The curious case of Victoria’s very low shelter inflation
The year is 2004, mid-summer. The real estate market is on fire, with the average house selling for just under $400,000, up 40% from just two years ago. The average tenant is paying $629 for a 1 bed. Prices and rents both are destined to triple over the next two decades.
And yet, according to Statistics Canada, Victoria’s shelter inflation stayed incredibly low during the following period. In fact, our 20 year shelter inflation is the lowest in Canada. Surprise! Apparently poor housing affordability is just your imagination.
How is that possible? I thought I’d take a closer look.
First of all, what actually is the shelter component of inflation, and how is it connected to house prices? Well I’ve covered that in depth in a previous article, so for a more detailed look review that post, but in short it’s a measure of how costs are increasing for both renter and owner households. For renters, that’s mostly rent itself, but for owners it doesn’t directly reflect the price of homes. Instead it’s a mix of the cost of interest on the mortgage, property taxes, insurance, maintenance, and other accommodation expenses with the weights as below for the 2023 CPI basket.
| Component | Weight |
|---|---|
| Mortgage Interest cost | 5.58% |
| Replacement cost | 4.61% |
| Property taxes and other special charges | 2.43% |
| Home and mortgage insurance | 1.50% |
| Maintenance and repairs | 1.85% |
| Other accommodation expenses | 2.58% |
It’s worth noting that the weight of interest payments has increased drastically in the CPI as Canadians are forced to spend more to pay higher rates on their mortgage. The weight of mortgage interest in the CPI basket nearly doubled from 2.94% in 2021 to 5.84% in 2023. That means headline inflation is more sensitive to changes in prevailing interest rates, both on the way up (with inflation reading higher due to higher rates and due to higher weights), and when they start to drop. But that’s the same everywhere, and certainly doesn’t explain our low inflation readings.
Unfortunately while StatsCan breaks down shelter inflation by multiple sub-categories, that doesn’t happen at the level of most cities, so we don’t know whether it’s owned or rented accommodation expenses that supposedly are so much more stable in Victoria than the rest of the country.
So are our rents going up less than average? Well no, in fact with the lowest chronic rental vacancy rate in the country, our rents are also some of the highest. Thus it doesn’t seem likely that a lack of rental inflation is what’s keeping our shelter component down.
Prices too are usually near the top of the heap for the country, and our relative position compared to the rest of the country hasn’t moved much, so it’s unlikely that a lack of house price appreciation is the cause. However we do have one of the lowest rates of mortgaged homeowners in the country, which means increases in interest rates will impact inflation less in Victoria than elsewhere.
However, that doesn’t really jive with the fact that there’s a sharp change in trend between long run inflation and short run. Over 30 years and 20 years, Victoria has the lowest shelter inflation in the country, but on short horizons, the situation is reversed. Shelter inflation is running at 7.6% in Victoria from a year ago, the second highest in the country.
Prices are unchanged over last year, asking rents are also essentially unchanged, so why is shelter inflation suddenly skyrocketing after lagging the country for decades? Certainly interest rates are still continuing to filter through the mortgage market as borrowers renew, but that isn’t unique to Victoria, if anything we’re less affected. In addition, market rents are filtering into the rental market as people move, but that’s similar to any other market with rent control.
One unique factor to Victoria is in the Homeowner’s Replacement Cost, which makes up 4.6% of the CPI basket. That’s based partially on the New Housing Price Index, which for some reason is uniquely screwed up in Victoria. Since the start of the index in 1981, it indicates that new house prices in Ottawa, Winnipeg, and Calgary are all up about 5x. That sounds about right. In Victoria, a new house is apparently 8% cheaper than 33 years ago! That alone explains a portion of our erroneously low shelter inflation readings over the long run. It doesn’t really explain the spike in shelter inflation recently, since the NHPI is once again declining year over year in Victoria. Do you have any other theories for the discrepancy between inflation and reality?
It does however illustrate that even long running datasets that are relied on at the highest level can remain seriously flawed for decades without anyone bothering to investigate or correct them. I have reached out to StatsCan in the past on this without getting a useful answer, perhaps I’ll try again.
Also the weekly numbers.
| July 2024 |
July
2023
|
||||
|---|---|---|---|---|---|
| Wk 1 | Wk 2 | Wk 3 | Wk 4 | ||
| Sales | 134 | 285 | 442 | 571 | 595 |
| New Listings | 338 | 663 | 947 | 1183 | 1125 |
| Active Listings | 3395 | 3417 | 3396 | 3368 | 2419 |
| Sales to New Listings | 40% | 43% | 47% | 48% | 53% |
| Sales YoY Change | -9% | +3% | +2% | -2% | +17% |
| New Lists YoY Change | +20% | +19% | +12% | +7% | +2% |
| Inventory YoY Change | +45% | 43% | +41% | +39% | +12% |
| Months of Inventory | 4.1 | ||||
The sales rate continues to match last year very precisely, even if the July will end up with an approximately 7% increase due to the additional business days this year. New listings are still up year over year, but they’ve been dropping in recent weeks, and in the running two week average we now have a decline in new list activity for the first time since January. It looks like our new listings surge has ended, though I won’t fully call it until September when there’s a second wind for sellers coming onto the market. July will still end up above average for new listings, but no longer near the all time highs that we were approaching in the spring.
Stable sales and dropping new listings means our sales to new list ratio is converging with where we were a year ago after spending all spring at markedly weaker levels. I expect lower rates to give us year over year gains in both sales and market balance according to the sales to list ratio as we get into the fall. However higher inventory persists which will counter the expected increase in activity. My baseline forecast remains that the market will probably not do too much in either direction in the coming months, but there might be some fall weakness like we saw in the past two years.
Agree with this. I wonder if we should consider amending the CPP to allow voluntary additional contributions for additional retirement income. I realize you could just invest the extra money instead, or buy yourself an annuity if you have such extra money, but I think lots of people (a) don’t have the discipline or comfort-level for this, but (b) would be comfortable with some level of additional, voluntary CPP contribution (vs. lack of comfort with investing, or buying annuities). I think something like this could be helpful to future generation(s).
I think for current generation of older folks who aren’t getting by, a helpful amendment would be to reduce the ridiculous $ threshhold before OAS is clawed back and put that money instead into enhanced OAS at lower income-levels, or enhanced GIS or something similar. I realize this would be controversial, but the OAS is too rich in my view
New post: https://househuntvictoria.ca/2024/08/06/july-something-of-a-turning-point/
Dee makes a rather persuasive case for why the country should stop giving handouts.
Dee- People like you did not build this country.
Yes. If you are highly motivated and in good health you can do it. Hard to be motivated if you didn’t have a significant goal or serious family obligations like some newer immigrants do.
Long term this level of work can pay off significantly and lead to a level of success early where you don’t have to work ft if you don’t want to. It is also much easier to do if you like the work environment/your coworkers and you see something better ahead.
Who is giving those out?
Talk to some nurses, they’re working a ridiculous amount of time some months. Segment on CBC news last night about nurses and doctors working every day just to keep emergency rooms open in small Ontario communities. They take a day off, the ER closes for that day or days. It’s hell in the health care system. The same applies to doctors, wonder why they don’t want to work here. The new Manitoba NDP government promised they would fix health care. They hired head hunters to hire 150 doctors 8 months ago. To date, not one doctor has been hired. Our system is severely broken.
The condo market is caught between a rock and a hard place.
Typically developers would lower their prices until owner occupiers stepped in to buy. However, the gap between what home occupiers can pay and what investors were paying is too wide. Despite soft sales, new condo prices have not dropped significantly and condo projects are being cancelled or put on hold. It just isn’t possible to get the pre-sales necessary to build condos.
And at the same time we have existing airbnb’s where investors are flipping the bird to the province’s ban. That’s keeping condo prices and rents high too. So we end up with downtown ghost towers such as the ERA were only 30 of the 157 units are lived in by their owners and 62 by long term tenants (source Times Colonist).
We might have to tie some of those investors to a wagon wheel in bastion square and give them a good old caning.
No kidding, my co-worker was telling me his parents were never high income and didn’t buy a house until they were in their 50’s, but they paid it off in 15 years and now they have about $1.5M in savings in retirement which they likely won’t exhaust.
And those people have no business trying to by those homes as those homes are left for the $300k+ plus income households unfortunately. There are no shortage of them looking to buy in the premium areas, there are cheaper stuff by in the core and westshore though.
Nahh, I think that is just the market rate for rent here. Rent prices reflect actually what people can afford to pay so clearly there is demand at current prices, RE purchase prices are still more inflated but a huge 40% drop will not happen unless rent prices cratered. 20% drop with a big recession is probably the bottom should it happen.
But if we really had a free market rents would be lower, since people would be renting out everything from containers to mobile homes all over the place, not to mention accessory buildings. Not saying we need to do that, just that’s what would happen.
What someone wants, or what you think someone wants, is irrelevant. What’s relevant is what someone can afford.
https://househuntvictoria.ca/2024/07/29/the-curious-case-of-victorias-very-low-shelter-inflation/#comment-118313
a) 65K is not enough for much of a life in Victoria – especially if one has any dependents
b) Most people cannot handle working that much. I mean – have you ever actually worked 7 days a week, 12 hours a day for 365 days consecutively? I wonder if there are stats on the number of people who do this. I further wonder if there are stats on the kind of burnout (or other health effects) that such a workload causes. And I wonder how much those associated effects cost our health care system. Really does not make a lot of sense to suggest this as a realistic “solution” for those with less.
c) Isn’t there more to life than money? If i worked 12 hours a day I’d have no time to enjoy life at all. I think I’d rather exit life than work that much. It would just be too cruel and sad to have so much beauty and opportunities for adventure and experience, yet have to spend all my time working.
a+b+c together suggest it makes way more sense (especially given a) to be just slightly poorer and not have to work at all. I’d take the hand out.
Barrister: There’s nothing really wrong with CPP and OAS. They werent designed to replace 100% of preretirement income. CPP was 25% now growing to 33% for younger generations who are now contributing more. CPP/OAS are the baselayer of retirement savings but are not designed to fully fund retirement. You need to get a pension and/or save for retirement. Lots of seniors did that and are fine. Own a home, saved up a bunch (or had a pension). Logisticaly seniors are getting what they paid into cpp. Maybe a little more because it was pay as go up until the 90s. When CPP was fixeed the premiums were increases bit retirees paid the lower level for those first few decades, where subsequent generations paid more to create the fund. OAS is even harder because older generations had less older people to support. It costs way more to fund OAS now than it did when older generations were working and paying taxes. It’s a mess, and younger generations are worse off. I don’t think its doable to make younger generations pay more (generations with less opportunity) because old generations were undertaxed and didnt save.
Not much lower, cashflow neutral with 20% down for an up and down suited house will always be the floor if landlords are allowed. Current prices are at most 20% higher based on that metric, you can snag some homes for less than that.
We are dealing with a peak in a business cycle. A cycle that the governments have been re-vamping for decades with government bailouts to protect house prices. But now we have come to a point in the cycle that monetary and fiscal policies are no longer as effective. If we were in a true free market system then we would just let the market bust and then re-start at far lower house prices than we have today.
But we are not going to do that. We are going to give this horse a couple of more kicks to make it drink from the river one more time. We are going to beat this horse to death.
There are still lots of people out there buying houses through hard work with no hand outs from parents or relatives…. People are lazy and want to work a union job with flex Fridays but want a nice house in oak bay or Broadmead.
It’s not capitalism that is useless, it’s the people that are useless. Anyone can work 12 hours a day, 7 days a week, 52 weeks a year. At $15 an hour you would make $65,000 a year. That’s what I would do if I had nothing. It beats waiting for a handout.
Free market? Where? Not here, our market is anything but free.
The Singapore housing model for solving Canada’s affordability problem? Where the government plays a dominate role in land ownership, property development, financing, etc.
Not something that most westerners are accustomed to as most of us have been indoctrinated into believing the free market solves everything. Yet the free market is failing us today. In my opinion, private enterprise is not capable of solving our housing problem.
Don’t get me wrong. I still think capitalism is the better system, but there are times when it is as useless as tits on a bull.
“Fix” is not the right word for CPP. There is nothing wrong with CPP per se, the benefits are appropriate for the level of contributions. But when CPP was introduced back in the sixties far more workers had employer pensions. They’ve already beefed up CPP going forward with the accompanying increase in contributions, and there is already screaming. But you can’t get something for nothing.
CPP is self-financing, it receives no government funding. OAS is the real hot potato as it’s a government handout.
Really helpful info here — look at the median financial loss and time spent:
https://pdfupload.io/docs/6bd714fc
https://www.theglobeandmail.com/investing/personal-finance/household-finances/article-ticketmaster-privacy-breach-raises-question-of-identity-monitoring/
Marko: Absolutely agree with you that we are not doing enough for a large segment of seniors in terms of pensions. CPP does not even begin to pay enough to support a senior. I guess the issue is how to fix the government pension plans without the millennials screaming to high heaven. Any suggestions Marko?
If you can walk into a bank at 68 yrs old and qualify for a 7 figure mortgage on a rental property you have a very large income. Banks don’t lend just like that.
There are seniors out there with serious health issues that unfortunately can’t afford rent let alone take out million dollar mortgages on rentals.
You tell’em, Gus Mosig!
Residents battle illegal short-term rentals in their ‘ghost hotel’ building
https://www.timescolonist.com/local-news/residents-battle-illegal-short-term-rentals-in-their-ghost-hotel-building-9313480
Island Health is owed $15M from non-Canadian patients
https://www.timescolonist.com/local-news/island-health-is-owed-15m-from-non-canadian-patients-9307258
If the person pressuring them is family they’d be better off just giving them a gift (guessing that might be the case since you said there’s a “large emotional component.”) You seem to know that this is a bad idea. I guess you just feel bad for them that they might make a mistake. But that’s life and it’s their mistake to make. But if it was me and the realtor is family or something, I might gently suggest a gift as an alternative.
Marko, these people really dont even have a grasp on the costs involved in a condo investment much less the ability to do a realistic analysis of the condo investment market like you do. I absolutely agree that buying small condos makes a lot of sense, as you suggested, for multiple reasons. Overall, I think you are giving great advise as to the type of condo purchase makes sense and is best overall.
In this case however, I just dont think that a real estate investment of any sort is right for this couple. Frankly, I think they should just stay as liquid as possible since a few months back he received a stage three diagnosis
with a rather poor prognosis. The wife does not have any roots in BC so buying investments that might have to be sold in a few years simply does not make sense to me. There is a large emotional component involved here.
Before someone points out that not only am I not a real estate expert I absolutely agree that I am not a doctor either. Marko, with his medical background probably has a far better idea of the what prognosis for lung cancer is but I am guessing that it is not great and does not involve a ten year horizon in too many cases (but I could be wrong for all I know).
And what proper advice is a lawyer going to give?
I’ve always had a long list of why small condos make better investments and that list just keeps getting longer. For example, with the new 66% capital gains inclusion above 250k if you are going to keep something a long time you are less exposed to tax with small condos as you can sell multiple small condos over a number of years. You can’t do that with one large condo.
It fell 3.0%, not -3.0% 🙂
Exterior walkways with tile flooring. Not a good design choice for the winter with freezing rains.
So where are the rail lands Marko, I always thought the Songees where linked to the old roundhouse but I am obviously wrong. Sorry for the error.
Marko, I misnamed it the Raillands whereas it is actually in Vic West or Songees, anyway the building is Shutters at 68 Songhee Rd. It appears it was built in 2007 and I have no idea about the reserve.
Anyway I told my friend to go see one of the lawyers at Mullin DeMeo and get some proper advise. I am not an expert in real estate and this is a major decision. Besides people tend to be far more likely to listen to advise when they pay for it. Also I dont like taking the blame if things fall apart.
Nevertheless, I really suspect that this is not a good investment for this couple.
Patriotz, the strata lot value for a condominium is a hypothetical value created when the complex is registered in the land titles office. Hypothetical in that there is no physical land ten or 20 stories in the air. If the building collapses there is no strata lot land to sell. That’s why a condominium has a value in Situ, as do manufactured homes in parks. Separate the manufactured home from the site and its building value drops substantially.
Land does not depreciate as it does not suffer from a loss in utility. But land can still decline in price due to market conditions. Improvements depreciate because they have a loss in utility relative to the replacement costs of a new home. But they can still increase in value. A home built 30 years ago may have cost $100,000 to build at that time, but today it may be $400,000. The same for a condominium.
The loss in value due to depreciation at 25% would therefore be $100,000 on the replacement cost new. The contributory value of the home to the land would be $300,000 which is more than the cost to originally build. So the improvements went up in value.
As some stratas in Victoria are now over 50 years old, this is going to be more important in years to come when it comes to financing. As any improvements with more than 60 percent depreciation will have less than 30 years remaining economic life. The banks are confined by their regulations of not amortizing a 25 year loan with a remaining economic life of less than 30 years (25 plus 5). The same as a leasehold condominium that has only 30 years remaining on its land lease. The amortization period can not be longer than the lease.
This is an increasing problem with a lot of the older homes in Victoria that have not been updated over the years. And it may become difficult for a developer that is buying a property that they are likely to develop in less than five years (remaining economic life). As the bank should be lending 65 percent on the land value only and not 80 percent on the combined land and building. And from here it gets more complicated due to automated valuation applications that the lenders are now heavily relying upon for refinancing. The banks are over lending in these cases and putting their stakeholders at risk. If they are a big bank then the risk is spread out over hundreds of thousand of mortgages. If it is a small lender then it could be a disaster for them.
Some lenders are being proactive when it comes to this. National Bank for example has policies in-place in their new lending guidelines. Big banks like Scotia and BMO don’t have clear lending guidelines in-place. Suitcase lenders and private lenders are just cannon fodder.
Hardly. S&P 500 only fell -3.0% today and has already regained 1.0% of that in after-hours. Europe was down -2%. Only Japan, S. Korea and Taiwan had big drops, but they are only a small part (total 10%) of world stock market cap. fwiw) NIKKEI Japan is up 8.6% pre-market.
Really Marko cut him some slack, he said he doesn’t have all the details.
His friend might be thinking of one of the townhomes in the Railyards as they are definitely in the 1.2 million dollar range.
https://www.therailyards.ca/skyhomes.html
Yep, definitely some profit taking from gains, it’s not money until you turn a gain into cash. Should also be a nice rally by the end of the week. It should catch some of the easy panic people into losses. However, over the term into Xmas there should be a nice unwinding of over leveraged assets across the board.
Business cycle triggered, not event triggered like a pandemic. I don’t count 9/11 either because it was based on a one off event separate from economic pressures.
There is no condo in the Railyards that is $1.2 million….sounds like a fake story.
You can buy 2 bed 2 bath condos in high quality buildings for 1/2 the price -> https://www.realtor.ca/real-estate/27073684/809-728-yates-st-victoria-downtown?view=imagelist
Closest thing to cash flow neutral with 20% down would be something like this -> https://www.realtor.ca/real-estate/27077785/310-629-speed-ave-victoria-burnside
The “biggest meltdown since black monday 1987” was just for Japan I thought. Also they were coming off of record recent gains.
Where exactly were you in March 2020?
https://www.cnbc.com/2021/03/16/one-year-ago-stocks-dropped-12percent-in-a-single-day-what-investors-have-learned-since-then.html
Well, biggest stock meltdown since 87, and if recession forecasts play out, it doesn’t matter what happens with rate cuts; people will just stop spending and avoid major purchases. The downside to rate cuts, especially big ones, they are tied to economic downturns. Since governments blew their QE wad during the pandemic rates can only drop so much or inflation will get out of hand. Looks like we might be nicely set for a stagflation period until governments get their collective spending under control and allow productivity to grow.
There is good news, other than the September uptick to clean up stale inventory, the selection of home inventory and negative price pressure should continue well into next year (no matter what rates do). I made sure to leave enough left over from my home purchase to commence “Ski Chalet Hunt” or possibly pick up one of up-and-coming/air-bnb-for-me’s distressed properties.
Land value of a condo is very small, and that’s the only part that appreciates. Any structure will depreciate to zero in the long run. Barring more capital outlays, of course.
Gosig, stop drinking cheap wine so early in the morning and then you could avoid words like “barf”.
15 to 20 years old? Oh Boy! Just about the time the big ticket items are going to start to need replacing such as roof, elevator, windows.
Your friend is not going to obtain a high rent for a 15 to 20 year old 1.2 million dollar condo say, $3 to $4 a square foot.
At 68 years of age it might be better to look at new or near new. Not likely to have any surprises in the next decade that would burn a hole in their retirement plan.
But everyone has a different retirement plan. Some might think of investing the down payment of $240,000 in bitcoin as a “good” investment.
But you’re most likely correct. It isn’t going to provide a positive cash flow. If they are thinking of future appreciation, well my opinion is that isn’t investing – that’s speculating at a personal age when it may be wiser to be conservative in their investments.
“dont seem to pencil to me.”
I guess you could “pencil a line” but this verbification of the English language makes me want to barf.
Whatever, dont have the exact age of the building but over 15 and likely 20. I am waiting for the docs. But even ignoring any special assessment the numbers dont seem to pencil to me. This feels like a big hole in the ground with the added bonus of free headaches.
When you say “older building” How old?
Depending on when the building was constructed the risk of a special assessment can be quite low. What you might be missing is the strata minutes showing the depreciation report, size of the reserve fund/reserve fund study, and any building defects the strata council is addressing or will be addressing. Form B
NOTE: A depreciation report tells a strata corporation what common property and assets it has and the projected maintenance, repair and replacement costs over a 30-year time span.
The size of the reserve funds in older buildings has bee growing steadily since the act was introduced. So most stratas should have a sizable amount put aside for upcoming replacements.
As for structural defects:
In British Columbia, new condos are covered by a mandatory home warranty insurance, often referred to as the 2-5-10 warranty. This warranty is one of the strongest construction defect insurance coverages in Canada and includes:
2 years on labour and materials, covering defects in materials and labour for most parts of the home.
5 years on the building envelope, which includes protection against water penetration.
10 years on the structure of the home, covering major structural defects
My opinion is that if you’re buying a condo that is just a couple years old you are well protected. Not like if you’re buying a house off some yahoo that built their own home and now reselling it. Those are the ones that I would be worried about.
Barrister-That’s a stupid idea. I’m the same age and looking to divest. Condos especially are a bad investment today. The realtor is desperate to make a sale, they’re probably starving.
I had to go over the investment numbers for a neighbor who was thinking of buying a condo in the Railway lands as an investment.
I might be missing something but I just dont see how this makes financial sense. He is looking at buying a two bedroom in a older building for about 1.2 million with 20% down. I am guessing more than five thousand a month for the mortgage and almost another 1000 a month for maintance. Taxes about 400 a month and we dont have a number for insurance. It is a older building and sooner rather than later one can expect some special assessment.
He is 68 years old and I am guessing that he does not have 25 years for this thing to appreciate into a profit. His “friend” the real estate agent is really pushing this as a great investment.
My question is what, if anything, am I missing here?
What you talking about I don’t get it? All I am saying is that house has been on the market for like 2 years and has been chasing the market down the whole time and brought it up only ppl were talking about cedar hill goof course. Of course I know there’s better product than that on a golf course.
I’m not a Bear Mountain fan personally, but there’s lots of properties that eclipse that one VicRe in price, size, and property tax.
https://www.realtor.ca/real-estate/27084071/2032-troon-crt-langford-bear-mountain?view=imagelist
I’ve noticed a couple of houses that have been hanging around have sold signs . Maybe an early start to a robust fall market . Some good chatter about a 50 point cut in the U.S in September. That would help Tiff to keep the cuts coming . Good news all around
LMAO, speaking of cedar hill golf course this is back up again with a new price: https://www.realtor.ca/real-estate/27205992/1297-oakmount-rd-saanich-maplewood.
How modular housing could speed up construction of much-needed homes.
https://www.msn.com/en-ca/money/topstories/how-modular-housing-could-speed-up-construction-of-much-needed-homes/ar-AA1ocDyG?ocid=socialshare&cvid=1a14233e741f46cea1e9f8a5e6613c0f&ei=7
hearing several multiple offers last couple of days, looks like rate cuts are motivating some people even though it is the long weekend. Don’t know what the 3-6 month outlook is though, hearing of some lay offs in Vic based businesses coming up.
When I was traveling in Europe I spoke with an older lady in a smaller Spanish city and even she had heard of the Canadian wildfires. I think it’s somewhat common knowledge.
Probably had less customers, lower revenue and employed fewer people. So they’ll go back to that.
Everyone has access to weather reports and forecasts anywhere in the world. Search Kelowna, and if smoke is prevalent and air quality is poor, guess what? You don’t go there.
What did these businesses do before Airbnb?
I was in Kelowna a couple of years back. The downtown probably had its small town charm a decade ago. Today it is filled with Zombies. The rest of the place seemed to be strip malls and ugly housing. Even the vineyards seemed to lack the charm of italien or French vineyards.
Each to his taste, but I would not bother to return and that is before one takes into account the smoke. Like most things in life it is never just one thing but rather a number of different issues at the same time.
Mortgage and Title fraud back in the news once more.
https://www.msn.com/en-ca/money/topstories/homeowners-realtors-should-take-steps-to-protect-against-title-fraud-experts/ar-BB1k28hQ?ocid=socialshare&cvid=f8b56ebb0f8e41a287736273e18ff1a7&ei=39#comments
Good point. Kelowna tourism is down big, and it’s hitting their economy. Obviously there could be a number of reasons for that. But it looks like businesses are blaming airbnb crackdown as a big part of it.
https://globalnews.ca/news/10653745/kelowna-tourism-operators-blame-short-term-rental-rules-decrease-tourists/
“Some Kelowna tourism operators blame short-term rental rules for decrease in tourists. “We’re seeing a big decline,” Sawin said. “Last summer, we would see upwards of 40 reservations on a Saturday, now I’m sitting at about eight or nine.”
While there may be a number of factors involved, including the economy and fear of wildfires, some strongly believe it’s the crackdown on short-term rentals that’s to blame.
We’re down in our private bookings, which are the bulk of people who do stay in the short-term rental market, we’re down about 70 per cent over 2022 and 50 per cent down in that particular segment from 2023,” said Marsha Morrish with Okanagan Wine Country Tours.
But B.C.’s housing minister is not backing down.”
Victoria doesn’t have many purposed built side by side duplexes with the capability of two basement rental suites that average around 4,000 finished square feet for sale. Basically what the Eby government wants us to build. You can buy one for as low at 1.1 million in the Central Park neighborhood or 2 million in Oak Bay. The higher priced ones being recently upgraded to modern standards.
With average construction costs running around $350 a square foot and an average vacant lot at $850,000 it’s the reason why missing middle homes are not being built in the Victoria Core. Why build one when you can buy a completely renovated one for less.
https://youtu.be/MivjZC9U7M8
https://vimeo.com/837868955
Happy I booked our Airbnb rental last November and made sure it’s a suite in a house so we can do our annual trip to cultus lake. I should probably re book for next summer now.
Downtown Kelowna looked pretty dead at lunchtime in this video. Wow.
Similarly worrying: one out of every three vineyards in the Okanagan is for sale at the moment.
https://www.theglobeandmail.com/canada/article-bcs-wine-industry-is-in-the-process-of-a-major-shift-its-not-the-first/
The free market does create efficiencies, but a lot of the costs of construction are external. Disruptions in the supply chain or economic sanctions against countries that supply much of the material and appliances have a direct impact on costs that affect building.
China’s economy may not be in the toilet but it is in the sink near the toilet. Chinese industries that supplied cheap goods to build homes are no longer in business. Goods we don’t make anymore. Or rebar and iron steel which we don’t have a lot of industries that make anymore.
The free market system is the best system but it is not the panacea that many people think it is. The free market is susceptible to boom/bust cycles from under and over supply. At the moment the free market isn’t working well due to externalities that we can not control.
Ironic as it may seem. If you want to lower the cost of construction in a free market economy then you are going to have to kiss the ass of the Communist countries that supply the goods.
I also believe that the players in the housing game were relying on double digit increases in home prices every year. Any misjudgments on their part would have been covered by increasing home prices.
The mantra that I hear today is that we have to build smarter and faster. Well I don’t know how you are going to saw or nail wood any faster. And any AI program that will approve permits faster isn’t going to do much if the project is determined to be over budget at the planning stage. It still won’t get built until market prices for the end product increase.
Or there is a significant drop in the cost of material and labor. Which is a double edged sword because if material and labor costs are declining so would the marketplace for new homes. Projects that would be nearing completion would go bankrupt as they would have to compete with proposed construction at lower material and labor costs.
PBRs are doing well today because rents are high. I believe most of that is due to home owners that have not been renting out their basement suites. I don’t expect that to continue as the cost associated with home ownership have been increasing and these home owners will be contemplating dusting off the appliances in their suites for that additional income. About 40 percent of the homes that sell today have basement suites. And there are tens of thousands of homes in Victoria. It that trend were to reverse then that is a lot of potential suites to become available. The higher priced rentals in PBRs would then have a high vacancy rate which could result in insolvency.
Really?
I’d agree that developers report that local government bureaucracy is adding cost to development. Maybe the missing middle legislation helps with this, but the math does not work right now as far as I can tell even if you own the land already.
I’d disagree that the private sector had no incentive to control or reduce costs. That is the thing with the free market, it creates efficiencies because you need a profit margin and there competition for it.
Right now the cost of building is just higher than it was because the cost of borrowing is higher than it was. Existing housing stock is discounted because it was purchased at lower rates and the market has weakened. Sellers take what they can get because they have no choice if they want to sell. Builders stop building if the numbers don’t work — agree that PBR with government subsidies can assist with this.
Interest rates were higher in the 70’s when we were building gangbusters compared to today, as noted in this forum.
I don’t think it’s the rates per se, it’s just that all players in housing (industry, workers, government, buyers) became dependent on the 40 year decline in rates to make building and buying profitable and consequently had no incentive to reduce costs or eliminate inefficiencies. Lower rates, higher prices, higher profits, rinse and repeat.
Now that merry go round has stopped. I think the right role for government at the moment is to help with financing for PBR’s and non-profits to keep construction going. As well, get out of the way of market housing. But the old paradigm is not coming back.
The least expensive home to build that maximizes square footage while minimizing the price per square foot is an above ground basement entry home having three bedrooms and two baths on the main floor with a 3/4 partially finished basement with around 1,900 total square feet on a poured slab foundation and a single wide carport underneath built on a small lot.
We are not building this type of home in great numbers in subdivisions as most developers are catering to prospective purchasers that want a higher end product. A simple style home that doesn’t require a contractor or their employees to have great knowledge or experience. Build one and you can build a hundred. All a contractor needs is a stock set of plans that can be re-used over and over again and a cell phone and they are in business.
I have doubts that any new development with this utilitarian style home would currently be successful as peoples expectations have not decreased. We still want to have our cake and eat it too. We bitch about the high cost of construction but we are not ready to lower our expectations.
Nice to see USA and other foreign tourists to Canada numbers up ~10% in 2024. https://edata.conferenceboard.ca/docs/default-source/ctri1/prov_july24.pdf
This shouldn’t be surprising, given the huge numbers of millennials and “Numerous studies published over the years have shown that younger people like to travel more than older people. U.S. Millennials Travel the Most but Gen Z Is on the Rise ” https://mize.tech/blog/travel-trends-by-age-demographic-age-as-the-key-factor-in-tourism/
We and other cities may see a drop in worldwide tourism due to changing demographics. Where do people that immediately retire spend money? On their homes and on travel. Now that we have reached peak retirees I would expect tourism to trend lower over the next decade.
Speaking with someone involved with the schools in Victoria. Enrollment is down in the Victoria area but up in Langford due to changes in foreign students.
I don’t think we’ll see significant house price increases soon and we might see some declines in some areas. We are down significantly from the 2022 peak – particularly condos and high end homes.
Legislative and market changes have reduced demand from “investors” – people who buy a pre-sale condo or other home and rent it out until they retire or as part of their retirement plan. Just makes no sense to do this now. However, pre-sales are how a lot of homes get built in the first places so not a good scenario in a few years if we continue to have a growing population.
You can really see the impact of the reduction in out of town buyers/owners in the Okanagan right now. The Vancouverites and Albertans who owned a condo in the Okanagan are selling up and going elsewhere. I know three families personally who are doing this or have done it. And those that rented Airbnbs with their families are not choosing hotels as the alternative, they are also going elsewhere. Tourism is down significantly due to fires, Airbnb ban and probably lack of disposable income due to increased mortgage costs. I’m not sure if removing the people with higher disposable income from the local economy is the solution, but I guess we will find out how the housing locals vs. supporting local jobs balance goes.
https://globalnews.ca/news/10653745/kelowna-tourism-operators-blame-short-term-rental-rules-decrease-tourists/
Also, it seems to me that interest rates are too high for most new builds of any kind of housing to make financial sense vs. the price of existing housing. Everything is cyclical – just about how long.
You are ignoring the fact that Leo was directly responding to a comment about the BC government and its housing policies.
At any rate, I don’t know what your 1.2 mil is supposed to measure, but the permanent resident quota is about 500K a year. Anyone granted PR status is included in that 500K, including those already in Canada. Of course NPR’s need a place to live too, but they either get PR or leave eventually.
The feds have committed to reducing NPR numbers, they have already started with international students. You may justly criticize these commitments as small, but nobody else is willing to commit to numbers, apart from the PPC.
https://www.cbc.ca/news/politics/undocumented-workers-residential-status-canada-1.7283115
Immigration is the cause of the housing crisis and increased inflation. Not to mention the health care crisis. Not many new immigrants able to enter health care positions.
Introvert , immigration is the juice in the economy , it masks a lot of problems. I don’t see them taking the foot of the gas for very long . QE 8 , here we come .
Thursty’s on a roll!
Canada will never be able to build housing at or above the pace of immigration, so take a wild guess which direction immigration numbers need to go.
Leo studiously ignoring the 1.2 million immigrants (aka the elephant) in the room…
Well no, because….
First of all they were building the whole district from scratch so there were no neighbours to complain about trees being cut down, or just to use them as an excuse to oppose development, so the developers could do as they pleased. In fact there weren’t even any zoning laws back then.
Second these districts were among the first “garden suburbs” where the natural look was a selling point. So it was in the developers’ interests to leave the trees. These districts ended up with a lot of trees simply as a result of market forces.
Unfortunately today we have a lot of people with more money than taste and neighbours who rightly or wrongly see change as a threat. Thus tree regulation.
“That is not what HGTV has led me to believe”
I wonder how much affect these ludicrous shows have on our market. My home would likely be a candidate for a mocking by the host (I do not have granite countertops) and a complete gutting.
Probably a similar phenomenon of society norms and expectations that compel (real) men to purchase ludicrous large pickup trucks for no apparent good reason
Some homeowners are constantly improving and maintaining their homes. They are immaculate. This could cost them hundreds of thousands over the years. Do they get their investment back, probably not. They do however sell their property in less than a week with multiple offers and over ask offers. Then the slobs down the street think their run down outdated shack should be worth the same. That’s where comparable sales are difficult to accurately measure without all the information involved in the properties being used in a comparison. If you want to know what your property is worth on a given day, just ask yourself what it would take for you to part with it. That’s usually more than what it is worth to a prospective buyer.
That is not what HGTV has led me to believe 🙂
For me, a strata is much more of a source of anxiety than relief. I lived in a complex where the units were in terrible shape. Many people’s roofs were leaking, cracks in foundations, huge potholes in the parking lot, etc. The strata corp (which had solid marble walls in their office) did absolutely nothing. Eventually they did a special assessment which would have cost $30k per unit. Many people didn’t have the money. The board voted to change the strata corp, which means our buffer fund was gone. We were on our 4th strata corp before we got the roof repaired for $3k per unit. Absolute nightmare.
I’m in 2 unit non-conforming strata now. No fees, no corp, no problem. But my neighbor is also a bum and pitched in nothing when the fence needed replacing. I still prefer that over a corp.
PS – If you are in a non-conforming strata, make sure you’ve got the right insurance. I saved myself (and the bum neighbor) thousands by shopping around and making sure we weren’t paying for things like employee theft insurance on a strata corp office that doesn’t exist.
My mailbox fills up with junk-mail from realtors who want to “give you a free market evaluation” or “let you know what your home is worth”. So yes it is OK to follow up on these requests and have a realtor look at your place and do a quick market analysis. The realtors know that many/most of these don’t lead to immediate work, but they hope that down the road you might turn to them thanks to the helpful and friendly market analysis they gave you. Of course if you literally told the realtor what you put in this message maybe they will be less keen on coming over.
If you can’t handle the moral dilemma of having the realtor do some busy work for you then hire an appraiser. Last time I hired an appraiser (2018 I think) it was 400 plus GST.
I think your premise is flawed though. if the renovations are already done and you won’t be selling for years then the question of whether your renovations are currently “breaking even” seems pretty irrelevant. Many renovations don’t actually break even, but when SFH prices are continually ascending then it seems like renos are breaking even or even adding value, even when you might have made more money by doing nothing.
If you are not selling then the value of the renovations is mainly the increased enjoyment you are deriving from them
Someone in my neighborhood did a major renovation to their old character house. I knew the contractor — not a good person to hire. Unfortunately this is the guy they got. Several years later and the project is finally wrapping up. They had to hire some kind of specialist to come and stare at a tree for a whole day. The guy had to come from Vancouver and I think, if I remember right, there had to be two of them bc of breaks. It was crazy what they had to pay just for someone to come stand and stare at a tree. How are we going to get the job of massively increasing supply done when there are rules like this that slow everything down? I think Marko is right to he skeptical – but of course we need to try to fix the problem.
I think some of the commenters here are realtors? I’m wondering what the etiquette is on asking a realtor to come look at your house to give you an idea of what it might sell for when you really have no intention or desire to sell? We’ve spent a lot updating it and I’d like to know if we’d break even. But I don’t want to waste anyone’s time.
The “engineer” who signed off on my home in 1912 was very optimistic on the load bearing capacity of widely spaced 2x4s as rafters 🙂
Mind you it didn’t collapse in the epic snow of 1996 so maybe he was right.
I am a huge fan of half duplexes as well, but not everyone shares that opinion, read this – https://www.reddit.com/r/VictoriaBC/comments/18ylxz5/just_a_warning_to_you_guys/
As for the affect of airbnb’s on rentals it is too soon to tell. There seem to be quite a few that are not complying. Let’s see some fines reported in the local paper first.
As William Calley might have said. You take one of them out of the crowd, put them against a wall and shoot them. Then the crowd will become eager to cooperate.
Sure. But given the choice of politicians that can articulate the problem and actually make big changes to tackle it, and politicians that are like “yeah we should let cities just keep doing what they’re doing”, I think it’s pretty clear which has a higher chance of actually changing things
This is a developed woke nation issue in general. Patrick can google how long it took to build the empire state building versus how long it took to build one world trade center.
Let us see how many are built then we can discuss again. And I don’t think the problems are complex at all. We just make them complex.
Do you think when character homes were being built 110 years ago in Fairfield and Oak Bay there were multiple tree conservation officers employed? 10 consultants/stakeholders fretting over sidewalk design?
Are the home collapsing 110 years later as a structural engineer didn’t sign off on the framing?
And I am just saying why not cancel the useless owner builder exam? Why not allow owner builders to build triplexes?
There are many obstacles to housing that could be dealt with easily before 5 pm but they won’t be.
We’ve been building roads + housing for a few thousand years so I agree these are very easy problems in theory, but we live in reality where two trees hold up 20 townhomes for years.
Just saying we should be exploring all the options. Just seems ridiculous to have the same strata requirements for 3 units as 30 or 300. They could be rentals, but we need more ownership options that aren’t tied to a bunch of hassle for owners.
I highly recommend a duplex. I have one half of a barely attached duplex. We share a carport, driveway and an insurance policy. That’s it. I can do whatever I want with mine. And they can paint theirs pink. No strata fees. We work it out like adults regarding replacing fences and cleaning gutters etc.
You can easily pay $500 a month with a townhouse.
I don’t know how it was structured on feltham, but carving out a little road nubbin that is then city owned seems feasible on deep lots.
Or have the access road segment part of each of the lots with easement to use by the other units.
These aren’t unsolvable problems if we made housing a priority.
How do you envision this exactly? Freehold townhomes with a private strata lane? Then they aren’t freehold anymore.
Hopefully. People should be able to paint their house any damn colour they choose. Why are Canadian’s addicted to beige, taupe and grey?
You’re probably right about people not paying enough attention Marko especially if they’re planning coups in their strata complex. Ironically, the back room conspiring of one group against another draws parallels to maneuvering in politics.
And I completely agree that the Airbnb ban was popular but it hasn’t lowered rents like they claimed it would. And they allowed them in suites. This is anecdotal but I know multiple people that have switched their longtime rental suites to airbnbs when their last tenants moved out.
I also think their province wide rezoning of properties to get municipalities out of meddling with housing was also positive, but some of the new tenancy laws are going to push people that don’t have to rent out their suites away from renting altogether.
And I’m not being negative on this government necessarily but we all have to right to be critical as you should never forget that they work for us, even if it doesn’t feel that way.
That was also popular circa 2007. The goal is to obscure the drop in the true market price of the property. This is one variation of the exploding mortgage which caused so much wreckage.
Almost all new townhouses and duplexes in Ontario are freehold so it appears the buyers there aren’t scared. Indeed it appears that buyers are willing to pay more than for a comparable strata unit. For example:
https://www.realtor.ca/on/vaughan/townhomes-for-sale
If the only common property is the street, then it might be done as a bare land strata and the owners would only pay for the upkeep of the road and insurance. That would be far less expensive.
Another way to get buyers back was in the news this morning. Developers in the USA are buying down the first three years of a mortgage at about half the interest rate.
Your mortgage payment for the first three years will lower. That makes it easier for new home buyers.
Another way would be to rebate part of the cost of high ratio mortgages. If at renewal time the property has increased in value then one could switch to a conventional mortgage and the unused insurance premium would be rebated to the buyer.
Where does this requirement come from?
The easy way to address it is scrap minimum lot sizes. Unlikely to happen though
I’m very confident that they will be lower than the counter factual where we do nothing. But depends on how powerful the opposition is to new housing.
Just seems weird to me to be so negative on a government that has identified the problems accurately (regulations that block, slow down, or add cost to housing) and is working on solutions. Will those solutions be effective? We’ll see. The problems are complex and there are many people who would rather see nothing change, so some local governments will fight tooth and nail to undermine the province on this.
That is a re-zoning, not a MM project.
True, but with strata fees so high these days I think it would be a net benefit (you would gain more buyers from lack of strata versus versus lose those from fear of party wall agreement). I had a good read through the party wall agreement and not really sure how it is scarier than a strata.
I think the problem is you need municipal road frontage which presents a ton of challenges.
You think the City of Victoria is going to allow a townhome development with a driveway out to the street for each townhome?
not quite six plex but I am pretty sure I drove by a townhouse construction site on cedar hill (close to cedar hill x road) last week.
fyi, true duplexes usually don’t collect a strata fee, etc.,; however, they are not being run in accordance with the strata property act in BC. In theory they should have a budget, strata fees, minutes, and everything else.
So what you are saying with expanding is lets allow more strata title properties to not adhere to the strata property act.
Some devs think the party wall agreement scares off buyers so they don’t like to do it. Have been meaning to connect with a developer who has built one but haven’t found anyone yet
Would be interesting to see if this can be expanded to some of the forms under SSMUH
Building a front to back duplex with two permitted basement suites is another option to meet the needs of the missing middle. For a side by side duplex you need a wider lot than most city lots are in Victoria. A front to back would be doable.
In that way it’s possible to bring down construction costs as basement rental suites more often have a lower quality of finish.
Another way is to build a front to back duplex and leave the basement mostly unfinished but with roughed in plumbing for a suite which the owner may finish at a later date at their cost. Or the lot could be just rough graded. Then the buyer can finish the landscaping. The landscaping could be credited as being 5 percent of the down payment from the developer.
There are ways that things can be done.
Hard to believe that there wasn’t an issue at hand. Especially when you said you wanted to “ speak, lay out the facts and common sense, and shut this non-sense down.”.
What would you be speaking about? Nothing?
We already do this with side by side and front to back duplexes. Both are strata titled and usually don’t collect a strata fee or have a depreciation report done. There is a provision in the strata act for duplex built homes to opt out. It does happen that one side paints their side a different color or installs new windows, etc which makes it an odd looking duplex.
There are also a few up and down duplexes in the city. They’re an odd ball. Imagine strata titling a Gordon Head home and selling the basement suite as a separate unit.
Speaking of surplus government land there is hundreds of acres surrounding the old Dominion observatory.
These are not even being used as a park. A few thousand SFH could be built there with the land being sold to young BC families for ten dollars a lot on strict conditions of people building and living there for ten years.
Maybe fifty prime view lots could be sold for market value to help pay for addition road and infrastructure.
Other than the gated strata subdivisions (not that many) on Bear Mountain I believe the roads are owned by Langford; therefore, Langford is responsible for repairs/maintenance (unless Langford applied some covenants re road maintenance responsibilities).
We have freehold townhomes in Victoria, I just had clients purchase one a few months ago and maintenance/repairs were addressed with a title charge called a party wall agreement (details the rights, obligations, and ownership with respect to the common wall ‘the party wall’, maintenance obligations, etc.)
Here is one example current for sale of a freehold townhome -> https://www.realtor.ca/real-estate/27044952/943-lobo-vale-langford-happy-valley
I think the problem is the driveway of the townhome needs to exist onto a city road (remember, this is a freehold townhome no strata common lane) and getting municipalities to work with such probably near impossible otherwise developers would go for it.
Let me know when 10 MMI sixplexes are completed in Victoria.
Secondly, given the government is doing so much to help out renters let me know where rents are at in 5, 10, and 15 years.
Nope, literally just crazy people with too much time on their hands.
Depends. Appearance could still be normalized via other methods by the city restricting it or covenants.
Then again, how many truly insane houses do you see? Seems like most owners are not interested in deviating too much from the norm
In Ontario most freehold townhouses only share walls between each other and there is a covenant that if there is a problem that you can take it to arbitration. Otherwise there is separate water, gas and utility feeds and it it no different than a single family home. The ones I was familiar with in Caledon had concrete double walls with separate foundations for each town house. I guess the only other thing that was shared was side fences but that it usually true for SFH.
Roadways and sewer were municipal owned and operated.
Out of curiosity, are the roads, sewer and water on developments like Bear Mountain in BC part of the strata and are they potential future liabilities for the owners? I assume here someone like Marko would know.
Problems can happen in any system but lots of people are just allergic to strata and I think we need to provide a freehold option for people outside of single family.
Townhouses have fewer units and the builds are simple so even in a strata it’s not as complex, but making them freehold removes a lot more. You want to replace a window? Just do it. Mow or don’t mow your lawn? Up to you. Repaint? Do it. That gives you a lot more control and also ability to manage costs. Can’t really DIY anything in a strata outside your own unit.
There’s simply a lot less common property that has to be managed. The only real issue to resolve is things like a flood that might breach units (could be mostly mitigated with good construction) or roof replacement. Even on the roof side in other countries it’s common for an owner to just replace the roof above their own units if the others don’t want to
Say what you will about this and the drug decriminalization, but i actually like that they take feedback and will effectively admit to making a mistake and make changes based on it. Shows they aren’t too proud. Sure, they could have figured this out before hand but they have rolled out a LOT of housing changes and there are bound to be hiccups along the way.
Also this is why we need more freehold townhouses
I wouldn’t jump to that conclusion. I mean, sure the absence of strata fees is appealing, but what happens in a freehold townhouse situation if they do have such urgent issues that actually require collective action, but now there are no strata rules and mechanics for forcing a decision and implementation if people can’t otherwise come to agreement?
How exactly does a freehold townhouse development work? Who decides what, can I paint my unit pink if I so choose? My first concern would be capital items. Is this determined by covenants? And, what would be the benefits? Strata fees generally cover ordinary current and long term expenses.
Probably a childless cat lady.
Freehold town homes of four or less units would be doable. Anymore and it would be very difficult to make collective repairs if an expensive structural fault was found with the property. Eliminating the monthly strata fee of say $500 to $700 per month would make it easier to purchase but 25 years later they would have some units where one or a few owners have not kept their properties up and that could decrease the value of the remaining units.
I’m sure there would be ways to work around this, but one would be substituting a strata council for court actions.
There was a strata in Rockland where an elderly lady was quite vigorous in filing frivolous law suits against the council to the point that units in the complex were nearly unsaleable as anyone buying in the building could almost count on being sued.
I think she finally died.
Count me in as the sheep I guess.
Sure they bungled the notice thing, but this governments actions on zoning and permitting reform is more movement in the right direction than any other province by a mile. The cities invested in blocking housing call it heavy handed. Good. If they didn’t we’d know there’d be a problem.
As you said, Airbnb action is super popular. I’m on the fence about it as policy but pretty sure it’s good politics.
Seems like there must be some urgent issues? Wonder what they would say about it.
Also this is why we need more freehold townhouses
A reduction to three months makes more sense.
The policy is stilled aimed at owner occupation (four months) which it seems was the most abused type of eviction by landlords. I spoke with a landlord last month that wasn’t aware of the changes and her intention was to evict the tenant under the guise of home occupation, live in it for several months while doing upgrades and then re-rent it at 25 percent more.
I explained to her that in order to obtain the rent she thought, it would necessary to complete $125,000 in renovations on a small 1,000 square feet house which would mostly negate the increase in rent. The house had not had any updates in over 30 years.
Canada 5 year bond yield is in free fall, now below 3% at 2.92%. If that sticks, using the rule of thumb of 5-year mortgage rates being about 1.5% higher than this yield, we may be seeing 5 year mortgage rates around 4.4%.
I was in a four hour SGM last night. In one of my buildings a group of owners overthrew the current strata council, can’t say I’ve seen anything like it. Definitively the craziest strata thing I’ve ever been involved in but some of you may find interesting.
Summary
Group of owners in the building unhappy with current strata council (I personally don’t believe there was merit to be unhappy with current strata council based on my experiences in many other buildings).
The group door knocked around the building and convinced a bunch of owners to sign a petition (you need 20%) to call a SGM to overthrow the current council and at the same time convivence owners to sign proxies for them (rhetoric being current council has invested interest with developer not to finish any warranty strata items and other non-sense). They were very aggressive as I was subject to such but I refused to sign a proxy despite being aggressively asked multiple times.
SGH is called and two property managers are present plus a very well know local strata lawyer to oversee proceedings. I think around 40 +/- people present on the zoom call and 60 +/- proxies with the group overthrowing have the majority of the proxies.
At this point I am thinking l’ll speak, lay out the facts and common sense, and shut this non-sense down.
Before anyone can talk the group of owners call a motion to not allow any discussion and to move straight to the vote to overthrow the current council, strata lawyer verifies they have the right to do so. As they have so many proxies the motion goes through and off we go to the vote which ends up being 53 for (overthrowing current council) and 48 opposed.
Existing council is overthrown.
The group nominates 7 of their own members for a new council (only one has ever served on a council before so almost no experience). At this point I am like wtf is going on so I nominate myself and lay out my resume (I’ve been president, strata treasurer, etc., of multiple 100+ unit buildings in Victoria) and another person nominates themselves. As this group has so many proxies they automatically elect their 7 members.
Crazy thing is we have an AGM coming up at the end of the year, which this group could have just waited for and ran for council.
You sure about that? From what I can gather some of the housing policies (while I don’t agree with them whatsoever) have been wildly popular with the public. For example, the AirBnb ban.
Also, last month when I posted the insanity of the 4-month notice to tenants, having to give the tenants the buyers’ personal information such as birthdates/address/etc,, and a contract of purchase and sale no one really cared. Did a single media outlet pick up the lunacy of the requirement of giving a tenant a copy of the CPS?
I think people with common sense, which isn’t common, realize housing policy is just a complete disaster but the majority are just a bunch of sheep that you can literally spin anything to.
Totally agree. This is how it works in many parts of Europe and the world. Then all resources can be focused on providing shelters and treatment.
Introvert sorry don’t know Andrew but 19+ years is a weird time to just randomly decide to drop out ahead of an election when you’re an incumbent and likely to win again and your pension is actually secured at 6+ years, but ok.
Not to mention other MLAs that intended to not run again bowed out months ago when they were asked to declare. Theres an exodus away from Eby and it’s due to his style way of leading. The housing policy is heavy handed and inept so I’m not surprised accomplished MLAs wouldn’t want to be tied to him.
And whateverIwanttocallmyself I’m not sure if you’re talking about Eby but he’s not appealing to anyone that isn’t closely associated with him.
Horgan was their common sense leader and now that he’s gone the inmates are running the asylum.
I usually just look at the review volume by month on the insideairbnb data. June is pretty steady still (have to download the data, the dashboard doesn’t let you view that info) https://insideairbnb.com/victoria/
90+ day ads are rare.
He is appealing to ordinary people who feel that their concerns are disregarded by established groups.
Marko is right, they really have no idea what they are doing. But at least they have solved the doctor problem and we are assured that everyone has a GP.
Have you been talking to Andrew Weaver? 🙂
I’m more inclined to think it’s because they’re now pensionable and 19+ years is a long time to do anything, especially something that comes with the public scrutiny and pressure that being a politician and cabinet minister does.
What do AirBnb stats track just out of curiosity? You can set a minimum stay on an Airbnb listing to whatever you want like 90 days for example – would that track as an active listing even thought it has nothing to do with a short term rental?
100% agreed, it is like they literally talked to no one and considered absolutely nothing before the 4-month change.
I also see the requirement to provide the tenant a copy of the contract of purchase and sale has been quietly dropped…..lol, literally just making policy up on the fly. It is like they have no idea what they are doing.
Maybe some AirbNb impact starting to show in the stats now. Surprisingly no huge drop in active Airbnbs in the tracking stats yet though in June.
But why not drop rates ease up on credit and pump up prices . That’s the go to play book that keeps the economy going . The economy of the old is no longer relevant in a modern world
While I agree with the decision to change the period from 4 months to 3 months it really feels like the government is just making policy up on the fly. Heavy on promises and light on results. And trying to frame it as helping first time homebuyers is a just political rhetoric to try to save face from having to change a policy after a few weeks. No wonder they have several veteran ministers and MLAs walking away from Eby and his approach to governing
That does make sense given that the market was already running out of steam before the first rate hike.
At least I think it’s underappreciated that in past downturns the market didn’t really turn around until affordability had substantially improved. That hasn’t really happened yet, so whether will require price declines or just substantial rate cuts while prices don’t move much, I think the people who expect rate cuts to reignite the market immediately will be disappointed
Notice to end tenancy changed from 4 months to 3. Takes effect Aug 21 https://news.gov.bc.ca/releases/2024HOUS0141-001239
“Read Marko’s book, The Multimillionaire in the Micro-Suite Next Door!”
Things must be getting slow. They’re turning on themselves.
https://youtu.be/uxv0ZNXvmqk?si=eiM_kTuACUp_dhdy
And he wears socks with holes in them. And he reuses cooking oil. And he triple-steeps his tea bags. And, if he’s in the West Shore, he’ll sometimes have Costco samples for lunch.
Read Marko’s book, The Multimillionaire in the Micro-Suite Next Door!
Interesting news, if one can trust it. I would guess most leaving are from Vancouver and the Fraser Valley. But our market is very small compared to them so it wouldn’t take many leaving Victoria to have an impact here.
https://www.msn.com/en-ca/video/news/survey-finds-b-c-residents-consider-moving-to-one-of-canada-s-most-affordable-cities/vi-BB1nkM5H?ocid=socialshare&cvid=77a1b80edd834c1cbfc9e41051270da6&ei=24
That is surprising given last year we had two rate hikes in June/July and this year we had two cuts and sales are still flat. Could this be the start of prices decreasing while rates are going down scenario referenced? https://www.newswire.ca/news-releases/history-suggests-stressful-times-for-the-canadian-housing-market-880614911.html
Turn the golf course into housing and we “solve” the housing problem for a handful of people, but we lose greenspace while adding pollution, noise, and traffic in perpetuity. But since the supply of people is always increasing, we’re like a rat in a wheel, never able to “solve” the problem — but, in the attempt, we lower the quality of life for all residents already here.
This is old news at Oaklands. It’s already been like that for a few years. Though obviously could still get worse
Marko – Are you seeing the uncertainty re: tenants translate into potential buyers passing on homes that are tenanted?
BC Government just issued a press release changing the notice eviction timeslines again just two weeks after implementing them
It is certainly making deal with tenants I am working on right now interesting to navigate.
We are definitely bouncing off the bottom when it comes to sales . The reduced rates today , the U.S in September, I’m thinking fomo
Unfortunately the next generation of homeless people are being born today in one of our many homeless factories.
Hi,
Any guidance on typical pocket/ exclusive listing commissions?
Thanks
“Clearly trying to move people out of the Pandora and downtown area imo.”
-Duh!
Clearly trying to move people out of the Pandora and downtown area imo.
So glad I do not live near one of these parks – especially Pemberton and Oaklands which are larger and more private. People who live nearby need to get ready for an increase in theft, trash, and sirens – and a decrease in the ability to feel safe walking the neighbourhood.
I’m so tired of it. It should be illegal to be homeless and the province should be court-mandated to provide a reasonable alternative shelter for people to be placed if they are picked up for being homeless based on what their specific health needs are. With all the tax dollars and time being spent on this in a non-coordinated ineffective way I can’t imagine this would cost more.
Nvm … let’s just continue to ignore the problem and see what that looks like in 5, 10 years.
They will likely need a shuttle service to and from downtown each day as that is where many of these free market entrepreneurs work.
Not much in the way of food services available. I wonder if the city would allow a hot dog or caterer truck vendor to set up in the parks?
Sounds good to me.
July numbers
Sales: 650 (up 9% year over year, or no change in sales rate to last year by business day)
New lists: 1319 (up 17% year over year, up 7% by business day)
Inventory: 3348 (up 38%)
Cruise through Victoria’s parks at sunset or sunrise and you’ll find campers in many/most of them: Irving, Beacon Hill, Clover Point, Redfern, Stadacona, Summit, Topaz, Banfield are just some of the other parks I’ve seen campers recently.
Fellow has been camping in the same spot in Beacon Hill for six months. Packing up every morning just before 7 AM
I read about these sleeping pods installed in Germany that fit up to two people plus a pet and a reasonable amount of belongings. They lock from the inside, are temperature controlled, and notifying social services when in use. Maybe we should install some of those around the parks and get rid of the tents altogether. The point being that there are more and more homeless and they’re not going anywhere and they don’t just disappear. Ignoring it doesn’t work and as the number of homeless increases makes things much much worse (see, for example, California). A solution might be to offer all kinds of housing (including very transient like the pods) and spread it around.
https://youtu.be/cdC-wEgmeWo?si=Xj5Xp1Lm55gupKct
Might be a middle finger to Oak Bay too
Gonzales Park and Pemberton are in a neighborhood that does not vote for the woke crowd anyway. A middle finder to Fairfield. No doubt to be followed by safe injections sites and wrap around supports or at least wrap around drug dealers. Politically it makes sense. I imagine the city will physically move them there but they will have to provide food for them. Gonzales also almost borders on Oak Bay which is at least emotionally an added bonus. Lots of fun.
My parents live besides Oaklands Park and the fact that there was been campers/homeless people here for years creates for situations like this (I am familiar with the path and at least 100+ people must have walked by and done nothing as they assumed it was just another camper sleeping) -> https://www.timescolonist.com/local-news/dozens-may-have-walked-by-dead-person-at-victoria-park-9131469
Even thought I like density I would be 100% on board with this as I am pro build everything as much as possible; however, one has to assess the reality of the situation. It will never happen.
“The city is narrowing the number of parks where overnight camping is allowed from five to just three; Gonzales Park, Oaklands Park and Pemberton Park”
https://www.cheknews.ca/at-midnight-only-two-parks-available-to-overnight-camp-in-victoria-1216972/
curious choices. i bet the neighbours are thrilled.
although i suspect its a ruse. a long way from downtown. vast majority of campers are not that mobile and wont leave the comfort of “home”
Happy to clear cut Langford to Sooke if we can provide SFH for young families or great retirement places and towns for older folk.
I don’t know about that, maybe compared to hockey. All the sports I play are almost free. Occassionally I buy a new set of balls for tennis but that is about it.
Problem is the majority don’t understand the “or” part. People don’t want towers, but they don’t want Langford to Sooke being clear cut either. They want SFHs without the clearing/blasting/bigger roads.
That’s untrue about younger people and golf, there’s just a lot more activities to choose from than in the past. I am a member of one of the private golf clubs in Oak Bay and there are lots of millennial members and the waiting list to join is full. Golf is actually not that expensive compared to other sports with monthly dues under $40.
It doesn’t take that long to learn unless you’re unathletic?
Building steel and concrete is expensive and takes years or decades to build out. The idea behind missing middle is to have lots of home owners building at the same time.
A modular home subdivision is fast as all one needs to do is build roads, sidewalks, curbs, and underground services. All that a home owner has to do is order a home from a stock set of plans and depending on the complexity it can be built in 16 to 32 weeks and delivered to the site. During that time the site is being prepped with a foundation for the home to be placed on and connected to the underground services.
Once it is up and ready, peak new homes of 50 every month could be built. Or you could wait five years to get 100 condos built. And your at the whim of the developer that can put the next tower on hold as Bosa has done.
Cedar Hill Golf course is loosing money and that’s because millennials are not golfers as it is expensive and takes four hours to play and takes a long time to learn. Golf courses are becoming the relic of the past. So do we keep subsidizing golfers or do we shit and get off the pot.
https://youtu.be/dzY2ihzrdIQ?si=4YfBI3kJYbsbFVpo
Let’s not get rid of parks and golf courses. Instead, we should build up. I once lived in a building in Asia where it was a tall tower. You walk into the building and directly in front of you is an elevator. Then there is a staircase behind you. To the left and right are two apartments – each with 3 bedrooms. There’s huge communal compost and recycling for each building. I can’t remember exactly how many stories but something like 26. The apartments were amazing because there was sliding balcony doors on both sides of unit so you could get amazing air flow all the way through. Didn’t the government acquire some old decrepit hotels? Tear them down and build up! I realize that changing the skyline might be extremely distasteful to some. But it’s either up or within what’s already here (i.e. parks, golf courses etc). I personally think up is the better option. Especially if these towers are largely concentrated downtown.
Saanich could still retain ownership of the land similar to how First Nation’s lands in Vancouver have been done or how the Songhees Nation has developed land in View Royal. For example 85 Wolf Lane MLS# 969398 or 112 Camas Lane #963355 Pad fees of around $600 to $700 per month. For 2,000 homes that could add another 15 to 20 million a year to the district’s budget to buy more parkland.
These are nice looking well built retirement/first time buyer homes of around 1,300 square feet on small lots for under $500,000.
If things were easy- they would have been done already.
“We herd sheep, we drive cattle, we lead people. Lead, Follow, or Get out of My Way”
-General George S Patton
You do realize that removal of park designation at Cedar Hill or any municipality in BC requires a bylaw passed by vote of electors right?
And it can only be done if it is sold for value and the money goes into a reserve fund to buy other park land OR other lands are given in exchange and turned into a park.
Unless the NDP radically alter the Community Charter this is not going to happen imo.
Community Charter
Exchange or other disposal of park land
27
…
(2)A council may, by bylaw adopted with the approval of the electors,
(a)dispose of all or part of the land in exchange for other land suitable for a park or public square, or
(b)dispose of the land, provided that the proceeds of the disposal are to be placed to the credit of a reserve fund under section 188 (2) (b) [park land acquisition reserve fund].
(3)Land taken in exchange by a municipality under this section is dedicated for the purpose of a park or public square and the title to it vests in the municipality.
(4)A transfer of land by a municipality under this section has effect free of any dedication to the public for the purpose of a park or a public square and section 30 (3) [removal of park dedication] does not apply.
Trade in your golf clubs and take up pickle ball.
I enjoy golfing at cedar and would say it’s not suitable for housing . It’s best to leave that one off the table , don’t need housing that badly
Cedar Hill Golf Course is 132 acres or seven times the size of Uptown Shopping Centre. There is a lot of things that one can do with 132 acres. That would make one heck of a big manufactured/modular home park. Maybe 2000 homes.
Market them to retirees that what a new smaller home on a smaller lot. Now they won’t have to move to Comox. They can sell their home to families of 3 or 4 that want a basement rental suite.
Government giving land for free to build houses that people own? Sounds pretty nuts. Land leases for a nominal amount for purpose built rentals I can see.
I was always told “buy what you can when you can.” I don’t understand people who choose to wait. If we had waited we would probably have been priced out. But I was willing to live in a 2 bedroom condo with my 2 kids – so probably not.
It’s great having Patrick here. He’s like Google, but a real person too.
Don’t hesitate to submit requests if you want him to find your comments from 3 days or 3 years ago.
But your situation (as you’ve described it) isn’t much different from the HHV norm. You’ve told us you’re a millennial, currently renting ($3,500/month), and could buy a place for $950k now. Lots of HHVers are in the same situation. But you’re choosing to wait until you can buy a place for $1.5m instead of buying now. You detailed all that in your post here. https://househuntvictoria.ca/2024/02/03/january-teetering/#comment-111679
Of course that’s a reasonable position to take. But I think it’s also reasonable to state my opinion, which is that given the ongoing explosion in population, especially in the young age groups (+6.6% in one year for ages 30-35 in 2023), I think you and other millennial HHVers in the same boat are better to buy what you can now, and not wait. I’ve said the same thing for 5+ years on HHV, and prices are up +35% since then. I think most people who bought 5 years ago are happy they did, and people who waited are sorry they waited.
Thanks for the discussion.
Marko, the point about the golf coarse was to divide into small 5000 ft lots and give them away for a dollar to first time buyers or people with families or both who then have to build a small house and live on them for ten years. The point was affordable SFH houses for young families. Affordable because the land component was free. What would it cost to build a 1000 sq. foot modest house? (pre approved plans and not super energy efficient requirements) 400k or 500k at most? With prebuilds maybe even 300k.
Sorry folks I don’t mean to beat a dead horse but I just wanted to add some sanity here to these statistics.
Even though it is true that the 2021 census shows that 71% of households in Victoria have only 1 or 2 people, because those households have fewer people than those with 3 or more members, they represent a minority of the population. Only 49% of people live in 1-2 person households, whereas 51% of people in Victoria live in larger households of 3 or more people.
Refer to: https://www12.statcan.gc.ca/census-recensement/2021/dp-pd/prof/details/page.cfm?Lang=E&SearchText=Victoria&GENDERlist=1,2,3&STATISTIClist=1&DGUIDlist=2021S0503935&HEADERlist=0
Anyways I’m done with this thread.
There are 318 billion trees in Canada, so losing a few hundred thousand won’t make a measurable difference. One tree can provide shade and enhance an area, but we have somehow given them an importance that is outsized for their actual value. Calgary’s tree bylaws protect trees owned by the City(makes sense), whereas Victoria’s bylaws protect trees that they don’t own. I think the ALR is far greater issue in preventing development, but trees are definitely slowing and preventing housing being built.
In terms of extreme heat, getting an air conditioner is going to help people survive a lot more than planting trees. Also, is there another example of the extreme heat dome, or are we planning on changing policy on a one off event? For those of us who survived the huge snowfall of 1996 https://www.victoriabuzz.com/2021/12/here-are-96-photos-from-victorias-blizzard-of-96-on-its-25th-anniversary/, there were requests on the radio for anyone with a snowmobile to contact the Ambulance service, because they needed help getting to people. Just imagine if everyone bought a snow mobile in the off chance we would have another snowfall like that….. sometimes there is just crazy weather.
Vacant but owned by someone else so he was both trespassing and damaging property. Not their trees to top. Clearly illegal and worthy of a fine and restitution order without any arguments about god.
Most places require a permit in advance of cutting and it will be granted for this situation.
The message is don’t cut down trees without a permit and don’t top them without owner permission.
I think the laws on tree protection are going to need to be revised for missing middle.
There are ways around that.
I’ve taken down at least 10 trees at my cottage in Manitoba. Never needed a permit or anything. It’s nice having property not under the control of Nazis.
A lot of trees are going to be the way if we are to build 3 or 4 condo units on 5500 square lots in the core . I envision alot of angry tree huggers
Properties that back onto a golf course generally have an enhanced value. Golf courses are not as biodiverse such as conservation land or public parks, as they are monocultures often using non-native turf grasses. So while they are considered to be greenspace they are not as green as parks or conservation lands.
As for trees, I recall one court case where a neighbor topped the trees on an adjacent vacant site to enhance their water views and property value. I remember the lawyers comment that stuck with me about the trees. “Only God can make a tree”. The defendant lost and had to pay restitution and damages.
Another example is when a friend of mine cut down a tree on his property as the roots were buckling his driveway and he couldn’t park his Jaguar in the driveway. The city sent him a bill for $40,000.
The message is clear. Don’t “F” with trees in the city.
Honestly, I’m sometimes amazed by the comments I find on here.
First, I don’t appreciate ad hominem attacks simply because I disagree with your flawed arguments.
Fortunately, I’ve found the mute button for people who don’t understand civil discourse.
And, as I have posted on here previously, my household is high income and we aren’t facing the same problems that low and median income households are facing.
Apparently I have to explain this to Patrick, but people can still hold valid opinions about how legitimately difficult Canada’s housing situation is for most people, even if their own personal situation differs from the norm.
Trees are more important than ever. If they need to come down for development then they need to be replaced in that same area to ensure adequate shade and long term protection from effects of extreme heat.
https://www.nationalobserver.com/2024/06/14/news/100k-trees-vancouver-extreme-heat
Totalitarian proposal: all complainers about trees must correctly estimate the number of trees on Vancouver island to within 10% before opening the mouth.
I agree, but the majority would disagree.
Whenever I read complaints about cutting down trees for development I can’t help but think that the people complaining need to get out more. BC has its problems, but a lack of trees isn’t one of them!
and what is the big deal with cutting down two trees on private property to accommodate 20 townhomes? apparently big enough deal for everyone to get on board with a “save the trees” campaign.
Golf courses are not green space.
because SFHs on the cedar hill golf course would be >$1.5 million so the rhetoric would be we are losing valuable greenspace in our city for housing the rich.
I can’t see developing cedar hill golf course having more than 20% support of the population even in this housing crisis, maybe I am wrong.
And how do you know that exactly? What I do know is that the people in Ottawa protesting possible subdivisions of golf courses (there are a couple of these) are neighbouring SFH owners, mostly longstanding.
The same families that are pissed off about not being able to afford a SFH would be protesting the conversion of Cedar Hill Golf Course into a subdivision.
Townhome developments have been stalled for years over a couple of trees….good luck with this idea.
And that is a the beauty of the free market. Don’t want to live in a two bedroom condo in Victoria? Awesome, move to Edmonton and buy a huge house.
I don’t completely believe this narrative that developers aren’t building family sized condos. I truly believe they wouldn’t sell if developers built them. What family is going to spend $1 million on a three bed condo when they can get a SFH on the Westshore for $1 million?
In Croatia most condos are two or three bedrooms, because as per my example below buyers are willing to pay 2x more for a family condo in town versus a luxury house 30 minutes out of town. Developers know this so they build to the market.
Adults like back yards too. We use our back yard a lot as we have walk out access and it is very private. We regularly have friends over in it too because our house is small. When we had pets they got a lot of use out of it.
We don’t use our front yard at all. Gets you a bit back from the street but that is about it. Lots of countries don’t have front yard setbacks.
I would also be fine with a condo and we may end up in one. Lock and go is pretty nice.
A backyard is useful for kids from the ages of 2 to about 8/9, after that they outgrow the backyard and would much rather to to parks & beaches etc.
Can you clarify why? Or are you talking about building town homes on a single lot which then needs to be corner?
I absolutely can see a small family being happy in a condo. That is different than saying it is ideal for all people with a family. We seem to overwhelmingly building condos rather than increasing the number of townhouses and single family homes for young people.
I am happy to support thirty five story condo tower on the railway lands but lets convert the golf coarses to single family lots.
Want to be serious about building affordable houses for young families them convert a lot of the government owned lands to a lottery of small lots for young families at a dollar a lot as long as they build a SFH within two years and live in it for ten. Municipal golf courses would be a good start. All the land around Royal Roads and large parts of Dean Park and Mt Doug can be repurposed for small single family lots given out by lottery.
There is a limit to how much you can reduce the coast of construction but you can give young families free land which should cut the costs of a house by almost a half. Move government jobs to areas were there is land available.
maybe not four, but happy and a condo yes. I find it interesting that people can’t grasp the concept that a family could happily live in a condo even if a condo isn’t for their own family.
Scummy!
West Vancouver sells public beach access to private buyer
https://www.cbc.ca/news/canada/british-columbia/west-vancouver-public-beach-access-1.7279886
I’ve mentioned at least 10+ times over the years the dramatic decrease in population in Croatia; however, context is very important. The largest city of Zagreb has actually increased in population. Culturally things are totally different in Croatia and it shows in the real estate market.
A decent condo in Zagreb is very expensive, here is what one million CND buys you (nothing special) -> https://www.njuskalo.hr/nekretnine/vmd-novogradnja-c-darwina-luxuzan-trosoban-stan-108.55m2-oglas-43264389
30 minutes outside of Zagreb for less than 1/2 the price you can buy a massive concrete built house on an acreage -> https://www.njuskalo.hr/nekretnine/ekskluzivna-nekretnina-luksuzna-kuca-376-m2-imanjem-16.588-m2-oglas-39485816
For example, if a condo downtown Victoria is $800,000 it would be the equivalent of buying a 5,000 sq/ft house in Sooke on an acre or two for $400,000. Two hours outside of Zagreb in a town with school(s), medical clinic, everything you need to live you can buy a solid house for $100,000 cnd, but at the end of the day people want to be in the city.
People value location (no or shorter commute) over space.
Instead of whining, do your own “cherry picking”, find a home you can afford, and buy it. Like the $399k home at Quadra/Hillside I found in 5 minutes.
The big problem you have is that the population of millennials is rising each year through immigration. Housebuying age group 30-35 rose by an incredible 6.7% in one year in 2023.
That means 6.7% more “house hunting Zachs” snapping up the “cherries”, leaving you the leftovers if/when you finally decide to buy.
What Marko conveniently forgets to mention about Croatia is that its population has decreased by about 20% in the last ten years. Most young people that have anything going for them get the hell out of there. So his happy family group are largely the leftovers. There are beautiful and elegant parts of Croatia especially on the coast that strangely enough are mostly owned by Germans. By the way all the Croatians I knew in Toronto and there were a lot were incredibly hard working and talented people, also extremely kind and honest people. Come to think of it I cannot remember any that did not own their own SFH although I am sure some did not.
Marko is happy with less space as are many single people. I dont see Marko saying that his wife and four kids are all living happily in his two bedroom condo.
I am as old as the hills, too old even to be a boomer, I just dont believe that we have done very well for our kids, grandkids and great grand kids overall.
Problem is for townhomes you need a corner lot and the civil improvements and dedications to the COV on such for MMI projects are truly insane, so I too think we will see very few townhomes and mostly small condos under MMI.
My neighbors two kids both decided to move to Alberta because they wanted to have families and they felt that not only was Victoria expensive but that the city was not family friendly nor oriented to young people who wanted to have children.
When you look at what we are building I cant say that they are wrong. For example the Missing Middle was an opportunity to build family friendly townhouses. We do have a shortage of townhouses but what looks like is going to be build is just more small condo apartments. 500 to 700 square foot condo apartments is not what is missing in this city. I know BC is losing population in terms of residents moving out (as opposed to immigration from abroad) but I wonder how much of the population loss is from some of our most talented young people. I am not sure anyone is keeping track of who is leaving. In my neighbours case the kids and their spouses are all skilled professionals included one GP and another in the medical services field. Maybe their situation is unique but I wonder if that is truly the case. Someone here is bound to say that young people dont want to have children anymore and while there might be some truth to that I dont think we can ignore the fact that most cant afford to even if they wanted kids.
In Europe you have 500 sq.ft. two bedrooms, but that requires a small linear kitchen, one bathroom, etc. In North Amercia people want islands, an ensuite, etc., which drives up the square footage of the two bedrooms.
You are correct in that walls in-between units in most of Europe are concrete; however, I think if you offered such in Canada families still wouldn’t buy it.
The premium in Victoria between stick built and concrete is shockingly small which would indicate to me that concrete isn’t a big priority for buyers.
Other countries build sound proof condos with concrete. Have a crying infant or fighting couple next door or above in stick built and you’ll be in it with them.
I agree a couple can live in 700 square feet. Most Canadians with kids are not going to choose a one bed stick built 3rd floor with neighbours on all sides due to poor design and soundproofing. They will probably continue to rent until they can get at least a two bedroom.
The risk of special assessments is high in older condos but they are more available now and prices are down.
Interestingly enough as my earnings have grown throughout my life, I’ve desired less pace.
Only in North America. 700 sq.ft. is a three bedroom condo in many countries, check out this 640 sq.ft. three bedroom condo -> https://youtu.be/34v8u4ElDnI?feature=shared&t=187 (sorry, I am speaking Croatian in video but you can see the floorplan).
Multiple micro-studio sales at the Janion yesterday. One for $388,000 and one for $340,000 so apparently there still is a market for 300 sq.ft. even with Airbnb/investors wiped out. Another unit at Janion has an accepted offer so likely to go pending soon as well.
I still to this day remain fascinated with the affinity for space in North America as I don’t see a tangible correlation to quality of life/happiness. I go to Europe and family members live in super small condos units but have more education, speak 3-4 languages, make incredibly healthy and delicious food in tiny condo kitchens.
Then I go see a friend here with some insane 4,000 sq/ft house and a huge kitchen, 72 burner stove + island and we order pizza 🙂
Clearly you have missed my point by a mile.
My argument was that even the lowest cost unit in the city — which you cherry picked from sales boards — is financially no better than renting for people who are looking to find a home. That’s why people aren’t doing this. It’s just not worth the hassle, it is financially more expensive than staying in your current rental, and comes with too many downside risks.
Also, your use or statistics here makes no sense.
Why are you talking about “1 person households” in the same sentence as “median two-person income”? They are different groups of people.
Additionally, that data set you are using is of little value to this discussion.
The number of 1 and 2 person households in Victoria includes a lot of wealthy retirees and young, single renters: neither of which is the group who are actually looking to buy a starter home.
Finally, you make an entirely separate argument about affordability.
The fact that you can cherry pick one or 2 condos within city limits that are just barely “affordable” to a DINK couple who are willing to live in cramped quarters for a decade, doesn’t mean that housing in this city is “affordable”.
71% of Greater Victoria households have only 1 or 2 people. Only 29% have 3 or more people.
A 700 sq ft condo is a perfectly acceptable starter home for households with 1 or 2 people, which is most (71%) households.
And it is affordable ($399k) to median two-person income ($100k) and that’s in core Victoria. (e.g. Quadra/Hillside)
Sure, a bigger home would be nicer, but it’s not a “housing crisis”
https://www12.statcan.gc.ca/census-recensement/2021/dp-pd/prof/details/page.cfm?Lang=E&SearchText=Victoria&GENDERlist=1,2,3&STATISTIClist=1&DGUIDlist=2021S0503935&HEADERlist=0
Non-recoverable costs for this 1 bed condo are $2,100 per month after taxes and strata fees. Let’s not forget a first time homebuyer loses the FHSA tax deduction, and needs to save up $20k for the downpayment. Let’s not forgot those special assessments on 45 year old condos that hit when you least expect them.
Most renters in a 1 bedroom are paying less than this currently. And I doubt that there are many households earning $100k per year who are looking for only 700 sqft of living space. Pop out a kid and you have to move ASAP. Do this within 5 years and you’ve lost money on the transaction costs.
There’s a reason the condo bubble has popped in many cities. There’s an over-supply of tiny shoeboxes compared to demand among people who actually live in their home. Investors have been the people pushing the condo boom and now they’re increasingly underwater on their investments.
Barcelona wants to get rid of annoying tourists.
Barcelona wants to get rid of short-term rental units.
To safeguard and expand the housing supply for full-time residents, local authorities want to rid the Spanish city known for its architecture, beaches and Catalan culture of the 10,000 apartments licensed as short-term rentals.
Deputy Mayor Laia Bonet said the city wants tourism, which accounts for 15% of the local economy, but must help residents cope with skyrocketing rents and real estate prices. “Our housing emergency obligates us, forces us, to change the way we do things and to put the priority on housing above our policies for accommodating tourists,” Bonet told The Associated Press.
Residential real estate prices in Barcelona have increased by an average of 38% over the past decade, a period in which the average rent soared by 68%, according to the municipal government. Like in other popular urban areas, many young people who grew up there struggle to afford a place of their own.
The median price for a one-bedroom in Victoria’s core districts is $459,000. For most first time home buyers they will need to save up more than 5% as a down payment unless they get help from the bank of mum and dad. Accumulating that larger down payment is going to be their biggest barrier to home ownership as most of their pay check now goes to high rent costs leaving little to savings. One would likely need to save up at least 20 percent as a down payment to buy a one-bedroom condo just to break even between rent and mortgage payments.
And that 640 square feet condo will be about 15 years old located n the outer 8 kilometer ring of Victoria.
If you are planning to buy your first home then to be on the safe side you should hit mum and dad up for at least 200K.
Shipping approaching capacity and about to cause backlogs and container rates hitting pandemic levels of cost. Might get that September cut, but inflation is getting set roar in the fall from a constricted and costly supply chain.
Regarding the very tricky airbnb problem, I’m wondering if it might work to allow STR but only as a certain proportion of a rental portfolio. Like, in a single building for every 3 long term rental units a landlord/owner could have a 4th that is allowed to be a STR. Would this both encourage investment into long term rentals and provide a reasonable amount of STRs (which we seem to need)? The need for family type residences for STR could still be met by the exception allowing people to rent out their primary residence. Then, an investor (or group of them) maybe would want to buy say 4 units at the Janion knowing one could be a STR.
Hmmmm, I can’t believe this never crossed my mind until I received an email this afternoon. You won’t be able to build what the zoning allows for on your own property as an owner-builder anymore.
[context, there is no workaround]
“Hi there Marko,
I’m reaching out in regards to your youtube video on the BC owner builder study guide.
I definitely agree with your statement regarding cancelling this program, it seems senseless.
If I may ask as well, it states that the owner builder can only erect a single dwelling unit? Is there a workaround to allow for a triplex as that is now allowed on my property and I am trying to accommodate multiple family members?
Regards,
xxxxx xxxxx “
Looks about right for what two people making ~30% more than minimum wage should be able to afford.
Canada has been in a per-capita GDP recession for almost two years, and it is a matter of time (1 or 2 quarters) before we enter the recession based on aggregate GDP. US will follow next year.
It would get them in to this door… $399k (2747 Quadra near hillside. 1 bdr, 700 sq ft., balcony, 1 Parking spots, high scores for walking/transit/bike)
https://www.realtor.ca/real-estate/27121165/304-2747-quadra-st-victoria-hillside
Does this somehow not qualify for your definition of “an entry level home in Victoria”?
Just hideous IMHO. That sort of thing might fetch $4 million in Vancouver but it appears Oak Bay has still retained a bit of taste. I wonder what the 2022 buyer was thinking.
Median family earning 100k/year with zero other debt can currently borrow about 380k according to this calculator (assuming 350 strata 100 heat):
https://www.ratehub.ca/mortgage-affordability-calculator
An extra 30k of borrowing is not getting them in the door.
I’m guessing we are out of the woods as far as a recession here and in the U.S imo
How about in two days (Aug 1), when they can borrow 8% more by taking a 30 year amortization, insured mortgage, and making the same monthly payment?
Even today I don’t think house prices are really out of whack . Lots of money out there that easily buy at these prices . September rate cut on the way , question is 25 points or 50
What are you basing that on? Right now the median income family cannot qualify for a mortgage for an entry level home in Victoria even if they have a 5% down payment.
Yeah, been following this listing. Huge loss and they probably won’t get the full list even now. It is a new build but really lacks privacy the way it is designed and located on that corner lot with those big low windows and no fence or hedge. Uncomfortable.
How tied are rents to home prices? That’s a tough question to answer. If condo prices were to decline then I suspect renters may chose to buy over rent. That could raise the vacancy rate and lead to rent declines. Or not.
The barrier to entry for homes for most renters is the down payment.
The move to jumbo mortgages in the last several years is concerning. A few quarter point drops in the interest rate isn’t going to be much in the way of relief for these jumbo mortgage holders that took advantage of historically low interest rates.
Re-listed at 630k below 2022 purchase price -> https://www.realtor.ca/real-estate/27230853/2685-burdick-ave-oak-bay-estevan
I think the system is comparable to trying to keep your eye on the pea while one tries to predict which shell the pea will be under..
It has become much more complicated than it needs to be in order to keep people in the dark.
Kind of like the old British pounds, shillings and pence money system. It required a certain amount of math and excluded those less educated in earlier days.
Just a thought.
Keep things simple:)
New entrants add about 2% of total dwellings per year, albeit at higher prices. Mortgage interest expenses fall by about 4% per year on average. Adding 2% of new entrants to the 98% of existing entrants isn’t enough to change the effect of reduced mortgage interest payments on shelter inflation. And most of those new entrants will see their interest expenses fall each year too. Remember that 40%+ of homeowners are mortgage-free, that have $0 interest to pay, so no mortgage interest inflation for them, and those numbers grow yearly too. Statcan tracks the same properties to measure shelter inflation, as they should. They don’t use “mortgage balance” in their inflation calculation, they use the change in interest expenses on the same properties, which are typically falling.
“5-year bond yield approaching a 1-year low.”
”
”
Yup, recession happening in Canada and most likely in the US within the next 6 – 12 months.
That’s true for individual homeowners once they buy but not homeowners in aggregate, since you’re always getting new entrants into the market. In fact if you have rising prices you’re going to get rising interest costs in aggregate even with flat rates. This can be seen from the average mortgage balance.
https://betterdwelling.com/a-typical-canadian-mortgage-went-from-less-than-300k-to-over-600k-in-five-years/
5-year bond yield approaching a 1-year low.
For homeowners, a big portion of shelter costs are inherently deflationary, and since this is reflected in the statcan “shelter inflation”, I don’t see this being “seriously flawed” as you call it. It is just telling people that owning a home will help protect you from inflation because some major homeowner costs fall, not rise. Details of this are described below.
Most Canadians own homes (67%) and the main shelter cost in shelter inflation calculation is “mortgage interest” , and that is a deflationary payment. If rates stay steady, since the principal is falling, the interest paid falls (average -4%) each year, and gradually falls to $0 after 25 years and stays there.
For example, consider someone with a $500k, 25-year mortgage and 5% mortgage rate.
——Year 1 they pay $24,510 interest. Year 2 they pay $23,984. So their mortgage interest expenses have fallen $526 (down -2.14%).
—— assume that overall CPI inflation is 4%, and other expenses (property tax, insurance, repairs) of $10,000, go up 4% in year that’s +$400.
So the net is that these total shelter expenses fell in the year ($400-$526= -$126) and for this homeowner, despite overall headline CPI inflation of 4%, their shelter inflation is actually DEFLATION of -$126/($24510+$10000)= -0.4% for the year.
If we get another rate cut in Sept I am predicting we are clearing 6,500 sales for the year.
People did spend a lot of money improving their homes and suites during Covid. The suites that are available for rent today all seem to have been updated and remodeled. The same with apartment owners’ upgrades as they had to compete with condominiums to receive higher rents. That trend seemed to be happening everywhere in Canada.
If the suite went vacant, the owner would upgrade and raise the rent to the next tenant for the costs they incurred. Due to the low vacancy rate during Covid there were some crazy high rents being paid. That has settled down and I am seeing more consistency in rents.
For example, during Covid I was speaking with a person that worked as a bus driver earning 90K a year and he was paying $4,500 a month (54K) for a three bedroom updated main floor suite in Gordon Head. It is very unlikely to get that high of a rent in Gordon Head today for a three-bedroom suite.