Saturday Open Thread

I have nothing to say today. So this post is all yours. Feel free to post on anything related to the market, house hunting, real estate... and so on. Feel free to rant, vent etc too.

I've really enjoyed the comments on this site and over at Victoria's Truth. We're really liking the March predictions going on.

Over to you...

A suggestion: this blog is all about anonymity. Feel free to post as anonymous. But may we suggest that you create a pseudonym and use it consistently? Just choose other in the comments and give yourself a random name, that way everyone will know which anon is which and conversations will flow better. Cheers.

Friday Low-End Market Watch

Going to do it a bit different this week. Instead of calculating the sold above/sold below, we'll just note sales over list if any. We're no longer counting sales at list price as over as we've discovered there are many ways to make a place 'look' like it sold for asking price.

[criteria is suited, or suite potential, under $425K in SW, SE, Vic, Langford, ESQ]
Total houses: 83 (76); 7 new listings

Number sold: 51 (46); 5 above previous week

Sales over list price: 0

Average days on the market: (38)

Listings to sales ratio: 83/51 = 1.62 months inventory (76/46 = 1.65); slight decline in inventory

[criteria is 2 beds, at least 1 bath, under $250K in SW, SE, Vic, Langford, ESQ]
Total condos: 131 (122); 9 new listings, 4 less than last week

Number sold: 56 (48); 8 above previous week

Sales over list price: 0

Average days on the market: 30 (30)

Listings to sales ratio: 131/56 = 2.34 months inventory (122/48 = 2.54); slight decline

Our thoughts: starting to get concerned that the declining inventory (which could well be a miscalculation on my part) is becoming a trend in our price range. If it is a trend, the other indicators like rising prices and quicker sales aren't following suit. In fact, prices don't seem do be going up, there were multiple price changes, and no homes sold for above asking price this week.

I'm really looking forward to the March numbers coming out from VREB this next week. Should be interesting to see what trends, if any, have formed in the first 3 months of 2007. I would have thought that March would have shown significant action in listings, but it hasn't really in our segment. I'm also beginning to think our segment is too small to 'fit' into the greater market trends.

On a happy note, we found a new place to rent beginning in May. We don't have to sign a lease, we'll be paying about $1 per SF, which is on par with what we're paying now. We're going from a tiny two-bed to a larger 1 bed, both suites in houses. We anticipate a slight increase in monthly rent related charges (we expect our utility bill to be higher), but we'll get much more sun. Only downfall is it's a bit farther away from the centres of our current lives (work/school). And we were able to negotiate on the rent too. Not much, but still something.

We have decided to not buy at this point, but we're very happy that we don't have to sign a lease as we plan to keep that option open and, depending on market conditions, can see potential action on that front in the fall or next winter.

A Sign of the Top?

This just in: according to A-Channel News Victoria, the Delta Ocean Point Resort amongst other downtown hotel properties have been listed for sale. According to the RE investment group the hot RE market has presented a unique opportunity to sell these properties.

I'm guessing the hyper-inflated price of RE in Victoria coupled with the decrease in tourism equates to "unique opportunity".

When the big boys of RE investing sell can the rest of us take this as a sign of the top?

UPDATE: After some digging, it turns out that the Delta and Harbour Towers are both owned by CHIP REIT. There are no announcements on their website regarding this news.

FURTHER UPDATE: This article in the Toronto Star suggests that every asset of CHIP is for sale, as is the trust itself. It seems that this decision has more to do with tax law than RE market status.

"Citing changes in federal taxation of income trusts, Canadian Hotel Income Properties Real Estate Investment Trust (TSX: HOT.UN) has signalled it's for sale"

Why did A-Channel reference "hot market conditions" as a possible reason?

FURTHER FURTHER UPDATE: The Vancouver Sun has this article that also suggests that CHIP may be selling because of hot market conditions.

I'm thinking I'm reading too much into this. If I was a trust holder I'd probably be happy with both the performance of my units and the potential sales of these properties. Makes sense.

The Trouble with Condos

I've never been a big fan of condo ownership. There's something about it that conflicts with the pride-full "man's home is his castle" thing. (I apologize for the gender-bias in this statement)

I have a friend who bought a two-bed, one-bath unit around 3.5 years ago. It had been a previous rental unit and had been sitting on the market for a while as it didn't show well. Of course, this was before the crazy market times of 2004/05. It's 1050SF and two levels. He paid $107K in 2002. His purchase was one of the true own for less than you rent situations.

Fast forward to this year. His assessment came in at $224K. He's invested about $15K into making his home his castle. He's very creative and has done a fantastic job of painting, installing new floors and turning a rather drab unit into a bright, arts and crafts-style home.

In the span of his ownership, his monthly assessment has increased from $178/month to $278/month. The reasoning behind the increase: new fences and decks for all units. Two months ago, the strata sent notices to all residents that they planned to go ahead with a building remediation. This building is not a leaky condo. It was built in the mid-70s.

The reason for the remediation? There are two buildings directly across the street. They have units selling in them for high $280Ks to low $300K. The building my friend lives in has never had a unit sell for over $235K. The building is centrally located on a busy street. The strata believes that re-mediating the outside from stucco to sturdy-board and updating the common spaces will increase the value of each unit upwards of $50K each and bring them in line with their neighbours. The per unit charge will be approximately $30K. There are, of course , other condos within a two block radius that are selling for less than this one; my friend feels the strata is ignoring this fact.

My friend is heart broken. He loves his home, though hasn't planned to stay there forever. He has a financial investment in it, but his emotional investment is greater. He recognizes that he has done very well financially in his 'investment' and is grateful that the market has cooperated. He is very aware of current market trends and is skeptical of the promised gains in his unit if the strata goes ahead with its planned work.

Should he sell? Two other units have been put up for sale since the announcement. Both have asking prices between $219K and $230K. My friend feels his should get more because he's confident that it will show better, but things aren't moving too quickly in the condo market right now.

His realtor has been by to discuss and seems to think he'll be fine, but has cautioned him that in order to move his unit he may have to eat the $30K remediation charge. If he's lucky, he'll find someone who loves his unit so much they agree to pay half the charge and give him full price. She stated that there is very little likelihood of a bidding war and that he should price his place at $229K, $5K above assessment. He's looked around and isn't happy with what he's seen in similar price ranges and isn't keen to go back to renting either.

He's afraid that if he doesn't sell soon, he'll be stuck with the extra $30K debt, which will be about $300/month to his mortgage, and a declining asset value as the condo market flattens and dips. He's not happy with the strata corporation and feels they haven't done due diligence with their work on this project; he has lingering anger regarding the high monthly assessment and the lack of transparency regarding its justification. If they go ahead with this work, combining that charge with the increase in his monthly assessment, his payments will have almost doubled in a short span of 4 years.

He's spoken to neighbours, but many do not feel the same and are happy to remortgage their property to do the work. It's a big strata and he doesn't feel confident that his efforts to change people's minds will go over well. He'd rather not rock that boat.

I'll leave this open to every one's input. My friend will be reading this, though is unlikely to respond to comments. He's just wanting to 'poll' public opinion foremost. Any advice will be taken with a large helping of salt. He's hoping that some insights will help him to see things in a different light.

Perfect Storm Brewing?

There's been a great discussion of current market trends over on Victoria's Truth this weekend. Some of the generally accepted facts are that current prices have reached an affordability crisis, that an increase in inventory is leading to a softening in the market (if it's still going up, it's not happening quickly, some actually think the downward trend has started), and that it will take a significant economic event like an increase in interest rates or a recession to trigger a market correction.

This post is about a significant economic event brewing right here in Victoria that already has municipalities screaming not in my yard! Sewage Treatment. Whether or not you think it's necessary is irrelevant to the economic impact that a major infrastructural project like this can have on the group of 13 that make up the CRD. Estimates put the average costs to the municipal taxpayer at $500/year. My guess is once it actually gets built, like most government projects, cost over-runs will be considerable and taxpayers will be on the hook. Remember too that the $500/year is only representative of 1/3rd the total cost; if the Federal or Provincial governments 'adjust' their contributions as they often do, it's the CRD that will have to make up the shortfall.

So what does this mean to the housing market? Consider the tables below:

Municipal Taxes
	Business Rate	Residential Rate	Bus:Res Ratio
North Saanich	12.78	1.57	8.15
Metchosin	7.48	1.64	4.55
Colwood	12.15	2.81	4.33
View Royal	10.04	2.36	4.25
Saanich	14.71	3.59	4.10
Sooke	9.49	2.50	3.79
District of Highlands	11.06	2.95	3.75
Victoria	14.27	3.89	3.67
Sidney	8.73	2.83	3.08
Langford	8.03	2.63	3.06
Esquimalt	16.49	5.53	2.98
Central Saanich	10.25	4.05	2.53
Oak Bay	5.91	3.18	1.86

Capital Regional Levies
	Business Rate	Residential Rate	Bus:Res Ratio
North Saanich	3.12	0.38	8.15
Colwood	1.62	0.37	4.33
View Royal	1.24	0.29	4.25
Saanich	1.24	0.30	4.10
Sooke	3.97	1.05	3.79
Victoria	1.68	0.46	3.67
Esquimalt	2.06	0.63	3.29
Sidney	1.36	0.44	3.08
Central Saanich	3.51	1.39	2.53
District of Highlands	0.94	0.38	2.45
Metchosin	1.02	0.41	2.45
Langford	1.36	0.56	2.45
Oak Bay	0.97	0.52	1.86

These are the 2006 tax rates for business and residential properties in the CRD as stated by the Victoria Chamber of Commerce. I can't find any average numbers for properties, but let's use the $520K average price for houses in what we call Victoria. I'm going to calculate the tax based on Saanich, because it is most representative of the average due to being the biggest municipality and the most average in the price range. So: $520K at 3.59% = $1867.00 in annual tax. Add that to the CRD levy of $156/year and you get $2023.00/year.

So to check how accurate my calculations are I called my friendly neighbourhood homeowner. He lives in Saanich (Gordon Head), his 2006 assessment was $467K, his 2007 property tax bill is roughly $2400 after his $900 principle residence home owner's grant. I'm not even close apparently.

I know it's a complicated formula that gets used, but the crux of my argument is this: will the average $500 tax increase affect how people feel about purchasing? I'm going to argue yes. And here is my reasoning:

It's not just $500. It's a combination of factors. And that $500 may just be the elephant in the closet.

Factor One: If you lived here during the referendum on the new Arena, many homeowners were pissed about a minor increase in property taxes to pay for a $30 Million project. Now we're talking about an estimated $1.44 Billion project (adjusted for inflation) that the CRD will have to come up with $480 Million for. That's 16 times greater, and they can't even agree on whether we need it, or where we should put it.

Economics are already tight for downtown business owners; think you that they will quietly take this? I imagine many business owners may choose to close and retire (I have anecdotal evidence of two such choices already made). Walked around downtown lately? There are plenty of empty business spaces; out in the new Westshore strip malls too. When business tax revenue goes down, residential taxes will have to go up. And when businesses close, people get nervous about the economy and people lose jobs, and this get's labelled as a recession.

Factor Two: Affordability. We're already at 50% gross earnings for the PIT on an average home in Victoria; fundamentals are 30%. Factor in that an average house price is 6-7 times average annual earnings in purchase price, when fundamentals suggest that you shouldn't consider anything over 3 times earnings, and what you get is unsustainable. Something has to change: either prices come down, or earnings go up. The only other way to finance this is for banks to introduce longer-term amortization and interest only options, which they already have. This also happened in the States during the run-up and sub-prime mortgage meltdown news is getting worse every day. There is talk of a recession in the US Federal Reserve. The BoC has indicated it may raise interest rates to calm inflation, and oil prices are on the rise; none of these point to increases in affordability for the average Victoria home owner through increased earnings.

Factor Three: Inventory is on the rise. I see no arguments against this right now. Even the VREB states a return to a balanced housing market is underway. There are many new units scheduled for construction, some won't happen, but a lot will. Inventory will continue to climb for the next few years. Population growth is not keeping pace.

Conclusion: When the three factors converge, and they will, a perfect storm will form. The market is fuelled by fear and greed. We've just had five years of greed. Seems to me that a few years, at least, of fear-driven storming is due. The MSM will pick this story up eventually and drive it like they have driven the wild winter weather = global warming theory proven story (OK that's just a guess really). Sewage treatment will be the focusing event needed in Victoria to let the elephant out of the closet.

Stage This House!

We're thinking it prudent to start a discussion on the ways that people make their homes more appealing to potential buyers. We want to do this for obvious reasons: so that anybody reading this learns the tricks, doesn't fall for them and makes an offer to purchase for a fair price in a quickly stagnating market, rather than getting duped into believing "offer big or you might not get it".

According to perennial real-estate experts, MSN Sympatico, (sarcasm intended) home staging is "your secret weapon in home sales". Why stage your home, you may ask?

"If you’re lucky (emphasis added), your home will look so good that potential buyers will start a bidding war, and you might get as much as 10% over your asking price or more."

And if that isn't convincing enough, we'll bring in a completely unbiased opinion:

“Everybody who is selling a home can benefit from home staging regardless of price, condition, or location,” affirms Christine Rae, president of www.canadianstagingprofessionals.com. “Sellers can expect anywhere from 3% to 10% over list price (emphasis mine) when a home has been properly staged,” she says. “The other benefit is that a house will sell faster, especially in a slow market.”

Wow. Expect 3% to 10% over list. We did not make this up. So what exactly is home staging?

"Home-staging activities can range from minor fixes (updated light fixtures, new area rugs) to major undertakings (kitchens and bathroom renovations)."

Correct me if I'm wrong, but major undertakings like kitchen and bathroom renovations are called renovations and are usually considered improvements to a house. How can this be re-interpreted as home-staging? Isn't home staging doing a major cleaning-up, having some ambient music playing in the background and getting one's less-than-nicer fixtures out of the place? Shouldn't you have a pot of coffee on, or a potpourri candle burning in the corner? After all:

"What a potential buyer sees, smells, hears, and feels while in your home can make or break a sale."

Well, according to the experts, apparently not:

"Our expert advises you not to fill your home with the scent of fresh coffee or potpourri, since buyers will wonder what you are hiding from them."

So apparently home staging isn't something so obvious that you can do it for yourself. Nor is it a quality that professional real estate agents should possess and incorporate into their own marketing which you pay a rather-nice premium for in your agreement with them to sell your home. After all, they shouldn't be expected to renovate your home, should they? So what can you do to make sure that you keep your costs under control?

"Set a budget. 'Look at home staging as an investment in your home rather than a cost,' advises Ms. Rae. 'A good rule of thumb is to budget 1% to 5% of your list price for home staging.'"

Can you imagine staging your home for $26,000 (average price $520K x 5%)? For $26,000! I guess everyone is doing a new kitchen and bathrooms.

Is it me or does all this sound an awful lot like flipping? I mean, I could purchase your lived-in without updating home for less, spend that 5% to 'stage your home' and then collect the large profits for myself 6 months later... or you could do it yourself. Every one's a flipper baby...

I should state this clearly as I tend to get carried away with my cynicism occasionally :)
I am all for you, as a seller, getting as much for your house in any market condition as you can. You owe it to yourself and your family. It is the way the market works. The information is available to all of us if we take the time to seek it out. And I don't think the market disadvantages anyone disproportionately to the work they put in.

So stage your home, it is obviously a good idea. But should you pay someone else to do it for you? Yes, if you can afford it, don't have any sense of taste, common-sense, or style to do it yourself, or haven't gotten in touch with a RE agent who should do this for you as part of their marketing plan for your house which you will be paying them anywhere between 6-9% to sell for you.

But beware, as expert tip number 1 states:

"Stage before calling an agent. 'Get your house staged before you contact a real estate agent or before you start trying to sell it yourself,' advises Ms. Rae. Home staging will affect real estate agents as much as buyers."

In other words: if you don't, the CSP will be out of business faster than McDonald's in a world of vegetarians. Our favourite section of their website: Success Stories. A true mark of professionalism is providing real, quantifiable, research-able, substantiated evidence of success. Success Stories uses no names, no MLS numbers, no attributed quotes... in fact there is no way to tell if they just made them up or not.

If we come across any homes staged in this manner (and we have in our hunt) we're impressed. Instantly. The house is warm, smells nice, and presents well. Then we walk away, look at the price, compare it to the others we've seen and think about how much it would cost us to do the work ourselves. Then we steer clear, choosing not to get caught up in any 'emotional hype' surrounding the property. The market is driven by fear and greed, or so we are told. The only way to beat the market is to be rational and intelligent.

Oh, to be a Flippee!

In today's Homes section of the Times Colonist there is a story from the perspective of the couple that bought the house of a subject of a recent article about flipping. Apparently the Flippee's were happy to purchase a home that they knew had been bought in the past year for considerably less than they paid for it and had been 'updated' and received minor renovations. The article isn't available electronically, so I can't link to it.

But one question really stood out for me: could I be happy buying someone else's home? As we hunt around for a new place to live, one of the reasons why we want to buy, is we want a house that is ours. This means we want to take some time, put in some 'sweat equity', not to gain value so much in the monetary sense, but to gain the value of emotional attachment to our living space and the pride of ownership.

So why would we buy a flipper's house? We won't. We don't want someone else's decorating and interior design ideas preventing us from making a place our own. Why would a flippee's house prevent us from redecorating? Simply because the house is priced accordingly to their improvements. We could negotiate a $5K discount to change paint etc... sure. But we couldn't get a $25K discount to redo a brand-new kitchen with different cabinets could we?

I know my arguments here are purely anecdotal. But I got the sense that in the way the author wrote her article she was really suggesting that there is an increased market for flipped homes. Come in, clean up, change non-structural layout, create space, fire in new kitchen and bathrooms, slap up some new paint and baseboards, and SELL TO MAKE A PROFIT. It's apparently a great home-based business, pun intended.

But as a buyer, would you want this? One of the bonuses of buying a new home is that quite often you get to make some choices for yourself: paint, flooring, cabinetry, extra bathroom, finished or unfinished basement etc. Yes, the choices are almost always limited, and there are financial consequences to those choices, but in a flipped house you get one choice: buy or don't. If you want to make changes for aesthetics, fine, but don't expect a discount because you don't like the new paint and cabinets.

You also don't get a warranty. The only warranty you get is a home inspection that you pay for.

We for one, want the discount associated with an older property; and the emotional attachment of purchasing 'good bones' that may require a bit of non-structural upgrading. We want to put the time and little-bit of money in to make our house our home. In this market, pride of ownership may be the only attractive thing about purchasing. Being on the receiving end of the flip doesn't seem like a good deal to us. Why can't the TC write that story?

Friday Low-End Market Watch

Back again with the now-weekly review of market activity in the segment we're paying close attention to. Last week's numbers are in brackets.

[criteria is suited, or suite potential, under $425K in SW, SE, Vic, Langford, ESQ]
Total houses: 76 (71); 5 new listings, same as last week

Number sold: 46 (35); 11 above previous week

Sold above asking price: 1 (1); again, I counted sold at asking as above

Sold below asking price: 10 (11)

Average days on the market: 38 (37)

Listings to sales ratio: 76/46 = 1.65 months inventory (71/35 = 2.02); big decline in inventory

[criteria is 2 beds, at least 1 bath, under $250K in SW, SE, Vic, Langford, ESQ]
Total condos: 122 (109); 13 new listings, same as last week

Number sold: 48 (38); 10 above previous week

Sold above asking price: 0 (1); again, I counted sold at asking as above

Sold below asking price: 10 (6); 3 more sales than last week

Average days on the market: 30 (24); gain of 6 days

Listings to sales ratio: 122/48 = 2.54 months inventory (109/38 = 2.86)

Our thoughts: really quite surprised by the non-increase in inventory in this segment. But I guess it makes sense that those in the low-end would not be hurrying to sell, as they probably can't trade up any longer. Maybe this is the safest segment of the market. Not necessarily affordable, but when you compare the numbers to the average house and condo prices ($521K, $280ishK) definitely better.

I'm beginning to think that the true measure of where this market is headed is coming in the March VREB numbers release next week. Should be interesting. Will the low-end segment be vastly different than the average price segments?

Stat Hunting

I'm still at a loss to explain whose buying. So we did some digging this morning. Census numbers showed a growth of 5.8% for the CRD in total population between 2001-2006.

I couldn't find year over year data, but this is illuminating none-the-less, is it not? CRD states that housing starts in the district were up 40.4% in 2005-2006 for a total of 7635 units (which includes houses, townhouses and condos). Population in 2001 was 303,539, in 2006 it was 321,144, for a difference of 17, 605. I can't find more recent numbers on average household size than 2001 figures that had 2.4 people per household.

If that's the case then, in 2005-2006, the CRD issued enough permits for 2.3 people for each unit built in that period. Sounds pretty sustainable right? Not really, because that's a two-year period of housing growth measured against a five-year period of population growth. It seems a safe assumption to us that there were at least double the number of units built in the other 4 years combined: 2001, 2002, 2003, 2004. Not to mention the planned development and under construction units that will be ready for 2007, 2008, 2009.

Considering that you'll need a household income of at least $60K for the average condo and $135K for the average SFH it's also a safe assumption that most purchases are being made by combined incomes of at least 2 people. The most recent numbers I have found for average household income in the CRD are from 2000, which I think is too far back to bring into this analysis.

The conclusions: housing starts are up dramatically (though I can't give you an exact number) when compared to the actual increase in population. Does the old "if you build it they will come" ring true? Even if it does, and pop. growth maintains the same momentum and we see 6-7% in the next census period, we will still have seen more units built than can be absorbed by the natural growth of population. So this means that in order to keep the market balanced, enough of those units will have to be purchased to sit empty much of the year (census figures don't discriminate between homeowner/renter). Are there really that many people purchasing vacation homes here?

We can say with certainty that there was a modest price decline in the CRD RE market in the last 6 months of 2006. More certain is there was considerable price compression between neighbourhoods. It is only a matter of months before people figure out this market is grossly distorted from historical buying cycles in Victoria.

UPDATE: thanks to jmk for pointing out my shallow digging. I incorrectly used the number of building permits in the above calculations, so this would include renos and wrongly skew the numbers of units I claimed to be constructed.

Revised numbers based on the same period of 2005/06: I use the net CRD numbers which I added up to be: 5096. This is a difference to my above numbers of 2539 units. It's a substantial decrease in the total 2539/7635 = 33%. It would also change the 40.4% to also include renos (which makes sense with the number of HELOCs that banks would be handing out during a time of significant real estate market gains).

Feel free to correct me wherever my numbers go awry. I'm still fairly confident in the assumptions made above, namely that there are more units being constructed than pop. growth fills, obviously to a lesser degree though now. And there are big gaps in the number of years that CRD isn't reporting.

First Time Buyer Affordability?

In light of the RBC report, and this article in the Sun today, I think a good discussion of affordability is prudent.

"For many, condos remain the only viable option to tap into the housing market as condo ownership costs require just 35.4% of local median household income compared to a whopping 73.5% required for a two-storey home." (RBC)

Their numbers are based on Vancouver prices, but our's here in Victoria are close enough to just bring them over.

"The final quarter of 2006, however, delivered some much needed affordability relief as a rising supply of homes on the market overpowered an already cooling pace of resale activity. The improvements were reported for the two-storey and detached bungalow segment, while condos and townhomes continued a fifth straight quarter of deteriorating affordability." (RBC)

So what does RBC say about income, average price, and affordability? Let's start with the price. RBC says that an average condo price is $273,313 for Q4 2006. What kind of income did RBC say you needed to get that mortgage? $60,444/year. And given the price, based on the percentage of your income, your mortgage would have consumed only 35.4% or fully 1/3rd.

So what does MLS have as the average price in Victoria for last year? The 6-month average for the last half of 2006 was $286,881. That's a difference of $13,568.

I could stop here, but I won't, because I think the RBC report is misleading us. Completely. The relationship between their numbers becomes more sketchy when you factor in their criteria for qualifying for a mortgage based on these numbers: 25% down and the remainder is amortized over 25 years. Or, if we use the MLS numbers, you would need to have $71,500 as a down payment to get your monthly mortgage payment down so that it only eats up 35% of your available resources. Know anyone who is able to save up 1.2 x gross earnings for a down payment while also saving for retirement, when the actual costs of your new home shouldn't exceed 3 x gross earnings when they refer to their own fundamentals.

"'Purchasers simply refuse to be priced out of the market, even though household income has not kept pace with housing appreciation,' Elton Ash, Re/Max's western vice-president said in a news release." (SUN)

Ah, the Sun. In an effort to create a balanced story, the Sun quotes from the RBC report and then backs up their findings with Re/Max experts:

"Vancouver first-time homebuyers continue to raid RRSPs, borrow money from family and take on mortgages that will take longer to pay off to get into the property market, the Re/Max real estate company reported today."

Apparently Victoria's first-time buyers do as well. Except they do it a little bit more than their peers in Vancouver. So what I want to know now is who is a first-time buyer? I like to think we are. We're youngish, early 30s, haven't owned before, make an above-average income, carry a bit of student debt, have a bit to put down, but certainly not close to 25%. So we're really not first-time buyers because we can't/won't buy in this market with these numbers.

My guess for the 'real' first-time buyer? No idea, but they have to be ignoring the fundamentals. And so does the bank, because if the average first time buyer is "borrowing money from family" doesn't that hurt their ability to cover the mortgage? No problem if your the bank though right? They have 25% equity into the place day of purchase, the family will be the first people to not get their money when finances become tight because there's less consequences to the debtor's credit there.

Your thoughts? Tomorrow we'll bring houses into the discussion.

UPDATE: thanks to Roger for this great find in the TC business section:

"Today is the grand opening of the VREB Barber Shop in Victoria BC. Will Shaveit, owner and hairstylist, welcomes all home sellers in the region to his new enterprise. A few customers arrived on opening day and were given a light trim haircut. Customers do not need an appointment but business is expected to pickup shortly.

Will gave the following statement to the press: "We saw an excellent opportunity in the Victoria region and look forward to serving many of you in the near future. Several new barbers will be joining us over the next few months and a brushcut specialist will be joining us later this summer."

Live Links

There's been some really good links posted in the comments last few days. This post is just to make them 'live'.

I think we're still seeking an answer in the post below, so please keep the commentary going. We've really enjoyed the discussion thus far.

Links

RBC Economics

Bank of Mummy and Daddy

Bullish Bearishness

House Flipping Video

Who is Buying these New High-End Condos?

h/t to Roger Need for suggesting this post. I'll leave it up top for a few days to see if we can drum up some good insight and discussion and so I can complete some school work too.

Let's start with Shutters Spa and Residences: I used to see this advertised all the time in the TC. Not today. Anyone know how much the starting price was? Anyone own a unit?

Sister project to Shutters is The Falls: Their website says starting price is $389K, but the TC has an advert today for a 6th floor, 1 bed, 708SF unit for $409K. I guess if you don't mind living above Starbucks and her jazz-lite till 10 pm you can save yourself $30K and live on the 2nd floor.

Prefer golf to the downtown spa lifestyle? Money to burn? Have no fear, Victoria's got it here: The Sayward Hill project offers "million dollar views for free", and all you'll need to get started on this new, exclusive lifestyle is a mere $720K for over 1800SF of living space looking over the par 3 pitch and putt and Cordova Bay Golf Club.

Don't want to spend that kind of cashola? Don't plan on making Victoria your home more than one week per month? Not a concern here at Parkside Victoria where for just $125K you can get luxury living at a quarter of the price. My favourite thing about this development? When I enter in my criteria into MLS (you know, under $200K) this one always comes up. I figure we buy a share, live at home with the in-laws 3 weeks per month and live it up the rest of the time. Maybe we'll make some career moving contacts?

Like urban living without the condo? Well Redstone just may be for you. Priced between $485K and $659K these homes without the size and hassle of the real thing offer urban living in a unique "masterpiece of architectural design". Another sister property, Vicino, in James Bay is over 60% sold and starts at just $349K.

And the final piece in our luxury living puzzle? Bayview. Now I can't find any Internet links to back up these claims, but I'm pretty sure Mike Harris and Brian Tobin are involved in this project... at least as unit owners (I clearly remember the unveiling featured Alan Lowe, and the two aforementioned ex-politicos.

So what is the point of this post? Well, first off my cynicism and lame attempts at humour should not be misconstrued as contempt for any or all of these projects and what they bring to our city. I'm glad they are here and feel open to the idea of more. I think responsible development is generally good, especially if it considers the community and gives back perks in the form of green technologies and public green spaces. It means more natural financial gain for business owners and employees alike in this town and hopefully a reduction in the reliance of seasonal tourism for some businesses.

But really, who can afford to live in these places at these prices? Let's use Sayward Hill as an example because it is probably median price for luxury in this town. I can't back that up, but for this hypothetical it seems to me that is unnecessary.

Purchase Price: $720K... I'm a shrewd negotiator so I got them to eat the GST.

Down Payment: $180K or 25%. I'm a savvy investor, I know the market is high, my returns in stocks will likely be better so I won't keep all my cash in RE.

Monthly mortgage payment: $2700; I'm a high net-worth person, the banks appreciate my business, I have no trouble getting 5% interest rate for 5 years.

Fundamentals: if $2700 represents 30% of my available monthly income, as it should, then my monthly income is somewhere around $9K give or take a few hundred depending on how the bond market is doing this month. What do I have to have in my savings to generate that kind of dough? Only about $1.7-1.8 Million if my bond yield is around 5-6%.

We had a really interesting conversation with 5 adults whom I would guess to be roughly in the age demographic of buyers of these types of units. It was insightful to say the least. 2 of them were from TO and simply said, you sell your North Toronto home for $550K-$650K once your kids are gone, then 'downsize' out West to one of these units. You get luxury, a beautiful city, fresh air, rare snow (and all the other things we know about the west coast lifestyle) all for roughly the same equity you had in your TO house that was paid for a decade ago. Your retirement income doesn't change no matter where you live, and in effect your purchasing power goes up a bit out here because generally speaking the cost of living is cheaper here than in TO.

That part of the conversation made perfect sense. And maybe that's the answer to this question?

Those of us from out here already didn't quite see it that way. We just see condos costing more than the homes we grew-up or still live in and can't fathom the idea of selling a perfectly good house at $600K to carry a mortgage on a relatively good-sized condo that, while may be a luxury-upgrade, comes at a cost of high monthly assessments and a new round of keeping up with the Jones' in the parkade where our Toyota Corolla's don't fit in with the sea of BMWs and Mercedes. So we sell our house, buy a $450K, 800 SF unit, not quite on the water, invest the $150K difference elsewhere and there you may have the buyers of the lower priced units.

So next question? Whose buying those $950K houses in Oak Bay? I could chase my tail around these questions all day. So I will stop and let you try to make some sense of it for me.

Have You Flipped?

Inquiring minds want to know...

When I read stuff like this I can't help but wonder if people actually find this encouraging. I really do hope that people don't go out and buy the junk we're looking at to renovate and put the prices up into territory that we can't possibly mortgage our first born to pay... or maybe I do. That way when they realize the mistake they've made and can't possibly cover their flip-related debts with the rents they can bring in they'll be forced to sell in a hurry and bears like us can come in and low-ball. Someone please write that story for the $250 prize.

Friday Low-end Market Watch

This will be the first time we've done numbers up week over week. So if they seem like insignificant changes it's because the previous two 'market watch posts' have used 3 and 2 week periods respectively. From here on we plan to do this up weekly on Friday mornings. I may do a low-end market monthly re-cap on the last day of the month in March?

We're only watching low-end houses; what we deem to be affordable anyway, criteria below.

[criteria is suited, or suite potential, under $425K in SW, SE, Vic, Langford, ESQ]
Total houses: 71 (66); 5 new listings, significant drop from 18 for last two-week period

Number sold: 35 (30); 5 above previous

Sold above asking price: 1 (2); again, I counted sold at asking as above, I've noticed that anything in the CedarHill neighbourhood in this price range is fetching above asking. This one was a 'handyman special' that sold for $25K above, and almost $400K

Sold below asking price: 4 (11)

Average days on the market: 37 (27); 3 houses with over 100 DOM sold this week

Listings to sales ratio: 71/35 = 2.03 months inventory (66/30 = 2.2); slight decline

[criteria is 2 beds, at least 1 bath, under $250K in SW, SE, Vic, Langford, ESQ]
Total condos: 109 (96); 13 new listings, slight decline from last 2 weeks 29 new lists

Number sold: 38 (32); 6 above previous week; 1 taken off market

Sold above asking price: 0 (5); again, I counted sold at asking as above

Sold below asking price: 6 (8); sales down from last week by 7

Average days on the market: 24 (23); slight gain

Listings to sales ratio: 109/38 = 2.86 months inventory (96/32 = 3) I'm confused by this outcome. If we have 13 new listings and only 6 sales, inventory should climb right? Not by this math... there must be a margin of error, or I'm completely of my math rocker, which wouldn't surprise me in the slightest.

Our Thoughts: maybe one week's worth of numbers isn't enough to extrapolate anything out of. There were quite a few price changes this week. One dandy downfall from $245K to $200K; still unsold. Our gut is telling us that the low-end condo market is cooling rapidly. The first couple of weeks of March is proving nothing like February. We think the market is speaking. Even our realtor is saying, don't worry, there's no pressure to buy anything, listings will be on the rise in April and May and the selection will get better.

The CedarHill, Maplewood and Mt Tolmie neighbourhoods are still moving. They're nice places to live and most homes are priced closer to $500K, so the ones we see are either experiencing some price compression or are anomalies in this market. Langford used market is slow. This is probably because you can buy new for the same price (you just get a much smaller footprint and lot).

Interesting topic at Victoria's Truth this week. We'll be reading it intently. Seems like a lengthy comments section will grow out of it!

Can You Negotiate Rents in this Market?

So the vacancy rate stands at 0.5% and the RE market has priced many first-time buyers, like ourselves, out. Chances are the vacancy rate will stay this way for some time; it's been hovering around 1% for several years now.

Can we negotiate rents with landlords now, or is this purely out of the question? We've noticed some trends with rental suites: you can guess when the properties were bought based on the asking price for suites. Higher, recent purchase, lower, it's been a holding property. Something like that anyway.

I'll use us as an example. We have no dependants (pets included), we're quiet, we don't smoke, we don't party, we're pretty private people, we keep a place clean, have good jobs, and both study full or part time in an effort to advance our careers. We come with good references. We feel fairly confident that we'd present no problems to a landlord if they lived up to their end of the agreement. We're OK with signing a one-year lease.

If we look at a place, that we know is quite nice, and is therefore going to receive plenty of applications, are we in a position to negotiate rent if we think the price is a bit much?

I tend to think that just asking for a rent reduction, even if its low ($50/month on a $1000/month suite) that we'd send the wrong signal to the landlord and we'd get pushed down to the bottom of the pile.

If we do attempt to negotiate, do we wait until we get the call back offering us the place, and then ask? Anyone have any success on this venture in this or similar markets?

Census numbers for the period 2001-2006 are out. Interesting that these dates coincide approximately with the CRD housing run-up and bubble.

Highlights:

• CRD increase of 5.8% (previous census 1996-2001 showed 4.9% provincially)
• Westshore increases in the double digits: View Royal 20.6%; Langford 19.2%
• Saanich still largest but growth of under average at 4.4%
• Downtown up 17.5% (large number of new condos credited)
• B.C. birthrate of 1.4 is one of lowest nationally
• immigration cited as source of growth

While the number of people in the CRD grew, so did the housing costs.

Condos

(year)[total sales]Average price

(2001) [1169] $138K

(2002) [1451] $151K

(2003) [1712] $183K

(2004) [2018] $216K

(2005) [2279] $252K

(2006) [2140] $286K

Houses

(2001) [4096] $259K

(2002) [4430] $280K

(2003) [4477] $328K

(2004) [4285] $386K

(2005) [4214] $463K

(2006) [4008] $521K

But census showed growth in 1996-2001 as well, and the housing price indexes aren't reflective. While population grew, house prices remained flat.

Condos

(1996) [1379] $148K

(1997) [1199] $151K

(1998) [1008] $155K

(1999) [891] $150K

(2000) [768] $143K

Houses

(1996) [3812] $242K

(1997) [3639] $249K

(1998) [3145] $246K

(1999) [3228] $250K

(2000) [3220] $251K

Anyone know where to find historical data on the number of listings? It seems from the above data almost impossible to make a correlation between population growth and housing prices. The missing info may be the most telling piece of data, or it may not.

Another interesting tidbit of info is that in 1996 the vacancy rate in Victoria was 4%; today it is 0.5%. Does this mean more people that come here rent? In which case, it would support the rumour that the job growth is fuelled more by service workers making sub $20/hour than professionals and the like who have average household incomes of $100K/year plus. If it takes $134K/year to finance the average house price in Victoria, then one of two things is going to happen in short order: house prices are coming down, or incomes are going up.

Given the near-recession-like numbers emerging in the US, and the losses on the DOW and TSX of this month, safe bet is incomes won't be increasing anytime soon. Anyone else see the pin peering around the corner with a look of glee on its face as the bubble comes bumbling down the street completely oblivious?

Bonus points if you can tell me how to put tables in blogger...

How Do You Think of Housing?

In an effort to further the ongoing discussion that we've been having here and over on Victoria's Truth and the one that is also happening on the Alberta Bubble, I offer you these thoughts to pick apart:

About ten years ago, I started reading financial books. I was poor, had poor spending habits, and like most people my age, watched many peers 'benefit' from investments in the stock and real estate markets. I wanted to know what they were doing that I wasn't. I now know that the 'benefits' that many claimed, were either temporary of false, but that's beside the point.

In the late 90s, we were caught up with the tech market and the dot.com bubble. Hindsight being 20/20, we learned that much of the money made, didn't exist and was based purely on emotion and speculation.

Beginning in 2001, we've watched an unprecedented global RE market run-up to levels that can't possibly be sustainable unless incomes catch-up. Yes, our employment levels are the best they've been in a long time, but how about our income levels? There is a growing gap between rich and poor. Less people are rich and more people are poor. These are generalizations that I have no desire to define, but the fact remains that the middle class that emerged out of the baby boom generation is not a trend that is repeating itself, and how affluent those individuals are depends very much on the types of investments they hold and the performance of the market.

So what is an investment? Many of us consider our biggest investment (or asset) to be our home(s). Is this true? h/t Alberta Bubble

A few of the many books I read about money and investing were written by Robert Kiyosaki of Rich Dad Poor Dad fame. He is not the be-all end-all undisputed guru of business and investments, he has his detractors certainly, but like him and his ideas or not, he's fairly successful and has some rules that other financial people use too.

One of those rules is don't look at the house you live in as an asset as long as the bank owns it and you are paying for it. So the trick to turning your home into an asset is getting someone else to pay for it. Build a suite, build two, generate enough rents from those suites to cover your mortgage, insurance, taxes, inflation, and the whole other myriad of costs associated with your house and you have an asset. Otherwise, your bank has the asset, and you have the liability.

But we have to live somewhere. We're better off owning than renting aren't we?

I see two situations where you are better off owning your residence: you can afford it and still have extra money to invest in 'real' investments that do better than the approximate 5.25% real rate of return in real estate over the past 25 years; and a repeat of the above where you get someone else to pay a significant part of your mortgage. Note that the 'real' rate of return doesn't account for inflation.

Yesterday, Prairie Boy described a situation (much better than I ever have too) that we have looked at MANY times in the past couple of months: namely the mortgage helper. Here's what we've come up with so far (and I reserve the right to change my mind on this because really I am a novice on the whole issue): When your $1000-$1200 'mortgage helper' occupies 40-50% of your home, and doesn't pay dollar for dollar (eg 45-50% of your mortgage + other expenses) then you are actually subsidizing someone else's living costs, even if it's just over the short term until the fundamentals change. To consider the 'mortgage helper' an investment, it should be covering more like 55-60% of your mortgage for 40-45% of your square footage.

So when do the fundamentals change? Either the property value comes down or the rent goes up. Can you get more than $1200 a month for a two or three bed suite in your house? Sure, but then the value of that house is much bigger than the $400,000 places we're looking at. I'm guessing the market value of the suite in this place, and its a big suite, would be $1000-$1100/month depending on how much you invest in making it look really nice and trendy for the trustafarian students at UVic who want it all and want it now.

Let me try and bring this all back together and wrap it up so that this post doesn't turn into an essay. The house you live in is not an asset until its paid for. The faster you pay it off, the more of an asset it will be, especially if it has a 'mortgage helper' that turns into an income. The myth of home as your number one asset is propagated by our attachments to the old-world classical liberal ideas of private property ownership and property rights. We have to break the ties to our ideas of needing to own a home in order to practice the smart fundamentals of money management that defines an asset as something that generates an income for you and not an income for your bank.

We also need a place to live. Renting is less costly and more restrictive personaly than owning. Owning provides more personal freedom at a much greater cost in this market. I still remember those adds from 3-4 years ago that showed you how owning your apartment condo WAS cheaper than renting; we don't see those adds so much these days. Perhaps we'll wait until we see them again before we buy.

I'll close this off with the best definition of wealth I have ever found: "The number of days you can survive, without physically working (or anyone else in your household physically working) and still maintain your standard of living.... Ultimately it is not how much money you make that matters, but how much money you keep and how long that money works for you." (R. Kiyosaki in Rich Dad's Cashflow Quadrant)

What Month is the Best to Buy?

The discussion in the thread below got me thinking (thanks to Roger for all the links to info) about the state of the market, the impending correction, the past 6 month downturn (though slight) and the current talk from both our realtor and the MSM.

Our realtor expects roughly 10% gains this year. CMHC is predicting 3% gains this year.

Here's my dandy downfall of the week: downtown condo, originally listed for $235K, 3 price reductions of $230K, $225 and today $220K, BC assessment $237K, DOM 51; I've walked through this one, its OK, a bit dark but certainly not the worst one out there. It has a lot of upside compared to down.

Here's my question: has the release of the BC Assessment valuations created a new sense of over-inflation in some segments of the market? Or has it simply turned buyers off completely so that places like the Dandy Downfall have to change their prices south to get a sale?

Busy time in the RE market is just around the corner... I'm hoping the correction has started.

What is it going to take...

for the market correction to begin and prices to be more reasonable?

We looked at five properties yesterday. We had hoped to get in to see one we'd viewed before; we were almost ready to make an offer. It was a 2 bed 2 bath condo that needing extensive updating but was ready to move into. We thought we'd be able to get in well under asking. Asking was close to assessment, we thought we'd get under that and in a year's time, be in a place to begin slowly updating our home. (by updating we mean, painting, new flooring, perhaps new counters/cupboards in bathrooms and kitchens: those would more likely be long term things though)

So, it sold before we got back into it. We're surprised to say the least. The location was convenient, but busy. There is no parking there for 2nd vehicles or guests, not even on the street. The parking isn't secure. The building isn't attractive, really it's rather drab. The common spaces haven't been touched in years. But the suite was big; at least 150 square feet bigger than anything we've seen in condos and it had two full baths. We gave it potential and thought we may be able to bargain.

We got the report this morning. The deal closed at assessment, only $4.9K less than asking. We'd planned to offer closer to $20K under. It wasn't meant to be.

So we spent the rest of yesterday fairly dejected looking at other properties. One building had two suites listed. The first one was owned by the strata president... there's a reason why Realtors tell you not to be home when your suite is shown... we'll leave it at that. Turned us off the building completely, won't consider it at all.

Two other suites we saw were nice. Both ground floor which are harder to sell and we feel a bit uncomfortable with the idea of being in busy neighbourhoods on the ground level. One had been on the market a while and had come down in price over $15K already. The other was completely updated and showed really well, but you could tell the building had issues, and the location was less than ideal.

We think we've decided to rent until the fall. We don't think we're seeing price increases at the moment, more like a market that can't decide if its going up slowly or coming down slowly. We'll have increased our income by $30K in September (I'll be done Uni then) so making a purchase will be less of a stretch than it is now.

After doing the math on two-dozen places over the past 2 months, we're not any closer to understanding the differences between renting and buying on average. The only building that we have seen that we know what rents are at has a difference of about $400/month. For a 2-bed one bath suite is that high or low? Given the gains in the market, what do you think is a reasonable correction. The unit I'm talking about has a market value of $225K. To close rent and purchase price it would have to come down $40K or just about 20%. When the correction happens, what do you think we can expect to see? The last time we saw prices in condos like that was 2002 according to the VREB historical price sheet.

If we don't buy now, we'd be losing about $800/month in rent with no chance of getting it back. If we buy now, we could lose some value in the correction, but we are all agreed that it is highly likely that the market will cycle up and over this level in a subsequent boom period, so you don't lose if you don't sell. History supports this. So if we wait a year or two, that rent money adds up quick doesn't it?

I hope you use the comments to weigh in on this debate. I think it's safe to say that most people reading this are outside the market looking in. What are you waiting for and why? If you're in, how do you look at it, and would you sell now to rent again?

Friday Low-end Market Watch

Start of watch-period is January 31. No houses or units removed from the list so the previous counts about two weeks ago have numbers added to them. I'll put previous numbers in brackets.

These are the numbers from the end of the market we're paying close attention to:

[criteria is suited, or suite potential, under $425K in SW, SE, Vic, Langford, ESQ]

Total houses: 66 (48); 18 new listings

Number sold: 30 (17); 13 above previous

Sold above asking price: 2 (10); again, I counted sold at asking as above.

Sold below asking price: 11 (7); Biggest discount was from $394,888 (original price $400K) to $375K or $21K for 18%

Average days on the market: 27 (11); that's a big jump kiddies from February 22. Take it for what it is though: anecdotal evidence at best and quite possibly skewed by houses that had been on market for 100+ days that sold.

Listings to sales ratio: 66/30 = 2.2 months inventory (48/17 = 2.82)

[criteria is 2 beds, at least 1 bath, under $250K in SW, SE, Vic, Langford, ESQ]

Total condos: 96 (67); 29 new listings

Number sold: 32 (19); 13 above previous; 4 taken off market

Sold above asking price: 5 (7); again, I counted sold at asking as above (although there was one gem with an asking of $239K that went for $267K.

Sold below asking price: 8 (12)

Average days on the market: 23 (23); no change

Listings to sales ratio: 96/32 = 3 months inventory (67/19 = 3.52)

Our thoughts: If you look at inventory, the numbers have come down in the past couple of weeks in our market. This isn't reflective of the whole market, just the bottom end. Is it possible to take anything away from this analysis then? If this is a start of a trend, then as a buyer I'm worried. But if this is just a two week blip, then no panic necessary.

If you look at sales to price ratios on the condo side approximately the same number sold above asking as in the previous watch period (which was actually longer by over a week). On the houses side though, we see a significant drop in the number of homes that sold above asking.

We know there are a myriad of ways to make a home look like a bidding war took place, or for an owner to get asking price, so we won't attempt to read too much into these numbers.

I have to admit, I'm more confused by this analysis than reassured. Your thoughts?

Tomorrow: we trying to get into 5 condo units for viewings.

Panic Selling?

This week has been an odd one for the properties we're watching (mostly 2 bed condos under $250K and houses under $425K). The start of the week was very slow, no sales, no new listings, we were getting kind of worried that this was going to become a trend and possibly signal a shift in this market back in favour of sellers.

Well, over the past two days, a completely different trend has emerged: price reductions and increased back-on-the-markets. A listing can be pulled off the MLS anytime. Then, the realtor can re-list it at a different price and reset the days on market stat back to 0. It's a shady deal, but then again so is the RE market eh?

So I check in this afternoon with the listings to look for sales. Instead what greets me in the system is several significant price reductions; in more than one case 10%+ reductions in condo asking prices (all around 220K). That to me is a significant discount. If I was buying, I'd be thinking I drove a hard bargain getting that kind of price reduction out of the seller.

What's the trigger? Well, some people could have conditional offers on other places and could see themselves losing their new homes because they can't sell their old one. Or, I prefer to think the market is shifting, especially with condos. But I'm seeing it with houses too. One house that we looked at twice and did the math on at least a dozen times, sold for $25K under its asking price. Had we made an offer, we thought this kind of low-ball as borderline insulting. Not so apparently.

So are we seeing that places are priced too high for the market? Are we seeing some panicky selling? Or, and most likely, I'm describing circumstantial, anecdotal evidence that we can't possibly extrapolate into the market. But for us bears, I'm holding out hope.

Tomorrow I'll do an update of our list of watched homes and condos and do the math like in our previous post here.

On another note: watching the CBC as I type this, and get this, the business update included a brief discussion of a housing slowdown across Canada fuelled by overspending due to increased real estate values. Or in plain english, people have re-mortgaged their homes to buy new cars and expensive furniture and other goods, and have now realized their debts are significant and are changing their spending ways so as to pay down debt which in turn means less buying of homes which means a decline in housing values... ah, the market fuelled by idiocy.

Wednesday News Hunt

Victoria's Truth has a good link to a G&M article.

Here's something from the US regarding a possible recession.

A rant from a reader at the TC.

Some anecdotal evidence from Rob.

Anything missed?

Drive by Shooting. In Victoria?

Went out to do some drive by shootings of condo developments in and around Victoria on Saturday. Picture quality may not be the best, weather sucked, but we'll do our best to articulate what we found in our explorations.
Above: Carey Hill Walk. Looks almost complete. Price per sqft is outrageous for a neighbourhood that we consider less than desirable. That said, the development makes good use of its natural advantages and the back corner suites will be very quiet and have a decent view towards Swan Lake and Christmas Hill. Bet they're all sold though.
Above: you can't tell from this photo, but Reflections hasn't had any visible work done to it recently. We go past here several times a week, never see trucks, never see cranes etc. Not surprising considering the ridiculous prices they expect people to pay to live in a glass house on the busiest street in Langford.
Above: McConnell Place. You can see the new building down the street. Not sure if people are living in the front one yet, but looks like the standard Langford condo development of the future. Units for sale at $231K for a small 2 bed (under 700 sqft). Interesting to note that these units original MLS price a year ago were $219K; $12K more or about 5% (that's barely inflation in the construction business and likely less than inflation). Another indicator that the market hasn't jumped like the MSM and Realtors would have us believe?

Above: Latoria Walk development. Not working on Saturday, but plenty of evidence to suggest that the project is well under way. Lots of golf inference in the sales information and signs around. This suggests to me that the marketing is aimed at people relocating to the island for lifestyle, not so much for the people who are already here.
Above: The Strathmore. Looks like the foundation has been semi-poured. Busy street way in front, but central location and easy to jump onto major highways. Don't know too much about this development yet.

Above: Corner of Millstream and HWY 1. The sign in the distance pronounces "Rental Flats" and gives a phone number. I didn't get it, but I assume this is a rental only development and can't find anything online anywhere to gain any info. Nice to see some rental units being built specifically. With purchase prices beyond affordable and rents quickly catching up, I am actually surprised that more real estate investors aren't building these sorts of developments. I know that most new strata's are approved only without rental restrictions as the municipalities use these restrictions to appear like they are addressing housing affordability/rental suite availability issues within a market context. Does it work? Hasn't appeared to as of yet.
Above: This is the Hatley Ridge development. It's advertised in the TC regularly, though it doesn't appear on Vibrant Victoria. Looks like groundbreaking has happened, not a lot of other evidence of work taking place.

Above: Richmond Gate. We live around the corner. We're actually interested in this development as a purchase. Work happens 6 days a week. I wonder what the effects of building in the rain will have on this long term. If you seal in moisture using the new rainscreen 'technology' doesn't this just seal in the rot? Update: went into the sales office to inquire about 1-bed suites. Sold out at $249K. Next suite up, one-bed plus closet called den for an additional $90K. Note, for $90K you get 100 square feet (the den is only about 35 square feet) so the rest of the area is distributed into other rooms.
Saved our favourite for last: Mayfair Walk. 70% sold. Just of the busiest street leading into town. No view. Across the street you have 5 of the seediest houses we have seen in this town. One driveway had a beat up old early 80s Toyota with a bumper sticker that stated: "If you're gonna ride my ass the least you could do is pull my hair." Imagine having your in laws over for dinner and that being the awkward talk of the table. Right beside the Mayfair Hotel, which we are pretty sure doesn't attract the kind of clientele that we would want to have living next to us.

So what does all this mean? We're checking out new developments to try to figure out the justification for the per sqft charges being so out of line with existing property. We can't. The condos we've looked at are all around $200-$220/sqft. These places are all above $250/sqft with the average being closer to $300/sqft. If you move to Langford, chances are you will need two vehicles (bus service sucks from there to town). Of course there are exceptions. But if you do need two cars, you don't get two parking spaces, and there is a definite lack of parking on street in these neighbourhoods.