April Market Update: All about those listings
If you look at sales activity, there’s precisely nothing interesting happening in the Victoria real estate market. April sales ended up 6% over last April, but that’s only because there were two additional business days. The sales rate is completely unremarkable from a historical perspective, running 12% below the 20 year average for the month. Slow but steady.
The breakdown by property types is similarly unremarkable. Things are moving along essentially as they have been since 2022 when rates spiked. There’s a few variations as rates wavered up and down a little, but essentially it’s been status quo for two years. The month to month moves in seasonally adjusted sales are essentially noise.
I’ve often pointed out that this is about the same sales rate we had a decade ago, but back then we had more inventory, putting us solidly into a buyers market. That’s still true, with April 2014 registering very similar sales levels with 50% more inventory on the market (3461 residential properties vs 2313 today). However we are closing that gap, with a 48% increase in inventory this April from last year putting us essentially at the 20 year average.
By the way if you’re interested in non-residential properties (multifamily, commercial, industrial, etc), the inventory patterns looks similar.
Unlike last year when the spring brought dropping seasonally adjusted inventory, this spring we are continuing to build properties on the market.
That’s entirely due to the fact that the new listings picture is starkly different. Last spring we were in a new listings drought, while this year we have an abundance. The year over year jump of 56% is a little exaggerated as a result, but we haven’t seen this level of new listings since 2010. At 17% above the long run average I’m not ringing the alarm bells, but for the time being it’s good news for buyers who can enjoy a much more balanced market than a year ago and more inventory than we’ve seen in nearly a decade.
It’s still not entirely clear why new lists are up. As discussed last week, it’s a broad-based increased, across all residential property types and even non-residential. Given the somewhat bigger increase in the western communities I suspect rate pressure on existing owners is a factor, though not the only one.
Last year the Bank of Canada wrote a paper looking at the impact of higher rates on mortgage payments. They showed that holders of the popular 5 year fixed rate mortgages would start to be hit by renewals at an accelerated rate starting in early 2024. Now we are seeing an increase in new listings activity around the country. Coincidence? That renewal pain won’t let up for a couple years either. I wouldn’t expect the market to pick up in that time unless we see a substantial drop in rates.
Higher new lists and active inventory means months of inventory ticked up a bit on a seasonally adjusted basis, indicating the market cooled a little last month.
That’s still mild sellers market territory, but the sales to new list ratio points shows that the ground feel is weaker than that. Again, it’s about the same level we were at when interest rates first spiked.
On the market gauge, we remain in sellers market territory with residential months of inventory below 4, though the trend is cooling.
Despite the relatively low months of inventory, the healthy rate of new lists is keeping buyers fed and prices pretty stable. Condo and townhouse prices are pretty much unchanged for the last two years, while detached prices remain up a little from the 2022 and 2023 lows.
From a sales to assessed value ratio, things are little changed in April, with the median sale coming in essentially at assessed value for all property types. As usual, the assessed value on any given property is essentially meaningless due to all the property characteristics that aren’t taken into account, but as a whole assessments actually capture market value of the housing stock quite well. Tracking the median sales to assessed value ratio provides some more insight into where prices are going without the noise of averages and medians or the downsides of the more complex house price indices. That’s true at least for condos and houses where there’s lots of sales, a little less so for townhouses that sometimes only sell a few dozen a month.
The stability in the market is likely to persist through the spring peak buying months. However if new listings stay healthy we could see another bout of price weakness into the summer and fall.
Meanwhile, the short term rental restrictions came into effect today, which should crater the remaining short term rental activity and force the owners of short term rental listings to make a decision to either rent on the long term market, sell (and accept the cut in value), or leave it empty and use it as a secondary property (remember there’s a $2000 vacancy tax credit for BC residents which essentially allows you to leave a $400k property vacant tax-free). What I’m watching is what happens to hotel rates. So far we only have data to March, but I’d expect to see at least some boost in rates over the summer. Supply and demand applies to short term as well as long term housing.
New post: https://househuntvictoria.ca/2024/05/06/checking-in-on-construction-activity/
I just don’t see any advantage to the seller for doing that so I don’t think it’s worth regulating. Also it’s easy to misjudge market value. Someone may well list a $1.05M property for $1M just because they misjudged it. And then what, force them to take the first list price offer? Or force them to take one of the offers from the first batch? Just a mess.
He told me going In, that when I come out of this, It Is really going to hurt.
He told me about the oxy’s (I think because he had to) But he advised me against It.
He had been my dentist for many years and I didn’t even know what an oxy was.
I just trusted his advice. And It really, really hurt.
When I broke a femur I was not declining any opioids. More like begging for more.
It doesn’t so much stop the pain as stop you caring about the pain.
So would you be cool with someone throwing up a $1 million dollar home +/- for $499,900 to draw attention and then just countering each offer at a million? I don’t think it looks professional and nither does listing for a million but expecting $1,050,000, imo. The public already hates us as is 🙂
I still think It would be a good thing to not have In my life.
Life Is hard enough. I don’t need that shit In It.
I had all four wisdom teeth pulled at once. I was offered oxy’s…I declined.
They were all growing In horizontally. They had to be pulled at once. It wasn’t an option…It hurt!
Even a full blast of fentanyl wouldn’t have helped for this pain.
I just had to suck It up.
Yes pointless, it was more, well, you want to be a dick, here’s a dick offer right back at you… It was facetious statement because it would just a waste of energy to continue and you just move on and not bother with them after they came back with their 1,050,000 counter. Also, if can afford to go beyond 999,900 for the property, well you’d just move on to the next one because there are lots of homes out there people are tired of sleeping in that are probably better to deal with.
Hitchens’s razor
“what may be asserted without evidence may be dismissed without evidence.”
That’s not typical thankfully.
“Taking an opioid regularly increases the risk of becoming addicted. The time it takes to become physically dependent varies from person to person, but it is usually a couple of weeks. Taking an opioid for a day or two is not a problem for most people, but some studies show that even the first dose can have physiological effects that can make someone vulnerable to opioid use disorder.”
If you show up at ER with a bone sticking out of your leg you are most likely going to get opioids. Most of those people don’t go on to get addicted.
Respectfully, Leo, I disagree. You could point to which statements specifically you disagree with if you want to have a serious conversation about this.
I agree, that the average sales prices in Vancouver have increased only modestly; however, the listing prices in the Transit oriented development (TOD) areas have very much increased. These areas won’t affect the city wide averages dramatically, but they have very significantly increased the prices in the TOD zones.
If you disagree, then perhaps you can point to some data supporting that view. I have been watching prices pretty closely in a number of areas and I have seen a dramatic change in listed property prices once a property crosses into the TOD zones, and this tapers off steeply outside of these zones.
Perhaps satisfying but also a pointless waste of time. No reason to get anchored on their asking price. The game is to get a property at a reasonable price not to win points in a negotiation. In this situation if you have been looking for a while you should have an idea of the maximum you would pay for the property in relation to what else is out there. If 999,900 was the absolute maximum that you would pay then either walk away or counter at the same level as your first offer. If the property is still on the market weeks later – and you are still interested – that would be the time to make a lowball offer.
That’s when the buyer should counter back at 900K . I was involved in a Friday listing and offers due Monday about a month ago. They were pumping their listing below assessment and I think they were believing it was going to draw 10+ offers, but on offer day, even though they had a tonne interest (as they said), there were only the two offers on the table on the Monday.
The percentage of our population that is addicted to opioids is frightening. Especially in the 14-45 age group. Any boomers who were into these drugs are probably dead by now. Hopefully few pre-teens are not hooked yet.
I am going through child rearing right now. My oldest Is good to go. ..Solid employment, girlfriend, good solid group of friends, and a loving family. My youngest Is 15. This Is the danger zone. The last thing that you want to be In this zone…Is a helicopter parent. You have to cut them loose while keeping a very close eye on them from a distance.
He is doing very well In school, He has had the same girlfriend for over a year now, solid group of friends, just entering the workforce at a part time level. So far so good. I think he’ll be fine…And so does my Wife.
It Is crucial that parents understand that this can happen to any child (even yours). Action Is required safe guarding your children In this opioid explosion that Is unfolding right before your very eyes.
Addiction to opioids only takes a single use for It to take hold.
I have sadly known a few people in the last 18 months to lose someone to poisoned drugs. One woman lost her beautiful son. He was only 22. If you saw a picture of him you’d never know of his struggles. He tried to fight and quit but ultimately he was poisoned and died. The second is a good friend of mine who was out with her friend to celebrate his birthday. She went home and he stayed out. He took some drugs that were poisoned and died that night. She is a mess and I’m not sure that she will recover. I was talking to my HR lady and she was out of office because a family member died from poison drugs. Poisoned drugs are a tragic new normal. I think we need to all be compassionate about it. Sooner or later chances are that you too will know someone that this happens to.
The older I get the more I find truth in specific quotes. One of them is “you don’t know what you don’t know”.
I don’t have the answer to addiction and homelessness, but it seems pretty clear that it is a desperate form of human misery which no-one would choose for their child.
The difference Is… The ones camped out will just walk In, grab what they need, and walk out…Without paying a dime.
Would you approach one of these Individuals? I would strongly suggest that you don’t.
They are zombies, You cannot reason with them…You are the enemy In their world.
You are far better off to turn around and run. They are very quick and they will stab you.
And they are everywhere…Look around!
Go to a return It depot for recycling. The only reason they go there Is because It gives them cash for more drugs.
They are crazier than a shit house rat.
The only thing that people can really do about this huge problem Is don’t be one.
And keep your distance with your eyes toward the ground.
Comparing a group of homeowners In the Millstream village strip, whom are taxpayers and contribute to society on a daily basis. To a group of drug attics, thieves, prostitutes, pimps, and drug dealers that contribute nothing to society at all. Would be a very poor comparison. IMO.
And no…I don’t live In the Millstream village strip!
They’re already parked in the parking lot or camped out on a nearby boulevard, what’s the difference?
The only thing that could be better would be a condo inside a Walmart.
Some people might actually like that strip. Talk about amenities.
Sometimes It makes a lot of sense to sell. Have you ever heard a rock crusher?
Similarly, if they remove the capital gains exemption for the principal residence in the future, you cannot claim the expenses as tax deductible.
Commuting to and from work is not a business use. It is considered personal use. You can deduct these expenses if you use your car while you are at work for work purposes, ie. a realtor driving to showings.
We already had someone ask to buy our place as part of a land assembly. After talking with our neighbors we just said no and so did they. It depends where your lot is in relation to the proposed development. In our case both the lots were necessary and it was too far in the future for the developer to pay a high enough price to make moving worthwhile for us. If the development can go ahead without you that does create a bit more pressure I guess.
You both appear to be confusing operating expenses and capital expenditures.
Capital expenditures, e.g. improvements to a property, get added to the adjusted cost base of a property. When the property is sold, this affects the capital gain. But it’s not a deduction properly speaking.
On the other hand operating expenses of any asset used by a business (which could include a car) are deductible from the income earned by it. For rental property obvious expenses are mortgage interest, property taxes, insurance, and maintenance (which means fixing things, not adding new stuff).
The two are independent of each other.
In the US, mortgage interest payments on principal residences are tax-deductible. This was done to encourage ownership. It is up to the Congress to keep it or take it away. Same way, the Parliament in Canada can change the laws to suit their policy preferences.
You buy a car, use it commute to work, maintain it, make improvements, etc. Are you able to deduct any of these expenses from your income for tax purposes?
Barrister – us and our neighbor are the two lots that are most obvious to develop. I do worry that our neighbor might sell and a developer could buy and we be living next to a construction site. But in such a case I am sure they would want our lot too – they are twin lots closest to the corner (which is a separate thing).
I think the pressure would be on if our neighbor listed – I’d be quite worried about who would buy it.
I think it will go above 3500.
Not if your property is contingent to their site plan. So you need to be somewhat savvy/knowledgeable if you do decide to hold out or else you can end up like those people in the millstream shopping center.
Totoro: If a developer has already assembled a few houses adjacent to you, for a six story building does that sort of put you into a financial bind as whether to sell or have your house possibly devalued because it is adjacent to a high rise?
If a developer comes knocking for a land assembly, they would typically already payer higher than an end user/investor (who would pay more for a renovated house) so you would have already captured whatever premium you would have other wise gotten from another buyer.
The “Have to Sell Your House if You Receive an Offer at Asking Price Regulation”? Let’s set up a registry and an enforcement unit 🙂
Thank you! I really like this house and can see staying a long time. It’s very practical because it can accommodate multi generational living in the future. We could move to a smaller suite and our kids – if they have family – could take the bigger suite. I also love the location.
Maybe if you foresee selling and moving soon. But if you are happy where you are you have to live for today to some extent.
I assume the renovations to the suites are paying you back in the form of higher rents. The renovation to your living space will have to pay you back in enjoyment/quality of life because within a few years post reno no way are you “getting your money back” whether you sell to developers or anyone else.
We renovated our home and will continue to do so even though it will probably be redeveloped at some point due to location. If a developer ever approaches you, you don’t have to sell, but you are living there in the meantime. It does seem like a waste if it is ever torn down, but someone would have to pay a pretty significant price to motivate us to sell. Too much uncertainty of outcome and timing not to do what makes sense now imo.
Disagree. I get this is annoying, but in the end the seller is just hurting themselves by pissing off buyers. Trying to regulate this would be too many unintended consequences and drive sellers to be way too cautious on listing.
My neighbor and I both have houses on large lots close to transit that, even before all the upzoning were marked in the OCP for future densification. Since we bought we’ve put probably 100k into the house. We’ve fully renovated both suites (they’re beautiful and good for 20 years now) and are slowly renovating our suite. Meanwhile, our neighbour, who has lived in his house for over 30 years, does surface maintenance only (ie no actual renovations). I had a couple people – including our own realtor – tell us one day a developer might come knocking. So, my question is, is it stupid to be putting all this money into this house? Would we get the money back? Do developers pay more for houses that are updated even if they’re just planning on tearing them down?
Sounding like condos and sfh are heading in 2 different directions . The rungs on the ladder are just getting bigger .
5% / business day increase in sales rate
64% increase in new list rate
52% increase in inventory.
As an agent, what happens in this situation when it progresses to the point where 2 or more of your clients want to offer on the same house pretty much at the same time? Just wondering. Do you end up telling one of them you’re conflicted, or how is this dealt with? I mean, it would be hard to write up an offer for client #1 at $XYZ knowing, say, that client #2 is writing/has written at $XYZ+? Even if you say nothing.
Officially the highest inventory we’ve seen since 2015 (surpassing 2019 high) ->
Yeah my wife and I were certainly surprised to see it on 3 different properties in a relatively short amount of time. I assumed the practice was left behind. I guess it can act as a useful filter for us when it does come up as we are selling our own house and so we have a subject to sale when making offers, making us non-competitive in a highly competitive environment like that.
It really has to be a specific property type to do an offer delay right now, otherwise it is a really bad strategy imo (I don’t agree with Leo that under listing/delay offer is a decent strategy in most markets).
I follow a few mainland agents on YouTube and you have agents/sellers that try a delay offer hoping the property will go substantially over asking then when they get no offers they don’t adjust their asking price up to their false expectation but they keep their offer expectations above asking. I.e., they list for $999,900 and receive no offers but leave it on the market at $999,900 and if you offer $999,900 they come back with a counter of $1,050,000 even thought it isn’t a multiple offer situation. Not seeing any of that here, but practice should be put to a stop.
Exact reason why this person has never owned any RE. LMAO, full of shit from day 1.
In the Cowichan Valley where we are currently house shopping (not directly Victoria related, I know) we have come across 3 houses in the last few weeks that are doing that thing where they are taking offers on a specific day not long after listing. I guess they are hoping for multiple offers over asking like when we were at the peak of the market. One of the houses was taking offers the Sunday before last and they were relisted shortly after at the same price. Seems they didn’t get what they were looking for. Kind of interesting, unless I’m mistaken, really seems these people are trying to force a bit of a buzz for their property.
To charge capital gains on a principal residence removes the designation of principal residence and every piece of property would be classified as an investment. For which deductions can be realized.
Why wouldn’t one be able to deduct improvements made to a property? It’s called capitalizing, look into it.
This person clearly doesn’t have a clue how capital gains taxation works. Doesn’t work that way for investment RE, for starters.
Your suggestion does simplify things, but I think even those planted petunias could be considered land improvements done by the owner.
Most of your comment makes no sense and this is clearly false. Prices are little changed in Vancouver
I wonder if taxing only the profit on the value of the land would be a way to simplify the equation.
I will never see this exemption. Even though I am 100% eligible for this exemption.
I would however be 100% stupid If I did decide to sell my house at this time In order to collect this exemption.
Not now, but within 2 decades this exemption is likely to be removed, or at least capped like it is in the US.
We are Europeanizing our cities with a massive push to densify at any cost.
While I love the feel of European cities, it’s also clear that these cities survive because of renter majorities, and that’s where we are headed.
It’s increasingly clear to me that Canada is inevitably heading in this direction. The push to produce “transit-protected development” and increased density, along with rapid population growth that supply can barely match, is only going to drive up prices further.
I’m starting to see the logic of some of the NIMBYs and pro-sprawl Canadians now — they recognize the truth that development and increased supply can only meaningfully lower prices if it is at a low cost to build (ie low rise, limited land value appreciation from up-zoning) and if the supply dramatically outpaces population growth.
Neither of those things is happening here.
I think what really convinced me to look at this view more openly is when I saw the massive increase in Vancouver housing prices with in the past year. All of the TOD zones have literally doubled in price. Developers are going to be forced to build tall towers packed with mostly luxury condos just to make ends meet, like they have for years.
So yeah, I think in 10 or 20 years if we continue on this policy path most people won’t be able to buy, and instead the majority will be seeing themselves as living in government-built affordable rentals instead of future owners.
When that happens the principal residence tax exemption is toast.
But hey, I’d love as much as anyone to see a different future.
Another proof that you don’t actually own any real estate…..
I already posted
I think he muted you dude.
Marko-Can you give a description of exactly what they want?
Yes, but extremely specific to some SFHs in the core between 900k and $1.5 million.
Exactly this. When a certain type of SFH in the core areas hits the market in that 900k to $1.5 million range it isn’t usual for two or three of my own buyers to email me about the same house and I am one out of 1649 licensed agents with the VREB.
Problem is everyone wants pretty much the exact same thing and there is low supply of such and will only get lower over time. Of course, versus accepting that everyone wants the same thing we’ve managed to find a million scapegoats starting with foreign buyers and who knows where it ends.
Problem with first time buyers are that most are looking for the exact same type of sfh that investors are: kinda shitty but livable sfh with a basement suite on a 6000+ lot in the core in the 900k to 1.2M range. So chances are they are going to have to compete with someone thats better captilized.
Marko are you seeing many bidding wars?
When you cash out. Sure you will have a bunch of money…And that’s great. Good for you!
What you have to remember Is, when I first bought In, like a couple of decades ago…The rules were a lot different than they are today.
This stress test alone must suck. It doesn’t really matter how much liquid cash you have…Its the numbers on your T4… And your age.
I look at my house as not only a place to live and raise my family, It Is also a storage of wealth…Not an Investment, a storage for after tax money. When I bought this house I was not expecting this massive price acceleration that followed for the next 20+ years.
Vancouver Island was a secret then…Now Its not!
A house has always been a tangible asset to own. You can use It to tap Into liquid cash If you need It. Its a buy and hold thing.
Principle payments are principle payments. Its like your own private bank that you can live In…With your family.
This 100% capital gains exemption on your principle residence Isn’t really a tax break at all for most people.
I have lived on this Island my entire life. I have never seen a real estate crash. I have seen a flat line or two (plateau). But never a crash.
I have also seen people lose their shirts on the stock market…Namely the .dot com bubble, The GFC aswell.
Real estate always seems to hold Its ground…If It has dirt.
Home ownership comes with very little stress, Very little risk, And It creates a treasure trove of memories…Memories that money could never possibly buy.
Slow and steady wins the race!
If the government wanted to tax principal residences, it would be an accounting nightmare. Owners of a property for, let’s say, 40 years would have to keep track of decades of property taxes, mortgage interest, all repairs and improvements, insurance, and every petunia they ever planted. That would be deducted from their “windfall” capital gains and may result in a capital loss in some areas of the country. That’s why it’s not discussed.
I know a guy and His Wife that did this. They are still living In the fifth wheel… And I’ll tell you right now pad rentals are not cheap. Especially In peak season.
They f****d up.
They are priced out forever.
It hasn’t come up in my business whatsoever. Buyers that want to do an inspection we just write in a 4 days subject to inspection so we aren’t dealing with the rescission period and buyers going unconditional are doing a pre-inspection or not doing an inspection whatsoever. Why would one do a pre-inspection instead of an access clause? Simple, you’ll beat out the other unconditional offer with an access clause.
An unconditional offer with a rescission period, but with a clause to grant access for inspection during the three business days is going to lose out to a competing unconditional offer without such a clause.
Setting up an unconditional offer with inspection access during the period you might beat out an offer that is subject to inspection as the sellers knows you are committing 0.25% more than the conditional offer, but that is a relatively small subset of situations.
100% agree.
I remember reading a story about a couple that sold their house and rented the suite back from the new owner. They thought they’d been really smart and timed the market – but it rose sharply afterwards. It was in the news. They weren’t able to get back in.
Just using common sense – limited supply and high demand – I don’t see how the prices for sfh in the corner will plummet. The only way I could see that is if rates went up a lot. Even if there’s a dip I don’t see how that segment will go anywhere but up (even if at a slower pace, still up).I could be wrong, of course.
Condo prices are on the way down, but SFHs will slowly increase in value. Unfortunately, rents will remain high due to falling demand for new construction. Not many winners in that scenario. What other tricks does J.T. have up his sleeve? So far his magic act has bombed.
Problem is the bottom is usually when it seems like the bottom is about to fall out so it is very hard to time. Thats why in the long run its better to buy when the fundamentals make sense regardless of the market seniment.
But if its principal residence then just buy if you like the place and can afford it. Downside risk is much greater than upside, i.e. over paying by 200k is alot better than being priced out for 10+ years
You were concerned about this when it first came in, but how is this playing out in practice? Seen any sellers refuse buyer reasonable access during rescission
Owners don’t want it and many renters see themselves as future owners.
My guess is rates might go down 25-50bps, in the next year, but never to Covid lows.
Come Summer the inventory will flood the market, that will absolutely put more downward pressure on prices.
If first time home buyers are patient, there will be great deals to be had.
https://www.theglobeandmail.com/business/commentary/article-and-what-if-interest-rates-never-go-down/
Vic , I do agree , everyone is going to see things differently, and that’s ok
Bobby , I’m willing to say we have hit the bottom and we will turn the corner this year , but it’s just another prediction. I have 2 kids that I’m encouraging to buy up in the market , so I do have faith lol
Who cares what indviduals want, the market will do what it will do.
Thurston, it sounds like your trying to convince yourself that the housing market is going to be ok. Given very low home sales , exploding inventory, probable recession in Canada and housing price charts, I thnk its fairly obvious where prices are heading.
I think a lot of people would like to see prices fall in an orderly fashion or stay flat for 10 years, anyone with children who want to see them be able to afford a house would like to see prices moderate. I don’t really get what difference it makes if prices rise unless your an investor, or on the sell side of the real estate industry, unless you plan on selling and never buying back in. I could care less whether my home, in one of the more expensive areas of town, goes up in value.
Rodger , at this point it would take a much higher interest rate to get a meaningful reduction in prices . I don’t think anybody wants that , u would also decimate the economy and create a lot of hardship . If prices were going to drop significantly in the last 3 years they would have by now .
That would have to be Grandfathered.
This property ladder thing doesn’t work anymore.
Even though I am muted I am going to keep rambling on to you.
Most people don’t even look at It as an Investment, and If they do they’re stupid…They look at It as a place to live.
Its people like you that created this whole Investment thing, when In reality…Its just a roof over your head!
Buy a house that you can afford to live In and pay off the mortgage debt as soon as you possibly can…Then live happily ever after.
When you die…You can pass It down to your kids.
I don’t subscribe to the idea if investment properties will be taxed moreso going forward that perhaps you should just buy more/bigger principal residence for the tax shelter.
IMO, a limitation on principal residence tax exemption is not off the table going forward.
I do think thought more money in stocks might be a better place to put money and that’s my current plan but I won’t be selling any rental properties anytime soon. I think the numbers on rental properties could bounce back quicker than anticipated like with 5 years or less. We simply aren’t building no where enough homes and I can’t see that resulting in a soft rental market long term.
The principal of my mortgage isn’t inflation adjusted so nominal rents up, mortgage principal down I am happy with that. If interest rates drop that’s a bonus as well.
That’s exactly what they want to do – to get the real estate prices down to an affordable range. TMack and Rogers have talked about this many times. JT is making this job easier (and maintain the interest rates at a higher level) with his uncontrolled spending.
There was once a time when charging Interest on a loan was considered usury and was punishable by hanging.
Infact, SJ Willis (corner of hillside and blanshard) was once a penitentiary where public hangings would occur for all to see.
Of course rents will go up in nominal terms over 10 years. The real question is if rents are currently out of whack with ownership costs what factors are going to change to bring them back and by how much and how soon. And to your “either”, don’t leave out a fall in real if not nominal prices.
https://www.theglobeandmail.com/real-estate/article-weak-condo-market-in-downtown-toronto-leads-to-dip-in-rental-rates/
Is the correct term primary residence or principle residence? Just wondering.
Probably both. Question is what the appreciation rate will be and how much the rate drops. Could be better places for money. Like a primary residence.
Well, I’m not In the game at this time. And I am really happy that I am not. Good luck!
Yes, but I also wouldn’t make an unconditional off – and I know lots were over the past few years.
We made an offer on a place a while back that we didn’t get. Successful bid was also conditional. Inspection found what was likely $30k in damage that had to be remediated before their deal closed.
I have done it 3 times, it was when they were having offer presentation dates. You must have missed the the last while in Victoria, negotiations weren’t a thing, just offers.
Ya, there was almost a year or two that any conditional offers weren’t even looked at. It’s great that conditional offers are thing again in this market with it having slowed down a bit. You wouldn’t have had worried about the $500 or $600 because your offer wouldn’t have made it.
That would be a conditional offer subject to Inspection.
Do you really expect the seller to pay for your Inspector?
I wouldn’t pay $500-$600 for an inspection before having an accepted subject to contract.
Unless you had an offer on the table there would be no Inspections.
Do you really think people are going to open their door for your Inspector prior to any negotiations?
I am not sure where you are going with this…. I had inspections done before making an offer, so when my offer made it went in unconditional.
Unless I have been misinformed, that’s why you’d put the property access stipulation in the offer and if need be, to happen during the rescission period. However, the main point, I have never had an issue getting an inspection before making an unconditional offer and I found it well worth it.
I don’t know about 10 years. Either rates will drop or rents will go up.
Fyi, rescission period doesn’t give you right of access to home for inspection.
That goes both ways. If I was a seller and had an offer subject to Inspection. The Inspection came back with some negative Issues. The buyer will request a further Inspection. I would deny the request, They will walk…I would then cancel the listing at no cost.
Once you accept an offer (even with conditions) It becomes a legal and binding contract…You can’t get out.
However, If you refuse further Inspections and they walk as a result…You are out at no cost.
Before the recision period was in place, I managed to get inspections done before the offer was was due (Friday listing, Tuesday offers during the busy time) and at only about $600 an inspection, that was always well worth it even if I didn’t get the place. With the recision period, it’s even easier now especially if your offer is accepted on a Friday, it gives you 5 days to sort out an inspection and if you back out of the sale, it only costs you about $3000. Small numbers when you consider the risks of a bad purchase.
I do have a couple of lava lamps…Maybe I don’t even need the woodstove.
When I was a kid my Father would give me a 10 cent fine If I left my bedroom light on while not In use.
That Is why It Is etched Into my brain to always turn the light off while not In use…It becomes a habit.
My Wife and kids leave the lights on all the time. As long as I don’t do It I can cope.
There was a time when many large office buildings had no heating system. They just left the lights turned on day and night.
It really is Leo. Meaningful work is a gift, as is the opportunity to be of service.
This might even benefit sellers. Buyers who would sit on the sidelines if they needed to waive an inspection might make an offer if they knew they could back out later. Doing an inspection is not a costless endeavor – the buyer still needs to have skin in the game to go through the process.
Fun!
As long as your cell phone Is turned on and you can open a pdf document…Your good to go!
Retirement Is old school when Its this easy.
For example. When running a job, my possible presence alone Is enough to keep things on track. I could be onsite at 7am or I could be onsite at 4pm or I could not show up at all. They just know that I could be there at anytime!
This goes for any management position…Not just construction.
Was asked back on a special project that fit within my area of expertise. Said yes to one thing and led to something else that I get a lot of value from being involved with. PT but I guess the answer is sort of?
It doesn’t work if you use LED bulbs, they produce little to no heat, if you can stand the harsh light they emit. I’ve tried them, they don’t seem to last long, contrary to popular belief..
Did you unretire totoro?
Clearly
No it doesn’t. If investors were bailing en masse it makes no sense for a quarter of purchases to be from investors. The ratio should be a lot lower (and maybe it is in the current quarter but we don’t know that)
Lmao
I am – and none of your business.
Because It Is a massive wild fire risk zone. Perhaps they have finally had enough?
https://ycharts.com/companies/L.TO/profit_margin
I do, my Wife still has one somewhere…But I don’t heat my house with light bulbs.
Back to housing… I have been tracking cabins for a rec property out in the Thompson-Cariboo. It took a while, but I am finally seeing some significant price declines on Lake cabins. A lot of folks out there got stuck on pandemic pricing there and have finally awoken that the area is not the Okanagan or Shuswap.
Not saying that you made anything up. I just don’t agree with the French that you’re wasting energy by leaving lights on. Because that doesn’t waste energy, since it mostly heats your house. Remember the old versions of the “Easy bake oven” which were powered by light bulbs? Those bulbs give off lots of heat. Of course if your house is too hot, turning off the lights makes sense.
My wife thinks like the French on this point, and is always telling me to turn lights off. So that’s where the “energy use thing” becomes relevant.
I do turn lights off when not In use. Its just etched In my brain…Even with the new led bulbs.
Its the people that turn the heat off everyday when they go to work. The recovery energy It takes to reheat the house Is massive.
It Is far more efficient to keep the heat on at all times at a comfortable temperature.
Are you saying I’m making it up? I don’t know Patrick – go to France and explain the energy use thing I guess?
Charming story, but doesn’t make sense from an energy use perspective.
Energy is conserved, so at least in the colder months …. If you turn off light bulbs, and save $1 of electricity by doing so, you’ll also spend close to $1 more to heat your house. The light bulbs help heat the house, so it isn’t wasted energy. The only loss would be small, from light from the bulb through a transparent window to outside of the house . And the cost of replacing the light bulbs when they need to be replaced (costs about $1 every 400 hours of light bulb use). Actually all electrical appliances (blender, washing machine etc).. help heat the house, as the energy gets converted to heat. Even an elevator, which converts energy to potential energy when lifting someone up a floor, will heat the house eventually when the person walks back down a floor.
https://www.cbc.ca/news/business/loblaw-boycott-privilege-1.7192869
Article says “On Wednesday, Loblaw reported its quarterly profit was $459 million, marking a 9.8 per cent increase.”
Is there a source for the 3.4% number please?
It wasn’t about government spending. It was a dressing up joke. I guess it wasn’t too easy.
Loblaws profit margin is 3.4%, but try telling that to the angry mob…
The great pyramid of Giza was constructed to create and maintain a healthy, vibrant economy.
Recession or depression. The Government will always step In and provide the stimulus to create construction jobs .
It could be a highway or a bridge or whatever Infrastructure They think Is necessary.
I think we will see a bit of both moving forward.
I guess this one is too easy, but…
Please tell me what Isn’t?
Are you? What do you do?
Turning out all the lights (when away) is a huge thing in France. Once I was leaving a BnB in a small town and left a light on for when I get home. Lady came out and asked what’s wrong. Im fluent in French so conversing is easy. I explained it’s common to leave on a light in Canada so you can see when you get home. Her husband had come out by then to see what was wrong and when I explained about lights in Canada they both looked surprised. After living there for a while I finally asked a French person what’s up with the light thing. She said growing up there’s a saying – we’re not Versailles in here – close the lights! I was like – what does that mean about Versailles? She said a few hundred years ago everyone was so poor the only lights you could see were the lights of the palace at Versailles- everything else was dark.
I really hope we’re not on a path of learning first hand the consequences of not protecting/having a robust/healthy middle class. No one takes their own demise laying down. More and more wealth siphoned up and away from the many to the few is dangerous. First housing, now food. Ir scares me.
I don’t plan on staying in Canada full time when I retire and I plan on retiring at the first opportunity. In Spain our family of four could eat a beautiful meal for $50 CAD. We will do Spain or Portugal or France – depending. That’s the long term plan. I cannot emphasize enough how beautiful and amazing San Sebastián is. Thé culture and people and buildings and food. Just amazing.
Just broke 200 active downtown condo listings today. Highest number of active listings in a decade. 37% higher than May of last year.
And Craigslist has 115 downtown condos for lease at an average rent of $2,161 per month.
You are correct. But there are a lot more people now…And they never used to live In tents!
Max , your in construction, you have seen this all before , it’s just rinse and repeat
Huh , no big job losses , salaries have gone up for a lot of folks , inflation is back down , and interest rates went back to normal and are heading south soon enough . Yes the grocery bill has gotten bigger but that’s life and loblaws are not the problem . Only big downside is Edmonton vs Canucks , the oils power play is on fire
The only thing keeping the wheels turning right now Is debt. End of story!
Even If Loblaws profits were 9%. How much went to the share holders?
A share holder Is debt to Loblaws. This Is the problem and this Is what needs to be corrected!
I want to pay for the banana…I don’t want to pay for the share holders.
They have only just started their taxation hayride. Soon they’ll just take It all…For the greater good.
Bank accounts will be sucked dry and everyone will be on UBI.
There’s a lot of pain for average folks right now. Lots of people are pissed especially about the price of food. A Reddit group dedicated to boycotting Loblaws for the month of May us huge. Loblaws denies it’s doing anything wrong but people aren’t buying it – Loblaws profits rose over 9% last year.
There IS a lot of hurting right now. I’m annoyed at the prices of groceries – I can’t imagine what it’s like for poorer folks right now.
I miss Europe a lot these days – so much saner over there.
That would be fantastic. I would welcome that with open arms.
Not seeing the pain . Sunny days are coming , I think a lot of this is just chatter . If investors are dumping condos I think it’s shortsighted imo The boc will not allow real estate to continue in a funk for long
This Is exactly why people need to avoid debt like the plague. There Is no such thing as good debt.
I am even considering cancelling my credit card. Businesses have added a 2% surcharge for the privilege of paying with my cc.
Everyone and everything Is starving for money right now. Over the coarse of the next decade It is going to take families everything they have just to survive.
I would consider myself to be positioned very well…For now!
Who knows what the hell they’re going to throw at us next.
What do the recent employment numbers look like. In particular what do the private sector employment numbers look like?
A recession would hit especially hard in BC.
The BC government already has a $5.6 billion operating deficit, and this deficit is as large as the $5.6billion deficit in 2020 – the worst of COVID.
But it’s much worse than that .., BC will add $42 billion in debt over the next three years.
And that’s in the “good times” – imagine how much worse this would be in a recession.
https://www.fraserinstitute.org/blogs/bc-coming-debt-boom-will-make-covid-deficits-look-like-small-potatoes
I am tangentially connected to the construction industry in BC through my work. I was in a meeting yesterday where the word recession was prominent and the impact on the ground for base material suppliers has already resulted in layoffs.
Yes, that is what is being reported. Realtors are getting the listings for these condos but they are sitting. Not good for them because no commissions.
.. and also investors not buying…
Totoro: “ not much is moving in this sector because investors are not buying”
It makes sense to me that people would being listing rental condos if they are cash flow negative, rates prob won’t come down much, and appreciation has stalled or gone negative and might not rise much for the next few years. No point unless you are okay with holding that way for ten years. Some will be. I also believe the realtor reports out of TO and Vancouver which state they are getting rental condo listings but not primary residences.
I think if it is a primary residence you do what it takes to keep making the payments.
I just rented out a 1 bedroom suite. It felt like prices have softened. There were fewer applications and the people just generally seemed less desperate. And that’s a good thing. Two years ago when I rented out a suite some applicants were on the verge of homelessness. When I posted the ad it blinked and there were like 50 responses. I had to take it down after only 1 day. And the place was not massively discounted. Not sure if people are leaving Victoria or more long term rentals on the scene due to Airbnb regulations or what – but definitely a difference.
Appears to me that Totoro’s point was that significant number of investors are selling.
A surge in sales by investors doesn’t seem likely in tandem with a decline in total sales, although not impossible.
Your posted chart shows investor SHARE of all purchases, not the NUMBER of investor purchases. This is relevant, because as you can see Toronto sales in 2023 were down 30-40% from most prior years. So that (combined with your % share chart) means that total investor purchases were DOWN in numbers, which supports the point that Totoro and others are making.
Even if there was some trend of small landlords selling their condos to be occurring one would expect this to happen over a few years especially at the point where the condo became vacant. There would not be a flood all at once but rather a steady trickle. Are we seeing this, I have no idea and not even sure how you would measure this accurately.
The increasing stigma against landlords is mostly worrisome for landlords in that it might be a harbinger of more pro tenant policies by the NDP and in particular the growing discussion and calls for vacancy controls.
Patrick- Your the only other person to bring up the number of properties that are demolished to create a “new” house. The housing stock in Canada is old and aging rapidly. We’ll never catch up to demand.
I think the people saying “investors are bailing” are referring to private “mom n’ pop” investors, not the universe of rentals that would determine rental prices. The universe of rentals has been expanding at much higher rates than usual, with big increases in purpose built and apartment rentals.
So the fall in rents in Toronto may be due to the increased rental supply, despite the exit of “mom n pop” investors. This isn’t new, remember that the homeownership rate fell in the 2021 census, mainly because of the increase in rental/apartment construction.
Easy to continue to make a bullish case for higher Victoria SFH prices in 2024 and beyond. Increasing population (demand), with close to 0% net SFH growth in SFH stock in core Victoria. Half of Victoria homeowners are mortgage free, and the rest (999/1,000) are paying their mortgages on time.
While Greater Victoria saw a record number of housing starts in 2023 (4,992), only 8% of them (392) were detached SFH. If we subtract teardown SFH from that total, the net addition to the SFH stock is approaching or close to zero for 2023. Especially in core Victoria.
https://www.timescolonist.com/business/greater-victoria-sets-new-homebuilding-record-8123237
“According to CMHC, of the 4,992 housing starts in the [greater victoria, 2023] region last year, 4,238 were condominium units or rental apartments. Only 385 were single-family homes.”
Yeah definitely presale market is dead, I just don’t think investors are bailing in numbers.
Rents have also been dropping in Toronto, which seems unlikely if investment condos were all being sold and rental stock depleted.
This data is a little old (2023Q3) but investor purchases didn’t pull that much after rates rose. Still 25% of the market, more than pre-pandemic. Maybe that changed in 2024.
For Vancouver I’m basing it on recent comments by Steve Saretsky about how many rental condos are being listed currently and how not much is moving in this sector because investors are not buying such as here: https://www.youtube.com/watch?v=BqsdAdwnfMI&t=29s
For Toronto I’m basing in the almost record high number of listings for condos and numerous reports of people not buying investment condos:
https://www.blogto.com/real-estate-toronto/2024/05/toronto-record-most-condos-market-people-worried/
May not be the best evidence, but seems to be repeated amongst a number of sources. We’ll see if the stats match later.
Patriots, no I don’t think a rebate connected to the landlords marginal tax … or any other direct connection. just pointing out that rentals are not always a loss and, at least in this case, the governments are collecting nearly as much as the landlord.
Simply put, a rebate of rents paid would go further than the $40k forgivable loan. That’s if they want to do anything useful at all, which is debatable.
When the snowstorm subsides do the loaves of bread stay high or go back down? I don’t think Covid is what’s causing the current high rents – even if it started a steep upward climb.
So is there an unusual number of condos in the downtown core for sale? I dont follow that market so I dont have a feel for it.
What are you basing this on?
This Is my true story In 2008/09…This Is no bullshit…I was there!
Mortgage fraud Is a thing. I have seen It once personally. I had a couple contact me regarding a very large renovation project. It was a 15,000 sq/ft house with an Indoor Olympic sized swimming pool and 15 bathrooms. These people were very nice. She was Italian and I could tell through conversation that she wore the pants…The Husband said nothing.
They wanted me to do a bunch of structure upgrades. I didn’t really feel comfortable with the size of the project…It was huge.
They had a bunch of roman structural columns Imported. I was ready to walk. She said you can do It…I know you can!
I told her I would do It, but I wanted to be paid every Friday, and I supply no material. She agreed.
Sure as shit Friday came along and she came out In the morning to check out my progress. I gave her an Invoice with my services for the week + GST. Later In the day her Husband came by to drop off my cheque. I noticed right away It was a numbered account…That sketched me out. I took It to my accountant with a copy of my Invoice. He said If It clears your good to go! It cleared.
I did this for 18 months until I was done. It was a huge undertaking. I was paid In full, I was happy, my accountant was happy…Life was great. So now I’m on holidays until the new year enjoying Christmas with the family…Not a care In the world. I flip on check 6 news and was shocked to see the two people I had been working for over the past 18 months. I got out just In time, a lot of the other subcontractors got burned big time!
This Is the video story on check 6 news…
https://www.google.com/search?client=firefox-b-e&sca_esv=aefa6caa23033a76&q=Johnson+brothers+roofing+mortgage+fraud+investigation&sa=X&ved=2ahUKEwjb5JPQsfKFAxU5CTQIHcAlAokQ1QJ6BAgoEAE&biw=1366&bih=681#fpstate=ive&vld=cid:8acc0a97,vid:0v14vl72-uY,st:0
Mortgage fraud happens all the time!
They had rental condos all over town financed by nothing other than a mountain of lies!
If there is a significant increase in listings we may not see a decline in prices immediately. What will see is that a buyer will get more value for their money such as a larger, newer unit for the same price.
In April of 2024 the median price paid for a condo in the Victoria core was $557,000 with an average exposure of 39 days-on-market. That bought a 2003 built condo of some 938 square feet.
In April of 2023 the median price paid for a condo in the same areas was $542,500 with an average exposure of 34 days-on-market. That bought a 1996 built condo of some 880 square feet.
The price is slightly higher than last year, but you’re getting more value for your money.
“En Masse” means a substantial % of investors. And that’s not happening. If it did you would have seen a huge upswing in listings, given how many properties are investor-owned.
BTW…I think It had something to do with the 42 kilos.
The downtown condo market will have the highest percentage of investor units. So if investors start to list in large numbers, it’s the downtown area that will show a change first. And I think it is, as the 10 year average for active listings in the downtown core is 130 units and last month we broke a ten year high at 193 or about 7 months of inventory.
Outside of the downtown area are mostly condos bought for owner occupation ,which only has 3.4 months of inventory.
Lots of investors are making a killing off their rentals due to the shortage of units during covid that drove rents up 20 to 30 percent. But to me, that’s like a bakery charging $10 a loaf during a snow storm. It’s not the free market it’s price gouging.
The free market should bring more rentals available and rents should tumble as supply is in excess of demand. It’s a lot easier with the supply of bread as it takes less time to make a loaf of bread than build a rental. But rents should come down over time.
☮
“Conditions have changed. People are not buying condos to rent out these days’
Conditions have indeed changed but not for the reasons you mentioned. Prospective rental “investors” have either discovered how to use a calculator or have learned by being burned. It is not, has never been, and never will be possible to purchase a single-unit rental property and be cash-flow positive.
It is, and has been, and always will be possible to purchase a single-unit property in order to make an (owner subsidized) speculative ploy on asset appreciation, but this is not investing, it is merely gambling. If you can count from a four-deck shoe, blackjack is a much better “investment”.
They certainly are in Toronto and now Vancouver. Seems like they are selling more than buying condos in Victoria too.
Perhaps, but that doesn’t mean landlords are getting out en masse. If they were that would have a big downward effect on prices.
You think that government assistance to a tenant should be based on the landlord’s marginal tax rate, which depends on the latter’s total income? What does that have to do with the needs of the tenant?
Conditions have changed. People are not buying condos to rent out these days. Combination of interest rates, tax and legislative changes, res ten rule changes and anti-landlord sentiment.
Thanks for stepping in Barrister, that is my point.
To be very clear, the landlords do not have an issue…. They receive rent and pay tax on it. All good.
The tax of aprox $6,000 that they pay is derived from the low income tenant’s rent. A rebate of that tax to the tenant would be a better step than the convoluted “forgiveness loan” that actually does not benefit the tenants or the landlord.
Well no, it’s derived from the landlords’ total income, which is their other income plus a fraction of the tenant’s income (their rent) minus expenses, i.e. the landlords’ net rental income.
What’s your beef exactly? You think well off business owners shouldn’t pay the same tax rates as anyone else just because their customers have low incomes?
Westerly, you are saying that your child and spouse pay 6000 tax on the rent received from the tenants. The tenants income is not relevant to the tax that your child is paying. I am assuming from this, that your child is at a fairly high marginal rate for tax.
Precisely what point is it that you are trying to make?
No low income tenant, no $6,000.
My first born and spouse pay $6,000 in tax on the rent money they receive from the low(er) income tenants who, as retirees, have an income of approximately $30 – $40,000 per year. The $6k prov and fed tax is derived from the tenant’s low income.
Including the net rental income? A couple making $25K each in BC only pays $1,151 in income tax + CPP + EI between them, total federal and provincial, with no deductions. If one spouse makes all the $50K it’s $3,583.
If anyone’s up for a local unsolved mystery over the rainy weekend… There Is a really good write up about Lindsay Buziak going on over at Victoria reddit right now.
https://www.reddit.com/r/UnresolvedMysteries/comments/1cj0l8c/lindsay_buziak_24_was_targeted_setup_and_killed/
Such a shame.
Patriots: “this is called income tax and it’s being spent”. This $6000 is money derived from a renter’s household income of $40-$50k. Not much more to say.
@patriotz there’s a difference between corporate and individual investors. The corporate ones aren’t as visible and probably don’t care as much about the branding.
That’s at odds with data showing historically high levels of investor ownership.
https://www.cbc.ca/news/canada/british-columbia/housing-investors-canada-bc-1.6743083
Government will get back part of the subsidy when the homeowner pays taxes on rental income and it has zero of the cost of construction, maintenance and management.
The free market is way more efficient in these tasks so my guess is that this approach would make financial sense overall shorter-term, but doesn’t deal with rental tenure security. And more people than ever don’t want to be landlords and be branded as “exploitative”. If government wants more private market rentals they’ll need to shift the dialogue.
Longer term it may make more sense for non-profits to own and operate affordable housing or, perhaps, coops.
I don’t know. Seems to me there are many homeowners choosing not to rent out suites. I think if you make a high enough income to be able to qualify for a huge mortgage many won’t be enticed by the net rental income. My neighbor 2 doors down has two suites she refuses to rent. That’s just one example. I don’t think the answer is to make landowners richer by giving them tax breaks to incentivize them to rent. I think the gov needs to do what it can to move away from reliance on basement suites altogether and focus on building tons of rental stock (or incentivize getting that built). Tricky tho because we still rely on the basement suites for now – i think the gov is moving too fast with changes yo the RTA – these changes should happen after we have more PBR’s/rental stock. Just my 2c
Right, but you could take it to the logical extreme and just handle all rental subsidy this way, redirecting all social housing spending to the cash subsidies. I’m no expert on low income housing policy so no idea if this is better or worse, but it’s certainly simpler to administrate.
I suppose you really mean rental income.
Well look at it this way. If you’re a homeowner you’re paying interest and other expenses whether you rent out a suite or not. Those expenses, pro rated, are deductible when arriving at net rental income which is taxable. For a good many homeowners – particularly those with big mortgages who really need the money – the marginal tax paid on the gross rent, i.e. the extra cash flow, is going to be very low.
Isn’t that a pretty good incentive for people to rent out suites?
This is called “income tax”, and it’s being spent. All of it. It’s not sitting in a drawer waiting to be handed out.
@Westerly almost half of our reveal income goes to taxes. I’m not suggesting it’s unfair since it’s a good problem to have. But it is a disincentive to keeping it rented. That’s just reality.
As for building affordable housing vs a credit – why is the credit better and who pays for the credit? I do think we need to do more to spread wealth around. I mean when I lived in France I was shocked to see that even middle income people get vouchers for school supplies (just an example). It’s hard to be very rich in those places and there’s generally more equality (less disparity) in standard of living. I personally prefer that but I do nite that some people that live in those places complain about it/the government.
How are retail businesses doing downtown? I noticed a number of closures when I was there a few days ago but that just might be the norm.
I was listening to a great podcast last week that advocated that property taxes are far too low in most of Canada to fund the Infrastructure deficit and should be doubled. They also talked about removing the capital gain exemption on principal residences and taxing rental properties gains as income rather than capital gains to discourage treating homes as investments.
They doubted that any political party has the courage to propose and inact these changes to help solve the housing crisis.
Leo and Mt Tolmie – totally agree. As the program is presented everyone gets screwed and the Province gets to appear like it’s doing something. It’s not.
Barrister, they shouldn’t. They are running a business. I’m just questioning if they are taxed on it. If they are it’s another consideration as to whether or not to participate in the program.
I’m not advocating good or bad, just think people should be informed and ask the questions. What someone does with the information is up to them.
This already exists. It is the rental assistance program. Problem is that income qualification is so low and rents so high that many who need help are not covered. https://www.bchousing.org/housing-assistance/rental-assistance-programs/RAP
Patriots, they weren’t complaining and neither am I. The topic is a possible credit directly to the renters. Our governments conveniently leave out the fact that they are collecting 40% of the net rents from the landlords. This could be rebated to the tenants.
There’s certainly a school of thought out there that the government should completely get out of trying to build affordable housing and just hand out rent vouchers to people who can’t afford rent.
This is how the provincial program should have been designed
Structure it as a rebate. Renter pays $2000, then gets a $400 rebate a few days later.
Risky, but some may try it.
Westerly, I am not following your reasoning. If you are renting a unit then you are running a business. Why should it be any different than any other business?
Oh the humanity! Net rental income (that’s after all expenses) is taxed at the same rate as employment income. Net rental income would appear to be around $12K or more on a gross income of $21.6K. That means their deductible monthly expenses (mortgage interest, taxes, maintenance) are around $800/month, less than half the rent.
What are they complaining about?
Patriots, it’s not absolutely subterfuge. It’s either allowed under the program or it’s not. Rereading the requirements I’m leaning towards not. But still possible.
If anything is offside it’s the program itself.
Bear and Joey is closing on Sunday. It seemed like a popular spot. Noticed a couple of new closures downtown yesterday as well. How are businesses doing downtown? About normal?
Patriots, it comes about when it’s received in connection with business income, rent is business. I hope you’re right, just haven’t seen it.
“Give renters a tax break”. I agree with this. Our first born and spouse rent to a low(er) income couple at aprox $1800/month. They paid aprox $5-6000 in tax between them on the rent income. That’s fed and province tax. Somehow that’s missed when Trudeau talks of helping where it counts and is totally ignored when comments about greedy landlords come up.
I work in Esquimalt. Wow, they are really giving it to those Spongy Moths this morning!
Sales seem to have started out strong in the last few days. Seems like a beautiful day ahead so hopefully everyone gets out and has some fun this weekend.
That’s the case where the parties have a business relationship, e.g. employer to employee. Forgivable loans from government are generally treated as grants which are not taxable income.
That’s an obvious subterfuge to try to get around rent controls. The monthly rent that the tenant is contractually obliged to pay is the base rent for rent control purposes, not some fictitious higher rent.
Like I suggested a while ago, set an affordable rent amount, which would vary in each province/region, and give renters a tax deduction for the amount over the affordable rate. Eg. A one bedroom affordable rate is set at $1000, the renter pays $1600 per month, and gets a $7200 income tax deduction. Homeowners get tax breaks, now renters would.
One other point, most forgivable loans are taxable to the recipient. Not sure on this one but I don’t see an exception.
That was my thought too. I’m surprised that the government would come out with an “incentive” that is so transparently unattractive.
Actually, just read more detail on the program. Firstly, you have to live in the home for a full five years. That’s already a non-starter for many. Marcos right and this program won’t be picked up by many. And, agreed Umm
It’s a discount on a monthly rate, a 1st month or 2 month free wouldn’t be a discount on the monthly. However, the 6 month discount would be a interesting test if could be expanded to 5 years then expiry. However, the funny thing would be, is it a fixed rate for the 5 years or is the discount tied to annual allowable increase in rents (within the below market cap) or an adjustable discount? Once government is involved, things will get dumber and dumber and dumber…. A lot of potential headaches to let the government to get involved in your life and property for just 40k. Not mention, opening a percentage of your home to capital gains tax (I am guessing the feds didn’t think that one through in wanting more housing options built).
Umm, landlords provide discounts all the time, usually when vacancy is high: 1st month or two free, 6 month discount etc. Can’t see RTO invalidating such a lease – although you never know with them.
Dee, I’m not suggesting circumventing the rules and I would think you would have to provide the lease and any addendums to B.C. in an application.
That’s the rub, once below market, the government believes you will be stuck there since tenants won’t be willing to give it up. The fixed term lease loopholes were closed years ago, you will still only be able to increase by the allowable amount and not suddenly make it market value. The contract would be found invalid and landlord would be paying penalties in the end.
WoW westerly good question. Doesn’t protect against ending up in the news tho.
I had similar question about fixed term tenancy with move out date for landlords use. Could this be used to circumvent the new extensive notice periods and penalties somehow?
Well that takes the fun out of the game. What happened to “my tenants pay my mortgage”? I gave up renting my 1100 sq/ft suite way back In Y2K. Its just not worth It. I was not meant to be a landlord! If you need the rental Income… That’s code for you need to work more!
@greg if it’s a new listing my guess is you softened them for the next buyer. Mauve try back in a week if you’re really into it?
I offered below ask (not lowball) once abd was told that the seller was offended. In that case the property had been on the market for around a month in a hot market. I was told it was bc of the seller culture where they think a lot about what is fair before asking a price. I don’t know the culture. Anyway we walked – maybe because in this culture we expect to bargain in most cases and no way I was paying asking on a lingering property that must have been overpriced. They took down the listing, re listed a month later, and sold for less than what we offered. I truly loved that house ir was so cool and unique but I much prefer our current area. It’s weird to think that our whole lives would be different if they would have accepted our offer. As of now we live a 25 minute walk to downtown and I’m so happy we chose location over house.
Anyway if you really dig it maybe go back in a week with a slightly higher offer – if it’s still available. Maybe.
On the topic of the “$40,000 forgivable loan”, I wonder if someone can enter into a full market rental agreement but discount it by contract to B.C.’s required amount for 5 years? Then at the 5 year mark you’re not increasing the rent, the discount expires.
Honestly though this is a good system. Crowdsourcing the data directly from owners if things are off and the rest of if they can basically catch on sale. A self-improving system.
I’ve dealt with assessment systems in different jurisdictions. Ours is better than most.
They have filled it with their own special farts for 3 years. That likely adds a certain intrinsic value that you really can’t put a price on.
Gregonomic, how long was the townhome on the market? I think sellers react emotionally to lower than desired initial offers. They sometimes then get more realistic as the days go on. Townhouse prices are so all over the map. Some are more than single family homes! Others are less than condos of similar size. It doesn’t always really make any sense.
For clarification, our second offer would have been equal to the sale price of an identical* townhouse next door, 12 months ago. And 30% more than what the sellers paid for the place 3 years ago.
*If they made significant improvements to the property, they weren’t noted in the listing or by the agent present at the open home, and weren’t apparent to us.
Strong sales to start the first two days of the month….SFH median running at $1,405,000 (YTD is $1,144,350). It will come down during the course of the month but off to a flying start. A couple of 5 mill sales today too.
They would need to pull the strata plans for each condo building and those with parking spots registered as part of strata lot it would be easy to figure out which unit has parking and which doesn’t.
For units were the parking spots are common property on the strata plan and assigned or “leased” then BC Assessments would need to get the master parking assignment list from each strata corporation.
So a bit of email/tracking down stratas involved but totally doable if they wanted to do a proper job of assessing, but it isn’t like there are any consequences for poor assessing. Owners can just appeal and that is that….and those of us with assessments 300k below market value just keeps our mouth shut 🙂
Don’t know who you have in mind, but we’re complete amateurs at haggling compared to most Asian cultures. A seller may claim to be insulted by a low offer but it’s just part of the act.
I kind of assumed they also digest the MLS data stream, but don’t know.
It would actually require a bit of work as whether a unit has a parking spot or not is not always known from the registered strata plan at BC Land Title……and let’s face it government employees and work do not go hand in hand. Flex Fridays and work from home > correctly assessing condos with/without parking.
Good point.
Seems like an easy thing for them to fix. Median S/Assessment last 2 months
Condos without parking: 97%
Condos with 1 spot: 101%
My building is a perfect example. BC Assessments assesses the same $ per sq.ft. on the north side non-view units as the south side unobstructed ocean view units. Actual market value difference is approx. $250 to $300k between similar sized units depending on this orientation.
Also parking spots, BC Assessments does not account for whether a condo has a parking spot or not.
and a million other things.
The soil testing is a bizarre/bs (but hopefully resolvable) requirement that isn’t supposed to be applied to many residential builds. The law states it only applies “ for land that the person knows or reasonably should know has been used for a specified industrial or commercial use”. Yet, the landfills are going farther than the law and landfill sites are now requiring testing of clean soil from residential areas, (mis-)citing the province’s regulation.
The issue is described here and the builders association describes it as “resolvable” https://www.vrba.ca/news/provinces-soil-regulation-boosts-housing-costs/
This seems a situation for BC Housing to step in asap and fix it so the landfills follow the law and only land used for commercial purposes (and with specific chemicals) needs the soil testing.
The province has been boasting about cutting red tape quickly, so let’s see some action from them on this ! Leo, this might be a good litmus issue to track, to see if the government is serious or not.
Yup this program is going to flop for sure. I’d be surprised if they get even 10% of their 1000 applicants a year target.
The 1 bed affordable rent for Victoria is $1400/month
Lets say market rent is $2000/month
So 5 years of below market rent = $36,000. Let’s call it $40k in lost revenue.
But good news, you got a $40k forgivable loan, so you don’t lose any money and you get to feel good because you provided affordable housing for all those years.
Problem is, now you have a tenant still living in your suite and losing $600/month (let’s ignore annual increases) in perpetuity. No one in their right mind will want to move out of this cheap place, so good chance they aren’t leaving anytime soon.
So now your options are:
1. Give up about $7000 per year in lost revenue while you hope for the tenant to leave.
2. Evict the tenant citing family use (assuming you can) and run the risk of ending up in the news. “Landlord who got $40,000 in provincial grants kicks out tenant”
Lose lose proposition. Maybe it works better in other cities, but I doubt it.
It’s just so individual to the property. Unfortunately the stat that the average townhouse is selling at assessed value is unlikely to be convincing to an owner with an offer.
But, it remains the case that if a townhouse is listed at well over the median sales to assessed value ratio, then there better be some evidence that
1. The townhouse is nicer than the median in a way that isn’t captured by assessment (say they renovated the inside) OR
2. The assessment is wrong for some other reason (again, usually because of some unique characteristic that isn’t captured by BC assessment).
Definitely on average you’re better off using comparables to judge fair market value rather than assessed value.
See sales distribution for townhouses:
Also keep in mind that in some places irons rude to offer below asking because it implies that the person isn’t virtuous and is trying to rip you off. So if the person was insulted perhaps they are just from another culture?
@caveat – new program is a fools paradise. I’m sure the gov determines what below market rents are and makes the entire process very difficult. We will see – if bet that the few that engage with that program may regret it and there will be much headaches and head scratching. Fools paradise.
I see this play out in real life all the time. A few months ago I had clients offer 10% below asking and sellers didn’t reply and then two months later the sellers sold for 6% below asking and my clients asked me ‘why didn’t they counter us? Maybe would would have come up to 6% below ask”…..and that exactly scenario likely happened. A few lowballs and an additional two months on market primed the sellers to take 6% off asking.
Why don’t you find a townhome listed below assessment and offer assessed 🙂
As per Leo’s article above
A property listed 10% over assessed actually might be very well priced and a property listed 10% below assessment might be overpriced.
That’s what happens when you write in a joke about their weight into the offer, negging can be a good strategy sometimes, but it’s more likely to give the next person taking a shot a better chance. Jokes aside, we had the feedback once that our offer was “shockingly low”, turned out to pretty close to what the other offer was that took down the sale. They were just trying to get us to bid it up. Pretty sure the others got the “shockingly low” statement that prompted them to add to their offer.
Leo’s sales-to-assessment chart is great, and I hope your agent showed that as a reality check to the “insulted” seller.
Work? lol…..this is a complete joke. There are literally so many issues with this idiotic program it would take me an hour to write out my thoughts.
First of all you have to rent your suite below market value -> https://www.bchousing.org/sites/default/files/media/documents/BC-RAHA-Rent-Affordability-Limit.pdf
5 years of renting below market value is a lot of cash and after 5 years you are stuck with a below market tenant, sounds awesome.
Secondly, if you know anything about real life the city permitting process will eat up more than 6 months (just to get the permit) and way more than $40,000 in total costs related to the permit.
Quick example. If you own an older home you’ll have to upgrade your services. Plumbing inspector is going to say “well you are adding more plumbing fixtures and your water line is only 1/2” inches, please upgraded to 1” based on our load calculations.”
Remember what I talked about the other day re soil sample testing (see below)? Bam….there goes 10k+
So my options are do a suite without permits for $120k and rent at market value or spend $180k, get 40k back, and rent below market value for 5 years.
Not to mention so much other BS like they register a charge on your title, etc.
This government is buying votes and doing very little to actually help housing, imo.
Right, good move. And of course with bidding wars, there’s pressure to forgoe the inspection too. In Australia, every sale is legally entitled to a house inspection and the BC government should have included that with their 3 day “rescission” period changes.
Not likely…. It is government doing it.
Great article Leo. The hotel rate chart will be interesting to track over the summer.
Of course not all STR customers will switch to hotels in the same city. Some articles like this Harvard Business Review estimate that up to 50% of airbnb bookings at busy times of the year won’t switch to hotels, and will be lost visits to the city. https://hbr.org/2024/02/what-does-banning-short-term-rentals-really-accomplish
Most common reason is that similar accomodation at hotels are more expensive or just not available. Lots of people (like me) seek out airbnb, with kitchens etc, and those aren’t available in large numbers at hotels, so are likely to get sold out or become very expensive.
This isn’t going to work, is it?
https://news.gov.bc.ca/releases/2024PREM0021-000672
More affordable rental homes are on the way for people in B.C. as the Province launches a three-year pilot of the new Secondary Suite Incentive Program.
@greg I’ve walked away from a few places and have no real regrets. It’s good to know your limit and be willing to walk. We had realtor pressure us to do bidding war but I refused. Ended up getting our current place day it was listed for slightly under ask. No regrets.
Sooke, Duncan, Campbell River, Alberni, Nanaimo, and Victoria all have homeless and drug addiction issues atm. I wouldn’t compare Sooke to Victoria for a second. Pandora is a community unto itself and not something I would want to live anywhere near.
Your comment about townhouse sale vs assessed is interesting, Leo.
We made an offer on a townhouse last week. Asking price is 10% over assessed. We offered assessed. That was “insulting” according to the sellers’ agent. Negotiations ended there.
Ah, ok. I was going by anecdotes. Wife used to work at a hotel. When they know they’re selling the last rooms in the city, they just say the biggest number they can say with a straight face. I guess that’s still represented by the average daily room rate.
I don’t believe that is true. Here’s the definition of average daily room rate “Average Daily Room Rate by Community
Published by STR, the data reports the average daily room rates for selected communities; the update is available monthly. Average daily room rate (ADR) is a statistical unit used to measure a hotel’s pricing scale; the figure is derived by dividing actual total revenue for the period represented by the total number of occupied room nights.”
Source: https://www.destinationbc.ca/tourism-industry-dashboard/
Thanks for the kind comments everyone!
Very much appreciated for sure. And thank you to Leo for allowing me to post about the art show. ( I will not abuse this kind courtesy.)
Yes…it used to be named “The Stick” coffee shop.
It’s what I like about Sooke as a community. People get involved and there are a lot of nice groups of people.
Feels a bit like Fernwood in some ways. People work together and Create interesting events.
A group of people banded together to form a type of co op coffee shop when the original owner decided to sell. He concentrates his efforts now on roasting the beans which is served in the coffee shop.
I can’t say enough good things about the people who run the coffee shop. Very community minded.
Prices out here seem to have stabilized somewhat. I still see some properties sitting for some time. But also some moving when they are priced right.
There is a mix of properties ….some with the typical small cramped lots and then there are many with larger lots with great future potential. And then of course some good sized acreage
I would not want to do the commute though. Not every morning. Great when it’s not rush hour.
Mind you ….we are spoiled in Victoria in general. In rush hour it is about one hour or less which is really not so bad but not for me.
Neat to see the hotel pricing but also keep in mind that those are posted rates. If a hotel is selling the last rooms available in the city, they’ll double the rates because they know they can. Visitors don’t like driving to Sooke just to sleep.
I wouldnt be surprised if those problems get pushed more to areas outside the core. Land is too expensive in the core, some services and social housing will be pushed out. I remember seeing communities in abandoned parking lots and light industrial neighborhoods in Europe. Wouldn’t be surprised if that’s happening here too. Thankfully we ate building more supportive housing. It seems that most people understand why universal housing is in everyone’s interest. I’d say I’m pretty liberal but even I’m in favour of no drug use in public. Funny how having kids changes ones perspective on these things.
Long before my wife and I became the Sahtlam land barons we are today, we rented on Massie drive in Langford. The house next door has since been demolished and the road punched through. We did a drive by and wouldn’t you know it, people hunched over, using drugs right on the sidewalk next to our old house. It was pretty shocking honestly. I don’t remember much of that type of behaviour a decade or so ago when we lived there. I suspect this problem is getting bad everywhere.
I know a few folks that moved to Sooke the last few years for more space for their families and on top the commute and etc… the thing they didn’t expect is the junkie problem they are having out there now. They went for space and safe places for their kids to play and they are finding the needles in playgrounds are getting as bad as in Victoria.
@Barrister – I’ve never understood so much why a trade deficit matters. Is it because it means our exports are being bought less elsewhere in the world and indicates a slow economy/lack of productivity/uncompetitive output?
Warren, why assume that everyone is driving into Victoria in order to visit Pandora. More and more businesses are located in the West shore these days.
Victoria annual precipitation 960 mm Sooke 1390 mm
Victoria annual bright sun tally 2193 hours Sooke 1611
That is a long, tedious drive just to end up with trench foot.
Our March trade deficit was 2.3 Billion which is a little bit disturbing. Hopefully the rest of the year balances out.
This is the “Stick in the Mud Cafe” reborn with new owners and a new name. It was a favorite of mine before. I haven’t been to the new iteration yet, but if it’s still at the same standard then it’s worth a visit both for the yummy treats AND Deryk’s art.
V0S1N0 = Sooke postal code
If the changes become law, I seriously doubt Poilievre will reverse them when he’s in power.
I seriously doubt the capital gains changes are going to be implemented.
Spotted a listing: “Seller looking for quick completion June 24th or sooner”
Love the art you post Deryk!
Deryk’s art is worth the trip out to Sooke and he is fascinating to talk with.
Its good to see the real estate market settle into a more sensible pattern. When people are scrambling all over each other trying to get houses inspected in a big rush and facing multiple offers etc …its not good for anyone.
On another note, if I could be so cheeky, for those of you who have followed my posts over the years, you might be interested in coming out to Sooke this evening with a meet the artist event at 6:00 pm…to see my artwork at a little coffee shop called “VASINO”. (6715 Eustace road)
The show runs May 2nd through to July 29th.
Sooke is a wonderful community and a great alternative to Victoria for affordability and lifestyle. Especially for those who work from home. Lots of opportunities for self employed trades people and the population is mixed ages which is what we like.
Lots of family’s. Amazing west coast beaches. Great recreational facilities. Day care centers, community centers, schools, New Library, etc and things are growing.
We sold our house about five years ago and have not regretted the move. I still come into Victoria for old man soccer twice a week (when I don’t have one pulled muscle or another) and can be on the field from my home in 35 to 45 minutes.
Of course, living in a small community is not for everyone and I get that.
Anyway….I’d love to see some of you on House Hunt Victoria and put a face to some of you !
So come out this evening if you can make it!
Get to know Sooke a bit better and consider other a change perhaps.
What do you guys think is the reason that inventory is increasing rapidly but sales and prices are holding steady? Are people waiting for better deals or can buyers not afford to buy at the moment given the high interest rates?
Also on Airbnb I still see a bunch of listings for May. Do you think the government will actually crack down on them and start handing out big fine?