March: Slow sales & tight supply, plus housing reforms
March is a wrap, and the situation remained substantially the same as in February. Sales are still historically slow for this time of year, but sellers are uninterested in playing ball with new listings trailing the year ago level throughout the month. New lists were off only 8% from last March in the end, but that was enough to put us near the bottom for the pace of new listings in the last 20 years.
Sales were down by 29% from the already mediocre March of 2022, which also puts them in the bottom quarter of sales for this time of year.
Shown another way, on a seasonally adjusted basis we remain at the slow levels we’ve been at for the better part of a year.
Inventory is creeping upwards quite slowly. Seasonal adjustment has some trouble with endpoints so this chart will move around slightly every month. However it’s clear that we don’t have a strongly increasing trend and we remain at half the inventory of the last true buyers market a decade ago.
Months of inventory continued the drop from February, and the sales to new listings ratio rose somewhat. Both indicate a market moving more in favour of sellers, though the sales to new listings ratio remains quite weak.
Prices in response have bounced slightly since the low this fall.
If we look at sales relative to assessed value, it’s essentially flat for the first three months of 2023, with potentially the start of a small uptick in March.
It’s clear that prices are neither dropping nor are they taking off right now despite the low months of inventory. However the market can only resist these tight conditions for so long, and the relationship in this chart will not be suspended forever. If we are to have stable prices or a return to price drops, we need more listings to come on, and soon. If that doesn’t happen we should expect at least a small increase in prices in the immediate future.
Housing reform (plans) arrived this week
Meanwhile more parts of David Eby’s housing platform landed today. Amongst other actions, the new “Homes for People” plan announced plans by the government to:
- Abolish single family restrictive zoning in “most areas” of the province and allow 3 or 4 homes per lot, with additional density near transit
- Build another 4000 units of student housing
- Implement a flipping tax for properties bought and sold quickly (within 1-2 years according to earlier messaging)
- Give more power to municipalities to restrict short term rentals
- Increase funding for non-profit homes
- and build 10,000 homes near transit.
What will be the impact on the real estate market? First of all, nothing. These are plans not legislation, and a lot of the details remain in the air, with legislation at least for the province wide upzoning promised to come in the fall. Don’t expect much concrete before the end of the year, but it does signal the direction of housing policy for this administration. Let’s take a brief look at each of these policy recommendations and the potential impact if enacted.
- Abolish single family zoning – Assuming the legalized forms are buildable, this could substantially increase the supply of ground-oriented units such as townhouses or multiplexes in the medium and long run. Unless this legislation is carefully constructed, it could easily be kiboshed with parking, setbacks, or height requirements at the local level, however it seems that at least the government is aware of those challenges and is trying to address them. David Eby stated “We’re going to set minimum standards. The process for building the housing that we need needs to be the same as building a single family house. It needs to be just as easy to build affordable attainable middle income housing as it is to build the most expensive housing”. If that sentiment made it to legislation it would actually go further than current missing middle policies like in Victoria, where multifamily housing still has additional hoops and costs compared to single family housing. Levelling that playing field would go a long way to encouraging more redevelopment in the multifamily direction and increase selection and affordability for those homes.
- More student housing – This is a measure I’ve long felt was overlooked by governments and I’m glad to see it included here. The land is already there on campus, neighbourhood opposition is usually muted, rents can pay for costs in the long run, and every unit of on-campus housing reduces the pressure on the broader rental market while reducing traffic and emissions from commuting students. I hope the target of 4000 new units (in addition to the 8000 already built or underway) continues to get ramped up. In the long run if there is sufficient housing on campus there would be less demand from investors to buy up housing near campus for rentals.
- A flipping tax – Though described as a large component of rising prices in the announcement, the reality is flipping properties likely has a net zero impact on the market in the long run. During price runups flippers can add demand and increase price pressure, but when the market stalls out they also bail and add to downward pressure. In Eby’s fall platform announcement he stated that any flipping tax would come with plenty of warning to allow flippers to sell their property before the tax takes effect. Flipping transactions are usually just a few percent of sales and a tax with the inevitable exemptions for life events will likely not make a noticeable impact. The biggest value here is to add balance to the more significant supply side measures and gain support from those who believe speculation is the reason for our high prices.
- Short Term Vacation Rental Restrictions – No details were announced here, but previous messaging indicated it would be forcing vacation rental platforms to share data with municipalities. That’s something I called for last summer, and it’s good news for any municipality that wants to restrict short term rentals without dedicated as much staff resources as Victoria has had to do to pursue unlicensed units one by one. It won’t make a huge difference, but region wide it could bring back several hundred to a couple thousand homes back to the long term occupancy market. Long term we need to address the shortage of short term rental / hotel space for tourists too though.
- More non-profit and transit proximate homes – Though the government can’t build at the scale necessary to solve the housing shortage, we know that the market will never produce homes affordable to the lowest income segment of society. That’s where an increase in non-market homes is required, and the non-profit sector seems to be pleased with the measures. These homes are likely to be rentals and if they actually get built should help relieve some of the intense upward pressure on rents we’ve been seeing in the province.
Of those measures, the biggest potential impact comes from the upzoning for missing middle. Though it isn’t likely to be enough for Vancouver (they need 6 storeys, not 4 units), it has the potential to add a lot of family suitable housing in our region that is dominated by single family zoning. It’s not likely ambitious enough on it’s own and there are plenty of ways the implementation could be bungled, but at least the government is barking up the right tree now. If successful, we should see a big increase in the construction of row units (orange on this chart) that have historically been a very small part of our market.
It will be interesting to see how the municipalities react in the coming months, with carrots from the federal government on one side and sticks on the provincial side in the form of minimum standards. Council conflicts ahead.
Such a seemingly simple phrase Highest and Best Use. Yet it is one of the more difficult concepts to learn. Sauder School of Business allots some 15 hours of instruction time to teach this concept and at the end only half the students will have grasped how to determine it.
And in my opinion, this is where most of the proposals to provide missing middle housing will fail. Upzoning a property is just the first step in determining HBU and not the most important. You could blanket zone an entire neighborhood for four suite homes but if the proposed buildings do not result in their HBU, not a single one will be built.
No, I’m referring to the property being taxed for the “highest and best use”, as described below. So if your house had a large lot, with potential for a large apartment block, you’d be assessed for the potential. That doesn’t mean the tax is based on there being a built apartment block, just the potential. Yes, that could be similar to market value, but city of Vancouver says that BC assessment is based on the best use, and doesn’t say market value. which might not be the same. Market value is based on actual sales.
This is the “highest and best use” method they use. Note that they could have dispensed with this 10 page description of their method if they just based it on “market value” as you say https://info.bcassessment.ca/services-and-products/APPs/Highest-and-Best-Use-Interim-Use-Policy.pdf
https://vancouver.ca/home-property-development/commercial-sub-class-tax-relief-proposal.aspx
‘We recognize that some small businesses and other commercial tenants in the arts, culture, and non-profit sector are struggling to pay high property taxes passed on by their commercial landlords.
Causes of the higher property taxes
Property is assessed by BC Assessment at its “highest and best use”, meaning development potential—even if it is not yet built—is taxed in BC.
Real estate speculation and other factors, such as zoning changes, have driven up land value significantly in some areas.
Under “highest and best use”, land with a single-storey commercial building on it may be valued as if it were built out as a multi-storey residential tower.
Most commercial property owners are passing on the increased cost of property taxes to their tenants through triple net leases.’
Patrick It’s looking like commercial real estate is becoming a thorn in the sides of banks
BC Assessment Act specifies that assessments are at market value (section 19.1). The term “best use” does not appear in the Act.
If what you mean is assessing the property as though it had the maximum permitted structure, that’s de facto a land tax, which I think wouldn’t be a bad idea. But I don’t think that the Act will be changed to say that.
Nope. Market value.
Strong signs in the USA of a credit crunch, at least for small businesses and real estate developers. Likely fallout from the regional bank problems, and expected to cause problems for small businesses and real estate developers. Likely higher mortgage rates too.
With a credit crunch, we would see high interest rates for loans and mortgages, even if inflation has fallen. Ouch!
In the last two weeks, there has been:
– a sudden drop in small bank real estate loans (see chart)
– A sudden surge in interest rate charges for small business loans ( from 7-10%, to 20-30%), as described here by Kevin O’Leary https://www.cnn.com/videos/business/2023/04/11/small-banks-hard-to-borrow-money-kevin-oleary-cnntm-vpx.cnn
Hopefully people are just allowed to do what they want with their own property and the zoning allows them to do it (of course some rules on industrial/commercial vs. reseidential considerations). Banning SFD detached housing through zoning is as narrow minded as banning multi-family housing through zoning. Ideally, people should stay out of each other’s way and not try to impose their likes, dislikes and preferences on each other. Don’t like what someone wants to build on a lot, well, you can buy it and build what you want there instead. However, if SFD zoning is banned, well that will really spike demand and the price on the remaining stock…. Doesn’t really do much on bringing that cost. The more people try to engineer specific outcomes with complex processes, the more inefficiency is created and end in the complex process just engineering failure. Oh government….
I don’t expect an outright ban on SFH density. But I wouldn’t be surprised to see property taxes rise for SFH based on “best use” of the property. That already happens for commercial real estate, where if your small property is suitable for a huge office, you can get “smoked out” of it by huge property taxes.
Of course we don’t have this “property tax based on best use” yet for SFH zoning. But I expect that many HHVers and “density advocates” here would be in favour of it.
As long as it has exemptions to insure that it won’t apply to them of course 🙂
I have used Russ McCarthy, and two others when Russ wasn’t available for pre-offer inspections. Russ was the best them.
Russ McCarthy from Barnes and Company is probably the best inspector in greater Victoria, imo.
I’m looking for the name of an experienced home inspector who is very through to inspect a 50’s home for a pre purchase in Oak Bay for a friend.
City of Vancouver rezoned just about all SFH areas as duplex some years ago and I haven’t heard about anyone having problems remodeling their SFH.
I just read something today on daily hive -April 6 that mentions “minimum” density in certain areas and even greater minimums in high use transit areas due to the proposed rezoning in BC. What does that potentially mean could happen if a SFH owner wants to rebuild or remodel the home they own in the future and not increase density? Would they get shot down and told to increase their density? It’s one thing to say anything goes up to four units but another to say you have to have two or three or more if you’re applying to make a change to your property? We’re not heading to a New Zealand model where SFH zoning will be abolished are we?
Why not just give someone your bank card and PIN number?
Today’s scam of the week…..
From: https://www.ctvnews.ca/business/there-s-a-new-way-to-finance-a-home-down-payment-but-one-expert-says-it-s-risky-1.6349044
I would say things like this should be illegal, but I think we have enough of a nanny-state mentality in Canada already and it’s also morally wrong to let a sucker keep their money.
You might want to watch a few “Judge Judy” shows first. I wouldn’t expect that you’d get the full replacement costs for old appliances or 20 year old carpets. But we don’t know what kind of damage was done or if it were accidental or intentional.
Some times you just have to suck it up as a cost of doing business. Depending on what kind of damages, you might get to write it off in one year or reduce your future capital gains. If the damages are $10,000 that would only add $60 a month in financing. So how much do you think you can raise the rent before the tenants walk on you?
Might be time to start looking for a new tenant, because your tenants are probably going to be looking depending on how much you raise the rent.
Insurance doesn’t cover intentional damage and often does not cover damage caused by neglect. A lot of tenant-caused damage falls into those two categories.
Putting in a claim for tenant damage will cause your rates to skyrocket. Not really an option.
Landlord Insurance Policy or the Tenant’s Insurance policy.
Are all of the tenants named on the tenancy agreement? If yes, they should all be cc’d on issues of damage and costs to repair. If not, then the named tenants should be – they are jointly and severally liable for tenant damage.
Are they continuing tenants? If so, the damage is payable as rent if this is set out in the agreement and not paid immediately. If the tenants don’t pay within a reasonable time the Landlord can seek a monetary order through dispute resolution under the Residential Tenancy Act for the cost of repairs, serve a notice to end a tenancy, or both.
If the tenants are leaving you can make an application to res ten to retain the damage deposit and a claim for anything over this amount as damages.
Make sure you retain proof that it was not damaged at move-in (report & pics) and take pictures of the damage and post repair.
https://www2.gov.bc.ca/gov/content/housing-tenancy/residential-tenancies/apply-online
I’m not entirely sure how much is standardized. The CRD did a bunch of the reports for local munis and they all look the same, but which methods are required I don’t know. The provincial opening doors report criticized the reports for relying too much on projecting past trends into the future which doesn’t capture unmet need, but the method to determine the final need is based on more than that. Some kind of estimate of household formation I believe
The UBC HART project is looking to provide standard methods but i don’t think any of the existing reports use them https://hart.ubc.ca/
URGENT QUESTIONS: I have tenants who caused damage to my rental property in Fernwood. One of the group agreed to pay for the damage. Am I as landlord required to provide any of the 4 tenants quotes from different contractors? Or can I just go ahead and get the work done and provide them with a receipt? And, if one signs the inspection report, when does it have to be provided to the others?
Any landlords out there?
https://www.bikeattorney.com/bike-accident-common-causes.html
https://cyclingmagazine.ca/sections/news/in-2020-major-canadian-cities-saw-no-reduction-in-cyclist-fatalities/
Homeowner has nothing to fear, because they still have to live somewhere.
I completely agree, and also ban motorcycle, bicycle, skateboard, roller skates, and inline skates.
As an avid cyclist, I agree that you are absolutely right that car culture is going away.
But, is it a right thing to do by remove the road to increase traffic load and make way for low traffic bicycle lanes in our environment and topography that aren’t ideal for cycling?
Just because our friends are jumping off the bridge, it doesn’t make us any smarter or braver to jump off the bridge too. In fact, many cities/countries in the world banned or planing to ban 2 and 3 wheelers on their streets to eased congestions and recklessness (from the top of my head, China, UK, and Vietnam.)
Leo, how do municipalities determine their housing needs (for the Housing Needs Report)? And is there a standard methodology for determining this, or can each municipality invent their own?
They also have better drivers there w/r to bikers. Maybe it’s that they actually get more than a token fine for killing someone on their bike? Drivers here are pretty ridiculous sometimes.
Hold
Yes. For example, Lochside trail + galloping goose is a nice path entirely free of traffic for most of the way from Saanich to downtown. Pure fun, great exercise and no splats or curb-plunks!
Yeah, agree it depends on the individual. Someone who is sedentary maybe, but for someone who is exceeding the health guidelines for exercise already it seems it does not. And the health benefit for cycling can also be offset if you are cycling in a polluted environment. It is not just about dying for me, it is about getting injured. If you have a pretty safe route in Victoria with backroads and bike lanes/paths that seems fine to me – just not my situation.
Do we think rates will hold? Or possibly raise?
https://globalnews.ca/news/9611953/canada-interest-rate-april-2023-preview/?fbclid=IwAR0pCN0rt9ZnaUMb2zbfoyoauapBSmTVgBY9VazVz5cUJA5_ddyBYhafHG8&mibextid=tejx2t
On a population basis the longevity benefits of cycling exercise have been demonstrated to outweigh the risk of being splatted by a vehicle. But admittedly you can’t really make that inference for each individual. Plus you can get the exercise benefit in other ways – though many don’t.
It is pretty high. We both commute by bike but largely on either back roads or protected separated paths.
I’m ok with the risk of bicycles for the exchange of the easy commute but I did sell all my motorcycles before we had kids.
I expect Victoria numbers are less per capita than ROC, but still big numbers of serious injuries.
https://globalnews.ca/news/6953000/cyclist-safety-southern-alberta/
“ According to the Canadian Automobile Association and Statistics Canada, around 7,500 cyclists are seriously injured in Canada each year, with most crashes and incidents occurring during the afternoon rush hour.”
I made the choice not to ride a bicycle on Victoria roads based on the risk of injury from vehicles, whatever the cause, after reading a bunch of NA stats. Maybe the new bike lines solve this for some – way lower rates of injury/death in Holland and Germany which do have better cycling infrastructure.
Noticing some shorter DOM and sales above ask. Marko are you seeing this on the ground?
Claims that cars are taking 100% of the space are disingenuous.
Also, a lot of the space is shared with water and sewer mains.
How would you feel if those were typically located under sidewalks, necessitating occasional closures for maintenance?
I think the “happy” mostly refers to being satisfied with the issue being solved. Not whether they’re happy with life in general.
Since most HHVers (including me) don’t like NIMBY activists unreasonably blocking housing developments, let use them as a good example of “some activists are never satisfied”. Haven’t we all seen NIMBYs object to a development, but when their concerns are addressed they keep coming up with new objections? Doesn’t it seem a reasonable statement to say that in that case “some activists are never satisfied”?
Generally speaking yes. However there are some so called e-bikes that fall outside of B.C.’s legal definition and these ones are not legal on bike paths or bike lanes AFAIK.
The only localish bike infrastructure i have seen where e-bikes are banned is certain mountain biike trails
There’s peer reviewed literature on the cause of bike/car crashes. Possibly more credible than “motorbiscuit”
I’d like to see the studies on that. Anecdotally I know several people that I would consider activists who also seem very happy.
Yes! Let’s have more government regulations! Just for the fun of it!
Thanks for the feedback as my comment was snarky.
I see this very blog as activism. Reading it has helped inform my opinions regarding affordability, the murkiness of the real estate industry and what could be real solutions to a complex issue. I don’t know if Leo wants the title of Activist, but I see his work that way.
I personally celebrate activism even though that doesn’t require me to be passionate about every cause. It’s great to see individuals who spend their time working towards positive social change – protected bicycle lanes included.
Tend to agree, with two caveats:
“What matters is recognizing reality and where cities are going, which is to reallocate some space and policies from optimizing for cars to optimizing for pedestrian, cycling/rolling, and transit.” and densification. That’s why I think single family will go back to substantial increases in the not too distant future. The house we bought has a huge backyard and so does the one next to it. The municipality wanted to put townhouses here before the upzoning. Now with upzoning investors will be looking at every single family with a decent sized lot for densification opportunity (not just ours). I personally wouldn’t buy something on a tiny lot whose value is already maximized, but buying a home with land seems – especially if one plans to keep it for 5+ years – seems like a no brainer.
Not sure who that “you” was directed to, but I’ve got nothing against more bike lanes, sidewalks and mass transit. I hope they close off more Victoria downtown streets to cars completely, like they do for the “old city” parts of European cities.
How any given individual sees the world is entirely irrelevant.
What matters is recognizing reality and where cities are going, which is to reallocate some space and policies from optimizing for cars to optimizing for pedestrian, cycling/rolling, and transit. In most cases cars still have the vast majority of road space but going from 100% to 80% feels like a big change
You can get mad about it or accept it as something that is happening in nearly every city because everyone is realizing you can’t move everyone by private vehicle. It’s not a Victoria thing, it’s a global thing.
As a general comment, I’ve noticed a deterioration in the HHV comments section. Some posters attempt to rebut someone by only saying one word. “Laughable”, “Hysterical”, “LMAO”, “ROFL” etc.
There’s nothing wrong with using terms like that, if they are also accompanied by the courtesy of at least one sentence describing the reason you are “rolling on the floor laughing”. But on HHV lately, often all we get is these lazy, one word utterances (as above), with nothing to back them up.
2wheels,
There’s no need for QT to “reflect on how he sees the world”.
Lots of other people/articles have commented that some activists are never satisfied (happy).
There is a well described “perpetual discontent” among some activists, regardless of the progress made in their cause. Psychologists have attributed this to various things like the activist’s psychological makeup (negative affect), risk of losing identity/purpose if they lose their “cause”, perfectionism (won’t be happy until things are exactly what they want), and moral licensing (their “good behavior” as an activist entitles them to “bad behavior” in other social/moral areas).
Now against my explanation above supporting QT’s statement , we have your one word comment (“laughable”). 2wheels, how about you actually read something on this topic?
When you’re done, perhaps you will be able to come back to us up with something more literate than one word (“laughable”) to characterize QT’s statement.
Like telling us reasons why you find his statement laughable.
“ says Oak Bay Mayor Kevin Murdoch.”
Province’s housing program short on detail and direction, some mayors say
https://www.timescolonist.com/local-news/provinces-housing-program-short-on-detail-and-direction-some-mayors-say-6827936
“That is the problem, activists are never happy” Leo, please put this one up on the HHV quote wall of fame.
I encourage some reflection on how you see the world QT. Laughable.
Are ebikes allowed to use bike lanes?
But drivers are at fault in 100% of car-car crashes.
Obviously they are talking about bike-car accidents, not all accidents.
Also note that pedestrians are making up an increasing % of traffic fatalities. Drivers and passengers of cars have increasing levels of protection (e.g. air bags) while cities are becoming less pedestrian-friendly. And of course, they are also a lot friendlier to cars than to bikes, so it’s harder for the latter to obey all the rules.
Perhaps bikers should have to go through a defensive riding course and have a riding license, plus carry bike insurance. Because, it would place the onus on the person/s that cause the accident.
That is the problem, activists are never happy.
https://www.motorbiscuit.com/what-causes-more-accidents-bicycles-cars/
Wait until a bicyclist hits one of the concrete barriers. That’s when the howling will start.
Yes depends on the municipality but around May usually
Happy Easter to those who celebrate 🙂
When do Property Tax notices come? Only issue once per year in Victoria … is that correct?
Conditions off April 13th
1215 Oxford: Pending $1.63M
If simple interest rate is s over n years, equivalent compound rate r will be:
r = (1+s*n)^(1/n) – 1
The bigger n gets, the larger the difference:
s = 0.05 n=10 r= .041
s = 0.05 n=20 r= .035
Also looking for a sold price on the 1200 block of Oxford this past week. Thanks in advance (too)!
Anybody know what 1735 Townley Street sold for?
Thanks in advance!
That means the true interest rate is lower. I’ll take a look at the math and come back.
Of course like any lending against property there is a risk of default. But as long as prices keep going up, that doesn’t manifest itself.
What’s the seniority of the deferred taxes against existing mortgage debt? As whatever pointed out, mortgage lenders aren’t going to be too happy with any lien senior to their own.
Since these rates are close to market, this illustrates that the deferral program isn’t costing the BC government much money if anything. They are likely borrowing the money at cheaper rates than that, and the amounts involved aren’t big enough to affect their overall borrowing ability or credit rating. There can be valid reasons to oppose tax deferral, but the cost to the government isn’t one of them.
I don’t think anything has actually changed relatively. It was like 1.x% before and GICs were paying 2% and now it’s 4.45% and GICs at 5%.
Also simple interest on the deferral
Dunno, but I believe the vote to continue the rapid buildout was unanimous
Yes it is.
Where are Chambers and Brownoff?
Protected bike infrastructure is good
Not sure what to say about this council.
If you still have a mortgage, ALWAYS speak with your lender before you defer your property taxes.
FYI: BC property tax deferment interest rate is 4.45% for seniors and 6.45% for families, from April 1st to Sept 30th 2023.
So property tax deferral might not be as good a deal as before, unless one has investments with better after tax returns, or couldn’t afford to pay.
@sidekick when we posted ours only on Craigslist got a few responses then put it up on facebook marketplace and there was a tidal wave of applicants. So, if you’re seeking a rental you may have less competition if you look at places like Craigslist, however, if you’re posting a rental I’d go for facebook marketplace.
Which websites are people using to advertise rentals?
Equating knowledge about what the competition is charging with collusion is a misunderstanding of how markets work. One of the biggest barriers to strong competition is lack of insight into what others are charging. That is why most companies try to hide their pricing from competition if they can and hidden discounts and rebates are illegal in certain markets since they are anti-competitive.
For example one of the biggest benefits to farmers in Africa of cell phones was to gain knowledge of what their goods were selling for in the city markets. This allows them to sell their products at market value without being solely reliant on what middle men were willing to offer them.
Some people seem to believe that sellers charging what buyers are willing to pay is wrong if the seller makes a profit. True sellers will charge more if they can, and there most of the time there is no reason they should not (otherwise middlemen will). However, giving sellers more insight into what buyers are willing to pay, causes prices to drop if there is abundant supply and in an efficient market should encourage new supply to be added if potential sellers see the profit that is available to be made, which should increase supply.
Better investment for sure, but don’t want to spend my time dealing with too many SFHs investments. Looking for one or two but only for missing middle development purposes.
Condos are kind of cool, imo, as tenants typically are smart enough not to phone me if elevator is down or garage gate is broken and they can’t get out. It’s very hands off especially these days with e-transfer for rent.
Barrister- There’s only one thing worse than a fire on a boat, a fire on a plane. I’m sure they would have a sprinkler system, but it would be totally ineffective. Hopefully underground parking areas would have their own fire hydrant. A fire truck simply could not access underground parking.
Interesting. If I was going to bet on anything I’d be betting on detached aka land.
Looks like a ‘no’ to that. When faced with a minor car battery fire, they turn the ferry around, return to shore and call the (land) fire dept. like everyone else. (Of course they have extinguishers and a “deluge” sprinkler system if a fire gets out of hand.) https://www.timescolonist.com/local-news/car-fire-puts-ferry-70-minutes-behind-schedule-4614630
Well Frank, I think you have been getting Marko’s goat for quite awhile now.
Are BC Ferries equipped to deal with a car battery fire?
Marko- One of many reasons I would not live in a condo. That’s fine if owners want to charge their vehicles in a condo parking facility (some that are beneath the complex) just carry enough liability insurance to cover the extensive damages that occur when ( not if) one of them ignites and the fire department can’t get to it.
I’m busy this weekend sourcing plans for my chicken coop, luckily I don’t need a permit to build anything less than 10×12’. Anyone know where I can get a couple goats?
Those Ontario markets saw big runups during Covid. What was going on in Prince Rupert?
https://www.theglobeandmail.com/business/article-private-mortgage-lenders-loan-renewals/
Frank is not going to like this….
https://vancouver.citynews.ca/2023/04/06/bc-electric-vehicle-strata-rules/
100% agree. The government should just get out of the way of the free market, let the market build, and then buy the finished product at market value.
However, I have zero faith in this actually happening irrelevant of the NDP announcement. I am going to double down on this. If pricing isn’t insane I’ll be picking up multiple units in future bosa towers @ dockside and then just sit back and rent them out for next 20 years.
From: https://financialpost.com/news/economy/canada-jobs-blowout-economists-view
Come on BoC rate increase for April 12th…
Can I please get an invite to the next rental price fixing confab? I need to up my evil game.
I just asked a colleague from quadreal and they benchmarked some of the cost quotes from Ellisdon to hospital projects currently going on in Vancouver. large scale Infrastructure projects are always challenging though regardless of private or public sector, you just don’t really hear about the issues in Kitmat with LNG Canada like you would with Site C at BC Hydro.
But yes there seems to be a lack of incentive for government employees to work hard and manage contracts appropriately, why would you want to get in a dispute with a contractor when you can just post on HHV all day when the pay is the same. They really need to just cut the chq and not get into any of the project/contract management roles.
I have a friend who works for the government (use to work for a developer in Vancouver but went into government so he could spend time with his kids) overseeing contracts and he says the amount of waste is just sickening. They will replace a roof on a structure only to tear it down a year later and rebuild. One project on the island the government kept doing change orders and the construction company billed another $800,000, which the government paid. The construction company can do this as they know they will get paid. In the private sector they know it is going to be a struggle with the developer to issue insane change order invoices.
There are over 100 people working at DND just in administration overseeing capital expenditures (DCC) at the base I think the budget is around $150 million per year. You have developers doing $100+ million per year in projects with a staff of 4 or 5.
DCC is also opening a new fancy office downtown Victoria with yet more people to oversee expenditures. Why do you think the rental market is so strong?
Actually, I wish the government would develop a few rental buildings so we can see how ridiculous the costs would be.
Maybe on these odd quotes on very small jobs but on large infrastructure projects the private sector also uses government projects as a benchmark for costing, oakridge re-development as an example.
Looks like 1/3 of pending sales in last 24 hrs are at ask or over asking price. Kind of crazy for a slow sales market.
What’s the difference between 1 landlord with 100 units and 100 landlords with 100 units?
The ability of the consumer to negotiate is greater when there is more competition. The landlords of Bob, Ted, Carol, and Alice have to compete against each other to get you as a tenant. If Bob has all the rentals, he doesn’t have to compete at all. You pay Bob’s rent or you buy a tent.
If Carol gets a vacancy and figures she can raise the rent by $50 she would be doing fine . But if she calls up Bob and they discus what the rent should be and then she raises it by $100 – well that’s collusion. However if Carol looks up their web sites and sees Bob has a similar suite for $100 more then that’s the free market.
The same for gas stations. The gas station owner doesn’t have to call up their competition. They just have to look at the advertising board outside of the stations. That’s not collusion – that’s the free market.
The free market system works well in most cases unless their is a scarcity or a perception by the public of a scarcity.
Of course this isn’t economics 101. This is Econ 201, you have to pass the first year course to lean this.
What do you mean, you and I and thousands of other landlords don’t meet in an underground bunker to set rental prices?
And I think the world is flat. I’ll provide zero evidence to support my claim. Thnx.
Isn’t it one of the largest in Victoria?
And mine was that large players set the market.
The problem is the rental apartments would cost more per square foot than a luxury condos.
When I worked for my father in stone masonry I use to do quotes for jobs just so I would get out of mixing mortar for a few hours. When it was ICBC, military housing, inner harbour authority, etc. I would just double or trip the quote and more often than not we would get the work. Muncipal work went to tender but even that we went in at least 50% more over private work.
Multiply the magnitude. There is a reason why the government gets ripped off on infrastructure projects depsite all the consultants.
When it isn’t your money there is no accountability. I’ll repeat this for the millionth time. BC Housing and Chard development are doing a project together on Douglas Street. BC Housing paid $26 million for their hotel teardown and Chard paid $7.5 million for their Whitespot teardown.
I am sure BC Housing hired a consultant (appraiser) but they still got ripped off as no one at BC Housing cares how much they pay. Chard on the other hand has to run a viable business.
I said I undercut the new Hudson rental tower, not that I undercut large buildings. The reason I opted to undercut the Hudson project is they were the only competition at the time as there was no direct individual condo competition.
If there was three individual condos listed on the same street I would undercut them as to me personally quality tenant is more important than top rent.
My point was I price 10% below market whatever that may be as I’ve mentioned may times over the years on HHV.
Public perception affects Supply and Demand. If consumer information about available supply is skewed, the resulting demand is affected as well. One example occurred immediately after the terrorist attacks in New York City on September 11, 2001. The public immediately became concerned about the future availability of oil. Some companies took advantage of this and temporarily raised their gas prices.
There was no actual shortage, but the perception of one artificially increased the demand for gasoline, resulting in stations suddenly charging up to $5 a gallon for gas when the price had been less than $2 a day earlier.
The rental market is an imperfect market in that consumers are only informed on asking prices not realized rents. If the rental market was more transparent perhaps we wouldn’t see huge rent increases.
If you look at Ebay, as an example, you can watch the auction bids come in. That open bidding process tends to keep prices low.
Yep, that’s all we talk about here.
It was an open ended question about 1 landlord owning 100 units and 100 landlords owning 100 units
You being a landlord has literally no bearing on this discussion.
They’ve already brought grocery store CEOs before the house of commons, in the last month no less. Nothing is going to be done by submitting something to that web form. They’ve had 30+ years for Victoria gas stations, your real option is to not use them. Drive electric, ride a bike, don’t buy their stuff. At least Peninsula co-op gives you money back at the end of the year.
is there anything stopping government from hiring consultants to manage these things? All they need to do is cut the chq, if the CRD can deliver an $800 million dollar wastewater treatment plant, can they not build some apartments if they really wanted to?
Unless you actually have evidence I’m not sure why you are raising collusion on rents as, presumably, a local issue given this is a local RE discussion. I as a landlord can definitively say I have zero evidence of this being a factor locally and I don’t see that this could even be a big thing here given the fact that there doesn’t appear to be big market players owning a large % of the rentals. It is not collusion driving up rental places, it is lack of supply and excess demand.
The only big players in the market, and ones I hope to see build lots more units, are government subsidized rental units and university owned housing. Do you have different information?
Gas stations in Canada do sometimes engage in illegal price fixing. Again, here is the right place to raise your concerns about gas stations and grocery stores:
https://competitionbureau.gc.ca/eic/site/cb-bc.Nsf/eng/h_00118.html
They already have a review of grocery pricing in Canada underway:
https://ised-isde.canada.ca/site/competition-bureau-canada/en/retail-grocery-market-study
Victoria is literally the only place of any size that I’ve been to where this is true. Port Angeles is 20 times smaller than Victoria and you can see gas stations within 100 meters of each other selling gas for prices as different as 40 cents a gallon (over 10 cents a liter).
The product is near identical. It should sell at nearly identical price within a geographic area
I’m not presenting evidence, or even saying that it’s happening here, I also won’t go out on a limb and say that it isn’t without evidence. If you read my original remarks I’ve never said that it is happening here.
That was to Marko. You can either go back and see, or he can post them again. He has specifically said he undercuts large condo buildings.
That has never been the track I’ve been on, so…
Where is your evidence of collusion happening in our rental market? I see zero evidence of this. And if you are going to use the definition of “collusion” you should be sure that what is going meets the test that it “is an illegal secretive agreement or cooperation between two parties intending to disrupt market stability”.
Are you talking about some condo buildings in particular? I’m unaware of any big landlords dominating the market here, and certainly not SFH/Townhouses which are primary owned by individuals. And prices here are not set by “big landlords” in my experience, but by what is available at the time you list – by all sorts of landlords.
If you have evidence to support what you are stating, I’d go straight to the Competition Bureau if you would like to see something done about it. If you don’t have evidence then why keep on this track here?
Here is where you can submit your concerns – they specifically deal with illegal price-fixing: https://ised-isde.canada.ca/site/competition-bureau-canada/en/contact-competition-bureau-canada/forms
Same way they do now.
Who’s pretending? There absolutely is a supply problem, that doesn’t mean that others aren’t colluding to raise prices. You yourself use prices set by big landlords to price your rentals, they set the market. Just like in gas and grocery, why is gas the same price in Victoria no matter where you fill up? Because one guy who owns all the Petro-Cans sets the price. Why is grocery making money hand over fist right now? Because they’ve used the supply problems to raise prices because there is no real competition as they’ve bought it all, the big grocers set the price for the small ones. Same way large landlords have used the supply crisis in housing to their advantage.
The discussion was about there being no difference between having 1 landlord with 100 rentals vs 100 landlords with 1 each. Large landlords in the US use software to collude on prices, making more money while keeping more rentals empty exacerbating supply issues. It could never happen here clearly because it would be hilarious to Marko. 100 landlords having 1 rental would likely lead to more landlords bidding on a second place during hot markets, further exacerbating run ups in prices. I wasn’t putting a judgement on which one is better or worse, just saying that there is a difference. This was based on the suggestion that people should have a cap on the number of places they could own, which would negate the issues with the 100 landlords.
Agreed. I haven’t seen any evidence of this actually happening here. Other than rent controls, it seems like we have rent prices set by the free market.
70% of rental housing in BC is supplied by the secondary market (e.g., condo units and basement suites), and most of those are owned by mom/dad, and small time investors like Marko.
I am not sure why there is a discussion going on about price fixing…
This rental price fixing discussion is hilarious imo. So when my parents put their Oaklands suite up for rent and receive 100 inquiries in 24 hrs we are going to pretend like supply isn’t a problem that just might be driving prices up? Common.
Last two units I’ve personally rented in Vic West, military individuals. It doesn’t take a genius mathematician to conclude that the population is growing, the population is finding meaningful employment whether it be military or other, and we aren’t building enough. Just maybe could have something with rents going up and not some software.
That is exactly my point. People losing deposits in their bank or credit union would lead to a true crisis and the government would have to intervene.
Every single person I know should NOT have applied, but everyone qualified under the the criteria for the program. Not sure if it is possible to go after them?
It’s like when I bought my Tesla I got a $5,000 cheque in the mail from the government. Didn’t make sense given I was buying a 6-figure car, but I qualified under the criteria.
That is true. I remember getting multiple prompts from my bank telling me our CCPC qualified & should apply for this, complete with easy steps. Just checked the gov’t website, and a total of $49 billion have been approved under this program. Repaying the balance of the loan by Dec. 31, 2023 can result in loan forgiveness of 33%.
Although in general I think this fed gov’t spends money like drunken sailors, in their defense, at the time, it was a true crisis and gov’t had to focus more on getting money out to people rather than too much red tape to gum up the works. They are now going after excess CERB recipient amounts with some vengeance, so I wouldn’t be surprised to see audit on these other programs as well, and I hope it recovers some portion from people who really shouldn’t have applied to begin with.
Anyways, I never applied for the loan/grant, because I’m a strong believer in karma…the wave of gov’t intervention money was already driving up the stock market/our investments exponentially, so better to leave well enough alone & maybe increase your charitable giving a bit.
The discussion on potential price fixing by large landlords is interesting. Economics 101 says consolidation of sellers leads to price increases. I am not sure Victoria rental market is consolidated enough. Other obvious factors that affect the price are capacity (vacancy), demand (population increase), etc. Canadian cellphone market is definitely consolidated enough. It’s a ripoff.
Looking at the Airlines pricing, their software has enables them to charge the highest price a customer is able/willing to pay for each ticket. Their software monitors the activity of each fare searcher (using IP address, etc.), and the price changes every minute. A sudden increase in searches on a certain route is guaranteed to suddenly increase the price for that route. In the last 10 years, the airlines capacity has not increased, and at the same time, the industry has consolidated quite a bit. For example United acquired Continental, Delta acquired Northwestern, American acquired US Air, America West, etc.
We still refer to developers as building XYZ project, even thought everyone contracts out the physical work to Campbell, Farmer, Ledcor, etc. There is still a lot of know how involved even if you are contracting out the construction to a GC.
It isn’t like government employees built the bridge or the McKenzie overpass, yet it was still a disaster.
So how is the government going to provide government subsidized housing? Buying buildings off REITS? Not sure what that would do as the number of units supply would stay fixed. We need more inventory and someone has to build it. Musical chairs won’t work.
And if all the landlords are using the same software, and those that aren’t set their rental rates based on rates being charged by those big landlords….
When that software is using the data from all the other landlords to set prices, you’ve effectively removed competition from the market, and you get … well, the same thing we get when Sobeys buys Safeway and Thirfty’s.
Police clear encampment from Vancouver’s Downtown Eastside
This is good to see, since it’s been going on for two years, and severely impacting businesses and residents. Of course we hope that this is co-ordinated with social services so that there are alternate options for the homeless that are displaced.
https://youtu.be/qacYKMI1dZQ
lol, no, we have never been talking about anybody building anything. Unless you think mom & pop landlords are actually building things instead of just taking already built houses off the market.
I dont think government is actually in the construction or rental management business. They would hire a third party to do these things like any developer or institutional investor.
Good advice Marko. I already have a cottage a block away from Lake Winnipeg. Lots of fish, deer regularly wander through my yard, plenty of firewood and an endless supply of water from a well. I am lacking firearms and bullets however. After I take all my money out of the banks, I’ll head down to Cabela’s.
Also don’t get on a ferry that has an EV because you will probably die in a raging inferno, while you are at buy an acerage for cheap up island with good south exposure for growing crops.
We are talking about the government building/managing rental stock.
BNN: TD bank is the most shorted stock in North America (not good). They have a lot of exposure to U.S. banks (also not good). If I had any money in that institution, I think I’d take it out today. This could get ugly here, Canada is not immune to banking/currency problems.
Marko, governments (various levels) subsidize housing right now and have for years. Instead of resorting to exaggerated hypotheticals, why not just look into the actual facts. You generally do a good job when you stick to the latter.
Of course the biggest government subsidies to housing are the tax exemptions for owner-occupied housing (both income and property taxes), and government mortgage guarantees, but for some reason we seldom hear complaints about these subsidies.
The government takes a year to process a permit that should take 5 business days. Odds are they would put in an exam required to build subsidized housing the government themselves could not pass. Each subsidized unit would cost more to build than the market price of a luxury condo unit.
Just look at the bridge and Mckenzie overpass, government can’t do s*** efficiently.
COV paid 10 million for a property on Pandora the developer bought a few years earlier for $3.5 million. Province paid $26 million for an old hotel they are tearing down and the adjacent Whitespot Chard Development bought for $7.5 million at a LATER date, in a rising market. Then a report determined the government paid appraised value, lol. A business person would have questioned the appraised value. In any other country I would suspect corruption, here just insane levels of stupidity.
Yes. What’s happening is that these software tools make the market more efficient.
Take a perfectly efficient rental market. Both tenants and apartment managers have complete knowledge of what the options and rents are in their market and make decisions to optimize their own situations (tenants optimize for lowest rate, landlords optimize for highest). As soon as the vacancy rate changes rents change immediately to reflect the change in fundamentals.
Reality is the rental market is not perfectly efficient, and many landlords have only partial knowledge of what people are paying. Sometimes that leads to them advertising rents that are too high and causing units to sit vacant for longer, and sometimes that causes them to advertise too low and get swarmed by applicants.
Software helps provide better information about market rents so it helps them set the asking rate more accurately. But the market still has to support those rents. If the software tells a landlord they should advertise a place for $2000 but similar properties are going for $1800 then their property will never be rented.
Some friends of mine live in a building like that in Seattle, and currently rents are going down. They have been going to ask about the rent for a new lease and it’s been going down every week.
As for landlords abusing tenants by hiking rents 20% on existing tenants because the software thinks they can get it, the solution to that is better tenant protections to smooth rent increases like we have in BC.
It’s possible that a more efficient market will tend to have slightly higher rents because there are fewer uninformed landlords that are taking below market rents. But good luck trying to argue that landlords shouldn’t use data like every other business out there.
The underlying issue is that the vacancy rate in the US is very low and that is causing rent increases
The obvious answer is government subsidized housing Marko ; )
I’ve posted 12 HHV messages in 3 days, that’s 4 messages per day (and less than some others). And that’s somehow leads you to conclude that I’m “posting all day”? What type of feeble productivity scale do you use to lead you to that conclusion?
How about I have at least average productivity, and can crank out a post in <15 minutes. That means at most one hour a day. Probably less. FYI, I posted most of them while watching a slow-moving two hour YouTube tutorial today on something unrelated.
As for the government union job – nope, you’re way off! And thanks for the “side business” suggestion – but I started businesses decades ago that are still going.
If you bought TD at the beginning of April, 5 years ago for $71 you currently have about $8 a share capital gains and you have collected $16 in dividends in the five years.
Very mediocre, but not disastrous.
“Patrick, you know I am always interested in your posts, you get people thinking (me anyway), you are funny and for sure you have a mind boggling amount of general knowledge.
LMAO, man’s clearly got a government union job just surfing and posting on the internet all day. Good for him though, I would probably use the time to start a side business or something instead though.
Nope. There’s $17 trillion cash in us banks, about $7 trillion is above the limit and not insured. And not guaranteed by US government. As I pointed out in a previous post, the expected thing to happen in a crisis is that the bank deposits over $250k in a failing us bank will get converted to stock. With no government bailout. (Dodd-Frank legislation).
The “bailout” of the large silicon bank depositors wasn’t a government bailout, it was provided by the other US banks (who fund the FDIC insurance). Of course who knows what happens in a crisis, but at least in the USA large depositors should be aware that their deposits > $250k are likely to get converted to stock if the bank is failing and needs a recap.
That’s it for me for now on this banks/finance topic. Will resume when the next financial crisis hits….
Well OK. Did you predict the 2008 GFC or the 2020 Covid financial crisis? Neither did I. To me, at least it makes sense to know what the insured limits are, as for many people it’s easy to arrange things so that their deposits are fully insured.
On a side note. The most “shorted” bank stock today – (that investors think will fall) in the entire world is our own “TD Bank” https://money.usnews.com/investing/news/articles/2023-04-05/td-worlds-most-shorted-banking-stock-shares-down-ortex-data
We may think our Canadian banks like TD depend only on our own economy. So if people in Gordon Head are paying their mortgages, TD will be just fine. But they have huge exposure to USA and global markets. Including the regional US banks. That’s one reason TD stock is flat over the last 5 years, and the “shorts” are betting it has farther to fall.
To be clear, I’m not predicting bank failures. But there are a lot of stages between “business as normal” and “Armageddon”, and those may involve various groups losing money, including large depositors. So I think it’s important to at least know what the rules are.
From what I understand the U.S. government is guaranteeing all deposits. Heaven forbid people decide to switch to cryptocurrency instead of the all mighty U.S. dollar. Lots of big businesses have to maintain large multimillion deposits to run their business, payroll, etc… The auction company I work with just sold $350,000 in cars last night in one auction, and it’s a family run business with 3 employees.
lol, you mean like how he didn’t bail out the 1%ers during covid? I know at least 10 people that make in excess of 500k/year (and continued to do so during covid) that qualified for the Canada Emergency Business Account, one of many examples of how the government handed it out to the rich. Interest free which they just keep extending the deadline and you don’t have to pay back the entire amount. What did someone working at Walmart get?
So no I don’t think he would pull the rich depositor card. The integrity of the entire financial system would be at stake.
In the event of a Canadian bank collapse, insured deposits would be covered for sure. For amounts over that, I’m not so sure. I can see Trudeau saying that the these large “rich” depositors knew they weren’t insured, and so they aren’t going to get bailed out with government cash. Instead, maybe they will get their excess cash converted to stock (equity) in the bank (a so-called “bail-in)
For example, in the USA it’s more likely that the large depositors (>$250k) won’t get bailed out. Because the Dodd-Frank “bail-in” legislation passed in 2010 specifically allows a failed bank to use large depositors money to “bail-in” the bank. Now that means the USA bank deposits over $250k insurance limit get the cash wiped out, but the depositors are given equity (stocks) in the bank instead. Probably next to worthless stock, but you never know. This cash to equity swap “bail-in” would recapitalize the bank and it wouldn’t actually fail. Something like this happened in Cyprus 10 years ago.
Canada passed similar “bail-in” legislation after the 2008, but that doesn’t allow the bank to convert the excess insured deposits to bank stock like Americans do. It does allow the banks to convert their bonds to stocks, which recapitalizes them.
Yes, these bank failures are unlikely, but we just need to remember 2008 (GFC) and 2020 (Covid), when the government told us that bank/market failures may have happened without their huge intervention. For example, 2020 the BOC told us that the Canadian bond market had seized up, requiring them to buy 1/4 of all Canadian bonds. That’s not fear mongering, it happened.
If the government allowed people to lose their deposits at a failed credit union or bank the entire financial system would collapse. You think if someone lost 500k at XYZ institution the remainder of the population would have confidence in anything else other than cash or real estate? That is why, big picture, I think it is a non-sense fear mongering discussion. In reality the government would quickly step in to avert a complete collapse.
It’s like the non-sense fear mongering land title discussion that went on for weeks. Yea, sure, someone could sell your house without your knowledge but the odds are a lot lower than being struck by lighting. You wouldn’t stop exercising outside for the fear of being struck by lighting.
But after all, popular advice on HHV 15 years ago was to buy an acreage so you can grow your own vegetables when everything implodes so we’ve made some improvements I suppose.
Alexandra,
Yes, everything you’ve posted there is right, the $100,000 CDIC insurance I was talking about is per account category. , and the rules are complicated. So , in a bank (or coast capital credit union) you could have $100k total insurance in bank accounts + $100k insured in rsp account + $100k insured in a joint account , for a total of $300k. Whereas you could have an unlimited amount in VanCity (or most other BC credit unions), and it’s all insured by CUDIC. Of note CUDIC isn’t insured or officially backstopped by the BC government, but they likely would bail them out, since there is legislation section 271 specifically allowing them to do that ). There has never been a credit union failure in BC where depositors lost money.
That was one single poster (umm.. really) telling people to have second thoughts about VanCity, that’s not the same thing as you said which is HHVers telling people to be “pulling deposits out of credit unions before they collapse“. The ongoing HHV discussion actually confirmed that most BC credit unions (including VanCity) have unlimited deposit insurance, except some like Coast Capital that only have $100k insurance as they are federal credit unions. I see nothing in that entire that merits a label of “nonsense”.
Anyway, If that thoughtful post from umm..really is the best example of “nonsense” posts you have, HHVers are doing pretty well
Patrick, you know I am always interested in your posts, you get people thinking (me anyway), you are funny and for sure you have a mind boggling amount of general knowledge. But when talking (advising) about investments, it isn’t what they say (and I don’t mean you in particular),…..it is what they don’t say in most cases. So, for instance saying each persons deposits are insured up to $100K is not incorrect, but there is a lot more to it than that. No doubt I will leave something out but CDIC coverage of $100K is for each deposit category. So one can have up to $100K (including P&I) insured for non registered accounts (per institution), including singularly or combined in savings, chequing and term deposits.
Registered accounts are all separately insured for RRSPs, TFSA’s, RESP’s, and more.
Couple’s may have separate accounts insured (for 2) as well as accounts in both names (for 1).
I have met so many formally educated people (and I am not), that can’t even understand the simple tax rules around TFSA’s.
Not sure what exactly people want when it comes to rental stock ownership. REITs are bad because they collude on price, multiple unit individual owners are bad because they are greedy investors, what do people want?
Right…..
As of February 2022, the nine leading real estate investment trusts (REITs) in Canada had a combined market capitalization of over 50 billion Canadian dollars. CDN Apartment Un had the highest market cap at 9.5 billion Canadian dollars, over two billion higher than Riocan Real Estate Un, which held second place. CDN Apartment UN is an apartment properties investment trust that specializes in mid-tier and luxury multiunit residential rental properties.
It’s too bad the big box stores (Wal-Mart, Costco, Superstore) didn’t construct 10-20 storey apartments above their stores. Takes zero space, employees could be offered reduced rent and would not have to travel to work. The other tenants could access their food and other necessities without having to travel or have huge Amazon trucks delivering items on a daily basis. The parking lot would need to be larger and a park on site would be nice. Plus most of them are on bus routes. Sounds like a convenient arrangement.
Ok. Just read it.
I don’t see this being an issue in Victoria myself given the stark lack of corporate-owned rentals taking a preponderance of the market share. Maybe UVic is going to start raising student housing rates dramatically, but I doubt they’d get away with this given that they are publicly funded and this would be a violation of their mandate. Remember that many US universities are private.
UVic’s rental rates remain a relative bargain. I don’t see that changing.
Nonsense.
No one on HHV discussed “pulling deposits out of credit unions before they collapse”. The discussion was reasonable, and about deposit insurance limits for credit unions in BC and Canada. The limits of deposit insurance coverage for credit unions vary within BC and other provinces (either $100k, $250k, or unlimited) and are summarized here https://househuntvictoria.ca/2023/03/13/the-not-so-runaway-strata-fees/#comment-99918
I mean… have you read about RealPage? DOJ has opened an investigation into them for collusion. https://www.propublica.org/article/yieldstar-realpage-rent-doj-investigation-antitrust
Here’s the original article that prompted it: https://www.propublica.org/article/yieldstar-rent-increase-realpage-rent
Same reason they leave units empty. Leo said there was no difference between 1 person owning 100 units and 100 people owning 100 units. Maybe it’s less in a market that has low vacancy, maybe it’s more? there’s definitely a difference. I’d also say there’s a difference when there’s 1 person looking for more units to buy in a bull market versus 100.
There are already a number of taxes on homes that are not primary residences.
The biggest one is that there is no exemption from capital gains. This means that the government makes a lot of money from the sale of these types of properties and should, theoretically, be able to apply these funds in a way that increases housing affordability by increasing non-profit and rent geared to income housing stock.
A home bought by someone 20 years ago for 400k which is now worth 1.5 million would be taxed 0 when sold if owned as a primary residence (est. of 100k personal income). However that same home that was an “investment” and rented out will be subject to $279,240 in tax when sold.
As a taxpayer, I’m much happier to see that 279k go to government than I am to see it go to the homeowner who provided no shelter to anyone but themselves and paid no income taxes on the equivalent rental value less expenses either – whereas the landlord did. It is just a windfall with no basis in tax fairness that I can see given the housing crisis. Perhaps it is a nod to the fact that Canadians home owners have relied on this exemption in many cases to fund their retirements.
Trying to point out some owners of multiple homes as villains here ignores the math of how negative it is for non-homeowners to allow the complete capital gains exemption on primary residences when homeowners are the beneficiaries of the crisis/shortage of housing.
@Dee I’m really not sure of the specifics of the tax. I suppose if it were every introduced there would be some exemptions/rules around how it was applied. You make good points (as do others) about impacts on rental stock. If the tax was ever imposed these would be the kind of concerns that would need to be looked at to ensure fairness and avoid unintended consequences.
HHV is hilarious…just in the last month we’ve covered so much non-sense. Rent collusion with no one landlord controlling more than 5% of the units, your house being sold without your knowledge via title fraud that occurs 3 in 10 million transactions, pulling deposits out of credit unions before they collapse, etc. 🙂
What collusion? The market sets the prices and vacancy rates correlate with up/down and how fast. Supply and demand.
A landlord with access to software or, in the same line, ability to review ads for comparable rentals on FB Marketplace or CL, is reacting to the market and not setting it. If they don’t get a good response to the ad they lower the price. Too many applicants and they either raise the price or accept the very best tenant. If their variable mortgage rate rises the landlord has no ability to up the rent above market because their costs have increased.
The fallacy of individual control over market conditions is annoying. Landlords who are not non-profits and tenants have the right to act in their best interests in housing.
The average asking rent for a one-bedroom in the core districts based on 103 listings on craigslist has an average rent of $1,770 per month. A two-bedroom with 94 listings has an average is $2,429 per month.
I’m not keeping track of how rents have changed over the last year but I don’t think they have changed significantly despite the reported vacancy rate. With rents not changing, a 1 to 2 percent vacancy rate might be reasonable for Victoria.
Yes there is a reason, rent control. You are better off to give a month free and to start at a higher baseline monthly rent. You really think they care what the other tenants think in the very UNLIKELY scenario they are paying more rent? The existing tenants are going to incur the costs of a move to save $50 per month, probably not.
10 years ago rents weren’t going up here, but I’m not limiting this discussion to a town of under half a million on an island in the pacific. People that own 1 hundred units are more likely to use things like RealPage as well, colluding through software to up rent across the board. Also there’s a reason that when the market is softer, they offer months of rent free rather than reducing the price of the rent.
Wouldn’t apply to Victoria whatsoever, rents have only been going up; therefore, even if they had to reduce the advertised rent 99% of the other units would be paying less.
Secondly, yes they leave units vacant as in one or two out of 200 for a month maybe. That is less vacancy proportionally than a private seller leaving one month vacant in 10 years.
Because of rent controls, newly vacant units can easily be rented out for more than current tenants are paying.
As for how many units the big owners are leaving empty, take a look at the vacancy statistics.
And yet they do it all the time. Maybe because if they reduce the rent on one unit, people in other units paying more find out.
It’s quite something, ain’t it?
The real estate market has many characteristics of the railway mania in the mid 1800’s
Google. “Railway Mania: The Largest Speculative Bubble You’ve Never Heard of”
An easy step to help this would be for government to increase the notice for eviction for landlord to move in from two months to six months.
@fern do they waive the tax if the buyer keeps it a rental for a long enough period? Because if they keep it as a rental then it has served an important purpose (ie to supply more rental housing) and is not speculative. If they don’t waive the tax in those situations it seems to unfairly discriminate against small business owners while large corporate players get to avoid taxes. Should be based on tenure as a rental to be fair. Everyone who converts away from rental in a certain amount of time should be subject to the tax. In Winnipeg for example there was no shortage of purpose built rentals, until several owners of large apartment buildings decided to cash out by converting them to condos.
That follows from Leo’s first law of Housing Dynamics: “You can’t solve a housing crisis by redistribution”
Personally it took me a long time to overcome the negative polarization of the people making the supply side arguments and even seriously examine their merits.
In the end it’s good to restrict many of the speculative demand side issues but we can’t get away from the underlying shortage
Right. I recall hearing many discussions like this ..
Councilor: “We should hold approval until we see a biologist report”
Applicant: “We already did one, would you like to see it?”
Councilor: “No. Let’s get another hydrologist report”
I’m convinced most people would be radicalized on zoning reform if they had to listen to just one public hearing
Your point about selling units is correct, and a rental in a multi-unit title is more secure than a single unit title. However, a landlord can still move in to evict from a unit that isn’t individually titled. Therefore the more units the landlord owns make it less likely they will do this… The most secure tenancy would be in a single titled property with many rental units.
If the units are individually titled, they can sell one by one to new owners who can evict the tenants. Security of tenancy is about individually titled properties versus PBR, not how many units the landlord owns.
+1, I just watched a View Royal rezoning public hearing for 22 town homes a few days ago and it was absolutely painful to watch and it was voted down.
The crap the councilors came up with was just insane.
Once councilor questioned why the developer had not purchased a third property for the land assembly. Made a completely inappropriate comment “I know the seller and he wants to sell.” Then when the developer replied with “yes, we approached them and the sellers wants twice the amount for their property that we paid for the other two combined. Unfortunately project would not be economically feasibly”…..councilor continues on how third property should be included, lol.
Next councilor starts talking on and on about traffic site lines even thought developer paid for a traffic study (approx 20k) and the staff have no concerns with the traffic study. Like wtf, if you are going to force the developer to hire 14 consultants at least respect the reports those consultants publish.
Next councilor notes they don’t want to move too quickly with density, lol.
I think “people with no special training” is a very generous way of putting it. For the most part these people have no common sense, let alone special training. Actually most of them are idiots. Just look at the parking non-sense in Victoria. We went from shutting down projects because they didn’t have 1 to 1 parking to mandating ridiculously low maximum parking requirements, in a span of 5 years? Did people stop driving, no, simply stupidity at city hall increased dramatically.
I have zero faith in this new NDP announcement. Good luck building a triplex-fourplex in Oak Bay anytime soon. You will apply for a permit and than 18 months later you will receive word the city sewer and storm cannot handle more capacity and your permit will go no where, or a million other things.
+1, very simple concept yet no one understands or does not want to understand.
We discussed this a month back or so….no company has substantial market share in Victoria to set prices. Big companies aren’t as stupid as individual owners. It is pretty basic month that leaving a unit vacant for a few months is very counterproductive. Good luck making it up with slightly higher rent.
I look at that sale and think damn, how can the market be so resilient despite the interest rates. Basically sold for same amount as close to peak market. It was actually more affordable to a buyer last year than it is this year.
But that is counterproductive unless they control the market. Leaving units empty just deprives them of revenue and won’t impact rents because the only control a tiny fraction of the entire markets.
@Dee I saw this idea in the Ontario Green Party’s platform during the last election. The tax would apply to both individuals and corporations but is targeted at new purchases of homes or condo units so assume it wouldn’t affect the purchase of rental buildings. There could be unintended consequences but seems like an interesting idea to consider.
“to tackle rampant speculation, Ontario Greens will implement a multiple homes speculation tax, equivalent to the existing Non-Resident Speculation Tax (NRST). The tax will only apply to new purchases of homes for domestic individual or corporate buyers who already own two or more homes or condominium units. The tax would start at 20% for the third home purchased and would increase with each additional property.”
https://gpo.ca/2022/04/27/ontario-greens-will-combat-speculation-to-make-housing-more-affordable-for-first-time-home-buyers/
@Totoro agree renters are generally much more vulnerable than owners, but more people being able to buy could also reduce rental demand.
Yes. The stats are very clear on this. The vast majority of evictions are due to owners moving in or moving family in. Not an option for corporate landlords
The notion of zoning prohibiting secondary suites isn’t as absolute as you might think.
Zoning bylaws allow city council to grant a variance whenever they feel like it.
That is, zoning bylaws do allow secondary suites to be built anywhere.
As with all construction there are requirements to be met (building code, electric code, etc.)
A variance is an additional requirement in some areas.
@Fern re the idea to tax people with 3+ rental properties. Would this apply to corporations too? Because if not people would just incorporate to avoid the tax, right? If it applies to all “persons” (including corporate persons) then I guess those who own more might be motivated to sell? I don’t know… seems like that idea could have weird ripple effects that were not anticipated (bad ones).
The only way out of the housing crisis is to build our way out. Disincentives at this early stage don’t seem wise to me.
This only makes sense if you think that homeowners have a greater right to own a house than renters have to rent a house. I would argue that it is renters who cannot buy that are in greater need given the vacancy rates and likely lack of resources. The fewer rentals on the market the lower the vacancy rate, so your proposal makes no sense to me from a social policy or fairness perspective. Maybe one day if there is a huge influx of rental housing, but the market will respond to that anyway.
The reason for it is irrelevant, it’s more about the state and health of the market as it relates to the likely outcomes of investment or hold properties and the likely risk that might be assumed going forward. The people and their individual circumstances is of no concern, it just is what it is…. Don’t think about the individual circumstances of people selling stocks at a loss? That may be from sort of negative personal outcome somewhere, a housing loss is really no different and neither is the discussion about it.
Hey Totoro, is this the CNAREA ruling on illegal suites you are sourcing?
Date: April 07, 2022
To all Members:
We have been contacted by some of our industry partners requesting clarification on our Members completing Market Rent Opinions for properties involving Secondary Suites which are not legally permissible according to the local zoning requirements. We believe it to be self-evident that a non-permitted use would preclude an appraiser providing an opinion of Market Rent.
Therefore, to clarify the current situation, if the use of a rental suite is not a permitted use, according to the JHA, Members are not permitted of offer an opinion of Market Rent (other than $0.) As stated in the USPAP, the use of any Extraordinary Assumptions or Hypothetical Conditions must be credible. Appraisers must use logic and sound judgment in accepting and fulfilling client requests, and Members are again cautioned that assignment results must be credible and not misleading.
“Basement Suites” may offer significant ‘contributory value’ to the property, as demonstrated in the Cost Approach and/or Sales Comparison Approach, however if they are not a permitted use as a rental suite, they, on their own will not contribute income in the form of rent.
Obviously, the variety of situations where you may be asked to provide an opinion of Market Rent are innumerable. It is recommended that using the principles outlined above, in the March 15, 2022, announcement, and along with logic and sound judgement, you will be able to determine if you are able to meet the needs of your clients, comply with the USPAP, and produce credible assignment results.
Someone owning one property can (and often does) evict the tenant by moving a family member in. Someone owning 100 units can’t (and doesn’t) easily do that. If I was looking for a stable rental, I’d take a place where the landlord owned 100 units, rather than a mom n’ pop rental.
Very likely a loss of money to hold a property for a year. But so what, you don’t have any idea of the circumstances resulting in this sale. For example, if it was due to an illness or death would you spend your time speculating on how much money they may have lost?
One company owning 100 units can afford to keep units empty until they get their price target. Someone who owns 1 property will reduce the price.
977 Island Rd. Oak Bay. Just listed as sold 1.26 mil. Previous sold May 2022 for 1.26 mil. Geez, how would that be in fees, taxes and mortgage carrying costs that had to be eaten in the time span between sales?
From: https://financialpost.com/fp-finance/banking/toronto-dominion-bank-biggest-short
It would reduce the number of investment properties being bought by at least one source. Its like how building student housing reduces one source of pressure on the rental market. The bottom line is reduced demand. Agree that companies monopolizing rental markets are also a concern.
Love how the guy in the article had 53 properties when the tax was brought in.
I doubt they’ll ever do this again, though, since it worked!
I never quite understood this. If we have 100 rentals owned by 100 individual owners or one person owning 100 rentals or one company owning one building with 100 units it’s about the same.
I can definitely see the concern about companies monopolizing the rental market as is the case in some small northern towns, but I don’t think it’s possible in a larger city. Even bigger landlords like Devon or Starlight don’t come close to having price control power.
Given what we know about evictions, the majority are no fault due to owner moving in, so 100 individuals owning one rental each may be the worst scenario for tenant security even if rental investments are more equally distributed.
Just got a reply from the AIC about BC’s suites.
Nicely worded but in a nutshell they said “No”
I’m appealing it.
I think it would free up some housing for first time buyers, which would in turn remove some demand from the rental market. Two properties per person seems reasonable to me, especially in a housing crisis. A person could still purchase a primary residence plus an additional property, but would have to pay for anything more than that.
Because the BC government published its intent to legalize the illegal on April 3, 2023. I believe it would be a reasonable assumption to expect the government to follow through. So under this extraordinary assumption supported by published evidence, I believe it would meet the test of the “reasonable appraiser” to provide a Market Rent Report on an illegal suite subject to some limiting conditions such as the applicant applying and receiving a permit within a reasonable time period. If the applicant fails to receive approval then the conclusions within the Market Rent Report would be void and the lender would not be able to rely on the report for income verification.
AS per an AIC Communique
“If there is evidence that a municipality is changing its bylaws in the near future, a Member may be able to provide a Market Rent for a secondary suite BUT:
An Extraordinary Assumption/Hypothetical Condition must be invoked, and a description of their efforts to obtain this information must be included in the Scope, Extraordinary Items Addendum, and transmittal letter”
So at least in BC, it would now be possible to provide a Market Rent Report subject to some limiting conditions.
Mind you, this was a real tax on speculation.
Ontario tried a speculation tax on property, and the market ‘collapsed overnight’
Tax will solve everything from poverty to climate change, so why wouldn’t it work with housing?
https://www.cbc.ca/news/canada/british-columbia/housing-investors-canada-bc-1.6743083
Brilliant, first it was the dirty Chinese money that drive up the housing price, now it is the investor.
Perhaps, we should ban real estate investing altogether, and see if that decrease housing start by 1/3 from now into eternity. Maybe it will give the government another excuse to increase taxes to build more housing.
What public policy reason would this fulfil that is not met by the vacant or underused home taxes that have been brought in? Whether an individual owns one or four properties the question should be whether the houses or multiplexes or condos are available to owner-occupants or renters for non short-term accommodation purposes.
From: https://vancouverisland.ctvnews.ca/developer-pushes-back-against-victoria-s-call-for-fewer-parking-spaces-at-new-condos-1.6342102
Glad to see the reminder upstream about low affordability. Curious to hear about pay increases. At UVic we finally had a new collective bargaining agreement between the university and the Faculty Association (although the pay increase corresponding to July 1 2022 has yet to be implemented), but the numbers involved are actually only a small increase on top of business as usual. On the order of an extra 0.5% for 2022, 3-4% for 2023 and -1% for 2024 relative to the previous 3-year cycle.
I like some of the changes Eby is suggesting. I wish there was a tax on people buying 3 or more properties though. I think that would have a stronger impact than the flipping tax (although he could also do both).
Leo, when I looked into the appraisal issues my conclusion was that the change was not really material when it comes to financing as this depends on lender policy. An appraiser can still provide a statement as to rents reported by the homeowner for an unpermitted suite, and it will be up to the lender to include or exclude this amount or a discounted amount where the suite is unpermitted.
There are two appraisal accreditation bodies btw and they have taken opposite positions on this matter. If you engage an AIC accredited appraiser recently they would likely not have given you a market rent appraisal on an unauthorized suite where it is not permitted by zoning and/or permits or evidence of construction in accord with standards existed. An CNREA appraiser would, at last check, still have conducted a market rent assessment with some specific limitations as their accrediting body did not prohibit this. https://cnarea.ca/market-rent-request-secondary-suite/
What is now happening with the NDP announcement that secondary suites won’t be prohibited anywhere is that the advisory from the AIC may change and the invocation of the hypothetical conditions allowing a market rent appraisal for unpermitted suites, provided there is evidence that the work was carried out according to code, might proceed – if I understand matters correctly.
Basically, the biggest hurdle was the fact that some municipalities had prohibitions on secondary suites so they could never be legalized and the income potential was always in jeopardy aka unreliable. This appears to no longer be the case once the legislation is implemented for whatever type of housing it applies to (presumably at least SFHs), so AIC and CNREA appraisers may have different directions from their accrediting bodies fwiw.
The more they stay the same?
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Sorry I’m a bit confused. As of today and or subject to new guidelines if they are coming, would you appraise a home with a legal permitted suite differently than an illegal one? And is that different than it was and would it affect lending?
Actually Leo S, with the announcement from the BC Government on April 3, 2023 to provide assistance to legalize unauthorized suites that provided the evidence to support the claim that there is a reasonable assumption that the unauthorized suite, subject to approval from the municipalities’ planning departments, may receive a permit. The homes would have to meet the different municipalities bylaw requirements to be approved. That can, for some home owner’s, be extremely expensive.
That published BC Government provided the evidence that will allow an appraiser to invoke both a hypothetical condition and an Extraordinary Assumption and thereby retain insurance coverage. The appraisal would be subject to the purchaser applying for and receiving a permit within a reasonable time period. If the applicant is unable to do so, then the income verification provided by the Market Rent Report that was used to qualify a purchaser for a much larger mortgage would be invalid. The homeowner would then have to qualify on their actual reported income from T4’s, etc.
It gets the appraiser off the hook for having to pay for someone else’s mortgage if they can no longer meet their debt obligations. It puts the due diligence of income verification back on to the lender.
Interesting things have come up from different provinces. In Alberta, unlike BC, the listing agent has to show clearly in their listings if the suite is legal or not legal. That would be a good thing for BC to adopt.
If you have a taste for watching unthinking, overpaid, under-qualified planning martinets in action I highly recommend Season Two of Clarkson’s farm on Prime. It will make you weep.
Xenophobia, owner builder exam, and save the planet/trees must have increased housing volume.
Maybe this was already mentioned, but appraisal institute will no longer recognize illegal suite income for appraisals?
If we do that, then how half of the government administrators and politician justify their jobs, spending, and taxes?
The “how municipalities react” is so odd to be a critical factor. I mean, it is a small number of people with no special training sitting around a room making decisions on a crisis topic of wide public impact with excessive nimby pressure. This is repeated all around the province with varying bad results for housing affordability and options. It will be interesting to see if the provincial minimum standards are effective on the ground. I do sympathize re. parking issues though and hope we have some good solutions that aren’t doing away with reasonable on-site parking because the majority of people are still going to have cars.
(Un)affordability remains at the high levels we’ve seen since the top of the market.
The uncertainty here is recent income gains, which are estimated. More on that next week.
Well I’m sure that foreign buyer ban will make a big difference.
The Fraser Valley Real Estate Board is an association of 4,958 real estate professionals who live and work in the BC communities of
Abbotsford, Langley, Mission, North Delta, Surrey, and White Rock.
MLS® HPI Benchmark Price Activity
• Single Family Detached: At $1,390,600 the Benchmark price for an FVREB single-family detached home increased 1.9
per cent compared to February 2023 and decreased 21.7 per cent compared to March 2022.
• Townhomes: At $794,400, the Benchmark price for an FVREB townhome increased 2.3 per cent compared to February
2023 and decreased 14.5 per cent compared to March 2022.
• Apartments: At $521,800 the Benchmark price for an FVREB apartment/condo increased 2.3 per cent compared to
February 2023 and decreased 11 per cent compared to March 2022.
Note that REBGV territory does not extend south of the Fraser, except for Richmond and South Delta, so their stats tend to make the metro look more expensive than it actually is, as they exclude North Delta, Surrey, and Langley. Not that the latter are cheap by any standard except Vancouver.
The more things change…
https://twitter.com/j_mcelroy/status/1643264503021469697
Your statement regarding parking and densities restricting extra missing middle housing is going to be 100% correct unless property owners make a multitude of micro units. The only reason Victoria’s missing middle can make any sense is because of the increase FAR allowance (notwithstanding that their open space requirements restrict even reasonable levels of parking).
Also, thank you for pointing out the realities of flipping and short term rentals. When people are in pain we like to point the finger at others and it’s easy to forget that this all would not be a problem if creating supply was less of one. If we made housings starts as easy as creating an air bnb or flipping a house, we would have more housing.