July: Something of a turning point?
Though July’s 650 sales were up 9% from last year, the reality is the sales rate was unchanged, with the increase entirely due to a couple more business days this year. The 1319 new listings represented an increase of 17% year over year, but that drops to +7% after accounting for the business day difference, and once you look at the recent new listings rate, we are actually starting to trail where we were a year ago.
Slightly lower new lists and slightly higher sales means our sales to new list ratio is now ahead of this time last year, after trailing quite badly since February. Most of that gap was closed because last year the market was weakening quickly, but the trend in recent weeks has also been one of warming as new listings faltered.
Nothing exciting going on in sales, with just small movements in all categories.
Putting all the sales together, we are still at the low end of average, even if not quite as slow as right after rates were raised, or in our last true buyers market over a decade ago.
New lists have come down some, but it’s worth remembering that last July we had a healthy rate of new listings. That puts us down from peak but still higher than most of the last 10 years.
So while sales remained pretty sluggish and new lists are still healthy, inventory dropped last month, both on an actual and seasonally adjusted level. Small movements, but not something we’ve seen since the start of the year.
You can clearly see we are charting out quite a different pattern in inventory this year than last. This year represents a more normal seasonal pattern compared to the unusual late peak from 2023.
Similar to last month, the drop in inventory is partially due to an elevated rate of cancelled listings. 781 listings were taken off market in July, and that’s more than we’ve seen since 2011 and a huge jump from the 453 last July. So while inventory isn’t currently going up, I would take that with a grain of salt. A lot of these places are not selling, and owners are pulling back with the hopes that the market will improve later. It’s worth noting that in 2010 sellers did the same thing, taking huge numbers of properties off the market as the market cooled. However that didn’t stop inventory from growing in the following years, or prices declining.
Both measures of market balance have not moved a lot in recent months. Months of inventory remains pretty close to where it has been all year, still in a mild sellers market (under 6), while the sales to new list ratio is similar but pointing to buyers market conditions overall (under 50%). That averages out to roughly balanced still, though variations by area and market segment persist.
Broadly that has kept prices pretty stable this year, with recent months giving up some springtime gains.
Median sales to assessed value ratios tell the same story, coming in pretty close to where they were to start the year.
So the market has picked up a little, and that is while fixed rates remained in the high 4s. However the bond market has been diving in response to weaker economic data out of the US, and if that holds we may see rates come down to the low 4s. We’re back to similar levels as 2023, but with inflation largely tamed, there’s a better chance that this is the start of a more durable decline than just a temporary low.
The year over year comparison really shows the different trends we are on. This time last year rates were rising and really dragging on the market which led to an exceptionally slow fall with weak pricing. This year we are seeing rates decline and buyers will have access to lower rates this fall than last, which will definitely bring some buyers back from the sidelines. I expect some decent year over year increases in sales activity this fall.
Of course, rates are coming down because the economy is weakening and unemployment rates are rising. So while lower rates improve affordability for those with a job, there’s nothing worse for affordability than not being employed. Generally I would expect those two factors to roughly cancel out, and I’m not changing my baseline forecast that the market will go sideways for quite a bit longer while affordability improves. However one interesting phenomenon is that the increase in unemployment has been concentrated in youth and new immigrants.
That drags on the economy, but it’s not a group that’s typically buying property anyway so it may be less of a drag on the resale market. Is it a change in how this downturn will play out, or just the leading edge of a broader increase in unemployment? Too early to tell, but the increased number of non-permanent residents in the form of low-wage temporary foreign workers also gives the government a bigger policy lever to control unemployment at those margins. If it rises too high, they could simply crack down and lower the temporary workforce. Theoretically that gives them more ability to tighten up the labour market on demand, but whether they actually have enough control or competence to pull that off remains to be seen.
That would be the same Garth who was a cabinet minister in the government which suffered the biggest election defeat in Canadian history.
New post: https://househuntvictoria.ca/2024/08/12/airbnb-hosts-playing-a-dangerous-game-of-chicken/
Obviously.
We are discussing notice periods. Seems relevant to mention that longer notice periods are an important way to provide secure housing to tenants using an example of a country that has strong tenant protections and roughly equal numbers renting and owning.
Other than the majority of housing starts in recent years you mean.
Heck of an assumption. Interest rates, price uncertainty, and increase in costs are the main reason condo development is slow. What tax changes have hurt condo development? I don’t see any evidence that tenancy reforms have actually dissuaded a lot of investors. What’s never mentioned is that RTB wait times have come down a lot in BC. We are doing way better than Ontario where the RTB is a total mess with wait times of months and months. Important to have quick dispute resolution to reduce risks for investors.
I wouldn’t be worried about that, no internet armchair generals on here are capable of creating any fomo or transact in realestate.
There seems to be a lot of cheerleading and undue excitement here about our real estate market – perhaps an attempt to create a FOMO situation like 2021. The reality is quite different: Economy is teetering on the edges of a recession, unemployment has been rising for a year and will keep going up for another year, inflation won’t reach 2% until the end of 2025, BoC interest rate won’t reach 3% for another year, etc. The typical bottom for a RE market cycle is many years after a bust.
To build a condominium tower the developer needs pre-sales to show his financial backers that the complex is economically viable.
The issue is the developer is building what they can sell to investors not necessarily what an end-user needs. This is usually a lot of expensive small one-bedroom condos. Over decades of construction this causes end-users to move from dense central business districts towards lower density suburban areas.
This hollowing out effect leads to lower rents and condo prices in the densely packed downtown areas. This “donut effect” has been reshaping American cities and larger Canadian cities like Toronto and Vancouver.
Here is a 38 page Discussion Paper on the topic that may be downloaded
https://cep.lse.ac.uk/pubs/download/dp1793.pdf
We are not Germany and their taxation and regulatory system is very different. Cherry-picking one stat and holding it out as an example is meaningless as it is the overall ROI vs. hassle that matters. For example, there are other compensatory mechanisms in Germany: if you buy and rent out a property in Germany for ten years your capital gains are completely tax exempt; mortgage rates and terms for rental properties are almost identical to primary residence mortgages; there are generous tax breaks for rental properties; and, the annual long run rate of return on property appreciation in Germany has be 7.85%.
In Canada a lot of what ends up as a rental condo/townhouse is purchased as a presale by investors – often as part of their retirement strategy either for income or to live in later on. Without presales buildings don’t get built in the first place. Add in the headaches of pushing tenant-protections too far and you’ll worsen the housing shortage imo, although maybe some of that can be mitigated a bit through reduced immigration – not sure.
At the end of the day capital goes where it makes the most sense. Right now it is not in being a landlord due to lack of appreciation plus interest rates combined with all the tenancy and tax law changes.
Nice bit on Garth today about our worthless government in this province. Basically using your children’s and grand-children’s future tax revenues to buy apartment buildings for developers. Nice.
It’s too bad, but totally understandable advice, if we’re in an environment where everything is “us vs. them”
One idea that might help provide more secure rentals:
Provide incentives for landlords to provide long term tenancies. For example:
– Provide yearly tax credits for landlords with a tenant occupying longer than 5 years. This provides a “thank you” from the government (and society) to have provided a long term rental.
– balanced by a requirement for a longer notice period for eviction for this same tenant occupying more than 5 years.
To clarify we gave them 4 months notice but they chose to move out sooner (a month after they got the notice).
” A family renting a place for 10 years that are suddenly being kicked out in 2 months before the school year would likely disagree with the assessment of it being “no issue”.”
I agree. I don’t mind giving 4 months notice. It’s a bit annoying but oh well, so is being a landlord.
Our tenant moved out a month after we gave notice. There were no issues. They got another place very similar to ours and for only $50 more per month. We gave them the deposits back, they left the place spotless. We paid them the penalty. All money was sent to tenant w/i 24 hours of them moving out and all documents were signed. In a perfect world that’s how it should go.
The balancing act is that we are supposed to have a robust definition of “ownership” that includes the right to take back the unit. I mean, it’s not a life lease after-all. But 4 months notice is fine (but annoying). It should be annoying to evict someone.
Leo my concern with raising it for extra long tenancies (even above the 4 months) is that we still have many rentals that aren’t pbr. Those tenants that become families (i.e. via having children) during their tenure might be at greater risk of being evicted before the longer periods kick in if they’re not in a pbr and landlord’s use is an option. I’m curious in Germany if many of their rentals are like suites in houses.
Yes definitely. That’s why I brought up the example of a family established in a certain neighbourhood with kids in school, etc. Sure they can find another rental, but it’s not so easy as you hopping to another condo when you have no commitments. That’s precisely the reason the notice period increases with time of tenancy in Germany. With half the population renting, they’ve decided that that half should also enjoy access to secure housing even though that certainly dissuades some landlords from owning property
It’s all shades of grey. How many landlords are going to decide not to rent their suite based on tenancy going from 2 months to 3? 1%? Is that decline worth the increase in tenant protections? Impossible to say, but I think painting a minor change to the balance between owners as some kind of catastrophic issue is not honest.
As you say, these are peripheral issues at best. Either we solve the housing shortage or we don’t. Everything else is less important when it comes to owner and renter welfare
The other possibility is that some of the applications are deficient.
For example, an HHVer recently described one holdup being because the applicant hadn’t provided requested details of Telus hookup, and their suggestion was they might substitute by just saying “will provide Starlink or something”. https://househuntvictoria.ca/2024/07/22/death-by-ssmuh-ssmuh/#comment-117910
So yah, if the applicant is going to be deficient/unresponsive like that, yes their application will be delayed. If they can’t manage that, then ‘get out of the way’ and let the pros handle development. Especially in these PBR projects where government (taxpayers) are providing the CMHC funding, and taking much of the risk.
On the bright side, a near record 5,000 units got approved /started last year in Greater Victoria, which is no ‘joke’.
Join the group….73 comments so far. I brought this up with the following comment of mine
“This is a really interesting scenario. What if the buyers immediate family member that was suppose to move in can’t due to a health issue or similar that has come up? In such scenarios if the new buyer is honest about what has transpired with the existing tenant they are potentially looking at a 12 month rent penalty?”
and reply from original poster was
“Marko Juras well I guess they should have thought about that before they asked for my notice”
The consensus from other people is go after the buyers for 12 months rent penalty versus I am reading the situation as the buyers basically put out an olive branch to the tenant and could potentially get really screwed. They would have been better off not offering the tenant to stay at below market rent.
This is why I shut down a ton of ideas my clients have in real estate where they want to be helpful to the other party. I’ve seen it backfire so many times. Just a month ago I had a seller insistent on giving the new buyer a tour of the property at completion and then I get an email from the buyer’s agent a day later “your seller told my buyer that there is a sprinkler head that is not functioning, we expect it to be replaced.” [context is sprinkler system is absolutely ancient and that head wasn’t functioning for last 10+ years and seller thought he was being helpful mentioned that when he gave a tour of the garden]
and as a result of shit happens people sideline their basement suite. They do a few airbnb rentals each year and say f*** it to long term renting so there is your consequence.
Maybe I’m just reading it wrong, but it sounds like the new owners are just indicating to the tenant that they have some flexibility, which maybe the current owner didn’t even know about, and – sigh – now the tenant’s instant question is can I get money from someone. Doesn’t sound like anyone was trying to screw them?
It is the wrong issue to tackle. Do you think 2 months’ notice (actually 2.5 months on average) would be an issue if there was an abundance of supply and rentals available?
That is a slightly extreme examples but if it increased vacancy as a result of supply it might not be a bad thing.
What is better in your opinion?
Tenancy laws lean so heavily towards the tenants (let’s say 1 year notice) that supply is so restricted due to lack of investment/landlords that after that 1 year notice is up the tenant has to move out of their $1,500/month place to a an equivalent $3,200/month place
or
Tenancy laws are non existent and the tenancy has to move out in 1 week from $1,500 to $1,550 per month.
See my example from this morning on FB below….sure the tenant has protections and can potentially go after the buyer but his or her rent just went from $1,250 to $1,750 in the course of a year.
Thanks. That’s exactly the scenario I was describing. Looks like they got it right.
While we discuss this notice length and “responsibility of provide housing” the COV is holding up multiple purpose built rental 3-bedroom townhome projects, lol.
This is all just one big joke imo.
The exception for home purchasers, reducing the notice period to three months, will be effective from August 21, while the general four-month notice period for landlords intending to use the property for personal use remains in place.
Maybe. But everything’s a balance. They are tilting the playing field more towards professional managers and away from mom & pops. Is that a good thing? Well we have the highest rate of forced moves in the country, so perhaps it’s an issue worth tackling.
We could also make the eviction period a week and let landlords evict at will. That would probably attract more landlords because then there’s no risk, but would that be a good thing?
So? I don’t see the problem here. Shit happens occasionally. That’s all part of the risk of owning property. Seems like a real stretch to say this is somehow a consequence of a 3 month notice period.
Not sure I agree with you on this one Leo. The end result of what the BC Government and government in general is doing is going to be less properties available for rent. As my parents get older certain scenarios stress them more than they use to and once the current set of tenants moves out of their basement suite in the Oaklands area that will be it and won’t long term rent it anymore. They don’t need the money and once they pay income tax (they report the income) it isn’t that much money anyway.
I was a renter myself 2013-2015 at the Bayview One in Vic West and it was an amazing deal. $1,350 per month for a high-end 800 sq.ft. unit, just the strata fees at that time were $400/month for the landlord. In the two years I rented he didn’t increase the rent but it was always on my mind what if the week before I go on a month long trip to Europe he gives me two months’ notice? Such notice does not provide stability whatsoever; however, you can address it in many different ways as a tenant versus hoping the government protects you via more and more legislation
Purchase a property and don’t worry about the inconvenience of such ever again.
Rent in a purpose built rental building and don’t worry about the inconvenience of such ever again.
Ask to sign a lease every year with the landlord (I would sign such with all my tenants if they wanted to).
Etc.
I don’t think you are looking at the situation from all the real life perspectives that actually play out just like the government didn’t when they came out with the 4 month notice for purchaser to occupy and then they quickly backtracked to 3 months when some obvious things were pointed out to them.
Here is one of many scenarios I can think of that play out in REAL LIFE even with 3 months notice.
i. Buyer removes conditions today (August 12th) on a rental property asks for landlord to provide notice to tenant.
ii. To allow for such the completion/possession is December 2nd
iii. Tenant turns around on August 15th and issues 10 days notice back to the landlord that they are moving out on August 25th. Landlord still has to give the tenant a month free compensation. I know you are thinking how is this possible re 10 days, I’ve seen it many times (tenant moves back in with parents, etc.).
iv. Landlord goes back to buyer and says hey great news tenant is moving out in 10 days, let’s move completion date up to end of August
v. Buyer comes back and says, sorry we will keep the dates as per the CPS December 2nd (could be a variety of reasons including thinking they can secure better financing closer to Dec 2nd, etc.) and now landlord is stuck with a vacant property for 3+ months and they’ve had to compensate the tenant. So landlord has to give 3 months (which is really 3.5 months on average) and tenant gets to give 10 days notice.
I already rented about this 8 days ago -> https://www.youtube.com/watch?v=dj4ZjonuLqY
They also made other changes they didn’t mention in their press release. For example, you no longer have to provide a contract of purchase and sale to the tenant. I am not 100% clear whether you still have to provide the birthdate of the buyers and some other nonsense to the tenants or not.
Perhaps I didn’t word it clearly enough. I’m referring to selling the property, where the new owner requests to move in, which is a valid reason for eviction, and the seller files the forms as soon as conditions are removed .
That should be distinct from a landlord just wanting to move in, where there is no sale (and of course no issue of a new owner obtaining a mortgage hold for longer than three months). In this case the notice period should be longer (4 months).
Also this feels like something that Marko has already posted but it is funny that the government page on evictions has no mention of the fact that it was changed back to 3 months. LOL.
https://www2.gov.bc.ca/gov/content/housing-tenancy/residential-tenancies/ending-a-tenancy/evictions/types-of-evictions#personal
Selling the property is not a valid reason for eviction in BC.
Changing the term to three months for eviction with selling the property makes sense, assuming the mortgage rate issue wasn’t something the banks could extend.
But they should have left eviction for landlords use of the property (without selling) at four months as planned.
Other provinces like Manitoba have different lengths of notice for landlord use vs selling, and BC could have done that too.
I believe that insecure rentals are a big part of the housing crisis, because they pressure people with families into buying as the only way to get secure accommodation for their family. Longer eviction times is a small step in making rentals more secure but much more should be done.
No doubt the rollout was bungled, but I can’t agree with Steve’s flippant treatment of the issue either. “Not that there was anything wrong with the two month requirement to begin with, it’s been that way for decades, with little to no issues” A family renting a place for 10 years that are suddenly being kicked out in 2 months before the school year would likely disagree with the assessment of it being “no issue”. BC government is making landlords take the responsibility of providing housing more seriously. In Germany the minimum notice is 3 months and it goes up to 9 months if you’ve been there for more than 8 years.
As for Kelowna, the provincial rules would have let people keep offering AirBnb in their principle residence and in a suite. It also lets cities with adequate rental vacancy opt-out completely (which West Kelowna did). City of Kelowna council decided to ban it entirely instead. So this example isn’t even relevant to the claim that a one size fits all solution is bad.
Middle management is usually the sweet spot for layoffs, decent enough salary but not doing actual work and so they are expandable.
Interesting scenario posted on one of the Victoria FB rental groups today. Probably good thing the government dialed back the notice period from 4 months to 3 months as buyer’s circumstances can change the longer the notice period (for example, adult child decides not to move into the suite of the property). So many unintended consequences government does not consider.
Regarding BC’s change in giving eviction notices from 2 months -> 4 months (-> 3 months):
https://substack.com/@stevesaretsky/p-147590630
Vicreanalyst, ya not surprising, expensive and restrictive money is working as planned. Not sure who gets layed off but it’s probably the guy at the bottom rung . Raising interest rates to fight inflation seems to hit the poor unfairly
What economic sanctions?
Before the government can get investors back buying pre-sales they are going to have to kiss some Chinese nationalist butts and put an end to economic sanctions.
Mainland Chinese investors built Vancouver.
Agreed.
Layoffs incoming though, heard from a few sizable businesses in town.
Whatever , unfortunately I think all governments will go back to what has worked in the past , not saying I agree with it . I would not be surprised if they roll back some of the investor regulations to get things built too
What cost range to rebuild a house while retaining the basement and foundation on a square foot basis. Medium quality build. (obviously ballpark figures)?
Past history is on your side Thursty. The best predictor of future behavior is past behavior or past performance in a similar situation. If you’re betting on a horse race its always best to go with the horse that has finished first in past races.
Bet on the favorite to win.
Let me see , interest rate cuts both in Canada and abroad . Increasing sales and decreasing inventory. I would venture to guess this good news will be out and sellers will hold out for more money . Seems pretty black and white to me
Would a rate drop in September increase inventory? I’m assuming when you say an increase in inventory you mean an increase greater than the historical seasonal fluctuation.
My opinion is it boils down to how end-users and investors react. More so in the condo market rather than the single family market. There just seems to be a lot of vacant properties owned by investors that are not reducing their asking prices or have not listed their properties for sale or transitioned to long term rentals. Consistently, in the past it has been end-users that have capitulated and bought at higher prices. Past history has shown that Victoria has been resilient to price declines as investors wait for the market to rebound and end-users to step up and pay higher prices.
I think it hinges on whether this market is different from past markets when the unemployment rate was lower, few PBRs were being built, the vacancy rate was ultra low, rent increases were galloping along, mortgage applications were up, no airbnb ban, and we were having more interprovincial migration into Victoria.
The current market is not investor friendly. An interest rate decrease in September may signal to investors that it is time to get out of Dodge City and that could result in more listings over the typical seasonal increase. It’s just a guess of how large the shadow inventory of investors might exist in Victoria.
And that’s the reason why I am watching the downtown condo market. If it’s going to happen it’s going to start in the downtown market. Single family homes will not be affected as much as condos but there should be some cross over into the single family market.
The airbnb ban is still new and we haven’t seen much in the way of enforcement? Are we going to see strata councils implementing their own fines on vacation rentals in these complexes? Take the ERA for example there are more end-users living in the complex now than investors operating vacation rentals. Will these downtown condo towers self-regulate themselves as the owner occupiers are fed up with transient occupation in their building?
I don’t know what will happen and it doesn’t seem that any else does either. There is a lot of guess work. I don’t even know where you would find the appropriate data available to make a best guess. Maybe look at the Toronto and Vancouver markets which seems to be ahead of ours.
Patrick, I’m on board with that
Sound familiar?
July 2024. Housing market snapshot.
—- housing starts down 19%, lowest in 10 years
—- Demand is rising fast and the supply gap is widening at an increasing rate.
—- strong demand aided by the pick-up in immigration population growth, and limited supply that offset the effects of higher rates.
—- The cost of new property is inflated by 40% through taxes and charges imposed by various levels of Government. It’s preventing new supply at a time when we desperately need more homes.
—- house prices at all time high
—- Prices are projected to rise a further 22% over the next 3 years.
btw) The above stats and descriptions are all about Sydney Australia. But most of it also applies to Vancouver, Victoria or other cities.
https://propertyupdate.com.au/property-investment-sydney/#were-just-not-building-enough-dwellings-in-sydney
Buyers getting fomo and sellers trying to capitalize on the cut to exit.
Why would the rate drop in September increase inventory?
I would think most families would opt for that substitution.
almost certainly will be with the rate announcement on Sep 4.
Agreed.
Very funny to see mortgage brokers like Rob McLister now pointing to the stress test as a reason that borrowers have been able to handle when they were so against it when it rolled out.
As I’ve said before, OSFI should get some kind of policy gold medal for bringing in the stress test.
Yes seems extremely likely. There’s usually a bit of a bump in September but not enough to regain the peak.
Sales: 172 (up 9% over same time last year)
New lists: 368 (up 2%)
Inventory: 3287 (up 34%)
I am not a huge fan of trying to time market especially when you are buying something on the other end. I tell clients to list when it personally works for them (unless there is some sort of attribute to their property that makes it difficult to sell a certain time of year).
Do you have a plan of where you are going to live if you get a great offer, but the buyers want a quick four week completion?
Not sure if we have to wait until September to be 100% certain but looks like inventory may have peaked?
So the municipality wants you to bury your electrical service but Saanich spends who knows how many millions on Shelbourne and can’t bury the ugly poles not to mention how many people have crashed into them over the years.
That would be an older house, but definitively a reasonable substitute to a new or newer three bed condo.
Reports of a ‘mortgage renewal cliff’ have been greatly exaggerated
https://financialpost.com/real-estate/mortgage-renewal-cliff-reports-greatly-exaggerated
You can get a suited house in a decent neighborhood for 1.2….
I would wait until the September rate announcement and list in the hopes of catching the fall market and potentially some fomo buyers. You should be focusing on the price differential between your expected sale price and purchase price up island and not one or the other in isolation.
I think you are ignoring cultural differences. Just look at what North American’s drive versus Europeans. In Canada the smallest Toyota offered is the Corolla and in Europe Toyota sells three models smaller than the Corolla.
Will there be 1,200 sq.ft. condos at the Roundhouse? Yes there will be but they will be 2 bed 2 bath units geared towards people retiring from across Canada. The average family is never going to pay $1.2 million for a 3 bed condo at the Roundhouse when they have brand new or near new 3 bed townhome options from 980k to $1.2 mill. For example, for less money they can buy a 500 sq.ft. larger townhome with 4 bedrooms -> https://www.realtor.ca/real-estate/27226229/5-1810-kings-rd-saanich-camosun?view=imagelist
I personally don’t believe the theory that developers are exclusively deciding to build one bedrooms/small condos. The market decides what gets built. No one is forcing developers in Croatia to build three bedroom condos, but they do as there is a market for three bedroom condos. Last year only 8% of real estate transactions in Croatia were SFHs as culturally people are willing to live in condos with kids and they prefer to be walking distance to amenities versus driving in from Dean Park every day.
Is Singapore’s housing model a realistic solution for Canada’s affordability woes?
https://www.westerninvestor.com/real-estate/is-singapores-housing-model-a-realistic-solution-for-canadas-affordability-woes-9314784
Wait until spring, rates will be lower. Early spring. You will probably have to pay more up Island in the spring, so you might not be any further ahead.
I accept the market for what it is. I will probably list a couple hundred k under assessed value: My house is mostly lot value. It needs updates but is totally liveable and in a great neighbourhood. Haven’t bought anything up island yet so no pressure to sell quickly.
Did you already buy something up island? And are you selling a nice house or is it old with no updates? Lastly, are you greedy and irrational or do you accept the market for what it is?
Fall market might suprise to the upside , but probably get more money next year and the year after and the year after and
Im looking for input re: selling. Im moving up Island and will be listing my 2-bdrm Oak Bay bungalow. Moving date is flexible. Im contemplating listing in a few weeks (after Labour Day) but have been advised by friends to wait until Spring 2025. Any thoughts re: timing the market? I understand DOM is around 40, and probably longer for a 2-bdrm, so if it sells this fall it might happen before December. Thanks in advance for your thoughts.
Wildflower Lane does not strike me as a particularly pleasant looking house. For me at any rate, grey walls in a city which is clouded over grey about half the year is less than appealing. Boring houses at best.
Will this end up selling at the pre-reno purchase price?
Hi Marko,
How many units is the builder getting with those civil costs?
We just finished paying a civil Engineer for plans on our building, that we are adding two units to. The units are also within existing space and no new services were added or required.
COV did want us to scrap the existing overhead electrical service and put in a brand new underground service lol. This is after bc hydro and our electrical Engineer says our current service could handle another 10 units haha.
I was thinking more like the roundhouse project. There’s tons of empty land there. Are any of the towers going to be dedicated family towers (3
+ beds). I guess I don’t agree that people would always choose the colwood crawl over a short jaunt to downtown from a location like roundhouse. I know we wouldn’t! Roundhouse seems like perfect opportunity.
A tower on a residential street in-between SFHs?
We build towers, but there is low demand for three bedroom condos. The condo would need to be 1,200 sq.ft. and that would be $1.2 million and in Canada people would rather just buy a SFH on the Westshore somewhere for $1.2 million over a $1.2 mill condo in James Bay/Vic West, etc.
Even when developers do build 1,200 sq/ft brand new condos they are almost always build two bedroom condos with larger living spaces as a larger 1,200 sq/ft two bedroom condo has a bigger market compared to a three bedroom 1,200 sq/ft condo.
This newer three bedroom condo is 699k -> https://www.realtor.ca/real-estate/27268072/204-150-nursery-hill-dr-view-royal-six-mile
which is below replacement cost at current construction costs, but in the low 700s you have three bed townhomes on the Westshore so most buyers will just drive a bit further to buy a townhome so they can get closer to that “SFH” feel.
In other countries three bedroom condos are built in mass as people will pay 2x for such a condo in relation to a SFH 30 minutes outside of the city so the numbers work for developers.
Sounds like a great deal, I’ll pass.
This is probably a silly question but I’m wondering why MM isn’t focused more on building family friendly density upwards (in terms of towers) as opposed to townhouses. The 3 bedroom I lived in overseas had a very cool design and was on the 13th floor of a tower with 2x 3 bed units on each side (~20 floors). I’m guessing it has to do with something like stairs. I’m also guessing that there will be very few 3 beds in the new towers coming to yates street. Shame that we can’t figure out a way to get those built.
Marko- My property in Ladysmith burnt a few months ago. The house needs to be demolished, the land, 14,000 sq. ft. with a panhandle driveway, will be sold for around $400,000. Maybe you should be looking outside of Victoria. The property has amazing views.
Realistically the only housing we are going to get going forward is condos/apartments.
i/ SFHs – where are you going to physically build them? Especially in Victoria.
ii/ Missing Middle – numbers don’t work
We won’t hit 6,000 SFHs in BC this year (page 6), see numbers here -> https://www.bchousing.org/sites/default/files/media/documents/New-Homes-Registry-Report-June-2024.pdf
Has there been less than 6,000 SFHs built in the last 100 years? 20 years ago with a smaller population we were building 15,000+ SFHs in BC.
I predict by 2030 we are at less than 2,000 SFHs/year.
That isn’t the point. The point is the COV MMI/Province MMI rolled this out under the premise to allow for a variety of housing to be built to address the housing crisis, while due to government bureaucracy nothing will actually get built so home owners don’t need to worry about a 4plex being built next to them.
Easy enough to avoid a 4plex next to you….just buy a home in-between two newer or renovated homes. The numbers don’t work on a teardown, let alone a half decent house.
I don’t think there is one home owner that wants a 4plex built next to them. I definitely don’t.
I made a YouTube video on this and brought it up on various platforms….and no one cares. Essentially no one in BC can build on their own property to the new upzoning.
If we lived in a common sense world just one sentence needs to be changed at BC Housing…owner-builder can build up to six-plex and that is that. They still have to go through a million consultants like everyone else.
A house we built in 2010/2011 in the Oklands I just took a look at the accounting and we spent $4,800 on Curb/Gutter/Sidewalks and $1,800 on Road Cutting/Paving. No civil engineer or any other professional involved whatsoever. I remember it was framed and a lady came from the COV to inspect. She checked all the slopes and gave a go ahead to go pour. She also didn’t make us replace the entire 50′ of frontage and it looks totally fine -> https://maps.app.goo.gl/f2NtE5uyUKF3e3cp8
We sold a 3,000 sq/ft home with a two bedroom suite for $799k and made a profit.
By the time we built the next house in the Oaklands area in 2022 just the professional consultants for the sidewalk were over $20,000. Multiple arborist reports for COV trees (arborist said trees had zero value himself) close to the sidewalk cost $2,500 for initial report plus $2,000 for various amendments.
Based on the feedback builders are sending me now the consultant costs are going to far and exceed the cost of the actual work just 10 years ago. On one MMI project I am counting over 50 comments/subpoints in-between submission and re-submission. We are talking sidewalks here like piece of concrete you walk on, lol.
Once again, these are comments coming back from drawings a reputable experienced civil engineering firm is submitting.
To be clear this is not for a rezoning, but for MMI projects.
“11. Please provide additional cross sections of the proposed pathway along xxxx St. every 10 m intervals following the statins shown on your profile view would be appreciated. (Please ensure you provide at least one cross section where the connecting walkways from the townhomes to the pathway is shown, – include cut and fill slopes as needed.”
“17. Please include on the civil plan the walkways shown on the architectural plans connecting the townhome entrances to the pathway along xxxx St. (include some grade points to understand its construction and slopes) as stated before no retaining walls are allowed within the Public right of way)”
I think that is a bit of a different topic.
The cost breakdown is more relevant to the fact very few missing middle units will actually be built. When you have a 200 unit tower downtown $2 million in civil work can be absorbed by the developer as it is spread out over 200 units. At 700k for a multi-plex it simply won’t be built.
Are houses here built better than this? https://www.youtube.com/watch?v=74ycedBTRF8
That’s insane.
I did hear back from BC Housing that I cannot build a multifamily under owner builder (as Marko mentioned earlier). Next option under investigation is two accessory dwelling units.
Well I guess Marko’s cost breakdown shows why only 1 bed and studios get built.
Often people on this blog write about how new housing is not as good as the older homes. This video will explain the differences in construction quality, materials used as well as the problems of houses specific to the era they were built. These improvement over the decades and changes to the building codes have led to an increase in building costs.
https://youtu.be/bSmgLy26CDE?si=JD9slTRLMSn1AROn
COV missing middle civil work budget (corner lot)….in my opinion given we are in a “housing crisis” this could easily be cut back to 1/3 with some common sense. Are the existing sidewalks functioning without substantial trip hazards? If yes, then eliminate the need for new sidewalks not only would it save 195k but it was also decrease the carbon footprint.
Civil Works/Off Site Improvements
City Of Victoria Water Connection Fee $36,500.00
City Of Victoria S//D Connections $77,500.00
Soil Testing for City side connections $8,000.00
Curb/Gutter/Sidewalks $195,000.00
Retaining Walls for sidewalks $14,500.00
Storm Retention System/ Storm Pump $25,500.00
BC Hydro Underground Servic/PMT – pull conduit/service hydro/Tel $75,000.00
Road Cutting/Paving $52,500.00
Civil Pipe Materials/Labour/Betting Material/Machine Time – Bed Material inlcluded $225,000.00
Total Civil Works/Site Improvements $706,906.11
Missing middle stuff just gets crazier by the day. Another builder emailed me regarding COV excavation deposit which came out to over $100k as he is going below grade with his project.
https://www.victoria.ca/building-business/permits-development-construction/rezoning-development/summary-fees
Scroll down to bottom “Additional Deposits”
“1.2 times the estimated cost to backfill the excavation.”
The excavation permit has a long list of things you have to provide and one of them is a report from a professional with a cost to fill in the planned excavation including trucking, cost of fill, etc.
So you have to pay for a non-sense report so the city can hit you up with 120% deposit of cost to fill in the excavated hole 🙂
Do we have a rampant problem in Victoria of builders tearing down properties and living excavated holes vacant?
I have to come up with a list of how many useless reports one has to provide to build a multi-plex, it is already very long and every day I am learning about a new one 🙂
and for some reason the excavation deposit does not apply to new SFHs but applies to MMI which are going to be build on SFHs lots, makes sense.
More boomer versus the rest of the world. This is funny but there are a lot of “F” bombs.
https://youtube.com/shorts/l86Tiz37YnY?si=OIiqWzFmlYL5h75f
for 99.99 percent of residential real estate doing such an analysis is mental masturbation.
However, there are leasehold properties that have a future value of zero. Without a reversionary value it’s going to be necessary to recapture the purchase price during the remaining years of the lease. You might want to do the calculation then.
The problem with finding a partner making 150K is that you’re going to have to get rid of the old one first.
Monster gain for the Canadian dollar , I’m guessing interest rates and the dollar are no longer tied together
No need for all that shit for personal RE investments. Buy something that is cashflow neutral or better with 20% down and you are almost certainly good, don’t make it more complicated than what it is. Same with stocks, gamble 10% at most with your portfolio and have 90% in quality ETFs and dividend paying stocks and go relax. Then go out try a little bit and and get a $150k+ a year job and pick a partner that is similar and you can put life on cruise control.
As VicREanalyst has alluded to, one can have two properties with identical gross yields but with different expenses. Using the gross yield is a rough method to compares properties quickly. The gross yield or its inverse the gross income multiplier is a quick back of the envelope method to determine the reasonableness of the investment. In the previous example a gross yield of 4.5% is equivalent to a GIM of 22.2 If you are looking at several properties it is a way to short list properties.
The Cap Rate will tell you how one property compares to other similar properties based on the property’s net income before debt servicing. It won’t tell you your personal rate of return as that depends on how much you will be financing the purchase and that varies from person to person. Neither will it tell you how the return on real estate compares to buying non real estate such as stocks or bonds.
If you want to compare real estate with non real estate investments then you need to calculate the Internal Rate of Return and the Net Present Value which incorporates the time value of money.
So why should you care? Because a condominium project may advertise a yield of 6% but that’s not what you are going to earn. And for some it could lead to confusion as they jump to a conclusion that 6% is better than a five or ten year bond at say 4%. It might not be.
There is a reason why cap rate exists…..
I did some more reading — and you’re correct.
You can expect to slice off about 825 a month for strata fees , property taxes and insurance I am guessing looking at a few buildings downtown. Which gives you a yield under 3%.
It is before any expenses. So yield is much lower when those are factored in.
A $700k condo renting for $2,625 per month would have a 4.5% gross rental yield.
Patrick, is :Gross rental yield: before deduction of property taxes, strata fees and insurance? Or is the amount after typical expenses? The definition seems to exclude all the normal operating expenses which reduces the net yield (before accounting for any mortgage costs). I suspect your cash return (assuming no mortgage) is a lot lower than 4.5%.
You’re right.
Gross rental yield is only 4.5% in Victoria (numbeo.com). That’s lower than yield from other investments (dividends, corporate bonds etc.).
Also much lower than other cities like Edmonton (9%) or Winnipeg (6.5%).
Rents are high but do they really justify the price of most condos if one is looking for an investment? There seems to be a lot of units that are PBR coming on line which might be impacting rental rates. Profits seem to be almost exclusively based on increased resale value at a time were these are far from certain in a timely fashion.
I found it interesting that the Real Estate commentary used a ten year comparison where Leo seems to insist on twenty years. The problem with twenty is that it distorts the comparative number of sales simply because the number of housing units was a lot less than today. Go back ten years and this is the lowest number of sales which provides a better picture of the state of the market.
Peasant mindset ftw
Yes it is – unless your grow it back. Let’s say you are 40 years old and never invested in your TFSA before. Assuming you have been living in Canada the last 15 years, your contribution room is 95,000. If you contributed 95k to your TFSA this year and threw it in a penny stock, for example, trying to turn it into 500k and that penny stock goes to $0.00 that room is gone. You don’t get it back the next year. The only thing you will have the next year is whatever the new contribution room is (this year it was $7000). On the flip side If you do turn that 95k into 500k and take it all out this year the full 500k can be recontributed next year. In short growth and losses impact your room.
The example you posted is saying that but not very clearly ‘The $4,000 loss that Amanda incurred during the year is not considered a “withdrawal”‘
Because it’s not a ‘withdrawal’ they are saying it can not be recontributed next year. Only the $1000 can. Meaning the $4000 is lost unless she grows the account again and increases it by $4000. Then the contribution room is back. (Much easier to take $5000 and make it $1000 then turning $1000 into $5000)
Here’s a summation by a local real estate agent on our market that is worthy of a listen.
https://youtu.be/Y38_jEmuxrI?si=8VxbnbFcm5G3bT7v
I think the point is if you have a loss in a TFSA, or RRSP for that matter, you don’t get an increase in the contribution room to make up for it. So you don’t have an opportunity to put in more money to buy low to take advantage of future gains. You could of course buy in a taxable account if you have the cash. But the losses in the TFSA/RRSP cannot be applied against capital gains in a taxable account.
crazy thing in all of this MMI non-sense is I have to hear about embodied carbon in concrete BS but COV makes builders rip up perfectly functioning no trip hazard concrete sidewalks just because….makes sense.
I have a couple of builders sending me COV comments on MMI project BPs they are working on (one is well over a year now). Third submission for one builder and received back 20 comments (with subpoints) just regarding sidewalks 🙂 he is close to pulling the plug on the rental project due to delays and consultant costs. Keep in mind a well known experienced civil engineering firm is doing all the civil drawings for the project and communicating with city staff – still 20 comments on a re-submission (p.engineer address the first set of comments on the initial submission).
MMI is one massive joke as I predicted two years ago. Builders talk amongst themselves and I just can’t see any substantial uptake of such projects. COV wants like 1/2 million worth of civil work on a corner MMI lots – difficult to make the economics work.
Yes you can build a multi-plex or townhomes but you have to rebuild the street 🙂
Good example for other municipalities that want to prevent uptake of multiplexes, just don’t allow for the economics to work.
Below is one of the 20 comments….
“9. In consideration of existing poor asphalt conditions on xxxxxx St., the extended damage any milling and paving operations can cause on the reminder paved section, the tie-in works needed behind the new sidewalk alignment, the relocation of the CB, and for the benefit of the new residents in the area. The city has assessed that it would be more beneficial to pave full width the south section of xxxxx St. and remove the asphalt restoration area along xxxxxx St.
a- Please note that on xxxxx St. a 1 m wide asphalt restoration area would be required where new curb & gutter is to be installed.
b- The full width pavement is only for the south portion of xxxxx St. ( i.e. From the parking lot entrance to the back alignment of the new sidewalk at xxxxxx St.) – See markup provided.
c- Full pavement width limits to be 5.7 m wide at front of driveway crossing into the lot’s parking lot, and gradually matching the existing crossing width at the intersection With xxxxxx St.
d- please re-grade area to control water run-offs towards nearby CBs – a low-profile asphalt curb at the west limits would be acceptable to help this purpose.”
It’s not lost forever, I don’t think:
https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/rc4466/tax-free-savings-account-tfsa-guide-individuals.html#losses_incurred
You can buy companies that have paid a dividend 50+ years in a row so you can definitively mitigate risk a lot.
Disagree, calculated risks is a better term as options can be bought but not sold.
That was a reply to ” Take some risks and once you get to 500k then it really starts to pay off. “. Cumulative TFSA contribution room to date is $95K. Anyone with $500K now or in the near future has been taking some very big risks. And no more than a few are going to get there.
Put it in a GIC then? As far as I know, there are no risk free easy ways to get ahead outside of luck (lottery, rich family)? You either have to take some risk or put in the work.
Dee, all of that is maybe true, but the great thing nowadays is that index funds allow you to buy even just a single ETF like VGRO and have an instantly & fully diversified holding that spans the globe. If you just buy that one fund and just keep throwing excess money at it, you’ll probably do better than 80% of the full-commission advisors out there. Index funds have really helped level the playing field.
“One really underrated benefit of an experience like this is the long-term health effects of early adult labour/movement.”
Toto unfortunately, far to often younger people get hurt on physical labor jobs through over use or poor technique and sustain injuries that will stay with them for life. I am very cautious with my boys and certain physical jobs especially while they are physically developing.
Yeah except when you don’t get lucky and your TFSA drops 50% or worse goes to near $0 that room is lost forever. Have to wait for the increment every year to replace anything in it.
I tend to think that business savviness is a particular kind of intelligence that some people just don’t have. I know that I am intelligent in some specific ways but not necessarily in business. I have an uncle who is very good with stocks and he has no kids and wanted to teach me. I have no interest and find it all quite overwhelming. Another person I know who is very successful business person seemed to have that ability somewhat naturally. I think some people are just gifted in business or stocks, and others aren’t. I’m very good a sudoku puzzles, does that mean everyone who isn’t is dumb? Obviously not.
Doing something hard because you have to def creates a sense of appreciation later when you don’t.
One really underrated benefit of an experience like this is the long-term health effects of early adult labour/movement. I attribute a lot of my current health status to the fact that did a lot of physical labour from 12-early adulthood. The research seems to support that it not only gives you better physical condition later, it has long-lasting effects on cognition. Having a desk job is a health risk.
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8277086/
I think that’s correct. Kind of unfortunate when you think about it. Still & all, I think the TFSA is the greatest gift Harper gave us…:-)
Very true. Government actions like preventing foreigners from owning or taxing them with high spec taxes likely leads to less new business formation.
Government workers (politicians) exist in their own fantasy land. Most only know bureaucracy, they have no idea about productivity, producing economically sustainable businesses that employ people with the profits they make. We really don’t know how many businesses give Canada a pass on setting up here due to the mind numbing regulations imposed. Some regulation is necessary, but I think it is going too far.
Keep buying more now if you can, as interest rates goes down the price of dividend stocks goes up. Watch out for u.s. names though as they will get taxed in TFSA, hold them in rrsp instead and let it DRIP.
It is pretty amazing, I am up to $1,150/month average in tax free dividends I use to buy more dividend shares and I am not pulling my hair out with some flex Friday bureaucrat at COV taking 12 months to turn around a building permit while bleeding money on carrying costs of the property trying to produce something.
TFSA is a great wealth builder with a little bit of luck. Take some risks and once you get to 500k then it really starts to pay off.
100%, I’ve seen this so many times with the houses we’ve built. Great example, one of our SFH builds re-sold this week.
Bought lot in Colwood Feb 2017. It was the last vacant building lot on this particular street and Colwood decided that they wanted a development permit for character and form even thought not one of the previous houses on the street required such. Struggle with Colwood. As it was the last lot on street and all the other houses were finished struggle with neighbors pissed off about blasting as if blasting wasn’t required for their homes. Then deal with a bunch of non-sense during the build. One of the many examples is we hired a framer who subcontracted someone who he didn’t pay and this individual placed a lien on the house – deal with that, etc.
At the end of the day we sold the house for $743,000+GST Sept 2018, buyers phoned back a number of times over the years about various deficiencies we addressed, etc. Profit approx. $120,000. House re-sold this week for $1,230,000 so the buyers walked away with over 400k tax free and since house is out of warranty (other than structural) they obviously don’t need to deal with any deficiency liability once they hand the keys over.
You have to be kind of dumb to produce anything in Canada at this point. I am looking at the numbers on a 10 unit townhome MMI development in Vic West and I literally make more flipping paper contributing nothing to society in one year than what is dragging out to be a 5+ year project from land acquisition to completion.
A much better skill than working hard and producing is having common sense/savviness. Just simple things like starting very young on your TSFA and letting that compound, for example.
FYI Patrick
How Canada averted the 2008 financial crisis? Or did it?
Here is an interesting video, its a bit dated as he doesn’t bring in the effect of huge immigration over the last couple of years that has kept us out of a recession or Covid. Immigrants that have injected billions and billions into our economy. On average each immigrant brings $47,000 into our economy.
I’m not saying this is going to happen in Canada as the general consensus among economists is for a soft landing. I consider myself as an optimist on housing rather than a pessimist, but sometimes it’s really close. However, I like to read both sides of the argument. That’s why I don’t block anyone as people on this blog have come up with some ingenious solutions that I would never have thought.
But I wouldn’t gloat thinking that somehow Canadians are smarter than the rest of the world. Although I believe Canada has some of the very best economists. I spoke with housing strategist twice today who I thought was highly intelligent and well informed – probably because she agreed with me on most points about airbnbs, investors, and end-users. I mean how could I not think she was intelligent
https://youtu.be/BHgDQ1LDjZo?si=Nt_LvW-p_SXnP22g
Post Script, in the news today. China is dumping steel and aluminum on the market.
Collectively, we are spending more and pushing economic activity higher but, individually, we are restricting purchases and behaving as if we are in a recession.
Sounds confusing? That’s because it is.
Record population growth has kept Canada’s economy clipping along. If we hadn’t imported more people we would have been in a recession. So while it is boom times for some provinces the people living there and here are not feeling it. We are purchasing less and that usually means an increase in the unemployment rate.
But will the 30 year mortgage increase demand allowing would-be FIRST TIME owners to potentially qualify for a larger mortgage effectively shaving of 75-80 basis points off the mortgage rate on an INSURED NEW HOME WITH LESS THAN 20 PERCENT DOWN when it comes to carrying costs? Most think it won’t as those that can meet the qualifications will be low. Which includes Victoria as most new homes are over one million bucks. NOTE: the CMHC insurance surcharge is equivalent to adding another 20 basis points.
Good and bad news on rents. According to rents.ca while year over year rents are up, the rate of increase is slowing.
There’s an HHVer here that’s been telling people that same “RE price crash coming” story (that never came) on various Canadian RE forums since at least 2006 – arguably longer than Garth.
Including schadenfreude themed comments like … “The people buying today are the wannabees and poseurs, who are going to be the nouveau poor.” Thankfully this HHVer has been perpetually wrong and none of that has happened.
They got what they paid for.
That’s funny because Garth blew it for thousands of people by telling them — repeatedly, over decades — that a RE price-crash was imminent.
What I get out of it is that you can make a lot more money exploiting assets in various ways than by actually producing anything, which is probably the biggest thing wrong with Canada.
Not blaming any individual for taking advantage of it though. It’s a living. I got quite a bit from it myself.
For any given rate, population growth is always exponential. No matter how large or how small. Decline at a given rate is exponential for that matter.
Intellectual long Covid.
Frank is right.
https://www.bbc.com/culture/article/20240724-why-doing-nothing-intentionally-is-good-for-us-the-rise-of-the-slow-living-movement
That’s what built this country, old world work ethic. Now we’re going in reverse.
I love reading Marko’s mortar-to-riches story. Inspirational.
More boomer hate.
https://youtube.com/shorts/evxfoXzeeek?si=zD_SOkMS09bCq4Qo
“Markets rise. They fall. You are on a journey that ends. Don’t blow it.”
-Garth Turner
When I attended Vic High my father was working as a stone mason so I had to be his helper when available and that was the best life lesson I’ve ever had. After a few years of carrying rocks and mixing mortar by hand in the rain everything seemed easy after that. I remember once I worked six 12 hr nightshifts in a row across Christmas at the Jubilee ICU and my thought process was….meh, better than mixing mortar and I am getting overtime, stat pay, nightshift differential, etc, I was happy with the opportunity to work as much as I wanted. There were a few years early on in my real estate career I would work 80 hrs/week and same thing….show a house a 5 pm on a Sunday and then put together an offer after? still better than mixing mortar.
While things are obviously very difficult today, there is also so much opportunity out there. When I was a kid my family for extra income we had to deliver fliers. Now you have a million other options like you buy a cheaper electric car and you drive Uber after your day job. 10 years ago when I went travelling I would leave my condo vacant, now via Airbnb I cover all the costs of the trip. You can run your own TSFA on your phone for essentially no cost.
I was curious so I monetized my YouTube Channel a couple of months ago and I’ve been making $2/day ($700/year) and my videos/content are so bad and very niche. If you were creative and put in a bit of effort you could easily have a nice supplemental income off YouTube.
A know a number of realtors that have made a substantial amount of money off random YouTube stuff, for example local realtor with his best video at 5.8 million views -> https://www.youtube.com/@PatrickNovotny/videos
A million dollar down payment? A couple of good stock choices and you’re there. As a percentage of society its small but people win the lottery all the time.
Save their rent and give it to them when they move out to help them on their life adventures.
Then move to a one-bedroom condo so that they can never move back home.
@Thursty – hopefully you’re right – it still makes sense then.
Dee if they’re living at home they are not building equity . Rent might be good for u but it does nothing for the kids . Quicker u kick them out and encourage them to buy the better
Lots of early 30s clients I work with that are well over 200k hh income/year and institutionally employed (government, island health, BC Ferries, military, etc.). I’ve also found it shocking how many clients I’ve worked with in the last couple of years where they are capped at $1 million on the basis of the down payment (don’t have 200k down), not income. I wouldn’t have thought at these interest rates there would be very few younger professionals that qualify for 800k-950k mortgages, but there are plenty (maybe not as a % in society) in relation to availability of livable SFH inventory around a million.
Well, if dnd uses it for its own personnel that justifies a lot of subsidy. Maybe dnd could even count it as part of its 2% military spending commitment to nato 😉
Holding them back from what Thursty? It is this exact perspective that I think is changing – and will have to change – given our new reality. Don’t get me wrong, my kids will pay rent and contribute, but I plan to be here to offer them an alternative to extreme adversity in unfair conditions. What we are seeing here is a global phenomenon. It’s a trend and I don’t want to be too cynical but I strongly suspect that due to a number of factors things are only going to get tougher. I’m prepared for that. We must adapt.
Would love to see what the construction costs end up being 🙂
Government can’t even pull the most basic lever to try and make this work – eliminate the useless owner-builder exam for garden suites/laneways let alone support anything.
Leo’s having a lot of fun with emoticons on Twitter:
https://x.com/LeoSpalteholz/status/1821564272847270320
https://x.com/LeoSpalteholz/status/1821567176563945576
Is Leo implying that children growing up in the highest-priced municipality on Vancouver Island deserve to buy a home that is “affordable” in said municipality as soon as they reach adulthood?
I mean, there are other places to live in Victoria, and maybe Oak Bay shouldn’t have to ruin itself to support exponential population growth?
I agree with you Thursty, if you have done your job well as a parent then your children will fly the nest. Or in the case of baby boomers get thrown out of the nest.
Having your kids living in the family home in their 30s and 40s is just holding them back . Better idea is to just leverage the family home to the moon .
Not just the cost of an Accessory Dwelling Unit (ADU) but the time it takes to build one on site. Those extra months are lost income.
Something we haven’t talked about is concrete. We don’t have to build ADUs on poured concrete foundations. There are less expensive alternatives but we are stuck in 100 year old construction methods.
I agree totoro. There’s a very cool multi gen family going in on Selkirk. I think people buying now with young kids should expect that those kids might want to stay around much longer than previous generations. My 12 year old son asked the other week if he can have our house one day and I said “of course!” Planning for this way ahead is a good idea imo. And not shaming kids if they stay around longer. It’s just going to be the new normal.
The cost of laneway housing in Calgary – 660-700 a square foot excluding land costs. 500k for 750 square feet just to construct.
This architect says it is only working for extended family. Same conclusion we came to. I think government should really support and push for multigen housing instead of trying to force homeowners to build suites/laneways for strangers as they do in the existing forgivable loan program. The numbers do not work at all for this.
Everyone needs to get to the place where they can acknowledge the practical reality that new builds of any type are not going to be affordable housing unless they are government subsidized rentals. You can go smaller to make housing more affordable, but 2-3 bed family oriented housing is going to be expensive to build and buy. Existing housing stock is going to be more affordable by far.
https://www.youtube.com/watch?v=DRfHYgSFOZk
The contributors to this blog have shown over and over again that the government policy was not for affordable housing but for accessible housing. A decade or two from now we will be thankful, but not in the immediate future.
My opinion has been that the billions should be tied to a vacancy rate. If the vacancy rate goes over 10 percent then there should be claw backs. Not likely to happen. The high rental rates in these PBRs will result in a higher than typical vacancy rate for the immediate future.
Two decades from now we will look back and say that was a really good idea to build so many PBRs. However are western mind set is orientated to immediate returns unlike other cultures that think in generations.
To solve the housing crisis we have to change how we think about developing and constructing housing and understand that we may not see the benefits for a decade or more.
In the past, I’ve done work on the DND married quarter’s land in Victoria. Superimposing a residential development of small lots that could be developed in phases. Most if not all of the existing housing needs to be demolished and there is acres of non-contiguous land that has been left vacant in case DND needed it for future expansion.
The idea has been around for a long time. There will be a lot of push back on this proposal. For anyone that has spent time in the military they understand that the military mind works differently than the rest of us.
The DND commitment to use its lands to provide housing is excellent. We need more student housing on university/college lands too. It would be great if there was more long-term care housing on hospital lands – though I have no idea if there’s enough surplus lands to do that.
$2 billion in rotating line of credit. Not as if they were spending $2 billion in tax dollars. Ultimately if they are causing housing to be built it is helping.
B.C. NDP explains why $2B housing affordability program was not about, er, delivering affordable housing
https://vancouversun.com/opinion/columnists/vaughn-palmer-bc-ndp-explains-why-2b-housing-affordability-program-not-about-delivering-affordable-housing
Better late than never, I suppose…
Defence minister promises to ‘unlock’ DND lands for housing
https://www.timescolonist.com/local-news/defence-minister-promises-to-unlock-dnd-lands-for-housing-9323594
You need to look at the types of homes that are transacting. Updated in good shape in nice neighborhoods are selling briskly if priced around assessment or over. Pos houses and luxury are going for under or sitting
Pent-up demand describes a rapid increase in demand for a service or product, usually following a period of subdued spending. Consumers tend to hold off making purchases during a recession, building up a backlog of demand that is unleashed when signs of a recovery emerge.
It’s not easy to accurately measure pent-up demand because it is a fairly inexact science. One method economists use to get a sense of pent-up demand is to look closely at the average age of durable goods stocks. When consumers hold off on purchases to replace cars, home appliances, and similar items, the average age of the stock of these goods increases.
For real estate that would be the turn over rate for housing. The longer a person puts off buying a home the greater the pent-up demand. One could also look at how many years people are holding real estate before buying their next property. That’s quite the calculation as one would have to look at every sale and when it was last sold. Too much work for a housing blog. The longer a person defers making a purchase the greater the pent-up demand. Another way is to look at mortgage applications if they are up then there is pent-up demand. I don’t have that data.
If for example, the average period that a person owns a home before selling is say eight years. If that increases to 12 then there is pent-up demand. If it decreases to 5 then there is no pent-up demand.
Intuitively one might say we have been in a technical recession as people have been holding off purchasing their next home since the interest rates increased, The counter argument is that a lot of purchasers rushed into the market when interest rates were low thereby bringing demand forward.
However, we could also have pent-up supply as sellers are waiting for rates to fall before listing their properties. If they all list at the same time then the month of inventory will rise steeply and we could have a glut of housing. Not likely for single family houses but it could happen to condominiums. If the decline in condo prices is significant that could cross over to houses.
This is the stuff you pay big bucks to companies to answer.
I don’t think it matters for the ordinary Joe or Jane they buy when they can afford to buy. It only matters to banks so that they can increase their reserves for delinquencies. Again data that I don’t have.
We have had 15 years of Liberal policies designed to keep home prices from falling. I don’t see that changing under a Liberal government.
I was telling people to buy then too. How about you? My perma-bull thesis was contrary to the standard HHV narrative at the time which was that affordability was cyclical depending on “consumer sentiment”, and had upper and lower bounds. Thankfully, I never bought into that, and it doesn’t appear that anyone does now.
The point being, the best time to buy a home that you can afford is now, don’t wait. Homes aren’t getting cheaper. Of course this assumes you are going to stay in it for at least 5-10 years.
The term I used was “pent-up demand” which is different than “demand”. There is an ongoing build up in Victoria of pent-up demand for SFH which is a predictor of future prices. The HHVers who have been unsuccessful to date in getting their SFH are only postponing the date when they will have saved up enough to get one.
And greater Victoria house prices are up since 2017, 2016, 2015 and 1985 too. All of which are comparing one point in time to another point time. And disregard whether the monthly trends over time are increasing or decreasing.
Well of course G. Victoria SFH prices are up huge, 35%+ since 2019, and unaffordability is up more than that with interest rates.
Supply always equals demand at the market price at a point in time. It’s impossible for it not to be. But both supply and demand are fluid so a change in either one or both will result in market prices changing over time.
If market prices have been increasing over time then looking back one can say either supply, demand or both were not in balance. That’s not was has been happening. Market prices measured for each one month point in time have been stable with minor fluctuations since March of 2023.
When interest rates are declining then more people will qualify for a mortgage to buy a home and demand should increase if there is pent-up demand.
But sometimes that doesn’t happen with prices remaining unchanged. And in rare cases prices decline as interest rates decline. As people have more selection and list their properties as they want a change thereby creating a glut of housing on the market.
Supply always equals demand at the market price. By definition.
Demand is not what people would like to have. It’s what people are able and willing to pay for.
If that were true Patrick then house prices in the core should be increasing. Instead of being mostly flat since March of 2023. That’s a strong indicator that supply is meeting demand.
“I reject your reality and substitute my own”
-Dr. Who
The supply of SFH in Core Victoria (saanich, COV, oak bay) available to be purchased each year is tiny in comparison to the pent-up demand from new arrivals and existing househunters.
– construction of new SFH in Core Victoria is almost zero after subtracting tear downs,
– a main source of net SFH is elderly downsizing or estate sales. Many of these are “spoken for” and kept in the family so never see the MLS.
Adds up to far more interested buyers than sellers for SFH and ongoing scarcity, pent-up demand and upward pressure on SFH prices.
Only 62% home ownership in Canada in 1981. Less than today (66.5%).
Smaller homes today (condos) than back then (SFH), smaller household sizes too.
I actually think it is difficult for someone to buy a starter single family house in Victoria. These starter homes were being purchased by investors to repair and then flip for a profit or rent. But that’s not likely to happen much today. What an investor was willing to pay and what a first time home end-user can pay are wide apart.
Instead of going for a fixer upper house, most first time owners are buying condos or half duplexes that don’t need major renovations. Generally someone looking to purchase their first home don’t have a lot of extra cash for repairs. They are looking for a condo in the $300,000 to 550,000 range. While a starter house starts at around $700,000. That’s too wide of a spread.
While it would be nice to save up $100,000 for a down payment, my opinion is that a first time buyer isn’t going to wait that long. They are going to want to get into the market a lot sooner with half that amount saved. And those that have a one-bedroom condo to sell would be looking at a two-bedroom pre 1950’s house not needing immediate repairs and assuming they have built up enough equity in their condo for say a 20 percent down payment or around $150,000 to $200,000 equity. Or someone that had bought their condo back in 2015.
The numbers are around there, some people will be different but I think that’s a good summary of the current market.
I don’t think we have seen the impact of investors leaving the market yet. The gap between investor and end-user has to close up.
The homeless problem I never get into .
Rush for life , I was referring to poor people not the homeless . There has always been low income earners and they will probaly always be renters . I think poverty has improved over the decades but not everyone gets everything, that’s life
Perhaps for someone born in 1945. Not this boomer. But this boomer bought a house anyway.
Boomers had it tougher back in those days. As one was telling me, in their day they didn’t have condos – their first home had to be a house. Today’s generations don’t know how easy they have it.
For someone that makes 100k a year, shouldn’t take more than 5 years to amass 100k assuming they are in saving mode with no crazy debt. Two people living together generates additional synergies so should take less than 5 years.
Some intersections have a homeless person asking for money at all 4 medians. It used to be one. The homeless factories keep cranking them out.
I think many would disagree. I grew up in Courtenay and there was barely a homeless person to be found. I was talking to a friend who still lives there recently who said they now have their own tent city at the city hall filled with homeless people.
This recent Vancouver count found: “4,821individuals were identified as experiencing homelessness in this year’s count, compared to 3,634. This is the largest increase measured between Counts since the regional Counts began in 2005. https://hsa-bc.ca/_Library/2023_HC/2023_Homeless_Count_for_Greater_Vancouver.pdf
Also as to why, or at least in part – “A large body of academic research has consistently found that homelessness in an area is driven by housing costs, whether expressed in terms of rents, rent-to-income ratios, price-to-income ratios, or home prices.” https://www.pewtrusts.org/en/research-and-analysis/articles/2023/08/22/how-housing-costs-drive-levels-of-homelessness#:~:text=A%20large%20body%20of%20academic,income%20ratios%2C%20or%20home%20prices.
So i would argue its not what its ‘always been’, its getting worse, and it is a big deal.
I spoke with a boomer the other day that sold his three year old car and used that money for a down payment to buy his first house.
If one were to make a drawing of a healthy housing market it would be shaped like a pyramid with lots of homes for first time buyers/investors, fewer middle income and still fewer upper income at the top of the pyramid.
The problem is that we don’t have a pyramid. We have a bottleneck around the middle income housing market. We can’t solve the housing problem until we understand why we have a bottleneck around middle income housing.
When I look at the Hillside, Fernwood, Tillicum, and Oaklands areas I see a lot of homes that are well past there best by due date. Why aren’t these neighborhoods being demolished with higher density use of the land and quality energy efficient construction?
It’s 50 years of bad government policies, an assessment and property tax system that rewards those that don’t improve their lands. Developers that catered to investors’ preferences rather than end-users. In a way, I can see why the BC government has to put a stick up the arse of city counsellors to clean the middle income blockage.
The cities need an enema.
Yes Dee we can build lots of housing, but not in the traditional way we develop property or build homes today. Just read the comments on this blog.
We know that golf courses are a thing of the past. Golf course are not coming back and most are likely to go bankrupt in the future unless the city puts millions of tax dollars into them every year – forever.
Why not enter into a contract to build two thousand modular homes with a company to build retirement/starter housing on small leased lots from the city. That modular company will build a factory here, hire a hundred people and build those homes on site if given a contract for two thousand homes.
But we immediately get those wanting to throw up road blocks or scour the internet for any reason to sink anything that goes against the traditional western way of development and construction. There may be legislation against possible proposals but those rules are written on paper. They are not carved in stone.
When it comes to providing housing we are our own worst enemy.
There’s always going to be enough folks that can afford a sfh . Hard to believe but there’s a ton of people with money and equity out there . Poor folks have always been around not a big deal
By what age are you imagining that they could amass a 200k downpayment given that income? A lot of things would have to go right to make that happen. I’m sure in terms of raw numbers there are “lots” of people that fall into that category, but I question how big of a percentage they are of new adults. And, what percentage had parental help. 200k is a lot of money to have saved up for most people. Especially if they have student debt and need to pay rent and buy food.
I don’t think so, 160k-200k hh income and 200k downpayment can still get a SFH in the core with a suite (or not if closer to 200k). I don’t think that is unreasonable, I am sure Marko can tell you about all the clients he has which fall into that category.
Working long hours without overtime pay was and is still common after finishing university. Most are grateful to start a job in their academic field.
The advice I would give to a recent graduate is to keep your CV up to date, go to meetings of the professional body that you may belong to. Volunteer often for pro bono work. And be ready to move to another company with short notice. You don’t owe loyalty to your employer. You should be able to put everything in your office desk into a briefcase and walk out in the morning and start with a new company in the afternoon. Change jobs often to obtain wider experience.
I started my work with a smallish company owned by absolute dick of human being but there was a lot of variety in the work. After a couple of years I moved to an internationally owned company and traveled extensively across Canada. A third of my life was spent in hotels away from home which contributed to several failed relationships. In that way life is easier today as you can text someone your breaking up with them and change your status back to single on your social programs.
I guess the issue is more where as opposed to how.
Oh we know how. The question is whether, not how.
I think SFH is plain out of reach for most new adults. It’s not the end of the world – society changes and that includes things like housing. As long as there’s a suitable alternative and the game, overall, is fair.
I wish we could figure out how to build a ton of townhouses. Or even taller rental buildings with just two suites on each floor (each being 3-4 bedrooms). Just something so there’s more alternative to SFH.
A market that is slightly in favor of sellers with prospective purchasers having less control over terms and conditions in the sale. Terms such as subject to the sale of their property may be problematic. This is tethered to the provincial government announced changes to the Residential Tenancy Act that have resulted in some uncertainty for those considering homes with rental options.
The changes have made an already complex transaction more complicated and have added more risk. It’s a strange market that has market forces pitted against government interventions.
The Contracts of Purchase and Sale that I have reviewed are mostly standard. The strangest one being a sale that ticked the boxes for being be a potential missing middle re-development property which had an accepted offer in February with subject removals in July. A bit of a gamble for the purchaser as market values could decreased over time.
The biggest change that I have noticed from last year is that lenders have gone heavily into the use of software applications to approve properties without the benefit of having someone look at the interior or exterior of the property for items that effect market value. Not necessarily for a cost savings as they are charged for that automated service, but to approve mortgages faster. It is a highly competitive market for lenders due to lower demand for sales and refinancing. The lender doesn’t want the client to get out of the seat in front of them and weigh their options with other lenders. Brokers doing refinances of properties that sold during Covid are having challenges. Depending on when the property was purchased the market values may have decreased 5 to 10 percent.
The use of automated valuations is not really a problem for sales with a conventional mortgage. Lending at a loan to value at 80 percent or less provides a reasonable wiggle room for error in the software. However using an automated system for refinances is more risky. As the automated system can be way off as the applicants have made changes to their property or the property has fallen into disrepair during their ownership . Factors that are not picked up by the software program. Data entry errors or using spurious information can make a huge difference in the amount of financing approved and lead to the bank over lending on a property. Not a big problem for the big banks as they spread the risk over lots of properties. However small sized lenders and suitcase lenders may be at a greater risk.
I can see OSFI stepping in and putting conditions on the use of automated software for refinancing such as if the property was purchased more than three years ago. At the moment their regulations governing automated valuations are inconsistent or non existent with their regulations governing appraisals. Potentially a big loop hole that may be exploited for nefarious purposes.
too funny. i dont you should limit yourself to working just the 24 hours a day though
makes me think of the “Four Yorkshireman” sketch
Pre Monty Python sketch from the TV who show At Last The 1948 Show starring Tim Brooke-Taylor, John Cleese, Graham Chapman and Marty Feldman.
https://www.youtube.com/watch?v=VKHFZBUTA4k
Probably harder to get financing that way compared to working 2 jobs.
Another way would be to have the government job and buy and fix up a home or add a suite to it. That was what a lot of people did who wanted to get ahead. Now it is harder because SFH prices went up so much.
I’m gen x. It was not 50 years ago. These strategies still work but house prices are a bigger barrier. If I was starting out again I’d consider co-ownership or coops, remote work, or, most likely, I would leave Canada and work in a country where I could earn and save more. So much information is available on these options now.
No overtime either but there was a sizable year end bonus at roughly 50% of my base salary if expectations were met and the firm hit it’s targets. Mind you I was single and in my early/mid 20s and so were many of my colleagues so it almost had the same feel as cramming for tests at night during university so it actually wasn’t too bad. Also, the work was sometimes sporadic so there were times where you had a couple of hours during the afternoon with no tasks but still have to work until midnight due to waiting for materials from other parties etc.
@totoro thanks for sharing that. It is very cool that we live in a country where it’s possible to do that (to change the circumstances one is born into). I too worked in restaurants while in university whereas most of my friends didn’t have to. I don’t regret it at all. It gave me grit. As an adult I had to work multiple jobs for a while to get to where I am. It wasn’t sustainable long term but I did what I had to do and don’t regret it.
Still don’t think it scales to minimum wage – but I could be wrong.
I work with young adults currently. I think they’re great. They don’t strike me as particularly lazy. I think they are willing to work hard. But they also are aware of the unique challenges that they face (housing, climate). Doesn’t help to just think everything is the same as it was 50 years ago.
Frank I like the idea of giving young people a break and rewarding the hard work.
I think if one is motivated they can do a government union job for 80k with a pension and flex fridays and then do part time and or gig jobs on evenings and weekends and end up with I don’t know an extra 40k and be able to write off a bunch of expenses, so net take home pay is probably similar to someone making $150k at one job.
It’s all about motivation. The government should make the first hundred grand a person makes tax free before they turn 22. University students, the first 200 grand tax free before they turn 30. Working, interacting with other people, is invaluable and is the best thing for your physical and mental health. It’s very hard to break a cycle of inactivity.
Yes, me. I grew up poor. I was quite motivated to change my circumstances and thrilled to be able to work this much and have the opportunities that came with it.
I worked full-time while going to school starting at 13, although I had a paper route before this. This meant I finished school and went to my job until 9pm and worked weekends. In the summer I worked two jobs. They were fun jobs in restaurants with people I went to school with. I continued to work full-time while attending university – also in restaurants which was highly social and fun and I have lifelong friendships out of it – we still meet up regularly to this day. I never thought of this as a hardship, although when I had kids I realized I did not want that for them – it did come at the cost of ex. competing in sports as I had done when I was younger.
The most I ever worked was the first couple of years when I became a “professional”. That was 80-90 hours a week for a couple of years like VicREanalyst – no overtime. It paid off. I quickly gained specialized expertise and I was able to start my own business after two years of this. I made the same salary and worked half the time. Ultimately, I was able to “retire” very early as a result of the hours I worked and the lack of debt I had accumulated by working my way through school.
When you are young and healthy you can easily work this much imo. However, the question is whether it is worth it. It is worth it for the lowest paying jobs if you need the money to accomplish something that will ultimately make your life easier and you have a path to something with a better wage. It might be worth it longer term if you are supporting a family as a new immigrant and don’t have language skills or knowledge yet to get a better job.
The only time I can ever recall taking a sick day in my life was when I broke my collarbone. If I was not feeling well I went to work anyway. Back then it was expected you would show up anyway. When I worked in Asia you were also expected to show up, but you were supposed to wear a mask – which was better. Covid taught us that staying home makes sense so you don’t make others ill and that seems reasonable to me and work culture has probably changed a bit – not sure if this is the case for young professionals.
Being poor was way more stressful and hard on my health than working hard was.
How many security guards are out there, mostly sitting on their ass, that work every hour they are offered? They might live alone and would rather be making money than sitting in an apartment with no money. The point I was trying to make, it is better to do something (anything) productive than lying around getting high. Work is the solution to a lot of our social problems.
@vicRE I think that might be what’s happening here. People who work in professional jobs mistakenly thinking it scales to the lowest paying jobs. I can see a person working 80-90 hours a week (happens in my industry too) but they’re at a single job and often have a fair bit of autonomy. I don’t think it scales to the minimum wage jobs.
I worked on average 80-90 hours a week my first couple of years out of university, now I am around 50-60 depending on what is happening and also travel a decent amount. The real high paying jobs all demand significantly more than 40 hours a week and require you to work adhoc on evenings, weekends and holidays. A good WLB sweet spot would be $200 to 250k for ~40 to 45 hours a week, but once you make more and are still in prime earning years then it’s hard to come down.
@totoro do you know anyone personally who has worked that much in real life? I don’t see how it’s possible. In a single year wouldnt they get sick at least once? And I’m assuming they’d have to commute between jobs in a single day because the numbers didn’t include overtime, which is legally required after much less than 12 hours. So maybe the two jobs are right next to each other and the transport is minimal. But the person would still need time to change clothing (lower paying jobs often mandate certain clothing or uniforms). I just don’t think Frank’s scenario is even possible. I think there’d need to be a third job in there too – maybe even a fourth – given daily maximum for working hours and employer wanting to avoid o/t.
Also, I believe that there is research looking at people working in high stress situations and the health impacts of this. It’s just not realistic and certainly shouldn’t be expected of anyone. At all.
I imagine there is no way of knowing but I wonder how many listings are “forced” sales because of death, divorce and Disability (nursing home). Basically units that have to be sold and practically cannot be taken off the market.
Nice , I’m the first one to say we are bouncing off the bottom , with higher sales and higher prices .