Where the bids are landing
It’s a quiet time in the market between the active spring market and the back to school bump in activity we usually see in September. Despite prices that are unchanged, incomes that are higher, and rates that are lower, there is not much sign of a change in the market since last August, with a sales and new listings rate that is essentially identical to this time last year.
| August 2024 |
August
2023
|
||||
|---|---|---|---|---|---|
| Wk 1 | Wk 2 | Wk 3 | Wk 4 | ||
| Sales | 70 | 172 | 292 | 544 | |
| New Listings | 164 | 368 | 621 | 1095 | |
| Active Listings | 3305 | 3287 | 3290 | 2490 | |
| Sales to New Listings | 43% | 47% | 47% | 50% | |
| Sales YoY Change | — | +9% | 0% | +14% | |
| New Lists YoY Change | — | +2% | +3% | +12% | |
| Inventory YoY Change | +38% | +34% | +34% | +17% | |
| Months of Inventory | 4.6 | ||||
Sellers are frustrated by a stagnant market going on two years, and are cancelling listings in large numbers, hoping that the market will pick up again when rates inevitably fall from their current levels. The sales to new listings ratio is very similar to this time last year (just a little better), but higher inventory by a third has kept the market generally cooler all year. That is reflected in several indicators, including the rate of properties going for over the asking price. There aren’t huge differences here – in August 2021 over 70% of properties went for over ask – but it’s been consistently lower all year.
We know that sales have been coming in near assessed value for all property types, and after a brief increase in the spring, properties overall are selling at values near to where they started the year.
But sales to assessed value ratios are only really meaningful as a group. I’ve verified a number of times that BC assessment is pretty good at valuing a large set of properties, and not so good at valuing any given one. This means that the median sales to assessed value ratio is a decent measure of how prices are moving without the major noise issues inherent in average and median prices, but on any given property the assessed value doesn’t tell you that much. If we look at the distribution of all those sales where the median sale come in very close to assessed value, only a quarter of condos and about a fifth of detached properties actually sold within 2.5% of their assessed value. The sales distribution is below, showing a fairly wide range of sales and the broader curve of detached properties that are more variable and thus difficult to value.
With respect to where sales prices are landing relative to list price, the median buyer is getting 2.1% off the list price of a condo, and 2.3% off the list price of a house. The distribution here is tighter, with most landing very close to list. As always, outside of acute shocks in the market where sellers don’t have time to adjust (GFC, COVID), sellers prefer to lower their price gradually over time rather than accepting lowballs.
Sales for houses are more variable here again, with about 5% of house buyers getting more than 10% off the price, compared to only 1% of condo buyers.
Meanwhile BCFSA has released a report on some of the data they gathered from brokerages about real estate transactions in the early spring (h/t Marko). The report is interesting, even if the findings are a little banal given the volume of data gathered (and admin effort to gather it). A few items of note, despite 32% of transactions being reported as having multiple offers in Victoria, by my records only 9% of properties went for over the asking price in the same period. So if you hear back that there’s multiple offers, don’t automatically assume it’s going for over the asking price. In multiple-offer situations, 80% of sellers took the higher offer, which is lower than I would have thought. Now presumably in most of the remaining 20% of cases the lower offer was not much lower or had no conditions, but only 8% of all offers had no conditions. That leaves a sizeable number of sellers that aren’t taking the highest price for unclear reasons and I’ve asked BCFSA if they can share more detail on those situations.
There’s also some data on the use of the rescission period, and though the BCFSA warn about data quality from inconsistent reporting, to date the recission period was only exercised in less than 0.3% of transactions. A whopping 19 uses reported in Victoria for 2023. No surprise, that was a policy designed to address risks from an overheated market that ended before the policy took effect. Perhaps it will be of some use in the future when the market heats up again, but for now it’s just another hoop to jump through.
New post: https://househuntvictoria.ca/2024/08/26/how-did-prices-respond-to-higher-rates/
Patrick: I’m in the centre, and I’m more likely to vote Cons than Federal NDP (I’ll vote for the provincial NDP, but not the feds). I think either the Cons win a majoiry, or they win a minority, and it pulls the liberals back to centre. Either way Federal NDP probably don’t have anything to gain going into an election, except they lose the power they do have, because right now the Libs need their votes. After an election, no one needs their votes.
Asking price is $420,000 over assessed value…
I think they really dropped the ball on immigration the impact on housing which were pretty f’ing obvious. If they hadn’t done that then they likely will get another term.
I agree. It’s the Canadian way. We get tired of the leader and party after 5-10 years and so it’s time for a change.
Same story happened to Trudeau Sr., Mulroney, Chretien, Harper…and soon Justin.
One wild card for the election. Will the NDP grow a spine, and force an early election in the spring? They’re about the same level of support as last election (18%), but forcing an election would show that they are a different party than the Liberals. Give the disaffected Liberals a reason to vote NDP. They’d have a good shot at official opposition and could roll the dice for something better.
I think people are just fed up with the Liberals at this point so it doesn’t matter. No policy promises will convince people, and we’re too close to election to really move the needle on the big issues in terms of results (housing, health, justice). I’ll probably vote Liberal due to a lack of sensible alternatives, but I’m under no illusion they have a chance to stay in power (unless Trudeau steps down, but I’m not sure who would replace him).
I think you are wrong about that one my friend.
I don’t think they will take their foot of the gas , and feds no matter what party will pump population. It will be business as usual , as we need as many as we can get
I wouldn’t go that far, they could admit their mistakes in the past and immediately rectify some polices.
Interesting graph.
About 1%
What’s normal?
My forecast is that population growth will be back to normal by 2025. Not that it matters to the liberals, there is nothing they can do at this point to prevent an election loss.
Good timing with all the PBRs, definite headwind for condo investors going forward.
Well my first response is “what income” (see previous post). My second response is that’s it’s stupid to set yourself for possible consequences for so little money.
A mainstream party actually talking about reducing PR numbers. This may well be out of desperation, but the genie is out of the bottle.
In fact most people don’t declare the income period……
Temporary foreign workers changes don’t affect certain jobs such as construction, healthcare, so it is just more smoke and mirrors from our dysfunctional government.
In fact most people would pay little or no tax on the suite revenue because the taxable income would be greatly reduced by prorated deductions on mortgage interest, property tax, etc.
Temporary foreign worker changes:
https://www.cbc.ca/news/politics/trudeau-crackdown-temporary-foreign-workers-1.7304819
For detached you are not getting anything for 1.5 in Vancouver.
+1, you need to buy a $1.5 to $2.5 million dollar home with income you’ve already paid 54% tax on in the highest bracket. Then you need to pay PTT (3% above $2 mill in BC), then you need to pay property taxes that are rising faster than inflation every year. Then if you have a suite you need to pay 54% on that rental income after you’ve waited a year to get a building permit for a garden suite from local government authorities.
For the privilege of not having a family doctor. Only a matter of time before capital starts leaving the country, imo.
That’s quite something.
1666 Kenmore another renoed gordon head box pending at 1.195
And luckily for the Victoria core, we have a lot of POS houses to choose from.
http://app.standardres.ca/312-island-hwy/
Never thought I would agree with Patrick…. LMAO
Potentially but definitely lots of variability depending on the individual
A “POS” Victoria house is still in Victoria, which has the nicest weather in the country. For many, that makes it a better choice than a nicer house in many Canadian cities.
Angels on the head of a pin.
Yes, and the investment “return” doesn’t need to be financial.
e.g. (from Cambridge dictionary) There’s been a significant investment of time and energy in order to make the project a success.
So there should be no problem considering a house purchase as an “investment”, given the accepted broad definition. But it doesn’t mean that it’s necessarily an investment for a financial return.
The house investment “returns” can be non financial – improved family stability, community, health, happiness etc. Those are the main reasons I’ve bought/own a house and advise others to do the same.
Month to date market activity:
Sales: 439 (up 9% compared to same period last year)
New lists: 836 (down 2%)
Inventory: 3232 (up 29%)
An investment is something you buy now in expectation of a future return. A stock in a company that subsequently goes bankrupt was still an investment, just a lousy one. That’s only known after the fact of course.
And having a place to live is a future return with an objective value (i.e imputed rental value).
But I see where you’re coming from, too many people think an investment is “something that is guaranteed to give me a superior return.”
That’s the problem, you need high incomes to live in cities like Toronto and Vancouver where a decent house in a good neighborhood will run you in excess of $2.5M.
You will likely have trouble buying a POS house or a half decent townhouse in Victoria on 2 median incomes.
Oh, I’m happy to take it. I was just responding to the concept of more inheritance taxes (or wealth taxes for that matter) & thinking there’s easier things to change before we introduce a blunt tool like that
I thought the same until recently when I looked at the OECD data. We’re actually middle of the pack, and similar to the USA on average (although in the US there is wide variation in income tax regimes across states, much wider than here).
This is probably the best description of the OECD data as the official report is pretty dense: https://taxfoundation.org/data/all/global/tax-burden-on-labor-oecd-2024/
In fact, Canadians earning median incomes pay quite reasonable taxes. It is at high incomes, well above the median, that our progressive taxes are quite high internationally.
What most people on median incomes are struggling with is the declining earnings relative to expenses and inflation; and the lack of quality services for the taxes that we do pay: schools and healthcare being 2 examples of supposedly universal, publicly funded services that are not delivering the value that they once did.
Why is that a bad thing, it is literally the only thing (outside of principal residence) law abiding middle and upper middle Canadians can do to generate some wealth in this tax heavy socialist country.
Congrats to GenX, the wealthiest household generation, wealthier than the “evil, wealthy” boomers.
—— Time for the HHVers who “blame the boomers” to rework their narrative to include the richest generation of all – Gen X.
—— And could we please stop hearing money-related complaints from millennials – they’re worth half a million per household on average and their average age is only 35!
Average Canadian household net worth, by generation as of 2024 Q1. Source: stacan https://financialpost.com/wealth/canadian-households-worth-more-than-1-million-average#:~:text=Data%20released%20by%20Statistics%20Canada,full%20quarter%20before%20the%20pandemic
I thought it would be a lot higher.
Good news for Canadians in all age groups, from the latest statcan 2024 Q1 data. Average household wealth (net worth) is at a record and over $1 million per household. Thats net worth, assets minus liabilities (like mortgages). About half of the net worth is from real estate.
The net worth of all age groups has gone way up since 2019, with the biggest percentage gain being under age 35 which saw a 42% increase in net worth to $316,000. That’s doubly impressive, because this group has gone way up in population with immigration (typically low net worth), yet the under age 35 average net worth has still gone up 42%.
July 31, 2024: https://financialpost.com/wealth/canadian-households-worth-more-than-1-million-average#:~:text=Data%20released%20by%20Statistics%20Canada,full%20quarter%20before%20the%20pandemic.
Canadian households are worth more than $1 million on average:
Average household net worth in Canada hit $1,009,483, up nearly 30 per cent from before the pandemic
Canadian households in the 55-64 age bracket were the wealthiest in the first quarter, with average household net worth of $1,592,996. They were followed by those aged 45-54 at $1,342,851, the 65+ crowd at $1,121,020 and those aged 35-44 at $655,195. Households under age 35 were least wealthy with an average net worth of $336,348. A silver lining for young Canadians, though, is that they have seen their wealth increase the most since before the pandemic, up 42.5 per cent from $236,039.
I hope you’re wrong about more death-related taxes on top of the one we have already, but you do have a point about OAS. Tightening up the OAS restrictions seems like really low-hanging fruit in terms of “tax fairness”. I mean, the current threshholds before any clawback are something like $85k PER PERSON, and not fully clawed back until more like $140k per person. It’s ridiculous. And as much as many people my age won’t want to hear it, it seems like a good opportunity to have a frank ‘conversation’ about giving something back inter-generationally. I guess gov’t is too scared politically.
It gets even more out of whack if you consider TFSAs and how that interplays with OAS and the like. No caps on what TFSAs can grow into. Ours are almost enough to live off now. Theoretically if we get to that point, we could just draw completely tax-free TFSA income, and get maximum OAS and even GIS (TFSA income doesn’t count), all while letting other assets just pile up.
I think this is low-hanging fruit we could easily fix first.
The federal government has added 56 properties to a new public lands bank of locations that are suitable for long-term leases so developers can build affordable housing.
No details yet, but I’m cautious in how they will set up these long-term leases. Will they be pre-paid or monthly leases? And what does the government means when they say long term leases. 50 years? 99 years? Makes a difference. I’ve always been an advocate of public/private projects for affordable housing.
I had high hopes for the FN’s lands in Vancouver, but was disappointed in that it failed to deliver on affordability.
Oh ya, description please. Lol you have no idea what I want and what I currently have. P.S. no oak bay please, I don’t want that.
I may have the house for u
Not emotional value but functional and enjoyment value, if there was a house I saw in mid 2022 that checked all the boxes significantly more than my current house and was at a price that I can live with then I would have bought it. Once you get to the higher price ranges the houses are more unique and you don’t know when the next one that checks all the boxes in terms of location, position, landscape (including trees), build, finishes will come up, if ever (and we don’t live forever). Definitely not like these gordon head boxes where they are all more or less the same in a 5 block radius which is then like whatever just get the next one that comes up.
It’s more or less like going on vacation or going to a restaurant, you don’t ever get your money back for those but you get to enjoy the experience so you are happy to spend the money and do it. You make money so you can spend it and enjoy life, trying to time the market that is completely out of your control at the expense of your own enjoyment in life is foolish.
Whatever, ya I’m different that way as I have never had an emotional attachment to any house I’ve lived in . I do have an attachment to my stuff . I have family and friends that have only bought 1 house and it blows my mind .
Most anything may be called an investment including education. If it makes you feel better calling a house an investment that’s fine. When it’s also your home it also has an emotional value to you alone.
As for timing the market, you can choose to buy or sell when market conditions are in your favor.
With real estate the holding costs are expensive. Property taxes, maintenance, repairs, selling costs are seldom calculated when someone determines how well their home has performed over their ownership.
If it makes you feel better calling your home an investment to justify the price to yourself then who am I to say anything different.
Not me, my principal home is a place where my family and I enjoy, so I don’t care what it does price wise or if I buy it at the peak as long as I am financially responsible. Rentals are another story though, but I also understand most people are likely in a different position where their principal residence is the largest asset they own by far.
I always thought of my home as an investment , and have always timed the market to get the best upside . Pretty easy always sell for more than u bought it for and u will never loss money
Investing in anything is risky. When it comes to real estate, the city you choose to buy in, the neighborhood, the style of house, etc… will greatly affect the future gains or losses one might incur. Doing some research always pays off. It’s true, not all real estate turns into a gold mine, some turn into a pile of dirt.
There’s a strong case to buying because you want stability. The idea of buying a home that you live in as an “investment” is flawed.
When random people on the internet try to conflate these 2 things it can lead to problems. For example: if the value of your principal residence fails to appreciate, and you didn’t invest separately for retirement, you’re going to own your home but lack retirement income to pay for expenses.
Right now there are many cities, such as Victoria, where people in rentals at prices from several years ago are getting far ahead in terms of investible income compared to people who are paying today’s variable or new fixed rate mortgages (5.7% variable, 4.7% fixed).
What has been really popular in BC for the last decade is to claim that housing is the only good investment, and this has pushed loads of people into leveraging into multiple properties. Condo investors right now are getting taken to the cleaners due to having signed on to this gamble.
What’s really shocking is when you look at the real return on Canadian housing, it is virtual 0% capital price appreciation Canada-wide since the start of the pandemic, despite the nominal price increases. Most of the prior jump in prices from 2013-2016 in Vancouver and Toronto was due to international capital moving into these condo markets mostly from China, and due to a massive drop in the valuation of CAD to USD between 2012 and later years (it was on parity, now it sits at 74 cents on the dollar).
National Bank continues to track condo prices in Canada and around the world, and despite our home prices being expensive for Canadians, you can see that Toronto and Vancouver are fairly priced (at middling prices) to international buyers (NYC costs literally double what Toronto costs, see https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/housing-affordability.pdf).
This discrepancy reflects the fact that Canadian incomes have stagnated and are now falling in real terms, and so local housing is pricy to us, but cheap to people earning American incomes.
4027 osgoode pending for 1.18, renoed up and down suited sfh in Gordon Head. Looks to be vacant possession also. I think this one was on and off for over a year and started out at 1.35.
Just casually looking still, got the big step promotion at work this year so just need to stick it out another 5-7 years then pretty much set provided I don’t do anything stupid. So definitely don’t need to do anything that doesn’t cashflow, I did look at a duplex recently but wasn’t ideal.
“Higher interest rates”
These rates aren’t high, junior.
A condo investor in Victoria is not looking at cash flow. Because there isn’t any. They are buying for appreciation. Quite similar to buying stocks in a company. To break even where the rent covers the mortgage and insurance will require about a 40 percent down payment. Otherwise you will be having a negative cash flow investment for the first five years. Hopefully you are paying off the principle at the same amount as you’re losing in cash flow.
So has it paid off for an investor over the last five years? Yes it has. The median price of a Victoria condo is now $548,500 compared to five years ago when is was $425,000. Even if you had bought four years ago the property would have appreciated by almost the same amount.
If you bought in 2021 then the condo would have still appreciated by about $50,000
If you had bought in 2022 or 2023 then you would have lost in appreciation making buying a condo the worst investment that you could have made.
You should be seeing a trend by now. As do today’s investors because without positive cash flow or appreciation investing in condos has become a bad investment for most investors.
And that brings us to the Sunk Cost Fallacy as investors that have bought over the last three years believe that condo prices will rebound with lower interest rates.
And that’s the discussion over the dinner table most investors are having. Should we keep the property and hope for appreciation, the Hail Mary approach to investing, or should we sell and invest in non real estate investments. The worst case scenario is that a significant number of investors will chose to sell at the same time.
Booby k , if your a member of the club we probably play together , so we have to stick together
Vicre , I agree , change is in the air and there will be opportunity. How goes your hunt in maplewood
I don’t know but for the people with plenty of cash and already own homes, these high interest rates are great, getting close to 5% on liquid money market or hight int savings accounts is a no brainer. Plenty of higher yielding dividend stocks available also. Life is good!
As traffic becomes more congested, Victoria council is coming up with inventive solutions for more bike lanes.
https://youtube.com/shorts/P_4M9pMfT4s?si=Zi7pwPl4Bb0FwhlR
Hmm leverage now while homes are on sale . Market is picking up steam , it’s going to be a busy fall market
The last letter deals with the ongoing bike lane obesssion. this letter actually hits the nail on the head and makes common sense (for a change), get use to it bike lanes are the future. Heads will explode in the next few weeks when Shelboure from Hillside to Cedar Hill Cross Road is openned up to one lane in each direction.
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“Lots of gasoline just to move a vehicle
Look into the space and energy needed to use your vehicle.
Firstly, calculate how much of your gas is used to transport you or the contents of the vehicle vs. how much gas is used just to move the vehicle — it’s a simple calculation: take your weight, and divide by the combined weight of you and your car.
You are probably using 85% or more of your gasoline costs just to move your car.
Your car is incredibly inefficient and wasteful — you’re basically paying an 85% fuel charge just to move your car around.
Secondly, look in your vehicles and others’ vehicles while they’re driving. Notice how many passengers you have? Your car is taking up a lot of space on the roads out there, which a bike doesn’t. You aren’t sitting in traffic, you are the traffic.
Thirdly, why does our public space have to be allocated to park your car? The road is not yours, it’s ours.
If my taxes can go towards significantly reducing traffic, I am all for it.
I like to drive, but I’ll be damned if I become traffic, and if there are more bike lanes, that means one fewer car for each cyclist and therefore less traffic for those who are required, for whatever reason, to use a vehicle.”
Chris Tooley
Saanich
Then another letter complaining about property tax increases. Get used to property taxes at minimum double the rate of inflation (or more) as prior generations underfunded and passed down maintenance and improvements (pools, arenas etc…) to future genertations.
Saanich expenditures need to be reined in
Re: “Saanich faces sticker shock in early budget,” Aug. 18.
I am increasingly concerned with the rapidly escalating residential property taxes in Saanich driven by Saanich council’s vision and the level of Saanich council’s expenditures.
The property tax on my home has gone up by 49% in the last four years. In 2023 and 2024 Saanich increased my property taxes by 14.1% and 11.8% respectively, which is way above inflation and certainly hurts on the affordability front of life in Saanich.
Saanich council needs to manage their work processes, expenditures and taxes more in line with the budgetary realities faced by the residents of Saanich.
Doug Wilson
Saanich
This was in the Times Colonist today and is the definition of a NIMBY. She says the property is only suitable for 4 small family homes. The property is over 74,000 sq/feet.
“Massive housing is out of place
I strongly object to the proposed 70-plus unit development at the corner of Gordon Head and Feltham Roads.
This small field is suitable for four new family homes at most, if they are allowed to have small areas of greenspace around them such as a backyard.
There is no way that 70-plus housing units will be appropriate or fit in that area.
I am sick of seeing ugly modern box houses ruining what was once beautiful Greater Victoria.
Saanich council members are remiss in approving all this building without taking into account that it’s already one big traffic jam, the real issue is the lack of affordable housing, not housing numbers, and we still have no doctors or walk-in clinics.
The field in Gordon Head is small. It is only suitable for four small family homes to fit into the architectural landscape of Gordon Head and give them much needed greenspace around their homes.
We already have a massive housing unit at University Heights, which is around the corner. There is another highrise across the street from University Heights.
Stop all this madness. We don’t have the services, and there are no jobs either.”
Diane Wolf
Gordon Head
Sounds more Thursty is overleveraged and desperate.
Thursty is real thirsty lol
I know Thursty, you’ve been saying the same thing over and over again.
What’s happening today isn’t much different from what has happened in past markets. What you want to happen is prices to rise and sales to increase as a 25 or 50 points will stimulate the buyers that have possibly been holding off from purchasing to rush in. And that is what has happened countless times in the past. Buyers have stepped up to the plate and paid higher prices. Pent up demand.
There are some differences this time. With a lot more PBRs being built, a prospective purchaser can rent the same quality of condominium at near the same price as buying without having to put 20 or 25% down.
An improved financial market might swing them to renting than purchasing as they will get a return on that equity they would have spent. There is also the allure of Alberta with its lower home prices and improving economy. And far less competition from investors that were driving prices up.
This time around those options have improved which may skim off the froth in the local market. A local condo developer isn’t just competing with other housing projects, they are competing with the financial markets and other provinces.
Investors have not been doing so well and they constitute a large shadow inventory of condos in Victoria, maybe 40 percent of the total condo inventory. If a better option for them presents itself that might cause them to reconsider holding property as they would get a better return somewhere else. Pent up supply.
But if history is any prediction of the future then you are probably right as investors usually are looking in the rear view mirror at how their investments have performed. Not looking forward at options for better growth potential. History is heavily weighted on your side Thursty. We have a rare event as most economists agree with you. And we know that economists are never wrong.
That area is known for being poorly drained. Damp basements are common there.
WhTever, meh not seeing developers in trouble as a big deal , it’s only paper . This will be good for homeowners as supply drys up it should help to push up prices . Kinda opposite that lots of armchair warriors have been going on about . The future looks bright as nothing is getting built
https://www.cbc.ca/news/canada/british-columbia/brentwood-park-covenants-single-family-homes-densification-provincial-legislation-1.7303509
Here’s a bit more on the problems a developer is having financing projects.
This is a bit convoluted and a bit of a circle jerk with the speakers but the essence is still there.
https://youtu.be/V83lvkkBTIc?si=N07db94Iu1R5kaHY
Not quite on topic but related to RE is the First Home Savings Account, FHSA. Works like an RRSP but without the tax on withdrawal. A couple things people should know:
– Contribution room doesn’t start until an account is open. I recommend to anyone listening that hasn’t owned a home that they should open an account even if they can only contribute $50 this year. Next year contribution room will be $16,000 less whatever was contributed.
– Contribution room carry forward maxes out when it hits $8,000, so once year two goes by it will only be a max of $8,000. To maximize the benefit one should contribute at least $8,000 in year two and following years up to the $40,000 max.
– I believe you can carryforward contributions to future years to maximize the tax benefit.
I would rather help my adult kid contribute to their FHSA than leave money in my estate to the whim of some future government. Actually, I’ll start that next year.
Children only get the rollover if they are minors or disabled in some respect and dependent on you. If you are concerned about the risk of dying young and taking the tax hit you could hedge it by buying life insurance.
Once you’re actually retired you can also hedge by buying an annuity instead of putting the funds in a RRIF.
You could also use the TFSA to the max since it doesn’t have this issue, but I would assume you already are.
Yes Patriotz and Frank you’re correct if there is a spouse/partner who is the beneficiary but that doesn’t apply in my case. I’m not sure my three adult children who are named beneficiaries get to just roll it into their RRSPs. I think it is added to my income, taxed and then disbursed. If it’s hundreds of thousands it’s going to be taxed at the highest tax rates. Particularly if I am working and earning still on top of that at the time. Need to get some tax/estate planning advice re this. Aside from my home and car it’s my only asset and I’m not keen to have it effectively chopped in half. If I’m still wrong it would be a relief to know.
You”re correct about that but you didn’t mention the tax deduction you got when you put the money in. In other words the RRSP/RRIF contains before-tax income and it wasn’t all your money in the first place. And any withdrawl is taxable, not just upon death.
As well it should be noted that the RRSP/RRIF can be rolled over to a surviving spouse, tax free.
See below regarding RRSPs. I believe you’re wrong in most cases.
Only after a tsunami.
Does living in a tsunami hazard zone (like the one that stretches through South Oak Bay) affect real estate prices? The yellow on this map indicates vulnerable areas:
https://experience.arcgis.com/experience/9b18fae1bcac4640afcb40dcb6471644/
There kind of is already an inherent “inheritance tax”. If when I die I have funds in an RRSP or RRIF it gets all thrown into income for the year of death and that’s taxed. Ouch! Before it can pass to beneficiaries it’s really gotten a haircut.
.
CPP is self financed, no government money goes into it. You do have a point about OAS.
I don’t think we will get an inheritance tax. Too much on top of deemed capital gains and would likely lead to various avoidance schemes and capital flight. Note that the Liberals have been willing to make a lot of people unhappy about the capital gains inclusion increase but they won’t go near an inheritance tax.
The rational answer to the need for more revenue is to raise GST back to 7% as Mulroney implemented it. But rational does not equate to popular.
I think it is inevitable that we will see an inheritance tax. It’s just a mountain of cash for the government. If immigration is scaled back the government is going to need someone to pay for all the CPP and OAS. Just think of it as the government getting reimbursed for all those payments.
Well, let’s hope that any gov’t that would be looking at it would also have the common sense to see that Canada has an inheritance tax in all but name, taxing inherent capital gains rates (and now at increased rates over & above the threshhold) on assets at death. Otherwise, if these gov’ts simply adopt such an inheritance tax without taking this into account, they’d be double-taxing. Don’t know why you’d “cc Pierre Poilievre” on this, surely you must realize the only person goofy enough to think this is a great “windfall” to grab would be Jagmeet Singh?
Neither party is mentioning inheritance tax. But boy oh boy is the UK raking it in. 2.8 billion pounds in just the first four months of the tax year. And every year it is going to get bigger thanks to the baby boomers!
The first $325,000 pounds are tax free. After that the tax is 40%
Any government that is elected would be looking at the UK windfall.
cc’d Pierre Poilievre
New Brunswick’s July inflation rate was the highest in Canada at 2.9%
BUT WHY?
Pierre-Marcel Desjardins, a professor of economics at the Universite de Moncton explained that it was do to increases in electricity rates and residential housing. Not if you own your home as NB was essentially the same as other provinces-but if you rent as the increase over the past 12 months has been significantly higher than in other provinces.
source -CBC
As per CNN -August 23rd. The US Justice Department has filed a civil law suit against a real estate company alleging the company’s software uses landlord data to artificially inflate the price of rent across the Unites States by quelling competition in the market.
The software, according to the complaint, uses non-public data provided by landlords to see what competitors are charging or offering to maximize the amount landlords can charge as well as other ways they can make more money from renters. The software is used in managing 3 million rental units across the USA allowing corporate landlords to game the rental market.
Of course this is in the excited states of America and would never happen in Canada as such collusion would be against our anti combines legislation.
And before all the haters and trolls jump in. This isn’t to do with mom and pop rentals that just look on sites such as Craigslist to set an asking price. This is large corporate landlords that share data among themselves using commercial revenue management software.
If you have ever studied monopolies and cartels, this doesn’t come without a risk as it relies on all members to follow rules. It’s when a few chose not to follow the rules in order to gain an advantage then these cartels fall apart rapidly. That would happen if the vacancy rate were to increase which isn’t likely in today’s tight rental market.
U.S fed , saying cuts are on the way . Good for Canadian dollar . I suspect we are at the bottom , no where to go but up .
That was in April Patrick. Maybe they jacked them up!
Interesting. Their home page says “starting from” $2,450 (1 bdr) and $2,750 (2bdr). I guess they’ve lowered it already in their Facebook ads. https://devonproperties.com/up-and-coming/vantage-apartments-at-royal-bay/
In any event, that’s much cheaper than the Esquimalt one Trent posted at $4.35/sq foot. Thanks for posting.
Patrick, one PBR example -Royal Bay Vantage. One bedroom from $2,000 and two bedrooms from $2,500. I’ve had a lot come up in my Facebook feed this week for some reason.
OK, my mistake. Maybe someone else has seen other PBR prices.
Thanks for the discussion.
Nope that wasn’t me. That was Trent and Marko.
Have I seen any new PBR prices? No, because I haven’t been looking for them.
Patrick, you’re just trolling now.
Anyway, my question was have you seen any other new PBR prices, perhaps you can answer that.
I don’t think so, but feel free to elaborate.
You’re just ranting. I have no idea why you have now become concerned about renters. Did you see Jesus in the clouds? If the PBRs can’t rent them then they will eventually lower the rents or give incentives.
Most are advertising a 13 month free gimmick. The 13th month isn’t free, You’re paying for it with a higher monthly rent over 12 months.
In the example. It isn’t $4.35 a square foot It’s 4.00 after you adjust for the 13th month. It’s not 1,000 square feet. It’s about 550 square feet. Last I looked we are living in Victoria. What do rents in Vancouver have to do with us?
If you want to bring in mortgages. Compare them with a similar sized condo not a house. Say a new $500,000 one-bedroom condo in the area with a 20 percent down payment.
etc. etc. etc.
The new PBR units asking rents are likely to be sky high, judging from the $4.35/sq ft “luxury” example you posted. That’s $4,350 for 1,000 sq ft – common to see in Vancouver but not Victoria.
fwiw) $4,350/month would instead get you a $827k mortgage loan (if/when 5 year rates fall to 4%), which might get you into a low end SFH depending on stress test and down payment. So it’s hard to see many families opting to pay sky high rents like that.
Have you seen any other examples of more reasonable rents in the new PBR buildings?
I hope that rents do start to decline as that will be one factor that will allow the BoC more wiggle room to reduce interest rates to meet their 2 percent target. As more PBRs come on to the market over the next couple of years that might happen and/or more people leave Victoria for better opportunities and lower housing costs.
But there isn’t any quick fix for current rental rates. Rental rates are not “falling”.
https://youtu.be/6sw4FaLYGUY?si=oaWBzxOHJRrK49I1
Rent is only a small part (6%) of the CPI, so isn’t going to have much affect on the overall inflation number. Overall, shelter is 27% of the CPI but that’s mainly owner expenses including mortgage interest, utilities and other expenses. https://www150.statcan.gc.ca/n1/pub/62f0014m/62f0014m2017001-eng.htm
I don’t see that happening at all. Yes, rising rents – if we had them – would ‘contribute’ to higher inflation, but, first of all, stagnant (vs. much rising) rents do not, and second, rents are only one factor, a much bigger factor being the overall effects of a decline in productivity, output and all its implications on labour & other factors impacting inflation. At the end of the day, we’re closer to a recessionary environment than one where there would be rampant inflation.
Interest rates are & will be dropping.
But average rents are now falling in Canada:
https://globalnews.ca/news/10612800/rental-market-canada-rents-june-2024/
VicREanalyst you might get half of what you want.
Renters are in for a tough stretch as rental prices are expected to remain stubbornly high for the next two years, according to TD Bank. This trend aligns with a global phenomenon impacting developed economies like the US (7.7% year-over-year rent inflation), UK (20% increase since 2022), and Australia (record high median rent of A$627 a week).
Shelter costs, which include rent, account for a significant portion (around 30%) of the Consumer Price Index (CPI) in Canada. As rents continue to rise, it becomes more difficult for the overall inflation rate to decline towards the Bank of Canada’s target of 2%.
This situation creates a precarious loop:
-Rising rents contribute to higher inflation.
-To combat inflation, the Bank of Canada may raise interest rates.
-Higher interest rates may further limit new housing supply and push more people towards rentals, keeping rents elevated.
Even more confused… Fully invested in what? And if you are selling a shittier house for something nicer then a down market helps you close the gap more…. I want prices lower and rents higher.
If you watched the video, you might say we are hooped.
But only temporarily. These insolvent partially completed properties become a lucrative buying opportunity. A very lucrative opportunity where investors can buy them for pennies on the dollar and finish them with all of the units at current prices. The total costs are now well below replacement making a good profit for the new investor(s).
However, it’s not going to happen overnight. It can be a long legal process – or maybe not?
Man I’m confused , I thought zoning was the problem and the rest was just fine sheesh
Here’s a primer for anyone left on this blog that is still having difficulty understanding what is happening with new construction.
https://www.msn.com/en-ca/news/canada/we-re-in-a-housing-crisis-why-are-so-many-builds-going-bust-about-that/vi-AA1p4nmp?ocid=socialshare&cvid=43725d56b4144297c61d476b1e8946b7&ei=64
Vicre , like most here I’m fully invested , so I am a fan of higher and higher prices . I do have something to sell and something to buy
Actually when I needed emergency medical care in a country that’s an economy in transition because of a cut that required 8 stitches I was in and out in about an hour. There were no people in halls and the nurses were walking around at a reasonable pace because there was enough of them. I have been to developing countries as well and yes when I was in hospital here I did think that it would probably be similar in some ways. I don’t know though – hopefully I’m wrong abd it’s better elsewhere or alternatively I should be grateful because it’s not as bad here as it is in some places.
Things that have improved I think include that people seem kinder. People seem to be more compassionate. Our technology is pretty amazing too. And in Canada we are, many of us, extremely fortunate compared to a large part of the global population that lives in poverty or conflict (or both). But thankfully we have standards and notice a deterioration in conditions otherwise would things ever improve? Complaining has its purpose too 🙂
But how would that get the party started for you? I am really confused.
This might help you Patriotz
https://youtu.be/3Pd3aLQj64M?si=91GX5ViaSOZMMXFI
If you think an 82 year old is most likely to live another 1 year, not so.
If someone reaching 80 can expect to live another 9.79 years, someone reaching 82 can expect to live a bit more than another 7.79 years (because some of the 80 year olds have already died).
Vicre , bringing down interest rates will be a welcome relief for a lot of Canadians . It’s just time to get the party started , I’m not getting any younger
Then why all the complaints about interest rates?
FYI
https://youtube.com/shorts/JfJ7Pn3LupM?si=LBVoOV5e5HWAgjBN
Lol
Good news for those that turned 82 today.
More good news about things getting better…
Despite the difficulty in finding a doctor, and the post-op “rotten egg” being served at a Victoria hospital….
Life expectancy in Canada continues to rise each year… now 83.11, up a full year from 2017.
https://www.macrotrends.net/global-metrics/countries/CAN/canada/life-expectancy#:~:text=The%20current%20life%20expectancy%20for,a%200.18%25%20increase%20from%202021.
And Canada life expectancy is now 4 years higher than the USA. 79.25 https://www.macrotrends.net/global-metrics/countries/USA/united-states/life-expectancy#:~:text=The%20current%20life%20expectancy%20for,a%200.18%25%20increase%20from%202023. )
so easy to have money
Vicre, economy is still in pretty good shape , real estate prices are holding up and interest rate help is around the corner . I myself have not seen any personal change in lifestyle in the last few years , so don’t have anything to complain about . Maybe my golf game
Dee- Did you just compare your stay in the hospital to a third world country?
Totoro , easy fix if u have money . History has always been about inequality, nothing new there
Where?
If true that is a pretty good return, did you have to pay cash or were you able to employ leverage and finance?
Some things have improved while others have gotten worse.
Unfortunately some of the factors in decline can affect quality of life significantly. Like housing affordability if you don’t already own, visible homelessness and addiction, rates of addiction, and access to timely medical care including mental health services. The significant inflation we’ve seen in consumer goods and food is pretty remarkable and impacts quality of life if you are not well off. Plus climate change/wild fires.
It is okay to be a glass half full person, especially if you are not directly impacted, but facts are facts.
Humans are amazing. I start every day with thanks – a list of things I’m grateful for. I’m very fortunate.
I had a medical procedure in April (I’m totally fine). I was supposed to spend 2-3 nights in hospital but went home after only one night. I’m relatively young and fit (vegetarian and do yoga 2-3x per week). That’s probably partly why I was able to leave early. But I wasn’t prepared at all for the conditions in the hospital. It was insanity. Gross. The my gave me a rotten egg to eat. I can’t even describe what it was like in there. It really felt like something a person would experience in a poor country. Point is I think some conditions have improved but others have gotten worse (like hospitals).
But yes I’m very fortunate.
Can you at least agree that things are “improved overall” from where they were 3-4 years ago, when we were all locked inside in the depths of Covid and the world was ending as we knew it?
And we got out through a worldwide effort to develop/distribute a hi-tech vaccine in just over a year. I look at that and say, “wow the human race is amazing”. And now that things are back to normal, I don’t forget about that because there are other problems still exist. Especially (sadly) intractable problems like addiction and homelessness. The point is, humans are working on all the problems you’ve mentioned, and I predict they will improve as well. In the meantime, look at your own family and ask if yourself if you have it pretty good. And odds are the answer is “yes” and you also have it better than the generations before you.
Everything isn’t “perfect” but overall things are getting better.
Topic on a realtor FB group this morning
🙂
This discussion came up today on essentially what is House Hunt Zagreb and someone had a great reply in Croatian that I will translate (as everyone lives in condos prices referenced below are cost per square meter).
The reply is another few pages long but basically same story as here, everything is always too expensive but prices just keep going up (even right now). A condo I purchased in 2016 in Zagreb for 168,000 euros is now going for approximately 420,000 euros while the population of Croatia has decreased in such time, crazy.
I hope you’re right Thursty. I want much better health care and less social problems with homelessness and addictions before I will personally think that things are improved overall.
But we both agree that buying RE is good.
Not seeing the doom and gloom , I would say that things have never been so good . Real estate will prove again to be a great investment. Inflation is dead and the economy will start will roar to life . I see sunny days ahead
“A rising tide lifts all boats, and this has meant dramatic improvements in world poverty rates….” Unfortunately I think this was a theory (or slogan?) that was proved false. Sure, conditions for earth’s poorest have maybe improved and so there is a reduction in global poverty. But here at home the conditions are getting worse – aren’t they? I was speaking to a very intelligent person who told me that the very rich are not even part of the economy. And when we speak of productivity – are people that run Airbnb a productive part of an economy? Because a lot of the argument against them seems to be that they are more like parasites – which I think the same thing can be said of the very rich using similar logic. I think a reasonable response for any individual is to build resilience within their own family. To me it seems like as conditions here deteriorate we will be more like developing countries where families stay together and that is a reasonable thing to do because they are more resilient inter-generationally. Buying a home increases resilience – buying land even more so. I would not want to be a renter – not only because it’s less good financially but more importantly because I am (hopefully) more resilient, as is my family, if things continue to deteriorate.
Yes Patrick you will die a rich man. You will have won.
I was speaking with an octogenarian living in a large multi-million dollar home all by herself with lots of money she got when her husband died. And I asked her at 86 years-old why doesn’t she enjoy some of her wealth. And she told me she was saving it for her old age.
Most people will die with 90% of their wealth intact.
Principal residence doesn’t count in my books.
This is the main benefit along with having a place where you can customize to your liking.
It’s not all doom-n-gloom.
A rising tide lifts all boats, and this has meant dramatic improvements in world poverty rates. And this will continue, helped by technological and other human achievements.
Also, deaths (per capita) from wars have also dropped dramatically over the last 70 years, and are now at/near 600 year lows. https://www.vox.com/2015/6/23/8832311/war-casualties-600-years
So maybe we don’t need to “change to survive” after all. Just keep at it.
Leo: Distributions! Amazing!
Barrister – in that photo….you are looking at the joy of our life! ….my three and a half year old grandson.
I posted it because I thought it reflected the next generation looking at the world out there.
Our western world and economies could survive if we could change from a war based economy to a multi polar world where power and wealth is more shared. We could do so well.
I don’t know which way it will go. I don’t think anyone knows.
But we are about to find out.
It’s why I advise my children to keep debt low and move carefully in real estate.
Your YouTuber focuses too much on house price.
Even without price appreciation, buying is a good move IMO. If you buy a $1m house and price stays flat for 25 years, you’ve paid off the house, have $1m in equity with no further mortgage payments. There’s a name for people like that, and it’s “millionaire”. And you’ve enjoyed the house with your family growing up for 25 years.
If you instead rented for 25 years, you’d have no equity, and who knows how much (if any) on top of rent you would have managed to save. Moreover, if you have a family it’s best to raise them in a stable envoirnment, and I think owning a home is a big part of that.
I am not disagreeing that we don’t want to make sudden changes and drop it to zero overnight but long term this is not a sustainable solution. While one could argue that the carrying capacity of the earth is more or less than what we currently have, long term there is a limit. Every country on earth has a model that is based on an ever increasing population so the young can look after the old (either directly or financially through taxation). We can cheat for a few year by using immigration to boost our population at the expense of another country but that is not a long term solution. While I have no solutions, I will be very interested to see if we come up with something remotely comfortable to the individuals living here. I am a pessimist so I am suspecting that it will be a lot like climate change and we bury our heads in the sand until nature takes care of it for us with one of the usual solutions like famine or pandemic. At that point we can start all over again……
So basically, he’s a Garth Turner who figured out how to use YouTube…Where were all the market timers in December 2022 when they could have bought an SFD at close to a 20% discount off peak?
This is one of the guys who gets what’s happenning and possibly what might happen to real estate in Canada in the future. I’m surprised the real estate cabal hasn’t shut him down yet.
https://www.youtube.com/watch?v=dT-PSJfSB-8
Hey Dereck you look great in the picture. I am guessing that is not your oldest child in the picture. It is a wonderful picture that really captures a moment in time.
Whatever, I suspect that I am not typical since I am too old to be a baby boomer (you do the math). My point about 65 as a general retirement age is that as the baby boomers age the number of people entering retirement is decreasing. If you want to use 55 then the numbers are really starting to drop significantly. While the total number of seniors is increasing the statistic is a bit misleading in terms of housing when one accounts for the greater increase in seniors in care facilities. The baby boomers are starting to leave SFH a bit faster than they are buying them at this point either into care homes or condos.
My biggest concern is what is happening in the world and how the dumping of the American dollar for trade and the dumping of American debt is going to effect everything we value here in the Western world.
Things are changing in ways we can’t even imagine or what those effects will be.
I advise my children to keep their heads down and be grateful for what they have.
Barrister at what age did you move to Victoria and retire? Because most make the move at around 55 which were the well to do early retirees or those transferring here to be near family.
What I don’t find are very retirees moving here at 65.
Wonder if there might be a few less retirees moving to Victoria than a couple of years ago, There is less people turning sixty five this year than last year and the numbers will continue to decrease. At the same time the numbers moving into assisted living are on the increase.