Wednesday, June 25, 2008

Times they are a changing

Long the darling of the upstart technology industry in Victoria, it seems Carmanah is closing the doors and issuing pink slips to the team at its manufacturing facility. Is this a sign of trouble in the tech marketplace or simply a globalization reality? Either way, people are losing well-paid jobs and it remains to be seen if they'll replace them by looking for work here or elsewhere.

Apparently high gas prices are driving highway-side residents to move to the worst corner of Victoria, otherwise known as Victoria's Yaletown. Apparently, as in Yaletown, if you drop prices drastically (like from $360K to $299K and then accept a lowball offer) you can sell a condo in town. But only to people who had previously lived on a highway.

My nomination for the greatest quote ever on HHV found in the last thread goes to Patriotz's response to:
Why is it that when someone makes a comment critical of Victoria or certain citizens' attitudes they are either told that they "loathe" the city or are asked why they don't leave?

Because you're either with or against us. If you don't buy a house right now, you're letting the bearrorists win. :-)
Bearrorists! Wicked.

I've never understood why when you believe RE is over-valued you're suddenly an enemy of the city. Victoria is a great city. It just has neighbourhoods that aren't as great as some RE marketers would have you believe. That said, I can compare the city to many, and I'd rather be here than there because I love my lifestyle. But I won't overpay for a crappy condo on a crappy corner just because a Realtor tells me it's our Yaletown. Not that I'd buy in Yaletown either... but you get my point.

Oh. Yah. Just one question for you Taylor: if the market is so hopping, how come you're wasting all those dollars on cheezy ads that make you look out of touch with reality? Couldn't you have stated the truth instead of the hype: "List with me and I'll price your place lower than anything else in the neighbourhood. Together, we'll get you a sale!"

Is it me, or is there a lot more real estate advertising on TV and the radio lately... must be all the sales.


Anonymous said...

You're delusional. Those condos on Bay and Quadra sold very quickly for a very high price. Just proves that this market is still quite healthy. Sure it's more balanced but balance is good for everyone including home owners, sellers and buyers. It's a great life here in Victoria and everyone wants to live here. Vancouver could crash but it won't happen here.

boomer said...


Anonymous said...

I want what anon 7:00 is smoking!

olives said...

speaking of ridiculous realtor ads, MLS #247886 listed by Remax for the low price of $595,000 is advertised by them as being suited to a "first time buyer". Can they possibly be serious????????

Maybe it will sell as quickly to a first time buyer as did the condos at the corner of Bay and Quadra.

greg said...

Olives -

well, if there are any first time buyers around with $300,000 to put down, to get the mortgage down to an almost manageable $2,000/month, maybe this insanity will continue.

I remember when I thought the words first time buyer and $300,000 plus listing were mutually exclusive, but I was sadly deluded (at the time).

The stuka has just about smashed into the dirt. Get out of the way. No pain until the actual crash, of course...

hhv said...

anecdotal, but I just returned from dinner out with my contractor friend who informed me that at least 3 trades firms he uses are currently laying people off due to lack of work. Electricians, plumbers, carpenters etc... I said WOW.

hhv said...

Oh, and never buy a condo built after 1992 in Victoria... aparently even the new concrete ones have air bubbles that are creating structural nightmares... not to mention rusty deck rails (ahem, Juliet, Shutters) not to name names or anything.

womp said...

I popped into an open house up the street the other day and had a nice chat with the agent... she advised me to wait until at least November to buy anything. I thanked her for her honesty, but I don't think she quite had a grasp of what's going to happen.

Anonymous said...

Or a condo that is more than 25 years old, unless the building has been inspected by a structural engineer (NOT a building inspectior). The older buildings generally need an expensive face lift too.

just jack

holgs said...

Another anecdote:

An acquaintance is still trying to sell his condo. Apparently their realtor is blaming the lack of a sale on "nobody is buying anything right now."

holgs said...

I can't believe that crack house on Quadra&Bay has finally sold. I can't believe anyone would ever buy in there, for any price! I always thought they should just tear it down and sell each half of the property to the neighboring property on either side... just to provide the neighbours with a bit more buffer between them and the road.

In any case, I liked the couple that moved there... I know they overpaid, but I can't spite them for the the fact that they enjoy walking or riding their bikes to work... 1 less car!

Perhaps they are seeing into the future - with gas at $500/barrel, there won't be nearly as much traffic noise! :)

holgs said...

One last thing... Would anyone reading this blog be down for a meetup some time in the next two weeks, perhaps on a weekday evening, at a pub downtown? Put some faces on these names?

olives said...

Greg, I should qualify - the house itself was actually a first-time buyer's house (of course).

air bubbles in concrete? how do you fix that and who will pay for it?

I know some building inspectors who would say don't buy any condo built after the mid 1980's. It's true that the newest ones are the most concerning though - in some municipalities they aren't even inspected by building inspectors any more. That, combined with the questionable labour qualification issue and now concrete bubbles, etc.,looks like a new nightmare for condo owners in the future.

greg said...

holgs -

I wouldn't mind a beer, but I thought we were holding out for -10% drops before we go to the Bengal Lounge for a beer.

That was the idea last summer, anyway...

S2 said...

Beers which HHV is going to buy. Correct still HHV?

olives said...

Is that a 10 percent drop on the median or the average?

hhv said...


we see 10% on either and that's a Bengal Trip, we'll get Bearrorist shirts made up so we recognize each other! :)

Anonymous said...

HHV: At least you'll have lots of time to save up.

Anonymous said...

"speaking of ridiculous realtor ads, MLS #247886 listed by Remax for the low price of $595,000 is advertised by them as being suited to a "first time buyer". Can they possibly be serious????????"

They actually are serious and although there could be a natural downswing in this cycle, we won't see an average SFH in Victoria under $1 million within about 8-10 years.

I hope the bears on here have signed on the list of people that will not be complaining about house prices after 5 years from now. Go ahead and predict and make your sound choices, but "DO NOT" come asking the municipalities or its property owners for any hardship concessions.

Anonymous said...

Anon 9:48 PM,
You sound like my broker who said Nortel will never trade below $80. It is ended trading at 50 cents. You definitely don't read the news much?? We are now competing with Phoenix for Alberta, etc investors. In Phoenix, fyi if you don't read, SFHs average $150K. SFHs here will likely fall below that level. It will be a bloodbath. Dream on about this $1m for average price of a home. Where do you work? How much money do you make? We don't have HQ office jobs here, just hotel and old age home ass swipping jobs! I don't think at $12/hour, the vast majority of Victorians will afford $1 m homes. It's a matter of demand and supply. But you probably don't know what that means from the sounds of your statement.

Anonymous said...

God's honest truth I saw that woman today in her front yard as I was driving home on Bay at 5 o'clock. As I was wondering what would possess her to be standing out there at that time of day, I noticed the red/white/blue RE sign advertising 1 unit still for sale at $299K.

So I looked up the listing tonight: DOM 86 days. And that's after its initial listing expired after 82 days. Open house on Saturday.

So whoever anon 7 p.m. is:
you're a liar.

As for anon 9:48, a million-plus for the avg SFH? Plausible, if central bank money creation stays in the double digits for those 8-10 years. But then, bread will cost $20 a loaf and gas will be $12 a litre.

greg said...

anon 12:58

don't forget, minimum wage will be 50 bucks an hour....

beagle said...

"I hope the bears on here have signed on the list of people that will not be complaining about house prices after 5 years from now. Go ahead and predict and make your sound choices, but "DO NOT" come asking the municipalities or its property owners for any hardship concessions."

I won't complain if you promise not to want a government bailout if things get ugly on the downside. And just for your info many of the bears are property owners.

Trevor Stack said...

I have a general real estate question that I hope one of you experts can help me out with.

I'm looking to find some value estimates (fair market value, not like... BC land assessment) for farmland in Central Saanich. It's ALR land, so it can't be rezoned without provincial approval, as I understand it.

I was going to pop onto MLS to see if I was lucky enough to find any listings, but I thought I would check here first. What value range would you assign to an acre of farmland in Central Saanich? And what would that number be based on?

kabloona said...

Check this out in the Times Colonist:

"Marketplace indicates the boom may be bust -
Number and value of sales are down but industry says not to panic"

olives said...

"They actually are serious and although there could be a natural downswing in this cycle, we won't see an average SFH in Victoria under $1 million within about 8-10 years."

I'd really be interested in how many first time buyers in victoria can save/borrow this type of money - there can't be many.

Muriel said...

The Province, June 27, 2008
Housing: Bye-bye boom

By Mario Toneguzzi

CALGARY -- Canada's housing boom has come to an end and that is no more evident than in Alberta -- with prices continuing to fall this year by eight to 10 per cent from their peak, says a national real-estate report.

The report released yesterday by TD Economics says "the long-awaited end of the Canadian housing boom has occurred, reflecting more moderate demand and increased supply of properties for sale" and it is a trend that is broadly based "but it has been particularly sharp in some of the markets that had experienced the most dramatic price growth."
More here:

beagle said...

Slump knocks 40% of price of home in four months

The six-bedroom Victorian house in sought-after Bedford Park, west London, went on the market in early March for £3.2 million.

Since then, the collapse in interest from buyers has forced the sellers to cut the price, first to £2.6 million in April, then to £2.25million in May and finally to £1.9 million this month - a total reduction of £1.3 million.

It is the starkest example yet of how the credit crunch and dearth of buyers has driven down asking prices in all but the very top of the central London market, which is dominated by wealthy foreign investors.

But don't worry Victoria has much more to offer than London!

holgs said...

I'm totally down for the bearrorist shirts. I've been thinking about making up some shirts reading JBR on the front, but bearrorist is even better!

As for the beer, perhaps we can celebrate Calgary's 10% drops?

boomer said...

"we won't see an average SFH in Victoria under $1 million within about 8-10 years."

Ok--I'll bite.

What demographic or economic rationale justifies your prediction?

B2B said...

Indeed, folks like the anonymous nutcase who thinks houses in Victoria are going to $1M just needs to look at the UK to see how ridiculous that is. That's a small island with 60M people, and even just outside London houses that were £500k (roughly $1M) are now dropping in price - and they're far nicer than houses listed at $1M in Victoria.

But we should all cheer on people like that - the stronger the delusion, the more likely that people will still make investments in this market right up to the crash, and that just worsens the crash and causes one more person to be out of financial action after the crash.

Thus, so much the better if smug bulls come on here, spout some nonsense, and then think they've won the argument. Sssshhh - let them go away and buy a new investment property!

Trevor Stack said...

FYI and per my previous comment, it's looking like undeveloped ALR land may be coming out at around $70-$80k per acre?

Anyone want to cast doubt on this figure?

hhv said...

Fascinating that they keep trying to say hey, sales are down, but only compared to 2007, not to the norm of say 2004-2007… News Flash people, 2004-2007 was not a norm, it was a time of booming sales compared to the norm… a norm is more like 1978-2007… so sales are still above norm, yet prices are flat or declining. What happens when sales correct to the norm, then past the norm, as that’s typically what happens in a “correction”? Sales prices go down.

That article is littered with quotes that suggest the local real estate market will experience the same trends as the wider N.A. RE market, which is only now just starting to get hammered. TD says Edmonton and Calgary will correct in 2008 and then go up in 2009. Why? No justification in economic fundamentals whatsoever. I’ve seen Craig Alexander speak to this last year. Last year he said there wouldn’t be any correction, just a leveling off to 8-10% growth. It’s not his job to call it like it is going to be, it’s his job to help TD sell investment products and mortgages, which is why he has little credible authority to make predictions.

The dismal scientists are proving to be almost as accurate as climate-change modelers: hardly accurate at all. The dogma of “soft-landing”, “this time it’s different”, and “we’re not over-extended in our personal home-related debt like the US” is purely an emotional argument with plenty of facts reported by these same people elsewhere to suggest they don’t believe it; they just “have” to say it. I think this is akin to asking a Canadian Conservative whether or not global warming exists. They’re too scared of appearing like a wing nut to speak their truths; which is why this blog exists, though I’m more of a moon bat than a wing nut, or something like that anyway.

beagle said...

Housing drop looming in Canada?

That sinking feeling (pdf file)

MSM is starting to pile on now

S2 said...

Most (or all) of the bears on this site were thought to be wing nuts a year ago.

Hold on!

We are probably still thought to be wing nuts.

boomer said...

re acreage;
At least north of the Malahat, what you will find for un-subdividable residential acreage (not specifically farmland) is that, once you get larger than about 4-5 acres the incremental cost per acre is quite small and the bigger the acreage the less incremental value per acre there is. Some of the best bargains for those wanting lots of room are in really large pieces. Its kinda strange that most(residential) buyers want large lots-but only to a point, and that can make large residential properties difficult to sell.

Anonymous said...

From the Times Colonist
"Marketplace indicates the boom may be bust - Number and value of sales are down but industry says not to panic"

Anonymous said...

"but industry says not to panic"

What a joke. The ones who panic, cut their losses and sell now will be considered lucky when the history books are written.

Libresprit said...

from today's Globe and Mail:

House Drop Looming in Canada?

and also excellent charts:


womp said...

"Evidence of the national downturn is evident in year-over-year price growth for existing homes in Canada's major markets, which fell to only 1.1 per cent in May, down from 8.6 per cent just four months earlier, the report said."

Wasn't it like 3 months ago that they were so confident in a "moderate" gain of 6-8% in house prices across Canada?

How the hell MSM economic analysts stay employed is beyond me. I'd say the game is tied up with huge momentum on the bear's side.