Thursday, July 26, 2007

Victoria Mansions: keeping the MSM honest?

It never ceases to amaze me that Victoria has some fantastic properties. I rode past this one the other day on my bike. I knew it would be another on the long list of always-for-sale uber properties on our waterfront loop.

The Times Colonist states:
The Oak Bay property that set the record last year for the highest sale price in Greater Victoria is on the market again - but for $7 million more

It is one of several Greater Victoria properties on the multiple listing service with price tags topping $10 million as Victoria's real estate market continues to sizzle.

"There are definitely more properties listed at this price point," said real estate agent Sylvia Therrien, who is selling the estate at the corner of Rutland Road and Beach Drive.

Within this group, the Rutland property, with more than 215 metres of waterfront, three islets, a private woodland, seven bedrooms and 10 bathrooms, is the "crown jewel," she said yesterday when asked to explain the $7-million jump.

Am I the only one that doesn't get this logic? For $#@& sakes Sylvia, they've done nothing to the property in a year and you price it up by 60%. And an even bigger what the $&#% to the TC for not questioning this one bit. No market in Canada has grown by 60% in the past year. Victoria's hasn't even gone up 10%. Sizzling, yah right.

Record sales sure. Record sale prices too. Don't forget record number of listings. Rising interest rates. A forestry industry that is all but shut down. An economy that has inflationary pressures that could lead to recession. A stock market that has lost over 700 points (4%) in four days. Keep it up pumpers, keep it up.

Update:
OK. I shouldn't get myself worked up over this stuff. So I'm going to do two things today: a long ride to de-stress after my Last University Exam Ever; and show the MSM of this town just what I think of this sewer, ahem, real estate pumpage with a taste of soccer-inspired hooliganism left over from the U-20s...

Updater: CBC is on it today... look out.

UPDATERER: That 4% loss in a week has almost doubled today; we're now talking about a loss on the week of close to 7%. And we still have a day of trading left. I genuinely hope you all aren't losing too much savings today.

The U.S. subprime mortgage sector has been a source of worry in the United States for several months, as rising interest rates have led to more people falling behind on their mortgages or going into default.

In addition, the failure of a group of banks to a sell a debt package for Cerberus Capital's acquisition of Chrysler prompted worries about corporate lending.

32 comments:

vg said...

That is disgusting HHV, the TC is like A Channel, they are pumpers for the whole industry as we know they pay the bills.
Do they have to pump it to the bitter end when the writing on the wall is in capital letters now ? thats what pisses me off,no one even slightly questioning this bubble when the US news is like an avalanche of bad news that most of us predicted and does not look to stop anytime soon.

Take Ozzie Jurok yesterday pumping Williams Lake and Victoria of all places,what a two faced bastard,he does an interview on HoweStreet.com commenting on the "bigger fool" theory when discussing condo/RE prices in Vancouver,then gets on Global TV and pumps the sales numbers with that phoney smile,now that is pathetic.

Wait til all these pre-approvals have expired in the next month and the next new home buyers will be out of the loop from qualifying when we tack on an extra point and a half and another point coming over the next few months. That will be a huge segment taken out of the picture.

greg said...

hhv -

this is typical marketing.

I'm guessing they price up 60% - hoping after a year or however long goes by, that someone will come by and give them an extra million or two on the last purchase price, and then feel like they got a bargain.

I could be wrong, but considering the avalanche of bad news in the US, I can't see these properties going much farther, unless oil sheikhs from Dubai take a sudden liking to our market.

Ooops, I guess that will be the next MSM fantasy foreigner spin - oil money from the middle east....

vg said...

great pic HHV.

A bloodbath on the markets today,if this isnt a sign of overvaluation of global assets then I don't know what can keep people buying houses in BC,no fear or no brains. Even the German markets/business enviroment are being called unsteady,this may be the beginning of we have predicted for too long now.

Anonymous said...

A great "Special to the Sun" article on mortgage brokers in today's Vancouver Sun.

http://www.canada.com/vancouversun/story.html?id=7f26d367-5099-4709-948e-6757e4c416fd

Investigative journalism is not alive and well anymore. It is completely and utterly dead.

S2

House Frau said...

I put this on Victoria's Truth. Nothing over $1 million is really selling unless it is Great!!!! One did sell for over $2 million but it was just a super house .


Another house did sell. It had a private beach, 18,000 sq. ft. lot. Asking was $1,795 million then 1,695 and finally sold for $1,650.

Another just sold. Great street in the Uplands and a lot of 21,780 sq. ft. (one can subdivide???) . Asking was $1,195, the $1,095 and finally sold for $1,030.

The rest are sitting or there are price changes right left and centre. Nothng is selling for asking. and there are certainly not multiple offers.

Maybe these selling prices are not huge declines but RE agents would have you believe that people are clamoring to buy expensive properties here.

It will be interesting to see how long it takes to sell that house and how long. I believe the people wanted to do something with it and the powers that be said no dice so they are selling.

July 26, 2007 12:02 PM

Anonymous said...

When you buy a house they often let you know what it last sold for. Anyone with that kind of money and I don't care who it is would look at the fact that it went up 60% (for some strange reason) and say forget it.

People who have that money are not stupid. I think Meg Tilly once owned it and English people bought it and wanted to renovate but the powers that be in the Uplands would not allow it.

If you can sell a house for 60% more than I am going to sell my house NOW!!!!!! and my family can live in a trailer!!!!!

HA! I am so fed up with this. Saw a house in the Uplands, crappy lot, it had faux wood wall paper. Maybe we should have jumped at it because the don't make faux wood wall paper anymore.

greg said...

The picture of that kid, wow, hope his classmates, teachers, friends etc don't get a look at that one....

Anonymous said...

Putting aside the blatant lack of news in this press release (without attribution to the VREB PR flack), who can these deluded moron's be marketing to?

Seriously, google this "Britney Spears buys a $6.55 million dollar house?"
You'll probably find something like this "Britney looks at a $6.55 million dollar five bedroom, eight bathroom 8370 square foot Mediterranean style mansion set on 3.1 acres in the mega expensive ..."


So if Britney Spears cannot afford Victoria, and Victoria is more expensive than "mega expensive Pacific Palisades" who can?
Insane pricing and disgusting that the TC would consider putting this fluff in the paper at all.

Ps. California is also insanely priced [well, less so every day :-) ], I'm just stunned that a Victoria house is 3X a rock star's California house.

hhv said...

but you have to pay extra for the "crown jewels"... lol

Anonymous said...

Man, I have to say, you are pretty bitter. I enjoy reading your opinions, but ranting, that's different.

hhv said...

anon at 8:56am,

nothing I write should ever be taken too seriously... if I have offended you in anyway, I apologize.

This blog's audience tends to be a fairly vocal group of RE market bears. I had intended to give them a laugh. I don't take myself seriously in these types of posts.

Anonymous said...

Just because you cannot afford it don't try to justify it with fundamentals. Many "desired" cities will keep their value and will not be for the median.

It is like the person who is making 60,000 a year telling the guy/girl with 10-20-100+ million in the bank how to make money...

greg said...

jealous bitter renter was an insult in San Francisco in 2005.

not so much now....

equally, the acronym FB as in
"F*%^#d Borrower" came into play around the same time over at Patrick.net.

Just insults from one side to the other, home debtors to renters...

greg said...

dude at 10:36 -

what makes you conclude we cannot "afford it"?

If you don't like people expressing these views about the real estate market, find something else to read.

This is a free market democracy, that means people are allowed to knock voodoo economics if they want to.

The only reason for you to read that is if you have an interest. If you want to provide stats like jmk, we will argue with you all day, but at least you are trying to support your case.

On what basis does Victoria fit into the "many desired cities" category. Have a look at what is happening in the US, I suggest checking dataquick.

Otherwise, go somewhere where you can hang out with other 100 millionaires and not worry about what "unmedian people" are writing about....

greg said...

Oh yeah-

and why would affordability not be connected to fundamentals?

Last time I checked, the vast majority of houses were still owned by people who live here!

Aleks said...

There's a big difference between "holding value" and a 60% price hike. That house may in fact hold its value, but that means a selling price a lot closer to $10 million than $17.5.

hhv said...

Wow. I didn't realize that Uplands was the new Hyde Park, or Park Ave, or Hollywood Hills... It's nice. It may even be $17.5 Mill nice. I love my city. I want to stay here. I want to buy a house here. Just because I think people are off their rockers with what's been happening lately doesn't contradict any of the sentiments I feel about my town.

And anon, please give yourself a pseudonym so we can direct our comments, it would be appreciated.

Anonymous said...

You really want to put fundamentals and values to the test explain this:

Doctors are paid less then athletes, celebs, etc.

With that said there is a difference between NEED and WANT.

NEED, needs to be supported fundamentally as everyone has to be able to afford it.

WANT, does not need to be supported. This is based on emotion and is driven by what "You" can afford.

Anonymous said...

hhv, no apology necessary. I'm a renter at the moment, lived and travelled in a lot of countries, and now live in Victoria. My thinking's changed, I guess, from seeing other parts of the world, and I feel we have it so great here, even if I have to pay a high price to enter the market.
My concern would be a crash would take down a lot more than just RE, and would likely affect purchasing power more than the current prices.
Off topic, there are multiple offers out there still, but only for the best properties.

Anonymous said...

Dude at 10:30

I make over 100K/year (gross), have over $100K in savings/investments I can pull out today, $40K in LOC's I can access, another 30K in European account, and another $250K in a house I'm going to be selling soon. My wife is about to start working at 40-60K/year.

Do you think I can not afford a 700K+ house? I can and relatively easily... but I'd be nuts to be buying anything at these prices.

Anonymous said...

erm that last one was for dude at 10:36 not 10:30.

Anonymous said...

Dude at 1043pm

Don't buy then! Nobody is twisting your arm. If you think the 700k home is going to sink then wait. I guess it is like the past 4 years of crashes.....

I can tell you know that most people who have the ability to own will own.

Just like people say that fundamentally we are not affordable for the average. Well, what are the stats on who is the purchasing, can they make their payments....

In the end it doesn't make a difference if the average cannot purchase to keep the housing market hot. It matters on one thing only are there enough non average people who can purchase and can they make their payments. If they can then don't expect the market to take a dive.

Anonymous said...

We own a nice house in Oak Bay. We have been in the RE market in Europe and Toronto for 20 years. As we have had a 4th child we need a larger house. My husband refuses to sink any more money in Victoria Real Estate as he is convinced it is going to crash.

Even people that own property are waiting.

hhv said...

Anon,

"In the end it doesn't make a difference if the average cannot purchase to keep the housing market hot. It matters on one thing only are there enough non average people who can purchase and can they make their payments. If they can then don't expect the market to take a dive."

Do you honestly believe this? Do you really think that non-average people will continue to come here (and no data supports that they are to begin with) and buy below average properties at above national average prices? The reality is far from it. Albertans are now looking at properties in Saskatchewan. Money follows hot markets, where people can make money.

Our RE market can no longer be described as "hot." Yes prices are higher than ever, yes sales are record breaking, but so are listings. And when people realize that they don't have to get into bidding wars over garbage properties (and they have realized it) we see "new price" signs all around town.

The average DOM stat is increasing. Last fall we witnessed a 6 month average price decline. Do you think that isn't going to repeat itself this fall?

The logical fallacy of everyone wants to be here so prices will only continue to skyrocket is just an emotional sales lie.

As long as I've lived in this town, 30 years, the argument has always been the same. But we saw a correction in 82 that took 5 years to regain to 81 prices and in the 1990s, it took 7 years to regain 1994 prices. Those are facts.

"Everyone wants to be here" and therefore no correction can happen is not a fact, it's a fallacy.

greg said...

hhv -

I couldn't have said it better myself, and in fact, it's probably better that I didn't.

hhv said...

greg,

I like it when you say it... it's usually much more colourful than I; Ms. HHV doesn't like that she get's lumped into my rants at times so she keeps me on a short leash in the colourful commentary department :)

Anonymous said...

As I said on VT, can someone/s please write a letter in response to today's Knox column? It's definitely more balanced than the stupid mansion story, but I didn't see any reality check letters in response to that either. Due to my dayjob it is not really appropriate for me to write letters to the editor, but I wish someone would - think this is a small way of influencing the zeitgeist/common wisdom on this subject. The letter could be something along these lines:


Dear editor,
Let me supply the obvious answer to Jack Knox's question , “How, when you compare Victoria house prices to incomes, is this sustainable?" (Cheapest House in Greater Victoria selling for $325,000, July 28): Not much longer at all. The average household income in the CRD does not allow home purchase at the current inflated prices, leaving fewer and fewer of those essential first-time buyers to fuel the market. Many others who can afford to buy are wisely choosing not to do so after assessing the local market conditions and historic price cycles.

Just as many other "places that people want to be" (see Southern California, Arizona and Florida) are experiencing market meltdown, so, most likely, will Victoria for the same reasons - prices cannot infinitely spiral beyond the point where local populations can afford them. Buyers beware. Do your research.

I'm sure regular readers can come up with a much better letter than this - I just want to see some kind of response/rebuttal to these real estate stories in MSM.

Anonymous said...

Still depends on the reason for purchasing.

Are you purchasing purely for investment or for lifestyle?

Do you think lifestyle is what you are getting in Saskatchewan?

What I see is smart people making money by purchasing out there and then taking the money to by lifestyle on the Westcoast. You are always going to pay more for lifestyle. You can work out and be healthy for free yet the health industry is one of the most profitable businesses.

Victoria is starting to come up in the ranks and that is being displayed with many new condo/hotel opportunities and not just condo opportunities. There are hoteliers that realize that Victoria is starting to come into its own with the many Golf courses, mild weather compared to Vancouver, and natural beauty.

You have to ask yourself why are you purchasing. No one can definitively say that the market is going correct or increase.

You can play up that the markets of the 80's, etc but we ARE in a different time.

Housing is available for purchase by all countries and not just local, working is possible from homes, wealth among the top 10% has increased year over year.

Put it this way, someone with a million dollars in a bank account at 6% will make a return of the median income in BC.

Are we heading for a correction or are we heading for a new plateau. This could have been the correction? A correction of an undervalued market. Maybe we will not go any hire for awhile and these are the prices for the next few years.

I don't think you are going to see any waterfront home drop 50%

hhv said...

Anon at 9:31

"What I see is smart people making money by purchasing out there and then taking the money to by lifestyle on the Westcoast."

There is no evidence to suggest this at all. You are asking us to accept your opinion completely based on say-so.

What I've read about the Saskatoon and Regina markets is that they're being driven up by families who see a great opportunity to have well paid jobs and purchase a decent home in a decent neighbourhood for prices that fit historic economic fundamentals: i.e. 30-35% of after-tax income on mortgage. I know of two families who have left BC for Regina in the past 6 months for exactly this reason.

"No one can definitively say that the market is going correct or increase."

I agree.

"You can play up that the markets of the 80's, etc but we ARE in a different time."

While the years are different in number, this argument has no more basis than that.

Economic fundamentals rarely change significantly: hence why Warren Buffet after all these years still preaches value investing as the gospel; I'm guessing those lucky enough to own Berkshire Hathaway shares would tend to agree. He never overpays.

"Housing is available for purchase by all countries and not just local, working is possible from homes, wealth among the top 10% has increased year over year."

Housing in Canada has, for as long as I can remember, been available for purchase to people who are not citizens. If you can remember which year Parliament gave us a new law, I may concede this. Yes, the rich are definitely getting richer. Yes, we can work from home (I often do). There is very little evidence to suggest that Victoria is becoming the playground of the uber wealthy; rather it has been marketed and sold to mostly Albertans and Ontarians. I would wager that 30% of those luxury properties are purchased speculatively with no thought to actually living here.

Luxury condos and waterfront properties are not competing for the same buyers as SFHs in Gordon Head, Langford and View Royal. There is no reason for the skyrocketing prices in these neighbourhoods other than the greed of the locals and the fear of being priced out forever. Now many FTBs are priced out. They either can't afford it or, like us, refuse to take a 40-year mortgage and impoverish themselves into retirement.

"This could have been the correction? A correction of an undervalued market."

Can you provide a link to a credible source that would support this assertion? I haven't come across anything even remotely suggestive of this in my research.

olives said...

Did I read someone say "plateau"?

Maybe we've reached a "permanently high plateau" LOL

I purchased a used piece of furniture last week from a nurse leaving town to live in a more affordable location. That is the third nurse that I personally know that has left in the past couple years. We better all hope this isn't a plateau or there will be no young nurses here to take care of all the rich retirees! (or police men or civil servants, retail clerks or waiters,etc. etc.)

Anonymous said...

Wow a person moved for cost reasons....

I also know three people this past week alone that purchased condo's for 850 to 1.4 mil.

Your used furniture story is just as relevant as someone purchasing now. We all travel in different circles. Beleive me, I have lived in San Fran, Europe (London, Switzerland, Germany, Italy), Colorado, California, New York. Our locations (Vancouver and Victoria) cost of living for above average income holders is quite a bit cheaper.

Take a look at Rob Chipmans blog and there are still homes being sold at record paces.

We can go back and fourth on this all day long but I do not believe buying waterfront, golf course, etc is going to become bargain hunting for everyone.

Yes, buying something in langford out of Bear Mountain, Florence Lake, etc will take a dip or ease up but do not expect the others to decrease at the same amount.

People WILL pay to live in better locations.

olives said...

Anonymous. It's irrelevant what
"circles you travel in". All cities need nurses - this one probably a higher percentage than others since there is such a large older population.

Nurses do not generally purchase condos for $850 to $1.4 million. I am talking about "average" income earners - the jobs upon which the rest of us are dependent for services.

These type of people WILL NOT pay to live in better locations simply because they CANNOT.

I think it is more than a shame to be losing so many of these young valuable people.