About those AirBnB regulations
Last week the provincial government brought in broad new restrictions on short term rentals, defining minimum standards on what’s legal, unveiling new strategies for enforcement, and most surprisingly, ending the practice of grandfathering for short term rentals that were operating as legal non-conforming. If you want an accessible summary of the changes, I recommend reviewing the technical briefing presentation.
The first two changes have been signaled for a long time. The government was clear that restrictions on AirBnB were coming, and anyone that wasn’t expecting this move hasn’t been paying attention. With anger about housing affordability boiling over and every level of government casting about for what can be done in the short term, setting a provincial standard and tackling the enforcement problem were low hanging fruit. Despite the City of Victoria getting a lot of flak for not doing enough on short term rentals, the reality is they have likely done more than any other city in BC to bring down the numbers of short term rentals. It’s been 5 years since they banned entire homes being used as short term rentals, limiting AirBnB to only rooms in a primary residence or occasional stays when owners were away. They put significant staff resources on to enforcement, and even successfully sued hosts that continued operating illegally. However the city has been hampered by platforms that were uncooperative and refused to share data which made enforcement difficult. In addition the grandfathering requirement in the Local Government Act continued to allow short term rentals in 18 buildings that previously explicitly allowed that use in their zoning. So while AirBnB was effectively controlled in most areas of the city, it was concentrated in the some 1600 units that still allowed it, housing a few hundred short term rentals.
Up until last week, few people (me included) expected the province to tackle these legal non-conforming units. After all, though there were quite a few of them, it was a fixed number that couldn’t increase, and the concept of grandfathering in zoning is a practice that is maintained for many other uses. For example an industrial site that continues operating even after zoning is changed to residential, or the many small apartments like this one on Hollywood Crescent that still exist in Victoria despite the land being downzoned to single family decades ago. However the province clearly looked at the legal implications and expected it could win the inevitable challenges. Whether they’re right remains to be seen, but for the time being the move will increase the impact of the regulations.
Rental Market Impact
The primary reason cited by the province for moving on AirBnB is the impact they are having on the rental market. The province cited the study from McGill, which found that rents increase by $49/month for each 1% of the rental stock that moves to short term rentals. The conclusions from this study were wildly misunderstood by the media, with coverage implying that a large part of increasing rents were due to the proliferation of AirBnB. However the study actually found that between 2018 and 2022, the total estimated impact from AirBnB was an additional $6/month on island rents. However the impact in other regions (that didn’t try to control short term rentals) was estimated to be higher, up to an extra $59/month in the Okanagan over 5 years. It’s worth pointing out that this study was funded by the hotel industry.
A competing study, this time funded by AirBnB, found that short term rentals had only a very minor impact on rents. The exception was Quebec, where there was a greater concentration of AirBnBs and a greater impact on rents. These findings were generally presented by the media as short term rentals having no impact on rents.
Media coverage aside, the studies aren’t actually that far apart. While McGill estimated that rents on the island increased by $6/month in recent years due to AirBnB, the Conference Board study estimated the impact was less than $10/month in most markets. Whatever the real number, it is clear that taking away rental supply increases rents, so there’s no reason to doubt that short term rentals do increase rents by some amount. Conversely moving short term rentals back into the long term market is likely to decrease rents. Because these are market priced units, bringing them back into the long term rental market would increase rental availability and decrease rents by a similar amount as building the same number of new units.
To put the numbers into context, if perhaps half of the 3000 short term rentals in the region returned to long term rentals (likely an upper limit), the vacancy rate would approximately double, from a very low 1.5% to about 3.5%, which may be enough to stop rents from increasing temporarily.
Condo market impact
What about the potential impact on the condo market? Well it’s twofold:
- The short term rental premium evaporates. Buildings that allowed short term rentals consistently sold at a premium than those that didn’t. With this rule change, that premium should essentially disappear overnight (unless buyers believe the regulations will be overturned). Without the ability to run a short term rental, buyers will only be willing to pay the price for use as an owner occupied unit or long term rental.
- The condo market cools because of increased supply. All things equal, that means lower prices than the counterfactual. With the condo market at the warm end of balanced in September, this may be enough to tip it into a buyers market over the coming months.
What is the price premium for short term rentals? That depends on how you look at it. Realtor Ira Willey points out that short term rental buildings are somewhat unique based on their locations, size, and amenities. However based on his tracking of sales of comparable condos, he estimates a price premium of between 5 and 10% on average.
I took a somewhat different approach, and looked at condo sales in downtown Victoria since 2020. To account for the difference in condo characteristics, I created a matched set of condos that don’t allow short term rentals that are as similar as possible to those that do. The resulting set of 390 units were very close in their physical size, number of bedrooms, year built, and number of assigned parking spaces. However I’m not adjusting for presence of other amenities or exact location other than they are all in the City of Victoria. The average values of those units over time are as follows.
These data show a consistently positive price premium for short term rentals. From 2020 to 2022 that premium was 12.7%, while in 2023 it expanded to 20%. That expansion of the premium may be partially noise, but it does seem to be the case that condos that allowed short term rentals maintained their peak values, while the rest of the condo market declined from last year’s peak. While owner-occupiers were squeezed by deteriorating affordability and long term investors were squeezed by interest costs rising faster than rents, short term rental investors may have had enough income potential to keep buying.
That hit to values is going to be the most painful for owners of short term rentals, given it should take effect nearly immediately. Buyers will look at short term rental units like any other condo, and will no longer be willing to pay a premium for the income stream. I’ll be watching sales as they come in to see what the impact is over time.
The secondary impact will come from the additional inventory on the market. In September there were 686 active condo listings. Bringing a couple hundred additional units on the market would shift the market balance of an already weakening market towards buyers, but it’s unclear to what extent this will happen. Investors that bought years ago with smaller mortgages may choose to convert their units to long term rentals, while others may want to sell. With the short term rental premium already gone and the market about to enter winter hibernation, some owners may choose to squeeze the last 7 months of short term rental income out of their units (especially if they’ve paid for the city license) and try to list in the spring instead. On the other hand a quick sale may get ahead of the market if we enter a buyer’s market and prices fall. Impossible to predict, since of course the added inventory is only one of many factors influencing the condo market, but all else equal it will soften the condo market with a one-time injection of inventory.
If you are looking for a condo on the smaller side to live in or rent out, it’s probably not a bad idea to keep your eyes open this fall. However loss aversion being what it is, it will likely take some time for sellers to accept a lower price, unless they’re really squeezed on the cost side.
Also the weekly numbers
| October 2023 |
Oct
2022
|
||||
|---|---|---|---|---|---|
| Wk 1 | Wk 2 | Wk 3 | Wk 4 | ||
| Sales | 118 | 183 | 284 | 480 | |
| New Listings | 336 | 529 | 768 | 998 | |
| Active Listings | 2679 | 2708 | 2727 | 2192 | |
| Sales to New Listings | 35% | 35% | 37% | 48% | |
| Sales YoY Change | +1% | -13% | -15% | -36% | |
| New Lists YoY Change | +6% | +4% | +4% | +15% | |
| Inventory YoY Change | +18% | +20% | +21% | +106% | |
| Months of Inventory | 5.6 | ||||
Sales are continuing steadily, but slowly. No sign of a late month rally like we saw last October. New listings continue to come in at a normal pace, with little sign of distressed sellers. Meanwhile inventory continues to build slowly this month which is quite unusual. So far we are up 28 listings from the end of September while we usually lose 5% of our inventory in October. Gaining inventory in October has only happened once in 20 years, but we’re not quite at the end of the month yet.
At this pace, we are on track for about 430 sales for October. That’s slower than last year and well below average for the time of year, but not an all time low. The record low for October was 316 sales in October of 2008.
Oct 2023 sales projection marked
One effect of higher rates this year is driving more buyers to purchase in cash. After being consistently between a quarter and a fifth of buyers in the last decade, cash buyers represented nearly a third of buyers in 2023. It’s unclear whether that’s because the buyers are different (wealthier), or just the same types of buyers making decisions to liquidate other assets rather than taking on high priced mortgages.
And it’s not just that the number of buyers has dropped and cash buyers are who’s left. About 5000 properties have sold year to date, which is very similar to the sales rate between 2010 and 2014 when the percentage of all cash purchases was substantially lower. It’s difficult to find comparable statistics for other markets, but it feels like that’s a higher percentage than most places. A national survey of home buyers from a few years ago found that 13% of buyers required no financing, or about half the Victoria rate.
My parents were fond of telling me we had 4 dishwashers growing up.
Brief new post before end of month: https://househuntvictoria.ca/2023/10/30/some-quick-bits/
Leo, where is your new blog patiently waiting.
Again to each their own. I thought I saw an old street view of it and saw steel stud but looking back at it I only see some I beams still visible so I was obviously mistaken. EDIT( I found a photo of the steel stud I saw and it was on the ground floor and the rest of the building was already bricked. )That being said It was engineered by Herold engineering who don’t mess about I get them to engineer all my buildings. Wood performs better in quakes on buildings this size so Im not sure if I would be more likely to purchase all concrete or not especially with the carbon footprint of it. The Wade really turned us off with its dated 80’s throwback kitchen and interiors and weird layouts. Took less than 2 minutes to walk out. In the end we purchased our unit as a place holder for when we move to Vic. no matter where the market is we should be able to sell/buy with a similar market. Hoping market is down so the spread between what we got and what we want is smaller. Our tenant loves the place and it is very well run. I respect your opinion and when it comes time to sell it and buy something else I will definitely be calling you.
Yea, with you there, I also have nightmares from a childhood without a dishwasher.
Absolutely serious. I am a traumatized victim of living with “poor kitchen setup” for most of my adult life. Not only that I was scarred by growing up in a house with no dishwasher. No human being should have to suffer like I did!
I took a lot of photos of Black and White during construction and it is wood-framed with staggered wood partions, not steel stud and concrete. Photos here if you don’t believe me -> https://vibrantvictoria.ca/forum/index.php?/topic/3720-fairfield-black-and-white-condos-commercial-6-storeys-built-completed-in-2019/page-26
That Wade is concrete thought and not sure I agree with your assessment of terrible craftsmanship. I know the Wade took five years to build and the developer was terrible at communicating, but the end-product is solid imo.
The location of the B & W is better but product wise I would take Wade over B & W (the concrete alone is a huge step up) and yes I’ve been in the B & W over 25 times. There is no building in Victoria with more bulkheads inside units than B & W….if you don’t believe me review some listings on MLS as they come up.
Marko I am in the Black and White which is steel stud and concrete. As an Architectural designer myself and a former builder I can appreciate the details that went into the building. Im sure you have been in the B&W. It’s really nice. The attention to detail and the tile work and material choices are cohesive and elegant. I toured so many condos on my search in that price range and none of them held a candle to it. The Wade is the ugliest and most awkward layouts I saw on my tour with terrible craftsmanship throughout. I guess I just wanted to point out that saying “nobody thinks they make nice buildings” is so far from the truth it calls everything he says into question.
Always remember the words of my man Tom Davidoff:
However, Davidoff dispelled notions that creating more housing supply will bring down real estate prices.
“We’re not going to see affordability. That’s not what’s on the menu here. It’s that things get worse more slowly.
I don’t agree with Barrister, but these awards are given out by the Victoria Residential Builders Association…..just saying.
What about the structure, did you buy into a 2’6” stick frame or concrete?
I see you a replying to someone I have on mute posting non-sense stats they found on google 🙂 but yea, due to rent prices approxiamtely 70% of people aged 18 to 34 live at home with their parents (also keep in mind most housing stock is condos so a bunch of 30 year olds living with their parents in a condo, not detached).
Here is the on the ground reality. Condo for rent in my building in Zagreb @ 1,800 euros per month -> https://www.njuskalo.hr/nekretnine/zagreb-crnomerec-prekrasan-cetverosoban-stan-garazom-oglas-41402639
Registered nurse in Croatia makes on average 1,572 euros/month gross or 1,100 euros/month net. Groceries a bit cheaper, but the majority of things are more expensive in Croatia. For example, a car would be the same price as in Canada but in Euros so 40% more expensive. Even two nursing incomes you have to rent a crap 100 yr old no elevator no parking condo that is falling apart to cover monthly expenses.
Barrister. Abstract builds some of the nicest buildings in Victoria and has won numerous awards for interior and exterior design. https://abstractdevelopments.com/news/abstract-2020-care-awards/. I waited for months for a unit to come up for sale in one of their buildings and was blown away by the interior quality and finishes. But hey to each their own I guess.
The “lock-in-effect” refers to the disincentive for existing homeowners to sell their homes because their current mortgage rate is well below current market rates.
However, according to a Fannie Mae study, one third of home owners are Baby Boomers and 80 percent of them intend to age in place thus limiting the number of homes coming onto the market. For more homeowners to be incentivized to put their homes on the market, other factors beyond mortgage rates may have to change, such as older generations aging out of their homes.
-authored by Mark Palim and Rachel Zimmerman
-It’s almost like I wrote the study myself.
Is this sarcasam or a serious comment? All I know is I eat a lot better in Croatia and kitchens are a disaster in relation to what we refer to here as “poor kitchen setup.” I find kitchens here are 90% show/entertaining, 10% for cooking. You don’t need a huge kitchen to cook well.
What? Two bed just re-sold at Triple Crown today for $600,000 and that is a wood-framed on the highway in Langford. Pre-sale purchase price on that one was $509,900+GST. Very little is selling; however, as I’ve noted everyone is asking in excess of pre-sale pricing. Plenty of these re-sellers have enough room to drop and cover their fees right now, but this might not be the case come spring time.
At the Pearl the current re-sales are asking 200 to 400k above pre-sale purchase price.
Not in detail. Lots of issues with enforcement and many units went to 28 day+ rentals instead.
If you’re most of the people I cited in my examples, you’re certainly a “little guy” compared to the greedy multi-owner moneybags that some of the politicians and others have used to vilify these airbnb owners and to “sell” this. And BTW just to be clear, no I don’t own one.
You’re kind of helping me make a point I made earlier, which is that as soon as someone gets even one tiny rung up the ladder, he or she just becomes a target.
I don’t think this legislation was well-thought-out. But I recognize the groundswell of opinion goes your way on this.
Maybe when I was younger I might have thought like this, but now moral absolutes like this tend to make me uncomfortable. Not because I can’t think analytically.
Just because we are in a housing crisis doesn’t mean any human being should be expected to live with a “poor kitchen setup”. Some things we can’t compromise or we risk losing our humanity.
For 2 bedrooms?
You mentioned that in Croatia people don’t trust government and think it is corrupt. In Canada many people still have a touching faith in the competency of government. Residual from 30/40 years ago when government overall did seem a bit more competent and efficient (at least in some respects).
That’s call an extended family. Everyone should be so lucky.
If young adults stay with their parents rather than renting, they don’t get counted as rental households. Now mix that with a declining population and what do you get?
Croatia consistently has close to the highest homeownership rate in the world, at 92%.
https://en.wikipedia.org/wiki/List_of_countries_by_home_ownership_rate
https://www.statista.com/statistics/246355/home-ownership-rate-in-europe/
Probably because of the awesome “no property tax” and other low tax treatment of housing. High housing cost doesn’t make the top ten of reasons Croats are leaving Croatia – Corruption is number one. https://www.thedubrovniktimes.com/news/croatia/item/4651-these-are-the-reasons-why-there-is-a-mass-exodus-from-croatia
So that’s likely why fellow Croats give two thumbs down to your “vacancy tax” idea.
If it ain’t broke don’t fix it.
Please. There’s a lot of informed opinion that Canada’s overpriced RE, in which STR plays a role, is a major barrier to productive investment. For example:
https://www.theglobeandmail.com/business/commentary/article-canada-housing-crisis-prices-economy/
Yes that’s my point. We fast-track the least affordable types of housing and attach boat anchors to the more affordable types of housing and then wonder why we have a housing affordability problem.
Not sure I agree as the same people will continue to cheer for more government intervention that won’t actually solve their problems long term.
Leo, have you looked into what happened in Toronto when they had their airbnb restrictions introduced in 2019? https://www.cbc.ca/news/canada/toronto/toronto-airbnb-ruling-1.5364775
LeoS. As I am sure you already know, it did not require any zoning changes so exactly what approval are you taking about? It is a SFH on a single family lot within both height and setback requirements and also square footage for the size of the lot.
Being an expert as you are you already know this so exactly what approvals are you referring to?
The units will undoubtedly sell, presumably to owners that will live there or see potential as long term rentals, and they will be longer term homes. Whether it’s the same people cheering on the restrictions isn’t really relevant
The moral of the story regarding SRT is that BC and for that matter Canada is not necessarily a great place to invest your savings. Seriously and leaving aside the whole SRT issue, Canada is a risky place to invest and becoming risker with each passing year.
Did it take 10 years to get approval like the Quest?
I’ve sold a lot of units at the Janion and can’t say the water has been a tough sell. This is the outlook from a Janion unit I had listed and sold earlier this year….pretty sure people are going to take that over starring at Regents Park from Jukebox -> https://youtu.be/BHpNb-Frr3g?si=nSWOn08WKLOaD-Ud&t=24
Are they writing council demanding max bylaw size for SFHs be reduced?
That water part is a tough sell for me because of the shipyard and the industrial use in the area, but that’s just me.
That mansion you are mentioning upset a lot of people but it belongs to Mike Miller who owns Abstract. Guess it is what you get when you are a greedy developer. (God, it is one ugly house but no one ever thought Abstract built beautiful buildings.)
and at the Janion you have Northern Junk to finish off the David Foster Walkway + Capital Iron re-development for amenities. So both have some latent potential expect one is always going to be literally on the water with a kayak launch in the basement for residence to use.
I mean, it’d make it affordable for people to actually stay in Croatia, instead of having to leave. I guess reversing a brain drain is ruining Croatia. I disagree personally but I don’t have all my money invested in real estate there.
That gap may close depending on how the starlight development in Harris Green goes.
Even if the SRT gone the Janion will sell for substantially more than Jukebox, or even Ironworks. Tough to describe but the Janion has a cool subjective factor to it, plus location is going to be more desirable than Jukebox. A LTR Janion unit listed this morning with a tenant in place for $1,850 per month so they fetch reasonable LTR rent.
As in punish the existing investors or make it tougher for future investors?
Price is already there at the jukebox: https://www.realtor.ca/real-estate/26226847/807-1029-view-st-victoria-downtown
What people want and expect to afford is a SFH + cottage on the lake, not a 300 sq/ft unit at the Janion. Hypothetically if units at the Janion fell to 300-350k do you think everyone cheering the SRT ban would be buying there? No, they still want the SFH, but somehow they think the SRT ban will solve their problems.
There are some rumors floating around that the feds will soon propose new legislation to punish the investors in real estate.
If you own more than one property in a country where today most people who don’t own one can’t afford one, you are not a “little guy”. Put away the violins.
lol…..that aerial puts into perspective just how dumb society is….NIMBYs will block a 20 unit townhome development over one tree and I am guessing more than one tree went down to accommodate that mega mansion.
Yup. No one cares about trees or blasting or lack of affordability when it’s single family.
and
Agree with both these perspectives and am troubled by the widespread lack of analytical thinking and problem solving in our society. The blame game seems like default for a lot of people and that leads to no solution. Get the facts straight first and then fix it.
And I do think it is wrong to take away STR zoning for current owners. There is a huge swath of illegal STRs that will be shut down and these people had no right to believe they would continue.
The developer that got the 4-story approved on Oak Bay ave after 10 years is definied as greedy yet there is a SFH being built less than a block away from the condo development sight that must be over 10,000 sq/ft….I walked by it the other day and it is just insane. Not one person has commented on that. It is totally cool to build a SFH the size of a condo building, but it isn’t cool to build a condo building that will house 12 people/families.
As Steinbeck said, “Measures to bring down house prices never took root in Croatia because the renters see themselves not as an exploited proletariat but as temporarily embarrassed condo owners.”
This boils down to “eat the rich”. Like I said, I get that it’s politically popular to go after wealthy people in a time when many are struggling with housing costs. But there is in fact no ethical difference between financially hurting 5 people with 1 AirBnB each VS hurting one person with 5 airbnbs. Yeah the person with 5 units is wealthier, but you’re hitting them 5 times as hard.
If you believe it’s wrong to take away the grandfathered ability to run an AirBnB, then it’s wrong regardless of who owns them. If you believe it’s acceptable to take away that grandfathering, then it’s acceptable whether it’s a smarmy investor or your dear grandma that owns them.
But this is a common issue with housing. Everyone gets mad at investors and developers because they’re profiting from high house prices. But of course if it’s you or someone you know that’s profiting from high house prices that’s totally OK. No one gets mad at their neighbour for selling at market price which is double what they paid. No concerns about affordability there.
Yeah they are asking pre-rule change prices. Zero awareness from sellers that the short term rental premium evaporated overnight.
I guess it’s fair to say today if u wanted to buy a home there’s more than enough to choose from . Where are all the buyers
Same situation with STRs….units coming to market but asking prices are optimistic to put it kindly. Not one sale since the announcement.
And the majority of one bedrooms are a really good size 600 to 700 sq/ft with solid balconies so you can invite a few people over to the unit. If they had cheap 400 sq/ft units without balconies the amenities would be of more use imo.
Also, with the STR ban maybe a guest suite would of more benefit for family visiting out of town. I own units at Promontory and Encore and both guest suites are always fully booked.
Lots are actually burning more because the downpayment is on borrowed funds. The rooftop, gym and common space are very nice in the building. however outside of the gym, I wonder how much people will actually use them.
That’s kind of dumb. They could have easily assigned and got >5% of their deposit back from the assignee. Better than walking away from the entire 15 or 20% deposit and potentially being sued.
Fyi, some of the re-sales were bought under 500k. Pretty sure if they dropped to $549,900 they would sell.
IMO, break-even is the best case scenario if one needs to get out now.
No, they are bad evil investors. The Uplands owner with a 6,000 sq/ft mansion and a $2 million dollar “cottage” at Lake Cowichan is the normal person in this whole situation. They aren’t taking housing away from anyone for STRs.
How is my estimate of potential rent way off?
A lot of owners could get out now at a small profit or breakeven if they adjusted their prices accordingly. Most listings are approx $100k more than the pre-sale purchase price. If some of them dropped 50k they would start selling.
I really don’t understand what owners/investors are thinking at Dockside. There are currently 26 listings (including five developer units).
1 Only two re-sale units have sold so far.
2 We are heading into the three slowest months of the year seasonally, in a market that is at a 10 year low in sales in general.
3 Bosa is approximately 60 days out from bringing over 100 high-quality rental units to market in the third tower.
4 Interest rates are at 6% +/- so either your are bleeding (or opportunity cost) $3k on a one bed or $5k on a two bed per month.
5 SRT ban means we will see both more for sale condo invesntory and more LTRs.
Not sure if people are thinking market will improve (unlikely) or just have a ton of cash to burn? My personal take on the situation was rent right away for slightly below market so I can secure a great tenant on a 1-year lease. Tamponade the cash flow bleeding at $700 per month instead of $2,800 per month and re-assess the situation when the tenant moves out in 1, 2, or 3 years.
VicReanalyst, your insider information is pretty good on Dockside. For some pre sale buyers it’s going to be a flip of a coin if they make a profit or not. Although your estimate of their potential rent is way off.
I like Dockside Green as the bridge keeps a lot of the riff raff out of the neighborhood. If I had the choice between Dockside versus the Pearl, I would take Dockside. Not to sure if I would pay anymore for the two different locations as I’m a bit disappointed in the degree of the views at the Pearl. For most pre construction buyers the Pearl doesn’t have the same issue with pre-sales as Dockside as the pre-sale contract prices were significantly lower than today.
It’s going to be tough for some at Dockside as the monthly rents may fall short of the costs to own unless they had put down a substantial down payment in excess of 20 percent. Does one cut bait and take a potential loss or pump in more cash and hold the condo until prices to increase? With the cost of money today it would be expensive to deleverage in order to make the suite cash flow neutral as a rental.
It’s kinda the same with vacation rentals. Ideally you want these vacation rentals maxed or even 100 percent financed as you can write off a lot of the expenses. Having to go to month to month rentals and thereby cutting the gross potential income by a quarter to half is going to be stressful decision time for some of the hosts whether to sell or pump more cash into their suite(s). But that is going to depend on the host as some were looking to cash flow while others were betting on appreciation only.
Either way this is going to be a headache for the lenders that financed them as they fell into a grey area of financing a business that was included in the sale. Basic sloppy lending practices by some lenders as they should have been lending only on the building not on the business. The potential for the lenders to take a hit on these transient zoned properties if the mortgages go into default is a lot higher than a traditional strata condominium bought for home occupation.
I am starting to find politics quite fascinating. The housing crisis in Zagreb, a market I am just as familiar with as Victoria, is a lot worse than Victoria and whether it be FB/forums/Youtube no one is down with my idea of vacancy tax to bring to market some of the 54,000 vacant condos. I just posted a video on my YT channel over the weekend explaining why we should bring in vacancy tax to Zagreb and this is the classic reply (translated from Croatian).
“Any real estate tax would ruin Croatia. You are clearly out of touch with reality! We Croats keep our money exclusively in real estate and it would cause a total collapse of the market. If someone wants to have a summer house by the sea or an apartment in Zagreb and not rent it, that’s his business. This tax is an encroachment on private property.”
If someone suggested a restriction of any sort on short term rentals I think riots would break out 🙂 It is really odd even renters are not keen on vacancy tax or short term rental restrictions. I wonder if it is lack of understanding or people just don’t want too much government involvement in their lives.
Either way, same problem as here (even worse), but totally different attitudes and I wonder what that is shaped by.
There’s no practical difference in terms of how it affects the long-term rental market, but of course there’s a “moral, ethical or even financial difference”.
Airbnb owners as a group have been tarred with one & the same brush from the Prime Minister on down as big players who have commodified an essential need and are out to screw the little guy – he’s made it personal, and so have many of the detractors, just have a look at the spew on reddit. The whole story starts to break down somewhat as one considers the inconvenient truth that a lot of these airbnb owners are also just normal people, whether it’s buying a single unit to create a bit of retirement income/job, or as a first rung on the RE ladder, or as their home base with an itinerant career in other parts of the world, or have a place in town for visits to care for aging parents or medical situations, or god forbid, a place to get out of a prairie winter. That’s the “moral or ethical” difference vs. the big bad corporate octopus owner. The financial difference being that the little guy gets hurt disproportionately by these changes.
Who wants all the hassles of being a landlord, including the government changing the rules? There’s easier “do-nothing” ways to invest. Let the REIT get all the ‘fun’ of being the landlord.
basically if you are a “investor” then unless you are very well capitalized, then you either have to sell for a most likely a loss or rent out at a negative cashflow of ~$1,500 or more a month.
Yes, developer is also trying to sell some which aren’t moving and are cheaper than what the pre-sale buyers are listing at after accounting for gst. Also heard some aren’t able to close.
Month to date activity:
Sales: 376 (down 16% vs same time last year)
New listings: 1019 (up 9%)
Inventory: 2765 (up 26%)
A bit of an AirBnB boost in new listings there.
What do you mean, presale buyers trying to resell them> And the two bedrooms in particular?
The new dockside buildings are a problem for people trying to get out. Especially the 2 bedrooms.
One thing people are extremely lazy at is removing ads from the internet. Takes 2 seconds yet they simply leave ads up online.
It’s the end of the month and there are 194 one-bedroom rental units available within a 7.5 kilometer radius of downtown according to Craigslist. Average rent for a one-bedroom is about $1,950 per month. The spread between low and high, excluding outliers, is in the range of $1,700 to $2,400 per month.
I am a bit surprised by the number of two-bedrooms for rent. 178 listed on Craigslists seems like a lot. Average asking rent at $2,700 per month. Again some of the listings go back to mid September. Price range, excluding outliers, is between $2,400 to $3,000. One can still get a two-bedroom basement suite outside of the down town core for $1,800 per month. Noticing that property management companies are using Craigslist. That’s not that common as they usually have a waiting list of tenants.
Now if you are an airbnb host, then of course you would be putting your rental up for lease until the tourism season begins in April. So you might add a couple of hundred more for being furnished.
I have noticed that some condos have been listed for rent since mid September. What some are asking doesn’t seem atrocious such as a couple of them in Dockside Green at around $4 a square foot. It’s too bad that we just don’t have good, or for the most part any, data on vacancy rates. But I would opine that 194 available one-bedroom rentals at the end of the month with some going back to mid September suggests that the vacancy rate may be increasing in Victoria.
My opinion about vacation rentals is that the hosts are thinking that the government will back down or water down their policy before May. So while the number of pre-owned vacant condos (such as a vacation rental) listed for sale has increased slightly, most hosts are waiting it out.
-Cognitive Dissonance is a strong force in Victoria.
https://youtu.be/Iyr74Rs6BWU?si=48qXew2-Yf2Kim_i
BC realtor ordered to tear down home built without permits
https://infotel.ca/inhome/bc-realtor-ordered-to-tear-down-home-built-without-permits/it101269
The Calgary-based Boardwalk Real Estate Investment Trust (REIT) is among the REITs posting higher year-over-year revenues amid a stubbornly tight rental market.
In the first half of the year, the trust — which owns more than 33,000 apartment units, most of them in Alberta — saw its same-property net operating income (NOI) grow by 13 per cent compared to the same period last year.
It’s a trend happening across the industry, as all five of Canada’s largest publicly traded apartment REITs — Boardwalk, Killam, Minto, CapREIT and InterRent — saw their net operating incomes grow somewhere in the neighborhood of seven and 13 per cent year-over-year in the first half of 2023.
In theory this should boost the development of new rental housing, however few REITs set money aside to build more housing and instead concentrate on buying up existing rentals and maximizing rental rates. In practice REITs target apartment buildings with below average market rents that they can purchase , remodel and increase the rents. By doing so, they are removing the lower end rental buildings from the rental marketplace.
REITs have been around for a long time, but they have skyrocketed in popularity among investors desiring to get a piece of the appreciation in rental income from real estate without having the problems of ownership in a specific property. Investors made good returns as interest rates declined and bottomed out which led to an impressive growth in REITs.
I think there is no point in vilifying anyone. People buying a rental or operating a legal short term rental are not the issue. The issue is priority of housing and the rules needed to change to encourage long-term rentals instead of so many STRs. Even more, there needed to be effective enforcement of the rules because so many strs were operating illegally.
However, government should also be building a lot more purpose-built affordable rental units and have a long-term plan for this. The private market is never going to provide long term stable affordable housing. Individual landlords get old or tired of it and REITs are profit oriented.
There is no moral, ethical, or even financial difference. Sure I get that there may be a political difference, because everyone probably knows someone that owns one AirBnB whereas few people know people that own 50 short term rentals.
Actually LeoS, the re is a rather obvious difference as to whether you are financially damaging most a lot of small investors or whether you are mostly hurting a few larger investors that can easily withstand the hit.
I assume that your point is exclusively geared to bringing more units for full time occupation. You are right as far as that goes but I am surprised that you chose to simply overlook who is taking the financial hit.
Zero practical difference between one owner with 100 units and 100 owners with 1 unit each.
So funny that people alternate between what kind of investors they hate the most. Same thing in the long term market. Some people will cite the stats that individual investors are buying up half the condos and that’s uniquely bad. Then others will say it’s actually the big REITs that are the root of all evils in the housing market. There’s practical reasons to prefer investors with lots of units over small landlords, because the big landlords are generally more professional and can’t evict as easily, but the question of investor ownerships seems to derange many people’s thinking when it comes to the market
Exactly. And the study done on this does not seem to distinguish between ownership of homes and ownership of a property management company. Big difference and annoying to see the vilification of STR owners on false grounds.
Marko: Are we seeing a lot of AirBnBs getting listed this last week?
Yea but if you look at the hosts with 10+ properties they don’t actually own the properties.
It’s about 50:50 of hosts with one unit vs hosts with multiple units. 17% of listings are held by hosts with 10+ properties
Airbnb on the long term rental market. From Matt Dell on twitter. If you’re going to go on the rental market probably smart to be the first mover
That’s the problem, you don’t understand much….
Why would you sell an Airbnb at this time of the year? Milk it for a few months, then list or rent long term in the spring. From what I understand, the majority of owners are big players.
Are we starting to see any great number of AirBnBs come onto the market?
When it comes to construction, everyone wants their piece of the money pie. If the federal government gives up their piece, then someone is going to step in and take that piece for themselves. The feds left money on the table and Vancouver just got to the table first to get a bigger piece of the pie before someone else beat them to it.
Yup. Reading the comments from the councilors is good stuff too. Either total ignorance at how the development market works (“fees don’t matter”) or even that municipalities have any role in housing affordability, or just outrage that the feds are trying to step on their toes. And the feds didn’t even ask for much at all, they said just delay implementation for a year. But no munis are determined to capture the GST exemption for themselves and to hell with the housing shortage.
Hope that the feds hold strong and don’t give out any housing accelerator funds as they’ve threatened. But province should also step in. Currently the contribution ratio for DCCs (how much the city helps pay for costs) is at 50% and they want to change it to 1% which is the legal minimum. Province should step in and change the minimum.
I can’t say I am shocked, that’s just reality. You have politics and lip service and then you have real life. I just spent over $10k getting updated memo’s from consultants because the building shifted two feet on the site plan, at the request of city staff. I am sure the building moving two feet will impact the squirrel habitat in the biology report. Consultants sent update copy and paste memo’s and invoiced anywhere from $250+GST to $1,415+GST.
Politics may or may not change, but the bureaucracy is not going anywhere.
I agree that the price of real estate is not tied to what it cost the developer/builder to build; however, if there is no margin development ceases and then eventually supply dwindles and I don’t think we will have lack of demand in Victoria going forward.
In my opinion there is going to be a buying opportunity in the next 2 to 18 months…impossible to time, but I think in 3,4,5 years we are back to the same crazy prices/rents/unaffordability. Nothing tangible is being done to address to supply. Maybe in the next 2 to 18 months you don’t time the market perfectly but long term you take the risk of being completely priced out the way things are going.
I think it can make a dent in the short term like 6 to 12 months when you combine it with lower demand due to interest rates on the purchase price front and a number of large rental projects about to be completed on the rental front. Hudson Hudson obtained their occupancy I think early January and it took them until now to rent the building, actually they have a few two bedrooms left -> https://hudsonhouse.townline.com/floorplans
So you combine a few large rental towers + airbnb I could see rents moving down a bit.
That being said the downturn in the market will probably cause a few projects to delay construction a year or two and will be back in the same place in two years with rents trending up.
The hilarious part is discussions on FB about how to negotiate your rent lower once rent prices fall and there are cheaper comparables….people are dilusional if they think rents will drop that that extent.
Whatever- The Ukrainians I have spoken directly to have indicated that they have no intentions of returning to a country in ruins. Furthermore, they intend to bring their families to Canada. Ukraine’s population has been on decline for years, the war has given them the opportunity to directly come to Canada. The government has indicated this is a “temporary” arrangement, but once established, they’ll be given permanent residence. Canada has the highest population of Ukrainians behind Russia and Ukraine.
I realize this is off-topic for the article, but I’m just shocked to see that Metro Vancouver just decided to tack on $20k per unit of new housing in added development fees. Given how the move is being driven by local politicians trying to protect homeowners from higher property taxes, I think we have to wonder if this is going to play out here as well.
The added drama with the new federal housing minister leaves me pretty convinced that politicians at all levels in this country have all made a secret deal to just keep pumping housing to the moon so long as they can blame it on someone else at a different level of government.
https://vancouversun.com/news/local-news/akin-to-a-hostage-taking-rebuffing-ottawas-entreaty-metro-vancouver-forges-ahead-with-development-fee-hikes
That is a possibility if pigs actually can fly and Victoria population drop to the point that there are more houses than the population.
The only time that I saw house price dropped drastically was during the 80s when mortgage interest rates were 18-20% and stayed at an average of 10-12% for some time, with a Victorian exodus off the island because unemployment was as high as 22% at one point (a perfect storm with logging and fishing industry collapsed, mill closures and the shipyards in receivership at the same time). However, rental price didn’t drop at all, because the people that declared bankruptcy still have to live somewhere.
It doesn’t work like that. A RE crash would happen because lots of properties are on the market and very few are actually moving. The price of a new build isn’t a floor when the existing market would have tons of choice.
If these regulations hold, I imagine the value of very small properties will tank. A lot of units under 500 sqft were specifically built to be attractive to STR investors. It sure seems like they’re screwed. Those units have such poor kitchen setups and they’re all going to hit the market at the same time. They’re not going to make an attractive long term rentals or entry level housing.
According to Lida Construction, in 2021 it cost $400-500 sqf to build a house, and that isn’t included driveway, basement, porch/deck, or landscaping (didn’t mention garage). Just the construction alone, and before landscape/driveway, it would cost $920,000 to $1,150,000 for a standard 2300 sqf house.
Therefore, even with a hard real estate crash to the point that the land is absolutely free, we are not going to see average SFH price below $1.2 million (average new build with GST price). Unless developers are Santa Claus and construction workers are elves that work for free, then perhaps an average SFH could be going for less than $1.3 or $1.4 million in the future.
Concrete condo are going for well above $900 sqf due to construction costs, so I can’t see how a few airbnb converted back into long term rental will even make a dent on rent or purchase price.
Canada actually gets relatively few people escaping wars and turmoil, compared to many other countries. There are millions of Ukrainians in Poland and still millions of Syrians in Turkey, and so on. Closer to home the US and a number of Latin American countries also get many more.
Refugees account for only a fraction of those accepted for permanent residents in Canada. Greatly outnumbered by economic and family class immigrants.
Frank, I expect a lot of them will want to reunite with their families once the war(s) are over.
No matter what measures municipalities take to mitigate the housing crisis: banning airbnbs, foreign buyers ban/tax, increasing density (which few people want next to them), banning condo age restrictions, and so on, nothing will counteract the turmoil in the world. Canada is a magnet for people escaping the wars and devastation occurring daily. This is only going to get worse. The demand is endless, someone has to wake up and realize this before serious conflicts break out here.
The drop will not happen suddenly. it is usually a slow grind down and if the conditions continues to deteriorate then a sudden significant drop would will happen in short order.
Yes agreed, and on the flip side those that paid $1.5M for royal bay houses will be the casualties.
Very interesting post Whatever
No Frank, I would not consider the last five years as stable. Most would not due to the black swan event of Covid. For the long term stability of the economy Canada needs immigration as the birth rate is not enough to keep our population from declining.
Home prices are high in Canada as the majority of the population live in or around a dozen metropolitan areas while the rural areas are almost uninhabited. The trend has been for the rural areas to lose population to these metro areas as that is where the best paying jobs are to be found. But that trend can reverse as it becomes too expensive to live in these urban areas. I suspect this is already happening in Victoria as the U-Haul companies have seen an increase in business moving more families up island where younger families can afford a home and put away savings.
This trend is more notable in the USA. California is now losing population to other states such as Arizona and Texas. Last year they had a net loss of some 400,000 people. Victoria could follow that trend and in the long term become once more known as the city for the newlywed and nearly dead as the economics of raising a family here continues to deteriorate.
People are still moving to Victoria, and they come with buckets of money from the sale of their homes in other parts of Canada. But at the same time mortgage applications are down to a 21 year low. We may be gaining retirees but we may also be losing young families. How long will that gravy train of retirees continue is anyone’s guess, but they also are experiencing difficulties in selling their homes in other parts of Canada. If property values in Toronto took a tumble that would reverberate into Victoria as those retirees would change their plans and stay put as they would have a much smaller bucket of cash to make their move.
And I think, I’m seeing that happening in Victoria as the upper income and luxury markets have slowed down. Of the 450 house listings in the core about a third are priced over two million and they are not selling well with close to seven months of inventory. Eventually the prices for upper income and luxury homes will have to come down and that should open up the selection for middle to upper middle income families but most of these homes are likely mortgage free so it is going to take some time.
There is also been some interesting changes in the rental market for entire houses in the core. I’m lucky in that I can look up the data on these houses for rent to see when they were last purchased. What I’m seeing is that there has been an increase in the number of listings of homes that have been owned for a very long time which suggests that they are houses that were owned by baby boomers that have left their homes either voluntarily or by the act of nature and their families have chosen to rent them out. That may be helpful for families as the selection may be increasing and begin to put downward pressure on rents for entire houses. I am also seeing an increase in the number of vacant houses listed. The problem is that there is no data system that collects this mass data so it is a hodge podge of information that could be unreliable to determine a trend.
My personal opinion is that the market is changing in a way that isn’t showing in the month to month average prices yet. In that prices may be stable but what a buyer gets for the same money paid a year ago is improving. For the same price a buyer today is getting more value for their money. That may be a precursor to a decline in prices, but I think we would have to first see a drop in rents and a increase in the vacancy rate. If it were not for the high rents and low vacancy rates due to migration, Victoria would be hooped.
Yeah, but not wait idly – there are other things Nan and her cohort can lobby gov’ts to do while waiting to get back at the horrible boomers…when the mask slips a bit it’s ugly out there, folks! The Nans are a force to be reckoned with.
A few years back I recall some condo’s at Bear Mountain were sold as 1/4 ownerships. I haven’t seen any of those type up for resale for quite some time. Does anyone know if they were all converted to 100% ownership? If so, how was that accomplished? Thanks.
“Immigration is important to keep the market stable “. Really? You call the last 5 years stable?
If boomers are dying off so quickly, who is going to take care of their parents and children? There is a rumour out there that if you reach 65, your life expectancy jumps to 85. The other problem is many are still working well into their 70’s. Spoke to someone who retired from Boeing with a group of 30 others. Within 6 months 5 passed away. Retirement kills.
There are millions of people are applying to come to Canada so there won’t be a lack of it.
https://www.canada.ca/en/immigration-refugees-citizenship/news/2022/12/canada-welcomes-historic-number-of-newcomers-in-2022.html
https://www.canada.ca/en/immigration-refugees-citizenship/news/2021/12/canada-welcomes-the-most-immigrants-in-a-single-year-in-its-history.html
I don’t think it is going to make much of a different in the cost of housing even if all the boomers kick the bucket, because the government will bring in willing immigrants to fill the gap.
There are several other points that back the rising price theory as well. Such as, perpetual over government spending, and in the near term is the possibility of more wars. (Government will have to print more money for war spending, thus that drive up inflation.)
Pace of government spending ‘not helpful’ in efforts to tame inflation: Macklem — https://globalnews.ca/news/10048805/bank-of-canada-government-spending-inflation/
Baby boomers alone may not cause a glut of housing although its not that easy to say as they do own more than one property. One boomer dying might make 2 or 3 properties come up for sale.
The problem may be that their homes have increased so much that there may be fewer people that can afford them if the current interest rates don’t come down substantially.
Demographics alone won’t cause a glut in housing it would require a convergence of several factors. Immigration is important to keep the market stable, but estimates are that 30 percent of new immigrants leave Canada after a couple of years and there is no guarantee that with the cost of living in Canada being so high that immigrants will want to come here in the numbers they have in the past.
My belief is that if it were not for immigration, Canada would be in an economic recession right now as our population would be declining. There are several countries where this is happening. Russia and China have declining populations and there just isn’t going to be enough young people to support their aging populations.
Canada’s intention of poaching skilled young workers isn’t going to help these countries either.
I absolutely think that people who provide services deserve to get paid really well so they can afford to live here. I imagibe it might be coincidence but both my lawyer and accountant here in Victoria seem to be doing well and have houses in the Uplands. My house painter just finished buying his third house in Victoria and by the way has a vey nice house in Rockland (working his ass off and being really good at what he does may just be a coincidence).
My dad was a working man who made his living with his hands and the strength of his back. But he was still able to buy a small house and raise a family of nine. I will be the first to agree that things have gotten worse for the young generation. I am all for building condos on the rail yards and I will turn out to support it but I think that there should be three more highrises and that all the building should be a minimum of thirty five floors. But that is not going to make cheap units and it will not be great for young families.
I know nothing about Nan but since she sort of suggest that she adds a lot to the community I assume that the community values her and that she is paid really well, Must be getting paid as well as my lawyer or my accountant (or maybe more than Marko on here) certainly must be adding a lot more than my painter.
“Whatever” is basically correct, I believe that next year is the tipping point where boomers are dying faster than retiring. You also have to take into account that downsizing often occurs when one spouse dies. As then there are the numbers going into nursing homes.
Nevertheless this may not exactly make for a glut of homes on the market in Victoria. I wonder who will be blamed after all the boomers die”.
Well Frank, if you were born in 1946 then your life expectancy is 73 years. That would put those born in 1946 past their “best before date”. That’s why the mortality rate has been increasing in Canada and will continue to do so for at least another decade or more. Half of those on this blog that are 65 or older will not see 80. That’s a lot of properties that will have to be sold as they either expire or no longer can keep care of themselves or the homes they live in.
My advise for Baby Boomers born in the 1940’s and into the early 1950’s is to not buy green bananas.
It’s all about timing the market perfectly…
https://youtu.be/lSSfbbBtJe0?si=tPtL7zFifs7RvqXE
Where exactly are 400,000 boomers going to die? Canada’s death rate is just over 300,000 a year, not all boomers.
Please make your arguments without personal insults
Not necessarily. Pudowns of boomers are pretty common among folks with birthdates from 65 through 2023.
Funny, I read Barristers comment to mean that he felt the people you think he was slamming should be paid more so they could afford to live here. How did you interpret it? There will always be a supply of rich individuals (of all ages) who will move to desirable places and drive the prices up. Just because you got here first doesn’t mean they should not be allowed to move here unless you have a better way of regulating things.
Ironically, those who bitch about boomers, have boomer parents.
Youngsters don’t wanna wait or work these days. That’s the problem.
He did something to acquire enough wealth to be able to retire here when he did. He paid at the time the fair market value for his home in Rockland, it could have went up or down in value after he bought.
The grim news is that baby boomer bubble is deflating and has been since 2015. About 400,000 baby boomers are expected to die in 2024 and that number will be increasing for another decade or so.
So Nan all you have to do is pick the house you want – and wait.
Death to the BOOMERS! Oops, that’s me.
Nan I think it’s fair to say you’re full of anger . You have no greater right to live here than barrister does .
https://househuntvictoria.ca/2023/10/24/about-those-airbnb-regulations/#comment-106623
“You seem to miss the fundamental point that if you are not getting paid enough to live where you want to work than what you do is not important enough to anybody.”
This is maybe the the most sanctimonious BOOMER comment I have ever read on HHV.
Tell that to all the people that buzz around you serving you all day in restaurants, hospitals, coffee shops, making your existence here enjoyable. Even your doctor, lawyer and accountants can’t afford to live properly in this city.
Old ass NIMBYS like you are a huge problem because there are a lot of you and none of you have anything better to do than attend municipal meetings and bitch about how your Rockland views [removed insults -admin] will be “ruined” by the 200 people that will fit in a proposed Condo.
Not only that , from what I remember you are an equity and income nomad anyway. You didn’t’ earn your place in Victoria by contributing to it – you lived in a much shitter place making money until you decided to retire here. What does competing against higher incomes and net worth from other places have to do with the value of work a person delivers to their community? The answer should be nothing.
For someone who has nothing to do other than post on HHV all day what do you’re views matter anyway? Make way old man.
If the BC government removed the property tax deferral that would bring more existing properties to market. As it is now there are retirees that are living in middle income houses, that if not for the tax deferral, they would sell and downsize. Or at least raise the interest rate on the tax deferral to 7 percent. That would bring more existing middle income homes on to the market.
In 2022, BC had 15,588 new deferral applications and 68,220 homeowners renewed.
BC Conservatives have plenty of good ideas for the economy, employment and taxes. Examples – eliminate carbon tax, lower taxes overall + smaller government, expand LNG, private medicine, allow more icbc competition, balanced budget and special “density zones” for housing. .I like every one of those. Dismissing all of that as “culture war stuff” is just rhetoric. https://www.conservativebc.ca/ideas
insider contacts are saying some owner’s are unable to close at the new dockside condos.
I suspect the government has enough sense to realize that Airbnb tax is good politics but empty room tax isn’t.
Still waiting for a government to go full Texas and abolish income taxes in favour of high land taxes. Smart move IMO, but somehow our provincial conservatives are only interested in culture war stuff and not taxation reform
That isn’t an empty rooms tax because for the same property, the tax is the same if it has many vacant bedrooms (one person living there) or no vacant bedrooms (ten people living in it).
If there was a vacant rooms tax it would incentivize (lower taxes) owners and landlords to have more people per dwelling living there, which would help if not solve the housing crisis.
For example, it gives a landlord a financial incentive to rent to a big family instead of a single person. And it gives an owner a financial incentive to rent out a suite or rent to a roommate.
Looks like the COV is not willing to pro-rate the $2,500 licencing fee for STRs for 2024….wonder if it is going to make sense for people to continue operating January to May if they have to pay $2,500.
So a 5 bedroom home in Duncan pays the same tax as a 5 bedroom home in Oak Bay? In sense, I guess, but not sure if property tax is equivalent to empty room tax.
We do have an empty room tax in a sense, since property taxes are based on the market value of the property, not on how many people live there and use government services.
I liked this post I saw on FB 🙂
“If the STR ban doesn’t solve our rental problem, government should consider an empty room tax!!! The idea that someone just lets a room sit unoccupied when people are homeless or need shelter is sickening.”
What do we think about the amendments that BC United proposed and which the NDP simply ignored?
B.C. approves short-term rental legislation without amendments from Opposition
https://vancouversun.com/news/local-news/b-c-approves-short-term-rental-legislation-without-amendments-from-opposition
Many people: “We shouldn’t treat housing as an investment!”
Calgary RE: “Allow me to make that stance easier for you.”
Well she would say that.
Oops. Buy based on short-term rental income that any informed person could see is precarious, and interest rates that any informed person could see were even more precarious.
https://www.theglobeandmail.com/real-estate/vancouver/article-bcs-airbnb-crackdown-will-devastate-some-real-estate-investors/
Hotels provide a lot tax revenues to the local economy unlike the leeches called Airbnbs.
Those crazy socialist Albertans have decommodified housing.
Alberta is a bit of an outlier over that time period, particularly given 2014 was a price peak just before the oil bust.
Actually what’s notable is how consistent gains have been across the country in the last few years.
Speaking of assessments, thought I’d take a gander at the assessments of two friends in Calgary who bought a while ago.
#1
SFH in Rosedale (leafy, mature neighbourhood in the NW, not far from downtown)
Bought in 2014 for $1.09M
2023 assessment: $1.15M
9-year appreciation: $60K
#2
Brand new, large SFH in Parkdale (also leafy, mature neighbourhood in the NW)
Bought in 2014 for $1.775M
2023 assessment: $1.64M
9-year depreciation: $135K
It’s wild how divergent RE gains have been in different parts of the country.
It does seem that there has been an increase in new condos on the board’s listing service in the Victoria Core at a time that there may also be a potential increase in the number of STRs being listed.
At the moment there are some 486 freehold condos listed in the core. About 393 are re-sales of which 107 are vacant and 44 are tenant occupied or about 38%. That percentage does seem to be increasing as it did in the very early days of Covid. The difference is that this time a large number of tenants are not going to be evicted and have to find rental accommodation at time of a low vacancy rate. One of the factors that drove up rental rates in the first six months of Covid by some 15 to 20 percent.
What we have with vacation rentals is a similar stimulus of condo owners’ fear of the market declining as in the early days of Covid, but this time possibly an entirely different result as rents are likely to remain stable.
Yes. Roughly unchanged because the valuation date is July 1 and at that time houses were selling at about their assessed value
Any thoughts on where assessments will land this year for SFH?
Obviously not. Victoria city council is making generally pretty good decisions on housing IMO. One of the better councils we have in the region
Nelthorpe is the only way to get onto McKenzie heading west if you live in that Rainbow Park neighbourhood. When that density is added it’s going to be a traffic shitshow for everyone — newcomers to and current residents of the area, as well as drivers on McKenzie. Sigh.
Do you think we will see the City of Victoria rezoning the remaining hotels to residential? There are thousands of hotel rooms that could be providing housing for residents.
It would be dumb, but then Victoria city council…
It would be ironic (not in a good way) if the STR’s flooded the market, bringing the vacancy rate to 3.5% from 1.5%, thereby allowing once again STR’s, having crossed the 3% vacancy threshold.
Modern multifamily units are likely more sound-proof than 50 year old SFHs. They can also have proper filtration on air intakes. That said I don’t like some of the new smaller buildings that practically overhang traffic. Also busy is relative. Even Greater Victoria’s busiest streets are not that busy or polluted.
Victoria’s main air quality monitoring station sits just off Blanshard in Topaz Park and records pretty decent air quality (that would be regarded as excellent air quality in most parts of the world).
There are some housing advocates that aren’t a fan of that model, saying that poorer residents that can’t afford a single detached house shouldn’t be jammed on to the busiest / loudest / most polluted streets. Instead density should be distributed everywhere
On the other hand it makes sense to put multifamily where there are transit / active transportation routes.
Certainly Saanich is pursuing the villages and corridors strategy for most of their density.
Single family housing on the busiest street in Saanich is probably the worst design decision in this city. Can’t see how rectifying that would be an issue.
Introvert, there is also a future proposed multi-family condo building going in (if/when approved) directly across McKenzie from that condo tower residents are complaining about in Swan Lake, in 3-4 lots next to the large parcel Abstract is trying to put 26 townhomes in on Rainbow Street. I envision driving down McKenzie will become like driving down Shelbourne in the future. Side-by-side multi-family buildings.
STR condos listed:
Oct 2020: 18
Oct 2021: 17
Oct 2022: 9
Oct 2023: 25 (to date)
Or at least a big reduction. I have been a repeat problem-free customer at one AirBnB. On the third time I went to book the host contacted me outside the app and offered me a small discount if I booked with her directly. Since I trusted her and she trusted me this was an OK arrangement for both of us even though it has some risks relative to going through the app.
I have since heard from two hosts, one a relative and one a friend that they do this sometimes for repeat customers so it may be somewhat prevalent. Motivation at the time was cutting out the platform fees. Future motivation could be even stronger if it means keeping the CRA in the dark.
I also think that what this means is that this is the beginning of the end of any unreported STR income. I would expect that the federal government will move to require automatic reporting STR platforms and this will be cross-checked with the provincial registry where necessary. That is a good thing imo.
It does make me wonder if there will be an expansion to require the registration of all rental accommodation with the province.
My read is yes if I am correct in the interpretation because you will not be able to list on any short term rental site without provincial registration (and all STR sites must be provincially approved and meet provincial requirements) even if you are in an area that is exempt from the principal residence requirement. This means if the str use is not legal under the existing bylaw that bylaw needs to be amended or the province will not allow you to register. Mt. Washington should get on this asap with the RD to redefine bed and breakfast as a ski hill should be able to STR imo.
I looked into this a bit. Within the Comox Valley RD Washy has its own special zoning area divided into sub areas. In the area where nearly all the existing condos and cabins are located “bed and breakfast” is a permitted use. However “bed and breakfast” appears to be defined in a way that excludes STVR.
Therefore it appears to me that STVRs were never explicitly permitted there. According to the CVRD bylaw uses not permitted are prohibited.
The question then becomes: “ Will the provincial STVR registry cause a crackdown on these “prohibited” STVRs when they are located in rural or otherwise exempt areas?”
Full disclosure: we own a condo there. Don’t STVR it though.
Oct 20, 2023 data release (August 2023 data) from B.C. gov’t, showing falling construction building permit value (planned spending) for B.C. (and Victoria),
For example, B.C. single family (SFH) planned residential units down -33% YOY. that’s an apples to apples comparison of the same data point YOY. (Kamloops down -51%)
https://www2.gov.bc.ca/assets/gov/data/statistics/economy/building-permits/building_permits_highlights.pdf
“Building Permit Value by Census Metropolitan Area
The year-to-date value of building permits increased in Kelowna (+17.0%) while decreasing in all other census metropolitan areas. Kamloops (-51.4%) had the largest decrease in planned spending followed by Nanaimo (-39.2%), Victoria (-24.9%), Chilliwack (-24.3%), Vancouver (-14.7%) and Abbotsford-Mission (-0.8%).”
Not the case here.
But these units were financed under low interest rates. GST exemption will help projects going forward.
Toronto rental construction hits 9-quarter low as legislation to scrap GST introduced
https://financialpost.com/real-estate/toronto-rental-constructon-9-quarter-low
In most areas of the Gulf Islands, they require proof of a potable sufficient self-sufficient water supply (well, spring) before approving a build permit, so that shouldn’t be a reason to deny housing in the first place. If you talk to the people, you’ll hear they just want to keep the Islands like they are, and “why do we need to grow?”
Pay young people more and then they can afford to live on the Gulf Islands. That assumes that what they want to do is worth more to someone.
Doesn’t agriculture know that California has millions of more people to house?
My understanding is the Islands Trust is reluctant to approve more housing due to water shortages but I have no idea how much merit there is to that. The same argument is used against housing in California except the reality is agriculture not people uses the majority of the water there
The Gulf Islands have a 38% vacancy rate, where the owners don’t occupy the homes full-time. Yet they already have tough STVR restrictions, typically limiting to areas whether the owner is present at the site during the rental. On top of that, they are mostly NIMBYs opposed to expanding long term rentals through garden suites, subdivisions, approving multi-family etc.
Result is labor shortages, as young people can’t find places to rent, so can’t live on the Gulf islands.
Disgraceful!
Nan, fine as long as if the proposal is not in the zoning, we dont change the zoning for the developer and it does not get built.
You seem to miss the fundamental point that if you are not getting paid enough to live where you want to work than what you do is not important enough to anybody.
Marco Juris can easily afford to live here because people value what he does to pay him more than enough to live here.
If you want more nurses than pay them more. If you are making twenty an hour than that is the value that people put on you.
Exempt from the principal residence requirement only, but not from the provincial registration requirement which requires you to have a business licence or show that the str is legal in your community if business licenses are not issued I believe. The Province has included amendments to legislation to permit regional districts to issue business licences as part of the STR reform package.
Port Renfrew is in the CRD and under their bylaw I don't think you can STR any residential accommodation, only commercially zoned properties, but perhaps someone else can confirm as there may be something I've missed. The Comox Valley RD for Mt. Washington does appear to possibly permit tourist accommodation in residential zones already so perhaps they will start licensing. Not sure.
Note those are aggregate figures and don’t represent individuals. That is, people receiving interest income are unlikely to have significant debt, and people in debt are unlikely to have significant interest-bearing savings. Rather the bars better represent the ratio of debt to savings within each age cohort. And yes it’s nice to have a GIC paying more than inflation, if only a little bit.
Change in interest paid by age. Older folks making bank with these rates
Hopefully Port Renfrew is exempt, as it’s population < 10,000. If not, Port Renfrew would be getting stricter STVR restrictions than New York City.
I recall that areas <10,000 population are exempt.
The tourism angle is interesting. It may or may not impact Victoria considerably, but I guess no-one will be going to places like Port Renfrew anymore. And there were lots of new apartments built there that were ideal for STR but likely not for long term rentals. Are 100+ people going to move to Port Renfrew long term and pay a premium for new condos? I can’t see it. It’s great as a remote getaway destination, not as a place to live long term.
So, does this mean Mount Washington ski hill can’t have BnBs?
I have no problem with a nimby , nothing wrong with everyone having a voice .
Yes, I think we all are against NIMBYISM until development happens in our neighbourhood. Exhibit “A” is the recent council meeting over the proposed condos on McKenzie Ave. near Rainbow in Saanich.
Nimbyism should be completely outlawed. If a developer proposes a development and it’s in accordance with local zoning and building codes, it gets built. You don’t like it? tough. That’s progress.
Before any of you clarify, I mean exactly what I said. Don’t be so entitled to believe that your little part of the world will never change if you just complain about it enough. You want different building codes or zoning? Vote for them. Once land is bought, projects get set up and are ready to go, as long as they are in compliance, that’s it they get built.
The NIMBY part of the social contract that used to be something we tolerated when there were other places to put buildings and people needs to be redacted so that the rest of the social contract (you know going to work and being able to afford housing and food and perhaps a retirement) can be restored.
It’s a “resort” now? Guess in the Kootenays a town that used to have a mine that has a ski hill nearby is a resort. Goes for Fernie and Rossland too.
Note that Nelson did not make the list – it has a severe housing crisis.
I actually feel kind of sorry for that bylaw officer, he has made a conscientious and repeated effort to “catch” these folks doing something wrong – probably because people keep phoning him, so he has no choice. But I don’t think it’s led to anything much other than amping up the neighbourhood war we’re just trying to stay out of. I do find the 3 dogs annoying as they’re not trained to stop barking, but then again, the owner is actually pretty good about taking them inside whenever it does start to get out of control, and she’s also good about keeping them in the house at night etc. So, it’s not optimal, but I can live with it. We live sort of in the country so I think a certain live & let live should be tolerated.
I just wouldn’t do it – I think if I’m annoyed enough to make an anonymous complaint I should just talk to the neighbour instead, or at least first.
When we first moved in here, we had an anonymous bylaw call because we were having some trees trimmed & one removed. Three people showed up, a bylaw officer (ex-cop), someone else, plus the city planner himself! Of course we had a permit and were doing everything correctly, so it wasn’t a problem, but it did colour my first view of my new neighbours.
I’m not in favour of anonymous things like this.
I’ve been doing fully furnished long term rentals for 10+ years now. First of all, no issues securing tenants. Medical residents, individuals on work contracts, international students, young military folks without families, etc. Maybe the market is smaller, but so is the supply so I’ve never had issues securing furnished long term conventional tenancies.
Some of the reason I’ve done it
– Less wear and there on the unit in terms of furniture being moved in/out. I find movers aren’t super careful and if the unit is small it receives a lot of dings each time.
– Tenant profile for furnished unit usually vacates between 1 and 3 years which means I can reset the rent. Typically someone isn’t going to stay in a furnished place for 10 years, but I did have one 10 year tenant.
– If I ever had to liqudiate the unit it would show better for sale(versus tenants furniture which may be too big, etc.)
– Etc.
Conclusions after 10+ years
– Furniture starts to age and looks cappier and you have the headache of dealing with it.
– Tenants still do a number on the unit in terms of wear and tear, maybe less than if unfurnished, but with the exception of one unit (I think just a lucky streak of really good tenants) all have received a substantial amount of wear and tear.
– Many strata buildings I own have changed their move-in/move-out fees bylaws where they charge the fees with change of occupancy, not an actual move so have to pay those fees now anyway.
– Etc.
This last unit I completed on I was just too lazy to furnish it and my thought is it will get beat on one way or another and I’ll just renovate it (new floors, etc.) in 15 years as at that point it will have dated anyway.
With Airbnb essentially eliminated there might be a market for month to month furnished rentals under the RTA, at a premium. Movie industry, for example. You would be surprised what they pay for accomodation even for the crappy Hallmark movies.
No. Principal residence license fee is $150. (Note their website doesn’t seem to reflect the results of the vote in July though)
No vacancy tax there either.
And no automatic AirBnB restrictions in the resort regions.
City of Fernie
Town of Golden
Village of Harrison Hot Springs
District of Invermere
City of Kimberley
Town of Osoyoos
Village of Radium Hot Springs
City of Revelstoke
City of Rossland
Sun Peaks Mountain Resort Municipality
District of Tofino
District of Ucluelet
Village of Valemount
Resort Municipality of Whistler
What makes a resort? Some are pretty clear like Whistler, but plenty of normal people in Invermere, Golden, Revelstoke, Osoyoos, etc. Seems a little arbitrary.
You know what is interesting is it appears to me that the public is totally fine with “family cottages” being able to sit vacant on the Gulf Island, Cowichan, etc. Like someone who buys a 300 sq/ft unit in Victoria is evil, family that has a >$1-million-dollar waterfront cottage on Cowichan or Mayne Island that is totally cool. At least that is my perception.
People can get creative if they want to…..why can’t you just sign a RTA tenancy agreement with a mutual end to tenancy signed at the same time? A lot of other not black and white scenarios I can think of.
The RTA 100% above board already circumnavigates this SRT legislation. Let’s say you have a travel nurse/snowbirds/movie industry that needs a place for two months. You sign a RTA month-to-month tenancy agreement. They give you notice in the first month and there you have a 60 day legal rental under the RTA.
I’ve signed RTA tenancy agreements with people that found my listing on VRBO and we just skipped VRBO. As I mentioned a few weeks ago I don’t care about them staying longer as the rent is so inflated that they have monetary reason to leave.
Right…give me a call when someone is laid off at COV/Province/Feds. While population of Canada has increased 11% the number of fed employees during the same time frame has increased 37%. I am guessing similar numbers at provincial and municipal level.
Still trying to piece all of this together. If one wants to rent a room in a principal residence house, or the entire house while on vacation in Victoria, up to 4 times per year max they will have to pay $2,500/year for the STR municipal licence?
Thanks Leo. That is my thought too. Therefore for the many areas including rural areas and small towns where STVR is not currently permitted under bylaws it may be impossible to get a provincial license. Perhaps some of these communities may update bylaws so that they allow some degree of STVR
I live in Saanich. Here are Saanich’s rules on confidentiality as they relate to bylaw enforcement:
https://www.saanich.ca/assets/Local~Government/Documents/Bylaws~and~Policies/Council~Policies/bylaw-enforcement-policy-sep-2018.pdf
I’m not aware of any rule stating that “only an immediate neighbour” can make a complaint.
Not really. Someone several houses away can get annoyed by the rule-breaking.
I suppose, but a) people rarely take matters to court, and b) especially when they’re clearly in the wrong.
The odds of maintaining anonymity are heavily on your side.
City staff could do something illegal, but again, consider the odds.
I would.
I don’t think this is true. If it’s not a permitted use then the province is not going to step in and legalize short term rentals. That would undermine the entire thing.
So even if STVR is NOT a permitted use in the locally applicable zoning bylaw for a small town or rural area you will be able to get a provincial license (as long as their is no local licensing requirement)?
Yes, it was a logical move and one that caught on. People were worried they would be priced out given the rate of appreciation in desirable areas of BC and this was a way to get in earlier. Long-term these changes may significantly curb appreciation. I don’t really know because I don’t think we have a long-term precedent yet on this. New York and Quebec were ahead of BC by a bit, but not by much. I’d expect other provinces to follow suit soon – including Ontario – but we’ll see.
I suspect there will be a delayed downward domino effect on the RE market that may suppress price increases. Definitely going to be some out of work cleaning and property management companies and a severe shortage of tourist accommodation and accommodation for short-term valid purposes like medical treatment, road construction and the film industry.
Some will try it but without the review and vetting services and support of a platform with insurance it is a very high risk proposition. A reasonable person would not do this or book this way imo. Market will be limited.
Section 2 says it has to be your primary residence that you occupy. The forms for the City clearly spell this out and secondary suites are not eligible… currently. Maybe the city will change this to match the provincial legislation but I would not count on it.
Yes, where a local government has rules in place that require municipal licensing then this is required to get a provincial licence and the muni licence must be displayed on the listing as well. STR platforms like Airbnb and VRBO can only list provincially approved listings or they are subject to huge penalties.
It looks like where there is no municipal licensing then the provincial rules apply except in the exempt areas or Regional District/Rural which can opt in to the provincial system. A municipality can make it more restrictive or impossible to operate a STR, but they cannot permit STRs unless they are in a primary residence or suite/ADU on a primary residence property and you have to swear an affidavit stating that this is where you live most of the time.
https://www2.gov.bc.ca/gov/content/housing-tenancy/short-term-rentals
I think you need 20% down payment for non-primary residences.
It depends. Sometimes only an immediate neighbor can make a complaint which makes it pretty obvious. If the person who the complaint was raised against fights it and it goes to court I believe that the person making the complaint has to be identified. While it should not happen some people well connected to city hall will find out from staff. If the neighbor is obnoxious enough I would not count on remaining anonymous.
Can’t see anything in the Vic city STR bylaw that prohibits a secondary suite being licensed in a primary residence: https://www.victoria.ca/assets/City~Hall/Bylaws/18-036%20STR%20Regulation%20Bylaw.pdf
Just curious Peter about neighbours calling bylaw enforcement officers because of one person keeping 3 loud dogs. What have they done to deter this nuisance after so many complaints? Fines? Warnings?
totoro – you must be trying to trigger Marko
Is this true? If so you basically won’t be able to STVR anywhere in BC even in small towns and rural areas that would in theory allow STVRs under the provincial rules. There are relatively few zoning bylaws in BC that explicitly allow STVR*. Yet most zoning bylaws state that any use not specifically permitted is prohibited. Therefore you won’t get a license from your municipality or regional district.
some existing tourist areas like Tofino and Whistler do already regulate and license STVRs
I hope you know that the person who files the complaint remains confidential.
Yeah, we’ll have to see – I mean, enforcement is a so-so thing. Perhaps totoro is right and fines will be a sufficient deterrent, perhaps not & there will be an uptick in “underground” rentals – the law of unintended consequences.
In our last house, we had the next-door neighbour airbnb his basement suite. It was occasionally annoying for various reasons, but there’s no way we would call bylaw on our next-door neighbour, so we just learned to live with it.
OTOH, in our current hood, various neighbours call bylaw all the time because of one person who keeps 3 untrained loud dogs. It’s like a war.
So I guess it all depends on the degree of annoyance.
No longer depends on municipal enforcement. In order to list on STR you’ll need a provincial licence. In order to get a provincial licence you’ll need to show a municipal licence which you will not get for a suite in a primary residence. Given the super high provincial fines and high muni fees I don’t think there will be many trying to bypass this. There may even be job losses in municipalities as I think they’ll be able to cut back on STR enforcement services.
Exactly. You can’t STR your suite in your primary residence in Victoria. I’m not sure that this is legal anywhere in BC. The province allowing it might propel some Munis to change their bylaws – but seems unlikely given the blowback against STRs – maybe high tourism areas only.
assuming Victoria enforces its bylaw they can’t use their separate suite for STVR
true – but maybe there’ll be more now over time, if people come to realize they can now STR their suite more profitably especially in tourist season as the traditional tourist accommodation is impaired. And so maybe reducing the number of suites previously used for long-term tenants. An unintended ripple effect perhaps, we’ll have to see.
I agree with your post @8:18 this morning Totoro. I am thinking the same thing about people from all parts of Canada/U.S purchasing STR condo’s. If they wished to visit family regularly or wanted to spend the winter say in Vancouver/Victoria etc. combined with the thoughts of perhaps retiring there in the future, STR were the only way they could go. They could leave those time frames open for themselves as well as for other friends and family members who wanted to visit. Many I am sure figured if their wish was to eventually retire here, this type of purchase would somewhat ensure they could afford to.
Right. And this also applies to industries like the movie industry that require lots of short term accommodation. They have a choice of which city to make the movie in, and it could tip them into picking a different city.
Remains to be seen if and how much prices will drop on non-STR units.
I think the bigger impact may be on curbing appreciation going forward which de-commodifies real estate for many Canadians.
If the only option is long-term rentals and you can’t HELOC at low rates and appreciation stalls for more than five years then a whole swath of ordinary people who might have borrowed equity from their primary residence to buy a condo, retirement or vacation home will not do this. How much immigration offsets these factors for BC I don’t know. Need to be an awful lot of first time buyers instead.
This is fantastic news for all those that are in their prime saving years 45-65ish. Bad news if you are currently living off the drawdown of your retirement portfolio.
And yet the Tourism Industry Association put out a statement in support. Tricky balance between bringing down house prices for their workers which is likely their biggest challenge and accommodation for tourists I guess.
I suspect it’s largely banking rules are outdated and haven’t caught up with what the market is now offering and to mitigate the banks risk on getting stuck with an un-rentable or hard to sell unit. I have seen several deals collapse on financing on units in the 350-400 sq/ft range on financing. It’s still possible, but I tell my clients to run it by their lenders first before even making an offer.
looks like all the Canadian bank stocks have retreated back to pre pandemic prices, some even lower (CIBC, BNS). Good luck out there 🙂
I think it will be fine overall, just a bump in the road. The general economy will impact Victoria much more than fewer tourists due to expensive hotel rooms.
1800 ish max would be my guess.
https://twitter.com/trevortombe/status/1717181167382958393
https://www.bnnbloomberg.ca/lenders-cautious-about-micro-condo-mortgages-but-financing-options-still-plentiful-1.1812319
When i worked at Scotiabank i remember having to get approval for anything under 500 sq ft but never really looked into ‘why’. This article states:
“Brokers say many bank’s underwriting policies limit how small a condo can be — typically 400 or 500 square feet — to land their financing, and sometimes subject buyers of even smaller units to extra conditions or necessitate exceptions to get a mortgage.
Lenders are cautious around small condos because of marketability. If lenders have to take ownership of the condo because their borrower is defaulting on their mortgage, they reason smaller properties could be less attractive to prospective buyers, Laird said. ”
Maybe someone else knows another reason but that’s what i found.
Mind you, when the pandemic halted all cruise ships for two years Victoria somehow survived.
Converting a lot of the low costs motels in Victoria into druggie housing has eliminated a lot of the cheaper family tourist accommodation. Now getting rid of a fair number of AirBnBs is not going to help with family tourism to Victoria.
Combine this with the fact that a lot of cruise ships are pulling in much later, around seven, and only staying for about three hours and we are seeing some real impact on Tourism in Victoria.
If I were a tourist-dependent business or events-related venue in BC I’d be quite concerned. Without STRs there is just not enough accommodation. Wonder how this will play out…
I am doing a quick back of the envelop calculation on what would I need in rent to break even on a 450k Janion unit with 50k down payment. A 400k mortgage at a five year fixed is running almost 3k a month. Maintence fees are another 250 a month and property tax adds about a little less than a hundred a month and I have no idea what insurance would be.
So what do these units rent for if it is a regular long term tenant?
Interesting point. Please elaborate, why are banks hesitant to finance anything under 500 square feet?
Even if you own and don’t STR the STR zoning has value upon resale. I would guess these buildings appealed to people who want future flexibility, saw the past appreciation was higher than non-STR, and were counting on the premium holding its value in the event of resale. Also, if STR zoning is removed can’t these folks continue to STR the unit if it is their primary residence, they are licensed with the City, and the strata allows it?
I was really surprised that the province is removing STR zoning and not grandfathering – as were owners I suspect. The owners of STRS would have had a huge jump in value if this zoning had continued but all other STRs but licensed primary residences were shut down. Big hassle to run a STR in your primary residence if you have a family – can’t be many of them in Victoria.
Great article.
The 20% premium shown in the chart is remarkable. As I understand it, this is based on all purchasers, meaning that all buyers were paying 20% more for their condo in these buildings. If that’s correct, it means that all owners will get affected by the same reduction (on paper) in the value of their condo. A 20% premium is $120k on a $800k condo. Admittedly this number may be partly “noise” as mentioned.
Are we really seeing this 20% premium in the market though? Has the non-STR buyer really paying 20% more to buy in STR allowed condos, or have 100% of the buyers been STR-buyers. There must be non-STR buyers in the janion/union did they really pay 20% too much compared to comparable non-str buildings ? That seems hard to believe.
Comparing the number of units sold today to back in 2010 needs to have a caveat that acknowledges that there were a lot less houses back then. It is not a massive difference but it further emphasis that things are a bit slow. I expect that we might see some minor drop in prices over the next year but I cant see this being a major impact.
Thank you for all the great charts and info – as usual.
The combination of Airbnb prohibition plus interest rates is bad news for many people who have used this income to pay higher rate mortgage payments for their primary residence. Moving to long term rentals will be a significant drop in income.
Another group that may have to sell are those who own second home vacation or eventual retirement properties and STR them to pay the costs. This is a significant part of the STR market in the Okanagan, often owned by people from Vancouver and Alberta, and probably part of the Victoria STR market too. STRs were very good to second home owners who wanted to spend part of the year in a better climate or near family and now this just doesn’t work financially.
I think the STR rules/legislation are well thought out and capture the potential loopholes of 30-day rentals, the federal definition of primary residence, and the former ability of owners to require long term tenants to vacate at the end of a fixed term. The NDP understands what drives STRs and has shut down the motivators and provided significant disincentives in the form of high fines and what looks to be effective and inexpensive enforcement with cross-checking with the homeowner registry. I do think this is the end of unlicensed STRs and the vast majority of STRs will no longer be able to get a licence through their municipality.
Given how many STRs there are I would guess there is going to be a big impact. However, with all these rule changes and high interest rates and potential stalling of appreciation this also reduces the number of prospective buyers of new units. Seems like a disincentive to build more units.
If you are an all cash buyer these days I would say a GIC looks better than a rental for many.
As an aside, it is going to be a good time to buy second hand furniture and household goods.
Many flippers hold the property for a little over a year and then claim it as their principal residence after doing cosmetic renovations.
Maybe if you approach BC Registry they might let you review their numbers because of your academic approach. Does not hurt to ask. Failing that try a freedom of information request.
I haven’t, though it’s an interesting topic. Unfortunately it’s hampered by data availability. I could troll through sales data and find the resales to compute an average time owned, but that would be quite biased because it doesn’t include the ones that aren’t being sold and thus are being owned for much longer periods of time.
If the bc land registry opened their data it would be pretty easy to do because it captures all transfers, but that data is closed
Not quite the same thing, but here is the percent of properties sold that were purchased within 12 months
Why don’t you just assume it’s the one that stokes your xenophobia the most? That might save some time.
Macklem warned premiers about dangers of putting Bank of Canada’s independence at risk
https://financialpost.com/news/economy/bank-of-canada-tiff-macklem-warned-premiers-rate-requests
Swan Lake residents vent frustration over proposed condo project
https://www.timescolonist.com/local-news/swan-lake-residents-vent-frustration-over-proposed-condo-project-7731800
Unrelated to airbnbs (sorry) but I notice a lot of houses re-listing after only being owned for 1-2 years (example 3553 Kelsey pl, 991 Lobhrunner, a few others but I haven’t been writing them all down). Have you done any analysis on average time a home is owned prior to being on the market? And whether that has changed over time? I’m not sure what we’d learn from that data exactly but it seems like such an odd decision (other than the usual unexpected divorce or job change) that I’d be interested to see how common it is.
Bank of Canada holds rates
And what country was this child from? Hypocrisy is a prerequisite for politics.
Can’t BC’s loyal opposition find something a little less absurd to knock the government over STR restrictions?
https://www.theglobeandmail.com/canada/british-columbia/article-bc-united-calls-premier-condo-king-over-his-property-sale-eby-says/#comments
There are 53 STR condos for sale in Victoria right now.
8 were listed in the last week, post-announcement.
I expect that number to keep rising. Cash buyers will be required to move many of these units, particularly those in the Janion as banks are becoming more hesitant to finance anything under 500 sq/ft.
Interesting article. Wonder what impact on tourism.