Monday, August 11, 2008

TC shifts focus

I guess now that the writing is clearly written on the wall (but not in their paper) for buying a local property, the TC, in tribute to its obsession with hyping local RE, came up with this gem over the weekend. Here's the hype (emphasis mine).

They're facing the realities of a landlord's market

With the vacancy rate in Victoria 0.3 per cent, there's limited affordable housing available. (They are actually 0.5% which is a whopping 0.2% or 60% difference than what's stated... and they aren't reflective of the secondary market, which is where the majority of students find rentals).

The average rent for a room in a house is around $400, while a one-bedroom apartment is around $750. However, many listings have rooms starting at $700, or one-bedroom apartments higher than $1,000.

...the eviction of 13 students from a 4,000-square-foot, nine-bedroom house because of a Saanich bylaw which prohibits more than four unrelated residents to share a dwelling.

The three had a hard time finding a place, but rented a house for $2,800 a month.

Year-long leases are a problem for students, unless they are intending to stay in town over the summer or rent a place for more than a year.


To be fair, the piece is newsworthy, students do have a hard time finding a place to live in Victoria every September. That's why the smart ones look in May and get jobs in the ultra-low unemployment area that is Victoria.

It seems to me there are two things happening in the Victoria rental market:
  1. Long-term landlords are enjoying consistent return on their long-paid off properties and are being picky about tenants, which is their right; and,
  2. Short term landlords and recent Uvic/Camosun grads with huge mortgage payments believe that rents should pay at least 50% of their mortgage, so they ask for $1500 for a dumpy two-bed suite.

Because of the way CMHC calculates average rents and decides what constitutes a "rental," vacancy rates, much like inflation numbers, are notoriously low. If a property, or property manager/landlord, doesn't have three "units, " it's not counted. So every new basement suite in GH and Langford isn't counted. And students have a hard time getting rentals because they generally tend to party, move 13 kids into a house for a year (which isn't living, it's partying), move frequently, don't look after stuff, cause problems for landlords with their neighbours, run out of money etc. Their main problem is not that Victoria has low vacancy, it's that they are students with student lifestyles.

I feel for people looking for rentals. It is difficult to be picky. I have been lucky in this market because of two things: a really good network, no pets and never putting myself in a position to have to make a rushed decision. My only tip for would be renters in Victoria? Do the same. Establish a network, don't do things/have things that make you an undesirable tenant, and never, ever, ever, put yourself in a position to have to make a quick decision, like say, decide to move in September.

What are others seeing in the rental market right now?

118 comments:

Anonymous said...

I rented a Fairfield house for $1,400 for a year. A classic 1940s two bedroom one renovated bath cool place. I was a great tenant so when the lease was up, and in spite of the company usually requiring a year's lease, they let me go on month to month.

Causual looking found me a $1,200 a month great two bedroom one bath top/fourth floor apartment on Cook Street village with views of the mountains. Includes covered parking and storage. It's a great place to wait out the crash.

I don't know what people are talking about when they speak of rental shortages but I have a growing sense that the lack of accuracy the Times Colonist is showing on covering the Real Estate market extends to covering the rental market.
Futura

Anonymous said...

I haven't heard of anyone moving to Victoria recently that has had a hard time finding a decent rental unit for a reasonable price. Reasonable of course is subjective, but given the prices of houses and condos the rents are certainly comparable if not less than other markets.

B2B said...

I would agree that my own experience of renting lately is that while there are a lot of amateur investors taking the p*ss, you can easily screen them out. In general I think it's possible to find top-notch places where the landlord is happy to angle for your business. It helps to have a high salary and credit score though. But even with a cat, we found a very nice place at a good price.

I think you're being a bit hard on students, HHV. Some are first-year students in full party mode, but if you've got a third-year student in the sciences, or a Master's or PhD student or group thereof, you've potentially got a much better demographic (landlord-wise) than say young construction workers or restaurant workers. When I was still a landlord, I had some of my best tenant selections come from students.

Put it this way - the rental market is certainly less stressful and a better deal than the purchase market. I wouldn't want to trade places with the people I know who are currently active in the housing market.

boomer said...

A friend relocated to vic from ontario recently and she had no problems whatsoever getting a nice centrally located 2 br condo for $1250.(although many-probably most- condo strata councils dont allow rentals) She is verifiably a good tenant and had 2 potential landlords making concessions to get her to move in. Speaking as a(multiple times) ex-landlord, I would rather give up a hundred bucks a month to get the right tenant(s) rather than try to squeeze every last dime out of a rental to someone dubious.
Get your job and other references lined up and you wont have any problems.

cdub said...

Actually, it looks like the TC is right (for once)--the CMHC rental market report, released in the spring, gives the vacancy rate in Victoria as 0.3%.

Nick said...

I don't think the rental market is as bad as people say it is. I think the only problems come when you have a special consideration, like a pet, child or something like that. Otherwise, it's not too hard to find a place. Some landlords are obviously crazy, trying to get their tenants to pay half of a giant mortgage, but they will likely be in for a rude awakening, especially when unsold condos hit the rental market.

Anonymous said...

Boring topic.

You are a fool if you buy a house instead of renting in today’s market – RE price is dropping.

Your were a fool that you didn’t buy a house in 2001.

You are a normal person that you have been renting for the past 8 years and waiting to purchase a house.

Do you have much choice? No. So it is a very boring topic.

Art Vandelay said...

I don't believe 0.3% at all. Maybe for derelicts with animals and no job. But not for working people with a good credit history and solid references.

Muriel said...

These student rental scare stories are in the TC every year like clockwork. While I agree they do have some news value, there is a lot of regurgitated crap there too.

My biggest peeve is about the reporting of the vacancy rate - it would be easy enough to develop a concise qualifier phrase to append after that stat, so that the uneducated reader has some idea of the limits of that data.

Anonymous said...

Callit .3% or 3%, the fact is it's almost "0." Yes you can take your time and find something good, but people that are moving here from outside Victoria find it very difficult and the rental market definitely favors the landlord for the forseeable future - although admittedly not on an equity basis.

We've actually had prospective tenants showing up with resumes because they know how competitive it is for quality rentals.

It works well for everybody - rents are a little higher, landlords can keep up to R&M (upkeep rather than tenant damage,) and better tenants attract more better tenants. Everybody has a little higher quality of life. IMO.

Landlords also use the network system and high quality rentals may never even be advertised.

Anyone that doubts the rental rate should try placing an add for a day. It's brutal. My next add will be on the front lawn.

Anonymous said...

Well 0.3% is very different from 3%, by a factor of 10. So it would be 10 times easier to find a place to rent (and likely much cheaper).

But yes, it can be pretty brutal out there. I just spent 1 day going around with a family friend to find a place for her to rent and nearly every 1 bedroom anywhere close to downtown (fairfield, james bay, central park, etc) for under $900 had some 10-20+ applications. That being said, August/September have got to the best absolute worst months to try to rent. Definitely expect higher rents (except from perhaps the big boys that have been around "forever" - brown brothers & pemberton holmes), and more competition.

As it turns out, after a day of insane running around (which proceeded 1 week of online hunting and scheduling viewings), she ended up getting a guaranteed suite (zero other competing applications) in an apartment building where a friend of hers convinced the landlord that she had steady income, and wasn't a partier/smoker/drinker with no pets or children, etc.

So she got a larger than average 1 bedroom suite, with fresh paint, wood flooring and a parking spot for $825 just off cook street, 1 or 2 blocks from cook st. Village. Not the best deal in town I'm sure, but pretty damn good for August.

I plan to move in October or so, so perhaps I will post my experience as well.

Muriel said...

"It works well for everybody..."

Spare me!! It certainly does not.

It doesn't work for people working minimum wage and low-wage jobs, and there are still plenty of them, despite this supposed boom economy that we've been in.

It doesn't work for the social fabric of the community. Unaffordable rents drive diversity out of the city, as only people with well-paying (usually full-time) jobs or other sources of wealth can afford to move here and stay for any length of time. No artists, no mavericks, no people who prioritize other values over stability and financial security.

It doesn't work for tenants, because high rents and rental scarcity give the upper hand to the unscrupulous landlords, who are unfortunately all too common.

Fortunately, as renter, the horror stories do not reflect my personal experience. I think the fact that the "people who move here" have a horrible time is not coincidental with the fact that most of those same people are also students. Besides retirees, there's not that many others moving here.

vancouveritis said...

I spent a few weeks in June looking for a July 1st apartment to rent. I found there was a lot competition out there for apartments. Multiple potential tenants were often viewing the apartment at the same time as me. Landlords definitely have the upper hand in the current Victoria rental market, hence the ubiquitous "no pets" and the very specific viewing time/dates.

The rental market is not typical. Whether or not the 0.3% rate is accurate or not, we are in a low-vacancy period.

I remember going to see a 1-bedroom apartment at the Mosaic that was advertised for $1100. There were 4 other people in there looking at the place and picking up application forms. And the "bedroom" was actually just a raised alcove off the entrance hallway! The living room / kitchen was very tight. I'd guess a total of 600 sq. ft.

Now, if you're willing to fork over $1200 or $1300 for a 1-bedroom apartment there is a lot to choose from. But for the average renter who's looking for a reasonable suite at $900-$1100, there is a lot of competition.

Anonymous said...

I've own a house with a basement suite. I spent months renovating it including putting in bigger windows etc. I wanted it to be a place that I'd be willing to live in. I did most of the work myself but had permits and everything. Anyway I've got a great tenant, charge $750 a month for a one bedroom all inclusive with seperate laundry. I thought about raising the rent but first I started looking at the usedvictoria and craigslist ads. The rent is staying where it is because honestly there's tons and tons of rentals out there.

B2B said...

People shouldn't be shocked and surprised to see other people looking at advertised rentals. There will always be lots of applicants for a good place, just as a good job opening will have several applicants, not just one. This doesn't mean that there's something wrong with the job market.

Does anyone really think that if the rental market was less tight, you would be the only person looking at any given property, and would get the first one you looked at?

I too think the worries are overblown. It takes a bit of looking, and don't get me wrong - I looked at some appalling places on my recent search, and started to get a bit down with the downright insulting nature of some of the arrangements I looked at. But the (rare) intelligent landlords I talked to were usually pretty keen to rent to us. I don't believe the 0.3% statistic, since in the end, of 10 or so places we looked at, I had 2 landlords openly soliciting us, and a couple other places that I had a crack at. In the end we chose the best one, they didn't choose us.

When I used to be responsible as landlord for a family property, yes, I got dozens of calls and many many people applying, but some people who call are no-shows, some are obviously idiots, some have no job and/or no real income, and some have terrible credit scores or vicious breeds of dog. The number of well-adjusted, professional and respectful people who had jobs and decent credit scores were in the minority. Just as with landlords. On my recent search, the number of well-adjusted, professional and respectful landlords who seemed like they had any business being a landlord were in the minority.

Put another way, everyone thinks that they're a better-than-average tenant, and everyone else thinks they're a better-than-average landlord. But this can't be true - most people must be average, i.e. pretty half-assed. Same goes for drivers.

S2 said...

From today's TC

"U.S. homeowners in negative equity"

http://www.canada.com/victoriatimescolonist/news/business/story.html?id=f15047bb-14e7-4dff-8bbd-585c9f05d9d5

S2 said...

From today's TC

"U.S. homeowners in negative equity"

http://www.canada.com/victoriatimescolonist/news/business/story.html?id=f15047bb-14e7-4dff-8bbd-585c9f05d9d5

S2 said...

From today's Vancouver Sun

"Many oppose new, tougher mortgage rules: survey"

http://www.canada.com/vancouversun/news/business/story.html?id=8b6628e6-2293-4076-99a6-8a83880c5fde

vancouveritis said...

b2b,

I completely disagree with you.

I have been a renter in the vancouver market for more than 10 years, and have lived in 3 places in that time. I have also helped a friend look for an apartment in Vancouver during that time. Each time I was apartment hunting, I certainly did not feel the same amount of competition for apartments as I did in June of this year here in Victoria.

I was shocked by the number of people looking this time around.

This is not to say there is anything wrong with the rental market, but there were definitely more people in the market looking at the same apartments that I was looking at. My conclusion is that there is a much lower vacancy rate in comparison to the last 10 years (that is, if there is any comparison to the Vancouver market).

olives said...

b2b, I have had similar experience as you - landlords who seem to want to bend over backwards to get or retain us as tenants.

The first rental we left because we got a much bigger house in a better area for almost same cost - (went from 2 bedroom house for $1,200 to 3 bedroom house for $1,300), that landlord said she would do almost anything to keep us, including dropping the rent, renovating, etc.). We watched for the next two months as she had a very difficult time getting appropriate tenants. Even then she ended up getting a young couple whom she had to evict within two months.

In our new place there are no rental increases and ongoing renovations (he asks what we want done and supplies the money).

Both places were easy to find and happily accepted our cat.

Anonymous said...

Trust me the best landlords are the ones who know and understand the law and follow it.

If you see a ROMS BC membership sticker in the window of a place you know the landlord is serious about their job. If you see professionally done, carbon copy type applications they know what they're doing. Read the applications carefully though because they often indicate you are consenting to a credit check.

As a landlord it's funny some of the stuff I see. I don't want someone smoking in my home so I advertise and tell people I don't want smoking and yet I always get at least one or two applicants who reak like smoke when they come to see the place. I used to smoke so I know you lose the sense of smell but come on think about it just a little bit.

After a while of doing this you get a vibe from people. You can just tell who going to be a problem and who's not. I can say that as a landlord once you get a good tenant you do absolutely want them to stay and will try and please them. It's a pain to find good people. You get tons of no shows, losers, drug users, welfare people, snobs, bitches, the first year university student with the overprotective mom, the single cat lady (no pets), the party animal 20 year old guy with a ricer car complete with fart can, the guy who doesn't take off his shoes. It goes on and on until finally decent tenants walk in and you know you've finally found the right ones.

Anonymous said...

"Besides retirees, there's not that many others moving here."

That's absolute BS. I had several quality applications from professionals moving / transferring here for careers. In fact the only options I considered for tenants this month were professionals, they will pay a reasonable, not gouging, rent and they will get a home that is well maintained. To each his own I guess.

S2 said...

This month professionals.

Next month... college students

The month after that... drug dealers.

And then the month after that an old lady with 50 cats.

It's tenant of the month club.

Anonymous said...

Do you guys attend seminars for this hype - maybe like Amway?
Some of these posts really show the true colors of the "bears." Regardless of fact you want to paint it all brown.

It's actually a great city to be a landlord in, has been for over 20 years, and will be for another 20 years. You live in a regulated environment that made it less and less attractive to build rentals through the late 70s and 80's and now there is almost no institutional rentals being built.

You also live in a city where condos and SFH have been more profitable to a developer than building rentals since at least the early 80's - that's practically 30 years where the focus has been consistently on building housing for homeowners.

This shows no change in the near future, property is way too valuable and costs too great to build for rent.

The facts are undeniable.

B2B said...

It's undeniable - property is the surefire road to riches! YEEEE-HAAHHHH! Back up the truck boyz!

B2B said...

Regardless of fact you want to paint it all brown.

To be fair, that's pretty awesome. That's less "bear" than "coprophilia." Funny though. Brown bears welcome, black bears not so.

Anonymous said...

Someone's been eating too many fermented wild-berries.

Anonymous said...

I've met three couples from Alberta in the past 2-3 weeks that are planning to buy a condo and retire in Victoria in the next few years - all in their mid to late 50's.

What is the population here 350,000+? Victoria is still a small town by world and even Canadian comparisons and has a very good infrastructure for retirement.

But noone is moving here from Africa, and I'll deny any comment to the contrary.

olives said...

"It's actually a great city to be a landlord in, has been for over 20 years, and will be for another 20 years.


May well be, but in my experience the rental situation isn't as dire as many would have you believe either.

beagle said...

From Seattle:
Project's developers make switch from condos to rental apartments

Now, with the Belltown building two months from completion, Moda's developers have changed it to rental apartments.

"The market and the financing conditions for condominiums have really taken a drastic turn," said developer G. David Hoy, head of HMI Real Estate Inc. "The vast majority of (Moda's) buyers decided not to proceed with the purchase of their unit."

Some buyers found they could no longer get a loan, particularly for second homes or investment units, while others just got cold feet, Hoy said. "Because the vast majority have bailed out on us, we have no choice now but to turn it into a rental."

The slow market made trying to find new buyers a daunting prospect, he said.


When I look around Victoria and see the amount of condo build up I get the feeling that the rental situation is going to improve.

phil said...

"When I look around Victoria and see the amount of condo build up I get the feeling that the rental situation is going to improve."

Yes, thats what is happening in the former boom cities of the US, against the predictions of many who said the housing bust would lead to an increase in rental demand/prices.

http://tinyurl.com/67m6mn

hhv said...

anon at 10:20.

can you not see the fundamental contradiction in your claim?

How in a city where property values greatly outstrip their rent to price valuations can it be great to be a landlord today?

Sure, if you've been one for 20 years, but if you buy a place today to rent, you're cash flow negative and subsidizing someone else's housing costs.

You may get a good RE capital gains return after 40 years of ownership when you go to sell, but buying today and renting is NOT a good investment.

That's why no one savvy is doing it.

Anonymous said...

One of the many plausable reasons why home rental rates have increased is that people are selling their homes and going to rentals to wait out the anticipated fall in prices.

If you have sold your half million or more home why not rent a house at $2,000 a month for the next year or two. Then you can buy back your home in two years and have a big nest egg in the bank.

You can have your cake and eat it to.

just jack

womp said...

Speaking of condos turning into rentals... that reminds me that Silkwind presales were supposed to start on Tuesday. Anyone know how that's going?

Anonymous said...

Re: Silkwind Colwood Condos

I posted in the August 2nd blog thread over at VictoriasTruth Real estate blog, about their (outrageous) price ranges.

Here's the highlights:

2nd floor range: $535K - 659K
4th floor range: $546K - 682K
10th floor range:$648K - 764K
16th floor range:$685K - 838K
22nd floor range:$760K - $923K
24th top floor: $1.65M - $1.9M

Considering they won't be finished around the Fall/Winter 2010 and prices across the board by then should be at least 10% (if not 20%)lower, pre-construction buying would be a very bad (financial) move.

I might pop by there in a month or so, and ask how they are doing, but I would expect nothing but spin optimism from people who are paid to sell and smile.

olives said...

I don't know if this has been posted before - I heard yesterday that Tuscany Village is now in receivership.

S2 said...

Thanks Olives.

If it is true then all I can say is...finally.

Anonymous said...

just jack... the very best reason to not sell your house, rent, and then buy it back in two years?

What you will save you will end up spending to undo all the "renos" and "improvements" the new sellers destroyed your house with.

Anonymous said...

The very best reason to sell your house today.


$600,000 cash in your bank account.



just jack

Anonymous said...

"Sure, if you've been one for 20 years, but if you buy a place today to rent, you're cash flow negative and subsidizing someone else's housing costs.

You may get a good RE capital gains return after 40 years of ownership when you go to sell, but buying today and renting is NOT a good investment."

That's exactly my point and exactly why rent prices are not coming down anytime soon. Why would anyone purposely build rentals?

Anonymous said...

"$600,000 cash in your bank account."

Really, if you were mortgage free would you rent???

Anonymous said...

"$600,000 cash in your bank account."

Really, if you were mortgage free would you rent???

sitting pretty said...

Really, if you were mortgage free would you rent???

Note that people who claim to have sold their homes and banked all the cash while they wait to buy it back for 30% less are almost certainly bullshitting.

vg: "I'm all cash" Yeah, right. Rent cash, that is.

olives said...

"That's exactly my point and exactly why rent prices are not coming down anytime soon. Why would anyone purposely build rentals?"

They are maybe not rentals on purpose, but many "investment" properties become rentals if they can't sell (or waiting for the market to "recover")

Anonymous said...

Wow, maybe some of you sought-after tenants can give us a hand apartment hunting, because we have been looking for months now and can’t find anywhere we’d actually want to live in for a price we can afford. We have been renting our current place for three years and love it, but need an extra room for our now 12 month old baby. Our biggest challenge? The fact that we need to give notice to our current landlords before the end of the month. Right now we are looking for October 1st, meaning we would need to give our notice before the end of August. The tricky part is, very few places will be advertised for October until the beginning of September. Yes, we could take a chance, give our notice and hope for the best, but that’s not a risk we’ve so far been willing to take. The company managing our building has been renovating the suites as people move out, so they will be in no hurry to advertise should we give our notice late (they have also told us they will be putting up the rent several hundred dollars when we move out). We are non-smokers, non-partyers, no pets, and have good references from both our current and past landlord (of four years), but the competition out there is tough. When you are competing with 10+ potential tenants for a suite and you have a child, unless your dealing with a rare philanthropist landlord, you’re going to lose out to the single professional who just wants the extra space. While I agree networking would be a huge advantage in terms of finding unadvertised places, we must run in very different circles, as most of our acquaintances know we’ve been hunting and have not come up with any leads. Despite the general feeling on this board that being a renter is piece of cake, we personally have two sets of friends that have been “kicked out” of their condos/townhouses because their landlord has decided to put them on the market. When you’re wondering in previous blog posts who the “fools” are buying at this point of the cycle it’s them. Why? Because they are similarly having a hard time finding a decent place to rent, are frustrated with landlords who don’t maintain there properties (definitely not ours, but some seem to perhaps rightly feel that tenants are a dime a dozen) or are scared that they will settle into a new rented home just in time for the landlord to hand them another 3 month notice that they intend to sell.
I have been following this blog for a long time as my husband (a professional) has wanted to buy and I have told him to hold off on many of your provided stats and advice. Our frustration with the rental market is making it harder and harder to convince him this is such a good plan, especially since the monthly payments we’ve been quoted on a 25 yr mortgage are less than many of the equivalent rental properties are asking (and without having to grovel just for a chance to fork over $1200+/month). We will wait a while longer, keep saving up that down payment, but it’s getting awfully cozy here with 3 of us in 650 sq ft.

Good Tenant

sitting pretty said...

Wow, maybe some of you sought-after tenants can give us a hand apartment hunting, because we have been looking for months now and can’t find anywhere we’d actually want to live in for a price we can afford.

There's a lot of BS on this board, not the least of which is the idea that renting a renovated waterfront 3-bedroom house for $1200/mo is easy.

We are non-smokers, non-partyers, no pets, and have good references from both our current and past landlord (of four years), but the competition out there is tough.

Likewise the bear blogger womp, who sold his condo and moved his wife and baby into a rental where they smell and listen to the chain-smoking party animals in the adjacent unit. Woo hoo!

Our frustration with the rental market is making it harder and harder to convince him this is such a good plan, especially since the monthly payments we’ve been quoted on a 25 yr mortgage are less than many of the equivalent rental properties are asking (and without having to grovel just for a chance to fork over $1200+/month).

Now you know why renters are often bitter.

Swing said...

Anon 8:01

Find a place, rent it... then give notice on your old place.

So you pay rent on two places for a month. Is this really a big deal?

Just pretend you're seeing what it's like to pay a mortgage for the month!

Nick said...

Our frustration with the rental market is making it harder and harder to convince him this is such a good plan, especially since the monthly payments we’ve been quoted on a 25 yr mortgage are less than many of the equivalent rental properties are asking (and without having to grovel just for a chance to fork over $1200+/month). We will wait a while longer, keep saving up that down payment, but it’s getting awfully cozy here with 3 of us in 650 sq ft.

I hear you, I am getting pretty sick of renting too. However, when I look at what it would cost for me to upgrade from a 2 bedroom rental to a 3 bedroom SFD, I just can't justify it at this point when prices are sky high. If I was evicted or something, I could buy something tomorrow. However, I don't want to waste my first-time buyer tax benefits and buy something I wasn't too happy with, not to mention sinking all of my money into something that seems likely to decline in value in the short term.

hhv said...

Good tenant,

i feel your pain and encourage you to look past sitting pretty's petty cynicism. if you've been reading this blog for a while what i state next shouldn't be news to you:

if you can afford the payments, don't have to take out a 40 year mortgage to do so, know you can live in whatever you buy happily for a long time (7-10 years) then today is a fine day to buy. you're not playing the market, you're not investing in a house, you're buying a home. IMHO it will always cost a premium to benefit from the stability and pride-of-ownership factor. deciding what premium you're comfortable with is your own decision.

that said, you need to ask yourself is it worth it right now? you can see the market and the direction it's headed. you can choose, like i have, to believe that a year or two from now, you'll be able to get more home for the same dollar.

why don't you give duttons or brown bros a call and explain your circumstance to them? you want a two or three bed unit, you're good tenants with good references willing to sign a year long lease, the worse that can happen is they have nothing for you right now. the best is that they give you a call next month when they do because they want to rent to you and they save themselves the advertising dollars come sept 1.

i'd also suggest that you think about maybe giving up your current damage deposit as the price to maintain flexibility. it is only half a month's rent, so maybe up to $600 in your case. i know that is a lot of money, but it's a small price to pay if you find a great place and get it and it could be a great insurance policy against putting yourselves into a must move situation where you don't find decent housing and end up either paying way too much for your budget or getting a crappy place because it's all you can find.

I'm guessing that $1200 you're talking about in rent is about what you want to spend in mortgage? if you get a $225K fixer upper condo for that kind of monthly payment, will it be in a neighbourhood you want to live in? will you be able to stay there when your child is 3 or 4 or you decide to have another one? what if you can't and that $225K condo isn't worth $225K anymore? If you bought it last July for that price, it's only worth the same today, not more, and it will cost you 6% plus to sell it. if you buy soething else, you'll be paying a fair amount in closing costs and transfer taxes.

you have to forgive my friend sitting pretty, good tenant, she/he has had the great fortune of having been in a position back in 2001/2002 or maybe a bit later, or even a bit earlier, to get into the market before the current run up. good for her or him. we weren't in that position, so now we are forced, or choose to as is my case, to wait this cycle/correction until we think it's a better time to buy for the long term.

and that is the problem in a nutshell. we're surrounded by all of our sitting pretty friends who by no planning, but just plain luck of the cycle, did very well in RE and became TRUE BELIEVERS who can't fathom that RE cycles repeat themselves and that at some point in time, better days to buy will come. it's up to us to resist the urge to buy for the sake of buying and work hard to get through the challenging times and set ourselves up for long term happiness in our homes.

i don't know about you, but a year in a less than ideal rental is far better than a lifetime of debt to a place that isn't much better and is worth less than i paid for it.

olives said...

Amen HHV.

Anonymous said...

I'm not SP nor do I aspire to much of the crap that spews forth, but I'll respond to this:
"and that is the problem in a nutshell. we're surrounded by all of our sitting pretty friends who by no planning, but just plain luck of the cycle, did very well in RE"

That's about as ignorant as it can get. FYI, we planned for years and worked very hard to finally get into our home back in 2003. It was all our doing and not lucky. Sorry you were so busy making other plans.

As for this part:
"I'd also suggest that you think about maybe giving up your current damage deposit as the price to maintain flexibility. it is only half a month's rent, so maybe up to $600 in your case."

Better let the lawyers rant this one, because you'll quickly have someone paying two monthly rents for who know's how long...

Granted don't buy a house today, HHV, but the rest of your post is shot from the hip and makes little sense. You are really providing bad advise here.

Anonymous said...

"That's exactly my point and exactly why rent prices are not coming down anytime soon. Why would anyone purposely build rentals?"

They are maybe not rentals on purpose, but many "investment" properties become rentals if they can't sell (or waiting for the market to "recover")

August 14, 2008 7:33 PM

Olives, there are very few purpose built condos that have become rentals. They are way better off sold at a fire sale - which you'll notice also does not happen.

Do you think Tuscany will become rentals from the developer? Not likely - the tax and GST implications alone are enough to stir up a hornets nest.

It really is not as simple as "didn't sell, OK rent it out." Let's rent 30 units for $1,200 / month or fire sale at perhaps $350,000 (I'm not sure what the prices are but I'm the're up there.) Do the math.

Rental is not much of an option and people buying the fire sales are not buying to rent cheap.

Mr.4AM said...

HHV said:"I'd also suggest that you think about maybe giving up your current damage deposit as the price to maintain flexibility. it is only half a month's rent, so maybe up to $600 in your case."

Then anon 10:30pm said:"Better let the lawyers rant this one, because you'll quickly have someone paying two monthly rents for who know's how long..."

HHV, I must admit I didn't quite get how giving up your damage deposit or half a months rent can somehow get you into a new place?

The concern to my understanding is that you need to give 30 days notice to the existing landlord and as the original post said, you risk not finding a great place when you are looking, to which the suggestions was paying 2 months rent in 1 month (one to each landlord)... and to which anon 10:45pm misunderstood as having two lease commitments - which is a possibility, but highly unlikely if Good tenant was there for 4 years.

Here's a couple of rental tips:

1) Multiple Applications: When filling out rent applications, make sure you understand that the professional applications that you fill out may actually imply that you are liable to pay 1 months rent even if you change your mind later and not even move in.

If you are applying with the bigger rental places in town (i.e. brown brothers) where they may have some 50+ rental buildings. Again, if you apply at 2 or more of them and hope that 1 of them gets accepted, and somehow you end up getting accepted at 2 of them, you may be legally liable for 2 simultaneous leases. I doubt they would enforce it if you told them right away as surely they'll have 15 other people on the wait list, but just FYI.

2) Breaking a lease: I don't think most renters are aware that you can actually break your lease and NOT be liable for the rest of the lease, with the exception that you have to pay a $500 penalty fee to the landlord (for advertizing costs and the hassel/time to look for new tenants). This is actually a clause in the BC tenancy act that allows a tenant to break a lease for "emergency reasons". You'll note that emergency is kind of a vague term and people can claim that having to move for (whatever reason) is an emergency to you. I've heard of landlords not bothering to waste their time trying to dispute what constitutes an emergency as it's nearly impossible to prove whatever the tenant says anyway.

Anyway, just a few lesson's I've learned along the way... both as a previous landlord and as a tenant myself.

Best regards,
Mr.4AM

vancouveritis said...

"FYI, we planned for years and worked very hard to finally get into our home back in 2003. It was all our doing and not lucky."

Nope. That was luck.

You happened to be ready to buy when the real estate cycle was in the early stages of the the recent price increases. The rest of us were still in school, or for other reasons we couldn't buy.

boomer said...

"especially since the monthly payments we’ve been quoted on a 25 yr mortgage are less than many of the equivalent rental properties are asking (and without having to grovel just for a chance to fork over $1200+/month)"

If,in fact, you can really buy an equivalent place that you want to live in with mortgage payments less than , the same as, or even a bit more than the rental payments, that's exactly what you should do.

So,go for it.

However,I doubt if that situation currently exists in Victoria, so would be interested in seeing an example posted.

Realtors? (you should have an easy sale here -if not to "good tenant" then certainly someone else)

vg said...

don't mind sitting pretty, it's her time of the month "again". She has to make up BS stories to discredit reality.


When you have kids your priorities change and buying may be your thing if you can ride out the possibility of a 30% downturn and don't plan to sell or expect a small profit for 10 years. If you can afford it and it's cheaper than rent then go for it I always say.

BMO said yesterday on BNN that the days of the big gains on real estate are over for the next 10-20 years. The demographics of retirees selling over this period on masse will keep a lid on any major spikes.

olives said...

"Olives, there are very few purpose built condos that have become rentals. They are way better off sold at a fire sale - which you'll notice also does not happen.

Do you think Tuscany will become rentals from the developer? Not likely - the tax and GST implications alone are enough to stir up a hornets nest."



In the mid 1980s a family friend was a developer who couldn't sell his condos, even at fire-sale prices. They became rentals. I'm sure it would be preferrable to sell them, but maybe not always possible. Of course there was no GST then.

From reading stories from down south it seems many people who couldn't sell (whether the houses or condos were investments or simply due to job transfers, etc.), ended up attempting to rent these properties. I don't think the original intention for many was rentals. It seems like it was more of a last resort to bring in some income and help with costs.

womp said...

Good Renter,

I found that there was actually quite a bit of stuff advertised 6 weeks in advance - i.e. you'll probably see October 1st stuff start showing up around now.

B2B said...


we personally have two sets of friends that have been “kicked out” of their condos/townhouses because their landlord has decided to put them on the market


Hi Good Tenant,

I was one of the people earlier opining that the rental market isn't so bad. But that doesn't mean I can't sympathize. Let me give you some background - I was only in my last place for 1 year, until the landlord decided to sell and we decided to get out without compensation so that we didn't end up looking in the Aug/Sept rush. So even though that was unpleasant, it's all relative - I would find it much more unpleasant to buy a crappy house right now.

And there was a comment from our resident misanthrope about how we are all spreading lies about how easy it is to rent a 3-bed renovated waterfront house for $1200. This may have been a reference to one of my earlier posts, because our current place is a 3-bed 3-bath renovated waterfront. But it's $1800. I wouldn't imagine you could get this for any less - we consider ourselves lucky to get it for $1800.

As noted, if you're willing to pay double rent, you can line up your new place and rent it before giving notice. It's a tiny cost in comparison to the astronomical and never-ending fees associated wityh buying a house. We nearly did pay double rent until I struck a deal with the ex-landlord (who was desperate to get the place empty) to pay for only the few days of the last month that we were there. If you're in an apartment building, then the owners will have your old place rented in days anyway, in which case they will have to refund you the extra rent. I'm sure they will cut a deal.

Don't get me wrong - like the others said, if you can afford a nice place you like on a 25-year mortgage and it's as good a neighborhood and dwelling as what you can rent for the same monthly payment, then go nuts. But I am convinced that such a property does not exist in this market. Look at my current place. Sold a year ago for $1.2M, and rents for $1800. Buying it would be downright stupid.

B2B said...

I forgot to mention - Pemberton Holmes is all right for rentals, and Firm Management is really good. I can wholeheartedly recommend Firm Management (Saanichton).

Anonymous said...

August 15, 2008 British Columbia Real Estate Association news release

http://www.bcrea.bc.ca/news_room/2008-07.pdf

S2

Anonymous said...

Good tenant here again, I appreciate all your input.

HHV, I don’t understand your damage deposit in lieu of notice comment either. As our building manager explained it, we are responsible for the next month’s rent if we fail to give notice before the end of the month. B2B, as I stated in my original post, the property management company that took over our building have been doing renos as tenants move out, so I don’t think they will be in a big hurry to rent it out if we don’t give our notice in time. Also our building manager has told us they are planning on jacking up the rent several hundred dollars when we leave, which may mean it takes longer for them to rent it. Interesting info about the $500 clause Mr. 4am, though I’m guessing your current landlord wouldn’t be such a great reference if you used this technicality. Though we have been long term tenants in our last two rentals, I must admit both of us dislike the idea of signing a one year lease. It seems inevitable, as month-to-month rentals appear to be the exception rather than the rule. Still, making a year-long commitment based on a property manager’s 5 minute tour, usually with lots of other tenant wanna-bes milling around, is a bit scary. Usually, these showings are during the day, when the partying neighbour hasn’t started up festivities and the chain smoker next door is either at work or taking a brief respite. I guess you face the same trouble when looking at places to buy, but I used to herald the flexibility of renting as one of it’s major advantages over ownership. In theory, you could pick up and leave in a month. Not so with leases and the tight rental market. Granted, the financial penalty for sacrificing the remainder of your lease vs. selling if the market has dropped is considerably less. I guess you could also hope to find someone to take over your lease, though it seems many of the ads for such arrangements on Craigslist, etc, seem to sit there for months. Maybe their authors neglected to take them down, or maybe they just ended up eating the money.

HHV, we will have to get more proactive in our search to beat the advertising rush. We have considered putting up “wanted” ads… again there seems to be lots of those out there, anybody personally had any luck with these? I did want to respond to some of your comments on not being able to buy in a neighborhood where we want to live. Thus far, we have not been able to afford a rental where we want to live. We are currently in James Bay and love it. We really feel part of the community here, love that there is such a broad spectrum of people/lifestyles, and I feel having everything within walking distance is a real advantage with today’s gas prices. But the hard fact is that at today’s prices we can’t afford it. And if living in “Victoria” means renting out someone’s dodgy basement suite in Nowheresville, Langford for years until prices dip to levels we can afford (if this happens), then we really have to ask ourselves if this is the best place for us. We do think Victoria is a great place to be, maybe just a bit too pricey for our stage of life.

Anonymous said...

Why would anyone have to pay double rent? As far as I know, all that happens if you don't give a full 30 day notice is that you may forgo your damage deposit. The renter didn't say anything about having a lease that they would be breaking, etc. I assume they are month to month tenants. All the landlord can do is keep your damage deposit if they don't rent the apartment to someone else for the next month. It may not be ideal, but it isn't the end of the world. It is better than giving notice on time and then not being able to find a suitable rental.

Anonymous said...

I've always just paid double rent to give me time to move wihtout the big rush. This way you can also get better rates on movers or rental vans.

Ryan said...

Me too. It's much less stressful to move stuff a carload at a time than to have to pack everything into boxes and move it all on one day. Most recently I moved across town and my girlfriend moved over from Vancouver. My move was a lot less stressful than hers. A month's rent is a fair amount of money, but I think it's worth it. The stuff I moved over was all unpacked and put away before we moved in, whereas some of her stuff is still in boxes.

Anonymous said...

Saving $20 bucks here or there with movers and better truck rental deals, comes nowhere close to what you have to pay these days in "double rent". Paying double rent for a month would be about convinience and peace of mind during the moving process and a better chance at finding a home closer to your wants/needs - might be worth it for some, but I doubt this is the case with the majority here in Victoria.

Double rent on average is probably an extra $750 to $1200 for most people.

That's a lot of gas tanks even @ 142 cents/liter; speaking of which, what is up with our gas prices not going down considering the continually decreasing price of crude?

hhv said...

From the BC residential tenancy act

"Ending a fixed-term early

The tenant must have the landlord’s written agreement to end a fixed-term tenancy early.

The tenant could also ask the landlord for permission to assign the lease. To assign the lease, the tenant must find someone else to take over the tenancy agreement. The landlord has the right to check references and approve any potential tenant.

A tenant who ends a fixed-term tenancy early and without the landlord’s agreement can be held accountable for any loss incurred by the land-lord, such as rent or advertising costs to re-rent the unit. The landlord is obliged to limit any potential loss.

A tenancy agreement can include a term requiring the tenant to pay some form of compensation to end the tenancy early.

Tenant Gives Notice to End the Tenancy

A tenant can end a month-to-month tenancy by giving one full month’s notice in writing. Verbal notice is not acceptable. The notice must be signed by the tenant and indicate the complete address of the rental unit and the date the tenant plans to end the tenancy.

A tenant who does not give proper notice could be responsible for paying any costs incurred by the landlord. This could include paying advertising costs and lost rent monies."


I had originally thought you could walk and would only lose your damage deposit. Not the best choice either way, but I'd factored it in as an option and I stand corrected. You'd have to pay a month's rent on two places, minimum.

Nick said...

Legally you are responsible for those costs; however, it seems rare that someone will actually go through the hassle of trying to get money out of someone when they walk away from their rental.

hhv said...

Anon at 10:45 said: "That's about as ignorant as it can get. FYI, we planned for years and worked very hard to finally get into our home back in 2003. It was all our doing and not lucky. Sorry you were so busy making other plans."

Just to clarify, I was speaking to the fact that housing prices more than doubled between 2002 and April 2008. That was lucky for people who bought then. And I don't believe for minute that anyone predicted it, foresaw it or planned for it.

I don't bemoan anyone for getting into the market when they did/do. It is purely luck though that the last 6 years have been so good for RE in Victoria. The next 6 may not be so and clearly today is the worst day in the history of Victoria to buy property.

I made a choice in 2002 to not buy a house and go back to university. Hindsight being what it is, I wish I had done both. That said, I don't regret not buying because I probably wouldn't have gone to school. I remember the choice very clearly, I also remember doing the math on my income (which was very similar to what it is now, but I like my new career) back then and realizing I couldn't get something I'd be happy with for 7-10 years on my single income.

My "income" has effectively doubled because of Ms.HHV's in the eyes of the bank, and we can still only qulaify for the same products as I could, alone, back in 2002.

Anonymous said...

"Just to clarify, I was speaking to the fact that housing prices more than doubled between 2002 and April 2008. That was lucky for people who bought then. And I don't believe for minute that anyone predicted it, foresaw it or planned for it."

Hindsite is always 20:20, and we certainly did not expect to have doubled our equity in so few years. But the move was anything but lucky and frought with much stress and concern. We also wish we had bought 10 properties, but were only interested in our home. We love our home and obtained it through great risk and uncertainty.

The fact is we bought only 1 home and our gains will really only be realized by our kids. We don't feel lucky, we feel fortunate and are always thankful.

beagle said...

"That's a lot of gas tanks even @ 142 cents/liter; speaking of which, what is up with our gas prices not going down considering the continually decreasing price of crude?"

I think it's because our dollar has been tanking at the same time and oil is priced in US dollars.

Happy Owner said...

I'm always amused by the cost of rent vs. the cost of mortgage debate here. Hands down, renting is cheaper than buying in todays market. But you know, rents don't live in a vacuum. Rent prices also go up in comparison to home prices. Does it make financial sense to be unwilling to pay what it takes to finance a mortgage now, and pay the same amount for rent in 15 years when RE prices have doubled? Ironically, rental properties are like waterfront properties....they just are not making them anymore.

vg said...

"Does it make financial sense to be unwilling to pay what it takes to finance a mortgage now, and pay the same amount for rent in 15 years when RE prices have doubled?"


You still don't get it happy owner,buying at the top of the market with a correction beginning can cost you 10 years of pain. In 15 years one could be mortgage free after a 30 % correction. By your theory they would still be in hock for another 25.

Patience and brains at this critical junction as in 1990 and 1982 is the key here. Happy owner likes to see people waste hundreds of thousands to the banks for a couple of years of saying "I own a home".

Happy Owner said...

Actually VG, you don't get it at all. Your pipe dream of big loses in re value are just that; a dream. You can grasp onto drops in Las Vegas or San diego or maybe Botswana, but if your sole life finacial plan is a big drop in RE, well let me tell ya..you ARE SCREWED. I don't live on dreams like you do, I live in REALITY. Can you comprehend a world that does'nt drop to your standards and most likely will leave you behind if you don't get your shit together and realize that 1983 RE pricing is just history; never to be repeated again, not here.

Nick said...

I'm sure people in Calgary would have said the exact same thing this time last year before they experienced a 10% decline on their property values.

Anonymous said...

Aw, leave Happy Owner alone. He's trying to hold up the value of his overpriced home on his shoulders, like Atlas with the entire planet.

Happy Owner will finally just go away when that globe crumbles under its own weight and crushes him. Right now he's angry at the rest of us for getting out of the way and not helping him prop up what can't be saved with more propaganda bs.

Anonymous said...

Happy Owner said :

1) "Rent prices also go up in comparison to home prices."

Actually no they do not, and right now they couldn't be further apart; so much so that renting even with all the large rent increases we've seen in the last 2 years, renting is still way cheaper than having an average mortgage; this was not always the case.

If you move every year or so, you will likely see more increase in your monthly rent than if you take the time to find a good place that will suite you for years and sticking to it until you are ready to buy. If you take the latter approach the MAX rent can increase per year is 2% + inflation (another 2% or so). That's the LAW! And that rent increase has to be given to you as a written notice 4 months before the rent goes up, or the landlord can't legally increase your rent.

On the other hand property prices have gone up in double digit percentage increases in many areas every year, for several years. Simply speaking that's why renting is so much cheaper... because it is limited by law under certain circumstances as to how fast it can increase.

2) "Does it make financial sense to be unwilling to pay what it takes to finance a mortgage now, and pay the same amount for rent in 15 years when RE prices have doubled? "

Please go back and read some of our past posts. Nobody here is suggesting to rent forever, not even 15 years, not even 10 years. We are suggesting (if your circumstances allow you to wait) to rent until the house prices hit a bottom or as close to it as possible, then *BUY*. The house price drops have JUST begun. Many people here think we'll be close to a bottom in about 4 years or so.

Many of us here CAN afford to buy today, but it doesn't make any financial/logical/mathematical sense.

Why would anybody want to finance a mortgage of $500K for a hypothetical house of $600K when in 4 years that house will sell for ~$400K? Immediately this means not only have you just had your hard earned $100K downpayment that took you YEARS to save up for wiped out, but you also have an asset that is worth an additional $100K LESS than what you bought it for! In other words, your networth is now down by $200K! This does not include the fact that some 80 to 90% of each and everyone of your mortgage payments ($500K @ 6% for 5 yr fixed, 35yr term) of $2,800 per month in the next 4 years will go to pay the bank interest and does not reduce your total owing principal ammount. According to a mortgage Calculator, in 4 years you will still owe $480K on your mortgage, meanwhile you paid $134K in interest alone while only reducing the principal by 20K.

So now your total loss is $200K + $134K = 334K!

And this does not include house insurance + property taxes + money to fix your house.

By comparison, if you rent a decent place for $1200/month for 4 years, your total loss is less than $62,000 (including 4% rent increases per year).

So in conclusion: You can lose $62K in rent, but take the $1600 (difference between $1200 rent and $2800 mortgage) and save it for an additional downpayment on top of the $100K you already had and add to that 76.8K (4years * $1600 = $76.8K), or have next to no savings and lose 334K?

IN 4 YEARS:

A)If you buy now:
- Your house will be worth $400K
- You still owe $480K in your mortgage (you owe more than your house is worth!)
- Owning the house for 4 years cost you $134K in interest payments

B)If you rent and wait 4 years to buy:
- The house you are buying is worth $400K
- You have $178K saved up as a downpayment
- 400-178 = Mortgage of $222K (versus $480k above!)
- You spent $62,000 in rent (versus paying the bank $134K in money you will never see again).

Quite frankly, I'm getting tired of doing these calculations for people. Will somebody please put this (in more detail) in a spreadsheet so that anytime somebody brings up this wrong arguement, we can just say download the spreadsheet and go plug in your own circumstance numbers then come back and talk.

vg said...

"Can you comprehend a world that does'nt drop to your standards and most likely will leave you behind if you don't get your shit together and realize that 1983 RE pricing is just history; never to be repeated again, not here."



Man you are out to lunch. Of course, we are different right bud ? and all those 10% price drops and no more bidding wars are just another "dream" eh ? denial at it's extreme.

Best you wake up from your fantasy land before you look more like a fool, it's called a "market" and they go up and they go DOWN too. This market just hit an iceberg as HISTORY repeats itself or did you forget about that word ?

vg said...

"Please go back and read some of our past posts. Nobody here is suggesting to rent forever, not even 15 years, not even 10 years. We are suggesting (if your circumstances allow you to wait) to rent until the house prices hit a bottom or as close to it as possible, then *BUY*. The house price drops have JUST begun. "







anonymous 7:55,

good explanation and numbers, and yes it is getting tiring trying to explain the most simple logic that bears believe will save them hundreds of thousands in a very short period of time.


If I was a "happy owner" this would be the last place I would be wasting time at. And whose to say prices will even double in 10-15 years, the world is entering some dangerous times where the commodities/oil correction may kill the Canadian economy (especially BC) for many years and the credit crisis is so far from over. Happy owner needs to get his head out of his ass and look at the world outside of La La Island.



VG the "happy renter".

Anonymous said...

The fact is we couldn't afford houses when they were $250,000 (although some of us chose to), we can't afford them now at $600,000, and 4 years from now maybe it will be $450,000 maybe $700,000 - who knows? Not you and not me. They will still not be affordable.

I'm not buying or selling or recommending any such decision to anyone. Those that own a house do so primarily for personal not financial reasons.

Actually the ones making the riskiest decisions are people recently buying and people recently selling. The rest of us, renters and owners, get to watch.

Anonymous said...

"The fact is we couldn't afford houses when they were $250,000 (although some of us chose to), we can't afford them now at $600,000,"

That's a nonsensical argument. Didn't I just finish saying that many of us here can afford to buy a house today (at $500K+?), but simply refuse because the numbers don't make sense?

FYI, I could and *DID* buy a house when it was $277K a few years ago, and just sold it last month for a huge profit.

Anonymous said...

If you plan to buy back in the near or distant future you have no idea how much you may have just made - OR LOST - only opinion, which you cannot eat. And therein lies the risk.

If this was not your PR and you bought for investment at $277,000 with the intent of doubling your money in 3-4 years you took a very large risk at the time. OR maybe you had the forsight that noone else is credited for?

Anonymous said...

"That's a nonsensical argument. Didn't I just finish saying that many of us here can afford to buy a house today (at $500K+?), but simply refuse because the numbers don't make sense?"

There's a big difference between what people can afford and what they might choose to buy. At $250K interest rates were 7-8%. At $600K int rates are 4-5%. family incomes back then maybe $60K, family incomes now maybe $75K. It actually makes sense.

We also chose to buy back then and couldn't afford it. Now the monthly amount we pay compared to our incomes is quite reasonable to say the least.

beagle said...

"There's a big difference between what people can afford and what they might choose to buy. At $250K interest rates were 7-8%. At $600K int rates are 4-5%. family incomes back then maybe $60K, family incomes now maybe $75K. It actually makes sense."

To buy at 8 times income seems to be a huge risk to me because rates can't go much lower and I don't see much income growth taking place. I would wait till either the income increases or the prices fall to make the ratio closer to 4 times again. Where you purchased.

patriotz said...

Rental is not much of an option and people buying the fire sales are not buying to rent cheap.

When a new condo is sold it is either:

- sold to a current renter who moves out of his rental unit. One less renter, same number of rentals.

or...

- sold to an investor who rents it out. One more rental, same number of renters.

or...

- sold to a downsizing homeowner who puts his old house on the market. Rinse and repeat.

or...

- sold to a new resident who otherwise would have rented and the condo sold to one of the above.

Get the picture? It makes no difference to net rental supply/demand whether new units are purpose built rentals or condos, or whether new condos are sold to investors or owner-occupiers.

Anonymous said...

Nice picture. Maybe you could explain how, given the building boom of the last 5 years, the rental situation continues to be close to zero. Clearly not new residents, eh?

Anonymous said...

The rental market is actually much worse now than it was at the end of the last "bear" market - say 2001ish..

Anonymous said...

Our vacancy rate has for the most part always ranged between 0.5 to 1.0 percent. Except for periods right after a market correction when the rate has shot up to the 2 to 4 percent range.

So, a vacancy rate for apartments at 0.3 is not bad. One, can still find a place in one day. The problem is not the lack of rentals, but the lack of affordable rentals.

For example, a one-bedroom basement suite in Victoria has in the last two years gone up from $575 to $800 per month. Now for a single person making less than $36,000 per annum this is a difficult payment.

A landlord has a choice of offering the suite for $600 or $800 per month. At $600, they may receive 30 applicants. At $800 they may receive only 7 applicants. The more applicants you have the more likely that you will choose a good tenant. At $600 per month, a tenant is less likely to move. If the rent is too high, the tenant will always be looking for cheaper acommodation.

The landlord today is trading off higher rents for quality of tenants and length of tenancy. The hidden cost to the landlord in short term tenancy is damages, painting, cleaning, advertising and lost monthly rent.

Short term gains for long term pain.

just jack

hhv said...

just jack,

that is by far the best analysis of the current rental market I've read yet. I wonder if it's too early to coint he term: "Bitter Landlord."

The number of new, forced-to-be but know nothing about, landlords is astounding.

All you have to do is check out KIV; it seems like there is a post every other day about what to do with a problem tenant?, how do you get rid of?, what are my rights as the landlord?, etc.

Really, when people buy these homes with suites they just see them as mortgage helpers. REALTORS should be educating them that they are embarking on a living cost subsidization endeavour that has far more consequences than just the net benefit of effectively lowering one's homeownership costs and getting them into a bigger property sooner.

vg said...

"family incomes back then maybe $60K, family incomes now maybe $75K."



if you base it on the average union 2% wage hike over the last 5 years then it's more like a $9000 increase,not $15,000. Toss in higher costs for insurance,food,gas etc, the increase really amounts to nothing after taking off taxes as well. If you are non union working the same job you were probably lucky to get half that increase.

Bottom line is the market is overvalued by 30% and has started to correct, just wait til fall sets in,if this is the peak buying time of the year it will right ugly by Xmas.

Anonymous said...

"If you are non union working the same job you were probably lucky to get half that increase."

Apparently you haven't been following the job market for the past few years. It's an employee's market out there and they are making much more than 5-6% per year more than they did a few years ago. Starting wage for a labourer on construction: $15-$18 per hour.

All employers are suffering the same consequence and facing higher wages to lower experienced employees - and you would correctly point out that this is why our economy must slow down.

As a government employee, my wages are up 5% per year not counting the fact that I have received advancement. 3 years ago $33,000 in private sector (I have a friend in that job and it's now paying $45,000) and today I'm slightly over $60,000 / year with full benefits.

I agree that the market is over-valued on an asset or rebuild cost basis; however, it's not going to correct enough to make a difference to the average first time buyers. Those that have sold with the idea that they are going to reap great rewards when they buy back in may be disappointed.

Anonymous said...

"The landlord today is trading off higher rents for quality of tenants and length of tenancy. The hidden cost to the landlord in short term tenancy is damages, painting, cleaning, advertising and lost monthly rent."

I agree that there is a cost to high rents in the form of turnover or vacancy. I do not agree that there is necessarily a lower quality of tenants. In fact, the tenants I'm renting to are increasingly of a professional level which is reducing both repair cost and vacancy (no need to keep a suite vacant to clean it up.)

hhv said...

Anon at 8:22--

"'If you are non union working the same job you were probably lucky to get half that increase.'

Apparently you haven't been following the job market for the past few years. It's an employee's market out there and they are making much more than 5-6% per year more than they did a few years ago. Starting wage for a labourer on construction: $15-$18 per hour.

All employers are suffering the same consequence and facing higher wages to lower experienced employees - and you would correctly point out that this is why our economy must slow down.

As a government employee, my wages are up 5% per year not counting the fact that I have received advancement. 3 years ago $33,000 in private sector (I have a friend in that job and it's now paying $45,000) and today I'm slightly over $60,000 / year with full benefits.

I agree that the market is over-valued on an asset or rebuild cost basis; however, it's not going to correct enough to make a difference to the average first time buyers. Those that have sold with the idea that they are going to reap great rewards when they buy back in may be disappointed."


There is only one problem with your theory: numbers.

You can't extrapolate your anecdotal evidence into market wide fact. But StatsCan does, and they say you are wrong. In fact, they say that real wages (adjusted for inflation) haven't increased between 1982 and 2007. So unless all of the "wage increases" you cite are back-end loaded into the first two quarters of 2008, your evidence is very specified, or wrong.

Kind of like this statement: "however, it's not going to correct enough to make a difference to the average first time buyers.

Fact: it's correcting now.
Fact: no government employees (except directors and some IT (rare) have received 5%/YOY wage hikes not counting advancement (please prove me wrong here with real evidence).
Fact: we have no idea how far it's going to correct.
Fact: Merrill Lynch thinks 35% in Victoria is in order.
Fact: 35% is going to make a VERY BIG difference to this FTBer.

Anonymous said...

You must be living in a bubble. My family net income has gone from about $60,000 (2004) to over $100,000 (2008) and not through huge career advancement.

As for stats Canada - what do they record as average NFI? $75,000? Don't like $600,000 at 5%, try $450,000 at 7% on today's equivalent of $75,000 in 2012. It will remain unaffordable to the average FTB.

These are not the market makers and quite frankly irrelevant numbers to home prices.

Anonymous said...

Oh, and:
"Fact: 35% is going to make a VERY BIG difference to this FTBer."

While I hope prices come down like this so that some of us can consider rental properties, it's not going to happen in the next 4 years. Too many retirees coming here, too many immigrants, etc.

Anonymous said...

"Too many retirees coming here, too many immigrants, etc"

But the comments on here reflect that there are not too many people moving here. Does anyone know actual population changes in Victoria in the last 4 years?

If the population isn't changing much and every new home = one less renter, then what gives? Why is the vacancy rate still near zero (and in fact worse than 3 years ago) after the past 5 years of building boom?

Something's wrong with these numbers.

Anonymous said...

"In fact, they say that real wages (adjusted for inflation) haven't increased between 1982 and 2007."

Nice range, try somthing a little more relevant to this market like year 2000 through 2007.

vg said...

I call BS on the 5 %, please show us the contract. The highest I have heard in government is 3 % but most contracts are 1.5 to 3 % max. Look on the BCGEU website.

I wasn't including job advancement as per my statement, different matter all together.

I have never heard of 60 grand to 100 grand increases,the most I heard was $20,000 for some very high stress jobs, with a high turnover rate due to that stress. Unless your company was rolling in the cash those are short term wage hikes that will end with a lay off at the end of boom.

vg said...

Kind of like this statement: "however, it's not going to correct enough to make a difference to the average first time buyers. "



$100,000 average won't make a difference to a FTB when we are seeing $40,000 price reductions with regularity on average priced homes ? sounds like happy owner and SP's "wishfull thinking" theory. 30% declines plus have happened twice in the last 2 decades, I believe in 3 times lucky.

Nick said...

I call BS on the 5 %, please show us the contract. The highest I have heard in government is 3 % but most contracts are 1.5 to 3 % max. Look on the BCGEU website.

It depends, if an employee is new to government, they are also getting step increases which tack on another 1 or 2 percent for the first 5 years.

vg said...

"It depends, if an employee is new to government, they are also getting step increases which tack on another 1 or 2 percent for the first 5 years."



nick,

I am sure that could be possible, but I think most were thinking basic across the board percentage increases as per most contracts.

Anonymous said...

A perfect example of what's wrong with Victoria:

Trying to unload something that should have been torn down in 1930.

Anyone who pays more than $50,000 for this is simply out of their minds or living out their own personal reincarnation fantasy.

patriotz said...

it's not going to happen in the next 4 years. Too many retirees coming here, too many immigrants, etc.

Now where have I heard that before? Oh, how about Vancouver in 1981 or Florida in 2006?

As for rental vacancy rates, note that the official vacancy rate is only for multi-unit landlords, i.e. it excludes SFH, basement suites and condos. There are a LOT of the latter sitting empty either due to speculation or unrealistic asking rents, and market forces are going to result in them becoming occupied by either new owners or renters as the RE market declines.

Anonymous said...

"Look on the BCGEU website."

This is actually a good example. I know for a fact that the Province is having as much trouble as anyone with succession and offering all kinds of incentives for middle-management type employees to join - recall signing bonuses in the last contract , how about student loan grants? They also negotiate wages on the way in.

Government includes at least BC, municipalities and the feds. And I know that at least some of them have been providing annual contract increases of 2.5% along with annual incremental increases of 2.5% - coupounded, of course.

Also VG, "I have never heard of 60 grand to 100 grand increases,the most I heard was $20,000 for some very high stress jobs"

I think if you read a bit closer you'll see "family net income." Presumably this includes a spouse?

Fodder said...

I'm curious about the 1917 house Anon says is garbage. I have this deep seeded belief that anything built since the 90's has some major flaw due to some hidden corner cut.

A question to people who know construction... are these older houses bad news? I thought they'd have their age issues, but their bones are solid. What years are the best to look for in a price/quality comparison?

hhv said...

Fodder,

house built in the same era as a leaky condo... say 1987 on, is built to the same code. Leaky houses are only disappointing to one or two owners... leaky condos are far more news worthy. I wouldn't touch a spec house with anyone's money.

B2B said...

Fodder, I agree. I'm not nearly as skeptical of older houses as some. Of course, it all depends on the inspection, and I would pay the couple grand for an invasive inspection. Some of these houses built pre-1960 are built by the owner and not the greatest. Some lack footings for the foundation, etc. I wouldn't touch those. But some of these older ones are way overbuilt with full-dimensional old-growth lumber and oversized foundations and footings. Those houses are like bunkers. I have been told that up to about 1960 or so was the golden age of building this type of house.

Not to say that they shouldn't be cheaper if their insulation, wiring, windows, and plumbing are out of date. But I do reckon that the ones that were overbuilt are a good bet for renovation.

This is from a guy though who has given up on any car built before 1978. My current car is a '76 and I don't plan to change it. I get a lot of grief about this, but I figure I have the last laugh when it comes to maintenance and parts. I have to confess I have the same attitude when it comes to furniture and houses - I reckon most stuff built since the 70s is junk.

However just as my '76 car was $1500 in great shape, I wouldn't pay very much for an older house in a nice part of Victoria, good bones or not, that needed all new insulation, wiring, windows, roof, and plumbing. $200k or less would be the sort of price I'd be looking for.

boomer said...

"A question to people who know construction... are these older houses bad news? I thought they'd have their age issues, but their bones are solid. What years are the best to look for in a price/quality comparison?"

I like old homes BUT Architectural and Appearance preferences aside, the newer the better. Anyone claiming that old homes are better built than new homes is probably a nostalgia freak,unless you're talking craftsman built stone mansions, and even then updating to modern standards is incredibly time consuming and expensive.

Plaster and Lath is NOT better than boring drywall.

Particle insulation is NOT better than boring pink fiberglass batts.

Single paned wood windows are NOT better than current LOW E glass.

Old electric,plumbing,heating and roofing systems are nowhere near as good as modern technology.(some of these can be dangerous and make the house uninsurable)

Considering buying an old house?
Live with some or all of its faults, or if you want to do a complete fix up,consider it a long term labour of love, certainly not a way to save money on the structure.
Realtors certainly love that "good bones" line but a complete upgrading of an old house to modern standards in many cases will cost as much or more than building from scratch and will take longer.
(however, you can do it over time--a LONG time)

osiris_vic said...

Anon on August 16, 2008 9:53 PM

I think these are the numbers you want to see:
immigration stats

olives said...

HHV or Roger - KIV is asking for a detailed update on the local market.

hhv said...

gave em a link to Roger's graphs. Single best way to see the reality, period.

Anonymous said...

Have you folks ever LIVED in a house with one bathroom and an eight square foot kitchen? I grew up in one built in 1948; I don't have "happy memories" of waiting in line.

These things might be "built well", but they're still unliveable shacks.

For anyone under 75, that is, who doesn't move around much and bascially goes from one bed to one chair. Families? Forget it.

And to say that there haven't been SOME fantastic technological and lifestyle advances since 1917 (despite the failure of vapour barrier plastic in rainy climates) would be silly.

I'd take a 1970's 2.5 bath trailer over this masterpiece any day of the week. As long as it didn't have flat ceilings.

But not for over $100,000, either. They will be correcting soon too.

greg said...

fodder-

I bought a Mike Holmes book at Costco, he rates 60s-70s as best eras for construction, FWIW...

Anonymous said...

:osiris_vic said...
Anon on August 16, 2008 9:53 PM

I think these are the numbers you want to see."

Thanks for that. So, Victoria at 1.27 million and counting. I would have thought it was quite a bit lower than that but I guess it depends on where you cut it off.

The stats are interesting trends with Victoria increasing while BC is decreasing.

Nick said...

Thanks for that. So, Victoria at 1.27 million and counting. I would have thought it was quite a bit lower than that but I guess it depends on where you cut it off.

1.27 million?

Anonymous said...

A ya, sorry about that, I was reading that table all wrong.

I'll go back to reading.

Anonymous said...

It seems that every decade of housing had its problems. Having worked in some of the larger cities in Canada (what city isn't), I would say that quality of construction of most
of Victoria's homes built prior to 1971 were "handyman" quality. It seemed that if you owned a hammer and a copy of the yellow pages you were a Victoria General Contractor.

Except for boom real estate markets, the quality of homes has steadily increased from the 1970's on. Of course there are exceptions like Urea Formaldehyde Foam Insulation, Asbestos shingles, electrical ballast in flourescent lights, aluminium wiring, etc.

Having said this, I have to express one exception and that were homes built during the Great Depression in the 1930's. If you had the money, you got the best materials and the best labour. As long as there are no additions to the home, I generally find these were the best built decade of housing prior to the late 1990's. Of course, most of the buildings mechanics would have to be stripped and replaced to today's standards, remove the knob and tube wiring, get rid of the oil tank, put in perimeter drains, and new wood sash windows would be nice. Oh hell, they're money pits!

I would have said that the Depression era homes were of the best quality until the late 1990's. The quality and variety of building materials vastly improved then.

Today, my issue is not materials (except for laminate floors, pressed board cabinets and some other items) but very poor workmanship. No construction company is immune from this sloppy work as so much of the work is sub contracted.

In closing, I would say that you should look at homes no less than than 2 years old and not more than 10.

Or homes older than 30 years old that have recently been updated by a licensed contractor.

Check for building permits for additions by calling the city hall.

Use a building inspector not referred to you by your agent. Call the inspector yourself and do not give your realtor his/her name.


just jack

P.S.
to the person renting to "professionals". When I think back on the problem clients in my past the majority of them were "professionals". Never had a problem with people who had very little in material items but a lot of integrity. Integrity, does not come dressed in an Armani suit.

The one thing that you can be sure about someone with a new Mercedes - they have a lot of bills to be paid and you are at the bottom of their list.

Anonymous said...

Just jack, re: sloppy workmanship... you said it.

The so lauded pressboard crown moulding hides a multitude of shoddy workmanship sins...

Ditto the ridiculously wide base mouldings and wide mouldings and shutters on outside windows.

And always painted white, white, white, to show every fingerprint, every bit of dirt, because there's no woodgrain underneath the paint. And to keep them from outgassing formaldehyde.

In the 60's and 70's, you couldn't hide shoddy workmanship with pressboard moulding. They'd actually precision cut each siding board right up against the thin window frames.