June: Market still largely undeterred by rising rates
The Bank of Canada hit resume on their rate hiking path in June, and may well continue with another rate hike this month. At the same time the bond market is up 65 bbps in 60 days, and that has been driving up fixed rates in recent weeks. What has the market done in the face of all that pressure? Not a whole heck of a lot. Yes sales have been following a seasonal path downwards since peaking in late May, but otherwise nothing dramatically has changed since a month ago.
When comparing to this time last year, we’re gone from being down 40% year over year to up around 10%. Part of that is base effects as we are now comparing against much weaker months, but once you look at the seasonally adjusted data you also see a gradual return of demand there. If there’s good news here, it’s that new lists have closed that gap and ended July at roughly the same levels as a year ago.
About one in five properties went for over the asking price in June, similar to what we’ve seen throughout the spring market.
Both sales and new listings are in the bottom third of the historical range for June. Note that with the final real estate board numbers coming in on the 4th these will be subject to slight revision.
However while inventory is up from May, it hasn’t made massive gains relative to the historical range in some time now.
Breaking down sales into the individual property types and seasonally adjusting, it was a bit of a mixed bag in June. Detached sales down a bit while townhouses increased slightly, but what the heck is going on with condos? Did we suddenly have a huge jump in condo sales? Is the condo market going to the moon?
In short: No it’s just an artifact of reporting. To explain what’s going on, a bit of a background is needed on how the Victoria Real Estate Board counts sales. There’s essentially three ways to report sales:
- When the land title transfers between the seller and and the buyer. Technically this is when the sale actually happens, so it the most correct in terms of when the property actually changes hands. However in relation to the price, it’s often a couple months after the parties came to an agreement so statistics based on this date lag actual market conditions. Teranet uses the completion date, and that’s why it generally lags the market somewhat.
- When the sale goes unconditional, using the “pending” date. This is nice because it’s the exact date that the buyer and seller agreed on a price, so it’s most correct if you are interested in market value. The problem is that sales are not always reported immediately, and the real estate board doesn’t want to keep revising their sales figures. When they publish their monthly figures tomorrow, they don’t want to then go back and change them every time some realtor submits a sale they closed on the weekend.
- When they are reported to the board. This is what the real estate board uses. They tally up all the sales that were reported to them in the month, even if they may have happened slightly earlier. Then they take any collapsed sales and subtract those out to ensure they aren’t over-stating the actual market activity.
I use a bit of a mix of methods 2 and 3. Anything from the board is using the reported date method, so weekly sales tables and monthly figures from the board that I have going back to the 80s. Some other charts like the daily sales and new listings data are based on the pending date (method 2). In most cases it hardly matters because shifting methods only shifts a few sales around and so the statistics are similar. An exception is when it comes to new construction sales, especially condos. Those are often sold on developer websites, and only a few units show up on MLS. It’s for that reason that I exclude new construction in many charts (daily sales, over-ask, sales/assessment) because it’s simply unpredictable how many sales in a given project will be reported on MLS.
June was a month where there was a dump of new construction sales reported on MLS that inflated the condo sales numbers. A massive 62 units at 947 Whirlaway Cres were reported as sold last month, even though the actual sales were spread out over the last 6 months. Subtract those out and condo sales would have been entirely unremarkable. Unfortunately there’s little that can be done about that. While I can look at sales by pending date, it doesn’t address the problem that new construction sales are sporadically reported, and the full history of sales is all based on reported date so we just have to live with it. Luckily it’s not usually a problem, and when we get a weird month with a lot of reported new construction sales, it generally drops down again the following month so doesn’t really move the trend.
Just know that if anyone tries to tell you that the condo market is on fire based on June’s sales, they aren’t looking closely enough.
Meanwhile market conditions measured by both the sales to new listings ratio and months of inventory were little changed in June, a relief from the more rapid tightening we’ve seen in previous months. Of course the sales data issue also affects these measures, but it won’t be a massive shift either way.
Perhaps this is the start of the long expected cooling of the market for the latter half of the year, but with residential months of inventory up only slightly from May to 2.4, we’re still solidly stuck in sellers market territory.
Median and average prices in June were nearly identical to May, though the 3 month running average still points up for detached and semi-detached.
Looking at sales relative to assessments, there is little change from May, with the median sale happening just a percent or two above the current (2023) assessed value. Prices may have stalled out for the time being, but again we need to see those market conditions start moving clearly towards cooling to sustainably stop price growth. Either way it’s somewhat promising for those buyers that have been surprised by the jump in activity and were feeling the FOMO start up again. As I discussed last month, while I don’t expect this to turn into a dead cat bounce with large price declines (absent a major employment shock), it also didn’t make sense for the market to take off when absolutely nothing has improved on the affordability front. While population growth pressures are high, it doesn’t change the fact that buyers still need to service those mortgages somehow, and that’s harder than it’s been in decades.
New (guest) post while I’m on vacation: https://househuntvictoria.ca/2023/07/10/ai-guest-post-is-there-seasonality-in-house-prices/
I guess we’ll find out in the next year or so. The restaurant association says that part of the current spending is a result of pent up demand due to covid. People are also travelling a lot more.
https://www.thestar.com/business/2022/03/18/canadians-cutting-back-spending-on-groceries-restaurants-as-inflation-rises-poll.html
This summer the hottest housing market seems to be in Alberta. Calgary is doing pretty good.
Hasn’t happened yet according to the restaurant spending stats posted here.
I think discretionary spending has and will drop a lot for Canadians with mortgages. I know three people with large variable rate mortgages who are cutting back wherever they can. It is only a matter of time for those with a fixed terms too. There may be movement from other investments into paying down mortgages.
I remember when Saretzky and other crypto cult members were convinced that the BoC was in cahoots with the government and were going to “let inflation run hot” to inflate away the debt. How’d that work out?
USD/CAD will be the main driver for our rate decisions.
At the beginning of the pandemic, everyone expected house prices to go down. Instead, they went up 50% over the next two years. Trying to time the housing market is a really terrible idea.
Do you think JT can force BoC to reduce the rates for the elections? All the federal government spending in the recent past and before the election will likely keep inflation high, which will force the BoC to keep the rates higher for longer.
A common problem for people is to try to time the market to get the most out of their investment.
Far easier to set a goal at the beginning of what you want to achieve from the investment. Once you meet that goal then anytime is a good time to sell. It wouldn’t matter if the investment continued to rise in value as you would have freed up capital that can be re-invested in something else.
You can’t spend your life regretting what could have been.
Maybe speak with your wife and ask her what she wants to achieve. You may find that your goals are not the same.
We all know how hard it is to time getting out “at the high” and then buying back “at the right time”. Possibly tying the health of your relationship to the outcome seems like a monumentally bad idea to me.
From: https://vancouverisland.ctvnews.ca/victoria-tourism-industry-struggles-as-travel-spending-drops-1.6471055
She will be if you sell and the market keeps rising. As Rob Shaw wrote in my quote below, Canada intends to boost immigration targets to 500,000 people annually by 2025
The 5 year fixed at 1.68% is up for renewal early 2026, I am watching things very carefully…this is on a sub 200k mortgage btw.
I am trying to get my wife on board, but she’s not buying it. She thinks its another Garth Turner false prediction.
I keep telling her, this is a once in a lifetime windfall…but she’s not biting.
I’ll keep trying.
touche …However when opportunity knocks, perhaps you should open the door.
vs. yesterday’s
??
I read that deputy PM Freeland invited Premier Eby to discuss ways the Federal gov’t could assist in alleviating BC’s housing problems. Some of the issues he broached are straight of off this forum:
Tax breaks for rental construction buildings;
how modular housing construction could really address some of the skilled trade shortages;
“…population centres that are growing exponentially quickly, under the federal immigration targets, and as these areas grow, we need the housing infrastructure to match.” Canada intends to boost immigration targets to 500,000 people annually by 2025 — many of whom are expected to settle in B.C. B.C. has in the past pitched tying federal housing support funding to immigration levels, but Ottawa has not been receptive to the idea [yet];
a federal mortgage lending fund for rental housing, which provides cheaper rents, isn’t aligned with a provincial program to help finance the construction of rental housing at a lower rate;
and my favourite,
The premier said he repeated his call for Ottawa to use public land, including military land for housing.
Maybe there is hope for all levels of gov’t to work together.
https://northernbeat.ca/opinion/eby-bc-housing-solutions-ottawa/
I would sell tomorrow, but my wife won’t let me, our youngest son is 15 and we have been here for over 20 years…so I cant do that…yet.
I wish I could though.
Okay, so we’ll just keep jacking rates until the entire construction industry caves and all the construction/service workers are out of a job.
The 1980’s are going to look like a hay ride. Question is, do we as homeowners dump real estate now and get liquid…or not?
I personally think we have peaked out here. Tell me what else drives this economy other than housing?
Well Max, we will likely never get an accurate number.
Although, I think it is important number for the BC government to consider when they are making projections of how many units are needed to be built. There are potentially thousands and thousands of rental units that can come back onto the market which would devastate new condo construction and put a lot of construction workers out of a job.
Would all these rental units come onto the market at the same time? Most likely not. Depending on when the condo was purchased, even with the higher interest rates a fair amount of these rentals bought before Covid would still have a positive cash flow due to the much higher current rents. Condo prices did peak in the Spring of 2022 at around $600,000 and have only declined slightly to around $550,000 today
I don’t think there is much chance for the rental market to soften and vacancy rates to rise, as it did during BC’s recession in the early 1980’s. BC lost a lot of workers in the very important 24 to 34 age group to Alberta and Ontario during that recession. An age group that makes up a substantial portion of the rental market. The other thing that’s different was that BC was not building rental units in the 1980’s at the same level as today.
I also don’t think the other 89% are investors, rather owner occupied condos listed for sale in the core.
” The new owner can set the rent at full market level.”
I say sell it with the tenant if you can, while you still can.
They are not in a hurry to sell because its not 2026 yet.
There about 285 pre-owned condos listed for sale in the Core, but only 31 are tenant occupied. That’s about 11 percent. Looking at that number it doesn’t seem like investors are in a hurry to sell their units.
But, is it better to sell your condo with a tenant or vacant? I suppose the resident agent on this blog could best answer that question. Should you sell your investment condo with a tenant and then the new owner will inherit the tenancy or sell the condo vacant and then the new owner can set the rent at full market level?
Unfortunately the real estate board’s data system is not set up to answer this question. The “possession” data question does not list vacant as an option. The best is to look to see if the unit is available for “immediate possession” Then that percentage jumps up to 38%.
The term immediate possession is open to interpretation.
There is a section that allows for occupant type with the option of vacant but half the agents leave this blank. Of those condos that the agent bothered to answer the question about 51% were either vacant or tenant occupied.
These are not new condos. I removed new condos from the data pool.
Hopefully this illustrates to people on this blog the importance investors play in the market place. Not just for creating new condos but by putting their existing units up for sale when they feel the market may have peaked. Then the additional inventory will start to lower prices. The investor will jump back into the market when prices decline too far as there would be a profit motive once again. Investors therefore have a stabilizing effect on prices.
The casualties of selling the units vacant are of course the renters. As they will be evicted and have to find another rental in a very tight rental market.
Now for some guess work. I think this is what happened at the start of covid. Investors got spooked and decided to exit the market. That dumped a lot renters into the rental market and rents jumped. The higher rents brought the investors back into the market and prices jumped. If one were to go way out on a limb, this could be what people refer to as a dead cat bounce.
Could this happen again? Of course. But this time things are a bit different in that the interest rate and insurance cost are much higher. An investor has to put down a larger down payment to make a condo obtain a positive cash flow. If there are no alternative investments, other than real estate, to invest in then this could be another rinse and repeat cycle. Some people on this blog have suggested that the stock market could be at the start of another bull run. If that pans out then the investors may chose stocks over real estate.
If you buy a rental property, 100% of the interest is tax deductible, even swapping the light bulb is tax deductible.
When you sell, only 50% for example on $100,000 is taxable = $50,000.
The total interest on a principle residence of say $300,000
25-year mortgage with a 4.5% fixed interest rate, you’ll pay approximately $200,249.23 in interest over the life of your mortgage.
None of this is tax deductible, and either are the light bulbs.
So I could buy a house, rent it out to buddy declaring all the income and pay all the income taxes that come with it…and live secretly in the basement, writing off all the interest payments, all the light bulbs, everything…nothing but principle payments going towards the asset, and buddy is paying for it.
After massive price acceleration, I sell, paying only 50% of the capital gains on this asset.
You get it now? this is whats happening…And No, I don’t advise doing this.
Source:
https://www.finder.com/ca/300000-mortgage
https://realestatetaxtips.ca/calculate-tax-payable-sale-rental-properties/
Am I wrong?
From: https://www.ctvnews.ca/business/here-s-how-the-last-boc-rate-hike-affected-home-sales-in-different-markets-1.6472407
If we can keep the interest rate pace up, this fall and winter should be slower than last fall and winter with similar declines in the real estate market. Lets see if debt loads and renewals start forcing more inventory onto the market.
I would totally be in favour of scrapping the principal residence capital gains exemption altogether, as long as i could write off all interest, all the service and maintenance costs involved with owning a house. Its expensive to sell, move, then buy again…Its a waste of money.
This would cool the market right now, reduce development, save the trees. They are killing this place.
Buy a house and live there.
“The bank of mom and dad has been generational dont c it as a big deal it works well to build family wealth.”
Until it doesn’t.
The bank of mom and dad has been generational dont c it as a big deal it works well to build family wealth
The bank of Mom and Dad must be freaking out, Its their signature that made the deal work to begin with…That signature could very well be the death blow for them as well.
“It does seem that we are heading towards a perfect storm, in the next few years, unless their is a substantial decrease in the interest rate.”
Damn straight there will be…Federal election, It would be political suicide if they do not, and they will make it very difficult for the banks to kick them out even if they can’t pay. Listen to Rob Mclister.
This leads me to surmise that we in the west have priced ourselves out of the idea of individualistic society, and maybe could learn something from cultures that are fine with multi-generational households.
If embraced, that could be a solution to a myriad of this society’s current problems, from a lack of affordable housing, child & elder care to disenfranchised youth . Giving people a greater sense of belonging would go a long way towards mitigating the mental health crisis plaguing our society today.
Anyone who has lived as long as I have has seen a substantial diminishment of societal cohesion of late…something needs to change.
In the Victoria core districts there are 834 homes of all types listed for sale. The total inventory of homes for the core is about 138,500. That’s about half of one percent.
And there’s the problem. We need two or three times that number of active listings as we did in 2013, 2014, 2015, 2019, and 2020.
In any market, there are people that get themselves into financial or family problems and have to sell their homes. This hasn’t been much of a problem over the years as prices have risen during their ownership and these home owners were only a small fraction of the total housing market. But with active listings so low, properties that are under duress circumstance now form a larger portion of active listings. Those that bought their homes prior to 2021 should be okay unless they pulled out the equity in their homes. However human nature is that a home owner will do anything they can to hold onto their home. So when the lenders throw out a life preserver of extending amortization they will grab onto it rather than deal with the situation they are in today.
A market place with low listings is not a good market as it is more prone to internal and external shocks. It’s an apple cart with one wobbly wheel.
Indeed. This blog really counts on Frank’s dispassionate analysis of the facts, totally uncoloured by any pre-existing biases.
I agree with you Barrister. When one looks back over the last five years there were months that had significantly more sales that others. Generally those months were March, April, May. 2021 was the highest year of sales. Terms are typically 1,3 and 5 years. That would make the spring of 2024 and 2026 with the largest number of renewals.
It also seems that the bank of Mom and Dad is being tapped once more. Not for a down payment, but to help pay for monthly living expenses. When it comes to the 25 to 35 age group some 35 percent of these home owners are needing help from the parents once again to met their debt obligations.
Some home owners are in a bit of a pickle. They are falling behind and using their credit, extending amortizations, and tapping M & D once more. They don’t have many options. They could sell and get out from under all of this debt, but then they would have to rent. And since rents are astronomical these days, renting would not provide much relief in their monthly bills.
It does seem that we are heading towards a perfect storm, in the next few years, unless their is a substantial decrease in the interest rate.
Thank you so much, Frank. Normally one would have to attend a monster truck event or a Trump rally to have access to this sort of critical scientific analysis.
I may be a high school drop-out that owns a home, but I’m definitely not “Rich Clownman”
I suspect that the mortgage renewal shock will only start to impact the market in a year or two from now. It wont be a dramatic thud but rather a gradual increase in inventory. At worst it will be a small drop in prices but more likely a leveling out of house prices. But all I am doing is just guessing.
https://www.theglobeandmail.com/investing/personal-finance/household-finances/article-government-intervention-mortgage-defaults-cost/
Code interpreter access now live in ChatGPT. Conversational real estate analysis, pretty cool
So as the really “dumb”guy that actually builds your homes I have to say how hilarious these comments are. I have ignored this comment section for weeks but my attention was drawn back to it by a coworker and now I see I’ve been called a high school dropout in order to own a home and a few rentals! That poster (Rich Clownman who now seems to be Arrow) probably couldn’t pass a credit check. This blog is a swamp.
It looks as though some financial institutions are not only playing the sub-prime game, but also fudging numbers (are they keeping good mortgages on the books or is there some other sort of fraud/kickback scheme going on?).
“B.C.’s consumer protection agency has levied fines against eight banks and credit unions in the province after finding they were not complying with mortgage discharge regulations aimed at preventing fraud and making transactions more seamless.
For failing to discharge mortgages within 30 days of a mortgage loan being paid in full, Consumer Protection BC announced Thursday it levied fines against three big banks and five other financial institutions, including a $5.3-million fine against Toronto Dominion Bank (TD) — the largest, to date.”
https://www.castanet.net/news/BC/435788/B-C-banks-and-credit-unions-fined-for-mortgage-documentation-failures
Apparently, they found Scotia Banks mortgage provisions in much worse shape than CIBC because SB leaned forward into highly indebted borrowers to grab market share. So, now it makes up too large of portion the bank’s mortgage balance sheet and they will need to start restricting lending significantly to bring back to a more acceptable level.
https://www.theglobeandmail.com/business/article-cibc-osfi-mortgage-underwriting/
On Heron, asking price was ridiculous low. Absolutely one of the best neighborhood.
Market already stalled before the last rate hike.
I’ll get back on topic, doesn’t seem like there is much convincing of @Frank that’ll take place.
Jobs report tilts the favour towards another rate hike in July: https://www.bnnbloomberg.ca/strong-june-jobs-data-justifies-another-rate-hike-in-july-economists-1.1942723
I wonder if this will start to stall the market as people’s fear of recession and affordability stops their search?
Thank you Marko for the insights, while not statically in nature, your boots on the ground assessments provide great insight. Thanks for taking the time to give your opinion.
I don’t think most immigrants are going to leave Canada primarily due to high housing costs. I think a lot of immigrants who have extended families plan for this when they make the move and do what it takes to buy. Back to my cab driver, he said Southern India ground water and air is so polluted in many places that it is a serious health hazard worth emigrating from. What has happened is that extended families with relatives in Canada sponsor their relatives. The relatives live with them to start or the younger ones get a student visa. Everyone works together. Five people in a house making 40k each still have a combined income of 200k.
So many places that are desirable to live for immigrants are in same RE rental and ownership cost/availability crisis we are. Ireland, England, some parts of the US and Canada, Australia, NZ…
Australia actually seems worse than here and NZ marginally better. The research is essentially the same and the news articles are interchangeable among the countries. Not enough purpose built rentals and social housing for the population growth, along with restrictive zoning and expensive construction costs leading to extremely low vacancy rates and skyrocketing rents and purchase prices.
https://www.abc.net.au/news/2023-06-15/australia-needs-national-strategy-to-fix-broken-housing-policies/102478490
I noticed a number of listings with reduced prices in the portal. Do you believe this is a reflection of unrealistic initial asking prices? Or downward pressure on prices and band compression as max affordability seems to be in the 1 to 1.2 range?
Rodger, while I do strongly suspect that high housing prices will lead new immigrants to leave Canada at higher rates than in the past, I think you are misusing that chart which only includes cross-sectional data from 2021.
Of course, the rate of immigrants with Canadian citizenship will be lower in the most recent decade compared to prior cohorts. That’s always going to be true as there is a lag after someone comes to this country before they get citizenship, and further, people who stay for more than 10 years will nearly all either become citizens or leave (and, after leaving they won’t be counted in the denominator any more).
This trend is just the natural feature of that type of data.
To make the argument that new immigrants are leaving at higher rates than in the last, we actually need a similar dataset collected from prior years (maybe the 2011 and 2001 versions of the chart).
Where? Desirable neighborhood?
Cad bond yield over 4% this morning.
Difficult market to decipher at the moment. A decent amount of new listings but you still have insane bidding wars; dated house >300k over asking today. When you see some pending prices definitively interest rates are not impacting everyone’s purchasing power equally.
Other stuff I think is good value in my opinion, not moving. Number of price reductions kind of middle of the road.
Did not think I would use the mute button but the name calling seems a bit much. Back to housing. Are we likely to see major price reductions as we go into the spring.
Arrow young or old everyone are pretty much saying the same thing
Members of this forum had a field day (rightly) vilifying Garth Turner’s spiel, but let me just say that compared to his comment section, this one is just as, or more so, blighted by angry old white men complaining about immigration, taxes, and the poor.
The biggest difference is that at Greater Fool comments are screened, and the worst are deleted.
Back in November it seemed that the discussions here stayed more on the topic of real estate without so much myopic classism and thinly veiled racism. Societal decay is a bitch when your day is waning.
Let me check what my “insider contacts” are saying 😉
They been pretty bang on so far lol
https://househuntvictoria.ca/2023/06/06/wheres-the-most-action/#comment-102704
Between July 1, 2021 and June 30, 2022, approximately 49,770 people emigrated from Canada to another country. The majority of emigrants from Canada came from the province of Ontario, with British Columbia having the second largest number of any province.
Almost all emigrants left from just three provinces. Ontario was the source of nearly half of outflows (47.1%) — the biggest source of people leaving, by far. It was followed by BC (20.4%) in a distant second, and Alberta (13.5%). Three provinces known for high skill labor and pricey real estate.
Your chart is the % of immigrants who have become citizens. That’s irrelevant, since being a citizen has no effect on taxation or any other economic parameter. What matters is how many stay and how many leave – and note that many of those who leave, do so after obtaining Canadian citizenship.
In fact the chart doesn’t say much at all, since it simply shows how many have become citizens between time of landing and today. Obviously someone who came 40 years ago is a lot more likely to have become a citizen than someone who arrived a few years ago, who isn’t even eligible yet.
How many houses do you own again?
Top 5 reasons not to move to Canada | Why Canada is broken — https://www.youtube.com/watch?v=OlKbssRy5aM
Can’t make enough money
No healthcare
Crisis in Canadian politics
Heads in the sand mentality
Never be able to own a house
Canadian immigration program must stop
Thanks to the government wasteful spending that many people on this board advocates for. From social housing, to free higher education, free daycare, cash/incentive for enviro schemes, and free drugs, etc…
A slow train wreck example, Canada is buying a small number of Volkswagen battery jobs for $13 billions, meanwhile slowing productions of its EV cars because no one is buying them.
Volkswagen to cut electric car production in Germany due to ‘strong customer reluctance’ as demand for battery vehicles slumps — https://www.thisismoney.co.uk/money/electriccars/article-12250631/Volkswagen-cut-electric-car-production-Germany-demand-slumps.html
It wasn’t a coincidence that drug overdoses increased when the CERB checks came out either. You’re right, I don’t have a lot of confidence that some people won’t spend the money wisely. I’ll be driving by the liquor stores when the checks hit the bank accounts to see how long the lineups are. I’ll keep you posted.
@Frank – you don’t have to worry or wonder about what happens when you give low-income or homeless people cash injections like the grocery rebate. I find the underlying assumption of your statement that they will spend it on “smokes, booze, and marijuana” troublesome and tiring, but worse, completely lacking in empathy. First off, it’s none of your business what those in the worst economic situations might do to ease a bit of the pain (mile in their shoes much?) must be Boomer lack of perspective-taking I’ve seen so many exhibit.
Besides that, you’re just wrong.
By doing a simple search with that fancy internet-thingy one can find actual research on this. For example, a study on Vancouvers Downtown Eastside that made it’s way to NPR: https://www.npr.org/sections/money/2013/10/25/240590433/what-happens-when-you-just-give-money-to-poor-people
Or, the longest study of universal basic income: https://humanrights.ca/story/manitobas-mincome-experiment. In this study there were two groups who took “advantage” of the welfare payments, sigh, “Two notable groups of people did use Mincome to stay out of the work force. New mothers chose to stay at home longer with their babies and teenaged boys stayed in school instead of dropping out before Grade 12 to help support their families”
Or, a recent study done out of Berkeley on a non-western population: https://www.npr.org/sections/goatsandsoda/2019/12/02/781152563/researchers-find-a-remarkable-ripple-effect-when-you-give-cash-to-poor-families
And that’s just a smidgen of research when it comes to the broader topic. If anything, the $450 grocery rebate is much too little. I don’t suppose you often read anything that might counter your ideas on low-income people, however.
Oh, just to top it off for fun because I doubt you’ll read any of this, here’s a great Harvard article on the “dependency” myth: https://epod.cid.harvard.edu/article/dispelling-myth-welfare-dependency
The median price for both detached homes and condominiums have remained stable over the last four months in the Victoria Core This is despite the market being strongly in favor of sellers which most often translates into rising prices.
Currently home prices are about what they were one year ago. However, how the sales are distributed across the different price ranges has changed. Most noticeably in sales of homes in excess of $1,250,000. By this time last year there were 611 house sales in the core in excess of $1,250,000. This year that number has dropped by 37% to 385.
The number of homes priced under $1,250,000 are pretty much the same as this time last year.
The first reason that comes to mind is of course interest rates. But, I think the reason may be deeper. In that we should be looking at where the down payments are originating from? The sale of a condominium? Out of town purchasers? The bank of mom and dad?
If most of the house purchases originate from the sale of a condominium, then it would be important to watch the condo market. How the condo market performs would then have a direct effect on the house market under $1,250,000. Is the gap between condo and home prices narrowing or widening? Looking at the gap between the two could be expressed in terms of how many condos does it take to buy a house.
Those out of town purchasers buying in the upper band of housing, I would think are effected by their home markets. How Vancouver, Alberta, Ontario performs would likely have an effect on the upper band prices in Victoria.
As for the bank of mom & dad? My opinion, is that this is mostly concentrated in the condo market. So I’m considering the bank of M & D as being immaterial when it comes to houses in the core.
This is a problem for cities like Victoria that have much, much smaller marketplace than say Vancouver, Calgary and Toronto. Our upper band market for housing is under the control of outside influences. We have little control over the upper income houses as the demand for upper band houses is mostly external / non local. This market is at the mercy of external forces. If these external markets get a sniffle then we are likely to get a cold.
I wouldn’t call it a SFD listings surge, but nice getting some SFD new lists on over the last few days.
However, the immigrants are cluing onto the scheme. There have been some cracks in the scheme. The retention rate in the scheme is going down. No problem. Just increase the number of new people in the bottom. That can increase the bottom layer of the scheme and keep it going for another decade or so. Only half the people who got PR 10 years ago have become citizens. The rich PRs have a figured out a way to beat the system by getting the benefits and not pay the taxes. They leave their spouse and kids here but work outside Canada and not pay taxes in Canada. Once they maximize the benefits and minimize the taxes, they leave Canada.
GREAT CANADIAN PONZI SCHEME AKA IMMIGRATION
The Canadian immigration is being used as a giant wealth transfer system to transfer wealth from immigrants to the baby boomers.
The plan has been working to perfection by sucking the immigrants into the scheme so that boomers can sell their house later and enjoy a long retired life with taxes paid by the immigrants and younger Canadians but still maintaining control by influencing politicians. Like any good Ponzi scheme, the key is to have a good retention rate.
Those properties were purchased over 20 years ago, when there was no housing crisis and sellers were happy to sell to anyone. Calculate the number of new Canadians in the last 20 years and you have a housing crisis. I didn’t vote for Trudeau either. BTW, I sold the Langford shack in 2017 to buy a commercial property in Winnipeg. I also didn’t have to evict my tenant because they passed away. And yes, property has been a far better investment than the gold stocks I bought in the 90’s.
“totoro- And that’s how you get a housing crisis. “In Canada property is better than gold “.”
Hey Frank, what’s the different between you and the cab driver? or is that just because you are senior? You own at least three rental properties on the Island (Ladysmith, Langford, Henderson Oak Bay), apparently you see properties here are better than gold too.
Where in Ireland? In a major city (similar to Croatia) prices are high. In the rural areas, I hear the prices are much lower. Population growth is less than 1% every year. Same can be said for Canada, houses are cheap in rural areas, unfortunately, people don’t want to live there, poor access to healthcare and amenities would be my guess.
In Ireland.. chatting with some friends that bought their townhouse for ~260k 10 years ago, has now tripled in value. All the same issues as here with growth and not enough housing and growing homelessness. Gotta look into the situation more since they did have a housing crash in 2008
In Canada, couple families with children have much higher median income ($130k) than couple families with no children ($81k) . https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=1110001301
Some of the things they are trying to direct don’t make any real sense. It’s almost like some glib talking points are being tried out as policy without the functional process to carry them out.
From: https://financialpost.com/real-estate/mortgages/new-guidelines-to-protect-at-risk-mortgage-borrowers
get up half an hour before we went to bed…..Whatever, your wit & insight are what keeps me coming back here
Pre-Monty Python “We were so poor”
https://youtu.be/VAdlkunflRs
That pretty much tells you what the future has in store for real estate prices and (un)affordability.
totoro- And that’s how you get a housing crisis. “In Canada property is better than gold “.
There are a lot of things non-first gen Canadians and Canadians who grew up middle class or better don’t get. Somehow the predominantly European settlers from England/Western Europe managed to forge a culture in which the nuclear family castle is the goal and children need to leave and make it on their own as soon as they are grown.
I was speaking with my cab driver this morning on the way to the airport. He came to Canada 10 years ago from Northern India when he was 19. He owns a home in Victoria with a rental suite. His brother is here too and also owns a home. His parents also decided to immigrate despite having a good life in Norther India. He said that they all worked together to buy property as a priority because “in Canada it is better than gold”. They have other extended family here that also come together for business and RE investment purposes.
It is way more efficient for generations and extended family to work together to build and preserve economic wealth and share caregiving responsibilities. As property values rise the predominant cultural attitudes on this are probably going to shift over time due to economic necessity – or people without family help are going to live in smaller and smaller spaces.
George Orwell. Still true over 70 years later.
To this day, the majority of people argue — the argument is variously expressed, but always boils down to more or less the same thing — that large families are impossible for economic reasons. At the same time, it is widely known that the birthrate is highest among the low-standard nations, and, in our population, highest among the worst-paid groups.
Yup….families of four live in less than 619 square feet in Croatia 🙂
Vacationing means you aren’t driving Uber which is what I do in my spare time to get into a condo or something if I was starting out, but each to his or her own. The crazy thing about my parents coming to Canada and then working 6 days a week plus fliers on Sundays is they were happy that they had an opportunity to do such. I don’t think Canadians truly have a good perspective and how crap things can be elsewhere.
As far as retirement I could have retired 5 years ago and lived very comfortably in Croatia till death. Cool for a few months then gets boring.
Since this would also apply to rentals, as a landlord you’d save money in property taxes by renting out to large families vs small families. That would make it easier for large families to find rentals.
The problem is, large families are very expensive (that’s why few have more than 2 kids), and they couldn’t afford the higher priced large house. Your premise is valid but not practical. Even lower property taxes would not make it affordable. We don’t need the government telling us where we should be living.
The point is to use tax policy to incentivize the large families to be able to live in large homes and the small families to live in small homes. So if you consider the single person to be already paying higher taxes, fine but he will be pay even higher taxes than that with my idea. Why should it be outrageous to have a huge home vacant (no occupants), but totally fine to have one person living in a house that could house 8 people easily? All my idea would do is tax that single person even more than they’re paying now.
Better matching of household sizes to dwellings sizes is a good thing, which is the point. Big families should be in large dwellings and small families should be in small dwellings. That might mean they all have the same living space per person, not less.
If a 2,000 sq foot house is for sale, and the two bidders are a 4-person family and a single person, it is better for society if the 4-person family gets it, because that is providing housing for 4 people instead of one. Because the occupied density of that house is 4X higher. So one way to make that happen is to have the 4-person family pay less property taxes (and transfer tax) and the 1-person household pays more tax.
To me, a major part of the housing crisis is when a large family can’t find a large home. It isn’t a housing crisis if a 1-2 person household lives in a small condo. So if you agree with me, then all we need to do to stop the housing crisis is help the big households find big homes. And we start to do this by creating tax incentives as I’ve described.
Definition of “fair share”: I pay less taxes.
You are the poster child for self-rightious neo-liberal ideologues.
To quote an inteligent member of this forum, “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“
I’m sure hundreds of thousands of seniors are working. I know many retired teachers return immediately to substitute, almost daily, if they didn’t, our education system would collapse.
I was referring to seniors who met the criteria for the handout, many wouldn’t qualify. It would be nice to think that the extra money would find its way into needy children’s stomachs, but I doubt it will. Giving cash to someone for food doesn’t mean they’ll use it wisely.
From what I’ve observed of the general population, I would say that close to 50% are obese, I don’t see many wasting away from malnutrition.
Frank, why for seniors? The already get CPP and OAP. That’s enough charity for them. Most own a home. If these seniors would get off their rump and work for minimum wage we wouldn’t have a labor shortage. Those requiring oxygen tanks could be hired as scuba divers cleaning the harbor floor. Dementia is no excuse either, they could be put to work as politicians.
And what about all those lazy children. My grandfather quit school after grade IV and went to work on the farm. By the time a kid is ten, you pretty much know which ones are going to spend their lives behind bars. I say write them off now and save the taxpayers’ pocket. Put them to work immediately as there is no sense in them going to school as they will only disrupt those children that want to learn. At that age their hands would still be very small and would be perfect to assemble micro chips.
These would have been just modest proposals presented by Dr. Jonathon Swift if he were alive today
A single person is already paying higher property tax than a house of 4 of the same size, because the single person has to bear the entire cost of the property while use 1/4 of the service as 4 people. And, a single person with no children pay the added school tax whilst not using any of the school services.
How about making everyone pay their fair share of taxes, no rebates, no welfare, no incentive, and we will not have a population or housing crisis.
The problem with handouts is that it creates a dependency. People have to learn to fend for themselves and not rely on government assistance. I would be in favor of the grocery “rebate” for seniors, everyone else should get off their lazy asses.
That would be an interesting UCLA professor report to read. Especially how they define “social value” which is another way to account for value rather than just what a property is worth in terms of money. ie happiness.
As per an article published by LSE.
Urban living increases employment prospects and consumption opportunities but also exposes individuals to numerous urban problems including high living costs, congestion, pollution, crime, and traffic among others. New research by John Winters and Yu Li examines the overall effects of urban living on happiness in the US as measured by self-reported life satisfaction. They find that living in large metropolitan areas and counties with higher population densities reduces average happiness levels.
Patrick, I’m basically pinko-scum at heart, so please understand that I am not opposed to tax policy, but what you are suggesting is still a straight up tax on personal space. It might be “revenue neutral”, but ultimately the incentive is just to push for less living space on a per-person basis. To which I have to ask… why? Why would you want this? Less living space per person is not a good thing!
I understand that you would prefer 3×600 sqft apartments over 1x 1800 square foot penthouse, but that’s not actually a trade that’s been made anywhere in the system. New apartments are usually very small!
The high space-per-person is reflective of two trends: the popularity of single family housing and lots of people living alone. In the former case, you can’t break up a big house into lots of units because of zoning. In the latter case, the necessity of each unit to have a kitchen/bathroom/entryway means the actual useable space is quite small to begin with, and taxing a single person living in a 700ft (well above average!) square foot apartment for “wasting” space (GET MARRIED YOU SELFISH PRICK!) is straight up cruel.
If you want to argue that we should have a lot more 1200 sq ft 3 bedroom townhomes suitable for a family of 3, I WHOLEHEARTEDLY agree with you, but you’re not arguing for creating anything. You’re suggesting we tax single people and empty nesters to try and force them into more cramped accommodations on the grounds that they don’t deserve the space they occupy, while ignoring that the limitations on living space/person are almost entirely artificial (based on square footage area ratio, setbacks, height limits, etc).
Needless to say, I do not agree with maintaining the status quo while making things even harder for the few people who have found comfortable places to live.
Wrong-O is still grinding that same old axe with classism & hyperbole.
As with the GST and carbon tax rebate payments sent to lower income families, this “grocery rebate” is back pay (to offset higher food costs that were uncured in the past. i.e. “The 76-year-old said she plans to treat herself to some of the food items she’s been avoiding at the grocery store lately, due to rising costs.”)
Our government is giving 11 million Canadians money for groceries, one problem, how much of it won’t be spent on food but smokes, booze and marijuana.
The Victoria Transport Policy Institute has a great opinion piece in today’s TC, and here are some excerpts for nimbys to chew on:
…UCLA professors found that building new market-rate [housing] significantly reduces nearby housing prices and rents.
…Infill recycles urban land in ways that increase its social value. For example, allowing single-family houses, which average $1.2 million, to be replaced by four townhouses that average $750,000, or 12 condominiums that average $550,000, greatly increases the number of families that can live in an area
…Increasing housing affordability is the most effective way to reduce homelessness
…Where apartments are available for $1,000 per month, homelessness rates are a third of those in cities where basic apartment rents exceed $2,000 per month.
…According to Canada’s Homelessness Hub, Montreal had just 0.8 people without homes per 1,000, much less than Victoria’s 4.9
…Montreal allows townhouses and low-rise apartments on about 70 per cent of its land area
https://www.timescolonist.com/local-news/victoria-council-approves-residential-towers-up-to-21-storeys-at-north-end-of-downtown-7235457
The part of this news story that really caught my attention is the musical chairs aspect of The 90-unit supportive housing is planned for 722 and 726 Discovery St., where people living in Capital City Centre can move to before the hotel is torn down for the new development.
Whoever synchronized this timing deserves an honorary degree in urban planning.
Patrick, this is a great idea and maybe high housing costs that force renters / buyers to have roommates / suites or multi family joint mortgages is a solution that reaches the same end via the marketplace rather than via government intervention.
Other cultures that are familiar with multi-generational households seem to have this issue nailed.
I think it’s a valid point, notwithstanding your (Patrick) idea is to be tax-neutral.
I’m in my early 60s and have decent financial and mental ability to deal with change. But I know more than a few folks who see those elements reduced once they get into the 70s and who get absolutely overwhelmed with even small things once in their 80s. They are our (yours and mine) parents, grandparents. Now they are supposed to be “incentivized” (maybe “forced” is more honest) to either pay a bunch more tax, or what, take in a large family of renters, deal with all the myriad issues that often arise, or downsize, when the article makes the point that downsizing into something suitable is often not even an option? They are a captive audience with perhaps little ability to cope. So maybe an easy target, but that doesn’t mean we should shoot.
Younger people will perhaps tend to say, well the older generation screwed up XYZ so it’s only fair – guess what, they always say that.
In general, I’d say it’s true that the folks we’re talking about are relatively better off, and it’s fair they should pay more tax. But chances are high they already do or already have, given the progressivity of our tax system. According to the Financial Post, the top 10% of earners in Canada pay over 50% of the nation’s income tax, so income tax might be tapped out, so now let’s increase the burden on people who are relatively property-rich but perhaps with less income? I guess we’ll have to eliminate the property-tax deferral as well then.
I wouldn’t be surprised if some version of your idea comes to life, but it will fall hard on a segment of society that is just kind of a captive audience with little ability to deal. I won’t be cheering it.
Not sure if you’re referring to my post. But if you are, please note that the idea is tax neutral. There would be as many people with tax reductions as tax increases.
More taxes on just about everything is always the best answer. It warms the hearts of all social engineers and lets them feel like they are the masters of the universe.
Taxing isn’t an invasion of privacy, and is done all the time. In answer to your question, a large family would be taxed lower than a smaller family would occupying the same amount of space.
If we consider a 2,500 square foot house.. the highest taxes would be paid when total people living in the house (including suites) was low, and lowest taxes would be paid with highest number of people living in the house. This would apply owner-occupiers but also to landlord-owners paying taxes too, so landlords would be tax incentivized to rent out to big families to pay less property tax.
In support of my previous message, with the idea to incentivize people with large households to live in big homes, and people with small households to live in small homes (or rent out a suite)….
Here’s a table showing Canadians having 619 square feet per person, more than almost any other country.
That means we’ve already done “build, build, build”, since we’ve “built, built, built” more square foot per person than most countries. So now we just need to work on incentivizing the big families to be able to live in the big homes, and the small families to live in the small homes.
https://guide.rew.ca/articles/canadians-enjoy-second-most-living-space-per-person-global-survey-1.9905436
next msg –
Patrick— What you are suggesting is not unreasonable, it is just too invasive on our privacy and rights. What about having a large family of 3 or more children? Should they be taxed more? They are adding to the housing crisis by creating more future demand.
We need to change the definition of “housing density” to help the housing crisis. Stop thinking of “housing density” as number of people per sq. Kilometer of land, and instead measure it as number of people per existing sq. Foot of housing. And then implement government incentives to increase this type of density.
This can be done without building more dwellings or increasing taxes. Instead of trying to increase “density” by building more dwellings, we instead should increase the number of people per square feet living in the existing dwellings, by introducing revenue-neutral tax changes to incentivize people with small households (few people) to live in small dwellings (or rent out a suite to increase total household size), and people with large households (lots of people) to live in large dwellings (or
There is a simple no-cost measure government could do to improve the housing crisis.
For example, we could do this:
—— Property taxes should be based on square feet used per person.
So that, for example, a 4,000 sq foot house with one person living there should pay higher property tax than the same house with 4 people living in it (this might be a single family, or a two person family + suite).
This would be revenue neutral, with some paying more taxes and some less.
I’ve been waiting for this “under use” of one’s private property rhetoric to be brought up. I guess communism isn’t that far off. We all know how well that works.
And Victoria as I have pointed out.
https://www.theglobeandmail.com/business/article-vacant-bedrooms-seniors-downsizing-options/
From: https://www.reuters.com/business/finance/why-15-trillion-source-corporate-financing-is-choking-higher-rates-2023-07-05/
LeoS: Would the ten year historical average for things like inventory, especially for condos, perhaps be more appropriate? The number of condos today as opposed to twenty years ago is dramatically different. 100 condos listed today is a much smaller percentage of total condos than twenty years ago. I was just wondering?
Yes, it was recommended.
I don’t think anyone suggested moving to Winnipeg as some kind of arbitrage play.
It’s a good thing I did not sell and move to Winnipeg, as advised in this forum.
I would have been priced-out and never be able to move back.
Biden and Congress control the inflation numbers.
Multifamily construction also ripping
Currently in Calgary. Alberta is going to have absolutely epic growth
You know that neither Biden nor Congress controls the Fed, don’t you?
The spending by US administrations go up significantly In the 3rd and 4th year. In the current election cycle, any increase in spending will result in higher inflation and this will force the Fed to hike the rates or keep the rates high for longer. The attempt to “forgive” student loans failed and there will be more attempts for such giveaways soon. Any fiscal expansion when productivity is declining will result in higher inflation.
LAMO (excuse my language), Frank stop keep made up things just in purpose to against immigrations. – the snapshot you referred says “SPEAK ENGLISH ONLY”, not “speak only English”.
an immigrant- See the info below, households in Tuxedo speaking only English- 85.5%, French almost 0, that leaves 14.5% of households that speak a language other than English, although some of the family members are fluent in English, they still speak to their parents or grandparents in their native language. The average price for a house in Tuxedo is 1.4 million, I’d say there are a significant number of new immigrants doing quite well.
There’s a U.S. election in 17 months, rates will miraculously go down in the next year.
Correction, my calculation for the Dow would be perhaps rise to 42,000-43,000 within 24 months.
Remember when the rate hike first started, most people agreed duration is key.
I guess with all this market resilience there is really no reason not to keep bumping up those central bank rates.
I can’t see vacations impacting the ability to buy a home that much, unless your talking $10k plus ones couple times a year. A nice car though is a different story.
Josh, it is good to hear that housing crisis is overblown and young people are doing fine.
My mind is at ease and I won’t worry about them anymore.
So you’re saying if you want to be a first time home buyer spend a lot on vacations too?
Only immigrants with tons of money or the ones that can out compete you for your jobs should scare you.
Perhaps that indicates that only higher income cohorts are in the running to buy these days. In the past, those with lower income (like your parents) or one income (like me) could get into the market after a few years of serious saving. Doesn’t work any more.
SMH. I know this is a novel concept Frank but immigrants don’t scare me.
When you compare the costs of travelling or even nice cars with housing, I can see why someone would chose to spend their money enjoying their life instead of scraping together everything they can for a decade just to make a mortgage slightly less debilitating. I have a friend that worked for a big tech company in NY and saved enough to essentially retire in Thailand at my age. They still couldn’t come close to affording NY real estate, and they don’t have to.
That is a key difference between immigrants and “Canadians”, willingness to sacrifice in the present.
LMAO, no need to count at the walmart here.
ok, you live in Winnipeg, go out to count how many immigrants working in the local big box stores and fast food restaurants making minimum pay, then count how many immigrants live in Tuxedo.
Just gonna repost this from the previous thread, so it gets seen:
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.”
Happy summer!
In case you haven’t noticed, the war in Ukraine is not ending any time soon and even more refugees are coming every day. If that 3 million number doesn’t scare you, maybe 4 million will.
As for students, they are allowed to purchase property and many are enrolling in degree mills that exist only to fast track their way into Canada.
I also don’t see many new immigrants with holes in their shoes living on the street.
The article notes that about half that increase is Ukrainians. The other half is largely making up for the net loss in non-permanent residents, both students and TFW, due to the pandemic. A one-off in both cases.
As noted above students aren’t immigrants, they are non-permanent residents. As for bringing a lot of cash, maybe some, but not all. For example:
https://www.youtube.com/watch?v=uzxOAqH-pkc
I still believe that a significant portion of new immigrants are coming here with a lot of cash behind them, especially students. See the info below concerning the increase in temporary residents that came here last year, over double.
I am not an avocado and toast spending is the root cause for lack of affordability for first time buyers but when I look at our first few years in Canada and my typical first time buyers big difference. A lot of my first time buyers are constantly going in trips to Tofino, Whistler, driving nice cars, pets, etc. When we came we couldn’t go anywhere as my parents both worked 6 days and Sunday was fliers in Oak Bay and Fernwood. When I played soccer I was lucky enough to have nice coaches that always picked me up as my parents were at work.
Same with 1st time buyer expectations in terms of fit and finish and updates. My parents bought their 1949 yr built Oaklands home original kitchen/original bathroom. First two years were spent saving money to put in the suite downstairs. Then 10 years later came windows and a new roof. It wasn’t 15 years into home ownership my parents finally felt comfortable enough to update the original kitchen and bathroom. The 1949 tub weight a ton I remember took four of us get it out of the house.
Fyi, they were not reported as sold last month. These sales were reported as pending 1.5 yrs ago. The reason you saw them in the pending feed this week is on those 62 sales they changed the completion date (construction likely running a few months behind) via something called a sale change order form which brings it back into the pending feed but it isn’t counted as a sale yet again. It was counted as a sale 1.5 years ago for that months’ respective numbers.
As far as the condo market it has picked up a bit completely out of no where the last couple of weeks. I had four downtown condos listed for a while going completely no where and three sold all of a sudden and 4th one has an accepted offer with conditions off this Friday. At least three are going to investors from what I can tell and I had predicted a complete collapse of demand from investors. It would appear even at these interest rates people just don’t know what to do with their money. I don’t think it has picked up enough to put pressure on prices but rather return to some sort of stability.
I hope you are right about the start of a bull run. I would rather put my cash in the stock market than in real estate these days.
Everyone need a roof over their head, and many immigrants are used to living in multi generations dwelling with long mortgages, and long work week, so they will easily prevail in our environment.
I personally think the window of a recession potential is long over now, because the Dow and Nasdaq is setting up for a bull run. Unemployment is at 5.2% well below the 9% threshold, and wage increase will also ease the pain of housing costs.
Dow is steady and well above 34,000 points, and Nasdaq is near 14,000 and well above pre-pandemic 9500 points. Therefore, I can see the Dow easily rise well above 40,000 points (perhaps close to 48,000-49,000 points) within 24 months or less and carry Canada economy with it for the ride.
On another note, Wall Street is offering up to $150/hour with pay overtime for interns, which is an indication of confident and acceleration of inflation.
https://www.dailymail.co.uk/news/article-12243609/College-students-paid-150-hour-INTERN-Wall-Street-firms.html