Did we get more 55+ housing?
Last fall on November 24th, the provincial government curtailed the ability of strata corporations to set limits on the age of their residents. Where previously strata corps were able to set a minimum age for residents at essentially any number, after the changes they could only limit residents to 55 and older. In other words, the commonly used adults-only (18+) restriction was no longer enforceable, but seniors-only (55+) was still possible.
There have been a number of stories in the media of buildings that were previously adults-only voting to transition to seniors-only to preserve their children-free status. That put some owners looking to have kids in a tough situation, and the province made changes to the Strata Act on May 1st to exempt children or caregivers of existing residents from the 55+ restrictions.
But how many buildings actually made the transition to 55+ since last fall? Well unfortunately we don’t have data on the housing stock so we can’t just look at which ones now have 55+ bylaws on the books that didn’t before. A proxy is to look at sales of condo units. That’s not perfect since a building may have transitioned to 55+ but if no units sold it wouldn’t show up in the data. However with 7 months of sales it gives us a good sense of whether it’s a trickle or a flood of buildings making the change.
For a baseline, I looked at 4580 condo sales between 2021 and Nov 24, 2022 in 815 unique buildings. 41 of those buildings (5%) were seniors-only. Notably that’s the same percentage of seniors-only buildings that I found in a separate set of sales from 2012 to 2013 so it’s likely pretty accurate to say that about 1 in 20 buildings were seniors-only before the strata changes.
This year there have been 1016 condo sales in 515 buildings. 39 of those buildings (7.5%) were seniors only. That might be a surprisingly small increase given the coverage in the media that has described estimates of the number of BC strata corps converting to 55+ as “many“, “hundreds“, or “5 to 10 a week“. Given that a full 24% of buildings were previously adult-only (a minimum age other than 55), it seems most adult-only buildings in fact transitioned to no restrictions rather than going seniors-only.
Looking into the actual buildings, we have the following that are newly 55+ and have had at least one sale this year.
| Address | Change |
| 9942 Third St | Unrestricted to 55+ |
| 280 Douglas St | 45+ to 55+ |
| 1560 Hillside Ave | 50+ to 55+ |
| 1019 McClure St | 45+ to 55+ |
| 1204 Fairfield Rd | 18+ to 55+ |
| 1521 Church Ave | 50+ to 55+ |
| 36 South Turner St | 18+ to 55+ |
| 9880 Fourth St | Unrestricted to 55+ |
| 978 Heywood Ave | 19+ to 55+ |
| 3009 Brittany Dr | 19+ to 55+ |
| 420 Linden Ave | 50+ to 55+ |
| 9901 Third St | 50+ to 55+ |
| 1450 Beach Dr | 50+ to 55+ |
As you can see, most of these were already essentially “older adult”-only buildings, but had the minimum age at 45 or 50, so they just bumped it to 55+. Hardly something anyone will likely get upset about. Four buildings went from adults only (18/19+) to seniors only, and interestingly enough two buildings went from unrestricted to 55+. Both of those buildings previously banned rentals, so I suspect this was an attempt to mitigate the impact of the loss of the ability to ban rentals. While owners can still rent out units in 55+ buildings, the tenant must be 55 or older so investing in those units has significantly less appeal.
Of course there are likely a few more buildings that voted to go seniors-only and simply haven’t had any sales yet, but in general it feels like the change to the strata act had the intended effect: to reduce the number of age restrictions in the stock of condos. The large majority of adults-only condos simply went unrestricted, and as units turn over it will be more and more difficult to get the votes together to transition to 55+.
Stay tuned for a future article where I’ll take an updated look at what has happened to the values in previously rental-restricted and seniors-only condos.
Also the weekly sales numbers:
| June 2023 |
June
2022
|
||||
|---|---|---|---|---|---|
| Wk 1 | Wk 2 | Wk 3 | Wk 4 | ||
| Sales | 95 | 264 | 410 | 566 | 612 |
| New Listings | 159 | 473 | 781 | 1060 | 1380 |
| Active Listings | 2173 | 2228 | 2293 | 2326 | 2059 |
| Sales to New Listings | 60% | 56% | 52% | 53% | 44% |
| Sales YoY Change | +7% | +23% | +10% | +13% | -35% |
| New Lists YoY Change | -11% | -6% | -6% | -7% | +14% |
| Inventory YoY Change | +21% | +19% | +19% | +15% | +50% |
| Months of Inventory | 2.3 | ||||
Little change as we round out the month in market activity. Just over three full weeks in we are running at 13% more sales than last June and will likely end the month somewhat over 700. Meanwhile new listings are down just 7% and inventory remains up 15% from this time last year.
There are two ways to interpret that sales performance. On the one hand given we’re comparing to a 20 year low for June sales, it’s not particularly surprising or impressive that activity is up a bit. On the other hand last June the overnight rate was 1.5% and today it’s 4.75%. People were getting fixed rates around 4% while today they’re approaching 5.5%. The median detached property sold for $1,178,250 while last month it was a nearly identical $1,174,950. While we’re still down from peak pricing, the fact that the market has remained as resilient as it has while borrowing costs have exploded is remarkable.
I still believe that the market will weaken in the second half as economic indicators deteriorate and the Bank of Canada continues their hiking path until something breaks. Consumer debt levels and delinquencies are rising and we’re rounding 12 months of an inverted yield curve that should lead to a recession eventually, even if it has defied economists’ predictions to date. In the end an increase in the unemployment rate while owners are faced with large mortgage payment increases will be the real test of resiliency. OSFI is buttoning down the hatches to prepare for a storm by increasing required buffers for banks, and warning about letting extended amortizations slide for too long. Given how prescient they were on the mortgage stress test it’s probably worth listening to them.
I can’t imagine the trouble we’d be in if borrowers renewing at north of 5% had qualified at 1 or 2%.
That didn’t come out well.
Well QT, we are really going to need those immigrants that can buy a home to come here. Because without them we are up the creek without a paddle. Our local economy may not be sufficient to support our current price levels. Our gross dollar sales volume for real estate is quite a bit lower than last year. That means less money in circulation and weaker economic growth which could put us into a recession.
New post: https://househuntvictoria.ca/2023/07/03/june-market-still-largely-undeterred-by-rising-rates/
It will take a longer time for rents to come down even if condo prices came down. The question for most condo investors is if they should sell their unit vacant or with a tenant? I suspect most will opt for vacant. That means the investor will evict their tenant as it will be easier to sell as the new owner can rent the unit at full market rent rather than inherit a tenant that is paying below economic rent. Contra intuitive as it sounds, if condo prices were to come down as more investors sell, the rents will continue to increase.
I suspect, that fewer people in the 20 to 40 age group may move here and more may start to leave. That’s why it is really important to watch the demographics in this age group. A lot of small businesses depend on minimum wage staff to keep their doors open. These owners are going to have cash problems just as their guests are cutting back in their expenses to make rent.
My neighbor bought her home two years ago after a recent divorce. She has a year left on her term and if the rates don’t come down she is going to be forced to sell. She doesn’t earn enough to live in Victoria. The day the term is up, she is broke. The neighbors across the street were renting but left Victoria as their combined income wasn’t enough to buy a home. They moved to Comox and bought a house at half the price of a similar house in Victoria.
On the flip side, a person that I know that is mortgage free was chastising a young woman that her problem was that she didn’t know how to save. And that just because she wanted to live here doesn’t mean that she has the right to live here. As he told her that when he bought his house he didn’t need the latest gadgets like a smart phone and went without and that’s how he saved and paid off his house. I did have to remind him that when he bought his house, smart phones were not invented. It just seems that the older generation don’t have a clue of hard it is for the younger generation to pay their bills. And I would say that someone who is 65 and older today had it a lot easier when they were in their 20’s than today’s generation. By a long shot.
Fortunately, the world is not that bleak, because human are resourceful and will find ways to survive as world population rising (8 billions at the present, and 9 billion bodies in 14 years).
The obvious answer is yes they can afford to live here in and are buying.
Case in point, Leo S parents, Marko and his parents, and I’m are all immigrants to name some of the few that are not Canadian born are making Victoria a home for ourselves, and then we have Canadian immigrants from the rest of Canada and the mainland who are voting with their feet/wallet.
Interesting article. The cost of living in Vancouver will be hardest on new arrivals needing a place to live. Others may have been renting for the last five years or so and they will be less hard done by. A recent graduate of nursing would have a hard time finding a place to live in Vancouver. And they are generally well paid. So Vancouver has a shortage of health care providers. It isn’t that they don’t want to work in Vancouver. It’s just that they can’t.
How far can you stretch an elastic band until it snaps?
Victoria is not the only place that’s full, Canada is full. Across the country the health care system is unable to meet the demand. Senior care is bad and getting much worse. (I’ll take a pill over going into a care home any day). Our justice system is completely inadequate as more people are turning to crime to survive the escalating cost of living. I’m not sure of the state of our education system, however, I do know that most teachers that retire return as substitutes and can work almost every day. Something is not adding up.
Watching the oppressive heat in the south, there will be more climate refugees coming north. Winter is not that bad compared to 40*C. heat. Bottom line: our quality of life is deteriorating depending on what one’s interpretation of quality is.
It’s just not here in Victoria. Surrey has a larger market than ours and slightly higher prices and they are having problems. If someone is having problems selling their home in Surrey or Vancouver then they are not moving here. And that’s what is different this year from last year. Our high end market is down by 35% from last year.
As housing costs soar, some financial analysts advise to scrap the 30% rule
https://www.cbc.ca/news/canada/british-columbia/housing-costs-soar-financial-analysts-30-per-cent-rule-1.6894375
The answer is never.
Yup.
Tom Davidoff, UBC economist, was quoted in a recent article as saying, no matter how much housing we build, “we’re not going to see affordability. That’s not what’s on the menu here.”
Whatever: I agree that the upper end market takes longer to adjust to any downward trend. Some people will not budget on price and others might wait for a better market. But a large number will lower expectations to the market. I dont see anything new here.
Not necessarily Barrister. The owner just won’t sell. This is why a well functioning market requires more new listings than sales as a portion of those new listing will end up being cancelled or expire. Last month the core had 269 new listings and 138 house sales. That’s almost 2 new listings for every home that sold. That’s a lot. But how many are “willing” sellers? A good portion of these new lists will have price reductions over time but they won’t be counted in the SNL ratio, unless they are re-listed.
If you look at last month half the homes in Victoria sold for under $1,275,000. Most sold in the range of one million to 1.5 million.
If you look at those properties over $1,500,000 the ratio is 2.4 new listings for ever sale with 4.7 months of inventory. If you look at houses under 1.5 million then the ratio is 1.7 new lists for every sale with 2.7 months of inventory. Our market is top heavy in high end listings. A lot of those top end properties need to come down in price but it’s going to be tough to convince someone in Oak Bay to lower their price when they see what homes in Gordon Head are selling at.
There are 70 houses for sale in Oak Bay and 62 of them are over 1.5 million. There have been zero sales in Uplands for three out of the last six months. The owners don’t want to reduce their price. And I suspect it’s because they are looking at the value for the money. A home in Oak Bay, in their minds, has to be twice the price of a house in Saanich East. I mean everyone wants to live in Oak Bay – right? The problem is that with the higher interest rate – not everyone can anymore.
4.7 months of inventory isn’t that bad. Or not bad enough for people in the upper end of the market to change their expectations. It probably has to go a lot higher. Maybe 7 to 9 months?
A problem with high months of inventory is that there are always people that for one reason or another are under duress to sell. They don’t have the option of taking the home off the market. They start to form a larger segment of home sales and go from being outliers to becoming the market.
But not just yet. (I had to add this as some of the regular posters might piss their adult diapers.)
I am a little curious when the pro growth types would consider Victoria full. Right now the argument is people want to move here and they have a right to an affordable house here so we have to raise density to provide more homes and drive down prices. While I am not convinced that this will lower prices, sooner or later all the missing middle will be built out and Victoria will look like Montreal or Croatia. At that point there will still be people demanding a reasonably priced home in Victoria so do you now consider Victoria full so tough luck or will the refrain shift to we have to demolish all this low density missing middle and build higher towers? If so, at what point do you consider the towers high enough and dense enough? If the affordability formula really was higher density equals cheaper housing then Vancouver would be cheaper than Victoria and New York would be cheaper than Vancouver. I don’t expect to see this in my lifetime but clearly there will come a point where we have lost everything people move to Victoria for if we don’t taper off at some point and it still won’t be full enough for some. Just like everybody in Florida that wants to close the gate once they are in, I would be happy to start tapering now…..
On a slightly related note, most people here at least pay lip service to the idea that higher density needs more green space, parks, and recreation facilities like soccer and baseball fields. As back yard get smaller and smaller, more and more people will want to go to a local park for their picnic. I hear lots of complaints about public meetings where locals are protesting new higher density developments but I don’t hear ANYBODY here lobbying for putting a new park or soccer field in where a block of outdated houses could be demolished. Obviously this one is going to have to be public money but no elected councils seem very proactive on this front. Everybody raves about the foresight of Douglas setting aside Beacon Hill park but nobody seems to think it would be a good idea now.
Whatever, that 3 million dollar home will in most cases eventually lower its price if there are no buyers. A number of the homes in this price range are there because of death, divorce or dementia. Prices will decline until they find a buyer. The process might be slow and take months but it will happen.
This is where I differ from you Patriotz. One hears frequently on this blog that they key to affordability is less regulations, less taxes. Wasn’t that the key points of both Freidman and Regan. Less taxes, less regulations, less government interference.
As for more is more. Take two similar houses in Gordon Head. One is on waterfront and the other is not. If the non water front home sells for 1.6 million, then the person with the waterfront looks at that sale and says mine is worth double, because it is to them, so they wont take less than 3 million as they would be giving the property away in their minds. But there are no or few buyers at 3 million so the property does not sell. A year or two ago, it might have when there were buyers in that price range. But not today. So is this listing at 3 million doing anything to effect market prices as it is so outlandishly priced that people don’t even look at it?
Adding more water front or new properties isn’t going to have much of an effect on Gordon Head homes. Increasing supply in order to lower price won’t effectively work unless you are increasing the supply of housing that is most needed. And a portion of that housing is in the hands of investors. Building anything new is super expensive and I have never met an altruistic builder that reduces their price because their costs are lower. They charge what the market will bear. If the home cost them $500,000 and you are willing to pay a million they are not going to turn that down.
What we need is more 25 and 50 year old properties for sale rather than new properties. We just haven’t figured out how to build a 25 year old home. For the last two decades we have been increasing supply with low interest rates and easier access to credit. Something that both Friedman and Reagan would approve of to stimulate the economy. This did improve affordability for awhile, but now we are reaping the crop we sowed in our exuberance. We have a market that is top heavy in high end homes that are not selling well, very little in the middle, and the starter and condominium market seems to be pushed to its limits in affordability and the cash flow is not very appealing to an investor anymore.
I understand that we have committed a lot of resources to new construction in the hope that if we keep building then we will eventually saturate the market with new homes and the builders will have to lower prices. Lower new home prices would then cause a trickle down effect on older home prices. This is the long way to get the desired results. And this is the pathway we have committed ourselves to. I don’t see anyway to get off this path, we are committed to take this market to its natural end. This is the free market system in which we build until we bust. We can’t do anything else as we have convinced ourselves that the free market system and its invisible hand will solve everything. And it will – just not in the way we might want.
Capitalism is a good system. It’s not perfect but it’s the best one we got. It just can be so unforgiving when it goes wrong.
That’s not supply-side economics, which is the theory that if you make the rich richer, it will trickle down to ordinary people. Became big in the 1980’s and you can see the results.
As far as housing goes, more is more. If they are market priced, a given number of units will have the same impact on the overall market. People buying or renting in any new development are not going to be outbidding people somewhere else.
And note again that although two FN’s are partners in Jericho it’s not a reserve development and is subject to the same rules and oversight as any commercial development.
We have lost about 35% of the high end house sales ($1,250,000 plus) in the core relative to the same time period last year. While the middle income market has remained nearly the same.
That could mean many things, such as the out of town buyers are not coming to Victoria in the numbers they have before or that middle income households are holding back from purchasing in the upper income market or a combination of both. The higher interest rates and uncertainty in the market place are being felt in the upper income ($1,250,000 plus) market in Victoria.
Having a bit of a glitch in the stats for condos. I have to recheck it later.
Sounds like some sort of Möbius Loop.
The First Nation’s development will provide more housing. But it isn’t going to be cheap housing. The Native band doesn’t have to pay for the land. The cost of the land could be 25% of the cost to build a Fee Simple development. Theoretically they could sell and rent these units at far less than that of a Fee Simple development on private land. But just because they’re native doesn’t make them stupid. They too will be selling 99 year prepaid leases and providing rental housing at premium prices to maximize their profit. The Natives will be paying close attention to the absorption rate and if too many units are coming onto the market they will slow down or halt the construction phases.
We are sort of fooling ourselves in thinking that if the market place is swamped with a lot of new housing that will bring prices down which will will trickle down into the older buildings. There are a lot of people with vested interests that don’t want that to happen. When it comes to housing, in my opinion, supply-side economics does not work. However, we didn’t have a choice with low interest rates. There was too much money arriving in duffle bags to our shores that needed to be laundered through real estate while the interest rates for the domestic market was too low.
I differ from most people on this blog, in that I do not believe that you can build yourself into affordability in the short term. As the act of building stimulates the economy and thereby raises prices and rents. It would take decades to solve the housing problem by building. There is only one proven way to attain affordable housing and that is through an economic recession or depression. Then investors will sell their holdings and the market will change from a shortage to a glut of housing on the market. We have two decades of investors that have bought housing for rentals. That is a lot of units that can come back on the market, which can happen quickly or at least quicker than trying to build millions of housing units.
I’m not concerned about immigration. Immigrants won’t come here when there are no jobs for them.
I see a partial solution to the lack of housing availability being the development of DND, Provincial and Indigenous owned lands inside cities, and I am still hoping to read some learned opinions regarding these two competing visions for Vancouver’s 90 acre Jericho Lands:
One way of looking at it is, “a combination of mid- to high-rise buildings…Vancouver area planners have a term for putting clusters of high-rises around train stations — transit-oriented development. A prime example is Burnaby’s Metrotown. And now it appears something of a similar scale is proposed for Vancouver’s west side.”
See https://syc.vancouver.ca/projects/jericho-lands/jericho-lands-phase-3-engagement-boards-section-5.pdf
From the other perspective, “Accessible, ground, or close-to-the-ground units of varying sizes…Low- to mid-rise buildings.”
“The Jericho Coalition is opposed to the City of Vancouver’s proposed many towers of sizes far out of proportion to the surrounding cityscape…not solely because of the maximum heights but for multiple reasons. The towers are too big, unsustainable and units will be too expensive”
See https://jerichocoalition.org/
Ignoring the hyperbole in the Tyee piece that Introvert provided a link to, my (naive) opinion is based solely on Leo’s density per sq ft increases with height graphics and some comments here about RoI, but would like to better understand urban planning.
Unless you’ve got a real long time line, investing in real estate doesn’t make much sense. Probably the only business model that works is an Airbnb, that’s not going to help the housing shortage. I wouldn’t want to be a renter and have to throw all that money away every month with nothing to show for it years from now.
107 one-bedroom suites on Craigslist, within a 6 kilometer radius of downtown at a average price of $1,868 per month. Median price for a one-bedroom in the core is $475,000 or 21 times Gross Income.
73 two-bedroom suites at $2,810 per month. Median price $634,000 or 19 times gross annual rental income.
An investor would need a substantial down payment to receive a positive cash flow.
Sure it’s possible for some individuals to do this but it’s not a collective solution. There are only so many opportunities in one place and only so many people who can move in before rents and prices start going up – which is already happening in Alberta.
https://www.theglobeandmail.com/opinion/article-canadas-housing-affordability-crisis-comes-to-alberta/
Are you talking at me…I just bought a house and moved here.
(Pardon me for interpreting your posts as complaints about it being too expensive here)
Why don’t you move there, I already have a house.
Anecdotal:
“…25 year-old Ukrainian immigrant couple…Came to Alberta as non-permanent residents 13 months ago. Both started working almost right away. The guy does landscaping and got a contract to clean the common areas in an apartment building…
He works all the time. He has bought, cleaned up and sold 30 cars. …They got married in November and just got a mortgage to buy a townhouse…Any Canadian-born young person whimpering about how hard it is to get ahead and afford a house could move to where houses are cheaper and where there is opportunity.”
Keep in mind that the big uptick in residents over the last year was making up for the loss of students and TFWs over the pandemic. When you talk about affordability you have to look at how these people live. Generally singles sharing accommodation. They don’t expect to meet your standards of living.
I don’t care how many people you bring in, can they afford to live here?
Yes there is demand for accommodations, and those accommodations are available everywhere…but people can’t afford them. The food bank is setting decade long records, If they were a retail store they would be rolling in money hand over fist.
The third reason is that population exploded in just a year, hence there is more demand for everything from accommodation to services.
So home price will continue the upward march.
This was my experience as well. To my surprise, they didn’t want to budge on this either.
I suspect that is because bankers know people misrepresent personal income on mortgage applications; doing so on a business filing to the CRA is less beneficial and more dangerous.
Not my experience. Lenders asked for not just the personal income, but also three years of corporate tax returns and reviewed corporate bank statements, articles of incorporation and share register. There are often additional lending criteria for individuals who are employed through a company they own and you need to inquire and follow up on this to make sure this factor is assessed. Not all staff understand this as it is an atypical situation.
Yes. When I was working, I paid myself T4 employment income out of my own company, and that’s pretty much all the bank ever looked at for purposes of the mortgage. They didn’t care how much income I was retaining in the company, and didn’t care (or realize?) that I could have increased my salary or cut it off altogether a minute after receiving the mortgage – just slavishly focused on the T4.
A T4 slip is a document that summarizes all of the money paid by an employer to an employee during a calendar year. When a person pays themself and does not file or receive a T4 there is a perception at the bank that the income numbers could be padded.
If you ask J.T. self employed is non-essential.
Even after 20 years, renewing my 5 year fixed they do a soft inquiry or soft pull to check you out. What is self employed? That guy up the road running that bustling pub with 10 employees, The restaurant around the corner fully staffed with every table occupied, some guy who does contract work for the provincial government and makes $300k per year, every service worker in town. It’s all indirectly self employed. The rug could be pulled out on any of these individuals at any given time…Nothing is concrete, nothing is solid…Sh!t happens.
It is getting way too expensive.
From the Tyee piece, “…the City of Vancouver propose it to be home to many towers of sizes far out of proportion to the surrounding cityscape…Is there an alternative? Are there better ways to build out this site that produce as many units of housing, as much density and a similar number of units per acre?”
Well, I never attended urban design classes at university but I did see Leo’s recent graphics showing density per square foot increases with height, so I’d answer that question with a no.
“The Jericho Coalition is a group of engaged and concerned volunteer citizens” More like enraged and consecrated. With their high incomes and higher educations, these well organized nimbys have produced a slick opening gambit: https://jerichocoalition.org/
The inventory that does come onto the market will easily be absorbed by the demand since there doesn’t seem to be enough new builds to satisfy demand. Any info/data on growing millennial demand, they’re getting older every year.
Patriotz, interesting article
Agree. It also has to do with the lenders to the secondary lenders getting nervous. Which means that the secondary lenders aren’t able to roll over their loans at end of term and have to ask for their money back whether they want to or not.
https://www.theglobeandmail.com/canada/article-private-lenders-rein-in-real-estate-borrowers/
I don’t think the banks will be foreclosing on many properties. They screen borrowers closely and are reluctant to lend to self employed people. It’s the secondary lenders that charge high rates that could get nervous and want their investments back.
Think about it. Buddy has had enough, sends the keys back to the bank, goes BK, wipes his hands clean, then starts over. Who is left holding the bag? The bank.
Its expensive for banks to go through forced sales and foreclosures, That is probably why they are working with these people whom are more than likely already underwater…I don’t think there is much skin left even for the banks.
https://thetyee.ca/Opinion/2022/04/06/Jericho-Lands-Need-Human-Scaled-Rethink/
Hmm you would think that banks would have an end game when comes to how long they are willing to kick the mortgage can down the road Maybe some letters will be sent out next year forcing sales
Inside information is a fallacy… And they are not done with 5% interest. Lets throw on $2 litre fuel, soaring food prices, insane property tax increases, home maintenance service costs…Then we’ll hike rates again in early July, followed by another rate hike in September.
I can’t believe these VRM’s are even a thing…What were they thinking?
Sorry to hear that Barrister. I hope you get better soon. We may all poke fun at each other and sometimes get a bit harsh in criticism but I wish nothing but the best for the regulars here.
There’s literally no “inside information” that will do you much good for forecasting residential real estate. Suppose you were best buddies with Tiff and he told you in January 2022: “Hey, by the way we are going to start hiking rates in a couple days and we aren’t stopping till we get to 5+% in summer 2023.” Would that have enabled you to foresee housing market developments? Would it have made your forecast more prescient than those relying on publicly available information? I doubt it or only marginally so. Yes you could have made a killing in interest rate futures but your housing forecast probably would have been no better than Leo’s
it’s not like equities where insider information on a not yet announced takeover or sucky quarterly numbers can actually make or save you a bundle of money overnight.
The bank is going to be the one left holding the bag here. Yeah, buddy can’t even make the interest payments, so we’ll just stack it at the back end of the loan. I can’t even believe this is real.
https://www.theglobeandmail.com/business/article-bank-regulator-warns-that-mortgage-holders-are-leaning-too-heavily-on/
Patrick must be hot and dry there right now u won’t get this messsge till tomorrow morning cheers
David Goldman (Spengler) at Asia Times is singing your song:
“Microsoft has added about US$1.5 trillion to its market capitalization this year after the launch of ChatGPT…Even if that estimate were correct, market valuations are three to five times higher than $126 billion of revenue would justify. And I don’t see how generative AI can throw off that level of revenue, not by an order of magnitude.
…won’t replace help desk representatives anytime soon, let alone radiologists, and the trillions of stock market valuations that mushroomed in anticipation of generative ai will vanish like the other ai bubbles of the past few years.”
https://asiatimes.com/2023/06/the-great-chatbot-bubble/
or, with no paywall:
https://menafn.com/1106514470/The-Great-Chatbot-Bubble
Finished an hour long seminar on chatgpt. The presenter wasn’t well prepared and spent considerable time waiting for the app to complete. While the presenter repeatedly described that it isn’t a search engine, it certainly seemed like one to me. At this time, I don’t consider chatgpt to be at the development stage which would benefit for me. If you’re looking to have a lot of filler in your writing then it may be useful or if you are paid by the word. In my opinion, any time savings that you’ll receive researching will be offset by the additional time spent vetting the information. GIGO
I’m interested in AI, as an investment, but there seems to be a wide interpretation of what AI is. I think it may be the next dot.com craze with a lot of bull crap companies that want to exploit the “AI” branding. If someone has a different opinion, I would like to hear it.
Riiight, you’re in St. tropez and just can’t help yourself to go on an anonymous internet forum and go searching for past posts from 6 months ago or scour the internet for stats canada and rbc articles to post. Lmao, hope your supervisor let’s you go home early today 😉
While you got time to waste and are good at searching, can u post links to all my other calls and inside contact tips? Would like to see how all those are doing?
Correct. Your prediction was bullish for house prices and its looking good, probably the most accurate on the board so far. Perhaps your crystal ball isn’t broken after all, and you should let the Bay Street Insiders know that. I was referring to VicRE’s bearish -17% prediction, which is why I also provided a link to it. I am sorry to hear about the oxygen, and certainly hope that you get better soon.
This seems a good time to end the current topic, and so I’ll sign out
Patrick, who predicted a 17% fall in house prices? That certainly was not me. While it might be sheer coincidence, what my friends did mention about interest rates turns out to be very accurate in terms of a change in policy.
It is a beautiful day out there today and you really should be out there enjoying it unless you happen to be hooked up to oxygen like I am.
Not to worry. I’m currently in the South of France, and there’s plenty of sun.
I feel bad for him tbh, i didnt even name anyone and he got all defensive lmao, nothing better to do on a Friday before the long weekend lol? try to spend sometime outside and enjoy the weather. The internet will still be here come Tuesday:)
Not surprising that our HHV bears are fascinated by things that might make bulls happy. But you’re missing a big one, the strong/resilient economy and rising house prices.
Searching back to a December post to dis someone tells a lot about what makes him happy.
I see Langford is getting with the process party.
“I only wanted to apply this insane process to other people, not myself!”
Congrats
SFH- When’s the party?
Some Friday good news for the forum.
We finally bought a SFH in Victoria. Closed on a house in Oaklands. We have been looking for 18 months and I have been following this blog closely in that time. I have learned a hell of a lot from this blog – trigger rates, heat pumps, insurance clauses, CPI, missing middle, affordability measures, immigration stats……..all sorts!
Thanks to Leo in particular, but all the main contributors too.
LMAO, I was looking for cashflow neutral in Maplewood as a rental property and it didn’t happen, was getting close to striking range though. Why you get so triggered all the time Patrick? LMAO, you should really try to be more happy in life, because there is more to life than anonymous internet forums 🙂
The saddest part of these “Bay Street insider” predictions wasn’t that they were made-up stories. It is that suckers like VicRE believed them as “insider” accounts. Leading him to officially predict a -17% fall in house prices for 2023, and missing out on a chance to buy the house he’s been looking for. https://househuntvictoria.ca/2022/12/27/2023-predictions/#comment-96925
Let’s’ hope that no other HHVers made the same mistake.
Ya unfortunately that’s typically what happens when people are down on their own life with a bunch of time to waste on an anonymous internet forum.
VicRE: Just to be clear I never predicted mortgage rates myself (wife took my crystal ball years ago). I just passed on what some of my old LSUC friends who where in corporate and banking on Bay Street were saying. It was simply a matter of what the word on the Street was at the time for whatever that is worth.
I learned not to do that again since it generated more than a bit of a negative response. Also the comments were rather personalized in some instances. Personally I did not perceive higher rates as a bad thing and considering the damage that inflation can do it is at worst a necessary evil. So far it does not seem to have crashed the real estate market or even drastically slowed the economy. Time will tell.
Hey barrister, didnt u get a bunch of flak from the usual suspects here when u called for 6-7% mortgage rates awhile back?
Cash flow= net income-property taxes- insurance- management fees-repairs and maintenance-mortgage interest = + or- zero.
Think of the employment construction jobs create. They are slowly pulling the rug out, and it will accelerate very quickly moving forward. Its not just the guy with a hammer who will be out of work here, think of the office jobs that will come down with it. Then what? Tech.
That is exactly the point. Cash flow != net income.
Battening is too strong a word for what they’ve done here. It’s like closing the barn door once all of the animals are loose, but really still leaving it slightly ajar.
Ahem it’s batten down the hatches, rather than button. Thank you for coming to my Ted Talk.
Like anything in life, it’s work harder, get smarter or move.
LOL. Let’s help this guy find a career in Victoria so that he can afford a decent lifestyle, defined as:
https://www.reddit.com/r/VictoriaBC/comments/14kz9k8/careers_to_actually_thrive_in_vic/
The CRA is aware of how much income you reported…..
But on a shorter time-scale,
“[US] Homebuilders have been cutting prices like mad starting in November of 2022…The recent six-month decline was 19 percent, the largest six-month decline in history…Home builders finally got the consumer message that houses were not affordable due to the combination of high price, rising mortgage rates, and rising inflation overall. The builders reacted by building cheaper homes and offering mortgage rate buydowns.”
Maybe artificially low interest rates allowed buyers more fancy gizmos & granite than they could actually afford.
The CRA is not aware of how much your mortgage was paid down, you only report the interest.
It does, because you only get to deduct the interest paid on the mortgage, not the principal pay-down.
Of course EV chargers should increase value. Any sensible improvement to a building or a unit should increase value.
It’s a legitimate question whether the increase in value would be enough to cover costs of the improvements.
It came up in our building a few years ago. Seemed like there was a fair bit of support for the idea but then board got the idea that we should wait until there were more government incentives.
I haven’t followed the issue but seems like incentives are just as likely to go away as ev infrastructure becomes the expected norm.
B.C. Securities Commission confirms investigation into Greg Martel
https://www.timescolonist.com/business/bc-securities-commission-confirms-investigation-into-martel-matter-7209473
First, I am still running gas powered cars. But I have installed electric chargers both in the garage and the carriage house. We have a lot of company and some of them drive electric cars and it is only polite for me to accommodate them.
As to Marko’s comments, it is obvious that an electric charger spot increases the overall value of your condo for comparatively little cost. I am less sure about 55 plus restrictions reducing the value of the building. In my mind it depends on the demand for 55 plus. It needs to be looked at as a separate and distinct product. It obviously reduces the buyer pool but depending on the availability of the product the demand might or might not increase its value. There are a lot of older people, often with money, who will only look at 55 plus buildings. It comes down to the old supply versus demand equation.
But Marko is one hundred percent right about electric chargers. Question for Marko, what is the demand like for buildings with no parking?
Former- I’m well aware of making a “profit” by paying down the principal. However, this does not show up on your income tax return and could take years to realize. The way everything is escalating (and rents kept artificially low) I doubt many are making a reliable income on their real estate investments. I consider it an investment only and wouldn’t want to rely totally on the income to survive. Repairs are not fun.
And new condos aren’t even providing a parking space per unit. So what’s the problem, just take public transit or ride a bike. That looks good when you go see a client to list their million dollar property. If you want to install your own charger, wouldn’t that increase the future value of your unit? Your expense, your gain.
Interesting timing to this article! My clients have made an offer on a condo where two weeks ago at an AGM 55+ restrictions were discussed (without detail in the minutes as to the outcome of the discussion) and the strata is going to have a SGM re bylaw amendments (we don’t know yet if 55+ is being tabled). The condo in question was 19+ prior to legislation.
If 55+ is being tabled my clients will collapse the offer and who knows when the next buyer comes along for the seller. 55+ is an awesome way to decrease market value, imo.
On a side note in my own building we had a information meeting about EV charging infrastructure for every single stall and wow, I’ve never heard so much stupidity in my life. Everyone upset over a potential 2k assessment/unit when the average unit is worth approximately $1 million.
Lots of “EVs are just a fad” comments, lol. Lots of “let’s wait for cost of technology to drop,” lol since when is pulling cooper wiring around a parkade “technology.” It was one idiotic comment after another. Needless to say don’t think we will have nearly enough votes at the AGM to approve EV infrastructure. I don’t care as I already have a developer installed charger in my stall but wow, people are dumb.
Of course when they go to sell in 5 years and we are losing buyers due to lack of EV charging everyone will complain as to why their unit hasn’t sold.
People also questioned me on how not having EV infrastructure could possibly impact market value and if I had any proof to back up my claim. It was a hilarious and yet disappointing meeting.
I’ve had two people in the last three months email me asking if I can setup their matrix search for condos with level 2 charging only. When I suggested they look at other options such as public charging or a spot next to a regular 120v outlet as level 2 criteria would severely restrict the number of condos that will meet their criteria they didn’t like the idea. Sticking to finding condos with level 2 charging in the assigned parking stall.
Cost of new house construction index has gone up “through the roof” according to StatsCan data and a RBC economics report. “Residential Construction Price Index” Up 51% since Sep 2020.
“Canada’s residential construction price index has soared 51% since the start of the pandemic, putting new pressure on home prices amid a severe housing affordability crisis.”
Source data for this is Stats Canada, chart is from RBC Economics
https://thoughtleadership.rbc.com/proof-point-soaring-construction-costs-will-hamper-canadas-homebuilding-ambitions/
Here is statCan description of that index: https://www23.statcan.gc.ca/imdb/p2SV.pl?Function=getSurvey&SDDS=2317. “ The contractor’s price reflects the value of all materials, labour, equipment, overhead and profit to construct a new building. It excludes value added taxes and any costs for land, land assembly, building design, land development and real estate fees.”
They maintain a “residential” and non-residential one. Interestingly, only the residential one has soared +51%. The non-residential one is only up +25%. That seems odd, perhaps there’s a change in methodology or something, as the new house price index has been criticized in the past.
See next msg
Wasn’t asking the forum was asking you.
re: “Money paid to levels of Government now represent 31% of new build prices New Development Lending Cost is up 250% in 16 months”
Insider Tip: If you want to find out where a quoted (“ “) item comes from, paste it into Google. No need to ask the forum for help with that.
You can be cash flow negative and still make a profit. Paying down principal is not a loss. Also if you are making a loss for a few years but you have an expectation tomake a profit at some point you will also be fine.
So if you’re subsidizing your rental property initially in expectation of future appreciation, CRA disallows the loss deduction. This could force out some investors, decreasing rental inventory, and further increasing rents due to lack of availability. Until the mortgage is paid down, few rental properties are cash flow positive. Some years a property may require extensive repairs (which can be capitalized) creating a loss. But when you do sell at a profit, the government wants their share, I guess they want their cake and eat it too. Typical.
Lmao, guy sure has time to waste.
If CRA determines you are not in a reasonable position to turn an operating profit, they will not let you deduct losses from your other income. This is a general rule for business activities.
https://www.theglobeandmail.com/real-estate/article-investor-home-owners-looking-for-a-tax-break-on-losses-wait-for-cras/
It’s from Twitter, without further citation. Handle “@ronmortagegguy” 🙂
https://twitter.com/ronmortgageguy/status/1674040690781609990
Where is this from?
That has been the case for the last 40 years. In the past 40 years, Fed has always increased the interest rates when inflation was approaching 3%.
However, in this cycle, the Fed and Boc were one year behind in raising the interest rates, and frantically catching up only now. So I would expect the recession will start soon. The current cycle is very similar to the 70s cycle when the Fed waited too long to raise interest rates and prematurely eased, causing inflation to come back stronger.
Typically the central banks drop rates when recession starts. For the yield curve to un-invert, they have to drop rates, which is unlikely in 2023.
That’s the rule. Qualified by the observation that economists’ predictions based on these infallible rules seem to be always wrong 🙂
Two reasons that new home prices are so high…
“Money paid to levels of Government now represent 31% of new build prices
New Development Lending Cost is up 250% in 16 months”
Does anyone have resources similar to HHV for other markets on the island? Looking for general market data (months of inventory, sales vs. lists, etc.) and trends for Cowichan, Nanaimo and Comox Valley in particular.
Isn’t rule of thumb that it’s at least a year from when the curve inverts until the recession starts? Generally around the point where the curve starts to head back to zero. We’ve continued to get deeper and are now at -1.31%, should hit 12 months on July 12th.
@leo and others, is there any information on the Secondary Suite Program? I’m wondering if individuals with non-legal suites would be able to access the program to renovate to a legal suite? Also, is there a sense of how below market rent will be calculated? Thanks!
Sidekick I’m just starting the process for my parents. They need a new HVAC system and seems like they are eligible for greener homes but haven’t applied yet.
@Totoro – which Canada Greener Homes grant(s) are you applying for? In my case the solar companies had people on staff who could do the audit, although I used someone else.
The loan program is a crazy good deal given it’s a zero-interest loan.
From: https://vancouversun.com/news/local-news/b-c-economy-in-for-a-rough-ride-says-td-economist/wcm/5bb9c7d0-354d-4ac5-bb6b-3da7b8ebdd6f/amp/
Patience