Nov 25 Market Update
The market is continuing on a bit of a tear in November, and while cities around the province and country are reporting a rebound in sales activity, Victoria is showing one of the strongest recoveries. The 62% sales increase in October is well ahead of the 33% average provincewide.
With the recent figures we’re no longer up that much, but sales are still outpacing last November by 46%, while new lists are lagging slightly for the first time.
| November 2024 |
Nov
2023
|
||||
|---|---|---|---|---|---|
| Wk 1 | Wk 2 | Wk 3 | Wk 4 | ||
| Sales | 30 | 170 | 287 | 425 | 394 |
| New Listings | 89 | 332 | 512 | 656 | 885 |
| Active Listings | 3103 | 3063 | 3013 | 2909 | 2644 |
| Sales to New Listings | 34% | 51% | 56% | +65% | 45% |
| Sales YoY Change | — | +44% | +47% | +46% | +3% |
| New Lists YoY Change | — | +3% | +0% | -6% | +13% |
| Inventory YoY Change | +14% | +12% | +10% | +9% | +25% |
| Months of Inventory | 6.7 | ||||
We should get close to 600 sales for the month, which will be about 10-15% above the long run average of 527 sales.
Unlike October where the sales recovery was almost entirely on the single family side, this month the increase is broad-based across all property types.
Inventory is still up 9% overall, but that includes all types of properties including commercial. The charts below are from a couple days ago and things will change slightly before the end of the month, but overall residential, detached, and condos are pretty similar to where they were a year ago.
When you look at the always popular entry-level detached market segment, we’ve actually seen a decrease in availability since October.
The core has been more active than the westshore for quite some time, and it looks like that’s starting to hold back sales. With only 27 active detached listings in the core under a million, we actually aren’t seeing as many sales as this time last year when there was twice the selection. With the bond market creeping up again (it’s basically at the same level it was 2 years ago) it will be interesting to see if the activity holds into the spring. No doubt there will be lots of economic volatility with the changeover the US, and whether that’s good for their economy or not, I’m pretty confident that an aggressive America-first agenda isn’t going to do us any favours. That may finally break the back of an economy that has been teetering nationally, but surprisingly strong in Victoria. In addition, despite lower rates, condo affordability is still substantially worse than where we’ve seen markets turn around in the past, so any sustained price growth at this point would be unusual. And of course we’re entering a period of lower population growth that will drag on demand. All reasons not to be too bullish on the sales surge, but none of that changes conditions on the ground.
The problem for house hunters is that waiting to see what happens becomes decidedly less pleasant with the market on the trajectory it’s on right now.
Depends on the context, I can say the same thing about earning 600k with 2 kids in private school and a wife that shops all day instead of working.
My point was that even earning 300K doesn’t leave you rolling in money as any extra money that you may have at the end of the month may go into long term savings portfolio if you want to retire before 60.
You aren’t taking into account the fact that most people who own houses got into the market when prices were much lower.
My car cost $11K by the way.Not per month, not per year. Just one shot. Gets me there as quickly as any other car.
New post: https://househuntvictoria.ca/2024/12/02/november-buyers-are-optimistic-as-sales-stay-elevated
Well then, put your spouse to work! Then you’ll have 6k-8k each month in extra savings.
So another 3k/mth of savings on top of maxing out TFSA, RRSP and RESP, sounds like disposable income to me and pretty comfortable living.
Caveat, “not yet sure about the legalities of some future owner”. I agree with future proofing it for resale; however, I’d probably look into the property tax changes. We can build a 8X10 shed without permit (and no concern re property tax) but once it’s a permitted structure it will add to the tax calculation. Is the BC Assessment valuation of say a 20X30 permitted stand alone shop structure with full electrical / plumbing permits etc. much different than a completed suite? I don’t know the answer to that, but would include that in my considerations. Now, if the expected enjoyment is worth any potential added tax then go for it.
Sure, we get that. What exactly are you whining about anyway? Is it your 3-4k savings each month?
300K income pays 115K taxes, 32.5K RRSP contibution (17.2K refund), 7K TFSA, 5K RESP (assume 2 kids), 5K monthly mortgage, propertry taxes (rising rapidly) , 1K monthly car payment, gas, insurance, leaves you 7K/month for travel, food, utilities, memberships, home furniture and improvements which may leave you with 3 -4K extra savings each month, unless you children pay high level sports like hockey that can be 5K to 25K year/each.
If spouse works that will change things a lot.
The one wild card is the enormous wealth transfer that is taking place over the next 25 years from boomers already starting to pass away. Receiving 500K to 1MM+ will be life changing for a lot of people.
Why do you need to save 5-10k/month to be able to max out a 7k annual TFSA room? Also, $18k a month net should be pretty comfortable servicing a $1M mortgage in the low 4% range with enough left over to provide for a comfortable life that has kids in the equation.
That’s sort of the plan at least for quality of build and utilities. not yet sure about the legalities of some future owner later converting it to an ADU.
I built this for 70k with all the permits. Open concept kitchen with the bath at the back supporting the upper loft bedroom. 12/12 Vaulted ceilings everywhere. I designed it for my Son. I don’t know if it adds any value, but it was just a septic field before.
This is why we all have 10,000 sq/ft lots out here, to allow for the four distribution fingers of the gravity septic field. Now we are all on sewer, so you can now build on these areas providing you follow the rules.
“but if you maxed your TSFA out every year and had a 10% return/year which isn’t crazy wouldn’t you be clearing 200K?”
@Marco How many of your clients have anything left after buying, & lifestyle? I bet most folks that make even 300k/ year combined, after tax income of 18k/ month gets crushed pretty quickly with a mortgage, $1k / car in car payments, groceries eating out, childcare, heat, p.tax, water + vacations clothes, renos, etc. I bet this is two orders of magnitude more common that a couple that makes the same 300k and has less than 500k in mortgage, drives used cars and saves 5-10k/ month.
Most people that own houses aren’t rich because they are so expensive that owning one literally prevents you from ever being rich. It’s just math but as I’m sure you’ve noticed, Canadians could be a bit better at that.
I know you specifically said NOT, but I would investigate what it would take to make an accessory building that is large enough to be converted to an ADU in the future. Leave it as a garage for now, but think sizing / utilities to allow conversion later. More cost, but IMO a lot more likely to be recoverable on resale than a shed.
Though personally we derive immense value from the shed that was built by the previous owners (basically to the same quality standard as our house) and without existing garage / shed the value should be pretty good on resale.
What do folks think the return on building an accessory building (heated garage/workspace NOT an accessory dwelling) is for an existing SFH with lots of room on the lot but lacking any current garage/accessory building? Location – somewhat above average in Fairfield
Obviously I’ll never get back what we spend on this, and I’m not looking at building it for financial return but for our own convenience/enjoyment, but I am curious what bump in value we might see.
Well it is called a savings account you know. That’s a reason why many people choose guaranteed investments over stocks in their TFSA.
And on average people are going to slightly underperform the market due to management costs
Most will also liquidate the majority if not all of it when buying a home.
Because the great majority of people with TFSA’s don’t contribute anywhere near the maximum.
Obvious.
Max out your TFSA every year on January 1 and earn 10% (net of commissions or management fees) a year. In that case you will be at $227 K at the end of this year.
8% annual return, same assumptions = $189K
12% annual = $273K
Million dollar TFSAs would equate to over 25% annual return.
Some larger than average TFSAs are going to be big not because of returns but because of a spouse passing away and combining the two.
Definitely.
30-40 years annualize return for the Dow is slightly over 10% and so as the TSX, and the NASDAQ 30-40 years return is well above 13%.
All of which hit or surpass the 10% annualize return target.
I’m sorry but the TFSA didn’t exist before 2009, so we have to work with 15 years or less for the account.
Nothing wrong with a 100% US large cap equities approach. Just saying while 15 years is a good run, when your time horizon for the life of a TFSA is 30-40 years, you want to think on those timescales.
That was 1999-2009 specifically.
I agree completely, but the S&P 500 ten years annualize return at any time in 2012 to 2022 was not -.67%.
You are correct that the US and Canadian stock market has fair quite well in the last 10-15 years compare to the lethargic EU, but I think most Canadian myself included stick with Canada and US market.
And, I don’t think it is a coincident, because my TFSA is well within the $200K-1M as Marko.
https://tradethatswing.com/average-historical-stock-market-returns-for-sp-500-5-year-up-to-150-year-averages/
https://finance.yahoo.com/quote/SPY/performance/
The BC Assessments that we will be receiving soon are calculated as at July 1, 2024. Comparing the July 1, 2023 to the July 1, 2024 median prices for houses in the core districts of Victoria there is little change between them of less than 3 percent. I suspect some home owners may see a very small decrease in their new total assessed value.
It’s important that the home owner check that the information about their property is correct.
For single family properties that sold around July 1, 2024 the Sales To Assessment Ratio ranged from a low of 0.74 to a high of 1.78 (excluding outliers). Most properties sold around the median SAR of 1.02. The typical property that sold around July 1, 2024 would have sold for two percent over the assessed value. For most home owners their new assessment should be a fair and equitable indication of the value of their property.
If you feel that your property was worth significantly more or less as at July 1, 2024 than the assessed value it would be prudent on your part to appeal the assessed value. It costs you nothing to do so.
My experience shows that most real estate agents and prospective purchasers put a lot of reliance on the assessed value. It is therefore important that you check that the information about your property is accurate.
Important context.
@GlennC – the numbers on that site may be current but are the ones referenced in the Reddit post?
For reference, a common all equity ETF is VEQT. In July 2022, a unit of VEQT was about $30. Today it’s nearly $47. A 57% increase.
Ahh thanks Leo. The Globe article references this:
https://theijf.org/open-by-default/24383738
The data was released by CRA in July 2022. And it may have taken them time to pull that data together; so it could be even earlier than that. Most TFSA balances will be up substantially since summer 2022 so makes sense that the numbers look understated.
True, but the previous 10 years in the S&P 500 your annualized return (with investing dividends!) was -.67%. That’s what I mean about long run. No doubt this isn’t relevant to the discussion of TFSA balances, but it is relevant to the decision of whether you want to put 100% of your investments into large cap US equities
IMHO, most if not all who bought indexes ETFs should be well above $200K if they topped up their TFSA account regularly, because both the S&P 500 and NASDAQ-100 average 14% return in the last 15 years, and the TSX track pretty close to the Dow.
And, even with the conservative calculation of 10% compound return, one should be above $200K.
Leo, are we getting a new post today?
TFSA numbers are current to Jan. 15, 2024 according to the Open by Default database (the two-page government doc @ https://theijf.org/open-by-default — search for ‘tfsa’)
Bit of a slower week to end the month.
Final numbers.
Sales: 551 (+40% from last November)
New lists: 803 (-9%)
Inventory: 2836 (+7%)
Flatish
New assessments coming soon, any guesses as to increases or decreases?
Combo of low contributions and then poor investments after that. The average retail investor I think gets about 3%?
You’ve done well in your investments but 10%/year long run return is likely not a realistic estimate. You would need to outperform the market by a few percentage points a year and maintain that. But even at average returns maxing a TFSA would put you in the top 3% or so of contributors
Presumably this one but I don’t have a
subscription https://www.theglobeandmail.com/investing/personal-finance/household-finances/article-29-canadians-have-tfsas-worth-5-million-or-more-dont-feel-bad-if-yours/
It will be very interesting to see what 487 Superior Street actually sells for.
If someone finds out….please post the number.
Does anyone have a link to the source article that provided those TFSA numbers? It’s supposed to be from the Globe. Not clear if those are current numbers.
@totoro
While it’s true that an interest rate rise from 2% to 4.3% won’t double the monthly payment, it could more than double the total interest paid on the loan (assuming the higher rate is carried for a majority of the loan duration).
So while the mortgage formula spreads out the interest so that it doesn’t hurt as much now, it sure does hurt in the future.
I am going to guess 1 out of 29 is over $25 mill 🙂
How can this number be this low? I am well into this bracket and I’ve been investing in the most boring dividend plays like Sienna Senior Living, TRP, etc.
Maybe someone smarter than me can crunch the numbers but if you maxed your TSFA out every year and had a 10% return/year which isn’t crazy wouldn’t you be clearing 200K?
Vacant, looks like they want to sell fast. I’m nearly always in favour of aggressive asking price. Especially now that buyers have returned. Dec always a tough month in terms of sales, but always someone looking to buy.
Not sure if already posted, but thought this was interesting from reddit https://www.reddit.com/r/CanadianInvestor/comments/1h1jjf3/comment/lzf5ruv/
And the average balances
Obesity is going to get worse when Trudeau axes the tax on junk food in time for Christmas.
Last thing we need! Obesity levels are already over 30%.
Imagine the strain on the structural frame…
Busy day today at the opens , ‘tis the season to shop for a home before Christmas. Shoppers will find no bargains this spring lol
160,000 real estate agents to handle 500,000-600,000 sales per year. Not exactly what I would call efficient.
Unfortunately the entire real estate industry is stagnant and none of the products produced by all those workers can be exported. If home sales stalled, many of those real estate agents can return to their full time employment selling hot dogs.
Plus- Licensed Builder (HPO) fee… 20% of the total build.
.
List of subcontractors needed to build the average house (source NAHB) Contractors use between 11 and 30 subcontractors (average 22) to build the average house.
Security System
Carpeting
HVAC
Electrical
Tech (CAT 5 wiring)
Fireplace
Foundation
Drywall
Masonry
Concrete flatwork
Roofing
Kitchen Countertops
Ceramic Tiles
Flooring other than carpet and tile
Painting
Landscaping
Kitchen cabinets
Exterior doors and Windows
Framing’
Exterior Siding
Interior Doors
Finished carpentry
That’s just the house. Doesn’t include the roadwork, lender, insurance, city workers, real estate agent, etc. Or those employed to manufacture and sell appliances and building materials.
Just real estate agents alone, there are 160,000 of them in Canada.
IMHO, I think it has been slowly restricted since the illegal hippy immigrants invaded Canada in the 60s/70s.
Max-Something Trudeau has restricted for the last 10 years.
Okay, well then lets fire up all cylinders. Eradicate all the red tape involved with all levels of government for oil, lng, minerals, mining, forestry, agriculture, vineyards, beef cattle farming, poultry farming, dairy farming and commercial fishing.
Could you imagine the trickle down economics with an action plan like that?
Punt the NIMBY’s to the curb, put agenda 2030 in the closet and turn this ship around.
What boom? The gold rush in the Klondike was a boom.
How many jobs, other than construction which is stagnant, does real estate create. Not many. Doesn’t contribute much to the economy in general.
In 2023, real estate accounted for over 20% of Canada’s GDP, making it the country’s largest economic sector. This is a significant increase from 2020, when real estate accounted for about 14% of GDP.
Source AI generated
“OTTAWA—Most people are surprised to learn that this country’s biggest economic sector is not oil and gas or manufacturing, but real estate. Real estate contributes more than 20 per cent of Canada’s GDP, leaving manufacturing, oil and gas, and finance and insurance far behind.
-Less Whittington of the The Hill Times December 1, 2024
Investment in housing takes away from money in other sectors, undercutting the country’s ability to devote funds to the kinds of spending crucial to Canada’s future prosperity. My opinion is that real estate is Canada’s Dutch Disease* with Canadians being over invested in real estate.
*Dutch Disease is the notion that a boom in one sector causes losses in others which is harmful for the Canadian economy.
Rodger, “but in reality, way too many people are using real estate as a substitute for working hard and being productive…” People that invest in real estate are lazy and unproductive? And, at least partially responsible for Canada’s low GDP, unemployment, and low standard of living? Far from it I’m afraid. Sounds like sour grapes to me.
The first nations gangs on the prairies are not the most welcoming variety.
I don’t think way too many people are, especially with SFH. I think atleast 85-90% are just happy living in their house and in order to keep the lights on they must be productive in some form or fashion.
Yes, exactly how it SHOULD be, but in reality, way too many people are using real estate as a substitute for working hard and being productive. Until this changes, Canadian GDP, unemployment, and standard of living won’t improve.
Maybe check the UN human development index as well. Canada doesn’t fare quite as well there.
Went to Winnipeg some time ago and decided to take the bus. My family was like – no we will drive you. And I was like – it’s ok I took the bus all around Europe, it’ll be fine. Took my kids, found the bus stop. Got on the bus and I am not joking it was like something out of a movie – like a jail bus. There was a lot of metal, no signage at all. I have never seen a bus like that in my entire life. I guess the busses there are not safe. Anyway it’s a different world in Winnipeg. My friend who lives there said people from BC are moving there to buy cheap houses – I was like, no thanks.
Patrick if there was only some statistic that would weigh crimes based on seriousness as well as volume?
Oh there is, and it’s the Crime Severity Index.
https://www.oakbaynews.com/local-news/victoria-leads-crime-severity-index-for-municipal-police-forces-7458938
Two homicides is a busy weekend in Winnipeg. Multiple violent assaults every day. Zero consequences for criminals. Federal initiatives have created most of these problems by not punishing reoffending criminals appropriately.
There’s been a small uptick in homicide rate in Canada, but overall has been consistently falling. The uptick is from 1.5 homicides per 100,000 people, to 1.8, so it’s still tiny numbers. And Greater Victoria homicide numbers are way below Canada average. We would expect seven homicides per year based on population and in 2023 we saw only two. Low crime is one more reason Canadians move here.
https://en.wikipedia.org/wiki/Crime_in_Canada
I’ve been to about 30 countries on that list, and (with some exceptions) it looks about right to me. You’ve noted the deterioration you’ve seen in Winnipeg with huge increase in crime / gangs etc. – and I agree with you there. But that’s not happening to the same extent in Victoria or Canada – wide.
In 2023, there were 45 homicides in Winnipeg. In Greater Victoria there were two.
https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=3510007101
>>. But if you go back to the press release of January 2022 the HPI for January 2022 is different.
So why are they different?
Here’s why…
https://www.vreb.org/media/attachments/view/doc/stats_release_2024_05/pdf/stats_release_2024_05.pdf?utm_source=chatgpt.com
“ NOTE on the annual HPI review. In line with statistical best practices, the MLS® HPI is reviewed annually to ensure all data and benchmark attributes are up-to-date and remain relevant over time. The updates are reflected in this [May 2024] month’s statistics. .. To ensure HPI coverage is consistent and comparable, historical aggregate and composite data may have been recalculated based on revised and consistent coverage.”
It makes it hard to use benchmarks as a comparison of price changes if the methodology is changing. I prefer comparing prices.
How many of the 17,000 people surveyed have actually been to Canada? What are their impressions based on? I’m sure their perception would change if they came here and saw the third world conditions thousands of people live in. I’ve never seen this country in such a mess, and a great deal of deterioration has occurred in the last 10 years. I’m sure 40 million Canadians would agree.
> Nine years of incompetent government has reduced Canada from a wealthy country admired around the world, to a poor joke.
I agree with you on the “incompetent government” part, but global perception of Canada in 2024 is still near the top worldwide. US news and World reports does a yearly survey of 17,000 people all over the world, getting their responses to their perceptions of 73 desirable attributes of countries.
Canada in 2024 remains near the top at as the 4 th best country in the world . Thats # 4 out of 89 countries. The worst ranking – Belarus at # 89.
https://www.usnews.com/news/best-countries/rankings
The top 10
Switzerland
Japan
USA
***** Canada *****
Australia
Sweden
Germany
UK
New Zealand
Denmark
Justin Trudeau has publicly stated that he bases cabinet appointments on gender, not competence.
Nine years of incompetent government has reduced Canada from a wealthy country admired around the world, to a poor joke.
Max, do you know how the internet works?
Because you can go onto the Victoria Real Estate Board’s web site and find the press releases yourself.
What’s up with 487 Superior Street? Listed for $1,000,000. Last sold for $1,198,000 in 2022..
Do you have a link to this Intel? Otherwise I’d just chalk it up to the Mandela Effect.
The Mandela Effect is a type of false memory that occurs when many different people incorrectly remember the same thing.
Here is an extract of the press release for January 2023 showing the HPI index for January 22, 2022
“The Multiple Listing Service® Home Price Index benchmark value for a single family home in the Victoria Core in
January 2022 was $1,296,600”
But if you go back to the press release of January 2022 the HPI for January 2022 is different.
“The Multiple Listing Service® Home Price Index benchmark value for a single family home in the Victoria Core in
January 2021 was $932,200. The benchmark value for the same home in January 2022 increased by 24.6
per cent to $1,161,500…”
So why are they different?
May 2022 benchmark home value 1.446MM vs 1.26MM today = – 13% + inflation = – 24%
Where the heck are you getting 13% inflation for this period? Between May 2022 and October 2024, Canada’s Consumer Price Index (CPI) increased from 151.9 to 161.8, indicating a cumulative inflation rate of approximately 6.5% over this period according to the online calculators?
Calculation:
CPI in May 2022: 151.9
Statistics Canada
CPI in October 2024: 161.8
Statistics Canada
Inflation Rate = ((161.8 – 151.9) / 151.9) × 100 ≈ 6.5%
The housing market in Victoria was supposed to be flat like a halibut “for years” way back when HHV himself was the author of this blog. The housing prices in Victoria just kept going up. He ended up bolting to Alberta to buy an affordable house.
There was an online game called “crack shack or mc mansion” involving Vancouver real estate going on at that time.
Max, “What’s worse is its nothing new. The floggers have been flogging…” Upwards of two decades on this site alone (maybe more?) Although, TBH the hardcore perma-bears seem to have left the room for a few years now – or, maybe they’ve left the province?
Sorry 2.5 years not 3 years. May 2022 benchmark home value 1.446MM vs 1.26MM today = – 13% + inflation = – 24%
What’s worse is its nothing new. The floggers have been flogging this shit for decades.
So in conclusion , Victoria real estate is not flat or stagnant and has been trending up. There are going to be a lot of unhappy folks flogging the “It’s going to be flat for a decade theory “ lol
Totoro, “what are the terms?” I haven’t used my TD Waterhouse margin account for a while but it appears the interest rate is 7.5%. Seems high as compared to dividends etc.
Retract.
He figures since apples went up 30% house prices have come down 30%.
I think it depends on your credit and banks, but a month ago I think it was 11~14% interest at TD.
What the terms?
You would be surprise how much banks would loan in a margin account to leverage, anywhere between 1:1 to as high as 50:1.
How do you figure this?
A benchmark SFH in the Victoria Core sold for $1,161,500 in January 2022. The same benchmark house sold for $1,300,200 in October 2024. For Greater Victoria as a whole the benchmark SF was $1,085,800 in January 2022 and $1,257,500 in October 2024.
Between January 2022 and October 2024, the benchmark home price for SFH in Greater Victoria increased nominally by approximately 15.81%. After adjusting for an estimated cumulative inflation of 12.9%, the real increase is approximately 2.5%
https://www.vreb.org/media/attachments/view/doc/stats_release_2022_01/pdf/stats_release_2022_01.pdf
https://www.vreb.org/current-statistics#gsc.tab=0
I did, several times, but not since I last renewed at a very low fixed rate.
Depends on how you measure it. Using average prices , GV SFH prices are down 9% over that period adjusted for inflation. Not “down between – 25% and – 30%”
SFH average price in Victoria is up 4% nominally over that period (Jan 1, 2022 to today) . (Vreb.org reports average SFH price $1,206,000 at start of 2022, and $1,260,000 in October 2024. Inflation over that period was 13.66%. So thats SFH prices down 9% in real terms.
Bobby k , makes a good point that real estate is now an undervalued asset when compared to gold , the stock market, bitcoin . I know where I would put my money . ( disclaimer , I started my stock portfolio in the mid 80s , so I’m well invested )
I always stretch out the amortization as much as possible to minimize monthly payments and then do lump sums throughout the year at my discretion. Part of it is because my pay is heavily tilted towards bonuses and also to provide max flexibility in case something happens. Very happy with the TD product as you can do lump sums as many times as you like throughout the year and the minimum is only $100.
Would a bank lend you $500k with 20% down to go play in the north american stock market?
Would a bank lend you $500k with 20% down to purchase a secured, hard asset such as a SFH?
You can’t live in a stock and any capital gains are not 100% exempt.
Guess what people do in a down housing market. They don’t put anything up for sale.
Bobby k , i hear what you’re saying , home prices have become more affordable and will be on a tear next year . Maybe say 20/30 percent hmm
Sign of the times. Trudeau is asked about the size of the deficit, and it’s obvious that he doesn’t have a clue what it is, because he’s “ focused on delivering for Canadians. “
https://x.com/PierrePoilievre/status/1862942952810524907
SFH values have fallen between – 25% and – 30% in GV adjusted for inflation since the start of 2022, meanwhile north american stock markets are ahead around + 20% after inflation during that time with gold up about 30%. Who said home values never fall.
zach, all the signs are there for more asset inflation , soon we might c the porsche 356 start trading hands for 500 grand. a banana costs 6 mil now , inflation
Q3 2024 economic data is now in. Annualized GDP growth drops to 1%, which is well below the BoC estimate.
As population continues to grow, and inflation remains above 1%, this has continued the trend for nearly the last year of declining real GDP per capita.
Real GDP per capita is at around early 2017 levels. If this trend continues, by next year we will have seen nearly a decade of zero growth in GDP per capita.
Another way of saying this: the economic growth seen under the current Liberal government is almost entirely due to inflation and population growth.
The degrowthers among us might cheer this on, but I think regular Canadians are starting to worry that this is becoming the new normal. Imagine another decade of essentially zero real GDP growth per person.
All the while, assets like land and equities continue to rise faster than inflation. Wealth is holding up, but real incomes are likely to continue to decline.
Is it any wonder that governments are getting toppled globally this year?
I have no idea what that means for the housing market… although, given what’s happened in the last few years, the irony is that this might just be the perfect time for another housing bull market.
I do 12% extra payment biweekly (principle only payment).
Don’t think I’ve ever done a lump sum , it’s good if your wanting to pay off your mortgage though
Vicre, “take advantage of lump sum…” We have but only to reduce mortgage penalty if we were switching lenders or closing it out for some reason. It’s been a long while since that’s happened too.
How many ppl take advantage of the lump sum pre payment option on their mortgage?
This is why I’ve always said appraisers in general are useless. The bar to become one of those is so much lower than any Institutional RE investor/broker/developer.
JT is on plane trip to Mar-a-Lago this evening.
If “Twinkle Toes” doesn’t act fast, he stands a very good chance of losing the next Federal election! Talk about a black swan!
Looking like the $250 fed gift for April 25’ is blowing in the wind. So much for dropping it in our kid’s fhsa. Maybe JT reads this blog, on his way to skiing.
If you had raised a couple of kids attending public schools over the past 10-12 years I think you’d understand more.
I know Leo doesn’t like this conversation on his blog, so I’ll end it there.
Really? You think this is the reason for a potentially stagnant economy? I don’t understand why people get upset with all this gender stuff, but I don’t want to open a can of worms on the forum.
Probably more than homeowners.
Homeowners tend to save more money for rainy days since they have much more responsibility. I think they would be less likely to spend frivolously.
Max, “that’s consumer debt and I have no sympathy for stupidity…” Agreed but the stress test is in place to limit stupidity, and maybe the greed of unscrupulous players in Real Estate. On that topic, how many renters and other would-be homeowners have newish vehicles and other “nice to have” consumer assets purchased with debt?
A man reaps what he sows. Because, Canadian voted in leaders that squandered economic opportunities at home and abroad, such as the G7, G8, G20 for more than a decade, forcing genders equality and greenwashing instead of focus on economic development and political issues.
25 years of experience watching my five year fixed go up and down, and the politics involved that resulted into those interest rate decisions.
Please elaborate on what fundamentals that you think 5 year fixed rate would drop from the current 4~4.9%.
I think inflation is not going to drop off to a desire level or to such a low level that 5 year fixed interest rates to be below 3% in the next 12-24 months. And, we can definitely kiss the wishing of low rates good bye when Trump tariffs and trade wars come into play.
What is a B-lender mortgage?
B lenders are financial institutions which cater to people who do not fit in the A lender category. This might include people with low credit scores, new Canadians who have not yet built a credit history, or those with incomes that do not qualify them for mortgages at the A lender institutions.
Well its not even 2025 yet.
Many could get around the stress test as it only applied to Federal lenders. If you got your mortgage from a “B” lender then there was often no stress test. This year most of the foreclosures were originated from “B” lenders.
If prices go up in 2025 then I guess that those that bought in 2021 and 2022 will be saying it was the best time to buy. But right now – not so much.
That is consumer debt and I have no sympathy for stupidity.
One problem with the stress test is [ as far as I know] it doesn’t speak to what happens after someone moves into their new to them home: new furniture, new car, maybe a camping trailer, a boat. Everything is great when your mortgage is at 1.79%
I thought that’s what this stress test was all about? To condition people for ups and downs, higher interest rates…etc?
I’m guessing in 2025 people might be wishing they bought in 2021 lol. This shite is so rinse and repeat .
Undoubtedly home prices have increased from 2018. Not so much from mid 2021. And in is some cases their home wealth has decreased if they bought in late 2021 and early 2022. I don’t think those people are as happy as Max thinks they are. They will be the most challenged at renewal time as their homes could be worth 10 to 15 per cent less than their purchase price. That may limit their option of switching lenders.
In the next month or so, most of us will be getting our new BC Assessment. Lenders use these in assessing risk. As those values were set as a July 1, 2024 my expectation is that these assessments will be around 5 per cent higher than current market value for a house in the core. That could be a problem as the assessment is usually considered to be lower than market value. The lender won’t have that base number to work with anymore to set the low range. They won’t know how much lower your home’s value is relative to the assessment, all they will know is the property is likely worth less than the assessment but they won’t know by how much.
Owning a house is not only a shelter to keep the elements out. Its a 100% capital gains tax shelter for every dime the asset appreciates throughout the 25 year amortization period. Its like living in your very own bank. If you ever need a loan, well you couldn’t ask for a better asset to be holding.
Add to that, all the forced savings towards the principle pay down.
They are not sitting on their houses. They are happily living in them and raising a family.
Rodger, people have been making lots of money on they’re houses since 2018 , so it seems to be working well
There could be a 50 base point difference between what an ‘A’ lender, such as RBC, will offer at renewal to that of a “B” lender. But will that be enough incentive, if the interest rate is lower, in your monthly payment to switch lenders? Any decrease has to be weighed against the costs to switch lenders. If you have a jumbo mortgage it may be something to consider.
Mortgage brokers and lawyers should benefit the most with the increase in business. I would also expect them to increase their fees with the sharp increase in business.
The GDP per capita in Canada is the same as in 2018. We haven’t progressed for over 6 years. This is primarily the result of people sitting on their houses and hoping it will make money for them. Canadian productivity has been declining for many decades.
I stand by a 2.75% five year fixed by late 2025.
2.75% (at renewal 5 year fixed rate) subtracting the 1.86% (current five year fixed rate) equals an additional 0.89%.
Holly shit. Perhaps I should consult an insolvency trustee!
My point of the post was in the last paragraph, that the increase in the interest rate may not be as stressful as some mortgage-holders facing renewal think. My view on that point isn’t changed. That Carolyn Ireland, a real estate reporter, for the Globe and Mail and her source a real estate broker, made the error illustrates that some Canadians may be under the same assumption that their mortgage payments will double.
My opinion remains the same that home-owners have taken pre-emptive actions to reduce their exposure to higher interest rate at renewal. There still will be some that can’t manage the increase but that will depend on the home owner and how much debt they took on when the interest rates were lower and what the rate will be at renewal. Personally, although the increase for some may be significant, I doubt that it will be wide spread. But we will just have to wait and see.
Max, mortgage wars, osfi rule changes , government gifts. I guess pretty clear which direction we are headed . With more to come
Me too!
A “mortgage war” could be on the horizon as interest rates decline since more than half of all mortgages with Canadian banks are set to be renewed in the next two fiscal years, Royal Bank of Canada analysts say.
After a period of “significant inflation,” consumers will have a “strong incentive” to shop around for the lowest available mortgage in the coming years. In today’s market, lower mortgage rates will make a significant difference for Canadians whose mortgages were originated at all-time low interest rates.
The cuts are gradually shifting the focus from “mortgage payment shocks” to a high competition for renewals, analysts say.
An “especially fierce” competition could also lead to lower margins and lower net interest income for the banks, he said.
Let the good times roll.
https://financialpost.com/fp-finance/banking/canadian-banks-face-mortgage-war-rbc-analysts
Marko, forget about people , I don’t think any government can survive a stagnant market . They need the jobs and tax’s that our number 1 industry creates. I read a good piece about mortgage wars this spring , so yes I think we are bouncing off the bottom .
Groot, when you’re in a hole, the first thing to do is stop digging 🙂
Quoting someone else who can’t do math to support your point does not bolster your credibility. Moving from 2% to 4.3% does not double your mortgage payments.
When you double the interest rate, the portion of your payment that covers the interest increases significantly. However, the principal repayment portion (the amount required to pay back the loan within the term) remains relatively stable. In addition, mortgage payments are based on the amortization formula, which spreads out the repayment of both principal and interest over the loan term. When the rate increases, the monthly interest portion grows, but the overall increase is less dramatic due to the compounding structure of the formula.
The non-linear effect on the payments happens because the higher interest cost is balanced out by the long repayment period and how payments are structured. It’s like adding more weight to a balance, but spreading that weight across many supports—each support (monthly payment) doesn’t bear as much of the increase.
I am seeing a tightening of the SFH market in the core. Listings under a million are close to non-existent. Also, seeing lots of signs that the SFH may have bottom outed and the best opportunity to purchase is now behind us.
Some examples in last few days. The house on Oxford in Fairfield. Purchased in May for $1,100,000 and just re-sold for $1,175,000.
Home in the Jubilee area was on the market this spring for 94 days at $999,900 without a successful sale. Re-listed last week and sells right away for $1,000,000.
Recent listing around a million I went to took at a couple of days ago I thought it was 100k over-priced, but ended up with three offers last night.
Another a couple of rate cuts we could see upward price pressure on SFHs come spring which would be unfortunate imo. It would be nice to have 4-5 years of relatively flat like 2010-2015.
“The rate for a three-year, fixed-term mortgage was recently hovering around 4.3 per cent, he points out. For buyers who purchased when the rate was at two per cent and are now facing renewal, that still represents a doubling of mortgage payments.”
Source: Carolyn Ireland with the Globe and Mail November 27, 2024
A quick look at a mortgage calculation site shows a 28% increase.
As for sheep, I’ve done well following Craig’s Doctrine: 90% of people are wrong 90% of the time, so you have a pretty good chance of being right if you do it differently.
LMAO, the amount of pure bullshit posted by this “appraiser”…… Go try the math again and report back.
I suspect, though, that you followed a different path, otherwise you wouldn’t be grinding up Canada Geese for dog food, for example
My Father would always tell me…Just do what everyone else is doing. He was right!
Groot I would agree it’s hard to place your bet and go against the herd . Was at slegg today and getting no relief on the cost of materials , we could see a big bump next year as shite is still in short supply
Buyers are still holding back in anticipation of lower rates and more selection but concerned that not all buyers are doing the same. When a property in a neighborhood sells at full price with multiple offers that may trigger another sale in the same area for a home that has been listed for months.
It’s sheep mentality as the buyer wants to follow the herd. There is safety in following the herd and most times it works out to the benefit of the herd.
See what happens on the buyer side in Victoria. The feds have already started a quiet workforce “controls” and the province and municipalities probably won’t be too far behind no matter how “progressive” they might be. As well, the University sector here is unlikely to be making any gains any time soon. The market backbone of government workers might be getting soft entering the new year.
While rates for fixed-term mortgages have come down from their highs, they have not come down enough to comfort many homeowners who bought when rates were at two per cent. The three-year, fixed-term mortgage was recently hover around 4.3 per cent. For buyers who purchased when the rate was at two per cent and are now facing renewal, that still represents a doubling of mortgage payments.
Some bank economists believe that mortgage renewals are going to be less stressful for households than many previously feared as mortgage-holders, facing renewals at much higher rates, took pre-emptive steps to reduce the impact to their budgets. Homeowners refinance from variable-rate mortgages into fixed-rate, increased regular payments and reduced spending so the could pay down debt.
Thursty. Looking like another spring full of Bidding wars/sealed bids for SFH.
Canadian Geese ground then boiled and added to boiled, strained wild rice makes for excellent dog food.
You do have a dog(s)?
Pretty steep drop off in Vancouver and the Fraser Valley this week in terms of sales to new listings. Is Victoria continuing to buck the trend?
I’m seeing a lot of sold signs in the hood , could be a real shortage of inventory in the spring . I’m worried it could supercharge house prices
Frank I hope you have a shotgun for those big Manitoba mosquitos
Geese are sometimes referred to as flying rats. You don’t need a gun, they stand in front of your car and are about bumper height. Tons of them and other exotic migratory birds. Have even seen bears crossing the highway and one big cat. Nothing poisonous like Australia.
Can I buy airline tickets with Bitcoin?
You can buy plane tickets with Bitcoin and other alternative cryptocurrencies such as Ethereum, Dash, and many more. Just make a search for the flights and routes you need and select the Cryptocurrency payment option at checkout. Here you will see a range of cryptocurrencies available to use on the site.
Another reason to hold money in a digital wallet is times of sheer panic. And don’t tell me that can’t happen.
Something like this…
Canadian geese?
Yes, permits to kill Canada Geese are issued to help prevent crop and other kinds of damage, and to reduce aircraft-related risks at airports.
https://www.canada.ca/en/environment-climate-change/services/migratory-bird-conservation/managing-conflicts/frequently-asked-questions.html
No moose, lots of deer. They visit my yard daily.
Is there meese up there?
Every time we’ve bought a home people have chirped that prices might go down. Every time they’ve been wrong.
No, no, I was in my camper for a month doing my shopping.
Glad to see you still have a sense of humour. We wanted to be near the ocean’s moderating climate, but not that near.
Did you buy a float home?
That is an option, thanks. However I have certain ideas of what I think is functional for me. For instance, I don’t need a large kitchen, in fact I would make it as small as possible. I would need a workout area, only one bedroom, it would be designed around a wood stove, definitely not something I could buy off the shelf. I would also incorporate solar panels and a windmill as power goes out frequently. It would definitely be unique. There’s also lots of room on the existing lot to build another winterized cottage.
Frank why don’t you look into manufactured/modular home options. They’re pretty reasonable.
Two years ago today I was at the Salish Sea RV shopping for a home. At the time, half the people said, “wait, prices & selection will get better,” and the other half said, “if you find the “right” house, grab it now.” I didn’t have an Ouiji board with me so I bought a “right” house then.
It seem as though that wait/act dichotomy is still the background hum.
All I can say is that we’ve had two great years here, and haven’t seen a house I’d rather have bought (let alone at that price): if you like it and can afford it, buy it. (btw, I had invaluable help from some of you HHV folk -thanks.)
Clown Phil Soper predictions called out
https://m.youtube.com/watch?v=iZDC9Rp_zy8
That has already happened in Vancouver, there you can still claw your way into a meh SFH (1.8ish) with two working professionals and I suspect that will always will be the case due to the townhouse substitution effect, but the next rung up virtually impossible now as they are pretty much all $3M+ (most are 4M+) and that is a killer for almost all T4 earners. Right now in Vic you just need an extra 250/300k to move up to the next rung so much more doable.
I think all the homeless should camp on all the bike lanes and save the grass.
City living is getting less and less appealing to me. I’m actually considering moving out to the lake if I can find a winterized cottage. I would keep the cottage my grandfather built in 1950, as I am emotionally attached to the property. Out of respect I would prefer to restore the structure for minimal cost and my own labor, keeping it a seasonal cottage. Building a new 4 season cottage is simply cost prohibitive. Friends of mine just had a new “cottage” built on land they already owned and I suspect it was well over $700,000. Money they could never recoup. Crime is minimal out there, no homeless people, and lots of peace and quiet. The only drawback is access to healthcare. Fortunately, so far, I rarely need to see a doctor.
I for one would be quite happy to see my property taxes double if it meant we actually invested the money in maintaining the existing Infrastructure and invest in things we actually need like new pools (uvic closed, crystal pool is falling apart and now closed for 6 weeks for unexpected repairs), new multi-rink arena and more not less bike lanes etc.. I think taxes will most likely double in the next 10 years anyways but I would like to see the funds go to improving peoples quality of life not more paper pushers.
Yeah, those bad guys wouldn’t even think about capitalizing on BC’s explosive real estate appreciation.
Cashing out at an ATM is the equivalent of selling your Bitcoin, says California Bitcoin ATM company Hermes Bitcoin. Bitcoin
ATMs are a way to get immediate access to cash using your bitcoins. Bitcoin ATMs do not operate like traditional ATMs. In order to make a cash withdrawal and sell your Bitcoin from the ATM, the machine provides a QR code to which you send your Bitcoin. You simply wait a couple of minutes and receive your cash.
Holding fiat currency is akin to catching a falling knife.
Please explain to me exactly what isn’t an instrument for pure speculation? Bay street, Wall street, US treasuries?
A balanced and diversified portfolio? Real estate? A day job? With AI even their days are numbered.
Don’t forget about extortion and money laundering.
Do have anything other than a tweet?
This is the key here to understand. Think of the total value of bitcoin and the dollar as a whole pie where 1 dollar and 1 bitcoin each represents a slice of the pie. When you make bitcoin more divisible, say 10 decimals instead of 8, each person who owns bitcoin has the same size slice but now it can be broken into smaller slices. When more dollars are printed, every person’s slice (dollars) becomes a smaller potion of the whole pie. This means 1 dollar represents less value because it’s now a smaller portion of the whole pie while 1 bitcoin would represent the same value just more divisible.
None of this is true. Try to pay for your groceries or for plumbing work with bitcoin. It is an instrument for pure speculation.
Some of the happiest people I know live in the Highlands. Very nice house on 10 acres with a gen-set fuelled by a 500lb propane tank that can power the entire house for atleast a week in case the power goes out . They pack a chainsaw in the back of the truck in case they have to buck a fallen tree in half to clear it off Millstream road so they can get to work everyday and make a Kings ransom to rip up the streets of Greater Victoria.
They come with their diesel excavators, diesel dump trucks, diesel compactors and diesel water pumps. laying their petroleum based PVC pipe and back filling it with aggregate that was crushed with a diesel crusher and then finally topped with petroleum based asphalt and lines painted to the surface with a petroleum based reflective paint.
With all the petroleum based bike lanes soon to be in place. This holiday season couldn’t be a better time to purchase your petroleum based e-bike!
The most miserable people are the ones making $325k per year bitching about how they can’t afford a million dollar SFH in the core! Just so a small minority can have bike lanes everywhere. Anything four lane (2 lane each way) was put there for a reason! And that was fifty years ago!
The vast majority of transactions in Croatia do not involve realtors and the exact same problems exist…..realtors do not override the basic concepts of supply and demand somehow. People who own land want the highest possible price for their land…..has this changed in the last 500 years?
I don’t know about evidence, but I would bet the average priced out of real estate younger individual also thinks it is important to have a “diversity coordinator/manager” position at the COV at a 6 figure salary. Which a perfectly acceptable opinion but heavy bureaucracy and productivity/affordable housing don’t go hand in hand imo.
Why would we care about more regulations? We don’t have to deal with them. Besides we’re too busy keeping up with all the home renovation grants available these days.
https://www.bchydro.com/powersmart/residential/rebates-programs/home-renovation.html
Seems to me regulation is popular, we just keep adding more , dont hear folks ever complaining about it
What is your evidence for this? Seems to me that it’s existing owners who are more likely to want more regulation. As for taxes, everyone wants lower taxes for themselves but doesn’t have a problem with higher taxes for others.
Vicre, agree, sfh will be worth a pot of gold . The same people that complain about affordability are the same ones that cheer on more and more tax’s and regulation. So there’s zero relief coming for house prices . I’m having building materials delivered a couple times a week and blown away by the costs .
Coins are a term reserved for cryptocurrency assets that are easily exchangeable for goods and services and therefore are equivalent to a more traditional form of “currency”. Similar to fiat currencies like USD or CAD, these coins behave like traditional money since they are fungible, divisible and easily exchangeable. The most common example of this would be Bitcoin.
Fun·gi·ble
adjective: Law.
(of a product or commodity) replaceable by another identical item; mutually interchangeable.
If you are a buy and hold investor, BTC is the only answer.
https://www.google.com/search?client=firefox-b-e&q=BTC
As with any investment. Only invest what you can afford to lose. Example…Don’t go balls deep!
Marko has a point re bureaucracy increasing costs of building but to be fair I bet you’ll find Marko that those who own the land and the means to build aren’t exactly acting in good faith to society either. There’s a lot of fingers to be pointed at a lot of people. For exactly what reason for example ought a realtor receive a % of sale – also not incentivized to act in the best interest of society. Share the blame industry.
100%.
Or bitcoin investors.
I think this product will likely be out of reach for two doctor salaries in the next 30-40 years and reserved for generation wealth or business owners (pulling in more than two doctor salaries). It is has been like this in Europe for generations.
I think it’s really the next step up above the starter SFH that will be unattainable (e.g. decent house in a desirable neighborhood in the core) are houses currently in the 1.35 – 1.75 range. That will get pushed up hard because everyone with means will fight and claw to get those and now you are competing with subset of educated, motivated people who may also have parental help because there is no substitute for that product period. I can see people going for a nice townhouse instead of some POS SFH on Burnside/Tillicum but there is no substitute for a nice SFH on a full size lot in Arbutus, Henderson, Broadmead, Cordova bay, Oak bay and Fairfield.
My parents bought their home in 1997 in the Oaklands area for 180k. My mother was making $17/hr as a housekeeper at Vic General. Now that same house is over a million, but the housekeeper only makes $25/hr so those numbers above seem pretty accurate.
Who else am I going to see? We are going to have a 50 year low in terms of SFH starts in BC while the population is much larger than it was 50 years ago. Right now perhaps 10% of the population can afford a SFH, in 15 years it will be 5% and in 30 years it will be 2%. Average worker won’t be buying anything let alone SFH.
We’ve decided as a society that rules/regulations/beauracy, taxation, saving trees, soil sample testing, and a million other factors are more important than the average worker having somewhat attainable housing – it is what it is.
@VicREanalyst: It’s just that $100k isn’t a high earner anymore from a purchasing power perspective. I saw someone compare two regular wage earners from the late 90’s making $45k each (very similar to my parents), and to have the same purchasing power today (not straight inflation over that time, but taking into account housing prices which CPI doesn’t really account for very well) you’d have to make around $245K, which, let’s be frank, most aren’t. Yes I know Marko sees all these fat-cat government workers making $100k a piece in their early thirties, but that’s a bit of a presentation/availability bias (Marko only sees people who at least think they have a means to buy in this market), I’m much closer to the average workers and most young families in their thirties are lucky to be able to save $5k after taxes a YEAR. Most are wondering how they are going to retire even if they manage to pay off a house.
Some are lucky enough to have $$$ coming from parents upon their shedding their mortal coil, but the majority do not. I do however work in a more blue collar industry.
One of the most ill conceived programs I’ve seen. The timing is horrible for businesses, the added work for 2 months, people delaying purchases to save a few bucks. It’s insane. Add to that the postal strike and this could be a disastrous season for retailers when they need it the most. Bye, bye J.T.
Too funny:
Governments in HST provinces are crying foul and want their prov tax base back;
People in PST provinces are crying foul and want a tax-free holiday;
Retail businesses wonder how to manage the chaos.
Did the Department of Finance Canada have a team of monkeys workin’ on this press release?
*Note that this tax holiday has not yet been legislated or enacted, and the government has not released legislative proposals that would provide details on how it intends to administer this temporary relief.
Saw the 2bed penthouse at the ERA sell for 925k, that looks pretty reasonable. I think it is still sucks for a single lower tier professional to do a 1 bed downtown at current prices, assuming someone that has a decent down payment and ends up with a $450k mortgage, that is still ~$2,600 a month after mortgage, strata and property taxes. Definitely doable at $100k/ year but again, not a lifestyle you would expect from what some people think is a “high earner”. However, the difference between renting has substantially shrunk so I can see the appeal.
Take away all the government overspending and it’s not teetering, it’s collapsing. This type of economic stimulus is not sustainable.
4/5 are core; one is open from Sidney to Westshore as searching for a SFH with a budget in mind that limits options.
For the first time in 2+ years people are starting to email re purchasing downtown condos – all owner occupiers. Prices are down substantially, if they work downtown most likely their wages are up, interest rates are down and their rent is probably still very high.
It is getting back to the point where a single professional can qualify to purchase a 1 bed with parking in a concrete building.
Not sure about a teetering economy . That sounds like vibecession talk. Canada has been doing alright and things are looking to be swinging up .
Lol let me guess, most if not all want core?
Inventory in this segment has been steadily shrinking. Only a matter of a couple of years before there is no core SFH inventory below $1 million beyond the occassional unicorn (small house on a small non-development friendly lot).
Last week I received 5 inquiries from new buyers looking to start their search to purchase a property; four bc gov. We don’t have manufacturing and industry here, instead we have various institutions like BCI that employ 700-800 people that aren’t going anywhere and provide for strong salaries that can absorb our limited inventory. Not to mention all the muncipalities – doubt they are cutting back on the 110k/year “inclusion coordinator” jobs anytime soon. As I said last week as much as I complain about bloated government it generates the majority of my business.