Checking in on construction activity
The national supply side picture has been looking a little shaky, with CMHC reporting a drop in the pace of starts in recent months as high rates and tepid demand put scores of projects on hold. As usual with real estate though, it’s worth zooming out to put this news into perspective. That shows the 12 month rolling sum of starts is in fact down from peak, but only by 6% from the recent high at the end of 2022. Not great when we still have strong population growth, but also not as much of a decline as some might expect given how much rising rates have impacted new construction financing.
However the picture is highly variable by province. Atlantic Canada and BC haven’t dropped at all (and in fact are currently at their peak all time construction rates), while Quebec, Saskatchewan, and Manitoba have cratered. While that sounds like BC is doing something right, a lack of response to demand dropping is also a signal that supply was fairly constrained and inelastic to start with.
But what about locally? Construction costs have exploded while land remained stubbornly expensive and presale condo buyers have pulled back, threatening financing. All those headwinds however were not enough to slow down starts, which have held just under 5000 a year for the past few years. Permit data (which is about 3 months ahead of starts usually) has also held up well.
If you look closer at where those starts are happening, there are big swings over time between municipalities. Most of that short term variability isn’t policy driven, rather a reflection of an industry more or less at capacity moving between sites in different municipalities. Victoria and Langford usually account for about half of the region’s starts, with the other municipalities filling in the rest (that part is definitely policy driven). Victoria’s starts saw a substantial pullback last year, while Langford stayed relatively constant and municipalities like Esquimalt, Sooke, and Central Saanich stepped up activity in recent years.
The major reason starts haven’t collapsed with higher rates is federal rental financing, which is keeping projects going with lower financing rates as other sources dry up. In the last 12 months, a full 70% of all starts were for rental units, up substantially since rates started rising. As I’ve mentioned before, the rental supply boom combined with the planned outflow of non-permanent residents may well increase vacancy rates to levels we haven’t seen in 30 years. Back in the mid 90s was the last time Victoria had vacancy rates above 3%, generally accepted as required to stabilize rents. That’s good news for tenants, and landlords would be advised to do their projections with higher vacancy rates than they may be used to.
Meanwhile the province is starting to review 6 month reports on progress towards housing targets from the first set of municipalities, including Victoria, Saanich, and Oak Bay locally. To no one’s surprise, Oak Bay and Saanich are not on track to hit their targets, with only Victoria ahead of the targets so far. However it’s worth remembering that
- The targets for Victoria were not much higher than their existing home building rate. No great surprise given that Victoria has historically built a good chunk of the regional housing, while Saanich substantially lagged considering their size and central location. Oak Bay hasn’t built much of anything in 50 years so the relatively modest targets will still be a big increase.
- Completions in the first 6 months of the 5 year target do not reflect any policy decisions made in response to the housing targets. Before raising completions, a city needs to increase starts and construction time is currently around 18-24 months for apartments. Before increasing starts you need to increase building permits about 3 months earlier. Before more building permits there needs to be reforms, which may take several months to be digested by the industry and likely 6-12 months to develop. All said, with housing targets announced last October, completions won’t really reflect the reaction of cities until year 3 of the targets. Until then, the provincial and local governments will have to fight over whether they are implementing sufficient reforms to get on track. While Victoria appears to be doing well, falling starts in the last year should give them some pause about how solid that lead is.
Also the weekly numbers
| May 2024 |
May
2023
|
||||
|---|---|---|---|---|---|
| Wk 1 | Wk 2 | Wk 3 | Wk 4 | ||
| Sales | 111 | 775 | |||
| New Listings | 344 | 1356 | |||
| Active Listings | 3102 | 2189 | |||
| Sales to New Listings | 32% | 57% | |||
| Sales YoY Change | +5% | +2% | |||
| New Lists YoY Change | +64% | -11% | |||
| Inventory YoY Change | +52% | +23% | |||
| Months of Inventory | |||||
May is continuing the pattern from April, with very strong increases in the rate of new listings combined with sales that are chugging along essentially at the year ago rate.
About 10% of properties are going for over the asking price, compared to 15% last year. The bidding wars are still concentrated in the entry/mid level detached properties under a million, though even there activity has moderated a bit, with about 20% of listings going for over ask compared to 40% in February. Detached houses under a million in the core are one of the few property types where the increased pace of new listings has been absorbed by buyers, with no increase in inventory year over year.
Usually June marks peak inventory for the year, and on average we add 300 properties to the market between April and the end of June. That would put us at 3300, but when the market is cooling, peak inventory usually happens later and with larger increases. I expect we’ll peak at around 3500 to 3700 for the year, and hit that peak late summer or fall.
Sending some temporary workers back will result in much higher food prices, even shortages.
New post: https://househuntvictoria.ca/2024/05/13/towards-a-better-measure-of-market-balance/
Lots will be sent home as TFW permits are not renewed. And lots will turn into PRs. Growth isn’t going to go negative.
I’m not surprised at all — predicted it right from the start, in fact.
As for being upset, Canadians have a right to be. The excessive population increase is having terrible effects, such as contributing greatly to the housing and health care crises.
Reducing the number of temporary foreign workers by sending some of them home is entirely reasonable.
Luckily that’s your job and not mine 🙂
I’ll be pricing to sell quickly when that time comes.
Fair enough, I don’t remember that big of a decline with SFHs but the numbers don’t lie.
Good luck convincing the average seller on the third option.
Fair point, though even then the backfiring isn’t exactly a huge penalty. Could always reject the two offers and leave it on.
By aggressive pricing I don’t necessarily mean that aggressive though. There’s a third option which is pricing at $960k and getting the sale in less than 2 weeks somewhere in that price range vs toodling around at $1.05M for months.
3 years of decline in the single family median (12 month rolling avg) between July 2010 and July 2023. But total decline of only ~7%, or 2.3%/year
The golden ratio…Not everyone gets the concept.
Yes, but I don’t think that matters. What matters is whether buyers are buying and sellers are selling. That’s reflected in the months of inventory. The improved affordability is likely why the market was able to turn around and do another doubling (which it very likely can’t do today).
So then thr assumption is that the niche buyer will offer less than what they would have thr first time around.
I meant buyers.
There are loads of things I could afford to buy, but I haven’t. In fact, that’s mainly why I could afford to buy them.
Seasonal bipolar…
https://www.mayoclinic.org/diseases-conditions/seasonal-affective-disorder/symptoms-causes/syc-20364651
I think a lot of sellers do try to time the market. We all should have heard many a person state that they will list their home in the Spring when prices are the highest. They are trying to time the market to get the most offers and the highest price.
And historically they have succeeded.
Yea, but the cancelled listing is visible in the system and then the buyer knows you tried at delayed offer situation at X price and failed/
Ya but you dont need to take the low offer, you can just relist at higher if the bidding doesnt produce an acceptable result
So what’s your plan? Wait It out another decade?
Most end users don’t, the ones that do it usually ends in disaster.
So why are rents so damn high?
During Covid-19 pandemic’s initial wave, the country’s priciest places suddenly found themselves reeling from a dramatic increase in the number of empty apartments. From New York to San Francisco, rents were in free fall with $1,000 plus discounts on luxury apartments. Moving companies were slammed with clients looking to abandon crowded urban centers. And home owners got used to not having a basement tenant – and they liked it. That basement suite was re-purposed as a home office.
But as quickly as rents fell, though, they began soaring again. Tenants watched their rents increase substantially the next year, lines to view apartments swelled and landlords once again had the upper hand. Though rent growth has slowed in recent months, the renters in large cities are still felling the effects of the 2021-22 rent boom.
So why is rent still so expensive? The answer isn’t that more people are moving back to big cities. The answer is that people got used to living on their own and had no need to rent out part of the home anymore. And with remote work they are not wanting to give up that home office anytime soon.
Nicholas Bloom found there was a “donut effect” earlier on in the pandemic, in which housing demand fell in dense urban areas as people move to the surrounding residential area and suburbs. The sudden flight to the burbs was counteracted by an equally starling surge in household formation. A household refers to any group of people living together in one unit. A family of five in a suburban home counts as one households, as does a group of three roommates living in an urban apartment, If those three roommates move out and each gets a one-bedroom unit, the net effect is two additional households.
This surge in household formation caused an increase in the “extensive margin of demand” — essentially, the total number of housing units that a given population desires. But there was also an increase in the “intensive margin,” or the size and quality of units that people demand. Put another way, remote work led to an increase in the number of people wanting not only places of their own but also bigger homes. Shifting to remote work in 2021 was associated with a 20% increase in rent payments each month.
So what’s next?
The rental market is now in the middle of another shift as higher interest rates squeeze consumers. Demand for apartments has been sluggish this spring in 40 of the USA’s 100 biggest cities. High house prices, high rents, and higher interest rates are probably pushing back against household formation. Slowing house formation is likely one of the reasons that the median asking rent has not significantly changed in the last year. But even if more people start to double up again, end remote work, or landlords begin to rent their basement suites again we will still need more housing units to catch up with growing demand.
yea but by 2012 SFHs prices were double those of 2002 and 2002 was more than double 1989. Affordability of SFH has been gradually eroding for a long time.
They were stable, but at half the price, and a much more favourable level of affordability, right?
We had a decent spring last year and then summer slowed.
Condos, but I don’t remember SFHs falling 2-3% in multiple consecutive years. Flat for the most part.
Yes in theory….but in our society no one has any discipline whatsoever. If people can afford to buy a house, car, dog, cat or whatever they buy those things for the most part.
Plenty of luxury sales right now too….who really “needs to buy” a $2, $3, $4, $5 million dollar house? Reality is in any market you have people with $ that maybe take the approach of hey I am 65 years old, I have 15 summers left +/- I am going to buy that $3 mill house so I can see my grandkids swimming in the pool and that is that. Not everyone is trying to time the market.
The problem with pricing aggressively in a slow market is there might not be multiple buyers out there to correct to market value.
For example, in a hot market you price a $1 million dollar property for $899,000 and you receive 10 offers and best one is $1,005,000 and you sell.
In a slow market you price a $1 million dollar property for $899,000 and maybe there are only three buyers willing to compete and one is away on vacation and one bids $925,000 and the other $935,000 versus if you had priced at $1 million maybe the third buyer on vacation comes back and pays $990,000, for example +/-.
So I do disagree with you that pricing aggressively is always the best approach. It can backfire.
Definitely a better line of discussion than: “there were 16 offers and I went 130k over ask, but the person who went 215k over ask and unconditional got it”.
If the sales are enough to cover the need to sell sellers, it could remain at a stalemate for quite some time. Remember a decade ago we had much more inventory and prices were still stable / maybe falling 2-3% a year.
It’s only when there’s more people that need to sell than buyers that prices drop quickly
You “needs to buy It” …Before someone else does.
There is no such thing as “needs to buy” it’s only “wants to buy” as opposed to the other side where you can actually have a “needs to sell”.
The infamous Canadian standoff. Who will cave first? Sellers? Or buyers?
This happened to me back In my spec house building days. Their house was not moving…So I bought It.
I was totally over extended, but I made It work.
I was running out of time on my course of construction mortgage (demand loan).
They want to buy my house, but they need to sell their house first In order to arrange the financing, because I know this deal is about to fall apart, I buy their house In order to bring this deal together.
It worked out very well.
not it was the opposite
don’t count your chickens before they hatch.
Apparently, the US inflation numbers that are due out this week will put to bed any talk about interest rate cuts this summer and possibly also the fall as well.
Isn’t this the issue of Owners being stubburn? which building?
I think there was in inflection point last June/July where BoC raised rates and sales fell off.
You said you disagree with me that pricing aggressively and selling quickly is a good idea in most situations, but what situations do you think it’s a good idea to price higher and stay on market longer? Outside of unique properties that have a very limited buyer pool, I just don’t see any evidence that leaving a property on market longer helps fetch a better price.
Personally I would also put a lot of negative value on the hassle associated with long listings periods. Showings, keeping the place clean, hassle of back and forth with the realtor, thinking about it, etc.
For example I know someone who has an offer on a new house, conditional on selling current place. But current place is priced well above assessment and isn’t moving. Lots of stress and mental energy going to go into this game of chicken when they could just cut the price and sell. And if they misjudged the market and can’t sell for enough money to swing the upgrade, better to find that out quickly and re-assess.
Sales were pretty steady tracking the seasonal norms last year. The only real reason the spring market was so active and prices rising was because new listings were super low so inventory couldn’t keep up.
Does seem like a slow sales start to the month after more or less tracking the year ago pace
Lots of headscratching listings coming to market. For example, in a four year old downtown condo building a 14th floor unit with an unobstructed view is listed for $569,900 and 10 DOMs. Today the exact same 4th floor unit (like same orientation, identical layout, etc.), but obstructed view because it doesn’t clear building next door listed for $589,900.
I think the spring was slow last year. The pick up was in June last year when folks anticipated peak interest and then were slapped down by Tiff, but my memory might be off
Sales: 262 (-6% compared to same time last year)
New lists: 739 (+40%)
Inventory: 3206 (+52%)
-6%? When did sales drop off last year? I think it was June/July?
https://househuntvictoria.ca/2024/05/06/checking-in-on-construction-activity/#comment-115350
@Marko Juras, that’s sell side only. Did I do the comment properly?
Month to date activity
Sales: 262 (-6% compared to same time last year)
New lists: 739 (+40%)
Inventory: 3206 (+52%)
Unclear why people are surprised or upset about this. A good chunk of the new PRs every year are former NPR. That’s how the pathway works and always has done. If you do the math on the plan to reduce the NPR proportion to 5% we end up with 0.9% population growth, more or less what it was before it got out of control in the past few years. Unclear what people expected, mass deportations?
With more selection coming on line there may be opportunities for home owners to move up the property ladder without having to consider renovating an old home such as Cochrane. Ironically an increase in listing and sales could lead to lower prices as fewer would be involved in bidding wars in the more choice locations.
Cochrane is a choice location in the core with a low neighborhood turn over rate; with renovated homes in the area fetching around 1.75 million mostly due to lack of supply of newer or renovated homes.
Back in Victoria tomorrow, seems the weather is nice.
The cochrane listing – land value only. House is worth nothing. Should sell for 1.15MM tops maybe 1.2MM. Think of all the fart smells in that carpet. That place looks nasty. Not to mention the urine scents and stains in the bathroom, they probably reckoned that carpet color was a good choice for camo (who was it that ever thought carpeted bogs were a good idea???)
Still on the slope and not on the plateau. But a nice area.
@caveat i agrée . The money we spent on our 6 month family adventure could have been put toward a fancy new kitchen. Instead we made the memories of a lifetime. Priceless.
Literally the best reason to make more money beyond a middle class existence. Acquisition of stuff- incredibly over-rated. Doing cool stuff – whatever that means to you – not at all over-rated.
Lol.. the 1978 Cochrane st. valuation/asking seems to be rather batshit crazy. I guess they don’t realize they are not in Oak Bay and if they were, that ask would be a stretch there as well.
In my circumstance has nothing to do with hoarding money, I spend a lot (on experiences, not stuff). Airbnb long-staying my place while I am away perhaps lets me stay away for an extra week, visit an additional country, etc. I took three months off summer 2018 and rented out my place for those three months. I don’t remember anything pertaining to coming back in 2018 and not being happy with how my place was left (had a cleaner go in before I came back), etc. However, I do remember the 11 countries I visited. I remember heading to a world cup came in Kaliningrad with my cousin on a bus from Poland with 40 Nigerian fans and them giving us their jerseys and going to another game and randomly getting a ride back in a private Pilatus PC-12.
Experiences I can buy with the funds of renting my place outweigh having someone stay at my place (doesn’t bother me at all). Everyone is a bit different.
Temporary workers and foreign students are good for the economy. They take the entry level jobs that Canadians don’t want. There is a worldwide labour shortage, at least in the developed countries that I’ve visited, and I hope that Canada keeps up with the big numbers of foreign workers. Just yesterday I went to 2 Tim Hortons, and the lineups were too long so I left. It isn’t the end of the world, but it illustrates that we have a shortage of entry level workers. With 5% unemployment in BC, we can’t expect to find more workers to take these entry level jobs, and like most other developed countries, the solution is foreign workers.
One of my Croatian friends that is a tradesperson in Victoria finally got drawn for a provincial nomination, after 7 years in Canada.
VicRE: The temporary into permanent residents will probably be under a Special Program and will not count towards the yearly quota. Basically in addition to the yearly quota.
Sorry, I’m still not clear on why you are saying. What demand are you referring to?
You are implying that the temporary foreign resident limit won’t do much to demand due to foreign residents turning into permenant residents. I am pointing out that you are missing the big picture.
I don’t think so, please show some actual transactions of ~780sqft 2016 built downtown or vicwest condos transacting at 508k.
Whatever , good take , investors know that sunnier days are ahead
Downtown Freehold Condominiums for sale 201 with 30 sales in the last 30 days. At the current rate of sales it would take 6.7 months to sell the active listings assuming that no other condos came onto the market.
Sale Prices ranged from a low of $322,000 to a high of $6,000,000 with the majority of condominiums selling around the median price of $508,500 which bought a 2016 built condominium of around 780 square feet. Which can either be a junior two-bedroom or a large one-bedroom suite. Average economic rent for a downtown condominium is $2,150 per month ($2.75 per square foot) or $25,800 per annum which is a gross rent multiplier of around 20.
Despite the Months of Inventory for condominiums illustrating a sellers market for downtown condominiums, investors continue to keep prices from falling significantly as the GRM stays within the 18 to 22 range. I would be concerned if the GRM fell below 18 as that would signal a massive exit of investors out of the condo market. So there is lots of downtown condos to chose from but even with the market favoring buyers it is very unlikely that someone will get a fire sale of a price as an investor is ready to step in and buy the unit for its income producing potential if the GRM is lower than 20.
No deals in the downtown condo market to be found despite the large selection of units available.
https://www.cbc.ca/player/play/video/9.4219875
I know guys with brains that are completely wired to making money. The thought of even losing a dime would be enough to send them over the edge. They have their employees hooked up to digital apps so they can monitor their every move remotely while jotting down a list of ways to make them even more efficient.
Now, since life costs money…You cannot tell me these guys are having a good time! They are constantly glued to their phone looking at their money. It Is actually quite embarrassing even going out with these guys because they are so cheap…Even though they have a shit load of money. They have their eyes on that money at all times. Its a disorder…They are whacked on money.
That’s just how they roll.
What do you mean VicREanalyst?
I said the government “will reduce the number of temporary foreign workers be granting a lot of them permanent residency.”
The government now says they “will reduce the number of temporary foreign workers by granting a lot of them permanent residency”.
I’m giving Trudeau the benefit of the doubt and assuming he is a lackey to the WEF and Blackrock.
The alternative is he is a complete idiot.
Ya life is short , good to have balance , make money reward yourself . I find cheap folk who dream of riches are usually poor
That would be a really shitty way to experience life.
Not for me, i don’t want strangers in my home period. To each their own.
Yes that is the point, there will actually be a net decrease. But most people wont understand until the inflection point anyways.
Neither of my parents were well off. I grew up with only the cheapest of everything. It does impact how you view money.
100% correct. My Father was a very wealthy man. My Mother was dirt poor.
I grew up In a mixed bag. I don’t talk to either of them…They are both equally crazy Individuals.
But yes, I understand the value of money…Many would consider to be frugal.
At the same time…My Wife spends all my money anyway…But I love her, and she feeds me, and I wouldn’t have It any other way.
I hooked up with my Wife when I was 17 years old…I totally trust her with my money.
I am very grateful for what I have.
Some people who grew up in a financially challanged household our during financial stressful times, such as the great depression, may never feel financially secure so they continue to hoard money even when they have more then enough to live on for the rest of their lives. Many people who grew up during the great depression always felt anxious about money.
Other people are such hard workers and savers that they can’t change gears and feel guility spending money. Both of these people could benefit from speaking with a mental health professional.
Et tu? You didn’t strike me as a crackpot previously. Or did I miss a smiley?
Any temporary resident granted permanent residence gets included in the permanent resident quota. There is nothing new about this, during the pandemic most of the new permanent residents were already living in Canada.
One more new permanent resident in this matter means one less new permanent resident from offshore, for a given quota.
You mustn’t speak out!
The WEF gives Trudeau et al a quota to fill.
Looks like we rolling into Monday with over 3,200 listings. Sales continue to be stable.
Other than dividends and an online business I have that is less than 1 hr of work per month everything is kind of an inconvenience. Showings all of this weekend I would say are far more inconvenient than having someone stay at my place while I am away.
I have lots of reference points like paper routes, working for my dad when he was a stone mason, nightshifts in ICU….and $250-$300/night for something that would sit vacant is a ton of $ in my opinion.
I’ve had really good experiences so far, I’ve had an usual number of single people stay even thought it is a 2 bed 2 bath condo.
Not quite…. question to you, how do people get permenant resident status in the first place?
@Westerly the thing is house insurance ususally requires someone to be on site (can’t leave a property vacant for extended period).
For example when my dads neighbor is out of country my dad walks through his house every day to make sure no problems. So why would Insurance have a problem with the swap? Please post back with what you find 🙂
Re: insurance policy and short term rental / swap. That’s a good point Patrick. We’re not doing that as yet but also makes me think of house / dog sitters, which we do use. Typically a friend of a friend and not an insured business. I’ll check into that for next time and will inquire about swapping / short while I’m there.
Yeah, called it:
https://www.cp24.com/news/one-way-to-decrease-temporary-residents-is-to-make-them-permanent-ministers-suggest-1.6881294
My municipality Is In a very dark place at this time.
We got too cozy and just expected another win.
We didn’t even bother to get out there and vote…We just expected a win.
We f****d up! And we all know It.
We will never allow this to happen again.
Ever!
If I were a multimillionaire like Marko, I sure as heck wouldn’t be inconveniencing myself for $300 a night.
But if you’re like Marko and only have one mode (make money), it’s hard to leave money on the table.
This is concerning. A 170 unit apartment block (4 storeys tall) had to evict all the tenants due to structural defects in the support columns in the parkade. The apartment block (in Winnipeg) was built in the 1960’s and located on one of the heaviest travelled main streets in the city. It will take months to do major structural repairs and all the tenants’ leases were terminated. They were given 12 hours to remove their belongings. I’ve been in that building, some of the apartments are 1200 sq. ft. You would think that they would be responsible for providing the tenants with accommodations since they had signed leases, apparently not. What would be the consequences if the building had been converted into condos? That’s one way to get rid of long term tenants.
It does look good for job growth in this country, for every boomer that retires, they have to hire 3 people to take their place.
Lots of good news for BC in yesterday’s job numbers. Unemployment rate decreased from 5.5% to 5.0% in a month.
https://www150.statcan.gc.ca/n1/daily-quotidien/240510/dq240510a-eng.htm#
“In British Columbia, employment rose by 23,000 (+0.8%) in April, the first significant increase since December 2023. The unemployment rate fell 0.5 percentage points to 5.0% in April 2024. The employment rate in British Columbia was 62.0%, up 0.3 percentage points in the month, and little changed on a year-over-year basis.“
Don’t get too excited about yesterday’s jobs repot. If you zoom out, you will find that over the last 12 months we had a population increase of more than 1 million, labor force expansion of > 650K, but total jobs created were at 350 K. Nevertheless, BoC will use this report as an excuse to postpone the quarter point rate drop by a couple of months (September?).
The Canadian economy is weak, the GDP per capita growth has been negative for 12 months. We caught up to the 2019 GDP only in 2023 and it is stagnating again in 2024. Regardless, until inflation drops closer to 2%, don’t expect any drop in interest rate.
A typical home owner insurance policy doesn’t cover short term rentals. People renting out their principle residence or home swapping should check their policy as they might need to purchase short term rental insurance. Unless they want to self-insure against the risk, which could include significant liability exposure from a tenant slip and fall or a fire etc.
I dont see the point of inconviencing yourself for $ if you are already financially secure unless its for a short defined period and the pay off is massive.
I’ve also been thinking about house swapping since that doesn’t have any of the tax implications or other yucky stuff. We were approached by a sweet family in France and their family composition was very similar to ours (similar professions with kids of similar ages). But we weren’t ready at that time. Still might be worth it to do something like that.
After two days of webinars listening to panels of experts speaking on speculation, vacancy taxes, zoning, demography, development policies, small scale multi-unit housing, etc. there does seem to be a consistency among them on how to tackle the problem of housing. It’s just the implementation that is posing a problem of how to get contractors, developers, and home owners to take the financial risk.
The implementation part of the plan is the most challenging as a quick back of the cigarettes pack calculations show that housing quickly is very expensive and not economically feasible without large subsidies.
It will likely take decades of construction to meet these ambitious targets and after living in Victoria for a decade or two of construction, I don’t think I can do another two decades of living in a city that looks like a bombed out Beirut.
I can take it for the right reason. Maybe joining a vacation group would be better. I would trade a month in Spain for a month in Victoria any time. Hopefully similar value both in terms of space and people.
Does anyone really want anyone In their bubble anyway? I mean, I am a very personable…But I don’t want you In my bubble.
Obviously my Immediate family Is allowed In my bubble…Just no one else.
Given that airbnb is taxable income I can’t see it being worth the hassle for a lot of people, most people are in the minimum 30% tax bracket up to 55%, so after taxes and expenses it seems like it would be a hassle. Also, if your elderly and receiving CPP/OAS and RRIF it could put you in another tax bracket.
I told my partner we should live in the backyard for the summer and rent out our place. That was a hard no.
I’m just kidding.
My Wife wouldn’t like the hotel Idea.
I just want to go to Montenegro and have my accommodations covered while there.
I just want to make a hotel out of my suite using airbnb as my portal.
I’ve. noticed a change in the kind of Airbnb suite available. Close to where we live there is a family renting their normal home, but it seems to be available only for a couple of weeks in the summer. I guess that’s when they’re away. Now that there’s less competition I guess it becomes worth it to do this? Just do a search on Airbnb for homes that will allow 2 adults, 4 kids, and have at least 3 bedrooms. There’s so little competition. I think if people are renting out their home only sporadically that is in the spirit of what Airbnb was supposed to be – a sharing type thing that’s also a little side hustle at the same time. If it becomes a problem again where people find loopholes and start milking them, I’d expect the province to fix those.
I would be on premise while the suite was occupied…In another suite.
I don’t care about taxes, I’ll just pay them.
Its kind of like yours, freshly renovated, untouched, and Its been vacant since Y2K because I hate having long term tenants.
I would reconsider for 6 figures per year.
I have the capital to stage It with the latest and greatest shit.
@Max I don’t know. Maybe that’s how it works under the STR act (for now)? But I’m sure there are other implications in terms of taxes and other residency considerations.
I stayed in an Airbnb in Paris that was clearly the family’s primary home. It had kids toys and regular spices etc in the kitchen. It was lovely and my kids adored it. It would be very cool if we rent our family place for a couple of months (say next summer) while we travel.
So let me get this straight. Since this Is my principle residence of 20+ years, and I live here full time, I can airbnb my 2 bed 1100 sq/ft suite with no problem?
There Is clearly a demand In my area for str…
https://www.timescolonist.com/business/langford-approves-zoning-for-a-103-unit-hotel-in-downtown-8719055
Good discussion on the capital gains change https://rationalreminder.ca/podcast/304
Like I’ve said before, Marko is a money-making machine.
Right, which is the same minimum penalty for breaking any mortgage duration. But there’s no interest rate differential penalty for the 10 year mortgages after 5 years. That feature alone adds about 0.7% interest to the 10 year mortgage rate, as lenders want to be compensated for that risk.
I wouldn’t rent to this guy either
Not penalty-free, but it reverts to 3 months interest after 5 years.
Ya, no need for another demand side subsidy from the government in the form of 25 and 30 year insured mortgages.
Yes if I’m right officers in particular have additional character requirements and might not want to risk eviction.
I too have noted that the STR act seems to have created an interesting opportunity for owners with the ability and desire to travel.
Three of my long term rental condos right now rented to military officers. When I see military officer and they drive a Mazda3 or Mazda CX-30 (and not a Helicat) it is an automatic approval in my books.
For $500 I’ll sleep in a tent 🙂
$300/night is 9k per month a few months of that covers my mortgage, strata fees, taxes and I maintain my principal residence status and the rest of the year I am staring at the ocean in an A/C’ed unit. Can’t go too wrong.
While I am against the STR ban it has created an opportunity for principal residency owners who spend a lot of time away, imo. The requests I get through Airbnb make sense, there is a tangible need for shorter term rentals where people don’t want to be in a hotel.
Of course, because that lowers their risk as an insurer.
Patrick – so a person with a 10 year fixed can get out after 5 years penalty-free? I didn’t know that. Certainly is a disincentive for lenders.
The province have unique definitions of principle residence that differ than the one for federal taxes. You should check it, but as I recall for some taxes like spec tax it is the home you live in the most during the year.
CMHC have stated publicly that they’d like to see longer terms available. They say the markets just aren’t there to support them until changes in banking laws and regulations are made to support them. An example is the rule that allows refinancing after 5 years with no penalty for years on terms more than five.
For example, yes a 25 year mortgage is available but the rate would be absurdly high. (10-12%).
Custom built mansion to sleeping at your parents house in 5 years. Just can’t stop hustlin 🙂
Military folks are great to rent to. Especially officers.
Our home is unique because it’s a family home in the main unit with three beds plus the 1 bed suite. I’m not thinking about in the near future but it does occur to me that I could make a 6 figure income (before taxes) just by Airbnb this place 10 months of the year ($400/night seems reasonable). It’s fantasy at this point but nothing wrong with thinking long term.
Is that equally split across both listing and coop or just on the listing side?
@caveat – are you implying that if you’re earning money (say as a digital nomad) it’s different than just vacationing around? I mean I can see that for tax purposes but what about short term rental accommodations act?
Not sure but I’ve accepted a few and turned down a lot of requests (military and movie industry mostly) @ $250/night + $500 cleaning fee. I am going to try $300/night now that I have a few booked at $250/night already.
One situation is military transfer, their stuff is on a container from overseas so they need two months +/- to stay somewhere.
Given my parents are going to be spending half the year in Croatia I think for $300 a night we’ll just go sleep at my parents’ house.
I didn’t know about the 25 year rate. We got a 7 year fixed for 3.49 – paid a penalty to get out of the old one a bit early. The penalty was not that much compared to how much we’ve saved. We definitely went against the grain doing that.
You know, social pressure is funny because it’s hard to identify as a factor in one’s personal individual decision making. There was so much dialogue about rates being forever low – it was a nice fantasy.
Going on “vacation” wouldn’t change your principal residence status. Even if the vacation is 10 months long (or longer)
Rush4Life,
No, you’re looking at the wrong comment. I was referring to Thurston’s bullish statements that were separate from any comments about Sweden or rates.
They were clearly bullish…
Thurston: “ I’m of belief we are at the start of a up cycle and the fear of recession has passed . There’s a new bull in the room ”
Yes indeed, and how many people took up the opportunity to get one for a few % circa 2022? Precious few.
You can even get a 25 year fixed rate from a major bank, but the rate’s not attractive.
Interesting divergence in unemployment rates
On another subject, in the Short Term Rental Accommodation Act it says principal residence « means the residence in which an individual resides for a longer period of time in a calendar year than any other place. » Does this mean that if I live as an international nomad, spending no more than two months in one country, and then come home and stay in my house for 2 months, that said house would be my principal residence under that Act?
As far as I know you can get a 10 year fixed rate. We have a mortgage with a 7 year fixed rate that we got when prices started going up. Sadly I listened to my mortgage specialist and our second segment is coming due next year. I asked her about locking in that one for 7 (or even 10 years) and she said no one was advising that bc rates could go lower. I should have listened to my intuition but oh well not a huge difference.
In other news, our basement tenant found a new place for June 1 so our family of four will finally have 2 bathrooms! I can’t wait! Although I must admit I worry about getting used to the space and extra bathroom since I hope to travel again and in Europe we never had 2 bathrooms. Kind of like drinking good wine – hard to go back.
Yeah the report looks real strong, it looks like students and people struggling going back to work, these reports are also very lumpy and open to major revisions.
“In April, employers mostly added part-time positions, which rose by about 50,000. The private sector accounted for most of the employment growth, although there were strong gains in the public sector, as well.”
I think this is more telling a barometer
As Canadian consumers remain in a funk, cutting back on non-essential spending to cope with the higher cost of living, store owners are changing how they stock their shelves and delaying purchases while they await a revival in demand for their products. That trend has been noticeable at one of Canada’s largest retailers: On Thursday, Canadian Tire Corp. reported lower retail sales in its first quarter, citing a “challenging consumer demand environment.”
I think you misunderstood the comment. Thurston has been talking about BoC cutting rates soon (based on Sweden just cutting theirs and the UK possibly cutting theirs soon as well). That poster (Bobby K) meant that the data isn’t supporting rate cuts. The data you just posted is aligned with that comment as those job numbers are not supportive of a rate cut. So you should be telling Thurston too bad for his friends who may have to renew into higher rates as based on those numbers, a rate cut may not come in June. I’m staying tuned for the inflation data in a couple weeks before placing my bet though.
At least thats how i read the comments.
You might want to revise that comment about all economic data pointing down, given the upbeat April jobs data, described as a “shocker” with a big gain of 90,000 jobs. Obviously it’s only a month data, which can be volatile, but it’s a big number, 5X the forecast of 18,000 job gains.
Expect more good news like this, as I’ve said we’re in the Roaring Twenties.
This is a fundamental choice to disincentive risky lending in Canada vs. other countries like the US. Banks have to keep mortgages on their books, so they have an incentive not to freely lend out money. A comparison of delinquency rates reveals this conservative approach:
https://cba.ca/mortgages-in-arrears
Another reason why people don’t just get up and give the bank their keys is that lenders can go after all of your assets in case of default. This isn’t true in many places in US (not everywhere). Hence, Canadians are more likely to cut back on all other expenses to make their mortgage payments.
I agree that providing borrowers with certainty and stability over the life of their mortgage is good, but the costs to the system as a whole are often buried somewhere. There is no free lunch.
I’m sure that comes along with a shitload of taxes, commission for the realtor, lender transfer fees that would be associated, legals, appraisals…etc.
I am not bitching here… I have done alright.
You are right Canada should be providing the same.
I still think Its better to buy and hold…Meaning, buy the house you want to live In forever and stay there…Its just too expensive otherwise.
In other words, moving up the property ladder Is equivalent to flushing your money down the toilet.
Kids have 30 year fixed terms, mortgages are transferable to a new house within the same state assuming house appraises to acceptable amount. Canada should be providing the same.
I think It should be 4.25% for a 25 year fixed…None of this 5 year fixed bullshit!
You had better make sure this Is your forever house!
Now you are trapped for 25 years and can’t get out.
I thought we wanted a balanced, more affordable market?
If I could rewind time I would have done It…If It was available.
Just the ability to map out my future alone would have been golden…The possibilities.
When Its static you can plan shit out much better.
Its the ups and downs that cause the uncertainty.
…And the Municipal, Provincial, and Federal Governments!
Well…Atleast you live on an Island.
Max , shite no , thurston is my alter ego lol
I always thought you were that rich dude from Gilligans Island.
Westerly , spot on
For anybody that’s up for a nice nerdy read on Canada’s financial stability.
https://www.bankofcanada.ca/2024/05/financial-stability-report-2024/
Slow and steady, but watch out…
and… Don’t plan on an intervention with interest rates to save you….
At the BC Land Summit webinar. Some good speakers commenting on affordable non market housing in the province.
MunEng. I see Thurston as not being in a predicament. Just watching out for their friends and family. Similarly, I have a range of priorities that will shift between helping my kids and manage making my best options in terms of holding for now and in the future. Always considering best outcomes.
Bobby k , yep just another opinion on househunt , all good . I’m just seeing it maybe a little different
Thurston. Good luck love. I empathise with your predicament. I’m more in a looking to buy in like 2 years stage but I understand the pressures people in our demographic are facing at the moment(I’m 29). I hope things turn out well for you but if I were a betting man I’d prepare for a less than ideal scenario. Our productivity is not growing and inflation is still not back at 2%. Markets are not pricing in big rate cuts over the next year.
Older people are the voter base for the political parties because they actually vote. When things are good older people in general will see their wealth multiply because they actually have it and when things are bad we younger people will have to sell and/or cut back hard because we have far less of a cushion. It might not be fair but that’s the way the game is setup. The days of old men planting trees whose shade they will never enjoy are gone. They’re enjoying the trees in Florida now.
I hope things work out for you I really do but I’d start pinching pennies if I was in your position. Relying on the world, the government, or even fortune to help has a habit of leading to heartbreak. Best of luck.
Thurston, you are certainly a contrarian to where all the economic data is pointing.
Did someone say that there is more bull crap in the room?
Awesome! The Roaring Twenties!
Muneng , thanks man , I would like to c some relief for young folks that have bought in the last few years and not c them get hit at renewal . I’m of belief we are at the start of a up cycle and the fear of recession has passed . There’s a new bull in the room lol
@Thurston why’re you thirsting so hard for a rate cut? Is everything ok?
More renters in financial difficulties will result in an increase in vacancy and bad debts for landlords.
I’m of the opinion that it is our rental market that could be one of the root causes of a housing recession. Too many home owners heavily rely on suite income to make their mortgage payments. Lose a tenant or two for a month, two, or three and that home owner is &^*(ed as the bank is calling for missed payments.
Not inherently. Mortgage rates have gone up a lot more proportionately than consumer loan rates. Credit card rates have hardly changed at all since 2021, for example.
It’s because as a group non-homeowners are in a weaker financial position than homeowners. But that doesn’t mean a homeowner is in a stronger position, other factors being equal.
Bank of England sounds like it’s getting ready to move on interest rate cuts . Banks in the western world all looking to move at the same time . I think the Canadian dollar would be just fine if we start cutting rates in June before the U.S imo
The pandemic subsidies temporarily bailed out a lot of people and businesses that should’ve went under (even without the pandemic), the catch up should be interesting. With the increased debt loads and higher interest rates, the normalization curve might rapidly turn into a spike few are expecting.
Looks like a return to pre-pandemic levels, which were also low (compared to USA for example). Not surprising, since major risk for credit card delinquency is job loss, and unemployment has been low. It’s actually impressive that unemployment is 6%, but only 1.5% are delinquent on credit cards.
And only 1/1200 mortgages are delinquent in Victoria (2023q4). This is well below pre-pandemic levels, for example mortgage delinquencies were 5X higher in 2014.
https://assets.cmhc-schl.gc.ca/sites/cmhc/professional/housing-markets-data-and-research/housing-data-tables/mortgage-debt/mortgage-delinquency-rate-canada-provinces-cmas/mortgage-delinquency-rate-ca-prov-cmas-2012-q3-2023-q4-en.xlsx.
Depends on what the market is offering. Micro condos/hotel rooms or run down houses requiring $100,000-200,000 of work which new buyers don’t have.
Makes sense. People who don’t own a home and have consumer debt are most at risk when rates rise.
Concerns raised over urban containment boundary as Saanich adopts new OCP
https://www.timescolonist.com/local-news/concerns-raised-over-urban-containment-boundary-as-saanich-adopts-new-ocp-8718952
Renewal gap for mortgages.
They say “financial pressure will increase most for households that took out a mortgage in 2021 and early 2022 when house prices were close to their peak and mortgage rates were very low. These borrowers generally:
have taken on large mortgages relative to their income
have seen little increase (and potentially a decrease) in home equity
will see larger increases in payments at renewal”
Report https://www.bankofcanada.ca/2024/05/financial-stability-report-2024/
Bank of Canada: credit delinquencies increasing more for people without a mortgage
What a concept, a seller has to compete to sell something. Maybe take some steps to make their product more attractive than the alternatives. The funny thing is we are not even technically in a balanced market yet. It just shows how skewed the real estate market was over the last bunch of years as it departed the basics of how sales and marketing should work resulting in the strange expectations that sellers and realtors now have.
How high are interest rates in Sweden? If inflation was 12%, they must have been lofty. A .25% cut could be insignificant.
The strong US economy is working against potential rate cuts in Canada. Reason is Canadian rates have to track the US to avoid a falling CAD and resulting higher inflation.
As for Sweden:
Listings don’t translate into sales. Giving buyers more choice might be driving realtors crazy showing multiple houses to prospective buyers. Buyers that are under no pressure to make a decision.
Doesn’t have to be rate cuts, those commissions can roll in just as well with price cuts instead. Especially with all that inventory sitting there waiting to be sold. Should actually be easier to make some cash for realtors, they have an increased volume of listings for the first time in years that needs to moved.
Vicreanalyst , I have no money , but it’s time to fire up the market , it’s been a long 2 years
lol why do you want rate cuts so bad? Ain’t nothing wrong with earning a risk free 5%
Sweden’s economy is in better shape than Canada.
Sweden first to cut interest rate 25 points . Let’s get the party going , Canada can do better than that
Unless your agent is seriously incompetent and cant organize showings or transmit offers as they come in then I dont see any reason to change agents. This is not rocket science.
3140 Wessex Close?
Too funny/too true; the overpriced SFH down the block just changed listing agent after about a month, and likely will list for less than $1.6 this time.
Tell your wife that she can use some of the money saved to buy a new handbag. And screw the open house, serious buyers don’t goto those.
Hopefully your wife doesn’t know anyone that sells Amway, vacuums, knives, gym memberships, or is a chiropractor. Key thing to remember, anyone who believes they are entitled to your money or your business and will try to make things difficult for you socially if you don’t give it to them, is not a friend. Tough situation. At least you were able to negotiate the discount without any hassle, good one! Best of luck on the sale.
Maybe In a couple of decades this might mean something.
Kinda like the Infiltration units In the Rockland area…It only took a century for those character homes to be divided Into saleable units.
In a nutshell…Yes.
@VicREAnalyst – it’s a somewhat complicated situation I TRIED to get out of but this person is close to my wife and there’s been some recent entanglements in their social circle that would have made it somewhat awkward to get out of. I was willing to tackle that but she was not.Plus, it’s not the realtor, they are probably fine at being a realtor (it’s not hard), it’s just if it was just my decision I would have done mere posting and done the “marketing” through my own channels.
@josh – I said, “that’s a lot of money for what I see as probably less than 20 hours of work, would you be willing to discount XX%?” they countered with a slightly lower discount at which point I said, let’s calculate your take with the discount (about $15K if house sells near asking), and asked them what their process was. Once they ran through the very simple process of putting up a listing, coordinating some pictures, and running a couple of open houses before finally changing a few lines in boilerplate forms, they seemed to quickly agree that that amount of money was more than reasonable. Negotiation over! Let them talk themselves into it.
Lol what? Why are you obliged to do anything?
Mind if I ask how negotiated? I don’t honestly know what a decent rate is.
Our Place is doing a good job. Also nice to see that the feds have finally re-criminalized public drug use in BC after BC’s request to do so.
Obviously a failed BC initiative, supported by the “wacko” feds, and good to see that police will get back some of the tools they need to deal with public drug use.
https://www.msn.com/en-ca/news/canada/ottawa-approves-british-columbia-s-request-to-make-public-drug-use-illegal-again/ar-BB1lZ7kD
My house is going up for sale tomorrow. Wish me luck! BTW, we negotiated fees with our realtor. They were more than happy to take a significant cut and didn’t even look bothered when we asked. It’s almost as if they know the realtor fees are usury…. You have to advocate for yourself. I would have used Marko for mere listing if we weren’t obliged to use a realtor because of social network ties.
Marko, what I meant is these may be the same people that believe that agents actually make much difference in the price their house untimately sells for.
Typically people are switiching out from one luxury branded experienced agent to another with the same fees.
You don’t see people dumping an agent with a 1,000 sales under their belt to someone who has 50 career sales that may be offering lower fees.
If people dumped Suzy’s Luxury Agent to go with Bob’s Low Commission Agent I would get that.
Marko, maybe these are the same people that pay full real estate fees?
Lots of agents are being switched out in the high-end market. Every day seeing properties re-listed with a different agent (and typically a lower price). I’ve never understood this why sellers do this…..”the agent is the problem, so let’s get a new agent, but will also drop the price 100 or 200k.” I’ve now started going to listing presentations were previous listing expired with another agent and when I ask the seller politely if they had any issues with their previous agent most of the time the answer is “I felt like they weren’t working hard enough for me.” Most of the time the price was too high.
Westerly , not much , whatever gets built will be too expensive for the average joe , and there’s no way to fix that
“23000 units, now what?” Don’t know tbh, but will be worth watching. Will be interesting to see how the other muni’s respond to the new legislation as well. Will it translate into housing? Time will tell.
I thought that the last round of purchasing motels and shelters was supposed to move them all out. Our Place has turned running shelters into a real industry for them.
Our Place sets goal to move people off Pandora Avenue by end of year
They collected a list of 77 names along with information on their ages, how long they have been unhoused and what brought them to Pandora, said Daly, adding no one said they wanted to stay on the block.
Ninety-five per cent of those surveyed said they need support for mental-health and addictions issues, while 82 per cent cited physical health problems, he said.
https://www.timescolonist.com/local-news/our-place-sets-goal-to-move-people-off-pandora-avenue-by-end-of-year-8712617
23,000 properties rezoned, now what? Nothing.
Nanaimo set to rezone 23500 properties to comply with prov. Nanaimo Bulletin.
Another interesting dynamic will be how the government attempts to lower costs for developers while prices go up/down. If prices fall, that’s less revenue for government which might need to be made up for with higher taxes/regulation to maintain the same level of service. Passing these costs onto constituents may be a difficult option politically. Alternatively, higher prices don’t help with the affordability crisis.
This dilemma makes me feel that lowering building costs will likely be difficult to do or financed with debt.
Yes it does. The RTB forms have this all laid out.
I’ll get the RTB30 filled out and see where it goes.
NE14T mentioned interest rates – at this point the street’s bet of a rate cut is what 65-70% odds for June 5th? So, much more likely than not. That’s as of now but we’ve seen before that things can change quite a bit in a month. Until it happens or doesn’t happen its purely a guess. But even if it does happen, I don’t see it stoking demand that much. I think people who can afford to buy now, even with a full point cut if it eventually gets there, are very limited and are just waiting for money to get cheaper anyway and for more selection.
@totoro in this case sounds like not initialled.
If you have a fixed term lease that states that the owner is moving in and possession date is agreed to as a term of the lease which is initialed by both parties you do not have to pay compensation if your lease is at least six months long.
The tenant always has to pay rent on time. RTB30 for late payment needs to be served whether the vacate clause is initialed/valid or not.
Also sidekick if you didn’t do the vacate clause and so s.49 doesn’t apply then looks like you have to pay compensation (assuming you issue a new and proper notice to vacate). I’m just extra careful with these things. Like I said there’s a couple places you can call.
But does your lease have a vacate clause that states the reason and is initialled by the parties (see first paragraph in B of linked RTB policy guideline). Look I could be wrong but I’d wavy to make sure. You should call landlord BC or the RTB. There are some tenants out there that could use this deficiency (if there is one) to their advantage.
@Dee – thanks.
Per that link:
The tenancy agreement states this specifically – ‘must move out for landlord use’.
@sidekick you might want to read this.
https://www2.gov.bc.ca/assets/gov/housing-and-tenancy/residential-tenancies/policy-guidelines/gl30.pdf
Might have to do a new notice under landlord use if your lease was defective per above???
Getting a bit messy because now there are potentially 3 separate issues.
@sidekick not personally but I know someone who has. They said they serve it within 2 days of rent being unpaid. I’m sure you’re aware but the RTB publishes policy guidelines that sometimes outline how rules are interpreted/applied. Mentioning this because I believe a fixed term tenancy with a move out clause has specific requirements – maybe even around signing that particular provision in the lease. I can’t remember but I’d want to look it up.
Anyone have experience with serving a RTB30 for unpaid rent? I have a lease ending and tenants may have decided not to pay the final few months of rent (signed lease ending due to pre-planned owner occupation, ie, it’s on the original lease).
Not to mention an enormous amount of snowfall every winter.
Having spent time Quebec, it has a fully different culture and business cycle around real estate than what exists in the rest of Canada. As well, Montreal itself is also different than the rest Quebec. Talking to friends there, the rise in rental costs recently is driving more towards buying, but many still don’t want to give up their “freedom” that renting provides them. It’s probably the toughest market to use as a comparable for what might be happening nationally. It’s also a tough market for investors or people from away because of taxes, regulations, corruption and Quebec nationalism factors.
That Montreal is only half the price of Victoria perhaps?
https://montreal.ctvnews.ca/buying-a-home-here-s-what-500k-will-get-you-in-montreal-1.6500073
Whatever- I believe it is more complicated as we proceed into an era of changing demographics. Boomers are on the decline, however I think it will be a slow decline as seniors (widows and widowers) will stay in their homes due to the unaffordable seniors residences currently available. Investors, also an aging group, will sell their properties due to the negative forces working against them, such as the high costs of providing and maintaining their rental properties. I don’t think a new generation of younger investors even exists and faced with the same factors, will not be overly enthusiastic to become landlords. It is going to create a very bad situation for renters as availability of housing declines and what is available is more than they can afford. This is what I am encountering and other investors that I know.
A 25 point jump in house sales last month year over year in Montreal . Buyers there might know something we don’t
I too partake in that more preferable type of stupidity from time to time.
Did it happen at Mt. Washington?
Stupidity basically. But the best kind because only I paid the price.
The ability to be uninsured v. insured in those situations?
I also feel rates won’t be coming down much or as quickly as people expect but the big banks are saying 3.5%, 3.5% and 3.75% are their overnight lending rate predictions for Q1 2025 and you would think they would be smarter than I. That’s 5 or 6 0.25 cuts which seems difficult to picture right now.
I have a mortgage coming up August 1st and can’t decide between 3-year fixed or a variable around 6%. If the big banks a right about the 3.5% Q1 2025 the variable would make more sense.
I don’t think it is super noticeable as a result of the $1 million cutoff. Where I personally start to see “value” is around $1.2ish.
I’ve also been involved in a number of multiple offer situations recently where my $999,999 max buyers have been outbid by a $1,005,000 +/- offer.
Apparently last night Langford council passed a new bylaw requiring a six-foot setback for retaining walls (to allow for space for trees to be planted), which may mean future Westhills development plans now must be revised.
Gosh, how did you break your femur?
Because they allow both parents (or single parent) to be employed, increasing their income and taxes paid.
For a principal residence, that is. Because neither the imputed income (rental value) nor capital gains are taxable.
It’s unfortunate Frank that this is happening to both landlords and tenants. But this is what happens when a market place is over stressed. Both the landlord and the tenant are just trying to survive.
In an open market system, landlords will opt out and sell their rentals and thereby increase the supply of listings, drive prices down to the point that potential landlords will come back into the market when the rewards are greater than the risk. That’s the role that an investor plays in the marketplace. They stabilize the market by opting out at the height and buying in at the low.
This is how Capitalism works. Where a boom is followed by a bust. And the rental market has been on a tear as rents rocketed during Covid creating windfall profits for a lot of landlords and encouraged more amateur investors to become landlords. In the space of a few years, rents have increased by 30 percent and more.
Never have so few people owned so much real estate.
Marko or anyone close to the market have an opinion on whether the jump from 1mn to 1.05MN for example, sees a much larger increase in quality of home given the CMHC limit then a comparable jump from 950K to 1MN? Does the drop off in buyers stuck with CMHC result in more bang for your buck or is it not really noticeable?
At least daycare costs are tax deductible. Mortgage interest is not.
Segment on CBC news last night concerning landlords in Ontario having difficulties with bad tenants. They have empty dwellings that they are afraid to rent because of all the aggravation renters are deliberately causing. Not paying rent, refusing to move out, lengthy court delays, cash for keys scams, etc… It’s to the point that some of them are going to lose their property. Finding a good tenant is going to become more of a challenge and more investors are going to exit real estate opting to go into cash if rates remain high.
INTEREST RATES
My thoughts are that interest rates won’t be moving much (maybe down .25 basis points this year). But so many people I speak to have this assumption that rates will be going down for sure. Some people talk like it’s a certainty.
My prediction is that they stay roughly where they are today for the next 12-18 months with maybe one 25 basis point reduction.
Our rate is renewing next month and going from 3.04% to 4.94% on a new 5 year fixed rate. So basically the savings I’ll see from daycare costs will go straight into new interest on the mortgage. Good times!
I wish there was a better measuring stick than relying on CMHC’s vacancy rate. CMHC doesn’t seem to put their heart into calculating the rate.
When it comes to the rental market there is a lack of reliable and recent data.
For this reason I would think that developing a program where landlord’s register their properties in a data base and in return get a free credit check on the tenants would be helpful for those looking to find a rental as well as having reliable data for long term planning for housing.
If City of Victoria vacancy goes >3%, they can opt out of str ban, and I expect they would.
I was traveling out east in Canada recently. Obvious shortage of workers at hotels and restaurants. And no rental/housing crisis. So there’s no reason for them to get less foreign workers – they need more.
Only 72 SFH starts for Greater Victoria in Q1 2024, that’s an annual rate of 288. Most of those aren’t in core Victoria, so with tear downs we may net zero (or negative!) SFH additions in core Victoria. The multi-unit rentals will bring people to Victoria and increase population. But that’s also more people ultimately wanting a dwindling supply of SFH.
https://www.vrba.ca/news/victoria-posts-94-5-housing-decline-year-to-date/
“Overall, there has been a 16% decline in Greater Victoria housing starts year-to-date January – March. The total is 916 in 2024 vs 1,088 in 2023.
There are 749 units from large multi-family projects, 72 single family and 95 townhomes, duplex, etc also known as “missing middle.” There has been a big shift to large multis due to high construction costs, government fees, taxes and regulations, and high interest rates. Monthly housing data will be skewed based on the timing/appearance of these large projects.
Most of the new housing was in Langford (537), Colwood (131) followed by Saanich (93), View Royal (69) and Sooke (52). Municipalities posting zero starts this year are Central Saanich, Highlands, and Metchosin. North Saanich has 1 new home. Sidney has 6 and Oak Bay and Esquimalt have 7 each.
End of Summer, all that inventory. Going to be very interesting to see what happens with prices. My bet is there’s some good deals to be had on properties in which sellers have to sell.
As noted on this forum, construction was going gangbusters compared to today back in the 1970’s when rates were higher than they are now. Indeed it kept on going under historically high rates until the bottom fell out of the market in the early 1980’s.
I think more than the rates in themselves it’s the rate trend, and resulting price and affordability uncertainty, that matters.
This is where location and product helps. If you have an investment condo in Vic West there isn’t much competition in terms from rental buildings (just the one Bosa tower so far). If you have an investment condo in Langford there are a lot more apartment buildings going up.
When times are good everything rents, when times aren’t good I do feel you are insulated a bit in the right location/right building. One of my 1-beds in Vic West is in a building with a really nice pool/gym, a/c in each unit, etc. I would say it is a bit of a differentiator to a one bed in Langford in a wood-frame (and there wasn’t a massive premium over a 1-bed in Langford when I bought it in 2016).
Great article Leo. Thanks for writing these.
While I appreciate the need for more rentals, seeing 3/4 of new starts rental units, I have three thoughts:
Firstly, 95% appear to be bachelor, 1 and 2 bed units. So I have no idea how the rental segment is servicing families.
Secondly, it doesn’t really advance the cause of making ownership affordable for people who are able and interested in buying, since the supply of purchasable houses, townhouses is really just crawling along.
Thirdly, with the relative abundance of rental multi-fam units about to come to market, I can’t see rents for condos moving up at all in the coming years, for those who have a condo as an investment property. There will be a generous supply of studio, 1, 2 bed units to compete with. Houses / house rentals I can see staying strong, but not so much for multi-family rental units.
This one makes a lot of sense to me. The most limiting factor I’ve seen people around my age and point in life (28-34, couple looking to have kids, young professional, 150,000 household income, kids soon) is that no one has 200k-300k saved up in cash which puts the above 1 mil houses out of reach. For the mortgage many like me have their parents willing to be cosigners.
The parents are usually in late 50s early 60s and have either paid of or nearly paid of their mortgage and are near their peak earnings. Also while I can’t be sure I suspect we’ll be making at least 25% more in 10 years. Once the first 5 years are done it will be much easier and won’t need the family help.
Seems like family help imo. Parents as cosigner bumps up the qualification significantly.
I’ve been involved first hand with this and CMHC financing is much easier on larger projects, very few lenders willing to pick up projects in the $5 to $10 million range. Below $5 million likely impossible which is going to making missing middle projects a tad of a challenge as they will have to be financed at market rates for the most part.
What I find interesting is how many first-time buyers contact me that qualify up to $999,999 (they don’t have 20% down). I would have thought the number of first-time buyers that can qualify for a 800k+ mortgage at these interest rates would be very small but I see it on a regular basis in my business.
It isn’t tracked. Active inventory adjusts for the re-lists that is why I always look at new listings plus how much active inventory jumped, accounting for sales/cancellations.
I am not opposed to a seller not willing to take asking price in an offer delay situation, but if you haven’t received offers on the delay keeping the list price below your expectations is just a waste of everyone’s time. If the seller has an expectation of $1,050,000 and an offer delay at $999,900 does not produce any offers in my opinion the seller at that point should increase the price to $1,050,000.
If seller has been on market for a few weeks/months there should be an expecation that they are willing to accept asking price with reasonable terms otherwise asking price has no meaning. How to regulate, not sure.
What percentage of active listings are condos? Obviously investors are dumping a product that was produced for a market that no longer exists. Surprise, surprise.
When the new listings are tracked does it track if the listing is brand new or was relisted. When I look at properties it is not unusual for me to see it having been listed multiple towns over the past couple of years. If every time the property is listed counts is sales to new lists even a reliable stat at that point?