Monday, July 21, 2008

Caviar Dreams, Champagne Wishes


and the median family income (sorry, couldn't resist).

When I was teenager (17) and moving out the summer after high school graduation, the search for my first apartment was an eye-opener. I had these dreams of finding a great place I could call my own (and use to impress the ladies) but no idea of the cost. Back then, I did what every other house hunter did and scoured the newspaper (the internet was not yet even local back then) and check out the offerings.

I must have toured a dozen places before settling on my first bachelor pad. Most of the places I looked at were shared accomodations for around $350 a month. I got my first basement, wood panelling and all, two-room bachelor suite for $425 inclusive (and not something I'd even invite the ladies into for that matter). The only bill I paid was my phone. It was on Shelbourne, a few blocks from Mt. Doug and not too far from where I live now. Fifteen years later, I have a one-year old suite, about three times the size of my first place, I pay $750 per month and my bills run just under a hundred, let's call it $850 even. Neither of these places qualify as the perfect apartment, but I'm not ashamed of where I live at all.

Tonight I had a visit with some friends who just moved into a Fairfield character suite. I don't know how much they pay, and really it's irrelevant. I know they don't own it and they don't care to. And I also know they searched for several months looking for their perfect apartment. It was like being in an episode of Friends and we lived in New York listening to the way they were talking. It's a fantastic place: big, bright, airy, quiet. I can't say anything negative about the place. Nor would I want to; I'm genuinely thrilled for them.

But it got me thinking: "Can you buy the perfect apartment?"

I don't think you can in Victoria. Sure there are lots of nice places in town. You can even pick up some condo conversions in old Maclure Mansions in the Rockland area. You can buy a great new flat in Shoal Point or at Bayview if you're a downsizing ex-executive boomer (though I question how great anything made in this boom will turn out to be). You can head out to the Metchosin sand pit and buy a McMansion that looks oh so similar to its neighbour not ten feet to the right, and left for that matter, if you're a non-ex-executive boomer. You can buy property out on Land's End Road, then tear it down and build the home of your dreams--if you win the lottery first, and even then, not likely at today's prices and today's jackpots.

The real estate myth that is "The Perfect Apartment" is a renter's dream; I wonder how long until we start hearing our friends talking about that regularly, instead of the condo they just bought in Sooke that they will trade in for the Gordon Head home next year? For me, it started tonight. Sign of the times I guess.

109 comments:

Fodder said...

I like this topic HHV. Me and the little lady live in a one bedroom apartment that we love and pay about $700 a month for. There has been a seed in my head saying that we need a bigger place over the last few years. After doing the numbers on purchasing we started to look at some numbers on 2 bedrooms. With the change in rent prices even that wasn't worth it. So I am working on my perspective.

We doing two things to enjoy the place we live. The first is slowly throwing out inherited furniture for furniture that use the space we have better. The other one is throwing out my concept of deserving 2 acres as a birth right. Our apartment is larger then 70% of the world have to raise a family of 5. Our apartment is in truth large enough for all our needs. The only thing we give up is being able to have a large dinner gathering once a year.

It is a struggle of my human ego though; an apartment the fits all my needs and leaves me with good savings Vs. a house so I can fulfill a basic requirements of adulthood.

roger said...

HHV,

Looks like you are getting a deal on your rental accomodation in Victoria.

Rents are going to increase in Vancouver during the Olympics. Will current tenants get the boot?

Houses for rent during the Olympics Games

People from around the globe will be streaming into B.C. for the Olympics, but many have nowhere to stay.

That strong demand has created an incredible opportunity for local residents to rent out their homes, be they houses, condos, townhouses, basement suites and even motor homes to the international tourists who will be arriving.

Prices for an average home in the Lower Mainland are listing at a whopping $1500 per night or $45,000 for the month of February 2010, he points out.

patriotz said...

Yeah right.

In 2010 BC is going to be into the worst recession since WWII and a 2 week sporting event is not going to change anything. There is also going to be a huge glut of condos completing over the next few years.

Combine that with who knows how many existing condo and house owners going to Mexico for the 2 weeks, or living with Mom and Dad, and renting out - or trying to rent out - their own place.

You also cannot boot out a sitting tenant in BC without proper cause.

Note that the 1988 winter Olympics in Calgary had no effect to speak of on either the rental or RE sales markets, and it was way smaller then Vancouver is now (still is of course).

roger said...

Patriotz,

C'mon whay rain on the homeowners and speculators parade. This is what they have been waiting for. It is their chance to make easy money in a few years and allows them to rationalize the falling price of their abode.

Even Victoria will benefit because the visitors will pile on the ferry and spread their tourist dollars all over town. Perhaps they will snap up a condo or two at Bare Mountain.

Anonymous said...

I was listening to the radio yesterday and the guest was asked about what they think of the current housing market in Vancouver (the guest was just a typical, average Joe) - their response was that is was slow right now, but that is only because of the nice weather we've been having lately. Once the weather isn't so nice, sales will pick up again. As such, she wasn't worried about the housing market at all.

It made me laugh because I remember in Jan/Feb the Toronto Real estate board saying the market was so slow due to the bad weather. And that when the weather was nicer, sales would pick up again. They weren't worried at the time either...

olives said...

HHV, I seriously doubt you had any problem impressing ladies, even in your tiny hovel.

Definitely the key to waiting out a real estate correction is a great rental. I have a few friends renting and we are all pretty proud of our great deals.

Are all the tourists missing from downtown now waiting until 2010 to visit?

S2 said...

roger said

"Even Victoria will benefit because the visitors will pile on the ferry and spread their tourist dollars all over town. Perhaps they will snap up a condo or two at Bare Mountain."

Don't jest. :-) I have a friend who really truly believes this will happen.

roger said...

S2,

Why do you think I was saying these things in jest? :>)

A top notch REALTOR® and guest editor for Dream House Magazine has commented on this very subject.

Today we are seeing an increase in Canadian buyers, specifically from Calgary, Edmonton and Toronto, although our B.C. buyer still represents the majority of the sales. In the next few years we are likely to see the “Whistler Effect” as we anticipate increased interest drawn by the approach of the Olympics in 2010.

S2 said...

I don't doubt that there may be someone from Slovakia or some other country that will come here for the Olympics and wish to buy real estate in the best place on earth.

Will it be in droves?

I'd be surprised but then again this whole past 8 years has been a surprise so who knows. :-)

B2B said...

I think the big mistake the hypesters are making is that the Winter Olympics are a very different animal from the Summer Olympics. Many people in Europe I talked to about Vancouver hosting the winter games were a bit nonplussed, and were clearly thinking only of the summer games when I said "Olympics".

I don't know what the attendance numbers are for each, but here's a simple test. How much have you read in the world media (NOT the Vancouver Sun or the Globe & Mail) about the Beijing games, and by comparison, how much have you read about the Vancouver games? Does anyone recall seeing anything about the upcoming winter games in the Times, the Telegraph, or the Economist, or the New York Times?


On the main subject, I too find that for voluntary renters that have the money to buy, but choose to rent, we truly are living in fabulous Friends-type times. Our new (waterfront) place sold last year for $1.02M and rents for $1800. You can see the looks of confusion on the faces of people who have bought unremarkable houses when they visit our current palace. You can practically read the worried thought balloon above their head saying "Sure this place is great, but it's somehow better to own, isn't it? Isn't it?!?!?!"

In a few years we'll get from the mainstream "it's better to rent", and then we will know it's time to buy. Gotta love it.

vg said...

I think one has to really look ahead here by at least 2 years. Do you all realize that after the Olympics have all packed up and left town that we will be in the midst of the largest labor showdown in this province's history ?

All those union contracts expiring all within a short period of time in a post boom era is going to kill the consumer confidence level in spades.

You think they will be handing out the 4% plus demands in a high inflation enviroment ? there will be many a labor strike going on in this town that we have never seen since the Billy Bennett Solidarity days and most likely worse. For that reason alone I am in no hurry to buy for at least 2 years.

Mr.4AM said...

Good point VG,
In the States, where they are some 2 years ahead of us (in regards to real estate), they are now just starting the job crash.

iTulip editors wrote an excellent piece on this.

Check it out here: Housing Bubble Correction Update: Fasten your seat belts, here comes the jobs crash (Part I)


Cheers,
Mr.4AM

Ryan said...

"It made me laugh because I remember in Jan/Feb the Toronto Real estate board saying the market was so slow due to the bad weather."

I heard a realtor say that when the weather is bad, they get a lot fewer looky-loos at open houses, but the serious buyers are undeterred. That I will believe. All this stuff about sales being affected by weather is about as valid as running out of land.

roger said...

The Reflections has had various deal sweeteners in recent months for their condos. But this Calgary developer must be really desperate to offer this Promotion

I think these kind of "deals" are not far off in Victoria.

olives said...

MLS #249750:

"Our ever changing World, is now reaching the Housing market with a cooling off, offering buyers at last, good opportunities to acquire the dream home at a fair price, like this one...."

patriotz said...

But this Calgary developer must be really desperate to offer this Promotion

There must be a Calgary in Florida or something. It cant't be Calgary, Alberta, because we know that all Albertans are rich, rich, rich and are going to buy every new property in BC from Youbou to Wardner, so surely nothing in their hometown could be going unsold.

olives said...

Interesting stat on the Edmonton Real Estate Blog - 33 percent of all listings (SFH and condos) are vacant.

Anonymous said...

I ran the numbers for resale houses listed for sale in Greater Victoria marked for immediate possession (I assumed this is equivalent to vacant) and came up with 9.3%

Is one-out-of-ten non new homes for sale being vacant a high number? Obviously not when compared to Edmonton. As our days-on-market extends into the 60 to 90 day period will the number of vacant homes increase also? Will this be the precursor to falling prices?


just jack

Anonymous said...

Did a similar analyis but for re-sale condominiums and the percentage came out at 17.6%

just jack

S2 said...

From today's Financial Post

"CIBC sued over subprime investments"

http://www.financialpost.com/story.html?id=674985

B2B said...


olives said...
MLS #249750:

"Our ever changing World, is now reaching the Housing market with a cooling off, offering buyers at last, good opportunities to acquire the dream home at a fair price, like this one...."


Hehehehe. I was surprised to see that the listing was a Mill Bay house for $569k, not a dream house in Victoria for $300k. I love the fractured, run-on pseudo-poem though. I love commas, but COME ON!

Anonymous said...

MLS 247199:

"MOTIVATED SELLERS HAVE PRICED TO SELL"

Huh. Could've fooled me, at $700k.

Anonymous said...

One thing to consider.
People tend to buy homes when they are ready financially to make the step. Housing prices will over time rise. I seriously doubt we'll loose more than 25% of current pricing, before they keep their trend of upward climbing with our income increases. It's a consistent trend that we've seen(up until 2005 - 2008).
Is it a good time to buy? If you're ready financially, sure. Are you buying to make a quick buck, or to find a nice home that you will enjoy for the years? If for the latter, then anytime is a good time to buy.

You renters, there will always be places to rent. I rented here for 6 years before my father said, I'll buy a place, and you can continue paying rent to me. (A very fortunate situation, I know, which taught me a great lesson). 9 years later, and $65,000 in rent payments, he cut me a cheque for 120K, for my portion of equity that I helped build up in the property. I used it for a down payment on my house.

Don't get caught up in the marketing and media. Look at your life, and decide, what's really manageable for you to buy. If you can't afford to buy, you better be saving for a down payment, because the prices here aren't going to drop that much before getting back into a moderate growth that will be more realistic with past growth.

Housing prices are based on what someone is willing to pay for a house. Plain and simple. Much like regular consumer goods. The past 3 years, that wasn't the case. Now things are getting back to the way they should be. The biggest problem, is the fear of the market dropping out on us, and the fact that our $300,000 home is going to be worth $150,000 next year. NOT GOING TO HAPPEN HERE IN CANADA, and especially not in Victoria, where we are the MOST desirable place to live in this fantastic country.

Keep positive people. It's the doom and gloom mentality that can kills markets.
:)

Anonymous said...

Poor 12:23 anon...
Lambasted in: 3...2...1...

hhv said...

"Keep positive people. It's the doom and gloom mentality that can kills markets"

I'm positive this little blog doesn't impact the market at all, nor is it doomy or gloomy. It's just real.

Even though I agree with much of what you've stated, I will say that I'll wait out the 25% correction you call for; which is bigger than the downpayment check your Dad handed you on the average Victoria home; you save your way, I'll save mine.

Anonymous said...

Van Sun article with an interesting take on construction and real estate.

"Hollywood no match for 'Hurricane Holmes'"

http://www.canada.com/vancouversun/news/at_home/story.html?id=d59c84c6-d1b6-4ece-bf45-b428b11f95b9&p=1

S2

Anonymous said...

Wonderfull, you and your Dad made out fine and you are now a happy home owner. Your Dad saw an opportunity and made it happen.

You do realize that you are the poster child picture of why this market will collapse.

The market was fed on windfall profits which required a steady inflow of buyers to prop up the prices (that was you). Your father still has a heavily mortgaged home, he just took out the paper profits and you used the bubble bucks as a down payment to buy a home at an inflated price caused by other parents doing the same thing for their kids.

As property values cease to increase, your scenario disappears. So who is left to buy either your home or your Dad's.

I am assuming that you are in your 20's. By far the best investment that one can ever, ever make is in oneselve. In my opinion the best investment you could have made with the money would have been in an MBA degree from Queen's rather than today's equivalent to Beanie Babies.

Give a man a fish and he will eat for a day. Teach a man to fish and he will feed himself all his life.

but then again I have been wrong many times before.

just jack

olives said...

"...It's the doom and gloom mentality that can kills markets."

I totally agre - the psychology of the herd is everything.

Anonymous said...

"You renters, there will always be places to rent. I rented here for 6 years before my father said, I'll buy a place, and you can continue paying rent to me. (A very fortunate situation, I know, which taught me a great lesson). 9 years later, and $65,000 in rent payments, he cut me a cheque for 120K, for my portion of equity that I helped build up in the property. I used it for a down payment on my house."

Great post overall anon 12;23. I won't make any assumptions about you being in your 20's, you're clearly much wiser than that.

I hope to also help my kids into their first home and intend to buy a condo with my daughter when she turns 18 (2-3 years) - nice and close to Uvic. Not rich, just steadily making life decisions that help us all.

And you're right, Victoria is great!

Anonymous said...

I don't know how to post this link properly here, but I love this graph...LA County house prices from 2003 until now...looks kinda familiar....

Bet they thought this wouldn't happen in LALA land either.


http://bp0.blogger.com/_-Y5euKGyFc8/SIFxcDfdmrI/AAAAAAAAB9A/tSM0lGfopwA/s1600-h/lacounty-median-sfr.png

roger said...

anon 12:23 said:

I seriously doubt we'll loose (sic) more than 25% of current pricing, before they keep their trend of upward climbing with our income increases.

A 25% drop sounds great to me - today's 600K house sells for 450K in a year or two. Who knows what will happen to house prices after they reach that point?

A question. Do you really think that someone buying today will be a happy camper after they watch prices drop for the next few years? It will be hard for most folks to make a down payment, like 50K, and see the market value of their property drop so that their equity is gone and they are now upside down on their mortgage. Sell and take a big loss or stay and pay every month on a mortgage that exceeds the market value. Hard to keep focused on the twenty year plan under that stressful a situation.

anon 12:23 also said:

NOT GOING TO HAPPEN HERE IN CANADA, and especially not in Victoria, where we are the MOST desirable place to live in this fantastic country.

This type of smug and arrogant statement has been made several times in the past in this blog. There are many great places in Canada to live and most folks are happy and proud to live in the area of their choice. Some Victorians need to get off the Island and see other parts of Canada and what they have to offer.

patriotz said...

I hope to also help my kids into their first home and intend to buy a condo with my daughter when she turns 18 (2-3 years) - nice and close to Uvic. Not rich, just steadily making life decisions that help us all.

"Help us all"? You're pouring your family wealth down the drain.

Multiply your scenario by thousands of households and you can see how much of the middle class is going to see its wealth, such as it is, go up in smoke in the coming bust.

roger said...

anon 6:42 said:

I hope to also help my kids into their first home and intend to buy a condo with my daughter when she turns 18 (2-3 years) - nice and close to Uvic. Not rich, just steadily making life decisions that help us all.

Just out of curiosity what ever happened to kids standing on their own two feet and making their own way in the world?

It used to be that parents would help their kids with their education and then they would leave the nest as financially independent adults working towards their own goals. There is a certain sense of satisfaction and pride when one looks at their home and knows it was obtained with self reliance, hard work and financial acumen. Certainly not the same feeling and sense of accomplishment when Mom & Dad paid for part of it.

Anonymous said...

I don't think you should wait till your daughter is 18. Do it NOW! Give her the gift that she will always remember you for ...











bankruptcy.

vg said...

"The biggest problem, is the fear of the market dropping out on us, and the fact that our $300,000 home is going to be worth $150,000 next year. NOT GOING TO HAPPEN HERE IN CANADA, and especially not in Victoria, where we are the MOST desirable place to live in this fantastic country."



Thats frigging hilarious, in 1982 Victoria was just as desirable as it is today and that didn't stop the crash. Interest rates will be rising with inflation and it won't take more than a percent or two higher to create the same situation as back then as you are dealing with a larger set of numbers this time around in relation to incomes.

It's a nice thought train to think that coming from a position of major profit and the bank of dad helping out but even Ozzie Jurock said today that "price adjustments are coming as things are totally out of whack". He also mentioned the 72 % affordability index in Vancouver and the declining Victoria prices too. When the main RE pumper the last 7 years says the party's over then you better listen up.

Anonymous said...

"the MOST desirable place to live in this fantastic country."

Kind of like Miami or San Diego.... WHOOPS!

roger said...

just jack

I have been watching PCS every day this month and listings seem to have slowed down but there are lots of price reductions every day. Sales seem to have really slowed down as well.

Any chance you can give us some stats on unit sales so far this month?

- total MLS sales
- condos
- SFH

Nick said...

roger:

I totally agree, a 25% decline would be fine with me. On most decent Victoria properties, we're talking a minimum reduction of over 100k, which is rather substantial.

People sometimes talk about a decline of 10% or 20% like it's no big deal, but it certainly isn't chump change when we're talking about the average price of Victoria real estate.

Anonymous said...

Check out the video at this site. A great summary of where the US is right now, and where we will be in a few years. (CMHC bailout etc.)

www.fedupusa.org

olives said...

"I hope to also help my kids into their first home and intend to buy a condo with my daughter when she turns 18 (2-3 years) - nice and close to Uvic. Not rich, just steadily making life decisions that help us all. "

Hey there may still be some "brand new" condos for sale at Tuscany Village at that time.

vg said...

"Keep positive people. It's the doom and gloom mentality that can kills markets.
:) "


Thats what they said in the tech crash a few short years ago.

roger,
I find it unusual too that kids don't seem to be able to bust their ass at a real job and live tight for a few years and actually try to save up even 5% of the down payment. Now it's the parents responsibility to dump $120,000 down ?

And where is the spouse in this story ? solo ownership of a house is supposed to be affordable for someone who never saved a nickel or invested his own coin for 9 years ? I am sure this story repeats itself but also shows us the work ethic that seems to be missing in todays "gotta have it now" generation.

PS anon,
25% off any amount starting at $300,000 is a hell of alot of coin and can make like 10 years difference for those happy 40 year mortgage holders. Almost the same amount you paid dad for 9 years.

patriotz said...

People sometimes talk about a decline of 10% or 20% like it's no big deal

10% or 20% decline in an asset that is leveraged 95-100% is a very big deal. Don't forget that.

That's negative net worth territory for a lot of people.

Anonymous said...

Wow you guys are making some wild assumptions about what's actually going on here for both posts.

We struggled through school as adult students with kids and paid for our own education. We bought a home a number of years back and could not have done so without the help of our parents. At the time SFHs were around $250K - a quarter of a million dollars. Does anyone think that wasn't mind-blowing? Think that decision was "lucky?" Think again.

Our parents gave us $20K for a down payment and we added our own - having saved for years and paid off all debts. Combined we added to 25% down and avoided CMHC which in my opinion is government theft.

When I talk of buying a condo in 2-3 years I'm projecting a near market bottom, and intend to buy more RE. If I get there and things are still uncertain, I may wait another 2-3 years.

Notice I said "with my daughter, not for my daughter." There will be plenty of room for her to self actualize, and she will not be aware of any significant gifting for years to come.

Even if prices came down 30% we're still talking $350-$400K for a decent SFH. We as parents are going to have to be there for our kids to help them make big life purchases - assuming, for me, that they are making their own way, and not layin' about on the couch.

If I can help my kids to be 10 years ahead of themselves by the time they are 40, 20 years ahead of where I was at that age, I'll be there.

Anonymous said...

How about asking your kid if she wants the responsibility of home ownership!

From your posts it sounds more to me that your telling your kid what to do, stradling her with a huge debt and tying her to your purse strings. And you want her to be eternally grateful to you!

Don't believe me! Of course you don't afterall you know what is best for your daughter.

Then ask yourself this question.

What happens when her boyfriend moves into the condo? After a few years of helping with the bills, he will be entitled to some of the gain in market value?


The coffee is on...

smell it!

roger said...

Garth gets some company:

Mortgage crisis may be looming for Canada

Lost amid concern over United States government agencies moving in to support mortgage lenders Freddie Mac and Fannie Mae plus IndyMac Bankcorp, was a warning that Canada could soon face its own mortgage crisis.

Peter Hall, vice-president and chief economist with Export Development Canada, said in a report that in addition to U.S. housing woes, housing starts were down 56% year-over-year during May in the United Kingdom, 18% during the first quarter of the year in Spain and 17% year-over-year in May in France.

Hall noted that housing starts in Canada are "soaring on the strength of the domestic economy and a huge dollop of very sell-timed fiscal stimulus," and that a continuing excess of housing starts over requirements means "Canada's turn may come soon" for a housing crisis.

vg said...

"Our parents gave us $20K for a down payment and we added our own - having saved for years and paid off all debts. Combined we added to 25% down and avoided CMHC which in my opinion is government theft."



Those are the stories I like to hear. I have nothing against the bank of mom and dad helping out, mine helped me with a quarter portion of my first down paymemt but it was only 10%. It's the cases where the kids are given 30% or more as if it is a given right then try to tell us prices will never crash here as if they are some expert on real estate.

A little hard to stomach as they slough off 25% losses as well, that amount will bankrupt many a household thats on shaky ground starting out and I am sure there are many.

B2B said...


Thats frigging hilarious, in 1982 Victoria was just as desirable as it is today and that didn't stop the crash.


Agreed VG - indeed, it could be argued that Victoria was more desirable in 1982 than it is today.

Anonymous said...

What happens if your daughter wants or needs to move for a job? What if she wants to have a family one day and the condo isn't big enough?

Like another poster said what if she doesn't want the costs and responsibility that comes with owning a condo.

She'll be 18. That is a lot to hand to someone at that age whether she helps with it or not.

roger said...

VG,

Nice to see you back posting - you were absent for a while.

Looks like we are a getting more anonymous drive-by posters recently. Homeowners surfing the Net looking for reassurance that all is well with Victoria housing. It is getting harder to find with many agents now agreeing that the market is cooling. I think that there will be more nervous homeowners once the July numbers come out.

Something I have noticed on the price reductions happening all over town. A few months ago 5-10K was the typical amount knocked off the price but recently 15-20K is the typical reduction with the odd 30-50K by flippers in trouble.

S2 said...

I have a question for the bears about demographics.

I think we understand that there is a large amount of people who will be dying/downsizing/not buying coming up.

I think we all also understand that there are not a huge number of people coming along behind them.

So what is going to happen with regards to taxes, infrastructure, etc. in those areas of Victoria that are known for having a high percentage of old(er) people?

I know what I think. I just want to see what the other bears think.

Thanks.

olives said...

s2 - I read a news article last night that due to state property tax shortfalls California is going to start paying it's hourly workers only $6.50 per hour. It made me wonder how much revenue the Provincial government is generating recently because of the real estate boom - and how serious will be the effects when this revenue mostly disappears (in combination with Olympic debt during a recession of course)

Nick said...

olives:

I don't think it will have that much of a direct impact on provincial government finances. The property transfer tax brings in something like a billion dollars of the ~40 billion in revenue that they take in annually. Not inconsequential, but it's far from being one of government's biggest revenue generators.

Of course, a market decline would likely have a big effect on consumer spending and therefore on the economy as a whole, which would make much more of a difference to government revenues.

Anonymous said...

Just noticed this comment from the earlier Jim Flaherty post.

"Anonymous said...
"Better yet; NO ONE believes it, least of all YOU."

Pretty much everyone I talk to believes it, and in fact the ONLY place I'm hearing talk of a huge bust is here. With that said, I think I'll go look elsewhere before I start catching the disease."

Who is this 'everyone' you speak of?

This must be one of those rare can't read and don't have TV people that you hear about from time to time.

hhv said...

property taxes are the main source of income for municipalities, who also have a much tougher time in taking on debt.

I don't think the tax pool will diminish greatly. in previous busts, they just do less roadwork and beauty-type projects...

of course, that just feeds on itself. The US stuff is a different beast of financing.

Demographically, Victoria hasn't changed much in the past 30 odd years. That's why I always laugh at "everybody wants to be here" nonsense.

Immigration is the only tool the gov't is using to replace the aging population. current immigration policy favours young professionals. Victoria is NOT a favourite destination for immigrants, especially younger ones. I suspect that housing prices will reflect the absense of a super-cohort of boomers in 25-30 years.

roger said...

Another interesting news story:

Canadian consumers downbeat about the economy

Canadian consumer confidence has been shaken, survey results released Thursday suggest.

"Waning consumer confidence is further evidence of softening domestic demand and bad news for Canadian business," TNS Canadian Facts vice-president Richard Jenkins said Thursday in releasing the results of the market research firm's July survey.

Its consumer confidence index slipped to 96.5 this month from 97.8 in June, leaving it down a "significant" 11.5 per cent from its 109 peak last November.

Only 29 per cent of Canadians currently think this is a good time to make a major purchase, it noted.

"Although confidence has not completely evaporated, we expect more and more consumers to retreat from making major purchases and scale back discretionary spending," Jenkins said.


However, this only applies to Canadians living on the mainland. Things are different here on VI because everyone wants to move here and buy a house or condo. Those living here have lots of cash to help the kids buy that first home so that they can be close to Mom and Dad. This all leads to lots of furniture and household appliance purchases and a robust economy.

Anonymous said...

From today's Vancouver Sun.

"Food joins gas in fuelling Canadian inflation"

http://www.canada.com/vancouversun/news/business/story.html?id=59b3c64c-6c09-426b-9b6a-35bfb9ab28a0

S2 (I keep forgetting to log in)

Metaldwarf said...

Article from New York Times on American consumer Debt. The numbers are for the USA but I am sure the same applies for most Canadians as well.

http://tinyurl.com/628zcs

From the Article
"Today, Americans carry $2.56 trillion in consumer debt, up 22 percent since 2000 alone, according to the Federal Reserve Board. The average household’s credit card debt is $8,565, up almost 15 percent from 2000.

College debt has more than doubled since 1995. The average student emerges from college carrying $20,000 in educational debt.

Household debt, including mortgages and credit cards, represents 19 percent of household assets, according to the Fed, compared with 13 percent in 1980.

Even as this debt was mounting, incomes stagnated for many Americans. As a result, the percentage of disposable income that consumers must set aside to service their debt — a figure that includes monthly credit card payments, car loans, mortgage interest and principal — has risen to 14.5 percent from 11 percent just 15 years ago.

By contrast, the nation’s savings rate, which exceeded 8 percent of disposable income in 1968, stood at 0.4 percent at the end of the first quarter of this year, according to the Bureau of Economic Analysis.

More ominous, as Americans have dug themselves deeper into debt, the value of their assets has started to fall. Mortgage debt stood at $10.5 trillion at the end of last year, more than double the $4.8 trillion just seven years earlier, but home prices that were rising to support increasing levels of debt, like home equity lines of credit, are now dropping. "


The credit card debt numbers scare the crap out of me. I have two credit cards, combined I have credit worth approximately 50% of my annual income. They are paid off every month religiously. I have only ever paid interest once ever in my life, and only due to extenuating circumstances, I was out of the country for 2 months with no access to internet to pay online. The balance owing was about $12 worth of lunch from the airport, interest paid was about 11 cents.

Anonymous said...

In reguards to demographics and immigration it's actually worse than you might think. Look at Vancouver. Here you have a city that's attracting a decent number of immigrants but they're all living together in huge family units. Remember that Europe is in even more of a population decline than us so that leaves asia as the new nursery for north america. Asia's having all the kids you everyone here is too lazy to have. Anyway these large asian households will replace the small ones occupied by the grey hairs of today. I think you'll see less households that are much larger than today's average one which means less homes will be required.

patriotz said...

Asia's having all the kids you everyone here is too lazy to have.

Really now? Ever hear of China's one-child policy?

You are a few decades out of date. Asia's birthrates have fallen considerably.

property taxes are the main source of income for municipalities,

As has been pointed out before, property taxes in BC are not dependent on property values. Municipal taxes are based on budgeted spending regardless of property values.

Many US states, including California, have different property taxation systems. Don't apply news stories from the US to here.

roger said...

Here is the latest on Calgary:

Calgary Herald - Price slide

Mario Toneguzzi , Calgary Herald
Published: Thursday, July 24, 2008

CALGARY - One year ago, Calgary's residential real estate market set a record for the highest monthly average sale price for a single-family home at $505,920 in July.

But the market has changed since then and according to the Calgary Real Estate Board website on Thursday the average MLS sale price for single-family homes in Calgary metro for the past 30 days was $462,778.

Also in the past 30 days the median sale price was $410,000 while a year ago in July it was $435,000.

At the end of July 2007, the number of single-family homes on the market was 4,510. As of Thursday in Calgary, active listings numbered 6,452 homes.


This is happening in a province with high incomes, no provincial sales tax, tremendous oil and gas revenues, lots of jobs and low income tax.

In Victoria the average and median prices of a single family home peaked in April. Can we smell the coffee here in BC?

Anonymous said...

"What happens if your daughter wants or needs to move for a job? What if she wants to have a family one day and the condo isn't big enough?

She'll be 18. That is a lot to hand to someone at that age whether she helps with it or not."

I haven't refined all of the details and these are certainly some of the issues I'll contend with. What if she needs to move or wants a bigger home for a family - great!

As for being a lot to handle at 18, ya it is at first. I'll actually be working up to it coaching her on shorter term investments - and actually saving money. She saves now, invests in GICs etc, and has a pretty good understanding of what it takes to put money away (which she earns at her part time job) and is learning to appreciate the compounding effect of delayed gratification.

Don't get me wrong, I'm not buying her a porsche, handing her the keys, and saying, "see you Sunday night." I simply want my kids to grow up with an understanding that there is more to life than sweat and tears. As far as I know, we are only here once.



Thinking about buying more RE in the next few years:
Posters on here talk about house prices dropping to "fundamental values," i.e. cap rates (as though SFHs somehow follow commercial rent pricing, which of course they do not.) Are you not also willing to concede then that at some point over the next decade rental purchase will make some sense? (assuming it's of interest to an investor?) Are you preparing for this?

I wonder how many people still intend to invest in rental property when prices come down?

Anonymous said...

Patriotz said:"Really now? Ever hear of China's one-child policy?

You are a few decades out of date. Asia's birthrates have fallen considerably."

True the birth "rate" has fallen, but the population continues to grow. I was speaking to a mainland born chinese Canadian not to long ago that assured me in fact that the "one child" ruling is largely unsuccessful. This makes some sense if you consider that if there was only one child per couple over 3-4 decades they would now be a some fraction of one half where they were years ago. This has not happened and they are in fact at a higher total population than 20 years (or 3 years) ago.

This hasn't happened, in fact the population continues to grow, and is expected to continue to grow (albeit as you say at a slower rate) through perhaps 2020.

Perhaps Patriots you are so far ahead of the dacades that you're somewhere in the future, say 2050? For now, the Chinese people are still moving here.

patriotz said...

According to the CIA World Fact Book, China's fertility rate is 1.77/woman. Canada's is 1.57. I don't think the CIA would act as a propagandist for the Chinese government.

China's one-child policy did not start until 1979. It takes more than one generation for a decline in birth rates to work its way through the population pyramid and result in actual declines in population.

Anonymous said...

Patriots said: "China's one-child policy did not start until 1979. It takes more than one generation for a decline in birth rates to work its way through the population pyramid and result in actual declines in population."

It may be that your fact book is a little out of date, or as mentioned maybe it's prophetic (not to be confused with prophylactic:-)

Here's an intro on a BBC news article from May of 07:

"China's top family planning body has warned of a "population rebound" as couples flout one child policy rules.

The widening wealth gap could lead to a rise in birth rates, Zhang Weiqing, from the National Population and Family Planning Commission, told state media."

1979, so that's one year short of 3 decades (not 3-4 as I guessed.) I would imagine that it may take as little as 9 months for a policy like that to show its effects, 29 years is plenty of time. People continuing to die at one end and birthrates at a fraction of what they were just last year (if we're following the rules.)

So,..in summary, the Chinese people are still moving here.

Osiris_vic said...

They may be moving here but at a stagnant rate in Victoria and a dropping rate in Vancouver, BC, and Canada as a whole, Yet we are building at record rates.
2007 Stats
Unless 2008 bucks the trend there is likely less people moving here than last year, and even if it does it is a pretty likely it wont reach 2005's peak numbers.

Anonymous said...

Asia is a large subcontinent which includes south west asia also known as the middle east and of course India. China's one of the worlds worst breader nations for sure with it's mandatory policy of population decline. Patrioz you should really do some further reading on this subject.

Anonymous said...

"Unless 2008 bucks the trend there is likely less people moving here than last year, and even if it does it is a pretty likely it wont reach 2005's peak numbers."

Less people moving here than last year. Exactly how many people are moving here in 2008? What about 2010? Naa, couldn't happen.

Taiwan's population alone is as big as all of Canada. One person burps in Asia and we have another 5 immigrants. Given the stats and turmoil in all of Asia, I wouldn't want to project anything based on what may have (or may not have?) happened in BC in 2007.

The Chinese and the Indian people, however, only move to Toronto, Vancouver, and Surrey, so try not to fret. Those that do slip through to Victoria huddle together 15 at a time in small apartments. LMAO.

olives said...

I don't know if this has been posted previously, but on the "Rumours" thread on the Vibrant Victoria site someone indicated that Reflections is in receivership.

B2B said...

Anonymous, all this talk about people burping and us getting 5 more immigrants is not only totally unsubstantiated, but smacks a little of xenophobia. Canada is a nation of immigrants, and I bet your family are immigrants at root, since the native population is pretty low. But correct me if I am wrong and you are First Nations - in which case I think you would have a somewhat legitimate grievance about your old country being taken over by European immigrants.

The fact is that immigration to BC and Canada is historically mild right now. Numbers from China are dropping off and numbers from India increasing. But in the long run, surely Chinese and Indian folks with ambition will stay at home, and even move back from North America.

As far as fertility, I understand from the Economist that the US is outpacing much of the rest of the world when it comes to having babies. You can conclude from that what you will.

roger said...

Are you considering the purchase of a condo for your kid?

Then you might be interested in a presale condo.

Buying Presales in Victoria Real Estate Market

Presales are an excellent vehicle for purchasers to buy a new home and often result in cost savings for the purchaser.

Anonymous said...

Anon 11:03 AM, that "everyone" the bull was talking about were the braindead people still futily pricing their houses without truly deep discounts, at prices fully double what they will eventually sell for.

For some people it takes years for reality to set it.

For others, it never sets in, and they leave their depreciated unsold suburban"asset" to the kids to unload as they won't want to live out of the city limits either. At least for the kids ANY sale will be a net gain.

womp said...

Olives:

Wow! Just the other day we drove by Reflections and I commented to my wife that the finishing touches sure seemed to be taking forever....

Wouldn't that be something? That would be a major wake-up call for the local market if such a high-profile project tanked.

Any bets on if the Radius will ever get going again :D

olives said...

Womp,
Considering that the Hudson's developer purchased the Radius site, the Hudson is only 65 percent sold and they are cancelling parts of the project, I can't see them rushing to start anything on the Radius site. Then again as far as condo developments go around town, nothing is really too surprising lately.

roger said...

We are only a week away from the VREB stats for July. Anyone care to make a prediction??

Here is my prediction:
(June numbers in parentheses)

Total MLS inventory - 4725 (4513)
Total MLS sales - 650 (723)
Total sales SFH - 360 (395)
Average price** SFH - 575K (580K)
Median price SFH - 530K (538K)
Condo sales - 170 (180)
Average price** condo - 315K (319K)
Median price condo - 290 (295K)

** The average price will fluctuate considerably month-to-month over the remainder of the year. This because a few high end sales (or lack of sales) will have a significant effect on the average due to the low seasonal unit sales numbers in fall and winter months. However IMHO , the future overall trend, will be down and this will be seen in the 3 month rolling average as shown in these SFH and Condo graphs.

Vancouveritis said...

Another reason to shirk those pre-sale condos with the granite and stainless steel: it's rare, but some granite is radio-active above normal background levels.

What’s Lurking in Your Countertop?

Anonymous said...

All that means is that you no longer nead a microwave.

Worried about your daughter's new boyfriend?

No problem...

have he sit on the counter top for a couple of minutes.


just jack

Anonymous said...

Okay, okay

I have to learn to proof read ie "he" is supposed to be "him".

Vancouveritis said...

Interesting product possibility:
Granite microwave ovens!

vg said...

" I simply want my kids to grow up with an understanding that there is more to life than sweat and tears."


In other words you don't want your kid to learn what real life is about. Some sweat and tears can build something thats called "character". Something todays youth seem to lack cause they are spoilt rotten by parents who don't want little johnny or susie to dare have to have a tough moment.

Ryan said...

Reflections has been in trouble since the beginning. Start with a dumb idea and it's hard to recover. They scaled back the design at least once, maybe twice, had a legal fight with their construction company, and offered huge incentives (pay half your mortgage for three years). Personally, I've always thought it was inevitable that they would go bankrupt at some point, the question was only whether it would get finished or not.

Seriously, who builds a luxury condo on a busy road in the sticks? Their slogan "Where the water meets the sky" might work for the Thetis Lake development or Royal Bay, but the only water you'll ever see from Reflections is pooling on the parkway when it rains.

Anonymous said...

vg lecturing on character--that's rich.

roger said...

Here is the latest Ozzie Jurock interview video on YouTube:

Slowdown in real estate across Canada

Ryan said...

"In other words you don't want your kid to learn what real life is about. Some sweat and tears can build something thats called "character". Something todays youth seem to lack cause they are spoilt rotten by parents who don't want little johnny or susie to dare have to have a tough moment."

No kidding. Renting from your parents or having them buy you a place is functionally the same as living at home. You're still depending on mom and dad to fix all your problems, and your parents still have the whole "while you're living under my roof" leverage. Whereas actually moving out on your own is the first major step towards independence, this is just another sign of dependence.

vg said...

anon 2:43, the "anonymous" poster with no ID, which one are you ? the disapearing "griz" or one of the other SP trolls ?

hhv said...

I've been searching the channels most of the day and can't see where recent "news" is telling us Reflections is in trouble.

I think, much like Tuscany, Reflections is a case of poor management and concept rather than a case of a market imploding. Right now anyway.

I think it's only a matter of a short time before the good projects start having trouble surface though.

Village said...

Radio-Active countertops, that's definitely a new twist.

"Welcome to your new home, now with 50% more cancer!"

Anonymous said...

Everyone wants to live in Langford right near the boston pizza. That is the prime location of all of Victoria. Young professionals abound in Victoria and they strive to live in luxury in a nice convienient location within walking distance of some of the best dining in the city. The added bonus of being close to the costco and the superstore are certainly attractive. I've bought 10 condos in the Reflections based on it's many many exceptional features.

Anonymous said...

Anon 7:54, you forgot to mention how close it is to the RCMP station. They will need to be called when all the bums and addicts hanging out in the empty condos get a little too rowdy at 3AM. That location has a lot going for it.

*ps: I wonder who gets the 50 foot cleavage poster when its all over?*

Fodder said...

Why all the hate for someone wanting to invest in a place with their kids. I remember at 18 I lived with my brother in my parents second house free of rent as long as I was in school. I had a part time job and full course load and did some traveling in the summers.
There is a difference between helping and spoiling your kids. If I ever had kids I'd try teach them some of the things it's taken me years to learn. The hard part is doing it with them, not doing it for them.

olives said...

I hadn't checked out the Sacramento Area Flippers in Trouble for a while:

http://flippersintrouble.blogspot.com/

Lots of losses in the 40 to 50 percent range, and others approaching 60 percent.

S2 said...

fodder said "Why all the hate for someone wanting to invest in a place with their kids."

You know what? You're right.

If it goes all wonderfully perfect then that could be a great life lesson. If it goes all horribly wrong then that could be a great life lesson.

roger said...

Here is the latest on the Silkwood condo development in Colwood.

Silkwind tower on pause for presales

Greg Paull of Sotheby’s International Realty, said most of the prep work is done on the 1.36 acre site, but actual construction will begin after it meets the presale target.

Paull said it’s typical for lending institutions to want 50 per cent of the projected revenue banked before backing a project. The value of the presale target has not been released.

roger said...

Ozzie Jurock is in the press again with answers to readers questions.

Western Canada still paradise on earth

I think you will enjoy this excerpt:

But whatever the short-term outcome, this is still paradise -- the whole world wants to be here.

Living in Western Canada is being close to being in heaven on earth.

The environment is majestic, the climate outstanding, the views spectacular.

There is a very special flavour here. In Alberta, call it the crisp mountain air and the sweeping wide-open spaces; in B.C., call it the pert ocean spray, balmy sunsets, beach-roses in February and asters in October.

There is a Western Canadian flavour. A flavour unlike any other.

This is the best place in the world to be -- and that means that our real estate prices will always be higher than elsewhere .... eventually

roger said...

Olives said:

MLS #249750 "Our ever changing World, is now reaching the Housing market with a cooling off, offering buyers at last, good opportunities to acquire the dream home at a fair price, like this one...."

This house started @629K last January and was just relisted at 569K. Karen and Kim are now on Craigslist with this listing.

Price slashed again today, to $559000. Going down $10k / week tills SOLD. What are U waiting for ?

olives said...

ha, I'm sure there's someone who would like to wait about 20 weeks or so before they pounce on that one then.

Anonymous said...

B2B said...
"Anonymous, all this talk about people burping and us getting 5 more immigrants is not only totally unsubstantiated, but smacks a little of xenophobia. Canada is a nation of immigrants, and I bet your family are immigrants at root, since the native population is pretty low. But correct me if I am wrong and you are First Nations - in which case I think you would have a somewhat legitimate grievance about your old country being taken over by European immigrants.

The fact is that immigration to BC and Canada is historically mild right now. Numbers from China are dropping off and numbers from India increasing. But in the long run, surely Chinese and Indian folks with ambition will stay at home, and even move back from North America."

Number 1: please don't use words that I have to look up (and yes I planted that for your personal entertainment - have fun.)

Number 2: I see nothing in my post that appears racist or Zenophobic, nor is there any mention of a grievance with immigration. Quite right, my family roots is of immigrants (Whales actually, immigrated 1850ish). I have no problem - whatsoever - with immigration. Canada is built on it.

Number 3: Far beit for me to make any unsubstantiated opinion-based comments such as your last paragraph:
"in the long run, surely Chinese and Indian folks with ambition will stay at home, and even move back from North America"

Really? Any chance you can substantiate that lot?

By the way, I'm not bullish on this market, but reasonably bearish on BS. Actually I think this should be considered a Hyena blog for its entertainment value.

olives said...

Roger

Our favourite Mill Bay listing (now at $569,000 and dropping weekly) is also advertised on Usedvic as a rental at $2,400

ad #6561477

boomer said...

anon.1:44

your family roots are immigrant whales that came here in the 1850s?

Fodder said...

With the beginning of a down turn in all areas of our economy coming I'm interested in reading on some long term savings ideas. I'm wondering if the good people on this blog have any suggestions on good financial planning blogs?

Mr.4AM said...

Good question fodder. I'll provide some of my observations and links and would also appreciate contributions from others, especially those that have been around investment circles longer and are actually successful.

Disclaimer: I'm an amateur investor, so please do your own homework before following any below "advice".

With Bernake/Congress/Bush rescuing Freddie & Fannie, and Canada (BoC) playing Monkey See, Monkey Do, this will likely drag out the downward spiral another year or so, but I doubt it will save it.

Oil is likely to drop further in the short term as summer ends and the US gets closer to an admited recession (because depending on what stats or sectors you look at, many parts already are in a recession), though I expect it to jump back up by late spring next year as it appears to be a fairly seasonal, and ChIndia while growing at a slower pace, will still increase consumption significantly while no new major oil fields has been found, although several countries are hoping to find something in the Artic, but that's many years away still.

If the US economy recovers a bit in the short term (1-4 months) due to the recent freddie/fannie bailout, it's likely to depress gold prices a $100 or so. I'd call that one a buying opportunity if this occurs. But always remember that gold is not truly an "investment", it is merely a hedge against falling currencies. The second currencies gain real stability, get the heck out of gold. The same goes for Silver; however in the mean time Silver continues to be sold cheaply when one compares to historic ratios held against gold (in other words, holding a little silver might not be a bad idea, but if you have lots of $$, the physical stuff is impractical - you'd need too much safe storage space, and hassle to transport, so if you get silver, go mostly ETFs unless the #$@# hits the fan.

I would still consider financials to be falling knives, though I expect the "too big to fail" banks may bounce back up short term a bit further as they already have in the past week or so, while other banks continue to implode.

I'm left wondering if food/agricultural stocks may be the only long term safe investment, as anything else mentioned above would definitely be short term. So if you use a financial advisor to invest, visit them frequently to re-assess your portfolio, although this advice goes against the advice of most FA's because investment is supposed to be long term, but they forget that's only sound advice during bull markets. In bear markets, only those that can shift their assets around fast, are the only ones that likely profit, or at least escape most of the down turn.

Personally, while I read a few articles every other day, I find that for every expert analyst, there's a counter opinion from another supposed expert, and the markets remain fairly unpredictable, so I'm in a similar boat, and holding out mostly in cash (Tbills, GICs, etc) at the moment until I see some clarity in trends.

Long, long term, I think BRIC (Brazil, Russia, India, China) to
be great investments, though I'm still waiting for India and China to bottom out a bit as these countries' stock markets are *highly* volatile.

From a more global perspective, we're witnessing an unprecidented International downward trend accross the board, in part lead by international real estate bubbles in nearly 30countries

Here's a few sites I visit frequently. I'd appreciate it if others also posted any not already on this list:

1. Financial Post
2. BloomBerg Internet TV (free)
3. Mish's blog
4. Prudent Bear
5. iTulip

6. Globe & Mail Business
7. Canadian Capitalist (great lil blog)
8. Canadian Mortgage Trends

Best Regards,
Mr.4AM

patriotz said...

Our favourite Mill Bay listing (now at $569,000 and dropping weekly) is also advertised on Usedvic as a rental at $2,400

Well, that's "only" a price/rent of 237 (assuming it rents for that price).

But look what $2800/month gets you in Oak Bay

Anyone for a round of "When you wish upon a star"?

And in other happy news:

'Perfect storm' hits Canada's tourism market

vg said...

Mortgage crisis building in Canada

Too many housing starts means crunch 'may come soon,' says report


http://www.canada.com/theprovince/news/story.html?id=59d18372-95ff-48dc-95b3-4bf9bfbd6f9e

olives said...

Mr. 4am: How about Calculated Risk?

olives said...

Patriotz - at $2,800 and with 5 bedrooms and close to Willows Beach, that house in Oak Bay would probably suit 5 students or similar young roommates (although I bet that's not what the owners have in mind).

B2B said...

agreed Olives - I don't know how many families are left in Victoria that can easily afford $2800/month and haven't already bought or inherited a house.

B2B said...

This is big news folks - Bank of Canada to take garbage as collateral, following in the steps of the Fed:

Bank of Canada's monkey see monkey do

kabloona said...

mr.4am:

Thanks for taking the time to make such a lengthy post (July 27, 2008 9:38 PM)...much appreciated. I was having drinks with a friend of mine Saturday night at The Bird of Paradise pub having pretty much the same discussion, namely: what the heck is a safe investment, where's a place to park our spare cash and get a bit of a decent return....?

fodder said...

Thank you for the sites listed Mr 4am. They should give me some hours of reading and learning.

Anonymous said...

"your family roots are immigrant whales that came here in the 1850s?"

Nice... and yes actually carnivorous whales, we prefer bear meat:-) OK so I've never been to Wales, but that is where my history is from, or least about 3/4's of it. Thanks.