Monday, March 3, 2008

Real estate T-Ball

When I was a kid I was lousy at baseball. So I played T-ball, because that meant the ball was set up for you and all you had to do was step up to the plate and smack it as hard as you could.

Today, VREB set the ball up for all us bears to step up and smack it out of the park. And all you have to do is NOTHING. DON'T BUY. WAIT. IT'S HAPPENING!

These are busy months in RE. Prices should be creeping up along with sales. But the only thing creeping up is listings. Prices and sales are headed down. You can grease the slide by doing NOTHING. Except if you own a property, especially a second or third property that you currently spend an extra $1000 or so a month on subsidizing someone else's living, you can grease the slide by LISTING that money-losing property. And get out while the getting may almost be categorized as good.

Property Sales Moderate in February

The number of sales of homes and other properties in the Greater Victoria area moderated in February. There were 619 sales through the Victoria Real Estate Board’s Multiple Listing Service® (MLS®) in February, down from the 707 sales in the same month a year ago. There were 464 sales in January.

Victoria Real Estate Board President, Tony Joe, says the market continues to be well-balanced with strong demand for homes that are realistically priced coupled with a growing selection of available properties for sale. "The total number of properties available for sale rose to 3,311 in February - a 13 per cent increase over February of last year," noted Joe. Last month over 27 per cent of single family homes sold for under $450,000 while nearly 37 per cent of condominiums sold for under $275,000. At the higher end of the market, Joe noted that there were nine sales in Greater Victoria and one sale on the Gulf Islands of over $1 million.

The average price of single family homes sold in February in Greater Victoria was $587,295; the median price was lower at $543,500. The six-month average for single family homes was $588,826. The average price of all condominiums sold in February was $333,408; the average for the last six months was $334,577. The median was again lower at $299,450. The average price of all townhomes sold last month was $422,607; the six month average was $426,685. The median price was $395,000.

MLS® sales last month included 316 single family homes, 177 condominiums, 73 townhomes and 13 manufactured homes.

My favourite line here is "strong demand for homes that are realistically priced." What this actually points to is two things. First of all, no one can afford anything but the lowest end of our market. Realistically priced means that only homes under $475K are realistically priced. Given that a full 3/4 of homes in Victoria are above that mark, then 3/4 of home owners are out to lunch on what is realistic for their properties. And secondly, why is anyone buying right now when clearly the two-month-does-not-a-trend-make is telling you that the longer you wait the cheaper these houses are going to be. Feels good to be a bear today. Even if I am getting a bit ahead of myself.

Personal anecdote related to a previous post about how we almost bought two months ago: the condo sold for $13K below asking, which means had we taken the support we were offered we would not have really received the full value of the support. This point is not meant to belittle the significant value of the help that was offered to us. But seeing as how in a sudden, unplanned turn of events, we would have had to list this place as soon as it closed, we would have either lost out financially or sentenced Ms.HHV to having to turn down a great career moving opportunity. That place would have cost us $25K (sold less plus the Realtor commission) in two months. Crazy when you put it into perspective eh?


greg said...

One of the most interesting things about that average price chart is this is the first time in the past two years where prices have fallen two months in a row.

snaptee said...

Does anyone know of any housing blogs related to the Ottawa area that isn't a real estate agent's front for generating contacts?

roger said...

Times Colonist reports on VREB stats: Greater Victoria average house price slips

Surprising comments on the state of the market in Victoria.

The average price for a single-family home in Greater Victoria slid in February while the number of sales grew.

Last month saw the average price for a single-family house, sold through the local multiple listing service, dip to $587,295 from $606,449 in January. December's average price set an all-time high of $624,450.

There were a total of 619 sales last month, up from 464 in January. But February sales were lower than the past three years when there were 707 sales in 2007, 658 in 2006, and 662 in 2005.

A telling figure in local real estate numbers is the amount of inventory on the market. February had 3,311 properties listed for sale, up 13 per cent from February 2007.

There was the expected balanced market and strong demand comments by VREB but overall the article will dampen seller and RE agent enthusiasm.

Anonymous said...

Well, as a bear, I still would not read into this too much. I am waiting for March and April to come in to play. These are the key months in my opinion. It was nice to to see the decline but it still is early in the year and next two months IMO will dictate the tone until years end. If March is flat or increases we will probably see an up down battle for the rest of the year. If March is down I think we will see some buyer remorse and some chaos

Anonymous said...

There was clearly a mistake in the TC article: average and median prices in Victoria repeatedly surpass $1 million,

Well its been 2 months of downturn in average prices, Jan still saw more million dollar properties sold than Feb. but the average still fell to 600k, do top end buyers know something- they probably do and they have experience plus Alberta and US money is drying up, about 100 less sales and inventory up, will this begin to make a difference, todays new listings(astronomical), I agree that March is a critical month and will set the pace and sentiment for a long period, a lot more negative economic news lately, we had average price of 550k in Dec.05, when there were greater sales in o7 and 06 of Feb. there were also less inventory thats why prices went up so much, what point does inventory need to reach in order for prices to drop significantly, they're still calling for a less than 10% increase in prices, are they nuts, could this still happen- sounds crazy but I guess maybe the bottom end is still strong or fools are still rushing in, one more month or maybe just a couple weeks to tell how things will play out

Anonymous said...

I think Victorians are going to read the paper tommorrow morning and those who have been thinking of selling are going to rush out and list. People who have been thinking of buying are probably going to think twice and put off for a bit. All this will drop averages down further. Just as someone mentioned how the States started a downward trend 2 years ago the same will occur here.

Anonymous said...

I am sure that there are a number of developers in town whose butts just puckered right up when they read the TC Monday morning.

No lipstick left to put on this pig. The smart ones will sell for whatever price they can get as waiting will net them even less.

Anonymous said...

Greg: I noticed also that 2 month decrease in summer 06, I thought they would have continued downward as the inventory was about what it is today but they made a rebound, this time I think prices will continue to slide down because of the entire economy and the numbers no loger make sense fundementally

Tim Ayres said...

Tim Ayres:

I think you guys are assuming too much that everyone in the Victoria market has a huge portfolio of investment properties that they are going to try to unload. What about people who have bought their house to live in? Unless interest rates are going to skyrocket in the near future, I don't think you're going to see "..the smart ones ... sell for whatever price they can get as waiting will net them even less."

What if it had the opposite effect? For example, assume I have a client that was planning on making a move to a different area in Victoria this spring. She senses a change in the market, so she decides not to move. Her potential listing is removed from the inventory, and as such there is less supply.

I'm not here to argue about ups and downs; I think this year will be full of them on a month-to-month basis. But I think a crash is extremely unlikely. The same people have been "predicting" it would happen every month since the end of 2005.

The thing about our market is that there is a wide variation in prices, which can distort the average and even the median prices. Everyone mentions December 2007 as the peak from which we are now descending, but in that month one property that I know of sold for $7M. In a small-to-mid sized market like ours and a traditionally slow month, that can greatly skew the average.

- Tim Ayres

hhv said...

Your right Tim, but your professional organization loves to trumpet that skewed average all the time. I'd say turnabout is fair play.

vg said...

Some will say two months downward doesn't make a trend. I will stick my neck out and say in this case it does. Look at last year when the market was up 4 months in a row from December to March. We have no excuses about bad weather keeping the buyers away, this winter was average,interest rates are as low as ever too.

Sorry bulls,the pendulem is now swinging the other way,the financial world is in tough times and overvalued assets are out of favor. This market has gone on 2 years too long which only means a hard landing is in order.

vg said...

A half a point interest rate cut this morning by the Bank of Canada does not show much confidence either. I thought we were "insulated" like the analysts all said ?

roger said...


Last month 10 houses sold for over 1 million. Today there are 180 homes for sale over 1 million.

Don't you think some of these folks will want to sell and will be forced to lower the price??

It starts at the high end in any falling market. I have seen it in Ottawa and Toronto. Prices fall at the high end and average prices start dropping. Pretty soon the 1M home is now 900 so the 900 becomes 800 and so on. Buyers get savvy and start making lower offers which makes sellers anxious.

Buyer intention is also important. This morning Reuters had a news release on this study (pdf) by the Royal Bank

The number of Canadians who express an intention to buy a home within the next two years has dropped significantly from last year, according to a Royal Bank of Canada report released on Tuesday, suggesting a slowdown in the housing market.

Agents that have been through a housing cycle before will be advising sellers to set a very realistic price or their home will sit unsold while the market drops.

boomer said...

uh Tim --the comment made in the post that you object to: "The smart ones will sell for whatever price they can get as waiting will net them even less."
was obviously referring to CONDO DEVELOPERS and NOT "people who have bought their house to live in"
You guys cant seem to stop putting realtor spin on everything you say.

Since the post was about condos,What ARE your words of wisdom regarding the thousand plus plus plus CONDOS on the market?

poster saying t

roger said...

hhv said

Your right Tim, but your professional organization loves to trumpet that skewed average all the time.

The average sales price is not the best indicator but this is what the media and VREB in Victoria have historically used. The exception was this month when Tony Joe of VREB said that the median was a better indicator (I wonder why??)

However the man on the street has long forgottten the grade school definition of median. Average price is something they will latch onto and a 43K drop in two months will catch their attention.

VG hasn't said this yet so I will- Watch out below!!

bruno said...

Tim the realtor says
"For example, assume I have a client that was planning on making a move to a different area in Victoria this spring. She senses a change in the market, so she decides not to move. Her potential listing is removed from the inventory, and as such there is less supply."



NO listing-NO purchase =NO change
not "less supply"

Anonymous said...

good catch bruno

olives said...

Tim said:

"The same people have been "predicting" it would happen every month since the end of 2005."

To me, anyone who made the prediction of a housing downturn as early as 2005, even before the downturn in the U.S. had really taken off, is intelligent and well informed!

awum said...

I honestly don't see much price movement at this point. The real story is inventory. It's only February, and you're looking at about five and half months of inventory.

Mind you, the story in Condos is worse. Compared to SFHs, Condos are selling fewer and inventory piling up quicker.

Don't expect a crash? Maybe, maybe not. Is it a terrible time to buy Victoria Real Estate? Absolutely -- perhaps the worst time in recent history. Affordability is at a historic low, the economy is shakey, there's little room for lower interest rates or greater credit flexibility, Americans are out of the picture, inventory is up and sales are down.

Think Florida condos a year ago. I'm just saying...

awum said...

... oh, and buyer intent is at its lowest level in 15 years. Florida didn't even have that...

Anonymous said...

VG: Even though the Bank of Canada reduced its rate the banks will not be following suit that closely as they are in severe trouble( I reluctantly say this as I hold banks in the 6 figures)They have not historically followed the bank of Canada, only in recent years, By the way the ratio of owners to renters is close to 50 /50 in Victoria maybe 60/40 and a lot of people have reasons to sell---retirement, tired of, historical data suggesting the cycle is over, etc. When you go into retirment you can spread the capital gain over a few years, some people want to retire early, they're kids aren't interested in such investments but just want to live so that's some of the dynamic

REFLECTIONS is going to have a special promotion going on this Sat with CFAX....I'm not surprised I'll be keeping an eye on that one for sure

vg said...

Good point,the banks can't afford to lower much more.

It was the BOC's accompanying statement that is saying we are not decoupling as they thought that is the scary part. The US problems are going to effect us so get used to it and for longer than they first thought.

Tim said:

"The same people have been "predicting" it would happen every month since the end of 2005."

yep, about the same time that the banks started quietly pushing the 40 year mortgage to keep this bubble alive. I think you will learn many lessons before this is all over Tim,but they will be hard ones to learn I am sure.

Anonymous said...

Sat beside a lady on a flight yesterday who is a property assessment expert (30 years in business). She was brought in from out of town to assess the value of a couple of condo developments on behalf of a bank (wouldn't say which ones).

She told me that in her opinion the properties she looked at were overvalued by 40%. She also raised a good point with condos and what happens when a high % of the units remain unsold. It takes the same amount of money to clean carpets and maintain the building when there are 20% of he units sold vs 100% only there are far fewer people to share the expense!

sitting pretty said...

HHV if you had bought a condo in February 2007 instead of starting this whining blog, you could sell it and move to Vancouver, and you would be up 15%. It's all very well to try to time the market, but to you can't get anywhere in the market if you're not in it. To all you blogging bears with your noses pressed up against the window of home ownership, waiting for financial armageddon to befall us owners, you will still be living in your basement apartments in five years because if housing prices fall, so will your investments, and you might even lose your jobs as the economy follows the housing market down. Only the government workers (like me and my hubby) are safe, and we made the smart choice to own real estate before everyone else jumped on the bandwagon.

olives said...

condo prices are up 15 percent over last year? really?

You are right about one thing Sitting Pretty - the whole of the economy will be affected - real estate values, retail, employment, but with regard to job security of government employees (like many of us are), check out what's going on recently in Vallejo, California.

Anonymous said...

Sitting pretty,

I'm fairly certain you lurk around here to just stir the pot. For which I thank you.

Perhaps you could spend some of your gov't blogging time instead googling basic economic theory and real estate market cycles then come back and add something intelligent to the debates here.

Until then though, you can use the link on this post to find the VREB stats that will demonstrate just how far removed your "sitting pretty" is from reality.

Anonymous said...

Sitting pretty,

I'm fairly certain you lurk around here to just stir the pot. For which I thank you.

Perhaps you could spend some of your gov't blogging time instead googling basic economic theory and real estate market cycles then come back and add something intelligent to the debates here.

Until then though, you can use the link on this post to find the VREB stats that will demonstrate just how far removed your "sitting pretty" is from reality.

olives said...

Here's a link explaining some of the problems in Vallejo (on the brink of bankruptcy).

Anonymous said...

Sitting Pretty,

If you had no concerns about the value of yur property or your "safe" job then you wouldn't be trolling this blog!

sitting pretty said...

"condo prices are up 15 percent over last year? really?"

Check the VREB report. Feb 2007: median $262K. Feb 2008: median $300K. That's +15%. As for government jobs, it's the municipalities hurting in the US. My hubby and I work for the provincial government and there will always be work for tax collectors and spenders. You have to pay your taxes before you buy anything else. We're first in line for our paychecks!

roger said...

Some blog readers think the drop in sales in Victoria is just an anomaly. Not so... VIREB just released the numbers for the rest of the island. (

Month Sales - Yr.ago - Avg.Price -YOY%change

Dec-07 - 279 (243) sales - 347K - 21%
Jan-08 - 267 (331) sales - 343K - 17%
Feb-08 - 371 (418) sales - 347K - 11%

You can see that like Victoria sales have been down in January and February from those recorded a year ago and that the average sales price has been flat for three months. Like Victoria MLS inventory has been increasing as we enter the busy listing season.

The other interesting thing is that the year-over year change in average price has been dropping for 3 months. Only 11% up now compared to a year ago. Before long an investor will have made more money buying a GIC than buying a house a year earlier.

Flat prices, increasing inventory, slowdown in sales volume. See economics 101 for answer.

beagle said...

"Only the government workers (like me and my hubby) are safe"
Your job may be safe but good luck with your union trying to get higher wages when inflation really gets going at the same time government revenues are going down. At least in my private sector business I can just charge you real estate tycoons more money for my services. :) Also a lot of us bears actually own houses, we would just like to see a return to balanced fundamentals for the sake of the community.

olives said...

ALL levels of government are affected in the U.S., not JUST municipal. Government employees do get laid off and take pay cuts in bad times.

roger said...

Fellow blog readers,

This blog has always been a great forum for the exchange of ideas and information on the Victoria real estate market and the world-wide factors that influence it. The dialogue sometimes gets heated given the different points of view but folks have been very courteous in the past.

Now that the market has started to turn there will be real estate owners and investors surfing the Web looking for reasons for the market correction. When they hit this blog they will be defensive which is understandable given that with each passing month the value of their asset is dropping.

As an example, on the Alberta Bubble blog, the state of Edmonton real estate market (which has been falling for months)is being discussed and many owners have dropped by and posted pejorative comments and/or personal insults. Responding to these posts just raises the temperature and ruins the blog for the constructive exchange of ideas.

I see that a couple of new posters have started to act this way on this blog. I hope that we can all respond to their rudeness in a courteous fashion. Perhaps then they will change their tone and learn something or maybe just go away.

Metaldwarf said...

Sitting Pretty is a troll.

She likely suffers from poor self image and low self esteem. Her pride and satisfaction in a government job shows a lack of motivation and independence. She probably was ostracized as a child and often felt alone and unhappy. She satisfies her need for love and attention by posting inflammatory statements on this blog because she cannot interact with people in outside life. She is very probably overweight and exercises once every six months and then devours a pint of ice cream as a reward for her meager efforts. She is a compulsive shopper (retail therapy) and hold large amounts of consumer and credit card debt. She feels secure in her government pension and has little to no independent investments or diversified holdings of her own because that would mean less retail therapy. She feels she is above working for a living and is entitled to happiness and prosperity. Without her home and her cushy government job she is nothing.

Then again this is the internet and she could just as well be a 42 year old plumber named Bruno.

Metaldwarf said...

Also the Q radio station had a segment this morning talking about the VREB stats and that prices are falling.

blood in the water

S2 said...

I too think that as we start to see real estate correct in Victoria we will have visits from home owners fighting tooth and nail on the way down.

If all was peachy keen wonderful in Victoria RE I'm sure all of the bear RE blogs would have no interest to them and we would not see them on here. We would be viewed as just a cute bunch of nutcases to be avoided at all costs.

As they start to get more frantic let us all be respectful. It is always better to take the high road and the best part is that it will piss them right off. :)

vg said...

sitting pretty,

you are now turning into an obnoxious beech,are you into abuse ? only someone so arrogant would post that kind of drivel over and over. Not to mention your embarrasment to government workers.

I look forward to entering this market in a couple of years at half the price and with any luck I will be your new next door neighbour,I will have a couple of loud dogs and a Fender Stratocaster that I love to crank on high volume. ;)

vg said...


if you let me know the IP address of sitting pretty and it is infact a government address then please let me know as I can have it tracked very easily. Somethin tells me sitting pretty lives in a a Langford trailer park.

greg said...

Sitting pretty is making trollish comments.

In your responses, how about not insulting all other government workers?

Most work hard and for a purpose.

Save right/left wing arguments about the size and validity of government programs/services for some other blog.


roger said...

Tonight there should be some news reports on TV about the VREB data.

If you see anything interesting how about posting your comments.

Aleks said...

"Sitting Pretty is a troll."

Ding! So stop f'ing feeding it.

Anonymous said...

My favourite phrase from the VREB report:

"was again lower"

That line makes it sound as if the VREB writers:
1) are realistic;
2) accept the fact that the stats are all down; and
3) are at peace with the new normal.

hhv said...


thanks for the offer, but I've always stated that anonymous comments are welcome here. I'm not interested in a witch hunt... i'm guessing that sitting pretty isn't really who she says she is, it's just too predictable...

judging from the number of and ip addresses that frequent this blog, she's not alone anyway.

olives said...

I kinda like the interaction with sitting pretty (as bizarre and rude as it can be at times), for the simple fact that some of her "arguments" may be the same as others who are reading this blog, and perhaps the debate (if you can call it that), will provide some answers/info to those readers.

It's the same reason I like posting real estate and economic opinion on KIV. I just try (try, try try) to do it an a way that doesn't obviously offend anyone).

S2 said...

Olives. I like your "try in a way that doesn't OBVIOUSLY offend anyone" line. :) Discretion is the better part of valor.

Anonymous said...

Olives - could you post a link to where these discussions happen on KIV - I just want to go and look, not provoke anyone. I looked myself already, but didn't find any good real estate threads there.

Anonymous said...

CBC National doing a story tonight on the new trend of 40-year mortgages - called "Going Long". May be available online later, or replayed on Newsworld, etc.

olives said...

if you go on the KIV website and scroll back maybe three or four pages, there were at least 3 separate polls in the past 2 days about real estate - maybe just not on the first couple pages anymore. They tend to get a lot of "views", but not too much response.

Some people have either chickened out from posting or are now posting incognito (wink wink s2)

Please add to the post, whatever your opinion may be!

olives said...

I saw that CBC story and thought it was quite gloomy. They were suggesting 40 year mortgages were a very bad idea.

hhv said...


I'm fairly certain they weren't so much as suggesting that the 40 year mortgage was not a good thing as opposed to stating that the extra $145K interest on a $200K mortgage was in fact a very bad thing.

About time our national media finally starts echoing the bear blogs of canada.

talus said...

Olives said...
"To me, anyone who made the prediction of a housing downturn as early as 2005, even before the downturn in the U.S. had really taken off, is intelligent and well informed!"

Check out Christopher Thornberg, senior economist at UCLA's Anderson School of Management.

This was posted back in early 2006 using data from 2005. Of course it's US but it framed my decision NOT TO BUY after selling my house and moving to Victoria.

Best 59 minute video on where we were headed that I have ever seen.

S2 said...

Here is the link to KIV.

Click on Community and Classifieds and then scroll down and click on Cafe KIV.

There are some posts on page 2 and page 3 although they may have been bumped to page 4 and 5 by this time.

They are titled:

- Housing market poll - edited
- For PH and other interested
parties - Real Estate Stats
- How much will housing prices drop?
- Economic News Update

It is very interesting getting insight into how the bulls see things.

Tony Danza said...

I too think that as we start to see real estate correct in Victoria we will have visits from home owners fighting tooth and nail on the way down.

Actually the height of the shrill bull posts on the US bubble blogs occurred just as the market was turning. Once things really started sliding there was nary a peep from the REIC.

roger said...

A Request to All REALTORS®

A number of RE agents drop by and read this blog. The majority disagree withe the bear point of view and this post will not discuss RE market trends.

Instead I would like to caution buyers and their agents on the use of variable rate, closed 5 year (or longer) term mortgages. The recent drop in the bank rate will make them attractive to prospective and current owners. This can be a real trap for buyers and can lead to financial stress and loss of one's home.

Given the current drop in the BOC rate variable rate loans are available for 4.65% with a five year closed term. This looks very attractive compared to the 5.93% fixed rate. It will probably look better when the BOC drops the rate again in April.

However the BOC rate can change quickly and inflation, while moderate now, can rise quickly and the upward movement can be brisk. If requested, I will post the reasons for near term inflation in a separate post. Buyers that stretched themselves to buy using a 4.65% rate can get hurt badly when rates rise.

However, savvy agents and buyers can use this mortgage product to save a lot of money. Here is what I am suggesting:

1. When purchasing or refinancing do NOT buy more home than you can afford using the current 5 year fixed rate (i.e. 6%). Calculate the monthly payments.

2. Negotiate hard for the best variable with at least .6% off bank prime and the best terms for prepayment, discharge penalties etc. Calculate the monthly payment.

3. Save the difference between the calculated monthly fixed and the variable rate monthly payment and use it to pay down the loan every month or failing that on the mortgage anniversary.

If this strategy is used the buyer will pay less interest, the loan principal will decrease rapidly and there will be a cushion when rates rise.

Any comments??

snaptee said...

That's a good video Talus. There is quite a bit of discussion about it (and him) on the web as well.

He made the point that real prices and fundamentals (rents) always converge and that the condition can come about by a drop in prices or the steady rise of the fundamentals over time but he failed to mention what causes the market to go down either path. He mentioned large job losses as being one condition that will cause a drop in prices but not much else.

Assuming that what he said is true, what path do you guys think the market will go down here and why?

Anonymous said...

One thing I have noticed about the employment stats in Victoria is that the unemployment rate is extremely low simply because there aren't enough young people to fill all vacancies and the construction industry has scooped up a lot of workers for now, the situation will continue in the years ahead, just look at how many schools they've had to shut down in recent years, people are just not having kids, also traditionally unemployment was far greater for young people, under 30, but with fewer of them competing for jobs these days they are all employed if they want to be,

roger said...

Lots of new listings this month. You can see all the new ones listed in the last 24 hours here

You can watch the market with full access to new listings, price reductions and sales price by signing up for a free PCS account

vg said...

Global TV had a segment on the over priced Vancouver market and it wasn't a postive tone. Even had the title "Red Hot Market ? ". Showed some dumpy WW2 house for like $900,000.

It was refreshing to see the interviewer talking about the prices and making eyebrow raised expressions as if to say "well I guess if your stupid enough to pay an arm and a leg for this dump then be my guest".

The fact the media is now questioning these ridiculous prices is positive rather than pumping the latest condo development for the rich specuvestors with the phony smile is a refreshing change.Won't be long now.

vg said...

"One thing I have noticed about the employment stats in Victoria is that the unemployment rate is extremely low simply because there aren't enough young people to fill all vacancies and the construction industry has scooped up a lot of workers for now"

and what construction worker will ever settle for working at the grocery stores or gas stations for $8 an hour even after the boom ends ? I understand one large grocery store is so short staffed and over worked they even hired back people they fired a month before. Talk about desperate. This has to stifle growth if you are opening any business and require low priced help.

roger said...

More news on the mortgage rates:

CBC: Bank of Canada chops rate, but fixed mortgages don't budge

A day after the big Bank of Canada move, fixed mortgage rates remain just where they were before the central bank acted.

In fact, since early December last year, the central bank has chopped its key lending rate by a full percentage point and it has signalled that further rate cuts are "likely."

Yet the posted rate for the popular five-year fixed mortgage has dipped by less than two-tenths of a percentage point in the same time frame.

"What essentially is happening is the banks are increasing the spread between what they charge you for a mortgage and what they may pay for money," said Tsur Somerville of the Sauder School of Business in Vancouver.

"They're essentially compensating themselves for higher risk in real estate," he told CBC News.

That one-percentage-point discount on the posted rate that mortgage borrowers were automatically offered is also becoming more difficult to get.

"All the different ways that you used to be able to get a discount — those seem to be drying up, " Somerville said. "So when I talk to people, what they're saying is those discounts are hard to get right now."

vg said...

"They're essentially compensating themselves for higher risk in real estate," he told CBC News."

what ? Victoria real estate high risk ? my how times change, and no more one point discount too ? looks like tough times ahead don't you think ?

AMBAC did their deal today,the stock got hit and the market yawned, gold up big, oil up again,it is looking dicier by the day here.

Anonymous said...

Rather than expect all prices to reset to 50% of the current level and then carry on as usual, at least one analyst expects the housing market to undergo a significant structural change in the next decade or so. It's food for thought--for Victoria, the sprawl into the western communities and north of the Malahat will become troubled areas and likely never recover, while the urban centers will remain in high demand.

Anonymous said...

I can see it now: welcome to Mudriver Estates, where you can live on the dole and your kids can go to rehab all in one convenient neighbourhood.

Anonymous said...

Anybody have an idea of what SFH and Condos are going for at Latoria Walk?

roger said...

If you want to see a great statistical analysis of the Victoria market drop by Greg's CheapRealty site

Why not leave him a message. He works hard to keep the site updated with good material.

Happy Owner said...

An increase in listing numbers, on the surface, can indicate a trend toward a buyers market (downward pressure on prices). But how many listings are just sellers looking for a price and don't really have to sell? Significant price drops only occur during "HAVE TO" sell listings. The investment market ,which is mostly condos and up-to-the-eyeballs-in-debt small time developers, will be the best bet for the bears. SFH is still the benchmark for real estate success, even with flat or slightly diminishing prices.Look at all the bears sitting around here waiting for the right price point to buy in. There is demand, and with demand, over the longer term, buying in will NEVER be a bad thing. I would definitley wait for prices to shake themselves out but "major drop" or "collapse" may be a warm and fuzzy for the (bear crowd) potential buyers out there, but it's not going to happen.

beagle said...

happy owner:
A year ago I would probably agree with you but the way the economic winds are blowing now I think we are looking at a world wide crash and I don't think Victoria will be spared. I guess it all depends how many SFH owners are prepared for rainy days and have a good financial buffer. Time will tell.

Anonymous said...

I must agree with beagle on this. The coming crash will not just be in property. It looks like we are heading for difficult economic times. In a financial general crash, it is most unlikely that property will escape scot free no matter what the present demand.

sitting pretty said...

I'm agreeing with happy owner. My hubby says the bears on this blog are just sour people who are hoping the economy will crash and everyone will be miserable. Problem is, if that happens, the bears will be the most miserable of all, since they will still be in their basement apartments, and the owners will still be in their nice houses. Everything will be worth less, but everyone will be in the same place they are today. By the way, the threats that have been made against me will not change the truth. You people threatening me and telling stupid stories sound like you are just dumb teenagers doing you know what in your basement bedrooms.

Anonymous said...

Well, a big thank you to happy owner and sitting pretty for stirring the pot again, it was getting a little dull.

To happy owner, there will always be someone who "has" to sell, even owners of SFH, due to divorce, transfer, etc. Not to mention the owners who have paid attention to what is happening in the world and the market and want to get out while they can still make a profit. When they lower their price to make the sale, it will affect future sales.

To sitting pretty, I hate to be personal, but you sound awfully immature. I can't speak for everyone, but we bears are not for the most part "sour people who are hoping the economy will crash". But denying reality is not going to make it go away. And I believe many of us have been investing and saving our money in preparation for buying a house when prices return to a more reasonable level, so we are unlikely to be stuck in our "basements". By the way, I am the prowd owner of a mortgage, just not in Victoria, or I would have sold by now and be happily renting. And please, do try at least once to post without the phrase "my hubby says". And what threats are you talking about?


hhv said...

I think bear = value investor. And seeing as how the world's greatest value investor, Warren Buffet, just jumped ahead of Gates for world's richest title... i think it works.

Value investing = never paying too much for an investment. Today's prices are 30-40% too much for ROI in RE. You silly bulls can tell yourselves whatever you want to help you sleep at night (bitter basement renters syndrome), your husband led drive-by insults roll off the shoulders of most people who choose to rent because they refuse to buy hyper-inflated homes.

Anonymous said...

I bought a SFH with an inground pool for $175K in Phoenix last week (the same house sold for $425K in 2005), after I went there on vaction last week. I'm still waiting for price to tumble here 40-50% before I buy. I'd say we'll be there by Dec. 08 or 1 Q' 09.

beagle said...

sitting pretty said:

Everything will be worth less, but everyone will be in the same place they are today

This is true except for one critical fact. The mortgage payment. It will probably be more.

S2 said...

When shoeshine boys buy real estate it's over.

When busty, blond, movie starlets like Pam Anderson become condo developers you know it's over.

Anonymous said...

Tomorrow, we'll read in the TC that the Pope is getting in on the condo development action on Vancouver Island. It'll be a divine development.

Anonymous said...

Ladysmith is now Canada's Beverly Hills.

roger said...

Anothe condo project goes under in Abbotsford.

CBC: Construction halted on Fraser Valley condo project

hhv said...


by my count that's 6 in BC this year. This time it must be different. but the bulls will spin this as declining listings, so i guess prices will keep going up.

vg said...

sitting pretty doesnt get it that the HAVE TO SELLS set the prices. If more of them sell below asking prices then all the pricing by agents has to be made by what is the selling prices in that particular neighborhood and price range.

But then again sitting pretty has never sold a house in her life so what does she know except how to scrub the floor before hubby gets home.

Anonymous said...

I agree with HHV.

In this market, bears are just a different type of buyer. Buying a house isn't a decision you make just because you want to own a house. If for whatever reason you didn't buy before the bubble, just wait till its over. If you don't recognize that it's a bubble then you're deluded.

Anonymous said...

I don't know if this will happen but I would not say it is not possible.

One thing I have learned is not to repeat the same mistakes. That said, why is it not possible that Canada's leaders find a way to hedge themselves against the U.S storm instead of falling prey to it? Or, have we potentially done so and therefore our economy will correct instead of crash.

Just because we have been dependent on the U.S. in the past does not mean we have to be in the future. Last time I checked we have a lot of water on both sides of Canada that allows us the ability to ship our resources to other up and coming economies (India, China, Middle East).

When I use to sell lemonade I used to go to where the customers "are" not "were"

Aleks said...

"When busty, blond, movie starlets like Pam Anderson become condo developers you know it's over."

Ha! I thought the exact same thing when I saw the TC this morning.

"Everything will be worth less, but everyone will be in the same place they are today"

Nonsense. Leverage works on the way down as well as the way up. A homeowner with $50,000 in equity on a $500,000 house will be $50,000 under water if the market goes down 20%. Whereas a renter with $50,000 in investments now would still have $40,000 after a 20% correction, and would have $50,000 + interest if the money is in a regular old bank account.

roger said...

anon said

That said, why is it not possible that Canada's leaders find a way to hedge themselves against the U.S storm instead of falling prey to it?

There are a couple of good reasons why we will not avoid the inevitable recession in the US

- over 70% of our exports are to the US and our rising dollar has made our products much more expensive to our southern neighbours

- the Canadian government has limited ability to deflect an economic downturn. Interest rates are fairly low now and any more than 50-75 basis points will start to push inflation up faster than already projected. Massive spending on government projects or tax breaks/grants to industry will lead to deficit financing like the US.

- the rest of the world is also coupled tightly to the US economy and they will slowdown as well. We should have been pushing for more worldwide trade in recent years and now our dependency on the US will come to haunt us.

Happy Owner said...

I think a lot of the people here (hello annonymous)look at real estate as a commodity; something that you invest in like wheat, or gold, or forest companies, or.... but your missing the point of real estate. It's something that you can live in. And everyone has to live somewhere. A lot of real estate "investors" are really estate GAMBLERS looking at property ownership as a flip; buy it - sell it - buy again. The investment aspect of Victoria is completly gone (at this point in time anyway). But I'm someone whose an average working guy (in my mid - 40's) with a pretty good job,who can attest to the VALUE of real estate ownership.I will be mortgage free in 2 months with a $550,000 asset in my pocket that I pay $300.00 a month to live in, which I could rent for $2000.00 a month. My father, and my father's father always said " make sure you own your own HOUSE or you'll just end up renting all your life". Well my rent's only going to be $300.00 a month.

vg said...

happy owner, kudos for you but you are just a blow hard troll.

Incase you and your wifey dont know its the GAMBLERS that will bring down the market the first 20% as they dump at any cost,then the rest of the potential buyers get freaked out as 1981 is revisited in the media more then ever before and the tanking continues for the next 2-5 years.

Those like happy owner have a home worth $350,000 and will be choked people like myself and the other bears can buy at 2002 prices again.

Some just don't get it how bad the world financial system is in right now, it is teetering on a meltdown.

vg said...

UK market looking scary.

Pressure on homebuyers raises memories of the price crash 19 years ago

Now homeowners are growing increasingly concerned that a much more frightening similarity may emerge between 1989 and 2008 - a house price crash.

vg said...

Garth Turner says look out below ! This a beauty. ;)

Canada not immune from subprime crisis: Garth Turner

The U.S. real estate crash is about to sweep into Canada, says Garth Turner in a just-published book entitled “Greater Fool.”
Turner – the Liberal MP, entrepreneur and real estate investor – says the problems underlying the American subprime crisis “go far beyond mortgage products and also reach into Toronto, Calgary and Vancouver.”

In a nutshell, Turner urges his Canadian readers to sell their real estate if it makes up much more than a third of total family net worth and consider renting until the storm passes.

He suggests baby boomers sell their “McMansions” while they can still get decent prices and find more reasonably priced modest homes located near hospitals, public transit and other amenities.

The book is timely enough, considering it includes such recent news reports as the line-ups for downtown Toronto condos: line-ups he says were largely fabricated for the benefit of gullible media types.

He warns that overextended young Canadian couples are buying into several real estate myths, “egged on by real estate marketing machines and reassured by economists paid by our largest lenders.” They “cling to the absurd belief that paying too much for something is okay” and that “there will always be a greater fool willing to pay more.”


vg said...

sitting pretty and happy owner, that last post was dedicated specially just for you two, see ya at the bottom. ;)

boomer said...

hey-leave pamela alone

Shes used her skills and assets to live an interesting life and make a lot of money. I bet she could compare her net worth very favorably against most of the posters here and those that call her a bimbo--not to mention shes a hell of a lot nicer to look at.(of course i havent seen you guys but i assume that to be true)

besides-Ladysmith badly needs more condos

beagle said...

Wow, Garth turner should make for some interesting listening on the talk show circuit promoting that book. There is a web site too.

Anonymous said...

Right on Garth.

Those of us old enough to remember the housing downturn in the mid 80's will recall half finished condos and office buildings sitting vacant for 5 YEARS until the market had corercted sufficient to warrant their completion and another 10 YEARS after that until inflation adjusted prices made people whole again.

If you can pucker your butt that long then may the force be with you.

Anonymous said...

"happy owner, kudos for you but you are just a blow hard troll."

Actually, vg, you are the one who sound like a blow hard. Happy owner has an opinion, and you can only respond with insults.

greg said...

Unfortunately, happy owner has no facts to back up his opinion, and assuming his personal situation is as outlined, he bought years ago at a pice earnings ratio far below the currently absurd 7-8 median family income ratio of the current market.

Fools who listen to his little homily about how well he has done will do half as well as those who wait for a correction.

That's not an opinion, its a fact.

vg said...


An opinion ? I see none,only taunts,an I always respond with facts,if someone decides to repeatedly speak as if they are above others and taunt us because we have not profited like them then too bad if they get some backlash,goes with the territory. If you can't take it,don't dish it out as the saying goes.

vg said...


I suspect "anonymous" is another bull sitting on a ton of paper profit not impressed with the MANY FACTS I have presented on this site for a long time now that are all coming to fruition,especially todays article that the party is over.

I am still lost to see where I insulted anyone here today,probably a relative of theirs with a thin skin.

ladysmith hills said...

What happens when all the California surfers move to Ladysmith and get hit on the head by all those floating logs. Pretty bad scene, the blood and all.

Anonymous said...

Finally, a real estate investor(Garth Turner) who speaks the truth.

roger said...

happyowner said

I will be mortgage free in 2 months with a $550,000 asset in my pocket that I pay $300.00 a month to live in, which I could rent for $2000.00 a month.

Well my rent's only going to be $300.00 a month.

First off I want to congratulate you on being mortgage free by your mid-forties. You seem to be disciplined and like to handle credit wisely. I, like most of the bears on this site, view that purchasing and owning real estate is desirable under certain conditions. You bought when affordability levels were still reasonable which is not the case today. With todays 8:1 affordability levels buying now, in my opinion (and other bears), is not a prudent decision.

Your comment about your "rent" being $300 is flawed logic. When you own a house you need to consider your occupancy cost which is taxes + maintenance + lost investment return. Your lost investment return is around $24K because that is what you could get in rent or on your money if you sold the property and invested in tax-efficient preferred shares. So your occupancy cost is approximately 2K + 300 + 200 (min. maint.) or $2500 per month. $2500 per month is what it is really costing you to live there.

Someone buying a home like yours with 10% down would have a much higher occupancy cost because they are paying mortgage interest rates of 4.7 to 6%.

My other point is as follows: Can you live in the house through the downturn and be patient until the market becomes bullish again? Some people have a secure job and family life and the temperment to do this and others do not. It depends on your personal circumstances. It is much harder for someone who buys this month to be able to ride the downturn and keep on smiling.

By the way. Thanks for the post. It has generated some activity on the blog and it is always good to get different points of view.

roger said...

A message to happyowner, sitting pretty and the other bulls visiting this site

I think you will find this article by Garth Turner to be a summary of what the RE bears are talking about.

This is the threat.

As a society we have allowed a tangible asset, real estate, to become valued far beyond its real worth. This was facilitated by easy money in the form of subprime mortgages in the US and 40-year amortizations in Canada.

I hope you read it and give some thought to what the author has written.

Anonymous said...

Once RE prices plummet here, maybe folks will have some more disposable income to buy cars. Have you seen the pollution spewing rust buckets people in this city drive? My gosh, coming here is like stepping back in time 25 years. Rusty 1970's Dodge Caravans everywhere. And this is supposed to be a wealthy city. Well, I don't see any BMWs, Porsches, etc just crappy old cars. What's with that? This whole thing about our climate, desireability and wealthy people living here is all BS. We're just a bunch of greedy poor people living in a bubble thinking our hundred year old bungalows that are falling apart (and falling off the stone foundation.. watch out for the earthquakes) are worth $800K. Only fools and idiots would buy at this price.

Anonymous said...

vg - I kow who you are.

vg said...

"vg - I kow who you are."

kow ? moooooo lol

really ? who am I then ? and what are you planning on doing with this intimate knowledge ? stalk me ? LOL

my the bulls are getting threatening, please make note of that IP address HHV.

vg said...

"Most of the world’s banks are still carrying on their books hundreds of billions of dollars in loans, almost all based on residential mortgages and their derivatives, at 20 or 30 times their actual value. The leverage bubble that was built up during the real estate bubble which burst in the US and is wobbling in Canada, has turned toxic. It’s not about subprimes or lousy borrowers or over-inflated asset values anymore, this is now about money that actually isn’t there."


this is the part people don't grasp I was trying to get at weeks ago when that other bull was here for a coffee disputing this same info I presented.

What happens when the guy at the very end of the line bet big on derivatives and he is up $1 billion profit and he wants his money and he wants it now ? but there is a whole whack of these guys all wanting to be paid out what they are owed ? we have a very serious problem here like never before.

Anonymous said...

A developer I know asked me this week if we had purchased a house yet. I told him we were only watching the market, as our rent is really reasonable and we see the housing market only going down. He actually did acknowledge the softening of the condo market, with the remaining markets staying afloat. I did not respond, so he added that he had to feel that way as it was his line of business. Amazing.

roger said...

vg said

this is the part people don't grasp I was trying to get at weeks ago

but there is a whole whack of these guys all wanting to be paid out what they are owed ? we have a very serious problem here like never before.

You mean like this:

Banks face "systemic margin call," $325 billion hit: JPM

vg said...

Look out below.

Preparing for a 'real estate apocalypse'

Mike Donia has survived several housing market downturns in the Toronto area, and he figures, sure as death and taxes, that all good cycles will come to an end.

"It's not a question of whether the market will go south, it's when," says the veteran ReMax realtor, one of the brokerage's top agents.

vg said...

Looking on MLS at bungalows in the $400,000 range and I have never seen such trash listed before. They still look like the 1970 upgrade but worn out and they want mid 400's.

It's a complete joke,who in their right mind would put down $100,000 of good cash then borrow another $350,000 and pay over $3000 a month for those dumps for the next 40 years ?

Anonymous said...

You can forget about the Alberta investors. That's history. Bear Mountain and all the new snazzy condo developments in Victoria are going to be hanging the foreclosure signs. Why because "cheap" Albertans are now going here:

I can see condo prices in Victoria fall by 50-70% by September.

Happy Owner said...

Thanks Roger for the vote of confidence. I'm not trying to stir the pot or rub anyones face in my percieved success - just showing all my personal situation and how real estate ownership can be a benefit.Yes, I've been the market for almost 20 years - so ya, I got in when prices were "affordable" (sort of) and have been able to ride the market cycle up over the years while paying down my original (small amount by today's standards) mortgage putting me in the situation I'm in today. I don't at all discount the prevailing bear thinking here. Prices have way more downside then upside right now. The question is, how much downside can we expect? My view of real estate is strictly SFH. I personally don't care about condo's because a house is generally considered the benchmark and condo's an easily over-build commodity (which were probably seeing right now). I think a 10% haircut can be expected, some areas a little more, some areas not at all. But that's all your going to see in my 2 cent opinion.
ROGER, I can see what your saying about investing the money rather than living in it, but unless I missed something in you post, where does the 24k a year come from to rent the same house I live in now and how long would it take to recover the 20k in real estate fees as well as 10k in moving expenses.

Happy Owner said...

I think we need some new words for the bears to use to decribe the future of housing prices. Use them at your discretion.

annihilation, Armageddon, cataclysm, catastrophe, decimation, devastation, end of the world, holocaust

With words like that, crash doesn't sound so bad after all.

olives said...

Happy owner - I would be interested in hearing your reasoning why you believe there will only be a 10 percent correction for SFH prices - particularly bearing in mind the size of the credit bubble we are witnessing, the credit crunch that is now occurring, the problems we can see happening (and apparent future carnage tocome) in the banking industry, derivaties, etc. etc., as well as simply historical precedent for corrections in the 30 percent range during normal times, 45 percent during the recession of the 1980's,and approximately 75 percent correction in the last depression.

why is it different this time?

Anonymous said...

Albertans low ball and buy houses for $299K that are listed for $465K according to the article above. Maybe they'll come back and low ball those crappy houses in Victoria, low ball them say at $200K for stuff listed at $500K. It'll take some time for those holier that thou sheltered Victorians to get to used to that.

roger said...

Today in The Vancouver Province

Jobless rate stalls at 4.1%

B.C.'s unemployment rate stalled at 4.1 per cent last month as its job-producing engine leaked a little oil.

The province lost 2,000 jobs in February as an employment fall-off in its goods-producing sector outweighed gains in the service industries, Statistics Canada figures show.

The construction industry was again the star of the labour market, gaining 4,700 jobs for a record total of 214,500.

And manufacturing was the victim of the month, losing 8,700 jobs.

"On an annual basis, however, job growth in the province is starting to slow."

What happens to construction jobs when the Olympic projects are finished next year? What about B.C. building permits take a nosedive?

vg said...


Did you catch the part in the Globe article posted somewhere on here where the Merrill Lynch analyst claims there is zero new jobs as the StatsCan poll is just a flawed opinion poll not based on calling actual employers ?


happy owner doesn't want to discuss the global financial implications that have never been experienced since the dirty 30's so don't expect an answer.

For him to say he is not trying to rub it in is a farce,otherwise why mention the value etc. He didn't own during the 81 crash so he has no clue in his perfect bubble world how bad things can get when the buying demand he always talks about being there disapears overnight like the tap was turned off. No more one percent discounts,no more zero down payments,where will this "demand" come from ? a pie in the sky ?

roger said...


Interesting comment about Stats Can job numbers.

A few weeks ago you commented on the FED doing an early cut in interest rates. Looks like they may do it again.

Stocks may fall anew on recession fears

U.S. stocks could face a further pounding this week as evidence mounts that the economy has entered a recession and problems in the financial sector accelerate.


If there is to be any reprieve for the stock market, it could come from signs the Federal Reserve is contemplating an emergency interest-rate cut, analysts said.

Anonymous said...

"I would be interested in hearing your reasoning why you believe there will only be a 10 percent correction for SFH prices"

There's a temptation to grab the worst statistic and say "that's what's coming for Victoria." It's more sensible to look at a larger data set such as this report. Appendix C of the study looked at US housing corrections in the last 22 years and shows that the median decline was 17%, and the median duration of the slump was 4.25 years.

olives said...

Anon said: "There's a temptation to grab the worst statistic and say "that's what's coming for Victoria."

I don't know about that - I think I'm just pointing out what can happen , and asking why, under similar economic conditions, it can't occur once more.

As for data going back 22 years, I think we need to go back at least to the last credit cycle. The past 22 years have pretty much all be good times in Victoria.

Anonymous said...


Wow! Congratulations, you owned during the crash and that makes you smarter then the rest of the people that owned during the crash.

I purchased during the crash, actually at the peak, not for the reason of thinking that the party was going to continue but at that time I saved up enough to afford it and wanted a home.

I could have waited but I didn't know when a crash was going to happen. However, I did know that since I can afford the home that I need not worry no matter what happens.

In the end I sold for a profit, could I have bought at a cheaper price, yes, and I could have sold for more. However, in the years I had it, I enjoyed it, I lived well, and I still made money due to buying what I can afford.

To me, people buying today are not overpaying if they can afford it. I purchased a home last week at over a million. I put down 25% (could have put more) but my true investments carry the rest of the mortgage, decided on a 25 year mortgage, I can still go out with family, friends, etc and enjoy life.

I may be not average when it comes to wage but I once was. However, when I once was average I never thought of staying there. Focus your attention on things you can control. If you can afford to buy now you can afford to buy double during a crash. If you buy now buy it on lifestyle and less on investment.

VG - I understand how you are looking at the RE Market. You are looking at it for value, that is a mindset of making a good "numbers" investment. There are still many people looking at it as a "life" investment.

vg said...

agreed olives, we have to go beyond 22 years,and way back to the 30's to see any comparisons on the level of credit contraction period we are now just entering. As one analyst I heard this weekend say, "it is without precedent",in other words "unchartered waters".

roger said...

anon 5:38 said

You are looking at it for value, that is a mindset of making a good "numbers" investment. There are still many people looking at it as a "life" investment.

Anon, this is one of the reasons that this blog exists. A few years ago when affordability was still reasonable a "don't worry, be happy" approach to buying a house worked for many buyers. Most were just plain lucky - the run of cheap credit has lasted longer than anyone expected. It still works for you because you have the financial strength and investments to support your purchase. However, the young couple starting out is going to get burned if they mortgage themseles to the max at the peak of the market.

The party is over - the US is in recession; Cdn. manufacturing jobs (backbone of any economy) are disappearing; banks are tightening credit standards; and the RE market is slowing down across the country.

By all means enjoy your new home. But please exercise caution when advising others to purchase a home based on lifestyle and the want it now attitude.

vg said...

anonymous, you missed my point completely. I was referring to happy owners consistant statement that a per a serious correction or crash : "it's not going to happen" and that indeed yes it can happen as I have seen it and lived it once and til you experience it you can never say it isn't gonna happen on wishful thinking.

If you can afford a $ 1 million mortgage then good on you. My point has always been about timing when the overvaluations are screaming red flags everywhere.

You can say "life investment" all you want,I say you just made a very bad decision like you did in 81. A 50% potential correction by waiting one year is nothing to take light heartedly just cause you can afford it. But you obviously make much bigger bucks then me to qualify for that size mortgage so you can afford to lose 50% value, I can't and most average people can't.

And if you had read the obvious signs and waited one more year in 1981 you would have saved a bundle and years of regret and have no mortgage today.

vg said...

I do find it amusing that anonymous with their million dollar house and happy owner and his paid off house actually spend a second of time on this blog. If I was in that position this is the last place I would be or even care about because I would be too busy living my life.

Then again if you were insecure in your "life investment" then you would most certainly need to justify it somehow so I guess either they have no life or they are all BS or maybe both. ;)

BTW anonymous,if you were so confident in your purchase then why not put down all the cash and borrow against it for investment and write off the interest ? thats what the smart rich people do who make enough to service a million dollar mortgage.

sitting pretty said...

There's a temptation to grab the worst statistic and say "that's what's coming for Victoria." It's more sensible to look at a larger data set such as this report. Appendix C of the study looked at US housing corrections in the last 22 years and shows that the median decline was 17%, and the median duration of the slump was 4.25 years.

Not much flying-spittle comment on this from the usual crowd. Facts make you uncomfortable?

Anonymous said...

I don't know about Statscan but I can tell you that the company I work for has received more resumes in the past 6 weeks then during any time in the past 6 years.

Anonymous said...

Not much flying-spittle comment on this from the usual crowd. Facts make you uncomfortable?

You may have missed the previous comments where 22 years does not include the early 80's crash. Any long term chart avoiding that era can't be taken as fact.

olives said...

Even a 17 percent drop would be about $100,000 on an average-priced house - nothing to sneeze at I would think. And once again that 17 percent average drop is only during the good times of the past 22 years .

olives said...

It doesn't sound like the former US Treasury secretary believes the coming recession will be "average", or like anything seen in the past 22 years:

"On Friday, Larry Summers, the former US Treasury secretary, said the economy is “currently in recession” and warned that it was likely to be severe in its length and depth.

“I believe we are facing the most serious combination of macroeconomic and financial stresses that the US has faced in a generation - and possibly, much longer than that,” he said, addressing an annual economics summit organised by Stanford University in California"

roger said...

anon 3:13 said

Appendix C of the study looked at US housing corrections in the last 22 years and shows that the median decline was 17%, and the median duration of the slump was 4.25 years.

sitting pretty said

Not much flying-spittle comment on this from the usual crowd. Facts make you uncomfortable?

Sitting pretty. I think the reason that you did not see any comments on this study is that most bears on this blog find this to be a reasonable statement.

Perhaps you forgot the definition of Median or you do not have any background in statistics. It means 50% of the drops in house value were less than 17% and 50% of the drops were greater than 17%. The moderate bears on this forum are looking at 10-15% while others consider a 20% to 40% drop before we bottom out. Around 4 years to the bottom seems about right. So there was nothing much to say by either group.

Sitting pretty - it is great to see that you are comfortable with the facts in this study and are also predicting a median drop around 17%. Before I read your last post I was starting to think you were just a nervous homeowner troll.

olives said...

Credit Derivaties Turmoil Strikes:

Anonymous said...

Judging from the level of poverty in this city, the overwhelming number of working poor and the inordinate number of older cars (which indicates that people are poor in this city), the price of housing for SFHs should be more consistent those in Newfoundland, in and around $100-$150K range.

Anonymous said...

Assets that are priced too high go down much faster then they went up,thats another fact to consider. 17% will be for starters,too many fools have been taken in by the hype.

Santa Fe NM Real Estate said...

I wonder if prices will continue falling? It seems unlikely they will continue like this for three straight months!

Anonymous said...

It could easily happen for the next 5 months or more, markets are very nervous right now,lots of warnings out this weekend.

beagle said...

Is that 17% drop inflation adjusted? I can't seem to find that info in the document. I think people that didn't live through the late 70's early 80's don't really understand what a terrible thing high inflation is. Unfortunately it looks like we are in for a run of higher inflation going forward. It's pissing me off every time I go to buy my favourite bourbon!

Anonymous said...

I wish all y'all's damn hootin' and hollerin' about the market collapse would hurry up and come true. I can't even get viewings on some newly listed townhouses, they move so fast. Probably for the best since I can't afford 'em anyway. Again, hopefully that changes soon.

Victoria seems to have a severe shortage of real estate between the condo and the SFH level.

vg said...

give it a few months and you will have many to choose from but you seem in a hurry to lose money. The markets will be getting uglier by the day,lots of important TA signals broken today.

greg said...

I can't even get viewings on some newly listed townhouses, they move so fast.

What are you talking about? Last month around 73 townhouses sold and there are currently over 260 townhouses on the MLS, not to mention other ones being sold new by developers.

That is not a get them now, they're selling like hotcakes scenario like you are trying to portray, its more of a god I hope I can sell my townhouse soon one.

roger said...

Another blow to buyer confidence in BC!

CBC: Okanagan condo developer leaves pre-sale buyers in limbo

Another B.C. condo project has run into problems, leaving buyers with pre-sale agreements wondering if they will ever get to move into their new homes.

The Willows condominium development in the Okanagan town of Lake Country, just north of Kelowna, is in receivership, leaving about 78 purchasers in limbo.

The condos were being built by Divergent Environments, a Victoria-based company, whose website says it has 16 years of development experience in Western Canada, including at least four condominium projects.

Happy Owner said...

Hi guy's I'm back. Someone here wanted me to explain my reason for a 10% pull-back on house prices. I just simply looked at the historical SFH price graph supplied by the VRB. Using an average of 5% annual price increase ( a 14 year doubling of prices) the average price should be around $500k. It's currently around $550k.

Here's the address if your interested.

I didn't use any scientific theory, or read Garth Turners analysis on coming real estate apocalypse ( or is that end-of-the-world) 3 or 4 times predicting a 30 - 40 % drop either. Oh, by the way, did you know that Garth is trying to sell a book? It's funny that when the sh*t hits the fan in the Centre Of The Universe (that over course being ToRoNtO), that it's expected to stink up the rest of this world as well as other worlds undiscovered.

roger said...

happy owner said

I just simply looked at the historical SFH price graph supplied by the VRB. Using an average of 5% annual price increase ( a 14 year doubling of prices) the average price should be around $500k. It's currently around $550k.

happy owner - are you related to JMK? JMK was a prolific poster on this forum and I, for one, wish he would make a comeback.

Happy Owner said...

Hey Roger,

Should I take that in a good way or a bad way?

roger said...

JMK was a real estate bull but he was always courteous and kept the bears honest with their statistics.

He steadfastly stuck to the mantra that Victoria real estate over the long term increased by inflation + a few percent. He said he would be back to buy beers at the Bengal lounge if prices in Victoria fell by a certain percentage (10 or 15 % I think)

Good way or bad way?? - You decide. But are you related or are you really JMK in disguise??

Happy Owner said...

Hey Roger,

Not at all related. Just a new guy on the block. I've always been interested in real estate and decided to search Victoria info which eventually led me to this site, the prevailing bear thinking pressed me into posting some comments. Everyone is entitled to an opinion and should be free to express it. I absolutely will not hold a grudge if someone disagrees with comments I post, but lets not make it too personal. On the other hand, poking the bears with a stick can bring out some meaningful dialogue that can be beneficial to all of us.

vg said...

So what is your home happy owner ? is it an investment ? or a "life investment" as some others choose to call it ? and would you be able to handle seeing your house price decline by 30-50% in the next two years ?

Another condo developer bites the dust ? thats how the last 2 crashes have started.

PS it looks like you are poo pooing Garths books without seriously looking at how your home price got to where it is ? do you not think the lending crisis cannot hit little ole Victoria ? You are aware the banks are not lending out money to each other right now aren't you ?

Anonymous said...

I was checking out a few open house condos on the weekend (for fun). I mentioned to one of the realators that I'm a first-time buyer and that I really think the prices will go down and will probably end of waiting for a year or two to see what happens.

He agreed with me and said it probably would be best to wait. I've never heard a realor-type say anything like that! They always seem to say "buy, buy buy!".

It was nice to hear.

Happy Owner said...

The way I look at my current situation, a 50% drop is just a paper loss, so to speak.I'm just humouring you because I can say with a high degree of certainty that won't happen.But lets assume it does. This gives me an excellent opportunity to do the move up purchase. That property I'm eyeing thats $400k out of reach now is only $150k away. I buy up and get back on the merry-go-round and wait for the next cycle to start. NO big deal. Regardless of price, I still only pay $300 a month rent and can still rent it out for $2000 a month. Credit crisis? What crisis? The banks still seem willing to lend me more money then I need.The Canadian banking industry is far more conservative than the examples we've seen worldwide(hello U.S.A , U.K.)Lending practices in some countries(see above) is an absolute joke. The Canadian banks can most likely absorb sub-prime losses with a year(1.25 billion profits per quarter) and then they move on. "Good risk" loans and mortgages will still be made, the bears finally get a chance to buy in starting the next inflation of prices, and we all move on from there. The financial crises come and go; 2000 tech bubble, early 90's Asian banking crisis, 22% interest in the 1981, Black tuesday in the 70's (anyone out there old enough to remember that?). With all the carnage over the years, how is it that we can realize the high level of prosperity that we enjoy today.Positioning is everything. If you place yourself in the right position to weather potental problems, then problems can turn out to be opportunity.

hhv said...

happy owner,

its not personal credit that is the problem (yet) its business credit. They can't borrow to invest, they can't borrow to pay salaries, people lose jobs then personal credit becomes the problem.

I suggest you start reading about the credit crisis.

olives said...

Hey HHV - did you read in the past couple days Mike Shedlock mentioned he will be doing a post specifically about Vancouver (and area?) - he was looking for info, maybe you or roger or greg can provide him with some good info.