Will income gains fix affordability?
We know that despite price declines in the past year, affordability of real estate in Victoria has not improved. High rates have pushed prices down, but on a payment basis, it still costs about the same to buy a house or a condo as it did at the peak of the market. For a median house that’s about $5000 a month, while for a condo that is about $2500 a month. Both are up substantially from pre-pandemic when it was around $3000 and $1500/month.
Turning that into a measure of affordability, we compare those payments to incomes, and look at what percentage of local family income would be required to make the payment on the average property.
In the short run those charts look very similar because incomes don’t tend to increase very quickly. However in the last two decades we’ve actually seen substantial real income gains in BC and Victoria. After 25 years of stagnation and decline, real median family incomes are up by 35% in BC and Victoria which track quite closely (the Victoria series doesn’t go back earlier than 2000).
Those series only go to 2020, so we have to estimate what happened to incomes after that. For that we look at data on weekly earnings in BC. Wage data is different than family income due to a variety of compositional effects, but generally if weekly earnings go up, we tend to see similar increases in family income. Recently, wage data has been pretty volatile. In 2020 government supports made incomes shoot up while inflation was low, which was reflected in a strong increase in family income in that year. The following year in 2021, inflation started to outpace wage gains, but overall wages still kept up. Last year inflation clearly outpaced wage gains, which means wages dropped in real terms.
However that may be turning around this year. The tight labour market has put pressure on private sector wages, and most public sector unions have renegotiated their collective agreements. Many of those landed somewhere in the range of 6-7% increases in 2023, dropping back down to 2-4% in 2024. This year’s wage gains should be stronger than normal while inflation drops down at the same time.
But is it enough to bring back affordability? In short: no. I’m using condo affordability in this chart because unlike for detached homes, we shouldn’t expect condos to get continually less affordable over time. Other than the 1981 bubble when affordability briefly spiked to unsustainable levels, a mortgage on the average condo has required between just under 20% and 30% of the average income for the past 40 years. We’re currently on the unaffordable end of that range, but any reasonable income gains would not bring it back down much. We might expect perhaps 5 – 7% income gains in 2023, but it would take a 75% jump in income to bring affordability back to where it was about 10 years ago.
So if affordability is to return, we’ll probably need help from either lower prices, lower rates, or both.
However that depends on affordability improving like it has in the past. If for whatever reason that doesn’t happen, income gains can support small continued price gains while affordability remains poor. In that case, each 5% gain in income would support about a 2% increase in prices.
Also the weekly numbers.
| April 2023 |
Apr
2022
|
||||
|---|---|---|---|---|---|
| Wk 1 | Wk 2 | Wk 3 | Wk 4 | ||
| Sales | 159 | 824 | |||
| New Listings | 304 | 1368 | |||
| Active Listings | 2013 | 1365 | |||
| Sales to New Listings | 52% | 60% | |||
| Sales YoY Change | -36% | ||||
| Months of Inventory | 1.7 | ||||
A relatively slow start to the month for both new listings and sales. While sales are down 36% from the 247 we had last April 11th, new listings are also down 30% from 439 to 304. Of course the change in the timing of Easter is throwing the comparison for a bit of a loop here, but we’re going to need to see a jump in new listings activity pretty quick if we want to come even close to what we saw last April.
Total inventory is still increasing albeit slowly. We have 71% more inventory than this time last year. As of March, there was 80% more single family active listings, 68% more condo listings, but only 17% more townhouse listings than a year ago.
Over-ask activity remains between 10-20% of sales where it has been for most of the year.
The sales to new list ratio is now closing in on where it was this time last year rather than lagging substantially as it has for the past 12 months. Of course we are now starting to compare to the period a year ago where the market was being clobbered by rate hikes, so we can expect the large year over year weakening in stats to be nearly behind us.
Barrester, I think you are thinking of Dee’s comment.
New post: https://househuntvictoria.ca/2023/04/17/the-new-listings-puzzle/
That’s simply too much government control. I would still give them plenty of warning given the current situation. I don’t know how much it would help. Things might get even worse 6 months from now. Immigration is not slowing down.
The penalty would be that the tenant doesn’t have to move out until the six months notice period is completed. Instead of two months like it is now. You could still sell the property any time, but the new owner would need to finish waiting out the six months notice too before moving in.
Out of common courtesy I would want to give my tenants as much time as possible. However, is this practical? A wide variety of reasons could lead to the sale of a property. What would be the penalty? Another obstacle for landlords could motivate them to sell, creating one less rental property. Given that minuscule rent increases do not keep pace with ever increasing property taxes, insurance, and repair costs. Around 20 years ago I had to replace the roof’s shingles for $3500. Last year $13,000.
Yes. I agree with you 100% on the “precarious” part of rentals. For some reason, the government allows landlords to evict with only two months notice for landlord use, which occurs the landlord’s (or the new buyer’s) family wants to move in .Which does make it “precarious”.
An easy, no brainer improvement to that situation would be for the BC NDP to increase that period from two months to six months. That would make it less precarious by giving the tenant six months to find a new place (instead of two). Maybe some of the “housing crisis” advocates will ask the NDP about that.
Dee, since you are a landlord, would you be in favour of that ?
Fern, there seems to be lots of apartments at 2500 a month so if your lovely young couple has great jobs are you saying that they could not afford that?
Thank you. This is spot on.
Ever paint on a twelve foot ladder in the wind?
People are still moving here for jobs. As long as that continues rents are not going to start coming down.
A one bedroom in the core still averages $1,750 a month with 118 listings on Craigslist. And a two-bedroom $2,425 a month with 103 listings. And they keep coming.
“Affordable” two-bedroom housing in the newer rental complexes start at $2,500 a month. What we need is another thousand of these “affordable” places. That will bring rents down.
Looks like he can afford to pay 2k a month to rent a place. Just in case anecdotal accounts are not valid, I just did a quick search for the most unskilled trade out there – painters.
https://ca.indeed.com/Painter-jobs-in-Victoria,-BC?vjk=a0c10510a19f556d&aceid=&gclid=CjwKCAjw3POhBhBQEiwAqTCuBi3qPLXR_lQkYRjy_TSMduVBh2ImAFxNsQqVeaGbd3kLrOY_achXwBoCUKQQAvD_BwE&gclsrc=aw.ds
Victoria housing crisis: Do you see a pattern developing?
Talking about the Victoria housing crisis “for a number of years?” How about forever…
The “permanent” state of the Victoria housing crisis …
In at least the last 20 years+ , I’ve heard Victorians talking about the “housing crisis”, and it’s accepted as a “given”. A “crisis” is something that’s at/near a breaking point. Here’s a magazine article from 2007 about the rental housing crisis. And another from 2011 from a mayoral candidate trying to solve the housing crisis.
When I lived out east in 1980’s, I used to hear stories about Victoria house prices, that were mind bogglingly high. I would think “who can afford to live there’”.
And so now in 2023 we see posts about the “Victoria housing crisis”, as if it’s something fixable.
What if there are just lots of people who like to live and move here, who for various reasons can afford our prices?
2007) Co-op housing can provide solutions to Victoria’s affordable housing crisis https://annakemp.files.wordpress.com/2011/09/aug16cover_merged.pdf
(2011) Mayoral candidate Steve Filipovic takes different approach to solving housing crisis https://www.vicnews.com/news/municipal-election-mayoral-candidate-steve-filipovic-takes-different-approach-to-solving-housing-crisis/
I’m paying $35 an hour for an entirely unskilled labourer on my job site to be on garbage duty for all the trades. He’s university educated, very bright, but working out of his field of study because he likes this renovation site. And it pays well. Better than urban geography & he hated his time in the public service.
That’s interesting, I think most landlords out there would agree that the rental market has softened since late last year.
Ummm did I just dream up that minimum wage has gone up from 12.65 to 16.75 from 2018 to now? Is it so hard to fathom that to pay people to do physical trades work you need to pay a $4.00+ premium compared to standing around watching the self checkout stations at walmart?
The problem with the current situation is not (in my view) so much that people don’t own – maybe that has stayed more or less the same. It’s that renting is also so unattainable AND precarious. I’m not sure how anyone could keep a straight face and say there’s no housing crisis!! I’m a landlord and can tell you my two tenants, who are a lovely young couple with great jobs, were this close to being homeless. It is next to impossible for people to find a decent rental. That’s why buying anything – even a 2 bed condo for our family of 4 – was VERY important to me. It’s not so much the asset it’s that no one can kick you out (for repairs or their own use). Owning is security – and the asset part is obviously great too. Now, in the prairies where I’m from it’s very different. Most (a very wide majority) of renters live in purpose built rentals. The situation here is sad and not cool.
Well yes. Because the economy/employment is strong, lots of people are doing well, making lots of money, and can out-bid people on homes.
ummmm, have you read this post that you are commenting on? there are literally charts/data showing that things are less affordable now, despite your anecdotes of trades pay.
Ummm have u checked what minimum wage is now? All unskilled trades have a starting pay in excess of 20 an hour now, some are in excess of 30. These are not ticketed trades.
Heard a rumor that Apple will be requiring 5 days a week return to office.
We’ve been discussing it on this blog for a number of years. The price of homes and the price of rents have increased significantly while wages have not. The demand for housing outstrips supply. The government stopped building social housing. Universities significantly increased international students without building enough housing for them. Immigration levels have gone up significantly without a matching increase in supply. The BoC kept rates low for years on end increasing the price of assets, including homes, while reducing the value of wages and pensions.
How about you help me “get it”. Why is it “very hard times” for anyone who doesn’t own a home in Victoria?
This is actually a more savy move by the banks especially if the mortgage is insured. In this case, they have now over 40+ years of interest income with minimal default risk. The bank’s business model is lending, the sooner the mortgage is paid off the sooner that interest income ends and a new loan will need to replace the matured one. By extending out the amortization they have effectively decreased the frequency of the turnover required in their loan book to meet their profitability targets.
A more extreme example would be a loan shark, the loan shark wants to keep you borrowing as long as they possibly can as long as they are certain you aren’t going to default on the loan. They don’t want you to pay back the loan on the original terms and never approach them ever again.
What a ridiculous reply. You either don’t get it or don’t want to get it.
Shall we call it a crisis until 100% of people own homes?
OK just move to the East Coast… oh what’s this?
https://www.saltwire.com/atlantic-canada/news/nova-scotias-housing-crisis-why-its-getting-tougher-to-keep-a-roof-over-your-head-100811010/
Good times for people who already own homes; very hard times for those who don’t.
Not so easy to leave all your family, friends and employment and move, or to afford to buy a “smaller” victoria home.
In 81 or 93 if u couldn’t pay u sold the banks where not as kind as they are now
“Can anyone help me with a sale price on 3701 Casey? Sold quickly!”
$1,050,000
In 1993, Canada unemployment rate was 12%. Today it is near record low ( 5%). It’s not surprising that house prices are higher, because the economy is better. This isn’t a housing crisis,. If unemployment goes back to 12%, now that will create a housing crisis. (Forced sales, evictions, bankruptcies, collapse of construction, banks stop lending etc).
What we have now is the ”good times”. Enjoy!- and may they keep on ‘rollin’
Only 286 sales MTD as of this morning….looks like we won’t hit 600 again.
Feels a lot busier on the ground (I think because so few quality new listings that buyers fight over), but the numbers don’t lie, on space for slowest April since 2012.
I think anyone would agree that things are a lot worse. Even where prices are lower.
Is “people living in trailers on the outskirts of Chilliwack” unacceptable, and mean that we are in a housing crisis? Has there been a time in history without examples like this, or have we always been in a housing crisis?
We are down a little from all-time highs in home ownership in Canada (66.5%), but still near the 69% highs (2011).
That fall in homeownership is partly because the new home construction skews to rentals, which is likely a good thing for affordability. We still have higher homeownership rates than US, UK, New Zealand and similar rate to Australia. And a record low in mortgage delinquencies. None of this adds up to Canada-wide housing “crisis”.
Patrick- Rent what? CTV news did a segment on people living in trailers on the outskirts of Chilliwack. Mostly seniors on modest pensions. Parts of Canada are starting to resemble third world countries.
5 year bond yields ripping again. Doesn’t look like sub 4% 5 year fixed will happen for the spring market.
Can anyone help me with a sale price on 3701 Casey? Sold quickly!
There is no Canada wide housing crisis. There are two provinces with high home prices – Ontario ($880k average) and BC ($969k) . The rest of the provinces have home prices about 1/2 of BC or less than that. For example, the next highest is Quebec ($471k) and the rest are lower than that https://www.crea.ca/housing-market-stats/canadian-housing-market-stats/national-price-map/
If you want to escape the housing crisis, move to one of those 8 provinces. If you want to stay in Victoria and escape the “housing crisis”, rent or buy a smaller (below average) Victoria home.
I believe that most of our cities across the country are built on farmland. That’s the purpose of the city, to be in close proximity to our most valuable resource. Every new development burns more farmland. Since farmland represents only 7% of our landmass, unless we want to live on tundra, which is very difficult, as our population increases we loose more farmland. Politicians can’t seem to grasp this simple fact.
Cities are built in proximity to other resources such as oil, timber, and minerals. Resources that produce a profit that creates an economy. Building cities in the middle of nowhere does not make sense. Tax dollars have to come from somewhere.
Believing current immigration/temporary resident levels are too high given the housing crisis etc does not equate to advocating for zero immigration. Further, we can both lower immigration levels and build more housing (especially more social and student housing).
They’re investing, with no time frame or guarantee. Outboro is probably charging a fee and using other people’s money. Reminds me of time shares in a way.
It might work for some buyers, but when they sell to upgrade they’re going to be SOL, they’d need that profit for their next house that also appreciated with the market.
I think Frank may have inadvertently nailed it when he wondered where the money is coming from. Are they in the business of lending money or in the business of attracting investors?
A massive ripoff compared to the existing federal program. If the feds advance you, e.g. 10% of the purchase price, they collect 10% of the sale price when sold, i.e. they net 10% of the appreciation. I would guess they are targeting people who don’t qualify for the federal program.
https://www.placetocallhome.ca/fthbi/first-time-homebuyer-incentive
Well Frank, when you look at their website and particularly the view of the office, the sign on the door says it all.
Interesting article. Not only did Trudeau cause prices in Canada to rise, he must have caused prices in the USA and most other countries to rise during the pandemic too!
The housing bubble – blame it on Canada!
Ahhh, if only duplex zoning (two family) was just that simple. Parts of Victoria are blanket zoned duplex, but that does not mean you can build a duplex on the site. You will still have to meet minimum frontage and lot size requirements to build a duplex. Check the zoning bylaw.
For an R-2 Zone that means a minimum frontage of 15m and an overall size of not less than 555 m2
Some might get confused about what a duplex is or is not. You don’t have to be zoned two-family to have a basement suite or a Garden Suite. You can have a basement suite for family use in a single family zone. But you are going to need a permit to rent it to non-family. While a duplex has two self contained homes that are attached to each other. Those two attached self contained units may also have basement suites for family use.
So you can have a single dwelling home with two kitchens and living areas, or a two family home with four kitchens and living areas.
Sounds like something I would have wrote. Isn’t that why people go into politics? To make the rich richer, especially their friends.
https://vancouversun.com/opinion/columnists/douglas-todd-federal-liberals-are-directly-inflating-house-prices
A representative from Ourboro, the company that contributes ( invests) to your down payment, is on the radio. See below for how it works. Basically, if they contribute 50% of the down payment, when the house sells, they get 50% of the appreciation. The owner is responsible for all expenses and retains the mortgage principal that was paid down. I guess that business model could backfire if the property goes down in value (I don’t know if they get their initial investment back), but there is plenty of potential upside. I wonder where they get their money?
Well that didn’t last long. Canadian housing is a seller’s market again.
https://www.msn.com/en-ca/money/finance-real-estate/well-that-didnt-last-long-canadian-housing-is-a-sellers-market-again/ar-AA19RPa5
The Canadian housing market is back in familiar territory as fierce competition between buyers for too-few listings is becoming the norm once again.”
Yup. With TD MM, you just have to hope that the info you give them verbally, over the phone, gets input accurately on their end — and their track record in this regard is piss-poor, in my experience.
As some here may recall, I recently learned that they thought I was living in a duplex, not a detached SFH — a basic error that existed for years until I happened to discover it during a phone call with an agent. And one can’t discover errors like this easily, as you found out, Peter, because the policy paperwork TD MM sends you is uncomprehensive.
Nothing about my insurance company instills confidence; I am with them only because I have yet to find equivalent lower-cost insurance.
I recently had to look for a new insurer as Gore’s umbrella policy was no longer to our liking, and considered but rejected TD Meloche Monnex. While they were the cheapest alternative by a long shot, I was uncomfortable with the process being all verbal over the phone, and also some of the things you noted. They wouldn’t even let me see the policy wording prior to signing up. No thanks then – I like to read things and understand them before paying. And I like having the communications with the insurers/agents in writing, so I can print them out and keep them in my insurance binder in case there’s ever a serious claim and some ‘misunderstanding’ arises.
I found Gore pretty good over all these years, but being forced to move due to the umbrella issue, we ended up with Intact.
Spot on Alexandracdn and Peter. I wonder how many amateur landlords on this blog that have legal non-conforming properties have By-Law insurance as well.
There are numerous multiplex properties in Victoria where the land is zoned for a duplex but have a house with an additional third or fourth suite that have been grand-fathered permits, the current duplex zoning would not allow for that tri-plex or multiplex to be re-built today. The replacement cost of these non-conforming suites is not going to be covered unless additional insurance is purchased.
The onus is not on the insurance agent to enquire about these matters. It may be to their advantage not to enquire as it can reduce the size of any future claim. It doesn’t matter what the agent says it’s what’s written in the contract. Contract Law
Of course you must tell your insurance company if you are renting a suite out in your primary residence!!
It doesn’t matter if it is an “in-law suite” meaning family members (even if you say they aren’t paying rent) are living there, a legal suite (according to the municipality) or an “illegal” suite. You tell them the TRUTH. If something happens in that suite…a fire….flooding. vandalism, robbery….and it affects your own separate residence, and you haven’t disclosed this information, then quite probably you should consider yourself totally uninsured. Disclosure with any type of insurance is key to receiving funds for any damages and costs.
I once rented a small bachelor suite in my home. She was a quiet single woman who was also a friend. The insurance company agreed with me that my home was actually safer in the case of robbery, vandalism, fire or flooding because there was someone residing in the bottom level of the house who could quite possibly detect the problem first and would be able to call the police/fire department etc. immediately.
You mean permanent resident, of course.
Canada provides markedly better working conditions/pay than the Philippines for these jobs. Canada is also way easier to get a visa for than the US and workers have protection re. working hours and conditions under employment laws. Being a nurses aide is not an easy job, but plenty of Canadians work in these same positions under the same conditions.
The separation from family is tough, but they are supporting their family and they can apply to become a Canadian citizen after 12 months through the Canadian Experience Class and then sponsor their family members – and many come with this plan in mind because living conditions are objectively better here and there is already a large community of Filipinos here. I would hardly view this as “slavery”. Other countries hire many Filipino temporary workers but they are never eligible for citizenship (Japan, China/Hong Kong, Saudi Arabia).
We did, and they didn’t care.
They didn’t ever question it.
Apparently not, because when we kicked out our tenant I notified them of the change of use (hoping my premium would go down a bit) and they said they’ve noted it but cost remains unchanged.
One would think that insurance companies would care a lot more than they do about a variety of things, but this is not at all the case in my personal experience.
When I phone TD Meloche Monnex, I’m often talking to an agent, working from home in Nova Scotia, who has no idea whatsoever about anything going on in Victoria, BC, who really doesn’t seem to care about the particulars of anything, and who doesn’t seem to worry much if basic information they have on file is even correct.
Nothing about my insurance company instills confidence; I am with them only because I have yet to find equivalent lower-cost insurance.
Thanks for the observations and chart below Leo.
Not to dwell too long on this ‘upper end’ segment, but I wonder if ‘months inventory’ tells a more definitive/directional story since sales seem to be slightly idling just now?
Thanks Barrister. Thanks Leo
In my experience insurance agencies cover suites, but you have to tell them about it and pay for additional coverage. They don’t ask whether it is legal or illegal. You can read about exclusions here: https://www.squareone.ca/resource-centres/insurance-basics/home-insurance-policy-exclusions
135 active listings in March vs 80 last March. Up substantially, but it’s not entirely out of line. Remains to be seen if we get a continued growth into the summer and then we would be breaking records. Of course prices are up since a few years ago so we would expect active listings to increase in this price range from then.
Not necessary unless you noticed there is any part of load-bearing wall has be removed. The best person would be an experienced general contractor who is dealing with permit applications (not a framer or a handyman).
If a suite finished over 10-15 years before or just a handyman diy, it may not worth to make it legal because insulation, framing, fire code related, soundproofing, windows and etc won’t meet the building code requirement. For most old houses, to make an illegal suite legal, you are looking for minimum $10k just for plumbing and electrical upgrades.
Give or take there seems to be about 140 listings in the 2 to 4mil SFH in Greater Victoria, That strikes me as quite a few but I dont have any stats to compare with.
I was referring to the Manitoba government home care system, it’s a mess.
@Frank Most home care services are not great for many of the reasons you’ve mentioned but some are better. There’s only one living wage home care service in Victoria.
The Victoria agency it sounds like you’re describing is among the two worst and employs caregivers as “contractors” against labor law.
Without a legal suite any insurance claim would probably be voided, especially if they weren’t aware of the suite.
Overall, months inventory may be signalling a slightly tightening SFH market, there seem to be a relatively large number of new properties (not just re-listings) in the $2M market (+/- 500k) and that linger (beyond DOM that you’d expect for this segment) without much of a bump in sales? In other words a ‘significant’ increase in months inventory at the ‘upper end’. Sorta the opposite of the broader SFH market?
Anyone have data on this unsubstantiated observation?
Are there legal or insurance issues with an illegal suite? For example if you have a suite that is heated with the house furnace (or heat pump for cooling) and something goes wrong like carbon monoxide gets into the suite through the shared duct work or perhaps something more likely like a fire in the main house spreading to the suite more quickly than it would if there were proper fire breaks is the owner liable for any injuries to a tenant? Would the home owners liability insurance cover a situation like that? I am assuming you are expected to tell your insurance company you have a suite. Do they ever question whether or not the suite is legal or not? Does the cost of the insurance reflect the legality? One would think it should because often the reason a suite is not legal would be related to safety issues like separate entrance, adequate means of egress, fire breaks, shared heating system etc.
Unless you are doing it as part of a major reno, it’s likely not worth your while to try to legalize an unauthorized suite in an old house. Especially with so little downside to being illegal.
Long term issue, with excess demand over supply. In the US, there’s been a 40 year supply problem, with housing starts as a share of population falling since the 1970’s. In Victoria , it’s worse because SFH construction is tiny compared to demand and population growth. Net addition (after teardowns) of SFH in core Victoria is about 100 per year. With population growth of 5,000 people/year.
A symptom of this low inventory is when a HHVer asks “what did XXX sell for”, many HHVers have been looking at the same place. There’s more househunters than houses for sale.
https://www.whitehouse.gov/cea/written-materials/2021/09/01/alleviating-supply-constraints-in-the-housing-market/
“ For the past 40 years, housing supply has not kept pace with population growth. A simple way to observe this fact is by looking at housing starts (i.e., new residential construction) as a share of the U.S. population. The figure above shows that housing starts as a share of the population has been on an overall decreasing trend since the 1970s. ”
When my mother needed home care (she actually needed to be in a personal care home) most of the women (never a man) were from the Philippines. I felt sorry for them, they had ridiculous schedules, worked long hours, sometimes overnight, having to take buses at all hours. For little pay. It resembled slavery and they had little choice, even if they were well educated. Sometimes I wonder if they know what they’re getting themselves into. The “Canadian Dream “ isn’t that dreamy. Plus a lot of them are here alone, separated from their family.
I dunno Frank. Seems pretty obvious to me that immigrants are an essential part of economic growth (here and elsewhere). It’s an extreme example but look at Japan abd it’s problems – made over decades of state policy based on denial and xenophobia. Without immigration we would stagnate in no time. As for health care- dear gawd who would pay for it with an ever thinning tax base – not to mention who would fill the orderly etc positions so essential to hospitals. Plus – a lot of the demand is from people already here – can’t export the poor to other countries ( for so many reasons).
Solutions need to come on the supply side.
patriotz- Then why did our population grow by over one million? It wasn’t the birth rate.
QT- Where are these low paid people going to live? Tents. I’m not looking forward to the next twenty years, especially if I eventually need personal care. Hope it never comes to that.
One thing I’d like to know is how many empty planes leave Canada every year. Lots of people on one way trips.
IMHO, we need millions because there aren’t enough people to work in lower pay service sectors, agriculture, and construction, because everyone wants to be a paper pusher or keyboard puncher. And, the birth rate is well below the replacement rate, plus life expectancy is much higher than what it was in the 50s when the policies came into effect. Thus, we have a shortage of working bodies and taxpayers that the much-needed immigrants are coming to serve our millennials housing demand and aging population.
I’m sorry, but before there were standards, the 100-year-old houses with no safety standards were more than safe enough for your parents and grandparents. So, IMHO having a warm place to rest your head is much better than “sleeping in cars, tents, doorways, etc…”
Perhaps we should revisit our policies to see where we went wrong and remove the bureaucracy asap, because the end doesn’t justify the mean economically.
The funny things is that the pro policies proponents have every reason to increase “safety standards” (take owner builder exam as an example), but they have no qualms with staying in much lower safety standards on vacation in Mexico, Costa Rica, etc…
Canada is not taking in 1,000,000+ people a year. We’re not even taking in 500K permanent residents a year. There has been a bump in net foreign migration over the last year because the non-permanent residents (students, TFW) who decamped during the pandemic are coming back.
Dee- Lower demand. We can’t absorb 1,000,000+ people a year. We are basically burning up precious farmland, and everyone wants milder temps. I think the concept that we need tons of new immigrants is flawed. We need some, not a million.
Sounds plausible, but here is someone with the opposite anecdote. Low resale inventory because people are renting the places out instead of selling https://twitter.com/kbessey/status/1647318730903543810?s=46&t=x3t9-Oy2Ij5MmoyatC2ATg
@Frank – what is the alternative to building our way out (increasing supply given so much demand/need). I don’t understand (or see?) an alternative. What is it?
If folks are locked in at 1.5% to 2.5% mortgage rates, probably little appetite to buy and eat a higher rate, that also combines with the lack of move up options. I have a few friends that bought 5 years ago with what they figured we property ladder homes and they are happy with their gains, and want to sell and get something else, but there is a lack of what they want at their price range. If they sell, they figure they might not find another home.
According to my agent/manager, a lot of his investors who owned rentals have sold leaving him with less rental inventory. I might be cashing out this year, I think insurance rates a going to be ridiculous. We’ll see what the property tax increases are, with minimal rent increases, eventually it’s just not worth it. Prices will still go up steadily until there is a real economic meltdown. Boy are my tenants going to be pissed, I can’t subsidize them forever.
So what are everyone’s theory as to why there is such low inventory. Especially why considering that prices have remained high? Death and divorce are still listing so which group are not listing.
When are we going to realize that we are never going to build ourselves out of this problem. Time to look at a different approach.
The easiest way to find out if you can add a legal suite to the home is to call Saanich Inspections. It’s not just the suite, the entire home will have to meet current fire, safety, health, current BC building codes (including ceiling height) and municipal regulations for suites.
It’s not just a matter of a bylaw officer ticking off a box. It’s going to cost a lot of money to get approval on existing homes if or when the BC government initiative comes into effect. I suspect that the home owner will have to hire an Engineer to do the inspection(s) before the municipal bylaw officer will sign off on the suite. So how much money do you want to spend in getting approval?
It’s far easier to obtain suite approval on a new build when the walls are open and the electrical and plumbing can be inspected and the materials used are new. Aluminum wiring, asbestos, etc. are all going to have to be removed. The suites have to be on their own electrical panel and two hot water tanks.
Yes we have a housing shortage but that is not a valid reason to approve or fast track sub standard or unsafe housing.
I wonder if the natural level of unconditionals will increase with the rescission period.
$1,060,000
Sounds to me that the powers that be are setting standards that are cost prohibitive making projects economically impossible. Maybe that’s why 931 McClure is on the market, the owners were faced with unrealistic obstacles. Higher interest rates haven’t helped, why invest money into a project that may not pay off in the distant future when you can earn easy money in the bank. Looks like there’s few solutions to the housing problem, let alone affordability.
I grew up in a house where the basement playroom, where we spent most of our time as kids, had a 6’8 ceiling height, with light fixtures and HVAC drop-downs to 6’2. My (relatively short) family never had an issue, and we had guests sleeping over down there on dozens of occasions. It didn’t feel like a safety hazard, and more to the point, the government certainly wasn’t going to show up and demand we remodel our basement.
Is the building code part of the problem? Like, if we are trying to house people who otherwise are homeless (or at risk or being homeless), and therefore sleeping in cars, tents, doorways, RV’s and friends’ closets, maybe we shouldn’t be worrying about whether sub-7 foot ceilings are a problem for everyone (or just those over 6’5)? I know we don’t want people dying in house fires, but It seems like super-high standards may be seriously constraining market flexibility. We know anything built pre-1980 isn’t close to matching modern building codes, and yet we don’t force homeowners to update. Just speculating on if there’s a solution where rules could allow for lower standards for rentals (for adults only maybe? Not kids?) to help bring more suites to market.
Things feel busy as it has been super slow this winter, but if we end the month at around 600 sales that is 50% less sales (close to 1,200) that we had just two years ago. It is a bit of a bizarre market.
In my first 5 or 6 years in real estate I never laid eyes on an unconditional offer and now you see them all the time with all the multiple offers and over ask sales, despite the sales volume being the same as 2011-2014. The different is back then we have over 4,000 listings. Not 2,000.
I think so. 2.1 metre minimum height IIRC?
7-foot basement, can you make a legal suite out of that?
931 McClure street is for sale. Any of the RE experts want to comment what this might indicate?
4 bdrms up and ample space downstairs for a relatively easy to put in suite. Probably just end up as an up/down rental hold property.
1735 Townley- Very dated, modest lot, sold under assessment. Is this a flip or tear down?
$1,052,000
Still listed as active on the portal.. Hasn’t posted the pending or sold price yet.
Anyone know what 1735 Townley sold for? I think conditions have been removed at this point.
Thanks!
Hello – can anyone tell me what 3065 Irma St sold for? It went surprisingly quickly….
Has anyone heard of many foreclosure sales?
I agree with Leo, I think the market is boring … and will probably get more so in the next year.
Pretty much. Just really bad new listings situation.
Ya it is the spring market so it’s picking up but i wouldn’t say the worse is behind us This meh can go on for a good while yet imo
Right, in my area a few listed houses haven’t sold (in that price range) and have been listed for months,
I have been following 2to 4 million and listing seem to be coming on a lot faster than sales. But one of the STATS GODS here would have a clearer picture.
Definitely seems market is changing last 4 weeks. DOM decrease, more sold over ask and assessed. Realtors are you feeling this yet? I’m watching Core Victoria.
Definitely still a few terrible sales out there where houses are listed low (eg, below assessed) and accepted low, but the good houses in desirable neighborhoods seem to be killing it again.
My bad, I got the number crossed wired with something else, but according to Wikipedia more than half of the Canadian families were living in poverty up to 1951.
https://en.wikipedia.org/wiki/Poverty_in_Canada
It doesn’t matter how you slice it, the Macro trend graph may use different lower dollar amount for measurement, but all in all life has greatly improved in Canada from half the population in 1950s that lived in poverty to less than one 10th of the population currently.
In case you missed it, the point of both QT and my post was that poverty rates in Canada have fallen dramatically. Down by 33% from 2012-2019 using your (and my) preferred method (MBM (“market basket measure”)). As shown on the chart I posted.
If you agree with that, fine and there’s nothing more to discuss, and we should both be happy that poverty rates are falling fast in Canada . If you don’t, come up with something to contradict that.
Apartment complexes should have sprinkler systems. They can also cause a great deal of damage but I believe they can be set up to focus on the point of origin. Don’t they also install fire escapes on large buildings, or is that a thing of the past? People still forget things on the stove, light candles, charge their ebikes and other devices. One would think that building codes are created to keep occupants safe. 20 homes were a complete loss, 10-15 more sustained heat.damage. High winds and density were reported to be the main contributing factors. I think building houses too close together is evil, it definitely is greedy.
I would also think that townhouses would have a substantial fire barrier between each unit.
Open construction with exposed timber that doesn’t have it’s exterior fire resistant cladding on yet was probably more the problem for the fire spread and likely wouldn’t have been an issue with completed construction. Not really sure that is sacrificing lives for economics. By that logic all multi-family, townhomes, condos, duplexes and apartments are just built as death traps for sake of the evil real estate corporate cartel profiteers.
The original point was that the houses were built within a few feet from each other allowing the fire to easily spread. Not sure of the exact distance, but too close for comfort. Someone is sacrificing lives for density and economics.
Or maybe just a coincidental fire, but it is as the kids say, sus
Lol, not the developer, the buyer’s that made their pre-purchase agreements 2 years ago and now have a finance problem at the new rates. There were quite a few stories coming out of southern Ontario of buyer’s wanting out of developments that were coming due for delivery that the buyers could no longer afford.
I would think that developers are very well off and would not risk their well-being on one project by committing a crime like arson. If you’re building multimillion dollar projects, you’ve got plenty of backup.
Should be a pretty easy suspect list for police to put together.. Hmmm, who was under water and not able to get their delivery financing approved and facing a massive court ordered liability for breach of contract? Now I guess the developer is in breach for not being able to deliver and might have to pay those deposits back.. should be lawsuits all the way around on that one.
$5.50 usd a day could translate into enough money to survive on depending on the country and the value of its currency. The US dollar is like gold in some parts of the world, that’s why it’s so heavily counterfeited. And who is going to police that? Not the CIA, they probably supply the ink and paper.
No. It is not some “popular” measure appropriate to assess how great Canada is doing. The World Bank’s poverty measures are used to track progress in eradicating extreme poverty internationally. If Canada was below 5.50 US/day per capita headcount (now actually $6.85 US in 2017 dollars), this could bring it to the attention of the World Bank and within some program eligibility. And, as the World Bank did not even have these measures in place in the 1950s, I don’t know where QT is getting his 9% poverty rate for Canada in the 1950s from, but it is not from the World Bank’s measure.
As the World Bank states:
https://datatopics.worldbank.org/world-development-indicators/themes/poverty-and-inequality.html#:~:text=Poverty%20measured%20at%20the%20international%20poverty%20line%20of,poverty%20to%20less%20than%203%20percent%20by%202030.
That may be suitable for some place like China but that amount of money couldn’t even keep you off the street in Canada, never mind out of poverty.
There has in fact been a significant decline in numbers living in poverty in Canada over the last decade, the main reason being the introduction of the Canada Child Benefit, which got a further boost during the pandemic as totoro noted.
I wonder if there’s a blog called House Hunt Pebble Beach or House Hunt Santa Monica where earnest and intelligent people are manifestly mystified by the lack of affordable housing in their neighborhood.
Canada has 10,000,000 square kilometres. Of those, there are 6 square kilometres where any human would remain of their own free will. These 6 km are centered around Gonzales Observatory.
Houses there are………..very, very expensive.
Oh my! “Just Plain wrong”, calls for a … “fact check on aisle 9!”
There are of course many different scales to measure poverty. The World Bank has several.
QT is (correctly) using one of the popular ones from the world bank , which is clearly labelled in his chart ($5.50 usd/day, based in fixed 2011 dollars).
Since 2018 Canada uses a poverty measure, called MBM (“market basket measure”). As you can see, any way you look at it, there is good news in the poverty numbers, with the MBM falling from 15% (2012) to 10% (pre-Covid 2019) (Covid year 2020 excluded). This is a much bigger drop (-33%) in poverty in recent years than shown on QT’s chart.
Conclusion: QT’s chart is correct for what it states it is measuring. Canada’s official poverty line (MBM) also show huge improvements from 2012-2019
https://www.statcan.gc.ca/en/topics-start/poverty
“ According to the MBM, a family is considered to be in poverty if, given its size and region of residence, it does not have enough income to buy a set of goods and services considered to represent a modest, basic standard of living.”
Yeah, this is just plain wrong. The poverty rate in BC was 9.6% in 2020 and for Canada it was 8.1%. There was a drop from 2015 but, according to StatsCan:
https://www12.statcan.gc.ca/census-recensement/2021/as-sa/98-200-X/2021009/98-200-x2021009-eng.cfm
US$5.50 a day is US$165 a month or about CAD $220. That’s your poverty threshold? Or is it supposed to be inflation adjusted to some date?
Perhaps housing is an issue, but poverty has dropped to a historic low to less than 1% in Canada. And, the prosperous 50s poverty rate was at 9%.
https://www.macrotrends.net/countries/CAN/canada/poverty-rate
Short term rental restrictions would help the condos where short term rentals are still allowed. Less competition.
Careful about buying a short term rental in another muni though if the provincial legislation comes through. Make sure it works as a long term rental. Good point though that “long term” doesn’t mean years. Anything over a month counts.
I can definitively see this. New year resolution this year was not to buy any articles of clothing or shoes. So far so good. Don’t care about the environment just want to wear down my closet to a few articles of clothing over the next few years.
I have $30 H&M shirts that are holding in there 12-13 years later. For example, I wear this shirt once a week
Youtube video from 10+ years ago wearing the shirt – https://www.youtube.com/watch?v=QPq22sd5Z60&t
exact same shirt 2 months ago – https://www.youtube.com/watch?v=6kU9u1J9udw&t
If you want to cloth super cheap the options are there. Same with eating, inflation hasn’t really hit bananas and rice too bad. Vegetables sure but if you shop around it isn’t the end of the world either. If you don’t know how to cook yea no shit it is expensive to eat.
Transportation is about to get a lot cheaper as EVs drop in price. I’ve now had years where I didn’t need to change tires where my only expense was insurance (I have lifetime free supercharging with my EV).
Yes, if you want to go see Bruce Springsteen in Vancouver for $900-ticket inflation sucks, fill your boots.
Some insane sales at the Janion….over $1,500 per square foot. A 257 sq.ft. unit sold today for $418,950.
Despite all the negativity regarding AirBnB and short term rentals looks like we are hitting all time peak prices for such product. Not technically short term, but I was offered $7k per month for a four month rental on my 1,000 sq.ft. Vic West condo. Lots of demand for shorter term type rentals from plenty of industries (such as movie industry), and not much in terms of options especially now that the supply is fixed. No new hotels being built either.
Speaking with my property manager/agent today and according to him, there are very few SFHs for rent, the lowest he’s ever seen (over 30 years). He attributes it to small investors that have sold their rental properties, leaving him little inventory. He gets several calls a day and has nothing to offer. He also mentioned that he has several buyers and money is not a problem so long as they find what they want. I asked him how old he is: 71. I’ve been dealing with him since 1994. Good to get another perspective.
Yes, thanks. This is good news. Not just me reporting it, but also statCan, and Leo with charts!. For those unfamiliar with the term “core housing”, here’s statCan defining it for you. And note that there have been big IMPROVEMENTS in that the % of people in unsuitable dwellings has fallen from 12% to 10% (statCan summarizes it below, but Leo’s chart has the details.
From statCan
“ Almost 1.5 million, or 1 in 10, households were in core housing need in 2021
Almost 1.5 million Canadian households lived in core housing need in 2021, defined as living in an unsuitable, inadequate or unaffordable dwelling and not able to afford alternative housing in their community. The core housing need rate fell from 12.7% in 2016 to 10.1% in 2021, driven largely by the improvements in household incomes and housing affordability.”
It’s nice to see you back trying to argue there is no problem with housing. To help you out, I recently made this chart.
Again, jibber jabber and misinterpretation.
The report this is taken from – stats can’s 2021 survey – goes on to explain that the decline is largely due to the temporary pandemic payments by government to lower income Canadians:
And Canada is a big country. There is a big difference between provinces and between urban centers and rural and the economic position of the 67% of existing homeowners vs. those that rent and those who want to purchase a house now and going forward. If we consider the stats for our market, they are dire, and it is a crisis for renters who earn median and below incomes and have children in particular, and it has become much harder for people to buy a first home. I’ve done the math for my children and can see this is true.
Here is what the 2021 stats show:
Add in the growth rate of the population here vs. available housing stock and it will only get worse.
The stats don’t lie and the math is clear. Many people in Victoria are spending around 50% of their income on average on shelter unless they bought some time ago. That is not due to discretionary choices, but due to median cost of shelter vs. incomes.
Discretionary income rising means that people can use this income any way they want. And that can mean buying a nicer home, which is an asset of course, and a clever use of discretionary income.
Almost nobody on HHV is looking for a 1-2 bedroom condo. They can afford better than that. They just gripe because the nice core SFH they want costs more than they can afford.
That makes no sense.
If some essential goods become less expensive this does not mean other essential goods become more expensive – it should mean that discretionary income increases if the costs remain stable as a percent of income.
Also, the article references stats from 2003 which is already 20 years ago, it is from the US, and, as Patriotz points out, most significantly, it does not account for the overall change in family budgets due to two income households since the 1970s. Without two incomes many households cannot afford to pay for family-appropriate shelter today, unlike in the 1950s.
https://www150.statcan.gc.ca/n1/pub/11-630-x/11-630-x2016005-eng.htm
Canadian house price growth has outpaced income growth by almost 50 percent since 2015. In Victoria, households now have to pay 48% of their income to afford a mortgage, and renters pay this much or more on average. And, unlike the 1950s, households may pay another 10%-20% of their incomes for childcare at certain stages of life, and 10-20% of their incomes for transportation.
We are expected to assume as a given that, due to this unrelenting housing crisis, more Canadian households are spending more than 30% of income in shelter costs.
StatCan has posted some “inconvenient” data and insights to challenge that, from the 2021 housing survey data.
https://www150.statcan.gc.ca/n1/daily-quotidien/220921/dq220921b-eng.htm
— The rate of unaffordable housing, or the proportion of households that spent 30% or more of their income on shelter costs, fell from 24.1% in 2016 to 20.9% in 2021
—- The rate of unaffordable housing in Canada for renters fell from 40.0% in 2016 to 33.2% in 2021, with most of the decline occurring among renters earning below the median household income of all renters (68.4% in 2016, compared with 56.0% in 2021)
If you ask me the problem is the arson. Those homes were new builds days from closing
Except for the people buying avocado toast. They have no income left for housing
Two big reasons why % spending on food and clothing is lower in more recent decades. One, households are smaller, and two households are much more likely to have two wage earners. So instead of having one earner supporting five or six people in 1950, we have now have two earners supporting three or four people. And yes that leaves more money available to spend on housing. In particular the shift from one to two wage earners is responsible for a good deal of the increase in housing costs since the post-war period.
However, as usual looking at average costs for housing ignores the real problem, which is at the margin. Costs of home ownership vary dramatically depending on when the owner got into the market. Renters face rapidly rising rents on the open market. I note also that the most recent data is from the US in 2003. A lot has changed in the US itself in two decades, and housing affordability has declined more in Canada than the US over that period.
Have you been outside lately Patrick? Yes clothing is cheaper thanks to Asian sweat shops. What about transportation? I remember when bus fare was 10 cents, now it’s $3.00. Gasoline was 50 cents a gallon in the 1970’s, now its around $7-8 a gallon. I also remember my food budget in 1980 when I was going to school in Georgia was $25 a week. Granted, food prices were cheap in the U.S. In the 1950’s and 60’s it took one income to buy a decent house, now you need at least 2 incomes. I haven’t got $50,000 to spend on a new car, $200-1000 to go to a concert! When I was young concerts were $10-15. Prices of most things are astronomical in my opinion, especially housing.
The average household spends more on housing because their expenses in other areas (food, clothing) have fallen dramatically. As you can see from this chart, comparing the years 1900, 1950 and 2003.
Comparing 1950 to 2003, we see that:
—- housing expenses as % of income have risen by 5%, from 27% (in 1950) to 32% (2003)
However
— food expenses have fallen by 17%, from 30% to 13%
– clothing expenses have fallen by 8%, from 12% to 4%
———
—- So overall, in 1950 people spent 69% of income on housing+food+clothes.
—- And in 2003 that fell to 49%.
—- In 2021, the housing % has risen to 34%, so the total spend is slightly higher at 51%, but well below the 69% spent in 1950.
—-That’s a dramatic improvement in household expenses over time, and explains why people are able to spend more on housing.
If we consider housing+food+clothes to be the “essentials”, we should be aware that these essential household expenses have fallen dramatically over time (69% of income for essentials (1950) to 51% (2021)
https://www.theatlantic.com/business/archive/2012/04/how-america-spends-money-100-years-in-the-life-of-the-family-budget/255475/
Not sure why I never posted this here. I came across this a while ago, and it seems apropos to Leo’s (and many others’) efforts round these parts.
https://worksinprogress.co/issue/the-housing-theory-of-everything
Just heard of a fire in a new subdivision in Vaughan, Ont. that destroyed several houses. The problem is the small distance between structures. I’ve noticed that new houses are being squeezed close together in an effort to maximize land use. Unfortunately, this creates other problems.
And that was a generalization.
Leo-All I got was piano music. Having kids in a community is a healthy sign of a balanced demographic. That’s where importing millions of adults (many with their own kids) might have not been the best plan to grow our dwindling population. Maybe increasing adoption of the millions of orphans around the world would have been wiser. But the problem is that couples (and there are fewer couples than ever) don’t want or can’t afford to raise a large family.
This interview with the housing minister is well worth a watch. He gets it.
https://www.youtube.com/watch?v=2uD9WSepoQM
Some quotes.
“If you don’t have kids in your community, your community is not strong. That should be the bar on whether a community is successful or not, is whether you have kids growing up in it”
“you can’t set people up for success when they’re coming here if you don’t have adequate housing. We have international students here, 8, 10 people living in 1 bedroom suites, how is that healthy for society?”
“We are learning from other jurisdictions that when you have ambitious plans, there are a lot of things that can be set as roadblock to ensure that plan doesn’t go through: parking, setbacks, heights can be used as barriers to stop housing”
“If communities put as much attention and care into housing as they do into parking for cars, we wouldn’t be in a housing crisis. We think about the cars more than the people in our neighbourhoods”.
On missing middle: “When we bring in legislation, we will be looking at how do we ensure that there’s not overemphasis put on parking, we’re looking at setbacks, we’re looking at what height requirements will actually allow this type of housing to be built”
“In order for us to get the housing built that we need, we have to de-politicize the process. As long as the politics are there, every single decision is going to be hard”
“That’s why we changed the law to say that if a plan fits within the OCP, then you don’t need to go back to council, that’s why we did that. Now only some communities have taken us up on it”.
“We need to ensure decisions are being made for the right reasons, and not for whoever has the loudest voice. Often the loudest voice is those who have the most power. People who have no homes or new immigrants working 50-60 hours a week they don’t have time for these conversations. We have to bring other voices into the conversations”
“A lot of the pieces we are talking about will require legislation, and our goal is to have most of it this fall”
“I’m worried about rental construction given where interest rates have gone, and a lot of rental projects now are not viable under the new conditions. We’re going to need additional units and FSR in order for them to be viable, and if any local govt thinks that’s not the case, then we have a bigger problem”
“We’re gonna have to find ways to make rental projects more viable. The three ways are:
1. (Relaxing) DCCs and CACs
2. Considering additional density
3. Getting them approved faster
or all three”
“I’m sympathetic to many arguments that people make because people come from different places and have legitimate concerns. Fear of renters, I just don’t get. I just don’t get it.”
Without stats and data you end back up at individual opinion which is not a reliable indicator of trends you can use to plan your own future.
I tend to agree with Patriotz that owning a house likely correlated with financial well-being and this is more significant. Also, just because you live in a townhouse doesn’t mean you have stronger social connections. When you don’t get to choose your neighbours it is a roll of the dice. I don’t really care about living in a SFH re. expectations of others or prestige, but I do care about noise and having to share a wall or floor with someone I find annoying or don’t like and I can’t move easily. Other countries have better building standards for condos – ie. concrete – and cultures which have greater social obligations re. controlling for noise/disturbance in closer quarters. NA tends to have the “home as castle” culture.
Seemed obvious to me too. I’ve been posting about this here for well over a decade and the steps we took as a result.
If life satisfaction/happiness is your goal then you have far smaller but more important things to take care of than getting a SFH in Victoria. And focusing on what you can’t have does lead to greater unhappiness. Canadians have a lot “head-start” in healthcare/social supports/natural environment.
If you want to be happier than you might otherwise be the research shows it is small daily actions and habits repeated over time that make the most difference. Like focus on maintaining positive family connections and long-term friendships. Choose your spouse carefully and don’t get divorced if you can avoid it. If you have trauma get the help you need to move through. Exercise and learn about nutrition – btw this is a great free site to understand nutritional values – cronometer.com. Stop drinking or limit it to 2 drinks a week. Don’t smoke. Get morning light. Get good sleep. Avoid chronic stress. Save and invest for retirement.
https://hubermanlab.com/science-based-tools-for-increasing-happiness/
And the new studies do show there is not the upper limit correlation between income and happiness as previously thought, but there are different gradations for people who have different levels of emotional well-being to start with for other reasons:
https://www.sciencedaily.com/releases/2023/03/230306163006.htm
BoC’s comment on mortgages and housing.
https://www.cbc.ca/news/politics/bank-of-canada-deputy-governor-s-advice-to-anyone-renewing-a-mortgage-1.6807936
Stop it Barrister! Don’t you know that real men don’t generalize?
Now you understand why almost everybody has a problem with some Millennials.
@Barrister I don’t share the view that the change in expectations means that they are lowered. I don’t think someone who lives in a townhouse or with shared walls is necessarily less happy because of it or worse off overall. I’m happy that expectations are shifting and I hope that they shift more. I mean, who couldn’t see this coming anyway like a decade ago. Look at Victoria on a map and you’ll see it’s surrounded by water, plus the climate, plus migration. It’s like the closing of the frontier – except this time the frontier is SF. Meaning, the older generations can let themselves off the hook in terms of housing (except lack of investment in social housing) because these are much larger forces (probably global too) that are causing the shift (which not everyone thinks is bad anyway). The climate, that’s another story…
Main flaw in the study is not the added happiness with more $ its actually the added stress and effort of making that extra $. If one could make 150k with the same level of effort and stress as making 75k, I guarantee that person will be more happy.
Barrister
Now, you understand why Millennials have a problem with Boomers…
Dee, have to disagree, it is not a matter of SFH being a status symbol but actually there is actual value and utility in them.
Sometimes I get the feeling that the goal is to mirror North Korea in terms of how far people should lower expectations.
My dads generation strove to make things better for my generation but these days the narrative seems to be that people need to settle for less. I feel like we are failing the younger generations.
A new study recently done found that the Princeton study was not totally correct that happiness continues to climb with more wealth.
Ya so that 75k is probably 120k now.
This simple mindset shift could make a difference in the way people view success and their lives, but of course there are other variables at play. For example, while this study didn’t cover how income specifically affects life satisfaction, researchers agree that it also impacts people’s happiness. A 2010 study out of Princeton University found that there’s a correlation between happiness and wealth, to a point of about $75,000 per year. When people make more than $75,000 a year, their happiness doesn’t increase, but the lower their income is the worse they feel, the study found.
Jiao added in the press release that, above all, it’s important to keep in mind the things that bring you happiness that don’t come with a price tag. “These include family, friends, your health, continual learning and new experiences,” she said.
Money can’t buy you happiness, but it can buy you a yacht big enough to pull up right alongside it.
-David Lee Roth.
You seem to be talking here and above about the US. In Canada, there was a big increase in household debt during the 2008-9 recession and a corresponding increase in house prices. Not an accident, it’s what Harper wanted, and I recall him on the radio saying it was an indication of how well Canada had dealt with the recession.
It’s well established that there’s a strong correlation between financial well-being and happiness. Being poor is a drag. I think that’s mainly responsible for the correlation between home ownership and life satisfaction. It’s not really the house, it’s being able to afford the house.
@totoro those are nice stats but it’s possible that people that own SFH are most satisfied because, as a society, we have tended to correlate SFH ownership with success. Perhaps there’s a chicken and egg thing happening with those stats. Makes me wonder if that implies that folks in countries where there is virtually no SFH are therefore statistically less happy than folks here that have SF. Also, as was pointed out, sense of community and belonging are huge predictors of happiness. Less isolation in townhouses so maybe once we stop valuing SF ownership as the most important the stats will change and townhouse dwellers will turn out to be happiest.
Build more townhouses. That’s what we need.
I would expect they would still want a SFH. If you look at the survey, that’s what they said “ SFH was also the preference of 81% of buyers between 22 and 30”.
There was a narrative a few years ago on HHV that millennials were different than previous generations, and would be seeking downtown living in condos. I recall in 2019 when Barrister was discussing selling his 6,000+ square foot house, several HHVers told him no one wants big houses anymore, and “good luck” selling it. Then COVID hit, and everyone needs space for home offices and big SFH are back!
Not everyone who wants to will own a SFH in Victoria, but remote work opens up options for ownership in less expensive communities. This was not available to previous generations.
And the property ladder is a real thing. Equity accrues through principal paydown and appreciation and this happens for new buyers at a time when they are typically increasing their salaries.
Finally, multigen housing will probably become more popular, along with coownership. The missing middle houseplex conversions that provide affordable owned housing may also be a good option. We’ll see what the new NDP legislation has in it for housing options.
Luckily, people set their aspirations based on achievable goals for the most part. Life satisfaction is correlated with stable housing, but the research shows that statistically people get way more happiness from positive social/family connections, good health, financial stability and a positive outlook than they would from specifically owning a single family house.
Affordability and therefor options change over time, but I’m not sure this is a value change. A good thing is that people adapt to the choices available and things that were unusual like raising a family in a condo become accepted. However, on a societal level the trends show that homeowners are more satisfied with their housing than renters and owners of SFHs are more satisfied with their homes than those who own high-rise condos overall.
https://www12.statcan.gc.ca/census-recensement/2016/as-sa/98-200-x/2016005/98-200-x2016005-eng.cfm
@Patrick sure, but what about the ones that are in their 20s now – the generation post millennial. Do they have any expectation of ever being able to own a SFD? If not, are they hopeless or, what do they aspire to?
All the data I’ve seen points to millennials wanting SFH with big yards. It’s the boomers that are less interested in buying SFH. This all makes sense, as millennials have young kids and boomers have empty nests.
https://www.hgtv.ca/18-things-millennial-buyers-want-in-a-new-home-for-2021/
18 Things millennial buyers want in a new home.
“ Detached Single-Family Home
Millennials are in on one of the biggest Canadian real estate market trends of 2021: they want detached single-family homes. This is a trend south of the border too, where the National Association of Realtors – or NAR – conducted a study of what different generations want in their homes now. The NAR report says that 88% of buyers between 31 and 40 wanted a detached single-family home, while it was also the preference of 81% of buyers between 22 and 30. What millennials don’t want are apartments or condos.”
The biggest difference between 2008 and 2020 was that in 2008, government actions (only monetary policy) were targeted at repairing banks’ balance sheets. In 2020, the actions (massive monetary as well as fiscal) were directed at consumers and businesses as well as banks, which already had surplus money to lend.
In 2008, banks absorbed all the money and used it to improve the liquidity and solvency issues so no money was lent out, resulting in a long period of disinflation. In 2020, the consumers directly received the payments and spent it crazy in 2021 and causing a rapid rise in inflation.
In retrospect, monetary response during pandemic was unnecessary as nobody needed to borrow large amounts of money when the economy was shut down. All that stimulus went to the RE rather than real economy.
“Expecting people to sell their single family home and downsize is simply not that realistic. Most couples have 2 vehicles, the new complexes are offering 1/8 parking. No thank you.”
Sure but I think values change over time. For example, we only have 1 car and try to use bikes to get to work. We also have tenants above and below us. We have a yard but what does that matter when most people spend 90+% of their free time inside and when they want to go outside they can go to a park. I wonder if we will see a change in values. Maybe people would rather have a much lower financial obligation that frees up income, as opposed to sitting on a bunch of locked up wealth in the form of a house. Maybe they’d prefer less stress and freedom over that piece of dirt. Perhaps the view that owning a detached house is the apex of success or what we should all aspire to will shift to something else. We personally share our space with tenants and have one car, but now we are going to travel overseas with our two young children for half a year. That’s our priority over having a bunch of empty space that we never use, have to clean and pay to heat etc… just so we can say it’s “all ours.” I am very excited to see the new values that this younger generation brings. I think it will be very different – I think it will have to be.
Thanks for this Leo. It was literally the question I was asking myself this morning.
I’m curious about your thoughts on the rental market and how increasing incomes may help there? Do you think increases will relieve some of the stress or will it take a few years of income increases (and for a renter to stay in place long enough to realize the benefit of not moving around too much)
Expecting people to sell their single family home and downsize is simply not that realistic. Most couples have 2 vehicles, the new complexes are offering 1/8 parking. No thank you.
Condo maintenance fees can be very high adding to monthly costs, with the special assessment always looming over your head. I’d much rather invest money into my house than into an entire complex.
You may be very comfortable with your neighbors and surroundings, something that is difficult to duplicate.
The rental market is very tight, prices are high and you may be asked to leave with few options.
There’s nothing like owning your own piece of dirt.
Anyone interested in seeing how correlated the improvements in Victoria SFH affordability have been to BC interprovincial migration should check out these two charts. One is Leo’s affordability chart, and the second is BC net migration from other provinces. You can see they have the same peaks and valleys.
The point being… if the good times keep rolling, and ROCers keep coming to BC, likely affordability won’t improve. But if the BC economy goes bad, with unemployment etc., and we see net out-migration from BC, it is likely that affordability will improve. Simply put, more people sell their Victoria homes and move to places like Alberta.
My #1 curiosity with all this is whether the prices for single family will completely detach from the rest of the market (townhouses and condos). If so, then some people might be tempted to sell and move down to a townhome or condo. I’m curious to see the lines in a few years and whether there is a clear detaching that starts especially this year. This is of course based on looking at many graphs on this site and seeing that all three housing types seem to move more or less in tandem. Perhaps I’m mistaken in my memory of that though.
The main factor that has correlated with affordability improving (by lowering prices).has been … Migration from BC to other provinces
Every improvement in affordability that we’ve seen in the last 40+ years in Victoria has been co-related with net out-migration from BC to other provinces.
Now this (out-migration) is also co-related with a lousy BC economy, and a recession/unemployment by itself would be the other big factor that would improve affordability Both these factors improve affordability by lowering demand/increasing supply, leading to lower prices.
I don’t think this is correct. Lots of people were expecting the banks and government to do everything to prevent defaults, because that’s also what happened in 2008. What I think people (and me included) did not expect was that it would (so far) work more or less perfectly. There are plenty of real estate and economic disasters where government and banks take action to prevent or mitigate the declines and it simply doesn’t work.
https://twitter.com/MikePMoffatt/status/1646153393101066241
Those that actually have savings I am not worried about. Agents that have established business usually do okay in downturns as sellers panic and don’t want to risk it with someone newer. I think the record number of agents might have to do with a 1 year delay in licencing….new agents coming on board started the process of becoming licenced a year ago when things were quite this slow yet.
Exactly, no one came out and said, hey maybe the government and banks will do everything possible to prevent defaults which looking back doesn’t seem like an unreasonable prediction whatsoever.
It is kind of like when we had the massive run up in prices in Victoria in 2016 it turned out Vancouver buyers were a large contributor to the demand equation. However, not one person brought up the fact that Vancouver prices were trending up in 2014 and 2015 (while Victoria was flat) and that maybe people would start selling their $2.5 mill kits homes to buy the same home for $1.0 mill in Oak Bay. It was only after it actually happened that it made sense.
I agree with you Barrister. Everyone who doesn’t own a home is always going on about the paper gains – and having bought a home 3 years ago I realie how difficult it is to get into the market with normal or high-ish wages – but as to the current situation – So yes, maybe you want to sell your home. Where will you go? Moving up the market is even more expensive and unless you are looking to downsize, you are stuck. Most the recent millenial homebuyers I know, including myself are waiting it out and cutting some costs. You need somewhere to live anyhow.
@Marko Juras – perhaps it’s simply that given the record number of sales at record prices the last few years, some Realtors (just like others) are working their way through their savings before they call it quits?
Rush: I suspect that you are correct that the banks are allowing people to drag out the problem. The other factor is that people cannot afford to sell because they cannot afford a new mortgage at a higher rate. Basically they are stuck with what they have. This is like turning an aircraft carrier. It takes a long time to make this sort of turn. But we can still rely on death and divorce to keep adding inventory.
I think, in part, people incorrectly expected the free market to do its thing while the banks had different plans:
“New data from CIBC show that $52-billion worth of mortgages – the equivalent of 20 per cent of the bank’s $263-billion residential loan portfolio – were in a position where the borrower’s monthly payment was not high enough to cover even the interest portion of the loans. The bank has allowed these borrowers to stretch out the length of time it takes to pay off the loan, which is known as the amortization period. As well, borrowers are adding unpaid interest onto their original loan or principal.”
This is on top of the 6 month deferrals they were giving out at the beginning of the pandemic along with increased amortizations for those who needed it.
If the banks won’t allow people to feel the impact of higher rates – or at least will look the other ways for those who can’t afford to – how can we expect to see people selling their homes especially as Canadians are accustomed to ‘just wait and prices will go higher’? This is at least PART of the reason why IMO.
I am predicting 600 sales for the month. The crazy thing is we keep hitting an all time high in terms of licenced realtors. With the number of brick and mortar real estate offices that have opened in the last 5 years someone has to be feeling the pinch of this market but not seeing any cracks in the industry, yet.
Yup, come fall we will be looking at large YOY gains in sales numbers and even a possibility there is less inventory.
So what happened to all these narratives we’ve had since covid started that new listings would ballon? First it was job losses, then it was mortgage payment deferrals coming to an end, then it was mortgage rates crushing people forcing them to sell. We haven’t even seen average new listings let alone above average or a flood which is leading to low inventory and price stability.
My point is markets are very difficult to predict.
I predicted 3,000 active listings by May and obviously way off on that prediction. Not sure if we will hit 2,300 at this pace. Certainly won’t hit 3,000 this year.