What’s going on with condo affordability?
We know that single detached affordability will get worse and worse over the long run simply because houses will get more and more rare as a percentage of available homes. That means the remaining houses will be bought by those with the most wealth, and become less and less affordable to the average income earning household. This trend will hold regardless of what happens with rates or prices or anything else (short of outright population decline). If anything this trend will accelerate as we run out of greenfield land to sprawl into, and every level of government focuses more on developing existing single family lots into multifamily housing.
That’s not to say prices for detached properties can’t decrease. They certainly can and with affordability as stretched as it is today we may see that in the near term, possibly followed by a long period of stagnation. But when you look at the trend measured in decades, I’m very confident that affordability will only decrease.
So if many people are excluded from detached houses, that leaves condos and townhouses as options for ownership housing. How is affordability doing there? In short: Not great.
Household income source: Table 206-0011, income after 2021 estimated
We’re not at the worst condo affordability in history, but the last time it was this bad was spring of 1990. Condo prices proceeded to go exactly nowhere in the following 10 years, despite mortgage rates nearly halving and household incomes increasing by 25%. 17 years later in the spring of 2007, payments on an average priced condo peaked at 31% of the average household income. That was followed by 7-8 years of price stagnation, again while rates were cut in half and incomes increased by 15%. Back in 1981 condo affordability was much worse, with payments hitting nearly 60% of the average income. That was followed by a price crash in which condo prices dropped by over a third while rates dropped nearly in half to restore affordability.
Is it different this time? I doubt it. We’re not at epic crash levels of unaffordability, but we’re definitely at levels that have seen declines or stagnation for long periods of time. Now the good news is that we’re at 35% today because we’re pushing 6% mortgage rates, and it’s quite possible that rates will once again drop in half over the next few years. At 3% mortgage rates we’d be at an entirely unremarkable 25% with today’s prices, but historically affordability has bottomed at more like 20% or less.
Of course one could argue that things are different now. Population is growing more quickly. Construction costs are up. Rents are high. Maybe even multifamily housing will be permanently less affordable. Just because we’ve had affordability move in a range before does not mean it has to move in that same range forever.
All of that is true, but if I were buying a condo today I’d be prepared to live in it for 10 years or have it be suitable as a rental as well. If it’s an investment, it’s probably wise to make sure the cap rate and cash flow is acceptable from the beginning rather than relying on appreciation.
On something of a tangent, here is how the size of new condos has changed over the decades in Victoria. There’s a definite trend to smaller condos for more recent builds. If detached houses are more or less permanently out of reach for most families, we are going to need to find a way to build a lot more family-sized housing.
Also the weekly numbers
| October 2023 |
Oct
2022
|
||||
|---|---|---|---|---|---|
| Wk 1 | Wk 2 | Wk 3 | Wk 4 | ||
| Sales | 118 | 183 | 480 | ||
| New Listings | 336 | 529 | 998 | ||
| Active Listings | 2679 | 2708 | 2192 | ||
| Sales to New Listings | 35% | 35% | 48% | ||
| Sales YoY Change | +1% | -13% | -36% | ||
| New Lists YoY Change | +6% | +4% | +15% | ||
| Inventory YoY Change | +18% | +20% | +106% | ||
| Months of Inventory | 5.6 | ||||
I wouldn’t read too much into the difference between last week’s numbers and this week’s because the week 1 numbers were not released until Wednesday, but there’s no doubt it was a very slow week for sales, which dropped precipitously right around the same time we started to see a late-month rally last year.
New lists are normal, but it’s a sharp reversal in sales trend from the healthy activity that ended September. Detached sales are hardest hit, with pending sales for houses in the first two weeks of October down 31% from the same period a year ago, while condo sales are down only 14%.
As of September the detached market was a bit weaker than the condo market, but with today’s short term rental announcements likely to motivate condo supply on to the market, this will change over the coming 6 months.
New post https://househuntvictoria.ca/2023/10/24/about-those-airbnb-regulations/
So the question is whether there is any market for long stays in segments of 90 days or more since the legislation won’t apply to those. Is there any advantage in trying to rent on that basis over a conventional tenancy of indefinite length? What do people think?
I think the provincial regulations will change this. Their enforcement mechanisms look very strong and without a muni business licence you won’t be able to reregister with airbnb/vrbo. Seems like there will be no STRs in Greater Victoria except primary residences under the City of Victoria licences.
Yes that’s correct. Short term rentals are not a permitted use in residential areas in Saanich. Most munis are the same. They don’t have short term rental bylaws, but they also don’t allow it.
Historically there has been basically zero enforcement of this, so people have been operating AirBnBs anyway under the radar. The provincial regulations may change this (if the province does the enforcement)
I called saanich today and was told that short term rentals aren’t allowed (under 30 days) anywhere in the municipality. I was pretty surprised as I couldn’t find this info anywhere clearly listed on the website. Did I get correct info? Thanks.
There are other items you can deduct in an airbnb, think furniture, cleaners, household items etc. If one wanted to operate in the grey area they can try and deduct household expenses incurred on their principal residence.
Interest is deductible on any investment.
Interest is deductible on any rental, and all condos can now be rented.
You’re too modest, Leo. Give us a heads-up when you’re going to be on the radio.
I caught Leo on a CBC radio interview before one day a year or two back as well. He sounded great! Big fan on this site. First time poster, long time lurker. Appreciate the insights from so many people.
I don’t think CBC posts most segments online.
Thanks PeninsulaNeophyte, appreciate it. I did a couple others where the angle was more as a housing advocate, this one they were more interested in the potential market impact.
Marko,
Does dockside still have units the developer is selling? Seems like these ones here aren’t resales and are priced lower than the resales.
https://www.realtor.ca/real-estate/26199476/1207-363-tyee-rd-victoria-victoria-west
https://www.realtor.ca/real-estate/26200321/805-363-tyee-rd-victoria-victoria-west
What if you look at Astoria, ERA and Juliet?
Link please
All properties will be affected by a bigger market downturn, which may happen with the Airbnb rules plus interest rates as fixed rate mortgages come due.
Airbnbs are usually very well maintained and located properties. A lot of money has gone into upgrading for Airbnbs and that has value for a renter or new owner. Really small condos that were zoned for hotel use might have more of an impact.
Regular homeowners with “normal” type homes that have not been upgraded and who have trouble making mortgage payments and list in spring might have more trouble competing with former Airbnbs.
People with Airbnb suites in their primary residence that were not licensed because their muni does not permit this use and relied on this income to pay the increased mortgage are possibly going to be in trouble. Even those these are permitted provincially, if the muni doesn’t permit it then they will be shut down. I don’t think any municipality in greater Victoria allows you to STR a suite in your primary residence – including Victoria.
I should say this is only City of Victoria sales
“Leo S October 24, 2023 8:00 am
Small delay, new post later today.”
Negligible ‘price’ to pay for that excellent CBC interview you gave at 5:30pm yesterday. Nicely done.
I think Leo is onto something here. I look at non Airbnb buildings like the 834 and you can defintively see a big price drop from peak. I recently sold a 7th floor unit for $556,000 and the same 5th floor unit sold at peak March 2022 for $650,000.
On the other hand you didn’t really see much downward price pressure at Janion/Union/etc., since peak.
We’ve had approx 5 Airbnb listings since the news and sellers certainly asking top dollar. This appears to be the same as the new construction re-sale market, no one wants to take a loss. I think we might be waiting until Spring for any serious downward price pressure, if it is to happen.
Condo peak – 620k median Feb 2022
559k median currently
I would say that downtown condos are more insulated than the ones in the suburbs. Plus most airbnb condos are newer buildings also.
“Here’s an interesting thing. Doesn’t seem like AirBnB condo values were affected by higher rates nearly as much as regular condos.
Maybe due to interest being tax deductible.
Here’s an interesting thing. Doesn’t seem like AirBnB condo values were affected by higher rates nearly as much as regular condos.
Small delay, new post later today.
U.S. court honours Canadian rulings on fugitive Victoria mortgage broker Greg Martel
https://www.timescolonist.com/business/us-court-honours-canadian-rulings-on-fugitive-victoria-mortgage-broker-greg-martel-7726309
Every city announcing 4 units by right on a lot, but as usual Edmonton is taking it up a notch
Hey Leo,
What did you think of Edmonton’s new zoning rules?
https://twitter.com/jacoobaloo/status/1716499312023339479
YOLO…… I believe the quote here was: “who wants to be the richest man in the retirement home”?
Sometimes it’s nice to be able to choose to be in what home you want to be in.
Mr. Cufflin has one option- Rob a bank. Instant place to live, free food, no bills, access to a doctor, the perks go on and on.
Appears to me that after 30 years of ownership, he owed a good deal more than the price he originally paid for the house.
https://www.cbc.ca/news/canada/calgary/calgary-seniors-unaffordable-rent-interest-rates-1.7001817
All I can say is that the province had all their ducks in a row prior to announcing this, keep in mind they have an entire ministry full of internal lawyers who’s job is to draft legislation (where eby was previously the minister in charge) supplemented by specialized expertise from the external big law firms.
Is there one more tower completing?
Ya $5k+ a month is a lot of pain unless you are well capitalized. Perhaps flood gates will open come spring time if things don’t improve.
20 years of people saying “I wish I had held on, the price doubled” is a powerful thing. People believe if they can get through the short term pain it will be rewarding. They may be right, but I suspect it’s going to be a number of years of pain, and people will tire of it.
Anyone read any legal opinions published on the change to legal non-conforming? I haven’t found anything good, though one would think the lawyers would be all over it. What is the precedent for non-conforming uses being taken away in BC?
Honestly, I am shocked how long people can hold these units. My carrying costs on a one-bed at Dockside are $2,800ish per month. Two-bed must be close to 5k/month and some of these will sit vacant for 4-5 months.
In my opinion right now either you price to sell or you rent right away.
Other than Victoria, Kelowna is another city which had a significant number of buildings that allowed short term rentals. https://m.youtube.com/clip/UgkxJT19AiNL8kPhFDJtnP3pafntf8jdeCab?si=BAxp6dXsiPmx2FfX
I guess it really depends how much longer sellers can hold on paying the 6% mortgage and strata, some will be better capitalized than others.
Tough to say, still seeing good demand for larger quality two beds from the out of town crowd (retirees from across Canada). Every two-bed pre-sale I sold at Dockside was out of town.
Thing right now is I can’t find a single re-sale whether it be Dockside or Triple Crown in Langford on the highway asking below the pre-sale purchase price. Everyone is asking above to at the very least cover transaction fees. There is a lot of stickiness on the down side but that can’t last forever, maybe until spring. Either sellers have to adjust prices or rent the unit.
That sounds right. Swap markets put the odds of a hike at Wednesday’s meeting at only 15%. If it was up to me, they should hike 25.
Here’s the current odds of a hike at the next several meetings. The market is looking for increased chances of hikes in 2024 as you can see.
https://www.theglobeandmail.com/investing/markets/inside-the-market/article-market-reacts-odds-of-another-boc-rate-hike-dive-after-surprise-drop/
What do you think they will go for now? I think low 900k range maybe 950 if they get lucky.
On pace for about 420 for the month.
Both of those sold for >100k less during pre-sales than current asking price.
wow, look at this dreamer in the new dockside building…..
https://www.realtor.ca/real-estate/26138608/708-363-tyee-rd-victoria-victoria-west
Why would you do that when another lesser dreamer has this listing:
https://www.realtor.ca/real-estate/26088005/902-369-tyee-rd-victoria-victoria-west?view=imagelist
How much were these originally purchased for during presale?
Month to date activity
Sales: 284 (down 15% compared to same time last year)
New listings: 768 (up 4%)
Inventory: 2727 (up 21%)
I was wondering what happened with that. I remember when they spray painted out spots on the grass. Thought the plan just disappeared, crazy to think they’re still working on it.
I suspect that they are going to just hold but I am just guessing.
It’s Wednesday Barrister.
Remind me, when is the next bank of Canada interest rate date?
Any reliable data on how many days a month the average Victoria Airbnb is occupied? Seasonality would be a factor, maybe Leo can conjure up a graph if there is anything to graph. Any Airbnb owner anecdotes, remembering that down times are usually not mentioned. I wonder, over the course of a year, and factoring maintenance costs, what the financial advantage is over long term rental. Some owners might welcome more reliable monthly income given current rental rates and vacancies. Others will bail on their investments. I doubt these new regulations will significantly affect rental rates or condo prices.
Leo, I’d be interested in knowing what Taylor Swift, Rex Murphy and Peter Dinklage think about the housing market. Why aren’t you talking about that? And what about people who work in the hardware store? They sell caulk and light bulbs and nails. It seems like you could do an article about that.
Just in time for Xmas for the folks that want to get ahead of the rush, early new year for those looking to squeeze out some last holiday cash and March and April (right up to that May 1st deadline) for those praying for a miracle decline in interest rates or an uptick in the market.
It’s gona be full of Google links lmao
Things that seem to be working to provide affordable rentals.
1) The Whistler Housing Authority that makes use of public land to build on and private builders.
2) The City of Montreal has pre-emptive right to acquire property. These are low-rent buildings in gentrifying neighborhoods. When one of these properties is sold on the open market, the city has 60 days to match that offer and buy the site for the same price.
What they have in common is that the government becomes a stakeholder in the property.
I would think everyone on this site would say that rent controls are bad as they stifle new construction. Yet having no rent controls does not lead to more affordable housing either. What does increase the amount of affordable housing is direct intervention of the government in its production.
Now, how do we do that without breaking the public’s piggy bank?
My goodness. That’s an odd comment, indicating some underlying bias against developers. So you don’t want to write an article about what developers might suggest to help the housing crisis, because it might be advertising. I find that disappointing, and it makes no sense to me, but at least the comment is clear. To me, developers are a big part of the solution, and we should talk to/about them .
Anyway, you asked “why should I write about developers” and I gave my opinion. Thanks for the discussion.
When do we think we might start to see AirBnB units come on the market? Anytime soon?
Leo you need to learn to use the mute button 🙂
If you want a website that is dedicated to advertising for developers you can go read Citified.
We do this work as part of HFL. That article would never appear here because again that’s not what this website is about.
Looking forward to your new website with all this fascinating content
Rodger or where did all the investors go and that pent up demand
I really hope not because that would really leave Frank confused.
At some point in 2024, we will be wondering: where did all these supply come from? A recession would do wonders (with or without high interest rates) for increased supply.
I think it’s fair to say househunt has become a pro development blog imo. I do get lately leo has become frustrated with the whole process of rezoning and permitting , I do think it’s a rabbit hole not be ventured down. I’m accepting of this is how things are done today on all fronts . Real estate might not be the biggest and most important crises
There are no big developers in Victoria outside of maybe the Jawls and their specialty is office which is why they teamed up with Concert to do Capital Park. No one local is capable of doing a 1000+ unit project.
Patriotz, the church receives a tax exemption similar to how properties in the ALR are assessed. In the case of this property there is an exemption of some $11,200,000 on their assessed value of $19,200,000 which brings the assessed value down to around 8 million on which they pay property taxes of about $34,000 per year.
The Legion along the Gorge also receives an exemption and its taxes are $552 per year.
The property that I think you are referencing was a Buddhist Temple in Vancouver as it was not registered as not for profit organization.
Now let’s try to get back to the point. What I find interesting is not for profit organizations building rental housing and the possible property tax exemptions to lower property taxes. Not that it’s a church or a community hall that serves beverages but that its a not for profit organization.
The stated scope of your HHV articles is “articles examining every aspect of our [Victoria] market and what makes it tick. https://househuntvictoria.ca/about/
Obviously developers “make it tick”, and let’s hear how they make it tick, and not just keep hearing about failed small developers like your “church leader” friend who apparently “can’t make it tick”.
You already boast about all the developers you talk to, so why not write about them, with names and quotes on the record? For example, in your message below this one you say “I’ve heard it dozens of times from affordable housing developers and affordable housing developer consultants.“ If you escaped this echo-chamber of “affordable housing consultants” , and instead interviewed a few successful big developers, you could ask them why there were no missing middle units built so far, and will the recent changes fix that.
Aside from developers, you should also have an article interviewing senior city housing staff/mayors etc. I think as a journalist you owe that “equal time” to them, because you attack them by saying things like this “Everyone is working as hard as they can to continue it [the housing crisis]”. That’s a cheap-shot, and you wouldn’t appreciate it if someone said that about you.
I’d love to see an article.. “What do developers want?” where we get names and quotes from actual successful big developers.
One more note on this, because the idea is so funny.
Obviously the church are not development experts, no one said they were and it would be insane to expect them to be.
Imagine instead of 6 years of bureaucracy, that when someone said “we have some free land to donate for affordable housing” BC Housing stepped in and said great we will handle it from here and started development. You know, a competent government response that actually produced housing?
Crazy idea I know.
By the way Lytton is 2.5 years post fire, they’ve spent tens of millions and not rebuilt a single house. But I’m sure you’ll tell me that’s not really a problem because there’s actually been a lot of other homes built in BC during that time. https://www.cbc.ca/amp/1.7001050
How is it possible you’ve been here for so long and don’t know what this site is about? Why would I write an article about a developer?
Here is where it helps to know something about affordable housing. If this was an isolated story I wouldn’t mention it. I’ve heard it dozens of times from affordable housing developers and affordable housing developer consultants. You have to understand this preliminary work is often funded by CMHC seed money. An absolutely staggering amount of money earmarked for affordable housing is wasted in the process, producing exactly zero affordable housing. People would be shocked at how inefficient it is but neither the non-profits or the consultants want to make too much noise because they fear they will be blacklisted if they do.
Under BC law only actual places of worship receive religious exemption from property taxation. It’s been a while, but there was a case where the Church of Scientology, which was operating from a storefront near the old Eaton’s on West Hastings in Vancouver, was challenged on its exemption claim, on the grounds that it was running a business out of its premises. They resolved the problem by partitioning the storefront and having two front doors, one for the “Church of Scientology” which was for worship only, and the “Scientology Bookstore” which was for the business activities.
Other properties owned by churches may be eligible for favourable tax treatment on other grounds, but that’s based on how they are used, not on ownership.
https://info.bcassessment.ca/services-and-products/APPs/Places-of-Public-Worship-Policy.pdf
Maybe the devil was in the details.
It seems many of your anecdotes are from failed development plans. Yet the Victoria data shows a record high number of housing starts for the last two years – about 5,000 housing start units per year in greater Victoria that have achieved what you say is so difficult, getting city approval and putting shovels in the ground.
Have you ever considered writing at least one article about one of the developers who have succeeded, instead of people that have failed. In over five years, I cannot recall a single “good news” HHV article about a successful developer
For your latest “church” example, apparently it’s “sad” that a church couldn’t get it together to get their ideas fully funded with taxpayer money to build “affordable housing”. But there could be a lot of reasons why that project hasn’t succeeded. Yet you don’t consider them, and just jump to your goal-seeked conclusion that “everyone is working as hard as they can to continue it [the housing shortage]”
Have you considered the alternate possibility that the church doesn’t know what they are doing, and the government agencies are correctly delaying the project because they don’t want to continue to waste taxpayer funds?
Like i said in the beginning of summer, something big is in the works for saanich. Patience Leo 😉
Is the leader proposing to build on church land? Because that sounds really interesting. St. Clare Villa on Carrick Street is a leasehold condominium complex operated by the Catholic Church. The Church has tax exemptions that substantially lower their property taxes.
Talking to leader of a local church at a party, they are on year 6 trying to get affordable housing built on their land
Staggering amounts of housing funding & effort wasted in endless negotiations and debates and changes back and forth forever. BC Housing and local government and CMHC all are interested only in following rules and have zero interest in housing actually getting built. Every little rule is more important than moving forward.
Funny that we still wonder why there’s a housing shortage. Everyone is working as hard as they can to continue it
Now that “short term” will be redefined as under 90 days, is there any market for Airbnb type long stays in 90 day (or longer) segments (other than conventional tenancies)? E.g. in a 1 BR unit.
As a related question what advantages or disadvantages are there in renting furnished vs unfurnished in a conventional tenancy? Is there any significant rent premium? Does renting furnished narrow the potential market for tenants? Thanks.
Some did phone me back for feedback once I uploaded everything and the feedback wasn’t useful.
Judging by how many people drive while on their smartphone which could potentially kill someone I will not be losing sleep if I happen to break this ever so important law of only renting my place four times a year.
I got a CRA review letter a couple of months ago, and I’ve discovered that it is now impossible to call the CRA. I’ve gotten a “call back later” message every time I’ve attempted to talk to somebody. You can submit any necessary paperwork over their web site easily enough, but don’t expect any feedback about whether anyone’s looked at it.
I wouldn’t get too cocky on this part, once government decides it needs more tax revenues then things can shift in a hurry. I rather get my paper work proper and ready than count on some lazy union worker not giving a crap about their job.
That would cause me way too much stress. Following the rules is way more relaxing.
Not an ideal situation for this fellow but legally he can do 4 rentals x 21 days and 90% of his competition has been eliminated. I also think due to climate change Victoria will become an attractive tourist destination going forward so I don’t think demand will drop.
As for beyond the 4 rentals how on earth are they going to enforce that? It’s not like someone is going to be monitoring every single platform. You have to remember the enforcement unit is a bunch of government workers whether it be municipal or provincial more worried about their flex Friday than nailing someone.
I had a CRA audit earlier this year and it was eye opening. My main contact there was a dog barking in the back half our conversations. Gave me 30 day extensions when I didn’t come up with certain documents. When I asked what happens if I am late on the extension then it was like ohhh we just send you a registered letter giving you another 30 day extension.
Airbnb enforcement is and will be similar. They will nail a few people to for a news story but on the whole I wouldn’t worry too much about the 4 rule. And if they did nail someone for renting their prinicpal residence 5 times what exactly is achieved.
meh, that was always a risk if they bought it in June 2022. I am very curious to see how the new dockside condos do, people who pre-purchased there were not contemplating current rates at closing. If Marko is $700 a month cashflow negative without paying principal then some of the others will be in much worse shape.
umm really: I see 824 Monterey was purchased in June 2022 for $1,270,000. Now asking $1,300,00 after all those renovations.
Buying houses as an investment is no different than buying any other investment on leverage, you are exposed to both regulatory risk and general economic conditions. Just let the cycle play out, I said in 2022 that rate duration is key and we are just getting past the one year mark now and things appear to be breaking only now, so just let it ride and see what happens.
If you make the mistake of reading a Black Press “newspaper”, you’ll learn that some two bedroom units now cost more to rent than an entire house. The “evidence” for this includes a $6000 two bedroom (which also happens to be an entire waterfront house), and a few cherry-picked examples of non-specified luxury two-bedrooms vs. two relatively affordable houses. I have to wonder what qualifications are necessary to be hired as a reporter for Black Press Media, because my Basset Hound has seemed bored lately, and I wouldn’t mind some extra income.
https://www.peninsulanewsreview.com/local-news/some-greater-victoria-two-bedroom-rents-now-more-than-renting-entire-houses-5888939
Another price drop on 824 Monterey.. Flips are getting tougher.
It’s like when people say “we need to stop thinking of housing as an investment.” Just asinine.
Multi-family development consists of three components
-Land
-Cost of improvements
-Builder’s Profit
The emphasis of the government to deliver low cost housing is directed at building cost and builder’s profit and that gets very complicated very quickly as costs and profits varies from project to project.
The cost of the land is a simpler way for the government to make rental housing available. Reduce the cost of land to the developer and the risk to the builder is lower and makes the project viable immediately. If the builder could sell the land to the government and then lease it back that would give the developer a capital injection to reduce their total cost of construction . The government would retain ownership of the land and charge a ground rent to the purchaser of the rental housing.
That land lease is a marketable asset that could be sold off to investors wanting a secured income stream from a long term investment or retained by the government. Similar to how the leasehold apartments and condominiums in Vancouver were structured by the City of Vancouver in the 1980’s.
When it comes down to renters they don’t care if their rental unit is leasehold or not. They pay exactly the same rent. This type of public/private venture reduces the total construction cost and risk to the developer and at the end of the long term lease the land reverts to the government to build new rental housing once more.
Yeah doesn’t seem to be a desireable state. You could go the Vienna or Singapore route and build social housing for the majority of residents, but I doubt Canadians are interested in the widespread expropriation of property that would be required. No doubt we should probably have more non-market housing than the current ~5% or so.
I think the best case we can strive for is to stabilize the cost of multifamily housing by ensuring we have an abundance of it, and bring back affordability over time via income gains / rate decreases, and then keep it there by continuing to build enough homes.
A survey of Croatians leaving Croatia didn’t mention “housing cost” on their top ten reasons that they’re leaving.
Perhaps because Croatia actually has a very high rate (92%) of home ownership, close to the highest in the world https://en.wikipedia.org/wiki/List_of_countries_by_home_ownership_rate.
Main reasons Croatians listed for leaving are much deeper than housing, and refer to corruption, nepotism, intolerance, decay and a poorly organized state.
Here’s a 2018 article from Dubrovnik Times
https://www.thedubrovniktimes.com/news/croatia/item/4651-these-are-the-reasons-why-there-is-a-mass-exodus-from-croatia
“These are the reasons why there is a mass exodus from Croatia
As the most common reasons for their departure, the respondents chose the unorganized and poorly governed state, the incompetent politicians and the political parties without a vision (8 percent of all answers), then the hopelessness, the decay of the state, society and people (7.6 percent), and employment of people from parties and nepotism (7.4 percent). Corruption and crime in the country was chosen as a reason of 7.3 percent of respondents, Ustase and Partisans talk 6.4 percent, while low wages were the reason for leaving for 5.2 percent of them.
Primitivism, religious intolerance and nationalism affected 6.2 percent of emigrants, and the absence of changes in the country 6.1 percent.
The impact of the war defenders on society is the reason for 4.8 percent of respondents.”
Yes, Greens, please explain how you plan to do the impossible.
I feel like the move by the city to restrict bookings to 4 per year was dumb. What was the point there? I assume it came from people exploiting a loophole somehow but it’s not clear what. In this case there is no harm letting this guy AirBnb his place, zero chance it would be available to anyone long term.
Pretty bad article. “2 greens said something I bet the NDP agrees”.
Why not just write about what the greens want? For example how do they propose to decommodify housing? I spoke with Adam Olsen about housing policy a while back, he’s a smart guy. At the time they were developing their housing strategy, but I presume they won’t reveal it until the election.
I don’t disagree with the idea that you can’t have housing be appreciating at ~7% a year and have it become an endless wealth train. Eventually it’s moving too fast for people to jump on.
It’s not hard to imagine the NDP side nodding quietly at Green MLA Adam Olsen’s views. He, along with Leader Sonia Furstenau, earlier condemned the “commodification” of housing, which amounts to opposing the entire premise on which a major part of the economy and society rests.
The word describes any process by which a property or resource can be bought or sold. Housing has been subject to that since the first cave-dweller traded up for better shelter.
Les Leyne: Greens’ views on ‘decommodifying’ housing may have quiet NDP support
https://www.timescolonist.com/local-news/les-leyne-greens-views-on-decommodifying-housing-may-have-quiet-ndp-support-7716972
https://www.timescolonist.com/local-news/attack-on-property-rights-why-bcs-new-rental-rules-leave-some-owners-on-edge-7716966
First fellow they talk about in here has an interesting situation. One of the first Airbnb “sob stories “ that actually makes me feel bad for the person involved. But sounds like he is being hosed by Victoria regs not by the new provincial rules.
‘Attack on property rights:’ Why B.C.’s new rental rules leave some owners on edge
https://www.timescolonist.com/local-news/attack-on-property-rights-why-bcs-new-rental-rules-leave-some-owners-on-edge-7716966
Victoria regulations for a Bed and Breakfast is the owner must have his principal residence in the house. Basically covered by the proposed provincial regulations.
I think it was posted on FB. Can’t exactly recall – but def saw it.
Sounds dreamy.
Buying into a building that has so many investors is that deferred maintenance becomes an issue.
I didn’t realize the Janion used to be a hotel, I suppose a case could be made to still allow short term rentals in there….. Maybe anything less than 400 sqft or something.
Seems like it, though no sale listed in MLS
Not quite it appears. Seems to me that they are subject to much the same regulatory regime as hotels. In Ireland:
https://www.pointofsinglecontact.ie/browse-by-sector/travel-and-tourism/bed-and-breakfasts.html
What was it purchased for pre-flip?
Another tale of a flip… Started 2.158 mil and now 1.749 mil
267 Richmond
So a more savvy investor offloaded their “bag” to him and now he is crying? LMAO, definitely doesn’t jive with the skillset listed on his LinkedIn.
Pretty sure he bought it like that – I saw the listing when it was up for sale.
I always liked Chateau and Relais when travelling in Europe. Great places to stay.
No I think that is for one place he bought last year that he decorated into a “Friends” theme.
My methodology is similar. I’ll ask family in France/Germany/etc., how much does a nurse/teacher/etc. make and how much is rent/cost of a condo and there are places that are much worse than Victoria. I can tell you a decent condo in Zagreb is not much cheaper than Victoria when you compare similar product and the salary for a nurse, for example, is about 1/3 in Zagreb vs Victoria.
I have a friend the moved to Victoria from Milan approx 7-8 years ago that I helped buy a home approx 4 years ago and in his opinion affordability in Italy is far far worse for his profession (software engineer).
If you show up as a foreigner in some of these countries things local cheap on a Canadian income, but they aren’t for locals.
Two young nurses in Victoria can pull in 200k/year which can qualify for a townhome on the Westshore which seems silly compared to 25 yrs ago two nurses could buy a solid house in Oak Bay; however, when you look at the rest of the world it’s still a very high standard.
Marko: Who is leaving the country, apparently doctors.
🙂
Yup, it comes up as a topic of conversation with local scientists when visiting those places. So there is some self-selection. When visiting I sample the opinions of the locals (so, for Trieste, ICTP and SISSA) how rough it is to obtain housing for professional scientists and their families, postdocs, grad students. Yeah, Milan is rough. But at least for that demographic Trieste not so bad actually.. Thing is, as you’ve mentioned before, places near the city center are frightfully expensive relative to local incomes. But prices fall outside the city center. So this is what academics with families tend to do or at least they have the option.
No. I would have preferred our Airbnb experience to a “floor at the Ritz” even if the Ritz was half the price. A “floor at the Ritz” has no appeal to me.
Anyway, there’s lots of HHVer posts today from other people who also prefer Airbnb, so you can can continue the discussion with them.
I guess everyone is different , I lean towards Airbnb because of choice no interest in saving money . Having said that most of my trips will
be combination of both , with hotels being for shorter stays. I would think if you have a larger family Airbnb would probably work better
The last sale in the Janion for nine year old 573 square foot condo was $635,000 or $1,108 per square foot.
The median price for a downtown condo built between 2009-2019 having between 473 to 673 square feet is $553,750 or $965 a square foot.
There is a price difference of around $80,000. That’s about the amount that Steve Nyguen in the tv interview estimated he would lose for his two units of $150,000. 10 to 15% drop in price and a 30 to 40% drop in revenue. Ceteris paribus.
But I doubt everything else will stay the same. If a lot of them go up for sale that will effect inventory. If others are going to long term tenancy that will effect the vacancy rate. The volume of condo sales is so low, I don’t think it would take much of an increase in condo listings to push the market into one that favors buyers.
A lot of people that have stayed at my personal place in Victoria via Airbnb have had government per diems in excess of $200 per night. When I’ve asked them why not a hotel typical replay has been…”don’t want to be in a hotel for 30 days.”
Not as good when they are teenagers or if you have more than two because you no longer fit. Not so many kitchenette units in larger cities like Victoria as some of the less expensive ones have been transitioned to homeless supportive housing. I guess people in the film industry could get together and rent whole houses for three-month terms and maybe more hotels will get built.
Not always. When I travel for business I use Airbnb and I don’t pay for it. I could go to a hotel, but I prefer quieter places.
I was in Trieste a few times as a young child. My dad would drive us there in a 40 hp? Renault 4 (approx 10 hr drive each way) so he could buy consumer goods not available in communist Yugoslavia like a jeans and fishing gear. Yes 20 hrs of driving for jeans 🙂
There is enough housing for local residents who care afford it. Have you ever looked at real estate prices in Italy especially bigger places like Milan?
The difference between Victoria and a place in Croatia, for example, is the situation in Croatia is 10x worse but it isn’t front and center politcally while here it is.
The housing situation in Croatia is so bad we’ve lost 20% of the population in 30 years. People don’t leave Croatia because they are hungry, they aren’t (and the food is way better than the countries they emmigrate to).
Sure people in Victoria are leaving for Alberta but who is leaving the country?
Which is precisely why you need to use a comparative approach as I had detailed. The changes in inventory, interest rates and any other macro factors would be normalized when your are comparing the delta of the change in value in an airbnb building versus a none airbnb building pre and post legislation.
Yeah various ways to look at it. Volume of listings in STR condos to see if people are selling or switching to long term rentals. Comparing STR vs non-STR buildings over long periods like Ira has done to see diff in $/sqft and average out variability in unit mix, looking at price / assessment in STR vs non-STR and see if one is hit more (not sure if BC assessment is correctly valuing STR buildings right now though).
Also the drop in STR buildings isn’t the only thing here. If we get a few hundred additional condo listings that’s a negative impact on the value of all condos, not just the STR ones.
Tend to disagree, but it depends on the location. We generally prefer to stay in hotels with kids when we travel, we just look for places with kitchenettes so we can do some of our own food prep. Less variability, professional management, and no nonsense inflated cleaning fees.
Of course if we’re on the gulf islands or something then AirBnB is the only option. Back in the day Airbnb also had a significant cost advantage (we once rented a massive house on the ocean for a family gettogether for I believe less than $400/night. Now when I see it come up it’s triple the price.
The funny thing is that no one seems to have an issue with Bed and Breakfasts, despite them being essentially the same as AirBnB. When we were in Ireland there were a million bed and breakfasts and we usually stayed there. Just people converting their houses to mini hotels, but somehow never heard anyone complaining about that.
The control is the price drop for 845 Johnson. Juliet drops 20% from pre to post announcement while 845 Johnson drops 10%, that 10% delta is the true impact of the STR ban for the Juliet after factoring in general market conditions.
There is no swing and a miss, it is cheaper over all for you to do this which is why you did it, it wasn’t done for the pure experience. If cost wasn’t a factor you would have rented out a floor at the Ritz for everyone to stay at.
you’re just proving my point, people aren’t choosing airbnb because they love the experience as per Patrick, they do it because it is cheaper.
+1.
It would be easier to stomach if these changes will come in tandem with significant O(1) improvements to supply especially for housing suitable for young families. But I’m not holding my breath.
—
I’m leaving for a workshop in Trieste (northeastern Italy) next week. Staying in an apartment for five nights at something like ~120 CAD/night. Hotels are comparable. Also, there’s enough housing for local residents. Being able to provide supply and accommodate visitors is something other places can figure out..
In 1990 unaffordability peaked at 36% and dropped to ~18% by 1996. But condo prices kept going down for a few more years, bottoming at about 15% less in 2001 (maybe unique due to leaky condos though). In 2007 unaffordability peaked at 31% and then dropped to about 18% in 2009. 3 years later prices weren’t much different. So if you’re ok with waiting out a flat market for a few years then buy when affordability improves to somewhere in the low 20s.
If you want to time a jump, maybe hold on until it starts to heat up again. But if we look at COVID, affordability improved to 19% only for a few months then prices started jumping (same in 2009). So probably best to strike when affordability improves rather than waiting around to see if it stays down.
For anyone traveling with kids or staying somewhere for more than a few days, Airbnb is the clear winner.
We have had many guests at our Airbnbs stay for other reasons than pure recreation. Medical treatments, relocations, major renovations at their homes, temporary work (LOTS of Films/movie projects)… it’s a very big gap hotels aren’t able to fill and it will hurt the local economy with them gone.
Swing-and-a-miss there VicRE.
Max occupancy was 12 and we were under that at 10 people. So no stuffing. Furthermore, like most of Europe, every guest was required to register with the rental office with a copy of their passport. So they have pictures and numbers of guests staying, which discourages “stuffing” and is more than most Canadian hotels do.
When I travel I prefer Airbnb over hotel. I also grew up in a tourist country where hotels were far and few between and 90% of accommodation was private.
Outside of North America people don’t realize there were platforms 50 years before AirBnb like you get off a bus and a lady is holding up a sign “zimmer” (German for room). My parents had no problem short term renting their place in the late 80s in Croatia before the war broke out. We would sleep at my grandparents during the summer months.
It’s going to be funny reading Reddit threads in a year or two with people complaining they can’t afford to go to Vancouver to see Taylor Swift.
I was chatting with Mike Grace (exceptional mortgage broker imo) a few days ago and according to his analysis when you factor in wage growth, interest rates, and condo median prices in Victoria condo prices would need to drop 31% to return to pre-covid affordability levels.
Which begs the question when is the “opportunity?” 5, 10, 15, or 25% drop?
Not at all comparable. Chateau Victoria is $500 plus a night for max four people – two beds. So, double the price for way less space and you have to pay for parking and stay downtown. We travel with six people so would need to spend $1000 a night and stay in two different units. With Airbnb we spend max $300 a night and can choose highly rated places in areas we want to walk in. Yes, first world problems, but they are in no way the same price point or set of amenities/experience.
I’m not saying that a curtailment and regulation is not in order, but people like me will travel less within the province. Bad for tourism but good for long term renters. Seems like the long term renters should have priority.
I was the listing agent on the 8th floor 834 unit and it was on the shelter side (not desirable).
Leo can comment but your analysis idea makes zero sense in my opinon. A Juliet unit could drop from 500k to 400k with 80k being as a result of the overall market and 20k as a result of STR ban. There has to be a control.
There are purpose built extended stay hotels for this very purpose, see Chateau Victoria downtown or the Residence Inn brand under Marriot for example. The idea of having an apartment like experience for extended travel stays is not something airbnb invented..
The Canadian economy looks extremely week in terms of GDP, Employment, Retail Sales, etc. Most of the jobs created recently are part-time jobs. People are being forced to work multiple part-time jobs. This will probably result in lower GoC 5Y yield in the short term, probably to 4% range.
We are probably looking at Stagflation for the next 12 months with stubborn inflation above 3%. Higher for longer will be the theme for next 12 months.
So basically you found a place to stuff as many people as you can in there because it was cheaper. Exact reason why airbnbs are popular as they aren’t really able to enforce how many people are using the unit unlike a hotel.
More than a week prefer a Airbnb with a kitchen . Just can’t stick ordering off a menu for 3 square a day . So I definitely see str having a place for travel
Yes. Just like the foreigner ownership ban. Canadians expect to be able to buy properties in USA, but support the ban of Americans buying in Canada.
Seems like Canadians have forgotten the golden rule … “do unto others as you would have them do unto you”
I’m not looking to stay in a “standard business travel hotel”. I’m typically travelling for pleasure, not business. For example, this summer stayed in a couple of beautiful Airbnb’s in Spain and France. One was a 4 bedroom in Barcelona with a private grass courtyard and pool. Full kitchen. We had 10 family staying in it. Awesome, and beats everyone staying in “standard business travel” hotel rooms.
Next time you travel for pleasure (not business), try one out. I expect many if not most here on HHV also stay at Airbnb’s and also find them fantastic.
Dude, what kind of hotels are you staying at? I doubt many if any would choose an airbnb condo over a standard business travel hotel (4 star) unless they absolutely need the kitchen.
Patrick, as usual, is arguing in bad faith.
It’s not at all arbitrary and he knows exactly why. Back to mute.
@Patrick. You can almost guarantee most of these proponents and those who are voting for this bill stay at Airbnbs themselves when they travel. It is always a “do as I say, not do what I do” mentality in these cases.
Where was the opposition when the new hotel on Broad St was approved? Interestingly the argument for it was that Victoria is lacking 400-600 rooms:
https://biv.com/article/2023/05/chard-answers-victoria-call-more-hotel-rooms?amp
There was a policy vacuum with Airbnb – the new legislation addresses that. Other jurisdictions can address similar vacuums as they deem fit.
Good write up Ira, here are my thoughts:
1) Product differentiation in condos (location, amenities) drives a significant differences in value so comparing between buildings is almost impossible. You already mentioned that in the Aria versus the Falls as the Aria carries the “Humboldt Valley” premium (which has diminished now for part of the building due to the Telus tower). Same goes to what floor the condo is on but that should be normalized as you are doing the price/sqf over a year so the product mix of the sales should be similar between two similar buildings.
So really the only way to isolate the impact of the legislation is to compare prices in the same building pre and post announcement, how did the value in the Falls perform versus the Aria? Measuring this way will also eliminate any impacts from interest rates and general market conditions.
2) The people in the airbnb units who will sell at lower prices resulting in lower comps likely won’t be the people forced to sell. They will be the early investors who just want to cash out at a reduced profit. Think of the $250k 1bdrm pre sale buyers in the Union, after 5+ years of getting airbnb cashflow, selling for $400k now doesn’t seem like a bad idea. Unlikely someone who paid $600k last year will sell at a steep loss, they will likely try to list at $599k or something while trying their best to manage the mortgage inevitably chasing the market down in the process.
I expect many of the people against the Airbnb’s in Victoria have no problems with staying at Airbnb’s when they travel, and find them much nicer and better than hotels. If this is the case, why should Victoria’s downtown not also be containing similar Airbnb’s, confined to certain areas and buildings?
It seems arbitrary to have decided Airbnb’s are ok if owner principle residence, but otherwise is not OK.
I love Airbnb;s when traveling. I wouldn’t like the idea of staying in an owner’s home if the owner was there, or in his basement etc
Thanks Ira, very interesting. Could be some opportunities for buyers there perhaps if we have a lot of motivated sellers. will be interesting to see how many sell vs transition to long term rentals.
It’s hard to compare STR vs Non-STR since most of the STR buildings are unique in their locations and amenities. For example 595 Pandora, Union, Mermaid Wharf, Oriential, etc are all clustered in Old Town with no similar condos in that part of town except the newly built Pearl. Janion is obviously a one-off.
Falls vs Aria would be a good comp even though Falls has a pool/AC but you could argue Aria is superior in location and also has a concierge. Both come in at around $750 sq/ft on average over the last 5 years so not much difference in pricing there, in fact Aria is slightly higher (1.5%).
Astoria (751 Fairfield) vs Belvedere (788 Humboldt) is a good comp. 5 year average price per square foot on Astoria is $849 sq/ft vs $780 at Belvedere. Which is a 8% difference.
Legato vs 989, both around $825 over the last 5 years.
Here’s the numbers if anyone is interested. I have a spreadsheet with all condos in Victoria price per square foot 2018-2022 so if there’s another set you want me to compare let me know. As it stands, I don’t think the premium overall is as big as people think, maybe 5-10%.
There are enough desirable features in these buildings that they will hold their value without STR over the long term. Janion will probably be hit the hardest and we’ll likely see those microloft units go back to the $300k range. $400k+ was pure inflation from STR. The same goes for lofts at 562 Yates or 524 Yates with no parking going for $500-$600k+… those could be hit the hardest. Union also seemed like the sales got a bit out of hand there. GST is what’s going to hurt the sellers most in those other buildings if they sell and of course if there is mass panic selling. If we see 5-10 new units in each building for sale over the next few months, then that will bring down prices since it’s almost certain someone will “break” first and cash out at a big loss.
They provide much needed rental inventory. If we had enough rentals maybe it is neutral. We don’t. Not by a long shot. I would argue we need more of this inventory and not less until we have a lot more purpose built rentals because people need a place to live and not everyone can afford to buy.
Rental stock should be a priority. If government gets going and builds a huge amount of social housing/affordable rentals – which it should – rental prices should stabilize or fall and there will be less demand for private rentals.
In any event, I don’t think you need to worry too much about excessive demand from a swarm of “investors” competing with other buyers right now. Interest rates are so high and the probability of significant appreciation in the near to medium term so low that someone with money looking for a reasonable return is going to be investing in a GIC and not a rental property in many cases.
Nobody cares frank, you can see that via the lack of engagement on your posts. I only respond because while find your b.s. annoying but at the same time it is amusing to clap back because it’s so easy.
801 – 834 Johnson St (834, never had AirBnB zoning) sold June 6th, 2023 for $476,500. 542 sq/ft with parking @ $879 per foot.
Come on marko, you know you can’t compare an 8th floor condo vs a 3rd floor condo on a pure $/sqft basis. A true analysis would be to see the sales price change pre and post airbnb announcement on similar units in the same building.
The 3 properties I have sold, two on the mainland (in the early 90’s) and one in Langford (2017) were all bought by other investors, not end users. How many investment properties and owners are there? I guess you can blame (or thank) investors for the gains that owners currently enjoy.
For the resale market yes. Investor buying one unit adds demand and no supply. For the overall market it’s about a net zero, with investors moving one home from the resale to rental side. Investors buying presales is a net positive given that’s what finances a lot of construction (but we should still focus more on PBR to get the secure tenure for renters).
If it’s not a basement suite, the majority of mom & pop rentals are just extra demand, and provide nothing for nobody. Buying an already built unit and renting it out does not provide more units for rent, it just takes one away from the sales market. As Leo says, it’s pure demand.
Airbnb PD: How B.C. will police new proposed short-term rental regulations
https://vancouversun.com/news/local-news/as-municipalities-hit-roadblocks-cracking-down-on-illegal-short-term-rentals-will-the-provinces-airbnb-police-have-more-teeth
I could see it providing a bit of help. Basically a small blip of inventory and new rental units. Long term it will do next to nothing.
However I think you could argue that totally separate from the housing crisis the proliferation of unlicensed hotels deserved some kind of regulatory response. Perhaps not exactly what the NDP proposed though.
Won’t be a problem. Legato vs 989 Johnson. Juliet and Corozan vs 834 Johnson, etc. Will be able to match some stuff up.
I don’t know about 10% (in relation to other buildings).
311 – 760 Johnson St (Juliet) sold May 17th, 2023 for $526,000. 614 sq/ft with parking @ $857 per foot.
801 – 834 Johnson St (834, never had AirBnB zoning) sold June 6th, 2023 for $476,500. 542 sq/ft with parking @ $879 per foot.
I also own a unit at the 834 and it is an inferior product to the Juliet and in particular the location is very tough at the 834 being right adjacent the homeless shelter. I can’t see the Juliet selling lower than the 834 even without the AirBnb angle and if it dropped 10% it would be cheaper than the 834.
So Mississauga decided not to allow 4plexes on residential lots and Sean Fraser the housing minister sent them a letter that they’re not getting their $120 million housing accelerator fund.
Heat is being turned up
No such thing as a single housing crisis. It depends on your income. For the lowest income folks it’s always been a housing crisis. They were talking about the housing crisis 45 years ago in the Victoria paper. Single mothers not being able to find a rental, people losing their homes.
What has changed is that more and higher income people are facing the same challenges. Im not sure if there’s much sense in flattening the problem into crisis or no crisis.
For many people there is no crisis at all and never has been
Do we have a drug crisis?
We’ll have to find some comparably sized buildings that weren’t transient zoned. Janion is pretty unique with the micro units.
It did, in fact I wrote an article about it. https://www.capitaldaily.ca/news/victoria-airbnbs-disappearing-covid-rentals
How did all these Airbnbs survive the Covid travel restrictions and lockdowns? Business must have dried up for some time. I agree with Patrick that this new legislation will have a minor affect on the real problem. Too much demand.
This airbnb crackdown is just the latest “boogeyman” to be slain by the NDP government. Just like all the rest, it won’t help the housing crisis.
File it away with all of the other boogeymen they told us were causing the housing crisis… money launderers, unexplained wealth, “numbered” companies, hidden beneficial owners, foreigners, satellite families, second home owners. Each one of those crackdowns was praised on HHV and expected to move the needle, which it didn’t. And so now we need a new one…. licensed STVR owners.
All for the government to distract from their failures to act on their 2017 promise to build 114,000 homes. https://www.policynote.ca/housing-promises/#:~:text=During%20the%202017%20election%20campaign,through%20partnerships%20over%20ten%20years.
“During the 2017 election campaign as part of its plan to make life more affordable, the BC NDP promised if elected to “build 114,000 affordable rental, non-profit, co-op and owner-purchase housing units through partnerships over ten years. These homes will be a mix of housing for students, singles, seniors and families and will range from supported social housing to quality, market rental housing.”
“Four years after the release of Homes for BC, it’s hard to see much progress on housing affordability in BC.”
Of course they’re not – nor did I say they were…and I don’t know about where the opposition in Ottawa is coming from, that hasn’t been a priority for me. Do you though seriously think the opposition in Victoria is mostly just the neighbours and there isn’t an element here driven by the other factors I mentioned? (without calling them “left wing wackos”…sigh) We’re as a society in an increasing divide caused significantly by housing and by the system no longer working and leaving too many people out. As I’ve said several times on this site.
Anyways – I read that article you linked, about a bunch of criminal shooters. It describes their sordid escapades in detail. I think there’s one line that mentions they were in an AirBnB – what is your point? Seems like you’re conflating a bunch of stuff that doesn’t hang together, sorry. Do you think people who stay in AirBnbs are largely criminals?? Most of them in Victoria are surely just tourists. In the downtown/Chinatown area where a lot of those AirBnbs are, I’d argue their presence as tourists actually contributes a certain vibrancy that counters other elements.
I think out of those, the juliet and falls will fall >10% for the 1 bedrooms.
Problem is this new legislation shut down regulated taxed units; the COV alone increased the yearly licence fee to $2,500/year before this new legislation.
I agree, they are well known AirBnb buildings; however, they never sold for substantially more than similar non-AirBnb buildings.
What I am trying to say is it’s not like you remove STR from the Juliet and all of a sudden the value drops below the market value of a less desirable building that never had STRs in the first place.
Also, tough to say how this plays…..Leo wrote on something very similar a few weeks ago -> https://househuntvictoria.ca/2023/09/25/what-happened-to-those-rental-restricted-condos/
Value might fall because of interest rates/market and a potential increase of supply (which will impact all condos) as a result of this legislation which shouldn’t be confused with loss of value due to loss of STR use. I am sure in a year or so Leo can account for all these factors and let us know how these buildings are performing in relation to buildings that weren’t previously Airbnb buildings.
I wonder how many neighbors of Airbnbs who complained loudly about one on their street have used them while on vacation. People are such hypocrites. I wouldn’t want one near my place. I also wonder why it took over 10 years to do something about them.
You know Peter, not everyone with views different than you is a left wing wacko who wants to “stick it” to those better off. I can tell you that opposition to AirBnB in Ottawa is very much homeowner driven. Not wanting an unregulated, undertaxed hotel operating on your street does not make you some kind of nut. Read this, it got a lot of coverage. So did those fire deaths in Montreal.
https://www.cbc.ca/news/canada/ottawa/gilmour-street-airbnb-shooting-guilty-1.6482019
That’s typically how things work though… it’s human nature
I don’t know, Juliet, ERA and Falls are fairly well known Airbnb buildings, they just happen to also have a substantial amount owner/occupiers as well. I guess it will be interesting to see the transaction values pre and post announcement.
fair enough, I’m sure a lot of those folks have a legitimate axe to grind. I’m just saying when you look at the vast public groundswell support there seems to be for these airbnb restrictions, it goes beyond those neighbouring homeowners you mention (it has to, it’s too big otherwise) – I think a lot of it also comes from people who have lost out in the current environment, have trouble getting housing, can sometimes tend to seize on easy scapegoats even when doing so just ends up hurting other people, and will happily vote for a government that gives it to them and sticks it to someone even slightly better off. The airbnbs became a lightning-rod for a great many things, and not always fairly.
Possibly, but it is going to be case by case as to what expansion mean and whether this gets narrowed down to specific units in a STVR building or if one STVR in a building means that the use has been continuous for the entire building rather than just the specific unit given the wording of 528 (5)
My read is that this could indicate that one STVR in continuous use in a building permits all to be grandfathered going forward, which would include the right for other units to get STVR licensing even when the bylaw changes – absent provincial law to the contrary.
Those buildings yes as they won’t see a substantial hit on market value. However, would be interesting to talk to an owner occupier in a building that will see a substantial hit on market value and the short term rentals will he replaced with long term rentals, for the most part.
Mortgage rates going up again next week?
This has already been addressed thought. Those buildings were 75% of the neighbors were against AinBnB already had their bylaws amendment not to allow AirBnB.
Just like many buildings are increasing their minimum age restriction to 55 to get around the strata act legislation.
Right. So say in 2018 when transient zoning was removed, there were 20 airbnbs in a building. Now there are 40. That means the scale of the non-conforming use has been expanded which is not allowed.
Can confirm, owner/occupiers in the Astoria, ERA, Juliet and Falls in particular absolutely love this!
I wonder what country Canadians could flee to if war and devastation broke out here. Greenland?
Not going to touch this one, Leo?
Wrong. A very significant number of those against AirBnB are neighbouring homeowners, particular condo owners, who don’t want the security issues and wear and tear associated with STR.
My thoughts on this specific argument… makes no sense. However, what the Community Charter states is that grandfathering is a use it or lose it proposition.
528
I would think this would apply to the entire building and not individual units though as 528 also states:
So additional units becoming STVRs may be permitted if other units in the building have been STVRs and there has been no six-month lapse of this use for the whole building. Not sure though.
“Experience keeps a dear school, but fools will learn in no other” – Ben Franklin.
This is set out in 530 of the Community Charter Leo:
Restrictions on increasing non-conforming use of land
530 In relation to land, section 528 [non-conforming uses] does not authorize the non-conforming use of land to be continued on a scale or to an extent or degree greater than that at the time of the adoption of the land use regulation bylaw.
Your rights are only up to what was legal prior to the change in zoning. You cannot expand.
It wasn’t but is now – thanks.
What are your thoughts on the argument that the non-conforming uses have to continue “unchanged” and one could argue that non-conforming use in this case has expanded because the number of units on Airbnb have expanded?
Until our vacancy rate exceeds at least 3% I would say we need all the rental properties we can get and stop picking on landlords because it makes no policy or fairness sense and deflects attention from where it needs to be. Everyone is never going to own and everyone needs an affordable safe place to live.
It is long-term renters that are the most disadvantaged group here. Focus your attention on the right target – government failure to invest in publicly funding rental housing for the last 20 years. The housing crisis was foreseeable and I’m willing to bet there are MANY policy briefing memos on this going back at least a decade.
Still there, not showing for you?
Yes. And there is no “Municipal Act” and there are a multitude of legal property rights. These rights are clearly set out in legislation and case law and our laws do evolve over time, but legal property ownership comes with a bunch of legally enforceable rights and limitations.
The Municipal Act was changed to the Local Government Act in 2020. And there is a legal right to retain a non-conforming use under the municipal legislation that applies – which is the Community Charter. It states specifically:
Non-conforming uses: authority to continue use
528 (1)Subject to this section, if, at the time a land use regulation bylaw is adopted,
(a)land, or a building or other structure, to which that bylaw applies is lawfully used, and
(b)the use does not conform to the bylaw,
the use may be continued as a non-conforming use.
https://www.bclaws.gov.bc.ca/civix/document/id/complete/statreg/r15001_14#division_d0e44295
Only the Province can remove non-conforming uses that have continued unchanged over time and are not subject to the Community Charter exceptions. The Province will likely be subject to legal challenge. Not sure of the merits of the case but the province will have had a legal opinion on why this change is required for public policy reasons (housing crisis) before making this move and is clearly up for it.
What happened to the mute button?
Yes, we all realize that you’re an absentee landlord, part of the group of people who’s making it more difficult for people to actually afford to buy a place in the city they live in. Thanks for nothing.
Under the Municipal Act they can change zoning and permitted uses. But in Canada there are no “legal” rights to property.
Zoning bylaws are regulations on use, not “legal” property rights and under the Municipal Act the city can change zoning and permitted uses.
Want to double down on this one?
I said he had 6 months to unload. I don’t know what clip you are watching but the man specifically said people/companies buying up multiple homes to airnbnb and leaving them empty for part of the year is the problem they want to address. The man also clarified that they are not incentivizing bringing airbnb’s back to the LTR but instead they will be taking action to do so in the fall. Not sure how much more clear it can get.
Super nonsense response. Legal property rights are ones that are attached to the property ie. zoning. Munis can’t remove these rights most of the time due to case law and grandfathering rights, although the province can subject to legal challenge. Charter has nothing to do with anything here.
Just out of curiosity Totoro what are you referencing when you say “legal property rights” Obviously not the Canadian Charter of Rights.
This clip was from six months ago. He bought a year ago. A year ago this was not the conversation and even if you watch the clip I think the message is clear to illegal operators but not to those who are properly zoned. In my view you do not take away zoning, the fairer move is to grandfather existing use and remove upon sale or transfer. However, I do understand that maybe there are just too many of these legally zoned units in Vancouver and Victoria currently. Still, I don’t think your average owner of a legally zoned STVR would have thought they’d lose this.
https://www.youtube.com/watch?v=xbok_dwfrDI
If the only way your investment worked was through airbnb and you watched this thinking nothing was going to impact your business then you are not “reasonably well-informed”.
The units were licensed and legally zoned for STVRs I thought? Definitely some risk, but most reasonably well-informed people did not think government would move to remove this zoning. I know I did not. So many other units operating illegally – seemed like the most likely target to me. The drastic impact on legal property rights is something I don’t support – and I don’t own one of these units.
I increase rent regularly because my costs go up over time and I want to protect against huge gaps as much as possible where tenants stay long term. BUT I tell every prospective new tenant that I do this and to expect it and that it’s nothing personal – before they sign the lease. I did have some excellent tenants leave once (they were inherited) but then the new tenants I got are just as excellent and pay significantly more than the ones who left. So yeah I will be increasing in 2024 (with proper notice) and I know no one will like it … but it must be so (that just how I operate).
Do you think the average airbnb “investor” would be able to grasp that concept? The sob story in the media is a perfect representation, someone with the advertised skillset of:
“With my business background I specialize in helping business owners and investors determine the feasibility of a purchase or a sale and can help with forecasting and scenario planning.”
“our resident business guru, with a background in finance and marketing, and solid experience analyzing income statements and creating profitability projections.”
Proceeds to buy an airbnb last year in a rising rate environment and did not unload when Ravi literally said in April of this year that they will be cracking down in the fall. Not to mention spending capital to decorate the place like “Friends”, lol I would love to see the ROI analysis on that investment.. But somehow very quickly calculated that he’s unit is worth 150k less…. just full of b.s.
There was also a strong lobby of folks well connected to the provincial Liberals pushing for rent controls to be abolished back when they were in power.
Successful governments find ways to keep the fringe elements in check and govern in the centre.
I’ve owned property in B.C. longer than some of you have been alive.
Not only that, but he seems to be unaware that his home Province of Manitoba already administers a system of vacancy control.
Leo, looking at various metrics (as far back as they go), when would you say that Victoria entered into a “housing crisis”?
Totally agree with all of this.
Frank, you don’t even live in B.C.
I believe I said $3,800/month. A few problems here
i/ We are heading into winter when rates fall.
ii/ Changing from STR to LTR may trigger 5% GST, change of use. ***Please consult an accountant.
Personally, if I was wanting to keep the unit I would look to LTR it sooner than later. As I noted before two big rental towers approaching completion. You also have the MOD approaching completion and I am guessing another 30 units come up for rent there from smaller investors, etc. It is kind of like the perfect storm coming up.
All the STVR owners are going to be in for a big surprise when they convert to long term rents and will have to pay GST on the market value of their units. Change in use will trigger the GST.
I think this is what is being missed in this whole AirBnB legislation that I find concerning, imo. The government took away legal LICENCED use away from property owners. The COV just increased the business licence fee for short term rentals from $1,500 to $2,500/year before this legislation came in.
Which makes me think literally nothing is off the table going foward in terms of property rights.
The numers currently make absolutely zero sense, but I view rental properties as a 20-25 year investment. I think the next 6 to 18 months will be very tough but I am not concerned about the long term whatsoever.
i. Housing shortage will literally never be addressed in my lifetime. It just moves so so slowly. This is a YouTube video I made over 7 years ago about using AirBnB as a scapegoat and not addressing other housing factors and and where are we today? https://www.youtube.com/watch?v=qP5QF6fLAWI&t
ii. Either rates come down or wage growth continues. I have two of my condos rented to navy personnel that make $6k/month which isn’t a lot, but the both of them are born in the early 2000s! I recently rented out one of my places to a nurse that graduated this year and on the application she put get wage down as $45.13/hr. I am not worried about being able to rent a place in Victoria, long term. My parents haven’t had a vacancy in their suite in 25+ years.
iii. Immigration will continue while we don’t build enough.
iv. Etc.
I mean hypothetically even if zoning/permitting/bureaucracy was sorted out overnight who would build all this housing? Then it would take another 20 years to sort out immigration to bring in immigrants with skills relevant to building housing. I see this firsthand as well, all young Croatian immigrants in Victoria that have desk jobs have their permanent residency. My two friends working skilled labour on construction site in Victoria 7 years later still don’t have their paperwork. There are too many problems to fix and not enough appetite to fix. You can follow BC invitations here which I take a look at every few weeks and trust me immigrants won’t be building our housing anytime soon -> https://www.welcomebc.ca/Immigrate-to-B-C/Invitations-To-Apply
Sure, maybe we get a flood of short term rental units on the LTR market and rents in the next 12 months fall from $2,000 to $1,800 but given we aren’t actually solving actual problems we will be back at $2,500 in 5 years.
Same when I was a landlord. If you are running a larger business obviously it would be important to maximize rents. If you are renting a unit in your basement as I was, other considerations come into play. Doubly so when the extra money is a nice to have rather than strictly necessary to pay the bills at the end of the month.
Fair enough. There is a strong lobby of folks well connected to the provincial NDP pushing vacancy control. I am unaware of much lobbying well connected to the federal Libs or Cons pushing for 100% capital gains inclusion or removing the F in TFSA.
Probably what saves us in the short term from vacancy control is a housing downturn that takes a bit of pressure off vacancy rates and rent.
If you have a good tenant the small increase doesn’t seem worth it for a lot of landlords. The increase permitted in no way keeps up with market rent increases. The allowable increase was 2.6 per cent in 2020, zero in 2021 due to the pandemic and 1.5 per cent in 2022.
Yes it is cumulative, but unless you are renting to long-term renters for a period of more than five years I always think it is better for the tenant who is paying after tax dollars to have this small benefit than me who has to pay tax on the increase. I agree that is probably not the way to handle it, but it is what I do as well.
Yes. The private market is never going to provide new affordable housing. Land and construction costs are too high. And purpose built rentals are way more secure than private market rentals. Other countries manage this better. https://www.huffpost.com/entry/vienna-affordable-housing-paradise_n_5b4e0b12e4b0b15aba88c7b0
Probably never going to be like Vienna here but hopefully the federal and provincial governments start working together on this.
Yeah, but I think this is a whole different category of remoteness. The possibility of increasing capital gains tax to 100% is like, say, oh, pretty much ZERO. Whereas I’d see the possibility of vacancy control as more like 20% and rising. One may quibble about whether it’s 20%. But I don’t think it’s anywhere close to zero.
LeoS: Housing ministers come and housing ministers go. Risk is a matter of probability times impact.
Obviously for a number of people that bought grandfathered units recently, according to the city decision on AirBnB, they miscalculated the risk of the Provincial government taking an almost unprecedented step of removing grandfathering of zoning just confirmed a few years previously by the city.
Of coarse, telling these investors that anything is possible and just too bad is how things just happen might be rather cold comfort.
Never understood this. Yes I understand that once you have a good tenant you don’t want to antagonize them, but the whole point of rent stabilization is to avoid big jumps in rent when demand surges / costs increase. Would the tenant really have left if you bumped it by 1-3% every year? And are you doing the tenant any favours by not increasing their rent and then being forced to sell by a surprise jump in costs?
Especially at the new lower rates of allowed increase, landlords should be raising by the max anytime market rent is above the rent paid. That’s what we see the big management companies doing. Prudent IMO.
Housing advocates should come up with ideas to build more rentals, not inefficient ideas to redistribute the existing stock.
IMO the average rental investment has always been dubious in Victoria, but eventually investors made bank via appreciating house prices.
https://househuntvictoria.ca/2020/11/16/returns-in-the-investment-condo-market/
Everything is a possibility. They could increase the capital gains tax to 100% tomorrow or start taxing TFSA withdrawals. Do I worry about that in relation to my equity investments? No.
So far from the conversations I’ve had, I’m pretty confident that Ravi is competent and won’t do any obviously dumb things on housing. I wouldn’t have the same confidence for Jagmeet who has floated plenty of very bad housing ideas.
I’m just confused as to how the rental numbers work in Vic. Like Marko, I’ve never increased rent, but with the interest rate changes I’m either selling or moving in next year. Rentals with a decent mortgage will not make any sense in the next couple of years (barring a decent drop in rates).
Very few landlords would stick around to play that game. The likelihood is that the government is introducing this at a time where the economy is turning down anyway. If that’s the case, they will be worsening the situation, as falling prices will collapse new construction.
Not really a problem I’m concerned about. Maybe it’ll turn all those short term rental hosts into housing advocates to build enough rentals and maintain a healthy vacancy rate.
Yes. With all respect to what Ravi said previously about “shooting this down” – if you were an investor contemplating buying RE in Victoria to rent out, in my view it would be dumb to ignore the possibility of vacancy control coming in at some point. While not point-on-point, it would be somewhat analogous to an AirBnB investor not taking into account the possibility of an adverse rule change. And both situations share this one basic fact also – property rights are not enshrined in the Charter.
The absence of vacancy control, I think, will increasingly be viewed as a “loophole” and surely it’s not hard to see a vocal segment of society clamouring for it (already happening) and a government acquiescing or even championing it at some point. The same basic constituents that ended up painting an AirBnB owner as some horrible human being, or that impose a rental cap which never ever keeps up to inflation, or that think it’s fine for tenants to just stop paying rent during a real crisis like covid (pinning that on that one landlord rather than having taxpayers as a whole pick up the tab).
My views on this are admittedly coloured by our last experience as landlords, where the tenant during covid threated to stop paying rent (didn’t follow through thank God) all while complaining about how I never asked her how her investment portfolio was doing. I’ll never be a landlord again.
And yeah, I can in fact see how different this all looks from a tenant perspective, I realize they have to deal with evictions, renovictions, all the games landlords play.
Just saying I will never do it again, and that ignoring the possibility of vacancy controls is folly in my view.
Marko said he can get 7k a month instead of 3k. So do that as long as u can until get forced back to LTR. Really depends on what the friction costs are.
As usual another absolutely clueless take. True or false, more bylaw officers are able to better enforce and give out more parking tickets, more CRA agents would be able to audit and assess more tax returns and increase therefore increase collections? As long as the marginal cost is less than the marginal collections it’s accretive, and in this case its measured both in dollars and supply.
Stick to immigration frank or maybe go offer 100k above asking for a unit in the janion.
$150,000 list price drop expected on this Victoria downtown 400 sq. foot condo.
https://bc.ctvnews.ca/airbnb-operator-says-he-s-facing-losses-of-hundreds-of-thousands-of-dollars-because-of-b-c-s-new-short-term-rental-laws-1.6605986
“As a result, he says he’s forced to sell the loft unit, but plans to list it for $150,000 less than he bought it for a year ago “
Looks like the unloading has officially started now:
https://realtor.ca/real-estate/26190917/210-528-pandora-ave-victoria-downtown?utm_source=consumerapp&utm_medium=referral&utm_campaign=socialsharelisting
https://realtor.ca/real-estate/26190154/311-409-swift-st-victoria-downtown?utm_source=consumerapp&utm_medium=referral&utm_campaign=socialsharelisting
https://realtor.ca/real-estate/26190703/1701-707-courtney-st-victoria-downtown?utm_source=consumerapp&utm_medium=referral&utm_campaign=socialsharelisting
And if they opt out, why would anyone return to STVR rentals? Because if the rate falls below 3% again, they’re likely prohibited again.
Little discussed, but I like the clause in the new regs that allows a municipality to opt out of the AirBnB ban if they have a rental vacancy rate of at least 3%. This correctly identifies that the cause of the problem is scarcity. There’s no issue with AirBnB if there’s enough housing.
To answer my own question, the Bed and Breakfast regulations already require the owner to live in the property as their principal residence. (suspect that this is often not the case.)
Banning SVR’s may end up reducing the supply of new housing. Developers won’t build unless they can make a profit. If banning svr’s lower selling prices of condos, this will make it less likely developers will proceed. Cities like Toronto are seeing many projects be cancelled, and that’s just from the higher costs to build. Add less demand and falling prices to that high-cost development scenario and that’s the end of the dreams to “build, build, build.”
First, I absolutely agree that vacancy controls are a bad idea. But my point was not about the policy but rather the attitude that has developed in a segment of the political elite. Anyway, I am busy with my first sips of coffee.
On a completely different note, there are a number of Bed and Breakfast places in Victoria. Things like the Dashwood Manor or Abbeymoor Band B. I suspect that the owners do not live in these boutique hotels. Do the new regulations apply to BandBs or are they zoned by the city as hotels?
Vacancy controls reduce rental supply. BC used to have them you know and I can tell you it just made a bad situation worse. Some renters may think it’s a good idea, but the NDP has the renters’ vote anyway. May I suggest that the STR restrictions were bought in because STR actually reduce LTR supply, and this government wants to increase LTR supply.
We just got a boost to future rental supply with the elimination of GST and PST on purpose built rentals and the last thing the government would want to do is see that go down in flames because they brought back a bad policy
Never said he was a bureaucrat and he is not one. Nor was this a discussion within government. I am not saying they are going to do this but it is a popular theme in a lot of circles.
Personally, I dont really care and I suspect that most of the population in BC could care even less. But there are a lot more tenants than landlords.
I am surprised at exactly how popular banning AirBnB has been and that has made me think that maybe vacancy controls might actually be considered. If rents continue to be high exactly what does the government do next?
I am not sure what there is left to try at this point? I absolutely agree that the government has specifically rejected vacancy controls up to this point. And they may well continue to do so.
But there a lot of people that think they would be a good idea.
It’s called vacancy control barrister, and it has repeatedly been shot down by this government. Senior bureaucrats are usually extremely careful not to divulge the substance of internal policy discussions, which are confidential, to folks outside government.
I think you’re just trying to stir the pot again.
The govt should let the dust settle from this first piece of disruptive legislation before introducing more disruptive legislation. I want to be able to trace impacts to one cause as much as possible.
LeoS This is not banning an increase, no this is completely different. It is limiting the amount of an increase. Capping it to a fair amount just like rent control does.
We have an affordability CRISIS and crisis is a magic word in politics.
Actually I suspect that this would be extremely popular more so even than the limitation on AirBnB.
I sure Hope if they limit increases to between tenants that they establish first a base fair market rate for each size unit. I tend to give increases regularly. Partly because when I was younger living in Ottawa I went to a party and the original tenant had been there for 15 years and was paying an insanely low amount for the unit. He’s have new roommates move in and out and his landlord never gave an increase. I always think about him and the possibility of tenants staying for a decade with no ability to bring it up to market and then imagine trying to sell. So the increases between tenants – that might mean that some places are frozen in market times from like the 90s – forever? Didn’t New York try this and it turned into a disaster?
I don’t think so. Ravi just shot this down at UBCM
Rental registry= More bureaucracy. More government workers. More provincial debt. Great.
I’ve never given a rent increase to a tenant in my life…..if this was brought in I would be sending a 3.5% or whatever the max is every single year to every tenant. Given the popularity of this AirBnb legislation nothing would surprise me anymore.
And assigning people appropriately to the housing based what is a learned panels assessment of the proper contribution the person makes to society, their loyalty to the party and advancing the movement……
I guess Horgan was able to keep a pragmatic cap on the nuttiness to govern for a bit, but the batshit crazies must be feeling emboldened now ready run us back into the incompetence of 90s in BC again since the other side fumbled themselves into a split vote and are showing no ability to mount a reasonable alternative to what’s in power now.
Frank: Rental registry I would guess.
How would they know what the previous renter was paying?
I was chatting the other day with a senior government policy advisor. There is serious thought to limiting the amount of increase when a new tenant is being brought into a unit. Banning all increases is perhaps a bridge too far but placing a ceiling would be popular. The ceiling would be determined annually and the first year or two would be generous. He said that it would be like boiling a frog with increases being reduced over time because of the affordability crisis.
Briefly, I did suggest that this might slow down investment. I was a bit surprised when he said that a slowdown in the private sector would simply highlight the need for more government built housing which is the way we should be going in any event.
It was an interesting conversation.
Well that’s a separate problem but as long as they’re not actively stopping homes from being built I’ll take it
As I’ve said, if I could go down to the COV and get a stock plan permit for a 6-plex in two to three weeks I would buy a missing property middle right now and pull the funds out of a GIC. With the bureaucratic uncertainty just not worth it, might as well let the funds sit in the bank collecting interest and do nothing.
Based on comments regarding the short-term rental ban I get this feeling that a lot of people would be happier to see a developer go bankrupt versus something be built in their neighbourhood. The greedy developer would suffer.
The comments on this AirBnb thing are funny, but sad at the same time -> https://www.reddit.com/r/VictoriaBC/comments/17aqyrb/new_rules_for_shortterm_rentals_in_bc_put/?sort=new
“Another point these greedy husks of human waste fail to realize is that we now have to fund massive housing supports through our taxes just so Brenda can afford to sneer at the passers by while she eats her mini cucumber sandwiches at the Empress, which she will do alone, for the rest of her miserable life.”
“Allow me to find a microscope, so I may locate & play the world’s smallest violin for her plight.”
“LOL oh no, you poor boomer. I can’t imagine how difficult it must be for you to not be able to contribute to a worsening affordability crisis you and your peers created. I am absolutely devastated that you’ll be forced to make a decision that will allow renters to secure a roof over their heads. How could the NDP do this to you?!”
In the end the policy is just going to end up as the government shooting itself in the foot (populist measures are seldom good policy, which the short term rental legislation is). It’s the bureaucracy and the approval process that stops the timely, efficient and cost effective construction of homes. The system needs all the investment it can get to build these things called homes. Trying to regulate the winners and losers on the investment side will just pull money out and end in fewer homes being built (compounding the problem). The solution is actually more investment and building more homes. It’s a scale problem and not a redistribution of limited assets problem. Want to take the profit out of short rentals? Well, have a bunch more short term rental properties then they will be looking to rent as long term because there’s too much competition for consistent revenues in the short term market. Also, just let developers over build, let them have the risk and just get out of the way.
Yeah. It is a very weird exemption.
This legislation just created another unit in the BC Government so on the bureaucracy front things got worse, no? Watch the COV lose $1.5 million in short term rental licence revenue and not lay off a single person.
This is why I’m long term optimistic on housing reform. All it takes is for the majority or a loud minority to feel disenfranchised by the system and they will have the political influence to change it.
The reason we have the system we have is no accident. It was put in place by voters and owners who didn’t want to see their neighbourhoods change and benefited from the housing shortage at the same time. You can see it as bureaucracy gone wild that it takes 14 consultants and 6 months to figure out whether you can cut a tree down, but that’s the intended outcome. Not through some mastermind evil design, but by the layering of a million processes put in place to address concerns by voters that didn’t like some development
That works until the other side becomes more influential.
I don’t know if owners going to the media with an emotional appeal is the correct approach here…..you have to read the room and there is overwhelming support for this legislation. I think the only logical angle here for owners is to pitch infringement of property rights, imo.
The more comments I read on various platforms seems to me that a large chunk of this overwhelming support has to do with “sticking it to greedy investors.” This is just a brilliant lesson on politics. The government restricts supply over the course of the last 20-30 years with poor policy creating a housing crisis. Then turns one group of people on another to deflect attention.
Also, back to the example I’ve been bringing up for the last 5 years on HHV. An owner with a entry level SFH with a suite is the evil landlord that should pay capital gains on the suite portion of the home. Someone that owns two small condos and rents one out is a greedy investor, etc.
Middle aged couple living in a 6,000 sq/ft home on a 20,000 sq/ft lot in the Uplands that paid $2 million for their home that is now worth $4 million which means they can pocket $2 million tax free appears to be the least likely to receive any negative attention whatsoever, while consuming the most housing and walking away with the most profits.
Even better, down the street from the 240 sq/ft units at the Janion we have people living in $10 million dollar units at Custom House with a 10 year tax break -> https://www.timescolonist.com/local-news/10-year-tax-holiday-for-buyers-at-customs-house-draws-fire-4659552
So we have the power and legislation to take away someones right to short term rent their unit but we can’t withdraw a tax break on $10 million dollar units. Interesting.
Let me build on that a little more: https://ca.linkedin.com/in/steve-nguyen-6b35a937
According to his linkedin, one of his skillset is: “With my business background I specialize in helping business owners and investors determine the feasibility of a purchase or a sale and can help with forecasting and scenario planning.”
According to his company website he is: “our resident business guru, with a background in finance and marketing, and solid experience analyzing income statements and creating profitability projections.”
https://www.vret.ca/about
From: https://bc.ctvnews.ca/airbnb-operator-says-he-s-facing-losses-of-hundreds-of-thousands-of-dollars-because-of-b-c-s-new-short-term-rental-laws-1.6605986
Building on the theme of the day.
Absolutely.
I am willing to bet that lady is now regretting trying to sell a sob story with her actual name.
Barrister- Rob a bank, maybe you’ll be cell mates.
I have been trying o get in touch with Gregg Martel so that I can start investing with him. Any idea how to contact him?
The lady has four units and only a million in mortgages. Even at a bargain price she should get 350 to 400 a unit. So she will cash out at about 400K to 600k. Doubt if she lost anything.
I’m willing to bet there’s some overlap here
I think that is a fair response. If you buy a house with an unauthorized suite you are taking a risk. I agree it is how a lot of families get in the market, but it is not a secure tenure at the outset.
I think we will see it earlier – by February. If you are airbnbing a non primary residence, and many people who have a secondary vacation place do Airbnb, you’ll be heading for a plan b now. Couple of viable options if you are subject to the vacancy tax and have a mortgage are long-term rentals, room rentals, or selling.
I think this will roll out like covid times did for rentals – prices will drop as selection increases. What happens when over, what, 2000 units (?), come on the rental market over the next year? Students will have an easy time finding furnished rentals in September I expect.
Damn, good reply!
Not as bad as investing with Greg Martel.
I would say it is a much bigger problem than Canada, but people don’t talk about it as much. They just leave the country for a better opportunity. There is plenty of housing in Croatia but it is where people don’t want to live. Everyone wants to be in the cities and there is very little available housing both for rent and sale.
Certainly nothing to do with value. People in Croatia don’t play the real estate ladder. They buy a condo for their family of 3 or 4 and they live there until the kids finish university + longer. Selling a condo to buy a house is not a thing there.
Other factors at play, people don’t trust the government to spend the money efficiently so a lot of them are at adverse to taxes, I think.
Yearly property taxes in Croatia is a huge no go, any political party would immediately be voted out of office, but I can’t even convience people on a 1% vacancy tax. It’s really odd.
It’s likely because they don’t have a problem with finding people housing. The population of the country is shrinking, not growing. Also seems like more of these people are basing their income on these properties. Same as the 4 unit janion lady, I’m sure she thinks it’s all shit too.
Super interesting. Do you think it’s because despite high prices everyone is basically an owner through family or whatever so most people would lose from a decline in value?
I think the shift in sentiment here is due primarily because there are more and more people that are shut out from housing and are angry about that. For the longest time those voices were a small minority and people were happy about being able to jump on the housing train and ride it up
That’s my interpretation. Reporters kept asking me about why not a full ban and I’m like why would we restrict a use that’s never going to lead to a long term unit hitting the market? Nothing wrong with Airbnb while you’re away. Over 6 months you get the spec tax anyway
The wisdom of an investment decision is not determined by the results though. Going all in on Airbnb (or any other risky non-diversified investment) with all your retirement money is a bad decision, even if it works out financially.
You heard it here on HHV first, people had like 3 months since I gave the first warning. Hopefully"airbnb4me" was able to unload 🙂 LMAO
Just from some contrast as I spend more time these days on Croatian discussion forms and those who follow me on YouTube have probably seen more of my content switch to Croatian.
Zagreb, Croatia – 373,000 thousand housing units
54,000 out of those 373,000 are sitting vacant.
20,000+ short term rentals out of 373,000 (there is NO INCOME TAX on short term rental income, only a 40 euro per year licencing fee).
Decent condo is like 1000 euros per month to rent while average salary is 1200 euros….people are leaving the country (population has dropped from 5 million to 3.9 million in the last 30 years).
I go online and try to suggest some of the concepts I’ve seen here so I am like “hey, I think we need a 1% vacancy tax in Zagreb, and I think short-term rentals should be taxed at the same rate as long-term rentals (approximately 18%)” and people just chew me out like I am nuts.
“You know Marko people worked hard for their properties, and if they want to keep them vacant they should be able to without more bullshit government taxes.”
The contrast in politics/mindset is just insane. There appears to be no middle ground.
You are 100% right and I have to give NDP credit, an absolutely brilliant political move. Insane support, very few people pissed off (<1%).
Throw in a real estate market being suffocated by interest rates, a number of large rental towers months away from completion (Bosa @ Dockside is over 100 rental units, Cox on the corner of Johnson and Vancouver is over 100 rental units, etc.) we actually might see some downward price pressure on prices/rents as the election rolls around…………only to be in a housing diaster a few years from now as we did nothing to address supply. Interesting times for sure.
That is what I said before. The likely scenario is that she is living in a rent controlled apartment in James Bay and doing an arbitrage with airbnb plus collecting her DB pension if she is actually retired now.
Why May 2024? the timeline should be appropriate for the amount of work involved. The airbnb legislation gave owners ~6 months to decide whether to sell or rent long term. So if the choice was to bring it up to code then I think the appropriate time would be like at least 1 year or more. You can’t please everyone with any choice you make.
Okay fair enough and how many people would be able to bring their suite up to code by May 2024? What about the ones that can’t bring the suite up to code? (ceiling too low, etc.)
Sure, if you don’t mind packing up your personal belongings and have a stranger move in for couple months. I am sure it’s not everyone’s cup of tea but if you don’t mind that part then its a great set up. I am guessing basement suits in cook street village, fairfield, james bay and fernwood would also benefit from this as they are the only alternatives compared to a hotel now.
A more accurate comparison would be “you have x months to bring your suite to code or else you cannot rent this out anymore”.
How much did she pay and how much is the market value on these units currently? She might have seen massive capital appreciation, we don’t know.
Over the last 4.5 years I’ve struggled a bit with Airbnb long-term when I go away in December as I am competing with all the full time STVRs. A summer month I’ll get around $7,000/month and December I’ve usually had to drop to $5,000ish/month. With 90% of the competition eliminated will be interesting to see if that $5,000/month moves up December 2024.
For everyone action there is a reaction and I think this might be a bit of an opportunity for people who have a condo principal residence and like to travel. If you go to a cheaper country, you can almost pay for your travels with Airbnb long-term or VRBO or whatever.
COV limited to 4 rentals per year? So technically you could do AirBnb long term for two 60-day terms and two 30-day terms (or some combination) and still meet local laws and maintain principal residence. If I am interpreting everything correctly? As far as giving AirBnb info, I don’t know what the issue is, I’ve always claimed and paid tax on my rental income.
We need financial literacy training in schools.
Most basement suites in Victoria do not have a permit in place. If the government immediately shut down all secondary suites without a permit at municipal hall would an okay argument be “well you knew when you bought it the suite was unauthorized, tough luck, shouldn’t have relied on the income?”
Because AirBNB’s business model claims that the owners (called hosts) rent a spare room in their house. That way, they can avoid rules and taxes associated with running a business. In practice, the owners are running a business and they are not hosting visitors but selling hotel rooms. The governments have every right to regulate them as businesses and where those businesses can run.
Yeah that’s a silly argument from the people upset about the ban. Tons of people would be happy with a small apartment because it will be less money to rent.
Generally I’ve found InsideAirBnB accurate but there does seem to have been a step up recently in these numbers. Used to be under 4000.
Also important to apply the filters to get closer to the numbers that are actually an issue.
4735 in greater victoria but
Whole home only: 4107
Only actual short term (less than a month): 3568
Remove zero nights booked: 3007
Actively booked (90+ nights/year): 1881
Also the hosts on the list below have not had a good week.
Can there really be this many Airbnb units in Victoria? http://insideairbnb.com/victoria
Or, in Frank’s world: “Trudeau likely to cut interest rates.”
‘Next move likely an interest-rate cut’ — What economists say about the latest inflation numbers
https://financialpost.com/news/economy/inflation-cools-in-canada-what-this-means-to-canadians
My co-worker looked at a one bed in there summer 2022 and was asking $999k. Currently a similar unit (about 30sqft smaller and no deck)is asking 745k
https://www.realtor.ca/real-estate/25868094/411-521-courtney-st-victoria-downtown
My opinion if I was government would be that because in the former the Owner is living in one and renting out a separate legal dwelling and in the latter the owner is living and renting out one legal dwelling. If you owned an entire duplex or 4 plex then under the current legislation you are not allowed to live in one and rent the others as an airbnb so same concept.
Does it suck that government can change legislation that has a negative effect on your business, of course. Should a prudent investor have seen this coming over the past 12 months, absolutely. Leveraging yourself to purchase an “investment” where the only way you can break even or make money is through the exploitation of a grandfathered loophole which governments around the world is actively trying to close ranks on the same level as investing with greg martel.
I’ve lived overseas in places where 400 square feet is considered fair sized. So, yeah, bring the suites from the Janion on to the long term market. Given the number of people living in vans I’m sure many won’t find them too small.
I do feel bad for those whose business are no longer viable. However, I am happy with the legislation overall and hope it withstands whatever is thrown at it.
Totoro: Frankly, I dont find Canada very attractive to invest in overall in the last decade.
The juicy items in my posts come from insider contacts 🙂
———-
Welcome to Google VicRE. Nice to see you posting links, like everyone else.
“If you can’t beat ‘em, join ‘em”
I agree Barrister. However, I also agree that provincial STVR regulation was long past due. I am not sure what will happen next with housing, but it will be interesting to see the impact of this combined with high mortgage rates. It has become a lot more attractive to invest in GICs. Maybe housing will become more affordable as the hassle factor of becoming a landlord is not compensated for by rental income vs. expenses or appreciation – possibly for a decade.
Totoro, the reason is that it is politically popular and that perhaps should give one pause.
Lets take the individual financial considerations out of the picture. Why should a homeowner with a suite be able to list on Airbnb while someone who owns one formerly legal STVR and no owned primary residence be prohibited?
Possibly the answer to this is that there are few areas where a homeowner is permitted to rent their suite in their primary residence short-term so it is a bit of a red herring. Even if permitted provincially, the vast majority of municipalities do not allow it. Maybe now that the province has exempted primary residences and suites or ADUs more munis will permit short term rentals in these circumstances – but it seems unlikely.
There seems to be a least seven listings for the Custom house and that seems a lot considering the size of the building. I dont really follow the condo market so I wonder what is happening especially with the mortgage increases starting to bite.
Leo, I see that you’re not on here anymore. Do you no longer work at UVic?
Debra sheets made $158k last fiscal year according to the compensation information published at uvic. Lol she might even be “renting” her place from a holding company she owns.
https://www.uvic.ca/financialplanning/assets/docs/financial-reporting-docs/uvicfinancialstatements/university-of-victoria-financial-information-act-2022-23-statement-of-financial-information.pdf
I notice that John Alexander did not offer any opinion on the legality of the provincial move on AirBnB. For me it is just further confirmation that BC can be a risky place to invest.
You have no idea of her financial situation. It also says she is a retired nursing professor from uvic which she should have a db pension and also she has over $1m in mortgages on those units so clearly she was not living off kraft dinner. Likely she has very cheap below market rent at her current place and is arbtraging her capital by doing the airbnb gig.
Here is her LinkedIn, you decide whether or not she is a struggling senior, doesn’t even say she is retired.
https://www.linkedin.com/in/debra-sheets-b3432211?utm_source=share&utm_campaign=share_via&utm_content=profile&utm_medium=android_app
Saanich council to nix requirement that speakers publicly reveal their addresses
https://www.timescolonist.com/local-news/saanich-council-to-nix-requirement-that-speakers-publicly-reveal-their-addresses-7699238
Victoria lawyer John Alexander, who specializes in areas such as land-use law, local government and land title, said his phone is ringing non-stop from owners of short-term rentals, most of them Victoria residents.
…
A potential court challenge might come because the grandfathering rights are being taken away without compensation, [Alexander] said.
New rules for short‑term rentals in B.C. put investment and retirement plans into disarray
https://www.timescolonist.com/local-news/new-rules-for-short-term-rentals-in-bc-put-investment-and-retirement-plans-into-disarray-7699213
“I find it annoying that the housing minister is talking about people owning 5-20 units as a rationale”
‘Annoying’ is a mild reaction. It’s actually totally outrageous. You may recall that when they targeted the handful of people from Alberta who had empty holiday homes here it was presented to us a massive victory in the class war. This is just another dose of amateurish agitprop delivered by the ideologues of impotent envy.
What about all the apartments that are Airbnbs? Any numbers on that?
The government wants to be seen as helping owner-occupiers to keep their houses, thus the provision to allow STR in suites. Political optics.
And frankly I don’t think the poor senior who owns two properties sob story is going to fly. If such people actually exist they can go LTR or sell. This is investing and investing has its ups and downs. I’ve lost 100% on some stocks I’ve owned and I’m not asking anyone to feel sorry for me.
The two golden rules of investing: (!) Don’t put all your eggs in one basket. (2) Don’t buy anything you can’t take a loss on. Not that I think many of these “seniors” would take a loss if they sold.
I think investing in short term rentals that were not legal was always high risk and temporary. However, investing in legal short term rentals is a different thing.
Pretty devastating for many individuals who have no pension and followed the rules at a time when interest rates were so low that keeping cash in a gic gave no security. These people will have to sell – maybe at a loss.
How can a suite in a house be Airbnb’d but a retiree with one Janion unit who lives in a rental themself be prohibited? I find it annoying that the housing minister is talking about people owning 5-20 units as a rationale and failing to acknowledge the single formerly legal stvr unit owners.
https://www.cbc.ca/news/canada/british-columbia/freeland-short-term-rentals-1.6999471
Marko: The rules for municipal governments are completely separate and different than provincial powers.
So many interesting questions. The man in the video said they would want compensation for the “economic expropriation” – so like then they’d have to rent it out in the interim to at least mitigate so they can claim the difference? Imagine just sitting on your hands and incurring that kind of loss as an investor then having the balls to go before a judge during a housing crisis. I don’t see any good arguments against the legislation that being said I know that arguments will be made and that this particular group will not go down without a fight. Not to be too dark but I do like popcorn.
That is exactly why I had an issue with the foreign buyer tax being applied to unconditional contracts (that had not yet completed) when it was introduced. In business you need some certainty/clarity.
Not exactly the same but when 613 Herald was under construction the COV tried to remove the transient zoning and I think the developer/pre-sale purchasers? successfully challenged it in court and 613 Herald was allowed to keep its non-conforming use. I believe the law firm representing the developer was Cox Taylor. Not sure if court cases are made public/how to look them up?
The real significance of this legislation is that once again it is underlined that BC can be a risky place to invest in terms of governance. Housing crisis, rental crisis, environmental crisis should make one think twice before investing in BC.
There is nothing that forces the provincial government to pay you for expropriation if they chose not to. The provincial government can elect to have the Expropriation act not apply to any piece of legislation. My recollection is that property rights were specifically decided to be exclude from the charter. Not my area of expertise so looking for a more defined opinion.
Barrister – the guy from the video who I believe is head of a STR group (presumably well resourced) referred to it as “economic expropriation.” So if they try that unique angle – who knows. I’m sure there are other angles as well. However that being said the gov has David Eby at the helm with this and he is a very bright lawyer – so I’m sure they’ve thought of all of this and are ready for the fight.
Not my area of expertise, but I really cannot see on what grounds this could be challenged in the courts. This is clearly an area of provincial constitutional power. I cannot see any grounds for a charter challenge and that there is nothing that mandates any compensation for harm done by new legislation. But not my area of expertise. Love to hear other peoples thoughts.
That’s what is amazing about this leg – who it targets. It is very ballsy. I personally hope it stands up.
Personally I’m a bit sceptical whether Phase 4 (the provincial registry and enforcement unit) of the government’s STR strategy will ever come into being. First off there’s an election between now and then. Second, Phase 4 is the part that will start to cost the provincial government significant dollars. And unlike some of the other policies that were going to solve the housing crisis (spec tax, foreign buyer tax) this program won’t pay for itself. Even if the same government is returned after the election they could easily declare success by saying “we have given local governments all the tools they need to address this issue”. Doubly so if they find themselves in the position of having to rein in spending a bit and not wanting to staff and resource a whole new program area.
If they do proceed with the registry, which I’d still rate as the more probable outcome (say 70:30), expect it to be late (sometime in 2025 not 2024), and also expect to be underwhelmed by initial enforcement efforts. If I owned an AirBnB outside of a municipality that has been active in regulating STVRs i wouldn’t be in panic mode yet.
I did a quick off the bat calculation. Assuming that you got one of the Janion units for a bargain basement price of 360k and assuming you had 20% down cash you would be looking at a mortgage payment (five year fixed @7%) of 2100 per month, strata, insurance and taxes would add about 400 per month plus any additional internal maintence. If you got rent of 2000 per month (worse if it is only 1800) you are still running at a negative cash flow of about 500 per month. Maybe you might get a better mortgage rate but on the other hand they are asking for over four on the units.
The idea of regulating rent increases between tenants, or at least some limitation of increase is extremely popular in many circles of the government and their supporters. This may not be the best province to invest your money into at this point.
A lot of airbnb suites and whole houses/townhomes in Langford; therefore, I falsley assumed Langford allowed short term rentals. I guess they just aren’t enforcing? Anyone know?
Nope. There are only 6 units at Ironworks without parking and mine is one of those 6 without.
I would say insanely popular from all the platforms I am following. Unfortunately pulls attention further away for the supply side of the equation.
That is generally how the interaction of provincial leg. and municipal bylaws work. Munis can add restrictions on top of provincial requirements .
There are examples of laws drafted differently though. Cases where munis CAN’T add additional restrictions and cases where provincial law stands down if bylaws meeting certain criteria exist.
So will probably have to wait to get a definite answer on this
Marko, does your ironworks come with parking?
On grandfathering, seems like it doesn’t allow the scale of the non-conforming use to be expanded. So if the government was on the ball here they could have likely stopped new units from being converted to Airbnb when the city regs came in in 2018. Or maybe this is what the province is banking on. Airbnb expanded in these buildings and so they lost their grandfathering
Did that get challenged? I can’t recall. I agree with you from a fairness perspective it’s no good, but I don’t know what the precedents are here. Another way to achieve the same result would have been to crank the license fee to $10k
I imagine they convinced themselves it’s a legal challenge they can win. Also coming up to an election and reading the reaction to this in various places feels like it’s also massively popular.
Does Langford allow short term rentals? Looks like no, so the provincial regs wouldn’t change that. The way I understand it the provincial rules are a minimum backstop, they don’t loosen any existing municipal restrictions
That’s what I mean…when they introduced the foreign buyer tax I didn’t have an issue with the tax I had an issue that they were applying it to unconditional contracts. They were asking buyers to come up with an extra 15% tax out of no where on contracts they couldn’t back out of.
What’s your thought on them allowing suites to be airbnbed? Would be interesting if a bunch now popped up in Langford and other muncipalities that allow for such.
Oh I support the move, just didn’t think they would want the legal headache. Everything in the bill is slow acting except for that. Could actually be a noticeable impact.
The only thing I’m not convinced about is the 90 day definition. I think they should have left it at 30 days. Lots of legitimate need for medium term rentals.
There are two advertised on FB marketplace, one $1,800 and one $2,100. I am renting my Ironworks studio for $1,500 and Janion is going to be more than Irownworks for sure.
They’ve done similar non-sense before.
For example, remember when they introduced the foreigner buyer tax in BC and made it applicable to unconditional but not yet completed contracts?
I’ve been posting for 5+ years on HHV on how I don’t like the numbers behind Airbnb operations and I prefer to simply long-term rent as the monthly rents are very high to start. You have to think 2k/month on a 1-bed is $67/night 365 nights a year with little to no work involved in relation to Airbnb.
That being said even if I don’t like the business personally people bought into these buildings with the assumption they would be able to operate.
I am eagerly awaiting all the reddit/FB comments when a Janion owner posts a fully furnished unit for long term rent at $2,000/month.
What’s the market rental rate for a micro condo in the janion?
That is interesting Marko, wonder how the other units will respond.
Me too. Be interesting to read the government’s legal opinion. I’m not sure courts will be as sympathetic to this type of legislation as they would be to legislation restricting short term rentals in residentially zoned neighbourhoods.
It is about changing direction. Always better to get out early if there is a chance of further decline and the math no longer works for you.
There will be a number of owners evaluating their options. Some of them will list. Prices already are not going up due to the mortgage rates and the numbers do not work for long-term rentals unless you can hold and be cash flow negative for a number of years and put up with the RTB rules and tenants.
I think there will be some buying opportunities in areas with a lot of vacation rentals affected by the new legislation. Many of the Airbnbs are well maintained. Maybe next spring?
I’m surprised they tackled the non conforming units, I would have thought it’s a legal minefield but I’m not a lawyer. Will be interesting to see if there’s a challenge and how far they get.
But it’s been obvious that there’s an Airbnb crackdown coming all year. Anyone buying an Airbnb in another municipality recently relying on a lack of enforcement has no one to blame but themselves.
Lmao, more like bag holders who couldn’t read the room. Job losses from cleaning companies, lmao I thought we had a labour shortage, perfect they can get a job doing something else that’s in urgent need.
Not sure how anyone can actually profit from this…. I knew this was coming for months and the only thing I could have done was to unload before the announcement if I had units in those buildings. I did warn everyone on this forum multiple times though.
‘Government overreach’: Short-term rental owners criticize proposed regulations
https://www.cheknews.ca/videos/652f264081f3270001a76c89/government-overreach-short-term-rental-owners-criticize-proposed-regulations
Announcements about changes to STVRs have been made for months. Some people clearly had their ducks lined up. And probably going to get more for their places as a result.
If professional photos involved would be difficult to have a listing up and running today as a result of the announcement yesterday. I would think earliest we would see new units coming up for sale would be next week but I think people will take some time to digest this. A ton of variables at play including GST. Some sellers may opt to long-term rent first before selling.
Seeing some airbnb units listed for sale already in the Okanagan… Interesting times.
What was it before? not much of a price adjustment if they bought it in 2021 for 40k less. Lord, is that a crib in there too??
First price adjustment at the Janion post announcement -> https://www.realtor.ca/real-estate/26120255/m05-456-pandora-ave-victoria-downtown
Yes. Airbnb and hotels are not interchangeable. I will not travel as much in BC now as I usually bring family members and cook plus, as a light sleeper, I just don’t enjoy staying in hotels. And Airbnbs are way more affordable overall than hotels. I suspect many people won’t travel as much in province. Not a tragedy, and the rental shortage is real, but also not great for provincial tourism as the Airbnb cut-back affects every tourist who has gotten used to STVR-style travel.
I have compassion for people less fortunate than me. Someone who can fork out a million dollars for a house in Langford doesn’t qualify. And further, the reason house prices go down in the first place is that people were paying too much.
Please don’t tell me you invested money with that greg martel….
Agreed, the by product is all the drug addictions and all the other left wing nonsense
Read the 151 comments -> https://www.youtube.com/watch?v=g1lZgdPxa1o
Unlike other people that talk about how to help people I’ve actually tangibly helped many people in my life, the owner builder exam is just one of my multiple side hobbies.
and yes I do think we in North America are incredibly spoiled and out of touch with reality.
I don’t believe you feel badly for anyone Marco. You are an extremely intelligent young man. Unfortunately, you don’t seem to understand that intelligence is a gift. Be grateful for it. I couldn’t count the times on here where you have called people stupid. You don’t display empathy for others. Anyway, who am I to talk. lol.
We are talking a 900k house here, not a 150k condo in Edmonton a family of four purchased and got hit with a 50k special assessment they can’t affford.
Am I suppose to feel bad for someone that purchases a 5 mill house and sells it for 4 mill?
Ah yes, what is happening in Ukraine is sad. Of course it is. No one is going to disagree with that.
When we were children and didn’t want to eat those brussel sprouts we were made to feel ungrateful because “think of all the starving children in China” we were told. A lesson in guilt. When you skinned your leg and cried did it make you feel better knowing that someone else didn’t have a leg?
If you believe that you should be grateful when things go wrong for you because you know others have it much worse, then you should also believe that you should never be satisfied with all you have because so many have much more.
We are all humans and we all have a right to feel pain when it hurts. There is always someone better and someone worse off than you.
Comparing Victoria to Toronto is like comparing New Zealand to Canada.
Like what I said before, Victoria is slow. Go look at what is happening in Toronto right now to get an idea of what is likely going to happen here in a few months.
Taking a page out of Frank’s broken playbook, maybe they want the capital loss to offset a capital gain in oil stocks? Who knows. Maybe they’ve speculated on RE for the past 10 years and have made out like bandits and decided to cut losses on this one.
No, bear mountain is not it’s own municipality so suits or garden suits only.
More recent look at LT rates.
I believe we are entering the shite happens part of the economic cycle , never fun but u do have to flush the toilet
It depends on the evolution of inflation over the next 12 months.
Weak economy/recession & inflation > 2 – 3% (aka Stagflation), Short Term Rate (BoC) stays high. Currently 5.0%.
Weak economy/recession & inflation < 2%, Short Term Rate will be dropped.
Even if the short term rates go down, they are unlikely to go below 3%, meaning a prime rate of 5.2%. BoC will be cautious about dropping the rates too low. This will decide the VRM rates.
Long term rates (5Y & above) will stay elevated for a while due to quantitative tightening (QT) as well as global factors (wars, capital vs labor balance, global power shift to the East from the West, etc.). This will decide the FRM rates.
The sentence was “Another sad story?” Note the question mark.
On another topic: I know Bear Mountain used to be considered as a Resort Area. Is it still? Are residences there able to Air BnB?
Unfortunately I have to agree with VicRe on this. Why is this sad? People that own real estate in Victoria/Vancouver/Toronto have literally won the lottery over the last 20 years. Prices can’t go up forever.
Sad is what is happening in Ukraine/Israel not someone taking a loss on a 900k house.
Agreed, but the numbers are probably bigger – that Times Colonist article VicRE linked refers to an estimated 1,600 units. And I know two people who own & airbnb such units and they get very high occupancy, way more than 50 times a year, and 90%+ in tourist season when the issue really arises.
Those airbnbs also fill a niche for people who are staying for longer and want a kitchen (not as often provided in a hotel), including those who come here in the off-season from the prairies etc.
But “shit happens” means accepting that there is some randomness, that despite our even best efforts things can go wrong. And so, since shit happens to everyone everywhere, compassion is also something we should strive for.
absolutely, right after prudent financial planning when it comes to lifestyle and expenses.
Are you/did you teach your kids that life lesson VicRe?
Why is it a sad story. Shit happens, there is no guaranteed excess profit on any investment which is why if you want to play you need to do your due diligence, control your emotions and live with your decision.
Another sad story? MLS 939172, 3449 Myles Mansell Rd. Just sold for $860K. Originally purchased almost two years ago on 30Nov 2021 for $925,365.
Not according to the CEO of destination Victoria LMAO. Thats where the 5 hotels came from
https://www.timescolonist.com/local-news/bc-slams-door-on-operators-of-multiple-vacation-rentals-7692982
ya I can’t recall where I saw 5
Vicreanalyst I know of 2 that will be coming on , but are still a long time out . Hard to do a deal on existing properties not much for sale and asking too much money
Both internal and external legal opinions were sought and evaluated in drafting of the legislation is what “insider contacts” have told me
I read somewhere there are 5 new hotels in the works.
What is remarkable is that this legislation seems to intentionally target the investor class. It could have gone the other way – to protect a carve out for investor/owners of units in places like the Janion while taking out mom-and -pop businesses. Of course there will be lawsuits. I think the drafters have thought of this and taken it into account. I bet the legislation will be solid. The next year is going to be very interesting.
Yep not enough hotel rooms in Vic . Not easy to get a deal done to add more and the numbers are hard to make work
600 units.
We get more than 3 million visitors to the city annually.
Even if they are used 50 times a piece per year, that’s one percent of the required space. We’d need to build 2 additional hotels to come up with that number of units.
This won’t be the popular view, but I agree with this.
I haven’t read all this in detail yet, but it appears the proposed rules would essentially remove the “provincial grandfathering” and throw it back on Victoria to apply its own rules, which would then end the short-term rental grandfathering, unless something changes.
Possibly Victoria could realize the importance of these units to the local tourism economy – I mean, it seems we don’t even really have enough hotels? And so for instance, Victoria could decide, say, that while the “blanket grandfathering” for whole buildings is gone, they could continue grandfathering for units actually in use as STR. But while that might seem like a decent compromise (to me), it’s not going to resonate with all the people who desperately need housing. So it seems unlikely.
I come back to thinking this hurts some buildings more than others, ie. the Janion where the units are so small that they’re quite a bit less attractive as long-term rentals, compared to, say, Mermaid Wharf or even the Union.
“The BC government in their release is specifically talking about Victoria’s buildings. It’s targeted at them, no other city really has this issue. There is no way this could be more clear.”
They could have been a lot more clear and specifically mentioned Victoria.
I recorded that video quite fast so didn’t compose that point correctly and could have worded that differently. Yes there is a 99.9% chance that non-conforming buildings like Mermaid, Janion, Astoria, etc will disappear but it hasn’t happened yet and this is still only a proposal.
Frank forgot again that neither Congress nor the president controls interest rates.
If the SVR ban is successful, and removes 600 units, that’s a one time gain. We add about 4,000 units per year in Victoria, so that’s a one time gain of two months supply. Seems like a case of burning the furniture for heat. Victoria is a tourist city, recently voted # 1 small city in the world by travelers. STVR’s are a part of a tourist economy. The B.C. government recognizes this by exempting 10 tourist areas like Whistler. But not Victoria. These changes may hurt our Victoria economy more than it helps the housing crisis.
Yes I agree that is much worse but sex sells.
I thought that video was great, very honest and transparent.
Like I said, he understands and this is a matter of presentation, not lack of not understanding, that keyboard warriors cannot relate to. At least he is putting content out there. If you want to hire an agent because they make great IG short-reels of them running along Dallas Rd with their dog, which the vast majority of people do, sure go for it.
A bunch of people chewed me out for that video I made about my most recent long-term rental unit/numbers. You just can’t win.
He is not casting doubt, he just doesn’t understand the relationship between transient zoning versus legal non-conforming. He clearly thinks those are two different things and speaks to it that way in the video and in the comments. He does seem like a nice guy though
Yes, he understands it and describes the various issues. But he doesn’t help by describing it as “there is talk” when it is well beyond that, and is introduced (proposed) legislation. https://news.gov.bc.ca/releases/2023HOUS0060-001598
Look, I don’t need to get into an argument about it, and like I said Ira is a smart guy that knows his stuff, but it’s simply the case that “there’s even talk of eliminating the coveted transient zoning that allows many of Victoria’s STRs to exist” and casting doubt on whether the changes to non-conforming affect Victoria’s grandfathered buildings are incorrect.
The BC government in their release is specifically talking about Victoria’s buildings. It’s targeted at them, no other city really has this issue. There is no way this could be more clear.
Such surprise at the congenital bone-headedness of officialdom… In a previous incarnation this very blog was headed with a the gently disrespectful quote
“because we never know when interest rates will be increased to stimulate the economy” ~ VREB
Love to see inventory rising, my guess is it continues trending up. Nature is healing ❤️
He addresses the matter at 15 seconds into the video. Just eliminate the words “there is talk.” He understands.
It’s unusual but I would say not wildly unusual. Happened in 2018 as well, and usually though there is a downtrend it’s pretty slow in October.
From the end of September to the end of October we lose an average of 5% of our inventory. the only time inventory ever increased September to October was 2005 (+2%). But we’re not at the end of October yet so things can change.
It’s really clear to me why he presents the information the way he does. It literally just got released yesterday and everyone is digesting the information. When you are a licenced professional on camera you need to be a bit more careful about what and how you say it versus being an anonymous keyboard warrior.
I’ll be honest with you even I am not in tune with all the municipal bylaws regarding short term rentals and how they overlap with this provincial legislation, etc. This will take a few months to digest.
I think there is a small probability of a class action court challenge as well. Small but I wouldn’t rule it out.
Watch it again, he doesn’t grasp that the legal non-conforming classification replaced the transient zoning classification. He thinks they are two different things. He probably still thinks the airbnb units he has are still transient instead of legal non confirming
Ira generally knows what he’s talking about. Not sure why he says it’s not clear what will happen to transient zoned properties when those are clearly being phased out. But perhaps he thinks it will be challenged successfully in court (he mentions this later)
Price per square foot is almost always higher for smaller spaces, but for most people that’s not really relevant. If you have the money to buy a house then yes buy a house (and that’s generally what people do). Cheaper for the space and I suspect values will hold up better.
But it’s not an option for most people. If you can’t afford $1.2M then it’s simply not an option and you’ll be looking at townhouses or condos which provide a home for less money
Condos in the way we currently build them are difficult to make large or 3 beds for families.
But we could legalize townhouses or multiplexes and legalize single stair buildings. Those options are why other countries have family sized multifamily and we generally don’t
Population is growing more slowly both in Victoria and in Canada than in the early 80s.
He refers to the matter of legal non-confirming units four times in the video? Pretty clear he understands.
My (non-expert) impression from reading extensively on this and speaking to people with economics backgrounds, is that most people have assumed that the low interest rate environment of the last 2 decades is the “new norm”. The logic behind this seems to be that aging populations consume less essential goods and therefore produce less inflationary drive, which has allowed central banks to keep interest rates low without triggering an inflationary spiral (until 2021, that is).
So maybe if low inflation is the new norm, then inflation will eventually fall, and stay low due to how our current economy works, and then interest rates can be brought back down without triggering a new inflation spiral.
I don’t know about you but I think the above idea is really just guesswork.
Those assumptions, could easily be wrong.
It doesn’t take an expert in this area to know that it is impossible to predict future trends in any field, including economics, and the assumptions about how demographic change affect inflation and interest rates could be completely wrong.
Most Realtors are just plain incompetent. Someone posted a link about transient zoned air bnb buildings. The site is ran by an award winning realtor who apparently owns and operates multiple long and short term rentals. That same realtor puts out a video in YouTube talking about the new legislation but doesn’t even understand that it’s game over for all condos..
https://youtu.be/TQn5MOd2mF0?si=NUjysEZX0Rg32pJO
Inflation dropped slightly to 3.8%
Why do you consistently spew b.s. you have zero understanding of? Do you know what NIM is for banks and whether that expands contracts during a rate rising environment? Seriously just stick to your immigration b.s.
Thanks for providing some data for context on this, Leo.
As you point out, while condos may be more affordable on the raw price point than larger homes, once you account for the space that a family needs there just aren’t many options.
I wonder what the data looks like if you compare condos to single family homes on a price per square foot basis?
My admittedly anecdotal review of the data in my neighbourhood is that condos (most of which were built in the last 10 years) are almost always more expensive per square foot than townhomes or even some SFHs (on small lots, with less land value relative to liveable square footage).
This price premium for condo square footage makes it unlikely that we can make homes more affordable for families by building more condos, unless these costs can be lowered.
Maybe the price premium is just down to building materials or land values; or perhaps taxes and developer fees can be eliminated to level the cost for larger condos to be built to add to the supply that families need.
Otherwise we’re stuck waiting for the local government to pass policies that actually legalize these building forms as of right. Still waiting on the proposed changes to the missing middle program to come to fruition…
Dee- Government debt and banks are losing money paying higher rates on deposits while people have reduced borrowing. U.S. election next year, no one gets re-elected in a recession. Inflation rates will magically go down and rates will fall with it.
I am wondering why people think interest rates will go down. I’m not a financial expert. I keep hearing this and I find it confusing. Would it be a recession that causes interest rates to go down? Genuinely curious as to why some people think this (especially since one of our two mortgage segments will be up for renewal in about 2 years!)
Will these new regulations drive up prices in smaller communities?
Leo, thanks for producing an interesting set of facts. While it is possible that we will see interest rates down to 3% I think that is highly unlikely. Sure anything is possible, maybe the Toronto Maple Leafs might win the Stanley cup in the next ten years.
Not sure that I would have enjoyed raising six kids in todays condos.
Hey Leo,
With ‘active listings’ continuing to build into the second week of October (modestly, and now at 2708), how much of a calendar anomaly is this? Put another way, is this close to the latest calendar date for active listings to still be building? Thks for the brilliant blog.