Monday, June 2, 2014

May results and a whine from the mortgage industry

May numbers are in, and they're about as expected.  714 sales which puts us on the low middle between a hot market (963 in May 2007) and a moribund one (572 in May 2011).   Prices are well within the margin of noise, with SFH medians up a bit, and townhouses and condos flat.





Just Jack has it right when he says that the market is very fragmented.  There are both reasonably good deals in certain segments, while others have barely declined at all.  The best options price-wise seem to be those houses that have one or two little defects, or a few year old condos.  Unless that condo is cash flow positive, it's likely a losing proposition in the foreseeable future.

While Victoria's market is spectacularly unexciting, the rest of the country seems to be doing ok, with just a few cracks showing in such unimportant places like Halifax and Quebec..  and Ottawa...  and Montreal.  Not to worry.   However just in case there is something to worry about - like more government regulation - the Canadian Association of Accredited Mortgage Professionals are either hosting their annual get together for hay fever suffers (CAAMP ACCHA!), or have released their spring quarterly report.    In there they conclude that the 2012 mortgage changes were inappropriate, in that they apparently didn't do much to slow price appreciation in Canada.

Otherwise there isn't much of interest, mostly because the survey isn't worth a lot.  When they claim that average Canadian homeowner equity has increased by 6 percentage points in 6 months, you can pretty much judge the validity of the rest of the numbers.

One interesting tidbit:  Adding up the increased payments and lump sum payments, we get 12 billion in additional mortgage pay down in 2013.   Pretty impressive right?  Except at the same time home owners extracted $52.7 billion in equity out of their homes.  Well I'm sure the economy won't miss that $40 billion in spending when that well dries up.

188 comments:

dasmo said...

Thanks for graphing Leo...

koozdra said...

Greater Victoria home sales up in May

“The increase may be attributed to the extended period of low mortgage rates we are seeing, and to the great diversity of properties currently available,”

Tim gets it. While rates remain low real estate will continue booming. Not in our case but in the general case.

I'd worry if there was an increase in interest rates. However there is nothing to worry about. You see, we have this whole interest rate thing figured out.

Will a protracted period of lower mortgage origination bring back 0-down 40 year mortgages? If I was a home owner, I would be cheering for it.

koozdra said...

Survey finds third of first-time home buyers prefer long amortizations

"Long amortizations are controversial. There was a period around 2006 when Canadians were able to obtain 40-year mortgages that were covered by government-backed mortgage insurance."

I'm all for longer amortizations. 50 years, 100 years, I don't care. Lets let the free market decide.

But lets make it a free market and stop offering government backed insurance for these massive sub prime mortgages.

The banks will have to price risk into premiums. Risk, now there's a term I haven't heard in a while.

Just Jack said...

The riskier the investment, the higher the rate of return. In otherwords if you are going to lend on a risky investment then you'd charge a higher interest rate to compensate for the additional risk.

And the private mortgage market does charge substantially higher rates. If you're a builder who has had several bankruptcies and building "spec" homes that rate will likely be around 12%.

However, if you can get that mortgage insured then the rate is down to 3 or 4%.

That's the problem. CMHC expanded its lending to cover higher risk mortgagees. CMHC had no business being in that market segment. It was being done to feed the federal coffers with insurance premiums and defer an economic recession. Now OSFI is reducing the level of risk that the previous CMHC wanker directors had taken.

Just Jack said...

Here are some stats that you may find interesting for the month of May

Victoria houses
132 current listings
36 sales
72 New Listings
3.7 Months of Inventory
50% Sales to New Listings Ratio
34 Average Days on Market
111.6 Sales to Assessment Ratio

Vic West, Esquimalt and View Ryoal
123 CL
27 Sales
54 NL
4.6 MOI 50% SNL% 62 DOM 106.8 SA%

Oak Bay
101 CL
34 Sales
54 NL
3.0 MOI 63% SNL% 40 DOM 106.6 SA%


Saanich East
260 CL
80 Sales
163 NL
3.3 MOI 49% SNL 31 DOM 106.2 SA%

Saanich West
133 CL
39 Sales
63 NL
3.5 MOI 62% SNL% 43 DOM 103.4 SA%

Generally, 5 to 7 Months of Inventory (MOI) a Sales to New Listings ratio (SNL%) between 40 to 60 percent and between 30 to 90 days on the market (DOM) indicate a balanced market between buyer and seller with stable prices.

Less that 5 MOI, a SNL% greater than 60% and a DOM of less than 30 indicate a market in favor of the seller that may lead to increasing prices.

This might help some readers in visualizing what neighborhoods are hotter than others.

It's been an average to good Spring market. Nothing fantastic and a little boring. But now that we are heading into the slower summer months I would expect the market pendulum to begin its swing back from a market favoring sellers to one favoring buyers. I would also expect the Sales to Assessment Ratios to have peaked and the SA% will begin to slide back to pre Spring market levels.

Simply seasonal adjustments for prices.

Just Jack said...

Even the pre-owned condo market did okay this spring.

Victoria City had 5.2 MOI last month. A SNL% of 56%. A DOM of 54 days. And the typically re-sale condo price was at 99.7 percent of its assessed value.

Vic West, Esquimalt and View Royal had 5.8 MOI, 41% SNL% with the average home selling after 54 DOM at 101.2% or its assessed value.

Saanich East had 6.0 MOI with lots of new listings coming on the market which sewered its SNL% to 35%. 58 days to find a buyer with the typical condo selling at 101.8 percent of its BC Assessment.

I expect some good deals on strata titled condos this summer as demand weakens. Might even be time to sharpen up those talons and do some vultching on some of the condos that are on the outside of the herd.

info said...

Single Family Home Sales Totals
. . . . (January through May). . . . .
. . . . . . .Greater Victoria. . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . .
2007...********************
2014...*****
2013...**
2012...*****
2011...****
2010...************
2009...*********
2008...*************
2006...*****************
. . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . .-35%. . . . . . . .0%. . . . . .

This chart compares single family home sales totals of recent years (January through May) to 2007’s total, which was (at best) average.

2014’s SFH sales total is well below Greater Victoria’s long term average.

In General, price declines follow slow, sluggish sales.

House prices in Victoria have been declining since 2010 in a heavily stimulated environment of historically low interest rates. This price decline will continue.

info said...

@ Just Jack

"Even the pre-owned condo market did okay this spring."

Compared to what? If you consider the performance of pre-owned condo markets in most other Canadian cities, Victoria's condo market is weak in comparison.

Remember, Canada's housing market continues to be heavily stimulated. Condo/house prices across Greater Victoria should be experiencing strong gains under these conditions. That prices in Victoria are not increasing in this heavily stimulated environment is a sure sign of weakness.

Under these circumstances, your statement that Victoria's "pre-owned condo market did ok this spring" is false.

Just Jack said...

Compared to the months of inventory, sales to new listings ratio and days on market.

All of them suggesting that the market while not stellar is still okay. Condos are still selling at close to their assessed values, taking a little bit longer to find a buyer and there isn't a torrent of new listings coming to the market.

So how do you mean compared?

Just Jack said...

Let's compare those numbers for the core to where the population of Greater Victoria has been growing the fastest over the last decade.

In Langford and Colwood there is 4.8 Months of Inventory. The Sales to New Listings Ratio is at 58% and it now takes a house on average 50 days to find a buyer. Not bad if we were talking about the overall year but we're looking at the strongest market of the entire year, the Spring, and we just got to a ho-hum balance.

And at the precipice of our CMA is Sooke. 8.9 Months of Inventory. Sales to New Listings Ratio at 43% and we are into extended listing contracts to sell a home on average now taking 102 days.

And before you say "How can it get worse than Sooke" There's Salt Spring Island. 12.2 MOI 47% SNL% and 178 days to find on average a buyer. If it weren't for a spat of Vancouver buyers thinking they're getting a deal in the last month those numbers would be a lot worse. Just wait till those Vancouverites meet the Salt Spring Island Fockers. I give them one summer and they'll be back to their East Van massage parlors. No happy endings on the island for them.

koozdra said...

Lowest rates in a year do nothing for mortgages

Why don't they just lower rates to stimulate the housing sector?

Oh wait...

LeoM said...

Nice graphs LeoS, as usual.
The graph "Victoria SFH Median & Yearly Months of Inventory" might be interesting if you add the mortgage rate for a five year fixed rate, currently at 2.99%.

I watch only one narrow segment of the housing market in Greater Victoria, in a few specific neighbourhoods, and narrowed down to a typical SFH 3 bed 2 bath with full basement without a suite. To gauge the relative price I've used a simple formula to watch the price changes over the past 20+ years. The formula is simply this:
2,000,000 divided by the current 5 year fixed mortgage rate.
For example:
2,000,000 divided by 2.99 = $669,000 which is exactly what my watch list houses sell for currently, on average.

Several years ago when interest rates for a 5 year fixed was 7% the result was:
2,000,000 divided by 7 = $285,000 which was exactly what my watch list houses sold for on average.

The formula is modified slightly for various house types and neighbourhoods and whether or not the house is well maintained and whether or not recent quality renos have been done.

When interest rates go up it's clear and obvious that house prices will decline in direct relationship to 5 year fixed rates.

Just Jack said...

I think interest rates play a larger factor in house prices as we near the end of a boom cycle. At the start of an up cycle like we had in 2000 the interest rate played a small part in house prices.

Interest rates today provide a stress test on prices as prospective buyers are maxed out on price, amortization and debt service levels.

I also think most buyers significantly underestimate the additional monthly costs of home ownership other than the mortgage payment. Property taxes, garbage, water are substantial hard costs that a home owner has no control over. You might be able to turn out a light or hang the clothes to dry to reduce your variable costs like electricity but you're hooped on municipal fees and taxes.

And if Mayor Dean goes the sewer proposal alone, I think we may see an exodus of pensioners from the city. How many of us could afford our municipal fees to double or triple from what they are now?

Seth Perry said...

+1 @just jacks last comment .

koozdra said...

"When interest rates go up it's clear and obvious that house prices will decline in direct relationship to 5 year fixed rates."

It will not be a direct relationship. An increase in interest rates doesn't just affect our current housing bubble but our frothy debt bubble also.

SJ said...

When inflation rate is rising faster than interest rate, as is case now, prices go up with rising interest rates. Leaders always wait long time for plenty inflation before allowing interest rate to rise. Capitalism work best this way.

DavidL said...

Bank of Canada leaves key interest rate unchanged
The Bank of Canada left its benchmark interest rate unchanged at one per cent today. An unchanged rate means governor Stephen Poloz does not believe the Canadian economy is strong enough to withstand higher interest rates, despite lingering concern about high consumer debt and rising housing prices.


Stephen Poloz keeps us guessing about economy
Essentially, leaving interest rates the same is a vote on the gloomy side. That's because a change in favour of higher rates would mean the bank was expecting the smouldering North American economy to catch fire.
...
On Friday, both Canada and the United States will get their next important economic indicator, when the jobless figures come out. Last month, Canada got a rude shock when the economy lost 29,000 jobs instead of gaining 13,500, as economists had predicted.

Leo S said...

Several years ago when interest rates for a 5 year fixed was 7% the result was:
2,000,000 divided by 7 = $285,000 which was exactly what my watch list houses sold for on average.


That works for a couple points in history, but won't generally be true. Unless you are saying it stabilizes eventually to that point.

Leo S said...

Canada got a rude shock when the economy lost 29,000 jobs instead of gaining 13,500, as economists had predicted.

The only people worse than me at predicting the future are those paid 6 figures to do so.

Dizzy said...

The graphs are pretty but could you complete the previous entries easy to read form? Would be very helpful. Thanks

Leo S said...

>> The graphs are pretty but could you complete the previous entries easy to read form?

Sorry I don't know what you mean by that

DavidL said...

European Central Bank adopts negative interest rates
The ECB also took the unorthodox and untested step of imposing a negative interest rate on money banks deposit with it, an attempt to push them to lend that money, not hoard it.

Basically, in a desperate attempt to keep the economy sputtering along - depositors will lose money. The only way to keep the value is to spend it by lending. It's a Brave New World of economics ...

koozdra said...

"Unusual move geared at preventing deflation puts ECB in "uncharted waters""


Poloz's favourite analogy. We've been in uncharted waters for a while now.

Dizzy said...

Leo "I don't know what you mean by that"

Sorry, I am referring to the form in the May 20th Blog entry.

Just Jack said...

Just for any ones information who is intending on buying a new home. Market Value according to BC Assessment does not include the GST.

However, lending institutions will include the Net GST in their loan calculations.

If you are buying new with 5% down that makes your mortgage, in some cases, close to 105% financed.

Leo S said...

Anyone know previous sale price for 777 Snowdrop Ave? Seems to be a pretty reasonable price.

Marko said...

^ $470,000 in 2009.

Jack and Cate said...

Leo S said...
Anyone know previous sale price for 777 Snowdrop Ave? Seems to be a pretty reasonable price.

June 5, 2014 at 5:48 PM
Marko said...
^ $470,000 in 2009.
-------------------------------

Another if you sell at that price you will lose about 50k or more with maintenance, realtor fees, taxes and city utility charges. Not a wise investment nor signs of an improving market IMHO.....

Leo S said...

Thanks Marko.

Jack and Cate, could relatively easily to a rent vs own calculation on that one. I think it would come out pretty close.

Marko said...

Monday, June 9, 2014 8:20am

MTD June
2014 2013
Net Unconditional Sales: 183 664
New Listings: 350 1,240
Active Listings: 4,631 4,833

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

koozdra said...

What does the future hold for CMHC?

“The changes are a business decision designed to increase market discipline in residential lending while reducing taxpayers’ exposure to the housing sector through CMHC,” an official release from the crown corporation reads. “They also support the government’s continued efforts to adjust the housing finance framework to restrain growth of taxpayer-backed mortgage insurance, as noted in Economic Action Plan 2014.”

The CMHC should not rest until we have a 100% home ownership rate. There is nothing wrong with sub prime mortgages when the housing market moves up in value every year.

dasmo said...

looks like mark has been doing a good job....
http://www.businessweek.com/articles/2014-05-22/london-housing-market-may-be-in-bubble-territory

Just Jack said...

It seems more regulations are coming for CMHC as OSFI attempts to get them back to their original mandate of 20 years ago of assisting people to buy a home. That the political whores later turned it into an instrument to protect lenders from dubious lending policies for investors and condominium builders and thus fill the government coffers with billions in insurance fees. Thereby inflating prices and placing the Canadian tax payer at risk.

But I digress.

Further mortgage caps limiting the size of the jumbo loans are necessary and I think more stringent controls on the 5% minimum down payment should be considered. 5 percent is too little skin in the game and much too easy to acquire from parents and credit cards. The down payment has to be large enough to create a barrier, if only psychological, to entry into the housing market. It also may cause the parents to think...

"Well Jonny you've always been a little shit to us over the years, we would've done 5% just out of guilt, but you're not worth the risk at 10"

koozdra said...

World’s soundest banks no immunity as Stephen Poloz stresses risks to Canada

Banks lending sub prime mortgages which are insured by the government. The apotheosis of soundness.

dasmo said...

Judging by the info meter of activity on HHV the threat of an imminent crash is over....

koozdra said...

CMHC guarantee on mortgage insurance putting taxpayers at risk: OECD

Marko said...

Interesting market right now. The core seems to be doing okay; however, outside of the core certain market segments are a tough go right now like the Westshore above 700k or the Peninsula over 800k.

4300 sq/ft home on Bear Mountain just sold yesterday for $690,000 (previous purchase price $739,000). Not one sale on BM over $1 million this year; however, 13 properties currently listed over $1 million.

Than you have Happy Valley and the sub brand new 500k market that seems to be doing okay.

Oak Bay 35 sales over a million since the New Year.

Seth Perry said...

I'm seeing similar results here on the Saan Pen. I commute / shortcut past the Tanner Ridge area daily and I see many houses over 800K sitting on the market since early spring (or earlier), unsold. Some of been pulled off the market. Yet Canora Mews (Sidney Airport) is allegedly selling very well.

Gary Lunn paved a 24 million McTavish Road Interchange (aka Airport Roundabout) right up to his newest development. Property virgins seem to love the starting price and the fact that they can high-five their neighbours through facing windows.

Seth Perry said...

It is actually selling very well. There seems to be strong demand for these cookie-cutter-sandwich-style houses.

Prices under $450K for a sfh.

dasmo said...

That's because they have a name that sounds like a cat and it's a well know fact that the majority of the human population has toxoplasmosis which greatly affects their judgment. Excellent marketing!

DavidL said...

@Seth, @dasmo

Your posts crack me up! :-)

DavidL said...

CBC News: Stephen Poloz sees high home prices as economic risk

Speaking in Ottawa Thursday, Poloz said Canada’s financial system is vulnerable to a sharp correction in housing prices.

“The most important domestic risk is a sharp reduction in house prices,” he said at a news conference following the release of the central bank’s semi-annual review of the financial system.

Death Plague said...

People like the fact that it's not langford even though it's a longer commute and twice the driving distance.

dasmo said...

Why would you buy a million dollar home on BM? It's an unfinished development zone. A buyer should get a deal for buying into a construction zone that could last their lifetime. If I had that kind off $$ I would buy in an established area....

Marko said...

You can buy a 500k home on Bear Mountain too. Some of the million dollar homes on BM would be two million in Oak Bay.

Supernova said...

Can anyone tell me what 741 Walpole ended up going for?

Also, most of Bear Mountain isn't THAT much of a construction zone, is it? Mostly the centre across from Pond's Landing looks a bit rough still.

dasmo said...

No it's not that bad. It's just not the finished dream. If I have a million I have a lot of options for a house. Now that the hype is over it's a harder sell. There is simply more value in established areas.

dasmo said...

For instance:
http://beta.realtor.ca/propertyDetails.aspx?PropertyId=14506647

koozdra said...

The biggest housing bubble in the world is in … Canada?

"They're the six most dangerous words in the English language, but here they are anyway: maybe this time really is different."

info said...

@ dasmo

"Judging by the info meter of activity on HHV the threat of an imminent crash is over...."

I'll assume you are talking about me.

As I've said many times on this blog, no bull has been able to find any proof that I wrote about an "imminent crash" on this site.

Bulls have accused me of this in the past. When I challenged them to find a quote to substantiate their claim, they failed to do so.

I have, however, said that it's possible that house prices in Victoria could fall a total of 40-50% over the course of 10 years (4-5% per year). It wouldn't qualify as a crash, but it would be just as devastating.

House prices in Victoria are lower now than they were in 2010 despite the market-boosting effect of a heavily stimulated environment of lax lending standards and historically low interest rates. Prices should have been skyrocketing, not falling. This fact highlights the weakness of Victoria's housing market.

Further (significant) price declines will happen. No doubt about that. I haven't changed my view one bit.

Death Plague said...

Yeah I agree Victoria's house prices will continue to drop while prices continue to rise pretty much everywhere else nationwide. Victoria's such a terrible place to live and has such a terrible economy I see no reason for housing prices to rise here. We're the tip of the spear.

Marko said...

741 Walpole - listing expired.

Supernova said...

Death Plague - Not sure if troll.

Marko - That's very interesting, thanks. It was listed for quite a while, I wonder if they will relist or what. Do you have access to information re: last time it sold and for how much?

Such a strange market we're in, but it does still seem that things well-priced will move in good time, as always.

Jack and Cate said...
This comment has been removed by the author.
Jack and Cate said...

Death Plague said...
Yeah I agree Victoria's house prices will continue to drop while prices continue to rise pretty much everywhere else nationwide.

--------------------------------

Don't know about that. Cameron Muir is on a tear again hyping B.C. real estate and the Realtors just can't beleive their luck.....

Best since 2007 dontchaknow!

sabina easmin easmin said...

You then must collect the essential mortgage info via loan companies, financial institutions, thrift corporations, mortgage corporations and credit rating unions.
best rate mortgage

totoro victoria said...

There is plenty of proof info wrote about the crash coming soon to our neighbourhood. Imminent means to occur in the near future.

Quote from info on December 5, 2013:

"Canada's housing bubble will burst soon and house prices will correct/crash until fundamentals can once again provide price support. This is the way it played out in the US and many other countries."

https://www.blogger.com/comment.g?blogID=7123542260692860177&postID=4966967615263797492

"There is absolutely nothing that points to Canada's correction/ crash being anything less than what the US went through.

Info: August 29, 2013 at 3:46 PM"

https://www.blogger.com/comment.g?blogID=7123542260692860177&postID=5662303064153843099

Leo S said...

The "correct/crash" is the loophole there.

info said...

@ totoro

"There is plenty of proof info wrote about the crash coming soon to our neighbourhood."

Completely false.

Let's take a look at dasmo's comment again.

"Judging by the info meter of activity on HHV the threat of an imminent crash is over...."

Imminent definition:
about to happen.
synonyms: impending, close (at hand), near, (fast) approaching...

The accusation here was that I wrote that house prices in Victoria were about to crash within a very short period of time. This, of course, is a completely false accusation.


"Imminent means to occur in the near future."

The future could be 5,000 years from now. Again, check the definition of imminent.

"Quote from info on December 5, 2013:

"Canada's housing bubble will burst soon and house prices will correct/crash until fundamentals can once again provide price support. This is the way it played out in the US and many other countries."

https://www.blogger.com/comment.g?blogID=7123542260692860177&postID=4966967615263797492"

This link goes back to the current thread.

Even if I wrote that, it wouldn't be evidence that I wrote that a "crash was imminent" for Victoria.


""There is absolutely nothing that points to Canada's correction/ crash being anything less than what the US went through."

Info: August 29, 2013 at 3:46 PM

https://www.blogger.com/comment.g?blogID=7123542260692860177&postID=5662303064153843099"

Your accusation is that I wrote about an "imminent crash". There is no such phrase in that comment.

Perhaps you should spend the entire weekend attempting to find that elusive quote. Good luck with that.

info said...

@ Leo

"The "correct/crash" is the loophole there."

Incorrect.

In order for "correct/crash" to be a loophole, you would have to find a quote about an "imminent correction/crash".

I don't think that exists either.

The fact of that matter is that a quote about an "imminent crash" for Victoria simply doesn't exist.

totoro victoria said...

You seem to be hung up on the word imminent. You do realize "soon" is a synonym in the context of a housing crash right?

You stated that, to quote, "Canada's housing bubble will burst soon".

You also indicated that Victoria would fall harder than other cities.

For example: "Victoria's price decline from peak leads all Canadian cities... in the US, the cities that started to correct/crash first (think Victoria) experienced, in general, the biggest overall price declines from peak."

Info: October 29http://househuntvictoria.blogspot.ca/2013/10/oct-28-market-update.html, 2013:

Soon is not 5000 years from now under any definition of the meaning of the word in relation to the housing market.

Soon means imminent and, in particular, at a time that is not long from now. Check your dictionary or the online version:

http://www.merriam-webster.com/dictionary/soon

September 6 2013 Info blogpost:

"Unfortunately for most mortgage holders, the (debt induced) housing bubble days will soon be a thing of the past in Canada"

http://househuntvictoria.blogspot.ca/2013/09/august-wrap-up.html

September 3, 2013 Info blogpost

"The sales boosting effect of the (soon to be underwater) rate hold crowd will taper off before the end of September, then sales will tank."


August 2013 Info blogpost comment:

"Foreign investors know that the Canadian housing market will be undergoing a major correction soon and their actions prove it."

"Canada's housing bubble will burst soon and millions of debt addicts will be forced to face the consequences of their actions. The housing market correction/crash will cause many Canadians financial hardship for many years."

http://househuntvictoria.blogspot.ca/2013/08/almost-weakest-market-in-country-for.html

June 2013 Info blogpost:

"Nothing can refute my logical presentation of factual information."

"The Canadian housing market crashed in the 80s. Period. There is nothing about the 80s example that suggests that Canada's housing market will not crash this time."

http://househuntvictoria.blogspot.ca/2013/06/june-10-market-update.html
June 3, 2013 Info blogpost comments:

"I always laugh when people say that Canada is different. I usually tell them that what they don’t understand is that the US isn’t different."

and

"It's interesting that there are still some people out there who deny that Victoria's housing market is correcting."

and

"Nothing supports the view that the housing market in Victoria will not crash."

and

"The big price plunges for Victoria are still coming down the pipe."

and

"Canada's housing market will crash/correct without inflation or deflation."

Jack and Cate said...

sabina easmin easmin said...

You then must collect the essential mortgage info via loan companies, financial institutions, thrift corporations, mortgage corporations and credit rating unions.
best rate mortgage
June 14, 2014 at 9:53 AM
---------------------------------


Didn't ake too long for the "hawkers" to start posting here. Now if they would only use proper grammar it would help.

Jack and Cate said...

sabina easmin easmin said...

You then must collect the essential mortgage info via loan companies, financial institutions, thrift corporations, mortgage corporations and credit rating unions.
best rate mortgage
June 14, 2014 at 9:53 AM
---------------------------------


Didn't ake too long for the "hawkers" to start posting here. Now if they would only use proper grammar it would help.

Marko said...

Monday, June 16, 2014 8:25am

MTD June
2014 2013
Net Unconditional Sales: 328 664
New Listings: 637 1,240
Active Listings: 4,661 4,833

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

Marko said...
This comment has been removed by the author.
LeoM said...

Info will be partially right if and when interest rates start to climb.

or...

Info will be partially wrong if interest rates stay at the current levels.

It's just that simple; although we won't have a crash in real estate, just a gradual price decline to match the gradual interest rate increases.

Lets wait until Wednesday to hear what Yellen does with interest rates in the USA.

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

@ totoro

dasmo wrote:

"Judging by the info meter of activity on HHV the threat of an imminent crash is over...."

Nowhere on this blog did I write that Victoria's housing market was facing an "imminent crash". Facts are facts.

Despite repeated attempts by bulls on this blog, no such phrase has been found.

Totoro, you have been unsuccessful in our attempts at finding this quote as well. It simply doesn't exist.

Obviously you are obsessed and angry with me.

You ignored my warnings about a price correction for Victoria's housing market 2-3 years ago and bought a house near the peak.

You have no positive factual information to present on this blog with regard to the performance of Victoria's housing market since 2010, so you turned your attention toward me and attempted to discredit me.

These attempts at discrediting me have failed. In the process, you have lost all credibility.

In your last post, you twisted words around in an attempt to confuse readers into believing that I predicted an imminent crash for Victoria's housing market, but that didn't work. It made you look even worse.

None of the quotes you provided in your last post say that I predicted an "imminent crash for Victoria's housing market.

You can't pin the phrase "imminent crash" on me. It simply will not happen. As I've said, it doesn't exist.

Perhaps your time would be better spent attempting to find something positive about the performance of Victoria's housing market since 2010. Oh wait, that isn't possible either. SFH sales have been well below Victoria's long term average since 2010 and house prices in Victoria have fallen since then as well, enough that many peak buyers are now dealing with negative equity and have, effectively, been eliminated as potential move-up buyers.


totoro victoria said...

My conclusion is that you have difficulty with English and with being wrong.

It was never about pinning a specific phrase on anyone, it was about your prediction that there would be a crash very soon which changed early in 2014 from prices will crash in the near future to prices will decline slowly over a number of years plus a denial that you'd ever said anything different.

Many of your previous posts have been deleted. But I digress. Why would anyone care if you used the word "imminent" or "soon" or any other synonym?

My guess is that English is not your first language, in which case I would give some leeway. Ditto with disordered thinking which is hopefully partly cultural. So, I agree, it is probably time to give it a rest.

As for purchasing a home in 2012, yes, I bought a multi-family property with 20% down which I now live in for zero monthly rent or mortgage costs and which is paid for by tenants. And yes, I own other cash-flow positive rentals which I am happy with.

I do agree that prices have fallen a bit since peak, but not a crash and not in all areas. Outlying areas and condos are down more than, say, OB. Prices might crash if rates rise, but it looks more like we are in for a long flat ride.

I hope prices drop and interest rates stay low - I'll buy more. As it stands now nowhere in BC that I'm interested in has dropped enough to make me consider another purchase.

I have been looking at commercial real estate lately and the numbers don't work either. Maybe I just haven't found the right place.

And as far as it being personal, it is not. The repetitive wrongness is just a bit annoying and I thought if it was pointed out clearly to you it might assist with a shift in viewpoint. It seems that in a way it did?

I agree that it is not worth responding to further and, hey, maybe your crash will materialize.

caveat emptor said...

"The increase in chatter is likely due to the fact that Victoria's market is starting to crash. I think we will look back on this time (and earlier) as the beginning of the end of Victoria's housing bubble.

The same thing happened in the US immediately prior to and at the beginning of their crash.
December 12, 2012 at 11:39 AM"


Still one of the best ever posts on HHV.

Seth Perry said...

CMHC to return to lower-risk roots

"The head of Canada Mortgage and Housing Corp. is shifting the priority of the mortgage insurer to helping Canadians buy homes they need, not the bigger, pricier homes they might want."

"It’s a return in direction back CMHC’s roots"

"He added that the Crown corporation is choosing to cut its own risks"

Mr. Siddall said the Canadian market is “modestly overvalued” but he believes that there will be a soft landing, meaning a gradual petering out as opposed to any crash in prices.

“If prices continue to grow, all things being equal, we would be worried,” he said. “But we are not concerned right now about the level of prices or the level of activity in the housing market.”

“We are concerned about the elevated level of Canadian consumer indebtedness,” he said, adding that it removes consumers’ ability to withstand an unforeseen event.

The aritlce goes on to say that the Organization for Economic Co-operation and Development (OECD) says the "government should consider privatizing CMHC’s insurance activities."

So do you think the slack will be picked up by private? I"m guessing private will only get into the insurance biz if they see that there is an acceptable level of risk and profit of course.

info said...

@ totoro

My view about the depth of Victoria's housing market price correction has been the same all along. It has not changed at all.

I did not predict.a crash. I have not deleted any previous posts unless I made changes immediately after posting them. More false accusations on your part.

You are now stooping so low as to make this a racial thing. I think you should be banned from this blog for doing this.

You simply have no evidence that I previously wrote about a coming crash for Victoria and then changed that view.

You were not invited into this conversation when it started a day or two ago. It is a display of poor manners on your part to join a conversation, make completely false accusations that you can't back with evidence, make racial comments and then try to look like the good girl by saying you want out of the conversation.

Marko said...

61 sales in Oak Bay over 800k since January 1st compared to 1 sale in Sooke over 800k during the same time period.

Sooke has double the active listings.

Al + TOH said...

Give it a break info, and take it easy and relax. Otherwise, instead of skipping your posts, we might run as fast as we can, when we see "info" next time ;-).

info said...

totoro victoria wrote:

Blogger totoro victoria said...
My conclusion is that you have difficulty with English and with being wrong.

It was never about pinning a specific phrase on anyone, it was about your prediction that there would be a crash very soon which changed early in 2014 from prices will crash in the near future to prices will decline slowly over a number of years plus a denial that you'd ever said anything different.

Many of your previous posts have been deleted. But I digress. Why would anyone care if you used the word "imminent" or "soon" or any other synonym?

My guess is that English is not your first language, in which case I would give some leeway. Ditto with disordered thinking which is hopefully partly cultural. So, I agree, it is probably time to give it a rest.

As for purchasing a home in 2012, yes, I bought a multi-family property with 20% down which I now live in for zero monthly rent or mortgage costs and which is paid for by tenants. And yes, I own other cash-flow positive rentals which I am happy with.

I do agree that prices have fallen a bit since peak, but not a crash and not in all areas. Outlying areas and condos are down more than, say, OB. Prices might crash if rates rise, but it looks more like we are in for a long flat ride.

I hope prices drop and interest rates stay low - I'll buy more. As it stands now nowhere in BC that I'm interested in has dropped enough to make me consider another purchase.

I have been looking at commercial real estate lately and the numbers don't work either. Maybe I just haven't found the right place.

And as far as it being personal, it is not. The repetitive wrongness is just a bit annoying and I thought if it was pointed out clearly to you it might assist with a shift in viewpoint. It seems that in a way it did?

I agree that it is not worth responding to further and, hey, maybe your crash will materialize.

June 16, 2014 at 2:58 PM


Jennifer Boss said...

Thanks for the insight. I read this before choosing a property in rentalboss.com and found it really helpful. Your data changed my outlook a lot.

Al + TOH said...

Info,

I can see why you are upset by totoro's post. But there are some valid points and useful messages there. I remembered that you questioned and argued with a professional property appraiser and long time blogger (Just Jack) here as you didn't like the numbers he gave, without thinking that knowing property value is his full time job and he is really on your side. When these were pointed out to you, you just ignored and kept matching on, without saying: I am sorry that I didn't spend time to read details of Just Jack's posts.

No one is perfect, and we all make mistakes. So keep saying "you are wrong, I am right" all the time is a bit childish, regardless of what culture. English is not my first language, and I grew up in another culture, too. But I disagree with totoro, this has little to do with language nor culture, but more to do with the person.

So come down and relax, be less argumentative and more constructive, if you would like us to start reading your posts again.

Thank you.

TOH (The Other Half of Al)

Death Plague said...

The banter back and forth between info and the rest is hilarious, please keep it up.

On a side note I guess house hunt "victoria" did well capitulating to cow town yes?

koozdra said...

"They're renters.. by choice"

Better to rent or buy a home?

What has the world come to? Will these people be incentivized to buy in when people are declaring bankruptcies left and right? Not in my opinion.

Al + TOH said...

"Death Plague said...
The banter back and forth between info and the rest is hilarious, please keep it up. "

See info, others treat this as a funny joke, is that what you want?

Seth Perry said...

Isn't everyone is entitled to their own opinion? Isn't that a benefit of this blog?

5 years from now, when I have a flash back to this blog, I'll smile and fondly remember:

Just Jack's insightful and witty posts,

Introvert's unwavering devotion to grammar excellence,

and Info's plain-text charts that are just a little too wide for this old blog (pats monitor)

Keep being you

koozdra said...

Soon the conversation will shift.

Statements like: "you don't realize any gains if you don't sell" will be come less commonplace and the conversation will shift to: "you don't realize any losses if you don't sell".

Oh yeah, there is an imminent housing crash coming.

SJ said...

Inflation...also known as a home-buyer's best friend.

Jun 17
http://www.cbc.ca/news/business/u-s-inflation-sees-strongest-month-in-a-year-1.2678059

http://www.cbc.ca/news/business/canada-s-inflation-rate-hits-2-year-high-of-2-1.2651812

SJ said...

Well, next to falling vacancy rates.

Kelowna vacancy rate
Apr '13 — 4.8%
Apr '14 — 1.5%
Vancouver vacancy rate
Apr '13 — 2.9%
Apr '14 — 1.8%
Victoria vacancy rate
Apr '13 — 3.4%
Apr '14 — 2.7%
http://www.cmhc-schl.gc.ca/en/corp/nero/nere/2014/2014-06-11-0816.cfm?WT.cg_n=TWT_MAC

I was as negative as the next guy on the property markets but you got to watch what the numbers are doing.

koozdra said...

"Inflation...also known as a home-buyer's best friend."

Excellent, now we can raise interest rates. Nobody is relying on these low rates, right?

reasonfirst said...

SJ - I think you meant to say that over the long-run, house prices track inflation. Think that through...

SJ said...

House prices over the long run have easily beat inflation. Victoria houses for instance have beat inflation by an average 4% per annum for as long as we have records, 1960 I believe. However in inflationary decades accompanied by rising interest rates, they have beat inflation by over 10% per annum. I do not see why the 4% would ever fail in a world where currencies are not backed by something real. Perhaps you do, but I do not expect governments to reinstitute something like the gold standard in our lifetime.

koozdra said...

I completely agree there is nothing that will ever bring down the Victoria housing market. In the next issue of the Oxford dictionary the term "Sure Thing" will receive an addendum.

Sure Thing

1.
something that is or is supposed to be a certain success, as a bet or a business venture.

2.
something assured; certainty.

3.
surely; for sure; O.K.; roger (often used as an interjection).

4.
Victoria real estate.

koozdra said...

Uh oh.

CMHC to return to lower-risk roots

Seth Perry said...

More Canadians Chasing After Fewer Jobs

It’s getting harder and harder to find a job in Canada, and even the booming west is seeing a worsening labour market, new StatsCan data shows.

There were 17 per cent fewer jobs available to Canadians in the first three months of the year than there were a year earlier, StatsCan’s latest job vacancy survey shows.

The number of people chasing after every available job in Canada has increased. There were 6.8 people looking for work per job opening in the three months ending in March, the survey found, up from 6.3 people per job a year earlier.

reasonfirst said...

SJ - maybe my mind could be changed but I am not going to take your word for it. Show me your data.

reasonfirst said...

Does anyone know where to get house price date back to 1960 for Victoria?

Just Jack said...

I believe most economists would concede that real estate is a hedge against inflation. Mostly because the component inputs into construction are a significant driver of the economy. From wood studs to washers, the construction and housing industry provides considerable goods and services to the economy.

Yet house prices don't directly follow inflation in the short term. Market fluctuations are common. Even today, you can find prices in one BC town decreasing while another city will have prices rising and yet both cities will have identical inflation rates.

New construction stimulates the local economy and you'll see home prices rise with rising construction costs. Under the theory of substitution, in an expanding economy, older homes will also follow the rise in prices of new construction.

In a contracting economy the opposite occurs. As more and more new homes are built, these near new homes compete with new construction and tend to drag down new house prices. That slows the economy down more and more and that causes a decline in house prices. Or to put it another way, in the beginning when there is very few new homes, new home construction leads the way in price advances as the economy expands. When the market is saturated with new or near new housing then prices will decline and you'll find existing homes as the driving factor in price declines.

In summary, over the long term home prices will track inflation, but it's the short term market that will make you or break you as a developer or speculator in real estate.

Jack and Cate said...

SJ said...

Well, next to falling vacancy rates.
-------------------------------

Vacancy rates fall as buyer's become renter's but rent prices are not increasing...there is a difference

reasonfirst said...

Jack - I think you are the best commenter here but in your last post you did not mention interest rates at all. I can't believe that inflation (if it does come - SJ says it is))won't drive interest rates and housing is not at all interest rate sensitive at this point. Also, inflation is targeted between 1 & 3 percent, interest rates have no cap.

Your summary, I think, catches this but not explicitly.

koozdra said...

Mortgage interest never as easy to pay as now — as long as rates stay low, DBRS report shows

“This is a good news story with clouds on the horizon because it’s a lot harder for rates to go down further and a lot easier for them to go up,” says Jamie Feehely, managing director of Canadian structured finance with DBRS.

mikegobblin said...

I can see that you are putting a lot of time and effort into your blog and detailed articles! Will be back often to read more updates!

http://www.amaialand.com/condominium/quezon-city/amaia-skies-cubao

koozdra said...

Debt peddlers displeased with toning down of the CMHC

We need government backed sub prime mortgage insurance to keep the housing bubble/market going.

Won't somebody think of the first time home buyers?

How are they supposed to fund my retirement with out sub prime mortgage insurance?

caveat emptor said...

@reasonfirst

I agree with Jack that housing will track inflation (plus a bit) over the long term. But you raise a good point. An outbreak of inflation (whenever it comes) will be accompanied by sharply higher interest rates that are more likely to crush prices than boost them.

Mind you at this point both above target inflation and substantially higher interest rates are WELL off into the future

SJ said...

Reasonfirst, LeoS had posted the 1960-present data here. I have it in front of me, however I'm not sure how to post it.

The past 54 yrs in Victoria have averaged 4% above inflation, however from 1966 to 1981 the average house gained 12% per annum #beyond# inflation. Noteworthy since the posted 5yr mortgage rate in 1966 was 7% rising to approximately 20% by 1981 and yet prices, for lack of a better word, skyrocketed. It's a misconception that rising interest rates lead to falling prices. More typically they rise in conjunction.

Just Jack said...

At this point I'm watching the vacancy rate more than the interest rate. This is the cruelest way to lose your home to foreclosure.

You can't take less on the rent because you won't be able to pay the mortgage. You can't sell the home as the mortgage is more than the house is worth.

You're caught between a rock and a hard place. And it happens so quickly. Unlike interest rates that could theoretically go up today but won't affect you until your mortgage renewal time.

A vacant home that is costing $3,000 a month is go to burn into any cash reserves and credit you have - very quickly.

Having said this, I am noticing a lot more vacant homes on the market these days - almost double of what there has been over the last decade. That must have a meaning in this market.

The other thing to watch is the mortgage default rate. With the low sales activity it wouldn't take much of a rise in the default rate to change our market from an orderly liquidation to one under duress. A market where agents practice trough pricing. In that a new listing is set slightly below the last price of a similar home to sell.

Seth Perry said...

Foreclosure and vacancy rates, is there a good source for this data? Who tracks this?

An interesting quote from Dale Sheppard (local real estate agent).

"Another facet of the market to watch is the number of foreclosures. This is an unfortunate part of the market and due to the global economic slowdown, and the drop in local prices, the number of foreclosed properties has been increasing each year. 2013 had the highest number of foreclosures that I have ever seen. 2014 appears on pace for even more. The savior for the foreclosed property is increases in house prices, and once this starts to happen, there will be a decrease in foreclosures. During the last upswing, foreclosures virtually disappeared, which is a good thing. Let’s hope this happens sooner than later in this downturn."

http://dalesheppard.com/blog/?p=140

Just Jack said...

The number of foreclosures is a tough one to track. It simply isn't common knowledge or a requirement for agents to disclose. Its like searching for Black Holes in space. You have to look at everything around a foreclosure.

First, the homes are going to be vacant. If the lender has Conduct of Sale, the owners are gone and the tenants have moved.

The property will tend to be neglected. Gone are the days of the agent mowing the lawns or sweeping the floors.

The water will be turned off and the property secured with a notice posted on the front door.

No disclosure statement. Not a chance that you'll have anyone put their ass on the line for a foreclosure.

koozdra said...

"It's a misconception that rising interest rates lead to falling prices. More typically they rise in conjunction."

A two percent rise in rates would crush the housing market. Attitude towards debt has changed dramatically from the "good old days". Kids these days don't think of mortgage debt is debt at all. They think that rolling credit card debt into their mortgage means they become debt free. They are the ones that will facilitate the crash.

55 per cent of homes purchased in 2013 were bought by first time buyers

These are people that think these ultra low, highly stimulative interest rates are the new normal.

reasonfirst said...

SJ

Thanks - you could post the link to Leo's post.

What happened for the few years after 1981? And it would be interesting to see the difference in leverage between then and now as alluded by Koozdra to indicate the level of interest rate sensitivity.

S-J said...


Marko,

Can you please tell me what 2659-2663 Currie Road previously sold for and when?

Thanks!

Unknown said...
This comment has been removed by the author.
Marko said...

650k in 2010.

Death Plague said...

Well there goes story of flip gone bad on that one hey?

totoro victoria said...

Because it is being listed for $1,275,000 four years later?

S-J said...


@ Marko,

Thanks, I do vaguely remember the old listing and thought it was around the $600 mark, but wasn't sure.

That's quite an increase, even with the work they have done.

Al + TOH said...

Don't under-estimate the reno cost. My friends' house in fairfiled, the one under reno right now and I mentioned here before, had more than $300k into it already and is still not water tight and not a single room is finished. They are going to change the contractor this month, but at the end, it would be total more than a year time and at least $750K to $800K to complete it.

There is another house near us under reno for more than half year now, very ordinary 60s spilt-level, and will cost over $600K when the dust settles in two or three months.

The issue is, when these renovated house go to market, the sellers normally think FMV = property value (before the reno) + reno cost. But the buyers may not think the same way, especially for the reno parts they don't like or need.

LeoM said...

If you hire a general contractor to do your major reno, then you will lose buckets of money at resale time unless you are lucky enough to start your reno at the beginning of a five year boom cycle... but then again, if you buy at the beginning of a boom cycle you don't need to lift a finger to make a 100% markup.

Moral of the story... do the work yourself or piecemeal the work to the various trades or be prepared to lose a small fortune to a contractor.

Just Jack said...

An appraiser can provide a current value estimate of your home and a prospective value upon completion of any renovations that you are planning to have done.

Prior to the boom, contractors kept their costs in line with the market and a hundred thousand renovation did get a good pay back.

Not today, construction costs for renovations are from a different planet these days. A two hundred thousand renovation might only add 50 to 75K to your home value.

That might be okay if you've owned your home for a dozen years. But I think those that have bought in the last few years should stay clear of any substantial renovations.

I see a lot of waste by contractors. For example putting in new drain tiles. 5 men on the site for 10 days and each one of them had a company vehicle they drove to the site each morning. Plus a bobcat backhoe that spent most of the time idle.

That's at least $2,000 a day for men and equipment, with most of the equipment just parked, to dig a trench.

If this were Southern California, I could pick up a half dozen workers from the downtown in my pick up and have them dig the same trench in 5 days for a total of $2,500 rather than $20,000.

Double billing is another thing. The plans call for standard counter tops and you change them to granite. So you're billed the total cost of the granite.

You should only be charged for the difference between the two types of counters. And that happens on every item you change. Its all cost plus, plus. I remember one elderly couple that were charged another $35,000 for a heat pump. And the house was only at the framing stage of new construction. Eventually they had to sell the home because they couldn't get any more financing from the bank as prices went ballistic on them.

I think it boils down to that most people are taken advantage of when it comes to their lack of knowledge of construction and the trades.

Of course not all contractors take advantage of people but I wouldn't trust anyone under 30 with a new truck.

Marko said...

An individual that is 29 could potentially have 10 years of experience in construction?

Just Jack said...

It's a play on a saying coined back in the 1960's. Google "Jack Weinberg"

A contractor today is just someone with a Web site and access to Youtube videos.

Jack and Cate said...

Just Jack - I am certainly with you on the contractor side. We traveled to PEI two years ago to build and live for a five year window. We created plans with a local family designer and planner/construction drawer.

Hired a local realtor/retired contractor to purchase the lot and then assist in finding builders.

House bid out to 5 then cut to 3 builders. All 3 did not/could not do modern HVAC we had used in B.C. so bid on a N.S. sub-contractor (+$10,000 for travel and extra costs).

Only 2 window suppliers on the whole island bid on the same window package and yet, yes a $22,000 difference for the same specs. installed. Couldn't believe it so I went around myself to get the quotes on a couple of major items and found the over-charging was common.

House that was to cost $155 sq ft ballooned to $225 a sq ft and certainly not up to the standards we would have been used to in B.C.

We met several times with our realtor to sort out what was going on and final conclusion "Westerners from away, we know they have money and we are smarter than them" Realtor agreed and we cancelled our build and kept the plans. Builders then contacted us directly trying to "amend a few items that might bring the build back on line..."

Now back in B.C. and looking to build but more the wiser and money is not burning a hole in our pocket. Sold the lot and said goodbye to family...... for now.

Just Jack said...

So how do you know what is fair and what is not fair?

In my opinion you should look at homes similar in size and quality of finish that are just a few years older than what you want to build.

You'll still have to pay a premium but at least you know how much of a premium for a new home. The GST is a confusing one. Is the tax or is the tax not considered part of fair market value. Generally the answer is no, however the banks by policy do lend on the Net GST. Net GST being the cost of the home including GST with any tax rebates assigned to the builder.

Or better yet for a couple hundred bucks hire an appraiser. He/she will do all the leg work for you and be able to discuss what is fair and what is not. That includes, like in the case of Jack and Cate a proposed home just from the building plans.

Supernova said...

Witnessing an egregious flip take place at 221 Skinner Street. I think this place was a court sale last year asking something like 299k? Now fresh paint = 400k asking. I wonder what else was done to it, as I walked through it last year and I thought I was going to get a lung disease from the mould and pee in the air. Truly needed to be taken down to studs in our opinion.

Here's hoping any potential buyers get a good inspection.

reasonfirst said...

Has anyone seen this summary by the BOC - lots of historical graphs going back to the 30s including home ownership rate, debt to disposable income and CPI. One stop shop.

http://www.bankofcanada.ca/wp-content/uploads/2010/07/chart_media_75years.pdf

For anyone who is interested here is leos post of victoria averages to 1960:

http://househuntvictoria.blogspot.ca/2012/05/tuesday-update-and-note-about-seattle.html

Marko said...

Monday, June 23, 2014 8:00am

MTD June
2014 2013
Net Unconditional Sales: 496 664
New Listings: 932 1,240
Active Listings: 4,708 4,833

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

reasonfirst said...

Now back to SJ, Ok I accept that Victoria houses have beat inflation by about 4%. It was more like 7% for the 10 years leading to the lastest peak in 2010. That in itself is cause for concern.

But is you look at the period of high inflation in Canada according to the BOC chart in the above post - 1973 - 1990 7.5%/year. Then you look at Leos chart, you can see this was a period of slower growth in Victoria prices not faster growth. House prices have grown much faster in the recent low inflation environment....a bit opposite of what you said... (PS this is just eyeballing the charts)

SJ said...

What I see is BC prices did remarkably better than inflation in the 70s despite cpi being near 10%. As inflation fell off a cliff in '82, so did prices.
Now BC seems to do well as long as inflation is as high as 2%. The exception of course was 2011 due to the incredible deals across the border stealing our recreational and retirement market.
yr cpi
98 0.3
99 1.1
00 1.8
01 1.7
02 2.4
03 2.2
04 2.0
05 2.0
06 1.7
07 1.8
08 2.1
09 0.0
10 1.3
11 2.4
12 1.1
13 -0.1
Here are the BC inflation numbers. We are pulling out of the 0% range now to 1.5%.
http://www.statcan.gc.ca/daily-quotidien/140523/dq140523a-eng.htm

Just Jack said...

I can understand NEW housing tracking inflation, but re-sales or used housing doesn't have to at all.

A pre-owned or used commodity is priced by supply and demand. If the marketplace is overbuilt in condos and buyers are scarce then pre-owned condo prices will not track inflation. They won't even match detached homes in appreciation. Certainly not manufactured homes, leaseholds, co-operatives, water front, acreage or Mansions. Even different locations like Langford and Fairfield can have prices going up and coming down at the same time.

The social, geographical, political and economic inputs that form value are vast and complicated. The Bank of Canada can announce an interest rate increase that could make prices go up or go down depending on if the local market is expanding or contracting.

Anecdotally speaking of the last several homes that I've been asked to value all of them were the same scenario. The home owner has moved back to Alberta for work and the mortgage is more than the property is worth. The home owner has simply walked and the lender is going for Conduct of Sale and a CMHC bail out. The home owner is not even going to try to keep title.

That's a lot different from a generation or two of home owners before. They felt they had a moral obligation to pay their bills. Not this time around - it's F*&K the bank - and back to Ontario they go.

-They say in BC the housings mighty fine
-House prices went under water and bankrupted a friend of mine
-Oh, I don't want no more of BC life
-Gee Ma I want to go
-back to Ontario
-Gee Ma, I wanta go home.

https://www.youtube.com/watch?v=GKe8U5Pg-dk

reasonfirst said...
This comment has been removed by the author.
SJ said...

It's straight from your BOC link above. Page 3, the red inflation line goes from 13% to 4% from ‘82 to ‘84. Most would agree, that is a cliff dive. Much bigger than the inflation dive in the early 90s recession that by the way also dropped Victoria prices. Prices and inflation typically dive together. I'm not sure why you think the opposite, that rising inflation drops prices. History shows real estate loves inflation.

reasonfirst said...

SJ - I was going to re-phrase my admittedly premature comments about the cliff before I noticed you posted again.

To be more precise it went from 12.2 to 4.7 during those years (http://www.bankofcanada.ca/rates/related/inflation-calculator/)

That is a 60% drop - sure that sounds cliff-like. But looking at you BC numbers and change over four years e.g. 2006 to 2009 was a 100% drop. hmmm - maybe not so much in relative terms.

I did not say that inflation drops prices. You are using a strawman on that. I was arguing that your blanket belief that inflation is a home owners best friend is inaccurate.

How can you look a the last decade of the greatest growth in house prices when inflation has been extremely muted and see what you see? It means interest rates have had much more of an influence.

Inflation drives house prices in the short-term until interest rates kick in and destroy much of that gain. And with current debt levels, anything leveraged is going to be highly interest rate sensitive.



Just Jack said...

You can have rising inflation without pre-owned real estate rising too.

New construction has new inputs like timber, washers, cabinets, dryers and labour costs. New construction prices have to go up with inflation. If prices don't rise then builders stop building. You don't have that with pre-owned housing.

I think prices and recession dive together. Is it possible to have a recession and inflation at the same time? Locally, its quite possible.

Rising inflation can drop prices, as governments usually step in and raise interest rates to slow the economy down.

Generally, real estate is seen as a hedge against inflation. But I think house prices can get ahead of inflation as people flock to real estate to protect their wealth. Especially in this economy where there doesn't seem to be a viable alternative to real estate. Just like any other commodity to many over anxious bidders can spoil the market.

patriotz said...

History shows real estate loves inflation.

In those times of high inflation unions had much more power than today to keep their wages ahead.

If you think a takeoff in inflation without wages keeping up is going to boost RE prices you're kidding yourself.

patriotz said...

Also the period of high inflation from the 1970's to early 1980's coincided almost perfectly with the transition from 1 income to 2 income households as the norm.

reasonfirst said...

Thanks Patriotz - and the BOC didn't start targeting inflation until 1991.

SJ said...

Pat said"If you think a takeoff in inflation without wages keeping up is going to boost RE prices you're kidding yourself."

Wage inflation is presently much higher than price inflation. Wages are growing at 4.4%, while the latest cpi for BC is only 1.5%.
http://www.statcan.gc.ca/daily-quotidien/140529/longdesc-cg140529a003-eng.htm

SJ said...

That may be why Vancouver is heating up so much again. Van is now a seller's market again going by sales to new listing ratios.

http://www.cbc.ca/news/canada/british-columbia/vancouver-real-estate-hot-spots-identified-1.2684952
He says it's not unusual for sellers to receive nine or 10 offers.
"Frequently, there are offers with hundreds of thousands over the list price,"

Al + TOH said...

I am so glad that there is no bridge nor tunnel connected us to Vancouver. The few hundred dollars ferry cost is much better than "hundreds of thousands over the list price", plus the peace and quiet ... ...

Seth Perry said...

‘Astounding’ tax hit for Victoria area lurks in sewage mess

hint - to get around TC Paywall, press ESC quickly after the initial text loads. Might need to press several times.

Property owner tax estimates range from $125 - $685 for the typical Esquimalt householder. A a straight-line calculation for Oak Bay, an average household in Oak Bay under the current plan would range from $450 - 2,700 - "That's not just during the time of construction, that’s from here on in"

"That is an astounding hit for any taxpayer," Jensen said, adding that while the dollar numbers vary from municipality to municipality, the magnitude of the increase will be the same.

Time to start shopping at kmart?

Just Jack said...

If Esquimalt took the 19 million they would spent it plus more. You give any politician and city unions access to cash and they will spend it and more. Money that would be spent on wage increases, more management and frivolous items. As long as the city has a surplus it will spend like a drunk sailor in a Thai bar.

There would be no need to use it to offset property taxes. Esquimalt will always raise their taxes to be in line with the other cities.

You are asking Politicians, both present and future, to be responsible with the money. Like asking a banker to be responsible for your investments.

https://www.youtube.com/watch?v=-DT7bX-B1Mg

reasonfirst said...

SJ/Patz

SJ makes a valid point with average weekly earnings. What I don't get is that average weekly rates are only up 0.3 % and hours worked are down 0.6% over the past year in BC. How does that reconcile?

Patriotz - you are good at this stuff...

http://www.bcstats.gov.bc.ca/StatisticsBySubject/LabourIncome/Earnings.aspx

koozdra said...

Higher Interest Rates Coming Sooner Than Advertised

SJ could be right about rates but he/she is completely out to lunch on the effects.

"In addition, higher interest rates would likely slow the pace of growth in consumer spending and investment in housing. Consumer indebtedness in Canada remains high, and any increase in interest rates on consumer debt would lead to higher debt-service burdens and reduce the ability of consumers to finance additional purchases. Weaker consumer spending would, of course, have negative repercussions for growth in the broader economy.
The Bank of Canada has a tricky job ahead of it—unwinding monetary stimulus after nearly six long years of interest rates at extraordinarily low levels. Getting the balance between controlling inflation and sustaining economic growth right will be a challenge. Homebuyers beware—the days of five-year fixed mortgages below 3 per cent may soon be a distant memory."

mooselessness said...

I laughed out loud at this property description, and not just because it evokes Sauron:

On top of a hill on a quiet street, flooded with light, you will notice a large mountain in the distance. That’s right, Mt. Douglas, staring directly at you day and night. Do you want to be that family everyone talks about? Cooking Chinese food will be a wok in the park using this kitchenette specifically designed to cook Asian culinary. This home is equipped with 8 bedrooms, 6 bathrooms, and two family suites. Rest easy, the added insulation used in this quality built home will ensure definite privacy when both mother-in-laws are in town. What are you waiting for? Book your showing, and view this wonderful spectacle of quality craftsmanship.

MLS 339327

Marko said...

Have to be careful with property descriptions like that......a few years ago one of my clients insisted she write the description for her condo....a part of the description read, "Every person should have the sink of her dreams and this unit boasts a Franke [very expensive sink]." I ended up getting two hate emails over that.

LeoM said...

Curious about house prices in American cities as a ratio to annual family income?

How Much House You Can Buy, In 385 U.S. Cities


DavidL said...

@ mooselessness

Yep, I can see some getting offended with that listing ... How about the artistic license with MLS 334482 (1506 Regents Pl), asking $799,000: "It's almost free at this price."

Dr. Doinglittle said...

Almost free, with almost 100 DOM...

SilverSurfer said...

Rent vs Buy? The "tipping point" was years ago, but it seems at least 1 couple has come to their senses after they sold their box in Vancouver and decided to rent one in Toronto instead of buying.

Apparently if you rent, you end up with savings that you can invest. What a concept.

http://www.cbc.ca/player/News/TV%20Shows/The%20National/Canada/ID/2465258641/

Ps. Too bad they cut off the professor who was listing all the costs of home ownership. Probably the most educative part of the entire video.

Just Jack said...

I can understand why both the agent and the home seller may feel that the asking price is a "steal" at $799,000 for Regents Place.

That's because since the home owner bought their home back in 1998, the median price for homes in the core has gone from $230,000 to $599,000. Making their original purchase price trend up to nearly a million dollars today.

And it might have been, except that Victoria has a price ceiling for houses. That means a lot of better homes are competing at the million dollar mark these days.

If you're wealthy and don't need mortgage insurance, the quality of home at slightly over a million is magnitudes greater than just under a million. More so than in any other price bracket.

So properties, like Regents Place, take a hit and sell for under assessed value these days.

The home owner might have gotten their price a few years back - they just waited too long to cash in their real estate lottery ticket.

Hopefully they are ahead of the game with the new list price and have a chance at the lottery bonus number, otherwise they may just have to follow the market down.

koozdra said...

"The advice we have received is that we are not in a bubble," -Oliver

Good news everyone, there isn't a bubble, the government said so.

Phil said...

I thought I saw more prairie license plates around.

Vacationers from Alberta and Saskatchewan eyeing B.C. recreational real estate
With weak dollar and rising prices in southwest U.S., Prairie buyers are shifting their gaze back home

koozdra said...

Canada Banking Regulator Continues to Sound Alarm over Debt


""With interest rates expected to remain exceptionally low and household indebtedness high, these risks are likely to remain elevated for the foreseeable future," Mr. Zelmer said in an address at a housing policy conference in Toronto. His speaking notes were distributed to journalists."

And if rates don't remain low?

koozdra said...

Don’t get complacent about risks of housing downturn, OSFI warns lenders and insurers

"Canada’s top banking regulator is urging mortgage lenders and insurers not to grow complacent despite healthy bank capital levels and predictions of a soft landing in the housing market."

Is a summer mortgage rate war that is insured by government backed sub prime mortgage insurance a sign of complacency?

DavidL said...

Does anyone know what the "story" is with foreclosure at 832 Haliburton Rd (MLS 339235).

S-J said...


@ DavidL

"Does anyone know what the "story" is with foreclosure at 832 Haliburton Rd (MLS 339235)"

If it is the one I am thinking it is, I remember a number of years ago there was an older house for sale with a large piece of land (where this new house has been built). The older house was on a different road, I believe.

If I remember correctly, it was listed around $1.6M (not sure what the buyers paid for it). I believe they subdivided the land and created "Haliburton Heights"?

Regarding the foreclosure house - not sure whether the people/developer who bought the house and land built this house on spec, or somebody purchased the lot and built on it. I'm not even sure it has ever been lived in. All the pictures have shown the property empty (it has been listed before).

I'm sure Marko will know more about this.

Marko said...

I'm sure Marko will know more about this.

Haven't paid much attention to this particular property so I don't know more.

Just Jack said...

Should I or should I not buy a house under Conduct of Sale?

There's lots of them out there. And the agents do price aggressively in order to get that initial offer.

Although the agent has listed at an eye brow lifting price that doesn't mean you're going to get the home for that price. You could go in at full price and the offer not accepted by the Mortgage Company. In those cases the asking price is more of a "teaser" to get an auction going.

But maybe you don't have to do this dance with the mortgage company. Maybe you can use their teaser price as a negotiation tool when bidding on a similar home in the area. Perhaps a home that isn't under court order and has been up for sale for over 90 days now. You just have to ask that the seller match the price of the court ordered property.

Seth Perry said...

751 Cameo St sold recently. Marko, do you know what it went for?

What are the rules when it comes to selling a home where a homicide occurred? Are the new buyers from out of town?

Happy Friday

Seth Perry said...

Here are a few helpful links for those interested in the story.

Listing

Police probe fatal shooting inside Saanich home

802 Cameo listed for about the same, $469

Just Jack said...
This comment has been removed by the author.
Just Jack said...

How do you get luminol off walls?

DavidL said...

Thanks, S-J. It seems that four agents have tried selling it over the past year - each at a lower price.
326334 $815,900 2013-07-23
330297 $798,000 2014-02-15
336790 $774,900 2014-05-02
339235 $749,900 2014-06-21

It's an interesting point that Just Jack makes about the bank not being obliged to accept the listed price.

Marko said...

What are the rules when it comes to selling a home where a homicide occurred?

Not in BC, that I am aware of.

info said...
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info said...
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info said...

. . . . . . . . . .Victoria House Prices. . . . . . . . . . .
. . . . . Percent Decrease Since May 2010. . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . 0%. . . .*. . . . . . . . . . . . . . . . . . . . . . . . . . .
-0.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-1.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-1.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-2.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-2.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-3.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-3.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-4.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-4.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-5.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-5.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-6.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-6.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-7.0% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-7.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-8.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-8.5% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-9.0% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-9.5%. . . . . . . . . . . . . . . . * . . . . . . . . . . . . . . . .
-10.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-10.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-11.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-11.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-12.0%. . . . . . . . . . . . . . . . . . . . . . . . . . .* . . . .
-12.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-13.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . May. . . . . . . . May. . . . . . . . May. . . .
. . . . . . . .2010. . . . . . . . 2012 . . . . . . . 2014. . . .

(Index data from Brookfield RPS)

Based on this data, house prices in Victoria have fallen 12.2% from the peak that was established in May 2010 and are currently lower than at any point since August 2007 (except April 2014, when prices were 0.1% lower).


LeoM said...

"Does anyone know what the "story" is with foreclosure at 832 Haliburton Rd (MLS 339235)"
-------------------

If I recall correctly, this area of Haliburton Rd were new lots were created as part of a subdivision re-development project. If this is the property I'm thinking of, almost everyone involved lost money on this Haliburton subdivision/redevelopment project. Marko probably can't comment because one of his Realty colleagues was involved as a developer/promoter/investor. I think one or two lots are still for sale from this subdivision, but I'd never buy a steep hillside lot because the hillside would require geo-engineering to prevent sluffing, making it a very expensive build and only suitable for expensive geo-engineering if the lot had spectacular views, which these lots don't have. It's common for properties in failed developments to have multiple liens, so caveat emptor.

Marko said...

Monday, June 30, 2014 8:00am

MTD June
2014 2013
Net Unconditional Sales: 655 664
New Listings: 1,209 1,240
Active Listings: 4,697 4,833

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

Leo S said...

Fewer sales than last year... That hasn't happened in a while

dasmo said...

Happy Canada day nerds!

Seth Perry said...

@leo I don't think all the stats are in yet. Probably closer to 688?

Marko said...

I think we'll be around 685 sales and possibly a 8 year low in terms of new listings.

Seth Perry said...

here to present the final numbers for june 2014, Marko J... drum roll ....

Marko said...

Wed Jul 2, 2014 7:00am:

Jun Jun
2014 2013
Net Unconditional Sales: 680 664
New Listings: 1,234 1,240
Active Listings: 4,695 4,833

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

Marko said...

The numbers don't look spectacular but we ended up with the highest sales number in 5 years, the lowest new listing count in 8 years and lowest active listing count in 4 years.

Marko said...

I think the stagnation in prices is causing low inventory. Last month alone I had 3-4 inquiries along the lines of....

"Hi Marko, I have a rental condo (or house) and I would to simply my life, how much do you think I could get for it. Thanks, Bob"

"Well Bob, you could get xxx,xxx for it."

"Hmmmm, okay, I'll rent it out for another year."

Seth Perry said...

Anecdotal time:

At a BBQ last Friday, some one we know says their vacation plans have been on hold for a while because they can't sell their rental property. I think they've been wanting to sell since last year. I guess they aren't getting the price they want. They've vowed to take a vacation as soon as it sells. Cross your fingers.

I overheard two moms chatting at a park, one was complaining that her family had to leave their home because of a showing (their home is for sale), "seems like our these showings have been going on forever", "I put in extra time cleaning and showcasing but it doesn't seem to make a difference", "So frustrating". "I didn't think it would be this hard to sell".

On the positive side, someone we know sold their home (1009 Richmond Ave) "after one day on the market". Now moving to a condo on beach drive. Smart lady!

It sounds like a real mixed bag out there.

Seth Perry said...

Some sound advice from the Chicken Baron with a golden voice.

caveat emptor said...

Flatness:
average Ternaet HPI over the last seven years = 139.2
All but 5 out of 84 months were within + or - 5% of that average. Currently we are 3.9% below that average.

Of course in that seven years of approximate flatness inflation has eroded purchasing power by 11% (BOC Inflation calc) for a real return of -11% (on top of what you might have lost or gained by buying in one of the peaks or dips in the general flatness).

It's easy to see a correction in home prices playing out as continued flatness for several more years during which price to income ratios will gradually mean revert.

info said...

. . . . . . . . . . . . .Victoria House Prices. . . . . . . . . . . . .
. . . . . . . . .Percent Decrease Since May 2010. . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . 0%. . .*. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-0.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-1.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-1.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-2.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-2.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-3.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-3.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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-9.0% . . . . . . . . . . . . . . . . .*. . *. . *. . . . . . . . . . . . . .
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-11.0%. . . . . . . . . . . *. . . . . . . . . . . . . . . *. . . . . . . . .
-11.5%. . . . . . . . .*. . . . . . . . . . . . . . . . . . . . . . . . . . .
-12.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . *. . . *. . .
-12.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . *. . . . .
-13.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . May. ./. M .J. J. A. S. O. N. D. J. F. M. A. M. .
. . . . . . 2010. ./ . . . . . . 2013. . . . . ./. . . 2014. . . . . . . .

(Index data from Brookfield RPS)
(Index link)

This monthly price chart includes price levels from May 2013 to May 2014 as well as the peak (May 2010).

continued...

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

(continued)

Based on this data, house prices in Victoria have fallen 12.2% from the peak that was established in May 2010. May 2014’s monthly price level was the lowest of any month since August 2007 (except April 2014, when prices were slightly lower).

House prices in May 2014 were 1% lower than in May 2013.

Many Canadian cities posted strong year-over-year price gains, highlighting Victoria's market weakness.

In 2006, many housing industry "experts" in the US predicted a soft landing for their housing market, saying that prices would correct 5-10%, then flatten out while incomes caught up to support prices. How did that work out for them? Similar predictions were made for other (now deflated) housing bubble around the world.

Why didn't income gains stop the US housing correction after prices corrected 5-10%?

In general, income gains slow as the inflation stage of a housing bubble ends and the bubble deflates. This was true in the US and many other countries. The inflation of a housing bubble causes a dramatic increase in the level of activity of housing market related industries, finance, insurance, etc. and this boosts economic growth and wage growth to above average, unsustainable levels. As the housing bubble deflates, the level of activity of these industries cools significantly and this has a negative impact on economic growth and wage growth. As well, as house prices fall, consumer spending slows and this also has a negative impact on the economy and wage growth. Again, the US provides us with a good example of this.

In the US, no city experienced big price declines until 2007, when the country's household debt-to-income ratio began to fall (third chart). After that, the weakest housing markets in the US experienced significant price declines. The same will happen in Canada. Victoria is Canada's weakest major housing market. House prices in Victoria will decline significantly more than the 12-15% correction that has happened so far.

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

. . . . . . . . . . . . .Victoria House Prices. . . . . . . . . . . .
. . . . . . . . . . . . . Percent Below Peak. . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . 0%. . . . . . . . . . . . .*. . . . . . . . . . . . . . . . . . . . . . .
-0.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-1.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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-2.5%. . . . . . . . . . *. . . . . . . . . . . . . . . . . . . . . . . . . .
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-12.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .*. . . .
-12.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . 08. . . 09. . . 10. . . 11. . . 12. . . 13. . . 14. . .

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Haleema Zaheer said...

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Real Estate