Changing rates and the market

The central bank is likely getting ready to hike again on Wednesday, with consensus expectations of a 0.25% increase in the overnight rate.  However unlike previous rate hikes that directly increased both the lowest available rates and the stress test hurdle, I don’t believe this will affect the real estate market directly.  The biggest impact will likely be accelerating a tsunami of refinancing as borrowers find fixed rates available for a full percentage point lower than what they are paying on variable.   Get ready to wait on hold at your bank due to the always “unprecedented” call volume.

Of course the central bank is looking closely at inflation data, and will stop at nothing to drive it back to the target range of 1 to 3%.  And if we break down where inflation is coming from, it’s pretty broad based with large increases in many categories.

However we know that everything is more expensive than a year ago.  What’s more interesting is if prices are still going up, or if rate hikes and supply chain normalization have already done the job.   While there are still things that rose in price in the last 6 months – most notably big ticket food and rent categories – the increases are a lot less, and there are a number where prices have pulled back as well.   The massive exception is the category driven (partially) by rate hikes themselves:  mortgage interest.  Though we can argue about the definition of that category (it certainly lags), it’s clear that there have been real and large increases in the actual dollars households are paying on interest and it’s a significant force pushing up the CPI.

That raises the question: as the central bank prepares to hike again on Wednesday, are they considering the inherent feedback loop?   And how low do other categories have to go to counter the impact of rates while returning us to the target range?   I wouldn’t want to be in Tiff’s shoes.

We know that the big impact from rising rates has been on variable rate borrowers, where every rate hike is immediately passed on to borrowers.  Whether those borrowers end up with actually higher monthly rates when hitting their trigger points, or just ludicrously long amortizations instead is not really material, as the interest costs need to be paid one way or another.

However for fixed rates which are two thirds of the outstanding mortgage book, it’s worth remembering that mortgage holders are still enjoying extremely low rates below 3%.

For the approximately 2% of borrowers that renew every month, the increased rate is a shocker, but as with variable borrowers stressed by trigger rates, fixed rate borrowers can also generally extend amortizations to spread the pain across a longer period.

For those wanting to stay on schedule, the renewal gap of nearly 2% combined with the average mortgage taken out in Victoria 5 years ago ($377,208) means a monthly payment increase of $332 or 18%.   That’s sizeable, but given we haven’t seen the much more rapid rise in variable rates trigger a wave of distressed sellers, it seems that a much slower drip of higher rates to the fixed mortgage pool is unlikely to lead to a lot of distressed sellers either.  Think of it more as a sucking of income out of the economy putting a drag on things.   That drag is likely to continue, but with 5 year bonds dipping back below 3% which signal fixed rates in the mid 4s, it seems the time of continued rate hike shock is over.

Without more rate shocks, I suspect we will see more price stability than last year as long as unemployment holds up.  The much anticipated recession and associated drop in employment hasn’t arrived yet, though if it does arrive it normally comes with a significant deterioration in the labour market.  The BCREA wrote an interesting paper looking at the real estate market during recessions, and though there isn’t enough consistency in real estate impact to make any predictions, past recessions have come with increases in the unemployment rate from +3.1% to +9.8%.  That would bring us from an ultra-low 3.4% to moderate or high rates of unemployment.   So far – though provinces with high priced real estate may be more vulnerable – predictions seem to be for a relatively mild recession, but we know how successful those predictions have been in the past.


Also the weekly numbers.

January 2023
Jan
2022
Wk 1 Wk 2 Wk 3 Wk 4
Sales 26 74 155 474
New Listings 190 379 575 692
Active Listings 1617 1670 1707 744
Sales to New Listings 14% 20% 27% 68%
Sales YoY Change -51% -47% -48%
Months of Inventory 1.6

Finally sales have started the upward path that we expect in January, though still lagging substantially from the frenzied pace of a year ago.  There’s one additional business day this January, but if we end the month down around 40% from the year ago pace, that would put us at the slowest January since 2009 when there were only 247 sales (still a decent chance we also exceed the 294 sales in January 2013).

There’s lots of chatter online about the market picking up this year, for example here’s a thread of anecdotes from Realtors around the province.  I’m not one to downplay anecdotes as they often signal market changes before they are visible in the data, but I don’t see a lot of reason to believe this is a significant change.  In Vancouver the percentage of properties selling over ask in January is unchanged.

There’s a small uptick in Victoria, but given there have been so few sales I wouldn’t read much into that yet.

It’s certainly possible that we see some return of activity from previously very low levels.  As I’ve pointed out repeatedly, with continued low inventory it won’t take much to stabilize the market, but I believe that still-poor affordability will put a lid on how much of a bump we’ll be able to see.  I’d be pretty shocked if we saw an actual recovery with payments still this elevated.  I suspect most of the excitement online is just people being fooled by the normal seasonal jump in the market that we see every year after the holidays, however the full month’s numbers will give us a better sense of whether there’s any substance to the murmurs.

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Patrick
Patrick
January 27, 2023 6:43 pm

The number of people moving from British Columbia to Alberta has reached a 20-year high, according to the latest data from Statistics Canada.

Yes, Q3 2022 in BC was quite something, demographically. We had a migration out to Alberta, with a small overall net migration loss of 5,000 and still pulled off the largest net BC population increase for a quarter in history. About 53K people added to BC population in three months. Through immigration (+58k), with flat natural (birth/death) increase. Q3 is usually the biggest quarter for BC pop. Growth so we can’t annualize that. (If we did it would be something absurd like 4% growth).
https://www150.statcan.gc.ca/n1/pub/71-607-x/71-607-x2019036-eng.htm

Patrick
Patrick
January 27, 2023 6:27 pm

Only one of many definitions. Every level of government defines it differently. As a term it is useless.

OK. I guess I’m just used to the “old fashioned” use of the term, where “affordable housing” meant low-income, subsidized or public housing.
I can accept what you say, in that the definition has changed, and it means more affordable housing.

I think it would be beneficial if people make it clear what they mean by “affordable housing” though. Because when city council insists that 10% of the units be affordable housing, we should know what that means.

I guess we need a new term for housing that low-income people can afford.

Umm..really
Umm..really
January 27, 2023 6:24 pm

The number of people moving from British Columbia to Alberta has reached a 20-year high, according to the latest data from Statistics Canada.

https://vancouverisland.ctvnews.ca/number-of-people-leaving-b-c-for-alberta-reaches-20-year-high-1.6249825

The article interviews some folks that moved.

Introvert
Introvert
January 27, 2023 5:31 pm

Given what the city put you through with the delays, consultants and the sidewalk to nowhere etc., I’m surprised that you’d go back for more.

It’s fun to touch a hot stove over and over again. Plus, you can complain how hot the stove is!

Marko Juras
January 27, 2023 5:22 pm

Right, if you get about 150K/yr rent for this sixplex (say 2-3bed, 2-2bed, 2-1bed) after expenses, that would be about 5% return, lower than the dividend yields of BCE/BNS/RSI/TRP/GWO/… and with different income tax treatment.

Thing is I don’t have three million to buy Telus stock and I am not going to borrow $1.5 million to buy Telus stock. I feel comfortable with a 1.5 mill mortgage on a sixplex so you can use a bit of leverage. But yes, at the end of the day the numbers have to make sense. 5% return on stable dividend paying stocks is literally zero work. Even a GIC is now 4.5%, or you spend that $ and 4 years trying to build a MM sixplex.

This is why I find it hilarious that people think COV owners will be selling their homes for $1.5 mill for the purposes of MM.

Marko Juras
January 27, 2023 5:20 pm

What would the 1,000 square foot units sell for (I know you’ll be renting, but what could you sell them for)?

I think there will be a market for these, but I do feel like they are inferior to a larger condo building. Surface parking, unless on ground floor you have stairs/no elevator/probably much smaller windows/wood-framed, etc. They won’t have the “character” of the character conversions.

I am going to guess $800 a foot for the ground floor units with a patio and $700 a foot for the non-ground floor units (stairs, no elevator not ideal), with parking included. Rough ballpark. Obviously location will be huge. Sixplex units on Howe in Fairfield will sell for a lot more than a sixplex on a random street behind Hillside Mall.

I wouldn’t be surprised if the premium locations like Fairfield went with underground parking so everyone has parking. This is very common in Europe but the driveway into the parkade is usually very steep (you don’t have enough run on a small lot). In Croatia we call multiplexes “urban villas.” They are extremely popular. I am not a huge fan as you have to be involved in the strata with so few people and being self-managed. Personally, for myself, I prefer the bigger buildings where I don’t have to deal with the strata or talk to anyone. I cast a vote at the AGM from time to time and that is all.

freedom_2008
freedom_2008
January 27, 2023 5:10 pm

However, the numbers have to work. I can’t go out and drop $1 million on a MM teardown, 5,000 sq/ft x $350 to $400 a foot is another $2 million. That is $3 million for 6 units.

Right, if you get about 150K/yr rent for this sixplex rental (say 2-3bed, 2-2bed, 2-1bed) after expenses, that would be about 5% return, lower than the dividend yields of BCE/BNS/RSI/TRP/GWO/…  and with different income tax treatment. 

But it is investment diversification for some, if you want a certain % of real estate (including your principal residence) in your total portfolio.

Patrick
Patrick
January 27, 2023 5:06 pm

If you ask me that is a good cross-mix

Yes, it is a good cross mix. What would the 1,000 square foot units sell for (I know you’ll be renting, but what could you sell them for)?

Patrick
Patrick
January 27, 2023 4:59 pm

Here’s Wikipedia’s definition of affordable housing… “ Affordable housing is housing which is deemed affordable to those with a household income at or below the median”

D1660805-FD70-4541-8F64-B54AF5124A95.jpeg
Patrick
Patrick
January 27, 2023 4:57 pm

No one (and certainly not me or homes for living) ever said they were going to be affordable to low income folks.

OK. But people get confused when they see the term “affordable housing”
https://www.homesforliving.ca/

64561878-270C-4D7F-8F8D-E905C31B6D21.jpeg
Marko Juras
January 27, 2023 4:56 pm

500 square foot units without parking aren’t the family homes that the homes for living have been advocating for.

Each MM building will have two 3-bedroom units. Depending on the size of the lot this will most likely play out in the form of two 3-bedrooms and two 2-bedrooms and two 1-bedrooms or four 1-bedrooms. More than two 3-bedrooms and studios would also work but I don’t think builders/developers will want to do more than two 3-bedrooms.

If you ask me that is a good cross-mix. 500 sq.ft. can work for young single professionals, young couple professionals, single seniors (especially if ground floor), etc.

Marko Juras
January 27, 2023 4:51 pm

Given what the city put you through with the delays, consultants and the sidewalk to nowhere etc., I’m surprised that you’d go back for more. Instead of buying turn key. Is the developer profit worth it at the end of the day?

Sidewalk to nowhere a bit easier to accept on 6 units versus a small SFH home.

I wan’t something very specific so would rather build than buy otherwise I’ll just contine buying condos. There is a long list of things beyond what I already mentioned below. For example, absolutely no pumps (storm or sewer). I want everything gravity fed and this requires the right lot grade/service depth/design (no basement), etc.

Not interested in being back in Croatia fishing getting a text from property manager that a pump failed and something flooded. Just not a fan of mechanical devices even with battery and every single other back-up.

Patrick
Patrick
January 27, 2023 4:51 pm

Therefore, you’ll be left with some 500 sq/ft units without parking

500 square foot units without parking aren’t the family homes that the homes for living have been advocating for.

Marko Juras
January 27, 2023 4:45 pm

To making these MM buildings work on the average size lot there will need to be a few units under 500k. You need to throw in two 3-bed units which will likely have a min sq.m. requirement of something like 90 sq.m. which means you’ll need small units to offset to come in under max buildable area. Also, on a 50′ wide lot (majority of Victoria) it will be difficult to stuff 6 parking spots in the back. Realistically the 2 to 3 spots you have in the back you will give to the 3 bed units. Therefore, you’ll be left with some 500 sq/ft units without parking slightly under 500k which isn’t cheap but might be a good alternative to someone who doesn’t want to live in a downtown condo on Pandora, but rather in a residential neighbourhood.

This is assuming they are strata. So far everyone I’ve talked to wants to do rentals.

Patrick
Patrick
January 27, 2023 4:44 pm

Personally, I am looking for a MM property as I would like to build a rental sixplex

Given what the city put you through with the delays, consultants and the sidewalk to nowhere etc., I’m surprised that you’d go back for more. Instead of buying turn key. Is the developer profit worth it at the end of the day?

Patrick
Patrick
January 27, 2023 4:39 pm

This is what the housing advocates like Homes For Living lied and sold people on when in reality if any of this MMH gets built you’ll have to wait in a long lineup with lots of other people for your chance to own a $1 million townhome next to Barrister’s house.

Exactly. And of course one less SFH after the hand deconstructed tear down.

Marko Juras
January 27, 2023 4:35 pm

Can you not get under $300/sqft now. not saying it provides a different outcome to the analysis but construction costs are coming down. On the commercial side, some subs are much more negotiable now than 6 months ago.

You could probably do a 5,000 sq/ft SFH under $300/sqft but not a sixplex. COV will drive up costs with consultants not required for SFH, additional fees for services, civil work, etc., etc.

Problem is when you get consultants involved on a small project you can’t spread the cost over 100 units and a consultant isn’t charging 6/100th for a sixplex vs 100-unit building.

As I’ve explained before you aren’t going to be seeing multiple sixplexes on your street anytime soon. This will be a 10-20-30 year thing.

totoro
totoro
January 27, 2023 3:52 pm

Personally, I am looking for a MM property as I would like to build a rental sixplex over buying 6 more investment condos. Reasons being is I can design a MM sixplex with no elevator, surface parking, no common areas (each unit has their own exterior door), I can probably engage a rental property management company for 7-8% management fee versus 10-11% on individual condos, I can design a near maintenance free exterior facade with larger roof overhands, etc. Essentially, the advantage is I can get 6 units without the strata fees and those his units would be simple to manage and the building would be almost maintenance free for the next 20-30 years.

This is a very smart plan imo. I wish I had the skill and patience to pull it off. It sounds like an ideal solution for tenants and you.

deryk houston
deryk houston
January 27, 2023 3:49 pm

It’s hard to say why NB does not keep it’s immigrants. (The government is trying to do studies to find out.)
I believe it is because of the French/ English language issue, but then I haven’t done such a study:)
I have heard a lot about the language barrier as being a problem for people. If you want to do many jobs you must be bilingual. (Even paramedics….which does makes sense actually.)
The main movement of people seem to be from places like Toronto who are just fed up with paying huge mortgages. and can move to NB and save hundreds of thousands of dollars in costs.
Our duplex in Moncton has been very kind to us as an investment. It’s run by a property management company and so it is stress free. Easy to rent out and excellent income. Taxes were never too bad and even the governments has made some changes recently. Heating is terrible… but again… nothing outrageous or different from anywhere else on the east coast. (tenants pay their own heat anyway.)
I would never move out there myself but that is because I can afford to live in this part of the world comfortably, with no worries.
Moncton is not what it used to be. The governments there are spending money to attract people back and that has been working in recent years. A lot of new exciting projects that will provide high paying jobs. (Such as the marine research facility I mentioned before.)
I post this only to let people know about some of the exciting opportunities in the Maritimes.

VicREanalyst
VicREanalyst
January 27, 2023 3:19 pm

$350 to $400 a foot

Can you not get under $300/sqft now. not saying it provides a different outcome to the analysis but construction costs are coming down. On the commercial side, some subs are much more negotiable now than 6 months ago.

Barrister
Barrister
January 27, 2023 3:18 pm

Rumor alert: No idea if it is true, but again I am hearing from some people who have been rather accurate in the past that their is a push to tie rent control to the unit rather than the tenant. Personally I am taking that one with a bit of a grain of salt myself. (Ebby in the past said henwas not considering it at the time, but with politicians…)

My actually question is what would that do, if anything, to the price of condos? What that cause any hesitancy in the building of purpose built apartments.

VicREanalyst
VicREanalyst
January 27, 2023 3:15 pm

Rising rents are relevant to your formula for buying.

Ya except current/market rents already account for that rise noted so its pointless. Thanks for the discussion

Marko Juras
January 27, 2023 3:06 pm

Regarding MM and uplift in land value….complete non-sense imo.

Personally, I am looking for a MM property as I would like to build a rental sixplex over buying 6 more investment condos. Reasons being is I can design a MM sixplex with no elevator, surface parking, no common areas (each unit has their own exterior door), I can probably engage a rental property management company for 7-8% management fee versus 10-11% on individual condos, I can design a near maintenance free exterior facade with larger roof overhands, etc. Essentially, the advantage is I can get 6 units without the strata fees and those his units would be simple to manage and the building would be almost maintenance free for the next 20-30 years.

However, the numbers have to work. I can’t go out and drop $1 million on a MM teardown, 5,000 sq/ft x $350 to $400 a foot is another $2 million. That is $3 million for 6 units. For $3 million I can go out right now and buy a mix of older townhomes and newer condos as everything is now rentable. For example, this townhome is under 500k -> https://www.realtor.ca/real-estate/25226065/6-3341-mary-anne-cres-colwood-triangle

Sixplex is realistically going to take four years….two years of paperwork, four months notice to tenants, 18 months to build.

To make the numbers work I realistically need to find a teardown between 700 and 850k tops. The absolute shittiest houses will see a bit of an uplift. The livable million dollar house on an average sized lot will remain at a million dollars.

People throwing out numbers like $1.5 million on Reddit and FB…..yea. Developer is going to pay almost the equivalent of three units for the just the land, on a six unit project. Not sure what people are smoking.

Barrister
Barrister
January 27, 2023 3:03 pm

Closer to a 2 million dollar townhouse at this point.

patriotz
patriotz
January 27, 2023 2:46 pm

If by “affordable housing” you mean non-market correct it’s not. But more housing makes market housing more affordable.

up-and-coming
up-and-coming
January 27, 2023 2:27 pm

The missing middle is affordable family size units that will allow low equity families to live in Victoria.

What? No it isn’t, there’s a Vic councilor that voted for MM on Twitter right now explicitly stating that the MMHI is not about affordable housing. This is what the housing advocates like Homes For Living lied and sold people on when in reality if any of this MMH gets built you’ll have to wait in a long lineup with lots of other people for your chance to own a $1 million townhome next to Barrister’s house.

Couple that circus with Lisa Helps and her fake housing PhD being hired as an advisor by Eby and it’s been quite the dog and pony show for housing this week.

Dad
Dad
January 27, 2023 2:21 pm

What’s with the quality codes on the units in the different cities?

it’s the quality of the data

Patrick
Patrick
January 27, 2023 2:03 pm

He did call the massive downturn in 2018 though.

As did you.

Patrick
Patrick
January 27, 2023 1:36 pm

?? what does that have to do anything.

Rising rents are relevant to your formula for buying. “ Its a combination of price, rents and mortgage rates.”

If it isn’t relevant to you, just ignore it. The comment was intended for everyone, and Leo’s chart is on the same topic.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
January 27, 2023 1:35 pm

How Lisa @ Co will approach the missing middle problem has yet to determined. My guess is they will buy down the interest rates for home owners to develop large family sized suites along with a cap on the rents that can be charged for a decade. How that will effect prices if the home owner sells before the term is anyone’s guess.

Along the same line as MURBs done in the past when investors built subsidized multi-family housing that could not be owner occupied for the first ten years.

VicREanalyst
VicREanalyst
January 27, 2023 1:33 pm

That CMHC rent report showed rents up 20% on turnover.

?? what does that have to do anything.

Patrick
Patrick
January 27, 2023 1:32 pm

On the chart..
What’s with the quality codes on the units in the different cities?
Every city is “excellent”, except Sidney (good/poor)

Does CMHC have something against Sidney?

Patrick
Patrick
January 27, 2023 1:21 pm

Its a combination of price, rents and mortgage rates.

That CMHC rent report showed rents up 20% on turnover.

VicREanalyst
VicREanalyst
January 27, 2023 1:18 pm

You’ve been calling for things to cool down in Feb. 2023, allowing you to scoop up something in Maple Bay.

Sticking with that?

Maplewood you mean? I said cashflow neutrality or better on 3 bed up and 2 bed down rental then I will be getting one and I was expecting it in Feb 2023. Its a combination of price, rents and mortgage rates.

Patrick
Patrick
January 27, 2023 1:12 pm

that’s the same guy who called 25bps rate hike and done in 2022.

You’ve been calling for things to cool down in Feb. 2023, allowing you to scoop up something.

Sticking with that?

James Soper
James Soper
January 27, 2023 1:11 pm

LMAO, that’s the same guy who called 25bps rate hike and done in 2022.

He did call the massive downturn in 2018 though. :o|

Whateveriwanttocallmyself
Whateveriwanttocallmyself
January 27, 2023 1:10 pm

To see if SFH owners have won the lottery, I think we will have to see what the missing middle is. I don’t see any benefit for adding suites to a single family house unless it will provide a minimum of three-bedrooms and 1,000 square feet. The missing middle is affordable family size units that will allow low equity families to live in Victoria.

Otherwise the home owners are just directly competing with developers that are already building small one and two-room units. The idea that you might have four or six suites in your home may be just a pipe dream.

The cost of adding a 1,000 square foot addition or raising the home by one storey is monstrous. You will most likely have to rent that three-bedroom suite at a premium to recover these costs. Ten years from now when the home owners have paid down their mortgage then these suites may have an impact on affordability.

(sarcasm alert)
Otherwise start tearing down the schools in Victoria and putting up hi-rises, because without families we are not going to need them.

VicREanalyst
VicREanalyst
January 27, 2023 1:08 pm

Vancouver YouTuber Steve Saretsky is seeing a housing market rally, expected to “coincide with higher prices”

LMAO, that’s the same guy who called 25bps rate hike and done in 2022.

Patrick
Patrick
January 27, 2023 12:58 pm

Vancouver YouTuber Steve Saretsky is seeing a housing market rally, expected to “coincide with higher prices”

751295B6-189C-4CEF-BA5E-A52C170785F9.jpeg
Ciena
Ciena
January 27, 2023 12:45 pm

Have SFH owners in Victoria won the lottery with the new rezoning?? Long term will this drive up SFH prices? Interested to hear everyone’s thoughts.

Twitter comment from Michael Pelletier (regular finance commentator on BNN Bloomberg):
https://mobile.twitter.com/MPelletierCIO/status/1619063629877489665

VicREanalyst
VicREanalyst
January 27, 2023 11:31 am

There would need to be a huge uptick in secure jobs suitable for immigrants in Moncton to see this change imo.

Fair enough, I have zero idea what kind of jobs there are in Moncton. Anyone got some recent sales in Roya Bay? My realtor insider contacts are both on vacation currently.

Patrick
Patrick
January 27, 2023 11:21 am

This is offtopic and not going to lead anywhere productive further comments will be deleted

That’s Leo’s version of “Thanks for the discussion” 🙂

Patrick
Patrick
January 27, 2023 11:13 am

I never really understood the part about giving priority to the indigenous population simply based on indigenous status. Why isn’t it just based on need, say indigenous folks living in underserved remote community?

Right. And BC Health Paxlovid eligibility specifically includes people that “self-identify as indigenous”. That includes racially white people with no indigenous ancestry, that simply self-identify as indigenous. There are white supremacist groups (“white settlers”) in Quebec that self-identify as indigenous, and so they’ll be eligible for Paxlovid from BC Health. https://nbmediacoop.org/2019/11/22/race-shifters-white-people-who-identify-as-indigenous/

Mind you, many white supremacists are also unvaccinated, and anyone completely unvaccinated over 50 is automatically eligible for Paxlovid, even in perfect health. But no Paxlovid for a 95 year old BC vaccinated woman with heart failure and asthma (because that’s only two chronic conditions and you need three). Maybe it’s time for her to self-identify as indigenous?

Whateveriwanttocallmyself
Whateveriwanttocallmyself
January 27, 2023 11:10 am

If anyone is looking for a plumber for work around their house, I met someone at coffee this morning that is looking for work. Robb Bouchard 250-883-7590

Arrow
Arrow
January 27, 2023 11:00 am

That same house would cost you under $900 in property taxes here
That same house would cost way more than $200K here and so would have a similar property tax (it is all about Mill Rate).

patriotz
patriotz
January 27, 2023 10:52 am

That same house would cost you under $900 in property taxes here.

Not not the same house. Rather a $200K house, which doesn’t exist in Victoria. 🙂

totoro
totoro
January 27, 2023 10:50 am

If you believe the immigration hype then you have to assume that atleast a portion of the immigrants will be attracted to lower cost housing

The East Coast has had much lower-cost housing all along, but has not attracted many immigrants. Immigrants looking for lower-cost housing have typically chosen places like Winnipeg. There would need to be a huge uptick in secure jobs suitable for immigrants in Moncton to see this change imo.

totoro
totoro
January 27, 2023 10:38 am

If I live next to indigenous folks and we both have otherwise equal health status and equal access to healthcare, what’s the priority all about? making up for past wrongs wouldn’t seem like “healthcare” policy.

It is science-based. Indigenous people as a group, like seniors, are at 3.5-5 times the risk of serious illness should they get Covid than the non-Indigenous population. They also have, in general, overcrowded multi-gen housing in which transmission risk is elevated for all ages. https://www.cmaj.ca/content/cmaj/192/48/E1620.full.pdf

Not sure why, but I don’t think I’ve seen much if any public discussion about this.

I recommend google. You’ll find a bunch of information on this.

VicREanalyst
VicREanalyst
January 27, 2023 10:28 am

The average long-run appreciation rate in Victoria and a number of areas of BC (unadjusted) is over 7% I believe – might be lower going forward but I’ll be it exceeds Moncton’s.

If you believe the immigration hype then you have to assume that atleast a portion of the immigrants will be attracted to lower cost housing and would want to move there despite the harsh winters. So on a % basis it could very well outperform Victoria given how low the prices are to begin with (see westshore over the past couple years as an example)

totoro
totoro
January 27, 2023 10:10 am

A few things to keep in mind about Moncton.

Your 200k house will have a $4,218/year property tax bill. $200,000 in RE would cost you under $900 in property taxes here. This bill continues on after you’ve paid down your mortgage.
Your utility bills will be much higher. This also continues after your mortgage has been paid down.
Winter is long and storms are severe.
The average long-run appreciation rate in Moncton has been very low – which is why you can buy a house for 200k. This changed during the pandemic, but there is no guarantee this trend will continue. The average long-run appreciation rate in Victoria and a number of areas of BC (unadjusted) is over 7% I believe – might be lower going forward but I’ll be it exceeds Moncton’s.

If you have a pension and are fine with moving, the East Coast might be a good place to be able to buy a house and have more disposable income. If, like 1/4 of Canadians, you plan on using your home equity in retirement it might not be a great plan.

Peter
Peter
January 27, 2023 10:10 am

Because in BC, you need to be over 70 AND have at least three chronic conditions to get it. (Unless indigenous, unvaccinated or immunocompromised

I never really understood the part about giving priority to the indigenous population simply based on indigenous status. Why isn’t it just based on need, say indigenous folks living in underserved remote community? If I live next to indigenous folks and we both have otherwise equal health status and equal access to healthcare, what’s the priority all about? making up for past wrongs wouldn’t seem like “healthcare” policy. Not sure why, but I don’t think I’ve seen much if any public discussion about this.

deryk houston
deryk houston
January 27, 2023 9:36 am

For anyone unable to get into the real estate market here in Victoria, or is tired of paying huge rents, there are alternatives in other parts of Canada.
New Brunswick for example.
https://www.royallepage.ca/en/property/new-brunswick/moncton/143-north-st/19067387/?utm_source=allclassifieds.ca
A simple, modest little house for $199,000.00 asking price in Moncton NB. There are lots of them available.
(I have no financial interest in this house. I simply give it as an example for others to consider what is out there.)
There are few places like Victoria. But there are astonishingly good deals out there for family’s if a person is interested in experiencing a new adventure. (Millions of people live in eastern Canada and the united States.) Moncton is a growing city with some very exciting new developments going on. For example: The major new Marine science center addition … which will add something like over 300 new employees “after” it is built.

James Soper
James Soper
January 27, 2023 8:26 am

@Introvert your favourite inflation indicator (lumber) is up to $525 per 1000 board feet today.

VicREanalyst
VicREanalyst
January 27, 2023 8:03 am

Whats the lowest sales of those royal bay houses recently?

Introvert
Introvert
January 27, 2023 7:05 am

Impersonators posing as homeowners linked to 32 fraud cases in Ontario and B.C.

https://www.ctvnews.ca/canada/impersonators-posing-as-homeowners-linked-to-32-fraud-cases-in-ontario-and-b-c-1.6246976

Introvert
Introvert
January 27, 2023 6:59 am
patriotz
patriotz
January 27, 2023 6:29 am

As financial pressures intensify, real estate industry professionals are keeping a wary eye on debt-burdened homeowners – particularly those who rely on cash from private lenders. The credit that flowed so easily from private and alternative lenders when the Canadian real estate market was climbing is scarce, expensive and sometimes unobtainable when property values fall.
.
Mark Morris, Toronto-based real estate lawyer with LegalClosing.ca has a growing sense of foreboding as more problem files land on his desk. The steep climb in interest rates combined with a slide in house prices may be a major source of instability in the real estate market in the Greater Toronto Area and beyond, Mr. Morris says.
.
“The stars are aligned for a bloodletting,” he says.

https://www.theglobeandmail.com/canada/article-private-lenders-rein-in-real-estate-borrowers/

Market2023
Market2023
January 26, 2023 8:30 pm

For example, 85 year old BC lady in whistler sick with Covid, so sick she couldn’t climb stairs, was denied Paxlovid on Dec 26 because she didn’t have three chronic conditions.

Patrick: absolute disgrace. There is absolutely no excuse for this whatsoever! It’s an outrage. Stockpiling these medications while people die is conservatism run amuck and cannot be explained. It makes no sense!

Marko Juras
January 26, 2023 8:27 pm

“MMHI update

Just received notifications from listing agents re offers that have come in on two out of three properties I was keeping an eye on for MMHI. This will be super interesting to watch over the next few years. Wonder if some of the waterfront teardown lots in Fairfield now end up going the route of high-end 6 unit condos over custom SFHs.

Wonder if Saanich will follow or wait a few years to see how this plays out in Victoria?

freedom_2008
freedom_2008
January 26, 2023 5:23 pm

FYI: 🙂 🙂 🙂

“MMHI update
@CityOfVictoria
council has passed the Missing Middle Housing Initiative 6-3. Thompson, Loughton, Dell, Alto, Caradonna, and Kim in Favour. Coleman, Hammond, and Gardiner against.”

https://twitter.com/HomesForLiving_/status/1618779620194807809

Patrick
Patrick
January 26, 2023 5:13 pm

Kudos to Ontario health, and an outrageous fail for BC Health.

Good news for Ontarians who get Covid. If they’re over 60, Covid + (pcr), (or age 18-59 with one medical condition) they just visit a pharmacist (no need for a dr.) and get Paxlovid on the spot, an approved/effective pill treatment . https://news.ontario.ca/en/release/1002565/ontarians-can-now-visit-local-pharmacies-for-paxlovid-prescriptions

Bad news for BCers. The BC health has kept much stricter standards in place, and keeps stockpiling unused Paxlovid to an absurd level. They’ve received 30,000 and dispensed 2,500. Because in BC, you need to be over 70 AND have at least three chronic conditions to get it. (Unless indigenous, unvaccinated or immunocompromised). Even then your doctor has to spend 30 minutes filling out forms, and then apply, wait for approval. Meanwhile Paxlovid is only effective if given in the first 5 days!

For example, 85 year old BC lady in whistler sick with Covid, so sick she couldn’t climb stairs, was denied Paxlovid on Dec 26 because she didn’t have three chronic conditions.

Hopefully this CTV article shames BC Health into doing something, but as of today (Jan 26)
the requirements are unchanged for who gets Paxlovid https://www2.gov.bc.ca/gov/content/covid-19/vaccine/treatments

https://bc.ctvnews.ca/b-c-s-stockpile-of-covid-treatments-growing-amid-continued-eligibility-restrictions-1.6216756

This is the type of nonsense that happens when we allow government bureaucrats to get in the middle between patients and their doctor.
If you want to do something about this, go here https://protectbc.ca/broaden-paxlovid-availability/

Patrick
Patrick
January 26, 2023 4:04 pm

That chart doesn’t include the HELOC taken out by Mom and Dad to help Junior with the down payment.

Only 27% of homeowners have a HELOC. And only half of them have any balance outstanding.. So that leaves 14% of homeowners with a HELOC balance. Average balance is low at $75k. Most use it for renos. As you know, they can pay interest only and withdraw from the HELOC to do it. So they’re not stretched. .

Moreover, HELOC balances (total $168 billion) have been falling for the last ten years, until 2022 when they rose a modest 1.8% (well below inflation, and flat per capita ). No signs of danger there.
https://www.mpamag.com/ca/specialty/specialized-lending/how-is-canadas-heloc-debt-burden-shaping-up/411187

Patrick
Patrick
January 26, 2023 3:48 pm

How do you define stretched

I’m referring to the average new mortgage of $500k. Yours is way above average ($1.2m). Presumably because you qualified so your income is also way above average. And your income has risen with inflation since you bought.

So maybe you can tell us what stretched means to you, are you going to sell your house, or just pay the extra amount (and cut back other expenses)?

patriotz
patriotz
January 26, 2023 3:48 pm

That chart doesn’t include the HELOC taken out by Mom and Dad to help Junior with the down payment.

Tillicum Guy
Tillicum Guy
January 26, 2023 3:39 pm

Perhaps FTB are stretched less than previous – which runs counter to the common narrative,

How do you define stretched? A % of monthly income? Overall purchase price? Disposable income left over after obligations are paid?

For what it’s worth, I’m a FTB and our recent PA came in at:

Amount: $1,235,000
Rate: 5.24%
Payment: $6,769.09

We would be stretched with that payment.

James Soper
James Soper
January 26, 2023 3:26 pm

Received a managing broker email bulletin update this morning….hmmm, never knew about this depsite being a landlord for 10+ years.

That’s because it’s been zero for over a decade.

Patrick
Patrick
January 26, 2023 3:08 pm

That’s an interesting chart. Looks to be a huge average down payment. (330k/800k) = 41%
Compared to about 25% in 2013.
Higher % down payment despite higher, more unaffordable prices – who knew?
Perhaps FTB are stretched less than previous – which runs counter to the common narrative.
For a new mortgage purchase, with a 41% down payment, house value would need to fall 41% before the buyer would be underwater on the mortgage.

That’s points to less “recent buyer” pain out there, which should be good news to those here that have been posting/worrying about that

Caveat Emptor
Caveat Emptor
January 26, 2023 2:11 pm

never knew about this depsite being a landlord for 10+ years

Hasn’t been relevant for a long time. I paid a tenant a trifling amount in 2008 and that was the last time the prescribed rate was greater than zero.

Marko Juras
January 26, 2023 1:18 pm

Received a managing broker email bulletin update this morning….hmmm, never knew about this depsite being a landlord for 10+ years.

“The Residential Tenancy Branch (“RTB”) has announced that the interest rate due on tenant deposits for residential rental units is now 1.95%. Per Section 4 of the Residential Tenancy Regulation, the interest that landlords owe tenants upon the return of their deposits is calculated at prime minus 4.5%. Since 2009, the effective interest on deposits has been 0% while interest rates were below 4.5%. But with recent rate increases, your landlord clients should be made aware that interest will be owed again to their tenant(s). 

Section 26(1) of the Real Estate Services Act (“RESA”) also requires that brokerages hold deposit funds in an interest-bearing account. Any interest that is earned on the deposit over and above the amount which is paid to the tenant must be given to the landlord. Remember, per Section 29(2) of RESA, no interest accumulated on funds held under a duty under the Residential Tenancy Act should be forwarded to the Real Estate Foundation.”

Marko Juras
January 26, 2023 1:15 pm

This, I think anyone who is an active landlord would agree with me as well ( pretty sure Marko saw the same thing), the demand declined quite significantly compared to couple months prior. There’s still lot of demand, don’t get me wrong but you cannot just price higher than comparables and expect people to rent from you.

Re-rented 430 sqft in Vic West from $1,500 to $1,750 in December.

Just re-rented 520 sqft in Vic West from $1,700 to $2,000 in Jan.

Not getting 100 inquiries off FB marketplace anymore but enough (20ish) to find a good candiate.

Even with these insane prices still undercutting the big players. Hudson has 200 units but check out their prices -> https://hudsonhouse.townline.com/floorplans
Add $175 for parking.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
January 26, 2023 12:58 pm

A quick look at craigslist this morning shows the average one-bedroom rate is $1,868 +/- 20% per month. A two-bedroom at $2,353 +/- 20% per month in Victoria.

Older apartment buildings in less desirable areas being at the lower end of the range while newer centrally located condominiums with views will lay at the higher end.

I’m using a bedroom analysis as that is how the data is presented. The size of one and two-bedrooms can vary significantly. Therefore a price per rentable floor area would be the preferred method and give better results.

-However You gotta work with what ya got.

Rents do follow the economic principle of diminishing utility. As the size of the rental increases the price per square foot rate decreases. Small one-bedroom suites will therefore lease at a higher price per rentable area than a large one-bedroom suite. The typical one-bedroom suite being about 650 square feet or $2.87 and a two-bedroom at about 1,000 square feet at $2.65. Ceteris paribus

In my opinion rents have plateaued. The 1.5% vacancy rate is good news but I believe that rate has to at least double before we will see significant declines in rental rates. A 1.5% vacancy rate may just mean that it will take a landlord a little bit longer to sign a tenant at current market rents.

However if you want to sign a tenant sooner and receive dozens of emails enquiring about your suite then you can offer your unit at below current rent levels.

Patrick
Patrick
January 26, 2023 12:55 pm

Yup, called the rent peak back in November. … the demand declined quite significantly compared to couple months prior

That could be expected seasonal effect, and nothing new. Renter interest and rents are higher in summer (May-October) and lower in winter (December to March), as described here for an analysis of US cities.

https://www.renthop.com/studies/national/best-time-of-year-to-rent

“The “best” or cheapest months to rent tended to be between December and March (early winter to early spring) across the 10 cities.
The “worst” or most expensive months across all the metros are in the May through October (basically early summer to early fall)”

VicREanalyst
VicREanalyst
January 26, 2023 12:13 pm

Are you saying you think market rents peaked in November?

This, I think anyone who is an active landlord would agree with me as well ( pretty sure Marko saw the same thing), the demand declined quite significantly compared to couple months prior. There’s still lot of demand, don’t get me wrong but you cannot just price higher than comparables and expect people to rent from you.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
January 26, 2023 12:05 pm

.

Dad
Dad
January 26, 2023 12:04 pm

Yup, called the rent peak back in November. Leo, I assume this means you are slowly getting on board with the call now?

Are you saying you think market rents peaked in November? Or demand for rentals peaked in November?

Introvert
Introvert
January 26, 2023 11:41 am
VicREanalyst
VicREanalyst
January 26, 2023 11:05 am

New CMHC rental report. Vacancy up to 1.5% but still well below healthy rate (3%)

Yup, called the rent peak back in November. Leo, I assume this means you are slowly getting on board with the call now?

Patrick
Patrick
January 26, 2023 10:58 am

New CMHC rental report. Vacancy up to 1.5% but still well below healthy rate (3%

That’s 1.5% for the “purpose built” number, and then the “condo” rate is much lower, at 0.2%

I can’t recall, why do you place importance on the PBR vac. Rate , but not the condo vac. rate?

James Soper
James Soper
January 26, 2023 10:57 am

Atleast now it’s obvious you don’t know how the real world works.

As I’ve said before. Some people just exist to waste your time. Experts in everything, experience in nothing.
Thanks for the discussion, now go eat a bagel.

VicREanalyst
VicREanalyst
January 26, 2023 10:43 am

That’s good enough for me. Thanks for the discussion.

LMAO, thank you for the discussion actually. Atleast now it’s obvious you don’t know how the real world works. Yup, your the exact type I describe when I say slow victoria folks.

Patrick
Patrick
January 26, 2023 10:24 am

Totoro: “ Realtors are not professionals, they fall in the Technician/Associate Professional category ”
Patrick: ”your list calls a RE agent an “Associate Professional”, which makes them a professional”
Totoro: “No, it does not.”

Thanks for the discussion.

Patrick
Patrick
January 26, 2023 10:22 am

maybe not a direct commission

The statement of mine that you challenged was this “ I’m glad my doctor isn’t paid big commissions for prescribing certain drugs.”
And so now you admit “ maybe not a direct commission”.
That’s good enough for me. Thanks for the discussion.

totoro
totoro
January 26, 2023 10:21 am

despite being “non-professionals” on your list

It is not my list. It is the international standard used to clear up the types of confusion on terms and classifications that are common.

You’re confusing the term “professional” with “profession”

No, it is actually the reverse, you are confusing profession with Professional.

Seems to me Bill Gates and Mark Zuckerberg and millions of other CEO/Managers have a chosen profession, despite being “non-professionals” on your list.

CEOs are Managers, not Professionals. Again, you are confusing the definition of profession with the category of “Professional”. It is a classification system that you seem to be ascribing your own judgements and definitions to – if you want more information on why these distinctions are made and on what basis the website drop down menu provides this.

Moreover, you state that your list calls a RE agent an “Associate Professional”, which makes them a professional, just like an associate professor is a professor.

No, it does not. These are separate major categories distinguished by the types of tasks they carry out and the level of education required. An associate Prof is not the same as an Associate Professional. An Associate Professor is categorized under Professional.

Frank
Frank
January 26, 2023 10:11 am

Doctors do go on educational seminars that happen to take place on a cruise ship in the Mediterranean, funded by pharmaceutical companies. My friend was in Saudi Arabia last November to give a presentation, all expenses paid. There are perks.

Patrick
Patrick
January 26, 2023 10:11 am

Realtors are not professionals, they fall in the Technician/Associate Professional category

—- You’re confusing the term “professional” with “profession”.
— For example, your list of occupations lists a company CEO or President as a “manager” not a “professional”.
—-Seems to me Bill Gates and Mark Zuckerberg and millions of other CEO/Managers have a chosen profession, despite being “non-professionals” on your list.
— Moreover, you state that your list calls a RE agent an “Associate Professional”, which makes them a professional, just like an associate professor is a professor.

VicREanalyst
VicREanalyst
January 26, 2023 9:54 am

I am very familiar with physicians, and pharmaceutical sales. And no, physicians don’t receive money from pharmaceutical sales just because they write a prescription. If there are illegal cases where something like that is discovered, doctor typically loses his license +/- goes to jail.

Riighttttt.
https://www.utoronto.ca/news/what-big-pharma-pays-your-doctor-u-t-expert
https://www.cbc.ca/news/health/pharmaceutical-drug-company-doctor-physician-payment-disclosure-transparency-1.4169888
https://theconversation.com/guidelines-governing-canadian-doctors-relationships-with-pharma-companies-under-review-149519

Looks like you are an expert thinking there is no financial relationship, maybe not a direct commission but if you think there is no benefit then I got a house to sell you on a 3000 sqft lot in royal bay for 1.6M. Better hurry though, Frank might put in a bully bid

James Soper
James Soper
January 26, 2023 8:15 am

Hundreds of thousands of houses in Canada do not meet construction standards for energy efficiency, and need to be replaced.

If Japan can grow their housing stock by 2% a year, while at the same time taking down .5% per year, I think we can manage, just need to stop holding it up.

totoro
totoro
January 26, 2023 8:15 am

Not sure where you came up with that. The definition of profession has nothing to do with the status of provincial regulation. As an aside, do you know what the “world’s oldest profession” is, and is it regulated by the BC government?

Realtors are not professionals, they fall in the Technician/Associate Professional category according to the International Standard Classification of Occupations. Their specific subgroup is classified as Business Service Agents. Seems about right. Sex workers are also not Professionals. They are Personal Service Workers Not Otherwise Categorized.

You can search your own job and find your category here:

https://ilostat.ilo.org/resources/concepts-and-definitions/classification-occupation/

freedom_2008
freedom_2008
January 26, 2023 7:39 am

The other alternative is to pave over more farmland. Farmland does not extend very far north of the border.

People do also need to eat, after or before they get housing. Smart density is the only way, IMHO.

Frank
Frank
January 26, 2023 6:38 am

Supply will never catch up to demand under the current immigration policies. Hundreds of thousands of houses in Canada do not meet construction standards for energy efficiency, and need to be replaced. The other alternative is to pave over more farmland. Farmland does not extend very far north of the border.

patriotz
patriotz
January 26, 2023 4:43 am

No, although at the time it was introduced – 1987 – it exempted 95% of properties as it only applied to sales above $200K (!).

As we’ve already discussed, getting rid of the PTT would not improve affordability as you would have the same number of buyers bidding for the same number of properties with the same amount of buying power – so prices would just go up by the amount of the foregone tax.

What would improve affordability is more properties on the market, i.e. more supply.

Ciena
Ciena
January 26, 2023 12:53 am

Wasn’t the land transfer tax supposed to be temporary? That would be an easy win to help with affordability. Unfortunately I would suspect govt is to greedy to give it up though.

James Soper
James Soper
January 25, 2023 10:50 pm

The Bank of Canada did its job: Rising interest rates and inflation look to be ending

I found this part interesting

Oil is one-third lower now than its highs last summer. Global food prices are down more than 13 per cent. Fertilizer prices are down almost one-
fifth.

I personally don’t see oil prices continuing to be low with China ramping up, and Europe getting very little in the way of snow this winter. Better hope for a cool summer. Also, weird that global food prices are down, and yet groceries just continue to get more expensive here. Someone’s making a mint.

Patrick
Patrick
January 25, 2023 9:53 pm

The buyer’s agent will still show it and present it to their clients just as well as all the other listings offering $15,000 to $25,000 coop. After all, they are acting in the best interest of the client.

Yes, I agree. When I tried to convince my family member selling his house to get a discount from the selling agent, I had lots of other family telling me the agent wouldn’t “try as hard’, which seemed absurd. So I believe that the discounted agent will in fact do just as good a job as full-fee agent. So I’m not suggesting that RE agents aren’t acting in the interest of clients, I’m saying that they do, regardless of what they’re getting paid. And so if/when I sell my house, I’m going to be one of the 80-95% of sellers that you refer to looking for full service, and lower commission.

Patrick
Patrick
January 25, 2023 9:44 pm

RE agents are not a profession in BC, any more than barbers are.

Not sure where you came up with that. The definition of profession has nothing to do with the status of provincial regulation.
As an aside, do you know what the “world’s oldest profession” is, and is it regulated by the BC government? 🙂

Introvert
Introvert
January 25, 2023 8:53 pm

Well this economist thinks Canada could actually nail a soft landing:

The Bank of Canada did its job: Rising interest rates and inflation look to be ending

https://docdro.id/WIMLMsc

https://www.theglobeandmail.com/business/commentary/article-bank-of-canada-stop-raising-interest-rates/

Introvert
Introvert
January 25, 2023 8:41 pm

Just don’t sell and re-buy so often. The lowest commission is no commission. Not to mention all the other money you’ll save by simply not transacting.

Hassle, time, and stress — you’ll also save yourself those.

Marko Juras
January 25, 2023 8:15 pm

I don’t think you should keep score on your income with every transaction.

I am just giving you hypothetical scenarios. What I am trying to convey is if all agents “act in the best interests of the client;” then one would reasonably conclude that as a seller offering a $1 cooperating commission should have no impact on the sale of the property. The buyer’s agent will still show it and present it to their clients just as well as all the other listings offering $15,000 to $25,000 coop. After all, they are acting in the best interest of the client.

patriotz
patriotz
January 25, 2023 6:47 pm

If RE agents were regulated properly, as other professions are

Fixed that for you. RE agents are not a profession in BC, any more than barbers are. Actually barbers are more of a profession, since the BC government took back governance of RE agents.

Patrick
Patrick
January 25, 2023 6:34 pm

Are you being sarcastic? I am assuming you have heard of pharmaceutical sales?

I am very familiar with physicians, and pharmaceutical sales. And no, physicians don’t receive money from pharmaceutical sales just because they write a prescription. If there are illegal cases where something like that is discovered, doctor typically loses his license +/- goes to jail. If you know of anything like that, report it to cpsbc.ca and they’ll get right on it. Other than that, accept this as a word from an “insider” that it doesn’t happen.

Note that a doctor may own a pharmacy, and make money from the sale of anything from that pharmacy. Those aren’t commissions for prescribing that drug. I am referring to what I said, namely getting a commission from the pharmaceutical company based on prescribing a drug, which the patient can fill anywhere.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
January 25, 2023 6:15 pm

Sometimes you wonder if anyone is looking after the buyer’s interest when the commission is based on the sale price. First time and out of town buyers are most susceptible to over paying for a property as they have no reference unlike if they were also trying to sell a property in the same market as they are trying to buy into.

Maybe once or twice a year, I’ll have someone call me about a property they want to buy. The first thing I tell them is that I don’t want to know what you are offering on the property. Let me do my analysis and I’ll give you the low and high market value range along with my opinion and the margin of error in my results. Then we can talk about the property itself and the need for immediate repairs, items found in the home inspection, and renovation costs. The problem is this takes time and most buyers have to lift conditions quickly. They don’t have time for an unbiased party to complete an analysis. So they wing it.

This is different from a mortgage appraisal where the appraiser is working for the lender and confirming that the offer is reliable and reasonable for bank financing ,because the appraiser is now at the beginning of the process of buying a home and advising the client on where they should make an offer. Not at the end when everything has been finalized and the appraisal becomes just a formality.

People seem to like this service and it costs less than a home building inspection. Depending on the lender they could get a letter of transmittal from the appraiser which swaps out the client from the buyer to the lender and they then can use if for bank financing. The appraiser is then legally bound to the lender for losses resulting from an erroneous valuation. But not always, and in most cases they end up paying for two appraisals. One performed expressly for them and the other for the lender that they will most likely never be given a copy due to third party liability issues.

And don’t get me wrong, I think agents do a good job with their clients. It just sometimes people want an unbiased opinion especially on the unusual properties where there are little to no recent sales available.

VicREanalyst
VicREanalyst
January 25, 2023 6:09 pm

I’m glad my doctor isn’t paid big commissions for prescribing certain drugs.

Are you being sarcastic? I am assuming you have heard of pharmaceutical sales?

Patrick
Patrick
January 25, 2023 5:39 pm

When I do mere postings I always recommend my sellers offer a reasonable coop commission. Sure, you can offer $1 and the buyer’s agent has to work in the best interest of their client…..but their is reality

If RE agents were regulated properly, as other professions are, an agent found to be acting against their client’s interest because of a $1 commission would lose their license. And then it would no longer be “reality”. Other professions have matured, and got rid of this type of unethical behavior.

Patrick
Patrick
January 25, 2023 5:21 pm

The cooperating commission is very low and I list off every single negative about the property to my buyers and I don’t really go over the positives too much. Am I being an awesome realtor protecting my clients’ best interests or am I not happy with the coop.

I don’t think you should keep score on your income with every transaction. Imagine if your doctor did that, and thought “oh, here’s this guy, who doesn’t make me much money”. And so he didn’t ask you many questions, and got you outta there fast.

Instead, look at your income annually. It will still be huge, despite making way less than average on some transactions.

Marko Juras
January 25, 2023 5:13 pm

25k isn’t a decent co-op commission? If you offer $1000, ok, they’re going to talk it down their client but 25k sounds pretty not embarrassing for 1 sale, no?

Sorry my bad. The buyer example had nothing to do with double-end scenario in paragraph above.

totoro
totoro
January 25, 2023 5:01 pm

How does one differentiate whether that is my honest opinion or I am stretching the truth on what I really think because I see 50k in front of me?

There are going to be people in all walks of life who are honest to a fault, and others who are not.

I think you are in charge of your honesty, and the industry has a code of conduct to make sure those that cannot distinguish have some mandatory standards to adhere to and consumers have a complaints mechanism when they don’t.

This is ultimately why double commissions were prohibited. They are a clear conflict of interest situation.

>Am I being an awesome realtor protecting my clients’ best interests or am I not happy with the coop. Impossible to really determine.

You know.

I would say these scenarios point to reasons not to use a realtor who is working on commission. I’d rather go it on my own than pay someone who has a duty to act in my best interests but is instead manipulating a transaction so they get paid more or earlier. The only time this would be worth it to me is if I felt the realtor was acting in my best interests and was also more knowledgeable than me about the market.

When I do mere postings I always recommend my sellers offer a reasonable coop commission. Sure, you can offer $1 and the buyer’s agent has to work in the best interest of their client…..but their is reality.

Yeah. But your advice appears to be in their best interests if that does influence the salability of the property.

DuranDuran
DuranDuran
January 25, 2023 4:56 pm

25k isn’t a decent co-op commission? If you offer $1000, ok, they’re going to talk it down their client but 25k sounds pretty not embarrassing for 1 sale, no?

Marko Juras
January 25, 2023 4:25 pm

I think you’ll run into an ethical issue there. I don’t think I want my listing realtor who I am paying for representation to talk me down 17k or some part of that so they can get this money instead. Not to mention that this seems like it could be a breach of section 30 of the RE Service

Let’s say I am the listing agent on a $2 million dollar property, it has been on market four months and seller is nervous. Gross commission $50k, coop $25k. We receive an unrepresented offer for $1.65 million and seller counters at $1.9 million. Unrepresented buyer says $1.70 million best and final. Seller asks me what I think and I explain that there is likely a glut of inventory coming this spring as high interest rates take their time to work through the system and I list off every single reason why the market is likely to continue to drop. How does one differentiate whether that is my honest opinion or I am stretching the truth on what I really think because I see 50k in front of me?

Same goes as a buyer’s agent. The cooperating commission is very low and I list off every single negative about the property to my buyers and I don’t really go over the positives too much. Am I being an awesome realtor protecting my clients’ best interests or am I not happy with the coop. Impossible to really determine. When I do mere postings I always recommend my sellers offer a reasonable coop commission. Sure, you can offer $1 and the buyer’s agent has to work in the best interest of their client…..but their is reality.

totoro
totoro
January 25, 2023 3:42 pm

The listing agent and the seller have a listing contract. I feel like the buyer asking for the cooperating commission to be reduced to $0 is trying to interfere with a contract they are not a party in.

I see. It is up to the listing realtor to agree to (or not) the request. An unrepresented buyer cannot compel cooperation. However, not sure why a listing realtor would be opposed as they are not disadvantaged by this. They are put in the same position they would have been dealing with a represented buyer.

Other than that I strongly believe in human nature (let the 2x commission for listing agent go to work). Some of the best deals I ever saw were dual agency (now known as unrepresented) transactions.

I think you’ll run into an ethical issue there. I don’t think I want my listing realtor who I am paying for representation to talk me down 17k or some part of that so they can get this money instead. Not to mention that this seems like it could be a breach of section 30 of the RE Service Rules:

Subject to sections 31 [modification of duties] and 32 [designated agency], if a client engages a brokerage to provide real estate services to or on behalf of the client, the brokerage and its related licensees must do all of the following:
1–act in the best interests of the client;|

Patrick
Patrick
January 25, 2023 3:18 pm

if the minimum tip on the machine is 18%

On the tipping conversation, it turns out you’re not alone Barrister. And there’s even a word for this – tipflation !

https://www.newsweek.com/restaurant-bill-tip-minimum-sparks-discussion-tipflation-viral-reddit-1736649

Whateveriwanttocallmyself
Whateveriwanttocallmyself
January 25, 2023 3:10 pm

Mayfair Man, I think that might contravene the Bank Act. Although most lender’s include the GST in the mortgage but do not include the property purchase tax. Why one tax but not the other?

Mayfair Man
Mayfair Man
January 25, 2023 3:01 pm

I think a system where the seller pays their realtor and the buyer pays their realtor(but it can be rolled into the mortgage) would be the most fair. That way the buyer isn’t having to come up with a lump sum payment for the realtor.

Patrick
Patrick
January 25, 2023 3:00 pm

I would say 99% of buyers have representation which is not the case in other countries.

There are times when buying a home when I wonder whose side my agent was on. You walk through a crappy house, and they’re trying to talk it up like they’re the selling agent. Just seemed like they want to make a sale period. I’m glad my doctor isn’t paid big commissions for prescribing certain drugs.

Marko Juras
January 25, 2023 2:50 pm

In the end anyone that wants to save money can, but almost no one is putting in the work necessary to do so.

This is 110% what is boils down to.

Marko Juras
January 25, 2023 2:50 pm

In Ontario that average commission is 5%, much higher than here for the same service. Should Ontarians be happy with that, because it is worse in Croatia?

I am not referencing commission percentages specifically, but the system setup as a whole. For example, in BC I would say 99% of buyers have representation which is not the case in other countries.

You can negotiate the commission. Do you really think with 1594 active agents in Victoria and 290 sales in January that you can’t find an agent in Victoria to list an Oak Bay home for 2.75% (1.25% listing end, 1.5% coop). You easily can, but as I said people want the agent that will fly in banned foreign buyers from New York that he or she can’t represented because dual agency is banned, to list their property.

Marko Juras
January 25, 2023 2:48 pm

In theory the best would be seller pays per hour for his or her agent and the buyer does the same.

Given the reality and the established culture of our system this is the best you can do from a practical standpoint in my opinion.

98% of buyers; try to secure an agent that will give you some sort of kickback
2% of savvy buyers; unrepresented

5-20% of sellers; mere posting
80-95% of sellers; lower commission full service

Patrick
Patrick
January 25, 2023 2:46 pm

I know we complain here a lot, but from what I’ve seen in other countries our system including mls isn’t actually too bad.

In Ontario that average commission is 5%, much higher than here for the same service. Should Ontarians be happy with that, because it is worse in Croatia?

Marko Juras
January 25, 2023 2:43 pm

I don’t see the advantage to the unrepresented buyer in this situation. The approach might work in a very slow market, but not in a seller’s market. Relying on a listing realtor acting on self-interest in the transaction doesn’t seem like a good move for a buyer – although I agree it is impolite not to request the split from the listing realtor in advance. Why should a self-represented buyer not gain a fully quantified and visible cost they are saving in the transaction for doing all the work themselves?

The listing agent and the seller have a listing contract. I feel like the buyer asking for the cooperating commission to be reduced to $0 is trying to interfere with a contract they are not a party in.

Other than that I strongly believe in human nature (let the 2x commission for listing agent go to work). Some of the best deals I ever saw were dual agency (now known as unrepresented) transactions.

Marko Juras
January 25, 2023 2:40 pm

In Croatia there are no buyer’s agents. The listing agent typically collects 2% from the seller and 2% from the dual agency buyer. As the buyer you are paying someone out of pocket not representing your best interests. The system is 100x worse than here.

I know we complain here a lot, but from what I’ve seen in other countries our system including mls isn’t actually too bad.

Marko Juras
January 25, 2023 2:38 pm

LOL, are you expecting realtors to send clients a task list like Lawyers? 36min driving around, 12 min answering your email, 6 min updating search criteria on MLS.ca.

10 years ago this was my buyer end business model

Up to 10 houses viewed – 50% cash back
11 to 25 houses viewed – 30% cash back
26+ houses view – $1,000 cash back.

My thought was if I spend less time with you I give you more cash back. Other than having to track showings there were so many problems with the model. First of all, the super cheap client that would call the listing agent(s) to set up showings. Then the listing agent would find out they were working with me and be extremely upset and accuse me of being lazy and not wanting to show houses in person, etc. It wasn’t fun getting hate phone calls from colleagues. Often I had clients view 14 houses, for example, and gripe that they were only getting 30% then I would bump them up to 50%. It is a referral business, what I am going to say? Sorry tough luck, we had a deal you are getting 30% and then they aren’t happy and don’t refer me to anyone. This business model also doesn’t account for 300k condo and 3 mill house, etc.

Then for years after that I would receive emails all the time “we are incredibly easy to work with, we’ve found the perfect property, we JUST need you to write an offer on this one home but we need 50% cash back.” I think my career success rate on this type of email is 1/50. I remember the 1 as it was a young family that actually bought a house in Gordon Head they emailed me about. The remainder believe it or not did not work out….people writing insane lowballs, bailing on conditions, etc. and then I would be like why did I agree to the 50%, i tought this was suppose to be easy/sure thing.

Life lesson I learned is when someone approaches you about how incredibly easy they are to work with as a client is they are most likely are complete nightmare.

Last 5 years I’ve gone 1k cash. Keep it nice and simple. If people want more Google Search and I am sure you’ll find someone offering more.

Patrick
Patrick
January 25, 2023 2:26 pm

Seller gives away his or hers bottom line right off the bat.

Why would the bonus start at the “bottom line”? Why not put it at the list price, which is already public. Or 10% below list. That doesn’t reveal bottom line.

Patrick
Patrick
January 25, 2023 2:21 pm

I definitely think the majority of the impediment is that there just isn’t huge demand for the low fee options

That is a big part of it. The seller is flush with cash, so what’s an extra $20k.

Making the buyer pay his own fee to the agent would be a different story however. Buyers have been penny pinching to save every nickel for the down payment, so wouldn’t be freely throwing tens of thou$ands at their buyer agent. If you forced buyer’s to pay for their agent, fee for service along the way, you’d see a big demand for low fee options.

totoro
totoro
January 25, 2023 2:19 pm

Make a lowball offer and let the listing agent decide if he or she wants to lower the double-end commission to the seller, or he or she wants to try and collect both end and talk the seller into accepting a lower price point.

I don’t see the advantage to the unrepresented buyer in this situation. The approach might work in a very slow market, but not in a seller’s market. Relying on a listing realtor acting on self-interest in the transaction doesn’t seem like a good move for a buyer – although I agree it is impolite not to request the split from the listing realtor in advance. Why should a self-represented buyer not gain a fully quantified and visible cost they are saving in the transaction for doing all the work themselves?

Patrick
Patrick
January 25, 2023 2:16 pm

are you expecting realtors to send clients a task list like Lawyers? 36min driving around, 12 min answering your email, 6 min updating search criteria on MLS.ca

I didn’t ask for an itemized list. They could just send a bill listing 20 hours @ $150 /hr in the month, and that’s $3,000.
And just like hiring a lawyer/accountant, I could fire them or they could quit anytime, and I just owe them for services rendered.

Marko Juras
January 25, 2023 2:10 pm

In Australia they have flat fee or percentage of sale and a bonus structure so I’m sure lots of workable examples in other countries no need to overthink it

It’s more like a sliding scale versus bonus. For example, certain % up to 500k then a different % over 500k.

We often have that in Victoria/Canada.

Straight up bonuses (i.e. if you sell home over 800k you get bonus or 10%) don’t work well in my opinion. Seller gives away his or hers bottom line right off the bat.

Marko Juras
January 25, 2023 2:07 pm

How would that work practically?

Make a lowball offer and let the listing agent decide if he or she wants to lower the double-end commission to the seller, or he or she wants to try and collect both end and talk the seller into accepting a lower price point.

totoro
totoro
January 25, 2023 2:03 pm

Only part I will disagree with you on is if going with the self-represented approach I think the buyer should let the deductions or listing agent beat down the seller on pricepoint play out in the background, versus asking for a deduction.

How would that work practically?

Marko Juras
January 25, 2023 2:01 pm

Some agents may be better at selling than others.

99% of properties are on lockbox (listing agent not present); therefore, if minimum level of competence is met (floorplan, professional photos, correct data input into mls) how is one agent better than another one.

Honestly as a industry insider it 99% comes down to price/market.

I just slimmed down from 205 lb to 190 lb. Despite there being a million diet methods/programs/etc. guess what I did. I ate less and exercised more. It isn’t that complicated. ***do not mean to offend anyone with health/genetic related obesity. Obviously there are exceptions to eat less exercise more but for the majority it is as simple as that yet people spend billions on diet plans.

Real estate is the same. A lot of fog being sold.

Thurston
Thurston
January 25, 2023 1:59 pm

In Australia they have flat fee or percentage of sale and a bonus structure so I’m sure lots of workable examples in other countries no need to overthink it

VicREanalyst
VicREanalyst
January 25, 2023 1:57 pm

They could charge more $$ per hour, just like the hot-shot lawyers do.

LOL, are you expecting realtors to send clients a task list like Lawyers? 36min driving around, 12 min answering your email, 6 min updating search criteria on MLS.ca.

Marko Juras
January 25, 2023 1:55 pm

However, on the last place we purchased in 2021 we had a 17k deduction agreed to on the basis of a commission split as self-represented buyers.

Only part I will disagree with you on is if going with the self-represented approach I think the buyer should let the deductions or listing agent beat down the seller on pricepoint play out in the background, versus asking for a deduction.

And there may well be RE agents willing to do this. Staging and marketing will be expensive so I would only go this route in a strong sellers market personally. Looking at the time and costs involved, I’d estimate that this is going to be a minimum of 6k which you lose if there is no sale.

I’ve run into this problem with mere postings. The consumer just does not want to pay more than $1,000 upfront not knowing whether the property will sell or not even thought it makes mathematical common sense.

Maybe 6 or 7 years ago a university mathematics professor called me inquiring re listing his Oak Bay home and we got into some probability discussions. He was worried about the home not selling and being out $1,000. At that time the success on my mere postings was around 75% (inline with full service listings). I was trying to explain to him that $1,000 @ 75% success was mathematical far superior than $16,500 (listing side for full service commission on his 1 mill dollar home at the time). He ended up listing full service with another brokerage at the price I suggested he mere post. The house sold as it would have with the mere posting as well.

As you say billing per hour would not work for the consumer in slower markets.

Patrick
Patrick
January 25, 2023 1:52 pm

Some agents may be better at selling than others.

They could charge more $$ per hour, just like the hot-shot lawyers do.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
January 25, 2023 1:42 pm

There are problems with paying an hourly rate. Some agents may be better at selling than others. In that case those agents with experience would be penalized for being better at their job. While an agent say with less experience would take longer to effect a sale and receive a higher compensation than an experienced agent.

You might say that an experienced sales person should charge a higher hourly rate, but the consumer would not know the difference between the two sales people. In their minds the sales people would be like cans of soup and the consumer would select the lowest hourly rate.

This would be the same if agent’s competed on a flat fee or piece work basis. Industries that follow this method of pricing are offsetting quality for time. As the adage goes. You can have it good or you can have it fast. Pick one.

totoro
totoro
January 25, 2023 1:32 pm

Practically speaking I find buyers just give up on signing the forms for each showing and getting negative pushback from listing agents that are afraid to deal with a unrepresented party that they just end up with a buyers agent. In conclusion, a lot more difficult/annoying to be without a buyer’s agent than it was 10 years ago thanks to the government.

Yeah, I can see that and agree things have changed. Some brokerages won’t even show listings to an unrepresented buyer even with signed forms. All of Parksville/Qualicum won’t. I do have a problem with this approach as it does seem like a cartel and designed to protect commissions. Almost all agents in this area work with Royal LePage.

However, on the last place we purchased in 2021 we had a 17k deduction agreed to on the basis of a commission split as self-represented buyers.

That amount is worth paying a lawyer for an hour of their time to write up an offer for you and make it on your behalf. Takes the stress off of you and listing realtor.

But I agree that most people will not do this.

I don’t want “do-nothing” RE services from a lawyer. As a seller, I want full-on RE seller agent services, where they show the home, put up signs, get it staged etc. I just want to pay the RE agent like a pay a lawyer – by the hour.

And there may well be RE agents willing to do this. Staging and marketing will be expensive so I would only go this route in a strong sellers market personally. Looking at the time and costs involved, I’d estimate that this is going to be a minimum of 6k which you lose if there is no sale.

Patrick
Patrick
January 25, 2023 1:16 pm

You can already do this by using a lawyer to sell or buy instead of a realtor

I don’t want “do-nothing” RE services from a lawyer. As a seller, I want full-on RE seller agent services, where they show the home, put up signs, get it staged etc. I just want to pay the RE agent like a pay a lawyer – by the hour.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
January 25, 2023 1:14 pm

Just a reminder for those that want to appeal their assessments. The cut off date to start an inquiry is January 31.

VicREanalyst
VicREanalyst
January 25, 2023 1:14 pm

Imagine you go to your lawyer and ask his advice on the house you’re planning to buy. And you know he’s going to get paid by the seller, and will make nothing if you don’t buy it. Would you accept that kind of legal advice?

Happens all the time in business. For example, a investment banker pitches me a deal to buy a company and their commission is based on the transaction completing and on the value of the transaction, the seller also has an investment banker/s advising them and they also get a commission/fee once the deal completes, this example over simplifies it but the overall process is very similar to RE. Both myself and the seller negotiate bespoke commission structures with our respective investment bankers which would take into account various other relationships we have with those banks. The lawyers and other consultants involved on the deal will typically work on a pay for fee basis, just like RE.

Alot of the time, the DCM arm of the same bank advising me would also be part of the financing solution, so they are making money advising me and also loaning me money when I buy.

Nan
Nan
January 25, 2023 1:13 pm

https://househuntvictoria.ca/2023/01/23/changing-rates-and-the-market/#comment-97831

Because if they thought about it that way they wouldn’t stop there : they could just add a financing portal and a cart and a handful of online forms to realtor.ca and 10% of Canadians would be out of work.

totoro
totoro
January 25, 2023 1:07 pm

There should be legislation prohibiting commissions, period. Each party (buyer and seller) pays for their own representation. Just like they each hire and pay their lawyer.

This means the seller’s agent would bill an hourly fee for their services, payable by the seller . And so would the buyers’ agent, payable by the buyer.

You can already do this by using a lawyer to sell or buy instead of a realtor. Lawyers are permitted provide full RE services. The reason lawyers have not moved into this field more heavily is, imo, because people do not want to pay up front and there is still a barrier with realtor.ca listing access.

So if you are wanting to pay by the hour, call up a RE lawyer and ask. You’ll have to use FSBO to list, but they may well be willing to do all the work if paid by the hour.

RE ACT
Requirement for licence to provide real estate services
3 (1)A person must not provide real estate services to or on behalf of another, for or in expectation of remuneration, unless the person is

(a)licensed under this Part to provide those real estate services, or

(b)exempted by subsection (3) or the regulations from the requirement to be licensed under this Part in relation to the provision of those real estate services.

(2)A licence required by this Part is additional to any licence, registration, certificate, enrolment or qualification required under any other Act.

(3)In addition to any exemption provided by regulation, the following are exempt from the requirement to be licensed under this Part:

(f)a practising lawyer as defined in section 1 of the Legal Profession Act, in respect of real estate services provided in the course of the person’s practice.

Patrick
Patrick
January 25, 2023 1:06 pm

So a home listed for 400k gives a commission of $7,888

Why is there a commission in the first place? Why can’t they charge fee for service (ie typically per hour), like most professions (lawyer, accountant etc.) ?

Patrick
Patrick
January 25, 2023 1:00 pm

A realtor can offer a cashback regime that mimic’s this if they wanted to, reason they don’t is because there are enough people willing to pay the full commission.

Why is the seller paying the buyer’s agent at all? That’s an obvious conflict-of-interest, that wouldn’t be legal in other professions.

Imagine you go to your lawyer (or accountant) and ask his advice on the house you’re planning to buy. And you know he’s going to get paid a fat commi$$ion by the seller, and will make nothing if you don’t buy it. Would you accept that kind of legal (or accounting) advice?

totoro
totoro
January 25, 2023 12:54 pm

Honestly, any realtor should be willing to do the work they do for 1/5th of what they currently make plus direct costs. Don’t rely on the government to make a rule. Just take your business somewhere else until you get the pricing you want.

Really?

So a home listed for 400k gives a commission of $7,888 to the listing realtor. Of this, the realtor may have spent what – up to $800? to photograph, market and list the property and then has to pay their brokerage about half the commission amount if they are with one of the major brokerages So they are getting $3500 for their time and effort to list and show less their other costs of doing business like mileage, advertising, licensing and continuing education.

At 1/5 the commission amount you are now suggesting they act for free in the best case, or worse, pay to list your place, with the chance of zero compensation for their time and expenses and the listing costs?

Where there is more room for commission reductions is with higher priced places and with realtors who are not with brokers who are charging a large split.

VicREanalyst
VicREanalyst
January 25, 2023 12:53 pm

If it’s a quickie sale, and the agent charges $150/hour, and only spends 5 hours on it, lucky for the seller as he gets billed $750.
And so would the buyers’ agent, payable by the buyer. I\payable whether the buyer buys or not.

A realtor can offer a cashback regime that mimic’s this if they wanted to, reason they don’t is because there are enough people willing to pay the full commission.

Marko Juras
January 25, 2023 12:46 pm

If you want a realtor to do the work of listing, marketing, showing and managing offers you should be prepared to pay for this.

I wanted to go back to one car in July so I sold my second one. It was worth somewhere around 120k-130k (I paid 94 brand new pre-covid, funny times). I put it on autotrader.ca for 119.9k and within 24 hrs was already annoyed with all the inquiries/questions/people wanting test drives/more photos/etc.

I called up the local dealership and we negotiated 108k on a Monday. I dropped off the car on a Tuesday. Picked up bankdraft on Wednesday.

They listed the car with a CPO manufacturer warranty for $129,900 and sold it two months later.

The dealership probably made 10k? I saw the value in this service at 10k verus selling privately myself for 118k.

I do not see the value in paying someone 2.25% MER every year to buy Telus sharss on my behalf.

Patrick
Patrick
January 25, 2023 12:45 pm

I’m not sure how much more wide open the process can be when you can already FSBO and negotiate commissions.

There’s a lot more that can and should be done. The solution is actually quite simple.

There should be legislation prohibiting commissions, period. Each party (buyer and seller) pays for their own representation. Just like they typically each hire and pay their own lawyer for a RE transaction

This means the seller’s agent would bill an hourly fee for their services, payable by the seller paid whether the house sells or not. . If it’s a quickie sale, and the agent charges $150/hour, and only spends 5 hours on it, lucky for the seller as he gets billed $750. Maybe his rate rises for $300/hour during the sale process, as this is more involved.
And so would the buyers’ agent, payable by the buyer. payable whether the buyer buys or not.

This is similar to how most other professions work. You hire a $400/hour lawyer, and if he spends 3 hours on your $5m sale, you get charged $1,200. The lawyer’s incentive to do a good job for you is ethics and his reputation for providing value for his services.

btw) Lots of people think like me on this. e.g. https://www.zerovaluerealty.ca/blog/meet-the-cartel

Marko Juras
January 25, 2023 12:40 pm

You can make an offer as an unrepresented buyer and request the commission split as a discount on your offer.

As Leo pointed out government hasn’t helped this process for savvy buyers.

i/ Before 2018 you could set up a showing with the listing agent with no forms to sign. Now you as the buyer have to sign two different forms before the listing agent will book a showing.

ii/ Definition of unrepresented outlined on these forms is pretty scary for everyone but the sophisticated savvy buyer. For example, listing agent don’t have to disclose anything to you, they don’t have to protect your confidential information, they don’t have to act in your best interest, etc.

iii/ As agent we are constantly getting reminder by the BC Real Estate Council/associations/managing brokers to avoid unrepresented buyers like the plague because everyone is afriad of getting slapped on the wrist by the government.

Practically speaking I find buyers just give up on signing the forms for each showing and getting negative pushback from listing agents that are afraid to deal with a unrepresented party that they just end up with a buyers agent.

In conclusion, a lot more difficult/annoying to be without a buyer’s agent than it was 10 years ago thanks to the government.

VicREanalyst
VicREanalyst
January 25, 2023 12:37 pm

Re commissions are all negotiable. Do you think people buying/selling $5M+ homes use the same commission structure as those buying 500k condos??

Nan
Nan
January 25, 2023 12:36 pm

Oh and on inflation, that’s it – 0%-2% headline by August. Cuts before Q4 2023. Perhaps as fast as we saw on the way up as all the input costs that have crashed over the last 12 months work their way into margins and inevitable price cuts as vendors fight for business amidst bloated inventories and indebted customers.

Nan
Nan
January 25, 2023 12:33 pm

There is a neat conversation going on in here about “limiting commissions”. How about all those who think the commissions realtor’s “charge” is too high negotiate for yourself instead of just paying whatever they want? This is honestly one of the craziest things in Canada that people just pay for, along with investment fees. Is this what Canada has become? A country full of weak people who don’t know when to push for what they want unless the government makes a rule that says it’s ok that you can point to? Honestly, any realtor should be willing to do the work they do for 1/5th of what they currently make plus direct costs. Don’t rely on the government to make a rule. Just take your business somewhere else until you get the pricing you want. Like you should be doing with everything else.

totoro
totoro
January 25, 2023 11:55 am

Marko: You argument does not really hold water in terms of buying a house. Regardless of what agent I used to buy a house the commission structure was basically set by the vendor.

How many times have I posted this?

You can make an offer as an unrepresented buyer and request the commission split as a discount on your offer. They may or may not agree, but 100% of the times I’ve done this, there has been agreement. I’ve both bought and sold without a realtor and the process is not that complicated imo and there are standard forms available and you can pay a RE lawyer for an hour of their time to review the forms and offer the first time you make one.

Recently we used Marko to purchase a property and it was worth it. We were travelling a fair bit and not familiar with the type of property. His advice was excellent and it was less work for me. I think a knowledgeable realtor is worth using for the majority of people when purchasing. And probably when selling if you are stressed by the process.

reducing Real Estate commissions would leave a bit more money in both the sellers and buyers pockets overall. At worst it would give the seller a bit more cash for their next purchase. Getting rid or reducing an unnecessary expense is a good thing.

Again, if you are wanting to sell yourself without a realtor you can already list on realtor.ca by using a fsbo process. It will cost you $549 and includes access to all the buy/sell contracts with instructions. https://www.fsbo.ca/

If you want a realtor to do the work of listing, marketing, showing and managing offers and you don’t want to pay them for their time as they go or for doing all of this without a guarantee of payment in the event of no sale, as opposed to up front, then a commission seems fair.

I’m not sure how much more wide open the process can be when you can already FSBO and negotiate commissions.

Patrick
Patrick
January 25, 2023 11:49 am

Different from Craigslist/Kijiji/Facebook Marketplace? Not sure what you are thinking.

Do you consider the Re sales market to be wide open to free competition, with all the Re agents working within one set of rules?. And you figure it’s wide open because people who don’t like that can put an ad on Craigslist, and sell without an agent?

Marko Juras
January 25, 2023 11:45 am

You got back into this? I thought you said you stopped doing them.

Opened it up for 3 months, increased back end fee to $1,300 and did 9 of them in three months. Shutting them down again shortly as a lot busier than I thought I would be.

Marko Juras
January 25, 2023 11:36 am

Maybe it wouldn’t be a homeowner, it would be a competing organization, with its own rules.

Different from Craigslist/Kijiji/Facebook Marketplace?

Not sure what you are thinking.

Patrick
Patrick
January 25, 2023 11:34 am

. I wouldn’t support a home owner being able to upload directly to realtor.ca like craigslist.

Maybe it wouldn’t be a homeowner, it would be a competing organization, with its own rules. The same way rogers and Shaw have to cooperate/grant access to other telcos, under rules from the crtc to encourage competition and prevent monopolies.

Marko Juras
January 25, 2023 11:25 am

They should open up the listing service though, so it would include private/other listings.

Mere postings readily available so not sure what more they can open up. I wouldn’t support a home owner being able to upload directly to realtor.ca like craigslist.

https://markojuras.com/flat-fee/

Patrick
Patrick
January 25, 2023 11:08 am

“limiting and reducing real estate commissions to a much more reasonable percentage such as a maximum of one percent.”

They shouldn’t mess with compensation limits. They should open up the listing service though, so it would include private/other listings.

Arrow
Arrow
January 25, 2023 10:58 am

“limiting and reducing real estate commissions to a much more reasonable percentage such as a maximum of one percent.”
That has me thinking about the tipping conversation:–as the menu prices increase so does the tip; to maintain the same absolute tip its % must drop.

patriotz
patriotz
January 25, 2023 10:53 am

Modern Monetary Theory (MMT) that our financially challenged PM (and many others) embraced.

I can’t say I’ve ever heard JT and associates ever talking about MMT. It seems to be some kind of straw man invented by the right to bash those they consider to be on the left. The same kind of people also like to bash JT for saying he doesn’t think about monetary policy, which seems contradictory to me.

That’s not meant as an endorsement of the current federal government’s fiscal policies, however.

Barrister
Barrister
January 25, 2023 10:41 am

Marko, actually lawyer fees are regulated by the taxing masters in a lot of instances. Would have happily used John from 50 or 80% cash back for buyers. Do you have a list of agents that give that sort of cash back in Victoria.

James Soper
James Soper
January 25, 2023 10:39 am

No, but will give it a go one day now.

I’m pretty sure it’s a Lebanese family that owns it. They’re very nice.

Marko Juras
January 25, 2023 10:35 am

Have you ever been to Caravana in the Jutland area? Great Salads.

No, but will give it a go one day now.

James Soper
James Soper
January 25, 2023 10:33 am

I’ve been going there for more than 15 years now. Family owned. I am use to Croatian resturants where you order chicken and they don’t have it because they didn’t kill any chickens that morning. For example, in Canada, I find resturants salads a complete disaster, barely edible. Maria’s Soulvaki the Greek Salad is actually edible for me, it taste somewhat fresh compared to the rest of the garbage here.

Have you ever been to Caravana in the Jutland area? Great Salads.

Marko Juras
January 25, 2023 10:32 am

Actually, when you think about it, if commissions were limited to one percent I could still look around for an agent with the type of experience required without having to pay the higher commission.

Maybe we should limit lawyer fees to $200/hr. Doesn’t matter if you have a proven track record and 20 years of experience or straight out of law school. That makes sense, right?

Marko: You argument does not really hold water in terms of buying a house. Regardless of what agent I used to buy a house the commission structure was basically set by the vendor.

I guess you didn’t read this part in my comment

John from 50% cash back to buyers real estate.

Gosig Mus
Gosig Mus
January 25, 2023 10:29 am

I read the reddit post somebody linked & it was pretty insightful in terms of how crazy restaurant prices have become. I understand about inflationary pressures, but also think there’s been some significant gouging of customers going on here, just my feeling.

a lot of inflationary blame has been cast on grocery stores – and apparently now restaurants.

i think the cause really has to lie with this BS Modern Monetary Theory (MMT) that our financially challenged PM (and many others) embraced. how could this not be the greatest invention ever?

“MMT’s central idea is that governments with a fiat currency system under their control can and should print as much money as they need to spend because they cannot go broke or be insolvent unless a political decision to do so is taken. … While supporters of MMT acknowledge that inflation is theoretically a possible outcome from such spending, they say it is highly unlikely and can be fought with policy decisions in the future if required.”

i remember reading about this “new math” at the beginning of the pandemic. were the ECON classes that i took years ago so completey wrong? apparently not.

Marko Juras
January 25, 2023 10:29 am

It’s actually funny you say that, because it’s the one Sidney restaurant we’ve been reluctant to go into as we never really see anyone eating there…just timing I guess. Did you like it?

I’ve been going there for more than 15 years now. Family owned. I am use to Croatian resturants where you order chicken and they don’t have it because they didn’t kill any chickens that morning. For example, in Canada, I find resturants salads a complete disaster, barely edible. Maria’s Soulvaki the Greek Salad is actually edible for me, it tastes somewhat fresh compared to the rest of the garbage here.

Barrister
Barrister
January 25, 2023 10:28 am

Marko: You argument does not really hold water in terms of buying a house. Regardless of what agent I used to buy a house the commission structure was basically set by the vendor.

Actually, when you think about it, if commissions were limited to one percent I could still look around for an agent with the type of experience required without having to pay the higher commission. But even if your conclusion is that somehow the consumer is the “Problem” then the problem can be solved by limiting commissions to one percent maximum. Much better for the consumer. We should give it a try.

Marko Juras
January 25, 2023 10:16 am

What might be much more popular is limiting and reducing real estate commissions to a much more reasonable percentage such as a maximum of one percent. Considering that the real estate industry in BC coincidentally virtually all charge the same for selling your house it is clearly a matter of price fixing in effect.

Out of 1596 active agents with the VREB no one has close to the experience I have with lower/alterantive business models on both the buying and selling end. I can’t think of anyone licenced in Victoria that is remotely close in terms of career mere posting listings, for example.

My conclusion is the consumer is the problem, not regulation (other than government making it more difficult for FSBOS to sell). Commissions are completely negotiatable and many lower commissions models have come and gone in Victoria without success due to poor consumer absorption. This includes full service lower commission listing models, let alone mere postings.

How many times have I posted on HHV the steps involved in doing a mere posting and selling your home privately? I am sure 100s of people have read these steps and then taken their kids to soccer practice and then listed their home with Suzy from Bob’s Full Commission Realty because her kids play on the same soccer team.

Barrister, you yourself have often refered to looking for an agent with Rockland experience/specality. You are the type of consumer that is going to pay full pop for someone with “Rockland experience,” over someone without such experience at a 50% discount.

Based on reading your comments over the last 5+ years I am betting when you purchased your Rockland home you used a top 5 agent in Victoria, not John from 50% cash back to buyers real estate.

When I was 19 years old I opened a Questrade and TD Waterhouse account as in my opinion MERs provide no value. I am lobbying out there that the government should shut down John’s Wealth Management Group charging 2.25% MERs? If you can’t do 10 hours for the sake of your financial future, tough luck. John’s Wealth Management Group it is for you. No one if forcing you to go to Johns and no one is forcing you to list your home with anyone.

Everyone is complaining about real estate commissions but everyone wants to list with the brokerage that has an office in L.A., Berlin, and Hong Kong so banned foreign buyers can be flown in to pay top dollar for your home. Consumer needs to grow some common sense.

Barrister
Barrister
January 25, 2023 10:07 am

Reducing Real Estate commissions would leave a bit more money in both the sellers and buyers pockets overall. At worst it would give the seller a bit more cash for their next purchase. Getting rid or reducing an unnecessary expense is a good thing.

I wonder if the NDP would find this a rather popular step in terms of regulating maximum commissions.

James Soper
James Soper
January 25, 2023 10:05 am

Looks like inflation in Australia/NZ is jumping back up again, 7.8% for Oz, and 7.2% for NZ.

Marko Juras
January 25, 2023 10:05 am

I do think the province should think about their regulatory regime with the express purpose of encouraging competition and lower commission business models in the real estate industry. All they’ve done since they took over is discourage people from doing it themselves.

Wow, surprised to see someone gets it! 110% agreed.

It is a parallel to the owner builder exam. Government says we want to reduce delays and costs to construction, but they have a 100% useless exam in place that creates a 2 to 4 month delay and adds costs to homeowners.

Everything they’ve done in my 13 years discourages people from selling themselves. We only have to go back three weeks for their latest genius idea. To buy a few votes they introduce the rescission period which is completely useless. Not only that instead of making a super SIMPLE decision to exempt the rescission period from private sales they don’t so now private deals are also subject to the rescission period as well.

You want to buy a home off your best friend so you both can save on transaction fees? Yes, government says you still need a rescission period.

So what’s the big deal? The problem is the CPS (contract of purchase & sale) is now more complicated and has grown in lenght by yet another page. The rescission fee needs to be calculated every time there is a counter offer (changes by a few dollar literally). The time when the final acceptance has made has to be added, the day when the rescission period expires (not including stats/weekends) has to be added, etc.

It just makes things more complicated for the FSBO and gives the industry more ammunition….”you better think twice about selling yourself, lots of liability involved.”

In summary, as Leo points out discourages people from doing it themselves.

Leo, you need to run for office somewhere!

Peter
Peter
January 25, 2023 9:25 am

If I have to show a place in North Saanich/Sidney I’ll grab a bite at Maria’s Souvlaki, for example…was there recently and it was very busy.

It’s actually funny you say that, because it’s the one Sidney restaurant we’ve been reluctant to go into as we never really see anyone eating there…just timing I guess. Did you like it?

We live in North Saanich and have found restaurants in Sidney pretty disappointing with a few exceptions. It just sort of seems they charge Victoria prices but without Victoria quality. So we often go to Victoria. The other factor in Sidney is that because so many people are retired, the restaurants get busy at ‘off’ times, so our usual old trick of eating at ‘off’ times doesn’t work haha.

We do like Surly Mermaid in Sidney, also the Chinese food place, and we like the Stonehouse pub by the ferry. And for the occasional splurge, the Deep Cove Chalet is great.

I read the reddit post somebody linked & it was pretty insightful in terms of how crazy restaurant prices have become. I understand about inflationary pressures, but also think there’s been some significant gouging of customers going on here, just my feeling.

patriotz
patriotz
January 25, 2023 8:53 am

The obvious one is to reduce the Land Transfer tax.

The obvious response is that since people buy at the limits of affordability, that would just result in the selling price increasing by the amount of the foregone tax.

As I’ve pointed out before, a similar tax in Toronto was blamed by the RE industry for falling prices, in 2008.

James Soper
James Soper
January 25, 2023 8:49 am

There are a number of things that the government should consider to ease things for buyers

Why? So they can buy houses that they can’t afford?

Anonymous501
Anonymous501
January 25, 2023 8:47 am

Anything to make homes more affordable, like lowering land transfer tax, or commissions, would just mean people would have more capacity to increase the bid for a home? Sort of like how most government affordability programs increase the buying power of the buyer, and ergo create more competition for the real estate. It doesn’t seam to bring home prices down, it just increases how much people can bid on them?

Barrister
Barrister
January 25, 2023 8:15 am

I think it is a difficult time for average homebuyers, There are a number of things that the government should consider to ease things for buyers. The obvious one is to reduce the Land Transfer tax. But this would not be popular with the politicians.
Reducing government revenues is never popular.

What might be much more popular is limiting and reducing real estate commissions to a much more reasonable percentage such as a maximum of one percent. Considering that the real estate industry in BC coincidentally virtually all charge the same for selling your house it is clearly a matter of price fixing in effect.
It is a regulated industry already and reducing transaction costs would benefit everyone except real estate agents. Politically it would be popular since the BMW crowd is rather on the outs with the NDP base.

Patrick
Patrick
January 25, 2023 7:14 am

BOC up 25 basis points (as expected). And “expects to hold” (pause) for awhile. Next meeting is March.

https://www.bankofcanada.ca/2023/01/fad-press-release-2023-01-25/

“If economic developments evolve broadly in line with the MPR outlook, Governing Council expects to hold the policy rate at its current level while it assesses the impact of the cumulative interest rate increases. “

Totoro
Totoro
January 25, 2023 3:12 am

Me and a few others speaking in support but times like these when I think Marko is right we are so fucked on housing. Don’t envy the council having to defend a vote for or vote down a totally modest development against staff recommendation to approve

This clearly should not be a municipal decision. It is irresponsible for the Province to leave this authority at this level. A no win situation for sure for Council – and a recipe for no, slow, or illogical/biased decision making.

Marko Juras
January 24, 2023 11:24 pm

For example, the Hudson building heights were controversial….”too tall.” Now that the entire development is finished do nimbys look at the towers driving down blanshard and think “boy I really miss the old Hudson store parkade on Blanshard, it was a piece of art.”

We got 500+ units out of the three buildings and the blanshard frontage looks 10x better than that shit parkade that use to be there. Seems like a win win to me.

caveat emptor
caveat emptor
January 24, 2023 11:15 pm

What are some examples of controversial rezonings that have been a complete disaster on completion.

Cook and Oliphant was going to be TEOTWAWKI, but surprise surprise the sun still rises in the east and Cook Street Village is nicer than ever.

Marko Juras
January 24, 2023 11:06 pm

What happens to sales and inventory when those groups shrink as a percentage of buyers?

% isn’t as important as absolute numbers when we aren’t doing enough on the supply side of things.

As Victoria grows it requires more and more high income earners such as doctors, for example. Certain product such as SFHs in the core will decrease over time and become more and more unaffordable. More absolute demand, less absolute supply.

Marko Juras
January 24, 2023 10:52 pm

I really don’t comprehend the anger when it comes to these rezonings. 98% of time the development has essentially zero impact (or a positive impact via new civil infrastructure such as new better sidewalks, etc.) on the quality of life of those complaining.

What are some examples of controversial rezonings that have been a complete disaster on completion? I walked by those townhomes on Fairfield Rd the other day that those nimbys idiots took to the supreme court. Like wtf is the the difference? I walked by some new modern townhomes instead two shit poorly maintained houses that were there before. Guess what happened to the two public tennis courts I like to play on besides the development? Still there, just like before. What changed except all the cars are now hidden underground and a few more families live there.

Why do people waste so much energy being so angry against development when there is so little tangible impact on their life. Why not spend your time doing something relaxing. Read a book, walk a dog, plan your next vacation or something.

I am concerned about state of health care. Don’t give a flying f*** about three stories townhomes instead of 2.5 stories three blocks away from me. Who cares.

Tillicum Guy
Tillicum Guy
January 24, 2023 9:09 pm

I don’t think the average or even above average family is in the market at these mortgage rates.

If the average and above average family isn’t in the market at these mortgage rates, how long can we expect above average families (i.e. dual income professionals) to keep the market afloat? What happens to sales and inventory when those groups shrink as a percentage of buyers? I don’t see how the game of musical chairs can continue unless average and above average families (and buyers) are there to support the lower rungs of the housing ladder.

caveat emptor
caveat emptor
January 24, 2023 9:04 pm

The population of Victoria City is around 92,000 and is basically static.

Victoria’s added 12000 people in the last 10 years 2011 – 2021. Colwood and Langford combined have added 20000 over the same time period. So it’s a bit simplistic to assume that all the growth is happening on the Westshore.

Percentage growth rates in Langford are likely to slow in the next census period compared to the blowout numbers of the past, though I suspect Sooke and Langford will still top the percentage growth charts in 2026. Colwood on the other hand will actually increase it’s growth rate 2021-2026 from its previous tepid pace.

caveat emptor
caveat emptor
January 24, 2023 8:50 pm

Lately I’ve been tipping in cash, and tipping heavier % for low priced meals.

I have reverted to paying cash in restaurants quite often. Saves me the stupid 18, 20, 25% screens and I can still tip a reasonable amount. 10 for mediocre but OK service, 15 for average good service and 18-20 for exceptional service (especially with lower priced meals)

Whateveriwanttocallmyself
Whateveriwanttocallmyself
January 24, 2023 8:21 pm

The population of Victoria City is around 92,000 and is basically static. Langford and Colwood is now around 65,000 and growing. If the provincial government de-centralized and moved some of the government departments out to the Westshore then we would not need rapid transit as fewer people would be in their vehicles and others would be travelling to work from Victoria to the Westshore in the opposite direction from the morning and afternoon traffic rush.

Patrick
Patrick
January 24, 2023 7:10 pm

With government able to find $500 million funding to help non-profits buy existing buildings, how about throwing money at some big infrastructure to help housing in the suburbs. Such as rapid rail and other transport from Victoria to Langford and Sooke? We can’t expect to fit everyone inside the core forever.

Patrick
Patrick
January 24, 2023 7:02 pm

Lately I’ve been tipping in cash, and tipping heavier % for low priced meals. They seem to appreciate the cash. And it’s nice to be able to find a good use for wallet cash that’s been sitting idle for months.
I expect we all appreciate these servers and other ”non-remote” workers more since Covid, especially when you see half of the restaurant closed from lack of workers.

Umm..really
Umm..really
January 24, 2023 6:55 pm

The B.C. government is ushering in changes it says will help protect owners in strata developments at risk of higher insurance costs due to neglected maintenance needs.

From: https://www.cbc.ca/news/canada/british-columbia/strata-contingency-funds-1.6724796

Frank
Frank
January 24, 2023 6:17 pm

I’m getting hungry.

Dad
Dad
January 24, 2023 6:09 pm

What are you referring to exactly?

Trade as a % of gdp.

Dad
Dad
January 24, 2023 5:17 pm

But I guess it will work with the tourists.

I think it works with most people who don’t feel like ruining their server’s day. Tipping zero at a sit down restaurant is a scum bag move unless the service was truly awful.

I guess it’s not quite as bad as screaming at the teenager ringing in your groceries because you don’t like the price of lettuce, but scummy nonetheless.

Marko Juras
January 24, 2023 4:19 pm

Really good ones, and really reasonable, which is why they’ve got loads of customers, since everywhere else isn’t.

Why would I go to something that isn’t good and reasonable? Rather make something at home at that point.

patriotz
patriotz
January 24, 2023 3:33 pm

Deglobalization started after 2009.

Well the US-China trade figures certainly don’t support that. What are you referring to exactly?

https://www.census.gov/foreign-trade/balance/c5700.html#2009

VicREanalyst
VicREanalyst
January 24, 2023 3:21 pm

But I guess it will work with the tourists.

Even starbucks and subway have tip options now

James Soper
James Soper
January 24, 2023 3:14 pm

If I have to show a place in North Saanich/Sidney I’ll grab a bite at Maria’s Souvlaki, for example…was there recently and it was very busy. If I have to show some condos downtown, I’ll stop by Tacofino, packed inside, people waiting outside for orders, etc.

There are 4-5 tables inside Tacofino. Those are basically fast food restaurants Marko. Really good ones, and really reasonable, which is why they’ve got loads of customers, since everywhere else isn’t.

Dad
Dad
January 24, 2023 3:09 pm

The low-interest-rate era was supported by the disinflationary force of globalization

Deglobalization started after 2009. I assume if it accelerates post pandemic, production will mostly shift to low cost “friendly” jurisdictions like Mexico or poor southern states. And it’ll be a slow process anyway.

Barrister
Barrister
January 24, 2023 2:57 pm

If the minimum tip on the machine is 18% I will spend the extra annoying time to go to the next screen, but then the tip goes to zero. I wont be manipulated and that is what it feels like. There is only a couple of places where I feel like I get outstanding service in Victoria. But I guess it will work with the tourists.

patriotz
patriotz
January 24, 2023 2:45 pm

The low-interest-rate era was supported by the disinflationary force of globalization that shifted production to lower-cost parts of the world that, in turn, reduced consumer prices. It made the job of keeping inflation subdued much easier for central banks and contributed to perpetually low interest rates.
.
However, in the wake of the pandemic and amid the tensions with China and Russia, businesses are now shifting their supply chains to build resilience and reduce risk. Future capital investment will be determined by more than just the cost of production, including geopolitical risk and ESG considerations. This will raise prices and make it harder for central banks to control inflation.

https://www.theglobeandmail.com/business/commentary/article-bank-of-canada-low-interest-rates-over/

patriotz
patriotz
January 24, 2023 2:40 pm

or is a chunk of it also going to the owners, which is sometimes the case.

BC Employment Standards:

Employers can require that tips are redistributed in a tip pool. Employers may not share in tips unless they do similar work to the employees who receive the tips. Employers cannot withhold tips or force employees to give up tips unless it’s required by law (e.g. they have a court order to garnish wages).

VicREanalyst
VicREanalyst
January 24, 2023 2:09 pm

I’ve heard that it’s good to find out where your tip is going.

That’s not my problem, servers are free to choose where they work. So if they don’t like the tip structure then work somewhere else. Just like if I don’t like my pay then I should go find a new job/career

Introvert
Introvert
January 24, 2023 2:07 pm

So for servers where the majority of their income is on tips this actually favours them quite abit.

I’ve heard that it’s good to find out where your tip is going. Is it split among servers and back-of-house staff only, or is a chunk of it also going to the owners, which is sometimes the case.

deryk houston
deryk houston
January 24, 2023 2:02 pm

We hardly go out for a meal anymore. We used to go out a lot.
One…..because we still do not like crowded places, but also because the prices just seem outrageous.
I don’t see how they are going to survive. It is a tough racket with high rents, high taxes, etc.
We eat healthier. Know what is in our food. Enjoy making a meal with everyone helping out in the kitchen.
And ….I do not have to endure the big scowls when you ask how to put ten percent in the tip section.

VicREanalyst
VicREanalyst
January 24, 2023 1:56 pm

You can just enter a custom percent or amount I’ve never seen a machine without the option

Some machines are harder to navigate to than others. The issue is that when menu prices increase by say 20%, the tip amount automatically increases by 20% assuming a constant 15% tip. So if the minimum is now 18% then you are actually paying closer to 40% extra in tips.

For example a $10 item at 15% tip is $1.5 in tips. If the price is now $12 and you are paying 18% tip then that is $2.16 in tips, a 37% increase. So for servers where the majority of their income is on tips this actually favours them quite abit.

Thurston
Thurston
January 24, 2023 1:36 pm

Don’t mind the prices too much or the food but man the hospitality industry sure do complain a lot The sad sacks of the business world

James
James
January 24, 2023 1:24 pm

You can just enter a custom percent or amount I’ve never seen a machine without the option

Whateveriwanttocallmyself
Whateveriwanttocallmyself
January 24, 2023 12:44 pm

Tipping is a bit of an issue with me these days. The minimum wage is good for restaurant workers today. But I am stuck in the old habit of always adding a tip from the old days when staff were paid poorly. I tipped 15% because its easy to calculate on a bill. Now I’m thinking 10 percent is reasonable.

There’s no 10 percent option on the card machine.

Inspector
January 24, 2023 12:32 pm

We now go out for a meal about half as much as we used to but we go to nicer restaurants. They aren’t twice as much these days. Deep Cove Chalet is a bargain and has one of the best onion soups (au gratin) in town for $12.00, then add the quail for $35.00. The portions are a good size plus you won’t mind tipping for the service you get. Dress nice, don’t be in a rush and enjoy. (If you’re feeling flush have the Grand Marnier souffle – $16.00)

tomtom
tomtom
January 24, 2023 12:19 pm

min 18% tip.

This is exactly the only reason why we limited going out for dinner. Even Subway’s POS machine showing 10%, 15% and 18% tip options.

totoro
totoro
January 24, 2023 11:59 am

I was surprised to see a $25 bowl of chowder at a local restaurant this week – well over $30 when you factor taxes and min 18% tip. This was at a nice pub, but still…

Warren Blacking
Warren Blacking
January 24, 2023 11:38 am

We were fairly heavy restaurant diners in the past but now, when contemplating bills which itemize $28 entrées for very average boil-in-a-bag efforts, we have decided that our interests and the restaurant’s interests can no longer find an acceptable middle ground.. I think all restaurants are facing a very tough decade.

Marko Juras
January 24, 2023 11:34 am

Just not where Marko goes.

If I have to show a place in North Saanich/Sidney I’ll grab a bite at Maria’s Souvlaki, for example…was there recently and it was very busy. If I have to show some condos downtown, I’ll stop by Tacofino, packed inside, people waiting outside for orders, etc.

I wish for there be a slowdown, maybe I can get some redfish bluefish this spring without waiting 30 minutes in line. The kept closing online ordering last year so I stopped going.

patriotz
patriotz
January 24, 2023 11:27 am

There has been a drop in restaurant spending.

Just not where Marko goes. 🙂

freedom_2008
freedom_2008
January 24, 2023 11:14 am

See this recent post from local reddit (with close to 600 vote-ups and responses from mostly 20-45 years old – the prime restaurant goers) :

My wife and I cannot really afford to dine out in Victoria any longer – the industry has outpriced us.
https://www.reddit.com/r/VictoriaBC/comments/10j1cc4/my_wife_and_i_cannot_really_afford_to_dine_out_in/

VicREanalyst
VicREanalyst
January 24, 2023 11:02 am

Resturants still packed.

i actually noticed a significant drop off in how busy restaurants and pubs are now compared to pre- pandemic.

totoro
totoro
January 24, 2023 10:52 am

I just don’t see it in day to day life.

There has been a drop in restaurant spending. Consumer spending is tracked through credit card use. My bet is that the trend will continue on the downward trajectory this year.

https://thoughtleadership.rbc.com/rbc-consumer-spending-tracker/

But real restaurant spending pulled back in the fourth quarter—an early sign that higher interest rates and decades-high inflation are weighing on consumer discretionary spending.

Marko Juras
January 24, 2023 10:04 am

As far as food goes, the difference pre-pandemic and now is dramatic – particularly in restaurants and for certain products. Hard times ahead for dining establishments if unemployment rates rise I’d think.

I just don’t see it in day to day life. Resturants still packed. Every day I see like five Ford Broncos (new model that must be like 15L/100km in real world city driving so obviously people don’t care about $1.80l/gas) and 0 brand new Kia Rios (common sense economical reliable cheap car).

Marko Juras
January 24, 2023 10:00 am

I suspect most of the excitement online is just people being fooled by the normal seasonal jump in the market that we see every year after the holidays, however the full month’s numbers will give us a better sense of whether there’s any substance to the murmurs.

I don’t know….getting way more inquiries from buyers than clients wanting to list. I am probably going to retract my prediction from a month ago that we hit 3,000 active listings by May. Certainly, does not seem that way based on what I am seeing.

Marko Juras
January 24, 2023 9:58 am

that would put us at the slowest January since 2009 when there were only 247 sales (still a decent chance we also exceed the 294 sales in January 2013).

However, not very far off many other years

2011 – 339
2012 – 372
2013 – 294
2014 – 342
2015 – 351
2019 – 329
2023 – 290 (my prediction)

The one difference between 2011-2015, and 2019 vs 2023 is I didn’t see any multiple offers those years. This January there are a lot (from what I am seeing on the ground); however, the end result is still below asking. I think it might be a function of lack of quality inventory? Buyers are tapped out on affordability but still more buyers out there than half decent product available.

That being said even with the peak lack of affordability the emails I get from buyers every week are kind of insane. Couples in their 20s with 1/2 million downpayments, first time professional dual income buyers qualified with a big bank for up to 2 million, etc. There must be some transfer of wealth going on or similar as something doesn’t add up. I don’t think the average or even above average family is in the market at these mortgage rates.

Marko Juras
January 24, 2023 9:51 am

For those wanting to stay on schedule, the renewal gap of nearly 2% combined with the average mortgage taken out in Victoria 5 years ago ($377,208) means a monthly payment increase of $332 or 18%. That’s sizeable, but given we haven’t seen the much more rapid rise in variable rates trigger a wave of distressed sellers, it seems that a much slower drip of higher rates to the fixed mortgage pool is unlikely to lead to a lot of distressed sellers either.

I think there is a chance that the gap of 2% shrinks through the year (rates went up throughout 2018) and with the bond market the way it is decent chance 5-year fixed rates come into the mid 4s. BC Government workers receiving a 6.75% pay increase here shortly so combined with last year that is over 10% in a span of 6-7 months on a much bigger monthly absolute number. I.e. average family salary going up a lot more $332/month. I know everything is more expensive which impacts a budget, but I can’t see too many distressed sellers either.

deryk houston
deryk houston
January 24, 2023 9:29 am

Patriotz….I’m glad to hear that they do include the fact that the product is reduced in size. I haven’t eaten a Big Mac for years but I’m told that you can now hold it between two fingers:)
Certainly Cosco has smaller containers now for many products. (Still about one third cheaper than most other stores.)

patriotz
patriotz
January 24, 2023 8:28 am

But does that include the fact that the size of the product is shrinking and you are getting less product.

According to the rules for CPI yes.

totoro
totoro
January 24, 2023 8:24 am

Thanks Leo.

I’m looking in a different (and smaller) BC market right now and the decline is more obvious than Victoria. Very attractive places still move at or above assessment value, but anything with any issues does not – it just sits.

I think the biggest factor keeping listing prices higher is likely seller resistance. It is hard to accept 10% less than assessed value.

As far as food goes, the difference pre-pandemic and now is dramatic – particularly in restaurants and for certain products. Hard times ahead for dining establishments if unemployment rates rise I’d think.

deryk houston
deryk houston
January 24, 2023 8:00 am

Interesting to see graphs and think about what they mean.
For example: Price of food on the consumer price index shows ten percent increase. But does that include the fact that the size of the product is shrinking and you are getting less product.
Another example: If people are now pricing their homes more realistically one might expect that there could be what appears as an increase in those bidding over the asking price.
It will be an interesting spring. If we survive nuclear war that is.
( And that’s my positive outlook even after having my first coffee Barrister:)

Dahlias
Dahlias
January 24, 2023 7:07 am

Thanks for a good post Leo. Some thoughts… how many of these current buyers have cash vs., trying to lock into a mortgage they secured 3 months ago… I do feel like in a low inventory market this puts pressure on buying as people are “scared” of being priced out, and will take what they can get (I.e., low inventory in January with a rate increase tomorrow), can’t wait to watch what happens this Spring.

Barrister
Barrister
January 24, 2023 6:39 am

Interesting read. I would not necessarily assume that the five year rate will stay this low or that this is the last interest rate bump.

Not having my full first cup of coffee, I was wondering what the natural mortality rate was for housing coming on the market. How many houses come on the market because the owner died?