All bunched up

Last week I mentioned that we’ve seen more houses available under the one million dollar mark as prices have declined over the past 10 months.  Crossing below that threshold drops down payment requirements and opens up the market to buyers that don’t have at least $230k ($200k down payment + $18k PTT + $2k legal) lying around.  What I meant was that as the whole sales distribution moved down, more of it would fall under a million.   However a reader asked if the policy decision to require 20% down at one million actually bunched sales at just below that point.

First, the term “bunching” refers to the phenomenon where individuals tend to group behaviour at key policy thresholds.  This is seen in many areas, for example in tax policy where individuals optimize income around tax thresholds, or company size around regulatory requirements, or drug weights around thresholds for mandatory minimum sentencing.

The bunching effect around a threshold. Source

In real estate, I think we’re all familiar with minimum down payment requirements.  That’s 5% under $500,000.  10% on the portion between $500k and $1M, and 20% (on the entire purchase price) above the million dollar mark.   Various lenders will require more for higher amounts, but those are the basic requirements and there’s an obvious discontinuity at the 7 figure mark.

Logically we can expect a severe jump in the cost of entry to change buyer behaviour, but does it really?  Perhaps everyone in the market for a million dollar house has the 20% down and it doesn’t matter.  To check, I looked at the distribution of the last 500 detached sales, for which the median was just over a million.  We would expect to see a distribution with a right skew, but roughly normal around the median.  Instead we see a noticeable dip between $1M and $1.1M, with a peak just below.  While there could be other factors such as the psychological barrier at seven figures, the size of the effect lends credence to the bunching theory.  We see excess activity pushed below the million mark while there’s a gap of perhaps a couple dozen sales just above that point.

To double check that this is a real effect, I’ve gone back 10 years and charted another 500 sales when prices were about half of what they are today and with continuous down payment requirements.   Sure enough, without the policy threshold that distribution does not have the bunching effect.

The other thresholds at $500,000 when the 10% down starts are far less drastic and I don’t see any bunching effect there.  There may be some effect in condos from the under $500,000 property tax exemption for first time buyers, but there aren’t enough first timers and the dollar value of the benefit isn’t as high to make it clear in the data.

Given the bunching effect seems to exist, how does that impact market participants?

  1. If you’re a buyer in the market for a house around a million, you might find a bit of a deal at just under that mark, as properties that normally would be worth just into seven figures sell for just under to enter the broader buyer group.   On the other hand, if the down payment isn’t an issue for you, you will likely face less competition and less chance of a multiple bid situation at just over a million.
  2. Alternately if you’re a seller with a house valued just over a million but want to sell more quickly, you may want to sacrifice a bit on price to open up the buying pool.

The Liberals did promise to bump that threshold to $1.25M, but predictably there is no sign of that coming.


Also the weekly numbers.

February 2023
Feb
2022
Wk 1 Wk 2 Wk 3 Wk 4
Sales 57 718
New Listings 161 932
Active Listings 1747 849
Sales to New Listings 35% 77%
Sales YoY Change -47%
Months of Inventory 1.2

Not much to say early in the month, with new listings on the same pace as last year, while sales continue to lag similarly to how they did in January.

I’m keeping a close eye on over-ask sales.  If the market is going to pick up a bit we’ll likely see it there first.  There has been a bit of an increase since the end of last year, though I would want to see a sustained reading of 15% or higher before really calling this anything.

With a drastically decreased sales rate from the peak of the market, some people have been wondering if a lot of agents have thrown in the towel, but so far no sign of that with the number of active agents still up from this time last year.  Looking back as far as I can find data, it seems that the number rises more quickly when prices are jumping up (2015-2017 and 2020-2022) and stays roughly flat in less active periods, but so far there doesn’t seem to have been any significant drop from peak (1599 in September).  For the survival of agents it’s sales volume that really counts, and despite a sales slowdown, high prices kept that strong last year.

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Patrick
Patrick
February 13, 2023 8:28 pm

For all sorts of things. Definitely saves time.

Yes, frightenly good, especially for a version 1.0. Definitely needs a fact checker though, as I’ve seen it come up with well-written articles full of bad mistakes. Imagine if it digested the HHV comments section to use as a source of Victoria housing information 🙂

totoro
totoro
February 13, 2023 8:05 pm

Only a matter of time I think.

For all sorts of things. Definitely saves time. This test site is pretty amazing if you want to have a preview of what ai can do: https://chat.openai.com/auth/login

Barrister
Barrister
February 13, 2023 8:00 pm

Simple solution is to have the province set the maximum commission at 1%. Problem solved.

Marko Juras
February 13, 2023 6:55 pm

I’ll point out again that Bear Mountain Developments went bankrupt about a decade ago. Doesn’t sound like they got their own way.

and Starlight recently halted distributions on two funds…weird, why wouldn’t they just increase rents?

Marko Juras
February 13, 2023 6:51 pm

I am selling my house the next 3 years and looking for experienced realtors that wants to make $ for giving me good advice. Not commission. $ per hr.

I gave free advice yesterday (below) on how to save commission when selling your home. Market value you can determine through a number of different avenues such as an appraisal, ask agents offering “free market evalulation, etc.

Marko Juras
February 13, 2023 6:48 pm

but it will likely take a new hungry agent that doesn’t have the established business to do it.

And in 13 years no one has really attempted it locally. It’s not like you need any special skills, everything is on my website to copy -> https://markojuras.com/flat-fee/ and I would gladly help an agent with the process and any questions they may have. 100% full well knowing no one is ever going to contact me to help them with establishing mere postings as part of their business 🙂

I talked yesterday about why real estate brokerages have multiple large offices around Greater Victoria when there is actually no need for them. Optics, but not only consumer optics also optics for recruiting agents. A new agent is going to want to go to the shinny brokerage with a huge fancy office rather than have me mentor them on how to sign up mere postings 🙂

Friendly
February 13, 2023 6:42 pm

I am selling my house the next 3 years and looking for experienced realtors that wants to make $ for giving me good advice. Not commission. $ per hr.
Maybe they deserve $500/hr ( not $2000/hr) for working.
If there is a realtor that wants to work, please let me know their name.

Marko Juras
February 13, 2023 6:40 pm

Somehow the UK manages the same system with 1.5% rates. No idea how though. Certainly hasn’t helped their house prices though. Going to Ireland this year and their housing crisis is hideous.

Probably just a competitive market? If the market for real estate fees in Victoria dropped to 2% gross (1% listing, 1% coop), for example, the industry would continue to be extremely well staffed with a surplus of agents.

Marko Juras
February 13, 2023 6:34 pm

The competition bureau already stepped in to force CREA to take mere postings and stop them from monopolizing the data

Small little fact…the agreement with the competition bureau was only for 10 years, it expired a couple of years ago so technically CREA could ban mere postings again although I don’t think they will.

Marko Juras
February 13, 2023 6:32 pm

The only countries that seem to have successfully reduced real estate commissions are those where buyers don’t use a realtor (so the seller only pays one person instead of 2). Honestly I think that is more likely than the average rate of commission coming down substantially.

I am writing my real estate exam in Croatia later this year and that’s the system there, no buyer’s agent. Horrible system from my experiences buying property there. The commissions end up being the same 3 to 4% gross but so my inefficiencies create for 10x the time involved for the listing agent to sell a property.

Again Marco… do you see a future for a realtor? Legally there is only a need for a Lawyer.

100% the profession is not going anywhere in my lifetime. 80% of the job is counselling and maybe like 20% is selling properties. In my 13 years people have become a lot more entitled and difficult in general which makes it very difficult for private sellers to put deals together, not to mention BCFSA regulations, etc.

Friendly
February 13, 2023 6:19 pm

RE: Mere Postings
I agree with Leo where he refers to Mere may be back if someone wants to push it.
I know the 3%-6% commission is all but… COMPLETELY OVER over. I give it 3 years 5 years max.
2% realty is making a weak push. 1% realty has a bad reputation. IMHO.
The buyers realtor needs to be paid by the hour once the person finds the house they want … then they pay their realtor good money/hr to give their professional opinion. The sellers realtor has to hire some expert and be a bit more strategic. I could see them getting a small commission.
Again Marco… do you see a future for a realtor? Legally there is only a need for a Lawyer.

patriotz
patriotz
February 13, 2023 6:09 pm

It also seems obvious that major property owners will have a large impact on the market and set prices that smaller players will follow.

It’s really the other way around, since the major property owners have to follow the market, where smaller players dominate in numbers. The kind of gyrations we see in RE is evidence that nobody is really in control of prices.

I’ll point out again that Bear Mountain Developments went bankrupt about a decade ago. Doesn’t sound like they got their own way.

Patrick
Patrick
February 13, 2023 6:05 pm

There is simply no consumer demand for mere postings in Victoria so why put the effort into promotion and advancement of such product.

Wasn’t it helpful to you as a source of new clients, and to get your name out there? If so, that sounds like a reason for someone else to put in the effort.

fern
fern
February 13, 2023 5:16 pm

Whatever, I can see what you are saying and don’t doubt there is collusion in setting condo prices after learning about how REITs like Starlight have done similar things. It also seems obvious that major property owners will have a large impact on the market and set prices that smaller players will follow. All you have to do to see what is happening is take a look around and its obvious.

Marko Juras
February 13, 2023 3:35 pm

I first talked to you when all you were promoting is Mere Listings. I thought thought you were ahead of your time!! Now you are not promoting Mere.. You are promoting? Smaller % commissions? I am interested in how and why you changed?

There is simply no consumer demand for mere postings in Victoria so why put the effort into promotion and advancement of such product.

What is your solution now to how much $ realtors make?

I am not interested in how much realtors make so not really sure how to answer your question. I am always happy to offer people advice on how to save on real estate commissions as I did below but no one listens anyway so everything always remains status quo.

Marko Juras
February 13, 2023 3:27 pm

Based on Leo’s graph above, we hit 20 sales per day at the end of Feb 2022, and that was a well above average February. You’re saying we’re going to hit 18.5 this week, 20 next week and 22.5 for the last 2 days of the month. Can’t find the weekly numbers from last year, but that seems like it’s equaling them at minimum. Dead market, to booming market.

I don’t really use Leo’s numbers. I do my own common sense math.

We had 128 sales last week.
Sales ramp up in pace throughout the spring; therefore, 130 followed by 140 is not unreaslistic.
The final two days of the month are a Monday and Tuesday and the Monday typical sees a lot of deals go unconditional.

The market isn’t going from dead to booming. In 2021 and 2022 we had 863 and 718 February sales respectively so I don’t consider 500 to be “booming.”

Patrick
Patrick
February 13, 2023 2:58 pm

The typical busy/successful RE agent is not to blame for commissions being too high. .

There are two groups responsible for high real estate commissions:

Real estate agents with no (or low) income, because they don’t hustle and offer/promote discounted commissions.
Buyers or sellers that don’t seek out re agents that offer discounted commissions.

For example, here on HHV we have Marko (an experienced RE agent) providing great/honest/helpful information.

And there are hundreds of RE agents out there making next-to-nothing. And they’re not posting anything here on HHV.
If I was starting out as a RE agent with few clients, I’d be posting everywhere I could (including HHV), subtly promoting my lowest-commissions-in-town offers to buyers and sellers. Where are they ????

James Soper
James Soper
February 13, 2023 2:21 pm

130 next week + 140 week after and then 45 sales 27th and 28th and there is 500 without any sort of crazy pace.

Based on Leo’s graph above, we hit 20 sales per day at the end of Feb 2022, and that was a well above average February. You’re saying we’re going to hit 18.5 this week, 20 next week and 22.5 for the last 2 days of the month. Can’t find the weekly numbers from last year, but that seems like it’s equaling them at minimum. Dead market, to booming market.

Friendly
February 13, 2023 2:10 pm

Re: Marco
I first talked to you when all you were promoting is Mere Listings. I thought thought you were ahead of your time!! Now you are not promoting Mere.. You are promoting? Smaller % commissions? I am interested in how and why you changed? What is your solution now to how much $ realtors make?

Marko Juras
February 13, 2023 2:10 pm

(unless I’m getting the numbers wrong here).

You are getting the numbers wrong. 185 currently + 130 next week + 140 week after and then 45 sales 27th and 28th and there is 500 without any sort of crazy pace.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
February 13, 2023 1:53 pm

Rents are a bit softer now. But still within the range I originally posted for a renovated building. They are all on Craigslist check it out.

James Soper
James Soper
February 13, 2023 1:37 pm

I think we are on pace for approximately 500 sales

That would be sales per day at about what we had at the end of February last year, which was 20% above the 10 year average, starting now. I guess I’d be really surprised, I know financial conditions are a bit looser right now, but the market going from completely dead to one of the hottest Februarys ever seems a little crazy (unless I’m getting the numbers wrong here).

Arrow
Arrow
February 13, 2023 1:27 pm

November 29, 2022 ?!

You folks at HHV sure take winning seriously. If this bickering fills this board for much longer and I’m going back to the greater fool’s bickerfest
(ie..#12 “DELETED (Churlish)” #51 “DELETED (Gratuitous insult)”)

freedom_2008
freedom_2008
February 13, 2023 1:16 pm

Freedom, I don’t do boarding houses for students. Rents are always determined as a single tenancy not on a per room basis. $4,000 a month for a modernized two-bedroom in Fairfield or James Bay is excessive even at 1,150 Square feet. $3,000 to $3,500 is the current range unless there is a view amenity.

But look at what you said before:
“@ Whateveriwanttocallmyself November 29, 2022 12:02 pm
These older buildings do have HUGE suites. A suite that use to have one or two senior owners could now have four tenants paying a thousand bucks each every month. Some of these suites are bigger than the main floor of a Gordon Head house.”

VicREanalyst
VicREanalyst
February 13, 2023 12:57 pm

Exactly. After seeing your (i.e. @whatever) suggestion that one can get $4000/month rent from an old wood-framed 2 bedroom apartment (to 4 students so they can share bedroom after paying $1k each) and outdated thinking of how short-term rentals advertising listing, I stopped reading your posts about rental.

LMAO, what?? $1k a month assumes one has a separate bedroom in a house, and that figure is declining with older units going for less than that.

Marko Juras
February 13, 2023 12:39 pm

@Marko, it’s definitely an increase, but is this what you were expecting, or were you expecting more?

I was expecting 200 sales months to date but a lot of unconditional contracts late on the reporting including three of mine that went unconditional Thursday/Friday. I think we are on pace for approximately 500 sales +/- with inventory not really moving up as much as I thought it would be. It is creating for multiple offer situations on most properties my clients offer on.

135k over ask sale in Vic West this morning reported (after the numbers released).

Whateveriwanttocallmyself
Whateveriwanttocallmyself
February 13, 2023 12:36 pm

Freedom, I don’t do boarding houses for students. Rents are always determined as a single tenancy not on a per room basis. $4,000 a month for a modernized two-bedroom in Fairfield or James Bay is excessive even at 1,150 Square feet. $3,000 to $3,500 is the current range unless there is a view amenity. Feel free to check out Craigslist before you call someone out.

However you will also find, on Craigslist, rooms for student rentals starting at $750 per month for non modernized room in a home in Fernwood. Some are at $1,150 for a private room and bath in Royal Oak.

I do research rents before I post.

The same for garden suites. I get the plans and the construction budget’s on them. The last one I did in Saanich was a thousand square feet. Including landscaping, fencing, driveway, connections, and municipal fees it came in at $500 per square foot. The owner was renting this ancillary house out for long term stays in excess of 30 days and got $9,000 a month furnished for up to three travelling nurses during peak periods.

Even at 400 square feet, a garden suite will be close to $300,000 when all of the costs are included. Fencing alone will cost an additional $30,000.

If you live around Jubilee or VGH then renting to travelling nurses in excess of 30 days, a furnished garden suite, might be something to look into. There will be times when the suite is vacant between occupants, but you’re getting a lot more than a yearly lease as a single tenancy.

Oh, would that be trading off a higher vacancy rate for a higher rent?? You do the math.

Arrow
Arrow
February 13, 2023 10:55 am

The exceptional strength seen in the Canadian jobs report for January calls into question just how long the Bank of Canada will maintain its conditional pause on its rate-hike campaign….The Canadian jobs market is showing no signs of slowing; this has to make the Bank of Canada at least a bit nervous…The US jobs market data in January was also robust, and the Fed chairman, Jay Powell, has offered assurances to markets that interest rates are likely to rise further.

The stars might not be lining up the way the spring-sales optimists had hoped.

Arrow
Arrow
February 13, 2023 10:52 am

After surging more than a half percentage point a week ago and then mildly easing off, 30-year mortgage rates are back on the rise, tacking on almost two-tenths of a percentage point Friday to touch a five-week high.

James Soper
James Soper
February 13, 2023 10:48 am

Let’s leave this discussion to the next Monday numbers. Feel free to call me out if you don’t see a substantial increase in pace of sales at that point.

@Marko, it’s definitely an increase, but is this what you were expecting, or were you expecting more?

Month to date numbers.
Sales: 185 (down 36% vs same time last year)
New listings: 382 (down 5%)
Inventory: 1793 (up 123%)

Barrister
Barrister
February 13, 2023 10:16 am

Marko: We often disagree but in this instance you are absolutely right. Rather than wasting your time might I recommend to you the old maxum “You cannot fix stupid”.

Enjoy the day.

freedom_2008
freedom_2008
February 13, 2023 10:15 am

So you are free not to read the posts

Exactly. After seeing your (i.e. @whatever) suggestion that one can get $4000/month rent from an old wood-framed 2 bedroom apartment (to 4 students so they can share bedroom after paying $1k each) and outdated thinking of how short-term rentals advertising listing, I stopped reading your posts about rental.

Posting knowledge one knows and something backed up by facts, rather by imagination, would be much more appreciated.

Thanks.

Marko Juras
February 13, 2023 9:59 am

Well the posts get long when others call you a liar and bait and switch in their posts. I tend to post on week ends as Leo generally starts a new post on Monday. So you are free not to read the posts as Marko has said he does frequently.

You wrote: “Well Marko, the two strata condominium complexes were bought up by investors that list them for rent through a communal property manager. Only a few locals got a chance to bid on buying these 156 units as 97 percent were bought by investors. Now they are rentals offered at the same price as a downtown condo in Victoria. If you don’t like the rent then you don’t get to negotiate. One manager controls all of the suites.”

I replied: “What you are referring to isn’t a strata building, it is an apartment building called Crossing at Belmont assessed at $15.428 million owned by one company from Nova Scotia. There is ONE title to the property and the building has 156 apartments. This was never sold to 156 investors who teamed up to fix prices through one property manager.”

You: “Marko, I know what I am talking about because I was there.”

I’ll leave it at that.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
February 13, 2023 9:55 am

Well the posts get long when others call you a liar and bait and switch in their posts. I tend to post on week ends as Leo generally starts a new post on Monday. So you are free not to read the posts as Marko has said he does frequently.

Arrow
Arrow
February 13, 2023 8:47 am

a glass of wine was more fulfilling

That recent Marco/Whatever stream was reminiscent of a “Ponzie” & “Crowded” bickerfest at greater fool, but way more intelligent.

Warren Blacking
Warren Blacking
February 13, 2023 8:18 am

Marko, your posts from four o’clock yesterday are remarkably generous of both your time and hard-earned experience. We are all deeply in your debt.

As to some others, perhaps a self-imposed one-post-a-day limit would let some oxygen back into the forum. Prolixity is the cigar-smoke in the club room.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
February 13, 2023 7:39 am

Marko, I know what I am talking about because I was there. If you ever bothered to look back at the list price of condos at that time you would see the co-operation among them with their pricing. I was involved with a developer who was approached by them as he wanted to build a small complex in Belmont Corners. I was there.

Frank
Frank
February 13, 2023 4:23 am

At what point does densification become overcrowding? People are leaving overcrowded countries to come to Canada to escape overcrowding. And want to raise large families here. Ironic. I’m not anti- immigration, I’m anti-overpopulation, it’s that simple. The population of the world has tripled in my lifetime and the strain on the planet (notice I didn’t say “our” planet) has increased exponentially. Politicians do not have any answers to the problems we are facing. This does not end well.

VicREanalyst
VicREanalyst
February 12, 2023 10:43 pm

Lmao, let’s not forget that bs about how it costs 500k to build a garden suite…

Marko Juras
February 12, 2023 10:16 pm

That’s what happened in Langford when there was only two or three condominium builders at the beginning. They could get together and set their prices to the level of condominiums in Victoria. If you wanted a new condo in Langford, then you paid their prices. It’s only when you have a lot of competition from same size investors is it a free market.

I already called you out with facts on all the bs you randomly fabricated about the Langford rental market -> https://househuntvictoria.ca/2022/10/11/vote-housing/#comment-94560 In case you forgot, I busted you blatantly lying. Now you are making up new price fixing conspiracies. What is next, there is an underground association of owners with rental suites in Langford that set prices as well? I already ignore 90% of your posts and tonight I made the unfortunate mistake of reading 10%.

Caveat Emptor
Caveat Emptor
February 12, 2023 10:12 pm

I think we have reached the point where someone needs to tell “whateverIwanttocallmyself” :

“Thanks for the discussion”

VicREanalyst
VicREanalyst
February 12, 2023 9:41 pm

It’s called normalizing the income and expense statements.

Read my posts again, already mentioned it.

Barrister
Barrister
February 12, 2023 9:40 pm

Read all the rental comments and decided that having a glass of wine was more fulfilling.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
February 12, 2023 9:35 pm

“It is pretty simple, the market in Victoria supports much higher rents due to supply and demand dynamics”

I never said it didn’t.

Telus and Rogers are actually good examples of market leaders. There are smaller providers with lower prices but they have little effect on the price these companies charge.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
February 12, 2023 9:33 pm

Well Marko, its because 50,000 units are not on the market at the same time. Harris will always have units on the market and those small investors will look to Harris as the market leader in setting their rents. Harris won’t have a monopoly but it will be one of two or three market leaders and that’s effectively an oligopoly. None of their competitors will be close to their size.

That’s what happened in Langford when there was only two or three condominium builders at the beginning. They could get together and set their prices to the level of condominiums in Victoria. If you wanted a new condo in Langford, then you paid their prices. It’s only when you have a lot of competition from same size investors is it a free market.

Oligopoly: a state of limited competition, in which a market is shared by a small number of producers or sellers.

And for these reasons, my opinion is that Harris should be made available to a wider market of investors that can purchase blocks of rentals. That makes a competitive and free market.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
February 12, 2023 9:04 pm

VicAnalyst, and if you know what you are doing then you will test to see if the expense are in line with other similar investments as are the ratios. It’s called normalizing the income and expense statements.

You must have heard this term before?

Even if you are doing a business valuation that doesn’t own real estate. You will still look at the lease to determine if it is at market or front/ back end loaded.

But I shouldn’t be telling you something you already know.

VicREanalyst
VicREanalyst
February 12, 2023 8:16 pm

VicAnalyst, it sounds like you don’t care if the business is losing money or if the owner has been deferring maintenance to make the bottom line look better. You only care about the gross. I don’t want you working for me.

LMAO, deferring maintenance can make the topline look good?? That is actually how NOI is manipulated….. As much fun as it may be working for you, I don’t think you can afford my services without me taking probably a 60-70% pay cut.

Marko Juras
February 12, 2023 8:09 pm

In Edmonton with half the rents of Victoria it would be due to land being half the cost of Victoria.

And why is the the land in Edmonton half the cost of Victoria? Why is the developer willing to pay $45 million for this patch of land in Victoria

https://victoria.citified.ca/news/1050-yates-street-45-million-land-acquisition-will-deliver-450-rentals-public-plaza-to-former-pacific-mazda-lands/

but no where near that in Edmonton? It is pretty simple, the market in Victoria supports much higher rents due to supply and demand dynamics, see Leo’s chart below.

patriotz has the best comment so far. There are over 32,000 purpose built rentals. There will be over 36,000 purpose built rentals by the time Harris Green is finished. This doesn’t include small investors. How on earth is one owner of 1,600 units going to influence a market that has over 50,000 rentals. That simply makes no sense, sorry. This isn’t Bell, Telus, Rogers and nothing else.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
February 12, 2023 8:06 pm

VicAnalyst, it sounds like you don’t care if the business is losing money or if the owner has been deferring maintenance to make the bottom line look better. You only care about the gross.

I don’t want you working for me.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
February 12, 2023 8:01 pm

“make the numbers work”????? WTF. The numbers are what they are. No one makes the numbers work.

You have gross income less vacancy, bad debt, and expenses attributable to the operation.

That is unless you’re Donald Trump and keep two sets of books. One for the lender and one for the government.

It’s a simple equation. Where is the supply and demand in this equation?

If you’re alluding to rents, those are set by the market place. Charge too much and you get a higher vacancy rate. Charge too little then you have full occupancy. There is point in between where you will accept a higher vacancy rate after you have met the rate of return in your market place. You could lower your rents to attain full occupancy which would cause a storm of existing renters demanding that you match the new rent and drive the NOI down or you can manage the vacancy rate.

In Edmonton with half the rents of Victoria it would be due to land being half the cost of Victoria. Both Edmonton and Victoria would still make similar rates of return on their investments.

If someone came to me with an investment with a 15% return when the market for similar investments is 5% I would be suspicious that they are cooking their books by either over stating their income or under stating their expenses or a combination of both.

VicREanalyst
VicREanalyst
February 12, 2023 7:35 pm

The key metric is maximize the net return which can be accomplished by reducing expenses. Real Estate investments are bought on their net operating income not on their gross income. They can afford to hire firms like Altus to fight their property assessments every year. They would also have full time professional property managers to deal with complaints and delinquencies. As opposed to part time amateur landlords that hope to select better tenants by underpricing their suites.

I work on the institutional side, top-line rent and revenue metrics are always the most important when you want to transact. You would expect expenses to fall into the market average over time unless the building is shit. NOI is looked at more closely when evaluating the capital structure for the transaction.

Marko Juras
February 12, 2023 6:56 pm

So what’s the math of rents in Edmonton being 1/2 of that of Victoria since these big investors just set the prices to make the numbers work?

It is a little difficut to argue with someone who doesn’t grasp the basics of supply and demand.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
February 12, 2023 6:50 pm

Marko that’s called a strawman argument. They don’t accept a higher vacancy rate in order to double their prices. No one does that.

If their target is a 5% return on there NOI, which is really good in this market, they might accomplish that with a 90 percent occupancy. It’s all in the math.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
February 12, 2023 6:43 pm

The key metric is not to maximize the rent per square foot. Although that is important.

The key metric is maximize the net return which can be accomplished by reducing expenses. Real Estate investments are bought on their net operating income not on their gross income. They can afford to hire firms like Altus to fight their property assessments every year. They would also have full time professional property managers to deal with complaints and delinquencies. As opposed to part time amateur landlords that hope to select better tenants by underpricing their suites.

Asking a slightly higher rent serves to initially weed out problem tenants as they tend to gravitate to lower priced properties.

VicREanalyst
VicREanalyst
February 12, 2023 6:11 pm

No one party sets the rental prices, it is a collective price discovery process, smaller investors are much more nimble than larger landlords. Large investors also have return metrics and KPI’s they shoot for which doesn’t make sense for individual investors, for example individual investors would sacrifice some rent price for a quality of tennent, institutional investors would sacrifice that to maximize the rent/sqft as that is a key metric when it comes to selling the building.

Marko Juras
February 12, 2023 6:11 pm

One investor controlling that many units can maintain a much higher vacancy rate as their costs are much lower and induce your tenants to move to their complex. They can guarantee long term rental security which you can’t. Is that security worth another $200 a month?

As I said the other investor literally across the street will be controling 450 units, same security for tenants -> https://www.vancouverislandfreedaily.com/news/developer-snaps-up-downtown-victoria-property-plans-450-rental-units/

Since these large investors can set prices why are rents so much lower in many other cities in Canada? Why don’t the investors accept higher vacancy and double their prices?

Whateveriwanttocallmyself
Whateveriwanttocallmyself
February 12, 2023 6:04 pm

On the contrary, Marko. Yello is building its share of the market by attracting tenants. Those inducements will end when they reach their target occupancy at their target rents. If I were Yello I would offer free moving and hook up fees for anyone moving within a ten kilometer radius. Compete with that predatory tactic!

Perhaps you can handle a two month vacancy, but the return on your investment is thin at around 3 percent. A two month vacancy (8 weeks) cuts into your gross by 17 percent and you still have to cover your hard costs for those 8 weeks.

The vacancy rate is low right now at 1.5%, as I said there are about 150 current listings. One investor controlling that many units can maintain a much higher vacancy rate as their costs are much lower and induce your tenants to move to their complex. They can guarantee long term rental security which you can’t. Is that security worth another $200 a month?

I think that if the vacancy rose to over 3 percent then you will see individual condo landlords leave the rental business rather than go into the red ink. I doubt most could handle a two month vacancy. But a 3 percent vacancy rate for Harris Green would be a walk in the park and they would not have to lower their rents.

It’s not an even playing field between individual condo landlords and Harris Green. Harris Green expenses per unit for similar accommodation are less than any condo. It’s the same with Hotels versus airbnbs. The Hotels take the big chunk of the tourist trade and leave the scraps for the hundred or so airbnbs to fight over among themselves.

Marko Juras
February 12, 2023 5:17 pm

Yes Marko, but Harris Green will net more than you will and keep their rents $200 higher. You can’t afford a two month vacancy but they can.

Why can’t I afford to have a two month vacancy?

As I said you are a market follower. You set your rate from what they charge. Not the other way around.

Right so they set the prices to whatever they want, lol. Why is Yellow on Yates offering a month free since they call the shots? You do realize I took a tenant away from the Hudson or Yellow on Yates or someone else and perhaps a few other small investors took away a tenant here and there, maybe a few left to rent at the new Hudson building, which is FORCING Yellow on Yates to offer a month free to secure a tenant.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
February 12, 2023 5:15 pm

No Patiotz, Marko’s rental is not like Pepsi competing with Coke. You’re being delusional.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
February 12, 2023 5:13 pm

Yes Marko, but Harris Green will net more than you will and keep their rents $200 higher. You can’t afford a two month vacancy but they can.

As I said you are a market follower. You set your rate from what they charge. Not the other way around.

Marko Juras
February 12, 2023 5:12 pm

Yes it is Patriotz. It’s like comparing Costco to a corner store.

Not really, it is like comparing coke to pepsi and one store has 1,600 stock of coke, store across the street has 450 stock of coke, and 30 other unaffiliated stores have 30,000 stock of pepsi. The consumer isn’t going to pay an arm and a leg for the privelage of drinking coke when there is a near identical substitute.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
February 12, 2023 5:06 pm

Yes it is Patriotz. It’s like comparing Costco to a corner store.

patriotz
patriotz
February 12, 2023 4:58 pm

Today on Craigslist there are 150 listings for one and two bedroom units downtown that are competing against each other for tenants. Harris Green will control 1600 units.

That’s comparing vacancies on one hand with total stock on the other.

Marko Juras
February 12, 2023 4:53 pm

Harris Green is able to do rent inducements that Marko can not compete against such a one month free rent and 25% off Telus TV and internet per month. Google Yello on Yates

I literally just undercut https://hudsonhouse.townline.com/floorplans a few weeks ago. I looked at the prices in that link and undercut them by $200 and rented my place out. My rental also has premium finishing as higher-end condo, A/C, pool, gym, I don’t charge for parking, etc. When I want to compete with the large investors they can’t offer something comparable and it is literally a matter of want as I am substantially cash flow positive on every property I own and I have no one to answer to other than myself.

Marko can’t compete is complete non-sense. If Bosa was finishing their rental tower in Vic West now (instead of fall) I would have gone even lower just to make sure everyone was undercut as for me priority is best possible tenant over return.

Unless Bosa Properties (rental above Save on Foods, etc), Bosa Developments (rental tower Vic West, etc.), Townline, Cox, and all the other large players and REITS are sitting down every week setting prices downtown Victoria I don’t think we need to worry. Now that I think about it there is actually more than 10 big players just in the downtown area.

Like literally across the street will be 450 units owned by a different owner -> https://victoria.citified.ca/news/1050-yates-street-45-million-land-acquisition-will-deliver-450-rentals-public-plaza-to-former-pacific-mazda-lands/

Kitty corner there will be at least 40 small investors – https://nestbychard.com/

The other side will be Mod, at least another 50 small investors – https://victoria.citified.ca/condos/mod-victoria/

Whateveriwanttocallmyself
Whateveriwanttocallmyself
February 12, 2023 4:46 pm

What is market share?

Market share is the percentage of total sales in an industry that is generated by a particular company. It represents the portion of the market that is controlled by that company. Understanding a company’s market share is useful because it indicates the size of a company in relation to its competitors. The company with the largest market share is referred to as the market leader.

What is market leader and market follower?

‍Market Follower: A market follower seeks to gain market share but is less interested in differentiating its brand from the market leader. Instead, the market follower effectively rides on the market leader’s coattails while positioning its brand just far enough away from the market leader to be different.

In our example, Marko is the follower. He will set his rent at or slightly below the market leader. Harris Green wouldn’t care what Marko charges.

Today on Craigslist there are 150 listings for one and two bedroom units downtown that are competing against each other for tenants. Harris Green will control 1600 units.

Then there is the Economy of Scale

Economies of scale are cost advantages reaped by companies when production becomes efficient. Companies can achieve economies of scale by increasing production and lowering costs. This happens because costs are spread over a larger number of goods. Costs can be both fixed and variable.

For example, property taxes on a per unit basis for apartments are lower than individual condominiums. Telus will give a discount on their services as will other companies that do cleaning and landscaping. They can keep rents high and maintain a higher vacancy rate as their costs are lower.

Harris Green is able to do rent inducements that Marko can not compete against such a one month free rent and 25% off Telus TV and internet per month. Google Yello on Yates

This is like the mouse sleeping beside the elephant. When the mouse rolls over, the elephant feels nothing. When the elephant rolls over the mouse is flattened.

Marko Juras
February 12, 2023 4:16 pm

PS do you think it’s worthwhile asking whoever they pick to spring for a floor plan? It’s a large house, and they’re planning to do realtors’ open(s), but probably not general public opens. And what about Matterport, is that worthwhile?

I would hope that for 60k commission a floorplan is included! What’s most important is floorplan and quality photos. The rest (Matterport), marketing videos, drone footage, etc., is of limited benefit for the vast majority of properties. On my listings I use Matterport 30% of the time and 70% of the time I’ll do a marketing video. I am just uploading a few today for new listings coming up this week, here is an example of one for a new listing on Tuesday -> https://www.youtube.com/watch?v=d6ZwMR_lACg

I find the Matterport and videos don’t really help too much in terms of securing a sale. All of my out of town buyers till want a facetime walk-through of the property even with all the marketing products in place including Matterport. Personally, I find the Matterport really annoying to use but some of my clients like it so if a seller mentions they like it I’ll do that instead of the video.

In all honestly marketing products beyond photos and floorplans are for the agent (i.e. another seller sees the marketing products and thinks “hmmmm this person does a good job on his or her listings let me call him or her for an interview to sell my place”).

Real estate is about optics. Just look at all the huge real estate offices, but as someone who is in the top 1% of real estate sales year after year I can tell you there is absolutely zero need for a brick and mortar real estate office. At Fair Realty we closed our brick and mortar office on Fort Street years ago and I had my best years in real estate following. Sellers want me to see their property, buyers want me to show them properties, and 99% of people prefer DocuSign over sitting them in an office to sign paperwork. No need to print anything, everything is 100% legible, you can take 20 minutes or 2 hours to read the paperwork without someone starring at you, etc. So why the huge offices? Because you as the consumer are going to think if Bob’s Brokerage has an office in your hood they are somehow in a better position to sell your home. Optics.

Of interesting note is that why is there 10x physical real estate officies in some muncipalities versus others? Hmm, wonder if it has to do anything with average sale price.

Marko Juras
February 12, 2023 3:59 pm

Because the market allows them to. Consumers need to choose alternatives, but unclear when they will. Maybe with extended price stagnation?

The complaining about commissions is frustrating as the consumer WILLINGLY wants to pay a luxury car for the sale of their $2+ million-dollar Oak Bay home. It is literally that simple.

Once again, I will explain how to save 10s of thousands in real estate commission. Not sure why as as no one will have enough common sense to absorb or take any action and then will proceed to complain about the cost of real estate fees.

I just reviewed the last 100 SFHs sales in Oak Bay. In 100 out of the 100 last sales the buyer was represented by a different agent. There was not one “unrepresented” party sale. What does this tell you? This tells you there is close to a 100% chance that the BUYERS’ AGENT will sell the home, not the listing agent. This is how the system and regulations (no dual agency allowed) are built.

If you want to save approximately $30,000 and do a bit of work yourself on your $2 million dollar Oak Bay home here are the steps.

1 Order all the marketing products you would like for approximately $1,000 (prices here -> https://standardres.ca/our-products/). There are multiple companies in Victoria offering such services, easy to find via Google Search.
2 Order a mere posting to place your home on MLS with the marketing products ($1,000 to $2,300 for a mere posting).
3 Offer a cooperating commission of approximately 1.5% (refer to above as to how the last 100 homes in Oak Bay have sold).

If you want to save approximately $15,000 and do zero work yourself on your $2 million dollar sale it is even simpler.

1 Interview a number of agents and just let them know you want a cooperating commission of 1.5% and to sharpen their pencil on the listing portion of the commission to the best number they can do. Guaranteed you’ll find agents offering to do 1.5% + 0.75% = 2.25% at $2 million. If you threw up such a proposition on the “Vancouver Island Housing Market” Facebook page at least 10 agents would PM you.

Why isn’t the consumer interested in saving $15,000 or $30,000? Zero common senses unfortunately. They fall for very simple tactics along the lines of “I am an Oak Bay expert, I’ve sold XX homes in Oak Bay and if I can’t negotiate and hold firm at my 3% commission how am I suppose to negotiate the best outcome on you $2 million dollar Oak Bay home?”

or…..”my international brokerage offers extensive marketing.”

Right, marketing that results in the property being sold by the buyers’ agent 100% of the time.

The options are out there, consumer doesn’t want to exercise them so why complain?

Marko Juras
February 12, 2023 3:08 pm

A 1600 unit complex with one owner can keep a much higher vacancy rate as that investor has control over all of the units.

That owner has to compete with 10 other REITs/large institutional investors downtown and those institutional investors have to compete with small investors like myself that have a much better product (in terms of unit quality) to offer.

Then everyone above has to compete with everything outside of downtown Victoria like Langford, etc.

caveat emptor
caveat emptor
February 12, 2023 2:18 pm

If you want to rent in that complex then you have to pay the rent that investor offers. Therefore they can maintain high rents

If you want to rent my basement suite you have to pay the rent I offer. Therefore I can maintain high rents.

Oh…wait. There’s another 30,000 rental units in Victoria. Darn.

patriotz
patriotz
February 12, 2023 1:51 pm

A 1600 unit complex with one owner can keep a much higher vacancy rate as that investor has control over all of the units. If you want to rent in that complex then you have to pay the rent that investor offers.

That goes for any purpose built rental. Now then, what’s the current vacancy rate for purpose built rentals? How come investors don’t let units sit empty?

Patrick
Patrick
February 12, 2023 12:28 pm

So much misunderstanding would be averted if journalists got in the habit of including charts.

Thanks for the chart Leo. “A picture is worth a thousand words”

Whateveriwanttocallmyself
Whateveriwanttocallmyself
February 12, 2023 11:15 am

Okay, I won’t bring up ripped, sweaty, tanned carpenters with Chippendale bodies hanging out in bars. Obviously that image is not one this site is ready for.

“not that there is anything wrong with that”
-Jerry Seinfield

Back to real estate.

I thought I would explain why 1600 rental units in Harris Green would be better if the units were sold in small blocks to many investors rather than just a few investors.

If they were sold in blocks of four rental units, then anyone with the financial means can purchase them with conventional residential mortgages. After four units then they that would be a commercial loan with higher bank fees. For example, appraisal fees jump after 4 units by a factor of four times when the property has five or more units as the report has to be presented as a narrative report rather than a form report. Why 4? Because some unknown banker working in the head office on Bay street in Toronto, 50 years ago, picked that number out of their arse. This is also going to be a problem for those that want to develop their single family property with five units and more. You’re are going to be a commercial loan now.

As an example, if a block of four had a gross rent of $2,200 per month per unit that would be an annual gross income of $105,600. That would trade typically at 15 times income or a potential sale price of $1,584,000 or roughly $400,000 per door. Not cheap, but a conventional mortgage with a 20 percent down payment is $316,800. Which is what I’m guessing is the range of most down payments for a middle income house in Victoria today.

That’s a pool of a potential 400 investors that would have to compete with other investors for tenants. In order to keep a low vacancy rate in their block investment they would have to limit rent increases.

A 1600 unit complex with one owner can keep a much higher vacancy rate as that investor has control over all of the units. If you want to rent in that complex then you have to pay the rent that investor offers. Therefore they can maintain high rents and operate with a much higher vacancy rate at say 10 percent than would not be possible with small investors. That is a potential 160 non rented units.

Then there is the risk of default. With 400 investors if a few are forced to sell it isn’t a catastrophe in contrast to what happen in Toronto with Marathon Properties that had 11,000 units and went into bankruptcy back in the 1980’s. Not many buyers for that many units. Thus it would be more stable for the City’s tax base as the loss of unpaid taxes would be in the millions per year until a single buyer could be found.

Peter
Peter
February 12, 2023 9:49 am

6% on the first $100k and 3% on the balance is by far the most common.

Thanks, Leo.

PS do you think it’s worthwhile asking whoever they pick to spring for a floor plan? It’s a large house, and they’re planning to do realtors’ open(s), but probably not general public opens. And what about Matterport, is that worthwhile?

Patrick
Patrick
February 12, 2023 9:47 am

CAIRP also said that consumer insolvencies rose 11.2 per cent in 2022 and were up 16.3 per cent in the fourth quarter of last year compared with the same time in 2021.

yawn…..That’s the usual click-bait reporting on insolvencies that we’ve seen for the last few years. They always find some data point that’s rising, and ignore the rest. Soon chatGPT will be writing the monthly “insolvencies on the rise” click-bait articles
Just go to the source, and you may find yourself saying “oops…why did I copy and paste that story to HHV”
Here is the source data, and I’ve circled some data points showing LESS bankruptcies or proposals in BC or Canada.
The point being data is still showing small numbers of insolvencies, and it’s a mixed bag of trends up/down, mainly because the numbers are so small. For example, in the last 12 months a total of 1,821 BC’ers filed bankruptcy. Down 16% from the previous year (2021). Does that sound like a big number to you, and isn’t it good news that it’s falling? Yes, “proposals” are rising, but this is the less serious type of insolvency, since people filing proposals are keeping all of the assets (including the house), and are just restructuring the payments.

If you want to conclude that this data shows an alarming rise, go ahead. But don’t just copy and paste some click-bait article.
https://ised-isde.canada.ca/site/office-superintendent-bankruptcy/en/statistics-and-research/insolvency-statistics-december-2022#t2

18EA2AE1-D8BB-43F9-A254-C9BFF3A8D123.jpeg
Introvert
Introvert
February 12, 2023 9:34 am

Faced with crime, downtown Victoria business asks: ‘Is it worth it?’

https://www.timescolonist.com/local-news/faced-with-crime-downtown-victoria-business-asks-is-it-worth-it-6529241

Arrow
Arrow
February 12, 2023 8:33 am

You get a “ripped” body

All the carpenters that I know now live with shoulder pain due to having ripped one or two rotator cuffs

Barrister
Barrister
February 12, 2023 8:07 am

Even if you are not carrying a lot of debt people are getting seriously hit by inflation.

Umm..really
Umm..really
February 12, 2023 7:44 am

Signs are mounting that households and businesses are struggling to manage the rising cost of debt with bankruptcies and proposals to renegotiate terms of loans expected to rise, at least in the first quarter of the year, despite the mitigating effects of a strong labour market and “unprecedented” levels of consumer savings. The forecasts come after Canadian business insolvency filings grew 37.2 per cent in 2022, representing the largest year-over-year percentage increase in more than 30 years, according to a report from the Canadian Association of Insolvency and Restructuring Professionals (CAIRP) released on Feb. 7. CAIRP also said that consumer insolvencies rose 11.2 per cent in 2022 and were up 16.3 per cent in the fourth quarter of last year compared with the same time in 2021.

From: https://financialpost.com/personal-finance/debt/bankruptices-proposals-renegotiate-loan-terms-rise-q1

Frank
Frank
February 12, 2023 5:31 am

Thinking of tradesmen, the disturbing image of a 250 lb. plumber bending over comes to mind. Hubba hubba. Gross. Realtors have lots of time on their hands lately and can spend most it at the gym, if they can afford the membership.

Thurston
Thurston
February 11, 2023 9:48 pm

Qt u make just as much doing side jobs in a trade as your regular gig No ripped bods just a buggered up back and probably a drug problem Your average shmuck won’t last unless u have attitude on a job site even worse on a condo project

avocado toast
avocado toast
February 11, 2023 8:31 pm

” There are benefits in your 20’s of “swinging a hammer” all day. You get a “ripped” body.

Put on a pair of jeans and a tight T shirt and go to the bar and well – do I have to say more.

Then those portly, Jonah Hill like, real estate agents can’t compete against someone that looks like Brad Pitt.”

I know I’m new here, but there’s a lot to unpack in this post. Although, I will give credit where’s it’s due. That last line made me chuckle and I’m sure anyone rocking a toolbelt to work and reading this is feeling pretty good about themselves right now.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
February 11, 2023 8:08 pm

I think they also list properties differently. The agent lists at X amount but the bids are above the asking price. There is no negotiating a lower price. And I suspect the flat fee is paid in advance and not conditional on the sale of the property.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
February 11, 2023 7:46 pm

There are benefits in your 20’s of “swinging a hammer” all day. You get a “ripped” body.

Put on a pair of jeans and a tight T shirt and go to the bar and well – do I have to say more.

Then those portly, Jonah Hill like, real estate agents can’t compete against someone that looks like Brad Pitt.

Arrow
Arrow
February 11, 2023 5:19 pm

As with servers’ tips, being as house prices have more than doubled in the past few years why has the commission % stayed the same resulting in almost double the pay for the same service?

QT
QT
February 11, 2023 5:12 pm

Now we can see the reason why people do not want to swing a hammer for a living. Because, swinging a hammer in Vancouver for a year is potentially making as much or less than the commission for selling a house in Oakbay.

$68,401 /yr Carpenter Salaries in Vancouver, BC.
https://www.glassdoor.ca/Salaries/vancouver-carpenter-salary-SRCH_IL.0,9_IM972_KO10,19.htm

QT
QT
February 11, 2023 4:33 pm

One agent has suggested norm is 3.0% on the balance

That is just absolutely robbery for the little amount of work that they do, because many people don’t even make $60K in a year.

IMO, 1% is much more than what they deserve. It is common to see 0.4% commission in other countries such as Vietnam.

Frank
Frank
February 11, 2023 4:24 pm

Try selling it privately and take a vacation, or buy a Porsche.

Peter
Peter
February 11, 2023 3:52 pm

Question on commissions, please. In-laws are about to list their house in Oak Bay, 2+ million. Apart from discounts & special situations, to the extent there’s a “norm”, is it still X% of the first $100k and 2.5% on the balance? One agent has suggested norm is 3.0% on the balance, but that wasn’t our previous experience.

Thanks for any responses.

Patrick
Patrick
February 11, 2023 3:48 pm

I think I would be more in favor of the 1600 rental units if they were not under the control of a few investors.

The upside of corporate ownership of Harris green is that these are quality rentals, not likely subject to eviction by landlord. And ultimate control is the government, that can change any laws it wants to control rentals like this.

And btw, the shareholders/llp of these investment funds behind Harris green are funds like pension funds. Seems like win/win to me.

Barrister
Barrister
February 11, 2023 3:11 pm

Parts of Victoria sort of remind me of “Shameless”.

Dad
Dad
February 11, 2023 1:30 pm

Inventory may be “dogshit” but a lot of the stock of housing is dogshit in Victoria

Wouldn’t argue with that. There are some solid houses in the late 50s-60s subdivisions, but they aren’t necessarily in the most desirable locations, e.g., Northridge which is nice but has a bit of a no man’s land vibe imo.

It’s a compromise for most people.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
February 11, 2023 1:00 pm

I think I would be more in favor of the 1600 rental units if they were not under the control of a few investors. If the rental units were sold off in small blocks of units so that the investors had to compete with each other for tenants.

Instead of being a monopoly/oligopoly the free(er) market would prevail.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
February 11, 2023 12:36 pm

Inventory may be “dogshit” but a lot of the stock of housing is dogshit in Victoria. Take Oaklands, Fernwood, Hillside and Mayfair as examples. They are good neighborhoods but the homes are mostly dated in appearance, pre 1960’s 2x 4 stick frame that were built at a time when anyone with a phone directory and a phone called themselves a builder. Lots of dogshit homes in good neighborhoods where the land value constitutes the majority of the value of the whole property.

I don’t think that Victoria has ever had a good selection of housing to choose from. It has always been a trade off between the quality of the house and the location. A good quality home in a good neighborhood is more of the exception than the rule in Victoria.

I’ll now put on my bullet proof vest and await the replies.

Maggie
Maggie
February 11, 2023 12:15 pm

Sad but par for the course, so often oldsters want things left the same and youngsters want change for the better.

We’ve raised the planet’s surface temperature and filled the ocean with plastic, and that’s not good enough for them? Where do these smart-ass whippersnappers get off thinking they need a place to live? Isn’t there a tree we can complain about to put the kibosh on this insanity? If not, I guess we can always whine about parking.

Umm..really
Umm..really
February 11, 2023 8:04 am

Well, even with listings and inventory on the rise, overall selection still remains mostly dogshit.

Arrow
Arrow
February 10, 2023 9:55 pm

Also speaking out were local post-secondary students who described the immense struggle it was for them to find any housing in the area…CEO of the Downtown Victoria Business Association, said the project would revitalize downtown with its commercial space and mix of units that would support a diverse group of people.

Arrow
Arrow
February 10, 2023 9:51 pm

Council holding special meeting Monday on 1,600-unit Harris Green Village project: Public hearing showed concerns about height, excitement over housing influx
“The hearing did present an undeniably noticeable theme where older speakers were more likely to oppose the project and younger ones were overwhelmingly supportive.”
https://www.vicnews.com/news/council-holding-special-meeting-monday-on-1600-unit-harris-green-village-project/

Sad but par for the course, so often oldsters want things left the same and youngsters want change for the better.

avocado toast
avocado toast
February 10, 2023 9:05 pm

Thanks for the replies. I only asked because it’s tricky to navigate the current market. I’ve only purchased a home in a situation where it’s been nothing but immediate offers, little due diligence and high-pressure situations. I’m not complaining, just sharing.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
February 10, 2023 7:37 pm

Every builder is different, but most are not in the rental business as there are some tax considerations to think about.

Generally speaking, it is better to add incentives rather than lower the price as you risk that those that bought last month, and the sale has not closed, will want a similar reduction.

If you buy at full price at $999,900 not including GST then you get a week paid holiday in Hawaii, a TV, kitchen upgrade, etc.

But every builder is different.

Thurston
Thurston
February 10, 2023 5:50 pm

Avacado it comes down to builders holding power Having to rent a project does suck If your a small builder and want to keep rolling u need to keep liquid

Whateveriwanttocallmyself
Whateveriwanttocallmyself
February 10, 2023 4:26 pm

I’m looking for mixed use low rise commercial/residential in the city and it’s costly. Outside of the downtown area it’s about $300 a square foot for land. Then demo costs.

Marko Juras
February 10, 2023 3:50 pm

Record breaking sale at the Janion. $420k for 262 sq/ft.

Marko Juras
February 10, 2023 3:49 pm

I understand each situation is different, but just wondering if anyone has any information around this even if it’s anecdotal.

Way too many moving parts here to give you an answers, but in general

  • If the builder has a mortgage on the property (often they don’t) the interest rate is 1-3% above what the retail client obtains
  • Vacant insurance is very expensive ($5kish/year)
  • Property taxes
  • Utilities

Problem right now for a lot of builders is there isn’t any vacant lots available and what is available is expensive so when you sell you really don’t have much in terms of options for the next project. Lowers motivation versus having a good selection of lots at a price point where you can make a profit.

Marko Juras
February 10, 2023 3:45 pm

Western mindset and place greater value on laborious work instead of placing paper pushing bureaucracies a head of everything else. Why pay a doctor $300K a year, or an IT person $150K a year?

In general I agree, but I’ll take $300k doctors any day over $94k/year COV “Tree Preservation Coordinators.”

avocado toast
avocado toast
February 10, 2023 3:17 pm

“Yes. $1,019,000”

Thanks. Another question I have is: does anyone know if there’s an average amount of time a builder needs to sell a new home. I’m asking about houses specifically as there are a lot of new homes in the $1.3-1.5 million range that have been sitting empty for a while with only minor price adjustments downwards. These empty houses must be costing them money each month and I’m just wondering if anyone knows if there’s a certain point, such as 6 months, where they start losing too much or missing out on moving onto their next project and if they just decide to rent it out or consider offers that are much lower than the list price. I asked a realtor and she said they feel no pressure at all and then I read on Twitter or Facebook that prices have to come down due to interest rates, debt, and other reasons. I understand each situation is different, but just wondering if anyone has any information around this even if it’s anecdotal.

Arrow
Arrow
February 10, 2023 2:50 pm

a state of mind of doing nothing and a way of life in Dalmatia.

Among people born in BC, there is no shortage of people in that state of mind.

QT
QT
February 10, 2023 2:45 pm

Half of my family is from a place in Croatia that was 12,000 people population pre-war and currently it is 2,800 people 28 years after the war.

IMO, it depends on the situation. Places like Japan, South Korea, and Vietnam economic recovery is relatively quick after the wars.

We 100% need to take in as many refugees as possible in my opinion but when you mix it with other immigration issues I have (why so many tech workers and so few skilled construction workers?) it just won’t work well long term for Canada imo.

I agree completely, however to attract talent we must revisit our Western mindset and place greater value on laborious work instead of placing paper pushing bureaucracies a head of everything else. Why pay a doctor $300K a year, or an IT person $150K a year? While people that clean your sewer, keep the street clean, lights on in your home, food on your table, and build your house get pay much less?

Exactly. My parents were hard working and hated the corruption so they “voted with their feet” and left Croatia.
The majority of Croatians, especially Dalmatians are incredibly lazy people (I am Dalmatian).

These phenomenon happens all over the world, and the go getter tend to vote with their feet. People move to where there are better opportunities be it job and financial opportunities, or where there are free handouts, such as drugs and housing.

Google the term “fjaka” difficult to translate but it is a state of mind of doing nothing and a way of life in Dalmatia.

Mañana in Spanish.

Marko Juras
February 10, 2023 2:30 pm

I took a cab in Dubrovnik (2016) and I was telling the guy what a beautiful place it seems to be, and he said “yes, but it sucks because of the corruption everywhere”. That could also be a reason people come to Canada, separate from the 1990’s war

Exactly. My parents were hard working and hated the corruption so they “voted with their feet” and left Croatia.

The majority of Croatians, especially Dalmatians are incredibly lazy people (I am Dalmatian). They complain about corruption while drinking coffee/beer/vino with friends 5 hr each day. If they can’t make enough in 3 months driving cab in Dubrovnik or Split so they don’t have to work the other 9 months they aren’t in a good mood and complain about life. If Dalmatia had been occupied by Serbian forces these are not the refugees you would want in Canada. 10% would work hard other 90% would do the bare minimum and would reminisce about life back in Dubrovnik the rest of the time.

Google the term “fjaka” difficult to translate but it is a state of mind of doing nothing and a way of life in Dalmatia.

You as a tourist don’t see that your cab driver doesn’t do anything 9 months of the year.

Marko Juras
February 10, 2023 2:24 pm

This discussion started with you saying the immigrants arriving are going to be a burden to Canada … “The demographic of immigrants we are bringing into Canada probably need more servicing than services they provide back, etc.”

And that’s my opinion when I see what takes place in reality. Classic example, Croatian young family comes to Victoria on an IT sector skilled worker draw. The spouse secures a BC government job and within 12 to 18 months they are buying real estate. Keep in mind they came with 18k minimum. Anyone with 18k in cash in Croatia is well off/savvy/etc.

Then I’ll see them outside somewhere on a Tuesday after a long weekend and they’ll be like “took a family day at work have a doctor’s appointment.” Happy for my fellow Croatians on figuring out the game of life but this is a burden for Canada in my opinion. Are they helping address any pressing issues? (Housing, Health Care, etc.)

Patrick
Patrick
February 10, 2023 1:28 pm

Have you ever been to a war torn city after a war? There isn’t exactly much to return to. The factories/employment typical doesn’t restart, etc., even with government help. Half of my family is from a place in Croatia that was 12,000 people population pre-war and currently it is 2,800 people 28 years after the war.

This discussion started with you saying the immigrants arriving are going to be a burden to Canada … “The demographic of immigrants we are bringing into Canada probably need more servicing than services they provide back, etc.”

Now we are talking about Croatia that hasn’t fully rebuilt their economy in the 30 years since the war. I’ve lost the connection between those two points.

I took a cab in Dubrovnik (2016) and I was telling the guy what a beautiful place it seems to be, and he said “yes, but it sucks because of the corruption everywhere”. That could also be a reason people come to Canada, separate from the 1990’s war

Marko Juras
February 10, 2023 1:12 pm

The war in Croatia is long over, and these refugees you refer to who apparently don’t “want to be here [in Canada]” could simply return. Some do, but most stay in Canada, and their complaints fade away.

Have you ever been to a war torn city after a war? There isn’t exactly much to return to. The factories/employment typical doesn’t restart, etc., even with government help. Half of my family is from a place in Croatia that was 12,000 population pre-war and currently it is 2,800 people 28 years after the war.

You don’t see post WWII Germany rebuilding after every war.

If you are a refugee I don’t think the complaints/pain ever fades from being displaced, unless your life was a complete disaster beforehand (no running water, food, etc.).

Patrick
Patrick
February 10, 2023 1:05 pm

Not my experience and this is based on knowing people first hand that came from Croatia for economic reasons versus war refugees. One party wants to be here, one party has been forced out of their homeland and as a result is here.

The war in Croatia is long over (20+ years ago), and these refugees you refer to who apparently don’t “want to be here [in Canada]” could simply return. They haven’t (for 20 years) so that should tell you something more than listening to their complaints about Canada. As nice as the “old country” is, there are still plenty of problems there (corruption, poverty, unemployment etc).

Marko Juras
February 10, 2023 12:54 pm

That hasn’t been my experience. I’ve got lots of family that came to Canada as war refugees. They came to Canada, learned English and worked hard. No problem with their “mindset”.

Not my experience and this is based on knowing people first hand that came from Croatia for economic reasons versus war refugees. Unless you’ve come from a war torn country difficult to explain. I am not saying refugees are worse or better people than non-refugees but you can’t brush aside human nature. One party wants to be here, one party has been forced out of their homeland and as a result is here. (A huge difference based upon where the war is occurring too and what the standard of living was prior to the war which in places like Croatia and Ukraine would have been high relative to the globe. If you are starving before the war being a refugee might not be a bad thing).

It’s like saying all the health care workers I know are in it because they love helping people….I don’t know about that.

Regardless, with immigrants, it’s always about the next generation. The immigrants sacrificed to come here, and they know that. But they did it for their kids. And they see their kids growing up happy , plenty of opportunities and doing well in Canada. And then there’s no looking back. And then the generation after that… many people in Canada I’ve met don’t even know what country their grandparents came from.

This is old school immigrants like my parents. New immigrants (non-refugees) are seeking a better future for themselves. You need to show 18k in cash (for a family of three) to come to Canada. These are well-educated, english speaking, well-off [by global standards] immigrants on average coming to Canada which I think is a problem. I’ve helped 8 Croatian families in Canada less then 5 years buy real estate in Victoria. The Croatian friends in construction in Victoria (which is what we need imo) on work visas don’t have enough points to get drawn and end up going back. In my opinion government should focus on skilled trades not more IT/government types.

Just look at the point system I posted below for BC skilled immigrants.

Patrick
Patrick
February 10, 2023 12:44 pm

Or you live in Victoria, the territory is taken over by another nation. You are forced to leave and become a refugee and you end up in Frankfurt where you don’t speak the language and perhaps one or more of your family members were killed fleeing Victoria. You aren’t in the same mindset/state as someone who came to Frankfurt as a non-refugee on their own will.

That hasn’t been my experience. I’ve got lots of family that came to Canada as war refugees. They came to Canada, learned English and worked hard. No problem with their “mindset”.
Regardless, with immigrants, it’s always about the next generation. The immigrants sacrificed to come here, and they know that. But they did it for their kids. And they see their kids growing up happy , plenty of opportunities and doing well in Canada. And then there’s no looking back. And then the generation after that… many people in Canada I’ve met don’t even know what country their grandparents came from.

Marko Juras
February 10, 2023 12:10 pm

Immigrants are young/working age – 29 average. Not sure what services you’re talking about , but only 4% (15k per year out of 430k) are over age 65. And of the few older ones, most are sponsored & living with their kids, and helping out at home while kids are at work.

Immigration is kind of like housing. There is theory and then there is reality and if you are on the ground in the reality of housing involved in development, construction, etc., you realize we are totally screwed on the housing front despite what the government tells us they are doing to improve the situation.

My family including myself immigrated to Canada and through various avenues I meet a lot of Croatians here on work visas, permanent residence, etc., and I follow every week as to what the BC Government is drawing in terms of skilled immigrants which you can find here -> https://www.welcomebc.ca/Immigrate-to-B-C/Invitations-To-Apply I have a good idea of the of the scores and what the mean, etc.

There is a lot more to immigration than average age. I could talk about 10+ real life immigration issues I see but maybe let’s touch on refugees since that is topic these days due to the unfortunate war in Ukraine.

My parents immigrated to Canada/Victoria in 1994 and as you may or may not know there was a war in Croatia 1991-1995. We were fortunate enough that we lived in a city away from the front lines so we were only shelled a handful of times and I only remember having to hide in a bomb shelter twice. My parents simply came to Canada for economic reasons. We were relatively safe in Croatia at the time, had plenty of food, the weather was awesome, but my parents both of who were very hard working couldn’t afford a 500-600 sq/ft condo. They were happy to come to Canada to work 50-60 hours per and then deliver fliers on Sundays for extra income in hopes of being able to buy something which happen to be a small bungalow in the Oaklands area where they live to this day.

At that time because of the war we also knew a lot of people from Croatia and Bosnia displaced because of war or in mixed Croat/Serb marriages that came to Canada as refugees. The reality that no one wants to talk about as it is likely insensitive is refugees are forced out of their land and reality is a decent percentage of them didn’t actually want to be in Canada, they wanted to be back home in Croatia/Bosnia.

Think of it this way. You live in Victoria as a clerk in the government and you are well fed, safe, etc., but you hate the housing situation and you feel there is a better opportunity in Frankfurt, Germany so you go there, learn German, you open a business, you work 60 hours a week, etc. You want to be there.

Or you live in Victoria, the territory is taken over by another nation. You are forced to leave and become a refugee and you end up in Frankfurt where you don’t speak the language and perhaps one or more of your family members were killed fleeing Victoria. You aren’t going to be in the same mindset/state as someone who came to Frankfurt as a non-refugee on their own will. Yes, The National will run a feel good story in 15 years about a young Ukranine refugee from Mariupol that became a neurosurgeon in Toronto but this isn’t going to be the average productivity based on the unfortunate circumstances.

We 100% need to take in as many refugees as possible in my opinion but when you mix it with other immigration issues I have (why so many tech workers and so few skilled construction workers?) it just won’t work well long term for Canada imo.

Just like housing the problem is the government policy is disconnected from reality and often counterproductive.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
February 10, 2023 12:06 pm

Construction jobs are hard to fill as you would likely need to import labor. But these workers have a difficult time finding “affordable” housing. You can pay them $35 an hour but a big chunk of that income goes to the landlord.

Any solution to the labor shortage also has to also address the cost of housing.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
February 10, 2023 11:41 am

The service sector is a challenge because of benefits paid to full time versus part time. Then there is the employee versus the sub contactor and those paid on a commission/piece work basis.

As an example. A job at a fast food restaurant. You could hire a full time employee and pay all of the benefits including holiday pay or two part time employees that don’t work enough hours to qualify for those same benefits.

And that’s why you find young workers having two jobs. I spoke with a person at Wallmart. He works as an insurance agent and as a cashier.

Patrick
Patrick
February 10, 2023 11:18 am

The demographic of immigrants we are bringing into Canada probably need more servicing than services they provide back, etc.

Immigrants are young/working age – 29 average. Not sure what services you’re talking about , but only 4% (15k per year out of 430k) are over age 65. And of the few older ones, most are sponsored & living with their kids, and helping out at home while kids are at work.

0B774278-C1E1-40B7-934E-DB1B0B70A96B.jpeg
Whateveriwanttocallmyself
Whateveriwanttocallmyself
February 10, 2023 11:08 am

There is a demand for jobs. I had a meeting with developers a couple of weeks back and one pulled me off to the side and asked if I would consider moving to Alberta.

Of course the winter, snow, etc thing is an issue. But the job comes with a house. When was the last time someone included a house in their job offer?

patriotz
patriotz
February 10, 2023 10:59 am

“And back up for the 5 years. 150k new jobs is wild ” I am not surprised personally. All levels of government constantly hiring

From CBC article. That’s almost 9 out of 10 new jobs, which is proportionally far greater than the private sector’s share of total employment.

And most of the jobs were in the private sector, which added 132,000 new positions.

James Soper
James Soper
February 10, 2023 10:56 am

I suppose only having one condescendingly confrontational poster on the board is a good thing.

I’ve given it some more thought. I guess for certain posters that display hard anti immigrant tendencies, or want to stop other people from coming to the island once they’ve done so themselves, or accuse other posters of killing their children, I don’t have as much patience for them as others might. I understand how that might come across as me being a dick.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
February 10, 2023 10:55 am

House listings for under a million are down. But there have been sales of starter homes under $800,000. I just think that when we look at this segment of the market we should also considering the condominium market as part of the starter home market. A strata home and a small starter house on a lot are alternative choices in this price range.

There is a trade-off between the two. A newer condominium versus an older house that needs some immediate repairs. It may not be a 50/50 coin toss but I think it still comes down choice.

Marko Juras
February 10, 2023 10:41 am

And back up for the 5 years. 150k new jobs is wild

I am not surprised personally. All levels of government constantly hiring. Eby just created 242 government positions to oversee communication between other government departments in BC, lol. Health care in crisis, as much employment as you want there. Even construction I was talking to a friend who works for a large contractor asking him if he is worried about his job because of developers putting projects on hold and he laughed. The company he works for has over 10+ non-developer contracts in place (hospital in Ducan, some school in Duncan, etc.) and they can’t even find enough labour for those projects let alone all the private sector projects. He says the biggest struggle for them by far is still labour.

Then immigration is another mess in my opinion. The demographic of immigrants we are bringing into Canada probably need more servicing than services they provide back, etc.

Oil seems to be holding steady so no reason for mass layoffs in Alberta and that sector.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
February 10, 2023 10:33 am

Since property taxes are in the news today I thought of speaking about how we assess properties that are then taxed.

BC has one of the finest assessment system in the world. When China wanted to adopt an assessment system they came to BC. When Cambodia wanted to move from its hereditary system of land ownership to a market based system they came to BC.

Our system is progressive in that the more expensive the property the higher the taxes for the property. But it has a fault. It penalizes those that improve their properties and rewards those that don’t.

And in Victoria you will find lots of old, small houses on 6,000 square foot lots. The owners have little incentive to re-develop these sites as that will increase their taxes.

If I were to change one thing about the way we tax properties, it would be to disincentive owners to retain these marginal properties or leave building sites vacant.

Patrick
Patrick
February 10, 2023 10:31 am

150k new jobs is wild

Right. Another blowout month of job growth. +150,000.
And good jobs – full time.
One surprise, wages up only 4.5% YOY. Not sure how wages can stay low with ultra-low unemployment and worker shortages like this.
Also, last month’s 100k jobs was quietly revised down to 69k. Still a big number.
Canada added 150,000 jobs last month https://www.cbc.ca/news/business/canada-jobs-january-1.6743822
“ “January’s blockbuster jobs report is proof that there is still plenty of wind in the sails for Canada’s labour market,” Abdou said. “The big takeaway from this morning’s data is that calls for a recession … will have to wait.”

VicREanalyst
VicREanalyst
February 10, 2023 10:24 am

I realize you don’t know much about Victoria, but it’s in a really precarious position w/r to tectonic plates. Everyone here should be well aware for the potential for a massive disaster to occur.

Not sure about Victoria but one of the largest RE investment/development firms in the country (10 figure AUM) will not hold any property in Richmond due to potential liquefaction.

Frank
Frank
February 10, 2023 10:23 am

I’ve only been going to Victoria for the last 30 years. Also own a home in Oak Bay since 1994, owned on the mainland since 1989. I’m well aware of the risks and benefits of the Island, probably more than most.

Marko Juras
February 10, 2023 10:22 am

Is it just me, but are listings gaining in every sector except the 1.2-1.4 range in Victoria proper? Seems like everything interesting is “updated” and asking 1.6+ just seem disappointing

Not much is most sectors. As I’ve posted before SFH core freehold under $1,000,000 is running about 1/2 ior less nventory then it was a few months ago. I’ve been writing offers for clients on 15 yr old condos in Langford and those are not starting to go in multiples (although mostly slightly below asking but competing multiple offers).

As it stands right now best time to buy was November/December. I am not saying there is no chance of dipping below those months but SFH median in January was a 5th month high and February will most likely be higher than January so 6 month high.

The slight weakness I see right now is the luxury north of three million market. A nice home in Fairfield just sold for $4.7 million and previous purchase price was $5 million in 2020. Almost everything else other than luxury is up from 2020 numbers and low inventory.

The two – three million market seems okay. Multiple 2+ mill sales on Bear Mountain yesterday.

James Soper
James Soper
February 10, 2023 10:18 am

I suppose only having one condescendingly confrontational poster on the board is a good thing.

Those aren’t condescending posts. Frank doesn’t know much about Victoria, he lives in Winnipeg, and owns a rental in Ladysmith, and Introvert got here in the mid-late 00s. Wait until you meet up-and-coming.

Arrow
Arrow
February 10, 2023 10:04 am

I realize you don’t know much about Victoria
Well before you came to Victoria

I suppose only having one condescendingly confrontational poster on the board is a good thing.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
February 10, 2023 10:00 am

Some may be worried about a Tsunami hitting Victoria but are oblivious to that we live by a Naval base which makes Victoria a first strike city. So which should you worry about more? Or should you not worry at all?

Mt Vesuvius is still active and last erupted in 1944 and yet hundreds of thousands of people live around the active Volcano today. They know the risk, they can see it from their windows, but still choose to live there.

Now for a segue to real estate.

For the last two decades or so neither BC or Canada has experienced a recession and property values have mostly continued to climb. We, like the people living around Mt. Vesuvius, have a sense of security developed from the recent past that we’re impervious to a long term decline.

We’re unable to determine the risk until we have experienced it. Such as in the 1980’s. People were scared off from buying for a decade after experiencing that economic Tsunami.

The effect of a Tsunami or tidal wave has little or no bearing on where we purchase before the event. After the event it’s different, at least until our memory once again begins to fade.

patriotz
patriotz
February 10, 2023 9:46 am

Toronto, but may be of interest:

Their four-bedroom, 2,200-square-foot dwelling occupies the back of a 30-foot-wide lot….
.
Some advocates argued that laneway housing would add to the city’s housing supply and improve affordability. This was never realistic. The numbers are too small, and building is expensive. Today Ms. Williamson estimates the minimum construction cost for a four-bedroom laneway house at roughly $600,000. “And these are ultimately bespoke buildings,” she adds. “Every site is different, and every family is different. The process takes time. Custom houses can only do so much.”

https://www.theglobeandmail.com/real-estate/article-back-alley-toronto-home-with-forward-thinking-design/

James Soper
James Soper
February 10, 2023 9:16 am

I can’t imagine that region being redeveloped soon, building on a tectonic plate isn’t a good idea. I’m sure someone was aware of the potential for such a disaster occurring.

I realize you don’t know much about Victoria, but it’s in a really precarious position w/r to tectonic plates. Everyone here should be well aware for the potential for a massive disaster to occur.

https://www.newyorker.com/magazine/2015/07/20/the-really-big-one
https://www.capitaldaily.ca/news/tsunami-earthquake-1700-vancouver-island-oral-history

VicREanalyst
VicREanalyst
February 10, 2023 7:54 am

And back up for the 5 years.

Yup like I said, no one can predict interest rates now that QE is over.

James Soper
James Soper
February 10, 2023 7:34 am

Yes. $1,019,000

Someone read your article Leo and realized they’d win with a bid just over a million.

Dahlias
Dahlias
February 10, 2023 6:36 am

Is it just me, but are listings gaining in every sector except the 1.2-1.4 range in Victoria proper? Seems like everything interesting is “updated” and asking 1.6+ just seem disappointing

patriotz
patriotz
February 10, 2023 6:04 am

Turkey’s birth rate is 1.92 births per woman, which is below replacement.

Frank
Frank
February 10, 2023 5:57 am

Focused on the disaster in Turkey/Syria lately, it looks like a Godzilla movie. I’m sure our government will be announcing policy on how many refugees we will be accepting shortly. I can’t imagine that region being redeveloped soon, building on a tectonic plate isn’t a good idea. I’m sure someone was aware of the potential for such a disaster occurring.
I found this interesting table on Turkey’s population dynamics. Almost 900 people leave every day, but the birth rate exceeds the death rate by 2100 daily. In a mountainous country so densely populated, millions have no where to go.

1AF2DD1D-DAE3-4821-8D8D-7B8E297E1B32.png
Umm..really
Umm..really
February 9, 2023 10:02 pm

Many new homes at risk, as major Vancouver developer files for insolvency

From: https://dailyhive.com/vancouver/coromandel-properties-insolvency-protection-vancouver

avocado toast
avocado toast
February 9, 2023 7:47 pm

Does anyone know if 4164 Rockhome Gardens sold? Curious as it was listed in the “bunched up” zone described in the article but wondering if an offer below the $1 million threshold made a sale happen. For context it was just over $1 million. 1,045,000 I think.

patriotz
patriotz
February 9, 2023 3:36 pm

Probably has a lot to do with the age of the owner households. Compare West End to Downtown for example, basically all owner households in both are condos. But the housing stock in the West End is much older on average than in Downtown.

It doesn’t have anything to do with current affordability, just about how long ago the owner bought. We saw a few weeks back that Calgary ranks very low among Canadian cities for mortgage-free households.

Introvert
Introvert
February 9, 2023 3:11 pm

Article says Saanich is 47% mortgage-free.

Introvert
Introvert
February 9, 2023 3:07 pm
Introvert
Introvert
February 9, 2023 2:58 pm

Late 80s, early 90s. Well before you came to Victoria.

Back when Victoria was an even sweeter place to live than it is today.

Patrick
Patrick
February 9, 2023 2:49 pm

Leo. “ purpose built rental stock (universe as CMHC calls it)”
Dad “ CMHC defines the rental universe as rental units contained in all row projects and apartment structures with three or more units. ”

Well those seem quite different definitions of whatever it is CMHC means by “rental universe”

Dad
Dad
February 9, 2023 2:42 pm

Another thought:
CMHC defines the rental universe as rental units contained in all row projects and apartment structures with three or more units. But wouldn’t completions also include a secondary suite in a new-build house? Or is the secondary unit not counted? Also not sure how accurate the completions data would be. Some units start out as intended for the rental market and then get flipped to homeownership.

But I would bet the reason BC has a ton of rental intended completions, but slow growth in the rental universe is primarily due to demolitions.

Patrick
Patrick
February 9, 2023 2:27 pm

Sure they do – they produce the most comprehensive report on the rental housing market in Canada,

Yes, and that’s the data that Leo says doesn’t make sense. Yet he prepares a chart of it, calls it “rental universe”, with no mention of CMHC on the chart. So someone else will see it, and say oh look the rental universe growth vs completions is so different among the provinces.

He asked for input, so I provided mine, which is that CMHC isn’t measuring the rental universe, so shouldn’t mislead people. And I expect that this confusion leads to the discrepancies between provinces mentioned by Leo in his post.

Dad
Dad
February 9, 2023 2:24 pm

Well that just makes it a silly term. CMHC doesn’t get to define a subset of rentals as “rental universe”

Sure they do – they produce the most comprehensive report on the rental housing market in Canada, and there are good reasons to distinguish between PBR and secondary market rentals.

If you want to know the size of the rental universe, just count the number of renter households in the Census. That should give you a pretty good idea.

Patrick
Patrick
February 9, 2023 2:15 pm

Because that’s what CMHC calls it.

Well that just makes it a silly term. CMHC doesn’t get to define a subset of rentals as “rental universe”

Dad
Dad
February 9, 2023 2:02 pm

But why are you calling these purpose rental subset the “rental universe” on your chart?

Because that’s what CMHC calls it.

the rental universe grows much more slowly compared to rental completions

I think BC could be explained by the number of demolitions that have taken place in the lower mainland. Quebec I’m not too sure about…I think the rental universe is an estimate based on a survey, so would be subject to revision.

EDIT: Apparently CMHC has some method for counting the number of units in the rental universe and they say they constantly update it to ensure it is accurate as possible.

James Soper
James Soper
February 9, 2023 1:58 pm

I’m comparing 10 years of rental completions to the 10 year growth in the purpose built rental stock (universe as CMHC calls it). The results are all over the place, and BC is an outlier in that the rental universe grows much more slowly compared to rental completions, and Quebec it grows way faster (maybe they’re buying up old buildings?)

The amount of units being built vs. completion over the last 8 years is the same. # of units under construction went up significantly in 2016, but # completed has never been close to what’s under construction.

Don’t remember that. What era was this?

Late 80s, early 90s. Well before you came to Victoria.

Patrick
Patrick
February 9, 2023 1:35 pm

Tenants care. They are vastly more vulnerable to eviction in the secondary market.

But why are you calling these purpose rental subset the “rental universe” on your chart?
No mention of any other rental units added (condo rentals, suites in homes, garden suites, townhouse rentals etc.).
There’s been a HHV narrative for years about the investors outbidding homeowners and buying up existing units to rent, yet you are excluding these investor added rentals from the “rental universe”?

Do you think the average person thinks that “rental universe” should exclude units in a new building bought by investors and rented out? If you’re going to exclude those rentals, you need a better term than “rental universe” to describe what’s left

========

https://betterdwelling.com/canadian-cities-have-seen-up-to-90-of-new-real-estate-supply-scooped-by-investors/

“ Cities have seen up to 90% of recently completed homes go to investors, much higher than normal. Vancouver Has Seen 44% Of Its New Supply Go To Investors
Vancouver real estate shows a similar trend, but a higher share of investors. Investors owned nearly 1 in 4 (23.5%) of total housing supply in 2020. For recent builds, that share jumps to nearly half (44.0%) of the supply. “

Frank
Frank
February 9, 2023 1:25 pm

High interest rates kill investment in all sorts of industries, not only housing/apartment construction. This only decreases supply, as long as demand remains high, the problem gets worse. It’s a real paradox, raising rates, meant to slow inflation, only stops development which puts more pressure on existing supply.

Introvert
Introvert
February 9, 2023 1:24 pm

This one was dead center of the road.

Don’t remember that. What era was this?

Patrick
Patrick
February 9, 2023 1:17 pm

purpose built rental stock (universe as CMHC calls it)

— Using a term like “Rental universe” should mean all rental units, regardless if they were purpose built, old/new. Basements suites etc.
—- using a term like “purpose built” restricts it to a subset that isn’t helpful in measuring rental universe.

Who cares how many purpose built rental units there are? Maybe there’s a 100 unit building that was sold as condos, but 80% of the units are rented out – so that doesn’t get counted because it wasn’t “purpose built” from the very start? Seems silly.

Arrow
Arrow
February 9, 2023 12:47 pm

Not a single picture…

of an Otter 2 taking flight.

Thurston
Thurston
February 9, 2023 12:34 pm

Whatever there are developers that are over extended without the sales they quickly find themselves in trouble The sales just are not there right now and if the spring market is a bust we will see more of these headlines Who knows we might already be in a recession

Whateveriwanttocallmyself
Whateveriwanttocallmyself
February 9, 2023 12:23 pm

Construction is underway on one of Vancouver’s largest projects, set to redefine a major part of the city. Led by the Squamish Nation, the Senakw development, a modern mega-complex on False Creek has been in the headlines for months.

The plan is to provide rental and 99 year leasehold condominiums for up to 9,000 residents. That’s more units than Vancouver provided last year and will make the First Nations the largest land developer in Vancouver.

The First Nations in Victoria have more land along Craigflower Road than this Vancouver building site and are currently building on one small site four mid-rise rental buildings comprising 98 units that rent for around $2,500 per month.

Peter
Peter
February 9, 2023 11:59 am

One area where a realtor can really help clients is to use professional pictures – so worth it. But not everyone got the memo, take a look at these (hope this link works, I haven’t done this before on this blog):

https://www.realtor.ca/real-estate/25262089/204-636-montreal-st-victoria-james-bay

I just don’t get it. Not a single picture of the living room. But nice picture of the storage closet, and the bathroom. With the toilet lid up, it’s certainly inviting. And what is that thing hanging from the shower head, a shed snake skin??

James Soper
James Soper
February 9, 2023 11:58 am

Oh yeah. And several large trees along Gordon Head Rd have been felled since I moved to GH. Also, the Shelbourne corridor project necessitated chopping down all the mature trees at Feltham and Shelbourne. The area looks naked now. Terrible. The bike lanes and such are good, though.

This one was dead center of the road. It was literally a natural traffic calming mechanism. People just rip down that road.

Introvert
Introvert
February 9, 2023 11:32 am

That’s the one. Between Colleen and Hannah.

Oh yeah. And several large trees along Gordon Head Rd have been felled since I moved to GH. Also, the Shelbourne corridor project necessitated chopping down all the mature trees at Feltham and Shelbourne. The area looks naked now. Terrible. The bike lanes and such are good, though.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
February 9, 2023 10:55 am

Coromandel Properties Ltd., which has a former longtime Vancouver city councillor among its principals, filed a petition in B.C. Supreme Court this week asking for time to sort through a maze of financial problems due to sluggish progress on 16 development projects — most of which are unfinished — and difficulty servicing its debts due to rising interest rates.

In all, there is $700 million in outstanding debt secured against Coromandel’s projects, the petition says.

“Due to the rise of interest rates since 2022, the petitioners have had difficulty servicing the secured debt on the projects,” it says. It lists a number of secured creditors who have called their loans in the millions of dollars and liabilities to eight secured lenders who have demanded repayment amounting to about $218 million.

James Soper
James Soper
February 9, 2023 9:03 am

Hillcrest Rd doesn’t exist. Do you mean Ave? When was this?

That’s the one. Between Colleen and Hannah.

Introvert
Introvert
February 9, 2023 9:01 am

That’s actually smaller than the one they removed from the middle of Hillcrest road in Gordon Head, so that cars could go faster.

Hillcrest Rd doesn’t exist. Do you mean Ave? When was this?

James Soper
James Soper
February 9, 2023 8:07 am

‘Landmark’ arbutus tree falls in Langford to make way for towers

That’s actually smaller than the one they removed from the middle of Hillcrest road in Gordon Head, so that cars could go faster.

Has anyone taken the new road, Pacific Marine, from Port Renfrew to Lake Cowichan?

Why do you say “new” road? (Honest question) It’s been paved for a long time now.

ABC
ABC
February 9, 2023 8:01 am

Leo – Thought I would share that your posts are great and very informative. Thank you for sharing this work for everyone to see.

Introvert
Introvert
February 9, 2023 7:39 am

Bank of Canada releases details on interest rate decision for the first time

https://www.ctvnews.ca/business/bank-of-canada-releases-details-on-interest-rate-decision-for-the-first-time-1.6265265

Introvert
Introvert
February 9, 2023 7:22 am
Whateveriwanttocallmyself
Whateveriwanttocallmyself
February 8, 2023 8:26 pm

Sounds like a road to open up the twin turbos on.

Arrow
Arrow
February 8, 2023 7:58 pm

Port Renfrew to Lake Cowachin

~1.5 hour drive up and over to Cowachin. It’s got everything: windy bits; steep bits; a few narrow sections; and like any old logging road it has lots of fantastic landscape views. Don’t let the cut blocks wreck your day as their openings allow for the panorama views, and if you look without judgement, the different ages of regen add context.
Plan time to make a few stops to appreciate the wetlands & canyons.
The tubes can be rented in downtown Cowichan w a shuttle bus back for a cold beer at Jakes overlooking the lake.

Yet Another Boomer
Yet Another Boomer
February 8, 2023 7:51 pm

Pacific Marine, from Port Renfrew to Lake Cowichan?

As mentioned, it is paved and a huge improvement over the logging roads you used to have to take but there are a lot of corners. The driver will enjoy it but not all passengers do. Of course the drivers level of enthusiasm also contributes to the passengers experience.

Not to be a downer but the amount of sunscreen in the river is starting to have a lot of impact on the insect life which will have an impact on the fish. Yet another case of too many people is not good for the environment. A few people did not have a measurable impact but the same cannot be said any more.

Dad
Dad
February 8, 2023 7:37 pm

Has anyone taken the new road, Pacific Marine, from Port Renfrew to Lake Cowichan? I would like to go out that way for a weekend drive and I’m wondering what kind of a drive it’s like?

Haven’t driven it for a couple years but it’s paved the entire way and was well maintained. You go through lots of old clearcuts though, so not the most scenic.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
February 8, 2023 6:53 pm

Has anyone taken the new road, Pacific Marine, from Port Renfrew to Lake Cowichan? I would like to go out that way for a weekend drive and I’m wondering what kind of a drive it’s like?

I was looking an aerial photo of Lake Cowichan and there were all these dots in the river. So I zoomed in and they are hundreds of people drifting down the river in little rafts. I know where I’m going this summer.

Umm..really
Umm..really
February 8, 2023 6:10 pm

CMHC also has it all for free online.

https://www.cmhc-schl.gc.ca/en/consumers/home-buying/buying-guides/home-buying

The pdf guides and checklists at the bottom of the webpage as well.

Barrister
Barrister
February 8, 2023 5:24 pm

There is any number of helpful and straightforward books on steps to take when buying a house. Suspect the public library has a number of them available.

deryk houston
deryk houston
February 8, 2023 2:17 pm

Totally agree with Peter . …”it takes maybe a few weeks of watching the market, looking at comparables online, making a list of a dozen houses, doing a thorough drive-by of all of them and then looking at as many as you can, getting info on solds, and at the end of that process you ought to have a pretty good overview idea of the market.”
I think the whole process is also getting much too complicated these days and control is being taken away from the individual more and more. More paperwork than ever and yet more mistakes being made.
Take back control. “Do your own due diligence”. You are very much on your own anyway. Trust no one….unfortunately.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
February 8, 2023 2:00 pm

Well Gosig, most businesses rely on referrals, however there are regulations regarding referral and/or hidden fees. Only about 3 times in the past have I ever been offered a kickback or suggestion to kick back some of my fees to obtain more work. But this is what happens when you are caught and I suspect the law society have similar regulations.

Ethics Standards 5.9.3

The payment and/or receipt of a concealed fee, a commission, or a thing of value or of non-value in connection with the procurement of any Assignment is unethical.

Disclosure of fees, commissions, or things of value connected to the procurement of an Assignment must appear in the certification of the written Report and in any Letter of Transmittal in which conclusions are stated.

The Client must be made aware of, and consent to, any fees, commissions or things of value, including referral fees, connected to the procurement or referral of an Assignment prior to accepting the Assignment.

And the penalties are severe.

  1. Professional Practice Sanctions

The following sanctions can be implemented by Sanction Consent Agreement or
imposed by an Adjudicating or Appeal Sub-Committee decision:

Reprimand: A written warning calling the attention of the member to a breach of the
Institute’s Bylaws, Regulations, Policies and/or CUSPAP

Education: A sanction intended to provide the educational foundation to permit a
member to improve their valuation practice. It is completed at the member’s
expense.

Peer Review: An administrative review conducted in accordance with the AIC’s peer
review program of a report on a professional service rendered by an AIC
member.

Fine: A fine not to exceed $10,000.00

All of these sanctions remain on a member’s Professional Practice Record for a period of
5 years.

The following sanctions can only be imposed by an Adjudicating or Appeal SubCommittee decision:

Censure: A formal written expression of criticism and disapproval for a breach of the
Institute’s Bylaws, Regulations, Policies or CUSPAP.

Suspension: The suspension of use of a member’s designation and/or membership.

Expulsion: A permanent expulsion of the member from the Institute. A member that
has been expelled may be considered for reinstatement of membership after a
period of five (5) years.

All of these sanctions remain on a member’s Professional Practice Record permanently.
The Professional Practice Database can be accessed only by the Director, Professional
Practice and the Professional Practice Coordinator

… You just don’t f’ing do it.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
February 8, 2023 1:12 pm

Frank, a few years ago I spoke with a couple that had a fantastic idea for dealing with Estate Sales. They would de-clutter the home and organize the items that would be sold through the auction houses, other items through Ebay, then garage sales and what else remained would be sent for disposal.

An absolutely brilliant idea that solved many of the problems that anyone that has ever been been an executor of an estate faces. Don’t know what happened to them.

Some of the Estate homes in Victoria have incredible antiques and libraries of first edition books. I don’t appraise chattels or portable property so I refer them to Faith Grant, Haunted House Books, or Lunds Auctions for estate or insurance valuations.

Barrister
Barrister
February 8, 2023 12:43 pm

One does have to consider the interests of anyone one hires and act accordingly (including lawyers and other professionals).

patriotz
patriotz
February 8, 2023 12:24 pm

The only time a lawyer takes a commission (known as a contingency fee) is when they are suing someone else on your behalf. That is, the commission is taken on money going to you. Even that is not allowed in all jurisdictions, but I think BC allows it. A moot issue for motor vehicle injuries in BC now, however.

Gosig Mus
Gosig Mus
February 8, 2023 12:08 pm

“With all due respect to real estate agents, the basic economics of the situation is that the agent is on their side and not yours”

Wonder if that is the case with other professions? Lawyers for example (With all due respect.)

My understanding is that most real estate business is through referrals or repeat customers. Self serving behavior certainly wouldn’t get you far.

Peter
Peter
February 8, 2023 10:41 am

For most people, buying a house is one of their biggest financial decisions in life, and so any & all possible sources of information can only be useful, whether an appraisal, realtor’s thoughts etc. Certainly the process as described by Whatever sounds very in-depth and useful if you get the right person.

All that said, it depends on what kind of person you are, but personally I’ve never really relied on third-party advisors for any financial decisions, whether it’s real estate or investing. Especially in real estate, I think it’s relatively easy to get the info you need to make your own decision. I mean, it takes maybe a few weeks of watching the market, looking at comparables online, making a list of a dozen houses, doing a thorough drive-by of all of them and then looking at as many as you can, getting info on solds, and at the end of that process you ought to have a pretty good overview idea of the market. And then you’d be in a good position I think to spot a relatively sound deal when one comes up. Ancillary information like BC assessment etc. is just that, ancillary. It’s not a science, it’s a judgment call. Of course gather as much info as you possibly can, but with RE I don’t find it hard to then distill that into your own judgment, and I’d rather rely on that.

Just my 2 cents. Of course very different if one is an out-of-town buyer.

Barrister
Barrister
February 8, 2023 8:54 am

With all due respect to real estate agents, the basic economics of the situation is that the agent is on their side and not yours. Their interest is simply that you either sell your house or buy a house as quickly as possible with the least amount of fuss and time involved by them. So if you are selling your agent will try to get you to lower your price as much as possible to get a fast sale and if you are buying they will try to convince you to offer the asking price if possible. It is better for their financial interest to only have to show you three houses rather than twenty. They are better off selling your house in a week at a bit lower price than taking six months to get you an extra hundred thousand.

I am sure that there are exceptions to this but dont assume that your agent is one of them. The basic fact is that your economic interests do not align.

If you are out of town getting an appraisal is probably a really good idea, if possible renting for a year and getting to understand the city is also smart. Talking to your RE lawyer before putting an offer in can sometimes give you a valuable insight into that bargain property you agent found for you.

Shawn Dhanda
Shawn Dhanda
February 8, 2023 8:28 am

I can’t believe Leo does the research and creates these posts expecting nothing in return. What an amazing dude.

Frank
Frank
February 8, 2023 5:27 am

An appraiser also doesn’t have any skin in the game. I help a local auction house determine the value of items in estates. My experience in buying (I emphasize BUYING) and selling (usually by auction) gives me the information to assess market value. The auction owner just knows what he has sold items for in the past, they have no idea what to pay for an estate or separate items. It’s a skill that can’t be taught. Auction results can disappoint or pleasantly surprise. The more knowledgeable you are, the more surprised your results.

patriotz
patriotz
February 8, 2023 4:17 am

does an appraiser offer a buyer a more accurate value estimate to base an offer on than the buyer’s real estate agent could?

Well an appraiser doesn’t depend on a sale to get paid, and doesn’t get a % of the sale price.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
February 7, 2023 10:35 pm

Frank, I agree with you. Some appraisals are sub standard. And I encourage those people that feel that they have been wronged to sue the arse off the appraiser. Every appraisal performed is backed by $2,000,000 of liability insurance. I pay $4,000 a year for that insurance. No one has collected on me yet.

You want to lodge a justifiable complaint about an appraiser. I’ll buy the stamps.

Because it is like all industries. There are good ones and there are bad ones.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
February 7, 2023 10:24 pm

Agents are listing, showing, selling every day. And as such are very competent in determining value. For sale purposes all the appraiser would be providing is an unbiased opinion along with the justification on how that conclusion was determined.

Having said that, at times an agent and an appraiser will have different opinions about the value of a property. The most common one I receive from agents is that if the property sold at this price then that’s its market value. And the appraiser’s response is that the property may have sold at that price but there is no evidence to support that price being at market value.

I’ll give you an example on a property where the person was from out of town and wanted to purchase a somewhat unusual property being a turn-of-the-century home on an acre of land in a built up area of mostly 1960’s homes. The home had nominal updating and was mostly in original condition. The client’s reason for hiring me was just to give herself confidence in that she was not over paying for the property. First thing I explained to her is that I don’t want to know what she is offering. I would do my analysis and then later we would discuss the results as well as the costs she would likely have to incur for any immediate repairs to the house or obvious structural faults that I noted during my inspection. Her and I went through the inspection together and I explained what I was looking for and noting about the structure. There was some oddities about one of the upper floor rooms and I showed her that this was from a very old addition made to the upper floor. Went into the basement and looked for possible water infiltration as well as the electrical panel for old knob and tube wiring or signs of asbestos. Talked to her about the moss on the roof and that the roof had been double shingled and the most likely cost of replacing the roof as well as the window seals that have failed and a general idea of the costs to replace the windows. That’s exactly what she wanted.

In the end, my results were a little higher than what she had offered but the difference was that I had justified my analysis with data covering the previous five years in that neighborhood. I utilized several hundred sales using several methods to come up with my conclusion along with an estimate of the margin of error in the results. She was unfamiliar with the area and unfamiliar with the agents and just wanted an independent opinion. She was also paying for a bank to have another appraisal done on the property, but the bank would not allow her to have a copy of the report and that made her uncomfortable as the appraiser would be looking after the bank’s interests and not hers.

The difference between what I was doing and what the bank appraiser was doing was that I was informing her about the property while the bank appraiser was determining if the offer was reasonable for first mortgage financing.

Frank
Frank
February 7, 2023 9:16 pm

The best way to ascertain the value of anything is to get the opinion of someone who is active in trading the commodity. A realtor, active investor, people involved in actively buying and selling property have to know what they can pay for a property. They also have to know what they think they can sell it for. You learn the value you are willing to pay and have the money to back a legitimate offer. A lot of appraisals aren’t worth the paper they’re written on.

Arrow
Arrow
February 7, 2023 8:35 pm

when I am doing an appraisal

Other than for financing/mortgage reasons, does an appraiser offer a buyer a more accurate value estimate to base an offer on than the buyer’s real estate agent could?

Patrick
Patrick
February 7, 2023 8:32 pm

As a buyer what is the advantage of buying in 2001 at 180k versus 1994 at 180k even thought 2001 is 18% lower inflation adjusted? You still have to pay 180k? If one purchased in 1994 you would have dented the principal by 2001 and not had to worry about receiving notice from your landlord to vacate for seven years.

You’re comparing someone buying in 1994 vs someone renting from 1994 to 2001. Yes, in that example, I agree that the 1994 buyer is better off.
Of course affordability is better for a FTB in 2001, so a 30 year old in 2001 has an advantage over a 30 year old in 1994, because their salary would be higher. But a 30 year old in 1994 waiting around renting 7 years and then buying at age 37 makes no sense to me.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
February 7, 2023 7:23 pm

Like Marko, I also do a cursory verification when I am doing an appraisal. Mine is a little bit different as I ask questions about the property that usually only an owner would know.

When was your house built?
How long have you owned your home?
During the time that you have owned the home have you replaced or repaired any items such as kitchens, bathrooms, furnaces, oil tanks?

Most of that is then verified against BC assessment records and board data.

A question that I get sometimes from the occupant while I am calling to make an appointment is “Do I have to be there”
My typical answer is that I would prefer them to be home so that I can ask them questions about the house while I’m doing the mortgage inspection.

Most everything you say to an appraiser is documented and placed in the appraiser’s work file. So don’t say to the appraiser that you need a low or high estimate because it’s being done for a divorce. That goes right into the work file.

The appraiser that did an appraisal on Donald Trump’s condo was impressive. She documented oh how he hurried her through his home and would not allow access to several rooms. That was written into the report and came out in court.

James Soper
James Soper
February 7, 2023 6:45 pm

As a buyer what is the advantage of buying in 2001 at 180k versus 1994 at 180k even thought 2001 is 18% lower inflation adjusted? You still have to pay 180k?

You should have a larger down payment, which means way less interest paid in the long run. Doesn’t apply to the 90s, but currently you might actually qualify for a mortgage 7 years later when you wouldn’t previously.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
February 7, 2023 6:33 pm

Arrow, there are various report format that appraisers perform. The one I’m speaking about is called a “Desk Top”. It’s taking the current information from the real estate board that describes the physical and location aspects of the property and assuming that information is mostly correct and reliable. The online data systems and applications today are fantastic. You couldn’t do this type of analysis ten or 20 years ago. One had to use Lotus 1-2-3 before to collect and analyze the data. Now its just a few mouse clicks.

Most appraisers will be reluctant to do these reports for the general public. However, lenders use Desk Tops frequently when the loan to value ratio is low.

As you said you would never buy an excavator without seeing it first. The gold standard is for an appraiser to do a cursory inspection or walk through of the home but this adds a day or two to getting the report. The appraiser has to set up an appointment with the home owner to view the interior and the owner may not be available for a day or two. Desk tops while quick can therefore be less reliable and are mostly discouraged but they do have a place when time is essential in assisting someone in developing a level of confidence before making an offer. And unlike the selling agent, the appraiser has no skin in the game. The numbers fall where the numbers fall. That is not meant to be a disparaging remark about selling agents, they do provide a good service in guiding you through the buying process.

The appraiser should provide you with a range of value along as well as their data supported opinion. My suggestion is that you call around to various appraisers to find one that you have confidence using. Not all appraisers are the same. If the appraiser doesn’t know what a SAR is then it’s time to find a different appraiser. Interview them on the phone before you get into a situation in making an offer that is time sensitive.

Marko Juras
February 7, 2023 6:15 pm

Received a “Licensees Can Help Prevent Fraudulent Real Estate Transactions” bulletin today from BC Services Financial Authority….every single point amounts to use common sense.

  • Talk to your client and get to know them.

  • Ask clients conversational questions about themselves such as where they work, how long they have lived in their current place of residence, where they have lived previously, and their marital status.

  • Take notes to record the information. If the information provided changes over time, it may raise a red flag and prompt additional clarification or confirmation.

  • Verify information about a seller on the property title. Look for discrepancies in how your client’s name is spelled, or what charges are registered against the property. See BCFSA’s Land Title and Survey Authority (LTSA) Information.

  • Use registries such as the Land Owner Transparency Registry which can help support or refute what a buyer has said about being a first-time home buyer or an owner of several properties.

  • Compare the information on documents provided by your clients and that you gather to ensure they are consistent with each other and the information your client provides.

  • Look for other red flags that might call for greater scrutiny like refusals to publicly list or advertise the property, a desire for a quick deal, an empty or abandoned property, unusual email address formats, or a willingness to accept much less than market value.

Marko Juras
February 7, 2023 6:12 pm

Mostly flat with 6% inflation is still dropping my friend.

This seems to come up as a discussion on HHV every 6 months for the last 15 years and I still don’t understand it. Leo has as posted before but inflation adjusted SFH prices in Victoria dropped 18% +/- 1994 to 2001. As a buyer what is the advantage of buying in 2001 at 180k versus 1994 at 180k even thought 2001 is 18% lower inflation adjusted? You still have to pay 180k? If one purchased in 1994 you would have dented the principal by 2001 and not had to worry about receiving notice from your landlord to vacate for seven years.

Arrow
Arrow
February 7, 2023 5:39 pm

I don’t know why people don’t hire an appraiser before they make an offer

Neither do I. I’ll try that as they (are you of that profession?) would be familiar with all the data sources you mention. The only one I know how to access is BCAssessment.

(Even hiring a home inspection after the bid sounds odd; In my world, I’ve never made an offer on an excavator before having it inspected.)

Thanks again,

Whateveriwanttocallmyself
Whateveriwanttocallmyself
February 7, 2023 5:12 pm

Arrow since one of the reason you are on this board is to learn allow me to try to explain what is happening. The Sales to Assessment ratio is a valuable tool to assist in cross checking market value. It’s not one of the primary methods such as comparing recent sales of like properties within a set geographical area. It’s a cross check.

But, there is a problem with the SAR. The assessment used in theses calculations are not July 1, 2022. The real estate board has not updated their system to this year’s assessments. The calculation is based on the previous year of July 1, 2021.

You have to determine which assessment year a person is stating. It’s reliable in most cases to say that properties are selling around their assessed value but based on the prior year’s assessed value. In the Fleetwood case that SAR ranges between a low of 0.88 to a high of 1.19 with the majority of properties selling AROUND the median of 0.98. All based on the July 1, 2021 assessed value – not the current July 1, 2022.

You have to a bit careful then with statements such as “listed below assessed value” as the agent may be using July 1, 2022 which are thought most often to be higher than current market value.

In 2021 the Fleetwood property was assessed at $914,000
In 2022 the Fleetwood property is assessed at $1,053,000

The SAR is just one of several different methods to cross check a price. You can trend the past sale’s history of the property up to current market conditions. You can look at the last sale of a highly similar property along the street and trend that past sale price up to current conditions. Then you can look at judgement sample of recent sales both on their gross selling price as in a price per square foot method or on an adjusted method taking into account differences in say house size, lot size, parking, etc.

Then bring all of these different calculations together and reconcile them to find a reliable, reasonable, fair and equitable value.

It’s difficult for you to do these calculations because you don’t have access to the raw data and sometimes the data is imperfect. Then one has to make a judgement call. A home buyer will pay $500 for a home inspection and that inspection is cloaked in assumptions and limitations. I don’t know why people don’t hire an appraiser before they make an offer to get a unbiased third party opinion. They’re cheaper than a building inspection and can save you from a costly mistake. All of the above cross checks take about an hour to collect and put in a short form report. You could get an answer, in most cases, while you are walking back to your car after looking at the house.

Just like MacDonalds but without the calories.

Dad
Dad
February 7, 2023 4:26 pm

Is this a bidding war bait?

Look at the property behind it. May be a tough sell.

Arrow
Arrow
February 7, 2023 4:05 pm

less than assessment

Its ask price is $36K over the July 2021 assessment.
Do you think that tax assessments based on July 2022 numbers are very relevant today?

Umm..really
Umm..really
February 7, 2023 4:03 pm

$103K less than assessment.

I have been seeing quite a few coming in at $100k to $200k under assessment. A few of them have been selling for around asking. They seem to sell quicker, but I am not sure they have gotten a bidding war started. Probably more to do with how this year’s assessments were skewed by sales last spring and summer when the sale price samples were take. For example, 2848 Dewdney on Oak Bay is almost $400k under assessed and has been on market for over 100 days. Also, see quite a few listings just over a million with assessments around 1.2 mil. Assessments are probably even less reliable than usual to peg any sort of market value to them this year.

QT
QT
February 7, 2023 3:52 pm

Is this a bidding war bait?

https://www.realtor.ca/real-estate/25252910/2419-fleetwood-crt-langford-florence-lake

$103K less than assessment.

Arrow
Arrow
February 7, 2023 3:23 pm

Patrick,

It was bound to happen.
If one frequents any comment section for long enough, one notices the bicker-fest aspect of people; It seemed like such a simple premise.
Never-the-less, you folks here enjoy a relatively peaceful board -I’m having fun and learning lots.

Caveat Emptor
Caveat Emptor
February 7, 2023 2:24 pm

How is everyone’s CRD blue box pick-up going?

Yup rarely picked up on the scheduled day anymore. Often 1-2 days later. Twice not picked up at all which becomes a pain with the amount of recycling you end up with.

The CRD is fine if you just drop off your recycling at the Fisgard office 🙂

Patrick
Patrick
February 7, 2023 1:05 pm

I’d rather have borrowed money at 0.5% two years ago, than loaned out money at 0.5%.
Depends on the term doesn’t it.

You referred to the last two years, so I assume that’s the term.
We’ve had 13.5% inflation in the two years (2021-7%, 2022-6.5%).

If you lent me $1 million two years ago, now that’s only worth about $870,000 in constant dollars. So you’ve lost $130,000 in buying power and you charged me 0.5% interest which is $10,000 for two years. I’d say you got the worst of the deal, by $120,000

It wasn’t even close over the last two years. A creditor is losing money (in real terms) if he lends at less out at less than inflation. Because he’s lending at negative interest rates. That’s no way to make money, regardless of the term, or rate (if it’s less than inflation).

Arrow
Arrow
February 7, 2023 12:57 pm

Roubini would qualify as the textbook permabear.

The poster-boy for permabear, to be sure, but didn’t he gain notoriety as a Casandra during the last housing peak ?
Even with all the wishful thinking in the wind lately, surprises can happen -but I’m not betting on that one.

Dad
Dad
February 7, 2023 12:46 pm

Roubini and others are suggesting that Stagflation will soon be the topic of the day.

I think Roubini would qualify as the textbook permabear. Who knows what the future holds. I’m just saying saying what’s happened over the last six months, and I acknowledge that declining energy prices are a major factor.

Core inflation remains elevated. But that is being driven by the shelter component, which of course is being driven by rising mortgage interest, and the lagging effects of rising rent.

I am (cautiously) optimistic that it is not the 1970s again.

patriotz
patriotz
February 7, 2023 12:43 pm

I’d rather have borrowed money at 0.5% two years ago, than loaned out money at 0.5%.

Depends on the term doesn’t it.

Introvert
Introvert
February 7, 2023 12:36 pm

Talking about worker shortages: How is everyone’s CRD blue box pick-up going?

The service has been poor for many months now. I reached out to Colin Plant, CRD chair, a little while ago about it; he agrees it’s bad, says Emterra is being replaced by a new service provider starting Jan. 1, 2024. The new provider will have 25 trucks vs. the current 18.

So we’ve got a year of bad service left before it might get better.

Dad
Dad
February 7, 2023 12:33 pm

I hope that’s correct. But that assumes that wage inflation will be under control. Why would that be the case with record low unemployment and the pervasive worker shortages that we have?

Good question – wage growth appears to have tapered down to normal-ish levels in the US, e.g., ~5% yoy despite the rosy job reports/unemployment rate. So is there underlying weakness that isn’t being reflected in the robust job numbers? On another note, ~5% wage growth hasn’t been inconsistent with a 2% inflation target in the past. Probably in part, because wage growth is being offset by productivity gains.

Patrick
Patrick
February 7, 2023 12:20 pm

Are most debtors having an easier time of things compared to two years ago? How come?

I’d rather have borrowed money at 0.5% two years ago, than loaned out money at 0.5%. The valuation on your bond investments should tell you that.

Arrow
Arrow
February 7, 2023 12:10 pm

trying to dance

OK, lets dance.
If you wish to answer the original question then direct your comments to he who asked it.
You seem to be responding to me & and my comment that, inflation helps debtors and harms savers. A very broad view, I’ll admit.

James Soper
James Soper
February 7, 2023 11:56 am

Are you trying to be difficult? I mentioned a debt with a fixed interest rate, not a new debt or renewed debt agreement.

No, I’m just answering the original question instead of trying to dance around it for specific cases.

alexandracdn
alexandracdn
February 7, 2023 11:42 am

Talking about worker shortages: How is everyone’s CRD blue box pick-up going? Is it picked up on your scheduled day? Just wondering because ours is rarely picked up on the scheduled day and often, such as last pick-up day, not at all. Any complaints out there? Thanks.

Arrow
Arrow
February 7, 2023 11:41 am

won’t be talking about inflation anymore

Roubini and others are suggesting that Stagflation will soon be the topic of the day.

VicREanalyst
VicREanalyst
February 7, 2023 11:40 am

Anyone have a rough number on how much additional monthly take home (after tax) an 80k BC government employee would take after the 0.25 cents + 3.24% adjustment + 6.75% adjustment? Curious how this plays into affordability, must have a small dent.

I am guessing ~$5k extra take home going from $80k to $90k accounting for increased CPP and EI, not sure what impact on union dues . Is that enough to offset the increases to other none shelter related inflation though? I have no idea.

Patrick
Patrick
February 7, 2023 11:32 am

[Do you know James Soper at all?]
I’m beginning to.

Better be careful, or James will (pretend to) block out your messages 🙂

Patrick
Patrick
February 7, 2023 11:29 am

that keeps up, we won’t be talking about inflation anymore by about June. No guarantees it will keep up, but definitely tells a different story than the headline number.

I hope that’s correct. But that assumes that wage inflation will be under control. Why would that be the case with record low unemployment and the pervasive worker shortages that we have?

Arrow
Arrow
February 7, 2023 11:27 am

Do you know James Soper at all?

I’m beginning to.

Whateveriwanttocallmyself
Whateveriwanttocallmyself
February 7, 2023 11:16 am

As for writing an offer under a million and then having a side deal for the appliances. Developers can also not complete the landscaping which would be up to the new home owner to complete to lower the cost. Definitely many ways around the issue.

This is similar to what is known as a key fee or key money. You can google it. It’s a bit of a grey area.

When it comes to residential mortgage lending the lenders are not that sophisticated to pick up on concessions or key money in the contracts. It becomes a larger issue when they are lending at 95 percent then with the GST, concessions, or key money they could be lending at greater than 100 percent. Frankly, I don’t think most lenders care, they just want the deal to go through.

Introvert
Introvert
February 7, 2023 11:08 am

Are you trying to be difficult?

Do you know James Soper at all?

2wheels
2wheels
February 7, 2023 11:00 am

@leo any chance you could start including a second weekly numbers table that breaks out SFH data?

Arrow
Arrow
February 7, 2023 10:48 am

because their interest payments have gone up significantly

Are you trying to be difficult? I mentioned a debt with a fixed interest rate, not a new debt or renewed debt agreement.

Caveat Emptor
Caveat Emptor
February 7, 2023 10:47 am

Buy 6 donuts, no GST, because that’s a “grocery”.

Best consumed half a dozen at a time anyhow.

James Soper
James Soper
February 7, 2023 10:41 am

Inflation usually accompanied by wage increases. a debt with a fixed interest can then be paid with higher value income dollars.

The answer was no, because their interest payments have gone up significantly.

Arrow
Arrow
February 7, 2023 10:23 am

How come?

Inflation usually accompanied by wage increases. a debt with a fixed interest can then be paid with higher value income dollars.

James Soper
James Soper
February 7, 2023 10:14 am

No guarantees it will keep up, but definitely tells a different story than the headline number.

The story it’s telling is that it’s been a mild winter, and oil prices have gone down. Hot summer & oil companies not investing any of the money they made into new production might throw a wrench into that equation.

James Soper
James Soper
February 7, 2023 10:10 am
 the balance owing on homeowner mortgages is also dropping. 

Guessing Patrick since it’s not outright hostile, don’t know why you continue to reply to me when you specifically asked for me to block you.
Balance owing would be dropping, so long as the interest rate increases hasn’t actually made it worse. Some people will be paying more per month, and actually paying less off their principal.

Dad
Dad
February 7, 2023 10:06 am

Mostly flat with 6% inflation is still dropping my friend.

Annualized inflation over the last 6 months = 2.8% seasonally adjusted, 0.1% unadjusted. If that keeps up, we won’t be talking about inflation anymore by about June. No guarantees it will keep up, but definitely tells a different story than the headline number.

Marko Juras
February 7, 2023 10:00 am

You are going to see a substantial increase in the pace of sales from now until at least end of March. I guarantee it.

I was factoring in seasonal trends….even with those accounted for I think you’ll be surprised at the market pick up come Monday. Who knows everything might crash and burn in April but right now its busy on the ground.

patriotz
patriotz
February 7, 2023 10:00 am

Yep, inflation helps debtors and harms savers.

Are most debtors having an easier time of things compared to two years ago? How come?

Patrick
Patrick
February 7, 2023 9:57 am

If you would like another example, when the GST was introduced there was an exemption for restaurant meals below $7. This resulted in a proliferation of $6.99 lunch specials. Anyone else remember those?

My favorite GST example is still in effect today. Buy one donut, pay GST as a “snack”. Buy 6 donuts, no GST, because that’s a “grocery”.
Maybe donut purchases get “bunched up” at 6, like house sales under $1 million 🙂

Arrow
Arrow
February 7, 2023 9:55 am

the balance owing on homeowner mortgages is also dropping.

Yep, inflation helps debtors and harms savers.

Patrick
Patrick
February 7, 2023 9:47 am

[house prices] Mostly flat with 6% inflation is still dropping my friend.

By that reasoning, the balance owing on homeowner mortgages is also dropping.

Marko Juras
February 7, 2023 9:30 am

Compared to when the median was higher. Median moves down and more sales will fall under a million

Median is the highest it has been in 5 months.

Your fellow agents are losing faith in the rally:

Let’s leave this discussion to the next Monday numbers. Feel free to call me out if you don’t see a substantial increase in pace of sales at that point.

Introvert
Introvert
February 7, 2023 9:07 am

If you would like another example, when the GST was introduced there was an exemption for restaurant meals below $7. This resulted in a proliferation of $6.99 lunch specials. Anyone else remember those?

No, most of us were in elementary school at the time.

James Soper
James Soper
February 7, 2023 8:35 am

Your fellow agents are losing faith in the rally:

I like how Jesse Klein is trying to rationalize in his subsequent tweet.

I’m thinking prices will be mostly flat through the Spring.
Still a big change from mid last year, when prices were in free-fall.

Mostly flat with 6% inflation is still dropping my friend.

VicREanalyst
VicREanalyst
February 7, 2023 8:13 am

I think $5k+ a month on realized housing costs for new buyers puts lots of families on the sidelines.

Marko Juras
February 7, 2023 7:55 am

For the survival of agents it’s sales volume that really counts, and despite a sales slowdown, high prices kept that strong last year.

Second highest sales volume on record last year. This year most likely we will have the 6th highest sales volume on record even if the number of sales dive off a cliff to 5,000 (which would be an all time record low and unlikely). Throw in the fact that the consumers are not demand lower commission business models there is enough commission dollars to go around assuming these dollars were evenly distributed, which they are not. We will lose 100 agent by the end of the year and be around 1500 active agents. It takes people a year +/- to become licensed so that is why you haven’t seen number start to drop yet.

Marko Juras
February 7, 2023 7:41 am

Anyone have a rough number on how much additional monthly take home (after tax) an 80k BC government employee would take after the 0.25 cents + 3.24% adjustment + 6.75% adjustment? Curious how this plays into affordability, must have a small dent.

Marko Juras
February 7, 2023 7:38 am

I’m keeping a close eye on over-ask sales. If the market is going to pick up a bit we’ll likely see it there first. There has been a bit of an increase since the end of last year, though I would want to see a sustained reading of 15% or higher before really calling this anything.

It has picked up, a lot. Wait for the numbers next Monday, I think you’ll see the anecdotes finally translating into the numbers. It is a surprise to see, I thought things were going to be a lot worse given 5% interest rates. I can’t imagine the chaos if rates started dropping.

Last week I mentioned that we’ve seen more houses available under the one million dollar mark as prices have declined over the past 10 months.

Not sure what you mean, SFH core freehold under $1 million is half the active inventory there was four months ago?

Marko Juras
February 7, 2023 7:32 am

Re bunching @ a million there are maneuvers where you can bring the price down to 999.9k even thought the sale price is in reality higher. For example, if the seller doesn’t want to come down below $1,010,000 and the buyer wants to pay $1,010,000 but the down payment is the problem just separate out the chattels (appliances). Write up the contract as $999.9k not including appliances and add $10,100 to be paid via statement of adjustments on completion. I’ve never had this come up as an issue with a lender. It has to be within reason, that last time we did 10k it was a house with a suite and all new appliances. Paying 20k for 15 yr old appliances wouldn’t be legit.

I use to exclude appliances a lot 10 years ago when starter homes were around 425k (PTT cutoff at the time). I remember calling the province at that time to verify it was acceptable practice and they confirmed PTT payable on fixtures, not chattels. Brought a number of contracts down from 430k to 425k to skip the PTT completely. Just think of all the millions the province has collected in PTT on chattels over the years and continues to do to this day as 99% of contracts include appliances.

patriotz
patriotz
February 7, 2023 7:00 am

Looking at Teranet 2014 saw a slight drop in the index and a drop in sales volume for Vancouver. REBGV average price for detached declined from about $1.4 million to $1.2 million. But I don’t have data for price brackets.

VicREanalyst
VicREanalyst
February 7, 2023 6:27 am

Does the cheaper insured mortgage rate at less than 1M play into this also?

Frank
Frank
February 7, 2023 5:21 am

Thanks patriotz, time sure flies. Was there a “bunching” effect back then?

Frank
Frank
February 7, 2023 4:33 am

When did the requirement for 20% down payment on property over 1 mil come into effect? I am aware of it existing, just can’t remember when it was implemented.

patriotz
patriotz
February 7, 2023 4:15 am

Maybe it is time to adjust the barrier points to account for inflation.

Making financing more accessible makes housing more expensive.

patriotz
patriotz
February 7, 2023 3:55 am

If you would like another example, when the GST was introduced there was an exemption for restaurant meals below $7. This resulted in a proliferation of $6.99 lunch specials. Anyone else remember those?

Josh
Josh
February 7, 2023 12:32 am

Crossing below that threshold drops down payment requirements and opens up the market to buyers that don’t have at least $230k ($200k down payment + $18k PTT + $2k legal) lying around.

200 + 18 + 2 = 220 🙂

Whateveriwanttocallmyself
Whateveriwanttocallmyself
February 7, 2023 12:08 am

If I were to throw out an opinion as to the bunching effect it would be that it may illustrate that the market is transitioning from a balanced market to a market more in favor of buyers. Buyers having more negotiating power than they had previously.

We may see a bimodal distribution in the months to come which may indicate that there are two different groups of buyers.

Barrister
Barrister
February 6, 2023 9:50 pm

Maybe it is time to adjust the barrier points to account for inflation.