Revisiting holding
I’ve written about the returns in Victoria real estate by holding period before, but it’s already been over 5 years so it’s time for an update. First, a quick review of price trends.
For single family houses, inflation-adjusted prices have increased by an average of 3.9% per year for the past 65 years. Nominal prices are substantially lower than the best fit exponential trend in recent years due to high inflation before 1990, but between 1960 and 2024 we have a CAGR of 8.1%.
For condos we only have price history back to 1978, but in those 47 years, inflation-adjusted condo prices rose 2.8% annually, or 5.4%/year in nominal terms.
While prices have been generally going up in Victoria over the long run, there have also been periods of flat or declining prices. In addition, transaction costs for real estate are extremely high (with selling fees and taxes adding up to around 5%), so even when prices are rising you can end up losing money if you buy and sell.
While long run price appreciation is best measured in real dollars, the reality is people think in nominal dollars, and often want to know what the chances of losing money would be if they buy today. Well no one knows where prices will go, but we can look back at the decades of data and see how long it has taken in the past. The below chart shows the change in average house prices for holding periods between 1 and 8 years (which is the minimum holding period where there have been no losses in Victoria). Of course the average price does not represent the value of any given individual house, but it should be a pretty good proxy factoring out any changes in home condition.
Put another way, for houses if you’re:
- Holding for 1 year, you would have lost money money 41% of the time.
- Holding for 3 years, you would have lost 19% of the time
- Holding for 5 years, you would have lost 15% of the time (but only if you bought in 1981 was that a significant loss)
- Holding for 8 years you would be entirely safe.
What about for condos? It’s a similar picture, though condos have not done as well as houses overall, and we had a uniquely prolonged period of price weakness in the 1990s due to the leaky condo fiasco. To avoid price declines in condos, we have to go to a 10 year holding period.
For condos if you’re:
- Holding for 1 year, you would have lost money money 56% of the time.
- Holding for 3 years, you would have lost 39% of the time
- Holding for 5 years, you would have lost 26% of the time
- Holding for 10 years you would be entirely safe.
Realistically though, “not losing money” is a just an arbitrary psychological barrier. Unless you are at risk of the loss being financially problematic for you, it should not really affect your purchasing decision. Reality is, the more you buy and sell, the more you burn in transaction costs, and it doesn’t matter if you made money on the sale or not. If you bought a house in 2010 you would have broken even 5 years later. If you bought in 2015 you would have walked away with nearly $300k in 5 years, but the transaction costs would be gone in both cases. Like in equities, minimizing costs and thinking long term is likely to yield superior returns. More important than satisfying the human bias of loss aversion, holding for longer is the way to bring those costs down substantially.
My advice: Plan for 10 years and if something goes sideways after 5 you’re likely still to be in good shape. Sounds like common sense, but the reality is a large proportion of properties are sold and resold much more often.
Also the weekly sales:
| October 2024 |
Oct
2023
|
||||
|---|---|---|---|---|---|
| Wk 1 | Wk 2 | Wk 3 | Wk 4 | ||
| Sales | 140 | 282 | 412 | 407 | |
| New Listings | 271 | 533 | 773 | 1100 | |
| Active Listings | 3239 | 3220 | 3209 | 2756 | |
| Sales to New Listings | 52% | 53% | 53% | 37% | |
| Sales YoY Change | — | +54% | +55% | -15% | |
| New Lists YoY Change | — | +1% | +1% | +10% | |
| Inventory YoY Change | +19% | +18% | +26% | ||
| Months of Inventory | 6.8 | ||||
Pretty steady last week both in new listings and sales. We are still running over 50% ahead of last year’s sales pace, and about even on new listings. Last October was a pretty strong month for new listings, but not a record, while sales were very slow as discussed last week.
The difference between this year and last is also clear from the weekly sales to list and months of inventory calculations. While last year saw an increase in months of inventory (weakening) in October, this year there is a clear dip (strengthening)
The central bank will be dropping rates again on Wednesday, quite possibly by half a percent (some even expect 0.75%) this time. Inflation came in well within the target range and that joins weak economic data on all fronts.
It’s worth remembering that even after a 0.5% drop to 3.75%, the rate remains above the neutral rate, so it would still be expected to drag on the economy until it is cut further.
Source: Trevor Tombe
Economists like to talk about the lagged effect that rates have on our economy. In other words, rising rates won’t really be reflected in the economy until 18+ months after they go up, and similarly we shouldn’t see the stimulative effects of dropping rates until later. While I’m sure that’s true in a broader sense, it’s not necessarily the case for real estate. Sales dropped off a cliff nearly immediately after rates rose, and I think it’s because affordability was already so poor that buyers simply couldn’t swing higher payments. Will the market similarly firm up quickly as rates drop? In the past it didn’t. Though sometimes sales bounced back when rates dropped, prices in past corrections stayed flat or down for longer despite lower rates. Perhaps one difference this time is that the economy seems to be somewhat more resilient for the time being, especially in Victoria. We’ll have to see if that lasts.
It works the first time but if you edit the post it stops working.
https://www.eia.gov/tools/faqs/faq.php?id=727&t=6
New post: https://househuntvictoria.ca/2024/10/28/feds-slam-the-immigration-brakes-whats-the-housing-impact/
Thanks.
This is not true. US is the largest oil producer in the world at more than 13 million barrels per day, but it consumes ~ 20 million barrels per day.
This is how it works
Owners of 22 former short-term rental units in Victoria have filed nine lawsuits against the province, arguing legislation limiting the strata units’ use amounts to expropriation and owners are due compensation.
Those locations include 608 Broughton St., 760 Johnson St., 601 Herald St., 613 Herald St., 27 Songhees Rd., 1310 Waddington Alley, 751 Fairfield Rd., 409 Swift St., 528 Pandora Ave., 534 Pandora Ave. and 595 Pandora Ave.
Five of the cases represent owners with one unit each, one owner has two units, another has three, one has five and one has seven
This may be an interesting case to follow as the property, which consists of land and improvements (in situ) was not expropriated. The owners still retain ownership of the real estate. What has changed is the business component.
For lending purposes the lender only wants to loan on the value of the land and improvements (Real Property). If there is a business component the value of the business as well as furnishings are to be excluded. This is the problem I had back in 2021 as these properties were selling at a premium over their land and improvement value. I found it easier just to decline these assignments than face a barrage of emails from lenders, brokers, and agents of why my assessment was under the sale price.
If they want to lend on the business then they should hire an accountant to perform a valuation of the business. One would be looking at the difference in the airbnb income over that of a month to month tenants and I suspect that there is no goodwill as the airbnb or other platform ratings are not transferable to the next owner, but I’ll let the accountant figure that one out.
@ Leo S
I know you’re about ready to turn the page. I used to be able to quote. Now I can’t. This was the tag I used to use and it always worked perfect. I’m running the latest and greatest Mozilla Firefox browser with ad block pro and the “no auto pause” in youtube/netflix plugin extentions.
Any ideas?
Thanks.
Whateveriwanttocallmyself
I would not click on a YouTube link in which the poster has stated nothing about its content. Would you?
https://youtu.be/jGtR9t4_nS8?si=H5cSYs_Fnhknj9oH
@Thursty “Max , I think you’re on to something , I will sit on a bench eating a sandwich and enjoy Victoria’s beautiful waterfront from clover point”
Exactly. Just think of all the park benches you can enjoy with all the 25 point rate cuts coming at us throughout 2025!
@Whateveriwanttocallmyself “As at noon, the NDP was elected or leading in 47 seats while the cons are at 44. Greens still at 2.”
Well, I’m not going to be a sore loser here…Congratulations NDP. Now finish what you started and get shit done. Its very obvious just how divided this Province has become!
Max , I think you’re on to something , I will sit on a bench eating a sandwich and enjoy Victoria’s beautiful waterfront from clover point
As at noon, the NDP was elected or leading in 47 seats while the cons are at 44. Greens still at 2.
@ Thursty “Just have to juice asset prices with cheap easy credit and all of Canadas woes will disappear.”
Totally. When that 50 point rate cut comes in December, you should pick a different park…Just for demographics.
Just have to juice asset prices with cheap easy credit and all of Canadas woes will disappear.
@QT “unnecessary environmental pet projects”
“Earth’s climate has changed throughout history. Just in the last 800,000 years, there have been eight cycles of ice ages and warmer periods, with the end of the last ice age about 11,700 years ago marking the beginning of the modern climate era — and of human civilization. Most of these climate changes are attributed to very small variations in Earth’s orbit that change the amount of solar energy our planet receives.”
“In the last 3 years oil price hover between $75 and $124 USD, and the CAD worth roughly at the same level as 1993-1997 when crude oil was $43 or less. Personally, at the current oil price I expect the CAD to at least worth $0.82-0.92 USD if NIMBY untie the resource industry hands that feed it.”
The US became a net exporter of oil in October 2019. As is Canada of course. Thus we would not expect oil prices to affect the CAD-USD rate as it did in previous decades. In particular, the USD was affected greatly by the 1970’s oil crisis.
A distinction should be made between subsidies that are “pro-developer” and “neutral to developers”. Which is not acknowledged in your sarcastic reply “oh good, another buyer side subsidy”
In this case, the proposed subsidy is “pro-developer”. Because it means no 5% federal sales tax on new homes under $1 million. If you are a developer, it means good news and likely will lead to some combination of higher prices, more sales for you. Which also leads to more development .
Wheras other “subsidies” like rsp withdrawals apply to any home purchase, so don’t preferentially help developers sell their new homes, and encourage them to build more.
“At the height of the commodity boom, the Canadian dollar reached $1.06 (US) on July 21, 2011. It then experienced its fastest decline in modern-day history as commodity prices rapidly deteriorated.”
In the last 3 years oil price hover between $75 and $124 USD, and the CAD worth roughly at the same level as 1993-1997 when crude oil was $43 or less.
Personally, at the current oil price I expect the CAD to at least worth $0.82-0.92 USD if NIMBY untie the resource industry hands that feed it.
PS. I just got back from San Francisco city and it progressive policies has rotten the core. The city center is completely empty of people and tourist except for straggling vagabonds and the wafting human excrement in the wind.
@QT “1975 exchange rate was $1 CAD = $0.98 USD”
“At the height of the commodity boom, the Canadian dollar reached $1.06 (US) on July 21, 2011. It then experienced its fastest decline in modern-day history as commodity prices rapidly deteriorated.”
https://cclfg.cclgroup.com/insight/se-history-of-the-canadian-dollar/
“Qt, 50 point cut in December is my gut feeling , but sure could be wrong . Interest rates are still too high need to be chopped in half”
IMHO, poor economic forced the BoC to drop rates otherwise it would keep high interest rates to attract foreign investment.
Canada GDP growth has been growing at an anemic rate at roughly half the rate of our Southern neighbor.
1975 Canada GDP per capita was $7,537, and the US was $7,801 USD.
2023 Canada GDP per capita was $44,388, and the US was $81,632
1975 exchange rate was $1 CAD = $0.98 USD
Current exchange rate $1 CAD = $0.72 USD
@QT” That is just lips service, because the government is cash strap with a large public sector, unnecessary environmental pet projects, and unproductive social services.”
You nailed it 🙂
Qt, 50 point cut in December is my gut feeling , but sure could be wrong . Interest rates are still too high need to be chopped in half
Westerly , I agree I think it’s just a ploy , can u imagine the sad sack headlines if folks are forcefully being removed , oh my
I hope you are trying to be sarcastic, because the BoC wouldn’t need to goose the economy with rate cuts.
That is just lips service, because the government is cash strap with a large public sector, unnecessary environmental pet projects, and unproductive social services.
Patrick, “Apartment developers have already lost many potential buyers thanks to government – foreigners banned, second home taxes, airbnb bans, flipping taxes – and now add less immigrants”
I’ve been meaning to pose this for a couple weeks. Because I do not trust anything I read from the Government of the day, that is any G of the day, I have an unresearched theory that this is just JT backstopping his recent aggressive moves against foreigners. The damage has been done, foreigners are likely already looking elsewhere on the globe for a place to park their $$. Two years from now he will say, “see, I did as you asked, sorry for the loss to the economy and…” well, NVM, he may not have the chance.
Anything the Government does has an equal and opposite consequence somewhere else, reduction to immigration included.
The kids at the park will be thrilled to hear this! 🙂
Good to see active sales, market here seems a lot better than Toronto or Vancouver.
Marko , good to see the torrid pace of sales , looking like another 50 point cut in rates in December coming . I think Canada is going to be alright
Patriotz , yep want higher prices gotta inflate the debt away
Oh good, another buyer side subsidy.
Good if you want higher prices.
They might be getting some incentives coming up -> https://ca.finance.yahoo.com/news/poilievre-promises-abolish-federal-sales-134800947.html
Month Oct Oct
Year 2024 2023
New Unconditional Sales 559 407
New Listings 1,036 1,100
Active Listings 3,172 2,756
On pace for 650ish or approx. 60% increase year over year.
At least it’s getting somewhere. That gas station perplexes me. I can only come to the conclusion that the purpose of that business is to lose money. Why did they completely replace the underground tanks, pumps and concrete surface, only to close for renovation? Those pumps are like 6 years old and haven’t served a single customer. It’s gotta be a tax break business for some larger entity.
I don’t think the feds will go as far as to kick the crap out of the economy with their silly immigration policies . Besides how are they going to get a million folks to leave , too funny Tough to be a developer in Canada right now , they would be better off to put their efforts south of the border. All of which is good for house prices
Poilievre promises to abolish federal sales tax on new homes under $1 million
https://x.com/CTVNews/status/1850902867344830969
Maybe it is time to invest capital and labor into something that we can manufacture and sell at a profit. I was pleased to see that we will be making more water bombers and selling them to Europe.
NP article says shrinking population in 2025, 2026 – not seen since the 1950’s ! – would hurt economic growth and send new home construction numbers falling. There’s a big “IF” to if this population decrease really happens, but if it does…
I agree and expect the hit to the economy to be immediate as employers and home developers adjust downward and cancel their plans. Apartment developers have already lost many potential buyers thanks to government – foreigners banned, second home taxes, airbnb bans, flipping taxes – and now add less immigrants.
https://ca.finance.yahoo.com/news/posthaste-economists-ripping-forecasts-ottawa-120213582.html
Posthaste: Economists are ripping up their forecasts after Ottawa slashed immigration targets
If it meets these goals, Canada’s population will actually shrink for the first time in data going back to the early 1950s, reports Bloomberg — by 0.2 per cent in 2025 and 2026, before returning to growth in 2027.
The biggest risk, he said, is to residential investment, with the surge in housing starts of purpose-built rental buildings “likely to go into reverse,” as demand drops
Stephen Brown, from Capital Economics, said the new targets meant their economists had to tear up their forecasts for GDP growth of 2 per cent in 2024 and 3 per cent in 2025.
With a stagnating labour force, GDP growth likely will be no more than 1 per cent for the next two years and even that would take a jump in productivity growth, he said.
.
I doubt whether the Liberals will cut back as much as they say, but if the Conservatives are elected I would not be surprised about major changes.
An Ontario college, Seneca Polytechnic is closing their Markham campus due to decreased foreign student enrolment. Obviously one of the many bogus diploma mills enabling foreigners to enter the country. I wonder how many students actually showed up for class. What a scam.
https://househuntvictoria.ca/2024/10/21/revisiting-holding/#comment-121372
If they actually cut population growth as they claim this will be significant. But I don’t think their plans are credible.
I just want to point out that it was nearly 1 year ago that the Liberal government bowed to the public outrage sparked by >3% population growth the prior year and officially cut back on temporary resident spots.
What happened in the following 12 months? Another 3% population growth, mostly due to temporary residents entering the country.
I really don’t see how they’re going to achieve what they claim. 7.5% of the population is now temporary residents. 40% of 400k permanent immigrant spots will go to them, i.e. 160k per year and falling. And they want to reduce the temporary resident population to 5%. Well, that’s a decline of over 1 million temporary residents over just a few years, and only 150-160k of them will get a permanent spot each year.
Mass deportations aren’t politically on the menu, and do you really think this many people will leave willingly when the Canadian government explicitly sold them these temporary work and study positions as a future path to permanent residency?
I’ll believe it when I see it.
Whateveriwanttocallmyself
I get that part.
The U.S. Tariffs on Canadian softwood lumber in August nearly doubled. That means lower exports to the U.S. causing Canadian companies to curtail production. We produce more lumber than the domestic market consumes.
The supply chain disruption affects mostly imports. All the products and materials that we import to build homes.
Infamous james bay gas station.
Is wooden scaffolding legal? Looks sketchy. Though consistent with this whole project.
@Whateveriwanttocallmyself “One of the many challenges of construction is the continuing supply chain disruption.”
I don’t buy the supply chain disruption story.
Oct 07, 2024.
“Western Forest Products temporarily curtails sawmill production.
The reduction will affect operating schedules at all B.C. WFP sawmill locations, including Ladysmith, Saltair, Cowichan Bay, Duke Point and Chemainus sawmills, impacting about 800 employees, said WFP communications senior director Babita Khunkhun.”
That means If WFP doesn’t get the money they want. They will just halt production until they get the money they want.
https://www.cbc.ca/news/canada/british-columbia/western-forest-products-curtailment-1.7345594
Its the same with anything petrol based like roofing shingles, sm board, ABS/PEX/PVC pipe. Metals such as flashing or copper fittings, etc… All of which are made in Canada BTW. If you can afford a house with dirt now is the time. This is the ditch/bottom.
@ Whateveriwanttocallmyself “That’s not really going to help you much.”
Exactly. So why do anything at all? Other than be happy with what I already have.
One of the many challenges of construction is the continuing supply chain disruption.
Despite overall inflation on a downward trend, prices for residential construction building materials as a whole have accelerated since the beginning of 2024, leaving home builders to continue to deal with higher costs. The year-over-year price growth in June 2024 was the highest since February 2023.
Many raw materials used in construction are globally traded. Factors like geopolitical tensions, trade disputes, and changes in international trade policies can disrupt supply chains and lead to price increases.
The rising material costs are made worse by uncertainties within the production process and when supplies will be available to complete homes in a timely manner.
-National Association of Home Builders.
If you’re panicking to sell the property you have bigger problems in your life than real estate.
It’s pretty much a sure bet that a hundred years from now your house will be worth more. That’s not really going to help you much.
@Whateveriwanttocallmyself “That doesn’t mean there won’t be down markets or periods of flat house price inflation such as we have had for the last couple of years.”
You don’t realize a loss unless you panic sell the asset.
“As opposed to time in the housing market which means the longer one holds property the likelihood that the property will increase in value is very high.”
I agree. As long it has dirt.
@Whateveriwanttocallmyself “Total floor area is 832 square feet.”
I would assume that comes with the hamster wheel. 832 sq/ft for a family of four? I don’t care how many near by parks are in the area.
That’s right Max the article is from 2022 and the article anticipated property values to go up.
But prices did not.
The median price of a house in the core in 2022 was $1,292,500 and this year it is $1,260,000. A condo was $575,000 and this year it is $547,638
There is a three-bedroom condo for sale in The Wade along Cook asking $649,000. Total floor area is 832 square feet. Bedroom sizes are 75, 80 and 60 square feet. The living room is 122 square feet but it is open do a small dining area. So is the problem three-bedrooms or is it the small room sizes?
If a lender sent me out to look at this property my comments would be that the small room sizes limit the number of prospective purchasers and would lead to an extended period of time to effectively market the property.
In this example having three-bedrooms is a detriment to the value of the property.
“Article in the paper that the new immigration policies are going to keep the population stable and perhaps even reduce the population over the next five years with less students and foreign workers. If that is actually true exactly what does that mean for house prices and with all the units being built does that mean the housing crisis may actual start to disappear?”
The housing shortage will take a decade of backlog construction to fulfill, and that hasn’t factor in the population growth. And, Canadian are not getting younger so the demand for services would be higher, that translate to more taxes with a smaller pool of worker/taxpayer. That lead me to believe housing price is not going to drop at anytime soon, but likely to rise higher due to lack of young skilled worker.
Whateveriwanttocallmyself, “A report from the Vancouver Island Economic Alliance (VIEA) shows a steady influx of new residents to the island, and a demographic shift skewing younger.”
That article you linked is from April 2022. Also from the article:
“Even though our prices have increased significantly, our prices are still low compared to some larger centres.”
But like elsewhere in B.C., those prices are going up, particularly as the island becomes a hot destination amid limited supply.
https://globalnews.ca/news/8776199/vancouver-island-younger-demographic-2022/
The April 2022 article also suggests:
“being able to work remotely has encouraged people to leave some larger centres and seek lifestyle options.”
I think as more and more people are mandated back into the office, that demographic will change.
Whatever , I myself am holding out for more , as I feel the time will be right
Absolutely. Our drive to Calgary and back every summer reinforces to us how fortunate we are to live in Victoria.
There are a bunch of townhouses right by castle hardware that are very beautiful. Small studios are below grade (~6 steps down) plus two level townhouse above. They’re so nice looking. Not sure who designed them but they did a great job.
Having said that:
If anyone knows of a nice-sized 1-acre(+-) parcel of land in Victoria area for sale with a regular polygon shape, please do let me know.
Put simply, “timing the housing market” refers to trying to predict when conditions will be right for buying or selling a property, while “time in the housing market” means holding onto a property for a longer period of time.
We’ve all heard it before, a home owner waiting until spring to sell as they believe the probability of selling and obtaining a higher price is greater in the spring. It isn’t predicting a specific price or buying at the bottom and selling at the top, but what is most likely to occur.
The idea behind this is that the historical performance of the property market has cyclical patterns. And when one applies those patterns to the present situation, they can give an idea of what might be coming next.
For example, Victoria’s past performance may show that there is an 80 percent chance that condominium prices will increase in the Spring. That doesn’t mean they will increase, just that the past history indicates that the odds are in favor of sellers in the spring. A lot of things may happen between now and the spring which can change the outcome.
As opposed to time in the housing market which means the longer one holds property the likelihood that the property will increase in value is very high. That doesn’t mean there won’t be down markets or periods of flat house price inflation such as we have had for the last couple of years.
Umm really, all good man , I do have one to sell though . I just need the upper end of the market to get going
I suppose a distinction should be made between investing and speculating. Investors tend to look long term while speculators are looking for an upward tick in the market when they can take advantage of an ever increasing market. Difficult to do, timing the market is something most people cannot do, unless you have a crystal ball.
Vancouver Island has long held a reputation as a destination for retirees, but British Columbia’s red hot real estate market appears to be changing that.
A report from the Vancouver Island Economic Alliance (VIEA) shows a steady influx of new residents to the island, and a demographic shift skewing younger.
The group’s State of the Island Economic report found that more than 89,000 people moved to Vancouver Island between 2014 and 2021, more than half of whom relocated from elsewhere in B.C.
Over that same period, the percentage of people aged 50 and up moving to the island fell from 59 per cent to 35 per cent.
https://globalnews.ca/news/8776199/vancouver-island-younger-demographic-2022/
Well, leverage up (rates are coming down), buy them, tear them down, build and sell. Come on Thurston time to practice what you preach! However, Cookman and Bank are funny, sold for 1.35 within the last year and for the last couple months have been trying to catch someone to pay over 1.4 with little or no work done to them… Oh, house flippers…..
@ QT “Perhaps the person has money”
They do. Just like a beautiful car or yacht, they want to comfortably see just whats under the hood. I’m comfortable sitting next to my high efficiency woodstove with my dog at my side. Some people are just more comfortable lowering the blinds and turning the lights off using their smart phone.
Hopeful. A lot to unpack in your general question with many moving parts. The vast majority of newcomers to Victoria are actually people moving from other parts of Canada (internal migration), so the net effect on Victoria housing demand will be less than other regions ie. Vancouver and Toronto. Victoria has long been a retirement destination for many and this trend should continue and actually increase moderately over the next 10 years as a greater percentage of our population turns 65.
I think house prices in general will be impacted to a much greater extent on other economic and political factors, many of which are unknown at this time and very hard to predict. Whatever happens on these fronts, I think Victoria and the entire southern Vancouver Island will fair better than other regions.
I’d qualify that the true diamond in the rough is the house in the excellent location that is discounted only because it looks old. When we looked for our last two purchases we were always trying to find places that were cheaper because old kitchen/bathroom etc but didn’t need any changes to the layout. It was a respected designer that told me that – if you want to save money buy an ugly house in a good neighbourhood that doesn’t need layout changes. It’s surprising how many people will veto a house with an amazing location, good price, good layout, just because the kitchen cupboards need updating. Our current house was a diamond in the rough – couldn’t believe that we were able to find one with 3 bedrooms on the main – very rare for this kind of house.
I think it would mean the opposite, with less employees will lead to higher wage inflation and higher interest rates. I think it’s inevitable that home prices decline like most things that went up during covid, see used rvs that are flooding the market and depressing prices.
Hopeful, reducing immigration means bank of Canada will have to go lower for longer to support the economy , a gift for mortgage holders .
Article in the paper that the new immigration policies are going to keep the population stable and perhaps even reduce the population over the next five years with less students and foreign workers. If that is actually true exactly what does that mean for house prices and with all the units being built does that mean the housing crisis may actual start to disappear?
“How much is a 50 year old house on the Westshore?”
I think the short answer is probably land value.
Thuston- Better a shite house in need of restoration than one that has been poorly renovated with hidden gremlins in the walls. It’s called a diamond in the rough. People shouldn’t be afraid of getting their hands dirty.
Ohh Thurston, you’re a funny guy. Always exaggerating the truth when it comes to the market. Time will tell, wonder what Leo’s numbers look like this coming week.
“A pump per zone has to be the most inefficient and expensive option out there. 10 pumps with a custom ~3″ copper manifold? This is like using a monster truck to commute on the highway. Why?”
Perhaps the person has money, and didn’t want to spend money on 3-way/4-way valves and/or zones manifolds which can cost the same as each circ pump per zone.
I do not think it is that inefficient, because each pump may consume very little power (likely idle for most of the year, and since they are serving only each zone it wouldn’t be running continuously except for when the zone is calling for heat), and the energy/heat lost on it would be radiating/heating back into the mechanical room.
Air lock is often the root cause of cold spot and inefficiency in a hydronic heating system, and bleeding the air from each zone would be a cinch on this setup.
man there is shite houses in O.B and fairfield
vicre, gotta get a card show some interest and snag halloween treats maybe take all the kids too
Patrick, I’ve read literature on price to rent ratios, and the condo to house gap but nothing discussing the number of sales of condos to houses. There have been so many condos built in the last decade with many not being listed on the real estate board, but sold out of onsite developers sales offices that important data is not obtainable. Without that data any analysis or conclusion may be misleading.
What you need business cards for? What kind of treats were there? I might do that tomorrow lol
A pump per zone has to be the most inefficient and expensive option out there. 10 pumps with a custom ~3″ copper manifold? This is like using a monster truck to commute on the highway. Why?
Went to a open in oak bay , good time of year to grab a business card and a handful of treats off the counter do a spin around and more treats then out the door
Where at?
Interesting stats. Thanks. What is the mix of sales numbers for SFH vs condo and has that changed too?
Here are the numbers to two decimal points. I’m not making any predictions.
{2.09, 2.21, 2.37, 2.26, 2.10, 2.02, 2.26, 2.41, 2.25, 2.28}
Current 2.30
Oh my lord the opens were busy this weekend , standing room only. If this keeps up we are looking at no homes for sale this spring , holy bejesus
If the top and bottom outlier are taken out the the average would be some where between 2.1 & 2.4, therefore the current 2.3 is darn close to the average of 2.25.
To me housing is similar to the stock market because we can’t predict the future to time it. Therefore buy at anytime that we need within our budget.
Perhaps it is nothing has to do with heat loss, but more so of how many zones for comfort and energy efficiency.
The House-to- Condo Price Gap
A large gap means more savings and mortgage financing are needed for condo owners to upsize to a house.
During 2014 it took 2.1 condos to buy a house in the Victoria Core districts.
2014 – 2.1
2015 – 2.2
2016 – 2.4
2017 – 2.3
2018 – 2.1
2019 – 2.0
2020 – 2.3
2021 – 2.4
2022 – 2.2
2023 -2.3 10 year average 2.2. The gap ranged between 2.0 to 2.4
2019 was the best year to sell your condo to purchase a house. 2021 was the worst year to sell your condo to buy a house. The better years to move up the property ladder were in 2014, 2016, 2018, 2019. The lesser years to move up the property ladder were in 2016, 2017, 2020, and 2021
So far this year the gap is 2.3
It’s more of a challenge to determine when is the best time to buy a condo and that would be the price-to-rent ratio. The problem is that there is no historical data for actual contract rents paid. There are asking prices which during a low vacancy rate should be reasonably reliable. The conventional thought is when the ratio is between 15 to 20 it’s in the renters favor to buy. Less than 15 is a good time to buy, greater than 20 is not in their favor. Currently the ratio is 20.
Wild cards that have recently come into play this year are the changes in the bank rate, lower immigration targets, foreign students, vacation rentals, and the number of new PBRs coming soon to the rental market.
Yes Max, I’ve installed hydronic in my last two houses, so I’m familiar with these systems. I was referring to how much heat loss the house would have to require such a massive heat plant.
I recently sold a near new proper three bed in Esquimalt at 1,183 sq.ft for 770k if a 1,600 sqft condo on Beach Drive doesn’t float your boat.
Also, when we say 1,200 sqft ground floor orientated for families is that now brand new as well? Older won’t work because?
How much is a 50 year old house on the Westshore?
https://househuntvictoria.ca/2024/10/21/revisiting-holding/#comment-121331
This is how stock markets work. The biggest gains are held by a portion of the market at any point in time. Right now the only unique feature is that we see a very heavy concentration of gains among a small number of monopolies of recent technology changes.
So long as you consistently hold a diversified portfolio with a long time horizon, the market downswings are very likely to be a drop in the bucket. The broader market still consistently grows over many years.
Quote: “A large three bedroom condo in a prime location (for example, https://www.realtor.ca/real-estate/27368829/107-1440-beach-dr-oak-bay-south-oak-bay?view=imagelist) is approximately equivalent to a SFH 45 to 60 minutes from downtown (Sooke, Duncan, etc.).”
Marko, you know as well as I that this is a 50 year old condo. That’s why the price is so low. It’s priced at $500 per sqft!
The listing doesn’t even show the maintenance fees. It’s either maintenance fees of at least $1000 per month for this unit or the strata has failed to save for a rainy day and there is a series of $50,000 special assessments coming up.
A 1600 sqft modern condo, built in Victoria since 2018 would cost double this price.
Dee, sorry for the confusion, I am not renewing a mortgage. I was responding to QT, who is renewing.
@tbone curious as to why you’re locking in now. Because we will be up for renewal and for the first time ever I’m considering doing variable to see what the market does. Because I’m expecting mortgage rates to go down.
Bank rate is definitely going down. I had a mortgage renewal meeting at my bank yesterday and the current 3 year fixed close is 4.49%, and 5 year fixed closed is 4.45%. And, I’m asking for 3 year fixed at 3.95% (will likely getting something between 3.95% and 4.49%).
The point is that the future is looking good for even lower mortgage rate in 2025.
I’m inclined to take the other side of that argument. The bond vigilantes are out in force. Yield on the US 10 bond just popped above 4.2% last week. US debt to reach 34 trillion by years end and interest cost on that debt is now over $1 trillion per year making it the largest single expense item in the US budget.
@tbobe I guess it varies within India. I was referring to this
https://www.cnn.com/2024/10/22/india/young-indians-chase-american-dream-intl-hnk-dst/index.html
Dee, just as an fyi, India’s economy is actually doing quite well and their TFR (total fertility rate) is now below replacement
https://househuntvictoria.ca/2024/10/21/revisiting-holding/#comment-121334:~:text=4%2C000%20sq/ft%20home%20with%20an%20estate%2055%20min%20outside%20(easy%20drive%20as%20flat)%20of%20Zagreb%20(399k%20euros)%20%2D%3E%20https%3A//www.njuskalo.hr/nekretnine/ekskluzivna%2Dnekretnina%2Dluksuzna%2Dkuca%2D376%2Dm2%2Dimanjem%2D16.588%2Dm2%2Doglas%2D39485816
Marco, interesting listing. A couple of questions. 1. Could you estimate the value of this property say 5 to 7 years ago? And same question 5 to 7 years from now.? 2. What would you estimate the construction cost would be to build that home today, in Croatia?
@Frank
Can they surf year round?
You can ice fish, hunt and golf with pink golf balls anywhere in Canada in the winter.
“totoro”
The year round fishing, hunting, and golf alone make the Island the most desirable place to live in the entire country.
Not just heat – smoke too. If I lived elsewhere in BC I’d be looking to relocate to the island for the summer at least. When the mainland is blanketed in wildfire smoke Victoria generally escapes it.
Overall Victoria is very well placed to withstand projected climate changes – with some more extreme events, wetter warmer fall/winters and drier hotter, but not unbearable, summers. The ocean doesn’t fare as well re acidification and rising sea levels.
Bank rate is definitely going down. I had a mortgage renewal meeting at my bank yesterday and the current 3 year fixed close is 4.49%, and 5 year fixed closed is 4.45%. And, I’m asking for 3 year fixed at 3.95% (will likely getting something between 3.95% and 4.49%).
The point is that the future is looking good for even lower mortgage rate in 2025.
Yes well there are no jobs and people are going hungry in India which has a massive population and is a source for migration into Canada for a long time. Meanwhile here we’re letting less people in. So it’s a global phenomenon the effects of which vary wildly depending largely on region.
“Decent condo in a nice part of Tokyo is still very expensive despite the population decline in Japan.”
Absolutely, however price wise the current price is still exactly the same as 1989 price.
How the 50 point cut will effect prospective purchasers and mortgagees.
https://www.msn.com/en-ca/video/money/by-the-numbers-how-the-interest-rate-cut-will-affect-your-variable-mortgage/vi-AA1sT9rs?ocid=socialshare
One thing that might become interest long term in Victoria is the mild summers (and winters). Most of Europe is becoming unbearable in the summer.
Decent condo in a nice part of Tokyo is still very expensive despite the population decline in Japan.
I have a three part YT series coming up on this topic that I filmed when I was in Croatia but I haven’t had a chance to edit yet.
I clued into a bunch of stuff this summer pertaining to the single stair topic, for example the single stair thing adds huge efficiency to large buildings as well. Here in Victoria your typically non-tower building you see being built all over the place has two elevators side by side and then a hallway from one side of the building to the other side and two staircases accessible from that super long hallway. One of my places in Croatia has two entrances to the building essentially splitting it in half on the interior with an elevator and one staircase for each entrance and then when you go up to your floor the hallway is super short accessing six units and the other entrance accesses six units as well as the hallway doesn’t have cut the entire length to connect the staircases. Difficult to explain in words, will make sense when I show it in the video, but basically according to my calculations space wasted on hallway is reduced to by 2/3s and that hallway becomes living space in the end units and the interior units where the building is split.
Love it, but I still don’t think it would sell to families. It would sell, but probably to downsizers.
A large three bedroom condo in a prime location (for example, https://www.realtor.ca/real-estate/27368829/107-1440-beach-dr-oak-bay-south-oak-bay?view=imagelist) is approximately equivalent to a SFH 45 to 60 minutes from downtown (Sooke, Duncan, etc.).
This tells me culturally people will trade a 45 to 60 minutes commute for a SFH (versus a three bedroom condo in an attractive location in town).
This isn’t the case in my parts of the world. People aren’t obsessed with having a SFH and the differential between a three bedroom condo in town and 45 to 60 minutes away is massive.
For example,
Three bedroom condo in Zagreb city core with in the tram network (850k euros) -> https://www.njuskalo.hr/nekretnine/stan-vmd-darwinova-140-m2-stan-2gpm-spremiste-vii-kat-oglas-44522541
4,000 sq/ft home with an estate 55 min outside (easy drive as flat) of Zagreb (399k euros) -> https://www.njuskalo.hr/nekretnine/ekskluzivna-nekretnina-luksuzna-kuca-376-m2-imanjem-16.588-m2-oglas-39485816
A regular 2,000 sq/ft home on a 6,000 sq/ft lot you can buy 45 min from Zagreb for 200k euros or 1/3rd to 1/4th of a three bedroom condo within the tram network.
“The heat loss calc on that house must be off the charts!”
“Hydronic systems and radiant heat provide the ultimate in home heating comfort, and can consume less energy than forced air systems. And because hydronic systems are insulated, there is virtually no loss of heat as it’s distributed throughout your home.”
https://www.fortisbc.com/services/natural-gas-services/gas-heating-systems-appliances/hydronic-heating-systems
Those S&P remarkable gains are due to only a few high flying AI and tech stocks. Things can turn on a dime and you’re behind 10 years and may never regain your losses.
I’m both impressed and disgusted at the same time. The heat loss calc on that house must be off the charts!
A reliable source told me that starting January 1st, 2025, Airbnb will report to CRA your name, SIN number, address booked, income and nights booked. They will know how long it was rented out and will determine if it’s a business you’re running or you’re heading to Italy for two weeks and just want to make some income while you’re away for your summer vacation.
I would say “deferred gratification” rather than “lower standard of living”, but we all have our own POV. That’s what got me where I am today.
10.26% is a 50 year average, so it’s an incredibly reliable figure. And of course there are fluctuations; it’s up 23% this year.
Anyone can make these gains with a simple index fund.
“If you think there is a logical reason as to how single family in the core could go down – other than some external unpredicted third factor – please share (genuinely curious).”
Dee, I said I could make a case for both. It is true that housing prices can and do increase in an environment where population is decreasing. Prices in Tokyo for example have experienced price appreciation while most of the rest of Japan has seen huge decreases. As the smaller towns and villages depopulate, businesses close and economic opportunity diminishes and forces migration to the larger urban centres. Tokyo being the largest is their last hope. The last report I saw coming out of Japan indicated that 2024 was the year that Tokyo would begin to see systemic prices declines.
While Victoria is not Tokyo or Seoul or Zagreb it enjoys many of the characteristics that make it a preferred destination and so my thesis is, Greater Victoria will be a beacon in the otherwise massive demographic storm that is about to wash over us, until like Tokyo population decline is so pervasive it sinks all boats.
So to sum up, short term market should continue to do well. long term??? Timing will be crucial, because the market will anticipate the changes well before the events on the ground take hold.
LMAO
Well with Joe’s nephew it seemed like there was a lot of optimism on the investing option and more conservative with the buying option. Plus I’d wonder why not buy something cheaper than a 2 bed/2 bath – like a very nice 1 bed (+den) and 1 bath? Then the math works out better.
As for the saving – we were talking about forced savings and buying a home does force ppl to save. The two people I know that tried to participate in deferred salary programs through their works both exited the programs in less than a year. It takes a lot of discipline to invest every month (unless you have a lot of extra money) because basically you have to opt in to a lower standard of living. That’s what we do – we opt in to something much lower than what we could afford if we weren’t saving. It’s hard for a lot of folks to do that.
Joe wasn’t pointing to a fund payout of 10.26% but rather the longer-term average price increase in the value of the US S&P index, so that would be relying on capital gains, not distributions per se. But yes, there are funds paying out very high amounts per year, and I’m sure simple googling will point you right at them, eg. covered-call type of funds in Canada. Personally, I would view any fund with a high payout, say anything much over 4-5%, as a bit of a red flag (funds with very high payouts often having some inherent downside as well, ultimately sacrificing total return). Yield chasing is usually a bad idea for long-term performance in equity markets IMO.
And this is just it – there are often articles explaining why someone might well be better off renting and instead investing the downpayment/monthly savings, but these articles usually miss something. I’d say for the general public, if you get one of those brief moments in this real estate market where buying something that reasonably fits your lifestyle is actually within reach, better off doing that rather than renting and finding out 5-10 years later that one really didn’t have the financial acumen or discipline to make the investments work optimally but in the meantime one is priced out as RE has had another big move.
There’s no guarantee it is going to pay over 10% each year. That is past performance. It can lose 50% the next year.
IS it true that there’s a single fund that has an average payout of 10.26% a year? Is that a low risk fund? I’m confused. Someone I know who knows about money told me when you’re doing math for investing you assuming 5-7%. Which one pays 10.26% a year and where can I buy it.
I would support the government getting out of the way and letting the market decide if buildings with no parking actually sell.
But first, I think the government should get out of the way of deciding whether land can be used for SFH or not. The default biome for Vancouver Island is forest, so millions of trees were cut down for farmland and the development of neighborhoods like Fairfield, Oaklands, and Gordon Head. It is hypocritical for anyone who lives in a SFH to not support the use of farmland or forest for the creation of more SFH, when that is what was required for their own SFH.
As Marko has pointed out, there is very little demand for three bedroom family friendly accommodation that is not SFH, so why can’t society listen to the people? Also copying Europe on anything would be fine if all was well there, but it isn’t. All the wonderful walkable big cities there are expensive and they don’t have a replacement fertility rate. We need to think about where we want to be in 20 or 40 years and start making decisions that will have the greatest chance of getting us there. Humanity is important and not a scourge on the planet.
>> Oh good we’re doing this again. You don’t like townhouses because there’s too many cars.
You’re thinking of someone else, I never said that.
>> I know you’re a big fan of government controlling peoples lives, but I have a radical idea: let the people decide.
I’m no fan of government controlling people lives . You got me mixed up with someone else there too. If homes don’t have parking, they’re going to park on the street, at which point it affects everyone, so that’s why society decides on parking rules.
As they say “someone’s right to swing their arms freely ends at my face” 🙂
It’s actually conservative. S&P 500 long term average is 10.26% a year. It was 23% this year.
Seems like maybe you don’t know much about investing.
Oh good we’re doing this again. You don’t like townhouses because there’s too many cars. You don’t like car-free homes because there’s too few cars.
Wouldn’t work so well for us, but I know families without cars. Seems to be plenty of demand for this car-free sixplex: https://www.urbanthrive.ca/633belton
I know you’re a big fan of government controlling peoples lives, but I have a radical idea: let the people decide.
If someone puts up a no-parking sixplex and people want to pay less for a place with no parking, let them. If the developer has radically misjudged the market and no one wants the places, then they have to make it cheaper. Win win for people looking for housing.
Oh and it’s also possible to make this with parking. Still illegal to build everywhere in Canada.
Lamo, is that Warren buffet renting?
Not a problem. Free enterprise to the rescue
https://youtube.com/shorts/6oQVqkagHU4?si=ZXn-ZKp1HIe2Pb5k
>>.> here’s a great 6 plex with family sized units. Illegal everywhere in Canada.
Triple banned in fact
—— Doesn’t meet parking minimums (unless you pave every square inch of the lot and even then, doubtful)
——-=====
How can you consider a place family (w/kids) friendly when it lacks a parking spot? Could you imagine your family without a parking spot? Is it a common position among family housing advocates that parking for a family with children isn’t required? Kudos to the government for considering families with children, and making designs like this illegal by insisting on parking minimums.
Wonder if small elevators will become more popular as the population ages and prices come down?
I asked an architect if it would be possible to recess the first floor by 2 to 3 feet so that the ground floor suites would be below grade with a couple of walk down steps to their units. The second floor would be accessed by a single external stairway that opens up to an interior common property entry and then one flight of interior stairs to the third floor. He didn’t know if that would or would not be acceptable.
The reason why I liked the idea was the exterior stairway would be fewer steps to climb to the second floor. In that way the stairway didn’t protrude out so far towards the street and in my opinion looked nicer. The overall height above grade for the building would also be lower. If you had to hang from a third floor window or balcony during a fire the drop would be less and would be reachable by a 20 foot ladder.
Small footprint of under 7sq/ft, carries two people.
https://www.stiltzliftscanada.com/residential-elevator/
That’s what we are seeing people build here and it works as well, but you lose a lot of liveable space to stairs, and you’re spending a lot of time going up and down stairs in your daily life just to get back and forth between bedrooms and living space. I think both are fine, but serve different needs. The 3 floor walk-up should be more affordable all things equal.
Can you accomplish similar going up/down in narrower townhouses?
What a shame. That would be a lovely building for many.
Marko, here’s a great 6 plex with family sized units.
3 bedrooms, 1200 square feet. It or some minor variant thereof fits on many single family standard lots
Illegal everywhere in Canada.
Triple banned in fact
@ Sidekick “Surely that isn’t a SFD mech room.”
Yes it is. That’s an in floor hydronic heating system.
Hydronic heating systems:
“Radiant heat warms everything in your home, not just the air, providing you with comfortable, cozy heat. Hydronic systems use water to distribute heat throughout a home or building. Hot water from a central boiler is circulated to radiators, or radiant floor coils, in each room through pipes.”
https://www.fortisbc.com/services/natural-gas-services/gas-heating-systems-appliances/hydronic-heating-systems
Stupid question> If the Greens are able to get their Vacancy Controls between tenants passed is this going to have any impact on condo prices going forward? Some people are saying no impact others that investors will be flooding the market with condos/ I dont know what to think?
Surely that isn’t a SFD mech room. Looks cool, but I wouldn’t want it.
@ Leo S “but people put a premium on new builds.”
The mechanical rooms in these new build sfd are absolutely outstanding to say the least. 10’x12′ space with epoxy flooring, aluminum checker plate wall panelling, natural gas boiler controlling the in floor hydronic heating system, demand hot water, heat recovery ventilation system, water filtration unit, wifi modem/router, 200 amp square D electrical panel, multi media distribution panel, solar power distribution panel, Interior Tesla charging distribution panel, security/camera distribution panel, irrigation control panel, Telus backup battery panel, vaccuflow dustpan collection unit.
The attention to detail and the pride of workmanship that goes into these mechanical rooms are something to see. Everything is level, plumb and square. All exposed copper plumbing has escutcheon covers at the wall panel and is polished to a fine finish with brasso. There is no surface mounted electrical wiring.
Shelter cost refers to the average monthly total of all shelter expenses paid by households.
Shelter costs for owner households include, where applicable, mortgage payments, property taxes and condominium fees, along with the costs of electricity, heat, water and other municipal services.
For renter households, shelter costs include, where applicable, the rent and the costs of electricity, heat, water and other municipal services.
Source: Statistics Canada
https://www23.statcan.gc.ca/imdb/p3Var.pl?Function=DEC&Id=103403
I was running some figures for my nephew. For a young couple living downtown or in the core, the math is a bit trickier and requires at least moderate price appreciation to make financial sense.
Buy 2 bedroom 2 bath condo: $725,000 with $50,000 down payment.
Mortgage is $3,700, taxes $275, strata $600 = $4,575 per month.
Principal paid over 5-year term is approximately $90k + $50k down payment = $140,000 without price appreciation.
Rent 2 bedroom 2 bath condo = $2750/month.
Save and invest difference between buying and renting ($21,900 per year) compounding at 9.5% for 5 years = $220,000.
So you need to see at least $80,000 price appreciation in the condo over 5 years to break even. Arguably $100,000 if you factor in transaction fees.
As long as the math holds up on evacuation times for a catastrophic fire. I will give you your anti-parking minimums, but sacrificing fire egress times is a tough one.
The 2k mortgage is comprised of $1350 in interest and $650 in equity pay down with a rate of 4.6%. Assuming your home is worth at least what you purchased it for when you sell you get the $650/month back. If you sell in 5 years your equity return is your original 50k plus 45k in equity pay down plus any appreciation or less any depreciation.
What this means is that you reduce your shelter cost from $2100 a month in rent subject to annual rent increases, to $1750 a month subject to any special assessments, or mortgage rate changes if you are variable.
Legalizing single stair buildings can increase number of family-sized units. Here comparing typical german vs typical NA buildings https://x.com/Lanefab/status/1849923229864935554
Are you deducting the part of the payment that goes to principal pay down?
What do you mean totoro?
I would go for a fixer upper in the core every day, but people put a premium on new builds.
Are you deducting the part of the payment that goes to principal pay down?
Re: opportunity costs of investing in stock market v buying. Say there is a 30 year old, single, making 100k/yr in Victoria. No partner, no kids. They have focused on paying off student loans and so have no real savings (maybe 5k in the bank). The loans have all been paid off as of last month. Suddenly they are gifted 50k (no strings attached). Imagine this person is paying average rent of 2,100/month currently for a nice 1 bedroom in a pbr. Now, what should they do with the 50k? Continue renting for 2100 or buy a condo with it? If they buy a condo and their mortgage is for 375k then the condo is 425k and that will be a more or less equal standard to what they are currently renting. The mortgage for 375k will be 2k/mo but then they have to pay condo fees (300/month) and property taxes (100/month). So they have to pay 300 more per month owning than they do renting. Is that right? So, the lost opportunity cost is if the person had taken the original 50k, and invested in stock, and takes the extra 300/month and puts that in stock too, and just keeps renting forever? Then, since stocks don’t tie up money the way real estate does, if they do get married/reproduce instead of aiming to own a home they will aim to rent a home for a reasonable price (and hope they don’t get evicted). I guess I don’t understand at all how that is better since it seems pretty risky to opt out of the real estate market and then possibly it becomes more and more difficult to own as life changes. Also, show me the family friendly rentals in the core for anything like a reasonable price. And, how much does the average person know about stock? I guess they could do an index fund and that pays what – 5-7%/yr. I don’t know Nan… either way has risks but I am so happy that we didn’t opt out of the market when we had the chance to get in.
Okay, I guess, but why wouldn’t you just buy a freehold house at that point?
Even concrete and you plant a playground right in front of the building with an elementary school across the street and groceries a 5 min walk people won’t go for it. The concept of SFH is deeply engrained in North America.
Haven’t seen the prices. Nothing about freehold means they have to be built to a certain price point
The ones that start at 925k+GST? and $1.025+GST for the larger layout?
How was the sound-proofing and amenities for kids ie. on-site play structures? In Eastern Europe you get big concrete block buildings that are pretty good on soundproofing and big playgrounds right outside.
Last month I sold a proper 1,152 sq.ft. proper three bed condo at Esquimalt Town Square and it was a struggle.
It is interesting I read a lot about family sized condos, for example, and the need for such and whenever I have to sell a three bed condo there is no market for it. It would seem people would rather commute to Duncan than living a condo.
Gonna go check out the freehold townhouses being built up at Royal Bay. Hope to see more of that in the area. I think a big part of it is just educating people/developers/realtors on the product and that it can be a good alternative to strata.
Yep, we are basically doubling down on bad planning.
I think 3 beds, 1000-1200 sqft and up. Ground oriented (i.e. you can see them playing outside from the apartment) is a plus but higher up apartment OK too.
“So let’s clear cut and spend a fortune on infrastructure such as roads? Just curious how this works with the climate change priorities most young people have as well?”
It depends what is important, I would argue humans should come first, but clearly our society has embraced the whole humans are a scourge philosophy. I find it sad to see so many young people who are pessimistic about the future.
An “actual population decrease” would come as an unexpected and unwelcome shock for business. Because they have been planning for population increases. This will include housing developers. It’s one thing planning a huge new tower to accommodate a growing population, but who would build a new tower if population is falling?
This could end up lowering new housing supply, which could worsen housing affordability. Same idea for other parts of the economy – why build a new A&W or more 5G cell towers if the population is falling?
I was referring to Eastern Europe.
sorry, yes you are right.
Not only that, few people actually prefer to live in a SFH and it is really reflected in prices.
So let’s clear cut and spend a fortune on infrastructure such as roads? Just curious how this works with the climate change priorities most young people have as well?
Whenever they blast apart a hill in Langford to allow for SFHs all I see is non-stop complaining on Reddit/FB.
https://househuntvictoria.ca/2024/10/21/revisiting-holding/#comment-121143
You have to know what the opportunity costs of investing in the stock market are to really figure this out. In most cases, equity in a house is a bad place to store capital. Not as bad as in cash in the bank but not much better.
The next blow that’s coming down the pike for condo owners will make the leaky condo crisis look like a hay ride. Our structural engineer brought this to our attention last week. Its old news but really starting to gain traction as the BCBC continues to be more and more seismically updated.
“SUMMARY:
Council has consistently promoted seismically safe building standards in Vancouver. These standards, reflected in Vancouver Building Code requirements, have continued to evolve over time as our collective knowledge of earthquakes and their effects grows. Currently there is sufficient research, understanding, and experience to support a more proactive approach to seismic upgrade. Many jurisdictions, in earthquake prone areas, have developed long term seismic hazard abatement programs to substantially reduce the life safety and financial risks associated with vulnerable structures. This report recommends that work commence to develop such a program in Vancouver.
The report identifies the need to create a permanent staff resource, funded from existing permit revenues. This senior seismic specialist
will analyse the City’s risk and develop recommended options for a comprehensive hazard abatement program and report back to Council in 18 months. In conjunction with that work the position would also support and improve the current structural review program for new buildings, which the report recommends be continued. To enhance the effectiveness of the structural review program, the report recommends that the building permit fee schedule be revised to permit recovery of the cost of third party reviews in instances of significant or repeated non-compliance.”
And its not just condos, office towers as well.
https://council.vancouver.ca/000502/rr1ii.htm
Women who live in houses choose to have more children than women who live in apartments. Most young people aspire to eventually live in SFH. So why aren’t our politicians and our society making it the highest priority to free up the abundant land in the region for SFH?
Max, funny I read a piece asking homeowners not renovate their houses as it made homes more expensive. U can’t make up this level of stupidity lol
@thurston.
Add to that more and more people are choosing to update their existing house as apposed to selling it and buying back in.
dee, thats pretty much the just of it, if i was a big developer in Van or Vic i would probaly start to shift more towards the U.S or elsewhere as Canada has become too problematic. We could possibly to emergency low interest rates next year to help pump up the economy
@Tbone”highly uncertain.”
Everything is highly uncertain these days with the exception of death and taxes. The upside with greater Victoria real estate is you can always just live in it.
I can’t see it going anywhere but up for single family. Give me a logical explanation as to why it might go down. It’s the fundamentals – too few supply for the demand. For townhouses I bet it’s similar to single family. Condos – don’t know. That’s all in the core. The west shore would fall first in any case.
If you think there is a logical reason as to how single family in the core could go down – other than some external unpredicted third factor – please share (genuinely curious).
The question I was hoping to get to with an understanding of demographics as it relates to the Victoria real estate market is, does it support an upward price trajectory or a downward pressure on price? I can see an argument for both but this is unprecedented and highly uncertain. Thoughts?
It will be interesting to see if Trump wins the election, as his only platform is stopping illegal immigration. Citizens are worried about the crime, squalor, and unsafe conditions cities are experiencing. There is definitely a movement in developed countries to tighten the flow of immigrants. The countries that they come from aren’t begging them to stay.
She said where she’s from few people live in sfd. They’re used to less space and she grew up sharing a small 2 bed with her parents and brother. Not a big deal for them.
Are being from Eastern Europe smaller or something so they require less space? 🙂
Marko, good take , I can see buyers wanting to get ahead of the curve and not wait for the spring market , clearly another cut coming in December. I don’t dabble in condo’s just sfh , and my take is that there’s more than enough money around for buyers at ever higher prices with a shrinking inventory. I’m betting that sfh prices will move between 5 and 10 points give or take
@Marko depends on #/gender of kids. If only 1 kid then maybe even a 1 bedroom would be ok. 2 kids of the same gender can be in a 2 bedroom. Personally I wouldn’t want my son & daughter to share a bedroom so we would need a 3 bedroom (unless someone wants to sleep in the living room). I have a friend who bought a 2 bed condo in vancouver for her and her 2 sons. She’s happy as a clam and it’s under 900 sq ft. But she’s from eastern europe.
Dee, yes I am a proponent of programs to support family formation, child care, fertility treatment, etc. The reality however is that all of these programs have marginal impact on addressing the problem.
Whatever , sure why not lol
@Marko Juras “How big of a place does a family with one and two children need in terms of “bigger?”
Three beds at 12’x12′, great room at 14’x14′, bath and a half at 5’x10′ (main) 5’x5′ (half), laundry at 5’x5′, kitchen at 12’x12′, some hallway space 3’x12′, couple of closets at 2’x5′ each. 928 sq/ft minimum.
Not to mention what is being built is primarily rental buildings.
As for SFH construction I am really curious to see what happens next year. This year we are looking at a 50 year low but I think things could plummet even further from a 50 year low next year as builders wait for the multi-plex bylaws, unless there are some huge SFHs subdivisions on the mainland coming aboard next year.
I do really well in slow/difficult markets personally so my business isn’t well correlated to overall market health, but I would say we will clear 650 sales for the month. Seeing a bit more urgency with buyers that are looking right now (writing relatively quickly versus dragging it out 6 months and looking at 50 properties).
Recently I’ve also ended up with offers on three listings that are all more than three months on market (with no price adjustment) so that is always an indicator that things might be improving a bit.
That all being said I see increased YOY sales volumes with relatively flat prices until February but what happens then will be interesting. I wouldn’t be shocked if we saw upward SFH price priced in the spring.
Almost 40% of the Israeli population (I’m talking about Israel proper) is either Arab or Haredi (so-called Ultra-Orthodox) Jewish.
Other Jews in Israel have birth rates similar to Western countries.
How about the anti-testicles movement?
https://youtu.be/yF2TyajIL94?si=whSR8QDbb4u3VRu7
With all the changes goverments on all levels are making developers are putting the brakes on construction. Everything that’s being done is reducing demand . We might be entering a time of very little being built ( cause why would a developer try if sales aren’t there ). This should should do wonders to house prices as we enter a cycle of double digit price increases year over year . The future looks bright if your holding real estate
Yes tbone. I personally know a woman who waited to long and is aged out now. And another, who was career focused and suddenly wanted a family once she met a suitable partner. She has a ton of money so was able to access a solution.
By ideal, what I mean is before age 25 I think women should just have fun and explore. That time of 20-25 is sacred and a time for the self. I tell my daughter this.
There are some interesting possible solution. What about free day-care on campus, reduced tuition for mothers. All these out -of-the-box ideas to help make it so a person can both get their credentials and have a family. Instead of it being an apparent choice between one or the other.
How big of a place does a family with one and two children need in terms of “bigger?”
@Leo S “Max, leave the culture wars off the blog please.”
Understood.
Housing is a huge part of this. Can’t have kids if you can’t afford a bigger place. Just one of the many reasons we need a lot more housing.
Dee, to me this is one of the saddest aspects of this problem. Young women who plan to have children, but delay it for all the reason already mentioned, only to find out in their early 30’s, they are unable to conceive. The statistic I see most often is this affects approx. 50% of women in this cohort. And maybe even more tragic perhaps is the effect this has on their mental state.
In my mind the ideal age to have a baby for a woman is 25-35 (physically, psychologically). Unfortunately society is now such that women often don’t feel ready until they’re 35+. There’s a mismatch. Personally I didn’t want to have children after 35 so we prioritized having children and had them before we were financially stable. It was very tough for a couple of years but everything is great now – no regrets.
If this were to be true, then men & women are “unable” to conceive despite trying. This may be true for a very small fraction (older) of the population, and this won’t affect the overall fertility rate that much. There are many factors: women’s choice, wealth (rich societies have fewer children), couple’s choice, delayed marriages, cost of living, housing prices, etc. are all factors affecting fertility rate.
I’m out there Jerry and I’m loving it.
The great boxers versus tighty-whities debate.
https://youtu.be/sFPu0N8D15Q?si=WtSZeqC8PA0dOoQX
Let the boys run free.
QT, I wouldn’t put it all on “women” but your point is correct. The biggest factor seems to be urbanization, children born on the farm are considered as asset, while children born the city are a liability.
To your point, women in Japan are reportedly marrying themselves.
Marko is your phone ringing alil more . I had a chinwag at the bank and the mortgage fella was saying they have seen a sizeable uptick in mortgage enquires after the last rate cut . Another 50 points in December should set up a hot spring market
Current academia consensus is that high educated women having fewer children, because they are holding off having children due to time spent on education, career, and the mentality of having a partner of equal or greater social economic standing.
In a way, modern women are pricing themselves out of the marriage market and child bearing age. And, the detrimental for being progressive is low birth rate.
“Israel is an interesting study, where fertility rates are still above replacement (2.1).”
Israel is a fanatic religious society where it believes a family must have 3 children or more, and the government fully subsidize in vitro fertilization up to the age of 45.
“Simply put, it’s because women want and are able to have fewer children.”
And I don’t see that trend changing anytime soon. Governments around the world have introduced various incentives to increase fertility rate with no measurable effect. The trend is actually accelerating as more young people gravitate to the larger urban centres and away from the dying smaller towns and villages.
Israel is an interesting study, where fertility rates are still above replacement (2.1).
Dee, I take your point, but demographics is a rather exact science. Based on the number of babies born today, we can predict with precise accuracy the number of 40 year olds in 40 years. Regardless of social, religious or cultural differences between societies, babies are still conceived the old fashion way.
Environmental factors may have some impact on fertility but it’s obvious from comparing societies that it’s socioeconomic factors that account for falling birth rates. Simply put, it’s because women want and are able to have fewer children.
Right within Canada there are and always have been differences in birth rates between different socioeconomic groups.
Tbone is right – there’s some scientific explanation for the falling fertility rate – which is not only impacting humans but other species as well. With sea turtles I heard it has to do with the temperature of the waters, for example (need to double check that for accuracy – just saying I remember hearing it and also that it’s not just humans).
Back to housing, sfd will be safe from this supposed existential threat. Note that the threat might not get worse but could instead flatten out. I’ve been reading some interesting projections with climate change. Some scientists think it’s not so dire because of counter technologies that are being developed at a rapid rate. Bottom line: humans are terrible at preventing problems but pretty darn good at solving urgent ones. Same will be true with any “existential threat” related to fertility.
My own kids worry about the future and climate change. They’re young. I tell them humans are like cockroaches – as a species we are incredibly resilient. I mean, what other species can live on basically any climate on earth, modify as necessary to make a life there? There are even societies that live on the ocean, a harsh desert environment, on floating villages. There, the humans can hold their breath for so long because the dive to fish. We are truly a remarkable species.
Deleted comment. Max, leave the culture wars off the blog please.
I thoroughly enjoyed watching J.T. admit that his immigration policy was a huge mistake. Now will he admit to all the other mistakes he has made in the last 9 long years. Carbon tax? Legalization of marijuana? His fixation on climate change while ignoring the most severe drug problem in the history of our country? Maybe if he did he might have a chance in the next election. I doubt it. He can soon look forward to pursuing a career he has the credentials for- a third grade phys. ed. teacher.
Speaking of immigration, have any of you heard the term “demographic imperialism”. The act of industrialized countries stealing the youth of developing countries to support the needs of their aging populations. So it may be that the Liberals announced reduction in immigration levels may not be entirely of their choosing. Developing Countries are acutely aware of their own demographic cliff and may look at restricting emigration. China has just announced a ban on foreign adoptions.
The point of all this is to say, if we are expecting immigration to provide fuel to our real estate market we better understand the forces outside of our control that may significantly alter that trajectory.
hmm, maybe not vaccinations but micro plastics for sure, causing up to 50 % reduction in male sperm count. If you consume dairy in any of its forms you are ingesting micro plastics through the tubing used in milking machines.
Yes, and since global fertility has been falling for 70 years, those sneaky mRNA vaccines must have time travel capabilities, or else you’ve just spouted yet another idiotic opinion.
https://www.healthdata.org/news-events/newsroom/news-releases/lancet-dramatic-declines-global-fertility-rates-set-transform
Never could have guessed. Thanks for letting us know.
You’re also illiterate.
@Tbone.
Well, we did just go through a global vaccination experiment.
@” Umm.. really?”
I really hope Trump wins too and I think Elon Musk should be the vp. I also hope when all these 65,000 mail in ballots are counted the conservatives bring it home for a win. I am as far right as you can get and proud of it. I am not woke, I am awake. Its time to turn this welfare, entitlement ship around and get back on course.
This is just my opinion. Everyone is entitled to their own opinion. I advocate nothing.
Max, but falling fertility rates is not just a first world problem and has demographers scrambling to explain the phenom. Even sub-saharan Africa is experiencing falling birth rates, still above replacement but declining none the less. Interesting fact out of Japan recently. They just set two ominous population records in 2023. Highest number of deaths ever recorded and lowest number of birth ever recorded.
It was just reported last week that for the first 6 months of 2024, BC has the lowest birth rate in Canada at1.25 and Victoria and Kelowna both have below replacement natural population.
Any of the big talent will want to avoid the Kim Campbell scenario and wait until after the wipeout to take the party. The cynical thinker in me would suggest that Trudeau is hoping on a Trump win in the US so they can pivot an anti Trump narrative and try to tie that to Cons here.
@Tbone “World population implosion is one of the cited existential threats to the future of humanity. Ignore it at your peril!”
Which is exactly why young people just aren’t having kids anymore…Some aren’t stupid. They understand the expense of (day care and everything else involved). These young people were raised on youtube. Young people are like a sponge they absorb their surroundings very fast especially if it comes to them in video format. Some of these young people are totally aware of the tent cities, drug addiction, poverty, the economy, the multiple employment positions required to have a decent quality of life and all the other dire straights. They can clearly see they’ve been shafted.
In order to kick the perpetual can down the road they just bring in new people that will have children in order to fill the void.
That’s getting in . Getting in
If u have cash your getting on lol
Just like they’re creative with inflation numbers.
We’ll see if the supposed slashes to the immigration targets actually materialize. The liberals are slippery as can be on this issue. It would hardly surprise me if they make use of some creative accounting to keep the actual number of bodies the same or higher.
The declining rental market due to fewer international students allowed to enter Canada.
https://youtu.be/VHuNDm9c1mU?si=2WJM2oLGJ7wMKCsP
If the Liberals picked a new leader would they not want to establish him before calling an election. On the other hand with a new leader would not the NDP want a early election before the new leader has a chance to gain some popularity. Also I am not sure that the liberals have an obvious choice.
The Libs are setting up for a defeat on the budget in Feb/March so they can run it as their election plafform. It’s all on Bloc and NDP if they want to give the Libs the opportunity the set up their campaign based on a defeated budget. It’s super strange that the Federal NDP will risk losing a chance to be the official opposition by floating the government. The bloc has made its face saving move by making the two demands the government said no to for support, and now the bloc can vote no confidence without looking like doing the Cons bidding on a defeat of the government.
I think there is some confusion and equivocation between a change in leadership and calling an election. There may be a change in leadership, but there’s no reasonable prospect of an early election. The liberals will continue handing out cookies until the bitter end in hope of turning the tide. It won’t work.
The upside to not calling an election is that you have a job and perhaps a bigger pension
wasn’t it 3% vacancy then you can airbnb your rental property again?
Vicre, ya buying condo to flip over ya airbnb would be a good bet , as I think str will flip at some point . Not for me but good for a lot of folk though
He won’t have a choice. Downside will only get worse with time.
Don’t count on it. Literally nothing but downsides for Liberals to volunteer themselves out of office early.
I have 2 of the 3, I am good with the 7+% dividend yield with no appreciation for part of my PA
Trudeau is finished, even his party wants him gone. What he’s doing now is trying to save his neck, it’s not going to work. Expect an election in a few months, maybe February or March. He’s done enough damage.
Politicians always follow public sentiment on issues regardless of economic realities, you can trust as long as the majority of Canadians desire less immigration ( Which the majority of polls now show) politicians will act to reduce immigration. Bearish news for rental housing and entry level owner housing, less so for SFHs.
I wouldn’t put too much stock in lower immigration. Just liberal optics of a party on the ropes . Any ruling party will just dream up a new program to get peeps in
Yep. Said a year ago if I was in the market for a SFH now and had the funds I would buy it. Same view today.
Either it stays flat for some years (which is fine) or it goes up. I’m very confident we won’t see significant declines in that side.
50 year low in SFH construction in BC and will likely be even lower next year, I also wouldn’t bet on waiting to buy a SFH.
We also never hit crazy high inventory depsite the interest rate shock. Never got close to the 5,000 listing we had in 2012-2014 and even back then prices pretty much went sideways.
So not like there is a ton of inventory to clear if the market picks up as a result of lower rates.
Why I’ve always been a fan of buying quality rental properties in attractive locations.
I suspect that dozen and dozens of wood-framed apartment buildings in Langford will feel the brunt of any potential softenest in the rental market.
If there is softens look for more one or two months free versus lower rents.
Hmmm that can’t be good for half my profolio 🙂 less people less cell dataplans through telus/rogers/bell.
“Global population is fine. It will even out eventually. ”
Global population is not fine. If you want a glimpse of our future real estate market, study the effects population decline has had on the economy in general in Japan and the real estate market in particular.
Time to get an Airbnb condo!
World population implosion is one of the cited existential threats to the future of humanity. Ignore it at your peril!
Rental market should ease substantially. My bet is higher vacancy than we’ve seen in 20-30 years with lower growth and high rental completions. While we don’t know if growth in Victoria specially will decrease along with national growth, I think it’s safe to assume there will be less growth pressure. I agree with Patrick that I very much doubt we’ll see actual population decreases in Victoria.
Prices, I don’t think there’s much impact. Prices didn’t go up because of high immigration and they’re not going to go down due to that correcting. That said, healthier rental market means less pressure to buy which does decrease demand. I’m sticking with my flatter for longer forecast (at least for multifamily)
>> Will the projected population decrease have a significant impact on housing here in Victoria? Genuine question.
Unlikely that we see a population decrease in Victoria. The long term source of our population growth is ROCers (Canadians) moving here from other parts of Canada. We actually get less immigration than expected for our population (we’d expect 1% of immigrants but we get 0.6%). Provincial Migration fluctuates year to year so it’s possible that we’d lose people to Alberta or Ontario some years, but I don’t think immigration changes will be the big factor. Canadians want to move to Victoria, and many will do it when their finances permit.
Global population is fine. It will even out eventually. The problem is not the number of people it’s the hoarding and the systems that enable/encourage it.
Will the projected population decrease have a significant impact on housing here in Victoria? Genuine question.
A bunch of jingoist anti-imigrant racist…. Oh wait, not a conservative government yet, so they won’t be calling the policy that yet..
The entire world needs a population decrease.
They are targeting an actual population decrease. Didn’t expect that
Trudeau announcing a major reduction of immigration levels, permanent and temporary. Some anticipating as much as 20%. What took so long?
Regarding human resiliency, I recall a recent discussion about leaving Victoria for the winter to avoid the brutal cold and traveling somewhere warmer for several months. Talk about weak.
Funny… something happened to the mute button… oh wait there it is.
Unless there’s more than one “max” on this site, I’m pretty sure this guy changed their email or added invisible letters to the handle to get around the mute.
Because I’m 100% sure I muted that guy 6 months ago for being a troll.
@thurston”Might be just me but i say the boc blows it and interest rates slide below 2.5 imo”
I want them to slide back down to 0.25% so I can lock back into another 5 year fixed at 1.86% come Oct 2025. I love borrowing free money at less than inflation.
This is just to help some readers understand how bond yields effect fixed mortgage rates.
https://youtu.be/KrHjqxKPzIA?si=kN0mn96Roi0zKUKz
zach , thats a fair take on things. the feds and boc where never going to let the market slide. THat was just hopeful thinking by folks who where wanting 30 percent off . .Might be just me but i say the boc blows it and interest rates slide below 2.5 imo
@Zach”Don’t wait to “get a house on sale” next year because that market crash ain’t happening.”
Well that’s great news Zach. All these years of trying to time the market. I should have just come over and asked you if the market was going to crash or not.
With a half point rate cut finally bringing us to 3.75, I think the next year is going to be interesting.
Most banks are predicting a terminal rate at around 2.5% or less. This means discount variable rates could hit 3.7 or lower in 12-18 months.
Fixed rates realistically have already approached 3.9 and then rebounded. The latest rate cut had no effect on the bond market because these cuts are already priced in, so it’s fair to say that discount fixed rates are locked in at 3.8-4.2% indefinitely, unless the market starts expecting the BOC to cut significantly below 2.5 down the line.
I think it’s fair to say that prices aren’t likely to go down any time soon, short of a massive, unexpected recession. Not with still rapid population growth after 2 years, declining home construction and falling interest rates.
So I’m moving my market expectations forward by a year. I think it’s likely that anyone who can lock in at 3.9% fixed or get a variable rate at significantly below
Prime today is likely to get a decent deal if they buy in over the next 6 months.
Don’t wait to “get a house on sale” next year because that market crash ain’t happening.
And it’s hard to predict if FOMO and investors will pump up the market in another year.
If you have to wait, then so be it — who knows, we might get lucky and things will slide flat for a while. I wouldn’t count on it, though.
@ Dee “Humans are generally very resilient.”
Until they aren’t. after 72 hours without food the switch flips and they become very irritated. We have a two year old English bull dog (not to be confused with the short/fat British bull dog). He is super friendly to the family, but if he doesn’t know you and you enter the house. My oldest son has his FAC for hunting, household protection is good. At Costco I suggest flats of easy open chunky soup (they have everything you need). Load up on batteries while your there. Pull out some cash…$5/$10 bills are good, you don’t need to drain the account. Keep your fuel topped up in your vehicle.
I assume you already have the fundamentals such as five hundred gallons of water, a radio, camping lanterns, flashlights, lighters, camp stove with the small propane cylinders, a primary household woodstove with dry cord wood…etc. There is an extremely good chance that nothing will happen. If that’s the case just eat all those flats of chunky soup and rotate as necessary.
It’s also Victoria and it’s full of government workers. They leave the workplace if someone wears perfume, there’s a close talker, offended by a person’s non-verbal facial expression, smells fresh paint or feels violence was done to them because their name is spelled wrong on their Starbucks order. So, prepared folks could likely defend their stores with minimal harsh language and just will have to face the post emergency human rights complaint from the would be looters.
Re: people coming for provisions: Get a scary dog. Problem solved.
I just have a bunch of canned chick peas. Will take at least 2 weeks before anyone wants those anyway. I read about a guy who survived three months in the woods eating only dried chick peas and berries. Humans are generally very resilient.
The prepared folks are likely more prepared with the means to keep their stuff than the folks thinking they can take it. It’s usually the 72 hour mark in an emergency without support that the issues start arising.
Introvert, thanks I’m just reporting what I saw when I was sitting on park bench having a sandwich
@Whateveriwanttocallmyself “What Max could do in the nineties with ease can’t be so done as quickly by Max junior today.”
Yes. you are correct. But even back then you still had to put your neck on the line at 12% interest for a new build construction loan. There was nothing there for the lender to take back if shit went sideways. It was all trust… High risk business. As the builder you might win or lose your shirt. As a lender…Same shit. I also used private lenders since they knew the game and the risk.
It was a reputation thing.
The impact isn’t so much on people buying a house, fixing it up and then reselling two years later. What it does is add to the cost of those that speculate in a rapidly rising market that intend on selling in a short period. They aren’t able to turn over properties quickly. As in the previous posts this increases the holding period and in theory should slow the rate of home price inflation.
What Max could do in the nineties with ease can’t be so done as quickly by Max junior today. This might also adversely effect condominium presales where speculators were buying up a half dozen condos at a discount prior to completion as they may have to rent them for awhile to escape the additional costs.
Is this a perfect solution to reduce the commoditizing of housing? Nope. But if you have been a reader for awhile on this platform you should have come to the conclusion that there isn’t a perfect solution for anything. It will help some and hurt others.
This made me laugh so hard. Thursty, you’re a beauty.
It has been a while, hasn’t it.
I always wonder whether (some of) the unprepared folks won’t just come and take the food and supplies from the prepared folks. Did that kind of stuff happen with the 2011 Christchurch, New Zealand, earthquake? I might have to google that one day.
@Whateveriwanttocallmyself “More bad news for you Max”.
I haven’t flipped anything since y2k. I oversee things now as a sole proprietor. I am basically a babysitter. I go around from job to job and make sure everything is moving forward as it should be. I problem solve and wipe the tears from the eyes of the individuals that can’t seem to figure it out. I take care of the scheduling and prepare the job cost summaries . I don’t flip or speculate anything anymore…And haven’t since y2k. That’s 9,125 days since my last flip!
Off topic: But good intel for homeowners.
I rotated my earthquake preparedness pantry today. It cost me a grand at Costco for a month of everything that will make life comfortable…All non perishables. I also pulled out some cash for the fire/water proof safe. I have all my firewood for the season in the garage and I always have a full tank of gas in the truck. The political landscape on a global scale…Well, never mind. Its very important to have stock in house to hunker down for atleast a month without needing any help from the outside world.
I don’t get the attack on “flippers”. They are buying one home and selling one home. Net impact should be zero. And in the process, they are paying PTT and RE commissions. And many are putting in sweat equity to add value. Turning “pos” into “nice”… Making the world a “better place”.
More bad news for you Max,
The BC home flipping tax applies to the income you earn from selling a property in British Columbia (including presale contracts) if you owned the property for less than 730 days.
https://www2.gov.bc.ca/gov/content/taxes/income-taxes/bc-home-flipping-tax
Where is Barrister?
@Whateveriwanttocallmyself “Last year, CRA adopted the concept of “house-flipping” to deny people who own their home for less than a year the right to sell it without paying tax on its capital gain.”
Its been that way for as long as I’ve been in the game. Back in the early 90’s I would build a spec house then move into it for a year and sell it. Build another one and again move into it for a year and sell it (all capital gains were exempt) as long as you had atleast one year of mail delivered to that address including bills (at that time) from bc tel, shaw cable, centra gas, and bc hydro. Everything was great until my girlfriend (at that time) got sick and tired of living out of a suitcase and wanted me to plant roots, get married, and have kids… What could I say?
So here we are now with roots firmly planted, married, with two kids that are now taller than me, and we still have to fill out that ridiculous spec tax form every year even though it’s very clear that we are not speculators. How much money does that program mandate cost to administer anyway?
2 years ago ABC Vancouver (who won a strong majority on Vancouver council) promised to get townhouse permit approvals down to 3 weeks.
A year ago they introduced a multiplex policy legalizing some triplexes/quadplexes.
Average approval time is 245 days, or 1066% longer than the target.
I see it going around 540k to 580k based on recent comps.
It’s a charming space. Lack of parking will probably be a deal killer for a lot of folks, however.
That Yates street loft is very nice looking. <3
LOL
Thanks, Marko. Just curious how you can tell it’s a foreclosure (my guess is that I just missed something in the description!)
A couple of things going on there.\
i/ Purchase at the very peak of the market.
ii/ Court foreclosure so until it goes to court tough to say what it will actually sell for
Wouldn’t read too much into the Canadian dollar , currencies will flop around a bit as interest rates come down around the world . Boc doesn’t seem too worried which is good enough for me . Interest rate cuts are saving folks lotsa money which will be flowing back into the economy . Seeing lots of smiling faces and kids playing in the parks today because of the rate cut
Stumbled across this listing while browsing: https://www.realtor.ca/real-estate/27573558/301-524-yates-st-victoria-downtown
What explains it? Was it FOMO driven? Purchased for $698k in 2022 and asking $440k today. Assuming it sells around asking, it would be probably the worst, quickest loss (by percentage) I’ve seen in some time.
You’ll be paying a 40% exchange rate, maybe a little more. It reflects the state of our country. Makes nice wallpaper.
Need to go to Seattle, am I imagining it or has the Canadian dollar dropped more than two cents in the last couple of weeks?
Principal residences remain untouched by income taxation as they have always been.
Regarding investment properties, they are subject to changes in tax policies just as as stocks are. Don’t like it, invest your money in an RRSP or TFSA.
Canadian governments have been targeting what they view as Canadians’ most undertaxed assets: their homes.
Capital gains inclusion rate to 67 percent of gains above $250,000 may be the best known.
If children inherit an investment property or cottage they will likely have a staggering tax to pay. If they can’t come up with the money, the property will have to be sold.
Airbnbs and similar renting platforms have become a money machine with licenses and annual fees, along with expenses for third party audits, inspections, and detailed record-keeping, often making rentals unprofitable. The loss of supplementary rental income forces many to sell.
A change-in-use from short to long term triggers a GST tax on the full market value providing a windfall to CRA. If the owner later decides to stop renting and go back to living in the home, it’s deemed to have been sold at fair market value, making any appreciation a taxable capital gains. Because the change-in-use rules are new, ill-defined and untested, owners are bound to get trapped in their contradictions.
Last year, CRA adopted the concept of “house-flipping” to deny people who own their home for less than a year the right to sell it without paying tax on its capital gain. For Canadians that work abroad, CRA deemed them a non-resident and claw back their resident’s tax-exempt status for their years away. They too are deemed to have sold, which means a GST hit on its market value and then capital gains tax on any appreciated value when they return from abroad.
If a home owner decides not to rent their home when living abroad, they will be subject to the vacant home tax. In the case of Vancouver that could total six percent of a property’s value.
Governments’ extraction of value from homes has accelerated in recent years. Homes that were once a no-brainer investment strategy have morphed for many into a liability.
But you have to pay to live somewhere. So why not pay into your own forced savings? In our case when we had our two suites rented our monthly mortgage was only $300/month (we claim all rental income so I know it’s more complicated than just dollar for dollar – but on a monthly basis it’s a huge difference). Point is in some cases it’s actually cheaper to own (over renting).
Excellent graphs and points of discussion, as always. I think a point that is slightly absent is the opportunity cost. To me, the question is not generally “will I lose money?” but instead “will other investments perform better?”.
With lower prime rates, homeowners with variable-rate mortgages and fixed payments will see a higher portion of their payments going towards the principal amount of their mortgage. Those with variable mortgage payments or HELOCS will experience a decrease in their total payments.
However, for fixed-rate mortgages, the rate cut is unlikely to result in a significant change in fixed mortgage rates, as they are priced based on government bond yields.
For those with an upcoming mortgage renewal the renewal rates are still likely to be higher than the rate they currently hold, the increase will likely be more manageable than it would have been at the beginning of the easing cycle.
We were facing a wall of renewals starting in the spring of 2025 that previously had a potential for bank sales, the rate cut has lowered that expectation.
I still think of a house as a place to live and to enjoy with family and friends. I guess a nest egg to pay for that decent retirement home if I live that long.
Nice to see the 50 point cut , maybe another 50 points in December coming . Leverage up and beat inflation and then go on vacation
Totoro-The inflation I was referring to was house inflation. Yes, it usually is higher but not everywhere.
>> Equity pay down is just debt repayment which is savings, not return on the existing investment.
Of course. You might not have read my original post, as I already stated that . Patrick: “Of course the equity has been paid in via the mortgage, but so has the interest, and they are paid in lieu of rent I which adds no equity).”
Notice how you need to invent a term of return on the “existing” investment, not return on the “original” investment (the down payment). Because if I put $50k down payment on a house, sell it 5 years later and end up with $104k (as in my example), I’ve made money on the original investment ($50k). If you did want to measure your term of return on the “existing “investment, you’d need to subtract imputed rent and add in other expenses.
Fact is, you end up with $104k more cash (less RE fees) at the end upon selling after 5 years owning the house (using my example).
Forced savings is a huge part of home ownership, and it turns into real cash when you sell, and doesn’t occur with renting.
No. Leveraged money multiplies the gain dramatically. Appreciation rates on housing in Victoria have already been well above inflation for my lifetime. This is why new buyers can’t afford a sfh.
Lmao, I am surprised this simple point needs to be explained to the hhv internet armchair captain…..
Pop quiz, if you pay down 100k of mortgage in your principal residence (value stays flat since your purchase) and then took out 100k HELOC to buy a 500k rental condo and then that condo decreased in value by 100k, are you better off?
Plain and simple, home ownership is a form of forced savings ( otherwise the money would probably be wasted, most people are not disciplined savers). Price appreciation is nice but only keeps one on par with never ending inflation. Everyone should strive to own some dirt.
Equity pay down is just debt repayment which is savings, not return on the existing investment. Same with buying stocks on margin, paying down that margin is independent of the return from the stocks.
In either case the pay down is itself a new investment, and you get a return on that investment which is reduced interest payments, but that’s not to be confused with return on the existing investment itself.
High transaction costs have an effect on the holding period in real estate investments and make it expensive for most investors to buy and then sell assets after only short holding periods. Unless there is a mis-pricing of the asset at the time of purchase, ‘flipping” a property can be profitable only if there is a large change in the value of the asset over a short period.
I suspect that Leo’s data may show that the holding period of assets is shorter during periods of rapid home inflation.
https://youtube.com/shorts/dSDOWzNIvDk?si=lW4mkTb42TkT6_b7
@Patrick (ie no suite).
I have a lower 2 bedroom suite that’s been vacant for the better part of 18 years. We don’t need the space and my oldest son won’t move down there in fear of having to pay rent (He’s 19 with a full time job). We just keep it clean and have it staged for when guests come and stay over the holidays. To me I really think its value added to the house. I think it adds a cool factor to have the extra accommodations available even though its rarely used. We do use the lower kitchen for pressure canning and preserving annually.
When I first bought this property I had visions of grandeur thinking I would rent out the lower suite and the tenants would pay my mortgage every month. I was young and stupid so I figured I would become an amateur landlord…Everyone was doing it. I’m a family man, I am very personable, positive, and friendly. At the same time I can be a real asshole if you are disrespecting my space.
I went through two rounds of tenants and two rounds of residential tenancy meetings and that was way back in 2002…Never again!
Everyone misses the forced savings part and the price acceleration (that comes with a long term hold) which can then be used as leverage if you ever need some capital. I don’t know what the ltv is these days? But I’m sure it’ll get you out of a surprise. Once you get over the bell curve of a 25 year mortgage (the life of the loan). The amount of the bank’s money you’re borrowing gets smaller and smaller and therefore, so does the interest you pay (front end loaded). Now the huge majority of the monthly mortgage payments hammer down the principle very rapidly (forced savings). You also have to live somewhere and its tax free money.
Its very hard not to smile while looking over your monthly banking statements when that time comes to fruition.
Re: cost of upgrading vs staying put. Leo the Rational Reminder episode you linked to recently noted that there can be tax advantages to putting more $ into principle residence IF one has maxed out tax-advantaged investment accounts. So if a homeowner is considering upgrading, they should be thinking about future tax-free increases in the value of their (more expensive) home vs. after tax investment returns in a non-registered account should they stay put.
That’s if one wants to get super geeky about it. But in real life, most of just make these decisions based on gut feel, e.g. if happy = stay put, if not, look for something else. For us, we weren’t keen on upgrading and weren’t even looking, but the right place came up and rest is history.
> Holding for 5 years, you would have lost 15% of the time
I don’t see it like that. Your analysis hasn’t considered equity pay down, which is a big and important advantage of owning vs renting.
So for example, when you say “ Holding for 5 years, you would have lost 15% of the time”. In fact, at the end of 5 years, on a 4%/25 year mortgage, 13% of the mortgage is paid off, and is equity. On a $800k mortgage that is $104,000 equity. Which is much higher than a RE+PPT fee to sell/buy a new house, and would make your claim that you have “lost money 15% of the time” false. Of course the equity has been paid in via the mortgage, but so has the interest, and they are paid in lieu of rent I which adds no equity).
Taken to extreme, if someone buys a home for $1 million, and it’s paid off in 25 years, but only worth $900,000, their net worth is up $900,000 and isn’t down $100,000 and they haven’t “lost money”. An easy way to confirm how most people think about this, is do you measure your current net worth from your original mortgage balance or your current balance?
Money aside. Selling, buying and moving sucks! Its always been relative. Its a waste of time and money. Just live in your house and be happy you have one. The only real surprise expense for a typical 2600 sq/ft sfd is a roof replacement every 25 years and some common sense general maintenance. A new roof only costs $11k…That’s only .83 cents per day or $25 per month.
Good point. “Whatever” made a good point also, which is about half of the houses for sale have suites. (I can’t recall if that was new/used or both). That doesn’t make them “crappy” but it does take them out of play for the HHVers looking for a “SINGLE” family home (ie no suite). So the actual number of houses with no suite available is much smaller than the total.
I would agree that you are doing well and no need to worry about a different strategy if you are happy with this.
With what money? The calculations I used assumed using 100% borrowed money at low rates available for primary residences. I personally would not borrow at, ex. heloc, rates to invest in the market.
Math is not as favourable. For one, you are getting a condo for the 500k and you’ll need to put 100k down which comes from where? Then borrowing to invest is at a much higher rate and the gains are not tax exempt. The rental income will offset some of the mortgage but not all. Plus you get only 5% appreciation taxable vs. 8% tax exempt. You’d be better off upgrading to a primary residence with a small suite if you want rental income.
Lol so live in a POS house in a POS area forever is doing well? LMAO not taking vacations or eating at restaurants are also a surefire ways to accumulate more wealth.
Of course if things go up then you are better off buying more of it. But you’re not taking into account the opportunity cost. Instead should probably compare upgrading to
1. Not upgrading and investing the difference elsewhere
2. Not upgrading and adding a $500k rental.
Hmm. Good question. How would you define good vs crappy house and location? Is that just captured in the price? So cheaper homes would be expected to sell more often than more expensive home?
“Buy, sell, buy” can net you more in the end (but doesn’t always). However, “buy and hold” is a surefire, lower-cost way to do well.
Would you agree?
What instinct? You mean adding up PTT and commissions and deducting it from appreciation repeatedly. That is pretty straight-forward math.
Change homes without having a compensatory or larger jump in appreciation on the new places and the math favours staying put.
However, a lot of people sell ex. an entry level home or less than ideal home and buy a more expensive/nicer house instead with their retained equity plus increases in salaries over the years.
If the new home is, 1.5 million vs the sale of a 1 million existing home and you held it between 2014 and 2024 you’d have compound tax exempt appreciation of about 8.1% (or whatever it is) on the 500k difference. This is an extra $589,000 less the additional ex. $125,000 in interest – so $464,000 more in your pocket over holding your existing home less the one-time transaction cost of selling the first home est of $60k. So about $400,000 better off.
This is an excellent article. Thank you Leo.
I went to the open house a few years ago and the entire house seemed like it had a facelift with no major work – except a brand new kitchen (probably cost 70K). When house sold for 400k over ask I thought – wow that’s a 400K kitchen! Would have been much cheaper to buy a place with an ugly kitchen and re-do it after the purchase.
Always been the case, POS houses are what people dump at first sight of a strong market and are the ones where low-ball offers are accepted during down turns.
Leo providing data that supports my instinct:
https://househuntvictoria.ca/2024/10/06/vote-housing-a-review-of-the-platforms/#comment-120847
Love when this happens.
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Turning McKenzie into one lane each way for regular traffic? Dumb idea.
And ironically named a “rapid” transit plan. 🙂
Re holding periods.
Seems like there is a trend of crappy houses (structure or location) selling more frequently and nicer houses less often, which sort of makes sense. Folks are more likely to settle for the long term in better locations. I wonder how much this shows up in the data?
Also explains why there is always so much crap on the market. Not only do crap houses take longer to sell, but probably they also get sold more often
Some good stats , nice to sales on a tear. As long as we have a strong real estate market the rest of the problems will work themselves out
Thanks Leo.
ok, but I don’t think the unemployment rate tells us much about the increasing portion of society barely getting by due to the paradigm shift of exponentially higher housing cost (looked at generationally), for example. Or what happens to society if the wealth disparity rises too high. I find the rapid swing from surplus to significant deficit under Eby alarming, and more so because if it’s not anchored to something, I view it as just piling on more intergenerational problems for the future. Plus come to think of it, we’re getting lots more food bank requests these days – I don’t think it’s just me, I think there’s a problem
Saanich council was presented with the Quadra McKenzie study last, the final draft of which is now online. It’s a very comprehensive document, with a notable change from the prior draft in the addition of a new Center, called Gordon Head McKenzie. Since Saanich planning has put all the housing with higher density mostly within the first 2 blocks from the major thoroughfares, there isn’t much impact on many Saanich residents, with one possible exception. The rapid transit plan for McKenzie Ave shows one lane of traffic in each direction for cars and one for buses, with wide sidewalks, boulevards and bike lanes on each side, from the Pat Bay to UVic. Interesting. Also, considering that Saanich plans to implement the 15 minute city with intermittent Hubs to bridge the distance between the Centers and Villages, leaving Gordon Head and other larger residential areas basically as-is seems odd. I guess it’s politically expedient. I watched the meeting last night online – interesting to see the individual councillors questions. Some of them certainly have their pet interests.
Having a payroll of over 800,000 federal employees doesn’t help either. Imagine the billions spent on warfare. I think I read that the U.S. maintains 50,000 troops in South Korea alone. Thousands of personnel on one aircraft carrier. It’s mind boggling. The u.S. is a house of cards, but no other country creates more cash than their economy. If Trump wins, expect an increase of U. S. citizens moving to Canada. Our exchange rate is nearing 40%.
That has to be the rankest piece of hypocrisy I’ve ever read. The reason the US is running up debt so fast is Trump’s massive tax cuts for the rich. Exhibit A being the writer of that piece, who just happens to be on stage campaigning for Trump.
https://www.cbpp.org/research/federal-tax/the-2017-trump-tax-law-was-skewed-to-the-rich-expensive-and-failed-to-deliver
The best advice I’ve heard all my life is to think long term.
I also learned early on to make sure you don’t get into something unless you have the ability to hang on.
Use debt wisely. Times can change on a dime.
Elon Musk: ” In just three weeks, total U.S. debt skyrocketed by $473 billion, reaching a record $35.8 trillion—equivalent to $1,450 per American added in mere weeks. Each citizen now bears $103,700 in national debt. Meanwhile, interest payments surpassed $1 trillion in 2024, costing every American $3,360 in interest alone. This fiscal irresponsibility is an unsustainable gimmick to hide the true state of the economy”. (Whether you like or hate Musk doesn’t matter. The debt numbers should frighten anyone.)
Canadian politics and who is in power here in Canada amounts to very little.
Dig in and think long term.