Feds unleash the CMHC floodgate
There’s an arbitrary divider in market activity that I’ve written about a number of times in the past: the CMHC mortgage cap of $1M has concentrated activity below that amount while weakening activity above it. That bunching is caused not directly by the availability of CMHC insurance (which will get you slightly lower mortgage rates but people hate paying it anyway), but by the lower down payments required for properties under a million. Cross that magical threshold and suddenly you need to come up with an extra $125,000 down. No small impact when most buyers are dependent on financing.
Today the federal government announced that they would finally keep one of their election promises to raise the CMHC insurance cap. Back in 2021 both the Liberals and Conservatives promised to raise it from $1M to $1.25M (but that’s nearly $1.5M in today’s dollars), and a scant 3 years later they’ve followed through along with some expanded access to 30 year amortizations for first time buyers. Amazing what plunging poll numbers will do.
Back in early 2023, I found a substantial bunching effect around the CMHC threshold, with a prominent gap in sales just above a million as well as substantially more competition and incidence of over-ask sales for properties below the magical 7-figure mark than above. Is that still the case? Prices are little changed from that time, and the effect seems to still be prominent in recent sales. Below is a look at the last 1500 detached sales this year, and there remains a prominent gap in sales right above the million dollar mark.
If you consider the distribution of home values, it of course does not look like this. Those homes worth just over a million still exist, but they either aren’t selling well due to the lack of buyers, or are being pushed down market to sell slightly below their true values.
However as pronounce as the bunching effect is, it’s also only clear in a narrow price band. Above $1.1 or $1.15M, it’s no longer clear that the unavailability of mortgage insurance has much of an effect. After all, there are few buyers who have a high enough income to carry a mortgage above a million but still can’t scrape together the 20% required to do so today.
So what will the impact be of raising the CMHC cap? Generally it should remove the bunching effect at the million dollar mark, and redistribute demand and sales more evenly. That will move some demand from just below a million (lessening competition there) to just above (increasing competition). It may also add a bit of demand as a few buyers that are currently sidelined by down payment requirements can now access the market above a million. Overall, I expect the market impact to be relatively minor overall, perhaps slightly positive for pricing in the detached market overall.
In general, if you have a place that you want to sell for just over a million and aren’t in a rush, it may be in your interest to hold off until after the change takes effect in December. Conversely, if you are buying in that price range, you may be better off acting soon rather than waiting for the unwashed (but newly insured) masses to compete with you. If you’re in the market for a place just under a million, the effect is a little less clear, but you may actually find less competition after the change.
Also the weekly numbers.
| September 2024 |
Sept
2023
|
||||
|---|---|---|---|---|---|
| Wk 1 | Wk 2 | Wk 3 | Wk 4 | ||
| Sales | 111 | 258 | 493 | ||
| New Listings | 391 | 809 | 1297 | ||
| Active Listings | 3198 | 3309 | 2699 | ||
| Sales to New Listings | 28% | 32% | 38% | ||
| Sales YoY Change | -6% | +9% | +20% | ||
| New Lists YoY Change | +18% | +17% | +12% | ||
| Inventory YoY Change | +26% | +26% | +17% | ||
| Months of Inventory | 5.5 | ||||
A decent week for both sales and new listings. The fall market is on, and so far it looks like sellers are responding with a decent increase over last year’s pace of new listings. Sales too are running a little ahead of last year’s pace, though not as much as you might expect given that conditions are definitely better for buyers this year with lower rates, higher incomes, and more selection.
Election silly season is nearly upon us, and with housing one of the top priority for British Columbians, expect a good amount of focus on housing policy in the platforms which are due to be dropped soon. Honestly I doubt anything that could be announced by provinces at this point having much impact on the market in the short term. We’ve thrown a lot of quick fixes at the housing market in the last decade and few had more than a marginal effect. At this point, there only remaining solutions at the provincial level are slow and comparatively difficult ones, but I’m sure that won’t stop the parties from throwing some goodies at the wall that could help you as a house hunter. Stay tuned for a review of the platforms when they’re released.
New post: https://househuntvictoria.ca/2024/09/23/rates-are-dropping-but-dont-get-too-excited/
Caveat , I’m guessing all politicians today are frightening . It attracts nut jobs and that’s kinda what we get today . I do find them entertaining though
BC Liberals in 2001 were a pretty conventional centre-right option. Conservatives of 2024 have a bunch of whack-job candidates believing every kooky conspiracy theory under the sun. I know one of them, it’s frightening.
How big a mortgage will I need to take out on my PR to get the Rustad rebate?
They were elected in 2001.
Gordon Campbell also said the 25% tax cut would “pay for itself.” It never did.
And his budget cuts were devastating, especially for children in care (many of whom died) and the poor. It’s all well-explained by one of Campbell’s own cabinet ministers, George Abbott, in a book he wrote.
BC Liberals cut provincial income taxes by 25% across the board when they got elected in 1999. Then proceeded to slash spending and shrunk BC civil service to the lowest in Canada. Conservatives would plan to do the same idea, lower spending, lower deficits and stable/ lower taxes
If we introduce new taxes/restrictions to reduce home demand (foreign buyer tax, spec tax, foreign buyer ban, flipping taxes, increased cap gains, airbnb/svr crackdown, higher builder fees etc.) , that will kill new construction, and worsen the housing crisis. And that is happening in much of Canada. These are all failed housing policy that accomplished nothing and lowered new home construction.
Better to introduce measures that improve affordability and increase home demand, which will lead to more people owning homes by incentivizing new construction, which is exactly what we need. And fast. Home prices stay firm, but are more affordable – great for buyers and builders. Recent measures like 30-year amort, lower down payments . higher insurance thresholds and the proposed Rostad Rebate are all good housing policy measures to accomplish this.
Yeah that’s the other half of it. NDP’s deficits are a key vulnerability for them. There’s good arguments to be made that they are too high and we should cut spending. But when the conservatives say they’ll immediately cut tax revenue by very large amounts, that weakens their ability to attack the NDP on deficits because their first action is to make them worse. We’re talking some massive spending cuts to balance the budget with so much less revenue coming in.
It’s bad housing policy, but it’s also bad fiscal policy. The plan will cost $3.5B. How’s he going to pay for that?
According to the BC Conservative website it’s a credit not a deduction on BC taxes only. Less money than first appears, but still a bad idea. Particularly given most of such a credit goes toward a windfall for existing owners – or renters. Both new homeowners and new renters (who pay market price) would likely see higher prices.
https://www.conservativebc.ca/john_rustad_announces_bold_rustad_rebate_plan
Agree it seems like a bad idea. I guess it would be a reason keep your mortgage and not get a heloc, or take on more mortgage debt.
I’m not a fan of stupid policies even if I benefit from them.
Vicre , u give them too much credit . Every time the gov gets involved it’s a Fuk up . Vote conservatives and let’s throw all that rubbish in the garbage can . Say no to to bill 44
I am actually almost certain they won’t as the results from 2020/2021 are still too fresh
Vicre, I am pretty sure the boc will Fuk it up and bring it down too much .overshoot is kinda what they do lol
Ya the question is how far will it come down, it could very well bottom to where variable ends up being around 4% next summer, but that is likely a better deal than locking in whatever fixed rate was at the time.
I have a fixed and a variable coming up in Dec and will be going variable and follow this market down .
I went variable three months ago….I am no economist but in my opinion the writing was on the wall that the economy was going downhill and there was a very high probability of rates cuts. Even three months ago if you backed out immigration we were in a recession.
Qt, next months 50 point cut should get people jumping into variable.
Okay I didn’t account for that, my fault. I’ll go with 540 now.
Unfortunately, there are consequences of over spending on social services, vanity and pet projects that are now has to be pay back, therefore it is highly likely to be tax increases and belt tightening for the foreseeable future.
On another note, it looks like now is the time to go for variable instead of fixed mortgage rate, because the economy has cooled and to keep in step with the FED.
So much noise week to week, that’s why I stopped putting in estimates for end of the month, they were always quite off.
Last year we had zero pending sales and only 2 reported sales on Truth and reconcilliation day, so I treated it more as a holiday.
Thanks folks for indulging me. I didn’t even realize it wasn’t the end of the month yet! Think I might have the flu…
Leo’s methodology is far more advanced, I just go off gut feel.
392 sales so far. Last week we had 134 sales and I have a feeling that sales pace might increase just a bit to 145ish.
So 392 + 145ish + 30ish (Monday Sept 30th) = around 570.
I’ve been wrong many times before.
There’s different ways of projecting sales, and none of them are overly accurate because sales vary week to week just based on noise. As of Monday we have 392 sales and we have a 5 business days left. Last year on Sept 25 we were at 390 sales and ended up with another 103 more sales in the following 6 days (5 business days, 1 saturday). This year we have the same week left, so at 7% more sales we might expect another 110 sales to Saturday, and then we have two more holiday days which usually only see about 5 pending sales each. Then there’s some end of the month shenanigans where realtors are more likely to make sure their sales are reported because that influences their standings for the month and usually leads to a few more reported sales.
So my personal estimate is lower than Marko’s 570, perhaps more like 530-540. But it’s all a crapshoot.
Never mind. My mind is absolutely gassed this morning. I understand this very obvious math now.
I’m sorry. And how does this take us to 570? Kindly humour me.
Consider this…. two buyers are bidding on a home, and one would be an owner-occupier and the other an investor landlord.
With a Rustad Rebate in place, the owner-occupier will get $900 per year to help with mortgage payments. And the investor landlord gets no rebate. So the owner-occupier buyer has a financial advantage on the investor buyer. This encourages personal home ownership over investor ownership, which is good housing policy. And $900 per year is $22,500 over 25 years of a mortgage, thereby reducing the cost of homeownership.
Sales rate this year is about 7% higher than this time last year.
I like lower taxes, and if this was an announcement that was just “I’m gonna lower income taxes” I’d be for it. We should generally tax income less and land more for various reasons.
As housing policy, it sucks. It does nothing for housing other than potentially driving up prices and rents, and higher income folks get the biggest tax cuts since their housing costs tend to be higher, and they have a higher marginal tax rate so it’s regressive too. Maybe good politics (who doesn’t like free money?), but bad policy.
Marko, why will the number this year increase from what you posted?
Well it’s lower taxes for a change, which is good policy in my book.
And it’s better than the NDP’s recent affordable housing announcement (Heather First Nation land), that only benefits lucky “lottery winners”, and not everyone who qualifies.
Because the Rustad Rebate applies to anyone that fits the criteria (rent or owner-occupier with mortgage, and a a BC taxpayer)
Next msg
Last year was 493, this year we will finish around 570 +/-.
Hope not. This isn’t good housing policy.
So far their platform seems to be reversing the zoning reforms which all things equal would reduce supply, and then adding demand via rebates. Less supply more demand = higher prices and rents.
If you want to give people a tax cut, give them a tax cut. Adding a ton of overhead by tying it to housing costs is dumb.
Homeowner with a mortgage gets a rebate, same owner with the same income and wealth but without a mortgage doesn’t? Makes no sense. Paying more rent gets you more rebate? Also makes no sense.
Crazy that September numbers were even softer than last year, which was already abysmal.
But how are the paces of new listings though? Are they also ramping up compared to last year?
Looks like a work around if landlords have a HELOC on their own principal residence perhaps.. LOL
I like that “Rustad Rebate” goes to renters and homeowner-occupiers with mortgages.
And doesn’t go to landlords (since they already pass their costs on to renters), and also doesn’t go to owner-occupiers with no mortgages (they don’t need help).
They also mention the relief will be further targeted to help those “ who need it to get ahead in life” which I hope is means-testing to exclude high income and wealthy. (who’ve already got ahead)
They estimate it will cost the government $900 million in the first year. That could represent an average of $900 reduction for 1 million renter/owners eligible in BC.
Next up will be the NDP, who must be quickly cooking up something similar in response to this.
I think we might hit 6,700 for year the year; I predicted 7,000.
Not for long….>90% of the time October inventory drops in relation to September based on seasonality, last year being a rare exception where we went from 2,699 (Sep) to 2,756 (Oct).
I think you might still be thursty for a little while longer 😉
Still at close to 3,400 active listings!
Nice to see sales trending upwards . Real estate is becoming fun again
Month Sep Sep
Year 2024 2023
New Unconditional Sales: 392 493
New Listings: 1,172 1,297
Active Listings: 3,398 2,699
On pace for approximately 570 sales.
BC Conservatives plan to give an across the board tax credit on housing costs up to $3000/month https://www.conservativebc.ca/john_rustad_announces_bold_rustad_rebate_plan
Yes I would load up on credit in retirement and a heloc being one . I’m not in a position to be mortgage free and don’t want to be .
You are almost certainly better off having a 500k HELOC available than a 200k HELOC and a 300k mortgage. But yes to each their own….
I came back from a road trip down to Portland recently. Now those are bad roads. It’s not a competition, I know, but I did breath a sigh of relief the moment I was over the border. Limping back on a donut no less. PSA – don’t cheap out on tires. They can have tons of tread but if they’re 8+ years old they’re a ticking time bomb. Ours decided to spontaneously and completely de-laminate at 60Mph. Could have been bad but we were lucky.
Yes I would load up on credit in retirement and a heloc being one . I’m not in a position to be mortgage free and don’t want to be . To each they’re own
I took a retirement seminar, and the financial planner said he recommends people go into retirement mortgage-free but have a HELOC so you have access to cheaper debt. Once you no longer have T4 income it could be more difficult to qualify for loans, yet you will still need to make large purchases. What if you want to buy a car? Give your child a large cash gift, take advantage of a travel deal, renovate your house, need to replace your furnace/roof/sewer line, buy an RV for a cross country road trip? Part of retirement planning involves tax planning… certain things are paid out monthly (pensions, OAS/CPP, RIF) but what if it’s October and you need $30k to replace your car, but you already drew out all your budgeted RRSP for the year and taking out anymore will put you into a higher tax bracket (or put you in OAS repayment territory..)? You could take it out of your TFSA, but your investments are doing poorly and you don’t want to crystallize those losses and would rather ride it out… then what? Luckily, you have that healthy HELOC with a zero balance sitting there that you can easily transfer $30k instantly to your chequing account, pay a little bit of interest for 3 months until you do your annual RRSP withdrawal in January to pay back the HELOC. The HELOC is a tool that provides you flexibility.
Heloc is on demand, only pay when you need to use the cash. Carrying a mortgage has costs every month regardless if you need the extra money or not.
I fail to see the difference frankly. Borrowing for consumption is borrowing. Only meaningful parameter is what interest you’re paying.
Hmm , soo many good ideas , get the feeling we might all might be arriving at the same place. Can’t get into much , not the place to talk about finances lol
You can take out a HELOC against your primary residence and use those funds as a down payment for an investment property. And there’s a tax benefit if you use the funds from a HELOC to invest, just like if you use a mortgage to invest. In both cases, the loan interest is tax deductible.
ok so why can’t you put 50 percent down and then finance the other 50% using the heloc and turn the heloc into a term mortgage? That way the other house is free and clear and you can never pay off your current mortgage.
Vicre, for myself I do have a heloc , but I don’t use it to buy property . I guess I could if I was putting 5 or 10 percent down but it’s not what I do . I will put well north of 50 percent down and take a mortgage with no plan to pay it off .
I fail to see how it makes sense to do that instead of paying off the mortgage and using a heloc to fund the fun things as required and then converting that heloc into a term mortgage.
You can turn the HELOC borrowing into a standard term mortgage if you choose to. HELOC has a higher rate because you can pay it back any time you want without penalty. If you want access to credit then you should pay off your mortgage and have a HELOC available and not keep a small mortgage that you make monthly payments to while hoarding the money saved by not paying off the mortgage in a margin account.
“10% annual “mortgage-free discount” on our home insurance”. I wasn’t aware of this until recently – or maybe I’d forgotten, or never mortgage free long enough to have encountered it. We were refinancing with different bank and the bank needed to be added to the policy. Broker calls up and says, “now that you’re not mortgage free your insurance will go up.” I’m like, what? We’ve had a mortgage since buying the house. We would have gone through the steps when we first bought / mortgaged it. They apologized for the error, good thing there wasn’t a claim – bet that would have been a problem!
I think this makes sense for a lot of people. As has been mentioned, a HELOC once set up involves no direct ongoing financing costs until you draw on it, so in that sense alone, why not have one for flexibility just in case some monetary need comes up once you’re retired, even once your regular mortgage has been paid off?
There are usually some costs to setting up a HELOC if one doesn’t already have one. AFAIK the bank may or may not charge some type of fee (hopefully they would waive it), plus I believe they more or less require title insurance (which is pretty cheap until you get to a certain value threshhold). And then there’s the tricky question of how soon before retirement to set this up (sooner rather than later so the bank doesn’t need to focus unduly on your impending loss of regular salary type income, if doing this on retirement?).
We looked into it before retirement and decided not to proceed, as we didn’t think we’d realistically be needing it, and it would in fact have cost us the 10% annual “mortgage-free discount” on our home insurance, so it’s not totally “free”.
Yes the HELOC is just about credit availability. We may never use it. If we wait until we actually need it in retirement the bank may say, sorry no.
A friend expanded his to $1.5m. They owe nothing and wouldn’t have a known reason to expect to need it.
Yes Frank that is true there are older well built houses that are torn down to make way for a new home. Well built being a highly subjective term. That’s infill housing where there are few to none vacant building lots available. Just because the house is “well built” doesn’t make it safe from the bulldozer. I have also seen five year old homes demolished as the zoning was changed to multi-family.
If the improvements are contributing less than 20 percent to the value of the property as a whole then in most cases it is a tear down. The improvements are under utilizing the potential of the land to be used at its Highest and Best Use. So you will find older 5,000 plus square feet homes on water front lots or in prestigious neighborhoods that appear to be well built torn down. Take a drive through Uplands and look at the newer homes. Those sites at one time had large “well built” older homes that were demolished.
When a person is looking to build their “forever home” the costs are secondary in their decision making process as is the re-sale value of the new home. They are not building to re-sell they are buying and building what they think will be the last home they will ever live in. Doesn’t always work out that way.
I’ve seen lots of older, well built houses bought at market value and immediately torn down to be replaced by a modern house with all of the features people value today. These are usually in very good neighborhoods. Basically, you’re buying the land (serviced land).
A Home Equity Line of Credit, or HELOC, is a revolving line of credit secured against the equity in your home. Home equity is the difference between the value of your home and the outstanding mortgage amount and/or other loans secured on it. For example, if your home is worth $600,000 and your mortgage balance is $200,000, your home equity is valued at $400,000.
The interest rate on a HELOC is typically higher than a mortgage as the costs to the lender to administer the HELOC is higher but lower than an unsecured line of credit. That’s because lenders have the security of liquidating your home in case you miss payments.
In Canada, your HELOC cannot exceed 65% of your home’s value, with one exception. If your lender combines your home equity line of credit limit with your mortgage, the HELOC can amount to 80% of your home’s value (with the mortgage accounting for 15%).
When you apply for a HELOC and are approved, you can use the funds for any needs that arise, such as home renovations, education or other financial needs. HELOCs that have an amortizing mortgage portion often come with flexible monthly payment schedules. If the HELOC is limited to a revolving loan, you are only obligated to pay the interest each month. But at any time, you can pay back as much or as little principal as you wish.
Unlike a standard refinance, you are not required to break your existing mortgage when considering a HELOC. You can often simply add one on top of your mortgage.
I’m not sure either but HELOCs are 1-2% higher than mortgages. Question is whether your mortgage is tax deductible because if it is not you can deduct HELOC interest if you are using the funds to invest. I guess if someone wants to spend a lot of money on non-tax deductible things like cars and trips keeping a mortgage might make more sense.
FYI on HELOCs
https://www.canada.ca/en/financial-consumer-agency/services/mortgages/home-equity-line-credit.html
Frank, separating the land value from the property value as a whole is a hypothetical. Property values are in situ as you can not magically separate land value from improvement value.
When it comes to neglected properties the improvements may actually lower the value of the land component as you would need to consider the cost of demolition.
Similar if you overbuild on a lot which results in an over improvement or superadeqaciy for the neighborhood. In this example the new improvements would suffer from incurable functional loss in value.
An example of an over improvement or superadeqaciy may be constructing a six-plex in an area of single family homes or an inground pool. The cost of the land and improvements would be significantly more than what the property would sell in the marketplace.
I think you are confused about what a HELOC is, a HELOC is credit available to you, just like a credit card. You only owe money when you draw on it and you can leave it untouched if you don’t need it. Leaving a small mortgage balance is actual debt which you will need to service every month.
You will be able to switch HELOC products between all the big banks. I still don’t understand why anyone would keep an active mortgage for “leverage” and not just use a HELOC. you don’t pay any payments on the HELOC if you don’t use it, with an active mortgage you are constantly making payments. You can convert the HELOC into a term mortgage if you determine that is what you need, but you would only do that after you are certain of you situation.
Leaving a mortgage balance open and making payments on it with after tax dollars just so you have a cash balance built up in a taxable account is not very prudent.
Every house is a potential money pit, you’re buying land. Even a new house can be a nightmare.
Things that may devalue your property.
Physical depreciation or normal wear and tear that is curable
-dated plumbing fixtures such as brass faucets
-neglected maintenance
-lack of energy efficiency
-outdated electrical wiring
– a filled in fireplace
-wallpaper
-dated kitchen and bathroom cabinets
-carpets throughout the home
-overuse of paneling
-bad smells
-siding such as aluminum that can cheapen the appearance of the home
-weird landscaping and an unkempt yard
-cracks in the pavement
Functional Obsolescence a loss in value due to lack of utility or desirability. The more costly items that may be curable or incurable depending on cost.
-an unappealing floor plan layout
-updates without permits
-a pool
External obsolescence or a loss in value due to forces outside the physical structure. Typically not curable
-being located near a church or sports center
-unsightly buildings nearby
-noise pollution
-street traffic
-sketchy neighbors
-foreclosures in the neighborhood
A HELOC is a secured line of credit which is typically at a lower interest rate than an unsecured line of credit. Nice to have for some of the large expenses that will crop up as the building ages. One can still obtain a HELOC at a latter date when those expenses occur but you will likely have to pay a fee to set up that HELOC with your lender.
The HELOC is a charge against the property which could make it more challenging to change lenders.
Uhhh says who? That’s news to me. I still don’t understand why someone would rather have a mortgage remaining that they make regular payments on rather than have it paid off but a heloc available for whenever they need it.
But your house is partially an income property. That’s different from a house that is just your residence.
Debt certainly is not bad in itself, it depends on what it’s for, but my view is that going into or carrying debt because you’d rather just spend the money is not a good idea, particularly once you’re past your working years.
Maybe he’s saying his HELOC can’t be used as downpayment anymore? It’s hard to tell. A person needs actual liquidity from some other than debt to access financing.
Do people not understand what a heloc is? It’s a line of credit secured by your house that you can access at anytime. It’s free to keep open and you can turn whatever you take out into a term loan if you want….
Why do people want a HELOC for retirement? We had one but closed it because I didn’t want more debt. I don’t understand why people would want that. In our case when we retire we will have pensions, some RRSP, probably rental income too since our house has 3 suites and we really don’t need all the space. Why would we need a heloc?
As for the keeping of some mortgage debt. I’m thinking we’d have something like 80% equity in our home at retirement – it would just be a small amount (relatively) that we’re not in a hurry to pay off. If rents for a 1 bed in 15 years are say 2,500 a month (very conservative) then that would cover our remaining monthly mortgage payment with some to spare.
When I think about it logically I just don’t see that it’s super important to pay off the mortgage by retirement. My dad, for example, thought it was very important and he now has no mortgage in retirement and he always talks about how awesome it is. But he was raised very poor and was in a blue collar job his entire life. He’s working class and working class people tend to be afraid of debt. It wasn’t until a friend who is from a middle class upbringing told me if it wasn’t for debt there’d be no middle class that I started to understand – not all debt is bad.
I still don’t get why people would want a HELOC for retirement though.
How does this transfer risk to low risk borrows? If borrower is low risk, they typically don’t have or require insurance. By definition in mortgages, if you require insurance, you are a high risk borrower. It the unfortunate part that the taxpayer backstops the mortgage insurers. The cost that actually gets transferred to low risk borrowers is the extra demand pushing prices up from government subsidies in mortgage insurance resulting in lenders pushing more money to high risk borrowers because the lending is backed giving or more debt than otherwise would be appropriate.
The move to 1.5 million may be a way to mitigate mortgage delinquencies. Delinquencies are primarily a liquidity issue. People try to sell before defaulting and only default after failing to do so.
Prices haven’t moved much in response to to the lowering of interest rates illustrating how liquidity problems may be piling up. There’s always a buyer for a property, but falling into delinquency first means the price was out of reach for anyone to realistically consider. The fact that prices haven’t made a significant decline indicates most of these mortgages are likely recent buyers, and investors.
An end-user will struggle to avoid defaulting on their shelter, and have a longer period to ride out negative equity if need be. Investors are more likely to default since they have shorter timelines and less motivation than end users.
Increasing the home insurance is Capital Cushioning where end-user demand is created, transferring the risk from a group of high-risk borrowers to lower-risk ones.
Not sure about age based amortization rules, but most people I know in those age brackets with debt tied to a residence either have an open mortgage or a line of credit (the odd sucker has a reverse mortgage). All just anecdotal based on some folks that I know. I would imagine with the right life insurance, you could get any lending product you want. It would be more risk based for the lender than any rule based thing.
Seeing retirement on the horizon, we have also considered the implications of potential lower debt availability. We will be talking to the bank over the next year to ensure we maximize our HELOC before our annual income drops.
And, on another close topic, our current mortgage is a “global account”. The mortgage debt and the HELOC are tied together so that as the mortgage is paid down the HELOC availability rises. Maybe that will be enough.
“I’ve never heard of this happening on renewal if you’re staying with the same lender, and have been making your mortgage payments”
What I meant is going to a new amortization schedule, which is what Dee was talking about. That also has to be approved by CMHC (et al) if insured.
Certainly I don’t see any problems with simple renewal.
“Does anyone know what a maximum amortization period that you can get at 60, 65, and even 70? Are there rules about max amortizations based on age?”
The listings the past week are incredible, if they continue the next month or two, it’ll be interesting what prices do.
Vicre, i can’t run my shtick with a heloc , I need financing , so don’t have a problem with debt. To really get ahead u need to leverage
I don’t get your post, why not just have a heloc available but no mortgage?
I’m with the BC Conservatives on housing, but not a lot else.
Patrioz, not a fan of paying off the mortgage. All goes well I will be in more debt by the time i call it quits and the kids can do what they want with it . I know too many folks go broke when they start selling in retirement.
I’ve never heard of this happening on renewal if you’re staying with the same lender, and have been making your mortgage payments.
I believe that lenders cannot impose parameters such as allowed amortization based simply on age as that is prohibited discrimination. However they can certainly consider income, and if your mortgage comes up for renewal after you retire and have reduced income that might be taken into consideration.
What I find interesting is how many people going into retirement today, i.e. boomers, are still carrying mortgages when they have been in such a favourable position to have paid them off. When I bought my first house I borrowed less than $50K.
I’m trying to make a long term retirement plan. I know some people that are in the older generation that are coming up to retirement. For them, it’s really important to pay off their house entirely before they retire. However, I think that as time goes on, mortgages go up, and wages don’t keep up, it seems like this goal will be increasingly unrealistic for many people.
Does anyone know what a maximum amortization period that you can get at 60, 65, and even 70? Are there rules about max amortizations based on age?
Introvert voting BC Con….
The American dollar should be kept in mind as the world goes through one of the biggest changes since the second world war.
It’s not the be all and end all, but it might give people food for thought when deciding how and where to invest or simply how to protect what you already have.
(Hope this link works.)
https://www.bing.com/videos/riverview/relatedvideo?q=is+the+american+dollar+in+trouble&mid=1BAD83FBF89D0E9CBDEA1BAD83FBF89D0E9CBDEA&mmscn=stvo&FORM=VIRE
Bobby k , the world is not doom and gloom , turn that frown upside down . I’m in Calgary and this town is booming , everyone seem so happy
Not seeing a lot of new listings in OB and Fairfield , and when something comes up it’s selling quickly with just guessing multiple offers .
Has anyone noticed that the active inventory is exploding, especially for SFD? Doesn’t seem to bode well for the prices.
Thursty, lol
It should be a busy weekend for open houses . People feeling much better about the economy now that we have avoided a recession and are on the upside
Sorry for often mentioning Moncton:)
It’s just that it is the one place in Canada that really caught my eye.
I mean…we flew out there to check on a fishing lodge that was for sale….and….well…we discovered what we saw as a gold mine and from our point of view, it still is.
Purchasing real estate there was the easiest decision in our life. ( Much like buying an ice cream cone!)
I simply get the urge to share that with people who might not have heard of it.
I now promise not to mention Moncton for one more year!
Mt. Tolmie, indeed.
Let’s crank it up a notch. Nicest place I ever got to go for a workshop (and probably will ever be in my life) was here:
https://youtu.be/bsK22ZoYi_k?feature=shared
I doubt that’s in the top 10 if you sampled the whole HHV population though! South of France this, gallivanting through east Asia that..
Both of you need to upgrade your travel posts.
Here are a couple of examples of what we are expecting:
https://www.youtube.com/watch?v=BpGQzcOkKd8
https://www.youtube.com/watch?v=BuXp4cIJvjQ
It’s a tie.
I wonder what readers finds more annoying; you posting about Moncton or me posting about Zagreb.
The leverage is the big difference. I’ve always had my TSFA/RRSPs maxed out and I’ve been pretty lucky with the returns but difficult to match real estate transactions like this due to leverage….bought jr. one bed with parking at Promontory for $193k with $40k down. Cash flow positive from day one starting at $150 and now over $600/month. Current market value around $450k and mortgage down to 50k. If I had ran it cash flow neutral mortgage would be paid off. So essentially $40k into $450k.
^not saying this will happen going forward, but there is always the potential with leverage. Reality is I don’t feel comfortable running margin on my brokerage accounts.
Long term I do want to move the majority of my assets into equity markets just because of lifestyle, not necessarily the best return. The dividends are never late into my accounts. I don’t have to interact with people. Very liquid. No “the unit above me flooded my place” potential phone calls, etc.
It’s kind of like housing. If it was purely $ motivated I would buy a huge house to take advantage of the principal residence tax exemption but at a point in my life where I’ll be fine with a smaller tax free uplift.
Leo’s worst nightmare:
For a family considering other options such a a small duplex in Moncton NB …here is an example.
$279,000.00 gets you a “Duplex”. Live in one and rent out the other.
Quite astonishing actually.
https://soldwell.com/real-estate/Moncton-NB/350-352-Cameron-E1C-5Z6-M161874-7783246
Most duplexes in the Moncton area seem to be around 350,000.00 or up into the $400,000.00 range …..which is still amazing value for a Duplex.
Moncton is growing. Many people are moving back there or seeking alternatives for their families and immigrants focus on NB because of the lower housing costs.
Incomes are generally low and so maintenance is reasonable.
Our family has done quite well with investing in Moncton. We have a good property manager there . Taxes are quite high, but the rents are fairly good.
And yes…..It does get snow!
I post this kind of thing here on House Hunt Victoria from time to time….. because i simply want people to understand that there are some interesting options out there.
Income interest payments will be coming down. Housing getting dusted. 100 of 100.
Introvert, more good news coming , sunnier times ahead . If u own a sfd , just gotta figure out where to spend all that money
People living in Langley will continue to have affordable rents and housing certainty with the purchase of 108 homes, made possible through the Rental Protection Fund.
“We launched the Rental Protection Fund to protect renters and preserve valuable affordable housing,” said Ravi Kahlon, Minister of Housing. “We heard concerns about real estate investment trusts buying up buildings, and in some cases displacing renters and increasing rents. Today, we are reversing that trend and ensuring that people and families, including those living in these 108 homes, will have the security of staying in the place they know and the community they love.”
The buildings were listed for sale on the open market by Canadian Apartment Properties REIT (CAPREIT). These are the first of several hundred units owned by REITs that will move into community housing-sector ownership with the support of the Rental Protection Fund, securing affordable homes for people for years to come.
Seems like he is using 1% for inflation adjusted returns for housing. In Victoria seems like it has been about 4.4%?
His assumptions about costs are all based on a % of the value of the home. In high value markets like ours this is fundamentally flawed. Same house here costs 2x what it costs in another town in Canada but maintenance is def not 2x the amount. And his assumed property tax rate is 1%. In Victoria it is actually .491%.
Inaccurate at best. Potentially deliberately biased and misleading towards the investment service he provides.
I agree with all this.
Outside of personal use properties, I don’t/won’t own any investment RE. Seems like too much work, and very illiquid. No doubt that it’s a profitable and fairly low risk investment for the owner/landlords that are cash flow positive and put in the time. So I’m invested in stocks, a mix of etf and single stocks – like most people here on HHV.
The point being, any suggestions I’m giving on HHV about affordability or to “buy RE” is always described as buying RE to occupy for you and your family. And I’m definitely not telling anyone to buy investment/rental properties.
A nice thing about owning personal use property (eg principle residence) is it’s for you and your family to enjoy, so there’s lots of benefits aside from the bottom line on house value.
I’m wondering what the change to 1.5 million for prospective purchasers desiring to move up the property ladder from a one-bedroom condo will have on the condominium market? The previous limit kept some of those buyers in the condo/townhouse market.
Why buy a condo as your second move when you can buy a house? Currently it takes about 2.5 condos to buy a house in the same market. Will the gap between condos and houses widen?
There are so many different variables to consider that I suspect the answer is we just don’t know.
Mortgage and real estate industry hit the jackpot this week with trio of announcements
https://financialpost.com/real-estate/mortgages/mortgage-real-estate-industry-jackpot-trio-announcements
Returns on RE have exceeded inflation for a long time in Victoria. Of course there have been ups and downs in both appreciation and inflation. My understanding is that if we look at a 50-year period the overall appreciation rate has been 5-7% while inflation has averaged 3-4%.
Could this continue indefinitely? Maybe if houses keep getting smaller, parents keep helping their kids, people keep wanting to move here, the big earthquake doesn’t hit, and government invests in a massive amount of subsidized rental housing.
However, imo, with changes in capital gains taxes, immigration changes, short term rental legislation and interest rates it seems more likely that prices will stay flat for a period of time. Condos might have lower appreciation than SFHs given that we are not building many SFHs. Still good to own a leveraged primary residence, but investment in RE is less attractive for ex. a couple looking to buy a condo for retirement savings purposes. Better to just invest in the stock market.
What happens if investors exit the market or don’t enter it at the same rate? I guess we are seeing this now – pre-sales falter and the number of private rentals decline once any STR volume is absorbed. I think there are a lot of economic knock off effects from this but I’m not sure how it will play out.
The leverage is more flexible in RE than margin in a brokerage account. Then there are the tax write offs depending on how you run the rental business. There is nothing wrong in investing in the equity markets and I have decent amount of coin in there also, as do some of the other landlords here.
Marko, of course no one gets the lows (people are more likely to buy at the highs :), I was just getting peoples attention to the fact that outside of real estate loads of money is being made, the answer as you well know is diversification and buy low sell high, the first one is easy the second one not so much, last lesson is whatever the experts say the opposite will more than likely happen.
https://househuntvictoria.ca/2024/09/16/feds-unleash-the-cmhc-floodgate/#comment-120061
This is true in most places. Not Victoria or Canada for that matter for the last 20 years but most places. Expected return on Real estate can’t be indefinitely higher than inflation and it has been higher than inflation for long enough to really cap out or get close to capping out without crazy long amortizations as you have seen over the last year. Slowing sales and softening prices. All the income has been absorbed by houses. We will see what happens with the new rules with longer amorts and lower rates but I suspect that houses are currently high enough to not move much even with 3-4% rates and 30 year amorts in Victoria.
Additionally, as you settle the leverage on the house, the unleveraged portfolio will overtake the leveraged housing assets (because the return will be close to 3x) unless you keep the leverage which I don’t think most financial literate people want to worry about ever really but especially as they approach retirement ad have better things to do.
I’m sure that’s right, but a lot of that is probably also due to leverage, which is much easier & more palatable when investing in real estate than in equity markets.
I guess in concept, you could just use leverage sort of indefinitely in RE, and then RE may indeed prove a superior investment when just looking at a cash-on-cash return vs. a % of FMV return. I’m not sure that’s measuring risk & reward appropriately, but in any event, if you get to a point where you just want to pay off all debt and no longer use leverage, then the picture may change for you.
https://househuntvictoria.ca/2024/09/16/feds-unleash-the-cmhc-floodgate/#comment-120054
Sure but if you look at return over every time period, there is no comparison. There’s a 4% differential between the average annual TSX return and the average S&P return and I don’t believe in timing the markets or picking stocks.
Canadas business environment and investor community wants low risk sure things and that kind of behavior doesn’t yield the next generation of Palantir’s, Apples, Amazon’s, Teslas, NVidias, Facebooks, Googles, what have you. Even with all the government bullshit companies like Walmart and Costco are doing a better job in Canada serving Canadians and China and it’s communist government and all it’s restriction are doing a better job of freeing and supporting it’s people to build globally meaningful companies.
Odd of purchasing at a one year low 1/365, seems like a reasonable methodology.
And so then I agree that’s a powerful argument in favour of not trading up the house & taking on a whole pile of new mortgage debt. If you’re reasonably comfortable where you are & just stay there and continue your focus on investing and keeping debt to a manageable level, you will probably come out ahead. At a point where your investments outpace what you need for day-to-day living, there’s a snowball effect and it doesn’t take that long before you have all kinds of choices.
RE in Victoria has obviously done well & IMO will continue to do well. If I were looking for a house, I think now or next few months would be a pretty good time to buy (financing costs coming down smartly, prices still basically flat, etc.). If one finds something that fits the family requirements, I think it’s sound to buy now. That said, in terms of investment return, making a good return in equity markets has been like falling off a log for a long time now. So all in all, I’d be focusing on RE in terms of a principal residence, and would divert any extra money to other opportunities. Which is probably a good thing.
Interesting, I’ve generated in excess of 50k in cashflow so far this year from my rentals and have written a significant amount of that off for tax purposes. Would I better off if I sold in 2022 and put all the money in bank stocks? perhaps but I can’t time the top nor the bottom. Would I have been better off putting the down payments in the stock market instead of SFH rentals 10+ years ago? Absolutely not.
This would go for Marko and all others who have purchased rentals properties prior to covid.
I guess not many comments on the Rational Reminder podcast showing stocks outperforming real estate in most large centers in Canada this century still has peoples heads spinning?
https://rationalreminder.ca/podcast
Take all the copium you need, Leo.
Nan, I think you may want to take a closer look at the data, from Jan 2000 to Jan 2020 the TSX and S&P 500 indexes had nearly identical returns (leaving out currency appreciation), its only been in the last few years where p/e ratios have exploded for some of the biggest stocks in the US that explains the difference vs some of the bigger Cdn stock where p/e ratios have stagnated. What this means is it may be time to sell some US and buy Canada stocks and Cad$ the old buy low sell high, check back in with me in a couple of years to see how that worked out 🙂 Also don’t forget the dividend tax credit for Canadian stocks.
https://househuntvictoria.ca/2024/09/16/feds-unleash-the-cmhc-floodgate/#comment-120031
Thanks but I don’t pick stocks. I invest in ETF’s. Also, I don’t buy Canadian ETFs unless they contain US ETF’s because most Canadian companies (including the banks) are not the kind of thing I want to hold. Similar to real estate, investing in most Canadian stock has you investing in uncompetitive oligopolies who only survive with the governments willingness to continue to prop them up and that is a gamble I think you will lose one day.
For a number of fairly obvious reasons Canada will never create the kind of business value consistently over time for investors the US does. The fact that we even have a real estate blogs like this all over the country is one of those reasons. Just think of the human waste dealing with negotiating basic stuff like saving and buying a house or renewing a mortgage when this country requires that those be life changing gambles for the most part. Our country is completely out to lunch on what it means to be productive.
On paying off the mortgage, as long as my after tax expected stock market return is higher than my mortgage interest rate, I will stay invested and pay the mortgage off as slowly as I can. I could pay it off anytime I want but the leverage powers my portfolio to the tune of a spread of about 4-6% per year. As I get older, I may reconsider as my risk tolerance gets smaller as I get closer to retirement and my expected return shrinks but for now, I’m happy with that spread & risk level.
Marko, YTD returns to today
RBC = aprox 27%
CIBC = 35% YTD
Now you and patrick and trusty can get back to generating FOMO 🙂
Good grief Patrick, I specifically said the YTD low may be off by 1 month which was around around Oct 25/2023 so from $108 to $167 when I looked today, plus dividends is about 60% return, I said it was an estimate as I’m very busy.
BMO 14% (inc divdends)
TD 23%
BNS 40%
RBC 60%
CIBC = 84%
Real estate = 0%
How is that any different from having two mortgages owing the exact same amount as one mortgage?
My mortgage is in 2 segments. We make a solid family income but still owe a lot on our house, which we bought in 2020. What do people think about dumping one of the segments – meaning when it comes up for renewal just amortizing it as long as possible with no real plan to ever pay it off? Then, we focus on paying off the other half entirely and by the time we retire in 15 years we will have a mortgage but it will be small and the costs will be more than offset by our rental income. I want to be able to enjoy life now and retire in 15 years. They seem to be mutually exclusive in the sense that if I want to aggressively pay off both mortgages then we won’t be able to afford to travel etc.
While your at it Patrick, can you check what the return of a cdn bank etf is? I bet it’s no more than 20% YTD
>>> BobbyK “RBC 52 week high $169, low $107 plus dividends the low date may be off a month it was an rough estimate, so 65%”
65%?…. Good grief. I think we have a new term “BobbyK picking” where you measure the 1 year return of a stock from 52-week low to the 52-week high
The actual one year return on RBC is 40% (35.6% in the stock, and 4.6% in the dividend).
And no, that’s not 65% unless you’re “BobbyK picking” 🙂
Money will soon flow back into the real estate market from stocks as soon as we get some solid appreciation in real estate. Same thing goes for cash . Savers are losers
You’re right, it isn’t. The last thing we need is a Texas approach to roads
And what’s the return if you picked BMO or TD?
He’s trying to say that with 400k in CIBC that’s 280k return. $1M portfolio with no house is about as typical as an oak bay house purchased for 700k in the fall of 2016 and now worth 1.7M.
So TD, BMO, etc., are not bank stocks?
And yes 1MM portfolio, super typical
Globe and Mail today (paywall)
How Canada’s middle class got shafted
Real median wages of Canadians have barely changed since 1976. Canadians need a two-income household and must work longer hours than international peers
When we moved here when we were young in 2001 we bought a house 2 blocks from the ocean on a quiet street in the core for 275K which was less than 2X our household income, and it was paid off in around 5 years.
That same house with inflation should be around 570K today and a 130K income would be 270K today so that same home is now 5X my old income vs 2X my income in 2001 ( these numbers are all quick estimates). We have moved and I am now retired ( actually I first retired back in 2015 in my mid 40’s, that ain’t happening for many millennials. I also had the luxury of not starting a real job until age 27 after travelling in my early 20’s ( I’m setting to sound like Scott Galloway). We generation X and boomers generally had it so much easier then today young.
So Patrick to say that young people have never had it so good is way off base. It is actually generation X who got the best deals, low house prices after a long plateau in house prices in the 1990s and interest rates free falling. And when we had our first child in mid 2000s we had the option for my wife to stay at home and raise our kids if she wanted to.
I’m very greatful for all of this and don’t look down on the younger generation and tell them to suck it up and buy, buy , buy to pump up house prices for downsizing aging boomers. No wonder young people aren’t having children, they have no time or money for that luxury.
RBC 52 week high $169, low $107 plus dividends the low date may be off a month it was an rough estimate, so 65%
RBC is up from $123 to $167 YoY. Not bad but nowhere near 60%, even including the 3.4% dividend.
Peak price was reached in 2022. See Leo’s chart below.
It’s been an incredible year in the stock market, take CiBC up over 70% and RBC almost 60% including dividends, take a typical portfolio of 1MM with typical 30-40% bank stocks and a few of the big 7 and you can almostbuy a nice little condo with the 1 year returns compared to real estate at 0% and you can understand why real estate investors especially condo owners are running for the exits.
From what i remember Dallas is super spread out with highways everywhere it’s like comparing Victoria to Sooke, cone to think of it I’ve heard Sookes traffic can be worse than Victoria
Hello? As I mentioned Dallas is about 20 times bigger than Victoria.
It shouldn’t even be possible to compare them, but there you go.
>> It’s a tragedy how poor roads are in Victoria.
Agreed. And after the road diets, the COV concludes that the problem is too many cars. So they limit parking in new developments. Like Harris Green where the COV wanted no more than 0.34 spots per unit. https://vancouverisland.ctvnews.ca/developer-pushes-back-against-victoria-s-call-for-fewer-parking-spaces-at-new-condos-1.6342102
Inadequate apartment parking will end up as more street parking, worsening the traffic and downtown parking shortage.
So they’re driving faster and it’s taking longer? Awesome
“Well it’s taking me longer to get places but on the plus side I’m burning more gas to do it”
That sounds right to me.
Man good job on your investing . Up 400 k already in your investing this year is very impressive , you will have that 400 k mortgage payed off and fast . That is some awesome stock picking , not easy
I highly doubt an oakbay house purchased for 700k in the fall of 2016 is now worth 1.7M with no substantive renovations post purchase. Colleague’s house in oak bay with a suite purchased for 700k in 2014 is not able to get 1.7M currently.
Patrick: 26% of 22- to 30-year-olds anticipate living in their homes for four or five years after purchasing, and 7% expect to stay for only two to three years… to add to that, I read somewhere that people buy on average 4.5 homes in their lifetime. I could guess that this is 3.5 X moving up and 1 time downsizing.
Oak bay. And yes banks do. Mine was increased by hundreds of thousands with no fees after 1 call and a meeting to sign. I didn’t initiate it, they asked me if I wanted it, I asked if it was free, they said yes so I got it. I don’t have a 1.7mm heloc. I have a heloc secured by a 1.7mm value. I only draw on it to buy stock and right now the balance owing is zero. The point was to explain a third parties view of the value of the house. Not the limit on the heloc. No bank would let you draw 100% anyways.
Anyways I didn’t post the first time to get into a dick measuring contest with anyone. Only to explain why the data posted in a previous post makes sense to me.
Typical travel speed.
It’s a tragedy how poor roads are in Victoria.
It’s a comedy how parochial some people are in Victoria.
But you literally just said you still owe 400k mortgage on it. Banks don’t proactively increase your heloc value, you need to ask for it and also need an appraisal and pay a fee, doesn’t really jive with your don’t like owing anyone anything attitude. But the real 1.7M question is what neighborhood?
I have a heloc secured based on the house being worth 1.7mm. It’s the banks value not mine and I don’t like owing anyone anything. There was another house a block over than sold for a bit more in July so I am reasonably sure it’s worth at least that much. The numbers for my region on VREB also show similar growth.
On levering up, I’m up 400k this year on invested money I didn’t buy housing with. By retirement that pile will generate 160k-/200k/ year without having to do anything. No mortgage. No renters. No maintenance, nothing. Just money and time.
I guess I could take on way more risk and lever up my principle residence but then I won’t be in control of my future. I’d prefer not to live being dependent on the continued financial and economic illiteracy of our government, low productivity of Canadians and irresponsible immigration for my retirement.
Being rich to me means I don’t have to do anything for anyone ever and the path I picked works for me. Unfortunately move up buying doesn’t.
Heating question: has anyone dealt with the residential gas absorption heatpumps?
Patrick it could be a causation fallacy.
For example, ice cream sales and violent crime rates are closely correlated, but they are not causally linked with each other. Instead, hot temperatures, a third variable, affects both variables separately.
Also helps that it’s basically a flat blob without intervening natural features. Makes it easier to get around.
Define “flows better”. Not 100% sure if US and Canadian statistics on this front are entirely comparable but
Dallas average commute time: 29.7minutes
Victoria: 22 minutes.
Oh, let’s take Dallas for example. 7.6 million people and the traffic flows better there than here.
How can that be?
They invested in roads, instead of “road diets”.
Ummm what area in Victoria has gained that much from fall 2016? you need to go back to 2013.2024 to get that 2.4x gain. I mean your overall thesis is correct but the numbers don’t really compute.
Lol, I don’t think the bank would view that house being worth $1.7M…
Man, I would be off to the bank and borrow against your house , leverage up and enjoy the gains in equity as the market fires up . Good to have 2 properties in retirement, cause your going to want to sell 1 and need cash
In the same US article I quoted, they measured by age and found that young people (FTB) moved more frequently than old.
https://www.thezebra.com/resources/home/average-length-of-homeownership/#:~:text=35%25%20of%20homeowners%20have%20lived,increase%20over%20the%20last%20decade
“ First-time buyers spend less time in their homes
The average age for buying a first home is 27 years old — a significant drop from 34 years old only a few years ago. First-time homebuyers typically fall outside of the norm when it comes to homebuying behaviors. Most first-time buyers keep their first starter home for only two to five years. In fact, 26% of 22- to 30-year-olds anticipate living in their homes for four or five years after purchasing, and 7% expect to stay for only two to three years.
https://househuntvictoria.ca/2024/09/16/feds-unleash-the-cmhc-floodgate/#comment-120012
People move more often when they can actually pay for the house and not have the market run away on them like happens today.
20 years ago being a move up buyer in a market with income attached house prices was common. Since then, the best strategy is to buy the most expensive house your income can afford, never sell or upgrade because the probability that the gap between your house and the next one up has increased is 100%.
For instance, I bought a house for 700k about 8 years ago. That was a bit more than 3x my income at the time. We had one child and one on the way, my wife was working less etc. and I didn’t want any problems financially no matter what. The gap to the next house up was about $300k for a 1MM house. Today, my income is about the same but my house is worth 1.7MM and the next step up today is 2.6MM. My house is up almost 200% but the gap to the next level in house is also up 200% to 700k or as much as my house cost in the first place. And my income is still around 200k. My wife is working again so were closer to 300k now but it just doesn’t make sense to take on another 700k in mortgage plus also carry the 400k left on the original mortgage to move up when I am 8 years older? I want to retire early and the math just doesn’t work to move up, since we are also saving and the opportunity cost there is high in years of work. Perhaps if the gap was similar or even smaller relative to our incomes moving up would make sense but it isn’t – it’s more than double what it was when we first bought so no thanks.
Income detached house price increases make moving up unpalatable if not impossible when price growth outstrips income growth and you don’t want to work forever.
If prices are rising, that means borrowing more money to move up than if they didn’t rise. On the other hand if you’re moving down you’re borrowing less money or no money.
That was the Musqueam reserve in SW Vancouver, not Shaughnessy, and they were not prepaid 99 year leases, but essentially ground renting on short term lease. The existing leases didn’t get tossed by the way, they just expired. The litigation was over what a fair increase for a new lease would be. Check out what this property is paying.
https://www.realtor.ca/real-estate/27264848/3-halss-crescent-vancouver
I wouldn’t jump to the conclusion that its old people moving less frequently than young. It more likely has to do with the economy. If prices are not rising quickly then home owners have to rely more on mortgage paydown to increase equity for the next move.
Interesting. In the USA, people keep their homes for a long time (13 year median).
And that number has risen dramatically over the last 20 years (from 5 years to 13). In general, old people move less frequently than young.
Here’s US data showing increase in median length owning time of a home.
https://www.thezebra.com/resources/home/average-length-of-homeownership/#:~:text=35%25%20of%20homeowners%20have%20lived,increase%20over%20the%20last%20decade.
So the question is, does the US experience of longer home ownership now than 20 years ago also occur in Victoria?
Not at the onset of a 99 year lease
Pretty sure that is not the case. I agree the calculator is unclear and not very useful because it doesn’t explain return assumptions on both sides (or let you change the expected appreciation rates), but if you read Ben’s writing on the 5% it’s based on differentials between market and real estate returns.
So, what are they using to peg that market value to with the announcement today? It’s leasehold right? So, isn’t 60% below market is what leasehold generally runs? What happened about 15 years ago with those upset mansion owners in Shaughnessy when their lease holds got tossed by the court? I recall some upset folks that couldn’t sell.
Yeah I didn’t mean prices dropping really, I mean waiting to get into a better place. Say someone can buy a $950k rancher right now, but maybe by this time next year they can buy bigger place that will last them longer for $1.1M. There’s a big quality difference between entry level and a little bit higher in houses. If you can avoid having to upgrade you can save yourself many tens of thousands. That’s where it becomes a tricky decision.
Correct.
And yet so many people are buying and selling more frequently than that
Poorly done analysis by PWL Capital – who have a vested interest in gaining new clients with money to invest in their products. Their online rent vs. buy calculator assigns 0 value to home appreciation.
In my opinion, the risk of buying and prices dropping (as long as you can afford to keep making payments) is a lot less detrimental then waiting and potentially being priced out.
Key is to buy something where you can stay put for 10 years. I don’t believe we have a 10 year period in Victoria where prices decreased?
I am having a hard time conceptualizing this….wouldn’t there be a huge different between a buyer that has 5% and 50% down for a potential purchase?
On the soft landing rhetoric front from the central bank, recession is here and its real despite their psychological approach to PR. 75% of the last 4 recessions caused houses to noticeably get devalued. Bad economy = flat or declining house prices. If the economy can’t handle 5%, you’ve got a bad economy. Monetarists are selling money supply as the primary driver of demand, and every time a macro rate cut cycle happens they get their portfolios clapped because of beliefs and theories when they could of chosen charts and history. Rate cuts cause fiscal drag and decrease interest income transfers.
Is this 40% of the sale price? Like is government just financing 40% of the sale price for the buyer?
neighborhood first, can always throw money at a junky house but can’t change an undesirable neighborhood unless you move.
I echoed that the other day from my experience as a landlord then, over price by 25 bucks and you are getting no interest. Was lucky to get $3k for up and down suites (3bd and 2 bd) combined.
On the Rational Reminder podcast today they reviewed an extensive study looking at whether it was better to buy or rent a home in I believe the 12 biggest centers in Canada over the last 20 years (during a housing bull market) and their conclusion in 8 or 9 of the biggest cities you were financially further ahead by renting and investing the difference into an index fund. This of course leaves out the obvious factor of stability.
I’m predicting that homes prices will stagnate and be only up by inflation for the next few years. Predicting further into the future has too many variables. As mentioned expect the opposite of what you think will happen.
https://rationalreminder.ca/podcast
We should hit peak price for sfd in the core next year . With falling rates and no way to add more homes in a meaningful way it’s up and away
Price forecast is just for fun. Really should not impact a buying decision if you think prices will go sideways or up. A year ago I said good time to buy detached, unlikely to go lower than where it was then.
Reason not to buy is if you can’t afford it, or if you think we’re about to have a big price drop.
Third scenario is if you can buy a junky house now, is it better to buy or wait until you have saved more and can buy a better house? That’s where price trajectories factor into it and there’s a risk to take
These middle-income lottery winners aren’t buying homes either, it’s a 99-year lease.
Government should be leasing (99 year) these homes for social housing, so poor people with greatest need can live in them.
Poor people don’t buy homes
Agree, it just changes the balance of power somewhat so landlords can’t get away with everything. Return to rental incentives. Even back in 2012 the environment was so much better as a renter. We had a landlord following up with us offering a couple months free rent when we decided against renting their house.
Bigger impact is on investors I think. For 30 years we were in a situation where the only new rental supply was from individual investors buying condos and such. Totally different now. Last few years we haven’t noticed because of the extraordinary population growth. That’s over and we’re going to get to at least a much healthier rental market but maybe even on the slack side.
Of course that makes condos a tough sell for developers. With investment case lower they lose a good chunk of presale interest
OK idea, but wait, incomes up to $131k eligible, and there’s a “lottery” to see who gets these…yuk.
What happened to government helping those most in need (poor people), not helping some lucky middle income people via a lottery?
40% of the value on sale needs to be paid to government? That makes some sense. Not interest free, but lower risk to the buyer that way.
Likely will be zero SFH added in core Victoria for 2024…
YTD (Jan-July) in Greater Victoria, CMHC reports only 167 SFH housing starts, for an annual rate of 286. https://www.vrba.ca/wp-content/uploads/August-Sept-Newsletter-2024.pdf#page3
Most of those are westshore leaving maybe 100 SFH starts in core Victoria. But subtract SFH teardowns from that and we are likely close to ZERO net SFH added in Core Victoria. And there will be at least 3,000 more households added in Greater Victoria. Many of these are cashed-up from selling elsewhere and looking for SFH in Core Victoria.
Is there an election coming or something?
https://ca.finance.yahoo.com/news/b-c-first-nations-reach-174712061.html
If you are thinking you may want to own a SFH one day another thing to keep in mind
Number of SFH built in BC 20 years ago (2003) – 15,005
SFH built in BC 2023 – 6,332
2024 we are on pace for under 6,000 or the lowest since who knows when, perhaps a 70 year low? With the missing middle this trend will not change.
As I’m sure you know, my forecast for prices is “up, up and away”. Leo’s is different – “sideways for longer”.
And yes, if I’m right and (for example) house prices rise 10%, then affordability of average home would worsen. From 43% of income to pay mortgage to 47.3%. People who can afford to should buy before that happens as their home value would rise.
So doesn’t that go back to Marko’s point?
Assuming that longer amortization and lower rates have no effect on price. That’s a big assumption.
Condos would work good as inspection is not really required especially for newer buildings.
4.0% is already here!
I think it might impact brand new purpose built buildings but I don’t think it will have a large impact on the majority of landlords in Victoria. Reality is due to rent caps most tenants are renting below current market so even if your tenant moves out and there is a flood of purpose built rentals for rent odds are you can still rent for a higher amount than your tenant moving out.
BOSA is renting studios at Dockside for north of 2k (plus extra for parking) while I am renting a jr. 1 bedroom at Promontory with parking included for $1,750. If it peaked at 2.2k and then softens down to 2k I am still ahead when the tenant eventually decides to move out.
but yes, I am hearing rumblings from a few smaller developers that the uptake of their purpose built rentals has slowed substantially.
Yes. and with a 30 year amortization, and a 4.0% mortgage (likely here in the next few months), SFH affordability on your chart improves from 50% to 43%. And that’s just year 1 affordability. With every subsequent year after purchase, affordability for that buyer typically improves as income increases with inflation, and mortgage payment stays the same (assuming rates don’t change). For example, in year 10 after purchase, income is likely up 25%, so affordability for that owner has improved.
I know what you mean, but unconditional bids can work very well in slow market in terms of achieving the best possible price. I had two very successful unconditional offers with buyers over the weekend.
The best part, as I have learned in the last year, is you beat out other offers that are sometimes substantially higher in price, or if not a competing situation the seller takes substantially lower than their bottom line because the offer is “unconditional,” but it really isn’t unconditional.
I made a video on this topic a few months ago -> The art of the “fake” unconditional offer (aka rescission period) | Real Estate Victoria BC https://www.youtube.com/watch?v=ssPqw7K-o0M
Tend to agree. I’m not changing my baseline forecast (sideways for longer), but this fall looks pretty good.
Yes, and I’ve been saying that consistently here on HHV for 6+ years straight. For that matter, if you bought it to occupy and held it for >5 years, almost any time in the last 50+ years was a good time to buy a SFH in Victoria. And the next 50 will be no different.
As I detailed below, lower rates, higher incomes, increased insurance threshold to $1.5m, and 30 year amortizations are all working to improve affordability. So that a $125k household income family can afford ($3k per month, 29% of income) and pass stress test for a $750k home (which buys a SFH in most of Canada, and a nice 2bd condo in Victoria) https://househuntvictoria.ca/2024/09/16/feds-unleash-the-cmhc-floodgate/#comment-119915
Interesting. We’d be in massive trouble on housing supply if it wasn’t for CMHC rental financing which I assume they’re accessing.
I think people are sleeping on the rental market impacts of sharp decrease in population growth hitting very large completion numbers.
@vicREanalyst which property is that?
Prices are down, rates are dropping, Trudeau relaxing mortgage regulations and nothing has been done to address housing supply especially in terms of what buyers actually want to buy. The majority of housing starts are now apartments.
You’ll absolutely never time the bottom, but I am fairly confident that prices in 5, 10, 15 years will be higher.
Assuming you have a stable job and you buy in the next 12 months the worse is prices drop and your variable mortgage keeps dropping at the same time and your ride it out. On the other hand, you don’t buy and we see another leg up and you are priced out. Sooner or later the vast majority of the population will be priced out of SFHs.
The news out there is pretty bearish right now…Toronto condo market crashing, etc.
Also – actually time to think about the decision, rather than unconditional bids over ask and hope for the best.
~1.1M for a livable house with suite in the core and rates in the 4’s.
Marko’s right. Relative to the recent past, right now is a pretty decent time to buy.
“And millennials blame the foreigner, immigrant, rich people, and everyone in between for the housing crisis and high price instead of holding the policy makers accountable”
Asset owners lobby for immigration to maintain their assets and a large labor pool for their choosing. Asset owners lobbied for 30 year mortgages to further enable a draining of the middle class for their benefit. The only blame is on the rich and their inability to see that the middle class is a social lubricant worth keeping, short sighted. Why has the economy been in the dumps since 2008 and never recovered? Simple, erosion of the middle class is bad for the economy. Wealth inequality has never been more prominent in the G8 and the causes of this never so synchronized across multiple nation states, yet apparently millennials just don’t get it. Marko is a pumper. The real estate industry is full of high school drop outs.
Yeah right. Name the cities of 8 million with less congestion than Greater Victoria. Or maybe you meant only City of Victoria? In that case name the cities of 1.9 million with less congestion than city of Victoria.
I think Marko is fairly balanced, Patrick is the one trying to create FOMO if anything.
Speaking of bureaucracy, I listened to a snippet of this on the radio and it sounded really interesting:
https://www.cbc.ca/radio/ideas/bureaumania-corporate-red-tape-1.7321307
Looks like Marko is trying to create FOMO.
If the last few years have taught us anything it’s that the opposite will usually happen to what you think will happen.
One of the MMI projects I am following is just pure insanity (I’ve been complaining about bureaucracy when it comes to construction since 2011 on HHV but now it is completely off the rails)…….COV staff just keep re-inventing new comments every single re-submission. Builder has set a deadline in October and at that point he is pulling the plug on 10 rental townhomes in Vic West if no BP in hand.
After having the DP approved, working on the BP now for almost a year in a recent set of comments the storm water management person just drops this, amongst many other comments that weren’t brought forward in the last year during re-submissions of plans for the BP.
^Keep in mind he has a p. engineer working on the storm water management and a bunch of other very expensive consultants. This isn’t the builder/developer submitting paperwork he put together.
There is no hope. I’ve never been a buy now type personality but if I could afford to buy a condo/townhome/SFH/whatever I would make efforts to do so in the next 12 months. I think there is a good opportunity right now with the soft market and interest rates coming down.
Long term housing is just going to be an absolute disaster, imo.
Don’t know why these students can’t take most of the courses online. They’re going to end up working online, might as well get used to it.
And millennials blame the foreigner, immigrant, rich people, and everyone in between for the housing crisis and high price instead of holding the policy makers accountable.
https://monitor.icef.com/2024/09/canada-announces-updates-for-foreign-enrolment-cap-and-post-study-work-rules/
Also another announcement was made yesterday regarding international students.
Highlights:
1) Cap reduced further: the cap will be set at a stable level for 2025 and 2026 and will be set at 10% below the 2024 cap level. The idea is to reduce the cap ceiling from about 485,000 issued study permits in 2024 to 437,000 study permits issued in both 2025 and 2026.
2) Graduate and PhD now included: “The 2025–2026 study permit intake cap will include master’s and doctoral students who will now have to submit a provincial or territorial attestation letter. We will be reserving approximately 12% of allocation spaces for these students in recognition of the benefits they bring to the Canadian labour market.”
3) Limits on PGWP: international students approved for a study permit after 1 October 2024 – if they graduate from college certificate or diploma programs – will no longer be eligible for a PGWP unless their work is linked to areas of high labour market demand
4) Spouses’ work permit: Previously, the spouses or partners of students at the graduate level had preserved their right to obtain an open work permit. But later this year, the spouses/partners of master’s degree students whose programs are less than 16 months in duration will no longer be eligible for such a permit.
5) PGWP language requirement: A Canadian Language Benchmark (CLB) level 7 for university graduates and CLB 5 for college graduates will be required for anyone applying for a post-graduation work permit on or after 1 November 2024.
https://www.biv.com/news/human-resources-education/some-bc-universities-could-lose-tens-of-millions-a-year-due-to-student-cap-8441105 according to this article in March, “UVic’s international undergraduate enrolment for 2023-24 is the lowest it has been in over 10 years, at 1,130 students, 11 per cent of the overall student population. Tuition from international students made up approximately 33 per cent of total tuition revenue,” said a statement from the university.” That’s a really big drop from 2023! I’m very curious now at what the figure is for this year.
The online tenant notice generator is proving to be a huge pain. Too many things to list, first of all BCiED account setup….14 character min password requirement? lol, what public servant came up with that brilliant idea.
One set of clients I had to go over to their house physically to help them out.
Last night, a younger landlord filled out the majority of the data and then got stuck at buyer’s birthdays and a bunch of other non-sense (all info on person who will be moving into the unit – not sure if buyers or their child/parent) that we didn’t have as the buyer’s agent typically doesn’t send their clients IDs to the listing agent.
and you can’t save what you’ve filled out, lol.
Then when the system generates the notice you, as the landlord, are still responsible for delivering the notice to the tenant which still leaves the potential issue of the tenant saying that they didn’t receive the notice, or didn’t receive it on time.
Why not have an option in the generator where you can type in the tenant’s email and the system sends the notice to the tenant and keeps a record?
I am not sure what problem this notice generator addresses. How do the buyers’ birthdays help the tenant? Is the government going to be sending someone to knock on doors to make sure the buyers are actually living the unit?
Awesome mis-information in that post on Reddit, people have really bad agents or simply can’t read. To clarify, the building will be completed in the New Year; however, the developer is cancelling the pre-sale contracts and completing the building as a rental. It is not being abandoned!
I’ve advised all my clients to seek legal advice and preferably a law firm from Vancouver that has experiences with situations like this -> https://www.cbc.ca/news/canada/british-columbia/condo-contract-cancelled-developer-1.7112666
I’ve never been involved in a situation where the physical structure is actually being completed, but the contract cancelled.
I am going to make YT video on this scenario as it has been a poor experience for my clients waiting for the last three years. As I noted in the post below, I will not be recommending anyone buy any pre-sales from any developer in the future with the rare exception. Just not worth it anymore in terms of risk/reward. It made sense when pre-sales were cheaper than re-sales and completion delays were in the months not years, but such is not the case anymore.
Unfortunately, I think this is a really really crappy situation for the developer too. They had a massive showroom at Mayfair Mall (I believe built by Aryze) then another showroom plus salespeople for years. I am guessing they spent millions on securing pre-sales + massive construction delays (interest $$$), etc. It has not gone according to plan.
The City of Victoria also had a large contribution to financial viability and delays. The 1st phase sat completed for months while the developer, I believe, tried to phase out the development so they could register the 1st building at BC Land Title and convey the units to purchasers. The carrying interest costs while the building sat completed and empty must have been in the hundreds of thousands.
It simple sucks for everyone involved; developer (has lost millions), buyers (lost opportunity of deposit funds during inflation), agents (zero compensation after three years and this ended up being quite a bit of work due to a lot of amendments, issues, delays, answering a lot of questions from each buyer).
Good grief. Victoria isn’t even a big city, let alone the megalopolis you are imagining.
There are cities 20 times the size of Victoria with less congestion.
I wonder if the reason why Victoria is bucking the trend is more to do with the labor participation rate. We could be seeing the results of an aging population leaving the workforce along with slower population growth as people are leaving for better job opportunities.
Victorians could get very excited from examples like 1990-93, when BOC rates fell and Victoria SFH prices rose 37% in that time.
1990-93, BOC rates fell from 13 to 4%
Victoria SFH prices rose 37% in 3 years, from $179k (1990) to $246k (1993)
Especially ”exciting”, because this “bucked the trend” as it happened during a recession in Canada (1990-92) and house price crash (1989-96) in Toronto,
Victoria SFH Prices.. https://www.vreb.org/media/attachments/view/doc/2023_historic_summary_of_single_family_detached_sales_by_year/pdf/2023_historic_summary_of_single_family_detached_sales_by_year.pdf
Rates…
Some of that equity has evaporated now. If you want to treat RE as an investment then you have to focus on cashflow first.
My point there is that people shouldn’t get too excited about rate drops.
Then again, this was the next slide
Did you also point out how lower rates are good news for typical homeowners with mortgages, regardless if prices stay flat? By pointing out how much cheaper monthly house payments got for existing homeowners, when their mortgage payments fell when they renewed at interest rates that were half as high?
Using your examples…
—- Rates drop from 20% to 10%… monthly mortgage payment (20% mortgage) on renewal (at 10%) drops by 46%
—- rates drop 9% to 5%, monthly mortgage payment on renewal drops by 30%
—- 5 to 2.5%, monthly mortgage payment on renewal drops by 23%
And a greater portion of the monthly payment went to equity, vs down-the-drain interest.
psychology is the same, look at all the listings now since the rates started dropping
Times a changed , past downturns are no longer relevant in a modern world . Of course just one opinion amongst many
It’s funny that Aryze is also affiliated with a Mass Timber manufacturer.
yup that’s what happens.
Man they started as mass timber and then switched to concrete. Years ago I was on that site, lots of geotechnical issues.
From a presentation I gave this week
Continue?
Peter, agree no reason not to do 75 points before Christmas. Cant go wrong going big , QE here we come
I’ve seen several universities from the inside and I don’t think they have anything on the RE cabal for delivering minimal results for maximal outlay.
Mind you that’s the science/engineering side, can’t speak for the other side which appears to be the model for the university knockers.
With our unemployment rate? I don’t think so. I’d bet money on him cutting by 0.50
I wouldn’t be surprised to see Tiff hold the BoC rate until the new year now to see how the new lending policies play out on the economy.
Nice to see the feds dropping a half point . Starting to read some feel good stories around real estate . A half point cut next month and sales should continue continue to rebound
Well, after a decade of crashing investment in anything that produces, the government has fumbled itself into crashing money going into education. The irony is the anti-investment and anti-business folks at universities that have influence in government have really just done it themselves. The even funnier thing is the only organizations that or more bloated, inefficient, non-agile and wasteful than government is probably universities. Get ready hear the screams of the need for massive influx tax dollars or students will face massive tuition hikes. The answer should be: no more tax dollars, and direct the universities to get their own houses in order. I believe Laurentian University had a model where they didn’t change its habits believing it wouldn’t be allowed to fail. Oh well, nothing builds efficiency and the fixing of bad union contracts and poor spending management like a bankruptcy reorganization.
Yes, new foreign student numbers are down across the board 30-40%. Numbers went down even in areas unaffected by the cap (master’s and doctoral degrees). https://monitor.icef.com/2024/09/canada-mid-year-data-indicates-that-international-student-commencements-could-drop-by-nearly-50-for-2024/
Money dysmorphia is why some wealthy people don’t fee like they’re rich. They have a distorted view of their finances with anxiety over not making enough money.
A study of 1,000 people making in the top 10 per cent of tax filers, 25 per cent described themselves as “very poor, “poor”.
I guess they live in the poor area of Beverley Hills
Whatever:
The way it was described to us is this. After the 2023-24 year began, some enrollment target was drawn up for the following (’24-25) academic year. The claim we heard yesterday is that the international student target for this year was met. First time in a few years that has been the case.
Leo:
Here’s an observation from your numbers: (2019)/(2023) = 1.55.
The big impact is likely the closing off the pathways work and residency post degree. Tough to imagine investing the time and money in education in a country where you’re unlikely going to be able stay in.
4.9/5 on ratemyprofessor, nice!!
Apparently this is for the whole university? I will try to get some more solid data on this.
For what it’s worth, the first year class I’m teaching is bigger than ever. Overall enrollment looks to be up so whatever drop in international students seems to have been made up with more domestic students.
In the publicly available data, they snapshot it in November for total international enrollments. Previous years seem to be
2019: 2,826
2020: 2,596
2021: 2,515
2022: 2,179
2023: 1,832
That’s a vacuously true statement by your department as it is dependent on the last revised target.
Leo: Really? We just heard in our department meeting yesterday that international enrollment for the current academic year met their target..
(It would be kind of hilarious if I learn more about what’s going on here through HHV than through official channels.)
U.S. Fed just cut half a point.
The oil and gas industry is also subsidized. Heavily.
Absolutely. That’s why I said partially. Government subsidies without the creative, scientific, engineering geniuses actually inventing and building things would accomplish nothing
What does this translate into in terms of how many less students, approximately, are in Victoria physically as a result?
International student enrollment at UVic apparently down 55%. Not due to caps, due to lack of interest from students (geopolitical impacts).
In my opinion Tesla and the subsequent EV market that followed would have made it without government subsidies. The product/concept is simply too good. Sure, they would have grown slower and so would have the EV market but once Tesla rolled out the Model S in 2012 I don’t think there was a chance EVs would not make at it at that point – it was the car of the year in 2013.
Did it? It seemed to really take a crazy guy who built a better product, marketed and then the competition moved to keep up because the market demand was created. No amount of government subsidies can make a poor product desirable or successful. How’s your Bricklyn, DeLorean or Ballard fuel cell treating you?
Affordable EVs exist partially because of a phase of heavy government subsidies.
Likewise for affordable solar.
And government policy for the fact that you can hook your solar to the grid.
Ya, about as much and the same as that enviro marketing had people feeling good about themselves with their Eco Volkswagen and BMW diesels a decade ago or so ago.
Kristan, if you haven’t already, also sign up on the provincial online registry. Saw this in the newspaper today:
Almost 250,000 B.C. patients matched with doctors through registry: province
https://www.timescolonist.com/local-news/almost-250k-patients-matched-with-doctors-through-registry-province-9535957
So you have something (a lawn) that requires significant watering, provides nothing for the ecosystem, not ideal for wildlife, requires chemical to kill weeds., etc., but you’ve made a pro-environment choice on the type of mower.
My parents have a small boat with a 6 hp Yamaha I use to get around the Island in Croatia. I am looking at electric options right now, not because I want to change my “behavior” but because it is a pain the in ass going to the gas station. Not to mention the noise, vibration, etc. A lot of electric items these days are simply better products in the first place.
Put money in the hands via well paying jobs and sooner or later they will naturally gravitate towards the better products.
I love walking but I also have enough money to afford a condo in one of the best cities in the country in a very desirable location so yea it is easy for me to walk around/bike around/etc. I also enjoy walking and feel way better when I can get my 20,000 steps in.
But if my budget was a rental condo on Sooke Rd and I have to work at Amazon warehouse in Sidney or I am living in Edmonton working at Walmart on the other side of town probably not walking/riding my bike or driving a Tesla.
Or it can simply be buying the best possible product that makes sense. My decision to purchase my first Tesla nine years ago has nothing to do with ideology or wanting to change my behavior, I simply thought it was the best product on the market. My parents have solar panels on their house in Croatia and it just makes economic sense, the decision wasn’t driven by a desire to change behavior either.
Humans wouldn’t last one week living like an animal. We’ve lost all our adaptations to the environment. Unlike wildlife, we require permanent shelter, heat, clothing, and food delivered to our door to survive. That all requires an enormous amount of energy to provide.
Marko, I would disagree with you, I remember reading an article over 20 years ago about how bad gas lawn mowers are for the environment and I needed a new mower and so bought an electric one, I also like riding bikes for my errands and keep a bucket for old batteries to recycle instead of throwing them in the garbage and other things like that so some people actually do care about the environment. I think most people just have very little awareness of their impact and or don’t care.
Driving a Tesla (or other EV) or installing solar panels IS changing your behaviour.
Sums everything up nicely, I’ll add that dog food randomly appears by magic on shelves 🙂 but how could Charlie ever be bad for the environment, he is so fluffy.
and of course my family flying to Mexico or Hawaii and a trip to Toronto to see family that is totally acceptable, what isn’t is the people that fly three times a year.
There is ideology and then there is reality, reality being the poster that posted on HHV a few months ago that he and his wife needed 3,000 sq.ft. for media room/entertaining etc. Not trying to pick on that poster but that is simply reality. No one actually wants to change their own behavior they just want to virtue signal with their Tesla and solar panels on their SFH.
It is already here for some borrowers, uninsured at that.
Big improvements incoming for housing affordability for FTB Canadians, with lower mortgage rates and 30 year amorts available. It should make average homes affordable to $125k household income FTB Canadians. As detailed below.
5 year mortgages are very likely headed to 4.0% in the next few months.
When that happens, many more homes will be affordable to a FTB household with $125k income. Median household income for dual-income Canadian household in 2022 was $116k in 2022, so $125k seems like a reasonable number for FTB homeowners. https://www.statista.com/statistics/465750/median-annual-total-income-of-dual-earner-families-in-canada/
With a 4% mortgage, and $125k income, and a 5 year/ 30 year amortization mortgage, you can borrow $630k and pass the stress test. And pay an affordable $3,000/month mortgage, which works out to a reasonable 29% of household income.
Borrowing $630k + $120k down means a $750k home. Thats close to the average SFH price in Canada, which is $790k in August 2024. In Victoria, $750k gets you a nice 2 bdr condo, but that’s still an affordable home for a $125k income household. The households with less than $125k income should look among the 50% of homes that are priced below average.
Yeah, all those SFD home owners with kids destroying the planet. Along with anyone who has ever flown anywhere, driven a car, eats meat or owns any products that has been shipped from over seas… What a bunch of dirtbags! Oh, wait a minute……
The rich should feel ashamed, as study after study concludes that they pollute many times more than everyone else.
https://househuntvictoria.ca/2024/09/16/feds-unleash-the-cmhc-floodgate/#comment-119903
This comment made me think that at least part of the conversation on climate change is supported by poor people who think that “if I can’t have those things, neither should you”
A new way to make rich people feel bad for being rich if you will.
The province announced on September 13th the opening of 97 rental homes at a James Bay site known as Michigan Square. Studios to three-bedrooms. Rents are to be in the $1770 to $2,800 range ($3.65 to $3.18 per square foot) . The 97 units replaced an old 53 unit apartment building that was at the end of its life span.
The costs to build (not including land) from the province, federal and city government worked out to about an average of $350,000 a unit to build.
for the most part
Don’t you have rental properties in Croatia? I find it normal for a responsible landlord to go check on them atleast once a year.
Our family doctor is usually two days for a phone appointment (which works very well for my family). Three days for an in person appointment. I think phone appointments are really the way forward. Its way less taxing on him. What can he really do for you in person anyway that he can’t already see from your history on his laptop?
He can refill prescriptions, arrange specialists, surgeries, scans, etc… All over the network in a fraction of the time it would take him for an in person appointment.
Just do your own dentistry and save a lot.
https://youtu.be/L1JR-9Z5ORE?si=3jvDxnaXgKiaeD1c
Absolutely not, but for whatever it worth, people are going to vote with their wallets and get the procedure done where it is convenient.
Flying to Croatia to get your teeth done. Great climate choice, smdh.
Rich people generally don’t like being classified as rich 🙂
Not able to claim that for dental work for sure. Perhaps some medical procedures.
https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/lines-33099-33199-eligible-medical-expenses-you-claim-on-your-tax-return/details-medical-expenses.html#trvlcnd
on the basis of?
Crazy times out. My buyers just received letters from a developer that after 2.5 years of construction the building is no longer viable as condo project, the pre-sale contacts are to be cancelled, and the developer can only finish the project as a rental building due to financing issues.
I was a huge fan of pre-sales 10 years ago but I am swinging 180 degrees. I can’t see myself recommending anyone buy a pre-sale (in particular condo) going forward. The prices are higher than re-sales, the construction delays can be in the years, and looks like we are going to start seeing failures to complete and the buyer has lost the opportunity cost of that deposit sitting in trust for years (deposits are protected so you do get the deposit back).
write that off for CDN income tax too.
I had a root canal + crown done in Croatia for 800 euros and my dentist in Victoria was impressed with the quality. State of the art clinic with many dentists trained abroad -> https://dentum.com/en/about-us/dentum-expert-team/
4.9/5 google review on 771 reviews.
I often find flights to Croatia roundtrip with KLM for $1,100 CND. Obviously inconvenient but flight + hotel + cost is cheaper than the cost of a root canal + crown done in Victoria.
It doesn’t have to be super cost prohibitive. I am sure many options in Mexico and more convenient.
Full annual physical costs me 200 euros and then cardiology work-up/consult every year another 150 euros (I have high cholesterol, few minor things, etc., which I like to keep on top).
I’d say it is the middle class option these days. Rich people go to the US. Bigger money gets you the Mayo clinic or a quick trip to Seattle for a knee replacement with no wait. Same with cancer treatment.
Sorry!
Rent in B.C. communities declined after short-term vacation home rules were implemented, report finds
https://archive.ph/kCIOE
Of the major Canadian metro centres, residents of Greater Victoria enjoyed the shortest average commute of 20.5 minutes, an 80 second decrease in average commute times compared to May 2023, according to Statistics Canada.
https://www.timescolonist.com/local-news/victoria-remains-in-the-lead-for-commuter-cyclists-in-a-canadian-city-9437773
I don’t know if this finding from Stats Can corresponds to what people are experiencing. I commute by bike so the only way my commute is getting faster is if I get fitter.
To some extent it’s a binning effect but yes my eyes twitched when I saw that too. 🙂
No, because it’s open ended compared to the other intervals which are only $50K wide.
Is anyone else weirded out that the most popular segment in that graph is over $2m? That’s not typical is it?
Why not Washington State, which is a good deal closer. Answer I think is that it’s easy for you to outbid the locals over there but not next door. Likely nothing magical about their medical systems, it’s just that the countries are a lot less affluent.
And there’s nothing at all new about medical tourism, although the countries and procedures vary over time.
lol
This was meant for the “highly paid” remote big tech workers.
Apparently, B.C. added 708 family doctors over the last year.
https://bc.ctvnews.ca/b-c-has-gained-708-family-doctors-over-the-last-year-here-s-where-they-re-working-1.6772815
Of course, that doesn’t seem to be enough, as Kristan and so many others still don’t have a GP.
But we’re going in the right direction if numerous news articles/editorials in other provinces citing the loss of healthcare workers to B.C. is any indication.
You don’t have to be rich to access healthcare in another country. Lots of people who vacation in places like Mexico save thousands of dollars on dental work done at a fraction of the cost here. Pays for the vacation.
Thanks!
And no, I don’t think Poilievre is going to save the day. These are big problems across scales that will likely take a decade or two to resolve. But I do agree with Marko that there’s far too much excuse-making and ideology.
Is this supposed to be some kind of “gotcha!”? I’ve worked remotely for 12 years. It’s going better than I ever imagined it would. The pendulum between office and remote has been swinging long before covid. They’ll switch when they can’t convince workers to move to high cost-of-living urban centers anymore. Then they’ll switch back when tech layoffs give them the luxury of doing so.
Leo and all YIMBYs better hope that the BC Conservatives don’t get elected in October!
Rustad says he wants to end the BC NDP’s “authoritarian” approach on density and zoning.
https://www.biv.com/news/real-estate/put-it-down-in-writing-eby-says-housing-specifics-needed-from-rustad-9518868
Yes, it is. Plus, the older one gets, the easier it is to get overwhelmed by simple things and just give up – I wouldn’t be surprised if older people who maybe don’t have a reliable family doctor just give up first time they try this 8:01 thing, and then they either do nothing, or go clog up the ERs. I also wouldn’t be surprised if this increases overall morbidity.
On the other hand, last time I had communications with Island Health via email, they did upgrade their land acknowledgement to say now that we’re not just acknowledging being on ancestral lands but grateful for being “guests” here – so we know they’re spending money on something. It’s strange, because if I were a guest, I don’t remember being invited, and I’m pretty sure I’ve overstayed my welcome.
I think the current state of affairs is a national disgrace.
In 2023 (I think), weren’t BC family doctors given some huge raise, and is there anything that shows whether this has improved outcomes, eg in terms of the number of new family doctors, accessibility etc? It was a lot of money, and I’m hoping we are slowly seeing something measurable for it?
I come back to my simplistic solution: charge a nominal user-pay fee (say $20) per visit to the clinic. Means-tested if you like. The $20 goes to the clinic, but only if they implement full “normal” walk-in hours of say 4-5 hours per day without appointment.
Sorry to hear that. I hope it works eventually.
BTW, you don’t think Poilievre is gonna solve all your/our problems, do you?
Until reading this blog, I never realized how common it is for rich people to pay for private healthcare and go out-of-country for tests/procedures.
Apropos of that, I’ve been on the “Find a Doctor BC” service you suggested for over twelve months now without success.
—
Regarding pushing up CMHC, out of curiosity does this have any impact on uninsured interest rates for <1.5m purchase price? (Before now, there are discounts for both insured and <1m ; not sure if those are related.)
Ick
Marko’s ramblings sounding more and more like Pierre Poilievre political ads.
I am not making excuses for Canada. Our health care system used to rank with the best and is now only middling. And the immediate trends are towards further worsening. And we pay a lot for our mediocre system. So no “excuses” here. I challenge however your assertion that medical care in Vietnam is better than here even though it is pretty good for a third world country. Good for medical tourism is different than good for the residents that live there.
Tolmie, bike lanes get a lot of criticism but apart from the decison to mess up Richardson St (I believe done to give oak bay the finger), the COV is 100% on the right track with putting bike lanes everywhere, if were going to grow you cant keep addings thoundsands of cars a year to the road in Victoria and not expect total grid lock in the future, its just common sense. I would bet if more people tried biking they would be healthier and really enjoy it but we make it too easy for poeple not to change their habits.
The next step should be changing all roads to 30 km/hr for safety and calmness and charge a toll and high licence fees to drive in the city, cars days as the primary source of transporation and dominating the roads will slowly and gradually come to end and we will be a healthier, happier and fitter for it. No this does not mean that everyone has to ride a bike all the time.
I guess Canada is not the land of milk and honey that we think it is.
I believe much of the congestion is an intentional result of ideology at city hall. Road diets, and such.
The preventative care is the key term. How much of peoples quality of life is impacted and ailments that could be easily rectified by earlier intention instead of waiting untill it becomes a crisis or emergency to treat? I really enjoy how something is classified as “elective” unless you are immediately dying from something in the moment.
Totoro, agree u need to fund health for yourself and be willing to pay . Harrison has been great , and if I need a mri or something I just pay for it . I would not want to be a poor putz in the public system
Tesla got me to drive a Tesla by building an exceptional product. The time saved by not having to service the car a couple of times a year, not having to go to gas stations, etc., amazing tech, is worth a lot more to me than the implications of the carbon tax. Same applies to rebates. I just received 8k worth of EV rebates….I would have bought the car without the rebates as well.
As I said if you put money into peoples hands by creating high paying jobs they would by Tesla Cybertrucks and other high-end products sans carbon tax. Or you can carbon tax their gasoline pick-up trucks but doubt that will lead to less pick-up trucks or more of those owners riding bikes.
As per the article below there is ideology and theory and then there is reality.
No – System is ridiculously bad for access. People can’t get family doctors and that’s not due to addictions. Referrals to specialists can take more than a year.
We pay privately in Canada and go overseas. You can be seen same day by specialists trained in the US for an affordable price in Malaysia and Thailand. Tests done in the am and get the results in a few hours.
Better save more for retirement and keep your passport valid if you want good, timely and preventative health care.
Got you to drive a Tesla. What’s the total % of EVs in Victoria these days?
You’re missing the “city governments” reference in the first sentence. It’s about the effect of municipal bans, most notably City of Vancouver.
Didn’t the AirBnb ban go into effect May 2024? What am I missing?
Carbon tax must be working really well.
I have to drive around for work, but unless work related grateful I live in a super walkable location. Averaging just a tad over 20,000 steps/day – top 1% according to Samsung Health 🙂
I’ve started doing downtown condo showings on foot. I can typically get faster from building to building on foot than my clients can drive + find parking.
If your wondering why traffic is much worse in Victoria and Vancouver Island then in the past it’s simple there are way more cars on the road outpacing population growth.
I absolutely hate driving around town these days and only drive when absolutely necessary and take a bike instead, I say keep building the bikes lanes!
https://victoria.citified.ca/news/car-ownership-on-vancouver-island-continues-to-outpace-population-growth-and-greater-victorias-love-for-cars-continues/?fbclid=IwY2xjawFWWzFleHRuA2FlbQIxMQABHX1HFpceW0nGgKzW9OPqxRs-g9xHshQtb4ACfIXKcZ3RClch-c6siQXIGg_aem_4zqpmBw2E3DsAR9wRic4zw
https://www.theglobeandmail.com/canada/british-columbia/article-rent-in-bc-communities-declined-after-short-term-vacation-home-rules/
What about drug abuse in Southeast Asia? I believe they have very strict laws (unlike Canada). Our health care system is overburdened by drug addicts needing overdose treatment dozens of times a year. I have M.D. friends that confirm this. This wastes so much precious time and resources in our system. It also greatly contributes to doctor and nurse burnout having to deal with the combative and violent nature of some addicts. One of my oldest friends has been an ER doctor in an inner city hospital for over 40 years. He has seen it all. We don’t discuss it much (he’s not allowed to) but the few nuggets of information I get tell me that our system isn’t broken, Canadians are broken.
Most Vietnamese males are heavy smokers at 72.8% of the population, 19% of all deaths are cancer and lung cancer is the leading cause. Traffic related death in VN is 30.6/100,000 (Canada 5.3/100,000), diabetes is reported to be 6.1% of the 20-79 year old population, and obesity rate is 3.6% of the population (Canada obesity rate is 27.23%. My BMI is 24.1).
Sorry for the long rant, but the crux of the matter here is that a second rate borderline third world country somehow manage to have good access to professional physicians, and we rank within the top 10 wealthiest country in the world that somehow manage to provide mediocre access to medical professionals.
https://www.worldeconomics.com/Wealth/Canada.aspx
caveat- I believe people in Southeast Asia are heavy smokers, maybe QT can verify. Do they also have the obesity rate as North Americans?
Marko- Why would someone take a lower unconditional offer? Are they afraid they will find something wrong with their property? And how much lower, in general, are the unconditional offers.
Quality product in that 1 mill to 1.5 mill range in the core still in demand. Over the weekend one of my clients ended up in a four offer situation and another set of clients in a five offer situation. Got both properties for very reasonable numbers given the number of offers. There are buyers going substantially above asking, but conditional so right now lots of properties not selling to highest offer as sellers opt for much lower unconditional offer.
Essentially the 100k+ over ask unconditional is not common anymore in bidding wars.
I think there is some merit to that statistics from a month ago noting 20% of sellers not taking the highest offer.
Croatia is a bit behind Canada; however, if you adjusted for some cultural factors such as everyone smokes and drives like a lunatic (much higher road fatalities) life expectancy would probably be on par with Canada.
In my opinion it is beyond comprehension how bad health care is in Canada when you compare to a country like Croatia and Vietnam.
Phoning every walking in clinic at 8:01 am and hoping you are lucky enough to get through to obtain an appointment is just insanity.
This in a country with an abundance of natural resources. We should be one of the richest countries in the world with world class health care.
You are absolutely right, however I am still able to see a doctor whenever I like and get the medical attention that I needed (without waiting and shy of begging for the service in BC) from a poor developing country that has a GDP of $4400 USD per person.
Not long ago Vietnam was destroyed from wars and embargoes from the West that lasted till the mid 1990s. Male life expectancy for Vietnam was 27.5 years up till 1975. While the Canadian male was 70 years in 1975, and was slightly over 80 years by 2019 and is dropping rapidly to 79 in the last 5 years or so.
It is sad that you are making excuses for a wealthy country such as Canada with policies that breed complacent and tardiness instead of holding it up to higher standards. And, it is a very low bar to set for Canada a country that has a near zero extreme poverty rate (Canada is an extremely high tax socialist country) to a country such as VN that had an extreme poverty rate of 80% in 1980 and 5% presently.
Add:
Honestly, it is much quicker for me to buy a plane ticket and fly 12,000km to VN to see a specialist (doable within 48-72 hours or less), than waiting often a week to a month to see my family doctor here in Victoria let alone specialist, and luckily I have a family doctor. And, I can only imagine how difficult it would be for people without a family doctor.
Mid month rental market for downtown condos averaged $2,279 per month. Renters comprise two out of every five Canadians. Ranging from a low of $,1650 for a studio to $3,750 for a two-bedroom in the new “Nest” which includes parking and Wi-FI. Which is way too much relative to similar units for rent in the Hudson at $2,925 including parking or the Yello at $2,695 or the Wave at $2,650.
Despite three interest rate cuts since June, Ottawa (Reuters) stated that Canadian consumers still appear to be feeling more stressed than than their neighbors in the excited States of America.
The persistent financial pressure reflects the vagaries of the Canadian mortgage structure, a surge in rents and heavy debt load carried by many households. All three have crimped disposable incomes.
With more mortgage renewals coming up and high population growth to put more upward pressure on rents, analysts and economist say Canadians will feel stressed well into next year and after, keeping economic growth muted.
Canadians are spending less showing consumers are reeling under the burden while Americans are spending more. For homeowners with low-interest loans now coming up for renewal, they can expect their payments to jump, even with the Bank of Canada’s current series of cuts. About $400 billion worth of mortgages are set to renew in 2025. The 2025 figure is more than 30% of the value of mortgages being renewed this year.
10 years behind Canada in life expectancy ( 73 vs 83) so thinking it might not be all roses in Vietnam either.
I wouldn’t be surprised at all to see the full time telework option disappear and see the BC Gov landing somewhat near the feds where remote workers have to be in the office three days a week.