A mix of good and bad indicators on debt
There’s a new tool out there for monitoring indicators around mortgages, housing, and financial vulnerability on a national level. The Bank of Canada has a new page with indicators of financial vulnerability that shows up to date quarterly data on those topics. There’s lots of interesting charts on there, but perhaps more importantly it’s great that the Bank of Canada is committing to updating these on a regular basis instead of just periodically releasing some tidbits as part of a financial system review. In this article I take a look at some that stood out to me.
I’ve posted my own chart of these data before, but it shows again that after reaching a high of over 50% of all loans, the take rate for variable mortgages has collapsed to just 12% in the most recent quarter. That’s no surprise given that variable rates went from a full 1% discount over the average 5 year rate to a 1.5% premium as of March. Only the hardcore few that are betting on the Bank of Canada dropping rates quickly, are expecting to have to break their mortgage and can’t tolerate fixed rate penalties, or simply got bad advice from their mortgage broker.
Those variable-rate refugees, rather than returning to the old stalwart of 5 year fixed rates, have poured into shorter term rates from 1 to 4 years. As of the first quarter, two thirds of borrowers were choosing a fixed rate with a term of under 5 years, taking a small rate hit in exchange for the bet that they would be able to renew into lower fixed rates sooner. That seems like a sound bet if you’re paying about the same as a 5 year for a 3-4 year rate, but personally I would be cautious about paying a substantial premium for a 1 or 2 year rate in the hopes that we’ll be back to free money funtime by then. The Bank of Canada is certainly doing some work to throw cold water on the idea that rates will quickly drop back to very low levels.
The Bank of Canada has often talked about the Loan to Income (LTI) ratio, paying special attention to borrowers with an LTI of over 450% which it calls especially vulnerable to losses of income or rate shocks. That (and the median LTI ratio) have dropped off a cliff, and in fact the median LTI is now back to pre-pandemic levels.
That’s true across the board with LTI for all types of homebuyers declining, though note that the data below are 2 quarters behind the data for all mortgages. What does it mean? It’s not that Canadians have suddenly found additional wealth and need to leverage less, it’s just that those taking on large debt loads have been sidelined by rising rates, while remaining buyers either have larger down payments or larger incomes to enable them to continue buying.
Interestingly enough when looking at initial Loan to Value (percent of the property value that is mortgaged at purchase) the average ratio has been declining for a decade. You could read that as good news, given that a lower LTV means buyers have more equity to withstand price declines.
However that decrease in LTV ratios is concentrated almost entirely in repeat buyers. Those have been able to leverage exploding home values post-pandemic into newer and bigger homes, while first time buyers didn’t benefit.
The overall improving trend of loan to value ratios have also benefited from first time buyers being squeezed from 50% of buyers to 42% in the last decade (investors have made up most of the difference). Interestingly enough investors have not pulled back nationally since the rate increases. Perhaps the surge in nationwide rents has kept them interested, even if local data seems to indicate a pullback.
Flipping activity in Victoria is middle of the pack nationally, with 2.9% of home sales representing a flip (resale within 12 months). Note that with the feds cracking down on flips, the province threatening the same, and a pause to the rampant price gains, I expect that the incidence of flips will slowly decrease. However these data are reported as 12 month averages so that will take some time to show up.
Probably the most concerning indicator for mortgage holders is the debt service ratio, which spiked with rising interest rates. For housing stability what’s important is not so much the average home owner (who will be OK no matter what happens), but the ones on the margins. The Bank of Canada considers borrowers with a DSR of over 25% to be financially vulnerable. “All else being equal, a household that spends a large portion of its income on mortgage payments may be more vulnerable to financial stress—it may be more likely to fall behind on debt payments if a negative income shock or a rise in mortgage interest rates were to occur”. Though the chart below is for new mortgages, rising rates are currently trickling through all borrowers and will have a similar sharp impact on carrying costs. That’s probably fine as long as the economy is running ticketyboo, everyone has a job, and banks remain unconcerned about infinite amortizations. However it seems the Bank of Canada may not be satisfied that rising rates have done their job until that is no longer the case.
Will it lead to instability among existing owners and as a result more listings? Quite possibly. However Victoria should be more resilient than most markets given our low share of owners that carry mortgages.
Speaking of resilience, our market so far has not been deterred by the Bank of Canada’s rate hiking antics or poor affordability, and sales continued at a decent clip last week.
| June 2023 |
June
2022
|
||||
|---|---|---|---|---|---|
| Wk 1 | Wk 2 | Wk 3 | Wk 4 | ||
| Sales | 95 | 264 | 612 | ||
| New Listings | 159 | 473 | 1380 | ||
| Active Listings | 2173 | 2228 | 2059 | ||
| Sales to New Listings | 60% | 56% | 44% | ||
| Sales YoY Change | +7% | +23% | -35% | ||
| New Lists YoY Change | -11% | -6% | +14% | ||
| Inventory YoY Change | +21% | +19% | +50% | ||
| Months of Inventory | 2.3 | ||||
Inventory is still increasing, but more sales and fewer new listings means the market is certainly tighter than this point last year. The sub-market that most people are looking in (residential resales in Metro Victoria excluding the Malahat and Islands) is showing a smaller year over year increase (up only 5% for the last 2 weeks), so I’m withholding judgement for the time being as to how the month might play out. Over asks are also down a bit to 15% of sales in the last couple weeks.
Either way we will certainly outperform last June for sales. Currently we are some 900 sales down from this time last year, so it will take some catching up to exceed the annual total, however given how lame the second half of 2022 was, that should be possible while at the same time being no great trick. While buyers have been slowly returning to the market, we know that our resilience is not due to particularly high sales, but rather low new and active listings. There’s little reason to expect buyers to come roaring back this year with none of the affordability challenges resolved.
Maybe we need to stop foreigners posing as new immigrants to stop investing in real estate. There are millions of wealthy people in the world looking for a place to park their money and Canada has been very obliging. Only wealthy people can afford to send their children to university in a different country, allowing them to buy property. Maybe we should make becoming a Canadian citizen mandatory within 2 years. Maybe we should tax the hell out of airbnbs.
After saying all that, property taxes for investors is only 5% higher than a resident owner receiving the senior’s discount. The taxes for investment properties could be $1000 more, but that would possibly increase rents more. I doubt that extra money would result in the creation of affordable housing, instead it would create more government bureaucracy. Until you hear that they are reducing immigration by 50%, don’t expect housing to go anywhere but up.
New post: https://househuntvictoria.ca/2023/06/19/the-impact-of-months-of-inventory/
I was anticipating that investors might start to sell their rental condominiums. Of the 267 NON NEW condos for sale in the Victoria Core 55 are either vacant or tenant occupied. That’s about 20%. It could be higher as 162 condos for sale did not report the occupant type. Of those 105 that did report the occupant type it was about 50%
Interesting or meaningless – you be the judge.
Meanwhile Saanich is applying for the federal Housing Accelerator Funds and one of their reforms is to legalize missing middle infill. They say in 3 years they will incentivize 105 additional units (which they get paid for). At the same time they are starting a 2 year process to just consult about it. Just bald faced lying to the feds.
If you taxed the current selling prices of housing aggressively it would stop new construction overnight. It would be interesting to see what would happen if you applied your aggressive tax to the land only portion of the assessment. Not sure but my guess is that it would shift the premium for more desirable parts of the country even further. Seniors would all defer their property taxes. Property transfer tax would suffer.
My guess is that powers that be wouldn’t really like the outcome so would not enact it. If they did they would be voted out pretty quickly but it would be an interesting premise to explore.
Oh, so no new purpose-built rental housing then?
I wouldn’t immediately dismiss Frank’s comment.
According to Craigslist asking rents have gone up by about $100 per month for one-bedrooms within a 6 kilometer radius of the downtown core – just in the last month. As of today the average rent for a one-bedroom is now $1,870 per month.
That puts most couples that are each making minimum wage on the edge of not being able to afford a one-bedroom. This is why we have a labor shortage in Victoria and people living in their vans.
Here is more basic economics: if you tax the hell out of a particular asset class then that asset class ceases to become a good investment. We need to stop investment in homes. We need to stop the flow of money into non productive assets. We need to stop people from parking all their savings in real estate. Is it really that complicated?
How does it work? More rental properties get sold, less inventory (already happening) and rents go up. More basic economics.
“What would happen if property taxes went up? Rents would go up. Another failed “solution “.”
How about a 10% federal property tax. That would shake things up. The housing market problem is not as complex as you think it is. Just need a political party in charge that has balls.
How does that work again?
What would happen if property taxes went up? Rents would go up. Another failed “solution “.
Well this did happen:
Ontario tried a speculation tax on property, and the market ‘collapsed overnight’
More recently, the RE industry in Toronto blamed declining RE prices in 2008 on a new property transfer tax, although in all likelihood they would have fallen anyway.
Thought experiment: what would happen if the total property tax rate went up to over 2%, as it is in major Texas cities?
Yep, the world of people that some how think they can make things efficient through more government regulation and management that goes along with folks that think you can tax things into being cheaper. We see the success with healthcare (facetious) where they have tried to solve the problem of shortages of doctors, nurses and specialist by adding administrative staff, rules and new layers processes that surprisingly (for those that did it) made the problem worse. In the end, you just can’t fix stupid.
Nah, turns out this guy was the chump:
Here’s the revered leader of the bears being completely wrong about Victoria RE, as always:
https://www.theglobeandmail.com/business/article-changing-amortization-cap-on-insured-mortgages-not-the-answer-to/
Extending the amortization on an insured mortgage requires requalification and payment of a new insurance premium. Of course if equity has risen to over 20% a new uninsured mortgage can be taken out.
Their vantage point was more on the listing side originally which has played out pretty much exactly as predicted so far since May as confirmed by Leo’s data prior to rate hike.
My personal non insider contact view is that the yoy comps will look better as you get later in the year due to base effect.
I dont understand why it is taking so long to develop the Vic West Rai lands. It seems an idea location for four or five more 40 story highrises.
Problem is how do you isolate their vantage point versus BOC/interest rate impact on the market. I think August is going to be a very slow month, but it has nothing to do with my vantage point because I don’t have a vantage point to look that far out. If I talked to 500 local colleagues, I still wouldn’t have a vantage point for August.
The original “insider contact” calls was made before the rate hike. Again, you see the information once its solidified but not all the ones currently in the works but aren’t in the system yet. That’s where talking and discussing with others in the industry could offer a better vantage point for whats potentially to come going forward.
Sales can only go up/flat/down so chances of randomly making a prediction are high. It would be like me saying August is going to be slow in terms of sales (which is my prediction) and then someone saying an insider said August will be slow when I don’t have any inside information whatsoever but I can see the obvious that everyone else can see…..i.e., interest rates are trending up which will supress the market in August substantially. There is no inside information better than Leo’s analysis, imo, and this is being an insider.
I do admit, I am having an incredibly busy month with my own transactions which may have influenced me to overestimate my 750 sales prediction. I think we are on pace for 720ish from what I can see at this point.
It’s not reserve land and as the story notes it requires the same municipal approval as any development. However it’s easier to approve high density when it’s not in an existing neighbourhood.
According the Leo’s stats comparing the same days, the YOY increased sales dropped over 50%, from 23% to 10% last week. I think my insider contacts are pretty bang on so far. Lets see how the month finishes off, your call was 30% increase and my insider contacts was 15% or less
I’ve been saying this here for more than a decade. Here is my post from seven years ago.
and you are right, this was one response
However, I never participate in the annual guestimates/poll here. I have some confidence in long term appreciation, but hard for me to predict what will happen over the next 12 months. I always think that if you are ready to buy and can afford it you make the best decision you can and don’t hold out for better times.
So far, our home has appreciated well above 4% a year btw – works out to 6.5% – however my bet is the rate will slow a bit going forward. As far as rents go, turns out we have exceeded 4% per year I think – as much as 27% in one year from 2021-2022 according to this: https://www.victoriabuzz.com/2022/08/victorias-average-rent-had-the-highest-year-over-year-increase-on-all-properties/
In some ways, housing is like climate change. It takes catastrophic effects in near proximity before people believe what science and data shows well in advance. Human nature I guess.
“169 to 147 sales/week a bit slower but a some of that is seasonal.”
So when there is a decrease in sales it is due to seasonality, but when there is an increase in sales it is due to a bewildering strong resilient market. Noted. Thank you Marko for your non-biased insight.
169 to 147 sales/week a bit slower but a some of that is seasonal.
At a missing middle talk with a city planner present…still no applications received as of today.
……………
It’s funny (to me) because, not that many years ago, if someone on HHV suggested that folks buy a SFH now or be priced-out forever they’d be mercilessly ridiculed by some very angry bears.
So what ended up happening — and is still happening?
Many, many people have been…priced-out forever.
The number of house sales in the core resembles last year. But the distribution of the sales does not. The number of sales in the upper income and luxury market for housing has fallen from last year.
I suspect that those considering purchasing an upper income / luxury market have downsized their expectations to the middle band of housing because of the higher interest rates. That has boosted sales in the middle band housing which is in the 1 million to 1.5 million range. At the same time prices in the lower band, which are mostly condominiums, has not been rising. It now takes about to 2.4 condominiums to buy one house in the middle band range in the Victoria Core.
It’s called the substitution effect. When the price of steak gets too high then people buy chicken. That causes the price of chicken to rise. Chicken relative to steak becomes over valued, for the short term, until the price of steak comes down as fewer people are now buying steak.
That’s what I suspect is happening in real estate. Buyers in the middle band are not getting the same value for their money as they received in previous years. The prices may be higher but they are getting less quality for their money.
There are two possible future scenarios for the long term. That condos and the upper income market are under priced and will increase in value or the middle band market is over priced and will decline in the long term.
My best guess is that prices in the upper end market will adjust lower. And then the middle band will begin to decline to compete with the new pricing in the upper band market. The market is not expanding even though listings are increasing somewhat, but it is contracting due to changing buyer’s preferences.
Quality is not typically accounted for in most published trend analysis. But if you are paying the same price for a home as last year but now the home is lower quality that is a decline in value for your money.
What was the peak inventory in 2022? was it around 2300 or something? Looks like we will pass that this week.
Or..
From: https://fortune.com/2023/06/18/housing-market-loses-appeal-for-wall-street-type-home-buyer/
It’s all very entertaining
Isn’t the slow down already in effect based on Leo’s stats? Went from 23% increase MTD the first week of June to 10% increase last week?
Month to date activity:
Sales: 410 (up 10% same time last year)
New lists: 781 (down 6%)
Inventory: 2293 (up 19%)
https://househuntvictoria.ca/2023/06/06/wheres-the-most-action/#comment-102689
It isn’t the norm though, minimum wage earners had a bigger bump this year than unionized public sector workers.
Yes.
Ten years from now, I think Vic detached house prices will have doubled. That would be prices +7% per year, from a combination of inflation+ real price growth.
Only 95 net SFH additions per year in “core” Victoria (COV,OB,Saanich), yet SFH are the preferred dwelling type for 70% of house hunters.
Short term (6 to 24 months) who knows but long term I am very bullish. Wage growth, immigration, and anti-development policies does not bode well for lower or flat prices long term.
I see the BC government salary grids for both union and non-union staff just took a ~7% jump year over year. It’s hard to get too bearish on local prices with that kind of raise being the norm.
https://www2.gov.bc.ca/gov/content/careers-myhr/all-employees/pay-benefits/salaries/salarylookuptool
Month to date activity:
Sales: 410 (up 10% same time last year)
New lists: 781 (down 6%)
Inventory: 2293 (up 19%)
I’ve heard you have to be in the country for 5 years to qualify for a security guard position.
be a disaster in many cases. Medical training is not standardized across countries. Foreign-trained professionals need to demonstrate both that they meet the knowledge requirements and standard of care in Canada (MCCQE exam) plus they need to be supervised for a period of time so they are familiar with Canadian systems.
Canada has a branch of government that deals with this: https://www.cicic.ca/
There may be ways to make this process easier but the standards need to be upheld.
Not to harp on this but there is a Globe and Mail articles that alleges that BC is actually sending thousands of cancer patients to the US. Originally I was under the impression it was just a handful. Somehow we need to figure out how to link additional housing with expanded medical facilities here in BC.
The two are interlinked whether we like it or not.
From a G&M column this morning:
Of the 10 costliest years Canadian insurance companies have ever had to bear, nine have occurred since 2011.
+1
And the resilience is not just Victoria . Big turnaround in US House Indexes for builder sentiment, prospective buyers etc. NAHB index now 55 indicating growth (up from 32 at start of 2023)
https://www.fxempire.com/news/article/nahb-housing-market-rebounds-builder-confidence-hits-highest-level-in-a-year-1355414
Maybe condo owners are typically older people and have a higher turnover rate. Any stats on average age of condo owners vs. SFH owners age?
Despite intense pressure, due to lack of supply, the median price for a condominium has not increased over the last 3.5 months. Neither has the average days-on-market fallen below 30 which is different from past markets that had low months of inventory.
The average days-on-market is a good indicator of the market place. It is generally the leading indicator showing a change is happening in the marketplace. What we are seeing is that For Sale signs are up for longer. That’s a visual cue to those looking to buy not to be in a hurry to purchase. Condominiums are not selling in a few days or a week or two weeks when the market was hot. Now it typically takes a month to find a purchaser.
Condo prices are still stable, but if you’re a developer you may want to give incentives, other than a price reduction, to attract a purchaser. Being creative in the financing options, free upgrades, a TV, air fare to Hawaii?
Hate to get back to housing but I noticed that Abstract seems to be offering condos with only 5% down and the balance not due until completion. I am guessing Abstract is self financing at this point?
Canadian doctors have been poached by the U.S. for decades. They get paid ridiculous sums of money. Nurses also.
Nothing wrong with that. Our main immigration program is “economic immigrants” which is Canada getting talented people from other countries. I’ve not heard anyone other than you complain that this was “poaching”.
Sure, but accepting doctors trained in their home country directly into Canada’s medical system would likely increase the number of doctors jumping ship. sort of like global labour arbitrage, but in reverse.
And we actively poach nurses:
“Work will include a new marketing campaign to promote B.C. and a new provincial website to provide information on available supports. Health Match BC will also provide recruitment navigation support and administer bursaries to help IENS overcome barriers and encourage them build their future in B.C.”
“Removing some financial barriers and streamlining the assessment process will facilitate pathways to employment in the province and ensure British Columbians have access to the health care they deserve with even more nurses and health-care assistants.”
You can’t expect that Canada takes in 500,000 immigrants per year, but shouldn’t take in trained physicians, because that would be “poaching”. Most of the immigrants are trained in something, so we’d be guilty of poaching more than doctors.
FYI, the Canadian doctors that get trained overseas are not subsidized. They pay big bucks for their medical education.
I know, and if my mute would stay on I wouldn’t have to read your inane ideological rants against those who do not live in a way that you approve of.
Case in point:
Rebecca Chen·Reporter
Sun, June 18, 2023 at 12:30 p.m. PDT·3 min read
While buyers in more affordable ranges are experiencing massive housing shortages, that’s not the case for the Los Angeles luxury home market.
“We have a good amount of inventory,” Josh Altman, co-founder of the Altman Brothers, a real estate agent firm that focuses on luxury homes, told Yahoo Finance LIVE (video above). “Good houses still are selling.”
In Los Angeles, there are 400 available listings for single families over $5 million, representing 18% of the total single-family inventory of around 2,200 homes, according to a filter search on Redfin.com.
But there are a lot fewer buyers in this price range. A $5 million home requires buyers to earn around $850,000 a year, a bracketed range that includes less than 1% of Californians, based on data analyzed by SmartAsset.
Victoria’s real estate market is top heavy too. I suspect that is likely in most cities across Canada as the higher interest rates have made prospective purchasers lower their expectations and increasing demand in the mid-band range of homes.
On the lower end we have an affordability problem and on the upper end a liquidity problem.
Arrow- I’m not referring to the elderly, I’m referring to drug addicts that overdose on a weekly basis. Get private funding and set up a system that deals effectively with them. Unfortunately our pill popping society and doctors writing endless prescriptions for pain killers feed the very problem they’re trying to solve. As for apartment dwellers, they always have money for beer and smokes, which also causes health problems.
Maybe like realtors?
https://www.bcfsa.ca/industry-resources/real-estate-professional-resources/education-and-licensing/becoming-licensed/real-estate-careers
The real estate industry in B.C. achieves high standards in licensing by requiring individuals to fulfill comprehensive education and experience requirements………………….You should expect to take up to one year to complete the required licensing course and examination before applying for licensing.
Our health care should be Federally administered and not provincially. The way one could move from province to province without any interruptions to their plan.
Read the obits and see how many seniors pass a way here who were originally from other provinces. Once you are over 55 years old and develop major health problems such as diabetes, heart & lung diseases, dementia etc. etc., the real costs of your health care explodes. Even mild forms of diabetes requiring taking 500 mg of Metformin per day and or the onset of high blood pressure taking 2.5 mg of say Amlodipine per day requires a visit every three months to your doctor. Not to mention having lab work done evert three months as well. Most seniors eventually go into some form of LTC facilities. If they are on a low income, their care is greatly subsidized. If you aren’t there (age 55 and up), you will be one day.
It would be if that other country subsidized their medical education with the expectation that the training would be used to better lives there, as Canada does.
Are you referring to the elderly?
…and as for $50 charges & plumbers, that’s irrelevant. Many renting families don’t pay plumbers and just scrape by without an extra $50 to spend if an ER visit is needed…it is called a universal healthcare system for a reason.
The only problem is that BoC will be happy with a RE crash, sooner the better. It will correct their original mistake of creating the huge RE bubble. Even if the economy crashes, they will have to wait until inflation drops to 2% before dropping rates.
Getting lots of updates on properties I showed in the last few days that had offers delayed for today with 2,3 or 4 offers coming in.
Not seeing the second half June slowdown many insides predicted. The resiliency of this market is bewildering to me. I am going to be way off on all my 2023 predictions that way things are going.
I have a friend that was an ICU nurse, then she went to work in the private sector, and now that ICU nurse compensation has improved ($60 hr given her experience) she is going back to ICU shortly and I think she mentioned it will be going up towards $70 hr.
On the real estate side of things, I’ve now worked with 15 +/- GPs (all younger) in my career and not one has had a practice. I am curious as to what the shortage would be if compensation was $500,000/year? Seems like a lot but I mean as a society we are running entire departments of government workers doing absolutely nothing (in the case of the owner-builder exam at BC Housing an entire department being counter productive for the good of society). Plenty of resources to compensate GPs $500,000. Just let go a few “tree preservation coordinators” at each municipality.
Personally, I would rather have medical care than a few branches missing here and there on municipal trees. Being a rich country we have the resources for good health care, we just choose to prioritize other things such as a huge bureaucracy even on a health care level. More than half of Island Health employees are non-clinical in nature. What was that stat 40 years ago? Like 20%?
Or just lower the education requirement for a Family Physician in Canada so they wouldn’t need an undergraduate degree. A two year diploma in Health Science instead of bachelor’s degree.
In Canada, the term IMG (International Medical Graduate) typically refers to a doctor that’s already in Canada, just unable to practice Medicine. There are thousands of them. Some are driving cabs. Many of them are Canadian born and raised. They just got their MD abroad. So training them wouldn’t be “poaching” them from another country.
Set up a separate system to deal with chronic abusers, and there’ll be plenty of access for the general public. What most people don’t realize is that our health care is rationed to limit the amount of money that is spent. I believe in user fees to supplement the system. $50 to go to emergency is a lot cheaper than $100 to get a plumber to look at a problem.
Maybe effective, but definitely selfish poaching of human talent from the country that educated them and needs them too.
How about more spaces and incentives to train Canadian youth as is currently underway, albeit a tad too little too late.
A big part of the problem is a shortage of family doctors (and nurse practitioners). When this shortage exists, a doctor in the private system is seen as taking away a needed doctor from the public system. Which is a good point.
Federal and provincial governments should cooperate to create a path to licensure for the thousands of internationally trained doctors (IMG) in Canada.
“A system based on the ability to pay rather than the urgency need of treatment.”
Just like our current housing market. Housing not based on need but rather based on profit…the ability to pay rather than the need for shelter.
We could have a private medical system with agents/brokers selling access to Healthcare. Yes, you could see certain professionals and procedures lead to multiple offer scenarios.
If more money makes the system better then…
Why not an online auction to see a doctor? The next doctor visit will be at 1:00 PM. The bidding will start at $250. Do I hear $300?
I would hope that most readers would say this is ridiculous. But isn’t that what you’re suggesting. Those that can pay more get priority over those that can not. You’re paying to take someone else’s place in the queue. A system based on the ability to pay rather than the urgency need of treatment.
I find the edit button more valuable than the mute button.
It’s funny that when it comes to health care many of you think a public government run system is best, but when it comes to housing/shelter many of you also think that a private capitalist system is the only choice.
Why are we talking about how shitty Canadian Healthcare is? I thought that was offtopic, Leo?
Actually not based on politics.
Absolutely agree with Marko.
Why are we always comparing to the US, the worst example of private health care.
I quite like the system in Croatia. A lot of specialist work the in the public system and then run private clinics in even afternoon/evening. I quite like it, money is a solid motivator. Most specialist you can see privately within two days for approximately $100 CND in top notch clinics.
Same thing here for dental. I wanted to get a CT on a tooth I had a root canal/crown put on in Croatia a few years ago. Phoned endodontist office here in Victoria at 9 am, they got me in at 11 am for a consult. It was ridiculously expensive at $300 for 20 minutes but I rather have an expensive option versus no option at all.
I think we should give GPs one day where they can charge whatever the market can bare (assuming they work minimum amount of hours under MSP). I would gladly pay $200-$300 for an appointment when I need it.
A long time friend of mine just had bypass surgery in Minneapolis. He’s 68, I’ll have to ask him about costs. His wife is a nurse with a high level administrative position in a hospital. That helps.
Couldn’t agree more. I have retired friends in the U.S., both not yet eligible for Medicare. As of three years ago, they were paying $20,000 (i.e. $26,000 Canadian) for health insurance each year, even with the “Affordable” Care Act. They also pay large deductibles. If they ever have to wait too long, they can expedite things by going out of their insurance network, but that entails even more money. They never thought about it until they retired, because their employers provided their health insurance. That tends to hide the true cost of privatized health care from most Americans. As much as people complain about the state of things here, I wonder how fully they understand the alternatives. I’d like to fix and improve what we have. It’ll still be much cheaper than privatization.
A good point Barrister.
I understand that some property developments are faced with an infrastructure fee, from small (new sidewalks) to big (money for water, sewer, & road upgrades). Seems to me that Hospitals and their staffing are equally or more important infrastructure needs as an area’s population increases.
Just another unaccounted for externality that society needs to reset, I suppose.
Thats great Patrick but somehow in spite of all that we still have a major shortage of hospital beds in Victoria. The province is sending cancer patients to the US for treatment which might be a sign that all is not well.
Patrick I appreciate that your comments are founded on politics.
On a totally different note, the mute button seems to be a good feature and does Leo have a stats on its use?
The provincial government already is doing that. Health spending is rising fast and last budget has $6 billion extra, with spending rising 20% to $30 billion per year by 2026. Health will be 1/3 of the entire budget.
I’ll leave the allocation up to BC Health, I think they do a great job putting the money where it’s needed. Recent focus is on addictions and training/retention of health care workers, which makes sense. If you’re interested, there are some details here https://globalnews.ca/news/9515174/b-c-budget-health-2023-health-care-addictions/#
Victoria ends up getting more health care money per capita spent here than other areas of BC, because it’s a center for administration and tertiary care.
Current “levy” is taxes of $24 billion per year for health care, about $5,000 per person in B.C. which will rise to $30 billion, about $6,000 per person in 3 years. Money well spent. Taxes are a good way to fund it.
If we are planning major developments or continuing to create more highrises we need to seriously consider some sort of levy to fund additional hospital beds. I know that is supposed to be a provincial concern but we cannot ignore the major hospital deficit that the city has when the population base is increased.
Canada is getting too complicated.
Have you heard the plaintive call of “…Coalition of Vancouver Neighbourhoods and a Kitsilano resident, said he worries the tower development will inspire other building owners in the area to “get stars in their eyes” and want to level older buildings and build higher as well.”
There is no end to the variety of warbles heard from Chicken Littles
Yes I would, along with any other underutilized federal, provincial & regional government properties inside municipal boundaries.
Arrow would you be suggesting pinning an eviction notice to the door of Government House? That’s a 33 acre site that could be a similar development to Vancouver which could house 5,000 people within walking and biking distance to the downtown core. That’s about 3/4″s of the population of Oak Bay.
Developed with 99 year prepaid ground leases that can be sold to developers to build high rises, leasehold strata homes sold to individuals and rentals. A development like this would make the lək̓ʷəŋən People the wealthiest land developers on Vancouver Island, as they would own the head lease in perpetuity.
And it would be a new community, likely with a native theme, which would be much more appealing than a piecemeal solution of one house here and one house there.
And it would be ironic for the City of Victoria to turn to the Province that has been threatening the city to comply to then cause the eviction of the Lieutenant Governor.
I can already hear the dulcet tones of an incoming throng of screeching, indignant NIMBYs in their native habitat. They’re easy to spot in the wild, with their designer Stefano Ricci polo shirts and throbbing neck veins.
And now, back to housing & development…
This seems like a much better use for underutilized DoD lands (i.e. CFB Esquimalt’s 10,000 acres), bet the public consultation process will be complicated by powerful factions…
“A housing proposal spearheaded by three First Nations that would double the population of Vancouver’s West Point Grey neighbourhood begins its public consultations this week…Set to more than double the area’s population with the promise of 13,000 new homes.
The Jericho Lands area is currently home to a former garrison, several dozen homes leased to military families and a private school. The site itself is owned by the Musqueam, Squamish and Tsleil-Waututh First Nations — whose unceded territories Vancouver is built on — in partnership with the Canada Lands Company, a federal Crown corporation.”
https://www.cbc.ca/news/canada/british-columbia/jericho-lands-proposal-1.6880445
Getting some great owner builder emails lately
“Hi Marko.
Just watched your 2023 update. Very interesting!
I have to write on Thursday. Your help would be very much appreciated with respect to providing the study guide.
I renovated my garage into a carriage house with carport as outlined and required by the City of XXXXXX for a ‘secondary suite’. They issued a building permit, inspected as required regularly and gave me an occupancy permit in October 2020. I rented out my main house and moved into the carriage house as I’d just retired and wanted to travel – unfortunately COVID hit. I hired the contractors and trades but didn’t realize I needed this Owner Builder Authorization until I went to sell my property a few months ago and the property declaration form asked for a yes/no regarding the owner builder authorization or warranty.
I looked into it and was told to apply ($450+ later) so filled out a very detailed application form with my hand drawn plans (first career was a draftsperson, second and current an engineer) and they evaluated whether or not, two years later, that I could retroactively obtain authorization by writing the exam. They gave me three months to write and pass the exam.
My biggest issue was WHY do the requirements apply to my build as it was just a renovation of an existing building! I guess the renovation was substantial enough to warrant the compliance with the reg/act.
Final rant: do builders, architects, etc., whether residential or other, memorize the BC Building Code, or do they look shit up when designing?? Does this OBA program help provide MORE housing or just delay building rental suites? The 250 new BC Govt employees will enforce the Act/Regulation or just help owners/developers get their building & development permits – walk through the red tape with all the local governments? I’m so curious what they will actually be doing. Anyway, looking forward to hearing from you.
Thanks a million.”
This is the same province that will solve our housing crisis, lol. Obviously someone in the permits department of this city didn’t do their job and now this poor lady is stuck with non-sense to sell her home thanks to the province.
He’s a great money maker, but he is also a master bull shiter. Talking about ridiculous nonsense… No your 8 year old Tesla is not safer than a brand new Tesla. He’s either dillusional or he is full of shite. Either way I can’t trust people who have to win every argument and can never admit when they are wrong.
Re: Tesla phantom braking
Only 2% of Teslas have AP1/MobilEye, so need to factor that in when analyzing data. Phantom Braking has been seen in AP1/radar teslas too. E.g. https://teslamotorsclub.com/tmc/threads/ap1-ms-braking-inappropriately-driving-on-the-continent.245850/
Ive read about it. I’ve never seen it myself. Most reports I’ve read have been people using autoPilot, cruise control or FSD, and I don’t use any of those much. It seems to be in certain areas – e.g. like Texas where it’s very hot and “mirages” are seen commonly. I think it will be a software fix.
——-
A nice Tesla safety enhancement that’s recently come to standard Model S, X Y and 3 is the inside drivers airbag. – that means the driver (and passenger) gets a “full cocoon” – 3 airbags and the seat back making 4 sides that they’re protected. https://www.tesla.com/ownersmanual/modely/en_eu/GUID-0943510B-B8A7-4E0E-8998-62ACB9BD4D12.html
Look up phantom breaking on brand new Teslas. Do I think a 2030 Tesla will be way safer than a 2015? Yes. Do I think a non-beta 2 camera + radar 2015 Tesla is any less safe than a phantom breaking 2023 Tesla with 9 camera that is still in FSD Beta….not so much. If the 9 cameras actually worked that would be great but applying emergency braking at 160 km/h for someone to rear-end you at high speed is not safe imo.
For the most part we are accepting highly educated immigrants that are coming from already decent lives; therefore, there is an opportunity for them to go back easily. This wouldn’t be the case if we accepted less educated immigrants to work on construction sites, etc. You aren’t going to leave a Canadian construction site at $40/hr to go back to Napal to work for $2/hr.
If you are a French computer programmer, you aren’t taking a huge pay cut going back home and the Canadian company even might let you work remotely back in France if they need your talent.
Getting away from the car topic, I’ve gone to look at two used vehicles in the last couple months and in both cases the sellers were moving back to their countries of origin. One couple were from France, the other a family from India. Both lived in apartments. Maybe the Canadian dream isn’t what some people imagine. I don’t think everyone who comes to Canada is enamoured with the place. However, my mechanic’s brother is moving here from Guyana. I don’t think we’ll see a net loss any time soon.
It does seem that we agree that Teslas are the safest cars out there. And I’m happy to leave it there.
Man I’m in trouble my daily driver is a sports car from the 50s zero safety
Will just ignore all the cost saving measures Tesla has carried out? The deletion of the proximity sensor, radar delete, etc. You can’t tell me the 9 cameras are better than the proximity sellers for purposes of parking, for example.
AP1 I’ve never had do anything incredibly dangerous. Earlier this year in Europe 2023 Tesla there applied emergency phantom breaking on me twice. Once at 160km/h and once at 110km/h in a tunnel. If you do a bit of research AP1 is regarded as actually quite bug free compared to the new stuff.
Finally my primary reason for the Tesla is fundamental such as no engine, almost impossible to roll over due to weight distribution, etc.
Even cheap cars have most of these preventative safety features but good luck when someone on Sooke Rd isn’t pay attention and leaves their lane and you are in a head on collision.
OK. So it’s a 2015. Why is that relevant? You said it’s Ap1 which means it’s MobilEye and only one camera (front) used for safety, (rear camera not used for safety).
Compared to 9 cameras and much better hardware/software now. Developed directly by Tesla, not by MobilEye. If you think that MobilEye dinosaur system is “best safety in the world”, you’re kidding yourself.
Except I don’t have a 2014 Tesla…it would help if your math was a little better.
If one looks back over the last five years, there are certain months with peak sales. Those peak sales are typically March, April, and May and would have the largest amount of annual renewals at the higher interest rates. I suspect that if our market were to have a correction that would be around the time we would have a dramatic increase in listings. Historically, the Spring market is one to watch as it is an indicator for the remainder of the year.
We didn’t have a significant increase in listings this Spring. However if one looks back three and to a lesser degree four years ago in 2020 and 2019 there was a period of sustained high level of sales beyond the Spring market from June to October. Those that took out a short term financing during that period will be having to make some hard decisions which may include selling or down sizing.
At this time I see that our market is top heavy in listings in the upper income and luxury markets of say 1.7 million plus, we may see that trend continue as home owners in that market segment chose to down size to lower their payments. However there is not much selection in the mid band of housing to purchase. I would expect the need for bridge financing to increase as home owners may have difficulty selling their properties in the upper and luxury market as the days-on-market and months of inventory increases in that higher price range.
We may be experiencing the start of this down sizing trend. For example in Oak Bay, which most of us believe to be an area of our highest priced properties, now has as the highest number of active listings since October 2020. If my guess work is reasonable then we should see the months of inventory and days-on-market increase in Oak Bay more than the surrounding areas over the summer.
Or not.
——- Your 2014 Tesla with AP1 is definitely not the safest car in the world. I’d give that award to the 2023 Tesla.
——- a 2014 Tesla doesn’t have the anywhere near same safety features as a 2023 Tesla. The software and hardware for safety on a 2023 Tesla is much improved.
——- Comparing safety features of a 2014 Tesla AP1 (w/ 1 safety camera) to a 2023 Tesla AP 4.0 (w/ 9 safety cameras and 800 times faster chip) is like comparing an iPhone 4 to a iPhone 14 Pro. And you can’t say your iPhone 4 is the best mobile phone in the world when there are iPhone 15’s around.
——- Your Tesla only has one camera (front facing) used for safety features (the rear camera isn’t used for safety).
——- Newest teslas have 8 outside cameras+1 inside cameras (all used for safety), as well as 800 X (800 times) faster hardware chip to process. All of the safety systems depend on these chips to process, so 800 times faster chips is a big deal. Consequently many of the safety software updates only apply to newer hardware (AP2 to AP 4.0) , and not to your old ap1 hardware.
——- your old tesla has primitive versions of the safety features, compared to the newest tesla. The AP1 doesn’t get many of the over the air updates that apply to newer hardware (AP4) because they depend on the 9 cameras.
——- Newer teslas Activate seat belt pre-tensioners and deploy airbags BEFORE a crash using “Autopilot AI”.
——- Things like altering for lane changes are much improved, since the old teslas have no side camera, and use ultrasound with a small range, where the new teslas have 8 cameras with 360 degree view.
——- New teslas Change the way airbags will deploy based on who is sitting in the car and where. (Due to added hardware pressure sensors in the seats of newer teslas).
——- Your MobilEye AP1 doesn’t have full 360 vision on cameras,
—— new hardware added like Advanced Front-Structure Castings (safer during crash),
——- Automatic Airbag Suppression (protects child in car seat),
——- Added hardware airbag. Far-Side Airbag (protects against head injuries from side movements),
——- Collision Avoidance Driver Monitoring System(monitors for distracted driver, using the cabin camera not present on a 2014 ap1 Tesla)
In my inbox yesterday:
Very close to doubling the payment now, which definitely stings. This is the highest interest rate I’ve ever paid (going back to 2003), and would have locked in earlier if there wasn’t a high chance of selling the house. I’m definitely learning a lesson!
I think there are a lot of folks who will not be able to soak up >2k/mo adjustment come renewal time. The question in my mind is how quickly (if at all) the BoC drops rates as the RE market/economy starts to falter.
Except my Tesla isn’t ten years old, but eight years old as I noted and comes with AP1 hardware including cameras + radar and all the safety features associated with that.
Have houses on Bear Mountain tripled in price over the last seven years?
Sorry, but your “safest 5,000 lb car in the world” claim for your older 2013 Tesla is the same type of “hilarious nonsense” HHV post that you (frequently) complain about.
Car safety is more than protecting yourself and your passengers from injuries in a crash. It is also preventing the crash in the first place, and subsequent damage to other cars and pedestrians.
Your ten year old 2013 Tesla S has good crash protection for your occupants, but lacks many of the modern safety features present on newer cars on the road. Such as Forward Collision Warning, Automatic Emergency Braking, Obstacle-Aware Acceleration, Blind spot detection, lane departure warning, 360 degree vision, center airbags, intersection scanning auto-braking, adaptive cruise, night vision, safety exit assist, pedestrian warning sounds etc.
If you want to be able to boast on HHV that you drive the “safest car in the world”, pay up and buy a newer car that has these modern safety features. Such as a new Tesla 🙂
Some of these are pretty funny:
https://twitter.com/seabusmemes/status/1669846450556256256
Sweden’s property prices are facing a serious drop as the country’s former central bank governor warns of lofty household debt levels.
House prices in Sweden have risen fairly reliably over the last decade. This has been buoyed by ultra-low interest rates in a system where around half of people’s mortgages are financed with variable rates and many of the rest are on short-term fixed rates.
But now property prices are tumbling. And this downturn is not surprising given the “dysfunctional” nature of the market, according to Stefan Ingves, who headed Sweden’s Riksbank from 2006 to 2022.
“I’ve persistently time and time again said that the debt level in the household sector is just way, way too high and there will be a day of reckoning and eventually rates will go up, and now rates have gone up,” Ingves told CNBC’s “Squawk Box Europe” in an exclusive interview Tuesday.
During the Covid-19 pandemic, house prices across Europe continued to rise, and Sweden was no exception. Demand for property skyrocketed as working from home and a preference for domestic vacations prompted people to upsize their spaces.
On average, house prices were up as much as 30% compared to the pre-pandemic level of January 2020, according to Nordea Bank, as the Riksbank started purchasing mortgage bonds, trying to bring rates down and adding fire to an already hot housing market.
But now prices are falling, dramatically.
What price bracket? And what are you looking for? People tend to go crazy for quartz and a million-btu cooktop, but personally I wouldn’t equate that with quality.
Yikes. That and heritage status will def reduce the number of buyers. Fewer for an arch site than a heritage home as there are heritage home buffs at least, but a home that cannot be renovated without an arch permit and special insurance? I guess that is one way to get into a SFH in OB…
Josh- Now you got me started. Search “Car and Driver car fires” and read the article. Apparently those stats cannot be verified. There are over 250 million passenger cars in the U.S., if 1500 out of every 100,000 cars were catching fire every year, there would be 4 million fires a year, or 11,000 every day. If that were true we would be riding horse and buggy’s again. The actual number of car fires every year is 117,000. Something doesn’t add up.
What I didn’t find in that paper is a definition of each of the building forms. I would like to see what their assumptions are regarding lot size, unit size, etc.
https://househuntvictoria.ca/2023/06/12/a-mix-of-good-and-bad-indicators-on-debt/#comment-102867
It is on a registered archaeological site (DcRt-25: shell midden since 1991). Anything disturbing the ground requires a provincial heritage permit. Specialty insurance likely necessary.
The Babylonian Empire’s Code of Hammurabi – 1750 BC aka BC’s next building code.
-If a builder build a house for a man and complete it, that man shall pay him two shekels of silver per sar (approximately 12 square feet) of house as his wage
-If a builder has built a house for a man and if the house he has built falls in and kills the householder, that builder shall be slain.
-If the child of the householder be killed, the child of that builder shall be slain.
-If the slave of the householder be killed, he shall give slave for slave to the householder.
-If goods have been destroyed: he shall restore the fallen house out of his own material.
-If a builder has built a house for a man, and his work is not done properly and a wall shifts, then that builder shall make that good with his own silver.
I would take a newbuild over a 100 year old any day of the week. Because, newbuild come with 1, 2, 5, and 10 year warranty.
So what are the things to look out for in a new build? For example, is the brand of windows important? Should one ask about the roofing tiles?
No one is “starting” you. It’s in the stats.
I once spent a fascinating hour talking to Jim S?, one of the original Vintage Woodwork owners when they were in Fan Tan Alley. Very bright guy that loved old buildings and went the extra mile to understand why they did things the way they did. The details are a bit fuzzy now but he did all the replacement windows for St. Ann’s Academy when it was restored. Apparently there were three vintages of windows in the building and they all lasted about the same amount of time. The original batch were through tenons that drained any water intrusion out and rotted much slower. The last batch were done with glue about 80 years later and they did not last at all well but were quicker to assemble. Unfortunately I suspect that the trade off between a new window and an old one is longevity vs draft stopping. My double hung windows have lasted but I suspect they are responsible for a large part of my heat loss.
So based on that paper, they fit 2000 people on 3 sq. km in the suburban home model, and based on Greater Victoria being 696 sq. kms we should be at 464,000 people to even fit that model.
Also means if everyone lived in courtyard style housing we could fit all of Gordon Head into half of UVic’s campus.
Same.
I own a typical mid century box. There was a building code in effect at the time, and some clear indications that it was sorta being followed. Looks and feels like a solid house, but there were lots of little liberties taken, some obvious framing errors, etc.
All things being equal, I’d 100% take a newbuild home over a post war stucco box. But its not equal, because you have to pay for the higher build quality on new homes.
That’s the one! Thanks! You really forced me to be patient there… 😐
Houses built in the early 1900’s were probably built by new immigrants who were given a piece of land providing they build a house on it. Some of them are early farmhouses. I would avoid these properties. My preference would be post war 1950-1970 houses that were built by professionals.
What I don’t understand is the houses in Europe that are hundreds of years old and still being used. Getting any improvements done would be a nightmare. Right Barrister?
This one?
From this article: https://househuntvictoria.ca/2020/02/24/nimbyism-is-incompatible-with-victorias-environmentalism-and-other-progressive-ideas/
I have a few charts implemented in Google Charts that fetch their data from google sheets. The google sheets data is periodically updated by me, so it uses the latest data.
Since I wrote that code, there is now a REST api for statscan data, so that would be much smarter to use in the future.
Hey Leo,
2 questions – I was trying to look for an old post where you showed how many people could fit in a certain area when it was all single family homes vs townhouses vs condos, any idea where that graphic is?
Also, while doing that I found this:
https://househuntvictoria.ca/2021/11/16/how-many-homes-do-we-need/
And I noticed that the SVG is actually up to date on a post that is 2 years old. How are you doing that?
My house built in 1912. Echo everything Boomer said. Sure the old growth rough cut Douglas fir is nice wood better than anything you can find at the lumber yard today. But other than that the construction is not good.
Little to no cross bracing, skimpy use of fasteners, non-existent footings, undersized overspaced framing, unsupported cantilevered loads. Yikes the list goes on.
When we did some work upstairs and stripped to the rafters my first thought was: “How did this house not collapse in 1996 under a metre of snow?”
Thank you so much Introvert and Leo for the roofing plugs!
I live on a street with relatively new buildings. 2009, 2014, 2019 and there is a kitchen or countertop van/truck parked out front every week. People aren’t renovating because the kitchens are falling apart but because of style/bordem. While doordash is dropping off food on the street non-stop.
When I show 80s/90s houses and people “need” to renovate the kitchen/bathrooms are perfectly functional, they just don’t like the look.
So not sure what the point of a super durable kitchen is as most people will want to renovate it and unlike some other countries people don’t really buy a multi generational forever homes in Canada.
.
I’m gonna get crushed!
Tools today are far superior buildings materials where better back in the day and labour today is so so
My house was built in 1905 but in fairness, there is very little of the original left. There is a saying in the renovation industry that goes something like “They don’t build houses the way they used to. Thank goodness.” There are many things that would be prohibitively labour expensive to do today but lots of the basic construction is far superior today. You can bring in an excavator and dig a proper hole down to something solid and install proper drainage at very little cost over the bare minimum. If you are doing it by hand with a shovel there is a real temptation to go to a 6 foot basement and the bare minimum of footings. Settling is very common in old houses. It is not a big deal in anything built in the last 50 years. When you are pouring the foundations you call the cement truck and they bring whatever mix you order. The wouldn’t sell concrete that is shy on cement powder. If you are mixing it by hand and using whatever gravel you can find (beach gravel anybody) you are going to be tempted to skimp on the footings and not pour the wall any higher than it needs to be which explains why rotting out sills are a big deal in old houses and much less common in new. You have probably heard stories of veterans returning from the war, getting married and building a war time special themselves. The wife straightened used nails and the husband nailed them up. Today they are using nail guns with new galvanized nails and the tendency is to fire in a few too many rather than just enough to hold it up. Simpson strong ties are an amazing invention that adds an enormous amount of strength to a structure. You never see them or anything older. I am not an engineer but I suspect that building codes have gone a little overboard with the fresh new engineer deciding that just to be safe he better add another 30% to the old code. “You know, you can’t buy material like you used to and we don’t want a building settling on my watch.” Do that a couple of times and you end up well overbuilt. I used to look at the soil, calculate the loading per square foot, estimate the weight, add 50% or 100% and build accordingly. Looking at new buildings now they seem to just pour what looks like twice or three times that much. I am assuming they get less hassle from the inspectors and the cost of an extra yard of concrete is a rounding error if you have a crew and pumper truck there anyway. There are many more examples that are similar in nature.
The story flips when it comes to finishing. There are lots of solid wood cabinets that were built in the 30’s or 40’s that are perfectly serviceable today even if they are well out of style. Same goes for wood trim. The same can’t be said for particle board anything. Hands down I would go for a modern structure right out to the drywall. From there out the older stuff was far superior from a durability point of view but how many kitchens and bathrooms don’t get renovated after 30 years or so.
I’ve stated before, in the 1970’s when inflation was high, housing quality suffered, IMO. Many other products were poorly made such as furniture, cars, etc…
My house is our a hundred and is doing surprisingly well. Not to say that it does not need constant maintence. I doubt whether the floors or the windows will last as well in the new houses.
In fairness, I dont think you really could afford to build houses these days using the same materials.
It would be interesting to know what others think of todays new builds in terms of quality? In particular what should one look out for in a new built, Bad windows, cheap floors. Type of exterior envelope. What should one look for or at least look out for in a new build. Marko should have a few thoughts here.
I’m wondering how well new houses are being built today. Construction materials have come down but are still high compared to 10 years ago. Every builder’s objective is to make money and is tempted to cut corners or use less expensive materials. I’ve looked at the exterior of some houses that may be 10 years old and they are starting to look a little shabby. Hopefully they won’t need replacing in a few decades.
I also am concerned with the quality of some of the tradespeople doing the work. Everything is a rush.
https://househuntvictoria.ca/2023/06/12/a-mix-of-good-and-bad-indicators-on-debt/#comment-102864
My policy starts June 20.
From: https://www.cbc.ca/news/business/fed-core-column-don-pittis-1.6875879
Let’s see if Tiff and the BoC go for 50 points in our July announcement now.
You can get a WCB clearance letter for a contractor in like 10 seconds online. Without that I don’t allow anyone on our construction sites.
Which rolls us nicely back to the topic of liability insurance. If the employee of an uninsured contractor is injured while working on your property, some responsibility is going to flow your way…
That’s interesting, I will have to check that out, thanks. No, I am not an employer. They well knew that when we registered. Maybe the rules have changed, I will find out.
Now you know what to expect in January!
A case of someone finding a old pot that’s having a real impact on property value here in our own backyard
Umm really when a sewer replacement was being done they found an artifact on the property take that for what its worth
Interesting one on Deal St. In Oak Bay… Started at 1.5 mil ask, over it’s 76 days on market dropped to a 1.2 mil ask and posted as sold today at 1.15 mil at about 400k under assessed.
Admirals Roofing did ours in 2021. A co-worker recommended them. Theirs was the lowest quote we got, and we were very pleased with everything.
It doesn’t seem like any insurance provider includes tsunami coverage. Perhaps it’s because the tsunami risk area is well defined. So everyone in rhe “tsunami zone” wants insurance, and everyone out of it doesn’t. Not a great model for insurance.
On the bright side, the tsunami zone risk map for Victoria is quite detailed, and includes outlines of specific houses. Very few oceanfront houses seem to be at tsunami risk. So, in lieu of insurance, at least you can see if your house is in the zone.
https://capital-region-tsunami-information-portal-bcgov03.hub.arcgis.com/ menu: interactive map.
If you have your eye on an oceanfront Cordova bay beach house, you might want to check if the tsunami zone tells you your uninsurable $2m dream home might get washed away.
A tsunami would wipe out a house, no repairs needed. And your house could float away down the Salish sea. Likely we will never see that.
When did your policy start for this year? Because your numbers are very similar to Leo’s, but mine are way lower.
This (sort of) helps explain why my SFH somehow changed to a duplex in their system, which I just happened to catch when asking about something else.
TD is just flying by the seat of its pants, as is consistently clear.
Good idea if you employ a worker, but:
“As a homeowner, you’re not eligible to register with WorkSafeBC unless you are an employer. If you hire an independent business and are a customer of that business, then you are not eligible for WorkSafeBC insurance coverage. An independent business might look like a business that provides services to multiple customers. When you hire an independent business, you are a customer of that business and not their employer.
https://www.worksafebc.com/en/insurance/need-coverage/who-needs-coverage/homeowners
Thanks for the info Leo. Am not planning on going with metal. Does anyone else on HHV have any recommendations for a roof replacement company?
REPORT TO COUNCIL
DATE: June 1, 2023
TO: Mayor & Council
FROM: Acting Chief Administrative Officer
SUBJECT: State of Local Emergency
“Following the devastating wildfire that swept through the Village of Lytton on June 30, 2021, Council enacted a State of Local Emergency (SOLE). The SOLE has been renewed weekly since that time, the most recent SOLE set to expire on June 19, 2023.
…The SOLE was deemed necessary by the VOL due to the extensive remediation and archaeological work that was taking place over the last 18 months. The shift of focus from recovery to rebuild means the SOLE is no longer necessary.
…As the remediation, backfilling and archaeological work continues in specific areas, additional measures may be required to periodically restrict access to certain locations in the VOL. Recovery staff will work with property owners to coordinate these activities on a site-by-site basis.”
https://lyttonbc.civicweb.net/document/14050/2023-06-14%20RTC%20SOLE%20Declaration%20Removal.docx?handle=AF633B62490849D7A10C015AD42EA81A
Anyone want to guess how long Victoria City Council and CRD Directors would keep a “State of Local Emergency” in place following a (potential) major earth quake here…
I get that part – I drive a substantial SUV for the same reason. But liability insurance is a pretty cheap add-on, relative to most types of insurance. To me, it makes sense to insure for catastrophic things, even if remote, especially if the premium is cheap.
I’ll give you another example: I have WCB coverage for home services on our property. Had a situation many years ago where a service provider fell backwards down our stairs and had a real problem & it was touch and go for a while as to whether he’d be suing us (sure, then we could argue about fault). Ever since then, WCB coverage. Costs about $200 or less a year, but almost nobody does this. I can tell you with certainty that some significant percentage of the service providers out there have no WCB of their own, even the ones that claim they do. Sure, I could check out every one of them before they come to the house, and only deal with those that do, but why bother? e.g. our landscape company claims they have WCB but I know they don’t. But we like them. Get your own WCB and no worries. Just an example of a different approach I guess.
Side benefit. I’m tired of scraping moss off my roof, and I like the look of metal.
But yes will likely toss some panels on myself after the roof is replaced.
Another article said the province claims this isn’t the source of the delays. Hard to know what to believe but the results (exactly none in 2 years) are hard to argue with
Does TD actually allow you to drop earthquake insurance? I asked about it a few years ago, and the TD rep on the phone alluded to it being a mandatory component.
This isn’t a new development in BC, and I suspect it is old news in parts of the world where ancient civilizations are respected (i.e. Europe & Egypt).
Have you ever spent time in or around Lytton?
I have earthquake insurance with TD Meloche Monnex as well. It doubled this year! I called to ask why and they said TD wasn’t provided with any reason for why it went up. What a joke. My total premium this year is $2,015 for a 70s box assessed at 1.2M. More than half ($1,192) is for the earthquake coverage.
I still choose to have earthquake insurance. I want the peace of mind that if my house needs to be rebuilt after an earthquake I am covered (after paying the large $75,000 deductible of course).
Also, a large caution to people calling into TD about their insurance. They moved to a new software system sometime last year and some property details did not transfer over. So what they did was just put basic details for a lot of homes. For example, I just replaced my natural gas furnace with a heat pump and I asked if removing the old nat gas furnace would lower my premium. They said “hmmm, we don’t have a nat gas furnace or nat gas fireplace listed on your property due to software system upgrade”. Because I called in to ask that one question my premium went up $200 after they updated everything. Brutal!
Did you go with metal primarily because of the ease of attaching solar panels?
Would now need to be tested and handled like drywall I have never seen so much brick and cement rubble advertised in marketplace lol
Sidekick I think the change came about in March
Typically smaller quakes do not generate tsunamis. While the new fault is very close to Victoria and potentially very dangerous it is not likely to generate a LARGE quake like the subduction zone off the west coast.
https://www.usgs.gov/faqs/what-it-about-earthquake-causes-a-tsunami
I assume that’s if you want to dispose of it (they’re checking for a report)?
Used to be you didn’t need any permit/permission to take down a chimney.
Asbestos is probably in our food from the sounds of it. We’ll never be able to meet housing demands, especially if we now need archeologist reports to verify we’re not disrupting an ancient gravesite. The world has gone completely insane.
Sidekick most red brick and cinder block now needs to be tested for asbestos it’s being treated like drywall and more than likely requires a permit and hazmat removal
How much?
Metal from Irwin Industries.
Oh yes, I’ve been given a few pauses by them as well.
Keep us posted.
Yes. The map shown includes all tsunami risk, including from the west coast (reflected) and local. Specifically…
https://capital-region-tsunami-information-portal-bcgov03.hub.arcgis.com/
“ The capital region is an at risk area to tsunami hazards from a number of potential sources including the Cascadia Subduction Zone, the Alaska-Aleutian Subduction Zone and local shallow crustal faults.”
Maybe not as safe as a horse and carriage Frank. As someone who worked emerg/icu and saw things first hand I am a big believer in that having no engine allowing for a much bigger crumble zone is a huge feature.
Deceleration force can shear your aorta no problem. I’ve done chest compressions on people in emerg that didn’t make and they looked total fine externally.
The other insurance provider also excluded this. Does anyone know if the tsunami map linked below is for a quake off the west coast? Or does it also include the newly discovered fault due south of Victoria?
A Tesla is the safest 5000 lbs. car in the world? Don’t get me started.
Right. I also like that Wimbledon collected $141 million for pandemic insurance after paying it each year for 17 years. https://www.usatoday.com/story/sports/tennis/2020/04/09/wimbledon-pandemic-insurance-policy-payout-141-million/5123987002/
TD earthquake insurance excludes tsunami damage (as do many others) https://www.tdinsurance.com/products-services/home-insurance/tips-advice/earthquake “ Please note that damage caused by tidal waves and tsunamis is excluded from this coverage”
Tsunami is not any concern for most of Victoria, except some waterfront shown in yellow here https://www.capitaldaily.ca/news/greater-victoria-tsunami-risk
This conversation reminds me of the dentist(s) who made bank by having pandemic insurance. Who saw that one coming…
Climate would be the biggest factor in Victoria property taxes. No (or little) snow removal, streets don’t require the same amount of repairs like most cities where frost gets in and destroys the concrete, and many other joys winter provides most of the country. IMO.
When was the last time a modern condo building in Victoria had a substantial fire? Keep in mind that a modern condo would have between 50 and 200 units. What are the odds the super rare fire originates from my unit? Well multiply the non-existent fires by 1/50 to 1/200. What are the odds the strata is able to pin in on me and be legally successful? This is not something that keeps me awake at night. Floods on the other hand happen all the time, so I do insure my 10th floor rental as there is a lot of units below mine to flood.
Do you know what statistically can actually happen to you? A car accident where you are serious injured or killed. That is where I personally put my money…I drive arguably the safest 5,000 lb car in the world. People obsess with liability insurance and then drive an ICE car (much less safe in a front-end accident as you don’t have the massive crumple zone of an electric car and if something is going to kill you it will be deceleration forces). Accidents take place every day, modern day condo fires, not so much.
There were a few extra minor exclusions, but the TD policy seemed equivalent (the TD flat deductible was better IMHO). They did not ask nearly the same number of questions as Coast Capital/Western, which does give me pause…
This ‘loss prevention specialist’ they’re sending around may change the equation though.
My ancient Toyota is probably worth $4K at most, and every time I look into removing collision and comprehensive it doesn’t lower my premium by any appreciable margin; so I just keep collision and comprehensive because why not.
And did you find out the why?
Agree with Frank on this one – don’t you want/need insurance for the liability component?
Even if you insist that your renters have tenant insurance with liability coverage, that won’t protect you in case some of that liability falls on you as owner. e.g. electrical short in the walls starts a fire, or some trip & fall coma claim due to some “design flaw”, ie. owner’s liability not because of something the tenant did. Yes it’s a remote circumstance, but with a potentially sizable number.
For most of our insurance, liability coverage is the #1 thing I focus on. I care a lot less about smaller things for which I’m happy to self-insure. We jack up our deductibles for the same reason (I’ll never make some small claim anyways – view insurance as being for catastrophic events primarly)
Tell me you’re in the 0.1% without telling me you’re in the 0.1% 🙂
From the same story,
“According to the study, this demonstrates a weak relationship between income tax and owned property value in Vancouver when compared to U.S. metropolitan areas. In addition, the study said this points to most luxury homes being bought with money “from sources other than earnings taxed in Canada.”
Those are “low” because they are expressed as a percentage of the property value. Which is high. The $ amount paid isn’t low compared to other cities.
“[BC] is home to four out the five cities with the lowest property taxes in the country.
Vancouver, Victoria, Abbotsford and Kelowna all have property tax rates under 0.5 per cent.
“Although at first glance it sounds like lower property taxes are really good and appealing to buyers, it can make conditions quite difficult for the average homebuyer,” said Zoocasa spokeswoman Patti Cosgarea. “Lower property taxes are appealing to investors. So this really brings a lot of competition to Vancouver and surrounding markets.”
https://biv.com/article/2023/06/four-bc-cities-have-canadas-lowest-property-tax-rates-zoocasa
I’ve taken a few down, and depending on the age of the place it’s usually a few taps with a hammer and the bricks pop right off. Once you’re inside the structure, it does get messy (like Marko mentioned). I have PPE if you decide to try it out.
With respect to insurance, I got shocked last year on a renewal with Coast Capital/Western Insurance which went from 3k->5k. The rep said they were reviewing all policies and that everyone would eventually be paying much higher premiums (they were reviewing all policies, starting with the higher-value ones).
I switched to TD which was way cheaper – so much so that I actually read the 60 pages of fine print to find out why. They have, however, sent out a “loss control specialist” to review one policy. No idea what will come of that.
I’ve had the ‘to buy earthquake insurance’ conversation with my structural engineer (for a 2019 build), and her response was ‘your place won’t collapse, but it still might be condemned’. I suspect she was being overly cautious, as another engineer thought most newer SFHs would be fine. All I can say is buy stock in Simpson or Hilti…
With the Christchurch NZ magnitude 6.3 earthquake , 170,000 buildings were damaged or destroyed. After five years 90% of the 50,000 insurance claims were settled. The 10% (5,000 claims) that aren’t settled are said to be due to court challenges by the claimants or delays from government insurance (EOC, <$100k) claims.
https://www.bbc.com/news/world-asia-35612298
A cautionary note to the uninsured…
Christchurch was a 6.3 magnitude. “ Since 1900, [in or near] Victoria has had 1 quake of magnitude 7.3, 4 quakes between 6.0 and 7.0, 16 quakes between 5.0 and 6.0, 52 quakes between 4.0 and 5.0, and 390 quakes between 3.0 and 4.0.” https://www.volcanodiscovery.com/place/404244/earthquakes/victoria/largest.html
My insurance is a payout only in the event of a major or virtually total loss. There is a fixed amount paid out with no requirement to rebuild. I just get a check.
I have no idea how the house will do in a earthquake but sitting on solid granite probably helps. I do carry pretty large liability insurance in case someone trips on a blade of grass.
In the event of a big one (and assuming I survive) there is no way that Victoria will be rebuilt in my lifetime.
Marko- What about liability insurance? Better have $2-5 million. Driving is one of the most dangerous activities we do regularly, best to have too much insurance. Why are you worried about a few hundred dollars????
My final comment on insurance. Use some common sense. When my Tesla was worth $100k yes I bought collision/comprehensive. Now that it is 8 yrs old with 240,000 km I am not going to buy collision/comprehensive for a car only worth 30k. If I drive it into a tree, so be it, I drove it into a tree. $613/year basic insurance for a 5000 lb car is all I pay. I have friends paying double for Honda Civics.
Same with my rental condos. If it is a 10th floor unit, I’ll buy insurance in the event my tenant does something stupid. However, my 2nd floor unit above a parkade entrance I skip the insurance. Tenant can’t possibly flood more than 2 units worth of flooring which wouldn’t bankrupt me.
I’ve dealt with a ton of real life situations to figure out insurance kind of sucks. For example, a month ago a tenant phoned me to let me know there was water on the floors likely coming from above that caused approximately $500 worth of drywall damage in my unit (luckily floors were okay as we dealt with it quickly). Strata sends out a plumber to investigate…
I email property manager and this is her reply, copy and paste
“Unless an insurance claim is being processed by the Strata Corporation, which would require there to be damages in excess of $25,000 for water damage, any damages within a strata lot, regardless of the source, are an owner responsibility.”
I reply with
“Okay, can you let me know which unit the water leak came from and what the source was? The tenant notes a plumber came and knocked on his door when this took place.”
and I receive a reply of
“Sorry couldn’t identify which unit leak came from, likely someone used too much water to clean floors.”
Like common.
Conclusion, way easier for me just to pay for $500 worth of drywall repairs and be on my way then to deal with insurance. Property manager not interested in assisting to figure out where the leak came from so I can track down that owner.
I’ll email you a recommendation. I did these jobs with my dad when he was working as a stone mason and then we would use the brick at a different job site for other purposes. I remember once we took a chimney down in Sooke from the roof line to the basement and I’ve never been filthier in my entire life, I came home and looked like I just walked out of a coal mine after two years. It was worth it thought $1,500 and we did the job in one day, brick loaded on to truck and all. That was a lot of money 20 years ago.
My experience based on having a condo in the epicenter of the earthquake in Zagreb is buy modern quality construction. I bought a 2016 high quality concrete build and there literally wasn’t a single crack in the drywall or grout in my entire unit while older buildings on the same block were evacuated due to structural damage and still don’t have occupancy/repairs haven’t started.
And I’ll mention the impact on the real estate market. In 1963 there was a large earthquake in Skopje where over 1,000 people died and 200,000 people were left homeless. As a result in the mid 1960s the build code dramatically changed in Croatia (formerly Yugoslavia).
In Zagreb after the 2020 earthquake pre-1960s construction in the city center dropped in value substantially (demand dropped) while post mid-1960s increased quite a bit (demand increased) and that is still seen today. (The post mid 1960s buildings performed much better in the 2020 earthquake). People don’t want to be stuck in something old when the next one hits.
Reality.
2nd piece of reality I’ll mention for a third time today….Danbrook One in Langford.
Yet when the big one strikes, we will efficiently repair hundreds/thousands of structurally compromised buildings, lol. We can’t repair one.
Did you ask TD what the premium would be if your deducitble was $200k? I am guessing like $500 less per year.
Exactly my point. Everyone is so focused on securing the policy they aren’t really thinking through the implications of that policy being triggered. If your house is in excess of $75k in damage to the point where the insurance made sense it has likely slid off the foundation or has structure issues and yup could be 10 years for a rebuild.
At least you’ve spent your money on something tangible and while you might have no insurance you’ll have a place to live. The rest won’t have a place to live but they will sleep well knowing they have insurance 🙂
Hi Leo, I have to replace my roof this year as well. Can I ask you what company you decided to go with?
It’s not the loss of use of the chimney after the earthquake that will be bad; it’s that your house will be exposed to the elements where your chimney used to be.
Leo I would say any carpenter can remove but now I think it’s a job for hazmat
CTV news on rebuilding of Lytton- progress has been hampered by archaeology reports. If any artifacts are discovered, construction stops to do further exploration. That’s what everyone is primarily concerned with, ancient shards of pottery.
Would like to dismantle mine, at least above the roof line since I am replacing the roof this year. Anyone can recommend someone who could do that?
If you have a high efficiency furnace and electric water heater, you won’t need the chimney.
Brick chimneys will also crumble, and just about every house has one.
Some good news from the other side of the pond in Surrey. Will Victoria be far behind?
SURREY, BC – The Fraser Valley real estate market saw an injection of supply in May as new listings surged by more than 40 per cent over April.
At 3,533, new listings were just below May 2022 levels (3,631) but slightly higher (2.7 per cent) than the ten-year average for the region. A welcome trend towards alleviating housing supply issues.
“Typically we would see an influx of inventory earlier in the spring sales cycle,” said Narinder Bains, Chair of the Fraser Valley Real Estate Board. “The series of interest rate hikes during the latter half of 2022 had many sellers and buyers in a holding pattern for most of the year. What we’re seeing now is a recovery and adjustment to the new financing landscape.”
Active listings grew to 5,558, a 20 per cent increase over April, the highest month-over-month jump in more than a year.
The strong supply trend was met with healthy demand. In May, the Board processed 1,711 sales on its Multiple Listing Service®, a 10.1 per cent increase over last month and a 25.8 per cent jump over May of last year.
Prices continued to edge upward across all categories as buyer confidence grew, with the composite Benchmark price topping the one-million mark at $1.01 million, a level not seen since September 2022.
MLS® HPI Benchmark Price Activity
Single Family Detached: At $1,491,700, the Benchmark price for an FVREB single-family detached home increased 2.5 per cent compared to April 2023 and decreased 12.7 per cent compared to May 2022.
Townhomes: At $826,200, the Benchmark price for an FVREB townhome increased 1.4 per cent compared to April 2023 and decreased 9.8 per cent compared to May 2022.
Apartments: At $542,300, the Benchmark price for an FVREB apartment/condo increased 2 per cent compared to April 2023 and decreased 6.3 per cent compared to May 2022.
In comparison here is what the Victoria Core experienced: (source VREB)
There were 2,189 active listings for sale on the Victoria Real Estate Board Multiple Listing Service® at the end of May 2023, an increase of 7.1 per cent compared to the previous month of April and a 23.3 per cent increase from the 1,776 active listings for sale at the end of May 2022.
The Multiple Listing Service® Home Price Index benchmark value for a single family home in the Victoria Core in May 2022 was $1,424,000. The benchmark value for the same home in May 2023 decreased by 8.9 per cent to $1,297,600, which is up from April’s value of $1,295,800.
The MLS® HPI benchmark value for a condominium in the Victoria Core area in May 2022 was $619,500, while the benchmark value for the same condominium in May 2023 decreased by 8.1 per cent to $569,300, which is up from the April value of $564,000.
LeoS Bad pun alert.
I could well be wrong but I understand that a modern wood frame SFH is very unlikely to be a total loss. A lot of the damage is related to the harmonics of the structure and frequency of shaking. For example in the Mexico city quake in about 1980 only about 2% of the structures suffered total failure and those were all 5 and 6 story buildings. In a perfect world you would be built on bedrock and not clay. I have not redone the calculations since the switch to fixed deductible but most damage is typically broken windows and cracked drywall (plus a lot of popped nails!). That typically comes in under the percentage deductible. Not sure what happens now but under the old rules, structure deductible was calculated separately from contents deductible so you got even less. I could very well regret the decision but I have put the money I would have spent on premiums on lots of Simpson strong ties everywhere I could put them along with drilling the foundation for anchors. Since I have an unfinished basement and attic that covered a lot of the structure. Assuming I am still in good health I would probably have most of the damage repaired (or at least warm and dry) by myself long before the government or insurance got around to settling things. If nothing else, the city types will probably be too busy to be trying to enforce sidewalk construction and tree removal so I will probably be left in peace. At least I can hope.
The rental market is getting hammered again. The average one-bedroom within a six kilometer radius of downtown is up to $1,869 per month with 126 listings on Craigslist. The range is from $1,500 to $2,200 per month.
The average two-bedroom is $2,497. One of the newest rental buildings on Shelbourne has a small two-bedroom listed at $2,900 per month ($4.32 a square). Hudson Walk has a couple of two-bedrooms available for around $2,395 to $2,495 plus parking and a locker for another $250 per month. You can find them on CRAIGSLIST.
In, Vancouver a one-bedroom, 6Km from the Central Business District is $2,511. A two-bedroom is $3,105
Surrey, like Victoria, is at $1,860 and $2,500 with a similar number of listings.
I doubt that we will see any relief for renters for a long time to come.
And rebuild using an earthquake and flood-proof design
Speaking of insurance, there’s a flood of companies leaving the Florida market. Sign of things to come
https://www.wesh.com/article/farmers-insurance-property-policies-florida/44189948#
I’ve never been terrified by the thought of an earthquake until now.
From: https://fortune.com/2023/06/13/parents-financially-supporting-adult-children-ruining-retirements-raiding-savings/amp/
Yes, but be sure to hang on to your rubble-covered plot of land in Victoria because, if the California experience is any guide, property values will come back and then some.
This all sounds about right. But with many policies insurance is on the hook to rebuild your home regardless of the (increased) costs. So they share part of the “nightmare” in rebuilding. Faced with that, insurance companies might make some decent payout offers earlier than ten years out.
This is pretty anecdotal, but a surprising number of the properties I have hooked on my watchlist did the old cancel and relist in the last 5 to 10 days.
Insurance is there to protect against catastrophic losses. I never understood people making claims for things like a TV or some bikes being stolen. This makes no economic sense when you look at the premiums.
If an earthquake happens and your neighbors house catches fire, maybe you will be the “lucky one” that can claim the cause of the damage was from fire and not the earthquake. Then you’re covered.
Used to be a percentage, now it’s a fixed $ amount for TD. Ours is $75k but Introvert said theirs is $25k
As for workers, just look at what happened in Christchurch. Many years after their earthquake people were still fighting to resolve insurance claims. Or look at Lytton. 2 years after the fire not a single building permit has been issued and that was just a hundred houses.
Now consider that if the big one hits here it will affect millions of people in various cities, not a couple hundred thousand. I would not expect your home to be rebuilt for 10 years at least. If the quake hits, pick up and move to Saskatchewan.
I think there is a misunderstanding about how most variable rate mortgages work. When interest rates rise, more of your payment goes to interest and less goes to the principal. When you renew, you are forced back to your original amortization schedule (unless you refinance) and your payments will be increased to make up for the shortfall in principal payments that happened during the previous term.
By not requiring additional payments after a mortgage holder hits their trigger point – which is discretionary under the terms of some mortgages – they are just letting people kick the can down the road until renewal. But unless they can refinance, they will be forced back to the original amortization at renewal which could mean some pretty big payment increases. Of course if rates were lower, that would lessen the blow.
Look at what’s happening in Turkey and Syria, you end up in refuge camps. Unless you have relatives in other parts of the country and can find a way out, you’re screwed. But humans are resourceful, look at the bombing of Japan, Germany and the future of Ukraine, they came back with a great deal of outside help.
Barrister, maybe consider 961 Joan that just sold for 2.4 million. Back in 2013 it was bought for $1,364,000 which is an increase of 76 percent
How did that sale compare to the general increase in single family home prices in the core from 2013 to 2023? In 2013 the annual median price for a house in the core was $572,500. Today it’s $1,255,500. An increase of 119 percent.
One sale does not make a market. But in the case of this one sale, it suggests that the high end properties are lagging behind the general market in appreciation.
That should make sense as there are far fewer prospective buyers in the 2.4 million dollar range than in the middle band of housing where there is strong demand relative to the number of listings. Relative to cities like Vancouver and Toronto, the Victoria core district is quite small and that means the selection of available housing is small too. If you want to buy an upper income house – you have to go where the house is located or you have to wait for a long time for one to come up for sale in the neighborhood you want. If one that meets your expectations ever comes up for sale in that neighborhood.
When it comes to appreciation, It’s not so much location as it is price range.
How long before you get the money?
And, will you have a job while have to pay mortgage and bills without a roof over your head?
Or, cut your lost and take the little pay out that your insurance company know that they can get away with, because you are in no position to haggle?
Ditto.
My thinking on earthquake insurance boils down to: do I want to pay nothing and have zero chance of insurance paying the vast majority of the cost to rebuild my house, or do I want to pay a nominal premium and have a nonzero chance of insurance paying the vast majority of the cost to rebuild my house?
I, personally, prefer Option 2.
How long would it take for the city to make the decision to waive the permits, and how long would it take for city geologists to do their studies, and what new earthquake and environment regulations will they dream up before you can rebuild?
Perhaps, several (3-5) years after the disaster, if you can find trades workers in a town that lost 50% of the population and housing price increase by 46% like New Orleans after Katrina?
And, if Oak Bay get hit hard enough for houses to be 100% destroyed, then it would be Armageddon on the mainland, that would surely make insurance companies to drag out the paying process.
Like Markos, I don’t bank on the government to bail me out or the insurance companies to step in without months, possibly years of wrangling.
Interesting idea, but I’m not smart enough to think that many chess moves ahead. I’ll just pay my insurance and hope we don’t have an earthquake.
My mistake. So many acronyms and so little time, or maybe it is my dyslexia showing through.
BoC doesn’t regulate this, rather OSFI does. That keeps BoC out of having to be concerned about wearing two hats re interest rate policy.
I’d be shocked if TD MM even bothered to find out whether a map for Victoria existed, let alone take its contents into account.
I bet for them it’s as sophisticated as “Victoria: earthquake: likely” and “Regina: earthquake: unlikely.”
Everyone, don’t argue with Marko, or else the King of Common Sense will mute your ass.
I don’t think you get what I am getting at. There is a strong possibility the government would introduces policies that would increase the value of the vacant land to the point where it is worth more than the previous market value of the old home; therefore, you wouldn’t be bankrupt without insurance.
That is an incredibly small % of housing stock. The other thing is this would have to be a newer home (modern foundation, structurally engineered); therefore, this type of home is far less likely to suffer damaged exceeding the deducible compared to the average.
As I said, if a $3 million dollar Bear Mountain home ($1.8 million in improvements, lot $1.2 million) suffers 15% damage of $1.8 million Oak Bay is simply levelled.
I am not arguing against earthquake insurance, I am arguing against earthquake insurance with massive deductibles (the only insurance you can buy).
I agree, but the noted above won’t be tied to whether your home is insured, or not, for the most part.
It doesn’t matter if you have rent coverage or not through insurance. Government will only be able to set up so many container homes in fields.
I am painting a picture of a scenario here where the insurance actually kicks in. The much more likely scenario is we have an earthquake that causes extensive damage but not enough for 15% deductibles to come into play making the insurance useless.
Sure. With low-interest loans, means tested. Maximum value <$100,000. The government (taxpayers) are not going to replace someone’s Oak Bay mansion for them because they skipped getting earthquake insurance.
Too true. I looked at that map before my purchase, and noticed a sweet spot between the liquification and the strong reverb zones -a simple twist of fate allowed me to purchase a house in that sweet spot.
I agree with Marko that in the event of a major shake, one or more levels of gov’t would be forced to step in.
If I had added earthquake coverage to my house insurance policy my annual premium of $1,477 would have doubled. That combined with being informed that the underwriters will soon not offer/renew that sort of coverage made the choice easy -no earthquake insurance (the vast majority of value of this property is situated in the land component anyway).
The global insurance industry is in a tightening vice with the extreme weather anomalies of late, and we should expect to pay more for less.
We aren’t Croatia. We are more likely to respond like Christchurch or California did.
Renters and lower income folks are more likely to relocate – possibly permanently. Government will step in with temporary housing and emergency relief programs. The Red Cross will come and many Canadians will donate to this cause and many Canadians will provide temporary shelter in the short-term. There will be an influx of tradespeople brought in or drawn in by the work to repair.
Insured homes will likely be repaired/rebuilt quickly once infrastructure repairs are completed. And Victoria RE values will recover quickly imo and there might be increased confidence in reduced risk post the big one.
One of the bigger risks apart from injury/death is psychological trauma. PTSD is a real thing and experienced by at least 30% of survivors of an earthquake.
There’s a map of Victoria that’s available which has a plain assessment of whether you live in a danger zone of liquefaction or landslide. It’d be pretty easy to just look at the map and see if they’re in that zone.
SomeGuy: I was actually asking about the increase in value not where it is cheaper. I suspect that houses in Oak Bay have increased more (in terms of percentage increase) than houses in Victoria. My house is still more expensive than one on Bear Mountain but I am starting to suspect that Bear Mountain houses have seen a greater rate of increase. But I am guessing either Leo or someone has the stats.
BCE is cutting 1300 positions, probably mostly upper management. Assuming six figure incomes, that’s $130 million per year. If our government did that, our national debt would be gone in 8000 years.
When I said a “$1-2 million” house, that meant the value of the house, excluding land. So you would lose that house value when selling it as a tear down.
If you’ve already got a tear down quality house, sure skip earthquake insurance and fire insurance while you’re at it. But if your house is worth something, insure it.
My uninsured house is destroyed, and I get… “Mortgage deferral, and waived building permit fees” ? …. Whoopee!!
In answer to your question Barrister.
The median price for a condo in the Victoria Core versus Langford /Colwood
Condominium prices for the last four months in the core have been pretty much stable with May being $550,000. Langford and Colwood have vacillated over a wider range over the last four months with last month’s median at $555,700
So on dollar for dollar basis there is no difference. However, one also has to take into consideration other factors such as unit size and quality. Quality measured using an age/condition factor.
In Langford / Colwood the typical condo is the same in size but it is some 15 years newer.
Once you have accounted for quality then Langford/Colwood is less expensive as you are getting better quality of improvements for the same price.
The math requires some fancy calculations to estimate land to building ratios and assumes straight line deprecation. The price differential works out to between $50,000 and $75,000 between the two areas.
That doesn’t sound like very much if one looks at commuting times. However it does make sense in that prospective purchasers for condos are mostly first time buyers and they have limitations on income and the size of down payment no matter where they choose to buy. They are likely buying condos at the extreme end of their household income affordability which tends to cause a similar price ceiling in both areas.
In contrast vacant building lots between the two areas on average have a $250,000 difference. Ceterus Paribus.
Single family is trickier as the Victoria Core has a lot more variety in housing in design, house size, lot size, views, renovations, and quality. A lot more variables to take into consideration which makes the math more difficult.
But it may be a prudent political move (albeit for short term political gain).
I know people in the financial industry who believe that the BoC allowing lenders to extend payment length is not pure finance, but rather, influenced by political winds.
Only if you have a brand new $3 million dollar house on Bear Mountain that is beyond repair (which means everyone in Oak Bay is dead).
In the core you would sell your previous market value $1.1 home as an unrepairable earthquake damaged teardown for $1 million for the purposes of a 6plex. I am sure the government would step in with a bunch of programs as well such as mortgage payment deferrals, waive building permit fees, etc., etc.
I meant literally physically where would you live, not economically. If strata buildings are exercising 15% deductibles where are you finding a place with an occupancy permit to rent? Not everyone could move to Calgary while Victoria is rebuilt.
In Croatia people are still living in containers in fields two years later waiting for their homes to be repaired and that was a relatively small earthquake.
One again, just look at the Danrook One in Langford. Now imagine much more tangible damage per building and multiple by 500x.
Thanks Leo for the extra charts. Looks like 2025/2026 will be tough years for VRM holders.
Totally agree, based on my experience.
People tend to assume home insurance companies are organized, careful, and meticulous, when in reality they are disturbingly error-prone, clumsy, and arbitrary.
Yes, I think of it as catastrophic earthquake insurance. And it’s cheap, about 1/1000 of the value of the house per year. For a lot of uninsured homeowners, the “catastrophe” wouldn’t be the earthquake, it would be the economic loss of an uninsured $1-2 million house.
Earthquake coverage typically includes loss of use coverage, ie. paying for rental accommodation while your home is uninhabitable, up to whatever limit you pay for/is available.
Friend wanted to meet at Boom & Batten last night, had to sit at the bar. No tables on a Tuesday night. Just the appetizers are $18-$22.
Beyond the restaurants what I find shocking is the average car parked in front of a house in Kettle Creek/Happy Valley/Westhills/Royal Bay. Even cars that start selling after the interest rate increases (such as the new Ford Bronco) are all over the place.
My gut feel is there is a lot of spending that could be cut to absorb higher interest rates. Just buy a Mazda3 (super nice car) for 25k instead of a Bronco for 55k and you have the extra $ to re-financing at a higher interest rate.
My condo building in Zagreb was near the epicenter of the March 2020 earthquake. Two buildings on my street that suffered heavy damage (uninhabitable) repairs still haven’t started and they were both properly insured.
There are many earthquake insurance related concerns people worry about right now, but I don’t really understand the concerns. For example, one of the many concerns right now is that it is near impossible to find insurance for the strata earthquake deductible, I’ve seen deals collapse over this.
100 unit condo building
$60 million replacement cost
15% earthquake deductible ($9 million)
$90,000/unit unit entitlement for the deductible
Owners worried because they can’t find insurance for the $90k.
Let’s think about this. We can’t fix the Danbrook One in Langford, but yea everything will fine if the earthquake is big enough to exercise the 15% earthquake deductibles (millions of dollars on condo buildings). The damage at that point is beyond enormous.
The issue I have with earthquake insurance is it isn’t really earthquake insurance due to the huge deductibles. It should be called catastrophic earthquake insurance only and at that point I am worried about being alive rather than the deductible.
Or if my condo building has $9 million dollars worth of damage where am I physically living for the next few years?
People are just so focused on buying the insurance they really aren’t applying common sense as to how this would play out in real life. A crew isn’t showing up to fix $9 million dollars worth of damage on a building over the course of two weeks.
What are the odds that your building/house is damaged to exercise the deductible but hundreds of other buildings/thousands of other houses are just fine?
do insurance companies have stats/algorithm that actually breaks down to this level of detail though? I’d be amazed if they do, most of my interactions with insurers over the years have convinced me that they are reactionary and dense at best…
Despite inflation and interest rate increases, downtown is probably busier than I’ve ever seen it. It’s sort of hard to directly compare prices between the two because the product is different. Brand new mansions on bear mountain vs 80 year old houses in the core and larger, older condos outside of the core vs smaller within the core. Looking at land value and price/sqft for condos it does not appear to be close though in favour of downtown. I think you may be getting a bit too much news via Adrian Raeside types Barrister.
You look at Christchurch, many homes suffered more than $100k in damage and weren’t rebuild-able at all because the land wasn’t stable enough to rebuild it back on.
Is a condo on Cook street (or one in Oak Bay) worth more these days because it is NOT downtown? Is there a growing movement away from being in the core. Are houses on Bear Mountain starting to sell for more than Fairfield?
I am noticing that a number of the houses in the core seem to either be sitting for weeks or are dropping their asking by a lot. Does anyone have any stats as to ho prices in the core are doing compared with other areas?
Yes, but Canadian households also have $15 trillion net worth, and that’s $14 trillion if we subtract that $1 trillion government debt.
For perspective, the government debt is only 7% of Household’s net worth.
Marko- Where would the inspectors come from to delay repairs? Maybe you could become an inspector.
At least most personal debt is backed by assets. Everyone eventually dies and their debt is taken care of. Government debt is ever expanding by uncontrollable spending. The U.S. hit one trillion in debt in 1981, now it’s 33+ trillion. We recently hit one trillion, are we headed for $30 trillion?
Maybe you could change careers again and become a construction worker, since there would be no homes for you to sell.
What are the deductibles on earthquake insurance? 10-15% of replacement cost? Where exactly would the workers come from if homes suffered $50-$100k worth of damage?
My insurance last year was $1150. No earthquake
Not going to take it out.
This is the fatal economic mistake, the amortization extension worked for banks and the politicians, however, they forgot the most important part of the mortgage equation. THE BOND HOLDERS….If the people buying the mortgage bonds can’t have faith in the terms of contracts being honoured as stipulated, then the risk is too high to purchase those bonds (people always forget that banks don’t have a big Scrooge McDuck like vault that they dole mortgage money out of and that the mortgage needs to be sold to investors). With contracts terms not being worth the paper they are written on, there is really any guess on what term could or could not be unilaterally changed. So, they just might have stumbled into a future lending liquidity crisis by focusing too much on alleviating some short term pain on people that were poor planners.
I’m also with TD. Learned today that my earthquake premium is going from $1300 to $2400. In total my policy will be $3800 for a 100+ year old SFH in Victoria. Ouch.
The regulators should be worried about lenders arbitrarily extending the amortization period. In some cases extending the amortization period may result in the period being greater than the property’s remaining economic life. That makes the loan riskier and the loan may no longer be a conventional mortgage.
A property that has the vast majority of value situated in the land component is riskier as land values can fluctuate greatly. Depending on the lender, a property with the majority of value in the land component and a remaining economic life of less than 25 years might have its loan to value ratio cut back from 80% to 65%.
Extending the amortization without re-confirming the remaining economic life of the improvements may not be a prudent lending practice.
If it is all possible could some of you do the breakdown on your house insurance?
For instance on Section I: Property Insurance
Dwelling, detached structures,personal property,additional living expenses
Section II Personal liability
Personal Liability, Voluntary Medical Payments, Voluntary Payment Damage to Property
What about Optional Coverages : What is included?
Unfortunately, urge is not mandate.
Looks like the regulator is starting to worry:
https://www.reuters.com/business/finance/canadas-banking-regulator-urges-lenders-tackle-risks-mortgage-extensions-2023-06-13/
I suspect that we are in fairly good shape and at worst there might be a slow trickle of homes coming on the market because of owners having trouble paying the mortgage. Nor do I see house prices doing much more than just flattening out at worst.
I dont think that this is likely to turn into a drama.
More correctly, that’s the average value for a new mortgage loan. Doesn’t have to be a new homeowner, nor for that matter does it have to be a new (as opposed to current) home. Could be a refi.
I took that stat from here and it states it is the average for BC Mortgages: https://snappyrates.ca/mortgage-statistics-canada/
But when you look at the underlying data is actually for new homeowners in 2021-2022: https://www.finder.com/ca/canadian-mortgage-statistics
I can’t quickly find more recent data on overall average mortgage debt, but it seems like the number was around 360k overall average in 2018 – much higher than this in Vancouver area lower than this in more rural areas.
https://dailyhive.com/vancouver/vancouver-homeowner-mortgage-debt
Is that the average balance over all outstanding mortgages, or the average amount advanced on a new mortgage? If the former, that’s scary.
You can sell your house, move into an apartment and never have to worry about earthquake insurance. When one happens, you’ll be flattened in the rubble. Another reason to own your own home, just remember to sleep in the bathtub.
I’d worry more if I lived in L.A. or San Francisco. Earthquake insurance is probably a cash cow for the insurance industry.
My renewals quake premium increased dramatically this year. I’m with TD meloche. Any idea when underwriting adopted this change? Perhaps introvert renewed prior to changes?
Are there any insurance providers known to be less expensive than others for Victoria?
The coverage cost/value discrepancy doesn’t surprise me, Leo. Our insurance provider has no idea what they are doing. You’re lucky if they even know that you live in a SFH and not a duplex.
33% of Canadians have mortgages. Average mortgage in BC is $500k. Going from 1.6% to 6.25% on 500k means paying an extra $1200 a month.
Yup. Covers Jan. 1, 2023, to Jan. 1, 2024.
Dafuq?! Is that for this year’s renewal? Thanks for posting.
They have simply tightened up the criteria to ensure that flipping is taxable as a business activity. Which it is exactly.
Letting a business activity escape fair taxation reduces revenue and may lead to overpricing as it attracts capital from taxed activities.
Yes, they put some pretty interesting charts on that into the FSR:
Do you mean that, for example, someone who borrowed 800k at 1.6% in 2020 over 25 years is now paying about $3,400 a month for their mortgage. Upon renewal at ex. 6.25% their principal will be almost the same but their payment will jump to $5,300-$5,800 a month?
Having to pay an additional $1900-2400 a month for a mortgage will be difficult for many. It will certainly cut discretionary spending, and this will affect other aspects of our economy.
I don’t think it is just the 2020-2022 borrowers either. Anyone with a mortgage that renews will get hit with a fairly big increase in monthly payments, just easier to handle for those with a smaller mortgages. Paying more, even if doable, will affect consumer spending patterns imo.
I think many people with mortgages are already thinking about this and cutting back.
Are you at the top of the hill though or the bottom? If you look at which areas of Victoria are prone to issues during an earthquake (landslides, liquefaction, etc) there are places close by the are much worse off just based on the landscape.
So interesting. Leo and I have the same insurance provider and nearly identical houses. Here are my numbers:
$1192 for $2M coverage, $1.5K deductible.
$677 of which is earthquake w/ $25K deductible.
Maybe time to call and ask why a person six blocks away with the same house is paying 48% less with lower deductibles!
The first chart is great, but what may be more useful for the BOC is the same breakdown, organized by date of mortgage maturity. This will plainly show when the combined interest rate increases will hit and impact the borrowing public.
My particular concern is the 2020-early 2022 variable rate cohort that has been using static payment to extend amortizations. Come renewal, their 50-75yr am loan will be force renewed into a 20 or 25yr am.
Reducing amortization + application of massive rate increases = major payment shock coming. No refinance options available as many were originated at max LTV at peak market.
The borrower cohort prior to this segment has options. This cohort simply needs to pray for lower rates/inflation.
Victoria has had 57 earthquakes in the last 365 days (greater than 1.5). That’s probably a good thing.
If there’s no insurance, where would the payout come from? My guess is there would immediately be a call for the government to indemnify for earthquake loss, but I’d rather not find out what would happen. I guess the good news is that the affordability problem would be solved.
In my view, the high end and luxury house sales market has declined precipitously from last year and I’m guessing that is directly related to the interest rate increases. Prospective purchasers in the high end market have re-evaluated their purchasing decisions and chosen to buy less of a property and thereby lessening or eliminating the need to finance at a high debt service ratio. They are substituting high end property purchases for middle and upper middle band properties.
That has increased demand in the middle to upper middle house market which is driving our market.
Conversely, prices in the starter house and condominium market, while under pressure for values to rise, has not seen the same appreciation as the constraints of lower incomes and less equity along with the need for higher debt servicing has kept prices stable.
What would happen if an earthquake hits, and given it would take years to rebuild you go and sell the lot with the collapsed house to live somewhere else, would the new owners get the payout to rebuild the house?
The big thing is the DSR increase which does look pretty substantial and will ripple through to all borrowers. Whether it’s a problem I think depends on whether the BoC pulls off the soft landing or not.
Great article Leo! Yes, a mixed bag on debt data, nothing extreme.
Is a condo on Cook street (or one in Oak Bay) worth more these days because it is NOT downtown? Is there a growing movement away from being in the core. Are houses on Bear Mountain starting to sell for more than Fairfield?
Everything has gone up in price naturally but has Dean Park seen a larger increase as a percentage than Rockland?
I fail to see the logic in the government “cracking down on flips”. Most buyers are only looking for move in ready properties. I would think that properties requiring extensive renovation could sit on the market for longer than a year without flippers. What happened to the “disaster” house that was renovated and put back on the market?
Few buyers are capable or have the time/resources to renovate a house while living in it. It can also drag on for years, creating added stress to the owners. If a flipper can take a property that most buyers wouldn’t touch, and make it saleable, they are actually adding to the inventory. I’m sure Marko’s experience could add more insight to this topic.
My insurance broker told me he expects insurance companies to stop offering earthquake coverage altogether over the next few years.
IMO what we’re experiencing currently in the housing market is a dead cat bounce.
There has been a curious and somewhat surprising mini-bounce May into June, but there is a lot of seasonality in housing data. What that means is prices statistically tend to rise through multiple months because that’s like a very strong demand part of the cycle (Spring/Summer market). Then come the Fall/Winter market, interest rate hikes have been funneled through, and seasonally the market slows, my guess is inventory takes off and prices decline. Time will tell.