Monday, April 14, 2014

April 14 Market Update

MLS numbers update courtesy of the VREB via Marko Juras. These numbers are for the Victoria Real Estate Board's reporting area, including Sooke, Shawnigan Lake and the Gulf Islands.


April 2014April
 2013
Wk 1Wk 2Wk 3Wk 4
Unconditional Sales108
278


615
New Listings338695

1408
Active Listings40874170

4585
Sales to New Listings
32%
40%

44%
Sales Projection---679 


Months of Inventory
7.5


Same pace continues, sales ahead of last year.  This month might even be ok compared to more than just last year, but I don't think it'll be anything to write home about.   Teranet for March is out, flat year over year.  The beginning of the month predictor said to expect 705 sales, which should be pretty accurate given that sales are still accelerating through April.   

180 comments:

Marko said...

As a current tenant and also a landlord, what can be considered normal in terms of frequency of a landlord inspecting the property from people’s experiences?

Is once every 3 months too much?

Leo S said...

On the inside? I would say too much. We never had a landlord come by for an inspection in any place we rented.

koozdra said...

"Is once every 3 months too much?"

I've only ever had a landlord come by once a year. Make sure to give lots of notice, it takes a while to relocate a meth lab.

Marko said...

On the inside?

Yes, on the inside.

koozdra said...

The buyers of tomorrow.

Soaring tuition costs force students to work more hours: analysis

At least they are used to paying way more for things that used to cost a lot less. Institutionalized debtors.

fatjay said...

I have a friend who owns some lower priced rentals, and he always has simple, smart advice for landlords.

His tenants pay monthly, and rather than have them come to him he uses it as an excuse to drop by, pick up the rent and have a quick inspection - not necessarily a thorough check, but enough to make sure nothing fishy is going on.

Often your insurance will require that you check several times per year as well, and if you always do a quick inspection when you grab the rent cheque then you have built-in notice for the tenants and built-in documentation that you were doing the checks.

fatjay said...

I have also been renting for 4 years, and have never had a landlord come by for an inspection, but I suspect that we are not typical renters. And I also suspect that the owner is supposed to be checking 6x per year for their own insurance since that was the number that they said they would be doing when we first moved in.

death said...

I've never inspected a rental either but I do agree it's best to pickup the rent cheques in person.

Dave said...

Never had a landlord inspect when we rented a non-condo. And just the building's fire / smoke alarm inspection done by the maintenance when we rented a condo.

Dave3

Seth Perry said...

More jobs lost in BC...

695 Canadian coal miners in B.C. to be laid off.


Coal miner Walter Energy Inc said it would idle its mines in British Columbia and temporarily lay off about 695 jobs.

"Given the current met coal pricing environment, our best course of action at this time is to idle these operations until we can achieve reasonable value from these reserves." Chief Executive Walter Scheller III said in a statement.

The company said it expects to incur severance charges of about $7 million in the second quarter of 2014 in connection with the idling of the mines.

LeoM said...

The last time I checked with my insurance company they said I must inspect once every three months and keep written records, otherwise, if the suite was used for an illegal purpose which caused damage, the insurance would not cover the damage.

The Residential Tenancy Act has rules too; for example:
--------
"When can a landlord enter the tenant's home?

A tenant is entitled to exclusive possession of a rental unit, including reasonable privacy, and quiet and peaceful enjoyment.

A landlord may enter the tenant's home only under the following circumstances:

there is an emergency such as a fire, damaged or blocked pipes or flooding;
the tenant is at home and agrees to let the landlord in;
the tenant agreed, not more than 30 days before, to let the landlord in for a certain reason;
the tenant has abandoned the rental unit;
the landlord has a Residential Tenancy Branch order or court order to enter the rental unit;
the landlord has given the tenant written notice at least 24 hours and not more than 30 days in advance. The notice must give the reasons for entering, which must be reasonable, and the time that the landlord will enter the rental unit. The time in the notice must be between 8 a.m. and 9 p.m., unless the tenant agrees to another time."

Landlord's Access

LeoM said...

And one more link on Landlord Access which says a monthly inspection is allowed, after giving the tenant notice.

Monthly Inspections are Allowed

Just Jack said...

A cursory look at the houses sold in the last 30 days in the core seems to show an upwards increase in prices too. 86 percent of the houses listed and sold in the last 30 days sold above their assessed value.

I'd guess that 80 percent of all the houses bought today are being bought by the top 20 percent of wage earners. Real Estate is a high stakes game. A game that first time buyers and middle income families on a tight budget should not be playing.

info said...
This comment has been removed by the author.
info said...

. . . . . . . . . . . . . .House Prices. . . . . . . . . . . . . . . .
Percentage Price Increase / Decrease Since June 2010
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . +15%
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . *. . . . . +14%. . Canada
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . +13%
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . +12%
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . +11%
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . +10%
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .+9%
. . . . . . . . . . . . . . . . .* . . . . . . . . . . . . . . . . . . .+8%
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .+7%
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .+6%
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .+5%
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .+4%
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .+3%
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .+2%
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .+1%
*. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .0%
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .-1%
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .-2%
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .-3%
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .-4%
. . . . . . . . . . . . . . . . . *. . . . . . . . . . . . . . . . . . .-5%
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .-6%
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .-7%
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . *. . . . . .-8%. . Victoria
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .-9%
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -10%
--------------------------------------------------------------------
June. . . . . . . . . . . . May. . . . . . . . . .March. . . . . . .
2010. . . . . . . . . . . ..2012 . . . . . . . . ..2014. . . . . . .

(Source: index)

info said...

Teranet made methodology changes for Victoria and Vancouver in May 2012.

Quoting: " … the May 30th index publication … will entail a slight revision to some of the city indices, more specifically the Vancouver and Victoria house price indice."

Teranet revised Victoria’s methodology in May 2012 after house prices in Victoria had lost 5% in less than two years. It’s interesting to note that house prices across the rest of Canada had experienced an 8% gain over the same period of time and that Teranet made no methodology changes to any other Canadian market indicies (except Vancouver).

Apparently only indices in falling markets need tweeking.

Since the changes were made in May 2012, Victoria’s price decline has continued and is now at 8% below peak while prices across the rest of Canada have continue to climb.

Teranet’s index is put together by bankers who have a vested interest in keeping house prices high in Canada. Considering this and the timing of Victoria’s methodology changes, it is probably safe to assume that the net effect of the changes has resulted in a slower index price decline for Victoria since May 2012.

The Case-Shiller Home Price Index in the US comes from a source that doesn’t have a vested interest in keeping house prices high (unlike either of Canada’s two indices).

It would be difficult to argue that house prices in Victoria haven’t fallen more than 8% from peak.

Death Plague said...

It sure seems to be like houses close to town in the 500-700 range with a suite get swamped and sold quickly unless they're real crap boxes or are in a bad location. Open houses in Gordon Head are teeming with people and even the dumbest junk goes. Anyone else finding this?

dasmo said...

You'll know it's truely shifted when Mcleans starts publishing covers of Weeping buyers and vicious bidding wars instead of burning and crashing houses...

Just Jack said...

Finally, the "Castle" in the Highlands has sold. A 6,000 square foot custom built home of exacting standards meant to showcase the builder's expertise. Situated on 4 acres of privacy off Millstream Road.

At one time this Deer property was listed for 2 million Bucks. And that's a lot of Doe in the Highlands

Sure the builder/owner walked off in a huff and left a lot of the home unfinished. Then CMHC bought it for $1,575,000.

Well today, fellow taxpayers, you should feel proud to be a Canadian as CMHC sold it for $880,000.

Because this is how we do business in Canada. We f%$# the taxpayer.

koozdra said...

We're making speculators rich... together.

koozdra said...

Spring warms up real estate

Lang:
"what happens when rates start to creep up"

Sandu:
"The Canadian consumer is an astute consumer, they've seen what happened in the states and they are saving"... "everybody is expecting rates to rise"

and here's the kicker!

"buyers and sellers are ready for that [rising interest rates], I don't think it will have a major impact on the market at all"


There is nothing to worry about friends. The experts (employed by the real estate industry) assure us that everything is good and sustainable.

David said...

Be careful with you’re assumptions - Prices quickly doubled as mortgage rates doubled in the late seventies/early eighties. You never know. It could happen again. London’s already on the path, rising at 18% annual pace now (2nd graph).

http://qz.com/194562/amazingly-londons-property-boom-may-still-have-years-to-run/

koozdra said...

"Be careful with you’re assumptions - Prices quickly doubled as mortgage rates doubled in the late seventies/early eighties."

Anything is possible, no matter how unlikely.

Just Jack said...

Collateral Mortgages v. Conventional Mortgages

Is there anyone who has had experiences with collateral loans?

Are they a mortgage or are they a loan. That could make a big difference when it comes to defaulting on the loan and the way the loan interest rate is calculated.

In BC we have legislation that protects home owners when it comes to foreclosure and how interest rates are calculated. Are those the same as a collateral mortgage/loan?

koozdra said...

What a crazy idea? The end of the housing boom is the economic event that crashes it...

End of housing boom will be costly, Scotiabank warns

"The impact of a softening housing market will be felt broadly," the banks said. "The likelihood of smaller household wealth gains as house price growth slows — or adjusts lower — will reinforce a more cautious trend in consumer spending.​"

info said...

@ David

"Be careful with you’re assumptions - Prices quickly doubled as mortgage rates doubled in the late seventies/early eighties. You never know."

What's important to consider in 2014 is the recent performance of Victoria's housing market vs interest rates over the last 5 years.

House prices in Victoria have been falling since 2010 in a stimulated environment of falling 5-year mortgage rates (4.29% in May 2010 vs 2.64% in April 2014).

House prices across the rest of Canada have followed an upward path since 2010. Falling rates provide stimulus to a housing market and the normal result is rising prices.

Any housing market that experiences falling house prices in an environment that is stimulated by falling rates is, obviously, extremely weak (Victoria) and behaving abnormally.

The result of falling interest rates is supposed to be rising house prices, however, Victoria's housing market has defied expectations (in a negative way) since 2010.

House prices in Victoria will continue to fall even if interest rates remain flat over the next number of years (we all know that 5-year rates will follow (generally) an upward path over the next number of years).

There are many (underwater) mortgage holders in Victoria. This has contributed to a weaker market as these mortgage holders have, effectively, been eliminated as potential move-up buyers.

Bubble housing markets always deflate. It has happened many times (worldwide) in other cities over the years and now it's Victoria's turn.

patriotz said...

Prices quickly doubled as mortgage rates doubled in the late seventies/early eighties.

What was the annual increase in wages back then? Also this was a time of a very large increase in female participation in the work force and boomers reaching home buying age.

You never know. It could happen again.

All of the above, not in our lifetimes. Any one, still very unlikely.

David said...

“…boomers reaching home buying age.”

I think you’re overlooking that their kids are now reaching their home buying age of 36.
http://www.news1130.com/2014/04/04/first-time-homebuyers-in-canada-are-getting-older-poll/

I realise there are other differences but like father, like son. It’s clear from our population structure that even without further immigration there’s an increasing number of first-timers for the next 15 years, akin to their parents in the seventies if you consider more singles are buying today than back then.

http://www.indexmundi.com/graphs/population-pyramids/canada-population-pyramid-2013.gif

Leo S said...

But the boomers are reaching their net selling years.

David said...

Previous generations, yes, but the boomers have been known to extend things. The word 'downsize' itself is quite foreign to them. Perhaps once in their seventies their egos will shrink enough to make better financial and health decisions.

koozdra said...

It's not the well off boomers you have to worry about. They'll just lose wealth. It's the "thirty something young professionals" that are buying with 5% that you should be worried about.

Don't have 5%? You can get a cash back mortgage and buy with 2.5%.

The only thing everyone can agree on is that we don't have a sub prime mortgage problem in Canada.

patriotz said...

But the boomers are reaching their net selling years.

Further to this, the boomers have a lot more brothers and sisters than they have kids.

In other words, never before have there been so many older generation sellers relative to next generation buyers.

You have to go back to the 1920's and earlier to find family sizes larger than the boomers, and the country was much more rural and home ownership much less widespread, so the present situation is essentially unprecedented.

Just Jack said...

It isn't like there has to be a Tsunami of Baby Boomers choosing to sell their surplus revenue properties.

With demand being so low these days, an increasing trend of boomers selling could change this market from being demand-driven to supply-driven.

I'm seeing it now with so many homes vacant. The boomers are choosing to sell rather than re-rent their revenue properties as the properties become vacant. Luckily most of these properties have 2 or 3 suites making them attractive to those requiring a Tri-Income to buy these days. But that's a niche market where supply can easily swamp demand.

Phil said...

Good luck on us Boomers giving up on real estate. Won't happen. Our parents still live in their 1950 bungalows for christopher sake. We have only ever known inflation and rising house prices and be mindful we are the ones controlling the printing presses.
Which brings me to today's CPI release. Noteworthy is that oily province at CPI of 3.9% !
___
http://www.statcan.gc.ca/daily-quotidien/140417/longdesc-cg140417a004-eng.htm

koozdra said...

"Good luck on us Boomers giving up on real estate."

You won't give it up. It will be taken away from you. A crash erodes wealth that is sitting in equity. The hundreds of thousands of dollars that you thought were yours will disappear, just as mysteriously as they appeared.

But don't worry it won't happen to you. Just everyone else.

koozdra said...
This comment has been removed by the author.
koozdra said...

Expect an influx of business: Broker

“For clients with a low – or no – down payment there is definitely going to be an influx (of business) because when B-21 kicks in it will effectively eliminate zero down payment mortgages so I could definitely see an influx of people getting into the market,” Lior Herhkovitz of Mortgage Edge told MortgageBrokerNews.ca “Especially those with a very low down payment.”
...
“It could have been worse; I’m a little bit relieved and the good thing is that for now it remains a draft so it’s not going to implemented anytime soon which gives us more time to basically close 100 per cent financing type of mortgages to the credit unions,” Hershkovitz said. “But definitely it’s going to be restrictive for new home buyers who don’t have much of a down payment. They’re going to have to face some serious headwinds once these policies take effect.”

This policy is unreasonable. If we pick the stability of the Canadian housing market as an axiom then why should people need to put down any money to purchase a home? Since the value of homes always goes up (or at least travels in a neat horizontal line) then I don't really see the need for people to have put any money down. If they get into financial trouble they can "always" sell.

I mean 95% financing, 100% financing, what's the difference?
Are we really separating the wheat from the chaff?

Just Jack said...

That's a good point. All home owners are not the marketplace. The real estate market is made up of WILLING buyers and WILLING sellers. And that's only about 3 percent of all home owners.

What you do as a home owning Baby Boomer or more precisely what you don't do has ZERO effect on the marketplace. You may as well be in Timbuktu. It's just like an auction at Lunds or Kilshaws, if you're sitting at home you have no effect on what the item sells for at the auction.

The supply curve of sellers is easy to obtain. The demand curve is not. Like a black hole we only know when it matches, weak or strong by its effect on price.

Right now it seems demand is matching supply in most market segments as prices are stable.

In the last 12 months, some 1,200 condos were bought in the core districts of Victoria. But at the same time, the Supply added was close to 2000 condos. That 800 condos did not find a buyer during that time suggest that demand is a lot weaker than condo home owners think. There isn't a plethora of buyers. But there is a massive stock of inventory 97% of all properties that could come to market. It's not likely that all 97% would come to the market - but what would another 2 or 3% of that inventory do to prices. And I would suspect that Baby Boomers own a lot more that 2 or 3 percent of the rental properties.

And that's the wild card. If Baby Boomers get spooked about the market - they will dump inventory onto the market.

Seth Perry said...

"Good luck on us Boomers giving up on real estate."

lol, many won't have a choice. They will be moving into retirement with very little cash-flow. Most will have one big asset (home) but that won't help them with day to day expenses. CP and OAS is what most will use for their daily expenses. (Food, hydro, clothes), but what about home maintenance, vacation??), it won't be enough.

Many consider their home as their nestegg, except, it's not liquid, which is why many will have to finance their retirement by extracting equity from their homes or they will be forced to downsize and use the proceeds to fund their 'Golden Years'.

Some will be luckily enough to sell their home to the house horny (FTB's) who are rejoicing over 2.99% financing, borrowed down payments from anywhere they can, including banks (VanCity) offering to cover half the minimum down payment. See where this is all going?

If feel bad for FTB's who will be getting the raw end of the deal and those retirees who put all their eggs in one non-liquid asset.

There's no question, some astute retirees will have other investments or that elusive company pension. Hopefully they won't retire with a mortgage.

My folks are certainly going to struggle even though they've benefited from the housing boom. They will be retiring on CP, OAS and whatever value they can extract from their home. They will be dancing to a different tune once their income slows and they realize all their wealth is one asset that may be depreciating over the next several years.

In addition to that, today's retirees aren't the same as their parents. Our beloved grandparents knew how to scrimp and save and live within their means. I see a big contrast there.

We'll see how the boomers fair.

Just Jack said...

FTB's have been stress test by the banks. So I wouldn't be too worried about them.

It's those that used their equity to buy businesses that have failed, or have maxed out their mortgages because of a divorce, or lost their jobs that are being affected in this market.

All of their house wealth is gone. They're just existing until the next economic shock happens to them.

Death Plague said...

Anyone else notice how many listings are completely inaccurate? It seems mostly around how many bedrooms a place has. They'll say 5 bedrooms and then somewhere in the description it'll say "no closet". That's not a bedroom. Even worse sometimes it says office could be a bedroom and they count is as being one already and you look at the pictures and there's no window and no closet.

I NEVER go and even bother looking at those places because who knows what other scams are being played. Do realtors think buyers won't notice this?

Leo S said...

Good luck on us Boomers giving up on real estate. Won't happen.

The primary driving factor that turns an age group in a retirement destination into net sellers is death. Good luck trying to avoid that.

Just Jack said...

Accuracy of listings??

They're advertisements!

Is there any real estate agent that measures a house anymore? Or do they just take it from a past listing?

A few months back, some people were talking about how some agents have been altering photos. Making the home brighter, the sky dark blue, the trees more green. Even stretching the photo to make the home appear wider.

Or how about bumping the size of the home by a hundred square feet in the listing. This used to be so common among agents when the banks had minimum floor area regulations for conventional financing. I've seen as much as 400 square feet added to a listing to make it appear better than it is.

I've also seen the square footage under stated to make the listing less desirable.

Moral of the story. You should check it out yourself or hire someone to do it before you buy.


And just because the square footage is inaccurate or the listing says 3 bedrooms when it only has 2 does not mean you're getting out of the deal. The listing does not form part of the contract that you sign. If the square footage is important to you, then you should add that into the written contract.

Marko said...

Anyone else notice how many listings are completely inaccurate? It seems mostly around how many bedrooms a place has. They'll say 5 bedrooms and then somewhere in the description it'll say "no closet". That's not a bedroom. Even worse sometimes it says office could be a bedroom and they count is as being one already and you look at the pictures and there's no window and no closet.

I NEVER go and even bother looking at those places because who knows what other scams are being played. Do realtors think buyers won't notice this?


I've been in this situation a few times. Last year I had to list a home where the seller took out a closet from one of the bedrooms to make it into his office; therefore, he took a legitimate three bedroom home and made it into a technically speaking two bedroom home. Cost to covert back to a technically three bedroom was minimal. I advertised it as three bedrooms with "no closet." Wasn't trying to scam anyone but the difference in PCS account exposure would be like 600 PCS accounts (three bedroom) compared to 300 PCS accounts (two bedroom). I can see in my system how many PCS accounts are being hit. Flip side is you could have a 8x8 room with a window and a closet called a "bedroom."

Not sure why anyone would advertise a 4 bedroom home as 5 bedrooms as the percentage of buyers set up on PCS accounts with "5+ bedrooms" is very minimal. You derive very little benefit from jumping 4 to 5.

Marko said...

Is there any real estate agent that measures a house anymore? Or do they just take it from a past listing?

With floor plans costs down to around $100 it doesn't make too much sense to measure.

Interestingly enough I've noticed a few times differences in finished square footage between different professional measurement companies.

One discrepancy I see often is between a floor plan measurements on condos and the strata plan...sometimes up to 10%.

DavidL said...

On the subject of measurements, does the total area typically include hallways and stairwells? I see some listings where the total area is the sum of the rooms while others where the total area is quite a more...

Marko said...

When I personally measure homes, which isn't often, I include hallways and the staircase too, but the staircase for only one level.

The biggest challenge with measurements is poorly finished basements and whether you include the square footage as finished or not. Often very poor finishing is advertised as "finished."

Everyone has their various beef with measurements. I had a guy come to an open house last month and grilled me on why my professional floor plan didn't have the ceiling height in the garage. When I told him it was likely because not a great percentage of buyers were interested in putting a car hoist in a garage he stormed out of the open house.

Marko said...

I see some listings where the total area is the sum of the rooms

That would be a very incorrect method.

Marko said...

At the end of the day as a buyer if you are concerned about the measurements just pay a $100 to have the house measured by a professional company. The inspection will set you back $450. If you have the drain tiles scoped that is another $200. Any sort of asbestos testing another $300 plus. An underground radar scan for oil tank $300.....etc., another $100 won't break the bank in the grand scheme of things.

Marko said...

These guys do anything under 2,000 sq/ft for $85 -> http://standardres.ca/how-it-works/

Phil said...

“ The primary driving factor that turns an age group in a retirement destination into net sellers is death. Good luck trying to avoid that. “

Good luck if your grand plan is waiting for all us 50-60 year old Boomers to croak. My wife plans on living in this place to 100. The stubborn broad will probably make it too.

DavidL said...

@Marko

Any suggestions for property surveyors? I'm considering putting in a fence but want to make sure that it is on my property rather than Saanich'.

koozdra said...

Well this is really strange.

All these proposals seem like they should be adhered to already in a "well regulated" system. If these regulations weren't in place before then were these financial institutions "well regulated"? Is self regulation "well regulated"?

B.C.’s New B-20-like Guideline

Canada does not have a sub prime mortgage problem. We have a vast sub prime mortgage industry... but it's not a problem. We've reinvented what it means to be sub prime borrower.

In Canada no one is a sub prime borrower because our housing market is so stable and always goes up in value.

Marko said...

Any suggestions for property surveyors? I'm considering putting in a fence but want to make sure that it is on my property rather than Saanich.

Maybe Michael E. Claxton?

fyi....surveyors aren't cheap!

LeoM said...

Asking a question about the square footage of a house is almost meaningless unless you qualify your question because there are so many different definitions. Here are a two examples:

1. The legal definition used by the Municipality. This definition varies between each municipality, so you must read the bylaw definition. The legal definition is important if you intend to do any renovations or add-on to the house. For example, in Victoria the definition is the entire area which is enclosed by the **interior** face of the exterior walls; but in Saanich the gross square footage is measured from the outside of the **exterior** walls and in Saanich it includes all areas with a ceiling height of more than 5 feet 6 inches in height, but you only count a stairwell once. So in Saanich, the legal definition of a house with a main floor of 1200 square feet (ex: exterior dimensions of 30’ x 40’) and a full basement with a height of 5’5” is a 1200 sq.ft. house; BUT, if the basement is an inch higher at 5’6.1” then the house is legally a 2400 sq ft house (stairwells ignored for this example).

2. The common definition of “Living Space” is usually the usable square footage. This is a subjective definition that normally includes just the sum of the square footage of the rooms and hallways. This definition would not include a basement with a six foot ceiling or the stairwells. Using this definition with the house in the first example, the ‘Living Space” is about 1000 square feet.

3. Then there is a Realtor’s definition… but I won’t go there…

So using the same house in the first example, you could say the Square Footage is either 1000, 1200, or 2400. Take your pick based on what you’re trying to emphasize.

Just Jack said...

And then there are balconies.

Depending on when the condominium strata plan was registered the floor area might include the balcony. Later strata plans do not include the balconies which became common property. This was changed once more to limited common property as your neighbour could have used your deck as it was common property.

Then there are those buildings that enclosed the balconies with glass but were not heated. Did this make them livable floor area?

CREA actually sets out how a home should be measured. The companies that provide the floor plans for the agents should be following these standards. In that way all homes should be measured to the same standard.

Dave said...

Does anybody know why Victoria has such a strong uptick?
It recent broke its zero bound after spending >3 years below it. What changed?

Marko said...

20% more sales and 10% less new listings is a change.

Marko said...

New listings last year and this year are coming in substantially lower than the 5 and 10 year averages.

dasmo said...

Because if you come from Van you are surprised you can still buy a house for 500k...

dasmo said...

Also because prices are returning to their previous levels down south?

Jack and Cate said...

Dave said...
Does anybody know why Victoria has such a strong uptick?

It recent broke its zero bound after spending >3 years below it. What changed?
-----------------------

Panic at the disco, nothing more. CREA playing with the HPI and fear mongering by using the media as their sales medium. 'cause if it is on the 'net or in the news it must be real.

Hipsters and newbies need to have something to talk about after over paying for a property and planning how to ask mom and dad for more money.


And to think they only bought it $240k over asking in a bidding war...tsk...tsk

caveat emptor said...

house correction calculator

dasmo said...

Theory of relativity?
The most expensive cities in the US are returning to their previous highs.
As this spreads through the media perhaps it makes people feel that we won't collapse here after all?

Just Jack said...

This uptick happens most often in the Spring. The desire to buy arrives before inventory begins to increase.

Buyers start looking at homes without any pressure to buy and then start to see properties selling quickly when they come to market.

They develop a fear that they will lose out on buying a house. At the start of their house hunting, perhaps they were willing to look around for a year before they would buy. Now with the new listings selling quickly they now want to purchase in the next few months.

- The straw that broke the Camel's back.

Depending on how much the market is stressed and how close we are to peak price affordability if the rise in prices is too quick and too high that could cause the market to switch from demand-driven to supply driven. Many home owner's may look at this uptick as the last chance to get out of the market at high prices. While a lot of buyers just give up at buying as they can't qualify at the higher prices.

At this point, no one knows what will happen. The Spring market is THE most important market, it sets the flavor of the housing market for the rest of the year.

Will it be sweet or sour?

Marko said...

Tuesday, April 22, 2014 8:50am

MTD April
2014 2013
Net Unconditional Sales: 436 615
New Listings: 1,073 1,408
Active Listings: 4,289 4,585

Please Note
Left Column: stats so far this month
Right Column: stats for the entire month from last year

Just Jack said...

This uptick in prices isn't happening everywhere. That's what makes this market interesting. Or should I say the only thing that makes this market interesting.

The Western Provinces of the Victorian Empire are still being crucified with high Months of Inventory and low sales to listing ratios. Note: Easter theme

The same with the older condos in the core districts. Condos are more like the car market than real estate these days. As people want new or newer models and not the old clunkers. Even when these clunkers are bigger and in the best hoods of this city. That just means that condos will get cheaper every year they get older. While house prices may appreciate, condos will likely never be worth more than your purchase price. Unless you upgrade with cabinets and a Holly 4 Barrel with a Hurst shifter.

koozdra said...

How Did Canada's Middle Class Get So Rich?

"Canadians are standing on their rooftops screaming for more debt while too many Americans are buried under their houses."

Alexandrahere said...

Within my criteria last week, 18 of the 27 homes that sold had secondary suites.

Bitterbear said...

A couple week ago, I toured through a couple of those new steel and wood houses in that new little development on Sinclair, half way up the hill from Peppers.

The two that I looked at had their basements chopped up into rabbit warrens of one bedroom suites, one bedroom "sweets", in-law suites, nanny suites and student studios.

Price tags 1.2 and 1.3 million. Designed so a working stiff can own a million dollar property. I thought the whole thing was kind of bizarre.

info said...


. . . . . . . . .Percentage Price Decline From Peak . . . . . . . . . . .
. . . . . . . . . . . . . Las Vegas Home Prices. . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0%. . . . . . . . . . . . . . . . . . . *. . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 10%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-15%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 20%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-25%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-30%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-35% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-40%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-45% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . * . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-50%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-55%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . *. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-60%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .* . . . . . . . . . . . .
-65%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
---------------------------------------------------------------------------------
. . . . . . 2000. . . . . . . . . . . 2006. . . . . . . . . . . .2012. . .2013. . .

(Source: .Case-Shiller Home Price Index).

As of December 2013, Las Vegas home prices were 45.3% below peak.

The bottom was established in January 2012 at 61.6% below peak.

Las Vegas home prices may have rebounded more than any other US market since hitting bottom.

It looks as though the rally has erased about one quarter of the prices losses since the peak in 2006. The amount of recovery in many other US markets would probably be a lot less than this.

Millions of US families continue to deal with underwater mortgages. Buying a house always comes with risks.

Many think the US housing market is ripe for another price correction.

SaskSucks said...
This comment has been removed by the author.
info said...

@ dasmo

"The most expensive cities in the US are returning to their previous highs.
As this spreads through the media perhaps it makes people feel that we won't collapse here after all?"

All housing bubbles deflate. This always results in a major, multi-year price decline. It isn't different in Canada. Canada's housing bubble is much larager than the 2006 US housing bubble.

As house prices in the US began to fall in 2006, lending standards in Canada were loosened even more and the Canadian housing bubble continued to inflate. Many Canadians were aware that house prices in the US were falling after 2006, but that didn't stop them from taking advantage of the easy credit that was available. The result was higher house prices in Canada.

Apparently the average Canadian thinks it is different in Canada.

When house prices in Canada begin to fall, fear will become the dominant emotion among Canadians and this will result in even more downward pressure on prices.

As house prices fall in Canada, whatever is happening with the US housing market will probably have little effect on Canadians as the average Canadian will continue to concentrate on their own situation.

info said...
This comment has been removed by the author.
info said...

Total mortgage insurance-in-force (Canada):

CMHC: $559.8 B (Q3 2013)
Genworth: $309 B (Q3 2013)?
Canada Guaranty: less than 5% of total market share


Does anyone have any other information?

Dr. Doinglittle said...

My wife and I are looking to buy our first detached home, and have been actively looking since last year.

What Marko says rings true - there currently seems to be few listings to choose from. The places we see that are priced competitively, and in decent shape, sell very quickly - especially if they're move in ready - but these are the minority by far. There's no shortage of homes with high DOMs, usually need updating or major renos. These seem to fetch 5-10% under original asking if and when they sell.

caveat emptor said...

Out past Sooke this weekend. There seemed to be an amazing amount for sale (both lots and houses) in the strip along the coast from Sooke to Jordan River.

Phil said...

with regards to "uptick"
4 down years for Vic was the most we got out of the last two cycles , so this one sort of fits. Maybe that's about how long it takes for the stimulus money to funnel through each time. Notice that whoever made this started at 1971. In 1971 the gold standard was abandoned and as a result the large upswings to follow.

Phil said...

Other west coast cities like Seattle & San Fran also took about 4 years from peak to bottom. Mind you a deeper bottom. However Vic saw lots of properties trade hands for 25 to 40% off peak.
http://ca.spindices.com/indices/real-estate/sp-case-shiller-ca-san-francisco-home-price-index

patriotz said...

4 down years for Vic was the most we got out of the last two cycles

Vancouver also went down over the same periods during those cycles.

I certainly don't expect Victoria to start going up if Vancouver starts going down.

Leo S said...

What Marko says rings true - there currently seems to be few listings to choose from.

There are actually still quite a lot of listings overall. Fewer than last year, but compared to the hot years there is lots of choice.

Just Jack said...

Sooke is the closest we have to a supply-driven downturn. With 208 detached homes for sell, 12.8 Months of Inventory and a Sales to New Listings Ratio of 30%

Or to put in another way, your chances of selling a Sooke home in the last 6 months was about One in Five.

That's a market with liquidity problems. Easy to buy but tough to sell.

koozdra said...

Wait.. wait a minute... are you trying to tell me that these emergency low, ultra stimulative rates that we have come to depend on aren't normal?

How badly would you be hurt in a housing market price correction?

“I think it’s going to be a huge shock to the Canadian real estate market,” said Craig Alexander, chief economist at Toronto-Dominion Bank. “I do a lot of real estate presentations from coast to coast and an awful lot of young people think these low interest rates are normal. They don’t see anything abnormal about a 3-per-cent five-year mortgage. I always have to say, can you please have a conversation with the grey-haired gentleman at your table about the normal level of interest rates.”

Just Jack said...

It seems to be shaping up for a "hot" market for houses in the city core this spring.

The Sales to Assessment ratio for pending sales has skyrocketed to 114% and the days-on-market has dropped to 38. Increasing demand seems to be leading the charge in prices while inventory is limping upwards. The most dramatic increase not being Oak Bay or Victoria - but Saanich West where buyers on average are purchasing at 137% of the Property's assessed value!

Great news for those commission earners relying on sale volumes.

Just Jack said...

This is a segmented market. While some sectors appear to be doing well others are troubled.

What happens when you make a bad choice in the real estate you purchase? That mistake is when you buy into the market without thinking of re-sale in the future.

That's most obvious in condos these days. And more specifically in older condos in less desirable neighborhoods.

Nine years ago, the market for condos was at the beginning of its boom. It seemed like anything bought would sell for more and more and more. And people made some bad choices without thinking about all of the condos that were under construction or how was Colwood and Langford going to absorb this inventory. Or if it was even viable to build condos in an area dominated by families that wanted single family homes.

Back in March of 2005 an older condo in Colwood Corners sold at $136,000 and now nine years later after the greatest appreciation in the history of real estate it once again sold at $136,000.

And I see people making those same judgement errors in the properties they are buying today. Not thinking of who will be buying their home nine years from now.

When it comes to re-sale, you should think of who will be buying your home in the next decade. The answer is that it will be someone just like you - but 10 years younger. How much do you think someone with a job like yours will be able to pay for your home ten years from now? If you're scrimping and buying a property that marginally meets your requirements your likely going to look at a future buyer that has a lower income than yours. That means small homes, small lots and busy streets or properties that need a mortgage helper - there is little upside future market for them.

The next home you buy will likely be the last home you'll ever purchase - and not by choice.

CS said...

The two that I looked at had their basements chopped up into rabbit warrens of one bedroom suites, one bedroom "sweets", in-law suites, nanny suites and student studios.

Price tags 1.2 and 1.3 million. Designed so a working stiff can own a million dollar property. I thought the whole thing was kind of bizarre.



Will the next stage may be for buyers to live in "the sweet", or maybe the garage, while renting the house? That would make it possible to carry an even larger mortgage.

CS said...

Curiously, the never-ending globalization recession may be causing prices to rise by causing changes in family living arrangements that slow property turnover. With numbers of not just young adults, but middle-aged folks reported to be moving in with their parents, some aging couples are denied the opportunity to down-size to a condo or migrate to Mexico.

StalJ said...

JJ your fishing worked ;)
And more specifically in older condos in less desirable neighborhoods.

Yes but the desirable hoods are seeing bidding wars just like houses.
The 1st two recent examples went over ask and don't even have a veiw of anything except a busy street which shows how important is location.
202-1158 Fairfield Rd, Built 1990, Assess 319k, Sold over ask for 381k
201-1037 Richardson St, Built 1993, Assess 364k, Sold over ask for 398k
104-1033 Belmont Ave, Built 1987, Assess 518k, Sold near ask reno’d 808k
402-2323 Hamiota, Oak Bay, Built 1976, Assess 321.7k, Sold for ask 387.5k

StalJ said...

When it comes to re-sale, you should think of who will be buying your home in the next decade.

That's easy. 10 million Canadian babyboomers for starters will be looking to down size to condos in good locations in places like Victoria. Not mention their age 30 kids will finally get kicked from the nest to find starter pads.
By looking at examples above, maybe its already started ;)

koozdra said...

Hayman Global Outlook Pitfalls and Opportunities for 2014 by Kyle Bass

"Median house prices in Canada are 9 times the median salary. In the US at the height of the sub prime bubble they got to 7"

dasmo said...

? Victoria's is 6.7

info said...
This comment has been removed by the author.
info said...

So far this year, total SFH sales in the expensive areas (Oak Bay, Saanich East and North Saanich) have been weak.

Total SFH sales (January + February + March) in the above 3 areas (compared to 2007's quarterly total):

2007: 280
2006: 254 (-9.3%)
2011: 234 (-16.4%)
2012: 228 (-18.6%)

2014: 210 (-25.0%)

In general, slow sales indicate future price declines.

2007's yearly SFH sales total was 38% below 1989's total (population adjusted).

As of December 2013, SFH prices in Oak Bay, Saanich East and North Saanich were 11.6% below peak (3-month median).

That means there are plenty of (underwater) mortgage holders in these 3 areas.

Weak, sluggish sales always indicate an unhealthy market, regardless of how many listings there are. Lisings in these areas will increase. It is only a matter of time. The price decline will continue.

It isn't different in Oak Bay, Saanich East or North Saanich.

MikeN said...

Just Jack said...

"......And people made some bad choices without thinking about all of the condos that were under construction or how was Colwood and Langford going to absorb this inventory."

And finally, someone has raised my own serious concern. What the HELL is Langford thinking? Or Colwood for that matter? My wife and I entered the market a year ago in the Happy Valley area and I can throw a stone in any direction and hit new construction going up and that does not even count the thousands of new homes underway or planned for Royal Bay and Westhills. The crazy pace of new construction in this slow market worries me more than anything else I have read on this blog.

patriotz said...

What the HELL is Langford thinking? Or Colwood for that matter?

When the local economy depends largely on RE, and RE prices are still very high by national and historical standards, you should hardly be surprised that local governments are going to approve developments and developers are going to go for it.

You should be asking what the hell are buyers today thinking.

StalJ said...

Also JJ as a reminder,
March median house price was only up 3.7% y-o-y in Victoria,
median condo on other hand was up 6.9% y-o-y

see last page of
http://www.vreb.org/pdf/VREBNewsRelease.pdf

Stick that in your condo-trashin pipe and smoke it ;)

MikeN said...

Well, for myself, I bought because it was time, and I thought it was a good buy. My wife and I are very happy with our place and accept that it may be our LAST house as well as our first given the very uncertain future of interest rates and value.

Buyers wisdom or folly aside, my question is where the heck are all these thousands of people going to come from and where do the developers and municipalities think they are going to work?

Last I checked, the economy was not great here in greater Vic.

koozdra said...

"March median house price was only up 3.7% y-o-y in Victoria"

Dead cat bounce?

koozdra said...

"where the heck are all these thousands of people going to come from and where do the developers and municipalities think they are going to work?"

I wonder if they'll even finish it before the crash.

Leo S said...

>> The crazy pace of new construction in this slow market worries me more than anything else I have read on this blog.

Indeed. Especially condo construction is wildly disproportionate to the market. In the 90s correction condo construction slowed right down. Now they are building like the boom is still here

Just Jack said...

The condo developers don't have to sell the units, they just have to get investors to pay for the construction. And if you can get CMHC to back the development then the development looks even better to an investor.

We're not selling condos to live in we're selling investments that are backed by a condo and CMHC. There is no economic reason to stop building.

Marko said...

And finally, someone has raised my own serious concern. What the HELL is Langford thinking? Or Colwood for that matter? My wife and I entered the market a year ago in the Happy Valley area and I can throw a stone in any direction and hit new construction going up and that does not even count the thousands of new homes underway or planned for Royal Bay and Westhills. The crazy pace of new construction in this slow market worries me more than anything else I have read on this blog.

When you buy a home in Happy Valley for $450,000 you are paying $150,000 or less for the lot and $300,000 or more for the improvements. When you buy a $450,000 home in the core often you are paying $350,000 to $400,000 for the land and $50,000 to $100,0000 for the improvements.

When most of the value of a home in in the improvements there is risk when construction is around you as improvements depreciate and reality is buyers prefer brand new never lived in versus resale.

Renter said...

Has anyone stumbled across this sort of problem before:

Looking at a house that on the map is clearly in the Juan de Fuca regional district (Willis Pt) but the title says that it's in the Highlands.

Are titles often wrong? How much of a hassle/cost would it be to fix? Anyone know?

Just Jack said...

The Title may not be wrong at all. The legal description is a left over from times long past when the municipalities had different boundaries or didn't even exist. Most of the legal description has now become irrelevant today. The basic information you need to find any property in BC is the lot number and the plan number. And really all you need is the PID number.

Marko said...

The Title may not be wrong at all. The legal description is a left over from times long past when the municipalities had different boundaries or didn't even exist. Most of the legal description has now become irrelevant today. The basic information you need to find any property in BC is the lot number and the plan number. And really all you need is the PID number.

+ 1

Renter said...

It's in the wrong jurisdiction. The district of The Highlands, when contacted, has already confirmed that the house is not actually in their area, even though the homeowners have been paying taxes to them. Geographically, saying this house is in the Highlands is like saying Goldstream Rd is in Metchosin.

Marko said...

But what does it actually say on title? For example, every other title in Colwood under "Description of Land" will say "Esquimalt District," but it doesn't mean it is in Esquimalt. The taxation authority for the PID number is a more accurate method of determining the municipality.

Marko said...

Indeed. Especially condo construction is wildly disproportionate to the market. In the 90s correction condo construction slowed right down. Now they are building like the boom is still here

I was really worried last year but I've noticed most developers are riding the low interest rates and slow absorption rates without any panic.

For example, the Mondrian downtown was only about 25% sold on completion but they've had steady sales over the last 9-10 months and now they are up over 75%.

Same goes for a development like Gardiner's Green that has been mentioned many times on this blog. Sales have been slow but steady and now they are 60% sold. It seems like every month they'll move a unit or two and over the course of a year sales build -> http://www.gardinersgreen.com/site_map.html

Just Jack said...

The Juan de Fuca Regional district only came into existence a few years back. Before that Willis Point while geographically located near Saanich West was administered through the Capital Regional District and Island Trust. The Capital Regional District also came into existence some 30 or 40 years ago too.

Still worried? I would call the Land Registry and ask them about your legal description.

Interestingly or not.

The Province has a vault of maps going back to the original land concessions from whence the original legal descriptions were obtained in the 19th century. A hermetically sealed room that is off limits to the public - although I had a special tour of it. If there is a fire the doors are sealed and the room is gassed to protect these irreplaceable documents. Not a place to nodd off in.

Just Jack said...

Back in the slow down of the 1990's, our economy was souring. Condo construction proved to have construction faults, bad designs, poor materials and a building code that stank.

It was also tougher to get a mortgage. You needed 10 percent down on an insured mortgage and 25% on a conventional. The banks called the shots as there wasn't the deregulation like today.

Your lender was a well informed person that did their due diligence and acted like a Councillor on your mortgage or purchase. They generally cared about you. These were the days that Canadian banking was considered conservative relative to the USA.

Builders built to sell. That's how they made their money. Today they build to get investors. Much like how China has built cities of hi-rise towers with few people living in them.

The chief planner for the City of Vancouver has estimated that 25% of the newer condominium towers in Vancouver are vacant - yet they keep building more towers in Vancouver. BC Hydro estimated a few years back that there are 18,000 condominiums in Vancouver that are consuming only enough power for a refrigerator to operate.

What's different about this market than others is the disconnect between building and selling the units. Of course there are small developers that can't stimulate investors to buy into their project. They still have to make money the old fashioned way - they have to earn it one sale at a time.

David said...

Jack, I think you’re overlooking 3 big factors why developers are planning condos. Developers typically stay ahead of the curve by forecasting things like demand.
* Immigrants are now pouring into our country, most come from large emerging metros and are very used to condo-living. They will want to locate near their new jobs and cultural resources.
* With houses being such a leap, young families now have to climb on the property ladder starting with condos.
* Baby Boomers will soon start selling their two-storey houses in the burbs to bank some money and for lifestyle reasons. Ageing hips and knees don’t do well with stairs.

However, nothing wrong with an investor getting between the developer and the end user like you were getting at. It takes some risk off the developer.

dasmo said...

It's also supplying the rental market which most developers don't want to get into (except lefevre and company it seems).
It's still a sale of a unit. What the buyer does with it is their business. What Leage was doing is more in line with what your are talking about JJ. This one on development in the region that is now dead (Thankfully)...

reasonfirst said...

David,

Immigrants, new jobs, cultural resources? - we are talking Victoria here. Have you seen the population projections?

The last 2 bullets are contradictory. If Boomers all sell their houses to fill up condos, then young families will once again be able to afford SFHs.

Just Jack said...

The nice thing about those points is that none of them can be proven or dis-proven.

But what we can show is that in Canada we are building more units than the rate of household formation.

What I see, is that a lot of your points have already occurred and that's a big cause of why our prices went so high in the past and have now stagnated.

The retiring baby boomers are still coming to Victoria but in fewer and fewer numbers each year. There is no project that is being targeted at seniors relocating to Victoria. A decade ago, all of the advertising was for seniors to come to Victoria. The adds were of a white haired gentleman with a sweater wrapped around his neck well into his 60's with a 30 something blonde on his arm sipping wine on a balcony. Today its all about bohemian males with facial stubble and tar-paper blondes with jogging baby strollers.

Buying a condo today in the hope of moving up the property ladder to a house is becoming a fallacy. As a lot of condo owners have been finding out lately. House and condo prices are going in opposite directions. Better to go right for the detached home today than buy a condo and have the gap widen and possibly not be able to sell the condo for more than the mortgage. If you had bought a condo from a developer in Langford or Colwood in the last 10 years it is unlikely you could sell it today for more than the original purchase price.

Some baby boomers do downsize to a condo. But for most downsizing is to a smaller house with the master bedroom on the main living level. It is just as strong a feeling for those that own a house moving to a condo as a house owner moving to a rental. It's done but not on a great scale.

Immigrants are a tough one. We see three Asians in a show room - are they immigrants? Immigration can temporarily raise prices but the market place has to be supported in the long term by the local market. Open a new pit in Fort Mac and home prices go up - a year later they're back down again.

The Americans could loosen their immigration policy tomorrow and immigration to Canada would drop off a cliff. That the Americans are so paranoid about "us and them people" is likely why Vancouver is doing so well in Immigration.

And by the way, the immigration goes both ways. After the residency requirement is completed, a lot of the immigrants return to their original country, families, friends and well paying jobs along with their Canadian Passports. Something that I've noticed with some of the UVIC professors. Unbelievable, their homes are like no one has every lived in them for the last three years. Not a nail hole in the wall or a scrape on the floors. And no mortgage on them - or at least one registered in Canada.

StalJ said...

JJ says
House and condo prices are going in opposite directions.

teehee, sort of I guess- if you mean condos are now outpacing house gains by double.

March median house price was only up 3.7% y-o-y in Victoria,
median condo on other hand was up 6.9% y-o-y

see last page of
http://www.vreb.org/pdf/VREBNewsRelease.pdf

Just Jack said...

Have year over year condo prices increased in the core?

Tracking condo prices isn't straight forward. Mostly because pre-construction prices are included in the stats. Your looking at prices for buildings that don't exist? I don't think they should be included. And by excluding them you find that the reported year over year increase in condo prices drops substantially.

But what does it matter...it's just a condo. It's not like it's "real" real estate - there is no physical land. If the tower was fire damaged and condemned it's not like you could sell the strata lot by itself 10 stories in the air.

Which is something to think about when you are buying a 40 year old condo. What are you really buying. Especially when it comes to substantial repairs. Repairs that could be in excess of what it would cost to re-build the whole complex. There comes a time when these buildings will have to be demolished. They were not built to last forever.

Some building inspectors have suggested that a wood frame building should be fully renovated at 25 years and demolished at 50 years. And that if Victoria was ever to have a significant earthquake of 7 or more, most of Fairfield would become wood splinters. That includes a lot of 40 year old condominium complexes.

Leo S said...

I was really worried last year but I've noticed most developers are riding the low interest rates and slow absorption rates without any panic.

Except if the rate of construction continues that slow absorption rate will just continue to get slower. Low rates lets developers carry units longer, but not forever.

Leo S said...

teehee, sort of I guess- if you mean condos are now outpacing house gains by double.

Comparing two months a year apart is completely meaningless due to month to month variability. You should probably know that by now.

Leo S said...

Buying a condo today in the hope of moving up the property ladder to a house is becoming a fallacy. As a lot of condo owners have been finding out lately. House and condo prices are going in opposite directions. Better to go right for the detached home today than buy a condo and have the gap widen and possibly not be able to sell the condo for more than the mortgage.

Bingo. The property ladder is broken. People who bought condos in 2008 are now facing the prospect of paying thousands just to be able to get out of the mortgage. And with the pace of new construction older condos will just continue to devalue.

Marko said...

Except if the rate of construction continues that slow absorption rate will just continue to get slower. Low rates lets developers carry units longer, but not forever.

It won't, most of the big projects are finished or will be finished by the end of the year. 2015 will bring very few big condo starts.

Marko said...

Bingo. The property ladder is broken. People who bought condos in 2008 are now facing the prospect of paying thousands just to be able to get out of the mortgage.

I couldn't agree more. The property ladder now revolves around getting more education, working harder, and taking some calculated risk in hopes of increasing ones income so they can move up in terms of property.

The actual property ladder of buying and selling doesn't work and probably won't work for a long time.

Leo S said...

It won't, most of the big projects are finished or will be finished by the end of the year. 2015 will bring very few big condo starts.

Thanks, will be interesting to the rate of starts this year. I have the impression there are lots of little condo buildings sprouting up all over but this might just be in our area.

StalJ said...

JJ you helped me see it was time to buy. You were pointing out some of the great deals on condos last Fall. I guess this is my way of thanking you. So far so good anyway. The near unit as mine just sold for 64K more than I paid back in Fall and of course my unit is better- hehe ;) Could be a bounce that fades, we will have wait and see.

StalJ said...

My theory on it is mostly Alberta effect since Fall. How do I know? I've studied sales data from Kootenay, Kelowna, and Van Isle. In the K&K regions, the areas nearest Alberta has seen biggest gains. Nearest to airports on the Island too- Comox to Nanaimo areas have also seen big gains.

koozdra said...

We can't close the output gap with "housing or consumption. It's not sustainable." -Poloz

No, no it isn't. Time to stop wasting time cheering for higher asset prices and start producing things again.

Just Jack said...

I would also look at property values around some of the schools in Victoria.

For example Oaklands. This neighborhood accounts for a lot of the transactions in Victoria City. I'm starting to think of this as a Tri-Income neighborhood. Double Income plus a tenant. As public schools go - it's better than most and rated 5.7 out of 10 by the Fraser Institute. Let's face it - it's unlikely a Nobel Prize winner will ever come out of Victoria. Some damn good drywallers but not a Poet Laureate. And that's fine.

The problem comes when it's time for middle school - the choices stink. You don't want to raise tween and teenagers this close to downtown.

Amazing prices are paid for this hood. And a lot of turn-over. People buy in this hood, renovate then get the hell out. Again a neighborhood with a lot of old stick frame housing that will be shaken off their foundations during an earthquake. I also don't like the idea that your children are in a hundred year old brick school building that will rain down on them. When it comes to a child's safety this is one time I would literally like to kick some Heritage Societies' ass.

But this is symptomatic of Victoria itself. This isn't a city for families. In contrast to the Westshore, this is a city of retirees and empty nesters. Once you start having a family you're planning to leave in the next few years to areas like the Westshore or Saanich.

Just Jack said...

Glad to help STATJ, now where's my cheque.

Anyway, there are always opportunities in transitional markets. I would buy a condo or a town home. But I would also buy a manufactured home too. And lately my thoughts have been leaning to a Grand Tour Prevost. MSRP $2,098,000

or a Bambi Airstream

caveat emptor said...

This isn't a city for families

Well according to Stats Canada about 8100 families disagree with that characterization. That said Victoria does have the lowest percentage of under 15's of all the CRD municipalities.

this is a city of retirees and empty nesters

Stats Can community profile would suggest it is more like the city of the singles and young couples. Despite having fewer kids than any other CRD municipality Victoria still has a younger than average age.

"Once you start having a family you're planning to leave in the next few years to areas like the Westshore or Saanich."

The statistics do support that. However i'd argue that's not because they don't think Victoria is suitable for kids, but rather because they can't afford the housing they want in Victoria.

Among my "wealthy" (= more money than me :-) friends and acquaintances that have kids most choose to live in Oak bay and the balance are split between Victoria City and the Peninsula.

Leo S said...

You were pointing out some of the great deals on condos last Fall. I guess this is my way of thanking you. So far so good anyway. The near unit as mine just sold for 64K more than I paid back in Fall

So you really should understand the variability of medians given your direct experience. Last fall condo median was about $15,000 more than it is now.
Just don't kid yourself that the value of your condo somehow increased by $64k in 6 months.

StalJ said...

Come on Leo, I have to celebrate the 4 year waiting game somehow. I owe you too for running this blog. If I bought this place in 2010 I could have paid 100K more as I got it for near 100K less than 2011 city assessment. True, doesn't mean it's going to go up now, but its exciting to see a similar unit in building go for 64K more than when I bought months ago. All I really care about is I'm spending less per month now than when I was renting.

btw, the month I bought last fall the median condo was only 255,000 -now 283,200 not that it matters
http://www.vreb.org/pdf/historical_statistics/MSS1311.pdf
Maybe the other months were way higher, don't have time to check, but absolutely true, the monthlys medians aren't that acccurate. Better way to gage the market is to use sold comparables.

caveat emptor said...

And that if Victoria was ever to have a significant earthquake of 7 or more, most of Fairfield would become wood splinters.

The experience of San Francisco in 1989 (mag 6.9) doesn't really support that theory. Lots of old wood frame buildings there, but most of the damage was either masonry or concrete structures collapsing, or damage due to soil liquefaction. Timber frame houses on solid ground did OK.

Fairfield (and greater victoria) have a few spots prone to liquefaction. Google "CRD earthquake hazard" to find the local hazard maps

Death Plague said...

Seems like last weekend and now this weekend are dead slow on the listing front. I thought last weekend was because of Easter but man this week there were only a small handful of new listings in my pcs for what I'm after. Isn't April / May traditionally the listing time of year?

dasmo said...

"Much of the damage from earthquakes stems not from the shaking but from the fires afterward. Far more of San Francisco was destroyed by fire in 1906 than was damaged in the quake. Fires are caused mainly by broken gas lines. Make sure all gas appliances are supplied by flexible stainless steel connectors, and strap water heaters to the framing to keep them from falling over. Installing an automatic gas shut-off valve at the meter is also a good idea.

The good news is that the old-growth timber and quality building methods used to construct old houses are likely to make seismically retrofitted old houses far more resistant to damage from an earthquake than newer houses. For a fairly small investment of time and money, you and your house can be ready to ride out the next Big One with minimal damage."

David said...

"buying a 40 year old...they were not built to last forever."

I always thought that was a sweet spot or vintage?
* post-asbestos of 50s, 60s
* post-Aluminum wiring of 60s
* pre-polybutylene piping of 80s
* pre-mould issues of 80s, 90s, 00s
* any UFFI has long since dissipated
* pre-pressed boards & plastics, used real materials
* pre-Chinese drywall
...

"should be demolished at 50 years"

Why so many 19th century old mansions still standing? Size of timbers?

dasmo said...

Quality of timbers....
"New growth wood is now common in the lumber industry and it transcends the framing and cladding product lines. The most significant differences in these new growth products are lack of density and maturity. This paucity in formidably seems to affect the retention of the natural oils and acids, especially in the Cedars. This deficit of new growth Cedar results in a "softness" of the deteriorated wood in 15 to 20 years of weather exposure. It appears that the distance between the rings and the lacking amounts of natural oils and acids contribute to early wood failures when left to the weather."

Leo S said...

* post-Aluminum wiring of 60s

Aluminum wiring is very common in the 70s boxes (Gordon Head) including in our house. No plans to replace it, but it does increase the cost of insurance somewhat.

David said...

I see, so once again 1987 onwards is the problem area. From your link:

"Clearly, it is common to find roofing and siding installed after 1987 to have failed. That date in time seems to be representative of the onset of full-blown new growth proliferation in the Cedar siding and roofing marketplaces."
"We have worked on homes from the early 1700’s with little or no paint existing on the exterior and zero deterioration was evident from either insect or microbe. By contrast, a twenty year old home can be found rotting away in areas that have succumbed to moisture."

David said...

"Aluminum wiring is very common in the 70s boxes (Gordon Head)"

I've noticed it in up to mid-70s homes also, although I believe the earlier stuff is more of a hazard.

"The problems related to aluminum wire are typically associated with older pre-1970s solid wire smaller than No. 8 AWG, as the properties of that wire result in significantly more expansion and contraction than modern day AA-8000 series aluminum wire."

Just Jack said...

The older homes are also drafty as they don't have a vapour seal. That allows the building to naturally air out and reduces moisture build up and rot.

Does that make the older homes better or worse? Because once you put a vapour barrier in these homes they will deteriorate just like a new home.

There are 200 year old barns still standing today, but few people would want to live in one.

How long should a home last?
Physically quite a long time.
Economically only about 50 years. After 50 years they are not comfortable to live in and increasingly more expensive to maintain.

Why are there so many in Victoria then? Basically because we're cheap and don't fix or repair until things fall down. Drive down almost any street and you see the derelicts still standing. Paint peeling, shingles curling, front porch sagging.

koozdra said...

CANADA MORTGAGE
AND HOUSING CORPORATION


Look at this well regulated Canadian institutions. Well.. now better regulated. What's better than well regulated?

Very well regulated.

dasmo said...

low interest rates may be here to stay
"Poloz says the new normal will be lower rates than in the past and people should get used to that."

dasmo said...

My house is 81 years old and very comfy :-)
I wouldn't dream of replacing my vintage single pane windows drafty as they may be. We don't live in Ottawa so no biggy. (Honeycomb blinds are your friend). Houses should be built to last for hundreds of years if maintained...

caveat emptor said...

^101 years and also comfy albeit more expensive to heat than I would like.

koozdra said...

creative (image)

Leo S said...

My wife's top criteria when looking at a house was newer windows. To this day she'll often say "ooh nice windows on that house" if we're out walking.

Single pane is a bit too close to the elements for me. I've had enough places where the windows rattle and you can feel the draft when a storm blows through.

dasmo said...

I wouldn't put them in a new build but after my patents house having all their double pain windows lose their seal and essentially need replacing after 25 years of service I am a little skeptical. I'm pretty sure modern windows are better made than those in the 70's though.... They never did replace them and had very large heating bills as they were as efficient as single pane...

patriotz said...

Wyndansea lands back on the market

"Priced five years ago at $37 million after plans for a $650 million golf resort collapsed into bankruptcy, the Wyndansea property on Vancouver Island is back on the market – for less than $8 million.

Jones Lang LaSalle of Vancouver listed the 360-acre ocean-side site just north of Ucluelet April 8 on behalf of the lenders, who are owed an estimated $25 million."

dasmo said...

Go figure, that rough and tumble fishing town, home to luxury resorts and condos... Oh wait didn't that already happen? Wish I was rich... I would by this and put in a yurt village, a mushroom farm and a forested disc golf course...

Leo S said...

Anyone know the previous sale price of 1566 Richardson? Would have been about 2009...

Just Jack said...

The Richardson property is an interesting one. That's a tough price range to be selling in today. Not that the property isn't worth close to the asking price, but that there isn't that many prospective buyers for that kind of property. I'm wondering how much of a premium the 11,000 square foot lot will get over a more standard 7,000 square foot site? As it is priced today, the surplus 4,000 square feet of land may be contributing some $200,000 to the asking price.

When prices were going up, back in 2007, I certainly would have paid for that extra land. I'm not too sure that I would today? Or maybe I would?

Definitely a property to look into to find out how motivated the vendor is in selling.

Marko said...

1566 Richardson went for $1,150,000 in 2007.

Bitterbear said...

I'm looking at a house that is a two bedroom converted to a four bedroom (handyman special, probably not up to code) and the owners will not do a disclosure because they say they never lived there. I've never bought a house without a disclosure statement. Is this a common practice?

Bitterbear said...

Hmmmm...turns out there is what appears to be asbestos wrapping on some pipes. Maybe that's why no disclosure?

Marko said...

Rental properties and estate sales almost always have the property disclosure statement crossed out. It is normal practice if the seller hasn't lived in the home; however, whether that is right or wrong is up for debate.

Marko said...

Hmmmm...turns out there is what appears to be asbestos wrapping on some pipes. Maybe that's why no disclosure?

Every other home has asbestos tape around ducting, literally.

Bitterbear said...

Thanks Marko, I think there are enough choices out there that I'll go with a house with a disclosure statement and without asbestos.

CS said...

Time to stop wasting time cheering for higher asset prices and start producing things again.

But how to produce things in competition with the Third world, where people work in collapsible factories for pennies an hour.

Either we'd have to slash wages to practically nothing or impose tariffs. But all mainstream political parties are for globalization and the WTO. So a declining standard of living for all but the 1% seems unavoidable.

The implication is that the demand for cheap condos may continue to grow relative to the demand for sfh's.

This trend may be concealed in Victoria, which attracts wealthy foreign investors and Canadian retirees who have driven prices of the best properties beyond the ability of all but a small minority of locally employed people to pay.

CS said...

Time to stop wasting time cheering for higher asset prices and start producing things again.

But how to produce things in competition with the Third world, where people work in collapsible factories for pennies an hour.

Either we'd have to slash wages to practically nothing or impose tariffs. But all mainstream political parties are for globalization and the WTO. So a declining standard of living for all but the 1% seems unavoidable.

The implication is that the demand for cheap condos may continue to grow relative to the demand for sfh's.

This trend may be concealed in Victoria, which attracts wealthy foreign investors and Canadian retirees who have driven prices of the best properties beyond the ability of all but a small minority of locally employed people to pay.

dasmo said...

By making better stuff...
http://www.cowichanvalleycitizen.com/news/valley-dollmaker-wins-small-business-bc-honour-1.884587

dasmo said...

Or
http://www.douglasmagazine.com/profiles/16035-david-curtis-ceo-and-president-of-viking-air.html

dasmo said...

Or
http://en.m.wikipedia.org/wiki/Quester_Tangent_Corporation

dasmo said...

Or
http://www.victoriachamber.ca/chamber_interviews/daniels_electronics.aspx

dasmo said...

Or
http://tectoria.wordpress.com/2013/03/18/starfish-medical-aims-to-solve-the-right-problems-for-their-customers/

dasmo said...

Or
http://www.timescolonist.com/business/firm-makes-8-million-splash-1.4770

dasmo said...

Just let me know if you want me to keep going...

Marko said...

Thanks Marko, I think there are enough choices out there that I'll go with a house with a disclosure statement and without asbestos.

Really bad strategy. You are making an assumption that filled out property disclosure statements are accurate - good luck with that.

Secondly, certain forms of asbestos can be less than $1,000 to remove. Drain tiles can be $10,000 or more. Roof can be $5,000 or more, etc.

Marko said...

To add to my previous post...I've dealt with 10 plus buried oil tanks in my career....don't remember them being disclosed on the property disclosure :)

Bitterbear said...

completing a PDS in good faith and being ignorant of the defects of their own property tells me the sellers didn't know their property, didn't care for it or didn't care to know about it.

failing to complete a PDS raises questions for me about what they are trying not to say.

Marko said...

completing a PDS in good faith

How do you know which ones are completed in good faith?

and being ignorant of the defects of their own property tells me the sellers didn't know their property, didn't care for it or didn't care to know about it.

A lot of different scenarios where the above three points don't apply. For example, Mr. Good Faith bought a house 15 years ago when vermiculite wasn't on the radar. Inspector at the time told him attic insulation is adequate.

failing to complete a PDS raises questions for me about what they are trying not to say.

In theory, but in reality 95% of the time it isn't completed because the listing REALTOR® or seller's lawyer told them not to complete it because they haven't lived at the property.

Marko said...

Monday, April 28, 2014 8:00am

MTD April
2014 2013
Net Unconditional Sales: 564 615
New Listings: 1,374 1,408
Active Listings: 4,394 4,585

Please Note
Left Column: stats so far this month
Right Column: stats for the entire month from last year

Mike Lewis said...

"...expect 705 sales, which should be pretty accurate..."

I see no updates on the front page - have you guys given up finally?

Seth Perry said...


MTD April
2014 2013
Net Unconditional Sales: 564 615
New Listings: 1,374 1,408
Active Listings: 4,394 4,585


Thanks Marko!

The second half of April seems to have slowed. Are we still on track to break last years numbers? We still have 3 days left...

Either way, numbers look pretty flat.

Marko said...

We'll definitely beat last years numbers but we won't get to 700 like I initially thought we might.

May will be the best opportunity to try and clear 700 sales (hasn't happened in 49 consecutive months).

Seth Perry said...

@Marko, what's the best way to project sales numbers throughout the month? Where will the 50 + sales come from over the next few days to put us above last years numbers?

What's the general feeling among real estate agents out there? Positive outlook for 2014?

Thanks again for your contributions.

Leo S said...

Where will the 50 + sales come from over the next few days to put us above last years numbers?

Monday's always have lots because the sales over the weekend show up on Mondays.
But even without that we're on pace at ~30 sales/day so 3 days should net about 90 sales or 653 for the month.

Leo S said...

per weekday rather.

Marko said...

Monday's always have lots because the sales over the weekend show up on Mondays.
But even without that we're on pace at ~30 sales/day so 3 days should net about 90 sales or 653 for the month.


Sales over the weekend show up on the weekend. The reason Mondays are busy is 95% of the time conditions are removed on a business day because financing is typically the condition that takes the longest; therefore, the two busiest days for sales are always Mondays and Fridays.

Marko said...

Marko, what's the best way to project sales numbers throughout the month?

What Leo has come up with is the best projection formula I've seen.

Marko said...

Calgary stats for March 2014....

Total Sales: 2,484
Active Listings: 3,231
Days on Market: 27

4 times the sales and less inventory than Victoria. Crazy.

Leo S said...

1.3 months of inventory. Now that is a hot market!
Even during the boom I don't think we ever dipped below 2 MOI