AirBnB hosts playing a dangerous game of chicken
Property owners have generally been accustomed to not worrying too much about what aspects of their property is or isn’t legal.
Buying a home with an illegal suite? Well that’s almost all of them, and while you’re taking on some risk depending on the municipality, buyers generally have been conditioned into a sense of complacency by decades of cities looking the other way. The real estate board is so used to half-hearted attempts to obfuscate the presence of a suite in listings that they have a custom search that finds listings with terms like “in-law”, “teen”, “granny”, or two kitchens even if a suite isn’t specifically indicated as present.
Buying a home with unpermitted renovations? Again, that’s probably most homes more than a decade or two old. An honest seller will disclose this and you’ll need to accept the material latent defect, but often they don’t even know. Occasionally this can lead to a nightmare if a pedantic inspector catches wind of it, but in the large majority of cases there will be no consequences.
Using a property as a short term rental? Again, outside of the City of Victoria, local municipalities generally did not care, despite the fact that short term rentals were not a legal use in most of them. Any enforcement was driven on a complaint basis, so as long as your neighbours didn’t hate you, you could probably get away with running a short term rental without issue. Even in the City of Victoria which genuinely put a lot of effort into enforcement (hiring multiple staff and taking hosts to court), enforcement was far from comprehensive because the short term rental platforms refused to share data with the city. That made tracking down illegal hosts an exercise in painstaking investigation, with enforcement dependent on tying listings to addresses and proving bookings without solid proof.
So it may be understandable that despite the new provincial restrictions on short term rentals that kicked in May 1st, there are still thousands of hosts that have seemingly decided that the new restrictions are going to be just as toothless as previous attempts and thus can be safely ignored. The article above notes over 900 illegal listings in Victoria, and data from InsideAirBnB backs up that impression. While the impact of the regulatory change is clear – AirBnB review volume is down 10% year over year in June after growing an average of 17% before that – it’s also a surprisingly small change given that most short term rentals are illegal.
No doubt shift of some of the units to the long term market has helped the rental and ownership markets somewhat. Adding units for sale and for rent helps control prices and rents. But the set of short term rentals is a lot smaller than the set of long term rentals, so moving a couple hundred units from the short term to long term markets is like scooping a cup of water out of a pot and putting it into a pool. The volume of water removed from one is the same as that added to the other, but the change in water level is much easier to observe in the pot. Similarly with rentals, the clearest signal in the data is likely the year over year increase in hotel rates, which jumped 14% in June compared to an average increase of 4% in the 12 months prior.
There have also been reports of a slow tourist season in Kelowna, with the blame landing on the AirBnB restrictions. Kelowna enacted more stringent restrictions than the provincial mandate, choosing to effectively ban all short term rentals in the city except for those with existing licenses that were grandfathered. Indeed active listings seem to be down substantially (-44% according to AirDNA). The drop in Kelowna has seemingly not led to an explosion in neighbouring West Kelowna, which completely opted out of the provincial restrictions because they had a rental vacancy rate over 3%. Despite the lack of restrictions, listings are down (14%) in West Kelowna as well. Hotel occupancy and rates though are not up by much (+5.1% and 6.8% respectively), indicating the tourists really might be staying away to some extent. As always, other factors including the ongoing unpredictable fire seasons probably also have a large impact here.
Back to Victoria though. For investors still banking on business as usual under the new provincial restrictions, I would advise extreme caution. Before May 1st, cities were responsible for enforcement and they:
- Often had no specific bylaw against short term rentals or specific penalties on the books, even if short term rentals were not a permitted use in zoning
- Had little to no will to enforce restrictions against short term rentals
- Had little to no resources to go after any STRs that were reported.
- Had no access to data, making enforcement nearly impossible even if they had the will and resources.
After May 1st, the province has:
- The regulations against short term rentals with stiff fines on the books
- The political will to go after hosts
- The resources allocated and
- The complete data set from the hosts linking listings to properties.
Will the STR crackdown have a big impact on the housing market? No. I’m ambivalent about the policy and classify it with the dozens of demand side interventions that have been done in the last decade with only small impacts. But regardless of how you feel about them, the changes are in place, and if you’re operating a short term rental in contravention to the regulations you’re taking a much bigger risk than you may realize.
Also the weekly numbers.
| August 2024 |
August
2023
|
||||
|---|---|---|---|---|---|
| Wk 1 | Wk 2 | Wk 3 | Wk 4 | ||
| Sales | 70 | 172 | 544 | ||
| New Listings | 164 | 368 | 1095 | ||
| Active Listings | 3305 | 3287 | 2490 | ||
| Sales to New Listings | 43% | 47% | 50% | ||
| Sales YoY Change | — | +9% | +14% | ||
| New Lists YoY Change | — | +2% | +12% | ||
| Inventory YoY Change | +38% | +34% | +17% | ||
| Months of Inventory | 4.6 | ||||
Inventory has now definitely peaked for the year and is making it’s way down along roughly normal seasonal patterns. While we often get a bit of a new listings surge in September, that is roughly matched by an increase in sales. On average, inventory between the end of August and September is roughly flat, while we are now 185 listings below the peak for the year. The gap between this year and last will continue to narrow until at least October.
Sales are running ahead of last year’s pace, while new lists are roughly flat. As mentioned, I would expect a decent increase in sales activity this fall over last, partially due to the fact that last year was quite weak. Even though last August had an additional business day, expect sales to crack 600 fairly comfortably this month.
The trajectory of the market in the coming months thus depends largely on the strength of new listings. Will all those cancelled listings retry their luck after the next rate drop, or will they wait on the sidelines longer?
New post: https://househuntvictoria.ca/2024/08/20/where-the-bids-are-landing
I talked to the chief planner in Kelowna about what made their infill policy so successful. Getting rid of rezoning (much less risk) and having the pre-approved plans allowed simple unsophisticated builders with little capital or risk tolerance to build quadplexes when before they were at best building detached homes or maybe just subcontracting. It broke the developer monopoly on adding homes.
No doubt, government needs to fix the horrendous lack of immigration planning that has caused the growth rate to swing quite wildly in the last 3-4 years. No supply-side policies even in a YIMBY utopia can keep up with this kind of bad planning. I completely agree with you there, and unfortunately out of control population growth has seriously undermined housing reforms as it sucks all the oxygen out of the room.
But before let’s say 2020, or even 2015 if you’re a Trudeau-hater, was housing fine? What about the billion comments on HHV from 2007 to 2015 complaining about housing despite the fact that immigration was totally normal and not out of control?
If you’re suggesting cutting immigration to 0, then that will cause massive issues with sustainability of our services as our population ages. No one is seriously proposing that for good reason.
I took this off the net.
“Easy to construct, more than 10,000 Vancouver Specials were produced by small-scale builders. The cookie-cutter plans could be purchased near City Hall for less than $100, and City staff could approve permits for the familiar design within three days. The house would then take two months to manufacture”
Whatever, different times, I don’t think we are ever going back to the good ol days when we could build a house start to finish in 6 months
LMAO speak of the devil, 1043 Thistlewood Drive is a strong sale at 1.56 for all original with zero upgrades. Might be the first sale over assessed in broadmead for awhile.
Thrusty, no where in that entire comment did I mention a half decent framer or that you would get stumped framing a house or that the house would be cheap house on a million dollar lot. The Vancouver Special was a utilitarian design that maximized square footage while minimizing cost. If you bothered to watch the video you’d would have noted that the city hall became familiar with the stock plans and that sped up approval. And then you wouldn’t have problems because the designer forgot about a gas bib putting your plans at the bottom of the pile.
But you had to be very competitive on price as the client is showing the same plans to other builders that are likely building the same home on the same street. So the client is not going to get these wild differences in price between builders for the same house.
Some builders won’t build them but there will always be others that will.
So you can keep building your bespoke spec homes.
Whatever , a half decent framer can whip up a custom home just as fast as a Vancouver special. There is little cost savings , just because the floor plan changes. I have never been stumped framing a house . If I’m doing a spec house today I’m building max sq and as attractive with all the bells and whistles to get the most money . I wouldn’t be trying to build a cheap house on a million dollar lot
Maybe we should just force Leo to actually live in a unit in one of these fourplexs for the next twenty years.
I have a long range EV now!
But yeah was just in Kelowna, forgot to take a picture of them though
Maybe we need our own Vancouver Special? One of the good things about the Vancouver Special was that everyone knew what it would cost to build and that made builders keep their prices low to get the job. Builders made very little on them and some cases were working beside their employees just to pay themselves a wage. They were tight budgets with little to no cost overruns. Even the real estate agents had to lower their commissions. They were so successful that entire city blocks of bungalows were demolished from one end to the other using the same set of building plans.
https://youtu.be/Zr18Su01YHE?si=MDdcnnbyljHDv79A
Speaking of Airbnb just joined a WhatsApp group where people are posting short term stay requests….”need place for three people, Sept 17th-20th, downtown…..”
Hmmm, wonder if over regulation is going to force some things underground.
We should go on a field trip to Kelowna to check out these fourplexes/neighbourhoods.
In Leo’s Leaf in the middle of winter.
Random chart. What happens when you stop actively preventing people from building homes. Kelowna was upzoning before it was cool, and is still the only city that has actually shown real-world results instead of just legalizing housing on paper. The pilot has since been expanded to most of the city (after the provincial mandate)
Vic, I would rather want to know is how the household income on mortgage applications has changed? The banks would have that information when determining their forecasts and RBC sees the market sputtering over the next few months. Draw your conclusions from that.
My opinion, is that investors are following where sales are outpacing supply and right now that’s Montreal and Edmonton.
What I have seen is that not all of the markets are acting in unison as they did on the way up. Toronto, Vancouver, and the Fraser Valley for example. Our market is so small that we generally don’t get mentioned in media reports.
What we haven’t had unlike the above is a soar in listings. Most of the time our market follows the Fraser Valley that has similar prices and household income levels. RBC suggests that the these markets are currently being driven by two factors-investors pulling some off the market and sellers betting lower rates will spur buyer interest and improve sale outcomes.
In any case, RBC continues to see the market sputtering over the next few months. They repeated that much larger rate cuts will need to be observed for any material impact on demand.
Now what’s a much larger rate cut?
How much higher are wages?
Well we have had two rate drops with no effect on median house prices while median condo prices have slipped. Yes people can afford more, but are they willing to take on higher prices and more debt in a balanced market?
For prices to rise usually requires the market to shift into a seller’s market. And we still have a wall of purchasers that took out five year mortgages at low rates that will be refinancing at higher rates in 2025. Most should be okay because of the stress test if they got their financing from federally regulated lenders. That was the purpose of the stress test in the first place so that there wasn’t a panic to sell at renewal time.
I’m just not convinced that 4% is low enough to entice buyers back into the market and shift this market into a sellers market. We will still be almost double the interest rate that was available during Covid. Home prices are still 25% higher than pre-Covid when the interest rates were higher than during Covid.
At this time, I’m thinking you might be optimistic in calling for a 13% increase. The phrase that I hear a lot more is that we are in a me-session as people are feeling poorer, that may say a lot about consumer confidence. My opinion is that people will need to see their bank accounts growing for awhile before they commit to higher prices.
Combination of rates and economy, hard to say.
The trend will be lower interest rates and higher prices . Victoria’s market like Vancouvers won’t rely on local money for its market . Newbie’s will push prices higher and higher and that’s not a bad thing
Hate to say it but I agree with Patrick, stress test is not effective in preventing price increases, see what happened during COVID …
I’m saying prices will rise (due to lower rates lowering mortgage payments), that’s my point expressed in my headline “Expect higher home prices.”
Affordability is based on monthly mortgage payment so it won’t change much, despite the rise in prices.
Patrick are you assuming that the prices will not increase to meet the increased demand?
Not debatable. There’s a stress test calculator where we can show how much income you need for each of the two cases.
And you can see they are almost identical ($125k vs $126k income ). This means that if the monthly mortgage payment is the same (because rates have fallen), you can borrow more money ($570k vs $500k) and still pass the stress test.
Here are the exact numbers, matching the two cases in my post. You will see how much more you can borrow and still pass the stress test as rates fall.
With a 5.25% mortgage, and $125k income, you can borrow $500k and pass the stress test. And pay $3,000/month mortgage.
With a 4% mortgage, and $126k income, you can borrow $570k and pass the stress test. And pay the same $3,000/month mortgage.
https://itools-ioutils.fcac-acfc.gc.ca/MQ-HQ/MQCalc-EAPHCalc-eng.aspx
‘Marko, the back math, as you may already well knew how it works, is pretty straightforward.
4.37108 unit 800(estimate average unit size) *12month *80%(factor expenses converting into NOI, as CMHC may choose use 21 percent for new construction)=2.5mm NOI
2.5mm NOI with 5 -5.25% cap rate for new construction in Victoria area gets 70mm assets( from the appraisal report)
on the debt side, 2.5m NOI, with 95% loan to value, 50yrs Amortization @1.10 debt service ratio@CMB 3.84(today’s rate) as per MLI Select program – this allows the developer to take out 44.5M
without knowing the actual hard cost of this site, I suspect, the developer should be make min. 10% of that 44.5% or lenders wont touch it. They get to ask very high rent on this one, in order to make the deal pencil. I suspect the actual cost is above 380-410/sqft range as it seems got some nice finishing
there are some serious professional on HHV, feel free to chime in about the construction side of the business or any observation on this deal 😉
You HHV bears have been wrong 10 years straight. Imagine if you’d just listened to the HHV bulls? House prices have more than doubled.
If they pass the stress test. That’s the debatable point. If you listen to the BoC they are concerned not to cause house inflation.
It would only be a short term gain and we would be right back to where we are now.
I really don’t give a “F” what anyone said ten years ago before Russia, China’s implosion, Covid, immigration, and supply chain issues. All things no one could have envisioned happening to the world market.
They will still pass the stress test, because their monthly mortgage payments are the same. I will post the exact calculations later.
Not necessarily Patrick, some buyers will still have to pass the stress test.
This might help you understand what’s happening in the market.
https://youtube.com/shorts/__Ck7mG18GY?si=EXTgP-NmY9EDeIom
Expect higher home prices.
There should be home price increases incoming over the next few months. Lower rates will help borrowers bid up homes by up to 13% with the same monthly mortgage payment.
With today’s low CPI print (2.5%), expect three more .25% drops in rates by the end of the year. That will total 1.25% worth of drops. Of course that’s the overnight rate, and the 5 year mortgage is based on the 5 year bond yield. But IMO we will also see 5 year mortgage rates drop from 5.25% (June 2024) to around 4.0% (Dec. 2024).
If we do see 4.0% 5 year mortgages….This produces a big improvement in affordability, where someone is able to borrow 13% more for the same monthly payment!
Here are the numbers:
For the same payment of $3k per month.
– at a rate of 5.25% can borrow $503,000 (25 years). Payment $3,000
– at a rate of 4.0% can borrow $570,000 . payment $3,000 (if rates stay at 4%, on average over 25 years, 63% of this $3k payment goes to equity, 37% to interest).
–
– That’s an increase of $67k or 13.3%. For the same $3,000 monthly payment. And more of the payment is going to equity.
Expect higher home prices.
You need to adjust for the 13 month free incentive. They have set their rental rates similar to a downtown condo which is exactly what I would have done. Because If you don’t ask then you don’t get. The management company will have lease up targets to meet. They might be aiming for a 90 percent occupancy in 12 months.
It may take a long time to lease up 105 units but the management company would have taken that into consideration. We’ll see what happens a year from now when the initial renters come up for rent renewal.
We are only near the beginning of PBRs being made available. There should be a lot more coming onto the market.
I have a hard time believe they are renting units out at that price; those are some crazy prices. If that is a true reflection of the rental marketplace then most landlords are just a few rate cuts and a tenant moving out away from stabilizing their current investments.
If one looks back 30 years there wasn’t much in the way of options to move up the property ladder. Oak Bay was pretty much it.
Not true today. If you have been lucky in life and accumulated great wealth to be in the top percentile, there is no reason why it is necessary to restrict yourself to one location.
The most expensive residence on Vancouver Island to sell in the last six months wasn’t in Victoria. It was in Tofino for 13 million bucks.
https://vimeo.com/918471033/52e3c2c476?share=copy
https://victoria.craigslist.org/apa/d/esquimalt-adelaide-brand-new-luxury/7773571172.html
Noticed the asking rent hits $4.35/sqft in Esquimalt for PBR. The NOI is strong enough to sustain the land price high. Good news for the land owners around that project,
There is also the sunk-cost fallacy
In real estate, the biggest example of the sunk cost fallacy is when a property owner confuses the cost of the building they purchased, or prior renovations they undertook, and base a decision on what to do next as if those costs were still an important part of the analysis.
They have become heavily invested both financially and emotionally in their home. I find this with people that have over paid for their property as they struggle to find a way to justify spending more money on the property after the economic rationale of doing so is dead. Throwing good money after bad.
When we were in Bruges a tour guide told us many of the houses in the old town were owned by the same family and passed down generation after generation. The houses in old town Bruges are absolutely gorgeous. And very expensive.
I have lived in a few different places and would be open to moving if there was a significant change in my financial circumstances. I love where I live but sure if I won a ton of money I’d probably move. But in that case it might be outside of Victoria. It just isn’t helpful for me to think about since the house I have is great for what we need. We are all 20 minutes away from work/school by bike/walk or drive. It’s large. We have awesome neighbours. It would have to be a significant step up for me to want to change. VicRE I think people value different things and not everyone is pining for a better house or area. I think people do come to like where they live (as Dad said).
Lots of long time owners in my neighbourhood too. In fact, I bought my (mid-century) house off the original owner. I’m sure there are some people who try to upgrade to “nicer” areas for status or whatever, but I doubt there are that many.
Why Do People Move?
The most common are: economic and social. In addition to economic and social, other reasons people may need to move are: political and environmental. These are not in any particular order.
Economic
Moving for work is very common. Around 20% of moves take place due to this reason.
New job – Relocating for a new job or a new position within an existing company is one of the main reasons people will decide to move. When presented with an opportunity, whether it be a steady job, a higher position, a higher income, or perhaps better working conditions.
In pursuit of work – Moving to a new place in search of employment, or to follow your chosen career path might be necessary.
Corporate move – Corporate companies often transfer employees to different cities,
Commuting – Long commutes to and from work on a daily bases is another reason that people will make a job related move. It enables them to be closer to work and create more time.
Social
Moving for social reasons can occur in one or more situations.
New home – You might decide to move to a new location if your current home is: too small, too big, or you desire to have a better home, or own your own house.
New neighborhood – Having a better quality of life for you or your family. Safer neighborhood, good schools, greener environment, compatible climate, a booming or more affluent area could be just a few of the reasons to move.
Family and friends – Around 30% of moves are associated with family. Relationships play a very big part in the lives of some people, and being close to family and friends is very important.
Divorce or separation – If there has been a divorce or change in the relationship, separating might require moving from a house or moving to a new area.
Elderly parents or children – As parents age and become older, being close and spending time together is a common reason for moving. Sometimes it will be the elderly parents moving to be with the children and grandchildren. Or, the adult children will move closer to the elderly parents.
My wife’s place in Lugano has been in her family since at least 1600 and probably a long time before. Europe is different than from here.
What is the definition of lots? My parents have neighbors to either side of them in the Oaklands area that have owned for more than 30 years (one 40 years). Directly across the street is another 25+ yr ownership old neighbor.
Not saying people don’t try to upgrade from 2,000 sq/ft to 3,000 sq/ft as they need room for entertainment and a media room and spare bedrooms for their kids/grandkids that visit two weeks a year, but difficult to say whether that is lots of people in general or lots in relation to people participating in real estate transactions.
Not sure I buy that, most people trading up homes definitely take neighborhood into consideration. Lots of people trying to go from crappy areas of Gordon Head, Oakland’s, esq or westshore to oak bay, broadmead, Fairfield, Rockland, Cordova bay etc. There are abundance of posts about that on hhv, that millennial homeowner x2 sold two places and got into the “forever house” in Cordova bay.
If you adjusted for vintage of home, finished square footage and lot size is Broadmead really more expensive as a neighborhood? I sold three homes in Broadmead last week and if you take those three homes and pluck them in Saxe Point or Oaklands I think they would fetch the same amount, but you simply don’t have 1990s 3,000 sq/ft on a 12,000 sq/ft lot homes in Oaklands and many other areas. You are looking much older, <2,000 sq/ft finished on a I think most people just end up liking where they live. Even if money was no object, I personally would have zero interest in moving to a place like Broadmead or Oak Bay.
My parents are like this. Bought a house in the Oaklands now approaching 30 years ago. Upstairs is 800 sq.ft. and downstairs is 800 sq.ft. (rented entire length of ownership) and they’ve literally had zero interest in moving and wouldn’t even thought they could easily afford a house 2x the value without taking out a mortgage or impacting their retirement lifestyle.
Different culturally. My grandfather was born in the same house he died in at 84 years old. My other grandparents built a house in a small fishing village in Dalmatia in their 30s and died in that house and now my cousins (their grandkids) live in that house.
I think VicREanalyst makes a good point re working from home. Much easier to do real estate part time if your core job shifted from in office to WFH.
Perhaps they are so useless that no one in other industries will hire them.
Pretty much everywhere I’ve lived in Victoria has felt like the greatest place ever at the time. And everywhere I haven’t lived I think “wow it would be nice to live here” when I pass through. You can’t go wrong! They all have downsides (I agree James bay is perpetually freezing cold) but those downsides are usually minor and easy to ignore when you live there.
Also I wanted to defend the claim that broadmead is not walkable – before I moved to broadmead I thought walkability would suck and was a bit worried about it… but it has actually been amazing. 15 min to Broadmead village, 15 min to the beach, 20 min to commonwealth, 30 min to matticks farm… I can jog to the top of mt Doug and back in less than an hour, hop on the Lochside trail to get downtown or to North saanich pretty quick… I run downtown for appointments occasionally and it takes just about an hour… rithets bog is also close and lots of other nice trails… granted we’re a physically active family; it might be less amazing if you prefer 5 minute walks everywhere. But you’re definitely not in the boonies!
https://www.smbc-comics.com/comic/treadmill
I just really enjoy calling out bullshit. This is beyond comical.
I’m coping quite well overall and I hope you are too. Cheers
I could understand someone preferring Royal Bay. But again – if you offer it to me for free of course I take Uplands, because then I can sell it and live wherever I want in the region or beyond
Bingo. Most people stay put unless they are in an objectively shitty building or location (and even then many stay put).
And agree on the second point.No point moving unless it is for a real change.
oh oh, why not just admit the coping than deny it. It’s quite obvious
The F are you talking about? People literally are saying why they prefer their cheaper neighborhood over a more expensive one. LMAO, I guess royal bay is preferable over uplands because who wants to deal with a huge piece of land. These types of posts are full of cope, but whatever makes people feel better.
I also love how broadmead became the neighborhood posters concentrated on the most, clearly that’s not without good reason….
OH-OH, someone is stuck on the hedonic treadmill with the setting on max!
Two totally different questions. First one is which item you’d prefer which factors in attributes of the item and quirky personal preferences. Second question can be rephrased as “do you want the larger or slightly smaller pile of free money” and most will of course opt for the larger pile.
For the record I’d prefer a Toyota. Lexus doesn’t make a car I particularly want
Never buy lottery tickets and not looking for a free ride. What I choose to drive or live in is not dictated by what I can afford. I choose vehicles based on utility and homes based on location, connection, safety, walk-ability and esthetics and then I’m good. No desire to upgrade anything. The bigger/better/newer the more you have to worry about maintenance. We are all just walking each other home and it is too easy to get distracted by shiny stuff.
LeoS, fairly big difference between the two in some ways but have family in both (food is better in Lugano).
Grandkids are always a joy. Staring to feel the years Leo when I travel still still I wake up every morning thinking it is glorious to be alive.
Speaking with a pensioner today who just got his house insurance renewal. He’s thinking of cancelling the earthquake insurance. Even with a $150,000 deductible it has gone to over $3,000. He figures at his age he would rather sell the lot than rebuild. His house is built on rock unlike parts of the core that are on silt that is more susceptible to liquefaction.
I wonder how many other pensioners are thinking along the same lines?
Never got to the crying stage but definitely a grind but it’s a sacrifice for 2 years in your early/mid 20′ that helps to put you on a different path in life.
Ok but if someone was going to offer you a straight up trade you probably take them up on it….
Definitely not. The trees around here are far taller than 3 stories.
Lugano, Colorado, what’s the difference eh?
I lived in Broadmead for 5-6 years. Our lot had trees but tons of sunshine. Close to Broadmead Village and Royal Oak, Saanich Commonwealth Place. Beaches, Mount Doug park and two golf courses not too far away. I miss the walks there. Trails can’t be beat. Trees are lovely. But my chiropractor used to shudder and say, “too dark!” Very limited minority of homes are shrouded in tree shade, lol. And no most of the houses were not built after 1985. I remember coming to Victoria and driving around Broadmead in the early ‘80s and thinking it was the best neighborhood I’d ever seen with such neat houses on our trips from Edmonton. Some infill buildings going in still. They were all different but congenial to each other I thought. Yes there’s covenants on properties in Broadmead. If you don’t like them you don’t have to buy there. If I could afford it I’d move back in a heartbeat.
You must be on speed dial today Vickey. I only had it posted for 15 seconds to check the videos.
https://youtube.com/shorts/kAm-u_SoirY?si=S5qT57AmVY90DCYr
I think most people just end up liking where they live. Even if money was no object, I personally would have zero interest in moving to a place like Broadmead or Oak Bay. My inclination would be stay where I am or move somewhere rural.
I see oak bay vs Henderson….. Are you sure you are a real RE appraiser?
Of course not, but when people start going on about why their cheaper stuff is better than the more expensive stuff that becomes coping. There is a reason why certain neighborhoods are more expensive than other ones, wanna know why?
.
There’s nothing wrong with buying what you can afford and being happy with it and grateful. I have a basic car and I’m happy with that too. But my e bike is luxury so there’s that.
Ya and I bet people can come up with all sorts of reasons why they prefer a Toyota over a Lexus. But if it comes to picking one to have for free, guess which one everyone would choose.
https://www.saanichnews.com/local-news/body-found-in-oak-bay-in-suspicious-death-case-belonged-to-33-year-old-man-1281112
I honestly wouldn’t take broadmead! Oak Bay, cook street or Fairfield if I was in the market for luxury (or maybe move to the ocean front part of Esquimalt). But i wouldn’t move to broadmead. I can tell you that. I do think it’s nice it’s just not my preference to live so far and need a car for everything that I want to do.
Different strokes for different folks. While we eat out two or three times a week (more in the summer), I doubt thatwe dine out in the CofV more than once a month. Proximity to downtown is not a positive for me although I understand that it is for other folks. Each to his own. I have reached that age where I am finding Colorado more and more appealing.
Booby k , I’m pretty sure the OB fuzz run the homeless out of town . If your a beggar with a shingle out on the ave , you won’t last long lol
That’s not a location that is “Easy to walk downtown.“
Multiple people stated their reasons though. Someone who dismisses those reasons because they don’t share in them seems like the one coping. I don’t know how else to explain that or if there’s any point to it but.. money isn’t everything? I wouldn’t be pleased with my day-to-day lifestyle if the only thing I could say about my neighborhood was that it’s very expensive.
I don’t see to many homeless walking around my area at the Uplands/ Oak Bay border.
Piqued my interest but all I could find was reports of a shoe containing a foot, not a body.
You could get some marketing out of that you know, “Leg in Boot Square” in Vancouver’s False Creek is quite fashionable.
Typically the one that claims they wouldn’t take something worth more over what they currently have. Another example would be someone saying they would rather keep their Toyota over a Lexus due to whatever cope reason they can come up with.
Who’s the one coping here?
No you wouldn’t, quit your coping lol.
Yup. “Easy to walk downtown “ also means “easy for ’downtown’ to walk to you”. Lock your doors.
Works both ways with the undesirables residing downtown. Coworker’s house was by the body found last summer around Gonzalez beach.
Given the obsession with broadmead, I conclude most commenting either already live there or want to live there, despite saying otherwise….
I don’t live in or near Broadmead, but should point out that much of Uplands and Ten Mile Point have the same density of trees ( as can be seen on Google maps). Those neighborhoods might not suit your solar panels either.
Wait until you get tall 6-plexes on either side of you. You may spend more time in the shade.
Chalk up another vote against broadmead from me, despite the fact that we live in a decidedly not walkable neighborhood. Just too dark. Would be good in a hotter climate but around here me and my solar panels prefer the sun
The map you posted is just a bunch of personal weather stations, and in any event, one day of data proves nothing. On average, James Bay is cooler in the summer than UVic. That’s a fact.
It depends where you measure. Temperatures vary all over Victoria, and even within James Bay, as shown on the Wunderground map. Lots of places in Victoria now with the same temp as shoal point.
Here is data from a weather station located at Shoal Point:
https://climate.weather.gc.ca/climate_data/daily_data_e.html?StationID=53479
Now let’s compare it to data from a weather station at Uvic:
https://climate.weather.gc.ca/climate_data/daily_data_e.html?StationID=6812
Depends where you are. Right now, parts of James Bay are the hottest reading in Victoria (22) on WunderMap.com. Elsewhere in James Bay it’s 18.
But that’s not a bug, it’s a feature.
“Also agree that working and middle class neighbourhoods tend to have fewer nosey/busybody types looking for a reason to report you for some stupid bylaw infraction”.
Broadmead gets top marks for busybody types by far for any neighbourhood in Victoria including even the most upscale ones. The residents association or “BARA” is like a strata council going around to make sure gardens are trimmed, realty signs match the west coast wood decor and there is not a peep of a dreaded INLAW SUITE.
I live down the street from a popular beach, 1 km from rec center 2 km from major shopping center, just down the street from my golf club, around the corner from large park with courts and fields and right near a bike route to downtown on a bike in 10 -15 mins. This is why Victoria is so awesome and the car dependant suburbs like broadmead and langford etc.. are inferior, IMO.
A great day is a day when I workout 2 or 3 times and don’t have to use my car.
Broadmead is nice, but too dark and too far away from amenities. I would take Esquimalt over Broadmead any day. Also agree that working and middle class neighbourhoods tend to have fewer nosey/busybody types looking for a reason to report you for some stupid bylaw infraction.
James Bay is also very cold in the summer.
Lots are part time with other full time jobs… Wfh has made that a lot easier.
Yeah the slow market does not seem to have culled the field at all.
I find James Bay kind of annoying to get in/out of. Personally Vic West > James Bay.
We are now three years of a slow market and just keep hitting all time highs in terms of agents with the VREB; 1668 as of this morning – the most I’ve ever seen.
But you’ll gladly trade for cook at village, Fairfield or James bay….
Interesting comment…..
Month to date activity
Sales: 292 (no change from same time last year)
New Lists: 621 (up 3%)
Inventory: 3290 (up 34%)
I live in Esquimalt and don’t want to move to broadmead. It is nice there but I couldn’t give up being able to walk downtown in under 30 minutes or ride bike there in 10. Walkability makes me happy. People also mind their business in more working class neighborhoods and there’s a whole live and let live vibe that I like.
August 15, 2024
Vancouver real estate has fared well since the market slowed, but signs of stress are appearing. Equifax data shows Vancouver mortgage delinquencies climbed in Q1 2024. The delinquency rate remains relatively low, but it made a sharp turn and has already climbed back to pre-pandemic levels. Slow borrowing and sales still persist, meaning this trend will likely worsen before it improves.
The delinquency rate for Vancouver mortgages is now back to pre-pandemic levels. It’s still 0.02 points below the peak seen shortly after lockdowns and before rate cuts stimulated a boom. However, even if it climbed above that level in the next quarter, the delinquency rate has a long way before returning to the one seen before the non-resident buying boom in 2016.
This is mostly a fluff piece, but interesting as it is the first time I’ve read that 2016 was the beginning of the non-resident buying boom?
I read people for a living, she/he ain’t gonna do a damn thing because they are too busy flexing on counting pennies while missing dollars. Go fix your fence at least LMAO.
It’s interesting as those are mainly the ones listed for sale. Nice SFH in good areas without suites are few and far in between.
Based on no fact checking – just some version you have in your head of introvert. Meanwhile she and her partner have a paid off home with suite she chooses not to rent out in Gordon Head and no other debt and I don’t doubt she could move to a Broadmead home if she wanted to. Doesn’t appeal personally – too dark and amenities are not in a walkable – but I can see why people who don’t want density like it.
In a market like the current one where interest rates have gone up and there have been a lot of measures brought in to cool housing it seems like the more affordable SFH’s with suites are in demand. We’ve been through a variety of market conditions though. In hot markets with little inventory sometimes the higher end homes shoot up.
Long term it seems like we won’t be building as many SFHs so I guess if we enter a hot market these could increase faster than other properties.
No, i am just giving you a reality check, applies to other higher end neighborhoods also.
Yet you probably wish you live somewhere else lol.
“Westshore folks please take note lol.”
I’ll bite and trigger the troll persona. Bought Royal Bay house for $645k in 2017. Valued by bank at $1.3M in 2022, exact same house and land size sold for $1.18M in mid 2024. $535k profit in 7 years if i sold today. Going to call that resilient in a downturn.
You really don’t want me in Broadmead, LOL.
Even though I could, I wouldn’t move there right now — don’t want to uproot the kids from their schools, and don’t want a mortgage.
I’d probably do it in 10 or 20 years, and pay cash.
Unlikely you will get 1.2 for whatever you have, 1.6 also won’t cut it unless it’s aged renos, then there are the increases in property taxes and maintenance and the complexities involved in selling and buying plus whatever it is you got going on with those poor kids of yours or whatever. So in conclusion it is unlikely someone like you will be moving there anytime soon.
I see in the paper today Saanich is projecting another almost 10% property tax increase for 2025. This is the new normal and can only put further pressure on house prices.
Say a house in Broadmead is $1.6M. That’s a $400K mortgage, in my situation. Very doable.
New titles not loaded so I can’t see purchases prices quite yet.
Yes, but I can’t see the character of Oak Bay and Tilicum area changing so much in our lifetime to narrow the price gap. Highway will always be close to Tilicum and the nice beaches will always be in Oak Bay.
Pool looks tiny, I wonder if presale Owner’s can try and get their money back for that as I am assuming most are probably underwater now?
Congrats to the city of Saanich building permitting department.
They are in the first four (saanich, langley, cowichan, n.van) of 190 BC municipalities that have launched the digital building permit hub, intended to process building permit applications simpler and faster.
The BC hub is here https://buildingpermit.gov.bc.ca/welcome
And the Saanich portal is here
https://buildingpermit.gov.bc.ca/jurisdictions/corporation-of-the-district-of-saanich
General info about the BC hub from the government
https://news.gov.bc.ca/releases/2024HOUS0028-000817
It’s all labeled beta, and this is early days. And I’m sure HHVers will continue to complain. But with programs like this, at least you can’t say they aren’t trying.
That is precisely my question. There is a reason why all these neighborhoods are priced differently.
Victoria is so small not sure how much more you can narrow purely on neighborhood beyond core vs westshore. What are the odds Oak Bay (or any core neighbourhood) holds in better versus Cadboro Bay or Maplewood or Broadmead without some event like a bunch of shelters going into Cadboro Bay.
I am not talking about absolute return, I am talking about resilience in a downturn. Lots home owners would probably rather have that than larger volatility on either side.
Precisely why I focused on neighborhood and not house
Stopped paying attention after all that MMT bullshit.
Re-sale units at One Bear Mountain hitting the market -> https://www.realtor.ca/real-estate/27304872/502-2000-hannington-rd-langford-bear-mountain
Steve’s content lately has been quite good I find.
I live in something that quite possibly has the worst possible return long term in terms of appreciation, but I don’t depend on that return so I prioritize what I personally want to live in versus return.
However, question was what would be the most resilient in a downturn, not what provides for the best lifestyle.
I think if you boil it down further, if the house is a tear down where all the value is in the land it is going to appreciate (% wise) a lot more than a nice house.
I have that example for the nice Transit house that went from $2,050,000 to just under three million in 15 years. However, if you bought a crap house in Oak Bay for $500,000 it would be over $1,100,000 now. In 2013 or 2014 I remember I had a listing on Monteray south of McNeil that sold for $500,000 (and it was livable).
If you had bought four of those versus a luxury house for $2 million you would have done a lot better. You would have made over 100% return versus 50% return (not factoring in principal residence/capital gains calculations).
It’s nice to see that there is no big delay in solar permitting for Victoria and the island.
“ On southern Vancouver Island, permitting times fluctuate between about three to six weeks, said Bowker, who operates on the south Island. Permitting challenges appear to be a bigger issue on the mainland, he said”
Oak Bay home owners, myself included, are not necessarily buying for maximum return, it’s more lifestyle. More often then not oak bay home owners may also have a few million of investable assets and are not too concerned about home prices as they are not needing growth in order to move up to a nicer area like say someone in Gordon head
Didn’t know you needed municipal permits for solar panels.
https://www.timescolonist.com/islander/nightmare-permitting-strangling-bc-solar-industry-say-installers-9364240
One of the biggest barriers, according to owners of several solar installation companies, is permitting.
Outside a handful of cities, electrical permits fall under the jurisdiction of Technical Safety BC and are approved within days or weeks, several contractors said. But that timeline can also unravel due to requirements from a handful of municipalities and BC Hydro.
Lloyd says jobs in Burnaby, Vancouver, Surrey and West Vancouver have taken between four and six months to receive permits. One job in the Township of Langley took nearly a year to get approved, he said.
“In the U.K., I could take a deposit today, and get the job done tomorrow,” said Lloyd. “Here, I have to wait for six months for a permit from the City of Vancouver.”
.The statistical estimates are based on a sample and are therefore subject to sampling variability. Estimates from smaller geographic areas or types of properties such as Oak Bay will have more variability.
In your Transit example it shows that this house in Oak Bay increased by 46% from 2009 to now. That’s not doubling.
Oak Bay SFH have more than doubled (2.5X) since 2009. Selling at $2,175k (2023) vs $854k in 2009.
https://www.vreb.org/historical-statistics#gsc.tab=0
I would say % wise as well. Maybe if Leo has time he can overlay a price graph of 70s SFHs in Gordon Head vs SFHs in Oak Bay.
Whenever I look at nicer home in sales in Oak Bay that were purchased let’s say 10, 15 or 20 years ago you would have been way better off buying two boxes in Gordon Head.
For example, the last sale on Tranist in Oak Bay comes to mind. Sold for just under 3 million and it was purchased in 2008 for $2,050,000; whereas, a Gordon Head box doubled if not more in such time.
Kettle Creek is just a disaster in my opinion and homes there went from sub 300k to over 750k and they haven’t really dropped much.
I don’t think “nice” is specifically tied to market performance. Affordability is also a large factor.
1970s home also unlikely to take a large depreciation hit as already 50+ years old versus a newer nice home where the new premium might wear off in first 10 years, especially if colour/design trends or something changes substantially.
You gotta look at it from a % perspective though. I don’t think oak bay drop was 40% off of purchase price… Problem with Gordon Head boxes are that they are typically not nice and many streets are overrun with rentals and tenants. Anyone living there that comes into a bit of money will want to upgrade, so it will always track what investors will pay where the bottom will be cash flow neutrality with up and down suites, not many will pay a premium to buy there.
Now if you were to put into words what you see
People would lose their mind if zoning bylaws allowed for such but in real life it is actually pretty nice.
Also note parking solution when you don’t mandate a front yard. Every sixplex has 10 parking spots total (5 garages and 5 exterior spots).
Instead of neighborhood I am going to say narrow it down to type of home + neighborhood and in my opinion that would be a 1970s box in Gordon Head.
Problem with Oak Bay is price point, you have homes in Oak Bay listed 500k below purchase price versus a $1.2 million 70s box with a suite in Gordon Head is unlikely to drop to $700,000.
They also have adequate square footage between 1800 and 2,200 sq.ft. and decent lot sizes between 6,000 to 10,000 sq.ft. so it covers a lot of points for an array of buyers. Location is also reasonable.
Probably one of the less exciting products in real estate but in my now 15th year in real estate 70s Gordon Head boxes have always sold well.
Uhhhh, it’s half the price……. Luxury doesn’t do well in downturns, too few sales so bid ask is too wide.
Re: Broadmead. I think it is great value for an upper middle class neighbourhood. Strong points include lots of trees, spacious homes for the price especially compared to the old “character cottages” of South Oak Bay, VERY strong SFH covenants that should resist the NDP plan to rezone most of the province. Lot sizes are decently sized. West coast modern style architecture was controlled and quite uniform so it looks tidy and right now the cedar west coast look is back in fashion. It gives space and easy highway access without the traffic congestion of the Westshore. Broadmead was well planned from day one, originally a “new money” area but they kept the trees from day one unlike say Bear Mountain today. It’s aged gracefully. While Rockland I think has more interesting streetscape, history and homes, it is just a bit too close to the downtown Victoria gong show and was vulnerable even as early as the 1940s to sometimes ugly/cheap high density projects. Yes, Broadmead will hold its value well in a number of scenarios. It’s solidly in the upper end of Victoria areas for sure.
Downsides are that lots of trees can mean a darker environment which puts off some people. The uniformity means a little less interesting neighbourhood and during periods when west coast modern is out of style, the whole area can look a little less fashionable than its rivals. Some of the homes from the 1970s. 1980s and early 1990s are dated. Compared to other upscale areas, it is not close to the waterfront and does not have any oceanfront homes. While the lots sizes are above average, you don’t get the massive estates of the Uplands or 10 Mile Point. And you don’t get the enormous mansions either.
Barrister, A lot of it has to do with renovations, maintenance and keeping up with repairs. However at some time in the future it will be more valuable for someone to tear down the structure and redevelop the lot into smaller sites or as a higher density housing. Then it doesn’t matter how well kept the house has been. If the Pyramids weren’t protected it would be a subdivision today.
Mine was 1914 and it seems solid, all the wiring is very recent. New copper plumbing as well. I am not sure that most from that era were as well built.
That’s most of broadmead. Biggest issue is potential first generation poly B piping.
You’re pretty safe buying a home built after 1984. A little more safe after 1994 and you should be fine for home built after 2006 when it comes to asbestos, wiring, acrylic stucco, and plumbing. Each decade had its problems. Prior to those years most of the builders were mickey mouse unless one was building a custom home from a respected builder who didn’t cut corners. And I think that was because we started to have builders from Alberta move to Victoria. Most of the local builders were just horrible. But with building costs so high now, I am seeing some crappy subtrades as the general contractors are trying to get cheaper labor.
When I first moved here I was surprised about how much shit housing there was. Most of the homes now have been updated but I am seeing more homes up for sale this year that have never been updated. Most are estate sales as the inheritors are choosing to sell rather than spend gobs of money renovating.
My favorite style of homes are the custom built homes built during the Great Depression. If one had money back then one could get the best architects, craftsmen and materials to build a house but there aren’t too many of them in Victoria. Too many people think that the older character homes were all built well. They may look good from afar but they are far from good. Renovating one today is just a money pit.
I’m happy to see them torn down and a custom west coast contemporary built. And it seems I’m not alone as more of these older homes are getting replaced. Unfortunately some of the designers today have gotten their inspiration from Minecraft.
Please enlighten us on the percentage of homes build under the old building code….
Out of your price range and class.
Broadmead was developed in the 1970’s and 1980’s. Restrictions were put in place to retain much of the forest as possible and to control various aspect of the housing such as house exteriors and roofs to blend naturally with the environment.
Depending on when the house was built, it would fall under different building regulations. The older homes being 2 x 4 construction without vapor barriers, possible aluminum wiring and original quarter inch thermal windows. Those are both curable and incurable functional obsolescence.
So be wise when buying in Broadmead otherwise you may end up overpaying for a property.
I like Broadmead a lot. Might move there someday.
Introvert, I agree feds just need to put on a capital gains tax on principal residence. They would get their hands on a lot of cash that they can piss away like they did on arrivecan. The best part is there’s lots dim wit Canadians that like the idea of pissing away peoples money and getting nothing for it , it blows my mind that there’s such a luv of tax’s .
Many people are going to be quietly very disappointed when Poilievre solves precisely none of anybody’s problems, and his promises turn out to be hollow sloganeering. Just my two cents.
And BTW, I don’t think Trudeau deserves another term.
There are still lots of people whose money isn’t even close to running out that we could hit up.
Westshore cope? Broadmead houses are almost all 80s and later build. Same developer as british properties in Vancouver, upscale feel as you drive through only rivaled by uplands and 10 mile point. Some houses are heavily treed and the prices reflect that.
OMG how can anyone live in a home without a master onsuite.
Broadmead can be very dark and homes dated, also a very car dependant community
The only problem with that is having to hold your nose and vote to support a guy with a mean streak a mile wide. That can only ever be a short-term solution forcing the pendulum to swing back yet again? I mean, seems to me Harper (as introverted & control-focused as he was) was more moderate than Poilievre, and yet everybody except me seemed to hate him.
I am not going to vouch for exact wording multi years ago but it was a whopper along those lines
Or at the very least unintentional hilarity
Further solidifies my view that appraisers don’t know jack shit other than looking at some comps and making some simple adjustments which my 70 year old mom can do.
No he didn’t say that did he? in our life time? that’s like 2-3 full economic cycles.
That is luxury, which is a different market……. compare core Vancouver against surrey or white rock in the 80s, curious to see what the results are there?
LOL. Sounds like 80% of core Victoria is going to tank in value due to a lack of ensuite bathrooms. But core homeowners, have no fear, according to Just Jack, our resident real estate appraiser, you can unlock the value of your real estate by simply tearing down your house.
Just Jack/whateveriwanttocallmyself has been a consistent source of nonsense since early days of this blog when house prices were going to fall and not recover in our lifetime. I don’t usually call people out like this, but I hate to see a supposed professional promote such misinformation.
They might. As Whatever suggested, SFH prices are mostly lot value, and in Oak Bay et al the lot value comprises more of the market price than it does in View Royal et al. This is what happened in Vancouver West Side and West Van late in the last decade.
https://vancouversun.com/homes/buying-selling/five-examples-of-metro-vancouver-homeowners-losing-big-in-a-plunging-market
Steve is a wanna be institutional finance/RE guy, would take his BS with an extra grain of salt.
Good overview by Steve Saretsky on why new builds are not happening. New construction in Vancouver has to sell for 1600/square foot to be economic to build. Resale is selling at 1000/1100 per square foot. Consumers will choose resales until appreciation brings resale prices up again and it makes sense to buy new for some buyers.
Do you know where Oak Bay is?….. LMAO so you are saying these newer subdivisions in view royal/ bear mountain/royal bay will fair better than Oak Bay/Fairfield/James Bay in a downturn? You have lost your mind, LMAO might have to report you to the appraisal institute for some type of incompetence…..
“What’s everyone’s opinion on the neighborhoods in Victoria that are most resilient to price down turns?”
Neighborhoods were the housing is becoming dated relative to modern building materials and construction techniques which increases depreciation through functional obsolescence. Some forms of functional obsolescence are curable and some are incurable. Whether it is curable or incurable depends on the cost to cure.
For example. Older neighborhoods where the homes were built without a full ensuite bathroom, at least three-bedrooms, or 2 x4 construction. There are a few neighborhoods in Victoria where the homes are so functionally obsolete that they suppress the land value. In other words you would get a higher sale price if you demolished the home.
The homes in those neighborhoods will suffer increased loss in value.
Got family there, I wouldn’t be so certain on the covenants, however lots on many areas around there prevent multiplex housing due to geography and trees. Overall fairly stable, not going to get huge gains either, prices probably gone up around 25%/30% on average in that area since 2020. Not to be confused with Sunnymead though even if they are next to each other.
Prices are high enough that most public sector couple won’t be able to get in unless its on a lot that are full of trees with zero outdoor green space. Something decent with upgrades and outdoor green space will be atleast 1.55M/1.6M, that will be tough for those people without a suite which is typical for that area. Most public sector couples need to be under 1.3 with suite income.
Don’t forget the affect trees have on air quality.
Broadmead.
A “pure play” on SFH scarcity in core Victoria.
It’s almost all SFH. Gorgeous. Covenants prevent multi-units. Prices aren’t crazy high. Great for families.
You don’t need massive trees with invasive roots next to residential to create cooling effects. You can increase big trees in park areas and plant smaller trees near residential. Things like cool paints reduce ambient temps by 2 degrees and adding smaller scale vegetation – including grass lawns and suburban gardens – reduces temps by up to 5 degrees. Smaller scale vegetation also grows more quickly. Having solar panels on your roof can reduce the heat absorption on your roof by up to 40% and temp by 5 degrees.
What’s everyone’s opinion on the neighborhoods in Victoria that are most resilient to price down turns? Westshore folks please take note lol.
Agreed.
But help is on the way… Pierre Poilievre
Latest Nanos federal poll : Conservatives 42, Liberals 25, NDP 17
On the positive side , remax reports prices are starting to rip higher in some markets . A September interest rate cut should get the party started everywhere else
I think other stuff, like oh our much-vaunted medical system falling apart, was enough of a heads-up for me already. Endless deficit spending, no real economic plan except expanding taxation in the face of falling productivity, focus on virtue-signaling. As they say, eventually you run out of other people’s money.
All of Jasper (from what I’ve heard) is leased land. That could really slow things down if insurance policies have underestimated the cost to rebuild. Owners of the damaged properties would have to supplement rebuilding costs on property in which they don’t own the land.
I’ll watch Jasper. Maybe Lytton is small enough to ignore. But if we can’t rebuild a national icon that is also a huge tourist cash cow with reasonable haste then I don’t know what is wrong with us.
Looks like our cities are falling apart. Major water main breaks in Calgary, now Montreal. Building falls apart in Toronto. What’s not burning is getting flooded out. I think our infrastructure has reached its expiry date. And our governments are bankrupt.
https://www.theglobeandmail.com/canada/article-bc-a-relative-leader-in-housing-starts-when-compared-with-population/
Marko thé link you sent to Croatia street front had trees and looked beautiful and reasonable to me.
I’m not saying we have to worship trees but we can’t just nuke them all and then be like – oh the millennials nuked all the trees and look at what they left us in 30+ years when everything is even hotter than it is now.
There was a beautiful tree – extremely beautiful- by where I live. They took it down to build an apartment that will have many units. I was sad at first and a little pissed. But now I see the apartments and I get it. But still I expect them to plant some trees before they leave or I’ll probably start writing letters.
One of the reasons we aren’t seeing many of these 6-plexes being built is that there simply isn’t much demand to buy units in a 6-plex. Would you live in one of these shoeboxes?
In 6+ years on HHV, I don’t recall any house hunters looking for a unit in a 6-plex or similar on a small SFH sized lot. It’s always SFH or townhouse, or maybe the occasional condo with ocean views.
Once built, the price for these new small 6-plex units (including GST) is going to much higher than similar existing units, so I don’t know who will be buying them.
With thousands of PBR rentals coming, there are way better (also “new”) options for renters than this, and I don’t think many investors are going to buy these for cash flow negative rentals. That leaves owner occupiers, who mainly (70%) want SFH.
Putting it another way, it’s making more “hotdogs” when people want steak.
When I built my house I looked into it and pre-fab was same if not slightly more expensive, but that was for a one off custom house. My neighbor did pre-fab at the time and definitively better product. Don’t you think it would get cheaper if they were producing thousands of the same package?
Problem is people can’t tie it all together and it isn’t cool to blame the green initiative people so we blame foreign buyers, investors, greedy landlords, greedy developers, rich people leaving their secondary residences vacant, Airbnb owners, etc.
All very true. Not to mention the every parking spot is sacred people, the we need bigger and faster roads people, the where’s my 2nd Costco people, the status quo must be preserved people, the too many tourists people, the 4 stories is a travesty people.
Something has to give. So far it is affordability.
Yes – there is. They cool the area shaded for obvious reasons and they also cool the area because sunlight falling on trees causes a lot of evaporation (aka transpiration) and a little bit of heating. Sunlight falling on concrete (or asphalt roofs) causes zero evaporation and a lot more heating.
There are literally reams of research papers on the benefits of urban trees and urban greenspaces (and bluespaces aka water)
And just for the record I am not the overpaid tree guy that Marko likes to dunk on.
To be clear I enjoy walking down a tree lined street on a hot summer day and trees are often quite beautiful.
However, in Victoria there are tree people, houses should have front yards people, food security people, cars are bad people, walking and biking are the priority people, toxic substances must be dealt with people, green initiatives people, anti-development people, anti-sprawl/pro density people, hand demolition is good to prevent things from going into the landfill people, and I have a SFH but others should be happy in apartments people.
These “good intentions” form the basis for a large part of the increase in regulations since we had peak housing construction in Victoria, which I believe was the 1970’s. They all have some merit and would probably be fine if the average household income could afford the average desired property but that is clearly not the case, and in many cases are making housing more expensive.
ALR gives the optionality of farming in the future. Paving over loses that for a relatively long term. Urban trees aren’t going to affect global climate but they affect local climate and have other amenity values.
Nobody would die if Victoria nuked every tree. It’s more a question of how much shittification you want to promote in the interests of fitting in more people. I would agree that the focus should be much less on individual trees and more on mantaining lots of trees overall.
“I also saw things a lot while I was working, people picking up pennies in front of a steamroller by claiming wildly excessive deductions on personal expenses, including – everybody’s favourite – automobiles (ie above & beyond what’s really allowed), often these things are pretty dumb from a risk/reward basis, in my view”
There have been a few things that I wanted to write off. Then I ask my accountant and he’s like “no” and tells me why. Then I’m like – shucks.
As for the trees, surely there must be science to back up common sense that since they add shade the spaces under them are cooler. I didn’t think it was contentious either that concrete retains heat. And, unfortunately, trees can be ignored in a rush to densify lower income neighbourhoods in particular. So, then it creates equity issues as well. I like the idea of building for the next 7 generations. We need trees. (yes I’m a tree person, sorry not sorry).
https://www.theguardian.com/environment/2024/apr/17/pheonix-arizona-hottest-city-tree-planting-shade#:~:text=Over%20the%20course%20of%20three,hundreds%20of%20heat%2Drelated%20deaths.
**I understand that Phoenix is much hotter than here but the principle – plant trees to reduce heat – applies in places where we want to make sure that it doesn’t get too hot (now and in the future).
+1
I also saw things a lot while I was working, people picking up pennies in front of a steamroller by claiming wildly excessive deductions on personal expenses, including – everybody’s favourite – automobiles (ie above & beyond what’s really allowed), often these things are pretty dumb from a risk/reward basis, in my view
Prefab is of no use if they are not plug and play . Sears had house packages back in the day so it’s not like they havnt been around for a while
I harped on this for a while and my understanding is the engineers wouldn’t stick their necks out (or couldn’t due to regulations). Each set of plans had to be individually reviewed and sealed. I was advocating for plans that hit step 5 (in most cases) with energy modelling pre-done. That alone could knock 25k off costs. Then I suggested that the municipality offer tax rebates, or, lower permitting fees for structures that hit step 4/5. None of it went anywhere….
On the pre-fab front, it isn’t cheaper, but you get a better product for the same cost.
+1. Old Europe is lovely with courtyard space in place of front yards. I’d way rather have a private courtyard than a mostly useless front yard.
Allow rooftop gardens like Havana (or most of Europe). The deer can’t get at your plants and plenty of cooling.
“I do think we need trees bc of shade.”
You can download the daily weather data for Victoria here https://victoria.weatherstats.ca/download.html. We only average about 12 days where the daytime high gets above 25C, which is a very low bar to reach and the majority of the world’s population would not even consider that to be a hot day threshold. Marko has suggested that a zero front yard would allow a lot more housing, and it is a promising idea. The photo he linked to of a street in Croatia looks great.
I think the biggest challenge to a lack of housing that people actually want is the idea that you can impose conflicting “good ideas” and actually get cheaper, quicker housing. You can’t. As Marko pointed out in a theoretical story, if we had extreme earthquake damage to water mains, we would hopefully not waste time on soil sampling, so why do we do so now? Did we do so during the peak building times in the 70’s?
Despite the pressure from environmentalists for density rather than sprawl, the vast majority of young families want SFH. We have a lot of land that could be used (ALR and forested lands). I have never heard a scientifically reasonable scenario where that ALR land will be needed for food, nor is there any math that shows that a few hundred thousand trees will lower the potential temperature of 2100. Likewise there is no projected scenario for 2100 that shows that having zero front yard will lead to people dying from slight heating due to less shade(not to mention new neighborhoods often have little trees) , since the majority of the world’s cities are warmer than Victoria in the summer and they do fine. Marko has highlighted many times the level of red tape in all areas of construction and approvals. That red tape is in place because of all the well intentioned ideas that are actually conflicting with building the housing that people want.
@patriotz I have a friend who has a very nice house. She rented out a room for a few months. Then, tax time comes around and she wants to write off a fancy new improvement because it’s suite adjacent. The things that people want to write off and can’t or shouldn’t is substantial. Will they get caught? Highly unlikely. Could they get caught? Absolutely. In such cases it would likely just be a re-assessment and they’d have to re-pay whatever benefit that they got and shouldn’t have. Or, maybe the cra decides to audit all their claims for the last several years. Many people in these situations would rather take a risk that just isn’t worth it to me – especially for the amount I pay my accountant.
Probably nothing, since I’m guessing you’re paying attention.
One example – I use Ufile, and one issue I’ve noticed is that the interface/process for allocating investment income between spouses where there is a single tax slip isn’t exactly intuitive. It reverts to including 100% in the name of the person whose SIN appears on the tax slip, and you have to take extra & unprompted steps to allocate it properly (and within the limits of what’s permissible given the attribution rules in the Tax Act).
2500 start for one bedroom I believe.
“COV should have 10 pre-approved six-plex plans with pre-approved engineering that you can go pick up and have a building permit within seven business days. Any tree within building envelope or 15′ feet of foundation you can automatically cut down, etc.”
I honestly don’t understand why we don’t already have this.
“if everyone one picking a certain plan someone somewhere in Canada would say why don’t we just build a kit in a factory for these six-plexes and ship it out once the foundation is poured, etc.”
I did read an article about these pre-fab businesses in Canada going out of business w/i 5 years. I think tho it ties into the previous point – if it was pre-approved then these factories would make a lot more sense.
“If you allowed zero front yard offset to encourage more housing people in Victoria/Canada would have an absolute meltdown. ”
I agree except if you look at mega cities like Paris heat retention is a serious problem bc of all the concrete, people and lack of trees. that being said the street you linked to does have some trees so as long as there is shade I honestly don’t care. I’ve lived in European cities with no front yard offset and buildings right up to the street. I don’t find it necessarily prettier or uglier than here but I do think we need trees bc of shade.
As for immigration, a main reason I stay in Canada is that I personally don’t want to be a first generation immigrant. I think they often get thrown under the bus. Usually immigration is for generational downstream benefits. So I agree that it’s odd if we’re hiring people directly into middle jobs when what we need are construction and health care workers. That being said, we do live in a more global world now. If you read people moving around, for example US citizens being shocked that they can’t apply for certain visas from w/i a country. People seem to feel entitled to live anywhere these days (they’re not).
That’s why I pay $20 for tax software that figures out all the angles to pay the lowest amount of tax. I would really like to know what an accountant could offer beyond that for someone like me, i.e. no business income.
Now leasing at 952 Johnson Street a 93-unit PBR having one, two, and three-bedroom units. No details on the rents but they have a on-month free on a 13 month lease which means they are going to be costly. Open House this Saturday.
But to give you a sense of rents, a review of Craigslist shows a one-bedroom downtown condo is now about 2,200 per month (26,400 per year) but can range between $1,900 to $2,500. A two-bedroom about $3,000 per month ($36,000 per year) with a range of $2,700 to $4,100 per month.
The building being new and with the one-month free gimmick, I would expect studios would be priced at the one-bedroom downtown average and the one-bedrooms priced at the downtown average for a two-bedroom.
Outside of the core rents are a bit less expensive averaging $2,000 for a one-bedroom and $2,650 for a two-bedrooms.
Was that a preference or were they just priced out of SFHs?
+1, for sure. I do believe if you have critical thinking skills it is easier to evaluate a professional these days as there is so much content and information available. For example, I watch this CND real estate podcast and was really impressed with this accountant they had on the podcast -> https://www.youtube.com/watch?v=ZtV_SR2uG8M
he explained so many real estate related tax things in Canada in one hour really really well. Certainly worth watching if real estate related taxation is something that interests you.
Big picture what nan said earlier
and I’ll add lower immigration numbers and increase the % of construction workers and health care workers.
I am really happy for my Croatia immigrant friends that have come to Canada and landed great BC Government Jobs, but I don’t know how on earth that helps us on the whole. We need people to swing hammers on construction sites not more government workers. I’ve helped many of these immigrants buy properties (mostly townhomes in Greater Victoria) so end result it they induce demand on housing, but don’t contribute to supply via their skills.
Housing specific related the bureaucracy/regulations need to go. Everyone keeps calling this a “housing crisis,” so you are telling me if we had a huge earthquake and a bunch of water mains snapped and all the bridges collapsed in such a crisis we would be sending off soil sample testing before the excavator started to dig to repair the water mains? Or we would be waiting on the environmental impact from a biologist and arborist and 14 other consultants on the location of the temporary bridge to be built?
Maybe who knows, how many houses have been reubilt in Lytton.
“Housing crisis” and it takes a year to approve a legally zoned and allowed garden suite, how does that make any sense?
COV should have 10 pre-approved six-plex plans with pre-approved engineering that you can go pick up and have a building permit within seven business days. Any tree within building envelope or 15′ feet of foundation you can automatically cut down, etc.
If there was some common sense involved it would lead to further efficiencies. For example, if everyone one picking a certain plan someone somewhere in Canada would say why don’t we just build a kit in a factory for these six-plexes and ship it out once the foundation is poured, etc.
I guess in general less bureaucracy/regulation would go a long way in my opinion.
If you allowed zero front yard offset to encourage more housing people in Victoria/Canada would have an absolute meltdown. Then you go to a country with sixplexes and zero front yard offset and you don’t even notice it walking down the street. This is a street (sixplexes and almost no front yard offset) I walk down frequently and I don’t feel it impacts quality of life, but it provides for 6 families living on one lot instead of 1 -> https://maps.app.goo.gl/xogFXdhDTFzbUhAu5
Local accounting firm schibli stedman king was doing the books for Greg Martel….. LMAO
Can you elaborate?
Peter , I do agree , too much stock is put into other people’s abilities. I have a few friends that use financial advisors that are just a waste of time , u are best to do it yourself . I prefer a stockbroker that is just winging it , and least they are a lot more fun
And this is the thing – the public generally thinks accountants are experts at sort of a whole bunch of things but as with everything, you have to be careful to hire what you actually need. If you need tax advice, hire a tax accountant or at least make sure your general accountant is actually well-versed in tax & not just enough to be dangerous. If you need financial advice, again make sure you’re hiring the right person – I’m often surprised how many even thoughtful people think that an accountant is the right person to give investing advice. And some accountants do basic tax filings and glorified book-keeping, and not the more sophisticated stuff Westerly was doing.
So I think it’s a bit of a buyer-beware situation, and the general public isn’t well-equipped to figure out what a particular accountant is actually good at, yet believe in accountants sort of doing everything. Kind of reminds me of how people used to view GPs
When I think about my regular hourly wage and how much I pay for the accountant to do my taxes it doesn’t make a lot of sense for me to try to do them myself. I think we get a great deal though bc we’ve been with him for many years. He’s very smart with money and the fees also include calling him up from time to time if I need advice or have a question. I also manage a trust and I’m so happy that I have him for that. Trusts are complicated (and getting more complicated).
Marko other than the sidewalks I’m curious to know what you think a serious solution for the housing problem is.
Deductibility for long term condo rentals in Croatia is 30% as per law which is a little odd. So further to my example below if a condo is rented long term for 10,000 euros per year you deduct 3,000 euros as per law (you don’t provide expenses for purposes of accounting) and then you pay the 10% on the 7,000 euros so 700 euros.
I didn’t add this to original post as we have deductibility in Canada so that is somewhat cancelled out, just in Canada every owner has their own specific deductions.
One thing I find many people ignore is the cost and time involved in serious accounting. Before my PREC my personal taxes were a piece of cake and I just had a bookkeeper and the fees were cheap (less 1k/year as I would do the vast majority of the prep myself). Then as the government increased the income tax bracket %es I set up a PREC + Holdco and altogether it runs over 20k/year plus a lot more of my time is dedicated to accounting/legal/double the real estate licensing renewal fees and other random stuff that comes up (Land Owner Transparency Registry) associated with the companies versus personal. A ton of other factors with a PREC + HoldCo such as interest rates are substantially higher on “commercial” mortgages versus personal, etc.
Accountants and lawyers must be swimming in business these days.
Bobby, “Westerly, sorry I read that as 2018 not 1998”. It’s not really that different. Prime Rib was likely $4.00 / lb on sale too – we didn’t buy it. My point wasn’t about the house, it was about how there are tax / tax credit planning opportunities available to all income brackets. It does take some research and perseverance.
What about deductability of interest and other expenses as we have in Canada? If not applicable, it’s really a sales tax not an income tax. And it would be more than a lot of investors would be paying in income tax in Canada.
Marko, the rationale for a progressive tax is that a flat percentage on all income would place a disproportionate burden on people with low incomes. The dollar amount owed might be smaller but the effect on their real spending power would be greater.
A progressive tax system reduces the tax burden on those who can least afford to pay. This leaves more money in the pockets of low-wage earners who are likely to spend more of it on essential goods and services and stimulate the economy in the process.
I am memorizing a bunch of legal/land title/taxation stuff as I am writing the brokerage licensing exam in Croatia and lots differences that make you go hmmmmmm including rental income. In Croatia rental income isn’t added to your personal income, but is taxed straight up at 10%. Therefore, you rent a place for 10,000 euros per year you pay 1,000 euros tax irrelevant of personal income.
Here, if you rent a suite for $10,000 per year you could be paying $5,350 in tax while your neighbor renting an equivalent suite is paying $3,500 in tax while you pay the same property taxes to service those properties.
Westerly, sorry I read that as 2018 not 1998, I guess different times when the average house price in Victoria was under 300K. Getting most of your student loans waved must have really been helpful also.
I agrée. Accountant starts to make sense when you’re doing something more complex than working at a single job with just a T4 to worry about. Especially if the price is right.
Accountants are not that useful for lower – middle income households. You don’t need them to file taxes, you cannot afford to pay them for financial advice, and they do not understand lower income strategies. We need to research the rules as they apply to our specific circumstances.
I worked in an accountant’s office a few years after graduating. The managing partner asked me to run a basic tax scenario with a $40,000 each couple. The general approach is you provide net income / taxes by bracket, upping say $10K per level.
I did as directed and then also provided an analysis reducing income, adding in CCTB, GST, and maybe some others. Whatever the number was, client saved, or regained, minimum 20-30% over what the CA was looking for. Accountants do not do this.
Bobby – thank you! It was work! The first bit was finishing school in a required amount of time. Because of that, somewhere around 70-80% of the student loan debt was forgiven up front, likely in part because of our low-income. We went to school with people in our similar circumstances and they planned to avoid the loan payments altogether through bankruptcy. It didn’t work out well for them. The rules changed around that time where the loans now survive the BR (or did, haven’t kept up to it lately).
The cobwebs are clearing somewhat: When we applied for the loan remission they gave my wife almost nothing (I forget the details), researched that one some more, applied for a review, and voila – a significant increase to the remission. I think we came out owing $30-$50K. My point is that there is a lot of help out there for people willing to put in the time. FHSAs, TFSA, and RRSPs are awesome ways to get started.
Now we’re on the other leg, our 4 Y/O grandchild has $11,000 in RESP so far.
I agree , unless u have a business no need for an accountant . Like financial advisors they will never make u rich or save u money
Dee most people taxes are fairtly straight forward with no need for an accountant.
Westerly, your story is very impressive to be able to pay off that debt and buy a hosue in Greater Victoria!
I pay a very good accountant and I listen to advice! I trust him. He’s very good. I know people with more wealth than me that do their own taxes. And then they ask me for tax advice. My response is (as nicely as possible) – hire an accountant!
There’s actually a lot people (at all income brackets) can do to minimize taxes / maximize credits – legally. At the lower tax brackets, it’s all about credits. We graduated University with 2 children under 10 and worked the system to the Nth degree – legally and legitimately.
I don’t have the time or perhaps the memory to lay out how it worked but starting in about 1998 we went from $120,000 student loan debt (zero assets) to “$0.00” student loan debt and buying our first house in 3 years. We were not high income straight out of school, and really just above average now – in terms of wages. I do recall that we had a gift coming of $20,000 toward the house, borrowed $20,000 from the bank in anticipation of the gift (which paid off the loan) and put that into RRSPs (low income at the time meant approximately 50% return on RRSP contribution in: income tax, child credits, GST credits, who knows what else). We turned the $20,000 down payment into $30k plus.
What I do know is that I researched the F$$k out of every option available to reduce taxes, maximize credits, and get our family on the road to a reasonably wealthy life.
Thank you
Loop holes are best found by accountants that study the tax laws. Trying to think that you can out smart the tax man is just being stupid.
Captial gains and housing prices.
https://youtube.com/shorts/TBl975PtAkI?si=TgMpXV4xA–bfpeN
I guess the same kinds of people that don’t care about the airbnb laws are the ones likely to not claim rental income if they have a suite in their house and look for “loopholes” when it comes to taxes. These are all risks that I don’t personally take. I’m still waiting with my popcorn to see what the province will do in terms of enforcing airbnb rules.
Take for example the question I posed earlier about when you should do improvements before moving into your rental property or some time later.
Are the improvements done before moving into the property a betterment or just bringing the rental property back to a condition that it was before the property was originally rented using today’s materials. That could save the person tens of thousands in taxes if the work done was challenged.
Terminology such as good, average, fair, poor are not clearly defined. What is good to you, might be average to someone else. And those terms are not used in the same manner when talking about a neighborhood versus the improvements.
One can say the improvements are in average condition for its age or the improvements are in average condition for the neighborhood. They are not necessarily the same.
I’m into theoretical tax evasion.
A loophole in the law is a small mistake which allows people to do something that would otherwise be illegal.
I see it differently. Tax evasion is tax evasion and is illegal and not a technicality. You are talking multiple primary residences and potentially hundreds of thousands in illegal gains while others pay their taxes at the new inclusion rate.
There are things anyone can do to legally reduce some tax. No one can legally evade taxes
Dee did you know that Al Capone was rumored to have owned several properties in Victoria and Mill Bay in the 1920’s. The alleged house still exists today along Gonzales Beach. You can still see the boathouses in a row at the bottom of the house that took the booze out to a larger ship and then into Washington State.
yes and no, but they are not messing around with some stupid principal residence thing. They typically hire lawyers and tax accountants to find the optimal strategy (e.g. tax shelters) and some of those do get uncovered. https://www.cbc.ca/news/politics/kpmg-isle-of-man-taxes-house-commons-finance-committee-1.6047111
Pretty smart if you ask me and not something your average middle class grinder can come up with.
Don’t High net worth people have legal ways to avoid taxes? I mean, of course there are some that evade. Like Al Capone.
How about Nelson Skalbania then?
Donald Trump is a big weirdo. Not a representative example (I hope).
High net worth folks aren’t hustlers????
Donald Trump?
The fella that buried his ex wife in a golf course because cemeteries can’t be seized in that state.
Absolutely, that’s why actual “high net worth” folks won’t be doing something this stupid given the risk/reward. This is typically reserved for uneducated middle class grinders/hustlers with not much to lose.
“Sure technically maybe they are but it is essentially taking advantage of a loophole that is not readily enforced.” — not readily enforced…yet. I got my daycare bills audited. That was fun since the daycare had closed down and i had to track down the owner and ask for changes to the receipts because of defects. CRA can go after pockets of regular folks when it decides to.
deleted.
Sure technically they are but it is essentially taking advantage of a loophole that is not readily enforced. Not real difference than people not declaring income on a basement suit they rent out while living upstairs other than it is more lucrative.
Regardless these are not things “high net worth” people would typically do… These are typically uneducated middle class hustlers that are trying to get ahead because they don’t have any other means.
1625 Alderwood seems like a weak sale, big difference between POS houses and good houses.
fair
I think what the issue is, is that the CRA doesn’t manually look at many tax returns. A lot of it is automated. It’s not a problem unless you get flagged for an audit. Whether manually or random selection. People seem to get away with many things on their taxes. CRA isnt looking in many cases. Your both right. People do it, get away with it, but it’s not a problem unless you get selected for an audit. Like someone else said, maybe the CRA needs to put a bigger lense on it, rather then go after low income single moms, or low income couples reporting separate just to get the GST rebate. I still find ot funny when people go, but it’s illegal, so people can’t do it! There’s now millions of things that are illegal. It’s made ot virtually impossible to enforce most of it.
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I can understand comparing the pool of short term to long term pool is a very small percentage of the other. However, the long term inventory doesn’t go on the market very often as rental listings churn. It’s mostly locked up and unable for those seeking rentals. If rental list churn rates are known, we would able to see if short term listings numbers are in the same wheel house as those.
Both of these examples are illegal and tax evasion. Spouses can have houses in separate names but together they can only have one primary residence. Rental income needs to be declared and you can only rent out your primary residence and not live there for specified reasons such as temporary relocation for school.
This is very common in the south Asian community. 3 generations living in th same house but with multiple other homes registered as PR but actually serve as rentals with zero income tax declared. However I would not describe these people as “high net worth”. They are just grinders taking advantage of loop holes in the system.
I am not in favour of taxing PR capital gains in general, but just pointing out the unfairness in taxation.
If you buy a 1 mill home and 500k rental condo you are taxed (income plus capital gains) + an evil landlord.
If you buy a 2 mill home that appreciates to 4 mill in 20 years you make off with 2 million tax free and you are just another stand up Canadian citizen living in a SFH.
I made this video regarding GST on a condo flip 5 years ago – https://m.youtube.com/watch?v=qUH8ju0opOA&t=5s&pp=ygUPTWFya28ganVyYXMgZ3N0
5 years later I still haven’t heard of an example where the CRA has enforced this rule while they could literally bust 10s of thousands of transactions.
Frank, we are talking about something else (one family unit declaring two principal residences). That isn’t even counting the adult student in the family that is the sole owner of a third property 🙂
Not just a Vancouver thing, I scan 5,000+ titles per year and you’ll find expensive homes in Victoria with the one owner on title being a student you can tracy via Google to being a UVIC student.
And will do nothing while they bust some low income single mother on some small peanuts tax non-sense.
Marko, “Yes, that is the official CRA rule…..and the CRA sends out people to investigate whether someone is or isn’t in a common law relationship. Just like they send out people to determine why someone is building a new house every 5 years”.
CRA doesn’t need to send anyone out, both your marital relationship and the PR exemption are declared in your income taxes. This will also make the every 4-5 year house flipper easier to trace going forward.
One spouse could have inherited the recreation property from their family, why wouldn’t it be in their name? What’s illegal about that? Lots of professionals (doctors at one time) would put their primary residence in their wive’s name to protect it from potential lawsuits. I have friends who did this. And what about pre-nup agreements that separate assets.
I don’t know any hight net worth people ($10M+) that would take the chance to mess around with the CRA like that…
Not seeing a problem with capital gains on personal residence. Nothing to be gained by taxing it .
Capital gains tax should only apply to property that was sold within 10 years of initial purchase and inflation during that period should be factored into the gain. Property owned for more than 20 years should be completely exempt (I’m talking investment property) since inflation and maintenance (repairs) would cancel out any gain.
Just taxing the capital gain on principle residences would either open a can of worms or stop people from ascending the property ladder. If I was going to lose 33% of the gain on my house (50% tax on 66% of the gain) I would not be upgrading to a more expensive house. One of the more annoying things about capital gain taxes (at least to me) is that you are taxed on inflation in addition to the gain on any underlying value. I am sure you could make it more complicated by allowing a deduction for the new house but it would open all sorts of loop holes. You would also be pressured to allow deduction for the expenses of mortgage interest which would cost the government a lot of the windfall.
While on the subject of taxes, I always thought divorce and remarry would be an interesting way around the attribution rules but my wife was not interested…..
Yes, all true.
If anyone is interested, 231 buyers exercised their rescission period on some 83,xxx transactions.
Average time into rescission was 2.2 days with an average fee paid to seller of $2,889.
Marko, people in a common law relationship are supposed to file their income taxes as such. Now I suppose they could fraudulently file as single just to claim 2 principal residences, but that would open a huge can of worms with regard to separation/divorce, inheritance, pensions, employment benefits and other financial issues, not to mention simply being liable to be prosecuted for tax fraud.
+1
When the wife admonishes our boys to not do something that will result in them getting hurt two things are said: (1) don’t do that crazy thing you’ll get hurt and (2) we don’t have the time to spend 9 hours at the ER.
Yes, that is the official CRA rule…..and the CRA sends out people to investigate whether someone is or isn’t in a common law relationship. Just like they send out people to determine why someone is building a new house every 5 years.
100% in my opinion, but wouldn’t be popular politically so unlikely to see it soon.
Maybe the exemption should be capped then.
Because in Canada we punish people that want to do anything productive that is why the standard of living is dropping so quickly, as Nan pointed out….it isn’t sustainable.
100% agree and because most people don’t have critical thinking skills the government is doing a really good job at deflecting blame.
Well for the record it is cut and dry. Physics is a mature discipline after all. The questions we study are also vastly simpler than most everything involving human beings which is why physicists can correctly predict subatomic phenomena to many significant figures and yet basic questions about best fiscal policy remain wide open.
There’s only 1 PR per family, they would have to decide between Shawnigan Lake and Oak Bay.
Dee, high net worth people certainly use principal residence as investments as they understand taxes and get slaughtered on taxes in whatever they do for a living. Having one person on title in Oak Bay and the other on title on waterfront property at Shawnigan Lake is just one of the many strategies they employ. You really think CRA is going to go up to Shawnigan to interview the neighbors to see if that individual lived there enough to make it their “principal” residence.
Then you have developers/builders that just happen to move every 4 to 5 years. Buy lot for $1.5 million, build for $1.5 million, sell for $4.5 million and move onto the next build as kid has to be closer to Glenlyon Norfolk School.
Etc.
Also, now that capital gains is 66% >250k it kind of makes sense to buy a bigger principal residence versus smaller + investment property for taxation purposes.
I see what you’re saying but if it is an investment it is only to an extent, mostly it is valuable because we all need a place to live. To me it would make more sense to argue that the portion of a principal residence that is not used as a primary residence shouldn’t qualify for the exemption.
Also, my intention to rent my primary residence short term is only for when I will be away for 3-4 months. Or maybe if I’m away for a couple of weeks in any given summer. But not if it’s illegal.
No one said you are not getting shelter value from it as well as appreciation and, in your case, you also received rental income from it in the past and are considering short term rental. You can buy art as an investment and get esthetic value from it as well.
Well done. Funniest line I’ve read on HHV in a long time 🙂
Absolutely. …A good time for some Beatles lyrics…. tax Man
I hope everyone (not just every Boomer) knows the backstory to this song. It was 1966, and Harold Wilson got elected in the UK, bringing in tax increases that rose to 95% tax for the highest incomes. George Harrison learned that his new tax obligations of 95% was “likely to lead to his bankruptcy”. Not just George, but the Beatles accountant told them “ “Two of you [Beatles] are close to being bankrupt, and the other two could soon be.”
So George responded with this song, the first track of “Revolver”, and the first political song from the Fab Four. https://en.wikipedia.org/wiki/Taxman
And of course the song has the famous “95%” line “ There’s one for you, nineteen for me” which is a master stroke in writing lyrics.
Tax Man , George Harrison (Beatles) 1966
One, two, three, four
One, two (one, two, three, four)
Let me tell you how it will be
There’s one for you, nineteen for me,
‘Cause I’m the taxman
Yeah, I’m the taxman
Should five percent appear too small
Be thankful I don’t take it all
‘Cause I’m the taxman
Yeah, I’m the taxman
I’ll tax the street
(If you try to sit, sit) I’ll tax your seat
(If you get too cold, cold) I’ll tax the heat
(If you take a walk, walk) I’ll tax your feet
(Taxman)
‘Cause I’m the taxman
Yeah, I’m the taxman
Don’t ask me what I want it for
(Ah, ah, Mr. Wilson)
If you don’t want to pay some more
(Ah, ah, Mr. Heath)
‘Cause I’m the taxman
Yeah, I’m the taxman
Now my advice for those who die (taxman)
Declare the pennies on your eyes (taxman)
‘Cause I’m the taxman
Yeah, I’m the taxman
And you’re working for no one but me (taxman)
ITA s. 45(2) election to defer the capital again until the date of sale. YW that’ll be $5,000 in accounting costs, Ill send you an invoice.
If my primary residence were just an investment i’d probably live in a tent in the backyard and rent out the main living space and be flush with cash. I don’t do that because it’s more than an investment or is at least not just (or not even primarily) an investment. It’s like my brain could be taxed some kind of gains tax by a similar logic if I increase its utility and potential earning capacity by, say, getting a degree. Now, degrees are “sold” but they are still viewed in Canada as some kind of social benefit and are not treated like other investments. My home is not just an investment, even if it does, at times behave like one or have some of the benefits (and risks) that investments have.
All valid points. Interesting reading about the origins of the cap gains treatment. Good grief. The day will come when everything is taxed. I sure don’t think of my house as an investment. But it appears that other people do. These are the “good ole days”.
Patriotz, “Before, because it increases your ACB and thus decreases your capital gain. Do I get a gold star?” Maybe a Bronze runner-up medal (you got half of it). The upgrades will presumably increase the FMV, usually higher than the cost of the renos – and therefore increase the “deemed disposition value”. CRA could also look back on renos done in the previous year or two and deny them as personal.
Need to keep an attractive au pair somewhere. Then a guest room for when the in-laws visit.
Before, because it increases your ACB and thus decreases your capital gain. Do I get a gold star? 🙂
why do you need 5 bedrooms?
Most people can’t afford to buy a fourplex for 2 million or more, but a larger number might be able to buy a condo.
Show me a five bedroom home in Victoria that can be bought by a middle income family.
Incorrect. It absolutely is an investment and is the primary source of wealth for Canadians. In fact, the reason the exemption was recommended in the first place was largely for “administrative ease” and to encourage home ownership — not because it is not an investment. It has survived because it is politically unpopular to change it.
The 1971 backtrack was put in place to encourage home ownership and protect this investment. At the same time the government was implement capital gains taxes on other types of investment to fund social programs.
The windfall profit in the capital gain doesn’t seem to stand up to tax policy fairness considerations now given how houses have appreciated over time unequally. Doubt anyone back in 1971 was contemplating multi-million dollar gains in Vancouver.
If you chose to rent the home that you are currently living in then that is a change in use. Any increase from that date would be subject to capital gains tax. The same if you were to move into your investment property. As of that date capital gains tax would apply.
So when should you do extensive upgrades if you are planning to move into your investment property? Before you take personal possession or a year or two later?
Frank, If one is risky, then why would you own four?
With a freehold condo you do own land. What you own is a strata lot that gives you common property interest in the land that will be shared with the owners if the building has to be demolished according to the Unit Upon Destruction schedule.
With a leasehold condo you don’t own land.
I think Patrick is right. Look at the wording – it’s an “exemption.” The default is that there’s a tax, however, due to the particular kind of use of that one kind of property (as a primary residence), the tax doesn’t apply. The exemption should cease to apply if the use is converted.
Because principle residence is a home, required to shelter the family, and so isn’t considered an investment.
Whereas a rental condo is an investment, intended to generate income and profits. So it’s subject to taxes.
Same idea applies to services. If I mow my own lawn, no taxes to pay. If I mow my neighbour’s lawn and charge him money, I pay tax on the income.
Gotta draw a line somewhere between ‘personal’ and ‘business/investment’ activities, and I think the current system does that quite well.
I wouldn’t own one condo. They are all risky investments. No land.
Well as long as we are looking at the extremes Frank. What could possibly go wrong with owning four condominiums?
https://youtu.be/EMxizqFfZjU?si=y6DJhw9i6vZzOG2G
Owning one 4plex, versus 4 separate condos is not a wise decision. All your eggs are in one basket, something goes wrong, you’re screwed. Something goes wrong in one of 4 condos, you’ve still got money coming in from the other 3. It’s called diversification. Also a wise idea in the stock market.
When it comes to retired baby boomers they don’t seem to have a better option than to stay in place. If they sell their home and down size to a smaller less expensive residence and invest the surplus funds they are going to get taxed on any profit and have their government income supplements clawed back.
If we could somehow change that, maybe we could break the bottleneck in the housing supply freeing up five-bedroom homes for middle income households and thereby lower house prices by increasing supply.
Our mortgage is in 2 segments, one of which is coming up next year. The other one we locked in for 7 years when rates first started to climb so it won’t be up for renewal for quite a while. Not sure what we will do next year. Depending on the rates we might opt for a shorter amortization period and aggressively pay it down. If rates are below 4% for a 5 year fixed we will probably do that.
That movie cemented my decision to pursue ibanking during my university days.
As for greedy baby boomers. Here are two takes on how greed is good, 33 years apart, that influenced the BB generation and free enterprise.
https://youtu.be/PF_iorX_MAw?si=P_A5u0LoosCGQqr6
https://youtu.be/WDcaziUPK7M?si=q8KAHUJuI-MnrE-c
Is it a good time to buy? It depends on your personal circumstances.
If you are a visiting professor to Victoria with a one- or two-year contract is it a good time to buy?
As opposed to a plumber intent on living in the house for ten or twenty years?
So it isn’t a lie when an agent says it is a good time to buy. It depends on your personal circumstances.
Come on thirsty, most realtors will tell you it is always a good time to buy….
Owning a couple of condos isn’t house hoarding. If you’re buying properties for their income producing qualities, then if you own say four or more you’re just being financially stupid as you should be buying multi-family properties such as a triplex or four-plex. As the acquisition price is lower, the expenses are lower, and the net income is higher.
Years back there were line ups outside of new condo buildings in the big cities and people were buying half a dozen condos each. Now that was house hoarding but they were buying for appreciation. That’s not the same market as today. Back in those days I would inspect two-year old condos that still had the tape around the toilet and packaging in the stoves as they had never been occupied. That’s house hoarding.
A lot of odd things were happening in single family housing at that time too. On several occasions I would inspect properties near the university that were bought by a student and they only lived in one or two rooms of the house. The home was identical to when they purchased it four or five years before.
Not my area of expertise so not sure but my information is first-hand from a family member who works for government and is based on a review of their fee for service financial plan. Add in extended health benefits in retirement.
And I agree with Marko on why the heck is a massive primary residence capital gain tax exempt windfall for a multi-million dollar home a-ok while owning a rental condo subject to capital gains and income tax that provides shelter to others and gives government much greater revenues is “house hoarding” and wrong?
The real issue is that government has mismanaged the laws and policies and public investment in shelter in Canada for so long that they are looking for politically acceptable targets to deflect blame while they try to catch up even if those targets are illogical and unfair.
I would be tempted to go 5 year fixed by that time, my own mortgage is up early next year and that’s what I plan to do. If 5 year rates are in the low 4’s or high 3’s then the risk reward doesn’t benefit going shorter as I don’t see long run mortgage rates going below 3% for a long time. So you are essentially gambling 1% of upside against theoretically unlimited downside.
I would imagine most realtors are passing on the good news about interest rates .
3 years ago, none. Now, you would be surprised. I had a young family three months ago buy a pre-sale in Langford with a completion date in December and they were definitively in tune with things and thinking along the lines of there is a good probability rates come down by the time they have to complete on the purchase and looks like that is exactly how it is going to play out for them.
Sure, there are people along the lines of how much can I afford today and that is all the matters but my demographic of client is not calling me because they saw my face on a billboard on the highway, or secondary to my excellent Tiktok videos. If it isn’t a repeat client if they are coming across me they are usually doing a lot of research.
Marko, as a % how many of your buyers actually pay attention to the 5 year bond yield or interest rates in general when looking to buy?
The article says the zoning changes west Vancouver passed only apply to 3% of the lots, and for 97% things are unchanged. Not sure why that would be good enough to satisfy the BC government’s ultimatum.
“ the zoning changes would apply to less than three per cent of the total number of lots in the district.
Gambioli said that amounts to just over 380 individual lots, while zoning for all other properties in the district would remain unchanged.”
Too high given the current rates IMO.
Vic, 1.5 million is about right I suspect when you include the need to account for inflation indexing. Any pension experts here?
Vic, as long as the properties were bought during the marriage who is on title generally does not matter as to the division of property in a divorce. (exceptions such as inheritance do exist, consult with your lawyer). Overall a smart move, but one still has to be able to establish separate principle residences status.
I wonder if people are not only better off not getting married or even claiming common law status these days.
I have to agree with Marko, the Canadian standard of living has been seriously declining. If you want a quick measure of the situation compare the value of the Canadian dollar today with its value ten years ago as against the USD. So much of everything we use is imported.
Before someone personalizes this, my income and funds are all USD and I have medicare as well as US health insurance, but more than 20% of Victoria does not even have a family doctor and that includes a lot of seniors. My next door neighbours 36 year old son had to wait almost three months before they could remove a three inch (9cm) adrenal tumor.
You check the math on that? $1.5M seems very high
Hope they don’t get divorced…
+1, I also find it odd from a social perspective that someone with a $4 million dollar home in Oak Bay and $2 million dollar “cottage” on Shawnigan Lake with millions in tax free capital gains gets a free pass from any analysis (I know people that are together where the husband is on title to the property in Oak Bay and wife to the title of the “cottage,” wonder why). After all, they are just a regular CND family with a SFH and a cottage at the lake.
If you live in a condo and buy one to rent out – evil greedy landlord, or even if you just have a $1 million SFH with a suite you are still an evil greedy landlord.
Over the years I sold 10 units at the Janion – all individual owners. One lady was retired (late 60s), had a part time job in a kitchen and run her 240 sq.ft. Airbnb doing all her own cleaning, etc. This is a point people in Croatia bring up when I say government needs to introduce income tax on Airbnb income (there is no income tax on short term rental income believe it or not). The point is if the government allows people to make money renting out their own place short term the government isn’t under pressure as much to increase pensions and social programs, etc. *I don’t agree with this, I think in the case of Croatia short term rental income needs to be taxed, but it is an interesting perspective.
Maybe it’s the 2 bedroom suite that pushed it up but imo that house should not be worth more than 1.35 in the current market. At 1.45 you are now approaching broadmead/Cordova Bay territory which are much superior areas than Tremblay in Gordon Head.
I try to explain the AirBnb rules to friends in Croatia and everyone is like “what do you mean, you can’t you do whatever you want with your own property?”
Other than there being no rules regarding AirBnb there aren’t rules regarding a lot things. In Croatia a lot of law firms, IT firms, etc., just buy condos in residential buildings and run their business from there and oddly enough it doesn’t bother people and they go about their daily lives. Here if a lawyer setup a practice in a condo building people would make it out to be like the world is ending.
It’s CMHC mortgage for a rental, not a condo build. Gagan is from Victoria btw.
West Vancouver passes multi-unit housing bylaws after ultimatum
https://www.cbc.ca/news/canada/british-columbia/west-vancouver-housing-bylaws-passed-1.7292840
Gordon Head housing project heading to public hearing
Murdock said the application has a lot going for it, but does not meet all of the conditions of the official community plan, which has triggered the need for a public hearing.
https://www.timescolonist.com/local-news/gordon-head-housing-project-heading-to-public-hearing-9347646
You kind of forget how much it already has eroded when you visit other countries and then you realize it isn’t normal to wait 6 hrs in emerge for a minor medical problem. I don’t think Canada will recover in my lifetime.
Saanich OKs massive rental project on Tillicum Road
https://www.timescolonist.com/local-news/saanich-oks-massive-rental-project-on-tillicum-road-9348063
I saw that too, very strong sale. SFHs have no where to go but up long term. We are going to have likely a 100 year low (other than maybe a few WWII year) in new SFH construction in BC while the populations balloons and culturally everyone still wants a SFH.
There’s a saying in personal finance, “You can’t outearn your stupidity.”
Similarly, we can’t outbuild high immigration levels. We could in the 1950s and 60s. But not today.
Many people seem to have this impression, but the Conservatives have made no commitments to reduce immigration. Only the PPC and BQ have.
Go to 12:00 :
https://www.reddit.com/r/CanadaHousing2/comments/1azmbh9/poilievre_to_get_our_economy_firing_on_all/
Theoretical particle physics is cut and dry? What black hole are you living in?
Kristan,
Thanks for the reply.
I mostly agree with your post. Though I don’t follow this point (above) in your discussion. This one income $90k/year household can afford $2,400/month, and afford to live in Victoria, which satisfies your “Norwegian” definition of affordability… no?
For me, the $90k income household needs a 2 bdr rental unit that is rent controlled and a purpose built rental and they can live there securely for the long term. Which is precisely what the Canadian government is doing by providing CMHC funding for constructing PBR apartments in big numbers in Victoria. Around 3,000+ units per year coming in recent estimates.
For your other examples, with bigger families, I agree with your analysis. We should be developing greenfield land specifically for family housing (SFH, townhouses) as I consider that the biggest part of the housing crisis.
Hey Patrick,
Well, the housing market here isn’t as cut and dry as theoretical particle physics. Data is lacking; there doesn’t seem to be universally agreed upon metrics; and cause-and-effect can be extremely difficult to tease out for experts let alone for people-on-the-internet-with-opinions. For example, you mention household size, which is certainly correlated with difficulties in the housing market. We didn’t let being renters stop us from having kids, but that seems to be an unusual decision for our demographic. So difficulties in the market have some effect on household formation, which in turn correlates with what developers build, and so on.
Anyway, personally, I have a few metrics in mind. I don’t claim they are objective, more like a back-of-the-envelope approach. One is the Norwegian definition IIRC, namely, can a single mother working as a nurse afford to live in a place? In that life situation it makes sense to think about apartment rentals and two bedroom condos, not SFH obviously, since you’re looking at a household size of 2 or 3 and an annual income of ~90k. The market right now for two-bedroom apartment rentals is something like 2400/month. That’s a hair above the max recommendation for shelter costs (30% of income). What about two-bedroom condos? With the stress test and 50k of down payment you’re looking at ~425k of condo at current rates. There are currently 11 such condos (2 bed, <= 425k) right now in all of greater Victoria.
That exercise tells me that there is not enough supply in that market segment. So I would be with the density people and say that we probably do need more towers although not just of luxury flats, but both rentals and condos affordable to the majority of the population.
But I do agree with you that the story doesn't end there. You can run through similar exercises for different life situations. Take a family of four where the parents are in their 30s and they make average household income for that demographic here. So say ~150k annual income, which at current rates and with 100k down payment you're looking at a max purchase price of around 750k. In that situation a healthy supply-side would, IMO, be such that they could buy a 3 bedroom townhouse. At that price point there are currently 28 listings in greater Victoria, half of them in the Westshore, half of them in the 700-750k range which is just at the edge of buying power.
That exercise tells me that there is not enough supply in that market segment either. So I would still be with the density people insofar as we should have MM without 200k/unit in offsite development costs. (Personally, I think that row/townhouses are the sweet spot for families in CRD going forward. We were fortunate enough to be able to buy a house, but in the hierarchy for us and our friends with kids the ranking is something that would earn a disapproving look from Marko, namely condos <<<<<<<<<<<< townhouses < SFH)
You can run through a similar exercise with SFH. The number of attainable listings at say 200k/year household income and 300k down payment (<= 1.14m) is much better than in the two hypotheticals above (~125). But it could definitely be healthier.
—
That tells me that existing supply is meeting demand in such a way that people in many different life situations are under significant pressure to secure housing. Hence my seemingly flippant claim that the basic problem is a lack of housing (which I had in mind at all levels).
The US almost doubled its duties on Canadian softwood. Imagine that may hurt.
I mean, we’re at the point where the amount of things that are illegal borderlines on the ridiculous, and the ability to enforce the overwhelming majority of it doesn’t exist. Maybe the people playing chicken are on to something. With each passing year the consequences of breaking laws seems to become less and less and less. Law Enforcement focuses most of their resources tackling the revolving door of criminals from homelessness/drug addition problems. For those that do get busted, punishments seem relatively minor. Sort of like what’s going to happen when municipalities don’t meet the provincial housing goals.
Helluva post. And he’s right.
Canada isn’t in a recession . Canada is at the bottom of the business cycle and it’s to the moon from here . Invest in real estate and you will always be a winner
Meanwhile Gaga Lalli, CFA and the vice president of Real Estate Finance announced the recent funding of a CMHC insured construction loan for a 94-unit rental project in Langford.
Nan, I interpreted what you’re saying is that while we are not technically in a recession most Canadians are feeling poorer.
-That could explain some of the grumpy people on this blog and their populist views on immigration and the guy who wears funny colored socks.
As a country we have to invest more in businesses and new technology in order to increase worker productivity. We can start simply by telling employees that they are doing a good job. Something that we have not been doing for those working from home. People don’t just work for a pay cheque they will work harder for recognition.
I’ll start.
That’s a really good write up Nan. You nailed it!
“Confident countries invest in themselves and their workers”
Another strong sale in Gordon Head: 4463 Tremblay at $1.46M, 30k off ask and 50k over assessed. IMO no value in what is really an over-rated average neighborhood….
https://househuntvictoria.ca/2024/08/12/airbnb-hosts-playing-a-dangerous-game-of-chicken/#comment-118656
We have been in a per capita recession for 2 years and house prices are declining.
Sure we have erosion of the value of our dollar and immigration that makes the aggregate nominal dollar numbers look weak but non-negative but while perhaps the metric Canada usually refers to determine if we are in a recession as a country is not showing a recession, Canadians on an individual real dollar adjusted basis definitely are.
And this will only get worse because you can’t have sustainable high incomes without a globally competitive economy and you can’t have a globally competitive economy when our country’s principle innovation over the last 25 years are different ways the government and banks can team up to pump GDP with debt by lending Canadians bucket loads of money to overpay for housing.
This policy of debt driven GDP pulls forward tomorrows consumption at todays aggregate efficiency and costs with loans. Conversely, an innovation based economy increases today’s consumption via lower costs driven by more efficient resource use and allocation i.e. You can either consume more by borrowing money to afford it or making it cheaper to consume. Both ways facilitate higher consumption and GDP today but only one is sustainable. Canada picked the wrong door.
The damage is done. Canada’s real standard of living will continue to erode perhaps for a decade or more unless Canada either starts innovating in a meaningful way driving costs down and exports up (unlikely) or blows the doors off exporting rocks, logs, oil and gas which we are really good at and have lots of but is unpopular with our current extremist Liberal government but I expect to be much more popular with a highly likely Conservative government.
I’m curious. ,You’re a scientist, what objective metric are you using to determine that there is a “lack of housing”? I expect you’re aware that Victoria has an incredibly low people/household (2.1) compared to almost anywhere else in the world (2.5 for Canada, 2.5 for USA), . And Canada is close to highest in the world for housing square feet per capita. https://www.rew.ca/guide/articles/canadians-enjoy-second-most-living-space-per-person-global-survey-1.9905436
And so you’re conclusion is there’s a lack of housing? Are you only considering “owner-occupied” housing and so basing it on the high house price or are you telling us that Victoria rents are way higher than you saw in the Bay Area or ?
Maybe I’m naive, but when I see a place (greater Victoria) with a very low household size (2.1/household) and a huge square foot/person (Canada), I don’t jump to the conclusion that there’s a lack of housing, and we should blame “Canadian bureaucracy”. So what objective metric are you using?
It’s a serious question. Because if you’re right, and we suffer from a basic “lack of housing”, then building all these 1-2 bedroom apartment towers is the right thing to do. But what if it’s a different problem, namely a shortage of affordable SFH for sale to families? That has a different solution than what we are doing now, because construction of any number of condos and PBR apartments won’t help that. Because if it turns out that your “lack of housing” is really referring to a “lack of SFH” as the “basic problem” you should say that, because the”density” crowd isn’t aware of that as the issue.
I think immigration is very good for Canada. Immigrants bring a lot of new money into our economy, billions and billions of dollars every year. And heck we need them with our aging population.
At the same time I see the growing pains we are having in not building a lot of housing and the pressure on rents.
Intuitively the public and the populist politicians (PP) would want to pause immigration but I think that would push us into a recession. And that’s not good as it might not be easy to pull ourselves out a recession that could turn into a prolong depression sending home prices down. Canadians don’t want their home prices to come down and neither do politicians. The last time a politician screwed with Canadians their party got wiped out in an election.
So we end up doing a tricky dance of monetary and fiscal policies that seem to be at odds with each other.
During the height of pre-sales, I saw a lot of foreigners, let’s call them Americans, buying several pre-sale condos for cash and keeping them vacant. Not worth the hassle of renting them when property values were appreciating in the double digits. I saw a lot of these pre-sales bought by real estate agents living in Las Vegas. Victoria was a super hot deal because of the dollar. That didn’t help end-users trying to buy a place or renters.
That of course has now changed but I wonder if that isn’t also another reason why condos are no longer appreciating in value too as it was investors driving up prices. There is this wide gap between what an investor will pay in an appreciating market and what end-users can afford to pay. That gap has to narrow before we will see a change.
All good points rush4life. Victoria has changed quite a bit since 2004. These are problems that will cause fewer people to move here and more people to leave. As one person said to me after deciding to leave Victoria after living here for a few years. “Victoria is not like the brochure that sold them to come here” We are a small city with big city problems.
For a single person moving to Victoria for their first job they will live at the poverty line with most of their salary sucked out of them for rent and other living expenses making it near impossible to save for a home. We just won’t get those people moving here and it will be harder to keep those to continue to live here.
That’s why a marko burger costs $24. Soon to be $35
I suspect that’s what the government will do also. They will go after a whale with a couple of STRs and make an example of them. So it could be less riskier than one might think, as long as you aren’t one of the whales they are going to harpoon.
In other cases I can see the strata council going after STRs as the owner occupiers don’t want the troubles that come with transients in their buildings.
After spending many years on this forum I am starting to be skeptical of the supply side solution. I do believe this is almost certainly a supply/demand issue but there are too many blockers standing in the way on the supply side: 3 layers of government making it near impossible, along with many many taxpayers who don’t want their neighbourhoods to change. Frankly the latter is somewhat understandable. My neighbourhood hasnt’ changed much but driving around town is getting much worse, not to mention all the issues out to Westshore. There are solutions to those issues as well but again they cost a lot of money and i just don’t see any of these problems being solved in my life time. I have yet to hear of a country / area etc that reduced house prices with increased supply.
To me the demand-side solution is much easier to achieve. Cut off, or greatly reduce, the immigration taps. I say this as a man married to an immigrant and who has benefited more than most from immigration. But I’ve also had the stress of finding daycares in the past few years, waiting in the hospital for 6 hours on several occasions for something that could have been fixed by a walk in if we had enough doctors, and also impacted by the high cost of housing. I moved to Victoria in 2004 and none of these issues existed. I think reducing immigration is way easier then trying to build homes and update infrastructure. Its also much more palatable for the general population.
Now we need a Leo for a new ‘smart immigration Victoria’ forum with a bunch of fancy stats.
My familiarity with provincial enforcement in several areas makes me think that running an illegal STR may be LESS risky than many people think. However there is no question that there will be some enforcement, probably against someone running multiple STRs. Once they have one or two enforcement successes there will be a government news release trumpeting the ‘aggressive’ enforcement and including some tough sounding quotes from the Premier or Housing Minister.
I don’t consider it jibber jabber. The court case is scheduled for later this month so let’s see what happens.
As you’ve repeatedly stated, not me. There is no “we” in your opinion.
Who buys new condo presales? Mostly people who will rent them out for a short or long term, many as part of their retirement strategy. How do these condos get built without presales? They generally don’t.
Who can afford to add a suite in a home – or even a laneway home? An existing homeowner. Is this new supply? Yes, yes it is.
Yeah if I could buy a second property that’s the same or better than my current one with only a 5% down payment and using all of our salaries – I’d do that. But I have to be able to service both mortgages under our regular incomes plus only a part of rental income. Even when rental incomes would cover all costs with over 1k/month to spare (seems like a lot to me but maybe I’m wrong) and even if they second house also has a rental suite. I think the governments large investors not regular folks. Which is fine I guess.
As we’ve previously gone over, buying an existing property to rent out does nothing to increase net total supply. Building new housing is what does.
…
A middle income family generally can’t afford a five bedroom home.
Housing is a commodity in Canada and most places in the world. The buying, selling, building, renting out and renovating of housing has been a big part of our economy.
Housing is also a human right and core basic need.
We have a serious shortage of rental housing. We need more investment in rental housing – not less. If you want affordable housing this has to be subsidized by government because private investors are never going to provide this without subsidies and grants because the numbers do not work. The capital will not go there.
It is people with existing homes and home equity that can afford to create another more affordable rental unit or buy one to rent out if they are incentivized to do so. They can have very narrow property margins because they have the land/equity already. It would be better to incentivize homeowners to rent out their suites or buy a rental condo at greater rates. This won’t happen if the political dialogue keeps demonizing them and penalizing them with additional restrictions and taxes.
Just the like “save the trees” and “stop overdevelopment” folks were myopic and self-interested, government’s “protect tenants and penalize landlords and property owners” is the same at the opposite end of the spectrum. Both positions will not solve this problem.
Finally, I find it pretty odd from a social perspective that someone with a pension which is valued at 1.5 million which will pay them 4k a month indexed to inflation from age 60 (many govt and other crown corp or uni workers) is considered fortunate and deserving, while someone without a pension who saves and invests in two rental condos over time for retirement, which they maintain and manage themselves – instead is a greedy landlord despite the fact that they are providing housing for two families and a retirement income for themselves.
The first nations people in Vancouver are set to be the wealthiest people in Vancouver.
I look at the Songhees Nation that are evicting owners of manufactured homes in Victoria under the guise of providing much needed housing for its people. While there remains non developed land available in the reserve. And they developed the Ravenline apartment buildings a few years back rather than native housing as well as leasehold land off Admirals that was sold to non natives. My guess is that the manufacture home park will be developed for more apartments rented to non natives and not for indigenous housing.
At the least the band should have bought the homes in the park at fair market value as there was an implied leasehold interest to the people that bought into the park for all these years. I say implied as the occupants were paying property taxes on the land. If it were a true month to month rental pad then the occupants would not have been paying land taxes on something they didn’t own.
Strong sale at 4430 Shore Way… got 1.63 full ask at 50K above assessed for a POS house in gordon head with some ocean glimpses. That one surprised me, was thinking it would be in the 1.5-1.55 range.
https://x.com/kbessey/status/1823166528843563185
I never thought STRs were a good idea as they competed with the hotel industry. Instead we should have been building more hotels that employed more people and paid more taxes.
What we did instead was make housing a commodity to be sold on the world market rather than shelter for people. Investors were willing to pay a lot more for condos than end-users and that inflated prices as condo prices were increasing by double digits year over year.
Now we have a problem. While investors have mostly exited out of the new construction market the ones that remain are not ready to sell at lower prices. They are confident that what is happening now is only temporary and Victoria will once again come back to hot market conditions. All they have to do is wait out the market.
While end-users have to rely on family “gifts” to get into the market and their parents and grand-parents have to subsidize their children’s life style putting at risk their retirement plans. It’s hard not to have guilt as a parent when you live in a paid off two million dollar home and your children have trouble paying rent each month.
That’s why baby boomers are seen as greedy bastards all they had to do was sit on their rumps watching reruns of Fantasy Island as their homes escalated in price. Now they live alone in a five-bedroom house that would suit a middle income family in a housing shortage. Bottle necking the market.
But that’s what government programs of the past have done by incentivizing an entire generation of wrinklies to stay in their houses.
The problem isn’t a lack of housing, it’s a lack of affordable housing caused by excess demand driving up prices. You cannot build an “affordable house”, it’s impossible, land is too precious. Government housing is a disaster, look at the conditions on reserves, it’s deplorable.
Three thoughts:
I think most of us agree that the basic problem is a lack of housing. But then extending notice periods, Airbnb, etc, are at most of secondary concern. Policies and actions should be judged according to how they address the basic problems. By that standard, upzoning the province was a fantastic move, but if municipalities kneecap MM construction (as Marko has detailed of late; nearly 200k/unit off-site civic improvements on a MM build in CoV!) by turning it into a cash cow, well, that’s just giving with one hand and taking away with the other.
The Airbnb ban was a pretty transparent political move. Good as politics, sure, but hopelessly secondary to the basic and persistent problem of lack of housing. A one time bump, and then back to business as usual. While patting themselves on the back for it, and where the basic problems are still there! But, the thing is, when you make pretty transparent political plays, you make yourself vulnerable to accusations of incompetence and playing politics. The rollout of the new renter protections was a total screw-up and consistent with that narrative. I mean, providing tenants with the contact info for buyers of tenanted condos? What the hell were they thinking? We’re recent enough homeowners to know very well how important rental protections are in BC, but even then the impression is not of competence and effectiveness.
Foreigner perspective: it’s amazing how Canadian bureaucracy at all levels can be primarily responsible for major problems, here the lack of housing, and think that passing the blame around from one level of the bureaucracy to another — from the province, to municipalities, to the federal government, and back again (and more recently onto normal people) is a long-term strategy. “It’s not my fault it’s their fault” is not going to end well.
We are in this pickle of a problem because we haven’t been building PBRs for a very long time. Instead the decision was to rely on people leasing their homes. The belief was that private enterprise will solve all our problems. Investment condos would be the poor man’s apartment buildings. So we turned a blind eye to illegal suites.
If one could go back 30 years the solution would have been to close down all illegal suites in the city so that it was financially viable to build purpose built apartments and not to allow illegal suite income in qualifying for a mortgage. If we had done that then we would have a lot more PBRs of different ages and at different rental rates.
Now we are playing an expensive catch up game. If airbnbs are an example of government overreach, the same might happen with illegal basement suites when the hundreds of PBRs start to have problems filling their buildings a decade or two from now.
The golden age of real estate may be coming to a close. Might be a thought to teach your kids about investing in the stock market rather than being a real estate tycoon.
Governments are all about sticks . Nothing they do makes a positive difference, Myself I hope str folks keep on keeping on , the regulations where just plain silly
When it comes to enforcement it will depend on where the various governments get the funding. If the funding comes from fines levied and money provided by the province I would expect enforcement to be more aggressive. I think the biggest bang for the buck is to work with strata councils to have them self regulate their buildings.
Also agree with totoro, too many sticks, not enough carrots.
Also like to add that landlords getting a hearing w/i a reasonable time is great — but it’s a small consolation if the decisions are low quality and biased against landlords. RTB decisions are notoriously bad.
Except that you cannot change tenancy laws to favour tenants without disincentivizing people who have suites/property to rent. If you are going to adjust this factor you’ll need to encourage and support landlords in other ways – like Germany does. The whole thing is a balance and we don’t have enough rental housing. Right now government is ignoring this because it is popular to demonize landlords and protect renters when the real issue is a shortage of supply which government needs to address – and is in some ways with immigration reduction and funding for rental buildings. Ultimately this approach shifts the blame from government to third parties short term and reduces rentals long-term imo.
Capital gains changes , short term rental restrictions, plus changes to RTB rules have dissuaded a lot of people imo. Add in interest rates and depreciation and lets see where we land in a few years.
Pretty much -> https://www.cheknews.ca/woman-who-hit-11-year-old-saanich-girl-with-car-granted-full-parole-with-conditions-1079679/
Interesting story -> https://vancouversun.com/news/prospective-buyer-burnaby-home-multi-unit-property-hitch
About the violent offender enforcement, I had that thought too. It’ll be weird if the govt puts more money into taking down airbnb hosts than it does into criminal law enforcement. I mean, you can’t run an airbnb but it’s more or less ok to throw a brick at a pregnant women’s belly or to punch a 5 year old in the face. A key difference though is that with the criminal element it’s multiple things going on (mental health and addictions in addition to criminality). Presumably airbnb hosts won’t generally present these additional factors.
Which rules?, the provincial ones or the municipal ones. And will the province provide the municipalities the data they need to enforce their rules? For example, province doesn’t care if you Airbnb your principal residence but the COV does. Doubt province enforcement unit will be helping the COV enforce their rules.
Just the fact that the municipalities and province have different rules goes to show how important and well thought out all of this is.
Have you turned on the news lately? Govt can’t deal with violent offender enforcement -> https://globalnews.ca/news/10584754/family-tori-dunn-homicide-victim-outraged/
I predict not. Of course someone will get busted so the government can call the newspaper and have a headline “AirBnb operator fined $10,000 as task force cracks down” to make it look like they are doing something and everyone on Reddit will applauded their actions as they get booted from their $1,500 basement suite (with 3 months’ notice) into the their next $2,200 basement suite.
So many POS houses for sale but anything that is quality under 1.5 in good neighborhoods still getting snatched up quickly in multiples.
Yes there were always going to be those willing to test these laws. That’s why I wonder if it would have been wiser to tie the objective of increasing rental supply more tightly with airbnb regulations. Like say by allowing airbnb as a percentage of a rental portfolio. Oh well.
I predict that if these laws stick we could see outcomes like this:
https://www.cbc.ca/news/canada/nova-scotia/man-arrested-avoiding-child-support-1.5822413
Years ago, lenders required their appraiser to verify that new construction was under the New Home Warranty Program. It was part of the mortgage approval requirements. The lenders are not doing that today as more properties are done using a automated approval system. If a home builder’s license was cancelled I assume that the home warranty program would be voided.
If buying a home off a home builder it would be prudent for you to verify if the home warranty is still in place.
I would be cross referencing investor versus end-user not just by airbnb listings but also with BC Assessment records. Something that I have done in the past when I knew key people in the Assessment Authority and the privacy laws were not in place.
The Assessment Authority in a few minutes determine how many assessment notices are sent to a different address. That would provide a starting base for enforcement in condominiums as one would know which are investment condos and which are end-users. Cross match this with where the electricity bills are sent.
If you’re an airbnb operator be glad I don’t work for the government as I would be communicating with the strata councils on enforcement. I would be looking for some of the big whales that are running airbnbs as test cases for the new regulations.
I would personally not take the risk of running an airbnb atm. I think it’s clear that the govt is going to take action against at least some (more) of the hosts who are operating in contravention of the new rules. Govt must have known when they made these rules that it would be a long hard road and that enforcement would be needed. So, I perfectly expect some fines, other actions. Possibly even some very long drawn out legal actions with bizarre outcomes.
Enforcement of airbnbs are not by themselves going to solve our housing shortage. Most airbnb owners have just flipped the government the bird considering that the government will enforce the change as much as they have done with the helmet and anti-idling bylaws.
However, enforcement might come form the strata councils themselves as the number of owner occupiers increase and want to discourage transient accommodation in their buildings. If I were an enforcement officer this is where I would be working with the strata councils. Better for the strata council to levy the fines rather than the government. Self regulation is more effective than government regulation.
A landlords half of a fair rental agreement is… providing housing.. is it not? If you replace “responsibility” with “choice”, maybe that fits better in your mind?
There may be hiccups along the way, but the trend on inflation and rates is down in my view (FWIW).
I went P-1.0 earlier this summer and at that time 3 year fixed was over 5%. September cut who knows but definitively one more cut this year. The other advantage is you can switch into a 3 or 5 year fixed at any point if there are good deals to be had going forward.
My mortgage broker said not many people asking about variable whatsoever which makes me wonder what I am missing, what are the odds we get more inflation and rate cuts are suspended?
There is this thing called real life where people responsible for enforcement are the same people and embedded culture that takes a year to process to garden suite permit and are more concerned about their flex Friday than busting an Airbnb.
Have you ever looked at enforcement registries for certain things? An entire team at BC Housing has dealt out 6 enforcement actions in three years in regards to Owner Builder contraventions https://www.bchousing.org/licensing-consumer-services/owner-builder/enforcement-registry
In my 8 years and 10,000 plus contacts re Owner Builder exam I’ve never heard of BC Housing actually going out to a building site to enforce anything. On a weekly basis people email me along the lines of “if my framer does the foundation, structure, and envelope I am in contravention and BC Housing could fine me $25,000,” I just laugh.
Off-topic somewhat, Dee (I think) was asking about mortgage rates. We are closing in on making a decision, choices currently: 4.79% fixed or P-.8 VRM. Broker is suggesting the VRM should out-perform – but based on their assumption that BOC will drop 25 basis points each Q for the next several (actually 2) years.
We may decide to sell or redevelop the property in the next couple years, and so may go variable based on 3 months interest penalty rather than the IRD which I could see being expensive in the short / medium term.
So these 900 have been cross referenced with the BC Home Owner Grant to verify they aren’t principal residence?
As you increase regulations the number of resturants decreases and you end up with $24 for a burger everyone on reddit complains about.
“Responsibility of providing housing ” does not mean that anyone is “responsible for providing housing”, just as “responsibility of running a restaurant” does not mean that anyone is “responsible for running a restaurant”. Those who choose to operate a business take on the responsibility of abiding by regulations as the case may be.
This attitude of entitlement is concerning.
Landlords are responsible for fulfilling their part of a fair rental agreement. They aren’t “responsible for providing housing”.