Schrödingers Investors
The Bank of Canada maintains an interesting webpage called the Indicators of Financial Vulnerabilities, where they track metrics like mortgage characteristics, housing market activity, and consumer credit stress. The data is updated every quarter and is worth keeping an eye on.
One thing that has puzzled me for a long time is the data on who is buying homes. The Bank of Canada’s data shows that after staying relatively constant from 2014 to early 2020 at about 20% of buyers, the share of homes purchased by investors rose after the pandemic to 28% of all buyers in early 2022. That has a logical explanation: low rates, strong rental growth, and rising prices all made it very attractive for investors to pile into more real estate. But then rates rose dramatically, and the case for investors soured substantially. Though rents remained high, interest costs, maintenance costs, and taxes jumped, quickly turning a lot of previously attractive properties cash flow negative. At the same time the risk-free rate of return has risen dramatically, with GIC’s available at 5% making it more difficult to justify riskier alternatives. It’s not just theory either. The investor-driven presale market has been hit hard, and small condos typically aimed at the rental market are piling up unsold in Toronto. May saw the worst market conditions for condos in Toronto in well over a decade.
But despite that, the share of investor buyers apparently did not decline nationally, with the most recent rate of 28.44% in the final quarter of 2023 being higher than what it was before rates rose. How is that possible?
It’s especially mystifying because in Victoria, the rate of investor buyers did react as one would expect. Last year the rate of investor buyers was only 5.3% after hitting nearly 9% in 2021 and 2022.
Why the disconnect? After all, it seems exceedingly unlikely that investors in Victoria would behave substantially differently than those in the rest of the country.
First it’s worth remembering that both of those measures are just proxies for overall investor ownership. The national data defines the categories of home owners as follows:
- First-time homebuyers are new homebuyers who have never had a mortgage on their credit file.
- Repeat homebuyers are those who obtain a new mortgage and discharge a previous mortgage.
- Investors are homebuyers who obtain a mortgage to purchase a property while maintaining a mortgage on another property.
So we can already see this is an imperfect proxy for what most people would consider investors. Someone buying a rental property would show up as an investor, but only if they used a mortgage from one of the big banks. So we are missing cash buyers or those using other lenders, which is likely around 40% of the market. There’s also differences in how these types of buyers use credit, with especially repeat buyers substantially upping their equity component in recent years (and by extension more of them likely migrated to cash, dropping out of the national stats).
And while the local Realtor survey measures the motivation of buyers, the national data is looking only at multiple-mortgage holders. While nearly every owner has some degree of investment motivation, there are also reasons to have your name on multiple properties without those being primarily purchased for investment. With the return to work there may be more owners that went back to purchasing a home in town when the remote retreat was no longer feasible (and suddenly hard to sell). Another potential source is parents helping kids by co-signing mortgages at a greater rate (and thus being listed as holding multiple mortgages) when affordability took a nose-dive in 2022.
I’m not sure if those factors are enough to explain the lack of drop in “investor” participation in the national statistics, so it remains something of a mystery to me. However I have a strong suspicion that the numbers there are not what they seem. By all other measures, investors have pulled back in markets across the country and that is being felt most in the condo market.
The condo market is also where we see large differences in cities across the country. Why are condos so weak in Toronto while here they are holding up relatively well (3.4 months of detached inventory vs 3.5 for condos)? One prime suspect is the construction pipeline, which has for years been focused on rentals in Victoria, while Toronto continued to build condos. That’s true even in 2024. Out of 10 new apartment starts this year, 8 were rentals in Victoria while Toronto was the reverse. Condo inventory is more fluid than detached properties, and inventory can increase even if we don’t build many, but all things equal it should help keep condo inventories under control in Victoria, and mitigate some of the drop in demand from investors.
Also the weekly numbers
| June 2024 |
June
2023
|
||||
|---|---|---|---|---|---|
| Wk 1 | Wk 2 | Wk 3 | Wk 4 | ||
| Sales | 174 | 340 | 705 | ||
| New Listings | 458 | 863 | 1297 | ||
| Active Listings | 3387 | 3416 | 2342 | ||
| Sales to New Listings | 38% | 39% | 54% | ||
| Sales YoY Change | -8% | 0% | +15% | ||
| New Lists YoY Change | +18% | +24% | -6% | ||
| Inventory YoY Change | +52% | +49% | +14% | ||
| Months of Inventory | 3.3 | ||||
Sales are exactly on the year ago pace while new lists continue to be healthy. This was the time when the market was weakening due to rising fixed rates last year, so it will be interesting to see how the rest of the summer goes now that we have dropping rates rather than rising ones. I would not be surprised if we see some year over year increases in market activity later into the summer and especially the fall which was exceptionally weak last year.
New post: https://househuntvictoria.ca/2024/06/24/the-vacants/
You make a good point.
Did a lot of them jump out? I stopped tracking, but seems like sales were fairly modest and a lot ended up renting them out.
But yeah, whether suddenly or gradually, if the rentals don’t make sense anymore they will get back onto the resale market eventually.
Max’s cat ate Whatevers cat.
Max’s cat
https://youtube.com/shorts/audA_mJp4y8?si=rmoOPm_mhOodjjUZ
A few investors have lost money on The Pearl downtown but for the majority of downtown investors that have sold they have done fine. I don’t see any panic as the amount of downtown condos being sold vacant (which would mostly be airbnbs) is only slightly higher at 30% as compared with the rest of the Victoria core at 26% That’s only an increase of 8 downtown units for sale.
I would guess most airbnbs went to long term rentals. But it may be too soon to call. There doesn’t seem to have been an increase in downtown rentals on Craigslist either. The investors may be painting and upgrading the unit, getting rid of furniture , to stage it for sale or rent it long term. Downtown condos are now back to 2022 prices having peaked for two months in the first quarter of this year. Peak sales were this time three and five years ago. So we will see what happens. Will we have a significant bump in listings as Toronto did?
If your solid, private lenders will lend you the down payment in the form of a 2 year interest only demand loan. That’s how I got in without CMHC insurance. There’s more than one way to skin a cat.
You might call it investor volatility while I call it investor stability. Investors play an important roll in setting price floors and price ceilings. When prices get too high then investors sell off their properties thereby increasing supply and decreasing demand causing rising prices to stabilize. When prices are too low, that’s when investors buy properties reducing supply and increasing demand. That causes declining prices to stabilize.
I think the downtown condo market is a good example. Investors are not panicking but have slowed their purchases and increased the supply in an orderly manner. And prices have been stable for a couple of years. That allows prospective condo owners a chance to catch their financial breath by accumulating larger down payments and increasing incomes.
Or so it is suppose to. This time it is different as the gigantic increase in rents during covid has increased the amount of time to accumulate a down payment.
Wouldn’t the airbnb ban be a really good example of this? Investors jumped in but now they are jumping out?
FOMO for what exactly? Servitude for the rest of their lives? Its not how it used to be. The provincial Government is hell bent on taking investment out of the equation. Pulling demand forward is a thing of the past. IMO.
I think that’s definitely a factor, similar to how investors can increase market volatility by jumping in when prices start rising and jumping out when they fall. But those are short term factors whose effect on long run prices should net out to zero. Some people FOMOing in to ownership before they should have is just borrowing demand from the future. Investors jumping into bad investments on a speculative basis also can’t last forever.
You could attribute some of it to locals (investors, developers, end users) getting FOMO and jumping in once foreign buyers started snatching properties up and forcing up prices in certain areas.
Plus then they can tell a nice story. Oh we sold to the loveliest young couple too. They wrote a touching letter and we accepted their offer.
I never suggested the sky was falling. The video looks at how debt can even effect people who appear to have it all. That video was from 2014. You never know who’s swimming naked until the tide goes out. I think the LTV was around 80% at that time to help pull us out of the GFC. Your “richer than you think” became another commercial… Just “pull the money out of your walls” was another.
Just a bunch of predatory bullshit advertised during the 6 o’clock news preying the weak. This was prior to streaming we have today.
Not seeing the economy or a lot of folks in trouble , should be smooth sailing on out from here . The boc will take steps to get things firing on all cylinders soon enough
Does anyone remember this local commercial about affordability…
https://www.youtube.com/watch?v=LG-Z-kYSC4s
synopsis: Some people took the bait and are now in trouble…Most didn’t. (The clip is 30 seconds long).
The 1998 sale was for the previous house on the property. As someone who lived in Vancouver at the time the price seemed to me to be far too low for the current house. BC Assessment confirms 2008 build. Sloppy reporting. Georgia Strait:
https://www.straight.com/news/huaweis-meng-wanzhou-loved-vancouver-and-has-two-homes-worth-at-least-182-million
By the way, BC Assessment reports a sale for $4.8 million on Jul 29, 2023.
Sure if she also happens to be a CEO in China making 500K a year on ‘the side’. Just like this hairdresser:
“Another woman who owned homes in Aurora, Markham and Scarborough, worked part-time as a hairdresser while also claiming to earn $536,280 at a “Business Manager” job in Guangzhou.
or this:
“The bank found out that one lady works in a casino part-time but got a $1.4 million mortgage showing over $300,000 annual income,” he said. “Plus she takes money as benefits from the government, for her two kids.”
In other examples, an HSBC mortgage client claimed to earn $700,000 annually for remote work in China, while simultaneously living in Canada and paying off a $10,000 student loan.
https://www.thebureau.news/p/fake-chinese-income-mortgages-fuel
Yeah because the weekly releases always land on different days so I do it by either sales per business day or sales per calendar day (both have upsides and downsides)
Totally agree. There would need to be sophisticated document fraud going on to fake all the tax/bank/brokerage statements required and that’s not going to be many people.
Ahh, okay now I get it. You are referencing sales pace not direct YOY month number comparisons.
No, because we have 2 fewer business days this month vs last June. So unless we’re up 10% on the sales rate we’ll be down year over year. But that’s just an artifact of how the days land. The 1% up is a more accurate reflection of how activity is going compared to last year. No change.
And I just got an assignment that falls along lines that the lender is not following their own regulations. Now I have to write them back a letter showing that under their bank regulations the level of the assignment has to be increased or the assignment has to be declined.
Otherwise the bank auditors will flag this mortgage if it is reviewed.
Yes, good point
Marko, there are many types of mortgage fraud. It isn’t just about T-4 slips. I spent two days in a webinar that just discussed mortgage fraud. Yes I accept that prices are high because of supply and demand. What you don’t seem to understand is how demand got so high.
There was a trust company in Port Coquitlam that qualified a lot of tree planters for mortgages. An investigation of their clients showed that their clients were not just planting trees. They were financing grow ops.
Another case involved a person that got a hold of appraisal software and made up their own appraisals and submitted them to the banks using the names of real appraisal companies. And it worked because the lenders never checked with the real appraisal company or asked for letters of transmittals from those appraisal companies.
In other cases they just doctored the figures and no one ever checked to see if the numbers added up correctly. The adjusted price range of the comparable sales was from $450,000 to $500,000 but the doctored estimate of value was $700,000. In one example they used white out to change the estimate of value and the bank still lent on it! Other times they just changed the address and used a different appraisal report at a higher value.
Mortgage fraud is not just t-4 slips and it isn’t just to do with sales. It’s refinancing which you Marko never see. 80 percent of all appraisals are for re-financing not for sale purposes.
Bank can see if they wanted to that I’ve maxed out the TSFA contribution for 15+ years and never withdrawn. The mortgages I am taking are usually 50% LTV so a ton of equity in the particular property for them should I default.
My point is getting a mortgage is not as easy as people think and if it is easy the buyer is government/institutionally employeed. What is a nurse going to do? Fudge that he or she makes 300k per year when average salary is 100k?
When will we simply accept that prices are high as a result of supply and demand.
Are prices in Edmonton so cheap because people aren’t good at mortgage fraud there? Just curious.
TFSA is not creditor proof. RRSP is, although recent contributions (previous 1 year I think) are not. That’s part of a general protection for pension assets.
Those should have had an impact on June numbers then. Not sure why those May listings would cause an acceleration of sales from last week to this week?
The suited houses coming on market has been increasing since May from what I recall.
The problem is if these properties fall into default. Then the high ratio insurance is void and that raises the costs to the bank’s stakeholders. For the smaller and private lenders that means a lot of court cases, as these B lenders want to claim against insurance policies. They don’t have the deep pockets like the Big 6. Some B lenders could face bankruptcy due to their increased losses. That could have a domino effect as those that took out mortgages with these B lenders will have to find and qualify with another lender. ie Wells Fargo in Canada during 2008. Or Columbia Trust in the mid 1980’s
It could end up as a credit crunch for some home owners that find themselves caught between a rock and a hard place. The Big 6 will be fine but the smaller suit case lenders could have a hard time as they tend to attract borrowers with a less than stellar income history and don’t fall under OSFI regulations. Most banks have been increasing their reserves in case this happens.
And Marko, it’s not all about you. Unless you have been falsifying documents and have been getting your financing with “Bob’s Bank”. Your only problem will be falling off your wallet.
Whatever comes to market this week won’t have an impact on June numbers, but July.
TFSA+RRSP in BC are typically creditor proof from debts owned to banks on mortgages. So that’s why they’re not so impressed by your RRSP balance. They’re interested in you showing them assets they could seize.
Absolutely. Wanting to get full market value for your house doesn’t remotely make you a bad person.
1) Most of us can’t afford to be generous to the degree of selling for less than market value
2) those of us that CAN afford to be that generous would much better devote this generosity elsewhere to people or causes in genuine need.
3) selling stuff for full market value is literally just capitalism not perfect but not the worst economic system either
Related anecdote. I used to give stuff away for free via Craigslist, but stopped after having to deal with so many annoying, demanding people. Now i advertise the thing I’d be willing to give away for free for a small price but often end up giving it away free anyhow if the person that shows up seems decent. This is how I downsized a ton of kid and baby stuff and made a few people happy at a time in life when there are usually a lot of financial pressures.
I think it depends on what kind of product comes on the market, seems like lots of suited SFH coming on to the market lately which are selling quickly if priced properly.
I gutted my 100 year old house and it is not for the faint of heart. After gutting you end up with a crooked house at the “finished framing” stage so you have 90+% of the costs still ahead of you (framing is cheap) You probably have crumbling foundations so by the time you factor in fixing the foundations and the demolition costs you are going to spend more than you would on a new build. I did it because it was all I could afford and I could live in it while fixing it up (I have an amazing wife). Most people fix up an old house because they like the old style trim and character. The trim will be so old and dry you are very unlikely to be able to salvage it. If you try to duplicate old style trim today your eyes will quickly start watering at the price. 1X8 edge grain fir is considerably more expensive than the painted 1/2 X 2 hemlock trim you get at home depot. Throw in the labour to mill it and fit it to your crooked house and you better have REALLY deep pockets unless you are doing all the work yourself. Assuming you do all your own work it will take you years longer than you thought or you will give up when you get divorced. We made it to the end but it was 10+ years of our lives we could have spent doing more fun things. On the up side I learned a lot of skills and became reasonably competent at most home renovation tasks.
I have wandered through open houses where the basement is fully finished and often wondered what a house inspector could tell you about structural issues. If it is an unfinished basement I feel very confident I could identify major issues but I suspect a fully finished older house is going to result in lots of caveats because there is just no way to tell without drilling holes and other invasive techniques. I saw one old house where I went outside and dug around the foundation and noticed that the wall was starting to roll (probably no footings). I would be curious to know what percentage of inspectors would notice that.
lol, who is posting this non-sense, let me guess the same conspiracist that claims landlords are all getting together every month in Victoria and setting rental prices and that is why rents are high. Now prices are high because of mortage fraud, lol. If there is so much fraud why is the bank requiring 50 documents for me for a mortgage when my TSFA+RRSP accounts with the same bank are double the value of the mortgage. Yes, there is someone in BC providing fake documents but it being substantial in the marketplace, yea right.
Do you think we will end up 1% for the month? We had 166 sales last week so if that repeats we are only at 672 (veruss 705 last year).
I doubt much will come of it. Not that it doesn’t exist and we should absolutely crack down on it, but it’s not a major factor in our prices IMO.
The Ben Rabideoux youtube video posted by Bobby K is, in my opinion, a good summation of the market.
We haven’t gotten to these high prices in BC without a lot of mortgage fraud. My opinion is that on a per capita basis BC is the worst province for mortgage fraud.
Month to date market activity
Sales: 506 (up 1% vs same time last year)
New lists: 1211 (up 24%)
Inventory: 3472 (up 49%)
Frank 100 year old houses done up can be very nice , but yes if your redoing one best to gut it .
Taking an old house down to the studs would double your initial investment. Like I said, deep, deep pockets, and long arms.
Letters don’t work perhaps unless there is a tie offer. I would instruct my realtor to refuse any personal letters.
Thanks Patrick, I will pass that on and it really sounds like a good idea.
Thanks Peter, this is for someone that lives in Saanich so that would work great.
YMCA is good (and I’m not kidding) https://vancouverislandy.com/program-services/health-fitness-aquatics-downtown/fitness-downtown/personal-coaching-dt/
100 year old houses should be taken back to the studs to upgrade properly
Best not even to consider a 100 year old house unless you’ve got deep, deep pockets. They are all nightmares, unless the work is documented with the appropriate permits and receipts and photographs of the work being done in stages is provided. That will be reflected in higher assessment values and higher property taxes compared to other houses in the neighborhood. I wouldn’t rely on an inspection unless they guarantee that they have identified all problems. Which no one in their right mind would do.
I expect that the impact from the foreign student changes on BC will be none or negligible (a “nothing burger”).
The government isn’t limiting students to be accepted, it is limiting applications.
In 2023, BC accepted 60,000 foreign students from 97,000 applicants (62% acceptance rate). This year, BC is limited to 83,000 applicants. If BC increases the acceptance rate from 62% to 72% (60000/83000) there will be no change in numbers of accepted students, and BC in 2024 could accept 60,000 like 2023 . This is easy for them to do and expected to happen as they will stop accepting applications from countries and regions with low acceptance rates. Or just lower their standards for acceptance.
BC may end up with the same or more students accepted in 2024 vs 2023 – that’s up to the colleges to decide based on their acceptance rates.
Not your neck of the woods, Barrister, but in North Saanich, at Panorama Rec that description you gave covers the majority of the people and their trainers.
It’s not the blind leading the blind if you’re aware of your own limitations and pay someone $500 or whatever to give you the info you need to act prudently. So you would do what, Frank, not get an inspection on a 100 year-old house then? That’s exactly when I would get an inspection. Maybe you’re building-savvy enough to be able to walk through the house on a normal showing, and be able to spot all the problems in a 100 year-old house and have a clear idea of what’s been upgraded & what needs doing, but I’m not. Doesn’t mean I have to take a course on buying a house, I know how to do that part very well, after a proper inspection. For the $500 or whatever it cost me, I can have an expert tell me everything I want to know and then can make my offer and proceed, or not. Seems pretty sensible to me.
Off Topic, can anyone recommend a good gym for a fit senior who is 70? Needs a trainer who is used to working with seniors if possible. Thank you
There’s nothing stopping a foreign student from enrolling in another program at a different “college “. Haven’t you heard of the term “professional student “?
Will reducing the number of “students” coming to Canada for an “education” impact rents, ie. lower prices? I doubt it. Restricting airbnbs might have an impact, mostly by increasing the inventory of condos on the market creating a glut that will lower prices. Don’t know how many investors will rush in to buy these depreciating properties in a market of stagnant rents and higher interest rates. Not a brilliant business plan. Just shows that not every investment is risk free. Luckily a lot of people who invested in airbnbs can afford the hit. Some obviously can’t and will get crushed. That’s capitalism.
Most of the international student enrolment in Ontario is at colleges so they would be in 2 or 3 year programs. Don’t know figures for BC but I’m sure there are a lot in colleges too. This article shows how out of hand things got in Ontario.
https://www.cbc.ca/news/canada/toronto/ontario-canada-international-student-visas-study-permits-1.7094095
Canada is projected to approve 229 thousand student applications this year.
To put that in perspective here are some of the amount of applications approved per year:
2024 – 229k (projected)
2023 – 437k
2022 – 355k
2021 – 286k
2020 – 111k
2019 – 253k
2018 – 228k
2017 – 317k
2016 – 265k
2015 – 220k
To put things more in perspective here are some of the total amount of international students per year
2023 – 1040k
2022 – 804k
2021 – 617k
2020 – 527k
2019 – 638k
2018 – 567k
2017 – 491k
Important to note this data excludes extensions.
The pandemic obviously screwed up the numbers and trends as can be seen. However, given the massive increase is 2022 and 2023 it honestly doesn’t matter much.
Lets assume that it takes 4 years for people to graduate. This means that the massive increase in 2022 and 2023 won’t really leave till 2026 and 2027 respectively.
I’m curious if you guys think this will significantly impact rents and housing costs. I can really see this having a big impact in Ontario where the number of study permits are being cut drastically as opposed to BC.
Sources:
https://www.canada.ca/en/immigration-refugees-citizenship/corporate/transparency/committees/cimm-feb-15-17-2022/student-approval-rates.html#wb-auto-6
https://www.applyboard.com/applyinsights-article/student-interest-in-canada-study-permit-cap
https://www.applyboard.com/applyinsights-article/canada-hosted-over-1-million-international-students-in-2023-but-the-new-student-visa-policies-will-transform-the-sector-in-2024
https://www.canada.ca/en/immigration-refugees-citizenship/corporate/publications-manuals/annual-report-parliament-immigration-2018/report.html
Only the part of Canada that doesn’t support Lord Trudeau is screwed. His loyal subjects are thriving.
Recent video from one of Canada’s more respected independent analyst, he basically says that Canada is screwed. OCED predicts Canada will have the lowest growth in the devloped world over the rest of this decade, he predicts Canadas housing will greatly suffer.
I think its obvious that we are in already in a recession.
https://www.bcbc.com/insight/oecd-predicts-canada-will-be-the-worst-performing-advanced-economy-over-the-next-decade-and-the-three-decades-after-that#:~:text=The%20findings%20are%20sobering.,dead%20last%20among%20advanced%20countries.
https://www.youtube.com/watch?v=Q1ygHZ8nCtY&t=2904s
https://www.youtube.com/watch?v=oaGe9l8wAU4&t=544s
100%, why is everyone listing their house on MLS and paying 10s of thousands of dollars in real estate fees in trying to secure the absolute top price? If most people care about who they sell to why not put it on FB marketplace for a reasonable price, save the real estate fees, and meet the family you will sell your home to face to face and having tea in the home together versus have two agents of separation between the two parties?
I’ve worked with hundreds of sellers over the years from various cultures, professional backgrounds, differing religious beliefs, etc., and at the end of the day everyone wants to sell for the most amount of money they can get and most sellers aren’t bad people, but such is life.
I have a listing coming up for an elderly couple that has been in the same home for 42 years….guess what the Tapestry (senior living) unit they have lined up is $9,600 per month. They need to maximize what they are going to sell for so they don’t run out of funds before they move on.
Last year I sold an estate for two siblings where the parents had owned it for 50+ years. One sibling had two children (grandchildren of the estate) that were trying to get into the real estate market, needed funds for that, and the other sibling needs funds to purchase a place for retirement as he had rented his entire life. Unfortunately, they didn’t care for the letters we received from young families wanting to buy their home and I don’t think they are bad people for such.
Even someone heavily devoted to their church or similar will want every possible dollar so they can give to the church or similar.
The only time people care about selling to a wonderful local young family is when their offer is also the highest unconditional offer 🙂
Nah , another interest rate cut coming in july
Off Topic, can anyone recommend a good gym for a fit senior who is 70? Needs a trainer who is used to working with seniors if possible.
This sounds like a story people like to tell themselves to make them feel like better individuals.
What’s your ETA?
Max, Canada doesn’t have much wiggle room on interest rates. We follow what the yanks do. Stop thinking that Canada is the master of its own fate. We have to keep control of inflation at our long term target of 2%. We are still too high.
We are the mouse sleeping beside the elephant. When the mouse rolls over, the elephant doesn’t feel a thing. When the elephant rolls over then we get crushed.
Most people seem to be placing their bets on immigration to keep home prices stable. That may not be accurate, while the population is increasing our productivity is declining. Some have speculated that it’s because businesses have not kept up with advances in technology.
Canada is adding more jobs but not at enough of a rate for our population grown. And this is why our population and unemployment rate are increasing despite adding more jobs than ever before. Our population is increasing at three times the rate of jobs added. Experts warn the rising share of unemployment is more than enough to trigger a recession at this point.
A significant portion of our GDP is reliant on the construction sector. Building homes is very labor intensive in the manner that we build them today. There is little in the way of advances in technology that can change that. One can shorten the approval time but we can do little with shortening the construction time.
Canada can’t afford to lower interest rates.
Canada’s highly indebted households are now too indebted for prudential management. After a low rate, investor-driven home buying spree, many borrowers are unable to keep up with rising rates, despite having been “stress tested” for a similar scenario. As a result, banks and regulators granted temporary extensions to the maximum period a mortgage can be repaid. The problem was supposed to be mitigated as quickly as possible, but recent bank filings show most Big Six banks have mortgages on their books with a remaining amortization that far exceeds the maximum limit.
Canada’s Big Six banks are sitting on a substantial share of loans with over 35 years remaining. Second quarter filings show over a fifth (21.3%) of BMO’s Canadian mortgage portfolio had remaining amortizations longer than 35 years. It was followed by CIBC (20%), RBC (19%), and TD (16.5%)—in that order.
Lack of Affordability And Soaring Inventory To Hold Real Estate Back
Low rates help to stimulate purchasing by lowering financing costs faster than prices can adjust. Traditionally, a rate cut should help to boost demand—or at least remove some of the friction. That might not be the case this time around, since affordability is stretched to the point that the rate cut will have little impact. “Even with the correction in home prices and the recent decline in fixed mortgage rates, affordability is still strained,” says the bank. According to their calculations, a return to pre-pandemic affordability requires mortgage rates falling below 4%, prices down another 12%, incomes need to rise enough to make up the difference of those two, or a combination of all of the above need to occur.
(see my previous post when I described the difference on the marketplace between “Pent-Up Demand” and “Pent-Up Supply”)
Last month, home sales in Toronto and Vancouver fell roughly 20% each, while inventory surged higher. A flood of sellers had been waiting for rates to pull back before listing, helping to prop up prices. However, if buyers don’t return soon, it can apply downward pressure on the market.
You weren’t in the demographic that would be most likely to be receptive to a letter. An article like this (toronto RE agents and client interviews) describes the typical client receptive to letters to be older sellers where the home has been “long in the family”.
Here’s various anecdotes from agents and buyers in the article.
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https://torontorealtyblog.com/blog/does-a-personal-letter-really-help-a-buyer-rise-to-the-top/
In the Martins’ case, they weren’t the only buyers to write a letter and didn’t have the highest bid, but still landed the property. The sellers later told them their “impactful” note sealed the dea
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While some sellers make money the deciding factor in which bid they chose, he said most “care about who they sell the house to, not just the price.”
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“It swayed the seller,” Ferguson said. “We got the deal done.”
“People want to know they are trading their family home to another family,” she said, noting she has had clients bid $10,000 less than but still snag homes because of their letters.
This is every day common practice in Croatia. There is no exclusivity which means sellers can list with as many listing brokerages as they want and they can also sell privately at the same time while listed and pay zero commission; therefore, most brokerages do not advertise the address or unit of the property as most buyers would just go knock on the door to put together a private deal with the seller. There is also no such thing as a buyer’s agent in Croatia. There is also no mls system or actual sales data.
Here is the exact same condo in Zagreb in condo listed for $1.1 mill CND with at least 5 different brokerages (for slightly varying list prices too)
https://www.njuskalo.hr/nekretnine/zagreb-heinzelova-vmd-novogradnja-trosoban-stan-nkp107.52-garaza-oglas-42910909
https://www.njuskalo.hr/nekretnine/heinezelova-c-darwina-vmd-novogradnja-luksuzno-namjesten-3s-stan-lod-oglas-43003817
https://www.njuskalo.hr/nekretnine/vmd-charlesa-darwina-3s-garaza-gpm-oglas-43220557
However, in Victoria I’ve never been involved in a situation where buyer has bypassed agents on an actively listed property. I’ve had situations where my listing has expired for a year and when a buyer approaches the seller directly the seller gets me involved even thought they have no obligations to do such.
I’ve had two private sale scenarios cross my desk just in the last 30 days and both totally crazy. One was long time clients of mine became interested in a vacant property up-island that wasn’t on the market and asked me if I could do them a favour for them and pull the title. I pull the title and they send a letter to the owners who phone them back and turns out owners are planning on selling the property in the next two months. My clients phone me and I advise them to make a private offer without agents involved (thinking they will get the best deal as seller doesn’t have to pay any commission). Context here is buyers are very sophisticated and experienced, they don’t need financing or assistance in terms of due diligence on the property and I can’t add any value whatsoever.
I am going change the numbers a bit for privacy reasons but essentially the property is worth $950k (lots of good comparables). My clients really wanted it and they are willing to pay a bit above market value so they offer $975k privately. Seller’s bottom line $990k; therefore, the offer is not accepted at that time. Seller ends up signing a listing contract for $999k with an agent two months later. I tell my clients if you don’t need me to drive up there to view the property if you want I’ll give you a 10k cashback now that it is under listing contract (with a cooperating commission). We offer 980k that is accepted (keep in mind my clients are getting 10k back now so paying less than 975k net) and I pocket $6,000 for typing out an offer.
Problem is with residential real estate there is just too much emotion invoved. Seller and buyer negotiating directly typically doesn’t go well.
In theory, it is perfect. Property is worth $1 million and at 6%+3%balance (commissions may vary) that is $33k+GST in commission why just not split the difference and do a private transaction at $983,000….in theory. Both parties are 17k ahead.
They have 7 years to catch you. If they do find fraudulent claims, they can dig even further back. They have the resources to zero in on the last latte you purchased from Starbucks. They will use your SIN# to locate any finical institutions you are attached to. They will demand bank statements from these institutions dating back as far as their records have on file (usually 10 years). They will demand current activity statements. Its the law. The financial institutions must surrender this information to the federal Government… Even without you knowing.
https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/personal-income/line-12700-capital-gains/principal-residence-other-real-estate/sale-your-principal-residence.html
Just like form T776 for rental income within your principle residence.
https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/rental-income/completing-form-t776-statement-real-estate-rentals.html
They are cracking down hard on this shit. This is why its a terrible idea to rent any space within your principle residence if you are looking for 100% capital gains exemption on your principle residence. It also sucks having tenants living in your principle residence. Maybe it makes sense these days. Back in Y2k to 2024 with the price acceleration this made for a pretty big chunk of capital gains exception just for having a roof over your head. Not to mention the forced savings and the discipline required to make it work. It was very educational.
The reason I am saying this, is back in 2022 I received a letter from my bank stating that I owed 6k to CRA and that action was required or my back account would be frozen. I received nothing from CRA telling me this. I immediately paid the 6k to CRA and then phoned them and communicated with them wondering what this all about. It was for my CPP from 2012 to 2022. I guess the numbers didn’t add up on their end. But they went back 10 years and figured it out and in their eyes I owed 6k. I confirmed the payment was received. That was the end.
Marko,
Have you ever had a buyer contact the seller directly (bypassing both agents) trying to negotiate something?
Why? Were you bored?
As for people , including those who aren’t residents of Canada, failing to report capital gains on sales of real estate. BC seems to have five times the amount of cheaters per capita than any other province.
Davidoff co-authored a 2022 paper published in The Canadian Tax Journal, which examined the top five per cent of Greater Vancouver homes had a median value of $3.7 million, while the median owner paid income taxes of just $15,800. This was the lowest correlation of property values to income tax contributions of any North American city, the authors wrote, concluding that “most luxury homes in Greater Vancouver appear to be purchased with wealth derived from sources other than earnings taxed in Canada.”
For years, many British Columbians were “ringing the bell” about people cheating on their taxes with real estate dealings, said Davidoff, director of UBC’s Centre for Urban Economics and Real Estate. This recent crackdown might not make housing in B.C. significantly more affordable, he said, “but it’s real money and it’s certainly useful to get it back where it belongs.”
Considering these earlier findings, Davidoff said it makes sense that the CRA’s recent audits of B.C. real estate uncovered income tax “chicanery.”
It’s all about semi-mental value.
I also read every letter we received when we sold our last place. Of course we picked the highest offer:)
We were looking at an acreage maybe a decade ago, bare land, ALR, and not likely subdividable nor would it take multi-family. Our realtor suggested we send a letter in with our offer which we did. It had been sitting for a relatively long time, they lowered their price once. By memory, our offer was $40-$50K off list. They countered with very close to the asking. Deal died there.
The land sold a few months for significantly less than we had offered, never heard anything more from them. In hindsight maybe it was for the best, but I was kind-of choked at the time. Figured maybe it went to family, cash incentive, a trade-in-kind or some other incentive in the background that we couldn’t see. Deal closed, it still sits undeveloped and unused.
I think if anything, a letter just reinforces to the purchasers that “this is the property for us” and they can get sucked into the emotions.
Fwiw, I am one of those people that submitted a letter and the seller said they loved our letter many months later when we randomly met in person. So I guess it had some impact, but I don’t know what the other offer we competed against was.
Man is a storyteller, and I don’t think it hurts to spin a good tale and try and tug at the old heartstrings of the seller.
That said, I personally hated writing a letter with every offer.
You might not all remember this, but during the US bubble of nearly a couple decades ago, sellers demanding that buyers write a letter promising to feed the squirrels became a sort of meme.
I would guess that those writing letters today likely don’t remember.
I wouldn’t waste my time reading a letter with an offer, it’s all B.S. anyway.
So according to Marko, letters are never productive, but they can be counterproductive. Sounds like nonsense.
I was going to say you aren’t dumb, but no that isn’t the best way of putting. You simply just aren’t spewing non-sense. At the end of the day pretty much everyone wants the most they can get for their property.
The other problem is most buyers these days are writing letters because someone told them they could secure a better price with a letter.
I had a funny one earlier this year, 1st day on market on a listing of mine we get an offer+letter from a “lovely young family” and it is “their dream home they’ve been searching for.” Seller accepts and 7 days into the accepted offer they just send a release backing out of the offer. Never did an inspection, no explanation whatsoever, while for 7 days we are telling showings there is an accepted offer in place. It kind of screwed the sellers up and now all the buyers that were interesting are asking “well, why did the offer collapse?”
I am also starting to see more scenarios where the seller is annoyed at a letter(s) and it ends up being counter-productive for the buyer.
These were hard credit pulls? And you didnt goto a broker
Thats almost everyone.
Can I ask the group what site they would use to find rental accomodation, likely a suite, single occupancy? Is there perhaps one site that is more reliable/accurate/user-friendly/regularly up-dated than others?
I’ve personally been in the situation where I had a single offer below asking. The only thing I took into consideration was whether I was likely to get a better offer if I kept waiting. I wasn’t interested in finding out more about the buyer.
But I guess that’s just mean old me.
Right that’s not being a jerk and is good negotiating technique. Nice to hear that it (”I will switch banks”) still works.
Anyway, I happen to think that emotions play a big role for both sellers and buyers in RE, so it’s not always a simple matter of dollars. As I said, in a multiple offer situation it’s obvious that for a $1,000k list price, $980k offer is better than $970k so they’ll choose the $980k offer – emotions dont play a role there. .
But when the only offer is the $970k offer, the seller has to decide whether to take it or not. A tough decision. No obvious comparisons with a $980k offer. So I believe they take in everything into consideration, including who the buyer is. For example being a young family with children, and writing a nice letter might mean something to some sellers, and make it more likely that it will be accepted.
This is where Canadians are far too polite. Somehow business and sales in Canada has programed the public to think they a rude or a jerk if they expect to be treated well and competed for in order to get a sale. A person is not a jerk by making a salesperson work for it. All you are to salesperson is mark they are looking to bleed as much money out of as possible because you are their food. Understanding that and knowing that the people that are selling things to you are not your friends does not make a person a jerk. Now they are just ready for professional transaction.
As for the rate I recieved, it was pretty straightforward, I asked two institutions that I deal with for rate quotes. The one I had more of my assets with didn’t have the best offer. I made an appointment to move some assets to the institution that made the better offer and during the meeting they asked why I was moving the assets. I repsonded by informing them that is where I recieved a better mortgage rate offer and I was moving some assets too. The person said wait minute and left room and came back with their mortgage person. They initially offered just to match the other rate on the spot. I responded by saying that really isn’t competing. They asked if I could give them two days and I said yes. Two days later I had the rate and kept the assets at their institution. Nothing jerk like, just a polite and professional transaction.
On the contrary Max, it would tell me that the house was probably well maintained and the value of the property would be above average in the neighborhood. It’s called street appeal.
In other words not much added value, kinda like a swimming pool. Its the updates to the house that really matters.
You got a better deal than most on your mortgage (4.78%/ 3 yr). Do you think you would have got the same great rate if circumstances were identical ( same ongoing business with the bank etc.) , except you’d acted like a jerk during the negotiations? If not, then the end result depended in part on the bank liking you as a customer and stretching a little to give you a good deal.
Now the bank isn’t going to have much wiggle room based on factors like that, but an individual selling their own homes isn’t bound by the same rules. I wouldn’t expect home sellers to turn down a higher offer, but in the case where they only have a single offer below asking, I can see a greater chance of them accepting it based on soft factors such as if they liked the buyers. I know when selling used items to people I act like that.
Meticulous landscaping indicates that the owners are serious about caring for their property. I would expect updated wiring, plumbing, and HVAC system. Also newer roof, windows, doors, renovated kitchen and bath, etc.. When looking at a used car, check out the trunk, if it’s immaculate, the owner probably took care of the entire vehicle.
About what percentage of value add to beautifully Manicured landscaping for an SFH on a sizable lot?
I just assume the sellers agent will go back to the potential buyers that put in the heartfelt letter (even if they are the highest offer) and say the sellers really liked your letter and want to see you get the home, but need the offer to be better.
Do people that sign up for a waitlist to buy a car get a good deal? Lol.. In other news, that waitress and stripper really like talking to you for who you are as person, find you really interesting and will probably want meet up with you later.
Many homes are purchased for below asking, and their is only one bidder. If there was a letter involved, only the seller would know if it influenced their decision to accept a lower price (below asking). .
So the buyer RE agent is no position to declare that letters have no effect.
Also, I texted a friend that is a managing broker and reviews contracts for a living at a large brokerage. At the top of each contract there is a section to fill out “Prepared by ________________” where the agent name/brokerage go in and he couldn’t recall seeing an offer he has reviewed that was prepared by the listing agent.
He said it could see it occuring for technical reasons, for example, buyer’s agent isn’t in the middle of a 3 day hike or something and asks listing agent to put it together if they know eachother, but would be super rare for actual strategic reasons.
As I commented below, I haven’t seen it in 1,100 career transactions, but everyone purchased their home with a letter for a lower price, right.
Keep in mind 1/2 (550 +/- of these transactions) would be as the listing agent and I’ve never been involved in a situation where my seller didn’t take what they perceived as the best offer.
Sure, I’ve had sellers take less money, but they always took what they thought was the best offer. For example, a seller taking $1,040,000 unconditional versus $1,050,000 conditional.
I’ve also submitted hundreds and hundreds of letters for my buyers that are often well written, but not heartfelt/genuine based on what I know of my buyers (to the seller it would appear heartfelt and genuine). We are also taking about million dollar transactions here, as the seller if you don’t need (almost unheard of) seller to the highest bidder and use the funds to help people in actual needs not a family looking to buy your $1.4 million dollar Oak Bay home that will use any savings in a lower purchase price to buy more consumer goods.
Marlo the full story is linked from Global on the Vancouver island housing market page. I read it last night after I posted. LOL, and yes I’m someone that won out in an offer situation where I was the lower price because of the heartfelt and genuine letter I wrote when I bought this house. I found that out a couple of years later when the wife of the couple who lost out emailed me and we had a call during Covid about them potentially buying it from me if I ever wanted to sell because for her it was the one.
I can’t believe that someone would need an inspection to tell them that a 100 year old house had knob and tube wiring and galvanized plumbing. If that work had been upgraded, I’m sure the seller would have revealed that information and backed it with receipts. You automatically assume that any old house requires major mechanical improvements. Hope for the best and expect the worst. Maybe buyers should be required to take a course on buying a house. Unfortunately realtors aren’t even trained and tested about the workings of a house. It’s the blind leading the blind.
Have the seller draft the changes?… Absolutely. That’s done all the time, and for a case like this it is common sense. The changes required were few and very specific – lower price and no inspection condition. So it doesn’t matter who writes those up. Except it’s better for buyer for the seller to write them up, so seller signs first and sends to buyer. That way seller can’t back out once they’ve signed.
Emotions play a big role in house purchases. In this case, after a collapsed deal, the buyer’s wife was “devastated” and in no mood to write up another offer that might also fall through, but was receptive to the certainty and “optics” of a signed offer from the seller. Smart move by the buyer-husband, well played and the deal went though.
This still makes no sense. If you wanted it exactly a specific way why not have your buyers’ agent draft it and send it first to the sellers to sign and then just have your wife sign to finalize?
Wanting something specific and exact but having the other party draft it?
HHV experiences are interesting. For example, I’ve never seen a letter work in my entire 14 year career but if the question was thrown out on here guaranteed at least 10 HHVers got their house because of their letter.
We did a version of this once. Saw a house we loved, went through offer, counter-offer etc., got to an accepted offer. Then the inspection…so the inspector says basically look, the house is 100 years old, knob & tube wiring, mixed plumbing etc., and when you move in I know you’re going to want to spend money re-doing the kitchen and baths, but you’ll be wasting it unless you do all this other stuff first, so maybe just find a better house.
So we backed right off. Wife was devastated. A week later I was ready to buy the house with a lower price, but she didn’t even want to talk about it, she was so upset. So I told our agent to call the seller’s agent and ask sellers to draw up the (reverse) offer exactly as the accepted one had been minus inspection condition and at $X lower price. In other words, I asked them to just draw it up exactly the way we would want it & at a point where all my wife would have to do is sign it and we’re done.
Sure it was unconventional, but they did it, and presented it back to me & I gave it to my wife to look at & approve. It was Valentine’s Day & I still use this for points – priceless! Anyways, she was super happy, we bought the house and lived there happily over 10 years.
Obviously not a normal course of events or ‘strategy’.
Oooh, that was exactly what I guessed!
That transaction sounds like a huge headache, and still confused by it. You have to buy it WITH the upstairs suite? If you want the whole house, you need two mortgages? If you want the whole house, is it worth $1.2M?
I have never used instacart or food delivery, but I do use Amazon. I think it’s great that we have access to the same things that other mainland cities like Vancouver or Winnipeg do. I remember in the early 2000s when my husband and I had to go to Vancouver if we wanted anything from MEC! I always look for a local option first but a lot of times, I’m out of luck! For example last week we decided that we would surprise my husband (who was out of town for work) for Father’s day by cleaning his Weber. As my son and I were going thru that task, we realized that the heat deflector and flavourizer bars were rusted out and should be replaced, then when we turned on the BBQ, one of the burners wouldn’t light. I checked Rona (which was a Lowes when we bought the BBQ) and they had the flavourizer “Weber” branded ones for $74.99. Home Depot, $65.99. Quick check of Amazon, and the exact same ones for $31.99 (knockoff, but come on now, I’m not so bougie I need to pay a 134% premium). Amazon also had the stainless steel heat deflector (15.99) and burner tubes (31.99), which neither HD, Rona or Reliable Parts had. This is Victoria, that’s pretty much it for options… So for 79.97+tax I got all the parts I needed from one place within 2 days, one van (and not even the big Amazon branded grey cube van, but an Intelcomm delivery driver in a mini-van), vs. paying twice as much, if it’s even possible. I still haven’t found another store that sells the heat deflector or burner. Reliable Parts would probably have to special order it in, and guess what, it won’t arrive by carrier pigeon. We cleaned everything else as good as we could, and basically it was like a brand new BBQ.
Lower 8002 Galbraith Cres is now listed, 1 bed-1bath $550,000 and indicates that it’s already a split sale – the write-up is clearer as to the nature of the title / property and the JV is already in place.
Owning something like this, and trying to sell (in the not too distant future I would bet), each side has to agree to a sale price on their respective suites, purchaser(s) have to find joint financing that will accommodate this, and seemingly has to be purchased as a split ownership? The financing arrangement itself is enough to say “no thanks”. Sounds complicated – pass on the whole idea.
Per the description in the listing:
“Open Sat-Sun 2-4 This “Shared Home Ownership” listing is only the downstairs portion of this home being advertised for sale. This lower unit must be sold, “subject to being purchased with the upstairs portion”.”
“Because this is a Shared Home Ownership” listing, if the buyer needs to get financing, they will need to finance along with the new “upstairs suite purchaser”. A Joint Venture agreement is available to the successful parties. Ask for the Information package that describes this property and how it can be purchased and is being sold.”
1,100 transactions into my career I’ve never seen or heard of a reverse offer.
First of all, unless the buyer has previously made an offer on the property there is no way for the listing agent to draft such an offer as they don’t have the buyers’ ID.
Second off all, the scenario you describe plays out all the time but I’ve never seen it manifested with the listing agent actually drafting an offer. For example, I had a client of mine make an offer two weeks ago and we negotiated back and forth with my client maxing out at $1,175,000 and the seller wouldn’t come down to that number. A week later (last week) the listing agent emailed me and said “My client is now prepared to take $1,175,000, is your client still interested in the property?”
To which I replied he had secured an accepted offer on something else but I would let him know.
Do sellers reduce their price? Yes more than 30 do every day in the VREB. Do sellers go back to previous offers noting their expectations have come down? Yes.
Sellers actually writing reverse offers? First I’ve ever heard of this and I really don’t see the point. In my above scenario listing agent would have just wasted time as my buyer secured something else and was no longer interested.
Basically the story is it is a tough market and sellers have to adjust their pricing expectations being spun into some “creative” reverse offer nonsense.
Wow, yes, you are super creative you dropped your price.
They do? And I guess if the Kardashians were 50 plus, drove an economy car and did aquafit at the rec centre on Mondays and Wednesdays.
Biggest drama in Oak Bay right now is getting chased down the back alleys by deer while walking to your dog.
I’m sure millions of acres are consumed by Amazon distribution centers. What a waste. I’ve purchased 3 items on Amazon through a friend. It has to be the most inefficient system, having one item at a time delivered in a large gas guzzling van and left outside your door for someone to steal. I prefer shopping in person, it’s less addictive.
I find myself agreeing with REAddict. Now that the days-on-market is averaging a month and that there are more properties to select from this method might work out well. The first offer has to be a realistic price. It isn’t likely to work with low ball offers.
Marko, I think they just didn’t explain it well in that story. The seller probably made an offer to the buyer. This is what my son and daughter in law did a few years back. They bought a house and then put their townhome on the market. They got an early offer and countered but the buyers were maxed out. A few weeks later or however long and having already purchased and with a closing date looming their realtor suggested writing an offer to the buyers that had offered previously. They accepted and the deal was done. It definitely is a reversal of a normal offer.
Everything out here has shifted to residential purpose built rental units or business parks with 1-20 acre parcels available. We did a land swap with Metchosin all behind slegg’s is hectares of business parks. Leigh road over pass has even more hectares of business parks all behind costco stretching all the way to Goldstream Ave. Kinda like the bay street/ keating cross road business parks x 20.
I’m guessing Canada as a whole does not have a supply problem . So all the yammering on for more supply is for not . Job finished all good
Most people love to hear about Oak Bay on this blog. I guess its like watching the Kardashians.
It can be a very tricky neighborhood to estimate prices because the closeness to the water front or the degree of water view can make a huge difference in price. And that’s because the contributory value of the view is set by the underlying land values in the neighborhood. If the typical lot value is 1.3 million then if you have a partial view or a block from the waterfront that could add another $130,000 to $325,000 to the price of the home. A waterfront lot being double the median price.
In another neighborhood such as Cordova Bay where the land values are lower then it may be only add another $100,000 to $250,000 depending on the degree of view from water glimpses to panoramic. And the water front varies form a walk on sandy beach to high bank waterfront with perilous access to the beach.
So Oak Bay can be a challenge and it is best to hire an agent that is very active in the neighborhood like Jason Binab. There are some agents that I think are pushy but they get good results so I don’t care so much about their personalities as I do with their results. So I won’t mention her name, but she’s good at what she does and in my opinion she gets every dollar she can for her clients.
So when it comes to properties that have something unusual you are best to get as much advice you can before buying.
There is enough inventory now for most people to select from. So do your homework or hire a professional to help you set a fair market offer and don’t counter. If the property isn’t sold in two or three weeks call up the agent and ask if they are willing to accept your original offer. In the meantime keep looking at homes and making offers.
Key things you should know before making an offer.
1) The sales history of the property. And you should know how to calculate how the market has changed from the previous one or two last sales.
2) The median price of homes like the one you are looking to buy. In most neighborhood property values will range within 20 percent of the median for similar properties. Is your house typical or is it less than or greater than the typical?
3) The last sale of a highly similar house on the same street or in the same condo building. And how to calculate the change in market price from then to now.
4) the Sales to Assessment Ratio for all properties within the neighborhood.
5) recent sales of similar homes
6) what improvements the current owner has done and how much they have spent on the home since they bought.
If you know how to interpret the above you will have a reliable and reasonable indication of the property’s value that you are looking to purchase. If you can’t do this then hire someone for a couple hundred bucks that will do it for you.
You can’t bluff with an empty gun, the offer has to be realistic or you are just wasting your time.
Well, it wasn’t their first offer and it’s an institution a have a fair bit of other assets with. However, believe whatever you like.
Reverse offer? How a slow Canada housing market is forcing sellers to get creative -> https://www.youtube.com/watch?v=Q7dwso1F2Jc
Apparently someone at Global News thinks reducing a price is called a reverse offer, what?
Take it with a grain of salt then.
That’s why I’ve been asking recent hhv homebuyers to post the actual rate they got.
He shopped around a bit more and is switching to True North – 4.94% for 3 years.
As for Galbraith is the real estate agent selling real estate or is he selling shares?
I suspect the listings will get pulled by the real estate board.
Not from what I’ve seen.
Nope.
Umm:“ I grabbed a 3 year fixed that came in with a 4 handle on the rate. Uninsured.”
8002 Galbraith – Quick BC Assessment search shows it’s valued at $1.062M. It’s a single house with 5 bedrooms, so if the top floor is 3 beds, that must mean the lower has 2 bedrooms. Let’s say they price the lower suite at 550k, then if we assume their is only one owner, they would receive $1.2M for the house. At first glance I thought this was the same situation that my friend undertook about 6-8 years ago, where she bought a similar house in Saanich with separate owners up and down. It’s unclear from this listing if it’s ALREADY setup as a JV or if there is only one owner currently. The difference with my friend however, was that property was zoned “Duplex”. She and a friend bought both houses for the land value. They tore the house down and built a side-by-side 3 story West Coast style duplex instead with an ADU in the backyard.
I believe the way she did it was that she got the construction mortgage, he and his wife co-signed, and once the buildings were complete she sold one side to him. It was complicated, at any rate. The only saving grace was that it was already zoned appropriately so they weren’t as delayed in getting their permits and things moved relatively quickly.
‘shared home ownership: “If the buyer needs financing, they will need to work alongside the new “downstairs suite purchaser”.
https://www.realtor.ca/real-estate/27073560/upper-8002-galbraith-cres-central-saanich-saanichton
that would be quite the complicated sale..
Likely insured.
Actually, never mind the Ravens Cross comments – I’m confusing issues, for myself at least. What I was looking for was a common-ownership structure that is not strata. My previous post, “something like a bare land strata,” is in reference to the add Marko posted and what a co-ownership might look like.
“This is a ”Shared Home Ownership” listing” – it’s freehold – not strata. Something interesting I learned, build a duplex on a strata lot and you cannot strata it. You can’t strata a strata.
They are talking about a particular kind of strata with larger than usual common facilities, not sharing a property with a single title. It’s not “like” a strata, it is a strata. Ravens Crossing Cohousing (2319 Brethour Avenue, Sidney, B.C.) (photo appears to be out of date)
https://www.bcassessment.ca//Property/Info/RDAwMDFVSk5XUQ==
This looks like a reasonable explanation including a link to the differences in owning property in various ways (this one discusses it being like a strata condo project)
https://www.ravenscrossingcohousing.ca/about-cohousing-1
I’ve been loosely thinking about a shared agreement that would look something like this.
Incorporated land with the Corp as bare trustee – rules and bylaws would look something like a bare land strata and who gets to pick the apples (and otherwise use what part of the land and how) would be in the agreement. I can’t think of examples atm but I know they’re out there.
I would think the biggest hurdles would be financing (can you have two first mortgages?), somewhat illiquid (people won’t buy what they don’t understand), and what happens if the co-owner gets divorced, goes bankrupt etc. The add mentions possibly joint venture agreement – JVs typically detail what happens when one side wants out.
On the above guidance rent increases raised a couple weeks ago . Looks like landlords are using it more and it’s hitting the media
“As landlords are becoming more familiar with the policy, the applications are really ramping up as they start to know how easy it is to apply for an increase,” said Modrovic. “We try to help [tenants] with advice to be successful for hearings.”
From 2019 to this week, the Housing Ministry has received 368 applications under the ARI-C legislation. Of those, 186 applications have been granted — including 175 for capital expenditures — and 45 have been dismissed. Another 34 applications are classified as open while 45 have been withdrawn and two have been settled.
https://www.timescolonist.com/local-news/view-royal-residents-question-law-that-allows-landlords-to-increase-rent-for-repairs-9115433?utm_source=dlvr.it&utm_medium=twitter
Guess you could call it that. Note that the description is misleading, you are not buying part of the house. It’s not a strata. You are buying a part ownership in the whole property with some kind of contractual arrangement to share it.
As I put it previously, like getting married without the fun part.
What’s the price of the lower suite? Are the property taxes separate? How do you share the produce from the fruit trees? Too much hassle.
Interesting listing -> https://www.realtor.ca/real-estate/27073560/upper-8002-galbraith-cres-central-saanich-saanichton
I don’t know about crow, but ravens (big crow) are tasty in the crock pot.
Dude, I would eat my shoe before I payed $600 for a dinner of four and a bottle of wine.
If you are not first nations you are an immigrant to this continent even if you were born here. This is not our land. I often wonder what the first nation peoples think of this mass immigration flooding into their land. If they had a voice what would they say?
Lawyer couple accused of stealing millions from homebuyers. Husband blames the wife, but judge asks:
“Six million dollars goes missing. Goes into her account. Did she pay for nice gifts for you? Did you buy a car that she paid for? Did she pay mortgage payments? How can you not know, when you’re living with her and you’ve got a home together and you’ve children together, where $6 million went?”
https://www.cbc.ca/news/canada/toronto/cartel-bui-lawsuits-lso-1.7240756
4.78 is a great rate! My brother is with some mortgage company I had to google (RFA), and he’s quoted 5.09% for 3 year fixed. They renew this week.
On the topic of real estate, I just got this in my inbox from Borrowell today (normally it’s credit card offers, so this caught my eye).
Introducing the modern way of buying and selling real estate! People who sell their homes with Bōde save around 50% on commission!
https://bode.ca/sell-your-home
There are two listings in Victoria and then $15.6M vacant land on Salt Spring.
Not in Victoria and don’t see any really expensive wine there. But whatever to each their own.
Nuchatlaht First Nation Elder and Councillor Archie Little, centre, and Tyee Ha’with (Chief) Jordan Michael, far left, stand with supporters outside B.C. Supreme Court before the start of their Indigenous land title case in 2022. (Darryl Dyck/The Canadian Press)
The Nuchaatlaht FN was the first to win its land claims in April of this year to reclaim part of Nootka Island. The court case was started in 2022. It is only the second time B.C. courts have granted a First Nation Aboriginal title, meaning the Nuchatlaht will have full economic benefit of the land.
That makes Barrister the winner of the Lunch.
May I suggest a nice Chianti to go with your crow.
God people are weird and flexing on stupid shit. I can’t really think of any places that’s actually open for lunch with actual pricey wine or top shelf alcohol outside of q.
Personal knowledge.
Did you have trouble clicking to the policy directive I provided?
fulfillment of legal obligations or Agreements of Canada;
revenue adjustments resulting from a change in tax status;
financial implications for Canada;
regional infrastructure management;
regional traffic or transit management plans;
protected or environmentally sensitive areas (such as National Parks, Agricultural Land Reserves in British Columbia, or Greenbelt Lands in Ontario);
…
It is not. It is a complicated minefield of federal and provincial constitutional powers and existing laws and legal precedents aka case law. The province has jurisdiction over property and ALR designations. The federal government has jurisdiction over reserve creation, but has no power to compel the province to give up lands or change ALR status. The province itself cannot change ALR status without following the ALR Act. And then there is the requirement to consult with local governments and other impacted First Nations.
4.78 from a big 5 for 3-year term is a great rate. Likely the big down payment (>20%) makes that possible.
In Victoria the only way to make it “very” expensive would be with pricey alcohol purchases. Friend who used to work at Il Terrazo has some stories about that.
A very expensive lunch would be the Deep Cove Chalet. Lunch for four including a bottle of wine and tip – $600.
It’s probably worthwhile to have a look at the Woodwynn Farms property that is adjacent the Tsartlip First nations. They bought it 4 years ago with the help of the Province and with similar goals as the Tsawout First Nation. It is also in the ALR and the former owners (Creating Homefulness Society) were never able to get the province to allow additional residential development on the land. I don’t know how much work the band has done towards that end but I don’t see much movement yet.
I really think that the Tsawout FN will take their time with any future development. Having the land in their name is a huge step forward and I doubt they will rush into development. The bulk of the current development you see on their lands is the result of private developers partnering with band members who hold a Certificate of Possession on pieces of land. The new portion they have bought will be owned be the band itself and they will need different funding sources to develop housing for their own band members as opposed to existing developments which are leased to the public.
Wtf is a very expensive lunch?
How goes your prediction of neighbourhoods destroyed by massive missing middle boxes with 90% lot coverage?
Any major land use change requiring approval and consultation at multiple levels of government typically takes a very long time. You can’t really go wrong betting on any government to take far longer than is reasonable to do a very simple thing. No need to buy me a Big Mac, I’ve got plenty to eat at home.
At this rate, for your dinner I’d recommend using plastic cutlery 🙂
Totoro: You are on for that dinner bet. So where is your ten year provision based on? For that matter how did you come up with the need to have substitute ALR lands granted. At this point I think you are just making things up. Can you point out the provision that requires tax implications to be taken into account. For that matter which provision requires legal opinions be provided to the Minister as to the whether this action fits into the act.
The Minister has the discretion to decide what is relevant and what is not and to what degree. yes, the land needs a survey but it is an agricultural parcel which has been surveyed and has boundary posts. The Minister has to consult with the First Nations and while he has to take into account the impact on municipal and perhaps provincial interests he is not actually required to consult.
The First Nation has clearly stated that their intention is to build housing on this property which at present is in the ALR. It is not an issue of perception but rather policy. Clearly it is policy decision of whether economic opportunities for some First Nation Tribes overrides the need for the ALR in light of a housing crisis.
That’s how I got mine….
A change of their usual pace of the direct line from CREA. Global usually has shots of buyers purchasing houses from heli tours and pump don’t miss out narrative.
4.78 from a big 5.
It’s just people dumping their multiple units of Airbnb condos. The numbers don’t work, long term tenants are a pain, expect the condo market to be soft for a few years. Doubt it will help the housing crisis, people don’t have the down payments. Glad I only own property with land.
According to Global News
There are now 24,000 unsold units, including houses and condos, in Toronto which is a 14-year high. They are calling it a glut of housing.
And they are also reporting the condo market in Metro Vancouver is facing a slowdown, with sales for apartment-style homes down nearly 23 per cent year over year.
Pffft, it’s Global news.
I know what I am talking about Barrister and would double down and bet you a very expensive dinner that this land will not become part of the Reserve within three years. In addition, I am skeptical that the lands subject to ALR designation will be added to Reserve at all without the designation of new ALR lands to compensate.
But more to the point, my outrage is not about your speculation on the timeline for this specific transaction, but about your false statements that:
Patently false and, in my opinion, harmful to the public perception of Indigenous communities.
AND
Also patently false. The Minister does not have blanket discretion to add lands to Reserve. This is the final step which occurs only after the policy provisions and legal steps, including tax implications, basis for addition, surveys, environmental assessments and legal opinions on whether the transaction fits the ATR policy have been met.
https://sac-isc.gc.ca/eng/1465827292799/1611938828195#mm
Looming capital gains tax changes spark ‘unprecedented’ rush in B.C. property sales
https://vancouversun.com/business/real-estate/looming-capital-gains-tax-changes-spark-unprecedented-rush-in-b-c-property-sales
It took over 20 years to turn the Kapyong barracks in Winnipeg back to the First Nations. The Hudson’s Bay Building was turned over also, it’s a complete money pit and still sits empty. Can’t remember when it closed.
Totoro, read the steps again with a eye to who decides whether those steps have been fulfilled. Exactly what do you base your opinion that this is a ten year process. Exactly which provision do you think creates this difficult and insurmountable barrier to adopting the land to the reserve? There is a process but most of it would be pro forma in this case and the remainder would in the Minister opinion and discretion as to whether the rather vague criteria have been met. You need need some rather staunch opposition from the province to have any chance of delaying the process and I cannot realistically see that happening. “We want to deny First Nations an economic opportunity which is intended to provide more housing while we are in the midst of a “housing crisis”.
I believe that it fair to assume that this First Nations band received excellent legal advise before purchasing this land and making a public declaration as to its intended use. Moreover, any prudent law firm would have made informal enquiries as to the sentiment of the Minister to such a development.
I will bet you a very expense lunch that this land is attached to the reserve in under three years. Will you at least agree that if the land is attached to the reserve then it is removed from the provisions of the ALR?
What kind of jibber jabber fear mongering nonsense is this? Do you mean the Indian Act? If so I suggest you read the addition to reserve policy which must be followed before a ministerial order is issued. There is no sole discretion to bypass this legal process.
Can you trust your treasurer? Is he on “play now” all day long…It happens. Gambling is an addiction.
That is definitely a problem when it comes to stratas as they strata council can not obtain bank loans for repairs. Unlike yourself that can finance a new roof over 25 years. And someone that has paid into the reserve fund for 10 years doesn’t get that money back from the strata when they sell.
I wonder how big some of those reserve funds have ballooned to by now.
Meaning very high strata fees/contingency funds. Now I’m not really familiar with this minuets thing. But I have lived in this house for 12,088,800 minuets (525,600 X 23 years = 12,088,800 minuets). If I have a problem I just fix it myself. I will however sub out roof replacement, gutter cleaning, chimney sweeping.
I personally think condos are a toxic asset to own these days. No matter how long you have lived there.
Max, the function of the Depreciation Reports that the complexes have performed is to determine how much of a reserve for these repairs is necessary. In a well managed building there should be no necessity to pay a Special Assessment of $30,000 for repairs as it would come out of the reserve fund.
But you’re right, it now takes about 2.5 condos to buy a typical house in Victoria. That’s up from 2.0 from ten years ago.
So it does seem to be getting more difficult to move up the property ladder.
Question is, can they afford it? Is buying a condo with hopes of selling it down the road really going to help people move up the property ladder these days? Paying for unexpected deck, exterior wall , roof, elevator remediation. That could very easily be an unexpected $30k hit per unit.
Max , I’m sure all governments would like to get the party started , no real slow down in immigration , and lots of pent up demand
This is obviously not the place, disregard. Let the interest rates drop back down to 3% for a five year fixed and party on like its 1999.
In other words…Yolo.
Patriotz most of how pent-up demand is defined is in my post. The rest you can google.
And how is it defined? If you just mean if the price were lower more people would buy, that’s simply a characteristic of demand in general.
I would care if Max and his family had one or more of their family die or developed a long term disability. I got the shots not just to protect myself but for others who chose not to get the shot.
Okay, so we’re all equal again…The haves and the have not’s.
Totoro. I suggest that you reread the Act with the eye of a politician instead of an accountant. Note that land can be added to a reserve by way of a Ministerial Order which is in the sole discretion of the Minister. Something about an election coming up?
Max. No one gives a damn if you have had your shots.
Rush is quoting Reddit posts, and there are always caveats in those click-bait low mortgage rate numbers. But umm, It would be helpful to many here if you just told us what interest rate you got. Just like it was likely helpful for you for years to read on HHV “what did house XXXX sell for” and see an actual $ answer posted.
☮
No pent-up demand? Haven’t we been in a housing crisis for many years, where average Canadians have been trying to buy homes, but have been unsuccessful, so are renting? And so we have a lower than normal homeownership rate for the largest cohort of young people ever, who want homes. Which means more potential buyers. Doesn’t that fit your definition of pent-up demand?
By analogy, if iPhones were desirable but too expensive for most Canadians, wouldn’t we have pent-up demand for them?
Its the vaccines. They want everyone to live forever now… As perpetual tax slaves.
Whatever , I think unfortunately this will be rinse and repeat . I do think we will just start where we left off after a few interest rate cuts . Maybe July for another 25 points
It’s hard to gauge the effects of an interest rate cut in the housing market. Intuitively we may think that it should spur housing inflation. But that’s not a guaranteed result across Canada. Some sellers may have been waiting for an interest rate decrease to list their homes and that could bring on more inventory.
Contrary to what you might think, market perception has a large influence on value. It isn’t simply a matter of what the land sells for and the cost to build. While we have all heard of pent-up demand we could also have a pent-up supply of investors that have been waiting for a good time to sell. A drop in the interest rate could be the spark that ignites an increase in inventory as investors want out of the market. The makings of a dead-cat bounce.
When you look at how pent-up demand is defined, it doesn’t appear this accurately describes the current market. We have not been having a period of restrained activity. We haven’t had an economic downturn . And buyers that are in a position to purchase (ie prospective purchasers) have not been delaying their purchases. All of which are necessary over the course of years to cause pent-up demand.
Think of it in another way. Risk. Investors have had a shot across the bow of their real estate holdings. They are now reassessing the risk of holding real estate. An uptick in prices may signal to them to get out of the market while the getting is good.
It isn’t the number of immigrants that’s the issue. The problem is that we want to pack them all into five square kilometers of a downtown. Of course we are going to have problems with affordability then as more people compete with artificially designed land shortages.
What we could be doing is enhancing the smaller CMA’s to encourage migration to those smaller cities that have a much larger land base to expand into. It would be a lot easier to develop middle income housing in new areas than try to retrofit cities such as Victoria and Oak Bay with their antiquated housing and poor road systems.
Better bang for the buck expanding Duncan or Nanaimo than wasting the money in Victoria and Oak Bay assembling and demolishing over priced war shacks. And you will have spread the population out among more cities rather than creating congestion in one city.
Well, he asked which was the best and not the rate number. Anyways, looks like Rush got them in the ballpark.
Ya, the 3 year can be redone at 2 year and 6 month mark. I am guessing it will be a slow decline for the variable and it will beat my rate at around the 2 year mark, but by then I am 6 months away from renewal.
Talk about hyperbolic misrepresentation. Have you read the requirements to add land to reserve? Will be rare and based on demonstrated community requirements such as unmet housing needs based on current land base or other limited grounds and it takes up to ten years to complete.
The number is net. There weren’t many emigrees, about 1/10 of immigrants. The numbers are tracked, not estimates.
Here’s a national post article with the exact numbers.
“Canada’s population grew to top 41 million in the first quarter: StatCan
Statistics Canada said the increase came as the country welcomed 121,758 immigrants in the first quarter
Statistics Canada says the country’s population topped 41 million people in the first quarter of this year as it grew by 0.6 per cent.
The agency says the population reached 41,012,563 on April 1, a gain of 242,673 people in the first three months of the year.
Statistics Canada said the increase came as the country welcomed 121,758 immigrants in the first quarter.
Net emigration amounted to 12,613 people for the quarter.
Canada also added 131,810 non-permanent residents to the population.’
@Patrick – Is the 125k net or gross? Also do you know if these are tracked stats or estimates.
I guess we can say good bye to most of the ALR, first nations buys the farmland, with loans from the Feds, makes it part of its reserve and then just builds rental units on it. Front page TC today
Right. +250k population in 3 months. That consisted of (approximately) 125k immigrants and 125k temporary non-residents (foreign workers and students).
Permanent or temporary, that’s 100k more households that need housing, and Victoria’s 1% share of that by population would be about 1,000 units. Historically, we get less immigrants than our share, so it’s more likely 0.6% x 100k = 600 units in Victoria to house the arrivals in the last 3 months. And that doesn’t include Victoria’s main source of population growth, which is ROCers moving here from Vancouver etc.
BNN- Canada’s population hits 41 million. That didn’t take long. Darn boomers aren’t dying fast enough.
I think the brokers that post on redflag are as competitive as it gets. If you a lot of equity in the house the most recent quote was:
3 year fixed – 4.89%
4 year fixed – 4.79%
5 year fixed – 4.69%
5 year variable – prime – 1.20%
If you have less equity most of those change to a 5.XX.
https://forums.redflagdeals.com/official-mortgage-rates-thread-351105/4869/
Why not just disclose the actual rate?
Um really , I just renewed at a 1 year variable, should be interesting going forward, fixed or variable hmm
Best was a 4 year fixed, but I grabbed a 3 year fixed that came in with a 4 handle on the rate. Uninsured.
Cat and pigeons meet and greet…. From Garth, further fleshed out there in the usual coruscating prose…..
Conclusion: “The analysis of historic home prices, income levels and mortgage rates found that baby boomers — between the ages of 60 and 78 this year — “arguably faced the toughest housing market ever for first-time buyers.“ In 1980, when boomers were entering their prime homebuying years, mortgage rates spiked above 16% and the average monthly home loan payment jumped 34% year over year.”
And this: “During the years when boomers turned 30, the share of median household income needed to make the typical mortgage payment averaged 33.2%, the highest of any living generation. In contrast, millennials on average faced the lowest mortgage burdens, thanks to a decade of ultralow interest rates following the Great Recession.“
What’s the best mortgage interest rate you’re seeing?
There have been some very reasonable priced SFD rentals in Oak Bay lately. I was looking because I was checking my upcoming mortgage against rental prices.
It is nice that they are well dressed…. 🙂
I am surprised at the large amount of listings with suits.
I can c going forward with no real price relief on homes we will create a class society with nice and expensive rentals and cheaper shite rentals . Climbing the rental ladder will be a thing for future generations
Wow, here comes the June listings surge combined with price adjustments.
When you look at the asking rents for these apartment buildings along with comments from what’s his name the agent about them leasing up fast, and how builders have switched to apartments from condos it makes them sound like money printing machines.
It’s a surprise to me, but I suppose renters are fed up with landlords selling their rentals and want to pay for stability. No more smarmy landlords.
Renting is cheaper than owning a similar new one-bedroom condo.
Patrick, pencil the math yourself.
You’ve always told us that your crystal ball is broken. Is it fixed now? 🙂
It’s 10 year term and up to 50 year amortization. If the term is 50 years it means the interest rate is fixed for that period and you’d be unlikely to become unprofitable even with rent controls. 10 year term is a lot better than most investors are facing though.
https://www.cmhc-schl.gc.ca/professionals/project-funding-and-mortgage-financing/funding-programs/all-funding-programs/apartment-construction-loan-program
Depending on a number of factors, including possible vacancy controls, a number of these buildings will cease to be profitable in 15 or 20 years with mortgages in some cases with a 50 year term. At point the buildings will probably revert back to the mortgage guarantor which is you the taxpayer. Unlike homeowners developers have very little (and effectively in some cases no equity) in these buildings. But if you can find a bank that will let me buy a house with 3% down and next to no interest you let me know.
I don’t see it like that Barrister. These are loans to be paid back, just like any bank loan. To me, they are just as much investors as if they borrowed from RBC instead of CMHC.
Just like a homeowner whose bank has the mortgage insured by CMHC. – they’re still homeowners.
While technically investors, large development companies building rentals using really cheap government loans with little of their own cash in buildings seems to be outside the usual definition of investors. In some ways these are closer to government public housing projects with a veneer of private ownership.
Chart.
A big surge in population, prices and rents in the last 2 years, compared to the rest of the country.
Great article Leo
Canada Homeownership rate is 67%. To me, that means the rest are owned by “investors” – namely 33%.
Sure, that includes everyone that isn’t an owner occupier – reits, corporate owned, small and big landlords, non-profit and government owned etc. . But it makes more sense to include them all, instead of making up unique subsets of who gets included/excluded as an “investor”, so that no one knows what it means (as your Schrödinger article shows).
To illustrate the absurdity, of the homes added in Victoria last year, ~80%+ were not owner-occupied. I would call them 80% investor owned. Yet Leo’s article quotes “Percent of sales purchased for investment purposes” to be 6%. Of course, because if an investor builds (or buys) a 300 unit tower and rents it out, he’s not counted as an investor buyer!
Interesting website. I wonder what’s going on in Alberta that they have so many house flippers compared to the rest of the country? This is 6 month chart, the 12 month chart is similar.
Hoping inventory continues to increase and increase. It’ll be fun to see the spine break of these prices.
There is so little exit liquidity in the market and with the stagnating Canadian economy it’ll be entertaining to see people complaining about their lost value. Housing isn’t supposed to be an investment.
Ahh, should make for a stale summer sales for the hot sleepy vacation months, followed by some buys with the September uptick and then blood in the water for fall and winter if inventory maintains. However, if you see what you want, there’s price flexibility to had right now.