanalyst
October 21, 2022 1:37 pm

I think in a failure to close scenario the seller needs to show that they simply tried to get the agreed to rate and not delay the sale going for aa high price…. is that correct?

Winning a judgment in court versus actually collecting the $ are two very different things.

patriotz
patriotz
October 21, 2022 1:34 pm

I would think majority would sell or go into foreclosure before making the move downstairs.

As a matter of fact the prior owners of the foreclosed house I bought had done just that, and the downstairs wasn’t even finished. They then rented out the upstairs in an attempt to keep afloat, but it wasn’t enough. After the foreclosure went through the lender paid the tenants to move out. I finished the downstairs.

Sidekick
Sidekick
October 21, 2022 1:30 pm

I expect a pretty big collapse in number of people going variable

Could be. I’m thinking there is a higher chance of rates being lower in 18 months than higher, so variable could still make sense. It’s pretty expensive to break a fixed mortgage if rates do end up dropping significantly.

None
None
October 21, 2022 1:27 pm

Thanks Ted & VicREanalyst!

This will be fun to watch. I feel really badly for people who made a risky decision to buy in this environment and get burned but someone who just wanted a flip – I want to see them get crushed.

Although, now that I think about it. If it failed to close that means that possibly some family will just be on the hook for the difference. If that’s the case though I don’t know why the house wouldnt be listed at 825K. I think in a failure to close scenario the seller needs to show that they simply tried to get the agreed to rate and not delay the sale going for aa high price…. is that correct?

Ted
Ted
October 21, 2022 12:47 pm

None, good place to find sold prices is BC Assessment.

https://www.bcassessment.ca//Property/Info/RDAwMDEwUEtSQg==

caveat emptor
caveat emptor
October 21, 2022 12:27 pm

While Leo’s content is at an all time high in quality, in my opinion the comments section is at an all time low in terms of content and quality in the 15 years I’ve been on here.

This blog is so informative and Leo so level-headed in his opinions, comment, and answers that it is a gift. Some of the commenters could cool down a bit but I certainly see no reason to criticize Leo’s “tone”. And actually despite some snippy comments and the occasional uncalled for insult this comment section rates as an island of courtesy in an ocean of internet snark.

Marko Juras
October 21, 2022 12:23 pm

SFHs under 1 million seem to be selling ok last 10 days. We hit 60 freehold active SFHs 1 mill or less in the core 10 days ago down to 48 active today.

Market could be finding a bit of support at the moment in that segment.

Marko Juras
October 21, 2022 12:18 pm

The one thing I just can’t grasp is that 44% of people went with a variable mortgage in August, according to what Leo posted the other day. That makes zero sense to me. The discount is less than 1% over fixed and just September was pretty much a shoe in for a 0.75% increase. There is no way people are really banking on rates coming down in late 2023/2024?

I would have thought less than 10% would be going variable in August.

Marko Juras
October 21, 2022 12:15 pm

People will eat through their savings, sell cars and toys, and, in my case, move into the basement before selling the house.

Not sure about the basement part. I would have no issues doing that but I would think majority would sell or go into foreclosure before making the move downstairs.

Marko Juras
October 21, 2022 12:12 pm

Leo, I’ve been coming here since 2015 and I don’t recall seeing you write like this, and I’ve been seeing it quite a bit recently

The quality of comments, or lack of, and misinformation in the last 6 to 12 months has been very painful. It probably takes Leo a ton of discipline to let things be and not reply to the majority of non-sense being posted.

While Leo’s content is at an all time high in quality, in my opinion the comments section is at an all time low in terms of content and quality in the 15 years I’ve been on here. Not sure why, maybe the missing middle is really dividing everyone.

Dee
Dee
October 21, 2022 12:01 pm

I don’t think the recession will be that long. While recessions are necessary sometimes for economic reasons they are distasteful politically. I think the feds don’t have the stomach to allow a long deep dive into the pockets of Canadians and all will be done to prevent this from happening. Even though, perhaps, it must happen. That is why capitalism (late stage) has nothing good to promise – it depends on never ending growth pushing anything that gets in the way to the side and always kicking the can further down the road. So there will be a reckoning but I don’t think this is it. I could be wrong!! It’s all crystal ball stuff anyway.

VicREanalyst
VicREanalyst
October 21, 2022 11:59 am

The photos are the same.

So then the sale in August didn’t close? good luck with trying to sell a condo for 800k plus with no underground parking…

Kristan
Kristan
October 21, 2022 11:50 am

Again, for those of you that are interested, here are the best GIC rates today:

Thanks for listing these Alexandra. Ended up taking out an escalating term deposit with Hubert on your recommendation a couple months ago..

None
None
October 21, 2022 11:28 am

“What did it look like before?”

The photos are the same.

Now here it’s 824,999 while on realtor.ca it’s 859K..

https://www.pembertonholmes.com/listing/Victoria-BC/303-1015-Rockland-Ave/1zy6b?u=826#!gallery

I’m confused. why is the place listed as different prices on different website.????

VicREanalyst
VicREanalyst
October 21, 2022 11:19 am

I know it sold a couple months ago for something close to this listed price. Looks like a flip that could very well go very very wrong.

What did it look like before?

alexandracdn
alexandracdn
October 21, 2022 9:55 am

Again, for those of you that are interested, here are the best GIC rates today:

1yr @4.85% (Tangerine Bank)
2yr @4.88% (Wealth One Bank)
3yr @5.10% (Tangerine Bank)
4yr @5.08% (Wealth One Bank)
5yr @5.20% (Tangerine Bank)

GIC Wealth Management also has a 5 yr @5.25%. I believe only Ontario residents can purchase. Not sure what bank but probably a credit union.

James Soper
James Soper
October 21, 2022 9:22 am

That response above was sarcastic if not openly hostile, and flippantly disregards and distorts the poster’s thoughts (and conclusions) into something made to sound ridiculous and not even worth considering. That was not justified of you to do, IMO.

Honestly think that he nails that posters thoughts, and was right to disregard them. They’re a one position poster, everything is anti-development. Here’s the tell:

Using the homeless as an argument for more development is kind of comical.

Mt. Tolmie Foothills
Mt. Tolmie Foothills
October 21, 2022 9:19 am

I didn’t know our homeless problem is difficult while other countries have easy homeless problems

Some countries force addicts into treatment.

None
None
October 21, 2022 9:16 am

“Sold in August for $815k”

Weird how that transaction doesn’t show up on Realtor.ca price history. Isn;’t that leaving out info that they should be including in the listing?

Thurston
Thurston
October 21, 2022 9:09 am

This site has served me well since arriving in 2014 but I have found it’s become a little testy as of late

None
None
October 21, 2022 9:02 am

Not sure if I can ask this question but what’s the sale history on this place?

https://www.realtor.ca/real-estate/24922354/303-1015-rockland-ave-victoria-fairfield-west

I know it sold a couple months ago for something close to this listed price. Looks like a flip that could very well go very very wrong.

Local Fool
Local Fool
October 21, 2022 8:56 am

Oh I see, I didn’t know our homeless problem is difficult while other countries have easy homeless problems. Well let’s not fix it then.

Leo, I’ve been coming here since 2015 and I don’t recall seeing you write like this, and I’ve been seeing it quite a bit recently.

That response above was sarcastic if not openly hostile, and flippantly disregards and distorts the poster’s thoughts (and conclusions) into something made to sound ridiculous and not even worth considering. That was not justified of you to do, IMO.

You’ve always been reflective and eager in exploring both sides of any issue related to housing, and your inquisitive neutrality and intellect is one of the features that has made your site (and IMO, you) really shine and worth going to. That, and you ask for nothing in return. I get that everyone is entitled to their weaknesses and passions, but the quote above saddens me. You almost sound like someone else entirely. I really hope this isn’t a permanent shift, because a lot of people appreciate what you’ve done over the years. You should be proud of what you’ve built here, and it’s worth preserving.

James Soper
James Soper
October 21, 2022 8:56 am

Leo, Victoria’s housing issue is longstanding.

You must be new here.
We didn’t really have a housing issue until the 2000s. Homelessness in Victoria wasn’t really a huge problem until just before the 2010 Olympics. We always had homelessness, but not to this degree.

If we really want to reduce homelessness

Why say “we” when you truly don’t care.

SaanichAdam
SaanichAdam
October 21, 2022 8:30 am

@REaddict. I hear you! Similar to “R” down below, it would have been my unlikely prediction that rates would ramp up this fast, and I figured 3-4% for the next number of years would be reasonable. Well, wish I had polished my crystal ball!

Still doesn’t take away from the fact that a lot of people took on more expensive mortgages than they should have, with FOMO and banks being like “you can afford this!”. Truth is, outside of HHV, people are mostly awful at personal finance and often barely holding on anyhow. I see it in my line of work quite a bit.

When you add the aggressive rate increases I think we are in for more of a housing downturn than some economists are predicting. It will take a while though. People will eat through their savings, sell cars and toys, and, in my case, move into the basement before selling the house.

Market2022
Market2022
October 21, 2022 7:27 am

Good article. 4000 people in a country of 5 million. Meanwhile we have about 1500 in Victoria alone. The article mentions a 1 year wait list for housing so sounds like they still have work to do there too.

Leo, Victoria’s housing issue is longstanding. Homeless people from across Canada gravitate to the relatively moderate weather and move here. People on the street overwhelmingly have serious addiction and mental health issues prior to becoming homeless. It used to be legal to force people into treatment, but social activism by concerned mental health advocacy groups made it a human right to decline treatment in every province in Canada. Someone with psychosis has a right to decline anti-psychotic medication unless they are a risk. Many of these people have access to alternatives but chose to live as they do because their view of the world is more unique. Using the homeless as an argument for more development is kind of comical.

If we really want to reduce homelessness, we might want to make residential treatment far more available for addicts. Residential treatment is incredibly expensive and difficult for people to access. We might want to reform our healthcare system to be more responsive to those with mental health issues.

Frank
Frank
October 21, 2022 2:42 am

Poverty and homelessness in the U.S. are primarily caused by medical bills. Sorry, I don’t have a reference, read that somewhere. Since Canadians are somewhat protected from this, unless you’re tired of waiting and opt to get treatment in another country, our primary cause is loss of employment due to addiction or mental illness due to substance abuse during pregnancy. Once an individual born with a disability reaches 18, most social support ends and they are expected to fend for themselves, cruel. What social support exists for these people is inadequate in today’s high cost of living. In many cases the support money would be wasted on drugs.

VicREanalyst
VicREanalyst
October 20, 2022 9:11 pm

If you want to put in a garden suite then the secondary suite has to be rendered not a suite. Assuming you want to do it legally.

Yes I understand this, one could be an air bnb without a full stove/oven Appliance set. Hot plate and toaster oven will get around this.

REaddict
REaddict
October 20, 2022 9:04 pm

SaanichAdam, I too am in Saanich and on an adjustable variable rate mortgage, that is prime -1.1%, but the timeframe from when I renewed, to the rate increases starting, was only 6 months. And from the initially lowered payment (renewed from a fixed, about $200 more a month) to now, when my payments have shot past what I was paying on the original mortgage, wasn’t long enough for me to save a lot. I did save it, for the months that I could, and I didn’t have to start using it to top up my payments which have increased $517 a month so far until after the July increase because as long as it wasn’t higher than my original mortgage payment I didn’t care. The savings will only take me to December now though, and if there is another rate increase next week, then any difference in my payment will soon be fully felt. I truly thought I would have a longer timeframe to save in, and that they wouldn’t increase so quickly. Unfortunately, I don’t have a tenant, I was looking to buy a house with a suite so went variable as I was hoping to buy, and didn’t want a big penalty, but I haven’t been able to. These are stressful times. I wouldn’t have thought my mortgage payment would increase 38% in such a short time! The interest is more than triple what it was at the start, which feels like such a waste!

Mt. Tolmie Foothills
Mt. Tolmie Foothills
October 20, 2022 8:35 pm

You guys didn’t read the research did you?

I don’t know why you are referencing studies in other countries. The situations in the US and Finland are not the same as here.

The US, for example, has traditionally had higher rates of poverty and homelessness due to a lesser welfare system.

REaddict
REaddict
October 20, 2022 7:51 pm

VicREanaylst, you’re not currently allowed in Saanich to have a home with a secondary suite and a garden suite. If you want to put in a garden suite then the secondary suite has to be rendered not a suite. Assuming you want to do it legally.

Introvert
Introvert
October 20, 2022 6:09 pm

That CP/KCS merger is looking more interesting if it goes ahead.

It’s going to be weird seeing CPKC emblazoned on those locomotives after 141 years of Canadian Pacific.

patriotz
patriotz
October 20, 2022 5:42 pm

Well then I’ll throw in climate change which I think will be just as significant. It’s not going to make things any cheaper.

Dad
Dad
October 20, 2022 5:27 pm

Globalization not only gave us cheaper consumer goods, it suppressed wage growth over here.

I don’t like single factor explanations, but agree that globalization would be part of the equation, and that it does seem like the pendulum is going to swing back toward regional trading. That CP/KCS merger is looking more interesting if it goes ahead.

totoro
totoro
October 20, 2022 5:18 pm

Fraud is more common than we think

Fraud is a criminal offence. There are always going to be people who will break the law and it is up to lenders to manage this risk carefully. I don’t have much sympathy for people who do this and now cannot afford a mortgage – if that happens.

I also think that banks and brokers were just seeing dollar signs and not thinking past a year or two and qualifying people for mortgages that were going to be stressful at some point.

I’m really glad that banks and brokers don’t my financial planning for me past the B-20 guidelines. I would never have been able to buy my first house if they were thinking I might get stressed out in the future at some point by some mortgage rate changes. The B-20 guidelines and individual responsibility are enough risk management. If you are more risk averse or concerned about future changes you can make a decision to buy under your qualification level. Credit is valuable.

patriotz
patriotz
October 20, 2022 5:16 pm

I’m wondering what it is that has fundamentally changed to reach that conclusion.

I think the answer to that comes from looking for why we were able to get away with such low interest rates post-2008 for so long, without significant consumer price inflation. The answer is supply rose to meet the demand – from China in particular. Globalization not only gave us cheaper consumer goods, it suppressed wage growth over here. What’s fundamentally changed – well you can just draw a line from the two Michaels to Covid to what’s happening in Ukraine. It’s the end of an era.

R
R
October 20, 2022 5:05 pm

The people who didn’t skirt the stress test shouldn’t be close to the edge though.

That’s only assuming rates stay below the stress test? The posted rates for fixed are higher than what I was stress tested at, and variable will probably be higher too after the next hike.

VicREanalyst
VicREanalyst
October 20, 2022 4:35 pm

But I don’t blame people who were closer to the edge

The people who didn’t skirt the stress test shouldn’t be close to the edge though.

Dad
Dad
October 20, 2022 4:34 pm

I thought I’d be renewing my 1.85% 5 year fixed at around 3.5% in 2026

That seems like a reasonable expectation and personalfinancecanada is awful.

Some people are convinced that the era of low interest rates has ended, but I’m wondering what it is that has fundamentally changed to reach that conclusion. We are still heavily indebted, with an aging population, low birthrate and poor productivity. None of that screams high growth to me.

And to be clear, when I say era of low interest rates I’m not talking about emergency rates during the pandemic, but in the preceding period. The fed couldn’t even hike past 2.25% before they had to reverse course and settle at 1.75%.

VicREanalyst
VicREanalyst
October 20, 2022 4:31 pm

I think he was saying he would be shocked if the BoC hiked the policy rate to 5.5%.

It was quoted as a direct response to some saying fixed mortgage rates of 6% and variable of 4.5 %. Anyways, very few people saw rates rising this quickly, myself included.

I am surprised at how resilient the market is currently with the aggressive rate hikes, however I know rates take awhile to work their way through the system and cracks are definitely starting to show in the Vic RE market despite rents and immigration doing their best to backstop.

R
R
October 20, 2022 4:19 pm

I mean I’m not the most financially illiterate person in the world but I’m not amazing either. Probably pretty average. I had assumed that for the next 10 years we were unlikely to see fixed rates higher than 6%, and more likely I thought I’d be renewing my 1.85% 5 year fixed at around 3.5% in 2026 …so that was the range I planned for.

I assume most average people are similar. It seems a bit snobby for people (not anyone here necessarily, just a general comment. Looking at you personalfinancedanada) to brag about how they knew the existing rate environment was too good to be true and you should only buy a house if you can afford rates at 15% or something. That’s not “common knowledge “ for everyone and I don’t think most people bought houses with this mentality, which is totally fair imo.

ANYWAY this is not a pity party comment about myself… we’re lucky and we bought way WAY lower than what we qualified for so as long as I don’t get laid off in the recession it’s not a big deal if rates are 10% when we renew. But I don’t blame people who were closer to the edge. I think the average joe trusts that a bank is going to only loan you what you can afford.

Rush4life
Rush4life
October 20, 2022 4:16 pm

Re: banks circumventing stress test with higher ratios.

This was quite common for a time during the pandemic. My MTG broker is a friend and works at RBC and he said for a while about 50% of his MTG applications were going in for ‘exception approval’ and these were not restricted to millionaires. He told me if I had 20% down he could get me more mortgage approved. That’s how I found out about it (can’t do if you are insuring as CMHC or one of the other insurers needs to approve the app and they won’t accept higher ratios). Plenty of regular people got these ‘deals’ too. Ron the mortgage guy said that banks were allowing 10% or so to go around the b20 like this. Obviously no one knows for sure how many they did but it could have been they were doing them mainly for fixed mtgs as well. That would reduce risk.

Dad
Dad
October 20, 2022 3:49 pm

Not quite peaked but something to that effect none the less. Look at where we are today, a mere 2.5 months later….

I think he was saying he would be shocked if the BoC hiked the policy rate to 5.5%.

Who knows though. Central banks are flying blind at this point.

SaanichAdam
SaanichAdam
October 20, 2022 3:49 pm

@Totoro I was never saying it wasn’t my responsibility to determine affordability, and I did. We bought a house $350k under what we could “afford” according to banks and brokers. I did my research, I knew rates would go up. Did others? Some certainly didn’t and are in for a tough couple of years.

I also think that banks and brokers were just seeing dollar signs and not thinking past a year or two and qualifying people for mortgages that were going to be stressful at some point. Think of how many went on an expensive vacation, bought a car or two. Not blaming it on the banks but if everyone bought at the top of what they can “afford”, lots of people are going to be selling or just barely scraping by.

Have you seen the recent Marketplace bit? Fraud is more common than we think: https://www.cbc.ca/news/business/marketplace-mortgage-fraud-1.6614132

All because everyone just had to get in. Shady realtors don’t help either.

Dad
Dad
October 20, 2022 3:42 pm

Also, imo, Better Dwelling is a non-credible/balanced source of RE information. Their goal is clearly to gain readership rather than present facts.

Better Dwelling is awful. Scotiabank piloting a 50% TDS qualification program for borrowers with a combined income of at least $120,000 seems believable and credible though, and is consistent with information presented to me by a reputable brokerage that I obtained a mortgage from in late 2020.

Thurston
Thurston
October 20, 2022 3:40 pm

Maggie I agree I think we will get a early start to a disappointing spring market and start to get listings piling up I have noticed some listing having been removed sit empty I’m just guessing waiting for the new year

patriotz
patriotz
October 20, 2022 3:08 pm

Canadian home prices tumbled in September from August, posting the largest monthly decline since the index was launched in 1999, while year-over-year price gains continued to slow, Teranet–National Bank National Composite House Price data showed on Thursday.
.
The index, which tracks repeat sales of single-family homes in major Canadian markets, showed prices dropped a record 3.1 per cent in September from August, led by sharp declines in Toronto and Hamilton, Ontario.

The Teranet index tracks closings, so it typically lags realtor sales data by three to five months.

https://www.theglobeandmail.com/business/economy/article-canadian-home-prices-tumble-in-september-posting-largest-monthly-drop/

VicREanalyst
VicREanalyst
October 20, 2022 3:04 pm

I don’t think he said interest rates had peaked. I think he said it about inflation rates.

Not quite peaked but something to that effect none the less. Look at where we are today, a mere 2.5 months later….

https://househuntvictoria.ca/2022/08/02/july-sluggish-sales-and-price-slides-continue/#comment-91863

James Soper
James Soper
October 20, 2022 2:42 pm

Leo, I think you should officially acknowledge that your statement from August (?) about rates having peaked during this cycle was incorrect/premature. I think a lot browsers on this forum take your opinion seriously and may make significant $ decisions based on them.

I don’t think he said interest rates had peaked. I think he said it about inflation rates.

Frank
Frank
October 20, 2022 2:39 pm

You’d see a lot more listings before foreclosures started to increase. Canadians have an extremely low default rate. Banks aren’t thrilled with foreclosing, it’s a lose-lose proposition. Don’t expect any fire sales.

James Soper
James Soper
October 20, 2022 2:35 pm

This is why there are some exceptions to debt service ratios for, for example, high net worth individuals. These individuals may have millions in attachable assets to back up a loan request, but not meet the income test as they have planned for lower incomes for tax purposes. Guideline B-20 permits different approaches as long as:

I personally think that’s garbage. Make them qualify with the plebs, or let them use that high net worth to buy without a mortgage. Alternatively they can be taxed at a higher rate.

totoro
totoro
October 20, 2022 2:24 pm

Guideline B-20 is here: https://www.osfi-bsif.gc.ca/Eng/fi-if/rg-ro/gdn-ort/gl-ld/Pages/b20_dft.aspx

In terms of banks “playing around with debt service ratios” – guideline b-20 provides banks with flexibility provided adequate risk assessment takes place in keeping with the stress test.

This is why there are some exceptions to debt service ratios for, for example, high net worth individuals. These individuals may have millions in attachable assets to back up a loan request, but not meet the income test as they have planned for lower incomes for tax purposes. Guideline B-20 permits different approaches as long as:

Model Validation and Stress Testing
FRFIs often use models to contribute to residential mortgage underwriting and/or acquisition decisions (e.g., valuation or bankruptcy models) or to make lending decisions by way of auto-adjudication.

FRFIs are expected to have an independent validation process at both inception and on a regular basis for these models. This would include the regular review and recalibration of risk parameters with respect to their mortgage portfolio. The models used should reflect the nature of the portfolio and, as appropriate, be adapted if there is substantial variation of risk within the portfolio. This could include the development of new models to capture specific risk segments.

Additionally, FRFIs should have a stress-testing regime that considers unlikely, but plausible, scenarios and their potential impact on the residential mortgage portfolio. The results of such stress testing should be considered in the on-going validation of any models and substantially reflected in FRFIs’ Internal Capital Adequacy Assessment Process (ICAAP)Footnote17 (deposit-taking institutions) or internal target capital ratio (insurance companies).

Also, imo, Better Dwelling is a non-credible/balanced source of RE information. Their goal is clearly to gain readership rather than present facts.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
October 20, 2022 2:16 pm

Ohh it will take longer than that before foreclosures start popping up in the real estate listings. It usually takes a long time, like a year, before the lender goes through the court to get conduct of sale.

Maggie
Maggie
October 20, 2022 2:00 pm

A year from now, it would be interesting to know how much higher the foreclosure rate would have been without the stress test vs. whatever we’re about to see in the next year. My predictions have always sucked, but I won’t be surprised to see a glut of supply in February/March from people who can’t keep up with their mortgage payments. If so, there’ll need to be a lot of buzzards circling to sustain the current valuations.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
October 20, 2022 1:49 pm

For playing around with debt service ratios. Not so much for the Chartered Banks but brokers can by excluding and including some forms of income and expenses play around with the ratio. It isn’t uncommon for a big bank to deny the mortgage and then have an application from the same potential mortgagee presented by a broker to the same bank and the debt ratio falls within the parameters. Some types of income and expenses are a bit fuzzy. Neither one of them are necessarily wrong or fraudulent it is just how some types of income and expenses are interpreted or the bank employees guidelines, or if they show up on a credit check.

For example. You fill out the application and include your T4 income and all your expenses. And then the bank does a credit check.

What if you knew what was in the credit check BEFORE you wrote up the application. Would that change what you included or not included in your application? Or how about bonuses? Should bonuses be included in your income or not?

It isn’t as straight forward as you think.

Dad
Dad
October 20, 2022 1:32 pm

Lmao, weren’t people also complaining about how the stress test was stupid and back in 2021 and early 2022 because borrowers were stress tested at more than 3% of the going rate at the time. I am sure you can find some of those posts on this forum.

I don’t know. I remember the broker/real estate lobby complaining about it prior to the pandemic. Good thing nobody listened to them.

VicREanalyst
VicREanalyst
October 20, 2022 1:20 pm

I also think it was irresponsible of the Bank of Canada to provide forward guidance on rates into 2023.

Lmao, weren’t people also complaining about how the stress test was stupid and back in 2021 and early 2022 because borrowers were stress tested at more than 3% of the going rate at the time.

Dad
Dad
October 20, 2022 1:18 pm

Really? You think they were in control of the future? The stress test was, imo, adequate.

No, which is why they shouldn’t speak so confidently about it. They aren’t even in control of the present.

Where is your evidence of this for the big banks? What does “playing around” mean?

My evidence is anecdotal, just like your evidence of strict adherence is anecdotal. But, here is an article that seems to confirm what I am saying:

https://betterdwelling.com/canadian-banks-begin-circumventing-mortgage-stress-test-for-high-income-clients/

totoro
totoro
October 20, 2022 1:06 pm

Yes, but some lenders including big banks were playing around with debt service ratios to bypass the stress test

Where is your evidence of this for the big banks? What does “playing around” mean?

I qualified for a mortgage in 2020 and there was zero “playing around” by either TD or RBC. The list of documents required, examination of documents, and verification of documents was extremely thorough. No wiggle room was promoted whatsoever and the qualification criteria were strictly adhered to.

I also think it was irresponsible of the Bank of Canada to provide forward guidance on rates into 2023.

Really? You think they were in control of the future? The stress test was, imo, adequate and buyers would have been outraged if more controls had been put in place.

Dad
Dad
October 20, 2022 1:01 pm

It is absolutely not the responsibility of the broker or bank to do your long-term financial planning for you. It was not unreasonable for the banks to qualify you for the mortgage you were eligible for under the same criteria that they apply today. It was your responsibility to determine what you could afford now and if rates rose.

Yes, but some lenders including big banks were playing around with debt service ratios to bypass the stress test. In my opinion it was not at all reasonable to qualify people for a mortgage at 50% TDS when rates were at rock bottom. I’m not suggesting that I think this practice was widespread, but it was happening during the pandemic – it was certainly presented as an option to me, if I wanted to buy a more expensive house. I also think it was irresponsible of the Bank of Canada to provide forward guidance on rates into 2023.

Patrick
Patrick
October 20, 2022 12:09 pm

Good article. 4000 people in a country of 5 million. Meanwhile we have about 1500 in Victoria alone. The article mentions a 1 year wait list for housing so sounds like they still have work to do there too

Yes, encouraging results. One problem to overcome is that more people in need (homeless/addicted) might move to the city when this housing becomes available. Do we accept someone homeless who moved a week ago from Edmonton and find him free housing? Maybe that’s why Finland has a one year waiting list. And of course Finland has Ukrainian and Russian refugees as well. Anyway, housing the homeless is a great idea and we should do it.

totoro
totoro
October 20, 2022 12:07 pm

Many spent too much, however, and for some reason their mortgage brokers/banks and themselves didn’t want to look at what it would look like at 5+% interest rates. They just wanted a house, so they did it. It was also unreasonable what the banks said we could “afford” in 2020.

It is absolutely not the responsibility of the broker or bank to do your long-term financial planning for you. It was not unreasonable for the banks to qualify you for the mortgage you were eligible for under the same criteria that they apply today. It was your responsibility to determine what you could afford now and if rates rose.

It is the government’s responsibility to address homelessness here. They have not done a good job on affordable and subsidized housing for decades now and deinstitutionalization has led to a really poor outcome for mentally ill folks living on the streets.

Homelessness is correlated with lack of affordable housing, but it is also connected to addiction, mental illness and cultural values/family structure.

Japan has the lowest rate of homelessness in the world, with 3,992 homeless in 2020 in a country of 126,400,000 people. Canada has between 150,000 and 300,000 individuals who experience homelessness each year with a population less than a third of Japan. Japan has a way lower rate of addiction issues (other than alcohol) and illegal drugs are not readily available.

Japan has more people living in poverty (16%) than Canada does (6.4%)

Point being, we probably need a solution tailored to Canadian values/culture and perhaps a step making it illegal to be homeless and on the streets if we are able to provide enough housing.

Marko Juras
October 20, 2022 11:45 am

I don’t know much about homelessness to comment but anecdotally I don’t see any homeless people in Croatia when walking through cities. I just googled “homeless people in Croatia” and it came back with estimates of 2,000 people on a population of 3.9 million.

Canada has a 2x GDP per capita in relation to Croatia.

Local Fool
Local Fool
October 20, 2022 11:43 am

Finland effectively solved their homelessness problem.

Affordability and homelessness are not topics that have even a theoretically simple answer. Despite what I say about monetary policy and you say about zoning, we cannot distill affordability down to one cause – and no one action is ever going to solve it. It’s precisely the same for homelessness.

Anyone who defines the cause and effect relationship for affordability and/or homelessness as “X” and that the solution to these issues are simply to do “Y” or maybe “Y and Z”, are being disingenuous and IMO, are not coming from a position of neutrality and/or employing adequate scope in their analysis.

The reality is there are wicked problems out there, and both affordability and homelessness fit the bill. If Finland solved their homeless problem, good for Finland (I suspect that actually isn’t true, either). Even if the study is academically robust, I do not believe the societal comparison is inherently transplantable across countries that have vastly different social and political systems, especially between capitalist and welfare states. At best it may be suggestive, and may be valid to consider among other research.

But a bona-fide path to resolving to Victoria’s homelessness or affordability problem, it probably isn’t.

Over and out on this topic.

Marko Juras
October 20, 2022 11:39 am

Sounds like a lot of people wanted to form their own households and did.

Conclusions from my own research

i/ Explosion of housing inventory used for short term rentals which are unregulated in Croatia (you can literally short term rent any property) and secondly believe it or not there is no income tax on income from short term rentals!

The AirBnb “problem” we have in Victoria is a joke in relation. In Split, Croatia (on the coast) you literally cannot find a 1 year rental. 98% of advertised rentals are fully furnished and for only 9 months as all the owners want to cash in on the 90 day short term rental season.

ii/ 20-30% foreign buyers in certain regions. Impossible to know exactly as those stats aren’t collected by the government but reasonable estimate based on real estate brokerages I’ve been in touch with. Also, unlike Canada Croatia is royally screwed on this front as an EU member. I don’t think a 20% foreign buyer tax will be an option to address this problem. They can do a 20% tax on non-EU foreign buyers but that is probably less than 10% of foreign buyers.

iii/ Croatians don’t invest in anything other than real estate. Not unusual for people with excess capital to just buy a condo and keep it empty (no annual property taxes). There is no RRSPs, no TSFA, people don’t know what the S&P500 is, etc. You have money you buy another property, nothing else.

iv/ People wanted to form their own households and did….I would say this is behind the top 3 factors listed above.

Patrick
Patrick
October 20, 2022 11:12 am

https://yle.fi/news/3-12409059
April 2022: Despite progress through the ‘Housing First’ initiative, long-term homelessness has increased in Finland
Finland’s policy of ‘Housing First’ has often been lauded in international media, with claims that the country has “solved homelessness”.

The reality is that homelessness in Finland has been reduced at a record rate through the ‘Housing First’ principle, but around 4,000 in Finland remain without a home and the number of long-term homeless individuals rose in the past year

“However, history has shown that when conditions level off, the demand for larger cities grows. There is a risk that the number of applicants for affordable housing will increase significantly and thus limit the access of housing to others,” Ojankoski emphasised.

VicREanalyst
VicREanalyst
October 20, 2022 11:10 am

Canada 5 year bond to 3.8%. Fixed rates rising more.

Leo, I think you should officially acknowledge that your statement from August (?) about rates having peaked during this cycle was incorrect/premature. I think a lot browsers on this forum take your opinion seriously and may make significant $ decisions based on them.

Kristan
Kristan
October 20, 2022 11:03 am

[removed some comments about the homelessness; not worth going off topic more :)]

Regarding bond yields, whoa! .35% in two days. What’s the reason?

SaanichAdam
SaanichAdam
October 20, 2022 10:55 am

@ Leo S. Sticking with it. Hopefully the couple years of savings from 2020-2022 soaks up the next 12-16 months of increases and then as the economy turns we get some relief with a drop in the 1-2% range and then we will be more comfortable. If it stays 5-6% for the next number of years it will really hurt. If our tenant moves out we would charge a bit more (but still less than market). Worse comes to worse we sell or move into the basement as the upstairs would fetch significantly more than downstairs. I don’t really like being a SFH owner anyhow. Old house, tons of neverending work. A townhouse would have been more suitable for our lifestyle.

Kristan
Kristan
October 20, 2022 10:40 am

Sorry Leo, but on this one I must respectfully disagree. This is a highly ideological battleground as far as academic inquiry on the subject goes, not a settled matter. There is some evidence for what you’re saying, some evidence against. (In SF, where we were, something like 75-80% of the homeless population is severely mentally ill, and the problems there are simply different than say in inner London or Singapore which have comparable costs of living.) I’d encourage hesitation in drawing overly strong conclusions from social scientists happy to cherry pick data sets at the two sigma level.

James Soper
James Soper
October 20, 2022 10:39 am

5 year yields on a tear, up to 3.85% today. Might not have to wonder if fixed will be lower than variable.

Patrick
Patrick
October 20, 2022 10:35 am

Another interesting number is in the last 10 years the number of dwellings has increased 4.6% in Croatia. So you have 5.3% less households, 4.6% more dwellings and price have gone up 100% in that time span.

That is interesting about the prices. Looks like the world went nuts for houses in the last 10 years, for no apparent reason. Hard to see it continuing, we’ll be lucky to hold these prices.

Patrick
Patrick
October 20, 2022 10:32 am

I can certainly accept that expensive housing exacerbates the homeless issue, but I otherwise have trouble agreeing on principle. Homelessness is almost always a result of a cascade of breakdowns coming together over a long period of time.

+1 good post/

Marko Juras
October 20, 2022 10:29 am

So the question becomes, how come the Croatia news sites don’t have this information about the homeownership rate that says it is much lower than reported?

Croatian homeownership is actually 90%, that is absolutely correct. That is not what I meant by hollow, but rather that it is not indicative of the standard of living whatsoever. Croatia has lost 9.3% of its population and 5.3% households in the last 10 years due to emigration (the would be equivalent of Canada losing 3 million people in the last 10 years but instead we gained 4 million). Everyone has left to countries with a much lower home ownership such as Germany at 50% homeownership.

Another interesting number is in the last 10 years the number of dwellings has increased 4.6% in Croatia. So you have 5.3% less households, 4.6% more dwellings and price have gone up 100% in that time span.

Patrick
Patrick
October 20, 2022 10:29 am

Well no, but you can still find an “affordable” house in parts of Victoria and Esquimalt.

I agree, and I’m glad that it’s you saying that. When I suggest that homes are affordable here, I get my head chopped off.

James Soper
James Soper
October 20, 2022 10:26 am

If the answer is simply, “it’s housing”, then I would wonder why the kinds of people I am describing are so over-represented in the homeless cohort.

Weird that you wouldn’t think that people who aren’t getting most of the bottom 3 pillars of Maslow’s hierarchy of needs might turn to drugs & alcohol to cope. Housing cures homelessness, not addiction. There are plenty of drug addicts that manage to exist in our society that aren’t homeless, many have jobs and families.

VicREanalyst
VicREanalyst
October 20, 2022 10:22 am

I expect us to drop to at least the July 2021 assessments, which means still 10-15% “froth” left to blow off. Then we can see where go from there…

Lots are already going for less than assessment with some going for more. Like Leo’s stats, the more expensive end user properties are holding up better, mean while these “investor” homes are the ones selling at discounts to assessment as the current cap rates no longer make sense with current mortgage rates.

Couple new houses in Royal Bay asking under $1M now, IMO those things should be no more than 650k in the current environment.

Frank
Frank
October 20, 2022 10:10 am

How’s this for experience: I let the son of a friend stay in one of my houses for free for a while, he always had a roof over his head yet eventually died of a fentanyl overdose. Another old friend who was renting but eventually couldn’t pay rent so I let him stay for free, but still had money for alcohol, also died. His life was shortened by his alcoholism. There is no correlation between having a place to stay and beating an addiction, only monitored treatment helps, with a modest success rate. Addiction leads to homelessness, having a home does not cure addiction.

Thurston
Thurston
October 20, 2022 10:06 am

Yep used is affordable

Dad
Dad
October 20, 2022 9:58 am

We are never going to see new affordable homes in Oak Bay.

Well no, but you can still find an “affordable” house in parts of Victoria and Esquimalt. The trade off is that you get way less space and an older home.

Local Fool
Local Fool
October 20, 2022 9:54 am

Luckily we have actual research in this space. It’s housing.

I can certainly accept that expensive housing exacerbates the homeless issue, but I otherwise have trouble agreeing on principle. Homelessness is almost always a result of a cascade of breakdowns coming together over a long period of time. You and I may not realize it, but a person having a place to live on socially normative terms (paying rent or a mortgage) are actually indicators of certain “things” in their life that are in order at least on some level.

Most people who fall into homelessness have critical deficits that manifest in a variety of ways over many years – these norms are not attainable for them. They cannot cope in the same way we can, they fall into a cycle of addition, often crime, then undergo a tragic process of humanitarian breakdown and some of them over time almost become feral-like. There is no question that unaffordable housing makes this problem a lot worse, but it’s a stretch IMO to say that’s “the” problem. They couldn’t run their own place to begin with, even if it was affordable.

If the answer is simply, “it’s housing”, then I would wonder why the kinds of people I am describing are so over-represented in the homeless cohort. Perhaps you could argue that having no place to live creates these issues, but again I think it’s more complex than that. I would be far more inclined to say what we’re seeing downtown is primarily a result of a decades-long breakdown in the kind of healthcare that these people need, inflamed by the housing issue…

Patrick
Patrick
October 20, 2022 9:43 am

People here want no-commute homes in the core (vs the edge)
They also want affordable homes.

You can’t get both. We are never going to see new affordable homes in Oak Bay. They will all be in the suburbs. If they ever build many “missing middle” in Oak Bay, they’ll be luxury prices.

Local Fool
Local Fool
October 20, 2022 9:38 am

I think anyone who believes that you can keep prices under control solely by building up has been pretty oblivious to what has happened in cities that have followed approaches to densification in North America and yet seen housing prices and land prices sky rocket.

I could not have said it better myself. Density + sprawl is the way to go if affordability is the main goal. But “sprawl” has become a bit of a dirty word so it tends to be discounted quickly.

That’s the problem our government refuses to acknowledge, the real solution is institutionalization and rehabilitation, which our government refuses to fund adequately, the costs are astronomical.

A lot of deinstitutionalizing started occurring in the 1980’s, which was done under a somewhat cynical guise of “they will be better off connected to the community” (read—> cheaper). But many of these people can’t function in a community, and those on the margins that end up streetbound where their humanity is deconstructed to the point where they fall entirely off the margins and can’t function either. Those old paradigms of institutionalization and rehabilitation need to return with robust 3rd party oversight – it’s not a perfect solution but it’s a lot better for them and the community than the death, destruction and disease that inevitably awaits them in a “community centered” approach.

Patrick
Patrick
October 20, 2022 9:27 am

Up and down suited house (3 bed up and 2 bed down) in Gordon Head on a 6000 sqft lot just sold for $965k. Looks like you would be able to put a garden suite in the backyard without much work either.

Yes, everything I’m seeing points to bigger price declines ahead for Victoria . Not just Canada, but the US is seeing big price drops too. Seattle down 10%.
I expect us to drop to at least the July 2021 assessments, which means still 10-15% “froth” left to blow off. Then we can see where go from there…

US price drops…

2A3B3860-DCC6-4285-8605-480478221FD1.jpeg
VicREanalyst
VicREanalyst
October 20, 2022 9:13 am

Up and down suited house (3 bed up and 2 bed down) in Gordon Head on a 6000 sqft lot just sold for $965k. Looks like you would be able to put a garden suite in the backyard without much work either.

https://pakerman.remax.ca/bc/saanich/home-details/1641-alderwood-st-saanich-bc-v8n-1g7/1975446609629699874/M00000051/915709

Properties like this should be in the high 8s come Feb 2023 should rates hold, if they ramp up even more then look out.

I haven’t looked at the house personally so not sure if there are any significant issues that needs addressing outside of what you can see in the pictures.

Patrick
Patrick
October 20, 2022 9:00 am

It is a hollow statistic just like the home ownership stat… Croatia – 90%.. Canada – 70%
Yes, in Canada if everyone in a given city lived in an owner-occupied triplex, the ownership rate would be 33%. And in Canada an ownership rate of 70% means that 70% of households do own the dwelling they live in.

You should be careful about believing that the Croatia homeownership numbers are “hollow” (ie really are much lower), as that’s just coming anecdotally from someone who hasn’t actually measured a different home ownership rate. At least you should provide the same skepticism as if someone simply declared that canadas home ownership rate was 30% instead if the official 66.7%.

So the question becomes, how come the Croatia news sites don’t have this information about the homeownership rate that says it is much lower than reported?

For example, here are three news sites, in Croatia, all referring to the same home ownership rate of 90%. They all describe that this homeownership means the same thing it does in Canada.

“ an amazing 90 percent of Croatians own their own home”
https://www.thedubrovniktimes.com/news/croatia/item/4160-croatia-high-on-the-list-of-home-ownership-germany-bottom

“ Croatia has bucked this trend, with an increase in homeownership, from 88.2% in 2010 to 90.5% in 2019.”
https://www.croatiaweek.com/croatia-second-highest-homeownership-rate-in-europe-despite-global-decline/

“ As many as 91% of Croatians live in their own property”
https://www.total-croatia-news.com/lifestyle/58941-share-of-home-ownership-in-croatia-higher-than-in-denmark-and-germany

SaanichAdam
SaanichAdam
October 20, 2022 8:39 am

I’m one of the ones who bought in 2020 and went true variable. The mortgage is up $1500 a month so far. We’ve got a tenant so that helps, and I knew it wouldn’t stay this way forever. We bought a fairly modest home that needed repairs and had a legal suite. I’m not going to lie – BoC did kind of pull the rug out sooner than I thought but I also saved a ton at prime minus 1.35 for two years, and I put that in the bank. Others around me in my circle have not been so wise. Some have payments up $1800 a month so far with at least 2 or 3 rate hikes coming. It’s going to be a rough ride for recent buyers!

I think many, like me, who moved out here 10 or so years ago saw 2020 as the first opportunity they ever had to buy, so they did it. Most went variable. Many spent too much, however, and for some reason their mortgage brokers/banks and themselves didn’t want to look at what it would look like at 5+% interest rates. They just wanted a house, so they did it. It was also unreasonable what the banks said we could “afford” in 2020.

Mt. Tolmie Foothills
Mt. Tolmie Foothills
October 20, 2022 8:28 am

Luckily we have actual research in this space. It’s housing. Addiction is everywhere, but mass homelessness is only where people can’t get housing.

Would you rent your spare room to a Pandora Street zombie?

James Soper
James Soper
October 20, 2022 7:58 am

Homelessness is primarily a drug problem in this part of the world, by the way.


I totally agree that homelessness is a misnomer. Drugs, alcohol and mental illness are the main contributors to an individual’s inability to secure housing.

You both have extensive experience with the homeless and homelessness I presume?

Zach S
Zach S
October 20, 2022 7:33 am

<

blockquote> I fail to comprehend the majority of arguments against density.

I am definitely in agreement with advocates who argue for more density, but it’s important not to miss the role of the “anti-sprawl” NIMBY movement in propagating supply restriction and high housing prices.

Take a look across North America, a continent with nearly endless supply of land. Where do we see the lowest housing prices and the best affordability? The answer is almost always in places that do not restrict outward growth and sprawl.

I’m not saying that sprawl is better. I like living near a city core. It can be a much better way to live than a car dependent life.

However, there is a strong argument to be made that to keep prices from escalating you need both to allow higher density by eliminating SFH zoning and to relax restrictions on “sprawl”.

I think anyone who believes that you can keep prices under control solely by building up has been pretty oblivious to what has happened in cities that have followed approaches to densification in North America and yet seen housing prices and land prices sky rocket.

This doesn’t even get into the issue about high rises. Many of the most livable cities in Europe rarely build housing units above 5 or 6 stories. In Canada we love to build skyscrapers and SFHs, neither of which is particularly conducive to constructing the types of walkable neighbourhoods that Europeans live by.

So my argument would be that the “anti-sprawl” movement is misguided. A better approach would allow universal, unrestricted access to develop units up to 5 stories in height across the entire region.

This doesn’t block SFHs from being built but it does allow the types of units that ensure adequate density for walkable neighbourhoods to spring up around them without blotting out the sky.

I can tell you that the NIMBY movement is still very strong in this region. None of the housing platforms come close to taking real steps to address supply and reasoning, so I suspect we won’t see anything like this.

More likely politicians continue to block restrict home building under the “anti-sprawl” flag, while still limiting places that density can be built through (mostly) SFH zoning, with a few concessions like allowing those units to be turned into secondary and tertiary suites (has been done in Vancouver for years and look what happened there…), and forcing developers to build high rises along major arterial routes, with a handful of townhouses in more limited areas of our cities.

patriotz
patriotz
October 20, 2022 4:44 am

They purchased about a decade ago for under $500k and now their mortgage is almost $900k without adding any additional assets. They have kept refinancing over the years to subsidize their lifestyle

Gee, where have I seen that before? Right – south of the border in the early 2000’s.

patriotz
patriotz
October 20, 2022 4:41 am

It is a hollow statistic just like the home ownership stat… Croatia – 90%.. Canada – 70%

Yes, in Canada if everyone in a given city lived in an owner-occupied triplex, the ownership rate would be 33%. And in Canada an ownership rate of 70% means that 70% of households do own the dwelling they live in.

Frank
Frank
October 20, 2022 4:07 am

I totally agree that homelessness is a misnomer. Drugs, alcohol and mental illness are the main contributors to an individual’s inability to secure housing. They can’t even afford to pay utilities, let alone rent. Their addictions prevent them from being able to provide for themselves. They are unemployable. There are some exceptions, but any rational, mentally stable person is capable of accessing the available programs in place to solve their housing problem. The majority are too strung out, irrational and potentially dangerous (look at what happened to the RCMP officer in Burnaby) to qualify for housing. That’s the problem our government refuses to acknowledge, the real solution is institutionalization and rehabilitation, which our government refuses to fund adequately, the costs are astronomical.

caveat emptor
caveat emptor
October 19, 2022 10:40 pm

I bet a return flight to Europe produces more total emissions than 10 years of living in a SFH in Langford + commuting into town.

I invite someone to do the math

You don’t need to “do the math”. There are hundreds of GHG calculators available.

This is perhaps the most sound for aviation – https://www.icao.int/environmental-protection/Carbonoffset/Pages/default.aspx

Many choices for vehicles – here’s one – https://calculator.carbonfootprint.com/calculator.aspx?tab=4

Mt. Tolmie Foothills
Mt. Tolmie Foothills
October 19, 2022 10:39 pm

Like I said, you may want to get some perspective if you think Pandora means the city is “blighted”.
But yes, homelessness is a housing problem.

I didn’t say the whole city. And without a doubt there is blight.

Homelessness is primarily a drug problem in this part of the world, by the way.

Mt. Tolmie Foothills
Mt. Tolmie Foothills
October 19, 2022 10:19 pm

Blighted lol. We are so sheltered here

Oh, so the scene on Pandora Street is ok then? And the Vancouver DTES not so bad after all?

Mt. Tolmie Foothills
Mt. Tolmie Foothills
October 19, 2022 9:42 pm

As I mentioned in the previous thread in Croatia people will pay an arm and a leg to be in a condo in the core.

Marko, are city centres in Croatia blighted like many in Canada? Do they have the same issues with zombies, crazies, and discarded needles that we have?

Dad
Dad
October 19, 2022 9:42 pm

How did your your banks won’t/can’t enforce the contracts on trigger rates thing go?

Hmm. Excellent question, since I don’t remember ever saying that. I do vaguely remember saying that foreclosure is expensive and a last resort.

Umm..really
Umm..really
October 19, 2022 9:24 pm

The story is probably fiction, but I agree the characters deserve no sympathy.

How did your your banks won’t/can’t enforce the contracts on trigger rates thing go?

Umm..really
Umm..really
October 19, 2022 9:19 pm

Yah I don’t feel bad for the people in that situation. Sounds like one way or another they were gonna be in this position at some point.

Definitely no sympathy, they were still enjoying their $16 a piece drinks and discussing their upcoming winter trip to Hawaii. So, they can’t be too flummoxed.

Mt. Tolmie Foothills
Mt. Tolmie Foothills
October 19, 2022 9:18 pm

Just look at the massive Sooke Road expansion/realignment project that was required due to growth.

lmao!!! Only a true Victorian would call that a massive expansion. It won’t even be 4 lanes the whole way!

Sidekick
Sidekick
October 19, 2022 9:07 pm

BC Inflation. Gas mostly responsible for the spike.

Mortgage costs for those without fixed-payment variables is probably an order of magnitude (or more) higher than anything else. As more mortgages are renewed or get triggered, inflation+++.

Dad
Dad
October 19, 2022 9:03 pm

Yah I don’t feel bad for the people in that situation. Sounds like one way or another they were gonna be in this position at some point.

The story is probably fiction, but I agree the characters deserve no sympathy.

R
R
October 19, 2022 9:02 pm

feel bad for the first time buyers who might be stuck in variable right now.

I know someone in town with student loans, a car loan, and a recent first time home buyer with a substantial mortgage that they maxed out on approval wise.. on a variable rate that has been going up every rate hike. I get secondhand anxiety just thinking about them.

Rush4life
Rush4life
October 19, 2022 8:31 pm

Not just first time buyers

Yah I don’t feel bad for the people in that situation. Sounds like one way or another they were gonna be in this position at some point.

Umm..really
Umm..really
October 19, 2022 8:17 pm

feel bad for the first time buyers who might be stuck in variable right now.

Not just first time buyers. I was having drinks with a couple that lives in the Gorge the other night and the were saying they were flummoxed by the rate increases. They purchased about a decade ago for under $500k and now their mortgage is almost $900k without adding any additional assets. They have kept refinancing over the years to subsidize their lifestyle (travel and some other really expensive hobbies) and they are getting hit with variable increases. Their jobs really can’t support the extra costs because one of them is in services and the other sales (which they enjoyed because they could always take time off for their hobbies).

Rush4life
Rush4life
October 19, 2022 7:54 pm

Some pretty big mortgage payments increases in this thread – lots over a couple G’s a month. Can’t blame it all on the BoC but it was incredibly dumb to tell people rates would stay low until 2023 and now is the time to make big purchases. On top of that lots of brokers and Realtors saying that rates couldn’t go very high without breaking something – feel bad for the first time buyers who might be stuck in variable right now.

https://www.reddit.com/r/PersonalFinanceCanada/comments/y833rc/how_much_more_are_you_paying_in_mortgage_now/

Patrick
Patrick
October 19, 2022 7:02 pm

All I am trying to say is if the population of Victoria is going to grow we would be best to stuff as many people as possible in the core and as few as possible in Sooke.

That’s a reasonable position, explained very well. I’ve enjoyed the discussion.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
October 19, 2022 6:37 pm

Well Dad, how about the Ross Bay Cemetery? 27 acres of prime land owned by the city. And no living person would need to be evicted. Think of all the social housing that could be built there. People would think they have died and gone to heaven to live there.

Umm..really
Umm..really
October 19, 2022 6:36 pm

“The Bank’s core CPI inflation measures were unchanged in September but, given that we expected a decline due to more favourable base effects, that probably increases the odds of another 75 basis-point hike next week, particularly when households near-terms inflation expectations have risen further.

From: https://financialpost.com/news/economy/inflation-canada-consumer-price-index-economists

“(Federally regulated financial institutions) need to ensure that they are prepared to handle the potential implications of lower housing prices and higher interest rates,” the report read. “In particular, the level of loss experienced by lenders not only depends on the likelihood of a default, but also how much of the loan the banks would lose in case of a default.”OSFI pointed to high levels of Canadian household debt, which stood at 182 per cent of disposable income during the second quarter this year, as another potential risk. The regulator noted that a combination of these record debt levels, persistently high inflation, which clocked in at 6.9 per cent in September, and further Bank of Canada rate hikes would strain the ability of Canadians to make mortgage payments.

From: https://financialpost.com/real-estate/mortgages/osfi-keeping-close-watch-on-mortgage-lenders-as-rates-rise-home-prices-cool

Ya, this is really just the beginning or the front end of the impacts that are going to be dealt with and the more significant deleveraging period is still well ahead everyone that has over exposed themselves.

Introvert
Introvert
October 19, 2022 4:01 pm

Marko, how many times have you flown overseas (not just to Europe) in your lifetime?

Marko Juras
October 19, 2022 3:53 pm

So double that. 9024.72 miles ~= 14561km

Based on this calculation if my Tesla has 230,000 km (offsets my Euro trips by a lot) I am way ahead of the Langford resident driving an ICE flying to Mexico once a year.

Marko Juras
October 19, 2022 3:47 pm

I’m not sure what the concern is . Would it be better If no one was living in sooke, to solve your problem of the 1 hour drive?

My concern is not the existing people that live in Sooke or my drive as I simply don’t drive to Sooke anymore. All I am trying to say is if the population of Victoria is going to grow we would be best to stuff as many people as possible in the core and as few as possible in Sooke. Just look at the massive Sooke Road expansion/realignment project that was required due to growth. Big environmental impact and big cost to taxpayer. If Sooke continues to grow we will need a four lane highway to Sooke. Which is fine, but then why is everyone complaining about clearcutting?

I bet a return flight to Europe produces more total emissions than 10 years of living in a SFH in Langford + commuting into town.

Probably more, but I don’t pretend to care about the environment while I drive my 7.3 powerstroke to Goldstream Park 🙂

So that’s why no one lives in the suburbs of Toronto and has a horrendous commute into town.

The GTA is an example of the point I am trying to make. If you have 800k you can either

a) buy a nice SFH home in a suburb of Toronto and spend 3 hrs in a car every day -> https://www.realtor.ca/real-estate/24972225/33-natanya-blvd-georgina-keswick-north

b) a one bedroom condo downtown -> https://www.realtor.ca/real-estate/24899449/2708-825-church-st-toronto-rosedale-moore-park

James Soper
James Soper
October 19, 2022 3:45 pm

I bet a return flight to Europe produces more total emissions than 10 years of living in a SFH in Langford + commuting into town.

An economy one way flight from Victoria International Airport to Zagreb Airport will produce:

1226.6kg CO2e per passenger
Which is the same as:
How much 1 tree absorbs in 55.75 years
Driving 4524.86 miles in an average car

So double that. 9024.72 miles ~= 14561km
Average commute from Langford to Downtown is 14.5km.
So around 1004 trips, 502 round trips.
That’s about 2 years of commutes.

Dad
Dad
October 19, 2022 3:33 pm

Why not de-centralize the government and move some of those government ministries out to the Westshore? Or even relocate the Naval base to Sooke

Alternatively, they could just make all administrative/paper pusher positions fully remote. Problem partly solved without a massive and arbitrary make work project.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
October 19, 2022 3:27 pm

How about we think outside of the box on densification. Langford and Colwood are getting close to the population of Victoria City. Collectively they have a population of some 70,000 while Victoria City is at 92,000. That means tens of thousand of commuters traveling downtown twice a day. Those that live in Saanich can go either way to work as it is about the same time distance.

Why not de-centralize the government and move some of those government ministries out to the Westshore? Or even relocate the Naval base to Sooke or even Prince Rupert where it really should be as the deep water ships like the American aircraft carriers can come right into shore. That would eliminate a lot of daily commuters, would clean up the air quality and free up at least a hundred acres of prime real estate in the core for development. BAM! Problem solved!

But that’s not going to happen. Victoria City and Esquimalt make a lot of money from the government ministries and the navy base and that would likely mean they would shift more of the tax burden onto home property taxes. And you don’t get re-elected by raising taxes. Victoria and Esquimalt are not going to give up that plum government revenue.

It would make more sense to have two city cores than to keep increasing the density of one.

Patrick
Patrick
October 19, 2022 3:21 pm

Last time I had to go to Sooke it took 1 hour 14 minutes from Hillside Mall to Sooke core.

That’s about 50km, partly through city driving. Doesn’t seem so bad.

I’ve been referring business out there since then to a colleague.

Yes, there must be Sooke based re agents that could get there in 5 minutes.

I’m not sure what the concern is . Would it be better If no one was living in sooke, to solve your problem of the 1 hour drive?

Introvert
Introvert
October 19, 2022 2:57 pm

I bet a return flight to Europe produces more total emissions than 10 years of living in a SFH in Langford + commuting into town.

I invite someone to do the math 🙂

James Soper
James Soper
October 19, 2022 2:53 pm

I don’t believe that account for a moment, unless there was a very significant traffic accident.

Cops for Cancer bike ride.

Introvert
Introvert
October 19, 2022 2:43 pm

We can argue about this all day but economics will easily solve this. Options eventually will be spend 2 hrs in a car or live in a smaller space and walk/bike/or spend less than 30 minutes in a car and people will decide what they ultimately want.

So that’s why no one lives in the suburbs of Toronto and has a horrendous commute into town.

Marko Juras
October 19, 2022 2:41 pm

Common sense wise I haven’t seen traffic improve with 25% of people working from home. In the morning when I head north cars are backed up beyond Millstream, it looks very painful. Last time I had to go to Sooke it took 1 hour 14 minutes from Hillside Mall to Sooke core. I’ve been referring business out there since then to a colleague.

Patrick
Patrick
October 19, 2022 2:32 pm

So why isn’t it helping? 13 days ago on Reddit
“Literally took me entire 2 hours from downtown to Langford.

You’re out of touch if you think a typical drive from Langford to downtown Victoria takes two hours. You usually pride yourself on using “common sense”. How about using some of that instead of relying on a ridiculous Reddit post.

Local Fool
Local Fool
October 19, 2022 2:24 pm

So why isn’t it helping? 13 days ago on Reddit

I don’t believe that account for a moment, unless there was a very significant traffic accident.

Low density development increases emissions in four ways

Thanks for this. Any density has this effect; I think what this is helpfully demonstrating is that lower density exacerbates this phenomenon.

Marko Juras
October 19, 2022 2:06 pm

Huh? We’ve just moved 25% of the work force to remote working at home. Doesn’t that count as “moving jobs out to people”? I bet that HHVers are remote working higher than 25%. So they can live/work wherever they want and aren’t commuting much anywhere.

So why isn’t it helping? 13 days ago on Reddit

“Literally took me entire 2 hours from downtown to Langford. This is not sustainable for a developing city. With ever increasing development in Colwood, Langford, Metch., and Sooke. How will the CRD do to improve traffic?”

https://www.reddit.com/r/VictoriaBC/comments/xwqjrh/how_do_you_fix_this_victorias_traffic_problem_no/

Patrick
Patrick
October 19, 2022 2:04 pm

There is the theoretically concept where we move jobs out to the people such as move more BC Government Jobs to Westshore to cut down traffic but that concept doesn’t seem to be real life practice.

Huh? We’ve just moved 25% of the work force to remote working at home. Doesn’t that count as “moving jobs out to people”? I bet that HHVers are remote working higher than 25%. So they can live/work wherever they want and aren’t commuting much anywhere.

James Soper
James Soper
October 19, 2022 1:59 pm

Even Los Angeles isn’t usually that bad. I live in North Saanich and typically spend about 3.5 to 5 hours a week driving – and I work full time.

Yeah Marko, you’re over reacting! Such a hyperbole! They only spend — checks notes — ONE hour a day commuting to work, not two!

Marko Juras
October 19, 2022 1:49 pm

You often tell us that Croatians love to live in condos (“they’re so happy”) , but Wikipedia says Croatia has the highest % of people living in SFH detached – 73%. among any EU country. https://en.wikipedia.org/wiki/Housing_in_Europe

The statistics is slightly high (for example, I have my address registered as my parents’ house so I get cheaper ferry tickets when going to their house); however, nuances aside the static is most likely in the 60%.

The issue is SFHs as we know in Canada are very rare. Most SFHs are missing middle ILLEGAL (no permits beyond the one kitchen) triplexes to eightplexes that have one title and are classified as SFH detached. For example, this on the surface looks like a SFH but it has 6 apartments -> https://www.njuskalo.hr/nekretnine/kuca-prodaja-zagreb-crnomerec-477-m2-oglas-37642877

Everyone living in there would be classified as living in a SFH.

It is a hollow statistic just like the home ownership stat

Croatia – 90%
Canada – 70%
Germany – 50%

Unless you know what’s going on Croatia looks be paradise compared to Canada and Germany, 90% of people own their home!

Local Fool
Local Fool
October 19, 2022 1:37 pm

The pro-density individual (that isn’t a developer) wants what he or she perceives is the best for the community, which also is objectively the BEST outcome for the environment. The anti-density individual wasn’t what he or she perceives is the best for the community, which also is objectively NOT THE BEST outcome for the environment.

I can accept this, but then it moves into another argument – what is more important? The living experience of human communities, or the natural environment? And, is this even a practical argument?

Dwelling types are not really the largest environmental threat, and possibly by a considerable margin. ICE vehicles create emissions, sure, but that’s dwarfed globally by coal and oil electricity generation, manufacturing, and agricultural activities. The strongest argument I can see against SFH is elevated habitat destruction, but that depends on where it’s being built and the kind of land use policies that are in place.

Options eventually will be spend 2 hrs in a car or live in a smaller space and walk/bike/or spend less than 30 minutes in a car and people will decide what they ultimately want.

That is simplistic to the point of being inaccurate. Even Los Angeles isn’t usually that bad. I live in North Saanich and typically spend about 3.5 to 5 hours a week driving – and I work full time. Gas up once a month. 5-10 minutes of driving to basic amenities (one way).

I could easily decide not to drive that truck, but I value the camping utility of it more than the emissions reductions of not using it.

Sure. You’re just being human and are trying to live. Doesn’t mean you don’t care or otherwise make reasonable efforts, but, some people’s definitions of reasonable aren’t always the same. By the way, the truck sounds like fun. 🙂

Marko Juras
October 19, 2022 1:34 pm

Does everyone in Sidney commute to downtown Victoria, and need to drive everywhere to find groceries? With no options to walk/bike? You don’t need to live downtown to live your lifestyle.

You can live in Sidney and not leave, but reality is Pat Bay is packed every day and it isn’t just airport, ferry, and commercial traffic. I would also argue that most people in Sidney do drive to get groceries as the three grocery stores are all close together.

There is the theoretically concept where we move jobs out to the people such as move more BC Government Jobs to Westshore to cut down traffic but that concept doesn’t seem to be real life practice.

Patrick
Patrick
October 19, 2022 1:29 pm

Marko,
You often tell us that Croatians love to live in condos (“they’re so happy”) , but Wikipedia says Croatia has the highest % of people living in SFH detached – 73%. among any EU country. https://en.wikipedia.org/wiki/Housing_in_Europe

Are they correct? By comparison, only 53% in Canada live in SFH, and that would mean Croatia (73%) is much higher.
The share of people [in EU countries] living in detached houses peaked in Croatia (73.4%), Slovenia (65.1%), Hungary (62.1%) and Romania (60.1%); Serbia (66.1%) and Norway (61.2%) also reported that more than 6 out of every 10 persons in of their population were living in detached houses.”

Patrick
Patrick
October 19, 2022 1:14 pm

Options eventually will be spend 2 hrs in a car or live in a smaller space and walk/bike/or spend less than 30 minutes in a car and people will decide what they ultimately want.

Does everyone in Sidney commute to downtown Victoria, and need to drive everywhere to find groceries? With no options to walk/bike? You don’t need to live downtown to live your lifestyle.

James Soper
James Soper
October 19, 2022 1:12 pm

Local Fool, Not sure I get your pro-density versus anti-density crowd.

They’re saying that anti-density crowd can still care about the environment, or at least say they do while they sit in their car for hours every day on the way home to enjoy their sterile yard.

Marko Juras
October 19, 2022 12:59 pm

How about asking them, “if you were both working remotely from home, would you like more more space?”

For this particular cousin it isn’t a scenario that is on the table due to their careers.

I have a video coming soon 6 kids, three bedroom condo, and one of the parents works primarily from home and it works.

Patrick
Patrick
October 19, 2022 12:54 pm

I am working on the editing the other two interviews but here is the respond from the first one if they (family of four) would be happier in 2000 sq/ft vs current 532 sq/ft

How about asking them, “if you were both working remotely from home, would you like more more space?”

Marko Juras
October 19, 2022 12:54 pm

We can argue about this all day but economics will easily solve this. Options eventually will be spend 2 hrs in a car or live in a smaller space and walk/bike/or spend less than 30 minutes in a car and people will decide what they ultimately want.

Marko Juras
October 19, 2022 12:52 pm

I’m glad as a kid I didn’t grow up on the 8th floor of a condo downtown. I kinda liked my house and back yard. And a neighborhood full of families.

We lived in a 500 sq/ft soviet style apartment building and I loved it, also a neighborhood full of families. I met all my friends outside to play soccer, starting in grade one I walked to school by myself everyday. It was a really happy childhood.

Literally the only reason we ended up in Canada is my parents weren’t members of the “party” so they were never gifted and they couldn’t afford a 500 sq/ft condo and didn’t want to be tenants for life. If a 500 sq/ft condo was within their means they would have never left.

Marko Juras
October 19, 2022 12:49 pm

Local Fool,

Not sure I get your pro-density versus anti-density crowd. The pro-density individual (that isn’t a developer) wants what he or she perceives is the best for the community, which also is objectively the BEST outcome for the environment.

The anti-density individual wants what he or she perceives is the best for the community, which also is objectively NOT THE BEST outcome for the environment.

Patrick
Patrick
October 19, 2022 12:38 pm

So as I’ve always suspected, no one cares about the environment one bit if it doesn’t fit their narrative, in this case having a SFH with a nice yard

I care as much about the environment as you do Marko 🙂

Which reminds me of a relevant Russian joke.
Two FSB officers are in a bar talking after work. First FSB guy says “tell me the truth, what do you really think about Putin? Second fsb guy says “I think the same that you do”. First guy says “Oh. Sorry, but now I’m going to have to arrest you”.

Marko Juras
October 19, 2022 12:37 pm

We’ve been sold the idea of the SFH as they key to happiness but it just isn’t – in a lot of ways for many people they are overall worse off.

After interviews with three cousins living with their families ranging from two to six kids in condos in Europe I still don’t understand the SFH North American obsession. All three interviews I asked if they thought they would be happier living in more space and they all said no. Objectively speaking all three households are very active, parents + kids all speak three languages, they cook way healthier/organic despite very small kitchens, etc.

I am working on the editing the other two interviews but here is the respond from the first one if they (family of four) would be happier in 2000 sq/ft vs current 532 sq/ft -> https://youtu.be/bndG02UvDLg?t=370

The one trend that I have noticed thought is they all live in extremely central locations. Everything (schools, grocery stores, parks, etc.) are within a 5 to 10 minute walk.

Patrick
Patrick
October 19, 2022 12:33 pm

We’ve been sold the idea of the SFH as they key to happiness but it just isn’t – in a lot of ways for many people they are overall worse off.

That’s your opinion and you’re welcome to it. The crime rate in the core of cities is 2X the suburbs, and 3X rural areas. So not everyone in the core is happy. And family life isn’t all about your happiness, there is supposed to be some sacrifice for the benefit of your kids. A commute fits that bill (in an environment friendly EV of course). Even better to commute on an electric train.

I’m glad as a kid I didn’t grow up on the 8th floor of a condo downtown. I kinda liked my house and back yard. And a neighborhood full of families.

I know some people want those things

“Some people” wanting SFH include almost all the HH’ers here. Let me know if you notice a HH’er here looking for a condo.

Local Fool
Local Fool
October 19, 2022 12:31 pm

So as I’ve always suspected, no one cares about the environment one bit if it doesn’t fit their narrative, in this case having a SFH with a nice yard.

This is the kind of rhetoric and black-and-white reasoning that is unfortunately permeating so much political discourse these days. You’re smarter than this, Marko.

It’s clear that the abundance of SFH zoning in the CRD is out of balance with the reality of the city today. It’s only practical to look for solutions. You know it would be disingenuous to argue that all density proponents are greedy developers who don’t care how many people get crammed into a small space (ergo, all density arguments are somehow bad). Some people really just want what they think is best for a community, and they perceive density as the way to do it.

The other perspective is no different. People who are concerned about excessive density (whatever that means) on the whole or in part can still have capacity to care about the environment and make reasonable ecologically minded decisions, regardless of whether they live in a SFH or not. Not everyone who is concerned about density has the characteristics of the person you imply above.

Sure, there are self-interested parties out there. But self-serving hypocritical zealotry is a human condition, unfortunately found on whatever end of the spectrum you wish to look.

James Soper
James Soper
October 19, 2022 12:29 pm

BC Inflation. Gas mostly responsible for the spike.

Is it though?
I thought food was up 12% year over year?

SaanichAdam
SaanichAdam
October 19, 2022 12:08 pm

. I know some people want those things (Bigger SFH and yard etc, quiet area) and I do wish it was more affordable without having to move to the sticks. I’m more and more convinced (after mostly suburb living my whole life and having recently switched to a denser, more walkable area) that a lot of people don’t realize the toll that lack of community, sprawl, long commutes in traffic etc. have on both their pocket books and ability to retire, but more so their wellbeing. Both times in my life (now and in University over a decade ago) when I could commute within 10 minutes, buy all my groceries and other tasks by walking or cycling and reserved the car for special weekend trips or travel, I was a much happier person. I do believe if more people woke up to the fact that suburbs are worse for individuals (commutes, gas, mental health) as well as communities (less walkable means less community – not always but often), and also bad for municipalities (increase burden to maintain sprawling infrastructure) we would be in a much better place. We’ve been sold the idea of the SFH as they key to happiness but it just isn’t – in a lot of ways for many people they are overall worse off. I’m with Marko.

Marko Juras
October 19, 2022 12:02 pm

But you are left with the problem that not everyone likes condo living like you. Lots of people have families and kids, and want to live in a SFH with a nice yard. Not a townhouse or part of a missing middle triplex. That includes me and most HHV’ers. So for them, building SFH in the “sticks” is a good solution.

So as I’ve always suspected, no one cares about the environment one bit if it doesn’t fit their narrative, in this case having a SFH with a nice yard 🙂

Environment aside, where will the land come from? At some point we run out so you are left with….

i/ Increase your income to the point where you are within the top 2% of income earners
ii/ Commute to Sooke and further away 1 hr each way so you spend 2 hours of each day in your car
iii/ Move to Edmonton or Moncton and buy a small mansion
iv/ Missing middle

I would think some of the 98% that don’t fit under i/ will opt for iv/ versus ii/ and iii/. Even if it is only 10% it helps imo.

Patrick
Patrick
October 19, 2022 11:51 am

I don’t know about that, I absolutely love the density and social culture in Europe. Can’t stand the Broadmead/Dean Park/Bear Mountain drive into you two car garage and go watch TV.

Fair enough. So continue to live happily in a condo downtown. And of course, we do need more condos. Hopefully big towers like Harris Green with 1,584 units. Instead of a bunch of 2-3 units places that followed SFH teardowns. .

But you are left with the problem that not everyone likes condo living like you. Lots of people have families and kids, and want to live in a SFH with a nice yard. Not a townhouse or part of a missing middle triplex. That includes me and most HHV’ers. So for them, building SFH in the “sticks” is a good solution.

Dad
Dad
October 19, 2022 11:46 am

Curious if someone can comment on Nat.Gas prices. Have they gone up like gasoline? Heating oil?

Way up, but the price of gas is only one component you are billed for. Last time I bought heating oil is was in 2020 and it was $1.14 a litre. Looks to be over $2 now…ouch.

Dad
Dad
October 19, 2022 11:38 am

BC Inflation. Gas mostly responsible for the spike.

Wondering about the effect of mortgage interest. It is now a main contributor, but not sure what weight it is assigned. It’s always dangerous to start stripping out components to create a a more favourable narrative, but it would be interesting to see what core inflation looks like without it. I imagine the Bank of Canada would also account for this…or at least I hope they would.

Marko Juras
October 19, 2022 11:38 am

Is there more “room” out in the boonies? Technically yes. Does it make sense? Not to me. And that’s completely ignoring all the other issues that come with urban sprawl…

+1, I fail to comprehend the majority of arguments against density. For example, take a look at this 1,584 unit proposal -> https://www.harrisgreen.com/

That is 2,500 – 3,000 people. As far as I can tell

i/ Not one road would have to be built
ii/ Not one large tree would have to be cut down
iii/ Occupants can work from home (just like they can in the middle of no where)
iv/ Those that work downtown can walk to work
v/ There will be a grocery story in one of the podiums so you don’t have to drive for groceries
vi/ You can stuff a bunch of other amenities in the podiums (health clinics, dentist, gyms, daycares, etc.)
vii/ Occupants can ride their bikes down the new bike lane on Vancouver Street to Beacon Hill Park and Dallas waterfront

Might be a little tricky for families and schools but that is where the missing middle would fit in.

How many hills have to be deforested and blasted apart to accommodate 2,500 to 3,000 people in Langford, Sooke, Colwood. How many roads have to be built and expanded? How is the expansion of Sooke Rd environmentally friendly? I’ve driven through the construction a number of times on Sooke Rd in the last year and it is a huge project that is a result of sprawl simply put.

I find it odd that people freak out about two trees in Fairfield for a townhome complex but no one said a single word about 100s of trees cut down to expand Sooke Rd.

I’ll venture to say I do not believe that on the whole, greater and greater density means greater and greater psychological satisfaction for the great majority of people.

I don’t know about that, I absolutely love the density and social culture in Europe. Can’t stand the Broadmead/Dean Park/Bear Mountain drive into you two car garage and go watch TV. As I mentioned in the previous thread in Croatia people will pay an arm and a leg to be in a condo in the core. A condo in the core is way more expensive than the equivalent of a SFH in a Sooke-Victoria type relation. Someone mentioned gas prices, sure a bit of a factor, but a big part of it is cultural. People like to socialize a lot and difficult to socialize with your friends if you live in the middle of no where.

Patrick
Patrick
October 19, 2022 11:33 am

Lol, let’s choose the option that’s worse in pretty much every aspect (only positive I can think of is land is cheaper to purchase). Are you just trolling Patrick? You do realize our collective taxes pay for servicing all this sprawl right?

A simple question. Where are we going to add any additional SFH, if not on the “edges” where land is available?
We’re not only dealing with “missing middle”, we also have “missing detached”, and that problem gets worse with teardowns in the core.

Sidekick
Sidekick
October 19, 2022 11:11 am

Curious if someone can comment on Nat.Gas prices. Have they gone up like gasoline? Heating oil?

Sidekick
Sidekick
October 19, 2022 11:10 am

Sounds good to me. That’s the same successful process that got all these cities built to begin with.

Lol, let’s choose the option that’s worse in pretty much every aspect (only positive I can think of is land is cheaper to purchase). Are you just trolling Patrick? You do realize our collective taxes pay for servicing all this sprawl right?

Patrick
Patrick
October 19, 2022 10:17 am

Let me get this right. We should:
1. Clear forested land.
2. Blast/remove any rock.
3. Build roads.
4. Build sewer/water lines.
5. Build housing

Sounds good to me. That’s the same successful process that got all these cities built to begin with.

BGT
BGT
October 19, 2022 9:43 am

Homes for Living getting a shoutout in the Times Colonist.

All of the new councillors were endorsed by either Helps, Residents for a Better Victoria — which pushed for more transparent government — or Homes For Living, which pushes housing affordability.

“Those slates snapped up the votes, and I think that’s kind of what cost [councillor Ben Isitt] the election,” said Prince. “People were happy to see these teams.”

https://www.timescolonist.com/local-news/for-victoria-a-mostly-new-council-but-six-of-nine-endorsed-by-departing-mayor-5975338

Thurston
Thurston
October 19, 2022 9:30 am

Introvert Lol ya I get that a lot like everyday just gotta read passed it cheers

Introvert
Introvert
October 19, 2022 9:20 am

although the whole process would probably shorten my lifespan

Thurston, in the time you have remaining, perhaps consider using punctuation? 🙂

Thurston
Thurston
October 19, 2022 8:58 am

Would like to do an infill in oak bay but would need to be in around 1500 sq to make sense although the whole process would probably shorten my lifespan

Barrister
Barrister
October 19, 2022 8:36 am

James: Considering the last bump by the Fed I would not be surprised at another .75 bump followed by another one after that. We are a long way away from target rates of inflation. But I dont have a crystal ball and I am not making a prediction here. But we have a 73cent dollar which tells you something but nothing good.

Sidekick
Sidekick
October 19, 2022 8:21 am

That’s why the highest growth rates should occur in low density areas. In short…. “Because there is more room for growth in low dense areas”

Let me get this right. We should:
1. Clear forested land.
2. Blast/remove any rock.
3. Build roads.
4. Build sewer/water lines.
5. Build housing

or

  1. Remove end-of-life building(s)
  2. Build housing

Is there more “room” out in the boonies? Technically yes. Does it make sense? Not to me. And that’s completely ignoring all the other issues that come with urban sprawl…

James Soper
James Soper
October 19, 2022 8:11 am

Inflation higher than expected in Canada, 5 year bond yields up to 3.65% now. Wonder if we’re getting a 75 point increase next week.

small time developer
small time developer
October 19, 2022 8:09 am

Hi Leo,

What is your take on the new View Royal Mayor? Seems Screech might have forced the vote away after a few incidents with members of the community. On the Times Colonist article about the new mayor, it states that he wants developments to have more consultation with the community. I am thinking something was built by his home that forced him to run with neighbor and community support. I wish David Eby would lay groundwork so that each municipality followed the same process in an efficient manner. Why is it one year in Colwood, 2 years in COV and upto 3 in Saanich to vote on a rezoning. And the steps so different everywhere you go. You have to be a big company like Arzye or Abstract with staff dedicated to the process to even know what to do at each step.

Too many gate keepers.

Silky
Silky
October 19, 2022 7:27 am

Lol at infill developments in Oak Bay, should get that done right after Haiti has their next democratic election.

Frank
Frank
October 19, 2022 5:34 am

Two of my oldest friends (brothers) are finally dealing with the sale of their 95 year old father’s house ( in Winnipeg). Met with them yesterday with my realtor friend to help them out. Built in 1955, on farmland at the time, the 1030 sq. ft. main floor, 5 room, partially finished basement on a 4300 sq. ft. lot in a decent area, is still solid and useable. Recent modest renovations have removed the 1950’s out of the house but it still isn’t what most buyers are demanding, no open concept, no granite or quartz counters, no ensuite, original oak hardwood flooring with some laminate. Price range: $300,000. The area is maybe 50% Filipino and will most likely be the new buyers. Probably get multiple offers, where else can you put $30,000 down and pay a $1500 (a guess) mortgage.
These types of houses (post war) still have life left in them but do not meet today’s standards or expectations of new buyers. Pre-war houses, which Canada has tons of, have probably seen their day and in order to meet energy efficiency standards are, unfortunately, tear downs. There are exceptions, stately houses built in exclusive areas, but even those are getting the wreaking ball. A majority of pre-war houses were not great when they were built and are not worth the investment required to meet environmental standards.

Caveat Emptor
Caveat Emptor
October 18, 2022 11:21 pm

– Or buy vacant land in Langford, and build there.

If your vacant land in Langford is an unserviced rocky hill side that won’t be a cheap development at all. I’ll grant you that infill is going to be cheaper in Langford than Oak Bay. Of course people are likely to pay more for an OB townhouse than a Langford townhouse so the returns to the developer might be similar.

Patrick
Patrick
October 18, 2022 10:34 pm

I don’t see any reason why the absolute density is relevant

Higher cost to build in higher density areas makes it relevant. Land is cheaper in low density cities than high density.
Since the goal is to build affordable housing, it makes sense to develop in low density (=low cost) areas.

An example, let’s say you want to build a “missing middle” project, providing affordable housing.

You could either:
– buy in oak bay. Tear down a functional oak bay house, and then build the project,
– Or buy vacant land in Langford, and build there.

The Langford build will cost less to build, and therefore be more “affordable” housing by the time you’re finished.

Patrick
Patrick
October 18, 2022 10:04 pm

WestCom hasn’t yet established enough commercial infrastructure to inhibit enough people from driving into Victoria
They never will.

Remote workers don’t commute much. Makes more sense for them to live in low dense areas like Langford than already crowded cities. About 25% of workers are remote now, and that is expected over time to rise to 40%.

Patrick
Patrick
October 18, 2022 9:54 pm

I don’t see any reason why the absolute density is relevant. I mean if Victoria was wall to wall apartments I guess we could say it was full but we are nowhere near that. Certainly no reason why it can’t grow at 1-2% a year.

On the question of why absolute density is relevant, Local Fool’s reply is much better than I could do. Actually Leo, your own words list many good reasons why high density is relevant. Because these points apply to high dense areas in addition to the “concentrated growth” areas you refer to.

Leo: “Not only does it increase traffic, consume greenfield land, and increase emissions, but eventually the concentrated growth provokes a backlash with no other growth relief valve.”

These evils (traffic, loss of greenfield) are more likely in high density areas (city of Victoria, density=4400/km) than low density areas (Langford density = 800/km). That’s why the highest growth rates should occur in low density areas. In short…. “Because there is more room for growth in low dense areas

James Soper
James Soper
October 18, 2022 9:47 pm

WestCom hasn’t yet established enough commercial infrastructure to inhibit enough people from driving into Victoria

They never will.

You’re complaining about noise when the greatest source of noise is car traffic. Building out in Langford creates more of that, not less.
Car traffic can be terrible in walkable, and bikeable neighbourhoods, guess how much people care when they can actually walk and bike safely?

Car drop offs vs. Biking to school:
https://www.reddit.com/r/kutautos/comments/uau4rw/als_alle_scholieren_met_de_auto_naar_school/

Local Fool
Local Fool
October 18, 2022 9:34 pm

I don’t see any reason why the absolute density is relevant

This is where I feel like you’re coming from a different perspective than I. IMO population density is one of the most relevant aspects of a human being’s living experience you can consider. I can absolutely accept that there are people who like liking in crowded spaces. The ecological and amenities access benefits are obvious. But I also believe that greater crowding, growing noise, more traffic and ironically greater social disconnection can have profound psychological impacts on many people, and some more than others. I’ll venture to say I do not believe that on the whole, greater and greater density means greater and greater psychological satisfaction for the great majority of people. They may tolerate it, be able to live with it, but I don’t think it’s an inherently natural thing to want and thrive in. It’s not to say that on paper, absolute density seems irrelevant as long as the infrastructure can accommodate, but taking that perspective alone feels myopic and just at odds with the human side of the equation.

I’m unclear on why Langford is more set up for growth than say Victoria

If you do not currently perceive absolute density as relevant, then indeed, this wouldn’t be clear. Again, there is, on a square kilometer basis, much more room to put people in WestCom than Victoria. Yes, it creates greater traffic issues on the Trans Canada, but that’s also because WestCom hasn’t yet established enough commercial infrastructure to inhibit enough people from driving into Victoria. Besides, regardless of where you grow the density, traffic will be worse, and Victoria’s traffic is terrible at this point.

By sustainable I mean both governance stability (will the residents tolerate it long term) and environmental sustainability (how do we grow while reducing per capita emissions.

This one I can relate to much easier. However, on the first point, I’m not sure I could immediately accept that having WestCom absorb a greater portion of growth would compromise Good Governance or, lead to social unrest. Or I could flip it around and say that even greater crowding in one of the densest cities in Canada could just the same, have a stability impact. I would wager to some extent that is already happening downtown. Perhaps I don’t completely understand what you mean.

On the second point, I’ll presume what you’re meaning is reducing commuting. I think there’s the most room for hope here as the integration of home/office technologies (ie WFH) as well as the creation of localized commercial infrastructure will reduce the need for commuter travel. Of course, greater amounts of non ICE vehicles will be helpful. My dream project (as much as I could actually dream about Langford) would be the re-establishment of light rail, but with faster and higher capacity – like the skytrain. That would be amazing, but…good luck getting funding for that.

Jim
Jim
October 18, 2022 9:09 pm

Did a study in 1982 and underlying and multi-year reported U.S. inflation were more useful in predicting Canadian interest rates than Cdn inflation. In the 80’s and 90’s forecasts based on these relationships were quite good. A quick analysis using similar relationships indicates Canadian 5 year bonds rates are much closer to reasonable than last year but still low. Real rates based on current Cdn reported inflation numbers are interesting but probably not very predictive of future interest rates.

Introvert
Introvert
October 18, 2022 9:08 pm

and he didn’t understand why reforms were even necessary and didn’t want to give up project by project control.

It hadn’t occurred to me that, by passing broad upzoning, council would be extinguishing much of its own work and giving up power, basically.

That’s such a good insight.

Gosig mus
Gosig mus
October 18, 2022 9:00 pm

What’s a 1B condo?

One bedroom.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
October 18, 2022 8:50 pm

What’s a 1B condo?

Gosig mus
Gosig mus
October 18, 2022 8:33 pm

As a barometer, almost no one here on HHV is hunting for a condo.

I am patiently waiting, with cash, for the 1B condo market to turn. Looking for my mother. My south coast search criteria shows 26 listings. A huge improvement over six months ago when there were just 4. Prices are stubbornly still high. Most listings significantly over assessed value.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
October 18, 2022 8:03 pm

Wages may be increasing but wouldn’t a better metric be how after tax income is rising. And while house prices may decline the cost of money has been increasing. So while a home may become cheaper, the monthly mortgage payment that one pays with after tax dollars could still increase along with all the other costs of home ownership like property taxes , insurance, utilities.

Things that make you go Hmmmmm.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
October 18, 2022 7:48 pm

I’m just saying that if 250,000 houses are being demolished it is unlikely these sites are going to remain vacant. If the rest of Canada is like Greater Victoria these properties would have had improvements of marginal value and the site is being redeveloped. So are they a loss of housing?

Zach S
Zach S
October 18, 2022 7:41 pm

The other way to think about it is that house prices could stay flat in nominal terms, but decline in real terms to restore affordability.

Definitely I agree with this in principle. But, I think we’re really saying the same thing here but giving credit differently.

The basic point is that as CPI inflation catches up to housing prices, so long as incomes (mostly) rise in tandem, the real price of a home falls.

Perhaps you’re looking at this effect of inflation and placing the credit into the box of “wage growth”. Whereas I look at this as a “decline in real home prices” as CPI inflation eats back the overvaluation of Canadian homes.

Given that during this phase of high inflation, we aren’t seeing a rise in real incomes, in fact they’re falling, I personally would stick with giving credit to the idea that incomes are stagnant (relative to inflation) while homes are falling in value, even if the official prices (unadjusted for inflation) on real estate websites claim that home prices are stable.

But that’s just how I’m looking at it.

Local Fool
Local Fool
October 18, 2022 7:22 pm

Are they supposed to be meaningful?

Well, I guess it’s something you might consider if you’re inclined to borrow a large sum of money, presuming you had a high income to service it without current rates being a problem. As the interest rate is causing your loan to be more expensive in nominal terms, the greater degree of inflation cancels that out. So the cost of borrowing is free in real terms – or so it goes? I always thought of it as a curiosity, but if it’s a useful metric in some context I don’t know.

Patrick
Patrick
October 18, 2022 7:12 pm

I’m not sure if that means older homes were demolished and replaced with homes with suites.

To be clear, my only point is that stock of SFH per capita is falling. As measured by the 2016-21 census comparison. I have no idea how many SFH were demolished. If I “wild guessed” that it was 120 SFH teardowns per year in Victoria, that would be about 12,000 per year in Canada and 60,000 over five years. And that would be most of the 100,000 shortfall in SFH stock that we had that created the fall in SFH per capita. The rest of the shortfall being less SFH builds.

Any data I’ve seen shows that SFH are the most desired dwelling type by a lot. Of course people can’t afford them. But the situation with SFH stock seems to be one with reduced supply per capita.

As a barometer, almost no one here on HHV is hunting for a condo. Most are looking for a SFH, with Plan B being settling for a townhouse with plans for a future SFH.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
October 18, 2022 6:44 pm

I’m not sure if that means older homes were demolished and replaced with homes with suites or re-developed with hi-rise complexes. And while the population increased I would think that this should be tempered by the number of people per household. The population can increase by a hundred thousand but that doesn’t mean a hundred thousand new homes are needed.

Without more information, I wouldn’t consider this an accurate apples to apples comparison.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
October 18, 2022 6:33 pm

True Patriotz – you got me. Interest rates are still historically low by post WWII standards. I should have put an “er” on high. But knowing that interest rates are historically low by post WWII standards isn’t going to give many homeowners consolation at mortgage renewal or make contractors enthusiastic about building in this higher interest rate environment.

Patrick
Patrick
October 18, 2022 6:29 pm

Frank: around 250,000 houses are demolished every year which means our stock is not increasing one bit.
Patriotz:Not true of course, for example the 2021 census reported 14,978,941 “Private dwellings occupied by usual residents”, which I understand to exclude cottages, short term rentals and the like, compared to 14,072,079 in2016. That’s an increase of 6.4% while population went up 5.7%.

It looks like Frank was talking about houses (ie detached houses). And his claim is correct, per capita.
The stock of detached houses in Canada fell per capita from 2016 to 2021
The number of SFH rose by 4.4%. Population rose by 5.7%
To maintain the SFH per capita, they would have needed to build 100,000 more SFH in Canada from 2016 to 2021.
That’s a shortfall of 100,000 detached houses, which works out to about 1,000 short for Victoria.
https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=9810013801&pickMembers%5B0%5D=1.1&pickMembers%5B1%5D=2.2

Zach S
Zach S
October 18, 2022 6:07 pm

While it’s a useful exercise to divide the “return to affordability” into 3 components, it’s important to recognize the mutual interdependence between the components.

There’s little reason to expect a “strong decade of strong nominal wage growth”, at least not per capita, given how much of Canadian and BC GDP growth has been tied to population growth and housing price inflation. The period from 2000-2020 when household income rose above inflation was also the period of greatest housing price inflation and affordability declines in BC.
In contrast, the during the 1980s and 1990s we saw nominal incomes decline amidst high inflation and periods of housing price decline.

I’m not saying these relationships are purely causal, but Its hard to see how affordability improves over the next decade through per capita nominal wage growth, when we are facing the same 1980s style headwinds of persistently high inflation and where we are assuming that one of the main drivers of Canadian GDP growth (housing price inflation) has been taken off the table.

That’s not even taking into account the likely recession we are facing next year.

It seems to me that the most likely way housing affordability improves is through near term housing price declines, followed by medium term interest rate decreases.

If we’re lucky, there might be a massive supply surge, even larger than the Trudeau immigration boom, that will slow down the subsequent phase of housing price inflation in the latter half of this decade. That might allow future GDP growth to start eating into the affordability gap by 2030, but I’m not hanging my hat in it.

Far more likely than that, we live in a future operated by a rentier class of landlords who hold most of the property, while citizens of the masses vote to put in place extensive renter protections to ensure the working class don’t all become indentured servants. (I’m not sure is that the future or the present?)

Maggie
Maggie
October 18, 2022 6:06 pm

Stephen Andrew is a good example. His voting record at council was fine, but he waffled on missing middle because it was controversial, and he didn’t understand why reforms were even necessary and didn’t want to give up project by project control.

The vote on 1475 Fort Street told me everything I needed to know about Stephen Andrew. Appeasing his Rockland NIMBY pals was his top priority.

patriotz
patriotz
October 18, 2022 4:42 pm

Rates are deeply negative in real terms, are they not?

Well that’s a bit tricky, since inflation is only known in retrospect. The rates of a year or two ago certainly turned out to be.

Barrister
Barrister
October 18, 2022 4:42 pm

Caveat, thank you for the figures and , yes, I have asked city hall a number of times without getting any answer. I appreciate you efforts which are very helpful.

Introvert
Introvert
October 18, 2022 4:18 pm

HarrisonB and Leo,

Plant and Brice both have a 98% support record on new homes, according to HfL. You think that’s “middle of the road”? How could you possibly be worried about those two?

Worst case scenario (extremely unlikely), the pro-housing side outnumbers the opposition 5-4 on the new council. Still a majority.

I’m struggling to fathom why, Leo, you think that the previous council wasn’t pro-housing enough to pass sweeping upzoning and why you think this new council couldn’t do it either.

Local Fool
Local Fool
October 18, 2022 4:05 pm

In real terms they’re near all time lows.

Rates are deeply negative in real terms, are they not?

caveat emptor
caveat emptor
October 18, 2022 3:56 pm

Does anyone know how many actual jobs there are in the city of Victoria. How does employment compare with population?

You have been posing that question for quite a few years on HHV. There are folks at City Hall tasked with economic development who could probably give you a better and more up to date answer than anyone on HHV. Have you tried asking them?

2016 – Victoria population = 86000, labour force = 50000, employed = 47000 (This is from Stats Canada community profiles, not yet available for 2021 census).

From Victoria’s economic action plan “Victoria 3.0” 2018 figures

Muni – population – # of jobs

Victoria 93,000 91000
Langford 38,000 13000

of the CRD munis Victoria is the one with the big gap between # of people in workforce and # of jobs. Surrounding munis (I chose Langford as an example) have more people relative to jobs. All the munis are in the report.

This “surplus” of jobs and “deficit” of people is pretty typical of the central portions of most cities and drives the daily commuting pattern.

patriotz
patriotz
October 18, 2022 3:39 pm

our stock is not increasing one bit

Not true of course, for example the 2021 census reported 14,978,941 “Private dwellings occupied by usual residents”, which I understand to exclude cottages, short term rentals and the like, compared to 14,072,079 in2016. That’s an increase of 6.4% while population went up 5.7%.

https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=9810000101

patriotz
patriotz
October 18, 2022 3:31 pm

in the current high interest rate environment.

Interest rates aren’t high at all, they’re well under the average for the post-WWII era. In fact they’re lower than in the 1955-1965 decade, which everyone sees as the good old days. And plenty of housing got built back then.

That’s just looking at nominal rates of course. In real terms they’re near all time lows.

Dad
Dad
October 18, 2022 3:28 pm

around 250,000 houses are demolished every year which means our stock is not increasing one bit.

Where did you get this from? It makes zero sense.

Frank
Frank
October 18, 2022 3:05 pm

Well put Nan, you forgot the thousands of war refugees from Europe (even Russians are leaving), and the fact that around 250,000 houses are demolished every year which means our stock is not increasing one bit.

Nan
Nan
October 18, 2022 2:51 pm

As long as Canada continues to hobble our countries ability to do what we are globally competitive at today (resource extraction) while allocating limited capital to an industry that kills future capital value (housing) while ignoring what we could be competitive at later (Tech) and not investing profits of industry beyond the CPP in any kind of sovereign wealth fund while letting non-Canadians who come from countries with aggressive globally competitive economies compete with Canadians for Canada’s housing stock, there will be no return to true income/ purchase price affordability, EVER.

I feel like Steve Carrell’s character in The Big Short – ” What probability is there that affordability will return to Canada unless we aggressively address demand destruction? ZERO.

Everything else is rearranging the deck chairs on the titanic. Lip service from politicians to extract salaries and pension guarantees by winning a role in the “dramatic production” currently being starred in by our Actor in Chief, Justin Trudeau.

We let in 400k immigrants, 150k students per year + 350k births and we max out at 250k dwellings while the wealthy are permitted to hoard housing and existing homeowners and politicians at all levels fight most new building tooth and nail. Do the math. ZERO.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
October 18, 2022 2:19 pm

There are a little over 100 new 2022 built homes for sale in Greater Victoria. And over the last three months there have only been about 19 new home sales. So I would say the higher interest rates are definitely impacting the new detached housing market. Yet I don’t see any big price cuts by builders as they seem to be hanging tough on their prices.

What builders are not doing is buying land with only four sales in the last 90 days despite that there are some 135 building lots available to buy. That’s likely because the land developers’ are not reducing prices either.

I just think that this is going to cause a lot of unemployment or under employment in the construction and construction related trades in the next few months. .

This also shows me that re-zoning or increasing density is not going to solve the problem in the current high interest rate environment. Re-zoning is just one of several factors to increase housing. By far the more important factor is that it has to be profitable to build. If it isn’t profitable then it doesn’t get built.

This may also have an effect on migration to Victoria as fewer people will be moving here for construction jobs. And depending on how long the high interest rates continue it is possible that we could have a reversal with more people leaving Greater Victoria than moving here. Victoria is nice city to live in – if you have a regular pay check.

VicREanalyst
VicREanalyst
October 18, 2022 1:54 pm

We’re also actively job hunting in the Westshore to eliminate that long commute entirely, and considering a pay cut to do so.

I would be careful with that at this point with a likely recession on the horizon especially if you are in a union job with seniority and job security.

James Soper
James Soper
October 18, 2022 12:00 pm

Mena was the great mystery to me

Pretty sure she is a long time skating instructor. She’s got decades of community involvement where people know who she is and know her name. That’s more than most candidates will ever start with.

Sidekick
Sidekick
October 18, 2022 11:32 am

Seems obvious that this would be the less dense cities like Langford

Langford proper has quite a bit of green space (Goldstream / Finlayson), several lakes, and a crap-ton of big box / industrial area. I’m not sure how your density is calculated, but if it’s purely residents/municipal area, I think that would skew the numbers quite a bit.

Having said that, the point is to densify land that is already being used for residential purposes. Areas that are already fully serviced and close to amenities and minimize the need for long (individual) commutes.

HarrisonB
HarrisonB
October 18, 2022 11:27 am

Thanks Leo. Mena was the great mystery to me – very surprised how well she did. I actually think the problem if there is one in Saanich is not Council or zoning approvals but the regulations and bureaucracy there. My builder/architect friends say Saanich is one of the hardest places to build a house or anything else because you have to design and work around various tree by-laws, enviro rules etc. etc. Once you get approval, that’s just the start of a very long and complex journey. Oak Bay is the hardest place to get approvals. Saanich is the hardest place to build after you get the approval.

HarrisonB
HarrisonB
October 18, 2022 11:00 am

7-2 housing split remaining in Saanich? I think that is too simplistic. Two extremely pro-densification councilors resigned (Ned Taylor and Rebecca Mersereau). They were replaced by one very pro environment and moderate housing advocate (Phelps-Bondoroff) and another which is unknown (Mena W). I am a bit surprised how well Mena did in the election given I really don’t know what her policies are on housing or anything else. She was also late to the race and not an incumbent. Yet, she beat a huge field of prospective candidates and leapfrogged a number of successful incumbents so must have a big following. Great CV but then so did many others??

There are two clear anti densification councilor re-elected, Chambers and Brownoff. Two very pro-density, Harper and De Vries re-elected. The rest are kind of middle of the road, pro-densification in specific areas like major road corridors, like Brice and tend to go with the political wind (like Plant).

Cadborosaurus
Cadborosaurus
October 18, 2022 10:56 am

We’re on the edge vs. our jobs. One of us is commuting to UVic from Colwood and the other is temporarily WFH but otherwise works downtown Vic. We’re not moving back to the city, we love our home and neighbourhood full of kids, and like that we could actually barely afford to buy what we wanted out here vs. settling for a strata townhouse in town.

The commute sucks though so after one of us doing it for a year, the price of gas, and UVic jacking their parking rates / bringing in a hiring freeze / not providing raises, new considerations are arising.

We didn’t think we could afford a new vehicle at this point but doing the math on gas and maintenance we’re now considering swapping the commuter for an electric.

We’re also actively job hunting in the Westshore to eliminate that long commute entirely, and considering a pay cut to do so.

Local Fool
Local Fool
October 18, 2022 10:24 am

What’s clear to me is that the highly unequal growth patterns where everyone is pushed out to the edge of the city are not sustainable.

I enjoyed reading this article. The sentence above did stand out to me, though for a couple reasons. Personally, I think this is a bit of a black and white (ie polarized) statement.

Unequal growth isn’t inherently a bad thing – it kind of depends on the nature of the region you’re talking about. Downtown is way more dense than WestCom and probably more than Saanich. It is true that weighing growth all to the Westshore would create significant (ie even worse) traffic issues, which I don’t think we’re set up to accommodate. On the other hand, that’s par for the course for a growing population. Every city eventually encounters it.

I think the rapid growth of Langford and Colwood vis-à-vis other jurisdictions is distorting perspective a bit. I could just as easily say that historically, Colwood and Langford have underperformed growth-wise relative to Victoria, Saanich etc – and now we’ve been seeing years worth of catch-up. My guess is, these regions still haven’t caught up to their eastern counterparts, despite WestCom residents getting annoyed with the rate of that change.

Hence, I struggle to align with , “let’s shoot for even growth across the municipalities” because the reality is, some regions are way more set up to accommodate it than others, and that isn’t something that will change quickly (if ever) rather, over a very long period of time.

The other lesser comment I have, is I wouldn’t have said “where everyone is pushed out to the edge of the city are not sustainable”.

IMO, it’s fairer to say, “In my opinion, it is undesirable”, as I don’t see anything inherently unsustainable about one region growing faster than another, even if it’s significantly faster – it just trades one set of problems for a different set. Either way, there will be problems.

Patrick
Patrick
October 18, 2022 9:55 am

What’s clear to me is that the highly unequal growth patterns where everyone is pushed out to the edge of the city are not sustainable.  Not only does it increase traffic, consume greenfield land, and increase emissions, but eventually the concentrated growth provokes a backlash with no other growth relief valve.  Ideally the core municipalities will absorb more housing demand to even out growth in the region, but it’s too early to tell what the impact will be from this election on regional supply.

Huh? You talk about the need to increase density (via missing middle etc). And you say that the “core” cities need to absorb more growth compared to the “edge’. Well let’s have a look at current density among cities.

Density of Victoria cities, from highest to lowest
Victoria (city) density 4,405 (people per sq. Km) (among the highest in Canada)
Oak Bay 1,710
Saanich 1,136
Colwood 954
Langford 885

So, you say cities will need to “absorb more housing demand”. Yes, but which cities? Seems obvious that this would be the less dense cities like Langford and Colwood. Certainly not Victoria city (already 5x as dense as langford) or oak bay (already 2x dense as Langford). That means we should encourage more growth in the “edge” and less in the “core”, to even out density. Which is the opposite of what you’ve said above. Let Langford become as dense as oak bay, and then we can talk about oak bay needing to add more density.

Patrick
Patrick
October 18, 2022 9:51 am

Great article Leo. It’s remarkable how well the high end is holding up.

deryk houston
deryk houston
October 18, 2022 9:47 am

I hate to say it…but honestly…I think humans are too stupid to figure it out and these cycles will come and go forever.
Humans more often than not always look for simple answers to complicated questions.

Introvert
Introvert
October 18, 2022 9:26 am

After weeks, BCGEU finally ratifies, by the slim margin of 53.4%, a 3-yr deal with the province.

Next up, nurses and teachers…

https://www.thestar.com/news/canada/2022/10/17/wage-protection-against-inflation-part-of-bcgeus-three-year-collective-agreement.html

https://news.gov.bc.ca/releases/2022FIN0061-001559

Introvert
Introvert
October 18, 2022 9:21 am

Saanich too has moved a little more in that direction with the election of Dean Murdock, though council remains split.

Ah yes, that horrible 7-2 pro-housing “split” that’s been holding Saanich back — and will again!

VicREanalyst
VicREanalyst
October 18, 2022 8:59 am

All over in the news next year will be painful

If that happens then look for WFH folks to get canned or made to go back to the office full time in a hurry.

Thurston
Thurston
October 18, 2022 8:45 am

A 1980s crash would fix things in a hurry All over in the news next year will be painful

Barrister
Barrister
October 18, 2022 8:44 am

Seriouys question, Does anyone know how many actual jobs there are in the city of Victoria. How does employment compare with population.?

Everyone here keeps talking about people having to commute into the city but outside of construction workers building more condos I am wondering if CofV has actually added that many more jobs. I have tried looking for some solid stats but with little or no success.

Sidekick
Sidekick
October 18, 2022 8:40 am

That mortgage payment % graph is pretty telling. My family is certainly feeling the pinch from rapidly rising rates.