The vacants
Two years ago, inventory hit rock bottom at just 652 properties on the market in December 2021. Since then a combination of slack demand and recently increased new listings have brought active listings to 3472, which is the highest we’ve seen since September of 2015. An argument I’ve seen recently is people claiming that high inventory shows that the so-called housing shortage was a myth all along. After all, all it took was rates going up to bring thousands of properties onto the market when previously there was a shortage. The obvious problem with that theory is that most of the properties on the market are occupied. They can sell or not sell, but that doesn’t mean the current occupiers (whether owners or renters) disappear into thin air.
Of the properties that are on the market today, 90% are listed as currently occupied. While that inventory being available for sale means the market is weaker and has kept prices from increasing, swapping the owners of an occupied house doesn’t do anything for those wanting to form their own households. But what about the 10% of properties that are vacant? Those owners may have bought another place, or moved out of town, are liquidating investment property, or died, or have some other reason why they’re not living in the place anymore. In many ways they are more important to the market balance because they’re more likely to be motivated sellers than people with an idle desire to upgrade that can go either way.
Do we have a lot more vacant properties available for sale now? Well, no doubt vacant listings have been increasing lately along with more inventory as a whole. With 378 active vacant listings in June so far, we’re at a similar level as the end of 2014. In general the chart below looks similar to the overall inventory chart, though there was no real increase in vacant properties in the 2018/2019 period while total listings increased.
Owners of vacant properties are more likely to be motivated sellers, though that’s not necessarily reflected in the offers they will take. In the past decade, the average vacant property sold for 98.67% under the last list price, just a smidge under the 98.85% of list for occupied properties. So just because the seller feels more pressure to sell doesn’t mean they’re in the habit of taking lowballs. The difference is slightly higher relative to the original list price, with vacant properties dropping half a percent more compared to occupied properties. The average days to sell is slightly higher for vacant properties at 50 days vs 44, again showing that sellers are more determined to make deals eventually rather than letting a listing expire. Compared to assessed value, last year the average vacant place sold for 2% under assessment compared to full assessed value for occupied properties. However that may be partially due to physical condition differences rather than price flexibility from sellers. All things equal, I suspect the discount for the average vacant property is only around 1%.
So if you’re house hunting, it’s worth knowing whether a place is vacant if only for the fact that the place is more likely to actually sell rather than get de-listed. You aren’t likely to get much of a deal because in a functioning market the transaction prices can’t get far from market value. During market shocks they may be a strong target for lowball offers, but those shocks don’t come around very often. However along with paying attention in the fall when there’s fewer buyers around, it’s something to keep your eye on.
Also the weekly numbers
| June 2024 |
June
2023
|
||||
|---|---|---|---|---|---|
| Wk 1 | Wk 2 | Wk 3 | Wk 4 | ||
| Sales | 174 | 340 | 506 | 705 | |
| New Listings | 458 | 863 | 1211 | 1297 | |
| Active Listings | 3387 | 3416 | 3472 | 2342 | |
| Sales to New Listings | 38% | 39% | 42% | 54% | |
| Sales YoY Change | -8% | 0% | +1% | +15% | |
| New Lists YoY Change | +18% | +24% | +24% | -6% | |
| Inventory YoY Change | +52% | +49% | +49% | +14% | |
| Months of Inventory | 3.3 | ||||
It’s pretty steady out there, with sales coming in at exactly the same pace as they were at a year ago. A reminder that the year over year change comparison in the table above reflects the daily rate using sales per business day. So while the sales rate is the same as last year, the end of month numbers will show a year over year decline in sales because this June has two fewer business days than last. Don’t be fooled by the month-end numbers, sales are the same, not lower than last year. In fact it’s been pretty remarkable how closely sales have tracked the year ago levels for months now.
I do think that we will see small year over year increases in sales later in the summer and early fall. Last year was exceptionally weak, while this year we are seeing fixed rates dropping instead of rising. The all-important 5 year bond yield is some 0.5% less now than it was a year ago and that’s being reflected in fixed rates which are available at around 4.75%. That will bring a few more buyers back to the table, though I don’t expect a big rush.
Inventory is still growing, and the rate this year has been substantially faster than last due to an increased rate of new listings. Now last year was quite unusual because inventory didn’t peak until late in the fall, when it usually peaks in June. A late peak in inventory indicates a cooling market. Will we see the same this year? If not we would have to see the rate of increases start to slow down pretty soon.
If your agent had included a copy of the permit for the cottage in the listing this would not have become a problem.
This is an example of how a property can have two different values.
The first appraisal was estimating the market value for sale purposes.
The second appraisal is estimating the market value for first mortgage financing purposes and that means the lenders regulations have to be followed.
So if the secondary doesn’t have permit from the municipality, the banks regulations instructs the appraiser to disregard the cottage.
Similar but not exactly like an illegal basement suite.
Interesting thing I’ve learned today. If you recall our property has an accepted offer on it. All conditions were lifted today except for the condition of financing. There are 2 houses on the property. The bank is telling the potential buyer that appraisals don’t cover “cottages” in their appraisal. It’s a 1200 sq. Ft one bedroom, so I suppose it’d be called a cottage. Well the secondary dwelling is part of the value of the property, so the appraisal is falling short of the asking price/value. The buyers are having troubles with financing as a result and have asked for an extension.
This seems like a strange/arbitrary way to do things. Why not count the secondary dwelling? It’s entirely legal/permitted. We had an independent appraisal 18 months ago and it came in well over what we are asking for it. So it’s all a bit strange.
Trent, doing commercial is all about building connections to obtain lease and sales information as none or little is on MLS. I can’t believe how cheap the fees are. I would have charged Marko $10,000 to do his property. it’s no wonder the appraisal was low. You can’t spend enough time to do a good report.
Really Meow.
https://youtube.com/shorts/upnNSyCQrtg?si=ILfSuZOml33kMJPd
No reason to hate on the guy, I think It is quite an accomplishment to go from working on a BC Ferries ship to the “top agent in Victoria”.
It looks like the developer has downgraded the profit expectation from $1.5 m to $0.5 m.
Thanks for posting, Leo.
I had pretty good luck with Thunderbird, they run quotes by few different underwriters and see what they can offer. However, the best rate I get with them tends to be through the insurer that I have been with for a while, basically the discount came a bit from having a history without claims with them.
Hard to believe 1307 Transit Rd hasn’t sold considering the “top agent in Victoria” is the listed agent.
Peter, as with all legal documents they come with standard Assumptions and Limiting Conditions. But the court will only recognize them relative to how much reliance the appraiser has put on them within the body of the report. Boiler plate is not an assurance that you won’t be sued.
It isn’t easy to successfully sue an appraiser. The reason is that the appraisal body I belong to is self insured and reports are drafted based on previous court cases and the organization retains legal advice that provide claims bulletins and input into the wording used in the reports. On July 1 of this year all of the report formats were upgraded based on the advice of legal counsel. Sometimes it is simple changes. Last week you were an intended user. This week you are an authorized user. Makes no difference to you, but in court it does. And to tell you the truth, I don’t see a difference. But these changes are brought about by court cases.
Are the reports bullet proof. Nope. Negligence is still negligence. If you feel you have been wronged and have suffered damages my advice is to sue the ass off the appraiser. The courts are one way to get rid of the bad appraisers. If Marko feels he has been wronged then he should sue or at least file a complaint. It isn’t necessary to slag appraisers on a public website. You can go onto their national website and it will show you how to lodge a complaint against an appraiser. It’s in big letters on the very first page. You won’t find that on the real estate board’s web site for agents.
“I think working at a large developer with a relatively small team you would learn a ton very quickly. For example, if you worked at Le Fevre & Company or Chard before they become a big player. You literally have to deal with everything from land acquisition and years battling out rezonings to construction (and the million consultants that come with that), financing, sales, etc. And most importantly the company has to turn a profit otherwise you are out of work.”
~~~~~~~~
over the years, I have seen a few types of land developers: some commercial realtors, commercial mortgager brokers, accountants, life insurance sales, lawyers who have insider info from acquisition and all the way till the end of the projects.. I have also seen some Exemption market dealers who sell papers to UHNW individuals to pulling projects off, and former police officers who had tracked a few connections with those who had done a few construction etc etc.. key traits: self-belief and risk-taking….
~~~~~~~~~
on the side notes , have you ever wondered what a lender looks at on an appraisal other than valuation?
You can view the recording here:
https://vimeo.com/970200204/c8bbad0b1c?share=copy
more or less for residential stuff. commercial is a different animal- you get to watch out who is doing it 😉
Hard to say but last year we had 2342 at end of June and a peak of 2765 on Oct 30. Increase of 423.
I don’t think an increase of 240 from now to peak would be that unusual
1307 Transit Rd – dropped by $950k and I still don’t know who would pay that much for it. 20% is a big miss.
Marko, a different discipline to what an appraiser performs. Those would be inhouse positions where you are only accountable to the company. No necessity to be a obtain a designation or to be insured if none of your estimates don’t leave the company. But without a designation and insurance none of your work is accepted for financing or court purposes. The same for agent’s CMAs. CMAs are not appraisals but a marketing tool. I get to read agent’s CMAs as well as agent’s Contracts of Purchase and Sales as I have to comment on them within the appraisal report.
I was once sent a CMA to comment on from a law firm. As the real estate agent did one for a friend that was getting a divorce. Unfortunately the agent was also having an affair with the spouse. I have to admit some agent’s have balls.
Costco insurance quote: $3143 + required electrical inspection
Guess I’ll be sticking with TD.
I think we sales so slow we hit 3,500 possibly 3,600 in July but we won’t get to 3,700 this year.
VicRealanalyst. I started my career with American Appraisal, the largest appraisal company in the world with 55 offices in different countries. Head office in Canada was Toronto. After I left, the firm was bought by Duff & Phelps.
Damn, 40 short of 3500!
Agree. Especially westshore is looking pretty slow for sales. Likely not much rate relief this year either, though we should avoid the spike we had last fall. Kind of outweighed by the increase in inventory though.
Looks like we may be reaching peak inventory but I have a feeling this is going to be a long summer (in terms of slow sales).
I think working at a large developer with a relatively small team you would learn a ton very quickly. For example, if you worked at Le Fevre & Company or Chard before they become a big player. You literally have to deal with everything from land acquisition and years battling out rezonings to construction (and the million consultants that come with that), financing, sales, etc. And most importantly the company has to turn a profit otherwise you are out of work.
Really? I thought it was actually quite strong, but maybe it’s just the ones I’ve seen.
No one is coming at you, just stating facts that’s all. Appraisers to the RE industry are very similar to CBV’s in M&A/Private Equity, no sophisticated parties rely on them and they are only applicable to small mom and pop deals. Your original post was to advise a poster that they should get into a big appraisal firm to start their career, to which I eluded to that if the poster really want to be with the big boys in the RE field then they should look elsewhere for a starting point such as: RE Ibanking, large developer, institutional investment firm etc. I have nothing against appraisers, they serve a particular market and a particular function that’s it.
You could, but don’t these appraiser engagements come with waiver of liability/indemnity type of language? If drafted properly, I believe Canadian courts by & large find these types of clauses to be enforceable.
Not to say you couldn’t recover in some egregious case, but I’d bet it’s an uphill fight in a more run-of-the-mill situation.
4351 Gordon Head seems like a head scratcher. Sold in 2019 for $2.775m. Tried redeveloping it into either a luxury property or a small resort, obviously ran out of money and now they want $7.75m for it?
I wonder if the change to a single stairway will change the stairway design. We assume that the stairwell will be similar but according to a retired Vancouver fire chief their concern would be the increase of people coming down the staircase while the fire department is trying to go up the staircase with their equipment to clear the building. Hence the limitation on the size of the complex.
Sales prices relative to assessment seems pretty weak in June.
Part of the issue could be that the government bought an operating hotel while Chard bought an empty lot with no leases? Can’t recall if the whitespot was already done at time of sale.
https://www.theglobeandmail.com/canada/british-columbia/article-british-columbia-looks-to-change-building-code-to-develop-single-stair/
Talk about the good old days, prior to 1972, there was no capital gains tax. Guess who was the Prime Minister, Justin’s daddy.
It does seem the dogs are out to get me today.
But I can tell you that if an appraiser is consistently missing the mark then the lenders would not use them. Myself I aim to be within 5 percent of market value and I hit that consistently. The problem with most lenders is that I am more expensive to hire. That’s because I do a more in depth analysis than just three comparable sales. I do a median analysis, historical sales analysis, sales to assessment ratios, last sale of a similar property along the street analysis. If I were looking at your unit, I would also to a time trended analysis of the unit directly above and below your suite which would have a similar floor plan layout and view amenity. I will prove the value using at least four or five different methods. That’s why I am consistently within 5 percent of the value. How do I know that? Because I don’t look at the Contract of Purchase and Sale until after I finish my analysis. That’s my quality control. The reports take longer to complete but I have very few call backs from my clients. I may have done maybe three of which you were either the listing or selling agent but I don’t think I’ve ever met you. As most of the time I just go in with a lock box. Otherwise I just want the agent to open the door and let me do my job. I think I have had maybe two call backs in the last five years and neither one of them was yours.
As for some of your comments. It’s not typical for you to see the appraisal and I have never heard of an appraiser only being able to raise the value by a third because the could not find another two sales. There are enough sales to show superior properties they don’t have to be identical and even then they can easily do an adjustment. Sounds very strange to me.
So you seem to be having a lot of bad luck with appraisers. Maybe it’s not the appraisers have you ever thought of being less of a dink.
Everyone’s a real estate agent these days..
Happy Canada Day all!
+1, I thought I was going crazy there for a second.
The truth hurts but many people that end up in real estate sales come from other careers they didn’t thrive at, myself included. And then a lot of appraisers are either currently licenced real estate agents not doing a lot of business, or use to be real estate agents that did not thrive. Just saying, I’ll leave it at that as well.
100% true point.
Appraisals are good for fraud prevention and certain legal/taxation uses not for market value accuracy but for documenation (divorces, estates, capital gains, etc.) and that is about it, as I’ve said many times over the last 10+ years on HHV. I recently had a personal commercial appraisal come back at $1.9 million and if someone offered me $1.5 million I would take the money and run. Realistic market value is probably $1.3 million but I do have a very fancy commercial appraisal ($4,500) that says it is worth $1.9 million. Why did I have an appraisal done? Financing rubber stamp.
And maybe appraisals are good for getting the government to overpay for private property -> https://www.timescolonist.com/local-news/province-paid-below-market-value-to-buy-hotels-for-homeless-auditor-general-5114669
I’ve brought up like 10x times how Chard Development paid less than 1/3 for their portion of the lot on Douglas they are partnering with BC Housing on and they bought the Whitespot lot AFTER BC government bought the teardown hotel, in a rising market. But no, government didn’t overpay, appraisal said so 🙂 ha ha
Then I had my personal unit appraised at $200k under market value (appraiser using comparables with a non-ocean view versus subject unit has an unobstructed ocean view). Two weeks after the appraisal an ocean view unit sells and I email my mortgage broker to appeal the appraisal and they were able to raise it but only by 1/3 of the 200k as they “needed two more comparbles like the one that just sold” to fill in their average of three.
Had a rental condo I own earlier in the year appraise for $440k, market value maybe $370k, tops 375k (it is in a building I’ve 21 units in so I am very accurate on the eval).
You would have to be a pretty dumb, or the government, to use an appraisal for anything other than rubber stamping for lenders at best.
Has there ever been a study where they call in three different appraisers and see how close they are one within another?
What’s holding me back? The new capital gains tax. Plus higher interest rates.
So you just assumed that early in my career I never worked in I-banking and don’t still work with them on a daily basis? My point is simply that on big deals with sophisticated parties, no one uses appraisers to value a development or transaction.
I’m not an IB and neither are you. So what I did is I googled investment banker versus valuation and it had testimonials of people starting out in the valuation department after university doing the number crunching and were hoping to transition into IB.
I agreed with you. IBs are not appraisers. The commonality is that they both get a grounding in valuation. You’re not going to have an IB value an apartment building and you are not going to have an appraiser value stocks.
LMAO, please don’t pretend to be knowledgeable on things you have no idea about. Please read my posts again and then re-read your response.
Frank can you give any reason why you are not selling? What’s holding you back?
Fear?
An investment banker may start their career in valuation learning the techniques then transition into Investment banking. They learn the technical side but don’t need to become qualified appraisers as they are inhouse appraisers and are not liable for errors and don’t have to belong to professional appraisal body. So it would be rare to find an investment banker that is also a designated appraiser from a professional appraisal body. I know one person that started out as an inhouse appraiser and then left it to become a designated appraiser. Still had to take all the courses and be qualified. I also know one investment banker that left to become a carpenter as he found it difficult to lie to people about some of the junk he was selling.
But let’s not get business valuation mixed up with real estate valuations. Real estate is only part of what an investment banker does. They aren’t just selling the assets they are selling the business which also has real estate. There is a larger range in selling businesses while the companies inhouse valuation group provides only the asset’s values and that’s more precise.
For example Donald Trump has repeatedly said that the name Trump adds another billion dollars to his company over the value of its real estate. That could be true but how are you going to calculate it. However the buyer of his company is still going to want to see the value of the real estate. They may even commission their own real estate appraisers to do an analysis.
In summation an investment banker is not a qualified appraiser but they have to have a well grounded knowledge of things like the discounted cash flow analysis , capitalization rates, and comparison approaches. If you have ever had to do a discounted cash flow analysis then you realize that some of the assumptions necessary to determine that discount rate can be arguably questionable.
To which E&O insurance is mandatory. I’ve never met anyone at any reputable real-estate investment firm who started their career as an appraiser, its usually RE investment banking or institutional brokerage for a few years before coming to the other side. Being a consultant vs being someone with money on the line is fundamentally different, different pay attracts different caliber of people, I’ll leave it at that.
Frank, just stop renting then. No one is forcing you. It doesn’t sound like your heart is in it anymore. Time for you to move on.
We should be building apartments (condos) that people can afford to buy outright, not rent. When it doesn’t belong to you, you don’t take care of it, and the places go to rot. Renting should be banned, everyone should be owners. Possibly with the exception of rental properties for transient people who are working on a temporary basis, or newcomers that haven’t found a place to live. Also, everyone should be working, if able. We’re turning into a welfare society. Everyone should be self reliant, not dependent on the government, that doesn’t work.
Frank, in a way I agree with you. If we had had more PBRs built over the last 30 years there would be little to no necessity to have suites in homes. If we had more PBRs then the cities could have banned suites and their rents would not be used to push up prices to what they are now.
But the horse has left the barn and we’re stuck with them legal and not legal. Perhaps if we develop enough PBRs then the cities will start closing down the ones that don’t meet fire, health, and safety regulations.
If we have a housing recession, then you might find the PBRs lobbying to close down illegal suites. The hotel industry never lobbied the government to close down vacation rentals but it certainly has worked in their favor.
VicReanalyst, it’s too bad you have such a low opinion of appraisers. Myself, I find that most are fairly incorruptible. They all want to do the best job possible for their clients. When an appraiser signs an appraisal they are bound to the analysis and conclusions for the next seven years. So you can sue them anytime in the next seven years if you suffer a loss from their negligence. Rubber stamping is the best way to get sued.
Half of appraisers don’t appraise houses or commercial properties for lenders. They work for large corporations in their real estate departments or for assessment authorities across Canada. Myself, I once worked for the largest appraisal company in the world with offices in 55 countries out of the Toronto Office. Their clients were Potash mines, lumber companies, bus manufacturers, paper mills, etc. throughout Canada that needed valuations on their real estate as well as their machinery and equipment on a regular basis. The last job I did for them was appraising the Vancouver Airport. I liked Vancouver so I stayed.
I didn’t do housing until I came to Victoria. I’ve met some exemplary appraisers in Victoria as well as a few swarmy types but most if not all of them are retired now. The new generation of appraisers are outstanding.
Apparently, in BC, the security deposit cannot be more than half the first month’s rent.
And that amount is far too low. It’s not in line with today’s repair/replacement costs — not even close.
One reason why I’m getting reluctant to rent to tenants is you are putting a valuable asset in the hands of what could turn out to be nightmare tenants. I don’t know what the exact rules are, but one month security deposit just doesn’t cut it for me. You’re letting strangers take over a million dollar plus property for a few thousand dollars. They should be putting down more like 10 grand to have the privilege to live at your property. This probably is unrealistic but think how much of a down payment you have tied up. Insurance companies could start increasing premiums for rental properties, making it impossible for the numbers to work.
When it comes to landlords setting rents, it depends on the knowledge of the landlord. Property managers do a lot better of a job because they have daily experience and access to more data. They rarely over price a rental.
If you assembled the data from Craigslist and did a line of best fit that plotted rent versus square feet you would be able to estimate rent per square foot. Some would be above and some would be below that line. Just a quick browse through Craigslist and over priced rentals are easily discovered simply by looking at how long they have been listed. They would also show up as being above the scatter point line.
The problem is that amateur landlords put in inaccurate square footage, so it is necessary to cross reference their data with MLS listings or E-Value BC that have reliable square footage and exterior and interior pictures. All one needs to do is determine a quality of finish adjustment. That can be done by simply done by determining when a suite was installed and if it is good, average, or fair condition. Google Earth allows one to drill down onto a property and do a 360 degree view of the home. You can take a virtual drive along the street to see if there is any externalities that would effect the rent such as homeless shelters.
Totoro, I think you are still living in the 1990’s when data was far more limited. The real estate appraisers graduating today are all trained in statistical analysis and mass appraisal analysis. They all have undergraduate degrees usually in science, followed by another two years at the Sauder School of Business followed by another two to three years of articling. And every two years the appraiser has to requalify and pass national exams.
The only problem with developing AI is the cost. Not just to develop the program but to maintain it, office space, staff and equipment. So one has to weigh the projected annual costs to potential revenue. That would cost millions if you wanted to do just the major cities in Canada.
Lol, if you actually want to know what you are doing on large deals then you either need to go work for a broker (institutional) or on the developer/investor side. Appraisal firms do not serve a key role in large deals, they just do some rubber stamping for lenders at best.
When I read through economic papers on real estate, most use the average days on market in their analysis. Rarely does one see Months of Inventory or Sales to New Listings Ratios. That’s likely due to the advancement in computers over the years.
As Patriotz would remember there was a time when there was only catalogs of sales published and delivered every two weeks. And for some rural areas, it was the local appraiser that kept the records on 4 X6 cards in their offices. They would collect the up to date sales data from the real estate offices and assemble them. So any kind of research into past markets was tedious work as no one had a computer and there was no such thing as a Real Estate Board for those areas.
No program is going to be able to set rent more accurately than a landlord looking at comparables online, at least not until there is better AI tools for this.
The reason for this is that size and rooms and area only tell part of the story. You need to look at pictures and know the area. Low height basement? Poor finishing? In immaculate condition with great light? Next to a park with tents? Someone above?
These all affect value and are not accounted for in a program currently because they need strategic assessment of non-standard variables that, so far, only a human can do with the degree of market accuracy a landlord needs to set an attractive enough rent or a tenant needs to do to assess value for money.
We did break the ten year record for the number of active listings for downtown condos at 206. Previous high was in 2014 at 175. Record lows were in 2016 and 2017 at 62.
If one excludes the downtown core we are at 377 for the Victoria Core Districts. Previous June highs were
2014 at 584
2015 at 504
2019 at 384
2020 at 449
Lowest was 2017 at 151
Intuitively I would guess the reason for the peak downtown listings is to do with vacation rentals.
Overall, the market for condos in the Victoria core districts seems to be doing fine.
The numbers certainly look that way Barrister. But somethings reported in the media gave me concern. Most notably the size of “gift” parents are giving their children to buy a home or most likely in the cities a strata that may be a condo, a duplex, or a town house. I would have liked the reporter to have done their job and found out whether that gift was from cash savings or a line of credit against the parent’s home.
That brings in another set of people that are pivotal in buying stratas. It’s not just the 20 somethings buying condos but the 20 somethings and the 50 somethings that have to make a decision together. The 50 somethings will have the last say in which strata is purchased. That adds another level of complexity. If the 50 somethings decide it isn’t a good time to purchase we could have inventory climb rapidly and that will scare off the 50 somethings even more to bank roll the purchase.
A month back or so, I spoke with a 20 something that was looking to buy a strata. Along with him was his mother from the East Coast that was going to provide the lion share of the down payment. She wanted to see the strata and afterwards just said no. She wouldn’t give a down payment on a strata in below average condition that costs almost as much as her house.
She couldn’t see the value and she holds the purse strings. Assuming the media was correct in saying the average “gift” is $200,000 that’s a long way to fall in prices if that “gift” gets pulled.
P.S. one would have to stretch the imagination to think the $200,000 is a gift. I can’t see Totorro or Patriotz giving a gift with no strings attached or agreement in place. That makes it a loan which should be declared in the mortgage application but doesn’t always have to be. As I believe the only requirement is the money has to be in the buyers bank account for 30 days prior to purchase. No further verification required.
I guess we will get end of month stats in a couple of days. Prices seem to have remained resilient in spite of the slow buildup of inventory. Wonder what the fall will bring?
Marko notice that in your example. The rent increases with the size of the rental. The same with market values they also increase with the size of the units. There is a relationship between rent and value.
When you are trying to estimate the rent for your suites you are selecting comparable rentals in size and value. You’re not comparing your $800,000 condo to a $500,000 condo. A lot of programmers are developing AI programs to do a lot more complicated things than estimating rents.
The real estate board uses what is considered the most advanced and accurate tool to gauge a neighborhood’s home price levels and trends – the HPI. Hedonic scale statistical analysis. I’m using grade 8 math, simple linear regression and a hand calculator.
The point is that using a statistical analysis you don’t need to look for individual comparable rentals if they happen to exist that month. The program does it for you.
Your looking for comparable rentals but they don’t always exist when you need them. So when a lender asks me what would a property rent for – all I need is an estimate of its market value and knowledge of some basic physical aspects of the property and I can provide a reliable and reasonable estimate of its rent in a few seconds. As long as it within the same CMA, its location doesn’t matter as the rents will be higher in better locations as would the market value. The GRM takes that into consideration.
For greater accuracy and to incorporate more variables you need a more sophisticated program, big data, and a good PC
Now think of how many lenders need rent estimates every day and multiply that by $50 or $100. That will give you an indication of the revenue potential in cities like Vancouver, Toronto or even Victoria.
And if you provided it to the general public – how many hits per day would you get?
Exactly, so what is the point of the multiplier on an individual property. It’s like BC Assessments, you have houses selling 200k above and 200k below asking depending on variables. Not sure how a computer program would be useful for setting rents on SFHs in Victoria. Every property is very different with unique characteristics.
I have four rental condos in Vic West and when I need to set rental prices I use websites like rentals.ca and similar to see what the actual asking rents are in Vic West (which are fairly reliable as there typically isn’t much negotiation on rents beyond advertised incentives). If Bosa is renting a one bed for $2,200 and I have the same one bed layout not sure what the point of running various metrics/ratios is. It isn’t rocket science.
https://rentals.ca/victoria/dockside-green
Couldn’t find a Fairfield example but:
960 Carolwood in Broadmead is a pending sale $1,200,000 recently listed on Craigslist at $4,300 a month GRM is 23
3258 Willshire, Langford assessed at $889,000 currently up for rent at $3,500 per month. GRM is 21
If you think about it makes sense that there will be a relationship between rent and the home’s value. It won’t always be exactly the 22 I quoted but it is going to be close.
Go back and read “Things that will change the multiplier.”
So a $1.2 million dollar home in Royal Bay with a suite should fetch a similar amount to a $1.2 million dollar home two bed one bath on a large lot in Fairfield?
Things that will change the multiplier include:
surplus land
views
waterfront
acreage
having a property that is not typical for the neighborhood. Too large, Too small, Updated or not updated
suites – legal or not legal
There was a property that sold for $11,000,000 in Victoria. Obviously a GRM of 22 will not work. As that would be a rent of almost $41,500 per month. Not going to happen in Victoria unless you’re running a meth lab in the basement.
Interesting. How about some other price points? How does their multiplier change?
TD may be taking most of the information from the BC Assessment record. You should check online with E-Value BC. You might have to contact BC Assessment to have their records changed as well.
Let’s face it if you are paying the least for TD insurance they are not going to spend the extra time verifying your information. They will send an adjuster out after you make a claim to verify.
So remember to get rid of the gas cans.
Re: TD insurance. I just had the same experience, they had some critical info wrong and I only just got set up with them a year ago. And yet I stick with them because they are the cheapest and ask few questions about my >100 year old house.
Also, I don’t believe CMHC provides a market value. They just provide approved or not approved for insurance purposes. If the developer hits all the right tick boxes and scores well then they are approved.
I think there are a couple of videos on youtube to help developers hit the right score.
Actually, they would use all three approaches to value for new projects. The Cost Approach, the Direct Comparison, and the Income Approach. The value estimates from all three approaches are then reconciled into a final estimate of value. These are all physical composition methods to estimating value. The physical aspects of the property determine value. Including the Income Approach as the income generated is directly depended on the physical aspects of the property.
There is a fourth method but it is a financially derived and that is the Discounted Cash Flow analysis which is used for properties such as shopping malls or Golf Courses, that rarely sell on the open market. How many times has a shopping mall or Golf Course sold in Victoria?
The GRM, price per door, and price per square foot fall under the Direct Comparison Approach. They are all units of comparison not separate methods of valuation.
CMHC uses a program known as EMILI which is statistical in nature but it’s roots are in the comparison of similar properties as well as past sale’s history, and sales to assessment ratios. Similar to what Landcor uses. If the estimate falls within a certain range then it is passed. That range can be altered to approve more or fewer mortgages. From time to time CMHC contacts local appraisers to perform outside appraisals as a cross check.
The leading firms that provide commercial valuations in Victoria are DR Coel and Baker & Osland. Although more Vancouver based appraisers do the high priced properties as they have more experience in doing PBRs on a regular basis. Just because Vancouver have a lot more PBRs than Victoria the Vancouver appraisers have more experience. Top ranked commercial firm in BC is Burgess Cawley Sullivan & Associates in Vancouver. If you want to be the top in your field in BC, this is where you want to work. Otherwise you’ll have to go to Toronto for the big firms. Victoria is a nice place to end your career – not to start it.
‘
I work for lenders and they ask me to estimate rents. So occasionally I find that some of these properties appear on Craigslist later at or very close to my rent estimates so I’m fairly confident in my estimates. A way to check the rent estimates against actual property values is the rent multiplier. A detached house that has a value of say 1.2 million will likely rent at a multiplier of 22 times. That would make the rent at around $4,500 per month plus or minus 5 percent. There is a relationship between the rent and the value of the property. But it isn’t a science.
A way to check the rent estimates against actual property values is the rent multiplier. A detached house that has a value of say 1.2 million will likely rent at a multiplier of 22 times. That would make the rent at around $4,500 per month plus or minus 5 percent. There is a relationship between the rent and the value of the property. But it isn’t a science.
Some brilliant programmer could probably come up with a good algorithm to estimate rents that they could sell to property managers. If Bill Gates is reading this blog – I’m available.
~~~~~
Generally, for multi-unit properties consisting of up to 24 units, value is determined by a property appraiser using the direct comparison approach. On larger properties (25 units or more), CMHC uses the income approach based on capitalization rates (as determined by CMHC on the basis of its own market observations) or value per unit to assist in determining the CMHC lending value for loan insurance purposes.
Under certain circumstances, an alternate approach to value may be utilized for properties of seven to twelve units such as the use of a Gross income multiplier (GIM). CMHC will also look at other valuation methods (i.e. an appraisal) and market data (i.e. per unit values) to ensure the reasonableness of the property lending value for mortgage loan insurance purposes.
~~
if someone wants to know exactly how the CMHC approved lenders determine assets value so they do not end up with belly-up, hit me as well.
The problem Barrister is the data for rentals is almost non existent. These are all asking rents and not realized rents.
If renters had a similar data base as prospective purchasers it would certainly change things. For example if you were looking for a two-bedroom condo and you knew that other condos in the same building had recently been rented at $2,500 per month that would give you bargaining power if the landlord was asking $3,000.
I work for lenders and they ask me to estimate rents. So occasionally I find that some of these properties appear on Craigslist later at or very close to my rent estimates so I’m fairly confident in my estimates. A way to check the rent estimates against actual property values is the rent multiplier. A detached house that has a value of say 1.2 million will likely rent at a multiplier of 22 times. That would make the rent at around $4,500 per month plus or minus 5 percent. There is a relationship between the rent and the value of the property. But it isn’t a science.
Some brilliant programmer could probably come up with a good algorithm to estimate rents that they could sell to property managers. If Bill Gates is reading this blog – I’m available.
How about outside of the core within an 8 kilometer radius of downtown.
A lot more for rent at 400 listings but this also includes houses and basement suites. The average is $2,350 per month.
A one-bedroom PBR starts at $1,600 per month but the suites tend to be larger and most include parking but not in suite laundry.
A two-bedroom PBR at $2,000 per month but can increase steeply depending on location and age of the apartment.
The lowest price rent for an entire house on a lot that I could find starts at $3,500 per month for 2,332 square feet in the Gorge. Most often tenants pay hydro, gas, and water. That can be expensive due to the lack of updating for some of the older houses. A remodeled house starts at around $4,000. A good neighborhood away from the downtown core at around $4,500. There are so many variables it’s difficult to determine an average.
That is like a 25% premium per square foot for two bedrooms? You would thin that the builder would be adding more inventory here?
Last day of the month so for me it’s time once again to look at downtown condo rentals.
According Craigslist there are 67 condos left for rent since the beginning of the month within this half kilometer radius. Average asking rental rate $2,162 per month. Most downtown condos fall in the range of $1750 to$2300 per month.
Purpose built apartments (PBRs) start at $1,685 for studios not including parking or storage. ($3.95 per sq. ft.)
PBRs for one-bedrooms begin at $1,775 per month. ($3.29 per square foot)
PBRs for two-bedrooms begin at $2,875 per month ($4.25 per square foot)
Basically the PBRs charge another grand a month for an extra bedroom and bath. That’s a significant premium over a one-bedroom relative to how one- and two-bedroom condos are priced.
A condo studio starts around $1,400 per month
A one-bedroom condo at $1,775 per month
A two-bedroom condo at $2,500 per month
This type of pricing makes more sense to me as two-bedrooms are usually priced 40 percent more than a one-bedroom. Generally speaking the larger the suite the lower the rent per square foot. But there is a long list of factors that can change the asking rent. For example there are a lot more one-bedroom PBRs than two-bedroom PBRs available for rent in the downtown core.
Estimating rents is 75% science and 25% art.
The real reason for Lloydminster. Alberta or Saskatchewan
https://youtu.be/yio3Pin43eA?si=Kib1Q59z7r-2wiHX
…sometimes it goes the other way.
In communications with my insurer to clarify a major point, I saw that their Replacement Cost Information Sheet was incorrect; I added two porches, wood siding and two unused fireplaces, expecting a premium increase.
When they re-ran the evaluation on a newly installed evaluator system, my rebuild cost decreased as did my premium.
They sent me a refund cheque.
🙂 but the real reason is the higher taxes on the SK side. Remember you pay income tax where you live, not where you work. Same with Ottawa and Gatineau across the river.
TD insurance was always tempting, as on its face it was easy to apply for and the premium quote was always lower than what I was getting. But I could never get over the fact that so much of the process was not in writing. I prefer insurance where I can print out and keep for my records exactly all the factual information I gave them about the house. Even then, with my current insurer, I find when I get my policy, they always have various things incorrect and then I correct those via email and of course keep all those emails. As I understand it, you can’t do that with TD.
The real problem with them relying on incorrect information is that it calls into question just how “insured” you really are – do you want just an argument when you need them, and to boot, an argument that you can’t even back up with anything in writing? I mean, look at introvert’s example, maybe a bit extreme, but the insurer “thinks” they’re insuring a duplex, and your SFH burns down, now what? No thank you.
I don’t trust insurers, and if I can’t deal with them in writing, then I won’t deal with them at all.
The insurance companies in Canada also buy insurance for catastrophic events from the world’s largest insurance companies such as Lloyd’s of London. Because of the increase in world catastrophes those rates are now higher and that causes higher rates in BC. The fires in California and Hurricanes around the world have an effect on the rates charged in BC.
The insurance for my E & O is funded by its members (self funded) and incorporated in Bermuda (for tax reasons) but additional insurance is purchased from private insurance companies for shocks to the insurance program. Doing this lowers the cost of insurance as there hasn’t been a large world wide shock unlike for house insurance. I still pay $4,000 a year for E & O insurance which is up from $500 when the program was first initiated. Most of the increase stems from the increase in legal fees and that Canadians are becoming more litigious.
Right, and not only the weather. When you decide to visit Lloydminster (and I’m sure you will), you can save hotel and some other sales tax (PST) by staying on the AB side.
Patrick, like Victoria and Oak Bay the people of the two Lloydminsters say the difference in price is because one side gets better weather.
Some areas of California have the problem of homes now being built in forests (without clearcutting), where the “dry fuel” of the trees in a drought make the fires unstoppable.
Similar thing happened in Lytton “ By May 2022, the Institute for Catastrophic Loss Reduction released a report indicating that the Lytton fire department had no realistic chance of stopping the fire because the village was full of combustible material [sheds, wood piles] lying within 30 metres (98 ft) of structures”
Insurance isn’t my area but I thought there was something to this or similar: insurer can deem the property owner to have self-insured in part and this complicates the claim – ie, leaves the insured on the hook to come up with their percentage. This can be difficult in a significant fire etc. Does insurance pay up front for replacement or is it a “percentage of completion” type payment. If the later, does this not also make it difficult to finance?
These places are tiny. SK side is 12K population and the AB side is 20K. The SK side is 1/33 of Greater Victoria population, and would have about 20 home sales per month, so small sample size likely explains the wild swing in prices. Same could happen in Victoria if you just looked at sale prices for a single day.
And that’s why Lloydminster SK got its “day in the sun” on HHV 🙂
This reminds me about what is happening in California with home insurance. The state has started trying to force insurers to offer coverage to people at risk of forest fires burning down their homes, but at prices that are capped.
But as this forest fire risk is rising, insurers are pushing up their rates to ensure they will be profitable if they have to pay out more claims.
Now insurers are refusing to cover people or just backing out of the state because the risk is too much for what they are allowed to charge.
Given that we’re also quite prone to over regulation here as well I wonder if that’s related to insurers limiting the options they will sell you in your case.
(Over maybe there’s just an actuary that’s too lazy to crunch the numbers for those custom insurance options you’re alluding to.)
The two Lloydminsters are on opposite sides of a street. Curious that one side would fall 41.4% and the other side 8.5%. The two provincial governments are quite similar so I don’t see that factor making a difference. SK does have higher taxes but that’s always been the case, it’s not a new factor.
Are you wondering what cities are having declining home prices?
Lloydminster, SK has had a 41.4% decline in home prices from this time last year. Prices have fallen from $350,594 to $206,571
Fort McMurray, AB has seen a 16.2% with the average home price in the city now at $286,083
Swiftcurrent, SK down by 8.8%. Now at $243,900
Lloydminster AB down by 8.5% down to $249,852
Cornwall, ON down 6.3% to $393,545
Local residents are hopeful that global warming will cause prices to rebound. Others blame government building regulations requiring out houses to now be built with bricks.
Depending on the LTV you can
Well, when in Gordon Head, do as they do….
…..
Generous to say TD is thinking. There’s no thinking going on.
Yeah someone thought we were just crapping in the backyard for a decade or what
I don’t understand why I can’t just buy whatever insurance amount I want. One, two three million just charge me what that amount costs
You need insurance if you have a mortgage. Likewise, you only need clean underwear if you’re in an accident.
Go Commando!
$19k for the roof.
Just put solar up myself and flipped the switch on that a couple weeks ago. Piece of cake on the metal roof, just clamps on. Total no brainer economically even before incentives
You finally got the new metal roof! I do recall you mentioning how much the estimate cost climbed over the years… If you don’t mind sharing, what did the installation end up costing?
The insurance industry will eventually make investing in real estate a very risky business. They are already making EVs impractical to own. In the U.K. auto insurance increased 29% in one year, except EV’s, they went up 73%. Excessive repair costs (if anyone would touch one) is the reason cited.
While I don’t like the approach of having to buy the amount of insurance that would cover a total loss I do understand the logic they are using. Very few insurance claims in a city are for a total loss. The fire department usually arrives and puts a fire out long before that point. Since many people would under insure all that would happen is the rates would have to rise dramatically to cover it. Current rates are based on rarely paying out a total loss so to protect themselves, all the insurance companies prorate any claim using the logic “you under insured by 20% so we are reducing your claim by 20%”. If your claim is for 10,000 they will pay out 8,000.
Sounds like my insurance company. They insists on using an absurdly high number for value of contents, and claim they can’t lower it, as it’s based on a formula, not on what you actually have. Policy premium has gone vertical, like everyone else it appears.
I think you should just be able to buy insurance on the amount you want covered. Say your outstanding mortgage.
You should be able to buy $600,000 of insurance or $6,000,000. And pay on the coverage that you want. It’s up to you to decide what is the right amount. If your house can’t be rebuilt for the amount of coverage its your own frigging fault. But being a Canadian you will somehow figure out a way to blame it on the government.
This, right here, is the most disconcerting part.
We gave them correct information at application. Years go by, then we randomly discover that they either (a) didn’t input basic info accurately on Day 1, or (b) lost basic info along the way and didn’t care.
LOLOLOLOL
No one can fully comprehend just how incompetent TD insurance is until you personally experience it. Welcome aboard, Leo!
Here’s me, a year-and-a-half ago:
.
That’s twisting the meaning of self-insured, which means the owner of the property carries the risk.
I’m no fan of private insurers but I don’t think another political football is the answer.
TD insurance is so incompetent.
Calling up to tell them I have upgraded the electrical service to 200A and put a metal roof on, which should drop insurance.
TD: Ok, and some other basic questions about the house, number of bathrooms, foundation, heating, etc.
Me: Answer questions.
TD: Ok so your insurance is up to $2500.
Me: Wut? Shouldn’t the insurance go down with the roof?
TD: Yeah but the other questions put it up.
Me: Huh? Nothing about the number of bathrooms or the house changed. That’s what I put in initially when I got the insurance.
TD: Yeah but we had it as having zero bathrooms, so with 3 bathrooms the reconstruction cost put it from the $2M to the $3M bucket.
Me: WTF?? Put it back to $2M, that’s enough
TD: No
Maybe it’s time BC look into being self-insured for housing. The BC government would insure the basic coverage and then you would get private insurance for the extras.
When it comes to the lenders, all they care about is that you have enough insurance to pay out the mortgage. That type of insurance would be less expensive.
Insurance history last 5 years.
2020: $1,152
2021: $1,313
2022: $1,504
2023: $1,965
2024: $2,389
Wow, sincerely glad things turned out all right Warren! I have often shared the same sentiment Umm…really has said, probably out of frustration at the current state of healthcare but it’s true, proximity can make all the difference.
“It doesn’t matter if you’re 2 hours away”…
Here’s an example to the contrary. Had some discomfort in the middle of the night last November which ended up with a quick run to the Jubile where three stents were fitted. The seven-minute drive from the house to the hospital was a bit stressful but nothing like the it would have been from Maple Bay or Sooke. Would I have made it? Maybe, but I think I’ll stay where I am.
It doesn’t matter if you are 2 hours away, you’re still waiting a year to maybe get the diagnostic you need, maybe another to see the specialist and up to 2 years after that to get the procedure if you’re still well enough or alive by that point.
As you get older, it’s best to live in a major city to have access to hospitals and specialists. Eventually you will need care and to be an hour or two away is not a good idea. I sometimes contemplate moving away from the ills of a city, but don’t want the inconvenience of accessing health care, even with zero health issues. I rarely see a doctor (I get checked by a dermatologist once a year).
When you live in a city, you are going to pay a lot more in taxes and have more restrictions on what you can and can not do than in the rural areas of BC. So I wouldn’t say we love taxes. We just love to live in cities where we have the option of buying 100 different flavors of potato chips.
The condos that have been selling better this year than in the past are Victoria leaseholds. Typical sale price is $272,500. Typical rental income of say $22,500 per year. That’s a rent multiplier of around 12. Since one doesn’t get the reversionary value of the land, this multiplier represents only the return on improvements. That is different from a freehold which is around 20. There are exceptions due to view amenities.
For those of you that built an accessory dwelling (ADU) in their backyard, this is how how you determine its value. I get this call from agent’s that are listing homes with ADU’s as they are not familiar with estimating their contributory value.
Take the annual gross rent of the ADU and multiply it by 12 (improvement only multiplier) The rent has to be for a long term tenant lease. No travelling health care workers and short stays.
If you are renting an ADU for $2,400 per month (current economic rent). Then the ADU has a value of $345,500 (rounded). Renting at $2,800 then it’s $403,000. That’s the current contributory value of a detached ADU that is added to the value of the house and its lot.
Most people will realize immediately that this is less than the cost to build the ADU. That’s why not many ADU’s are being built.
But if your intention is like Max’s to move into his when he and his spouse are older or to to build an ADU for granny it would make long term sense.
When buying a pre-fab ADU, the cost does not include permits, underground services, concrete foundation and landscaping. This is where the city and province can provide an immediate solution to the housing problem. Similar financing to solar panels and relaxing of the permit costs if you provide rental accommodation for the next ten years.
It’s not that difficult to make more housing. You just need the will to do it. It’s time to end the forever consultants the cities have been hiring and start implementing solutions.
Marko , all of which helps to keep house prices high . But there is a luv in Canada for more regulation and tax’s . I get for some crazy reason a lot of push back for lower rates , it just doesn’t add up . To the moon
7 emails today regarding owner builder exam, not even sure how that is possible as only 692 owner builder homes were built last year.
But yea just one person after another being screwed over by idiotic non-sense BC Housing policy. God forbid someone come work on an unfinished house that has all municipal permits in place and has to be inspected by the municipal inspector at all stages, and signed off by structural engineer, etc.
Apparently that is $25,000 sin…you could run someone over with a car and the fine would be smaller.
A couple of odd things this week that one rarely sees available for sale. The owner has gutted the interior of the condo, removed the flooring, bathroom, and kitchen and selling the condo “as is”
A two-bedroom on Gorge Road offering 956 square feet asking $349,900
A one-bedroom on McClure with 751 square feet asking $300,000
A bathroom will cost around $25,000, the same with flooring, and a little more for kitchen and appliances. Say 75,000. contingency for cost over runs and we will up it to $75,000 for McClure and for Gorge $100,000 to finish.
Gorge in the $400,000 to $425,000 when completed.
Mcclure will likely sell in the $350,000 to $375,000 when completed
The demand for a completed condo is stronger as it is easier to finance. With one that has been gutted, you will likely need to use your own cash to finish. Although it may be possible to find a B lender that is willing to finance the condo and the costs to finish.
In a hot market your time and sweat equity is worth nothing. In a slow market for two months work it might be around $50,000.
It will be interesting to see what these eventually sell at in their unfinished condition. I suppose it matters what your time and sweat equity is worth.
Let the games begin.
These 4-plex fasttracked designs in Kelowna are really good looking imo -> https://www.kelowna.ca/homes-building/property-development/infill-housing
“More than 1,300 MF1-zoned laneless lots in the City’s Core Area are now eligible for ‘fast-track’ approval. This means that if your lot is eligible and you wish to proceed with an application for infill, your Development and Building Permit application can be approved within 10 business days if you’re working with a pre-approved multiplex design.”
Will do. Thanks for the discussion
Patrick, just go with whatever narrative you want then.
My point is that we aren’t adding any (net) SFH to core Victoria. Tearing down a SFH and replacing with a SFH+suite doesn’t add a SFH since there was a tear down. Suite-in-home is an unstable rental, subject to eviction when the owner wants it back. Much better to build purpose built rentals, or just big apartment blocks where the rentals are secure and long term.
It’s a sampling of the market Patrick. But as I said the more expensive the homes the less likely is the need for a mortgage helper. The median (typical) asking price for a new house with a suite is $2,600,000. The median price for a new house without a suite is $3,075,000.
Why would that be relevant? We are talking about new homes built following a tear down. Many that are pre sold and built as a custom so never see the mls. And my point was for core Victoria, not Langford. The rebuilds I see are custom luxury houses $2m+.
Sure 18 out of 32 of the active listings in Victoria for new homes have a suite.
You said “typically”, which means most.
Whatever: “ These homes are typically replaced with a house with a suite. ”
Anyway, do you have data for this “about 50/50” or just going by what you see. I would assume that a rebuild is a SFH only, or a multiplex of some sort. (Duplex, triplex etc)
Never said “most”, Patrick. It’s about 50/50. The more expensive the home the less likely the need for a mortgage helper.
Not on my street. I’m seeing one house torn down and replaced with one custom house, no suite. Do you have any data supporting your statement that most SFH rebuilds are a house with a suite? Are there many people willing to pay $2m+ for a new SFH house with a suite?
It’s good to see more houses for sale in the Victoria Core. We are close to that of May 2019 when inventory peaked briefly at 594 houses for sale. Before then we would have to go back to April of 2015. Pre Fort McMurry fire when oil prices were stimulating growth in Alberta. We had a lot of blue eyed sheiks moving to Victoria post fire and oil decline in 2016.
This is good for prospective purchasers. More selection might encourage those, that for the last several years have been holding off purchasing, as they couldn’t find a home worthy enough to move up the property ladder. Instead they chose to stay in-place and renovate.
Patrick, the homes that are being demolished tend to be pre 1960’s one-storey homes that contribute nominal value to the property. These homes are typically replaced with a house with a suite. That’s a five-bedroom home replacing a two-bedroom home. That’s potentially two households on the same lot.
Marko, thanks for the clarification. All of that makes sense to me, initially I was having trouble seeing how that was tying into my comment. Your point about the inspection having as much to do with the market as the inspection findings totally rings true. In a very extreme illustration of that, it wasn’t long ago inspections were regularly waived and asking for an inspection would make sure your offer never even got off the ground. I think inspections are back now in the majority (super layman observation). The quality of the houses hasn’t changed in the last 4 years or so but the market certainly has, coming down some from peak insanity.
Was just pointing out the real life compontent of real life transactions (most sellers are nervous during the inspection) that people ignore when they say the RE industry is done with AI, etc. (not saying you are anti-agent yourself).
The inspection has just as much to do with the market as the actual inspection findings. Early in my career 2010-2014 I had many deals falls apart on vermiculite (insulation in attic containing asbestos) as the market was slow. Then for 7-8 years (hot market) I didn’t have have a single deal go sideways on vermiculite as buyers were simply happy to secure a house, until this year (market slowed) I had a deal go sides on vermiculite. Buyers wanted 15k off to remove it, seller said nope, and the deal died, my buyers bought a different house.
Re-negotiate post inspection was a non-thing for the last few years, but now it is common place.
The savvy buyers typically hit you with a request for post inspection price amendment when they are in a position to remove subjects. “These were the following issues with your inspection, we want $5,000 off and if you agree we will remove subjects.”
If the seller has been on the market for a long time they typically agree or counter.
A million other scenarions too. In a slow market when the buyer has 8-10 days for conditions sometimes a better house is listed and then the buyer walks away on the inspection, but real reason is a better house came up.
Right, and (to state the obvious) each tear down means one less SFH in the core. If they replace it with a new SFH, we’re back to even, but if it’s a multi-plex we’ve lost another SFH in the core. I think with all these tear downs we are close to (net) zero additions of SFH in most core Victoria neighborhoods .
Tax payers aren’t footing the archeological work required, each resident has to cover the costs out of pocket. The woman on the radio this morning said her estimate was $45,000, and she’s going to pay it.
Marko, respectfully, I don’t even know what you’re trying to say here. I’m not nor have I been anti-real estate agent and I am using one on both ends of my transactions here. I read about potential buyers ditching their offers due to inspection, I’m not sure it’s all that uncommon and I’m curious how often a RE agent would mitigate that sort of thing, or if it’s even wise to do so. In the context of my comment, I was saying I am a bundle of nerves because I hope something isn’t discovered where the buyer might back out. I’m not sure my RE agent is going to provide me much relief on that front in what is a pretty stressful time for any normal person (biggest purchase of their life etc.)
Is there any point to rebuilding in Lytton, if it isn’t going to be to recommended fire-resistant standards? Taxpayers are footing much of the bill here…
They not only want to skip the owner-builder exam in Lytton , they also complained about the $5,000 extra it would cost to to rebuild to fire-resistant standards, so the mayor.council relaxed the fire-resistant rebuilding standards. Federal Government was going to be paying for most of the fire-resistance, but the builder needed to kick in $5,000., Good grief, at least the re-builders in Lytton should all be competent and building to fire-resistant standards. https://en.wikipedia.org/wiki/Lytton_wildfire#:~:text=An%20investigation%20of%20the%20Cisco,fire%2C%20focusing%20on%20two%20areas.
“ In May 2022, Lytton Mayor Jan Polderman hoped that the village could start rebuilding in September 2022. He planned to enact new bylaws to require fire-resistant materials in new buildings such as non-flammable siding and roofing materials, and to keep combustibles such as vegetation, sheds and wood piles at a safe distance from buildings.[38] The federal government promised $6 million to rebuild to fire-resistant standards. However, many residents balked at the extra estimated $5,000 to fireproof houses. Also some fireproof materials would be harder to source. Thus, Denise O’Connor, Polderman’s successor as [Lytton] mayor, along with city councilors decided to relax [fire-resistant] standards to facilitate rebuilding.
Westerly, a lot depends on where you are building.
For example in Colwood you can buy a fully serviced ready to feet build 6,700 square feet lot for $500,000 plus GST. Then build a 3,300 square feet semi-custom home with a suite that sells for $1,600,000 including GST. That’s a semi-custom at $325 a square foot built on speculation.
539 Stonehouse Place for example.
In the core, you rarely get a ready to build on lot. That increases your site preparation costs. Are you including site prep work for tearing down and clearing the lot in construction costs? Also most new homes built in the core are not built on speculation but are built with a contract. That can change your costs as not all builders charge the same for the same house and home owners are making changes as the home is being built.
If you have to tear down the house and prep the site. Then construction cost could increase to $375 a square foot.
For example 4172 Glanford built on speculation, the land was bought for $620,000 but an older house had to be demolished to build a 2,450 square feet home with a basement suite. That property sold for $1,550,000 including GST.
I’m rounding to the nearest $25 a square foot.
Custom homes are cost plus. As the sky is the limit as who knows what a home owner will want.
A lot more non-sense going on in Lytton, I’ve had several residents reach out to me re owner builder exam with some insane stories.
How is no one at BC Housing hmmm…these people are going through hardship let’s cut this useless exam that serves no purpose.
Uptick in people emailing me frustrated with the process of trying to obtain a builder’s licence which goes hand in hand with my data of people emailing me for the owner-builder exam not because they want to do an owner-builder home, but there is no licenced builder within a couple of hrs drive. Government doing everything it can to make it as difficult and expensive to build housing while they feed the massess the complete opposite in the media.
My father and I built/sold this home back in 2010 -> https://www.realtor.ca/real-estate/26823605/2223-woodhampton-rise-langford-bear-mountain
and while the interior colours are now dated I would say that is a solid semi-custom. $450×5,335 sq.ft. = $2,400,750 without the land. Realistically, you could build it for cheaper but $1,789,999 land included is way below replacement cost.
Thing is I remember taking the blueprints/paperwork to the muncipality on a Monday and picking up the building permit on a Friday.
The end to SFHs is approaching. More and more government bureaucracy literally non-stop. Soil same testing for new services is a classic example. $10k to test soil for service trench in a SFH is a lot more impactful than $10k to test for a 100 unit building and with rezoning reforms obviously no one is going to build SFHs.
As I’ve been saying for the last little while, if a SFH was something I wanted personally I would buy in the next 18 to 24 months. After that who know what happens to SFH affordability.
It’s not that many years ago we were hearing $225 / foot for a spec house, $350 for semi-custom – and none of that including the cost of the land. Today spec is, what, maybe $350? Semi-custom starts at $450 / foot all going well. 3,500′ house would be over $2,000,000 with land. You can get a lot more house on MLS as compared to the cost of taking on the risk of building a new house.
While the BC Housing minister boasts about a “projection” of more housing starts in 2024 vs 2023, https://x.com/KahlonRav/status/1806044670272655806 the current BC Housing data tells a different story. Namely, new housing registrations for 2024 (which occur before the issuance of building permits and housing starts) are BELOW 2023’s numbers.
“So far in 2024, total home registrations are down 1.4% from 2023. Registrations for multi-unit homes decreased 0.5%, while registrations for single detached homes decreased 6.2%.”
For those interested in family housing (the majority of househunters want SFH), the long term chart is even worse. The collapse in BC new detached SFH (light blue on the chart) is obvious and ongoing. For example, we are currently building about half the number of SFH we did in 2016, despite the population rising 20% And SFH numbers are DOWN an additional 6.2% in 2024 vs 2023.
https://www.bchousing.org/sites/default/files/media/documents/New-Homes-Registry-Report-May-2024.pdf
Lytton residents are being charged $20,000-80,000 for archeological work required prior to rebuilding. People are leaving. The place will never recover. I guess the past is more important than the present.
Assessed at $1,150,000. Bet the listing doesn’t mention that.
1560 Prairie
Listed 43 days at $1,388,800
Cancelled
Re-listed at $1,499,000
Better buy it quick before the price goes up again!
I too believe that Climate change is occurring, but have looked deeply into the IPCC and CRD reports and think there are higher priority issues.
I think a lot of people think that we can aim to fix more than one priority issue at a time, but that is often not possible. Given that Victoria is the third most unaffordable housing market in Canada I would like the municipalities to prioritize making housing (including sfh) cheaper. Instead I read about how for environmental reasons the urban containment boundaries shouldn’t be increased and the City of Victoria is surveying the public to determine whether climate friendly building materials or car share capabilities are more important. Neither will save people money.
Marko has mentioned how pessimistic he is for much to change in the length of time to build because of the government red tape, but ultimately I think the problems go deeper than that. Despite having the third most experience market and BC having the lowest fertility rate of the provinces, housing for young families is sadly not the top priority. Luckily there are other provinces that are more family friendly.
I suppose one reason why the “gift” has increased so much is to avoid high ratio financing and/or to have the kids qualify under their income.
The money is suppose to be a gift. Not a loan from the parents which would be a debt that would have to be disclosed. Not disclosing the debt would be mortgage fraud.
Making the full dataset publicly available would be even better. 🙂
BC has always been more expensive than Alberta. That goes back to the WAC Bennett days when nobody talked about ALR, bike lanes or what have you.
I think it has a lot more to do with topography.
I believe in the science of climate change; however, I agree with some of your points. Not sure what exactly we are trying to do in Canada other than substantially lower our quality of life. Last week I had multiple different clients complaining at various townhomes and SFHs showings on the lack of storage, lol. Everyone is environmentally friendly in Canada but also needs an insane amount of unreasonable storage for various consumer goods, makes sense.
Alberta housing minister spoke a month or two ago how Alberta won’t accepted accelerator housing funds if they are tied with green initiatives due to higher building costs and I agree with him.
Then every day in the news the same people environmentally friendly people are complaining about 500 sq.ft. condos downtown. Do some napkin month in terms of how much you have to clear cut and how much infrastructure you need to put in 200 unit condo tower versus 200 unit SFH subdivision.
^Not to pick on you, but reason why the real estate industry is not going anywhere. A lot of emotion involved, it would be very difficult bringing a lot of transactions across the finish line without a middle person(s). I can imagine a ton of private deals going sideways on inspection due to vastly different expectations between buyer and seller.
Unfortunately they don’t report the median, which would be more meaningful IMHO.
Should be some options from principal residence Airbnb owners, no? A ton of demand out there, I ended up at over $300/night on a long term stay and had a ton of various inquiries. For example, one couple their house flooded 2x in the last year due to poly-b leaks so they needed a place to stay for a couple of months while all the poly-b is replaced + drywall repaired + some additional renovations due to flood.
At least the long terms rents are falling….ohh wait they aren’t 🙂
Average down payment gift for first-time homebuyers soars into six digits: CIBC
https://www.timescolonist.com/z-central-newsletter/average-down-payment-gift-for-first-time-homebuyers-soars-into-six-digits-cibc-9141198
(For those first-time buyers that relied on a gift for the down payment, the average such gift in BC was 200k..)
When it’s reaching temperatures above 50 C. in India, I think climate change will directly affect our housing market. Lack of water also causes mass migrations.
Well your inspection won’t kill the deal , but just enough small crap usually for a lil discount from the seller lol . It seems that’s always the way it plays out
After many DOM we have an accepted offer on our place up island where we live. My house is being inspected as I type this. I am a bundle of nerves seeing how all of this might play out, really hoping I will see all conditions lifted soon. This is my first rodeo. So many moving pieces to this process and we have yet to find our next home. I really don’t have anything a question or a point, but I felt I had to post because I’m “in the trenches” and have no relief valve for the anticipation over here.
@SuccessfulHomebuyer – Please leave the climate change discussion elsewhere, offtopic for this site. Understood, and this will be the last post.
The only reason I am posting is that it has a direct impact on housing affordability. Policies like tree protection bylaws, and opposition to clearing land, protection for the ALR, the need for EV chargers, bike lanes, anti car roadway decisions are all in some part due to people thinking that these things are the most important because of climate change. There are many reasons why Alberta has cheaper housing than BC, and these are some big ones.
@SuccessfulHomebuyer – Please leave the climate change discussion elsewhere, offtopic for this site.
caveat emptor – I am happy that the BC wildfire site has the important fact “The risk from natural fires can also be reduced with fuel management and prescribed burning” Now we just need to somehow inform the “Climate Change is an existential crisis because of forest fires” people.
Nan ““there’s nothing we can do other than stop burning fossil fuels” to save the environment” . It seems like a large number of Canadians and a higher percentage who live on this island don’t understand basic math or science and actually believe this. I hear it all the time, the reason we need to subsidize EV’s or raise the carbon tax is “the forest fires! the Sea Level rise! the species extinction!”. It is really sad that a lot of people don’t understand that if they have a sum of money (any amount), then if they use it to adapt or mitigate they will be able to measure their success, but instead they need to cut other Canadians tiny amount of the 1.5% of global fossil fuel emissions. With forest fires there are a ton of measurable things you can do, such as controlled burns of undergrowth or trees in the off season or selective logging to create buffers around human habitation or letting fires burn if they can. The same people who don’t understand these effective practices are also more likely to be in the “every tree is vital” (they are not, there are 300 billion in Canada alone) or “forest fires are only caused by climate change” (ignoring all of history)
Hey a brand new conspiracy theory!! Congrats Nan!
Chemtrails!
Stolen Elections!
Fake Vaccines!
And now the most boring conspiracy theory of all – the fake forest fire data conspiracy.
For those willing to consider that US data (10x the population density) might not represent Canada here are some links from BC.
Causes: https://www2.gov.bc.ca/gov/content/safety/wildfire-status/wildfire-response/what-causes-wildfire
2023 Summary: https://www2.gov.bc.ca/gov/content/safety/wildfire-status/about-bcws/wildfire-history/wildfire-season-summary
Housing target progress at the 6 month mark relative to the 1 year targets.
Go on a vacation.
Returning to short term rental rules – I’ve maybe got myself caught in an edge case. Our house is sold, completion/possession Aug 2/3. Our new place is completion/possesion Aug 3/4. No big deal! But wait, the sellers of our new place want to rent back for a couple of weeks to accomodate their new possession dates. No problem right? We amend the contract to reduce the price we pay, and we find a place to live for a couple of weeks or a month so they can move out mid-August and we have a week or two to do some renovations. But wait – I can’t rent anything for less than 3 months legally, even if it is fully furnished. Maybe I can stay in a friends basement, maybe not. What’s legally allowed in this case? Are my only options a hotel?
Does anyone know the number of rental units either under construction or that are approved in the greater Victoria area.
There is no guarantee that the 5Y bond yields will stay low. Given the amount of debt being issued by US & Canada governments and with the Asian buyers increasingly unwilling to buy these bonds, bind yields will gently rise over the long term with occasional dips.
Council voted 7-2 on Monday in favour of permitting secondary suites on single-family lots outside the Urban Containment Boundary. District staff said the decision would allow 2,442 properties to add secondary suites to their existing homes.
“To add secondary suites”
But what about secondary suites that are already existing? What about those suites home owners have installed without a building permit? Will Saanich do anything to ensure they meet fire, health, and safety issues?
My Mortgage Auction was the vehicle through which Martel took investors’ money with the promise it would be used to provide short-term loans for real estate transactions and construction.
I think interest rates should be at the level to control inflation. I feel for that fraction of home owners that will find it no longer possible to make their mortgage obligation but I feel more for all Canadians that find it difficult to pay for groceries.
I suppose that would make me a strong conservative when I say let the market take care of itself. When they chose to over buy it isn’t anyone else’s problem but their own. They took a chance and they lost. I disagree with the government stepping in to allow home owners to extend their amortization rate.
All that has done is delay the inevitable. My preference is to tear the band aid off rather than slowly peel it off. If you can’t make your payments – then down size to a home that you can.
Court refuses to discharge Greg Martel from bankruptcy
https://www.timescolonist.com/business/court-refuses-to-discharge-greg-martel-from-bankruptcy-9138207
Saanich council votes to allow secondary suites in rural areas
https://www.timescolonist.com/local-news/saanich-votes-to-allow-secondary-suites-in-rural-areas-9138199
I think interest rates should stay around 4%. It would benefit everyone. Seniors could get some income on their savings, investors would have an alternative to buying real estate, and owners would have access to historically lower mortgage rates that would remain stable. Messing with interest rates (especially lowering to near zero) only creates more problems than it solves. If only the government spent our hard earned money responsibly.
When you tell yourself that I can build my own home.
https://youtube.com/shorts/HYBP5hQQuQM?si=-N-yWgxrxZZZEQjB
Bobby k , ya I don’t get too stuck on economics I kinda more of a winger , but it has served me well though lol
https://househuntvictoria.ca/2024/06/24/the-vacants/#comment-116933
I tend not to rely on data coming out of any Canadian data source anymore that can even be tangentially related to climate change. I generally prefer the US data since they aren’t beholden to the “there’s nothing we can do other than stop burning fossil fuels” to save the environment. And low and behold it’s the US emissions that are down and they say that 9/10 forest fires are caused by people. https://wfca.com/wildfire-articles/what-causes-wildfires/#:~:text=Humans%20cause%20nearly%2090%25%20of,lightning%20strikes%20and%20volcanic%20eruptions.
The US has 2/3 the forest as Canada but 20x the lightning strike rate and they STILL attribute 90% of fires to people.
I would guess that the BC data is massaged to make Canadians feel helpless other than by paying the carbon tax and buying EV’s because if stopping forest fires is as easy as not lightning them, the entire “Canada is burning because of Canadian behavior” narrative goes away (even though 99% of the emissions in Canadian air come from other countries anyway.)
Beware of anything that puts the word “smart” into the name branding, especially if it’s from government, typically it ends up being the opposite. Same if you’re dealing anything that refers to itself as a “centre of excellence” that’s usually where they put all the incompetent people.
Don’t confuse what is good for you with what is good for the country, this tends to be error that many politicians make as well.
Perhaps of the human caused fires but about half the fires are lightning caused. Obviously goes up and down a bit year to year.
https://househuntvictoria.ca/2024/06/24/the-vacants/#comment-116928
9/10 forest fires are caused by human stupidity. What we need isn’t hundreds of thousands in housing costs and expensive new rules enforced by even more expensive bureaucrats to prevent the consequences of stupidity. We need accountability and jail time for being stupid. And bring back Smokey the Bear.
3545 Murdoch Cres Oak Bay BC just listed… Geez, is someone not paying attention to the price drops on the options across the way on Redwood where DoM are climbing.
Thursty, tell me you have zero understanding of economics without telling me you have no zero understanding.
I received a question about purpose built rentals. Is there is a program for wheelchair accessible housing? Does anyone know of such a program?
Wildfire burns town of Lytton, BC, to the ground. Then…
https://www.theglobeandmail.com/canada/article-lytton-wildfires-three-years-later/
Low interest rates won’t do much for the country, but a new government would. Liberals got their asses kicked last night in Toronto. Not good news for the federal election.
Muneng , it’s not weird , I hang off any news of interest rate cuts . Need to get them down for the good of the country
I think rents have stabilized. There seems to be more rentals available and there is the option to buy an older condominium in the core with 20 percent down, the mortgage payment and strata fees are close to what the unit would rent.
There also seems to be more leasehold condos for sale in the $210,000 to $285,000 range. Again an option for some first time or retirees living on a budget.
Older two-bedroom freehold strata condos in the core start around $400,000 and would rent for around $2,400 a month.
For all you wannabee landlords there’s a two-bedroom condo on Dunedin under court order to sell. It’s been on the market for 55 days and no one has yet triggered a court date. List priced at $460,000. And getting close to having another price drop. I think back to 2016 and there would have been 50 people bidding on the property in the court house. I’m waiting for this one to be triggered to see how strong the bids will be that come in.
Is it weird that whenever I hear about inflation and interest rate news I think about Thursty?
A bad sign for anyone who’s Thursty for another rate cut:
.
Sure it will. Takes away demand to rent condos, which is turn makes them less attractive to investors.
I’m curious to see whether in a year or so from now, with the massive volumes of rentals in development (e.g. University Heights and similar sized developments elsewhere), whether rents will stabilize, or if it’s still not sufficient to make an impact. Of course that inventory won’t really help those who wish to own. It seems like there’s not much happening to create new houses in particular.
@Westerly it’s one of the eeriest things going on to airbnb and seeing virtually no listings. Personally can’t see the changes having much of an effect on rental prices, but a large effect on hotel rates.
Discussion on the last thread included whether investors will be unloading and what the BNB effect is or will be going forward, and the idea that maybe investors are cleaning up their properties / selling furniture etc. getting ready to sell. I think investors are as likely to rent furnished as vacant. Just looked at Craigslist Victoria, all rental listings = 801, restricting it to furnished and you get 133. That’s almost 17% furnished / total and pretty high. I don’t have historical numbers, but years ago furnished rentals were few and far between, and they did command a slightly higher rent value. Not to say units aren’t coming onto the market because we know they are, still interesting.