Tuesday, February 27, 2007

Hunting leases

Been engaged in a ton of purchase hunting and blogging about that market being inflated and competitive.

Unfortunately, from looking around, I'm starting to believe that the rental market is hot on the RE market's heals.

Here's the sites we are using to find places:
  1. UVIC off-campus housing so far, in my 12 years of renting in this town, this has been the best resource for good suites and good landlords.
  2. UsedVictoria.com
  3. Craig'slist.com
  4. renting.ca online version of the TC's classifieds.

There are definitely more; many firms like Brown Brother's and Dutton's and Co, have online listings for the buildings they manage. We're looking for a suite in a house, so we're not using them so much as they tend to manage either apartment buildings or whole houses.

The rise in free online classifieds leads me to believe that paid newspaper classifieds may not be the best way to find a suite anymore.

I have even rented a place in Fairfield several years ago that wasn't advertised anywhere. I was wandering around, coffee in hand, looking at houses and sure enough, for rent signs were found; a quick call on the cell, a walk through 2 minutes later and within 20 minutes I had signed a 1-year lease. It was a great place, a great neighbourhood, a great landlord and a really easy hunt. I was lucky, the suite had just been cleaned and the sign just put up within hours. I was the 4th call, but because I didn't go home and wanted to walk through right away, the place was mine.

Things I look for in a Landlord:

  • I want a landlord to check my references. If they don't, they don't care about their property and therefore they don't care about the issues I may have with it.
  • I want a landlord to have a lease, at least 6 months, but preferably a year. A lease helps me and it helps them. Without a lease, I don't have any guarantees that they won't sell the place or evict me in the short term. A landlord has to give you at least two months notice, and the second month is a 'free' month for the tenant. That's an economic consequence that is potentially painful to swallow, I don't expect them to take it lightly.
  • I want to see a place empty. This goes against the realtor's credo of showing a house with furniture in it because then buyers can get a better idea of size and layout. As a renter, I don't want to see beat-up furniture and messy dishes, I want to see that the place was cleaned by the landlord or a professional and that the potential one month of letting a place sit empty isn't overly crippling to a landlord; if they can't take that as part of being a landlord, then they may not get around to replacing a broken fridge or hot water heater too quickly either. ( I rarely get this wish granted though)

Fundamentals:

The vacancy rate in Victoria is 0.5% apparently... maybe its 1%. For the past two weeks I've been calling prospects. Calls go like this: "Hi, calling about your suite..." "sorry, its gone."

Long story short: no viewings scheduled at all this week. It's ok, we have a back-up plan, and don't have to move before May-June so plenty of time. No animals, no kids, non-smokers, both have professional jobs, we're quiet, don't party: confident we'll be ok.

Rent amounts: $800-900/month, we think is fair for a decent suite with light and a bit of space. We'd prefer 2-beds but we'll be ok with a bigger one bed suite. Laundry in unit preferable, but shared ok. Won't even look at a place that doesn't have access to laundry. Neighbourhoods for renting: Oak Bay, Gordon Head, Fairfield, Downtown, and Cadboro Bay. ( I think there are less slum lords in these neighbourhoods.) We may end up paying closer to $1000-1100/month the way it looks now.

Monday, February 26, 2007

Use a Realtor or not?

As a buyer, it makes perfect sense to use a realtor... it basically costs you nothing and their expertise could save you big time. Realtors often have access to info that the MLS system doesn't make readily available, especially online. Agencies internal listing services are usually much better and more up to date than MLS.

As a seller, I think given the massive number of new low-fee or no-fee services that have popped up in Victoria over the past 5 years, you could be forgiven for being more skeptical and inclined to sell-by-owner. Especially in a seller's market. I can't imagine FSBO-type sites doing well in buyer's markets.

Apart from the connections that the Realtor network provides, what are the other major benefits that a realtor can give you that you couldn't research or pay fee-for-service yourself?

I've been trying to source out all the private, non-Realtor websites for house hunting in Victoria.
  1. BC for sale by owner 6 active listings in Victoria (they claim 18)
  2. For sale by owner Canada no Victoria listings
  3. ForSaleByOwner.ca no Victoria listings
  4. PropertySold.ca 2 listings
  5. ByTheOwner.com 71 Victoria listings
  6. PropertyGuys.com 14 Victoria listings
  7. HomeSellCanada 2 listings
  8. BC Homes for sale 11 Victoria listings
  9. FSBO BC

Please fill in any blanks I am missing.

Hunt Update: drove by a bunch of new condo developments this weekend. Reflections in Langford is definitely untouched in weeks... if building is happening, they do a great job of removing evidence for the weekend.

Tuesday will be a rental hunting day. We'll start with links to the online sources of rental listings. Give me hints if you know of good ones, please.

Saturday, February 24, 2007

Whose buying anyway?

I'm dumbfounded to explain where people work, how much they make, and how they can possible afford to buy in this market.

Here's my information source. (2005 census numbers)

Here's my thoughts:
  • 351K total population in the CRD seems really low.
  • 167K to 182K between 2005-2010 is significant job growth: until you look at the % = 1.4%/year
  • CRD has second lowest job growth of all regions in BC; yet second highest housing inflation rate? [this is my assumption, based on average SFH price, Lower Mainland highest, CRD 2nd... I could have pulled this info out of thin air too, and am feeling too lazy to research so point me to the truth if I'm wrong please]
  • Construction boom in CRD in terms of jobs is big (7.5%) in 2007-2009 then predicted 6% drop in 2009/10. That's a big year of year decline and coincides well with current developments in CRD predicted completions. Does this mean no new growth is forecast for housing in 2010 and the near years post?
  • Highest number of job growth is in the low-pay accommodation- and food-services and retail industries.
  • Predicted decline in jobs for high-pay government and education jobs.
  • Increase in health care jobs: can these be considered high pay anymore? As I understand it, fewer well paid RNs hired, more $20/hour LPNs and Nurse's aides... I'd say it safe to assume that the two cancel each other out and we'll experience job growth without overall growth in pay. Again, just assumptions by a non-economist, so likely completely baseless, please educate me.

Going out this afternoon to explore new developments of condos and mixed SFH in Langford. Going to check out Latoria Walk, Royal Roads and Goldstream developments. I'm curious if speculators are buying these units or not. I'm inclined to think that the speculation isn't worth the risk anymore, that developers aren't willing to give the profits away so easily and the pre-build pricing is more in line with fully-completed unit price. Does anyone else think that $350-450/sqft is disgusting?

Weekly sales numbers are up at VT; is this an inventory slowdown? Does this means prices will increase sharply? Or just a weekly blip?

Friday, February 23, 2007

Friday News Hunt

Fridays are particularly good news days to check in with the local goings on in the world of housing.

Please use the comments to add to sources if there are any glaring omissions.

More commentary on the Building a Housing Legacy Budget here, here and here.

VHB's abrupt self-declared end gains some noteworthy coverage. And his list of resources is a worthwhile weekly read.

Local news:

Vancouver Sun behind a firewall; if anyone has access, feel free to post highlights in comments... please don't bend any copyright laws.

Gotta say about the Hudson... who are they kidding? I'm guessing that the prices will be significantly higher than the current 30-40% premium we pay for new units on the market now. Yesterday in the TC a report suggested that an income of $135K is necessary to cover a mortgage on $520K (current victoria average); correct me if I'm wrong but the current average condo price is $350K... downtown is higher priced, Hudson will be selling in 2009-10 most likely, I don't know how any single person will be able to afford $1800-2300/month mortgage payments.

Thursday, February 22, 2007

Thursday play with numbers

This is by no means truly scientific. Think of it more as a snap shot into a first-time home buyer's look at an outrageously priced market. Or, you can feel free to think of it as a political poll in the middle of a majority government's term: hardly proof of anything at all. Now that the disclaimer is out of the way:

I analysed the listings we've been watching since January 31. I don't know what I'm doing so pick my analysis apart, or ask questions for info you think is missing and pertinent.

Total houses: 48 [criteria is suited, or suite potential, under $425K in SW, SE, Vic, Langford, ESQ]
Number sold: 17
Sold above asking price: 10
Sold below asking price: 7
Average days on the market: 11

Total condos: 67 [criteria is 2 beds, at least 1 bath, under $250K in SW, SE, Vic, Langford, ESQ]
Number sold: 19
Sold above asking price: 7
Sold below asking price: 12
Average days on the market: 23

[I should clarify that I counted sold at asking price as above... I figure if someone is agreeable to paying full asking price then they haven't made a deal worth calling anything other than duped]

What I am taking away from this analysis: condo market doesn't seem to be as hot as the pros are saying, certainly not in the least-expensive category anyway.

Houses: how can anyone afford to buy one? I read in the TC today that in order to get in at the average price of 520K a family has to have an average income of $135K. Who's making this kind of money these days in this town? I'm guessing not many. I'm hoping that this is the last of the people who bought $100K condos doubling their money and stretching into the housing market.

I'm still at a loss to either explain or understand what is going on. I'm guessing we can call this bear-caught-in-the-bull-syndrome.

Your thoughts?

Thursday Hunting

Looked at two condos this morning. One was literally a closet. I am amazed that people are listing one-bed plus dens as two bedrooms. And then pricing them like they are luxury condos.

We talked about not getting trapped in the market if we buy. So our thoughts on the purchase is to approach the suites as a purchaser would. We can fix up the walls, change the floors, update the kitchens and baths. But we can't change the amount of light that comes into the rooms or change the layout.

So light and layout are imperative to any decisions we make.

I still think condos suck. Too much to compromise to ever really enjoy. There are some positives, but a lot of negatives too.

Over on Victoria's Truth there's been a bit of a discussion about the number of new units coming onto the market. I'm wondering the implications on the type of units we've been looking at. I'd classify what we've seen as the last of the affordable units around. The units are generally bigger, sometimes 20% or more, than the new developments. New units are usually priced at least 30-40% more as well. Granted, there aren't too many new units under construction in neighbourhoods that I would classify as affordable. What does this mean for the cheaper units available today? Does this make the affordable--OK, I can't use that term anymore, its not accurate, let's agree to call them least-expensive--units a more competitive market? Can we assume that they are going to experience a relative stable pricing effect because of this?

This market is terribly difficult to sort out. I'll tabulate some of the price to sales ratios that I can later today and post again.

Tuesday, February 20, 2007

Budget Day in BC and a little Hunting

Here's today's budget highlights (you can see the whole budget on the BC Gov website)[I should also disclose that I am not associated with any political party or organization and have consistently voted Liberal in BC since I've been eligible to vote]:

1. "First Time Home Buyers’ Program is enhanced to exempt first-time buyers across British Columbia from paying the Property Transfer Tax on homes valued up to $375,000. This will save first-time buyers up to $5,500" An increase from 325K

My thoughts: after checking out what's available in this price range, I'm none too thrilled. Considering that every 10K in purchase price at today's interest rates adds about 100/month to mortgage servicing, $5,500 isn't much. That's about $50/month on your mortgage payment. Whatever it's value is it is a tax break and I'll take it, but it won't impact my decision to purchase AT ALL.

2. "The government will introduce legislation to allow people to start deferring their property taxes at age 55, rather than age 60. This provides added budget flexibility for those on fixed incomes."

My thoughts: Great call Gordo... this isn't the largest, most-wealthy demographic in BC is it? This is a tax cut, given to the Grit's largest supporting demographic. And it does nothing to help those who can't get into the market. I doubt very much if this tax break will filter into rents either, so those of us renting don't get a break either.

3. On renting: "An additional 5,800 families — more than 20,000 in total — will now be eligible to receive up to $563 a month to help with their housing costs"

My thoughts: I'm all for helping those on low incomes find suitable housing... especially if it makes our downtown experience more pleasant for visitors.

4. "10 per cent personal income tax reduction for individuals earning up to $100,000"

My thoughts: before you think your tax bill just dropped by 10%, it didn't. This is 10% of BC income tax which is really just a blip on the total income tax bill you pay each year. My and the future wife (annual income roughly $70,000) average savings maybe $1800 [when they conveniently compare it to pre-2001 taxation]. What's that per month in a mortgage? Roughly $45 or an extra $4K in purchase price. When you bought a house in 2001, chances are you paid closer to $250K rather than the $520,000 it costs for a similar home in this market. Hardly keeping pace with the housing inflation rate I'd say.

5. Home owner grant increased threshold to $950K.

My thoughts: paper millionaires rejoice! Especially if you're a "low income senior, veteran, person with disability, and other qualified individuals"

I'd keep looking for more, but it's a bit boring, so search for yourself further if you'd like. Really, as I see it, this is an appearance of doing something without really doing much at all. Am I disappointed. Not really, I'm a bit of a fiscal conservative and would much rather the debt go down and the streets get cleaned-up before tax cuts that barely make a dent in the housing price crisis. If the Gov't really wanted to do something substantial, the only answer would be market intervention and I would never suggest that. This write-up is provided only for information purposes, I'd rather not engage in a partisan political debate, but just wanted to apply the housing affordability budget for those interested in the House Hunt land.

On to hunting. Completely devastated today. It is looking like our pipe-dream of home ownership is a dream without even a pipe to sell for a down payment.

Looked at one condo. Priced 5K above assessment. Huge, 2bed 2 bath, low monthly assessment ($135), hadn't been updated since it was built in 1975 (shag carpets and all). Our price per month on this baby $1400/month (when we include assessment, taxes, bills etc). $1400 to live in 1970s paradise!

Checked out half a dozen houses, all with suites except two (one had potential)... I won't go into detail because its not worth the effort. None of these were over $400K, but none could get the kind of monthly income we'd need to even approach the $1400/month of the condo-related payments... in one case, we'd be paying $1200/month to live in a dark, dingy one-bed basement suite nowhere convenient to our current working/studying lives, that is currently rented for $600/month inclusive.

Monday, February 19, 2007

Last Week's Hunt

Tuesday we checked out a bunch of condos. Some were sold, others newly listed, one was a long-time market fixture that likely will remain so for some time.

Of the 14 we'd indicated to our agent we'd wanted to see, we got 4. The other 10 had offers and are not allowing further viewing or had sold. All units were in Central Park/Hillside neighbourhoods. We're not interested in bidding wars or playing the game. Which leads me to thinking:

Over the past 5 weeks or so that we have been actively hunting, I've noticed one consistent trend. Houses priced within 10% of assessment are selling. Some are fetching above asking price, some are right at asking others are going for 5-10K under, but certainly no deep discounts.

Houses that are overpriced (15% + above assessment) [these are my designations, certainly not professional observations] are sitting for a while. Lots of these out in Langford/Colwood way.

I'm actually surprised by this. If I was selling, I would think that having a higher asking price would give me more downward room to play with so as to make the buyer think he/she was getting a good deal. As a buyer, that's what I'm looking for: a bargain. Or at least the emotional response of having thought I got a bargain.

No Hunt over the weekend. Going out tomorrow to look at houses again, View Royal and Langford. Don't want to move there, but need to see the values to make a fair decision.

Sunday, February 11, 2007

Weekend Rental Hunting

This weekend we looked at two rental suites in Gordon Head. Bigger 1 bedroom suites. One at $750/month plus 1/3 utilities, the other at $725/month plus 1/2 hydro, cable and other utilities included.

Considering we are currently in a 2 bedroom suite at $725/month inclusive, I kind of feel sick to my stomach. The thought of downsizing and paying more, not to mention living farther away from school and not on a direct bus route, just makes little sense. But in this market where stats indicate current rental vacancy rate at 0.5%... beggars can't be choosers. One positive, time is on our side.

This Tuesday we will reluctantly check out condos. We'll be looking mainly in the central park neighbourhood as it appears this may be best bang for the buck when you only consider square footage and building. The neighbourhood is trying to clean itself up, but after last week's police shooting, 7 units were put up for sale in the immediate area; could be coincidence, I wouldn't be so sure.

Condo criteria is two beds, at least one bath and in-suite laundry. No compromises on that. Would prefer to have two baths, but it's an unlikely find in our price range of under 225K. Prefer a building that allows renters, apparently these units are easier to sell.

We'll see. Next post after the Tuesday Hunt. Tell me your condo horror stories please. Help me convince my fiance that we shoudln't even look. Or, tell her your great stories and prove me closedminded.

Friday, February 9, 2007

Rent or Buy: is this even a question?

The market in Victoria is at best inflated and at worst bursting at the seams.

But, having said that, we have to move. We are currently renting a smaller than average suite close to UVic. We'd like to stay centrally located in Victoria; the neighbourhoods we are favouring are: Mt. Tolmie, Fernwood, Sears, Mayfair, Camosun, Maplewood and VicWest. We are also looking in Langford, Atkins and Mill Hill. Ideally the property will be a house with a two-bedroom suite priced under $425K. Tall order, but given some of the recent sales, if we're not too picky to overlook the so-called diamonds-in-the-rough, we may have some success.

If we rent, we're looking at suites in homes only, either one or two bedrooms, and around the $900/month mark.

Right now we're focusing more on looking at purchase properties; mainly because we don't have to move before June and its difficult to find people looking for tenants this early.

This week we looked at four properties. I'm unsure of rules and regs around disclosure so rather than provide addresses, I'll just give general info and price ranges. The first fit our requirements perfectly. It's on a bus route to UVic, has a two-bed suite down, three beds up and is under our max price by about 5%. It is also a lot bigger than we need. The house definitely needs work. As the suite is now, I'm not confident it's rentable. I'm guessing at least $5K is needed to get it to a condition where it could bring in $1000/month or more. It's asking price is about 12% above its assessed value on BC Assessment.

Two homes we looked at were junk: dirty neighbourhoods, dirty homes and didn't show anything like their photos on mls or their descriptions by the selling agents. But, not a total waste of time to look at because it gives us an insight on asking prices, ratios of asking to selling prices etc...

The last house sold. It was nice, in an ok location, had a one bed suite down and two beds up. It appeared in good condition, nothing obvious on the to-do list. It had a conditional offer on it and the sale went through yesterday. Here's the insight. It had been on the market for 60 days or so. Its original price was above $425K, owners dropped the price by $30K and then accepted an offer $10K below the new asking price. The assessed value was within our 10% range too. This leads me to believe that certain houses are starting to experience a bit of a correction. As I watch the market, I'll be closely looking to see if this is a neighbourhood trend or house-type trend.

We haven't done any walk-throughs on condos. We look at the listings daily. I'm scared by the condo market. I've seen outrageous monthly assessments, outrageous asking prices that are in some cases 75% above assessed values and no real pattern of price to condition. Plus the number of new units in development leads me to believe that condos in our price range will be the first to get hammered when the market corrects.

I'm also seeing huge discrepencies of prices within the same building. I've seen units at $160K on the top floor and ground level units priced $15K above because they have new floors and new appliances and some colour on the walls. I'm not an expert on home repair costs, but I do know that three new apartment sized appliances, paint and 500 sqft of laminate flooring doesn't equal $15K even if you paid someone else to do the job and bought stainless steel.

I'm hoping people find this blog and give us their thoughts on the Victoria market and the purchasing process. If you think we should rent and wait for the correction to happen, tell us.

In the meantime, I'll use it as a journal to record our thoughts as we go through the process of house hunting in Victoria and making the decision of renting or buying.